MINI PROJECT`OF

OVERVIEW OF UNION BANK OF INDIA In partial fulfillment of the requirements of summer training

SUMMER PROJECT

UNDER THE GUIDANCE OF

Mrs Khalil NishaSubmitted by -

Priyanka kumari (3510910560)

1

BONAFIDE CERTIFICATECertified that this is a Bonafide record of work done by Priyanka Kumari Reg No

(3510910560) of MBA Degree in Summer Project in Union Bank Of India of SRM

SCHOOL OF MANAGEMENT SRM UNIVERSITY Kattankulathur Kanchipuram

District (Tamil Nadu) during the academic year 2010-2011

Internal guide

Mrs Khalil Nisha

2

DECLARATION

We declare that this project report entitled ldquoOverview of Union Bank of Indiardquo a record of

an independent research work carried out by me under the supervision and guidance of

MsKhalil Nisha This has not previously submitted for the award of any Dipolma

Degree Associateship or other similar titles

Place Ranchi

Date 14072010

3

ACKNOWLEDGEMENT

I am grateful to the management of Union Bank Of India for giving me an opportunity to work as a summer trainee at Regional Office Ranchi

I would like to express my sincere gratitude towards the credit department of Union Bank Of India at Ranchi for taking keen interest in my training and encouraging me by providing guidance at every stage Their constant support and practical approach helped in making the project more objective

The entire staff of Union Bank Of India helped in making the study comfortable and thus focus on the necessities of the project

I would also like to thank my internal guide Mrs Khalil Nisha and my respected Dean Mrs Jayshree Suresh whose constant guidance and support has led me to completion of my project

I would like to thanks my parents and friends who have supported me through out this project

I can say that this work is a collaborative achievement

The contribution of everyone mentioned above has helped me to make a report and project possible Once again I am thankful to the members of credit department of Union Bank Of India Mrs Khalil Nisha and my family members for being extremely co-operative and supportive towards me during training period

Place Ranchi PRIYANKA KUMARIDate 14072010 MBA

SRM INSTITUTE OF MANAGEMENT

4

5

SRNO PARTICULARS PAGE NO

1 RESEARCH METHODOLOGY 6

2 OBJECTIVE 8

3 INTRODUCTION 9

4 MISSION VISION amp BRAND 10

5 PRODUCTS amp SERVICES 11

6 COLLECTION OF DUES 13

7 BANKING OMBUDSMAN SCHEME 148 UNION PARIVAR 15

9 VALUE ADDED SERVICES ON ATM 16

10 ATM CALL CENTRE 17

11 TRANSACTION FEE 18

12 SELF USER CREATION FOR INTERNET BANKING

19

13 SMS BANKING SERVICES 2214 UMOBILE 25

15 RETAIL LENDING 29

16 MSME SCHEMES 30

17 GOVT BASED SCHEMES 31

18 PPF 3319 LAS 3420 CREDITINSPECTION REPORT 3621 IRB RATING MODEL 3822 CGTMSE 3923 Brief Business Performance Review 4424 FINDINGS 6125 SUGGESTIONS 6326 BIBLIOGRAPHY 64

TABLE OF CONTENTS

RESEARCH METHODOLOGY

Redman and Mory defines research as a ldquoSystematized effort to gain New Knowledgerdquo According

to Clifford woody ldquoResearch comprises defining and redefining problems formulating hypothesis or

suggested solutions Collecting organizing and evaluating data making deductions and reaching

conclusions and at last carefully testing the conclusions to determine whether they fit the formulating

hypothesisrdquo

Research is an original contribution to the existing stock of knowledge making for its advancement It

is the pursuit of truth with the help of study observation comparison and excitement The search for

knowledge through objectives and systematic method of finding to a problem is a research

1 Research design

This research study is based on the descriptive type of research which includes surveys and fact

findings enquires of different kinds The major purpose is to find out the present state of affairs

existing in the company This is known as ldquoEx Post Facto researchrdquo which means that the researcher

has no control over the variables and that he has to report the situation as it is

2 Method of Data CollectionThe data was collected though the following methods in order to interpret facts and figures and other

kinds of materials serving as the basis for the study

There are two types of data

1 Primary Data

2 Secondary Data

6

Primary Data

These are first hand data These are the data which has been collected by the researcher or get it

collected by someone for solving their problems For collecting primary data I have used personal

interview method

Secondary Data

These are the data which has already collected and used by someone so a researcher should try and

collect maximum relevant information through this source I have collected information after referring

to some books and websites

3Bar diagram

Bar diagram is a diagram from of diagrammatic representation This diagram consists of a series of

rectangular bars standing on a common base

7

OBJECTIVES

To make people aware about the different strategies applied by the Union Bank Of India

regarding ATMs UMOBILE banking services SMS banking services etc

To make them understand how the Union Bank of India is contributing in the development of

the economy

To get the knowledge about the development amp improvement in the functions of Union Bank

of India

To get the knowledge about the softwarersquos that is being used by Union Bank Of India in order

to increase the efficiency and for proper working The softwarersquos used are Finacle LAS etc

8

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

BONAFIDE CERTIFICATECertified that this is a Bonafide record of work done by Priyanka Kumari Reg No

(3510910560) of MBA Degree in Summer Project in Union Bank Of India of SRM

SCHOOL OF MANAGEMENT SRM UNIVERSITY Kattankulathur Kanchipuram

District (Tamil Nadu) during the academic year 2010-2011

Internal guide

Mrs Khalil Nisha

2

DECLARATION

We declare that this project report entitled ldquoOverview of Union Bank of Indiardquo a record of

an independent research work carried out by me under the supervision and guidance of

MsKhalil Nisha This has not previously submitted for the award of any Dipolma

Degree Associateship or other similar titles

Place Ranchi

Date 14072010

3

ACKNOWLEDGEMENT

I am grateful to the management of Union Bank Of India for giving me an opportunity to work as a summer trainee at Regional Office Ranchi

I would like to express my sincere gratitude towards the credit department of Union Bank Of India at Ranchi for taking keen interest in my training and encouraging me by providing guidance at every stage Their constant support and practical approach helped in making the project more objective

The entire staff of Union Bank Of India helped in making the study comfortable and thus focus on the necessities of the project

I would also like to thank my internal guide Mrs Khalil Nisha and my respected Dean Mrs Jayshree Suresh whose constant guidance and support has led me to completion of my project

I would like to thanks my parents and friends who have supported me through out this project

I can say that this work is a collaborative achievement

The contribution of everyone mentioned above has helped me to make a report and project possible Once again I am thankful to the members of credit department of Union Bank Of India Mrs Khalil Nisha and my family members for being extremely co-operative and supportive towards me during training period

Place Ranchi PRIYANKA KUMARIDate 14072010 MBA

SRM INSTITUTE OF MANAGEMENT

4

5

SRNO PARTICULARS PAGE NO

1 RESEARCH METHODOLOGY 6

2 OBJECTIVE 8

3 INTRODUCTION 9

4 MISSION VISION amp BRAND 10

5 PRODUCTS amp SERVICES 11

6 COLLECTION OF DUES 13

7 BANKING OMBUDSMAN SCHEME 148 UNION PARIVAR 15

9 VALUE ADDED SERVICES ON ATM 16

10 ATM CALL CENTRE 17

11 TRANSACTION FEE 18

12 SELF USER CREATION FOR INTERNET BANKING

19

13 SMS BANKING SERVICES 2214 UMOBILE 25

15 RETAIL LENDING 29

16 MSME SCHEMES 30

17 GOVT BASED SCHEMES 31

18 PPF 3319 LAS 3420 CREDITINSPECTION REPORT 3621 IRB RATING MODEL 3822 CGTMSE 3923 Brief Business Performance Review 4424 FINDINGS 6125 SUGGESTIONS 6326 BIBLIOGRAPHY 64

TABLE OF CONTENTS

RESEARCH METHODOLOGY

Redman and Mory defines research as a ldquoSystematized effort to gain New Knowledgerdquo According

to Clifford woody ldquoResearch comprises defining and redefining problems formulating hypothesis or

suggested solutions Collecting organizing and evaluating data making deductions and reaching

conclusions and at last carefully testing the conclusions to determine whether they fit the formulating

hypothesisrdquo

Research is an original contribution to the existing stock of knowledge making for its advancement It

is the pursuit of truth with the help of study observation comparison and excitement The search for

knowledge through objectives and systematic method of finding to a problem is a research

1 Research design

This research study is based on the descriptive type of research which includes surveys and fact

findings enquires of different kinds The major purpose is to find out the present state of affairs

existing in the company This is known as ldquoEx Post Facto researchrdquo which means that the researcher

has no control over the variables and that he has to report the situation as it is

2 Method of Data CollectionThe data was collected though the following methods in order to interpret facts and figures and other

kinds of materials serving as the basis for the study

There are two types of data

1 Primary Data

2 Secondary Data

6

Primary Data

These are first hand data These are the data which has been collected by the researcher or get it

collected by someone for solving their problems For collecting primary data I have used personal

interview method

Secondary Data

These are the data which has already collected and used by someone so a researcher should try and

collect maximum relevant information through this source I have collected information after referring

to some books and websites

3Bar diagram

Bar diagram is a diagram from of diagrammatic representation This diagram consists of a series of

rectangular bars standing on a common base

7

OBJECTIVES

To make people aware about the different strategies applied by the Union Bank Of India

regarding ATMs UMOBILE banking services SMS banking services etc

To make them understand how the Union Bank of India is contributing in the development of

the economy

To get the knowledge about the development amp improvement in the functions of Union Bank

of India

To get the knowledge about the softwarersquos that is being used by Union Bank Of India in order

to increase the efficiency and for proper working The softwarersquos used are Finacle LAS etc

8

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

DECLARATION

We declare that this project report entitled ldquoOverview of Union Bank of Indiardquo a record of

an independent research work carried out by me under the supervision and guidance of

MsKhalil Nisha This has not previously submitted for the award of any Dipolma

Degree Associateship or other similar titles

Place Ranchi

Date 14072010

3

ACKNOWLEDGEMENT

I am grateful to the management of Union Bank Of India for giving me an opportunity to work as a summer trainee at Regional Office Ranchi

I would like to express my sincere gratitude towards the credit department of Union Bank Of India at Ranchi for taking keen interest in my training and encouraging me by providing guidance at every stage Their constant support and practical approach helped in making the project more objective

The entire staff of Union Bank Of India helped in making the study comfortable and thus focus on the necessities of the project

I would also like to thank my internal guide Mrs Khalil Nisha and my respected Dean Mrs Jayshree Suresh whose constant guidance and support has led me to completion of my project

I would like to thanks my parents and friends who have supported me through out this project

I can say that this work is a collaborative achievement

The contribution of everyone mentioned above has helped me to make a report and project possible Once again I am thankful to the members of credit department of Union Bank Of India Mrs Khalil Nisha and my family members for being extremely co-operative and supportive towards me during training period

Place Ranchi PRIYANKA KUMARIDate 14072010 MBA

SRM INSTITUTE OF MANAGEMENT

4

5

SRNO PARTICULARS PAGE NO

1 RESEARCH METHODOLOGY 6

2 OBJECTIVE 8

3 INTRODUCTION 9

4 MISSION VISION amp BRAND 10

5 PRODUCTS amp SERVICES 11

6 COLLECTION OF DUES 13

7 BANKING OMBUDSMAN SCHEME 148 UNION PARIVAR 15

9 VALUE ADDED SERVICES ON ATM 16

10 ATM CALL CENTRE 17

11 TRANSACTION FEE 18

12 SELF USER CREATION FOR INTERNET BANKING

19

13 SMS BANKING SERVICES 2214 UMOBILE 25

15 RETAIL LENDING 29

16 MSME SCHEMES 30

17 GOVT BASED SCHEMES 31

18 PPF 3319 LAS 3420 CREDITINSPECTION REPORT 3621 IRB RATING MODEL 3822 CGTMSE 3923 Brief Business Performance Review 4424 FINDINGS 6125 SUGGESTIONS 6326 BIBLIOGRAPHY 64

TABLE OF CONTENTS

RESEARCH METHODOLOGY

Redman and Mory defines research as a ldquoSystematized effort to gain New Knowledgerdquo According

to Clifford woody ldquoResearch comprises defining and redefining problems formulating hypothesis or

suggested solutions Collecting organizing and evaluating data making deductions and reaching

conclusions and at last carefully testing the conclusions to determine whether they fit the formulating

hypothesisrdquo

Research is an original contribution to the existing stock of knowledge making for its advancement It

is the pursuit of truth with the help of study observation comparison and excitement The search for

knowledge through objectives and systematic method of finding to a problem is a research

1 Research design

This research study is based on the descriptive type of research which includes surveys and fact

findings enquires of different kinds The major purpose is to find out the present state of affairs

existing in the company This is known as ldquoEx Post Facto researchrdquo which means that the researcher

has no control over the variables and that he has to report the situation as it is

2 Method of Data CollectionThe data was collected though the following methods in order to interpret facts and figures and other

kinds of materials serving as the basis for the study

There are two types of data

1 Primary Data

2 Secondary Data

6

Primary Data

These are first hand data These are the data which has been collected by the researcher or get it

collected by someone for solving their problems For collecting primary data I have used personal

interview method

Secondary Data

These are the data which has already collected and used by someone so a researcher should try and

collect maximum relevant information through this source I have collected information after referring

to some books and websites

3Bar diagram

Bar diagram is a diagram from of diagrammatic representation This diagram consists of a series of

rectangular bars standing on a common base

7

OBJECTIVES

To make people aware about the different strategies applied by the Union Bank Of India

regarding ATMs UMOBILE banking services SMS banking services etc

To make them understand how the Union Bank of India is contributing in the development of

the economy

To get the knowledge about the development amp improvement in the functions of Union Bank

of India

To get the knowledge about the softwarersquos that is being used by Union Bank Of India in order

to increase the efficiency and for proper working The softwarersquos used are Finacle LAS etc

8

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

ACKNOWLEDGEMENT

I am grateful to the management of Union Bank Of India for giving me an opportunity to work as a summer trainee at Regional Office Ranchi

I would like to express my sincere gratitude towards the credit department of Union Bank Of India at Ranchi for taking keen interest in my training and encouraging me by providing guidance at every stage Their constant support and practical approach helped in making the project more objective

The entire staff of Union Bank Of India helped in making the study comfortable and thus focus on the necessities of the project

I would also like to thank my internal guide Mrs Khalil Nisha and my respected Dean Mrs Jayshree Suresh whose constant guidance and support has led me to completion of my project

I would like to thanks my parents and friends who have supported me through out this project

I can say that this work is a collaborative achievement

The contribution of everyone mentioned above has helped me to make a report and project possible Once again I am thankful to the members of credit department of Union Bank Of India Mrs Khalil Nisha and my family members for being extremely co-operative and supportive towards me during training period

Place Ranchi PRIYANKA KUMARIDate 14072010 MBA

SRM INSTITUTE OF MANAGEMENT

4

5

SRNO PARTICULARS PAGE NO

1 RESEARCH METHODOLOGY 6

2 OBJECTIVE 8

3 INTRODUCTION 9

4 MISSION VISION amp BRAND 10

5 PRODUCTS amp SERVICES 11

6 COLLECTION OF DUES 13

7 BANKING OMBUDSMAN SCHEME 148 UNION PARIVAR 15

9 VALUE ADDED SERVICES ON ATM 16

10 ATM CALL CENTRE 17

11 TRANSACTION FEE 18

12 SELF USER CREATION FOR INTERNET BANKING

19

13 SMS BANKING SERVICES 2214 UMOBILE 25

15 RETAIL LENDING 29

16 MSME SCHEMES 30

17 GOVT BASED SCHEMES 31

18 PPF 3319 LAS 3420 CREDITINSPECTION REPORT 3621 IRB RATING MODEL 3822 CGTMSE 3923 Brief Business Performance Review 4424 FINDINGS 6125 SUGGESTIONS 6326 BIBLIOGRAPHY 64

TABLE OF CONTENTS

RESEARCH METHODOLOGY

Redman and Mory defines research as a ldquoSystematized effort to gain New Knowledgerdquo According

to Clifford woody ldquoResearch comprises defining and redefining problems formulating hypothesis or

suggested solutions Collecting organizing and evaluating data making deductions and reaching

conclusions and at last carefully testing the conclusions to determine whether they fit the formulating

hypothesisrdquo

Research is an original contribution to the existing stock of knowledge making for its advancement It

is the pursuit of truth with the help of study observation comparison and excitement The search for

knowledge through objectives and systematic method of finding to a problem is a research

1 Research design

This research study is based on the descriptive type of research which includes surveys and fact

findings enquires of different kinds The major purpose is to find out the present state of affairs

existing in the company This is known as ldquoEx Post Facto researchrdquo which means that the researcher

has no control over the variables and that he has to report the situation as it is

2 Method of Data CollectionThe data was collected though the following methods in order to interpret facts and figures and other

kinds of materials serving as the basis for the study

There are two types of data

1 Primary Data

2 Secondary Data

6

Primary Data

These are first hand data These are the data which has been collected by the researcher or get it

collected by someone for solving their problems For collecting primary data I have used personal

interview method

Secondary Data

These are the data which has already collected and used by someone so a researcher should try and

collect maximum relevant information through this source I have collected information after referring

to some books and websites

3Bar diagram

Bar diagram is a diagram from of diagrammatic representation This diagram consists of a series of

rectangular bars standing on a common base

7

OBJECTIVES

To make people aware about the different strategies applied by the Union Bank Of India

regarding ATMs UMOBILE banking services SMS banking services etc

To make them understand how the Union Bank of India is contributing in the development of

the economy

To get the knowledge about the development amp improvement in the functions of Union Bank

of India

To get the knowledge about the softwarersquos that is being used by Union Bank Of India in order

to increase the efficiency and for proper working The softwarersquos used are Finacle LAS etc

8

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

5

SRNO PARTICULARS PAGE NO

1 RESEARCH METHODOLOGY 6

2 OBJECTIVE 8

3 INTRODUCTION 9

4 MISSION VISION amp BRAND 10

5 PRODUCTS amp SERVICES 11

6 COLLECTION OF DUES 13

7 BANKING OMBUDSMAN SCHEME 148 UNION PARIVAR 15

9 VALUE ADDED SERVICES ON ATM 16

10 ATM CALL CENTRE 17

11 TRANSACTION FEE 18

12 SELF USER CREATION FOR INTERNET BANKING

19

13 SMS BANKING SERVICES 2214 UMOBILE 25

15 RETAIL LENDING 29

16 MSME SCHEMES 30

17 GOVT BASED SCHEMES 31

18 PPF 3319 LAS 3420 CREDITINSPECTION REPORT 3621 IRB RATING MODEL 3822 CGTMSE 3923 Brief Business Performance Review 4424 FINDINGS 6125 SUGGESTIONS 6326 BIBLIOGRAPHY 64

TABLE OF CONTENTS

RESEARCH METHODOLOGY

Redman and Mory defines research as a ldquoSystematized effort to gain New Knowledgerdquo According

to Clifford woody ldquoResearch comprises defining and redefining problems formulating hypothesis or

suggested solutions Collecting organizing and evaluating data making deductions and reaching

conclusions and at last carefully testing the conclusions to determine whether they fit the formulating

hypothesisrdquo

Research is an original contribution to the existing stock of knowledge making for its advancement It

is the pursuit of truth with the help of study observation comparison and excitement The search for

knowledge through objectives and systematic method of finding to a problem is a research

1 Research design

This research study is based on the descriptive type of research which includes surveys and fact

findings enquires of different kinds The major purpose is to find out the present state of affairs

existing in the company This is known as ldquoEx Post Facto researchrdquo which means that the researcher

has no control over the variables and that he has to report the situation as it is

2 Method of Data CollectionThe data was collected though the following methods in order to interpret facts and figures and other

kinds of materials serving as the basis for the study

There are two types of data

1 Primary Data

2 Secondary Data

6

Primary Data

These are first hand data These are the data which has been collected by the researcher or get it

collected by someone for solving their problems For collecting primary data I have used personal

interview method

Secondary Data

These are the data which has already collected and used by someone so a researcher should try and

collect maximum relevant information through this source I have collected information after referring

to some books and websites

3Bar diagram

Bar diagram is a diagram from of diagrammatic representation This diagram consists of a series of

rectangular bars standing on a common base

7

OBJECTIVES

To make people aware about the different strategies applied by the Union Bank Of India

regarding ATMs UMOBILE banking services SMS banking services etc

To make them understand how the Union Bank of India is contributing in the development of

the economy

To get the knowledge about the development amp improvement in the functions of Union Bank

of India

To get the knowledge about the softwarersquos that is being used by Union Bank Of India in order

to increase the efficiency and for proper working The softwarersquos used are Finacle LAS etc

8

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

RESEARCH METHODOLOGY

Redman and Mory defines research as a ldquoSystematized effort to gain New Knowledgerdquo According

to Clifford woody ldquoResearch comprises defining and redefining problems formulating hypothesis or

suggested solutions Collecting organizing and evaluating data making deductions and reaching

conclusions and at last carefully testing the conclusions to determine whether they fit the formulating

hypothesisrdquo

Research is an original contribution to the existing stock of knowledge making for its advancement It

is the pursuit of truth with the help of study observation comparison and excitement The search for

knowledge through objectives and systematic method of finding to a problem is a research

1 Research design

This research study is based on the descriptive type of research which includes surveys and fact

findings enquires of different kinds The major purpose is to find out the present state of affairs

existing in the company This is known as ldquoEx Post Facto researchrdquo which means that the researcher

has no control over the variables and that he has to report the situation as it is

2 Method of Data CollectionThe data was collected though the following methods in order to interpret facts and figures and other

kinds of materials serving as the basis for the study

There are two types of data

1 Primary Data

2 Secondary Data

6

Primary Data

These are first hand data These are the data which has been collected by the researcher or get it

collected by someone for solving their problems For collecting primary data I have used personal

interview method

Secondary Data

These are the data which has already collected and used by someone so a researcher should try and

collect maximum relevant information through this source I have collected information after referring

to some books and websites

3Bar diagram

Bar diagram is a diagram from of diagrammatic representation This diagram consists of a series of

rectangular bars standing on a common base

7

OBJECTIVES

To make people aware about the different strategies applied by the Union Bank Of India

regarding ATMs UMOBILE banking services SMS banking services etc

To make them understand how the Union Bank of India is contributing in the development of

the economy

To get the knowledge about the development amp improvement in the functions of Union Bank

of India

To get the knowledge about the softwarersquos that is being used by Union Bank Of India in order

to increase the efficiency and for proper working The softwarersquos used are Finacle LAS etc

8

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

Primary Data

These are first hand data These are the data which has been collected by the researcher or get it

collected by someone for solving their problems For collecting primary data I have used personal

interview method

Secondary Data

These are the data which has already collected and used by someone so a researcher should try and

collect maximum relevant information through this source I have collected information after referring

to some books and websites

3Bar diagram

Bar diagram is a diagram from of diagrammatic representation This diagram consists of a series of

rectangular bars standing on a common base

7

OBJECTIVES

To make people aware about the different strategies applied by the Union Bank Of India

regarding ATMs UMOBILE banking services SMS banking services etc

To make them understand how the Union Bank of India is contributing in the development of

the economy

To get the knowledge about the development amp improvement in the functions of Union Bank

of India

To get the knowledge about the softwarersquos that is being used by Union Bank Of India in order

to increase the efficiency and for proper working The softwarersquos used are Finacle LAS etc

8

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

OBJECTIVES

To make people aware about the different strategies applied by the Union Bank Of India

regarding ATMs UMOBILE banking services SMS banking services etc

To make them understand how the Union Bank of India is contributing in the development of

the economy

To get the knowledge about the development amp improvement in the functions of Union Bank

of India

To get the knowledge about the softwarersquos that is being used by Union Bank Of India in order

to increase the efficiency and for proper working The softwarersquos used are Finacle LAS etc

8

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

UNION BANK OF INDIA

Type PublicIndustry Financial Commercial banksHeadquarters Mumbai IndiaKey people Mavila Vishwanathan Nair (Chair)Revenue USD 123 billionNet income USD 016 billionEmployees 25630Website httpwwwunionbankofindiacoin

HISTORY amp BACKGROUND OF UNION BANK OF INDIA

Union Bank of India was inaugurated by the Father of the Nation Mahatma Gandhi on November 11 1919 Started as a limited company in Mumbai it was one of the few Financial Commercial banks in India Until 1947 UBI had only 4 branches - 3 in Mumbai and 1 in Saurashtra all concentrated in key trade centres Catering to all the sectors of the society be it agriculture industry trade and commerce services or infrastructure the bank has also played a major role in rendering services to the financial needs of every section Apart from this the bank also extended financial support to educational housing and trade centre

Union Bank of India undertook the task of establishment of village knowledge centers and self-employment training centers It was in 1975 that the Union Bank of India was nationalized It was then that it merged with the Belgaum Bank a private sector bank Another merger was on cards in 1985 this time with the Miraj State Bank Union Bank is a Public Sector Unit with 5543 Share Capital held by the Government of India The Bank came out with its Initial Public Offer (IPO) in August 20 2002 and Follow on Public Offer in February 2006 Presently 3915 of Share Capital is presently held by institutions individuals and others

Tech-SavvyWith the age of global banking Union Bank of India also changed its style boasting of urbanized and computerized core banking systems A front runner among public sector banks in modern-day banking it has all the facilities that a modern bank should have - internet banking and centrally computerized branches UBI was one of the pioneer public sector banks which launched Core Banking Solution in 2002 As of September 2005 more than 670 branchesextension counters of Bank are networked under Core Banking Solution The Bank has launched multiple Electronic Delivery Channels and has installed nearly 423 networked ATMs

Head Office239 Vidhan Bhavan Marg Central OfficeNariman PointMumbai -21Phone - (022) 22892000Website wwwunionbankofindiacoin

9

MISSION

1 To be customer centric organization known for its differentiatedCustomer service

2 To offer comprehensive range of products to meet all financialneeds of customers

3 To be a top creator of shareholder wealth through focus onProfitable growth

4 To be a young organization leveraging on technology ampexperienced workforce

5 To be the most trusted brand admired by all stakeholders

6 To be a leader in area of Financial Inclusion

Bankrsquos Brand Promise ldquoGood People to bank withrdquoOFFER EXECUTION TONE

Value for money

Consistent experience acrossmultiple channels

Quick and fast delivery ofservice - assurance of TAT

Trust amp Transparency

Recognition of relationship

10

PRODUCTS AND SERVICESUnion Bank of India offers its customers various types of products and services so that they can make the most of their banking experiences The wide range of the services and products consist of

Personal Banking

Accounts amp Deposits ndash cumulative deposit scheme deposit reinvestment certificate monthly income scheme union flexi-deposit senior citizens scheme multi gain savings account no frills saving account union super salary account union classic current account

Retail Loans ndash union cash union home union health union miles union education union top up EMI calculator union smile

Cards - Classic Silver Gold Corporate Credit Cards Add-On Cards Insurance amp Investment ndash mutual fund union healthcare Demat ndash demat accounts online share trading Payment

NRI Banking

Remittance - Union E-Remit Nostro Details for Remittance Savings amp Deposits ndash (NRO) Non Resident Ordinary Ac Scheme NRE Non Resident

External Rupee Resident Foreign Currency (RFC) Foreign Currency Non-Receipt FCNR(B) Union Unfixed Foreign Currency Deposit

Loan amp Services ndash house loans foreign currency loans loans against deposit immovable property and shares or debenture

Payments - Union Bill Pay

Corporate Banking

Cash Management Systems (CMS) - Union Speed Union Centralized DebitsCredits Union Prompt

E-Tax - Customs and Direct taxes Directorate General Foreign Trade (DGFT) Central Excise and Service Tax

Trade Finance ndash trade finance for exporters trade finance for importers foreign currency loans correspondent banking

Insurance - Non life Insurance ndash Corporate Agency Insurance- Corporate Agency Syndication of Loans MSME Banking Loans amp Policies

11

1 Deposit accounts

2 Changing of account

3 Closing of account

4 Cash transactions

5 Settlement of claims

6 Foreign exchange services

7 Issuance of credit card

8 Insurance

9 Mobile banking

10 Credit counseling facility

11 Getting records

12 Cancelling payments

13 Liability for losses

12

COLLECTION OF DUES

Whenever the bank gives loans they also explain their repayment process by way of amount tenure and periodicity of repayment However if the customers donrsquot pay as per the defined process in accordance with the laws of land will be followed for recovery of dues

The process will involve reminding by sending the notice or by making personal visits or by repossession of security

The collection policy is built on courtesy fair treatment and persuasion The banks believe in fostering customer confidence and long term relationship

They will post details of the recovery agency firms companies engaged by them on their website

The bank will provide all the information regarding dues and will endeavor to give sufficient notice for payment of dues

They will have a system of checks before passing on a default case to collection agencies so that the customers will not be harassed on account of lapses on our part

They will write to the customer against whom they have initiated the recovery proceedings

All the members of the staff or any person authorized to represent bank in collection or security repossession would follow the guidelines

The privacy of the customers would be respected

Interaction with the customers would be in civil manner

Time and number of calls and contents of conversation would be documented

They will investigate any complaint made by the customers about unfair practices by collection agents

During visits to the customer places for dues collection decency and decorum would be maintained

13

THE BANKING OMBUDSMAN SCHEME 2006

The scheme was framed by reserve bank of India in 1995 and revised in 2002 and 2006 to enlarge the extent and scope of the authority and functions of banking ombudsman

The scheme is introduced with the object of enabling resolution of complaints relating to certain services rendered by banks and to facilitate the satisfaction or settlement of customers

This scheme shall receive and consider complaints relating to the deficiencies in banking or other services filed and facilitate their satisfaction or settlement and mediation between the bank concerned and the aggrieved parties or by passing on award in accordance with the schemes

The complaint in writing shall be duly signed by the complainant or his authorized signatory It should include

o The name and address of the complainanto The name and address of the branch or office of the bank against which complaint is

madeo The facts giving rise to the complaintso The nature and extent of loss caused to the complainant

A complaint made through electronic means shall also be accepted by the banking ombudsman

No complaint to the banking ombudsman shall lies unlesso The complaint had before making a complaint to the banking ombudsman made a

written representation to the bank and the bank has rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or the complainant is not satisfied with the reply 24vgiven to him by the bank

o The bank will display the name of the official of the branch whom the customers can approach to resolve the grievances If the complaint is unresolved at the branch level the customers can approach the regional zonal manager at the address displayed

o Within 30 days of lodging a complaint with us if the customer didnrsquot get any satisfactory response the they can wish to approach banking ombudsman appointed by reserve bank of India under banking ombudsman scheme

14

INTRODUCTION TO UNION PARIVAR Manpower is the key factor for the success of any organization This bank has dedicated family

of 29000 plus employees As part of its corporate vision to promote confidence and commitment among its employees This bank has chosen the people soft- HRIS software which is named as Union Parivar for deploying across the bank

This package is immensely beneficial to the staff members Hence all staff members have to use this package for availing the various online staff facilities available therein

BENEFITSo There is large scale reduction in paper movement and expenditure on stationary has been

curtailed

o Real time data is available for the controlling offices for the purpose of decision making

o It is compatible with the Finacle software which the bank is using for the banking purpose and once the staff facility is approved online the remittance to the staff account is time and cost effective

o It is having good security features amp audit trail

o No additional software is required at user level as it works on any simple internet browser

o This employee self service modules are quite simple and empower employees to get their data online without approaching the controlling office

WORKS UNDER UNION PARIVAR

Viewing staff records Viewing Leave Balances Viewing Medical Aid Balance Employee PersonalJob Information Yearly unavailed Entertainment Balance of Officers Viewing pay slip Viewing PF balance

15

VALUE ADDED SERVICES ON ATMUnion Bank ATM network has been growing rapidly and has now reached the level of 1507 There is a need to utilize these ATMs to the optimum level for not only cash withdrawals but also for other services and utility payments With a view to provide additional facilities to encourage the customers to use our ATMs Mobile Topup service is started

Through this facility the Debit card holder can recharge his pre-paid connection obtained from Hutch Airtel Tata Indicom MTNL and BSNL by following simple steps as under

Customer inserts his Debit Card and enters his Pin

Customer selects the option ldquoOTHERSrdquo displayed on the left side of the screen and further selects ldquoPrepaid Service Optionrdquo

ATM prompts the customer to enter his mobile number once and confirms on entering again

ATM displays the tariff options offered for customer to select On selecting the tariff customer has to select the account to which the amount is to be debited

The request of the customer with the Mobile number and tariff amount selected are then sent to Oxigen Services(India)Pvt Ltd (earlier India Prepaid services) who respond by sending a PIN and instruction details to the customer

The customer has to make a note of the PIN obtained from Oxigen Services and convey the same to his service provider ndash Hutch Airtel etc

Branches are requested to bring to the notice of customers on the availability of Mobile Top up services through our ATMs in order to ensure wider use of our ATMs

A notice may be displayed on the Branch Notice Board as well as at the ATM informing availability of ldquoMobile Topuprdquo facility through ATMs of our Bank

16

ATM CALL CENTRE

This is to inform that a Call Center for ATM Division had started their functioning from 12032007 with a Toll Free number The Call Center start to function between 0800 am and 1000 pm on all working days and from 1000 am and 500 pm on Sundays and holidays

The Call Center always attending to the following tasks

bull Hot listing of ATM and Debit Cards

bull Non Receipt of Pins Cards

bull Request for repin Reissue of Cards

bull Non-activation non-functioning of Cards

bull Queries relating to Debit Card features Insurance

bull ATM locations

bull Receipt of complaints regarding Declined transactions Suspect transactions

bull Requests for Ready kits Providing information to branches on dispatch of ready kits Issues relating to Ready kits not activated

The persons handling the Call Center will provide necessary information to customers branches if the same is readily available In respect of queries issues which cannot be immediately attended to a reference number will be provided

The telephone numbers of the ATM Call Center should be displayed on the notice board at branch as well as at the ATMs for the information of the customers

17

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

PRODUCTS AND SERVICESUnion Bank of India offers its customers various types of products and services so that they can make the most of their banking experiences The wide range of the services and products consist of

Personal Banking

Accounts amp Deposits ndash cumulative deposit scheme deposit reinvestment certificate monthly income scheme union flexi-deposit senior citizens scheme multi gain savings account no frills saving account union super salary account union classic current account

Retail Loans ndash union cash union home union health union miles union education union top up EMI calculator union smile

Cards - Classic Silver Gold Corporate Credit Cards Add-On Cards Insurance amp Investment ndash mutual fund union healthcare Demat ndash demat accounts online share trading Payment

NRI Banking

Remittance - Union E-Remit Nostro Details for Remittance Savings amp Deposits ndash (NRO) Non Resident Ordinary Ac Scheme NRE Non Resident

External Rupee Resident Foreign Currency (RFC) Foreign Currency Non-Receipt FCNR(B) Union Unfixed Foreign Currency Deposit

Loan amp Services ndash house loans foreign currency loans loans against deposit immovable property and shares or debenture

Payments - Union Bill Pay

Corporate Banking

Cash Management Systems (CMS) - Union Speed Union Centralized DebitsCredits Union Prompt

E-Tax - Customs and Direct taxes Directorate General Foreign Trade (DGFT) Central Excise and Service Tax

Trade Finance ndash trade finance for exporters trade finance for importers foreign currency loans correspondent banking

Insurance - Non life Insurance ndash Corporate Agency Insurance- Corporate Agency Syndication of Loans MSME Banking Loans amp Policies

11

1 Deposit accounts

2 Changing of account

3 Closing of account

4 Cash transactions

5 Settlement of claims

6 Foreign exchange services

7 Issuance of credit card

8 Insurance

9 Mobile banking

10 Credit counseling facility

11 Getting records

12 Cancelling payments

13 Liability for losses

12

COLLECTION OF DUES

Whenever the bank gives loans they also explain their repayment process by way of amount tenure and periodicity of repayment However if the customers donrsquot pay as per the defined process in accordance with the laws of land will be followed for recovery of dues

The process will involve reminding by sending the notice or by making personal visits or by repossession of security

The collection policy is built on courtesy fair treatment and persuasion The banks believe in fostering customer confidence and long term relationship

They will post details of the recovery agency firms companies engaged by them on their website

The bank will provide all the information regarding dues and will endeavor to give sufficient notice for payment of dues

They will have a system of checks before passing on a default case to collection agencies so that the customers will not be harassed on account of lapses on our part

They will write to the customer against whom they have initiated the recovery proceedings

All the members of the staff or any person authorized to represent bank in collection or security repossession would follow the guidelines

The privacy of the customers would be respected

Interaction with the customers would be in civil manner

Time and number of calls and contents of conversation would be documented

They will investigate any complaint made by the customers about unfair practices by collection agents

During visits to the customer places for dues collection decency and decorum would be maintained

13

THE BANKING OMBUDSMAN SCHEME 2006

The scheme was framed by reserve bank of India in 1995 and revised in 2002 and 2006 to enlarge the extent and scope of the authority and functions of banking ombudsman

The scheme is introduced with the object of enabling resolution of complaints relating to certain services rendered by banks and to facilitate the satisfaction or settlement of customers

This scheme shall receive and consider complaints relating to the deficiencies in banking or other services filed and facilitate their satisfaction or settlement and mediation between the bank concerned and the aggrieved parties or by passing on award in accordance with the schemes

The complaint in writing shall be duly signed by the complainant or his authorized signatory It should include

o The name and address of the complainanto The name and address of the branch or office of the bank against which complaint is

madeo The facts giving rise to the complaintso The nature and extent of loss caused to the complainant

A complaint made through electronic means shall also be accepted by the banking ombudsman

No complaint to the banking ombudsman shall lies unlesso The complaint had before making a complaint to the banking ombudsman made a

written representation to the bank and the bank has rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or the complainant is not satisfied with the reply 24vgiven to him by the bank

o The bank will display the name of the official of the branch whom the customers can approach to resolve the grievances If the complaint is unresolved at the branch level the customers can approach the regional zonal manager at the address displayed

o Within 30 days of lodging a complaint with us if the customer didnrsquot get any satisfactory response the they can wish to approach banking ombudsman appointed by reserve bank of India under banking ombudsman scheme

14

INTRODUCTION TO UNION PARIVAR Manpower is the key factor for the success of any organization This bank has dedicated family

of 29000 plus employees As part of its corporate vision to promote confidence and commitment among its employees This bank has chosen the people soft- HRIS software which is named as Union Parivar for deploying across the bank

This package is immensely beneficial to the staff members Hence all staff members have to use this package for availing the various online staff facilities available therein

BENEFITSo There is large scale reduction in paper movement and expenditure on stationary has been

curtailed

o Real time data is available for the controlling offices for the purpose of decision making

o It is compatible with the Finacle software which the bank is using for the banking purpose and once the staff facility is approved online the remittance to the staff account is time and cost effective

o It is having good security features amp audit trail

o No additional software is required at user level as it works on any simple internet browser

o This employee self service modules are quite simple and empower employees to get their data online without approaching the controlling office

WORKS UNDER UNION PARIVAR

Viewing staff records Viewing Leave Balances Viewing Medical Aid Balance Employee PersonalJob Information Yearly unavailed Entertainment Balance of Officers Viewing pay slip Viewing PF balance

15

VALUE ADDED SERVICES ON ATMUnion Bank ATM network has been growing rapidly and has now reached the level of 1507 There is a need to utilize these ATMs to the optimum level for not only cash withdrawals but also for other services and utility payments With a view to provide additional facilities to encourage the customers to use our ATMs Mobile Topup service is started

Through this facility the Debit card holder can recharge his pre-paid connection obtained from Hutch Airtel Tata Indicom MTNL and BSNL by following simple steps as under

Customer inserts his Debit Card and enters his Pin

Customer selects the option ldquoOTHERSrdquo displayed on the left side of the screen and further selects ldquoPrepaid Service Optionrdquo

ATM prompts the customer to enter his mobile number once and confirms on entering again

ATM displays the tariff options offered for customer to select On selecting the tariff customer has to select the account to which the amount is to be debited

The request of the customer with the Mobile number and tariff amount selected are then sent to Oxigen Services(India)Pvt Ltd (earlier India Prepaid services) who respond by sending a PIN and instruction details to the customer

The customer has to make a note of the PIN obtained from Oxigen Services and convey the same to his service provider ndash Hutch Airtel etc

Branches are requested to bring to the notice of customers on the availability of Mobile Top up services through our ATMs in order to ensure wider use of our ATMs

A notice may be displayed on the Branch Notice Board as well as at the ATM informing availability of ldquoMobile Topuprdquo facility through ATMs of our Bank

16

ATM CALL CENTRE

This is to inform that a Call Center for ATM Division had started their functioning from 12032007 with a Toll Free number The Call Center start to function between 0800 am and 1000 pm on all working days and from 1000 am and 500 pm on Sundays and holidays

The Call Center always attending to the following tasks

bull Hot listing of ATM and Debit Cards

bull Non Receipt of Pins Cards

bull Request for repin Reissue of Cards

bull Non-activation non-functioning of Cards

bull Queries relating to Debit Card features Insurance

bull ATM locations

bull Receipt of complaints regarding Declined transactions Suspect transactions

bull Requests for Ready kits Providing information to branches on dispatch of ready kits Issues relating to Ready kits not activated

The persons handling the Call Center will provide necessary information to customers branches if the same is readily available In respect of queries issues which cannot be immediately attended to a reference number will be provided

The telephone numbers of the ATM Call Center should be displayed on the notice board at branch as well as at the ATMs for the information of the customers

17

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

1 Deposit accounts

2 Changing of account

3 Closing of account

4 Cash transactions

5 Settlement of claims

6 Foreign exchange services

7 Issuance of credit card

8 Insurance

9 Mobile banking

10 Credit counseling facility

11 Getting records

12 Cancelling payments

13 Liability for losses

12

COLLECTION OF DUES

Whenever the bank gives loans they also explain their repayment process by way of amount tenure and periodicity of repayment However if the customers donrsquot pay as per the defined process in accordance with the laws of land will be followed for recovery of dues

The process will involve reminding by sending the notice or by making personal visits or by repossession of security

The collection policy is built on courtesy fair treatment and persuasion The banks believe in fostering customer confidence and long term relationship

They will post details of the recovery agency firms companies engaged by them on their website

The bank will provide all the information regarding dues and will endeavor to give sufficient notice for payment of dues

They will have a system of checks before passing on a default case to collection agencies so that the customers will not be harassed on account of lapses on our part

They will write to the customer against whom they have initiated the recovery proceedings

All the members of the staff or any person authorized to represent bank in collection or security repossession would follow the guidelines

The privacy of the customers would be respected

Interaction with the customers would be in civil manner

Time and number of calls and contents of conversation would be documented

They will investigate any complaint made by the customers about unfair practices by collection agents

During visits to the customer places for dues collection decency and decorum would be maintained

13

THE BANKING OMBUDSMAN SCHEME 2006

The scheme was framed by reserve bank of India in 1995 and revised in 2002 and 2006 to enlarge the extent and scope of the authority and functions of banking ombudsman

The scheme is introduced with the object of enabling resolution of complaints relating to certain services rendered by banks and to facilitate the satisfaction or settlement of customers

This scheme shall receive and consider complaints relating to the deficiencies in banking or other services filed and facilitate their satisfaction or settlement and mediation between the bank concerned and the aggrieved parties or by passing on award in accordance with the schemes

The complaint in writing shall be duly signed by the complainant or his authorized signatory It should include

o The name and address of the complainanto The name and address of the branch or office of the bank against which complaint is

madeo The facts giving rise to the complaintso The nature and extent of loss caused to the complainant

A complaint made through electronic means shall also be accepted by the banking ombudsman

No complaint to the banking ombudsman shall lies unlesso The complaint had before making a complaint to the banking ombudsman made a

written representation to the bank and the bank has rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or the complainant is not satisfied with the reply 24vgiven to him by the bank

o The bank will display the name of the official of the branch whom the customers can approach to resolve the grievances If the complaint is unresolved at the branch level the customers can approach the regional zonal manager at the address displayed

o Within 30 days of lodging a complaint with us if the customer didnrsquot get any satisfactory response the they can wish to approach banking ombudsman appointed by reserve bank of India under banking ombudsman scheme

14

INTRODUCTION TO UNION PARIVAR Manpower is the key factor for the success of any organization This bank has dedicated family

of 29000 plus employees As part of its corporate vision to promote confidence and commitment among its employees This bank has chosen the people soft- HRIS software which is named as Union Parivar for deploying across the bank

This package is immensely beneficial to the staff members Hence all staff members have to use this package for availing the various online staff facilities available therein

BENEFITSo There is large scale reduction in paper movement and expenditure on stationary has been

curtailed

o Real time data is available for the controlling offices for the purpose of decision making

o It is compatible with the Finacle software which the bank is using for the banking purpose and once the staff facility is approved online the remittance to the staff account is time and cost effective

o It is having good security features amp audit trail

o No additional software is required at user level as it works on any simple internet browser

o This employee self service modules are quite simple and empower employees to get their data online without approaching the controlling office

WORKS UNDER UNION PARIVAR

Viewing staff records Viewing Leave Balances Viewing Medical Aid Balance Employee PersonalJob Information Yearly unavailed Entertainment Balance of Officers Viewing pay slip Viewing PF balance

15

VALUE ADDED SERVICES ON ATMUnion Bank ATM network has been growing rapidly and has now reached the level of 1507 There is a need to utilize these ATMs to the optimum level for not only cash withdrawals but also for other services and utility payments With a view to provide additional facilities to encourage the customers to use our ATMs Mobile Topup service is started

Through this facility the Debit card holder can recharge his pre-paid connection obtained from Hutch Airtel Tata Indicom MTNL and BSNL by following simple steps as under

Customer inserts his Debit Card and enters his Pin

Customer selects the option ldquoOTHERSrdquo displayed on the left side of the screen and further selects ldquoPrepaid Service Optionrdquo

ATM prompts the customer to enter his mobile number once and confirms on entering again

ATM displays the tariff options offered for customer to select On selecting the tariff customer has to select the account to which the amount is to be debited

The request of the customer with the Mobile number and tariff amount selected are then sent to Oxigen Services(India)Pvt Ltd (earlier India Prepaid services) who respond by sending a PIN and instruction details to the customer

The customer has to make a note of the PIN obtained from Oxigen Services and convey the same to his service provider ndash Hutch Airtel etc

Branches are requested to bring to the notice of customers on the availability of Mobile Top up services through our ATMs in order to ensure wider use of our ATMs

A notice may be displayed on the Branch Notice Board as well as at the ATM informing availability of ldquoMobile Topuprdquo facility through ATMs of our Bank

16

ATM CALL CENTRE

This is to inform that a Call Center for ATM Division had started their functioning from 12032007 with a Toll Free number The Call Center start to function between 0800 am and 1000 pm on all working days and from 1000 am and 500 pm on Sundays and holidays

The Call Center always attending to the following tasks

bull Hot listing of ATM and Debit Cards

bull Non Receipt of Pins Cards

bull Request for repin Reissue of Cards

bull Non-activation non-functioning of Cards

bull Queries relating to Debit Card features Insurance

bull ATM locations

bull Receipt of complaints regarding Declined transactions Suspect transactions

bull Requests for Ready kits Providing information to branches on dispatch of ready kits Issues relating to Ready kits not activated

The persons handling the Call Center will provide necessary information to customers branches if the same is readily available In respect of queries issues which cannot be immediately attended to a reference number will be provided

The telephone numbers of the ATM Call Center should be displayed on the notice board at branch as well as at the ATMs for the information of the customers

17

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

COLLECTION OF DUES

Whenever the bank gives loans they also explain their repayment process by way of amount tenure and periodicity of repayment However if the customers donrsquot pay as per the defined process in accordance with the laws of land will be followed for recovery of dues

The process will involve reminding by sending the notice or by making personal visits or by repossession of security

The collection policy is built on courtesy fair treatment and persuasion The banks believe in fostering customer confidence and long term relationship

They will post details of the recovery agency firms companies engaged by them on their website

The bank will provide all the information regarding dues and will endeavor to give sufficient notice for payment of dues

They will have a system of checks before passing on a default case to collection agencies so that the customers will not be harassed on account of lapses on our part

They will write to the customer against whom they have initiated the recovery proceedings

All the members of the staff or any person authorized to represent bank in collection or security repossession would follow the guidelines

The privacy of the customers would be respected

Interaction with the customers would be in civil manner

Time and number of calls and contents of conversation would be documented

They will investigate any complaint made by the customers about unfair practices by collection agents

During visits to the customer places for dues collection decency and decorum would be maintained

13

THE BANKING OMBUDSMAN SCHEME 2006

The scheme was framed by reserve bank of India in 1995 and revised in 2002 and 2006 to enlarge the extent and scope of the authority and functions of banking ombudsman

The scheme is introduced with the object of enabling resolution of complaints relating to certain services rendered by banks and to facilitate the satisfaction or settlement of customers

This scheme shall receive and consider complaints relating to the deficiencies in banking or other services filed and facilitate their satisfaction or settlement and mediation between the bank concerned and the aggrieved parties or by passing on award in accordance with the schemes

The complaint in writing shall be duly signed by the complainant or his authorized signatory It should include

o The name and address of the complainanto The name and address of the branch or office of the bank against which complaint is

madeo The facts giving rise to the complaintso The nature and extent of loss caused to the complainant

A complaint made through electronic means shall also be accepted by the banking ombudsman

No complaint to the banking ombudsman shall lies unlesso The complaint had before making a complaint to the banking ombudsman made a

written representation to the bank and the bank has rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or the complainant is not satisfied with the reply 24vgiven to him by the bank

o The bank will display the name of the official of the branch whom the customers can approach to resolve the grievances If the complaint is unresolved at the branch level the customers can approach the regional zonal manager at the address displayed

o Within 30 days of lodging a complaint with us if the customer didnrsquot get any satisfactory response the they can wish to approach banking ombudsman appointed by reserve bank of India under banking ombudsman scheme

14

INTRODUCTION TO UNION PARIVAR Manpower is the key factor for the success of any organization This bank has dedicated family

of 29000 plus employees As part of its corporate vision to promote confidence and commitment among its employees This bank has chosen the people soft- HRIS software which is named as Union Parivar for deploying across the bank

This package is immensely beneficial to the staff members Hence all staff members have to use this package for availing the various online staff facilities available therein

BENEFITSo There is large scale reduction in paper movement and expenditure on stationary has been

curtailed

o Real time data is available for the controlling offices for the purpose of decision making

o It is compatible with the Finacle software which the bank is using for the banking purpose and once the staff facility is approved online the remittance to the staff account is time and cost effective

o It is having good security features amp audit trail

o No additional software is required at user level as it works on any simple internet browser

o This employee self service modules are quite simple and empower employees to get their data online without approaching the controlling office

WORKS UNDER UNION PARIVAR

Viewing staff records Viewing Leave Balances Viewing Medical Aid Balance Employee PersonalJob Information Yearly unavailed Entertainment Balance of Officers Viewing pay slip Viewing PF balance

15

VALUE ADDED SERVICES ON ATMUnion Bank ATM network has been growing rapidly and has now reached the level of 1507 There is a need to utilize these ATMs to the optimum level for not only cash withdrawals but also for other services and utility payments With a view to provide additional facilities to encourage the customers to use our ATMs Mobile Topup service is started

Through this facility the Debit card holder can recharge his pre-paid connection obtained from Hutch Airtel Tata Indicom MTNL and BSNL by following simple steps as under

Customer inserts his Debit Card and enters his Pin

Customer selects the option ldquoOTHERSrdquo displayed on the left side of the screen and further selects ldquoPrepaid Service Optionrdquo

ATM prompts the customer to enter his mobile number once and confirms on entering again

ATM displays the tariff options offered for customer to select On selecting the tariff customer has to select the account to which the amount is to be debited

The request of the customer with the Mobile number and tariff amount selected are then sent to Oxigen Services(India)Pvt Ltd (earlier India Prepaid services) who respond by sending a PIN and instruction details to the customer

The customer has to make a note of the PIN obtained from Oxigen Services and convey the same to his service provider ndash Hutch Airtel etc

Branches are requested to bring to the notice of customers on the availability of Mobile Top up services through our ATMs in order to ensure wider use of our ATMs

A notice may be displayed on the Branch Notice Board as well as at the ATM informing availability of ldquoMobile Topuprdquo facility through ATMs of our Bank

16

ATM CALL CENTRE

This is to inform that a Call Center for ATM Division had started their functioning from 12032007 with a Toll Free number The Call Center start to function between 0800 am and 1000 pm on all working days and from 1000 am and 500 pm on Sundays and holidays

The Call Center always attending to the following tasks

bull Hot listing of ATM and Debit Cards

bull Non Receipt of Pins Cards

bull Request for repin Reissue of Cards

bull Non-activation non-functioning of Cards

bull Queries relating to Debit Card features Insurance

bull ATM locations

bull Receipt of complaints regarding Declined transactions Suspect transactions

bull Requests for Ready kits Providing information to branches on dispatch of ready kits Issues relating to Ready kits not activated

The persons handling the Call Center will provide necessary information to customers branches if the same is readily available In respect of queries issues which cannot be immediately attended to a reference number will be provided

The telephone numbers of the ATM Call Center should be displayed on the notice board at branch as well as at the ATMs for the information of the customers

17

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

THE BANKING OMBUDSMAN SCHEME 2006

The scheme was framed by reserve bank of India in 1995 and revised in 2002 and 2006 to enlarge the extent and scope of the authority and functions of banking ombudsman

The scheme is introduced with the object of enabling resolution of complaints relating to certain services rendered by banks and to facilitate the satisfaction or settlement of customers

This scheme shall receive and consider complaints relating to the deficiencies in banking or other services filed and facilitate their satisfaction or settlement and mediation between the bank concerned and the aggrieved parties or by passing on award in accordance with the schemes

The complaint in writing shall be duly signed by the complainant or his authorized signatory It should include

o The name and address of the complainanto The name and address of the branch or office of the bank against which complaint is

madeo The facts giving rise to the complaintso The nature and extent of loss caused to the complainant

A complaint made through electronic means shall also be accepted by the banking ombudsman

No complaint to the banking ombudsman shall lies unlesso The complaint had before making a complaint to the banking ombudsman made a

written representation to the bank and the bank has rejected the complaint or the complainant had not received any reply within a period of one month after the bank received his representation or the complainant is not satisfied with the reply 24vgiven to him by the bank

o The bank will display the name of the official of the branch whom the customers can approach to resolve the grievances If the complaint is unresolved at the branch level the customers can approach the regional zonal manager at the address displayed

o Within 30 days of lodging a complaint with us if the customer didnrsquot get any satisfactory response the they can wish to approach banking ombudsman appointed by reserve bank of India under banking ombudsman scheme

14

INTRODUCTION TO UNION PARIVAR Manpower is the key factor for the success of any organization This bank has dedicated family

of 29000 plus employees As part of its corporate vision to promote confidence and commitment among its employees This bank has chosen the people soft- HRIS software which is named as Union Parivar for deploying across the bank

This package is immensely beneficial to the staff members Hence all staff members have to use this package for availing the various online staff facilities available therein

BENEFITSo There is large scale reduction in paper movement and expenditure on stationary has been

curtailed

o Real time data is available for the controlling offices for the purpose of decision making

o It is compatible with the Finacle software which the bank is using for the banking purpose and once the staff facility is approved online the remittance to the staff account is time and cost effective

o It is having good security features amp audit trail

o No additional software is required at user level as it works on any simple internet browser

o This employee self service modules are quite simple and empower employees to get their data online without approaching the controlling office

WORKS UNDER UNION PARIVAR

Viewing staff records Viewing Leave Balances Viewing Medical Aid Balance Employee PersonalJob Information Yearly unavailed Entertainment Balance of Officers Viewing pay slip Viewing PF balance

15

VALUE ADDED SERVICES ON ATMUnion Bank ATM network has been growing rapidly and has now reached the level of 1507 There is a need to utilize these ATMs to the optimum level for not only cash withdrawals but also for other services and utility payments With a view to provide additional facilities to encourage the customers to use our ATMs Mobile Topup service is started

Through this facility the Debit card holder can recharge his pre-paid connection obtained from Hutch Airtel Tata Indicom MTNL and BSNL by following simple steps as under

Customer inserts his Debit Card and enters his Pin

Customer selects the option ldquoOTHERSrdquo displayed on the left side of the screen and further selects ldquoPrepaid Service Optionrdquo

ATM prompts the customer to enter his mobile number once and confirms on entering again

ATM displays the tariff options offered for customer to select On selecting the tariff customer has to select the account to which the amount is to be debited

The request of the customer with the Mobile number and tariff amount selected are then sent to Oxigen Services(India)Pvt Ltd (earlier India Prepaid services) who respond by sending a PIN and instruction details to the customer

The customer has to make a note of the PIN obtained from Oxigen Services and convey the same to his service provider ndash Hutch Airtel etc

Branches are requested to bring to the notice of customers on the availability of Mobile Top up services through our ATMs in order to ensure wider use of our ATMs

A notice may be displayed on the Branch Notice Board as well as at the ATM informing availability of ldquoMobile Topuprdquo facility through ATMs of our Bank

16

ATM CALL CENTRE

This is to inform that a Call Center for ATM Division had started their functioning from 12032007 with a Toll Free number The Call Center start to function between 0800 am and 1000 pm on all working days and from 1000 am and 500 pm on Sundays and holidays

The Call Center always attending to the following tasks

bull Hot listing of ATM and Debit Cards

bull Non Receipt of Pins Cards

bull Request for repin Reissue of Cards

bull Non-activation non-functioning of Cards

bull Queries relating to Debit Card features Insurance

bull ATM locations

bull Receipt of complaints regarding Declined transactions Suspect transactions

bull Requests for Ready kits Providing information to branches on dispatch of ready kits Issues relating to Ready kits not activated

The persons handling the Call Center will provide necessary information to customers branches if the same is readily available In respect of queries issues which cannot be immediately attended to a reference number will be provided

The telephone numbers of the ATM Call Center should be displayed on the notice board at branch as well as at the ATMs for the information of the customers

17

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

INTRODUCTION TO UNION PARIVAR Manpower is the key factor for the success of any organization This bank has dedicated family

of 29000 plus employees As part of its corporate vision to promote confidence and commitment among its employees This bank has chosen the people soft- HRIS software which is named as Union Parivar for deploying across the bank

This package is immensely beneficial to the staff members Hence all staff members have to use this package for availing the various online staff facilities available therein

BENEFITSo There is large scale reduction in paper movement and expenditure on stationary has been

curtailed

o Real time data is available for the controlling offices for the purpose of decision making

o It is compatible with the Finacle software which the bank is using for the banking purpose and once the staff facility is approved online the remittance to the staff account is time and cost effective

o It is having good security features amp audit trail

o No additional software is required at user level as it works on any simple internet browser

o This employee self service modules are quite simple and empower employees to get their data online without approaching the controlling office

WORKS UNDER UNION PARIVAR

Viewing staff records Viewing Leave Balances Viewing Medical Aid Balance Employee PersonalJob Information Yearly unavailed Entertainment Balance of Officers Viewing pay slip Viewing PF balance

15

VALUE ADDED SERVICES ON ATMUnion Bank ATM network has been growing rapidly and has now reached the level of 1507 There is a need to utilize these ATMs to the optimum level for not only cash withdrawals but also for other services and utility payments With a view to provide additional facilities to encourage the customers to use our ATMs Mobile Topup service is started

Through this facility the Debit card holder can recharge his pre-paid connection obtained from Hutch Airtel Tata Indicom MTNL and BSNL by following simple steps as under

Customer inserts his Debit Card and enters his Pin

Customer selects the option ldquoOTHERSrdquo displayed on the left side of the screen and further selects ldquoPrepaid Service Optionrdquo

ATM prompts the customer to enter his mobile number once and confirms on entering again

ATM displays the tariff options offered for customer to select On selecting the tariff customer has to select the account to which the amount is to be debited

The request of the customer with the Mobile number and tariff amount selected are then sent to Oxigen Services(India)Pvt Ltd (earlier India Prepaid services) who respond by sending a PIN and instruction details to the customer

The customer has to make a note of the PIN obtained from Oxigen Services and convey the same to his service provider ndash Hutch Airtel etc

Branches are requested to bring to the notice of customers on the availability of Mobile Top up services through our ATMs in order to ensure wider use of our ATMs

A notice may be displayed on the Branch Notice Board as well as at the ATM informing availability of ldquoMobile Topuprdquo facility through ATMs of our Bank

16

ATM CALL CENTRE

This is to inform that a Call Center for ATM Division had started their functioning from 12032007 with a Toll Free number The Call Center start to function between 0800 am and 1000 pm on all working days and from 1000 am and 500 pm on Sundays and holidays

The Call Center always attending to the following tasks

bull Hot listing of ATM and Debit Cards

bull Non Receipt of Pins Cards

bull Request for repin Reissue of Cards

bull Non-activation non-functioning of Cards

bull Queries relating to Debit Card features Insurance

bull ATM locations

bull Receipt of complaints regarding Declined transactions Suspect transactions

bull Requests for Ready kits Providing information to branches on dispatch of ready kits Issues relating to Ready kits not activated

The persons handling the Call Center will provide necessary information to customers branches if the same is readily available In respect of queries issues which cannot be immediately attended to a reference number will be provided

The telephone numbers of the ATM Call Center should be displayed on the notice board at branch as well as at the ATMs for the information of the customers

17

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

VALUE ADDED SERVICES ON ATMUnion Bank ATM network has been growing rapidly and has now reached the level of 1507 There is a need to utilize these ATMs to the optimum level for not only cash withdrawals but also for other services and utility payments With a view to provide additional facilities to encourage the customers to use our ATMs Mobile Topup service is started

Through this facility the Debit card holder can recharge his pre-paid connection obtained from Hutch Airtel Tata Indicom MTNL and BSNL by following simple steps as under

Customer inserts his Debit Card and enters his Pin

Customer selects the option ldquoOTHERSrdquo displayed on the left side of the screen and further selects ldquoPrepaid Service Optionrdquo

ATM prompts the customer to enter his mobile number once and confirms on entering again

ATM displays the tariff options offered for customer to select On selecting the tariff customer has to select the account to which the amount is to be debited

The request of the customer with the Mobile number and tariff amount selected are then sent to Oxigen Services(India)Pvt Ltd (earlier India Prepaid services) who respond by sending a PIN and instruction details to the customer

The customer has to make a note of the PIN obtained from Oxigen Services and convey the same to his service provider ndash Hutch Airtel etc

Branches are requested to bring to the notice of customers on the availability of Mobile Top up services through our ATMs in order to ensure wider use of our ATMs

A notice may be displayed on the Branch Notice Board as well as at the ATM informing availability of ldquoMobile Topuprdquo facility through ATMs of our Bank

16

ATM CALL CENTRE

This is to inform that a Call Center for ATM Division had started their functioning from 12032007 with a Toll Free number The Call Center start to function between 0800 am and 1000 pm on all working days and from 1000 am and 500 pm on Sundays and holidays

The Call Center always attending to the following tasks

bull Hot listing of ATM and Debit Cards

bull Non Receipt of Pins Cards

bull Request for repin Reissue of Cards

bull Non-activation non-functioning of Cards

bull Queries relating to Debit Card features Insurance

bull ATM locations

bull Receipt of complaints regarding Declined transactions Suspect transactions

bull Requests for Ready kits Providing information to branches on dispatch of ready kits Issues relating to Ready kits not activated

The persons handling the Call Center will provide necessary information to customers branches if the same is readily available In respect of queries issues which cannot be immediately attended to a reference number will be provided

The telephone numbers of the ATM Call Center should be displayed on the notice board at branch as well as at the ATMs for the information of the customers

17

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

ATM CALL CENTRE

This is to inform that a Call Center for ATM Division had started their functioning from 12032007 with a Toll Free number The Call Center start to function between 0800 am and 1000 pm on all working days and from 1000 am and 500 pm on Sundays and holidays

The Call Center always attending to the following tasks

bull Hot listing of ATM and Debit Cards

bull Non Receipt of Pins Cards

bull Request for repin Reissue of Cards

bull Non-activation non-functioning of Cards

bull Queries relating to Debit Card features Insurance

bull ATM locations

bull Receipt of complaints regarding Declined transactions Suspect transactions

bull Requests for Ready kits Providing information to branches on dispatch of ready kits Issues relating to Ready kits not activated

The persons handling the Call Center will provide necessary information to customers branches if the same is readily available In respect of queries issues which cannot be immediately attended to a reference number will be provided

The telephone numbers of the ATM Call Center should be displayed on the notice board at branch as well as at the ATMs for the information of the customers

17

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

CONSECUTIVE CHANGES HAPPENED FOR USING OTHER BANK ATMs Bank entered into ATM sharing arrangements with Cash Tree Group SBI Group NFS and VISA networks for providing access to our customers to ATMs of almost all Banks in the country to increase the usage of ATMs as a delivery channel Considering the variation in charges of different networks Reserve Bank of India directed the Banks to act as under with effect from 31032008

18

Dec232007 bull For cash withdrawal no bank

shall increase the charges prevailing as on Dec232007

bull Banks which are charging more than Rs20- per transaction shall reduce the charges to a maximum of Rs20- by March 2008

Mar292008 bull Banks has made balance

enquiry charges free bull It also reduced the charges in

respect of cash withdrawals at VISA ATMs to Rs20- while retaining the charges of Cash Tree at Rs10- SBI and NFS charges at Rs20-

bull Use of other Bank ATMs for balance enquiry to be made free immediately

April12009 bull Cash withdrawal charges at

other Bank ATMs to be made free from 1st April 2009

IN YEAR 2010 bull 1 5 transactions are free for the

ATM card of one bank if used in other banks

bull 2 After 5 transactions the service charge will be applicable as Rs 20-

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

SELF USER CREATION FOR INTERNET BANKINGEbanking services were launched by the Bank in April 2004 During the last 5 years over 336 lakhs Retail users and 030 lakh corporate users were provided with Ebanking facility The customer who has Internet banking facility can enjoy virtual banking facility from the comfort of his home or Office at any time of the day or night A host of services starting from transfer of funds to accounts within the Bank remittances to accounts in other Banks through Online Real Time Gross Settlement (RTGS) and Online Net Electronic Fund Transfer (NEFT) booking of AirTrain tickets making utility bill payments tax payments etc are made available through Internet banking at minimal or no cost and on real time basis The demand for Internet banking facility has been rising steadily

Despite the improved procedures for issuance of User ID and Password to the retail customers through Debit Card (DCARD) menu there have still been complaints on non-receipt mainly due to non-updation of addresses in Finacle Even those passwords which are regenerated in place of forgot passwords could not reach customers due to incorrect addressed in system Further due to inadvertence or lack of awareness several customers have been entering their Passwords wrongly and were forced to contact Internet banking Division for reactivation

In order to avoid such complaints and ensure customer delight a new procedure called Self User creation of Passwords by the Retail users themselves without the need to approach the Bank is being introduced The new procedure is applicable to both new as well as existing Ebanking users The customer should fulfill the following pre-requisites for the Self User CreationDebit Card NumberDebit Card PINDate of Birth or PAN number (Any one is compulsory)Any one of the previous 5 transactions in the account (Debit or Credit)MOBILE NUMBERE mail I D

Branches should ensure that essential details such as Date of Birth PAN number (either Date of Birth or PAN number are compulsory) Mobile number and email ID of the customer are entered in his account details in Finacle to facilitate the check The customer should necessarily be issued with a Debit Card and the Card and PIN should have been used by the customer atleast once One these prerequisites are ensured by the branch the system will be ready for the customer to create Passwords on his ownThe procedure which is simple and user friendly is detailed here below

19

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Procedure for new usersClick on ldquoSelf user creationrdquo link on the internet banking website when the following Registration form appearsSelf User Creation for Internet BankingATM Card Number ATM PIN Number Account Number Enter either Date of Birth or PAN (One of the two is mandatory)Date Of Birth (DD-MM-YYYY) - -

PAN NumberEnter details of any 1 out of last 5 transactions for the Account specifiedTransaction Amount Rupees Paisa

Transaction Type DebitFacility Type View Only View amp Transaction

The customer should enter appropriate details in the screen

ATM card number (16 Digits Debit card number as appearing on Card)ATM PIN number (4 Digit secret PIN number known only to him)Account number (15 digit account number)PAN Number Date of birth (One of the two is mandatory)Any one out of last five transactions in the account (Customer may either refer account statement or the mini statement generated from ATM)

Choose the facility Type ( ldquoview onlyrdquo or ldquoview amp transactionrsquo)Once the customer clicks on submit user ID and customer name is displayed Here the customer is provided with two options like ldquoContinuerdquo and ldquoCancelrdquo If the customer clicks on ldquoContinuerdquo it takes him to the next screen

The customer is prompted to enter password(s) System will ask for login password if he opts for ldquoView only ldquofacility Login amp transaction passwords are to be entered separately for ldquoview amp transactionrdquo facility

Password should be alpha numeric with minimum 6 and maximum 14 charactersAfter the valid password is entered a message ldquoSuccessfully registered for internet banking Kindly login after 2 working daysrdquo Is displayed on the screen The customer can login with his Passwords after 48 hours and access Internet Banking facilityOnce the process is completed the system will send an SMS to the Mobile number of the customer (The Mobile number which is registered in Finacle) informing that the customer has requested for Internet banking password The customer can act on this alert and prevent any damage if someone is wrongly trying to get a password for his accountA customer who is already having view facility opts for transaction password then a message will be displayed ldquoYou are having view facility and as you have opted for transaction password setting transaction password will enable you for Transaction facility toordquo The system changes the profile from ldquoview onlyrdquo to ldquoview amp Transactionrdquo

20

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Procedure for existing Ebanking users

1 Existing Ebanking Retail customers can create new passwords in case they have forgotten the same For this purpose they have to enter the details of Debit Card No Debit Card PIN No Account No Date of Birth PAN number and choose new password New Passwords can be generated by the customer as and when required

2 Customers having only view facility can opt for setting transaction password and the system will enable them for transaction facilityThe following are important guidelines applicable in this regard

1 The facility is available only to Retail customers which will include individual and proprietor accounts

2 The facility can be used only by those customers who have ATM cards

3 Branches will have to enter Date of birth and PAN number of the customer in ldquoCummrdquo of Finacle otherwise customers will not be able to make use of the facility

4 Customers can use the virtual key board to enter the details

Since we are the first PSU Bank to introduce such self user creation branches should ensure that due publicity is given and maximum number of customers register themselves for the facility

21

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

LAUNCH OF SMS BANKING SERVICESIn its pursuit to deliver highly personalized banking services to the customersmaking use of the core banking platform and the delivery channels like ATMsTelephone Internet etc Bank has been launched another product using mobile phonesto provide SMS Banking services from 17122007 onwards The product providescustomers the convenience of getting information related to their account throughMobile handsets on 24X7 basis and it also supports variety of alerts such as cashWithdrawals purchases using Debit Card transfer of funds through Internet etc

Salient features of the SMS Banking services are as underThe SMS banking services of Bank can be classified into three categories viz PullServices Push Messages and Bulk Messages

1 Pull Services Customers will be able to pull the following informationrelated to their accounts by sending SMS on 24 X 7 basisa Balance amountb Last three transactionsc Cheque statusd Helpe PIN change

2 Push Messages ie alerts Customers will be able to select any of thefollowing alerts that will be automatically generated and sent to theirMobilesa Balance falling below the limit desiredb Credit Debit transactions above the limit desiredc Deposit maturity dued Loan installment due

3 Bulk Messages Customers will also get the benefit of messages on interestrate changes new product launches greetings and personalized messagesfrom the bank

1048766 Implementation strategy for SMS bankingSMS banking services will be implemented in co-ordination between branchesSupport team at New Initiative Department (NID) and the maintenance and development team from Department Of IT (DIT) The role and responsibilities of the three tiers will be as under

1 Responsibilities of branch Branch will be the first point of contact forCustomers and have the major responsibility of popularizing the productTheir responsibilities will include

a Market the productb Get Customer registrations through applicationc Enable customers in Finacle cumm

22

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

d Register customer in smsrege Raise call to NID team in case unlocking re-issue of PINs is requiredf Raise call to NID in case customer complaints clarificationsg Unsubscribe customer

2 Responsibilities of NID NID will provide support to branches for SMSBranching related activities as under

a Plan marketing Strategyb Create and provide publicity materialc Formation of a team for SMS Banking day-to-day administration andCustomer supportd Decide on Service charges

3 Responsibilities of DIT DIT will be mainly responsible for all developmentand maintenance of the product Its responsibility will include

a Maintain 24 X 7 uptime for the serviceb Development and implementation of new additions in the servicec Web site contents for the productd Trouble shooting and support in problem resolution to NID teamThe role and responsibilities of the three tiers mentioned above are only indicativein nature and not exhaustive

1048766 SMS Banking ApplicationsA separate and simple application form has been designed for SMS bankingBranches are supposed to obtain the applications and complete the registration inFinacle smsreg ampcumm menus as detailed in the operational manual

1048766 Customer Support at branchesBranches will be helping their customers on all queries related to SMS banking by seeking assistance from the support team of NID All the operational details relating to SMS Banking and also a FAQ on the service is available on bankrsquos web site The mailbox styled smsbankinghelp is created in our mail system and will be attended by the team of NID

1048766 De-registration for SMS banking servicesWhenever requested by customers through letters applications branches will deregister the customers by canceling the entries made in Finacle smsreg cumm amp menus

1048766 Service charges for SMS bankingSMS banking services will be subject to annual levy of charges of Rs120- (plusService Tax) However for the initial period of 3 months the facility will beprovided free of charge in order to get the customer acquainted with the facilityThe charge will be subject to review from time to time

23

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Frequently Asked Questions (FAQ) Frequently asked questions on SMS Banking are put on our website Branches are requested to go through the FAQ and respond customer questions on the product SMS Banking is a unique product not available with many public sector banks The product enables customers to have complete control of their account as the instant alerts help detection of unauthorized transactions in customer accounts Branches should ensure customer awareness for this product and market SMS Banking to all the existing accountholders as well as attract new customers using this product thereby giving a boost to the CASA campaign

24

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

LAUNCHING OF MOBILE BANKING-U MOBILEBank has been effectively leveraging the 100 CBS of branches by introducing from time to time products and services through alternate delivery channels electronic channels which provide anytime anywhere transaction convenience to the customers at lowest cost One more such initiative for providing the easiest remittance mode is Mobile Banking ndash UMOBILE The financial transaction for transfer of funds using Mobile is completed within a minute The country has seen a tremendous growth in number of mobile users and the common man is conversant with mobile operations Hence Umobile product of the Bank is expected to receive good response from the customers

As per the guidelines of Reserve Bank of India only domestic transactions between two registered customers can take place Financial Transactions amounting to Rs5000 for funds transfer and Rs10000 for purchase of goods per day with a monthly limit of Rs150 lacs can be done by a customer To start with only fund transfer facility is being provided The product features are detailed here below

OVERVIEW

UMobile- a milestone in banking - provides the customers a secure and convenient means of inquiries and fund transfer from anywhere anytime Customers can transfer money to Union Bank of India accounts check their account balance and do a mini- statement all this happens by way of secured messaging from their mobile handsets UMobile is a secured payment channel since the customer does not compromise with his debit card number or ATM pin

FEATURESUMobile service currently has the following features

1 Fund Transfer

The option will allow the account holders to transfer funds to another account holder of Union Bank of India It requires both account holders ndash sender and receiver to register for UMobile services

2 Balance Enquiry

This option displays the current balance of the account holder3 Mini StatementThis option displays the last nine transaction of the respective account

25

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

REGISTRATION PROCESS

Customer can visit any of bankrsquos ATM to register for UMobile services The procedure is as follows-

1 The Customer inserts his debit card and enters his debit card pin number

2 On the displayed screen selects the ldquoothersrdquo option

3 Then on the next screen selects ldquoMobile Paymentrdquo

4 He has to now select ldquoRegistrationrdquo

5 He is prompted to enter his mobile number and then asked to re-enter the mobile number

6 On successful registration the ATM prints the receipt in the following format- ldquoRegistered successfully Activation Code XXXX visit site httpmobilefssnetcoinMPAYPORTAL for downloading mobile application onto your handset and further detailsrdquo Visit wwwunionbankofindiacoin

INSTALLATION PROCESS

Customer visits the link provided on bankrsquos web site to service providerrsquos site or directly through URL httpmobilefssnetcoinMPAYPORTAL and downloads the UMobile application to his mobile Download procedure is as follows

a Use the link provided on bank web site or Visit httpmobilefssnetcoinMPAYPORTAL directly

b Enter the mobile number and activation code

c Click on the ldquoDownload Applicationrdquo option

d Select the model from the Model list and click Download

e Accept the terms and conditions

f The application will get downloaded on your PClaptop which you can save on your machine

g Transfer the application to your phone using Data cableBluetoothUSB or GPRS

h Install the application on your handset

1 Installation using Bluetooth

Customers who have access to Bluetooth on their laptopPC can transfer the UMobile application into their handsets by selecting Download button and sending the same file to Mobile Handset through Bluetooth

26

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

2 Installation using Data Cable

Customers who have USB data cable to connect their laptopPC to the handset can download the UMobile Application to their mobile handset using data cable

3 Installation using GPRS

Customers having GPRS facility on their mobile phones can directly download the UMobile applicationWherever customer expresses difficulty in downloading the Mobile banking application on to his Mobile branches have to extend necessary help to facilitate the download to the Mobile

How to Use UMobile11 Balance Enquiry

bull To inquire about the current balanceselect Balance Enquiry

bull Enter your 4 digit mPin

bull When asked ldquoAllow application

UMobile to send messagerdquoClick Yes12 Mini Statement

bull To inquire about the last nine transactions in your account select Mini Statement

bull Enter your 4 digit mPin

bull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

13 Fund Transfer (within the bank)

bull To transfer money select Fund Transferbull Enter your 4 digit mPinbull Enter exact amount that you want to transferbull Enter Beneficiary mobile numberbull Select ldquoSendrdquo in the options to send the messagebull When asked ldquoAllow application UMobile to send messagerdquo Click Yes

bull Both the sender and the receiver will get SMS on successful completion of the remittance transaction

27

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

14 Inbox

bull Inbox includes last five responses received It may be Balance enquiry mini statement fund transfer done or fund transfer received through UMobile

15 Settings

bull Setting includes three options

1 Change mPin If you want to change your mPin select this option Then enter your old mPin after that enter you new mPin then re-enter your new mPin and then when asked ldquoAllow application UMobile to send text messagerdquo Click Yes

2 Change Service Number The Service number presently used (9870338500) is displayed by default Please do not make any changes to this number unless advised by bank

3 Application Memory Here you can select whether you want to store the responses received in application memory or not

DE-REGISTRATION PROCESSIn case the customer wants to de-register from U-Mobile service he has to visit the ATM The procedure is as follows-Others Mobile Payment UMOBILE De-registrationEnter Mobile number Re-Enter Mobile number

Charges In order to popularize the product with a wider acceptance it has been decided not to collect any charges from the customers during the first year

Branches should popularize the product by bringing to the notice of the customers the benefits of this product The product is owned and supported by the Payment amp Settlement Division(ATM Division) Branches may therefore approach the Department for necessary assistance guidance

28

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

RETAIL LENDING

PRODUCT FEATURES

UNION HOME For purchase construction of flat house repairs extension to existing house repayment of loans availed at higher rate for individuals

UNION TOP-UP SCHEME To meet any type of personal requirements expenditure in respect of house viz repairs to the house furnishing etc

UNION MILES For purchase of 24 wheelers for personal professional use by individuals

UNION EDUCATION To provide financial assistance for pursuing higher professional studies in India amp abroad

UNION MORTGAGE To provide financial assistance maximum upto 50 lacs for personal needs against EM of own property

UNION HEALTH To provide financial assistance to medical professionals purchase construction acquisition setting up of land plot building flats hospitals clinics amp purchase of equipment

UNION SMILE To meet unforeseen medical expenses timely payment of electricity bills telephone school fees water charges etc

UNION CASH To meet financial requirements

29

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

MICRO SMALL amp MEDIUM ENTERPRISE SCHEMES

1 MSMEs have been playing a pivotal role in countryrsquos overall economic growth and have achieved steady progress over the last couple of years

2 It provides employment to more than 29 million people through 128 million units and contributed more than 15 of Indiarsquos GDP in financial year 2007 Moreover MSMEs account for around 95 of the industrial units and contribute around 40 of countryrsquos industrial output They are the stepping stones for entrepreneurship development innovation and taking behavior

3 The enactment of Micro Small amp Medium Enterprises Development (MSMED) Act 2006 was a landmark initiative taken by Govt of India to enable MSMErsquos competitive strength address the issues and challenges and reap the benefits of global markets

4 Union bank has also taken various initiatives and adopted strategies to accelerate the credit flow to the MSME segment

ESTABLISHMENT OF MSME VERTICAL

A separate department exclusively for MSME finance has been established at corporate office headed by General Manager This department will oversee the growth of MSME credit incremental business revenue from special cluster schemes frame various MSME policies etc

CHALLENGES FACED BY MSME MSEs in general and Micro Enterprises have inadequate access to finance due to lack of

financial information and non formal business practices

MSEs lacks easy access to interstate and international markets

The access of MSEs Policy to technology and product innovations is also limited There is lack of awareness of global best practices

MSEs face considerable delays in the settlement of duespayment of bills by the large scale buyers

30

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

UNION SME PLUS Genuine credit need of temporary nature

UNION HIGH PRIDE For working capital needs term loans for purchase of machineries equipments construction of industrial sheds term loans in case of trading units business enterprises service units

UNION PROCURE For financing of receivables through bill discounting

UNION SUPPLY Financing purchases of dealers through buyers bills discounting relatingTo the products supplied by the concerned corporate

UNION CYBER A term loan can be considered for setting up internet cyber cafeacute for purchase of computers PCO equipments furniturersquos etc at rural semi urban and urban centers

UNION TRANSPORT For purchase of utility vehicles light commercial medium commercial vehicles luxury vehicles and heavy commercial vehicles

GOVERNMENT BASED SCHEMESThere are some schemes which are given by government of India and are being used by Union Bank Of India So that they can provide the credit facilities to all registered MSME units rural families below the poverty line at least 10 urban poor women has to form a group who are must below the poverty line etc

1 SCHEME FOR FINANCING THE PURCHASE OF GENERATOR SETS ON SOFTTERMPURPOSETo purchase a new diesel generator set of a standard company of appropriate capacity depending upon the size of the unit

2 SCHEME SMALL HOSIERY UNITS IN KOLKATA

31

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

PURPOSEFor replacement or purchase of new machinery equipment and to meet working capital needs of the units

3 SENIOR CITIZEN SAVING SCHEME 2004

4 SWARNJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

OBJECTIVE It covers many aspects such as organization of the poor into self help groups training credit

technology infrastructure and marketing

Objective is to bring every assisted rural family above the poverty line within three years and focuses on group approach

5 SWARNA JAYANTI SHAHARI ROJGAR YOJANA (SJSRY)

Being implemented in all urban and semi urban towns of India

OBJECTIVETo provide gainful employment to the urban poor through setting up of self employment ventures or provisions of wage employment

6 DEVELOPMENT OF WOMEN AND CHILDREN IN URBAN AREAS (DWCUA)

OBJECTIVETo provide assistance to women who decide to set up self employment ventures in a group

7 SELF EMPLOYMENT SCHEME FOR REHABILITATION OF MANUAL SCAVANGERS (SRMS)

In place of National Scheme for Liberation and Rehabilitation of Scavengers (NSLRS) implemented since 1993

OBJECTIVETo assist the scavengers for rehabilitation who are yet to be assisted in a time bound manner ie by March 2009

8 UNION GREEN CARD (UGC)

OBJECTIVETo meet working capital requirements of farmers for cultivation of crops and investment credit like minor irrigation farm mechanization etc and allied activities to agriculture Besides other consumption needs such as education consumable items medical expenses etc can be considered up to 25 of the limit arrived at or Rs 50000- whichever is less

32

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

PUBLIC PROVIDENT FUND (PPF)

It is a statutory scheme of the central government of India

The scheme is for 15 yrs

The rate of interest is 8 compounded annually

The minimum deposit is Rs 500 and maximum is Rs70000 in a financial year

It is not necessary to make a deposit in every month of the year The amount of deposit can be varied to suit the convenience of the account holders

Account can be opened by an individual or a minor through the guardian

Joint account is not permissible

A power of attorney holder can neither open nor operate a PPF account

The grandfathermother cannot open a PPF on behalf of their minor grandsondaughter

No age is prescribed for opening of a PPF account

Premature closure of a PPF account is not permissible except in case of death

The account holder has the option to extend the PPF account for any period in a block of 5 yrs On each time

The PPF scheme is operated through designated post office and designated nationalized banks

Account is transferrable from one post office to another and from post office to bank to post office

Account is transferrable from one bank to another bank as well as within the bank to any branch

Best for long term investment

33

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

LENDING AUTOMATION SOLUTIONS

PRODUCT OVERVIEW

LAS is totally integrated end to end software product that will automate the entire lending process of UBI bank LAS automate both retail and commercial lending LAS can collect personal financial details of every applicant and presents the risk profile based on pre-defined risk parameters

With LAS any number of retail and corporate loan products can be created and shared to all or selected branches across the country over the internet intranet All the branch needs is an internet WAN connection and access rights to enter LAS Loans can be processed in record time using LAS

ADVANTAGES

Risk is reduced considerably through better-informed decisions Speedy loan processing Automated workflow- no need to push papers between desks No time delays because of the application travelling between offices Document scanning and electronic movement of documents Easy creation and maintaining users

LOGGING INTO LASType the LAS URL in the browser that displays the login page of LAS for UBI

UNION BANK OF INDIALOAN PROCESSINGIRBCHANGE PASSWORDLENDING AUTOMATION SOLUTIONS

Click loan processingTthis will take to the homepage of LAS

The various options available on the home screen are

34

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

SET UP

MASTER

DEFAULTERS LIST

RETAIL amp AGRICULTURE

TERTIARY SECTOR

CORPORATE

MONITORING

NPA

MAIL BOX

WORK FLOW INBOX

RETAIL AGRICULTURE

CORPORATE

NPA

MONITORING ALERTS

MONITORING REPORT

Click on Corporate and then Customer Profile to create a new customer profileClick New Applicant In this new applicant screen we have three tabs- company DetailsBranches and Division

Company Details

Select the Corporate Type from the drop down box The options are corporate SME amp SSIEnter the Company Name Contact Name and Line of Activities PAN number Date of Incorporation Total Employees and Email Address and in dealing with our bank since enter the year from which the customer is having dealing with UBI

Select Type of Ownership from the dropdown boxIf you select ldquoPrivate Limited Companyrdquo or ldquoPublic Limited Companyrdquo from the dropdown box

Select the Location and Industry Type from the dropdown boxesEnter the Corporate Address Factory Address Registered Office Address and Administrative Address The Registered Office Address is mandatoryClick new to enter the details and click apply to update the changes Click close to return the company detail screen

IRB DETAILS

Click IRB DETAILS button to obtain the screen below

35

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

IRB Parameters

CONPANY SECTOR DETAILS BANKING

COUNTRY CODE INDIA

MARKET SEGMENT BUSINESS BANKING

IRB INDUSTRY CODE ELECTRONICS

ASSET CLASSIFICATION CORPORATE

EDIT SEND DETAILS TO IRB CLOSE

CREDIT INSPECTION REPORT

The Inspection report consists of following parameters Enter the details for the following fields

1 Infrastructure Location Factors2 Land and Building3 Plant and Machinery4 Products5 Production6 Raw Materials7 Marketing8 Profitability9 Management Capabilities of following in Production marketing Man management financial management general management and quality control10 Conclusion

36

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Credit Quality Rating Numeric Rating scores for 4 rating models ie Rs 2lacs to Rs 10lacs above Rs 10 lacs to Rs 100 lacs above Rs 100lacs to Rs 1000 lacs and above Rs 1000 lacsExisting Proposed

Lowest Risk CR-1 gt90 gt90Minimal Risk CR-2 81-90 81-90Moderate Risk CR-3 71-80 76-80Satisfactory Risk CR-4 66-70 71-75Acceptable Risk CR-5 61-65 66-70Watch List CR-6 56-60 61-65Risk Prone CR-7 51-55 56-60High Risk CR-8 50amp below 55 amp belowSub-standard CR-9 Default NPA Default NPADoubtful CR-10Loss CR-11

37

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

HOW TO DO RATING IN LAS SYSTEM

LEVEL-1 (Initiator) LEVEL-2 user (Validator) LEVEL-3 (Finaliser)Login into LAS

Loan processing

Customer profile

Application

Proposal

Credit amp Technical report

Executive summary

Login into IRB

Carry out rating amp send to next level

Generate report amp Executive summary

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp send to next level

Login into LAS

Loan processing

Proposal Executive summary amp credit reports

Login into IRB

Carry out rating amp finalise the case

38

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

About Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

ObjectiveAvailability of bank credit without the hassles of collaterals third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE) Keeping this objective in view Ministry of Micro Small amp Medium Enterprises (MSME) Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector To operationalise the scheme Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)The main objective is that the lender should give importance to project viability and secure credit facility purely on the primary security of the assets financed The other objective is that the lender availing guarantee facility should endeavour to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency The Credit Guarantee scheme (CGS) seeks to reassure the lender that in the event of a MSE unit which availed collateral free credit facilities fails to discharge its liabilities to the lender the Guarantee Trust would make good the loss incurred by the lender up to 75 80 85 per cent of the credit facility

ELIGIBILITY CRITERIA

Eligible Lending InstitutionsAll scheduled commercial banks and specified Regional Rural Banks NSIC SIDBI which have entered into an agreement with the Trust for the purpose The eligible lending Institutions on entering with an agreement with CGTMSE become Member Lending Institutions (MLIs) of CGTMSE

Eligible BorrowersNew as well as existing Micro and Small Enterprises

Maximum Risk CoverOf the credit facilities extended by MLIs Trust shall guarantee in case of default by the borrower up to 75 per cent (85 for select category of borrowers) of the defaulted principal amount in respect of term credit including interest on principal for one quarter and or outstanding working capital advances (inclusive of interest) as on the date of account becoming NPA or as on the date of filing the suit whichever is lower Other charges such as penal interest commitment charge service charge or any other levies expenses shall not qualify for the guarantee cover

Rehabilitation AssistanceFor the unit covered under CGTMSE and becoming sick due to factors beyond the control of management assistance for rehabilitation extended by the lender could also be covered under the scheme provided the overall assistance is within the credit capital of Rs100 lakh

39

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Non-EligibilityAny facility given on the basis of collateral security or third party guarantee shall be disqualified for coverage under the scheme The Trust also reserves the right to reject any application for the guarantee cover if it deems necessary

FEES INVOLVED

Guarantee fee

For credit facility up to Rs5 lakh an upfront Guarantee Fee (GF) of 1 of the amount sanctioned will have to be paid to the Trust by the MLI For amounts sanctioned beyond Rs5 lakh and upto Rs100 lakh the GF is 15 while for credit facility upto Rs 50 lakh for units in the North Eastern Region including Sikkim the GF is 075 The GF will have to be paid within 30 days from the date of first disbursement of credit facility by the MLI to a borrower

Annual Service Fee

Guarantee cover extended by CGTMSE in respect of any specific borrower shall be valid provided the MLI concerned pays an Annual Service Fee (ASF) of 050 on the amount guaranteed for credit facilities upto Rs5 lakh and 075 on the amount guaranteed for credit facilities beyond Rs5 lakh and upto Rs100 lakh Such ASF is to be paid by the MLI on or before 31st May of that year The Trust reserves the right to revise the guarantee fee annual service fee from time to time

Cost to the Borrower

The Credit Guarantee Scheme leaves it to the discretion of the MLIs to decide about passing on the incidence of Guarantee Fee and Annual Service Fee to the borrower or alternatively they may decide to bear it themselves

Interest Rate Payable by Borrower

The MLI shall follow the guidelines issued by RBI However interest rate shall not exceed 3 per cent over and above the Prime Lending Rate of the MLI excluding the annual service fee

FAST ANSWER QUESTIONS (FAQrsquoS)1 Which type of borrowers can be covered under the Scheme

New and existing Micro and Small Enterprises engaged in manufacturing or service activity excluding Retail Trade

2 Whether borrowers from all service sector enterprises are eligible under the Scheme

As of now all activities that come under service sector as per RBIs guidelines on Lending to Priority Sector and MSMED Act 2006 except retail trade are eligible for coverage under the scheme

40

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

3 Whether loans given to Small Road Transport Operators are eligible for coverage under the Scheme

Yes Small road and water transport loans are eligible for guarantee cover

4 Is it compulsory for the borrower to obtain Income Tax Permanent Account Number [IT-PAN] to be an eligible borrower

Under the Guarantee Scheme a borrower is required to obtain IT PAN number prior to availing of credit facility from the eligible lending institution Also it is a mandatory requirement under section 139A(5) read with section 272(C) of the IT Act 1961 to indicate IT PAN on all tax documents which include returns challans appeals etc However in respect of loans up to Rs 10 lakh CGTMSE is presently not insisting that the IT PAN be obtained at the time of availing of the guarantee cover IT Pan No is to be indicated in respect of credit facility above Rs10 lakh Nevertheless the MLIs have been advised to inform their borrowers to apply for IT PAN number It is desirable to indicate IT Pan No in all the application irrespective of the amount

5 Is guarantee benefit available to existing units of a lending institution which has become a MLI of CGTMSE

In case of existing units additional credit facilities in the form of term loan or renewal of working capital facilities can be covered as and when the facilities are extended provided no collateral security and or third party guarantee is obtained Part of the credit facility with collateral and part of the facility without collateral for guarantee cover would not be entertained if it is considered as a composite credit

6 Is it necessary that a borrower to be eligible should obtain all the required credit facilities from a single institution

Yes all credit facilities should be made available from a single institution Credit facilities extended jointly by two or more banks to a single borrower or credit facilities extended jointly by two or more institutions to a single borrower shall not be eligible for guarantee cover Since the quantum of credit facility is low it is expected that a single lender extend investment credit working capital and any incremental working capital required by the borrower However CGTMSE coverage is available in respect of credit facility extended by a commercial bank and SIDBI out of SIDBIs Micro and Small Enterprises Fund for North Eastern Region (NER)

7 Co-financing to a MSE unit by Financial Institution with a Commercial Bank can be covered under the Scheme

Yes joint financing by a financial institution (eg SIDBI NSIC) and Commercial bank can be covered under the scheme For eg MSE unit is financed by term loan from State financial institution and Working capital from a commercial bank

8 Whether credit facility extended to self-help group can be covered under the schemeNo At present as per the Scheme the credit facility extended to Self Help Group cannot be covered

41

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

CLAIMS SETTLEMENT

Prior to lender (also referred to as MLI) preferring any claim on the Trust there shall be a lock-in-period of 18 months from either the date of last disbursement of loan to the borrower or the date of the guarantee cover coming into force in respect of the particular credit facility whichever is later The lender shall however prefer a claim on the defaulted account which has become NPA immediately after recall of loan and initiation of recovery proceedings by way of legal action as specified by the Trust from time to time The Trust shall honour 75 per cent of the guaranteed portion in default subject to maximum of 75 per cent of the guaranteed cap amount (85 for select category of borrowers) immediately on preferring of claim by the lender The balance 25 per cent of the defaults or guaranteed cap amount as the case may be will be paid on conclusion of recovery proceedings by the lender

Lenders responsibilities

The lender shall evaluate the loan applications and conduct the account of the borrowers with normal banking prudence and shall use their business discretion in selecting commercially viable proposals This includes closely monitoring the account as also safeguarding the primary securities taken in good and enforceable condition In order to ensure continuance of guarantee cover MLI concerned should pay the annual service fee to CGTMSE latest by 31st May of every year The lender should ensure that the claim is filed within the prescribed time limit and there is no delay on the part of lender to notify the defaults which result in Trust facing a higher claim

The payment of claim by the Trust under question does not in any way take away the responsibility of the borrower to repay the entire amount of outstanding to the lender The lender shall exercise all caution and maintain its recourse to the borrower for full amount owed by him and effective action for recovering the amount including such action as may be suggested by the Trust

Appropriation of Residual Recovery

In case of default the lenders would exercise the right to takeover the assets However the Trust would have the priority in appropriation of sale of assets by the lenders before making the final settlement of the claim Therefore the amount realised from the sale of assets (residual recovery) must first be credited in full by the lenders to the Trust before they can finally claim the remaining 25 per cent of the default guaranteed capital amount

Claim Application [to be submitted by MLI]

42

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Brief Business Performance Review for the year 2009-101 The Bank achieved a total business of Rs291361 crore as on 31st March 2010 agrowth of 2295 over previous years level of Rs236968 crore (3355)

Banks name UNION BANKGlobal businessas of March 2009 236968

Global Business 291362as of March 2010

Y-o-Y growth 230

2 Our present analysis is based on select parameters namely Deposits CD SB CoreDeposits and Advances for 9 Zonal Offices (ZOs) 55 Regional Offices (ROs)

Summary

Zones which achieved targets inall 6 parameters

Nil

Zones which did not achievetargets in any parameters

Ahmadabad Bangalore amp Chennai

Regions which achieved targetsin all 6 parameters

Jaipur Karnal amp Pune

Regions which did notachieved targets in anyparameters

Bangalore Bhopal Ernakulam JabalpurJalandhar Jaunpur Kozhikode Madurai NelloreSalem Trivandrum Vijaywada Visakhapatnam

Deposits1 Banks total deposits stood at Rs170161 crore as on 31st Mar2010 vis-agrave-vis target ofRs175400 crore The year-on-year growths in deposits are recorded at 2268compared to 335 in the previous year However Bank was short of target byRs5239 crore ie 299

(Rs in crores

Mar 09 Amt

Mar 09 YoY Growth

Mar 10 Target

Mar10 Actual

YoY Growth

Gap to Target

Global Total

138703 3355 175400 170161 2268 5239

Domestic Total

138416 3327 175000 169819 2269 5181

2 3 Zones and 18 Regions achieved the total deposits targets

43

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Achieving the targets

Zones Regional Offices

Delhi Pune amp Mumbai

Delhi North Delhi South Chandigarh Karnal JaipurBhubaneshwar Durgapur Ranchi Mumbai West MumbaiNorth Lucknow Kanpur Nagpur Kolhapur Pune GoaRewa amp Raipur

3 6 Zones and 33 Regions could not achieve the target while 4 Regions (ROVijayawada RO Nellore RO Chennai and RO Ernakulum) remained below the levelof March 2009

4 In incremental deposits of Bank 4 Zones contributed the mostFig 1 Pie Chart - Contribution of zones in Incremental Deposit

44

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Current Deposits

1 Banks total Current deposits stood at Rs15790 crore as on 31st Mar2010 vis-agrave-vistarget of Rs15000 crore The year-on-year growths in current deposits arerecorded at 2336 compared to 1154 in the previous year Bank exceededtarget by Rs790 crore ie 527

(Rs in crores

Mar09 Amt

Mar09 Y-Y-o-Y Growth

Mar10 Target

Mar10 Actual

Y-o-YGrowth

Exceeded Target

Global Current Deposits

13166 1154 15000 15790 2339 790

Domestic Current Deposits

13152 1142 15000 15778 2343 778

2 3 Zones and 18 Regions achieved the total deposits targetsAchieving the targetsZones Regional Offices

Mumbai Delhi ampKolkata

Varanasi Dehradun Gorakhpur Azamgarh Agra Ranchi Durgapur Kolkata Jaipur Pune Kolhapur Nasik Mumbai NorthMumbai South Hyderabad Delhi South Karnal Chandigarh

3 6 Zones and 37 Regions could not achieve the target while 6 Regions (RO MeerutRO Chennai RO Nagpur RO Raipur RO Delhi North and RO Lucknow) remainedbelow the level of March 2009

4 In incremental current deposits of Bank 3 Zones the most however ZO Delhireported a negative growth of -155

45

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Fig 2 Pie Chart - Contribution of zones in Incremental Current Deposit

Saving Bank Deposits

1 Banks total savings deposits stood at Rs38031 crore as on 31st Mar2010 vis-agrave-vistarget of Rs39300 crore The year-on-year growth in savings deposits are recordedat 3215 compared to 1747 in the previous year However Bank was short oftarget by Rs1269 crore ie 323

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Exceeded Target

Global Saving Deposits

28545 1747 39300 38031 3215 1269

Domestic Saving Deposits

28544 1747 39300 38027 3213 1273

46

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

2 3 Zones and 21 Regions achieved the total Savings deposits targets

Achieving the targetsZones Regional Offices

Kolkata Puneamp Lucknow

Bhubaneshwar Siliguri Durgapur Guwahati Patna LucknowGhazipur Allahabad Agra Gorakhpur Kanpur Pune NagpurKolhapur Jaipur Belgaum Karnal Mumbai South AhmedabadBaroda Raipur

36 Zones and 34 Regions could not achieve the target

In incremental deposits of Bank 4 Zones (ZO Lucknow ZO Kolkata ZO Delhi ZOMumbai) contributed the mostFig 3 Pie Chart - Contribution of zones in Incremental SB Deposit

47

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

CASA Deposits1 Banks total CASA deposits stood at Rs53821 crore as on 31st Mar2010 vis-agrave-vistarget of Rs54300 crore The year-on-year growth in CASA deposits are recordedat 2944 compared to 1558 in the previous year However Bank was short oftarget by Rs479 crore ie 088

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global CASA

41711 1558 54300 53821 2944 479

Domestic CASA

41697 1554 53400 53805 2945 495

No of Account increase since 2007

2 4 Zones and 21 Regions achieved the CASA deposits targetsAchieving the targets

Zones Regional Offices

Kolkata Pune Mumbaiamp Lucknow

Lucknow Ghazipur Varanasi Agra Gorakhpur AllahabadDehradun Delhi South Jaipur Karnal SiliguriBhubaneshwar Durgapur Ranchi Guwahati KolkataPatna Mumbai South Mumbai North Pune Kolhapur

3 4 Zones and 34 Regions could not achieve the target

48

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

4 In incremental deposits of Bank 3 Zones (Mumbai Lucknow Kolkata) contributedthe mostFig 4 Pie Chart - Contribution of zones in Incremental CASA

49

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Advances1 Banks total Advances stood at Rs121200 crore as on 31st Mar2010 vis-agrave-vis targetof Rs127000 crore The year-on-year growths in advances are recorded at 2334compared to 2931 in the previous year However Bank was short of target byRs5800 crore ie 457

(Rs in crores

Mar09 Amt

Mar09 YoY Growth

Mar10 Target

Mar10 Actual

YoYGrowth

Gap to Target

Global Advances

98265 2931 127000 121200 2334 5800

Domestic Advances

96959 2760 125000 53805 2167 6758

2 4 Zones and 20 Regions achieved the total advances targetsAchieving the targets

Zones Regional offices

Delhi BhopalPune amp Mumbai

Karnal Delhi North Chandigarh Ludhiana Jaipur Delhi SouthRaipur Pune Goa Nagpur Nasik Bhubaneshwar RanchiGorakhpur Dehradun Varanasi Mumbai South Mumbai NorthHyderabad Surat

3 5 Zones and 35 Regions could not achieve the target while 2 Regions (RO Rewa andRO Chennai) remained below the level of March 2009

4 In incremental deposits of Bank 2 Zones (ZO Delhi amp ZO Mumbai) contributed themost

Fig 6 Pie Chart - Contribution of zones in Incremental Advances

50

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Fortnightly Statement of Position of the Bank vis-agrave-vis SCBs as on 26th March2010

Annual Growth Aggregate Deposits Bank Credit

2008-0928 Mar 08-27 Mar 09

2009-1027 Mar 09-26 Mar 10

2008-0928 Mar 08-27 Mar09

2009-1027 Mar 09-26 Mar 10

SCBs 199 170 175 167Union Bank 139 200 253 172Excess of UBIs growth over SCBs (in bps)

1200 300 780 50

Note 1 This data corresponds to domestic operations only Inter-Bank deposits andInter-Bank Advances are excluded from Deposits amp Advances respectivelyB The brief highlights are given hereunder

1 Aggregate Deposits

SCBs As on 26th March 2010 Aggregate Deposits of SCBs increased by 17 on Y-o-Ybasis compared to 199 in the corresponding period of the previous year Theaggregate deposits of SCBs increased by 190 during the last fortnight of the year

UBI Our Bank registered Y-o-Y growth of 20 as on 26th March 2010 compared to319 in the corresponding period of the previous year Aggregate Deposits of the Bank increased by 395 during the fortnight higher than the growth of 190 incase of SCBs2 Bank Credit

SCBs Credit of SCBs increased during the fortnight by Rs115549 crore (370) On Y-o-Y basis as of 26th March Credit of SCBs increased by 167 compared to 175 in the

51

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

previous year

UBI Our Bank registered Y-o-Y growth of 172 as on 26th March 2010 compared to253 in the corresponding period of the previous year During the fortnight ourbankrsquos credit growth was 106 lower than 370 for SCBs

3 CD Ratio As on 26th March 2010 CD ratio of SCBs stood at 7222 while it was 6833for Union Bank

RURAL amp AGRI BUSINESS VERTICAL Target Rs56000 crore

FOCUSDuring the recent budgetary announcement flow of credit to agriculture is raised toRs375lac crore for FY11 from Rs 325 lac crore during this fiscal It is also proposed tocontinue with interest subvention schemes

Tab 11 RABD Vertical -Guidance for FY11 amp Estimate for year end FY10Parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Applicable ANBC

74934 96960 118000 294 217

Priority sector credit

36341 44000 56000 211 273

PSC Adj Net Bank Credit

485 455 475

Agriculture 13519 18000 22500 331 25Agri ANBC 18 186 191Direct Agriculture

8956 11000 14500 228 318

Direct Agri ANBC ww

12 113 123

Production credit

4369 5000 6800 144 36

Investment credit

4587 6000 7700 308 283

Indirect Agriculture

4563 7000 8000 534 143

MSE credit 9434 14900 18000 579 208Tertiary sector 13388 11100 15500 -171 396

Note ANBC ndash Adjusted Net Bank Credit

52

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

STRATEGYFocus on increasing Rural Business at Identified 1000 Rural and Semi Urban Branches

Each Rural Branch- To achieve a minimum growth of 30 in Agricultural Advances

Bank has appointed over 600 Rural Development Officers (RDOs) for focused lending under agriculture and mobilization of low cost deposits To implement performance monitoring system for RDOs

To finance at least 100 new farmers by each RuralSemi Urban branch amp to process 2-3 new investment credit proposals and open minimum 250 accounts of new households

Direct Agriculture advances should be minimum 135 of ANBC as per RBI norms while our expected achievement for FY10 is only 113 The Bank needs to step it up to 135 by March 2012 Thus we have set direct agriculture target to be 123 of ANBC for Mar 11

To revisit organization structure and monitoring system at Central Office and plan to ensure achievement of agriculture credit target

Special Agriculture Credit Plan To provide special attention to Investment credit disbursement

DRI AdvancesThe prescribed benchmark is 1 of Total Advances outstanding as at the end of the previousyear DRI scheme being a niche scheme for the benefit of the poorweaker sections of thesociety and its revised income criteria and quantum of loan - each branch to explore possiblefinancing of at least 10 proposals per quarter The existing top-up loans under Indira AwasYojna(IAY) should also boost DRI Advances

Weaker Section AdvancesThe prescribed benchmark is 10 of Adjusted Net Bank CreditParticulars FY09-A FY10-E FY11-TWeaker Section Advances 6428 9700 11800 Adj Net Bank Credit 66 10 10

VALUE-ADDED PRODUCTS IN DETAILTab 16 Fee Based Income ndashGuidance for FY11 amp Estimate for year end FY10 (Rs in crore)parameters FY09-A FY10-E FY11-T YOY1009 YOY1110Life Insurance

163 24 90 4769 275

Non-life insurance

29 40 70 3793 75

Mutual Fund

09 15 30 7442 100

53

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Card Based Income

206 789 100 28394 2674

Debit cards- Income

158 740 940 36717 2703

Credit cards- Income

47 49 60 403 2245

Currency Chest Division

51 340 390 57061 1471

Cash Management Division

26 38 60 4729 5789

Trade Channel Finance amp Merchant BankingDemat services

155 25 35 6129 4000

Other Income 001 013 05 1200 28462Total 5077 14966 250 19478 6705

Note 1 Projected Life Insurance Premium for 2010-11 Rs 600 Crore Income (15) Rs 90 Crore

Note 2 Projected Mutual Fund Income for 2010-11 Rs300 Crore including Rs150 Croregenerated through distribution of products of Union KBC AMC (if launched by Sept 2010)

Note 3 Expected Life Insurance Premium for 2009-10 Rs300 Crore Income (8) Rs24Crore

Note 4 Negative growth in Stamp Franking due to reduction in commission payable from 1 to 050 in Maharashtra

Note 5 Negative growth in ECGC due to reduction in commission from 10 to 75 for Renewals amp Nil commission till the next renewal if existing policy is procured directly by the exporter

Note 6 Other Income includes payment assignment Online Trading ASBA Management Fee

Note 7 Excludes Float Income though Cash Management

Note 8 Total of Fee Income from transaction department may not match with above figures due to rounding off

STRATEGY To increase the strength of marketing officers to 500 from 211 batch by year end FY11 To train new Marketing officers (MOs) amp Customer Relationship Managers (CRMs) across the

country for insurance and mutual fund business To ensure visibility of Third Party Products at potential centresbranches To generate leads with centralization of Back offices and 100 CBS network all branches to

mobilize all Third Party Products Focus on increasing average hits per ATM per day to 300

54

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Alternate Channel BankingThe high set up cost incurred in adding new delivery channels is paying off The E-Bankinguser has shot up 10 times from 42000 users to 425000 and the debit card holder increasedfrom 8 lacs to 48 lacs in a span of 3 years Today 35 of the transactions are carried outthrough alternate channel For the FY11 the bank wants to have 50 of the transaction to becarried out through alternate channel

55

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

STRATEGYATM Credit Card amp PREPAID CARDS

Number of ATMs by March 2011 to be taken to 3750 Number of active Debit Cards to be increased to 75 lakhs from 48 lakhs Focus on increasing average hits per ATM per day to 300 Credit card base to be increased to 1 lakh by March 2011 NPAs to be brought down by 50 Issuance of Power Pay Cards to be increased to 1 lakhs and Gift cards to 50000

INTERNET BANKING

To Increase Retail users from 4 lakhs to 6 lakhs amp Corporate Users from 25Kto 60K

To ensure atleast 80 of the retail users to use ldquoSelf User Creationrdquo PortalSMS amp MOBILE BANKING

SMS Banking to be provided to 20 lakh customers by March 2011 Mobile banking users to be increased to 1 lakh by March 2011

56

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

PHONE BANKING

Bankrsquos 24X7 Call centre is and will continue to give a good on-boardexperience to our new customer by making out-bound welcome call andinforming them about the features of the call centre and services that theycan avail

The objective is to move more and more transaction to alternate channels

Call centre will encourage services like cheque book request FDR requestTDS certificate stop payments etc

Bank will increase the visibility for phone banking services through hoardingand advertisement Presently call-centre number is shown in the passbookdebit card bankrsquos website for easy recall of the customer

UNION BANK FINANCIAL STATEMENT PROFILEThe Bankrsquos determined focus on the business growth will help augment the Top-line and fairshare in the banking sector To reduce the cost of funds the bank wants to mobilize higherCASA determined to report above 30 growth every year for the next three years This should drive a healthy growth in bottom-line The operating profit for FY11 is estimated at RS 4900 crore a growth of 40 over the expected figure for FY10OPERATING PROFIT PROJECTION

Particulars FY09 FY10E FY11T YOY1009 YOY1110Interest Income 11889 13260 18250 115 376

Advances 8893 9800 13850 102 413Investments 2831 3350 4200 183 254Others 165 110 200 -333 818InterestExpense

8076 9200 12550 139 364

Deposits 7390 8600 11850 164 378

Others 686 600 700 -125 167

Net Interest Income

3813 4060 5700 65 404

Other Income 1483 1940 2500 308 289

Total Income 13372 15200 20750 137 365

OperatingExpenses

2214 2500 3300 129 32

57

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Establishment 1152 1310 1900 137 45

Others 1062 1190 1400 121 176

Total Expenses 10290 1170 15850 137 355

Operating Profit

3082 3500 4900 136 40

Cost to income ratio

418 417 402 -10bps -150bps

Cost of deposit 650 604 640 -46bps 36bps

Yield on advances

116 1005 1100 -101bps 95bps

Yield on investment

724 595 625 -129bps 30bps

Net Interest Margin

324 265 325 -59bps 60bps

Note The above figures reflects only domestic business amp rounded off to nearest 10s

COST CONTROL The bank is committed to curtail the other operating expenses the share of other expense has declined by 37 basis points from 4797 (FY09A) to 4760 (FY10) The bank would like to further reduce it by 517bps by end of FY11 Also the cost to income ratio should be maintained at the projected level of 402 The other initiatives desired at thebranchoffice level are

There should be strict monitoring and control of expenses on monthly basisCorrective action need to taken if the branchoffice exceeds its monthly budgetThe branchoffice to act lsquobe greenrsquo by reducing the usage of paper and to increase usageof IP phone emails and the likes

CASE STUDY58

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

This case study is related to the shifting of Regional Office of Union Bank Of India from Upper Bazaar to Kantatoli which was shifted to present place on 9 th March 2009 Employees had faced many problems while shifting from one place to another The problems which they were facing in Upper Bazaar is that the office was very far from the main market in that place and it was very difficult to access the market from that place The office was in a narrow lane But they also faced many problems because of lack of manpower space utilisation etcThe main benefit they have got is that now the office is situated at a good place having a good infrastructure They have solved all the problems related to proper documentation Many people has been recruited in order to deal with lack of manpower problem Its become easy for employees to access the market and customers can also easily find out the office to get the solution of all the problems

59

STRENGTH Space utilization Better manpower

handling Proper storage of

files ampdocuments Good infrastructure Easy to access the

market

OPPORTUNITY Enhanced

performance of employees

Improvement in customer relationship

STRENGTH amp OPPORTUNITY OF THE NEW PLACE FOR REGIONAL OFFICE

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

FINDINGS

60

WEAKNESS Shortage of space Problem of

manpower Situated in narrow

lane No Proper storage

of files ampdocuments Bad outlook

THREATS Decrease in

market share Reluctant

customers to visit Regional Office

WEAKNESS amp THREATS OF THE OLD PLACE FOR REGIONAL OFFICE

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

It is the Bank of first choice for Customers the Brand Union Bank of India is the bank that1 Listens amp renders assurance2 Is accessible3 Is transparent4 Is Partner in progress of country5 Is actively engaged in social wellbeing

The best finding is the rebranding work done in Union Bank of India The new logo consists of one U in red colour and another inverted U in blue colour which reminds me one of the concepts in strategy ie Blue Ocean strategy As per this concept market place is divided into 2 types of ocean One is Red Ocean which is very alive and competitive It is the place where many players fight for the market share Another is Blue Ocean which is unexplored and can be explored through innovation and by providing value added services to the customers In this market there is huge potential to make any organisation profitable So here the logo of Union Bank Of India reminds us that as they are going to provide the old services On the other hand they will use innovation as there tool to explore the Blue Ocean

As per the bank explanation

61

Blue Color signifies Blue Ocean Strategy Market that can be explored through innovation

Red Color signifies Red Ocean Strategy Present market where competition is prevailing

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

This new logo is a unique representation of a universal symbol It comprises two initial letters lsquoUrsquo of Union Bank Of India interlocked into one another This is called as Union Bank Interlock The symbol weaves around the word lsquoUnionrsquo from the brand name itself It symbolises integrity security strength and partnership While keeping the existing values and the brand promise of lsquoGood people to bank withrsquo intact the new symbol rises levels ahead to reinforce the properties of partnership amp bonding

The colours lsquoRedrsquo and lsquoBluersquo have been carefully chosen to bring out the values of the symbol in the best possible way While Red is the colour of energy strength power and determination Blue is symbolic of trust loyalty wisdom confidence responsibility and faith Red when used with Blue creates a high impact vibrant design a must for the very purpose of a noticeable change in the brand identity

SUGGESTIONSRECOMMENDATIONS

62

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

Proper training should be given to fresherrsquos of every department in order to develop the functions of this organisation So that they can feel comfortable with the working environment of the bank

The functions should be more advance to compete with the private sector banks otherwise it will be difficult for this bank to beat the private sectors banks in competition

In my opinion this bank should involve the concept of Financial Advisor for the development of themselves as well as to improve their image towards their customers

There is a problem of manpower in most of the branches of Union Bank which hinders the growth and affects the relationship between bank and the customers So here I suggest to increase the manpower so that they can deal with the problem of manpower crunch which will improve the performance and the relationship of bank in turn increase the profitability of this bank

To recruit more and more qualified people to develop and change the work culture of this organisation So that this bank can also cope up with the changes in the market rapidly

There should be more technology advancement in the working of the bank to reduce the problem of paper wastage This can be done by using more numbers of computers and hard disk to store the data (paperless system)

There is some problem with the house keeping at Union Bank Of India So I recommend to take initiative to improve the condition

63

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

BIBLIOGRAPHY

Sources of information are

BOOKSW Chan Kim and Reneacutee Mauborgne Blue Ocean StrategyHBS PublicationBottom of the Pyramid by CK PrahladBreakthrough Innovations by Paul

WEBSITESwwwcgtmsegovinwwwmsmegovinwwwkvicorgin wwwbankingrulescomwwwunionbankofindiacoinwwwunionbankofindiaonlinecoin

64

CONCLUSION

Our bank has over the years earned the reputation of being a techno-savy bank and is one of the front runners amongst public sector bank in the field of technology This bank has dedicated family of 29000 plus employees as part of its corporate vision to promote confidence and commitment among its employees The time delays has reduced to a large extent resulting to both internal and external customer satisfaction There is large scale reduction in paper movement This bank is having good security features and audit trail

65