BANKING OPERATIONS MANAGEMENT ASSIGNMENT

STATE BANK OF INDIA, JAIGAON BRANCH Dist.Jalpaiguri West Bengal.

SUBMITTED BY: Sneha Agarwal

Roll no.36 2011-13 BATCH INTRODUCTION: State Bank Of India is the largest state owned banking and financial services company of India. It was founded on 1st July, 1955. It is head quartered at Mumbai, Maharashtra.It has the largest number of branches spread across India. SBI has five associate banks – State bank of Bikaner & Jaipur, State Bank Of Hyderabad, State Bank Of Mysore, State Bank Of Patiala, state Bank Of Travancore. State Bank of Saurashtra and State Bank of Indore merged with SBI in 2008 and 2010 respectively. SBI has its presence in the international market as well. It has 151 offices spread over 32 countries. SBI has about 21000 ATMs and SBI Group altogether has 45000 ATMs.SBI has 12460 branches across India and 26500 branches including that of its associates. The project and its Objective:As part of the course on Banking operations Management, we were required to study how a typical bank branch functions and operates for which branch visits, interacting with the staffs of the branch and collecting data were required. The aim behind the project was to get an insight about how in practice a branch works on day to day basis, about the manpower deployed, services, transactions with the customers, customer base of the branch, organization of the branch, work environment etc. I chose one of the SBI branches and made visits to the branch on several occasions in order to collect data about the total manpower deployed and operations of the bank. Additional information like the total business, total deposits and advances, total customer base, types of customer etc have also been obtained.

ABOUT THE BRANCH:I have selected SBI Branch located at N. S. Road, Jaigaon which is the heart of the commercial centre in jaigaon. The branch is located on 1st floor in the building called R.P. Centre. The location of the bank is very good. It is situated at the borders of Bhutan. The area around the bank branch is commercially quite active, as it comprises the main market area of Jaigaon. Due to its location it is quite viable to the Indian as well as the Bhutanese customers.Some basic Information about the branch are as follows:

Date of opening of the branch 14/09/1995Floor Area 2500 sq. FeetLocation N.S. Road, Jaigaon, Dist : Jalpaiguri, West BengalBranch Code 6278MICR Code 735002508 IFSC Code SBIN0006278Branch Timings: Wednesday to sunday 10 a.m. – 4 p.m. Monday 10 a.m. – 1 p.m. Tuesday ClosedManager’s Name and Contact Details Asim Ray, 03566-263475E-mail sbi.06278@sbi.co.inBranch visited on:- 01.01.2012 (Sunday), 02.01.2012 (Monday)Floor Area and Site characteristics:The floor area of the bank is approximately 2500 sq feet. When spoken to the branch manager, it was found that this floor area seemed insufficient with respect to its size of customers and constituted a major constraint for the development of the bank branch. It seemed the branch has applied to the main branch in Kolkata to shift its branch activities to a

different building with larger floor space as expansion of the existing facility is not possible. Accessibility: The branch is located on N.S. Road in a busy area. As the town of Jaigaon is very small, this branch is at a walking distance for people living in Jaigaon. However, for people who do not wish to walk, it is easily accessible, by means of common mode of transport like auto or rickshaw. Being situated in a market place, there is a substantial rush by customers, who find it easier to commute to this place; and on a typical working day, the branch seems to be very busy, servicing its customers.Appearance: The branch looks sombre giving a typical old-fashioned look. The message that it conveys from the first impression is that it urgently needs some renovation. Although the fact that the branch is 16 years old makes one understand its lack of good appearance.Parking convenience: Since the bank’s building does not have any compound ,so there is no parking facility available for its customers.SERVICE AREA CHARACTERISTICS:

EXTERIORS:

Geographic: Geographically the branch is located on the main street. The area around the branch is well developed commercially. The borders of Bhutan falls just about 100 metres from the branch.Demographic: The branch is mainly surrounded by shops and commercial buildings. People from all the communities throng this branch because of its location in the market place. Economic: Since the branch is located in a town, its customer base mainly consists of retail and household customers. It even holds accounts of DANTAK employees. The customers range from lower middle class to middle class people.Competitive: The branch feels it has captured enough trust and loyalty on the part of the customers who would not leave the bank rather their customer base would multiply three fold. Hence, they do not consider any bank nearby as its competitor.

However, a few private and public banks like HDFC, IndusInd bank, and Axis bank has opened in the vicinity which would not become a competitor now but in years to come, SBI will have to compete with these bank’s products and services to remain a market leader. INTERIORS:Ambience: Although being an old branch, the interiors provide a warm and homely feeling. Walls were painted in white colour in order to provide a light and clean appearance. There were visible cracks on the walls due to the recent earthquake. The branch was kept clean, and operations seemed to be undertaken in a cooperative manner. Several banners were displayed on the wall showing various schemes offered by the bank. Most of the pamphlets bearing new schemes and advertisements were written in Hindi and English.Seating Arrangement: The branch premises did not have ample seating arrangements. There were two sofas for the customers visiting the branch.

Lighting and Ventilation: The branch was well lit up. There were tube-lights fitted in the required points. There was enough ventilation to ensure comfort within the premises.Air Conditioning: The branch was not air-conditioned. There were a few ceiling-fans. However, the Branch Manager’s cabin was air-conditioned but lacked modernity.Furniture: The tables, desks and the chairs used by the employees were old and needed replacement. The almirahs were over-stuffed with documents. There were no separate name plates or signs for the sections and it was difficult to identify each section except the cash deposit and withdrawal section. Window system:- There were 2 single window counters for payment and receipts. The tellers sitting there are assigned with the task of accepting deposits as well as the disbursements of funds in case of withdrawals.

ATM: Although there is ATM facility provided by the bank, which makes it easier for customers to withdraw cash and also other services offered by

ATMs, but there is no ATM facility provided by the bank in its branch. There is only one ATM in the town on the first floor of the building opposite to the bank branch.Security : There is no separate security guard employed by the branch. The sub- staff performs the job of the guard of closing the gate at appropriate time, not allowing people inside the branch beyond specific time etc.Technology Adopted by the BranchThe branch does its daily chores using Core Banking Solutions (CBS) developed by TCS. The Tata group was the system integrators of the project and had implemented a solution set, including the CBS Bancs from Sydney-based Financial Network Solutions (FNS), Exim Bills trade finance software from China Systems and e-Treasury from TCS. TCS was appointed by SBI, Jaigaon branch in January, 2008 as the prime systems integrator for CBS and trade finance technology solutions. The company has also undertaken training of key members of the SBI staff.Technology Driven Delivery ChannelsBranch has RTGS and NEFT services with it to cater to customers need of fast transfer of money. The other technology driven services are Debit Cards, Internet Banking, Mobile Banking, Centralized ECS Clearing, E-Shopping, Railway Ticket Booking, Insurance premium payments and utility bill payments.BUSINESS PROFILE :NPA :

31/3/11 31/10/11NPA 32.57 lacs 25.56 lacsDEPOSITS: As on 31/3/11 Budget2011-12 As on 31/10/11 Growth3708.25 lacs 1050 lacs 4364.02 lacs 655.77 lacs

ADVANCES: As on 31/3/11 Budget2011-12 As on 31/10/11 Growth596.90 lacs 250 lacs 586.53 lacs -10.37 lacsNet profit as on 31/3/11 is 162.41 lacs. The last circle audit was conducted on 29/5/11 and last statutory audit was conducted on 9/4/11. The branch received a score of 761 and a rating of AC in these audits.The branch conducted its self audits too. As in the 2011, two self audits were conducted. 1st on 24/1/11 where it received a score of 765 and 2nd on 2/11/11 where it scored 780.Number of accounts: Deposits:The branch has various types of deposits accounts. The type and number of accounts as on 15th December 2011 are as follows:Savings deposit accounts 15767Special term deposit accounts 1264Term deposit accounts of people employed in Dantak 27Current Accounts 319Loans:The branch has approximately 300 different types of loan accounts. The details of which could not be provided by the staff due to the workload.Transactions and analysis of Business:On an average a day’s transactions in the branch amounts to 79 lacs (Cr) and 35 lacs (Dr). The branch staff due to customer load could not give detailed information regarding transfers and clearing. However, they mentioned that they have huge transfers transactions with one transfer amounting to approximately 10 lacs(Cr).

The branch is deposits oriented due to its location. Customers of the branch are mainly retail customers who reside in the area. The branch faces a little difficulty in raising loans especially agricultural loan, as there is no agricultural activity or big organisations in the area. Only tea gardens are found which does not come under the category of agricultural loans. The commercial people too do not operate on a large scale in the area. Moreover, being situated in the borders of Bhutan, the branch cannot lend to the customers of Bhutan. Therefore, it collects more deposits than disburses loans.From the data we see that the branch has a very large amount of deposits approximately 4364.02 lacs as compared to Advances which is 586.53 lacs. The number of deposits held by the bank is approximately eight times that of the number of advances. The CD Ratio of the branch is 0.134.Thus the branch is primarily deposit oriented.As the liabilities exceed the asset there is excess of funds with the branch which it cannot keep idle. Thus the branch utilizes the excessive funds and earns interest on it. It banks the excessive funds with the SBI treasury( centre). It follows TRANSFER PRICING MECHANISM(TPM). In this process the branch incurs some cost due to the transfer and it also earns interest on the funds from the treasury. Thus the profit of the branch is in term of the spread which it obtained. The rate of the spread was not disclosed by the branch. Peak Business day : Wednesday Peak Business Hours – 10:30 am to 2:30 pmATM – 24hrs Steps taken to manage workload:The branch tries to provide speedy services to its customers during its peak working hours. The activities that are not very urgent like updating pass books etc are procrastinated and only the important activities like opening of accounts, depositing cash, withdrawals etc are carried out on those days.Manpower, their deployment and analysis: Staff (numbers):

Officers 3Clerks 9Sub-staff 1

Others -Types NumberCash 3Transfers 1Passbook 1

Counters:Departments:No Job Manpower Deployment    Officer Clerk Others1 Cash Counter   3 12 Transfers Counter   1  3 Passbook Counter   1  4 Deposit Department 1 2  5 Clearing Department 1 1  6 Advances Department 1 1  7 Establishment Department 1 1  8 Safe Deposit vault/Locker - -  9 Dispatch Department 1   1 

Note: One employee may be in-charge of one or more departments. Age : The age of the employees was on the higher side, with the average age around 40 years. The employees at the branch were highly efficient and most of them were clerical staffs. For each department there was adequate number of manpower deployed. Excessive number of staffs in most of the departments was avoided in order to prevent unnecessary cost involved in maintaining them. One observable thing of the branch was that there were no female staffs employed. Female staffs too could be appointed to render a better work culture and environment and improve the efficiency of the bank. As the branch is situated in a town, employment of female staffs would make the

branch environment more comfortable for the local ladies and they too would get encouraged to visit the branch, thereby, increasing the business of the branch. However, the ambience of the branch was great and the staff very friendly and co operative.

Hierarchical structure of the branch:The hierarchical structure of the concerned branch can be represented as below:

BRANCH MANAGER/ASST. GENERAL MANAGER

BRANCH MANAGER/ASST. GENERAL MANAGER

PASSING OFFICERS/ASST. MANAGER

PASSING OFFICERS/ASST. MANAGER

OPERATING STAFFS/CLERKS

OPERATING STAFFS/CLERKS

SUB-STAFF/ AWARD STAFF

SUB-STAFF/ AWARD STAFF

PRODUCTS AND SERVICES AVAILABLE AT THE BRANCH:The branch provides the following services of the bank:General Banking: Accepting deposits for the purpose of lending.Internet banking: With the help of internet customers can carry out transactions without physically being present in the bank. This is called 24 into 7 banking. Through this bill payment, tax payments etc can be done online, fund transfer, investment, purchase and sale, loan applications, viewing transactions etc. Banking has become easier due to internet banking.Mobile Banking: The branch has taken one step further by adopting Mobile banking. With the help of this service customers can do banking through their cell phones. They just need to register their number with the branch and they must hold an account with the branch. On registration the customers receive a unique pin no through which each time the customer avails mobile banking facility verification is done though the unique PIN no. The customers can make payments while shopping, recharge their cell phones, Book tickets through their cell phones, perform balance checks, carry out account transactions if they register for this service.NRI Banking: The branch also provides NRI Banking facility to the NRI customers. The NRI Customers can send money to the their relatives and friends in India through this account. This takes place through SWIFT.DIFFERENT TYPES OF CARD:

SBI ATM cum Debit Card( State Bank Cash Plus): There is no need to carry cash everywhere. Shopping and even online payments, recharge of mobile prepaid accounts, payment of electricity bills,payment of sbi life insurance premiums can be done through it. SBI International ATM- cum Debit Card SBI Credit Card SBI Gold Card etc.

Deposits: The branch provides all kinds of deposits to customers. It provides CASA deposits, Term deposits like FDs, RDs, JDS, LTDR, CLTD, KMJY, SEDS, Deposits of resident Indian Senior citizens It is mainly a deposit oriented branch and holds large number of deposits.

Loans and Advances: The branch lends only in the P segment i.e. Personal Segment. It offers Easy home loan, Home loan, SBI Advantage home loan, SBI Premium SBI Ezee Car Loans, Personal Loan etc. The bank does not lend to the priority sector i.e. agriculture, SME etc. The bank does not lend to the corporateRates offered by the bank:Savings deposit – 4% p.a compounded half yearly.Term deposit – It depends upon the tenure. Varies from 7 % to 9.25%For loans and advances : base rate :10%The rates differ from scheme to scheme. The bank provides floating interest rates for car and housing loans.The branch manager said that they perform cross selling to their existing customers i.e. selling of different products to the existing customers. Their widely cross sold products are Credit cards, SBI life, SBI Mutual fund, General Insurance etc.CUSTOMER BASE AND TYPES OF CUSTOMER:As on date the branch has about 20,000 customer accounts. These are mainly CASA deposits. In addition to this the branch has 300 loan accounts. The customers are both individual customers as well as corporate (retail).Marketing Strategies The bank has a deep impact in the minds of the people living there. They highly trust and prefer the bank. Therefore, the branch does not engage in a lot of marketing activities for its products and services. However, some of them are:

Word of mouth promotion Brochures and fliers circulation through local newspaper distributors Display boards and hoardings inside the branch premises..

Constraints Faced in managing customers and the operations of the branch1. Limitation due to the floor area. The floor area of the bank is only 2500 sq feet and for efficient operation of its activities, the branch requires at least 4000 sq feet.2. Being situated at the borders of Bhutan, yet no foreign exchange desk available in the branch leading to a lot of constraints in the acceptance of deposits and granting of advances to the Bhutanese customers in Ngultrum.3. Limitation on the budgets.

SWOT ANALYSIS OF THE BRANCH:STRENGTHS:

The brand name of SBI. SBI is associated with high brand loyalty and faith among customers. Location of the bank: the bank is centrally located. Availability of public transportation facility easily Efficiency of the employees in handling the transactions. Efficiency of the branch in continuously increasing its deposits. The deposits increased by almost 12% since its inception. The branch is 100 percent CBS enabled and thus takes part in different technology based transactions.

WEAKNESS: The geographic competition faced by the bank. It is located in a town which is not densely populated although population is quite enough. If it were densely populated then the business could have been more. Being situated at the borders of Bhutan, yet no foreign exchange desk available in the branch leading to a lot of constraints in the acceptance of deposits and granting of advances to the Bhutanese customers in Ngultrum.

It is a little over confident about its customer base and hence does not indulge in much marketing activities beyond the branch.OPPORTUNITIES:

As N.S. road is a commercial as well as residential area the branch can increase its business by market research and by marketing. As the branch is situated in the borders of Bhutan it should try to increase its NRI/NRO accounts and focus a little more on foreign exchange transactions. A separate foreign exchange counter should be introduced to attract more Bhutanese customers and hence, increase the business of the branch. The bank should introduce a “MAY I HELP YOU” counter to avoid unnecessary commotion in the branch. It would even enhance the visual appeal of the branch and make it look like a modern genre private banks. The branch can go in for expansion to improve the ambience and aesthetics of the branch. This could encourage not only the customers but even the staffs to work a little harder. The branch should opt for business process re-engineering and adopt systems like token system, no single window facilities etc. The branch should try to attract more HNI and upper class customers to increase its business size.

THREAT: The major threat faced by the bank is competition from the foreign bank in Bhutan and the private sector banks present in the vicinity of the branch. The major foreign bank located nearby is Bank of Bhutan which is a profitable bank and is very swift in its services. The private bank branches like IndusInd bank and HDFC also pose

a threat to the branch because they are very efficient in time management and customer relationship management.PERFORMANCE OF THE BRANCH:

Particulars Branch dataTotal business Rs. 4950.55 lakhsNet Profit per employee Rs. 12.49 lakhsGRR( Gross rate of return) 2.26%Average yield on advances 71.62%Average Cost of deposits 9.09% Average Interest spread 3.37%NPA 5.72%CAR 11.98%From the above table we get an insight about the performance of the branch. The total business of the branch as on October 2011 is approximately 4950 lakhs which is good enough for a semi urban branch. Another important parameter to judge the performance of the branch is the profit per employee which stands at whopping 12.49 lakh. The average profit per employee for SBI as a whole was approximately 20 lakh . Thus the branch shows figures well above this. This indicates that the branch is a profitable one and has efficient operations. The non-operating assets (NPA) are about 5.72%. This figure is well above the average NPA of SBI as a whole which was 1.61% for 2011. Thus the branch will have to make more efforts in assessing their customers and granting loans. However, as a whole the NPA of the branch has reduced compared to the previous quarter. Yet, the branch has a lot of progress to be made. However the GRR is 2.26% which is good and the returns of the bank are good. The interest spread that the branch earns is also quite high. Thus

overall we can come to the conclusion that the branch is profitable and efficient in its operations and the size of the branch and business of the branch is not very large. So, with a little more care and hardwork the branch can further improve its size of operations. It has a long way to go.

Experiences from the bank visit:During the project I had visited the SBI Jaigaon Branch twice. During this course I had the opportunity to interact with the Branch manager Mr. Asim Ray. He is Scale- 3 manager and was posted to the branch on August 2011 from SBI branch in Kochbihar. He shared his experiences about the branch with me. He was very polite and co-operative and tried to help me out in this project to the best of his ability. He provided all the necessary data he could provide taking in view the integrity of the bank. The data provided by him was of great help. During my project I also talked with the employees of the bank branch to know about their role so as to get a better insight about the operations of a typical bank branch. Mr. Ghanshyam and Mr. Swarey Shome who works as a clerical staff and Mr.Piyush Kanti Sarkar who works as an accountant also helped me a lot in my project.The ambience and the work environment of the bank was mesmerizing. Most of the employees were quite friendly and there was great level of co-operation among them. Both my visits were pre lunch. I observed that customers kept on coming till shutters were down and on both the days the number of people who had come for transactions were quite large. The branch is a busy one. And the wonderful facilities attract more customers. The branch is very organized and operations take place very systematically. Every employee in the branch was aware of his duties and was performing them efficiently.Suggestions:Yet I found, the branch could improve its efficiency by re-engineering its activities like adopting token system to manage rush, removing the single window system etc. That would help the branch keep in pace with the current market situations and make the branch more effective. The branch manager too agreed with this point and said he would look into the feasibility of Business Process Re engineering.

When asked about the CRM the manager responded that there is no separate customer relationship manager and that all the employees are customer oriented and are ready to help and serve the customers anytime they approach them. I felt the branch manager is under estimating the current market conditions and its competitors. Therefore, they should look into this aspect as well. Another point said by him was high level of customer retention by the bank in addition to acquiring new customers. The branch opened on 14/09/1995 and many customers are continuing with the branch since then. The branch should plan to introduce some new services to serve its existing as well as new customers to avoid stagnation of growth. The branch is proud of its high customer base which indicates that the branch provides excellent services and customers are satisfied with the branch.Overall, lot of practical knowledge was gained through the project.CONCLUSION: Thus from the project I came to know the various functions of a bank branch, how it operates and what all problems a branch manager faces in managing and co coordinating the activities of the staff as well as serving the customers.Lastly, I would like to thanks Mr. Ghanshyam, Mr. Piyush Kanti Sarkar and Mr. Swarey Shome for helping me out to collect the data regarding the branch. I would extend my thanks to Mr. Asim Ray (Branch Manager) without whose support and help this project would not have been successful.

APPENDIX:The following formats has been attached:

1. Savings and current account opening form.2. Savings bank withdrawal form without cheque.3. Deposit pay in slip.4. Draft form.