CHAPTER III RECENT SCENARIO OF THE INDIAN BANKING...

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CHAPTER – III

RECENT SCENARIO OF THE INDIAN

BANKING SECTOR

In this chapter an over view of banking services with reference to

recent growth and development in the field of automized way of providing

customer services has been given. Similarly in order to understand the

background of the establishment of the respective selected public sector

banks viz. Canara bank, Indian overseas bank and state bank of India banks

its profile were given in a brief note.

Banking system plays an important role in growth of economy. The

banking sector is the lifeline of any modern economy. It is one of the

important pillars of financial system, which plays a vital role in the success

or failure of an economy. It is a well known fact that banks are one of the

oldest financial intermediaries in the financial system. They play a crucial

role in the mobilization of deposits from the disbursement of credit to

various sectors of the economy. The banking system reflects the economic

health of the country. The strength of the economy of any country basically

hinges on the strength and efficiency of its financial system, which in turn

depends on a sound and solvent banking system.

A banking sector performs three primary function in economy, the

operation of the payment system, the mobilization of savings and the

allocation of saving to investment products. Banking industry has been

changed after reforms process. The government has taken this sector in a

basic priority and this service sector has been changed according to the need

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of present days. Banking sector reforms in India strive to increase efficiency

and profitability of the banking institutions as well as brought the existing

banking institutions face to face with global competition in globalization

process. Different type of banks differs from each other in terms of

operations, efficiency, productivity, profitability and credit efficiency. Indian

banking sector is an important constituent of the Indian Financial System.

The banking sector plays a vital role through promoting business in urban as

well as rural area in recent year, without a sound and effective banking

system, India cannot be considered as a healthy economy.

3.1 ORIGIN OF THE WORD “BANK”

There seems no uniformity amongst the economist about the origin of

the word “Bank“. According to some authors the word “Bank”, itself is

derived from the word “Bancus” or “Banque” that is a bench. The early

bankers, the Jews in Lombardy, transacted their business on benches in the

market place, when, a banker failed, his „Banco‟ was broken up by the

people; it was called „Bankrupt‟. This etymology is however, ridiculed by

mcleod on the ground that “the Italian money changers as such were never

called Banchier in the middle ages.”It is generally said that the word

"BANK" has been originated in Italy. In the middle of 12th century there

was a great financial crisis in Italy due to war. To meet the war expenses, the

government of that period a forced subscribed loan on citizens of the country

at the interest of 5 per cent per annum. Such loans were known as 'Compare',

'minto' etc. The most common name was "Monte'. In Germany the word

'Monte was named as 'Bank' or 'Banke'. According to some writers, the word

'Bank' has been derived from the word bank.


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It is also said that the word 'bank' has been derived from the word

'Banco' which means a bench. The Jews money lenders in Italy used to

transact their business sitting on benches at different market places. When

any of them used to fail to meet his obligations, his 'Banco' or banch or

bench would be broken by the angry creditors. The word 'Bankrupt' seems to

be originated from broken Banco. Since, the banking system has been

originated from money leading business; it is rightly argued that the word

'Bank' has been originated from the word "Banco'.

Today the word bank is used as a comprehensive term for a number of

institutions carrying on certain kinds of financial business. In practice, the

word 'Bank' means which borrows money from one class of people and

again lends money to another class of people for interest or profit.

Actually meaning of bank is not specifies in any regulation or act. In

India, different people have different type of meaning for bank. Normal

salary earner knows means of bank that it is a saving institution, for current

account holder or businessman knows bank as a financial institutions and

many other. Bank is not for profit making, it creates saving activity in salary

earner.

A Bank is an institution which accepts deposits from the general

public and extends loans to the households, the firms and the government.

Banks are those institutions which operate in money. Thus, they are money

traders, with the process of development functions of banks are also

increasing and diversifying now, the banks are not nearly the traders of

money, they also create credit. Their activities are increasing and


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diversifying. Hence it is very difficult to give a universally acceptable

definition of bank.

3.2 HISTORY OF BANKING

The first banks were probably the religious temples of the ancient

world, and were probably established sometime during the third millennium

B.C. Banks probably predated the invention of money. Deposits initially

consisted of grain and later other goods including cattle, agricultural

implements, and eventually Precious metals such as gold, in the form of

easy-to-carry compressed plates. Temples and palaces were the safest places

to store gold as they were constantly attended and well built. As sacred

places, temples presented an extra deterrent to would-be thieves. There are

extant records of loans from the 18th century BC in Babylon that were made

by temple priests/monks to merchants. By the time of Hammurabi`s Code,

banking was well enough developed to justify the promulgation of laws

governing various banking operations.

The fourth century B.C. saw increased use of credit-based banking in

the Mediterranean world. In Egypt, from early times, grain had been used as

a form Money in addition to precious metals, and state granaries functioned

as banks. When Egypt fell under the rule of a Greek dynasty, the Ptolemies

(332-30 B.C.), the numerous scattered government granaries were

transformed into a network of grain banks, centralized in Alexandria where

the main accounts from all the state granary banks were recorded. This

banking network functioned as a trade credit system in which payments were

affected by transfer of fund from one account to another without money

passing.


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3.3 HISTORY OF BANKING SERVICES IN INDIA

(i) Ancient India

The origin of banking in dates back to the Vedic period. There are

repeated references in the Vedic literature to money lending which was quite

common as a side business. Later, during the time of the Smritis, which

followed the Vedic Period and the Epic age, banking become a full-time

business and got diversified with bankers performing most of the functions

of the present day. The Vaish community, who conducted banking business

during this period. As far back as the second or third century Asian

Development. Manu the great Hindu Jurist, devoted a section of his work to

deposits and advances and laid down rules relating to rates of interest to be

charged. Still later, that is during the Buddhist period, banking business was

decentralized and become a matter of volition. Consequently, Brahmins and

Kshatriyas, who were earlier not permitted to take to banking as their

profession except under exceptionally rare circumstances, also took to it as

their business. During this period banking became more specific and

systematic and bills of exchange came in wide use. “Shresthis” or bankers

influential in society and very often acted as royal treasurers.

From the ancient periods in India, an indigenous banking system has

prevailed. The businessmen called Shroffs, Seths, Sahukars, Mahajans,

Chettis etc. had been carrying on the business of banking since ancient

times. These indigenous bankers included very small money lenders to

shroffs with huge businesses, who carried on the large and specialized

business even greater than the business.


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(ii) Mughal Period

Mughal dynasty started with Babur ascending the throne of Agra in

1526 A.D. During Mughal period the indigenous bankers played a very

important role in lending money and financing of foreign trade and

commerce. They were also engaged in the profitable business of money

changing. Banking business was, however particularly during the secular

and settled reign of Emperor Akbar was gave the much needed political

stability to the country. Every city, big or small had a „Sheth‟ also known as

a „Shah‟ or „Shroff‟, who performed a number of banking functions. He was

respected by all parts of people as an important citizen. In Principal cities,

besides shroffs, there was a „Nagar Sheth‟ or „Town Banker‟. They were

instrumental in changing funds from place to place and doing collection

business mainly through Hundis. The Hundis were accepted mode of change

of money for commercial transactions.

(iii) British Period

The seventeenth century witnessed the arrival of English traders in

India. The English traders established their own agency houses at the port

towns of Bombay, Calcutta and Madras. These agency houses, apart from

engaging in trade and commerce, also carried out on the banking business.

The development of the means of transport and communication causing

deflection of trade and commerce along new routes, changing the nature of

trade activities in the country were the other factor which also contributed to

the downfall of the indigenous bankers. Partly to fill the void caused by their

downfall and partly to finance the growing financial requirements of English

trade. The East India Company now came to favor the establishment of the

banking institutions patterned after the Western style.


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lending money discounting and collection bills and various agency services.

They insist higher security for loans.

3.6.4 Old Private Banks

These banks all registered under Indian Companies Act, 1956. Basic

difference between Co-operative banks and Private Banks is its objectives.

The Co-operative banks work for its members and private banks are work

for own profit.

3.6.5 New Private Banks

These banks lead the market of Indian banking business in very short

period because of its variety of services and approach to handle customer

and also because of long working hours and speed of services. This is also

registered under the Company Act 1956. Between old and new private banks

there is wide difference.

3.6.6 Foreign Banks

Foreign Banks mean multi-countries bank. In case of Indian foreign

banks are such banks which open its branch office in India and their head

office are outside of India. E.g. HSBC Bank, City Bank, Standard Chartered

Bank etc.

3.6.7 Co-operative Banks

Co-operative Banks another component of the Indian bank with the

enactment of the Co-operative Credit Societies were sated owing to the


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increasing demand of Co-operative Credit, a new Act of the 1994, which

provide for the increasing demand of Co-operative Central banks by a union

of primary credit societies or by a union of primary credit socialites and

individuals.

3.7 INDIAN BANKING STRUCTURE

The structure of Indian banking system that developed during the pre-

independence period was without any purposive control and direction. There

were no comprehensive banking laws except the Bank Charter Act 1876

which regulated the three presiding bank and the Indian Companies Act

1913 provided some safe guards against bank failures.


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3.8 BANKING SERVICES

In the recent changing scenario, the role of banks is very important for

the growth and development economical conditions of the country. Banking

Sector is offering traditional and other service as under:

- Regular Saving and current accounts

- Regular fixed deposits

- Asynchronous Transfer Mode (ATM) services

- Credit cards

- Demat cards

- Student banking

- Special Non Resident Indian (NRI) Services

- Home loan, Vehicle loan

- Tele and internet banking

- Online trading

- Business multiplies Accounts

- Insurance

- Relief bonds and mutual fund

- Loans against shares

- Retail banking

- Special deposit scheme

- Senior citizen – special deposit scheme

- Other facilities for customers.


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3.9 RETAIL BANKING SERVICES

3.9.1 Credit Cards

A credit card is an instrument, which provides immediate credit

facilities to its holder to avail variety of goods and services at the merchant

outlets. It is made of plastic and hence popularly called as Plastic Money.

Such cards are issued by bank to persons with minimum income ranging

between Rs. 50000 and Rs. 100000 per annum and are accepted by a variety

of business establishments which are notified by the card issuing bank.

Some banks insist on the cardholder being their customers while others do

not. Few banks do not charge any fee for issuing credit cards while others

impose an initial enrolment fee and annual fee also. If the amount is not paid

within the time duration the bank charges a flat interest of 2.5 per cent.

Leading Indian Banks such as: SBI, Bank Of Baroda, Canara Bank,

Industrial Credit Investment Corporation of India, Housing Development

Finance Corporation and a few foreign banks like CITIBANK, Standard

Chartered etc are the important issuers of credit card in India.

3.9.2 Debit Cards

It is a new product introduced in India by Citibank a few years ago in

association with MasterCard. A debit card facilitates purchases or payments

by the cardholder. It debit the money from the account of the cardholder

during each and every transaction. This implies that the cardholder can

spend only if his account having sufficient balance.


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3.9.3 Net Banking

This facilitates the customers to do all their banking transaction and

operations from their home by using the internet facility. With Net Banking

one can carry out all banking and shopping transactions safely and with total

confidentiality. With Net Banking one can easily perform various functions:

a. Check Account Balance

b. Download Account Statement

c. Request for a stop payment of a cheque.

d. Request for a new cheque book.

e. Access demats account

f. Transfer funds.

g. Facilitate bill Payments.

h. Pay Credit Card dues instantly.

3.9.4 Mobile Banking and Phone Banking

Phone and mobile banking are a fairly recent phenomenon for the

Indian banking industry. There exist operative guidelines and restrictions on

the type and quantum of transactions that can be undertaken via this route.

Phone banking channels function through an Interactive Voice Response

System (IVRS) or telebanking executives of the banks. The transactions are

limited to balance enquiries, transaction enquiries, stop payment instructions

on cheques and funds transfers of small amounts in which per transaction

limit is Rs. 2500. According to the draft guidelines on mobile banking, only

banks which are licensed and supervised in India and have a physical

presence in India are allowed to offer mobile banking services. Besides, only


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rupee based services can be offered. Mobile banking services are to be

restricted to bank account and credit card account holders which are Know

Your Customer (KYC) and AMC compliant.

With the rapidly growing mobile penetration in the country, mobile

banking has the potential to become a mass banking channel, with very

minimum investment required by the banks. However, more security issues

need to be addressed before banking can be conducted more freely via this

channel. While using the mobile banking facility a customer can enjoy the

following services.

a. Check Balance

b. Check last three transactions.

c. Request for a statement

d. Request for a cheque book.

e. Enquire on a cheque status.

f. Instruct stock cheque payment.

g. View FD details.

h. Transfer funds.

i. Pay Utility Bills

Phone Banking helps to conduct a wide range of banking transactions

from the comfort of one‟s home or office. Using phone banking facility

offers the following services.

a. Check Balance

b. Check last three transactions.

c. Request for a cheque book.


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d. Transfer funds.

e. Enquire on a cheque status, and much more.

3.9.5 Anywhere Banking

Anywhere Banking is a highly secure and convenient system for

online, real-time inter branch transactions across the Bank. Anywhere

banking offers you greater flexibility, transaction power, convenience and

ease in banking. The benefits of anywhere banking come to light in the

context that it is no longer practically possible to carry money everywhere

we go and also to restrict banking to one branch or open multiple bank

accounts wherever we go. One can deposit or withdraw cash from any

branch of a Particular bank all over the country up to a prescribed limit. One

can also transfer funds.

3.9.6 Automated Teller Machines (ATM)

ATMs feature user-friendly graphic screens with easy to follow

instructions. The ATMs Interact with customers in their local language for

increased convenience. ICICI Bank‟s ATM network is one of the largest and

most widespread ATM network in India. Following are the features

available on ATMs which can be accessed from any whereat anytime:

a. Cash Withdrawal

b. Cash Deposit

c. Balance Enquiry

d. Cheque Book Request

e. Transaction at various merchant establishments


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3.9.7 Smart Card

The smart card, a latest additional to the world of banking and

information technology has emerged as the largest volume driven end-

product in the world due to its data portability, security and convenience.

Smart Card is similar in size to today‟s plastic payment card; it has a

memory chip embedded in it. The chip stores electronic data and

programmes that are protected by advanced security features. When coupled

with a reader, the smart card has the processing power to serve many

different applications. As an access-control device, smart cards make

personal and business data available only to appropriate users. To ensure the

confidentiality of all banking service, smart cards have mechanisms offering

a high degree of security. These mechanisms are based on private and public

key cryptography combined with a digital certificate, one of the most

advanced security techniques currently available. In fact, it is possible to

connect to the web banking service without a smart card.

3.9.8 Electronic Clearing Service (ECS)

The Electronic Clearing Service (ECS) introduced by the RBI in

1995, is akin to the Automated Clearing House system that is operational in

certain other countries like the US. The ECS has two variants viz. ECS debit

clearing and ECS credit clearing service. The ECS credit clearing operates

on the principle of „single debit multiple credits‟ and is used for transactions

like payment of salary, dividend, pension, interest etc. The ECS debit

clearing service operates on the principle of „single credit multiple debits‟

and is used by utility service providers for collection of electricity bills,

telephone bills and other charges and also by banks for collections of


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principal and interest repayments. Settlement under the ECS is undertaken

on T+1 basis. Any ECS user can undertake the transactions by registering

themselves with an approved clearing house.

3.9.9 Electronic Funds Transfer Systems (EFT)

The launch of the electronic funds transfer mechanisms was

operationalised in 1995 covering 15 centres where the Reserve Bank

managed the clearing houses.

Special EFT (SEFT) scheme, a variant of the EFT system, was

introduced with effect from April 1, 2003, in order to increase the coverage

of the scheme and to provide for quicker funds transfers. It was made

available across branches of banks that were computerised and connected

via a network enabling transfer of electronic messages to the receiving

branch in a straight through manner (STP processing). In the case of EFT, all

branches of banks in the 15 locations were part of the scheme, whether they

are networked or not.

A new variant of the EFT called the National EFT (NEFT) was

decided to implemented during (November 2005) so as to broad base the

facilities of EFT. This was a nationwide retail electronic funds transfer

mechanism between the networked branches of banks. The NEFT provided

for integration with the Structured Financial Messaging Solution (SFMS) of

the Indian Financial Network (INFINET). The NEFT uses SFMS for EFT

message creation and transmission from the branch to the bank‟s gateway

and to the NEFT Centre, thereby considerably enhancing the security in the

transfer of funds. While Real Time Gross Settlement (RTGS) is a real time


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gross settlement funds transfer product, NEFT is a deferred net settlement

funds transfer product. As the NEFT system stabilized over time, the number

of settlements in NEFT was increased from the initial two to six. The NEFT

now provides six settlement cycles a day and enables funds transfer to the

beneficiaries account on T+0 basis, bringing it closer to real time settlement.

The commencement of NEFT led to discontinuation of SEFT, and

EFT is now available only for government payments. With the SFMS

facility, branches can participate in both the RTGS and the NEFT System. It

is envisioned that all the RTG Senabled bank branches would be NEFT-

enabled too, so that the customer would have a choice between RTGS or

NEFT, based on time urgency, value of the transaction and different charges

applicable on the two systems. Using the NEFT infrastructure, a one-way

remittance facility from India to Nepal has also been implemented by the

RBI since 15th May 2008.

In order to increase the coverage of NEFT to a wider section of bank

customers in semi-urban and rural areas, an enhancement of the NEFT

called the NEFT-X [National EFT (Extended)] is also proposed for phase

wise implementation. This would facilitate non-networked branches of

banks to transfer funds electronically by accessing NEFT-enabled branches

for transfer of funds. The extended from of NEFT would work on a T+1

basis and would ensure wide rural coverage of the electronic funds transfer

system.


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3.9.10 Performance of Public Sector Banks in India

The information related to deposits, investments and loan and

advances regarding to public sector banks India are presented in Table 3.1.

The Table reveals that significant performance of selected public sector

banks like Canara Bank (CB), State Bank of India (SBI) and Indian

Overseas Bank (IOB). The deposit of the three selected banks are having

increasing trend during the year from 2007-08 to 2011-12. The mean value

of deposits of Canara Bank was Rs.239328.55 crores whereas State Bank of

India got Rs.812234.69 crores and Indian Overseas Bank got Rs.123779.82

crores. The growth rates of the three selected banks are 16.25 percent, 14.20

percent and 16.17 percent respectively. The investment position of these

three banks are marked an increasing trend and its mean value was

Rs.72604.55 crores, Rs.271808.70 crores and Rs.40303.41 crores

respectively. From the research study, among the three selected banks, State

Bank of India has accounted the highest deposits, advances and Investment

when compared to other two banks. The co-efficient of variation found high

variation of deposits, advances and investment in Canara Bank and State

Bank of India and resulted that State Bank of India accounts low variation

among the three variables during the study period. The CAGR of the three

selected banks in three dimensions depicts that a significant growth in loans

and advances of State Bank of India.


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TABLE 3.1

DEPOSITS, ADVANCES AND INVESTMENT

(Rs. In Crores)

Year Deposits Advances Investments

CB SBI IOB CB SBI IOB CB SBI IOB

2007-08 154072.42 537403.94 84325.58 107238.04 416768.20 60423.84 49811.57 189501.27 28474.71

2008-09 186892.51 742073.13 100115.89 138219.40 542503.20 74885.27 57776.90 275953.96 31215.44

2009-10 234651.44 804116.23 110794.71 169334.63 631914.15 79003.93 69676.95 285790.07 37650.56

2010-11 293972.65 933932.81 145228.75 212467.17 756719.45 111832.98 83699.92 295600.57 48610.45

2011-12 327053.73 1043647.36 178434.18 232489.82 867578.89 140724.44 102057.43 312197.61 55565.88

Mean 239328.55 812234.69 123779.82 171949.81 643096.78 93374.09 72604.55 271808.70 40303.41

SD 71975.18 192926.64 37856.27 51572.62 176614.75 32468.61 20847.84 47917.88 11527.11

CV (%) 30.07 23.75 30.58 29.99 27.46 34.77 28.71 17.63 28.60

CAGR

(%) 16.25 14.20 16.17 16.74 15.79 18.42 15.43 10.50 14.31

Source : Annual reports of Canara Bank (CB), State Bank of India (SBI) and Indian Overseas bank (IOB).


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3.10 PROFILE OF THE SELECTED STUDY UNITS

3.10.1 Public Sector Banks

Nationalised banks dominate the banking system in India. The history

of nationalised banks in India dates back to mid-20th century, when Imperial

Bank of India was nationalised (under the SBI Act of 1955) and re-

christened as State Bank of India (SBI) in July 1955. Then on 19th July

1960, its seven subsidiaries were also nationalised with deposits over 200

crores. These subsidiaries of SBI were State Bank of Bikaner and Jaipur

(SBBJ), State Bank of Hyderabad (SBH), State Bank of Indore (SBIR), State

Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of

Saurashtra (SBS), and State Bank of Travancore (SBT).

However, the major nationalisation of banks happened in 1969 by the

former Prime Minister of the counting Mrs.Indira Gandhi. The major

objective behind nationalisation was to spread banking infrastructure in rural

areas and make cheap finance available to Indian farmers. The nationalised

14 major commercial banks were Allahabad Bank, Andhra Bank, Bank of

Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of

India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank,

Oriental Bank of Commerce (OBC), Punjab and Sind Bank, Punjab National

Bank (PNB), Syndicate Bank, UCO Bank, Union Bank of India, United

Bank of India (UBI), and Vijaya Bank.

In the year 1980, the second phase of nationalisation of Indian banks

took place, in which seven more banks were nationalised with deposits over

200 crores. With this, the Government of India held a control over 91 per


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cent of the banking industry in India. After the nationalisation of banks there

was a huge jump in the deposits and advances with the banks. At present, the

State Bank of India is the largest commercial bank of India and is ranked

one of the top five banks worldwide. It serves 90 million customers through

a network of 9,000 branches.

3.11 CANARA BANK

Founded as 'Canara Bank Hindu Permanent Fund' in 1906, by late

Shri Ammembal Subba Rao Pai, a philanthropist, this small seed blossomed

into a limited company as 'Canara Bank Ltd.' in 1910 and became Canara

Bank in 1969 after nationalization

(i) Founding Principles

1. To remove superstition and ignorance.

2. To spread education among all to sub-serve the first principle.

3. To inculcate the habit of thrift and savings.

4. To transform the financial institution not only as the financial heart of

the community but the social heart as well.

5. To assist the needy.

6. To work with sense of service and dedication.

7. To develop a concern for fellow human being and sensitivity to the

surroundings with a view to make changes/remove hardships and

sufferings.

Sound founding principles, enlightened leadership, unique work

culture and remarkable adaptability to changing banking environment have


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enabled Canara Bank to be a frontline banking institution with global

standards.

Widely known for customer centricity, Canara Bank was founded by

Shri Ammembal Subba Rao Pai, a great visionary and philanthropist, in July

1906, at Mangalore, then a small port town in Karnataka. The bank has gone

through the various phases of its growth trajectory over hundred years of its

existence. Growth of Canara Bank was phenomenal, especially after

nationalization in the year 1969, attaining the status of a national level player

in terms of geographical reach and clientele segments. Eighties was

characterized by business diversification for the Bank. In June 2006, the

bank completed a century of operation in the Indian banking industry. The

eventful journey of the bank has been characterized by several memorable

milestones. Today, Canara Bank occupies a premier position in the comity

of Indian banks. With an unbroken record of profits since its inception,

Canara Bank has several firsts to its credit. These include:

Launching of Inter-City ATM Network

Obtaining ISO Certification for a Branch

Articulation of „Good Banking‟ – Bank‟s Citizen Charter

Commissioning of Exclusive Mahila Banking Branch

Launching of Exclusive Subsidiary for IT Consultancy

Issuing credit card for farmers

Providing Agricultural Consultancy Services

Over the years, the bank has been scaling up its market position to

emerge as a major 'Financial Conglomerate' with as many as nine

subsidiaries/sponsored institutions/joint ventures in India and abroad. As at


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September 2012, the bank has further expanded its domestic presence, with

3650 branches spread across all geographical segments. Keeping customer

convenience at the forefront, the bank provides a wide array of alternative

delivery channels that include 3184 ATMs, covering 1182 centres. Several

IT initiatives have been undertaken during the year, which include Funds

Transfer through Interbank Mobile Payment Services (IMPS) in ATMs,

Applications Supported by Blocked Amount (ASBA) facility to net banking

users, E-filing of tax returns and facility for viewing details of tax deducted

at source, Terminal at 223 branches for customers to use net banking,

SMS/e-mail alerts for all transactions done through ATM, net banking, Psot

office Service (POS), mobile banking, online payments irrespective of

amounts, online loan applications and tracking facility, generation of

automatic pass sheets through e-mail and automatic renewal of term

deposits. Under government business, the bank has implemented internet

based application for University Grand Commission (UGC) Maulana Azad

National Fellowship Scheme, Web portal for National Scheme for Girl Child

Secondary Education, Electronic Accounting Systems of e-Receipts-

Customs (EASeR-C) for collection of customs duty and e-payment of

commercial taxes module for Uttar Pradesh, Karnataka, Delhi and Tamil

Nadu.

(ii) Vision

To emerge as a „Best Practices Bank‟ by pursuing global benchmarks

in profitability, operational efficiency, asset quality, risk management and

expanding the global reach.


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(iii) Mission

To provide quality banking services with enhanced customer

orientation, higher value creation for stakeholders and to continue as a

responsive corporate social citizen by effectively blending commercial

pursuits with social banking.

3.11.1 Awards and Achievements

Awards and Achievements during 2012-13

Canara Bank received second Runner Up award for 'Best Online

Bank' among Public Sector Banks at Indian Banking Assocition(IBA)

Banking Technology Awards 2011.

Canara Bank received second Runner Up award for 'Best Customer

Relationship Initiative' among Public Sector Banks at IBA Banking

Technology Awards 2011

Canara Bank received Institute for Development & Research in

Banking Technology (IDRBT) Best Bank Award Among Large Banks

For "Use of Technology for Financial Inclusion" from the hands of the

RBI Governor Dr. D Subbarao.

3.11.2 Significant Milestones in the performance

Year Milestones

1st July

1906

Canara Hindu Permanent Fund Limited formally registered with

a capital of 2000 shares of 50/- each, with 4 employees.

1910 Canara Hindu Permanent Fund renamed as Canara Bank

Limited

1969 14 major banks in the country, including Canara Bank,

nationalized on 19th July 1969.


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Year Milestones

1976 1000th branch inaugurated

1983 Overseas branch at London inaugurated Cancard (the Bank‟s

credit card) launched.

1984 Merger with the Laksmi Commercial Bank Limited

1985 Commissioning of Indo Hong Kong International Finance

Limited

1987 Canbank Mutual Fund and Canfin Homes launched

1989 Canbank Venture Capital Fund started

1989-90 Canbank Factors Limited, the factoring subsidiary launched

1992-93 Became the first Bank to articulate and adopt the directive

principles of “Good Banking”.

1995-96 Became the first Bank to be conferred with ISO 9002

certification for one of its branches in Bangalore

2001-02 Opened a 'Mahila Banking Branch', first of its kind at

Bangalore, for catering exclusively to the financial requirements

of women clientele.

2002-03 Maiden Initial Public Offering of the Bank

2003-04 Launched Internet Banking Services

2004-05 100 per cent Branch computerization

2005-06 Entered 100th Year in Banking Service. Launched Core

Banking Solution in select branches. Number One Position in

Aggregate Business among Nationalized Banks.

2006-07 Retained Number One Position in Aggregate Business among

Nationalized Banks. Signed Memorandum of Understanding

(MoU) for Commissioning Two Joint Ventures in Insurance and

Asset Management with international majors viz., HSBC (Asia

Pacific) Holding and Robeco Groep Net Value respectively.

2007-08 Launching of New Brand Identity. Incorporation of Insurance

and Asset Management Joint Venture. Launching of 'Online

Trading' portal. Launching of a „Call Centre‟. Switchover to

Basel II New Capital Adequacy Framework.

2008-09 The Bank crossed the coveted 3 lakh crore in aggregate

business. The Bank‟s 3rd foreign branch at Shanghai

commissioned.

2009-10 The Bank‟s aggregate business crossed 4 lakh crore mark.

Net profit of the Bank crossed 3000 crore. The Bank‟s branch

network crossed the 3000 mark.


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Year Milestones

2010-11 The Bank‟s aggregate business crossed 5 lakh crore mark. Net

profit of the Bank crossed 4000 crore. 100 per cent coverage

under Core Banking Solution. The Bank‟s 4th foreign branch at

Leicester and a Representative office at Sharjah, UAE, opened.

The Bank raised 1993 crore under QIP. Govt. holding reduced

to 67.72 per cent post QIP.

2011-12 Total number of branches reached 3600. The Bank‟s 5th foreign

branch at Manama, Bahrain opened.

As at September 2012, the total business volume of the bank stood at

Rs.552513 crore.

3.12 INDIAN OVERSEAS BANK (IOB)

The Indian Overseas Bank (IOB) (BSE: 532388) is a major bank

based in Chennai (Madras), with more than 2650 domestic branches, 3

extension counters and six branches overseas as of 31st March 2012. It has

an ISO certified in-house Information Technology department, which has

developed the software that 2650 branches use to provide online banking to

customers; the bank has achieved 100 per cent networking status as well as

100 per cent CBS status for its branches. IOB also has a network of about

1433 ATMs all over India and IOB's International VISA Debit Card is

accepted at all ATMs belonging to the Cash Tree and NFS networks. Indian

Overseas Bank offers internet Banking (E-See Banking) and Mobile

Banking and is one of the banks that the Government of India has approved

for online payment of taxes. The bank's business more than doubled in the

last four years.

The net profit for the year ended March 31, 2012 stood at Rs 1,050.13

crore. The total income stood at Rs 19,578.13 crore as against Rs 13,326.56


http://en.wikipedia.org/wiki/Bombay_Stock_Exchange

http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=532388

http://en.wikipedia.org/wiki/Chennai

http://en.wikipedia.org/wiki/Madras

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crore registered during the same period last financial year. For the full year,

the total business grew by 24 per cent to Rs. 3,21,707 crore from

Rs. 2,59,020 crore. Indian Overseas Bank has planned to achieve total

business of Rs. 3,85,000 crore to Rs 4,00,000 lakh crore this fiscal.

3.12.1 History of IOB

1937 Shri. M. Ct. M. Chidambaram Chettyar establishes the Indian

Overseas Bank (IOB) to encourage overseas banking and foreign exchange

operations. IOB started up simultaneously at three branches, one each in

Karaikudi, Madras (Chennai) and Rangoon (Yangon). It then quickly opened

a branch in Penang and another in Singapore.

Indian Overseas Bank was the first bank to venture into consumer

credit, as it introduced the popular Personal Loan scheme. In 1964, the bank

started computerization in the areas of inter-branch reconciliation and

provident fund accounts. Indian Overseas Bank was one of the 14 major

banks which were nationalized in 1969. After nationalization, the bank

emphasized on opening its branches in rural parts of India. In 1979, IOB

opened a Foreign Currency Banking Unit in the free trade zone in Colombo.

In the year 2000, Indian Overseas Band undertook an Initial Public

Offering (IPO) that brought the government's share in the bank's equity

down to 75 per cent. The equity shares of IOB are listed in the Madras Stock

Exchange (Regional), Bombay Stock Exchange, and National Stock

Exchange of India Limited, Mumbai. Since its inception, the IOB has

absorbed various banks including the latest - Bharat Overseas Bank - in

2007.


98

The Bank's IT department has developed software, which is used by

its 1200 branches to provide online banking to customers. Indian Overseas

Bank also has a network of about 500 ATMs throughout India. Its

International VISA Debit Card is accepted at all ATMs belonging to the

Cash Tree and NFS networks. IOB also offers Internet Banking; it's one of

the banks that the Government of India has approved for online payment of

taxes.

Indian Overseas Bank offers investment options like Mutual Funds

and Shares. It provides a wide range of consumer and commercial banking

services, including Savings Account, Current Account, Depositary Services,

VISA Cards, Credit Cards, Debit Cards, Online Banking, Any Branch

Banking, Home Loans, NRI Account, Agricultural Loans, Payment of Bills /

Taxes, Provident Fund Scheme, Forex Collection Services, Retail Loans,

etc.

(i) Corporate Vision

"To emerge as the most competitive Bank in the Industry"

(ii) Meaning of Logo

"Our logo aims at vertical growth with horizontal expansion of our

customer base"

(iii) Mission

IOB aims to become the most competitive bank in the industry in the

country during the next two years. If the bank is competitive, it is also

responsive to the challenges of the market force. In this process, it will also


99

emerge as the most profitable bank by cutting cost and increasing revenue.

Thus, by being competitive, the bank would be able to achieve all the other

desirable goals.

3.12.2 Milestones and Landmarks

Since the early 1990s when the financial and banking reforms were

initiated, the bank has crossed many milestones and grown from strength to

strength by expanding the branch net work, enhancing and diversifying

business, raising capital from the market and, in recent years, launching a

series of new products and services. The achievements in recent years have

been, truly, landmarks.

1996, Bank's profit crosses Rs. 100 Crores for the first time.

2000, the bank made a successful debut in raising capital from the

public. The issue was oversubscribed 1.87 times despite a subdued

market.

2005, launch of the Multicity Cheque facility.

2005, launch of the International Debit Card

2006, commercial and institutional branch, Chennai which was the

1000th

branch crossed Rs. 1000 Crore mark in advances.

2006, launch of IOB Visa Card.

2006, the bank crossed the Rs. 1 lakh crore in total business.

3.12.3 Overseas Expansion

The bank has 6 fully operational branches overseas – two in Hong

Kong and one each in Singapore, South Korea (Seoul) and Sri Lanka

(Colombo). The bank has representative offices in Guangzhou (China),


100

Kuala Lumpur (Malaysia), Dubai and Abu Dhabi (UAE). The bank has an

Extension Counter at New Kadhiresan Temple, Colombo and a remittance

centre at Singapore. The bank plans to open a branch in New Zeal and

representative office in Vietnam

3.12.4 Products and Services

The Indian Overseas Bank (IOB) Bank offers wide variety of deposit

products to suit your requirements. Coupled with convenience of networked

branches/ ATMs and facility of E-channels like Internet and Mobile

Banking, IOB Bank brings banking at your doorstep. Select any of our

deposit products and provide your details online and our representative will

contact you for account opening

(i) Various Deposits Schemes

(ii) Grantinty Loan‟s and Advance

(iii) NRI Accounts

(iv) Corporate Banking

(v) Rural

(vi) Other Services and Products

(vii) Secondary Function of the Bank

(viii) Credit Cards

(ix) Debit Cards

(x) Travel Card

(xi) Pre Paid Cards

(xii) IOB Bank Pure Gold

(xiii) Insurance Linked Retail Products

(xiv) Government Business

(xv) Service Availabilities at Free of Charges


101

3.13 STATE BANK OF INDIA

The origin of the State Bank of India goes back to the first decade of

the nineteenth century with the establishment of the Bank of Calcutta in

Calcutta on 2nd

June 1806. Three years later the bank received its charter and

was re-designed as the Bank of Bengal (2nd

January 1809). A unique

institution, it was the first joint-stock bank of British India sponsored by the

government of Bengal. The Bank of Bombay (15th

April 1840) and the Bank

of Madras (1st July 1843) followed the Bank of Bengal. These three banks

remained at the apex of modern banking in India till their amalgamation as

the Imperial Bank of India on 27th

January 1921.

Primarily Anglo-Indian creations, the three presidency banks came

into existence either as a result of the compulsions of imperial finance or by

the felt needs of local European commerce and were not imposed from

outside in an arbitrary manner to modernise India's economy. Their

evolution was, however, shaped by ideas called from similar developments

in Europe and England, and was influenced by changes occurring in the

structure of both the local trading environment and those in the relations of

the Indian economy to the economy of Europe and the global economic

framework.

3.13.1 History of the Bank

State Bank of India is the largest state-owned banking and financial

services sector in the country. The bank provides banking services to the

customer. In addition to the banking services, the bank through their

subsidiaries, provides a range of financial services, which include life


102

insurance, merchant banking, mutual funds, credit card, factoring, security

trading, pension fund management and primary dealership in the money

market. The bank operates in four business segments, namely Treasury,

Corporate/ wholesale Banking, Retail Banking and Other Banking Business.

The treasury segment includes the investment portfolio and trading in

foreign exchange contracts and derivative contracts.

The Corporate/ Wholesale Banking segment comprises the lending

activities of Corporate Accounts Group, Mid Corporate Accounts Group and

Stressed Assets Management Group. The Retail Banking segment consists

of branches in National Banking Group, which primarily includes personal

banking activities, including lending activities to corporate customers having

banking relations with branches in the National Banking Group. The SBI

provides a range of banking products through their vast network of branches

in India and overseas, including products aimed at NRIs. The State Bank

Group, with over 16,000 branches, has the largest banking branch network

in India.

The State bank of India is the 10th most reputed company in the world

according to Forbes. The bank has 156 overseas branches spread over 32

countries. They have branches of the parent in Colombo, Dhaka, Frankfurt,

Hong Kong, Johannesburg, London and environs, Los Angeles, Male in the

Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. They have

offshore banking units in the Bahamas, Bahrain, and Singapore, and

representative offices in Bhutan and Cape Town. It was incorporated in the

year 1955. The bank traces their ancestry to British India, through the


103

Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta,

making them the oldest commercial bank in the Indian Sub-continent.

The government of India nationalized the Imperial Bank of India in

the year 1955, with the Reserve Bank of India taking a 60 per cent stake, and

name was changed to State Bank of India. In the year 2001, the SBI Life

Insurance Company was started by the Bank. They are the only Bank that

have been permitted 74 per cent stake in the insurance business. The Bank's

insurance subsidiary 'SBI Life Insurance Company' is a joint venture with

Cardif S.A in which Cardif holds 26 per cent of the stake. During the year

2005-06, the bank introduced 'SBI e-tax' an online tax payments facility for

direct and indirect tax payment. They also launched the centralized pension

processing. The bank made a partnership with Tata Consultancy Services for

setup C-Edg Technologies and consulting services to the banking, financial

services and insurance industry.

The bank was noted as 'The most preferred bank' in a survey by TV

18 in association with AC Nielsen-ORG Marg. Also, the Bank was voted as

'The most preferred housing loan provider' in AWAAZ consumer awards for

the year 2006. In the customer loyalty survey 2006-07 conducted by

'Business World', the SBI was ranked number one in all parameters of

customer satisfaction, service orientation, customer care/ call center,

customer loyalty and home loans. The SBI Funds was judged 'Mutual fund

of the year' by CNBC/TV-18/CRISL.

The bank introduced new products and services such as web-based

remittance, instant fund transfer, online-trading and comprehensive cash

management. During the year 2007-08, the bank launched 965 branches all


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over the country. They inaugurated a new state-of-the art Dealing Room

with online connectivity to all active forex intensive branches at Corporate

Centre in Mumbai. They launched a new product, Construction Equipment

Loan to cater to construction Companies. Also, they introduced new

products such as SBI Reverse Mortgage Loan and SBI Home Plus in the

areas of Home Loans. During the year, the RBI transferred their entire

shareholding in the Bank representing 59.73 per cent of the issued capital of

the Bank to the Government of India. The Bank acquired 92.03 per cent of

equity of Global Trade Finance Ltd. Consequently, GTFL became a

subsidiary of the bank. They signed an Memorandum of Under standing

with the Indian railways for installing ATMs at 682 railway stations.

In March 2008, it opened their 10,000th branch and became only the

second bank in the world to have more than 10,000 branches after China's

ICBC. During the year 2008-09, the company launched Import factoring, a

new product in association with SBI Factors and Commercial Services

Limited. They increased the number of branches for retail sale of gold coins

from 250 to 518. Also, they re-launched Gold Deposit Scheme at 50

branches to mobilize gold from domestic market for deployment as metal

loans to jewellers. During the year, the Bank opened their 11,111th Branch

at Sonapur (Kamrup District) in Assam. They introduced three new products

viz., SBI Special Home Loan, SBI Happy Home Loan and SBI Lifestyle in

response to the stimulus package announced by the government of India.

Also, they entered into an exclusive arrangement with TATA Motors for

handling the booking process of TATA 'Nano' cars. During the year, the

bank launched on their web-site an on-line application form for registering

Auto Loan enquiries and expeditiously monitoring and converting these


105

leads into Auto Loans. Also, they launched 'e-invest' for the ASBA

(Applications Supported by Blocked Accounts) to aid investors for their

equity subscriptions, IPO and Rights applications.

During the year, the bank set up a custodial services company namely

SBI Custodial Services Private Limited in joint venture with Societe

Generale, France. They signed letter of intent for setting up of joint venture

company for undertaking General Insurance Business. Also, they divested

10 per cent equity stake in its wholly owned subsidiary SBI Pension Fund

Private Limited at cost in favour of its subsidiaries. In October 2008, the

Bank signed an Memorandum of Understanding with State General Reserve

Fund (SGRF) of Oman, for a general purpose private equity fund. During

the year, State Bank of Saurashtra (SBS), a wholly owned subsidiary of the

bank, amalgamated with the bank with effect from August 13, 2008. They

signed a joint venture agreement with Insurance Australia Group for

undertaking General Insurance business.

Also, they signed a joint venture agreement with Macquarie Capital

Group, Australia and International Finance Corporation, Washington for

setting up an Infrastructure fund of United States Dollar 3 billion for

investing in various infrastructure projects in India. During the year 2009-

10, the Bank opened 1,049 branches, out of which branches were opened in

metro and urban areas with a view to increase the Bank's reach and be more

accessible to customers. In July 2009, SBI introduced 'SBI Loan to Affluent

Pensioners' enabling the government pensioners to avail personal loans upto

Rs 3 lakh. During the year, the Bank designed a special package, the

Defence Salary Package, for personnel of the three Armed Forces i.e. the


106

Army, Navy and Air Force who maintain their Salary accounts with them.

As of March 2010, the Bank had 12,496 branches and 21,485 Group ATMs.

In June 2009, the company increased their shareholding in Nepal SBI Bank

Ltd to 55.02 percent and thus Nepal SBI Bank Ltd became a subsidiary of

the Bank with effect from 14th

June, 2009. In May 2010, the Bank selected

consortium of Elavon Incorporation, USA and Visa International, USA as

their Joint Venture (JV) partner for Merchant Acquiring Business.

They set up a wholly owned subsidiary, namely SBI Payment

Services Private Limited for conducting Merchant Acquiring Business. In

August 2010, State Bank of Indore was amalgamated with the Bank as per

the scheme of amalgamation approved by the Central Board. During the year

2010-11, the Bank introduced 2 new products, namely 'Pushpa Ullas' and

'Arthias Plus' on pilot basis. They made substantial progress in establishing

itself as a leading Personal Expenditure fund player of the country. Also,

they also signed a Joint Venture agreement with State General Reserve Fund

(SGRF) of Sultanate of Oman, a sovereign entity, to set up a general purpose

private equity fund with an initial corpus of United States Dollar 100 mn,

expandable further to USD 1.5 billion. During the year, the Bank opened

576 new branches besides merger of 470 branches of erstwhile State Bank of

Indore. Also, they opened 14 foreign offices during the year, taking the total

to 156. In July 1, 2010, the bank launched their 'Green Channel Counter' at

select branches across the country.

In General Insurance business, the bank launched limited operations

in April 2010 for the Corporate and Mid Corporate customers based at

Mumbai, and it was expanded to six other major locations in July 2010. In


107

the Retail segment, the bank launched their Long Term Home Insurance

business at Mumbai during October 2010, which was gradually extended to

cover 56 Retail Assets Central Processing Centres (RACPC) and Retail

Assets and Small and Medium Scale Enterprises Centralized Credit Cell

(RASMECC). General Insurance SME business was launched on a pilot

basis in Mumbai and Chennai in February 2011. During the first quarter of

the financial year 2011-12, the government of India issued the 'Acquisition

of State Bank of India Commercial and International Bank Limited. vide

notification dated 29th July, 2011. Consequent to the said notification, the

undertaking of State Bank of India Commercial and International stands

transferred to and vest in State Bank of India with effect from 29th

July,

2011.

(i) Logo and slogan

The logo of the State Bank of India is a blue circle with a small cut in the

bottom that depicts perfection and the small man the common man -

being the center of the bank's business.

Slogans: "PURE BANKING, NOTHING ELSE", "WITH YOU - ALL

THE WAY", "A BANK OF THE COMMON MAN", "THE BANKER

TO EVERY INDIAN", "THE NATION BANKS ON US".

(ii) Other SBI service points

The SBI has 27,000+ ATMs (25,000th ATM was inaugurated by the

then Chairman of State Bank Shri O.P. Bhatt on 31 March 2011, the day of

his retirement); and SBI group (including associate banks) has about 45,000


http://en.wikipedia.org/wiki/Automated_teller_machine

108

ATMs. The SBI has become the first bank to install an ATM at Drass in the

Jammu and Kashmir Kargil region. This was the Bank's 27,032nd ATM on

27th July 2012.

3.13.2 Recent Awards and Recognitions

Best Online Banking Award, Best Customer Initiative Award and

Best Risk Management Award (Runner Up) by IBA Banking

Technology Awards 2010

The Bank of the year 2009, India (won the second year in a row) by

The Banker Magazine

Best Bank – Large and Most Socially Responsible Bank by the

Business Bank Awards 2009

Best Bank 2009 by Business India

The Most Trusted Brand 2009 by The Economic Times.

Most Preferred Bank and Most preferred Home loan provider by

CNBC

Visionaries of Financial Inclusion By Financial Information Network

and Operations

Technology Bank of the Year by IBA Banking Technology Awards.

SKOCH Award 2010 for Virtual corporation Category for its

e-payment solution.

The Brand Trust Report:11th most trusted brand in Hindustan.

3.14 ERODE DISTRICT PROFILE

Erode District lies on the extreme north of Tamil Nadu. Erode District

is essentially a land-locked area having no sea-cost of its own. Erode District


http://en.wikipedia.org/wiki/The_Brand_Trust_Report

109

is situated between 10 36” and 11 58” North Latitude and between 76 49”

and 77 58” East Longitude.

3.14.1 Brief History of the District and Its Formation

Erode District was a part of Coimbatore , it had formed a part of the

ancient Kongu Kingdom known as "Kongu Nadu" whose history of which

dates back to the Sangam era .

(i) Jurisdictional Changes:

Erode District came into being as a result of the bifurcation of

Coimbatore District, through the G.O.Ms.No.1917, Revenue

dated 31.08.1979. Now Erode District consists of 5 taluks viz.,

Sathyamangalam, Bhavani, Gobichettipalayam, Perundurai and Erode.

There are 4 Municipalities in the district viz., Sathyamangalam, Bhavani,

Gobichettipalayam, and Punjai Puliampatti. The other four Municipalities in

the district viz. Periasemur, Kasipalayam, Surampatti and Veerappanchatram

have been merged recently with Erode Corporation. There are 42 Town

Panchayats, 230 Village Panchayats and 375 Revenue Villages. There are 14

Community Development Blocks in the district.

3.14.2 Demographics

Erode district had a population of 22,59,608 as of 2011 Census. Erode

is the largest town in the district followed by Gobichettipalayam which is

another major taluk next to Erode. The following table reveals the

comparative position of Erode city according to both 2000-01 and 2010-11

census.


http://en.wikipedia.org/wiki/Erode


http://en.wikipedia.org/wiki/Gobichettipalayam

110

Description 2010-11 2000-01

Actual Population 2259608 2016582

Male 1134191 1024732

Female 1125417 991850

Population Growth 0.1205 0.1185

Density/km2 397 354

Proportion to Tamil Nadu Population 0.0313 0.0323

Sex Ratio (Per 1000 males) 992 968

Average Literacy 72.96 65.44

Total Child Population (0-6 Age) 181188 200853

Literates 1516380 1188228

(i) Geography

The district is bounded by Chamarajanagar district of Karnataka in the

north, and by Kaveri River in the east. Across the Kaveri lies Salem,

Namakkal and Karur districts. Tirupur District lies immediately in the south,

and Coimbatore and the Nilgiris district lies in the west.

(ii) Climate and Rainfall

The district in general is characterised with a scanty rainfall and a dry

climate. Maximum rainfall is recorded in Gobichettipalayam and Bhavani

taluks. Unlike Coimbatore Erode District has dry weather throughout except

the monsoon season.

(iii) Soils

The soils of the district are mostly red sand and gravel with moderate

quantity of red-loam and occasional black loam tracts. Soils of Bhavani,

Erode and Perundurai taluks are chiefly gravelly and stony of the red variety.


http://en.wikipedia.org/wiki/Chamarajanagar_district

http://en.wikipedia.org/wiki/Karnataka

http://en.wikipedia.org/wiki/Kaveri_River

http://en.wikipedia.org/wiki/Salem_District

http://en.wikipedia.org/wiki/Namakkal_District

http://en.wikipedia.org/wiki/Karur_District

http://en.wikipedia.org/wiki/Tirupur_District

http://en.wikipedia.org/wiki/Coimbatore_District

http://en.wikipedia.org/wiki/Nilgiris_district

111

(iv) Minerals

Though the district cannot boost of great mineral wealth, both opaque

and translucent varieties of fine quality of Feldspar is found abundantly in

Erode taluk. Mica, Muscovite and Asbestos are also found in small

quantities in Erode district.

(v) Rivers

Bhavani, Cauvery and Noyyal are the main rivers of the district. This

river runs for over hundred miles through Erode District traversing through

Bhavani and Gobichettipalayam taluks. .

(vi) Forests

With more than 228,750 hectares of land under dense forest, Erode is

one of the few fortunate districts in the State which can boost of extensive

forest area. 27.7% of the total district area is under forests.

(vii) Land and Land use pattern

As per revenue land records, the total geographical area of the district

is 572,264 hectares. Of those 199,389 hectares have been brought under

cultivation as net area sown. Total cropped area is 224,786 hectares i.e.

39.2% of the total area in the district. Forests account for 227,511 hectares

i.e. 39% of the total area. .


112

(viii) Agriculture

The publicity and developmental activities launched by the

agricultural institutions in Coimbatore penetrated far and wide in Erode

District. Among condiments and spices, turmeric and chillies are significant.

Cultivation of turmeric extends over 14533 hectares. Among other non-food

crops raised here, the most important items are cotton, sugarcane and

tobacco, sugarcane is raised in 30903 hectares.

(ix) Irrigation

The net area irrigated in the district totals to 209,432 hectares. Rivers

in the western ghats are fed mostly by the south-west monsoon and are the

chief sources of irrigation in the district.

(x) Fisheries

In Erode District, Inland fisheries is the only resource of fishermen.

Being a landlocked district, there are no chances for marine fishing.

(xi) Animal Husbandry

There are three major breeds of cattle in the District. They are the

Burgur breed, the Kollegal variety and the Alanbodies. Erode has carved out

an enviable position for itself in the field of dairy development industry in

the State. .


113

(xii) Industries and Trade

In the Industrial map of Tamil Nadu, Erode district has a place of

unique importance with 40.32 percent of population depending on non-

agricultural sector.

(xiii) Transport and Communication

The transport and communication system in Erode district is well

developed. Erode being one of the prominent trading centres in the State is

well connected with all modern means of transport and communication

except for air service. There are two postal Divisions serving the district

with their headquarters at Erode and Tiruppur.

(xiv) Education and Health

In the field of education also, Erode District has recorded remarkable

achievement. There are a number of well established schools and colleges

preparing students for the usual degree and post-graduate degree courses in

various branches of science and humanities. There is a Medical College at

Perundurai run by the Road Transport Corporation.

(xv) Places of Historical, Religious and Archaeological importance

There are nearly 487 temples in Erode District. They are situated in

four taluks, Bhavani, Gobichettipalayam, Erode, Sathyamangalam,

Perundurai.


114

(xvi) Administration

Erode District is separated into 2 revenue divisions namely: Erode and

Gobichettipalayam. This district is divided into 6 taluks namely: Anthiyur,

Bhavani, Erode, Gobichettipalayam, Perundurai and Sathyamangalam.

(xvii) Politics

Erode District is divided between 3 Parliamentary Constituencies

namely: Erode, Nilgiris and Tirupur. The district consists of 8 assembly

constituencies namely Anthiyur, Bhavani, Bhavani Sagar, Erode East, Erode

West, Gobichettipalayam, Modakurichi and Perundurai.

(xviii) Economy

Agriculture is the most important income source of this district.

Paddy, Plantain, Groundnut, cotton, turmeric, coconut and sugarcane are

some of the agricultural products. With 43% share, the district is the top

turmeric producer in Tamil Nadu. Erode is also known as "The Turmeric

City".

(xix) Industries

Erode district is one among the industrialized district in Tamilnadu

and it is fifth among the districts in Tamilnadu as far as MSME concerned.

There are 18011 registered SSI/MSME Enterprises as on 31.03.2011 in the

district.




http://en.wikipedia.org/wiki/Taluk

http://en.wikipedia.org/wiki/Anthiyur

http://en.wikipedia.org/wiki/Bhavani



http://en.wikipedia.org/wiki/Perundurai

http://en.wikipedia.org/wiki/Sathyamangalam

http://en.wikipedia.org/wiki/Erode_%28Lok_Sabha_constituency%29

http://en.wikipedia.org/wiki/Nilgiris_%28Lok_Sabha_constituency%29

http://en.wikipedia.org/wiki/Tirupur_%28Lok_Sabha_constituency%29

http://en.wikipedia.org/wiki/Anthiyur_%28State_Assembly_Constituency%29

http://en.wikipedia.org/wiki/Bhavani_%28State_Assembly_Constituency%29

http://en.wikipedia.org/wiki/Bhavanisagar_%28State_Assembly_Constituency%29

http://en.wikipedia.org/wiki/Erode_East_%28State_Assembly_Constituency%29

http://en.wikipedia.org/wiki/Erode_West_%28State_Assembly_Constituency%29



http://en.wikipedia.org/wiki/Gobichettipalayam_%28State_Assembly_Constituency%29

http://en.wikipedia.org/wiki/Modakurichi_%28State_Assembly_Constituency%29

http://en.wikipedia.org/wiki/Perundurai_%28State_Assembly_Constituency%29

http://en.wikipedia.org/wiki/Turmeric


115

(xx) Area of Food product Concentration

Food products are concentrated at Erode, Perundurai. Beverages are

concentrated in all the 3 blocks of Erode Taluk namely, Modakurichi, Erode

and Kodumudi.

(xxi) Small Scale Service and Business Enterprises

Like the MSME Service sector has also grown considerably in this

district. There are 12683 Service Enterprises as on 31.03.2011 in this

District.

(xxii) Large Scale Industries

There are 64 Large Scale Industries in this district. Most of the

Enterprises are cotton textiles. And 31 enterprises are textile industries.

(xxiii) Industrial Cooperative Sector

At present there are 8 such industrial cooperatives with a total

membership of 565 numbers operating in this district.

(xxiv) Cottage Industries

In Erode District there is 7605 Enterprise registered under the cottage

industries as on 31.03.2011 and they are providing employment to 12974

persons.


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(xxv) Handicraft Units

Erode is well known for hand-loom, power-loom textile products and

ready-made garments and hence it is called Powerloom City of India.

3.14.3 Banking Development

Banking Developments in Erode District is made based on Banking

Statistics as at March 2010 & March 2011-12.

(i) Branch Expansion

The number of Commercial bank branches in the district are 239 as on

March 2011 comprises of the following branches.

State Bank group - 33 Branches

Nationalised Banks - 112 Branches

Private sector Banks - 67 Branches

Co-opertive banks - 21 Branches

Pallavan Gramin Bank - 6 Branches

Among the above, three specialised branches are functioning to cater

to the needs of Small Scale Industries. They are:

1. Canara Bank at Perundurai

2. State Bank of India at Bhavani

3. Indian Overseas Bank at Erode


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In the Co-operative Sector, Erode Central Co-operative Bank has 21

branches which are functioning in Erode district. The State Finance

Corporation has got a TIIC branch at Erode. Besides these, REPCO and

TAICO bank are functioning in Erode Town.

(ii) Deposits

The Total Deposit of all Banks in Erode District as at March 2011

stood at Rs 7573.42 Crores. The deposit which was Rs. 6402.02 cr as on

March 2010.

March 2010 : Rs 6402.02 cr

March 2011 : Rs 7573.42 cr

(iii) Advances

The total advances is Rs.8981.97crore on march 2011. The total

advance was Rs 7337.65 cr as at March 2010.

March 2010 : Rs 7337.65 cr

March 2011 : Rs 8981.97 cr

(iv) Advances to Priority Sector

The total advances to priority sector is Rs.5146.79crore on March

2011. The total advance to priority sector was Rs 4203.52 cr as at March

2010.

March 2010 : Rs 4203.52 cr

March 2011 : Rs 5146.79 cr


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(v) Credit Deposit Ratio

The CD ratio 118% as on March 2010, 115% as on March 2011.

(vi) Agriculture Advances

The Total outstanding under Agriculture advances as follows.

March 2010 Rs 1881.60 cr

March 2011 Rs 2318.75 cr

Agri. advance constitutes 47% of total priority advances.

(vii) Micro and SME

Micro and SME sector also show an upward growth and the

outstanding advances as on March 2011 stood at Rs 1496.12 cr

March 2010 : Rs.1214.08 cr

March 2011 : Rs.1492.12 cr

(viii) Advances to Weaker Section

The weaker section advances as on March 2011 stood at 819.52 CR.

Advances to SC/ST, weaker sections, minority communities have also

shown marked growth.

(ix) Government Sponsored Schemes

Erode District has an excellent Track Record of performing over and

above the targets fixed under all government sponsored schemes over the

years. Thanks to all the bank branches, District coordinators, District

administration and department officials who made this achievement

possible.


CHAPTER III RECENT SCENARIO OF THE INDIAN BANKING...

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