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Organizational Study

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1.1Executive Summary

The Course of MFA Offered by Bangalore City College, Bangalore has itssyllabus affiliated to Bangalore University which requires its students to

undertake any internship with any of the leading business organization for aperiod of 4 weeks for the 3rd semester. The purpose of this internship is to

enable the students to appreciate and understand the practical business the

application theoretical input administered during regular academic session. This

help in creating managers who are well equipped with the experience of linking

the theoretical inputs with those of practical environment. In a partial fulfillment

of MFA degree of Bangalore University. I undertook the internship in

Karnataka Bank Limited relating Organizational Study.

The experience of these four weeks was really a great exposure in the businessworld. I have learned a lot regarding the working of banks related to mentoringand notice various problems which they face and strategies used to overcome

them during mentoring period. It was really great working with this prestigious

organization of Karnataka Bank Limited.

1.2Title of report

Organizational Study of Karnataka Bank Limited.

1.3Objectives of the Study

To get practical exposure of an organization.To get acquainted with the real working environment of the organization.To get an overall idea about the industry and in depth comprehension of

the firm selected for extensive study.

To study the organization Structure of Karnataka Bank LimitedTo know and analyze the strength and weakness of the organization and

the forthcoming opportunities and threats of it.

To suggest to the bank on the areas of improvement, based on findings ofthe study.


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1.4Scope of the Study

The study provides an overview of Indian banking industry.The study gives a detailed picture of Karnataka bank limited its

history, structure, functional departments and other aspects.The study identifies various products and services offered by

Karnataka Bank Limited.

The study states the various strengths, weakness, opportunities andthreats of the bank.

The study identifies various findings and provides suggestions for theimprovement of the bank.

1.5Data Collection

Primary data collection technique Discussions with the Regional Manager Discussions with the Employees in regional office

Secondary data collection.Annual reports of the companyCompany websiteBooks

1.6Limitation of the study

Extensive interaction with the officers would not be possible as theywill be busy with banking activities.

The study is very specific to Karnataka bank Ltd. Hence we could notcompare this study with other similar banks.

Due to the shortage of time and other constraints financial analysis ofthe bank was not considered.

Primary data is collected as per knowledge of the executives andemployees.

Due to the limited period, study was a brief one and other banks werein the industry were taken into consideration.


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2. Industry Profile


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2.1Introduction

A bank is a financial institution that provides banking and other financialservices to their customers. A bank is generally understood as an institution

which provides fundamental banking services such as accepting deposits andproviding loans. There are also nonbanking institutions that provide certain

banking services without meeting the legal definition of a bank. Banks are a

subset of the financial services industry.

A banking system also referred as a system provided by the bank which offers

cash management services for customers, reporting the transactions of their

accounts and portfolios, throughout the day. The banking system in India should

not only be hassle free but it should be able to meet the new challenges posed

by the technology and any other external and internal factors. For the past threedecades, Indias banking system has several outstanding achievements to itscredit. The Banks are the main participants of the financial system in India. The

Banking sector offers several facilities and opportunities to their customers. All

the banks safeguards the money and valuables and provide loans, credit, and

payment services, such as checking accounts, money orders, and cashiers

cheques. The banks also offer investment and insurance products. As a varietyof models for cooperation and integration among finance industries have

emerged, some of the traditional distinctions between banks, insurance

companies, and securities firms have diminished. In spite of these changes,banks continue to maintain and perform their primary roleaccepting deposits

and lending funds from these deposits.

2.2Need of the Banks

Before the establishment of banks, the financial activities were handled by

money lenders and individuals. At that time the interest rates were very high.

Again there were no security of public savings and no uniformity regarding

loans. So as to overcome such problems the organized banking sector wasestablished, which was fully regulated by the government. The organizedbanking sector works within the financial system to provide loans, accept

deposits and provide other services to their customers.


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The following functions of the bank explain the need of the bank and its

importance:

To provide the security to the savings of customers. To control the supply of money and credit To encourage public confidence in the working of the financial system,

increase savings speedily and efficiently.

To avoid focus of financial powers in the hands of a few individuals andinstitutions.

To set equal norms and conditions (i.e. rate of interest, period of lendingetc.) to all types of customers.

2.3History of Indian Banking System

The first bank in India, called The General Bank of India was established in the

year 1786. The East India Company established The Bank of Bengal/Calcutta(1809), Bank of Bombay (1840) and Bank of Madras (1843). The next bank

was Bank of Hindustan which was established in 1870. These three individual

units (Bank of Calcutta, Bank of Bombay, and Bank of Madras) were called as

Presidency Banks. Allahabad Bank which was established in 1865, was for the

first time completely run by Indians. Punjab National Bank Ltd. was set up in1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India,

Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank ofMysore were set up. In 1921, all presidency banks were amalgamated to form

the Imperial Bank of India which was run by European Shareholders. After that

the Reserve Bank of India was established in April 1935.

At the time of first phase the growth of banking sector was very slow. Between

1913 and 1948 there were approximately 1100 small banks in India. To

streamline the functioning and activities of commercial banks, the Government

of India came up with the Banking Companies Act, 1949 which was later

changed to Banking Regulation Act 1949 as per amending Act of 1965 (ActNo.23 of 1965). Reserve Bank of India was vested with extensive powers for

the supervision of banking in India as a Central Banking Authority. After

independence, Government has taken most important steps in regard of Indian

Banking Sector reforms. In 1955, the Imperial Bank of India was nationalized

and was given the name "State Bank of India", to act as the principal agent of

RBI and to handle banking transactions all over the country. It was establishedunder State Bank of India Act, 1955. Seven banks forming subsidiary of State

Bank of India was nationalized in 1960. On 19th July, 1969, major process of

nationalization was carried out. At the same time 14 major Indian commercial

banks of the country were nationalized. In 1980, another six banks were


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nationalized, and thus raising the number of nationalized banks to 20. Seven

more banks were nationalized with deposits over 200 Crores. Till the year 1980

approximately 80% of the banking segment in India was under governments

ownership. On the suggestions of Narsimhan Committee, the Banking

Regulation Act was amended in 1993 and thus the gates for the new privatesector banks were opened.

2.4Important Milestones of the Banking Industry


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2.5Nationalization

Despite the provisions, control and regulations of Reserve Bank of India, banks

in India except the State Bank of India or SBI, continued to be owned and

operated by private persons. By the 1960s, the Indian banking industry hadbecome an important tool to facilitate the development of the Indian economy.At the same time, it had emerged as a large employer, and a debate had ensued

about the nationalization of the banking industry. Indira Gandhi, the then Prime

Minister of India, expressed the intention of the Government of India in the

annual conference of the All India Congress Meeting in a paper entitled "Stray

thoughts on Bank Nationalization." The meeting received the paper with

enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued anordinance ('Banking Companies (Acquisition and Transfer of Undertakings)

Ordinance, 1969') and nationalized the 14 largest commercial banks with effectfrom the midnight of 19 July 1969. These banks contained 85 percent of bank

deposits in the country. Jayaprakash Narayan, a national leader of India,

described the step as a "masterstroke of political sagacity." Within two weeks of

the issue of the ordinance, the Parliament passed the Banking Companies

(Acquisition and Transfer of Undertaking) Bill, and it received the presidentialapproval on 9 August 1969.

A second step of nationalization of 6 more commercial banks followed in 1980.The stated reason for the nationalization was to give the government more

control of credit delivery. With the second dose of nationalization, the

Government of India controlled around 91% of the banking business of India.

Later on, in the year 1993, the government merged New Bank of India with

Punjab National Bank. It was the only merger between nationalized banks and

resulted in the reduction of the number of nationalized banks from 20 to 19.

After this, until the 1990s, the nationalized banks grew at a pace of around 4%,

closer to the average growth rate of the Indian economy.The nationalized banks

were credited by some including Home Minister P. Chidambaram, to havehelped the Indian economy withstand the global financial crisis of 2007-2009.


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2.6Liberalization

In the early 1990s, the then government embarked on a policy of liberalization,

licensing a small number of private banks. These came to be known as New

Generation tech-savvy banks, and included Global Trust Bank (the first of suchnew generation banks to be set up), which later amalgamated with OrientalBank of Commerce, UTI Bank (since renamed Axis Bank), ICICI Bank and

HDFC Bank. This move, along with the rapid growth in the economy of India,

revitalized the banking sector in India, which has seen rapid growth with strong

contribution from all the three sectors of banks, namely, government banks,private banks and foreign banks.

The next stage for the Indian banking has been set up with the proposed

relaxation in the norms for Foreign Direct Investment, where all ForeignInvestors in banks may be given voting rights which could exceed the presentcap of 10%,at present it has gone up to 74% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this

time, were used to the 464 method (Borrow at 4%, Lend at 6%, Go home at4) of functioning. The new wave ushered in a modern outlook and tech-savvy

methods of working for traditional banks. All this led to the retail boom inIndia. People not just demanded more from their banks but also received more.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increaseits stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the

first time an investor has been allowed to hold more than 5% in a private sector

bank since the RBI announced norms in 2005 that any stake exceeding 5% in

the private sector banks would need to be voted by them.


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2.7Structure of the Financial Sector in India

2.8Who regulates the Financial Sector in India?


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2.9Structure of the Indian Banking Industry


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2.10Major Players in the Banking Industry

List of Public Sector Banks in IndiaAllahabad 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 ofCommerce

Punjab & Sind Bank Punjab National Bank Syndicate Bank

UCO Bank Union Bank of India United Bank Of India

(UBI)

Vijaya Bank IDBI Bank Limited

List of State Bank Group Banks in IndiaState Bank of India State Bank Of Bikaner &

Jaipur

State Bank of Hyderabad

State Bank of Mysore State Bank of Patiala State Bank of Travancore

List of Private Sector Banks in India

Catholic Syrian Bank City Union Bank Dhanalakshmi Bank Ltd

Federal Bank ING Vysya Bank Ltd Jammu & Kashmir Bank

Karnataka Bank Ltd Karur Vysya Bank Ltd Lakshmi Vilas Bank

The Ratnakar Bank Nanital Bank SBI Commercial &

International Bank

South India Bank Tamilnadu Mercantile Bank United Western Bank

IndusInd Bank HDFC Bank ICICI Bank Axis Bank Kotak Mahindra Bank Yes Bank

Development Credit Bank

(DCB Bank)


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List of Foreign Banks operating in IndiaABN-AMRO Bank NV American Express Bank Abu Dhabi Commercial

Bank

ANZ Grind lays Bank Arab Bangladesh Bank Bank International BankBank Muscat Saog Bank Of America NV Bank Of Bahrain & Kuwait

BSC

Bank Of Ceylon Bank Of Nova Scotia Bank Of Tokyo-Mitsubish

Barclays Bank PLC BNP Paribas China Trust Commercial

Bank

Cho Hung Bank Citi Bank Commerz Bank AG

Credit Agricole Indosuez Credit Lyonnais Deutsche Bank AG

Development Bank Of

Singapore

HSBC ING Bank NV

KBC Bank NV Krung Thai Bank Public Co Mashreq Bank

Oversea-Chinese Banking

Corporation

The Sanwa Bank Societe Generale

Sonali Bank Standard Chartered Bank Standard Chartered Grind

lays Bank

State Bank Of Mauritius The Sumitomo Bank The Chase Manhattan Bank

The Fuji Bank The Sakura Bank The Toronto-Dominion

Bank


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2.11Growth Drivers of the Banking Industry


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2.12Key Challenges of the Banking Industry


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2.13The Banking Outlook in 2013 & 2014

Paving the way for New Banks With the Banking laws (Amendment) Bill cleared on 20th December

2012 in RajyaSabha, it is likely that the RBI may issue 3-4 licenses

within the next 12 months.

NBFCs like PFC, L&T finance, Shriram group as well as some corporategroups (Reliance, Tata etc.) have applied for the banking licenses.

New Entrants in the space may result in price based competition ondeposits, loans and human resources and some M&A among the small

private banks.

Sparking M&A hopes Entry of New banks, with the issuance of banking licenses has sparked

the hope for M&A.

In order to scale up operations rapidly, smaller private banks with largerdistribution networks might be the possible targets of the new banks.

The potential targets may be Federal Bank, Karur Bank, DhanalaxmiBank, Lakshmi Vilas Bank.

Opportunities in the BankingWealth Management to be a big business Rapid growth of branches & ATMs Mobile banking to see huge growth Mortgages to cross Rs.40 lakh crores by 2020 Infrastructure financing to reach over Rs.20 trillion on Commercial banks

book by 2020

New Models to serve the Small & Medium Enterprises (SME)


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3. Company Profile


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3.1Overview of the Bank

Type:Private

BSE & NSE: Karnataka Bank,

Industry: Banking

Founded: 1924 (as The Karnataka Bank Limited)

Headquarters:

Karnataka Bank Ltd.,

Mahaveera Circle,

Kankanady,

Mangalore, India

Products:Loans, Credit Cards, Savings, Investment

vehicles

Revenue: USD

Total assets: Rs.31,693.01 crore

Website: www.karnatakabank.com


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3.2Background and Inception of the Bank

Karnataka Bank Ltd, a leading A Class scheduled commercial Bankin India,

was incorporated on Feb 18th 1924 with a registered office at Mangalore. The

Bank commenced its business on23rd May 1924 with an Initial Paid up

Capital of Rs.11, 580 contributed

by113shareholders.Sri.B.R.Vyasaraya

Achar was the first president of the

Bank. The Banks Memorandum ofAssociation in its Objective Clause

states that the Bank apart from

carrying on the general function

of Banking business, would set apartand appropriate from the annual net

profit towards the general, mental, moral and physical advancement of otherbeneficial purpose of the members of the Dravidian Brahmin community, Such

sums as may be deemed fit.

The first three branches of the Bank were at Mangalore Dongerkery, Madras

George, and Udupi Car Street. Sri Kalmadi Gopal Krishna had the distinguishion of becoming the first Branch Manager. At the end of the Banks first year of

operations the Banks deposits stood at Rs. 0.68Lakhs and advances were Rs.1.22 Lakhs. The Bank celebrated its Silver Jubilee in the year 1949 in its Silver

Jubilee year of operation the Bank earned a net profit of Rs. 0.75 Lakhs with

deposits of Rs.55.59 Lakhs and Advances of Rs. 39.39 lakhs.

Sri.K.S.N.Adiga became the chairman of the Bank on 23rd Nov 1958.

The First real recognition for the Mangalore based Bank came in the year 1959

with the Bank being elevated from C class to B Class. In the stride

of progress and expansion, the Bank got reinforced by the takeover of 3 banks

namely Shringeri Sharada Bank Ltd on 1st April1960.,Chitradurga Bank Ltd onDecember 30th 1964, and Bank of Karnataka Ltd on Dec 29th 1966.,. In the

year 1969 the Bank opened its 75th branch where its deposits crossed Rs. 10

Crore mark to reach Rs. 12.63 Crores, Advances were at Rs. 8.90 Crore and Net

profits were Rs. 3.05 Lakhs.

In year 1971 the Bank opened its first branch in the countrys financial capital.

The following year the Bank was elevated to A class by the Reserve Bank of

India. In its Golden Jubilee year of its operation the Banks total deposits were

Rs. 33.14 Crores and Advances were Rs.22.09 Crore with 146 branches and 126

employees. In 1977 Karnataka Bank Ltd., adopted the star symbol as its unique


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visual identity symbol. A product of Late Dr. Shivarama Karanth, it symbolizes

stability, discipline, harmony and confidence. The Staff Training College of the

Bank was started at Mangalore Dongerkery on Sept 27th 1977.

In 1977 the foreign exchange Business of the Bank was opened with a separatedepartment was established In Bangalore as central foreign exchange

department which was later shifted to Mumbai(1979). The Bank achieved the

target of Rs. 100 crores mark in deposits with the aggregate deposits being Rs.

104.24 crores as on 31-12-1979. In 1980 the Madras George Town Branch

celebrated its golden jubilee. In the diamond jubilee year of the Bank, thedeposits of the bank were Rs. 211.34 Crores and Advances was Rs. 122.22

crores respectively. In 1989 the Banking year was extended from 12 months to

15 months to end on 31st March. The Banks Mumbai Borivili branch was

declared as the first Model Branch of the Bank. In 1994-95 the first service

branch was opened At Mumbai. The first Industrial Finance Branch was also

opened at Bangalore on 20th March 1995.The first Agricultural Development

Branch of the Bank was opened on 1stApril 1995.

The Bank made it into the stock markets on October 1995 with a public issue of

Rs. 81 crores which was oversubscribed by about 2.5 times despite depressed

market condition During the year 2003, the Bank has taken up corporate agency

for marketing the various life policies of Met Life India Insurance Company

Ltd.it has also taken up corporate agency of Bajaj Allianz General InsuranceCo.Ltd for marketing general insurance products. The banks all round

excellence in the twin parameters of growth and stability has earned it rich

laurels in the form of P1+ rating for certificate of deposits from CRISIL.

3.3Nature of the Business Carried

In the words of Late Shri T.A.Pai Some people believe that Banking meansmoney lending and that a Banker is not but a glorified Money lender. But

Banking is not money-lending as money lender does not take the risk whereas

the Banker does. Bank is into pooling together the savings of the community

scattered all over and from the very same pool granting loans to the needy in the

society. Thus it acts as a link between the savers and the needy. Thus the two

main products of the Bank are Deposits and Loans.


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3.4History & Evolution


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Incorporatedin1924, Karnataka Bank is one of the oldest time testedprivate sector Banks.

Offers wide variety of corporate and retail banking products and servicesto over 7.2million customers.

Forayed into General Insurance business as a JV partner in UniversalSompo General Insurance Company Limited.

1,089 service outlets with 556 branches,4 Extension Counters and 529ATMs in 360 centers across India as on June30,2013.

Business Turnover of`78,000 crore as of August 2013.3.5India Presence


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3.6Vision, Mission, and Quality Policy

VisionWe believe in total quality at all levels. We are aiming at a total value package,

a one-stop shop for all your banking needs.Our motto is to serve you with high

standard professionalism with a personal

touch built on trust. After all, this is your

bank. your family bank. Across

INDIA

MissionThe Mission statement of any organization generally represents its long term

goals and strategies. Every organization

must have its own mission, which

describes present business scope of theorganization. The mission statement of

Karnataka Bank Ltd. is as follows. To

be a technology savvy, customer centricprogressive bank with national presence,

driven by the highest standards of

corporate governance and guided by sound ethical values.

Quality PolicyThe Quality policy of Karnataka Bank

Ltd is of providing Quick and Better

service and their by achieving CustomerSatisfaction.


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3.7Financial Performance


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3.8Shareholders Value


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3.9Awards

Best bank award for managing IT risks and Best bank award for useof IT for business innovation for 2012-13 among small bankscategory.

Karnataka Bank Ltd has won twoIDRBT Banking Technology

Excellence awards.

D Subba Rao, Governor, Reserve

Bank of India presented the

awards at a function held at

Institute for Development andResearch in Banking Technology,

Hyderabad.

Bank bags two IBA Awards during the current fiscal 2nd Runner-up under Best Financial Inclusion Initiative 2nd Runner-up under Best Risk Management and Facility

Initiative

Bank has won the Runner-up national award for the BEST BANKERFOR CUSTOMER FRIENDLINESS among the midsized Banks.

Bank has been awarded with Operational Excellence Award,instituted by NPCI [National Payment Corporation of India], in

recognition of its excellent performance in ATMs and switch

connected to NFS [National Financial Switch] ATM Network.

The rating symbol,A1+ indicates highest degree of safety fortimelypayment of principal and interest. CRISIL, Indias top credit

rating agency awarded the top P+ to the Banks certificate ofdeposit programme.


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3.10Recent Activities of KBL

The credit rating agency, ICRA ltd. (ICRA), one of the leading creditrating agencies of the country has accorded A1+ rating to the banks

certificate of deposit programme.

Karnataka Bank has declared dividend of 40% for the financial year2012-13 at the 89th Annual General Meeting held on July 06, 2013.

The Karnataka Bank is involved in Social activities like Blood donationcamp. Encourage social, cultural & educational activities. To protect the

interest of all the stakeholders of the Bank.

The Karnataka Bank has tied up with Times of Money to offer an internetbased online money transfer solution, Remit2 India, toNRIs on July2,2013.

The Karnataka Bank has entered into a MOU with Reliance Capital Ltd.For financing of MSMEs through co-financing arrangement, on July4,

2013.

The Karnataka Bank plans to open another 111 service outlets, including96 USBs, by the end of March 2014.

The Karnataka Bank has the economic survey of Indian banks hasaccorded the top rank to the bank among all time-tested Indian private

banks.

The Karnataka Bank is aimed at high growth with superior quality acrossassets & liabilities portfolio and products & services by Project Tejas.

The Karnataka Bank is providing banking services to rural unbankedareas through about 105 outlets, including 26 Ultra Small Branches

[USBs].

The bank has registered a jump of 12.87% in its net profit at Rs94.17crore for first quarter ended June 30, 2013 as compared to Rs83.43 crore

for the same quarter in the previous year. Total income of the bank has

increased by 21.76% at Rs1203.80 crore for FY14 as compared Rs988.66

crore for the corresponding quarter previous year.


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3.11Photo Gallery of KBL


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4. Product ServiceProfile


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4.1Introduction

At Karnataka Bank, They understand that all customers are different in unique

ways, which is why, regardless of the size of your business or your aspirations.

They treat everyone as individual and special. This means offering you choices,not only in relation to their products and services but also in the way you

interact with them. They understand the changes in your lifestyle recognize

these changes and support you with a high standard of professionalism and

service.

As a premier bank, they have developed comprehensive range of customized

products & services suitable for every kind of market, trade or perceived need -

Business or Personal. They include, borrowing facilities, deposits, providingoptimum returns on surplus funds or helping with overseas transactions.

They believe in total quality at all levels. They have deployed the most modern

information technology to deliver products & services for your benefit with an

aim to develop an effective long-term relationship. But most of all, Technology

is matched to your expectations of service, for today & for the future.

Throughout the years, they have focused on one task, one mission - To Give

You the Best in Services and In Products. Among other Banks, it was KarnatakaBank who first realized the importance of having a Centralized Banking system

and was among the first to deploy the Core Banking System in the year 2000.

These systems enabled us to store and process all the customers' accounts from

one single place - the Data Centre at Bangalore. To ensure that you have the

Best, They have deployed the State-Of-Art technology from the best players in

the Industry like Infosys, Sun and Wipro. These systems provide the highest

reliability thus enabling us to offer to you Non-Stop services of the highest

order.

They have taken a lead and implemented a Disaster Recovery Centre. This

center will replicate the Banks Centralized Banking system and all its data. This

center will also be the backup for the ATM operations. In the event of a natural

disaster at Bangalore, this center will immediately come into force and provide

full continuous service. Leaving nothing to chance. At Karnataka Bank,

Business never stops. They have ensured your business is protected by Non-

Stop Banking


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4.2Products Profile1.Savings Bank Accounts: -Karnataka Bank presents an array of Saving Bank

Products, ideally designed to suit the needs of various segments of the Society.

Their product suite include the following

a. KBL Vanitha- SB Account for Women.b. KBL Kishore- SB Account for the students between the age of 12 years

and 18 years.

c. KBL Tarun - SB Account with Any Branch Banking for the studentsbetween the age of 18 years and 25 years.

d. KBL Salary Privilege - SB Account for salaried Persons with theconvenience of Any Branch Banking.

e. SB GEN (General) - SB Account with added benefits and Any BranchBanking Facilities.

f.

SB Money Sapphire- A specially Designed SB Account with a Host ofFree Facilities.

g. SB Money Platinum - SB Account Scheme loaded with MaximumBenefits.

h. Insurance Linked Savings Bank Account - SB Account with Accident /Hospitalization Insurance Coverage at the bank's cost.

i. SB Sugama- SB Account with 'No Frills'.2. Current Accounts: -Karnataka Bank presents Power Packed KBL Current

Account with Five options to suit your business Needs. Their product suiteinclude the following

a. CA General d.CA Money Diamondb. CA Money Pearl e.CA Money Platinumc. CA Money Ruby


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3. Deposit Products:-Life is one big journey of discovery especially when

you're just starting out. In your personal finances, as in life, it is important to

make astute decisions when you face new challenges. And the bank can help

you get off to a good start. We aim to help you build on a strong foundation by

maximizing returns on your investments and increasing your assets. As their

privileged customer, you can make use of their customized products to take care

of your specific banking needs. Their basket of financial products include

a. Tax Planner: New tax saving deposit Schemes. The schemes providedual benefits of high returns and tax exemption under Section 80(C) ofthe Income Tax Act 1961.

b. Abhyudaya Cash Certificate:A growth oriented scheme with maximumreturns. Money invested multiplies after the specified period. The

minimum period of deposit is 6 months and the maximum period is 120

months. This is a re-investment plan and has a maturity value based oninterest compounded on quarterly basis.

c. Fixed Deposits: A high interest deposit scheme for specified periodsranging from 15 days to 10 years with interest payments made monthly,

quarterly, half-yearly or yearly as required by the depositor.

d. Soulabhya Deposit: A flexible 'twin gain' Deposit Scheme that allowswithdrawal of deposits in units of Rs.1,000/- each in case of need,

without affecting the interest payable on the remaining units. Minimum

amount of deposit is Rs.5,000/- and in multiples of Rs.1,000/- thereto.

e. Cumulative Deposit: A monthly deposit scheme whereby a fixedamount is to be contributed monthly for a minimum period of 6 months

and a maximum of 10 years. This is an ideal scheme to save a fixed

amount for future plans such as education, buying a home etc. The

maturity value of the investment is calculated based on the interestcumulated over the period of investment.

f. Insurance linked Savings Bank Deposit: Free accident insurancecoverage with your savings account! By maintaining a stipulated

minimum balance in SB account, you become entitled to free accident

insurance coverage of up to Rs.2 lakh and Rs.10,000/- towards re-

imbursement of hospitalization expenses arising out of accidents.


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g. Resident Foreign Currency (Domestic) Account: Foreign currency inUSD, GBP and Euros may be deposited. This account can be opened as a

current account only. The account carries no interest with it and there is

no minimum amount for opening the account. Foreign exchange acquired

in the form of currency notes, travellers cheques, gifts, honorariumreceived outside India, gifts received from relatives and earnings throughthe export of goods and services, can be credited to this account.

h. NRI products: Wide range of Deposit schemes for Non-ResidentIndians. It includes Non-Resident Rupee Account (NRE), Foreign

Currency Non- Resident (Bank) Scheme (FCNR[B]) and Non Resident(Ordinary) Account (NRO) with very attractive and competitive rates.

Resident Foreign Currency (RFC) (Domestic) Account for returning

Indians is also available.

i. Senior Citizens Deposit Scheme: Respecting our elders throughadditional interests for their savings and other benefits.

4. Loans:-A family man has different financial needs at different stages in his

life. By understanding your changing financial needs, They have developed

products that cater to your every step in life, be it luxury or providing quality

standard of life to your family. The products they offer to you are honest in

intent and quality in content. It offers you the individuality with respect to your

needs and to your earnings. And most of all, it comes with understanding youand your special individual needs. Their product suite include

a. KBL Vidyanidhi (Education Loan Scheme)b. KBL Easy ride ( For Two Wheelers)c. KBL Car finance (For New and Second Hand Cars)d. KBL Salaried Persons Loan (Scheme for Financing Salaried persons)e. K-Power (Personal Loans)f. KBL Insta Cash (For Consumption Purposes)g. KBL Apna Ghar (Home Loan)h. KBL Niveshan Scheme (Purchase of House site)i. Krishi card (Agriculture)


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5. Cards: -Karnataka Bank introduces a range of cards depending upon your

requirement. These cards gives you access to your account whenever you want,

wherever you are.

a. Money Plant Debit Cards:Money Plant International Debit Card allowsyou to purchase goods at Merchant Establishment and also gives freedomto withdraw cash from ATMs in India and abroad. This card gives you

the freedom of making the purchases without the hassle of paying in cash.

your purchase will be debited to your account instantly. You can use yourDebit card as a credit card with credit facility of maximum limit of Rs.

25000/- for 45 days under K Power Scheme.

Visa Debit Card Visa Gold Debit Card

b. KBL Gift Card: The KBL Gift Card has been specially designed tomake it easy for people to choose a gift for their loved ones. The card can

be used as an elegant way of gifting to your near and dear ones, who in

turn can use this card to shop, dine, party or to purchase online items of

their choice. It allows freedom of choice to the receiver. It can be used for

any occasion including Marriage, Birthday, Diwali, Holi, New Year, etc.

KBL Gift Card

c. KBL Travel Card:At Karnataka bank Ltd., our priority is to make yourleisure trips a hassle free experience. Hence we

bring you KBL Travel Card that offers you easy

Forex access. So while you travel abroad, our card

makes your trip convenient and free from Forex

hassles.

KBL Travel Card


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6. Working Capital Finance:-Fund Based credit facilities such as Cash Credit,

Overdraft, and Discounting & Purchasing of Bills etc. Export and Import

Finance. Non-fund Based credit facilities such as Letter of Credit, Bank

Guarantees (Performance / Financial) etc. Subject to loan policy of the bank and

SCC of RBI.

7. Term Loans:- Fund Based finance for capital expenditure / acquisition of

fixed assets towards setting up / capacity expansion of a business or industrial

unit. Non-fund Based finance in the form of Deferred Payment Guarantee

(DPG) for acquisition of fixed assets towards setting up of / capacity expansion

of a business or industrial unit Finance under Technology up gradation scheme.

Subject to loan policy of the bank and SCC of RBI.

8. Infrastructure Finance:- Financing for all kinds of infrastructure projects,

such as, Power Generation, Transmission & Distribution, Road constructions,

Construction of Bridges on the Road / Railway Lines, Air/ Sea Port-

development activities, Telecom, Water supply system, Urban Development etc.

Subject to loan policy of the bank and SCC of RBI.

9. Business Finance Products:-

a.

Retail trade - Helping your Retail Business Grow. Finance for everybusiness entrepreneur in the retail trade.

b. Finance to small scale Industry -Helping you to start your own smallindustry.

c. Project finance -Helping to start a larger Business. Either short or longterm you have flexible options.

d. Finance to Medium and Large scale Industries -Need based financefor acquiring assets and raw materials at attractive interest rates.

e. Export finance -Finance to help your export business. Timely assistanceto perform your export obligation.

f. Agriculture Finance -Finance for various Agriculture activities. Cometo the pioneers in many agro based credits.


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4.3Services Profile

1. Multi Branch Banking:- Multi Branch Banking facility is a value added

service to our customers taking advantage of "Core Banking Solution". It is a

'technology driven-anywhere banking' facility and 'at par' facilities for SavingsBank and Current account with structured schedule of services and charges.

Now the customer can access his account at all branches of the Bank.

The salient features of the scheme are as under:

1. The concept of 'anywhere' banking is extended to all domestic SB and

Current Accounts except NO Frills Accounts. Even SB-General and

Current-General accounts are eligible for MBB facility with Multicity

Cheques.

2. SB-General (SBGEN),SB-Money Sapphire, SB-Money Platinum, Current

A/c General (CAGEN),CA- Money Pearl, CA - Money Ruby, CA-

Money Diamond, CA-Money Platinum, are MBB accounts with

structured free services and Multicity Cheque facility with cheques

payable at par at all Branches.

Facilities available under MBB:

a. Payment Services: Anywhere Cash withdrawal for self cheques only Multicity Cheques Funds Transfer Funds Transfer through RTGS/NEFT

b. Collection Services: Anywhere Cash Deposit- By self only Collection of out station cheques Anywhere Deposit of cheques for collection

c. Other Facilities: Internet Banking Mobile Banking (SMS alerts) Demat Account 'Money Plant' Visa International Debit Card


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2. E-mail statements:- Karnataka Bank Ltd introduces Email Statements for all

its Savings (Resident & Non-Resident accounts) & Current account holders.

You can now receive your statements via email without any delays. You also

have the option to maintain the statement on email, print it or save it on a CD.

Essentially, you will receive the same information you would normally receive

by mail, but now at the click of a button. The features and benefits are as

follows

Features & Benefits:

Email Statements are FREE If you have a savings account/ current account you will get monthly

Email Statements.

Physical statements will be discontinued if you opt for Email Statements. Get information on our new products and mandatory information online.

3. Money Plant ATM:- In a major step towards ushering in convenience-

Banking for the Customers, Karnataka Bank has entered into ATM sharing

arrangement with NPCI-NF Sand . The NFS network with NPCI has 74

Member Banks and 75 sub member banks and covers around 1,18,660 ATMs .

All Debit & Money plant International Visa Debit Card holding customers of

Karnataka Bank can avail the facility of Withdrawal through Banks' Money

Plant ATMs and shared network ATMs. Additionally, the customers can also

avail the facility of "Mini Statement and Pin Change" in the NPCI-NFS network

ATMs.

Customers can avail Cash Withdrawal and Balance Inquiry facility in the

following ATMs. The Official logos of the networks shown above can be used

to identify the Member Bank ATMs. All The Member Banks' customers of both

networks can avail of acquirer services at all Karnataka Bank ATMs across the

country. The bank has NFS ATM sharing network with 150 banks and

67000plus ATMs across the country.


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4. Internet Banking:- Our Internet Banking facility Money Click lets you to

manage your finances in the comfort of your

home or your office as per your convenience.

Money Click is a Self-Service Channel, which is

available 24 hours a day and 365 days a year in

an absolutely simple, friendly but secured

environment. In Money Click, a mere touch of a button or click of a mouse

makes you accessible to a host of Banking Services, called Fingertip Banking.

You can carry out your banking transactions safely and with total

confidentiality by enjoying online banking without wasting your time or losing

your peace of mind.

a. Money Click - Retail: It offers different online services to ourretail/individual customers, like balance enquiry, requests for Chequebooks, recording stop-payment instructions, balance transfer instructions,

account opening and other forms of traditional banking services. This

also offers utility bill payment services to our valued customers for

payment of BSNL Mobile, Electricity, Water bills etc.

b. Money Click - Corporate: In addition to the above services, ourCorporate Customers can avail Trade Finance Facilities such as Import/Export Credit facilities, Requests for Forward Contracts, Inland Trade,

Bank Guarantee etc. Also Money click facilitates access control at

Corporate User level wherein various users at different hierarchy levels

have varying powers to operate a corporate account.

c. Money Click Cyber kids: Children between 12-18 years who arehaving Account with us are eligible for this special e-banking facility.

5. Mobile Banking:- It is to accomplish our endeavor to create additional

delivery channels to the customers, our Bank is launching yet another product

by name KBL Mobile where a host of Banking

services, within the specified limits, are made available

at the pre-registered Mobile Phone Handsets. The

Mobile Banking Services was launched on 25th

September 2012.


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Services offered to the customer

a. Enquiry Balance Enquiry Mini Statement Cheque Status IFSC Code Customer Care Details Deposit Account Enquiry Loan Account Enquiryb. Request Change Primary Account Stop Payment of Cheque (On line) Request Cheque Book Request Debit Card Request Debit Card PIN Request New Account Request Fixed Depositc. Fund Transfer Own Account - Fund transfer between the accounts. Within KBL- Fund transfer to any other account with Karnataka Bank Other Bank- Inter Bank Fund transfer through NEFT with IFS Code. Inter Bank Mobile Funds Transfer through NPCI using Mobile Money

Identifier (MMID) Person to person

Manage my MMID Regenerate MMID MMID transfers are enabled only for transfers between the personsd. Payee Create Payee within KBL Create Payee Other Bank Create Payee Immediate Payment Services (IMPS) View Payee


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e. KBL- ATM / Branch Locator ATM Locator Branch Locatorf. M-Commerce Airline Ticket booking Mobile Recharge M-Shopping DTH Top upg. Payments

Utility Bill Payments

6. Money Transfer:-

a. Real Time Gross Settlement (RTGS):RTGS is a payment system in which

both processing and final settlement of fund transfer instructions take place on

real time basis. It is a gross settlement system where fund-transfers are settled

individually, i.e. without netting debits against credits. RTGS effects final

settlement continuously and the settlements are immediate, final andirrevocable. Each Bank branch participating in the RTGS is identified by a

unique Indian Financial System Code (IFSC).

With the advancement of the Technological changes in the Banking industry the

RTGS introduction has become a boom in settling the interbank funds

instantaneously. The Customer can avail this facility and make instantaneous

transfer of funds to beneficiary`s account Karnataka Bank became a member of

Real Time Gross Settlement (RTGS) System from 16th July 2004 and has beensettling Inter-Bank transactions in Mumbai since then. Money Quick services

can be accessed by customers which uses RTGS service. This Money Quick

facility provides INTERBANK funds transfer. The minimum amount for

Interbank funds transfer facility for customers under MoneyQuick is fixed at Rs.

2,00,000 (Rupees Two Lakh only).Service Charges for outward customer

transactions - Rs.2 lakh to Rs.5 lakh is Rs.25/- and for Above Rs.5 lakh is

Rs.50/- per transaction plus service tax. Service Charges for Inward customer

transactions - FREE.


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b. Western Union Money Transfer (WUMT): Western Union Financial

Services International has a legacy of public trust built through more than 150

years of extra ordinary continuous service. This international money transfer

system facilitates quick, secure, reliable and convenient transfer of funds all

over the world.

Neither the sender nor the receiver has to have a Bank account with us and the

receiver pays no fee. The person who remits you the money will fill in a

prescribed form giving details of beneficiary and deposit the money along with

the requisite service charges (fee) at its agent abroad. The remitter will give one

Test Question and its answer for identification of beneficiary. The remitter then

gets a receipt with Money Transfer Control Number (MTCN) which he will

inform to you as the beneficiary of the transfer. The amount so deposited will beavailable to you within 10 seconds.

You walk into any of the branches of our Bank offering this facility in India, fill

in the form giving information available with you including MTCN, test

question etc., along with proof of identification like ration card / driving license

/ voter identity card / credit card etc. The paying branch will access the Western

Union System for authorization and make payment.

7. Insurance Service:-In conformity with their endeavor to become a financial

supermarket and to provide total financial solutions to their customers, they

have diversified into the marketing of life insurance products of PNB MetLife

India Insurance Co. Ltd., an affiliate of MetLife Inc, which is one of the leading

providers of insurance, annuities and employee benefit programs, serving 90

million customers across the world.They offer a wide range of solutions to help

you plan for your various financial needs like your children's education &

wedding, your retirement, protection of your housing loan repayments,

protection for your family etc.

They have forayed into General Insurance business by promoting a Joint

Venture company called Universal Sompo General Insurance Co. Ltd. and

entered into a Corporate Agency arrangement for distribution of their General

Insurance products through their branches. You can now get your assets insured

against fire, burglary and a host of other eventualities. You can also cover

yourself as well as your near and dear ones against the contingencies of

accidental death, hospitalization etc.


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4.4Various Rates of the Bank

KARNATAKA BANK LIMITED

Interest Rates at a Quick Glance

(As per format prescribed by RBI/2008-09/166 DBOD.No.Leg.BC.42 /09.07.005/2008-09 dated12-09-2008)

Rates at a Quick Glance as on 01-07-2013.

Deposit Accounts

Interest Rates on Term Deposits Domestic, NRE and FCNR

NatureRate of

Interest

(% p.a.)

Minimum Balance

Rural Semi Urban Urban Metropolitan1. Savings Bank A/c ( including NRE & NRO A/c)

a. With

cheque bookfacility Rs.1,000/-

b. Without

cheque bookfacility

Rs.200/-

2.No frillSB Account Rs.50/- Rs.100/- Rs.150/- Rs.200/-

Rate Of Interest of Savings Bank A/c(Including NRE& NRO A/c) 4.00 (w.e.f 10.07.2012)3. Term Deposits W. E. F. 16-08-2013

A.Domestic

General

Senior Citizens

(For FD and ACC only)

For Deposits

less than Rs. 1

crore

For Deposit of

Rs. 1 Crore and

above and upto

and inclusive of

Rs 5 Crore

For

Deposits of

above Rs. 5

crore

For Deposits up

to & inclusive

of Rs.2 crore

For

Deposits ofabove Rs. 2

crore upto& inclusive

of Rs. 5crore

ForDeposits

of aboveRs. 5crore

7 days to45 days

3.50 3.50 3.50 4.00 3.50 3.50

46 days to90 days

6.50 6.50 6.50 7.00 6.50 6.50

91 days to120 days

7.75 7.75 7.75 8.25 7.75 7.75

121 daysto 180days

8.25 8.25 8.25 8.75 8.25 8.25


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181 daysto 364days

8.258.25

8.25 8.75 8.25 8.25

1 year to 2years

9.25 9.25 9.00 9.75 9.25 9.00

Above 2years to 3

years

9.009.00

8.75 9.50 9.00 8.75

Above 3years to 5

years9.00

9.00- 9.50 9.00 -

Above 5

years to 10

years

8.758.75

-- 9.25 8.75 --

B. NRE Account W.E.F. 16.08.2013One year to 2 years 9.25

Above 2 years to 3 years 9.00Above 3 years to 5 years 9.00Above 5 years to 10 years 8.75

C. FCNR(B) Accounts W.E.F. 15.08.2013

Period USD GBP EUR CAD AUD JPY CHF SEK HKD SGD1 Year Only 2.67 2.86 2.47 3.37 4.48 2.41 2.24 3.28 2.51 2.48

Above 1 year but less than 2Years.

2.67 2.86 2.47 3.37 4.48 2.41 2.24 3.28 2.51 2.48

2 years and above but lessthan 3 Years. 2.48

2.71 2.56 3.55 4.65 2.28 2.20 3.45 2.65 2.71

3 Years and above but lessthan 4 years

4.78 4.87 4.74 5.78 6.89 4.32 4.34 5.67 4.93 5.00

4 years and above but lessthan 5 Yrs 5.17

5.11 4.96 6.03 7.19 4.38 4.52 5.89 5.31 5.41

5 years only 5.56 5.41 5.20 6.26 7.42 4.46 4.73 6.11 5.70 5.80


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Loans Rates

Loans Interest rates (W.E.F.10.11.2012)

Processing Charges

1. Housing Loan

(KBL-Apna Ghar ) Upto Rs.25Lakh

Above

25 LakhandUpto

Rs.100Lakh

AboveRs.100

LakhandUpto

Rs.200Lakh

Above

Rs.200Lakhupto

Rs.500Lakh

0.25% with a minimum ofRs 250.00

10.75 11.25 11.75 12.25

2. Personal Loansa. ConsumerDurable Loans BR+5.00%

0.25% with a minimum ofRs 250.00

b. Senior citizenLoan Scheme No such scheme

c. Personal LoanScheme BR+6.50%

0.50% with a minimum of

Rs 250.00

3. Vehicle Loan

a. Two wheelerloans (KBL-Easy

Ride)

Maximum Rs.1 lakh(NewVehicles Only)

0.25% with a minimum ofRs 250.00 + Up front asset

verification/inspectioncharges of Rs 250.00.13.75

b. Other vehicleLoan

(KBL MSE Scheme-Normally with

CGTMSE Cover)

New-Up toRs.5.00 lakh 11.75

0.25% with a minimum of

Rs 250.00 + Up front assetverification/inspectioncharges of Rs 1000.00.

New-AboveRs.5.00 lakhand up to Rs50.00 lakhs.

12.75

WithoutCGTMSE

OldVehicles(MaxRs 100 lakhs)

15.50

c. Cars Loans(KBL

Car Finance)

New Cars-Max

upto Rs 50

Lakh

11.250.25% with a minimum of

Rs 250.00 + Up front asset

verification/inspection

charges of Rs 1000.00.

For Old Cars

(Max Rs 20Lakh)

15.00

4. Educational

Loans (repayable in

5 to 7 years after

commencement of

repayment)

Up to Rs 4

Lakhs14.25

-NIL-Girls - up toRs. 4 lakhs

13.75

Above Rs. 4lakhs

14.75

Girls - aboveRs. 4 lakhs

14.25


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4.5Overveiw products & services Statistics

Deposits


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Advances & Loans


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Investments


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5.OrganizationStructure


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5.1OrganizationStructureofKarnatakaBa

nkLtd.


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5.2Hierarchical Structure

MD/CEO

General Manager

Deputy

Gen. Manager

Assistant

Gen. Manager

Manager


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5.3Functional Structure

5.4Reporting Structure

HO

Treasury &

AccountsHR & IR IT Credit Legal

Head office

Regional

office

Branches


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5.5Scalar Chain in a Branch

Manager

Asst. Branch Manager

Officer

Spl. Assistant

Clerk/Cashier

Sub-staff


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5.6Division of Work

Work is divided into various sections in the Head Office.Each regional office reports to the Head Office with respective sections.Each branch across various regions reports to the concerned regional

office.

Within a branch all report to the branch manager.

5.7Span of Control

Manager to associate: 1:5 in small branches or extension counter.OR

Manager to associate: 1:20 in large branches and corporate office.


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5.8Present Management Team


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6. Functional Departments


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6.1Introduction

A functional department is used to develop synergies for a number of entitiesthat are operating and help them implement their strategies. They also assist the

management committees in defining and implementing the groups strategy.They also monitor performance of various operating entities, business unit and

subsidiaries.

The structure of functional organizationThe inter-related functions are allotted to each department.An activity is allotted to each functional department.An activity allotted to each department can-not be allotted to another

department.Functional authority is confined to functional advice. It provides expert service at each functional department.Departmentation

Departmentation is the process of dividing the work of an organization

into departments or either into manageable units. Department areclassified on the basis of grouping of activities.

Basic purpose of DepartmentationTo make the size of each department unit manageable.To secure the advantage of specialization.To delegate responsibility.To facilitate administrative control.


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6.2Functional Department in Karnataka Bank Ltd

The various other departments that assist in the smooth functioning of the

banking activities are namely:-

Advance DepartmentTreasury Department Inspection and Audit DepartmentRecovery Department Investment DepartmentPlanning and Development DepartmentVigilance cellManagement Information System DepartmentLegal Department IT DepartmentCompany Secretariat

Departments

HR & IR Dept. AccountsDept.

Credit Dept.Risk Mgmt.

Dept.


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6.3Human Resource and Industrial Relation Department

The quality of Human resource in any organization will have an importanteffect on quality of services rendered by the organization. HR department

provides necessary and adequate training to the staff members to upgrade theirskill and knowledge. The HR and IR Department of Karnataka Bank Ltd. have

the authority to monitor all sorts of HR functions of the bank. It is leaded by the

DGM who is supported by 30 staff numbers including 2 chief managers.

Structure of HR & IR Department

1. List of activities being carried out by the HR department:Salaries across bank branches/officesRecruitment, promotions, transfersStaff provident FundPension and gratuityStaff quartersLeave position/man powerTravelling allowance sanctioningHospitalization and medical facilities.2. Activities being carried out by the IR departmentEnquiriesMatters related to complaintsLegal Matters

Deputy Gen.Manager

Chief Mgr. (HR)

Staff

Staff

Chief Mgr. (IR)

Staff

Staff


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6.4Accounts Department

The part of an organization that manages its money. The business functions of

the department typically include planning, organizing, auditing, accounting for

and controlling its company's finances. The department also usually producesthe company's financial statements.

Structure of Accounts Department

The accounts department is one of the most important departments in a bank, as

it helps to provide the financing and accounting information necessary to make

various decisions. However, this department has a role that encompasses anumber of duties which are given below:-

Book Keeping Profit & loss and Balance sheet

Update Managers Financing Considerations

Assistant Gen.

Manager

Chief Manager

Staff

Staff

Chief Manager

Staff

Staff

Deputy Gen.

Manager


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6.5Credit Department

Credit department is a department in a bank that evaluates the financial

condition of applicants and maintains a log of loan payments on currently

outstanding loans. Credit information is gathered on a confidential basis andstored for future reference. It also responds to requests by other lenders for

credit information on a particular borrower.

The main function of this department is lending of loans and advances to the

borrowers, recovery of non-performing assets, settling of dues, providingvarious loan schemes like housing loan scheme etc.

Credit (Policies & priority) Division: Formulating credit policy guidelines. Monitoring performance with regard to retail credit. All work relating to priority sector and rural development. Liaison with NABARD. Submission of related data to various outside agencies.Credit (Operations) Division: Processing of credit proposal coming under HO powers. Monitoring and control of performance credit.


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Structure of Credit Department


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6.6Risk Management Department

Effective risk management is essential for the success of the bank. The bank has

already formed committees of executives for identification, measurement,

monitoring and management of risks.

Structure of Risk Management Department

Deputy Gen. Manager

Chief Manager

Staff

Functions of the Department Developing policies and procedures for management of credit risk. Identify, Measure and Monitor the overall risk profile of the bank,

generally grouped credit, market and operation risks.

Finding the investment avenues with low risk and high returns. Ensuring the liquidity of the funds invested in the portfolio.


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6.7Other Department

Treasury DepartmentTreasury operations mainly comprises of surplus statutory liquidity ratios,

the non-statutory liquidity ratios investment.

Inspection and Audit DepartmentThe audit committee of Board of Directors is supervising the internal

audit and compliances functions. The system of regular inspection, shortterm inspection and credit inspection of branches forms part of system of

internal control.

Recovery DepartmentMain function of this department is to recover all dues. They make a list

of all the Non-performing assets and take follow up measures thereafter.

Investment DepartmentThis department deals with how the surplus amount has to be invested in

particular sectors or areas with regard to RBI regulations.

Advance DepartmentThe activities undertaken by the advance department are general advance,specialized advance, large advance, forex division, lease finance.

Planning and Development DepartmentMain function is to plan the development of the organization which

includes launching of new products, offering ATM services, deposits,insurance, mutual funds etc.

Vigilance CellThe functioning of this department is similar to that of the inspection

department. Inspection department looks into the general aspect while the

Vigilance department concentrates on the specific problem area.


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Management Information System DepartmentThe important function of this department is to collect information from

various branches for onward functioning of the bank.

Legal DepartmentIn the organization if there are any legal complications like filing a suit

etc., any advice required in relation to these matters can be obtained from

the legal section headed by the legal specialists.

IT DepartmentInformation technology follows the core banking systems. Managementof information technology is the main function of this department.

Company SecretariatThe Secretarial department heads the general meeting. The main function

of this department is issuing of shares, transfer of shares and conducting

annual meetings.


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SWOTAnalysis


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Karnataka Bank

Parent Company Karnataka Bank

Category Banking and Financial Services

Sector Banking and finance

Tagline/ Slogan Your family bank across India

USP Customer centric services

STP

Segment Individual and Industry banking

Target Group Urban Sector

Positioning Complete Banking solutions

SWOT Analysis

Strength

1. Over 470 branches across 20 states and 2 Union Territories

2. Emphasis on customer satisfaction

3. Have over 5844 employees and 4.84 million customers,

including farmers and artisans in villages and small towns

throughout the country

4. Quick Remit, a facility to make money transfer easy for Non-

Resident Indians living in Canada, USA and the UK

Weakness

1. Less reach across country in terms of ATMs, branches as

compared to bigger banks

2. Brand visibility is less due to lack of advertising

Opportunity

1. International banking in areas with good pockets of Indian

population

2. Rural banking and more services for the rural areas

Threats

1. Economic slowdown

2. Highly competitive environment

3. Stringent Banking Norms

Competition

Competitors

1. Indian bank

2. Union Bank of India

3. Federal bank

4. Dhanalakshmi Bank

5. Lakshmi vilas Bank

6. Karur Vysya Bank


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8. Findings


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8.1Findings

The Karnataka Bank has a very good customer relationship. The Bank gives high quality services to its customers. Karnataka Bank has introduced mobile banking and online trading

services.

Bank has 529 ATM and 556 Branches across the country. Bank uses new technologies in products and services to meet customer

needs and providing quick services.

Growing customers base for the bank. Deposits of the bank on 30thJune 2013 Rs.36,915crs. Advances of the bank on 30thJune 2013 Rs.25,244crs. Investment of the bank on 30thJune 2013 Rs.14,558crs. Bank has a widely spread distribution network in all southern region ofthe country. Customer friendly products and plans offered by the banks. Bank has developed its products in such way that it can meet different

needs customers.

Earnings per share on 30thJune 2013 were Rs.20 and Dividend per shareas on 31

st

march 2013 was 40%.


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9. Suggestions


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9.1Suggestions

The Karnataka Bank can come up with affordable and feasible policy foryounger and retired people.

The Karnataka Bank should reach across the country in terms of ATM,branches as compared to other private sectors banks.

The Karnataka Bank should concentrate for more operations in the northIndia.

The Karnataka Bank should concentrate on Customer awarenessprograms to reach across the country.

The Karnataka Bank should introduce products for lower income group. The Karnataka Bank should open an ATM and Branches in rural areas. The Karnataka Bank should concentrate on advertisement their products

and their convenience to reach across the country.

The Karnataka Bank should concentrate for more agriculture and smallscale industries purpose.

The Karnataka Bank should update new technologies to make customerlong term relationships and offer total quality service at all levels.

The Bank should be in par with competitors to have edge in the market.


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10. Learning Experience


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10.1Learning Experience

It was a great learning experience for me during the course of the internship.

The duration of one month doing the internship in an organization has taught

a lot of things which will be valuable and useful for me in the near future tocome. Here are some of the many things which I have learnt during the course

of this internship:

Practical knowledge of how day to day activities are carried out in a bank. Information and knowledge of Indian banking industry. About Karnataka bank its history and evolution over the years. About various products and services offered by Karnataka bank to its

customer and general public.

The organization structure and working of various functional departmentsof Karnataka bank.

Practical application of SWOT analysis to the bank. Preparation of a report and collection of data & information for the

report.

Interpretation on financial statements. Various banking rules and norms to be followed by a bank. Application of theoretical knowledge into practical aspects of business

and banking.


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11.Annexure


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11.1 Balance sheet of Karnataka Bank for 5yrs

Balance Sheet of Karnataka Bank ------------------- in Rs. Cr. -------------------Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mthsCapital and Liabilities:

Total Share Capital 188.35 188.29 188.20 133.99 121.58

Equity Share Capital 188.35 188.29 188.20 133.99 121.58

Share Application

Money

0.00 0.00 0.00 0.00 0.00

Preference Share

Capital

0.00 0.00 0.00 0.00 0.00

Reserves 2,668.73 2,409.92 2,240.89 1,698.76 1,445.44

Revaluation

Reserves

0.00 0.00 0.00 0.00 0.00

Net Worth 2,857.08 2,598.21 2,429.09 1,832.75 1,567.02

Deposits 36,056.22 31,608.32 27,336.45 23,730.65 20,333.29

Borrowings 1,579.76 1,147.07 1,086.33 341.64 3.97

Total Debt 37,635.98 32,755.39 28,422.78 24,072.29 20,337.26

Other Liabilities &

Provisions

1,033.32 967.96 841.14 1,130.11 953.52

Total Liabilities 41,526.38 36,321.56 31,693.01 27,035.15 22,857.80

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Assets:Cash & Balances

with RBI

1,717.96 1,704.75 1,939.81 1,743.10 1,364.98

Balance with Banks,

Money at Call

235.84 160.82 46.25 62.45 95.75

Advances 25,207.68 20,720.70 17,348.07 14,435.68 11,810.05

Investments 13,432.48 12,841.23 11,506.34 9,992.05 8,961.49

Gross Block 166.96 334.55 328.91 313.85 292.41

Accumulated

Depreciation

0.00 182.32 183.38 165.77 153.92

Net Block 166.96 152.23 145.53 148.08 138.49

Capital Work In

Progress

0.00 0.00 0.00 0.00 0.00

Other Assets 765.46 741.85 707.01 653.80 487.05

Total Assets 41,526.38 36,321.58 31,693.01 27,035.16 22,857.81

Contingent

Liabilities

5,618.16 9,624.53 8,278.58 9,445.63 9,598.35

Bills for collection 2,349.29 2,194.84 1,720.12 1,705.85 1,373.32

Book Value (Rs) 151.70 137.99 129.08 136.80 128.89


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Page 80

11.2 Profit & Loss Account of Karnataka Bank for 5yrs

Profit & Loss account of

Karnataka Bank ------------------- in Rs. Cr. -------------------


12 mths 12 mths 12 mths 12 mths 12 mths

Income

Interest Earned 3,764.29 3,112.88 2,370.85 2,043.42 1,917.40

Other Income 397.64 334.39 291.76 311.26 353.15

Total Income 4,161.93 3,447.27 2,662.61 2,354.68 2,270.55

Expenditure

Interest expended 2,860.56 2,368.87 1,758.36 1,707.79 1,443.83

Employee Cost 375.08 324.95 345.08 206.80 190.41

Selling and Admin

Expenses

0.00 220.82 195.61 184.05 132.41

Depreciation 24.03 21.91 22.99 22.23 19.84Miscellaneous Expenses 554.18 264.64 135.96 66.69 217.35

Preoperative Exp

Capitalized

0.00 0.00 0.00 0.00 0.00

Operating Expenses 666.03 651.93 630.18 474.61 393.50

Provisions &

Contingencies

287.26 180.39 69.46 5.16 166.51

Total Expenses 3,813.85 3,201.19 2,458.00 2,187.56 2,003.84


12 mths 12 mths 12 mths 12 mths 12 mthsNet Profit for the Year 348.08 246.07 204.61 167.12 266.71

Extra ordinary Items 0.00 0.00 0.00 0.00 0.00

Profit brought forward 0.03 0.03 0.02 0.03 0.10

Total 348.11 246.10 204.63 167.15 266.81

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 75.38 65.90 56.46 53.63 72.94

Corporate Dividend Tax 12.81 10.69 8.95 9.11 12.40

Per share data (annualized)

Earnings Per Share (Rs) 18.48 13.07 10.87 12.47 21.94

Equity Dividend (%) 40.00 35.00 30.00 40.00 60.00

Book Value (Rs) 151.70 137.99 129.08 136.80 128.89Appropriations

Transfer to Statutory

Reserves

197.14 129.57 102.55 101.38 174.43

Transfer to Other Reserves 62.69 39.91 36.65 3.01 7.00

Proposed

Dividend/Transfer to Govt

88.19 76.59 65.41 62.74 85.34

Balance c/f to Balance

Sheet

0.09 0.03 0.03 0.02 0.03

Total 348.11 246.10 204.64 167.15 266.80


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11.3 Results of Karnataka Bank for 5yrs

Yearly Results of Karnataka

Bank------------------- in Rs. Cr. -------------------

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09Interest Earned

(a) Int. /Disc. on Adv/Bills 2,817.72 2,373.80 1,707.65 1,388.98 1,390.93

(b) Income on Investment 938.43 736.33 642.22 633.46 513.83

(c) Int. on balances With

RBI

3.67 0.99 0.60 0.58 5.52

(d) Others 4.47 1.76 20.37 20.40 7.12

Other Income 397.64 334.39 291.76 311.26 353.15

EXPENDITURE

Interest Expended 2,860.56 2,368.87 1,758.36 1,707.79 1,443.83

Employees Cost 375.08 324.95 345.08 206.80 190.41

Other Expenses 290.96 243.24 203.87 179.25 156.10

Depreciation -- -- -- -- --

Operating Profit before

Provisions and

contingencies

635.33 510.21 355.29 260.84 480.21

Provisions And

Contingencies

171.15 221.62 120.35 71.08 80.50

Exceptional Items -- -- -- -- --

P/L Before Tax 464.18 288.59 234.94 189.76 399.71

Tax 116.10 42.52 30.33 22.64 133.01

P/L After Tax fromOrdinary Activities

348.08 246.07 204.61 167.12 266.70

Prior Year Adjustments -- -- -- -- --

Extra Ordinary Items -- -- -- -- --

Net Profit/(Loss) For the

Period

348.08 246.07 204.61 167.12 266.70

Equity Share Capital 188.35 188.29 188.20 133.99 121.58

Reserves Excluding

Revaluation Reserves

2,668.73 2,409.92 2,240.89 1,698.76 1,445.44

Equity Dividend Rate (%) -- -- -- -- --

ANALYTICAL RATIOS

a) % of Share by Govt. -- -- -- -- --

b) Capital Adequacy Ratio

- Basel -I

11.95 11.95 12.91 12.37 27.02

c) Capital Adequacy Ratio

- Basel -II

13.22 12.84 13.33 -- --

EPS Before Extra-Ordinary

Basic EPS 18.48 13.07 15.23 -- --

Diluted EPS 18.46 13.06 15.20 -- --

EPS After Extra Ordinary

Basic EPS 18.48 13.07 15.23 -- --

Diluted EPS 18.46 13.06 15.20 -- --NPA Ratios :


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Page 82

i) Gross NPA 638.86 684.72 702.17 -- --

ii) Net NPA 377.75 435.20 280.34 -- --

i) % of Gross NPA 2.51 3.27 3.97 -- --

ii) % of Net NPA 1.51 2.11 1.62 -- --

Return on Assets % 0.89 0.73 0.72 -- --

Public Share HoldingNo Of Shares (Crores) 18.83 18.83 18.82 13.40 12.16

Share Holding (%) 100.00 100.00 100.00 100.00 100.00

11.4 Cash Flow of Karnataka Bank for 5yrs

Cash Flow of Karnataka

Bank------------------- in Rs. Cr. -------------------

Mar

'13

Mar

'12

Mar

'11

Mar

'10

Mar

'09

12

mths

12

mths

12

mths

12

mths

12

mths

Net Profit Before Tax 465.30 287.78 235.45 193.05 406.15

Net Cash From Operating

Activities

102.74 -121.56 -589.39 301.74 -53.02

Net Cash (used in)/from

Investing Activities

-39.88 -27.59 -19.72 -31.47 -38.53

Net Cash (used in)/from

Financing Activities

25.37 28.66 789.63 74.54 -69.15

Net (decrease)/increase InCash and Cash Equivalents 88.23 -120.49 180.51 344.81 -160.70

Opening Cash & Cash

Equivalents

1865.57 1986.06 1805.55 1460.74 1621.43

Closing Cash & Cash

Equivalents

1953.80 1865.57 1986.06 1805.55 1460.74


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Page 83

11.5 Progress over a Decade


84/85


Page 84

12. Bibliography


85/85


12.1Books & Reports

Banking theory and practices- B.S.Raman Research Methodology- C.R.Kothari Marketing Research- Nargundkar Karnataka Banks 88th& 89th annual report

12.2Websites

www.karnatakabank.com www.moneycontrol.com www.wikipedia.com www.reportjunction.com

organization strcture

Documents