chapter -2: indian banking - shodhgangashodhganga.inflibnet.ac.in/bitstream/10603/49605/8/08_chapter...

Chapter -II: Indian Banking

22

Chapter - II

Indian Banking

2.1 A Sketch of the Indian Banking

Banking system came in existence since the early period of Babylon in the

traditional culture in Rome, and the advance system of banking started during the

renaissance era in Italy, where bankers bought and sold foreign currencies and also

took demand deposits. These deposits were given to the banker by the depositors

orally without anything in writing by sitting behind his table. The concept of cheques

was unknown during that period. Bankruptcy is being derived from the Italian ritual

of breaking the benchmark, which are unable to pay their debts. Prominent Italian

banker of that period was from the Medici family who ruled Florence, made loans

for merchants in Europe1.

2.2 Beginning of Banking Era in India

The Banks have been an essential foundation since the early phase of civilisation and

have been an integral part of the Indian culture, which people have failed to

understand. There was an era when the banking concept was missing and people

were more dependent and followed the law of the land. As the result of the

introduction of the concept of labour there came up a reason in the rise of use of

money, without which the exchange will not be possible or will result in complexity

of the exchange process. Therefore the exchange of money is not possible without

the banking institution2.

The modern or to say the present banking system is only two hundred year old but it

roots as a profession in the country like India are very old. The concept of loans were

discussed and understood by the people during that phase, and ‘rishis’ were

considered to be the people who were always true to their word and not the loner or

proprietors3. There are different orientations of ‘debt’ in the Vedas. There is also


23

evidence on this concept that banking businesses was undertaken in the prehistoric

period in India. B.K. Bhargava is a man of the early phase who was carrying the

banking activities in the modern era of India. They received deposits, provided loans,

personal security and made the process of granting loans simpler. The concept of

loan deeds was common during that phase, providing loans to the kings, act as

treasurer and managed currency issues of the nation4. Banking system is being

practised by the ‘Vaishyas’ in the traditional period and as the time passed the bonds

loosened and Brahmins and kshatriyas also entered in the battle. It was the period

when the bills of exchange came into existence and the control of it in the hands of

the king. Higher rate of interest was imposed and the people who were into such

activities were looked down by the society, various names were addressed to these

people like ‘mahajans’, ‘sahukars’ or ‘sresthis’ etc. Banking system evolved in India

way back when the entire world was on the way to find a standard of trade in the

form of currency5.

During the era of Mughal rule in India, the Indian history depicts that domestic and

foreign trade loans are given to them and these Mughal rulers assisted the economy

at the time of crises. ‘Hundis’ are a form of document mostly used as bill of

exchange. During the period the matter of metallic money also came in front which

gave immense opportunities to the people and bankers for developing their trade and

hiring officers, collectors, bankers and money exchangers etc. Many of these original

bankers were very famous in their field and had a strong political influence. These

bankers had such a strong influence that they were ahead of many bankers across the

globe and they were considered to be the ‘trusted keepers for deposits’ in the

country. They dealt with not only with the finances of the country but also fulfilled

the requirement of the royal treasury. Due to the following reasons original bankers

found their place in the economy and established themselves as institutions6. British

companies clubbed the banking and trading activities and become the conqueror of

the joint stock companies. They were shopkeepers, proprietors, cotton and flour and

saw mills owners etc. These houses got deposits from public and they gave loans to

them and concession on bills. It is this time when India entered into the field of

modern banking system. Apart from all these activities the local bankers also


24

conducted business with their personal resources. As a matter of fact, granting loans

on organised basis had been started with these business houses7.

2.3 Modern Banking - The Period after 1949

The year 1949 witnessed a new period for Indian banking system. Banking

legislation was formulated to keep a check and control the activities of the industrial

banks. Reserve Bank of India was given strong power and authority to control the

activities of the commercialised banks of India. As a result of this legislation there is

a decline in the number of scheduled and non scheduled banks.

Table: 2.3.1

Year Scheduled

Banks

Branches of

Scheduled Bank

Non – Scheduled

Banks

Branches of

Non –

Scheduled Bank

1949 94 2852 526 1589

1956 89 2953 333 1240

1961 82 4388 209 725

1967 24 216 74 6620

1969 73 8045 16 217

Source: Report of Bombay Banking Enquiry Committee, 1930.

From the above table, the number of scheduled banks has been declining during the

period from 1949 – 1967 and there is a rise in the number in the year 1969 as it is the

period of nationalisation and there is an increase in the number of branches of

scheduled banks till the year 1961 and then in 1967 there is a remarkable decline in

the number of branches of scheduled bank branches and in the year 1969 again there

is sudden rise in the number of branches. In the case of non – scheduled banks there

is a continuous decline in the number of banks till the year 1969 and in case of non -

scheduled branches there is a decline in number till the year 1961 and sudden rise in

1967 and a drastic fall in year 19698.


25

2.4 Banking Basics

Banking industry is one of the most vital parts of any individual, nation, business

houses whether large scale or small scale, corporate, entrepreneurs, or world to make

a proper functioning of day to day activities and complete well being of the

economy. In this industry a relationship between customers and financial

organisation is fostered on financial matters. With the help of these financial

institutions there can be an enhancement in the economic growth and it can act as a

channel between them. Bank provides a variety of options and facilities to the people

associated with them in form of accounts, loans, mortgages etc. As the time changes

and result of globalisation the commercial activities all across world has drastically

increased. With the increase in economic wealth and banking activities the industry

has adapted itself with a great pace and is providing new innovative banking services

and facilities. The motto of the modern banking system is to formulate new

strategies to cater the highly innovative market and face its challenges and deliver

financial backing to customers and the organisation9.

2.5 Concept: Bank

“Banking industry executed the business that means, accepting deposits in order

to lend and invest money of public and give then greater profits, returned on

command and withdrawal can be done through cheques, drafts etc.”

Many definitions have been given on banks by various authors. English law states

that, Banker is a person who is conducting the banking activities by staying in

premises for the investors, people, and organisations etc. Activities like opening

current account, handling cheques, depositing cheques, withdrawing cheques etc

come under its preview. Indian law states that banking industry is the one which

manages the businesses of the people or organisations by providing them financial

assistance by means of accepting the cheques, lending money, helps in investing the

money of the public, repaid if asked by the customers and also withdrawals can be

done through cheques and demand drafts9.

http://www.technofunc.com/index.php/domain-knowledge/banking-domain/item/definition-of-bank


26

In simpler term it can be explained as banks receive money as deposits, repaid when

asked for and earn a small portion of money as profits by loaning money. Banks fuel

up fiscal activities in market by trading with funds. It accumulates and organises the

funds of the people and make it available to the organisation for managing their

capital and reserves and for handling their expenditures. Banks give financial

assistance and services to the organisation in the form of commission and discounts

etc. The basic role of banks is related with funds i.e. financing, investing, depositing,

withdrawing of funds etc.

2.6 Categories of Banks

Banks are categorised into various forms, based on the type of clientele they are

dealing with and the type of products and services they are required to offer10

:

1. Retail Banks

2. Industrial banks/Commercial Banks

3. Cooperative banks

4. Investment Banks

5. Specialised banks

6. Central banks

Retail Banks

In retail banking the services are given to the individual customer. Services like

deposits, investment options, granting loans, opening of saving account and fixed

deposits are the regular features. Other services like deposit box, loans like

educational, personal, housing, car loans and certificate of deposits are also

additional features.


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Industrial Banks/Commercial Banks

The basic function of banks is to collect deposits from public and provide it to

people who are in want of it for the purpose of investing. Industrial/Commercial

banks are the banks which also provide the facilities of credit cards, debit cards,

account handling, granting secured and unsecured loans, deposits etc. Because of

deregulation industrial/commercial banks are hostile with the investments banks for

issues like market operations, underwriting, bonds dealing etc. Industrial banks act

as a financial organisation which helps in lifting of money from the market. Here

they claim on their deposited amount as and when required by them and it can be

redeemed right away on demand.

Two types of Industrial/Commercial Banks are there i.e. Public Sector and

Private Sector Banks.

Public Sector Banks

Public Sector Banks are the banks in which government has a major stake and

involvement in banking activities and their major concern is to fulfil the social

objectives rather than just profit generation.

Private Sector Banks

Private Sector Banks are the banks which are possessed, controlled and guarded

by private players and they function according to the market scenario.

Investment Banks

An Investment Bank is a financial association that supports people, companies and

administration in lifting up funds by countersigned or acting as the customer’s

representative for issuing of securities. In case of mergers & acquisitions these

investment banks can help the organisations in providing additional services like

market trading, foreign direct investment, foreign exchange, securities and


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commodities. These investment firms also act as consultative bodies who give

advice to the people for further investments and on transactions in which they are

already dealing with and also give advice on how to manage public assets.

Cooperative Banks

Cooperative Banks are associated with various cooperative societies and follow

various acts prepared by them. Their main role is to provide credit at low prices to

their associates. It is one of the most important resource for rural financing, rural

credit, micro financing, micro leasing and finance for agriculture in India.

Specialised Banks

Specialised Banks are the banks which deal into foreign activities i.e. foreign

exchange banks, foreign investments, export-import banks and fulfil the particular

needs of the customers. A specialised bank provides special economic relief to the

organisations and also supports important ventures and any other foreign investment

or trading.

Central Banks

Central Banks draw its history from the Bank of England. They give constant

financial and economic support to individuals and organisation from country to

country and have a major involvement in the economy of the country. Managing

policies related to foreign investments, interest rates, managing reserves, managing

reserves related to gold are some of the important functions which are being

followed by the bank as they regulate the activities of the entire banking industry.

These banks are having the monopoly in case of paper money and also have a right

to buy government amount outstanding and also lend money to the

commercial/industrial banks as the last remedy. Activities of all the industrial

/commercial banks are legalised and controlled by the Central bank. The central

bank of India is Reserve Bank of India is the central bank of India and the apex of

the banking industry in the country11

.


29

2.7 Nationalisation of Commercial/Industrial Banks

After independence India decided to make the society a united and to also

accomplish the goals collectively. It means they will form a society in which the

capital will be divided among all on the basis of equity, without making the nation

an authoritarian state and with a motto of achieving these goals through democratic

practices. For achieving this, a merged pattern of arrangement has been developed.

The public sector and the private sector are separated and asked to work independent

of one another. The public sector is solely owned and governed by the government

and the private sector is asked to undertake their activities following a proper system

i.e. regulations, licences, control and legislative rules, acts and policies. Public sector

organisations can grow and develop by the nationalisation of government institutions

and industries.

Bank is the keeper of the savings that are privately done and an influential apparatus

of providing credit to its customers. They make the resources of the country portable

by accommodating deposits and making it available to the industries and also use it

for the purpose of national development and conceding advances. The first Indian

bank which has been declared nationalised by combining the three smaller banks

was in the year 1955 and it was named as The Imperial Bank of India, later its

undertaking was occupied by The State Bank of India. In the case of scheduled

banks complaints have been raised that commercial banks are giving their advances

to large and medium sized organisation or big business house rather than the sectors

like agriculture, small scale industries which are the areas of major concerns. These

areas have more demands and they are not receiving their share. This is the main

reason behind the modifications in the banking regulation act12

.

Various means have been used in the year 1969 to modify the banking regulation

act, for the reason of imposing social control for the purpose of solving the faults in

the system and make sure that banks consider the demands and needs of the earlier

ignored and weaker segment of the society, instead of well established big business

houses and corporate. Although even after taking such measures and obligation on

social control the complaints still persist that the commercial banks are directing


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there advances to the large business houses and corporate in place of the needy small

scale firms, agriculture and exports. Development of public sector undertaking was

expected from this act, which was passed on July, 1969 and named as Banking

Companies Act, 1969. Under this act the central government has obtained the

undertaking of 14 huge commercial/industrial banks of India with deposits of Rs. 50

crore of each bank. The 14 banks are having 4,134 branches and deposits of Rs.

2,626. Details of all the 14 commercial banks are as follows13

:

Table: 2.7.1

Details of 14 Banks at the time of Nationalisation

(Rs. In Crore)

Bank Branches (No.) Deposits Advances

Central Bank of India 564 442 303

Bank of India 274 358 243

Punjab National Bank 570 358 257

Bank of Baroda 373 283 176

United Commercial

Bank 349 203 136

Canara Bank 325 148 109

United Bank of India 175 147 107

Dena Bank 234 125 76

Union Bank of India 241 115 74

Allahabad Bank 153 114 82

Syndicate Bank 307 110 90

Indian Bank 218 79 60

Bank of Maharashtra 153 78 55

Indian Overseas Bank 198 67 45

Total 4134 2626 1813

Source: Personal Website of R. Kannan Learning Circle - Banking Theory & Practices History &

Evolution of Indian Banking System


31

One of the most crucial landmarks in Indian banking history is the nationalisation of

these above listed 14 banks. Public sector banks have reached to such a mammoth

position in the banking history that they now get an authority to control 80 percent of

whole industrial banks, 83 percent of deposits and 84 percent of proceedings. The

situations of public sector banks during that period are follows14

:

Table: 2.7.2

Position of Public Sector Banks after Nationalisation

(Rs. In Crore)


Public Sector Banks 6.596 3,872 3,035

State Bank of India 1,596 948 966

SBI Associates 893 291 219

14 Nationalised Banks 4,134 2,633 1,850

Private Sector Banks 1.666 774 574

All Commercial Banks 8,262 4,646 3.609

Share of Public Sector Banks in

Total 79.8% 83.19% 84.19%

Source: Banking Frontiers

Nationalisation of the industrial banks was the era of revolution in Indian banking

history. It not only indicated the change in the history of banking system, but also

marked the commencement of a synchronised venture to utilise the various monetary

devices for the overall growth and financial viability of the country. Government

expects the nationalised banks to lay more focus on deprived sectors, to fulfil some

of the demands of the public sector deeds and to maintain equilibrium between all

the facets and sources in such a way that the less focused areas and the new ventures

will be preferred more than the big business concerns. These objectives can be

achieved if the backward areas and exporting sectors be charged will lower interest

rates in comparison to the well established business houses, i.e. by subsidising these

small business concerns. Another step can be taken in the form of credit guarantor


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payable by the large business concern to safeguard the people of the weaker section

and the risk involved in ventures can also visualised15

. With the purpose of

enhancing the overall banking system and economic development and to safeguard

the people, along with providing the welfare benefits to the people more effectively,

six banks from private sector banks has been nationalised on 13th

April, 1980 with

demand and liability of not less than Rs. 200 crores in India. These banks were

Oriental Bank of Commerce, Corporation Bank, Vijaya Bank, New Bank of India,

Andhra Bank, Punjab National Bank. The position of these banks at the time of

nationalisation was as follows16

:

Table: 2.7.3

Position of Six Banks at the time of Nationalisation

(Rs. In Crore)


Punjab National Bank 520 466 336

Andhra Bank 588 460 308

New Bank of India 402 391 237

Vijaya Bank 571 365 208

Oriental Bank of Commerce 301 216 152

Corporation Bank 304 212 134

Total 2,686 2,110 1,375

As the nationalisation of private sector banks took place therefore the increase in the

number of public sector banks rose to 28, apart from regional rural banks. Name of

those public sector nationalised banks were State Bank of India, seven State Bank of

India associated banks and twenty nationalised banks.


33

2.8 Entry of Fresh Private Sector Banks

Decades have been passed after the nationalisation of 14 Indian banks in the year

1969, there is no admission of private banks even after any legal restriction on the

entries of the private sector banks. Gradually with time public sector banks have

started increasing their branches all across India and are also putting focus on the

social requirements of the society, particularly the neglected and weaker sections

who are staying in rural areas. Public sector banks are having 91% out of the total

branches and constitute 86% of the entire banking industry of India. After realising

the value and significance of the public sector banking, a need of introducing

competition among them has been realised for the purpose of bringing efficiency and

increase in productivity of the banking structure. Now is a phase has been where

fresh private sector banks has been authorised to set up their businesses in the

banking so that competition among branches can be developed and a complete

market oriented system can be introduced.

Narasimham Committee suggested easing up the entry process in the fiscal system,

like the process of Reserve Bank of India setting up new private sector banks in the

existing banking sector. RBI wants the banks to obey to the rules related to start-up

capital and other requirements which have been stated under the laws and

regulations by them, it can be related with basic requirements, accounting and other

facets of business. Committee also suggested that a sense of equality must be

maintained between the public and private sector banks. A declaration has also been

given by the Government of India that nationalisation of banks will not take place

again in future. Finance Minister has ruled out the privatisation of these nationalised

banks and stated that the banking system must be open to more competition between

foreign banks and private banks17

.


34

2.9 Guidelines for Establishment of New Private Sector Banks by

Reserve Bank of India

In January 1993 Reserve Bank of India originate a set of guidelines for

establishment of new private sector banks. The guidelines for the same are as

follows:

(1) All these banks have to get themselves registered as a public company under

the Companies Act, 1956.

(2) Reserve Bank of India might provide licence to such banks under the

Banking Regulation Act, 1949. They can also include those banks under

Reserve Bank of India Act, 1934 in second schedule. Decisions taken by RBI

in this matter are all absolute and it is mandatory to follow them.

(3) Banks will be directed by the regulations stated under the banking regulation

act, with respect to the decisions related to paid-up capital, subscription,

authorisation etc. Minimum paid up capital will be 100 crores. The promoters

and developers of the banks will be determined by Reserve Bank of India and

shall follow other regulations also.

(4) Bank’s shares must be listed on stock exchange.

(5) Preference with respect to providing licence to those banks which divert their

focus of building headquarters from developed urban cities to less developed

areas.

(6) Shareholder’s voting rights should be administered by one percent out of total

voting rights mentioned under section 12 of Banking Regulation Act. Though

discharge from this upper limit could be agreed under Section 53 of the

Banking Regulation Act to various financial institutions.

(7) New banks are not allowed to have a director who is already the director of

some other bank or director of some organisation who are having the voting


35

rights of twenty percent of the total voting rights of any shareholder of banking

industry stated in Banking Regulation Act, 1949.

(8) Bank will be managed by the requirements of the Reserve Bank of India Act,

Banking Regulations Act, 1949 and other appropriate laws. All the

instructions, guidelines and directions provided by Reserve Bank of India are

applicable to all the banks. It must be ensured that the new banks must follow

all the directions given by Reserve Bank of India and others stated as per the

act, the new banks must concentrate on the interior banking system and its

activities.

(9) Banks must follow the regular laws relating to the accounting operations and

policies as stated by Reserve Bank of India. Laws related to capital sufficiency

and income appreciation must be relevant from the commencement.

(10) Banks must have to identify the targeted areas in the prioritised segments, to

make them applicants for the products and services of the bank.

(11) In the issues relating to credits given on exports, the new banks have to follow

all the instructions given by Reserve Bank of India which are relevant for the

existing banks.

(12) Only after three years of establishment, new banks are allowed to form

subsidiary or mutual funds. If the new bank holds the equity of other existing

banks or companies then it will be administrated by permanent employees of

the other banks.

(13) Banks have to mention their policies related to loans within the guidelines

given by Reserve Bank of India. It should also include the related laws of

precedence transactions.

(14) For satisfying the customers and to provide them good customer services,

office infrastructure and facilities must be used appropriately. Every bank must


36

have an independent grievance redressal cell where the customers can lodge

their complaints.

A new regulation has been passed by Reserve Bank of India that the new private

banks entrant has to have minimum capital of Rs 100 crores and with the

headquarters not in metropolitan cities17

.

Table: 2.9.1

Private Sector Banks Fresh Entrants

Name of Bank Registered Office Time of launch

UTI Bank Ltd. Ahmedabad April – 1994

Indus Ind. Bank Ltd. Pune April – 1994

ICICI Bank Ltd. Mumbai June – 1994

Bank of Punjab Ltd. Chandigarh August – 1994

Global Trust Bank Ltd. Secunderabad November – 1994

HDFC Bank Ltd. Mumbai January – 1995

Centurion Bank Ltd. Panajim Goa January – 1995

Times Bank Ltd. Faridabad August – 1995

IDBI Bank Ltd. Mumbai November – 1995

Source: Fortune, 27th

June, 1996

2.10 Indian Banking Industry preparing for the challenge

After the nationalisation of banks there is a tremendous growth of Indian banks both

in number of branches and geological extension which is incomparable in the world.

Incredible change has taken place with respect to customer service like development

of rural areas/sector, market development in interiors, more saving accounts, change

in credit flows dimensions etc18

.


37

Many measures have been adopted and regulations have been formulated by the

government for making the bank more effective and efficient. It also includes

reduction in bank outdoor limitation with respect to loans and improving supervision

along with every other thing to avoid complete damage. It includes:

Managing and validation of the structure of interest rates

Regulation and laws should be as per the international standards related to

income generation, assets arrangement and resource availability.

Making the supervision system of bank its strength.

Helping the new entrants while entering the industry19

.

To compete with the domestic and international players/competitors and to sustain in

the market, the bank has to formulate strategies and have competent, skilled,

specialist and committed people. To compete with the foreign banks while staying in

home country or in foreign countries the Indian banks need to follow the following:

Technological advancements, advanced payment systems, up-to-date information

to the customer regarding banking operations, product and services.

Change in work culture, good atmosphere and do away with of labour related

inflexibility which creates resistance.

Vigilant and encouraging management which can stand with the employees and

give directions on activities as and when required.

To compete with the changing environment new systems and infrastructure must

be installed.

To stay updated and develop expertise to manage the customer needs and

requirements on time.

Introduce new and developed products and services in advance to meet the

customer demands.


38

To re-organise the activities of branches in such a manner that the branch focuses

on more of specialised work. Such skills must be inculcated so that customer

problems can be foreseen and solved20

.

For growing further the banks must concentrate more on cost cutting, cutting

variable costs, charging the customers only for the actual services and reduction in

the fixed costs by mergers and acquisitions. In many banks of other countries the

system of cheque processing has been reallocated from banks to some local centres

to reduce costs. Focus of the banks should be on customers for rapid customer

service. For retaining the customer’s loyalty the banks need to solve all their

customer queries and fulfil their requirements. Apart from payment systems bank

must enlarge their range of products and facilities so that customers have more to

choose from.

The astonishing increase in the number of branches has facilitated the public sector

banks to organise money from the thrown away locations of the country and provide

funds to the poor sections of the society. The entry of banks into rural and semi rural

areas, it has helped in allocating funds in the economy and also put unorganised part

of the society under the governmental and RBI control21

.

Expansion in this area has resulted into exaggeration of loans in small scale

enterprises and agriculture etc. For the appropriate functioning of

industrial/commercial banks it is very necessary to have a proper channel or cycle

for funds rotation and its settlement. It can only be done with an effective follow-up

system.


39

Bank of Baroda (BOB)

2.11 Introduction

Bank of Baroda is a state owned Indian financial organisation, headquartered in

Vadodara, providing an array of products and services. It offers various services to

its clients and works on the various dimensions like asset management, credit cards,

investments etc. In the year 2012 it did a business of Rs 7,003 billion. It also has a

corporate headquarter in Mumbai.

By Forbes Global it has been ranked 715th based on the 2012 data. It has an asset of

gross total of Rs. 4 trillion. At present with 4,261 branches all across world and

2,500 ATMs, the bank was founded by H. H. Sir Sayajirao Gaekwad III, Maharaja

of Baroda in the year 1908. Bank of Baroda is being declared nationalised along with

other 13 commercial nationalised banks and on 19th

July, 1969. The declaration was

given by Government of India and has also been nominated for profit-making public

sector undertaking22

.


40

2.12 Details about the Bank

S. No. Provisions Particulars

1.

The details of the

bank’s functions

and duties

It is a Nationalised Bank formed under the Banking

Companies Act (Acquisition and Transfer of

Undertakings Act) 1970 with its headquarters at

Baroda and Corporate office at Mumbai23

.

2.

The authority

and job of

officers and

employees

All the officers from grade I to grade VI in the bank

working at different branches and levels have certain

discretionary powers which are revised time and

again by the management on the basis of requirement

and government/RBI guidelines. Based on what kind

of job people are performing authority/power is given

to them for achieving the organisational goals and

satisfying the customer needs. Sanctioning of a loan

depends on the discretion of the authority of that

particular branch.

3.

The method and

process of

decision making

including the

aspects of

supervision and

accountability

A well established system is followed by the Bank

for decision making process. Decision is taken at all

the level in the bank based on the category and

complexities of the job. Decisions are also taken by

the top level executives depending upon the

requirements. Applications for credits received and

advocated by the branch officers to the concerned

person. In case of applications regarding major loan

products the branches proceed them through a

centralised processing cell. A well organised

structure based on the guidelines of RBI is followed

by the bank. Every decision on credit is informed to

the senior authorities for proper controlling. Internal

inspection is done on the power and authority granted


41

to the officials.

4.

The norms or

regulations of

the Bank for

discharge of its

various

functions.

Interest rates on deposits are decided by the corporate

centres of the bank. Rates differ according to the

tenures as specified in the website. Details on loans

and advances procedure are mentioned on the

website. Loans are sanctioned after checking the

facts and details on each case and are the ultimate

discretion of the authority of the branch.

5.

The regulations,

laws, manuals

used by the

employees while

performing their

job.

Many documents like journals, manuals, schedules,

scheme of delegation of powers, circulars etc. are

used by the employees as a basis on which jobs are

performed by the bank employee. Hyperlinks are also

provided for the purpose of communicating the rules.

These are only for internal purpose and not issued to

the public.

6.

Statement of the

various

documents used

by the Bank or in

bank control.

Register of Shareholders and Records of the General

Meeting events are available for the investor’s

services at the head office at Vadadora. It is used for

the internal inspection of the shareholders during

weekdays; this procedure was set under the Bank of

Baroda Regulation Act, 1998. These documents can

only be used by the investors, customers, guarantors,

shareholders and stakeholders. It is private

information and cannot be used or issued to public.

7.

The particulars

of arrangements

for consultation

with, or

representation

by, the members

Questions can be raised against the policies made by

the bank in the Annual General Meeting which

directly relate with the policies of the bank.

Banks display the information related to its policies

on their website for information of public as well as

for shareholders. This will provide complete


42

of the public

with respect to

the formulation

and

implementation

of policy.

knowledge on the policy formulation and its

implementation.

8.

Details for

management,

committee and

other bodies

including two or

more persons,

being part of it

or for the

purpose of

advice and detail

of place where

these meetings

will be organised

and accessed to

the public

Sub Committees of the Board of the bank are as

follows: Management Committee, Audit Committee,

Risk Management Commission, Customer Service

Team, High Fraud Commission, Shareholders

Investors Committee, Grievances Redressal

Committee, Directors Commission and Navigation

Committee on Human Resource. These meetings are

not accessible by the public and they cannot

participate in it. Hence the minutes are not accessible

by them.

9.

Detailed

directory of

officials and

employees.

A detailed directory of employees and officials is

prepared along with their date of joining, place of

posting, gross salary etc. Details in this directory are

updated regularly.

10.

Budget

allocation

consisting of the

plans, projected

expenses and

No plans have been made on the projected

expenditure and payments and expenses of public

money. This provision is not valid in Bank of

Baroda.


43

information on

payments made.

11.

Methods of

distributing

subsidies

including the

details of amount

paid and the

information of

recipient of such

plans.

No such programmes are undertaken in the bank.

Various schemes on credits and advances have been

introduced by the bank, and the details on the same

have been mentioned on the website.

12.

Allowances and

authority granted

by the bank.

There is no method of allowance and authorisation

being granted by the bank and no provisions are

being made by the bank on the same.

13.

Information on

the facilities

given by the

bank on working

hours like

library, reading

room etc for the

public use.

The public has to consultant the banking officials if

any of such facilities are provided, information on the

same are not available in the banks website.

14.

Names,

designations and

other relevant

details of the

Public

Information

Officers

Regional Officer will be the Public Information

Officer for a particular region and will provide the

relevant information stated under the law to the

public. Principle Public Information Officers will be

the Zonal heads for all the regions that fall under that

particular zone including the general manager of the

bank23

.


44

2.13 Functions

Under the Section 3 of Sub section 5 of the Banking Act 1970, gives a compulsory

guideline that Bank of Baroda is a new bank and it should carry on the banking

activities according to the section 5 of clause b of the banking act 1949, and the bank

must engage itself into more than one banking business mentioned under section 6,

sub-section 1. Functions specified under section 6 of Banking Regulation Act, 1949

are as follows24

:

Apart from banking the banking business must be engaged in more than one

form of business activities like buying, selling, withdrawing, granting,

collecting, warrants, debentures, certificates, securities, circulars, issue of

credits, dealing in foreign currencies, holding, currency, investments,

purchasing of bonds, loans and advances, collection and transfer of money etc.

Performing the role of an agent for government organisation or other customers

carrying business activities of any kind like providing banking services, issuing

or giving receipts etc.

Contacting and pushing for private and public loans and issuing the same.

In managing and carrying activities like loans and advance, shares, debentures,

stocks and lending money for public and private sector organisations.

Handling transaction of every kind i.e. transaction of securities.

Handling possessions and selling the properties of the company which is the

part of the security for loans in satisfaction of its claim.

Develop an environment of unity and trust.

Undertaking the management of a zone and take the responsibility for

developing it as a trustee.


45

Establishing and supporting the organisations, institutions, associations etc.

and help them to benefit and provide convenience to the employees or

dependents, giving pension and payment against insurance, subscribing money

for charitable work or for any public or useful work.

The acquirement, creation, protection and modification of structure or facility

essential or suitable for the function of the company

Trading, management, developing, replacing, hiring, mortgaging, disposed off

or selling each or any particular possessions and privileges of the company.

Obtaining any part of business of any individual or a company, it can only be

done in case of those businesses which have been mentioned under the sub

sections.

Focus on the business which is legal for the banking company to involve in,

specified in the notification given by the official gazette and by the Central

Government24

.


46

2.14 Branches

Branch Network (24/4/2013)

Area No. of Branches

Metro 914

Urban 764

Semi-Urban 1162

Rural 1436

Total (Indian) 4276

Foreign (Overseas) 93

Total (Global) 4369

Controlling Offices

Zonal Offices 13

Regional Offices 56

Human Resources (01.04.2011)

Officers 15725

Clerks 15602

Sub - Staff 7986

On Contract 3

Total 39313

Source: www.bankofbaroda.com

http://www.bankofbaroda.com/


47

Bank Of Baroda – A Map of the branches in Jaipur


48

Bank Of Baroda – A Map of the branches in Ajmer


49

2.15 Organisational Structure (as on 31-03-2014)

Source: http://www.bankofbaroda.co.in/download/OrganizationStructure_2013.pdf


50

2.16 Employee Welfare Activities at Bank of Baroda (BoB)

Officer Provision Situation in Bank of Baroda

Some provisions have been made by Bank of Baroda for officers like Discipline and

Appeal Officers employee conduct, Bank of Baroda officers and employees

regulation act, 1976.

a. Scale of Pay – The salaries of the employees under the various scales are:

Scale I - Rs. 14500, Scale II - Rs. 19400, Scale III - Rs.25700, Scale IV -

Rs.30600, Scale V - Rs.36200, Scale VI - Rs.42000, Scale VII - Rs.46800.

b. Stagnation Officers are those who have moved from scale 1 to Scale 2

according to bank regulation act section 5(b), after reaching to the maximum

scale these officers will be eligible for four increments after every three years

completed in which first year hike will be Rs. 800 each and the remaining two

year hikes will be Rs. 900 each. Officers who moved from scale 2 to scale 3

according to regulation 5(b) after reaching the maximum of scale are eligible for

three stable increments of Rs. 900 each till the completion of three years of

service.

Dearness Allowance is paid on every increase or decrease of four points on

2836 points quarterly which is the average of consumer price index of working class

people in India, taken base as 0.15 percent of the pay.

House Rent Allowance is given to the employees based on the cities and living

cost i.e. class cities. Group A employees get 8.5 percent of their pay, employees

under group B categories like project area get 7.5 percent of the pay and the

remaining other employees in other locations are getting 6.5 percent of the pay.

City Compensatory Allowance is area specific like employees staying in the

state of Goa will get at 4 percent of basic pay i.e. a maximum of Rs. 540 per annum

and the employees staying in locations where the population is of more than five


51

lakhs and the places like state capitals will differ. eg. Employees in Chandigarh are

getting a city compensatory allowance of three percent of basic pay i.e. maximum of

Rs 375 per annum.

Fixed Personal Pay (FPP) from November 2007 the fixed personal pay and

house rent allowance has been fixed on a particular rate which will be same

throughout the entire period of an employee’s service. Depending upon the scale of

employees/officers, the increment rates will be decided. Fixed personal pay will be

provided only to the employees who are receiving accommodation from the bank.

Scale increment and dearness allowance will sum up into fixed personal pay as the

scale of employees/officers increases so does the fixed personal pay.

Mid Academic year transfer allowance is payable at Rs 700 per month and

other conditions are applicable w.e.f.1st May, 2010.

Deputation Allowance is based on some dimensions and criteria and deputation

allowances were decided from 1st May, 2010. An employee/officer who is deputed

and gives his/her services outside the bank then in such case they are entitled to avail

this allowance at 7.75 percent of the basic pay with maximum of Rs. 2300 per

month. Otherwise if employee/officers are deputed within the organisation then they

are entitled to avail it on 4 percent of the basic pay with a maximum of Rs. 1200 per

month.

Hill and Fuel Allowance based on specific criteria’s fuel charges are given

which are as follows: - places with an elevation of 1000 meters and less than 1500

meters will get 2 percent of basic pay and maximum of Rs. 550 per month, places

with a height of 1500 meters and above till 3000 meters will get allowances of 2.5

percent and maximum of Rs. 680 per month and place will an altitude of above 3000

meters will receive the allowances of 5 percent and maximum of Rs. 1570 per

month.


52

Project Area Allowance is based on projects divided in groups. Projects

included in group A, its employee will get Rs. 290 per month and projects included

in group B, its employees will get Rs. 255 per month.

Split Duty Allowance Allowances for split duties are given to employees i.e. Rs

165 per month25

.

Provident Fund Employees who are included in the pension scheme will

contribute ten percent of the pay in provident fund and the employees who are

covered under contributing provident fund and did not opt for pension scheme will

be available under joint note of April, 2010 and will be a part of contributory

provident fund. The Provident Fund facility is not given to the employees/officers,

who have joined the bank after 1st April, 2010. These officers will be a part of

defined provident fund schemes and they have to contribute ten percent of their basic

pay and dearness allowances. This scheme is governed by central government.

Pension All the employees/officers who have joined Bank of Baroda before 1st

April, 2010 and who have not entitled to pension schemes before and did not utilise

their option for pension scheme as according to Bank Employee’s Pension

Regulation Act, 1995 – 1996 are covered. The conditions of Bank Employee’s

Pension Regulation Act, 1995 – 1996, will not be applicable to the employees who

joined the bank after 1st April, 2010 which is governed by Central Government. The

employees/officers who died in service or retired during 1998 – 2002 will be re-fixed

as mentioned under clause 5 of 1999. No outstanding amount of pension and

converted amount of pension will be paid on report of such re-fixing of pension26

.

Non-Refundable Withdrawals from Provident Fund All the permanent

employees of the bank who are the member of provident fund and who have

completed ten years of service and have no disciplinary action or negative coercive

action against them are entitled for Non-Refundable withdrawals from provident

fund. Funds like the expenses for marriage of children – six month salary and

maximum fifty percent of member’s own contribution in provident fund or it can


53

also be said as voluntary provident fund are available to them. To fulfil the

requirements of education expenses for dependent children - calculated charges of

fifty percent education from members own expenses and provident funds whichever

is less can be used.

Medical Aid facility has been in action from 1st November 2007 –

employees/officers of Scales 1, 2, 3 who are getting Rs. 5100 per annum and

employees/officers of scale 4, 5, 6 who are getting Rs. 6320 per annum.

Medical Aid for Employees of 45 years and above.

Employees who are permanent and of the age forty-five or above are can avail

medical aid once in 2 years at mentioned centres, amount payable for medical check-

up is Rs. 1000. In some cities Bank of Baroda has tie-ups with Religare.

Housing Accommodation On lease basis housing accommodation are given to

the employees as specified under the manual and Bank of Baroda Regulation Act.

Accommodation charges are given to the employees/officers according to the cities,

scale of employees, city class, areas etc. Bank gives a maximum of six month

payment as rent to employees/officers which are refundable to landowner27

.

Reimbursement of Club membership fees Some amount of membership

funds can be reimbursed by the employees, officers, staffs etc. All officers can

reimburse up to Rs. 3000. Branch manager according to the kind of branch can get

reimbursed like for very large branch Rs. 2700, Large Branches Rs. 2400, Normal

Branch Rs. 2100, Medium Branch Rs. 1800 and Small Branches Rs. 1500.

Reimbursement charges are different for different scale employees/officers like

Scale 1 – 1200, Scale 2 – 1500, Scale 3 – 1800, Scale 4 – 2100, Scale 5 – 2400,

Scale 6 – 3000.

Reimbursement of Conveyance Expenses Each officer can get reimbursed

the conveyance expenses as per their actual expenses which they have made and

claim under their monthly income as specified under the regulation. Claim can be


54

made within three months from the due date of the claim, the expenses and limit of

officers and employees will be calculated on the basis of the petrol rates on the last

day of the month.

Travelling Expenses for Travel in Own Vehicle for Official Duty

Travelling expenses will be provided to the officials who use their own conveyance

for official work and can get reimbursed for the expenses, if any official wants to

receive travelling expenses they have to shift their vehicle on road for official duty

for receiving leave travelling concession. Charges for four wheelers Rs. 9.00 per km,

Motorcycle and Scooter Rs. 4.50 per km, Mopeds Rs. 3.00 per km. Prior permission

must be taken before using own personal vehicle.

Discomfort Allowance Employees/Officers who are working for 8 am – 8 pm

and are working in different branches on daily basis are entitled to receive

discomfort allowances which will be given according to the stipulated guidelines of

the bank.

House Maintenance Allowance Officers who are availing the facility of house

on lease by the bank are entitled to receive these house maintenance allowances. The

House maintenance allowance for scale 1 officers will be Rs. 500 per month, scale 2

officers will be Rs. 600 per month and scale 3 office will be Rs. 700 per month. The

officers who have acquired house under Bank’s scheme can also avail House

Maintenance Facility which will be as follows: scale 1 officers will be Rs. 300 per

month, scale 2 officers will be Rs. 400 per month and scale 3 office will be Rs. 500

per month. And officers who are staying in their own houses Scale I - Rs. 200, Scale

II – Rs. 300, Scale III – Rs. 300, Scale IV – Rs. 400, Scale V & Scale VI –Rs. 500,

Scale VII – Rs. 60028

.

Compensation on Transfer Officers are entitled to receive lump sum amount

during their transfers. Expenses like packaging, travelling, insurance, transportation

etc. Junior and middle management staff will receive Rs. 15000 while senior and top

management staff will receive Rs. 20000.


55

Mode of Travel and Expenses on Travel refers to those provisions which

are followed by the bank if an officer travels for duty: Officers under JMG category

will travel in AC second tier by train and if by air it will be economy class. Officers

under MMG category are required to travel in AC second tier by train and if by air in

economy class, if distance is of more than 1000 km. Officer in senior management

are asked to travel in AC first class by train and economy class by air. And the

remaining officers are asked to travel on their own or by taxi or any other mode of

travelling whichever is provided by the bank.

Leave Travel Concession After every four years of service the

employees/officers are eligible for leave travel concession to his/her hometown once

in every two years. In other case they can travel to their hometown in one half and in

second half any other place in India. The segment on which the officers will be

entitled to avail the leave travel concession would be same as officers entitled to

these facilities in normal transfer case and other conditions subject to leave travel

concession26

.

Festival Advance to Officers Employees/Officers will get the festive advance

up to one month or maximum of Rs. 30000 in a period of one year.

Various Staff Loans Various smaller loans to staff are also given by the bank

like staff housing loan and clean overdraft loans for staff.

Availability of Loans from Outside Sources It is compulsory for the

employees/officers to take prior permission from the bank officials before getting

any loans from outside sources.

Preferential Interest Rates on Deposits One percent additional interest have

been provided on the ruling rate of interest in case of deposits, savings etc by the

name of individuals, officers, dependents of the family etc.

Online Promotion Test Bank has counselled its staff to learn computers and

also plans to conduct online test for bank staff for promotional procedures26

.


56

Silver Salver Scheme On completing twenty five years of service in Bank of

Baroda this service can be availed by the employees/officers on the next Foundation

day with an amount of Rs. 2500.

Maternity Leave This leave will be granted to the female officers/employees for

a period of six month not exceeding more than that and for the period of twelve

month in the entire period of her service, leaves will also be given in case of

abortion, miscarriage etc. and leaves are also granted in case of hysterectomy for a

period of forty five days to the maximum.

Compensatory Leave In case of any requirement of an employee/officer who is

working extra then he/she will be entitled for compensatory leave provided by the

executive.

Promotion Policy Promotions are eligible both through normal channel and fast

track channel; promotion for higher scale employees has been reduced to seven years

in case of normal channel of promotion and in case of fast track channel of

promotion it has been reduced to four years. It is one of the fastest channels of

promotion of officers in the entire banking history. Selection of candidates for fast

track promotion channel will be based only on performances and criteria will be 80%

performance rating in each of the last three year ratings.

Selection Process Assessment and interviews are not kept in case of selection for

Scale 1 and 2 employees/officers. Written test procedure is used for Scale 3 and 4

employees/officers. Different factors under which the promotions will be granted to

the candidates have been kept. Transparency is maintained in case of written marks

as after the test the marks have been declared in front of all the officers.

Assets Liability Return Details of every asset and liability are to be submitted

every year in March and this is mandatory for all the officers.


57

Gratuity is paid according to the stipulated guidelines in the act of Parliament;

under the section 4(3) of the Payment of Gratuity Act, 1972 and it have been raised

from Rs. three lakhs fifty thousand to Rs. ten lakhs from May. 2010.

Encashment of Opportunity Leave on Retirement Officers who retire

and expire during the period of their service are eligible(dependants in the case of

death) to get the total sum of their salary of the period not exceeding more than 240

days, and they also get accumulated credits and benefits and use it on the day of

retirement or death.

Additional Retirement Benefits Officer’s who was in Bank and given their

service till 1st July, 1979 and now on retirement/voluntary retirement process will

receive six months of salary as extra added retirement benefit if they have given

twenty five years of service to the bank.

Pre-Mature Retirement of Officers benefit is for those officers who go for

premature retirement. It can be done only if an employee completes fifty five years

of age and thirty years of their service whichever is earlier.

Staff Welfare facilities are provided by the bank to the employees under staff

welfare fund like holiday homes, scholarship to the employee’s children, and

assistance to handicapped, financial help to the family members of the deceased

employee, incentives to the employees, canteen facilities, financial support to the

people who have some loss of pay, mementos to retired employees, support in

purchasing artificial limbs for the handicapped, health check-up for employees above

45 years of age etc.

Baroda Sujhav – Staff Suggestion Scheme Employees of Bank of Baroda

have an open platform to give their suggestions directly to the Chief Manager

through mails, letters or direct face to face conversations28

.

Para Marsh - Personal Counselling Centre Counselling centres have been

set up by Bank of Baroda in Mumbai for providing psychological assistance to the


58

employees to relieve them from problems, discomfort and other issues that they are

facing on day to day life.

Human Resource Network for Employee Services is set up to establish a

strong human resource web based system and to add value to the banking system i.e.

Human Resource Management System. HRMS have been installed and implemented

for the bank as well as the employees. This is done to improve the overall quality of

the human resource practices in the bank and make it tech based. This system

involves oracle modules, payroll modules and oracle learning management modules

which involves I-Learning for the employees28

.

Oracle HR module includes Human Resource Stock, Human Resource

Planning, Human Resource Recruitment, Human Resource Selection, Human

Resource Promotions, Transfer – Mobility, Industrial Relation, Assets & Liability

Details, Career Planning, Career Development, Human Resource Management

Information System, System Control Tools & Human Resource Management

Audit27

.

Fluous Payroll Module includes HR Pay-Roll, Leave Management, Travel

Management, Medical Schemes, Staff Welfare Schemes, Employee Loan and

Terminal Benefits.

Transfer Policy is for those officers who are considered for transfers and

includes all Zonal transfers, Pan India Transfers, Inter and Intra Transfers, Provision

Transfers and Request Transfers, Retention of accommodation from the previous

officer/employee, Help Line and Authority.

New Employee Performance Management System (EPMS) and Shift

system have been started for employee performance review system. Under this new

system each employee is responsible for their own performance, hence it is their

responsibility to plan and conduct their performances which will help them to

improve on continuous basis.


59

Policy for Overseas Posting is a facility that if bank wants to send its officer

for an overseas posting then a proactive approach should be followed in which the

need of the future requirements must be ascertain and a pool of officers must be

maintained and trained, it must not only be the substitute mission. For fulfilling the

requirement for this criteria the age, qualification and work experience must be

considered.

HR Resourcing Policy gives the details on the process, criteria, procedures,

systems and methods to be used for recruitment.

External Resourcing includes new recruitments – probationary employees, new

recruitments with experience – Specialist positions both for officers and executives,

Campus Placement Recruitment – Officers, Recruitment based on contracts –

officers and executives etc.

Internal Resourcing Providing opportunity to the internal employees/officers to

participate in the recruitment programmes and get higher scale. Some major changes

have been made in terms of employment to recruit employees under this category.

Probationary period for the entire selected candidate will be reduced to one year

from two year and the new employees who have been hired for the higher scale

will be put on a probationary period of six month.

Localised Recruitment employees will be selected as and when the bank plans to

expand and accordingly the localised hiring will be done.

Recruitment should be done for probationary employee/officer to fulfil the

requirement of officers for a specific area/zone.

Recruitment in officer’s segment will be given a choice to join either on scales or

on the CTC packages.


60

Schemes Managed by Association

Employees Scheme of Contribution of Rupees Ten (ESCORT) These

schemes have been undertaken after 1st January 1995 and this scheme has been

started for a noble cause. In this scheme every employee and officer will contribute

Rs. 10 and this amount is given to any employee or officer (the family of the

deceased) who dies during their service in the organisation. Members can participate

in the programme/scheme by giving an application to the authority for the deduction

from the salary. Under this scheme the bank is able to provide Rs. 1, 25,000 to the

families of the deceased employees26

.

All India Bank of Baroda Officers Welfare Fund (AIBOBOWF) of

the Bank of Baroda Association had launched welfare fund program in the year 1986

with the motive of improving the welfare of the employees, officers and their

families and the people who join this association start with a single membership of

Rs. 1000, which is named as ‘All India Bank of Baroda Officer’s Welfare Fund’.

This association provides the following assistance:

Financial assistance of Rs. 20000 to the families of the deceased employees

while in service.

Awards given to children of the employees who secure high percentages in 10th

,

12th

, Graduation and Post - Graduation etc.

Association is also planning to increase the range of activities for members who

are sufferers of natural disasters etc26

.


61

ICICI (Industrial Credit and Investment Corporation of India)

2.17 Introduction

ICICI Bank is an Indian financial provider with its head office in Mumbai. It is

India’s second leading bank in terms of assets acquired in India and third biggest in

terms of market capitalisation. It gives a broad scope of a variety products and

services to the retailers, customers, individuals and various other channels and

subsidiaries, venture capital and property management. ICICI Bank has a network of

3,000 and above branches all across the country with 10,021 ATM’s in India and

with a presence across nineteen countries. Subsidiaries of ICICI Bank exist in UK,

Russia, Canada, Singapore, US, Hong Kong, Sri Lanka, Dubai, UAE, Thailand,

Malaysia, China, Indonesia, Bangladesh and South Africa. ICICI Bank is among the

fourth biggest bank after State Bank of India, Punjab National Bank and Canara

Bank28

.

In March, 2013 according to Cobra magazine footage, in an operation named as Red

Spider it showed that the high rank officials of ICICI Bank agreed to turn black

money into white, which is illegal and an offence according to the Money

Laundering Control Act, 2002. The Government of India and Reserve Bank of India

put an order of enquiry against the officials involved in the case. On this case

eighteen employees has been suspended and the governor of RBI stated orders to

initiate actions against ICICI Bank in case of money laundering29

.

2.18 Corporate History

ICICI Bank - the home/parent company was formed in the year 1955 as a venture of

World Bank, public sector banks in India and insurance company to provide finances


62

to the Indian corporation. In the initial days the bank was known by its complete

name i.e. Industrial Credit and Investment Corporation of India Bank before the

bank give itself a curtailed name i.e. ICICI Bank. The Bank then merged with its

parent company and launched internet banking in the year 1998. The Bank’s

shareholding has been reduced to 46 percent after the offer made by public sector

unit in the year 1998 along with the equity offers in the form of deposits in the year

2000. In the year 2001 ICICI Bank took over Bank of Madura with all the stocks

inclusive and sold extra stocks to the investors in the year 2001-200230

.

Initially ICICI Bank only offered business development finances to the organisations

but after in the year 1990’s the bank started providing various products and services

to its customers either directly or through subsidiaries of ICICI Bank. Then in the

year 1999, ICICI Bank became the first Indian financial company to be listed on

NYSE with five millions American depositors along with a demand of issuing the

shares30

.

In the year 2001, the management of ICICI decided to merge two of it completely

owned venture i.e. ICICI Personal Financial Services Limited and ICICI Capital

Services Limited with the bank. Approval on the same has been received to the

shareholders of ICICI by high court of Gujarat in 2002, the high court of Mumbai

and Reserve Bank of India in April 2002. The rumours spread in the year 2008 of the

financial crisis of the ICICI Bank. Customers visited ICICI ATMs after knowing the

news of the weakening financial position of the bank. A certificate was issued by

RBI on strong financial condition of the bank to reduce the impact of the rumour.

ICICI Bank is the second largest Indian financial bank, with a total asset of 93

billion dollars and its profit after tax is 1,271 million dollars at the end of financial

year 2012. The Bank has 3100 branches and 11,000 ATMs all across country with its

existence is in nineteen countries. The Bank provides a wide variety of products and

services through an effective systematic channel in the fields of life insurance,

venture capital, wealth management, property management, investment banking

etc31

.


63

2.19 Mergers/Acquisitions

ICICI Bank has acquired many establishments which are as follows:

1996: ICICI Bank acquired SCICI Ltd.

1997: ITC finances, it is a non-banking financial institution. The company is

engaged in leasing and buying operations. This company have been established

in the year 1986, with eight branches, twenty six outlets and more than seven

hundred agents.

1998: Anagram finance ltd. with a network of fifty branches in Rajasthan,

Maharashtra and Gujarat. The company deals with finance on cars and trucks and

has more than 2, 50,000 depositors.

2001: Bank of Madura.

2002: Grind lays Bank

2005: Russian Bank i.e. Investitsionno - Kreditny Bank

2007: Sangli Bank, it is a private owned bank having its head office in

Maharashtra.

2010: Bank of Rajasthan32

.

2.20 Strategic Business Collaboration of ICICI Group

ICICI Bank Sales Academy in Collaboration with ITM University

To pursue a good career in ICICI Bank – India’s biggest private sector bank, and to

get precious certificate in retail banking management ICICI Bank has in

collaboration with the ITM institute organised a in retail banking. This course is for

the students who want to pursue their career in retail banking sector. The programme


64

structure is being designed by the bank in such a manner to brush up candidates to

look upon the sales task of the bank33

.

ICICI Bank and UK Trade & Investment Collaborate

ICICI Bank has entered into a tie-up with UK based trade and investment firms, this

tie-up have been initiated to facilitate the Indian organisations to explore openings in

UK. The motivation behind this joint venture is to give training and investment

assistance for Indian organisations, which want to enhance their business in the UK.

It is a government organisation which provides assistance to the UK companies to

develop in the international scenario by providing them suggestions and

understanding, the kind of product and service to be offered according to the

customer and businesses so to achieve success in international market. They also

provide an opportunity to bring high excellence investment in UK. On this event

Mrs. Chanda Kochhar, CEO and MD, ICICI Bank said that this collaboration will

provide assistance to the Indian industry to grow in UK. The bank is also

continuously progressing towards the ecological system of small and medium scale

enterprises34

.


65

2.21 Organisational Structure

Source:https://www.google.co.in/search?q=organisational+structure+of+icici+bank&newwindow=

1&tbm=isch&tbo=u&source=univ&sa=X&ei=eCrFU839FbOv7AbM9YCgDw&ved=0CBwQsAQ&

biw=1242&bih=585#facrc=_&imgdii=_&imgrc=l3hwlqbOfdA98M%253A%3BgoDglTupACZYmM

%3Bhttp%253A%252F%252Fwww.kanakadharaventures.com%252FAssets%252Fimages%252Fo

rganizationchart.gif%3Bhttp%253A%252F%252Fwww.kanakadharaventures.com%252Forganiza

tionchart.html%3B886%3B553


66

ICICI Bank – Jaipur Branches Map


67

ICICI Bank – Ajmer Branches Map


68

2.22 Employee Welfare Activities at Industrial Credit and

Investment Corporation of India (ICICI Bank) 35

Compensation of Fees for Children of the Staffs The purpose behind such

a compensation scheme is to give assistance to the staff members of the bank by

giving them some amount of incentives to support and encourage their children to go

for higher education. This scheme gives the facility of refund of the fee of two

dependent children of the staff and this scheme conveys the message that the family

is taken as one entity.

Relief to the Families of Deceased Employees Under this scheme instant

relief in financial terms is provided to the families of the deceased employee. This

scheme minimises the time gap in provident fund and gratuity payment to the

families after the employee’s death.

Reimbursement of Additional Medical Expenses to

Employees/Dependent Under this scheme the objective is to repay the medical

expenses to the families and dependent of the employees. Expenses like home,

hospital etc. is sanctioned under the scheme.

Hospitalisation Scheme For Permanent and Part-Time Safai

Karmacharis Under this scheme of hospitalisation the financial support is given

to the permanent and part-time safai karamcharis and the expenses made by them are

reimbursed.

Schemes Related to Medical Assistance for Retired Employee:

Settlement of Medical Support to Retired Employees is a scheme

providing financial assistance to the employees and has been introduced in the bank

for reinforcing the relationship between the bank and the employees even after their


69

retirement. This will help the bank to get the support from the retired employees in

bank activities.

Reimbursement of Hospitalisation Expenses is a scheme wherein the bank

repays the hospital expenses incurred by the retired employee or its family. This

scheme can be affiliated to the employees who wish to join this scheme. For joining

this scheme employees have to register under SWS Medical Assistance Scheme for

retired employees.

Travel Homes at Mumbai, Chennai, Calcutta and New Delhi for

Staff Members and Their Family Members For the effective functioning

of staff, bank has started providing travel accommodation in New Delhi, Mumbai,

Kolkata and Chennai, both for the staff and their families/dependents who are

moving to different places for medical treatment. This scheme allotment is done for

the employees on first come first serve basis; a single list of this scheme allotment is

being prepared irrespective of employee categories.

Arrangement in Reputed Hospitals for Reservation of Beds/Credit

Welfare provisions for the employees and their family/dependent those who require

hospitalisation. Under this scheme tie-up is being made with reputed hospitals for

providing service to the employees.

Rewarding the children of the employees who score in exams

meritoriously This scheme is to encourage, enhance and motivate the spirit of

employee’s children and to inspire them to do well further in the field of higher

studies.

Holiday Homes is the provision of holiday homes for leisure, rest and pastime for

the employees. Apart from spending quality time with family, employees can also

energise themselves and can get back to work with full enthusiasm. Holiday homes

are available at different cities at concessional rates to the employees. This facility is


70

for all the existing employees of the organisation as well as the retired employees of

the bank as goodwill of the bank and priority is given to the existing employees.

Compensation to Employees Compensation is given to the employees in the

form of cash and kind. Compensation package is the sum of items like salaries,

bonus, provident fund, gratuity, training expenses, employee state option plan,

voluntary retirement scheme, arrears paid and repayment expenses. This part of data

entry also includes the expenses on privileges provided to the employees. Depending

upon the organisation these expenses are calculated differently. These expenses are

reported by the company under the category of personal expenses.

Salaries & Wages include timely payment given to the employees in return to

their services rendered. It is provided to every category of employees including the

managerial level and the workers. If company computed the salary differently both

in the case of employee and manager then the two will be given accordingly. In

many cases it has also been seen that remuneration and salaries of managing

directors and executives are computed differently.

Bonus & Ex-Gratia Bonus is given to all the employees including the

management employees according to payment of bonus act and it is based on

performance of an employee. Bonus related information is available and in many

cases company gives detail of bonus with salaries and wages, in such a situation it

will be included in the salaries and wages segment.

Provident Fund Act makes it obligatory for the employers have to make a

contribution of 12 percent of basic pay and dearness allowances towards employee

provident fund, earlier it was 10 percent of the basic pay. It is a compulsory scheme

which is given to the employee’s to improve their post retirement life.

Gratuity is paid to the employees after retirement; gratuity is based on the number

of years of service the employee has given to the organisation. Generally gratuity is

given to an employee only if an employee has completed five years with the

organisation.


71

Staff Welfare includes various amenities given to the employees in the

organisation that are given to the employees for their welfare under a scheme or as a

part of their employment process. Welfare amenities are apart from salaries and

wages are additional benefits apart from salaries. These welfares facilities can be

given in the form of transportation, medical benefits, subsidised food in canteen etc.

Staff Training is an expense which is incurred by the organisation to develop the

skills and knowledge of their employees and for this purpose training is given to the

employees at all the levels. In some of the organisations like technology specific

companies or pharmaceutical companies employee training expenses is mentioned

under different heads and it comes under ‘expenses related to employees’. Largely,

the companies put such expenses under ‘recruitment and training of employee’s’

classification. If any company categorised recruitment and training expenses under a

separate head then it won’t be a part of employee welfare expenses. Some of the

other expenses like termination or repatriation will come under the head of ‘other

expenses on employees’. Companies do not consider training expenses as a personal

cost.

Employee Stock Option Plan (ESOP) is a scheme where the employees are

allowed to buy specific number of shares of the company in a particular price. The

reason behind such provision is to develop an interest of the employee within the

organisation, to motivate the employee and develop a sense of loyalty among them

towards the organisation. According to Securities Exchange Board of India (SEBI)

guidelines the value of ESOPs is the total amount granted to an employee in the

accounting period. This value can be calculated according to the straight line method

in the particular period. ICICI Bank includes ESOPs as part of compensation under

the miscellaneous expenses.

Voluntary Retirement Scheme (VRS) This scheme have been introduced for

the purpose of cutting the workforce of an organisation by providing lucrative offers

to the employees. No guidelines have been made related to such schemes in the early

period of these schemes. In the initial period companies used to put these


72

expenditures as an expense. Companies prefer to put such expenses as bad debts

during a particular time period, generally five years because putting such expenses as

bad debts regularly will affect the profits of the organisation.

Arrears Paid to the employees with a traditional approach. It is a process in

which salary of the past are paid as debts with the current salary. Companies usually

pay arrears either as pay revision process or in case of settlement of disagreement as

ordered by the government under law. The amount which has been decided will be

paid to the employee. Companies do not disclose the amount of arrears in salary

under a separate head. Arrears are being included under salaries and wages head. On

account of un-availability of funds, salaries of the previous year which are to be paid

in the current year will not covered under the expenses of previous year35

.


73

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