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Project Report on Canara Bank Life Insurance

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					                               Canara Bank RSTC Gurgaon
                                Interview Magnet Oct 2010




     REGIONAL STAFF TRAINING COLLEGE
SECTOR 18, PLOT NO: 80, IFFCO CHOWK, GURGAON,
                   HARYANA
              PHONE: 0124-2341589
        EMAIL: RSTCCODEL@CANBANK.CO.IN

              INTERVIEW


  MAGNET
   2010

                (PART -1)

            OCTOBER 2010

                                                       1
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

                                      OUR BANK
Our Founding Principles

 To remove superstition and ignorance.
 To spread education among all to sub-serve the first principle.
 To inculcate the habit of thrift and savings. To transform the financial institution not
  only as the financial heart of the community but the social heart as well.
 To assist the needy.
 To work with a sense of service and dedication.
 To develop a concern for fellow human beings and sensitivity to the surroundings with a
  view to make changes / remove hardships and sufferings.

Organizational Values

                 Family Culture                  Versatility
                 Focus and belief in People      Concern for Community
                 Commitment                      Spirit of challenge
                 Customer Orientation            Sensitivity to performance
                 Open Culture                    Consistency.

Corporate Vision: To emerge as a world class Bank with Best Practices in the realms
of Asset Portfolio, Customer Orientation, Product Innovation, Profitability & enhanced
value for Stake Holders.

Our Corporate Mission: To provide quality banking services with enhanced customer
orientation, high value creation for stakeholders and to continue as a responsive corporate
social citizen by effectively blending commercial pursuits with social banking.

Organization Details:

Board of Directors: The Bank's policies and business are governed by Board of Directors
consisting of following members

   Mr S Raman - CMD
   Mr Jagdish Pai KL - ED
   Mr HS Upendra Kamath - ED
   Dr. KP Krishnan Joint Secretary (CM) Ministry of Finance Dept. of Economic Affairs -
    Director representing Government of India
   Shri. G. Padmanabhan Chief General Manager - Director representing RBI
   Shri. Devender Dass Rustagi - Workmen Employee Director
   Shri. Khalid Luqman Bilgrami Chartered Accountant - Part -time Non-Official Director
   Dr. Yogendra Pati Tripathi - Part-timeNon-Official Director
   Shri. S. Shabbeer Pasha - Part -time Non-Official Director
   Shri. Pankaj Gopalji Thacker - Part -time Non-Official Director
   Shri. P. V. Maiya - Shareholder Director
   Shri. Sunil Gupta - Shareholder Director
   No. Of functional activities based upon which wings are formed at HO: Four .
   They are -Business functions, Business support functions, Corporate support functions &
    Control functions

                                                                                         2
                                                                  Canara Bank RSTC Gurgaon
                                                                   Interview Magnet Oct 2010
 No. Of wings in the Head Office: 18. (Cir.229/2010)

1. Personnel Wing                                 12. Treasury and International Operations
2. Vigilance Wing                                     Wing
3. Corporate Credit Wing                          13. General Administration Wing
4. Prime Corporate Credit Wing                    14. Department of Information Technology
5. Risk Management Wing                               Wing
6. Strategic Planning & Development Wing          15. Financial Management and Subsidiaries
7. Priority Credit Wing                               Wing
8. Recovery Wing                                  16. Transaction Banking Wing (New)
9. Retail Banking Wing                            17. Credit Administration Wing (New)
10. Inspection Wing                               18. MSME Wing (New)
11. Credit Monitoring Wing

Regional Offices : No regional Offices now.

1. Chairman & MD's Secretariat
2. Executive Directors' Secretariat
3. Compliance Department* (* More about Compliance department given separately)

 RRBS SPONSORED BY Shreyas Gramin Bank – UP
 OUR BANK                    South Malabar Gramin Bank – Kerala
                             Pragathi Gramin Bank – Karnataka
 No of Branches              3061 (as per press release dated 17.7.2010)
 No of Circles               34 (Latest Nagpur) Cir.26/2010
 RSTC                        13 + One Apex college
 FOREIGN BRANCHES            LONDON, HONGKONG, SHANGAI, LEICHESTER.
 Representative Office       Sharjah, UAE
 Joint venture Bank          COMMERICAL BANK OF INDIA LLC - (CBIL) @ Moscow
                             with State Bank of India on 60:40 basis.
 Bank's        International Network of 537 Correspondent Banks, spread over 94 Countries.
 Operations
 Rupee             Drawing with 20 Exchange Houses and 18 Banks in the Middle East for
 arrangement                 channelizing the remittances of expatriates
 Electronic funds transfer (EFT): (a) Al Razouki Intl Dubai (b) Eastern Exchange Doha (c) Bahrain
 India Intl Exchange Co Bahrain (d) Al Fardan Exchange (e) Zenj Exchange Company
 Mutual Funds                CANARA ROBECO Mutual Fund Products
                             HDFC Mutual Fund Products
 Bancassurance               United India Insurance Company Limited as a Corporate Agent
 (Non-Life)                  ECGC
 Life Insurance              “Canara HSBC Oriental Bank of Commerce Life Insurance Company
                             Limited”.
                             launched on 16th of June 2008.
                             Canara bank has a stake of 51%, HSBC Insurance (Asia Pacific)
                             Holdings Ltd 26% and Oriental bank of Commerce 23%.
                             We also act as a Corporate Agent of Our JV Company.
 Overseas            centres 21 for opening branches/offices. (South Africa, Germany, Bahrain,
 Identified                  Sultanate of Oman and Qatar).




                                                                                                    3
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

    What are the Extension Activities Conducted by your branch?

Bank's Corporate Social Responsibility: Consistent with its philanthropic roots and
genuine concerns for the needy, Bank has taken several initiatives including the following:

 KPJ Prabhu Artisans Training, Production & Marketing Centre at Jogaradoddi, Bidadi,
    Bangalore Rural District and C E Kamath Institute for Rural Artisans at Karkala provide
    training for artisans in wood carving, stone carving, sheet metal embossing and terra cotta
    and marketing their products
   Rural Women Self Employment Training Institute at Harohalli, Mahila Abhyudaya
    Yojana Gramina Mahila Jagruthi Kendras Centre for Entrepreneurship Development for
    Women provide counselling, guidance & training to make women self-reliant.
   A D Pai Institute for Rural Development at Vajrahalli and Rural Self Employment
    Promotion and Resource Guidance Centre at Holalur , Shimoga District provide training
    to rural youths for self employment.
   Rural Clinic Service and Mahila Shushrusha Yojana provide medical facilities in remote
    and backward villages and provide incentives to doctors to set up clinics in such areas.
   Cangrama Shikshana Kendra Adult education centres, Canara Bank Golden Jubilee
    Education Fund provide adult literacy and assist student fraternity by providing books,
    equipments, sponsoring libraries etc.
   Grama Jala Yojana
   Adarsha Grama Project & Jalayoga Scheme provide safe drinking water facility in
    backward villages.
   Hari Kalyana Yojana, Tribal Counselling Centres, Dr.Ambedkar Self-Employment
    Training Institute at Pudupudur and Subba Rao Pai Self-Employment Training Institute at
    Wandoor train SC/ST and minority youths to take up self-employment training.
   Rural Development and Self Employment Training Institutes and Rural Resource
    Development Centres provide training in adopting appropriate technology.
   Computer Training Centre for Urban Poor at Bangalore trains urban poor in the IT field
    and computers.
   Kalagrama - An art village, a complex of 18 houses (at K.P.J. Prabhu Artisans Training,
    Production & Marketing Centre, Jogaradoddi) has been set-up to assist the artisans who
    have undergone training in traditional arts to pursue and practice art for mutual learning
    and benefit.
   Canara Bank Institute of Information Technology (CBIIT), Alleppy has been set-up
    with an objective of imparting training to the rural youth of South Kerala in the field of
    Information Technology. The training is offered free of cost and backed up by post
    training follow-up to ensure credit linkage and settlement.
   Canara Bank Institute of Information Technology (CBIIT), Thiruvananthapuram
    has been set-up with an objective of imparting training in the field of Information
    Technology to the unemployed youth of Thiruvananthapuram and nearby districts. The
    training is offered free of cost in computer packages with emphasis on self-
    employment/wage employment in the IT field.

                                           ***
Logo: Symbol of two seamlessly connected links representing a bond was chosen. Blue
Colour represents: Stability; Scale; Depth. Yellow Colour represents: Energy; Warmth;
Optimism
                                             ***
                                                                                             4
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

          Re-organization of functional wings at Head Office
                                      (Cir.229/2010)

 Purpose: To have greater focus on individual business segments. + There is a pressing
  need to sustain the growth momentum while keeping the internal control and
  housekeeping intact.
 Redefining: General Administration Wing & Retail Banking Wing
 Bifurcation: Credit Monitoring Wing into: Credit Administration Wing and Credit
  Monitoring Wing.
 Creating: Transaction Banking Wing + MSME Wing
 It is also proposed to regroup New Products & Subsidiaries Wing and distribute the
  functions among Retail Banking Wing and Financial Management & International
  Operations Wing respectively. NP&S Wing will then cease to exist.
 Further, International Operations functions will be carved out from FM & IO Wing and
  will be attached to Treasury Wing. Consequent to the above, FM & IO Wing and
  Treasury Wing will be known as Financial Management & Subsidiaries Wing and
  Treasury and International Operations Wing respectively.
 The proposed re-organisation will be effective from 01.07.2010
 Transaction Banking Wing: At present, DIT Wing is handling DIT policy,
  programming and Implementation, apart from technology support for implementation of
  IT related products and services. In essence, DIT is handling both policy related and
  operations related functions. While IT related products will drive the business growth of
  the Bank, the technical and procedural aspects relating to branch functioning need greater
  focus. Though the system supports all technology related products in tune with the market
  trends, the branches are not able to popularize the same due to knowledge gap and
  inadequate technology support. Therefore it is proposed to open a new wing –
  “Transaction Banking Wing” which will look after the implementation of all IT related
  products and marketing of the same.
 Transaction Banking Wing objectives: (a) Marketing and Implementation of IT related
  products and services (DIT Wing will provide necessary technology support) (b) Issue of
  operational guidelines to branches relating to technology products. (c) Ensuring proper
  reconciliation and MIS relating to the technology products.
 Transaction Banking Wing Functions: (a) All IT related products such as Internet
  Banking, NEFT,RTGS,ATM/Debit Card, Credit Card, CCMS, Remittance Business,
  Debit/Credit Card Reconciliation, Maintenance of ATMs, attending to ATM complaints
  and any such related activities. (b) The Wing will also attend to all matters relating to
  Government Business and Currency Chest functions, including policy matters.
 MSME Wing: In order to have focused attention to SME /SE sector and to step up credit
  flow, SME Business unit may be upgraded as a Wing to look after the following
  functions: Policy related matters, Sanction of loans under HO powers, Development of
  products, Focus on Medium Enterprises, Supervision of SME Sulabh, Client Acquisition,
  Cross selling of other non-credit products, Monitoring of current account portfolio (New
  Concept).
 While current account is the gateway for sanction of loans to business units, the proposed
  Wing shall monitor the performance under current account portfolio and to adopt
  appropriate strategies to build up a strong portfolio. The Wing shall have a dedicated
  marketing force to supplement the efforts in building up strong SME and current account
  portfolio.



                                                                                          5
                                                            Canara Bank RSTC Gurgaon
                                                             Interview Magnet Oct 2010

                            Compliance Department
                             (From Cannet & Cir.421/2009)

 An independent Compliance Department is set up at Head Office and is headed by Chief
  Compliance Officer in the rank of Deputy General Manager.
 Compliance Department does not come under any Wing and reports directly to Top
  Management.
 Non adherence to Regulatory/Statutory guidelines/provisions would invite levying of
  penalty/penal interest by the Regulators. Such instances of penalty need to be disclosed
  in the Annual Report of the Bank and thus would lead to Reputation Risk for the Bank.
 Branches are also requested to note that any Non Adherence to
  Regulatory/Statutory/Internal Regulations/Guidelines would amount a Compliance
  Breach and all major Compliance Breaches would be placed before the Top
  Management/Board. Executives shall pay special attention to Compliance aspect during
  their branch visits

Objectives:

 Put in place an effective Compliance Risk Management System, applicable Bank wide
  encompassing: All the Wings at HO; All the Cos; All the branches and other operating
  units; All the Subsidiaries and sponsored entities of the Bank; Exchange Houses
  abroad; Overseas branches.
 To ensure strict adherence / compliance to various regulatory guidelines issued by
  Government, RBI and other Regulatory Bodies from time to time and also the Internal
  Guidelines issued by the Bank from time to time

Functions of Compliance Department:

 Lay down the Compliance Policy every year with the permission of ORMC/ RMC and
  Board.
 Prepare organizational structure for effective Compliance Risk Management.
 Define roles & responsibilities to various bodies involved in Compliance Risk
  Management like: Board of Directors; RMC of Board; ORMC; Chief Compliance
  Officer; Principal Officer to ensure adherence to KYC / AML guidelines.; Compliance
  Officers at various other units (Wings at HO to branches).; Compliance Department at
  HO; Compliance Officers at Overseas branches, Subsidiaries, Sponsored entities and
  Exchange Houses abroad.
 Draw Compliance Programme and procedure including dissemination of Regulatory
  Guidelines.
 Put in place a proper reporting framework and system.
 Put in place an appropriate monitoring and review mechanism.
 Advise Functional Wings for development of Compliance Manuals incorporating all
  Regulatory Guidelines.
 Create awareness across the Bank about Compliance Risk Management.

Compliance Function Cir.421/2009

 Pursuant to the RBI guidelines a comprehensive Compliance Policy was put in place in
  our Bank.


                                                                                         6
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010
 The Compliance Policy covered group-wise and also multi-jurisdictional, making it
  applicable to all Subsidiaries, Sponsored entities, Overseas branches, Exchange Houses
  etc.
 Bank has also introduced suitable Reporting Framework vide Ho Circular 18/2008 dated
  22.01.2008.
 The Compliance shall ensure strict adherence to all statutory, regulatory provisions
  contained in various legislations such as: Banking Regulation Act, Reserve Bank of India
  Act, Foreign Exchange Management Act, Prevention of Money Laundering Act, Right to
  Information Act (RTI) etc.,
 Compliance Risk – Definition: RBI defined Compliance Risk as: "The risk of legal or
  regulatory sanctions, material financial loss or loss to reputation a bank may suffer as a
  result of its failure to comply with laws, regulations, rules, related self-regulatory
  organization standards and codes of conduct applicable to its banking activities".
 Compliance risk can be broadly classified into Legal, Regulatory and Reputation
  Risks.

The Compliance Function shall include:

 Specific areas such as prevention of money laundering and terrorist financing and may
  extend to tax laws that are relevant to the structuring of banking products or customer
  advice.
 The Compliance Function is likely to go beyond what is legally binding and embrace
  broader standards of integrity and ethical standards.
 Adhering to Internal guidelines / Norms such as Various internal policies and guidelines
  issued by the Bank from time to time, Fair Practices Code, Time norms (customer
  service),Compliance of redressal mechanism on customer complaints., Compliance of
  redressal mechanism on shareholders' complaints. Etc.,
 In order to assist the branches to             ensure strict Compliance to various
  Regulatory/Statutory/Internal Laws, rules, guidelines etc a check list { illustrative & not
  exhaustive} on various aspects of Deposits/Advances/Foreign Exchange / KYC & AML
  activities / Tax Matters is evolved from Compliance Angle and the same is enclosed as
  Annexure to this Circular 421/2009.
 The check list provided can also be used by the branches for self inspection on monthly
  basis.

                     Staff Strength as on 30th June 2010
       General ManagerS                       31   Special Assistant            1541
       Deputy General Manager                 74   Clerk                       14560
       Assistant General Manager             245   Sub-Staff                    7427
       Divisional / Chief Manager            547   Part Time Employee           2284
       Senior Manager                       2075   Grand Total                 42830
       Manager                              4419
       Officer                              9627




                                                                                           7
                                                            Canara Bank RSTC Gurgaon
                                                             Interview Magnet Oct 2010

                    CANARA BANK JUNE 2010 RESULTS
                            Press Release Dated 17.7.2010

Total Business                                                        Rs.412649 Crores
Total Deposits                                                        Rs.238855 Crores
Net Advances                                                          Rs.173794 Crores
Operating Profit                                                        Rs.1483 Crores
(-) Provisions                                                           Rs.470 Crores
Net Profit                                                             Rs.1013 Crores
Total Income                                                            Rs.5895 Crores
Total Expenses                                                          Rs.4412 Crores
Provision Coverage Ratio                                                        78.01%
Branch Network                                                                     3061
CBS branches as on 16th July 2010                                                  2681
Bank's total business under CBS                                                    96%
Internet and Mobile Banking (IMB) services                                         2681
Clientele                                                                 37.49 Million
Deposit accounts                                                          33.03 Million
Debit card base                                                             55.50 lakhs
Borrowal accounts                                                          4.46 Million
Capital Adequacy Ratio                                                          12.44%
Cost- Income Ratio                                                              39.75%
NIM                                                                              3.01%
Cost of Deposits                                                                 5.69%
Return on average assets (RoAA)                                                  1.55%
Yield on Advances                                                                9.35%
Earnings per Share Rs.                                                        Rs.24.72
Book Value Rs.                                                               Rs.330.83
Tier I capital ratio                                                             8.10%
Government holding                                                              73.17%
Domestic business                                                                96.6%
CASA deposits                                                          Rs.69350 Crores
SB deposits                                                             Rs.53565 crore
CASA                                                                               30%
Credit to deposit ratio                                                         72.76%
Business per Employee                                                  Rs.10.17 Crores
Business per Branch                                                   Rs.134.81 Crores
Gross NPA                                                               Rs.2549 Crores
Gross NPA ratio                                                                  1.46%
Net NPA                                                                 Rs.1729 Crores
Net NPA ratio                                                                    1.00%
Cash recovery                                                            Rs.401 Crores
Advances to the priority segments                                      Rs.57621 Crores
Outstanding agricultural advances                                      Rs.23128 Crores
MSME Rs. crore                                                         Rs.31597 Crores
Education loan                                                          Rs.2976 Crores
Education loan - Number of students                                             171000
Retail lending                                                         Rs.23703 Crores

                                                                                     8
                                                                 Canara Bank RSTC Gurgaon
                                                                  Interview Magnet Oct 2010
Housing loan                                                               Rs.10101 Crores
Housing loan as a % of the retail lending                                             42.6%
No-frill accounts since inception                                               22.54 lakhs
Total financial inclusion achieved in lead districts                                      26
Self Help Groups formed                                                           3.26 lakhs
Credit linking of SHGs.                                                           2.82 lakhs
ATMs                                                                               over 2000
Domestic branches opened during the quarter                                               14
Foreign branches opened during the quarter                                     (1) Leicester
Representative Office opened during the quarter                           (1) Sharjah, UAE
All branches under CBS before.                                                31st July 2010
                                       Goals for FY11
Aggregate business                                                           Rs.5 lakh crore
Total deposits                                                             Rs.285000 crore
Advances                                                                   Rs.215000 crore
Global footprints                                                     Manama, QFC-Qatar
New branches                                                                        Over 200
Focus on                                             Core business, Profits and profitability

                     CANARA BANK’S MARCH 2010 FIGURES
                                 Mar’2010                                         Mar’2010
Cost of Deposits (%)                   6.12      Net Profit                           3021
Yield on Advances (%)                  9.81      Operating Profit                     5061
NIM (%)                                2.80      Net Interest Income                  5681
Capital Adequacy Ratio (%)            13.43      Total Business                     403986
RoAA (%)                               1.30      Total Deposits                     234651
Cost- Income Ratio (%)                40.73      Net Advances                       169335
Dividend (%)                           100       Branch Network                       3046
Provision Coverage Ratio%             77.71      Clientele (Million)                  37.34
CASA%                                29.85.      Gross NPA ratio Rs.2590 Crore       1.52%
Priority Sector % of ANBC             43.92      Net NPA ratio Rs.1800 crore         1.06%
Total business of all 3 RRBs    Rs.17509 crore   PAT of 3 RRBs                   Rs.107.8 crore


                                     Subsidiaries
1. Canara Robeco Asset management Company Ltd
2. Canbank Venture Capital Fund Ltd
3. Canfin Homes Ltd
4. Canbank Factors Ltd
5. Canbank Computer Services Ltd
 6.GILT Securities Trading Corpn Ltd
7. Commercial Bank of India LLC
8. Canara HSBC Oriental Bank Of Commerce Life Insurance Company Ltd
9.Canbank Financial Services Ltd (CANFINA)
10. Regional Rural Banks sponsored by the Bank



                                                                                             9
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010

                                     WHO IS WHO?
Finance Minister                                                     Pranab Mukerjee
Ministers of State for Finance                                       Namo narain Meena
                                                                     SS Palanimanickam
Governor, RBI                                                        Dr D. Subbarao
RBI’s four deputy governors                                          Mrs.Usha Thorat,
                                                                     Mr.K C Chakrabarty
                                                                     Mrs,Shyamala Gopinath
                                                                     Mr. Subir Gokarn
Finance Secretary – Dept of Economic Affairs.                          Sri Ashok Chawla
Finance Secretary – Dept of Financial Services (Banking & Insurance) R Gopalan
Finance Secretary – Dept of Expenditure                                Sushma Nath
Finance Secretary – Dept of Revenue                                    Sunit Mitra
Chief Economic Advisor, Department of Economic Affairs,                Kaushik Basu
Chairman, SEBI                                                         Sri C.B. Bhave
Chairman, Pension Fund Regulatory and Development Authority.           Yogesh Aggarwal
Chairperson of BCSBI                                                   Ms K J Udeshi
Chairman, Insurance Regulatory and Development Authority (IRDA) Sri Hari Narayana
Prime Minister's Economic Advisory Council - PMEAC Chairman            Dr. C Rangarajan
IBA Chairman                                                           O P Bhatt, SBI
Deputy Chairmans of IBA         Mr. M D Mallya of BoB, Mr. Aditya Puri of HDFC, S A Bhat, IOB
Planning Commission - Deputy Chairman of the panel         Mr Montek Singh Ahluwalia,
President of the Indian Institute of Banking and Finance               Mr O P Bhatt
Chairman of “Unique Identity Authority of India”                       Mr.Nandan Nilekani
BIFR Chairman                                                          Nirmal Singh
13TH finance commission Chairman                                     Shri.Vijay Kelkar
Cabinet Secretary                                                    Mr. K M Chandrasekhar
Exim Bank CMD                                                        Mr. T C A Ranganathan
Principal Secretary to PM                                            Mr.TKA Nair


                                 Know Your Branch
   Date of opening of branch
   Important Depositors / Borrowal Clients:
   Targets for Deposits, Advances, NPA, Productivity
   Staff Strength
   Profit before HO Int. , After HO Int., Cost , Yield on advances, Cost of deposits
   Major Business of branch
   Inspection Gradation
   Section/Work being attended by you at present.
   Low Cost Deposits - %
   Burden Ratio

                                             ***




                                                                                                10
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

                                   ROI on Loans
                              (Cir.348/2010 wef 01.10.2010)

 Considering the present market conditions, it has been decided to revise Base Rate
  upwards by 0.50% i.e. from existing 8% p.a. to 8.50% p.a. w.e.f. 01.10.2010.
 ROI for the exposures above Rs. 2 lakhs up to Rs 2 crores to be based on the scoring
  norms excepting Retail Loans.
 ROI on exposures above Rs.2.00 crore are to be based on credit risk rating (Internal /
  External).
 Working Capital limits/ Short Term Loans: 7.00% over Base Rate i.e.15.50% at present
 Term Loans Upto 5 years: 7.00% over Base Rate
 Term Loans 5 to 10 years: 7.50% over Base Rate
 Term Loans >10 years: 7.75% over Base Rate
 ECNOS 6.00% over Base Rate i.e.14.50% at present
 Clean OD/ DPN -Max. Rate 7.00% over Base Rate i.e.15.50% at present
 ROI for Unsecured advances: In respect of unsecured advances of Rs.1.00 crore and
  above, additional rate of 1% may be charged over and above the applicable rate even if
  it exceeds the maximum rate. Sanctioning authority at the level of GM (CO) and above
  may waive upto their delegated powers.

                            Other Rates at a Glance
 Deposit ROI last revision (Cir. 325/2010)    Wef 15.09.2010
 New maturity slabs under FD/KD introduced    555 days & 1000 days
 Maximum rates – Deposit – General < 1 Cr     7.75% (8 years & above to 10 years)
 Maximum rates – Deposit – Senior Citizen     8.75% < 1 Cr
 Maximum rates – Deposit – ExEmp+Sr Ctzn      9.25% < 1 Cr
 Maximum rates – Deposit                      7.25% > 1 Cr < 10 Cr
 Total number of time buckets in deposit ROI  16
 Can Tax Saver wef 9.8.2010                   7.50% (Cir.271/2010) 5 years only
 Canara Festival Deposit FDR Amount           Less than Rs. 1 crore
 Canara Festival Deposit Period               266 days
 Canara Festival Deposit ROI General Public   6.06
 Canara Festival Deposit ROI Senior Citizens  6.56
 ECNOS                                        For BPLR parties - BPLR + 1.5%;
                                              For Base Rate Parties - Base Rate + 6%
 FOREIGN ECNOS %.(IO 19/2010)                 LIBOR for 12 months plus 6.5
 BPLR of our bank from 12.8.2010 (Cir.278/2010)                        12.50%

               Chairman & Managing Director's Message
    "As we step into the second century, we aspire to emerge as a Global Bank with Best
                                         Practices."

                                           ***




                                                                                          11
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

           What was your Contribution in last year's Savings Utsav?
                      Excerpts from CMD Message dated 22.8.2009

 "….. Needless to add, an all-out participation in the 'Savings Utsav' will be
  recognized for postings and promotions. "
 Bank last year launched a bank-wide 'Savings Utsav' – a seven and half month long mega
  'Savings Deposit Campaign' starting from 17th August 2009 to continue till 31st March
  2010.
 Each branch was to bring in at least 4-5 savings accounts on day to day basis. It is a
  deep concern for all of us that we are adding just 1.5 savings bank account per day per
  branch and in current account we have already hit the stagnation stage.

Importance of CASA: (Discussion points)

 Share of low cost CASA deposits in total deposit plays a far greater role in reducing cost
  of deposits and enhancing our profits and profitability.
 Investors also take this as one of the important factors of our future earning profile-
  linked to our performance in the stock price.
 Despite substantial reduction in term deposit rates, our cost of deposit is still the highest
  among our peers. This is because of our relatively lower share of CASA deposits.
 Savings deposit is the barometer of our customer service and more so it is the
  introduction of a customer followed by all his future financial requirements.
 Failure to mobilize more savings accounts could ultimately result in future growth
  constraint for us. Our savings deposits will take a hit if we continue to neglect customer
  service.
 Today with no product differentiation, customers prefer to move to a bank, which is
  most friendly, approachable and prompt in service delivery.


Potentials & Marketing:

 It goes without saying that our market has a lot of potential for savings deposits- economy
  is growing, incomes of the people are rising and increasing number of people are coming
  into the middle income bracket.
 Banking habits are also changing and now more and more people are willing to have bank
  accounts to route all their transactions.
 If there is any area with steady future growth that is going to be savings bank deposits.
 This is the time we should press the alarm bell, wake up and be far more proactive.
 Staff at the counters should play a vital role in spreading the word of mouth and telling
  our customers to introduce new accounts.
 Branch managers must make special efforts to approach residential areas, educational
  institutions, commercial complexes, private concerns for getting more savings accounts-
  with more quality and high value savings accounts like salary accounts and online-trading
  account with substantial float funds.
 Let customers know about the benefits of having savings deposit accounts and debit
  cards- its utility as a safe e-wallet for making payments and drawing cash through ATMs.
 Those who participate energetically will get the benefits and those who do not will be the
  losers.
 The Bank's target last year (2009-10) was to add Rs.10,000 crore in savings deposits,
  with accretion of about 15 lakhs accounts.

                                                                                            12
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010
Strategies for CASA:

 Form task forces with branch level champions/cheerleaders, keep the morale and spirit of
  the staff high and contact potential groups and individuals and you are done with the job.
 Keep your energy level high, build sufficient excitement at branches and maintain a well
  designed plan of action diary and monitor achievement on every day basis.

March 2010 Actual:

 The Bank's core deposits grew by 32.3%.
 The share of CASA deposits in domestic deposits was 29.85%. Savings deposits recorded
  a growth of over 19%.
 The Bank could add a significant 16 lakh plus new savings bank accounts during the
  campaign period.

                                            ***

                           "Canara Festival Deposit"
                                      Cir. 275/2010

Product Features:

 Introduced w.e.f. 09.08.2010.
 Available under a new product code.
   The scheme is available only as FDR.
   The scheme is available only for Domestic, NRO & Capital Gains Account Scheme
      deposits of Less than Rs.1 crore
   The (Fixed) maturity period of deposit is 266 days
   Premature closure is permitted.
   Such prematurely closed/part withdrawn deposits will earn interest at a rate as
      applicable for the amount slab as ruling on the date of deposit and as applicable for
      the period run.
   The scheme will be on offer for 100 days from 09.08.2010 to 16.11.2010.
   Attractive interest rate - 6.06% (+ 0.50% for Senior Citizens*)
   (*) Senior Citizens not eligible for special rates under NRO deposits.
   Employees/ Ex-Employees/ Ex- Employee Senior Citizens/ Others eligible for
      preferential Interest rate 7.06%

                                            ***

          How much Festival Deposits you canvassed so far?

                                           ***




                                                                                         13
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

                                Savings Mahotsav
 The period of the campaign is from 01.09.2010 to 31.03.2011. (Seven months).
 Corporate goal – Rs.12000 crore quantum accretion and opening of 15 lac new SB
  accounts during the cited campaign.
 A mega compaign to mobilize Savings Deposits
 Savings Mahotsav - a campaign with unprecedented features.
 Incentives worth approximately Rs. Two & Half crores. Prizes include gold coins.
 Rewards are offered for branches achieving the minimum stipulated growth.
 Award for mobilizing "Canara Super Salary Accounts".
 Awards for: Exceptional performance + Big Catches + Early Birds + New Branch
  Category + Top Circle Offices
 Incentives for: MIPD & PP Sections of Top 9 Circles + Marketing Officers + Employees
  working in Administrative Units + Interim awards to Admn Units + Branches.
 The campaign presents a great opportunity for the Branches and Individual Employees
  to contribute to the Corporate goal and get splendid rewards for the additional efforts.
 Scope of contest and eligibility: Domestic, NRO and NRE SB deposits.
 All branches are eligible to participate.
 Separate Criteria is fixed for Branches opened after 01.04.2010.
 Circle level Awards for Branches: 8 gm Gold Coin for branch-in-charge, 5 gm Gold
  coin for Manager in charge of Deposits, 3 gms Gold coin for SB Deposits in-charge
  (Manager/officer/Special Assistant) and Rs.16000/- for the branch to provide mementos
  to the employees participating in the contest.
 Monthly Interim awards: (Additional BDE): (a) Group-A Group-B Group-C Group-D
  Group-E. (b) Incentive per branch (Rs) 4000; 5000; 6000; 7500; 10000/- . In order to
  achieve the award, branches have to fulfill the following eligibility criteria during the
  month. Addition of SB accounts during the month: 300; 300; 250; 200; 200. Increase in
  SB outstanding during the month (In Crore): 0.50; 1.00; 2.00; 3.00; 5.00.
 Early bird incentives: Achieving December 2010 Target in September 2010 and
  retaining above the targeted level at least till October 2010 – Rs.2500/- Additional
  Business development Expenses. Achieving March 2011 Target in December 2010 and
  retaining above the targeted level at least till January 2011 - Rs. 10000/-. Achieving
  March 2011 Target in January 2011 and retaining above the targeted level till February
  2011 - Rs.7500/-. Achieving March 2011 Target in February 2011 - Rs.5000/-.
 Award for mobilising Canara Super Salary Accounts: (Additional BDE). (a) Rural /
  Semi Urban – Opening 25 "Canara Super Salary Accounts" in a month- Rs.1000/- (b)
  Urban or Metro – Opening 50 "Canara Super Salary Accounts" in a month - Rs.1000/- (c)
  Rs. 1000/- each for every additional 50 "Canara Super Salary Accounts" accounts opened
  during the month.
 Awards for branches for exceptional performance: (Additional BDE). (a) 6000
  accounts /OR/ 40% Rs.7500/- (b) 4000 accounts /OR/ 35% Rs.5000/- (c) 2000 accounts
  /OR/ 30% Rs.3000/-
 Minimum Eligibility prize: (Additional BDE): All branches achieving the minimum
  eligibility criteria and not winning any other prize will be provided with Additional
  Business Development Expenses entitlement of Rs.5000/-.
 Awards for New Branches: (Additional BDE): Rs 10000/-. 2000 SB accounts and a net
  increase of Rs.4 Crore.
 Best performing New Branch under Savings Mahotsav: Rs.10000/-
 Big Catches Awards : All branches securing ‘Big Catches’ of Rs.1 crore and above as a
  single deposit in existing/new SB accounts (other than SSA and UGC funds) and

                                                                                        14
                                                                          Canara Bank RSTC Gurgaon
                                                                           Interview Magnet Oct 2010
    retaining the same for a minimum period of 1 month shall be entitled for additional
    business development expenses of Rs.2500/-.

Savings Mahotsav – Revision in Minimum Eligibility Criteria
Special Communication. 75/2010 dated 18.10.2010

With a view to make the minimum eligibility criteria for branches under each population
group more rational, the minimum eligibility criteria in the scheme of "Savings Mahotsav"
Campaign have been revised. The revised minimum eligibility criteria is as under:

 Population                     Minimum performance level                                 No change
   Group                   Existing                    Revised
                    New            Increase     New           Increase           Increase in      % Growth
                   a/cs to        in number    a/cs to           in              SB deposit       in average
                     be             of a/cs      be           number            Outstanding*          SB
                   opened                      opened          of a/cs                            Deposits**
Metro                600              500       1000            800             Rs. 8.00 crore        10
                                                                                    or 20%
Urban                600             500             600             500        Rs. 5.00 crore       10
                                                                                    or 20%
Semi                 600             500             600             500        Rs. 3.00 crore       10
Urban                                                                               or 20%
Rural                600             500             400             300        Rs. 2.00 crore       10
                                                                                    or 20%
* Target for March-2011    under SB Outstanding is to be achieved for reckoning performance under the subject
Contest.
** During the campaign period.
SB deposit outstanding and average, as on 27.08.2010 (as per RBI statement), will be taken as the base. Figures
as on 31.03.2011 (as per RBI statement) will be reckoned for calculating the growth during the Campaign
months. For number of accounts, figures as on 27.08.2010 and 25.03.2011 as per Flash Report will be taken into
consideration.

Suggested Strategies:

 Convene a staff meeting immediately & Inform about the scheme + incentive. Seek
  active involvement and evolve suitable strategies for Deposit Mobilization.
 The designated Resource Mobilization Executive/Marketing Teams from the Circles shall
  visit a cluster of branches and also involve the staff members of the branches in the
  Campaign. They shall ensure that all the branches are in Campaign mode.
 Concerted efforts are to be made at all levels to ensure active participation of branches
  and staff members.
 Road shows to be arranged in all the areas of the Circles.
 Branches to make the campaign visible with the help of publicity materials like posters,
  pamphlets, banners etc. which will be provided by Marketing section, H.O Bangalore to
  the Circles for onward transmission to branches.
 Performance under the Campaign to be regularly monitored and communications and
  updates on the Campaign to be periodically released at the Circle level.
 Retail Banking Division, HO, Bangalore will be monitoring the progress of the campaign
  regularly.
                                           ***
                   Your (branch) tally so far in Mahostav?
                                     ***

                                                                                                           15
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

                       "NRE Deposit Special Drive"
                        Special communication FX IO/11/2010

 It has been the endeavor of the bank to reduce the High Cost Deposits and increase Low
  Cost Deposits, to show improved performance under Net Interest Income (NII).
 NRE Deposits contribute significantly to our low cost deposits.
 It is observed that during the last few years our Market Share under the NRE Deposit
  segment is coming down.
 To give a shot in the arm and to encourage and recognize contribution on the part of
  operational units, Bank has devised a Contest Scheme on "NRE DEPOSIT SPECIAL
  DRIVE" for our branches.

Salient features of the Contest:

   From 1st October, 2010 to 31st March, 2011.
   Total number of prizes - 440.
   Total amount of incentives - Rs.38 lakhs.
   Corporate goal Rs. 4695 crores quantum accretion and opening of over one lakh new
    NRE SB accounts.
   Branches should contact all their existing NRI Customers in person, by letter or through
    Mail requesting them to introduce atleast 2 new NRI Accounts from their Friends and
    Relatives.
   Present NRE Deposits (NRE SB+NRE TD +FCNR) as at last Friday of June, 2010 was
    Rs.13,595.00 Crores which should be taken to a level of Rs.18, 290/- Crores by 31st
    March, 2011.
   Achieve 100% provision of Internet Banking facility to all their NRE Account holders as
    per norms.
   A Branch qualifying under more than one category, will win the highest among the
    awards eligible.
   If a Branch in a lower Group achieves the minimum performance prescribed for higher
    Group, it would be eligible for the incentive prescribed for the Higher Group.
   Based on the NRE Deposits (NRE SB+NRE TD+FCNR) as at last Friday of June, 2010
    Branches are divided into 9 categories.
   Branches to work on the following three areas (a) Minimum % of Increase In NRE
    Deposits {25% to 40%} (b) Minimum Amount Of NRE Deposit Increase Rs.25.00 lacs
    and above (c) Minimum Number of New NRE SB Accounts To be Opened per Branch.
    {10 to 100 depending on the category of branch}.
   Incentives and Prizes: Gold Coins to the branch in Charge plus cash incentive for the
    branch to provide mementos to the Employees participating in the Contest / Enhancement
    in Business Development Expenses entitlement of the branch.
   Corporate Special Prizes to Top 8 Branches: Branch in charges shall be given option
    of going abroad along with spouse Or Gold coin worth Rs.40000/-
   Individual Prizes: 45 Individual Staff Members (other than the Branches in Charge)
    shall be awarded prizes* for their involvement and achievement in the contest. The staff
    should have put forth exceptionally superlative performance in branch achieving the
    prizes and the Staff themselves should have canvassed at least 25 new NRE SB Accounts
    and should have personally canvassed minimum new NRE Deposits (NRE Term and
    FCNR) to the tune of Rs.25.00 lakhs each. {* Mementos worth Rs.2000/- to Rs.5,000-
    and appreciation letter from executive director / Circle Head}


                                                                                         16
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010
Action Points to Branches:

 Conduct a Staff Meeting immediately and inform about the NRE Deposit Special Drive
  Contest, the incentives and prizes.
 Seek the active participation of all the staff members and evolve suitable strategies to
  increase the NRE Deposit Base further.
 The designated Resource Mobilization Executive / Marketing teams from the Circles
  shall visit a cluster of branches and also involve the staff members of the branches in the
  campaign. They shall ensure that all the branches are in the campaign mode.
 Make the NRE Deposit -Special Drive visible with the help of publicity materials.
 Conduct NRI Meets in all potential Centers.
 Revive all the Inoperative NRE SB Accounts.
 Branches should achieve the minimum growth as noted below and also reach their targets
  as at 31st march, 2011.


                                ***
     Your (branch) tally so far in NRE Deposit Spl Drive?
    Your (branch) score in "Eachone Reachone" (last year)?

                                           ***

                                 FOCAL INDICATORS
RBI – Reserve Ratios: CRR (wef 24.4.2010) as % of net demand and               6.00%
time liabilities (NDTL)
RBI – Reserve Ratios: SLR (wef 7.11.2009) as % of net demand and              25.00%
time liabilities (NDTL)
RBI's Policy Rates Bank Rate (wef 29-04-2003)                                 6.00%
RBI's Policy Rates Repo Rate (wef 16.9.2010)                                  6.00%
RBI's Policy Rates Reverse Repo Rate (wef 16.9.2010)                          5.00%
BCTT wef 1.4.2009                                                               Nil
Service Tax wef 24.2.2009 (Cir.63/2009) (i.e., Base rate of 10% plus          10.30%
2% Education Cess plus 1% Secondary & Higher Education Cess)

                          RBI Reference Rate (8.10.2010)
   INR / 1 USD               : 44.3800
   INR / 1 Euro             : 61.8000
   INR / 100 Jap. YEN        : 53.8700
   INR / 1 Pound Sterling   : 70.3711

                                            ***




                                                                                          17
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010

                                   Retail Loan Festival
                                          (Cir.303/2010)

 Branches to celebrate five months from 1st September 2010 to 31st January 2011 as
  ‘Retail Loan Festival’. The following concessions are extended during this period.

HOUSING LOANS During the festival period:
                        Upto Rs.30 lacs            Above Rs.30 lacs upto Rs.1 crore
Upto 5 years            8.50%                      9.00%
                        (Base rate + 0.50%)        (Base rate + 1%)
Over 5 years upto 10 8.75%                         9.25%
years                   (Base rate + 0.75%)        (Base rate + 1.25%)
Above 10 years upto 9.00%                          9.75%
25 years                (Base rate + 1%)           (Base rate + 1.75%)
For acquisition of second house/flat: Additional interest of 0.25% waived

Canara Mobile Loans                                           10.00% (Base rate +2%)
Home Improvement Loan: Where EMT of the house/                As applicable to housing
flat is available in respect of loan availed as part of our   loans
housing finance OR Where housing finance earlier
availed by the party from our Bank is existing [without
any overdues].
Home Improvement Loan: In all other cases, other than         11.00% (Base rate + 3%)
the above

Processing Charges                    During the festival period
Housing loan                          0.125% Min:Rs.125 Max:Rs.2500
Home improvement loan                 Same as Housing Loan.
Canara mobile loan                    Two Wheeler: Flat Rs.100
                                      Four Wheeler: Flat Rs.250

 Rate of interest for housing loans above Rs.1crore is to be taken up with HO.

 Housing loans sanctioned during the festival period is to be availed before 31.03.2011
  and Canara Mobile loans/Home Improvement loans are to be availed before 15.02.2011
  provided the loans sanctioned between 01.09.2010 to 30.09.2010 are availed within six
  months of the date of sanction. For eg: Loan sanctioned on 05.09.2010 should be availed
  on or before 04.03.2011.

 Action Plan: At least one grand Retail Festival should be arranged by all circles by
  involving/inviting major builders/automobile dealers from the area. A legal help desk
  may also be set up.
                                ***
   Did you conduct atleast one grand (!) festival in your branch?
           What was the response? Proposals in Hand?

                                             ***

                                                                                         18
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

       India’s External Debt as at the end of June 2010 (Revised)
                        Major Highlights: RBI Website 30.9.2010

 As per the standard practice, India's external debt statistics for the quarters ending March
  and June are released by the Reserve Bank of India and those for the quarters ending
  September and December by the Ministry of Finance, Government of India.
 The external debt data are released with a lag of one quarter.
 India’s external debt, as at end-June 2010, was placed at US$ 273.1 billion recording an
  increase of US$ 10.8 billion or 4.1 per cent over the level at end-March 2010 on
  account of significant increase in short-term trade credits, commercial borrowings and
  multilateral government borrowings.
 Excluding the valuation effects due to appreciation of US dollar against other major
  international currencies and the Indian Rupee, the increase in external debt works out to
  US$ 12.1 billion over the quarter.
 The share of commercial borrowings stood highest at 27.3 per cent as at end-June 2010
  followed by short-term debt (21.2 per cent), NRI deposits (17.6 per cent) and multilateral
  debt (16.4 per cent).
 Based on residual maturity, short-term debt accounted for 42.5 per cent of the total
  external debt as at end-June 2010, while the share of short-term debt, by original
  maturity, was 21.2 per cent.
 The ratio of short-term debt to foreign exchange reserves rose to 21.0 per cent as at end-
  June 2010 from 18.8 per cent as at end-March 2010.
 External debt in terms of US dollar accounted for 59.8 per cent of the total external
  debt stock as at end-June 2010 followed by the Indian rupee (13.2 per cent).
 The ratio of foreign exchange reserves to external debt as at end June 2010 came down
  to 101.0 per cent from 106.4 per cent as at end-March 2010.

                                             ***

                  Government Securities Market: (8.10.2010)
   6.90 GS 2019 :8.0907%-8.0907%
   91 day T-bills        : 6.3977%
   182 day T-bills       : 6.5655%
   364 day T-bills       : 6.8564%
   Call Rates            : 4.00% - 6.15%

                                             ***




                                                                                           19
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010

         'Quarterly Statistics on Deposits and Credit of SCBs
            Highlights: RBI releases: March 2010' (RBI release 29 Sep 2010)

 The publication contains data relating to deposits and credit of SCBs including RRBs as
  on March 31, 2010.
 The data are based on BSR-7 giving branch wise data, received from all SCBs (including
  RRBs).
 A new Statement presenting the data on deposits and credit for all the Metropolitan and
  Urban Centres as on March 31, 2010 is also included (Statement 18).
 Number of banked centres: The number of banked centres served by SCBs stood at
  34,801. Of these centres, 27,946 were single office centres and 65 centers had 100 or
  more bank offices.
 Deposits and Credit of top 100/200 centres: The top 100 centres, arranged according to
  the size of deposits accounted for 69.4 % of the total deposits and the top hundred
  centres arranged according to the size of bank credit accounted for 78.0 % of total bank
  credit. In March 2009, the corresponding share of top hundred centres in aggregate
  deposits and gross bank credit was 69.2 % and 78.5 %, respectively. Aggregate deposits
  of top hundred centres increased by 17.2 % in March 2010 over March 2009 compared to
  a growth of 21.0 % recorded a year ago. Growth rate of gross bank credit of top hundred
  centres at 16.3 % in March 2010 was substantially lower than 20.5 % growth recorded in
  March 2009.
 The top 200 centres in terms of aggregate deposits covered 32.1 % of reporting offices
  and 74.4 % of aggregate deposits. The top 200 centres in terms of gross bank credit,
  accounted for 81.5 % of gross bank credit and 31.7 % of reporting offices.
 Bank-group wise shares in deposits and credit: Nationalised banks, as a group,
  accounted for 51.9 % of the aggregate deposits, while State Bank of India and its
  associates accounted for 22.5 %. The share of other SCBs, foreign banks and regional
  rural banks in aggregate deposits was 17.5 %, 5.0 % and 3.1 %, respectively. As regards
  gross bank credit, nationalised banks held the highest share of 52.0 % in the total bank
  credit followed by State Bank of India and its associates at 23.1 % and other SCBs at 17.4
  %. Foreign banks and regional rural banks had relatively lower shares in the total bank
  credit at 4.9 % and 2.5 %, respectively.
 Credit-Deposit ratio: At the all–India level, the credit-deposit (C-D) ratio of all SCBs
  (SCB) as on March 31, 2010 stood at 72.7 %. Among the states/union territories, the
  highest C-D ratio was observed in Chandigarh (131.7 %) followed by Tamil Nadu (112.6
  %) and Andhra Pradesh (105.1 %). At the bank group level, the C-D ratio was above the
  all-India ratio in respect of state bank of India and its associates (74.7 %) and nationalised
  banks (72.8 %). The C-D ratio of foreign banks (72.7 %) was at the all-India ratio. The C-
  D ratio of other scheduled commercial (72.3 %), and regional rural banks (58.6 %) were
  lower than the all SCBs C-D ratio. C-D ratio of all SCBs in metropolitan centres was the
  highest (84.9 %) followed distantly by rural centres (59.0 %) and urban centres (58.8 %).
  The semi-urban centres recorded the lowest C-D ratio at 51.8 %.
 Distribution of bank offices: It is observed from the distribution of scheduled
  commercial bank offices by size of deposits that the offices with deposits of Rs.10 crore
  or more, accounted for 66.0 % of the bank offices, 96.6 % in terms of aggregate deposits
  and 94.2 % in total bank credit. The offices, which extended credit of Rs.10 crore or
  more, accounted for 41.9 % in terms of total number of offices. These offices together
  accounted for 94.1 % of total bank credit whereas their share in aggregate deposits was
  79.0 %.


                                                                                             20
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

        India's Balance of Payments during the First Quarter
               Major Highlights of Developments (April-June) of 2010-11
                                RBI Website 30.9.2010

 Preliminary data on India’s balance of payments (BoP) for the first quarter (Q1) i.e.,
  April-June 2010 of the financial year 2010-11, are now available.
 Exports recorded a growth of 37.2 per cent during Q1 of 2010-11, on a year-on-year
  basis, as against a decline of 31.8 per cent during Q1 of 2009-10.
 Imports registered a growth of 35.7 per cent during Q1 of 2010-11 as against a decline
  of 21.7 per cent during Q1 of 2009-10.
 Despite higher growth in exports relative to imports, the trade deficit widened during
  Q1 of 2010-11.
 Services receipts recorded a growth of 22.5 per cent, on a year-on-year basis, led by
  travel, transportation, software, business and financial services.
 Private transfer receipts continued to be robust during Q1 of 2010-11.
 Net invisibles, however, declined owing to relatively higher invisibles payments driven
  particularly by higher payments under investment income and also by larger payments on
  account of travel, transportation, business and financial services.
 The higher trade deficit combined with the lower invisibles surplus resulted in the
  widening of current account deficit during Q1 of 2010-11.
 The capital account surplus increased significantly, over the corresponding quarter of
  last year, mainly due to short-term credit, external commercial borrowings (ECBs),
  external assistance and banking capital.
 Net foreign investment, however, was much lower than the corresponding quarter of
  last year mainly due to significant moderation in net inflows under foreign institutional
  investors (FIIs) investments. Net inflows under foreign direct investment (FDI) were also
  lower during the Q1 of 2010-11.
 With capital account surplus being higher than the current account deficit, the overall
  balance was in surplus at US$ 3.7 billion, which resulted in a net accretion to foreign
  exchange reserves of equivalent amount during the Q1 of 2010-11.

                                           ***

         Base Rates Hiked by various Banks from OCT 2010
   SBI : 7.5%                                 HDFC Bank : 7.5 per cent
   Bank of Baroda :8.5 per cent.              Andhra Bank : 8.50 per cent.
   PNB, IDBI, Allahabad Bank: 8.5%            Axis Bank : 7.75%
   ICICI Bank : 7.75 per cent.

                                           ***




                                                                                        21
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                           Profile of Our New C&MD:
 Sri S. Raman, ED, Union Bank of India has taken over as CMD of Canara Bank on 1st
  September 2010.
 A PG in Economics from Nagpur University.
 Second Rank in his Commerce Degree and a First Rank and Gold Medal in his post-
  graduation.
 Diploma in Business Management and a Senior Diploma in German.
 He is an ACIB from the Chartered Institute of Bankers, London and is also a CAIIB,
  Mumbai.
 Over 34 years experience in his parent bank, Bank of India
 Exposure to different segments including Corporate Banking, International Business and
  HRD.
 Served in various parts of the country including Mumbai, New Delhi, Ahmedabad, Pune,
  Hyderabad, Bhubaneswar and Nagpur in various capacities.
 Had two overseas strints at Jersey (UK) from 1983-1987 and was Chief Executive of
  Bank of India's US operations from June 2005 to October 2008.
 During his tenure the bank's operations registered spectacular progress. He joined the
  Union Bank of India as ED on 15th October, 2008 and was overseeing the portfolios of
  Corporate Credit, Treasury, International Business, Impaired Assets, Transaction Banking
  etc.
 Sri Raman is certain to bring to bear his rich fund of experience to his new assignment as
  CMD of our bank.

                                             ***

                Profile of our EDs - Shri Jagadish Pai K L
 Appointed as Executive Director and assumed charge on 4.2.2009
 Sri Jagdish Pai K L has taken over as Executive Director of our bank on 4th February
  2009.
 Born on 30th June, 1951, Sri Pai holds a Bachelor's degree in Commerce and is a rank
  holder from the Bangalore University.
 Joining the Bank of India as a Direct Recruit Officer in 1972, he rose rapidly in the ranks
  to become General Manager.
 He was General Manager, Human Resources at his parent bank at the time of his
  elevation and is credited with giving a new direction to HR and for the accomplishment
  of corporate goals.
 Sri Pai has abundant experience in diversified spheres of banking including Rural
  Banking and has also worked in the bank's New York Office as Vice-President.
 He has handled challenging assignments in Jabalpur, Bangalore, Karnataka Zone,
  Nagpur Zone and as DGM in Mumbai South Zone (The No. 1 Zone of the bank
  businesswise) and Raigad-Thane Zone.
 A proven leader with excellent communication skills, Sri Pai has an impeccable track
  record and is certain to bring to bear his rich fund of experience in his functioning in our
  bank.

                                             ***



                                                                                           22
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                   Profile of our EDs - Shri HSU. Kamath
 Sri H S U Kamath has taken charge as Executive Director of our bank on 26.3.2009.
  Born on 14th December 1953, Sri Kamath who is a Commerce graduate and CAIIB,
  joined the Union Bank of India as a Probationary Officer in 1973.
 In a career spanning three and a half decades, he has worked in the credit department at
  various regional/zonal offices of the bank.
 On elevation as Assistant General Manager, Sri Kamath was placed in charge of the
  Forex Department of the bank's Mumbai Samachar Marg branch and held fort as head of
  the bank's International Division in a lengthy tenure.
 Sri Kamath was instrumental in setting up the bank's New Initiative Department and in
  the launching of Cash Management Services, Life/Non-Life Insurance Corporate Agency,
  Demat services, Bullion business, etc. Moving to the bank's Credit Department at Head
  Office in 2005, he led from the front as GM, Credit since 2006, in restructuring the
  Department and launching the large corporate & MSME verticals, in addition to building
  up the credit cadre in the bank.
 Sri Kamath is also an avid reader, apart from being a versatile banker.

                                             ***



          Additional interest over and above the rate offered for general public:
                                      (Cir.275/2010)
                                                              Maturity Period
                                                 less than 5 years        5 years and above
For Senior Citizens* (including under Capital Gains Account Scheme, 1988)
Domestic TD < Rs.1 crore                               0.50%                    1.00%
*Special rates not eligible under NRO deposits / Recurring Deposits of Senior Citizens
For Employees / Ex-employees & other eligible categories
Deposits < Rs.1 crore                                    1%                      1%
Deposits > Rs.1 Crore                                    Nil                      Nil
For Ex-employee Senior Citizens (60 years and above)
                                                     < 5 years           > 5 years < 10 years
deposits less than Rs.1 crore                          1.00%                    1.50%
Deposits > Rs.1 Crore                                    Nil                      Nil




                                                                                           23
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

        Fresh slippages during 2009-10 more in your Branch?
                                       Cir.306/2010

 Unprecedented level of slippage of accounts to NPA was observed during 2009-10.
 Board had expressed serious concern over the huge slippages and ordered that Inspection
    Wing Officials should visit the branches showing huge slippages and ascertain the
    reasons for the same. Here are the Gist of The Findings:
Irregularities observed in sanction:
 Sanction beyond branch powers, where ratification from higher authorities is not on
    record.
 Income proof in case of HLs and loans under Retail lending not on record.
 Repayment capacity is not properly assessed. Multiple loan facilities permitted to
    borrowers/members of the same family, beyond their capacity to repay.’
 Non obtention of salary mandate and PDCs. Salary mandates are not registered with
    Employer.
 Fraud in EMT and Canbudget reported in some branches.
 Gold Loan sanctioned to borrowers whose accounts are in NPA as a result of which on
    the date of sanctioning itself GL becomes deemed NPA.
 Limits sanctioned on inflated projections.
 Loans sanctioned to units far away from command area.
 Mass lending of loans reported in Tractor Loans , KCC , Canara Budget.
 Involvement of middlemen in getting sanctions to ineligible parties, especially in tractor
    finance.
Monitoring of advances and efforts to recover over dues – Areas of concern:
 Laxity in post sanction follow up.
 Over dues not noticed and taken up for follow up in initial stage itself. There is delay in
    sending notices, personal contacts. In many branches, there is no record of follow up
    steps taken like date of notice / personal contact, etc.
 Wherever salary mandates are obtained, they are not taken up for execution.
 There is no worthwhile follow up of small loans.
 Salary accounts of employees who have availed personal loans not monitored after
    transfer and no remittance forth coming. No follow up/ immediate action on such
    accounts.
 Education Loan- Course completion certificate not obtained to fix repayment. Repayment
    holiday not correctly fed in the system.
 In many cases, EMI is not re-fixed or extension of period permitted on revision of Rate of
    Interest and conveyed to borrowers.
 Disbursement in stages in Housing Loan- No pre/post disbursement inspection reports on
    record.
 Salary Mandate executed by borrowers not honored by employers.
 Accounts restructured in 2009 slipped due to non remittance as per restructuring terms.
 Action not initiated in the accounts slipped during 2009-2010.
 Other Observations: In some branches, existing NPA / LPD accounts are shown under
    fresh slippage as the date of NPA is reflected wrongly in the system, at the time of
    migration. There is reluctance to repay by borrowers in Agriculture Sector, as they
    expect further relief scheme to be announced by Government. (Customers are not being
    educated properly). Many branches have not strictly adhered to IRAC norms for
    classification of assets resulting in Memorandum of Changes. Inspecting Officers have
    commented in many branches that some accounts which would have been classified as
    NPA in yesteryears are actually classified as NPA in 2009-2010.

                                                                                          24
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

          Do you have more number of SWL in your Branch?
Strategies for follow up of SWL accounts: Cir. 324 /2010: Ministry of Finance has
informed that Banks have to switch over to system based identification and collation of NPAs
(without any manual intervention) under CBS with effect from March 2011. Branches to
adopt a focused + continuous monitoring of SWL accounts and follow up for recovery.

Strategies for follow up of SWL accounts:

 Data cleansing/updation be completed for all loan accounts and no account be reported
    in SWL for the reasons of wrong input with regard to repayment schedule, holiday period
    etc.
   There should be one customer ID for a customer. If more than one customer ID is given
    for a customer the same should be merged without fail.
   Regular updation of DP/Value of security, submission of stock statements, etc
   Renewal /extension of Working capital limits are taken up with sanctioning/competent
    authorities well before expiry of the limit and details are updated in the system.
   Adhoc limits permitted in the accounts are followed up for recovery within the time
    stipulated and details are duly updated in the system.
   Extension of PC period / Bills tenure in deserving cases to be taken up with Sanctioning
    Authority well within expiry of tenure and permission received to be updated in the
    system promptly.
   Restructuring/rephasement details are properly updated in the system.
   If there are loan accounts/bills portfolio/agricultural loan accounts maintained manually,
    branches to take steps to shift such accounts to CBS data base immediately.
   In case of Education loans, obtain and update the information regarding the date of
    completion of the course, employment details and the due date for commencement of
    repayments, taking into account moratorium period by feeding correct data in the system.
   In the case of loans where disbursements are in stages, disbursement should be shown as
    'fresh disbursements' only and not 'other debits'. If such disbursements are shown as
    'other debits', the same will be reflected as overdues.
   Repayment of interest/installments in Term Loans should be followed up and recovered
    Promptly to ensure that accounts do not reflect in SWL/slip to NPA.
   In case of large borrowal accounts appearing frequently in SWL list, Circles may
    arrange meeting of the party/ies with Circle Heads for discussion on further course of
    action for regularization of the accounts. Outcome of such meetings to be minutes and
    followed up diligently.
   In case of agriculture loans the repayment should be correctly marked by taking into
    account whether the crop is short duration or long duration.
   Annual review of KCC should be done as per guidelines.
   In case of agriculture loans, to be eligible for relief schemes as per guidelines, the
    customers are to be educated properly for availing the benefits. Restructuring of
    agriculture loan accounts in case of natural calamities is to be done as per the guidelines
    issued by PC Wing, Ho and/or other competent agencies like RBI, SLBC.
   Delivery of notes through SHGs/Retired teachers etc. may be properly utilized.
   Utilizing the services of Call Centre for reminding to delinquent borrowers.
   In case of Retail/small value loan accounts, sending of notices to borrowers wherever
    repayments of monthly installments are delayed.
   Whenever there is change in interest rates of Housing Loans/Other personal loans,
    branches should reschedule the EMI or extend the repayment period immediately.

                                                                                            25
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010
     Otherwise, despite the borrower generally paying EMIs, overdues will appear in the
     account on account of differential interest/penal interest.
    Charges debited to loan accounts for insurance/visits etc. are to be recovered
     immediately.
    Due to debit of charges like inspection charges/insurance premium etc. in Housing Loan
     account which remain unrecovered, accounts are appearing in SWL though EMI is
     regularly recovered, such charges to be recovered separately by intimation to borrowers.
    In cases where PDCs are permitted to be obtained, in case of dishonour of such cheques,
     action to be initiated under NI Act after due notice to the borrower so as to avoid account
     being shown in SWL.
    Identifying accounts causing concern in Part A,B & C of SWL on regular basis and
     intensive follow up of the accounts for recovery/regularization to be undertaken.
    Branch Heads to ensure review of system generated SWL reports promptly on monthly
     basis to avoid wrong reporting of accounts in SWL statements.

                                    ***
    How many accounts were allotted to you as part of our Bank's Recovery
                            Contest 2010-11?
                                         Cir.182 / 2010

 The period of the contest will be from 1.4.2010 to 30.9.2010.
 Cash Recovery effected in NPA accounts with book liability of Rs.5 lacs and below
  categorised as Doubtful & Loss Asset accounts as at 31.12.2009 are eligible.
 The incentive shall be paid as follows:
  ► Cash Recovery from Doubtful asset 1 % of the amount recovered.
  ► Cash Recovery from Loss asset 3 % of the amount recovered
  ► Recovery from written off accounts 5 % of the amount recovered
 All employees at branches/administrative units including recovery officers but excluding
  Branch-in-Charge are eligible to participate.
 To become eligible for cash incentive, an employee has to make minimum total cash
  recovery of Rs. 1 lac during the contest period. The total cash incentive to be paid to an
  employee shall not exceed Rs.30,000/-
 Eligible cash incentives to individual employees will be disbursed quarterly as at the end
  of June 2010 and September 2010
 On reaching a claim amount of Rs. 3000/-, an Employee can also claim the incentive at
  the end of that particular month.
 No two employees can pick or identify the same account for the purpose of claiming
  incentive by bifurcating the recoveries.
 Cash recovery shall be exclusive of ECGC, Subsidy and CGMSE settlements.
 Wherever OTS is permitted, only the actual recovery component excluding the sacrifice
  is to be considered.
 Cash recovery received in normal course shall not be reckoned for the purpose of
  incentive.
 Staff loans, loans against approved securities like NSCs / LI Policies/ Shares/Deposits
  etc., and gold loans are not eligible.
 Branch to ensure that all incentives put together (incentive earned through other contests
  during the year) shall not exceed ceiling of 20% of the gross salary earned by the
  employee during 2010-11. TDS applicable for the cash incentive earned.
                                              ***

                                                                                             26
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

                              Capital Gains Account
 Income Tax under the head long term Capital Gains (LTCG) is payable whenever a
  capital asset (like house, etc) is sold or transferred by an assessee.
 However, exemption is available for a specified period till the sale proceeds / gains are
  reinvested in Capital Assets & if the funds are deposited in Capital Gains Accounts.
 Capital Gains Accounts Scheme applies to all assesses who are eligible for exemption u/s
  54, 54B, 54D, 54F or 54G of the IT Act.
 The Capital gains accounts are only transitory in nature pending investment in the
  specified assets.
 Mere depositing the money in the capital gains accounts will not entitle the depositors to
  tax exemption.
 The accounts can be opened by all branches excluding rural branches.

Who can open the accounts?

 Accounts can be opened by an individual or on behalf of a minor or a HUF or a firm or a
  company or an Association of Persons or a Body of Individuals.

Types of accounts:

   There are two types of accounts under this scheme.
   They are:
   CGA/c - A - SB account.
   CG A/c – B – (FD// KD).

Common Guidelines For “CG: A & B” Type Of Accounts:

   Introduction is not required.
   NRE / FCNR cannot be opened.
   Can be transferred to other branches except to rural branches.
   Account is exempted from wealth tax.
   Application for opening should be in NF 730 (FORM – A) in duplicate for both CG A/c –
    A & B type.
   Nomination can be made in Form E (NF 733) in favor of one or more (Not exceeding 3
    persons). The first named nominee will have the right to receive payment.
   Nomination CANNOT be made on behalf of a Minor or a HUF or a Firm or a Company
    or AOP / Body of Individuals.
   Nomination can be cancelled / varied.
   The deposits under this account cannot be placed or offered as security for any loan or
    guarantee. Cannot be charged / alienated in any manner whatsoever.
   For closure of capital gains account: Application should be made with the approval of
    Assessing Officer in form G (NF 734).
   Withdrawals should be used only for the purpose to which it is made. It should be
    utilized within SIXTY DAYS from the date of withdrawal.
   If the amount is not utilized within 60 days it should be re-deposited immediately.




                                                                                         27
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010
CAPITAL GAINS ACCOUNT SCHEME – A: (SB):

   Separate specimen card is not required.
   Pass books can be issued.
   Cheque books should NOT be issued.
   For every subsequent deposit after initial deposit, along with remittance, application
    should be obtained.
   Withdrawals under this account can be made from time to time, subject to other
    provisions of the scheme.
   For initial withdrawal depositor can apply at any time but in Form 731 (Form-C).
   Subsequent withdrawals should be applied in Form – D (NF 732) in duplicate. He should
    inform the manner and extent of usage of money withdrawn earlier.
   If withdrawals is more than Rs.25000/- branch should only give DD favoring the person
    to whom payment is to be made. No DD commission is to be charged.
   Preferential rate is not applicable to any category of depositors under CGA/c – A (SB).

CAPITAL GAINS ACCOUNTS SCHEME – B: Term Deposits:

 KDR – CGA (Cumulative) // FDR – CGA (Non cumulative) can be opened at the option
  of depositor.
 FD interest payable only quarterly OR at longer intervals. Interest to be credited to SB-
  CG account only.
 FD / KD to be closed on the completion of the term. Pre-closure 1% penal cut.
 No penal cut for premature closure for deposits of deceased persons.
 Refer HO circular 279/2008 dated 6.10.2008 for rate of interest payable after 10.10.2008.
 For Senior Citizens, additional interest of 0.50% over and above the base rate can be
  offered for deposits of less than Rs.15 lakhs.
 TDS applicable like any other time deposits.

                                           ***
                                Advantages of CBS
Customer: Multiple touch points; Online Remittances; Investment and Trading
Opportunities; Unified View of Accounts; Anytime Anywhere Any Device Banking;

Bank: Customer-centric; Real-time MIS; Reduction in Transaction Cost; Instantaneous
Product Launch; Cross-selling of products; New avenues for profitability

Branch: Centralised back-office; Automatic Reconciliation; Efficient delivery channels;
System generated statements and returns; Empowering people; Marketing Force; Comfort to
Users


                                           ***




                                                                                        28
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

                      Deposits from cooperative banks:
                                      Cir.151/2010

 Co-operative Banks are a good source of term deposits.
 Advantages: (a) There is no reserve requirement for Bank deposits under CRR. (b)
  Reserve requirement under SLR depends on the net Asset- Liability with the Banking
  system. (c) Term deposits from banks are low risk, non-volatile deposits and hence do not
  constitute any concentration risk.
 Considering the importance of Co-operative Bank deposits in augmenting the deposit
  base, notional weightage is permitted to term deposits from co-operative banks towards
  reckoning of target achievement, subject to the following: (a) Minimum amount of Rs.
  25 lakh. (b) Minimum period of 3 months. (c) 50% of the quantum of term deposit
  outstanding over and above the level outstanding as on 31.03.2010 shall be reckoned for
  Branch/CO target both under aggregate and average deposits. (d) The notional weightage
  will not be available for deposits secured from our sponsored RRBs.
 Major portion of the deposits should be by way of cheques (Cash component should be
  generally less than 50% of the deposits).
 Interest rates for the deposits of the Co-operative Banks will be as per the prevailing
  interest rate guidelines.
 Branches to utilize these relaxations and garner deposits.

                                           ***

                                  What is DTAA?
         DEDUCTION OF TDS ON NRO A/c at a lesser rate: (Cir: 160/2008)

Based on Double Taxation Avoidance Agreement (DTAA) of Government of India with the
government of the countries mentioned below, revised rate of TDS are applicable for the
interest earned by the NRI customers residing abroad in countries covered by DTAA.
 Branches have to obtain proof of residential status from the NRI deposit holder.

 Country        Article     Income       Country    Article Income Tax Rate(%)
                No. of      Tax                     No. of
                DTAA        Rate(%)                 DTAA
 Australia          11           15      Russia         11                   10
 Canada             11           15      Singapore      11                   15
 China              11           10      S. Africa      11                   10
 France             12           10      Spain          12                   15
 Germany            11           10      Srilanka       11                   10
 Hungary            11           10      UAE            11                  12.5
 Saudi              11           10      UK             12                   15
 Indonesia          11           10      USA            11                   15
 Italy              12           15      Malaysia       11                   10
 For full list of countries eligible under DTAA please refer to HO Circular 160/2008
 Cir.305/2009: The additional list of countries covered by DTAA and rate of Tax are given
 below: Botswana, Serbia & Montenegro, Syrian Arab Republic.


                                           ***

                                                                                        29
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                      CNet Banking // Internet Banking
 Internet and Mobile Banking (IMB) is a service, which drives banking technologically
  providing the ultimate in banking convenience, by facilitating easy and secure access to
  account information at any time from any part of the world through the Internet and
  Mobile Phone.
 CNet-Banking is the trade name for Internet and Mobile Banking Services in our bank. It
  consists of two modules: (a) CNet-Personal for Retail Users (b) CNet-Business for
  Corporate Users
 Customer can access Net-Banking through the Bank’s URL www.canarabank.in.
 Customers can access all their accounts maintained in CBS Branches under one login
  provided all the accounts are linked to the same customer number. All their accounts will
  be seen on a single page.
 The facility is available to all NRI's and is very helpful to access accounts sitting in the
  luxury of office or home from any part of the world.

Eligibility for CNet Personal:

(a) Individuals including staff & Joint Accounts where
(b) Operation is Either Or Survivor/Anyone or Survivor. Different login names will be given
    only at the specific request to the bank.
(c) In case of Minor Accounts operated by guardians, access can be provided to the guardian
    of the Minor
(d) In case of accounts operated by mandate/POA, the application for CNet-Banking has to
    be signed by the account holder. Access to CNet-Banking is not permissible solely
    against the application of the POA holder.

Facilities available in Net Banking - Individuals:

   Summary of Operative Accounts/Term Deposit/Loan Accounts.
   View/Query transactions in all your Operative/Loan Accounts.
   Account Details of all your Operative/Term Deposits/Loan Accounts.
   Funds transfer facility between your own accounts of the same branch/maintained across
    CBS branches and Third Party Transfers
   Opening and Viewing of Term Deposits, Term Deposit Payout Instructions and TDS
    Inquiry
   Initiation/Modification/Deletion and Viewing of Standing Instructions
   Repayment of Loan
   Bulletins from Bank’s Relationship Manager
   Cheque Book Request
   Cheque / Cheque Book Status Inquiry
   Request Account Statement.
   Forex Rate / Interest Rate Inquiry
   Term Deposit / Loan Calculator
   Change Password // Update Profile
   Contact Relationship Manager
   MAIL (View inbox / Draft / Compose mail to Relationship Manager / Sent Items)
   Stop Payment Instructions // DD/Pay Order Requests



                                                                                           30
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010
 Facilities available under Internet Banking are: (a) Viewing of account details (b)
  Query on Operative/Term Deposits/Loan Accounts (c) Request for Deposit
  Renewal/Change Mailing Address/Cheque Book Request.
 Facilities available under Mobile Banking are: (a) Enquiry on Balance and Last Five
  Transactions (b) Changing of SMS password (c) Sending Messages to Relationship
  Officer
 The above facilities are available FREE OF COST as of now.

Eligibility for CNet Business:

1. Proprietorship Firms: Access would be provided to the Sole Proprietor.
2. Partnership Firms: Access only to partners who are authorized to operate the account.
   All partners should sign the application.
3. Companies and Societies: Access only to those authorized to operate as per the latest
   Board Resolution. The Person so authorized should sign the application form

Net Banking Corporate: Net-Banking is the Internet Banking service provided by
Canara Bank in Core Banking Branches. Net-Banking Corporate is a part of Internet-
Banking tailor made specifically for Corporate customers. The following facilities are
available on-line to the Corporate users of Internet & Mobile Banking under CBS.

1. View/Query/Print of account summary, account details and transaction details of all
    Operative accounts.
2. Funds transfer between your own accounts and Third party account.
3. Viewing and Initiating Term Deposits.
4. Bulk file upload facility for one debit and multiple credits.
5. Online Excise / Service Tax payment
6. Facility to request for account transaction statement for a particular range based on dates,
    amounts, only debits or credits.
7. Request for issue of cheque book.
8. Stop payment Instruction.
9. Initiation, modification and Inquiry of Letter of Credits.
10. Initiation, modification and Inquiry of Bank Guarantee.
11. Enquiry of Import and Export Bills.
12. Inquiry on Forex rates .
13. Inquiry on Deposit and Loan interest rates.
14. View Bulletins posted by the Bank
15. Mail Box option to contact Bank’s Admin
16. Facility to change password

 SMS and WAP: All customers who are eligible for CNet-Personal.
 SMS (Short Messaging Service): A facility extended to the customer to give short
  messages through his mobile phone. All mobile phones are SMS enabled.
 WAP (Wireless Application Protocol): A facility offered to the customer by which the
  Internet/Mobile Banking facility is extended into his/her WAP enabled Mobile Phone. All
  mobile phones are not WAP phones. Though technically, all the functionalities supported
  on the browsers can be supported on WAP devices, the displays of the WAP devices are
  much smaller than the PC monitor browsers. Thus, the size of the display on the WAP
  device will be critical factor in deciding the various functionalities that are being offered.
  Display of the screen/data to the customers depends on the WAP enabled phone from

                                                                                             31
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
  which the caller makes the call. The commonly used set of WAP enabled phones can be
  classified into groups based on the sizes of the display and templates will be maintained
  for each group. Depending on the group that the callers phone belongs to, a corresponding
  template will be used to show the display. If in case the phone does not belong to any of
  the groupings, a standard template will be used to show the data.
 Ineligibility: (a) Joint accounts where operation is jointly (b) Illiterate Persons (c) Blind
  Persons (d) HUF, Trusts, Clubs and Associations {exclusive Internet Banking facility
  without Mobile Banking has since been permitted vide Cir.344/2008} (e) Accounts with
  court/attachment orders or which are subject to litigation/disputes
 Norms for Eligibility: Customers who have completed at least one year of satisfactory
  dealings are eligible to avail this facility. However the branch can exercise discretion to
  extend the facility to a new account holder whose account has not completed one year
  provided he/she is satisfied with the dealings of such an account holder.
 Relationship Manager: A Relationship Manager (RM) is a contact person for the
  Internet Banking Customer. One RM is identified for each circle. Any Customer enrolled
  for Internet Banking Service is linked to a RM of the circle overseeing the branch. All
  mails and requests sent by the customer through Internet Banking reaches the RM, who
  takes up the matter with the branch concerned for redressal. Any query/request made by
  the RM on behalf of the customer should be attended on PRIORITY.

                                             ***

                    How safe is our Bank's Net-Banking?
 Encryption: Customer’s Data and Messages travel in a 128Bit SSL mode encryption
  technique provided by IDRBT (Institution for Development and Research in Banking
  Technology), which is a subsidiary of RBI.
 Change Password Option: Customers are provided with an option to change Customer’s
  passwords any number of times through the application. Customers can change the
  passwords whenever Customers feel that Customer’s passwords have been compromised.
 Data Confidentiality: Customer’s Data and other Information is kept highly confidential.
  This will not be disclosed to anybody unless legally warranted.
 Password Confidentiality: Customer’s Passwords are known only to Customers. The
  Passwords are randomly generated by the system and will not be known to any person in
  the Bank.
 Number of Attempts to Login: Since Customer’s security is of foremost importance to
  us, we only allow three attempts for Customers to login. This will minimize brute force
  attacks. After the three attempts Customer’s User id will be automatically gets locked.
  Customers will have to request Customer’s branch to unlock the same, by way of a letter.
 Validity of Passwords: Customer’s passwords are valid for One year (Earlier 90 days).
  System will prompt Customers to change Customer’s passwords from 10 days before
  expiry of one year (earlier 90 days) from the date of previous change.
 Expiry of Passwords: Customer’s passwords will expire after one year of generation if
  Customers have not logged in. Customers will have to request for fresh set of passwords
  thereafter.

                                             ***




                                                                                            32
                                                                 Canara Bank RSTC Gurgaon
                                                                  Interview Magnet Oct 2010

   Internet Banking Facility for HUF/Trusts/Clubs/Associations.
                                (Cir 344/2008 dtd 11.12.2008):

 It is now permitted to extend Internet Banking facility (exclusive Internet Banking facility
  without Mobile Banking) with additional safeguards. Extended selectively to long
  standing clients only.
 Specific permission from MIPD section of concerned Circle Office is to be obtained.
 Access to be provided only to those who have been authorized by the respective bodies to
  access/operate the accounts.
 A resolution to this effect is to be obtained authorising person/s to access or operate the
  account through Internet banking facility on behalf of the subject bodies.
 The authorization should be in conformity with the regular instructions for the operation
  of the account.
 The signature/s of the person/s authorized to operate the account as per the resolution, to
  be obtained on the Internet Banking Application form.
 Since the subject accounts belong to the high risk category, branches are advised to
  exercise caution. Limits for funds transfer stipulated here below:

   Nature of fund transfer       Limit per day (Max)           Per transaction limit
 Own account fund transfer      Two lacs Cir.139/2010     Two lacs Cir.139/2010
 Third party fund transfer      Two lacs Cir.139/2010     Two lacs Cir.139/2010
 Issue of pay order             50,000/-                  50,000/-
 Issue of DD                    50,000/-                  50,000/-
 Opening term deposit           No limit                  Rs.1000/- minimum
 Standing instruction           50,000/-                  50,000/-

 The letter of acceptance, signed by the authorized signatories who are authorized to
  operate the internet banking facility, is to be obtained in addition to internet banking
  application form.
                                           ***




                                                                                           33
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

                   Internet Mobile Banking to Customers
                        (Cir.263/2006, 438/2009, 19/2010, 40/2010)

Capturing of internet data pertaining to corporate Customers at branches – Procedure
for User Maintenance: Cir. 438/2009

The admin functionalities of user creation (capturing internet data pertaining to customers,
generation of user-id, reset of passwords etc) are being done at Branches for IMB Retail
customers from 15.4.2008 onwards.

Bank has now decentralized admin functions of capturing internet data, generation of user-id
/ passwords, reset of user passwords, etc. pertaining to Corporate Customers also.

Password / Id:

 Validity of pass word: One Year (Cir.19/2010). (Earlier 90 days).
 Customer passwords are valid for one year and password will expire only after a period of
  one year from the date of last change of password, by the customer.
 User ID will be locked after a period of 2 months, if the user has not logged in for a
  period of 2 months continuously (User Hibernation)
 If a customer wants to withdraw internet banking facility, he has to give 21 days’ notice.

Facilities Available To Customers under IMB:

 Customers can view Accounts and Transactions details pertaining to Operative, Term
  deposits, Loans.
 Retail customers can view last six months transactions and Corporate Users can see last
  one month transactions
 Customer can request for cheque book issue, Change Mail Address and FD renewal
 Customers can change passwords, e mail id, formats of amount and date, account nick
  name etc whenever required.
 Mails utility is available to customer to correspond with the Bank. Activities carried out
  by customers can be enquired by themselves.
 What-if-analysis (Modelling) facility for Deposits and Loans is available for knowing the
  Maturity values and EMI amount, for a given deposit or loan amount and rate of interest.

Internet Banking – Registration of mobile number mandatory
Circular 318/2006, 428/2009

Presently the value added mobile phone SMS alerts are given for the following alerts free
of cost :

   Alert Type                      Amount / Periodicity
   Debit Transaction Alert         Amount to be more than the Rs. 10,000/- (Minimum
                                   amount fixed by the bank )
   Credit Transaction Alert        Amount to be more than the Rs. 10,000/- (Minimum
                                   amount fixed by the bank)
   Present Balance Alert            Monthly



                                                                                         34
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
Mobile alerts besides providing convenience of account information, serves as means of
security also. Moreover we are going to introduce in course of time the two factor
authentication for funds transfers and third party beneficiary maintenance. It is all the more
necessary that our Net Banking users register their mobile number with their branch where
their accounts are maintained.

Branches are requested to adhere to the following:

1. Sensitize the customers to register their mobile numbers immediately.
2. Display a notice board in the banking hall requesting customers to provide the mobile
   numbers
3. Whenever new account is opened please convince and obtain from the customer the
   details of his mobile number without fail for registration.
4. When customer submits the net banking application ( this contains a column for mobile
   number details) for internet facility please ensure that the details of the mobile number is
   furnished In the application without fail.
5. ensure that mobile number details are entered in Menu CIM09 ( under option Mailing
   address) without fail
6. Please convince the customer that mobile number registration is a must and it helps the
   customer to prevent / detect fraud.

Internet Banking – Retail and corporate-Customer Address Updation and complaints
handling: Cir.40/2010.

 In order to avoid the delay in creation of user id and passwords, the work regarding user
  creation for both Retail and Corporate customers have already been decentralized.
 Branches can themselves attend to the following now: (a) Creation of user id and
  password for Retail customers (decentralized in March 2008). (b) Creation of user id and
  password for Corporate Customers (decentralized in Dec 09) (c) Resetting of passwords
  for both Retail and corporate customers (d) LOCK / UNLOCK user accounts (e) Activate
  user accounts.
 For facilitating branches to do the above works, admin users are to be created at branches
  for both Retail and Corporate internet banking applications.
 The procedure for requesting admin user creation is enumerated in Cir 438/2009.
 Branches to write & email (imbhelpdesk@canbank.co.in) to Delivery Channel Group
  for creation of admin user-id and passwords to the Branch staff.
 Branches can recommend only 4 admin users.
 There are two types of admin users – Creator and Authorizer.
 If creator (clerk or officer) creates an entry it has to be authorized by another authorizer
  (officer and above).
 If authorizer creates an entry then it has to be authorized by another authorizer.

Attending customer complaints:

 In CH021 the internet banking tick box has to be ticked to enable the customer to get the
  internet facility.
 Cust ID to be properly linked & Roles properly to be granted.
 Address should be updated. Or else the cover will get returned. (CIM09).
 Any change in address should be effected both in CIM 09 as well as in IMB package .


                                                                                            35
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010
 Branches are requested to call the Internet Banking Help Desk (Phone numbers 080
  25580617 or 080 25580619 ) for help regarding Internet Banking issues.
 Branches can lodge their requests in email to imbhelpdesk@canbank.co.in. If reply is
  not received within 3 days Branches can escalate the matter by sending email to
  cbgimb@canbank.co.in or hodcg@canbank.co.in.


                                           ***

 Funds transfer facility through NEFT to retail customers under
                         Internet Banking.
                                       Cir.139/2010

 NEFT launched in our Bank : Circular 85/2006
 Enhanced features and functionalities under Internet Banking in CBS Environment:
  Cir.263/2006
 Now, in addition to those facilities, Funds Transfer facility through NEFT under Internet
  Banking is introduced for Internet Banking retail Customers of CBS Branches.

The Salient features:

   The product is available for retail customers of Internet Banking.
   Facilitates online interbank fund transfer by customer, without branch intervention.
   Fund transfer upto Rs. 2 lakh per day per customer.
   Fund Transfer facility available to own a/c as well as Third Party account.
   Various security features incorporated to ensure secured fund transfer.
   SMS alerts for transactions above Rs.10000/- presently. SMS alerts for all transactions,
    irrespective of the amount, will be introduced subsequently.
   Centralized monitoring at Head Office under Corporate Cash Management Section,
    SP&D Wing, to monitor the fund flow.
   The facility is account specific.
   Funds transfer facility through NEFT under Internet Banking will be available only to
    retail accounts with internet banking facility.
   The charges as applicable will be debited to the account online.
   Transactions involving NRI accounts shall be governed by the existing regulations
    regarding the same.
   The operational details of the product are provided in Annexure I of Cir.139/2010.
   Additional clauses in the Terms and Conditions for the customers for internet Banking
    consequent to introduction of NEFT facility are provided in Annexure-III. Terms and
    conditions for the customers are available in the website and when customer initiates to
    undertake NEFT transaction, system will prompt to accept the terms and conditions,
    which is displayed, before proceeding further.

Eligible accounts for NEFT facility under Net Banking- Retail:

 Any running account of individual/s including staff, NRI and Minor represented by
  Guardian.
 Joint Account/s where operation condition is severally – Joint or First (JOF) or Joint or
  Others (JOO).

                                                                                         36
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010
 Such account/s should be fully KYC compliant.
 Existing accounts should have satisfactory operations for reasonable period.
 Newly opened accounts, depending upon the value of the account and at the discretion of
  the Branch-in- charge.

The eligible persons to access are:

 By account holder himself/herself.
 By PA/LA holder*. (*Power of attorney should specifically mention the authority to
  transact under Internet Banking. The customer should also undertake to give proper
  intimation to the bank in case of revoking of the power of attorney).
 Minor accounts operated by guardians, by guardian of the minor.
 In respect of joint accounts where operation condition is specified as JOF or JOO,
  different user ids will be issued to each account holder of the account on specific request
  to the Bank.

The ineligible accounts:

   Joint accounts where operation condition is other than severally.
   Account/s of illiterate persons.
   Account/s of blind persons.
   Account/s under Court orders /Attachment orders.
   Dormant accounts.
   Frozen account/s for various reasons like disputes, litigation etc.
   Any other accounts not included under eligible accounts category.

Guidelines to Branches:

 Branch to confirm that the mobile number and e-mail id are valid before enabling the
  facility.
 Once the customer is enabled and subsequently wants to opt out, a request letter is to be
  obtained from the customer and the facility has to be disabled immediately.
 Branch-In- Charge/ Manager of Deposit section is the authorized person to enable/disable
  the facility.
 Daily reports of transactions at branch level are provided under option 7775, in Adhoc
  Reports 'BA121' and 'BA122'.
 These reports should be generated daily and reviewed/ scrutinized by the Branch-in-
  charge to ensure compliance of KYC/AML guidelines as well as non-diversion of funds
  from OD/OCC accounts.
 These reports are to be duly authenticated and filed.
 The same are to be made available during branch inspections.
 Detailed guidelines on generation and preservation of reports are provided in Circular
  355/2009 by Payment Systems Group, DIT Wing.
 Customers opting for Internet Banking facility are to be advised to take sufficient care
  with regard to confidentiality of password in view of risks such as phishing.

                                             ***




                                                                                          37
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010

                                    Mobile Banking
                                        (Cir.318/2006)

SMS Request/Enquiry Facility: Allows user to register and perform transactions by sending
an SMS from his/her Mobile phone. A pre-requisite is to have the mobile number registered
with the bank. The CANARA BANK specific number for sending the SMS is 56161

Sms / Email Alerts Facility: This facility enables User to get alerts through SMS/over E
Mail in following events:

      Debit greater than a specified amount (Minimum Rs 10000).
      Credit greater than a specified amount ( Minimum Rs 10000).
      Balance alert at a pre-defined frequency (Monthly)
      Overdraft alert when account goes to debit / TOD

The alert facility is to be enabled by the Supervisor in Internet Banking software at the branch
as per the guidelines send to the branches for Internet/Mobile banking enrolment procedure.
KEY WORDS FOR SMS Request/Enquiry Facility

 KeyWords      Message Format                 Purpose
 CANREG        CANREG <Customer No> <Acct.No> For Registration of default
                                              Account No.
 CANACC        CANACC <Customer No> <Acct.No> For changing the default Account
                                              No.
 CANBAL        CANBAL <Customer No>           For balance inquiry of default
                                              account
               CANBAL <Customer No> <Acct.No> For balance inquiry of other
                                              account
 CANTDQ        CANTDQ <Customer No>           For TD inquiry of first 3
                                              accounts
               CANTDQ <Customer No> <Acct.No> For TD inquiry of a specific
                                              account
 CANCHQ        CANCHQ <Customer No> <Cheque For Cheque status enquiry of
               No>                            default a/c
 CANTXN        CANTXN <Customer No>           Last five transaction enquiry of
                                              default account.
                                              Last five transaction enquiry of
               CANTXN <Customer No> <Acct.No> other account.
 CANDEL        CANDEL <Customer No>           To disable himself from the SMS
                                              facility.

SMS Services under Mobile Banking (Cir 318/06): Balance enquiry. Inquiry of last 5
transactions. SMS Alerts – when Debit/Credit transaction exceeds Rs.10,000/-. Customer
should send SMS to 56161




                                                                                             38
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
SMS Alerts for Cancard Users (158/2007):

As per the system, SMS alerts on transactions will be sent to our credit card holders who have
furnished their mobile phone numbers to our division.
 Once the card is used, an SMS message will be sent to the registered mobile number
    informing about the card issue immediately.
 For the time being, the transaction alerts will be SENT ON THE NEXT WORKING
    DAY.
 Additionally, the following types of messages would be sent to the Cardholders who have
    provided their mobile numbers to the Division.
 Alert on all card transaction value of Rs.3000 and above (free of cost)
 Alert on Billing with the amount to be paid and the due date. (free of cost)
 Alert on return of FTV and information about conversion of payment mode to Direct
    Billing (Service charge of Rs.5 will be collected)
 Overdues follow up alerts (Service charge of Rs.5 will be collected)
 Birthday greetings to Cardholders. (free of cost)
 Greetings on major festivals/occasions. (free of cost)

Help desk for Internet Mobile Banking applicable for Core Banking Branches only:
Delivery Channels Group msg dated 20.11.2009:

A separate help desk is functioning in dit wing to help our branches and customers on net
banking. Kindly make use of the same for all internet and mobile banking related enquiries.
STD Code : 080 // Telephone Nos. [DIRECT] 25580617 // 25580619 // 25580620 //
25580621 // 25580622 // [PABX] 25584040 EXTN. 229 AND 230


                                            ***




                                                                                           39
                                                                   Canara Bank RSTC Gurgaon
                                                                    Interview Magnet Oct 2010

                                  Debit Cards/ATM Cards
                       (Base circular 236/2003 & 329/2006, 66/2008, 178/2008)

     Eligibility: All SB, Current and OD account holders including NRIs, employees and ex-
     employees. Debit cards can be issued to:

1)       Individual accounts.
2)       Joint account with operation severally.
3)       Employees including under suspension, ex-employees
4)       HUF/proprietory concern.
5)       P.A. holder/holder of mandate
          6)     Non Resident Indian (NRI)

     Issuance of Debit Cards on a case to case basis only on the recommendation of the circle
     can be considered in the following cases:

        Authorised person/s of clubs,
        Associations (regd/unregistered),
        Charitable and Religious institutions,
        Trusts, Local Bodies,
        Partnership firms,
        Public and Private Ltd company,
        Societies (regd or unregistered),
        Provident fund account etc provided the operational condition is severally in case there
         are more than one authorized person to operate the account.

     Ineligible Accounts :

        Joint Accounts where operation condition is ‘Jointly’
        Accounts of illiterate persons/blind persons/minors.
        Accounts under Gurnishee/attachement orders or which are subject to litigation/dispute.
        Encumbered accounts.


                                          ***
                       Facilities Available at our ATMs Presently

      Cash Withdrawal                               Registration for Mobile Top Up through
      Fast cash                                      SMS.
      Ministatement                                 Daily Limit – 20000 for cash withdrawal
      Balance Inquiry                               Daily Limit – 20000 for POS transactions
      Pin Change                                    Visa Money Transfer – Fund transfer
      Cheque deposit for customer's of ATM           between Debit cards of Canara Bank and
       branch.                                        other Bank VISA cards.
      Mobile Top Up                                 Biometric ATMs ( at selective places)
      E ticketing for Kingfisher Airlines.          Mobile ATMs (at selective places)

                                                 ***


                                                                                               40
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

Issue of Canara Bank Debit Card-Non Personalised (CBDC-NP):
 Cir.307/2009, Box Item 38/2010, Box Item 48/2010, Box item to Cir.180/2010, 349/2010

 This scheme was introduced on PILOT basis in CBS branches in Bangalore Metro,
  Chennai and Mumbai Circles.
 This scheme was gradually extended to 1141 branches and around 5 lakhs cards have
  been issued so far.
 Issuing NP Cards to existing eligible accounts permitted (Box item to Cir.180/2010)
 Now the competent authority has permitted extension of this scheme to all branches of
  the Bank in phased manner. (a) First phase - Branches in Metros (b) Subsequent phases -
  Urban, Semi Urban branches where ATM Facility (Our or other bank) is available. (c)
  For Rural Branches where ATM Facility (Our or other bank) is available – Circle Head to
  recommend for this facility. (Cir.349/2010)
 Issue of Non Personalised Cards enables the branches to reduce (i) Foot-fall at the
  branches (ii) Risk of Cash handling and (iii) Considerable operational cost of the
  transactions.
 CBDC-NP is Debit Cards similar to the existing Canara Bank Debit Cards except that the
  name of the cardholder is not printed on the card and validity of the card will be 3
  years.
 The cards will be issued in association with Visa International and Master Card. {Master
  Card in Delhi, Chandigarh, Bhopal & Lucknow Circles in place of Visa Debit Cards.
  (Box Item 38/2010)}
 Cards with residual validity of more than 6 months only should be issued to the
  customers.
 The CBDC-NPs will have the card number and month & year of issue & expiry (valid
  from & valid thru) as in the case of existing Debit cards. The space meant for name on
  the card will be left blank.
 Customer has the option to take Non-personalised or our regular Canara Bank Debit Card.
 The CBDC-NP is issued to the customer as a part of Welcome Kit.
 The Cardholder should sign on the signature panel on the reverse of the card in the
  presence of the Bank Official.
 Card is activated after three working days from the date of linking the card.
 Cardholder to activate the card by using the card first in ATM for any financial or non-
  financial transactions.
 On expiry of validity of the card, Personalised Canara Bank Debit Card shall be issued as
  renewal card.
 Replacement card is issued at the branch itself in place of damaged cards.
 If the cardholder who opted for CBDC-NP requests for personalised Debit card before
  completion of its validity period, a service fee of Rs 100/- will be collected.
 The system facilitates instant issue of Debit cards while opening the accounts itself and
  helps to improve our card base.
 Cards can be delivered to the customers immediately after linking and delay in issue is
  avoided.
 Replacements for lost & hot listed cards can be issued immediately on the spot. The
  branches need to hotlist the card, delink the lost card and issue fresh card under
  acknowledgement duly linking the new card in place of lost card.
 The risk of holding undelivered cards at branches can be avoided.
 This system renders simplification of the entire debit card issue process.



                                                                                        41
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

          Canpremium Current Account:                   (Cir 221/07 & 212/2008)

   Scheme applicable only in CBS (Core Banking Solution) Branches
   Basically a Current Account. Rules of business as applicable to CA will apply here.
   Initial deposit Rs.50000/- (Cir 212/2008)
   Average monthly balance Rs.50000/(Cir 212/2008)
   In case of non-maintenance of Average monthly Balance of Rs.50000/- during the month,
    non-maintenance charges of Rs.1000/- for the month shall be levied. Circle Head can
    waive on case to case basis.
   CONTENTS OF WELCOME KIT (to be given latest by 7th day of opening of a/c):
   Welcome letter signed by branch in charge, booklet on bank products, cheque book, Debit
    card, Credit Card, Internet Banking Pin Mailer and Telebanking Pin mailer.
   50% concession on DD issue/ NEFT/RTGS.
   Free AWB, Debit & Credit Card
   Refund of usage in other bank ATM – Other bank charges will be reimbursed subject to
    maintenance of minimum daily balance of Rs.10,000/-
   Demat a/c opened free of charge
   No charges for IMB Banking
   Cheque book will be supplied with name of the depositor printed.


                           SB Gold: (Cir 220/07, 212/2008)
   Scheme applicable only in CBS (Core Banking Solution) Branches
   Initial deposit Rs.50,000/- (212/2008)
   Average monthly balance Rs.50000/-.(Cir 212/2008)
   Existing SB account holders may be permitted to have an account under this scheme also,
    as the scheme, per se, is a different product.
   For existing customers, separate Account Opening Form need not be insisted upon.
    Instead, the account may be got opened by obtaining a simple Letter of Request.
    Multi City Cheque (MCC): (115/2008):
   The facility of MCC shall be extended to customers of SB Gold and Can Premium
    Current Account where the daily minimum balance maintained during the immediately
    preceding calendar month is Rs.25,000/- and Rs.50,000/- respectively.
   The issue of MCC Cheques is in addition to the normal cheque book.
   50% concession on DD issue/ NEFT/RTGS. (DD concession is in addition to 2 DDs of
    Rs.25,000/- without commission)
   Free AWB, Debit Card
   Refund of usage in other bank ATM – Other bank charges will be reimbursed subject to
    maintenance of minimum daily balance of Rs.10,000/-
   Demat a/c opened free of charge
   No charges for IMB Banking
   Cheque book will be supplied with name of the depositor printed.
   If minimum balance is not maintained, future benefits will be withdrawn and monetary
    value given benefits during the month will also be recovered.

                                           ***




                                                                                        42
                                                           Canara Bank RSTC Gurgaon
                                                            Interview Magnet Oct 2010

    Multicity Cheque facility – MCC: Extension to all branches
                                     Cir.327/2010

 The issue of MCC Cheques is in addition to the normal cheque book. (115/2008)
 The facility may also be made available to normal SB, Canara Super Savings Salary
  Accounts Scheme and Current Account holders wherein a daily minimum balance of
  Rs.25,000/- and Rs.50,000/- (for Current Account) respectively is maintained during the
  immediately preceding calendar month. (115/2008)
 Cash Withdrawals not permitted through MCC except for NRI customers.
 Now MCC books could be issued by all the branches to eligible customers.
 The MCCs are payable at par at all branches of our Bank.
 A note "Payable at par at all Canara Bank branches" will be printed on the face of the
  cheque leaf.
 Hitherto the facility was extended to the CASA account holders. Now the facility is
  extended to customers having OD/OCC limit of Rs 20 Lakhs and above, to start
  with. Branch in charge can permit issuance of MCC Facility (MCC), to the customers
  with LR1 / LR2 / LR3 risk ratings, on specific requests. For other credit risk rating
  accounts, Branches shall seek permission from their Circle Offices.
 Cash withdrawal facility is restricted to NRI customers only: To provide convenience
  and flexibility to NRIs, it has been decided to permit Cash Withdrawal facility through
  MCCs, to them. (NRE account holders whose accounts are opened at centralized NRI
  branches shall be provided with MCC Book facility irrespective of the balances in their
  accounts. However, subsequent issue of MCCs shall be on fulfillment of the eligibility
  criteria as per Savings Bank account.)

Revised Charges for Usage of MCCs w.e.f 15.9.2010:

 Issue charge (Excluding applicable taxes) for SB Accounts: Nil for first 40/60 leaves
  as applicable (including normal cheque leaves). Thereafter normal cheque book charges
  applicable.
 Issue charge (Excluding applicable taxes) for CA Accounts: Normal cheque book
  charges applicable
 Issue charge (Excluding applicable taxes) for OD/OCC Accounts: Rs.5.00 per leaf
 Charges for Non maintenance of minimum balance: Rs.100/- per occasion (only for
  SB/CA holders)*. * The charges for Non-maintenance of minimum balance is not
  applicable in case of cheque books issued to NRI customers at centralised NRI branches.
  However, charges in respect of subsequent MCC cheque books are as applicable to
  Savings Bank account.
 Cheque return / Stop payment / Funds Transfer charge: Normal charges applicable.
 Cash Withdrawal charge: Cash Withdrawals not permitted through MCC except for
  NRI customers. For NRI customers - As applicable to normal Cash withdrawal charges
  under CBS environment, issued by Head Office from time to time

Local Processing Centre (LPC) vis-à-vis Designated Branches:

 As per the extant guidelines, MCCs received at the Accounts Sections are routed to the
  designated branches. The designated branches debit the cheques as per the norms
  applicable to inward clearing process. As the handlings of MCCs are similar to normal
  cheques with regards to clearing operations, it has been decided to shift the role of
  designated branches to LPCs.

                                                                                      43
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010
 The centers where LPCs are not functional, the Circle to identify designated branches, as
  per existing guidelines.

MCCs to be Personalised:

 Now MCC books shall be issued in personalized form.
 The personalized MCC may be indented by the branches as and when requested by the
  customers as is already being followed by the branches in case of other personalized
  cheque books, after duly verifying the eligibility norms.
 However, branches are advised to indent for personalized MCC books only after existing
  stock of MCC books, if any, lying at the branches is exhausted.

Procedural guidelines for procurement and issue of Personalised MCC books:

 Branches on receipt of request from the customer should send indent by email to
  hostationery@canbank.co.in furnishing the following details : Nature of Account / Type
  of Cheque book (i.e., MCC) and Number of leaves / Customer ID and Account Number /
  Account holder's name, to be printed on Cheques / Account holder's address along with
  email ID (as available in Bank's record) / Branch details i.e., address with DP code, IFSC
  Code and Phone Number.
 The request of the branch will be directed by stationery section to the security printers
  who shall dispatch the name printed MCC books to the concerned branch directly within
  4 days of the receipt of the such mail duly confirming the same through email to both
  stationery section and also the branch concerned
 The stock of MCCs received should be inwarded in the branch inventory.
 All the guidelines applicable to custody, handling and issue of normal cheque books are
  also applicable to MCC books.
 Branches to promptly update the signature scanning and also tenability details and
  Drawing Power of running limits in the system before issuing / indenting Cheque books.




                                                                                         44
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

                                        NF 1001
Introduction of New Account Opening Form NF 1001 for savings bank / current
accounts – Individuals: Cir.144/2010

 A new two page application form for opening Current / Savings bank account for
  individuals – NF No. 1001 has been introduced.
 For opening joint accounts & proprietorship accounts, existing account opening form NF
  101 shall continue to be used.
 This application form NF 1001 shall be used for opening CA/SB accounts for individuals
  only.
 Space for photograph, specimen signature of the applicant and the counter-signature of
  the supervisor & Manager is provided on the same strip for making it easier for scanning.
 Column for Customer ID and account number are provided on the top of the application
  to ensure that such details are provided in a conspicuous space.
 Optional details to be provided by customers are available in the first page of the
  application.
 Terms and conditions are provided in the second page of the application.
 The nomination details are available along with the application with option of utilizing or
  non-utilizing the facility. Provision is also made to enable the customer, exercise his
  option to indicate or not to indicate the nominee's name in the passbook.
 The number of signatures on the application is restricted to two places besides on
  nomination form.
 Column for mentioning Unique Identification Number (UIN) is provided, which shall be
  filled, when the UID No. is provided.
 A column for mentioning the threshold limit is also provided, which has to be filled by
  the customer.
 Branches shall use the new form with effect from 01.05.2010.

                       Telebanking Services under CBS
                                        Cir.28/2008

 10 facilities available: Enquiry of balance, details of lastl 5 transactions, request for
  statement, change of password, cheque status enquiry, stop payment instruction, loan
  details of retail customers, information on the bank's products/services, reporting loss of
  ATM/.Debit card and Demat account details(except on line booking)
 C.I.N – Customer Identification Number – Unique 10 digit number allotted by flex cube
 T.P.I.N. – Telephone Personal Identification Number – 6 digit password
 Eligible accounts – Individuals, Joint a/cs with either or survivor, A/cs of proprietorship
  and NRI A/cs.
 Ineligible accounts - A/cs of illiterates, a/cs of blind persons, a/cs of HUF, A/cs of
  minors, Jointly operated a/cs,l encumbered a/cs,l blocked accounts, in-operative accounts.
 CINs and TPINs are generated from a central location and dispatched by them directly to
  the customer, deliverable only to the account holder..
 In case the customer fails to remember the PIN he has to obtain a fresh PIN from DC & C
  Group, DIT through the branch after payment of Out of pocket expenses.
 Telebanking services Toll free No. 1800 425 0018
 There are 3 options for requests for statement of account over fax – a. fax on demand, fax
  to registered number, fax to specific number.

                                                                                          45
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

                                 GenNext Banking
            Dr. K. C. Chakrabarty, Deputy Governor's Speech dt.25.11.2009

 In 2020, the average Indian is estimated to be only 29 years old, compared with 37 in
  China and USA, 45 in West Europe and 48 in Japan. The implications of this to the
  country in general and the Indian Banking sector in particular are significant. India’s
  population, is projected to increase to 1,400 million by 2026.
 The opportunities presented by the increasing population and the transition to the young
  Gen-Next Banking are tremendous.
 Banks have to be proactive and be prepared to service the millions and millions of young
  customers ready to receive their products. As India is poised to be a global power in the
  21st century, Gen-Next Banks will be the catalytic agent in making India a global power.
 The critical issue is whether the Indian Banking system will gear up and tune itself with
  this new generation. The growth will be driven not just by the potential customer base but
  by others drivers as follows as well:
      ► Availability of information and communication technology.
      ► The issue of adequate market penetration.
      ► Banking skills needed to deal with the Knowledge Economy / workers.
 The Gen-Next society will essentially be a knowledge Society and the challenge is to see
  how Banking can be facilitated in a knowledge economy
 The expansion of banking services for the millions of new customers would imply that
  there would be tremendous growth in the volume of such services.
 The age structure of a population affects a nation's key socioeconomic issues.
 Although significant financial deepening has been taking place in Indian economy over
  the years as seen from the deposit-GDP ratio, bank assets-GDP ratio and credit-GDP
  ratio, the low levels of penetration in India can provide a medium term structural growth
  driver for banks.
 A noteworthy feature discernible in the Indian context is that the rise in indicators of
  financial deepening takes place along with a noticeable rise in the domestic savings rate.
  The existing studies on India suggest a near one-for-one relationship between the
  dependency ratio and national savings.
 A statistical analysis of the data on GDP, housing loan and educational loan for the period
  March 2004 to March 2009 suggests that a 1 per cent increase in GDP growth is
  associated with 3 per cent increase in housing loan and 5 per cent increase in
  education loan.
 The GenNext banks would be offering products and services right from birth until death.
 Banks would now have to increasingly deal with knowledge workers i.e. one who works
  primarily with information and uses knowledge in the work place.
 The players, regulators and policy makers operating in the Banking sector will have to
  face new issues and challenges like appropriate systems and structure to generate
  information for GenNext banks, Delivery Structure for the entire financial system,
  delivery model, policy changes, regulatory framework, Business Model (in terms of
  pricing, marketing, product development), Risk Management Framework, Technology,
  Communication & Network Connectivity, Human Resource etc.

                                            ***




                                                                                          46
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

  Technology in Banks: Responding to the Emerging Challenges
          Ms. Shyamala Gopinath, Deputy Governor's speech dated 23.3.2009

 The use of technology in India has undergone rapid transformation.
 The Core Banking concept to a great extent emerged from this centralization process.
 Technological and payment systems developmental initiatives have been undertaken in
  the Indian banking and financial sector viz. Core Banking Solutions (CBS), Customer
  Relationship Management (CRM), Corporate Banking, Management Information System
  (MIS), Internet Banking, Mobile Banking, Indian Financial Network (INFINET)
  Structured Financial Messaging System (SFMS), VSAT connection, Real Time Gross
  Settlement, Centralized Fund Management System (CFMS), Electronic Clearing System
  (ECS), National Electronic Fund Transfer (NEFT), National Financial Switch (NFS),
  Clearing Corporation of India Limited (CCIL), Automated Teller Machine (ATM),
  Electronic Banking and High Value Clearing and so on. RBI has also set up an institution
  called the Institute for Development Research in Banking Technology (IDRBT).
 However, dependency on 'technology' factors must be limited to 50% as these
  technologies have opened a floodgate of concerns due to the risk factors involved in the
  implementation like 'Phishing', 'SQL Injection', 'Advance Fee frauds', Database and
  Server Hacking, Network attacks, 'Denial of Service' attack, Web Defacing, Cross Site
  scripting, IP Spoofing, Man-in-the Middle Attacks.
 Extensible Business Reporting Language (XBRL) reduces the cost of analyzing and
  reporting business information helps in effective MIS aiding swift decision making.
 Effective Governance and Regulatory Compliance can avoid Credit card frauds, Money
  Laundering risk through electronic channel and its counters.
 Challenges like 'Change Management' issue and the shortage of skilled IT personnel also
  emerge can be dealt with robust and time-tested Business Continuity' and 'Disaster
  Recovery' Management plans.
 To avoid Operational Risk and risks involved in 'outsourcing' of IT activities in bank,
  Information Security, Information System Audit and adoption of international standards
  can be pertinent.
 Adoption of ISO / IEC 38500 Standard may help organizations for establishing an
  efficient and effective framework.
 ISO / IEC 38500 Standard: It is the first international standard for IT governance may
  help organisations for establishing an efficient and effective framework for IT governance
  for a better alignment of IT and business goals. The standard provides a single integrated
  framework that enables the financial institutions to take the full advantages of other
  standards / frameworks.
 The technology providers may be looked up with expectations for affordability,
  availability, reliability, adaptability and convenience.
                                           ***




                                                                                         47
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                     Mobile Commerce, Mobile Banking
        Address by Dr. K. C. Chakrabarty, Deputy Governor, on December 4, 2009.

 M-Commerce is an area which offers abundant scope for inclusive growth + Promises
  business opportunities to service providers and other players in the field of mobile
  communications + Presents new challenges to the regulators across the globe.
 E-Commerce is process of providing the buyers of goods and services, the option to
  carry out such transactions, and pay for the same, without being physically present.
 The internet is only one of the mediums to reach to the buyer, the confidence of the
  buyer depends on the reliability, safety and security of the delivery system and the
  trustworthiness of the merchants. Same would be applicable to m-commerce.
 Traditional Commerce Vs. E-Commerce or M-Commerce: In traditional
  commerce, delivery is a support function and a routine to be taken care by clerks or lower
  level staff. It is taken for granted unless something goes dramatically wrong. But in e-
  commerce or m-commerce, 'delivery' becomes Critical Care Competence in which
  businesses will be evaluated and preferred. Its speed, quality and responsiveness becomes
  decisive competitive factor which determines the success and sustainability of the
  company. No existing m-commerce player is organized for it. Very few yet are thinking
  in these terms. One who desires to enter this field must evaluate its 'delivery' capability.
 Need for collaboration between technology service provider and provider of goods and
  services: If it is m-medicine, we require collaboration between mobile service provider
  and health / medicine service provider. Similarly, in e-broking, we require collaboration
  between technology partner and broking service provider. Similarly, in m-banking or m-
  payment, we require collaboration between mobile service provider and banking /
  payment service provider.
 We cannot and should not think of, at the initial stage, mobile payments without bank
  accounts.
 Three aspects related to the payment delivery and banking technology in India: (a)
  Banking Technology is of recent origin in the country. Therefore, Scaling up requires
  more time. (b) Payment is only one aspect of banking. (c) Financial Inclusion goes
  beyond remittances. Other products and services are required which banks are better
  equipped to provide. The system will have to look for alternate non bank model. The
  important end of inclusive growth cannot suffer on account of our insistence on a
  particular means / model.
 Electronic financial services are e-banking / e-commerce / m-banking / m-commerce.
 RBI has been keeping in pace with the developments and introduced the ECS followed by
  the Electronic Fund Transfer System, later extended as the NEFT and the RTGS. All
  these systems offered a secure and efficient platform for transfer of funds between bank
  accounts without the need for paper-based payment instruments.
 The growth of internet brought about a revolution in access to information and heralded
  as the emergence of E-payments / E-commerce.
 From the convenience of the home, one could plan one's travels and book rail / air tickets
  instantly avoiding the hassles of visits to the travel agent or standing in a long queue at
  the railway booking counters. Most significantly, one could do and all this on a 24/7/365
  basis.
 The increasing popularity of the Mobile Phone (Number of telecom subscribers in India
  has crossed the 500 million mark as on September 30, 2009) and developments in
  mobile technology brought to fore the potential of this ubiquitous instrument as a tool for
  conduct of business, including electronic money transfers and the terms "Mobile
  banking" and "Mobile Commerce" acquired popularity.
                                                                                           48
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
 While e-commerce has skipped the majority of the population due to the cost of setting-
  up such channels, M-commerce has the capability to be inclusive due to the wide
  spread use of the mobile phones.
 Recognising the importance of this mode Reserve Bank of India issued the guidelines for
  Mobile Banking Transactions in October 2008.
 The guidelines permit banks to provide mobile banking transactions and mandates that all
  transactions have to originate from one bank account and terminate in another bank
  account.
 The protagonists of this view often refer to the reported success of the M-PESA model
  adopted by Kenya and feel that the same could adopted or adapted in our country.
 They generally argue that a non-bank led model with appropriate regulatory mechanism
  in place would not only be as safe as a bank-led model but also enable greater penetration
  into under-banked and non-banked areas and thereby contribute to the financial inclusion
  process.
 M-PESA is in effect a virtual prepaid payment product, allowing the mobile service
  provider to retain the pre-paid amount and permitting, inter alia, person to person
  remittance.
 In addition to remittance, Mobile Banking offers the facility of accessing banking
  products, which includes payments / remittances from bank account to bank account -
  either inter-bank or intra-bank.
 M-commerce risks: Four risk factors viz. anonymity, elusiveness, rapidity and poor
  oversight.
 Anonymity is the risk of not knowing a customer's actual identity.
 Elusiveness is the ability to disguise mobile transaction totals, origins and destinations.
 Rapidity is the speed with which illicit transactions can occur.
 Poor oversight identity refers to the level of regulation of service providers.
 Any model of mobile financial services needs to address to these issues.
 The Mobile Service Provider - MSP led model would have concerns from the point of
  view of money laundering and the safety and security of the transactions. It is difficult to
  contain the risk of anonymity in a MSP led model. Let me add here that the M-PESA
  model has the comfort of a National-ID scheme which is in existence in Kenya.
 MSP-led mobile commerce has two advantages: (i) leveraging the spread agent
  network (ii) transaction cost.
 Keeping in view the concerns about money laundering and financial terrorism, RBI
  would prefer a partnership where the MSPs gain from the Over The Air (OTA)
  transaction volume and banks leveraging the channels for wider reach.
 In this context two successful models of partnership between banks and MSPs
  observed are - Wizzit in South Africa and G-Cash in Philippines.
 Wizzit Bank is a virtual bank which is a subsidiary of Bank of Athens in South Africa. It
  provides the unbanked population in SA with bank accounts on mobile phones which can
  be used to make person-to-person payments, transfers and pre-paid purchases. Besides,
  account holders are also provided a Maestro card for cash withdrawal. The MSPs
  supports this facility as carriers of such transaction instructions.
 Philippines have been the pioneer in enabling financial services through use of mobile
  phones. The first product introduced in the country was SMART money - a partnership
  between, SMART telecom, Banco de Oro. Subsequently, G-cash a telecom led model
  was subsequently introduced by Globe Telecom. The country has seen the development
  of partnership between the mobile payment platforms provided and rural banks there.
 Financial Inclusion: The coverage of mobile phones and the use of such instruments by
  all section of the population can be exploited for extending financial services to the

                                                                                           49
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010
   excluded populations. A mobile based product for extending financial inclusion would
   permit the customer to carryout transactions independent of agents of BCs. The agents
   would only be required for enrollment, cash deposit and cash withdrawal. Whereas, in a
   smart card based technology, the presence of an agent is required for initiation of all
   transactions. The advantage of smart card is that, it can provide biometric authentication,
   which would help in reducing frauds and ensure identity of customers. Such cards can
   also hold all transaction details on the card. Further, the failure of transactions at POS
   would be less in comparison with the SMS based transactions.

Issues faced by banks in providing Mobile Banking

 More than one year has lapsed since the issuance of the guidelines by RBI.
 32 banks have been given approval (by Dec 2009) to provide mobile banking facility in
  India. Of this 21 banks have started providing these services.
 Yet we have not seen much activity in this area in India.
 The transaction volumes are very low.
 The requirement of end-to-end encryption makes implementation costly. Banks feel low
  ticket transactions do not require end-to-end encryption.
 Facilitation of mobile banking requires tie-ups with individual service providers for
  enabling such services. Banks face difficulties in entering into such partnerships.
 MSPs do not open up channels for facilitating mobile banking services by banks-Opening
  up USSD (Unstructured Supplementary Services Data) channel for mobile banking and
  enabling the accessing of mobile banking facilities through all GPRS connections.
 Role of Non-banks in Indian Payment Scenario: RBI has already permitted non-bank
  entities to issue prepaid payment instruments. The amendment to the policy guidelines
  issued on August 14, 2009, permits all non-bank entities including MSPs to issue mobile
  based prepaid instruments. This relaxation was carried out based on the representation
  from MSPs.
 Conclusion: The convenience of the mobile phone as an instrument for conduct of
  financial transactions and the immense potential it has in the process of financial
  inclusion and financial growth is well recognized. We all agree that the benefits of M-
  Commerce should reach the common man at the remotest locations in the country.
  However, the extent and the manner in which M-commerce should be facilitated needs a
  cautious and well considered approach keeping in view the concerns on money
  laundering and financial terrorism and the stability of the payment and settlement
  systems.


                                            ***




                                                                                           50
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                   Four Big Challenges for Indian Banks
                  R. Duvvuri Subbarao, Governor Speech dt 25.11.2009

Indian banking: There are four big challenges that Indian banks will need to address.
Meeting these challenges is going to demand lateral thinking, entrepreneurship and
management calibre.

First Challenge: Financial Inclusion

 Rough estimates indicate that of the 600,000 habitation centres in the country, only about
  30,000 centres are covered by commercial banks.
 The RBI has taken several steps to further financial inclusion - encouraging 'no frills'
  accounts, Business Correspondent (BC) model and the use of mobile phones for
  extending banking outreach.
 It is not possible to cover a country of a billion plus people, spread over 600,000
  habitations, covering vast distances, with poor infrastructure and sometimes inhospitable
  terrain by traditional brick and mortar branches.
 Financial inclusion is especially valuable as it will at once promote both growth and
  equity. Working to meet this challenge can hardly be a boring proposition.

Second Challenge : Financing Infrastructure

 The biggest supply constraint is of infrastructure - physical, social and urban.
 It is widely recognized that poor and inadequate infrastructure is adding to production
  costs, denting productivity of capital and eroding the competitiveness of our productive
  sectors.
 A big issue in bank financing of infrastructure is the asset-liability mismatch.
 While infrastructure typically requires long term funding, the deposits of banks, their
  main source of funds, are relatively short-term.
 The problem of asset-liability mismatch in long term financing is not unique to India;
  banks elsewhere too face the same problem. But in advanced economies, the long term
  finance space is filled by insurance companies and pension and provident funds.
 The burden of infrastructure financing will have to be met largely by the banks.
 In order to partly offset this problem, the Reserve Bank has, since 2000, allowed banks to
  enter into take-out financing arrangements with other financial institutions.
 To facilitate financing for infrastructure, the RBI has also relaxed the exposure norms. (to
  avoid concentration risk. For financing infrastructure these norms are relaxed by up to 5
  per cent in the case of a single borrower and 10 per cent in the case of a borrower group.
 A number of recent measures and several in the pipeline should facilitate greater flow of
  credit to the infrastructure sector. A few important ones are:
       1. First, interest rate futures have been reintroduced recently and these should aid
          banks in managing their interest risk more efficiently.
       2. Second, repos in corporate bonds are slated to start soon; we expect to issue final
          guidelines by end-November 2009.
       3. Third, in the second quarter policy review last month, we announced the
          introduction of plain vanilla OTC single-name credit default swaps (CDS) for
          corporate bonds for resident entities.
       4. Fourth, a separate category of NBFCs - infrastructure NBFCs - is being
          introduced. Fifth, banks will be permitted to build up capital for 'take-out'
          exposures in a phased manner.

                                                                                           51
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
       5. Finally, refinancing through the special purpose vehicle, India Infrastructure
          Finance Company Ltd. (IIFCL), is expected to leverage bank financing for Public
          Private Partnership (PPP) projects. These measures, along with existing ones, can
          be expected to enhance banks' ability to fund infrastructure projects.

   Financing infrastructure is going to be a big challenge for the banking sector. This huge
   and growing demand of infrastructure finance + finding the resources, will have to be met
   by banks. Then, banks will also need to hone their skills in appraisal and management of
   risks inherent in infrastructure financing. Hence it is going to be more challenging & not
   boring.

Third Challenge : Risk Management

 Two big forces will define the environment in which Indian banks will be called upon to
  operate: (1) a rapidly globalizing India and (2) a fiercely competitive banking industry.
 Hence, Indian banks will have to upgrade their risk management architectures.
 In addition to managing more effectively the traditional risks such as credit risk,
  operational risk and market risk, banks also need to manage some new risks that have
  proven to be significant such as reputation risk, counterparty credit risk, liquidity risk,
  interest rate risk in the banking book and incremental risks in the trading book. Risk
  management needs to be complemented by stress testing techniques.
 This calls for sharpening the skill endowment at the institutional level.
 As of March 2009, all Indian banks have migrated to the simpler approaches of the Basel
  II standard. The task on the way forward is to graduate to more advanced approaches.
  Towards this end, in consultation with banks, the Reserve Bank has now finalized a four-
  year time frame starting in April 2010 and ending with March 2014.
 Moving to advanced approaches is both skill and technology intensive. In the first
  instance, it will therefore necessarily have to be confined to the larger banks.
 Risk management is going to involve pushing the frontiers of knowledge and
  transforming that knowledge to practical policy. That can hardly fit the description of
  boring.

Fourth Challenge: Further Improvements in Efficiency

 The growth acceleration of the Indian economy during 2003-08 is attributable to a host of
  factors. Some of these are tangible such as the deregulation of the industrial sector,
  liberalization of external trade and external finance, reform of direct and indirect taxation
  and elimination of controls on doing business. Some of the factors that contributed to
  growth are intangible such as improved productivity, higher efficiency and growing
  entrepreneurism.
 The contribution made by the financial sector by way of larger and better quality financial
  intermediation that raised the level of aggregate savings and channelled them to
  investment.
 The rapid expansion of credit has been accompanied by a significant improvement in
  asset quality which is now close to international norms.
 The analysis in the Reserve Bank's Report on Currency and Finance 2006-08 shows that
  the Indian banking sector has recorded an impressive improvement in productivity over
  the last 15 years; many of the productivity / efficiency indicators have moved closer to
  the global levels. The Report also shows that the performance of public sector banks
  has converged with that of new private sector and foreign banks. More interestingly,

                                                                                            52
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010
    contrary to popular perception, there is also no significant relationship between
    ownership and efficiency - the most efficient banks straddle all three segments - public
    sector banks, private sector banks and foreign banks.
   The intermediation cost in India is still high, largely due to high operating costs.
   Non-interest sources of income constitute a very small share in total income of banks in
    India.
   Although overall efficiency and productivity have improved, resources are not being
    utilised in the most efficient manner. There is a degree of stickiness and non-transparency
    in bank lending rates.
   The challenge for Indian banks, therefore, is to reduce costs and pass on the benefits to
    both depositors and lenders. This will involve constantly reinventing business models and
    designing products and services demanded by a rapidly growing and diversifying
    economy.
   This means that Indian banks will need to improve efficiency even as their costs of doing
    business go up. This is a challenge that will test ingenuity, perseverance, ability to learn
    and adapt and management skills. And this is going to be anything but boring.

Conclusion: The four challenges that the banking sector has to meet head on are deepening
financial inclusion, financing infrastructure, strengthening risk management and improving
efficiency. These are formidable challenges, and meeting them is going to be an exciting,
rewarding and fulfilling opportunity.


                                              ***




                                                                                             53
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

                                   Beyond CBS…..
    Dr. K. C. Chakrabarty, Deputy Governor 02-07-2010 At Executive Roundtable
                           organized by IDRBT Kolkata

 Technology is the surest and most appropriate way of bringing inclusion in respect of any
  product and service. RBI with the help IDRBT and the banking sector has been involved
  in utilizing technology for the development of the Indian banking sector.
 The success of ATMs had made the banking sector develop more innovative delivery
  channels.
 As a consequence, Banks have begun to introduce processes like Tele-Banking, Call
  Centres, Internet Banking and Mobile Banking and the benefits of these processes could
  not have reached to all its customers without Core Banking Solution (CBS), which has
  now stabilized in the Banking sector.
 Now, we need a MIS server to generate returns automatically, centralization of KYC
  Norms, one-window-for-all-functions in the banking sector, techniques of Customer
  Relationship Management (CRM), and hence there is a need to look beyond CBS - which
  would succeed if we have IT governance in place.
 Thus, Banks need to know that IT holds the way forward for a more cost effective and
  yet, inclusive banking system.
 Globally, after technology adoption, 90 per cent of the banking staff is involved in “front
  office” jobs of enhancing customer base and ensuring customer loyalty. Only 10 per cent
  of the banking staff is involved in “back office” jobs.
 The situation in India even after the adoption of CBS is exactly the reverse.
 A large part of our back office staff is still heavily involved in the preparation and
  submission of various returns.
 To these concerns, I would say that we need a MIS server to generate returns
  automatically.
 We also need the centralisation of KYC Norms and one-window-for-all-functions in the
  banking sector.
 A mammoth public sector enterprise like the Indian Railways has managed to harness IT
  to ensure one-window-for-all-functions.
 We need to change our business processes, systems and delivery models.

About Customer Relationship Management (CRM):

 In today’s world of cutthroat competition in the banking sector, retaining customers along
  with growing customer base has become very important. In order to enhance the
  effectiveness of the various channels such as branch banking, mobile banking and internet
  banking, banks may consider the use of a comprehensive CRM solution which would
  enable them to access the entire customer details and provide a 360 degree view across
  channels and products and enhance service quality.
 CRM can be defined as the process that has the potential to make the right offer to the
  right client, at the right time via the right channel.
 Information on business profiles of banks and its margins, risks associated with the
  businesses, number of products, customer information, business volumes and income
  from various verticals play an important role in focussing on a profitable and effective
  CRM.
 There are four ways in which CRM enables the development of new capabilities in
  CBS to cope with emerging realities around risk, regulation and customer retention.
 First, it can offer a unified view of the customers.

                                                                                          54
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010
   Secondly, it can help provide a consistent message to customers.
   Third, it can provide end-to-end customer care.
   Fourth, it helps in building long-term customer relationships.
   Fifth, it helps in identification of best customers.
   CRM is thus recognised as an avenue for banks to go beyond other banks in terms of
    customer retention and increase in business volumes.
   CRM, however, has certain pre-conditions for its successful implementation.
   First, business requirements and targets have to be defined. I would say that technology
    has to make the solution, not the other way round.
   Secondly, it is important CRM does not solve all the problems a bank has, so first it may
    be necessary to analyse the problems, and the possible impact of CRM, then prioritise.
   Third, banks need to understand that they need to make a beginning. It may be a small
    start but it is important to start. They can learn and improve later.
   Fourthly, Business Process Re-engineering (BPR) of processes would be required
    before implementing the CRM.
   Fifth, there is a need to change the mindset of employees.

About IT Governance:

 For CRM to succeed, we also need to have in place IT governance, which is another area
  that would be covered in today’s seminar.
 Given the enormity of investment in IT infrastructure and the ever-increasing dependence
  on IT for operating and managing the day-to-day business activities, there are concerns
  among various stakeholders and hence, the call for IT Governance.
 Governance is not about what decisions get made - that is management - but it is about
  who makes the decisions and how they are made.
 IT governance is the process of specifying the decision rights and accountability
  framework to encourage desirable behaviour in the use of IT. As in the case of corporate
  governance,
 IT governance is the responsibility of the board of directors and executive
  management.
 In fact, it could be said that in the banking sector, IT Governance is an important sub-set
  of overall Corporate Governance.
 IT Governance in banks focuses on information technology systems, their performance
  and risk management.
 With the high rate of technological obsolescence, the need for proper IT governance,
  particularly in the case of banks, is gaining prominence.

Benefits of Adoption of IT Governance in banks:

 It would result in effective control and derive better value on the huge IT infrastructure
  created by banks.
 This would ultimately result in enabling better alignment between IT and Business, create
  efficiencies, enhance conformity to internationally accepted best practices and improve
  overall IT performance of banks.




                                                                                          55
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010
Constraints in implementation of IT governance:

 Poor strategic alignment between business and IT strategy, absence of appropriate and re-
  engineered business processes and delivery models, lack of project ownership, poor risk
  management, ineffective resource management. Time has come for banks to focus on
  these issues by going beyond CBS systems and thereby reap the full benefits of
  technology upgradation.
 Another important aspect of IT governance is the need to address enhanced security
  concerns associated with technology.
 Plethora of terms used in cyber crime world, such as, Malware, Viruses, Trojans, Worms,
  Spyware and Bots, Phishing Spam and Spoofing, etc.
 Basic security measures involve protection by well-selected passwords, change of file
  permissions and back up of computer's data.
 Security will probably always be high on the IT agenda simply because cyber criminals
  know that a successful attack can be very profitable. This means they will always strive to
  find new ways to circumvent IT security, and users will consequently need to be
  continually vigilant. This again requires banks to go beyond CBS as of today.

                                            ***

                   Why is Financial Inclusion Important?
 It is important simply because it is a necessary condition for generating and sustaining
  equitable growth.
 Economic opportunity is strongly intertwined with financial access. Such access is
  especially powerful for the poor as it provides them opportunities to build savings, make
  investments and avail credit.
 Importantly, access to financial services also helps the poor insure themselves against
  income shocks and equips them to meet emergencies such as illness, death in the family
  or loss of employment.

The Size of Financial Exclusion

 The statistics on financial exclusion in India are disheartening.
 Out of the 600,000 habitations in the country, only about 30,000, or just 5 percent, have a
  commercial bank branch.
 Just about 40 per cent of the population across the country have bank accounts, and this
  ratio is much lower in the north-east of the country.
 The proportion of people having any kind of life insurance cover is as low as 10 per cent,
  and the proportion having non-life insurance is an abysmally low 0.6 per cent.
 People having debit cards comprise only 13 per cent and those having credit cards a
  marginal 2 per cent.
 These statistics do not convey the true extent of financial exclusion.
 Even where bank accounts are claimed to have been opened, verification has shown that a
  significant portion of these accounts are dormant and fewer receive any credit.
 Millions of people across the country are thereby denied the opportunity to harness their
  earning capacity and entrepreneurial talent, and are condemned to marginalization and
  poverty.
                                               ***


                                                                                          56
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

                Financial Literacy and Credit Counselling
 The establishment of FLCCs is an important milestone in furthering financial inclusion.

What is Financial Education?

 Financial education can broadly be defined as the capacity to have familiarity with and
  understanding of the financial market products, especially rewards and risks in order to
  make informed choices. Viewed from this standpoint, financial education primarily
  relates to personal financial education to enable individuals to take effective actions to
  improve overall well-being and avoid distress in financial matters.
 Lack of literacy in general and financial literacy in particular, are the main hurdles in
  expanding the coverage of financial services to the poorer segments of society.
 Financial education is also an integral component of customer protection.

What is Credit Counselling?

 Credit Counselling can be defined as 'counselling that explores the possibility of repaying
  debts outside bankruptcy and educates the debtor about credit, budgeting, and financial
  management'.
 It serves three purposes. First, it examines the ways to solve current financial problems.
  Second, by educating about the costs of misusing a credit, it improves financial
  management. Third, it encourages the distressed people to access the formal financial
  system.
 Debt counselling / credit counselling can be both preventive and curative.
 In case of preventive counselling, the centres could provide awareness regarding cost of
  credit, availability of backward and forward linkages, where warranted, etc. The clients
  could be encouraged to avail of credit on the basis of their repaying capacity. Preventive
  counselling can be through the media, workshops and seminars.
 In the case of curative counselling, the clients may approach the counselling centres to
  work out individual debt management plans for resolving their unmanageable debt
  portfolio. Here, the centres could work out effective debt restructuring plans that could
  include repayment of debt to informal sources, if necessary, in consultation with the bank
  branch.

Objectives of FLCCs:

 Broad objective of the FLCCs will be to provide free financial literacy / education and
  credit counseling.
 FLCCs are not expected to act as investment advice centres / marketing centres for
  products of any particular bank / banks. Counsellors may refrain from marketing /
  providing advice regarding investment in insurance policies, investment in securities,
  value of securities, purchase / sale of securities, etc., or promoting investments only in
  bank's own products.
 Role of the RBI: The Banking Codes and Standards Board of India (BCSBI) has recently
  brought out an updated code to ensure that the banks formulate and adhere to their own
  comprehensive code of conduct for minimum standards of banking services, which
  individual customers can legitimately expect.



                                                                                            57
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                          Different Types of Companies
                  (From Ministry of Corporate Affairs web site - FAQs)

Public Company Limited by Shares:

In terms of section 3(1)(iv) of the Companies Act, 1956 a public company means a company
which is not a private company and has a minimum paid-up capital of five lakh rupees or
such higher paid-up capital as may be prescribed. A private company which is subsidiary of a
public company is also a public company.

 At least 7 persons are required to form a public company.
 A prospectus or a statement in lieu thereof has to be filed with the Registrar of Companies
  before allotment of shares.
 It has to obtain Certificate of Commencement of Business from the Registrar of
  Companies before it can commence business on incorporation.
 It has to hold a statutory meeting of members and file a Statutory Report with the
  Registrar of Companies.
 Any member of the public who is willing to pay the price may acquire its shares or
  debentures.
 Its shares are easily transferable and since these can be quoted on a recognised stock
  exchange, their liquidity is enhanced.
 It can have any number of members and it is easy for it to raise capital through public
  subscriptions.
 It can obtain loans from financial institutions and banks.
 It shall have at least three Directors.

Private Company Limited by Shares:

A private company, in terms of section 3(1)(iii) of the Act, means a company which has a
minimum paid-up capital of one lakh rupees or such higher paid-up capital as may be
prescribed, and by its articles :
    1. restricts the right to transfer its shares, if any;
    2. limits the number of its members to fifty;
    3. prohibits any invitation to the public to subscribe for any shares in, or debentures of
        the company; and
    4. Prohibits any invitation or acceptance of deposits from persons other than its
        members, directors or their relatives.
For calculating the number of members as per (b) above, joint holders of shares is counted as
single member and the members who are employees of the company including those who
continue to be members after their employment ceased are excluded.

 It can be registered with a minimum number of 2 members and cannot have more than 50
    members (excluding employee and ex-employee members).
   It cannot invite the public to subscribe to its share capital and has to obtain capital by
    private arrangement.
   It cannot allow free transfer of its shares.
   Its shares are not quoted on a recognised stock exchange.
   It cannot invite or accept deposits from persons other than its members, directors or their
    relatives.

                                                                                            58
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010
 Only two signatories to the memorandum of association are sufficient to form a private
   company.
 Any number of employees of a private company can become its members and their
  number is not counted for the purpose of maximum number of members even when the
  employees have left the company on retirement or otherwise.
 It can commence business immediately on incorporation.
 It shall have at least two Directors.

Section 25 company:

Where a company

 is formed for promoting commerce, art, science, religion, charity or any other useful
  object, and
 does not intend to pay any dividend to its members but to apply its profits or other income
  in promoting its objects, it may apply to the Central Government (now Regional Director,
  Ministry of Corporate Affairs as a delegate of the Central Government) for license under
  section 25 of the Act for its registration as a company with limited liability without the
  addition to its name of the word’ Limited’ or the words ‘Private Limited’, as the case may
  be.

Partnership firm and other associations : Registration as a company under Part IX of
the Act.

 Part IX of the Act provides an opportunity to an association of seven or more persons
   formed in pursuance of any other law in force in India to get itself registered under the
   Act as a company limited by shares, or as a company limited by guarantee or as an
   unlimited company. Even a partnership firm having seven or more partners with a
   permanent share capital divided into shares of a fixed amount and duly constituted
   according to the provisions of the Indian Partnership Act, 1932 can be registered as a
   company under this part.

Incorporation of co-operatives as Producer Companies.

 Part IXA added by the Companies (Amendment) Act, 2002 provides for incorporation of
   co-operatives as producer companies and also for registration of inter-State co-operative
   societies as producer companies. Any ten or more individuals, each of them being a
   producer or any two or more producer institutions or a combination of ten or more
   individuals and producer institutions, desirous of forming a producer company having
   specified objects and otherwise complying with the requirements of Part IXA and other
   provisions of the Companies Act, 1956 in respect of registration, may form an
   incorporated company as a producer company.

                                              ***




                                                                                          59
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

                                       Base Rate
            RBI Guidelines dated April 9, 2010 & Clarification dt.14.05.2010

 RBI constituted a Working Group on BPLR (Chairman : Shri Deepak Mohanty) to review
  the present benchmark prime lending rate (BPLR) system and suggest changes to make
  credit pricing more transparent.
 The BPLR system, introduced in 2003, fell short of its original objective of bringing
  transparency to lending rates. This was mainly because under the BPLR system, banks
  could lend below BPLR. For the same reason, it was also difficult to assess the
  transmission of policy rates of the Reserve Bank to lending rates of banks.
 The Base Rate system is aimed at enhancing transparency in lending rates of banks and
  enabling better assessment of transmission of monetary policy.

Base Rate

 The Base Rate system will replace the BPLR system with effect from July 1, 2010.
 Base Rate shall include all those elements of the lending rates that are common across all
  categories of borrowers.
 Base Rate = Cost of Deposit or Funds + Negative Carry on SLR/CRR* +
  Unallocatable Overhead Cost* + Average Return on Net Worth* ( *Formula has been
  suggested by RBI for calculating each of these elements of BR)
 Negative carry on CRR and SLR balances arises because the return on CRR balances is
  nil, while the return on SLR balances (proxied using the 364-day Treasury Bill rate) is
  lower than the cost of deposits.
 Unallocatable Overhead Cost is calculated by taking the ratio (expressed as a
  percentage) of unallocated overhead cost and deployable deposit.
 Average Return on Net Worth is computed as the product of net profit to net worth
  ratio and net worth to total liabilities ratio expressed as a percentage.
 Actual lending rates on loans will include such other customer specific charges as
  considered appropriate.
 Banks may choose any benchmark / methodology to arrive at the Base Rate for a specific
  tenor that may be disclosed transparently. (It should be consistent and be made available
  for supervisory review).
 The actual lending rates charged may be transparent and consistent and be made available
  for supervisory review.
 The Base Rate could also serve as the reference benchmark rate for floating rate loan
  products, apart from external market benchmark rates. The floating interest rate based on
  external benchmarks should, however, be equal to or above the Base Rate at the time of
  sanction or renewal.
 Base rate not applicable to: The following categories of loans could be priced without
  reference to the Base Rate: (a) DRI advances; (b) Loans to banks' own employees;
  (c) Loans to banks' depositors against their own deposits.

Applicability of Base Rate

 All categories of loans should henceforth be priced only with reference to the Base Rate.
 The Base Rate system would be applicable for all new loans and for those old loans that
  come up for renewal.
 Existing loans based on the BPLR system may run till their maturity.


                                                                                         60
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010
 In case existing borrowers want to switch to the new system, before expiry of the existing
  contracts, an option may be given to them, on mutually agreed terms. Banks, however,
  should not charge any fee for such switch-over.
 Changes in the Base Rate shall be applicable in respect of all existing loans linked to the
  Base Rate, in a transparent and non-discriminatory manner.
 Since the Base Rate will be the minimum rate for all loans, banks are not permitted to
  resort to any lending below the Base Rate. Accordingly, the current stipulation of BPLR
  as the ceiling rate for loans up to Rs.2 lakh stands withdrawn. It will increase the credit
  flow to small borrowers at reasonable rate and direct bank finance.
 RBI will separately announce the stipulation for export credit.
 Clarification on Fixed rate Loans: Even after introduction of the Base Rate system,
  banks would have the freedom to offer all categories of loans on fixed or floating rates.
  Where loans are offered on fixed rate basis, notwithstanding the quarterly review of the
  Base Rate, the rate of interest on fixed rate loans will continue to remain the same.
  However, the only condition is that such fixed rate should not be below the Base Rate.

Review of Base Rate

 Banks should review the Base Rate at least once in a quarter with the approval of the
  Board or the ALCOs.
 Since transparency in the pricing of lending products has been a key objective, banks to
  display their Base Rate at all branches / websites.
 Changes in the Base Rate should also be conveyed to the general public from time to time
  through appropriate channels.
 Banks to provide information on the actual minimum and maximum lending rates to the
  RBI on a quarterly basis.

                                            ***


                               Performance Budget
 The Performance Budgeting exercise is in vogue in our Bank for the past several years.
 It has become an integral part of the planning process of the Bank. (Bottoms up
  approach).
 Objective Of Performance Budgeting: The main objective of Performance Budgeting
   is to plan the business keeping in view the Corporate Objectives and generate maximum
  profits by ensuring optimum utilisation of the resources at our command.
 Efficiency, Innovation and Growth should be the objective in planning our Business
  Strategies.


                                           ***
 Is there any (big) party in your branch who is yet to shift to Base
                                Rate?

                                           ***


                                                                                          61
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                   Perspectives on Lending Rates in India
       Mr. Deepak Mohanty, Executive Director 11-06-2010 At the Bankers Club
                                     Kolkata

 Banks will be switching over to a 'base rate' system of loan pricing from 1st July 2010.
 Base Rate brings to fruition complete deregulation of rupee lending rates of banks, a
  process that began two decades ago.
 This is also a testimony to the maturity of the Indian banking system as our earlier
  attempts at interest rate deregulation were not very successful.

Evolution:

 Oct. 1994: Banks were required to declare their Prime lending rates (PLRs).
 Feb. 1997: Banks allowed to prescribe separate PLRs and spreads over PLRs, both for
  loan and cash credit components.
 Oct. 1997: For term loans of 3 years and above, separate Prime Term Lending Rates
  (PTLRs) were required to be announced by banks.
 April 1999: Tenor-linked Prime Lending Rates (TPLRs) introduced.
 April 2000: Banks allowed to charge fixed / floating rate on their lending for credit limit
  of over Rs.2 lakh.
 April 2001: Banks allowed to lend at sub-PLR rate for loans above Rs.2 lakh.
 April 2003: Benchmark PLR (BPLR) system introduced and tenor-linked PLRs
  discontinued.
 Feb. 2010: Draft circular on Base Rate placed on RBI web site for obtaining comments /
  suggestions from public / stakeholders.
 April 2010: Base Rate system of loan pricing introduced effective July 1, 2010. Rupee
  lending rate structure completely deregulated

The Base Rate System

 The base rate system will replace the BPLR system with effect from 1st July 2010.
 Base rate shall include all those elements of the lending rates that are common across all
  categories of borrowers.
 Banks may choose any benchmark to arrive at the base rate for a specific tenor that may
  be disclosed transparently.
 The base rate can also serve as the reference benchmark rate for floating rate loan
  products, apart from other external market benchmark rates.
 It is expected that this will increase the credit flow to small borrowers at reasonable rates
  and direct bank finance will provide effective competition to other forms of high cost
  credit.
 Keeping in view the largely retail deposit-based banking in India, there is a need for a
  benchmark for transparent pricing of loans. Even in wholesale fund- based banking
  systems, the London Interbank Offered Rate (LIBOR) is widely used as a benchmark
  which is essentially an interbank deposit rate. Thus, the base rate fulfills the requirement
  of a benchmark while giving full flexibility to banks with regards to its computation and
  overall loan pricing.




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                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
Implications of Base Rate:

 First, the introduction of the base rate system brings to end of two decades of efforts to
  deregulate the lending rates of banks. This is expected to enhance the allocative efficiency
  of the financial intermediation process by banks.
 Second, deregulation of lending rates will promote financial inclusion with greater credit
  flow to agriculture and small business. This, together with other specific measures taken
  by the Reserve Bank for financial inclusion, will draw borrowers away from the informal
  financial sector to the formal financial sector and thus, facilitate credit penetration.
 Third, the base rate system that comes into effect from 1st July 2010 gives complete
  freedom to banks in their loan pricing decisions while ensuring transparency. Banks have
  unlimited access to public deposits and privileged access to the liquidity facility of the
  Reserve Bank. Hence there is a greater need for transparency and responsible lending
  practices for public purposes.
 Fourth, the base rates of banks will mirror their relative efficiency and cost structure.
  While lending rates tend to be sticky, it is expected that the base rate system will show
  greater flexibility and strengthen both the interest rate and credit channels of monetary
  transmission.
 Fifth, the new system gives the freedom to banks to choose other market related
  benchmarks besides their base rates for pricing floating rate products. This could promote
  development of market benchmarks. It could also deepen the money market to facilitate
  short-term liquidity management by banks.
 Sixth, there is some apprehension that the base rate system may raise the effective cost of
  borrowings. This is unlikely because corporates have access to multiple sources of funds
  and hence the effective borrowing rates will be determined by market competition.
 Seventh, the nominal effective lending rate of the banking system which remained higher
  in the 1990s have declined significantly in the 2000s. This can largely be attributed to
  moderation in overall inflation, reduction in inflation risk premia, interest rate
  deregulation and increasing efficiency of the banking system.
 Eighth, the computation of real lending rate becomes challenging without a
  comprehensive measure of consumer price inflation and difficulties in measuring inflation
  expectations. Nevertheless, ex post measures of real lending rates over the last two
  decades show a clear pattern. The real lending rates rose in the 1990s and then declined in
  the 2000s. The real weighted average lending rate was higher than the real GDP growth
  rate, particularly during the period 1997-98 to 2002-03. Thereafter, the real weighted
  average lending rate has declined concurrent with the high growth phase of the Indian
  economy.
 Finally, credit and industrial output cycles show inverse relationship with real interest
  rate. However, there is a need for further research to better understand the relationship
  between credit and interest rate cycles and its implications for sustainable growth.

                                             ***




                                                                                           63
                                                             Canara Bank RSTC Gurgaon
                                                              Interview Magnet Oct 2010

         BANK CREDIT TO MSMES: PRESENT & WAY FORWARD
                     Address by Dr. K. C. Chakrabarty on 21-05-2010

 There are about 2.6 crore enterprises in this sector.
 The sector accounts for 45 per cent of the manufactured output and 8 per cent of the
  GDP.
 MSMEs contributed close to 40 per cent of all exports from the country and employ
  nearly 6 crore people which is next only to the agricultural sector.
 MSME is the best vehicle for inclusive growth, to create local demand and consumption.
 MSMEs cater to niche markets. The MSMEs of yesterday are the large corporates of
  today and could be MNCs of tomorrow.
 Thus the banks and other agencies should take pride while servicing the MSMEs as they
  are playing an instrumental role in the formation of MNCs of tomorrow.
 Banks are required to extend at least 60% of their advances to the MSE sector to Micro
  Enterprises.
 In today's globalised economy, improvements in products, processes, technology and
  organizational functions such as design, logistics and marketing have become key drivers
  in delivering competitiveness, for the MSEs.
 MSEs primarily rely on bank finance for a variety of purposes including purchase of land,
  building, plant and machinery as also for working capital, etc. Availability of timely
  credit at reasonable rates is the need of the sector.
 As at the end of March 2009, the total outstanding credit provided by all SCBs to the
  MSE sector constitute 11.4 percent of the ANBC.
 Despite the global financial crisis, there was enough liquidity in the Indian banking
  system and banks were willing to extend credit to viable projects.
 My message to the MSME sector is that as interest costs are a very small fraction of
  your operating costs, only approximately 4%, do not ask for low interest rates from the
  banking sector, and instead ask for credit at competitive rates. Credit has to be self-
  liquidating on a viable project and has a cost.
 After the introduction of Base Rate system, it is expected that the credit flow to small
  borrowers at reasonable rate will increase.

Measures by RBI:

 Collateral free loans up to Rs.5 lakh (Now Rs.10 lacs) sanctioned to the units of MSE
  sector (both manufacturing and service enterprises).
 Banks to give collateral free loans up to Rs.25 lakh, based on good track record and
  financial position of the units.
 Extending collateral free loans upto Rs.5 lakh (Now Rs.10 lacs) sanctioned to the units
  of MSE sector are mandatory in nature.
 A Non-discretionary OTS scheme for recovery of non-performing loans.
 As on date: 41 SCBs have a dedicated loan policy on MSE, 40 SCBs have a
  rehabilitation / restructuring policy and 39 SCBs have a non-discretionary OTS scheme.
 Creation of several Funds by the GOI such as a) National Equity Fund, b) Fund for
  Technology Upgradation, c) Marketing development Fund, d) Rehabilitation Fund, e)
  Venture capital / mezzanine finance to encourage the entrepreneurs to innovate new
  ideas, etc.
 RBI has been advised to ensure that banks strive for timely action for rehabilitation of
  sick units in the MSE sector, and put in place a credible, pro-active and a functional
  monitoring mechanism to review the progress in actual concrete outcomes.

                                                                                        64
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
GOI and MSEs

 A High Level Task Force has been constituted by the Government of India under the
  chairmanship of the Principal Secretary to the Hon'ble Prime Minister to consider various
  issues raised by various MSME associations and draw up an agenda for action.
 The Task Force which submitted its final report on January 30, 2010, has made several
  recommendations on issues relating to credit, taxation, marketing, labour, exit policy,
  infrastructure / technology / skill development and special packages for North East and
  Jammu and Kashmir, etc.
 A Steering Group on MSME has been set up by the GOI to review the implementation
  of the recommendations of the Task Force.
 Three important recommendations made by the Task Force:
 all SCBs should achieve a 20 per cent year-on-year growth in credit to micro and small
  enterprises to ensure enhanced credit flow;
 to increase the flow of credit to micro enterprises all SCBs should lend 60% of their
  MSE lending to micro enterprises in stages viz. 50% in the year 2010-11, 55% in the year
  2011-12 and 60% in 2012-13.
 all SCBs should achieve a 10 per cent annual growth in the number of micro enterprise
  accounts

Way Forward

 If India has to have a growth rate of 8-10 percent for the next couple of decades, it needs
  a strong MSME sector, without which it cannot be achieved.
 There are approximately 3 crore MSMEs in the country.
 The SMEs have shown an average growth of 18 percent over the last five years.
 Around 98 percent of the production units are in the SME sector.
 There has been a burst of entrepreneurship across the country, spanning rural, semi-urban
  and urban areas. This has to be nurtured and financed. But we also have to understand
  that there will be failures as well as successes.
 Despite the risk, financing of first time entrepreneurs is a must for financial inclusion
  and growth. Bank will therefore have to tone up their risk assessment and risk
  management capacities, and provide for these failures as part of their risk management.
 Reasons for higher failure rate: Delayed / inadequate availability of credit to non-
  availability of backward and forward support system.
 The main reasons for the financial constraints faced by SMEs are quite generic, and high
  on the list is the perception that SMEs are historically a high risk group lacking in
  financial discipline and unable to provide trustworthy financial track records.
 To overcome this perception, there should be adequate and reliable credit information
  mechanism, such as an SME credit bureau, that serves the needs of both the SMEs' and
  the potential lenders'.
 A World Bank report stated that a good credit information infrastructure can contribute
  significantly towards assisting SMEs' access to capital.
 The report further highlighted that small firms with access to credit bureaus have a 40%
  chance of obtaining a loan, whereas firms without access to credit bureaus have only a
  28% chance of receiving a loan.
 Micro and small enterprise are the worst sufferers when disaster strikes. It suffers from
  discontinuity of business, which it is normally not in a position to bear. It renders the
  recovery of already supplied goods difficult, besides affecting future supplies. These units
  need support in such situations. It has, therefore, felt that a separate umbrella

                                                                                           65
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010
    organisation be set up to provide all comprehensive services to the SME sector under
    one roof and also look at providing disaster assistance to small enterprises on the lines of
    Small Business Administration, USA. An expert Group has been set up by the GOI of
    India to examine the modalities to set up such a body in India.
   The GOI, may consider setting up a National Equity Fund to help green field projects and
    new generation entrepreneurs to tide over difficulties faced in start-up finance.
   There is a need to promote factoring services without recourse in the country for
    MSMEs and a suitable legal framework for promotion of factoring services without
    recourse in the country for MSMEs needs to be evolved.
   The Industry Associations have often been often representing on the delayed payments
    from large corporate. While banks have been advised to allocate a sub-limit in respect of
    large borrower accounts, for making payments to the MSE units against purchases from
    them but it is not possible for banks to force the large buyers to utilize the limit for
    making payments. This problem could be institutionally tackled by factoring.
   The Prime minister's Task Force on MSMEs also has recommended that a suitable
    framework for promotion of factoring services without recourse in the country for
    MSMEs.
   Reserve Bank has also constituted a Working Group on Securitization of Trade Credit
    Receivables to examine various options for liquidating the receivables before maturity.
   There is 96% exclusion of the small entrepreneurs, it is, therefore, imperative that they
    are financially included
   There is a need for greater participation of banks in the affairs of their constituents by
    convergence of credit services and non credit services.
   The banks should not only provide differentiated products for MSMEs, but also provide
    counselling & guidance to new and established businesses, extending marketing support
    etc.
   Entrepreneurship development is important in view of its visible impact on wealth
    creation and employment generation.
   To facilitate and encourage this, skill building has been impressed upon by the Prime
    Minister's Task Force for MSMEs.
   Enterprise Development Centres (EDC) should be set up by the Central / State
    Governments with incubators to provide training not just for setting up of new units but
    also provide continuing education on different aspects like product design, packaging,
    technology upgradation, financial management and marketing etc.
   Government has already set up a committee for amendment of Companies' Act. It is
    probably necessary that the revised Companies' Act should prescribe simplified
    disclosures norms and ICAI should come out with simplified account standards for
    SMEs.

                                                ***




                                                                                             66
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

    “Most appropriate and not just the best people be selected”
                          Dr. K. C. Chakrabarty // April 2, 2010.

At the Silver Jubilee Function of IBPS at IBPS House, Mumbai on

 Far-reaching developments in the roles and activities of banks and financial institutions
  in recent years have put a premium on appropriate manpower planning and personnel
  development, indeed the human resource function generally.
 Ensuring that the banks can recruit and retain appropriately qualified and experienced
  staff is at the heart of this challenge. This is made increasingly difficult by developments
  outside the financial sector and competition for key personnel even from international
  agencies.
 War for talent: Even public sector banks can perhaps no longer take a lifetime
  employment for granted.
 Issues relating to how to attract talented people, how to nurture them, how to develop
  them and give them the necessary space have now, therefore, moved to the centre stage
  and today constitute the major concerns that we may need to address adequately in the
  near and medium term.
 There have been broadly three catalytic forces that have brought about this changed
  perception of human resources :
 First, in this Information Age, the intangible assets such as intellectual capital and talent
  have in a sense supplanted hard assets of the Industrial Age such as capital, factories and
  inventories. The new reality is that people are increasingly the principal assets of any
  organization and institutions are dependent not just on the sum total of their individual
  human capital, but also on how effectively they are able to draw out the best from their
  talent bank.
 Secondly, in India as elsewhere, a host of new industries, some sector-specific like new
  generation Indian private sector banks and foreign banks and other sector-neutral like
  companies in the fields of information technology and media, have given rise to a supply
  demand imbalance. Today, these new industries are competing with the old for talent
  and have triggered the need for banks to look afresh not only at their recruitment
  strategies but also how to develop and retain their talent.
 Thirdly, there is the issue of ownership. While organizations own physical and financial
  assets, their ownership rights, however, do not extend to people. In Indian financial
  sector, in the pre-reforms days, employment bonding, especially in the public sector,
  worked on what was termed the 'psychological contract' or the 'loyalty contract'
  wherein long-term employment was co-terminus with employee loyalty. This, in today's
  world, has been seriously undermined, spurred not in the least by a spurt in job
  opportunities. The old values of loyalty have eroded and greater demand for talent has
  changed the playing field for the search and retention of personnel. This is the new reality
  that the banks in India, among others, have to contend with.
 Importantly, effective recruiting is the beginning of effective retention. Matching
  between tasks and talents is a challenging problem and it is essential for allocational
  efficiency that people get allocated to right occupations.
 Refashioning the recruitment process may well therefore be the precursor of an effective
  talent management strategy.
 This may include identification of key positions and turnover risks associated with these
  positions, and competency / behavioural-based selection criteria that support the retention
  strategy and business drivers.


                                                                                            67
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
 Only a carefully designed and integrated set of initiatives that allow the employee to
  align himself with the organisational goals and objectives, map competencies for
  diverse work areas, build up capacities through a well-crafted and sustained strategy and
  draw out latent possibilities optimally would ensure emergence of leadership talent that is
  critical to any organization’s prosperity and is therefore a central element of talent
  management.
 The aim is to align the current and future talents of individuals with the strategic
  challenges of our business. So while employees need to understand how to be more
  effective in their current roles, deliver specific business challenges, and pull together a
  personal development plan for shaping future careers, organizations too have to strategize
  how best to utilize the people's talents and identify areas for internal development
  necessary for ensuring future success.
 Engaged as it is in the critical exercise of getting the right people for the right job for
  organizations across the banking sector, the IBPS therefore has a central role to play in
  the broad mandate of talent management in the Indian banking system.
 Institute has to widen its services and engage itself more and more in other emerging
  areas like providing training workshops for executives on "interviewing skills",
  training programmes in the fields of performance appraisal, counseling services,
  performance counseling, team-building and organization development, manpower
  planning and organization restructuring and undertaking sponsored Research Projects,
  just to name a few.
 As Bank understandably attaches a lot of value to taking in bright, young professionals as
  Direct Recruits, your Institute's role in helping us in building up our human resource pool
  has been substantial.
 For its continued relevance for the next 25 years, IBPS must not only endeavour to
  select the best people but the most appropriate people for a job.
 Out of my own experience as a bank chairman, I can tell you that I found very few
  people willing to undergo rural postings. As the Indian banking system embarks on
  the massive goal of financial inclusion, IBPS would have to ensure that candidates
  having compassion for poor and underprivileged, willing to work in rural areas, etc.
  are selected for the banking industry.
 The key challenge, thus, is how to integrate such requirements into the selection process
  itself so that the most appropriate and not just the best people are selected.
 The second challenge is to meet the growing needs of an ever expanding financial sector.
 It is heartening to note that during 2009-10, IBPS would be clocking close to 10 million
  candidates in screening for various assignments.
 In a globalised world, everyone would be competing to attract the best people and the
  requirement is only going to go up. IBPS would have to upscale itself with appropriate
  methodology, technology, manpower, etc. to be able to effectively deliver on its clients'
  requirements.
 The third challenge is bracing for possible competition in future. Today, IBPS is alone in
  this field. As the number of institutions and the services desired increases, newer
  institutions providing similar services may come up. Thus, IBPS must strive to move up
  the value chain. It should not only upscale itself but widen its basket of services and
  engage itself more in newer areas like banks' internal promotions and other areas. It
  should strive for greater utilization of its services so that it can face competition when it
  comes.

                                             ***


                                                                                            68
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010

        'Ten Commandments of IT Security / Management in Banks'.
                            Dr. K. C. Chakrabarty // April 26, 2010

 Take adequate care of the human factor in IT implementation. There is a need to be
  vigilant against an insider who may know more than what is required and when aided
  with unfettered access, could wreak havoc on the bank concerned. Equally important is a
  customer who exploits technology loop holes for malafide intentions.
 Ensure permeation of IT security throughout the organization. World over, IT
  security is optimal if the implementation is top driven. Top Management of banks need to
  provide a missionary zeal for implementing IT security;
 Clear IT security policies and procedures. Well laid down processes and procedures
  not only enhance employee efficiency but also aid a great deal in ensuring that there is
  clarity of objective apart from acting as a veritable guide to the conduct of operations in a
  safe and secure manner. It is also imperative that these procedural requirements are fully
  disseminated to all sections of the staff for their unflinching compliance at all times.
 Take action at the appropriate time. It is almost impossible to achieve complete IT
  security in any organisation. Addressing IT security related concerns and breaches thus
  assume significance. The watch word here is timeliness; it is only those banks which
  take quick corrective action which can survive the onslaught of security breaches. Such
  prompt action is possible only if the banks have already put in place well defined systems
  and procedures. The need to focus on attempted security violations also needs to be taken
  care of since these offer themselves as excellent early warning signals which, if left
  unattended or improperly attended, may result in substantial losses and a small lapse often
  becomes a mega event due to lack of right decision at the right time.
 Ensure that adequate resource capability is provided for. An effective IT security
  framework cannot be implemented in isolation. It is imperative that all resources which
  facilitate the accomplishment of this objective are adequately provided for. These include
  adequate personnel, effective and efficient IT systems, good vendor management policies,
  and sound IT / ARE Audit mechanisms. Costs are certainly associated with these but the
  benefits accruing on account of reduced impact of IT security breaches more than
  compensates for the costs incurred in this regard.
 Provide for optimal Business Process Re-engineering. Business Process Re-
  engineering leads to cost savings, better work flows, improved efficiency and better
  customer service levels as Business Process systems are cross-functional, i.e. the system
  boundary is not within a single function but actually goes across boundary lines.
 Take care of obsolescence issues for IT security. The rapid degree of product and
  feature obsolescence in the IT industry is a formidable challenge for banks. Such
  obsolescence needs to be tackled in a systematic and proactive manner for mutual benefit
  of the banks and their customers. Care needs to be, taken in such a way that upgradation
  to take care of technology obsolescence is performed in a scientific manner and on a
  need-to-upgrade basis. This would help banks avoid falling into the technology-
  obsolescence trap requiring huge sums of money for to come out.
 Provide a framework for Incident Management. The best tool towards an effective IT
  security framework would thus be one which acknowledges such security instances and
  provides for a framework for appropriate incident reporting within the organization and to
  the regulators. Such a mechanism would provide insights into the security 9 violations
  and other such attempts, but the single largest beneficial factor would be the development
  of a set of knowledge workers who hold the key to success of any IT based initiative by
  banks in a country which can boast of some of the best IT companies runs by effective IT
  Czars.

                                                                                            69
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
 Take care of Data Quality and Integrity. The most vital component of IT security is the
  data which forms part of the IT enables business processing system. Data is hard to get or
  create, easy for misuse and is tough to be channeled towards beneficial interpretation
  resulting in meaningful analysis. To this end, banks need to work out effective standards
  aimed at high levels of data quality and integrity. I am reminded at this juncture of a book
  called 'Database Nation' written by Simson Garfinkel which outlines the death of
  privacy in the twenty-first century. The author skillfully elucidates the various facets
  governing data piracy while concluding that the owner of one's own private information is
  not himself! Banks cannot afford to fall into this category and data refinement is one
  approach which would facilitate good data management with adequate levels of
  protective covers.
 Provide for IT security as a way of life. The last commandment is more like a synopsis
  but is at the heart of all IT security related initiatives. IT security cannot be viewed in
  isolation; neither can it be implemented in fits and starts. Examples of good IT security
  implementation reveal that good IT security features are impregnated as essential
  requirements in a normal way of life. As banks, we need to imbibe the security culture
  in our normal day-to-day activities. This is a challenging and daunting task since the
  normal human mind is more attuned towards an easy, Laissez faire approach towards
  reduced security so as to enhance convenience. IT security does add on to inconvenience
  as it does towards increased costs, but it is economical in the long run.


                                            ***




                                                                                           70
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

         Global Economic Slowdown: Developments in India
                           Dr. Duvvuri Subbarao // April 24, 2010

 The Indian economy is recovering rapidly from the growth slowdown caused by the
  crisis.
 Current estimates are that real GDP had grown at 7.2 per cent during the just completed
  fiscal year 2009-10, up from 6.7 per cent during 2008-09.
 For policy purposes, the RBI has placed the baseline projection of real GDP growth for
  2010-11 at 8.0 per cent with an upside bias.
 The monetary and fiscal stimulus measures initiated in the wake of the global financial
  crisis played an important role, first in mitigating the adverse impact from the crisis
  contagion and then in ensuring that the economy recovered quickly.
 The developments on the inflation front, however, are worrisome.
 Inflation, which was earlier driven entirely by supply side factors, is now getting
  increasingly generalised.
 Keeping in view the inflation risk, the Reserve Bank embarked on a calibrated exit from
  the expansionary monetary policy.
 The Union Budget of 2010-11 has begun the process of fiscal consolidation by
  programming a reduction in the revenue deficit to 4.0 per cent of GDP from 5.3 per
  cent, and in the fiscal deficit to 5.5 per cent from 6.7 per cent during the previous year.
 Going forward, three major uncertainties cloud the outlook for inflation. (a) First, the
  prospects of the monsoon in 2010-11 are not yet clear. (b) Second, crude prices continue
  to be volatile. (c) Third, there is evidence of demand side pressures building up.
 On balance, keeping in view domestic demand-supply balance and the global trend in
  commodity prices, the baseline projection for WPI inflation for March 2011 is placed at
  5.5 per cent.
 Against this background, the conduct of monetary policy will continue to condition and
  contain perception of inflation in the range of 4.0-4.5 per cent.
 This will be in line with the medium-term objective of 3.0 per cent inflation consistent
  with India's broader integration into the global economy.
 In this context, accommodative monetary policies in the advanced economies, coupled
  with better growth prospects in India, could trigger large capital flows into the
  country.
 While the absorptive capacity of the Indian economy has been increasing, excessive flows
  pose a challenge for exchange rate and monetary management.

                                           ***




                                                                                          71
                                                                 Canara Bank RSTC Gurgaon
                                                                  Interview Magnet Oct 2010

                 Profit Planning Terminology in a Nutshell
 “Interest Spread” & “Net Interest Income” are one and the same.
 Spread: Difference between the Yield on Working Funds and Cost of Working Funds
  represents Spread.
 Net Interest Margin (NIM) : NIM is the ratio of net interest income (Total Interest
  Income minus Total Interest Expenditure) to average earning assets.
 The difference between ‘non-interest expenditure’ and non-interest income’ is defined as
  “Burden”.
 “Interest Spread’ less ‘Burden’ determines “ Operating Profit’ “
 Profit vs. Profitability: While profit represents an absolute figure, profitability,
  measured by a ratio, represents the operational efficiency. As opposed to absolute profit
  volumes, profitability is a more meaningful yardstick of operational efficiency as it is
  size-neutral.
 Return on Assets (RoA) : RoA is the ratio of Net profit to total assets. This is a standard
  measure of profitability with 1% deemed as the international benchmark.
 Return on Capital (ROC): ROC is the ratio of net profit to share capital. It indicates the
  return on paid up capital.
 Return on Net worth , also known as Return on Equity (ROE): Ratio of net profit to
  average net worth (share capital, plus reserves minus intangible assets). It indicates the
  return on equity capital.
 Book Value: Net worth divided by number of shares. Market price of share generally
  factors Book Value.
 Earning Per Share (EPS) & Price earning Ratio (P/E ratio) : EPS is the ratio of Net
  profit to number of shares.
 Price – Earning is the ratio of market price of a share to earning per share. EPS and P/E
  ratios indicate the ability of the bank to access to the capital market and the appetite of the
  bank’s scrip in the market.
 Capital to Risk-weight Assets Ratio (CRAR): Total capital, consisting of Tier-I & Tier-
  II capital, as a ratio of risk-weighted assets. It indicates the soundness and risk bearing
  ability of a bank.
 Yield on Advances: Interest income on advances divided by average advances indicates
  average yield on advances.
 Yield on Investments: Interest & dividend income on investment divided by average
  investments indicate yield on investments..
 Yield on Working Funds: Total interest income divided by average working funds,
  consisting of interest earning and non-interest earning assets.
 Cost of Deposits: Interest paid on deposits divided by the average deposits, consisting of
  Current, Savings and Term deposits. This is the comparable benchmark for liabilities
  management.
 Cost of Borrowings: Interest paid on borrowings, including borrowing for Tier-II capital,
  divided by average borrowings.
 Cost of Interest Bearing Liabilities: Interest paid on deposits and borrowings divided by
  average interest bearing liabilities (deposits and borrowings, including Tier-II bonds).
 Cost of Working Funds: Total interest expenditure divided by average working funds,
  consisting of interest bearing and non-interest bearing liabilities (total of liability side of
  balance sheet).
 Intermediation Ratio: It measures the ratio of operating expenditure to total assets. As
  per international criterion, this ratio should be less than 1 per cent.


                                                                                              72
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010
 Cost- Income (Efficiency) Ratio: Non-interest expenditure divided by net total income
  (total income minus interest expenses). It signifies movement in operating cost relative to
  income. Global benchmark is 40 per cent.
 Burden Ratio: Ratio of non-interest income to non-interest expenditure. As an efficiency
  criterion, non-interest income should be able to cover the non-interest expenditure.
 A recent cost benefit study on ATMs has revealed that a minimum of 150 transactions per
  day is required on an ATM to make it BREAK-EVEN.

 Global Benchmarks in Profitability:

        Criterion                      Parameter                       International Standard
Solvency Ratio                       Capital Adequacy                      Minimum 8%
Efficiency of Assets Use             Return on Assets                           1%
Net NPA Ratio                  Net NPA Ratio to Net Advances               Less than 1%
Intermediation Efficiency    Operating Cost to Average Working Funds       Less than 1%
Burden Ratio                 Other Income to Operating Expenses           Minimum 100%
Cost- Income Ratio              Operating Cost to Net Income              Less than 40%

 Benchmark Prime Lending Rate: RBI asked banks to declare their own Benchmark
  Prime Lending Rate (BPLR), i.e the minimum interest rate which the bank can charge for
  its zero risk customers.
 While deciding the BPLR, Banks should take into account following factors: Actual cost
  of Funds, Provision for NPAs, Other Regulatory provisions, Profit Margin.

                                             ***

                        Factors Affecting Pricing Policy
 Cost of Funds: Average Deposits Cost; Average Borrowings Cost including Tier-II
  Borrowings
 Operational / Transaction Cost: Staff Cost; Other Operating Cost;
 Regulatory Cost: Cost of Capital Adequacy; Standard Assets provisioning; NPA
  provisioning; Provisioning for Tax;
 Competition: Competitive pressure force banks to offer quality services at competitive
  prices; Innovation will only provide competitive advantage.
 Profit Margin: After covering Fund cost and operational costs profit margin should be
  factored into the price; Profit margin, generally market driven; however, it should cover
  benchmark RoA of 1%.
 Volume of Business: Competitive pressure may not allow in pricing the product as per
  actual cost and cover a profit margin of 1%; To reduce overall transaction cost, average
  fund cost and to increase absolute amount of total income, focus should be on enhancing
  the balance sheet size.


                                              ***




                                                                                           73
                                                                 Canara Bank RSTC Gurgaon
                                                                  Interview Magnet Oct 2010

          Maturity Matched Multiple Transfer Price Mechanism
                                           (Cir.12/2010)

 Hitherto, to evaluate the profit position of branches after application of HO interest, the Bank
    was following a simplified dual TPM, i.e., separate rates - for branches lending funds to
    H.O. and for branches borrowing funds from H.O., applied on the average net HO Funds of
    branches. HO interest was calculated at Circle Offices and conveyed to branches by sending
    memorandum of HO Interest. Vouching / Accounting of HO interest, debit or credit, in the
    books of accounts of the branches was dispensed with effect from 01-03-2009. Calculation
    and communication of H.O. interest to branches by sending memorandum of H.O. interest is
    continued at Circle level.
 Now, it is permitted by the Board to adopt 'Maturity Matched Multiple TPM' for FY10 to
    determine profit position of branches after HO interest.
 Under this concept, TP rates are computed for different products of assets and liabilities as
    this concept lays emphasis on product profitability and highlights areas for improvement.
 The concept works on the premise that deposit products are a source of funds, while advances
    products are for deployment of funds.
 The income from deposit products is the transfer price less the interest payout. The income
    from advances products is the interest received less the transfer price.
 Methodology: The new concept will be in force from the month of April 2009 onwards.
 To begin with, it has been decided that the HO interest would be calculated for following
    products: Liability Products: CA/c; SB; Term Deposits & Asset Products: Priority
    Advances ; Non Priority Advances.
 CASA share in total deposit of the Bank is at lower level and its growth is essential to reduce
    the cost and therefore incentive is factored in TP rates to promote CASA deposits.
 Further, basing on average cost of mobilizing term deposits, incentive is factored in TP rate of
    term deposits.
 Similarly, risk premium is added to Priority and Non Priority sector advances.
 Risk premium is kept low for priority sector advances, keeping in view the need to accelerate
    lending to this sector.
 Calculation of H.O. Interest: After validating Flash reports by MIP Section, H.O., HO
    interest would be calculated at Profit Planning Section, H.O. based on the monthly average of
    each product which is culled out from the FLASH report (PSR1) through the package
    modified/developed by the Department of Information Technology.
 'Maturity Matched Multiple TPM' takes into account the profitability of each product and
    hence branches would benefit depending upon their performance under each product.
 Branches to strive for judicious mix of business in their portfolio for improving profits and
    profitability.
 The Transfer Price rates for the financial year 2009-10: CA/c :5.87% /// SB : 7.24% ///
    Term Deposits : 8.17% /// Priority Advances: 5.85% /// Non Priority Advances: 7.85%
Illustration:
 Average Current Deposits 100000* (5.87%) = +5870
 Average Savings Bank Deposits 150000 *(7.24%)= +10860
 Average Term Deposits 350000*(8.17%) = +28595
 Average Priority Advances 100000* (5.85%) = -5850
 Average Non Priority Advances 150000*(7.85%) = -11775
 (+5870+10860+28595-5850-11775) =
 Total H.O. interest +27680
 (+) denotes HO Interest receivable by the branch and (-) denotes HO Interest payable by the
    branch.
                                                 ***


                                                                                               74
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                                Non Interest Income
                              (From Profit Planning Handbook)

 In case of Canara Bank, core income accounts for about 66% of total income.
 It is well recognized that the frequency in asset repricing, as opposed to liabilities
  involves a larger lead time, affecting thereby, the margins adversely.
 Fee based income does provide the elbowroom for banks to counter the margin pressures
  and shore up profitability levels. Such income streams are also relatively less volatile and
  more resilient to the risks. Of late, fee income deserves a concerted focus, especially in
  view of continued slackness in treasury profits and continued pressure on margins.
 The core non-interest revenue source constitutes nearly half of the total non interest
  income of the Bank.

Components of Non-Interest income:

 Trading Profits: Trading income is by nature very volatile and is prone to the
  vicissitudes of market forces. Banks' profitability from trading activities is being dented
  by the upswings in the interest rate.
 Commission, Exchange & Brokerage: This is one segment which has been growing
  steadily and has contributed to one third of Bank's total non-interest income in the recent
  years. The share of this segment has remained stagnant despite newer and potential
  business like Bancassurance (included under the head) growing faster.
 It is recognized that such income emanating from the traditional remittances and
  collection businesses is under pressure. While a substantial part of commission earnings
  used to accrue from Demand Drafts for customers, these forms of money transfers are fast
  disappearing with the arrival of RTGS of funds across banks and across locations,
  powered by technology. With cheques encashable at any location and the facility of
  instant transfer of funds through telebanking and ATMs, there is a sea change happening
  in the remittance business.
 Similarly, though bills culture is expected to assume significance, bills collection
  business, as practiced over the years, is fading due to basic changes taking place in the
  trade financing operations.
 Commission income on guarantees issued by banks, the other traditional fee earner, is
  facing serious pressure on rates. Scope for issue of guarantees on behalf of customers for
  long periods, such as, deferred payment guarantees to support buyer’s credit for purchase
  of machinery and other assets, has become rare, since clients are able to get more cost
  effective alternate financing arrangements.
 A new breed of IT enabled services has been added to the arena of banking services.
  Branches need to leverage the IT/ITES to popularize such services to compensate for
  the loss of revenues from traditional sources of fee based income. Investments in
  providing these ITES being very high, it is prudent to leverage commensurate returns
  from such investments.
 Service charges: Service charges contribute a higher percentage to our fee based income
  next only to ‘Commission, exchange and brokerage’ and the same has steadily improved
  during last 4 years. This segment encompasses a variety of charges/fees and is a potential
  area for higher growth of revenues. Service charges competitively priced can garner
  higher business as well as income. To boost collections under this segment, emphasis is to
  be laid on retail lending. Timely collection of service charges and plugging of income
  leakages can further add to this segment of revenues.


                                                                                           75
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
 P&L on exchange transactions: Profit from exchange transactions mainly emanates
  from the operations of Foreign Departments/ designated branches/ International Division,
  Mumbai. It contributes a good share to the coffers of non-interest income. Though the
  revenues from the segment are affected by the volatility in forex market, apart from
  influences from global markets, the decline/stagnant growth in recent years in exchange
  earnings at ID is a result of offering finest rates and concessions to Corporate clients.
  Despite the stiff competitive and compelling situations, Circles will appreciate, that little
  more prudence may help in minimizing its impact on our bottomline.
 Bancassurance and insurance products: Distribution of financial products is clearly a
  fast emerging segment. By engaging in distribution of third party products, banks would
  stand to draw additional value from millions of customers and offer them a useful range
  of services within their available contingent of manpower and infrastructure. Insurance
  and mutual funds stand apart in this respect as two important products that provide a
  ready opportunity for banks in India.

Measures To Augment Fee Based Earnings:

 High turnover coupled with a larger customer base will aid in augmentation of revenues.
 LCs/Guarantees is a segment, which contributes 44% of the total commission earnings
  and holds a large potential for further augmentation. However, growth rate of earnings
  from this stream has reduced now. Reasons: demand for concessions in tariff, as also the
  possibility of non fund business of our corporate clients being routed through other
  Banks.
 Selling of bancassurance and mutual fund products. For most customers buying
  insurance products, convenience in buying and ease of payment of premiums are the key
  motivating factors. More concentration on life insurance and pension plans, as the same
  offers higher commission. All the captive business in Non Life segment should be
  covered under our arrangement only.
 Bank has already tied up with other banks for sharing of ATM network/NFS. Bank is
  providing value added services like E-ticketing, mobile top up through ATM and
  SMS/mobile banking facility, Visa money transfer etc. All these services will aid in
  generation of fee based income.
 Stronger Card (Credit & Debit) base.
 Thrust on retail lending will mop up higher service charges.
 Judicious recourse to concessional facilities and periodical review of concessional
  facilities to ensure adequate compensation for the sacrifice.
 Branches need to ensure timely recovery of service charges and plug income leakages.
 Another promising avenue, where many of our peers are already in, is Bullion Trading.
  While the continuous uptrend in bullion price is likely to take care of the funds cost, even
  at a margin of Rs.40 per gram, it generates a revenue of Rs. 4 crore per ton of gold sold
  across the counters. We may have to diversify into such activities more and more to
  widen the fee based earning streams.
 We need to leverage our branch network and Information Technology towards improving
  value-added services such as On-Line Broking, Utility Bills Payment etc., to our clientele
  base. This, coupled with effective Customer-Relation Management, will ensure a
  sustained growth in non-interest income.

                                            ***



                                                                                            76
                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                                Branch Profitability
 Loss Making Branch - Definition : A loss-making branch is one, which incurs loss after
  application of HO interest for the period of review and has completed a gestation period
  of three years.
 Similarly a continuous loss-making branch is defined as a branch, which has been in
  existence for over 5 years and incurs losses continuously for three years.
 Major Cause Of Incurring Loss: (a) High level of core NPAs (b) Low or negative
  interest spread. (c) High cost of deposits (d) Low level of Business per Rupee of General
  Charges (e) Low level of business (f) Higher Burden. These factors impact the profit
  position of the branch even before application of HO interest since they have a direct
  bearing on the branch’s Profit & Loss account.
 Action Plan For Turnaround Of Loss Making Branches: Branch specific turnaround
  strategies need to be worked out by the branches in consultation with the controlling
  offices.
 Any turnaround strategy will need to factor business composition and potential of the
  command area in tandem with the manpower and other operating expenditure of the
  branch. Branches and controlling offices alike are in a position to monitor the profit
  position before and after application of HO interest on a monthly basis with the aid of the
  Monthly Profitability Report and the monthly vouching of HO interest accounted at
  branch books of accounts.
 From the corporate viewpoint, the following general strategies could provide cues for
  working out branch specific turn around strategies.
 NPA Management: Reduction in Gross NPA and Gross NPA ratio by increasing the
  Gross Advance level of the branch coupled with decrease in Gross NPA level through
  recovery efforts. Prompt transfer of NPAs to the ARM branches for reducing the Gross
  NPA and improving the yield on advances.
 Productivity and Profitability: Improvement in branch profitability by way of either
  increasing the business level and / or by right sizing of staff. Increase Business per Rupee
  of General Charges, either by improving the business level or by reducing the operating
  expense of the branch.
 Spread Management: Work towards improvement in interest spread / net interest
  income. Reduction in cost of deposits and increase in yield on advances by augmenting
  low cost deposits and high yielding advances respectively.
 Burden Management: Bring down the gap between General Charges and Non-interest
  income.
 Merger / closure / relocation of the branch could also be resorted.
 Based on the above and in consultation with the respective controlling offices, time bound
  turnaround strategies need to be put in place by branches.

                                            ***

Extracts from Profit Planning section, Educative series no:9/2009-10: Cost of deposit
(Dec 2009) for our bank - 6.37%. Daily products to SB wef 1.4.2010 will increase the cost of
deposit by 10-12 basis points. One basis point reduction in CoDeposit will reduce interest
cost by Rs.20 Crores.

                                            ***


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   Improvement of Government Business under Tax collections.
                                        Cir.282/2009

 Government Business is a good source of non-interest income
 Bank has 466 authorised branches under On-Line Tax Accounting System (OLTAS) and
  154 authorised branches for collection of Indirect Taxes under Electronic Accounting
  System in Excise & Service Tax (EASIEST), besides 79 branches handle Postal
  transactions at present.
 Our total Direct tax collections for the year 2008-09 was Rs.6031 crores as against
  collection of Rs.6997 crores during 2007-08 showing a decrease of 13.80% .
 The total collection of Direct taxes for the country for the year 2008-09 was Rs.338000
  crores and our Bank's share was a mere 1.78 % of the country's Direct Tax revenue.
 There is negative growth in the tax collection of our Bank.
 More than 50% of the total tax collection has come from two centres.
 Performance of the remaining centres is far from satisfactory.
 It may be noted that after introduction of e-payment of taxes, not only our authorised
  branches but also all our Core Banking Solution (CBS) branches can remit taxes directly
  through internet.
 Central Board of Excise & Customs has made e-payment of Service Tax and Excise Duty
  mandatory with effect from 01.10.2006 for those assessees who have paid Service Tax /
  Excise Duty of above Rs.50 lakhs in the preceding year or during the current financial
  year.
 In our Bank, e-payment mode for Service Tax / Excise Duty has been introduced with
  effect from 01.10.2006.
 Central Board of Direct Taxes (CBDT) has made e-payment of Direct Taxes mandatory
  with effect from 01.04.2008 in respect of following category of tax payers. (a) All
  companies; (b) All tax payers covered under provisions of Section 44AB, i.e., turnover or
  gross receipt from business exceeds Rs.40 lakhs in the previous year or whose gross
  receipts from profession exceed Rs.10 lakhs in the previous year.
 All our branches handling tax collections to display a keen and active interest in enrolling
  new tax payers, educate them and show improved performance under tax collection.

                              ***
        Rate of Agency Commission Paid by the Government:
Till 30th June 2005, the Banks were getting commission at 0.12 paise percent. However
w.e.f. 1st July 2005, the Government has revised the rate of commission as under:

 Direct / Indirect tax collections - Rs. 45 per challan
 Pension payment - Rs. 60 per payment
 All payment except pension - 0.09 paise percent ( Rs.9000/ crore)


                                            ***




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                                                             Canara Bank RSTC Gurgaon
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                     HUMAN RESOURCES DEVELOPMENT
Compulsory tools and Optional HR tools:

 Staff meeting, Job rotation, OPAS, etc – compulsory.
 QC, BSS, SC – Optional.

 Staff Meeting: (Cir no.224/04): It aims at ‘Open Culture’, ‘Family Feeling’, ‘Group
  Synergy’ and ‘Talent Recognition’. Agenda can reflect variety, topicality of issues and
  branch specific priorities. Once in a month with agenda decided well in advance. A goal
  oriented, target, task oriented, education oriented meetings.

 Job Rotation is compulsory both at branches and also at administrative units upto II Line
  Managers. The Job Rotation should be normally effected once in every six months.
  However, the branch-in-charge, depending on the size of the branch and departments
  handled, can have some flexibility regarding the period. But, the same should not be
  more than 12 months. This is to ensure smooth change over without affecting the
  customer service. Cir.75/2005, 217/2007

 Quality Circle: For self development and mutual development. QC is voluntary and
  formed to solve ordinary work related problems. QC team can ideally have 5-7 members.
  Leader and Deputy leader will be there, selected within the team. Branch incharge will act
  as a facilitator only. Dr.Kourou Ishikawa is the founder of QC movement in Japan.
  Fishbone diagram is one of the popular QC tools.

 Brain Storming Session: Periodicity is quarterly. A corporate topic is debated at all
  levels by involving a cross section of employees and valuable feedback gathered will help
  HO to introduce new systems/ bringing changes in existing systems and
  procedures/schemes, etc. Report should be sent to controlling office.

 Study Circle: Under this forum of Study Circle, important topics can be discussed like
  Time Management, Stress Management, Yoga and Meditation, Taxation, Blood
  Donation, Basel II norms, Quiz Program, etc. However, care to be taken to see that the
  topic chosen is interesting one and kindle desire in the minds of employees and active
  their thinking process. Periodicity of conducting study Circle meeting is once in 3
  months in case of branch and bi-monthly in RO/CO. Topics of banking/non-banking will
  be discussed by inviting a guest speaker who is well versed with the specialised topics.
  Honorarium of Rs.200 can be paid in case of branch having staff strength of less than 50
  and RS.500 in case of RO/CO/Branch having more than 50 staff strength.

Employees Suggestion Scheme: (Cir no.14/2004, 233/2010)

 To put in place system, procedures & reduce risk to inculcate team spirit. All employees
  of the Bank are eligible to participate. Employees in O&M Section, Management Audit
  System, Inspection Wing and their overseeing executives are not eligible. Group of
  employees: Minimum 3 and Maximum 5. Suggestion through                      e mail to:
  inspwingom@canbank.co.in
 Accepted Suggestions will be rewarded as follows: Appreciation letters signed by DGM
  of the Circle/GM Personnel Wing. It will be noted in personal records. Cash awards


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  Rs.3,000/- & Rs.5,000/- for individual and team respectively. Names with photographs
  of the prize winners will be published annually in “Shreyas”
 Memo will be issued. Annual Awards: 6 Best Suggestions : I – Rs.10,000/-         II –
  Rs.7,500/- & III – Rs.5,000/- and 3 consolation prizes :Rs.3000/- each.
 Special Award : adhoc by CMD for reduction in expenditure or in preventing frauds.

Presentation of Milestone Awards

 Wef February 1990. After completion of 25 years of meritorious service
 The award will be in the form of any one article, like wrist watch, silver, salver or any
  other article of the officer’s choice.
 The cost of the award should not exceed Rs. 2000/- (Cir 130/2000)
 Debit to: General Charges-Staff Welfare Account and the bills will be lodged with the
  (third copy) of the GC slip at the branch itself.
 The award will be presented in the monthly staff meeting.
 Award may be presented during the staff meeting of April / October - Every Year

Exit Interview: Exit Interview is for employees who are retiring from the services of the
Bank on superannuation, resigning from the services of the Bank and those who have opted
for Voluntary Retirement. Exit Interview is to be conducted by a person a rank higher than
the retiring/resigning person

Incentive Scheme For Officers And Clerical Employees For Taking Up Post Graduate
/Certificate/ Diploma Courses- (Cir no.311/06)

 Group I – Certificate / Diploma Courses
 Incentive of Rs.3000/- for completing PG Diploma in Financial Advising and Certificate
  course in Anti Money Laundering (AML) & Know your Customer (KYC)
 Group II – PG Courses
 Rs.5000/- for Masters in Financial Management (MFM)

Compassionate Employment In Our Bank (cir 262/07)

 Employee dying with in 5 years of first appointment or before reaching the age of 30
  years, whichever is later , leaving a dependant spouse and/or minor children
 Effective from 31-07-2004 (retrospective effect)
 Appointment can be made in Clerical and Sub Staff cadre
 Application by LH within 12 months of death of employee

Pratibha Scheme (cir 189/07)

 Age limit of employee : 48 years. There are 7 areas of specialization

Canteen Subsidy (H.O. Cir. 198/2001, 93/2007)

 All branches, irrespective of the staff strength, are eligible for canteen subsidy.
 The Subsidy amount at the rate of Rs 50/- per month, per employee shall be released by
  the Bank to the caterer directly (w.e.f. 1/9/2001).



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Annual Performance Appraisal (APA) System For Officers in Scale I, II and III
Memo No: 21/2009

Evaluation - Will be under 4 broad parameters: (Earlier – KRA (70%) + Mgl. dimensions
(20%) + Potential (10%).
      Business Dimension and qualitative aspects of business (Officers posted as   70
      Branch-in-charge)
  i)
                                           OR
      KRAs (Officers other than Br-in-charge or in administration)
  ii) Managerial dimensions and Managerial experience                              20
 iii) Judicious exercise of discretionary powers                                   5
 iv) Outstanding performance including creative and innovative quality             5
      TOTAL                                                                       100
Each broad parameter has sub parameters. Marks can be awarded in fractions upto 2
decimal points

 The marks awarded/rating matrix under each parameter is as follows :

                               Rating               Matrix
                          Extra-ordinary          Above 90%
                          Outstanding             81% to 90%
                          Good                   61% to < 81%
                          Average                40% to < 61%
                          Below Average           Below 40%

 Only when the overall rating under APA system is ‘AVERAGE’ or ‘BELOW
  AVERAGE’, the rating would be communicated to the employee with an advice to
  improve.

                                           ***




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                             Basel III (From BCBS website)
 "Basel III" is a comprehensive set of reform measures, developed by the Basel Committee
  on Banking Supervision, to strengthen the regulation, supervision and risk management
  of the banking sector.
 These measures aim to: (a) Improve the banking sector's ability to absorb shocks arising
  from financial and economic stress, whatever the source (b) Improve risk management
  and governance (c) Strengthen banks' transparency and disclosures.
 The reforms target: (a) Bank-level, or Microprudential, regulation, which will help
  raise the resilience of individual banking institutions to periods of stress. (b)
  Macroprudential, system wide risks that can build up across the banking sector as well
  as the procyclical amplification of these risks over time.
 These two approaches to supervision are complementary as greater resilience at the
  individual bank level reduces the risk of system wide shocks.
 The Basel Committee's oversight body - the Group of Central Bank Governors and Heads
  of Supervision (GHOS) - agreed on the broad framework of Basel III in September 2009
  and the Committee set out concrete proposals in December 2009.
 These consultative documents formed the basis of the Committee's response to the
  financial crisis and are part of the global initiatives to strengthen the financial regulatory
  system that have been endorsed by the G20 Leaders.
 The GHOS subsequently agreed on key design elements of the reform package at its July
  2010 meeting and on the calibration and transition to implement the measures at its
  September 2010 meeting.
 Basel III is part of the Committee's continuous effort to enhance the banking regulatory
  framework.
 It builds on the International Convergence of Capital Measurement and Capital Standards
  document (Basel II).

New Basel capital rules pose dilemma: Subbarao

 "The essence of 'Basel III' is to tighten regulation, which is to make it costly for banks to
  lend money. Benefit of Basel III will probably be less frequent crisis, less severe crisis,"
  Subbarao said, referring to the new bank capital rules.
 The new rules would require global banks to more than triple the amount of top-quality
  capital they must hold in reserve, although banks have a long lead time to make the
  adjustment. Indian banks on average have Tier 1 capital ratios of around 7.5 to 8 percent,
  which meet the proposed Basel III requirements.
 "As much we make it more costly for banks to lend, there is a sacrifice in growth. The
  question for us: where is the balance for India? We have to fall in line with Basel III, but
  where do we strike the balance," he said.

Basel III: Regulators agree on tougher bank rules (ET 12.09.2010)

 The new rules are likely to include a minimum core Tier 1 ratio of 4.5 to 6 %, with an
  additional capital conservation buffer of 2 to 3 %. Any bank that fails to keep above that
  buffer would have to curb payouts such as bonuses and dividends.
 There has been strenuous debate over how long banks should have to comply with the
  tougher rules; the final package is expected to include a transition period of about five
  to 10 years.


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 The world's top banks, having to a large degree recovered from the financial crisis, are
  not expected to need to rush to raise funds. But there remain worries that banks in some
  countries face a long road to recovery and that the changes will cut the amount of money
  which banks can lend out to companies.
 There are two new ratios that will be used in Basel III. New Proposed Ratios to measure
  and monitor Liquidity Risk
 Liquidity Coverage Ratio: Introduction of a Liquidity Coverage Ratio - to promote the
  short-term resiliency of the liquidity risk profile of institutions by ensuring that they have
  sufficient high quality liquid resources to survive an acute stress scenario lasting for one
  month.
 Net Stable Funding Ratio: To promote resiliency over longer-term time horizons by
  creating additional incentives for banks to fund their activities with more stable sources of
  funding on an ongoing structural basis. The Net Stable Funding Ratio has been developed
  to capture structural issues related to funding choices.
 “The major challenge for Indian banks lies in implementing the liquidity standards as
  they have limited capability to collect the relevant data accurately and granularly, and to
  formulate and predict the liquidity stress scenarios,” RBI Governor D Subbarao had said
  in a speech in Mumbai last week before the Basel-III norms were finalised.

Indian banks may not need more capital for Basel-III (BS September 14, 2010)

 Most Indian banks are unlikely to need additional capital in the near term to meet the
  Basel-III norms approved by the BCBS.
 Emphasis on core capital and a conservation buffer could put pressure on banks’ return on
  equity.
 BCBS recommended that Tier-I capital, which includes common equity and other
  financial instruments, will have to be increased to 6% from 4%.
 Minimum common equity capital requirement raised from 2% to 4.5% by January 1,
  2015.
 As on June 30, 2010, the aggregate capital to risk weighted assets ratio of the Indian
  banking system stood at 13.4%, of which Tier-I capital was 9.3%, according to the RBI
  data. This is well above the 6% Tier-I capital ratio mandated in the Basel-III norms.
 However, the standards mandate a minimum common equity of 7%, including a capital
  conservation buffer of 2.5%. This may be a challenge, especially for public sector banks,
  which rely more on perpetual debt instruments to shore up their Tier-I capital.
 The conservation buffer is intended to achieve, what BCBS says, “The broader macro-
  prudential goal of protecting the banking sector from periods of excess aggregate credit
  growth.”
 Implecations for PSBs: “There is no significant impact on Indian banks at this point in
  time. Current capitalization of top banks in India won’t require them to increase core
  capital significantly,’’ said Vibha Batra, co-head for Financial Sector Ratings at ICRA
  Ltd.
 “At present, public sector banks have a larger component of perpetual debt (and hence
  higher leverage) and lower Tier-1 ratios in general compared to private sector banks.
  Hence, a quicker transition to Basel-III will impose relatively greater capital requirements
  on them if they have to maintain current levels of growth,” according to a note from
  Macquarie Equities Research.
 The new norms will be implemented between January 1, 2013, and January 1, 2015.



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                                         Basel II

 In April 1992, RBI decided to introduce in India, a risk asset ratio system for banks
  (including foreign banks), as a capital adequacy measure, to adopt the framework on
  capital adequacy (Basel I), recommended by Basle Committee on Banking Supervision
  (BCBS).
 Under this system, the balance sheet assets, non-funded items and other off-balance sheet
  exposures are assigned risk weights and banks have to maintain unimpaired minimum
  capital funds equivalent to a prescribed ratio (called capital adequacy ratio), on the
  aggregate of the risk weighted assets and other exposures, on an ongoing basis.
 In June 2006, the BCBS released a comprehensive version of the revised framework
  (Basel II) which seeks to adopt more risk-sensitive approaches to capital requirements.
 The Revised Framework provides a range of options for determining the capital for credit
  risk and operational risk to allow banks and supervisors to select approaches that are most
  appropriate for their operations and financial markets.
 Three pillars of Basel II: The Basel-2 framework is based on 3 important components
  called 3 pillars, which include : Pillar-1 : Minimum capital standards, Pillar : 2
  Supervisory review and Pillar:3 Market discipline.
 Pillar -1 (Minimum Capital Standards): Banks are required to maintain capital funds
  with reference to their risk weighted assets. This is indicated in the form of a ratio called
  Capital Adequacy Ratio (CAR) or Capital to Risk Assets Ratio (CRAR). For maintaining
  capital, 3 types of risk are taken into account (a) credit risk (b) market risk and (c)
  operational risk.
 Minimum ratio: The minimum ratio that has been suggested in Basel 2 is 8% while in
  India, the banks are required to maintain it at 9%. While maintaining the minimum total
  CRAR of 9%, the banks are also to ensure that, Tier I capital should be 6% of risk
  weighted assets, by 31.03.2010. Further, the minimum capital would be subjected to a
  prudential floor, which shall be higher of: (a) minimum capital required to be maintained
  or ( b) a specified percentage of minimum capital required for credit & market risk as per
  Basel I.
 Calculation of Tier I CRAR = (Eligible Tier I Capital Funds) ÷ (Credit Risk RWA +
  Market Risk RWA + Operational Risk RWA) x 100
 Total CRAR = (Eligible Total Capital Funds) ÷ (Credit Risk RWA + Market Risk RWA
  + Operational Risk RWA) x 100
 Components of Capital fund I: There are two tiers of capital fund, namely Tier I and
  Tier II.
 While the Tier I (permanent capital or core capital) should be at least 6% to be achieved
  by 31.3.2010, Tier II (supplementary capital) cannot be more than 50% of the total capital
  funds.
 Tier I components: (a) paid-up capital, statutory reserves, other disclosed free reserves
  (b) capital reserves representing surplus of sale proceeds of assets. (c) Investment
  Fluctuation Reserve. (d) Innovative Perpetual Debt Instruments (IPDI) (e) Perpetual Non-
  Cumulative Preference shares (PNCPS)
 Amount of IPDI+PNCPS not to be more than 40% of Tier I capital.
 IPDI should not to be more than 15% of Tier I.
 There is no maturity period but there is call option available to the bank, after 10 years.
 Tier I capital = Tier I components as above Minus the following: (a) equity
  investments in subsidiaries, (b) intangible assets, and (c) losses in the current period and
  those brought forward from previous periods.

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Tier II components:

 Un-disclosed reserves and cumulative perpetual preference shares:
 Revaluation Reserves (at a discount of 55% while determining their value for inclusion in
  Tier II capital)
 General Provisions and Loss Reserves upto a maximum of 1.25% of weighted risk assets:
 Hybrid debt capital Instruments (say bonds):
 Subordinated debt (long term unsecured loans:
 Debt capital instruments
 Redeemable cumulative preference shares.
 Redeemable non-cumulative preference shares.
 Perpetual cumulative preference shares.

Approaches for risk assets calculation in Basel II: For calculation of risk weighted assets
to maintain capital, different approaches have been suggested under Basel II. These
approaches are:

1. Credit Risk: Standard Approach, Internal rating Based approach (that comprise
   foundation approach & advance approach)
2. Market Risk: Standard Approach (comprising maturity method & duration method),
   Internal risk based approach.
3. Operational Risk: Basic Indicator Approach, Standard Approach, Advance
   Measurement Approach

Implementation: Initially, in India, Standard approach for credit risk, Standard approach-
duration method for market risk and basic indicator approach for operational risk have been
adopted. Under these approaches the risk weights for different assets are prescribed by RBI
and banks cannot change the risk weight.

Migration to higher approach: Migration to other approaches is possible with prior
permission of RBI. Further, a bank having migrated to a higher approach will not be
permitted to revert back to the lower approach. RBI has planned to move to the advanced
approaches as per the following time schedule: (Modified on 7.7.2009)

                                            The earliest date of
                                                                 Likely     date    of
Approach                                    making application
                                                                 approval by the RBI
                                            to the RBI
Internal Models Approach (IMA)          for April 1, 2010        March 31, 2011
Market Risk
The Standardised Approach (TSA) for April 1, 2010                   September 30, 2010
Operational Risk
Advanced Measurement Approach (AMA) April 1, 2012                   March 31, 2014
for Operational Risk
Internal Ratings-Based (IRB) Approaches April 1, 2012               March 31, 2014
for Credit Risk (Foundation as well as
Advanced IRB)




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Reporting requirements:

1. Banks are also required to disclose in their balance sheet the quantum of Tier I and Tier II
   capital fund, under disclosure norms.
2. Annual return to be submitted by each bank indicating capital funds, conversion of off-
   balance sheet/non-funded exposures, calculation of risk -weighted assets, and calculations
   of capital to risk assets ratio.

Credit Risk: Under the Standardized Approach for Credit Risk, the risk weightages are
prescribed by RBI. These are adopted by the banks without any discretion to modify. This
approach is based on ratings from External Credit Rating Institutions for sovereigns, banks
and corporates. This approach is found to be more suitable in India, for the time being, in
view of lack of historical data and other such factors.

Ratings Agencies: RBI has identified 4 external domestic rating agencies namely CRISIL,
ICRA, CARE & Fitch for use of their rating. The international agencies are Fitch, Moody’s
and Standard & Poor’s.

Internal Ratings-Based Approach for credit risk: As an alternative to standardized
approach, the banks can adopt the IRB approach (having two variants i.e. foundation or
advanced), with approval from their RBI. This approach is based on bank’s internal
assessment of counterparties and exposures through the elements of
Unexpected Losses (UL) and Expected Losses (EL).

Capital for Market Risk: Market risk is the risk of possible losses in holding, on balance
sheet and off-balance sheet positions, due to movements in market prices. The market risk
positions, for capital charge requirement, are (a) the risks pertaining to interest rate related
instruments and equities in the trading book and (b) foreign exchange risk throughout the
bank. The Basle Committee has suggested two broad methodologies for computation of
capital charge for market risks (a) standardized method and (b) banks’ internal risk
management models method. As per RBI, initially the banks may adopt the standardized
method. Under the standardised method there are two principal methods of measuring market
risk, i.e. a ‘maturity method’ and a ‘duration method’. Banks are to adopt standardized
duration method. Banks are to measure the general market risk charge by calculating the
price sensitivity (modified duration) of each position separately.

Operational Risk:          Operational risk is defined as the risk of loss resulting from
inadequate or failed internal processes, people and systems or external events. This does not
include strategic and reputational risk. Some factors for operational risk could be lack of
competent management and/or proper planning and controls, incompetent staff, indiscipline,
involvement of staff in frauds, outdated systems, noncompliance, programming errors, failure
of computer systems, increased competition, deficiency in loan documentation etc.

Approach : For capital requirement in respect of operational risk, the risk can be measured
by adopting any of the three approaches i.e. the Basic Indicator Approach (BIA),
Standardized Approach and Advanced Measurement Approach. To begin with, banks have
adopted basic indicator approach. Banks which move to Standardized approach or AMA, will
not be allowed to move back to BIA.



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Basic Indicator Approach : As per this method, a bank will have to hold capital, equal to
average of previous 3 years’ positive annual gross income (i.e. net intt. income + net non-intt.
income), as a fixed %age (denoted alpha i.e. 15%). If there is negative gross income for any
year, it will be excluded both from numerator and denominator. Capital requirement =
Annual positive gross income for three years x 15% / no. of years for which gross income is
positive.

PILLAR 2 : SUPERVISORY REVIEW PROCESS

 Supervisory review process (SRP) is intended to ensure that banks have adequate capital
  to support all the risk in their business and encourage them to develop and use better risk
  management techniques in monitoring and managing their risk. Central banks are to
  evaluate as to how well banks are assessing their capital needs considering their risk
  profile. The Basel II lays down 4 key principles in regard to the SRP and the principles 2
  and 4 deal with the role of the supervisors.
 In India, as per RBI directives, the SRP requires all Indian banks to implement an internal
  process, called the Internal Capital Adequacy Assessment Process (ICAAP), for assessing
  their capital adequacy in relation to their risk profiles as well as a strategy for maintaining
  the capital levels. The Pillar 2 requires RBI to subject all the banks to an evaluation
  process, called Supervisory Review and Evaluation Process (SREP).
 ICAAP - It comprises a bank’s procedures and measures to ensure (a) identification and
  measurement of risks; (b) an appropriate level of internal capital in relation to the bank’s
  risk profile; and (c) application and further development of suitable risk management
  systems in the bank.
 SREP- It consists of a review and evaluation process adopted by the supervisor, for
  review and evaluation of the bank’s ICAAP, conducting an independent assessment of the
  bank’s risk profile, and if necessary, taking appropriate prudential measures and other
  supervisory actions.
 Conduct of the SREP by the RBI: Under the SREP, RBI will assess the overall capital
  adequacy of a bank through a comprehensive evaluation taking into account all relevant
  information. The SREP would be conducted by RBI periodically, along with the RBI’s
  Annual Financial Inspection (AFI) and in the light of the data in the off-site returns
  received from the banks, in conjunction with the ICAAP document (to be submitted every
  year to the RBI).

Pillar 3 : Market Discipline: The purpose of market discipline is to complement the Pillar 1
and the Pillar 2. Providing disclosures is an effective means of informing the market about a
bank’s exposure to those risks and provides a consistent and comprehensive disclosure
framework that enhances comparability.

Frequency of disclosures: Banks should provide disclosures, both (a) qualitative and (b)
quantitative, as at end March each year along with the annual financial statements. Banks
with capital funds of Rs.100 crore or more should make interim disclosures on the
quantitative aspects, on a standalone basis, on their respective websites as at end Sept.
Qualitative disclosures may be published on an annual basis.Banks with capital funds of Rs.
500 crore or more must disclose their Tier 1 capital, total capital, total required capital and
Tier 1 ratio and total capital adequacy ratio, on a quarterly basis on their respective websites.
These disclosures pertaining to a financial year should be available on the websites until
disclosure of 3rd subsequent annual disclosure is made.


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Implementation of Basel 2 recommendations in India: For foreign banks and Indian banks
having operations outside India, the implementation started from March 31, 2008 and for
other Indian banks, the implementation started from March 31, 2009.

INTERNAL CAPITAL ADEQUACY ASSESSMENT PROCESS (ICAAP): Under Tier 2
(Supervisory Review) of Basel II, every bank is required to have ICAAP in place on the basis
of which RBI shall conduct Supervisory Review and Evaluation Process (SREP). The banks
shall have ICAAP, both at the solo level (global position) as well as at the consolidated level.

Responsibility for designing and implementation of the ICAAP : It lies with the bank’s
board of directors of the bank and with the Chief Executive Officer in the case of the foreign
banks with branch presence in India.

Important aspects of ICAAP: The board of directors of a bank shall:
a) Set the tolerance level for risk;
b) Ensure that the senior management of the bank:
       i.      establishes a risk framework in order to assess and appropriately manage the
               various risk exposures of the bank;
       ii.     develops a system to monitor the bank’s risk exposures and to relate them to
               the bank’s capital and reserve funds;
       iii.    establishes a method to monitor the bank’s compliance with internal policies,
               particularly in regard to risk management;
       iv.     effectively communicates all relevant policies and procedures throughout the
               bank;
c) Adopt and support strong internal controls;
d) Ensure that the bank has appropriate written policies and procedures in place;
e) Ensure that the bank has an appropriate strategic plan in place, which, as a minimum,
   shall duly outline
f) The bank’s current and future capital needs;
g) The bank’s anticipated capital expenditure; and
h) The bank’s desired level of capital.

Submission of the outcome of the ICAAP to the Board: As the ICAAP is an ongoing
process, a written record on the outcome of the ICAAP is required to be periodically
submitted by the banks to their board of directors. Such written record should include, inter
alia, the risks identified, the manner in which those risks are monitored and managed, the
impact of the bank’s changing risk profile on the bank’s capital position, details of stress
tests/scenario analysis conducted and the resultant capital requirements. The board of
directors would be expected make timely adjustments to the strategic plan, as necessary.

Report to RBI : Based on the outcome of the ICAAP as submitted to and approved by the
Board, the ICAAP Document, should be furnished to the RBI. To begin with, the Document,
duly approved by the Board, should be sent to the RBI only once a year, for the year ending
March 31, but the frequency of submission could be reviewed in due course. The first such
submission was required to be for the year ending March 31, 2008 by the banks which
migrated to Basel II framework from that date while the remaining banks are to submit their
first ICAAP Document for the year ending March 31, 2009, the date from which they would
switch over to the Basel II framework. The document should reach the RBI latest by June 30,
2008 in respect of the first set of banks and by March 31, 2009 in respect of the second set of
banks, and thereafter, by end of March every year.

                                                                                             88
                                                                Canara Bank RSTC Gurgaon
                                                                 Interview Magnet Oct 2010
Review of the ICAAP outcomes: The board of directors are required to, at least once a
year, assess and document whether the processes relating the ICAAP implemented by the
bank successfully achieve the objectives envisaged by the board. The senior management is
also required to receive and review the reports regularly to evaluate the sensitivity of the key
assumptions and to assess the validity of the bank’s estimated future capital requirements. In
the light of such an assessment, appropriate changes in the ICAAP should be instituted to
ensure that the underlying objectives are effectively achieved.


                                             ***

                             Provision Coverage Ratio
                            (RBI Second Qtr Review Oct 2009)

 At present, the provisioning requirements for NPAs range between 10 per cent and 100
  per cent of the outstanding amount, depending on the age of the NPAs, the security
  available and the internal policy of the bank.
 Since the rates of provisioning stipulated by the Reserve Bank for NPAs are the minimum
  and banks can make additional provisions subject to a consistent policy based on riskiness
  of their credit portfolios, it has been observed that there is a wide heterogeneity and
  variance in the level of provisioning coverage ratio across different banks.
 With a view to improving the provisioning cover and enhancing the soundness of
  individual banks, it is proposed: to advise banks to augment their provisioning cushions
  consisting of specific provisions against NPAs as well as floating provisions, and ensure
  that their total provisioning coverage ratio, including floating provisions, is not less
  than 70 per cent. Banks should achieve this norm not later than end-September 2010.

                                              ***




                                                                                             89
                                                                 Canara Bank RSTC Gurgaon
                                                                  Interview Magnet Oct 2010

                              CROSS SELLING
                      AUGMENTING NON INTEREST INCOME

                             Canara Global credit Cards
 Canara Bank is the principal member of Visa-Worldwide and MasterCard Inc.
 Canara Cards For Different Segment Of Customers: (A) Canara Visa Classic /
  MasterCard Standard Global Card (B) Canara Global Gold Card (C) Canara Corporate
  Card.

Canara Card Privileges:

   No Annual fee & Enrolment fee till 31.08.2013. (Special offer)
   Canara Card is accepted throughout the world
   Minimum Gross income to get CANARA CARD is Rs.60000/-p.a. only.
   Liberal Card limit. Get 30% of customer’s gross annual income as customer’s Card limit.
    Fixing of the limit is at the sole discretion of Canara Bank.
   Cash withdrawal limit up to 50% of customer’s card limit.
   Cash withdrawal charges only Rs.30 per thousand. Minimum Rs.30 only.
   Free Credit period from 20-50 days
   Cash withdrawal facility at all ATMs of Canara bank & other Bank ATMs.
   No Interest on cash withdrawal if paid by the due date. If not paid by the DUE DATE,
    interest is charged from DUE DATE only and not from the DATE OF CASH
    WITHDRAWAL.
   Opt for Revolving Payment system and pay only 5% of the billed amount and defer the
    payment. Carried over balance attracts service charges at 2.5% p.m. only.
   No financial charges: i.e., interest on other transactions subsequent to cash withdrawal till
    the cash withdrawal is repaid.
   Bank provides free accident Insurance to customers and customer’s spouse too.
   Lost Card protection: Liability restricted to Rs.1,000 only from the time of reporting.
   Free card replacement in case of mutilation / loss of card.
   Free SMS alerts on billing and transactions above Rs. 3000. Please provide customer’s
    Mobile Phone number for activating this facility
   Loyalty/Bonus Points: Earn one bonus point for every purchase transaction of Rs.100.
    Value of one bonus point is Re.0.50. No maximum limit for accumulation. No time limit
    for retention of bonus points. Accumulate minimum of 1000 points for redemption.
    Bonus points will be redeemed at customer’s specific request only. (Cash withdrawals,
    disputed transactions, cancelled transactions, balance transfer transactions, foreign
    currency purchase, charges like interest, card fee etc. are not eligible for bonus points)
   National Electronic Fund Transfer (NEFT) facility available for payment of Card dues.
   Get free Demand Draft from any of the branches towards payment of customer’s card
    dues. Customers can also remit cash or Cheque at any branches of Canara Bank towards
    repayment of card dues.
   Customers may cover customer’s family with Floating Medical Insurance Cover under
    Family CANARA MEDICLAIM Policy with United India Insurance Company Limited at
    discounted rates. Avail cashless hospitalization facility, at networked hospitals.
   For Canara Bank Secure Internet Payment: Verified By VISA (VbV) and MaterCard
    SecureCode (MSC) are available.
   Customer Relations: Toll Free No. 1800 425 2470.

                                                                                              90
                                                                     Canara Bank RSTC Gurgaon
                                                                      Interview Magnet Oct 2010
 Collect call No. 080-25584171, 080-25582470

Canara Visa Classic / MasterCard Standard Global Credit Cards:

   Particulars                             Details (For Individuals)
   Eligibility:                            Satisfactory dealings &
                                           Min. Income limit Rs.60000 p.a.
                                           Minimum card limit Rs.10000.
   Maximum card limit-                     30% of annual income at the discretion of
                                           the card division. Maximum card limit Rs.
                                           3 Lakhs
   Enrollment Fee                          Free
   Free Credit period                      Up to 50 days
   Minimum repayment on Revolving 5% of the billed amount subject to min.
   Credit                                  Rs.100
   Cash advance limit (against credit card 50% of the credit limit with a maximum
   account)                                limit of Rs. 50000
   Cash withdrawal at all ATMs             Available. In other bank ATMs charges as
                                           applicable
   Complimentary Insurance cover for Death due to Air crash
   Accident Death                          Self --- Rs 4,00,000 lakhs
                                           Spouse–Rs 2,00,000 lakhs
                                           Death due to other than Air crash
                                           Self -----Rs 2,00,000 lakhs
                                           Spouse- Rs 1,00,000 lakh
   Lost card Liability                     Restricted to maximum of Rs. 1000/- from
                                           the time of authentic information of loss of
                                           card at our end.
   Purchase protection Cover               Rs 25,000
   Baggage insurance                       Rs 25,000
                              Billing Date          Due date for payment
                                th
   Canara Card VISA Classic   20 of every month     10th of the succeeding month
   Canara card MasterCard Last day of the 20th of the succeeding month
   Standard                   month
   Replacement card free of cost on usage abroad upon returning to India (on request): Available

Canara Global Gold Credit Cards:

   CANARA GLOBAL GOLD CARD (Individuals)
   Eligibility:                            a. Satisfactory dealings
                                           b. Min. Income limit Rs. 2, 00,000/- p.a.
   Card limit-                             Up to 50% of annual income at the discretion
                                           of the Card Division.
                                           Min. limit Rs. 75000/-, Max. Rs. 7,50,000/-
   Enrollment Fee                          Free
   Free Credit period                      Up to 50 days
   Minimum repayment on Revolving 5% of the billed amount subject to min.
   Credit                                  Rs.100
   Cash advance limit (against credit card 50% of the credit limit with a per day

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                                                                         Canara Bank RSTC Gurgaon
                                                                          Interview Magnet Oct 2010
   account)                                            maximum limit of
                                                       Rs.35, 000
   Cash withdrawal at all our ATMs                     Available. In other bank ATMs charges as
                                                       applicable will be levied.
   Replacement card free of cost on usage abroad upon returning to India (on request): Available
   Purchase protection Cover:                          Rs 50,000
   Baggage insurance                                   Rs 50,000
   Lost card Liability: NIL from the time of receipt of authentic information of loss of card at our
   end.
   Complimentary Insurance cover for Death due to Air crash
   Accident Death:                   Self --- Rs 8.00 lakhs
                                     Spouse–Rs 4.00 lakhs
                                     Death due to other than Air crash
                                     Self -----Rs 4.00 lakhs
                                     Spouse- Rs 2.00 lakhs

Canara Corporate Card - Visa:

 These cards are issued to cater to the needs of corporate clientele.
 These cards are meant for non-individuals such as – partnership firms, firms of chartered
  accountants, solicitors, tax consultants, public sector undertakings, public and private
  companies of good standing.
 Add on cards are issued to persons authorized by company/firm.
 At present bank issues separate cards to corporate clients for domestic and international
  use.
 Eligibility: (a) Companies/Firms who are enjoying credit limits with Canara Bank with
  S1 and S2 status. (b) Companies without credit limit –12 months satisfactory dealings. (c)
  Member affiliate banks can also be issued with Corporate Cards.
 Documents to be obtained along with application: (a) Board Resolution as per the
  Performa furnished by the Bank/Card Division. (b) Constitution papers like Partnership
  deed in case of firms and; (c) Memorandum of Association and Articles of Association in
  case of companies. (d) Financial statements of the company/firm for the last three years.
  (e) Any other relevant constitution papers / financial papers.
 Card limit and Sub limit for Cash withdrawal: The Company will be given a total/
  overall Card limit. The limit can be shared among the Add On Cardholders at the
  discretion of the Company.
 Card limit is need based in multiples of Rs.5,000 subject to minimum of Rs.50,000 and
  Maximum of Rs.25.00 lakhs. Overall
 Cash withdrawal limit for the Main Card is up to 50% of the card limit, subject to a
  maximum of Rs.5.00 lakhs. Max. Card withdrawal limit per Add On card is Rs. 25000
  per calendar month.
 Date of billing: 20th of every calendar month.
 Payment due date: 10th of every calendar month. Bill will be raised on the Company,
  which in turn will settle the bill on or before the payment due date.

                                                   ***




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                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010

                                   Can Mediclaim
                           (Cir.226/2006) (Spl Commn : 81/2007)

Our Bank has launched a unique Group Mediclaim Insurance Policy called “CAN
MEDICLAIM’ in association with United India Insurance Company Limited.

Covers:

 Hospitalization expenses for medical\surgical treatment arising out of any disease / illness
  / accident.
 Pre-hospitalization expenses up to 30 days prior to hospitalization.
 Post-hospitalization expenses up to 60 days after hospitalization.
 Anyone illness means continuous period of illness including relapse within 105 days from
  date of discharge.
 Personal Accident death only due to accident.

Eligibility:

 All account holders of the bank i.e. Deposit as well as loans, including Employees, ex-
  employees & Cancard holders can avail the benefits of the Scheme. Primary account
  Holder, spouse, 2 Dependent children, Dependent Parent.

Age:

 5 years to 65 years without medical examination. Children between 3 months And 5 years
  can be covered provided one or both parents are covered concurrently.
 Upper age limit can be relaxed up to 80 years only on renewals.

Policy Period:

 12 months.
 Risk covered under this policy is in addition to any other policy held by the account
  Holder with United India within or outside this scheme Or any other insurance company.
  However claim payable on rebate proportion of sum insured of all the policies to total
  claim amount subject to a maximum of actual expenses incurred.

Choice of Two Plans:

 Plan A: Account holder, spouse & 2 dependent children (1+3)
 Plan B: Account holder, spouse, 2 dependent children & parents (1+5).

Sum Insured (Mediclaim)

 Minimum: Rs.50000/-
 Maximum: Rs.500000/- Can be selected in multiples of Rs.50000/-
 The policy issued for a family of (1+3) or (1+5) would be a floater policy means any one
  member or all the members put together can avail hospitalization benefits during the
  policy period upto the sum assured.



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                                                               Canara Bank RSTC Gurgaon
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Sum Insured (Personal accident-Death)

   Policy Holder-100% of mediclaim Sum insured.
   Spouse-50% of mediclaim S.I.
   Children above 5 years-20% of mediclaim S.I.
   Children below 5 years-10% of mediclaim S.I.
   Nomination facility is available.
   Personal Accident does not extend to cover parents under plan B.

Additional benefits:

 Reasonable ambulance charges not exceeding Rs.1000/-
 Hospital cash upto Rs.1000/- to parents in case of hospitalization of children upto 12
  years and ago.
 Cost of Health Check-up: 1% of average sum insured after completion of three claim free
  years without break.
 Funeral expenses for a maximum amount of Rs.1000/- in case of insured donating eye(s)
  subject to illness/accident admitted under the policy.
 Maternity benefits and baby care-5% of sum insured if opted by the insured under the
  scheme.
 Reimbursement of admitted claims for all medical/ surgical treatments undertakenIn
  Nepal Bhutan in Indian currency.
 Mediclaim cover available to parents at an additional premium.
 Cash less facility through Third Party Administrator (TPA) in case services Of TPA
  network hospital are not utilized, claims to be submitted to selected TPA for
  reimbursement.
 Income tax benefit under section 80D of income Tax Act is available.

Distinctive Features:

 Sum insured is on Floater basis
 Flat premium irrespective of age
 No medical examination is required.

Exclusions (Mediclaim)

 Domiciliary hospitalization / Outpatient treatment.
 All diseases / injuries, which are pre-existing the cover incepts for the first time. For the
  purpose of applying this condition, the date of inception of the initial mediclaim taken
  from any of the Indian Insurance companies shall be taken, provided the renewals have
  been continuous and without break.
 The expenses on treatment of diseases such as Cataract, benign, prostatihypetrophy,
  hysterectomy, hydrocele, piles, sinusitis, etc during the first year of operations of
  insurance cover
 Cost of spectacles, hearing aids, vitamins, tonics and expense relating to dental treatment,
  convalescence, general disability, naturopathy, dental treatment etc.




                                                                                            94
                                                                 Canara Bank RSTC Gurgaon
                                                                  Interview Magnet Oct 2010
Personal accident

A.   Intentional self-injury/suicide/attempted suicide.
B.   While under the influence of intoxicating liquor/drugs.
C.   Whilst engaged in Aviation or Ballooning.
D.   Due to veneral diseases.
E.   Due to insured committing any breach of law with criminal intent.
F.   From service in the Armed forces.
G.   Directly/indirectly from childbirth / pregnancy.

Claim Procedure: For Personal Accident

    Claim intimation letter in writing to be given within 7 days from the date of accident.
    Claim form to be duly completed.
    Medical reports.
    Copy of FIR from the police authorities.
    Postmortem report.
    Death Certificate.

Hospitalizations Claim:

The insured shall enjoy cashless facility for taking treatment in any networked hospitals listed
in the Third Party Administrator Member guidebook. Expenses at non-networked hospitals
are reimbursed by TPAs up to the limit of sum assured. The claim after discharge has to be
submitted to TPA within 7 days from the date of discharge from hospital. Documents to be
submitted

    Copy of photo identity card issued by TPA
    Copy of policy certificate
    Original of detailed discharge summary.
    Original consolidated bill with item wise break up.
    Original reports and pharmacy bills with break up.
    The proposal of the account holders to be submitted in triplicate along with photograph of
     the applicant to the branches.

Premium Payable

 The premium payable is same whether size of family is either 1+1 or 1+2 Or 1+3 or 1+4
  or 1+5 or even one.

Plan - A - Family Size - Insured Spouse, Two Dependent Children (1+3)

Sum Assured                    50,000      1,00,000      1,50,000      2,00,000      2,50,000
MED.PREM                          830         1603          2348          3020          3616
P.A.PREM                           21            42            63            84           105
TOTAL                             851         1645          2411          3104          3721
SERVICE TAX                       105           203           298           384           460
TOTAL                             956         1848          2709          3488          4181


                                                                                               95
                                                         Canara Bank RSTC Gurgaon
                                                          Interview Magnet Oct 2010
Plan - A - Family Size - Insured Spouse, Two Dependent Children (1+3)

Sum Assured               3,00,000    3,50,000    4,00,000    4,50,000   5,00,000
MED.PREM                     4213        4734        5256        5779       6301
P.A.PREM                       126         147         168         189        210
TOTAL                        4339        4881        5424        5968       6511
SERVICE TAX                    536         603         670         738        805
TOTAL                        4875        5484        6094        6706       7316

Plan - B-Family Size - Insured Spouse, Two Dependent Children And Parents (1+5)

Sum Assured               50,000     1,00,000    1,50,000     2,00,000   2,50,000
MED. PREM                  1400         2704        3959         5091       6096
P.A.PREM                      21           42          63           84        105
TOTAL                      1421         2746        4022         5175       6201
SERVICE TAX                  176          339         497          640        766
TOTAL                      1597         3085        4519         5815       6967

Plan - B-Family Size - Insured Spouse, Two Dependent Children And Parents (1+5)

Sum Assured               3,00,000    3,50,000    4,00,000    4,50,000   5,00,000
MED. PREM                    7101        7980        8859        9740      10619
P.A.PREM                       126         147         168         189        210
TOTAL                        7227        8127        9027        9929      10829
SERVICE TAX                    893       1004        1116        1227       1338
TOTAL                        8120        9131       10143       11156      12167

                                        ***




                                                                                    96
                                                            Canara Bank RSTC Gurgaon
                                                             Interview Magnet Oct 2010

                                  Depository Services
What is a depository?

A Depository is an organisation which holds investors' securities in electronic form. The
depository also provides services related to various transactions in such securities. A
depository interfaces with its investors through Depository Participants. Depository
Participants maintain investors' accounts (demat accounts) which are similar to Savings
Bank/Current accounts with a Bank. Purchase and sale of securities can be done through
demat account.

Why demat account:

   Shares are held in electronic form
   No need to safe keep share certificates;
   No need to remember record dates of various companies
   Immediate transfer of securities
   No stamp duty on transfer of securities
   Risk of bad delivery, fake securities eliminated
   Reduced paper work for transfer of securities
   Reduced transaction cost
   Nomination facility available
   Automatic noting of change of address
   Easy transmission of securities
   Automatic credit of Dividend / bonus shares

Why demat account with Canara Bank:

   Multi location services across the country
   Competitive charges
   Customer friendly service
   IDeAS (Internet based Demat Account Statement) facility available for viewing and
    downloading transaction statements from internet.

Services available:

   Account opening
   Dematerialisation
   Transfer of securities
   Pledge services
   Freezing and un-freezing the depository account
   Nomination facility

For Revised / Updated Master Circular On Demat Account Opening:

Go to Cannet >> Products >> Others >> Depository Services




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                                                           Canara Bank RSTC Gurgaon
                                                            Interview Magnet Oct 2010
NSDL Reference Materials:

 Business Rules, By-Laws, Compliance Manuals, operations manual & Investor guide to
  depositories are available in CANNET & can be accessed "Cannet homepage-go to quick
  links- click on compliance-click on http://172.16.108.45/kmt- click on regulator- see
  other regulators-click on capital market- select and click on Depositories-NSDL"
 Other reference materials like Depositories Act, Regulations, Amendments , Guidelines
  etc. are available under CAPITAL MARKETS-SEBI

Documents required for opening depository(Demat) account:

1. Prescribed application form, DP agreement, Tariff Sheet, duly signed
2. Pass port size photo of self and of nominee
3. Proof of identity : PAN Card (Mandatory) - original to be produced for verification
4. Proof of address : (Bank Pass Book / Ration Card / Pass Port / Voter ID card / Driving
   License (original to be produced for verification)
5. Cancelled cheque leaf (proof of bank account details).

Charges:

a) Account opening charges - NIL
b) Annual account maintenance charges – Rs.200/- + service tax
c) Demat Charges – Rs.2/- per certificate (Minimum Rs.10/-) and courier charges Rs.25/-
   extra
d) Transaction Charges :
       a. Purchase – NIL
       b. Sale - 0.020% - Min. Rs.20/-; Max. Rs.500/-
e) Pledge Charges :
   Creation / Confirmation : Rs.50/- per ISIN
   Closure / Invocation :    Rs.25/- per ISIN

                                            ***




                                                                                      98
                                                              Canara Bank RSTC Gurgaon
                                                               Interview Magnet Oct 2010

            Online Trading In Securities (OLT) – e-Trading
                             (Cir. 71/2008, 33/2009, 195/2009)

CBSL Festival Offer – Free On line Trading (OLT) Account

 From 16.08.2010 to 19.11.2010
 Free Offer is exclusively for the employees of the Bank, Investment Officers recruited by
  the Bank and ex-employees of the Bank.
 Collect the application form from the designated branches / offices against cash or cheque
  favouring Canara Bank Securities Ltd for Rs.500/-. Submit the duly filled application to
  the branch / DP centre for opening Demat A/c. DP Centre will transmit the application to
  CBSL for opening OLT account. Refund of Rs.500/- will be given to the SB account of
  the employee upon opening of OLT account.
 Introducer will be eligible for the Cash Incentive as in vogue.
 Applicable AMC ( PRESENTLY Rs. 200 + Service Tax of Rs.25) for Demat account
  need to be paid.

Salient features of OLT facility:

 Commercial launching of OLT has been done by associating with our wholly owned
  broking subsidiary M/s Canara Bank Securities Ltd – (CBSL) - formerly M/s Gilt
  Securities Trading Corporation Ltd.
 OLT is totally a technology driven product which is targeted at tech-savvy, high net
  worth individuals having higher levels of disposable income and clients of younger
  generation who are active in capital market.
 Clients trading in stock market can buy or sell securities without visiting either the Bank
  or their DP.
 Provides good opportunity to rope in quality clientele
 Increasing CASA portfolio
 Cross selling of our other products and services.
 Bank will also be able to augment non-interest fee- based income.
 Hassle-free.

Pre-requisites for availing On-Line Trading facility:

 A client should have an operative Bank account (CASA) with one of our CBS branches, a
  depository (demat) account with our Bank and a Trading Account with our broking
  subsidiary viz., M/s CBSL, Mumbai.
 For this purpose, three-in-one application form comprising of account opening forms for
  opening the above said three accounts has been devised and made available to clients by
  M/s CBSL through designated CBS branches of our Bank.
 Working Procedure on handling three-in-one applications explained in Cir.33/2009.

Products offered:

Online Trading In Cash Segment (Equities):

   Seamless trading in both Exchanges viz. NSE, BSE.
   Varied products like Cash N Carry, Intraday, BITSOT.
   Leverage for day traders.

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                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
   Facility of product conversion.
   Real time market watch.
   Facility to view of pending orders and trade confirmations.
   Utility to view balance in linked CASA / Demat account.
   Facility to place orders even after market hours (AMO).
   View of contract notes and Back Office reports on a 24x7 basis.
   Stop Loss Trading (shortly to be introduced).

Online Trading In Futures & Options

   Facility to provide margins online.
   No need to provide advance deposits to trade in the segment.
   Benefit of calendar spread margins online.
   Use of common fund for cash, FNO and Currency futures.

Online Trading In Currency Derivatives

   Facility to clients having forex exposure.
   No documentation / paper work to take exposures.
   Lower margins and brokerage compared to FNO segment.
   8 hours trading per day from 9.00 am to 5 pm.

Online Subscription to IPOs

   No need to hunt for IPO application forms.
   No need to spend precious time in filling the details.
   No need to write cheques.
   No need to visit bidding centres / brokers office to submit application before the cut off
    time.
   No need to preserve the application stub. Details always available in the site.
   Easy to apply. Client need to key in the number of shares to be applied and rate. Rest of
    the contents to be submitted with mere click of mouse.
   Value added service without any extra charge.

Online Subscription to Mutual Funds

   Akin to online subscription to IPO.
   No paper work either for purchase or redemption of units.
   Facility to opt for SIP / SWP and to Switch.
   Details of complete holding statement at single page.
   Value added service without any extra charge (limited period offer).

Online trading facility to non-individual clients:

 Effective from 01/01/2009, our wholly owned subsidiary M/s CBSL has started extending
  online trading facility to non-individual clients like HUF, proprietorship concerns,
  partnership firms, Registered Trust and Body Corporate.
 Non-individual clients have to open CASA with any one of our CBS branches, DP
  account with our Bank & trading account with our wholly owned broking subsidiary viz.,
  M/s CBSL. All documents like BSE / NSE agreement etc., presently obtained for

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                                                               Canara Bank RSTC Gurgaon
                                                                Interview Magnet Oct 2010
  individuals are applicable to non-individuals also except Client Registration Form (KYC
  document).
 M/s CBSL will supply non-individual client registration forms based on receipt of indent
  from the branches.

Mandatory documents to be obtained for non-individual trading account:

1. Photograph of Karta/Proprietor/all Partner's/all Director's/all Trustees
2. Proof of Bank account ( pass sheet)
3. Copy of proof of address ( any one of the following) - Telephone / Electricity Bill / Leave
   & License Agreement / Bank Pass Sheet
4. Cancelled Cheque
5. PAN card copy of HUF /Partnership Firm/Body Corporate/Trust
6. PAN card copy Of Karta/Proprietor/Partners/Directors/Trustees
7. Declaration from Karta/Proprietor/Partners
8. Board resolution for Body Corporate and Trust
9. Documents to be signed on all pages by authorized signatories by affixing the stamp as
   per the constitution.

Apart from the above, the following additional documents to be obtained as per the
constitution:

OLT account in the name of HUFs: List of Co- parceners in the HUF, HUF letter

OLT account in the name of Proprietary concerns: Proprietorship letter

OLT account in the name of Partnership firms:

   Copy of Partnership Deed
   Copy of latest Income Tax Return filed
   Registration Certificate (If the firm is registered)
   Undertaking letter as per annexure
   Authorisation letter from all partners to open trading account, execute required documents
    and to operate the account.

OLT account in the name of Body Corporates:

   Copy of Memorandum of Association / Articles of Association
   Copy of Certificate of Incorporation and Commencement of Business
   Copy of Balance Sheet for the last two financial years (copy of annual balance sheet to be
    submitted every year)
   List of Directors
   Copy of latest holding pattern including list of all those holding more than 5% in the
    share capital of the company duly certified by the Company Secretary / Whole Time
    Director / Managing Director
   Copy of Board Resolution approving participation in equity / derivatives segment &
    naming authorized signatories for execution of documents & dealing in securities.




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OLT account in the name of Registered Trusts:

   Copy of Registered Trust Deed
   Copy of Balance Sheet for the last two financial years
   Certified copy of Resolution passed by Board of Trustees giving name/s of trustees
    authorized by Board of Trustees to open & operate demat/trading a/c

Documents to be signed on all pages by authorised signatories by affixing their seal.

For availing OLT by non-individual clients specified above, style of casa, demat and
trading accounts shall be as per the table below:

          Constituent       (non- Casa to Demat account To Trading
          individual category)    be in the be in the Name of account to
                                  name of                      be in the
                                                               name of
          HUF                     HUF       Karta              HUF
          Proprietorship concern  Firm      Proprietor's name  Firm
          Partnership firm        Firm      Single/joint names Firm
                                            of partners
          Body corporate          Company Company              Company
          Registered trusts       Trust     Trust              Trust


                                             ***




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                             Retail Sale of Gold Coins
                                       (Cir.112/2008)

 Augmentation of non interest income is essential to sustain the profits and enhance the
  profitability of Banks.
 Our Bank has been introducing (through our designated branches) new products from
  time to time as per the needs and requirements of our customers.
 India is the world’s largest consumer of gold accounting for 18% of total global
  consumption. India is unique in Gold markets because gold is deeply woven into the
  social, cultural and religious traditions and psyche of the people. In India gold provides
  basic economic security even to the poor.
 With this in view, we are offering a new product namely Retail Sale of Gold Coins.
  Arrangements have been finalised for supply of gold coins of 999,9 purity, from M K S
  Finance S A, Geneva, Switzerland.
 PAMP wholly owned by MKS Finance S A, Geneva, is the world’s largest independent
  and most prestigious refiner of precious metals established in 1977 in Switzerland. PAMP
  brand is endorsed as “Good Delivery” by the London Bullion Market Association which
  has also accorded to it the status of “Referee Assayer” the highest ranking of gold refiners
  in the world. PAMP produces more than half of the world market for gold bars under 50
  grams.
 Gold coins will be introduced in 5 grams, 8 grams, 10 grams and 20 grams, in round
  shape. To begin with 8 grams and 10 grams coins, bearing our Bank's name, logo and
  coin denomination on one side and picture of goddess Lakshmi on the other side will be
  supplied. Gold Coins will be delivered to identified branch having proximity to
  International Airport.
 24 Karat 999.9 pure gold Swiss made with Assay Certification, supplied by a reputed and
  known PAMP Refinery Switzerland, signifying the highest level of purity as per
  international standards.
 Round shape customised gold coins in denomination of 5, 8, 10 and 20 grams.
 Packaged in a tamper proof laminated card for easy viewing and prevent damage/theft
  during transit.
 In case of any defect as to quality and quantity, coin will be replaced by the manufacturer
  as long as certicard is intact.
 Both customers and non-customers are eligible to buy gold coins. Any transactions of Rs.
  50000 or more will attract the requirement of quoting of PAN.
 The sale price depending on the market rate will be informed on day to day basis by
  Precious Metal Cell, ID Mumbai.
 Gold coin can be purchased from our designated branches.
 For this purpose a Precious Metal Cell (PMC) has been formed under International
  Division, T & I O Wing, Mumbai. A detailed guidance policy has been provided to all the
  designated branches and MIPD Section, Circle Offices concerned,
 For the initial launch of the product, 18 branches spread across 9 cities have been
  identified (list of identified branches given in annexure). Branches other than designated
  Branches may refer the interested customers / non-customers to our designated Branches.

                                             ***




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   Measures to Improve Level of Customer Service at Branches
                                       (Cir 338/2009)

The Customer Service rendered by the Bank will play a crucial role in deciding the future of
the Bank. There is a need to sensitize our frontline staff to be extremely cordial and ready to
extend all necessary support to a customer who expects minimum level of service from a
branch, hence there is an immediatge need to address the following issues.

 Receipt and Redressal of Complaints at Branches: Branch-in-charge would be
  responsible for ensuring resolution of complaiants/grievances and closure of all
  complaints at Branches.
 Branches to resolve complaints on the spot: Branch-in-charge to see that the complaint
  is to be resolved at the branch itself. After exhausting all the efforts, If the Branch-in-
  charge feels that it is not possible to resolve the complaint at branch level he/she may
  refer the case to Regional or Circle Office for guidance.
 Branch Managers to act as a Floor Walker: It is to ensure that every customer who
  steps into the branch is promptly attended. All the Branch Managers should adopt the
  concept of “Floor Walker” for improving customer service at branches. Staff should keep
  abreast of our products, services and systems and procedures to give satisfactory reply.
 Attitude and Behaviour of Staff: The attitude of the Frontline staff/Managers and
  Branch-in-charge should be courteous, pleasant and receptive. Complaints regarding
  Misbehaviour by our Staff Members and harassments in transaction will have Zero
  Tolerance level.
 Prompt delivery of ATM Cards: Providing ATM Cards facility to the customers is the
  easiest way to reduce rush at counters
 Observation of "Customer Day" and "Customer Service Committee Meeting": Will
  provide an opportunity to address customer problem.
 Acknowledgement for receipt of cheque: Under no circumstances branches should
  refuse to give acknowledgement if a customer desires to tender the cheque across the
  counter.
 Collection of Cheques from Drop Boxes:Cheques dropped in the Drop Box should be
  handled with utmost care and strictly as per the guidelines to avoid any loss/piliferage.
  Branch should also display on the Box the Cut-off time for clearance of cheques dropped
  in the Box.
 Issue of Cheque Book: If customer desires to collect Cheque Books at the counter, the
  request for the same should be accepted.
 Obtention of Form 15 G or 15 H from eligible customers: Branches should strictly
  follow the guidelines issued by HO from time to time.
 KYC norms and AMC Standards: Branches shall strictly comply with the instructions
  relating to KYC and AMC requirements.

                                            ***




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             Customer Relationship Management (Talisma)
                    Service Module (Call Centre)
                                        (Cir.77/2008)

 Customer Relationship Management (CRM) is a new customer centric strategy adopted
  by our Bank which aims at enhancing the customer service and delight. CRM is being
  implemented in our Bank as an extended activity of Core banking solution.
 CRM aims to provide value added services to the customers of CBS branches.
 The first phase of CRM- Service module is introduced in March 2008.
 CRM has 3 modules. Service Module, Marketing Module and Sales Module.
 Detailed guidelines of Service module (Call Centre) are available in HO Cir 77/2008.
 Now, the second phase of CRM- Marketing and Sales module is being implemented.
  (Cir.155/2009 dt.30.4.2009).
 CRM can provide value added services to Non CBS customers also.
 First module, i.e. Call centre has commenced functioning from 29-03-2008. It facilitates
  the customer to interact with the Bank at his convenience and from his place.
 The call centre and telebanking services are provided through toll free number: 1800 425
  0018.
 The customers can have free access through this number from BSNL, Airtel land line and
  mobile.

The call centre will provide the following services:

 Information on various deposit products, credit cards, depository services, rate of interest,
  commission, Bancassurance.
 Specific enquiries by customers for balance and transaction in case of CBS branches.
 Noting down service requests of CBS branch customers.
 Noting down complaints, suggestions from customers.
 Calls made to 1800 425 0018 will reach IVRS (Interactive Voice Responsive System)
  first and caller will get answers for some predefined enquiries. If the caller wishes to have
  more details he can reach the official at Call Center by pressing ‘9’.
 At Call Center he may get replies to general enquiry only, unless he is a customer of CBS
  branch brought under CRM Module.
 CRM Integration with Business Units : CRM Services Module is having interface with
  FCR,FCC, Demat Accounts and Cancard.
 CRM integration with Delivery Channels: CRM is integrated with other delivery
  channels such as E-mail, Call centre, Branch, IVRS.

Components of CRM

 Services Module: For receiving, lodging and servicing customer requests
 Marketing Module : For campaigning our Bank products to existing and new customers.
 Sales Module : For converting marketing opportunities to sales.

CRM Services Module- Salient features

   Facility to reply to Customer's Enquiries & FAQ
   Facility to receive and lodge customer request for service.
   Complete track of Service Requests and their resolution.

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   Automatic escalation of Service Requests and Complaints if not resolved within the fixed
    time norms.
   Reports for monitoring performance and decision making.
   Creation of opportunities for Marketing & Sales module.
   Various services will be made available to the customers based on the authentication level
    through which they approach for the services.

Service types

 A customer may request for Enquiries related to his accounts and Bank products etc.
  which will be serviced by the call centre / E-mail team.
 The customer may request for certain services which may have to be serviced at the
  branches/other service units, and the same will be lodged as a Service Request with the
  respective branches/service units by the call centre / E-mail for resolution.
 The customer may also lodge complaints and suggestions through the call centre or e-
  mail.

Resolution types

 First Time Resolution – Enquiries which are resolved at the call centre is FTR.
 Non First Time Resolution – Service Requests which are to be resolved at service units
  other than call centre.

Authentication Levels

 No Authentication: The customer approaches without any authentication (manual or
  TPIN). The customer may be serviced for Enquiries such as general enquiry & Product
  enquiries.
 Manual Authentication: The customers may have to be manually identified (if the
  customer has not identified himself with his TPIN or does not hold a TPIN) for extending
  certain services like Account information etc.
 TPIN: Customers with TPIN ( Telephone PIN no.) has access to his account information
  through IVRS and may also contact the call centre for further Enquiries/Services. He
  need not be manually authenticated since he is already identified by way of his TPIN.
  Hence the Branches are requested to popularize for applying and use of TPIN by the
  customers to effectively make use of these channels which may reduce counter rush at the
  branches.

Notes:

1. The CRM Services Module is made available to branches through TALISMA package
   ported at the branches.
2. The identified CRM users are required to login to the system using User ID (Staff No.)
   and the password. The user should change the password as explained in the user
   guidelines on first login.
3. The branch receives an e-mail notification for each service request assigned to the branch
   RM.
4. Branch has the facility to send an e-mail reply to a customer through the package ( if the
   customer has provided his e-mail details).


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5. CRM users need to login and check for new interactions assigned to the branch at
   frequent intervals.
6. The interactions have to be resolved within the time norms fixed for each service request
   to give better customer service and to avoid escalations.

CRM: Marketing Module (Cir.155/2009)
 The Marketing module will be used to conduct campaigns through various means viz,e-
  mail, personal contact, door-to-door campaign, exhibitions, etc.
 In case of campaigns through personal contact or door-to-door campaign or exhibitions,
  the collected details can be uploaded in the CRM (Talisma) module for further follow-up
  / future campaigns.
 In case of email campaign, the bank will be able to send mailers* to existing or
  prospective customers having email ids for marketing of our products and services.
  (*Mailer is an e-mail containing our communication to customers.)
 The mailer can include the details of the products/services, special offers given on special
  occasions, specific location or for a specific period etc.
 Campaign can be segmented basing on various selection criteria like location, specific
  group of customers etc. For e.g., a campaign for Doctor's Choice loan can be targeted by
  selecting Doctors practicing at Delhi only.
 The positive responses from the customers will be treated as 'opportunities' and will be
  transferred to the Sales team (present marketing set up at Circles) of the Circle basing on
  contact preference, for further follow up and conversion into business.
 The Marketing Team under each Circle is treated as Sales team in the Marketing & Sales
  module of CRM.
 Unsubscribe option: There is an option in the mailer to unsubscribe the campaigns. If the
  receiver is not interested in receiving such campaign mailers to his/her e-mail id, he/she
  can click the link provided in the e-mail, through which the customer can unsubscribe for
  further promotional e-mails. The system will update the customer contact details
  accordingly and will not send further promotional mails to the customer.

Main Activities in Marketing module:

           Campaign management
           Targeted Marketing
           Response Management
           Opportunity Creation and transfer

Marketing Module: Marketing Set up for e-campaigns consists of Campaign Manager &
Campaign Response Agent. (Both these roles are handled at Head Office for the time being.)

Role of Campaign Manager

   •       Choose the matter for campaign
   •       Define target list
   •       Create Mailers
   •       Inserting Offers
   •       Defining the business logic for the campaign



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Role of Campaign Response Agent

    •   Sending reply to Contact’s response
    •   Handling the failed/undelivered mails
    •   Handing over the details of the contact to the Sales Team.
    •   Handling the unsubscribe/subscribe mails from the Contacts.

Campaigns through Door to door/Exhibitions/Loan Mela etc.

   Can be conducted by Circles/Branches/Marketing Officers at specific locations.
   The details like Campaign type, Date, Area etc. should be informed to CRM Section in
    advance.
   On receipt of the above, Campaign Id will be created at H O level and Campaign Id and
    Name will be communicated to the respective Circle.
   During the campaign the details collected from the prospective customers are to be
    entered in the system. The field ‘Created for Campaign’ should be filled with the
    Campaign name provided by H O.
   The new contacts created as above will be sales opportunities.

CRM: Sales Module (Cir.155/2009)
 The opportunities created are passed on to the Sales team of the Circle to convert them
  into business.
 The Sales Manager of the Circle will assign the opportunities to individual Sales Officers.
 The Sales Officer/Manager has to login to CRM Package, check the opportunities
  assigned to the team/him.
 All interaction details with the contact (opportunity) have to be entered by the Sales
  Officer in the Sales Pipeline of CRM - Sales module.
 Sales pipeline has various fields to enter the details of interaction at each stage (starting
  from contacting the party till conversion to business).
 It is possible to arrive at the total cost incurred for conducting a specific campaign. Step
  by step cost can also be fixed, in the process flow of the campaign and thus arrive at the
  cost at particular stage /total cost incurred for the particular campaign.

Existing/Potential customers- Approaching for service/product:

Apart from conducting campaigns through email, marketing can also be done through the
following delivery channels.
Call Centre:

 When a non customer calls Call Centre and evinces interest in the products offered by the
  Bank, Call agents will create a contact, along with an interaction containing the details of
  the products the customer is interested in.
 These contacts will be converted as opportunity by the Campaign response agent and
  assigned to Circle team.




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Branch

 When a non customer/visitor to a branch evinces interest in our products, system
  facilitates the branch users (Relationship Managers/Users) to enter the collected details,
  like name, e-mail id, etc, {as per the format in HO Circular 155/2009} in CRM- Talisma
  package, mark as an opportunity and follow up till conversion to business.
 This group of users shall also be able to see opportunities assigned to them from the Call
  Centre Team.

Website

 Customer will be able to register for the products they are interested in, through our Bank
  Website.
 A contact form will be made available in our website, wherein the visitor can fill the
  details.
 These details will be uploaded in Talisma and then, the response agent will convert this as
  an opportunity and passes it on to the sales team

Main activities in Sales Module

   Assigning Opportunities (leads) to the Sales Officers in various Circles.
   Follow-up with the identified opportunities/ Prospects and complete the Sale Cycle.

Organization structure of sales team at Circle is as follows:

   One Sales Executive in each Circle - View the progress in each opportunity
   One Sales Manager under Sales Executive - Opportunities created through various
    campaigns pertaining to the Circle can be viewed by the Sales Manager who has to assign
    the same to Sales Officers under him.
   Sales Officers under the Sales Manager – Sales Officers have to follow up the
    Opportunities assigned to them and record the progress in the respective pipelines.
    Relationship Managers at branches will be acting as Sales Officers if no Sales Officer is
    attached to the branch.

Sales Flow - Pipelines

   An opportunity signifies a potential sale to an organisation.
   During the sales process, an Opportunity passes through various Stages in the Sales
    Pipeline
   A Pipeline is a mechanism to track active Opportunities of an organization
   Separate pipelines are available for different products like Deposit Products, Loan
    Products, Credit Card etc.

Status of an opportunity

   The status of an opportunity will be ‘ACTIVE’ by default.
   If the opportunity has become an order (deposit, loan etc.) the ‘status’ can be changed as
    ‘WON’.
   If the opportunity could not be converted as an order status can be changed as ‘LOST’.

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   If the Opportunity is not attended by Sales Officer even 7 days after assigning to him it
    will be converted as ‘INACTIVE’ by the system itself.

Sales Executive /Sales Manager are able to view the progress of opportunities assigned to
their Circle through the system.

                                              ***

Installation documents and Job cards for various user are available in CANNET
Download - Core Banking Solutions  Talisma CRM

                                              ***

                                 Call Centre services
Canara Bank has introduced one more value added facilities, i.e. Call Center facility to its
customers. Customers can now avail a host of facilities through Call Center.

Number          1800 425 0018 - Toll free number
From            BSNL, Airtel (landline as well as mobile)
Timings         7 am to 9 pm on all days
Facilities      Product information on: -
                   1. Deposits products/schemes
                   2. Loan products/schemes
                   3. Credit / Debit Card
                   4. Branch/ATM location
                   5. Rate of Interest/service charges
                   6. Depository
Additional      Customers of our Core banking branches can have additional facilities
facilities      Enquiries on:                   and request for:
                1. Balance in accounts.         Account statement – SB / CA / OD / CC /
                2. Transaction details          credit card
                3. Status of cheques sent for Interest certificate for- deposits, TDS
                   collection                   Certificate
                4. Interest earned and paid     Loan account statement, Loan interest
                5. Standing instructions        Certificate
                6. TDS deducted                 Internet banking - PIN not received,
                7. ODCC - limit / interest      activating blocked PIN, login problem
                8. Credit     card    liability Tele banking - PIN not received, activation
                   information                  of blocked PIN, regeneration of PIN and
                                                login problems.
                                                Activation of restricted Debit card
                                                Non receipt of Debit card/credit card
                                                Debit card/credit card not working on
                                                POS/ATM
                                                ATM transaction discrepancy
                                                Credit card transaction discrepancy

                                              ***

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              Banking Codes and Standards Board of India
                            (BCSBI) : (Cir.230/2007, 253/2009)

 BCSBI is a autonomous body registered society & Trust.
 There are 83 member banks (69 Commercial Banks + 5 UCBs + 9 RRBs) (as on Jan
  2010) & Our bank is also a member of it.
 Recently (Jan 2010) the membership is opend to RRBs and Urban Coop Banks as well.
 Funding of expenditure is done by RBI for the first five years.
 Managed by Governing Council. GC Members are drawn from various fields.
 Formed on the recommendations of committee on Procedures and Performance Audit on
  Public Services (Tarapore Committee).
 The BCSBI was set up in February 2006.
 Fair Practice Code is given by IBA. But adherence to FPC is not followed up by IBA.
  Hence, BCSBI. Once a bank becomes member of BCSBI, the BCSBI codes will be
  applicable to them (IBA’s FPC is, therefore, not applicable for them).
 BCSBI acts as watchdog to ensure that the member banks are working upto the
  expectations / codes.
 BCSBI is following a collaborative and cooperative approach rather than regulator and
  regulate relationship.
 Monitoring is done by BCSBI in the following ways: Annual statement of compliance,
  Surveys (yearly), Incognito visits, Thematic visits (i.e. lot of complaints / news about one
  particular issue).
 RBI derives comfort from BCSBI.
 BCSBI released the Code of Bank's Commitment to Customers (Code) in July 2006.
 The codes are reviewed and updated once in 3 years. Last review was done on August
  2009.
 BCSBI has given another code separately for MSE units (only Micro & Small enterprises.
  Medium Scale not covered). MSE codes introduced in May 2008.
 Codes lay down the minimum standards of reliability, transparency and accountability in
  providing customer service. Codes outline how each bank is expected to deal with
  customer’s day to day requirements and accordingly what each customer could
  reasonably expect from his bank.
 MSE codes have both: Obligations to customers by banks and Obligations of customers
  to Banks.
 BCSBI commenced credit counseling from 1.10.2009 the services will be available free
  of cost to any retail borrower and MSE customers of member banks.
 The codes are voluntary in nature and such codes set minimum standards of Banking
  Practices for banks to follow when dealing with individual customers
 Chair Person: K J Udeshi

Recent Amendments to BCSBI Codes:

 The revision in BSCBI code is to bring about greater transparency, enhance banking
  practices relating to customer service, have a more responsive grievance redress system in
  banks and provide additional protection to customers
 Banks have to clearly outline their policies pertaining to cheque collection, compensation,
  collection of dues/ security repossession, and grievance redress on their websites
 If a customer has borrowed against a floating rate of interest then he/she has to be
  informed of the reference rate to which his/her floating rate if anchored and the bank will
  have to disclose on its website changes in such reference rate as and when they take place

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 Bankers who are members of BCSBI, will have to state on their web site that customers
  are entitled to compensation for delay in collection of cheques or delay in returning
  documents / securities beyond 15 days of settlement of dues without their demanding the
  same
 Banks to have to notify the joint holder/s in addition to the first holder of an account
  before classifying an account as dormant/ inoperative.
 Further banks cannot insist that insurance cover for securities lodged to be obtained from
  a particular insurer
 Banks can offer any pre-sanctioned facilities offered and accepted over telephone only
  after obtaining written consent of the customer
 Bankers have to introduce a system of check before referring a loan to a collection agent.
 Banks have to dispose of customer complaints in 30 days.
 Banks to display the codes in their web site.
 Display by banks of Comprehensive Notice Board. Remaining details will be given by
  way of a information folder/booklet.
 Code compliance officer has to be nominated for every branch.
 Adherence to code falls within the ambit of Banking Ombudsman. (RBI Second quarter
  review of Annual Policy Oct 2009)

Pursuant to the adoption of the Code, member banks have evolved policies on:

       1.   Collection of dues and repossession of securities,
       2.   Cheque collection
       3.   Compensation and
       4.   Grievances Redressal.

CHEQUE COLLECTION POLICY:

 Branches offering AWB services should credit outstation instruments drawn on AWB
  branches, on the same day
 Instant Credit: Upto Rs.15,000/- for parties having satisfactory dealings for 6 months.
 Instruments under OSCs should be credited (under ICDB) without request of party.
 Clearing cheques should be immediately credited if requested of party.
 In case of cheque return (ICDB) interest chargeable is from the date of RETURN of such
  cheque till recovery. ROI : Applicable to customer’s other limits for ROI applicable upto
  Rs.2 lacs
 High value clearing cheques i.e. Rs.1 lacs and above shall be credited on same day
 OSC normal period: Metros – 7 days, Metros to State Capitals (other than NE states) –
  10 days and other centers – 14 days.
 Delay upto 14 days, SB rate of interest, beyond 14 days – term deposit rate and For
  extraordinary delays (beyond 90 days) – 2% over TD rate of interest
 If OSC instrument is lost in transit, interest is payable by the bank for the period
  exceeding the normal stipulated collection period @ the stipulated rates above. In
  addition, bank will pay interest for 15 days at SB rate to provide for likely delay in
  obtaining duplicate instrument.
 ICDB cheques credited to OD/OCC, returned unpaid – Rate of interest: 2% above
  applicable rate of OD/OCC from date of credit, till reversal.
 Force Majeure: Bank is not liable to compensate the customer for delayed credit if the
  same is on a/c of some unforeseen event like commotion, sabotage, lockout, etc.


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Time frame for collection of cheque/instruments sent abroad is as under: Cir.253/2009

 Personal cheques/drafts payable in the country of currency – 21 days
 Personal cheques/drafts payable in the country other than in the currency of the country –
  45 days
 Instruments payable in India – 15 days

GRIEVANCE REDRESSAL POLICY:

 Customers’ Day: 15th of every month. Branch in charge should be present. Time:
  between 3pm and 5 pm.
 7 days time for grievance of complaint in case of Branch/RO/CO/HO each
 Banking ombudsman scheme to be displayed in website and branch notice boards.
 Standing committee on Customer Service (Constituted on 22.6.2005) is functioning.
  Function are: Evaluation of feedback on quality of customer service. Implementation of
  codes given by BCSBI. The committee is responsible for implementation of all
  regulatory guidelines regarding customer service. It submits report quarterly to Customer
  Service Committee of the Board.
 Customer Service committee of the board: (Constituted on 1.8.2004). This sub
  committee is responsible for formulation of comprehensive deposit policy, product
  approval process, survey of depositor satisfaction level, loan policy, etc.
 Nodal officer @ HO: DGM:CSS: M&CRM Wing: HO (DGM instead of GM designated Cir.152/2008)
 Quality Assurance Officer: DGM:M&CRM Wing: HO.
 Redressal of complaints - Adopted by our Bank : General complaints -21 days, RBI, MPs,
  VVIPs – 15 days, PM’s office – 7 days. (Stipulated by Ministry of Finance are: 30 days,
  21 days, 15 days).

Grievance Redressal Policy: Cir.152/2008: The review mechanism will help us for
identifying shortcomings in our delivery of products and services to the customers. In this
regard, RBI has advised all the Banks to ensure that:

1. Complaints register is kept at a prominent place in the branch, which would make it
   possible for the customers to enter their complaints.
2. To have a system of acknowledging the complaints, where the complaints are received
   through letters/forms.
3. To fix a time frame for resolving the complaints received at different levels.
4. Complaints emanating from rural areas and those relating to financial assistance to
   Priority Sector and Government's Poverty Alleviation Programmes also form part of the
   above process.
5. To display prominently the names of officials who can be contacted for redressal of
   complaints together with their direct Telephone number, Fax number, complete address
   (Not Post Box No.) and E-mail address etc., for proper and timely contact by the
   customer and for enhancing the effectiveness of the redressal machinery.
6. Complaints redressed within the next working day need not be included in the
   statement of complaints.
7. All the complaints are redressed within one month.
8. Where the complaints are not redressed within one month, the concerned
   branch/Regional Office should forward a copy of the same to the concerned Nodal
   Officer for Banking Ombudsman Scheme at Circle Office and keep them updated
   regarding the status of the complaint.

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9. The Nodal Officer is the DM/AGM overseeing Customer Service.
10. All the Circle Offices in turn shall send a consolidated list of such pending Complaints to
    the Nodal Officer at HO i.e. DGM, Customer Service Section, M&CRM Wing on an
    ongoing basis. The list shall contain the details of the complaint along with the action
    proposed for redressal of the complaint.
11. Further, it is also necessary that the customer is made aware of his rights to approach
    the concerned Banking Ombudsman in case he is not satisfied with the Banks' response.
12. As such, in the final letter sent to the customer regarding redressal of the complaint,
    Bank should indicate that the complainant could also approach the concerned Banking
    Ombudsman.
13. The details of the concerned Banking Ombudsman should also be included in the letter.

COMPENSATION POLICY:

 Bank to compensate the customer for any deficiency in services / monitory loss.
 Verification of erroneous debit – 7 days (if 3rd party is not involved) from the date of
  reporting by customer.
 Verification of erroneous debit – One month (if 3rd party is involved) from the date of
  reporting by customer.
 Erroneous debit in Credit card operations – Explanation & documentary proof should be
  given within 60 days from the date of reporting.
 If credit card is activated without the consent of the customer, the charges should be
  reversed and penalty @ twice the value of charges should be paid by the bank.
 If any cheque paid after stop payment instruction, bank has to reverse the entry within 2
  working days

Compensation Policy for delay in crediting the proceeds of foreign currency
instruments: (Cir.230/2007)

Branches are required to compensate the customers for delay in crediting the proceeds of
foreign currency instruments payable abroad/ in India and sent on collection basis.

 Personal cheques/drafts payable in the currency of the country – if the proceeds are not
  credited within 21 days.
 Personal cheques/drafts payable in the country other than in the currency of the country –
  if the proceeds are not credited within 45 days.
 Instruments payable in India – if proceeds are not credited within 15 days.
 Such interest compensation is payable at the rate of interest applicable to SB.

Customer Service: Reversal of Erroneous Debit arising on fraudulent or other
transactions: (Cir.176/2008)

RBI had advised all the banks to incorporate certain additional guidelines in the
Compensation Policy. As advised the following additional guidelines are incorporated under
the heading "Unauthorized/Erroneous Debit".

 In case of any fraud, if the branch is convinced that an irregularity/fraud has been
  committed by Staff towards any constituent, branch should at once acknowledge its
  liability and pay the just claim.
 In case where the branch is at fault, they may compensate the customer without demur.

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 In case where neither the branch nor the customer is at fault, but the fault lies elsewhere
  in the system, the branch should compensate the customer upto Rs.5000/- or actual loss
  whichever is lower and the same will be on merits of the case.
 The branches in all the above situations may refer such cases to Customer Service Section
  of their respective Circle Office for guidance and necessary direction.

Collection of Dues and Repossession of Security: (Cir.230/2007, 168/2008)

 Comes into force with effect from 31.3.2007.
 Normally customers have to be contacted between 07-00 hrs and 19-00 hrs. Retail
  Customers at residence and Business/Residence in case of others.

Policy on engaging recovery agents by the bank (Cir.169/2008)

 RBI has issued guidelines. Comes into force w.e.f the date on which it is adopted by the
  Board.
 'Recovery Agent' means the Agent/Agencies (which term does not include Bank's own
  employees) empanelled by the Head Office with the permission of C&MD of the Bank
  for recovery of its dues and repossession / enforcement of securities.
 Empanelment of the Recovery Agent shall be in tune with the Outsourcing Policy of the
  Bank issued by our Operational Risk Management Department, Risk Management Wing,
  Head Office and revised from time to time.
 Pre – employment Police verification.
 Re-verification of antecedents of Recovery Agents are carried out by them once in 3
  (three) years.
 The power to empanel/de-panel the Recovery Agent would be vested with the Head
  Office.
 Bank shall publish the up to date details of the Recovery Agent on the bank’s website
  immediately on his empanelment.
 Entrustment of cases to Recovery Agent shall be with the permission of the Circle Head.
 Bank shall issue due authorization letter to the Recovery Agent
 Bank shall instruct the Recovery Agent to ensure that there is a tape recording of the
  content/text of the calls made by him to the Borrower, and vice-versa.
 Bank shall ensure that Recovery Agent has undergone minimum 100 hours Training
  (Certificate Course) conducted by IIBF or Training College of our Bank

Grievance against Recovery Agents:

 The Borrower having any grievance/complaint against any Recovery Agent / Agency
  may bring to the notice of the in-charge of the Branch at the first instance.
 If not redressed, he can file a complaint to the Grievance Redressal Cells at HO / CO /
  RO as the case may be within whose jurisdiction the Branch or the Office of the Bank is
  located not later than thirty days from the date of cause of action.
 On receipt of the written complaint, the in-charge of the Grievance Redressal Cell/s shall,
  in any case not later than 30 days from the date of receipt of the complaint, initiate
  appropriate steps for redressal of the complaint. (Cir.169/2008)


                                           ***


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              Economic / Financial Reforms - In a Nutshell
This growing integration of Indian economy with rest of the world was essentially an
outcome of reform measures triggered by BOP crisis in 1991.

Reforms in Real Sector

 Deregulation of industry by way of eliminating licensing requirement,
 Overhauling of public enterprises,
 Enhanced role for private sector, abolition of MRTP Act,
 Automatic approval route for foreign investment,
 Elimination of quantitative import restrictions and reduction in tariff rates
 De-reservation of large number of items that were earlier meant to be produced
  exclusively in the small scale sector.
 Liberalization of foreign direct investment not only in terms of scope and proportion of
  foreign ownership but also with regard to procedural details.

Reforms in Services sector.

 Entry of private sector and foreign direct investment that introduced competition and state
  of the art technology brought a sea change in the services sector.
 For instance, Mobile phones, boom in information technology (IT) and Information
  Technology and Enabled Services (ITES) sectors.

Reforms in Agricultural sector.

 Measures relating to free movement of agricultural commodities,
 APMC Act permitting farmers to bypass the mandatory requirement of sale in regulated
  markets and relaxation of restrictions under Essential Commodity Act, 1955 along with
  introduction of future trading brought major change in the pricing mechanism.
 National commodity futures markets discover price rather manipulation by local traders.
 Banks in association with professionally managed godowns extend credit to farmers
  against warehouse receipts.
 Large consumer goods companies directly source agricultural produce from the farmers.

Economic Transformation - Reforms in Financial Sector

Money Market

 Reforms were essentially aimed at providing avenues for the market players to deploy or
  access to short-term funds and a platform to the monetary authority to modulate liquidity
  in the system.
 Deregulation of interest rates
 Introduction of new instruments.
 Freeing of interest rates on call and other money market instruments,
 Introduction of Commercial Paper and Certificate of Deposit,
 Exemption of inter-bank lending from reserve requirement,
 Introduction of screen based trading and rupee derivatives such as Interest Rate Swaps
  (IRS) and Forward Rate Agreements (FRA),


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 Enlarging the scope of Repo market by expanding the repo-able securities and eligible
  participants in the repo market and introduction of tripartite repo i.e. CBLO to create pure
  interbank call money market,

Government Securities Market

 Till mid-eighties Government had been borrowing at sub-market rates, (captive market
  created by statutory reserve requirement).
 Concessionary financing was eliminated with introduction of market auction system and
  phasing out of automatic monetisation with Ways and Means Advances (WMA).
 As yields became market related and Government started competing with the private
  sector in the market for funds, it had the desired impact on G-Sec market as evident by
  rising secondary market activity and near emergence of market yield curve.
 With reforms, G-Sec is no longer a captive market.
 Development of the market was sustained by up-gradation of technology and market
  infrastructure with regard to settlement systems and trading systems and amendment of
  legislative provisions.

Foreign Exchange Market

 Prior to reforms, foreign exchange market was virtually absent.
 Introduction of market based exchange rate regime,
 Adoption of current account convertibility and relaxation on capital account, inter alia, in
  terms of permission to run open positions, to hold investments abroad and to retain
  foreign exchange along with introduction of hedging tools (derivatives) led to emergence
  of active and vibrant foreign exchange market.
 Now exchange rate is flexible and market determined; and capital account is also
  effectively convertible for the non-residents.
 Computed from monthly NEER and REER indices, volatility in Indian market is one of
  the lowest in the world. Reform measures enhanced depth and liquidity in the market
  reflected in rising turnover and moderation in bid-ask spread over the years.

Capital Market

 Far reaching changes made in both the primary and secondary market segments of capital
  market.
 Primary market witnessed a significant movement away from CCI regime imposing
  primary issuance at sub-market rates to free pricing and book-building system along with
  mandatory disclosures as prescribed by SEBI.
 In the secondary market, corporatisation of exchanges, screen based trading replacing
  open outcry system, introduction of options and futures replacing erstwhile Badla System,
  rolling settlement replacing 14-day settlement cycle, dematting of securities with
  depository system created state-of-the art infrastructure comparable to best international
  practice.

Credit Market:

 Prior to reforms, banking operations both on the assets and liabilities side were governed
  by the guidelines set out by the regulator.


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 With guidelines that ensured banks' margin on cost plus basis, competition was virtually
  absent with no incentive to cut cost, raise efficiency or upgrade credit assessment skills.
 More competition along with higher flexibility and operational autonomy to the banks,
 Building up of risk management capabilities.
 Introduction of prudential regulation and supervision in line with best international
  practices.
 Widening of ownership due to stock market listing and associated disclosure
  requirements brought greater market discipline and transparency in the bank
  management.
 These measures transformed the banking sector which could be discerned in measures of
  efficiency and soundness.
 There has been steady decline in intermediation cost of banks from 6.24 per cent in 1991-
  92 to 3.43 in 2006-07.
 DEA based estimates of efficiency and productivity indicates sharp improvement in
  operations of public sector banks and are now comparable to their counter parts in the
  private sector (RBI, 2008).
 Growing soundness of the banking sector is also evident in falling NPAs from 7.7 per
  cent in 1995-96 to about 1 per cent in 2006-07.
 While banks' operations became more efficient, there has been considerable progress in
  terms of business volumes reflecting growing economy and reach of the banking sector.
 Over the past 11 years, on an average, deposits of scheduled commercial banks have risen
  at a compound growth rate of 17.7 per cent and advances grew by 21 per cent.
 Growth has been higher for urban and semi urban branches compared to rural branches.
 In terms of advances to various sectors of the economy banks' portfolio has been quite
  diversified.
 Since, 1998-99, while share of advances to agriculture sector remained around 12 per
  cent, there has been progressive diversification from industrial and wholesale credit to
  segments such as professionals, personal loans, etc.

Payment Systems

 The enactment of the Payment and Settlement Systems Act, 2007 empowering the
  Reserve Bank to regulate and supervise payment and settlement systems.
 To make free the use of other bank ATMs with effect from April 1, 2009.
 The service charges for 'Electronic Payment Products' and outstation cheque collection
  have also been rationalised.
 'Speed Clearing' has been introduced to reduce the time taken for realisation of
  outstation cheques to T+1 or T+2 basis.
 'Cheque Truncation System (CTS)' has been introduced in cheque clearing since July
  2008 in New Delhi.
 The coverage of Electronic Clearing System (ECS) has been increased to 75 centres and
  89 banks with 55, 225 branches are participating in National Electronic Funds Transfer
  (NEFT) system.
 These data suggest that the payment systems in India are robust, sound and have been
  growing at a steady pace.

                                            ***




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                  Tips from Executive Director
   Additional Safeguards required for Healthy Credit Portfolio
                                       Cir.197/2010

During the course of sanction review as reviewing authority, our Executive Director, while
stressing the need to adhere to the laid down guidelines, has been suggesting certain
additional safeguards to better the quality of the credit portfolio.

General:

 Ensure compliance with KYC norms, due diligence and Credit Information report as a
  pre sanction exercise while dealing with new customers or taking over accounts from
  other bankers.
 Credit Risk Rating (CRR) is a presanction exercise. CRR is an indicator of quality of
  asset & is essential in pricing decision too. CRR to be done basing on latest ABS
  promptly.
 Even in case of agricultural credit, CRR is mandatory if the borrower draws financial
  statements & gets the same audited.
 When last financials available is more than 6 months old, latest financials needs to be
  necessarily called for and movements of various financial indicators to be studied while
  taking exposure/additional exposure or renewal.
 When the party has accounts with other Banks, satisfactory OPLs to be ensured.
 In case of trust, there should be express provisions in trust deed for borrowing and other
  related activities. Necessary permission from Charity commissioner and other authorities
  as may be required under Trust Act, other state/central laws, rules are to be complied
  with.

Term Loans / Project Finance:

 Sanction of term loan alone is avoidable when working capital facilities are enjoyed by
  the party with other Banks. If such exposure is taken, proper escrow arrangement to meet
  repayment commitments to be in place.
 In the case of large term loans, at least 50% of the promoters’ margin should be brought
  up front. This is a basic safeguard. Promoter’s margin should be brought through the
  account with the branch. In the case of MSME category, 100% margin stipulated to be
  generally brought upfront.
 Deviations from margin stipulated by HO for certain schemes should not be permitted (eg
  Cold Storage Units- minimum margin required for working capital is 40%).
 Project margin through internal accruals needs more attention. Actual buildup of the same
  to be ensured while release of TL in such cases.
 Where build up is inadequate, party to bring in long term funds & the same to be brought
  upfront through the party's operative account with us. Close monitoring against diversion
  of working capital in such cases to be ensured.
 Disbursements under project finance to be made directly to the suppliers/service
  providers.
 Reasonableness of cost of construction to be studied so that margin to be provided by the
  client is not loaded into cost. Enhancing working capital limits for the existing capacity
  and sanctioning of TL simultaneously for expansion to be examined carefully so as to



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  ensure that enhancement is not used for meeting margin requirements especially when
  NWC does not offer enough cushion for meeting margin for the proposed TL.
 As a matter of policy, waiver of appraisal reports from the designated agencies shall not
  be permitted in case of TL proposals from new parties. Wherever, waiver is permitted in
  such cases, the reason for such waiver needs to be properly explained.
 Project implementation is to be monitored closely ensuring that disbursement is as
  originally planned in the project report.
 Extending credit to a holding company to fund the requirement of wholly owned
  subsidiaries (WOS) is fraught with legal risks. Financing WOS directly be examined.

Long term sources:

 CA’s certificates are produced by the clients in support of margin infusion. It is to be
  ensured that the contents of such certificates are reflected in the relative Balance Sheet.
 In a few cases, subordinated unsecured loans are paid back despite the loan accounts
  showing overdues. Due caution is to be exercised especially from the point of view of
  further exposure on them. There should be penal interest provision to cover such
  eventualities.
 Diversion of ST funds to fixed assets to the point of negatively affecting liquidity (as
  reflected in a comfortable Current Ratio in the immediately preceding year overshooting
  the benchmark level or turning negative the next year) to be reviewed.
 Steep decline in depreciation is not to be accepted as a matter of routine. It is to be
  analysed as to whether any sale of FA has taken place or is proposed thus affecting the
  security comfort for the bank.
 Increase/ Decrease in Reserves and surplus not matching with NPAT/loss figure needs
  further examination. If Reserves & Surplus include share premium also, the same is to be
  specified.
 Where current ratio and gearing ratio are below the bench mark level and the party has
  invested in Chit funds and other instruments, immediate bringing back into the system of
  such investments is to be insisted upon.
 Where huge unsecured loans from friends, relatives are there, subordination thereof is to
  be stipulated.

Working Capital:

 Wherever manufacturing facilities is outsourced partially or fully, risk of financing
  against stock is more. Additional collateral security to be insisted apart from obtaining
  letter of no lien & free access from the contracted job workers/units..
 Adequate NWC to be available in the system to meet margin requirements of working
  capital limits. Sanction of substantial enhancements in limits on projected NWC basis to
  be avoided.
 In case of limits against book debts, the limit is essentially a clean advance. Needs to be
  sanctioned only on selective basis. Sub-limits to be fixed for finance against book debts.
  Book debts of group/sister/associate concerns not to generally rank for DP unless
  specifically approved.
 OCC/ODBD as combined limit to be avoided. PC and OCC as combined limit to be
  avoided. PC / FBE as combined limit to be avoided.
 Steep increase in projected/estimated sales, profits, current assets and sharp reduction in
  Current Liabilities not to be accepted for the purpose of Working Capital Assessment
  without due regard to the past trends of the unit or industry.

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 Availability of DP in cases where cash losses are not made good by infusion of LT funds
  is to be ensured. The issue needs closer scrutiny as cash losses normally result in dilution
  of current assets. Renewal of limits in such a situation should not be considered as a
  matter of routine.
 Where security for OCC limit is stock which is susceptible to price fluctuations, close tab
  on movement of price to be kept so that at any point of time, liability is covered by value
  of stock with due margin.
 Working Capital Limits/enhanced working capital limits are to be released only when the
  project is ready for commercial operations/ the expanded capacity is ready for operations.
 Capacity utilization accepted by the sanctioning authority for the purpose of assessment
  should have relevance to the trends observed in the past.
 Trend of sales in Current Financial Year is to be necessarily gone into without which
  reasonableness of sales estimated cannot be assessed.
 Whenever performance guarantees are given, progress under the underlying contract to be
  obtained and reviewed quarterly.

Credit Culture - Negotiating for Security comfort:

 Any substantial increase in exposure should be followed with additional collateral
  security. This should come as a credit culture.
 Dilution of security without reduction in exposure normally to be avoided.
 Collateral Securities are not to be released when the financials and conduct of the account
  do not justify such a decision.
 Even in other cases, obtention of additional collateral during renewal with enhancements,
  adhoc limits should be insisted / explored.
 Endeavour should be to get security of personal properties also and not to confine only to
  assets appearing in the Balance Sheet

EMT:

 As far as possible, obtention of security of tenanted property or share of undivided
  property shall be discouraged in view of the inherent risk involved in delay in realization
  of the security including diminution in value of security, as advised in Cir No.223/2009 &
  179/2010.
 Whenever corporate guarantee or EMT of a third party company is taken,
  MOA/AOA of the concerned Company to be perused to ensure permissibility of ceding
  charge on the company's properties for benefit of third party and/or giving corporate
  guarantee to secure third party debts to be examined. Necessary resolution to be obtained
  for both EMT / Corporate Guarantee. Charge creation with ROC to be ensured wherever
  required.
 In case of EMT of agricultural lands, permissibility of the same under the State laws to
  be studied, necessary approvals to be obtained.
 In case of EMT of leasehold rights, lease deed provisions to be studied to ensure
  availability of necessary covenants in the lease deed permitting such EMT. If not, specific
  written permission to be obtained. It is preferable to ensure lessor joins EMT as
  consenting party to avoid future disputes.




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Takeover:

 In case of takeover of accounts, thorough due diligence on the account to be made to
  avoid adverse selection. Takeover norms to be complied in toto.
 Takeover of restructured account is avoidable.
 Takeover of projects under implementation is not to be encouraged
 In case of takeover of accounts, securities charged to the transferer Bank to be available
  to the transferee Bank.
 Before takeover of limits from other banks, title deeds of the properties proposed to be
  mortgaged are to be subjected to scrutiny by an advocate on the bank’s panel. Security
  creation, perfection of documentation including approval of loan papers by Legal Section
  to be ensured without any delay and title deeds are to be directly received by the
  advancing branch.
 Acceptance of collateral security of lesser value at the time of take over on the grounds
  that outstanding liability has come down is not proper as such proposals are made by the
  clients to get part-release of securities.

Monitoring:

 Right selection, right appraisal and right stipulation of safeguards/covenants is the first
  and an important step in monitoring the account.
 Review of sanction by the next higher authority is another opportunity for an independent
  quick review of the account and to suggest/advise additional safeguards wherever felt
  necessary to maintain/improve the quality of the account.
 Valuation of FA is to be done periodically as per the policy of the bank
 Diamond industry / Textile Industry is not doing well at present. Close monitoring
  required.
 In case of consortium loans, granting limits outside consortium that too for a SWL
  account is avoidable.
 Compliance of terms and conditions, R&L approval of loan papers to be ensured
  immediately on sanction. All pending matters, adverse features to be addressed before
  taking any further exposure.
 In case of educational loans, progress of the students and their employment details to be
  tracked.
 Confirmation about completion/compliance of stock audit/credit audit remarks to be
  ensured.
 Compliance of observations, if any, on the account in the last RBIA of the branch to be
  ensured.

The above is only an illustrative list and not exhaustive.

                                              ***




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        Risk Rating Of Branches: Tips to Ensure Better Rating
                                    Circular No.:273/2009

 The Bank has introduced Risk Based Internal Audit W.E.F 1 st March 2003.
 Bank replaced the system of Regular inspection/IS Audit with Risk Based Internal Audit
  w.e.f 01.04.2007 (Cir.120/2007)
 Risk Profile cum Risk Rating chart was redesigned. Cir.123/2008.
 Risk Rating System: Branches are categorized in 5 Scale Matrix viz; Low Risk,
  Medium Risk, High Risk, Very High Risk and Extremely High Risk.
 Branches with ratings High Risk, Very high Risk and Extremely High Risk fall under the
  category of Poorly Rated branches.
 Risk rating is done under two Major Components namely Business Risk and Control
  Risk which carry 1000 risk scores each.
 Risk areas assessed under various risk traits: Credit portfolio, deposit portfolio, internal
  control areas, technology management and other operational risk areas.
 Risk Score for Handling of credit portfolio (both quantitatively and qualitatively):
  Around 950 marks
 Risk Score for handling of liability portfolio (both quantitatively and qualitatively):
  Around 275 marks.
 Internal Control, Technology Management and control over income and expenditure
  (profit planning) are assigned with a risk score of 230 marks each.
 Thus, 1915 risk score out of the total risk score of 2000 are from credit portfolio, liability
  portfolio, internal control, technology management and profit planning.
 Proper management of Credit Portfolio and Liability Portfolio will directly result in profit
  planning.
 Thus, there is a need to focus the attention on Credit and Liability portfolios to achieve
  the desired risk rating by a branch.
 While quantitative achievement of various targets constitute only 270 marks out of
  2000 marks, qualitative achievement in the various areas of branch functioning
  contribute to 1730 marks.
 While achievement / non achievement of business targets are history before
  commencement of inspection and cannot be altered, all other areas are under the
  control of the branch only.
 Quantitative risk scores can be worked out by branches themselves whereas risk scores
  awarded by an inspecting officer on qualitative parameters depend on his perception
  about the functioning of the branch.
 The perception of an inspecting officer is made generally by the following:
      ► Handling of credit portfolio like appraisal, obtention of proper documentation,
           time barred AODs, non obtention of stock statements, absence of pre sanction /
           post sanction / follow up visits etc
      ► NPA / SWL management
      ► Internal Control i.e. not locating difference in various heads, absence of
           monitoring of negative balances, GL alerts etc.
 If little planning is done by branches before commencement of inspection, it is not
  difficult to achieve Low Risk rating in inspection by all our branches.
 Conducting a self inspection before commencement of inspection, ensuring 85% spot
  rectification and instant collection of income leakage will enable the branches to get
  a better risk rating.
 Pro-activeness on the part of the branches even at the last leg of the review period will
  help them for a better risk rating.

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 Areas requiring more attention to avoid slippage from Low Risk
                            Rating:
 Credit portfolio management:

 Non obtention of relevant application forms and financial papers like Salary Certificate,
  ITAO, STAO etc. while considering loans / limits.
 Non verification/absence of analysis of financial papers.
 Discussing more about the past history of the borrower and failure to pick up early
  warning signals in the accounts and bringing it in the credit reports.
 Non obtention of OPLs from other banks.
 Non preparation of Credit Investigation Report in NF 588.
 Non judicious use of delegated powers, be it in credit sanction or in expenditure.
 Failure to report adhoc credit facilities, TODs etc sanctioned beyond branch powers to
  appropriate authorities.
 Failure to conduct pre sanction, post sanction and follow up visits.
 Failure to conduct godown inspection/security verification.
 Failure to maintain Godown inspection registers and non recording of inspection
  conducted.
 Non obtention of stock statements.
 Non availability of loan papers.
 Blank loan documents.
 Documentation deficiencies.
 Non compliance to loan disbursement guidelines in all types of loans (e.g. obtention of
  bills, vouchers etc) and ensuring enduse.
 Failure to prepare stock inspection report.
 Not updating DP register and incorrect calculation of Drawing Power etc.
 Break in insurance, under insurance, non insurance, non maintenance of insurance diary;
  failure to report to higher authorities, wherever required.
 Non submission of periodical review reports like CMF, MTR etc.
 Non availability of LSR checklists, periodical valuation reports for prime and collateral
  securities.
 Failure to register our charges with ROC in time.
 Non availability of tax paid receipts, RC copies for vehicles.
 Non submission of PRR 12 in time and non obtention of AODs well before the due dates.
 AODs not made available for verification.
 Non availability of EMT papers, not updating the EMT register non obtention of EC /
  further ECs. Failure of branches in not obtaining all documents as stipulated in LSR.
 Delay in renewal of credit limits, non extension of limits, wherever required, allowing
  operations in expired credit limits without proper sanction.
 Failure in submission of PRR 139, 140, 179, copies of credit reports, wherever required to
  RO/CO on due dates.
 Delay in attending/ not replying to review letters received from RO/CO promptly.
 LCs/Guarantees getting devolved and delay in recovery.
 Failure to conduct Risk Rating exercise for all borrowal accounts at the time of sanction.




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                                                                 Canara Bank RSTC Gurgaon
                                                                  Interview Magnet Oct 2010
NPA portfolio management :

 Increasing number and amount under SWL accounts.
 Non adherence to IRAC norms.
 Failure to send loan notices, failure in follow up visits to parties for recovery etc.

 Liability portfolio management :

 Achieving deposit targets by concentrating on Bulk Deposit.
 No proper plan for a proper mix of deposits. Good Core deposits and Low Cost deposits
  will reduce the risk score.
 Gaps in adherence to KYC/AML norms.
 Scanning of specimen signature cards kept pending.

 Internal Control :

 Delay in submission of internal control returns and with incorrect data.
 No records for proper follow up of outstanding entries under BAA, SA, SL, SD, LCCR,
  and ATM difference etc., branches to ensure that all overdue entries are adjusted
  promptly.
 Avoid difference in books of accounts (inconsistency in balancing), Negative balances
  under various GLs etc.
 Non maintenance of and non updation of registers for recording of interest updations,
  interest checking etc.
 Huge income leakage.
 Absence of collective efforts for spot rectification of inspection remarks.


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DOCUMENT INFO
Description: Project Report on Canara Bank Life Insurance document sample