state bank of patiala Management discussions

THE STATE BANK OF PATIALA ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS 1. ECONOMIC SCENARIO: 1.1 The country has recorded a robust average GDP growth of 8.8 percent in the last three years. The growth for the year 2007-08 is estimated to touch 8.7%. It has become one of the fastest growing economies in the world. The drivers of growth continue to be services are manufacturing sectors, estimated to be growing at about 10.7% and 9.4%, respectively. 1.2 The Winter Season rainfall (Jan-Feb 2008) with normal/excess in 44% of meteorological sub-divisions. Food grains stocks were 19.9 million tonnes as on Jan 1, 2008. Broad Money Supply (M3) growth (year-on-year) was 21.5% as of Feb 15, 2008. It compared with 22.0% last year. Exports grew at 21.6% in dollar terms during April-January, 2007-08 Imports grew by 29.6% in April-January, 2007-08. 1.3 Nevertheless, the year 2007-08 had areas of concerns Overall industrial growth was 8.7% during April-Jan-2007-08 as compared to 11.2% in April-Jan, 2006-07 Core infrastructure sectors achieved an average growth rate of 5.7% during April-Dec, 2007. It compared with 8.9% in Apr-Dec, 2006. The first half of 2007-08 returned a growth of 9.1%, but from August 2007, the financial markets in the developed countries witnessed considerable turbulence. The consequences for developing countries are not yet clear. 1.4 The index of industrial production (IIP) rose by 9.2% during April-Nov 2007, as compared to 10.9% a year 3 ago. The growth of agriculture is hovering around 2.6% despite agriculture credit doubling in the last couple of years with outstanding estimated to read Rs. 240,000 crore as on 31-03- 2008. This growth needs to reach 4% in the current 11th plan period. Other economic indicators are moderately placed. World prices of crude oil, commodities and food grains have risen sharply from April 2007. 1.5 The capital inflows are far in excess of current account deficit. Countrys forex reserves have breached $ 300 billion mark. However, the inflation is hovering above 7% and international crude prices are ruling above $ 110 per barrel. The decline in index of industrial production (IIP) to 5.3% in January 2008 compared to 11.6% recorded in January 07, widening trade deficit, rupee appreciating from INR 47 per US dollar to about INR 39 in last one year, are some of the factors suggesting a possibility of a slowdown of economy. 1.6 Despite stiff challenges posed by the global volatility in financial markets, steep forex inflows, burden of interest on market stabilisation bonds, impact of sub-prime crisis, commitments under the Fiscal Responsibility and Budget Management Act (FRBMA) to cut the fiscal deficit levels are being pursued. The fiscal deficit of 3.1 percent in 2007-08 is expected to drop to 2.5 percent in 2003-09. Similarly, the revenue deficit of 1.4 percent is expected to come down to 1 percent during the same period. 1.7 Overall, the domestic outlook remains positive with continued favourable prospects of sustaining the growth momentum in an environment of price and financial stability. However, there are some indications of moderation in industrial production, corporate sales and profitability, business confidence and non-food credit. Domestic activity continues to be investment driven, supported by external demand. Net Profit & Operating Profit: Year Net Profit Operating Profit 2006 303.11 732.16 2007 366.53 789.13 2008 413.73 779.33 2. MONETARY AND CREDIT POLICY OF RBI: 2.1 A stable and efficient financial sector is essential for sustained economic growth and for the same, annual policy as well as quarterly reviews by the RBI have been continuously focussing on the development and regulatory measures to strengthen the financial system. The Mid Term Review by RBI noted that at this stage of development of the Indian Economy, the formulation of monetary policy has to be acutely sensitive to the impact of excessive market volatility on the real sector with feedback effects on the financial sector, particularly in view of the limited room for manoeuvre for fiscal policy. It was indicated that risks to inflation and inflation expectations would continue to demand priority in policy monitoring, with the biggest challenge being the management of capital flows and the attendant implications for liquidity and overall stability, especially in the context of the rapid escalation in asset prices driven by capital flows. Threats to inflation were also seen as emanating from global factors. 2.2 The latest quarterly review of the annual statement on monetary policy for the year 2007-08 was presented by RBI on 2th January 2008, and in view of the prevailing macroeconomic and overall monetary conditions, including the outlook for growth and inflation, the overall stance of the monetary policy in the period ahead was declared by the Reserve Bank of India, to broadly continue to be: * To reinforce the emphasis on price stability and well-anchored inflation expectations while ensuing a monetary and interest rate environment conducive to continuation of the growth momentum and orderly conditions in financial markets. * To emphasise credit quality as well as credit delivery, in particular for employment-intensive sectors, while pursuing financial inclusion. * To monitor the evolving heightened global uncertainties and domestic situation impinging on inflation expectations, financial stability and growth momenium tn order to respond swiftly with both conventional and unconventional measures, as appropriate. 2.3 Accoidingly, the following monetary measures were announced by the RBI in its third quarter review of Annual Statement on monetary policy for the year 2007-08: a) The Bank Rate was kept unchanged at 6 per cent. b) The repo rate under the LAF was kept unchanged at 7.75 per cent. The reverse repo rate under LAF was kept unchanged at 6.0 per cent. c) The Cash Reserve Ratio (CRR) of scheduled batiks was kept unchanged at its the then existing level of 7.5 percent. 2.4 Further, in the light of the current macroeconomic, monetary and anticipated liquidity conditions, and with a view to containing inflation expectations, it became essential to take appropriate action from monetary policy prospective. On a review of current liquidity situation, the RBI has decided to increase the CRR of scheduled commercial banks by 50 bps to 8.0 per cent in two stages (i.e.; to 7.75% and 8.0%), effective from specified fortnights (i.e.; the fortnights beginning from April 26, 2008 and May 10, 2008 respectively). 3. WORLD ECONOMY: 3.1 During the fourth quarter of 2007, financial markets in developed economies experienced tight conditions following the turbulence witnessed since July 2007 in response to the US sub prime mortgage crisis. Reduced financial leverage, lower credit availability and negative wealth effects have emerged as risks to consumption and growth, especially in the US. Firm inflationary pressures from food prices and high and volatile crude prices are other risks to the economic outlook. Substantial downside risks continue to be associated with respect to housing developments in the US and Europe and the fall-out on financial institutions/markets in an environment or heightened systemic risks and high volatility. According to World Economic Outlook (WEO) of the International Monetary Fund (IMF) released in October 2007, the forecast for the global real GDP growth on a purchasing power parity basis is placed at 5.2% for 2007 as compared to 5.4% in 2006, and is expected to decelerate further to 4.8% in 2008. 3.2 Globally, inflationary pressures have re-emerged as a key risk to global growth. The global environment is fraught with uncertainties, with international crude prices at new highs, having breached the level of USD 110 per barrel, and elevated food and metal prices that could effect inflation. Among commodities, the prices of iron ore, copper, lead, tin, urea, etc., are elevated. The prices of wheat and rice have increased in the world market. All these trends are inflationary. The downside risks to the global economic outlook have increased from a few months ago, accentuated by the financial market turmoil, firm inflationary pressures, and high and volatile crude prices. 3.3 Developments in global financial markets present several issues that need to be monitored carefully. Global macro economic prospects in the near-to-medium term are expected to be influenced by the rebalancing that has been underway over the last few years towards Europe, Japan and the Emerging Market Economies (EMEs). In this context, the role of EMEs in supporting the global economy and in cushioning global downturns is conditioned by the environment for decoupl ing from the US. 3.4 The outlook for global economy has somewhat worsened with risks to both growth and inflation having accentuated. While the dangers of global recession are relatively subdued and consensus expectations seem to support a soft lending, the upside pressures on inflation have become more potent and real than before. Consensus forecasts so far indicate a slowing of the global economy in 2008 with risks currently seen as weighed to the downside. 4. CORPORATE OPERATIONS: 4.1 PROFITABILITY AND PRODUCTIVITY: 4.1.1. The operating profit of the Bank tor the year 2007-08 stood at Rs.779.33 crore as compared to Rs. 789.13 crore in the previous year. The Bank posted a net profit.of Rs.413.73 crore as compared to 366.53 crore in the previous year, thus, registering a growth of 12.88%. Profit per employee is Rs. 3.70 lakh as compared to Rs. 3.24 lakh as on 31.03.2007. 4.1.2. The yield on advances has improved from 8.90% to 10.53% during the year. However, the cost of deposits also increased from 5.52% to 7.31%. 5. CAPITAL RESERVES AND CAPITAL ADEQUACY RATIO: 5.1. The paid up capital of the Bank has increased to Rs. 274.75 crore by infusion of additional capital of Rs. 250 crore by the State Bank of India during the year. The Bank has paid dividend amounting to Rs. 74.25 crore and dividend tax thereon. The Banks capital & reserves increased to Rs. 2708.63 crore as at the end of March 2008, as compared to Rs. 2488.00 crore as at the end of March 2007; showing an improvement of 8.87%. 5.2 The capital adequacy ratio of the Bank is well above the minimum requirement of 9% prescribed by the RBI and stood at 12.50% as at the end of March 2008, under Basel-I. 6. BUSINESS PERFORMANCE: 6.1 DEPOSITS: Total deposits of the Bank, which stood at Rs. 39,183.62 crore as at the end of March 2007, increased to Rs. 48,570.54 crore as at the end of March 2008. The growth in deposits at 23.96% during the year 2007-08 is higher than the ASCBs growth of 22.21 % (as on 28.03.2008) during the year. The Banks core deposits under personal and agriculture segment stood at Rs.18,828 crore, and constituted 39.07% of the aggregate deposits. NRI deposits of the Bank at Rs 1649 crore constituted 3.42 % of the aggregate deposits. Banks Market share in ASCB deposits as on 28th March 2008 was 1.51% as compared to 1.48% at the end of the previous year. 6.2 ADVANCES: Net advances of the Bank increased by Rs. 7630.28 crore and reached a level of Rs.36,400.04 crore as at the end of March 2008, showing an increase of 26.52% during the year. The yield on advances improved from 8.90% to 10.53% during the year. The C:D ratio of the Bank at 76.18% was above 60% as per RBI guidelines. Our market share in advances as on 28.03.2008 has increased to 1.52% from 1.50% at the end of previous year. 6.2.1 CORPORATE AND LARGE ADVANCES: The commercial network, consisting of branches at Mumbai, Delhi, Chandigarh, Ludhiana, Panipat and Faridabad, established to deal exclusively with high value clients, contributed a major share of the growth in Commercial and Institutional advances (C&I Segment) which increased from Rs. 18,096 crore to Rs. 23,037 crore during the year, thus showing a growth of 27.30 % on Y-o-Y basis. 6.2.2 PERSONAL BANKING ADVANCES: 6.2.2.1 Recognising the needs of our customers in personal banking segment, the Bank has formulated a number of personal loan schemes / products. As a result, the advances under this segment increased from Rs.4, 277 crore at the end of March 2007 to Rs. 5,117 crore as at the end of March 2008, showing a growth of Rs. 840 crore (19.64%) on Y-o-Y basis. 6.2.2.2. The outstanding in direct Housing loans increased to Rs. 2,902 crore from Rs.2,643 crore as at the end of the previous year, registering a growth of 9.80%. The education loans under Gyan Jyoti Scheme registered a growth of 46.61% and increased to Rs.173 crore from Rs. 118 crore as at the end of previous year. 6.2.3 PRIORITY SECTOR ADVANCES: 6.2.3.1. In line with the national priorities, and for upliftment of the downtrodden sections of the society, the Bank continued to lay emphasis on priority sector lending. The priority sector advances of the Bank stood at Rs.11,675.30 crore constituting 40.18% of Adjusted Net Bank Credit. The Bank will continue its thrust on priority sector advances in line with the priorities of the government. 6.2.3.2 The agricultural advances (including indirect agricultural advances) stood at Rs.5,281 crore, constituted 18.17% of the Adjusted Net Bank Credit, on the last working day of March, 2008, have increased by 17.35% over the previous year. During the year, the Bank launched a number of new schemes / products and modified the existing schemes / products to increase credit flow to agricultural sector. 6.2.3.3 The disbursement of agricultural advances under Special Agricultural Credit Plan (SACP) during the year was Rs. 4,104 crore, as against Rs. 3,683 crore during the previous year. 6.2.3.4 In order to further increase our advances to agriculture sector, the Bank has entered into tie-up arrangements with the National Bulk Handling Corporation (NBHO for financing against warehouse receipts, the Punjab Dairy Development Department for financing of milch cattle to dairy farmers, and Himachal Herbal Organic Growers Association (HHOGA) for financing horticulture floriculture based projects. 6.2.3.5 2,822 Farmers Meets were organized during the year, for strengthening our liaison and rapport with the rural clientele. Credit Consultancy Centres have been established for farmers at all our lead district offices. 6.2.3.6 29,417 Kisan Credit Cards, with aggregate limit of Rs. 323.58 crore, were issued during the year to farmers under Patiala Bank Kisan Card Scheme. Further, for meeting all credit needs of the farmers, 23491 Gold cards with an aggregate amount of Rs. 610.40 crore were issued under the SBP kisan Gold Card Scheme. 6.2.3.7 To improve the credit dispension to weaker sections and micro enterprises through Self Help Groups (SHGs), 719 SHGs have been linked for an amount of Rs.6.25 crore during the year 2007-08. 6.2.3.8 The Bank actively participated in all Govt. sponsored schemes. Under the Prime Minister Rozgar Yojana, the Bank has sanctioned loans aggregating to Rs.32.66 crore to 3,909 beneficiaries during the year. Cumulatively, 41644 units have been financed upto March 2008 with disbursement of Rs. 239.95 crore. The Bank sanctioned an amount of Rs. 2.18 crore to 521 beneficiaries under Swaran Jayanti Shahri Rozgar Yojana aimed at providing self- employment to the urban poor. The Bank is also participating in financing of borrowers under Scheme for Liberation of Scavengers (SLRS). 6.2.4 SMALL AND MEDIUM ENTERPRISES: As per the policy of the Reserve Bank of India the Public Sector Banks are required to achieve minimum 20% growth in credit to SMEs with a view to doubling the exposure to this segment by 31.03.2010. The Bank has achieved a growth of 111% in this segment upto 31.03.2008 over the base figure of 31.03.2005. 6.3 NO-FRILLS SAVINGS BANK ACCOUNTS: With a view to ensuring greater financial inclusion No Frills Savings Bank Account was introduced 216,049 such accounts have been opened upto 31.03.2008. 6.4 INTERNATIONAL BANKING BUSINESS: For promoting countrys exports and playing an active role in development of countrys international trade the Bank continued to provide need based credit assistance to exporters. The forex turnover of the Bank increased from Rs. 16,649 crore to Rs. 20,533 crore during the year, showing a growth of 23.33%. The export finance of the Bank increased from Rs. 2132.17 crore to Rs. 3268.45 crore, showing a growth of 53.29% during the year. 6.5 CROSS SELLING BUSINESS: To provide different financial services at one platform to its valued customers and to increase its non-interest income, the Bank is selling Life Insurance, Non-Life Insurance, Mutual Funds and Credit Cards through its branch network. For this purpose, the Bank has entered into tie-up arrangement with SBI Life Insurance Co. Ltd., United India Insurance Co. Ltd., SBI Funds Management Pvt. Ltd., Franklin Templeton Asset Management (India) Pvt. Ltd., UTI Asset Management Co. Pvt. Ltd and SBI Cards & Payment Services Pvt. Ltd. The Bank mobilised premium of Rs. 13.84 crore in General Insurance, Rs. 124.54 crore in Life Insurance, and Rs. 1337 crore in SBI / Franklin Templeton / UTI Mutual Funds, besides issuing 4802 SBI Credit Cards during the year 2007-08. The Treasury Branch (Mumbai) has also mobilized Rs. 3531 crore in other Mutual Funds. 6.6 TREASURY: 6.6.1 The Banks treasury continued to be an active player both in the rupee as well as forex operations. The treasury operations of the Bank have been in sync with the market, with emphasis upon diversification of portfolio with a view to maximise profits. 6.6.2 Treasury profits from bonds/gilts dwindled in the last couple of years after the RBI began hiking key interest rates in October 2004. The last hike in the policy rate was in March 2007, when the RBI raiser) the repo rate by 25 bps. However, the current financial year has been much better as compared to the previous year in this respect. stability to the future income flows. 6.6.3 The benchmark 10 year G Sec yield fell by around 100 bps from a high of 8.40% in the month of June 2007 to 7.39% in the month of December 2007 on account of low inflation and drop in US treasury yields during the period. Bonds yield, especially long term bonds, rallied substantially in the hope that RBI too will follow US Fed in cutting rates. However, in the January 2008 policy review, the RBI, contrary to market expectations of a rate cut, left policy rates unchanged. The inflation started rising and yields started climbing again and the 10 year benchmark ended the year at 7.94% level. 6.6.4 Against the backdrop of 9% growth rate of Indian economy, the Indian stock market rally continued in the year 2007-08 and the Sensex touched all time high of 20873 in the month of January 2008, The boom in the stock market ended after Flls started exiting the stock market on US sub prime woes. The correction was massive and the Sensex ended the year at 15644. The structural growth story is still attractive and growth though moderating is likely to stay robust at around 8%. 6.6.5 The rupee started the year at Rs. 43.35/USD and continued to gain strength on account of robust capital inflows and touched Rs. 39.02 in the month of Nov. 07. However, after the RBI intervention in the forex market coupled with stock market crash, the rupee ended the year at Rs. 40.02. 7. ASSET QUALITY: NPA management and improvement in asset quality are being given focussed attention. Gross NPAs of the Bank stood at Rs. 520.94 crore as at the end of March 2008. Gross NPAs to total advances ratio stood at 1.42%. Net NPAs stood at Rs. 216.99 crore and constitute 0.60% of net advances. Close monitoring of stressed assets, issuance of notices under SARFAESI Act in all eligible accounts, compromise settlements, reviewing accounts with outstanding of Rs. 1 crore and above at monthly intervals, etc., have yielded satisfactory results in effecting recoveries in these accounts. Total cash recovery in AUG accounts during the year 2007-08 was Rs. 77.72 crore. Further, cash recovery of Rs. 16.88 crore has been effected in written off small loans (individually below Rs. 50,000/-) which were not parked in AUCA. 8. RISK MANAGEMENT AND BASEL-II: 8.1 In the wake of globalization and liberalization, the Indian Banking has witnessed progressive deregulation, introduction of prudential norms and adoption of supervisory best practices such as BASEL-II framework. It has become imperative for banks to efficiently manage the various risks arising out of their activities. Effective risk management is critical to any Bank for achieving financial soundness. Taking into account the guidelines of Reserve Bank of India and its own business requirements and strategies, the Bank has formulated its risk management policies. These policies address the various issues related to different risk classes viz., Credit Risk, Market Risk and Operational Risk. The Bank has also put in place the Credit Risk Mitigation and Collateral Management Policy, Internal Capital Adequacy Assessment Process Policy (ICAAPP), and Disclosure Policy, as required for implementation of the new Capital Adequacy Framework (Basel II). 8.2 The Bank has in place a risk governance structure in conformity with RBIs guidelines. Risk Management Committee of the Board monitors overall risks in the Banks functioning. The Bank has adopted an integrated approach for management of risks and, in tune with this, Integrated Risk Management Department under the overall control of the Chief Risk Officer has been set up to identify, measure and control all the three types of risks viz.; Credit Risk, Market Risk and Operational Risk. Credit Risk Management Committee (CRMC), Asset Liability Management Committee (ALMC), Market Risk Management Committee (MRMQ and Operational Risk Management Committee (ORMC) have been constituted to address issues related to these risks. The Bank has migrated to Basel-ll with basic approaches, namely; Standardized Approach for credit risk and Basic Indicator Approach for operational risk, with effect from March 31, 2008. Standardized Duration Approach for market risk has already been in place since March 2006. 8.3 The Capital Adequacy Ratio of the Bank continues to be well above the minimum regulatory requirement of 9%. 8.4 As prescribed by the RBI, the Bank is required to make qualitative and quantitative disclosures under Pillar -III (market discipline) as per Basel - II guidelines. 9. LEAD BANK ROLE: The Bank is shouldering the responsibility of Lead Bank in seven districts of Punjab, namely; Patiala, Bathinda, Sangrur, Barnala, Fatehgarh Sahib, Mansa and Muktsar. The Annual Credit Plans (ACPs) were launched in time, based on the State Potential Linked Plans prepared by NABARD and the national priorities. The Bank monitors the progress made under the plans in District Level Review Committee (DLRC) meetings convened at quarterly intervals as prescribed by the Reserve Bank of India. 10. MALWA GRAMIN BANK: Malwa Gramin bank (MGB), the Regional Rural Bank sponsored by the Bank, with a network of 41 branches in 5 districts of Patiala, Mohali, Fatehgarh Sahib, Sangrur and Barnala, recorded satisfactory performance during the year 2007-08. It posted a net profit of Rs. 7.77 crore during the year 2007-08, showing an increase of 11.67%. At the end of March 08, the total deposits and advances of MGB stood at Rs. 314.29 crore and Rs. 276.03 crore, respectively showing a growth of 31% in its total business. Its reserves and surplus increased to Rs. 60.65 crore on its paid up capital of Rs.1 crore. The recovery percentage of MGB stood at 97.67%, Gross NPAs at 0.91% and Net NPAs at 0.58%. It plans to open 11 new branches in the year 2008-09. It was also adjudged as the 2nd best Rural Bank for the year 2006- 07 among all the RRBs sponsored by the Associate Banks. 11. COMMUNITY SERVICES BANKING: The Bank, as a responsible corporate citizen, has been actively participating in socially purposeful activities. Every year the Bank organizes/sponsors various activities under CSB, like, Blood Donation Camps, Veterinary Camps, Free Medical Check-up Camps, Adult Literacy Camps, Family Welfare Camps, etc.. During the year, 760 such activities were undertaken through the branches and the CSB Deptt. at Head Office. The Bank has also renewed its adoption of 23 orphan children of SOS Children Village (Rajpura) to meet their expenditure for the year. A Yog Vigyan camp by Patanjali Yog Peeth (Haridwar) was co-sponsored by the Bank. About 10000 persons attended this week-long health awareness camp. The Bank donated an ambulance to the Indian Red Cross Society, Himachal Pradesh State, through its Shimla branch and a mobile van to Indian Red Cross Society, Punjab State through Drug De-addiction-cum-Awareness Centre. Saket, Patiala. The children selected for the National Bravery Awards for the year 2007 were honoured by the Bank. A public address system was donated to the Deaf and Dumb School run by Society for the Welfare of the Handicapped, Amar Ashram, Patiala; and sewing machines to the war widows at an Ex-serviceman rally at Patiala. To create an awareness among the rural masses about AIDS / HIV, Dowry, Cancer, female foeticide and other social evils, the Bank donated a LCD projector and a Laptop to Salesian Society of Don Bosco, Kauli. The Toppers of Class 10th examination conducted by Punjab School Education board, Mohaii, were honoured with cash prizes and honorarium. To create awareness among the people for safe environment, a marathon Run Patiala Run was organized on the eve of 90th anniversary of Banks foundation. With a view to contributing in making the environment healthy, about 45000 sapl ings were planted during the year. 12. USE OF HINDI IN THE BANK: The Bank continued to make efforts to increase the use of Hindi in its functioning and has followed the directions received from the Govt, of India and the Reserve Bank of India from time to time. To promote use of Hindi, the Bank organized five Hindi workshops for its staff at its training centres. Similarly, six Hindi workshops were also organized at different Zonal Offices/ Regional Offices of the Bank. 10 competitions were organized during the Rajbhasha Chetna Mah at H.O., in which 87 participants competed. Other competitions were also held at different Zonal Offices / Regional Offices/branches during that month. Meetings of the Official Languages Implementation Committee were regularly held at Head Office and other offices to monitor the progressive use of Hindi in the internal working of the Bank. A Sub Committee is in place at Head office to review the progress in implementation of the various action points. A computer learning centre has been set up to impart training in typing in Hindi to the computer operators posted at Head Office. Hindi Font YUVRAJ has been loaded on all the computers in Head Office and Zonal Offices. Further, the APS 2000++ software has also been loaded in 40 computers established at Head Office. Banking vocabulary and important noting/s of daily use (English-Hindi) have been loaded on the Banks Intranet. Common noting/s and important points for implementation of Official Languages Act have also been got printed on the inner sides of all the file covers, for ready availability and easy reference. 13. RIGHT TO INFORMATION ACT, 2005: The Right to information Act, 2005 has been enacted by the Govt, of India with a view to setting out practical regime of right to information for citizens to secure access to information under the control of public authorities. Since the Bank comes within the domain of public authorities defined under the Act, all necessary steps have been taken to comply with its requirements and Central Public Information Officer has been appointed. Further steps are also being taken by the Bank for implementing the provisions of the said Act. Necessary information has been placed on the website of the Bank. 14. CUSTOMER SERVICE: 14.1 To bring about greater transparency in Banks operations, make the customers aware of their rights and also to make the Bank/Branches more responsive to the present banking needs of the customers, the bank has adopted the Best Practices Code and the Fair Lending Practices Code. 14.2 The Bank has adopted for its implementation, the Code of Banks Commitment to Customers set by the Banking Codes and Standards Board of India, which provides protection to customers and explains how the Bank would deal with customers in their day to day operations. The code applies to all the products and services provided by the Bank. 15. BUSINESS PROCESS RE-ENGINEERING (BPR): 15.1 The Bank has launched various BPR initiatives starting February 2005 to strengthen its ability to acquire new customers, build lasting relationships with existing customers and increase customer satisfaction through high quality customer-service. 15.2 BPR project also simplifies and redesigns business processes to fully leverage the core banking solution (CBS) platform. The goal of the bank is to have sales and service platform across all its branches and transfer the processing part to off-site centres, to ensure excellence in customer service and improve banks performance. 15.3 BPR initiatives have gathered momentum and the Grahak Mitra and the Drop Box initiatives have been established in 234 branches spread over 44 centres. Some other Initiatives are: Loan CPCs (RACPCs, SECCs, RASECCs, SMECCCs, Agri. CPCs), Trade-Finance CPC(TFCPC), Currency Administration Cells, Stressed Assets Resolution Centre (SARC), Relationship Managers (PB), Relationship Managers (Medium Enterprises), etc. 15.4 A Liability Central Processing Centre has been established at Patiala, to deliver personalized service to all deposit customers. A fully dedicated Central Pension Processing Cell has been established at Patiala for pensioners and a Central Clearing Processing Centre has been launched at Chandigarh. With the launching of all these 8PR initiatives at Chandigarh centre, branch redesigning is being launched for making the branches lean and compact and effectively providing alternate channels like ATM, Internet banking, etc., for transaction fulfilment so that the branches effectively become focussed Sales and Service hubs. 17. INFORMATION TECHNOLOGY: 17.1 We achieved networking of all our 798 branches and 50 extension counters, and implemented Core Banking Solution (CBS) way back in the year 2005 to provide Any where Any time banking services to the customers. All our branches are RTGS/NEFT enabled, provide latest technology based products and services, and offer other alternate delivery channels like; Internet banking for on-line inter / intra bank funds transfer, on-line payment of Central Excise/ Service Tax / Direct taxes, on-line booking of railway tickets, on-line payment of utility bills/ insurance premium/ SBI credit card payments, etc. 17.2 The Bank has expanded its ATM network, and now has 441 ATMs with ATM- cum-debit card base of 12.63 lakh. To provide customers the state-of-art technology, card to card funds transfer between State Bank Group card holders through ATMs, within the country, has been enabled. The customers of the Bank can also use ATMs for fee payments and donations to religious bodies. The Bank card (combo card) functions as ATM-cum-debit, access control and identity card for students and educational institutions. Our Card holders can use over 8500 ATMs of State Bank Group, free of cost. 17.3 New remittance facility Grpt for real-time transfer of funds, within State Bank group, has also been enabled at all our branches. Further, a stand-alone software to send transaction based SMS alerts has also been enabled. Submission of loan applications and sanction of loans, under education loan scheme, have been made on-line. 17.4 The Bank has developed an in-house intranet site sbpinfonet accessible within the Bank, which hosts data on deposits, advances and business performance of the Bank, which facilitates faster decision-making. The e-circular project has been launched in our Bank, which provides facility to view circulars/memos electronically, at all the branches/offices of the Bank. 18. HUMAN RESOURCES: 18.1 Human resources continue to be the backbone of the Banks operations. At the end of the year, the Banks staff strength was 11175, comprised of 4364 officers, 4757 clerical staff and 2054 subordinate staff. The reservation policy of the Govt, in respect of SCs/STs, OBCs, persons with disabilities and ex-service men is being implemented in the Bank as per Govt. of India guidelines. 18.2 Staff productivity, measured in terms of average business per employee, has improved from Rs. 526 lakh in 2006-07 to Rs. 665 lakh in 2007-08. 18.3 In all 7,232 employees of the Bank were imparted training at the Banks training centres at Patiala and Gurgaon, through 320 programmes structured to meet their training requirements for effectively and efficiently performing their roles in the Bank. Further, 572 officers were deputed to attend various programmes on specialized subjects at apex training institutes of State Bank of India, and other training institutes in India and abroad. The Bank also provided its officers opportunity for exposure to banking operations outside the country, by deputing them to the foreign offices of SBI The Bank has also rewarded the best performers by paying them incentives, on the basis of 31st March 2007 results of the Bank. Vi. INDUSTRIAL RELATIONS: The industrial relations remained harmonious and cordial in the Bank throughout the year. Talks / discussions were periodically held with the representatives of the Officers Association and Workmen Union, contributing to healthy industrial relations in the Bank. 19. BRANCH NETWORK: 19.1 The Bank has a network of 798 branches and 50 extension counters, including 7 Service Branches, 6 Commercial Branches, 24 Specialised SME Branches, 20 Specialised P-segment Branches, 13 Specialised Agricultural Branches and 1 High-Tech Agriculture Branch. In line with Banks customer- centric philosophy, the ambience has been improved at most branches of the Bank by suitable face-lifting of the premises and interiors. The Bank will continue to lay emphasis on improvement of ambience of its offices to provide pleasant atmosphere to customers and staff to conduct their business. 20.2 As at the end of March 2008, there was no loss incurring branch in the Bank.