An Overview of State Bank of India and Punjab National Bank

Transcription

1 Chapter A COMPARATIVE STUDY OF HRD POLICIES In State Bank of India & Punjab National Bank An Overview of State Bank of India and Punjab National Bank

2 3.1 STATE BANK OF INDIA State Bank of India having longest period of historical evolution in commercial banking is the biggest and the largest public sector bank in the world. The history of State Bank is a reflection of the history of organized banking in the country. The bank was constituted through an Act of Parliament on May 8, 1955 and came into existence on July 1, Section 3 (Chapter II) of the State Bank of India Act, 1955 states: "A bank to be called the State Bank of India shall be constituted to carry on the business of banking and other business in accordance with provisions of the Act and for the purpose of taking over the undertaking of the Imperial Bank". The State Bank of India was the outcome of the implementation of the recommendation of the committee appointed by the Reserve Bank of India in August, The committee recommended the setting up of a State Bank as one strong integrated state-partnered commercial banking institution with an effective machinery of branches spread throughout the country OBJECTIVE OF STATE BANK OF INDIA The main objectives of the State Bank of India, as laid down in the State Bank of India Act, 1955 are as under: "whereas for the extension of banking facilities on a large scale, more particularly in the rural and semiurban area, and for diverse other public purposes it is expedient to constitute a State Bank of India, and to transfer to it the undertaking of the Imperial Bank of India and to provide for other matters connected therewith or incidental thereto". 68

3 Corporate mission of the bank reads as STATE BANK OF INDIA - A PREMIER COMMERCIAL BANK COMMITTED TO SERVICE AND NATIONAL DEVELOPMENT. The corporate philosophy has been "GROWTH WITH PROFITABILITY" and to maintain its position of leadership in the banking industry. The major corporate objectives of the Bank are as follows: 1. Profit with growth. 2. Public image of efficiency and social purposiveness at home and abroad. 3. Utmost attention to customer service. 4. Maximum mobilization of resources. 5. Financing agricultural operation in an intensive manner. 6. Fostering growth of small scale industries. 7. Promoting export trade by providing sufficient financial assistance. 8. Removal of economic imbalances in the country FUNCTIONS OF STATE BANK OF INDIA The State Bank of India is authorized by the State Bank of India Act, 1955 to perform the following functions. 1. To act as an agent of the Reserve Bank of India at all places in India where the State Bank has a branch but there is no branch of the Banking Department of the Reserve Bank to pay, receive, collect and remit money, bullion and securities on behalf of the Government of India and transact any other business which the Reserve Bank may entrust to it from time to time. I. To advance and lend money and to open cash credits upon the security. 69

4 3. To sell and realize the proceeds of sale of any promissory notes, debentures, stock receipts, bonds, stocks, shares, securities of goods or documents of title which have been deposited with or pledged, hypothecated, assigned or transferred to the State Bank as security for such advances, loans or credit or which are held by the State Bank or over which the State Bank is entitled to any lien or charge in respect of any loan, advance, credit or claim of the State Bank and which have not been redeemed in due time. 4. To draw, accept, discount, buy and sell bills of exchange and other negotiable instruments. 5. To invest ftinds of the State Bank in shares and securities and to convert the same into the money when need arises to do so. 6. To issue demand drafts, to affect telegraphic transfers and other kinds of remittances made payable at its own offices, to purchase drafts, telegraphic transfers and other remittances, to make issue and circulate letters of credit to or otherwise than to the bearer on demand. 7. To buy and sell silver and gold. 8. To receive deposits and keep cash accounts. 9. To receive all kinds of bonds, scripts, title deeds or valuables on deposit or for safe custody. 10. To sell and realize all property, whether movable or immovable, which may come into the possession of the State Bank in satisfaction of its claims and hold any right, title or interest in any property which may be the State Bank's security for any loan or advance. 11. To act as agent of any co-operative bank which is registered under any law in force. 12. To underwrite issues of any stocks, shares, debentures or other securities in which the State Bank is authorized to invest its funds. 70

5 13. To transact pecuniary agency business on commission. 14. To administer whether jointly with other persons or alone estates for any purpose whether as executor, trustee or otherwise. 15. To draw bills of exchange and grant letters of credit payable out of India. 16. To buy bills of exchange payable out of India at any instance not exceeding 15 months in the case of bills relating to the financing of seasonal agricultural operations or six months in other cases. 17. To borrow money for the purpose of the business of the State Bank, to give security for money so borrowed by pledging assets or otherwise. 18. To advance or lend money to or to open cash credit in favour of any company having rupee shared capital or any co-operative society registered under any law in force, for the purpose of averting the winding up of the company or society or where any such company or society is being wound up for the purpose of facilitating such winding up for any period upon the security of the assets of such company or society. 19. With the approval of the Reserve Bank, to subscribe, to buy, acquire, hold and sell any shares in the capital of any banking company and to form and conduct any such banking institution as a subsidiary of the State Bank or in any other manner. 20. To subsidies from time to time the pension funds, if necessary. 21. To do any other kind of business which the Central Government in consultation with the Reserve Bank and on the recommendation of the Central Board, may authorize. 22. To perform functions entrusted to or required of the State Bank by this Act or by any other law for the time being in force. 23. Generally, to do all such matters and things as may be incidental or subsidiary to the transacting of various kinds of business, including foreign exchange business. 71

6 So, the State Bank, of India provides credit to industry, trade, agriculture and commerce as the erstwhile Imperial Bank of India used to do. An important statutory function assigned to the bank is the promotion of banking development through the establishment of effective machinery of branches spread over the whole country. It acts as an agent of the RBI at all places in India where it has a branch and where there is no branch of the Banking Department of the Reserve Bank. With the approval of the Central Government, the Bank may also enter into negotiations for acquiring the business, including the assets and liabilities of any banking institution. 3.2 HISTORICAL RETROSPECT The State Bank of India (SBI) has its beginning in 1806 in the form of Bank of Calcutta established under a Charter by East India Company on June 2. In 1809, Bank of Calcutta was converted into Bank of Bengal. The Bank was the first joint Stock bank with limited liability and sponsorship of the British government in India. Share of British government was to the extent of 20% and 80% shares were held by private persons. The government had the right to nominate three directors on the Board of Bank and one of them normally acted as the President. The Bank had the privilege of note issue within certain limits which had acceptability by the Treasury and wider circulation. The unique features of Bank of Bengal viz. limited liability, sponsorship of government and combination of deposit banking with note issue set it above all other contemporary banks in India. The other banks in India at that time were sponsored by private European business house and did not enjoy the privilege of limited liability or note issue. 72

7 At this time, the staff of the banks was dominated by Europeans. However, Khazanchi, or cash keeper used to be a local Indian who was also the chief source of information on the status of the Bank's constituents. Bank of Bombay (1840) and Bank of Madras (1843) were other ancestors of SBI. These three Presidency Banks functioned independently of each other in their own areas. All the three Banks were created by a charter and has close liaison with the Government. They acted as bankers to the government, all these were empowered to issue notes until From 1862 to 1866, these Banks acted as agent of the Government for management and circulation of new currency notes. In the beginning, these banks were Single Unit Banks and their Branch Banking commenced in Between , the Presidency Banks were facing an increase in competition from commercial Banks registered in India and Exchange Banks registered in U.K. Need was feh to regulate and integrate the working of the three. Accordingly, the Presidency Banks Act was passed in The Act provided for changed form of representation on the Boards. The Government ceased to be a shareholder but it continued to exercise supervision over them through its directors. The privilege of note issue had already been taken away in 1862 and the management of currency notes in Consequently private deposit become important source of their funds and financing of private trade become the main source of their profit. Presidency Banks became commercial oriented in their funding and leading operations during the period Branch expansion had to be resorted to during this period for diversifying deposit and loaning operations. On January 27, 1921, three Presidency Banks viz. Bank of Bengal (1806), Bank of Bombay (1840) and Bank of Madras (1843) were 73

8 amalgamated to form the Imperial Bank of India. The bank acted as commercial bank of India was the custodian of Government Bonds, Performed treasury work of Government as well as banker's bank and managed public debt of Government of India. In 1935, the Central Banking functions were separated out and Reserve Bank of India (RBI) was created. The Imperial Bank of India ceased to be the banker to Government. However, RBI entered into an agreement with the Imperial Bank of India, appointing the latter as the sole agent of the Reserve Bank for the maintenance of currency chests on commission basis. The imperial bank was also obliged to provide to all scheduled Banks and public, remittance facilities at the specified rates. As on December 31, 1934, the Imperial Bank of India had 160 braches including one in London in comparison to 688 branches of 105 Indian joint stock banks and 98 branches of 17 Exchange banks in India (23%) Deposits of imperial Bank of India and 105 Indian joint stock banks were about rupees 81 crores each (50%) CREATION OF STATE BANK After independence, the role of commercial banks started expanding due to initiation of economic development plans by the National Government All India Rural credit survey committed appointed by the RBI in 1951, interalia recommended for establishment of a strong State sponsored national level bank which could be used as an effective financial instrument for economic regeneration of the country in general and rural areas in particular. The bank was to act on commercial lines in conformity with public purpose. 74

9 The committee had accordingly recommended for creation of State Bank of India by amalgamating the Imperial Bank of India and major State associated banks. In 1955, State Bank of India Act was passed and the Imperial Bank of India was taken over by SBI with effect from July 1, 1955 along with its 466 offices in India and 11 offices abroad. The controlling interest in the Bank was vested in RBI ASSOCIATE BANKS In 1959, SBI (Subsidiary Banks) Act was passed whereby the 8 (Now 7 as State Bank of Bikaner and State Bank of Jaipur were merged into one on January, 1963) banks associated with the former princely States were converted into subsidiaries of SBI and brought within the SBI Group during October 1, 1959 and May 1, These banks were established during and were operating within the domains of princely States. A summary of these predecessors banks with name of subsidiary are shown in table. 75

10 Table No. 3.1 SUBSIDIARIES OF SBI Sr. No. Name of Predecessor Bank Established in Date of Nationalization No. of Branches on Date of Nationalization 1. State Bank of Saurashtra Bank of Mysore Bank of Patiala Bank of Indore Hyderabad State Bank Bank of Jaipur Travancore Bank Total BUSINESS AREAS IN SBI The bank realized a laudable performance of business and has substantially contributed to the realization of corporate and national goals. The bank has contributed significantly to the development of trade and industry for the country. The major activities of State Bank of India are furnished as follows. 76

11 (i) Bankers to the Government State Bank handles a significant part of the day-to-day banking business of both the Central and State Governments and is the main banker to most of the public sector corporations. State bank plays a major role infinancingthe procurement of grains and other commodities like cotton, jute and tobacco. Also, the Bank is often solely designated by the government of India to handle special schemes such as Gold Bonds, Gold replenishment Schemes (against export of Jewellery), The National Deposit Scheme etc. (ii) Industrial Finance State Bank plays a vital role in providing to Indian Industry, working capital and term finance, which in the last three decades has grown significantly from a negligible base, now to a level of about Rs. 24,000 Crores or over 50% of the State Bank's total advances. State Bank's involvement encompasses among others, both heavy and core industrial sectors as well as light engineering and electronics. Specialized attention is paid to the needs of industry through Commercial branches and Industrial Finance Branches which cater to large and medium industries. (iii) Agricultural Finance Committed to promote growth in rural areas, State Bank started large scale financing of agriculture in 1968 and since then has been extending both technical and financial assistance for agriculture and related activities through its network of 427 Agriculture Development Branches (initiated in 1972). The assistance goes beyond short term credit for seasonal agriculture operations and also covers marketing of agriculture produce, mechanization and modernization of farms, provision of irrigation facilities and development 77

12 of land. As on March 31, 1994 the banks load portfolio to this sector stood at Rs Crores. (iv) International Banking SBI is actively involved in foreign exchange and international banking operations through a network of its overseas branches and offices in India and abroad spread over 31 countries. The international operations includes developing and identifying new markets for Indian exporters, encouraging new export potentials within the country, providing trade information service for prospective exporters and conducting Entrepreneur Development Programmes for small exporters. The Bank also helps Indian Government and Corporations to raise foreign currency loans for financing high value imports. The bank also acts as an advisor to the Government of India, public and private sector corporations in regard to Euromarkets borrowings. (v) Innovation and change After a long journey of its existence, the SBI has been responding and adapting to changes in its environment by innovating and planning ahead to meet new challenges. In 1956, SBI pioneered the systematic financing of small scale industry and introduced the concept of need based finance. In 1967, State bank introduced the Entrepreneur Scheme under which technically qualified persons are being provided 100% of the finance required for projects with an outlay up to Rs. 2 Lakhs. In 1978, the Equity Fund Scheme was introduced to provide equity assistance to new entrepreneurs. State Bank also established its own consultancy Cells to enable these entrepreneurs to solve various technical and marketing problems. 78

13 In 1971, 'Marketing Segment' approach was adopted and branches were restructured. It is in this year that State Bank formalized its organizational structure with the help of Indian Institute of Management (IIM), Ahemdabad. An Innovating Banking Department (known as community services Banking Department) was set up in 1973 at each of the Local Head Offices (LHO's) of the Bank to explore the ways in which both banking and non banking services could be made available. Through these activities, the Bank seeks to build up the community in which it functions and to develop each of its branches as a responsible institutional member of the local society. In the efforts to know and fulfill customer needs, the bank is very conscious. State Bank has set up a Grievance redressal system in Now Bank plans to expand and enlarge this system to include the provision for payment of compensation in appropriate cases, the new system to be termed as State Bank Lok Pal. So, in SBI, innovation and the management of change is perceived well in advance, through a structured process of planning. The planned expansion of the business area would contribute significantly to the Bank's ability to grow and successfully performing the roles of developmental institution and commercial enterprise. (vi) House Keeping The activity includes balancing of books and accounts. This area has been constantly monitored and looked after. A comprehensive plan was drawn during the year for the two year period ( ) for balancing 79

14 principle and subsidiary accounts of the Bank and for disposal of outstanding entries in office accounts. This plan is being currently implemented. (vii) System and Technology For speed and efficiency in operations and to provide prompt service to customers. The Bank has introduced computers at all its Branches. The Bank had initially decided upon installation of Automated Teller Machines (ATM), in four metropolitan cities and now the facilities like Net Banking, Mobile Banking and Debit and Credit Card are common across the country to provide round- the-clock customer service. (viii) Communication Network On September 20, 1988, the bank initiated State Bank Integrated Communication Network (SBINET). A Satellite based communication network called Remote Area Business Message Network (RABMN) was introduced in the bank in 1991 for stable and reliable data communication. As on March 31, 1993, as many as 20 centres have been covered. State Bank is a member of the society for world-wide Inter-Bank Financial Telecommunication (SWIFT) which offers cost effective and fast transmission of financial messages globally. At present, 14 branches in India and 10 branches abroad are covered under this scheme. Another scheme called SBIDATANET is was introduced in the year 1994 for electronic fund transfer facility, efficient funds settlement and Forex related operations. The scheme is likely to cover 200 branches in the first phase. 80

15 3.4 STATE BANK GROUP The State Bank Group includes all the banking or non banking establishments wholly owned or with majority ownership by State Bank of India. The Group includes its banking subsidiaries as well as companies in India or abroad. ASSOCIATE BANKS In 1959, the Bank acquired following Banks as subsidiaries through special statutory enactment. The Bank's subsidiaries are: State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of Indore (SB Indore) State Bank of Mysore (SBM) State Bank of Patiala (SB?) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT) 3.5 MANAGEMENT OF SBI The management of the Bank vests in a Central Board of Directors which consists of appointees of Government of India, nominees from the Government of India and Reserve Bank and elected representatives of private share holders. The constitution of Central Board Directors is shown in table as follows.

16 Table No. 3.2 CONSTITUTION OF CENTRAL BOARD OF DIRECTORS IN SBI Sr. No. Designation Appointed By Number 1. Chairman and Deputy Chairman 2. Managing Director 3. Ex-Officio Directors 4. Elected Directors 5. Appointed Directors 6. Nominated Directors 7. Nominated Director Central Government in 1 consultation with RBI Central Board of Director with approval of Central 2 Government Under Section 19 (bb) of SBI 7 Act, 1955 Under Section 19 (c) of SBI 2 Act, 1955 Central Government under section 19 (ca) and (cb) of SBI 2 Act, 1955 Central Government under Section 19(d) and (e) of SBI 2 Act, 1955 Reserve Bank of India section 1 19(0 of SBI Act, 1955 The Chairman, Deputy Chairman and Managing Directors hold office for such term not exceeding 5 years as the Central Government may fix at the time of appointing them. They are eligible for reappointment. The Ex-officio Directors and those nominated by the Central Government hold office for 4 82

17 years and are eligible for re-election and re-nomination. Other nominated Directors hold office during the pleasure of the nominating authority. (i) LOCAL BOARDS At the Local Head Offices, Local Boards have been formed consisting of all the Ex-officio or Nominated Directors of Central Board of Directors ordinarily resident in the area served by the branch register of the Local head office. The number of such Directors shall not exceed 4. The Central Board of Director may constitute a Local committee for any area consisting of such members as it may determine and it may perform such functions and exercise such powers as may be assigned to it by Central Board of Directors. No person who is salaried officer of government holds the office of Director or Manager in any other Bank can become Director of the Central Board or member of the Local Board. (ii) ORGANIZATION IN SBI The organizational structure of the Bank has its Central Office at the apex, controlling 13 Local Head Offices which in turn Control Zonal offices (47) are directly supervised and controlled by the Central Office of the Bank. The structure and organizational set up was changed and reorganized on July, 1972 on the suggestions and recommendations of Indian Institute of Management (IIM) Ahmedabad team hired for the purpose. The type of organizational set up recommended was oriented towards the type of customer served. The Bank's domestic operations are grouped into the different customer groups representing Market Segments to achieve a focused business thrust at 83

18 the branch level. Performance Budgeting and review systems were adopted by the Bank to provide for both resource and output budgets to be determined as a results of a dialogue at different levels in the organization on an annual basis, the Zonal Offices and Local Head Offices are structured on a Market Segment as well as functional basis, an integration between functions is achieved through review meetings and structured forums like the Circle Management Committee and Circle Coordination Committee. The Bank's International operations are organized along functional lines viz. credit, General Banking and personnel and Services. The organizational Structure of the Bank consists of three control centers as shown in Table as follows: Table 3.3 ORGANIZATIONAL CONTROL CENTRES IN SBI Sr. No. Control Centre Responsibilities Headed By 1. Top Management 2. Circle Management 3. Zonal Management Corporate and Strategic Control Management Control Operational Control Chairman and Managing Directors Chief General Manger and General Managers Deputy General Manager and Assistant General Mangers The organization structure of the Bank has its Central Office at the apex, controlling 13 Local Head offices (Circles) which in turn Control Zonal Offices. 84

19 3.6 PUNJAB NATIONAL BANK Punjab National Bank was nationalized in 1969 along with 13 other major banks. Nationalization in 1969 infused PNB with new directions and thrust, bringing with it greater challenges and larger dimensions in diverse operational areas. The bank met the needs of nationalization enthusiastically and directed its efforts to accomplish the cherished national goals of mobilizing saving of the community on a large scale and deploying the same in a productive manner for development. PNB has always been concerned about its role in social and economic fabric of the country. As a bank with enduring tradition linked with India's history and future, it considers itself a potent instrument of social and economic change. During its long corporate history it has innovated new concepts, encouraged innovative thinking, explored and reshaped management system and verified the effectiveness of organizational process. It believes in improving services on an ongoing basis and evaluation of customer services forms an essential part of its internal audit. PNB- a bank born with the vision of future. A vision towards efficient and customer friendly banking. Today's world is driven by information technology. PNB endeavors to upgrade itself towards modem and progressive banking, serving over 35 millions customers through a large network of over 4022 branches HISTORY OF PUNJAB NATIONAL BANK In the annals of Indian history, the last decade of 19"" century has a special place. It was during this period that a reawakening of India began and 85

20 the nationalist fervor started asserting itself. At this juncture, a group of farsighted patriots and social reformers like Lala Lajpatray, The Lion of Punjab, S. Dyal Singh Majitha, who also the founder of Dyal Singh College and Tribune, Lala Lalchand, one of the founders of DAV College and President of its management society, Kali Prasono Roy, eminent leader who was also the chairman of the reception committee of the Indian National Congress at its Lahore Session in Lala Har Krishan Lai, who became widely known as the first Industrialist in Punjab, E.C. Jessawala, a well Parsi Merchants & Philanthropist of Multan and Lala Dholan Das, a great banker and merchant of Amritsar decided to start a bank which would be truly Indian in character and thus the Punjab National Bank was bom on May 19, 1894 on the economic horizon of the country. The bank was a part of the Swadeshi Movement. It was owned by the Indian people and would work for the Indian people, especially at a time when Indian capital was being used to run English Banks and companies, the profits accruing from which went entirely to Britishers, whilst Indians contended themselves with a small interest on their own chapter. The bank open for the business on April 12, 1895 and Lala Lajpatray opened the first account with the bank, housed in a building in the Anarkali Bazar, Lahore. The authorized total capital of the Bank was two lacs and the working capital was rupees twenty thousands. The bank appropriately choose the word, 'STABILITY' as its telegraphic, which proved prophetic as was shown by the events that followed in later years. The bank never left its pioneering and this become evident when on many issues and problems bank experiences even today from autonomy, delegation, discipline, role of directors, fraud, loan losses, cost control etc. 86

21 PNB clearly perceived the challenges and handled them effectively. For instances, as early as 1929, the bank introduced a system of continuous audit to prevent possibility of frauds; While in 1935 the system of recruitment, training, promotion and salaries was organized on truly scientific basis. Besides bank held staff welfare and public interest as paramount objectives. Profit sharing bonus, provident fund, voluntary outside audit, manpower rationalization etc. were introduced long before these were advocated by management experts for improved operational efficiency and employee motivation. In 1940 PNB acquired Bhagwan Dass Bank Limited, thereby raising its working capital. After the independence, in 1947 the Board of the bank took a momentous decision to shift the registered office to Delhi. After the partition bank had to close as many as 92 offices (33% of total) in West Pakistan, which constituted 40% of the total deposits of the bank by 1951, the damage that the partition of the country brought on the bank had been repaired and new era of growth had begun. This was the year of Bharat Bank Merger with PNB. The universal bank limited was taken over in 1961 and the bank moved ahead registering remarkable growth. The Hindustan Commercial Bank merger came in 1986 and the bank continued its impressive growth. Taking into account the inherent strength and financial soundness of PNB, the loss making New Bank of India was merged with PNB in September This was first ever merger of a loss making nationalized bank with a profitable nationalized bank. Further on the January 31, 2003 Nedungadi Bank Ltd. (NBL), a private sector bank based in Kerala was amalgamated with Punjab National Bank w.e.f, February 1, Despite the adversities and hurdles it has faced in more than 100 years of its eventful existence, PNB 87

22 has never looked back and always occupied a front line position among the banks and is a premier banking institution in India and is moving forward with confidence and dynamism to meet the merging challenges in proactive manner. True to its tradition PNB is committed to maintaining the highest standard of service, professional excellence and integrity. While striving to become one of the most profitable banks in the country it aims to be recognized as a socially responsible bank as well. With this corporate credo, PNB rededicates itself to the service of the nation FUNCTIONS OF PUNJAB NATIONAL BANK The term "Bank" originally referred to an individual or organization, which acted as a money changers and exchanges one currency for another. But these days, a bank is an institution in which people keep their cash balances in the form of deposits. According Prof Sayers, "Banks are institutions whose debts usually referred to as 'bank deposits'- are commonly accepted in final settlement of other people's debts". According to banking Regulation Act 1949, "banking means the accepting for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawal by cheque, drafts, order or otherwise". Following are the main functions of PNB. (i) Receiving deposits from public: An important fiinction of PNB is to attract deposit from the public. It accepts deposits from every class and from every source and in all cases, without exception, it undertakes to repay the money, either in part or in fiill, in legal tender money. Deposits are of various types- Demand Deposits, Saving Deposits and Fixed Deposits. 88

23 (ii) Making loans and Advances: The second major function of PNB is to make loans and advances out of the deposits of pubhc. Direct loans and advances are given to all types of persons particularly to business and investors, against personal security, gold and silver and other movable and immovable assets. The most common way of lending is by over draft facilities. (iii) Use of Cheque System: Apart from these two major functions, PNB performs a number of other useful functions to the community. It has developed the cheque systems, under which the depositors are given the right to withdraw from their deposits any amount at their convenience by means of cheque. (iv) Transfer of funds: Another function PNB is to provide facilities for transfer of funds from one part of the country to another or from one country to another. Any amount of money can be transferred cheaply through Punjab National Bank. (v) Other Functions: Other miscellaneous functions performed by PNB include: Lockers to keep valuable articles of customers in safe custody. Acting as agent for its customers to buy and sell gold and silver and securities on their behalf. Making and receiving payments on the behalf of its depositors. 89

24 Issuing letter of credit and travelers' cheque for the convenience of its customers. Performing all functions, which will bring in profits. PNB also offers Internet Banking services in the country for corporate, individuals. Internet banking services are available through all branches, which are networked under CBS. Providing 24 hours, 365 days banking right for the ATM users, internet banking offers world class banking facilities like any time any access to account, complete details of transaction, and statement of accounts, information of deposits. Loans overdraft account etc. PNB has recently installed online payment facility for railway reservation through IRCTC payment Gate and online Utility Bill Payment Services which allows internet banking access to pay their telephone, mobile, electricity, insurance and other bills any time anywhere from their desktop. Another step taken by PNB in meeting the changing aspirations of its clients is launch of its debit card which is also and ATM card. It enables the card holder to purchase goods and services through 45, 000 merchant establishments across the country. ATM card can be used to withdraw cash at more than 4500 ATMs. 90

25 Table No.3.4 SUBSIDIARIES OF PNB Name PNB Capital Services PNB Housing Finance PNB Asset Management Company Ltd. Year of Formation April 12, 1988 November 11, 1988 March PNB Gilts March 13, 1996 Business area and prospective SEBI Registered Bakers. Involved in syndication of loans, commercial papers, and external commercial borro^yings, debentures trusteeship, advisory services and project appraisal. Approved by NHB Provides Housing loans for purchase construction and up-gradation of a dwelling unit 1. Responsible for investment decision and day to day operation of PNB mutual funds including formulation and launch of new schemes under overall supervision, control and governance of the funds Board of Trustees. RBI authorized primary dealer. Trade in Government dated Securities, Treasury bills, Bonds of public sector enterprises Government Guaranteed bonds, State Government securities. Involved in Money market operation including dealing in call/notice and term money short-term borrowing, commercial papers and certificate of deposits 3.7 MANAGEMENT LEVEL IN PUNJAB NATIONAL BANK The term 'level' involves persons arranged in series. Thus, a level of management suggests the arranged managerial position in an organization. In Punjab National Bank there are four management levels or grades except 91

26 Board of Directors. Directors are nominees of government, RBI, Shareholders and woricers or employees. Four management levels or grades are constituted from seven scales of managers. Scales of managers and their name in hierarchy of management is given below: Table No. 3.5 Hierarchy of Management in PNB Scales Scale 1 Scale-II Scale III Scale IV Scale V Scale VI Scale VII Name in Hierarchy of Management Officer or Deputy Manager Manager or Branch Manager Senior Manger or Branch Manager Chief Manger or Regional Manger or Branch Manger Assistant General Manger or Branch Manger Deputy General Manger or Zonal Manger General Manger or Zonal Manger 92

27 Chart No. 3.6 Organization Control Centers in PNB Grades/Centers T.E.G. Top Executive Grades (Chairman and Board of Directors, Scale - VII & Scale-VI Mangers) Responsibilities Corporate goals -> and strategic Control S.M.G. Senior Management Grade (Scale V & IV Mangers) - Management Control M.M.G. Senior Management Grade (Scale V & IV Mangers) ^ Operational Control J.M.G. Junior Management Grade (Scale I managers) Supervisory Function or Control A. Top Executive Grade This is the policy-working group responsible for the overall direction and success of all banking activities. The principal responsibility is to establish operating policies and guide the organization's interactions with its environment. B. Senior Management Grade: Managers are also classified as Zonal Managers, Chief Mangers and Senior Regional Managers. They are usually made responsible for only one organizational activity or area. Such as credit, deposit, finance and zonal office on the basis of area. They manage an independent operating division. He (She) is responsible for all activities of that unit - its credit, deposit, marketing, finance etc. 93

28 C. Middle Management Grade: Middle mangers not only direct the activities of other mangers but also those of operating employees. Their major responsibility is to direct the activities that will implement the broad operating policies of the organization. They have a high degree of responsibility for the individual initiative and judgment, acting under policies and directives of top management. D. Junior Management Grade: It consists of officers of Deputy Managers. They are responsible for the work of others. They supervise and control operating employees not managers. They are directly responsible to the middle management grade for final execution of policies by rank and file employees, and for attainment of objective in assigned organizational units through practices and procedures approved and issued by Top or Middle management. 94