Arijeet Anand Project PDF

Arijeet Anand (4108026026) Indian Institute of Finance

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CHAPTER- 1

INTRODUCTION


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AXIS BANK LTD.

ABOUT THE COMPANY

Axis Bank was the first of the new private banks to have begun operations in 1994, after the

Government of India allowed new private banks to be established. The Bank was promoted

jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I),

Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC)

and other four PSU insurance companies, i.e. National Insurance Company Ltd., The New

India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India

Insurance Company Ltd.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai.

Presently, the Bank has a very wide network of more than 729 branch offices and Extension

Counters. The Bank has a network of over 3171 ATMs providing 24 hrs a day banking

convenience to its customers. This is one of the largest ATM networks in the country.

The Bank has strengths in both retail and corporate banking and is committed to adopting the

best industry practices internationally in order to achieve excellence.

Axis Bank Limited provides a suite of corporate and retail banking products. The Company

operates in different segments: Treasury, Corporate/Wholesale Banking, Retail Banking and

Other Banking Business. The Treasury segment includes investments in sovereign and

corporate debt, equity and mutual funds, trading operations, derivative trading and foreign

exchange operations on the account and for customers and central funding. The Retail Banking

segment constitutes lending to individual/small business subject to the orientation, product and

granularity criterion. Retail Banking activities also include liability produc ts, card services,

Internet banking and depository. The Corporate/Wholesale Banking includes corporate

relationships not included under Retail Banking, corporate advisory services, placements and

syndication, management of public issue, project appraisals, capital market related services and

cash management services.


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Quick Financial Synopsis

BRIEF: For the fiscal year ended 31 March 2009, Axis Bank Ltd.'s interest income increased

55% to RS108.29B. Net interest income after LLP increased 30% to RS29.48B. Net income

increased 71% to RS18.13B. Revenues reflect higher income from investments, an increase in

income from interest on bills/advances, partially offset by higher provision for non-performing

advances. Net income also reflects an increase in other income.

Axis Bank was formed as UTI when it was incorporated in 1994 when Government of India

allowed private players in the banking sector. The bank was sponsored together by the

administrator of the specified undertaking of the Unit Trust of India, Life Insurance

Corporation of India (LIC) and General Insurance Corporation ltd. and its subsidiaries namely

National insurance company ltd., the New India Assurance Company, the Oriental Insurance

Corporation and United Insurance Company Ltd. However, the name o f UTI was changed

because of the disagreement on terms and conditions of the bank authority over certain

stipulations including royalty charged over the name from UTI AMC. The bank also wanted to

have a new name from its pan-Indian as well as international business perspective. So from

July 30, 2007 onwards the UTI bank was named as Axis Bank.

Set up with a capital of Rs. 115 crore- with UTI contributing Rs. 100 crore, LIC contributing

Rs. 7.5 crore and GIC and its four subsidiaries contributing Rs. 1.5 crores, the bank came in

operation with its first registered office at Ahmedabad . Today, Axis Bank has more than 726

branch offices and Extension Counters spread over 341 cities, towns and villages of the

country. Presently, the authorized share capital of Axis Bank is Rs. 300 Crores and the paid up

share capital is Rs. 232.86 Crores. The Axis bank is currently capitalized with Rs. 282.65

Crores with a public holding of 57.05% apart from the promoters. The FY2009 shows a net

profit of Rs. 500.86 crore up by 63.24% yoy over the Net Profit of Rs. 306.83 crores for the

thirdquarter.


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Corporate Facilities

Cash Credit

Working Capital Demand Loan

Export Finance

Short Term Loan

Term Loan

Clean Bill Discounting

LC Backed Bill Discounting

Co-Acceptance of Bills

Credit Facilities against Guarantee or Stand By Letter of Credit issued by Foreign

Banks

Letter of Credit

Bank Guarantee

Solvency Certificates

Personal Facilities

Home Loans

Personal Loans

Car Loan

Zero Balance Savings Account

VBV - Online purchases using Credit Card

VBV / MSC - Online purchases using Debit Card

Mobile Banking

NRI Account

Study Loans

Mohur Gold

Easy Savings Account


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BANKS IN INDIA

India has a well developed banking system. Most of the banks in India were founded by Indian

entrepreneurs and visionaries in the pre- independence era to provide financial assistance to

traders, agriculturists and budding Indian industrialists. The origin of banking in India can be

traced back to the last decades of the 18th century. The General Bank of India and the Bank of

Hindustan, which started in 1786 were the first banks in India. Both the banks are now defunct.

The oldest bank in existence in India at the moment is the State Bank of India. The State Bank

of India came into existence in 1806. At that time it was known as the Bank of Calcutta. SBI is

presently the largest commercial bank in the country.

The role of central banking in India is looked by the Reserve Bank of India, which in 1935

formally took over these responsibilities from the then Imperial Bank of India. Reserve Bank

was nationalized in 1947 and was given broader powers. In 1969, 14 largest commercial banks

were nationalized followed by six next largest in 1980. But with adoption of economic

liberalization in 1991, private banking was again allowed.

The commercial banking structure in India consists of: Scheduled Commercial Banks and

Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been

included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only

those banks in this schedule, which satisfy the criteria laid down vide section 42 (6) (a) of the

Act.

Indian banks can be broadly classified into public sector banks (those banks in which the

Government of India holds a stake), private banks (government do not have a stake in these

banks; they may be publicly listed and traded on stock exchanges) and foreign banks.


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PRIVATE BANK IN INDIA

Initially all the banks in India were private banks, which were founded in the pre- independence

era to cater to the banking needs of the people. In 1921, three major banks i.e. Banks of

Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Ba nk of India. In

1935, the Reserve Bank of India (RBI) was established and it took over the central banking

responsibilities from the Imperial Bank of India, transferring commercial banking functions

completely to IBI. In 1955, after the declaration of firs t-five year plan, Imperial Bank of India

was subsequently transformed into State Bank of India (SBI).

Following this, occurred the nationalization of major banks in India on 19 July 1969. The

Government of India issued an ordinance and nationalized the 14 largest commercial banks of

India, including Punjab National Bank (PNB), Allahabad Bank, Canara Bank, Central Bank of

India, etc. Thus, public sector banks revived to take up leading role in the banking structure. In

1980, the GOI nationalized 6 more commercial banks, with control over 91% of banking

business of India.

In 1994, the Reserve Bank Of India issued a policy of liberalization to license limited number

of private banks, which came to be known as New Generation tech-savvy banks. Global Trust

Bank was, thus, the first private bank after liberalization; it was later amalgamated with

Oriental Bank of Commerce (OBC). Then Housing Development Finance Corporation Limited

(HDFC) became the first (still existing) to receive an 'in principle' approval from the Reserve

Bank of India (RBI) to set up a bank in the private sector.

At present, Private Banks in India include leading banks like ICICI Banks, ING Vysya Bank,

Jammu & Kashmir Bank, Karnataka Bank, Kotak Mahindra Bank, SBI Commercial and

International Bank, etc. Undoubtedly, being tech-savvy and full of expertise, private banks

have played a major role in the development of Indian banking industry. They have made

banking more efficient and customer friendly. In the process they have jolted public sector

banks out of complacency and forced them to become more competitive.


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Company History - Axis Bank

1993

- The Bank was incorporated on 3rd December and Certificate of business on 14th December.

The Bank transacts banking business of all description. UTI Bank Ltd. was promoted by Unit

Trust of India, Life Insurance Corporation of India, General Insurance Corporation of India

and its four subsidiaries.

- The bank was the first private sector bank to get a license under the new guidelines issued

by the RBI.

1997

- The Bank obtained license to act as Depository Participant with NSDL and applied for

registration with SEBI to act as `Trustee to Debenture Holders'.

- Rupees 100 crores was contributed by UTI, the rest from LIC Rs 7.5 crores, GIC and its four

subsidiaries Rs 1.5 crores each.

1998

- The Bank has 28 branches in urban and semi urban areas as on 31st July. All the branches are

fully computerized and networked through VSAT. ATM services are available in 27 branches.

- The Bank came out with a public issue of 1,50,00,000 No. of equity shares of Rs 10 each at a

premium of Rs 11 per share aggregating to Rs 31.50 crores and Offer for sale of 2,00,00,000

No. of equity shares for cash at a price of Rs 21 per share. Out of the public issue 2,20,000

shares were reserved for allotment on preferential basis to employees of UTI Bank. Balance of

3,47,80,000 shares were offered to the public.

- The company offers ATM cards, using which account-holders can withdraw money from

any of the bank's ATMs across the country which are inter-connected by VSAT.


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- UTI Bank has launched a new retail product with operational flexibility for its customers.

- UTI Bank will sign a co-brand agreement with the market, leader, Citibank NA for entering

into the highly promising credit card business.

- UTI Bank promoted by India's pioneer mutual fund Unit Trust of India along with LIC, GIC

and its four subsidiaries.

1999

- UTI Bank and Citibank have launched an international co-branded credit card.

- UTI Bank and Citibank have come together to launch an international co-branded credit

card under the MasterCard umbrella.

- UTI Bank Ltd has inaugurated an off site ATM at Ashok Nagar here taking the total number

of its offsite ATMs to 13.m

2000

- The Bank has announced the launch of Tele-Depository Services for its depository clients.

- UTI Bank has launch of `iConnect', its Internet banking Product.

- UTI Bank has signed a memorandum of understanding with equitymaster.com for e-broking

activities of the site.

- Infinity.com financial Securities Ltd., an e-broking outfit is typing up with UTI Bank for a

banking interface.

- Geojit Securities Ltd, the first company to start online trading services, has signed a MoU

with UTI Bank to enable investors to buy\sell demat stocks through the company's website.

- Indiabulls has signed a memorandum of understanding with UTI Bank.


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- UTI Bank has entered into an agreement with Stock Holding Corporation of India for

providing loans against shares to SCHCIL's customers and funding investors in public and

rights issues.

- ICRA has upgraded the rating og UTI Bank's Rs 500-crore certificate of deposit programme

to A1+.

- UTI Bank has tied up with L&T Trade.com for providing customized online trading solution

for brokers.

2001

- UTI Bank launched a private placement of non-convertible debentures to raise up to Rs 75

crore.

- UTI Bank has opened two offsite ATMs and one extension counter with an ATM in

Mangalore, taking its total number of ATMs across the country to 355.

- UTI Bank has recorded a 62 per cent rise in net profit for the quarter ended September 30,

2001, at Rs 30.95 crore. For the second quarter ended September 30, 2000, the net profit was

Rs 19.08 crore. The total income of the bank during the quarter was up 53 per cent at Rs

366.25 crore.

2002

- UTI Bank Ltd has informed BSE that Shri B R Barwale has resigned as a Director of the

Bank w.e.f. January 02, 2002. A C Shah, former chairman of Bank of Baroda, also retired from

the bank‘s board in the third quarter of last year. His place continues to be vacant.

M. Damodaran took over as the director of the board after taking in the reins of UTI. B S

Pandit has also joined the bank‘s board subsequent to the retirement of K G Vassal.


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- UTI Bank Ltd has informed that Shri Paul Fletcher has been appointed as an Additional

Director Nominee of CDC Financial Service (Mauritius) Ltd of the Bank.And Shri Donald

Peck has been appointed as an Additional Director (nominee of South Asia Regional Fund) of

the Bank.

- UTI Bank Ltd has informed that on laying down the office of Chairman of LIC on being

appointed as Chairman of SEBI, Shri G N Bajpai, Nominee Director of LIC has resigned as a

Director of the Bank

- B Paranjpe & Abid Hussain cease to be the Directors of UTI Bank.

- UTI Bank Ltd has informed that in the meeting of the Board of Directors following decisions

were taken: Mr Yash Mahajan, Vice Chairman and Managing Director of Punjab Tractors Ltd

was appointed as an Additional Director with immediate effect. Mr N C Singhal former Vice

Chairman and Managing Director of SCICI was appointed as an Additional Director with

immediate effect.

-ABN Amro, UTI Bank in pact to share ATMs.

-UTI Bank Ltd has informed BSE that a meeting of the Board of Directors of the Bank is

scheduled to be held on October 24, 2002 to consider and take on record the unaudited half

yearly/quarterly financial results of the Bank for the half year/Quarter ended September 30,

2002.

-UTI Bank Ltd has informed that Shri J M Trivedi has been appointed as an alternate director

to Shri Donald Peck with effect from November 2, 2002.

2003

-UTI Bank Ltd has informed BSE that at the meeting of the Board of Directors of the

company held on January 16, 2003, Shri R N Bharadwaj, Managing Director of LIC has been

appointed as an Additional Director of the Bank with immediate effect.


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- UTI Bank, the private sector bank has opeaned a branch at Nellore. The bank's Chairman and

Managing Director, Dr P.J. Nayak, inaugurating the bank branch at GT Road on May 26.

Speaking on the occasion, Dr Nayak said, This marks another step towards the extensive

customer banking focus that we are providing across the country and reinforces our

commitment to bring superior banking services, marked by convenience and closeness to

customers.

-UTI Bank Ltd. has informed the Exchange that at its meeting held on June 25, 2003 the BOD

have decided the following:

1) To appoint Mr. A T Pannir Selvam, former CMD of Union Bank of India and Prof. Jayanth

Varma of the Indian Institute of Management, Ahmedabad as additional directors of the Bank

with immediate effect. Further, Mr. Pannir Selvam will be the nominee director of the

Administrator of the specified undertaking of the Unit Trust of India (UTI-I) and Mr. Jayanth

Varma will be an Independent Director.

2) To issue Non-Convertible Unsecured Redeemable Debentures upto Rs.100 crore, in one or

more tranches as the Bank's Tier - II capital.

-UTI has been authorised to launch 16 ATMs on the Western Railway Stations of Mumbai

Division.

-UTI filed suit against financial institutions IFCI Ltd in the debt recovery tribunal at Mumbai

to recover Rs.85cr in dues.

-UTI bank made an entry to the Food Credit Programme, it has made an entry into the 59

cluster which includes private sector, public sector, old private sector and co-operative banks.

-Shri Ajeet Prasad, Nminee of UTI has resigned as the director of the bank.

-Banks Chairman and MD Dr.P.J.Nayak inaugurated a new branch at Nellore.

-UTI bank allots shares under Employee Stock Option Scheme to its employees.

-Unveils pre-paid travel card 'Visa Electron Travel Currency Card'

-Allotment of 58923 equity shares of Rs 10 each under ESOP.

-UTI Bank ties up with UK govt fund for contract farming


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-Shri B S Pandit, nominee of the Administrator of the Specified Undertaking of the Unit Trust

of India (UTI-I) has resigned as a director from the Bank wef November 12, 2003.

-UTI Bank unveils new ATM in Sikkim

2004

-Comes out with Rs. 500 mn Unsecured Redeemable Non-Convertible Debenture Issue, issue

fully subscribed

-UTI Bank Ltd has informed that Shri Ajeet Prasad, Nominee of the Administrator of the

Specified Undertaking of the Unit Trust of India (UTI - I) has been appointed as an Additional

Director of the Bank w.e.f. January 20, 2004.

-UTI Bank opens new branch in Udupi

-UTI Bank, Geojit in pact for trading platform in Qatar

-UTI Bank ties up with Shriram Group Cos

-Unveils premium payment facility through ATMs applicable to LIC & UTI Bank customers

-Metaljunction (MJ)- the online trading and procurement joint venture of Tata Steel and Steel

Authority of India (SAIL)- has roped in UTI Bank to start off own equipment for Tata Steel.

-DIEBOLD Systems Private Ltd, a wholly owned subsidiary of Diebold Incorporated, has

secured a major contract for the supply of ATMs and services to UTI Bank

-HSBC completes acquisition of 14.6% stake in UTI Bank for .6 m

-UTI Bank installs ATM in Thiruvananthapuram

-Launches `Remittance Card' in association with Remit2India, a Web site offering money-

transfer services


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2005

- UTI Bank enters into a bancassurance partnership with Bajaj Allianz General for selling

general insurance products through its branch network.

-UTI Bank launches its first Satellite Retail Assets Centre (SRAC) in Karnataka at Mangalore.

2006

-UBL sets up branch in Jaipur

-UTI Bank unveils priority banking lounge


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Mission of the organization:

Axis Bank aims to be one of the leading banks running across the globe. This does not just

mean being the largest or the most productive company in the market, rather it is a

combination of several things like-

1) Customer service of the highest order.

2) Value of money for customers.

3) Professionalism in carrying out business.

4) Innovative products to cater to different needs of different customers.

5) Use of technology to improve service standards.

6) Increasing market share.

7) Customer Service and Product Innovation tuned to diverse needs of individual and

corporate clientele.

8) Continuous technology upgradation while maintaining human values.

9) Progressive globalization and achieving international standards.

10) Efficiency and effectiveness built on ethical practices.

Core Values

Customer Satisfaction through

o Providing quality service effectively and efficiently

o "Smile, it enhances your face value" is a service quality stressed on

o Periodic Customer Service Audits

Maximisation of Stakeholder value

Success through Teamwork, Integrity and People


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BRAND VISION AND STRATEGY

AXIS BANK is pursuing a Brand strategy to build one of the finest financial brands in India.

BANK believes that differentiation begins with its service and trust mark embedded in ‗AXIS‘,

which represents the Bank‘s fundamental goal of being a highly service-oriented Financial

Institution. The endeavour at AXIS BANK is to provide an unprecedented Delightful Banking

Experience to all its customers.

The name AXIS signifies -

The essence of the brand completely by conveying all the values and characteristics -

Attractive, Smart, Simple, Serious, Reliable, Trustworthy, Optimistic, Positive,

Efficient, Universal

Clutter breaking in the banking environment, and affirmative with target clients across

business and market segments

Brand Vision and Commitment

To be recognised as the WORLD’s BEST QUALITY BANK IN INDIA

To provide a Delightful Banking Experience to all its customers

To be a long term partner with all stakeholders particularly customers by

creating & sharing value

To be a solid and trusted financial trust mark backed by two professional

promoters and an exceptional management team


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Brand Pillars

The AXIS BANK brand is being built around 5 Key Brand Pillars, which epitomise

the growing strengths of the Bank. All communication and advertising has been

created around these key Brand Pillars

Growth - AXIS BANK's core promise is growth, for it's internal and external

stakeholders.

Trust - BANK's Promoters, Investors and Top Management team, are all of the

highest pedigree with a demonstrated track record, thus inspiring and establishing

a Trust Mark.

Knowledge Driven Human Capital - AXIS BANK has adopted a knowledge

driven entrepreneurial approach to Banking and offers Financial Solutions

beyond the traditional realm of banking.

AXIS BANK's top quality Human Capital represents the finest talents in Indian

banking mobilised from India and abroad.

Technology - AXIS BANK is establishing the highest standards in customer

service by adopting cutting-edge Innovative Technology. The only thing constant

about AXIS BANK's Technology is Evolution.

Transparency & Responsible Banking - AXIS BANK holds Transparency and

Accountability above all else. The Bank has established the most stringent

Corporate Governance norms, and is also committed to Responsible Banking by

focusing on Sustainability and Social Responsibility.


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STORY OF COMPANY’S SUCCESS IN THE RECENT PAST

The Strongest Indian Bank and 5th in Asia Pacific 2008-09: Asian Banker 300.

Best Private Sector Bank 2008: NDTV Profit Business Leadership Award 2008.

Best Debt House in India: Euro money 2008.

Best Bond House in India: Finance Asia 2008.

Best Domestic Debt House in India: Asia Money 2008.

International Presence:

Branches at Singapore, Hong Kong and Dubai.

Representative‘s office at Shanghai and Dubai.

Total assets overseas amounted to US $ 2.30 bn. As compared to US $ 1.66 bn. as at

the end of March ‘08, a growth of 39% yoy.

Performance Highlights (FY 09):

Net Profit - Inc. 69% yoy (581 cr.)

Net Income Interest - Inc. 43% yoy (3686 cr.)

Fee Income - Inc. 64% yoy (2447 cr.)

Operating Revenue - Inc. 50% yoy (1878 cr.)

Operating Profit - Inc. 67% yoy (972 cr.)


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MILE STONES:

Axis Bank launches Platinum Credit Card, India's first EMV chip based card :

March 2008.

Axis Bank gets AAA National Long-Term Rating from Fitch Ratings: Dec. 2007.

Axis Bank ties up with Banque Privée Edmond de Rothschild Europe for Wealth

Management: Sept. 2007.

UTI Bank re-brands itself as Axis Bank: July 2007.

UTI Bank successfully raises USD 1050 million: July 2007.

UTI Bank ties up with IIFCL to provide finance for infrastructural projects in the

country: March 2007.

Finance Minister Shri P. Chidambaram Launches Shriram - UTI Bank Co - Branded

Credit Card Exclusively For Small Road Transport Operators (SRTOS): Feb. 2007.


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History of Banking in India

Without a sound and effective banking system in India it cannot have a healthy economy. The

banking system of India should not only be hassle free but it should be able to meet new

challenges posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its

credit. The most striking is its extensive reach. It is no longer confined to only metropolitans

or cosmopolitans in India. In fact, Indian banking system has reached even to the remote

corners of the country. This is one of the main reason of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends with the

nationalisation of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for getting a draft

or for withdrawing his own money. Today, he has a choice. Gone are days when the most

efficient bank transferred money from one branch to other in two days. Now it is simple as

instant messaging or dial a pizza. Money has become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till today,

the journey of Indian Banking System can be segregated into three distinct phases. They are

as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

New phase of Indian Banking System with the advent of Indian Financial & Banking

Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase 1, Phase 2 & Phase 3.

http://finance.indiamart.com/investment_in_india/banking_in_india.html




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Phase 1.

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and

Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay

(1840) and Bank of Madras (1843) as independent units and called it Presidency Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was established

which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913,

Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank

of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic failures

between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline

the functioning and activities of commercial banks, the Government of India came up with

The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949

as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with

extensive powers for the supervision of banking in India as the Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit

mobilisation was slow. Abreast of it the savings bank facility provided by the Postal

department was comparatively safer. Moreover, funds were largely given to traders.



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Phase2.

Government took major steps in this Indian Banking Sector Reform after independence. In

1955, it nationalised Imperial Bank of India with extensive banking facilities on a large scale

specially in rural and semi-urban areas. It formed State Bank of India to act as the principal

agent of RBI and to handle banking transactions of the Union and State Governments all o ver

thecountry.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th July,

1969, major process of nationalisation was carried out. It was the effort of the then Prime

Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country was

nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 with

seven more banks. This step brought 80% of the banking segment in India under Government

ownership.

The following are the steps taken by the Government of India to Regulate Banking

Institutions in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalisation of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalisation of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to

approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and

immense confidence about the sustainability of these institutions.


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Phase3.

This phase has introduced many more products and facilities in the banking sector in its

reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up

by his name which worked for the liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put to

give a satisfactory service to customers. Phone banking and net banking is introduced. The

entire system became more convenient and swift. Time is given more importance than

money.

The financial system of India has shown a great deal of resilience. It is sheltered from any

crisis triggered by any external macroeconomics shock as other East Asian Countries

suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the

capital account is not yet fully convertible, and banks and their customers have limited

foreign exchange exposure.




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OBJECTIVE OF THE PROJECT

The objective is to gain in-depth knowledge in the banking operations done by Axis Bank

Ltd. The project has focused on the Credit Appraisal and Investment Techniques followed by

the Axis Bank Ltd. In the present competitive market where lots of private players entered,

how the bank sustains its position and going up in the ladder. The project highlights the

uniqueness of the bank in different areas of investment and at the same time different credit

appraisal techniques.

RESEARCH OBJECTIVE

The research which will be based on the primary and secondary data, these data will again be

used for the quantitative as well as qualitative analysis.

The primary objective of the research is to suggest Axis Bank more viable Credit

Appraisal techniques, so that the credibility of the customers can be efficiently

analysed.

It will also serve the purpose of understanding the risk, return and viability of

different investments done by Axis Bank Ltd.


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CREDIT APPRAISAL

INTRODUCTION:

Credit appraisal is the process by which a lender appraises the creditworthiness of the

prospective borrower. This normally involves appraising the borrower‘s payment history and

establishing the quality and sustainability of his income. The lender satisfies himself of the

good intentions of the borrower, usually through an interview.

Credit appraisal is a process to ascertain the risk associated with the extension of the credit

facility. It is generally carried by the financial institutions which are involved in providing

financial funding to its customers. Credit risk is a risk related to the non-payment of the credit

obtained by the customer of a bank. Thus it is necessary to appraise the credibility of the

customer in order to mitigate the credit risk. Proper evaluation of the customer is performed,

which measures the financial condition and the ability of the customer to repay the loan in

future. Generally the credit facilities are extended against the security known as collateral.

But even though the loans are backed by the collateral, banks are normally interested in the

actual loan amount to be repaid along with the interest. Thus the customer‘s cash flows are

ascertained to ensure the timely payment of the principal and the interest.

CREDIT RATING / SCORING:

Credit scoring is the statistical system used by lender to determine the credit worthiness of

the borrower. Information about him and his credit experiences is collected from his loan

application and credit report. Using a statistical program, lender compares this information to

the credit performance of consumers with similar profiles.

A credit scoring system awards points for each factor that helps in predicting who is most

likely to repay a debt. A total number of points, i.e.‖ a credit score‖ helps in predicting how

creditworthy the borrower is, i.e. how likely it is that the borrower will repay a loan and make

the payment when due.


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The points are distributed in various aspects of profile such as:-

1) Personal Information:

Age

Educational Qualification

Number of Dependents / Children

Spouse‘s Income, e.t.c.

2) Employment Information:

Organisation

Designation

Duration of Service, e.t.c.

3) Income Information:

Net Income

Instalment of other Loans

Other Liabilities, e.t.c.

4) Net Worth Information:

Owning a House

Vehicles

Credit Cards

Telephone, e.t.c.

5) Previous Relation with the Lender:

Banking Account

Credit Cards

Any other Loans from same lender

Level of education can give an indication to the lenders, whether it is a good risk to extend

credit. Higher the education better is the credit score. A person with the professional

qualifications is given more points than a simple graduate.


26

Lenders prefer people who are stable. So, lenders assign more points to people who‘ve lived

in a particular location or have worked for a single employer for many years. If you‘ve

moved around a lot, you lose precious points. If you‘ve moved because of a better-paying

job, you can recoup some of those points if your salary has increased, for example.

Lenders rate borrower‘s profession and his employers too. Most of the lenders have a list of

approved companies. Credit points are allotted based on the type of company they work for

or the type of profession they are in. The rating from most favoured to least favoured

profession / organization may vary from lender to lender however an indicative list is

presented here under:

a) Government / Public Sector Undertaking / MNCs.

b) Teaching / Educational Institutions.

c) Scientist / Engineers.

d) Banks / Financial Institutions.

e) Chartered Accountants / Company Secretaries.

f) Hotels / Travel Organisations, e.t.c.


27

CHAPTER- 2

REVIEW

OF

LITERATURE


28

Making Customer Relationship Management Work:

Evidence from the Banking Industry in Taiwan

Authors: Nan-Hong Lin a; Wen-Chun Tseng b; Yu-Chung Hung c; David C. Yen d

Affiliations:

a Department of Business Management, Tatung University, Taipei, Taiwan,

Republic of China

b Accounting Section of Office of General Affairs, National Hualien

University of Education, Hualien, Taiwan, Republic of China

c Department of Accounting and Information Technology, National Chung

Cheng University, Minhsiung, Chiayi, Taiwan, Republic of China

d Department of DS and MIS, Miami University, Oxford, OH, USA

DOI: 10.1080/02642060701846788

Publication Frequency: 12 issues per year

Published in: The Service Industries Journal

First Published on: 29 May 2009

Subjects: Business & Management; Service Industries

http://www.informaworld.com/smpp/title%7Edb=all%7Econtent=t713636505

http://www.informaworld.com/smpp/browse%7Edb=all%7Ething=title%7Eby=subject%7Eappend=714594181,714594220#subject714594220

http://www.informaworld.com/smpp/browse%7Edb=all%7Ething=title%7Eby=subject%7Eappend=714594289,714594181,714594323#subject714594323


29

Abstract

Soon after becoming a WTO member, Taiwan found the internationalisation and

liberalisation in the financial industry ushered its domestic banks into a new era. In response

to this global trend, all its banks strove to rely on customer relationship manageme nt (CRM)

to enhance customer value (CV). This study aims to probe further into the connection

between CV and CRM. A series of examinations revealed that (1) both functional and social

value impact customer behaviour directly and positively; (2) customer satisfaction positively

and directly affects customer loyalty; (3) a positive and direct relationship exists between

customer loyalty and customer behaviour; and (4) the positive and significant relationship

between CV and customer behaviour can be developed through mediators such as customer

satisfaction and customer loyalty. Consequently, banks should offer their customers different

services, products, and marketing channels to meet their diversified needs to cultivate a win-

win environment of CRM for both parties.

Keywords: customer value; customer relationship management; RFM model; 80/20 Law

Measuring Customer Relationships:

The Case of the Retail Banking Industry

Authors: Venky Nagar, Madhav V. Rajan

DOI: 10.1287/mnsc.1050.0376

Affiliations: University of Michigan, 701 Tappan Street, Ann Arbor, Michigan 48109

Graduate School of Business, Stanford University, 518 Memorial Way, Stanford, California

94305

First Published on: 6, June 2005

Subjects: Management Science

http://www.informaworld.com/smpp/browse%7Edb=all%7Ething=title%7Eby=subject%7Eappend=714594181,714594220#subject714594220


30

Abstract

Arguing that GAAP is ill suited for estimating the future profitability of intangibles, the

accounting literature (e.g., Kaplan and Norton 1996, Lev 2001) has recently proposed

alternative measurement models. These models view intangibles as composed of a set of

fundamental business activities and use multiple financial and nonfinancial metrics causally

interlinked to profits to represent this view. Using a unique and proprietary cross-sectional

data set of the retail banking industry, we provide some of the first tests on the empirical

validity of such measurement models. We characterize the core deposit intangible, an

important retail banking intangible representing a bank‘s relationships with its customers,

using financial and nonfinancial metrics on price, service, customer usage, and customer

satisfaction. We find that the metrics do not individually predict future earnings, but gain

individual significance in a collective setting, increasing the predictive power substantially.

We argue that this result occurs because the activities underlying the measures are causally

interlinked to profits and explicitly illustrate these linkages with a structural path model. Our

measurement model also predicts significant interactive effects in the way our measures are

informative about future profits, and we document such effects, not just among the individual

measures, but also across the measures and environmental factors such as the bank‘s strategy.

In sum, our measurement model illustrates the key drivers, measures, and interactions in retail

banking customer relationships.

Key Words: nonfinancial measures; balanced scorecard; retail banking


31

Corporate Disclosure and Operational Strategy:

Financial vs. Operational Success

Mehmet Ozbilgin, Mark Penno

Zicklin School of Business, Baruch College, City University of New York, One Bernard

Baruch Way, New York, New York 10010

Tippie College of Business, The University of Iowa, 108 John Pappajohn Business Building,

Iowa City, Iowa 52242-1000

[email protected]

[email protected]

We introduce a simple game between two rival firms—a leader and a follower, where the

leader moves first and makes an operational choice under uncertainty. The leader‘s disclosure

of its resulting financial success or failure may in turn give the follower a competitive

advantage by informing its operational choice. When this occurs, the leader reacts by

sometimes making an operational choice that it knows to be less likely to produce operational

success than the alternative. This makes the financial report less useful to the follower and

expected financial success more likely for the leader. Alternatively, when the financial report

does not provide useful information to the follower (e.g., the financial report aggregates many

activities in addition to the activity the follower is interested in), it may be the follower rather

than the leader who makes the choice less likely to be operationally successful. We document

that when trading off operational success for financial success, the leader‘s aim is operational

unpredictability, while the follower‘s aim is coordination. As such, this paper highlights the

intricate interplay between internal operational decisions, public inferences concerning those

decisions, and different forms of success under intense competition.

Key Words: operational efficiency; competitive advantage; financial disclosure

History: Received: November 4, 2003;

mailto:[email protected]

mailto:[email protected]


32

Research Note: A Dynamic Programming Approach to Customer

Relationship Pricing

Authors: Michael Lewis

DOI: 10.1287/mnsc.1050.0373

Affiliations: Department of Marketing, University of Florida, Bryan Hall, Gainesville,

Florida 32611

Abstract

The practice of offering discounts to prospective customers represents a rudimentary form of using

transaction history measures to customize the marketing mix. Furthermore, the proliferation of

powerful customer relationship management (CRM) systems is providing the data and the

communications channels necessary to extend this type of pricing strategy into true dynamic

marketing policies that adjust pricing as customer relationships evolve. In this paper, we describe a

dynamic programming–based approach to creating optimal relationship pricing policies. The

methodology has two main components. The first component is a latent class logit model that is

used to model customer buying behavior. The second component is a dynamic optimization

procedure that computes profit-maximizing price paths. The methodology is illustrated using

subscriber data provided by a large metropolitan newspaper.

The empirical results provide support for the common managerial practice of offering

discounts to new customers. However, in contrast to current practice, the results suggest the

use of a series of decreasing discounts based on the length of customer tenure rather than a

single steep discount for first-time purchasers. The dynamic programming (DP) methodology

also represents an important approach to calculating customer value (CV). Specifically, the

DP framework allows the calculation of CV to be an explicit function of marketing policies

and customer status. As such, this method for calculating CV accounts for the value of

managerial flexibility and improves upon existing methods that do not model revenue and

attrition rates as functions of marketing variables.

Key Words: pricing research; customer relationship management; customer valuation

February 20, 2004;


33

CHAPTER- 3

RESEARCH

METHODOLOGY


34

METHODOLOGY FOLLOWED IN THE PROJECT

Mythology forms a strong platform for any kind of study. Methodology should be scientific

and simple that should cover all the aspect of the study so that it can make the study more

fruitful and reduce the time taken in the study. It should be stepwise and broad so that it can

cover all related areas of the study. Methodology removes error and repetition of any kind of

work.

In this summer training project report I followed a simple and strong methodology that covers

all the related topic of the subject. I followed the following simple steps

1. Studying and collecting information about the topic that I have been given in summer

training. The purpose of collecting such information is to get the answer the simple

question and begin the project with a strong base or platform.

In order to learn and observe the practical applicability and feasibility of various

theories and concepts, the following sources were followed and referred to which are

as follows:

a. Primary Source of Information:

Meetings with the project guide and staff members..

Meetings with the staff members of credit division.

b. Secondary Sources of information

RBI guidelines regulating the activities of the banks w.r.t. to credit

appraisal methods and techniques.

Research papers, power point presentations and other PDF files prepared

by the bank and its related officials.

Books related to credit appraisal.


35

2. Several questions are been searched out like what is credit appraisal? What is the

need for credit appraisal? Why any bank considers them important tool for lending?

What is risk management and what is the need of risk management Etc.

3. Then to know about the credit appraisal procedure and risk analysis procedure. This

will help me to get the overview of the work that I have to do during my summer

training.

4. Collecting data stepwise.

5. Analysis and interpretation of the data collected and put the analyzed data into a

proper sequence

6. Made out the findings & conclusion based on the findings

7. Give suggestion to the bank on the findings and results


36

Questionnaire

This structured questionnaire will help us in understanding your needs. All

information you provide us will remain highly confidential, will not be

disclosed in any form to any other organization and will be used for no other

purpose than to prepare a proposal.

1. Name_______________

2. Gender __________

3. Age / DOB _______________

4. Marital Status: ____________

5. If Married, Child: Y / N _______

6. Child’s Age _____________


37

7. Educational Qualification __________________

8. Annual Income _____________

9. Profession _____________

10. Contact No. _______________

11. E-mail __________________________

12. Do you have any past relationship with the axis bank in terms of

loan?

Yes No

13. Job Description

Salaried Self Employed


38

14. Number of years in the same profession

a) 0-5 b) 6-10 c) more than 10

15. Any other loan in past.

Yes No

If, Yes give details ____________________

16. Owning of house?

Yes No Planning To

17. Owning of four wheeler?

Yes No Planning To


39

AIM OF THE HANDY QUESTIONNAIRE

1) EASY PROCESS OF DISTRIBUTION OF LOAN

2) REDUCE THE DEFAULT BY CREDIT APPRAISAL

3) PRIMARY DATA IN THE HAND OF THE EMPLOYEE

4) EASY AVALIABLE INFORMATION OF THE BORROWER

5) DATA BASE OF BORROWER CAN BE EASILY MAINTAINED


40

OVERVIEW OF BANKING OPERATIONS

FOLLOWED BY AXIS BANK LTD.

BANKING OPERATIONS

CORPORATE BANKING

DEPT.

TREASURY DEPT.

AGRICULTUE & SME

BANKING

BUSINESS BANKING

CAPITAL MARKET

RETAIL BANKING


41

CORPORATE BANKING DEPT.

1. LARGE CORPORATE CREDIT

2. MID CORPORATE CREDIT

TREASURY DEPT.

1. FOREGIN EXCHANGE TRADING

2. SLR & MONEY MARKET TRADING

3. DERIVATIVES TRADING

AGRICULTURE & SME BANKING

1. AGRICULTURE

RETAIL AGRI.

CORPORATE AGRI.

COMMODITY AGRI.

MICROFINANCE.

2. SME

SCHEMATIC LOAN

NON-SCHEMATIC LOAN


42

BUSINESS BANKING

CASH MANAGEMENT SERVICES

CAPITAL MARKET

PLACEMENT & SYNDICATION OF DEBT ISSUES.

RETAIL BANKING

1. ACCOUNT OPENING.

CURRENT A/C

SAVINGS A/C

FIXED DEPOSITES

2. CARDS.

CREDIT CARDS

DEBIT CARDS

3. INSURANCE POLICIES.

4. VALUE ADDED SERVICES.

BILLS PAYMENT

SAFE VAULT


43

BUSINESS OVERVIEW

The performance of individual business segments during 2008-09 and their future strategies

are presented below:

RETAIL BANKING

The Bank has pursued an effective strategy over the years todevelop the retail liabilities

business, the success of which is reflected in the fact that savings bank deposits have grown

at a Compounded Annual Growth Rate (CAGR) of 64% between the years 2000 and 2009.

Savings bank deposits grew to Rs. 25,822 crores on 31st March 2009 from Rs. 19,982 crores

on 31st March 2008 registering a year-on-year growth of 29%. On a daily average basis,

savings bank deposits during the year grew by 42.41%. The following chart demonstrates the

strategic roadmap that the Bank has drawn up over the years in tune with changing market

dynamics, regularly building in initiatives that have enabled the Bank to stay ahead of

competition and to avoid the law of diminishing returns. Some of these strategic initiatives

have been the setting up a large and widespread network of ATMs, the creation of a

differentiated sales model, adoption of a customer-centric segmentation and the

implementation of an enterprise-wide strong cross-sell initiative. The Bank's ATM network

has grown rapidly over the years and during the financial year 2008-09 the Bank has added

831 ATMs to reach 3,595 ATMs on 31st March 2009, showing a growth of 30% over last

year. The Bank today has 4.35 ATMs for every Branch, a ratio that is higher than that of its

peers. The Bank has also built a sizeable sales force of over 3,800 personnel on its own

payroll. With a structured training programme, an attractive incentive structure and a well-

defined career path, the sales team has grown to become a powerful customer-acquisition

unit. In 2008-09, the Bank acquired 23,16,887 new accounts, an increase of 20% over the

previous year. The new accounts acquisition has brought in underlying balances of Rs. 7,873

crores this year against Rs. 7,529 crores in the previous year.


44

CORPORATE BANKING

Corporate banking business provides a variety of products and services to large and mid-size

corporates that include credit, trade finance for domestic as well as international transactions,

structured finance, project finance and syndication services through separate SBUs such as

large and mid-corporate credit, treasury, business banking and capital markets. The Bank

continues to pursue a two-pronged strategy of widening the customer base as well as

deepening existing client relationships. A careful choice of new relationships based on

appropriate risk-return guidelines forms the basis for the strategy of widening the customer

base. A deepening of existing client relationships is achieved by a careful account strategy

focusing on increasing the cross-sell of various corporate banking products as also products

from other businesses of the Bank, including investment banking and retail products.

CORPORATE CREDIT

During the year, large and mid-corporate advances grew by 41.98% to Rs. 41,211 crores from

Rs. 29,026 crores in the previous year. This includes advances at overseas branches

amounting to Rs. 10,166 crores (equivalent to USD 2.0 billion) comprising mainly the

portfolio of Indian corporates and their subsidiaries, as also trade finance. Corporate banking

has continuously increased its focus on risk management and on improving portfolio quality.

The Bank has in place procedures and practices to ensure regular updation of risks taken by

the Bank on various client accounts. Portfolio diversification remains the key for managing

asset quality and preventing concentration risks. Relationship groups in the Bank are

organized with an industry-sector focus for better evaluation of specified risks. The credit

policy of the Bank has also put in place ceilings on exposures to various industries with a

view to containing concentration risk and facilitating portfolio diversification. In keeping

with the Bank's strategy to diversify risks, the highest exposure to any individual sector was

11.69% of the Bank's total exposure. While the entire corporate lending portfolio was

internally rated with 79.21% of large corporate assets being rated A and above, 73.12% of the

large corporate loans has been externally rated. Efforts were made through the year to offer

integrated corporate banking solutions to the Bank's clientele, which resulted in significant

growth in core fee income. The Mid-Corporate Group, created as a result of reorganization of

the Corporate Credit group last year, has now emerged as an important business segment for

the Bank. As on 31st March 2009, the Mid-Corporate credit portfolio stood at Rs. 9,679


45

crores. This includes advances to Mid-Corporate of Rs. 698 crores through the Bank's

overseas branches. The Mid-Corporate Group has a healthy yield on advances at 11.86%,

besides having created a strong fee-based earning stream. While the selection criteria are

stringent and strongly underpinned by a rigorous risk assessment process, the Bank's clients

are offered the entire bouquet of corporate banking products, thus ensuring a better value

proposition for the Bank's clients. The economic downturn has had an adverse impact on

several Mid-Corporates, and this has particularly affected sectors like Textiles, Gems and

Jewellery, and Auto Ancillaries. The Group's facilitating approach has, however, helped it

maintain a high level of asset quality. Going forward, while maintaining a close vigil on asset

quality, the Bank will continue to source corporate relationships, which demonstrate the

ability to grow into large sized businesses.

TREASURY

The Bank has an integrated Treasury, which covers both domestic and global markets and

funds the balance sheet across locations.

The dealing rooms in Mumbai, Singapore, Hong Kong and DIFC assist customers in

managing their interest rate and foreign currency exposures, simultaneously maintaining

proprietary positions to generate trading income for the Bank. A major part of the year was

marred by the turmoil in the global financial markets and the management of liquidity

assumed top priority. Balance sheet management acquired greater importance with stressed

liquidity conditions during the year, which eased during the last quarter of the financial year

as a consequence of several monetary easing steps taken by Reserve Bank of India. In spite of

the volatility observed in the bond markets, the Bank's thrust was on maximizing profits and

the portfolio yield. The Bank's investments in government securities were dynamically

managed around duration, and the portfolio yielded a return of 7.42%. Incrementally, efforts

were directed at risk containment of the portfolio due to the rise of illiquidity in the markets.

Currency Futures were introduced in India in August 2008. The Bank started trading on the

very first day of the introduction of Currency Futures. The Bank continued its emphasis on

developing the customer business in foreign exchange, which saw a rise in turnover of over

85%. Proprietary trading in foreign exchange was also very profitable. The Bank sustains the

growth in customer driven forex business by strengthening existing relationships, acquiring

new clients and providing value-added services to clients.


46

BUSINESS BANKING

The Business Banking initiatives have consistently focused on procuring low cost funds by

offering a range of current account products and cash management solutions across all

business segments covering corporates, institutions, central and state government ministries

and undertakings, as well as small and retail business customers. Cross-selling of

transactional banking products to develop account relationships, aided by product innovation

and a customer-centric approach, have borne fruit in the form of growing current account

balances and increasing realisation of transaction banking fees, apart from enlarging the

customer base. The sourcing of current accounts is a critical enabler for the growth of the

balance sheet. As of 31st March 2009, current account balances for the Bank stood at Rs.

24,822 crores, as against Rs. 20,045 crores on 31st March 2008, a growth of 24%. On a daily

average basis, current accounts grew from a level of Rs. 11,834 crores on 31st March 2008 to

Rs. 14,658 crores on 31st March 2009. There was a greater focus on acquisition of high-value

current accounts by satisfying the needs of these value-based customers, thus maintaining the

pace of growth in current account balances.

Additionally, the launch of new and innovative products focusing on specific segments like

inland road transport, supplemented the efforts for efficiently targeting balances from these

segments. During the year, the Bank also introduced a new zero balance current account

product for traders with local business requirements, aiming specifically at generating upfront

fee income.

With the objective of providing various alternative platforms to business clients for satisfying

their transactional banking needs, the Bank introduced improved offerings under mobile

banking and internet banking, resulting in a surge in client registration and usage.


47

LENDING TO MICRO, SMALL AND MEDIUM ENTERPRISES,

AGRICULTURE AND MICRO FINANCE

The Micro, Small and Medium Enterprises (MSME) Sector is the backbone of the Indian

economy contributing significantly to economic growth, employment generation, poverty

alleviation and balanced regional development. The sector has the second largest share of

employment after agriculture, with more than half of those employed being women. Lending

to the MSME Sector forms a major part of the Bank's credit portfolio to the non-farm sector

and contributed 28.44% to the Bank's priority sector advances. This constitutes an important

area of lending for the Bank, and to fully exploit the large business potential in this sector the

Bank has set up 24 SME Centres across the country to extensively focus on the credit

requirements of MSME clients. The Bank has built strong sales and relationship teams to

source new relationships and deepen existing ones, and has strengthened the credit appraisal

teams to improve the quality of credit appraisal and reduce the turnaround time.

The lending to MSME continued to be impressive and the Bank achieved its overall priority

sector lending commitments. The Bank looks at agri-business as an inclusive and profitable

business proposition. The strategy was to finance the value chain and foster corporate

partnerships. During the year, seven Agri Business Centres were created to exclusively focus

on high potential geographies. At Agri Business Centres, the business is carried out under

three segments: retail agriculture, corporate agriculture and commodity business (i.e.

financing against warehouse receipts). These customer specific segments are manned by

separate officers and offer a wide range of products suitable for each segment. The retail

agriculture organisational model consists of 46 strategically placed agriculture clusters, and

the Bank offers its retail agri products to farmers through 249 of its branches. This has helped

in raising levels of business without any compromise on risk management or customer

service. The corporate agriculture team consists of client-specific relationship managers and a

team of credit analysts having sectoral expertise. Under commodity business, the Bank has

created 9 commodity business centres to which 74 branches are linked. Besides relying on the

services of collateral managers, the Bank also has an exclusive team of officers for onsite and

offsite monitoring, so as to avoid operational, market and credit risks and these teams are

provided with a state-of-the-art software, developed by Bank's IT team. The agricultural

loans outstanding formed 11.51% of the Bank's domestic loan book. The total agriculture

loan outstanding in theBank was 15.14% of the Bank's Adjusted Net Bank Credit (ANBC).


48

During the year, the Bank's agricultural borrower base grew by 33.45% over the previous

year and closed with 1,42,789 clients. The Bank believes that micro-credit and microfinance

services are major enablers of financial inclusion to the under privileged sections of society.

The microfinance business gained significant momentum during the year with an impressive

growth of 80% in the portfolio. In our endeavor to focus on a steady and disciplined growth

of the micro finance business, we partnered with highly redible Micro Finance Institutions

(MFIs) across the country. The Bank has 86 microfinance relationships in 18 states of which

4 are in the North East with a corresponding client outreach of around 18.50 lacs. Most of the

beneficiaries are poor women engaged in small and marginal enterprises. In line with our

overall strategy to support MFIs operating in underdeveloped parts of the country, we have

supported upcoming MFIs in remote areas of Bihar, Tripura and Madhya Pradesh. The Bank

also continued its strategy of extending loans under various central government sponsored

schemes.

INTERNATIONAL BANKING

The international operations of the Bank are at the core of the strategy to expand the horizon

of the product offerings and delivery channels to various geographies and across client

segments, covering the spectrum of retail and corporate banking solutions. The international

presence of the Bank now comprises branches in Singapore, Hong Kong and DIFC-Dubai,

and representative offices in Shanghai and Dubai, besides alliances with banks and exchange

houses in the Gulf Cooperation Council (GCC) countries. While the foreign branches

primarily offer corporate banking, trade finance, treasury and risk management solutions, the

Bank's retail initiatives in the GCC caters to the large Indian diaspora and promotes the

Bank's NRI products.

In a year marked by an unprecedented upheaval of the financial markets that has changed the

contours of the global financial system, the international operations of the Bank displayed

resilience and recorded impressive growth in assets and deposits, and maintained

profitability. The total assets of the foreign branches now constitute 7.90% of the total assets

of the Bank and grew by 38.55% to touch USD 2.30 billion from USD 1.66 billion a year

ago. Despite the prevailing recessionary trends in the developed world economies, the asset

quality at foreign offices continues to be satisfactory with zero level of non-performing

assets.


49

RISK MANAGEMENT

The role of risk management focuses strongly on anticipating vulnerabilities in a deteriorating

situation, and initiating curative measures proactively through quantitative and qualitative

assessments of such embedded risks. The Bank has developed in-house skills to manage key

areas of risk viz., credit risk, market risk and operational risk. The Bank's risk management

approach relies on the establishment of comprehensive processes and internal control

mechanisms. The Bank's risk management processes are guided by well-defined policies

appropriate for the various risk categories, independent risk oversight and periodic

monitoring through the sub-committees of the Board. The Board sets the overall risk appetite

and philosophy for the Bank. The Committee of Directors and the Risk Management

Committee, which are sub-committees of the Board, review various aspects of risk arising

from the businesses undertaken by the Bank. Senior management committees such as various

credit and investment committees, the Asset-Liability Committee (ALCO), the Operational

Risk Management Committee (ORMC) and the Credit Risk Management Committee

(CRMC) operate within the broad policy framework of the Bank.

Credit Risk

The Bank's credit risk management process integrates risk management into the business

management processes, while preserving the independence and integrity of risk assessment.

Emphasis is placed on evaluation and containment of risk at the level of individual

counterparty exposures, and analysis of portfolio behavior. The use of sophisticated

modelling techniques to contain credit risk is also being used for effective and continuous

monitoring. The credit risk management framework integrates quantitative processes with

qualitative judgement to support orderly growth in the asset book while ensuring an

acceptable risklevel in relation to return.

The growth in the asset book of the Bank during the year highlights the importance of

prudent credit risk management practices both at the individual obligor level as well as at the

portfolio level. The Bank has a structured and standardized credit approval process, which

includes a well-established procedure of comprehensive credit appraisal. The internal credit

rating system continues to provide integrity, credibility and objectivity to the lending process

to ensure an acceptable risk level in relation to the expected return. Portfolio level risk


50

analytics provide insight into capital allocation required to absorb unexpected losses at a

defined confidence level.

Dimensions of portfolio level risk analysis carried out by the Bank includes ensuring optimal

spread of risk across various rating classes and prevent undue risk concentration across

various industry segments in the portfolio.

A graphical representation highlighting the spread of risk across various rating grades for

large corporates and the MSME portfolio

Market Risk

Market risk is the risk to the Bank's earnings and capital due to changes in the market level of

interest rates, prices of securities, foreign exchange and equities, as well as the volatilities of

those changes. The Bank is exposed to market risk through its trading activities, which are

carried out for customers as also on a proprietary basis. The Bank adopts a comprehensive

approach to market risk management for its trading, investment and asset/liability portfolios.

For market risk management, the Bank uses both nonstatistical measures like position, gaps

and sensitivities (duration, PVBP, option greeks) and statistical measures like Value at Risk

(VaR), supplemented by stress tests and scenario analysis.

The Bank uses historical simulation and its variants for computing VaR for its trading

portfolio. VaR is calculated at a 99% confidence level for a one-day holding period. The VaR

models for different portfolios are back-tested at regular intervals and the results are used to

maintain and improve the efficacy of the model. The VaR measure is supplemented by a

series of stress tests and sensitivity analysis that estimates the likely behaviour of a portfolio

under extreme but plausible conditions and its impact on earnings and capital.

Liquidity Risk

Liquidity Risk is defined as the current and prospective risk to earnings or capital arising

from a bank's inability to meet its current or future obligations on the due date. The Bank's

ALM policy defines the gap limits for its structural liquidity position. The liquidity profile of

the Bank is analyzed on a static basis by tracking all cash inflows and outflows in the

maturity ladder based on the expected occurrence of cash flows. The liquidity profile of the

Bank is also estimated on a dynamic basis by considering the growth in depositsand loans,

investment obligations, etc. for a short-term period of three months. The Bank's ability to

meet its obligations and fund itself in a crisis scenario is critical and, accordingly, liquidity


51

stress tests are conducted under different scenarios at periodic intervals to assess the impact

on liquidity of stressed conditions.

The liquidity positions of overseas branches are managed in line with the Bank's internal

policies and host country regulations. Such positions are also reviewed centrally by the

Bank's ALCO along with domestic positions.

Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes,

people and systems or from external events. A policy on management of operational risk has

been approved by the Bank to ensure that operational risk within the Bank is properly

identified, monitored and reported in a structured manner, and this policy is reviewed

annually. The Bank has an Operational Risk Management Committee to oversee application

of the aforesaid policy directives. Each new product, process or service introduced by the

Bank is subjected to a rigorous risk review and signoff process by the Product Management

Committee where all relevant risks are identified and assessed by departments independent of

the risk-taking unit proposing the product, process or service. Changes proposed to the

existing products/processes as well as outsourcing activities are also subjected to a similar

process by the Change Management Committee and the Outsourcing Committee respectively.

The IT Security Committee of the Bank provides direction for mitigating the operational risk

in Information Systems. The business units put in place the internal controls as approved by

such committees to ensure a sound and well controlled operating environment in respect of

various activities of the Bank.


52

CORPORATE BANKING OPERATIONS

Corporate Banking Operations (CBO) within the Bank involves monitoring the accounts of

large/mid-corporates and SME customers while ensuring compliance with the regulatory

guidelines and systems and procedures of the Bank in the conduct of credit operations. CBO

Division is created at branches where advances exceed Rs. 50 crores, in order to ensure that

the operational risks in monitoring the advances and other related issues are well mitigated.

In case of other branches, trained and experienced manpower is posted when the number of

borrowal units and the advances level exceed a minimum threshold level. As part of business

process re-engineering, 8 city specific centralised CBO Hubs called Credit Management

Centres (CMCs) have been opened during the year for standardizing the skill pool for

efficient monitoring and control of advances. Facilitation Centres have been set up at select

branches of these 8 centres for providing prompt customer service in co-ordination with

CMC. Other branches located at these cities have been mapped to the closest facilitation

centres for all their credit, domestic trade finance and related operations. CBO Divisions and

CMCs handled 86% of the Bank's total domestic non-retail credit portfolio, ensuring that

trained and experienced personnel are monitoring a substantial percentage of advances.

CAPITAL MARKETS

The Bank's Capital Markets business encompasses activities both in the equity capital

markets and the debt capital markets. The equity capital markets activities involve providing

advisory and placement services pertaining to the raising of equity and quasiequity funds by

its corporate clients. The Bank is a SEBI-registered Category I Merchant Banker with

experience in the management of public and rights issues. The Bank provides debt capital

market services by acting as advisors and arrangers for raising Rupee and foreign currency

loans, foreign currency convertible bonds and Rupee-denominated bonds. The Bank has

continued to retain its leadership position in the domestic debt market and during 2008-09 has

syndicated an aggregate amount of about Rs. 69,000 crores by private placement of bonds,

debentures and term loans. Prime Database has ranked the Bank as the number 1 arranger for

private placement of bonds and debentures till 31st December 2008. Bloomberg has also

ranked the Bank as number 1 in India Domestic Bonds League table for the calendar year

2008. The Bank has been rated as the Best Bond House in India for the financial year 2008

by Finance Asia, Best Domestic Debt House in India for 2008 by Asia Money and Best Debt

House - India in the 2008 Euromoney Awards for excellence, and India Bond House 2008 in


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the IFR Asia Awards 2008. The Bank's Capital Markets Business also involves provid ing

corporate restructuring advisory services, mergers and acquisitions (M&A) advisory services,

arranging services for acquisition funding, infrastructure and project advisory services,

techno-economic feasibility reports, business plan preparation and bid process management.

The Bank has carved out the trusteeship business, hitherto a part of capital markets business

into a separate subsidiary company to enhance its functioning. The Bank has also started

providing custodial services.

During 2009-10, opportunities will be available in the private placement of equity, M&A

advisory and domestic bond placement. The Bank will continue to focus on project and

corporate finance by raising both debt and equity funds for various infrastructure and

manufacturing projects. The Bank also maintains an investment and proprietary trading

portfolio in corporate bonds and equities. As on 31st March 2009, the Bank's investment in

corporate bonds, equities and others was Rs. 18,603 crores against Rs. 13,526 crores in the

previous year. Of this as on 31st March 2009, the Bank has made investment of USD 152

million at overseas branches as against USD 153 million in the previous year.


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THE LOAN PROCESS

1. Pre-Qualification

2. Mortgage Programs and Rates

3. The Application

4. Processing

5. Required Documents

6. Credit Reports

7. Appraisal Basics

8. Underwriting

9. Closing

10. Summation

1. Pre-Qualification:

Pre-qualification starts the loan process. Once a lender has gathered information about

a borrower's income and debts, a determination can be made as to how much the

borrower can pay for a house. Since different loan programs can cause different

valuations a borrower should get pre-qualified for each loan type the borrower may

qualify for.

In attempting to approve homebuyers for the type and amount of mortgage they want,

mortgage companies look at two key factors: first, the borrower's ability to repay the

loan; and second, the borrower's willingness to repay the loan.

Ability to repay the mortgage is verified by your current employment and total

income. Generally speaking, mortgage companies prefer for you to have been

employed at the same place for at least two years, or at least be in the same line of

work for a few years.

http://myhomeloanmap.com/?s=MYHOMELOANMAP&p=loan_process.ascx#1











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The borrower's willingness to repay is determined by examining how the property

will be used. For instance, will you be living there or just renting it out? Willingness

is also closely related to how you have fulfilled previous financial commitments,

hence the emphasis on the Credit Report and/or your rental payment history.

It is important to remember that there are no rules carved in stone. Each applicant is

handled on a case-by-case basis. So even if you come up a little short in one area,

your stronger point could make up for the weak one. Mortgage companies couldn't

stay in business if they didn't generate loan business, so it's in everyone's best interest

to see that you qualify.

2. Mortgage Programs and Rates:

To properly analyze a Mortgage Program, the borrower needs to think about how long

they plan to keep the loan. If you plan to sell the house in a few years, an adjustable or

balloon loan may make more sense. If you plan to keep the house for a longer period,

a fixed loan may be more suitable.

Shopping for a loan is very time consuming and frustrating. With so many programs

to choose from, each with different rates, points and fees, an experienced mortgage

professional can evaluate a borrower's situation and recommend the most suitable

Mortgage Program, thus allowing the borrower to make an informed decision.

3. The Application :

The application is the true start of the loan process and usually occurs between days

one and five of the start of the loan process. With the aid of a mortgage professional,

the borrower completes an application and provides all required documentation.

The various fees and closing cost estimates will have been discussed while examining

the many mortgage programs and these costs will be verified by a Good Faith

Estimate (GFE) and a Truth-In-Lending Statement (TIL) which the borrower will

receive within three days of the submission of the application to the lender.












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4. Processing:

Once the application has been submitted, the processing of the mortgage begins. The

Processor orders the Credit Report, Appraisal and Title Report. The information on

the application, such as bank deposits and payment histories, are then verified. Any

derogatory credit items, such as late payments, collections and/or judgments require a

written explanation. The processor examines the Appraisal and Title Report checking

for property issues that may require further investigation. The entire mortgage

package is then put together for submission to the lender.

5. Required Document:

If you are purchasing or refinancing your home, and you are salaried you will need to

provide the past two-years W-2s and one month of pay-stubs: OR, if you are self-

employed you will need to provide the past two-years tax returns. If you own rental

property you will need to provide Rental Agreements and the past two-years tax

returns. If you wish to speed up the approval process, you should also provide the past

three-months bank, stock and mutual fund account statements. Provide the most

recent copies of any stock brokerage or IRA/401k accounts that you might have.

If you are requesting cash-out you will need a "Use of Proceeds" letter of explanation.

Provide a copy of any divorce decree if applicable. If you are not a US citizen,

provide a copy of your green card (front and back), or if you are NOT a permanent

resident provide your H-1 or L-1 visa.

If you are applying for a Home Equity Loan you will need to, in addition to the above

documents, provide a copy of your first mortgage note and deed of trust. These items

will normally be found in your mortgage closing documents.


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6. Credit Reports:

Most people applying for a home mortgage need not worry about the effects of their

credit history during the mortgage process. However, you can be better prepared if

you get a copy of your Credit Report before you apply for your mortgage. That way,

you can take steps to correct any negatives before making your application.

A Credit Profile refers to a consumer credit file, which is made up of various

consumer credit reporting agencies. It is a picture of how you paid back the

companies you have borrowed money from, or how you have met other financial

obligations. There are five categories of information on a credit profile:

Identifying Information

Employment Information

Credit Information

Public Record Information

Inquiries

NOT included on your credit profile is race, religion, health, driving record, criminal

record, political preference, or income.

If you have had credit problems, be prepared to discuss them honestly with a

mortgage professional who will assist you in writing your "Letter of Explanat ion."

Knowledgeable mortgage professionals know there can be legitimate reasons for

credit problems, such as unemployment, illness or other financial difficulties. If you

had problems that have been corrected (reestablishment of credit), and your payments

have been on time for a year or more, your credit may be considered satisfactory.

The mortgage industry tends to create its own language and credit rating is no

different. BC mortgage lending gets its name from the grading of one's credit based

on such things as payment history, amount of debt payments, bankruptcies, equity

position, credit scores, etc. Credit scoring is a statistical method of assessing the credit

risk of a mortgage application. The score looks at the following items: past

delinquencies, derogatory payment behavior, current debt levels, length of credit

history, types of credit and number of inquires.


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By now, most people have heard of credit scoring. The most common score (now the

most common terminology for credit scoring) is called the FICO score. This score

was developed by Fair, Isaac & Company, Inc. for the three main credit Bureaus;

Equifax (Beacon), Experian (formerly TRW), and Empirica (TransUnion).

FICO scores are simply repository scores meaning they ONLY consider the

information contained in a person's credit file. They DO NOT consider a person‘s

income, savings or down payment amount. Credit scores are based on five factors:

35% of the score is based on payment history, 30% on the amount owed, 15% on how

long you've had credit, 10% percent on new credit being sought and 10% on the types

of credit you have. The scores are useful in directing applications to specific loan

programs and to set levels of underwriting such as Streamline, Traditional or Second

Review, but are not the final word regarding the type of program you will qualify for

or your interest rate.

Many people in the mortgage business are skeptical about the accuracy of FICO

scores. Scoring has only been an integral part of the mortgage process for the past few

years (since 1999); however, the FICO scores have been used since the late 1950's by

retail merchants, credit card companies, insurance companies and banks for consumer

lending. The data from large scoring projects, such as large mortgage portfolios,

demonstrate their predictive quality and that the scores do work.

The following items are some of the ways that you can improve your credit score:

Pay the bills on time.

Keep balances low on credit cards.

Limit your credit accounts to what you really need. Accounts that are no longer

needed should be formally cancelled since zero balance accounts can still count

against you.

Check that your credit report information is accurate.

Be conservative in applying for credit and make sure that your credit is only checked

when necessary.


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A borrower with a score of 680 and above is considered an A+ borrower. A loan with

this score will be put through an "automated basic computerized underwriting" system

and be completed within minutes. Borrowers in this category qualify for the lowest

interest rates and their loan can close in a couple of days.

A score below 680 but above 620 may indicate underwriters will take a closer look in

determining potential risk. Supplemental documentation may be required before final

approval. Borrowers with this credit score may still obtain "A" pricing, but the loan

may take several days longer to close.

Borrowers with credit scores below 620 are not normally locked into the best rate and

terms offered. This loan type usually goes to "sub-prime" lenders. The loan terms and

conditions are less attractive with these loan types and more time is needed to find the

borrower the best rates.

All things being equal, when you have derogatory credit, all of the other aspects of the

loan need to be in order. Equity, stability, income, documentation, assets, etc. play a

larger role in the approval decision. Various combinations are allowed when

determining your grade, but the worst-case scenario will push your grade to a lower

credit grade. Late mortgage payments and Bankruptcies/Foreclosures are the most

important. Credit patterns, such as a high number of recent inquiries or more than a

few outstanding loans, may signal a problem. Since an indication of a "willingness to

pay" is important, several late payments in the same time period is better than random

lates.

7. Appraisal Basis:

An appraisal of real estate is the valuation of the rights of ownership. The appraiser

must define the rights to be appraised. The appraiser does not create value. The

appraiser interprets the market to arrive at a value estimate. As the appraiser compiles

data pertinent to a report, consideration must be given to the site and amenities as well

as the physical condition of the property. Considerable research and collection of data

must be completed prior to the appraiser arriving at a final opinion of value.

Using three common approaches, which are all derived from the market, derives the

opinion, or estimate of value. The first approach to value is the COST APPROACH.


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This method derives what it would cost to replace the existing improvements as of the

date of the appraisal, less any physical deterioration, functional obsolescence and

economic obsolescence. The second method is the COMPARISON APPROACH,

which uses other "bench mark" properties (comps) of similar size, quality and

location that have recently sold to determine value. The INCOME APPROACH is

used in the appraisal of rental properties and has little use in the valuation of single

family dwellings. This approach provides an objective estimate of what a prudent

investor would pay based on the net income the property produces.

8. Underwriting:

Once the processor has put together a complete package with all verifications and

documentation, the file is sent to the lender. The underwriter is responsible for

determining whether the package is deemed an acceptable loan. If more information is

needed the loan is put into "suspense" and the borrower is contacted to supply more

information and/or documentation. If the loan is acceptable as submitted, the loan is

put into an "approved" status.

9. Closing:

Once the loan is approved, the file is transferred to the closing and funding

department. The funding department notifies the broker and closing attorney of the

approval and verifies broker and closing fees. The closing attorney then schedules a

time for the borrower to sign the loan documentation.

At the closing the borrower should:

Bring a cashier‘s check for your down payment and closing costs if required. Personal

checks are normally not accepted and if they are they will delay the closing until the

check clears your bank.

Review the final loan documents. Make sure that the interest rate and loan terms are

what you agreed upon. Also, verify that the names and address on the loan documents

are accurate.

Sign the loan documents.


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Bring identification and proof of insurance.

After the documents are signed, the closing attorney returns the documents to the

lender who examines them and, if everything is in order, arranges for the funding of

the loan. Once the loan has funded, the closing attorney arranges for the mortgage

note and deed of trust to be recorded at the county recorders office. Once the

mortgage has been recorded, the closing attorney then prints the final settlement costs

on the HUD-1 Settlement Form. Final disbursements are then made.

10. Summation:

A typical "A" mortgage transaction takes between 14-21 business days to complete.

With new automated underwriting, this process speeds up greatly. Contact one of our

experienced Loan Officers today to discuss your particular mortgage needs or Apply

Online and a Loan Officer will promptly get back to you.


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SME FAST TRACK LOANS

Axis Bank offers fast track loans for SMEs under the following schemes:

1) Mpower Term Loan:

Axis Bank's Mpower-TL provides a hassle free way of meeting your business needs

of expansion and other long term funding requirements against the security of

immovable residential or commercial property. Mpower-TL is an EMI based loan and

can be availed by Partnership firms, Private Ltd. Companies and Trusts. Mpower-TL

has the following features:

o Loans upto Rs 5 crores*

o Flexible repayment options of upto 10 years

o Attractive market related interest rates

o Fast processing and quick disbursement

2) Business Loan for Property:

Looking to acquire an office space for your business? Axis Bank's BLFP offers you a

convenient way. It is an EMI based term loan and can be availed by Partnership firms,

Private Ltd. Companies and Trusts. BLFP has the following features:






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3) Power Rent:

Having a rental income from commercial property leased out to reputed corporate or

Public Sector Units or Banks or Insurance Companies? Axis Bank's Power Rent is

just the right product for you. The product offering involves discounting the future

receivables and providing an upfront loan to the landlord, thus extending immediate

liquidity in the hands of the landlord. It is an EMI based term loan, which can be

availed by Proprietors, Partnerships, Private Ltd. Companies and Trusts. Power Rent

has the following features:





4) Power Trade:

At Axis Bank we understand the unique needs of the trader segment and we have

tailor designed a specific product 'Power Trade' to meet your business needs. Axis

Bank's Power Trade is a hassle free and flexible credit facility for meeting your

working capital requirements like Cash Credit, Bills discounting, Export Credit, Bank

Guarantee, Letter of Credit or a term loan.

o Loan upto Rs 2.5 crore*

o Stock statements to be submitted quarterly*

o Tenure - 1 year for Working capital and 3 years for Term Loans


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5) Mpower Overdraft:

Axis Bank's Mpower-OD helps you meet your short-term funding needs and allows

you to leverage every business opportunity that comes your way against the security

of residential or commercial property.


o Tenure - 1 year

o Immovable Property as collateral



6) Enterprise Power:

Axis Bank's Enterprise Power is a unique product designed keeping in mind the

business requirements of Micro and Small Enterprises (MSE).

o Loans upto Rs. 1.00 crore*

o Tenure-1 year for working capital and 3 years for term loan




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7) Equipment Power:

This product is a term loan facility with a tenor upto 48 months for purchase of

construction, medical and office equipments. There is a standard list of equipments,

which the Bank would finance under the scheme and the maximum exposure

permitted under the product is Rs. 100.00 lacs.

8) Zero Collateral Loans to SSI Units:

Collateral free product to facilitates the MSE and software/IT related services to avail

both working capital and term finance from the Bank. The facility is secured by

guarantee cover of Credit Guarantee Fund Trust for Micro and Small Enterprises

(CGMSE). Maximum loan amount under the product is Rs. 50 lacs.


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THE BANK APPLICATION PROCESS

Essential Information:

Business Description: Usually completed on a Bank‘s application form. Be

prepared to provide company details such as address, telephone number, contact

names, tax registration numbers and other general information about your company.

Balance Sheet: Financial statement showing company assets, liabilities and equity.

(start up companies provide projections only)

Income Statement or Profit/loss Statement: Financial statement showing sales,

expenses and profit over a period of time. (start up companies provide projections

only)

Cash Flow Projections: Financial statement outlining the sources and uses of funds

over a period of time.

Statement from each owner outlining personal assets and obligations (if the owners

are providing a personal guarantee)

Additional Information:

In general, a Bank will require more information as the loan value increases.

Business plan

Projected balance sheet

Projected income statement

Personal tax returns from each owner

Business tax return

Credit history search on the owners and business (completed by the Bank only with

your permission)

Month-by-month cash flow statement outlining expected cash balances at the end of

each month.


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Aged list of accounts receivable and payable. This report lists suppliers and

customers sorted by how long the invoice is outstanding. Most lending institutions

discount any customer that has not paid you within 90 days.

Appraisal on assets. This is an estimate of value. Appraisals are generally required

when financing real estate, purchasing an existing business or used equipment.

Environmental assessment. Required when purchasing real estate. This is a survey

to test for environmental contamination.

Credit Rating Processes for Business Customers

The European Capital Requirements Directive requires banks to, if requested, explain the

credit rating process they use to assess applications made by SMEs and other corporate

applicants for loans. The information below is intended to illustrate this process.

Assessing Applications for Credit:

Banks are committed to helping you make financial decisions that best suit the circumstances

of your business. They want to help ensure that you do not take on more borrowing than your

business can afford to repay and then have trouble making repayments as they fall due.

A credit quality rating is one of the tools which banks may use to assess applications for

loans. Ratings are assessed in a number of ways. For smaller businesses, credit scoring will

frequently be used. For larger corporate, the rating is more likely to be based on an

assessment of financial accounts plus non-financial factors such as the experience and track

record of management. Transactional factors such as the length of loan requested and the

amount of security available may also be taken into account.

It is important to note that lenders have different lending policies and scoring systems and so

applications to them may be assessed differently. This means that one lender may accept an

application which another may not. Credit ratings are internal measures used by banks and as

such are not comparable between lenders. You can ask your bank about whether credit-

scoring techniques will be used when you are applying for credit.


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There are essentially two different credit scoring techniques used by banks: application

scoring and behavioural scoring. In the case of small businesses, both of these scoring

techniques will often involve consideration of personal accounts held by proprietors a nd may

include assessment of data held about one or more director.

Application Scoring:

Application scoring is often used to help inform decisions about lending to small

businesses and the opening of new small business accounts. Application scoring takes

into account information banks may hold about you or your business and any information

that you supply or that they may obtain from other organisations such as credit reference

agencies or fraud prevention agencies. Where they use the information from other

organisations they will tell you who they are.

Behavioural Scoring:

Behavioural scoring, also known as customer or predictive scoring, rates customers on the

way they operate their financial affairs, based on the pattern of activity seen passing

through existing customer accounts.

Behavioural scoring is most effective where customers have been with a bank for a period

of time. Statistically, it has been shown to be more consistent in identifying acceptable

credit risks to banks than manual assessments of borrowing requests.

This information is used to consider credit applications and for the ongoing management

of account facilities, such as overdrafts and bank cards, as it builds up an accurate picture

of how a customer manages their money, with the underlying principle that previous

performance trends can be used to reflect future patterns. An example of a negative

indicator might be where cheques or other items have been returned unpaid.

Behavioural scoring may be used in conjunction with application scoring to enable a

lender to decide whether they should lend money or not.


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What happens if the application is declined?

If a bank does not wish to accept the application, they will tell us. They will also tell us

on request the main reason why they were unable to agree our application. If we did not

pass their credit score they will tell us.

If a bank has declined our application we may contact them and ask them to reconsider

their decision. They may ask us to provide additional information.

If we are concerned about the way in which your application for credit has been dealt

with, we can ask the bank for more information about how the credit appraisal system

works. If we wish to appeal against a refusal of credit based on a credit scoring system,

ask the bank for details of how we can do this.

If we are unhappy about how our concerns have been handled, we can complain. The

Bank Facts information sheet on 'How to complain to your Bank' will be helpful. This

information sheet is one of a series of BankFacts published by the British Bankers'

Association.

Is credit scoring fair?

We believe that credit scoring is fair and impartial. It does not single out a specific piece

of information as the reason for declining an application and is based on the use of

objective criteria to make a decision. Credit scoring methods are tested regularly to make

sure they continue to be fair and unbiased. At no point is any information regarding race,

gender, disability, colour and religion taken into account.

Responsible lending is essential for us and our bank. The Office of Fair Trading regulates

credit and views credit scoring as a way of helping banks lend responsibly.

Although banks are confident that their appraisal methods provide a reliable and accurate

basis on which to make decisions, they do have processes in place to review and

potentially amend decisions.

It is important to stress that although credit rating has an important part to play in

determining the price at which a bank will offer to lend money; it is just one of several

factors which are taken into account.


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Basel II

EU banks are required to comply with the European Capital Requirements Directive, 2006.

This is based on the international framework for the calculation of bank capital agreed by the

central bank governors and the heads of supervision of the G10 countries in 2004, frequently

referred to as "Basel II".

The Directive determines the minimum amount of capital which a bank must set aside for

each lending transaction in relation to its risk. There are 3 alternative ways in which this can

be done:

A bank following the Standardised approach has to use a method wholly prescribed by

the Directive and based on external credit ratings.

Under the Foundation Internal Ratings Based (IRB) approach banks are permitted to use

their own models to estimate the risk of customer default but must use factors prescribed

by the Directive for transactional risks such as the amount likely to be drawn if a

customer defaults (Exposure at Default) and the amount of loss likely to be incurred

(Loss Given Default).

Banks following the Advanced IRB approach may use their internal models to estimate

both customer and transactional risks.

The ratings used to estimate capital for credit risk are likely to be similar, but not necessarily

identical, to those used internally for lending and pricing decisions.

In the UK, banks using either the Foundation IRB or Advanced IRB Approach require the

specific prior approval of the FSA. More details of the Capital Requirements Directive and

Basel II may be found on the FSA website: See link below.


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CHAPTER- 4

ANALYSIS


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PERSONAL POWER

RETAIL BANKING DEPARTMENT

Purpose: To meet the personal expenses.

Eligibility:

1) AXIS BANK‘S EMPLOYEES:

Confirmed employees who have completed 3 years of service with a minimum net

salary of Rs.10000 per month.

2) OTHERS:

A. Salaried Individuals:

Any individual having a cumulative experience of 2 years or more with a minimum

net income of Rs. 10000 p.m. should be eligible for the loan, irrespective of the

conformation in his present job.

Minimum 1 year in current job with 2 years of total work experience.

OR

Less than 1 year in current job (irrespective of confirmation) with 3 years of total

work experience (employment proof of 3 years required).

OR

Less than 2 years in employment for professionally qualified salaried individuals (i.e.

MBA from premier institutes IIMs/XLRI/JBIMS/FMS/MDI/SP

JAIN/NMIMS/SYMBIOSIS/XIMB OR B.TECH form IITs), but only with the proof

of qualification.

The applicants should be above 21 years of age and less than the age of

superannuation at the termination of the loan.


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B. Professionals (Doctors, Dentists, Engineers, Architects, Chartered Accountants, Cost

Accountant, Company Secretary, Management Consultants only) :

Any individual who is self employed for last 3 years with a minimum annual net

income of Rs. 1 lakh. The applicant should be above 24 years of age and less than 60

years at the termination of the loan.

C. Self Employed:

Any individual who is self- employed for the last three years with a minimum annual

net income of Rs.1.50 lakh. The applicant should be above 24 years of age and less

than 60 years at the termination of the loan.

Loan Amount:


Minimum Loan amount Rs.25,000/-

Maximum Loan amount Rs.2,00,000/-

A. Upto 4 times net monthly income

Repayable in 12 months

B. Upto 8 times net monthly income


C. Upto 10 times net monthly income


2) OTHERS:

Minimum Loan amount Rs.1,00,000/-

Maximum Loan amount Rs.1000000/-

(For salaried and professional individuals)


(For self employed individuals, without repayment track record).


(For self employed individuals, with repayment track record).


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Repayment Limit (Salaried / Professionals / Self Employed-others):

Maximum Loan Amount:

1) Salaried:

Max. Limit is Rs.1000000/-

Repayment Period:

a) More than or equal to 12 months but less than 24 months:

4 times Net Monthly Income.

b) More than or equal to 24 months but less than 36 months:


c) More than or equal to 36 months and upto 48 months:


2) Self Employed Professionals:

Engineers, Architects, Chartered Accountants, Cost Accountants, Management

Consultants only.

Max. Limit is Rs.750000/-

For Self Employed Doctors Max. Limit is Rs.1000000/-

Repayment Period:


1 Time Avg. (of 3 yrs.) Annual Income.


1.5 Times Avg. (of 3 yrs.) Annual Income.


2.25 Times Avg. (of 3 yrs.) Annual Income.


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3) Self Employed Others:

Max. Limit is Rs.150000/-(Without payment track record)

Max. Limit is Rs.300000/-(With payment track record)

Repayment Period:


1 Time Avg. (of 3 yrs.) Annual Income*.


1.5 Times Avg. (of 3 yrs.) Annual Income*.


2.25 Times Avg. (of 3 yrs.) Annual Income*.

* Income in case of self employed other individuals will be as per the IOT

acknowledged income tax return.

Security:


Third party guarantee of a person of satisfactory means not belonging to the

immediate family of the applicant.

2) OTHERS:

a) 3rd party guarantee of a person of satisfactory means is desirable but not

mandatory.

b) Providing of Collateral security: Collateral security implies interim security such

as units of UTI, NSCs, KVPs, Demat shares, Bank deposits, Surrender value of

Life Insurance policy and such other investments that are acceptable to the Bank.

Salaried (having salary power account with the Bank with check-off

facility) having net monthly income of Rs. 7500 to Rs.10,000/- need not

provide collateral security.


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Salaried (not having salary power account with the Bank) having net

monthly income of Rs. 7500 to Rs.10,000 need to provide 50% collateral

security or a 3rd party guarantee of a person of satisfactory means

Salaried/ Professionals having net monthly income/ average monthly

income of Rs. 10,000 or more need not provide collateral security.

Self employed individuals filing IT returns of less than Rs.1.50 lakhs p.a.

need to provide third party guarantee of a person of satisfactory means.

Self employed individuals filing IT returns of Rs.1.50 lakhs p.a. or more

need not provide collateral security.

However, in all cases, on providing collateral security, the following

relaxation with regards to the interest rates would be applicable:

Collateral security worth 25% - 50% of loan amount: reduction of 25 basis

points in the interest rates.

Collateral security greater than or equal to 50% of the loan amount:

reduction of 50 basis points in the interest rates.


77

BANKING RELATIONS


Salary account of employee is mandatory.

2) OTHER:

SALARIED/Self Employed /Professionals

For salaried, self employed and professionals, in the last six months maximum of 1

cheque bounce is allowed.

For salaried individuals, if the net salary of the borrower is less than Rs.10000/-, then

Average Bank Balance is One EMI and net salary of Guarantor should be greater than

Rs.10000/-.

For self employed (others), Average Bank Balance is one EMI mandatory for all.

For professionals, this is not required.

Average Bank Balance = (Balance on 1 st, 10th ,20th)/3

For salaried individuals, salary credit (in any bank) is mandatory.

REPAYMENT TRACK RECORD

1) SELF EMPLOYED:

For self employed (others), 1 yr repayment track record of more than Rs.1 Lac

Personal Loan is mandatory.

If Personal Loan track record is not available, then any other loan track record

plus own house is mandatory.

Self Employed individuals with repayment track record to be treated as Category C.


Repayment of the loan should be in 12/ 24/ 36 months in Equated Monthly

Installments (EMI) from the date of disbursement.


78

3) OTHERS:

Repayment of the loan should be in 12 to 48 months in Equated Monthly Installments

(EMI) from the date of disbursement by the way of post dated cheques in cases where

check-off facility is not available. Otherwise, the monthly installment will be received

from the employer under check-off facility.

PRE-PAYMENT PENALTY:


NIL

2) OTHERS:

NIL

RESIDENCE CRITERIA:

1) SALARIED:

For salaried individuals present residence should not be less than 6 months

(mandatory).

If present residence is less than 6 months, then it should be company provided

or own house or transfer case. Anything other than the listed case, guarantor

(local) mandatory.

For Bachelor/ Spinster salaried individual staying alone, 3rd party guarantor is

mandatory. Also in this case native place Field Investigation (FI) is mandatory

either by RAC/ SRAC present in that location and if not, then tele- verification

has to be done.

Maximum loan amount this segment (Bachelor staying alone) is Rs.1.50 Lacs.


79

2) SELF EMPLOYED (OTHRES/ PROFESSIONALS):

Minimum one year of present residence is mandatory.

Less than one year of present residence for Self Employed (Others &

Professionals) allowed for either own house or parent‘s house (mandatory).

For Bachelor/ Spinster self employed individual staying alone, 3rd party

guarantor is mandatory. Also in this case native place Field Investigation (FI)

is mandatory either by RAC/ SRAC present in that location and if not, then

tele- verification has to be done.

Maximum loan amount this segment (Bachelor staying alone) is Rs.1.50 Lacs.

PHONE CRITERIA:

1) For Salaried, Professionals & Self Employed, a 3 months old residence phone

(landline) is mandatory.

2) If landline is not there than Maximum Loan Amount is Rs.75000/-. In this criteria,

discretion to RAC Heads for CAT A/B Companies for deciding for Loan Amount.

3) For Self Employed (Other & Professionals), separate landline is mandatory at office

as well as residence. Incase office and residence is same, then permitted for own

house.


80

DISBURSEMENT:

The loan will be credited to the borrower‘s Savings Bank Account with the Branch, by pay

order favoring the borrower, or as per the borrower‘s instructions.

Service Charges:


NIL

2) OTHERS:

2% of loan amount is applied. It is to be collected along with the application

form preferably by means of a cheque drawn on the account from which PDCs

would be given.

In the event of rejection of the loan application, only 3/4th of the collected fees

will be refunded.

The processing fees would have to be realized prior to the sanction of the

facility.

In case the processing fee‘s cheque bounces, the proposal is to be rejected.

OTHER CONDITIONS:

Bank reserves the right to reject any application without assigning reasons thereof

The applicant will undertake to inform the Bank as and when there is a change in address

/ employment

The account will be recalled in case of dishonour of cheques consecutively for 3 times.

The terms & conditions mentioned above and elsewhere under the scheme are subject to

modification from time to time solely at Bank's discretion


81

PAPERS REQURIED:

To Be Submitted Along With The Application:

Purpose Salaried Others

Proof of Identity Passport / Voter's Card /

Driving Licence &

Photograph

Passport / Voter's Card / Driving

Licence & Photograph

Proof of Income Latest salary slip showing

all deductions or Form 16

alongwith current dated

salary certificate

IT Returns for the last 3 years and

Computation of income for the

last 3 years certified by a CA

Proof of Residence Ration Card/ Passport

Latest Electricity Bill/

Latest Telephone Bill/

Latest Credit Card Bill

Ration Card/Passport



Latest Credit Card Billing

Bank Statement / Pass

Book where salary /

income is credited

Last 6 months Last 6 months

Guarantor Form Yes (Optional) Yes (Optional)


82

AXIS BANK LTD

PERSONAL POWER - SALARIED

CREDIT SCORING SHEET

Name:

A/c No.

Sr.No. Parameters Total

Marks

Ex. G AA A Criteria

1. Personal

Information

Age

10

10

8

6

2

EX 21 years to 35 years.

G 36 years to 50 years.

AA 51 years to 55 years.

A more than 55 years.

2. Educational

Qualifications

5 5 3 2 2 EX – Post Graduate /

Professional

G – Graduate

AA/A – Under Graduate

3. No. of

Dependents

10 10 6 4 0 EX – Upto 4


83


Marks

Ex. G AA A Criteria

G – 5

AA – 6

A – More than 6

4. Income

Information

Net Present

Income From All

Sources

15

15

12

10

2

EX => Rs. 300000

G s => Rs. 200000

<Rs.300000

AA =>Rs.90000 <

Rs.200000

A => Rs. 50000 <

Rs.90000

5. Monthly

Instalment of

Loan / Net

Monthly

Income

(from all sources)

20 20 15 12 6 EX < 20%

G < 35%

AA < 45%

A > 45% , < 55%


84


Marks

Ex. G AA A Criteria

6.

Net Worth

Information

Owning of house

& vehicle

5

5

3

2

0

EX – Own (house + 4

Wheeler)

G – Own house only

AA – Own 4 Wheeler / 2

Wheeler

A -- Neither

7. Has Phone

2 2 0 0 0 EX – Yes

G/AA/A – No

8. Net Assets

(Total Assets –

Liab.)

10

10

8

6

4

EX Market Value

>Rs.500000

G Market Value >

Rs.300000

AA Market Value >

Rs.200000

A Market Value >

Rs.100000

9. Organisation

Information

EX – Government / Public


85


Marks

Ex. G AA A Criteria

Organisation

5

5

4

2

0

Sector Undertaking

MNC

G – Public Limited

Company

AA – Private Limited

Company

10. Designation

3 3 2 1 1 EX – Executive / Senior

Manager

G – Officer

AA / A – Others

11. Length of Service

in present job

5 5 3 2 0 EX > 3 Years

G > 2 Years

AA > 1 Years

A < 1 Years

12. Total length of

Service

5 5 3 2 0 EX > 3 Years

G > 2 Years

AA > 1 Years

A < 1 Years


86


Marks

Ex. G AA A Criteria

13. Credit Card

Information

i) Type of Credit

Card

3

3

2

0

0

EX - Gold / Diners

G - Silver / Blue / Classic /

Executive / Sterling Silver /

others

AA/A - No Card

EX< 2 Years

G – 1-2 years

AA> 1 year, A – No Card

ii) Members

since

2 2 1 0 0

Total Marks

100

CREDIT SCORING RATING

Point

Nos.

1 2 3 4 5 6 7 8 9 10 11 12 13 Total

Marks

Max

Scores

10 5 10 15 20 5 2 10 5 3 5 5 (3+2) 100

Marks

Scored

Cut off Score = 60%


87

AXIS BANK LTD

PERSONAL POWER – SELF EMPLOYED


Name: Shri / Smt. _________________________________

A/c No._________________


Marks

Ex. G AA A Criteria

1. Personal

Information

Age

10

10

8

6

2

EX - 30 years to 45 years.

G - 24 years to 30 years

(others) 46 years to 50

years(professional)

AA - 51 years to 60 years.

A - more than 60 years.

2. Educational

Qualifications


Professionals (Full time

Degree course e.g.

MBBS,BDS, Architect,

Engineers, Chartered

Accountants, Company


88


Marks

Ex. G AA A Criteria

Secretary, Cost

Accountants, MBAs.)

G – Graduate


3. No. of

Dependents

10 10 6 4 0 EX – Upto 4

G – 5

AA – 6

A – More than 6

4. Income

Information

Net Present

Income From All

Sources

(After ploughing

back

depreciation)

15

15

10

8

5

EX => Rs. 300000

G => Rs. 200000

<Rs.300000

AA=>Rs.100000 <

Rs.200000

A> Rs. 75000 < Rs.100000

5. Monthly

Instalment of

Loan / Net

20 20 15 12 6 EX < 25%

G < 40%


89


Marks

Ex. G AA A Criteria

Monthly

Income

(from all sources)

AA < 50%

A > 50% < 60%

6. Net Worth

Information

Owning of house

& vehicle

5

5

3

2

0

EX – Own (house + 4

Wheeler)

G – Own house only

AA – Own 4 Wheeler / 2

Wheeler

A -- Neither

7. Has Phone

2 2 0 0 0 EX – Yes

G/AA/A – No


90


Marks

Ex. G AA A Criteria

8. Net Assets

(Total Assets –

Liab.)

15

15

12

8

4

EX Market

Value>Rs.400000

G Market Value >

Rs.300000

AA Market

Value>Rs.200000

A Market Value >

Rs.100000

9. Organisation

Information

Organisation and

Designation

8

8

6

3

2

EX–Self-employed

professional / Director of

Pvt. Ltd Co. (with 50 or

more staff)

G – Director of Pvt. Ltd.

Co. with less than 50 staff

/ Partner in a partnership

firm with 25 or more

employees

AA – Partner in a partnership

firm with >10 and < 25

employees / Proprietor of a

firm with more than 25

employees


91


Marks

Ex. G AA A Criteria

A – Proprietor of a firm

with < 25 employees /

Partner in a partnership

firm with <10 employees


in current

business

5 5 3 2 1 EX > 3 Years

G > 2 Years

AA > 1 Year

A < 1Year

11. Credit Card

Information

i) Type of Credit

Card

3

3

2

0

0

EX - Gold / Diners

G - Silver / Blue / Classic

/

Executive / Sterling

Silver

/ others

AA/A - No Card

ii) Member

Since

2 2 1

0 0 EX < 2 Years

G 1 – 2 years

AA > 1 Year

A - No Card


92


Marks

Ex. G AA A Criteria

Total Marks

100


Point

Nos.

1 2 3 4 5 6 7 8 9 10 11 Total Marks

Max

Scores

10 5 10 15 20 5 2 15 8 5 3+2 100

Marks

Scored

Cut off Score = 60%


93

STUDY POWER


Purpose

To provide financial support to students for pursuing higher education in India and abroad.

To be provided to students who have obtained admission to different courses.

Quantum of Loan

ALL CATEGORIES

The quantum of finance under the scheme is capped at Rs.10 lacs for studies in India and Rs.20

lacs for studies abroad, which would cover tuition fees, hostel charges (if any), cost of books,

etc. The minimum amount of loan would be Rs. 50,000/-.

Expenses Considered for the Loan:

Fees payable to college/university/hostel

Examination/Library/Laboratory fees

Purchase of Books/Equipment/Instruments

Caution/refundable deposits supported by the Institution‘s bills/receipts

Travel expenses/passage money for studies abroad

Purchase of computers (when essential for the completion of the course)

Any other expenses required to complete the course, like study tours/project work/thesis, etc.

Margin

ALL CATEGORIES

No margin for loans upto Rs. 4 lacs. For loans above Rs. 4 lacs, 5% margin for studies

within India and 15% for higher studies overseas.


94

Rate of Interest

Quantum of Loan General Customers & UTI Employees AXIS Bank Employees

Rate of Interest At PLR, currently not exceeding 15% p.a. 8% p.a. – simple

interest

Repayment

ALL CATEGORIES

The loan would be repayable in a maximum of 84 instalments from the commencement of

repayment. The 1st instalment would be due 1 year after the completion of the course or 6

months after getting a job, whichever is earlier. However the total tenure of the scheme, i.e.

from the date of the 1st disbursement to the date of the last instalment, should not exceed 12

years. The periodical interest applied on the loan account, prior to the commencement of the

actual repayment, should be recovered from the account of the co-applicant, as and when

due.

Role of the Guardian

ALL CATEGORIES

The parent(s)/guardian of the student would be treated as a co-applicant of the loan. His/her

role would be, necessarily, like the primary debtor. He/she would be responsible for the

payment of the interest accrued on the loan account, prior to the commencement of the

EMIs.


95

Security

ALL CATEGORIES

Third Party Guarantee: It is necessary to have a 3rd party guarantee agreement in place,

especially in cases where the loan would not be secured by liquid collaterals (e.g. Units,

FDs, NSCs, paid-up LIC policies, etc.). The guarantor should not be a close relation of

the student (i.e. parents/siblings/spouse, etc.) and should be good for 100% of the loan

amount. No 3rd party guarantee need be insisted upon for loans upto Rs. 4 lacs.

Computers and other related hardware financed under the scheme would have to be,

necessarily, charged to the Bank as primary security.

Collateral Security: Educational Loans sanctioned would need to be secured by collateral

securities, to the minimum extent of 100% of the loan amount. The requirement of

obtaining 3rd party guarantee need not be insisted upon in cases where liquid securities

adequately cover the total loan. Such collateral securities would include –

First or pari-passu charge on unencumbered land and building

Govt. Securities / PSU Bonds

Surrender value of ‗paid-up‘ insurance policies

Demat shares/securities

Units and other pledgeable securities like NSCs, Bank FDs

Other freely transferable securities like KVPs and IVPs

As in the case of 3rd party guarantee, no collaterals need be insisted upon for loans

upto Rs. 4 lacs.


96

Life Cover:

In educational loans, since the ultimate exposure is on the earning capacity of the student,

post-completion of the course, it is desirable, in the interest of the student, to organize a Life

Insurance policy assuring the life of the student, the sum assured being at least 100% of the

loan amount. This policy should be assigned in the name of the Bank and the Bank must

ensure that the policy is kept alive during the currency of the loan. To ensure this, the annual

premium may be included in the computation of the loan requirement, along with the tuition

fees and other recurring charges. Further, the future income of the student needs to be

assigned in favour of the Bank for meeting the 96nstalment obligations.

Disbursement:

The loan will be disbursed in full or in suitable instalments taking into account the

requirement of funds and/or fee schedule as assessed by the Bank directly to the educational

institution/ vendor of books/equipment/instruments to the extent possible.

Processing Charges/ Admission Fee: NIL

Penalty for early closure: NIL

Other Conditions:

Bank reserves the right to reject any application without assigning reasons thereof the

applicant will undertake to inform the Bank as and when there is a change in address /

employment. The terms & conditions mentioned above and elsewhere under the scheme are

subject to modification from time to time solely at Bank's discretion.


97

Papers required to be submitted along with application


Proof of Identity Passport / Voter's Card /

Driving License & Photograph

Passport / Voter's Card / Driving

License & Photograph

Proof of Income Latest salary slip showing all

deductions or Form 16 along

with current dated salary

certificate.

IT Returns for the last 2 years and

Computation of income for the last

2 years certified by a CA

Proof of

Residence

Ration Card/



Passport/Latest Credit Card

Bill

Ration Card/



Passport/Latest Credit Card Billing

Bank Statement

/ Pass Book

where

salary/income is

credited


Guarantor Form Yes Yes

Other

documents

As per Annexure As per Annexure


98

Documentation at Branches:

ALL CATEGORIES

Credit Scoring Sheet

Educational Loan Application Form

Educational Loan Scheme Appraisal Form

Agreement for Term Loan for Educational Loan (tripartite between the Student, the

Guardian and the Bank)

Guarantee Agreement for Educational Loan Scheme

DP Note

DP Note Delivery Letter

Letter of Waiver

Deed of Ratification (to be executed and obtained in case the Student is a minor at the time

of sanction/disbursement of the loan)

Deed of Assignment of Future Income of the Student to meet the EMI Obligations

Delegation:

Branches headed by SVPs/ Other Branches

The loans will be sanctioned and disbursed at the branch level and the individual

sanctions would be reported to Zonal Office at monthly intervals in a pre -designed

format for review by the Zonal Office.


99

No relaxation /waivers would be permitted in respect of rates of interest, eligibility and

security for loans under this scheme.

STUDY POWER – APPLICATION FORM

Particulars of Student and the Course of Study

Full Name of Student :

Date of Birth :

Educational Qualifications :

Proposed Course of Studies :

Name of Institution/University :

Duration of Course :

Date of Commencement of Course :

Expected Monthly Income of Student

After Completion of the Course :

Particulars of Parent / Guardian

Full Name :

Residential Address (with phone no.) :

Office Address (with phone no.) :

Date of Birth :

Date of superannuation :

No. of dependants :

Gross Monthly Salary : Rs.


100

Deductions from Salary : Rs.

Net Monthly Salary : Rs.

Details of Present Borrowings –

Sl. No. Date of loan Amount of Loan Repayment

Plan

Security

Original Present

Particulars of Loan Applied For:

Total Expenses for the Course : Rs.

Details of non-repayable

studentship/fellowship, etc.

available to the student : Rs.

Details of repayable loan /

scholarship or other financial

assistance available : Rs.

Details of funds available

from family sources for

the course : Rs.

Amount of loan applied for : Rs.


101

Security Offered

Immovable Property Title Deed In the name of Address

(Lease / Freehold) dated

Other Securities:

Name of Security Distinctive Nos. Name of Holder Amount

Third Party Guarantee

Name of Guarantor :

Residential Address :

Office Address :

Date of Birth :

Date of Superannuation :

Declaration:

We certify that the information furnished above is correct to the best of our knowledge and

belief. We promise to abide by the terms and conditions governing the loan facility, if

sanctioned by the Bank.

Signature of Student Signature of Guardian

Date: Date:


102

STUDY POWER – APPRAISAL FORM

Name of Student :

Name of Guardian :

Computation of Loan Requirement:

Tution Fees

1st year of the course : Rs.

2nd year of the course : Rs.

3rd year of the course : Rs.

4th year of the course : Rs.


Examination and

Other Recurring Fees : Rs.

1st year of the course : Rs.

2nd year of the course : Rs.

3rd year of the course : Rs.



Essential Books, Stationery &

Equipments, if any : Rs.

Maintenance Expenditure

Rent : Rs.

Board : Rs.


103

Clothes : Rs.

Insurance Premia for the duration

Of Loan and Start-up Period : Rs.

T O T A L : Rs .

Less:

Non-repayable scholarship/

Fellowship, etc. : Rs.

Repayable loan scholarship

Or other financial asst. : Rs.

Funds available from family: Rs.

T O T A L : Rs.

Loan Amount Recommended : Rs.

Repayment Schedule:

Date:

Branch Head

Branch:


104

AXIS BANK LTD

STUDY POWER


FOR EVALUATING THE CO-APPLICANT

Name:

A/c No.


Marks

Ex. G AA A Criteria

1. Personal

Information

Age

3

3

2

1

1

EX<50 and > 35 Yrs.

G>25 and < 35 Yrs.

AA>50 and < 55 Yrs.

A>55 Yrs.

2. Educational

Qualifications


Professional

G – Graduate


3. No. of

Dependents/

Children

4 4 1 0 0 EX – Upto 2

G – 3 or 4

AA/A – More than 4


105


Marks

Ex. G AA A Criteria

5. Income

Information

i)Net Annual

Income (For

salaried)

15

15

10

8

5

EX > Rs.2,20,000

G> Rs.170000 - <Rs.220000

AA>Rs.120000-< Rs.170000

A>Rs.90000 - < Rs.120000 ii) Net Annual

Income (For

others)

15 15 10

8 5

6. Monthly

Instalment of Loan

/ Net Monthly

Income

(from all sources)

20 20 16 12 8 EX < 20%

G < 30%

AA < 40%

A > 40%

7. Net Worth

Information

Owning a house

10

10

5

0

0

EX – Own (Not Mortgaged)

G – Own (Mortgaged)

8. Has Phone

2 2 0 0 0 EX – Yes

G/AA/A – No


106


Marks

Ex. G AA A Criteria

9. Owning of vehicle

5

5 3 2 0 EX – 4 Wheeler fully owned

G – Company provided/

Hypothecated 4 Wheeler

AA- Two Wheeler

A – Does not own a vehicle

10. Net Assets (For

salaried)

(Total Assets –

Liab.)

8

8

6

4

2

EX Market Value

>Rs.400000

G Market Value > Rs.300000

AA MarketValue >

Rs.200000

A Market Value > Rs.100000

Net Assets

(For others)

(Total Assets –

Liab.)

10 10 7 4 2

11. Collateral Assets

(LIC/NSC etc.)

14 14 7 2 0 EX – when > 75% of loan

G – when < 75% and >50%of

loan

AA – when <50% and

>25%of loan

A – when < 25% of loan

12. Organisation EX – Government / Public


107


Marks

Ex. G AA A Criteria

Information

Organisation (*)

2

2

1

0

0

Sector Undertaking/MNC

G– Public Limited Company


in present job /

current business

4 4 3 2 1 EX - > 5 Years

G - > 4 Years

AA-> 3 Years

A - > 2 Years

14. Information on

Banking

Banking with UTIB

/

Account with UTIB

3

3

2

2

2

EX – Over 1 year

G/AA/A – 6 Months – 1 year

15. Information on

student

Aggregate score

in class XII Board

Exam

2 2 0 0 0 EX – Over 80%

G/AA/A – less than 80%

Total Marks

100


108


Point

Nos.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total

Marks

Max

Scores

3 4 4 4 15/

15

20 10 2 5 8/10 14 2/0 4 3 2 100

Marks

Scored

Cut off Score = 70%

(*)Not applicable in case of self-employed / professionals, etc.


109

LOANS AGAINST MUTUAL FUNDS


The bank proposes to introduce a scheme for generating liquidity for the mutual funds

customers by giving them an overdraft facility against mutual funds.

The details of the scheme as under:

Target Clients

Loans against the primary security of mutual funds unit only in dematerialized form

will be given to the individuals

Nature of Facility

The loan will be extended as: Overdraft facility against a list of approved mutual fund

schemes only.

Period of Loan

The facility shall be renewed/reviewed after 12 months from the date of sanction of

facility.

Loan Amount

Minimum Amount – Rs 25,000 (Twenty five thousand only)

Maximum Amount –Rs 20,00,000 (Twenty lacs only)

Eligibility Criteria

Only Resident individuals.

Applicant‘s age requirement: Min 18 years.

Units should be in the name of the borrower or guarantor (third party

pledgers). Third party pledgers have to be family members of the borrower.

Acceptable relationships include spouse, parents, and children above 18 years,


110

brothers, sisters, in- laws, grandparents, grandchildren (above 18 years of age).

Third party pledgers to sign an undertaking / guarantors form for this.

Unit holders should not be a minor.

Margin

Minimum 50 % margin to be maintained against latest valuations (as defined later)

Activity

NAV file submission – by RB, Wealth Management Group

Drawing Power calculation – NAV file upload - Daily –at RAMG/DCC

Uploading of Finacle balance file to Dpintranet -daily (For monitoring

purpose)- at RAMG/DCC.

Uploading of drawing power file from Dpintranet to Finacle - daily – at

RAMG/DCC.

Scheme Details

Overdraft account to be opened with OD limits for providing this facility

Third party units accepted for providing this facility. Third party pledgers have

to be family members of the borrower. Acceptable relationships include

spouse, parents, and children above 18 years, brothers, sisters, in- laws,

grandparents, grandchildren (above 18 years of age). Third party pledgers to

sign an undertaking / guarantors form for this.

Units should be on the approved list of securities of the Bank, which would be

revised periodically.

Loans can be sanctioned against units of single fund or from a basket of funds

(2 or more).


111

Charges

* Waiver of PF to the extent of 1% and rate of interest to the extent of 0.50% p.a. will rest

with the sanctioning authority.

Service tax to be borne by the customer.

Valuation & Scheme eligibility

A scheme will be approved only when:

The same is listed in stock exchange (like ETF) or repurchase facility is available

and the scheme should not be close ended

The scheme should not be under lock- in period

Monthly Income schemes and ELSS tax saving schemes are not eligible

A list of approved schemes is attached. Going forward, the research group of Wealth

Management team, RB will advise on modifications of the scheme.

Mutual funds units of approved schemes will be valued either at Net Asset Value (NAV) or

repurchase price or the market value, whichever is the least. The information regarding the

above information would be uploaded into the system on regular basis for calculation of

drawing power.

Types of Charges To be applied to customers

Rate of Interest * 12 % p.a.

Processing fees * 2 % + service tax

Penal Interest 2% above normal rate.

Renewal fees Rs.200/-+ stamp charges, if

any


112

Portfolio Monitoring

The portfolio will be monitored on a Loan to Value basis (LTV). The LTV will be

available on the daily reports generated customer wise.

The proposed follow-up grid is as follows:

LTV** Action Responsibility

50-65% Telecall customer and/or

Sending letter for cash

deposit/ additional pledge

Branch Head/ RAC Head or delegate.

>65% Redemption notice to

customer

Branch Head/ RAC Head or delegate.

> 75% Units redemption Centralised Monitoring unit send information on

delinquent customer to branch

Customer informed about lien invocation by the

branch

CO will redeem units confirm back the same to the

Branches.

**LTV is defined as the outstanding in account divided by the NAV value of pledged units


113

Process on redemption of units of a delinquent customer

It is mandatory to redeem units at LTV > 75%. Branches/RACs must ensure

that the sale process as defined above is initiated as soon as the LTV crosses

75%.

Central Office (RAMG) will be responsible for unit redemption/ pledge

cancellation. CO will send the request for pledge cancellation and redemption

to the concerned fund house. Customer‘s OD account will be directly credited

after realization of redemption.

The sanctioned limit available in Finacle have to be immediately cancelled

once the units are sent for redemption. Appropriate changes have to be made

in Dpintranet.

Once all the charges are recovered, balance needs to be refunded to the

customer. Any deviation from the aforementioned procedure will have to be

approved by VP-RB-Assets,CO.

Branches will have to ensure that post redemption intimation is sent to the

customer.

Before and after request for redemption/ pledge cancellation is sent to the fund

house, appropriate noting should be made in Dpintranet system.

Process on redemption of units of a regular customer

Branch will forward the original request letter for redemption (issued by the

customer) to RAMG.

RAMG will forward the customer‘s letter to the fund house for redemption.

The above letter will be accompanied by Bank‘s request letter for direct credit

of redemption proceed into client‘s loan account.

Once the redemption proceeds get credited into the loan account, necessary

entry should be made in Dpintranet system and limit has to be cancelled in

finacle by RAMG.

In case of voluntary pledge cancellation by the customer, customer will first

repay the outstanding in the loan account. Thereafter customer‘s request for

pledge cancellation has to be forwarded to RAMG.


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Operations procedure

The scheme will be booked in Finacle (GL Head- 67103, scheme code-

ODMF) and customer master has to be opened at the DpIntranet system, both

at the branch level only. Thereafter branch will forward the pledge request

letter and transfer request form (if required by the fund house) (issued by the

customer- Annexure - I) to RAMG.

RAMG will submit the pledging requests of customers to Registrars or Fund

houses/ funds house to mark a lien in the Bank‘s favor.

All limit set-ups will happen only after receipt of confirmation of pledge by

central ops.

Once limit set up happens in Dpintranet, Finacle limit will be uploaded next

day.

Processing/ renewal fees will be booked under GL Head 4900105

Delegation of Powers:

The Delegation of Powers to be followed for Loan against mutual funds are as follows:

Particulars President-

RB, Zonal

Heads

Branch Heads /RAC Heads(at

the minimum level of AVP),

Vice President- Retail Assets-

CO

Managers – at

Branch

/RACs/SRACs

Loan against

mutual funds for

individuals

20.00 20.00 10.00

@ As per the guidelines of RBI, maximum loan amount against mutual funds is Rs 20.00

Lacs for mutual funds units in dematerialized form.


115

Purpose of Loan & Other Conditions

Loans against mutual funds to individuals shall be provided only to meet

customer‘s personal needs. No loan under this segment would be granted for

investment in capital market instruments (shares/ debentures/ Bonds) or

further investment in any mutual funds schemes.

Declaration to be taken from customer by the Branch / RAC detailing his

existing loan against mutual funds from other banks / sources.This is stated in

the Application form and needs to be filled in.

Other Guidelines (Jointly held accounts)

If borrower has jointly held units, then second holder be signed as a guarantor

rather than co-borrower. While adding the second named person as a

guarantor, a letter of guarantee should to be obtained from the second holder.

The Personal Guarantee should state that, in consideration of the Bank

granting loan to the first holder, the guarantor guarantees the repayment in

case of any default by the principal borrower. A format of ‗Personal

Guarantee‘ is enclosed.

The Borrower as well as the guarantor (owner of units) should execute

agreement-cum-pledge and letter of continuing security. Borrower will sign on

service charge declaration, letter of waiver and DPN & DPN delivery letter.

Personal Guarantee form will be signed by guarantor only whereas Irrevocable

POA will have to be signed owner of units only.

Documentation

Documentation for Loan Against Mutual Funds to individuals is as follows:

Loan application form.

Proof of Identity and residence (as per Bank‘s KYC norms).

Latest Statement of holdings provided by the Mutual Funds house

Photograph (applicant & Co-applicant/Guarantor)

Overdraft agreement cum letter of pledge cum guarantee


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Demand Promissory Note and Letter of Continuity

Service charges declaration

D P Note delivery letter

Letter of waiver

Irrevocable Power of Attorney in favour of the Bank

Letter of undertaking

Duly signed undated transfer form, if required by the Fund house (e.g. UTI

Mutual Fund schemes)

Pledge request letter (in triplicate)

Personal Guarantee of guarantor

The application forms will be printed centrally at CO/RAMG and sent to the Zonal Offices

who will send this across to the Branches.

Process Flow for pledging units of Mutual Funds

Most of the mutual fund houses do not issue certificate to their holders, instead the holders

get statement of account which indicate folio number or account numbers of the units held by

them.

In order to create a pledge/mark lien in favour of The Axis Bank Ltd. the following

procedures have to be complied with:

Letter for pledging units(in triplicate) alongwith transfer form, if required, to be

obtained from the customer (annexure-1). All the copies have to be sent to RAMG.

Out of these, one copy is retained with the Bank and two copies are sent to the Fund

House/Register (Annexure)

A copy of the latest statement of account of the customer indicating the units under

his/her name has to be attached with the above.

Account will be opened in Finacle at the branch/ base branch of RAC and alongwith

the same reference no. the above documents will have to be submitted to Centralized

processing Unit at RAMG

A covering letter from the Bank which requests the Fund house/Registrar to mark lien

in our favour to be submitted to registrar/Funds House.


117

The fund house/ register will accept and acknowledge a copy of the above and send us a

confirmation via email/ courier after marking lien of the same. The exact modus operandi

may differ from one fund house to another.

After the centralized processing unit receives the confirmation as stated above, the same will

be entered in the system centrally and our DpIntranet system will pick up the appropriate

drawing power from backup data of mutual funds NAV/repurchase price. The drawing power

will be uploaded in Finacle system next day of data entry in DpIntranet.

Guidelines on Lending to Priority Sector-Weaker Sections

The bank refer to Reserve Bank of India‘s circular on the revised guidelines on lending to the

priority sector, wherein it is informed that the targets and sub-targets under priority sector

lending would be linked to Adjusted Net Bank Credit (ANBC) (Net Bank Credit and

investments made by banks in non-SLR bonds held in HTM category) or Credit Equivalent

amount of Off-Balance Sheet Exposures (OBE), whichever is higher, as on March 31 of the

previous year.

The sub-targets set under priority sector lending for Weaker sections is 10 percent of ANBCs

or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher.

The weaker sections under priority sector include the following:

a) Small and marginal farmers with land holding of 5 acres and less, landless laborers,

tenant farmers and share croppers;

b) Artisans, village and cottage industries where individual credit limits do not exceed

Rs.50,000/-;

c) Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY);

d) Scheduled Castes and Scheduled Tribes;

e) Beneficiaries of Differential Rate of Interest (DRI) scheme;

f) Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY);

g) Beneficiaries under the scheme for Liberation and Rehabilitat ion of Scavengers

(SLRS);

h) Advances to Self Help Groups;

i) Loans to distressed poor to prepay their debt to informal sector, against appropriate


118

Collateral or group security;

j) Loans granted under (a) to (i) above to persons from minority communities as may be

notified by Government of India from time to time.

k) In States, where one of the minority communities notified is, in fact, in majority, item

will cover only the other notified minorities.These States/Union Territories are

Jammu and Kashmir, Punjab, Meghalaya, Mizoram, Nagaland and Lakshadweep.

Subsequently, RBI, in its Annual Policy Statement has observed that banks have not been

achieving the sub-target of 10 percent for lending to weaker sections. In order to ensure

greater flow of credit to the weaker sections, RBI has proposed to take into account shortfall

in lending to weaker sections also for the purpose of allocating amounts to the domestic

Scheduled Commercial Banks for contribution to Rural Infrastructure Development Fund or

funds with other financial institutions as specified by RBI, with effect from April 2009.

As a first step towards stepping up of credit and to ensure timely and hassle- free flow of

credit to the weaker sections, we have to ensure that our lending to weaker sections are being

correctly reported. We, therefore propose to undertake the following exercise:

Proper classification of schematic agricultural loans to farmers under Kisan Power,

Kisan Power Plus, Power Gold, Power Gold Plus, Commodity Power etc., and non-

schematic agricultural loans. Branches / Agri Clusters are advised to verify the details

of the land holding of the farmers for the existing loan accounts and classify the

eligible farmers under the category of small and marginal farmer under the code

DA05-Direct Agriculture –small and marginal farmers in Finacle, wherever it has not

been done.

Further, efforts should be made to identify the SC/ST borrowers and borrowers

belonging to minority communities under weaker section and correctly enter the same

by modifying the Cust ID with appropriate information under CUMM option in

Finacle.


119

Car Loan

Axis Bank's Power Drive will help realize your dream. With some of the world's finest cars

now available in India don't let the price tags discourage you. Power Drive will bridge that

distance by financing a major part of the cost of your new car. So, you don't have to put the

brakes on your ambition.

Loan value calculated as per the on-road-price of the vehicle

Attractive interest rates

LTV of upto 85% of the on-road-price on selected models

Loans available for salaried and self employed individuals, proprietorships and

partnership firms

Special schemes for Axis Bank Salary and Priority accountholders

No income proof schemes available

Loans offered from Rs. 1 lac onwards

Loans tenure from 1 year to 7 years.

Eligibility

Salaried Individuals:

Minimum age of applicant: 21 years

Maximum age of applicant at loan maturity: 58 years

Income: Minimum income of Rs. 1 Lac p.a. for selected models and Rs. 2 Lac p.a.

for others

Income eligibility: As per latest salary slip or Form 16

Employment: Minimum 2 yrs cumulative experience.


120

Documentation

Pre-approval Documents:

Age proof

ID proof

Application form

Photograph

Residence proof

Income proof

Bank Statement

Signature verification

Performa invoice

Self-employed Individuals:

Minimum age of applicant: 21 years

Maximum age of applicant at loan maturity: 65 years

Income: Minimum income of Rs. 1.5 Lac p.a. to Rs 2 Lac p.a. as per the category of

the car being financed

Income eligibility - As per latest ITR and computation of income

Employment: Minimum 3 yrs cumulative experience in business.


121

Post Sanction / Pre Disbursement Documentation:

Loan Agreement duly signed along with RTO set.

Post Dated Cheques (PDCs) / ECS form / Standing Instruction (SI) request.

Margin money receipt.

Priority Account Scheme

Eligibility:

All Priority customers, with a vintage of 12 months

AND

A minimum Average Quarterly Balance as below:

For Cat A and Cat B cars the account must have an AQB of Rs. 1 Lac for last 2

completed quarters.

For Cat C cars the account must have an AQB of Rs. 2.5 Lac for last 2 completed

quarters.

For Cat D cars the account must have an AQB of Rs. 5 Lac for last 2 completed

quarters.

Maximum loan amount restricted to 3 times the AQB in the last 2 quarters

Benefits:

100% Waiver of Processing Fees

Waiver of Income documents & bank statements

All other documentation and terms of the loan will remain the same.


122

Salary A/c Scheme

Eligibility:

All customers having their Salary A/c with Axis Bank since the past 3 months and

above will qualify under this scheme

30 times Average Net Salary Credited during last 3 months

Special Benefits:

100% Waiver of Processing Fees

Waiver of Salary Slips & Bank Statements

All other documentation and terms of the loan will remain the same.

Fair Practice Code For Lenders

As directed by the Reserve Bank of India, the Bank has adopted modified Fair Practice Code

for lenders as approved by the Board of Directors. The salient features of the same are:

i) Applications for Loan

In the loan application form, the Bank shall provide comprehensive information including

information about fees and charges if any payable for processing and amount of such fees

refundable in case of non acceptance of application, prepayment options and other matter

which affects the interest of the borrowers, of all categories of loans, irrespective of the

amount of loan sought by them.


123

ii) Processing

a. The Bank shall provide acknowledgement for receipt of all loan applications

indicating the time frame within which the application will be disposed of.

b. The Bank shall verify the loan application and if additional details / documents are

required, these will be sought from the applicant.

c. For all categories of loans and irrespective of any threshold limits, the Bank will be

expected to process the application without delay. In case the application is turned

down, the Bank will convey in writing to the applicant the reasons for rejection

within one month.

iii) Loan Appraisal and Terms and Conditions

a. The sanctioning authority will be expected to ensure proper assessment of the credit

application as per the extant instructions and credit policy of the bank. The

availability of adequate margin and security will not be a substitute for due diligence

on the creditworthiness of the customer.

b. All the terms and conditions and other caveats will be duly communicated by an

authorized official of the Bank to the customer in writing.

c. The acceptance of the customer will be obtained on the sanction letter with the

customer's signature under the caption "I/WE ACCEPT ALL THE TERMS AND

CONDITIONS WHICH HAVE BEEN READ AND UNDERSTOOD BY ME/US".

d. A copy of the loan agreement along with all the enclosures quoted in the loan

agreement will be furnished to the customer at the time of issue of the sanc tion letter.


124

e. The sanction letter / loan agreement will clearly state that the credit facilities will be

extended solely at the discretion of the Bank and that drawings under the following

circumstances will be solely at the discretion of the Bank.

i. Drawings beyond the drawing power / sanctioned limits.

ii. Honouring of cheques issued for the purpose other than specifically stipulated

in the sanction.

iii. Drawings in an account once it is classified as NPA.

iv. No drawings will be allowed in case of non-compliance of the terms and

conditions by the borrower.

v. Meeting further requirements of the borrower on account of growth in

business will be subject to proper review of the credit limits.

iv) Disbursement of loans including changes in terms & conditions

a. The disbursement will be done immediately on compliance of all the terms and

conditions of the sanction by the borrower and the branches need not refer to the

sanctioning authority for disbursement.

b. Any changes in the terms and conditions of the sanction such as interest and charges

will be notified to the borrower before effecting the changes.

c. Any changes in interest rate and charges will be effected only prospectively after

giving due notice to the borrower.

v) Post disbursement supervision

a. The post disbursement supervision, such as submission of periodical reports and

periodic inspection, will be stipulated at the time of issue of the sanction letter. The

sanction letter would also mention whether the Bank or the borrower will bear the

cost of inspection.


125

b. The Bank will issue notices to the borrowers in advance in case the Bank decides to

recall the advance / accelerate the payment / accelerate the performance under the

loan agreement. Or seek additional securities.

c. The Bank shall release all securities on receiving payment of loan. However, the

Bank may decide to exercise the right to set off any legitimate right or lien for any

other claim against borrower. In case the Bank decides to retain the security, the

borrower will be notified about the remaining claims and the documents under which

the Bank is entitled to retain the security till the relevant claim is paid / settled.

v) Others

a. The Bank will not interference in the affairs of the borrowers except where provided

for in the terms and conditions of the loan sanction documents, such as periodic

inspection, scrutiny of books of accounts, verification of stocks and book debts, and

scrutiny of QIS statements.

b. In case any information not disclosed earlier by the borrower has come to the notice

of the Bank, the Bank will have the right to elicit the necessary information from the

borrower and initiate action to protect its interest.

c. While, the Bank may participate in credit- linked schemes framed for weaker sections

of the society, the Bank shall not discriminate on grounds of sex, caste and religion

in the matter of lending.

d. In the matter of recovery of loans, the Bank shall not resort to undue harassment such

as persistently bothering the borrowers at odd hours and use of muscle power.

e. In the case of receipt of request for transfer of borrowal account, either from the

borrower or from other banks / FIs which propose to take over the loan, the Banks'

consent or objection, if any, shall be conveyed within 21 days from the date of

receipt of request.


126

vi) Grievance Redressal

Though the sanction of the loans will be at the sole discretion of the Bank, borrowers will

have an opportunity to appeal against the decision of the Bank's functionaries. Any such

grievance received from the borrower will be heard and disposed of by the next higher

authority. For this purpose the following review structure is available to the borrower,

Grievance against

decision of

Reviewing Authority

Branch Head Zonal Head

VP / AVP Zonal Head

Zonal Head President (Credit) for corporate advances President (Merchant

Banking) for capital-market related advances andSenior Vice

President (Retail Banking) for retail advances.

Corporate Credit &

Retail Loans (under

Retail Banking)

Executive Director

All others Chairman and CEO


127

AXIS BANK LTD

FOUR WHEELER LOANS – SALARIED/SELF EMPLOYED


Name: Mr. /Mrs./ M/S _________________________________

Location: Date:


Marks

Ex. G AA A Criteria

1. Income

Information

Gross yearly

Income

25

25

20

15

0

EX => Rs. 300000

G => Rs. 150000 <Rs.300000

AA =>Rs.60000 < Rs.150000

A < Rs. 60000/ no income proof

2. Loan to Value

40

40

30

20

10

EX < =70%

G >70%< =80%

AA >80<= 90%

A > 90%

3. Residence

Information

EX – Own or parental house/

rented house more than 5 years/


128


Marks

Ex. G AA A Criteria

15

15

10

5

0

company owned

G – Rented house < 5 years but > 1

year

AA- Rented house > 6 months < 1

year

A – Rented house < 6 months

4. Has Phone

(landline/ mobile)

10

10

7 5 2 EX – Has both landline & mobile

G – Has landline only

AA- Has postpaid mobile only

A – Has prepaid mobile only

5. Total Length of

Service/ business

10 10 5 2 0 EX > 5 Years

G > 2 Years

AA > 1 Years

A < 1 Year

Total Marks

100


129

CREDIT SCORING

Point Nos. 1 2 3 4 5 Total Marks

Max Scores 25 40 15 10 10 100

Marks Scored

Cut off Score = 50

Test Result of Credit score card

Sl.

No.

Description Score card result Result of credit

assessment

Remarks

1. Self employed

professional

1 year into practice

return filed for

Rs.85K

Current residence

rented for 3 months

Having one phone at

office

Looking for a car

with maximum LTV

42 (fail) Case is not

recommended

due to

professional

instability factor

The scoring

matched with

the assessment.

However had he

taken LTV of

80%, he would

have scored 52

and qualify

2. A self employed

manufacturer

aged 45 years

filing return of

Rs.75K

70(passed) Case is

recommended

as the profile is

of a middle aged

established

The scoring

matched with

the assessment


130

Staying in rented

house since birth

Has phone at both

residence and office

businessman

3. New joinee in a company

Aged 25 years

Earning Rs.16K

Working city is

different from place

of birth (last 7

months in the city)

No phone at

residence

50 (passed) Case is

recommended

as the customer

has just got the

passing score.

The scoring

matched with

the assessment.

4. Self employed

Aged about 29 years

Business since 3

years

IT of Rs.60K

1 phone at resi

staying at rented

residence since birth

Looking for a car

with 80% LTV

50 (passed) Case is

recommended

as a self

employed

with residence

stability

is an acceptable

profile

The scoring

matched with

the assessment

5. Company official

aged about 32 years

net take home Rs.30

60(passed) Case is

recommended

The scoring

matched with

the assessment


131

K p.m.

working > 5 years

but transferred to

city for last 6 months

6. Self employed

aged 40 yeas

income Rs.50

staying in parental

house since birth

Phone both at resi

and office

Looking at LTV of

70%

75(passed) Case is highly

recommended

due to business

stability and low

LTV factor.

The scoring

matched with

the assessment


132

Home Loan

Axis Bank's Power Home puts an end to your Real Estate troubles. Augment your reach and

buy the house that you've set your heart on.

Features


Balance Transfer facility

Doorstep service

Option to choose from floating rate or fixed rate

Loan Purposes

You can apply for Power Home for the following purposes:

Purchase of a plot of land and construction of a house thereon

Construction of a house on plot of land already owned

Purchase of a new house or flat

Residual age of the property should not be less than 30 years old (Home Acquisition

Plan)

Extension or renovation or repair of a house or flat already owned by self

(improvement or extension plan)

Take-over of existing Housing Loan (Balance Transfer)

Pre-allotment booking finance

Loan takeover with additional refinance (Balance Transfer + top up)

Loan to NRI for purchase of ready residential property only

Purchase of residential plots only


133

Eligibility

A) Salaried Individuals

Any individual who is in permanent service in Government or reputed companies

The applicant in all the cases should be above 24 years of age at the time of loan

commencement and up to the age of superannuation

B) Professionals

Professionals (ie, doctors, engineers, dentists, architects, chartered accountants, cost

accountants, company secretary, management consultants only) can apply

The applicant should be above 24 years of age at the time of loan commencement

and up to 65 years or less at the time of loan maturity

C) Self Employed Individuals

Any individual filing Income Tax returns can apply


commencement and up to 65 years or less at the time of loan maturity

Loan Amount

Limits on home loan

Minimum - Rs 1 lac

Maximum - Rs 50 lacs

Margin

20% in the case of home loans

25% in case of improvement or renovation loans


134

Documentation

Documents Required

The following documents are required along with your loan application:


Proof of

identity

Voter's ID card or driving license or

PAN card or photo credit card or

employees ID card or defense or police

or government department ID card

Voter's ID card or driving

license or PAN card or photo

credit card

Proof of

income

Latest salary slip showing all deductions

or Form 16 along with recent salary

certificate

IT returns for the last 2 years

and computation of income for

the last 2 years certified by a

CA

Proof of

residence

Bank account statement or latest

electricity bill or latest mobile or

telephone bill or latest credit card

statement or latest LIC policy or

insurance premium receipt or employers

letter certifying the current mailing

address or latest NSC or other similar

instruments indicating the address or

existing house lease agreement


electricity bill or latest mobile

or telephone bill or latest credit

card statement or latest LIC

policy or insurance premium

receipt or latest NSC or other

similar instruments indicating

the address

Bank

statement or

Pass Book

where salary

or income is

credited



135

Interest Rates & Charges

Interest Rates:

Type Loan amount (Rs.) Rate Of Interest (p.a.)

Floating Up to 30 Lacs 9.00%

Above 30 Lacs 9.50%

Fixed Irrespective of the loan amount 14.00%

Loan

Processing

Charges

Prepayment

Charges

No Due

Certificate

Solvency

Certificate

Charges

for Late

Payment

of EMI

Charges

for

changing

from fixed

to floating

rates of

interest

Charges

for

changing

from

floating to

fixed rates

of interest

1% +

Service tax

as

applicable

Nil NA NA Rs 500 +

taxes per

cheque

bounce

Min. Rs.

5000 or 1%

of the

outstanding

amount

whichever

is higher

Min. Rs.

5000 or 1%

of the

outstanding

amount

whichever

is higher


136

Terms and Conditions

Repayment

Repayment period for home loans shall not exceed 20 years

Repayment period of pre-allotment bookings of housing loans shall not exceed 1½

year

Repayment period of improvement or renovation or extension of existing property

shall not exceed 10 years

Security

Equitable mortgage of the property to be financed by way of deposit of title deeds.

Disbursement

The loan will be disbursed in full or in suitable installments, taking into account the

requirement of funds and progress of construction, as assessed by the Bank directly to seller

or builder or local development authority or supplier of materials etc.

Processing charges or admission fee

Processing fee equivalent to 0.5% of the loan amount (applied for) will be collected along

with the application form (taxes as applicable).

Switching Cost:

Switching from the Floating rate scheme to the Fixed rate scheme and vice versa is

permissible. If a fixed rate customer wants to reschedule the loan to a lower interest rate, the

same is also permissible.


137

Penalty for early closure

Nil.

Other Conditions


The applicant will undertake to inform the Bank as and when there is a change in address or

employment

The terms and conditions mentioned above and elsewhere under the scheme are subject to

modification from time to time solely at Bank's discretion.


138

Asset Power (Loan Against Property)

Apply for Axis Bank's Asset Power. We will give you a loan against your property. Be it

commercial or residential. You can also apply for this loan if you need funds to acquire new

property. A take-over of your existing loan with refinancing is also possible with Asset

Power.

Features


Balance Transfer facility available with additional finance

Doorstep service

We can avail the following four products under Asset Power

Loan against property – Residential

Loan against property – Commercial

Loan for purchase of commercial property

Take-over of existing loan with additional refinance (Balance Transfer)

Lease Rental Discounting (LRD)

Eligibility

The following are the eligibility criteria depending upon the income profile :

Salaried Individuals:

Any individual who is in permanent service in government or a reputed company


commencement and up to the age of superannuation


139

Professionals:

Professionals (ie, doctors, engineers, dentists, architects, chartered accountants, cost

accountants, company secretary, and management consultants only) can apply

The applicant should be above 24 years of age at the time of loan commencement

and up to 65 years or less at the time of loan maturity

Self-employed Individuals:

Any individual filing Income Tax returns can apply


commencement and up to 65 years or less at the time of loan maturity

Documentation

An application for an Asset Power loan should feature the following documents:

Document Salaried Applicants Other Applicants

Proof of

identity

Voter's ID card or driving license or

PAN card or photo credit card or

employee's ID card, or defense or

police or government department ID

card

Voter's ID card or driving

license or PAN card or photo

credit card

Proof of

income

Latest salary slip showing all

deductions or Form 16 along with

recent salary certificate

IT Returns for the last 2 years

and computation of income for

the last 2 years certified by a

CA

Proof of

residence


electricity bill or latest mobile or

telephone bill or latest credit card

statement or latest LIC policy or

Bank account statement or

latest electricity bill or latest

mobile or telephone bill or

latest credit card statement or


140

insurance premium receipt or

employers letter certifying the current

mailing address or latest NSC or other

similar instruments indicating the

address or existing house lease

agreement

latest LIC policy or insurance

premium receipt or latest NSC

or other similar instruments

indicating the address

Bank statement

or pass book

where salary or

income is

credited


Guarantor form Optional Optional

Lease

Agreement

Copy of lease agreement required for

all lease rental discounting cases

Copy of lease agreement

required for all lease rental

discounting cases

Loan Amount

Limits for Asset Power

Minimum - Rs 2 lacs

Maximum - Rs 150 lacs

Margin

20 - 30% in case of purchase of commercial property

40 - 55% in case of Loan against residential/commercial property


141

Terms and Conditions

The following are the terms and conditions applicable to Asset Power:

Repayment: Repayment period for Loan Against Property is maximum 15 years.

Security: Equitable Mortgage of the property to be financed, by way of deposit of

title deeds.

Insurance: Customer can avail Property & Personal Accident insurance cover as per

the guidelines and arrangements with the insurer/underwriter. This is optional.

Processing Charges or Admission Fee: Minimum login fees of Rs 4000 will be

charged plus a processing fee equivalent to 1% of the loan amount sanctioned (taxes

as applicable).

Penalty for early closure: 2% will be charged if the amount exceeds 25% of the

principle outstanding during a quarter, otherwise no penalty.

Other Conditions:


The applicant will undertake to inform the Bank as and when there is a change in

address or employment

The terms and conditions mentioned above and elsewhere under the scheme are

subject to modification from time to time solely at Bank's discretion.


142

AXIS BANK LTD.

FINANCIAL STATEMENTS

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Income: Operating income 13,550.95 8,750.68 5,461.60 3,594.46 2,299.23

Expenses Material consumed - - - - -

Manufacturing expenses - - - - - Personnel expenses 997.66 670.25 381.35 240.20 176.85 Selling expenses 46.32 74.41 29.62 17.05 11.47

Adminstrative expenses 2,357.78 1,551.27 864.23 575.74 302.21 Expenses capitalised - - - - -

Cost of sales 3,401.76 2,295.92 1,275.19 833.00 490.53 Operating profit 2,999.92 2,034.80 1,193.09 950.90 615.71 Other recurring income 81.81 13.86 21.24 6.34 34.52

Adjusted PBDIT 3,081.73 2,048.66 1,214.32 957.24 650.24 Financial expenses 7,149.27 4,419.96 2,993.32 1,810.56 1,192.98

Depreciation 188.67 158.11 111.86 92.19 81.58 Other write offs - - - - - Adjusted PBT 2,893.07 1,890.54 1,102.46 865.05 568.66

Tax charges 970.12 734.86 418.82 246.35 180.03 Adjusted PAT 1,823.56 1,086.21 661.94 486.78 326.17

Non recurring items -8.20 -15.18 -2.91 -1.70 -2.39 Other non cash adjustments - - -31.80 - 10.80 Reported net profit 1,815.36 1,071.03 627.23 485.08 334.58

Earnigs before appropriation 3,369.23 2,100.10 1,358.26 682.49 516.68 Equity dividend 420.52 251.64 148.79 112.55 87.75

Preference dividend - - - - - Dividend tax - - - - - Retained earnings 2,948.71 1,848.47 1,209.47 569.94 428.93

Profit loss account (Rs crore)


143

Balance sheet (Rs crore)

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Sources of funds

Owner's fund Equity share capital 359.01 357.71 281.63 278.69 273.80

Share application money - - - 13.44 13.42 Preference share capital - - - - -

Reserves & surplus 9,855.79 8,412.98 3,120.58 2,593.50 2,134.39 Loan funds

Secured loans - - - - - Unsecured loans 1,17,374.11 87,626.22 58,785.60 40,113.53

Total 1,27,588.90 96,396.91 62,187.81 42,999.16 34,133.60 Uses of funds

Fixed assets Gross block 1,741.86 1,384.70 1,098.93 898.68 764.78

Less : revaluation reserve - - - - - Less : accumulated depreciation 726.45 590.33 450.55 345.33 261.98

Net block 1,015.40 794.37 648.38 553.34 502.80 Capital work- in-progress 57.48 128.48 24.82 14.37 15.64

Investments 46,330.35 33,705.10 26,897.16 21,527.35 14,274.95 Net current assets

Current assets, loans & advances 3,745.15 2,784.51 1,892.07 1,679.98 2,071.38 Less : current liabilities & provisions 9,947.67 7,556.90 5,873.80 4,051.03 1,828.68

Total net current assets -6,202.52 -4,772.38 -3,981.73 -2,371.05 242.70 Miscellaneous expenses not written - - - - -

Total 41,200.72 29,855.57 23,588.62 19,724.02 15,036.08 Notes:

Book value of unquoted investments - - - - - Market value of quoted investments - - - - -

Contingent liabilities 1,04,428.39 94,598.40 67,744.86 45,043.14 23,441.83 Number of equity sharesoutstanding

(Lacs) 3590.05 3577.10 2816.31 2786.91 2737.96


144

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Profit before tax 2,785.19 1,646.27 996.24 731.30 503.81 Net cashflow-operating activity 10,551.63 5,960.45 5,295.53 240.17 4,334.19

Net cash used in investing activity -9,741.96 -4,702.52 -3,655.58 -2,097.47 -5,829.62 Netcash used in fin. activity 1,692.32 4,325.79 1,637.01 996.21 1,108.22

Net inc/dec in cash and equivlnt 2,512.66 5,585.94 3,276.46 -861.09 -387.20 Cash and equivalnt begin of year 12,504.24 6,918.31 3,641.84 4,502.94 5,663.21 Cash and equivalnt end of year 15,016.90 12,504.24 6,918.31 3,641.84 5,276.01

Cash flow (Rs crore)


145

Consensus Estimates Trends

Sales and Profit Figures in India Rupee (INR) Earnings and Dividend Figures in India Rupee (INR)

Current 1 Week

Ago

1 Month

Ago

2 Month

Ago

1 Year

Ago

SALES (in millions) Quarter Ending Sep-09 19,615.33 19,045.50 19,607.00 19,607.00 -- Quarter Ending Dec-09 21,088.00 20,045.50 20,757.00 20,757.00 --

Year Ending Mar-10 71,144.82 79,604.12 79,229.34 76,612.77 79,813.29 Year Ending Mar-11 88,210.41 96,207.77 96,284.62 92,556.86 102,503.70

Earnings (per share) Quarter Ending Sep-09 13.94 14.32 14.69 14.69 -- Quarter Ending Dec-09 15.68 15.23 14.94 14.94 --

Quarter Ending Mar-10 58.17 56.13 56.06 54.68 51.27 Quarter Ending Mar-11 71.15 69.58 68.45 65.32 65.72

Consensus Estimates Analysis


# of Estimates Mean High Low 1 Year

Ago

SALES (in millions)

Quarter Ending Sep-09 3 19,615.33 20,272.00 18,967.00 -- Quarter Ending Dec-09 3 21,088.00 22,788.00 19,719.00 -- Year Ending Mar-10 31 71,144.82 97,237.06 42,387.00 79,813.29

Year Ending Mar-11 27 88,210.41 124,063.21 46,537.00 102,503.70 Earnings (per share)

Quarter Ending Sep-09 2 13.94 16.40 11.48 -- Quarter Ending Dec-09 2 15.68 16.90 14.46 -- Year Ending Mar-10 38 58.17 67.90 42.10 51.27

Year Ending Mar-11 35 71.15 91.83 45.44 65.72 LT Growth Rate (%) 4 22.45 25.00 18.00 27.50


146

Historical Surprises


Estimates vs Actual Estimate Actual Difference Surprise %

SALES (in millions)

Quarter Ending Jun-09 17,541.80 20,042.00 2,500.20 14.25 Quarter Ending Mar-09 15,738.43 18,781.10 3,042.67 19.33 Quarter Ending Dec-08 15,529.44 16,618.50 1,089.06 7.01

Quarter Ending Sep-08 14,190.29 16,078.70 1,888.41 13.31 Quarter Ending Jun-08 12,023.56 14,352.60 2,329.04 19.37

Earnings (per share) Quarter Ending Jun-09 14.05 15.50 1.45 10.35 Quarter Ending Mar-09 11.11 16.10 4.99 44.86

Quarter Ending Dec-08 11.26 13.78 2.52 22.40 Quarter Ending Sep-08 9.99 11.07 1.08 10.77

Quarter Ending Jun-08 6.98 9.03 2.05 29.32

Earnings Estimates Revisions Summary

Last Week Last 4 Weeks

Number Of Revisions: Up Down Up Down

Revenue Quarter Ending Sep-09 1 0 0 0 Quarter Ending Dec-09 1 0 0 0

Year Ending Mar-10 10 4 11 6 Year Ending Mar-11 9 3 10 4

Earnings Quarter Ending Sep-09 0 1 0 1 Quarter Ending Dec-09 1 0 1 0

Year Ending Mar-10 18 2 20 3 Year Ending Mar-11 14 2 18 2


147

Mar ' 09 Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05

Per share ratios

Adjusted EPS (Rs) 50.79 30.37 23.50 17.47 11.91 Adjusted cash EPS (Rs) 56.05 34.79 27.48 20.77 14.89

Reported EPS (Rs) 50.57 29.94 23.40 17.41 12.22 Reported cash EPS (Rs) 55.82 34.36 27.37 20.71 15.20

Dividend per share 10.00 6.00 4.50 3.50 2.80 Operating profit per share (Rs) 83.56 56.88 42.36 34.12 22.49

Book value (excl rev res) per share (Rs)

284.53 245.19 120.80 103.06 87.96

Book value (incl rev res) per share

(Rs.) 284.53 245.19 120.80 103.06 87.96

Net operating income per share (Rs) 377.46 244.63 193.93 128.98 83.98

Free reserves per share (Rs) 230.47 208.03 86.60 75.38 54.08

Profitability ratios

Operating margin (%) 22.13 23.25 21.84 26.45 26.77

Gross profit margin (%) 20.74 21.44 19.79 23.88 23.23 Net profit margin (%) 13.31 12.22 12.01 13.47 14.33

Adjusted cash margin (%) 14.76 14.19 14.11 16.07 17.47 Adjusted return on net worth (%) 17.85 12.38 19.45 16.94 13.54

Reported return on net worth (%) 17.77 12.21 19.37 16.88 13.89 Return on long term funds (%) 97.33 71.15 119.74 88.56 70.55

Leverage ratios

Long term debt / Equity - - - - - Total debt/equity 11.49 9.99 17.28 13.97 13.17

Owners fund as % of total source 8.00 9.09 5.47 6.68 7.05 Fixed assets turnover ratio 7.78 6.32 4.97 4.00 3.01

Ratios (Rs crore)


148

Liquidity ratios

Current ratio 0.37 0.36 0.32 0.41 1.13 Current ratio (inc. st loans) 0.02 0.02 0.02 0.03 0.06

Quick ratio 9.52 9.23 7.39 6.52 11.55 Inventory turnover ratio - - - - -

Payout ratios

Dividend payout ratio (net profit) 23.16 23.49 22.57 23.20 26.22 Dividend payout ratio (cash profit) 20.98 20.47 19.30 19.49 21.08

Earning retention ratio 76.94 76.84 77.53 76.88 73.10 Cash earnings retention ratio 79.11 79.78 80.78 80.57 78.48

Coverage ratios

Adjusted cash flow time total debt 58.33 70.42 75.97 69.28 77.77

Financial charges coverage ratio 1.43 1.46 1.41 1.53 1.54 Fin. charges cov.ratio (post tax) 1.28 1.28 1.26 1.32 1.35

Component ratios

Material cost component (% earnings) - - - - -

Selling cost Component 0.34 0.85 0.54 0.47 0.49 Exports as percent of total sales - - - - -

Import comp. in raw mat. consumed - - - - - Long term assets / total Assets 0.92 0.92 0.93 0.92 0.87

Bonus component in equity capital (%) - - - - -


149

Annual results in brief

(Rs crore)


Sales 10,835.48 7,005.31 4,560.40 2,888.79 1,924.16

Operating profit 7,037.59 4,270.75 2,979.45 1,812.22 1,280.86

Interest 7,149.27 4,419.96 2,993.32 1,810.56 1,192.98

Gross profit 3,724.88 2,225.92 1,362.60 993.81 565.62

EPS (Rs) 50.57 29.94 23.40 17.41 12.22

Annual results in details


Other income 2,896.88 1,795.49 1,010.11 729.63 415.82

Stock adjustment - - - - -

Raw material - - - - -

Power and fuel - - - - -

Employee expenses 997.66 670.25 381.35 240.20 176.85

Excise - - - - -

Admin and selling expenses - - - - -

Research and development expenses - - - - -

Expenses capitalised - - - - -

Other expenses 1,860.55 1,484.67 833.24 573.85 404.53

Provisions made 939.68 579.64 366.36 262.52 61.92

Depreciation - - - - -

Taxation 969.84 575.25 337.21 246.21 169.12

Net profit / loss 1,815.36 1,071.03 659.03 485.08 334.58

Extra ordinary item - - - - -

Prior year adjustments - - - - -

Equity capital 359.01 357.71 281.63 278.69 273.80

Equity dividend rate - - - - -

Agg.of non-prom. shares (Lacs) 1789.30 1926.06 1482.42 2014.46 1965.51

Agg.of non promotoHolding (%) 49.84 53.84 52.64 72.28 71.79

OPM (%) 64.95 60.96 65.33 62.73 66.57

GPM (%) 27.12 25.29 24.46 27.47 24.17

NPM (%) 13.22 12.17 11.83 13.41 14.30


150

Half yearly results in brief (Rs crore)

Mar ' 09 Sep ' 08 Mar ' 08 Sep ' 07 Mar ' 07

Sales 6,023.99 4,811.49 3,817.77 3,187.54 2,556.39


Interest 4,061.71 3,087.56 2,242.00 2,177.96 1,676.32

Gross profit 2,048.13 1,676.75 815.48 830.80 780.93

EPS (Rs) 30.15 20.43 18.68 11.30 14.08

Mar ' 09 Sep ' 08 Mar ' 08 Sep ' 07 Mar ' 07

Other income 1,577.68 1,319.20 1,044.37 751.12 580.84





Excise - - - - -




Other expenses 968.25 892.30 1,446.73 617.58 476.39

Provisions made 387.17 552.51 -215.37 215.37 182.79


Taxation 578.65 391.19 362.62 212.63 201.64

Net profit / loss 1,082.31 733.05 668.23 402.80 396.50



Equity capital 359.01 358.89 357.71 356.51 281.63

Half yearly results in details


151



Agg.of non promotoholding (%) 49.84 53.23 53.84 50.67 52.64

OPM (%) 68.81 60.12 58.37 64.07 66.25

GPM (%) 26.94 27.35 16.77 21.09 24.89

NPM (%) 14.24 11.96 13.74 10.23 12.64

Dividend

Year Month Dividend (%)

2009 Apr 100 2008 Apr 60 2007 Apr 45

2006 Apr 35 2005 Apr 28

2004 Apr 25 2003 May 22 2002 May 20

2001 May 15 2000 May 12

1999 May 10


152

Jun ' 09 Mar ' 09 Dec ' 08 Sep ' 08 Jun ' 08

Sales 2,905.56 3,039.22 2,984.77 2,545.05 2,266.44


Interest 1,859.93 2,006.62 2,055.09 1,631.58 1,455.98

Gross profit 1,176.36 1,138.50 909.63 874.43 802.32

EPS (Rs) 15.62 16.20 13.95 11.23 9.21

Jun ' 09 Mar ' 09 Dec ' 08 Sep ' 08 Jun ' 08

Other income 958.57 845.51 732.17 694.40 624.80





Excise - - - - -




Other expenses 518.51 482.10 486.15 473.04 419.26

Provisions made 315.29 255.19 131.98 255.78 296.73


Taxation 299.03 301.86 276.79 215.74 175.45

Net profit / loss 562.04 581.45 500.86 402.91 330.14



Equity capital 359.76 359.01 358.98 358.89 358.56



Agg.of non promotoholding (%) 50.27 49.84 49.79 53.23 53.76

OPM (%) 60.66 67.27 70.38 61.13 58.98

GPM (%) 30.44 29.31 24.47 26.99 27.75

NPM (%) 14.55 14.97 13.48 12.44 11.42

Quarterly results in brief

(Rs crore)

Quarterly results in details


153

Results at a Glance

• Net Profit rose to Rs. 562.04 crores during Q1FY10 from Rs. 330.14 crores in

Q1FY09, registeringa growth of 70.24% yoy.

• Balance Sheet Size increased 24.18% yoy from Rs. 1,13,660 crores at the end of

Q1FY09 to Rs.1,41,142 crores at the end of Q1FY10.

• Demand Deposits rose 24.62% yoy from Rs. 35,449 crores at the end of Q1FY09 to

Rs. 44,176crores at the end of Q1FY10. On a daily average basis, demand deposits

grew by 24.75% toRs 39,739 crores in Q1 FY10 from Rs 31,854 crores in Q1 FY09.

• The Bank is well capitalised with a Capital Adequacy Ratio of 15.28% at the end of

Q1 FY10compared to 13.25% at the end of Q1FY09 and 13.69% at the end of

FY2009. The Tier - Icapital was 9.39% at the end of the quarter against 9.93% at the

end of June 2008 and 9.26%at the end of FY2009.

38% in Q1 FY09. The Bank‘s Capital Adequacy Ratio was 15.28% as at end June 2009 as

compared to 13.25% as at end June 2008 and a Tier-I ratio of 9.39% as compared to 9.93% as

at end June 2008. The diluted quarterly EPS at Rs. 15.50 was 71.65% higher than the EPS of

Rs. 9.03 in the first quarter of the previous year


154

. FINANCIAL HIGHLIGHTS:

• Net Interest Income (NII) and Net Interest Margins (NIM)

The Bank continued to build a wide presence through its 861 Branches & Extension Counters

and 3,723 ATMs across 534 cities and towns. During the quarter the Bank added 26 Branches

& Extension Counters and 128 ATMs. The daily average balances of Savings Bank deposits

during the quarter grew 33% yoy and those of Current Accounts grew 15% yoy. Demand

deposits constituted 37% of the total daily average deposits during Q1 FY10 at nearly the

same level (38%) as in Q1 FY09 and higher than the level of 35% in Q4FY20. As a result,

the Bank posted a Net Interest Margin of 3.34%, marginally lower than the NIM of 3.37% in

Q4FY09 and 3.35% for Q1FY09.

The Bank‘s advances grew by 28% from Rs. 61,160 crores as at end June 2008 to Rs. 78,105

crores as at end June 2009, while investments rose to Rs. 46,328 crores fro m Rs. 35,718

crores, a growth of 30% yoy. The Net Interest Income rose to Rs. 1,046 crores in Q1FY10

from Rs. 810 crores in Q1FY09, a growth of 29% yoy.

• Fee income

Fee Income registered a growth of 17% yoy, rising to Rs. 626.63 crores in Q1FY10 compared

to Rs. 537.27 crores in Q1FY09, with contributions from all major businesses in the Bank.

Fee income from Treasury grew at 55% yoy, followed by that from Retail Banking (21%

yoy), Business Banking (19% yoy), Large & Mid Corporate Credit (15% yoy) and SME &

Agri lending businesses (8% yoy).

• Trading Profits

The Bank generated Rs. 326.07 crores of Trading Profits in Q1FY10, as compared to Rs.

57.31 crores in Q1FY09, a growth of 468.96% yoy. The share of Trading Profits to the

Operating Revenue increased from 3.99% in Q1FY09 to 16.27% in Q1FY10.


155

• Investment Portfolio

The book value of the Bank‘s investment portfolio as at end June 2009 was Rs. 46,328

crores, of which Rs. 26,859 crores was in government securities while Rs. 19,469 crores was

in other investments including corporate bonds, equities, preference shares, mutual funds etc.

91% of the government securities have been classified in the HTM category while 99% of the

corporate bond portfolio has been classified in the HFT and AFS categories. The distribution

of the investment portfolio in the three categories as well as the modified duration in each

category was as follows.

Category Percentage Duration

HFT 0.64% 5.7 years

AFS 41.86% 3.5 years

HTM 57.50% 5.6 years

BUSINESS OVERVIEW:

• Cash Management Services

Under Cash Management Services, the Bank handled a cash remittance throughput of Rs.

2,55,759 crores in Q1FY10 as compared to a throughput of Rs. 3,60,318 crores in Q4FY09

and higher than the throughput of Rs 2,40,102 crores during Q1FY09. The number of CMS

clients has grown to 5,089 as at end June 2009.

• Placement / Syndication and Project Advisory

The Bank maintained its No.1 rank as Debt Arranger as assessed by Prime Database for

the year ended March 2009. Further, in the Bloomberg league table for ‗ India Domestic

Bonds‘, the Bank has been ranked No.1 for the quarter ended June 2009. The Bank was

the arranger of debt aggregating Rs 14,630 crores during Q1FY10 as compared to Rs.

27,206 crores during Q4FY09 and substantially higher than Rs. 7,649 crores in Q1FY09,

a growth of 91% yoy. The Bank continues to strengthen its focus on project advisory

services.


156

• Retail Business

The number of Savings Bank accounts grew from 65.23 lakhs as at end June 2008 to 75.41

lakhs as at end June 2009.

� Retail Asset Products: Retail advances grew from Rs. 14,638 crores as at end June 2008

to Rs. 16,780 crores as at end June 2009, a growth of 15% yoy. Retail Advances

accounted for 21% of the total Advances of the Bank as at the end of June 2009. The

Bank has set up 64 Retail Asset Centres (RACs) for focussed retail lending.

� Card products: The Bank's International Debit Card issuance has risen to 124 lakh debit

cards as at end June 2009 as compared to 95 lakh cards as at end June 2008. The Bank

had over 5,43,000 Credit Cards in force as at end June 2009. The Bank has an installed

base of over 1,23,000 Electronic Data Capture (EDC) machines as at end June 2009.

� Wealth Advisory Services and Third Party Products: The Bank offers Wealth Advisory

Services and Mohur - Gold Coins and bars - through its select branches, and Personal

Investment Products including Mutual Funds, Life Insurance products in association with

Metlife India, General Insurance products in association with Bajaj Allianz Insurance and

Online trading accounts in association with Geojit Securities.

• International Business

The Bank has five international offices – branches at Singapore, Hong Kong and Dubai (at

the DIFC) and Representative Offices in Shanghai and Dubai - with focus on corporate

lending, trade finance, syndication, investment banking, risk management and liability

businesses. The total assets under overseas operations amounted to US$ 2.18 billion as at end

June 2009 as compared to US$ 1.80 billion as at end June 2008, a growth of 21% yoy.


157

• Capital & Net Worth:

The Net Worth of the Bank was Rs. 10,282 crores as at end June 2009 as compared to Rs.

8,742 crores as at end June 2008, a growth of 18% yoy. The Capital Adequacy Ratio for the

Bank was 15.28%, as at end June 2009, as compared to 13.25% as at end June 2008. The Tier

- I capital amounted to 9.39% as at end June 2009 as against 9.93% as at end June 2008.

Rs in crores

Financial Performance Q1FY10 Q1FY09 % Growth

Net Profit 562.04 330.14 70%

EPS Diluted (Rs.) 15.50 9.03 72%

Net Interest Income 1,045.63 810.46 29%

Other Income 958.57 624.80 53%

- Fee Income 626.63 537.27 17%

- Trad ing Income 326.07 57.31 469%

- Miscellaneous Income 5.87 30.22 (81%)

Operating Revenue 2,004.20 1,435.26 40%

Core Operating Revenue* 1,678.13 1,377.95 22%

Operating Expenses (incl.

depreciation) 827.84 632.94 31%

Operating Profit 1,176.36 802.32 47%

Core Operating Profit** 850.29 745.01 14%

* Core Operating Revenue = Operat ing Revenue – Trading Income

** Core Operating Profit = Operating Profit – Trading Income


158

Business Performance As at 30.06.09 As at 30.06.08 % Growth

Total Deposits 1,10,256 88,973 24%

Demand Deposits 44,176 35,449 25%

- Savings Bank Deposits 25,199 19,026 32%

- Current Account Deposits 18,977 16,423 16%

Demand Deposits as % of Total Deposits 40.07% 39.84%

Term Deposits 66,080 53,524 23%

Demand Deposits on a

Cumulat ive Daily Average

Basis

39,739 31,854 25%

Demand Deposits as % Total Deposits

(CDAB basis) 37.30% 37.54%

Net Advances 78,105 61,160 28%

- Large and Mid Corporate 38,875 29,455 32%

- SME 14,907 11,430 30%

- Agri 7,543 5,637 34%

- Retail Advances* 16,780 14,638 15%

Investments 46,328 35,718 30%

Balance Sheet Size 1,41,142 1,13,660 24%

Net NPA as % of Net Customer Assets 0.41% 0.47%

Gross NPA as % of Gross Customer

Assets 1.01% 0.92%

Equity Capital 359.76 358.56

Net Worth 10,282 8,742 18%

Capital Adequacy Ratio 15.28% 13.25%

- Tier I 9.39% 9.93%

- Tier II 5.89% 3.32%


159

SUGGESSIONS & CONCLUSION

1. More Parameters should be included in Credit Appraisal

Though the credit appraisal followed by Axis Bank is good, but more

parameters should be included for the customers prospective. Like, past

credit history of the borrower with the same bank should be included. It

will help in knowing the credit worthiness of that customer.

2. Industries should be Encouraged

More SMEs and Large cap. Industries should be encouraged by giving

easy term loans, for the fast development of the society.

3. Appraisal process of small SME loans should be simplified.

4. Though Credit Appraisal and Sanction process is centralised but

unavailability of RACs (Retail Asset Center) at small centres leads to

delay in the whole process. To overcome this RACs should be setup

for a cluster of small branches in their vicinity.

5. Though Credit Appraisal and Sanction process is centralised but

unavailability of dedicated staffs at small centers leads to delay in the

whole process.


160

LIMITATIONS

1) As per the policy of the bank, they does not provide the internal data

of the branch.

2) The project has done in the branch office of Axis Bank Ltd. not in the

corporate office so all the banking activities are not in operation.

3) Duration of the project was too short.

4) Most of the information collected is more practical and

understandable, but it is difficult to put it in proper theoretical

language


161

BIBLIOGRAPHY


162

BOOKS REFERED

1. Singhal Sanjiv, Internet banking-the second wave by, Land marks books

2. Bhattacharya, Banking strategy, credit appraisal and landing decisions: a

risk return Framework by, Landmark Books

3. M.Y. Khan P.K. Jain, Financial Management, Tata McGraw hill, Fifth

Edition, Page 29.1-29.23

4. Agrawal, J.D.-―Accounting for Financial Analysis:, Indian Institute of

Finance publication, Fifth Edition, 2002.

5. Brigham Eugee. F & Ehrhrdt Michael C. – ―Financial Management‖,

Thomsom South-western Publications, Tenth Edition, 2004.

6. Chandra P.-―Financial Management‖‘ Himalaya Publication, fourth

Edition.


163

7. Meheshawri S.N-―Financial Management‖‘ sultan Chand & Sons

Publication, Edition-2002.

8. Study material of AXIS BANK LTD., 2006-2007, 2007-2008, Page 67-

88, page 102-112, page 200-289

9. Annual report of AXIS BANK, Edition, 2008-2009, Page 23, 25,228,39

10. Manual of RBI Notification 2007-2008

11. Batchelor, Roy A., and Pami Dua. "Household Versus Economist

Forecasts of Inflation: A Reassessment," Journal of Money, Credit, and

Banking 21 (1989), pp. 252-7.

12. Bomberger, William A. "Disagreement as a Measure of Uncertainty,"

Journal of Money, Credit, and Banking 28 (1996), pp. 381-92.

13. Bomberger, William A., and William J. Frazer. "Interest Rates,

Uncertainty, and the Livingston Data," Journal of Finance 36 (1981), pp.

661-75.

14. Bond, Michael T., and Gerald E. Smolen. "The Fisher Effect: Inverted or

Not," Review of Business & Economic Research (1992), pp. 58-63.


164

15. Brooking, Carl G., and Patrick A. Taylor. "On the Necessity of

Estimating Expected Inflation in Assessing the Value of Lost Earnings,"

Paper presented at the Southeast Federation of Administrative Disciplines

Meeting, New Orleans, March 1989.

WEBSITE REFERED

1. www.axisbank.com

2. www.crisil.com

3. www.wikipedia/studymaterial/credit.com

4. www.econamictimes.com - smeinitiative.

5. www.businessline.com

6. www.iloveindia.com/finance/bank/private-bank/uti-bank.html

7. www.moneycontrol.com/stock/co.information/co._history

8. www.bseindia.com

9. www.equitymaster.com


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10. www.firstglobal.in

11. www.iif.edu

12. www.nseindia.com

13. www.sebi.gov.in

14. www.yahoo.co.in (yahoo finance)

15. www.nseindia.com

16. www.myiris.com

17. www.investopedia.com

18. www.finance.indiamart.com