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Quick Success Series: BPR Initiatives January 15, 2011

Quick Success Series

Business Process Reengineering Initiatives

Compiled By Shailesh Kumar Chief Manager, SBLC Deoghar Mobile- 9199373521 Email- sailesh.kumar@sbi.co.in

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Quick Success Series: BPR Initiatives January 15, 2011

BPR is the fundamental rethinking and radical redesign of business processes to bring about dramatic improvement in performance Consultants for BPR in SBI - Mc Kinsey Need of BPR in SBI Market conditions and expectations of customers had changed substantially mainly due to entry of New Generation Private Sector banks & Foreign Banks. These banks were offering world class services to the high end customers and were using state of the art technology. On the contrary, our processes have remained the same. Our market share was going down. Objective of BPR To enhance customer service levels and experience by simplifying processes and offering multiple delivery channels To build deep and lasting relationship with customers To improve productivity through increase of business and profit per employee To Free up time of Branch and Branch Manager to focus on sales and marketing To acquire new quality customers Pillars of BPR Branch Re-design ii) Centralised Processing Centers iii) Alternate Delivery Channels iv) Sales Forces Branch Redesign Two types of change envisaged i) Change in role of various functionaries & ii) Change in internal layout Benefits to Customers Help & guidance from Grahak Mitra at the entry point in branches Reduction in waiting time Convenience of completing all transactions at a single counter (SWO/CRO) Increased & friendlier customer area (70% of Banking Hall for customers) Benefits to employees Greater specialisation of skills due to separation of sales & service related activities in the branch Development of multi skills in employees (both clerical & supervising staff) will lead to self enrichment & self-confidence Fewer roles in the branch leading to greater clarity of roles of branch functionaries Better team spirit amongst staff Benefits to Bank Sudden absenteeism of staff does not impact customer service Multi skilling of staff helps in balancing work load & improving productivity Branch Manager is freed up to focus on sales due to creation of Service Managers roles

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Quick Success Series: BPR Initiatives January 15, 2011

Types of Branches after Redesign Core Sales and Service Branch (SSB) (ii) SSB with affluent module (iii) SSB with SME module iv) A self assisted outlet- Mini Branch operated by 1-2 staff and supported by a full suite of alternative channel access devices (ATMs, call center link, internet kiosk etc.) (iv) Sales focused outlet located in high traffic areas & (v) Product specific outlet such as home loan center, locker center Core Sales and Service Branch (SSB) will cater to a broad spectrum of customers including mass and mass affluent p-segment customers and small enterprises. Functionaries Branch Manager, Manager (Branch Operation), SWOs & Grahak Mitra Core SSB with affluent module branch will have the same format as that of core SSB with addition of an Affluent Module. This module will provide relationship based banking to affluent/mass affluent customers. Additional Functionary - Relationship Manager (Personal Banking) Core SSB with SME module branch has all the capabilities of a Core SSB with the usual functionalities along with additional module to service SMEs. Additional Functionary/Team - Relationship Manager (ME) and Credit Support Officer (CSO) to serve ME Customers Small Enterprises will be served by dedicated Customer Relation Officer (CRO) Role of Branch Manager Spend 60% of his time in acquiring valuable customers and up-selling/cross selling to top customers of the branch Role of Manager (Branch Operation) Allocation of staff duties to ensure that branch operates normally despite leave Complete responsibility for maintaining desired customer service levels in the branch (e.g., transaction time, waiting time for customers etc.) Authorizing transactions beyond the power of Single Window Operators Handle customer grievances on service which cannot be solved by Single Window Operators/ Grahak Mitra Ensure proper upkeep of branch premises Manage vendors and suppliers of the branch to ensure that there are no disruptions in branch work Ensure that staff administrative matters including leave records and staff records are in order Follow-up to ensure that all pending work in the Branch like IOA memos, un-reconciled GLIF entries are completed promptly Joint custodian of vault and ATM Role of Customer Relation Officer (CRO) To cross-sell to all walk-in customers of the Branch, To spend at least 20% time in proactive cross-selling products to the top customers To Handle transactions where there is a significant interaction and an opportunity to cross sell to the customer [e.g. account opening and closure for Liability a/cs (SB/ CA/ TDR/ RD/ STDR),

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Quick Success Series: BPR Initiatives January 15, 2011

Asset a/cs (Personal/ Housing/ Car/ Education loans), Government a/cs (PPF/Senior Citizen/Pension], Forex a/cs (FCNB/ FCNR/ NRE/ NRO) and Demat a/cs Handling deceased a/c cases Providing locker access to customers (if Special Asstt. is not posted) Role of Grahak Mitra Grahak Mitra will be a member of clerical staff & provide first level assistance to customers visiting the Branch He will also provide basic product information and brochures to customers coming for a general enquiry help the customers not well-versed with alternate channels to use them guide the customers with complex transaction needs to proper officer/ counter pass on customers interested in certain products to CRO, RM (PB) or Branch Manager greet the top customers of the Branch , nicely to address their recognition need and guide them to Manager PBD and/or Branch Manager in appropriate manner Role of Single Window Operator: To be a Single touch-point for customers for transaction related needs viz. cash receipt and deposit, pass book update, Draft/BC issuance, Government Challans, Accepting ATM card requests Grahak Mitra will support the single window operators by managing queues, provide forms/ vouchers to customers and help customers with use of alternate channels Relationship Manager (Personal Banking) [RM (PB)] To provide relationship based services to top 300 (approximately) high value P segment customers To get new high value customers for the Bank Customers entitled to receive the services of RM (PB): Having deposits/MF investments >5 Lacs Home Loan >10 Lac for top cities (Mumbai, Kolkata, Delhi, Chennai, Bangalore, Ahmedabad, Hyderabad) and 5 Lac for other places. Car Loan > 5 Lacs Income >2.40Lacs pa & deposits/investments > 2 Lacs (Pensioners not > 25% of total customers) Relationship Manager (Medium Enterprise) To acquire new ME businesses and as well as to maintain relationship existing ME accounts Scope of work for RM (ME) all loans satisfying following criteria: Annual turnover above Rs 5 crores and upto Rs 50 crores, and Aggregate Working Capital Limits (existing or proposed) less than Rs 10 crores from our Bank, and Term Loan (existing or proposed) less than Rs 10 crores from our Bank, and all specified NBG schemes where turnover criteria do not apply like Rent Plus, Mortgage Loan, Term Loan for equipment/ Transport Operator/ Hospitals/ Schools/ Educational Institutions/ Builders under housing tie-up etc. and Fund Based Limits exceeding Rs 100 lacs subject to subceilings.

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Quick Success Series: BPR Initiatives January 15, 2011

Component of RM (ME) team: A Relationship Manager for Medium Enterprises RM (ME) who is the leader of the team A Customer Support Officer (CSO). Models of RM (ME) Branch Based Model - RM (ME) team belongs to and is posted at one branch which has about 70 ME customers or has the potential to grow up to this level & Sales Hub Model- RM(ME) team takes care of a cluster of branches which, in aggregate, have about 70 ME customers or have the potential to grow up to this number RM (ME) team can be started at a centre/branch even with 30 ME customers only if adequate potential is available Central Processsing Centres Liability Central Processing Centre (LCPC) Retail Asset Central Processing Centre (RACPC) Small and Medium Enterprise City Credit Centre or SMECCC Centralised Pension Processing Cell (CPPC) Trade Finance Central Processing Centre (TFCPC) Stressed Assets Resolution Centre (SARC) Currency Administration Cell (CAC) Centralised Clearing Processing Centre (CCPC) Document Archival Centre (DAC) Centralised Settlement & Reconciliation of PPF transactions (CSRP) Home Loan Sales Team (HLST) Multi Product Sales Team (MPST) Inward Remittance Cell (IRC) Mid-Corporate Loan Administration Unit (MCLAU) LCPC has been created at 4 Metros for Account opening, closing & maintenance of all deposit accounts, both Rupee & FX accounts LCPC issues Welcome Kit to the branches on request. Inventory of KITs are created in CBS by the officials at LCPC before dispatching the KITs to the Branch Branches acknowledge the KITs through CBS before issuing it to customers Data to entered by branch before issuing the KIT- Name, Address, Date of Birth & KYC details Each Welcome Kit contains a) One Non Personalised ATM Card & b) One Cheque Book containing 10 leaves Welcome KIT can be issued to Primary Account Holder only Welcome KIT cannot be issued in - Accounts to be operated jointly , Non Individual Accounts & Illiterate Accounts RACPCs have been setup at Major Cities to handle P-segment loan applications except Xpress Credit, Pensioner Loan, Loan against Security & Staff Loan Activities at Branch - Sourcing of Loan Application & KYC Compliance Activities at RACPC - Pre-sanction Inspection, Appraisal & Sanction, Documentation, Disbursement, Obtention of Revival Letters, Obtaining & Lodging & Post Dated Cheques, Soft Recovery in irregular Loans, Closure of Account & Release of Documents

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Quick Success Series: BPR Initiatives January 15, 2011

Software used for processing Housing Loan/Car Loan & Education Loan- Dream Home Turn Around Time (TAT) a) Housing Loan 6 days b) Education Loan 5 Days c) Mortgage & Rent Plus 6 days d) Auto Loans 2 days Accounts maintained at RACPC: i) RACPC Advocates Fees Collection account ii) RACPC Valuers Fees Collection account RACPC Stamp Charges Collection account SMECC have been set up to handle processing, sanctioning, documentation, disbursement and also to take up maintenance of loans to SME units Activities at SMECC - Appraisal & Sanction, Review/ Renewal/Enhancement, DP set up for cash credit A/c, Disbursement of Term loans, Obtaining Insurance Policies & Revival, Inspection of Units, Soft recovery in irregular accounts Benchmark for Total Time to be taken for Sanction - 8 days Benchmark for Total Time to be taken for Sanction of Takeover proposals - 14 days Hybrid model of combining RACPC and SECC is known as RASECC CPPC have been set up to take care of back office activities connected with payment of pension Activities at CPPC - Crediting Pension online directly to the Pensioners A/C every Month, Calculation of Arrear o/a of Revision in Pension or DA & Storage of PPOs/Certificates Activities at Branch Forwarding New PPOs after completing formalities to CPPC & Obtaining Periodical Certificates from Pensioners and updating it in the system TFCPC conducts following activities on behalf of the branches (including MCG & CAG Branches linked to it Issue of Letters of Credits/BG (both Foreign and Inland) Handling Import/Inland inward bills Negotiation of Export/inland outward bills Advising of LCs (both Foreign and Inland) Forward contracts SARC a city based outfit for resolving stressed assets under Per & SME segments Activities - Rehabilitation /Restructuring of NPA A/cs, Resolution through legal processes like SARFAESI Act, Filing suits in DRT/ Civil Suits etc & Resolution through non-legal measures like Lok Adalats, Compromise, Write-off etc Monetary ceiling for transferring NPA a/cs to SARC NPAs with outstanding upto Rs 1 Crore if SAMB exist at the Centre NPAs with outstanding upto Rs 5 Crore if SAMB does not exist at the Centre Accounts not covered by SARC - Mid-Corporate A/cs (irrespective of amount), BIFR a/cs (irrespective of segment), Staff Accounts, Agl Segment A/cs & Frauds (till investigations are completed) Advantages of CAC - Cash Optimization, Transportation optimization & Man power optimization

o o o o o

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Quick Success Series: BPR Initiatives January 15, 2011

Functions of CAC- Arranging cash remittance to Hand Balance Branches needing cash, Arranging cash pick-ups from Hand Balance Branches having surplus cash, Replenishment of cash at offsite ATMs, Monitoring and Optimization of cash balances of Hand Balance Branches

CCPC- Models o HSPE file upload Model Mumbai (uses High speed machines and full functional cheque processing software) & o MICR file upload Model Amritsar (Uses low speed machines and Core Banking Solutions) Functions- Posting inward clearing instruments in customers accounts received from Clearing House, Posting outward clearing/SC/DDP instruments along with the pay-in slips received from linked branches & Posting ECS Inward Debits CCPC will not handle Local Intra-Bank Clearing DAC provides Record Management Solution to linked Branches & CPCs It has been created for Safe & scientific storage of Records/ Secured Documents of Branches/CPCs Retrieval of Records/Secured documents on request from Branches/CPCs Re-storage of retrieved Records/Secured Documents Destroying Records/Documents after retention period CSRP has been set up as a part of GAD at corporate centre To ensure expeditious processing & settlement of PPF Transactions with RBI To avoid penal interest and opportunity loss on account of delayed settlement of funds To reconcile transactions with CDC HLST has been constituted to sell Home Loan Product only MPST has been constituted to canvass Business from Small Enterprises Liabilities business & Third Party Products (Life, MF, etc.) Assets business (viz. Education Loans, Car Loans, etc. other than home loans) from Personal Segment clients only Head of HLST/MPST is designated as Chief Marketing Executive IRC, the single CPC for entire country is located at Global Markets Unit (Kolkata) It has been set up to handle All Non Trade Related Inward INR & Foreign Currency Remittances received through SWIFT MCLAU has been set up to take care of Post-sanction credit process of the offsite MidCorporate Accounts (MCA) on centralized basis Corporate - annual sales turnover of above Rs 500 Crores Mid Corporate - annual sales turnover of above Rs 50 Crores & Upto Rs 500 Crores Medium Enterprisesannual sales turnover of above Rs 5 Crores & Upto Rs 50 Crores Small Enterprise annual sales of upto Rs 5 Crores

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Quick Success Series: BPR Initiatives January 15, 2011

Drop Box Initiative Advantage - a) Hassle free service to cheque depositors b) Instant & 24*7 access & c) Frees up staff engaged in issuing counterfoil Drop Box has three colour coded slits for depositing cheques for Outstation Collection, Clearing and On- Branch respectively Cheques against Govt. Challans & Cheques for DDP & Local Purchase are to be deposited at the counter Key of the drop Box will be in custody of Accountant or Clearing in charge and he will also open it in the Beginning of the day, thereafter at least every 1 hour & at the end of business hours Person opening drop box will brand special crossing stamp on all cheques & ensure that name and account number of lodgers is written on the reverse of each cheque Notice required to be displayed on Drop Box in English, Hindi & Regional language of State Customers can also tender the cheques at the counter & obtain acknowledgement on the payin slip Customer Classification Super Affluent Annual Income > Rs 50 lacs Affluent - Annual Income > Rs 10 - 50 lacs Mass Affluent Annual Income> Rs 2.40 - 10 lacs Mass Annual Income> Rs 0.70 2.40 lacs Lower Mass Annual Income< 0.70 lacs Definition of HNI for population group Metro/Urban Total Relationship of Rs 15 lacs, Minimum 2 out of the following three a) Minimum Advances : 10 lacs b) Minimum Deposits : 5 lacs c) Minimum Assets under Management :2.5 lacs Definition of HNI for population group Semi Urban/Rural Total Relationship of Rs 7.5 lacs, Minimum 2 out of the following three a) Minimum Advances : 5 lacs b) Minimum Deposits : 2.5 lacs c) Minimum Assets under Management :1.25 lacs

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