THE ROLE OF ECONOMISTS IN BANKS The Crucial Role Of Bank Economists In Transforming The Banking System In India.

Economists Have To Be More Main Streamed Within The Operational Structure Of Commercial Banks. Apart From The Traditional Functioning Of Macro-Scanning, The Interlinkages Between Treasuries, Dealing Rooms And Trading Rooms Of Banks Need To Be Viewed Not Only With The Day-To-Day Needs Of Operational Necessity, But Also With Analytical Content And Policy Foresight. Today, Operational Aspects Of The Functioning Of Banks Are Attracting Intensive Research By Professional Economists. In Particular, Measuring And Modeling Different Kinds Of Risks Faced By Banks, The Behavior Of Risk-Return Relationships Associated With Different Portfolio Mixes And The Impact Of Fluctuations In Financial Markets On The Financial Performance Of Banks Are Areas Which Lend Themselves To Analytical And Empirical Appraisal By Economists And Econometricians. They, In Turn, Are Discovering The Degrees Of Freedom And Room For Analytical Maneuver In High Frequency Information Generated By The Day-To-Day Functioning Of Banks. It Is Vital That We Develop An Environment Where These Synergies Are Nurtured So As To Serve The Longer-Term Strategic Interests Of Banks. Even In Real Time Trading And Portfolio Decisions, The Fundamental Analysis Of Economists Provides An Independent Assessment Of Market Behavior, Reinforcing Technical Analysis. A Serious Limitation Of The Applicability Of Standard Economic Analysis To Banking Relates To The Inadequacies Of The Data-Base. Absence Of Long Time Series Data Storage In The Banking Industry Often Poses Serious Problems To The Quest For The Formal Analytical Relationships Between Variables. Even If Such Data Exist, The Presence Of Structural Breaks May Blur Meaningful Analysis Based On Traditional Formulation. Economists Need To Think Innovatively To Overcome This Problem. Use Of Panel Regression, NonParametric Methods And Multivariate Analyses Could Go A Long Way In Understanding And Validating Behavioral Relationships In Banking. Another Important Challenge For The Economics Profession Is To Develop Proper Models For Measurement Of Various Risks In Indian Conditions. This Is A Necessity In View Of The Move Towards Risk-Based Supervision. Quantification Of Operational Risks And Calibration Of Value At Risk (Var) Models Pose Major Computational Challenge To bankers and policy makers alike, particularly in India. A major difficulty lies in identifying the right statistical model that determines the underlying distribution suited to the particular category of operational loss, and building the necessary database for deriving operationally meaningful conclusions. In my inaugural address last year, I had also emphasized the need for bank economists to come out of their narrow specialization and address operational issues relating to banking and finance. In order to make a meaningful contribution to banking, economists must have the experience of working in operational areas of banks. For this purpose, economists need to soil their hands in dealing rooms, treasuries and investment units, credit authorization and loan recovery, strategic management groups and management information systems of the banks to understand the ground realities. There are also economies to be gained from field-level credit appraisal, asset recovery, debt restructuring, market and consumer behaviors in which banks are involved. Thus, the profession needs to amalgamate the objectivity and theoretical soundness of economics with the functional dimensions of banking and finance. It is this combination of specialist training with operational experience, which is going to make the economics profession relevant to the changing face of banking in India.

History of Banking in India Banks In India Banking services in India Reserve Bank of India (RBI) GENERAL BANKING??.Nature Of Banking Kinds Of Banks Role Of Banks In A Developing Economy Principles Of Bank Lending Policies Branch Setup In And Structure Organization System In Indaia Retail Bank ING-The New Flavor Strategic Issues In Bank Ing Service Knowledge Management. 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 reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization 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 Nationalization 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 I, Phase II and Phase III. PHASE I 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 day s public has lesser confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders. PHASE II Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially 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 over the country. Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July, 1969, major process of nationalization was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were nationalized. Second phase of nationalization 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 : Nationalization of State Bank of India. 1959 : Nationalization of SBI subsidiaries. 1961 : Insurance cover extended to deposits. 1969 : Nationalization of 14 major banks. 1971 : Creation of credit guarantee corporation. 1975 : Creation of regional rural banks. 1980 : Nationalization of seven banks with deposits over 200 crore. After the nationalization 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. PHASE III 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 liberalization 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.

BANKS IN INDIA------------------------------------------------------------In India the banks are being segregated in different groups. Each group has their own benefits and limitations in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are of Indian origin and some are foreign players. All these details and many more are discussed over here. The banks and its relation with the customers, their mode of operation, the names of banks under different groups and other such useful information are talked about. One more section has been taken note of is the upcoming foreign banks in India. The RBI has shown certain interest to involve more of foreign banks than the existing one recently. This step has paved a way for few more foreign banks to start business in India. Major Banks in India ABN-AMRO Bank Abu Dhabi Commercial Bank American Express Bank Andhra Bank Allahabad Bank Bank of Baroda Bank of India Bank of Maharastra Bank of Punjab Bank of Rajasthan Bank of Ceylon BNP Paribas Bank Canara Bank Catholic Syrian Bank Central Bank of India Centurion Bank Indian Overseas Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank JPMorgan Chase Bank Karnataka Bank Karur Vysya Bank Laxmi Vilas Bank Oriental Bank of Commerce Punjab National Bank Punjab & Sind Bank Scotia Bank South Indian Bank Standard Chartered Bank State Bank of India (SBI) State Bank of Bikaner & jaipur China Trust Commercial bank Citi Bank City Union Bank Corporation Bank Dena Bank Deutsche Bank Development Credit Bank Dhanalakshmi Bank Federal Bank HDFC Bank HSBC ICICI Bank IDBI Bank Indian Bank State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Saurastra State Bank of Travancore Syndicate Bank Taib Bank UCO Bank Union Bank of India United Bank of India United Bank Of India United Western Bank UTI Bank Vijaya Bank BANKING SERVICES IN INDIA:With years, banks are also adding services to their customers. The Indian banking industry is passing through a phase of customers market. The customers have more choices in choosing their banks. A competition has been established within the banks operating in India. With stiff competition and advancement of technology, the service provided by banks has become more easy and convenient. The past days are witness to an hour wait before withdrawing cash from accounts or a cheque from north of the country being cleared in one month in the south. This section of banking deals with the latest discovery in the banking instruments along with the polished version of their old systems. RESERVE BANK OF INDIA (RBI) -----------------------------The central bank of the country is the Reserve Bank of India (RBI). It was established in April 1935 with a share capital of Rs. 5 crores on the basis of the recommendations of the Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully paid which was entirely owned by private shareholders in the beginning. The Government held shares of nominal value of Rs. 2, 20,000. Reserve Bank of India was nationalized in the year 1949. The general superintendence and

direction of the Bank is entrusted to Central Board of Directors of 20 members, the Governor and four Deputy Governors, one Government official from the Ministry of Finance, ten nominated Directors by the Government to give representation to important elements in the economic life of the country, and four nominated Directors by the Central Government to represent the four local Boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Boards consist of five members each Central Government appointed for a term of four years to represent territorial and economic interests and the interests of co-operative and indigenous banks. The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank. The Bank was constituted for the need of following: To regulate the issue of banknotes To maintain reserves with a view to securing monetary stability and To operate the credit and currency system of the country to its advantage. FUNCTIONS OF RESERVE BANK OF INDIA The Reserve Bank of India Act of 1934 entrust all the important functions of a central bank the Reserve Bank of India. BANK OF ISSUE Under Section 22 of the Reserve Bank of India Act, the Bank has the sole right to issue bank notes of all denominations. The distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as agent of the Government. The Reserve Bank has a separate Issue Department which is entrusted with the issue of currency notes. The assets and liabilities of the Issue Department are kept separate from those of the Banking Department. Originally, the assets of the Issue Department were to consist of not less than two-fifths of gold coin, gold bullion or sterling securities provided the amount of gold was not less than Rs. 40 crores in value. The remaining three-fifths of the assets might be held in rupee coins, Government of India rupee securities, eligible bills of exchange and promissory notes payable in India. Due to the exigencies of the Second World War and the post-was period, these provisions were considerably modified. Since 1957, the Reserve Bank of India is required to maintain gold and foreign exchange reserves of Ra. 200 crores, of which at least Rs. 115 crores should be in gold. The system as it exists today is known as the minimum reserve system. Banker to Government The second important function of the Reserve Bank of India is to act as Government banker, agent and adviser. The Reserve Bank is agent of Central Government and of all State Governments in India excepting that of Jammu and Kashmir. The Reserve Bank has the obligation to transact Government business, via. to keep the cash balances as deposits free of interest, to receive and to make payments on behalf of the Government and to carry out their exchange remittances and other banking operations. The Reserve Bank of India helps the Government - both the Union and the States to float new loans and to manage public debt. The Bank makes ways and means advances to the Governments for 90 days. It makes loans and advances to the States and local authorities. It acts as adviser to the Government on all monetary and banking matters. BANKERS' BANK AND LENDER OF THE LAST RESORT

The Reserve Bank of India acts as the bankers' bank. According to the provisions of the Banking Companies Act of 1949, every scheduled bank was required to maintain with the Reserve Bank a cash balance equivalent to 5% of its demand liabilities and 2 per cent of its time liabilities in India. By an amendment of 1962, the distinction between demand and time liabilities was abolished and banks have been asked to keep cash reserves equal to 3 per cent of their aggregate deposit liabilities. The minimum cash requirements can be changed by the Reserve Bank of India. The scheduled banks can borrow from the Reserve Bank of India on the basis of eligible securities or get financial accommodation in times of need or stringency by rediscounting bills of exchange. Since commercial banks can always expect the Reserve Bank of India to come to their help in times of banking crisis the Reserve Bank becomes not only the banker's bank but also the lender of the last resort.

CONTROLLER OF CREDIT The Reserve Bank of India is the controller of credit i.e. it has the power to influence the volume of credit created by banks in India. It can do so through changing the Bank rate or through open market operations. According to the Banking Regulation Act of 1949, the Reserve Bank of India can ask any particular bank or the whole banking system not to lend to particular groups or persons on the basis of certain types of securities. Since 1956, selective controls of credit are increasingly being used by the Reserve Bank. The Reserve Bank of India is armed with many more powers to control the Indian money market. Every bank has to get a license from the Reserve Bank of India to do banking business within India, the license can be cancelled by the Reserve Bank of certain stipulated conditions are not fulfilled. Every bank will have to get the permission of the Reserve Bank before it can open a new branch. Each scheduled bank must send a weekly return to the Reserve Bank showing, in detail, its assets and liabilities. This power of the Bank to call for information is also intended to give it effective control of the credit system. The Reserve Bank has also the power to inspect the accounts of any commercial bank. As supreme banking authority in the country, the Reserve Bank of India, therefore, has the following powers: (a) It holds the cash reserves of all the scheduled banks. (b) It controls the credit operations of banks through quantitative and qualitative controls. (c) It controls the banking system through the system of licensing, inspection and calling for information.(d) It acts as the lender of the last resort by providing rediscount facilities to scheduled banks. CUSTODIAN OF FOREIGN RESERVES The Reserve Bank of India has the responsibility to maintain the official rate of exchange. According to the Reserve Bank of India Act of 1934, the Bank was required to buy and sell at fixed rates any amount of sterling in lots of not less than Rs. 10,000. The rate of exchange fixed was Re. 1 = sh. 6d. Since 1935 the Bank was able to maintain the exchange rate fixed at lsh.6d. Though there were periods of extreme pressure in favor of or against the rupee. After India became a member of the International Monetary Fund in 1946, the Reserve Bank has the responsibility of maintaining fixed exchange rates with all other member countries of the I.M.F. Besides maintaining the rate of exchange of the rupee, the Reserve Bank has to act as the custodian of India's reserve of international currencies. The vast sterling balances were acquired and managed by the Bank. Further, the RBI has the responsibility of administering the exchange controls of the country.

SUPERVISORY FUNCTIONS In addition to its traditional central banking functions, the Reserve bank has certain nonmonetary functions of the nature of supervision of banks and promotion of sound banking in India. The Reserve Bank Act, 1934, and the Banking Regulation Act, 1949 have given the RBI wide powers of supervision and control over commercial and co-operative banks, relating to licensing and establishments, branch expansion, liquidity of their assets, management and methods of working, amalgamation, reconstruction, and liquidation. The RBI is authorized to carry out periodical inspections of the banks and to call for returns and necessary information from them. The nationalization of 14 major Indian scheduled banks in July 1969 has imposed new responsibilities on the RBI for directing the growth of banking and credit policies towards more rapid development of the economy and realization of certain desired social objectives. The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound lines and to improve the methods of their operation.

PROMOTIONAL FUNCTIONS With economic growth assuming a new urgency since Independence, the range of the Reserve Bank's functions has steadily widened. The Bank now performs variety of developmental and promotional functions, which, at one time, were regarded as outside the normal scope of central banking. The Reserve Bank was asked to promote banking habit, extend banking facilities to rural and semi-urban areas, and establish and promote new specialized financing agencies. Accordingly, the Reserve Bank has helped in the setting up of the IFCI and the SFC; it set up the Deposit Insurance Corporation in 1962, the Unit Trust of India in 1964, the Industrial Development Bank of India also in 1964, the Agricultural Refinance Corporation of India in 1963 and the Industrial Reconstruction Corporation of India in 1972. These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilize savings, and to provide industrial finance as well as agricultural finance. As far back as 1935, the Reserve Bank of India set up the Agricultural Credit Department to provide agricultural credit. But only since 1951 the Bank's role in this field has become extremely important. The Bank has developed the co-operative credit movement to encourage saving, to eliminate moneylenders from the villages and to route its short term credit to agriculture. The RBI has set up the Agricultural Refinance and Development Corporation to provide long-term finance to farmers. CLASSIFICATION OF RBIS FUNCTIONS The monetary functions also known as the central banking functions of the RBI are related to control and regulation of money and credit, i.e., issue of currency, control of bank credit, control of foreign exchange operations, banker to the Government and to the money market. Monetary functions of the RBI are significant as they control and regulate the volume of money and credit in the country. Equally important, however, are the non-monetary functions of the RBI in the context of India's economic backwardness. The supervisory function of the RBI may be regarded as a non-monetary function (though many consider this a monetary function). The promotion of sound banking in India is an important goal of the RBI, the RBI has been given wide and drastic powers, under the Banking Regulation Act of 1949 - these powers relate to licensing of banks, branch expansion, liquidity of their assets, management and methods of working, inspection,

amalgamation, reconstruction and liquidation. Under the RBI's supervision and inspection, the working of banks has greatly improved. Commercial banks have developed into financially and operationally sound and viable units. The RBI's powers of supervision have now been extended to nonbanking financial intermediaries. Since independence, particularly after its nationalization 1949, the RBI has followed the promotional functions vigorously and has been responsible for strong financial support to industrial and agricultural development in the country.

NATURE OF BANKING IN INDIA --------------------------A banking company in India has been defined in the banking companies act,1949.as one which transacts the business of banking which means the accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise. Most of the activities a Bank performs are derived from the above definition. In addition, Banks are allowed to perform certain activities which are ancillary to this business of accepting deposits and lending. A bank's relationship with the public, therefore, revolves around accepting deposits and lending money. Another activity which is assuming increasing importance is transfer of money - both domestic and foreign from one place to another. This activity is generally known as "remittance business" in banking parlance. The so called forex (foreign exchange) business is largely a part of remittance albeit it involves buying and selling of foreign currencies. FUNCTIONING OF A BANK: Functioning of a Bank is among the more complicated of corporate operations. Since Banking involves dealing directly with money, governments in most countries regulate this sector rather stringently. In India, the regulation traditionally has been very strict and in the opinion of certain quarters, responsible for the present condition of banks, where NPAs are of a very high order. The process of financial reforms, which started in 1991, has cleared the cobwebs somewhat but a lot remains to be done. The multiplicity of policy and regulations that a Bank has to work with makes its operations even more complicated, sometimes bordering on illogical. This section, which is also intended for banking professional, attempts to give an overview of the functions in as simple manner as possible. Banking Regulation Act of India, 1949 defines Banking as "accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheques, draft, and order or otherwise." KINDS OF BANKS--------------------------------------------------------Financial requirements in a modern economy are of a diverse nature, distinctive variety and large magnitude. Hence, different types of banks have been instituted to cater to the varying needs of the community. Banks in the organized sector may, however, be classified in to the following major forms: 1. Commercial banks 2. Co-operative banks 3. Specialized banks 4. Central bank -: COMMERCIAL BANKS:Commercial banks are joint stock companies dealing in money and credit. In India, however there is a mixed banking system, prior to July 1969, all the commercial banks-73 scheduled and 26 non-scheduled banks, except the state bank of India and its subsidiaries-were under the control of private sector. On July 19, 1969, however, 14mejor

commercial banks with deposits of over 50 Corers were nationalized. In April 1980, another six commercial banks of high standing were taken over by the government. At present, there are 20 nationalized banks plus the state bank of India and its 7 subsidiaries constituting public sector banking which controls over 90 per cent of the banking business in the country. -:CO-OPERATIVE BANKS:Co-operative banks are a group of financial institutions organized under the provisions of the Co-operative societies Act of the states. The main objective of cooperative banks is to provide cheap credits to their members. They are based on the principle of self-reliance and mutual co-operation. Co-operative banking system in India has the shape of a pyramid a three tier structure, constituted by: Primary credit societies [APEX] Central co-operative banks [District level] State co-operative banks [Villages, Towns, Cities] -: SPECIALIZED BANKS:There are specialized forms of banks catering to some special needs with this unique nature of activities. There are thus, 1. Foreign exchange banks, 2. Industrial banks, 3. Development banks, 4. Land development banks, 5. Exim bank. -: CENTRAL BANK:A central bank is the apex financial institution in the banking and financial system of a country. It is regarded as the highest monetary authority in the country. It acts as the leader of the money market. It supervises, control and regulates the activities of the commercial banks. It is a service oriented financial institution. India central bank is the reserve bank of India established in 1935.a central bank is usually state owned but it may also be a private organization. For instance, the reserve bank of India (RBI), was started as a shareholders organization in 1935, however, it was nationalized after independence, in 1949.it is free from parliamentary control. ROLE OF BANKS IN A DEVELOPING ECONOMY----Banks play a very useful and dynamic role in the economic life of every modern state. A study of the economic history of western country shows that without the evolution of commercial banks in the 18th and 19th centuries, the industrial revolution would not have taken place in Europe. The economic importance of commercial banks to the developing countries may be viewed thus: 1. Promoting capital formation 2. Encouraging innovation 3. Monetsation 4. Influence economic activity 5. Facilitator of monetary policy Above all view we can see in briefly, which are given below: PROMOTING CAPITAL FORMATION:A developing economy needs a high rate of capital formation to accelerate the tempo of economic development, but the rate of capital formation depends upon the rate of saving. Unfortunately, in underdeveloped countries, saving is very low. Banks afford facilities for saving and, thus encourage the habits of thrift and industry in the community. They mobilize the ideal and dormant capital of the country and make it available for productive purposes. ENCOURAGING INNOVATION:Innovation is another factor responsible for economic development. The entrepreneur in innovation is largely dependent on the manner in which bank

credit is allocated and utilized in the process of economic growth. Bank credit enables entrepreneurs to innovate and invest, and thus uplift economic activity and progress. MONETSATION:Banks are the manufactures of money and they allow many to play its role freely in the economy. Banks monetize debts and also assist the backward subsistence sector of the rural economy by extending their branches in to the rural areas. They must be replaced by the modern commercial bank s branches. INFLUENCE ECONOMIC ACTIVITY:Banks are in a position to influence economic activity in a country by their influence on the rate interest. They can influence the rate of interest in the money market through its supply of funds. Banks may follow a cheap money policy with low interest rates which will tend to stimulate economic activity. FACILITATOR OF MONETARY POLICY:Thus monetary policy of a country should be conductive to economic development. But a well-developed banking system is on essential precondition to the effective implementation of monetary policy. Under-developed countries cannot afford to ignore this fact. A fine, an efficient and comprehensive banking system is a crucial factor of the developmental process. PRINCIPLES OF BANK LENDING POLICIES--------------The main business of banking company is to grant loans and advances to traders as well as commercial and industrial institutes. The most important use of banks money is lending. Yet, there are risks in lending. So the banks follow certain principles to minimize the risk: 1. Safety 2. Liquidity 3. Profitability 4. Purpose of loan 5. Principle of diversification of risks SAFETY:Normally the banker uses the money of depositors in granting loans and advances. So first of all initially the banker while granting loans should think first of the safety of depositor s money. The purpose behind the safety is to see the financial position of the borrower whether he can pay the debt as well as interest easily. LIQUIDITY:It is a legal duty of a banker to pay on demand the total deposited money to the depositor. So the banker has to keep certain percent cash of the total deposits on hand. Moreover the bank grants loan. It is also for the addition of short term or productive capital. Such type of lending is recovered on demand. PROFITABILITY:Commercial banking is profit earning institutes. Nationalized banks are also not an exception. They should have planning of deposits in a profitability way pay more interest to the depositors and more salary to the employees. Moreover the banker can also incur business cost and can give more benefits to customer. PURPOSE OF LOAN:Banks never lend or advance for any type of purpose. The banks grant loans and advances for the safety of its wealth, and certainty of recovery of loan and the bank lends only for productive purposes. For example, the bank gives such loan for the requirement for unproductive purposes.

PRINCIPLE OF DIVERSIFICATION OF RISKS:While lending loans or advances the banks normally keep such securities and assets as a supports so that lending may be safe and secured. Suppose, any particular state is hit by disasters but the bank shall get benefits from the lending to another states units. Thus, he effect on the entire business of banking is reduced. There are proverbs that do not keep all the eggs in one basket. ---a principle of considerations of sound lending is: 1. Safety 2. Liquidity 3. Shift ability 4. Profitability.

BRANCH SETUP AND STRUCTURE----------------------Ever since major commercial banks were nationalized in two phases in 1969 and 1980, there has been a sea change in their functions, outlook and perception. One of the main objectives of nationalization of banks has been to help achieve balanced, regional, sectoral and sectional development of the economy by way of making the banks reach out to the small man and to the remote areas of the country. RATIONAL OF A BANK STRUCTURE:An organization consists of people who carry out differentiated tasks which are coordinated so as to contribute and achieves planned goals. Organizations are created mainly for producing goods and services to the society for which they have to incorporate a formal structure. Indian banking is now operating in a more competitive setting with the induction of new banks. Both Indian and foreign, who will be bringing in new work technology and specialist expertise and a variety of new financing instruments. Branch is the primary unit of the bank s business, particularly for serving the weaker sections of the society. Branches have to develop close relationship they profess to serve. This leads to opening up or specialized branches, like industrial finance, small scale industries, and Hi-tech agriculture, overseas and non-resident Indian, according to market segmentation. This new vision entails a new chain of command, a new technology and specific delegation of authority. This calls for the branch manger to concentrate on his/her styles, skills and subordinates, goals, to shape the branch in the competitive environment to become a profit centre and to render better customer service. This implies that the branch manager should have adequate supporting staff to relieve him from the routine table work to developmental activities. In order to serve the customer it is necessary that one should understand and accept role and relationship with other so as to make sure that none of the supporting staff would be deemed to be independent of the branch manger. So the structure of branch organization must, from time to time, conform to the demands and peculiarities of the locality in which the branch is functioning. Before looking in to the branch structure of bank, it will be worthwhile examining how a formal organizational structure of a bank appears. During the mid-80s, banks started diversifying in to various areas like merchant banking, mutual funds, leasing, hire purchase, etc., to improve their profitability and to cater to the needs of the customers. These activities are performed by the banks either by separate departments or as subsidiaries. After liberalization and globalization of the economy, with a view to meeting the customer s needs and to avoid delays, a revised organizational structure of banks was convened by removing one tier. From the structure we can see how the functional relationship works in a branch. He structure also explains the reporting authority for each cadre of the employees. It indicates the

communication flow in the branch with well-defined accountability on the part of the employees roles. TYPES OF BRANCHES:According to locations, there are four types bank branches. They are rural, semiurban, urban and metropolitan branches. The B.M. has special role and functions in managing different types of branches. ORGANIZATION AND STRUCTURE OF COMMERCIAL BANK:Uniitt Bank Un Bank Group Bankiing Group Bank ng Miixed Bankiing M xed Bank ng Branch Bankiing Branch Bank ng Chaiin Bankiing Cha n Bank ng Correspondentt Bankiing Corresponden Bank ng BANK ORGANIZATION SYSTEM IN INDIA:The large volume of work passing through the banking system every day in the form of cash, cheque, and other credit instruments, together with the complexity of the many services rendered, calls not only for a high degree of skill, accuracy and knowledge on the part of the officials, but also up-to-date and efficient methods of organization, accountancy and control. Shareholders and directors The Branch Manager The Chief Clerk The Remittance or Waste Clerk The junior Clerk General Managers Branch Administration The Security Clerk Head office Administration Foreign Departments The cashier The day-book or Control Clerk Rotation of Duties The Ledger-Keeper The Shorthand Typist Modern Banking Methods RETAIL BANKING-THE NEW FLAVOR---------------------- The Concept of Retail Banking:The retail banking encompasses deposit and assets linked products as well as other financial services offered to individual for personal consumption. Generally, the pure retail banking is conceived to be the provision of mass banking products and services to private individuals as opposed to wholesale banking which focuses on corporate clients. Over the years, the concept of retail banking has been expanded to include in many cases the services provided to small and medium sized businesses. Some banks in Europe even include their private banking business i.e. services to high net worth net worth individuals in their retail Banking portfolio. The concept of Retail banking is not new to banks. it is only now that it is being viewed as an attractive market segment, which offers opportunities for growth with profits. The diversified portfolio characteristic of retail banking gives better comfort and spreads the essence of retail banking lies in individual customers. Though the term Retail Banking and retail lending are often used synonymously, yet the later is lust one side of Retail Banking. In retail banking, all the banking needs of individual customers are taken care of in an integrated manner. Retail Lending Products:Major retail lending products offered by banks are the following: I. Housing Loans II. Loan for Consumer goods III. Personal Loans for marriage, honeymoon, medical treatment and holding etc. IV. Education Loans V. Auto Loans VI. Gold Loans VII. Event Loans VIII. Festival Loans IX. Insurance ProductsX. Loan against Rent receivables XI. Loan against Pension receivables to senior citizens XII. Debit and Credit Cards XIII. Global and International Cards XIV. Loan to Doctors to set up their own Clinics or for purchase of medical equipments XV. Loan for Woman Empowerment for the Setting up of boutiques Setting up of

beauty parlours Setting up of creches Setting up of flower shops For making jaipuri quilts etc. Preparation and supply of Food Tiffins XVI. Loan for purchase of acoustic enclosures for Diesel Gen. Sets etc. Retail Banking Products for Depositors:Retail banking products for depositors in various segments of customers like; children, salaried persons. Senior citizens, professionals, technocrats business men, retail traders and farmers etc. Flexi deposit Accounts Savings Bank Accounts Recurring Deposit Accounts Short Term Deposits Deferred pension Linked Deposit Schemes Today pure deposit type products are giving way to multi-benefit, multi-access genres of banking products. Most of the innovation is taking place in saving bank accounts to make the meager return of 3.5% p.a. that they earn, more attractive. Most of the banks now offer Sweep in and sweep out account, called 2-in-1 accounts or value added savings bank accounts. This account is a combination of savings bank and term deposit accounts and offers twin benefit of liquidity of a savings bank account and higher interest earning of term deposit accounts. Free collection of specified number of outstation instruments Instant credit of outstanding cheques up to Rs.15000/Concession in exchange on demand drafts and pay-orders and commission on bills of exchange Issuance of free personalized cheques books Free issuance of ATM, Debit, Credit and add-on Cards Free investment advisory services Grant of redeemable reward points on use of credit cards Free internet banking, phone banking and any where banking facilities Issuance of discount coupons for purchase of various products like computer accessories, music CDs, cassettes, books, toys, garments etc.etc. Last but not the least, issuance of free PVR, Trade Fair tickets etc. etc. Concession in rate of interest on Group advances Exemption in upfront fees These concessions, freebies and add-ons are based on the True Relationship Value of customers and is calculated by the return on various products and services of the banks availed by them. These concessions and freebies are usually offered for purchase of consumer goods but now they have become an integral part of retail Banking products and services also. Other Retail Banking Services:Offer of several frills and goodies is not the end of the game. Banks also offer following Retail Banking services free of charges to customers: Payment of utility bills like water, electricity, telephone and mobile phone bills Payment of insurance premiums on due dates Payment of monthly/quarterly education fee of children to their respective schools Remittance of funds from one account to another Demating of shares, bonds, debentures, and mutual funds Payment of credit card bills on due dates Last but not the least, the filing of income tax returns and payment of income tax Retail Lending at Point of Sale:More and more banks have since entered into tie up arrangement with leading automobile, electronic and consumer goods dealers, builders and real estate agents,

universities and colleges etc. for promoting and selling their Retail Banking products including housing and educational loans to customer at the very point of sale. New delivery channels for Retail Banking Products and Services:The advent of new delivery channels viz. ATM, Interest and Telebanking have revolutionalised the retail banking activities. These channels enable Banks to deliver retail Banking products and services in an efficient and cost effective manner. Now-adays the banks are under great pressure to attract new and retain old customers, as margins are turning wafer thin. In these circumstances reducing administrative a transaction cost has become crucial. Banks are making special offerings to customers through these channels. Retail banking has been immensely benefited with the revolution in IT. and communication technology. The automation of the Banking processes is facilitating extension of their reach and rationalization of their costs as well. They are the engine for growth of retail banking business of Banks. The networking of branches has extended the scope of banking to anywhere and anytime 24 * 7 days week banking. It has enabled customer to be the customer of a bank rather then the customers of a particular branch only. Customers can transact retail Banking transactions at any of the networked branches without any extra cost. As a matter of fact the Retail Banking per se has taken off because of the advent of multiple banking channels. These channels have enabled banks to go on a massive customer acquisition mode since transaction volumes spread over multiple channels lessen the load on the brick and mortar bank branches. THE IMPACT OF RETAIL BANKING:The major impact of Retail Banking is that, the customers have become the emperors the fulcrum of all banking activities, both on the asset side and the liabilities front. The hitherto sellers market has transformed into buyers market. The customers have multiple of choices before them now for cherry picking products and services, which suit their life styles and tastes and financial requirements as well. Banks now go to their customers more often than the customers go to their banks. The non-banking finance Companies which have hitherto been thriving on retail business due to high risk and high returns thereon have been dislodged from their profit munching citadel. Retail banking is transforming banks in to one stop financial super markets. The share of retail loans is fast increasing in the loan books of banks. Banks can foster lasting business relationship with customers and retain the existing customers and attract new ones. There is a rise in their service levels as well. Banks can cut costs and achieve economies of scale and improve their revenues and profits by robust growth in retail business. Reduction in costs offers a win win situation both for banks and the customers. It has affected the interface of banking system through different delivery mechanism. It is not that banks are sharing the same pie of retail business. The pie itself is growing exponentially; retail banking has fueled a considerable quantum of purchasing power through a slew of retail products. Banks can diversify risks in their credit portfolio and contain the menace of NPAs. Re-engineering of business with sophisticated technology based products will lead to business creation, reduction in transaction cost and enhancement in efficiency of operations. Draw-backs of Retail Banking :Despite the numerous advantage of Retail Banking there are some drew-Backs in this business. These are as under:

a. Management of large number of clients may become a problem if IT systems are not robust. b. Rapid evolution of products can lead to IT complications. c. The cost of maintaining large number of small value transactions in branch networks will be relatively high, unless the customers use alternate delivery channels like ATMs, internet and phone banking etc. for carrying out banking transactions. THE FUTURE OF RETAIL BANKING :Though at present Retail Banking appears to be the best bet for banks to improve their top and bottom line, yet the future of Retail banking in general, may not be all roses as it appears to be. There are signs of slowdown in customer growth in some countries, which will inevitably have an impact on Retail Banking business growth. Secondly the possibility of deterioration in asset quality cannot be ruled out. With the boom in housing loan market, the sign of overheating has also started surfacing with potential problem for banks that have not exercised sufficient caution. Further the pressure on margins is mounting partly because of fierce competition and partly as a result of falling interest rates environment which has diminished to some extent the endowment effect of substantial deposit bases from which most retail banks have been deriving benefits. But banks, which have built a significant retail banking portfolio may fare relatively well in the current fiscal. Those banks which have a dynamic retail strategy and are well diversified in products, services and distribution channels and have at the same time managed to achieve a good level of cost efficiency are the ones that are most likely to succeed in the longer term. STRATEGIC ISSUES IN BANKING SERVICES---Strategic Planning: is the process of analyzing the organizational external and internal environments; developing the appropriate mission, vision, and overall goals; identifying the general strategies to be pursued; and allocated resources. Mission is an organization's current purpose or reason for existing. Vision is an organization's fundamental aspirations and purpose that usually appeals to its member's hearts and minds. Goals are what an organization is committed to achieving. Strategies are the major courses of action that an organization takes to achieves goals. Resource Allocation is the earmarking of money, through budgets, for various purposes. Downsizing Strategy signals an organization's intent to rely on fewer resourcesprimarily human-to accomplish its goals. Tactical Planning: is the process of making detailed decisions about what to do, which will do it, and how to do it-with a normal time and horizon of one year or less. The process generally includes: Choosing specific goals and the means of implementing the organization's strategic plan, as, Deciding on courses of action for improving current operations, and Developing budgets for each department, division and project. NON-PERFORMING ASSETS OF THE BANKING SECTOR:There was a significant decline in the non-performing assets (NPAs) of SCBs in 2003-04, despite adoption of 90 day delinquency norm from March 31, 2004. The Gross NPAs of SCBs declined from 4.0 per cent of total assets in 2002-03 to 3.3 percent in 2003-04. The corresponding decline in net NPAs was from 1.9 per cent to 1.2 per cent. Both gross NPAs and net NPAs declined in absolute terms.

While the gross NPAs declined from Rs. 68,717 crore in 2002-03 to Rs. 64,787 crore in 2003-04, net NPAs declined from Rs. 32,670 crore to Rs. 24,617 crore in the same period. There was also a significant decline in the proportion of net NPAs to net advances from 4.4 per cent in 2002-03 to 2.9 per cent in 2003-04. The significant decline in the net NPAs by 24.7 per cent in 2003-04 as compared to 8.1 per cent in 2002-03 was mainly on account of higher provisions (up to 40.0 per cent) for NPAs made by SCBs. The decline in NPAs in 2003-04 was witnessed across all bank groups. The decline in net NPAs as a proportion of total assets was quite significant in the case of new private sector banks, followed by PSBs. The ratio of net NPAs to net advances of SCBs declined from 4.4 per cent in 2002-03 to 2.9 per cent in 2003-04. Among the bank groups, old private sector banks had the highest ratio of net NPAs to net advances at 3.8 per cent followed by PSBs (3.0 per cent) new private sector banks (2.4 per cent) and foreign banks (1.5 per cent) An analysis of NPAs by sectors reveals that in 2003-04, advances to non-priority sectors accounted for bulk of the outstanding NPAs in the case of PSBs (51.24 per cent of total) and for private sector banks (75.30 per cent of total). While the share of NPAs in Agriculture sector and SSIs of PSBs declined in 2003-04, the share of other priority sectors increased. The share of loans to other priority sectors in priority sector lending also increased. Measures taken to reduce NPAs include re schedulement, restructuring at the bank level, corporate debt restructuring, and recovery through Lok Adalats, Civil Courts, and debt recovery tribunals and compromise settlements. The recovery management received a major fillip with the enactment of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 enabling banks to realize their dues without intervention of courts and tribunals. The Supreme Court in its judgment dated April 8, 2004, while upholding the constitutional validity of the Act, struck down section 17 (2) of the Act as unconstitutional and contrary to Article 14 of the Constitution of India. The Government amended the relevant provisions of the Act to address the concerns expressed by the Supreme Court regarding a fair deal to borrowers through an ordinance dated November 11, 2004. It is expected that the momentum in the recovery of NPAs will be resumed with the amendments to the Act. The revised guidelines for compromise settlement of chronic NPAs of PSBs were Issued in January 2003 and were extended from time to time till July 31, 2004. The cases filed by SCBs in Lok Adalats for recovery of NPAs stood at 5.20 lakh involving an amount of Rs. 2,674 crore (prov.). The recoveries effected in 1.69 lakh cases amounted to Rs.352 crore (prov.) as on September 30, 2004.The number of cases filed in debt recovery tribunals stood at 64, 941 as on June 30, 2004, involving an amount of Rs. 91,901 crore. Out of these, 29, 525 cases involving an amount of Rs. 27,869 crore have been adjudicated. The amount recovered was to Rs. 8,593 crore. Under the scheme of corporate debt restructuring introduced in 2001, the number of cases and value of assets restructured stood at 121 and Rs. 69,575 crore, respectively, as on December 31, 2004. Iron and steel, refinery, fertilizers and telecommunication sectors were the major beneficiaries of the scheme. These sectors accounted for more than two-third of the values of assets restructured. As credit information is crucial for the development of the financial system and for addressing the problems of NPAs, dissemination of credit information on suit-filed defaulters is being undertaken by the Credit Information Bureau of India Ltd. (CIBIL) from March 2003. In its annual policy statement for 2004-05, the RBI advised banks and financial institutions to review the measures taken for furnishing credit information in respect of all borrowers to CIBIL. In its mid-term review, the RBI again urged the banks to make persistent

efforts in obtaining consent from all the borrowers, in order to establish an efficient credit information system, which would help in enhancing the quality of credit decisions, improve the asset quality, and facilitate faster credit delivery. CAPITAL ADEQUACY RATIO:The concept of minimum capital to risk weighted assets ratio (CRAR) has been developed to ensure that banks can absorb a reasonable level of losses. Application of minimum CRAR protects the interest of depositors and promotes stability and efficiency of the financial system. At the end of March 31, 2004, CRAR of PSBs stood at 13.2 per cent, an improvement of 0.6 per centage point from the previous year. There was also an improvement in the CRAR of old private sector banks from 12.8 per cent in 2002-03 to 13.7 per cent in 2003-04. The CRAR of new private sector banks and foreign banks registered a decline in 2003-04. For the SCBs as a whole the CRAR improved from 12.7 per cent in 2002-03 to 12.9 per cent in 2003-04. All the bank groups had CRAR above the minimum 9 per cent stipulated by the RBI. During the current year, there was further improvement in the CRAR of SCBs. The ratio in the first half of 2004-05 improved to 13.4 per cent as compared to 12.9 per cent at the end of 2003-04. Among the bank groups, a substantial improvement was witnessed in the case of new private sector banks from 10.2 per cent as at the end of 2003-04 to 13.5 per cent in the first half of 2004-05. While PSBs and old private banks maintained the CRAR at almost the same level as in the previous year, the CRAR of foreign banks declined to 14.0 per cent in the first half of 2004-05 as compared to 15.0 per cent as at the end of 2003-04. TOTAL QUALITY MANAGEMENT:While Total Quality Management has proven to be an effective process for improving organizational functioning, its value can only be assured through a comprehensive and well thought out implementation process. The purpose of this chapter is to outline key aspects of implementation of large scale organizational change which may enable a practitioner to more thoughtfully and successfully implement TQM. First, the context will be set. TQM is, in fact, a large scale systems change, and guiding principles and considerations regarding this scale of change will be presented. Without attention to contextual factors, well intended changes may not be adequately designed. As another aspect of context, the expectations and perceptions of employees (workers and managers) will be assessed, so that the implementation plan can address them. Specifically, sources of resistance to change and ways of dealing with them will be discussed. This is important to allow a change agent to anticipate resistances and design for them, so that the process does not bog down or stall. Next, a model of implementation will be presented, including a discussion of key principles. Visionary leadership will be offered as an overriding perspective for someone instituting TQM. In recent years the literature on change management and leadership has grown steadily, and applications based on research findings will be more likely to succeed. Use of tested principles will also enable the change agent to avoid reinventing the proverbial wheel. Implementation principles will be followed by a review of steps in managing the transition to the new system and ways of helping institutionalize the process as part of the organization's culture. This section, too, will be informed by current writing in transition management and institutionalization of change. Finally, some miscellaneous do's and don t will be offered. Members of any organization have stories to tell of the introduction of new programs, techniques, systems, or even, in current terminology, paradigms. Usually the employee, who can be anywhere from the line worker to the executive level, describes such an incident with a combination of cynicism and disappointment: some manager went to a conference or in some other way got a "great idea" (or did it based on threat

or desperation such as an urgent need to cut costs) and came back to work to enthusiastically present it, usually mandating its implementation. The "program" probably raised people's expectations that this time things would improve, that management would listen to their ideas. Such a program usually is introduced with fanfare, plans are made, and things slowly return to normal. The manager blames unresponsive employees, line workers blame executives interested only in looking good, and all complain about the resistant middle managers. Unfortunately, the program itself is usually seen as worthless: "we tried team building (or organization development or quality circles or what have you) and it didn't work; neither will TQM". Planned change processes often work, if conceptualized and implemented properly; but, unfortunately, every organization is different, and the processes are often adopted "off the shelf" "the 'appliance model of organizational change': buy a complete program, like a 'quality circle package,' from a dealer, plug it in, and hope that it runs by itself" (Kanter, 1983, 249). Alternatively, especially in the under funded public and not for profit sectors, partial applications are tried, and in spite of management and employee commitment do not bear fruit. This chapter will focus on ways of preventing some of these disappointments. In summary, the purpose here is to review principles of effective planned change implementation and suggest specific TQM applications. Several assumptions are proposed: 1. TQM is a viable and effective planned change method, when properly installed 2. Not all organizations are appropriate or ready for TQM 3. Preconditions (appropriateness, readiness) for successful TQM can sometimes be created 4. Leadership commitment to a large scale, long term, and cultural change is necessary. While problems in adapting TQM in government and social service organizations have been identified, TQM can be useful in such organizations if properly modified. For survival, banks have to make efforts to improve their quality and competitiveness by planning and taking innovative in fall areas: Increase emphasis on customer focused activities Intro a total quality program Developing differential value added services Educating employees through involvement programs Increase quality through management and system Increase effectiveness of product development Developing product with lower uses costs TQM principles Customer satisfaction Plan-do-checkact (PDCA) cycle Management by 'fact' -- 5Ws (what, why, who, when, and where) + 1H (how) approach Respect for people TQM elements Total employee involvement (TEI) Total waste elimination (TWE) Total quality control (TQC) TQM focus areas Customer satisfaction Product quality Plant reliability Waste elimination Benefits achieved through TQM Increased focus on the customer Mindset of 'continuous improvement' Better product quality Better systems and procedures Better cross-functional teamwork Increased plant reliability Waste elimination in offices and factories. KNOWLEDGE MANAGEMENT------------------------------------According to Peter Drucker and Daniel Bell, the management Gurus knowledge is the only meaningful economic resource. Knowledge management can be defined as a systematic and integrative process of coordinating organization-wide activities of acquiring, creating, storing, sharing, diffusing, developing and deploying knowledge by individual and groups in the pursuit of major organizational goals. It also involves the creation of an interacting learning environment where organization members transfer and share what they know; and apply knowledge to solve problems, innovate and create new knowledge. Knowledge management is as much about people and culture as it is about technology. Knowledge management thrives only when the human communication network

operates freely across the shortest path between the knowledge providers and knowledge seekers. There must be a culture that promotes and rewards the pooling together of knowledge resources. Thus organizations must build a culture that motivates people to create, share and use knowledge. After the preoccupation with system and procedures to collect data ad translate it into information, its time for firms to focus on the next plane- knowledge. Knowledge management is not a buzzword. Every knowledge management solution, if currently implemented, has definite measurable business benefits. Future business success increasingly depends on the retention and the creative use of the knowledge ideas and experiences of an organization and its employees. And in knowledge economy corporations need for workers will be more than the workers need for employer. The work will demand more formal education and more cutting edge knowledge accumulation. INNOVATION IN BANK---------------------------------------------------Innovation drives organizations to grow, prosper and transform in sync with the changes in the environment, both internal and external. Banking is no exception to this. In fact, this sector has witnessed radical transformation of late, based on many innovations in products, processes, services, systems, business models, technology, governance and regulation. A liberalized and globalize financial infrastructure has provided an additional impetus to this gigantic effort. The pervasive influence of in formation technology has revolutionalized banking. Transaction costs have crumbled and handling of astronomical number of transactions in no time has become a reality. Internationally, the number brick and mortar structure has been rapidly yielding ground to click and order electronic banking with a plethora of new products. Banking has become boundary less and virtual with a 24 * 7 model. Banks who strongly rely on the merits of relationship banking as a time tested way of targeting and serving clients, have readily embraced Customer Relationship Management (CRM), with sharp focus on customer centricity, facilitated by the availability of superior technology. CRM has, therefore, become the new mantra in customer service management, which is both relationship based and information intensive. Risk management is no longer a mere regulatory issue.basel-2 has accorded a primacy of place to this fascinating exercise by repositioning it as the core of banking. We now see the evolution of many novel deferral products like credit derivatives, especially the Credit Risk Transfer (CRT) mechanism, as a consequence. CRT, characterized by significant product innovation, is a very useful credit risk management tool that enhances liquidity and market efficiency. Securitization is yet another example in this regard, whose strategic use has been rapidly rising globally. So is outsourcing. SOME RECENT INNOVATIONS IN INDIAN BANKING:Tandon can, however, usefully cast an eye at one way of shopping without revealing his credit card number. HDFC Banks Net Safe card is a one-time use card with a limit thats specified, taken from Tendons credit or debit card. Even if Tandon fails to utilize the full amount within 24 hours of creating the card, the card simply dies and the unspent amount in the temporary card reverts to his original credit or debit card. Welcome to one of the myriad ways in which bankers have been trying to innovate. They re bringing ATMs, cash and even foreign exchange to their customers doorsteps. Indeed, innovation has become the hottest banking game in town. Want to buy a house but dont want to go through the hassles of haggling with brokers and the mounds of paperwork? Not to worry. Your bank will tackle all

this. Its ready to come every step of the way for you to buy a house. Standard Chartered, for instance, has property advisors to guide a customer through the entire process of selecting and buying a house. They also lend a hand with the cumbersome documentation formalities and the registration. Dont fret if youve already bought your house or car you can do other things with both. You can leverage your new house or car these days with banks like ICICI Bank and Stanchart ready to extend loans against either, till its about five years old. Loans are available to all car owners for almost all brands of cars manufactured in India that are up to five years old. Still, innovation is more evident in retail banking. True, all banks offer pretty much the same suite of asset and liability products. But its the small tweaking here and there that makes all the difference. Take, for example, the once staid deposits. Some bank accounts combine a savings deposit account with a fixed deposit. A sweep-in account, as it is called, works like this: the account will have a cut-off, say, Rs 25,000; any amount over and above that gets automatically transferred to a fixed deposit which will earn the customer a clean 2 per cent more than the returns that a savings account gives. Last month, Kotak Mahindra Bank introduced a variant of the sweep-in account. If the balance tops Rs 1.5 lakh, the excess runs into Kotaks liquid mutual fund. Even if the money is there only for the weekend, a liquid fund can earn you a clean 4.5 per cent per annum,points out Shashi Arora, vice president, marketing, Kotak Mahindra Bank. Thats not a small gain considering that your current account does not pay you any interest. And if, meanwhile, you want to buy a big-ticket home theatre system, the minute you swipe your card the invested sum will return to your account. There plenty of innovation on home loans. ABN Amro sent the home mortgage market afire with its 6 per cent home loan offering last year. The product offers a 6 per cent interest rate for two years after which the interest rate is reset in tune with the prevailing market rate. All the other big home loan players slashed their rates after this was announced. Look too at the home saver product and its variants from Citibank, HSBC and Stanchart. The interest rate on the loan is determined by the balance you maintain in the savings account with the bank. The home builder can maintain a higher balance in his or her savings account and bring down the interest rate on the home loan. The rate is calculated on a daily basis on the net loan amount. Stanchart claims that since the launch of its home saver product in April 2002, close to 40 per cent of its customers have chosen it. Says Vishu Ramachandran, regional head, consumer banking, Standard Chartered: We believe that there are several ways to innovate and create value in the process, even in developed product areas. Banks are also attempting to reach out to residents of metropolitan cities where people are pressed for time (what with long commuting hours, traffic jams and both spouses working), beyond conventional banking hours. ICICI Bank, for example, introduced eight to eight banking hours, seven days of the week, in major cities. Not to be outdone, some of the other private banks have also done this too. HDFC Bank even has a 24-hour branch at Mumbais international airport. Several banks are even bringing ATMs to customer doorsteps. ICICI Bank, State Bank of India and Bank of India now have mobile ATMs or vans that go along a particular route in a city and are stationed at strategic locations for a few hours every day. This saves the bank infrastructure costs since it has one mobile ATM instead of multiple stationary ones. Thats not all. Even money is delivered to customers at home. Kotak Mahindra Bank, a late entrant into private banking, delivers cash at the doorstep. A customer can withdraw a minimum of Rs 5,000 and up to a maximum of Rs 2 lakh and get the money at home. And, mind you, Kotak is not alone. The list of banks offering a similar service includes Citibank,

Stanchart, ABN Amro and HDFC Bank. HDFC Bank brings even foreign exchange, whether travellers cheques or cash, to your doorstep courtesy its tie-up with Travelex India. All one has to do is call up the branch or HDFC Banks phone banking number. The banks country head, retail, Neeraj Swaroop, believes that continuous innovation will always make a differece, with customer needs changing day by day.Innovation will never become less important for us, he says. HDFC Bank has pioneered other innovations. Take point of sale (POS) terminals, a prerequisite in any store or restaurant worth its name in the country. Earlier this year, it tied up with Reliance Infocomm to offer mobile POS terminals. Although this might sound a tad too fancy today, there could soon be a day when you can swipe your card to pay your cabby, the pizza home delivery boy and even for the groceries from the local kirana store. But internet banking and shopping have been slow starters, given the low computer penetration in the country but banks are going all out to get the customer online. Not only is electronic fund transfer between banks across cities possible through internet banking today but banks also offer other features that benefit the customer. HDFC Bank, for instance, has an option called One View on its internet banking site which provides customers a comprehensive view of their investments and fund movements. Customers can look at their accounts in six different banks on one screen. These include HDFC Bank accounts and demat accounts, ICICI Bank, Citibank, HSBC and Standard Chartered Bank accounts, apart from details of Citibank credit card dues and so on. Banks are also innovating on the company and treasury operations fronts. In corporate loans, plain loans are passe. Mumbai inter-bank offered rate (MIBOR)-linked and commercial paper-linked interest rates on loans are common. MIBOR is a reference rate arrived at every day at 4 pm by Reuters. It is the weighted average rate of call money business transacted by 22 institutions, including banks, primary dealers and financial institutions. The State Bank of India was the first to usher in MIBOR-linked loans for top companies. Soon enough, other banks followed. ICICI Bank carried out the worlds first ever securitization of a micro finance portfolio last year. The bank securitized Rs 4.2 crore for Bharatiya Samruddhi Finance Ltd for crop production. Banks, of course, realize that innovation gives them only a first mover advantage until their rivals catch up. But then, they can console themselves.Iimitation the best form of flattery? TECHNOLOGY IN BANKING---------------------------------------Nobel Laureate Robert Solow had once remarked that computers are seen everywhere excepting in productivity statistics. More recent developments have shown how far this state of affairs has changed. Innovation in technology and worldwide revolution in information and communication technology (ICT) have emerged as dynamic sources of productivity growth. The relationship between IT and banking is fundamentally symbiotic. In the banking sector, IT can reduce costs, increase volumes, and facilitate customized products; similarly, IT requires banking and financial services to facilitate its growth. As far as the banking system is concerned, the payment system is perhaps the most important mechanism through which such interactive dynamics gets manifested. Recognizing the importance of payments and settlement systems in the economy, we have embarked on technology based solutions for the improvement of the payment and settlement system infrastructure, coupled with the introduction of new payment products such as

the computerized settlement of clearing transactions, use of Magnetic Ink Character Recognition (MICR) technology for cheque clearing which currently accounts for 65 per cent of the value of cheques processed in the country, the computerization of Government Accounts and Currency Chest transactions, operationalisation of Delivery versus Payment (DvP) for Government securities transactions. Two-way inter-city cheque collection and imaging have been operationalised at the four metros. The coverage of Electronic Clearing Service (Debit and Credit) has been significantly expanded to encourage non-paper based funds movement and develop the provision of a centralized facility for effecting payments. The scheme for Electronic Funds Transfer operated by the Reserve Bank has been significantly augmented and is now available across thirteen major cities. The scheme, which was originally intended for small value transactions, is processing high value (up to Rs.2 crore) from October 1, 2001. The Centralized Funds Management System (CFMS), which would enable banks to obtain consolidated accountwise and centre-wise positions of their balances with all 17 offices of the Deposits Accounts Departments of the Reserve Bank, has begun to be implemented in a phased manner from November 2001. A holistic approach has been adopted towards designing and development of a modern, robust, efficient, secure and integrated payment and settlement system taking into account certain aspects relating to potential risks, legal framework and the impact on theoperational framework of monetary policy. The approach to the modernization of the payment and settlement system in India has been three-pronged: (a) consolidation, (b) development, and (c) integration. The consolidation of the existing payment systems revolves around strengthening Computerized Cheque clearing, expanding the reach of Electronic Clearing Services and Electronic Funds Transfer by providing for systems with the latest levels of technology. The critical elements in the developmental strategy are the opening of new clearing houses, interconnection of clearing houses through the INFINET; optimizing the deployment of resources by banks through Real Time Gross Settlement System, Centralized Funds Management System (CFMS); Nego tiated Dealing System (NDS) and the Structured Financial Messaging Solution (SFMS). While integration of the various payment products with the systems of individual banks is the thrust area, it requires a high degree of standardization within a bank and seamless interfaces across banks. The setting up of the apex-level National Payments Council in May 1999 and the operationalisation of the INFINET by the Institute for Development and Research in Banking Technology (IDRBT), Hyderabad have been some important developments in the direction of providing a communication network for the exclusive use of banks and financial institutions. Membership in the INFINET has been opened up to all banks in addition to those in the public sector. At the base of all inter-bank message transfers using the INFINET is the Structured Financial Messaging System (SFMS). It would serve as a secure communication carrier with templates for intra- and inter-bank messages in fixed message formats that will facilitate straight through processing. All inter-bank transactions would be stored and switched at the central hub at Hyderabad while intrabank messages will be switched and stored by the bank gateway. Security features of the SFMS would match international standards. In order to maximize the benefits of such efforts, banks have to take pro-active measures to: further strengthen their infrastructure in respect of standardization, high levels of security and communication and networking; achieve inter-branch connectivity early; popularize the usage of the scheme of electronic funds transfer (EFT); and

Institute arrangements for an RTGS environment online with a view to integrating into a secure and consolidated payment system. Information technology has immense untapped potential in banking. Strengthening of information technology in banks could improve the effectiveness of asset-liability management in banks. Building up of a related data-base on a real time basis would enhance the forecasting of liquidity greatly even at the branch level. This could contribute to enhancing the risk management capabilities of banks. REGULATIONS AND COMPLIANCE---------------------------Progressive strengthening, deepening and refinement of the regulatory and supervisory system for the financial sector have been important elements of financial sector reforms. In the long run, it is the supervision and regulation function that is critical in safeguarding financial stability. There is also some evidence that proactive and effective supervision contributes to the efficiency of financial intermediation. Financial sector supervision is expected to become increasingly risk-based and concerned with validating systems rather than setting them. This will entail procedures for sound internal evaluation of risk for banks. As mentioned earlier, bank managements will have to develop internal capital assessment processes in accordance with their risk profile and control environment. These internal processes would then be subjected to review and supervisory intervention if necessary. The emphasis will be on evaluating the quality of risk management and the adequacy of risk containment. In such an environment, credibility assigned by markets to risk disclosures will hold only if they are validated by supervisors. Thus effective and appropriate supervision is critical for the effectiveness of capital requirements and market discipline. In certain areas, as for instance, in the urban cooperative banking segment, the regulatory requirements leave considerable scope for regulatory arbitrage and even circumvention. The problem is rendered more complex by the existence of regulatory overlap between the Central Government, the State Governments and the Reserve Bank. Regulatory overlap has impeded the speed of regulatory response to emerging problems. The need for removing multiple regulatory jurisdictions over the cooperative banking sector has been reiterated on several occasions. In this regard, the Reserve Bank has proposed the setting up of an apex supervisory body for urban cooperative banks under the control of a high-level supervisory board consisting of representatives of the Central governments, the State governments, the Reserve Bank and experts. The apex body is expected to ensure compliance with prudential requirements and also supervise on-site inspections and off-site surveillance. Recent developments in certain segments of the financial sector have also brought to the fore issues relating to corporate governance in banks. As part of on-going reforms, boards have been given greater autonomy to prescribe internal control guidelines, risk management and procedures for market discipline and accountability. It is extremely important that greater vigilance over adherence to these norms goes hand-in-hand with greater autonomy. Recent evidence of transgression of prudential guidelines by a few banks has raised the issue of the audit and supervisory functions of boards. As we move towards a more deregulated financial regime, these functions have to be transferred from either the Government or the Reserve Bank to bank boards. This imposes a greater responsibility and accountability on the bank management. It is in this context that a consultative group of directors of select banks and other

experts has been set up to recommend measures to strengthen the internal supervisory role of boards. The objective is to obtain a feedback on how boards function vis- -vis compliance with prudential norms, transparency and disclosure, functioning of the audit committee, etc., and to devise effective mechanisms for ensuring management discipline. Several other initiatives in improving the supervisory function have been undertaken, including a prudential supervisory reporting system for financial institutions, improvements in procedures for financial inspection, sensitizing the general public for better regulation of the activities of NBFCs and enactment of appropriate legislation to protect depositor interests in some States. Major legal reforms have been initiated in areas such as security laws, the Negotiable Instruments Act, bank frauds and the regulatory framework of banking. The Reserve Bank has also accepted the principle of transfer of ownership to the Government in respect of some financial institutions in view of the conflict of interest that may arise in the conduct of its supervisory function. It is expected that these initiatives will pave the way for an efficient, and risk-based supervisory environment in India. The largest set of consolidated regulations that mandate integrity of data in India are the IT Act and SEBI's clause 49 for listed companies. These regulations do not currently enforce the kind of security standards that are common in Europe and the US. In a global economy, however, no company is an island and India Inc is adopting US and European compliance procedures and certifications such as Sarbanes Oxley, Safe Harbour, BS, and ISO. Compliance, regulatory or otherwise, does not directly concern the IT department. In manufacturing for instance, compliance controls don't really involve system security, and a large part of the quality control required by authorities cannot be imposed or enforced using IT. Companies that deal with sensitive information, financial services and BPOs, banks, MNC subsidiaries or those with plans to expand beyond Indian shores are all affected. These will continue to make strides towards compliance. For the mediumscale segment (Rs 100-300 crore turnover), security and audits are not a priority. This segment is comfortable with public mail servers, and exchanging information over not very secure connections. CORPORATE GOVERNANCE - CODE OF CONDUCT--------1. Need and objective of the Code Clause 49 of the Listing agreement entered into with the Stock Exchanges, requires, as part of Corporate Governance the listed entities to lay down a Code of Conduct for Directors on the Board of an entity and its Senior Management. The term "Senior Management" shall mean personnel of the company who are members of its core management team excluding the Board of Directors. This would also include all members of management, one level below the Executive Directors including all functional heads. 2. Bank's Belief System This Code of Conduct attempts to set forth the guiding principles on which the Bank shall operate and conduct its daily business with its multitudinous stakeholders, government and regulatory agencies, media and anyone else with whom it is connected. It recognizes that the Bank is a trustee and custodian of public money and in order to fulfill fiduciary obligations and responsibilities, it has to maintain and continue to enjoy the trust and confidence of public at large.

The Bank acknowledges the need to uphold the integrity of every transaction it enters into and believes that honesty and integrity in its internal conduct would be judged by its external behavior. The bank shall be committed in all its actions to the interest of the countries in which it operates. The Bank is conscious of the reputation it carries amongst its customers and public at large and shall endeavor to do all it can to sustain and improve upon the same in its discharge of obligations. The Bank shall continue to initiate policies, which are customer centric and which promote financial prudence. 3. Philosophy of the Code The code envisages and expects a. Adherence to the highest standards of honest and ethical conduct, including proper and ethical procedures in dealing with actual or apparent conflicts of interest between personal and professional relationships. b. Full, fair, accurate, sensible, timely and meaningful disclosures in the periodic reports required to be filed by the Bank with government and regulatory agencies. c. Compliance with applicable laws, rules and regulations. d. To address misuse or misapplication of the Bank's assets and resources. e. The highest level of confidentiality and fair dealing within and outside the Bank. A. General Standards of conduct The Bank expects all Directors and members of the Core Management to exercise good judgment, to ensure the interests, safety and welfare of customers, employees and other stakeholders and to maintain a cooperative, efficient, positive, harmonious and productive work environment and business organization. The Directors and members of the Core Management while discharging duties of their office must act honestly and with due diligence. They are expected to act with that amount of utmost care and prudence, which an ordinary person is expected to take in his/ her own business. These standards need to be applied while working in the premises of the Bank, at offsite locations where business is being conducted whether in India or abroad, at Bank-sponsored business and social events, or at any other place where they act as representatives of the Bank. B. Conflict of Interest A "conflict of interest" occurs when personal interest of any member of the Board of Directors and of the Core management interferes or appears to interfere in any way with the interests of the Bank. Every member of the Board of Directors and Core Management has a responsibility to the Bank, its stakeholders and to each other. Although this duty does not prevent them from engaging in personal transactions and investments, it does demand that they avoid situations where a conflict of interest might occur or appear to occur. They are expected to perform their duties in a way that they do not conflict with the Bank's interest such as : Employment /Outside Employment - The members of the Core Management are expected to devote their total attention to the business interests of the Bank. They are prohibited from engaging in any activity that interferes with their performance or responsibilities to the Bank or otherwise is in conflict with or prejudicial to the Bank. Business Interests - If any member of the Board of Directors and Core Management considers investment in securities issued by the Bank's customer, supplier or competitor, they should ensure that these investments do not compromise their responsibilities to

the Bank. Many factors including the size and nature of the investment; their ability to influence the Bank's decisions, their access to confidential information of the Bank, or of the other entity, and the nature of the relationship between the Bank and the customer, supplier or competitor should be considered in determining whether a conflict exists. Additionally, they should disclose to the Bank any interest that they have which may conflict with the business of the Bank. Related Parties - As a general rule, the Directors and members of the Core Management should avoid conducting Bank' s business with a relative or any other person or any firm, Company, association in which the relative or other person is associated in any significant role. Relatives shall include : o Father o Mother (including step mother) o Son's Wife o Daughter (including step daughter) o Father's father o Father's mother o Mother's mother o Mother's father o Son's son o Son's son's wife o Son's daughter o Son's daughter's husband o Daughter's husband o Daughter's son o Daughter's son's wife o Daughter's daughter o Daughter's daughter's husband o Brother (including step brother) o Brother's wife o Sister (including step sister) o Sister's husband If such a related party Transaction is unavoidable, they must fully disclose the nature of the related party transaction to the appropriate authority. Any dealings with a related party must be conducted in such a way that no preferential treatment is given to that party. In the case of any other transaction or situation giving rise to conflicts of interests, the appropriate authority should after due deliberations decide on its impact. C. Applicable Laws The Directors of the Bank and Core Management must comply with applicable laws, regulations, rules and regulatory orders. They should report any inadvertent non compliance, if detected subsequently, to the concerned authorities. D. Disclosure Standards The Bank shall make full, fair, accurate, timely and meaningful disclosures in the periodic reports required to be filed with Government and Regulatory agencies. The members of Core Management of the bank shall initiate all actions deemed necessary for proper dissemination of relevant information to the Board of Directors, Auditors and other Statutory Agencies, as may be required by applicable laws, rules and regulations. Each member of the Board of Directors and the Core Management has a duty to the Bank to advance its legitimate interests while dealing with the Bank's assets and resources. Members of the Board of Directors and Core Management are prohibited from: Using Corporate property, information or position for personal gain, Soliciting, demanding, accepting or agreeing to accept anything of value from any person while dealing with the Bank's assets and resources, Acting on behalf of the Bank in any transaction in which they or any of their relative(s) have a significant direct or indirect interest. F. Confidentiality and Fair Dealings (i) Bank's confidential Information The Bank's confidential information is a valuable asset. It includes all trade related information, trade secrets, confidential and privileged information, customer information, employee related information, strategies, administration, research in connection with the Bank and commercial, legal, scientific, technical data that are either provided to or made available each member of the Board of Directors and the core Management by the Bank either in paper form or electronic media to facilitate their work or that they are able to know or obtain access by virtue of their position with the Bank. All confidential information must be used for Bank's

business purposes only. This information includes the safeguarding, securing and proper disposal of confidential information in accordance with the Bank's policy on maintaining and managing records. The obligation extends to confidential of third parties, which the Bank has rightfully received under non-disclosure agreements. To further the Bank's business, confidential information may have to be disclosed to potential business partners. Such disclosures should be made after considering its potential benefits and risks. Care should be taken to divulge the most sensitive information, only after the said potential business partner has signed a confidentiality agreement with the Bank. Any publication or publicly made statement that might be perceived or construed as attributable to the Bank, made outside the scope of any appropriate authority in the Bank, should include a disclaimer that the publication or statement represents the views of the specific author and not the Bank. (ii) Other Confidential Information The bank has many kinds of business relationships with many companies and individuals. Sometimes, they will volunteer confidential information about their products or business plans to induce the Bank to enter into a business relationship. At other times, the Bank may request that a third party provide confidential information to permit the Bank to evaluate a potential business relationship with the party. Therefore, special care must be taken by the Board of Directors and members of the Core Management to handle the confidential information of others responsibly. Such confidential information should be handled in accordance with the agreements with such third parties. The Bank requires that every Director and the member of Core Management, General Managers should be fully compliant with the laws, statutes, rules and regulations that have the objective of preventing unlawful gains of any nature whatsoever. Directors and members of Core Management shall not accept any offer, payment, promise to pay or authorization to pay any money, gift or anything of value from customers, suppliers, shareholders/ stakeholders etc that is perceived as intended, directly or indirectly, to influence any business decision, any act or failure to act, any commission of fraud or opportunity for the commission of any fraud. 4. Good Corporate Governance Practices Each member of the Board of Directors and Core Management of the Bank should adhere to the following so as to ensure compliance with good Corporate Governance practices. (a) Dos Attend Board meetings regularly and participate in the deliberations and discussions effectively. Study the Board papers thoroughly and enquire about follow-up reports on definite time schedule. Involve actively in the matter of formulation of general policies. Be familiar with the broad objectives of the Bank and policies laid down by the Government and the various laws and legislations. Ensure confidentiality of the Bank's agenda papers, notes and minutes. (b) Don'ts Do not interfere in the day to day functioning of the Bank. Do not reveal any information relating to any constituent of the Bank to anyone. Do not display the logo / distinctive design of the Bank on their personal visiting cards / letter heads. Do not sponsor any proposal relating to loans, investments, buildings or sites for Bank's premises, enlistment or empanelment of contractors, architects, auditors, doctors, lawyers and other professionals etc. Do not do anything, which will interfere with and/ or be subversive of maintenance of discipline, good conduct and integrity of the staff.

5. Waivers Any waiver of any provision of this Code of Conduct for a member of the Bank's Board of Directors or a member of the Core Management must be approved in writing by the Board of Directors of the Bank. The matters covered in this Code of Conduct are of the utmost importance to the bank, its stakeholders and its business partners, and are essential to the Bank's ability to conduct its business in accordance with its value system. ENTREPRENEURSHIP------------------------------------------------------Entrepreneurship is the practice of starting new organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship may involve creating many job opportunities. Many "high-profile" entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs. Our understanding of entrepreneurship owes a lot to the work of economist Joseph Schumpeter and the Austrian School of economics. For Schumpeter (1950), an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship forces "creative destruction" across markets and industries, simultaneously creating new products and business models and eliminating others. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. Despite Schumpeter's early 20th-century contributions, the traditional microeconomic theory of economics has had little room for entrepreneurs in their theories Characteristics of entrepreneurship:The entrepreneur, who has a vision and the enthusiasm for this vision, is the driving force of an entrepreneurship The vision is usually supported by a set of ideas that have not been awared by the majority of the market/industry The overall blueprint to realize the vision is clear, however details may be incomplete, flexible, and evolving The entrepreneur promotes the vision with an influential passion With a persistent and deterministic mindset, the entrepreneur devises a set of entrepreneurial strategies to thrive for the vision