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A Study on Analysis of Future contract in


Submitted by
Submitted to



In partial fulfillment of the requirement for the award of


Under the Guidance of

Internal Guide External Guide

Prof. Jyothi. G Mr. Sharath Kumar
Department of Management Studies Manager
NMIT, Bangalore Sharekhan Pvt ltd.,

Department of Management Studies

Nitte Meenakshi Institute of Technology
Bengaluru 560 064
Sl No Table of Content Page No.
1 Chapter 1
1.1 Introduction
1.2 Need of study
1.3 Statement of the problem
1.4 Literature Review
1.5 Objectives of the study
1.6 Scope of the study
1.7 Methodology adopted
1.8 Limitations of the study
2 Chapter 2
2.1 Industry profile
2.2 Company Profile
2.3 Promoters
2.4 Vision, mission & quality policy
2.5 Products/Service profile
2.6 Infrastructure facilities
2.7 Competitors information
2.8 SWOT Analysis
2.9 Future growth & Prospects
2.10 Financial Statements

3 Chapter 3
3.1 Theoretical background of the data collected
4 Chapter 4
4.1 Analysis and interpretation of data
5 Chapter 5
5.1 Summary of findings
5.2 Suggestions/recommendations
5.3 Conclusion
6 Bibliograaphy
7 Annexture

Chapter 1
Introduction about the Internship :
The Credit risk management process of the Bank shall be driven by a strong
organizational culture and sound operating procedures, involving corporate values,
attitudes, competencies, effective internal reporting and contingency planning.
Credit risk is the possibility of loss associated with changes in the credit quality of
the borrowers and counter parties. The counter parties may include small and
medium enterprises, individual, corporate, financial institution, bank etc. In a
banks portfolio, losses accelerate from outright default due to unwillingness of a
borrower or counter party to honor commitments in relation to leading settlement
and other financial transactions.
Addressing such risks proactively may provide an organization with a competitive
advantage. Organizations manage risk using a variety of strategies and products. It
is important to understand how these products and strategies work to reduce risk
within the context of the organizations risk tolerance and objective.
Need for credit risk management :
To gather key information about risk areas of a borrower.
It provides a basis for credit risk pricing.
It is a risk management tool for prospective new borrowers in addition to
monitoring the weaker parameters and taking remedial action.
It is needed to identify risk measures involved in the financial sector i.e.
dismantling of State control, deregulation, globalization and allowing things
to shape on the basis of market conditions, face new risk and challenges.

Objective of the study :

To analyze the credit risk rating and the pattern of rating the borrowers.
To have a clear understanding of the credit policies of the bank.
To understand the criteria under which advances are granted to the
To analyse the measures adopted by the bank to reduce credit risk.
To know effectiveness of the credit risk measures.
Scope of the study :
The study makes an attempt to understand the concept of Credit Risks in
Banks with special reference to Canara Bank Talaguppa branch.
This titled Credit Risk Management at Canara Bank has been purely
conducted for academic purposes.
This study includes the processes of credit risk management like
identification, monitoring, measuring and reviewing of the borrowers.
Research Methodology :
Research design means a search of facts, answers to questions and solution to the
problems. It is a foreseeable investigation. It is a systematic and objective analysis
and recording of controlled observation that may lead to the development of
generalization, resulting in prediction and possibly ultimate control of events.
The various research designs used in this study are descriptive, exploratory and
analytical research. Descriptive research design was well turned because the study
involved an depth study of credit risk management and the relationship between
two variables i.e financial performance and credit risk management of canara bank.
Further exploratory research was developed in order to define the nature of risk
management explain and clarify the understanding of usage and effectiveness of
risk management in canara bank and analytical research was developed to analyze
the financial statements, credit rating mechanism, financial ratios and thereby draw
Sources of Data :
Primary data :
1. Personal interview with the executives and staff of all the departments
including risk management department for collecting data about the
2. Questionnaires were also used as a medium to record information.

Secondary Data :
1. Banks manuals and circulars
2. Annual Report of previous years
3. Website of the Bank
4. Old Reports related to Banking services.

Literature Review :

Article 1
Title : Bank Credit Risk Management
Author : Boffey. R. Robson G N

About the Research :

Bank management, from a finance theory perspective, is generally
acknowledged to involve the management of four major balance sheet risks:
liquidity risk, interest rate risk, capital risk and Credit Risk . Of
these, Credit Risk has commonly been identified as the key risk in terms of
its influence on Bank performance (Sinkey, 1992, p.279) and Bank failure
(Spadaford, 1988).
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Article 2
Title : Credit risk assessment: a challenge for financial institutions

Author : kalapodas, Evangelos; Thomas Mary E

About the Research :

This study explores financial Credit risk assessment. This is an important issue
because there is currently no standardized method used by financial institutions for
the assessment of Credit risk. A critical evaluation of the most popular Credit
risk assessment methods--the judgmental method, Credit-scoring and portfolio
models--highlights a number of limitations when used on their own. Several
interviewees confirm that Credit risk assessment methods should be combined for
effective Credit risk assessment. Accordingly, the study proposes a framework for
improving Credit risk assessment, which combines the strengths of these methods
and copes successfully with their limitations.
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Article 3

Title : Credit risk management: a survey of practices

Author : Fatemi, Ali; Fooladi; Iraj

About the Research :

Proposes to investigate the current practices of Credit risk management by the
largest US-based financial institutions. Owing to the increasing variety in the types
of counterparties and the ever-expanding variety in the forms of obligations, Credit
risk management has jumped to the forefront of risk management activities
carried out by firms in the financial services industry. This study is designed to
shed light on the current practices of these firms. Design/methodology/approach -
A short questionnaire, containing seven questions, was mailed to each of the top
100 banking firms headquartered in the USA. Findings - It was found that
identifying counterparty default risk is the single most-important purpose served
by the Credit risk models utilized. Close to half of the responding institutions
utilize models that are also capable of dealing with counterparty migration risk.
Surprisingly, only a minority of banks currently utilize either a proprietary or a
vendor-marketed model for the management of their Credit risk . Interestingly,
those that utilize their own in -house model also utilize a vendor-marketed model.
Not surprisingly, such models are more widely used for the management of non-
traded Credit loan portfolios than they are for the management of traded bonds.
Originality/value - The results help one to understand the current practices of these
firms. As such, they enable us to make inferences about the perceived importance
of the risks. The paper is of particular value to the treasurers intending to better
understand the current trends in Credit risk management, and to academics
intending to carry out research in the field.

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Article 4
Title : Credit risk evaluation: the application of scorecard in financial services
Author : WU, Desheng Dash, Seco Luis A

About the Research :

In recent years, credit risk evaluation and credit default prediction have attracted a
great deal of interests from both practitioners and regulators in the financial
industry. This paper reviews various methods in credit risk evaluation. We
demonstrate the use of a scorecard in a bank and validate the performance of such
a scorecard through analysis of scores derived from scorecard models. The
promising results potentially provide benefit to the financial sector in the areas
of credit judgement, loan securitization and retail credit risk management.

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Article 5
Title : Credit Risk Management Policy And The Stability Of Latvian Banking

Author : Andrejeya A Rigert A

About the Research :

This paper aims to give an overview of the main issues related to credit risk
management policies and the implementation of the new Basel capital accord
proposals especially from the perspective of financial stability and financial
integration. The new rules place substantial emphasis on the importance for banks
to develop their own risk analysis, management and control systems. At the same
time banks will be able to apply their own methodologies to calculating risk and
the required capital backing. In the area of credit risk, two methods are available,
namely the standardized approach and the internal ratings-based (IRB) approach.
The former ties risk weights to ratings provided by recognized rating agencies. The
latter uses banks own estimates of certain risk factors. Banks assess their capital
adequacy on the basis of own internal risk management methodology. This is one
of the most innovative elements of the new framework because it
allows banks themselves to determine certain key elements in the calculation of
their capital requirements. The new approach envisages also more emphasis
on banks corporate governance mechanisms, greater focus on risk analysis and
management systems and correct pricing of risk. These beneficial effects will also
translate into a positive contribution to the stability of Latvian banking sector at
Document URL
Limitations of Study :

Credit risk data is confidential to banks; hence primary data availability is

Time is major constraint of this study.
The study is limited to the extent of available information supplied by the
The study restricted to only one branch.
Chapter 2
Industry Profile
The first bank in India, though conservative, was established in 1786. From 1786
till today, the journey of Indian Baking in India has a long and elaborate
history of more than 200 years. Banking System can be segregated into
three distinct phases. They areas 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. After that 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 merged in 1920 and Imperial Bank of India was
established which started as private shareholders banks, mostly Europeans

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 organized. Reserve
Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced
periodic failures between 1913 and 1948. There were approximately 1100 banks,
mostly small. To streamline the functioning and activities of commercial banks, the
Government of India came up with The Banking Companies Act, 1949 which was
later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act
No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the
supervision of banking in India as the Central Banking Authority.
During those days public has lesser confidence in the banks. As an
aftermath deposit 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 was 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.

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
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.

The banking sector is considered the most lucrative option in todays job market.
In the industry, a position in Treasury or Foreign exchange is considered right on
top and this is followed by careers in Private Banking, Investment Banking and
Retail Banking. One could work in a variety of areas in banking industry including
Recurring Deposit Account, Banking officer, Probationary officer, loan officer etc.
In the Financial Services, some of the important jobs include that of a stockbroker
who is essentially a person who buys and sells securities on behalf of the
individuals and institutions for some commission. While some brokers like to
practice with individual clients others work for institutions. Brokers who work for
institutional investors are often called securities trader. Many prefer to as dealers,
advisors and securities analysts.
History of Canara Bank
Late Sri Ammembal Subbarao Pai

Widely known for customer centricity, Canara Bank was founded

by Shri Ammembal Subba Rao Pai, a great visionary and
philanthropist, in July 1906, at Mangalore, then a small port town
in Karnataka. The Bank has gone through the various phases of its
growth trajectory over hundred years of its existence. Growth of
Canara Bank was phenomenal, especially after nationalization in
the year 1969, attaining the status of a national level player in
terms of geographical reach and clientele segments. Eighties was
characterized by business diversification for the Bank. In June
2006, the Bank completed a century of operation in the Indian
banking industry. The eventful journey of the Bank has been
characterized by several memorable milestones. Today, Canara
Bank occupies a premier position in the comity of Indian banks.
Canara Bank has several firsts to its credit.
These include:

Launching of Inter-City ATM Network

Obtaining ISO Certification for a Branch

Articulation of Good Banking Banks Citizen Charter

Commissioning of Exclusive Mahila Banking Branch

Launching of Exclusive Subsidiary for IT Consultancy

Issuing credit card for farmers

Providing Agricultural Consultancy Services

Over the years, the Bank has been scaling up its market position
to emerge as a major 'Financial Conglomerate' with as many as
nine subsidiaries/sponsored institutions/joint ventures in India and
abroad. As at September 2016, the Bank has further expanded its
domestic presence, with 5860 branches spread across all
geographical segments. Keeping customer convenience at the
forefront, the Bank provides a wide array of alternative delivery
channels that include 10026 ATMs, covering 4081 centres. The
Bank set up 182 hi-tech E-lounges in select branches with
facilities like ATM, Cash Deposit Kiosk with voice guided system,
Cheque Deposit Kiosk, Self Printing Passbook Kiosk, Internet
Banking Terminal, Online Trading Terminal and Corporate Website
Access. Several IT initiatives were undertaken. The Bank has
successfully launched Canara Empower- Unified payment
interface for single platform in accessing multiple bank accounts
and CANARA TECH- support for structured resolution of queries
related to tech-products. The Bank also launched Canara Bank
RuPay Debit Card, Canara Club Card Debit, Canara Secured
Credit Card, Canara Elite Debit Card, Canara Bank Platinum Rupay
Cards, Platinum Rupay Card and EMV Chip Cards under debit and
credit cards. Online Savings Bank and PPF account opening were
introduced. The Bank made several value additions under internet
banking and mobile banking services. The Bank has introduced
enhanced version of CanMobile, Canara e-InfoBook- an electronic
passbook and banking related information facility on mobile
platforms - Android, Windows & iOS and Canara m-Wallet to
provide more convenience and facilities to customers. Canara
Galaxy, a combo product launched, comprising SB, Demat, OLT,
Internet & Mobile Banking, Insurance, card services and other
add-ons. Under education loan interest subsidy, web portals
released for Central Scheme for Interest Subsidy (CSIS), Ministry
of HRD, GoI, Dr. Ambedkar Central Sector Scheme of Interest
Subsidy (ACSIS), Ministry of Social Justice & Empowerment, GoI
and Padho Pardesh, Ministry of Minority Affairs, GoI. The Bank has
launched Instant loan application sanction portal for Housing Loan
and Car Loan. The Bank issued MUDRA Debit Card for overdraft
accounts under MUDRA Card scheme. P2U (Person to UIDAI) funds
transfer through Mobile Banking in WAP channel was enabled by
the Bank. Subscription of Social Security Schemes of Govt. of
India through ATM, SMS and Internet Banking was enabled by the
Bank. The Bank has implemented Jeevan Praman a digital life
certificate for pensioners. The Bank has Implemented automated
reminder SMS/Email Alerts to customers intimating to submit RC
Copy/Insurance for the vehicle loans and tax paid
receipt/certificate for the mortgaged property. Missed Call / SMS
Based ePass Sheet generation made live by the Bank. The Bank
has successfully implemented SMS/Email Alerts to NPA Borrowers
intimating to regularize overdues in accounts. Mobile Banking
Registration through ATMs (Interoperability through NFS) has been
successfully introduced by the Bank. The Bank has successfully
completed Aadhaar seeding through BC Terminal and
implemented renewal of Subscription for Social Security Schemes
(PMJJBY & PMSBY). Not just in commercial banking, the Bank has
also carved a distinctive mark, in various corporate social
responsibilities, namely, serving national priorities, promoting
rural development, enhancing rural self-employment through
several training institutes and spearheading financial inclusion
objective. Promoting an inclusive growth strategy, which has been
formed as the basic plank of national policy agenda today, is in
fact deeply rooted in the Bank's founding principles. "A good
bank is not only the financial heart of the community, but
also one with an obligation of helping in every possible
manner to improve the economic conditions of the
common people". These insightful words of our founder
continue to resonate even today in serving the society with a
purpose. The growth story of Canara Bank in its first century was
due, among others, to the continued patronage of its valued
customers, stakeholders, committed staff and uncanny leadership
ability demonstrated by its leaders at the helm of affairs. We
strongly believe that the next century is going to be equally
rewarding and eventful not only in service of the nation but also
in helping the Bank emerge as a "Preferred Bank" by pursuing
global benchmarks in profitability, operational efficiency, asset
quality, risk management and expanding the global reach.
Background and Inception of the Banks

Type : Public (BSE: 532483, NSE: CANBK)

Industry : Banking , Finanacial Services

Founded : Canara Bank Hindu Permanent Fund (1906)

Canara Bank Ltd (1910)

Canara Bank (1969)

Headquarters : Bangalore, India

Key people : Shri T. N. Manoharan (Chairman)

Shri Rakesh Sharma (MD & CEO)

Employees : 53508 (2016)

Website : http://

Nature of the business :

Canara Bank is basically a public sector bank which carries acceptance of deposits,
mobilization of savings, provides loans and advances, NRI Services,
remittance/collection, funds management, customer service etc.

Vision & Mission :

Vision statement

To emerge as a Best Practices Bank by pursuing global benchmarks in

profitability, operational efficiency, asset quality, risk management and expanding
the global reach.
Mission ststement

To provide quality banking services with enhanced customer orientation, higher

value creation for stakeholders and to continue as a responsive corporate social
citizen by effectively blending commercial pursuits with social banking.

Product/Services Profile :

The bank has introduced a rich portfolio of deposits, loans remittances, bills,
foreign exchange, merchant banking products and credit card.

Deposit Schemes :

Savings Bank Account

Current Account

Term Deposits:

Fixed Deposits
Kamadhenu Deposits
Recurring Deposits
Can flexi Deposits

Loans & Advances:

Housing Loan
Home Improvement
Can carry (Consumer Durables)
Can cash (Shares)
Can mobile(vehicle)

NRE (Non Resident External Rupee Account)
NRO (Non Resident Ordinary Account)
FCNR (Foreign Currency Non Resident Accounts -Banks) - RFC Deposits
Credit Cards:
Cancard visa classic
Cancard visa corporate
Cancard MasterCard
Cancard visa international gold

Remittance Collection and Fcilities :

FOREX Remittance
Inland Remittance
Electronic Remittance Services
Inward / Outward Collection Instruments

Foreig Exchange :

FOREX Market Information

Card Rates

Area of Operation

After obtaining the certificate of incorporation, certificate of commencement and

getting the draft of the Memorandum of Association and Articles of Association
approved, Canara bank Ltd. Started functioning as per the provision of Indian
Companies Act.

Competitors Information :

Public Banks

Bank of India
Bank of Baroda
Central Bank of India
Union Bank of India
State Bank of India
Andra Bank
Dena Bank
And many more others
Private and Foreign Banks

Axis Bank
Barclays Bank
Deutsche Bank
And many more

SWOT Analysis of Canara Bank


Retail banking supermarket with Efforts are concentrated more

the ability to cross-sell entire towards the urban consumers
range of credit products. thus ignoring the rural
Innovative products counterpart.
Number and spread of branches is
Technological superiority very low as compared to PSU

Wide distribution banks.

Excessive focus on non-branch

High top of mind
distribution channel reducing the
awareness due to scope of personal interaction
aggressive advertising needed for the sale of retail
Strong Credit controls

High Customer Service

Economies of scale through
growing volumes.
24x7 service levels


Changing consumer outlook

Stiff competition in the housing
towards loans and related products
loans segment from HDFC, LIC
Rising consumer income levels
Housing etc.

Increasing banking habits among In the Credit card segment,

Indian consumers competition from Citibank, Stan

Chart etc.
Being No.1 in the auto finance
segment paves the way to Of late, lots of Non Banking
consolidate its market leadership Financial Institutions have emerged
across all the segments. and have eaten up the banks market
Rapid increase in the retail loan
market size to the tune of Educating people by way of
30 40 % advertisements might help
competitors to reap the benefits.

Significant Milestones
1st july Canara Hindu Permanent Fund Ltd. formally registered with a
capital of 2000 shares of Rs.50/- each, with 4 employees.
1910 Canara Hindu Permanent Fund renamed as Canara Bank Limited
1969 14 major banks in the country, including Canara Bank, nationalized
on July 19
1976 1000th branch inaugurated
1983 Overseas branch at London inaugurated Cancard (the Banks credit
card) launched
1984 Merger with the Laksmi Commercial Bank Limited
1985 Commissioning of Indo Hong Kong International Finance Limited
1987 Canbank Mutual Fund & Canfin Homes launched
1989 Canbank Venture Capital Fund started
1989-90 Canbank Factors Limited, the factoring subsidiary launched
1992-93 Became the first Bank to articulate and adopt the directive principles
of Good Banking.
1995-96 Became the first Bank to be conferred with ISO 9002 certification
for one of its branches in Bangalore
2001-02 Opened a 'Mahila Banking Branch', first of its kind at Bangalore, for
catering exclusively to the financial requirements of women
2002-03 Maiden IPO of the Bank

2003-04 Launched Internet & Mobile Banking Services

2004-05 100% Branch computerization
2005-06 Entered 100th Year in Banking Service
Launched Core Banking Solution in select branches
Number One Position in Aggregate Business among Nationalized
2006-07 Retained Number One Position in Aggregate Business among
Nationalized Banks.
Signed MoUs for Commissioning Two JVs in Insurance and Asset
Management with international majors viz., HSBC
(Asia Pacific) Holding and Robeco Groep N.V respectively
2007-08 Launching of New Brand Identity
Incorporation of Insurance and Asset Management JVs
Launching of 'Online Trading' portal
Launching of a Call Centre
Switchover to Basel II New Capital Adequacy Framework
2008-09 The Bank crossed the coveted Rs. 3 lakh crore in aggregate business.
The Banks 3rd foreign branch at Shanghai commissioned.

Future growth and prospects :

The bank has a lot of future growth and prospects. In future days the area of
operation will be globally spread. The bank is running under profit and has been
giving fair salary and dividend to the employees.
Compared to the previous year there is an increase of 10% in the companys
profits. The company is further planning to improve its overall business and
expand branch and ATM network. The main focus will be on improving CASA
level and Retail/MSME/Priority sector so that the profitability of the bank
improves further and also focus is laid on increasing treasury profits from Forex
and Domestic segments.