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Functions of Commercial Banks

The functions of a commercial banks are divided into two categories: i) Primary functions, and ii) Secondary functions including agency functions.

i) Primary functions:
The primary functions of a commercial bank include: a) accepting deposits; and b) granting loans and advances; a) Accepting deposits The most important activity of a commercial bank is to mobilise deposits from the public. People who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. Thus, deposits with the bank grow along with the interest earned. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank. b) Grant of loans and advances The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon the purpose, period and the mode of repayment. The difference between the rate of interest allowed on deposits and the rate charged on the Loans is the main source of a bank's income. i) Loans A loan is granted for a specific time period. Generally, commercial banks grant short-term loans. But term loans, that is, loan for more than a year, may also be granted. The borrower may withdraw the entire amount in lumpsum or in instalments. However, interest is charged on the full amount of loan. Loans are generally granted against the security of certain assets. A loan may be repaid either in lumpsum or in instalments.

ii)

Advances

An advance is a credit facility provided by the bank to its customers. It differs from loan in the sense that loans may be granted for longer period, but advances are normally granted for a short period of time. Further the purpose of granting advances is to meet the day to day requirements of business. The rate of interest charged on advances varies from bank to bank. Interest is charged only on the amount withdrawn and not on the sanctioned amount. Modes of short-term financial assistance Banks grant short-term financial assistance by way of cash credit, overdraft and bill discounting. a) Cash Credit Cash credit is an arrangement whereby the bank allows the borrower to draw amounts upto a specified limit. The amount is credited to the account of the customer. The customer can withdraw this amount as and when he requires. Interest is charged on the amount actually withdrawn. Cash Credit is granted as per agreed terms and conditions with the customers. b)Overdraft Overdraft is also a credit facility granted by bank. A customer who has a current account with the bank is allowed to withdraw more than the amount of credit balance in his account. It is a temporary arrangement. Overdraft facility with a specified limit is allowed either on the security of assets, or on personal security, or both. c) Discounting of Bills Banks provide short-term finance by discounting bills, that is, making payment of the amount before the due date of the bills after deducting a certain rate of discount. The party gets the funds without waiting for the date of maturity of the bills. In case any bill is dishonoured on the due date, the bank can recover the amount from the customer.

ii) Secondary functions Besides the primary functions of accepting deposits and lending money, banks perform a number of other functions which are called secondary functions. These are as follows Issuing letters of credit, travellers cheques, circular notes etc.
a) Undertaking safe custody of valuables, important documents, and securities by providing safe b) c) d) e) f) g)

deposit vaults or lockers; Providing customers with facilities of foreign exchange. Transferring money from one place to another; and from one branch to another branch of the bank. Standing guarantee on behalf of its customers, for making payments for purchase of goods, machinery, vehicles etc. Collecting and supplying business information; Issuing demand drafts and pay orders; and, Providing reports on the credit worthiness of customers.

Different modes of Acceptance of Deposits Banks receive money from the public by way of deposits. The following types of deposits are usually received by banks: i) ii) iii) iv) v) i) Current deposit Saving deposit Fixed deposit Recurring deposit Miscellaneous deposits Current Deposit

Also called 'demand deposit', current deposit can be withdrawn by the depositor at any time by cheques. Businessmen generally open current accounts with banks. Current accounts do not carry any interest as the amount deposited in these accounts is repayable on demand without any restriction. The Reserve bank of India prohibits payment of interest on current accounts or on deposits upto 14 Days or less except where prior sanction has been obtained. Banks usually charge a small amount known as incidental charges on current deposit accounts depending on the number of transaction.

ii)

Savings deposit/Savings Bank Accounts

Savings deposit account is meant for individuals who wish to deposit small amounts out of their current income. It helps in safe guarding their future and also earning interest on the savings. A saving account can be opened with or without cheque book facility. There are restrictions on the withdrawls from this account. Savings account holders are also allowed to deposit cheques, drafts, dividend warrants, etc. drawn in their favour for collection by the bank. To open a savings account, it is necessary for the depositor to be introduced by a person having a current or savings account with the same bank. iii) Fixed deposit

The term 'Fixed deposit' means deposit repayable after the expiry of a specified period. Since it is repayable only after a fixed period of time, which is to be determined at the time of opening of the account, it is also known as time deposit. Fixed deposits are most useful for a commercial bank. Since they are repayable only after a fixed period, the bank may invest these funds more profitably by lending at higher rates of interest and for relatively longer periods. The rate of interest on fixed deposits depends upon the period of deposits. The longer the period, the higher is the rate of interest offered. The rate of interest to be allowed on fixed deposits is governed by rules laid down by the Reserve Bank of India. iv) Recurring Deposits

Recurring Deposits are gaining wide popularity these days. Under this type of deposit, the depositor is required to deposit a fixed amount of money every month for a specific period of time. Each instalment may vary from Rs.5/- to Rs.500/- or more per month and the period of account may vary from 12 months to 10 years. After the completion of the specified period, the customer gets back all his deposits alongwith the cumulative interest accrued on the deposits. v) Miscellaneous Deposits

Banks have introduced several deposit schemes to attract deposits from different types of people, like Home Construction deposit scheme, Sickness Benefit deposit scheme, Children Gift plan, Old age pension scheme, Mini deposit scheme, etc.

Different methods of Granting Loans by Bank The basic function of a commercial bank is to make loans and advances out of the money which is received from the public by way of deposits. The loans are particularly granted to businessmen and members of the public against personal security, gold and silver and other movable and immovable assets. Commercial bank generally lend money in the following form: i. Cash credit ii. Loans iii. Bank overdraft, and iv. Discounting of Bills

i.

Cash Credit : A cash credit is an arrangement whereby the bank agrees to lend money to the borrower upto a certain limit. The bank puts this amount of money to the credit of the borrower. The borrower draws the money as and when he needs. Interest is charged only on the amount actually drawn and not on the amount placed to the credit of borrower's account. Cash credit is generally granted on a bond of credit or certain other securities. This a very popular method of lending in our country. Loans: A specified amount sanctioned by a bank to the customer is called a 'loan'. It is granted for a fixed period, say six months, or a year. The specified amount is put on the credit of the borrower's account. He can withdraw this amount in lump sum or can draw cheques against this sum for any amount. Interest is charged on the full amount even if the borrower does not utilise it. The rate of interest is lower on loans in comparison to cash credit. A loan is generally granted against the security of property or personal security. The loan may be repaid in lump sum or in instalments. Every bank has its own procedure of granting loans. Hence a bank is at liberty to grant loan depending on its own resources. The loan can be granted as: a) Demand loan;or, b) Term loan. a) Demand loan: Demand loan is repayable on demand. In other words it is repayable at short notice. The entire amount of demand loan is disbursed at one time and the borrower has to pay interest on it. The borrower can repay the loan either in lumpsum (one time) or as agreed with the bank. Loans are normally granted by the bank against tangible securities including securities like N.S.C., Kisan Vikas Patra, Life Insurance policies and U.T.I. certificates.

ii.

b) Term loans: Medium and long term loans are called 'Term loans'. Term loans are granted for more than one year and repayment of such loans is spread over a longer period. The repayment is generally made in suitable instalments of fixed amount. These loans are repayable over a period of 5 years and maximum upto 15 years. Term loan is required for the purpose of setting up of new business activity, renovation, modernisation, expansion/extension of existing units, purchase of plant and machinery, vehicles, land for setting up a factory, construction of factory building or purchase of other immovable assets. These loans are generally secured against the mortgage of land, plant and machinery, building and other securities. The normal rate of interest charged for such loans is generally quite high. iii) Bank Overdraft: Overdraft facility is more or less similar to cash credit facility. Overdraft facility is the result of an agreement with the bank by which a current account holder is allowed to withdraw a specified amount over and above the credit balance in his/her account. It is a short term facility. This facility is made available to current account holders who operate their account through cheques. The customer is permitted to withdraw the amount as and when he/she needs it and to repay it through deposits in his account as and when it is convenient to him/her. Overdraft facility is generally granted by bank on the basis of a written request by the customer. Some times, banks also insist on either a promissory note from the borrower or personal security to ensure safety of funds. Interest is charged on actual amount withdrawn by thecustomer. The interest rate on overdraft is higher than that of the rate on loan. iv) Discounting of Bills Apart from granting cash credit, loans and overdraft, banks also grant financial assistance to customers by discounting bills of exchange. Banks purchase the bills at face value minus interest at current rate of interest for the period of the bill. This is known as 'discounting of bills'. Bills of exchange are negotiable instruments and enable the debtors to discharge their obligations towards their creditors. Such bills of exchange arise out of commercial transactions both in internal trade and external trade. By discounting these bills before they are due for a nominal amount, the banks help the business community. Of course, the banks recover the full amount of these bills from the persons liable to make payment.

Agency and General Utility Services provided by Modern Commercial Banks


Besides the two main activities, commercial banks also render a number of ancillary services. These services supplement the main activities of the banks. They are essentially non-banking in nature and broadly fall under two categories:
i) ii) i) Agency services, and General utility services. Agency Services

Agency services are those services which are rendered by commercial banks as agents of their customers. They include : 1. Collection and payment of cheques and bills on behalf of the customers; 2. Collection of dividends, interest and rent, etc. on behalf of customers, if so instructed by them;
3. Purchase and sale of shares and securities on behalf of customers; 4. Payment of rent, interest, insurance premium, subscriptions etc. on

behalf of customers, if so instructed;


5. Acting as a trustee or executor; 6. Acting as agents or correspondents on behalf of customers for other banks and financial

institutions at home and abroad. ii) General utility services

General utility services are those services which are rendered by commercial banks not only to the customers but also to the general public. These are available to the public on payment of a fee or charge. They include : a) Issuing letters of credit and travellers' cheques; b) c) d) Underwriting of shares, debentures, etc.; Safe-keeping of valuables in safe deposit locker; Underwriting loans floated by government and public bodies.

e) f) g)

Supplying trade information and statistical data useful to customers; Acting as a referee regarding the financial status of customers; Undertaking foreign exchange business.

DEPOSIT PRODUCTS: Flexi-Fix Deposit

1. Introduction: 1.1 The scheme gives maximum return without sacrificing the liquidity. 2. The Scheme: 2.1 Salient features and Rules of the Scheme are as follows :
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It is a running account consisting of multiple units of simple or compound interest fetching Term Deposit Accounts like normal Fixed Deposit or Double Deposit Plan respectively. No Term Deposit Receipt will be issued for the deposits. Instead, a specially designed pass book will be issued to the depositor, in which all the particulars regarding deposits, withdrawals, interest credit/ debit are recorded. However, the account under the scheme will be linked to a base account, which may be a Savings Bank or Current Account. For payment of interest or the maturity amount of a unit or at the time of premature withdrawal of a unit, as the case may be, the proceed thereof, net of TDS, as and where applicable, will be automatically swept to the base account for making the funds available at the disposal of the depositor/s. Under the scheme, a depositor is required to make an initial deposit of Rs.25,000/- or more in multiples of Rs.5,000/- as Fixed Deposit/ Double Deposit Plan for a fixed period of one year. Thereafter, the depositor can make any number of deposits in multiples of Rs.5,000/- each at any time in the account for a period of one year. Every Rs.5,000/- in the account will be treated as a separate unit of deposit. The depositor will be required to maintain a minimum principal outstanding of Rs.25,000/- i.e. 5 units of Rs.5,000/- each at all points of time. In case of fall in principal outstanding in the account below Rs.25000/-, the facility of further deposit of units in the account will stand withdrawn. The depositor is free to withdraw any amount of the principal in multiples of Rs.5,000/at any time before maturity without affecting the remaining units of deposit. However, the depositor will be required to maintain a minimum principal outstanding of Rs.25,000/- i.e. 5 units of Rs.5,000/- each at all points of time, as stated hereinabove.There will be no penalty for the prematurely withdrawn units.

The rate of interest for the units will be the rate prevailing on the date of deposit of the individual unit/s for the period of one year. In case of premature withdrawal of a unit, interest due, if any, will be paid net of TDS, as and where applicable, at the rate prevailing on the date of deposit of the unit for the period for which the deposit remained with the Bank No interest will be paid for premature withdrawal of a unit if the deposit remains with the Bank for a period less than 15 days. The balance units remaining in the account will continue to earn interest at the contracted rates for the individual units. Usual account opening procedures and formalities including observance of KYC and AML guidelines will be followed. In addition, a special letter for opening account under the scheme will be obtained from the depositor/s. No loan will be allowed against this deposit.

RETAIL CREDIT PRODUCTS: Allahabad Bank Housing Finance Scheme Target Group: Permanent salaried employees, Professionals & Self-Employed Persons, Businessmen, having regular income to liquidate the loans. Purpose:
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y y y y y y

For construction of residential house on land already owned. For purchase of plot by salaried persons from Govt. Agency / Development Authority or any Govt. recognized agency (viz., HUDA, HOUSEFED) and construction of residential house thereon. For purchase of house/flat to be used for residential purpose. For renovation / extension / repair of residential house already owned. For purchase of unfinished / old house(maximum 20 year old) and Renovation /extension / repair of the same. For taking over of housing loans from other finance companies / financial institutions / banks. Bank finance extended to a person who already owns a house in town / village where he resides, for buying / constructing a second house in the same or other town / village for the purpose of self occupation. Bank finance extended for purchase of a house by a borrower who proposes to let it out on rental basis on account of his posting outside the headquarters or because he has been provided accommodation by his employer. Bank finance extended to a person who proposes to buy an old house (Maximum 20 years old) where he is residing as a tenant.

Supplementary finance:
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Additional finance may be granted by the bank within the overall ceiling for carrying out alterations/ additions/repairs to the house/flat. Bank finance to individuals who have raised funds for construction / acquisition of accommodation from other sources and need supplementary finance from our bank after creating pari-passu charge over the property mortgaged in favour of other lenders and/or against such other security.

Eligibility: Housing Loan may be sanctioned to those who have regular income sufficient enough to liquidate the loan alongwith interest within stipulated period of repayment.The employees who have availed of housing loan from their own organisations may also avail of loan from the Bank under this scheme if they are having regular income sufficient to liquidate the loan within the stipulated period and are able to comply with other stipulations of the scheme. However, special facility is also available as under a. Repayment Option for salaried persons desirous to extend the repayment period beyond the date of retirement under Public Housing Loan Scheme of the Bank will be eligible upto 5 years after the date of retirement. b. Availability of Progressive monthly installments (PMI) options under public housing loan scheme. Nature of Loan: Term Loan Loan amount: a. In case of salaried persons: The loan amount will be restricted to 60 times of monthly gross salary last drawn subject to the condition that it is within the project cost less stipulated margin and Total deductions including EMI of proposed loan should not exceed 40% of the Gross monthly salary of the applicant. b. In case of others: The loan will be restricted up to 4 times of gross Income average shown in last 3 years Income Tax Assessment Order/ acknowledged copy of income tax return subject to the condition that it is within the project cost less stipulated margin and Total deductions including EMI of proposed loan should not exceed 40% of the Gross monthly income of the applicant as per IT Returns. Income Tax returns will be got verified by engaging services of Chartered Accountant. For repairing/furnishing of house/flat: Maximum loan for Repairing/ Furnishing of

existing House/ Flats will be 75% of the estimated expenses or Rs 3, 00,000 which ever is low subject to the condition that borrower has sufficient repaying capacity as per income criteria given hereunder: The minimum take home monthly salary/income taking into account all deductions (including EMI of proposed loan) should not be less than 40% of last month's gross salary in case of salaried persons & 50 % of average gross monthly income as per average of last three years IT Return in case of others. 4.3 For application money raised by Housing Boards/ Development Authorities: Permissible Loan amount for Application Money raised by local Housing Boards/ Development Authorities will be 75% of application amount or Rs 3,50,000/- which ever is lower subject to the condition that the borrower has capacity to repay the loan within stipulated repayment period. 4.4. For Joint Borrowers: While computing repaying capacity in case of joint borrowers*, income of all borrowers may be clubbed. Joint borrowers may be the coowner of the property or they may not be co owner (but must be legal heirs of owner of the property / PF nominee / Spouse having future interest in the property) but their income is to be considered as one of the source of loan repayment. (*However, Income of Co- borrower / (s) will be clubbed only if source of income of co-borrower is salary and co-borrower / (s) is a permanent employees of Government / Semi Government / Public Sector Unit/ Multinational Corporate Houses/ Blue Chip Companies / reputed companies.) Note: Income Tax return must be obtained in all cases including salaried persons. Margin:
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25 % of project cost and in case of repairing / furnishing 25% in all categories (including salaried class)

Project cost will consist of y y y y

Purchase price of land/ house/ Flat, plus Cost of construction/ renovation/ extension (if applicable) plus Stamp duty and registrations charges, as applicable plus Accrued Interest amount of moratorium period, if proposed to be capitalized It will be ensured that margin at all stages has been contributed by the borrower upfront where disbursement is to be made in phases.

Fixed rate of interest will be subject to following conditions:


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Subject to "interest rate reset" clause in terms of which fixed rates may be reset at the end of every three years on the basis of interest rate prevailing at that time. Subject to "force maejure" clause in terms of which Bank is authorized to revise fixed interest suitably and prospectively in the event of major volatility in

interest rates. Borrower of housing loan may exercise the option to switch over at any point of time from floating to fixed or vice versa on the condition that borrower has to pay as under:

From Fixed to Floating- 2% of outstanding balance for exercising the option From Floating to fixed- 0.50% of outstanding balance for exercising the option Security: Primary:
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Equitable/ Registered mortgage of the property or Pari- passu charge over the property if the borrower (salaried person) has already availed loan from his organisation.

Collateral Security:
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Personal Guarantee of one person of means and standing acceptable to the Bank will be taken in all cases. However, in case of delay in creation of mortgage Personal Guarantee of two person of means and standing will be taken, where delay over 6 months in creation of equitable mortgage of the property to be financed by the Bank is expected. In case of delay in creation of equitable mortgage of the property beyond 6 months, collateral security to the extent of loan amount in the shape of immovable property or financial securities or personal guarantee of two persons of means & standing acceptable to the Bank will be taken. However, the same will not be needed where a property is being purchased from seller/builder as mentioned hereunder: o Housing Board/ Development Authority /Govt agency o Good rated /reputed housing company / builder/developer well known at national / state level (VIZ: Ansal, Gujarat Ambuja, Bengal Ambuja, Bengal Peerless, Sahara Housing). List of such reputed housing companies/ developers will be circulated by respective Zonal Offices after its careful scrutiny and a copy will be endorsed to Retail Credit Section, Head Office. o Approved Housing Societies notified by Zonal Offices. o Builders/Developers whose project has been approved by the Bank as per bank's guidelines. (Approval of housing projects for the purpose of tie-up arrangement for loan to their prospective buyers where builder/developer is not seeking finance from the bank for the housing project may now be accorded by the Zonal Head).

Documentation: In a booklet form complete in all respect. Documentation Charge: Actual expenses / charges incurred for creation of mortgage.

Disbursement: In case of purchase of flat / House payment should be made direct to seller / promoters / societies by DD/ Banker's cheque and should be issued in the name of builders with Bank account number on it. Bank's official should be sent for delivering the cheque / draft to the builders / sellers property at the registered addressed mentioned in the title deed. In case of construction of new house / flat, loan will be disbursed in a phased manner, in 4 or more installments. Each such installment will be released only after verification of end use of funds already released by the bank. Repayment Period & Moratorium: a Repayment Period:y

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For construction of House &/ or Purchase of House/ Flat/Residential Plot: For salaried Persons-- Maximum 25 years or length of remaining service, whichever is less. For Others -- Maximum 20 years or remaining period in attaining an age of 65, which ever is earlier. For Repairing/ Furnishing of House/ Flat: For salaried Persons-- Maximum 7 years or length of remaining service, whichever is less. For Others -- Maximum 7 years or remaining period in attaining an age of 65, which ever is earlier. For Application Money raised by Housing Board/ Development Authority: 12 Months or receipt of refund order, which ever is earlier. Other Norms on Repayment Period:Repayment period will be exclusive of moratorium period.If the borrower desires to repay the loan in shorter period, he/she may be allowed to do so and monthly installment will be fixed accordingly. Interest will be realised on monthly basis during the moratorium period. However, in case of salaried persons the interest amount may be capitalised (i.e. included in project cost) on request of the borrower.

i) Loan Repayment Options is available. a) Repayment option for salaried persons desirous to extend the repayment period beyond the date of retirement under Housing Loan Scheme:
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To extend repayment period of housing loan to salaried persons upto 5 years after the date of retirement subject to the condition that EMI will be within 60% of their estimated post retirement monthly earnings (pension plus ascertainable other income such as rental earnings, income from investment in securities/LIP/NSC etc.., if any) as also existing net take home salary after taking all deductions will not be below 40% of gross salary. There will also be flexibility to consider some lump sum / bullet payment of full or part of the loan outstanding out of future sources of fund and draw the repayment schedule accordingly.

If post retirement EMI is more than stipulated norms, pre-retirement EMI may be proportionately increased with borrower's consent.

b) Offering progressive monthly instalments (PMI) options


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Under the plan, the initial monthly instalments for the first 5 years shall be kept lower i.e., 80% of normal EMI and it will gradually go up to 90% of EMI plus whatever shortfall during the first 10 years shall be realized after 10th year of loan. Accordingly, a three-tier repayment schedule will be drawn up. Borrowers will have also option for 2 tier repayment structure (with first tier not above one third of repayment period) Borrowers may also get higher amount of progressive monthly instalments (PMI) than the above norms by opting higher %of EMI for PMI calculation. Existing borrower or Bank's employees also can exercise options (a) & (b). Minimum 24 PDCs will be obtained before releasing of fund except salary tiedup cases.

Prepayment Penalty
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If liquidated within 1 year: 2% of outstanding balance If liquidated after 1 year: 1.50% of outstanding in case of takeover.

Special Package to Housing Loan Scheme (Public) All new Housing Loans (upto Rs.20.00 Lac for maximum period of 20 years) availed upto 31st December 2009 and shall not apply to swapping (takeover/ renewal) of loan w.e.f. 17/12/2008. (i) Interest Rate: Tenure Existing Floating Fixed Revised Upto Rs.5.00 Over Rs.5.00 Lac Lac to Rs.20.00 Lac @

Upto 5 years Above 5 years and upto 10 years Above 10 years and upto 15 years Above 15 years and upto 20 years @

PLR-3.75% 11.00% PLR-3.25% 11.50% 8.50% (Fixed) 9.25% (Fixed) pawmr. * PLR-3.00% 11.75% pawmr. * PLR-2.75% 12.25%

*The rate of interest will be reset after 5 years from the date of withdrawal of the first installment and the borrower will then have the option for going for a fixed rate or a floating rate of interest.

@ If Housing loan is sanctioned for tenure above 20 years to 25 years and/ or amount above Rs.20.00 Lac, existing instructions/ guidelines will remain unchanged. (ii) Margin: Existing 25% Revised Upto Rs.5.00 Lac Over Rs.5.00 Lac to Rs.20.00 Lac 10% 15%

(iii) Processing fee: Existing 0.50% of loan amount, maximum Rs.10000/(iv) Prepayment charges: Existing 2% of outstanding balance only in case of takeover Proposed Upto Rs.5.00 Lac Over Rs.5.00 Lac to Rs.20.00 Lac NIL NIL Revised Upto Rs.5.00 Lac Over Rs.5.00 Lac to Rs.20.00 Lac NIL NIL

(v) Free Life Insurance cover for the entire amount of outstanding loan will be provided to the borrower.

OTHER CREDIT PRODUCTS: Kisan Credit Card


A unique scheme for farmers under which they can draw loan amount in cash for crop production as well as domestic needs from the card issuing branch within the sanctioned limit. The details are as under: 1. Eligibility : Farmers having agricultural land, Pattaholders (i.e. land allotees) and Tenants Farmers forming Joint Liability Group are eligible. 2. Loan Limit : Limit is fixed to meet the cost of cultivation of crops based on land holding and also for domestic needs. There is no minimum or maximum loan limit. 3. Card : A common card named Kisan Credit-cum-Kisan Shakti Card is issued to the farmers on fixation of loan limit.

4. Rate of interest :

i) Upto Rs.50,000/ii) Above Rs.50,000/- & upto Rs.2.00 lacs

9.75% (fixed) 2% below PLR

iii) Above Rs.2.00 lacs & upto Rs.5.00 lacs 0.50% below PLR iv) Above Rs.5.00 lacs 0.50% above PLR

However, as per Union Budget Announcement for 2008-09, interest will be charged @7% p.a. for Short Term Crop Loan under KCC upto Rs. 3.00 lac disbursed from 01.04.08. 5. Security : a. For loans upto Rs.50,000/- : Hypothecation of crops & movable assets. b. For loans above Rs.50,000/-: i. Hypothecation of crops & movable assets. ii. Mortgage of land or charge on land as per Agricultural Credit Operation Act of the states concerned. Or Charge/ lien over liquid securities in the form of Fixed Deposit/ NSC/ Kisan Vikash Patra etc. providing full cover to the limit granted. 6. Repayment : i. The aggregate credit into the KCC account during the 12 months period should at least be equal to the maximum outstanding in the account And ii. No drawal in the account shall remain outstanding for more than 12 months 1. Validity : Card is valid for 3 years subject to annual review. 2. Features : y y y No admission/membership fee is levied by the Bank. A pass book is issued along with card to record transactions. Cardholders are covered under Personal Accident Insurance Scheme with sum assured for Rs.50,000/- against death/permanent total disability/ loss of two limbs/ eyes or one limb & one eye and Rs.25,000/- for loss of one limb/eye on payment of premium of Rs.5/- p.a by the cardholder.

Specified crops in notified areas grown under Kisan Credit Card is covered under Rashtriya Krishi Bima Yojna subject to notification issued by the State Government concerned.

INTEREST RATES: Deposit Schemes It has been decided by the Bank to revise interest rates on Domestic Term Deposits of below Rs.1.00 crore with effect from 23.11.2009 and Rs.1.00 crore & above with effect from 18.11.2009. The revised interest rates are as under :Tenor Existing Interest Rate p.a. (%) For For Rs. 1 For below cr to less Rs.10 cr Rs. 1 than Rs. & above cr 10 cr Revised Interest Rate p.a. (%) For below Rs. 1 cr (w.e.f. 23.11.09) For Rs. 1 cr to For Rs.10 cr less than Rs. & above 10 cr (w.e.f. (w.e.f. 18.11.09) 18.11.09)

7 days to 14 days 15 days to 29 days 30 days to 45 days 46 days to 60 days 61 days to 90 days 91 days to 179 days 180 days to 269 days 270 days to 364 days 1 year to

NA

1.50

1.50

NA

1.50

1.50

3.00

2.00

2.00

3.00

2.00

2.00

3.00

2.25

2.25

3.00

2.25

2.25

4.00

2.75

2.75

4.00

2.75

2.75

4.00

2.75

2.75

4.00

2.75

2.75

5.25

3.25

3.25

5.00

3.25

3.25

6.00

4.25

4.25

5.50

4.25

4.25

6.00

5.00

5.00

5.50

5.00

5.00

7.00

5.75

5.75

6.50

6.00

6.00

less than 2 years 2 years to less than 3 years 3 years to less than 5 years 5 years and upto 10 years 7.00 5.75 5.75 6.75 5.50 5.50

7.25

5.50

5.50

7.00

5.50

5.50

7.50

5.50

5.50

7.25

5.50

5.50

The above rates will be applicable for fresh deposits and renewal of deposits and rates are subject to revision at any time. The existing interest rate for AllBank Baalika Mangal Yojana Deposit Scheme will continue till further instruction. Existing additional interest rate for senior citizens will be continued. PENAL RATE OF INTEREST FOR PREMATURE WITHDRAWAL OF DOMESTIC TERM DEPOSITS Period of Deposit 1. Premature closure of term deposits for reinvestment in our bank 2. 15 days and upto 1 (one) year* 3. All others Amount of Penal Rate of Deposit Interest Any amount Any amount All others No penal rate to be charged No penal rate to be charged 1 % penal interest to be charged

*The period of Deposit agreed upon at the time of making the deposit. Non Resident (External) Rupee Savings Deposit Account (NRE-SB) Interest Rate % p.a. (unchanged since 18.11.2005)

3.50 Non Resident (External) Rupee Term Deposit Account (NRE) With effect from 01.04.2010

Period 1 year to less than 2 years 2 years to less than 3 years 3 years only

Existing rate % p.a. w.e.f 1st March, 2010 2.59 2.83 3.44

Revised Rate % p.a. w.e.f 1st April, 2010 2.67 2.99 3.59

Non-Resident (Ordinary) Rupee Term Deposits & Saving Bank A/c: The Interest rates of NRO deposits is at par with the Interest Rates for Domestic Deposits. Differential Rate of Interest/ Additional Rate for Senior Citizens: No Differential Rate on interest as also Additional Interest for Senior Citizens is allowed for Non-Resident Deposits as advised vide our Instruction Circular Nos. 6942/Foreign/2001-202/03 & 8144/Foreign/2004-05/04 dt. 03.09.01 & 07.05.2004 respectively Foreign Currency Non-Resident (FCNR (B)) Account and Resident Foreign Curency (RFC) accounts with effect from 01.04.2010 Fixed Deposit Existing Rate % p.a. (w.e.f. 01.03.2010) Revised Rate % p.a. (w.e.f. 01.04.2010)

USD GBP EUR CAD AUD USD GBP EUR CAD AUD 1 year to < 2 years 1.84 2.30 2.20 2.25 6.05 1.92 2.32 2.19 2.31 6.30 2 years to < 3 years 2.08 2.57 2.45 2.37 5.99 2.24 2.60 2.49 2.88 6.37 3 years to < 4 years 2.69 3.11 2.85 2.94 6.22 2.84 3.10 2.85 3.41 6.57 4 years to < 5 years 3.20 3.58 3.18 3.36 6.50 3.34 3.55 3.16 3.78 6.81 5 years only 3.62 3.94 3.47 3.69 6.65 3.75 3.86 3.42 4.04 6.92

Credit Schemes: Benchmark PRIME LENDING RATE BENCHMARK PLR 12.00%p.a. (w.e.f. from 01.07.2009) --Retail Scheme-For Interest Rates please refer schemes under Product > Retail Credit Products

MSME Finance Micro & Small Enterprises Advances (Secured): S.No. A B C Parameters Loan up to Rs.50000/Above Rs.50000/- to Rs.2.00 lacs. Above Rs.2.00 lakh to Rs.10.00 lacs. Micro Enterprises 8.75% (Fixed) PLR 3.00% PLR 2.50% AB1 : PLR 2.5% AB-2 : PLR 2.5% AB3 : PLR 1.5% D Rs.10.00 lacs & above (Linked to Rating of the account) AB4 : PLR 0.50% AB5 : PLR +1.00% AB6 : PLR +2.00% AB7 : PLR +3.00% Small Enterprises 9.25% (Fixed) PLR 2.50% PLR 2.00% AB1 : PLR 2.00% AB-2 : PLR 1.50% AB-3 : PLR 1.00% AB-4 : PLR AB-5 : PLR +1.50% AB-6 : PLR +2.50% AB-7 : PLR +3.50%

Medium Enterprises Advances (Secured): Exposure (Funded) up to Rs.10.00 Cr 9.25% (Fixed) PLR 2.50% PLR 2.00% AB1 : PLR 2.50% AB-2 : PLR 1.50% AB3 : PLR 1.00% D Rs.10.00 lacs & above (Linked to Rating of the account) AB4 : PLR 0.50% AB5 : PLR +1.00% AB6 : PLR +2.00% AB7 : PLR +3.00% Agriculture Advances
Agriculture Advances (Secured):

S.No. A B C

Parameters Loan up to Rs.50000/Above Rs.50000/- to Rs.2.00 lacs. Above Rs.2.00 lakh to Rs.10.00 lacs.

Exposure (Funded) above Rs.10.00 Cr 9.75% (Fixed) PLR 2.00% PLR 1.50% AB1 : PLR 1.50% AB-2 : PLR 1.00% AB-3 : PLR 0.50% AB-4 : PLR 0.50% AB-5 : PLR +1.50% AB-6 : PLR +2.50% AB-7 : PLR +3.50%

S.No. 1 2 3 3.1

Parameters Up to Rs.50000 .00 Above Rs.50000.00 & up to Rs.2.00 Lacs Above Rs.2.00 Lacs & up to Rs.5.00 Lacs Above Rs.5.00 Lacs

Rate 9.75% (Fixed) PLR-2% PLR-0.5% PLR+0.50% ( for exposure above Rs.10 lacs will be as per risk rating of the borrowers)

Above Rs.10.00 Lacs Cold Storage, Warehouse & Rural Godown

As per risk rating of borrowers

5 6

(Up to Rs.25.00 Lacs) Financing to SHGs-Up to Rs.50000.00 per member & upto Rs.5.00 lacs per Group (Maximum) Loans to MFIs

PLR-1% 9% (Fixed)

Up to Rs.50.00 Lacs PLR-2% PLR-1.50%

Above Rs.50.00 Lacs PLR-2% PLR-1.00% PLR

A B C D E F G

AB-1 OR HIGHEST RATING BY EXTERNAL AGENCY AB-2 OR HIGH RATING BY EXTERNAL AGENCY

AB-3 OR ABOVE AVERAGE RATING BY PLR-0.50% -DOAB-4 OR AVERAGE RATING BY -DOAB-5 AB-6 AB-7

PLR+0.50% PLR+0.50% PLR+1.00% PLR+1.50% PLR+1.50% PLR+2.00% PLR+3.50% PLR+3.50%

Agriculture Advances(Secured): (Based on the rating of accounts)

S.No.

Rating Grade

Agriculture (Having Exposure above 10.00 Lacs)

Poultry (Having Exposure above 25.00 Lacs)

Cold Storage, Warehouses & Rural Godown (Having Exposure above 25.00 Lacs) PLR PLR+0.50% PLR+1.00% PLR+1.50% PLR+2.00% PLR+2.50%

1 2 3 4 5 6

AB-1 AB-2 AB-3 AB-4 AB-5 AB-6

PLR PLR+0.50% PLR+1.00% PLR+1.50% PLR+2.00% PLR+2.50% PLR

PLR-1%

PLR+0.50% PLR+1.00% PLR+1.50% PLR+2.00%

AB-7

PLR+3.00%

PLR+3.00%

PLR+3.00%

Rate of Interest under Retail Credit Products (Rates applicable after change of PLR to 12.00 % w.e.f 01.07.2009)

Scheme AllBank Property All Bank Rent Scheme for O/D in S. B. Accounts All Bank Trade Upto Rs. 10.00 Lac Above Rs. 10.00 Lac as per Risk Grading AB-1 & AB-2 AB-3 AB-4 All Bank Mobike All bank Abhushan Car Loan In case of Salary tie-up & Full Collateral security, Doctors/Medical Practitioners In case of Others

Rate of Interest PLR+1.50% PLR+1.00% PLR+0.50%

PLR PLR-0.50% PLR PLR+1% PLR-1.00% PLR

PLR-1.50% PLR-1.00%

In case repayment is contracted for 24 months or earlier the ROI shall be 0.50% lower. Saral Loans PLR+1.00%

0.50% rebate in interest rate is allowed if liquid collateral security (FDR / NSC / LIP / KVP) or Equitable Mortgage of Land / Building for the amount equal to the loan amount is offered. Additional 0.50% interest rebate may be allowed as under: (a) Small organisations, where number of permanent employees is upto 50: - All employees should draw salary through their respective salary accounts (i.e. accounts of individual employees) maintained with our branches. (b) Big organisations where number of permanent employees is more than 50: - In such cases at least 50 employees should draw salary through their respective salary accounts (i.e. accounts of individual employees) maintained with our branches.

Personal Loan to Doctors Education Loan For IIT/ IIM/ ISB (loan upto 10.00 Lacs) For Other Loan upto 4.00 Lacs For loan above Rs.4.00 Lac @ Girl students rebate of 1.00% @ Rebate of 1.00% if interest is serviced during moratorium Housing Loan for Furnishing Gyan Dipika Personal Loan to Pensioners Loan against NSC/ KVP T/L O/D Gold loan Loan for Agricultural purpose

PLR+1.00%

PLR-1.75% PLR-0.75% PLR-1.00%

PLR-1% PLR PLR+1.00%

PLR-1.5% PLR

Rate prescribed by the bank for agriculture loan. At present as under 1. Up to Rs.50000 .00 - 9.75% (Fixed) 2 Above Rs.50000.00 & up to Rs.2.00 Lac - PLR-2% 3 Above Rs.2.00 Lacs & up to Rs.5.00 Lac - PLR-0.5% PLR

Loan for other purposes Short term loan to application money If interest is serviced on monthly

PLR-1.00%

If interest for 6 months is paid upfront & as margin PLR-1.50% Interest equivalent of 3 months is paid Reverse mortgage Housing Loan Floating Category Up to Rs.20 Lac Up to 5 years More than 5 Yrs & up to 10 Yrs PLR-3.75% PLR-3.25% 11.00% (Fixed) (Subject to reset clause of three years)

More than 10 Yrs & up to 15 Yrs More than 15 Yrs to 25 Yrs

PLR-3.00% PLR-2.75%

Floating Category above Rs. 20.00 Lacs but below 50.00 Lacs Up to 5 years More than 5 Yrs & up to 10 Yrs More than 10 Yrs & up to 15 Yrs More than 15 Yrs to 25 Yrs PLR-3.00% PLR-2.50% PLR-2.25% PLR-2.00%

Floating Category For loans Rs 50.00 Lacs and above Up to 5 years More than 5 Yrs & up to 10 Yrs More than 10 Yrs & up to 15 Yrs More than 15 Yrs to 25 Yrs Fixed Category Up to 5 years More than 5 Yrs & up to 10 Yrs More than 10 Yrs & up to 15 Yrs More than 15 Yrs to 25 Yrs ALLBANK COMMERCIAL VEHICLE FINANCE PLR-2.50% PLR-2.00% PLR-1.75% PLR-1.50% Up to Rs.20 Lac 11.00% 11.50% 11.75% 12.25% Term Loans Upto Rs 2.00 Lacs : PLR Above Rs 2.00 Lac to Rs 5.00 Lac : PLR +1 % Above Rs 5.00 Lac to Rs 200.00 Lac : PLR +2% Working capital : PLR AllBank IPO/ FPO Finance Scheme PLR-0.50% Above Rs. 20.00 Rs 50.00 Lacs lacs but below 50.00 and above Lacs 11.50% 12.00% 12.25% 12.25% 12.00% 12.50% 12.75% 12.75%

Unaudited Financial Results for the Quarter & Nine Months ended 31st December 2009
(Rs. In lakhs) Quarter Ended 31.12.2009 1. (a) (b) Interest Earned (a) + (b) + (c) +(d) Interest/discount on advances/bills Income on investments Interest on balances with Reserve Bank of India and other inter bank funds Others Other Income TOTAL INCOME (1)+(2) Interest Expended Operating Expenses (i) + (ii) Employees Cost Other operating expenses Total Expenditure (4+5) excluding provisions and contigencies Operating Profit before Provisions and contingencies (3-6) Provisions ( other than tax) and contingencies Exceptional Items Profit (+)/ Loss (-) from Ordinary Activities before tax (7-8-9) Tax Expenses Net Profit(+) / Loss (-) from Ordinary Activities after tax (10-11) Extraordinary Items (net of tax expenses) 210775.52 159551.76 50469.57 Quarter Ended (Reviewed) 31.12.2008 189804.45 145118.86 44230.27 Nine Months Ended 31.12.2009 616263.10 473479.17 140609.26 Nine Months Year Ended Ended (Audited) (Reviewed) 31.12.2008 544962.25 404916.66 138298.66 31.03.2009 736472.79 549438.81 184935.70

PARTICULARS

(c)

753.73

117.28

2098.51

715.82

1074.15

(d) 2. 3 4 5 (i) (ii)

0.46 33953.02 244728.54 143218.94 36496.68 20935.12 15561.56

338.04 40840.47 230644.92 129390.46 34648.49 23002.97 11645.52

76.16 111386.88 727649.98 425475.46 113114.48 70566.12 42548.36

1031.11 68365.53 613327.78 388346.14 96281.23 60176.61 36104.62

1024.13 114192.43 850665.22 520606.13 139943.84 87393.84 52550.00

179715.62

164038.95

538589.94

484627.37

660549.97

65012.92

66605.97

189060.04

128700.41

190115.25

8 9

24628.40 0.00

10297.81 0.00

47977.26 0.00

57172.99 0.00

82538.21 0.00

10

40384.52

56308.16

141082.78

71527.42

107577.04

11

5847.73

19361.22

42900.76

21076.12

30717.23

12

34536.79

36946.94

98182.02

50451.30

76859.81

13

0.00

0.00

0.00

0.00

0.00

14

Net Profit (+) / Loss (-) for the period (12- 34536.79 13) Paid-up equity share capital 44670.00 (Face Value @ Rs. 10 per Share)

36946.94

98182.02

50451.30

76859.81

15

44670.00

44670.00

44670.00

44670.00

16

Reserves excluding revaluation reserves (as per balance sheet of previous accounting year) Analytical Ratios Percentage of shares held by Government of India Capital Adequacy Ratio (%) Earning per share (Rs.)*

453187.88

389604.97

453187.88

389604.97

453187.88

17 (i)

55.23

55.23

55.23

55.23

55.23

(ii)

15.00

12.20

15.00

12.20

13.11

a. Basic and diluted EPS before extraordinary items( Net of Tax expense) for the period, (iii) for the year to date and for the previous year b. Basic and diluted EPS after extraordinary items for the period to date and for the previous year NPA Ratios a) (i) Gross NPA (ii) Net NPA (iv) (b) (i) % of Gross NPA (ii) % Net NPA (c) Return on Assets 18 Public Shareholding -- Number of shares

7.73

8.27

21.98

11.29

17.21

7.73

8.27

21.98

11.29

17.21

116050.00 22752.00 1.77 0.35 1.31

101601.00 42920.00 1.93 0.82 1.78

116050.00 22752.00 1.77 0.35 1.29

101601.00 42920.00 1.93 0.82 0.81

107824.47 41911.25 1.81 0.72 0.90

200000000

200000000 44.77

200000000 44.77

200000000 44.77

200000000 44.77

--Percentage of share 44.77 holding 19 a) Promoters and promoter group Shareholding Pledged/Encumbered - Number of Shares -Percentage of share (as a % of the total shareholding of promoter and promoter group) -Percentage of share (as a % of the total share capital of the Bank) b) Non-encumbered - No of Shares -Percentage of share 246700000 100 NIL 246700000

246700000

246700000

246700000

246700000

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

246700000 100

246700000 100

246700000 100

246700000 100

(as a % of the total shareholding of promoter and promoter group) -Percentage of share (as a % of the total share capital of the Bank)

55.23

55.23

55.23

55.23

55.23

Items of other operating Expenses Exceeded 10% of total expenditure excluding interest Expenditure Rent, Taxes & Lighting 4482.31 3361.99** 11976.64 9223.08** 13592.85**

* Not Annualised ** Not exceeding 10% of total expenditure excluding Interest Expenditure