ACKNOWLEDGEMENT

As a management student I Dream it a privilege to have

experience a panorama of Federal bank limited cherished
and enviable legacy. I would like to thank all those who have
directly or indirectly helped me to accomplish this project
successfully.
I would like to express my deep sense of gratitude to my
corporate, project guide, Ms Anupama Tewari, Bhubaneswar
whose support and guidance helped me in converting my
conception into visualization and also for continuance
guidance throughout the project.
Special thanks to my institute project head Prof.Duryodhan
Jena whose support and unflinching guidance and
encouragement helped me a lot to go with the project.

With regards,
Shilani Patro
Regd No- 0941333091

DECLARATION

1
This is to certify that Ms Shilani Patro out of
her Dissertation work presented in this entitled
“SME BUSINESS OF FEDERAL BANK
LIMITED” for the award of PGDM from
INSTITUTE OF BUSINESS AND
COMPUTER STUDIES under my supervision.
The Dissertation embodies result of original
work and studies carried out by student
herself and the contents of these do not form
the basis for the award of other degree to the
candidate or to anybody else.

2
 TABLE OF CONTENTS

CHAPTER:-1 INTRODUCTION TO INDIAN BANKING

SYSTEM
CHAPTER:-2 HISTORY OF FEDERAL BANK LTD.
CHAPTER:-3 INTRODUCTION TO SME BUSINESS
CHAPTER:-4 PRODUCTS AND SERVICES OFFERED BY
FEDERAL BANK TO SME BUSINESS
SECTOR
CHAPTER:-5 CONCLUSION
BIBLIOGRAPHY

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 CHAPTER:-1
INTRODUCTION TO INDIAN BANKING SYSTEM
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 nationalisation of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for
getting a draft or for withdrawing his own money. Today, he has a choice.
Gone are days when the most efficient bank transferred money from one
branch to other in two days. Now it is simple as instant messaging or dials a
pizza. Money has become the order of the day.

The first bank in India, though conservative, was established in 1786. From
1786 till today, the journey of Indian Banking System can be segregated into
three distinct phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks

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

Reforms.

New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.

4
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 days public has lesser confidence in the banks. As an aftermath
deposit mobilisation was slow. Abreast of it the savings bank facility provided
by the Postal department was comparatively safer. Moreover, funds were
largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after

5
independence. In 1955, it nationalised Imperial Bank of India with extensive
banking facilities on a large scale specially in rural and semi-urban areas. It
formed State Bank of india to act as the principal agent of RBI and to handle
banking transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960
on 19th July, 1969, major process of nationalisation was carried out. It was the
effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major
commercial banks in the country was nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out
in 1980 with seven more banks. This step brought 80% of the banking segment
in India under Government ownership.

The following are the steps taken by the Government of India to Regulate
Banking Institutions in the Country:

1949 : Enactment of Banking Regulation Act.

1955 : Nationalisation of State Bank of India.

1959 : Nationalisation of SBI subsidiaries.

1961 : Insurance cover extended to deposits.

1969 : Nationalisation of 14 major banks.

1971 : Creation of credit guarantee corporation.

1975 : Creation of regional rural banks.

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

After the nationalisation of banks, the branches of the public sector bank India
rose to approximately 800% in deposits and advances took a huge jump by
11,000%.

Banking in the sunshine of Government ownership gave the public implicit

faith and immense confidence about the sustainability of these institutions.

6
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
liberalisation of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are
being put to give a satisfactory service to customers. Phone banking and net
banking is introduced. The entire system became more convenient and swift.
Time is given more importance than money.

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

sheltered from any crisis triggered by any external macroeconomics shock as
other East Asian Countries suffered. This is all due to a flexible exchange rate
regime, the foreign reserves are high, the capital account is not yet fully
convertible, and banks and their customers have limited foreign exchange

exposure.

7
 CHAPTER:-2
HISTORY OF FEDERAL BANK LTD.:

The history of Federal Bank dates back to the pre-independence era. Though
initially it was known as the Travancore Federal Bank, it gradually transformed
into a full-fledged bank under the able leadership of its Founder, Mr. K P
Hormis. The name Federal Bank Limited was officially announced in the year
1947 with its headquarters nestled on the banks on the river Periyar. Since
then there has been no looking back and the bank has become one of the
strongest and most stable banks in the country.

Vision:
Develop into a stronger and more efficient and profitable financial
institution with a growing share of the market, providing an expanding
range of products and services to a growing clientele within and outside
the country, adopting best industry practices and employing

8
 contemporary technology, and be counted among the top private banks
in the country.

Mission:

 Devote balanced attention to the interests and expectations of

stakeholders, and in particular:
 Shareholders: Achieve a consistent annual post-tax return of at
least 20% on net worth.
 Employees: Develop in every employee a high degree of pride and
loyalty in serving the Bank.
 Customers: Meet and even exceed expectations of target
customers by delivering appropriate products and services,
employing, as far as feasible, the single-window and 24-hour-
seven-day-week concepts, leveraging strengthened branch
infrastructure, ATMs, and other alternative distribution channels,
cross-selling a range of products and services to meet customer
needs varying over time, and ensuring the highest standards of
service at all times.
 Pursue excellence in various facets of banking.
 Adopt best industry practices.
 Develop, adopt, and review a well-conceived business plan for
achieving realistic targets of growth, profitability, and market share
over the medium term.
 Operate within a well-defined, diversified, risk profile and adopt
prudent risk-management norms and processes and effective
control practices.
 Employ and leverage appropriate modern information technology
to: enhance the quality, speed, and accuracy of product/service
delivery; provide ‘anytime-anywhere’ banking facility; strengthen
management information and control systems and processes;
improve productivity; and reduce costs.
 Increase awareness of the "Federal Bank" brand among targeted
customer groups through cost-effective marketing.
 Adopt a robust corporate governance code emphasizing a high
degree of professionalism of the Board and the management, and
accountability and disclosure to shareholders.

9
  Decentralise decision making with accountability for decisions
made, and assign cascading profit responsibilities to middle and
junior management.
 Develop a conducive and transparent work environment that
fosters staff commitment, competence, initiative, innovation,
teamwork and service-orientation.

Future:

We are the fourth largest bank in India in terms of capital base and can
easily boast of a Capital Adequacy Ratio of 19.11%, one of the highest
in the industry. This along with the existence in a highly regulated
environment has helped the bank to tide over the recession with
minimum impact to its financial stability.

In fact we have been expanding organically over the past few months.
We believe in extending our reach to our customers by making our
services available to all, 24x7. We have over 690 ATMs and 669
Branches across India in addition to the Representative Office at Abu
Dhabi that serves as a nerve centre for the NRI customers in UAE.

We are transforming ourselves, keeping our principles in tact, into an

organisation that offers service beyond par.

Being in the service industry we are conscious of our surroundings and

what happens in the society.

10
Kulangara Paulo Hormis, the visionary Banker was born on 18th October, 1917
at Mookkannur; a small village in the suburbs of Greater Cochin, in a middle
class agricultural family.

Educated as a lawyer, Shri Hormis began his career as an Advocate in the

Courts of Perumbavoor. But the path breaker soon gravitated to commercial
banking and soon took up the reins of Federal Bank in 1945 as its Chief
Executive. Fired by a passion for institution building Shri Hormis built out of a
One-Branch-Small-Time Bank, a nationwide institution of 285 branches in the
34 years that he remained at the helm.  
The quintessential banker that he was, a structure for extending finance
to agriculture and the weaker sections of society was laid by him much
before these areas came into national focus.

Social Banking was his passion and the strength of the Bank today in
terms of national presence, diversified clientele, skilled and dedicated
manpower and profitable operations, owes a great deal to the vision of
this great man. The personality of Shri Hormis was multidimensional and
there was no field of activity he was associated with where he did not
leave his indelible imprint.

11
1931: The Federal Bank Limited (the erstwhile Travancore Federal Bank
Limited) was incorporated with an authorised capital of rupees five
thousand at Nedumpuram, a place near Tiruvalla in Central Travancore
on 28/4/1931 under the Travancore Company's Act. It started business
of auction -chitty and other banking transactions connected with
agriculture and industry.The bank though successful in the earlier
periods, suffered set backs and was on the verge of liquidation.

1944: Shri K P Hormis ,and his close relatives /friends obtained

controlling interest in the Bank.

1945:The paid up capital was increased to Rs.71000.The Board of

Directors of the Bank was reconstituted in 1945 and fresh Articles of
Association adopted. On 18-5-1945, the Regd.Office of the Bank was
shifted to Aluva and the Bank commenced business by opening its first
branch at Aluva.

1946:The Bank opened its second branch at Angamally on 26-1-1946

1947:In the Board Meeting held on 24-3-1947, it was resolved to change

the name of the Bank as "The Federal Bank Limited". The third branch of
the Bank was opened at Perumbavoor on 18-4-1947

12
1959:The Bank was licensed under Sec.22 of the Banking Companies
Act, 1949 on 11-7-1959. Bank floated several kuries one after another. It
also introduced several new deposit schemes. These strategies helped
the Bank to grow at a greater pace

1964:The Bank embarked for a massive take over bids, which

accelerated its growth horizontally and vertically. In that process it took
over the assets and liabilities of the following banks
1. The Chalakudy Public Bank Ltd., Chalakudy
2. The Cochin Union Bank Ltd., Trichur
3. The Alleppey Bank Ltd., Alleppey

1965:The St. George Union Bank Ltd. Puthenpally was merged with the
Bank

1968:The Marthandom Commercial Bank Ltd. Trivandrum was

amalgamated with the Bank

1970:The Bank became a Scheduled Commercial Bank in 1970, which

also coincided with the Silver Jubilee Year, since the Bank commenced
its operation in Aluva

1972:Witnessed expansion beyond the home state. The Bank became

an Authorised Dealer in Foreign Exchange in 1972.International Banking
Department started functioning from Mumbai in 1973.Since then, the
Bank could substantially increase its market share of the NRI business.
The International Banking Department was later shifted to Cochin in
1982 as part of consolidation and centralisation of activities

13
1973 to 1977:During the period, the bank adopted a massive branch
expansion and growth oriented programmes. To reflect the bank's
approach towards the Industrial finance it adopted a new emblem
-Farmer in action encircled by an industrial wheel. A few hallmarks of the
period: In the year 1973,there was a quantum jump in deposits to the
tune of 67% and in advances to the tune of 56% over that of the
previous year. The deposits grew by 52% while the advances registered
an increase of 45%. Increase in Priority sector advances was by 63%.

1975:Bank opened 53 branches and in 1976 it opened 42 branches. The

total number of branches reached 276 from a position of 114 in 1973

1977:The paid up capital was increased to Rs.100 Lakhs from a position

of Rs.10.66 Lakhs.

1980:Mr.V Verghese took over the reigns of the bank as Chairman and
Chief Executive Officer on 2/7/1980.Having worked long years in State
Bank of Travancore with well established traditions, systems and
methods, he placed his faith in introducing time tested and well proven
methods of organisation into the Bank

1983:
1. Shri. V.K.Syamasundaran after long innings in Reserve Bank of India
took over as Chairman and Chief Executive Officer of the Bank as a
successor to Mr.V.Verghese on 16/7/83.
2. The foundation stone of the multi-storied Administrative Building was
laid by the Founder Shri K.P.Hormis on 26-12-83

1984:As part of the organisation redesigning recommended by National

Institute of Bank Management in November, 1984, Bank has introduced

14
Three Tier Organisational Setup with Head Office, Regional Offices and
Branches. Agricultural Finance Department was set up in Head Office
with technically qualified personnel at central office and field level.
Bank's performance in the field of agricultural and priority sector lending
improved substantially thereafter.

1985: In tune with the NIBM recommendation, Personnel and Industrial

Relations Department was set up in July, 1985. With the active
assistance of Tata Consultancy Service, bank also set up its computer
department. A WIPRO computer was installed at our Head Office on
July, 1985 paving the way for computerisation of the Bank. Later, a PSI
microcomputer was installed at our International Banking Department at
Cochin. The first Advanced Ledger Posting Machine (ALPM-a Wipro
banker) was installed at Br. Aluva-Bank Junction branch

1987: The long cherished dream of the Federal Family, the multi-storied
administrative building complex was inaugurated by Shri. A Ghosh, Dy.
Governor, Reserve Bank of India

1988: Shri. M.P.K.Nair , a seasoned commercial banker trained in the

Union Bank of India assumed the captaincy of the Bank on 1-7-1988 as
its Chairman and Chief Executive Officer

1989: Commenced Merchant Banking Operations

15
1992: Deposits crossed Rs.10,000 Million. Adopted profit sector banking
as its slogan

1993: Roped in ICICI group as a shareholder through private placement

1994: Tapped the Capital Market with a public issue in March, 1994. The
issue oversubscribed by about 60 times. Started Leasing Business

1995: Registered 142.44% increase in PAT in FY 94-95.Bank registered

a CAGR of 78.13% in PAT during the period 1991-96. Emerged as a
perfect banking partner with diverse products, global reach and focus on
automation and HRM. Deposits cross Rs.35,000 Million

1996: Shri. K Nandan, a veteran banker from State Bank of India took
the stewardship on 1-1-1996: The bank had steady growth. The bank's
business crossed Rs.100000 Million mark as on 31/3/98 for the first time

1997: Bank's first ATM was inaugurated at Ernakulam North on 27-02-97

1999:
1. On 1-1-1999, Shri. K.P.Padmakumar, the Executive Director of the
Bank took over the baton from Shri. K Nandan. He thus became the first
Chairman and Chief Executive Officer of the bank risen from the rank
and file
2. Bank's 400th branch was inaugurated at Calcutta- Shakespeare
Sarani on 19.2.1999. The total business of the bank exceeded
Rs.110000 Million as on 31/03/99

16
2000:
1. On 24.1.2000 Bank started Any Where Banking at Bangalore
connecting all branches located in the Bangalore metro
2. Launched Depository Services in association with NSDL on 24.2.2000
3. The Bank has commenced Internet Banking 'FedNet' on 28th April
2000 with software support from Infosys Technologies Ltd
4. Federal Millennium CD is released on 18.9.2000

2001:In March 2001, Wide Area Network was launched connecting

Regional Offices at Mumbai, Bangalore, Chennai, Ernakulam and
Chennai F & I with Head Office

2002:
1. All the 412 branches of the Bank were fully computerised (using
FedSoft) as on 31.03.2002
2. The Installation of switch for networking all the ATMs, already
installed/proposed to be installed, started from 17/08/2002
3. Dec 10 2002 Federal Bank introduces FedAlerts, and FedMobile,
another first of its kind service among traditional banks in India. Real
time transaction alerts across the globe, and customisable options make
the service unique

2003: International Debit Cards launched

January 2004: Federal Bank becomes the first traditional bank to

network all its branches and attain 100% connectivity

17
February 2004: Co-branded credit cards launched in association with
ICICI Bank

October 2004: RTGS is enabled in all branches of the Bank and

becomes the first bank in India to implement RTGS facility in all the
branches. Online Railway Reservation through FedNet launched. The
First Kiosk inaugurated at the Marine Drive ( Kochi) branch

December 2004:
1. First Bank to launch automated telephone bill payment through
Interactive Voice Response System (IVR). Bank launched an innovative
product 'Fed-e-Pay' for automated payment of utility Bills
2. The Bank issued Bonus shares in the ratio of 2:1

February 2005: Federal Bank is awarded for Best Use of Information

Technology in Retail Banking by IBA and Infosys. The runner up status
reveals the strength and innovation in technology initiatives

May 2005: Shri.M Venugopalan joined the Bank as Chairman and Chief
Executive Officer Prior to joining the Bank, he was the Chairman and
Managing Director of Bank of India, one of the leading public sector
banks in India, from August 2003 to April 2005, and was an executive
director of the Union Bank of India immediately prior to joining the Bank
of India

June 2005: Federal Bank in association with AMRITA super specialty

hospital launches Fed+Amrita, an innovative online system for fixing
medical consultation, Health check up, and inpatient payments from
anywhere

18
January 2006: Federal Bank becomes the first traditional bank to
successfully issue GDR. While the issue of 18 million Global Depository
Receipts realised $71.46 million, the green shoe option of 2 million GDR
was also fully subscribed, bringing in a total of $80 million to the bank.
The GDR, each representing an underlying equity share, were priced at
$3.97 each — working out to approximately Rs.175 per share. The issue
was subscribed by major banks and Financial Institutions across the
globe.

February 2006: Federal Bank wins two prestigious awards for BEST
USE OF IT IN RETAIL BANKING & BEST PAYMENTS INITATIVE from
IBA and TFCI. This is the second consecutive time that the Bank has
won the award for best use of IT in Retail Banking. More details
available here

September 2006:
1. Amalgamation of Ganesh Bank of Kurundwad with Federal Bank
2. Bank’s Total No. of Branches crossed 500

November 2006: Bank entered into Life Insurance Joint Venture with
IDBI & FORTIS

January 2007: Bank won the award under category “Best Clearing &
Settlement System” in the Banking Technology Awards 2006 instituted
by IBA, Infosys & TFCI

19
Mar 2007: A full fledged Data Center was set up by the Bank

June 2007: Bank formed a Centralized Processing Centre for

centralizing the account opening process to make it quick and efficient.

September 2007:All branches/offices of the Bank were migrated to

Centralised Banking Solution (CBS), Finacle

January 2008:
1. Successfully completed 1:1 Rights Issue
2. Opened first overseas Representative Office at Abu Dhabi, UAE.

March 2008:
1. Bank’s Total No. of Branches crossed 600
2. The Asian Banker, together with the Technology Advisory Council of
The Asian Banker Summit, has affirmed Federal Bank as sole recipient
of the Best Core Banking Project Award 2007

September 2008: Bank started providing Online Stock Trading facility to

the customers in association with M/s Geojit Financial Services

20
January 2009: Bank won the award under category 'Best Customer
Relationship Achievement' in the Banking Technology awards 2008
instituted by IBA, Infosys & TFCI for the outstanding achievements in
technology infusion and dissemination. The Bank was winning IBA-TFCI
awards for the fourth time

March 2009:
1. Total Business of the Bank crossed Rs.50,000/- Crores
2. Bank becomes BASEL-II compliant

August 2009: Bank has taken an important step in customer Service by

dedicating 24 X 7 Contact Center to the customers. Started offering
NEFT/RTGS facility through Internet Banking. Bank started offering
Telebanking facility through a Toll-free number

21
Fedbank Hormis Memorial Foundation

Bank has instituted a public charitable trust by name Fedbank Hormis

Memorial Foundation in 1996 to perpetuate the fond memory of late K.
P. Hormis, the founder of the Bank. The activities of the Trust is directed
towards inculcating better knowledge and awareness in the field of
banking through training programmes, focused seminars, awards and so
on.
 

Youth Involvement

Bank is the title sponsor of the quiz programme ‘Yuva Challenge’ (2009)
in Manorama News channel. Last year also Bank was the title sponsor.
The programme is known as ‘Federal Bank presents Manorama yuva
Challenge’. The anchor is Sri.Mohammed Haneesh IAS, Director of
Public Instructions, Govt. of Kerala. The telecast has been started in
October 2009. Students of colleges and professional institutions from all
over India and Gulf are participating in the programme.
 

Social Banking

At Federal Bank, we believe that Business exists in the society and any
business requires social sanction for its survival and growth and
organisations should have a social commitment, as they owe their
existence to the society. All our social and mass banking initiatives are
towards fulfilling such social commitments. We are in the process of

22
leveraging the Bank’s strong rural presence for extending more and
more services to the rural people.
Following measures are already initiated by us towards this direction.

 Implementation of financial inclusion products like No-frills SB

account, General Credit Card, Micro- Credit etc.
 a.Utilisation of SHG members for marketing and servicing of the
Bank’s products & services among rural masses using the Banking
Facilitator Model.
 Launching of ‘Samrudhi’ Scheme through which the entire banking
needs of the residents of selected villages (Grama Panchayats)
are met by implementing various schemes of the Bank, so that
these villages can be developed into model villages. These model
villages are experimental samples for our innovations in Rural
Banking and would help the Bank to demonstrate the effectiveness
of its Rural Banking strategies and the Bank’s social commitment
by showcasing these villages.
 Setting up a Training & Guidance Centre at Vythiri in Wynad
District in collaboration with YMCA.
 Bank has launched the “Federal Ashwas Trust” and opened three
“Federal Ashwas Financial Literacy and Credit Counseling
Centers” in Alleppey District in December 2009, in association with
Gandhi Smaraka Grama Seva Kendram (GSGSK), Alapuzha, the
only NGO from Kerala figuring among the CRISIL top 50 MFIs in
India.
 Bank has launched “Federal Prathyasha Loan Scheme” to provide
credit to distressed poor / Small and Marginal farmers to prepay
their debt to informal sector against collateral or group security

The Bank is going to launch the “Federal Ashwas Trust” and to open
three “Federal Ashwas Financial Literacy and Credit Counseling
Centers” in Alleppey District during November 2009, in association with
Gandhi Smaraka Grama Seva Kendram (GSGSK), Mararikkulam, the

23
only NGO in Kerala among the top 50 MFIs in India.

IT Enabled Financial Inclusion

Kisan Credit Card (KCC) accounts - This is a comprehensive

scheme of the Bank to extend adequate and timely support to the
farmers. This aims at financial inclusion of small and marginal farmers. It
is ATM enabled with “Federal Haritha Card”
General Credit Card (GCC) - To provide hassle-free credit to
customers from rural and semi-urban centers based on their cash flow
without insistence on security, purpose or end-use of the credit. This is in
the nature of overdraft with no end-use stipulations and is also ATM
enabled.

Rubber Producer’s Societies

With an aim to help the small rubber growers, the Bank has implemented
a scheme for extending working capital finance to well run Rubber
Producers’ Societies promoted by the Rubber Board. The scheme is
designed to achieve financial independence of RPS, resulting in overall
development and economic growth of small rubber growers. More than
1000 societies representing nearly a lakh of Small Rubber Growers have
benefited by the scheme so far.
 

On the Health Front

Modernisation of the Medical Ward of Ernakulam General Hospital

in association with Rotary Club of Cochin Mid Town.

General Hospital, Ernakulam is located between the Subhash Chandra

Bose Park and the Head Post Office, Ernakulam. It is a multi specialty

24
hospital with all the major and minor specialties attached to it and is the
biggest General Hospital in Kerala. The hospital caters to the general
public and close to 1500 patients visit the OP every day. Even though
the bed strength is only 743, more patients are housed in the wards.
Bank has donated towards the modernization of the medical ward.

Dialysis machine for Kerala Kidney Research Foundation,

Kottayam.

The Kerala Kidney Foundation has established dialysis unit at the SH

Medical Centre and St.Mary’s Dialysis Unit at Karippal Hospital,
Kottayam and PVS Hospital Kochi, providing subsidized and free
dialysis. The dialysis machines were donated by many individuals

Donating ambulance to Kadungalloor Grama Panchayath.

The Kadungalloor Panchayath, which consists of 20 wards and spread

over 17 sq. Km. area faces challenges such as growing urbanization,
increasing population and industrial pollution. There are occurrences of
many health hazards and people living close to the industrial areas need
frequent hospitalization. The Public Health Centre at Binanipuram in the
Panchayath has no ambulance at present. The people have to depend
other Hospitals/organisations for an ambulance service, mostly from
places as far away from Aluva. In emergency situations this causes
great difficulty. The Panchayath has very limited resources to buy an
ambulance.
 

25
For the orphans

Financial assistance to Santhwanam- project for orphans.

Santhwanam is a project for the orphans. It is being implemented by

Rotary Cochin Central. Kochi City had many orphanages without even
the basic facilities, without access to proper sanitation and basic
comforts like beds. These orphanages are forced to shift location every
now and then from one rented building to another.   Rotary in a collective
decision decided to take up a mega project to construct a 4000 sq. ft
building with all facilities to accommodate at least 50 of these children.
Adequate conveniences such as play area, toilet facilities, kitchen,
dining area etc. would be incorporated. The project is named as
Santhwanam.
 

SOS Children’s Village

SOS Children’s Villages of India is an NGO working with children. They

provide long term family like care to children who lost their parents.
Every child who comes to SOS Children’s Village receives a ‘mother’,
brothers and sisters, a home and all opportunities to grow into happy
and successful adults. SOS has been working in 132 countries with
SOS-Kinderdorf International as the umbrella organisation that was
established in 1964. At present there are 38 children’s villages spread
across the country.

Bank is proud to have associated with SOS (2006) in constructing a

26
‘Learning Centre’ at the Choondy Unit, 4 Kms from Aluva. It was
constructed over an area of 1076 sq. ft.  The centre comprise of a
library, music room and computer lab.
 

For the environment

Aluva is the home town of Federal Bank. Bank has developed and is
maintaining a highway garden between Thottakkatukara Junction and
Bye pass Junction in NH47 at Aluva with permission from the National
Highway Authority. The garden forms the divider between the incoming
and outgoing lanes and it covers the approaches to the Marthandom
Bridge from either side. The traffic lights at both ends and the high mast
lamps at the bypass junction are also provided by the Bank
 

Recognitions

Bank has been adjudged as the ‘Best Performing Bank for the year
2007-08 in Ernakulam District under the Kudumbashree programme of
the Kerala State Poverty Eradication Mission’. Bank received the award
for this from Shri. S. Sharma, Hon’ble Minister for Fisheries &
Registration in a function held at Kolenchery on 16 May 2008 to
celebrate the 10th anniversary of the Kudumbashree programme.
Bank has been acclaimed as the ‘Best Private Sector Bank for
implementing the PMRY Scheme’ in the state.
Bank has been adjudged as the Best Private Sector Bank for
priority sector lending including Financial Inclusion category across the
country by Dun & Bradstreet.

27
Federal Bank focuses on customer delight and exemplary service. This
focus has earned us the approval of various organisations both at the
national and international level.

The Excellence Award for “Second Best Bank” among Traditional Private Sector
Banks in Kerala - constituted by the State Forum for Banker’s Clubs Kerala. The
Bank also received all three Excellence Awards for Best Branches and the
award for the Best Branch Managers among Traditional Private Sector Banks in
Kerala

The ‘Great Mind Challenge’ award

Federal Bank has won the ‘Great Mind Challenge’ award for
implementing the most innovative solution for business. This award is
being introduced by IBM for the first time in India for business
development initiatives. Federal Bank is the first Bank in India to receive
the award. The solution is being used by the Bank primarily for
international remittances. NRI customers can remit money to their

28
account in Federal Bank or to other Banks in the quickest possible time.
The award winning software was developed and implemented within a
record time of four months. This facility is extensively being used by
more than 40 Foreign Banks and Exchange Houses. An NRI customer
can even remit money to India by logging to the internet banking facility
of Foreign Banks. This is yet another unique feature being enabled by
the solution.

Economic Times Intelligence Group Survey

The Economic Times Intelligence Group has conducted a comparison of

Indian Banks (ET Investor’s Guide dated 23.11.2009) on various
parameters. Federal Bank has been ranked Number One in Efficiency
and in Financial Strength when compared to other Indian Banks.
Efficiency was calculated on the basis of Net Interest Margin, Business
per Employee and Return on Assets. Financial Strength was calculated
on the basis of Capital Adequacy Ratio and Non performing assets .  

PWC Survey

Ranked the Number One Old Private Sector Bank, among 56 scheduled
commercial banks, on four dimensions namely growth, size,
sustainability and risk in the PWC Survey conducted by Business World.

29
The Dun & Bradstreet Banking award 2009

The Dun & Bradstreet Banking award 2009 for the “Top Private Sector
Bank“ under the category Priority Sector Lending including Financial
Inclusion.

Best Customer Relationship Achievement

Federal Bank became the runner up for the "Best Customer Relationship
Achievement" Award in the Banking Technology awards instituted by
IBA & TFCI for the outstanding achievements in technology infusion and
dissemination.

Most Efficient Bank

In the annual survey conducted by Business Today, in association with

KPMG Consulting, Federal Bank was adjudged the “Most Efficient Bank”
in the Large Bank Category, second year in a row

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Best Core Banking Project Award

Federal Bank won the 'Best Core Banking Project Award 2007' at the
Asian Banker IT Implementation Awards 2008.

Survey by The Financial Express

Survey conducted by The Financial Express in association with Ernst & Young, on
the basis of five key parameters, viz. strength and soundness, growth, profitability,
efficiency and credit quality, adjudged Federal Bank, for the second time, one among
the top three Banks in the Old Private Sector Banks category.

31
 CHAPTER:-3
INTRODUCTION TO SME BUSINESS

Small and medium enterprises (also SMEs, small and medium

businesses, SMBs, and variations thereof) are companies whose
headcount or turnover falls below certain limits.

In most economies, smaller enterprises are much greater in number. In

the EU, SMEs comprise approximately 99% of all firms and employ
between them about 65 million people.[2] In many sectors, SMEs are also
responsible for driving innovation and competition. Globally SMEs
account for 99% of business numbers and 40% to 50% of GDP.

In India, the Micro and Small Enterprises (MSEs) sector plays a pivotal role in
the overall industrial economy of the country. It is estimated that in terms of

32
value, the sector accounts for about 39% of the manufacturing output and
around 33% of the total export of the country. Further, in recent years the MSE
sector has consistently registered higher growth rate compared to the overall
industrial sector. The major advantage of the sector is its employment
potential at low capital cost. As per available statistics, this sector employs an
estimated 31 million persons spread over 12.8 million enterprises and the
labour intensity in the MSE sector is estimated to be almost 4 times higher
than the large enterprises.

Definitions in use today define thresholds in terms of employment,

turnover and assets. They also incorporate a reasonable amount of
flexibility around year-to-year changes in these measures so that a
business qualifying as an SME in one year can have a reasonable
expectation of remaining an SME in the next. The thresholds
themselves, however, vary substantially between countries. As the SME
thresholds dictate to some extent the provision of government support,
countries in which manufacturing and labour-intensive industries are
prioritised politically tend to opt for more relaxed thresholds.

Breaking down the SME definition, Industry defines a small business as

one that has fewer than 100 employees (if the business is a goods-
producing business) or fewer than 50 employees (if the business is a
service-based business). A firm that has more employees than these
cut-offs but fewer than 500 employees is classified as a medium-sized
business.

33
 CHAPTER:-4
PRODUCTS AND SERVICES OFFERED BY
FEDERAL BANK TO SME BUSINESS SECTOR

Federal Bank- An Eternal Friend of Entrepreneurs

The Federal Bank acknowledges and appreciates the fact that Small &
Medium Enterprises contribute significantly to our national economy in
terms of production, employment and exports. Federal Bank with its
traditional values and modern outlook is committed to the development
of a strong, vibrant and responsive SME sector. Considering the
emerging trends, we are evolving a more focused approach towards this
sector. We are offering parameterized loan and various current account
products tailor-made for each sector under SME. Competitive pricing,
relaxation in collateral security, collateral free loans with CGTMSE cover,
customization in various current account products, cash management
services, internet bill payment facility etc are some of the features of our
products which makes us a real friend of entrepreneurs.

Federal Bank will always be a true friend to the entrepreneurs in their

times of need.

34
Federal Bank, with its wide range of products and services, is
a financial supermarket that caters to your banking needs.
We at Federal Bank believe in making banking a delightful
experience for our customers. We understand that your time
is valuable and hence have designed products so as to reduce
the amount and cost vested in banking. There are plenty of
freebies to make banking the last thing on your mind. There
is an extensive network of ATMs across the country that
make your account accessible from anywhere in India.

Products and services rendered by federal

bank towards the SME Business sector:

35
Savings bank
Current account products
Loans
Funds transfer
Mutual fund
Online bill collection
ATM services
Merchant banking
Safe deposit lockers
Online Tax payment
Demat accounts
Cash management
Federal pure gold
Anywhere banking
Tele-banking
Mobile alerts
E-mail alerts
Mobile banking ( Fed-Mobile )
Gilt accounts
Debit cards
Deposits
36
 Bank guarantee
Internet banking ( Fed-Net )

Introduction to SB accounts: We have an exclusive

range of Savings accounts with features to make
banking a pleasure for you. Whatever be your profile, we
have the right kind of account that suits your financial
requirements and lets you enjoy the benefits of easy
banking and greater transaction power. Open an
account with us and enjoy banking!

Our range of SB accounts

      Freedom SB
      SB Plus
      Fed Power
      Fed Power+

37
      Mahilamitra
      Yuvamitra
      Fed Classic
      Fed Classic+
      Fed Smart
      No Frills
      Fed NRI Power
      Fed NRI Premium
      Fed NRI Privilege
 

SB accounts help you to make your regular expenditure

easy. Debit cards allow you cashless transactions. And
the ATMs spread all over the country make your SB
accounts accessible from anywhere in the world. The
unutilized portion in your account earns you interest.

 Internet banking, instant funds transfers, online opening

of deposit accounts, e-statements, mobile alerts, online
payment of bills, personalised cheque books, passbooks
to keep track and reconcile your accounts… The
savings bank accounts come with a bundle of features
which one cannot live without.

38
Current accounts are mainly meant for business. We have a
horde of features that let you focus on your business without
having to worry about banking.

There are accounts for entrepreneurs of all kinds. Choose the

right one now that will suit your requirements. These
accounts come with the backing of a private sector bank with
years of experience.

These bouquet accounts give you the power to carry on

business with ease anywhere in India or abroad. The features
include free fund-transfers & cash withdrawals and e-
statements.

39
 Depending on the account you choose, there can be free
cheque-books and VISA International Debit Cards. Your
account can be easily operated from anywhere in India!
Operate and track your financial transactions at your
convenience, from your office or home!

There are accounts that suit all kinds of activities and

each account is designed with great care. They are
bundled with features you wish you could have.

Our various current account products are

 Freedom Current
 Current plus
 Fed Trade
 FedTrade 50
 Fed Trade +
 Fed Vanijya
 Fed Vanijya +

40
Federal Bank has got basket of loan products to suite all
your requirements.

Business Loans
Against Warehouse Receipts
Commodity Futures Linked
Digital Projector Loan
Exporter's Gold Card
Federal Service Loan
Federal Trader's Loan
Federal Industrial Loan
Rent Securitisation loan
Vanijya Loan
FTLS For LG Dealers

41
Housing Loan Products
Federal Housing Loan
Home Term Loan
Purchase of House Plots

Educational Loan Products

Federal Vidya Loan
Special Vidya Loan

Travel Loans
Subha Yatra Loan
Bon Voyage loan

Agri / Horti /Rural Loan Products

Agri Mobile
Agri Gold Loan
Agricultural development
Animal Husbandry
Fed Farm Hospitality
Finance To Horticulture
Financing Small Rubber Growers
42
Irrigation Infrastructure
Land Development Schemes
Self Help Groups
Rural Godowns
Kisan Credit Card Scheme
General Credit Card

Personal Loan Products

Personal Loan
Personal Car Loan
Gold Loan
Loans For Doctors
Easy Cash
Own Your Gold
Consumer Loan

Loans For Other Needs

Mortgage Loan
Aashray Scheme
Equity Subscription
Prathyasha Loan
Ashwas Gold Loan

43
Federal Bank has a bouquet of deposit products to
choose from.

If you are looking for personal accounts with cheque

books facility please opt for Savings Bank Accounts.

If you are a business firm or corporate looking for an

account to collect your receivables and make payments
to your suppliers and creditors choose Current
Accounts.

If you want to deposit your funds for a period, ranging

from a few days to a number of years, you are looking
for Term Deposits. Term Deposits with Federal Bank
fetches you good return coupled with high security. See
link to our credit rating page on the side menu.

44
Term Deposits come in three flavours.
If you want to withdraw periodical interest accrued in the
account opt for Fixed Deposits.

When you do not prefer periodical interest payments,

you can get compound interest (ie interest on interest)
on your deposit and the principal with interest is payable
at the end of the period. Cash Certificates from Federal
Bank offers you these features.

You are person who want to plan for the future but
would like to make only systematic small deposits over a
period of time, recurring deposits are for you. Federal
Bank offers the most convenient Federal Savings Fund
exactly to meet this requirement.

45
Federal Bank brings you gold in its purest form Gold
bullion of 24 carat which carries a fineness of 999,9 is
available at Federal Bank’s selected branches.

Gold is imported from the refiner giant, M/s PAMP SA,

Switzerland M/s PAMP SA, Switzerland is one of the
leading refiners in the world The bullion comes in varied
denominations (1gm, 2gm, 5gm, 8gm, 20gm, 50gm &
100gm) in tamper proof certicard with Assay
Certification which authenticates the purity.

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47