Oriental bank of commerce is established on 19th Feb' 1943 in Lahore, Oriental Bank of Commerce (OBC) is one of the public sector banks in India. Its modest beginning is creditable to its founder Late Rai Bahadur Lala Sohan Lal, the first Chairman of the OBC. Within four years of coming into existence, the country partitioned, the Bank shifted its Registered Office from Lahore to Amritsar. The Oriental Bank of Commerce was nationalized on 15th April 1980, and paved its way to count amongst the strongest banks in India.
OBC has a network of 530 branches and 505 ATM's spread throughout India, out of which 490 branches offer centralized banking solutions. With High Capital Adequacy Ratio, Oriental Bank of Commerce is known be a consistent profit-making bank. It offers various services and products, like current/ savings account, general loans, educational loans, agricultural loans, etc, for the benefit of customers. For its effective services, the National Institute of Bank Management (NIBM) rated OBC Bank as "Customer Friendly" Bank.
OBC India Grameen Project
OBC's Grameen Project aims to reduce poverty & to identify the reasons which are responsible for the failure or success. OBC is implementing a Grameen Project in Dehradun District (UP) and Hanumangarh District (Rajasthan). This Scheme has a unique feature of disbursing small loans, ranging from Rs. 75 onwards. The OBC has various Agriculture Loan Schemes for farmers, such as, Composite Credit Scheme for Agricultural Leading, Overdraft Facility to Farmers, Advance against Warehouse Receipts to Farmers & Purchase of Land for Agriculture Purposes, Agriculture Clinic & Agriculture Business Centers.
Comprehensive Village Development Programme
On 13 April 1997 at the occasion of Baisakhi, OBC launched another unique scheme, 'The Comprehensive Village Development Programme' in three villages of Punjab. After the success of this scheme in these villages, the Bank extended the programme to more villages. Today, it covers 10 villages in Punjab, 4 in Haryana and 1 in Rajasthan. This programme focuses on providing a comprehensive and integrated package, which offers finance to the villagers.
Special Services For Women
Oriental Bank of Commerce has also implemented 14 point action plan for strengthening the credit delivery to women. Under this scheme bank provide various loans to women, such as, Oriented Mahila Vikas Yojana, Scheme for Professional & self Employed Women, Scheme for Beauty Parlor/ Boutiques/ Saloons/Tailoring, Scheme for Financing Working Women, etc.
Achievements of Oriental Bank of Commerce
Business Growth of Oriental Bank of Commerce:-
Oriental Bank of Commerce declared its half-yearly results for the period ending Sep 2009, at New Delhi. Addressing the media Sh. T. Y. Prabhu, Chairman & Managing Director informed that the business-mix of the Bank has increased from Rs.148489 Crores (30.09.2008) to Rs. 1,84,425 crores as on 30th Sep 2009, registering a growth of 24.20% (YOY). Aggregate Deposits grew by 23.50% (YOY) from Rs.87368 Crores on 30.09.2008 to Rs. 107897 Crores, while Gross Advances showed growth of 25.21% (YOY) Rs.61121 Crores to (30.09.2008) to Rs. 76527 Crores.
The Bank has presently 1422 Branches and 59 Extension counters and 881 ATMs across the Country.
Financial Highlight of Oriental Bank of Commerce:-
Operating profit grew on YOY basis by 34.37% to 1021.79 Crores as on 30 Sep 2009 from Rs.760.44 Crores as on 30th Sep 2008.
Gross NPAs declined to 1.54% from 1.93% while Net NPAs came down to 0.66% from 0.86 % as on 30.09.2008.
Net NPA of the Bank decreased from 522 crores as on 30-09-2008 to 499 Crores as on 30.09.2009.
Non-interest income grew on YOY basis by 66% to 697 Crores as on 30.09.2009 compared to Rs.419 Crores as on 30th Sep 2008.
CRAR as on 30thSep 2009 stood at 12.66%.
Business per Employee - Oriental Bank of Commerce continues to have one of the highest business per employee amongst Public Sector Banks which rose to Rs.11.7 Crores from Rs.10.20 Crores.
Business per Branch on 30.09.2009 increased to Rs. 130 Crores from Rs. 110 Crores during the corresponding period last year.
Net Profit increased on YOY basis by 15.48% to Rs.528 Crores as on 30.09.2009 from Rs.457 Crores as on 30th Sep 2008.
Priority Sector & Retail Credit:-
Banks advances to Priority Sector stood at Rs.24754 Crores showing 19.38% growth (YOY).
Banks advances to Agriculture stood at Rs.8747 Crores showing 12.05% growth (YOY).
Bank retails advances stood at Rs.10614 Crores showing 27.19% growth (YOY).
Bank Housing Advances stood at Rs.8072 Crores showing 28.39% growth (YOY).
Education Loan advances stood at Rs.910 Crores showing 28.71% growth (YOY).
IT Initiatives of Oriental Bank of Commerce:-
The Bank has leveraged its IT capability of 100% computerization on Core Banking Solution platform offering an array of IT based products viz., Internet Banking, Electronic Remittance facilities through RTGS/NEFT, Online Education Loan, E-Shoppe, e-taxes(Direct and In- Direct), Online Trading of shares, SMS alerts, Proton debit cards, Cashmate cards for students and Third Party mutual funds.
Insurance Joint Venture
The Life Insurance joint Venture of the Bank Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd. has completed more than one year of operation. The Bank has already issued 30399 policies with first premium aggregating Rs.117.52 Crore since the time of commencement of the business by the company, viz. 16th June 2008 and up to 30.09.2009.
HR Initiatives
Bank had recruited 1427 personnel in 2008-09. The Bank intends to recruit more than 1550 personnel including 100 Marketing Managers and 83 Agriculture Officer during 2009-10 to meet its man power requirements for its proposed Branch and Business expansion.
Vision
To be a sound all India, customer centric, efficient retail bank with contemporary size, technology and human capital; endeavouring to enrich lives across all sections of society; and committed to upholding the highest standards of corporate governance.
Mission
To provide the finest banking services by upgrading human capital and infusing advanced technology, thereby achieving total customer satisfaction; and being reckoned as the "Best Bank" in the Industry on all efficiency parameters.
To enhance shareholders' wealth by ensuring sound growth of business and make valuable contributions to national economic growth.
SWOT ANALYSIS OF ORIENTAL BANK OF COMMERCE
Swot stands for
S------------- STRENGTH.
W----------- WEAKNESS
O-- ---------OPPORTUNITY
T-------------THREAT
Strength Of Oriental Bank Of Commerce:-
New Initiatives: - The oriental bank of commerce is taking new initiatives regarding providing the services.
Customer Satisfaction: - The main strength of the bank is the customer satisfaction. The satisfied customer is the asset for the bank.
Effective Services:- The bank provide the effective service to its customer such as EFT, RTGS, NRI services.
Use of Hindi in the bank for customer ease:- the bank make the use of Hindi language in its documents and disclosure of the information so that it may be easily understood by the required people.
Effective recovery of bank lending's:- banks recovery of loan is very good their non performing assets are decreased as compare to last few year.
Human resource and effective training and development program.
Weakness of Oriental Bank of Commerce:-
Lack of new technology is the weakness of bank.
Capital adequacy ratio is at margin point and there is chance of coming down of capital adequacy ratio.
Opportunity for Oriental Bank of Commerce:-
Global expansion:- There is the opportunity for the bank to expand its business not only in India but also outside the India.
High market potential:- As there is high potential for the Indian banks so oriental bank should try to capture the large part of the market.
Threat for Oriental Bank of Commerce:-
Recession:- Recession may create problem for the bank as during the time of recession people would not like to invest their money.
Private Banks:- As there are large number of private banks in India and there are big banks who take the maximum share of the market. The large banks like HDFC bank, ICICI banks are the main competitor of oriental bank and they are the threat for the business of the bank.
Public Banks:- The main competitor for the oriental bank is the public bank because people trust upon them. In public banks its competitor are SBI, PNB etc.
Foreign banks:- foreign banks are also the threat for the business of bank as they hold the large share of market. And there is huge investment from the outside India.
Financial Institutions:- financial institutes are also threat for the banks as they are providing loans to the people and they have effective loan recovery policy.
Comparative analysis of oriental bank of commerce with the five private banks.
In this we make the comparison of oriental bank of commerce with the private sector on the basis of the performance of the bank. We will compare the oriental bank's performance with the following private sector banks:-
HDFC BANK
ICICI BANK
YES BANK
UTI BANK
FEDERAL BANK
To make comparison we have to make use of financial analysis of bank data. In which we are going to compare the profit and loss of banks of last five year and ratio analysis of banks and also the CRAR and NPA of banks.
NET PROFIT OF BANKS
Year
2005
2006
2007
2008
2009
Oriental bankof commerce
726.07
537.32
580.81
353.22
905.42
HDFC BANK
665.30
870.32
1141.10
1590.12
2244.35
ICICI Bank
2005.20
2540.07
3110.22
4157.13
3757.55
Yes Bank
-3.76
55.32
94.37
208.02
303.84
Federal bank
90.09
225.21
292.73
368.05
500.49
Axis bank
334.58
485.08
627.23
1071.03
1815.36Interpretation
As we see the net profit of the oriental bank of commerce we came to know that the there is lack of consistency and lot of fluctuation in the profit. The bank earned good profit in 2005 i.e 726.07 crore than it will go down in 2006. In 2008 the bank earned the lowest profit as compare to last few years i.e 353.02 crore. But bank recovered well in 2009 the bank earned good profit i.e 905.45 crore.
The oriental bank of commerce's net profit is high as compare to Yes bank and Federal bank but its profit as compare to the Axis bank, HDFC and ICICI is very low. The bank has to concentrate on increasing its profit so that they may compete with these banks
CURRENT RATIO
Year
2005
2006
2007
2008
2009
Oriental bank of commerce
1.16
0.97
0.56
0.30
0.32
HDFC BANK
0.25
0.29
0.26
0.26
0.27
ICICI Bank
0.51
0.62
0.61
0.72
0.78
Yes Bank
1.75
0.72
0.30
0.51
0.45
Federal bank
0.63
0.65
0.53
0.31
0.39
Axis bank
1.13
0.41
0.31
0.36
0.37
Interpretation
If we see the current ratio of the oriental bank of commerce is declining year after year it is 1.16 in 225 but in 2009 it is only 0.32 which is very low which shows that the bank's liquidity position is not up to mark and there is lack of working capital management in the bank. If we compare the current ratio of oriental bank of commerce with the other five private bank we see that the except HDFC bank all the other banks current ratio is higher than the oriental bank of commerce. The bank has to work upon to increase their liquidity position so that they may not face the problem of shortage of funds in future.
Year
2005
2006
2007
2008
2009
Oriental bank of commerce
19.44
12.54
15.35
11.38
9.33
HDFC BANK
17.71
15.55
13.57
12.82
11.35
ICICI Bank
16.32
14.12
10.81
10.51
9.74
Yes Bank
-7.80
19.08
12.06
12.01
12.35
Federal bank
7.09
13.64
13.91
12.78
13.14
Axis bank
14.33
13.47
12.01
12.22
13.31PROFITABILITY RATIO ( NET PROFIT RATIO)
INTERPRETATION
As we see the net profit ratio of the oriental bank of commerce is 19.44% in 2005 and it decline to 12.54% in 2006 and again rise in the year 2007 i.e 15.35% and in 2009 it is at its lowest position i.e 9.33%.
If we make comparison of the oriental bank with the five other private banks we may conclude that the oriental bank has the lowest profitability ratio as the other bank has more net profit ratio than the oriental bank of commerce i.e more than 9.33%.
DEBT TO EQUITY RATIO
( source of data money wiz.com)
Year
2005
2006
2007
2008
2009
Oriental bank of commerce
14.38
9.71
11.43
13.48
15.25
HDFC BANK
8.04
10.53
10.62
8.76
9.75
ICICI Bank
7.89
7.45
9.50
5.27
4.42
Yes Bank
3.06
5.08
10.44
10.06
9.96
Federal bank
21.22
14.38
14.43
6.61
7.45
Axis bank
13.37
13.97
17.28
9.99
11.49INTERPRETATION:-
Debt equity ratio means total debt to equity it means how much the debt bank has as compare to the equity of the bank. If the debt is more than the equity there is a chance of losing the control over the functioning of the bank. If the debt is high than the bank has to take certain step to bring it down so that the control should be in the hand of the bank.
High debt equity ratio is not good for the business. If we see the oriental bank of commerce debt equity ratio it is high in 2005 than it came down in the 2006 after that it will contionously increasing.
If we compare oriental bank of commerce with other bank we see that the oriental bank has the largest debt equity ratio after that the Axis bank, Yes bank, federal bank and the lowest debt equity ratio is of HDFC bank in 2009.
Capital adequacy ratio:-
Capital adequacy ratio is also known as the CRAR. Capital adequacy ratio is calculated with the help of formula i.e
CRAR = Tier 1 capital + tier 2 capital / risk weighted average ratio.
Capital adequacy ratio of Oriental bank of commerce for the year 2009 is 12.04%.
Capital adequacy ratio of HDFC bank for the year 2009 is 13.60%.
Capital adequacy ratio of ICICI bank for the year 2009 is 16.00%.
Capital adequacy ratio of YES bank for the year 2009 is 12.61%.
Capital adequacy ratio of Axis bank for the year 2009 is 16.88%.
Capital adequacy ratio of Federal bank for the year 2009 is 19.11%.
The capital adequacy ratio for the public bank is 12% and for the private banks it is 9% which is the minimum capital adequacy ratio all the banks has to maintain if we analyze the above banks all the bank are maintaining the capital adequacy ratio. Which is good for them if they donot maintain the minimum capital adequacy ratio the Reserve Bank of India will take action against them.
The oriental bank of commerce has 12.04% capital Adequacy ratio its is on the line there is a chance of coming down of the capital adequacy ratio. So they should try to improve their capital adequacy.
NON PERFORMING ASSET OF THE BANKS
Non performing asset of the company are those lendings made by the banks which have the less chance of recovery or we can say that those debt which are doubtful or bad debt. If the non performing assets of any bank are high it is not good for the bank.
Non Performing Asset of oriental bank of commerce for the year 2009 is 1.53%.
Non Performing Asset of HDFC bank for the year 2009 is 1.98%.
Non Performing Asset of ICICI bank for the year 2009 is 4.32%.
Non Performing Asset of AXIS bank for the year 2009 is 1.08%.
Non Performing Asset of YES bank for the year 2009 is 0.68%.
Non Performing Asset of FEDERAL bank for the year 2009 is 2.57%.
If we see the above data we came to know that the oriental bank of commerce's non performing assets are less as compare to HDFC bank, ICICI bank, and Federal bank but more than the YES bank and Axis bank.
NPA shows the asset quality of the banks here the best asset quality is of YES bank after that Axis bank and than came the oriental bank of commerce.
( source of data http://rbidocs.rbi.org.in/rdos/publication/pdf)
