Group 2 Jyoti Belani PG 11 004 Priyanka Manchandani PG 11 025 Tejas Somaiya PG 11 055 Khusboo Kothari PG 11 086 Jaydeep Rathod

PG 11 104

A government-owned bank, is one of the oldest and largest commercial banks in India. Bank has 4100 branches and 270 extension counters across 27 Indian states and three Union Territories. Established in 1911, Central Bank of India was the first Indian commercial bank which was wholly owned and managed by Indians. Sir Pherozesha Mehta was the first Chairman of a truly 'Swadeshi Bank'. Presently, Shri. M.V.Tanksale Chairman & Managing Director. Subsidiaries : Centbank Financial Services Limited Centbank Home Finance Limited

%Holding
Government of India FI s FII s Insurance Cos. Other Body Public Others 79.15% 10.32% 2.48% 0.61% 1.39% 5.76% 0.29% Public 79.15% Other Body Insurance Cos. Government of India FI s FII s

Branches
1800 1600 1400 1531

1200
1000 800 600 400 200 0 Rural

1073 797 713 4114

Semi Urban

Urban

Metropolitan

Business (in Cr)

357139 318754 283561 CAGR 16.0%

CAGR 15% 203538

Total Deposit Credit

92212

130468

153601

Sep'08

Sep'09

Sep'10

Sep'11

Sep'12

Overview of Performance

Total Business of the Bank increased to Rs 357,139 crore from Rs 318754 crore in Sep-11, recording Y-o-Y growth of 12.04%.

ROA improved to 0.58% in Q2-2012-13 from 0.46% in Q2-2011-12.

NIMs
3.1 3 2.9 2.99 3

2.8
2.7 2.6 2.5 2.4 2.3 2.2 Mar'11 Jun'11 Sep'11 Dec'11 Mar'12 Jun'12 Sep'12

2.59
2.53

2.59

2.64

2.68 %

Amount (in Cr)

Amount (in Cr) 98,363 18,677 14,692

Corporate Credit Agriculture 64.% MSE

12.16 %

Retail
TOTAL

18,964
1,53,601

Equity capital: The bank has authorized capital of Rs.3000.00 Crore as on 31st March 2012, the bank has issued, subscribed and paid up equity capital of Rs.736.12crore. Out of this, 79.15% shareholding of shares is with the Government of India as of 31st March 2012.
Tier 1 Capital: 10978.41 Cr Tier 2 Capital : 6485.64 Cr Total Capital : 17464.04 Cr

The bank has adopted : Standardized approach for credit risk. Basic indicator approach for operational risk and Standardized duration approach for market risk.

Capital requirements for credit risk Fund Based : 10705.32 Cr Non Fund Based: 578.89 Cr Capital requirements for market risk: Interest rate risk : 439.73Cr Foreign exchange risk: 25.4 Cr Equity Risk: 239.32 Cr Capital requirements for operational risk: 685.35 Cr

The amount of capital that a firm, usually in financial services, needs to ensure that the company stays solvent. Economic capital is calculated internally and is the amount of capital the firm should have to support any risks it takes on. It is used for measuring and reporting market and operational risks across a financial organization. It measures risk using economic realities rather than accounting and regulatory rules, which have been known to be misleading. It is thought to give a more realistic representation of a firm's solvency.

It is the amount one would anticipate receiving on an investment that has various known or expected rates of return.

Spread Operating Expenses (%) Cost of Funds (%) Expected Return Significance Level Credit Value at Return (%) Total Assets Provisions & Contingencies Expected Loss Economic Capital Total Assets / Provisions & Contingencies Credit Value at Return Expected Loss Operating Expenses / Deposits & Borrowings Cost of Liabilities + Operating Expenses Spread + Cost of funds 5% Expected Return * Significance Level

6.30% 1.79% 8.48% 14.78% 1.64 24.244% 147512.85 2168.61 1.47% 22.774%

1.47%

95%

22.77%

RAROC an adjustment to the return on an investment that accounts for the element of risk. It gives decision makers the ability to compare the returns on several different projects with varying risk levels. By discounting risky cash flows against less risky cash flows, RAROC accounts for changes in the profile of the investment. In general, the higher the risk, the higher the return.

NIM ROC

Revenue Expenses Expected Return * Economic Capital

2.34% 3.3667%

Risk Adjusted Return

NIM + ROC Expected Loss

4.237%
18.603%

Profitability-Subsequent to the Basel III norms, the capital of many banks will reduce by around 60% because of the phased removal of certain components of capital from Tier 1. In addition, the risk weightings are expected to grow by nearly 200%. The twin impact of these two stipulations will greatly reduce the ROE and the profitability of banks Capital acquisition-Indian banks need to infuse additional capital over the next 5 years. Different estimates of additional capital infusion have been announced by various agencies. International credit ratings agency, Fitch, estimates this figure to be at around USD 50 billion, while ICRA projects a figure of around USD 80 billion. Macquarie Capital Securities predicts that there will be a USD 35 billion dilution in the existing capital of PSU banks subsequent to adoption of the stringent Basel III capital accord.

Liquidity Needs-One of the basic tenets of prudent banking is to borrow long and lend short. There must be a match between the duration of liabilities and the duration of assets, which is at the heart of asset-liability management. Limits on lending-A leverage ratio of 3% has to be adhered to by all banks, which translate into a limit on assets at 33 times of the capital. Before the recent financial crisis, international banks were leveraging 50 times, but this was not captured in the risk framework as low risk assets allow higher leverage. This anomaly is sought to be removed by having a simple leverage ratio of 3%. Thereby, if a bank wishes to acquire more assets, it can do so only by increasing its capital.

Bank consolidation-Basel III will set off a process of churning in the banking industry. Smaller banks will find it difficult to meet the new Basel guidelines, and a process of consolidation is underway. Smaller banks will find it difficult to raise more capital and meet the liquidity requirements. This will result in reduction of the scope of operations of the smaller banks, rendering them less profitable. Stability in the Banking system-Basel III incorporates both micro-prudential regulations and macro-prudential regulations. Micro-prudential guidelines ensure the viability and risk compliance of individual banks, while macro-prudential guidelines target the stability of the banking system as a whole.

As per our internal assessment, additional capital required at the end of the transition period for Basel-III i.e. 31/03/2018 is Rs. 14,067 crores . This is proposed to be raised through follow on public issue. Bank has robust plan to contain gross NPA at 3.50% and Net NPA at 2.00% . Return on Average Assets will be significantly improved to 0.50% by the financial year 2012-13 Leverage technology to increase fee based income. Shifting focus from wholesale banking to retail banking.

The Finance Ministry has recently decided to inject of Rs 12,000 crores in 12 public sector banks including State Bank of India, Central Bank of India and the United Bank of India in the form of investments. Out of the proposed Rs. 12000 crores SBI will get 0.56 %, CBI will get 0.99 % and UBI will get 0.73 %. ~ 1200 Cr to CBI. Recently , Large lenders asked to handhold small banks. in which CBI was asked to divide banks in seven pools and a large bank has been appointed as coordinator for each group, to improve internal policies and procedures.

Central Bank of India to be leading Indian Bank Allahabad Bank Bank of Maharashtra The banks have been asked to continuously interact and work collectively on issues such as human resources, e-governance, internal audit, fraud detection and protection, recovery, assetliability mismatch and business process re-engineering. Adding fuel towards consolidation of small banks with larger banks