Strong performance
Corporation Bank, known for its pioneering ventures in financial inclusion, has placed itself on the path “to emerge as a model for inclusive growth and innovative services”.
THE glitz and razzmatazz associated with modern banking, housed in large glass-and-concrete buildings, is a far cry from the business’ humble origins. Udupi, a town renowned for its temples, was the unlikely birthplace of one of the most important financial institutions to emerge in India, Corporation Bank. It was established by Khan Bahadur Haji Abdullah Haji Kasim Saheb Bahadur, a merchant. The bank started its operations on March 12, 1906, as the Canara Banking Corporation (Udupi) Ltd.
One of the main reasons for the emergence of Dakshina Kannada in general and Udupi in particular as the base of not just Corporation Bank but another large financial institution, Canara Bank, at around the same time was mainly that the existing lending structures were extremely onerous for borrowers. Udupi was a small town with a population of 7,000 in 1906, and trade was the main source of economic activity. However, small businesses’ access to credit was not only difficult but extremely costly; interest rates charged by moneylenders were in excess of 50 per cent per annum. Kasim Saheb Bahadur’s novel enterprise was not motivated by a yen for business. Inspired by the freedom movement, he spoke of “Swadeshism” while establishing the bank 114 years ago. In fact, a public notice issued by the bank in February 1906 stated: “The Primary object in forming ‘Corporation’ is not only to cultivate habits of thrift amongst all classes of people, without distinction of caste or creed, but also habits of cooperation amongst all classes. This is ‘Swadeshism’ pure and simple and every lover of the country is expected to come forward and cooperate in achieving this end in view.”
The bank’s unique structure and the loans extended on flexible and far easier terms than those offered by moneylenders endeared it to the local community. Moreover, the collateral it demanded was far less bur
densome for borrowers. Those whose loan amounts were smaller than the deposits they made with the bank did not have to furnish collateral. Those who borrowed more had to furnish the security of two other subscribers to the bank. Loans of even higher amounts required mortgaging of jewellery, but the interest rate in such cases was a mere 6.25 per cent—far less than the 50 per cent and more charged by the moneylenders. In fact, the first loan the bank extended, and the first deposit it accepted were identical, Rs.100 each, indicating its focus on small business.
In 1923 the bank opened its first branch, in Kundapur. This was followed, two years later, by a branch in Mangaluru. The bank stepped into the then Coorg State in 1934 by opening its seventh branch at Madikeri. In 1937, the bank was included in the second schedule of the Reserve Bank of India (as per its 1934 Act). In 1939, the bank’s name was changed to Canara Banking Corporation Ltd. It was further changed to Corporation Bank Limited in 1972. It assumed its present name after the second phase of bank nationalisation on April 15, 1980. The bank crossed the Rs.1,000 crore deposit mark in 1985 and launched into the 1990s with a focus on high quality growth and information technology. It joined hands with Canara Bank in introducing an innovation in banking: the credit card. The scheme was launched in October 1989 and, by the end of March 1990, the bank had issued more than 2,200 cards to its customers. The end of the first phase of reforms in India saw the bank emerging as one of the most innovative and dynamic banks in the public sector, in terms of asset quality, capital adequacy, operational efficiency, a well diversified income base, profitability, productivity and a strong balance sheet.
CASH MANAGEMENT SERVICES
During 1992-93, the bank pioneered cash management services, the primary aim of which was to provide enhanced liquidity to corporates by streamlining cash flows in an effective manner. Corporation Bank was the first public-sector bank to launch such a package using a specialised application software. Not surprisingly, the bank emerged as a market leader in this field. These measures resulted in a turnover of over Rs.11,000 crore during 1994-95, resulting in a substantial increase in the bank’s feebased income. In fact, the Indian Banks’ Association in 1995 described Corporation Bank as enjoying “the finest reputation amongst banks in India”. Soon, in 1997, the bank made its first initial public offer (IPO).
The bank’s total business crossed the Rs.50,000 crore mark in the financial year 2005-06. By 2010, the total volume of its business expanded threefold, reaching Rs.1.56 lakh crore at the end of that financial year. The bank now has a network of 2,432 branches, 2,845 ATMS across the country and a wholly owned subsidiary, Corp Bank Securities Limited (CBSL). The bank’s volume of business was Rs 3.12 lakh crore at the half year ended September 2019. At the end of the current financial year, this is expected to reach Rs.3.26 lakh crore, according to P.V. Bharathi, Corporation Bank MD and CEO. That is a long way from the Rupees 38, annas 13 and pies 2, which was the first day’s business back in 1906. From a net worth of Rs.5,000 to Rs.16,798 crore and from the first branch at Kundapur to around 10,000 service outlets, including branches, ATMS and branchless banking units across the country, the bank’s progress has been truly remarkable. It has over 18,000 employees and serves more than 27 million customers spread across 26 States and five Union Territories.
Corporation Bank is known for its pioneering ventures in the field of financial inclusion. Its vision is to “emerge as a model for inclusive growth and innovative banking services”, and the financial inclusion initiatives and branchless banking model taken up by it have won wide appreciation. The bank is active in implementing all the social security schemes introduced by the government. The Corporation Bank Economic Development Foundation (CBEDF), a non-profit economic outfit, has been pursuing its objectives of fulfilling social obligations in tune with its corporate mission. All CSR activities of the bank are conducted under the aegis of the foundation. Through “Corpkiran”, an association of spouses of the bank’s executives, the bank undertakes welfare activities and provides financial assistance across all the zones in India for the welfare of underprivileged sections.
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