amar deposit schemes project report
TRANSCRIPT
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UNIVERSITY OF MUMBAI
A PROJECT REPORT ON
A STUDY ON THE PERFORMANCE OF DEPOSIT SCHEMES IN KARNATAKA BANK
LIMITED
MASTER OF COMMERCE PARTII (BANKING AND FINANCE)
SUBJECT: INVESTMENT MANAGEMENT
SEMESTER- III
2013-14
In Partial Fulfillment of the Requirement under Semester Based Credit and Grading System for
post graduate (PG)
Program under Faculty of Commerce
SUBMITTED BY
MR. AMAR FUNDE
Roll no: 171
PROJECT GUIDE
PROF. AJAY PAWAR
Sydenham College of Commerce & Economics, B-Road, Churchgate-400020
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CERTIFICATE
This is to certify that MR AMAR FUNDE of M.Com. Banking and Finance Semester 3rd (2013-2014)
has successfully completed the Project on A STUDY ON THE PERFORMANCE OF DEPOSIT
SCHEMES IN KARNATAKA BANK LIMITED
under the guidance of PROF. AJAY PAWAR.
Project Guide ---------------------------------
Course Coordinator -------------------------------
Internal Examiner -------------------------------
External Examiner -------------------------------
Principal ------------------------------
Date:
Place: Mumbai
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DECLARATION
I Mr.AMAR FUNDE student of M.Com (Banking and Finance) 3rdsemester (2013-2014), hereby
declare that I have complete the project on A STUDY ON THE PERFORMANCE OF DEPOSIT
SCHEMES IN KARNATAKA BANK LIMITED
. The information submitted is true and original to the best of my knowledge.
AMAR FUNDE
(Signature)
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ACKNOWLEDGEMENT
I wish to express my sincere gratitude to Professor as well as our project guide PROF AJAY PAWAR
of Sydenham College of Commerce & Economics, providing me an opportunity to present a project on
A STUDY ON THE PERFORMANCE DEPOSIT SCHEMES IN KARNATAKA BANK LIMITED.
This project has not only developed my skills as academics are concerned but also to a further extent
help to know the topic in a much better way. I would also love to express my gratitude to our librarian
who co-operate in completion of my project.
I am also thankful to my parents and friends who have helped me in my completion of my project.
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CONTENTS
SR. NO TOPIC PAGE NO.
1 Executive Summary 6
2 Objective of study 7
3 Scope & Importance of Study 8
4 Limitations Of Study 9
5 Chapter-1 Introduction 10-27
6 Chapter-2 Review Of Literature 28-29
7 Chapter-3 Research Methodology 30-35
8 Chapter-4 Data Anlaysis & Interpretation 36-55
9 Chapter-5 Findings & Suggestions 56-57
10 Conclusion 58
11 Bibiliography 59
EXECIUTIVE SUMMARY
I have great pleasure in presenting my project , as my topic is A Study On The
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Performance Of Deposit Schemes In Karnataka Bank Limited. I have made sincere efforts to make
this project informative and i am sure it would justify the same.
Karnataka Bank Ltd, a premier private sector bank, is a leading 'A' Class Scheduled Commercial Bank
in India. The Bank offers a total value package, a one-stop shop for all the banking needs. They provide
Working Capital Finance, Term Loans and Infrastructure Finance to help the Business grow. The Bankoperates in four business segments, namely treasury, corporate and wholesale banking, retail banking
and other banking operations.
The data is collected and is anlaysed under the following heads products, services, etc. In analysis i
have discussed about the performance of deposit schemes provided by bank.
OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVE
To study the performance of deposit schemes in Karnataka Bank
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SECONDARY OBJECTIVES
1) To evaluate the performance of cash inflow in the form of deposits
2) To analyze the return on investment of deposit schemes
3) To find out the performance of demand deposits, savings bank deposits and term deposits
4) To analyze the efficiency of management
5) To find out the relationship between the deposits and loans
SCOPE OF THE STUDY
The present study attempts to obtain a general view of deposit schemes practice in Karnataka
bank. The study to know their increase or decrease of various schemes is also analyzed in order to give a
true and clear picture of its performance. The present study aims at studying deposits of the Karnataka
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bank. The study focuses only the views of the bank. But it does include the views of the others who are
directly or indirectly associated with the bank. It is concerned to the administration of assets & liabilities
to analysis the profitability liquidity of the organization with the help of ratios.
IMPORTANCE OF THE STUDY
Cash flow statement shows efficiency of a firm in generating cash inflows from its regularoperations.
Return on investment can be used to measure the value of the bank or of a specific investmentthat they might make.
Percentage analysis is help to evaluate and compare the deposits.
Ratio analysis is an important technique of financial statement analysis. Accounting ratios areuseful for understanding the financial position of the company. Different users such as investors,
management, bankers and creditors use the ratio to analyze the financial situation of the
company for their decision making purpose.
The effect of correlation is to reduce the range of uncertainty. The prediction based oncorrelation analysis is likely to be more variable and near to reality.
LIMITATIONS OF THE STUDY
The analysis is based on the secondary data. Hence there is a limitation of doubtful accuracy.
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The data collected is limited to 5 years and hence it does not give the whole picture.
As the present business moves from the cash basis to accrual basis, the prepaid and credittransactions might be represented an increase in working capital and it would be misleading to
equate net income to cash flow because a number of non cash items would affect the net income.
Return of investment does not take into account the time value of money. It does not account forthe variable nature of annual net cash inflows.
The ratios are generally calculated from past financial statements and thus are no indicator offuture.
A STUDY ON THE PERFORMANCE OF DEPOSIT SCHEMES IN
KARNATAKA BANK LIMITED
CHAPTER1
INTRODUCTION
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1.1 ABOUT THE INDUSTRY
Banking in Indiaoriginated in the last decades of the 18th century. The first banks were The General
Bank of India, which started in 1786, andBank of Hindustan, which started in 1790; both are now
defunct. The oldest bank in existence in India is the State Bank of India,which originated in theBank of
Calcutta in June 1806, which almost immediately became theBank of Bengal.This was one of the three
presidency banks, the other two being theBank of Bombay and theBank of Madras,all three of which
were established under charters from the British East India Company.For many years the Presidency
banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form
theImperial Bank of India,which, upon India's independence, became theState Bank of India in 1955.
HISTORY OF BANKING
Indian merchants inCalcutta established the Union Bank in 1839, but it failed in 1848 as a consequence
of the economic crisis of 1848-49. TheAllahabad Bank,established in 1865 and still functioning today,
is the oldest Joint Stock bank in India.(Joint Stock Bank: A company that issues stock and requires
shareholders to be held liable for the company's debt) It was not the first though. That honour belongs to
the Bank of Upper India, which was established in 1863, and which survived until 1913, when it failed,
with some of its assets and liabilities being transferred to theAlliance Bank of Simla.
When theAmerican Civil War stopped the supply of cotton toLancashire from theConfederate States,
promoters opened banks to finance trading in Indian cotton. With large exposure to speculative ventures,most of the banks opened in India during that period failed. The depositors lost money and lost interest
in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of
Europeans for next several decades until the beginning of the 20th century.
Foreign banks too started to arrive, particularly inCalcutta,in the 1860s. TheComptoire d'Escompte de
Paris opened a branch in Calcutta in 1860, and another inBombay in 1862; branches
inMadras andPondicherry,then a French colony, followed.HSBC established itself inBengal in 1869.
Calcutta was the most active trading port in India, mainly due to the trade of theBritish Empire,and so
became a banking centre.
The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881
inFaizabad. It failed in 1958. The next was thePunjab National Bank, established inLahore in 1895,
which has survived to the present and is now one of the largest banks in India. Around the turn of the
20th Century, the Indian economy was passing through a relative period of stability. Around five
decades had elapsed since the Indian Mutiny, and the social, industrial and other infrastructure had
improved. Indians had established small banks, most of which served particular ethnic and religious
communities.
http://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1http://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Pondicherryhttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Indian_rebellion_of_1857http://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Faizabadhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Bengalhttp://en.wikipedia.org/wiki/HSBChttp://en.wikipedia.org/wiki/Pondicherryhttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1http://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Confederate_Stateshttp://en.wikipedia.org/wiki/Lancashirehttp://en.wikipedia.org/wiki/American_Civil_Warhttp://en.wikipedia.org/wiki/Alliance_Bank_of_Simlahttp://en.wikipedia.org/wiki/Allahabad_Bankhttp://en.wikipedia.org/wiki/Calcuttahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Imperial_Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Madrashttp://en.wikipedia.org/wiki/Bank_of_Bombayhttp://en.wikipedia.org/wiki/Bank_of_Bengalhttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/Bank_of_Calcuttahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1 -
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The presidency banks dominated banking in India but there were also some exchange banks and a
number of Indianjoint stockbanks. All these banks operated in different segments of the economy. The
exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint
stock banks were generally undercapitalized and lacked the experience and maturity to compete with the
presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking itseems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden
bulkheads into separate and cumbersome compartments."
The period between 1906 and 1911, saw the establishment of banks inspired by
theSwadeshi movement. The Swadeshi movement inspired local businessmen and political figures to
found banks of and for the Indian community. A number of banks established then have survived to the
present such as Bank of India,Corporation Bank,Indian Bank,Bank of Baroda,Canara
Bank andCentral Bank of India.The fervour of Swadeshi movement lead to establishing of many privatebanks inDakshina Kannada andUdupi district which were unified earlier and known by the name South
Canara ( South Kanara ) district. Four nationalised banks started in this district and also a leading private
sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian
Banking".During theFirst World War (19141918) through the end of theSecond World War (1939
1945), and two years thereafter until theindependence of India were challenging for Indian banking.
POST INDEPENDENCEThepartition of India in 1947 adversely impacted the economies ofPunjab andWest Bengal,paralyzing
banking activities for months. India'sindependence marked the end of a regime of theLaissez-faire for
the Indian banking. TheGovernment of India initiated measures to play an active role in the economic
life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged
amixed economy. This resulted into greater involvement of the state in different segments of the
economy including banking and finance. The major steps to regulate banking included:
TheReserve Bank of India,India's central banking authority, was established in April 1934, butwas nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to
Public Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in]
In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India(RBI) "to regulate, control, and inspect the banks in India."
The Banking Regulation Act also provided that no new bank or branch of an existing bank couldbe opened without a license from the RBI, and no two banks could have common directors.
http://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/w/index.php?title=Indian_independence_goverment&action=edit&redlink=1http://en.wikipedia.org/wiki/Laissez-fairehttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Laissez-fairehttp://en.wikipedia.org/w/index.php?title=Indian_independence_goverment&action=edit&redlink=1http://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Second_World_Warhttp://en.wikipedia.org/wiki/First_World_Warhttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/Dakshina_Kannadahttp://en.wikipedia.org/wiki/Central_Bank_of_Indiahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Swadeshihttp://en.wikipedia.org/wiki/Joint_stock_company -
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NATIONALISATION
Despite the provisions, control and regulations of Reserve Bank of India, banks in India
except theState Bank of India or SBI, continued to be owned and operated by private persons. By the
1960s, the Indian banking industry had become an important tool to facilitate the development of
theIndian economy.At the same time, it had emerged as a large employer, and a debate had ensued
about the nationalization of the banking industry.Indira Gandhi,thenPrime Minister of India,expressed
the intention of theGovernment of India in the annual conference of the All India Congress Meeting in a
paper entitled "Stray thoughts on Bank Nationalisation." The meeting received the paper with
enthusiasm.
A second dose of nationalization of 6 more commercial banks followed in 1980. The stated
reason for the nationalization was to give the government more control of credit delivery. With the
second dose of nationalization, the Government of India controlled around 91% of the banking businessof India. Later on, in the year 1993, the government mergedNew Bank of India withPunjab National
Bank.It was the only merger between nationalized banks and resulted in the reduction of the number of
nationalised banks from 20 to 19. After this, until the 1990s, the nationalised banks grew at a pace of
around 4%, closer to the average growth rate of the Indian economy.
LIBERLIZATION
In the early 1990s, the thenNarasimha Rao government embarked on a policy ofliberalization,
licensing a small number of private banks. These came to be known as New Generation tech-savvy
banks, and included Global Trust Bank (the first of such new generation banks to be set up), which later
amalgamated with Oriental Bank of Commerce,Axis Bank(earlier asUTI Bank),ICICI
Bank andHDFC Bank.This move, along with the rapid growth in theeconomy of India,revitalized the
banking sector in India, which has seen rapid growth with strong contribution from all the three sectors
of banks, namely, government banks, private banks and foreign banks.
The new policy shook the Banking sector inIndia completely. Bankers, till this time, were usedto the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered
in a modern outlook and tech-savvy methods of working for traditional banks.Currently (2010), banking
in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural
India still remains a challenge for the private sector and foreign banks.
ADOPTION OF BANKING TECHONOLGY
The IT revolution had a great impact in the Indian banking system. The use of computers hadled to introduction of online banking in India. The use of the modern innovation and computerisation of
http://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Indian_economyhttp://en.wikipedia.org/wiki/Indira_Gandhihttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Narasimha_Raohttp://en.wikipedia.org/wiki/Liberalizationhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/ICICI_Bankhttp://en.wikipedia.org/wiki/UTI_Bankhttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/Liberalizationhttp://en.wikipedia.org/wiki/Narasimha_Raohttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Indira_Gandhihttp://en.wikipedia.org/wiki/Indian_economyhttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_India -
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the banking sector of India has increased many folds after the economic liberalisation of 1991 as the
country's banking sector has been exposed to the world's market. The Indian banks were finding it
difficult to compete with the international banks in terms of the customer service without the use of the
information technology and computers.
RESERVE BANK OF INDIA
Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the
Reserve Bank of India Act, 1934. Though initially RBI was privately owned, it was nationalized in
1949. Its central office is in Mumbai where the Governor of RBI sits.
India has a well developed banking system. Most of the banks in India were founded by Indian
entrepreneurs and visionaries in the pre-independence era to provide financial assistance to traders,
agriculturists and budding Indian industrialists. The origin of banking in India can be traced back to the
last decades of the 18th century.
Scheduled banks
Co-operative banksCommercial banks
Urban Co-
o eratives 52
Old (22)
Regional rural
banks (196)
Public Sector banks
(27)
State Co-operatives
(16)
Other Nationalised
banks (19)
Foreign banks (40)
Private Sector
banks (30)
New (8)State bank of India
and Associate
banks (8)
RESERVE BANK OF INDIA
Central bank and supreme monetary authority
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The role of central banking in India is looked by the Reserve Bank of India, which in 1935 formally
took over these responsibilities from the then Imperial Bank of India. Reserve Bank was nationalized in
1947 and was given broader powers. In 1969, 14 largest commercial banks were nationalized followed
by six next largest in 1980. But with adoption of economic liberalization in 1991, private banking was
again allowed. The commercial banking structure in India consists of: Scheduled Commercial Banksand Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been
included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934.
Indian banks can be broadly classified into public sector banks (those banks in which the Government of
India holds a stake), private banks (government does not have a stake in these banks; they may be
publicly listed and traded on stock exchanges) and foreign banks.
India has a strong and vibrant banking sector comprising state-owned banks, private sector banks,
foreign banks, financial institutions and regional banks including cooperative banks, rural banks andlocal area banks. In addition there are non-banking financial companies (NBFCs), housing finance
companies, Nidhi companies and chit fund companies which play the role of financial intermediaries.
India is also committed to further open the banking sector for foreign investment in pursuance to its
commitment to the World Trade Organisation (WTO).
As monetary authority of the country, the Reserve Bank of India (RBI) regulates the banking industry
and lays down guidelines for day-to-day functioning of banks within the overall framework of the
Banking Regulation Act, 1949, Foreign Exchange Management Act, 1999 and Foreign Direct
Investment (FDI) policy of the government.
STATE-OWNED BANKS
The Indian banking sector is dominated by 28 state-owned banks which operate through a network of
about 50,000 branches and 13,000 ATMs. The State Bank of India (SBI) in the largest bank in the
country and along with its seven associate banks has an asset base of about Rs. 7,000 billion
(approximately US$150 billion). The other large public sector banks are Punjab National Bank, Canara
Bank, Bank of Baroda, Bank of India and IDBI Bank.
PUBLIC SECTOR BANKS
The public sector banks have overseas operations with Bank of Baroda topping the list with 51
branches, subsidiaries, joint ventures and representative offices outside India, followed by SBI (45
overseas branches/offices) and Bank of India (26 overseas branches/offices). Indian banks, including
private sector banks, have 171 branches/offices abroad. SBI is present in 29 countries followed by Bank
of Baroda (20 countries) and Bank of India (14 countries).
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PRIVATE SECTOR BANKS
Private sector banks India has 29 private sector banks including nine new banks which were granted
licences after the government liberalised the banking sector. Some of the well known private sector
banks are Karnataka Bank, ICICI Bank, HDFC Bank and IndusInd Bank. Yes Bank is the latest entrant
to the private sector banking industry.
In terms of reach the private sector banks with an asset of over Rs 5,700 billion (about US$124 billion)
operate through a network of 6,500 branches and over 7,500 ATMs.
FOREIGN BANKS
Foreign banks have brought latest technology and latest banking practices in India. They have helped
made Indian Banking system more competitive and efficient. Government has come up with a road map
for expansion of foreign banks in India.
Foreign banks As many as 29 foreign banks originating from 19 countries are operating in India through
a network of 258 branches and about 900 ATMs. With total assets of more than Rs 2,000 billion (about
44 billion US dollars) they are present in 40 centres across 19 Indian states and Union Territories.
Some of the leading international banks that are doing brisk business in India include Standard
Chartered Bank, HSBC Bank, Citibank N.A. and ABN-AMRO Bank.
REGIONAL BANKS
Rural areas in India are served through a network of Regional Rural Banks (RRBs), urban cooperative
banks, rural cooperative credit institutions and local area banks. Many of these banks are not doing well
financially and the government is currently engaged in restructuring and consolidating them.
Local area banks were of recent origin and as on March 31, 2006 four such banks were operating in the
country.
NATIONALISED BANKS
Nationalised banks dominate the banking system in India. The history of nationalised banks in India
dates back to mid-20th century, when Imperial Bank of India was nationalised (under the SBI Act of
1955) and re-christened as State Bank of India (SBI) in July 1955.
FINANCIAL INSTITUTIONS
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Financial institutions India has seven major state-owned financial institutions which include Industrial
Development Bank of India (IDBI), Industrial and Financial Corporation of India (IFCI), Tourism
Finance Corporation of India (TFCI), Small Industries Development Bank of India (SIDBI), National
Bank for Agriculture and Rural Development (NABARD) and National Housing Bank (NHB).
These institutions provide term loans and arrange refinance. There are also specialised institutions likethe Power Finance Corporation (PFC), Indian Railway Finance Corporation (IRFC), and Infrastructure
Development Finance Company (IDFC) and state-level financial corporations.
1.2 ABOUT THE COMPANY
Karnataka Bank Ltd, a premier private sector bank, is a leading 'A' Class Scheduled Commercial Bank
in India. The Bank offers a total value package, a one-stop shop for all the banking needs. They provide
Working Capital Finance, Term Loans and Infrastructure Finance to help the Business grow. The Bank
operates in four business segments, namely treasury, corporate and wholesale banking, retail banking
and other banking operations.
Karnataka Bank Ltd was incorporated on February 18, 1924 as The Karnataka Bank Ltd at Mangalore in
Karnataka. The Bank was established to cater to the banking needs of the South Kanara Region. In May
23, 1924, the Bank obtained the certificate to commence business. In April 4, 1966, they received their
license to carry on the banking business in India. The Bank was promoted by B R Vysarayachar and
other leading members of the South Kanara Region. Under the table guidance of K S N Adiga, thesecond chairman of the Bank who held the post for a period of 21 years, the Bank made significant
progress thereby providing a strong foundation and as a result grew in stature in terms of number of
branches, deposits, advances etc.
In the year 1964, the Bank took over the assets and liabilities of the Chitaldurg Bank Ltd. In the 1966,
they took over the assets and liabilities of the Bank of Karnataka Ltd, Hubli and opened 14 new
branches in places where the Bank of Karnataka Ltd was formerly functioned.
In the year 1997, the Bank became an authorized dealer of foreign exchange and established specialized
branches for financing foreign exchange, industry and agriculture, etc. In the year 1989, they opened a
merchant banking division. In the year 1995, the Bank came out with the public cum right issue
aggregating Rs 81 crore.
In the year 2000, they signed a MoU with Infosys Technologies Ltd for implementation of Finacle, a
Core Banking Solution. In the year 2002, they made a pact with Corporation Bank for sharing ATM's.
Also, they made a tie-up with MetLife India for the distribution of insurance products as a corporate
agent. In the year 2003, the Bank took up Corporate Agency for distribution of products of Bajaj Allianz
General Insurance Co Ltd.
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The Bank in association with MetLife India launched K-Life a term product designed for SB/current
account holders of the bank. Also, the Bank launched a credit product 'KBL Insta Cash' for consumption
purposes, and 'KBL Vahana Mitra' for the purchase of new vehicles. The Bank along with Western
Union Financial Services made tie-up with Bharat Overseas Bank to provide inbound money transfer
services.In the year 2004, the Bank launched the 'Gold Card Scheme' for the exporters. In the year 2005, the
Bank launched real time gross settlement (RTGS) system under the name of Money Quick. Also, they
inked an agreement with National Financial Switch for ATM connectivity and launched 'no frills'
accounts.
In the year 2006, they made a tie up with Franklin Templeton (I) Private Limited for distribution of their
mutual funds. They launched CDSL-DP services at select branches. In the year 2007, the Bank signed
MoU with Allahabad Bank, Indian Overseas Bank, Sompo Japan Insurance Inc. and Dabur InvestmentCorporation to form a joint venture for undertaking General Insurance business.
During the year 2008-09, the Bank opend 16 branches at Moradabad, New Delhi - Karol Bagh, Thane,
Mumbai - Vile Parle, Bommasandra, Bangalore - Chandra Layout, Bangalore - Sadashivanagar, Mysore
- J P Nagar, Belgaum - Udyambag (Extension Counter upgraded), New Delhi - East of Kailash,
Bangalore -Yelahanka New Town, Pune-Dhankawadi, Doddaballpur, Uppal Kalan, Bellandur and
Hoskote.
The Bank added 30 ATM outlets at various locations. Also, they shifted 15 branches/ offices to new
premises. The Bank won the prestigious Sun and NDTV Green IT award instituted by Sun
Microsystems and NDTV, for use of eco efficient green technologies to run business. During the year
2009-10, the Bank opened 17 branches in Patna, Kanakapura, Tambaram, Vellore, Dhanbad, Kolkata -
Bhowanipore, Naganathapura, Gundlupet, New Delhi - Ashokvihar, Ujjain, Ghaziabad, Kancheepuram,
Chennai - Annanagar (West), Brahmapur, Serillingampally, Durg and Rajarhat - Kolkata. The Bank
added 46 ATM outlets at various locations. Also, they shifted 16 branches/offices to new premises.
In April 2010, the opened their 9th Regional Office at Hyderabad. The Bank bagged 'Special Award for
use of IT for Internal effectiveness' for the year 2009, instituted by Institute for Development and
Research in Banking Technology (IDRBT). As on March 31, 2010, the Bank had 464 branches, 217
ATM outlets, 8 Regional Offices, one International Division, one Data Centre, one Customer Care
Centre, 5 Service branches, 2 Currency Chests, 6 Extension Counters and two Central processing
centers, spread across 20 states and 2 Union Territories.Further, for better ambience and improved
customer service.
In September 2010, the Bank launched a new product exclusively for women, i.e. the new saving bank
account for women named KBL Vanitha to encourage saving habit among the womenfolk and also to
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allay the fear of managing their wealth. The Bank plans to increase their total number of business units
to 780, by increasing the total number of branches to 480 and own ATM network to 300 by March 2011.
MISSION
"Our mission is to be a technology savvy, customer centric progressive bank with a national presence,
driven by the highest standards of corporate governance and guided by sound ethical values."
BRANCHES AND BUSINESS
Karnataka bank has expanded its reach to various parts of India, over the 85 years of its existence.
Today, the bank has a total of 447 branches, spread across 19 states and 2 Union Territories, with a total
business of about Rs. 31248 Crore. The bank presently employs over 4,900 employees and is
answerable to about 71,822 shareholders and over 3.7 million customers. The bank has specialized
branches like Agricultural Development Branch, Overseas Branches, Foreign Exchange Branches,
Specialized SSI Branches, Asset Recovery Management Branches, Currency Chests, Central Processing
Centre spread across the length and breadth of the country.
FACILITIES AND CUSTOMER SERVICE
Karnataka Bank provides a broad range of customized products and services suitable for all kinds of
market, trade and perceived requirements, be it business or personal. It deals in personalized banking,
business banking, money transfer, internet banking and insurance services. The facilities include
borrowing facilities, deposits, optimum returns on surplus funds and helping with smooth overseas
transactions.As a part of personalized banking, Karnataka Bank provides services for high earning
deposits, simple & convenient loans, life insurance, money transfer, utility bill payments and thus,
efficiently keeps a track of your finances.
BOARD OF DIRECTORS
Chairman Ananthakrishna
Managing Director & CEO P Jayarama Bhat
S R Hegde
R V Shastri
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Director
U R Bhat
T S Vishwanath
Sitarama Murty M
S V Manjunath
D Harshendra Kumar
H Ramamohan
T R Chandrasekaran
Company Secretary Y V Balachandra
MULTI BRANCH BANKING
Multi Branch Banking facility is a value added service to our customers taking advantage of "Core
Banking Solution". It is a 'technology driven-anywhere banking' facility and 'at par' facilities for Savings
Bank and Current account with structured schedule of services and charges. Now the customer can
access his account at all branches of the Bank.
The salient features of the scheme are as under:
1. The concept of 'anywhere' banking is extended to all domestic SB and Current Accounts except
NO Frills Accounts. Even SB-General and Current-General accounts are eligible forMBB facility with
Multicity Cheques.2. SB-General (SBGEN),SB-Money Sapphire,SB-Money Platinum,Current A/c General
(CAGEN),CA- Money Pearl,CA - Money Ruby,CA- Money Diamond,CA-Money
Platinum, are MBB accounts with structured free services and Multicity Cheque facility
with cheques payable at par at all Branches.
FACILITIES AVAILABLE UNDER MBB
PAYMENT SERVICES:
Any where Cash withdrawal for self cheques only Multicity Cheques Funds Transfer Funds Transfer through RTGS/NEFT
http://www.karnatakabank.com/ktk/kblgeneral1.htmhttp://www.karnatakabank.com/ktk/kblplatinum1.htmhttp://www.karnatakabank.com/ktk/cagen.htmhttp://www.karnatakabank.com/ktk/caruby.htmhttp://www.karnatakabank.com/ktk/caplatinum.htmhttp://www.karnatakabank.com/ktk/caplatinum.htmhttp://www.karnatakabank.com/ktk/caplatinum.htmhttp://www.karnatakabank.com/ktk/caplatinum.htmhttp://www.karnatakabank.com/ktk/caruby.htmhttp://www.karnatakabank.com/ktk/caruby.htmhttp://www.karnatakabank.com/ktk/cagen.htmhttp://www.karnatakabank.com/ktk/cagen.htmhttp://www.karnatakabank.com/ktk/kblplatinum1.htmhttp://www.karnatakabank.com/ktk/kblplatinum1.htmhttp://www.karnatakabank.com/ktk/kblgeneral1.htmhttp://www.karnatakabank.com/ktk/kblgeneral1.htm -
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COLLECTION SERVICES:
Any where Cash Deposit- By self only Collection of out station cheques Any where Deposit of cheques for collection
OTHER FACILITIES:
Internet Banking Mobile Banking (SMS alerts) Demat Account 'MoneyPlant' Visa International Debit Card
INTERNET BANKING
Karnataka bank has been introduced Internet Banking facility MoneyClickTMto manage our finances in
the comfort of our home or our office as per our convenience.MoneyClickTMis a Self-Service Channel,
which is available 24 hours a day and 365 days a year in an absolutely simple, friendly but secured
environment.
In MoneyClickTM, a mere touch of a button or click of a mouse makes you accessible to a host of
Banking Services, called Fingertip Banking.We can carry out your banking transactions safely and with
total confidentiality by enjoying online banking without wasting your time or losing your peace of mind.
Money ClickTMRetailIt offers different online services to our retail/individual customers, like balance enquiry, requests for
Chequebooks, recording stop-payment instructions, balance transfer instructions, account opening and
other forms of traditional banking services. This also offers utility bill payment services to our valued
customers for payment of BSNL Mobile, Electricity, Water bills etc.
MoneyclickTMCorporateIn addition to the above services, our Corporate Customers can avail Trade Finance Facilities such as
Import/ Export Credit facilities, Requests for Forward Contracts, Inland Trade, and Bank Guarantee etc.
Also MoneyclickTMfacilitates access control at Corporate User level wherein various users at different
hierarchy levels have varying powers to operate a corporate account.
MoneyClickTMCyber Kids
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Children between 12-18 years who are having Account with us are eligible for this special e-banking
facility.
MOBILE BANKING
Karnataka Bank offers Mobile Banking for the convenience of paying for utility bills, mobile recharge,
movie tickets, online purchases, retail shopping and much more at over 15,000 merchants directly from
our mobile.
Karnataka Bank mobile payment service is independent of the handset model and service providers and
works on even the most basic handsets and across all telecom operators (GSM or CDMA).
FEATURES
Mobile payment facility will be an additional facility to our customer for making Paymentthrough their mobile for the goods purchased by them.
On registration for Mobile Payment solution, the customer will be enabled to make securedpayments directly from their registered mobile phone, authorized by using their ATM PIN.
Customers can use this facility round the clock. This facility is extended to the users free of cost. This facility saves time; avoid hassles of travelling, waiting in long queues to make bill payment,
ticket booking etc.
At present the facility will be extended to customers subject to a daily cap of Rs.50, 000/- percustomer for transaction involving purchase of goods/services(as per RBI guidelines).
BENEFITS
EASY:
Works on even the simplest mobile handsets across all operators (GSM or CDMA) Doesn't require GPRS connectivity, SIM change or application download SMS & Interactive Voice based transaction platform makes it very easy-to-use
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SECURE:
Confidential PIN Based Transaction PIN entry only through an IVR call where the PIN is transmitted in a DTMF format(Just as the
PIN entry system for tele banking)
No financial details divulged during the transaction process
CONVENIENT:
Transact over-the-counter, online, on the telephone or from just about anywhere Save time and effort by paying bills from anywhere, anytime Turn your mobile phone into a debit card
REGISTRATION:
Existing Debit Card holders (Classic/GOLD) who are above 18years are eligible for mobile banking
facilities. In case existing customers do not have debit cards, they have to first apply for Debit Cards and
upon receipt of the same they can register for Mobile Payment facility.A customer would be able to
register to use Pay mate services in any one of the following:
DEMAT ACCOUNT
A Bank where its Head Office provides the facility of opening and conduct of Accounts through its
branches, a Depository institution extends various services to the investors through its agents known as
Depository Participant. In India, now there are two Depositories. They are CDSL and NSDL. Participant
can be anybody who complies with the eligibility requirements. Participant (DP) can be a Bank also. All
the various functions undertaken and enabled through Demat accounts are referred to as DP activity.
Under the depository system, a demat account holder or holder/owner of securities who is entitled to all
the benefits (such as dividend or interest/bonus or right shares etc), is known as a Beneficial
Owner (BO).
PREREQUISITES OF OPENING A DEMAT ACCOUNT:
The formalities involved in opening a bank account and a demat account are similar. An investor
desirous of holding his securities in electronic form can open a demat account with a DP of his choice
by completing necessary account opening formalities after furnishing proof of his/her identity,
photograph and proof of address. An agreement with the DP in the prescribed format is to be executed
by paying requisite stamp duty.
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DEMATERIALISATION OF SECURITIES:
After getting the demat account number from the DP, the BO can cause credit of fresh purchases of
securities to his demat account and/or transfer the balances held in demat account held with other DP to
this newly opened demat account. He can also tender the securities held by him/her in physical form to
DP for dematerialization and credit to the demat account. After necessary verification, DP forwards the
physical securities (duly defaced) either to the company or to their duly appointed RTA (Registrar and
Transfer Agent) who, after necessary scrutiny, destroys the certificates in physical form and authorizes
the depository to give corresponding (electronic) credit to the subject demat account.
FREE FACILITIES BY CDSL TO ITS DEMAT ACCOUNT HOLDERS:
The evolution of the Indian capital market has seen several enhancements during the past few years and
this has been a result of innovative use of newer technologies. In the reduced settlement cycle era,
investors require updated demat account information at a much faster pace than ever before. In other
words, the quest for account status information has raised manifold.
In order to facilitate a CDSL demat account holder to easily adapt to the fast reducing settlement cycle,
CDSL has introduced Internet-enabled services called "easi" and "easiest" to empower a demat account
holder in managing his securities 'anytime-anywhere' in an efficient and convenient manner, all in a
state-of-the-art secure environment. Further to effective risk control mechanism for monitoring of demataccount, CDSL has also introduced "smart" facility.
MONEY PLANT ATM
Karnataka Bank has entered into ATM sharing arrangement with NPCI-NFSand CashTree ATM
network. The NFS network with NPCI has 66 Member Banks and covers around 86,793 ATMs while
CashTree network has 13 member Banks and covers around 7400 ATMs. All Debit &
MoneyplantTM
International Visa Debit Card/MoneyplantTM
ATM card holding customers of KarnatakaBank can avail the facility of withdrawal through Banks' MoneyPlantTM ATMs and shared network
ATMs.
1.3 ABOUT THE STUDY
One of the important functions of the Bank is to accept deposits from the public for the purpose
of lending. In fact, depositors are the major stakeholders of the Banking System. The depositors and
their interests form the key area of the regulatory framework for banking in India and this has been
enshrined in the Banking Regulation Act, 1949. The Reserve Bank of India is empowered to issue
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directives advices on interest rates on deposits and other aspects regarding conduct of deposit accounts
from time to time. With liberalization in the financial system and deregulation of interest rates, banks
are now free to formulate deposit products within the broad guidelines issued by RBI.
This policy document on deposits outlines the guiding principles in respect of formulation of
various deposit products offered by the Bank and terms and conditions governing the conduct of theaccount. The document recognises the rights of depositors and aims at dissemination of information
with regard to various aspects of acceptance of deposits from the members of the public, conduct and
operations of various deposits accounts, payment of interest on various deposit accounts, closure of
deposit accounts, method of disposal of deposits of deceased depositors, etc., for the benefit of
customers.
While adopting this policy, the bank reiterates its commitments to individual customers
outlined in 'Code of Banks' Commitment to Customers'.The various deposit products offered by the Bank can be categorised broadly into the following
types. Definitions of major deposits schemes are as under:
"Demand deposits" means a deposit received by the Bank which is withdrawable on demand."Savings deposits" means a form of demand deposit which is subject to restrictions as to the
number of withdrawals as also the amounts of withdrawals permitted by the Bank during any
specified period.
"Term deposit" means a deposit received by the Bank for a fixed period withdrawable only afterthe expiry of the fixed period.
"Current Account" means a form of demand deposit wherefrom withdrawals are allowed anynumber of times depending upon the balance in the account or up to a particular agreed amount
and will also include other deposit accounts which are neither Savings Deposit nor Term
Deposit.
ACCOUNT OPENING AND OPERATION OF DEPOSIT ACCOUNTS
The Bank before opening any deposit account will carry out due diligence as required under"Know Your Customer" (KYC) guidelines issued by RBI Anti-Money Laundering rules and
regulations and or such other norms or procedures as per the "Know Your Customer"(KYC)
policy of the bank. If the decision to open an account of a prospective depositor requires
clearance at a higher level, reasons for any delay in opening of the account will be informed to
the customer and the final decision of the Bank will be conveyed at the earliest to the customer.
The bank is committed to providing basic banking services to disadvantaged sections of thesociety. Banking services will be offered to them through 'no frill' accounts and accounts will be
opened with relaxed customer acceptance norms as per regulatory guidelines.
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The account opening forms and other material would be provided to the prospective depositor bythe Bank. The same will contain details of information to be furnished and documents to be
produced for verification and/or for record, it is expected of the Bank official opening the
account, to explain the procedural formalities and provide necessary clarifications sought by the
prospective depositor when he approaches for opening a deposit account. The regulatory guidelines require banks to categorize customers based on risk perception and
prepare profiles of customers for the purpose of transaction monitoring. Inability or
unwillingness of a prospective customer to provide necessary information/details could result in
the bank not opening an account.
Inability of an existing customer to furnish details required by the bank to fulfil statutoryobligations could also result in closure of the account after due notice(s) is provided to the
customer. For deposit products like Savings Bank Account and Current Deposit Account, the Bank will
normally stipulate certain minimum balances to be maintained as part of terms and conditions
governing operation of such accounts. Failure to maintain minimum balance in the account will
attract levy of charges as specified by the Bank from time to time. For Saving Bank Account, the
Bank may also place restrictions on number of transactions, cash withdrawals, etc., for a given
period. Similarly, the Bank may specify charges for issue of cheque books, additional statement
of accounts, duplicate passbook, folio charges, etc. All such details, regarding terms and
conditions for operation of the accounts and schedule of charges for various services provided
will be communicated to the prospective depositor while opening the account.
Savings Bank Accounts can be opened by eligible person/ persons and certain organizations/agencies (as advised by Reserve Bank of India (RBI) from time to time).
Current Accounts can be opened by individuals/partnership firms/ Private and Public LimitedCompanies/HUFs/ Specified Associates/Societies/ Trusts, Departments of Authority created by
Government (Central or State), Limited Liability Partnership etc.
Term Deposits Accounts can be opened by individuals/partnership firms/ Private and PublicLimited Companies/HUFs/ Specified Associates/Societies/ Trusts, Departments of Authority
created by Government (Central or State), Limited Liability Partnership etc.
The due diligence process, while opening a deposit account will involve satisfying about theidentity of the person, verification of address, satisfying about his occupation and source of
income. Obtaining introduction of the prospective depositor from a person acceptable to the
Bank and obtaining recent photograph of the person/s opening/ operating the account are part of
due diligence process.
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In addition to the due diligence requirements under KYC norms, the Bank is required by law toobtain Permanent Account Number (PAN) or General Index Register (GIR) Number or
alternatively declaration in Form No. 60 or 61 as specified under the Income Tax Act/ Rules.
Deposit accounts can be opened by an individual in his own name (status: known as account insingle name) or by more than one individual in their own names (status: known as JointAccount). Savings Bank Account can also be opened by a minor jointly with natural guardian or
with mother as the guardian (Status: known as Minors Account). Minors above the age of 10
will also be allowed to open and operate saving bank account independently. However no
overdrafts will be granted to these minors.
Operation of Joint Account: The Joint Account opened by more than one individual can beoperated by single individual or by more than one individual jointly. The mandate for operating
the account can be modified with the consent of all joint account holders. The Savings BankAccount opened by minor jointly with natural guardian/guardian can be operated by natural
guardian only till the minor attains majority.
The term deposit account holders at the time of placing their deposits can give instructions withregard to closure of deposit account or renewal of deposit for further period on the date of
maturity. In the absence of such mandate, the Bank will seek instructions from the depositor/s as
to the disposal of the deposit by sending intimation before 15 days of the maturity date of term
deposit by post or courier at the last known address of the depositor.
Nomination facility is available on all deposit accounts opened by individuals. Nomination isalso available to a sole proprietary concern account. Nomination can be made in favour of one
individual only.
Nomination so made can be cancelled or changed by the account holder/s any time. Whilemaking nomination, the signature of the account holder/s in the nomination forms (DA1, DA2 &
DA3) need not be attested by witnesses. However, thumb impression of the accountholder/s is
required to be attested by two witnesses.
Nomination can be modified by the consent of account holder/s. Nomination can be made infavour of a minor also. Nomination facility is also available for joint deposit accounts and in
such cases nomination should be made by all depositors jointly.
NRI SERVICES
An Indian citizen or a foreign citizen of Indian origin who stays abroad for
employment/carrying on business or vocation or under circumstances indicating an intention for an
uncertain duration of stay abroad is a Non-Resident Indian (NRI). (Those who stay abroad on business
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visit, medical treatment, study or such other purposes which do not indicate an intention to stay there for
an indefinite period will not be considered as NRIs).
An NRI is a person resident outside India who is a citizen of India or is a person of Indian
origin. Under the Foreign Exchange Management Act (FEMA), generally, a person is resident outside
India if he is in India for less than 182 days during the course of the preceding financial year and alsoincludes any person who stays abroad:
For the purposes of carrying out employment or any business or vocation; Under circumstances indicating an intention to stay outside India for an uncertain duration; Any Indian citizen deputed outside India for a temporary period in connection with employment For education
Bank offers vide range of deposit schemes for Non Resident Indians which includes Non
Resident Rupee account (NR (E) RA), Foreign Currency Non-Resident Account (FCNR), Non-ResidentOrdinary Account (NRO), and Resident Foreign Currency (Domestic) Account (RFCD).
Opening and maintaining of Bank Accounts of Non- Resident Indian is guided by the Foreign
Exchange Management Act-1999 (FEMA) and interest on terms deposits are revised based on LIBOR
rates from time to time.
CHAPTER2
REVIEW OF LITERATURE
Mr. Joseph (2005) studied the performance of Lead Bank Scheme in Kerala, the mobilisation
of bank deposits in Kerala by commercial Banks. He observed that competition from co-operative and
other institutions was the main obstacles to achieving the deposit mobilisation target. The popularity of
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private financial institutions was due to their personal relations with local people. 56.4 percent of the
customers (self employed) surveyed had their first percent dealing with banks for taking loans.
Mr. Laurent (2006) studied the perception of customers on five competing banks in a
medium size city in UK for private deposits. He observed that these five banks differed from each otheras a result of oligopolistic market situation only on seven attributes i.e., friendliness, quality of
service, community spirit, modem facilities, convenience, range of services and ownership. These seven
attributes accounted for 91 percent of the overall differences between the five banks. The study revealed
that on the basis of perception of overall image of the five banks relative to each other, there existed the
different market segments.
K. Avadhani (2007) studied the performance of rural branches of some commercial banks inorder to identify the factors influencing deposit mobilisation in rural areas in different states. He came
out with the opinion that there existed sufficient relationship between the deposits of a rural branch and
its age. The growth of deposits is at a faster rate in the first six years and tapers off subsequently. The
growth rate in deposits of commercial banks cannot be explained in terms of price differentials as co-
operatives offer high rates of interest. Therefore product differentials would offer a better explanation
of the disparate growth rates in deposits.
Mr. Nag and Mr. Shivaswamy (2008) studied the comparative performance of foreign and
Indian banks and observed that there was a distinct preference of bank customers to bank with foreign
banks notwithstanding the fact that foreign banks stipulate relatively high levels of minimum amounts to
be maintained as deposits and charge relatively high interest rates and service costs. In respect of deposit
supplies, their strategy had been to procure from a segmented part of the total supplies of deposits of
large size from a relatively small number of depositors. Large accretion of non-resident deposits with
foreign banks was mainly because of the familiarity of the names of foreign banks operating in India to
banks abroad.
Raju (2009) studiedthe levels of savings and the manner of their distribution among different
physical and financial assets of household sector in Kerala and identified the factors influencing their
savings behaviour. He found that major portions of the savings of households in Kerala were in the form
of financial savings and that too in the form of bank deposits.
Subramanian (2010) analyzedthe empirical analysis on dis-intermediation from the household
sectors portfolio preferences point of view based on demand model of five assets including bank
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deposits The study revealed that the household sectors preferences between bank deposits and lending
to private corporate sector tended to be in favour of the latter and against the former.
Nalini (2011) studied on the impact of mutual funds on the deposit mobilisationof commercial banks
examined the awareness level and adoption level of mutual funds among household investors inThiruvananthapuram district. She found that the advent of mutual funds has brought in expected
changes in the growth of bank deposits and their ownership pattern, but the changes were not of a
significant magnitude.
CHAPTER3
RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the research problem. It may be understand as a
science of studying as research is done scientifically in this we study various steps that are generally
adopted by a researcher in studying the research problem along with logic behind them.
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RESEARCH DESIGN
A Research design is a system of conditions for collection and analysis of data which aims
to provide the precise information.Research is a systematic way of exploring,analysing and
conceptualizing social life in order to extend and verify knowledge to see this research helps to construct
a theory.This method is simply a systematically planned way of doing things to achieve the desired
result.
AResearch design of this study is analytical in nature.It is an arrangement of condition of collection and
analysis of data in a proper that aims to combine relevance to the research purpose with economy in
procedure.
DATA DESIGN
Collection of data is the process remuneration together with the proper record of research.Those data
which are already been passed through the statistical process. In this study is based on the secondary
sources.Secondary data is the data that have been already collected by and readily available from other
sources. Such data are cheaper and more quickly obtainable than the primary data and also may be
available when primary data cannot be obtained at all.
It is economical. It saves efforts and expenses It helps to make primary data collection more specific since with the help of secondary data, we
are able to make out what are the gaps and deficiencies and what additional information needs to
be collected
It helps to improve the understanding of the problem It provides a basis for comparison for the data that is collected by the researcher
The secondary data for the study is mainly collected through
Annual reports Circulars Internet
TOOLS USED FOR ANALYSIS
RETURN OF INVESTMENT:
A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a
number of different investments. To calculate ROI, the return on an investment is divided by the cost of
the investment; the result is expressed as a percentage or a ratio.
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Return on investment is a popular metric because it is versatile and simple to use. If an investment does
not have a positive ROI or if there are alternative investment opportunities with a higher ROI, the
investment should not be undertaken.
EBIT
Return of Investment = __________________
Capital Employed
PERCENTAGE ANALYSIS
Percentage analysis consists of reducing a series of related amounts to a series of percentages of a given
base. Two approaches are often used. The first, called horizontal analysis, indicates the proportionate
change in financial statement items over a period of time, such analysis is most helpful in evaluating
trends. Vertical analysis (common-size analysis) is proportional expression of each item on the financial
statements in a given period to a base amount. It analyzes the composition of each of the financial
statements from different years
(a) To detect trends not evident from the comparison of absolute amounts and
(b) To make intercompany comparisons of different sized enterprises.
100
PERCENTAGE = __________________ CURRENT YEAR
BASE YEAR
RATIO ANALYSIS:
Ratio analysis is the process of determining and presenting the relationship of items and group of items
in the statements. According to Batty J. Management Accounting Ratio can assist management in its
basic functions of forecasting, planning coordination, control and communication.
It is helpful to know about the liquidity, solvency, capital structure and profitability of an
organization. It is helpful tool to aid in applying judgement, otherwise complex situations.
According to Accountants Handbook by Wixon, Kell and Bedford, a ratio is an expression of the
quantitative relationship between two numbers. A tool used by individuals to conduct a quantitative
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analysis of information in a company's financial statements. Ratios are calculated from current year
numbers and are then compared to previous years, other companies, the industry, or even the economy
to judge the performance of the company. Ratio analysis is predominately used by proponents of
fundamental analysis.
CURRENT RATIO
This ratio explains the relationship between current assets and current liabilities of a business.
Current Assets
Current Ratio = __________________
Current Liabilities
Current Assets:-Current assets includes those assets which can be converted into cash with in a years
time.
Current Assets = Cash in Hand + Cash at Bank + B/R + Short Term Investment + Debtors (Debtors
Provision) + Stock(Stock of Finished Goods + Stock of Raw Material + Work in Progress) + Prepaid
Expenses.
Current Liabilities: - Current liabilities include those liabilities which are repayablein a years time.
Current Liabilities = Bank Overdraft + B/P + Creditors + Provision for Taxation + Proposed Dividend +
Unclaimed Dividends + Outstanding Expenses + Loans Payable within a Year.
Significance:
According to accounting principles, a current ratio of 2:1 is supposed to be an ideal ratio.
It means that current assets of a business should, at least, be twice of its current liabilities. The
higher ratio indicates the better liquidity position; the firm will be able to pay its current liabilities more
easily. If the ratio is less than 2:1, it indicates lack of liquidity and shortage of working capital.The
biggest drawback of the current ratio is that it is susceptible to window dressing. This ratio can be
improved by an equal decrease in both current assets and current liabilities.
RATIO OF CURRENT LIABILITIES TO PROPRIETORS FUND:
This ratio explains the relationship between current liabilities and shareholders fund of a business.
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Current Liabilities
Ratio of Current Liabilities to Proprietors fund = __________________
Shareholders fund
Significance:
This ratio should be 33% or more than that. In other words, the proportion of shareholders funds to total
funds should be 33% or more.A higher proprietary ratio is generally treated an indicator of sound
financial position from long-term point of view, because it means that the firm is less dependent on
external sources of finance.If the ratio is low it indicates that long-term loans are less secured and they
face the risk of losing their money.
INTEREST COVERAGE RATIO
This ratio is also termed as Debt Service Ratio. This ratio is calculated as follows:
EBIT
Interest Coverage Ratio = ______________________________________Fixed Interest Charges
Significance:
This ratio indicates how many times the interest charges are covered by the profits available to pay
interest charges.This ratio measures the margin of safety for long-term lenders.This higher the ratio,
more secure the lenders is in respect of payment of interest regularly.
If profit just equals interest, it is an unsafe position for the lender as well as for the company also, as
nothing will be left for shareholders.An interest coverage ratio of 6 or 7 times is considered appropriate.
DEBT EQUITY RATIO
This ratio expresses the relationship between outsiders fund and shareholders fund.
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Outsiders fund
Debt Equity Ratio = ________________________________________
Shareholders fund
Outsiders Funds: - These refer to long term liabilities which mature after one year. These include
Debentures, Mortgage Loan, Bank Loan, and Loan from Financial institutions and Public Deposits etc.
Shareholders Funds: - These include Equity Share Capital, Preference Share Capital, Share Premium,
General Reserve, Capital Reserve, Other Reserve and Credit Balance of Profit & Loss Account.
Significance:This Ratio is calculated to assess the ability of the firm to meet its long term liabilities. Generally, debt
equity ratio of is considered safe.If the debt equity ratio is more than that, it shows a rather risky
financial position from the long-term point of view, as it indicates that more and more funds invested in
the business are provided by long-term lenders. The lower this ratio, the better it is for long-term lenders
because they are more secure in that case. Lower than 2:1 debt equity ratio provides sufficient protection
to long-term lenders.
WORKING CAPITAL RATIO
This ratio shows the difference between the current assets and current liabilities.
Working Capital Ratio = Current Assets Current Liabilities
Significance:
This ratio is of particular importance in non-manufacturing concerns where current assets play a major
role in generating sales. It shows the number of times working capital has been rotated in producing
sales.A high working capital turnover ratio shows efficient use of working capital and quick turnover of
current assets like stock and debtors. A low working capital turnover ratio indicates under-utilisation of
working capital.
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CASH FLOW STATEMENT
The cash flow statement is a financial statement that shows how changes in balance sheet accounts and
income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and
financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and cash
out of the business.
The statement captures both the current operating results and the accompanying changes in the balance
sheet. As an analytical tool, the statement of cash flows is useful in determining the short-term viability
of a company, particularly its ability to pay bills.
The cash flow statement is distinct from the income statement and balance sheet because it
does not include the amount of future incoming and outgoing cash that has been recorded on credit.
Therefore, cash is not the same as net income, which, on the income statement and balance sheet,includes cash sales and sales made on credit. The money coming into the business is called cash inflow,
and money going out from the business is called cash outflow.
CHAPTER4
DATA ANALYSIS AND INTERPRETATIONS
4.1 RETURN OF INVESTMENT
A performance measure used to evaluate the efficiency of an investment or compare the efficiency of a
number of different investments. Return on investment is a popular metric because it is versatile and
simple to use. If an investment does not have a positive ROI or if there are alternative investment
opportunities with a higher ROI, the investment should not be undertaken.
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EBIT
Return of Investment = __________________
Capital Employed
TABLE 4.1.1
RETURN ON INVESTMENT
(RS.IN CRORES)
YEARS EBIT CAPITAL
EMLOYED
ROI
2007 0.18 1.66 0.11
2008 0.25 1.52 0.16
2009 0.27 1.57 0.17
2010 0.17 2.17 0.08
2011 0.21 3.52 0.06
Source:Secondary data
INTERPRETATION:
The above table shows that the performance of return on investment is based on deposits. The return
on investment has been increased up to 2009. In 2010, the earning before in tax started to decrease, so
the return on investment also started to decrease in the year. The highest rate of return on investment is
0.17 Crores in the year 2009.
CHART 4.1.1
RETURN ON INVESTMENT
4.2 PERCENTAGE ANALYSIS
Percentage analysis consists of reducing a series of related amounts to a series of percentages of a given
base. Two approaches are often used. The first, called horizontal analysis, indicates the proportionate
change in financial statement items over a period of time, such analysis is most helpful in evaluating
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trends. Vertical analysis (common-size analysis) is proportional expression of each item on the financial
statements in a given period to a base amount. It analyzes the composition of each of the financial
statements from different years
(a) To detect trends not evident from the comparison of absolute amounts and
(b) To make intercompany comparisons of different sized enterprises.
100
PERCENTAGE = __________________ CURRENT YEAR
BASE YEAR
TABLE 4.2.1
DEMAND DEPOSITS
YEARS AMOUNTS (Rs) PERCENTAGE
2007 10,806,889 100
2008 11,192,915 103.57
2009 11,570,171 107.06
2010 17,064,834 157.91
2011 18,560,921 171.75
Source:Secondary data
INTERPRETATION:
The percentage analysis about demand deposits will be presented in the above table. The year 2007 was
taken as the base year for find out the percentage of deposits increasedfor remaining years (i.e., 2008 to
2011). The percentage of deposits increased compare to previous years because of increasing customers
year by year.
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CHART 4.2.1
DEMAND DEPOSITS
TABLE 4.2.2
SAVINGS BANK DEPOSITS
YEARS AMOUNTS (Rs) PERCENTAGE
2007 21,998,110 100
2008 26,483,683 120.39
2009 28,994,262 131.80
2010 38,136,801 173.36
100103.57
107.06
157.91
171.75
0
20
40
60
80
100
120
140
160
180
200
2007 2008 2009 2010 2011
P
ercentage
Years
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2011 49,465,383 224.86
Source:Secondary data
INTERPRETATION:
The above table shows the performance of savings bank deposits for the last five years with the help of
percentage analysis. The year 2007 was taken as the base year for find out the percentage of deposits
increased for remaining years (i.e., 2008 to 2011). The percentage of deposits increased compare to
previous years because of increasing customers year by year.
CHART 4.2.2
SAVINGS BANK DEPOSITS
TABLE 4.2.3
TERM DEPOSITS
YEARS AMOUNTS (Rs) PERCENTAGE
2007 107,569,355 100
2008 132,485,325 123.16
2009 162,768,420 151.31
2010 182,104,853 169.29
100
120.39131.8
173.36
224.86
0
50
100
150
200
250
2007 2008 2009 2010 2011
Percentage
Years
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2011 205,338,159 190.89
Source:Secondary data
INTERPRETATION:The above table shows the performance of term deposits for the last five years with the help of
percentage analysis. The year 2007 was taken as the base year for find out the percentage of deposits
increased for remaining years (i.e., 2008 to 2011). The percentage of deposits increased compare to
previous years because of increasing customers year by year.
CHART 4.2.3
TERM DEPOSITS
4.3 RATIO ANALYSIS
Ratio analysis is the process of determining and presenting the relationship of items and group of items
in the statements. According to Batty J. Management Accounting Ratio can assist management in its
basic functions of forecasting, planning coordination, control and communication.
4.3.1 CURRENT RATIO
Current Assets
Current Ratio = __________________
100
123.16
151.31
169.29
190.89
0
50
100
150
200
250
2007 2008 2009 2010 2011
Percentage
Years
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Current Liabilities
TABLE
4.3.1 CURRENT RATIO
(RS.IN CRORES)
Years Current Assets Current Liabilities Current Ratio
2007 10.71 4.22 2.53
2008 12.83 4.71 2.72
2009 13.27 5.01 2.65
2010 16.24 6.99 2.32
2011 19.33 8.73 2.21
Source:Secondary data
INTERPRETATION:
The current ratio of the company this shows that the current ratio is more than the standard
level 2:1 so they should maintain this for future
CHART 4.3.1
CURRENT RATIO
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4.3.2 RATIO OF CURRENT LIABILITIES TO PROPRIETORS FUND:
This ratio explains the relationship between current liabilities and shareholders fundof a business.
Current Liabilities
Ratio of Current Liabilities to Proprietors fund = __________________
Shareholders fund
TABLE 4.3.2
RATIO OF CURRENT LIABILITIES TO PROPRIETORS FUND
2.53
2.722.65
2.32
2.21
0
0.5
1
1.5
2
2.5
3
2007 2008 2009 2010 2011
Rs.I
nC
rore
s
Years
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(RS.IN CRORES)
Years Shareholders fund Current Liabilities Ratio of Current
Liabilities to
Proprietors fund
2007 1.24 4.22 3.40
2008 1.38 4.71 3.41
2009 1.57 5.01 3.19
2010 1.83 6.99 3.82
2011 2.43 8.73 3.59
Source:Secondary data
INTERPRETATION:
The above table reveals that ratio of current liabilities to Proprietors fund does not have same level of
ratio. In 2008, the ratio has been increased when compare to the previous year. But in 2009, the ratio hasdecreased. Then again the ratio has started to increase in 2010 and decrease in 2011.
CHART 4.3.2
RATIO OF CURRENT LIABLITIES TO PROPRIETORS FUND
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4.3.3 INTEREST COVERAGE RATIO
This ratio is also termed as Debt Service Ratio. This ratio is calculated as follows:
EBIT
Interest Coverage Ratio = ______________________________________
Fixed Interest Charges
TABLE 4.3.3
INTEREST COVERAGE RATIO
(RS.IN CRORES)
Years EBIT Fixed Interest
Charges
Interest Coverage
Ratio
2007 0.18 0.83 0.22
2008 0.26 1.10 0.24
3.4 3.41
3.19
3.82
3.59
2.8
2.9
3
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
2007 2008 2009 2010 2011
Rs.
InC
rores
Years
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2009 0.28 1.44 0.19
2010 0.17 1.71 0.10
2011 0.21 1.76 0.12
Source:Secondary data
INTERPRETATION:
The above table reveals that ratio of current liabilities to Proprietors fund does not have same level of
ratio. In 2008, the ratio has been increased when compare to the previous year. But in 2009, the ratio has
decreased. Then again the ratio has started to increase in 2010 and decrease in 2011.
CHART 4.3.3
INTEREST COVERAGE RATIO
0.22
0.24
0.19
0.1
0.12
0
0.05
0.1
0.15
0.2
0.25
0.3
2007 2008 2009 2010 2011
Rs.
InC
rores
Years
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4.3.4 DEBT EQUITY RATIO
This ratio expresses the relationship between outsiders fund and shareholders fund.
Outsiders fund
Debt Equity Ratio = ________________________________________
Shareholders fund
Outsiders Funds: - These refer to long term liabilities which mature after one year. These include
Debentures, Mortgage Loan, Bank Loan, and Loan from Financial institutions and Public Deposits etc.
Shareholders Funds: -These include Equity Share Capital, Preference Share Capital, Share Premium,
General Reserve, Capital Reserve, Other Reserve and Credit Balance of Profit & Loss Account.
TABLE 4.3.4
DEBT EQUITY RATIO(RS.IN CRORES)
Years Outsiders fund Shareholders fund Debt Equity Ratio
2007 0.94 1.24 0.76
2008 0.94 1.38 0.68
2009 0.96 1.57 0.61
2010 1.47 1.83 0.80
2011 1.93 2.43 0.79
Source:Secondary data
INTERPRETATION:
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The above table reveals that interest coverage ratio during the year 2007 was 0.76 and it is gradually
decreasing to 0.68 and 0.61 in the next years. But in 2010, the ratio is increasing to 0.80. And again the
ratio is decreasing to 0.79.
CHART 4.3.4
DEBT EQUITY RATIO
4.3.5 WORKING CAPITAL RATIO
0.76
0.68
0.61
0.8 0.79
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
2007 2008 2009 2010 2011
Rs.
InC
rore
s
Years
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This ratio shows the difference between the current assets and current liabilities.
Working Capital Ratio = Current Assets Current Liabilities
TABLE 4.3.5
WORKING CAPITAL
(RS.IN CRORES)
Years Current Assets Current Liabilities Working Capital
2007 10.71 4.22 6.49
2008 12.83 4.71 8.12
2009 13.27 5.01 8.26
2010 16.24 6.99 9.25
2011 19.33 8.73 10.6
Source:Secondary data
INTERPRETATION:
The above table reveals that working capital has been increasing every year. It shows this
ratio have more value in the future.
CHART 4.3.5
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WORKING CAPITAL
6.49
8.12 8.26
9.25
10.6
0
2
4
6
8
10
12
2007 2008 2009 2010 2011
Rs.
InC
rores
Years
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4.4CASH FLOW STATEMENT
TABLE 4.4.1
CASH FLOW STATEMENT FOR THE YEAR ENDED 31stMARCH 2007
Particulars
Rs
March 31,
2007
Rs
A.CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax and extra ordinary items
Adjustments for :
Depreciation on Fixed Assets including
Least Adjustment charges
Provisions and Contingencies
Amortisation of premium on Held to Maturity Investments
Rights Issue Expenses
Operating profit before working capital changes Adjustment
for :
Advances & Other Assets Investments Deposits, Borrowings & Other Liabilities
Cash generated from operations
Direct taxes paid
Net cash flow from operating activities (A)
166,081
837,800
107,220
0
-16,552,492
4,509,462
9,484,091
2,730,376
1,111,101
3,841,477
-2,558,939
1,282,538
1,212,431
70,107
Source:Secondary data
INTERPRETATION:
The above table shows the performance of cash inflow and outflow of March 31st2007, the total amount
of deposits was 9,484,091. It evaluates the cash inflow and outflow is based on deposits.
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TABLE 4.4.2
CASH FLOW STATEMENT FOR THE YEAR ENDED 31stMARCH 2008
Particulars
Rs
March 31,
2008
Rs
A.CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax and extra ordinary items
Adjustments for :
Depreciation on Fixed Assets including
Least Adjustment charges
Provisions and Contingencies
Amortisation of premium on Held to Maturity Investments
Rights Issue Expenses
Operating profit before working capital changes Adjustment
for :
Advances & Other Assets Investments Deposits, Borrowings & Other Liabilities
Cash generated from operations
Direct taxes paid
Net cash flow from operating activities (A)
174,558
577,000
103,505
0
-12,493,493
-8,994,232
27,882,669
3,435,443
855,063
4,290,506
6,394,944
10,685,4501,662,277
9,023,173
Source:Secondary data
INTERPREATION:
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The above table shows the performanceof cash inflow and outflow of March 31st2008, the amount of
deposits has been increased when compare to March 31st2007.
TABLE 4.4.3
CASH FLOW STATEMENT FOR THE YEAR ENDED 31stMARCH 2009
Particulars
Rs
March 31,
2009
Rs
A.CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax and extra ordinary items
Adjustments for :
Depreciation on Fixed Assets including
Least Adjustment charges
Provisions and Contingencies
Amortisation of premium on Held to Maturity Investments
Rights Issue Expenses
Operating profit before working capital changes Adjustment
for :
Advances & Other Assets Investments Deposits, Borrowings & Other LiabilitiesCash generated from operations
Direct taxes paid
Net ca