financial analysis sbi

5/22/2018 Financial Analysis SBI

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Study of performance of(Financial Analysis)

Prepared by

Submitted to

Guided by


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ACKNOWLEGEMENT

No task is single mans effort .Any job in this world however trivial or

tough cannot be accomplished without the assistance of others. An

assignment puts the knowledge and experience of an individual to litmus

test. There is always a sense of gratitude that one likes to express towards

the persons who helped to change an effort in a success. The opportunity

to express my indebtness to people who have helped me to accomplish

this task.

I deem it a proud privilege to extend my greatest sense of gratitude to my

Project Guide _______________________________ for the keen

interest, inspiring guidance, continuous encouragement, valuable

suggestions and constructive criticism throughout the pursuance of this

report.

I am thankful to Coordinator sir _______________________ for giving

me the opportunity to undertake the study. I am highly indebted to

Professor for sparing time from their busy schedule for providing me

with their able guidance at the time of need and helping me to achieve the

ultimate goal of the study. I would also like to thank Branch Manager,

SBI for their valuable support in helping me to gain this opportunity of

being associated with an organization of such esteem.

Last but not the least, it would be unfair if I dont express my i ndebtness

to my parents and all my friends for their active cooperation which was of

great help during the course of my training project.


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PREFACEIn any organization, the two important financial statements are the

Balance Sheet and Profit & Loss Account of the business. Balance Sheet

is a statement of financial position of an enterprise at a particular point of

time. Profit & Loss account shows the net profit or net loss of a company

for a specified period of time. When these statements of the last few year

of any organization are studied and analyzed, significant conclusions may

be arrived regarding the changes in the financial position, the important

policies followed and trends in profit and loss etc. Analysis andinterpretation of financial statement has now become an important

technique of credit appraisal. The investors, financial experts,

management executives and the bankers all analyze these statements.

Though the basic technique of appraisal remains the same in all the cases

but the approach and the emphasis in the analysis vary. A banker

interprets the financial statement so as to evaluate the financial soundness

and stability, the liquidity position and the profitability or the earning

capacity of borrowing concern. Analysis of financial statements isnecessary because it helps in depicting the financial position on the basis

of past and current records. Analysis of financial statements helps in

making the future decisions and strategies. Therefore it is very necessary

for every organization whether it is a financial or manufacturing, to make

financial statement and to analyze it.


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INDEX

Chapter no. PARTICULARS Page no.Acknowledgement

Preface1. Introduction Of Banking

2. Companys Profile

3. Research Methodology

4. Financial Analysis

5. Findings ,Suggestions AndConclusion.

6. Bibliography


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Definition Of Bank:Banking Means "Accepting Deposits for the purpose of lending or Investment of

deposits of money from the public, repayable on demand or otherwise and withdraw

by cheque, draft or otherwise."-Banking Companies (Regulation)

Act,1949

ORIGIN OF THE WOR NK:-The origin of the word bank is shrouded in mystery. According to one view point the

Italian business house carrying on crude from of banking were called banchi

bancheri" According to another viewpoint banking is derived from German word

"Branck" which mean heap or mound. In England, the issue of paper money by the

government was referred to as a raising a bank.

ORIGIN OF BANKING :Its origin in the simplest form can be traced to the origin of authentic history. After

recognizing the benefit of money as a medium of exchange, the importance of

banking was developed as it provides the safer place to store the money. This safe

place ultimately evolved in to financial institutions that accepts deposits and make

loans i.e., modern commercial banks.

Banking system in IndiaWithout a sound and effective banking system in India it cannot have a healthyeconomy.The banking system of India should not only be hassle free but it should be

able to meet new challenges posed by the technology and any other external and

internal factors.

For the past three decades India's banking system has several outstanding

achievements to its credit. The most striking is its extensive reach. It is no longer

confined to only metropolitans or cosmopolitans in India. In fact, Indian banking

system has reached even to the remote corners of the country. This is one of the main

reasons of India's growth process.


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HISTORY OF BANKING IN INDIA

Banking in India has its origin as early or Vedic period. It is believed that thetransitions from many lending to banking must have occurred even before Manu, the

great Hindu furriest, who has devoted a section of his work to deposit and advances

and laid down rules relating to the rate of interest. During the mogul period, the

indigenous banker played a very important role in lending money and financing

foreign trade and commerce.

During the days of the East India Company it was the turn of agency house to carry

on the banking business. The General Bank of India was the first joint stock bank to

be established in the year 1786. The other which followed was the Bank of Hindustan

and Bengal Bank. The Bank of Hindustan is reported to have continued till 1906.

While other two failed in the meantime. In the first half of the 19th century the East

India Company established there banks, The bank of Bengal in 1809, the Bank of

Bombay in 1840 and the Bank of Bombay in1843. These three banks also known as

the Presidency banks were the independent units and functioned well. These three

banks were amalgamated in 1920 and new bank, the Imperial Bank of India was

established on 27th January, 1921.

With the passing of the State Bank of India Act in 1955 the undertaking of the

Imperial Bank of India was taken over by the newly constituted SBI. The ReserveBank of India (RBI) which is the Central bank was established in April, 1935 by

passing Reserve bank of India act 1935. The Central office of RBI is in Mumbai and

it controls all the other banks in the country.

In the wake of Swadeshi Movement, number of banks with the Indian management

were established in the country namely, Punjab National Bank Ltd., Bank of India

Ltd., Bank of Baroda Ltd., Canara Bank. Ltd. on 19thJuly 1969, 14 major banks of the

country were nationalized and on 15thApril 1980, 6 more commercial private sector

banks were taken over by the government.

The first bank in India, though conservative, was established in 1786. From 1786 till

today,the journey of Indian Banking System can be segregated into three distinct

phases. They areas mentioned below:

Early phase from 1786 to 1969 of Indian Banks

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

Reforms.


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New phase of Indian Banking System with the advent of Indian Financial &

Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and

Phase III.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan

and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank

of Bombay (1840) and Bank of Madras (1843) as independent units and called it

Presidency Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was

established which started as private shareholders banks, mostly Europeans

shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab

National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906

and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, IndianBank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic

failures between 1913 and 1948. There were approximately 1100 banks, mostly small.

To streamline the functioning and activities of commercial banks, the Government of

India came up with The Banking Companies Act, 1949 which was later changed to

Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).

Reserve Bank of India was vested with extensive powers for the supervision of

banking in India as the Central Banking Authority.

During those days public has lesser confidence in the banks. As an aftermath deposit

mobilization was slow. Abreast of it the savings bank facility provided by the Postal

department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform afterindependence. In1955, it nationalized Imperial Bank of India with extensive banking


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facilities on a large scale especially in rural and semi-urban areas. It formed State

Bank of India to act as the principal agent of RBI and to handle banking transactions

of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on19th July,1969, major process of nationalization was carried out. It was the effort of

the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in

the country was nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in

1980 with seven more banks. This step brought 80% of the banking segment in India

under Government ownership.

The following are the steps taken by the Government of India to Regulate

BankingInstitutions in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India.

1959: Nationalization of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalization of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

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

After the nationalization of banks, the branches of the public sector bank India rose to

approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and

immense confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector inits reforms measure. In 1991, under the chairmanship of M Narasimham, a committee

was set up by his name which worked for the liberalization of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being

put to give a satisfactory service to customers. Phone banking and net banking is

introduced. The entire system became more convenient and swift. Time is given more

importance than money.

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

any crisis triggered by any external macroeconomics shock as other East Asian

Countries suffered. This is all due to a flexible exchange rate regime, the foreign


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reserves are high, the capital account is not yet fully convertible, and banks and their

customers have limited foreign exchange exposure.

B NKS IN INDIIn India the banks are being segregated in different groups. Each group has their own

benefits and limitations in operating in India. Each has their own dedicated target

market. Few of them only work in rural sector while others in both rural as well as

urban. Many even are only catering in cities. Some are of Indian origin and some are

foreign players.

All these details and many more is discussed over here. The banks and its relation

with the customers, their mode of operation, the names of banks under different

groups and other such useful informations are talked about.

One more section has been taken note of is the upcoming foreign banks in India. TheRBI has shown certain interest to involve more of foreign banks than the existing one

recently. This step has paved a way for few more foreign banks to start business in

India.


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BANKING STRUCTURE IN INDIA

SCHEDULED BANKS IN INDIA

1) Scheduled Commercial BanksPublic Sector Banks Private Sector

Banks

Foreign Banks In

India

Regional Rural

Banks

26) 25) 29) 95) Nationalized

Bank

Other Public

Sector Banks

(IDBI)

SBI And Its

Associates

Old PrivateBanks

New Private

Banks

2) Scheduled Cooperative BanksScheduled Urban Cooperative Banks Scheduled State Cooperative Banks

Public Sector BanksPublic sector banks are those banks which are owned by the Government. The Govt.

runs these Banks. In India 14 banks were nationalized in 1969 & in 1980 another 6

banks were also nationalized. Therefore in 1980 the number of nationalized bank 20.

At present there are total 26 Public Sector Banks in India (As on 26-09-2009). Of

these 19 are nationalised banks, 6(STATE BANK OF INDORE ALSO MERGED

RECENTLY) belong to SBI & associates group and 1 bank (IDBI Bank) is classified

as other public sector bank. Welfare is their primary objective.


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Nationalised banks Allahabad Bank

Andhra Bank

Bank Of Baroda Bank Of India

Bank Of Maharastra

Canara Bank

Central Bank Of India

Corporation Bank

Dena Bank

Indian Bank

Indian Overseas Bank

Oriental Bank OfCommerce

Punjab & Sind Bank

Punjab National Bank

Syndicate Bank

UCO Bank

Union Bank Of India

United Bank Of India

Vijaya Bank

OtherPublicSectorBanksIDBI

(Industrial

Development

Bank Of

India)Ltd.

SBI its Associates State Bank of India

State Bank of Hyderabad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

State Bank of Bikaner And

Jaipur

(State Bank of Saurastra merged with SBI in

the year 2008 and State Bank of Indore In

2010)


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Private Sector BanksThese banks are owned and run by the private sector. Various banks in the country such as

SBI, HDFC Bank etc. An individual has control over there banks in preparation to the share

of the banks held by him.

Private banking in India was practiced since the beginning of banking system in India. The

first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It

is one of the fastest growing Bank Private Sector Banks in India. IDBI ranks the tenth largest

development bank in the world as Private Banks in India and has promoted world class

institutions in India.

The first Private Bank in India to receive an in principle approval from the Reserve Bank of

India was Housing Development Finance Corporation Limited, to set up a bank in the private

sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It wasincorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and

commenced operations as Scheduled Commercial Bank in January 1995. ING Vysya, yet

another Private Bank of India was incorporated in the year 1930

Private sector banks have been subdivided into following 2 categories:-

Old Private Sector Banks Bank of Rajasthan Ltd.

Catholic Syrian Bank Ltd.

City Union Bank Ltd.

Dhanalakshmi Bank Ltd.

Federal Bank Ltd.

ING Vysya Bank Ltd.

Jammu and Kashmir Bank Ltd.

Karnataka Bank Ltd.

Karur Vysya Bank Ltd.

Lakshmi Vilas Bank Ltd.

Nainital Bank Ltd.

Ratnakar Bank Ltd.

SBI Commercial and International

Bank Ltd.

South Indian Bank Ltd.

Tamilnad Mercantile Bank Ltd.

United Western Bank Ltd.

New Private Sector Banks Bank of Punjab Ltd. (since

merged with Centurian Bank)

Centurian Bank of Punjab (since

merged with HDFC Bank)

Development Credit Bank Ltd.

HDFC Bank Ltd.

ICICI Bank Ltd.

IndusInd Bank Ltd.

Kotak Mahindra Bank Ltd.

Axis Bank (earlier UTI Bank)

Yes Bank Ltd.


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Foreign Banks In IndiaABN AMRO Bank N.V.

Abu Dhabi Commercial Bank LtdAmerican Express Bank

Antwerp Diamond Bank

Arab Bangladesh Bank

Bank International Indonesia

Bank of America

Bank of Bahrain & Kuwait

Bank of Ceylon

Bank of Nova ScotiaBank of Tokyo Mitsubishi UFJ

Barclays Bank

BNP Paribas

Calyon Bank

ChinaTrust Commercial Bank

Citibank

DBS BankDeutsche Bank

HSBC (Hongkong & Shanghai Banking Corporation)

JPMorgan Chase Bank

Krung Thai Bank

Mashreq Bank

Mizuho Corporate Bank

Oman International Bank

Shinhan BankSocit Gnrale

Sonali Bank

Standard Chartered Bank

State Bank of Mauritius

Cooperative banks in India


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The Cooperative bank is an important constituent of the Indian Financial System,

judging by the role assigned to co operative, the expectations the co operative is

supposed to fulfil, their number, and the number of offices the cooperative bank

operate. Though the co operative movement originated in the West, but the

importance of such banks have assumed in India is rarely paralleled anywhere else inthe world. The cooperative banks in India plays an important role even today in rural

financing. The businessess of cooperative bank in the urban areas also has increased

phenomenally in recent years due to the sharp increase in the number of primary co-

operative banks.

Co operative Banks in India are registered under the Co-operative Societies Act. The

cooperative bank is also regulated by the RBI. They are governed by the Banking

Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Rural banks in IndiaRural banking in I ndiastarted since the establishment of banking sector in India.

Rural Banks in those days mainly focussed upon the agro sector. Regional rural banks

in India penetrated every corner of the country and extended a helping hand in the

growth process of the country.

SBI has 30 Regional Rural Banks in India known as RRBs. The rural banks of SBI is

spread in 13 states extending from Kashmir to Karnataka and Himachal Pradesh to

North East. The total number of SBIs Regional Rural Banks in India branches is 2349(16%). Till date in rural banking in India, there are 14,475 rural banks in the country

of which 2126 (91%) are located in remote rural areas.

Apart from SBI, there are other few banks which functions for the development of the

rural areas in India. Few of them are as follows.

Haryana State Cooperative Apex Bank Limited

The Haryana State Cooperative Apex Bank Ltd. commonly called as HARCOBANKplays a vital role in rural banking in the economy of Haryana State and has been

providing aids and financing farmers, rural artisans, agricultural labourers,

entrepreneurs, etc. in the state and giving service to its depositors.

NABARD

National Bank for Agriculture and Rural Development (NABARD) is a development

bank in the sector of Regional Rural Banks in India. It provides and regulates credit

and gives service for the promotion and development of rural sectors mainly

agriculture, small scale industries, cottage and village industries, handicrafts. It also


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finance rural crafts and other allied rural economic activities to promote integrated

rural development. It helps in securing rural prosperity and its connected matters.

Sindhanur Urban Souharda Co-operative Bank

Sindhanur Urban Souharda Co-operative Bank, popularly known as SUCO BANK is

the first of its kind in rural banks of India. The impressive story of its inception is

interesting and inspiring for all the youth of this country.

United Bank of India

United Bank of India (UBI) also plays an important role in regional rural banks. It has

expanded its branch network in a big way to actively participate in the developmental

of the rural and semi-urban areas in conformity with the objectives of nationalisation.

Syndicate Bank

Syndicate Bank was firmly rooted in rural India as rural banking and have a clear

vision of future India by understanding the grassroot realities. Its progress has been

abreast of the phase of progressive banking in India especially in rural banks.

Fact Files of Banks in IndiaThe first Bank in India to be given an ISO certification. Canara Bank

The first Bank in Northern India to get ISO 9002 certification

for their selected branches.

Punjab and Sind

Bank


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The first Indian Bank to have been started solely with Indian capital. Punjab National

Bank

The first among the Private Sector Banks in Kerala to become Scheduled

Bank in 1946 under the RBI act.

South Indian Bank

Indias oldest,largest and the most successful commercial bank offering the

widest possible rang of domestic,international and NRI products and

services,through its vast network in India and overseas.

State Bank of India

Indias second largest Private Sector Bank and is now the largest scheduled

commercial bank in India.

The Federal Bank

Limited

Bank which started as Private Shareholders Banks,mostly European

shareholders.

Imperial Bank of

India

The first Indian Bank to open a branch outside India in London in 1946 and

the first to open a branch in continental Europe at Paris in 1974

Bank of India,

founded in 1906 in

Mumbai.

The oldest Public Sector Bank in India having branches all over India and

serving the customers for the last 132 years.

Allahabad Bank

The first Indian Commercial Bank which was wholly owned and managed by

Indians.

Central Bank of

India

INDIAN BANKING INDUSTRYThe Indian banking market is growing at an astonishing rate, with Assets expected to

reach US$1 trillion by 2013. An expanding economy, middleclass, and technological

innovations are all contributing to this growth.


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The countrys middle class accounts for over 320 million People. In correlation with

the growth of the economy, rising income levels, increased standard of living, and

affordability of banking products are promising factors for continued expansion.

Total deposits are estimated to grow to US$ 1,452.7 billion in FY14.

Indian Banking Industry AnalysisIndian banks total asset size is recorded at US$ 1.5 trillion in FY12 and is expected to

reach US$ 28.5 trillion by 2025. Increase in working population and growing

disposable incomes will increase the demand for banking and related services.

Housing and personal finance are expected to remain key demand drivers.

Indian banks currently devote around 15 per cent of total spending on technology.

Public sector banks account for over 73 per cent of interest income in the sector.

Deposits have grown at a compound annual growth rate (CAGR) of 21.2 per centduring FY06-13; in FY13 total deposits stood at US$ 1,274.3 billion.

Mobile, Internet banking and extension of facilities at ATM stations are expected to

improve operational efficiency. Total number of ATMs in India have increased to

104,500 in 2012 and is further expected to double over the next two years, thereby

taking the number of ATMs per million population from 85, at present, to about 170

GrowthTotal credit off-take is estimated to grow to US$ 1,140 billion in FY14.

Assets


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Total banking sector assets have increased at a compound annual growth rate (CAGR)

of 8.2 per cent to USD1.5 trillion during FY1

Growth

Deposits have grown at a CAGR of 21.2 per cent during FY06

13.

The Indian banking Industry is in the middle of an IT revolution, Focusing on the

expansion of retail and rural banking. Players are becoming increasingly customer -

centric in their approach, which has resulted in innovative methods of offering new

banking products and services. Banks are now realizing the importance of being a big

player and are beginning to focus their attention on mergers and acquisitions to take

advantage of economies of scale and/or comply with Basel II regulation.Indian

banking industry assets are expected to reach US$1 trillion by 2013 and are poised toreceive a greater infusion of foreign capital, says Prathima Rajan, analyst in Celent's

banking group and author of the report. The banking industry should focus on having

a small number of large players that can compete globally rather than having a large

number of fragmented players.


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State Bank of India (SBI) is a multinational banking and financial services company

based in India. It is a government-owned corporation with its headquarters in

Mumbai, Maharashtra. As of December 2013, it had assets of US$388 billion and

17,000 branches, including 190 foreign offices, making it the largest banking and

financial services company in India by assets.State Bank of India is one of the Big Four banks of India, along with ICICI Bank,

Punjab National Bank and Bank of Baroda.

The bank traces its ancestry to British India, through the Imperial Bank of India, to

the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in

the Indian Subcontinent. Bank of Madras merged into the other two presidency

banksBank of Calcutta and Bank of Bombayto form the Imperial Bank of India,

which in turn became the State Bank of India. Government of India owned the

Imperial Bank of India in 1955, with Reserve Bank of India taking a 60% stake, and

renamed it the State Bank of India. In 2008, the government took over the stake held

by the Reserve Bank of India.

SBI is a regional banking behemoth and has 20% market share in deposits and loans

among Indian commercial banks.

EVOLUTION OF SBI

The origin of the State Bank of India goes back to the first decade of the nineteenth

century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.Three years later the bank received its charter and was re-designed as the Bank of

Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of

British India sponsored by the Government of Bengal. The Bank of Bombay (15 April

1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These

three banks remained at the apex of modern banking in India till their amalgamation

as the Imperial Bank of India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence

either as a result of the compulsions of imperial finance or by the felt needs of localEuropean commerce and were not imposed from outside in an arbitrary manner to

modernise India's economy. Their evolution was, however, shaped by ideas culled

from similar developments in Europe and England, and was influenced by changes

occurring in the structure of both the local trading environment and those in the

relations of the Indian economy to the economy of Europe and the global economic

framework.


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Bank of Bengal H.O.

Establishment

The establishment of the Bank of Bengal marked the advent of limited liability, joint-

stock banking in India. So was the associated innovation in banking, viz. the decision

to allow the Bank of Bengal to issue notes, which would be accepted for payment of

public revenues within a restricted geographical area. This right of note issue was

very valuable not only for the Bank of Bengal but also its two siblings, the Banks of

Bombay and Madras. It meant an accretion to the capital of the banks, a capital on

which the proprietors did not have to pay any interest. The concept of deposit banking

was also an innovation because the practice of accepting money for safekeeping (and

in some cases, even investment on behalf of the clients) by the indigenous bankers

had not spread as a general habit in most parts of India. But, for a long time, and

especially upto the time that the three presidency banks had a right of note issue, banknotes and government balances made up the bulk of the investible resources of the

banks.

The three banks were governed by royal charters, which were revised from time to

time. Each charter provided for a share capital, four-fifth of which were privately

subscribed and the rest owned by the provincial government. The members of the

board of directors, which managed the affairs of each bank, were mostly proprietary

directors representing the large European managing agency houses in India. The restwere government nominees, invariably civil servants, one of whom was elected as the

president of the board.


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Group Photogaph of Central Board (1921)

Business

The business of the banks was initially confined to discounting of bills of exchange orother negotiable private securities, keeping cash accounts and receiving deposits and

issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period

of accommodation confined to three months only. The security for such loans was

public securities, commonly called Company's Paper, bullion, treasure, plate, jewels,

or goods 'not of a perishable nature' and no interest could be charged beyond a rate of

twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton

piece goods, mule twist and silk goods were also granted but such finance by way of

cash credits gained momentum only from the third decade of the nineteenth century.

All commodities, including tea, sugar and jute, which began to be financed later, wereeither pledged or hypothecated to the bank. Demand promissory notes were signed by

the borrower in favour of the guarantor, which was in turn endorsed to the bank.

Lending against shares of the banks or on the mortgage of houses, land or other real

property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the

business of discounts on private as well as salary bills was almost the exclusive

monopoly of individuals Europeans and their partnership firms. But the main function

of the three banks, as far as the government was concerned, was to help the latter raise

loans from time to time and also provide a degree of stability to the prices of

government securities.


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Old Bank of Bengal

Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal, Bombay and

Madras occurred after 1860. With the passing of the Paper Currency Act of 1861, the

right of note issue of the presidency banks was abolished and the Government of India

assumed from 1 March 1862 the sole power of issuing paper currency within British

India. The task of management and circulation of the new currency notes was

conferred on the presidency banks and the Government undertook to transfer the

Treasury balances to the banks at places where the banks would open branches. None

of the three banks had till then any branches (except the sole attempt and that too a

short-lived one by the Bank of Bengal at Mirzapore in 1839) although the charters hadgiven them such authority. But as soon as the three presidency bands were assured of

the free use of government Treasury balances at places where they would open

branches, they embarked on branch expansion at a rapid pace. By 1876, the branches,

agencies and sub agencies of the three presidency banks covered most of the major

parts and many of the inland trade centres in India. While the Bank of Bengal had

eighteen branches including its head office, seasonal branches and sub agencies, the

Banks of Bombay and Madras had fifteen each.

Bank of Madras Note Dated 1861 for Rs.10

Presidency Banks Act

The presidency Banks Act, which came into operation on 1 May 1876, brought the

three presidency banks under a common statute with similar restrictions on business.

The proprietary connection of the Government was, however, terminated, though the

banks continued to hold charge of the public debt offices in the three presidencytowns, and the custody of a part of the government balances. The Act also stipulated


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the creation of Reserve Treasuries at Calcutta, Bombay and Madras into which sums

above the specified minimum balances promised to the presidency banks at only their

head offices were to be lodged. The Government could lend to the presidency banks

from such Reserve Treasuries but the latter could look upon them more as a favour

than as a right.

Bank of Madras

The decision of the Government to keep the surplus balances in Reserve Treasuries

outside the normal control of the presidency banks and the connected decision not to

guarantee minimum government balances at new places where branches were to be

opened effectively checked the growth of new branches after 1876. The pace of

expansion witnessed in the previous decade fell sharply although, in the case of the

Bank of Madras, it continued on a modest scale as the profits of that bank were

mainly derived from trade dispersed among a number of port towns and inland centres

of the presidency.

India witnessed rapid commercialisation in the last quarter of the nineteenth century

as its railway network expanded to cover all the major regions of the country. New

irrigation networks in Madras, Punjab and Sind accelerated the process of conversion

of subsistence crops into cash crops, a portion of which found its way into the foreign

markets. Tea and coffee plantations transformed large areas of the eastern Terais, the

hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All

these resulted in the expansion of India's international trade more than six-fold. Thethree presidency banks were both beneficiaries and promoters of this

commercialisation process as they became involved in the financing of practically

every trading, manufacturing and mining activity in the sub-continent. While the

Banks of Bengal and Bombay were engaged in the financing of large modern

manufacturing industries, the Bank of Madras went into the financing of large modern

manufacturing industries, the Bank of Madras went into the financing of small-scale

industries in a way which had no parallel elsewhere. But the three banks were

rigorously excluded from any business involving foreign exchange. Not only was

such business considered risky for these banks, which held government deposits, it

was also feared that these banks enjoying government patronage would offer unfair


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competition to the exchange banks which had by then arrived in India. This exclusion

continued till the creation of the Reserve Bank of India in 1935.

Bank of Bombay

Presidency Banks of Bengal

The presidency Banks of Bengal, Bombay and Madras with their 70 branches were

merged in 1921 to form the Imperial Bank of India. The triad had been transformed

into a monolith and a giant among Indian commercial banks had emerged. The new

bank took on the triple role of a commercial bank, a banker's bank and a banker to the

government.

But this creation was preceded by years of deliberations on the need for a 'State Bank

of India'. What eventually emerged was a 'half-way house' combining the functions of

a commercial bank and a quasi-central bank.

The establishment of the Reserve Bank of India as the central bank of the country in

1935 ended the quasi-central banking role of the Imperial Bank. The latter ceased to

be bankers to the Government of India and instead became agent of the Reserve Bank

for the transaction of government business at centres at which the central bank was

not established. But it continued to maintain currency chests and small coin depots

and operate the remittance facilities scheme for other banks and the public on terms

stipulated by the Reserve Bank. It also acted as a bankers' bank by holding their

surplus cash and granting them advances against authorised securities. The

management of the bank clearing houses also continued with it at many places where

the Reserve Bank did not have offices. The bank was also the biggest tenderer at the

Treasury bill auctions conducted by the Reserve Bank on behalf of the Government.

The establishment of the Reserve Bank simultaneously saw important amendments

being made to the constitution of the Imperial Bank converting it into a purely

commercial bank. The earlier restrictions on its business were removed and the bank


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was permitted to undertake foreign exchange business and executor and trustee

business for the first time.

Imperial Bank

The Imperial Bank during the three and a half decades of its existence recorded an

impressive growth in terms of offices, reserves, deposits, investments and advances,

the increases in some cases amounting to more than six-fold. The financial status and

security inherited from its forerunners no doubt provided a firm and durable platform.

But the lofty traditions of banking which the Imperial Bank consistently maintained

and the high standard of integrity it observed in its operations inspired confidence in

its depositors that no other bank in India could perhaps then equal. All these enabled

the Imperial Bank to acquire a pre-eminent position in the Indian banking industryand also secure a vital place in the country's economic life.

Stamp of Imperial Bank of India

When India attained freedom, the Imperial Bank had a capital base (including

reserves) of Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94crores respectively and a network of 172 branches and more than 200 sub offices

extending all over the country.

First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural India

was given the highest priority. The commercial banks of the country including the

Imperial Bank of India had till then confined their operations to the urban sector andwere not equipped to respond to the emergent needs of economic regeneration of the


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rural areas. In order, therefore, to serve the economy in general and the rural sector in

particular, the All India Rural Credit Survey Committee recommended the creation of

a state-partnered and state-sponsored bank by taking over the Imperial Bank of India,

and integrating with it, the former state-owned or state-associate banks. An act was

accordingly passed in Parliament in May 1955 and the State Bank of India wasconstituted on 1 July 1955. More than a quarter of the resources of the Indian banking

system thus passed under the direct control of the State. Later, the State Bank of India

(Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take

over eight former State-associated banks as its subsidiaries (later named Associates).

The State Bank of India was thus born with a new sense of social purpose aided by

the 480 offices comprising branches, sub offices and three Local Head Offices

inherited from the Imperial Bank. The concept of banking as mere repositories of the

community's savings and lenders to creditworthy parties was soon to give way to the

concept of purposeful banking subserving the growing and diversified financial needs

of planned economic development. The State Bank of India was destined to act as the

pacesetter in this respect and lead the Indian banking system into the exciting field of

national development.

MISSION, VISION & VALUES

Mission, Vision & Values

VISION

My SBI.

My Customer first.

My SBI: First in customer satisfaction

MISSION

We will be prompt, polite and proactive with our customers.

We will speak the language of young India.

We will create products and services that help our customers achieve their

goals.

We will go beyond the call of duty to make our customers feel valued.

We will be of service even in the remotest part of our country.

We will offer excellence in services to those abroad as much as we do to those

in India.

We will imbibe state of the art technology to drive excellence.


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VALUES

We will always be honest, transparent and ethical.

We will respect our customers and fellow associates. We will be knowledge driven.

We will learn and we will share our learning.

We will never take the easy way out.

We will do everything we can to contribute to the community we work in.

We will nurture pride in India

BOARD OF DIRECTORS

List of Directors on the Central Board ofState Bank of India

(As on 28thDecember, 2013)

Sr.

No.Name Designation

1

Smt. Arundhati Bhattacharya

Chairman2 Shri Hemant G. Contractor Managing Director

3 Shri A. Krishna Kumar Managing Director4 Shri S.Vishvanathan Managing Director5 Shri P. Pradeep Kumar Managing Director6 Shri S. Venkatachalam Director7 Shri D. Sundaram Director8 Shri Parthasarathy Iyengar Director9 Shri Thomas Mathew Director10 Shri Jyoti Bhushan Mohapatra Workmen Employee

Director11 Shri S.K. Mukherjee Officer Employee

Director12 Dr. Rajiv Kumar Director13 Shri Deepak I. Amin Director14 Shri Harichandra Bahadur Singh Director15 Shri Tribhuwan Nath Chaturvedi Director16 Shri Rajiv Takru Director17 Dr. Urjit R. Patel Director

Operations

SBI provides a range of banking products through its network of branches in India


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and overseas, including products aimed at non-resident Indians (NRIs). SBI has 14regional hubs and 57 Zonal Offices that are located at important cities throughoutIndia.Domestic presenceSBI had 14,816 branches in India, as on 31 March 2013, of which 9,851 (66%)

were in Rural and Semi-urban areas. In the financial year 2012-13, its revenue wasINR 200,560 Crores (US$ 36.9 billion), out of which domestic operationscontributed to 95.35% of revenue. Similarly, domestic operations contributed to88.37% of total profits for the same financial year.

International presence

The Israeli branch of the State Bank of India located in Ramat Gan.As of 28 June 2013, the bank had 180 overseas offices spread over 34 countries. Ithas branches of the parent in Moscow, Colombo, Dhaka, Frankfurt, Hong Kong,Tehran, Johannesburg, London, Los Angeles, Male in the Maldives, Muscat,Dubai, New York, Osaka, Sydney, and Tokyo. It has offshore banking units in theBahamas, Bahrain, and Singapore, and representative offices in Bhutan and CapeTown. It also has an ADB in Boston, USA.The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It hasseven branches, four in the Toronto area and three in the Vancouver area.SBI operates several foreign subsidiaries or affiliates. In 1990, it established anoffshore bank: State Bank of India (Mauritius). SBI (Mauritius) has 15 branches inmajor cities/towns of the country including Rodrigues.

State Bank of India (S.B.I.) Branch at Tsim Sha Tsui, Hong KongIn 1982, the bank established a subsidiary, State Bank of India (California), whichnow has ten branchesnine branches in the state of California and one inWashington, D.C. The 10th branch was opened in Fremont, California on 28March 2011. The other eight branches in California are located in Los Angeles,Artesia, San Jose, Canoga Park, Fresno, San Diego, Tustin and Bakersfield.In Nigeria, SBI operates as INMB Bank. This bank began in 1981 as the Indo-

Nigerian Merchant Bank and received permission in 2002 to commence retail

banking. It now has five branches in Nigeria.In Nepal, SBI owns 55% of Nepal SBI Bank, which has branches throughout the


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country. In Moscow, SBI owns 60% of Commercial Bank of India, with CanaraBank owning the rest. In Indonesia, it owns 76% of PT Bank Indo Monex.The State Bank of India already has a branch in Shanghai and plans to open one inTianjin.In Kenya, State Bank of India owns 76% of Giro Commercial Bank, which it

acquired for US$8 million in October 2005.

Associate banks

SBI main branch at Mumbai lit up

Main Branch of SBI in Mumbai.SBI has five associate banks; all use the State Bank of India logo, which is a bluecircle, and all use the "State Bank of" name, followed by the regionalheadquarters' name:

State Bank of Bikaner & JaipurState Bank of HyderabadState Bank of MysoreState Bank of Patiala

State Bank of Travancore

Earlier SBI had seven associate banks, all of which had belonged to princely statesuntil the government nationalised them between October 1959 and May 1960. Intune with the first Five Year Plan, which prioritised the development of ruralIndia, the government integrated these banks into State Bank of India system toexpand its rural outreach. There has been a proposal to merge all the associate

banks into SBI to create a "mega bank" and streamline the group's operations.The first step towards unification occurred on 13 August 2008 when State Bank ofSaurashtra merged with SBI, reducing the number of associate state banks from

seven to six. Then on 19 June 2009 the SBI board approved the absorption of StateBank of Indore. SBI holds 98.3% in State Bank of Indore. (Individuals who heldthe shares prior to its takeover by the government hold the balance of 1.77%.)The acquisition of State Bank of Indore added 470 branches to SBI's existingnetwork of branches. Also, following the acquisition, SBI's total assets will inchvery close to the INR10 trillion mark (10 billion long scale). The total assets ofSBI and the State Bank of Indore stood at INR9,981,190 million as of March2009. The process of merging of State Bank of Indore was completed by April2010, and the SBI Indore branches started functioning as SBI branches on 26August 2010.SBI Mumbai LHO.


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State Bank of India Mumbai LHO.

Non-banking subsidiaries

Apart from its five associate banks, SBI also has the following non-bankingsubsidiaries:SBI Capital Markets Ltd

SBI Funds Management Pvt LtdSBI Factors & Commercial Services Pvt LtdSBI Cards & Payments Services Pvt. Ltd. (SBICPSL)SBI DFHI LtdSBI Life Insurance Company LimitedSBI General InsuranceIn March 2001, SBI (with 74% of the total capital), joined with BNP Paribas (with26% of the remaining capital), to form a joint venture life insurance companynamed SBI Life Insurance company Ltd. In 2004, SBI DFHI (Discount andFinance House of India) was founded with its headquarters in Mumbai.Other SBI service points

SBI has 27,000+ ATMs and SBI group (including associate banks) has 32,752ATMs. SBI has become the first bank to install an ATM at Drass in the Jammu &Kashmir Kargil region. This was the Bank's 27,032nd ATM on 27 July 2012.

Logo and slogan

The logo of the State Bank of India is a blue circle with a small cut in the bottomthat depicts perfection and the small man the common man - being the center ofthe bank's business. The logo came from National Institute of Design(NID),Ahmedabad and it was inspired by Kankaria Lake, Ahmedabad.

Slogans: "PURE BANKING, NOTHING ELSE", "WITH YOU - ALL THEWAY", "A BANK OF THE COMMON MAN", "THE BANKER TO EVERYINDIAN", "THE NATION BANKS ON US"

Listings and shareholding

As on 30 June 2013, Government of India held around 62% equity shares in SBI.Over 800,000 individual shareholders hold approx. 5.7% of its shares. LifeInsurance Corporation of India is the largest non-promoter shareholder in thecompany with 10.9% shareholding.

Shareholders ShareholdingPromoters: Government of India 62.31%


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Insurance Companies 11.90%Foreign Institutional Investors 09.79%Individual shareholders 05.70%GDRs 02.71%Others 07.59%

Total 100.0%The equity shares of SBI are listed on the Bombay Stock Exchange, where it is aconstituent of the BSE SENSEX index, and the National Stock Exchange of India,where it is a constituent of the S&P CNX Nifty.Its Global Depository Receipts (GDRs) are listed on the London Stock Exchange.

Employees

SBI is one of the largest employers in the country having 228,296 employees as on31st March 2013, out of which there were 46,833 female employees(21%) and2,402 disabled employees(1%). On the same date, SBI had 43,550 Schedule

Caste(19%) and 16,764 Schedule Tribe employees(7%). The percentage ofOfficers, Assistants and Sub-staff was 35%, 48% and 17% respectively on thesame date.Hiring drive: The bank hired 20,682 Assistants in FY 2012-13, from over 30 lakhapplicants, for expansion of the branch network and to mitigate staff shortage,

particularly at rural and semi-urban branches. In the same year, it recruited 847probationary officers from around 17 lakh candidates which applied for officersposition.Staff productivity: As per its Annual Report for FY 2012-13, each employeecontributed to revenues of INR 944 Lacs and net profit of INR 6.45 Lacs.Recent awards and recognitions

SBI was ranked 298th in the Fortune Global 500 rankings ofthe world's biggest corporations for the year 2012.

SBI won "Best Public Sector Bank" award in the D&B India's study on 'India'sTop Banks 2013'.State Bank of India won three IDRBT Banking Technology Excellence Awards2013 for Electronic Payment Systems, Best use of technology for FinancialInclusion, and Customer Management & Business Intelligence in the large

bank category.

SBI won National Award for its performance in the implementation of PrimeMinisters Employment Generation Programme (PMEGP) scheme for the year2012.Best Online Banking Award, Best Customer Initiative Award & Best RiskManagement Award (Runner Up) by IBA Banking Technology Awards 2010SKOCH Award 2010 for Virtual corporation Category for its e-payment solutionSBI was the only bank featured in the "top 10 brands of India" list in an annualsurvey conducted by Brand Finance and The Economic Times in 2010.The Bank of the year 2009, India (won the second year in a row) by The BankerMagazineBest BankLarge and Most Socially Responsible Bank by the Business BankAwards 2009Best Bank 2009 by Business India


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The Most Trusted Brand 2009 by The Economic Times.SBI was named the 29th most reputed company in the world according to Forbes2009 rankingsMost Preferred Bank & Most preferred Home loan provider by CNBCVisionaries of Financial Inclusion By FINO

Technology Bank of the Year by IBA Banking Technology AwardsSBI was 11th most trusted brand in India as per the Brand Trust Report 2010.

Major competitors

Some of the major competitors for SBI in the banking sector are Axis Bank, ICICIBank, HDFC Bank, Punjab National Bank, Bank of Baroda, Canara Bank andBank of India. However in terms of average market share, SBI is by far the largest

player in the market.

Products offered by SBI.

PERSONAL BANKING

State Bank of India offers a wide range of services in the Personal Banking Segment

which are indexed here.Click on each of them to access the details. Our products are designed with flexibility

to suit your personal requirements. Enjoy 24 hour facility through our ATMs -

growing speedily it has crossed the 21000 mark Watch this space for more details.

SBI Term Deposits

SBI Loan For Pensioners

SBI Recurring Deposits

Loan Against Mortgage Of Property

SBI Housing Loan

Loan Against Shares & Debentures

SBI Car Loan


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Rent Plus Scheme

SBI Educational Loan

Medi-Plus Scheme

SBI Personal Loan

e-Invest (ASBA)IPO

AGRICULTURE / RURAL

State Bank of India Caters to the needs of agriculturists and landless agricultural

labourers through a network of more than 9992 rural and semi-urban branches. Apart

from the branches, there are 428 Agricultural Development Branches (ADBs) which

also cater to agriculturists. We are the leaders in agri finance in the country with a

portfolio of Rs. 1,25,000 crores in agri advances for more than 1 crore farmer

families.

Our branches have covered a whole gamut of agricultural activities like crop

production , horticulture , plantation crops, farm mechanization, land developmentand reclamation, digging of wells, tube wells and irrigation projects, forestry,

construction of cold storages and godowns, processing of agri-products, finance to

agri-input dealers, allied activities like dairy , fisheries, poultry, sheep-goat, piggery

and rearing of silk worms.

To give special focus to agriculture lending Bank has also appointed agri specialists in

various disciplines to handle projects/ guide farmers in their agri ventures. Advances

are given to borrowers for very small activities covering poorest of the poor to hitech

activities involving large fund outlays.

We have set up eighteen Agri Commercial Branches (ACBs) which will handle high

value agri financing involving large investments. It envisages lending through

corporate partnerships and other large enterprises for commodity financing,

investment credit, other high value agriculture segments like horticulture, floriculture

& food processing etc. It also focuses on Agri related SME including setting up of

Rice and Dhal mills, seed processing industry, food processing industry, large and

small scale dairy units, etc.


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Traditionally, rural business is associated with agriculture and allied activities. Of late

however, the trickle down effect of economic growth, renewed focus on infrastructure

development, and employment generation in rural areas have led to huge investment

by the Government in rural India, with a view to bridge the urban and rural divide.

Considering that agriculture would continue to be significant driver of Indian

economy, with the possibilities of rapid growth in emerging areas like contract

farming, agro-processing and agro-export zones, etc., a separate Agri Business Unit

(ABU) with a distinct organizational structure has been set up in the Bank and under

noted objectives has been created in 2004:-

o Providing focused attention on the banking requirements of the agriculture

segment,

o Achieving 18% target under agricultural advances as required under priority sector

norms,

o Focus on micro finance and SHG opportunities (now part of non-farm sector in

Rural Business),

o Focus on Key Corporate and Institutional relationships in agriculture, emerging

opportunities, and special initiatives, as may be necessary,

o Focus on product development and management,

o Reduce NPA levels in Agriculture,

o Make agriculture a commercial proposition.

ABU has six departments headed by Deputy General Managers. :-

Agri Business, Planning, Monitoring and Market Intelligence.

NPA-AGRI

Corporate and Institutional Relationship.

Product Development and Management.

Lead Bank & RSETI.

Regional Rural Banks.


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We also have an effective Marketing and recovery team in each region with

responsibilities for marketing and building relationships with dealers of agri-products,

organizing promotional events and for loan sanction, processing, monitoring and

recovery.

With a collective effort of Govt. and the people, we are set forth to continue growth in

the rural and agri development and become the Banker to Every Indian.

SERVICES

Listed are Services, SBI offers to its customers.

DOMESTIC TREASURY

BROKING SERVICES

REVISED SERVICE CHARGES

ATM SERVICES

INTERNET BANKING

STATE BANK MOBICASH

E-PAY

E-RAIL

RBIEFT

SAFE DEPOSIT LOCKER

MICR CODES

FOREIGN INWARD REMITTANCES

SMECurrent Accounts, Deposits and Transaction Banking

SBI Asset Backed Loan

Fleet Finance Scheme

eDFSCollateral Free Loans


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Internet Banking

Mobile Banking

State Bank MobiCash

ATM ServicesDemat Services

Govt. BusinessGovt.Accounts

Public Provident Fund

SBI e-Tax

Corporate BankingCorporate Accounts

Mid Corporate Group

Project Finance

Products & Services

NRI ServicesAccounts & Deposits

RemittancesLoans

Investments


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Researchmethodology

The procedure adopted for conducting the research requires a lot of attention as it hasdirect bearing on accuracy, reliability and adequacy of results obtained. It is due tothis reason that research methodology, which we used at the time of conducting theresearch, needs to be elaborated upon. It may be understood as a science of studyinghow research is done scientifically. So, the research methodology not only talks aboutthe research methods but also considers the logic behind the method used in thecontext of the research study. Research Methodology is a way to systematically studyand solve the research problems. If a researcher wants to claim his study as a goodstudy, he must clearly state the methodology adapted in conducting the research theresearch so that it way be judged by the reader whether the methodology of work

done is sound or not.

The Research Methodology here includes:-

Objective of study

Meaning of Research.

Research Problem.

Research Design.

Data Collection method.

Analysis and interpretation of Data

Limitation of study

OBJECTIVE OF THE STUDY


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Objectives are the ends that states specifically how goal be achieved. Every studymust have an objective for which all the efforts have been done. Without objective noresearch can be conducted and no result can be obtained. On the basis of objective allthe research process is followed. Objectives are the main aspect of every study. The

objective of the studygives direction to go through the research problem. It guides the researcher and keepshim on track. I have two objectives regarding my research project. These are shown

below :-1. Primary objective2. Secondary objective

1. Primary objective :-1) To study the software used in SBI.2) To analyse the financial statements of the corporation to assess itstrue financial position by the use of ratios.

2. Secondary objective :-1) To find out the shortcomings in SBI.2) To see whether SBI is going well or not in different areas.

IMPORTANCE OF THE STUDY By FINANCIAL PERFORMANCE ANALYSIS OF SBI we would be able

to get a fair picture of the financial position of SBI.

By showing the financial performance to various lenders and creditors it ispossible to get credit in easy terms if good financial condition is maintained inthe company with assets outweighing the liabilities.

Protecting the property of the business.

Compliances with legal requirement.

Meaning of Research:


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Research is defined as a scientific and systematic search for pertinent information ona specific topic. Research is an art of scientific investigation. Research is asystematized effort to gain now knowledge. It is a careful investigation or inquiryespecially through search for new facts in any branch of knowledge. Research is anacademic activity and this term should be used in a technical sense. Research

comprises defining and redefining problems, formulating hypothesis or suggestedsolutions. Making deductions and reaching conclusions to determine whether they ifthe formulating hypothesis. Research is thus, an original contribution to the existingstock of knowledge making for its advancement. The search for knowledge throughobjective and systematic method of finding solutions to a problem is research.

Research ProblemThe first step while conducting research is careful definition of Research Problem.To ERR IS THE HUMAN is a proverb which indicates that no one is perfect in this

world. Every researcher has to face many problemswhich conducting any researchthats why problem statement is defined to know which type of problems a researcher

has to face while conducting anystudy. It is said that,

Problem well defined is problem half solved.

Basically, a problem statement refers to some difficulty, which researcherexperiences in the context of either a theoretical or practical situation andwants to obtain the solution for the same.

The problem statement here is:-

TO MAKE A FINANCIAL ANALYSIS OF FINANCIALSTATEMENTS OF SBI

Research Design


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A research designs is the arrangement of conditions for collection and analysis data ina manner that aims to combine relevance to the research purpose with economy in

procedure. Research Design is the conceptual structure with in which research inconducted. It constitutes the blueprint for the collection measurement and analysis ofdata. Research Design includes and outline of what the researcher will do form

writing the hypothesis and it operational implication to the final analysis of data. Aresearch design is a framework for the study and is used as guide in collection andanalyzing the data. It is a strategy specifying which approach will be used forgathering and analyzing the data. It also include the time and cost budget since moststudies are done under these two cost budget since most studies are done under thesestow constraints. The design is such studies must be rigid and not flexible and mostfocus attention on the following:-

What is the study about? Why is the study being made? Where will the study be carried out?

What type of data is required? Where can be required data be found? What period of time will the study include? What will be sample design? What techniques of data collection will be used? How will the data be analyzed? In what style will the report be prepared?

TYPES OF RESEARCH DESIGN : EXPERIMENTAL RESEARCH DESIGN EXPLORATORY RESEARCH DESIGN DESCRIPTIVE& DIAGNOSTIC RESEARCH

Exploratory Research Design: This research design is preferred when researcher hasa vague idea about the problem the researcher has to explore the subject.

Experimental Research DesignThe research design is used to provide a strongbasis for the existence of casual relationship between two or more variables.

Descriptive Research DesignIt seeks to determine the answers to who, what,where, when and how questions. It is based on some previous understanding of thematter.

Diagnostic Research Design It determines the frequency with which somethingoccurs or its association with something else.

RESEARCH DESIGN USED IN THE STUDY:

Descriptive research design is used in this study because it will ensure theminimization of bias and maximization of reliability of data collected. Descriptive


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study is based on some previous understanding of the topic. Research has got a veryspecific objective and clear cut data requirements The researcher had to use fact andinformation already available through financial statements of earlier years and analysethese to make critical evaluation of the available material. Hence by making the typeof the research conducted to be both Descriptive and Analytical in nature. From the

study, the type of data to be collected and the procedure to be used for this purposewere decided.

Data Collection MethodThe process of data collection begins after a research problem has beendefined and research design ahs been chalked out. There are two types ofdata

PRIMARY DATA -It is first hand data, which is collected by researcher itself. Primary data is collected

by various approaches so as to get a precise, accurate, realistic and relevant data. Themain tool in gathering primary data was investigation and observation. It wasachieved by a direct approach and observation from the officials of the company.

SECONDARY DATA - it is the data which is already collected by someone else.Researcher has to analyze the data and interprets the results. It has always beenimportant for the completion of any report. It provides reliable, suitable, adequate andspecificknowledge.

TYPE OF DATA USED IN THE STUDY

The required data for the study are basically secondaryin nature and the data arecollected from

The audited reports of the company. INTERNETwhich includes required financial data collected form SBIs

official website i.ewww.sbi.co.inand some other websites on the internet forthe purpose of getting all the required financial data of the bank and to getdetailed knowledge about SBI for the convenience of study.

Brouchers of SBI. The valuable cooperation extended by staff members and the branch manager

of SBI,dharmshala contributed a lot to fulfill the requirements in the collectionof data in order to complete the project.

Methods of data analysisThe data collected were edited, classified and tabulated for analysis. The analyticaltools used in this study are:
http://www.sbi.co.in/http://www.sbi.co.in/http://www.sbi.co.in/http://www.sbi.co.in/


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ANALYTICAL TOOLS APPLIED:

The study employs the following analytical tools:1. Comparative statement.

2. Trend Percentage.3. Ratio Analysis.4. Cash Flow Statement.

Limitations of studyDifficulty in data collection.Limited knowledge about the bank in the initial stages.Branch manager was reluctant for giving financial data of the

bank.The analysis and interpretation are based on secondary datacontained in the published annual reports of SBI for the study

period.Due to the limited time available at the disposable , the studyhas been confined for a period of 5 years (2005-2009).Ratio itself will not completely show the companys good or

bad financial position.Inter firm comparison was not possible due to the nonavailability of competitors data.The study of financial performance can be only a means to

know about the financial condition of the company andcannot show a through picture of the activities of thecompany

.


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INTRODUCTION OF THE TOPIC

Meaning Of Financial StatementsFinancial statements refer to such statements which contains financial informationabout an enterprise. They report profitability and the financial position of the businessat the end of accounting period. The team financial statement includes at least twostatements which the accountant prepares at the end of an accounting period. The twostatements are: -

The Balance Sheet

Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheetmirrors the financial position on a particular date in terms of the structure of assets,liabilities and owners equity, and so on and the Profit And Loss account shows theresults of operations during a certain period of time in terms of the revenues obtainedand the cost incurred during the year. Thus the financial statement provides asummarized view of financial positions and operations of a firm.

Meaning Of Financial AnalysisThe term financial analysis is also known as analysis and interpretation of

financial statements refers to the process of determining financial strength andweakness of the firm by establishing strategic relationship between the items of theBalance Sheet, Profit and Loss account and other operative data.The first task of financial analysis is to select the information relevant to the decisionunder consideration to the total information contained in the financial statement. Thesecond step is to arrange the information in a way to highlight significant relationship.The final step is interpretation and drawing of inference and conclusions. Financialstatement is the process of selection, relation and evaluation.

Features of Financial Analysiso To present a complex data contained in the financial statement in simple and

understandable form.

o To classify the items contained in the financial statement in convenient andrational groups.

o To make comparison between various groups to draw various conclusions.Purpose of Analysis of financial statements To know the earning capacity or profitability.


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To know the solvency.

To know the financial strengths.

To know the capability of payment of interest & dividends.

To make comparative study with other firms.

To know the trend of business.

To know the efficiency of mgt.

To provide useful information to mgt.

Procedure of Financial Statement AnalysisThe following procedure is adopted for the analysis and interpretation offinancial statements:-

The analyst should acquaint himself with principles and postulated ofaccounting. He should know the plans and policies of the management so thathe may be able to find out whether these plans are properly executed or not.

The extent of analysis should be determined so that the sphere of work may bedecided. If the aim is find out. Earning capacity of the enterprise then analysisof income statement will be undertaken. On the other hand, if financial

position is to be studied then balance sheet analysis will be necessary.

The financial data be given in statement should be recognized and rearranged.It will involve the grouping similar data under same heads. Breaking down ofindividual components of statement according to nature. The data is reduced toa standard form.

A relationship is established among financial statements with the help of tools& techniques of analysis such as ratios, trends, common size, fund flow etc.

The information is interpreted in a simple and understandable way. Thesignificance and utility of financial data is explained for help in decisionmaking.

The conclusions drawn from interpretation are presented to the management inthe form of reports.

Types Of Financial AnalysisThere are different ways of analysis the financial statements:

1. On The Basis Of Process Of Analysis


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a) Horizontal Analysis:This is used when the financial statement of a numberof years are to be analysed. Such analysis indicates the trends and the increaseor decrease in various items not only in absolute figures but also in percentageform. This analysis indicates the strengths and weaknesses of the firm. This

analysis is also called as dynamic analysis because it also shows the trend ofthe business.

b) Vertical Analysis : This is used when financial statements of a particular yearor on a particular date are analyzed. For this type of analysis we generally usecommon size statements and the ratio analysis. It involves a study ofquantitative relationship among various items of balance sheet and profit andloss account. This type of analysis is static analysis because this is based onthe financial results of one year. Vertical analysis is useful when we have tocompare the performance of different departments of the same company.

Among these two types of analysis, horizontal analysis is more useful because itbrings out more clearly the trends of working of a firm. This gives us moreconcrete bases for future planning.

2. On The Basis Of Information Available

a) Internal Analysis: This analysis is based on the information available to thebusiness firm only .Hence internal analysis is made by the management.Internal analysis is more reliable and helpful for financial decisions.

b)External Analysis : This analysis is made on the basis of publishedstatements,reports and informations. This analysis is made by external partiessuch as creditors,investors,banks,financial analysis etc. external analysis is lessreliable in comparison to internal analysis because of limited and oftenincomplete information.

3. On The Basis Of Number Of Firms

a) Inter-Firm Analysis : When financial analysis of two or more companies orfirms are analyzed and compared over a number of accounting period, it iscalled inter-firm analysis.

b) Intra -Firm Analysis : intra-firm analysis is concerned with the analysis offinancial performance of different units or departments or segments of the sameenterprise or company. Similarly when financial statements of two or more years ofthe same firm are analyzed and compared it is also called as intra-firm analysis.

4. On The Basis Of Objectives

a) Accounting Analysis:Accounting analysis is analysis of past financialperformance and involves examining how generally accepted accounting principles

and conventions have been applied in arriving at the values of assets, liabilities,revenues and expenses.


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b) Prospective Analysis : Prospective analysis involves developing forecastedfinancial statements keeping in view the changes that are likely to shape and affect the

business given the assumptions about these changes and the limitation of theforecasting technique used. This is quite complicated analysis.

Methods/Tools Of Financial AnalysisA number of methods can be used for the purpose of analysis of financial statements.These are also termed as techniques or tools of financial analysis. Out of these, andenterprise can choose those techniques which are suitable to its requirements. The

principal techniques of financial analysis are:-

a. Comparative financial statementsb. Common-size statements

c. Trend analysisd. Ratio analysise. Funds flow analysisf. Cash flow analysisg. Break even point analysis

a. Comparative Financial Statements:When financial statements figures for two or mote years are placed side-side tofacilitate comparison, these are called comparative Financial Statements. Such

statements not only show the absolute figures of various years but also provide for

columns to indicate to increase ort decrease in these figures from one year to another.In addition, these statements may also show the change from one year to another on

percentage form. Such cooperative statements are of great value in forming theopinion regarding the progress of the enterprise.

Objectives purpose or significance of comparative financial statements

1.To simplify data2.To make inter period/inter-firm comparison3.To indicate the trends4.To enable forecasting5.To indicate the strengths and weaknesses of the firm6.To compare the performance7.To analyse expenses8.To analyse profits

Tools for comparison of financial statements

Comparative financial statement is a tool of financial analysis that depicts change ineach item of the financial statement in both absolute amount and percentage term,taking the item in preceding accounting period as base.


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Comparison and analysis of financial statements may be carried out using thefollowing tools:

1.Comparative Balance Sheet :The comparative balance sheet shows increase anddecrease in absolute terms as well as percentages ,in various assets ,liabilities and

capital. A comparative analysis of balance sheets of two periods provides informationregarding progress of the business firm.The main purpose of comparative balance sheet is to measure the short- term andlong-term solvency position of the business.

2. Comparative Income Statement: Comparative income statement is prepared bytaking figures of two or more than two accounting periods,to enable the analyst tohave definite knowledge about the progress of the business.Compartative incomestatements facilitate the horizontal analysis since each accounting variable is analysedhorizontally.

b.Common- Size Statements:Common size statements are such statements in which the items of financialstatements are covered into percentage of common base. In common-size incomestatement, by assuming net sales as 100(i.e %)and other individual items areconverted as percentage of this. Similarly, in commonsize balance sheet ,total assetsare assumed to be 100 (i.e %) and individual assets are expressed as percentage.

Objectives of common size statements

1. Presenting the change in various items in relation to total assets or totalliabilities or net sales.

2. Establishing a relationship.3. Providing a common base for comparison.

Types of common size statements

1. Common-Size Balance Sheet : A commonsize balance sheet is a statementin which total of assets or liabilities is assumed to be equal to 100 and all thefigures are expressed as percentage of the total. That is why it is known as

percentage balance sheet.Common-size balance sheet facilitate the vertical analysis since each item ofthe Balance Sheet is analyzed vertically.

2. Common-Size Income Statement: Common-size income statement is astatement in which the figures of net sales is assumed to be equal to 100 and

all other figures of profit and loss A/c are expressed as percentage of netsales.this statement facilitate the vertical analysiss since each accounting


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variable is analyzed vertically. One can draw conclusion, regarding thebehaviour of expenses over period of time by examining these percentages.

c.Trend Analysis:Trend percentage are very useful is making comparative study of the financialstatements for a number of years. These indicate the direction of movement over along tine and help an analyst of financial statements to form an opinion as to whetherfavorable or unfavorable tendencies have developed. This helps in future forecasts ofvarious items. For calculating trend percentages any year may be taken as the base

year. Each item of bease year is assumed to be equal to 100 and on that basis the

percentage of item of each year calculated.

d.Ratio Analysis:Meaning :Absolute figures expressed in financial statements by themselves are meaningfulness.These figures often do not convey much meaning unless expressed in relation to otherfigures. Thus, it can be say that the relationship between two figures, expressed inarithmetical terms is called a ratio.

According to R.N. Anthony.

A ratio is simply one number expressed in terms ofanother. It is found by dividing one number into the other.

TYPES OF RATIOS1. Proportion or Pure Ratio or Simple ratio.2. Rate or so many Times.3. Percentage4. Fraction.

OBJECTS AND ADVANTAGES OR USES OF RATIO

ANALYSIS

1. Helpful in analysis of financial statements.2. Simplification of accounting data.


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3. Helpful in comparative study.4. Helpful in locating the weak spots of the business.5. Helpful in forecasting6. Estimate about the trend of the business7. Fixation of ideal standards

8. Effective control9. Study of financial soundness.

LIMITATION OF RATIO ANALYSIS

1. False accounting data gives false ratios2. Comparisons not possible of different firms adopt different3. Accounting policies.4. Ratio analysis becomes less effective due to price level5. change6. Ratios may be misleading in the absence of absolute data.7. Limited use of a single Ratio.

8. Window-Dressing9. Lack of proper standards.10.Ratio alone are not adequate for proper conclusions11.Effect of personal ability and bias of the analyst.

CLASSIFICATION OF RATIOSIn view of the financial management or according to the tests satisfied,various ratios have been classifieds as below:

Liquidity Ratios : These are the ratios which measure the short-term solvency orfinancial position of a firm. These ratios are calculated to comment upon the short-term paying capacity of a concern or the firms ability to meet its current obligations. LongTerm Solvency and Leverage Ratios: Long-term solvency ratios convey afirms ability to meet the interest cost and repayment schedules of its long-termobligation e.g. Debit Equity Ratio and Interest Coverage Ration. Leverage Ratios.

Activity Ratios: Activity ratios are calculated to measure the efficiency with whichthe resource of a firm have been employed. These ratios are also called turnover ratios

because they indicate the speed with which assets are being turned over into sales e.g.

debtors turnover ratio.

Profitablity Ratios: These ratios measure the results of business operations or overallperformance and effective of the firm e.g. gross profit ratio, operating ratio or capitalemployed. Generally, two types of profitability ratios are calculated.

(a) In relation to Sales, and

(b)In relation in Investment

FUNCTIONAL CLASSIFICATION IN VIEW OF


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FINANCIAL MANAGEMENT OR CLASSIFICATIONACCORDING TO TESTSLiquidity

Ratios

Long-term

Solvency and

Leverage

Ratios

Activity Ratios Profitability

Ratios

-Current Ratio-Liquid Ratio(Acid) Test orQuick Ratio.-Absolute liquid or-Cash Ratio.-DebtorsTurnover Ratio-Creditors TurnoverRatio-Inventory Turnoverratio

Financial OperatingComposite-Debt. EquityRatio-Debt to TotalCapital Ratio-InterestCoverage Ratio-Capital GearingRatio

Inventory TurnoverRatio.Debtors TurnoverRatioFixed AssetsTurnover RatioTotal Asset TurnoverRatioWorking CapitalTurnover Ratio.Payables TurnoverRatioCapital EmployedTurnover Ratio

In Relation to Sales.Gross Profit Ratio.Operating Ratio.Operating ProfitRatio.Net Profit Ratio.Expenses RatioIn relation to

investmentsReturn onInvestments.Return on capital.Return on EquityCapital.Return on totalResourcesEarning per share.Price Earning Ratio.

CASH-FLOW STATEMENTA cashflow statement is a statement showing inflows (receipts) andoutflows (payments) of cash during a particular period. In other words, it is asummary of sources and applications of each during a particular span oftime.

Objectives of Cash Flow Statement :1. Useful for Short-Term Financial Planning.2. Useful in Preparing the Cash Budget.3. Comparison with the Cash Budget.4. Study of the Trend of Cash Receipts and Payments.5. It explains the Deviations of Cash from Earnings.6. Helpful in Ascertaining Cash Flow from various Separately.7. Helpful in Making Dividend Decisions.


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State Bank of India

Consolidated Balance Sheet

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 684.03 671.04 635.00 634.88 634.88

Equity Share Capital 684.03 671.04 635.00 634.88 634.88

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Init. Contribution Settler 0.00 0.00 0.00 0.00 0.00

Preference Share ApplicationMoney

0.00 0.00 0.00 0.00 0.00

Employee Stock Opiton 0.00 0.00 0.00 0.00 0.00

Reserves 124,348.99 105,558.97 82,836.25 82,500.70 71,755.51

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00Net Worth 125,033.02 106,230.01 83,471.25 83,135.58 72,390.39

Deposits 1,627,402.61 1,414,689.40 1,255,562.48 1,116,464.56 1,011,988.33

Borrowings 203,723.20 157,991.36 142,470.77 122,074.57 64,591.64

Total Debt 1,831,125.81 1,572,680.76 1,398,033.25 1,238,539.13 1,076,579.97

Minority Interest 4,253.86 3,725.67 2,977.17 2,631.27 2,228.27

Policy Holders Funds 0.00 0.00 0.00 0.00 0.00

Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00

Other Liabilities & Provisions 172,745.65 147,319.73 163,416.58 125,837.97 153,627.10

Total Liabilities 2,133,158.34 1,829,956.17 1,647,898.25 1,450,143.95 1,304,825.73

Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

Assets

Cash & Balances with RBI 89,574.03 79,199.21 119,349.83 82,195.58 74,161.07

Balance with Banks, Money atCall

55,653.69 48,391.62 35,977.62 39,653.42 51,100.63

Advances 1,392,608.03 1,163,670.21 1,006,401.55 869,501.64 750,362.38

Investments 519,393.19 460,949.14 419,066.45 402,754.13 372,231.45

Gross Block 8,693.50 7,026.67 6,141.13 15,886.95 14,063.96

Accumulated Depreciation 0.00 0.00 0.

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