UNIVERSITY OF MUMBAI PROJECT REPORT ON “BANK” First Year M. Com. (Advance accounting) 2013-2014 Submitted By RAJESH KUMAR SITARAM Roll No.52 PROJECT GUIDE PROF. SURESH PUJARI People’s Education Society’s DR. AMBEDKAR COLLEGE OF COMMERCE AND ECONOMICS 1
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UNIVERSITY OF MUMBAI
PROJECT REPORT
ON
“BANK”
First Year M. Com. (Advance accounting)
2013-2014
Submitted By
RAJESH KUMAR SITARAM
Roll No.52
PROJECT GUIDE
PROF. SURESH PUJARI
People’s Education Society’s
DR. AMBEDKAR COLLEGE OF COMMERCE AND ECONOMICS
Wadala, Mumbai – 400 031.
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People’s Education Society’s
DR. AMBEDKAR COLLEGE OF COMMERCE AND ECONOMICS
WADALA , MUMBAI- 4000 31.
NAAC ACCREDITED
CERTIFICATE
This is to certify that, Mr RAJESH KUMAR SITARAM of ADVANCE ACCOUNTING, (2013-2014) has successfully completed the project on “ADVANCE FINANCIAL ACCOUNTING” under the guidance of Prof. SURESH PUJARI It is fit to be submitted for evaluation.
(Signature of Co-ordinator) (Signature of Principal)
(Signature of Project Guide) (Signature of External Examiner)
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DECLARATION
I Mr. RAJESH KUMAR SITARAM the student of Dr. Ambedkar College of Commerce & Economics, studying in First Year M.Com ADANVCE ACCOUNTING hereby declare that I have completed the project report on “BANK” in the academic year 2013- 14.
The information submitted is true and original to the best of my knowledge.
___________________
Date: _________ Signature of student
(RAJESH KUMAR SITARAM) (Roll No.52)
Place: _________
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ACKNOWLEDGEMENT
I express my sincere gratitude to the Principal Dr. SIDDHARTH R. KAMBLE &
ADANVCE ACCOUNTING co-ordinator Prof. SANJAY KHAIRE for their continuous
support & guidance.
I also sincerely thank Prof. SURESH PUJARI for guiding to me through project work.
I also thanks to my parents, relatives and colleagues for their encouragement and
support.
Last but not least, I would like to thank all these people, who helped me in completion
Of the project directly or indirectly.
Place : MUMBAI RAJESH KUMAR SITARAM
DATE : (SIGNATURE)
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INDEXSr. No.
Topic Page No.
1 Introduction to Banks 6
2 Role of Banks 11
3 Functions of bank 14
4 Statues Governing Banks 18
5 NPA’s in Banks 24
6An Analysis of ‘Banks’ Financial
Statement29
7 HDFC BANKHOME LOAN 38
8 Conclusion 42
9 Bibliography 43
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INDIAN BANKING SECTOR REVIEW
Introduction
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. The government's regular policy for Indian bank since
1969 has paid rich dividends with the nationalization of 14 major private banks of India.
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. Those
are:-
Early phase from 1786 to 1969 of Indian Banks
Nationalizations of Indian Banks and up to 1991 prior to
Indian banking sector Reforms
New phase of Indian Banking System with the advent of
Indian Financial & Banking Sector Reforms after 1991
The steps taken by the Government of India to Regulate Banking
Institutions in the Country:
1949: Enactment of Banking Regulation Act.
1955: Nationalization of State Bank of India.
1959: Nationalization of HDFC BANKsubsidiaries.
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 200crore.
Other Liabilities & Provisions 105,248.39 80,915.09
Total Liabilities 1,223,752.20 1,335,519.22
Assets
Cash & Balances with RBI 94,395.50 54,525.94
Balance with Banks, Money at Call 28,478.65 43,087.23
Advances 756,719.45 867,578.89
Investments 295,600.57 312,197.61
Gross Block 13,189.28 14,792.33
Accumulated Depreciation 8,757.33 9,658.46
Net Block 4,431.95 5,133.87
Capital Work In Progress 332.23 332.68
Other Assets 43,777.85 53,113.02
Total Assets 1,223,752.20 1,335,519.24
Contingent Liabilities 585,294.50 698,064.74
Bills for collection 205,092.29 201,500.44
Book Value (Rs) 1,023.40 1,251.05
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PROFIT AND LOSS OF CENTARL BANK
Profit & Loss account -- in Rs. Cr. --
Mar '11 Mar '12
Income
Interest Earned 81,394.52 106,521.45
Other Income 14,935.09 14,351.45
Total Income 96,329.45 120,872.90
Expenditure
Interest expended 48,867.96 63,230.37
Employee Cost 14,480.17 16,974.04
Selling and Admin Expenses 12,141.19 15,625.18
Depreciation 990.50 1,052.17
Miscellaneous Expenses 12,479.30 12,350.13
Preoperative Exp Capitalised 0.00 0.00
Operating Expenses 31,430.88 37,563.09
Provisions & Contingencies 8,660.28 8,393.43
Total Expenses 88,959.12 109,186.89
Net Profit for the Year 7,370.35 11,686.01
Extraordinary Items 0.00 21.28
Profit brought forward 0.34 6.05
Total 7,370.69 11,713.34
Preference Dividend 0.00 0.00
Equity Dividend 1,905.00 2,348.66
Corporate Dividend Tax 246.52 296.49
Per share data (annualised)
Earning Per Share (Rs) 116.52 174.15
Equity Dividend (%) 300.00 350.00
Book Value (Rs) 1,023.40 1,251.05
Appropriations
Transfer to Statutory Reserves 2,488.96 3,531.35
Transfer to Other Reserves 2,729.87 5,552.50
Proposed Dividend/Transfer to Govt 2,151.52 2,645.15
Balance c/f to Balance Sheet 0.34 0.34
Total 7,370.69 11,713.34
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FINANCIAL RATIOS OF CENTARL BANK
RATIOS 2011 2012
Total Debt/Equity Ratio 0.10 0.05
Total Asset Turnover Ratio 0.08 0.09
Asset Turnover Ratio 7.24 8.06
Return On Equity (%) 12.62 15.72
Return On Asset (%) 0.73 0.91
Return On Capital Employed (%) 5.61 6.39
Current Ratio 0.32 0.30
Quick Ratio 8.50 12.05
Earning Per Share 116.52 174.15
Dividend Pay Out Ratio 26.03 22.59
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Analysis
1. Total debt/ equity ratio
Total debt/ equity ratio = debt \ equity
Total debt equity ratio tests the long term stability of a company. A low debt- equity ratio also indicates stability and flexibility in arranging finance for future.
The total debt-equity ratio of HDFC BANKhas decreased from 0.10 in 2011 to 0.05 in 2012. This indicates that the bank is stable and flexible in arranging finance for future.
2. Total Assets Turnover Ratio
Total Asset Turnover Ratio=sales/Avg. Total asset
This ratio shows how much sales the firm is generating for every dollar of investment in
asset .The higher the ratio ,the better the firms is performing.
The total asset turnover ratio of HDFC BANKis increased from
0.08 in 2011 to 0.09 in 2012.
3. Asset Turnover ratio
Asset Turnover Ratio=Sales/Total assets
It is a measure of how well a firm is putting its asset to work. If the asset turnover ratio is low, it may indicate that the firm has too many unproductive asset.
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The asset turnover ratio of HDFC BANKhas increased from 7.24 in 2011 to 8.06 in 2012. It indicates that HDFC BANKhas reduced its no. of unproductive asset and the bank is using its assets effectively.
4. Return On Equity (%)
Return On Equity = Net Income/Average Shareholders Equity *100
The return on equity ratio means how much the shareholders earned for their investment in the company. The higher the rato the percentage ,the better return is for the investors to invest
The return On Equity Ratio has increased from 12.62 in 2011 to 15.72
in 2012 . it has shown a great increase in return on equity. This would help the bank to
attract more investors.
5.Return On Assets (%)
Return On Assets= Net Income/Avg Total Asset
The return On Asset Percentage shoes how profitable a company s asset are in generating revenue . The number tells you what the company tells you what the company can do with what it has
The return on asset % has increased from 0.73 in 2011 to 0.91 in 2012 .This indicates that HDFC BANKis utilizing its assets efficiently.
6.Return On Capital Employed
Return On capital Employed %=NPAT/Capital Employed *100
ROCE compares earnings with capital invested in the company. ROCE is used to prove the value that the bussines gains from its asset and liabilities. The higher the ratio the better is the return on capital employed.
ROCE of HDFC BANKhas increased from 5.61 in 2011 to 6.39 in2012. This indicates that the HDFC BANKhas
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7.Current Ratio
Current Ratio=Current Assets/Current Liability
Current ratio tests the short term financial strength of the company. it tests the company’s ability to pay its current liability. Acceptable current ratio vary from industry to industry and are generally between 1.5 to 3 for healthy bussines. If a company’s current ratio is below 1 then the company may have problem in meeting its short-term obligations.
In case of HDFC BANKthe current ratio has been 0.32 in 2011 and 0.30 in 2012. This shows that the current ratio is less than 1 and HDFC BANKmay face problems in meeting its short term obligation as it is below 1.
8.Quick Ratio
Quick Ratio=Quick Assets/Quick Liability
Quick ratio or liquid ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liability immediately. Quick assets include those current assets that presumably can be quickly converted to cash at close to their book value
The ratio of HDFC BANKhas increased from 8.50 in 2011 to 12.05 in 2012 .HDFC BANKhas a good quick ratio.
9.Earning Per Share
Earnings per share=net profit for equity share/number of equity share
Earnings per share is a test of profitability from equity shareholders point of view. the more the eps the more people will invest in the share of this company.
The eps of HDFC BANKwas 116.52 in 2011 which has increase to 174.15 in 2012.HDFC BANKhas shown a growing trend in eps. This would help them to attract more investors
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10 .Dividend payout ratio
Dividend Payout Ratio=Dividends/Earnings
Dividend payout ratio is the ratio of cash dividend paid through earning for a period.
The dividend payout ratio of HDFC BANK has reduced from 26-03 in 2011 to 22-59 in 2012
State Bank of India has informed BSE that a Meeting of the Bank's Central Board will be held on August 12, 2013, to take on record the Reviewed Working Results of the Bank for the quarter ended June 30, 2013 (Q1).
23-May-13
14-Feb-13
19-Jan-13
09-Nov-12
ANNUAL GENERAL MEETING 21-Jun-13
State Bank of India has informed BSE that the 58th Annual General Meeting (AGM) of the Company will be held on June 21, 2013. With reference to earlier announcement dated May 17, 2013 regarding AGM on June 21, 2013, State Bank of India has now submitted to BSE a copy of the Notice dated May 29, 2013 being issued in the news papers, informing Shareholders of the availability of Proxy Forms and Attendance Slips for the captioned AGM. (As Per BSE Announcement Dated On 04.06.2013) State Bank of India has informed BSE that the 58th Annual General Meeting (AGM) of the
36
Bank was held on June 21, 2013, under Clause 35A. (As Per BSE Announcement Dated On 24.06.2013)
22-Jun-12
20-Jun-11
16-Jun-10
19-Jun-09
EXTRA ORDINARY GENERAL MEETING18-Feb-13
State Bank of India has informed BSE that a General Meeting of the Shareholders of the Bank will be held on March 18, 2013. State Bank of India has submitted to BSE a copy of the Special Resolution passed by the Shareholders of the Bank in the General Meeting held on March 18, 2013. State Bank of India has informed BSE regarding the details of Voting result at the General Meeting of the Bank, pursuant to clause 35A and Extracts of the Minutes of the proceedings of the General Meeting of the Shareholders of the Bank was held on March 18, 2013. (As per BSE Announcement Dated on 18.03.2013)
30-Jan-13
19-Mar-12
24-Jun-11
12-Jan-09
INDIA INFOLINE RESEARCH
State Bank of India (Q1 FY14)
State Bank of India (Q3 FY13)
State Bank of India (Q2 FY13)
Mr. Pratip Chaudhuri, Chairman, State Bank of India
Loan for any purpose other than speculative. Repayment period co-terminus with the underlying Home Loan account. Upto two Home Equity Loans allowed to exist together. No prepayment/ pre closure penalty.
Eligibility
All Home Loans with a satisfactory repayment track of at least one year. Valid mortgage should have been created in favour of the Bank.
Loan Amount
Minimum: Rs. 0.50 lacs Maximum: Rs. 2 crores.
Permissible Loan amount is calculated at 75% of present market value of the house property less present outstanding in the Home Loan account.
Interest Rate Term Loan: 1.25% over Base Rate, present effective rate:11% p.a. Overdraft: 1.50% over Base Rate, present effective rate:11.25% p.a.
Loan Tenure The tenure of the loan will be co-terminus with the original residual maturity of the
Home Loan or the option exercised by customer, whichever is earlier. The loan has to be liquidated before the borrower attains the age of 70 years.
EARNEST MONEY DEPOSIT (EMD) SCHEME LOAN FOR EARNEST MONEY FOR ALLOTMENT OF A HOUSE/PLOT
Many Government agencies, viz. Urban Development Authorities and Housing Boards, periodically come out with schemes for allotment of plots/houses, wherein
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applicants have to deposit 10-20% of the total cost of plot/house as Earnest Money Deposit (EMD).
HDFC BANKEarnest Money Deposit Scheme provides finance for Earnest Money deposit to all individuals above 21 years of age.
Applicant should have regular source of income. No minimum income criteria. Margin waived. Finance upto 100% of application money, subject to a maximum
loan amount of Rs.10 Lacs. No security, irrespective of the loan amount.
Above mentioned features of the scheme are applicable subject to the following conditions:
Allotment letters/refund orders should be routed through CENTARL BANK.
Lump sum amount equal to 6 months interest to be paid upfront. Two PDCs, one for the principle amount of EMD and another towards interest for
the next 6 months should be taken to meet the eventuality of refund getting delayed.
HDFC BANKREVERSE MORTGAGE LOANLOAN FOR THE WELFARE OF SENIOR CITIZENS IN INDIA
House-owning Senior Citizens having inadequate income can avail this loan to meet their financial needs for renovation/repairs to house, medical & other personal uses.
No compulsion for the borrower to repay the loan amount during his or her lifetime or till such time he or she continues to stay in the house.
Borrowers have the options to prepay the loan at any time without any pre-payment penalty.
Interest Rate
2.75% above the Base Rate, present effective rate being 12.50% p.a. (Fixed) subject to reset every 5 years.
Disbursement
Either in Monthly/Quarterly payments or 50% of the sanctioned limit in lump-sum and the remaining in periodic payments.
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Scheduled Banks in India (Public Sector)
The following are the Scheduled Banks in India (Public Sector):
Allahabad Bank Andhra Bank [[Bank of baroda ] Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank IDBI Bank (Industrial Development Bank of India) Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab and Sindh Bank Punjab National Bank State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of India State Bank of Mysore State Bank of Patiala State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank
Scheduled Banks in India (Private Sector)
The following are the Scheduled Banks in India (Private Sector)
Bank of Punjab Ltd Bank of Rajasthan Catholic Syrian Bank Centurion Bank Ltd City Union Bank Development Credit Bank Dhanlaxmi Bank Federal Bank Ltd HDFC Bank Ltd ICICI Banking Corporation Bank Ltd IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank Nainital Bank , estb. 1954 Karur Vysya Bank Karnataka Bank Kotak Mahindra Bank Lakshmi Vilas Bank South Indian Bank Ltd Tamilnad Mercantile Bank Limited Yes Bank The Ratnakar Bank Ltd
Scheduled Foreign Banks in India
The following are the Scheduled Foreign Banks in India:
American Express Bank Ltd. ANZ Bank Bank of America NT & SA Bank of Tokyo Ltd. Banque Nationale de Paris Barclays Bank Plc Citibank Deutsche Bank AG Hongkong and Shanghai Banking Corporation The Royal Bank of Scotland The Chase Manhattan Bank Ltd. Dresdner Bank AG Standard Chartered Bank