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SUMMER TRAINING REPORT ON

DEPOSITE SCHEME

Undertaken at

INDIAN BANK

Submitted in partial fulfilment of the requirements for the award of the degreeof

MASTER OF BUSINESS ADMINISTRATIONto

Guru Gobind Singh Indraprastha University, Delhi

Under the Guidance of Submi tted byKulbir Kaur Pinky AggarwalDesignation MBA-IIISemester

PMCC/1056/13

Session 201314

PERIYAR MANAGEMENT AND COMPUTER COLLEGEPeriyar Centre, FC33, Plot No. 1&2, Institutional Area, Jasola, New Delhi 110025

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TO WHOM IT MAY CONCERN

I pinky Enrolment No.PMCC/1056/13 From MBA-III Semester of the Periyar

Management and Computer College hereby declare that the Summer Training Report

(MS-204) entitled______________________________________________________

___________________________at INDIAN BANKis an original work and the same

has not been submitted to any other Institute for the award of any other degree.

Date: Signature of theStudent

Certified that the Summer Training Report submitted in partial fulfilment of Master of

Business Administration (MBA) to be awarded by G.G.S.I.P. University, Delhi by

_________________________, Enrolment No. ________________ has been

completed under my guidance and is satisfactory.

Date: Signature of the GuideName of the Guide: Kulbir KaurDesignation:

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ACKNOWLEDGEMENT

Firstly, I would like to thank MR.PRABHAKAR KHARE (CHIEF MANAGER) and a

sincere thanks to all other staff members of .INDIAN BANK who have helped me directly or

indirectly in my difficulties.

I wish to express my deepest and most sincere thanks to my Faculty Guide, Mrs Kulbir

Kaur for their invaluable guidance & support throughout the completion of my project.

Last but not least, I am thankful to all my family for cooperating with me at every stage of the

project. They acted as a continuous source of inspiration and motivated me throughout the

duration of the project helping me a lot in completing this project.

( Pinky Aggarwal)

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CHAPTER1

INTRODUCTION

1.1 ABOUT THE INDUSTRY

Banking in Indiaoriginated in the last decades of the 18th century. The

first banks were The General Bank of India, which started in 1786, and Bank of

Hindustan, which started in 1790; both are now defunct. The oldest bank in

existence in India is theState Bank of India, which originated in the Bank of

Calcutta in June 1806, which almost immediately became theBank of Bengal.This

was one of the three presidency banks, the other two being theBank of Bombay and

theBank of Madras, all three of which were established under charters from the

British East India Company. For many years the Presidency banks acted as quasi-

central banks, as did their successors. The three banks merged in 1921 to form

the Imperial Bank of India, which, upon India's independence, became the State

Bank of India in 1955.

HISTORY OF BANKING

Indian merchants inCalcutta established the Union Bank in 1839, but it

failed in 1848 as a consequence of the economic crisis of 1848-49. TheAllahabad

Bank,established in 1865 and still functioning today, is the oldest Joint Stock bank

in India.(Joint Stock Bank: A company that issues stock and requires shareholders to

be held liable for the company's debt) It was not the first though. That honour

belongs to the Bank of Upper India, which was established in 1863, and which

survived until 1913, when it failed, with some of its assets and liabilities being

transferred to theAlliance Bank of Simla.

When theAmerican Civil War stopped the supply of cotton

toLancashire from theConfederate States, promoters opened banks to finance

trading in Indian cotton. With large exposure to speculative ventures, most of the

banks opened in India during that period failed. The depositors lost money and lost

interest in keeping deposits with banks. Subsequently, banking in India remained the

exclusive domain of Europeans for next several decades until the beginning of the

20th century.

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Foreign banks too started to arrive, particularly inCalcutta,in the 1860s.

TheComptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and

another inBombay in 1862; branches inMadras andPondicherry, then a French

colony, followed.HSBC established itself inBengal in 1869. Calcutta was the most

active trading port in India, mainly due to the trade of the British Empire, and so

became a banking centre.

The first entirely Indian joint stock bank was the Oudh Commercial

Bank, established in 1881 inFaizabad. It failed in 1958. The next was thePunjab

National Bank,established inLahore in 1895, which has survived to the present and

is now one of the largest banks in India. Around the turn of the 20th Century, the

Indian economy was passing through a relative period of stability. Around five

decades had elapsed since the Indian Mutiny, and the social, industrial and other

infrastructure had improved. Indians had established small banks, most of which

served particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also

some exchange banks and a number of Indian joint stockbanks. All these banks

operated in different segments of the economy. The exchange banks, mostly owned

by Europeans, concentrated on financing foreign trade. Indian joint stock banks were

generally undercapitalized and lacked the experience and maturity to compete with

the presidency and exchange banks. This segmentation let Lord Curzon to

observe, "In respect of banking it seems we are behind the times. We are like some

old fashioned sailing ship, divided by solid wooden bulkheads into separate and

cumbersome compartments."

The period between 1906 and 1911, saw the establishment of banks

inspired by theSwadeshi movement. The Swadeshi movement inspired local

businessmen and political figures to found banks of and for the Indian community.

A number of banks established then have survived to the present such as Bank of

India,Corporation Bank,Indian Bank,Bank of Baroda,Canara Bank andCentral

Bank of India. The fervour of Swadeshi movement lead to establishing of many

private banks in Dakshina Kannada and Udupi district which were unified earlier

and known by the name South Canara ( South Kanara ) district. Four nationalised

banks started in this district and also a leading private sector bank. Hence undivided

Dakshina Kannada district is known as "Cradle of Indian Banking". During theFirst

World War (19141918) through the end of theSecond World War (19391945),

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and two years thereafter until theindependence of India were challenging for Indian

banking.

POST INDEPENDENCEThepartition of India in 1947 adversely impacted the economies

ofPunjab andWest Bengal, paralyzing banking activities for months.

India'sindependence marked the end of a regime of theLaissez-faire for the Indian

banking. TheGovernment of India initiated measures to play an active role in the

economic life of the nation, and the Industrial Policy Resolution adopted by the

government in 1948 envisaged amixed economy. This resulted into greater

involvement of the state in different segments of the economy including banking andfinance. The major steps to regulate banking included:

TheReserve Bank of India,India's central banking authority, was established

in April 1934, but was nationalized on January 1, 1949 under the terms of the

Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI,

2005b).[Reference www.rbi.org.in]

In 1949, the Banking Regulation Act was enacted which empowered the

Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in

India."

The Banking Regulation Act also provided that no new bank or branch of an

existing bank could be opened without a license from the RBI, and no two

banks could have common directors.

NATIONALISATIONDespite the provisions, control and regulations ofReserve Bank of India,

banks in India except theState Bank of India or SBI, continued to be owned and

operated by private persons. By the 1960s, the Indian banking industry had become

an important tool to facilitate the development of theIndian economy.At the same

time, it had emerged as a large employer, and a debate had ensued about the

nationalization of the banking industry.Indira Gandhi,thenPrime Minister of India,

expressed the intention of theGovernment of India in the annual conference of the

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All India Congress Meeting in a paper entitled "Stray thoughts on Bank

Nationalisation." The meeting received the paper with enthusiasm.

A second dose of nationalization of 6 more commercial banks followed

in 1980. The stated reason for the nationalization was to give the government more

control of credit delivery. With the second dose of nationalization, the Government

of India controlled around 91% of the banking business of India. Later on, in the

year 1993, the government mergedNew Bank of India withPunjab National Bank.

It was the only merger between nationalized banks and resulted in the reduction of

the number of nationalised banks from 20 to 19. After this, until the 1990s, the

nationalised banks grew at a pace of around 4%, closer to the average growth rate of

the Indian economy.

LIBERLIZATION

In the early 1990s, the thenNarasimha Rao government embarked on a

policy ofliberalization,licensing a small number of private banks. These came to be

known as New Generation tech-savvy banks, and included Global Trust Bank (the

first of such new generation banks to be set up), which later amalgamated with

Oriental Bank of Commerce,Axis Bank(earlier asUTI Bank),ICICI

Bank andHDFC Bank.This move, along with the rapid growth in theeconomy of

India, revitalized the banking sector in India, which has seen rapid growth with

strong contribution from all the three sectors of banks, namely, government banks,

private banks and foreign banks.

The new policy shook the Banking sector inIndia completely. Bankers, till

this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4)

of functioning. The new wave ushered in a modern outlook and tech-savvy methods

of working for traditional banks. Currently (2010), banking in India is generally

fairly mature in terms of supply, product range and reach-even though reach in rural

India still remains a challenge for the private sector and foreign banks.

ADOPTION OF BANKING TECHONOLGY

The IT revolution had a great impact in the Indian banking system. The

use of computers had led to introduction of online banking in India. The use of the

modern innovation and computerisation of the banking sector of India has increased

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many folds after the economic liberalisation of 1991 as the country's banking sector

has been exposed to the world's market. The Indian banks were finding it difficult to

compete with the international banks in terms of the customer service without the

use of the information technology and computers.

RESERVE BANK OF INDIA

Reserve Bank of India was established on April 1, 1935 in accordance with

the provisions of the Reserve Bank of India Act, 1934. Though initially RBI was

privately owned, it was nationalized in 1949. Its central office is in Mumbai where

the Governor of RBI sits.

India has a well developed banking system. Most of the banks in India were

founded by Indian entrepreneurs and visionaries in the pre-independence era to

provide financial assistance to traders, agriculturists and budding Indian

Scheduled banks

Co-operative banksCommercial banks

Urban Co-

o eratives 52

Old (22)

Regional rural

banks (196)

Public Sector

banks (27)

State Co-

operatives (16)

Other Nationalised

banks (19)

Foreign banks (40)

Private Sector

banks (30)

New (8)State bank of India

and Associate

banks (8)

RESERVE BANK OF INDIA

Central bank and supreme monetary authority

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billion). The other large public sector banks are Punjab National Bank, Canara Bank,

Bank of Baroda, Bank of India and IDBI Bank.

PUBLIC SECTOR BANKS

The public sector banks have overseas operations with Bank of Barodatopping the list with 51 branches, subsidiaries, joint ventures and representative

offices outside India, followed by SBI (45 overseas branches/offices) and Bank of

India (26 overseas branches/offices). Indian banks, including private sector banks,

have 171 branches/offices abroad. SBI is present in 29 countries followed by Bank

of Baroda (20 countries) and Bank of India (14 countries).

PRIVATE SECTOR BANKSPrivate sector banks India has 29 private sector banks including nine new

banks which were granted licences after the government liberalised the banking

sector. Some of the well known private sector banks are Karnataka Bank, ICICI

Bank, HDFC Bank and IndusInd Bank. Yes Bank is the latest entrant to the private

sector banking industry.

In terms of reach the private sector banks with an asset of over Rs 5,700

billion (about US$124 billion) operate through a network of 6,500 branches and over

7,500 ATMs.

FOREIGN BANKS

Foreign banks have brought latest technology and latest banking practices

in India. They have helped made Indian Banking system more competitive and

efficient. Government has come up with a road map for expansion of foreign banks

in India.Foreign banks As many as 29 foreign banks originating from 19

countries are operating in India through a network of 258 branches and about 900

ATMs. With total assets of more than Rs 2,000 billion (about 44 billion US dollars)

they are present in 40 centres across 19 Indian states and Union Territories.

Some of the leading international banks that are doing brisk business in

India include Standard Chartered Bank, HSBC Bank, Citibank N.A. and ABN-

AMRO Bank.

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REGIONAL BANKS

Rural areas in India are served through a network of Regional Rural Banks

(RRBs), urban cooperative banks, rural cooperative credit institutions and local area

banks. Many of these banks are not doing well financially and the government iscurrently engaged in restructuring and consolidating them.

Local area banks were of recent origin and as on March 31, 2006 four

such banks were operating in the country.

NATIONALISED BANKS

Nationalised banks dominate the banking system in India. The history of

nationalised banks in India dates back to mid-20th century, when Imperial Bank of

India was nationalised (under the SBI Act of 1955) and re-christened as State Bank

of India (SBI) in July 1955.

FINANCIAL INSTITUTIONS

Financial institutions India has seven major state-owned financial

institutions which include Industrial Development Bank of India (IDBI), Industrial

and Financial Corporation of India (IFCI), Tourism Finance Corporation of India

(TFCI), Small Industries Development Bank of India (SIDBI), National Bank for

Agriculture and Rural Development (NABARD) and National Housing Bank

(NHB).

These institutions provide term loans and arrange refinance. There are also

specialised institutions like the Power Finance Corporation (PFC), Indian Railway

Finance Corporation (IRFC), and Infrastructure Development Finance Company

(IDFC) and state-level financial corporations.

1.2 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE

To study the performance of deposit schemes in Karnataka Bank

SECONDARY OBJECTIVES

1) To evaluate the performance of cash inflow in the form of deposits

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2) To analyze the return on investment of deposit schemes

3) To find out the performance of demand deposits, savings bank deposits and term de

posits

4) To analyze the efficiency of management

5) To find out the relationship between the deposits and loans

1.3 SCOPE OF THE STUDY

The present study attempts to obtain a general view of deposit schemes practice in

Indian bank. The study to know their increase or decrease of various schemes is alsoanalyzed in order to give atrue and clear picture of its performance. The present study

aims at studying deposits of the Indian bank. The study focuses only the views of the

bank. But it does include the views of the others who aredirectly or indirectly

associated with the bank. It is concerned to the administration of assets & liabilitiesto

analysis the profitability liquidity of the organization with the help of ratios

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pact with Corporation Bank for sharing ATM's. Also, they made a tie-up with

MetLife India for the distribution of insurance products as a corporate agent. In the

year 2003, the Bank took up Corporate Agency for distribution of products of Bajaj

Allianz General Insurance Co Ltd.

The Bank in association with MetLife India launched K-Life a term

product designed for SB/current account holders of the bank. Also, the Bank

launched a credit product 'KBL Insta Cash' for consumption purposes, and 'KBL

Vahana Mitra' for the purchase of new vehicles. The Bank along with Western

Union Financial Services made tie-up with Bharat Overseas Bank to provide

inbound money transfer services.

In the year 2004, the Bank launched the 'Gold Card Scheme' for the

exporters. In the year 2005, the Bank launched real time gross settlement (RTGS)

system under the name of Money Quick. Also, they inked an agreement with

National Financial Switch for ATM connectivity and launched 'no frills' accounts.

In the year 2006, they made a tie up with Franklin Templeton (I) Private

Limited for distribution of their mutual funds. They launched CDSL-DP services at

select branches. In the year 2007, the Bank signed MoU with Allahabad Bank,

Indian Overseas Bank, Sompo Japan Insurance Inc. and Dabur Investment

Corporation to form a joint venture for undertaking General Insurance business.

During the year 2008-09, the Bank opend 16 branches at Moradabad, New

Delhi - Karol Bagh, Thane, Mumbai - Vile Parle, Bommasandra, Bangalore -

Chandra Layout, Bangalore - Sadashivanagar, Mysore - J P Nagar, Belgaum -

Udyambag (Extension Counter upgraded), New Delhi - East of Kailash, Bangalore -

Yelahanka New Town, Pune-Dhankawadi, Doddaballpur, Uppal Kalan, Bellandur

and Hoskote.

The Bank added 30 ATM outlets at various locations. Also, they shifted

15 branches/ offices to new premises. The Bank won the prestigious Sun and NDTV

Green IT award instituted by Sun Microsystems and NDTV, for use of eco efficient

green technologies to run business. During the year 2009-10, the Bank opened 17

branches in Patna, Kanakapura, Tambaram, Vellore, Dhanbad, Kolkata -

Bhowanipore, Naganathapura, Gundlupet, New Delhi - Ashokvihar, Ujjain,

Ghaziabad, Kancheepuram, Chennai - Annanagar (West), Brahmapur,

Serillingampally, Durg and Rajarhat - Kolkata. The Bank added 46 ATM outlets at

various locations. Also, they shifted 16 branches/offices to new premises.

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In April 2010, the opened their 9th Regional Office at Hyderabad. The

Bank bagged 'Special Award for use of IT for Internal effectiveness' for the year

2009, instituted by Institute for Development and Research in Banking Technology

(IDRBT). As on March 31, 2010, the Bank had 464 branches, 217 ATM outlets, 8

Regional Offices, one International Division, one Data Centre, one Customer Care

Centre, 5 Service branches, 2 Currency Chests, 6 Extension Counters and two

Central processing centers, spread across 20 states and 2 Union Territories. Further,

for better ambience and improved customer service.

In September 2010, the Bank launched a new product exclusively for

women, i.e. the new saving bank account for women named KBL Vanitha to

encourage saving habit among the womenfolk and also to allay the fear of managing

their wealth. The Bank plans to increase their total number of business units to 780,

by increasing the total number of branches to 480 and own ATM network to 300 by

March 2011.

1.4.3 IndianBank MISSION

"Our mission is to be a technology savvy, customer centric progressive bank

with a national presence, driven by the highest standards of corporate governance

and guided by sound ethical values."

1.4.4 FACILITIES AND CUSTOMER SERVICE

Indian Bank provides a broad range of customized products and services

suitable for all kinds of market, trade and perceived requirements, be it business or

personal. It deals in personalized banking, business banking, money transfer,

internet banking and insurance services. The facilities include borrowing facilities,

deposits, optimum returns on surplus funds and helping with smooth overseas

transactions. As a part of personalized banking, Karnataka Bank provides services

for high earning deposits, simple & convenient loans, life insurance, money transfer,

utility bill payments and thus, efficiently keeps a track of your finances.

.

Customer Profile

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Branches should prepare a profile for each new customer based on risk categorization. A

format of the Customer Profile is given in Annexure 1.3. The customer profile contains

information relating to customer's social/financial status, nature of business activity,

information about his clients' business and their location, etc

Annexure 1.3

......................................................Branch

Part B - Business Profile

(to be used for accounts of business entities including Sole Proprietor concerns)

Note: i. This is in addition to Customer Profile Part A

ii. To be verified/filled in by the Authorized Officer and signed by

Customer and Officer

.

Geographical location of the business

Nature/Activity of business /occupation

Estimated income from the business Rs................................... per annumAny other source of income (indicate the source) Rs.Total annual income Rs.Approximate value of movable and immovable

AssetsDetails of existing bank accounts, if any

Details of Credit Facilities, if any, availed (If space

provided is found insufficient, furnish in a separate

sheet)Details of foreign countries, if any, visited during last

three years

Date: : .

Customer Authorized officer of Bank

(With Name and SS No.)

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BOARD OF DIRECTORS

Chairman Shri T.M. Bhasin

Managing Director & CEO Shri T.M. Bhasin

Director

S R Hegde

R V Shastri

U R Bhat

T S Vishwanath

Sitarama Murty M

S V Manjunath

D Harshendra Kumar

H Ramamohan

T R Chandrasekaran

Company Secretary Y V Balachandra

MULTI BRANCH BANKING

Multi Branch Banking facility is a value added service to our customers

taking advantage of "Core Banking Solution". It is a 'technology driven-anywhere

banking' facility and 'at par' facilities for Savings Bank and Current account with

structured schedule of services and charges. Now the customer can access his

account at all branches of the Bank.

The salient features of the scheme are as under:

1. The concept of 'anywhere' banking is extended to all domestic SB and Current

Accounts except NO Frills Accounts. Even SB-General and Current-Generalaccounts are eligible for MBB facility with Multicity Cheques.

2. SB-General (SBGEN),SB-Money Sapphire,SB-Money Platinum,Current A/c

General (CAGEN),CA- Money Pearl, CA - Money Ruby, CA- Money Diamond,

CA-Money Platinum, are MBB accounts with structured free services

and Multicity Cheque facility with cheques payable at par at all Branches.

FACILITIES AVAILABLE UNDER MBBPAYMENT SERVICES:

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Any where Cash withdrawal for self cheques only

Multicity Cheques

Funds Transfer

Funds Transfer through RTGS/NEFT

COLLECTION SERVICES:

Any where Cash Deposit- By self only

Collection of out station cheques

Any where Deposit of cheques for collection

OTHER FACILITIES: Internet Banking

Mobile Banking (SMS alerts)

Demat Account

'MoneyPlant' Visa International Debit Card

INTERNET BANKING

Karnataka bank has been introduced Internet Banking facility

MoneyClickTM to manage our finances in the comfort of our home or our office as

per our convenience. MoneyClickTMis a Self-Service Channel, which is available 24

hours a day and 365 days a year in an absolutely simple, friendly but secured

environment.

In MoneyClickTM, a mere touch of a button or click of a mouse makes

you accessible to a host of Banking Services, called Fingertip Banking. We can

carry out your banking transactions safely and with total confidentiality by enjoying

online banking without wasting your time or losing your peace of mind.

Money ClickTMRetail

It offers different online services to our retail/individual customers, like

balance enquiry, requests for Chequebooks, recording stop-payment instructions,

balance transfer instructions, account opening and other forms of traditional banking

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services. This also offers utility bill payment services to our valued customers for

payment of BSNL Mobile, Electricity, Water bills etc.

MoneyclickTMCorporate

In addition to the above services, our Corporate Customers can avail

Trade Finance Facilities such as Import/ Export Credit facilities, Requests for

Forward Contracts, Inland Trade, and Bank Guarantee etc. Also

MoneyclickTMfacilitates access control at Corporate User level wherein various

users at different hierarchy levels have varying powers to operate a corporate

account.

MoneyClickTMCyber Kids

Children between 12-18 years who are having Account with us are

eligible for this special e-banking facility.

MOBILE BANKING

Karnataka Bank offers Mobile Banking for the convenience of paying for

utility bills, mobile recharge, movie tickets, online purchases, retail shopping andmuch more at over 15,000 merchants directly from our mobile.

Karnataka Bank mobile payment service is independent of the handset

model and service providers and works on even the most basic handsets and across

all telecom operators (GSM or CDMA).

FEATURES

Mobile payment facility will be an additional facility to our customer for

making Payment through their mobile for the goods purchased by them.

On registration for Mobile Payment solution, the customer will be enabled to

make secured payments directly from their registered mobile phone,

authorized by using their ATM PIN.

Customers can use this facility round the clock.

This facility is extended to the users free of cost.

This facility saves time; avoid hassles of travelling, waiting in long queues tomake bill payment, ticket booking etc.

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At present the facility will be extended to customers subject to a daily cap of

Rs.50, 000/- per customer for transaction involving purchase of

goods/services (as per RBI guidelines).

BENEFITS

EASY:

Works on even the simplest mobile handsets across all operators (GSM or

CDMA)

Doesn't require GPRS connectivity, SIM change or application download

SMS & Interactive Voice based transaction platform makes it very easy-to-

use

SECURE:

Confidential PIN Based Transaction

PIN entry only through an IVR call where the PIN is transmitted in a DTMF

format(Just as the PIN entry system for tele banking)

No financial details divulged during the transaction process

CONVENIENT:

Transact over-the-counter, online, on the telephone or from just about

anywhere

Save time and effort by paying bills from anywhere, anytime

Turn your mobile phone into a debit card

REGISTRATION:Existing Debit Card holders (Classic/GOLD) who are above 18years are

eligible for mobile banking facilities. In case existing customers do not have debit

cards, they have to first apply for Debit Cards and upon receipt of the same they can

register for Mobile Payment facility. A customer would be able to register to use Pay

mate services in any one of the following:

DEMAT ACCOUNT

A Bank where its Head Office provides the facility of opening and

conduct of Accounts through its branches, a Depository institution extends various

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services to the investors through its agents known as Depository Participant. In

India, now there are two Depositories. They are CDSL and NSDL. Participant can

be anybody who complies with the eligibility requirements. Participant (DP) can be

a Bank also. All the various functions undertaken and enabled through Demat

accounts are referred to as DP activity. Under the depository system, a demat

account holder or holder/owner of securities who is entitled to all the benefits (such

as dividend or interest/bonus or right shares etc), is known as a Beneficial

Owner (BO).

PREREQUISITES OF OPENING A DEMAT ACCOUNT:

The formalities involved in opening a bank account and a demat account

are similar. An investor desirous of holding his securities in electronic form can

open a demat account with a DP of his choice by completing necessary account

opening formalities after furnishing proof of his/her identity, photograph and proof

of address. An agreement with the DP in the prescribed format is to be executed by

paying requisite stamp duty.

DEMATERIALISATION OF SECURITIES:

After getting the demat account number from the DP, the BO can cause

credit of fresh purchases of securities to his demat account and/or transfer the

balances held in demat account held with other DP to this newly opened demat

account. He can also tender the securities held by him/her in physical form to DP for

dematerialization and credit to the demat account. After necessary verification, DP

forwards the physical securities (duly defaced) either to the company or to their duly

appointed RTA (Registrar and Transfer Agent) who, after necessary scrutiny,

destroys the certificates in physical form and authorizes the depository to give

corresponding (electronic) credit to the subject demat account.

FREE FACILITIES BY CDSL TO ITS DEMAT ACCOUNT

HOLDERS:

The evolution of the Indian capital market has seen several enhancements

during the past few years and this has been a result of innovative use of newer

technologies. In the reduced settlement cycle era, investors require updated demat

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account information at a much faster pace than ever before. In other words, the quest

for account status information has raised manifold.

In order to facilitate a CDSL demat account holder to easily adapt to the

fast reducing settlement cycle, CDSL has introduced Internet-enabled services

called "easi" and "easiest" to empower a demat account holder in managing his

securities 'anytime-anywhere' in an efficient and convenient manner, all in a state-of-

the-art secure environment. Further to effective risk control mechanism for

monitoring of demat account, CDSL has also introduced "smart" facility.

MONEY PLANT ATM

Karnataka Bank has entered into ATM sharing arrangement with NPCI-

NFS and CashTree ATM network. The NFS network with NPCI has 66 Member

Banks and covers around 86,793 ATMs while CashTree network has 13 member

Banks and covers around 7400 ATMs. All Debit & MoneyplantTM International Visa

Debit Card/MoneyplantTMATM card holding customers of Karnataka Bank can

avail the facility of withdrawal through Banks' MoneyPlantTM ATMs and shared

network ATMs.

1.5 ABOUT THE Industry

One of the important functions of the Bank is to accept deposits from the

public for the purpose of lending. In fact, depositors are the major stakeholders of

the Banking System. The depositors and their interests form the key area of the

regulatory framework for banking in India and this has been enshrined in the

Banking Regulation Act, 1949. The Reserve Bank of India is empowered to issue

directives advices on interest rates on deposits and other aspects regarding conduct

of deposit accounts from time to time. With liberalization in the financial system and

deregulation of interest rates, banks are now free to formulate deposit products

within the broad guidelines issued by RBI.

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This policy document on deposits outlines the guiding principles in respect

of formulation of various deposit products offered by the Bank and terms and

conditions governing the conduct of the account. The document recognises the rights

of depositors and aims at dissemination of information with regard to various

aspects of acceptance of deposits from the members of the public, conduct and

operations of various deposits accounts, payment of interest on various deposit

accounts, closure of deposit accounts, method of disposal of deposits of deceased

depositors, etc., for the benefit of customers.

While adopting this policy, the bank reiterates its commitments to

individual customers outlined in 'Code of Banks' Commitment to Customers'.

The various deposit products offered by the Bank can be categorised

broadly into the following types. Definitions of major deposits schemes are as under:

"Demand deposits" means a deposit received by the Bank which is

withdrawable on demand. "Savings deposits" means a form of demand

deposit which is subject to restrictions as to the number of withdrawals as

also the amounts of withdrawals permitted by the Bank during any specified

period.

"Term deposit" means a deposit received by the Bank for a fixed period

withdrawable only after the expiry of the fixed period.

"Current Account" means a form of demand deposit wherefrom withdrawals

are allowed any number of times depending upon the balance in the account

or up to a particular agreed amount and will also include other deposit

accounts which are neither Savings Deposit nor Term Deposit.

ACCOUNT OPENING AND OPERATION OF DEPOSIT

ACCOUNTS

The Bank before opening any deposit account will carry out due diligence as

required under "Know Your Customer" (KYC) guidelines issued by RBI

Anti-Money Laundering rules and regulations and or such other norms or

procedures as per the "Know Your Customer"(KYC) policy of the bank. If

the decision to open an account of a prospective depositor requires clearance

at a higher level, reasons for any delay in opening of the account will be

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informed to the customer and the final decision of the Bank will be conveyed

at the earliest to the customer.

The bank is committed to providing basic banking services to disadvantaged

sections of the society. Banking services will be offered to them through 'no

frill' accounts and accounts will be opened with relaxed customer acceptance

norms as per regulatory guidelines.

The account opening forms and other material would be provided to the

prospective depositor by the Bank. The same will contain details of

information to be furnished and documents to be produced for verification

and/or for record, it is expected of the Bank official opening the account, to

explain the procedural formalities and provide necessary clarifications

sought by the prospective depositor when he approaches for opening a

deposit account.

The regulatory guidelines require banks to categorize customers based on

risk perception and prepare profiles of customers for the purpose of

transaction monitoring. Inability or unwillingness of a prospective customer

to provide necessary information/details could result in the bank not opening

an account.

Inability of an existing customer to furnish details required by the bank to

fulfil statutory obligations could also result in closure of the account after

due notice(s) is provided to the customer.

For deposit products like Savings Bank Account and Current Deposit

Account, the Bank will normally stipulate certain minimum balances to be

maintained as part of terms and conditions governing operation of such

accounts. Failure to maintain minimum balance in the account will attract

levy of charges as specified by the Bank from time to time. For Saving Bank

Account, the Bank may also place restrictions on number of transactions,

cash withdrawals, etc., for a given period. Similarly, the Bank may specify

charges for issue of cheque books, additional statement of accounts,

duplicate passbook, folio charges, etc. All such details, regarding terms and

conditions for operation of the accounts and schedule of charges for various

services provided will be communicated to the prospective depositor while

opening the account.

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Savings Bank Accounts can be opened by eligible person/ persons and

certain organizations/ agencies (as advised by Reserve Bank of India (RBI)

from time to time).

SavingsBank Account

Eligibility

Individuals, Joint accounts, Clubs, associations, trusts, Govt. Bodies,

societies (including co-operatives), educational institutions, associations

and other non-tradingorganizations.

Benefits

ECS/RTGS/NEFT facilities are available

Two cheque books of 2x20 leaves free in a calendar year for cheque

operated SB accounts

Collection of local cheques free

Collection of Outstation cheques with the presecibed charges

No charges for Intra / Inter city transactions

ICOOC ( Local / Outstation) facility available

ATM / Debit card One year from the date of first use FREE

From Second year onwards chargeable Rs.50/- per year + applicable

taxes. **

** Not applicable for the Senior Citizen Debit Cards and Biometric

Cards

24 hrs ATM facility with arrangements with various banks for sharingof their ATMs

Multicity cheque facility Intra city, intercity transactions,Internet/

mobile /phone banking facilities are available at all branches

Nomination facilities are available

50 withdrawals permitted free per half year . Rs.6/- will be levied for

each transaction beyond 50 transactions per half year

No TDS on interest earned on SB deposits

Min Amt

Minimum amount- Rs.250/- for non cheque operation

Minimum balance of Rs.500/- for cheque operation

Lesser minimum balance for pensioners and bonafide students

Non Maintenance of Minimum

BalanceA 30 per month for non maintenance of average monthly balance

Interest Rates In January and July on a daily product basis @4% p.a

Applications and Documents Application

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Specimen Signature Card

Form 60 or 61 (if customer does not have PAN card)

Photograph of depositor/s (2 copies)

Proof of address as per KYC norms

Any other related documents applicable to Students, Minor, HUF, Trusts

etc.

.Procedure for opening savings accounts

.1 KYC procedures

The prospective account holder should be properly identified as per KYC norms. Fordetailed guidelines on Know Your Customer procedures, please refer Chapter 1.

.2 Application and Specimen Signature Card

The application form (Refer Annexure 4.1) and specimen signature card should be

obtained duly signed by the prospective account holders. The details to be obtained inthe application form are given in Chapter 4 and the instructions given therein should

be followed. The opening of the account should be authorised by the Manager/AsstManager or any officer permitted by HO for this purpose (Refer Para 12 of Chapter1). Two copies of photographs of the depositors/persons authorised to operate theaccount should be obtained

(Refer Para 10 of Chapter 1).

3.3 Initial Deposit

The initial deposit for opening an account should be in cash. Opening of an account

by cheque should be avoided.

.4 Minimum Balance

4.4.1 The following minimum balances are prescribed for SB accounts

4.4.2 In case of pensioners the minimum balance in SB accounts withcheque facility is Rs.250 and without cheque facility there is no

need for maintenance of Minimum balance.

4.4.3 In case of Students with bonafide certificate, the minimum balance

will be Rs. 250 for accounts with cheque facility and Rs. 100 for

accounts without cheque facility .

4.4.4 Where the balance in SB accounts falls below the stipulated

minimum,a service charge as prescribed by Head Office shall be

levied on each occasion irrespective of the number of days for

which the position continues. There is no service chargesfor pensioners for non-maintenance of minimum balance in

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SB accounts without vcheque facility.

4.4.5 At the time of opening Savings Bank accounts, banks should

inform their customer about the requirement of maintaining

minimum balance and levying of charges, if such

minimum balance is not maintained

. Opening of Accounts

After the initial deposit is paid, the account is opened in the ledger in the serial

order duly indexed and entries made in the Account Opened and Closed

Register. Detaile instructions on opening of account is given in

Chapter 4 of this Manual.

Current Accounts can be opened by individuals/partnership firms/ Private

and Public Limited Companies/HUFs/ Specified Associates/Societies/

Trusts, Departments of Authority created by Government (Central or State),

Limited Liability Partnership etc.

Current Account

Eligibility

Suitable for all type of customers

Salient Features Ordinary Current Account

Min Amt Quarterly average balanceRs.5000 prescribed

Benefits

ECS/RTGS/NEFT facilities are available

Nomination facility for individuals and sole proprietor concerns,

Multicity cheque facility, Intra city, intercity transactions are

permitted in CBS branches ATM / Debit card One year from the date of first use FREE

From Second year onwards chargeable Rs.50/- per year +

applicable taxes. **

** Not applicable for the Senior Citizen Debit Cards and Biometric

Cards

No charges for Intra / Inter city transactions

Non Maintenance of Minimum Quarterly Average Balancenot maintained Rs. 340 per quarterfor metro / urban branches and Rs.115 per quarter for semi urban

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balance / rural branches

Term Deposits Accounts can be opened by individuals/partnership firms/

Private and Public Limited Companies/HUFs/ Specified

Associates/Societies/ Trusts, Departments of Authority created by

Government (Central or State), Limited Liability Partnership etc.

Term Deposit is a deposit received by the Bank for a fixed period which is

withdrawable only after the expiry of the said fixed period and shall alsoinclude deposits such as recurring, reinvestment, cash certificates and so on

The due diligence process, while opening a deposit account will involve

satisfying about the identity of the person, verification of address, satisfying

about his occupation and source of income. Obtaining introduction of the

prospective depositor from a person acceptable to the Bank and obtaining

recent photograph of the person/s opening/ operating the account are part of

due diligence process.

In addition to the due diligence requirements under KYC norms, the Bank is

required by law to obtain Permanent Account Number (PAN) or General

Index Register (GIR) Number or alternatively declaration in Form No. 60 or

61 as specified under the Income Tax Act/ Rules.

Deposit accounts can be opened by an individual in his own name (status:

known as account in single name) or by more than one individual in their

own names (status: known as Joint Account). Savings Bank Account can

also be opened by a minor jointly with natural guardian or with mother as the

guardian (Status: known as Minors Account). Minors above the age of 10

will also be allowed to open and operate saving bank account independently.

However no overdrafts will be granted to these minors.

Operation of Joint Account: The Joint Account opened by more than one

individual can be operated by single individual or by more than one

individual jointly. The mandate for operating the account can be modified

with the consent of all joint account holders. The Savings Bank Account

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opened by minor jointly with natural guardian/guardian can be operated by

natural guardian only till the minor attains majority.

The term deposit account holders at the time of placing their deposits can

give instructions with regard to closure of deposit account or renewal of

deposit for further period on the date of maturity. In the absence of such

mandate, the Bank will seek instructions from the depositor/s as to the

disposal of the deposit by sending intimation before 15 days of the maturity

date of term deposit by post or courier at the last known address of the

depositor.

Nomination facility is available on all deposit accounts opened by

individuals. Nomination is also available to a sole proprietary concern

account. Nomination can be made in favour of one individual only.

Nomination so made can be cancelled or changed by the account holder/s

any time. While making nomination, the signature of the account holder/s in

the nomination forms (DA1, DA2 & DA3) need not be attested by witnesses.

However, thumb impression of the accountholder/s is required to be attested

by two witnesses.

Nomination can be modified by the consent of account holder/s. Nomination

can be made in favour of a minor also. Nomination facility is also available

for joint deposit accounts and in such cases nomination should be made by

all depositors jointly.

Account opening form

A depositor desirous of opening an account with the Bank should complete the

relative account opening form/card (Annexure 4.1) in all respects with full name(s)and

specimen signature(s) at appropriate places. The prospective account holder shouldnormally be required to fill in the account opening form in the presence of a banksofficial.

NRI SERVICES

An Indian citizen or a foreign citizen of Indian origin who stays abroad for

employment/carrying on business or vocation or under circumstances indicating an

intention for an uncertain duration of stay abroad is a Non-Resident Indian (NRI).

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(Those who stay abroad on business visit, medical treatment, study or such other

purposes which do not indicate an intention to stay there for an indefinite period will

not be considered as NRIs).

An NRI is a person resident outside India who is a citizen of India or is a

person of Indian origin. Under the Foreign Exchange Management Act (FEMA),

generally, a person is resident outside India if he is in India for less than 182 days

during the course of the preceding financial year and also includes any person who

stays abroad:

For the purposes of carrying out employment or any business or vocation;

Under circumstances indicating an intention to stay outside India for an

uncertain duration;

Any Indian citizen deputed outside India for a temporary period in

connection with employment

For education

Bank offers vide range of deposit schemes for Non Resident Indians which

includes Non Resident Rupee account (NR (E) RA), Foreign Currency Non-

Resident Account (FCNR), Non-Resident Ordinary Account (NRO), and Resident

Foreign Currency (Domestic) Account (RFCD).

Opening and maintaining of Bank Accounts of Non- Resident Indian is

guided by the Foreign Exchange Management Act-1999 (FEMA) and interest on

terms deposits are revised based on LIBOR rates from time to time.

OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE

To study the performance of deposit schemes in Karnataka Bank

SECONDARY OBJECTIVES

1) To evaluate the performance of cash inflow in the form of deposits

2) To analyze the return on investment of deposit schemes

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3) To find out the performance of demand deposits, savings bank deposits and

term deposits

4) To analyze the efficiency of management

5) To find out the relationship between the deposits and loans

SCOPE OF THE STUDY

The present study attempts to obtain a general view of deposit schemes

practice in Karnataka bank. The study to know their increase or decrease of various

schemes is also analyzed in order to give a true and clear picture of its performance.

The present study aims at studying deposits of the Karnataka bank. The study

focuses only the views of the bank. But it does include the views of the others who

are directly or indirectly associated with the bank. It is concerned to the

administration of assets & liabilities to analysis the profitability liquidity of the

organization with the help of ratios.

IMPORTANCE OF THE STUDY

Cash flow statement shows efficiency of a firm in generating cash inflows

from its regular operations.

Return on investment can be used to measure the value of the bank or of a

specific investment that they might make.

Percentage analysis is help to evaluate and compare the deposits.

Ratio analysis is an important technique of financial statement analysis.

Accounting ratios are useful for understanding the financial position of the

company. Different users such as investors, management, bankers and

creditors use the ratio to analyze the financial situation of the company for

their decision making purpose.

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The effect of correlation is to reduce the range of uncertainty. The prediction

based on correlation analysis is likely to be more variable and near to reality.

LIMITATIONS OF THE STUDY

The analysis is based on the secondary data. Hence there is a limitation of

doubtful accuracy.

The data collected is limited to 5 years and hence it does not give the whole

picture.

As the present business moves from the cash basis to accrual basis, the

prepaid and credit transactions might be represented an increase in working

capital and it would be misleading to equate net income to cash flow because

a number of non cash items would affect the net income.

Return of investment does not take into account the time value of money. It

does not account for the variable nature of annual net cash inflows.

The ratios are generally calculated from past financial statements and thus

are no indicator of future.

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CHAPTER2

REVIEW OF LITERATURE

Mr. Joseph (2005) studied the performance of Lead Bank Scheme in

Kerala, the mobilisation of bank deposits in Kerala by commercial Banks. He

observed that competition from co-operative and other institutions was the main

obstacles to achieving the deposit mobilisation target. The popularity of private

financial institutions was due to their personal relations with local people. 56.4

percent of the customers (self employed) surveyed had their first percent dealing

with banks for taking loans.

Mr. Laurent (2006) studied the perception of customers on five

competing banks in a medium size city in UK for private deposits. He observed that

these five banks differed from each other as a result of oligopolistic market

situation only on seven attributes i.e., friendliness, quality of service, community

spirit, modem facilities, convenience, range of services and ownership. These seven

attributes accounted for 91 percent of the overall differences between the five banks.

The study revealed that on the basis of perception of overall image of the five banks

relative to each other, there existed the different market segments.

K. Avadhani (2007) studied the performance of rural branches of some

commercial banks in order to identify the factors influencing deposit mobilisation inrural areas in different states. He came out with the opinion that there existed

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sufficient relationship between the deposits of a rural branch and its age. The growth

of deposits is at a faster rate in the first six years and tapers off subsequently. The

growth rate in deposits of commercial banks cannot be explained in terms of price

differentials as co-operatives offer high rates of interest. Therefore product

differentials would offer a better explanation of the disparate growth rates in

deposits.

Mr. Nag and Mr. Shivaswamy (2008) studied the comparative

performance of foreign and Indian banks and observed that there was a distinct

preference of bank customers to bank with foreign banks notwithstanding the fact

that foreign banks stipulate relatively high levels of minimum amounts to be

maintained as deposits and charge relatively high interest rates and service costs. In

respect of deposit supplies, their strategy had been to procure from a segmented part

of the total supplies of deposits of large size from a relatively small number of

depositors. Large accretion of non-resident deposits with foreign banks was mainly

because of the familiarity of the names of foreign banks operating in India to banks

abroad.

Raju (2009) studied the levels of savings and the manner of their

distribution among different physical and financial assets of household sector in

Kerala and identified the factors influencing their savings behaviour. He found that

major portions of the savings of households in Kerala were in the form of financial

savings and that too in the form of bank deposits.

Subramanian (2010) analyzed the empirical analysis on dis-intermediation

from the household sectors portfolio preferences point of view based on demand

model of five assets including bank deposits The study revealed that the

household sectors preferences between bank deposits and lending to private

corporate sector tended to be in favour of the latter and against the former.

Nalini (2011) studied on the impact of mutual funds on the deposit

mobilisation of commercial banks examined the awareness level and adoption level

of mutual funds among household investors in Thiruvananthapuram district. She

found that the advent of mutual funds has brought in expected changes in the growth

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of bank deposits and their ownership pattern, but the changes were not of a

significant magnitude.

CHAPTER3

RESEARCH METHODOLOGY

Research Methodology is a way to systematically solve the research

problem. It may be understand as a science of studying as research is done

scientifically in this we study various steps that are generally adopted by a

researcher in studying the research problem along with logic behind them.

RESEARCH DESIGNA Research design is a system of conditions for collection and analysis

of data which aims to provide the precise information. Research is a systematic way

of exploring, analysing and conceptualizing social life in order to extend and verify

knowledge to see this research helps to construct a theory. This method is simply a

systematically planned way of doing things to achieve the desired result.

A Research design of this study is analytical in nature. It is an arrangement of

condition of collection and analysis of data in a proper that aims to combinerelevance to the research purpose with economy in procedure.

DATA DESIGN

Collection of data is the process remuneration together with the proper

record of research. Those data which are already been passed through the statistical

process. In this study is based on the secondary sources. Secondary data is the data

that have been already collected by and readily available from other sources. Such

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data are cheaper and more quickly obtainable than the primary data and also may be

available when primary data cannot be obtained at all.

It is economical.

It saves efforts and expenses

It helps to make primary data collection more specific since with the help of

secondary data, we are able to make out what are the gaps and deficiencies

and what additional information needs to be collected

It helps to improve the understanding of the problem

It provides a basis for comparison for the data that is collected by the

researcher

The secondary data for the study is mainly collected through

Annual reports

Circulars

Internet

TOOLS USED FOR ANALYSIS

RETURN OF INVESTMENT:

A performance measure used to evaluate the efficiency of an investmentor compare the efficiency of a number of different investments. To calculate ROI,

the return on an investment is divided by the cost of the investment; the result is

expressed as a percentage or a ratio.

Return on investment is a popular metric because it is versatile and simple to use. If

an investment does not have a positive ROI or if there are alternative investment

opportunities with a higher ROI, the investment should not be undertaken.

EBIT

Return of Investment = __________________

Capital Employed

PERCENTAGE ANALYSIS

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Percentage analysis consists of reducing a series of related amounts to a

series of percentages of a given base. Two approaches are often used. The first,

called horizontal analysis, indicates the proportionate change in financial statement

items over a period of time, such analysis is most helpful in evaluating trends.

Vertical analysis (common-size analysis) is proportional expression of each item on

the financial statements in a given period to a base amount. It analyzes the

composition of each of the financial statements from different years

(a) To detect trends not evident from the comparison of absolute amounts and

(b) To make intercompany comparisons of different sized enterprises.

100

PERCENTAGE = __________________ CURRENT

YEAR

BASE YEAR

RATIO ANALYSIS:

Ratio analysis is the process of determining and presenting the

relationship of items and group of items in the statements. According to Batty J.

Management Accounting Ratio can assist management in its basic functions of

forecasting, planning coordination, control and communication.

It is helpful to know about the liquidity, solvency, capital structure and

profitability of an organization. It is helpful tool to aid in applying judgement,

otherwise complex situations.

According to Accountants Handbook by Wixon, Kell and Bedford, a ratio is an

expression of the quantitative relationship between two numbers.A tool used by

individuals to conduct a quantitative analysis of information in a company's

financial statements. Ratios are calculated from current year numbers and are then

compared to previous years, other companies, the industry, or even the economy to

judge the performance of the company. Ratio analysis is predominately used by

proponents of fundamental analysis.

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CURRENT RATIO

This ratio explains the relationship between current assets and current

liabilities of a business.

Current Assets

Current Ratio = __________________

Current Liabilities

Current Assets:-Current assets includes those assets which can be converted into

cash with in a years time.

Current Assets = Cash in Hand + Cash at Bank + B/R + Short Term Investment +

Debtors (Debtors Provision) + Stock(Stock of Finished Goods + Stock of Raw

Material + Work in Progress) + Prepaid Expenses.

Current Liabilities: - Current liabilities include those liabilities which are repayable

in a years time.Current Liabilities = Bank Overdraft + B/P + Creditors + Provision for Taxation +

Proposed Dividend + Unclaimed Dividends + Outstanding Expenses + Loans

Payable within a Year.

Significance:

According to accounting principles, a current ratio of 2:1 is supposed to be an

ideal ratio.It means that current assets of a business should, at least, be twice of its

current liabilities. The higher ratio indicates the better liquidity position; the firm

will be able to pay its current liabilities more easily. If the ratio is less than 2:1, it

indicates lack of liquidity and shortage of working capital.The biggest drawback of

the current ratio is that it is susceptible to window dressing. This ratio can be

improved by an equal decrease in both current assets and current liabilities.

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RATIO OF CURRENT LIABILITIES TO PROPRIETORS

FUND:

This ratio explains the relationship between current liabilities and

shareholders fund of a business.

Current

Liabilities

Ratio of Current Liabilities to Proprietors fund =

__________________

Shareholders fund

Significance:

This ratio should be 33% or more than that. In other words, the proportion of

shareholders funds to total funds should be 33% or more. A higher proprietary ratio

is generally treated an indicator of sound financial position from long-term point ofview, because it means that the firm is less dependent on external sources of finance.

If the ratio is low it indicates that long-term loans are less secured and they face the

risk of losing their money.

INTEREST COVERAGE RATIO

This ratio is also termed as Debt Service Ratio. This ratio is calculated as

follows:

EBIT

Interest Coverage Ratio =

______________________________________

Fixed Interest Charges

Significance:

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This ratio indicates how many times the interest charges are covered by the

profits available to pay interest charges. This ratio measures the margin of safety for

long-term lenders. This higher the ratio, more secure the lenders is in respect of

payment of interest regularly.

If profit just equals interest, it is an unsafe position for the lender as well as for the

company also, as nothing will be left for shareholders. An interest coverage ratio of

6 or 7 times is considered appropriate.

DEBT EQUITY RATIO

This ratio expresses the relationship between outsiders fund and

shareholders fund.

Outsiders fund

Debt Equity Ratio =

________________________________________

Shareholders fund

Outsiders Funds: - These refer to long term liabilities which mature after one year.

These include Debentures, Mortgage Loan, Bank Loan, and Loan from Financial

institutions and Public Deposits etc.

Shareholders Funds: - These include Equity Share Capital, Preference Share

Capital, Share Premium, General Reserve, Capital Reserve, Other Reserve and

Credit Balance of Profit & Loss Account.

Significance:

This Ratio is calculated to assess the ability of the firm to meet its long term

liabilities. Generally, debt equity ratio of is considered safe. If the debt equity ratio is

more than that, it shows a rather risky financial position from the long-term point of

view, as it indicates that more and more funds invested in the business are provided

by long-term lenders. The lower this ratio, the better it is for long-term lenders

because they are more secure in that case. Lower than 2:1 debt equity ratio provides

sufficient protection to long-term lenders.

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WORKING CAPITAL RATIO

This ratio shows the difference between the current assets and current

liabilities.

Working Capital Ratio = Current Assets Current

Liabilities

Significance:

This ratio is of particular importance in non-manufacturing concerns where

current assets play a major role in generating sales. It shows the number of times

working capital has been rotated in producing sales.A high working capital turnover

ratio shows efficient use of working capital and quick turnover of current assets like

stock and debtors. A low working capital turnover ratio indicates under-utilisation of

working capital.

CASH FLOW STATEMENT

The cash flow statement is a financial statement that shows how changes in

balance sheet accounts and income affect cash and cash equivalents, and breaks the

analysis down to operating, investing, and financing activities. Essentially, the cash

flow statement is concerned with the flow of cash in and cash out of the business.

The statement captures both the current operating results and the

accompanying changes in the balance sheet. As an analytical tool, the statement of

cash flows is useful in determining the short-term viability of a company,

particularly its ability to pay bills.

The cash flow statement is distinct from the income statement and balance

sheet because it does not include the amount of future incoming and outgoing cash

that has been recorded on credit. Therefore, cash is not the same as net income,

which, on the income statement and balance sheet, includes cash sales and sales

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made on credit. The money coming into the business is called cash inflow, and

money going out from the business is called cash outflow.

CORRELATIONThe correlation is one of the most common and most useful statistics. A

correlation is a single number that describes the degree of relationship between two

variables.

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CHAPTER4

DATA REDUCTION ,PRESENTATION& ANALYSIS

4.1 RETURN OF INVESTMENT

A performance measure used to evaluate the efficiency of an

investment or compare the efficiency of a number of different investments. Returnon investment is a popular metric because it is versatile and simple to use. If an

investment does not have a positive ROI or if there are alternative investment

opportunities with a higher ROI, the investment should not be undertaken.

EBIT

Return of Investment = __________________

Capital Employed

TABLE 4.1.1

RETURN ON INVESTMENT

(RS.IN CRORES)

YEARS EBIT CAPITAL

EMLOYED

ROI

2007 0.18 1.66 0.11

2008 0.25 1.52 0.16

2009 0.27 1.57 0.17

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2010 0.17 2.17 0.08

2011 0.21 3.52 0.06

Source:Secondary data

INTERPRETATION:

The above table shows that the performance of return on investment

is based on deposits. The return on investment has been increased up to 2009. In

2010, the earning before in tax started to decrease, so the return on investment also

started to decrease in the year. The highest rate of return on investment is 0.17

Crores in the year 2009.

CHART 4.1.1

RETURN ON INVESTMENT

0.11

0.160.17

0.08

0.06

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

2007 2008 2009 2010 2011

Rs.

InC

rores

Years

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4.2 PERCENTAGE ANALYSIS

Percentage analysis consists of reducing a series of related amounts to a

series of percentages of a given base. Two approaches are often used. The first,

called horizontal analysis, indicates the proportionate change in financial statement

items over a period of time, such analysis is most helpful in evaluating trends.

Vertical analysis (common-size analysis) is proportional expression of each item on

the financial statements in a given period to a base amount. It analyzes the

composition of each of the financial statements from different years

(a) To detect trends not evident from the comparison of absolute amounts and

(b) To make intercompany comparisons of different sized enterprises.

100

PERCENTAGE = __________________ CURRENT YEAR

BASE YEAR

TABLE 4.2.1

DEMAND DEPOSITS

YEARS AMOUNTS (Rs) PERCENTAGE

2007 10,806,889 100

2008 11,192,915 103.57

2009 11,570,171 107.06

2010 17,064,834 157.91

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2011 18,560,921 171.75

Source:Secondary data

INTERPRETATION:

The percentage analysis about demand deposits will be presented in the

above table. The year 2007 was taken as the base year for find out the percentage of

deposits increased for remaining years (i.e., 2008 to 2011). The percentage of

deposits increased compare to previous years because of increasing customers year

by year.

CHART 4.2.1

DEMAND DEPOSITS

100 103.57107.06

157.91

171.75

0

20

40

60

80

100

120

140

160

180

200

2007 2008 2009 2010 2011

Percentage

Years

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TABLE 4.2.2

SAVINGS BANK DEPOSITS

YEARS AMOUNTS (Rs) PERCENTAGE

2007 21,998,110 100

2008 26,483,683 120.39

2009 28,994,262 131.80

2010 38,136,801 173.36

2011 49,465,383 224.86

Source:Secondary data

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CHAPTER5

DATA INTERPRETATION

The above table shows the performance of savings bank deposits for the last five

years with the help of percentage analysis. The year 2007 was taken as the base year

for find out the percentage of deposits increased for remaining years (i.e., 2008 to

2011). The percentage of deposits increased compare to previous years because of

increasing customers year by year.

CHART 5.1

SAVINGS BANK DEPOSITS

TABLE 5.2

TERM DEPOSITS

100

120.39131.8

173.36

224.86

0

50

100

150

200

250

2007 2008 2009 2010 2011

P

ercentage

Years

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YEARS AMOUNTS (Rs) PERCENTAGE

2007 107,569,355 100

2008 132,485,325 123.16

2009 162,768,420 151.31

2010 182,104,853 169.29

2011 205,338,159 190.89

Source:Secondary data

INTERPRETATION:

The above table shows the performance of term deposits for the

last five years with the help of percentage analysis. The year 2007 was taken as the

base year for find out the percentage of deposits increased for remaining years (i.e.,

2008 to 2011). The percentage of deposits increased compare to previous years

because of increasing customers year by year.

CHART 5.3

TERM DEPOSITS

100

123.16

151.31

169.29

190.89

0

50

100

150

200

250

2007 2008 2009 2010 2011

Percentage

Years

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50

5.3 RATIO ANALYSIS

Ratio analysis is the process of determining and presenting the

relationship of items and group of items in the statements. According to Batty J.

Management Accounting Ratio can assist management in its basic functions of

forecasting, planning coordination, control and communication.

5.3.1 CURRENT RATIO

Current Assets

Current Ratio = __________________

Current Liabilities

TABLE

5.3.1 CURRENT RATIO

(RS.IN CRORES)

Years Current Assets Current Liabilities Current Ratio

2007 10.71 4.22 2.53

2008 12.83 4.71 2.72

2009 13.27 5.01 2.65

2010 16.24 6.99 2.32

2011 19.33 8.73 2.21

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Source:Secondary data

INTERPRETATION:

The current ratio of the company this shows that the current ratio is

more than the standard level 2:1 so they should maintain this for future

CHART 5.3.1

CURRENT RATIO

5.3.2 RATIO OF CURRENT LIABILITIES TO PROPRIETORS

FUND:

This ratio explains the relationship between current liabilities and

shareholders fund of a business.

2.53

2.722.65

2.322.21

0

0.5

1

1.5

2

2.5

3

2007 2008 2009 2010 2011

Rs.I

nC

rores

Years

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Current Liabilities

Ratio of Current Liabilities to Proprietors fund = __________________

Shareholders fund

TABLE 4.3.2

RATIO OF CURRENT LIABILITIES TO PROPRIETORS FUND

(RS.IN CRORES)

Years Shareholders fund Current Liabilities Ratio of Current

Liabilities to

Proprietors fund

2007 1.24 4.22 3.40

2008 1.38 4.71 3.41

2009 1.57 5.01 3.19

2010 1.83 6.99 3.82

2011 2.43 8.73 3.59

Source:Secondary data

INTERPRETATION:

The above table reveals that ratio of current liabilities to

Proprietors fund does not have same level of ratio. In 2008, the ratio has been

increased when compare to the previous year. But in 2009, the ratio has decreased.

Then again the ratio has started to increase in 2010 and decrease in 2011.

CHART 5.3.2

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RATIO OF CURRENT LIABLITIES TO PROPRIETORS FUND

5.3.3 INTEREST COVERAGE RATIO

This ratio is also termed as Debt Service Ratio. This ratio is calculated

as follows:

EBIT

Interest Coverage Ratio = ______________________________________

Fixed Interest Charges

3.4 3.41

3.19

3.82

3.59

2.8

2.9

3

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

2007 2008 2009 2010 2011

Rs.

InC

rores

Years

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TABLE 5.3.3

INTEREST COVERAGE RATIO

(RS.IN CRORES)

Years EBIT Fixed Interest

Charges

Interest Coverage

Ratio

2007 0.18 0.83 0.22

2008 0.26 1.10 0.24

2009 0.28 1.44 0.19

2010 0.17 1.71 0.10

2011 0.21 1.76 0.12

Source:Secondary data

INTERPRETATION:

The above table reveals that ratio of current liabilities to

Proprietors fund does not have same level of ratio. In 2008, the ratio has been

increased when compare to the previous year. But in 2009, the ratio has decreased.

Then again the ratio has started to increase in 2010 and decrease in 2011.

CHART 5.3.3

INTEREST COVERAGE RATIO

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5.3.4 DEBT EQUITY RATIO

This ratio expresses the relationship between outsiders fund and

shareholders fund.

Outsiders fund

Debt Equity Ratio = ________________________________________

Shareholders fund

Outsiders Funds: -These refer to long term liabilities which mature after one year.

These include Debentures, Mortgage Loan, Bank Loan, and Loan from Financial

institutions and Public Deposits etc.

Shareholders Funds: - These include Equity Share Capital, Preference Share

Capital, Share Premium, General Reserve, Capital Reserve, Other Reserve and

Credit Balance of Profit & Loss Account.

0.22

0.24

0.19

0.1

0.12

0

0.05

0.1

0.15

0.2

0.25

0.3

2007 2008 2009 2010 2011

Rs.

InC

rores

Years

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TABLE 5.3.4

DEBT EQUITY RATIO

(RS.IN CRORES)

Years Outsiders fund Shareholders

fund

Debt Equity

Ratio

2007