Krishna Grameena Bank

Executive Summary

INTRODUCTION

Working capital management is typically seen as the managing the

money. Working capital management is one of the business firms and it

is an economic activity concerned with the production and sale of goods

and services for the purpose of earning profit.

Broadly defined, working capital management is a life and blood

of a business firm. Working capital management concerned with

problems that rise in attempting to manage current asset, current

liabilities and the exist between them.

Today, co-operative societies are found in rural as well as urban

areas. In rural areas they are known as primary credit societies and in

urban areas, they are known as co-operative banks.

Working capital management is an activity concerned with the

conversion of raw materials or semi finished goods into finished goods,

but in broad sense, it is a branch of business activity which is concerned

with the raising, production, processing or fabrication of products.

INSTITUTE OF BUSINESS MANAGEMENT &RESEARCH HUBLI Page 1

Working capital management has its own significance in the day to day

operations of the business working capital in the industry indicates the

effective utilization of working capital is the format requirement of any

industry.

OBJECTIVES OF THE STUDY

1) To study aims to achieve the following objectives

2) To study and understand financial statement of the bank

3) To study the utilization of a working capital in the bank

4) To achieve unit of direction in accomplishment of corporate goals at

all levels in the area of over all credit management

5) To meet all genuine credit needs of existing clients


RESEARCH METHDOLOGY

The study assumes great significance because it has an impact

on all the activities of the bank. Its primarily responsibility is to discharge

the credit function successfully . It touches on all the banking function.

And also assumes a great contribution because of the fact that the bank

requires certain strategic inputs into boost not only in the place of

function but also the service factor.

Sources of data

The source of information is collected from primary and secondary data.

1) Primary Data:

The information was collected by communicating with the

officers and employees observation and visiting all departments.

2) Secondary Data;

The secondary data has been collected from the annual reports of

the bank, last three years balance sheet and profit loss account.

Also information collected from text, bank annual reports, websites

etc and from the financial statement analysis which helps in calculating

different ratio


SCOPE OF THE STUDY

The scope of the study is to identify the areas of the control to have

better over various components of working capital management are

operating in nature and not our time decision.

So it is an attempt is to be made to identify the optimum working

capital requirement for corporation bank the manner in which they utilize

the current assets in a better way.

1.5 LIMITAION OF THE STUDY

1) Managers and employees were relevant in providing information

2) This study concentrates only on working capital aspects.

3) The information data collected and analyzed is restricted to the

researches knowledge and ability.


BANK PROFILE


BANK PROFILE

HEAD OFFICE

GULBARGA


Krishna Grameena Bank was established in the year 1978. The bank has

completed 29 years of its meaningful service to the people of Gulbarga

and Bidar districts. Since inception the bank is striving hard to achive its

set objectives in its area of operation. The bank has now extended its

coverage to all the urban and semi urban centers in both the districts.

The head office building has been well equipped with centralized air

conditioning, computerized, functioning, solar lighting, modern gadgets

and a sprawling well maintained garden. The head office premises is

regarded as one of the BEST CORPORATE OFFICE not only in

Gulbarga city but also in the entire Hyderabad Karnataka Area. The bank

enjoys the popularity as the PEOPLE’S BANK in the area.

During the year 2007-2008 the bank crossed a major milestone by

surpassing Rs.1566 crores of business by registering a growth of 29.68%

over the previous year. Further the bank has doubled its total business

during the last 3 years from Rs.777 crores as on March 2005 to Rs.1566

crores as on March 2008. Systematic, proactive and sustained efforts are

continued to accomplish all round excellence


The Krishna Grameena Bank is based on the traditional Indian value of services to

the community, bank is reputed as one of the well run banks in the community of

public sector banks in the country.

The bank has been richly endowed with a relatively young, dynamic and efficient

manpower, which is the key factor of the bank success. Excellence in performance

and uniqueness in customer service form the central core of the banks

organizational culture. The growing confidence of its clientele is well reflected in

the banks performance in all critical areas of its operations all through the years.

Krishna Grameena Bank is pioneer in promoting & extending financial

assistance to self help group so far the Bank has Credit linked 8042 SHG’s out

total 8841 SHGs who are having SB A/c with Bank. The aggregate quantum of

micro finance to SHGs is Rs.40.69 Crores.

The bank has bagged third prize from NABARD for best performances in

SHG Bank linkage programme in Karnataka State during 2005- 2006.

The Bank is one of the two RRBs in India selected by NABARD for

implementation of smart credit pilot project were in processor card are used by

SHG member to know balance in their SB A/c and to draw the money without

bothering to Branch Manager /Rural Development Officer.


ANNUAL REPORT OF FIVE YEARS

1. Directors Report:

The board of directors have pleasure in presently the annual report together

with balance sheet and profit and loss account of the bank for the five years

The bank has put in place a well articulated frame work of 3 P’s (people,

process, products) to identify and execute new initiatives to accelerate business

growth on sound and sustainable lines. This frame work is also designed to

improve customer engagement at all customer touch points.

Innovation is actively encouraged people initiatives include new programmes for

leadership development, succession planning, appointment of execute coach,

incentives for high performance, performance enhancement programmers through

counselors etc process initiative include centralized of back office functions,

separation of credit marketing and approved process and feed forward MIS to

branches. New product like branchless inclusion strategies. The bank is actively

chalking out strategies to take the bank to higher growth trajectory.


2. Branch Network:

As at the end of the financial year, the bank is having a well spread out

network of 109 branches, 76 in Gulbarga districts and remaining 33 in Bidar

district.

During the financial year 2007-2008, the bank has opened 4 new branches

two in Gulbarga district and two in Bidar districts. There are 4 area officer of

which 3 are in Gulbarga districts situated at Gulbarga, Sedam, and Shahapur and

one in Bidar.

3. Share Capital:

The bank has an authorized share capital of Rs.50000/- and an issued and

paid up capital of Rs.10000 thousands contributed by the three share holders viz,

Govt. of India : 50%

Sponsor Bank State of India : 35%

Govt. of Karnataka : 15%


4. Share Capital Deposit:

During the year 1997-1998 the bank was taken up for restructing and a sum

of Rs.251800 thousands was sanctioned to cleanse the ‘Balance Sheet’. According

an aggregate sum of Rs.187577 thousands has been received from all the three

share holders proportionately in two branches. The balance amount, in spite of our

best efforts was not released till date. As on 31/03/2008 the position of share

capital deposit was as under:

5. Deposit:

The bank has achieved a growth of Rs.1686786 thousands during the year.

The break up of existing level of deposits is as under:


Sl. NO. Name of the Share Holders Amount Released

1 Govt. of India (50%) 93788

2 Govt. of Karnataka (15%) 28137

3 State Bank of India (35%) 187577

Sl.

No.

Category of

Deposit

2008-2009 2009-2010

No. of A/cAmt

%No. of A/c Amt %

1 Demand Deposits 739592 48.65 591970 53.52

2 Time Deposits 103201 51.35 101309 46.48

Total 842793 100.00 693279 100.00

1. The growth in deposits during the year was a nefty 28.85% when compared

to the p.y. This is higher than all scheduled commercial banks growth rate of

23.10% during the year 2007-2008.

2. The percentage of demand deposits has came down during the year on

account of some of the state government departments preferring banks with core

bank facility and shifted their accounts from Krishna Grameena Bank.

3. Pre-branch deposits a raise from Rs.55129 thousands as on March 2007 to

Rs.69110 thousands as on March 2008.

4. Pre-employed deposits increased from Rs.12073 thousands as on March

2007 to Rs.15792 thousands as on March 2008

6. Borrowings:


Borrowings from NABARD and sponsor bank are the major sources of

funds for our bank besides deposits. The detailed of limit sanctioned and refinance

outstanding as on 31/03/2009 are as under The bank continued to make prompt

repayments to NABARD and the sponsor bank.

Sl.

NoParticulars

From NABARD From SBI

Limit

Sanctio

n

Amt.

Outstandin

g

Limit

Sanctio

n

Amt.

Outstandi

ng

1 Short term , seasonal

agricultural operation

389720 273710 168000

0

1319484

2 Short term, other than

seasonal agricultural

operation

- 640000 366288

3 Short term, development

of tribal population

304580 191515 126000

0

778492

4 Short term, national oil

seed development

programme

150757 83965 660000 519106

5 Short term, marketing of

crops

- - - -

6 Medium term (schematic) 595035 595035 - -

7 Medium term (conversion) - - - -

Total 1440092 1144225 424000

0

2983370


Investment:

As on 31/03/2009 the total investment of the bank stood at Rs.1747497

thousands.

Loans and Advances Outstanding:

The bank has recorded a growth of Rs.1409695 thousands during 2007-2008

as against Rs.1349083 thousands achieved during the p.y 2006-2007. During the

year the bank has disbursed Rs.4966578 thousands as against ACP target

Rs.3711996 thousands.

Schemes of Krishna Grameena Bank:

1. Krishna Krishi Card (KKC) Scheme:

Kisan credit cards under KGB brand name Krishna Krishi card, the bank has

disbursed an amount of Rs.3611500 thousands to formers. During the year the

bank has issued new KKC card to 6514 formers with this the total number of KKC

issued by the bank has shot up to 142500.

All eligible borrowers have been issued with the credit cards and personal

accident insurance cover has been provided to all eligible card holders (i.e. below

the stipulated age of 70 years) under personal accident insurance scheme (PAIS).

The share of premia borne by the bank is Rs.1361 thousands as against Rs.681

thousands contributed by borrowers.


Swarojgar Credit Cards (SCC):

The bank has sanctioned 432 SCC during the year 2007-2008 taking the

cumulative number of cards issued to 9858 as against 9426 as on 31/03/2007.

Amount outstanding also increased to Rs.2329.83 lakhs as on 31/03/2009 from

2150.55 lakhs as on March 2008.

Spread Analysis:

The following tables shows various financial ratio:

Sl. No. Particulars 2007-08 2008-09

Average working funds 8471005 10382014

1 Financial Return 9.00% 8.99%

2 Financial Cost 4.03% 4.47%

3 Financial Margin (I-II) 4.97% 4.52%

4 Operating Margin 2.86% 2.41%

5 Miscellaneous Income 0.78% 0.74%

6 Operating Profit 2.90% 2.85%

7 Risk Cost 0.04% 0.03%

8 Net Margin 2.86% 2.82%


The financial cost has increased by 0.44% on account of aggressive

mobilization of term deposits during the year and reduction of demand deposits

shares in total deposits as same of the government. Departments preferred to bank,

with bank having core banking facility for keeping their deposits. However, it is

gratifying to note management substantially from 2.85% as on 31/03/2007 to

2.41% as on 31/03/2008 variation in all other ratio are marginal.

Transfer Price Mechanism:

The bank has adopted a fair transfer price mechanism on funds lent to and

borrowed from internally as under;

1. Interest rate on funds that lent to head office on total monthly average

deposits at 9.50% p.a.

2. Interest rate on funds borrowed from head office on total monthly average

advances at 3.00% p.a.


BRANCHES COMING UNDER OUR VARIOUS AREA OFFICES

SBRANCHES OF AREA –I :Gulbarga area of branches Area Manager, Area Office: Aland Road, Shahbazar,

GULBARGA PIN- 585101 Tel :08472-242069

SL.NO.

Name of The BRANCH.

Taluk & District

OFFICE Telephone Numbers

PIN CODE

1. NehruGunj GULBARGA 958472-268263

585104

2. Harsoor. Taluka & District- Gulbarga

958478-222754

585102

3. Dongargaon. Taluka & District- Gulbarga

958478-224059

585313

4. Sonth. Taluka & District- Gulbarga

958478-225808

585324

5. Hagargundgi. Taluka & District- Gulbarga

958472-213259

585308

6. Aland. Taluk- Aland, Dist- Gulbarga

958477-202530

585302


7. SalgeraVK Taluk- Aland, Dist- Gulbarga

958477-222182

585316

8. Bhusnoor. Taluk- Aland, Dist- Gulbarga

958440-210140

585268

9. Khajuri Taluk- Aland, Dist- Gulbarga

958477-227449

585314

10. Madiyal. Taluk- Aland, Dist- Gulbarga

958440-217980

585336

11 Sarasamba. Taluk- Aland, Dist- Gulbarga

958477-238642

585302

12. Chinchansur. Taluk- Aland, Dist- Gulbarga

958477-231051

585104

13. Ladmugali. Taluk- Aland, Dist- Gulbarga

958477-233075

585316

14. Tadakal. Taluk- Aland, Dist- Gulbarga

958477-229160

585343

15. Narona. Taluk- Aland, Dist- Gulbarga

958477-228404

585311

16. Athnoor. Tq Afzalpur, Dist- Gulbarga

958470-260071

585301

17. Revoor-B Tq Afzalpur, Dist- Gulbarga

958470-269439

585301

18. Udachan. Tq Afzalpur, Dist- Gulbarga

958471-231513

585301

19. GobburB Tq Afzalpur, Dist- Gulbarga

958470-265018

585265

20. Bandarwad. Tq Afzalpur, Dist- Gulbarga

958470-261116

585265

21. Stn.Ghangapur. Tq Afzalpur, Dist- Gulbarga

958470-267236

585213

22. Desai.Kallur. Tq Afzalpur, Dist- Gulbarga

958470-268568

585301

23. Nelogi. Tq Jewargi, Dist- Gulbarga

958442-225010

585310

24. Aralgundagi. Tq Jewargi, Dist- Gulbarga

958442-290272

585310

25. Ankalga. Tq Jewargi, 958442- 585212


Dist- Gulbarga 222041

BRANCHES OF AREA –II SHAHAPUR AREAArea Manager, Area Office: B B Road SHAHAPUR

PIN- 585223 Tel :08479-244607

SL.NO.

Name of The BRANCH.

Taluk & DistrictOFFICE

Telephone Numbers

PIN CODE

1. Andola. Tq Jewargi, Dist- Gulbarga

958442-221691

585303

2. Ijeri. Tq Jewargi, Dist- Gulbarga

958442-223974

585310

3. Malli. Tq Jewargi, Dist- Gulbarga

958442-220027

585325

4. Balbatti. Tq Jewargi, Dist- Gulbarga

958442-280409

585309

5. Dornalli. Tq Shahapur Dist- Gulbarga

958479-212753

585223

6. Wanadurga. Tq Shahapur Dist- Gulbarga

958479-221073

585309

7. Wadagera. Tq Shahapur Dist- Gulbarga

958479-219127

585368

8. Bendebimbli. Tq Shahapur Dist- Gulbarga

……. 585368

9. Shorapur. Tq Shorapur. Dist- Gulbarga

958443-256069

585224

10. Devapur. Tq Shorapur. Dist- Gulbarga

958443-275350

585290

11 Pethammapur. Tq Shorapur. Dist- Gulbarga

958443-273002

585290

12. Rajankollur. Tq Shorapur. Dist Gulbarga

958443-223907

585291

13. Kodekal. Tq Shorapur. Dist Gulbarga

958444-222850

585237


14. Vajjal. Tq Shorapur. Dist Gulbarga

958443-200207

585215

15. Naganoor. Tq Shorapur. Dist Gulbarga

958443-271073

585215

16. Malagatti. Tq Shorapur. Dist Gulbarga

958443-329784

585216

17. Hunsagi. Tq Shorapur. Dist Gulbarga

958444-200087

585215

18. Yergol. Tq Yadgir. Dist Gulbarga

958473-215566

585218

19. Gajarkot. Tq Yadgir. Dist Gulbarga

958473-225605

585214

20. Putpak. Tq Yadgir. Dist Gulbarga

958473-225429

585214

21. Kadechur. Tq Yadgir. Dist Gulbarga

958473-281055

585374

22. Konkal. Tq Yadgir. Dist Gulbarga

958473-213737

585321

23 Gurmitkal. Tq Yadgir. Dist Gulbarga

958441-225363

585214


KRISHNA GRAMEENA BANKBOARD OF DIRECTORS

SHRI V. M. HAGARAGICHAIRMAN

DIRECTORS

1.SHRI P. THOMASASSISTANT GENERAL MANAGER

Rural Planning and Credit DepartmentReserve Bank of India

BANGALORE

2.SHRI P. G. SHETDistrict Development Manager

National Bank for Agriculture and Rural Development (NABARAD)

GULBARGA

3. SMT. GURAMMA SIDDA REDDYMIG-19, K H B Colony

BIDAR

4. SHRI ISHWAR B KHANDREC/O SHIR BHIMRAO KHANDRE

KHANDRE GALLI, GUNJBHALKI (DT. BIDAR)


5. SALMA K FAHIM I.A.S.Chief Executive Officer

Zilla PanchayatGULBARGA

6.SMT. GURNEET TEJ I.A.S.Chief Executive Officer

Zilla PanchayatBIDAR

7. SHRI.P.P.G.Muni Subba ReddyAssistant General Manager

(RBU II), State Bank of IndiaLocal Head Office

BANGALORE

8. SHRI.U.N.Narayana MaiyaAssistant General Manager

State Bank of IndiaRegional Business Office

GULBARGA


RATE OF INTEREST ON ADVANCES W.E.F.01.08.2009

Sl.

no

TtTYPES OF LOANS AND ADVANCE

EXISTING RATES

Revised Rate

Wef01-08-2009

1

ACC Upto Rs.50000/- 7% 7% *Rs.50001/- to Rs.2 lakhs 7% 7% *Above Rs.2 lakhs to 3 lakhs 7% 7% *Above Rs.3 lakhs 14% 14.5%

2

ATL/AATL Upto Rs.25000/- 13% 13.5%Rs.25001/- to Rs.50000/- 13% 13.5%Rs.50001/- to Rs.200000/- 14% 14.5%Above Rs.2 lakhs 14% 14.5%

3

GCC/GTL/COMPOSITE LOAN

(Rural artisns & craftsman)

Upto Rs.25000/- 13% 13.5%Rs.25001/- to Rs.50000/- 13% 13.5%Rs.50001/- to Rs.200000/- 14% 14.5%Above Rs.2 lakhs 14.50% 15.00%

4

Gcc/tlc To Other than Rural Artisans, Craftsmen

Upto Rs.25000/-

13%

13.5%

Rs.25001/- to Rs.50000/- 13% 13.5%

Rs.50001/- to Rs.200000/- 14% 14.5%Above Rs.2 lakhs 14.50% 15.00%

5House building loans

Upto Rs.2.00 lakhs 12.75% 13.25%Above Rs.2.00 lakhs 13.00% 13.50%

6 S.R.T.O 14.50% 15.00%7 Gold loans 14.50% 15.00%


8Ware house receipts

Up to Rs.50,000/- 9.00% 9.50%Above Rs.50,000/- 9.50% 10.00%

9Clean Demand Loans Salaried persons (with check-off facility)

14.00% 14.50%

Others 15.00% 15.50%

10

Government Sponsored Schemes

Upto Rs.25000/-

Rs.25001 to Rs.2.00 lakhs

Above Rs.2.00 lakhs

As per the type of loan (ATL/AAT

L

/GTL/GCC)

As per the type of loan (ATL/AATL

/GTL/GCC)


SL NO PARTICULARS SERVICE CHARGES

1

Collectioof Cheques/Instruments(Out of pocket expenses of Rs.15/- per cheque/instruments need to be recovered in addition to commission)

Up to Rs.5000/-Rs.25/- For Rs.5001/- upto Rs.20,000/-Rs.4.50 per Rs.1000Min: Rs.30/- For>Rs.20000/- Rs.5/- per 1000/-Min: Rs.100/-Max: Rs.12500/-

2

Collection of bills pocket expenses of Rs.30/- per bill need to be recovered in addition to commission)

Up to Rs.1000/- - Rs.65/-Up to Rs.10000/ - Rs.100/-> Rs.10000/-Rs.10/- per 1000/- Max: Rs.12500/-

3

Bankers' Cheques/ Demand Drafts

Upto Rs.10,000/-: Rs.30/- For>Rs.10,000/-Rs.3.50 per Rs.1000/-Min: Rs.50/-Max: Rs.12,500/-

4 Local Bankers' Cheque

Rs.3/- per thousand subject to a minimum of Rs.30/- maximum Rs.12,500/-

5

5A

Duplicate Bankers' Cheque/Drafts

Cancellation/revalida- -tion of Bankers' cheque/Drafts

Rs.100/- per instrument.

Rs.100/- per instrument

6 Returned cheques/billsLocal Outstation




7No due certificate (Other than Agriculture)

Rs.150/-

8 Solvency certificateRs.250/- per lacMin: Rs.1000/-Max: Rs.15000/-

9

Minimum balance Service charges

SB Acs. (ordinary) SB Acs. (Ch.Book) C.A. (Individual) C.A. (Others)

-Nil-Rs.150/- per quarter Rs.600/- per quarterRs.1200/- per quarter

10

Account closing before 12 months

Rs.200/-

11

Safe Deposit Locker

Rs.750/- p.


KRISHNA GRAMEENA BANK

Overview of the Bank:

Krishna Grameena Bank is pioneer in promoting & extending financial

assistance to self help group so far the Bank has Credit linked 8042 SHG’s out

total 8841 SHGs who are having SB A/c with Bank. The aggregate quantum of

micro finance to SHGs is Rs.40.69 Crores.

The bank has bagged third prize from NABARD for best performances in

SHG Bank linkage programme in Karnataka State during 2005- 2006.

The Bank is one of the two RRBs in India selected by NABARD for

implementation of smart credit pilot project were in processor card are used by

SHG member to know balance in their SB A/c and to draw the money without

bothering to Branch Manager /Rural Development Officer.

Vision of the Bank:

“To be the preferred banking institution of the people of our area,

committed to improve the living standard of the mass so as to achieve inclusive

growth with sustained viability”


Our Mission for 2009-2010:

To Surpass Rs.2000 Crores of total Business by 31-03-2012

To earn a minimum net profit of Rs. 25 Crores.

To bring down gross NPV to 1%

Our Values:

Integrity

Commitment

Passion

Seamlessness

Speed


Achievement in 2008-2009:

Business turnover crossed Rs.1566 crores surpassing the MoU signed with

state bank of India. Growth over the previous year was to the extant of 24.68%

ADVANCES: Aggregate advances crossed Rs.8 13.05 crores a growth of

20.97% over the previous year achievement being 136.86% of MoU target.

DEPOSITS: The level as on 3 1.03.2009 was Rs.753.30 crores a growth of

28.90% over the previous year achievement being 13 8.84% of MOU Target.

PROFIT: Net profit earned was Rs.19.54 crores as against the target of

Rs18.00 crores.

100% computerization of the bank has been completed. All the branches

completed annual closing work successfully using computer.

Adequate training was provided to staff of computerized branches.

No loss making branch as on 3 1.03.2009.

Ghorchincholi branch has been merged with Bhatambra branch.

Four New branches were opened at Omnagar, Karuneshwar nagar, Kamalnagar

& Naubad.


Organization Structure:

The Bank’s head officer is located at Kusnoor Road Gulbarga in It’s own

Building with centralized air conditioning the Bank is headed by chairman a TEG

Scale V officer on deputation from state Bank of India & is of the rank of asst

general manager. The manager (Audit & vigilance) has responsibility of Audit &

vigilance of all Branches / area officers and various Department Head office

Manager are as under Head office.

Personal Department

Credit Management Department

Assert Management Department

Fund Management Department

General Banking Department

Computer cell / Information Technology Department

The Branch network is spread in to four Areas

1. Gulbarga Area : 25 branches

2. Shahapur Area : 24 branches

3. Sedam Area : 23 branches

4. Bidar Area : 24 branches

5. Under GM’s control : 10 branches


TOTAL : 106 branches


Organizational structure of KG Bank of Chittapur Branch

The main reason to open this branch in Gulbarga was as this region was not

represented by the banks and the town was very much potential for the banking

service. Hence the branch was opened so as to improve this area with new things

by providing services to the customers easily. Initially at the starting stage when

this bank was opened lit has started with the numbers of 100 customers. The main

aim or the main motive is that for opening a branch in Gulbarga is to provide a

value based banking service to the customers and the development of bank from

strength to strength.

Following strategies are adopted by the bank

Identifying the customers needs

Lending the required loan to the customer.

Giving the polite service.

Systematic and up to date working of the bank etc.

The bank’s Head Office is located at Kusnoor road Gulbarga in the own building

with centralized air-conditioning. The bank is headed by a chairman.TEG Scale-V

officer on deputation from state bank of India the General Manager is an also on

deputation from SBI and is of the rank of asset General Manager (audit and

vigilance) has responsibility of audit vigilance of all branches /areas officers and

various department at head office.


Organizational structure of KG Bank of Chittapur Branch


Chairman/board of directors

Area manager

General Manager

Branch manger

Department heads

Clerical staff

SWOT ANALYSIS

S Strength

W Weakness

O Opportunit

STRENGTH:

The utilizing the time according to the situation effectively.

Bank have taken up wide ranging corporate social responsibilities. To

mention a few, establishing village libraries, malaria.

The total income of bank has increased from Rs.828692 to Rs.1011800.

All the branches of the bank have been brought under computerized

environment.


WEAKNESS:

Management because of the disproportent power, even to the employees,

the management could not have proper administration over the work.

Non resident India account are dependent on other banking sector.

OPPORTUNITIES:

Increased branch and ATM network will enable the bank to improve the

client base.

Sharing the ATM network with other banks will facilitate optimum use

of the banks infrastructure and resources.

Financial requirement coupled with accelerated economic activity will

necessitate a healthy bank credit which in turn increases the operational

income of the banks.

Integration to global market expands the position of oversea banking.


THREATS:

The interest rates have continued to decline over the past few years. In

conditions of excess liquidity, interest earnings of banks may be affected.

Bank like any other industry are exposed to credit, market and operational

risks in the day to day operation.

Thinking of interest spread affects the profitability structure of the bank.


THEORETICAL BACKGROUND

Working capital management

Introduction:

Working capital management refers to management of the working capital or to be

more precise, the management of current assets. A firms Working capital consist of

its investment in current assets which include short term assets such as cash and

bank balance, inventories receivables ( including debtors and bills ) and marketable

securities. So, the Working capital management refers to the management of level

of all individual current assets.

Working capital management includes the management of level of the all

individual current assets as well as the management of total working capital.

However, each individual current asset has unique characteristics which the

financial manager must consider in deciding how much money should be invested

in each of these current assets.


Concept of working capital:

These are two types of working capital. They are

1)Gross working capital

2)Net working capital

Gross Working Capital

Gross working capital refers to the firm’s investment in current assets which can be

concerned into and within an accounting year (or operating cycle) and include

cash, short term securities, debtors (accounts receivable or book debts) bills

receivable and stock (inventory).

Gross working capital points to the arranging of funds to finance current assets.

Net working capital

Net working capital refers to the difference between current assets and current

liabilities current liabilities are those claims of outsiders, which are expected to

mature for payment within accounting year and include creditors (account

payable), bills payable and outstanding expenses Networking capital can be


positive or negative. A positive networking capital will rise when current asset

liabilities are in excess of current asset.

Determinants of working capital

The firm should plan its operations in such a way that it should have neither

too much nor too little working capital. The total working capital requirement is

determined by a wide variety of factors. These factors however effect differently.

They also vary from time to time. The following factors are involved in the proper

assessment of the working capital.

Nature of business

The production policies pensive by the management have a Bearing on their

working capital needs. On the other hand trading and manufacturing concern

required torque amount of working capital to maintain a sufficient amount of cash,

inventories and books debts.

Production cycle

The production policies pensive by the management have significant effect on

the requirements of working capital of the business. The production schedule has a

great influence on the level of inventories. The decisions of the management

regarding auto motion etc will also its effects on working capital requirements.

Business cycle

The business fluctuation influence the size of working capital mainly during

the upward phase when boom conditions prevail, the need for working capital is


likely to grow to cover the bag between increased sales and receipt of cash as well

as invest in plant and machinery to meet the increased demand.

Credit policy

The credit policy concern to the sales and purchase also the working capital.

The credit policy influences the requirements of working capital in two ways,

Through credit terms granted by the firm to its customers/buyers of goods

Credit terms available to the firm from its creditors.

Operating Efficiency

The operating efficiency of the management is most important determinant of the

level of working capital. The operating efficiency of the firm relates to the

optimum utilization of resources at minimum cost. The firm will be effectively

contribute to its working capital of it is efficient the controlling the operating cost

and utilizing fixed and current assent leads to operating efficiency.


Marketing Cycle

Longer the manufacturing process, the higher be the requirements of working

capital and vice versa. This is because of the fact that highly capital structure

intensive industries require a large amount of working capital to run their

sophisticated (complicated) and long production process.

Objective of working capital

The need for working capital to run day to day business activities cannot be

overemphasized. We will hardly find, a business firm, which doesn’t required any

amount of working capital.Indeed,firm differ in their requirements of the working

capital.

The firm has to invest enough funds in current assets for cash instantaneously. This

is always an operating cycle involved in the conversion of sales into cash.

Sources of working capital

The need of working capital is increased by raising prices of products and relative

inputs. On the other hand, the government and monitoring authorities pray their

own role to runs the malice in period of inflation. The control measures often take

the firm of deal money policy and restrictions credit.

Financing of additional working capital in such an assessment becomes a real

problem to problem to finance manager of a concerned unit; commercial banks


play the most significant role in providing working capital finance. The sources of

finance that may be two type of financing.

Long term financing

Loan from financing institution the option is normally rules out, because

financial institutions do not provide finance for working capital requirements.

1. FLOATING OF DEBENTURES:

In Indian capital market, floating of debentures has still to gain popularly

debentures issues of companies in private sector not associated with certain reputed

groups generally failed to attract investors to invest funds in companies.

2. ACCEPTING PUBLIC DEPOSITS:

The issue of tapping public deposits is directly related to the image of the

company seeking to invite private deposits.

3. ISSUES OF SHARES:

With a view to financing additional working capital needs, issue of

additional equity share could be considered.


Raising funds by internal financing:

Raising funds from operational profit poses problems for any banks. sufficient

requirements to finance additional working assets, still a largely feasible solution

has increase profitability through cost control and cost reduction measures

managing the cash operating cycle, rationalizing investor stock and so on.

Types of working capital

1) Permanent working capital

2) Temporary working capital

1) Permanent working capital

The permanent working capital is the minimum level of current assets. Depending

upon the changes in production and sales, the need for working capital, over and

above permanent working capital, will Fluctuate.

2) Temporary working capital

The over and above the permanent working capital, the firm may also require

additional working capital in order to meet the requirements arising fluctuation in

sales volume. This extra working capital needed to support the increased volume of

sales.


Assessment of working capital requirements:

In view of the freedom given by RBI, banks make their own assessment of credit

requirement of borrowers based on a comprehensive study of borrowers business

options i.e. taking into account the production/processing cycle of the industry as

well as the financial and other relevant parameters of the borrowers. Accordingly,

banks can decide the levels of holdings of each item of inventory as also of

receivables, which in their would represent a reasonable build up of current assets

for being supported by bank finance. Reserve bank of India (RBI) will not

prescribe detailed norms for each item of inventory as also of receivables, it would

only advice the overall levels of inventory and receivable for different industry for

the guidance of banks to serve as broad indicators. Banks may also consider

evolving suitable internal guidelines for accepting the projections made by their

borrowers relating to the items, sundry creditors (goods) appearing as an item

under other current liabilities in the balance sheet.


RATIO ANALYSIS


RATIO ANALYSIS

Definition of ratio

Ratio is a wealth immaterial expression showing relationship between the items of

the financial statement

Definition of ratio analysis

Ratio analysis is a widely used tool financial analysis. It is a defined as the

systematic use of ratio interact the financial statement so that the strength or

weakness of a firm as well as it historic performance and current financial

conditions can be determined.

Advantage of ratio analysis:

1) Ratio analysis simplified the understanding of financial statement

2) It is a device to analyze and interpret the financial of the enterprise

3) Ratio facilitates inter firm and intra firm comparison, their by bringing out the

strength weakness and efficiency of the firm

4) Ratio’s makes its possible to estimate the other figure is known

5 )Investment decision can at times be based on the conditions revealed by ratio’s


Limitations of the ratio analysis:

While ratios are compared on a historical basis, though the time periods may be of

equivalent duration, the price level changes between the periods which may distort

the result if no allowances is made for this factor.

Since analysis is made on the basis of financial statement, this will have all the

limitations such as window dressing, improper valuation of assets, inclusion of

value of fiction assets etc

There is no reliable way of the measuring the profit potential of business so as to

compare the reported profit with the profit that could have been earned under the

circumstances.

Nevertheless, ratio analysis is a useful too and could be used along with other

quantitative techniques in financial management to assess the financial health of an

organization.


Classification of Ratio Analysis

The third step in analysis and interpretation of balance sheet is to calculate various

ratios. The various ratios can broadly classify into four categories namely:

1) Profitability Ratio

2) Liquidity Ratio

3) Leverage Ratio

4) Activity Ratio

A) Profitability Ratio

These ratios indicate whether the business has utilized the resources profitability.

The important profitability ratios are:

Gross profit

1. Gross profit ratio = x 100

Gross collection


Net profit

2. Net profit ratio = x 100

Gross collection

Operating cost

3. Operating ratio = x 100

Gross collection

Operating profit

4. Operating profit ratio = x 100

Gross collection

Profit before interest &tax

5. Return on investment ratio = x 100

Capital employed

Capital employed = net fixed assets + total current asset


Net profit after Tax

6. Net profit to net worth ratio = x 100

Net Worth

Net profit available to equity share holders

7. Earning per share (EPS) = x 100

Gross collection

Dividend equity share

8. Dividend payout ratio = x 100

Earning per equity share


B) Liquidity ratio

Liquidity refers to the company’s ability to meet its current obligations. The

liquidity ratios, therefore, have to do with the size and relationship of current

liabilities which represent the obligations due and current assets, which presumably

provide the source from which these obligations will be met. A company is not

sounds financially unless it has adequate liquidity. The liquidity ratios gibe us the

liquidity position of the concern.

The two important liquidity ratios used by the bankers are:

1) Current Ratio

2) Acid Test Ratio

Current ratio:

The current ratio of a concern is the ratio of its current assets and its current

liabilities such as creditors for materials and supplies, rates and taxes etc. it

indicates the ability to meet maturing current liabilities from amount realized out

of current assets.

It is calculated as follows

Current assets

CURRENT RATIO =

Current liabilities


This ratio is not only a measure of the company’s liquidity but also shows

the margin the company has for its current assets to shrink before it gets into

difficulty in meeting current obligations.

Though the rule of thumbs is that the current ratio should be around 2:1

banks leading policy norms stimulate the bench mark current ratio of 1.25:1.00

while considering all new proposals, with satisfactory credit ratings, for working

capital limits. However, its applicability depends on such things as the type

industry and outlook for the industry. If the company has a rapid turnover of

inventory and can easily collect its dues, the ratio can be somewhat lower. If the

ratio drops to 1:1 caution should exercised when the current liabilities exceed the

current asset the concern is in an unstable situation. Caution should also be

exercised if the current ratio has been dropping over a period of several years.

In this ratio 1:1 or below 1:1, it indicates that the company is

undercapitalized and that it may delay paying its creation due to liquidity problem.

It may also be due to unsound practice of buying fixed assets with short term

borrowing. In many such cases the concern will be only marginally profitable or

even unprofitable

For interpreting current ratio one has to be guided by the composition,

reliability and reliability of the current assets.


Acid test or Quick Ratio

This is very similarly to the current ratio. It id more sever test as it

compares only very liquid assets with total current liabilities. It is calculated as

follows:

Current asset- inventory

Acid test or Quick ratio =

Current liabilities

The rule of thumb is that the quick ratio should not be below 1:1 if the quick ratio

is low but the current ratio is high. It may bean that the company is carrying a very

high level of inventory and is not able to sell its finished products.

In interpreting this liquidity ratio the composition of the current assets is very

important. It is necessary that proportion of different current asset to the total as

well as their condition should be taken into account before concluding that the ratio

is favorable or unfavorable. It indicates the ability to meet maturing current

liabilities from readily reliable current asset.


C) Leverage Ratios

These ratios measure the owner’s contribution to the business as compared

to the outsiders. These ratios help us in knowing the stake of the

owners in the business in relation to long term liabilities are secured by fixed assets

and whether the company’s earning are sufficient to pay the loan installments and

the interest on the due dates.

The importance leverage ratios are:

1) Debt equity ratio

2) Fixes assets coverage ratio

3) Debt service coverage ratio

Debt equity ratio

The debt equity ratio is the relationship between the owner’s contribution

(capital, undistributed reserves and surpluses, etc) and the long term liabilities of

an enterprise, this ratio can be calculated asunder:


Debt (Long Term Debt)

Debt equity ratio =

Equity (Tangible Net worth)

The amount of equity in accompany can be considered as “Company

Cushion” by which it can absorb its initial losses and whether the lead times. The

ratio, thus, indicates the financial stability of a company to absorb losses and still

pay its obligations. Our lending policy guidelines indicates the healthy debt equity

ratio to be 2:1

The ratio is especially important because now day’s companies prefer to

borrow rather then to obtain more money through capital. The reason for this is

simple; borrowing is cheaper than raising the capital.Morever, the interest on

borrowing reduces the taxable profits.

The ratio should be such that there is a higher capital or equity base. In these

situations when the concern is wound up, the creditors have a bigger protection

buffer. Also banks lending policy stipulates promoters contribution for term loan

@ 25% while giving indication that the ratio of total outside liability to tangible net

worth shall not normally go beyond 3:1.


Fixed assets coverage ratio

Term loans are usually secured by fixed assets. This ratio’s shows the

coverage of long term uses by long term sources. It is computed as follows:

Net fixed assets (i.e. after depreciation) + other non current assets

Long term liabilities + tangible net worth

The reason is that, when a concern is in liquidation, its fixed assets should be

able to realize the amount to pay its long term debts. If this ratio is too low, it

implies that the assets of the concern are worth very little.

Activity Ratio

This ratio indicates how effectively the funds have been utilized in the

business. If the business keeps large funds idle, there is no written on these funds.

If all the funds available are invested than there will not be cash balances to meet

various contingencies in future as and when they occur.

A balance is therefore, to be struck between liquidity and profitability.

Activity ratios help us the funds are made available and whether they are properly

deployed.


The important activity ratios are:

1. Inventory Turnover Ratio

2. Debtors Velocity Ratio

3. Creditors Velocity Ratio

4. Assets Turnover Ratio

Cost of Goods Sold

Inventory Turnover ratio = x 100

Average Inventory

However, it can also be expressed in terms of so many months, weeks or

days holding. In this case it can be calculated as follows:

Average Inventory x No. of Months\weeks\Days in a year

Cost of Goods Sold


Uses of inventory turnover ratio

This ratio indicates the number of times the average stock of finished goods

is turned over or sold during a year. It also indicates the extent of overstocking or

under stocking of finished goods and the presence of non moving stock.

It helps to determine even the liquidity of a concern as it indicates the rate at

which stock is converted into sales and then into cash. (The stock turnover of 8

times a year is considered ideal).

Debtors Velocity Ratio

Net Annual Credit Sales

Debtors velocity ratio=

Average Debtors (Debtors and Bills Receivables Uses:

This ratio indicates the rate at which amounts are collected from debtors. It

indicated even the liquidity of the concern. The average realization period of the

business unit is being expressed in terms of number of sales (credit)


Creditors Velocity Ratio

Net Annual Credit purchases

Creditors velocity ratio=

Average Creditors (Creditors and Bills Payable)

Uses:

This ratio indicates the rate of which creditors are being paid by the unit i.e.

average payment period is expressed in terms of number of day’s purchases

(credit).

Assets Turnover Ratio

Net Sales

1. Fixed asset turnover ratio =

(Ideal 5 times) Fixed Assets


DATA ANALYSIS

AND

INTERPRETATION


DATA ANALYSIS AND INTERPRETATION

A. PROFITABILITY RATIO

Gross Profit

1. Gross Profit Ratio = x 100

Net Sales

Note:

In bank their will be no gross profit and as well as net sales, when their will

be purchase and sell it than the gross profit will be calculated. So, it is considered

as non trading activities.


Net Profit

2. Net Profit Ratio = x 100

Gross Collection

Year Net Profit Gross Collection Ratio

2005-06 21,67,50 65,79,20 32.95

2006-07 14,06,60 66,78,64 21.06

2007-08 16,50,17 828692 19.91

2008-09 19,54,05 1011800 19.31

2009-10 11,50,34 119,83,54 9.59

Table showing net profit ratio


0

50000

100000

150000

200000

250000216750

140660 165017

195405

115034

Net profit

Net profit


Operating cost

3. Operating Ratio = x 100

Gross collection


Year Operating Cost Gross Collection Ratio

2005-06 441170 657920 67.05

2006-07 527204 667864 78.93

2007-08 663675 828692 80.08

2008-09 816396 1011800 80.68

2009-10 1083320 1198354 90.40

2005-062006-07

2007-082008-09

2009-10

0

200000

400000

600000

800000

1000000

1200000

Operating CostGross CollectionRatio

Operating Profit


4. Operating Profit Ratio = x 100

Gross Collection

Gross Collection

Table showing Operating Profit Ratio


Year Operating Profit Gross Collection Ratio

2005-06 216750 657920 32.94

2006-07 140660 667864 21.06

2007-08 165017 828692 19.91

2008-09 195405 1011800 19.31

2009-10 115034 1198354 9.59

0

50000

100000

150000

200000

250000 216750

140660

165017

195405

115034

Operating profit

Profit before Interest

5. Return on Investment Ratio = x 100

Capital Employed


Table showing Return on Investment Ratio

Year

Operating

Profit Interest

& Tax

Capital Employed Ratio

2005-06 441170 657920 67.05

2006-07 527204 667864 78.93

2007-08 165017 828692 19.91

2008-09 195405 1011800 19.31

2009-10 1083320 1198354 90.40

a. Calculation of profit interest and tax for the year 2007-2008.

Profit before interest tax = Interest expended + Net profit

= 341829 + 165017

= 506346


Year 2009-2009

Profit before interest tax = 464432 + 195405

= 659837

a. Capital employed = Net fixed assets + total current assets

Year 2005-06 = 5817693+ 243546 + 401531

= 6462770

Year 2006-07 = 7681909+ 306176+ 779801

= 8767886

Year 2007-08 = 10038077 + 409091 + 1236108

= 11683276


Year 2008-09 = 12464576 + 715351 + 1412380

= 14592307

Year 2009-10 = 15443942+ 652427+ 2628196

= 18724565


0

200000

400000

600000

800000

1000000

1200000

441170

527204

165017195405

1083320

Return on investment ratio

Return on investment ratio


Interpretation:

The above table shows that the profit before interest and tax increased in

year 2008-09 and as well as capital employed also. Ratio is highest in the year

2008-09. It shows that in year 2008-09 bank earned more profit.

Net Profit after Tax

6. Net Profit to Net worth Ratio = x 100

Net Worth

Table showing Net Profit to Net worth Ratio

YearNet Profit After

TaxNet Worth Ratio

2005-06 441170

2006-07 527204

2007-08 165017 11683276 1.41

2008-09 195405 14592307 1.33

2009-10 1083320


Calculation of Net Worth

Year 2005-06

Net Worth = 243546+ 401531+ 5817693

= 6462770

Year 2006-07

Net Worth = 306176+ 779801+ 7681909

= 1854886

Year 2007-08

Net Worth = Cash on hand + Money at call + Total assets

= 409091 + 1236108 + 10038077

= 11683276


Year 2008-09

Net Worth = 715351 + 1412380 + 12464576

= 14592307

Year 2009-2010

Net Worth = 652427+ 2628196+ 15443942

= 18724565


0

200000

400000

600000

800000

1000000

1200000

441170

527204

165017 195405

1083320

Net profit to net worth ratio


Net Profit available to equity share holders

7. Earning Per Share = x 100

No. of Equity Shares

Table showing Earning per Share


Year

Net profit

available to

equity share

holders

No. of equity

sharesRatio

2005-06 216750 10000

2006-07 140660 10000

2007-08 165017 10000 16.50

2008-09 195405 10000 19.54

2009-10 115034 10000

B. LIQUIDITY RATIO

Current Assets

1. Current Ratio =

Current Liabilities

Note : This ratio is also non-trading activities. So, it is not applicable to banks.

Current Assets Inventory

2. Acid Test or Quick Ratio =

Current Liabilities

Note : In bank inventory will be not calculated, this is non trading activities.

C. LEVERAGE RATIO


Debt (Long Term Debts)

1. Debt Equity Ratio =

Equity (Tangible Net Worth)

Table showing Debt Equity Ratio

Calculation of long term debts

Years 2007-08


Year Debt Net Worth Ratio

2005-06 5014099

2006-07 5249273

2007-08 7967114 11683276 0.68

2008-09 9799661 14592307 0.67

2009-10 11830372

Long term debt = Investments + Advances

= 1365924 + 6601190

= 7967114

Years 2008-09

Long term debt = 1747497 + 8052164

= 9799661

Years 2009-10

Long term debt = 1084775+3929324

= 5014099

Years 2006-07

Long term debt = 1176151+5237512

= 6413663


Years 2008-09

Long term debt = 2307626+9522746

= 11830372


5014099

5249273

7967114

9799661

11830372

Debt equity ratio


D. ACTIVITY RATIO

Cost of Goods Sold

1. Inventory Turnover Ratio = x 100

Average Inventory

Note: In bank cost of goods sold and average inventory will be non trading

activities. In bank their will be no cost of goods sold, so it is not calculated.


2. Debtor Velocity Ratio =

Average Debtors (debtors & receivable)

Note: It is non trading activities in bank, so it is not applicable.



3. Creditor Velocity Ratio =

Average Creditors (creditors & bill payable)

Note: Firstly, in bank no purchase, so it is considered as non trading activities.

4. Assets Turnover Ratio

Net Sales

a. Fixed Assets Turn Over Ratio =

Fixed Assets

Note: Current assets turnover ratio considered as ideal 2 times but there will be no

nil sales and fixed assets, how could be possible in bank, so it is considerable as

non-trading activities.


PROFIT AND LOSS STATEMENT FOR THE YEAR ENDING 2004 -05

Particulars Schedule

No.

As on 31-3-2005 As on 31-03-2004

Income

Interest Earned 13 623547 473516

Other Income 14 34373 39231

TOTAL 657920 512747

EXPENDITURE

Interest expended 15 248717 269006

Operating Expenses 16 172458 158616

Provisions & Contingencies 19995 14795

TOTAL 441170 442417

PROFIT/LOSS

Net Profit/Loss (-) for the year 216750 70330

Profit/Loss brought forward ----- -----

Total Surplus /deficit(-)

available for appropriation

216750 70330

APPROPRAIATIONS

Transfer to statutory reserves 216750 7033

Transfer to other reserves ----- -----

Transfer to

government/Proposed dividend

----- -----

Carried over to bal. Sheet ----- -----

TOTAL 216750 70330


BALANCE SHEET AS ON 31/03/2005




No.

As on 31-3-2005 As on 31-

03-2004

CAPITAL &

LIABILITIES

Capital 1 10000 10000

Share Capital Deposit 1A 187577 187577

and Surplus

Deposits 2 387805 174068

Borrowings 3

4

3745804

1066877

3105962

800175

Other Liabilities and

Provisions 5

419633 374057

TOTAL 5817693 4651839

ASSETS

Cash and Balance with

reserve Bank of India 6

243546 260539

Balance with Banks and

Money at Call and Short

Notice

7

401531 360275

Investments 8 1084775 1146431

Advances 9 3929324 2668868

Other Assets 10 22406 18045

Fixed Assets 11 136111 197681

TOTAL 5817693 4651839

Contingent Liabilities 12 36487 40889

Bills for Collection ----- -----

BALANCE SHEET AS ON 31/03/2007

Particulars Schedul

e No.

As on 31-03

2007

As on 31-

03-2006

CAPITAL AND

LIABILITIES:

Capital

Share Capital Deposit.

Reserves and Surplus

Deposits

Borrowings

Deferred Tax Laibility

Other Liabilities and

Provisions

Total Rs.

ASSETS:

Cash and Balance with

Reserve Bank of India.



Notice

1

1A

2

3

4

5

6

7

8

9

10

11

12

1000

187577

693478

5846278

2789469

693

510581

100038077

409091

1236108

1365924

6601190

10000

187577

528462

4628355

1915376

0

412140

7681909

306176

779801

1176151

5237512

21618

160651


Advances

Fixed Assets

Other Assets

Total Rs.

Contingent Liabilities

Bills for Collection

31936

393828

10038077

44369

..

7681909

52797

--

BALANCE SHEET FOR THE YEAR 2007- 08

Particulars 31st march 2007 31st march 2008


Capital and liabilities

Capital 1000 1000

Share capital deposits 187577 187577

Reserve and surplus 693478 888883

Deposits 5846278 7533064

Borrowings 2789469 3131796

Other liabilities and

provision

510581 711844

Deferred tax liability 693 1412

Total 10038077 12464576

Assets

Cash and balanced

with RBI

409091 715351

Balance with banks

and money at call and

short notice

1236108 1412380

Investment 1365924 1747497

Advances 6601190 8052164

Fixed assets 31936 46427


Other assets 393828 490757

TOTAL 10038077 12464576

Contingent liabilities 44369 53130

Capital 1 10,000 10,000

Share capital deposit. 1A 18,75,77 18,75,77

Reserve And Surplus 2 10,09,121 88,88,83

Deposits 3 957,55,21 753,30,64

Borrowings 4 412,75,96 313,17,96

Deferred Tax Liability 14 1,412

Other Liabilities And

Provisions.

5 53,41,13 7,11,844


Total Rs. 154,43,942 124,64,576

ASSETS

Cash And Balance with

Reserve Bank of India.

6 65,24,27 71,53,51



Notice.

7 262,81,96 141,23,80

Investments 8 230,76,26 174,74,97

Advances 9 952,27,47 805,21,64

Fixed Assets 10 39,610 46,427

Other Assets 11 29,33,37 49,07,57

Total Rs. 154,43,942 124,64,576

Contingent Liabilities 12 59,114 53,130

BALANCE SHEET 2008-09

BALANCE SHHEET AS ON 31-03-2009 -2010


No.

As on 31-03-

2009

AS on 31-03-

2008INCOME:

Interest Earned 13 109,87,03 93,41,49


Other Income 14 99,651 77,651

Total Rs. 119,83,54 101,18,00

EXPENDITURE:

Interest Expended 15 65,83,20 46,44,32

Operating Expenses 16 37,50,31 26,97,16

Provisions &

Contingencies

49,969 82,248

Total Rs. 108,33,20 81,63,95

PROFIT/LOSS: _ _

Net Profit For the year _ _

Profit Brought Forward _ _

Total Surplus available for

appropriation

11,50,34 19,54,05

APPROPRIATIONS: _ _

Transfer to Statutory

Reserve

25,346 26,303

Transfer to Other

Reserves.

89,687 16,91,02

Transfer to

Government/Proposed

Dividend

_ _

Balance Carried over to

Balance Sheet

_ 12.02

Capital adequacy ratio _ _

NPA 18,10,71 14,26,35


Gross 1.89 0.02

Gross% 76,128 55,034

Net NPA Amount 0.79 0.01

Net NPA % _ _ _

FINDINGS, CONCLUSION AND SUGGESTION

FINDINGS:


It is found that the bank is efficient in achieving the budgeted target. The

bank is efficient in mobilizing the funds from customers.

It is found that the amount of loan outstanding is gradually increasing

year after, it shows that bank is inefficient in proper appraisals, inefficient

control system.

From the last five years data analyzed, it is found that the net movements

of Non performing of assets are in cyclic order. In the year 2002-2003 it was

high and it decreased in the year 2004-05, from 2005-06 it is again increasing

This shows that bank was efficient in recovery in the year 2004-05. This

could be due to recovery camps, recovery awareness camps etc adopted during

that year.

It is observed that the external reasons that contribute to increase in Non

performing of assets are natural calamities, political interference, Vitilated

recovery climate, failure of activity due to economic and managerial reasons.


It is noticed that the borrower related reasons that contribute to increase in

non performing of assets are Misultilisation of loans, diversification of funds,

lack of technical and managerial skills, failure of activity of economic

reasons, poor maintenance of assets, etc

Others reasons are personal accident death, shifting of place of residence

and business place, willful default, geographical factors, changes in policy

environment, changes in technology, changes in economic conditions, lack of

risk cover availability.

It is noticed found that the bank related reasons that contribute to increase

in non performing assets are improper identification of borrower of activity,

inadequate appraisal, delay in loan sanctioning, under and over financing,

insufficient gestation or repayment period, lack of post-disbursement follow-

up ,etc

Some of the other bank related problems are lack of borrower contact,

inadequate understanding of clientele, lack of recovery efforts, inefficient

internal control systems, low motivation and commitment of staff,

perception of bank as charity institution, poor industrial relations climate, lack

of information to borrower on due dates, amount etc.


SUGGESTIONS:

During the study it was convincingly proved that NPA’s have viable impact

on the loan portfolio of any financial institutions and banks affecting their balance

sheet, which ultimately affects their profits.

But it is also seen that banks and financial institutions are trying their best of


reduce the percentage of NPA’s in their banks. While the ratio of NPA’s to loan

assets can be brought down through the various measures, the biggest contribution

must be through recovery, up gradation and selective write off.

Few Suggestions are:

When ever any borrowing units face problems may be the beyond the

control of management, the bank should immediately find out the possibility where

the unit can be brought back to normal health by giving some concessions like

cutoff in interest appropriate rehabilitation package be released in time otherwise

early action for recovery of entire loan be taken in order to minimize the expected

losses in future.

The bank should make improvements in existing systems of appraisals.

They should create their own data bank of various type of information

and do unbiased appraisals, which should cover technical, commercial,

financial, economic and management aspects.


Securitization is another way which transforms non-performing assets to

performing. So the bank shall go for securitization of the assets.

Bank employees need to give more attention on the activities of the

NPA’s and slow recovery of overdue loans.

If the customers intentionally try to become NPA then take serious or

legal action. If they do this the other NPA’s account which are slow in

payment will be recovered fast.

Bank should properly evaluate all loan applications and analysis

project feasibility. Bank staff should be property trained in this regard.

Try to deal softly with NPA customers and motivate them to repay the

loan.

CONCLUSION:


Non-performing asset is one which does not generate income for the bank.

In other words, an advance account which ceases to yield income is a non-

performing asset.

NPA is not just a problem for banks, but also bad for the economy of the

country. The money which is locked in NPA is not available for productive

activities. It adversely affects the, profit of bank and results in higher rate of

interest to their diligent credit customers. Steps should be taken appropriately on

time to avoid NPAs. Qualitative appraisal, supervision and follow ups should be

taken for the present advances to avoid further NPAs .It is essential to restructure

the strategies for recovery process, this will improve banks general capabilities and

meets the prudential requirements.


BIBLIOGRAPHY


BIBLIOGRAPHY

Books:

Books Referred

“Financial Management” (Theory and Practice) Prasanna Chandra Tata Mc

Graw Hill, Pg.no.657, 658, 659

“Financial Management” I.M.Pandey, Vikas Publishing House Pvt Ltd.,

Pg.No.584, 585, 586, 587.

Websites

Company’s annual reports

www.Krishna Grameena bank


http://www.Krishna/

Documents

Krishna Grameena Bank