Prepared By: KOMAL MAHESHWARI

Enrollement No: 14BSP2540

A project is based on

Overall Banking Operations And

Assessment Of Working Capital

A project is based on

Banking Operations

Banking Operations

Working Capital Provided by

Banks

Working Capital Provided by

Banks

Methods for Assessment of Working Capital

Methods for Assessment of Working Capital

Observation & Discussion with

Manager

Observation & Discussion with

Manager

Read Company Profile, Annual

Reports of Companies

Read Company Profile, Annual

Reports of Companies

Referred RBI guidelines,

Sanction Proposals

Referred RBI guidelines,

Sanction Proposals

A BANK IS A FINANCIAL INSTITUTION WHICH ACCEPTS MONEY FROM THE PUBLIC FOR THE PURPOSE OF LANDING OR INVESTMENT REPAYABLE ON DEMAND OR OTHERWISE WITHDRAWALS BY CHEQUE DRAFTS OR ORDER OR OTHERWISE.

About Axis Bank

Axis Bank Limited (formerly UTI Bank) is the third largest private sector bank in India.

Axis Bank began its operations in 1994, after the Government of India allowed new private banks to be established.

The Bank was promoted in 1993 jointly by the Administrator of the

1) Unit Trust of India (UTI-I) 2) Life Insurance Corporation of India (LIC)

3) General Insurance Corporation Ltd. 4) National Insurance Company Ltd.

5) The New India Assurance Company 6) The Oriental Insurance Corporation 7) United India Insurance Company

Axis Bank (erstwhile UTI Bank) opened its registered office in Ahmedabad and corporate office in Mumbai in December 1993. The first branch was inaugurated on 2 April 1994 in Ahmedabad by Dr. Manmohan Singh, then Finance Minister of India.

It offers financial services to customer segments covering Large and Mid-Sized Corporates, MSME, Agriculture and Retail Businesses.

Axis Bank operates in four segments:

1) Treasury operations2) Retail banking3) Corporate/Wholesale banking4) Other banking

As on 31-Mar-2014, the Bank had a network of 2402 branches and extension counters and 12922 ATMs.

Functions of Axis Bank

Service Functions

Service Functions

Representative Functions

Representative Functions

Development Functions

Development Functions

General FunctionsGeneral

FunctionsCollecting deposits, Lending loan,

Money transfer, Honouring ChequesCollecting deposits, Lending loan,

Money transfer, Honouring Cheques

Creation of savings & formation of capital, HR and investment

development

Creation of savings & formation of capital, HR and investment

development

Selling of shares & securities, Receive & payment as the representative of

clients

Selling of shares & securities, Receive & payment as the representative of

clients

Transaction of foreign currencies, Information sharing consulting & other

service functions

Transaction of foreign currencies, Information sharing consulting & other

service functions

Saving Account

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Current Account

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Cash Receipt

Cash Payment

Cancellation Cheque

Cash Balancing

Checking Cash in Hand

Cash Safe keeping

Cash Receipt

Cash Payment

Cancellation Cheque

Cash Balancing

Checking Cash in Hand

Cash Safe keeping

Assessment of Working Capital

Process

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What should be the amount of WC ?

What should be the form of WC?

What should be the security that should be obtained for extending the WC?

What should be the amount of WC ?

What should be the form of WC?

What should be the security that should be obtained for extending the WC?

Non-Fund based Facility:-

1. Bank Guarantee

The contract of guarantee has three principal parties as under:

a) Principal debtor

b) Principal creditor

c) Guarantor or Surety

Non-Fund based Facility:-

1. Bank Guarantee

The contract of guarantee has three principal parties as under:

a) Principal debtor

b) Principal creditor

c) Guarantor or Surety

Assessment of Limit of Letter of Guarantee

Outstanding Bank Guarantee as per audited

balance sheet

A

Add bank guarantee required during the

period

B

Less estimated maturity or cancellation of

bank guarantee during the period

C

Requirement of bank guarantee D = A + B - C

2. Letter of Credit

The contract of guarantee has three principal parties as under:

I.Applicant/Opener

II.Opening bank/issuing bank

III.Beneficiary

IV.Advising Bank

V.Confirming Bank

VI.Negotiating Bank

2. Letter of Credit

The contract of guarantee has three principal parties as under:

I.Applicant/Opener

II.Opening bank/issuing bank

III.Beneficiary

IV.Advising Bank

V.Confirming Bank

VI.Negotiating Bank

Assessment of Limit of Letter of Credit

Annual Raw Material Consumption A

Annual Raw Material Procurement

through ILC/ FLC

B

Monthly Consumption C

Usance D

Lead Time E

Total Time F = D + E

LC Time Required G = F * C

Fund based Facility:-

Maximum Permissible Banking Finance Method (Tandon Committee)

Fund based Facility:-

Maximum Permissible Banking Finance Method (Tandon Committee)

Current Liabilities Current Assets

Creditors for

purchase

100 Raw material 200

Other current liability 50 Stock in process 20

Bank Borrowings 200 Finished Goods 90

  Receivables 50

  Other current assets 10

350 370

1st Method 2nd Method 3rd Method

Total CA 370 Total CA 370 Total CA 370

Less Total CL -

Bank

Borrowing

150 Less 25% of CA 92 Less Core CA from

long term sources

95

WCG 220 278 275

25% of WCG

from long term

sources

55 Less Total CL -

Bank

Borrowings

150 Less 25% from

long term

sources

 

Total CL - Bank

Borrowings

69 

 

 

150

MPBF 165 MPBF 128 MPBF 56

Current Ratio 1.17:1 Current Ratio 1.33:1 Current Ratio 1.79:1

Form 1: - particulars of the existing/proposed limit

from the banking system.

Form 2: -Operating statement.

Form 3: - Analysis of balance sheet.

Form 4: - Comparative statement of current asset and

liabilities.

Form 5: - Computation of maximum permissible bank

finance for working capital.

Form 6: - Fund flow statement

Form 1: - particulars of the existing/proposed limit

from the banking system.

Form 2: -Operating statement.

Form 3: - Analysis of balance sheet.

Form 4: - Comparative statement of current asset and

liabilities.

Form 5: - Computation of maximum permissible bank

finance for working capital.

Form 6: - Fund flow statement

Banks need some security from the borrowers against the credit facilities extended to them to avoid any kind of losses. Securities can be created in various ways. Banks provide credit on the basis of the following modes of security from the borrowers.

Hypothecation

Mortgage

Pledge

Lien

Banks need some security from the borrowers against the credit facilities extended to them to avoid any kind of losses. Securities can be created in various ways. Banks provide credit on the basis of the following modes of security from the borrowers.

Hypothecation

Mortgage

Pledge

Lien

Pre sanction processPre sanction process

Post sanction processPost sanction process