100612025 Deposit Schemes Project Report

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A STUDY ON THE PERFORMANCE OF DEPOSIT SCHEMES IN KARNATAK

BANK LIMITED

CHAPTER – 1

INTRODUCTION

1.1 ABOUT THE INDUSTRY

Banking in India originated 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 17!" both are now

defunct. The oldest bank in e#istence in India is the $tate Bank of India, which originated in the Bank of

%alcutta in &une 18!6, which al'ost i''ediately beca'e the Bank of Bengal. This was one of the three

(residency banks, the other two being the Bank of Bo'bay and the Bank of )adras, all three of whichwere established under charters fro' the British *ast India %o'(any.+or 'any years the residency

banks acted as -uasicentral banks, as did their successors. The three banks 'erged in 1/1 to for'

the I'(erial Bank of India, which, u(on India0s inde(endence, beca'e the $tate Bank of India in 1.

HISTORY OF BANKING

Indian 'erchants in %alcutta established the 2nion Bank in 183, but it failed in 1848 as a conse-uence

of the econo'ic crisis of 18484. The 5llahabad Bank , established in 186 and still functioning today,is the oldest &oint $tock bank in India.&oint $tock Bank 5 co'(any that issues stock and re-uires

shareholders to be held liable for the co'(any0s debt It was not the first though. That honour belongs to

the Bank of 2((er India, which was established in 1863, and which sur9i9ed until 113, when it failed,

with so'e of its assets and liabilities being transferred to the 5lliance Bank of $i'la.

:hen the 5'erican %i9il :ar sto((ed the su((ly of cotton to ;ancashire fro' the %onfederate $tates,

(ro'oters o(ened banks to finance trading in Indian cotton. :ith large e#(osure to s(eculati9e 9entures,

'ost of the banks o(ened in India during that (eriod failed. The de(ositors lost 'oney and lost interest

in kee(ing de(osits with banks. $ubse-uently, banking in India re'ained the e#clusi9e do'ain of

*uro(eans for ne#t se9eral decades until the beginning of the /!th century.

+oreign banks too started to arri9e, (articularly in %alcutta, in the 186!s. The %o'(toire d0*sco'(te de

aris o(ened a branch in %alcutta in 186!, and another in Bo'bay in 186/" branches

in )adras and ondicherry, then a +rench colony, followed. H$B% established itself in Bengal in 186.

%alcutta was the 'ost acti9e trading (ort in India, 'ainly due to the trade of the British *'(ire, and so

beca'e a banking centre.

The first entirely Indian <oint stock bank was the =udh %o''ercial Bank, established in 1881

in +ai>abad. It failed in 18. The ne#t was the un<ab ?ational Bank , established in ;ahore in 18,

1

http://en.wikipedia.org/w/index.php?title=Bank_of_Hindustan&action=edit&redlink=1


http://en.wikipedia.org/wiki/State_Bank_of_India

http://en.wikipedia.org/wiki/Bank_of_Calcutta


http://en.wikipedia.org/wiki/Bank_of_Bengal

http://en.wikipedia.org/wiki/Bank_of_Bombay

http://en.wikipedia.org/wiki/Bank_of_Madras

http://en.wikipedia.org/wiki/Imperial_Bank_of_India



http://en.wikipedia.org/wiki/Calcutta

http://en.wikipedia.org/wiki/Allahabad_Bank

http://en.wikipedia.org/wiki/Alliance_Bank_of_Simla

http://en.wikipedia.org/wiki/American_Civil_War

http://en.wikipedia.org/wiki/Lancashire

http://en.wikipedia.org/wiki/Confederate_States

http://en.wikipedia.org/wiki/Kolkata

http://en.wikipedia.org/w/index.php?title=Comptoire_d%27Escompte_de_Paris&action=edit&redlink=1


http://en.wikipedia.org/wiki/Mumbai

http://en.wikipedia.org/wiki/Chennai

http://en.wikipedia.org/wiki/Pondicherry

http://en.wikipedia.org/wiki/HSBC

http://en.wikipedia.org/wiki/Bengal

http://en.wikipedia.org/wiki/British_Raj

http://en.wikipedia.org/wiki/Faizabad

http://en.wikipedia.org/wiki/Punjab_National_Bank

http://en.wikipedia.org/wiki/Lahore




http://en.wikipedia.org/wiki/Bank_of_Bengal

http://en.wikipedia.org/wiki/Bank_of_Bombay

http://en.wikipedia.org/wiki/Bank_of_Madras



http://en.wikipedia.org/wiki/Calcutta

http://en.wikipedia.org/wiki/Allahabad_Bank

http://en.wikipedia.org/wiki/Alliance_Bank_of_Simla

http://en.wikipedia.org/wiki/American_Civil_War

http://en.wikipedia.org/wiki/Lancashire

http://en.wikipedia.org/wiki/Confederate_States

http://en.wikipedia.org/wiki/Kolkata



http://en.wikipedia.org/wiki/Mumbai

http://en.wikipedia.org/wiki/Chennai

http://en.wikipedia.org/wiki/Pondicherry

http://en.wikipedia.org/wiki/HSBC

http://en.wikipedia.org/wiki/Bengal

http://en.wikipedia.org/wiki/British_Raj

http://en.wikipedia.org/wiki/Faizabad


http://en.wikipedia.org/wiki/Lahore




which has sur9i9ed to the (resent and is now one of the largest banks in India. 5round the turn of the

/!th %entury, the Indian econo'y was (assing through a relati9e (eriod of stability. 5round fi9e

decades had ela(sed since the Indian )utiny, and the social, industrial and other infrastructure had

i'(ro9ed. Indians had established s'all banks, 'ost of which ser9ed (articular ethnic and religious

co''unities.

The (residency banks do'inated banking in India but there were also so'e e#change banks and a

nu'ber of Indian <oint stock banks. 5ll these banks o(erated in different seg'ents of the econo'y. The

e#change banks, 'ostly owned by *uro(eans, concentrated on financing foreign trade. Indian <oint

stock banks were generally underca(itali>ed and lacked the e#(erience and 'aturity to co'(ete with the

(residency and e#change banks. This seg'entation let ;ord %ur>on to obser9e, @In res(ect of banking it

see's we are behind the ti'es. :e are like so'e old fashioned sailing shi(, di9ided by solid wooden

bulkheads into se(arate and cu'berso'e co'(art'ents.@The (eriod between 1!6 and 111, saw the establish'ent of banks ins(ired by

the $wadeshi 'o9e'ent. The $wadeshi 'o9e'ent ins(ired local business'en and (olitical figures to

found banks of and for the Indian co''unity. 5 nu'ber of banks established then ha9e sur9i9ed to the

(resent such as Bank of India, %or(oration Bank , Indian Bank , Bank of Baroda, %anara

Bank and %entral Bank of India.The fer9our of $wadeshi 'o9e'ent lead to establishing of 'any (ri9ate

banks in Aakshina annada and 2du(i district which were unified earlier and known by the na'e $outh

%anara $outh anara district. +our nationalised banks started in this district and also a leading (ri9ate

sector bank. Hence undi9ided Aakshina annada district is known as @%radle of Indian

[email protected] the +irst :orld :ar 114C118 through the end of the $econd :orld :ar 13C

14, and two years thereafter until the inde(endence of India were challenging for Indian banking.

POST INDEPENDENCE

The (artition of India in 147 ad9ersely i'(acted the econo'ies of un<ab and :est Bengal, (araly>ing

banking acti9ities for 'onths. India0s inde(endence 'arked the end of a regi'e of the ;aisse>faire for the Indian banking. The Go9ern'ent of India initiated 'easures to (lay an acti9e role in the econo'ic

life of the nation, and the Industrial olicy Desolution ado(ted by the go9ern'ent in 148 en9isaged

a 'i#ed econo'y. This resulted into greater in9ol9e'ent of the state in different seg'ents of the

econo'y including banking and finance. The 'a<or ste(s to regulate banking included

The Deser9e Bank of India, India0s central banking authority, was established in 5(ril 134, but

was nationali>ed on &anuary 1, 14 under the ter's of the Deser9e Bank of India Transfer to

ublic =wnershi( 5ct, 148 DBI, /!!b.EDeference www.rbi.org.inF

2

http://en.wikipedia.org/wiki/Indian_rebellion_of_1857

http://en.wikipedia.org/wiki/Joint_stock_company

http://en.wikipedia.org/wiki/Swadeshi

http://en.wikipedia.org/wiki/Bank_of_India

http://en.wikipedia.org/wiki/Corporation_Bank

http://en.wikipedia.org/wiki/Indian_Bank

http://en.wikipedia.org/wiki/Bank_of_Baroda

http://en.wikipedia.org/wiki/Canara_Bank


http://en.wikipedia.org/wiki/Central_Bank_of_India

http://en.wikipedia.org/wiki/Dakshina_Kannada

http://en.wikipedia.org/wiki/Udupi_district

http://en.wikipedia.org/wiki/First_World_War

http://en.wikipedia.org/wiki/Second_World_War

http://en.wikipedia.org/wiki/Indian_independence_movement

http://en.wikipedia.org/wiki/Partition_of_India

http://en.wikipedia.org/wiki/Punjab,_India

http://en.wikipedia.org/wiki/West_Bengal

http://en.wikipedia.org/w/index.php?title=Indian_independence_goverment&action=edit&redlink=1


http://en.wikipedia.org/wiki/Laissez-faire

http://en.wikipedia.org/wiki/Government_of_India

http://en.wikipedia.org/wiki/Mixed_economy

http://en.wikipedia.org/wiki/Reserve_Bank_of_India


http://en.wikipedia.org/wiki/Indian_rebellion_of_1857

http://en.wikipedia.org/wiki/Joint_stock_company

http://en.wikipedia.org/wiki/Swadeshi

http://en.wikipedia.org/wiki/Bank_of_India

http://en.wikipedia.org/wiki/Corporation_Bank

http://en.wikipedia.org/wiki/Indian_Bank

http://en.wikipedia.org/wiki/Bank_of_Baroda



http://en.wikipedia.org/wiki/Central_Bank_of_India

http://en.wikipedia.org/wiki/Dakshina_Kannada

http://en.wikipedia.org/wiki/Udupi_district

http://en.wikipedia.org/wiki/First_World_War

http://en.wikipedia.org/wiki/Second_World_War

http://en.wikipedia.org/wiki/Indian_independence_movement

http://en.wikipedia.org/wiki/Partition_of_India

http://en.wikipedia.org/wiki/Punjab,_India

http://en.wikipedia.org/wiki/West_Bengal


http://en.wikipedia.org/wiki/Laissez-faire


http://en.wikipedia.org/wiki/Mixed_economy




In 14, the Banking Degulation 5ct was enacted which e'(owered the Deser9e Bank of India

DBI @to regulate, control, and ins(ect the banks in India.@ The Banking Degulation 5ct also (ro9ided that no new bank or branch of an e#isting bank could

be o(ened without a license fro' the DBI, and no two banks could ha9e co''on directors.

NATIONALISATION

Aes(ite the (ro9isions, control and regulations of Deser9e Bank of India, banks in India

e#ce(t the $tate Bank of India or $BI, continued to be owned and o(erated by (ri9ate (ersons. By the

16!s, the Indian banking industry had beco'e an i'(ortant tool to facilitate the de9elo('ent of

the Indian econo'y. 5t the sa'e ti'e, it had e'erged as a large e'(loyer, and a debate had ensued

about the nationali>ation of the banking industry. Indira Gandhi, then ri'e )inister of India, e#(ressed

the intention of the Go9ern'ent of India in the annual conference of the 5ll India %ongress )eeting in a (a(er entitled @$tray thoughts on Bank ?ationalisation.@ The 'eeting recei9ed the (a(er with

enthusias'.

5 second dose of nationali>ation of 6 'ore co''ercial banks followed in 18!. The stated

reason for the nationali>ation was to gi9e the go9ern'ent 'ore control of credit deli9ery. :ith the

second dose of nationali>ation, the Go9ern'ent of India controlled around 1 of the banking business

of India. ;ater on, in the year 13, the go9ern'ent 'erged ?ew Bank of India with un<ab ?ational

Bank . It was the only 'erger between nationali>ed banks and resulted in the reduction of the nu'ber of

nationalised banks fro' /! to 1. 5fter this, until the 1!s, the nationalised banks grew at a (ace of

around 4, closer to the a9erage growth rate of the Indian econo'y.

LIBERLIZATION

In the early 1!s, the then ?arasi'ha Dao go9ern'ent e'barked on a (olicy of liberali>ation,

licensing a s'all nu'ber of (ri9ate banks. These ca'e to be known as ?ew Generation techsa99y

banks, and included Global Trust Bank the first of such new generation banks to be set u(, which later a'alga'ated with =riental Bank of %o''erce, 5#is Bank earlier as 2TI Bank , I%I%I

Bank and HA+% Bank . This 'o9e, along with the ra(id growth in the econo'y of India, re9itali>ed the

banking sector in India, which has seen ra(id growth with strong contribution fro' all the three sectors

of banks, na'ely, go9ern'ent banks, (ri9ate banks and foreign banks.

The new (olicy shook the Banking sector in India co'(letely. Bankers, till this ti'e, were used

to the 464 'ethod Borrow at 4" ;end at 6" Go ho'e at 4 of functioning. The new wa9e ushered

in a 'odern outlook and techsa99y 'ethods of working for traditional banks.%urrently /!1!, banking

3





http://en.wikipedia.org/wiki/Indian_economy


http://en.wikipedia.org/wiki/Indira_Gandhi


http://en.wikipedia.org/wiki/Prime_Minister_of_India


http://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1



http://en.wikipedia.org/wiki/Narasimha_Rao

http://en.wikipedia.org/wiki/Liberalization


http://en.wikipedia.org/wiki/Axis_Bank


http://en.wikipedia.org/wiki/UTI_Bank


http://en.wikipedia.org/wiki/ICICI_Bank


http://en.wikipedia.org/wiki/HDFC_Bank


http://en.wikipedia.org/wiki/Economy_of_India

http://en.wikipedia.org/wiki/India





http://en.wikipedia.org/wiki/Prime_Minister_of_India


http://en.wikipedia.org/w/index.php?title=New_Bank_of_India&action=edit&redlink=1



http://en.wikipedia.org/wiki/Narasimha_Rao







http://en.wikipedia.org/wiki/Economy_of_India

http://en.wikipedia.org/wiki/India



in India is generally fairly 'ature in ter's of su((ly, (roduct range and reache9en though reach in rural

India still re'ains a challenge for the (ri9ate sector and foreign banks.

ADOPTION OF BANKING TECHONOLGY

The IT re9olution had a great i'(act in the Indian banking syste'. The use of co'(uters had

led to introduction of online banking in India. The use of the 'odern inno9ation and co'(uterisation of

the banking sector of India has increased 'any folds after the econo'ic liberalisation of 11 as the

country0s banking sector has been e#(osed to the world0s 'arket. The Indian banks were finding it

difficult to co'(ete with the international banks in ter's of the custo'er ser9ice without the use of the

infor'ation technology and co'(uters.

RESERE BANK OF INDIA

4

D*$*D* B5? =+ I?AI5

%entral bank and su(re'e 'onetary authority

$cheduled banks

%oo(erati9e banks%o''ercial banks

$tate %oo(erati9es

16

2rban %oo(erati9es

/

+oreign banks 4! Degional rural banks

16

ri9ate $ector

banks 3!ublic $ector banks

/7

?ew 8 =ld //=ther ?ationalised

banks 1

$tate bank of India

and 5ssociate banks

8



Deser9e Bank of India was established on 5(ril 1, 13 in accordance with the (ro9isions of the

Deser9e Bank of India 5ct, 134. Though initially DBI was (ri9ately owned, it was nationali>ed in

14. Its central office is in )u'bai where the Go9ernor of DBI sits.

India has a well de9elo(ed banking syste'. )ost of the banks in India were founded by Indian

entre(reneurs and 9isionaries in the (reinde(endence era to (ro9ide financial assistance to traders,

agriculturists and budding Indian industrialists. The origin of banking in India can be traced back to the

last decades of the 18th century.

The role of central banking in India is looked by the Deser9e Bank of India, which in 13 for'ally

took o9er these res(onsibilities fro' the then I'(erial Bank of India. Deser9e Bank was nationali>ed in

147 and was gi9en broader (owers. In 16, 14 largest co''ercial banks were nationali>ed followed

by si# ne#t largest in 18!. But with ado(tion of econo'ic liberali>ation in 11, (ri9ate banking was

again allowed. The co''ercial banking structure in India consists of $cheduled %o''ercial Banksand 2nscheduled Banks. $cheduled co''ercial Banks constitute those banks, which ha9e been

included in the $econd $chedule of Deser9e Bank of India DBI 5ct, 134.

Indian banks can be broadly classified into (ublic sector banks those banks in which the Go9ern'ent of

India holds a stake, (ri9ate banks go9ern'ent does not ha9e a stake in these banks" they 'ay be

(ublicly listed and traded on stock e#changes and foreign banks.

India has a strong and 9ibrant banking sector co'(rising stateowned banks, (ri9ate sector banks,

foreign banks, financial institutions and regional banks including coo(erati9e banks, rural banks and

local area banks. In addition there are nonbanking financial co'(anies ?B+%s, housing finance

co'(anies, ?idhi co'(anies and chit fund co'(anies which (lay the role of financial inter'ediaries.

India is also co''itted to further o(en the banking sector for foreign in9est'ent in (ursuance to its

co''it'ent to the :orld Trade =rganisation :T=.

5s 'onetary authority of the country, the Deser9e Bank of India DBI regulates the banking industry

and lays down guidelines for daytoday functioning of banks within the o9erall fra'ework of the

Banking Degulation 5ct, 14, +oreign *#change )anage'ent 5ct, 1 and +oreign Airect

In9est'ent +AI (olicy of the go9ern'ent.

STATE!O"NED BANKS

The Indian banking sector is do'inated by /8 stateowned banks which o(erate through a network of

about !,!!! branches and 13,!!! 5T)s. The $tate Bank of India $BI in the largest bank in the

country and along with its se9en associate banks has an asset base of about Ds. 7,!!! billion

a((ro#i'ately 2$1! billion. The other large (ublic sector banks are un<ab ?ational Bank, %anara

Bank, Bank of Baroda, Bank of India and IABI Bank.

5



PUBLIC SECTOR BANKS

The (ublic sector banks ha9e o9erseas o(erations with Bank of Baroda to((ing the list with 1

branches, subsidiaries, <oint 9entures and re(resentati9e offices outside India, followed by $BI 4

o9erseas branchesJoffices and Bank of India /6 o9erseas branchesJoffices. Indian banks, including

(ri9ate sector banks, ha9e 171 branchesJoffices abroad. $BI is (resent in / countries followed by Bank

of Baroda /! countries and Bank of India 14 countries.

PRIATE SECTOR BANKS

ri9ate sector banks India has / (ri9ate sector banks including nine new banks which were granted

licences after the go9ern'ent liberalised the banking sector. $o'e of the well known (ri9ate sector

banks are arnataka Bank, I%I%I Bank, HA+% Bank and IndusInd Bank. Kes Bank is the latest entrant

to the (ri9ate sector banking industry.

In ter's of reach the (ri9ate sector banks with an asset of o9er Ds ,7!! billion about 2$1/4 billion

o(erate through a network of 6,!! branches and o9er 7,!! 5T)s.

FOREIGN BANKS

+oreign banks ha9e brought latest technology and latest banking (ractices in India. They ha9e hel(ed

'ade Indian Banking syste' 'ore co'(etiti9e and efficient. Go9ern'ent has co'e u( with a road 'a(

for e#(ansion of foreign banks in India.

+oreign banks 5s 'any as / foreign banks originating fro' 1 countries are o(erating in India through

a network of /8 branches and about !! 5T)s. :ith total assets of 'ore than Ds /,!!! billion about

44 billion 2$ dollars they are (resent in 4! centres across 1 Indian states and 2nion Territories.

$o'e of the leading international banks that are doing brisk business in India include $tandard

%hartered Bank, H$B% Bank, %itibank ?.5. and 5B?5)D= Bank.

REGIONAL BANKS

Dural areas in India are ser9ed through a network of Degional Dural Banks DDBs, urban coo(erati9e

banks, rural coo(erati9e credit institutions and local area banks. )any of these banks are not doing well

financially and the go9ern'ent is currently engaged in restructuring and consolidating the'.

;ocal area banks were of recent origin and as on )arch 31, /!!6 four such banks were o(erating in the

country.

NATIONALISED BANKS

6



?ationalised banks do'inate the banking syste' in India. The history of nationalised banks in India

dates back to 'id/!th century, when I'(erial Bank of India was nationalised under the $BI 5ct of

1 and rechristened as $tate Bank of India $BI in &uly 1.

FINANCIAL INSTITUTIONS

+inancial institutions India has se9en 'a<or stateowned financial institutions which include Industrial

Ae9elo('ent Bank of India IABI, Industrial and +inancial %or(oration of India I+%I, Touris'

+inance %or(oration of India T+%I, $'all Industries Ae9elo('ent Bank of India $IABI, ?ational

Bank for 5griculture and Dural Ae9elo('ent ?5B5DA and ?ational Housing Bank ?HB.

These institutions (ro9ide ter' loans and arrange refinance. There are also s(ecialised institutions like

the ower +inance %or(oration +%, Indian Dailway +inance %or(oration ID+%, and Infrastructure

Ae9elo('ent +inance %o'(any IA+% and statele9el financial cor(orations.

1.# ABOUT THE COMPANY

arnataka Bank ;td, a (re'ier (ri9ate sector bank, is a leading 050 %lass $cheduled %o''ercial Bank

in India. The Bank offers a total 9alue (ackage, a onesto( sho( for all the banking needs. They (ro9ide

:orking %a(ital +inance, Ter' ;oans and Infrastructure +inance to hel( the Business grow. The Bank

7



o(erates in four business seg'ents, na'ely treasury, cor(orate and wholesale banking, retail banking

and other banking o(erations.

arnataka Bank ;td was incor(orated on +ebruary 18, 1/4 as The arnataka Bank ;td at )angalore in

arnataka. The Bank was established to cater to the banking needs of the $outh anara Degion. In )ay

/3, 1/4, the Bank obtained the certificate to co''ence business. In 5(ril 4, 166, they recei9ed their

license to carry on the banking business in India. The Bank was (ro'oted by B D ysarayachar and

other leading 'e'bers of the $outh anara Degion. 2nder the table guidance of $ ? 5diga, the

second chair'an of the Bank who held the (ost for a (eriod of /1 years, the Bank 'ade significant

(rogress thereby (ro9iding a strong foundation and as a result grew in stature in ter's of nu'ber of

branches, de(osits, ad9ances etc.

In the year 164, the Bank took o9er the assets and liabilities of the %hitaldurg Bank ;td. In the 166,

they took o9er the assets and liabilities of the Bank of arnataka ;td, Hubli and o(ened 14 new branches in (laces where the Bank of arnataka ;td was for'erly functioned.

In the year 17, the Bank beca'e an authori>ed dealer of foreign e#change and established s(eciali>ed

branches for financing foreign e#change, industry and agriculture, etc. In the year 18, they o(ened a

'erchant banking di9ision. In the year 1, the Bank ca'e out with the (ublic cu' right issue

aggregating Ds 81 crore.

In the year /!!!, they signed a )o2 with Infosys Technologies ;td for i'(le'entation of +inacle, a

%ore Banking $olution. In the year /!!/, they 'ade a (act with %or(oration Bank for sharing 5T)0s.

5lso, they 'ade a tieu( with )et;ife India for the distribution of insurance (roducts as a cor(orate

agent. In the year /!!3, the Bank took u( %or(orate 5gency for distribution of (roducts of Ba<a< 5llian>

General Insurance %o ;td.

The Bank in association with )et;ife India launched ;ife a ter' (roduct designed for $BJcurrent

account holders of the bank. 5lso, the Bank launched a credit (roduct 0B; Insta %ash0 for consu'(tion

(ur(oses, and 0B; ahana )itra0 for the (urchase of new 9ehicles. The Bank along with :estern

2nion +inancial $er9ices 'ade tieu( with Bharat =9erseas Bank to (ro9ide inbound 'oney transfer

ser9ices.

In the year /!!4, the Bank launched the 0Gold %ard $che'e0 for the e#(orters. In the year /!!, the

Bank launched real ti'e gross settle'ent DTG$ syste' under the na'e of )oney Luick. 5lso, they

inked an agree'ent with ?ational +inancial $witch for 5T) connecti9ity and launched 0no frills0

accounts.

In the year /!!6, they 'ade a tie u( with +ranklin Te'(leton I ri9ate ;i'ited for distribution of their

'utual funds. They launched %A$;A ser9ices at select branches. In the year /!!7, the Bank signed

)o2 with 5llahabad Bank, Indian =9erseas Bank, $o'(o &a(an Insurance Inc. and Aabur In9est'ent

%or(oration to for' a <oint 9enture for undertaking General Insurance business.

8



Auring the year /!!8!, the Bank o(end 16 branches at )oradabad, ?ew Aelhi arol Bagh, Thane,

)u'bai ile arle, Bo''asandra, Bangalore %handra ;ayout, Bangalore $adashi9anagar, )ysore

& ?agar, Belgau' 2dya'bag *#tension %ounter u(graded, ?ew Aelhi *ast of ailash,

Bangalore Kelahanka ?ew Town, uneAhankawadi, Aoddaball(ur, 2((al alan, Bellandur and

Hoskote.

The Bank added 3! 5T) outlets at 9arious locations. 5lso, they shifted 1 branchesJ offices to new

(re'ises. The Bank won the (restigious $un and ?AT Green IT award instituted by $un

)icrosyste's and ?AT, for use of eco efficient green technologies to run business. Auring the year

/!!1!, the Bank o(ened 17 branches in atna, anaka(ura, Ta'bara', ellore, Ahanbad, olkata

Bhowani(ore, ?aganatha(ura, Gundlu(et, ?ew Aelhi 5shok9ihar, 2<<ain, Gha>iabad, anchee(ura',

%hennai 5nnanagar :est, Brah'a(ur, $erillinga'(ally, Aurg and Da<arhat olkata. The Bank

added 46 5T) outlets at 9arious locations. 5lso, they shifted 16 branchesJoffices to new (re'ises.In 5(ril /!1!, the o(ened their th Degional =ffice at Hyderabad. The Bank bagged 0$(ecial 5ward for

use of IT for Internal effecti9eness0 for the year /!!, instituted by Institute for Ae9elo('ent and

Desearch in Banking Technology IADBT. 5s on )arch 31, /!1!, the Bank had 464 branches, /17

5T) outlets, 8 Degional =ffices, one International Ai9ision, one Aata %entre, one %usto'er %are

%entre, $er9ice branches, / %urrency %hests, 6 *#tension %ounters and two %entral (rocessing

centers, s(read across /! states and / 2nion Territories.+urther, for better a'bience and i'(ro9ed

custo'er ser9ice.

In $e(te'ber /!1!, the Bank launched a new (roduct e#clusi9ely for wo'en, i.e. the new sa9ing bank

account for wo'en na'ed B; anitha to encourage sa9ing habit a'ong the wo'enfolk and also to

allay the fear of 'anaging their wealth. The Bank (lans to increase their total nu'ber of business units

to 78!, by increasing the total nu'ber of branches to 48! and own 5T) network to 3!! by )arch /!11.

MISSION

@=ur 'ission is to be a technology sa99y, custo'er centric (rogressi9e bank with a national (resence,dri9en by the highest standards of cor(orate go9ernance and guided by sound ethical 9alues.@

BRANCHES AND BUSINESS

arnataka bank has e#(anded its reach to 9arious (arts of India, o9er the 8 years of its e#istence.

Today, the bank has a total of 447 branches, s(read across 1 states and / 2nion Territories, with a total

business of about Ds. 31/48 %rore. The bank (resently e'(loys o9er 4,!! e'(loyees and isanswerable to about 71,8// shareholders and o9er 3.7 'illion custo'ers. The bank has s(eciali>ed

9



branches like 5gricultural Ae9elo('ent Branch, =9erseas Branches, +oreign *#change Branches,

$(eciali>ed $$I Branches, 5sset Deco9ery )anage'ent Branches, %urrency %hests, %entral rocessing

%entre s(read across the length and breadth of the country.

FACILITIES AND CUSTOMER SERICE

arnataka Bank (ro9ides a broad range of custo'i>ed (roducts and ser9ices suitable for all kinds of

'arket, trade and (ercei9ed re-uire'ents, be it business or (ersonal. It deals in (ersonali>ed banking,

business banking, 'oney transfer, internet banking and insurance ser9ices. The facilities include

borrowing facilities, de(osits, o(ti'u' returns on sur(lus funds and hel(ing with s'ooth o9erseas

transactions.5s a (art of (ersonali>ed banking, arnataka Bank (ro9ides ser9ices for high earning

de(osits, si'(le M con9enient loans, life insurance, 'oney transfer, utility bill (ay'ents and thus,

efficiently kee(s a track of your finances.

BOARD OF DIRECTORS

%hair'an 5nanthakrishna

)anaging Airector M %*= &ayara'a Bhat

Airector

$ D Hegde

D $hastri

2 D Bhat

T $ ishwanath

$itara'a )urty )

$ )an<unath

A Harshendra u'ar

H Da'a'ohan

T D %handrasekaran

%o'(any $ecretary K Balachandra

MULTI BRANCH BANKING

)ulti Branch Banking facility is a 9alue added ser9ice to our custo'ers taking ad9antage of @%ore

Banking $olution@. It is a 0technology dri9enanywhere banking0 facility and 0at (ar0 facilities for $a9ings

Bank and %urrent account with structured schedule of ser9ices and charges. ?ow the custo'er can

access his account at all branches of the Bank.

The salient features of the sche'e are as under

10



1. The conce(t of 0anywhere0 banking is e#tended to all do'estic $B and %urrent 5ccounts e#ce(t

?= +rills 5ccounts. *9en $BGeneral and %urrentGeneral accounts are eligible for)BB facility with

)ulticity %he-ues.

/. $BGeneral $BG*?,$B)oney $a((hire,$B)oney latinu',%urrent 5Jc General

%5G*?,%5 )oney earl,%5 )oney Duby,%5 )oney Aia'ond,%5)oney

latinu', are )BB accounts with structured free ser9ices and )ulticity %he-ue facility

with che-ues (ayable at (ar at all Branches.

FACILITIES AAILABLE UNDER MBB

PAYMENT SERICES$

5ny where %ash withdrawal for self che-ues only

)ulticity %he-ues

+unds Transfer

+unds Transfer through DTG$J?*+T

COLLECTION SERICES$

5ny where %ash Ae(osit By self only

%ollection of out station che-ues

5ny where Ae(osit of che-ues for collection

OTHER FACILITIES$

Internet Banking

)obile Banking $)$ alerts

Ae'at 5ccount

11

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http://www.karnatakabank.com/ktk/kblsapphire1.htm

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0)oneylant0 isa International Aebit %ard

INTERNET BANKING

arnataka bank has been introduced Internet Banking facility )oney%lick T) to 'anage our finances in

the co'fort of our ho'e or our office as (er our con9enience.)oney%lick T) is a $elf$er9ice %hannel,

which is a9ailable /4 hours a day and 36 days a year in an absolutely si'(le, friendly but secured

en9iron'ent.

In )oney%lick T), a 'ere touch of a button or click of a 'ouse 'akes you accessible to a host of

Banking $er9ices, called +ingerti( Banking.:e can carry out your banking transactions safely and with

total confidentiality by en<oying online banking without wasting your ti'e or losing your (eace of 'ind.

• )oney %lickT) C Detail

It offers different online ser9ices to our retailJindi9idual custo'ers, like balance en-uiry, re-uests for

%he-uebooks, recording sto((ay'ent instructions, balance transfer instructions, account o(ening and

other for's of traditional banking ser9ices. This also offers utility bill (ay'ent ser9ices to our 9alued

custo'ers for (ay'ent of B$?; )obile, *lectricity, :ater bills etc.

• )oneyclickT) C %or(orate

In addition to the abo9e ser9ices, our %or(orate %usto'ers can a9ail Trade +inance +acilities such as

I'(ortJ *#(ort %redit facilities, De-uests for +orward %ontracts, Inland Trade, and Bank Guarantee etc.

5lso )oneyclick T) facilitates access control at %or(orate 2ser le9el wherein 9arious users at different

hierarchy le9els ha9e 9arying (owers to o(erate a cor(orate account.

• )oney%lickT) C %yber ids

%hildren between 1/18 years who are ha9ing 5ccount with us are eligible for this s(ecial ebanking

facility.

MOBILE BANKING

arnataka Bank offers )obile Banking for the con9enience of (aying for utility bills, 'obile recharge,

'o9ie tickets, online (urchases, retail sho((ing and 'uch 'ore at o9er 1,!!! 'erchants directly fro'

our 'obile.

12



arnataka Bank 'obile (ay'ent ser9ice is inde(endent of the handset 'odel and ser9ice (ro9iders and

works on e9en the 'ost basic handsets and across all teleco' o(erators G$) or %A)5.

FEATURES

)obile (ay'ent facility will be an additional facility to our custo'er for 'aking ay'ent

through their 'obile for the goods (urchased by the'. =n registration for )obile ay'ent solution, the custo'er will be enabled to 'ake secured

(ay'ents directly fro' their registered 'obile (hone, authori>ed by using their 5T) I?. %usto'ers can use this facility round the clock.

This facility is e#tended to the users free of cost.

This facility sa9es ti'e" a9oid hassles of tra9elling, waiting in long -ueues to 'ake bill (ay'ent,

ticket booking etc. 5t (resent the facility will be e#tended to custo'ers sub<ect to a daily ca( of Ds.!, !!!J (er

custo'er for transaction in9ol9ing (urchase of goodsJser9icesas (er DBI guidelines.

BENEFITS

EASY$

:orks on e9en the si'(lest 'obile handsets across all o(erators G$) or %A)5

Aoesn0t re-uire GD$ connecti9ity, $I) change or a((lication download

$)$ M Interacti9e oice based transaction (latfor' 'akes it 9ery easytouse

SECURE$

%onfidential I? Based Transaction

I? entry only through an ID call where the I? is trans'itted in a AT)+ for'at&ust as the

I? entry syste' for tele banking ?o financial details di9ulged during the transaction (rocess

CONENIENT$

Transact o9erthecounter, online, on the tele(hone or fro' <ust about anywhere $a9e ti'e and effort by (aying bills fro' anywhere, anyti'e

Turn your 'obile (hone into a debit card

REGISTRATION$

*#isting Aebit %ard holders %lassicJG=;A who are abo9e 18years are eligible for 'obile banking

facilities. In case e#isting custo'ers do not ha9e debit cards, they ha9e to first a((ly for Aebit %ards and

u(on recei(t of the sa'e they can register for )obile ay'ent facility.5 custo'er would be able to

register to use ay 'ate ser9ices in any one of the following

DEMAT ACCOUNT

13



5 Bank where itNs Head =ffice (ro9ides the facility of o(ening and conduct of 5ccounts through its

branches, a Ae(ository institution e#tends 9arious ser9ices to the in9estors through its agents known as

Ae(ository artici(ant. In India, now there are two Ae(ositories. They are %A$; and ?$A;. artici(ant

can be anybody who co'(lies with the eligibility re-uire'ents. artici(ant A can be a Bank also. 5ll

the 9arious functions undertaken and enabled through Ae'at accounts are referred to as A acti9ity.

2nder the de(ository syste', a de'at account holder or holderJowner of securities who is entitled to all

the benefits such as di9idend or interestJbonus or right shares etc, is known as a Beneficial

=wner B=.

PRERE%UISITES OF OPENING A DEMAT ACCOUNT$

The for'alities in9ol9ed in o(ening a bank account and a de'at account are si'ilar. 5n in9estor

desirous of holding his securities in electronic for' can o(en a de'at account with a A of his choice by co'(leting necessary account o(ening for'alities after furnishing (roof of hisJher identity,

(hotogra(h and (roof of address. 5n agree'ent with the A in the (rescribed for'at is to be e#ecuted

by (aying re-uisite sta'( duty.

DEMATERIALISATION OF SECURITIES$

5fter getting the de'at account nu'ber fro' the A, the B= can cause credit of fresh (urchases of

securities to his de'at account andJor transfer the balances held in de'at account held with other A to

this newly o(ened de'at account. He can also tender the securities held by hi'Jher in (hysical for' to

A for de'ateriali>ation and credit to the de'at account. 5fter necessary 9erification, A forwards the

(hysical securities duly defaced either to the co'(any or to their duly a((ointed DT5 Degistrar and

Transfer 5gent who, after necessary scrutiny, destroys the certificates in (hysical for' and authori>es

the de(ository to gi9e corres(onding electronic credit to the sub<ect de'at account.

FREE FACILITIES BY CDSL TO ITS DEMAT ACCOUNT HOLDERS$The e9olution of the Indian ca(ital 'arket has seen se9eral enhance'ents during the (ast few years and

this has been a result of inno9ati9e use of newer technologies. In the reduced settle'ent cycle era,

in9estors re-uire u(dated de'at account infor'ation at a 'uch faster (ace than e9er before. In other

words, the -uest for account status infor'ation has raised 'anifold.

In order to facilitate a %A$; de'at account holder to easily ada(t to the fast reducing settle'ent cycle,

%A$; has introduced Internetenabled ser9ices called @easi@ and @easiest@ to e'(ower a de'at account

holder in 'anaging his securities 0anyti'eanywhere0 in an efficient and con9enient 'anner, all in a

14



stateoftheart secure en9iron'ent. +urther to effecti9e risk control 'echanis' for 'onitoring of de'at

account, %A$; has also introduced @s'art@ facility.

MONEY PLANT ATM

arnataka Bank has entered into 5T) sharing arrange'ent with ?%I?+$and %ashTree 5T)

network. The ?+$ network with ?%I has 66 )e'ber Banks and co9ers around 86,73 5T)s while

%ashTree network has 13 'e'ber Banks and co9ers around 74!! 5T)s. 5ll Aebit M

)oney(lantT)International isa Aebit %ardJ)oney(lantT) 5T) card holding custo'ers of arnataka

Bank can a9ail the facility of withdrawal through Banks0 )oneylantT) 5T)s and shared network

5T)s.

15



1.& ABOUT THE STUDY

=ne of the i'(ortant functions of the Bank is to acce(t de(osits fro' the (ublic for the (ur(ose

of lending. In fact, de(ositors are the 'a<or stakeholders of the Banking $yste'. The de(ositors and

their interests for' the key area of the regulatory fra'ework for banking in India and this has been

enshrined in the Banking Degulation 5ct, 14. The Deser9e Bank of India is e'(owered to issue

directi9es ad9ices on interest rates on de(osits and other as(ects regarding conduct of de(osit accounts

fro' ti'e to ti'e. :ith liberali>ation in the financial syste' and deregulation of interest rates, banks are

now free to for'ulate de(osit (roducts within the broad guidelines issued by DBI.

This (olicy docu'ent on de(osits outlines the guiding (rinci(les in res(ect of for'ulation of

9arious de(osit (roducts offered by the Bank and ter's and conditions go9erning the conduct of the

account. The docu'ent recognises the rights of de(ositors and ai's at disse'ination of infor'ation

with regard to 9arious as(ects of acce(tance of de(osits fro' the 'e'bers of the (ublic, conduct ando(erations of 9arious de(osits accounts, (ay'ent of interest on 9arious de(osit accounts, closure of

de(osit accounts, 'ethod of dis(osal of de(osits of deceased de(ositors, etc., for the benefit of

custo'ers.

:hile ado(ting this (olicy, the bank reiterates its co''it'ents to indi9idual custo'ers outlined

in 0%ode of Banks0 %o''it'ent to %usto'ers0.

The 9arious de(osit (roducts offered by the Bank can be categorised broadly into the following

ty(es. Aefinitions of 'a<or de(osits sche'es are as under @Ae'and de(osits@ 'eans a de(osit recei9ed by the Bank which is withdrawable on de'and.

@$a9ings de(osits@ 'eans a for' of de'and de(osit which is sub<ect to restrictions as to the

nu'ber of withdrawals as also the a'ounts of withdrawals (er'itted by the Bank during any

s(ecified (eriod. @Ter' de(osit@ 'eans a de(osit recei9ed by the Bank for a fi#ed (eriod withdrawable only after

the e#(iry of the fi#ed (eriod. @%urrent 5ccount@ 'eans a for' of de'and de(osit wherefro' withdrawals are allowed any

nu'ber of ti'es de(ending u(on the balance in the account or u( to a (articular agreed a'ount

and will also include other de(osit accounts which are neither $a9ings Ae(osit nor Ter'

Ae(osit.

ACCOUNT OPENING AND OPERATION OF DEPOSIT ACCOUNTS

The Bank before o(ening any de(osit account will carry out due diligence as re-uired under

@now Kour %usto'er@ K% guidelines issued by DBI 5nti)oney ;aundering rules and

regulations and or such other nor's or (rocedures as (er the @now Kour %usto'er@K%

(olicy of the bank. If the decision to o(en an account of a (ros(ecti9e de(ositor re-uires

16



clearance at a higher le9el, reasons for any delay in o(ening of the account will be infor'ed to

the custo'er and the final decision of the Bank will be con9eyed at the earliest to the custo'er. The bank is co''itted to (ro9iding basic banking ser9ices to disad9antaged sections of the

society. Banking ser9ices will be offered to the' through 0no frill0 accounts and accounts will be

o(ened with rela#ed custo'er acce(tance nor's as (er regulatory guidelines. The account o(ening for's and other 'aterial would be (ro9ided to the (ros(ecti9e de(ositor by

the Bank. The sa'e will contain details of infor'ation to be furnished and docu'ents to be

(roduced for 9erification andJor for record, it is e#(ected of the Bank official o(ening the

account, to e#(lain the (rocedural for'alities and (ro9ide necessary clarifications sought by the

(ros(ecti9e de(ositor when he a((roaches for o(ening a de(osit account. The regulatory guidelines re-uire banks to categori>e custo'ers based on risk (erce(tion and

(re(are (rofiles of custo'ers for the (ur(ose of transaction 'onitoring. Inability or

unwillingness of a (ros(ecti9e custo'er to (ro9ide necessary infor'ationJdetails could result inthe bank not o(ening an account.

Inability of an e#isting custo'er to furnish details re-uired by the bank to fulfil statutory

obligations could also result in closure of the account after due notices is (ro9ided to the

custo'er. +or de(osit (roducts like $a9ings Bank 5ccount and %urrent Ae(osit 5ccount, the Bank will

nor'ally sti(ulate certain 'ini'u' balances to be 'aintained as (art of ter's and conditions

go9erning o(eration of such accounts. +ailure to 'aintain 'ini'u' balance in the account will

attract le9y of charges as s(ecified by the Bank fro' ti'e to ti'e. +or $a9ing Bank 5ccount, the

Bank 'ay also (lace restrictions on nu'ber of transactions, cash withdrawals, etc., for a gi9en

(eriod. $i'ilarly, the Bank 'ay s(ecify charges for issue of che-ue books, additional state'ent

of accounts, du(licate (assbook, folio charges, etc. 5ll such details, regarding ter's and

conditions for o(eration of the accounts and schedule of charges for 9arious ser9ices (ro9ided

will be co''unicated to the (ros(ecti9e de(ositor while o(ening the account. $a9ings Bank 5ccounts can be o(ened by eligible (ersonJ (ersons and certain organi>ationsJ

agencies as ad9ised by Deser9e Bank of India DBI fro' ti'e to ti'e. %urrent 5ccounts can be o(ened by indi9idualsJ(artnershi( fir'sJ ri9ate and ublic ;i'ited

%o'(aniesJH2+sJ $(ecified 5ssociatesJ$ocietiesJ Trusts, Ae(art'ents of 5uthority created by

Go9ern'ent %entral or $tate, ;i'ited ;iability artnershi( etc. Ter' Ae(osits 5ccounts can be o(ened by indi9idualsJ(artnershi( fir'sJ ri9ate and ublic

;i'ited %o'(aniesJH2+sJ $(ecified 5ssociatesJ$ocietiesJ Trusts, Ae(art'ents of 5uthority

created by Go9ern'ent %entral or $tate, ;i'ited ;iability artnershi( etc. The due diligence (rocess, while o(ening a de(osit account will in9ol9e satisfying about the

identity of the (erson, 9erification of address, satisfying about his occu(ation and source of inco'e. =btaining introduction of the (ros(ecti9e de(ositor fro' a (erson acce(table to the

17



Bank and obtaining recent (hotogra(h of the (ersonJs o(eningJ o(erating the account are (art of

due diligence (rocess. In addition to the due diligence re-uire'ents under K% nor's, the Bank is re-uired by law to

obtain er'anent 5ccount ?u'ber 5? or General Inde# Degister GID ?u'ber or

alternati9ely declaration in +or' ?o. 6! or 61 as s(ecified under the Inco'e Ta# 5ctJ Dules. Ae(osit accounts can be o(ened by an indi9idual in his own na'e status known as account in

single na'e or by 'ore than one indi9idual in their own na'es status known as &oint

5ccount. $a9ings Bank 5ccount can also be o(ened by a 'inor <ointly with natural guardian or

with 'other as the guardian $tatus known as )inorNs 5ccount. )inors abo9e the age of 1!

will also be allowed to o(en and o(erate sa9ing bank account inde(endently. Howe9er no

o9erdrafts will be granted to these 'inors. =(eration of &oint 5ccount The &oint 5ccount o(ened by 'ore than one indi9idual can be

o(erated by single indi9idual or by 'ore than one indi9idual <ointly. The 'andate for o(eratingthe account can be 'odified with the consent of all <oint account holders. The $a9ings Bank

5ccount o(ened by 'inor <ointly with natural guardianJguardian can be o(erated by natural

guardian only till the 'inor attains 'a<ority. The ter' de(osit account holders at the ti'e of (lacing their de(osits can gi9e instructions with

regard to closure of de(osit account or renewal of de(osit for further (eriod on the date of

'aturity. In the absence of such 'andate, the Bank will seek instructions fro' the de(ositorJs as

to the dis(osal of the de(osit by sending inti'ation before 1 days of the 'aturity date of ter'

de(osit by (ost or courier at the last known address of the de(ositor. ?o'ination facility is a9ailable on all de(osit accounts o(ened by indi9iduals. ?o'ination is

also a9ailable to a sole (ro(rietary concern account. ?o'ination can be 'ade in fa9our of one

indi9idual only. ?o'ination so 'ade can be cancelled or changed by the account holderJs any ti'e. :hile

'aking no'ination, the signature of the account holderJs in the no'ination for's A51, A5/ M

A53 need not be attested by witnesses. Howe9er, thu'b i'(ression of the accountholderJs is

re-uired to be attested by two witnesses. ?o'ination can be 'odified by the consent of account holderJs. ?o'ination can be 'ade in

fa9our of a 'inor also. ?o'ination facility is also a9ailable for <oint de(osit accounts and in

such cases no'ination should be 'ade by all de(ositors <ointly.

NRI SERICES

5n Indian citi>en or a foreign citi>en of Indian origin who stays abroad for

e'(loy'entJcarrying on business or 9ocation or under circu'stances indicating an intention for an

uncertain duration of stay abroad is a ?onDesident Indian ?DI. Those who stay abroad on business

18



9isit, 'edical treat'ent, study or such other (ur(oses which do not indicate an intention to stay there for

an indefinite (eriod will not be considered as ?DIs.

5n ?DI is a (erson resident outside India who is a citi>en of India or is a (erson of Indian

origin. 2nder the +oreign *#change )anage'ent 5ct +*)5, generally, a (erson is resident outside

India if he is in India for less than 18/ days during the course of the (receding financial year and also

includes any (erson who stays abroad

+or the (ur(oses of carrying out e'(loy'ent or any business or 9ocation"

2nder circu'stances indicating an intention to stay outside India for an uncertain duration"

5ny Indian citi>en de(uted outside India for a te'(orary (eriod in connection with e'(loy'ent

+or education

Bank offers 9ide range of de(osit sche'es for ?on Desident Indians which includes ?on

Desident Du(ee account ?D * D5, +oreign %urrency ?onDesident 5ccount +%?D, ?onDesident

=rdinary 5ccount ?D=, and Desident +oreign %urrency Ao'estic 5ccount D+%A.

=(ening and 'aintaining of Bank 5ccounts of ?on Desident Indian is guided by the +oreign

*#change )anage'ent 5ct1 +*)5 and interest on ter's de(osits are re9ised based on ;IB=D

rates fro' ti'e to ti'e.

1.&.1 OB'ECTIES OF THE STUDY

PRIMARY OB'ECTIE

19



To study the (erfor'ance of de(osit sche'es in arnataka Bank

SECONDARY OB'ECTIES

1 To e9aluate the (erfor'ance of cash inflow in the for' of de(osits

/ To analy>e the return on in9est'ent of de(osit sche'es

3 To find out the (erfor'ance of de'and de(osits, sa9ings bank de(osits and ter' de(osits

4 To analy>e the efficiency of 'anage'ent

To find out the relationshi( between the de(osits and loans

1.&.# SCOPE OF THE STUDY

The (resent study atte'(ts to obtain a general 9iew of de(osit sche'es (ractice in arnataka bank. The study to know their increase or decrease of 9arious sche'es is also analy>ed in order to gi9e a

20



true and clear (icture of its (erfor'ance. The (resent study ai's at studying de(osits of the arnataka

bank. The study focuses only the 9iews of the bank. But it does include the 9iews of the others who are

directly or indirectly associated with the bank. It is concerned to the ad'inistration of assets M liabilities

to analysis the (rofitability li-uidity of the organi>ation with the hel( of ratios.

1.&.& IMPORTANCE OF THE STUDY

%ash flow state'ent shows efficiency of a fir' in generating cash inflows fro' its regular

o(erations.

21



Deturn on in9est'ent can be used to 'easure the 9alue of the bank or of a s(ecific in9est'ent

that they 'ight 'ake.

ercentage analysis is hel( to e9aluate and co'(are the de(osits.

Datio analysis is an i'(ortant techni-ue of financial state'ent analysis. 5ccounting ratios are

useful for understanding the financial (osition of the co'(any. Aifferent users such as in9estors,

'anage'ent, bankers and creditors use the ratio to analy>e the financial situation of the

co'(any for their decision 'aking (ur(ose.

The effect of correlation is to reduce the range of uncertainty. The (rediction based on

correlation analysis is likely to be 'ore 9ariable and near to reality.

1.&.( LIMITATIONS OF THE STUDY

The analysis is based on the secondary data. Hence there is a li'itation of doubtful accuracy.

22



The data collected is li'ited to years and hence it does not gi9e the whole (icture.

5s the (resent business 'o9es fro' the cash basis to accrual basis, the (re(aid and credit

transactions 'ight be re(resented an increase in working ca(ital and it would be 'isleading to

e-uate net inco'e to cash flow because a nu'ber of non cash ite's would affect the net inco'e.

Deturn of in9est'ent does not take into account the ti'e 9alue of 'oney. It does not account for

the 9ariable nature of annual net cash inflows.

The ratios are generally calculated fro' (ast financial state'ents and thus are no indicator of

future.

CHAPTER – #

REIE" OF LITERATURE

23



)r. &ose(h /!! studied the (erfor'ance of ;ead Bank $che'e in erala, the 'obilisation

of bank de(osits in erala by co''ercial Banks. He obser9ed that co'(etition fro' coo(erati9e and

other institutions was the 'ain obstacles to achie9ing the de(osit 'obilisation target. The (o(ularity of

(ri9ate financial institutions was due to their (ersonal relations with local (eo(le. 6.4 (ercent of the

custo'ers self e'(loyed sur9eyed had their first (ercent dealing with banks for taking loans.

)r. ;aurent /!!6 studied the (erce(tion of custo'ers on fi9e co'(eting banks in a

'ediu' si>e city in 2 for (ri9ate de(osits. He obser9ed that these fi9e banks differed fro' each other

as a result of oligo(olistic 'arket situation only on se9en attributes i.e., friendliness, -uality of

ser9ice, co''unity s(irit, 'ode' facilities, con9enience, range of ser9ices and ownershi(. These se9en

attributes accounted for 1 (ercent of the o9erall differences between the fi9e banks. The study re9ealed

that on the basis of (erce(tion of o9erall i'age of the fi9e banks relati9e to each other, there e#isted thedifferent 'arket seg'ents.

. 59adhani /!!7 studied the (erfor'ance of rural branches of so'e co''ercial banks in

order to identify the factors influencing de(osit 'obilisation in rural areas in different states. He ca'e

out with the o(inion that there e#isted sufficient relationshi( between the de(osits of a rural branch and

its age. The growth of de(osits is at a faster rate in the first si# years and ta(ers off subse-uently. The

growth rate in de(osits of co''ercial banks cannot be e#(lained in ter's of (rice differentials as co

o(erati9es offer high rates of interest. Therefore (roduct differentials would offer a better e#(lanation of

the dis(arate growth rates in de(osits.

)r. ?ag and )r. $hi9aswa'y /!!8 studied the co'(arati9e (erfor'ance of foreign and

Indian banks and obser9ed that there was a distinct (reference of bank custo'ers to bank with foreign

banks notwithstanding the fact that foreign banks sti(ulate relati9ely high le9els of 'ini'u' a'ounts to

be 'aintained as de(osits and charge relati9ely high interest rates and ser9ice costs. In res(ect of de(osit

su((lies, their strategy had been to (rocure fro' a seg'ented (art of the total su((lies of de(osits of

large si>e fro' a relati9ely s'all nu'ber of de(ositors. ;arge accretion of nonresident de(osits with

foreign banks was 'ainly because of the fa'iliarity of the na'es of foreign banks o(erating in India to

banks abroad.

Da<u /!! studiedthe le9els of sa9ings and the 'anner of their distribution a'ong different

(hysical and financial assets of household sector in erala and identified the factors influencing their

sa9ings beha9iour. He found that 'a<or (ortions of the sa9ings of households in erala were in the for'

of financial sa9ings and that too in the for' of bank de(osits.

24



$ubra'anian /!1! analy>edthe e'(irical analysis on disinter'ediation fro' the household

sectors (ortfolio (references (oint of 9iew based on de'and 'odel of fi9e assets including bank

de(osits The study re9ealed that the household sectors (references between bank de(osits and lending

to (ri9ate cor(orate sector tended to be in fa9our of the latter and against the for'er.

?alini /!11 studied on the i'(act of 'utual funds on the de(osit 'obilisationof co''ercial banks

e#a'ined the awareness le9el and ado(tion le9el of 'utual funds a'ong household in9estors in

Thiru9anantha(ura' district. $he found that the ad9ent of 'utual funds has brought in e#(ected

changes in the growth of bank de(osits and their ownershi( (attern, but the changes were not of a

significant 'agnitude.

CHAPTER – &

RESEARCH METHODOLOGY

25



Desearch )ethodology is a way to syste'atically sol9e the research (roble'. It 'ay be understand as a

science of studying as research is done scientifically in this we study 9arious ste(s that are generally

ado(ted by a researcher in studying the research (roble' along with logic behind the'.

RESEARCH DESIGN

5 Desearch design is a syste' of conditions for collection and analysis of data which ai's to

(ro9ide the (recise infor'ation.Desearch is a syste'atic way of e#(loring,analysing and

conce(tuali>ing social life in order to e#tend and 9erify knowledge to see this research hel(s to construct

a theory.This 'ethod is si'(ly a syste'atically (lanned way of doing things to achie9e the desired

result.

5Desearch design of this study is analytical in nature.It is an arrange'ent of condition of collection and

analysis of data in a (ro(er that ai's to co'bine rele9ance to the research (ur(ose with econo'y in (rocedure.

DATA DESIGN

%ollection of data is the (rocess re'uneration together with the (ro(er record of research.Those data

which are already been (assed through the statistical (rocess. In this study is based on the secondary

sources.$econdary data is the data that ha9e been already collected by and readily a9ailable fro' other

sources. $uch data are chea(er and 'ore -uickly obtainable than the (ri'ary data and also 'ay bea9ailable when (ri'ary data cannot be obtained at all.

It is econo'ical.

It sa9es efforts and e#(enses

It hel(s to 'ake (ri'ary data collection 'ore s(ecific since with the hel( of secondary data, we

are able to 'ake out what are the ga(s and deficiencies and what additional infor'ation needs to

be collected It hel(s to i'(ro9e the understanding of the (roble'

It (ro9ides a basis for co'(arison for the data that is collected by the researcher

The secondary data for the study is 'ainly collected through

5nnual re(orts

%irculars

Internet

TOOLS USED FOR ANALYSIS

RETURN OF INESTMENT$

26



5 (erfor'ance 'easure used to e9aluate the efficiency of an in9est'ent or co'(are the efficiency of a

nu'ber of different in9est'ents. To calculate D=I, the return on an in9est'ent is di9ided by the cost of

the in9est'ent" the result is e#(ressed as a (ercentage or a ratio.

Deturn on in9est'ent is a (o(ular 'etric because it is 9ersatile and si'(le to use. If an in9est'ent does

not ha9e a (ositi9e D=I or if there are alternati9e in9est'ent o((ortunities with a higher D=I, the

in9est'ent should not be undertaken.

EBIT

R)*+,n - In/)0*)n* 2 333333333333333333

Ca4i*a5 E45-6)d

PERCENTAGE ANALYSIS

ercentage analysis consists of reducing a series of related a'ounts to a series of (ercentages of a gi9en

base. Two a((roaches are often used. The first, called hori>ontal analysis, indicates the (ro(ortionate

change in financial state'ent ite's o9er a (eriod of ti'e, such analysis is 'ost hel(ful in e9aluating

trends. ertical analysis co''onsi>e analysis is (ro(ortional e#(ression of each ite' on the financial

state'ents in a gi9en (eriod to a base a'ount. It analy>es the co'(osition of each of the financial

state'ents fro' different years

a To detect trends not e9ident fro' the co'(arison of absolute a'ounts and

b To 'ake interco'(any co'(arisons of different si>ed enter(rises.

177

PERCENTAGE 2 333333333333333333 8 CURRENT YEAR

BASE YEAR

RATIO ANALYSIS$

Datio analysis is the (rocess of deter'ining and (resenting the relationshi( of ite's and grou( of ite's

in the state'ents. 5ccording to Batty &. )anage'ent 5ccounting ODatio can assist 'anage'ent in its

basic functions of forecasting, (lanning coordination, control and co''unicationP.

27



It is hel(ful to know about the li-uidity, sol9ency, ca(ital structure and (rofitability of an

organi>ation. It is hel(ful tool to aid in a((lying <udge'ent, otherwise co'(le# situations.

5ccording to 5ccountantNs Handbook by :i#on, ell and Bedford, Oa ratio is an e#(ression of the

-uantitati9e relationshi( between two nu'bersP. 5 tool used by indi9iduals to conduct a -uantitati9e

analysis of infor'ation in a co'(any0s financial state'ents. Datios are calculated fro' current year

nu'bers and are then co'(ared to (re9ious years, other co'(anies, the industry, or e9en the econo'y

to <udge the (erfor'ance of the co'(any. Datio analysis is (redo'inately used by (ro(onents of

funda'ental analysis.

CURRENT RATIO

This ratio e#(lains the relationshi( between current assets and current liabilities of a business.

C+,,)n* A00)*0

C+,,)n* Ra*i- 2 333333333333333333

C+,,)n* Lia9i5i*i)0

%urrent 5ssetsQ%urrent assetsN includes those assets which can be con9erted into cash with in a yearNs

ti'e.

%urrent 5ssets R %ash in Hand S %ash at Bank S BJD S $hort Ter' In9est'ent S Aebtors Aebtors C

ro9ision S $tock$tock of +inished Goods S $tock of Daw )aterial S :ork in rogress S re(aid

*#(enses.

%urrent ;iabilities Q%urrent liabilitiesN include those liabilities which are re(ayable in a yearNs ti'e.

%urrent ;iabilities R Bank =9erdraft S BJ S %reditors S ro9ision for Ta#ation S ro(osed Ai9idend S

2nclai'ed Ai9idends S =utstanding *#(enses S ;oans ayable within a Kear.

Signii:an:)$

5ccording to accounting (rinci(les, a current ratio of /1 is su((osed to be an ideal ratio.

It 'eans that current assets of a business should, at least, be twice of its current liabilities. The

higher ratio indicates the better li-uidity (osition" the fir' will be able to (ay its current liabilities 'ore

easily. If the ratio is less than /1, it indicates lack of li-uidity and shortage of working ca(ital.The

biggest drawback of the current ratio is that it is susce(tible to Owindow dressingP. This ratio can bei'(ro9ed by an e-ual decrease in both current assets and current liabilities.

28



RATIO OF CURRENT LIABILITIES TO PROPRIETOR;S FUND$

This ratio e#(lains the relationshi( between current liabilities and shareholderNs fund of a business.

C+,,)n* Lia9i5i*i)0

Ra*i- - C+,,)n* Lia9i5i*i)0 *- P,-4,i)*-,;0 +nd 2 333333333333333333

S<a,)<-5d),;0 +nd

Signii:an:)$

This ratio should be 33 or 'ore than that. In other words, the (ro(ortion of shareholders funds to total

funds should be 33 or 'ore.5 higher (ro(rietary ratio is generally treated an indicator of sound

financial (osition fro' longter' (oint of 9iew, because it 'eans that the fir' is less de(endent on

e#ternal sources of finance.If the ratio is low it indicates that longter' loans are less secured and they

face the risk of losing their 'oney.

INTEREST COERAGE RATIO

This ratio is also ter'ed as QAebt $er9ice DatioN. This ratio is calculated as follows

EBIT

In*),)0* C-/),ag) Ra*i- 2 33333333333333333333333333333333333333

Fi=)d In*),)0* C<a,g)0

Signii:an:)$

This ratio indicates how 'any ti'es the interest charges are co9ered by the (rofits a9ailable to (ay

interest charges.This ratio 'easures the 'argin of safety for longter' lenders.This higher the ratio,

'ore secure the lenders is in res(ect of (ay'ent of interest regularly.

If (rofit <ust e-uals interest, it is an unsafe (osition for the lender as well as for the co'(any also, as

nothing will be left for shareholders.5n interest co9erage ratio of 6 or 7 ti'es is considered a((ro(riate.

DEBT E%UITY RATIO

This ratio e#(resses the relationshi( between outsiderNs fund and shareholderNs fund.

29



O+*0id),;0 +nd

D)9* E>+i*6 Ra*i- 2 3333333333333333333333333333333333333333

S<a,)<-5d),;0 +nd

=utsiderNs +unds These refer to long ter' liabilities which 'ature after one year. These include

Aebentures, )ortgage ;oan, Bank ;oan, and ;oan fro' +inancial institutions and ublic Ae(osits etc.

$hareholderNs +unds These include *-uity $hare %a(ital, reference $hare %a(ital, $hare re'iu',

General Deser9e, %a(ital Deser9e, =ther Deser9e and %redit Balance of rofit M ;oss 5ccount.

Signii:an:)$This Datio is calculated to assess the ability of the fir' to 'eet its long ter' liabilities. Generally, debt

e-uity ratio of is considered safe.If the debt e-uity ratio is 'ore than that, it shows a rather risky

financial (osition fro' the longter' (oint of 9iew, as it indicates that 'ore and 'ore funds in9ested in

the business are (ro9ided by longter' lenders. The lower this ratio, the better it is for longter' lenders

because they are 'ore secure in that case. ;ower than /1 debt e-uity ratio (ro9ides sufficient (rotection

to longter' lenders.

"ORKING CAPITAL RATIO

This ratio shows the difference between the current assets and current liabilities.

"-,king Ca4i*a5 Ra*i- 2 C+,,)n* A00)*0 – C+,,)n* Lia9i5i*i)0

Signii:an:)$

This ratio is of (articular i'(ortance in non'anufacturing concerns where current assets (lay a 'a<or

role in generating sales. It shows the nu'ber of ti'es working ca(ital has been rotated in (roducing

sales.5 high working ca(ital turno9er ratio shows efficient use of working ca(ital and -uick turno9er of

current assets like stock and debtors. 5 low working ca(ital turno9er ratio indicates underutilisation of

working ca(ital.

30



CASH FLO" STATEMENT

The cash flow state'ent is a financial state'ent that shows how changes in balance sheet accounts and

inco'e affect cash and cash e-ui9alents, and breaks the analysis down to o(erating, in9esting, and

financing acti9ities. *ssentially, the cash flow state'ent is concerned with the flow of cash in and cash

out of the business.

The state'ent ca(tures both the current o(erating results and the acco'(anying changes in the balance

sheet. 5s an analytical tool, the state'ent of cash flows is useful in deter'ining the shortter' 9iability

of a co'(any, (articularly its ability to (ay bills.

The cash flow state'ent is distinct fro' the inco'e state'ent and balance sheet because it

does not include the a'ount of future inco'ing and outgoing cash that has been recorded on credit.

Therefore, cash is not the sa'e as net inco'e, which, on the inco'e state'ent and balance sheet,

includes cash sales and sales 'ade on credit. The 'oney co'ing into the business is called cash inflow,and 'oney going out fro' the business is called cash outflow.

CORRELATION

The correlation is one of the 'ost co''on and 'ost useful statistics. 5 correlation is a single nu'ber

that describes the degree of relationshi( between two 9ariables.

x−´ x

∑ (¿)∑( y−´ y )

√ ∑ ( x−´ x) ²√ ∑ ( y−´ y) ²r=¿

CHAPTER – (

DATA ANALYSIS AND INTERPRETATIONS

(.1 RETURN OF INESTMENT

5 (erfor'ance 'easure used to e9aluate the efficiency of an in9est'ent or co'(are the efficiency of a

nu'ber of different in9est'ents. Deturn on in9est'ent is a (o(ular 'etric because it is 9ersatile and

31



si'(le to use. If an in9est'ent does not ha9e a (ositi9e D=I or if there are alternati9e in9est'ent

o((ortunities with a higher D=I, the in9est'ent should not be undertaken.

EBIT

R)*+,n - In/)0*)n* 2 333333333333333333

Ca4i*a5 E45-6)d

TABLE (.1.1

RETURN ON INESTMENT

?RS.IN CRORES@

YEARS EBIT CAPITAL

EMLOYED

ROI

/!!7 !.18 1.66 !.11

/!!8 !./ 1./ !.16

/!! !./7 1.7 !.17

/!1! !.17 /.17 !.!8

/!11 !./1 3./ !.!6

S-+,:)$ $econdary data

INTERPRETATION$

The abo9e table shows that the (erfor'ance of return on in9est'ent is based on de(osits. The return

on in9est'ent has been increased u( to /!!. In /!1!, the earning before in ta# started to decrease, so

the return on in9est'ent also started to decrease in the year. The highest rate of return on in9est'ent is

!.17 %rores in the year /!!.

CHART (.1.1

RETURN ON INESTMENT

32



2007 2008 2009 2010 2011

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.11

0.160.17

0.08

0.06

Years

Rs. In Crores

(.# PERCENTAGE ANALYSIS

ercentage analysis consists of reducing a series of related a'ounts to a series of (ercentages of a gi9en

base. Two a((roaches are often used. The first, called hori>ontal analysis, indicates the (ro(ortionate

change in financial state'ent ite's o9er a (eriod of ti'e, such analysis is 'ost hel(ful in e9aluating

trends. ertical analysis co''onsi>e analysis is (ro(ortional e#(ression of each ite' on the financial

33



state'ents in a gi9en (eriod to a base a'ount. It analy>es the co'(osition of each of the financial

state'ents fro' different years

a To detect trends not e9ident fro' the co'(arison of absolute a'ounts and

b To 'ake interco'(any co'(arisons of different si>ed enter(rises.

177

PERCENTAGE 2 333333333333333333 8 CURRENT YEAR

BASE YEAR

TABLE (.#.1

DEMAND DEPOSITS

YEARS AMOUNTS ?R0@ PERCENTAGE

/!!7 1!,8!6,88 1!!

/!!8 11,1/,1 1!3.7

/!! 11,7!,171 1!7.!6

/!1! 17,!64,834 17.1

/!11 18,6!,/1 171.7


INTERPRETATION$The (ercentage analysis about de'and de(osits will be (resented in the abo9e table. The year /!!7 was

taken as the base year for find out the (ercentage of de(osits increasedfor re'aining years i.e., /!!8 to

/!11. The (ercentage of de(osits increased co'(are to (re9ious years because of increasing custo'ers

year by year.

CHART (.#.1

DEMAND DEPOSITS

34



2007 2008 2009 2010 2011

0

20

40

60

80

100

120

140

160

180

200

100 103.57 107.06

157.91

171.75

Years

Percentage

TABLE (.#.#

SAINGS BANK DEPOSITS


/!!7 /1,8,11! 1!!

35



/!!8 /6,483,683 1/!.3

/!! /8,4,/6/ 131.8!

/!1! 38,136,8!1 173.36

/!11 4,46,383 //4.86


INTERPRETATION$

The abo9e table shows the (erfor'ance of sa9ings bank de(osits for the last fi9e years with the hel( of

(ercentage analysis. The year /!!7 was taken as the base year for find out the (ercentage of de(osits

increased for re'aining years i.e., /!!8 to /!11. The (ercentage of de(osits increased co'(are to

(re9ious years because of increasing custo'ers year by year.

CHART (.#.#

SAINGS BANK DEPOSITS

2007 2008 2009 2010 2011

0

50

100

150

200

250

100120.39

131.8

173.36

224.86

Years

Percentage

TABLE (.#.&

TERM DEPOSITS


/!!7 1!7,6,3 1!!

36



/!!8 13/,48,3/ 1/3.16

/!! 16/,768,4/! 11.31

/!1! 18/,1!4,83 16./

/!11 /!,338,1 1!.8


INTERPRETATION$

The abo9e table shows the (erfor'ance of ter' de(osits for the last fi9e years with the hel( of

(ercentage analysis. The year /!!7 was taken as the base year for find out the (ercentage of de(osits

increased for re'aining years i.e., /!!8 to /!11. The (ercentage of de(osits increased co'(are to

(re9ious years because of increasing custo'ers year by year.

CHART (.#.&

TERM DEPOSITS

2007 2008 2009 2010 20110

50

100

150

200

250

100

123.16

151.31169.29

190.89

Years

Percentage

(.& RATIO ANALYSIS

Datio analysis is the (rocess of deter'ining and (resenting the relationshi( of ite's and grou( of ite's

in the state'ents. 5ccording to Batty &. )anage'ent 5ccounting ODatio can assist 'anage'ent in its

basic functions of forecasting, (lanning coordination, control and co''unicationP.

37



(.&.1 CURRENT RATIO

C+,,)n* A00)*0

C+,,)n* Ra*i- 2 333333333333333333

C+,,)n* Lia9i5i*i)0

TABLE

(.&.1 CURRENT RATIO

?RS.IN CRORES@

Y)a,0 C+,,)n* A00)*0 C+,,)n* Lia9i5i*i)0 C+,,)n* Ra*i-

#77 1!.71 4.// /.3

#77 1/.83 4.71 /.7/

#77 13./7 .!1 /.6

#717 16./4 6. /.3/

#711 1.33 8.73 /./1


INTERPRETATION$

The current ratio of the co'(any this shows that the current ratio is 'ore than the standard

le9el /1 so they should 'aintain this for future

CHART (.&.1

CURRENT RATIO

38



2007 2008 2009 2010 2011

0

0.5

1

1.5

2

2.5

3

2.532.72 2.65

2.322.21

Years

Rs.In Crores

(.&.# RATIO OF CURRENT LIABILITIES TO PROPRIETOR;S FUND$

This ratio e#(lains the relationshi( between current liabilities and shareholderNs fund of a business.

39



C+,,)n* Lia9i5i*i)0

Ra*i- - C+,,)n* Lia9i5i*i)0 *- P,-4,i)*-,;0 +nd 2 333333333333333333

S<a,)<-5d),;0 +nd

TABLE (.&.#

RATIO OF CURRENT LIABILITIES TO PROPRIETOR;S FUND

?RS.IN CRORES@

Y)a,0 S<a,)<-5d),;0 +nd C+,,)n* Lia9i5i*i)0 Ra*i- - C+,,)n*

Lia9i5i*i)0 *-

P,-4,i)*-,0 +nd

#77 1./4 4.// 3.4!

#77 1.38 4.71 3.41

#77 1.7 .!1 3.1

#717 1.83 6. 3.8/

#711 /.43 8.73 3.


INTERPRETATION$

The abo9e table re9eals that ratio of current liabilities to ro(rietors fund does not ha9e sa'e le9el of

ratio. In /!!8, the ratio has been increased when co'(are to the (re9ious year. But in /!!, the ratio has

decreased. Then again the ratio has started to increase in /!1! and decrease in /!11.

CHART (.&.#

RATIO OF CURRENT LIABLITIES TO PROPRIETORS FUND

40



2007 2008 2009 2010 2011

2.8

3

3.2

3.4

3.6

3.8

4

3.4 3.41

3.19

3.82

3.59

Years

Rs. In Crores

(.&.& INTEREST COERAGE RATIO

This ratio is also ter'ed as QAebt $er9ice DatioN. This ratio is calculated as follows

41



EBIT

In*),)0* C-/),ag) Ra*i- 2 33333333333333333333333333333333333333

Fi=)d In*),)0* C<a,g)0

TABLE (.&.&


?RS.IN CRORES@

Y)a,0 EBIT Fi=)d In*),)0*

C<a,g)0

In*),)0* C-/),ag)

Ra*i-

#77 !.18 !.83 !.//

#77 !./6 1.1! !./4

#77 !./8 1.44 !.1

#717 !.17 1.71 !.1!

#711 !./1 1.76 !.1/


INTERPRETATION$

The abo9e table re9eals that ratio of current liabilities to ro(rietors fund does not ha9e sa'e le9el of

ratio. In /!!8, the ratio has been increased when co'(are to the (re9ious year. But in /!!, the ratio has

decreased. Then again the ratio has started to increase in /!1! and decrease in /!11.

CHART (.&.&


42



2007 2008 2009 2010 2011

0

0.05

0.1

0.15

0.2

0.25

0.3

0.220.24

0.19

0.10.12

Years

Rs. In Crores

(.&.( DEBT E%UITY RATIO

This ratio e#(resses the relationshi( between outsiderNs fund and shareholderNs fund.

43



O+*0id),;0 +nd

D)9* E>+i*6 Ra*i- 2 3333333333333333333333333333333333333333

S<a,)<-5d),;0 +nd

O+*0id),;0 F+nd0$ ! These refer to long ter' liabilities which 'ature after one year. These include

Aebentures, )ortgage ;oan, Bank ;oan, and ;oan fro' +inancial institutions and ublic Ae(osits etc.

S<a,)<-5d),;0 F+nd0$ ! These include *-uity $hare %a(ital, reference $hare %a(ital, $hare re'iu',

General Deser9e, %a(ital Deser9e, =ther Deser9e and %redit Balance of rofit M ;oss 5ccount.

TABLE (.&.(

DEBT E%UITY RATIO

?RS.IN CRORES@

Y)a,0 O+*0id),0 +nd S<a,)<-5d),;0 +nd D)9* E>+i*6 Ra*i-

#77 !.4 1./4 !.76

#77 !.4 1.38 !.68

#77 !.6 1.7 !.61

#717 1.47 1.83 !.8!

#711 1.3 /.43 !.7


INTERPRETATION$

The abo9e table re9eals that interest co9erage ratio during the year /!!7 was !.76 and it is gradually

decreasing to !.68 and !.61 in the ne#t years. But in /!1!, the ratio is increasing to !.8!. 5nd again the

ratio is decreasing to !.7.

CHART (.&.(

44



DEBT E%UITY RATIO

2007 2008 2009 2010 2011

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

0.76

0.680.61

0.8 0.79

Years

Rs. In Crores

(.&. "ORKING CAPITAL RATIO

45



This ratio shows the difference between the current assets and current liabilities.

"-,king Ca4i*a5 Ra*i- 2 C+,,)n* A00)*0 – C+,,)n* Lia9i5i*i)0

TABLE (.&.

"ORKING CAPITAL

?RS.IN CRORES@

Y)a,0 C+,,)n* A00)*0 C+,,)n* Lia9i5i*i)0 "-,king Ca4i*a5

#77 1!.71 4.// 6.4

#77 1/.83 4.71 8.1/

#77 13./7 .!1 8./6

#717 16./4 6. ./

#711 1.33 8.73 1!.6


INTERPRETATION$

The abo9e table re9eals that working ca(ital has been increasing e9ery year. It shows this

ratio ha9e 'ore 9alue in the future.

CHART (.&.

46



"ORKING CAPITAL

2007 2008 2009 2010 2011

0

2

4

6

8

10

12

6.49

8.12 8.26

9.25

10.6

Years

Rs. In Crores

(.(CASH FLO" STATEMENT

47



TABLE (.(.1

CASH FLO" STATEMENT FOR THE YEAR ENDED &10* MARCH #77

Pa,*i:+5a,0

R0

Ma,:< &1

#77

R0

A.CASH FLO" FROM OPERATING ACTIITIES

?et (rofit before ta# and e#tra ordinary ite's

5d<ust'ents for

Ae(reciation on +i#ed 5ssets including

;east 5d<ust'ent charges

ro9isions and %ontingencies

5'ortisation of (re'iu' on Held to )aturity In9est'ents

Dights Issue *#(enses

=(erating (rofit before working ca(ital changes 5d<ust'ent

for

• 5d9ances M =ther 5ssets

• In9est'ents

• Ae(osits, Borrowings M =ther ;iabilities

%ash generated fro' o(erations

Airect ta#es (aid

N)* :a0< 5- ,- -4),a*ing a:*i/i*i)0 ?A@

166,!81

837,8!!

1!7,//!

!

16,/,4/

4,!,46/

,484,!1

/,73!,376

1,111,1!1

3,841,477

/,8,3

1,/8/,38

1,/1/,431

717

Source: Secondary data

INTERPRETATION$

The abo9e table shows the (erfor'ance of cash inflow and outflow of )arch 31st /!!7, the total a'ount

of de(osits was ,484,!1. It e9aluates the cash inflow and outflow is based on de(osits.

48



TABLE (.(.#


Pa,*i:+5a,0

R0

Ma,:< &1

#77

R0



5d<ust'ents for Ae(reciation on +i#ed 5ssets including






for


• In9est'ents



Airect ta#es (aid

N)* :a0< 5- ,- -4),a*ing a:*i/i*i)0 ?A@

174,8

77,!!!

1!3,!

!

1/,43,43

8,4,/3/

/7,88/,66

3,43,443

8,!63

4,/!,!6

6,34,44

1!,68,4!

1,66/,/77

7#&1&


INTERPREATION$

The abo9e table shows the (erfor'anceof cash inflow and outflow of )arch 31st /!!8, the a'ount of

de(osits has been increased when co'(are to )arch 31st /!!7.

49



TABLE (.(.&


Pa,*i:+5a,0

R0

Ma,:< &1

#77

R0



5d<ust'ents for







for


• In9est'ents



Airect ta#es (aid

N)* :a0< 5- ,- -4),a*ing a:*i/i*i)0 ?A@

18,/81

8!,!!!

11,484

!

,1/,7/8

/6,!4,34

31,663,643

4,!61,484

1,1//,76

,184,/4

4,!33,43!

1,1!,81

1,681,!16

!&71


INTERPRETATION$

The abo9e table shows the (erfor'ance of cash inflow and outflow of )arch31st /!!, the a'ount of

de(osits has been increased when co'(are to )arch 31st /!!8.

50



TABLE (.(.(


Pa,*i:+5a,0

R0

Ma,:< &1

#717

R0



5d<ust'ents for Ae(reciation on +i#ed 5ssets including






for


• In9est'ents



Airect ta#es (aid

N)* :a0< 5- ,- -4),a*ing a:*i/i*i)0 ?A@

//1,41

71!,83!

/88,64

!

/6,6/8,81

1!,41/,!!

37,3/,73

1,3!,483

1,//!,3!

3,11,413

81,87

4,!43,/7!

1,!/,83!

&71((7

Source: Secondary data

INTERPRETATION$

51



The abo9e table shows the (erfor'ance of cash inflow and outflow of )arch31st /!1!, the a'ount of

de(osits has been increased when co'(are to )arch 31st /!!.

TABLE (.(.


Pa,*i:+5a,0

R0

Ma,:< &1

#711

R

0



5d<ust'ents for







for


• In9est'ents



Airect ta#es (aid

N)* :a0< 5- ,- -4),a*ing a:*i/i*i)0 ?A@

//,18

1,/!3,/!

71,44

!

/7,/3,7!/

1,6!3,686

34,36!,//!

/,34,48

1,!4,883

3,8,341

8,47,168

4,61,8/7

1,/74,1/!

!&(


INTERPRETATION$

The abo9e table shows the (erfor'ance of cash inflow and outflow of )arch31st /!11, the a'ount of

de(osits has been decreased when co'(are to )arch 31st /!1!.

52



TABLE (.(.

NET CASH FLO" FROM OPERATING ACTIITIES

RS.IN LAKHS@

Y)a,0 N)* O4),a*ing a:*i/i*i)0

/!!7 !.7

/!!8 !./3

/!! .3

/!1! 3!.17

/!11 8.3


INTERPRETATION$

The abo9e table shows the de(osits are one of the 'ain factors of net cash flow fro' o(erating

acti9ities. The cash inflow is based on the de(osits. If the a'ount of de(osits increased, the net cash

flow also increased.

CHART (.(.1

NET OPERATING ACTIITIES

53



2007 2008 2009 2010 2011

-80

-60

-40

-20

0

20

40

60

80

100

0.7

90.23

-5.3

30.17

-58.93

Years

Rs. In Lakhs

(. CORRELATION

The correlation is one of the 'ost co''on and 'ost useful statistics. 5 correlation is a single nu'ber

that describes the degree of relationshi( between two 9ariables.

x−´ x

∑(¿)∑( y−´ y )

√ ∑ ( x−´ x) ²√ ∑ ( y−´ y) ²r=¿

TABLE (..1

CORRELATION$

?RS.CRORES@

Y)a,0 D)4-0i*0?=@ L-an0?6@

#77 14 1!

#77 17 11

#77 /! 1/

#717 /4 14

#711 /7 17

54




RESULT$

, 2 7.

INTERPRETATION$

The abo9e calculation shows the (ositi9e correlation. $o there is significant relationshi( between two

9ariables.

CHAPTER –

FINDINGS AND SUGGESTIONS

.1 FINDINGS

The de(osits of arnataka bank ha9e been increasing e9ery year

The highest net cash flow fro' o(erating acti9ities is !./3 lakhs in the year /!!8 and the lowest

net cash flow fro' o(erating acti9ities 8.3 lakhs in the year /!11

The (ercentage analysis hel(s to identify the (ercentage of de'and de(osits, sa9ings bank

de(osits and ter' de(osits ha9e been increasing e9ery year

The (ercentage of sa9ings bank de(osits has been doubled in the year /!11

The current ratio of the bank fro' the year, /!!7/!11 is to be abo9e /1and itis satisfactory

The highest ratio of current liabilities to (ro(rietorNs fund is 3.8/ crores in the year /!1!

The lowest interest co9erage ratio is!.1! crores in the year /!1!

The highest debt e-uity ratio is !.8! crores in the year /!1!

55



The working ca(ital of the bank ha9e been increasing e9ery year, so the bank shall use the

ca(ital effecti9ely

The result of correlation shows (ositi9e correlation.

.# SUGGESTIONS

The de(osit sche'es are showing an unconstructi9e sign. $o the bank kee(s in control for the

future (eriod

The (ercentage analysis are essentially concerned with the identification of significant

accounting data relationshi(s, which gi9e the decision'aker insights into the financial

(erfor'ance of a co'(any

Datio analysis has a 'a<or significance in analysing the financial (erfor'ance of a co'(any o9er

a (eriod of ti'e.

The bank shall i'(ro9e their le9el of cash and bank balances because it is (laying a 9ital role for

additional i'(ro9e'ent

The result of correlation shows (ositi9e correlation. $o there is a good relationshi( between

de(osits and loans in the bank

56



CONCLUSION

The study is 'ade on the to(ic de(osit sche'es by using financial toolsM with fi9e years data at

arnataka bank ;td. This tools used for the study hel(ed in deter'ining the (osition of the concern

conse-uently for the (ast fi9e years. The analysis of financial state'ents is a (rocess of e9aluating the

relationshi( between co'(onent (arts of financial state'ents to obtain a better understanding of the

fir'Ns (osition and (erfor'ance. The bankNs o9erall financial (osition is satisfactory. The bank de(osit

sche'es ha9ebeen increasing year by year, so the bank gets 'ore growth in e9ery year.

57



BIBLIOGRAPHY

")9 0i*)0

.ka,na*aka9ank.:-

.iki4)dia.-,g

.g--g5).:-

B--k0 ,)),,)d

Basic +inancial )anage'entP C )K han M &ain

O+inancial )anage'entP C rasanna %handra

O+inancial 5ccountingP C &on Ben Hoyle M %& $kender

Ann+a5 ,)4-,*0

5nnual re(ort /!!6 C /!!7

5nnual re(ort /!!7 C /!!8

5nnual re(ort /!!8 C /!!

5nnual re(ort /!! C /!1!

5nnual re(ort /!1! C /!11

58

http://www.karnatakabank.com/

http://www.wikipedia.org/

http://www.google.com/

http://www.karnatakabank.com/

http://www.wikipedia.org/

http://www.google.com/



APPENDI

KARNATAKA BANK ?P@ LTD

MARCH!11 MARCH!17 MARCH!7 MARCH!7 MARCH!7

%5IT5; 5?A

;I5BI;ITI*$

%a(ital

Deser9es and

$ur(lus

Ae(osits

Borrowings

=ther ;iabilities

and ro9ision

1,88/,!!4

//,4!8,866

/73,364,463

1!,863,33

8,411,4!3

1,33,861

16,87,63/

/37,3!6,488

3,416,4!3

11,3!1,1

1,/1,847

14,44,4/3

/!3,33/,83

3,7/8

,3,/!

1,/13,33

1/,8/,!!

17!,161,/3

1,4/1,

8,!18,/67

1,/13,33

11,17/,744

14!,374,34

4,/!7,383

,/7,148

TOTAL &1&77

&1&77

#7&1(&

##77

1&&1

1###1

&1&77

#7&1(&

##77

1&&1

1###1

#7&1(& ##77 1&&1 1###1#

59



ASSETS

%ash M balances

with DBI

Balances with

Banks and

)oney at %all M

$hort ?otice

In9est'ents

5d9ances

+i#ed 5ssets

=ther 5ssets

1,38,!

46/,1

11,!63,33

173,48!,7!

1,4,/68

7,!7!,131

17,43!,7

6/4,!3

,/!,463

144,36,833

1,48!,78

6,38,!!7

13,64,83!

7,3

8,614,883

118,1!!,4!

1,384,876

4,87!,48/

14,8//,!

,!/!,4/

,637,!87

1!8,41,746

1,17,731

4,3!1,1/6

8,/68,/37

3,346,11

!,481,644

,/6,7

1,!68,/16

3,33,3TOTAL &1&77 #7&1(& ##77 1&&1 1###1#

%ontingent

;iabilities

!,38,!16

,6/8,/

1!1,1/,384

1!,3//,4/7

1!!,4/7,447

,/8,/87

6,!,!!

7,646,77

34,/7,!!!

6,7/8,84

100612025 Deposit Schemes Project Report

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Transcript of 100612025 Deposit Schemes Project Report