Final Research Project 4th Sem

8/2/2019 Final Research Project 4th Sem

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INTRODUCTION

DEFINITION OF BANK

The Oxford dictionary defines the Bank as,

An establishment for the custody of money, which it pays out, on a customers

order.

According to Whitehead,

A Bank is defined as an institution which collects surplus funds from the public,

safeguards them, and makes them available to the true owner when required and

also lends sums be their true owners to those who are in need of funds and can

provide security.Banking Company in India has been defined in the Banking Companies act1949,

One which transacts the business of banking which means the accepting, for the

purpose of lending or investment of the deposits of money from the public,

repayable on demand, or otherwise and withdraw able be cheque, draft, order or

otherwise. The banking system is an integral subsystem of the financial system. It

represents an important channel of collecting small savings from the households

and lending it to the corporate sector. The Indian banking system has Reserve Bank

of India (RBI) as the apex body for all matters relating to the banking system. It is

the central Bank of India. It is also known as the Banker to All Other Banks.


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EVOLUTION OF INDIAN BANKING

Ancient banking system of India constituted of indigenous bankers. They have been

carrying on their age-old banking operations in different parts of the country under

different names. The modern age of banking constitutes the fundamental basis of

economic growth. The term Bank is being used since long time but there is no clear

conception regarding its beginning. Italian money leaders were known as Banchi

because they kept a special type of table to transact their business.

HISTORY OF BANKING IN INDIA

There are three different phases in the history of banking in India.

1) Pre-Nationalization Era.

2) Nationalization Stage.

3) Post Liberalization Era.

1) Pre-Nationalization Era:

In India the business of banking and credit was practices even in very early

times. The remittance of money through Hundies, an indigenous credit

instrument, was very popular. The hundies were issued by bankers known as

Shroffs, Sahukars, Shahus or Mahajans in different parts of the country. The

modern type of banking, however, was developed by the Agency Houses of

Calcutta and Bombay after the establishment of Rule by the East India Company in

18th

and 19th

centuries.

During the early part of the 19th

Century, ht volume of foreign trade was

relatively small. Later on as the trade expanded, the need for banks of the

European type was felt and the government of the East India Company took


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interest in having its own bank. The government of Bengal took the initiative and

the first presidency bank, the Bank of Calcutta (Bank of Bengal) was established in

180. In 1840, the Bank of Bombay and IN 1843, the Bank of Madras was also set

up.

These three banks also known as Presidency Bank. The Presidency Banks had

their branches in important trading centers but mostly lacked in uniformity in their

operational policies. In 1899, the Government proposed to amalgamate these

three banks in to one so that it could also function as a Central Bank, but the

Presidency Banks did not favor the idea. However, the conditions obtaining during

world war period (1914-1918) emphasized the need for a unified banking

institution, as a result of which the Imperial Bank was set up in1921. The Imperial

Bank of India acted like a Central bank and as a banker for other banks. The RBI

(Reserve Bank of India) was established in 1935 as the Central Bank of the Country.

In 1949, the Banking Regulation act was passed and the RBI was nationalized and

acquired extensive regulatory powers over the commercial banks. In 1950, the

Indian Banking system comprised of the RBI, the Imperial Bank of India,

Cooperative banks, Exchange banks and Indian Joint Stock banks.

2) Nationalization Stages:

After Independence, in 1951, the All India Rural Credit survey, committee of

Direction with Shri. A. D. Gorwala as Chairman recommended amalgamation of the

Imperial Bank of India and ten others banks into a newly established bank called

the State Bank of India (SBI). The Government of India accepted the

recommendations of the committee and introduced the State Bank of India bill in

the Lok Sabha on 16th

April 1955 and it was passed by Parliament and got the


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presidents assent on 8th

May 1955. The Act came into force on 1st

July 1955, and

the Imperial Bank of India was nationalized in 1955 as the State Bank of India.

The main objective of establishing SBI by nationalizing the Imperial Bank of

India was to extend banking facilities on a large scale more particularly in the

rural and semi-urban areas and to diverse other public purposes.

In 1959, the SBI (Subsidiary Bank) act was proposed and the following eight

state-associated banks were taken over by the SBI as its subsidiaries.

Name of the Bank Subsidiary with effect from

1. State Bank of Hyderabad 1st October 1959

2. State Bank of Bikaner 1st

January 1960

3. State Bank of Jaipur 1st

January 1960

4. State Bank of Saurashtra 1st

May 1960

5. State Bank of Patiala 1st

April 1960

6. State Bank of Mysore 1st

March 1960

7. State Bank of Indore 1st

January 1968

8.

State Bank of Travancore 1st

January 1960

With effect from 1st January 1963, the State Bank of Bikaner and State

Bank of Jaipur with head office located at Jaipur. Thus, seven subsidiary banks

State Bank of India formed the SBI Group. The SBI Group under statutory

obligations was required to open new offices in rural and semi-urban areas and

modern banking was taken to these unbanked remote areas. On 19th

July 1969,

then the Prime Minister, Mrs. Indira Gandhi announced the nationalization of 14


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major scheduled Commercial Banks each having deposits worth Rs. 50 crore and

above. This was a turning point in the history of commercial banking in India.

Later the Government Nationalized six more commercial private sector

banks with deposit liability of not less than Rs. 200 crores on 15th

April 1980, viz.

i) Andhra Bank.ii) Corporation Bank.iii) New Bank Of India.iv) Oriental Bank of Commerce.v) Punjab and Sind Bank.vi) Vijaya Bank.In 1969, the Lead Bank Scheme was introduced to extend banking facilities to

every corner of the country. Later in 1975, Regional Rural Banks were set up to

supplement the activities of the commercial banks and to especially meet the

credit needs of the weaker sections of the rural society. Nationalization of banks

paved way for retail banking and as a result there has been an all round growth in

the branch network, the deposit mobilization, credit disposals and of course

employment. The first year after nationalization witnessed the total growth in the

agricultural loans and the loans made to SSI by 87% and 48% respectively. The

overall growth in the deposits and the advances indicates the improvement that

has taken place in the banking habits of the people in the rural and semi-urban

areas where the branch network has spread. Such credit expansion enabled the

banks to achieve the goals of nationalization, it was however, achieved at the

coast of profitability of the banks.


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3) Post-Liberalization Era---Thrust on Quality and Profitability:

By the beginning of 1990, the social banking goals set for the banking

industry made most of the public sector resulted in the presumption that there

was no need to look at the fundamental financial strength of this bank.

Consequently they remained undercapitalized. Revamping this structure of the

banking industry was of extreme importance, as the health of the financial sector

in particular and the economy was a whole would be reflected by its performance.

The need for restructuring the banking industry was felt greater with the

initiation of the real sector reform process in 1992. the reforms have enhanced the

opportunities and challenges for the real sector making them operate in a

borderless global market place. However, to harness the benefits of globalization,

there should be an efficient financial sector to support the structural reforms

taking place in the real economy. Hence, along with the reforms of the real sector,

the banking sector reformation was also addressed.

The route causes for the lackluster performance of banks, formed the

elements of the banking sector reforms. Some of the factors that led to the dismal

performance of banks were.

Regulated interest rate structure. Lack of focus on profitability. Lack of transparency in the banks balance sheet. Lack of competition. Excessive regulation on organization structure and managerial resource. Excessive support from government.


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Against this background, the financial sector reforms were initiated to bring about

a paradigm shift in the banking industry, by addressing the factors for its dismal

performance.

In this context, the recommendations made by a high level committee on

financial sector, chaired by Mr. Narasimham, laid the foundation for the banking

sector reforms. These reforms tried to enhance the viability and efficiency of the

banking sector. The Narasimham Committee suggested that there should be

functional autonomy, flexibility in operations, dilution of banking strangulations,

reduction in reserve requirements and adequate financial infrastructure in terms

of supervision, audit and technology. The committee further advocated

introduction of prudential forms, transparency in operations and improvement in

productivity, only aimed at liberalizing the regulatory framework, but also to keep

them in time with international standards. The emphasis shifted to efficient and

prudential banking linked to better customer care and customer services.

BSE BANKEX

In view of the emergence of banking stocks as a major segment in the equity

markets, BSE considered it desirable to design an index exclusively for bank

stocks.

Features

A few important features of the BANKEX are given below:

BANKEX tracks the performance of the leading banking sector stocks listedon the BSE

BANKEX is based on the free-float methodology of index construction


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The base date for BANKEX is 1st January 2002. The base value for BANKEX is 1000 points BSE has calculated the historical index values of BANKEX since 1st January

2002.

12 stocks which represent 90 percent of the total market capitalization of allbanking sector stocks listed on BSE are included in the Index

The Index is disseminated on a real-time basis through BSE Online Trading(BOLT) terminals.

Stocks forming part of the BANKEX along with the particulars of their free-float adjusted market capitalization are listed below.

History of replacements in BANKEX

Date Outgoing Scrips Replaced by09.02.2004 ING Vysya Bank UTI Bank Ltd.

Kotak Mahindra Bank

UCO BankIndian Overseas Bank

Jammu & Kashmir Bank31.01.2005 Vijaya Bank06.06.2005 Corporation Bank Allahabad Bank Ltd.

Jammu & Kashmir Bank Ltd.

UCO Bank28.11.2005 --- Centurion Bank Ltd.

Indusind Bank Ltd

Karnataka Bank Limited03.07.2006 Indusind Bank Ltd Federal Bank Ltd.

08.01.2007 Karnataka BankVijaya Bank09.07.2007 ... Karnataka Bank Ltd.

Yes Bank Ltd09.06.2008 Centurion Bank of Punjab Ltd.28.07.2008 Andhra Bank IDBI Bank Ltd.

Indusind Bank Ltd.


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PROFILE OF MAJOR BANKS IN INDIA

AXIS BANK

History

Axis Bank was the first of the new private banks to have begun operations in 1994,

after the Government of India allowed new private banks to be established. The

Bank was promoted jointly by the Administrator of the specified undertaking of

the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and

General Insurance Corporation of India (GIC) and other four PSU insurance

companies, i.e. National Insurance Company Ltd., The New India Assurance

Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance

Company Ltd

Branches and Business

The Bank's Registered Office is at Ahmadabad and its Central Office is located at

Mumbai. The Bank has a very wide network of more than 1281 branches

(including 169 Service Branches/CPCs as on 31st December, 2010). The Bank has

a network of over 5303 ATMs (as on 31st December, 2010) providing 24 hrs a day

banking convenience to its customers. This is one of the largest ATM networks in

the country. The Bank has strengths in both retail and corporate banking and is

committed to adopting the best industry practices internationally in order to

achieve excellence. There are 21,640 peoples are working in axis bank and profit

per employee is rupees 12lakh.


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Product and Services

Axis Bank is one of the few Banks that offer Zero Balance Account. Recently Axis

Bank introduced Platinum Credit Card which is Indias foremost EMV chip based

card. Axis Bank also had provided net Banking facility for the customers. Axis

Bank plays a key role in personal Banking, Mobile Banking, corporate Banking, NRI

Banking and also on some other banking products.

FEDERAL BANK

Federal Bank Limited was founded as Travancore Federal Bank Limited in the year

1931, with an authorized capital of Rs. 5000. It was established at Nedumpuram, a

place near Tiruvalla, in Central Travancore (a princely state later merged into

Kerala), under Travancore Company's Act. Thirteen years later, in 1944, Shri K P

Hormis and his close relatives /friends took over the controlling interest in the bank.

The following year, the paid-up capital of the bank went up to 71,000 and its

registered office shifted to Aluva, in Ernakulam district of Kerala. With the opening

of its first branch at Aluva, Travancore Federal Bank commenced its business. It

was in the Board Meeting of March 1947 that the name of the bank was changed to

Federal Bank Limited. After a gap of 12 years i.e. in 1959, the bank was licensed

under Sec. 22 of the Banking Companies Act 1949, after which it floated several

kuries and launched various deposit schemes. In 1964, it took over the liabilities of

Chalakudy Public Bank Ltd. (Chalakudy), Cochin Union Bank Ltd. (Trichur) and

Alleppey Bank Ltd. (Alleppey). In the next five year, Federal Bank took over

St.George Union Bank Ltd. Puthenpally (1965) and Marthandom Commercial Bank

Ltd. Trivandrum (1968). In 1970, it became a Scheduled Bank. Two years later, it


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Deposit services

Fixed Deposit, Cash Certificate, Fed Jeevan, Federal Savings Fund (FSF), Suraksha

Deposit, Federal Tax Savings Deposit,

Accounts Services

SB Plus, Fed Power, FreedomSB, FedClassic, FedClassic +, Yuvamitra,

MahilaMitra, FedSmart, No-Frills Savings Account, Fed Power +, FISA etc

Loan Services

Home Term Loan Scheme, Gold Loan Scheme, Mortgage Loan, Personal Loan,

Loans for Doctors, Federal Vidya Loan, Federal Housing Loan, Rent Securitization

Loan, Aashray Scheme, Consumer Loan Scheme, Purchase of House Plots,

Personal Car Loan, Subha Yatra Loan and many more

NRI Banking

Non- Resident Ordinary (NRO) accounts, Resident External (NRE), foreign

Currency Non Resident, Non Resident (External) A/C, Ordinary Non Resident

Account, Foreign Currency Non- Resident (FCNR) accounts

Internet Banking

Mobile Alerts, Account Information, net banking, Railway Tickets Booking, online

Funds Transfer, online Bills, Trade, Financial enquiries, Tele Banking, NonFinancial enquiries and lots more.


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HDFC BANK

HDFC (Housing Development Finance Corporation Limited) is Indias leading

housing finance company since its commencement in the year 1977. By gaining

experience in financial markets, the finance company was incorporated as HCFC

Bank Limited in the year 1994. Later it was called as scheduled Bank in the year

1995. HDFC Bank was the first to set up a Bank in the private sector. Since July

2001, Mr. Jagdish Capoor as a chairman leads HDFC Bank towards higher growth

and prosperity. HDFC Bank has been awarded as Best Performing Bank by UTI

MF-CNBC TV18 Financial Advisor Awards 2009.


With its headquarters in Mumbai, the HDFC Bank has a network of 1,729 branches

across the country. All the branches spread over 550 cities are linked on an online

real-time basis. The HDFC Bank also has a network of about 3,570 ATMs across

these 550 cities. HDFC Banks ATM network can be accessed by all domestic and

international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American

Express Credit/Charge cardholders.

HDFC Bank runs in a highly automated surrounding in terms of information

technology and communication systems. To construct the infrastructure, the HDFC

Bank has made considerable efforts in obtaining the Worlds best technology.

HDFC Bank has created Supply Chain Finance which facilitates the customers to

automate supply chain management resulting in operational efficiency and supply

chain gains. As on 31march 2010 bank has 51888 employees and the profit per

employee is Rs5.98lakh.
http://www.indianbanksguide.com/wp-content/uploads/2010/07/hdfc-bank.jpeg


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HDFC Bank provides services such as net Banking, phone Banking, trade services,

commercial and industrial Banking services, transactional services, mobile Banking,

cash management, agricultural finance etc It also offers many services to the non

resident Indians (NRIs).

The authorized share capital of HDFC Bank was Rs. 550crore till the month of

March, 2009. HDFC Banks target market ranges from large industries to small &

mid-sized companies and agriculture based businesses.

ICICI BANK

ICICI Bank was originated in the year 1955 in India as financial institution. Nearly

after 10 decades of its inception, ICICI started Banking corporation in the year

1994 and was named as ICICI BankLimited. The status ofICICI Bank was

enhanced when ICICI took over the Bank of Madura Limited which was very

famous in the rural areas. The Board of Directors of ICICI Bank includes Ms.

Chanda D. Kochhar, Managing Director & CEO, Mr. Sandeep Bakhshi, Deputy

Managing Director and Mr. N. S. Kannan, Executive Director & CFO. ICICI Bank,

Indias second largest Bank was adjudged Best Bank Award for Initiatives in

Mobile Payments and Banking by IDRBT.



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In India, ICICI Bank covers a network of 1,717 branches and over 4816 ATMS

and ICICI Bank is available in 18 countries. All ICICI Bank branches are fully

computerized with online facility and also the ATMs are interconnected by means

of internet. ICICI Banks equity shares are scheduled in the country on BSE and NSE

of India Limited. As on 31March 2010 the Bank has 35256 employees and the

profit per employee is Rs12lakh.


ICICI Bank provides a range of Banking stuffs and financial services such as

mobile Banking, TV Banking, I zone, internet Banking, online shopping etc. ICICI

Bank works with an aim to form a development financial institution for providing

medium-term and long-term project financing to Indian trades.

The asset of ICICI Bank was Rs. 3,674.19 billion as on 30th June, 2009. ICICI

Bank currently has branches in UK, USSR and Canada, branches in US, Singapore,

Bahrain, Hong Kong, Ceylon, Qatar and Dubai International Finance Center and

representative offices in UAE, China, South Africa, Bangladesh, Thailand,

Malaysia and Indonesia.

BANK OF INDIA

Bank of India (BOI) is a state-owned commercial bank with headquarters in

Mumbai. Government-owned since nationalization in 1969, It is India's 4th largest

bank, after State Bank of India, Punjab National Bankand Bank of Baroda. It has

3762 branches, including 29 branches outside India, and about 1300 ATMs. BoI is

a founder member of SWIFT (Society for Worldwide Inter Bank Financial
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Telecommunications), which facilitates provision of cost-effective financial

processing and communication services. The Bank completed its first one hundred

years of operations on 7 September 2006.

History

Previous banks that used the name Bank of India

At least three banks having the name Bank of India had preceded the setting up of

the present Bank of India.

1. A person named Ramakishen Dutt set up the first Bank of India in Calcutta(now Kolkata) in 1828, but nothing more is known about this bank.

2. The second Bank of India was incorporated in London in the year 1836 as anAnglo-Indian bank.

3. The third bank named Bank of India was registered in Bombay (nowMumbai) in the year 1864.

The earlier holders of the Bank of India name had failed and were no longer in

existence by the time a diverse group of Hindus, Muslims, Parsees, and Jews

helped establish the present Bank of India in 1906. It was the first in India

promoted by Indian interests to serve all the communities of India. At the time,

banks in India were either owned by Europeans and served mainly the interests of

the European merchant houses, or by different communities and served the

banking needs of their own community.

The promoters incorporated the Bank of India on 7 September 1906 under Act VI

of 1882, with an authorized capital of Rs. 1 crore divided into 100,000 shares each

of Rs. 100. The promoters placed 55,000 shares privately, and issued 45,000 to the
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public by way of IPO on 3 October 1906; the bank commenced operations on 1

November 1906.

The lead promoter of the Bank of India was Sir Sassoon J. David (1849-1926). He

was a member of the Sassoons, who in turn were part of a Bombay community of

Baghdadi Jews, which was notable for its history of social service. Sir David was a

prudent banker and remained the Chief Executive of the bank from its founding in

1906 until his death in 1926.

The first board of directors of the bank consisted of Sir Sassoon David, Sir

Cowasjee Jehangir, J. Cowasjee Jehangir, Sir Frederick Leigh Croft, RatanjeeDadabhoy Tata, Gordhandas Khattau, Lalubhai Samaldas, Khetsety Khiasey,

Ramnarain Hurnundrai, Jenarrayen Hindoomull Dani, Noordin Ebrahim Noordin.

Products --- commercial banking, private banking, retail banking, asset

management, credit cards, mortgage.

Revenue ----------- Rs. 24,393.50 crore (US $ 4.87 BILLION) total asset ---

3,64,556.48 crore.

Operating income---- Rs. 5,384.23 crore (US $ 1.07 billion).

Net Income---- Rs. 2,488.71 crore (US $ 496.5 million)
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UNION BANK OF INDIA

Employees-----27,746 (2011) ) (BSE: 532477) is one ofIndia's largest state-owned

banks (the government owns 55.43% of its share capital), is listed on the Forbes

2000. It has assets of USD 13.45 billion and all the bank's branches have been

networked with its 3025 ATMs. Its online Telebanking facility are available to all

its Core Banking Customers - individual as well as corporate. It has representative

offices in Abu Dhabi,United Arab Emirates, and Shanghai,Peoples Republic of

China, and a branch in Hong Kong.

History

Union Bank of India (UBI) was registered on 11 November 1919 as a limited

company in Mumbai and was inaugurated by Mahatma Gandhi. At the time of

India's Independence in 1947, UBI still only had four branches - three in Mumbai

and one in Saurashtra, all concentrated in key trade centres. After Independence

UBI accelerated its growth and by the time the government nationalized it in 1969,

it had grown to 240 branches in 28 states. Shortly after nationalization, UBI

merged in Belgaum Bank, a private sector bank established in 1930 that had itself

merged in a bank in 1964, the Shri Jadeya Shankarling Bank. Then in 1985 UBI

merged in Miraj State Bank, which had been established in 1929. In 1999 the

Reserve Bank of India requested that UBI acquire Sikkim Bank in a rescue after

extensive irregularities had been discovered at the non-scheduled bank. Sikkim

Bank had eight branches located in the North-east, which was attractive to UBI.

UBI began its international expansion in 2007 with the opening of representative

offices in Abu Dhabi, United Arab Emirates, and Shanghai, Peoples Republic of
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China. The next year, UBI established a branch in Hong Kong, its first branch

outside India. In 2009, UBI opened a representative office in Sydney, Australia.

Industry------ Financial services

Headquarters ----Mumbai, India

Key people---- Mavila Vishwanathan Nair (Chairman & MD)

Revenue------ 18,491 crore (US$3.69 billion)

Net income------ 2,081 crore (US$415.16 million)

BANK OF BARODA

Bank of Baroda (BOB) is the third largest bank in India, after the State Bank of

India and the Punjab National Bankand ahead ofICICI Bank. BOB is ranked 763

in Forbes Global 2000 list. BOB has total assets in excess of Rs. 3.58 lakh crores,

or Rs. 3,583 billion, a network of over 3,778 branches and offices, and about 1,657ATMs. It plans to open 400 new branches in the coming year. It offers a wide

range of banking products and financial services to corporate and retail customers

through a variety of delivery channels and through its specialized subsidiaries and

affiliates in the areas of investment banking, credit cards and asset management. Its

total business was Rs. 5,452 billion as of June 30.

As of August 2010, the bank has 78 branches abroad and by the end of FY11 this

number should climb to 90. In 2010, BOB opened a branch in Auckland, New

Zealand, and its tenth branch in the United Kingdom. The bank also plans to open

five branches in Africa. Besides branches, BOB plans to open three outlets in the

Persian Gulf region that will consist of ATMs with a couple of people.The
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Maharajah of Baroda, Sir Sayajirao Gaekwad III, founded the bank on 20 July

1908 in the princely state of Baroda, in Gujarat. The bank, along with 13 other

major commercial banks of India, was Nationalised on 19 July 1969, by the

government of India.

Type ---------- Public

Founded 1908

Headquarters---- -- Vadodra India, Mumbai India

Products------- Credit cards, consumer banking, corporate banking, finance and

insurance, investment banking, mortgage loans, private banking, private equity,

wealth management

Revenue----- 25,800 crore (US$5.15 billion)

Net income-------- 4,433 crore (US$884.38 million)

Total Assets----- 355,826 crore (US$70.99 billion)

Subsidiaries

BOB Capital Markets Ltd. (BOBCAPS) is a SEBI-registered investment banking

company based in Mumbai, Maharashtra. It is a wholly owned subsidiary of Bank

of Baroda. Its financial services portfolio includes Initial Public Offerings, private

placement of debts, corporate restructuring, Business valuation, mergers &

acquisition, project appraisal and

Bank of Baroda financials 2012

Sales Rs. 24,695 crores Profits Rs. 4,241 crores Assets Rs. 3,58,397 crores
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STATE BANK OF INDIA

State Bank of India (SBI) (NSE: SBIN, BSE: 500112, LSE: SBID) is the largest

banking and financial services company in India by revenue, assets and market

capitalization. Its a state-owned corporation with its headquarters in Mumbai,

Maharashtra. As of March 2011, it had assets of US$ 370 billion with over 13,000

outlets including 150 overseas branches and agents globally. The bank traces its

ancestry to British India, through the Imperial Bank of India, to the founding in

1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian

Subcontinent. Bank of Madras merged into the other two presidency banks, Bank

of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn

became State Bank of India. The government of India nationalized the Imperial

Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and

renamed it the State Bank of India. In 2008, the government took over the stake

held by the Reserve Bank of India. SBI is ranked 292 globally in Fortune Global

500 list in 2011.

SBI provides a range of banking products through its vast network of branches in

India and overseas, including products aimed at Non-resident Indians (NRIs). The

State Bank Group, with over 16,000 branches, has the largest banking branch

network in India. SBI has 14 Local Head Offices situated at Chandigarh, Delhi,

Lucknow, Patna, Kolkata, Guwahati (North East Circle), Bhuwaneshwar,

Hyderabad, Chennai, Trivandram, Banglore, Mumbai, Bhopal & Ahmedabad and

57 Zonal Offices that are located at important cities throughout the country. It also

has around 130 branches overseas.
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SBI is a regional banking behemoth and is one of the largest financial institutions

in the world. It has a market share among Indian commercial banks of about 20%

in deposits and loans. The State Bank of India is the 29th most reputed company in

the world according to Forbes. Also SBI is the only bank featured in the coveted

"top 10 brands of India" list in an annual survey conducted by Brand Finance and

The Economic Times in 2010.

The State Bank of India is the largest of the Big Four banks of India, along with

ICICI Bank, Punjab National Bankand HDFC Bankits main competitors.

Products--------- Credit cards, Consumer banking, corporate banking, finance andinsurance, investment banking, mortgage loans, private banking, wealth

management

Revenue---------- US$ 32.44 billion

Profit------------ US$ 02.34 billion

Total Assets--------US$ 369.56 billion

Total Equity-------US$ 018.71 billion

Employees---------- 222,933

Non-banking subsidiaries

Apart from its five associate banks, SBI also has the following non-banking

subsidiaries:

1.SBI Capital Markets Ltd

2.SBI Funds Management Pvt Ltd
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3.SBI Factors & Commercial Services Pvt Ltd

4.SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

5.SBI DFHI Ltd

6.SBI Life Insurance Company Ltd.

Branches of SBI

State Bank of India has 172 foreign offices in 37 countries across the globe. SBI has about 25,000 ATMs (25,000th ATM was inaugurated by the then

Chairman of State Bank Shri O.P. Bhatt on 31 March 2011, the day of his

retirement); and SBI group(including associate banks) has about 45,000

ATMs.

SBI has 21,500 branches, including branches that belong to its associate

banks. SBI includes 99345 offices in India. India's number one ADB is in bellary i.e State bank of India bellary ADB

PUNJAB NATIONAL BANK

Punjab National Bank (PNB) is an Indian financial services company based in

New Delhi, India. PNB is the third largest bank in India by assets. It was founded

in 1894 and is currently the second largest state-owned commercial bank in India

ahead ofBank of Baroda with about 5000 branches across 764 cities. It serves over

37 million customers. The bank has been ranked 248th biggest bank in the world
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by the Bankers Almanac, London. The bank's total assets for financial year 2007

were about US$60 billion. PNB has a banking subsidiary in the UK, as well as

branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty,

Dubai, Oslo, and Shanghai.

History

Punjab National Bank was registered on 19 May 1894 under the Indian Companies

Act with its office in Anarkali Bazaar Lahore. The founding board was drawn from

different parts of India professing different faiths and a varied back-ground with,

however, the common objective of providing country with a truly national bankwhich would further the economic interest of the country. PNB's founders included

several leaders of the Swadeshi movement such as Dyal Singh Majithia and Lala

Harkishan Lal, Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C. Jessawala, Shri

Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was

actively associated with the management of the Bank in its early years. The board

first met on 23 May 1894. Ironically, the PNB Website now claims Lala Lajpat Rai

to be the founding father, surpassing Rai Mul Raj and Dyal Singh Majithia.

PNB has the distinction of being the first Indian bank to have been started solely

with Indian capital that has survived to the present. (The first entirely Indian bank,

the Oudh Commercial Bank, was established in 1881 in Faizabad, but failed in

1958.)

PNB has had the privilege of maintaining accounts of national leaders such as

Mahatma Gandhi, Shri Jawahar Lal Nehru, Shri Lal Bahadur Shastri, Shrimati

Indira Gandhi, as well as the account of the famous Jalianwala Bagh Committee.
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since 2001 and is an affiliate of MetLife. The new entity, PNB Metlfe markets

insurance products through PNB's branches.

Products------------ Credit cards, consumer banking, corporate banking, finance

and insurance, investment banking, mortgage loans, private banking, private

equity, wealth management.

Revenue -------------- 31,206 crore (US$6.23 billion)

Net income---------- 4,574 crore (US$912.51 million)

Total Assets--------- 373,786 crore (US$74.57 billion)

Employees--------- 56,928

IDBI BANK

IDBI Bank Limited is an Indian financial service company headquartered

Mumbai, India. RBI categorised IDBI as an "other public sector bank". It was

established in 1964 by an Act of Parliament to provide credit and other facilitiesfor the development of the fledgling Indian industry. It is currently 10th largest

development bank in the world in terms of reach with 1514 ATMs, 923 branches

including one overseas branch at DIFC, Dubai and 621 centers including two

overseas centres at Singapore & Beijing. Some of the institutions built by IDBI are

the Securities and Exchange Board of India (SEBI), National Stock Exchange of

India (NSE), the National Securities Depository Limited (NSDL), the Stock

Holding Corporation of India Limited (SHCIL), the Credit Analysis & Research

Ltd, the Exim Bank (India), the Small Industries Development Bank of India

(SIDBI), the Entrepreneurship Development Institute of India, and IDBI BANK,

which is owned by the Indian Government. IDBI Bank is on a par with
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nationalized banks and the SBI Group as far as government ownership is

concerned. It is one among the 26 commercial banks owned by the Government of

India. The Bank has an aggregate balance sheet size of Rs. 2,53,378 crore as on

March 31, 2011. IDBI Bank's operations during the financial year ended March 31,

Products-------------Credit cards, consumer banking, corporate banking, finance

and insurance, investment banking, mortgage loans, private banking, private

equity, wealth management

Revenue------------ 20,858 crore (US$4.16 billion)

Net Income----------- 1,563 crore (US$311.82 million)

Total Assets--------- 253,116 crore (US$50.5 billion)

Employees ------------14,000
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REVIEW OF LITERATURE

Researchers have proposed many different theories about the factors that influence

a firms dividend policy. A number of factors have been identified in the previous

empirical studies to influence the dividend policy decisions of the firm such as

profitability, risk, cash flow, growth, taxes, price earnings ratio, debt equity ratio

etc. Profitability of the firm has long been regarded as the main indicator of the

firms ability to distribute dividend to the shareholders. Since the literature

available in the field under reference is wide in nature and scope, the literature

found in the form of popular write-ups, working groups, research studies/ articlesof researchers/ economists and the comments of economic analysts are reviewed

here in this particular section. The most important theoretical and empirical studies

related to dividend decisions have been reviewed here.

1. Lintner (1956) made an empirical attempt to explain corporate dividend

behaviour by means of conducting interviews of personnel of large firms of

United States of America. It was established that the primary determinants of

changes in dividends paid out were the most recent earnings and past dividend

paid. It was found that management is concerned with change in dividends rather

than the amount and it tries to maintain a level of dividends. Also, there was

propensity to move towards some target payout ratio but speed of adjustment

varies among companies. There exist many empirical studies in India and abroad

that identify the pattern and factors affecting dividend policy.

2. Miller and Modigliani (1961) viewed dividend as irrelevant, and believed that

in a world without market imperfections like taxes, transaction costs or asymmetric

information, dividend policy should have no effect on its market value. However,

since the capital market is neither perfect nor complete, the dividend irrelevance

proposition needs to be re-visited, especially focusing on the effects of information


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content of dividend, agency cost and institutional constraints. The market

imperfection of asymmetric information is the basis for three distinct efforts to

explain corporate dividend policy. The mitigation of the information asymmetric

between managers and owners via unexpected change in the dividend policy is the

cornerstone of dividend signalling models. Agency cost theory uses dividend

policy to better align the interests of shareholders and corporate managers. The free

cash flow hypothesis is an ad hoc combination of the signalling and agency cost

paradigm; the payment of dividends can decrease the level of funds available for

perquisite consumption by corporate managers.

The signalling theories posit dividend policy as a vehicle used by corporate

managers to transmit private information to the market. Agency problems result

from information asymmetries, potential wealth transfers from bondholders to

stockholders through the acceptance of high-risk and high-return projects by

managers, and failure to accept positive net present value projects and perquisite

consumption in excess of the level consumed by prudent corporate managers.

3. Smith (1963) studied factors influencing corporate saving decision of firms.

The factors have been classified into two broad categories, first being factors

involved in investment decisions and second arising from stability of dividends. It

was concluded that income, previous level of dividend played a very important role

in corporate savings in the short run but demand for investment funds had

somewhat smaller role in deciding behaviour of corporate savings. But in the long

run, demand for investment funds played a crucial role in estimating corporate

savings. In the Indian context, few studies have analysed the dividend behaviour of

corporate firms.

4. Fama and Bablak (1968) studied the determinants of dividend payments by

individual firms during 1946-64. For this purpose, the statistical techniques of

regression analysis, simulation and prediction tests were used. The study


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concluded that net income seems to provide a better measure of dividend than

either cash flow or net income and depreciation included as separate variables in

the model.

5. Krishnamurty and Sastry (1971) analysed dividend behaviour of Indian

chemical industry for the period 1962-1967 and took cross sectional data of 40

public limited companies. The results revealed that Linter model provides good

explanation of dividend behaviour.

6. Dhameja (1978) in his study tested the dividend behaviour of Indian companies

by classifying them into size group, industry group, growth group, and control

group. The study found that there was no statistically significant relationship

between dividend payout, on the one hand and industry and size on the other.

Growth was inversely related to dividend payout and was found to be significant.

The main conclusions are that dividend decisions are better explained by Lintners

model with current profit and lagged dividend as explanatory variables.

7. Rozeff (1982), used beta value of a firm as an indicator of its market risk. They

found statistically significant and negative relationship between beta and dividend

payout. The liquidity or cash flow position is also an important determinant of

dividend payouts. A poor liquidity position means less generous dividends due to

shortage of cash.

8. Partington (1983) elaborated that firms use target payout ratio, firms motives

for paying dividends and the extent to which dividends are determined are

independent of investment policy. Allietal (1993) reveal that dividend payment

depend more on cash flows, which reflect the companys ability to pay dividends,

than on current earnings, which are less heavily influenced by accounting

practices. They claim current earnings do not really reflect the firms ability to pay

dividends.


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9. Baker, Farelly and Edelman (1986) syrveyed 318 New York exchange firms

and concluded that the major determinants of dividend payments are anticipated

level of future earnings and pattern of past dividends.

10. Pruitt and Guitmann (1991) asked the financial manager of 1000 large US

companies and reported that current and past years profits are important factors

influencing dividend payments. He found in another study that risk (year to year

variability of earnings) also determine the firms dividend policy. A firm that has

relatively stable earnings is often able to predict approximately what its future

earning will be. Such a firm is more likely to pay a higher percentage of its

earnings as dividend rather than a firm with fluctuating earnimgs.

11. Green et. al (1993) questioned the irrelevance argument and investigated the

relationship between the dividends and investment and financing decisions. Their

study illustrated that dividend payout levels are not totally decided after a firms

investment and financing decisions. The results however do not support the views

of irrelevance of dividend given by Modigliani and Miller(1961).

12. Mahapatra and Sahu (1993) find cash flow as a major determinant of

dividend followed by net earnings.

13. Bhat and Pandey (1994) undertook a survey of managers perceptions of

dividend decisions and found that managers perceive current earnings as the most

significant factor.

14. Solvin, Sushka and Poloncheck(1994) assessed the information conveyed by

commercial bank announcements of dividend reductions. It has been established

that valuation effects on announcing banks are negative and significantly greater

than for industrial firms. Cross sectional regressions used in the study indicates

that the size of dividend reductions is crucial but there is no evidence of clientele

effects.


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15.Narasimhan and Asha (1997) observe that the uniform tax rate of 10 percent

on dividend as proposed by the Indian union budget 1997-98 alters the demand of

investors in favour of high payouts.

16. D. souza (1999) showed a positive but insignificant relationship in the case of

growth and negative but insignificant relationship in case of market to book value

with dividend payout ratio

17. Mohanty (1999) found that firms, which issued bonus shares, have either

maintained the pre-bonus level or only decreased in marginally, thereby, increasing

the payout to shareholders.

18. DeAngelo, DeAngelo and Skinner (2000) analysed the information content of

special dividends. The research concluded that special dividends were not

displaced by stock repurchases, indicating that most specials failed to survive on

their own accord and not because managers discovered the tax advantages of

repurchase.

19.Narasimhan and Vijayalakshmi (2002) analysed the influence of ownership

structure on dividend payout and found no influence of insider ownership on

dividend behaviour of firms

20. Frankfurter and wood (2002) established that a number of conflicting

theoretical models lacking strong empirical support define current attempts to

explain the puzzling reality of corporate dividend behaviour. The outcome is

consistent with the contention that no dividend model, either separately or jointly

with other models, is supported invariably.

21. Mahakud J. (2005) examined the influence of shareholding pattern on

dividends payout ratio of Indian Companies which belong to manufacturing

industries and were listed on the Bombay Stock Exchange (BSE) during the period

2001-2004. The study found a positive association of dividend with lagged

dividend, earning, sales and size of the company. Debt to equity ratio is found to


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be negatively related with dividend. Institutional shareholders have greater impact

or influence on the determination of dividend payout ratio and it influences

dividend policy inversely.

22. Li, Feng, Son and Shu (2006) analysed the decision making of dividend

policy and the reason for dividends policy selection in non-state-owned listed

companies in China by using structural equation modelling. The main research

findings are as follows:

The dividend policy of non-state-owned listed companies in China can beinterpreted by the western agency theory for dividend, and they found that if

compared with the manager, the owner is a more important variable thatinfluences the dividend policy.

Four motives such as investment opportunities, refinancing ability, stockprice and potential repayment capacity are all important factors for decisions

makers to determine the dividend policy.

23. K.Jayesh (2006) investigated the association between corporate governance

and dividend payout policy for a panel of Indian corporate firms over the period

1994-2000. He found a positive association of dividend trends. Debt equity ratio

was also identified to be negatively associated whereas, past investment

opportunities exert a positive impact on the dividends payout in level and corporate

ownership is negatively related in square.

24. Twaijri. A and Abdurrahman. A (2007) studied the variables with an

expected influence on dividend policy and payout ratio. They randomly selected

300 firms from Kuala Lumpur Stock Exchange. They had found that the current

dividends were affected by their past and their future prospects. Dividends were

associated to a lesser extent with net earnings. Payout ratios were not found to have

strong effect on the companys future earnings growth, but had negative

correlation with the companys leverage.


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25.Pourhevdari .O(2009) investigated the views of Chief Financial Officer

(CFOs) of Iranian firms listed on the Tehran Stock Exchange about the factors

influencing dividend policy. The findings showed that the most important

determinants of a firms dividend policies are the stability of cash flow, the

availability of profitable investment opportunities and stability of profitability.

Also, industry type appeared to influence that respondents placed on one

determinant of dividend policy.

REFERENCE

1.Linter, J.(1956), Distribution of income of corporations among dividends,retained earnings and taxes, American Economic Revirew, Vol 46,pp97-

113.

2.Miller,M.H. and Modigliani,F. (1961), Dividend policy, growth and thevaluation of shares, Journal of Business,No. October,pp.411-35.

3.Miller, M. and Modigliani, F. 1961. Dividend Policy, Growth, and theValuation of Shares, Journal of Business,34:411-433.

4.Smith, D.C. 1963. Corporate Saving Behavior, The Canadian Journal OfEconomic and Political Science, August.

5.Fama, Eugene F., and Babiak,H. 1968. Dividend Policy: An EmpiricalAnalysis, Journal of American Statistical Association, 63:1132-1161.

6.Krishnamurty, K. and Sastry, D.U. 1971. Some Aspects of CorporateBehavior in India: A Cross Section Analysis of Investment, Dividend and

External financing for the chemical industry:1962-1967, Indian Economic

Review, October.


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7.Dhameja, N.L 1978. Control of Companies and Their Dividend Practices,Margin, January. Dhrymes, P.J. and Kurz, M. 1964. On the Dividend Policy

of Electric Utilities, Rewiew of Economic and Statistics, Feb.

8.Rozeff, S.M. (1982),Growth, beta and agency cost as determinants ofdividend payout ratio, Journal of Financial Research, Vol.5,pp.411-33.

9.Partington,G.H.(1983),Why firms use payout target: a comparative study ofdividend policies:, paper presented at AAANZ Conference, Brisbane.

10.Farrelly, Gali E., Baker,K. and Richard B. Edelman, (1986),CorporateDividends: Views of Policy makers, Akon Business and Economic review,

Vol 17 No:4,pp 62-74.

11.Pruitt, S.W. and Gitman, L.W (1991), The interactions between theinvestment, financing and dividend decisions of major US firms, Financial

review, Vol.26 No.33,pp.409-30.

12.Green, P., Pogue, M., Watson, I. (1993), Dividend policy and itsrelationship to investment and financing policies: empirical evidence using

Irish data, IBAR, Vol. 14 No.2,pp.69-83.

13.Mahapatra, R.P. and Panda, B.K.1995. Determinants of Corporate DividendPolicy and the Target Payment Ratio, Productivity, July-Sep,36.

14.Bhat, R. and Pandey, I.M. 1991.Dividend Decision: A Study of ManagersPerceptions, Decisions 21, (1&2) January-June.

15.Slovin, Myron B., Sushka, Marie E. and Poloncheck, John 1994. DividendRestrictions and Commercial Banks, http://papers.ssrn.com/sol3/

papers.cfm?abstract_id=5739. Accessed on April 28, 2010.


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16.Narasimhan,M.S. and C. Asha 1997.Implications of Dividend Tax onCorporate Financial Policies, the ICFAI Journal of Applied

Finance,3(2):11-28.

17.DSouza, J.(1999), Agency cost, market risk, investment opportunities anddividend policy-an international perspective, Managerial Finance, Vol.25

No. 6,pp.35-43.

18.Mohanty,P. 1999. Dividend and Bonus Policies of the Indian Companies,Vikalpa,24,(4) October-December:35-42.

19.DeAngelo, H.DeAngelo, L. and Skinner, Douglas J.2000. Special dividendsand the Evolution of Dividend Signaling,Journal of Financial Economics,57

(3):309.

20.Narasimhan,M.S. and Vijayalakshmi, S.2002. Impact of Agency Cost onLeverage and Dividend Policies, The ICFAI Journal of Applied Finance,

8(2):16-25.

21.Frankfurter, George M.,and Wood,Bob G.Jr.2002. Dividend PolicyTheories and Their Empirical Tests, International Review of Financial

Analysis, 11:111-138.

22.Mahakud,M. (2005) Shareholding Pattern and Dividend Policy: Evidencefrom Indian Corporate Sector, ICFAI Journal of Applied Finance, Vol No

10, pp. 8-24.

23.Li, Li Qi feng, Yin, Song, Liu and Shu, Wang Man. 2006. Who make thedividend policy decision and their motives for doing so.Analysis based on a

questionnaire survey of non-state owned listed companies


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inChina,http://ccfr.org.cn/cicf2006paper/2006012820011.pdf.Accessed on

April 28 2010.

24.Twaijiry A, and Ali A (2007), Dividend Policy and Payout Ratio:Evidence from Kualalumpur stock exchange, Journal of Risk Finance, Vol

8 No 4,pp.349-363.

25.Pourheydari, O.(2009) A Survey of management views on Dividendpolicy in Iranian firm, International Journal of Islamic andMideastern

finance and management, Vol 2 No 1,pp.20-31.


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RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY:

An investor would like to be rational and scientific in his investment activity has to

evaluate a lot of information about past performance and the expected future

performance of the companies, industries and economies as a whole before taking

the investment decision.

Some of the objectives of conducting the study are as follows:

1. To know the basic detail of selected Banks (Bankex).2. To analyse the key determinants affecting the dividend Payout Ratio.3. To know the relationship between dependent and independent variables in

selected Banks.

4. To identify the most affecting determinant of Dividend Payout ratio.

RESEARCH DESIGN:

Research Design is the conceptual structure within which research is conducted, it

constitutes the blueprint for the collection, measurement and analysis of data. In

this study, Empirical research design is used.

Empirical research relies on experience or observation alone, often without due

regard for system and theory. It is data based research, coming up with conclusions

which are capable of being verified by observation or experiment.


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SCOPE OF THE STUDY:

Key Determinants

Dividend Payout ratio Beta (Risk) Earnings Per Share Earnings Tax profit before and tax Debt-Equity Ratio Cash flow From Operation

Sample Size: 10 Major Banks in India are chosen as sample size for the study.

They are :

State Bank of India. Punjab National Bank. Housing Development Finance Corporation Limited (HDFC). Industrial Development Bank of India (IDBI). Bank of India. Axis Bank. Bank of Baroda. Industrial Credit and Investment Corporation of India (ICICI). Federal Bank. Union Bank.

SOURCE OF DATA:

For the purpose of this study, secondary data has been used. The relevant

secondary data has been collected from :

Money control .com BSE India.com


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TIME PERIOD OF STUDY:

The study has been conducted during APRIL 2006 To MARCH 2011 .

TOOLS USED FOR ANALYSIS:

1. Ratio Analysis: Ratios being designed are named as:

Earnings Per Share (EPS) Dividend Per Share (DPS) Dividend Payout Ratio Debt Equity Ratio

2. Correlation

3. Multiple Regression Model

LIMITATION OF THE STUDY:

1. Time and resource constraints.

2. Chances of human error in analysis and interpretation of the data used in the

study.

3. The researcher had made an honest attempt to complete the study but financial

resources and lack of experience may be considered the major limitation.


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DATA ANALYSIS AND INTERPRETATION

YEAR : 2006-07

TABLE : 4.1

BANKS Y X1 X2 X3 X4 X5 X6

SBI 19 0.97 86.29 -0.0195 -0.2457 903 -1776.07

PNB 30.71 0.87 48.84 -0.0106 -0.1465 449.75 -10144.3

HDFC 22.91 1.09 43.29 0.0086 -0.1252 222.65 666.63

IDBI 20.16 1.02 8.7 -0.0439 -0.0463 118.4 200.63

BOI 17.51 1.28 23.04 -0.0175 -0.1258 259.15 5111.96

AXIS 22.57 0.93 23.4 -0.0172 -0.195 227.18 5295.53

BOB 24.59 0.96 28.18 -0.0157 -0.1977 344.86 5153.94

ICICI 33.89 1.02 34.59 -0.024 -0.0664 313.3 23061.9

FEDERAL 13.68 1.11 34.2 -0.0102 -0.1268 261.15 467.76

UNION 24.2 1.07 16.74 -0.0192 -0.204 177 1956.28

TABLE 4.2 CORRELATION BETWEEN INDEPENDENT & DEPENDENT VARIABLE

**Correlation is significant at the 0.01 level (2 tailed).

DPR BETARISK

EPS EARNING TAXPBT DER CFO

DPR Pearson CorrelationSig. (2-tailed)N

1 -.520.123

10

.014

.97010

-.005.988

10

.163

.65310

-.002.995

10

.348

.32410

BETA RISK Pearson Correlation

Sig. (2-tailed)N

1 -.298

.40410

.094

.79710

.282

.43010

-.339

.33710

.229

.52510

EPS Pearson CorrelationSig. (2-tailed)N

1 .360.306

10

-.477.163

10

.935**.000

10

-.260.468

10

EARNING Pearson CorrelationSig. (2-tailed)N

1 -.307.389

10

.090

.80510

-.214.552

10

TAXPBT Pearson CorrelationSig. (2-tailed)N

1 .567.087

10

.332

.34810

DER Pearson CorrelationSig. (2-tailed)N

1 -.228.526

10

CFO Pearson CorrelationSig. (2-tailed)N

1


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TABLE 4.3.1 REGRESSION RESULTS OF EMPIRICAL MODEL

Model Summary

Model R R Square AdjustedR Square

Std. Error ofThe Estimate

1 .800a .641 -.078 6.22169a. Predictors: (Constant), CFO, EARNING, DER,

BETERISK, TAXPBT, EPS.

TABLE 4.3.2 EGRESSION COEFFICIENT AND THEIR SIGNIFICANCE

Coefficientsa

a. Dependent variable: DPRINTERPRETATION

From correlation matrix in Table 4.2, it can be highlighted that there is no

significant correlation of dividend payout ratio with Beta, EPS, Earnings, Taxpbt,

DER, and CFO. It is clear from the table that Beta risk, earnings, and DER have

negative but low degree of correlation with DPR. EPS, Taxpbt and CFO have

positively correlated with DPR but CFO has significant correlation and shows

moderate degree of correlation.

Table 4.3.1, reveals that existing models explain about 64 % variability in the

Dividend Payout ratio. It means that 64% of total variations in the DPR occur due

to all defined variables. It is clear from the table 4.3.2, that B value of beta risk and

EPS shows negative association with DPR. Beta has negative but significant

relationship with DPR. The value of earnings and Taxpbt shows positive

association with DPR but earnings have very significant relationship with DPR. B

value of DER and CFO shows insignificant relationship with DPR.

Model

UnstandardizedCoefficients

StandardizedCoefficients

t Sig

B Std. Error Beta

1

(Constant)BETA RISKEPSEARNINGTAXPBTDERCFO

80.293-41.685-.404

342.65757.484

.040

.000

31.13320.632.639

396.89064.269

.064

.000

-.798-1.464

.745

.6051.473

.444

2.579-2.020-.633.863.894.621

1.173

.082.137

.572

.451

.437

.578

.325


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Model Summary



1 .721a -.520 -.439 6.34202

a. Predictors: (Constant), CFO, EARNING, DER,BETERISK, TAXPBT, EPS


Coefficientsa


From correlation matrix in Table 4.5, it can be highlighted that there is no

significant correlation of dividend payout ratio with Beta, EPS, Earnings,

Taxpbt, DER, and CFO. It is clear from the table that Beta risk, earnings,

and CFO have negative but beta risk shows low degree of correlation with

DPR whereas earning and CFO has significant relationship. EPS, Taxpbt

and DER have positively correlated and show most significant and moderate

degree of correlation with DPR.

Table 4.6.1 reveals that, existing models explain about 52% variability in the

dividend payout ratio. It means that 52% of total variations in the DPR occur

due to all defined variables. It is clear from the table 4.6.2 that, B value of

beta risk Earnings, Taxpbt shows negative association with DPR. Beta has

been found to have a negative but significant relationship with DPR. The

value of EPS shows positive and has significant relationship with DPR. B

value of DER and CFO shows negatively insignificant relationship with

DPR.

Model



t Sig

B Std. Error Beta

1 (Constant)BETA RISKEPSEARNINGTAXPBTDERCFO

31.076-14.839

.038-141.252

-21.792-.006-.001

21.23314.863

.665445.534

37.344.072.001

-.444.194

-.264-.364-.287-.717

1.464-.998.057

-.317-.584-.089

-1.097

.239

.392

.958

.772

.601

.935

.353


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YEAR : 2008-09

TABLE:4.7


SBI 22.9 1.06 143.67 -0.026 -0.2824 1253.44 29479.73

PNB 23.86 0.86 98.03 -0.0265 -0.2918 679.15 2105.16

HDFC 22.16 0.86 52.77 -0.02 -0.2036 342.04 -1736.14

IDBI 24.69 1.23 11.85 -0.0518 -0.0922 216.37 2767.71

BOI 16.34 0.96 57.26 -0.024 -0.212 378.76 4018.39

AXIS 23.16 1.24 50.57 -0.0232 -0.2604 355.31 10551.63

BOB 17.22 0.91 61.14 -0.025 -0.26 541.77 1125.47

ICICI 36.6 1.54 33.76 -0.0364 -0.1522 256.6 -14188.5

FEDERAL 20 1.02 29.26 -0.019 -0.2322 192.64 918.11

UNION 17.11 0.68 34.18 -0.031 -0.2005 282.28 5599.13

TABLE 4.8 CORRELATION BETWEEN INDEPENDENT AND DEPENDENT

VARIABLE

DPR BETARISK


DPR Pearson CorrelationSig. (2-tailed)N

1 .819**.004

10

-.085.816

10

-.421.226

10

.362

.30510

-.067.854

10

-.401.251

10

BETA RISK Pearson CorrelationSig. (2-tailed)N

1 .215.552

10

-.432.213

10

.416

.23210

-.151.678

10

-.259.471

10


1 .382.276

10

-.746*.013

10

.969**.000

10

-.697*.025

10


1 -.776**.008

10

.215

.55010

.183

.61310

TAXPBT Pearson CorrelationSig. (2-tailed)N

1 -.633*.050

10

-.498.143

10

DER Pearson CorrelationSig. (2-tailed)

N

1 .765**.010

10CFO Pearson Correlation

Sig. (2-tailed)N

1


*Correlation is significant at the 0.05 level (2 tailed).


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Model Summary



1 .921a .849 .547 3.93219a. Predictors: (Constant), CFO, EARNING, DER,



Coefficientsa

INTERPRETATION

From correlation matrix in Table 4.8, it can be highlighted that there is significant

correlation of dividend payout ratio with Beta. Also a weak correlation exists withEPS, Earnings, Taxpbt, DER, and CFO. It is clear from the table that EPS,

earnings, DER, and CFO have negative and shows low degree of correlation with

DPR but earning and CFO has significant relationship with DPR. Taxpbt have

positively correlated with DPR and shows moderate degree of correlation.


dividend payout ratio. It means that 84% of total variations in the DPR occur due

to all defined variables. It is clear from the table 4.9.2 that, B value of Earnings,

shows negative association with DPR. The value of Beta, EPS and Taxpbt shows

positive relationship with DPR. B value of DER shows negatively insignificant

relationship with DPR whereas CFO shows insignificant relationship with DPR.

Model



t Sig

B Std. Error Beta

1 (Constant)BETA RISKEPSEARNINGTAXPBTDERCFO

.550

16.473.170

-133.72215.229

-.010.000

17.497

6.163.231

282.12953.845

.028

.000

.6931.112-.222.160

-.533-.469

.031

2.673.735

-.474.283

-.347-1.173

.977

.075

.516

.668

.796

.752

.326


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YEAR : 2009-10

TABLE:4.10


SBI 23.36 1.16 144.37 -0.0275 -0.26 1428.82 -1805

PNB 20.74 0.85 123.86 -0.019 -0.273 851.86 1836

HDFC 21.72 0.78 64.42 -0.006 -0.2085 393.93 9389.89

IDBI 24.14 1.14 14.23 -0.044 -0.005 297.13 3879.39

BOI 24.61 1.03 33.15 -0.027 -0.156 479.48 8439.81

AXIS 28.57 1.18 62.06 -0.0077 -0.255 391.11 28.57

BOB 20.9 0.82 83.96 -0.021 -0.239 696 11252.45

ICICI 37.31 1.41 36.1 -0.0216 -0.1357 265.75 1869.21

FEDERAL 21.46 0.85 27.16 -0.0228 -0.3123 219.87 -555.25

UNION 15.66 0.71 41.08 -0.028 -0.2071 354.87 -505.07

TABLE 4.11 CORRELATION BETWEEN INDEPENDENT AND DEPENDENT

VARIABLE

DPR BETARISK


DPR Pearson Correlation

Sig. (2-tailed)N

1 .902**

.00010

-.194

.59110

.125

.73010

.308

.38710

-.197

.58510

-.081

.28510

BETA RISK Pearson CorrelationSig. (2-tailed)N

1 -.085.815

10

-.169.640

10

.413

.23510

.035

.92410

-.276.440

10


1 .274.444

10

-.543.105

10

.919**.000

10

-.137.705

10


1 -.611.061

10

-.038.916

10

.153

.67310

TAXPBT Pearson Correlation

Sig. (2-tailed)N

1 -.352

.31910

-.254

.48010

DER Pearson CorrelationSig. (2-tailed)N

1 -.146.687

10

CFO Pearson CorrelationSig. (2-tailed)N

1



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Model Summary



1 .987a .975 .925 1.58177a. Predictors: (Constant), CFO, EARNING, DER,



Coefficientsa


From correlation matrix in Table 4.11, it can be highlighted that there is significantcorrelation of dividend payout ratio with Beta. Also a weak correlation exists with

EPS, Earnings, Taxpbt, DER, and CFO. It is clear from the table that EPS, DER,

and CFO have negative and shows low degree of correlation with DPR. Earnings,

Taxpbt have positively correlated Taxpbt shows significant and moderate degree of

correlation with DPR.


dividend payout ratio. It means that 97% of total variations in the DPR occur due

to all defined variables.It is clear from the table 4.12.2 that, B value of Earnings,

Taxpbt shows negative association with DPR. Taxpbt has been found to have a

negative but significant relationship with the DPR. Beta and EPS has been found to

have a positive but Beta has significant relationship with DPR. B value of DER

and CFO shows negatively insignificant relationship with DPR.

Model



t Sig

B Std. Error Beta

1 (Constant)BETA RISKEPSEARNING

Final Research Project 4th Sem

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