sangli urban bank fix project

---------------------------------------------------------------------Financial statement Analysis

A

Project Report

On

A study of Financial Statement Analysis

“SANGLI URBAN CO-OPERATIVE BANK LIMITED, SANGLI BRANCH-

TASGAON.”

Submitted to,

BHARATI VIDYAPEETH UNIVERSITY, PUNE

In partial fulfillment of the Requirement for

MASTER OF BUSINESS ADMINISTRATION

Submitted By,

Mr. Suryawanshi Vikas Vilas

(MBA-II)

Under the guidance of

Prof. Mr.Watwe sir

Through,

The Director

Institute of Management and Rural Development Administration, Sangli.

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DECLARATION

To,

The Registrar,

Bharati Vidyapeeth University,

Pune.

Sir,

I the undersigned Mr. Suryawanshi Vikas Vilas hereby declare that the project

report returns and submitted by me to Bharati Vidyapeeth University as a partial

fulfillment of Master of

Business Administration course under the guidance of Prof. Mr. Watwe sir is my

original work.

The empirical findings and suggestions in this report are based on the data

collected by me.

I also hereby declare that this project of my own efforts and has not been

submitted earlier to any other university for the award of any degree or diploma.

Place – Sangli.

Date –

(Mr. Suryawanshi Vikas Vilas)

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ACKNOWLEDGEMENT

I wish to express my deep sense of obligation to the management of “Sangli

Urban Co-operative Bank ltd, Sangli Branch-Tasgaon for their kind permission to

undertake this study in their industry and also extending to me all the guidance and co

– operation in completing the project work successfully.

I would like to offer my sincere thanks to Mr. Marathe sir Manager of

Tasgaon Branch for valuable advice and guidance given to me throughout my

research work.

Particularly I thanks to Mr.Shendage sir and Mr.Lele sir for providing me in

this study an extending their co – operation. They have provided me information

whenever required. I also thank to all staff members in bank of accounting department

who helped me inspire of their routine work.

Thank you very much.

Place – Sangli. (Mr. Suryawanshi Vikas Vilas)

Date –

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Chapter Particulars

Chapter – I INTRODUCTION

1.1 Introduction

1.2 History

1.3 Scope

1.4 Objectives

1.5 Limitations

1.6 Methodology

Chapter - II Company Profile

Chapter - III Theoretical Background

Chapter - IV Data Interpretation

Chapter - V Findings

Chapter – VI Suggestions

Chapter - VII Conclusion

Chapter - VIII Bibliography

Index

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CHAPTER – I

INTRODUCTION

Introduction to Study

Sangli Urban Co-operative Bank Limited, Sangli is oldest Bank of the Sangli

city and as well as in the area of Sangli District. In today’s modern time the banking

sector have a unique characteristic to maintain the good relations with customer,

especially in the Banking sector. It is therefore very difficult for modern banking

sector to stand in market. The market is not only expanding but it has global

approach.

In order to stand in business and global market, the bank should be examined

and thoroughly viewed seriously after certain period, to earn maximum of return and

to be able to cope the globe competition.

For this purpose, different techniques should be applied by the banking

services. One of these techniques is Ratio Analysis. Through this technique, we can

judge the financial position of the organization. The study of financial position is

important, because in today’s market there is a huge competition and to survive in this

competition an organization should know that where it can stand and thus to take a

competitive decision.

So it is necessary to make the qualitative judgment about the financial

performance.

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History of Bank

The Sangli Urban Co-operative Bank was formally registered Under the

Sangli Sansthan Co-operative Act on 4th November 1935. The actual work out of the

Bank was started in January 1936. The Bank was started by young Boy named

‘Mahadev Hari Godbole’. That time he collected the capital as an equity shares of Rs.

1100/- at 10/- Rs. Per share. The basic purpose to start the Bank with the help of

Sangli Sansthan was to improve the business sector and also people who are

connected with the large scale and small scale industry before 1935. The bank was

also established on the objective of to provide the loan and deposit facility to the high

level and middle level people of Sangli and their near places. The Tasgoan branch

was establish at 10-01-1977. That time the branch manager was Bhupendra

Ganapatrao Bhore.

First start at Panachand Theater on 1977-1984. Then bank transfer to Joshi

galli on 1984 to 1995. After 1996 onward start at in front of Hatkeshwar temple and

near of post office. The total staff member is fifteen in this branch.

Scope of the study

The entire study is conducted in Sangli Urban Co-operative Bank Limited,

Tasgoan Branch. The scope of the study is limited to three years, commencing from

2006-2009 which is based on ratio analysis of Sangli Urban Co-operative Bank

Limited, Tasgoan Branch. The study is entirely based on data available from Bank

and financial statements. The project covers investigation, useful findings and positive

suggestions, which would be useful to the future planning.

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Limitations of the Study

1. The study is only for one particular bank, so the comparisonbetween two

companies was not possible due to non availability of data regarding other Bank.

Hence the ratio analysis is not a comparative study.

2. The period of the study was limited up to 3 years. (2006-2009)

3. The standard norm for the ratio analysis varies with industry to industry and hence

the interpretation could not be said with high degree of accuracy.

4. The collected data is based on past financial statements.

5. Only important ratios are used to study the Bank.

6. The analysis is supported by general accounting rules.

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Objectives of the Study

1) To study the profitability of an organization during study period.

2) To study the liquidity position of the origination.

3) To study the long term financial position of an organization.

4) To study the overall financial performance of the organization.

5) To find out strength and weaknesses of the society.

6) To present correct and actual financial position of the society.

7) To suggest remedies for better performance of the society.

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Period of Study:

The financial data has been collected from the financial records of “Sangli

urban co-operative bank, Tasgoan branch.” for the period of three years. i.e. 2006-07,

2007-08, 2008-2009.

Tools and Techniques:

The data drawn from the annual report of the bank. The various tools and

techniques are used for analyze of data. Such as ratio analysis, chart analysis, table

analysis etc.

For the purpose to ascertain the correct financial position I have used

various financial analysis techniques. Such as projected financial position, level of

risk, means of finance investment made by the bank is rational or not etc.

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Research Methodology of the Study

Methodology is the study of data collection, while preparing any thesis; the

researches will have to elaborate the matter related to the study.

The ratio analysis of the Bank necessitates accurate and reliable data, so

that the methodology used for the collection of data is divided into two parts, those

are as under-

1. Primary data collection

2. Secondary data collection

1. Primary data collection

Primary data collection includes observations, personal interviews and

discussions. So information is collected from Finance department and other personal

of the organization. But all the information and necessary data related to the study is

not collected through this method.

2. Secondary data collection

Secondary data is important because it is used for the actual study. It is collected

from the annual reports and other official records and related financial books.

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FUNCTION OF THE SOCIETY

The following functions are done by the co-operative society.

1. Acceptance of the deposits from the public:

It is the main function of the every co-operative credit society. The credit society

accepts deposits in the form of cash from its members and non – members. The

deposits accepted by public are refundable either on demand or after stipulated period.

2. Lending of money to the persons who need finance:

It is the function of society, which is done by co-operative society. For lending of

money to members its makes various scheme, plans etc. The society will have to

ensure itself that the money lend is adequately secured.

3. Payment of interest to Depositors:

The society makes different schemes for collecting deposit from depositors. And after

the stipulated period the deposit is return to the depositors with interest specified by

society.

4. Charging higher rate of interest for the loan that given:

Normally, the society charging the higher rate of interest for the loan given. It is the

way of income of the society.

5.Investment of Funds:

A society also invests its funds to District Central Co-operative Bank, Government

schemes, other co-operative banks and shares of the company etc. The organization

not only providers credit but also works in different sectors like educational, medical,

sports, social sectors. Which helps many needy persons. In this way organization

satisfied the co-operative principles.

Sr.No Name Designation

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.

1 Shri. Bapurao B. Pujari Mentor & Senior Director

2 Shri Pramod B. Pujari Chairman

3 Shri. Nabhiraj B. Pachore Vice Chairman

4 Shri. Shrikant D.Inamdar Director

5 Shri. Ramchandra D. Kamble Director

6 Shri. Anil V. Gadkari. Director

7 Shri. Balaji B. katkar. Director

8 Shri. Mahadev H. Deshmukh Director

9 Shri. Manju K. Kulkarni Director

10 Shri. Surekha D. Deshmukh. Director

11 Shri. Premkishor N. Mandhane Director

12 Shri. Vishram N. Bapat Director

13 Shri. Aanand P. Bhide Director

14 Shri. Anil s. Lokare Director

15 Shri.Arun J. Deol Director

16 Shri. Ashok S. Khot Director

17 Shri. Madhura s. Patil Honorary Director

18 Dr. Madhukar P. Machave. Technical Director

19 Sou. Vasant B. Jugale Technical Director

20 Shri. Yashavant N. Ujlambkar Technical Director

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21 Shri. Narayan R. Borgikar CEO

22 Shri. Sharad V. Brogikar Secretary

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2.1 COMPANY PROFILE

NAME : Sangli Urban Co-operative Bank

FOUNDER : Mahadev Hari Godbole’.

CONSTITUTION : Co-operative Bank

REGISTRATION : Under the Sangli Sansthan Co-operative Act

on 4th November 1935

REGISTRATION OFFICE : Harbhat Road, Sangli. (Maharashtra)

PHONE NO. : 0233/2332506, 2331170

EMAIL : [email protected]

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Types of Loan

Cash Credit Term Loan

Clean Cash Credit Security Cash Credit

Security loan deposit

Security loan other

Clean Loan

Gold Loan

Real Estate Loan

Plant & machinery loan

Hypo Other Loan

Hypo Cash Credit Loan

Hypo Vehicle Loan

Industrial Term Loan

Indus Cash Credit loan

Crop Loan

Milch Cattle Loan

Decreed Loan

Book Debt Loan


III.Theoretical Background

Financial statement analysis is defined as the process of identifying financial

strengths and weaknesses of the firm by properly establishing relationship between

the items of the balance sheet and the profit and loss account.

There are various methods or techniques that are used in analyzing financial

statements, such as comparative statements, schedule of changes in working capital,

common size percentages, funds analysis, trend analysis, and ratios analysis.

Financial statements are prepared to meet external reporting obligations and

also for decision making purposes. They play a dominant role in setting the

framework of managerial decisions. But the information provided in the financial

statements is not an end in itself as no meaningful conclusions can be drawn from

these statements alone. However, the information provided in the financial statements

is of immense use in making decisions through analysis and interpretation of financial

statements.

Advantages of Financial Statement Analysis:

There are various advantages of financial statements analysis. The major

benefit is that the investors get enough idea to decide about the investments of their

funds in the specific company. Secondly, regulatory authorities like International

Accounting Standards Board can ensure whether the company is following accounting

standards or not. Thirdly, financial statements analysis can help the government

agencies to analyze the taxation due to the company. Moreover, company can analyze

its own performance over the period of time through financial statements analysis.

Purpose

The purpose of the bank financial-statement analysis is to provide an informed

opinion about the overall financial condition of the target bank. Using a modified

version of the I-B approach. It should be possible to address specific strengths,

weaknesses, opportunities, and targets at both the bank- and industry-level. The I-

bank analytical approach is divided into two major focus sections: the industry and

bank analysis. The desired outcome of the analysis is to learn how to link the

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http://www.accountingformanagement.com/working_capital_definition.htm


economic analysis to the banking industry for the purpose of identifying whether the

bank under investigation is an investment-grade security.

Types of loan: -

A) Cash Credit:-

It is like a current account. In this cash is withdrawals as per the need

and when money comes it credit or fill in the bank.

I. Clean Cash credit:-

It is the first type of cash credit loan. In this transactions are going on

as like current account. In this interest is allowed on the day’s basis i.e.

how much day’s money withdrawals only for those days the interest

imposes.

II. Security Cash Credit:-

It is the second type of cash credit loan. In this type particular thing is

keep in the bank as security purpose. On that security bank gives loan

to persons.

It divides into two types as follows,

a. Security loan deposit:-

In this type the give the loan on the basis of deposits put in the

bank. That deposit may be receipt or any other security.

b. Security loan other:-

In this type loan given on the basis of deposits i.e. gold or any

other security.

B) Term Loan:-

This is the second main type of loan. In this installment of payment is

present.

It divides into following sub types as below,

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a) Clean Loan:-

It is regular type of loan. In this type particular security is taken

mortgage.

b) Gold Loan:-

It is second type of term loan. In this gold keep in the bank as

security or pledge.

c) Real Estate Loan:-

It is the 3rd type of term loan. In this the land, home, vehicle or any asset is keep as a

pledge in the bank.

d) Plant & machinery loan:-

It is the 4th type term loan. In this the any firm or any particular machinery is keep in

the bank as pledge.

e) Hypo Other Loan:-

It is the 5th type term loan. In this loan the particular security is keep in the bank as

pledge.

f) Hypo Cash Credit Loan:-

In this type of term loan the cash is withdraws money as current account

transactions.

g) Hypo Vehicle Loan:-

In this type of term loan any vehicle is keep as pledge for loan.

h) Industrial Term Loan:-

This type of loan is given for the industry purpose for their buying of things.

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i) Industry Cash Credit loan:-

In this type of loan the particular firm can withdraws money as like current account

and credit or fill that in bank as per their need.

j) Crop Loan:-

This type of loan is given to the farmer for buying seeds or nursery.

k) Milch Cattle Loan:-

This type of loan is given for the buying of cattle or for their survival things.

l) Decreed Loan:-

Decreed loan means those loans go in the court cases for their recovery.

m) Book Debt Loan:-

This type of loan is given to those person in which the total process of product from

raw material to finish product.

Types of Deposits:-

There are main three types of deposits as follows,

1. Current Deposits:-

These types of deposits are most convenient to the trader. It places no restrictions on

the number of times of money is deposited or withdrawn, offers maximum banking

services and is necessary for obtaining an overdraft from the bank. Except scheduled

bank all other bank has started paying interest within the rates from 1% to 3% on the

balance amount of the depositor. Overdraft is facility offered by the bank to current

account holders.

2. Saving deposits:-

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This type of deposits is not suitable for businessman because of

restriction on the withdrawals from his account. Maximum 2 withdrawals per week

permitted. The rate of interest is varies from bank to bank.

There are various types included in this deposit.

a) Saving deposit

b) Staff saving

c) Pension deposit

d) Dead saving

e) Non operative saving

f) Zero balance saving.

3. Fixed Deposits:-

In this type of deposit certain lump sum amount is kept with the bank for

a specific period of time. Amount once deposited cannot be withdraws until

predetermined period is over. At the end deposit holder gets amount deposited with

interest amount. The bank pays highest rate of interest on the deposit than the rate of

interest payable on other type of deposit. Longer the period of deposit higher the rate

of interest payable.

There are various types of FD as follows,

a. Fixed deposit.

b. Pigmy deposit.

c. Samruddhi thev.

d. Nirantar thev.

e. Lakshyadhish thev.

f. Shubhavivah thev.

4. Recurring deposits:-

This type of deposit in which deposit holder is required to deposit with

the bank a specific amount of cash every after a specific interval for specific period

of time . At maturity deposit holder gets back amount of cash he has deposited with

accumulated interest. This type of deposit account is not suitable for businessman.

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1. Capital Adequacy Ratio:-

a. Capital Risk Adequacy Ratio:

CRAR = Capital/ Total Risk Weighted Asset

Year CRAR2006-07 6.86%2007-08 11.32%2008-0 11.12%

2006-07 2007-08 2008-090.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

CRAR

CRAR

Interpretation:

Reserve Bank of India prescribes Banks to maintain a minimum

Capital to risk-weighted Assets Ratio (CRAR) of 9 % with regard to credit risk,

market risk and operational risk on an ongoing basis, as against 8 % prescribed in

Basel documents.

The higher the CRAR, the stronger is considered a bank, as it ensures high

safety against bankruptcy. The CRAR is increasing from the year 2006 to 2009 so it is

higher safety against bankrupt.

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B. Total advance to Total asset:- Total Advances/ Total Asset

i. For 06-07

2337617468.98

= ------------------------

4318707518

= 0.54

ii. For 07-08

2360707966.02

= ------------------------

4610701381

= 0.5120

iii. For 08-09

2554632913.97

= ------------------------

4847782966

= 0.5269

Particular 2006-07 2007-08 2008-09

a. Total Advances 2337617468.98 2360707966.02 2554632913.97

b. Total Asset 4318707518 4610701381 4847782966

Total advance to Total asset 0.54 0.5120 0.5269

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2006-07 2007-08 2008-090.495

0.50.505

0.510.515

0.520.525

0.530.535

0.540.545

Total Advances to Total Assets

Total Advances to Total Assets

Interpretation:-

This ratio indicates banks aggressiveness in lending which ultimately results in

better profitability.

Higher ratio of advances of bank deposits (assets) is preferred to a lower one.

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C. Debt Equity Ratio=Borrowings + deposit/ (Share Capital + reserves)

For 06-07

19854855.75+3334479835.87

= ----------------------------------------

150000000+489299970.08

335433491

= ------------------------

639299970

= 0.524

For 07-08

7353302.23+3521965093.51

= --------------------------------------

150000000+536112935.11

359548395.7

= ------------------------

686112935.1

= 5.2

For 08-09

No borrowing+3722049629.52

= -------------------------------------------

150000000+565969100.68

= 5.1

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Year CRAR2006-07 0.52%2007-08 0.52%2008-0 0.51%

2006-07 2007-08 2008-090.50%

0.52%

0.54%

Debt Equity Ratio

Debt Equity Ratio

Interpretation:-

It indicates how much of the bank business is financed through debt and how

much through equity Higher the ratio indicates less protection for the creditors and

depositors in the banking system.

The ratio is constant so it is beneficial to the creditors and depositors. In the

year 2008-09 no any borrowing from financial institute so it better news for the bank,

creditors and depositors.

c. Government Securities to Total Investments Ratio: -

For 06-07

885412528.10

= ------------------------

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902861028.10

= 0.981

For 07-08

991964849.10

= ------------------------

1009413349.10

= 0.9827

For 08-09

990570113.10

= ------------------------

1006797613.10

= 0.9838

Govt. Sec. to Total Invest. =Government Securities/ Total Investment

Year CRAR2006-07 0.9812007-08 0.98272008-09 0.9838

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2006-07 2007-08 2008-090.98%

0.98%

0.99%

Government Securities to Total In-vestments Ratio

Interpretation:-

The percentage of investment in government securities to total investment is a

very important indicator, which shows the risk taking ability of the bank. It indicates a

bank’s strategy as being high profit high risk or low profit low risk. The higher the

government security to investment ratio, the lower the risk involved in a bank’s

investments.

Here the ratio is increasing means bank is investing more in government

security.

D. NPA: Non-Performing Assets:-

a. Net NPA’s To Total Asset Ratio: - Net NPA”s/Total Assets

i. For 06-07

209600000.31

= ------------------------

4318707518

= 0.04853

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ii. For 07-08

165400000.44

= ------------------------

4610701381

= 0.03587

iii. For 08-09

83700000.33

= ------------------------

4847782966

= 0.01726

Year Net NPA’s To Total Asset Ratio

2006-07 0.048532007-08 0.035872008-09 0.01726

2006-07 2007-08 2008-090.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Net NPA’s To Total Asset Ratio

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Interpretation:-

This ratio is used to NET NPA’s are Gross NPA’s net of provisions on

NPA’s and interest in suspense account. Total Asset considered are net of revaluation

reserves.

The ratio is decreasing so this is great situation to the bank because

the NPA is decreasing.

b. Net NPA’s To Net Advances Ratio =Net NPA’s / Net

Advances

i. For 06-07

2096000.31

= ------------------------

2337617468.98

= 8.96

ii. For 07-08

1654000.44

= ------------------------

2360707966.02

= 7.0063

iii. For 08-09

837000.33

= ------------------------

2554632913.97

= 3.276

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Year Net NPA’s To Net Advances Ratio

2006-07 8.962007-08 7.00632008-09 3.276

2006-07 2007-08 2008-090.00%

100.00%

200.00%

300.00%

400.00%

500.00%

600.00%

700.00%

800.00%

900.00%

1000.00%

Net NPA’s To Net Advances Ratio

Interpretation:-

Here is also the better situation because the ratio is decreasing from

2006-09. The ratio is indicating that how much NPA is present on the given loan.

c. Total Invest. To Total Assets =Total Investments / Total Assets

i. For 06-07

902861028.10

= ------------------------

4318707518

= 0.209

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ii. For 07-08

1009413349.10

= ------------------------

4610701381

= 0.2189

iii. For 08-09

1006797613.10

= ------------------------

4847782966

= 0.2076

Year Total Invest. To Total Assets

2006-07 0.2092007-08 0.21892008-09 0.2076

2006-07 2007-08 2008-090.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Total Invest. To Total Assets

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Interpretation:-

This ratio is used as a tool to measure the percentage of total assets

locked up in investments. This ratio indicates that how much bank invests on the total

asset.

The ratio is constant so total investment of bank is increasing.

E. M – Management: -

a. Total Advance to Total Deposit Ratio: Total Advance/ Total

Deposit

i. For 06-07

2337617468.98

= ------------------------

3334479835.87

= 0.7010

ii. For 07-08

2360707966.02

= ------------------------

3521965093.51

= 0.670

iii. For 08-09

2554632913.97

= ------------------------

3722049629.52

= 0.686

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Year Total Advance to Total Deposit Ratio2006-07 0.70102007-08 0.6702008-09 0.686

2006-07 2007-08 2008-090.65%

0.66%

0.67%

0.68%

0.69%

0.70%

0.71%

Total Advance to Total Deposit Ratio

Interpretation:-

This ratio measures the efficiency and ability of the banks

management in converting the deposits available with the banks into high earning

advances.

The ratio is constant so the total advances are increasing as on the total

deposit.

b. Business per Employee Ratio: Total Advances+Deposits/ No. of

Employees

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i. For 06-07

2337617468.98+33344798353.87

= -------------------------------------------

50868

5672097303

= -------------------------------------------

50868

= 111506.2

ii. For 07-08

2360707966.02+3521965093.51

= -------------------------------------------

53257

5882673059

= -------------------------------------------

53257

= 110458.21

iii. For 08-09

2554632913.97+3722049629.52

= -------------------------------------------

54949

6276682542

= -------------------------------------------

54949

= 114227.42

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Year Business per Employee Ratio2006-07 111506.2

2007-08 110458.212008-09 114227.42

2006-07 2007-08 2008-09108000.00%

109000.00%

110000.00%

111000.00%

112000.00%

113000.00%

114000.00%

115000.00%

Business per Employee Ratio

Interpretation:-

Revenue per employee is a measure of how efficiently a particular

bank is utilizing its employees. Ideally, a bank wants the highest business per

employee possible, as it denotes higher productivity.

The rising ratio of business per employee from 2006-2009 is a positive sign

that suggests the bank is finding ways to squeeze more sales/revenues out of each of

its employee.

F. Profit per employees:- Profit after Tax/ No. of Employees

i. For 06-07

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No profit so loss.

ii. For 07-08

No profit so loss.

iii. For 08-09

5517746.13

= -----------------------

54949

= 100.415

Year Profit per employees2006-07 -

2007-08 -2008-09 100.415

2006-07 2007-08 2008-090.00%

2000.00%

4000.00%

6000.00%

8000.00%

10000.00%

12000.00%

Profit per Employees

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Interpretation:-

This ratio shows the surplus earned per employee. The higher the ratio shows

good efficiency of the management.

For the year 2006 to 2008 there is no profit but in the year 2009 it is

increasing so it shows good efficiency of management.

E – Earning & Profitability:

a. Dividend Payout Ratio: Dividend/ Net profit

i. For 06-07

Here no dividend is paid so loss.

ii. For 07-08


iii. For 08-09


Year Dividend Payout Ratio2006-07 -

2007-08 -2008-09 -

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2006-07 2007-08 2008-090.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Dividend Payout Ratio

Interpretation:-

Dividend payout ratio shows the percentage of profit shared with the

shareholders. The more the ratio will increase the goodwill of the bank in the share

market.

Here from the 2006 to 2009 no any dividend is paid to the

shareholders so it is bad situation to the bank.

b. Return on Asset Ratio: Net Profit/ Total Asset

i. For 06-07

No profit so loss.

ii. For 07-08

No profit so loss.

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


iii. For 08-09

5517746.13

= -----------------------

4847782966

= 1.138

Year Return on Asset Ratio2006-07 -

2007-08 -2008-09 1.138

2006-07 2007-08 2008-090.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

Return on Asset Ratio

Interpretation:-

Net profit to total asset indicates the efficiency of the banks in

utilizing their assets in generating profits. A higher ratio indicates the better income

generating capacity of the assets and better efficiency of management in future .

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


In the year 2006 to 2008 there was no profit so that time bank not

generating their profit, but in the 2009 the bank was in profit so it indicates better

efficiency of management in the bank.

c. Net Profit to Average Asset Ratio: Net Profit/ Average Asset

i. For 06-07

No profit so loss.

ii. For 07-08

No profit so loss.

iii. For 08-09

5517746.13

= -----------------------

4729242174

= 0.00116

Year Net Profit to Average Asset Ratio2006-07 -

2007-08 -

2008-09 0.00116

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


2006-07 2007-08 2008-090.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

Net Profit to Average Asset Ratio

Interpretation:-

Net profit to average asset indicates the efficiency of the banks in utilizing

their assets in generating profits. A higher ratio indicates the Net profit to average

asset indicates the efficiency of the banks in utilizing their assets in generating profits.

Higher ratio indicates better earning potential in the future. From 2006 to 2008

there was no profit so bank was in loss, but in 2009 bank was in profit so it indicates

the better income generating capacity of the assets and better efficiency of

management.

d. Interest Income to Total Income Ratio: Interest Income/ Total

Income

i. For 06-07

363120138.59

= -----------------------

447944188.32

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= 0.8106

ii. For 07-08

358005318.42

= -----------------------

391571960.70

= 0.91427

iii. For 08-09

381819020.21

= -----------------------

410025574.15

= 0.931

Year Interest Income to Total Income Ratio

2006-07 0.8106

2007-08 0.914272008-09 0.931

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


2006-07 2007-08 2008-090.75%

0.80%

0.85%

0.90%

0.95%

Interest Income to Total Income Ratio

Interpretation:-

The interest income total income indicates the ability of the bank in generating

income from its lending.

This ratio measures the income from lending operations as a percentage of the

total income generated by the bank in a year. The ratio is increasing so bank is

generating income.

e. Other Income to Total Income Ratio: Other Income/ Total

Income

i. For 06-07

47496002.75

= -----------------------

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


447944188.32

= 0.106

ii. For 07-08

26147904.66

= -----------------------

391571960.70

= 0.0667

iii. For 08-09

21078603.21

= -----------------------

410025574.15

= 0.0514

Year Other Income to Total Income Ratio

2006-07 0.106

2007-08 0.06672008-09 0.0514

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


2006-07 2007-08 2008-090.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

Other Income to Total Income Ratio

Interpretation:-

The bank generates higher fee income through innovative products and

adapting the technology for sustained service levels. The higher ratio indicates

increasing proportion of fee-based income.

The ratio is decreasing from 2006 to 2009 so proportion of fee based

income is decreased.

G. L – Liquidity:

a. Liquid Asset to Total Asset Ratio: - Liquid Asset/ Total

Asset

i. For 06-07

256258471.34+211966790.01

= ------------------------------------------------------

4318707518

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


468225261.3

= -----------------------

4318707518

= 0.1084

ii. For 07-08

367388754.16+217151668.04+30000000

= ------------------------------------------------------

4610701381

614540422.1

= -----------------------

4610701381

= 0.1332

iii. For 08-09

286860968+273172610+70000000

= ----------------------------------------------

4847782966

630033578

= -----------------------

4847782966

= 0.1299

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


Year Liquid Asset to Total Asset Ratio2006-07 0.1084

2007-08 0.13322008-09 0.1299

2006-07 2007-08 2008-090.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

Liquid Asset to Total Asset Ratio

Interpretation:-

The proportion of liquid asset to total asset indicates the overall

liquidity position of the bank so the ratio is constant means bank has greater liquid

position.

b. Government Securities to Total Asset: Government

Securities/ Total Asset

i. For 06-07

885412528.10

= -----------------------

4318707518

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


= 0.2050

ii. For 07-08

991964849.10

= -----------------------

4610701381

= 0.2151

iii. For 08-09

990570113.10

= -----------------------

4847782966

= 0.2043

Year Government Securities to Total Asset

2006-07 0.2050

2007-08 0.21512008-09 0.2043

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


2006-07 2007-08 2008-090.18%

0.20%

0.22%

Government Securities to Total Asset

Interpretation:-

Government Securities are the most liquid and safe investments. This ratio

measures the government securities as a proportion of total assets.

This ratio measures the risk involved in the assets hand by a bank . So the ratio

is constant within three years means risk is also same in three years.

c. Approved Securities to Total Asset Ratio: Approved

Securities/ Total Asset

i. For 06-07

9000000+8448500

= -----------------------

4318707518

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


17448500

= -----------------------

4318707518

= 4.0402

ii. For 07-08

9000000+8448500

= -----------------------

4610701381

17448500

= -----------------------

4610701381

= 3.7843

iii. For 08-09

9000000+7227500

= -----------------------

4847782966

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


16227500

= -----------------------

4847782966

= 3.347

Year Approved Securities to Total Asset Ratio

2006-07 4.040

2007-08 3.7843

2008-09 3.347

2006-07 2007-08 2008-090.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

Approved Securities to Total Asset Ratio

Interpretation:-

Approved securities include securities other than government securities. This

ratio measures the Approved Securities as a proportion of Total Assets.

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


This ratio measures the risk involved in the assets as compare to the

government security. The ratio is decreasing means the risk is also decreasing in the

bank.

d. Liquid Asset to Demand Deposit Ratio: Liquidity Asset/ demand

Deposit

i. For 06-07

256258471.34+211966790.01

= -----------------------

73542074949.11+97814596.11

468225261.3

= -----------------------

831579713.2

= 0.56305

ii. For 07-08

367388754.16+217151668.04+30000000

= ---------------------------------------------------

907652901.14+129168715.73

614540422.1

= -----------------------

1036821617

= 0.5927

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


iii. For 08-09

286860968.06+273172610.80+70000000

= ---------------------------------------------------

966820482.49+161640170.80

630033578.8

= -----------------------

1128469653

= 0.5583

Year Liquid Asset to Demand Deposit Ratio

2006-07 0.56305

2007-08 0.5927

2008-09 0.5583

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


2006-07 2007-08 2008-090.54%

0.55%

0.56%

0.57%

0.58%

0.59%

0.60%

Liquid Asset to Demand Deposit Ratio

Interpretation:-

This ratio measures the ability of a bank to meet the demand from

deposits in a particular year. Demand deposits offer high liquidity to the depositor and

hence banks have to invest these assets in a highly liquid form.

The ratio within three years i.e. 2006 to 2009 is same so same liquid

position.

e. Liquid Asset to Total Deposit Ratio:

Liquid Asset

Liquid Asset to Total Deposit = _________________

Total Deposit

I. For 06-07

468225261.3

= -----------------------

3334479835.87

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


= 0.1404

II. For 07-08

614540422.1

= -----------------------

3521965093.51

= 0.1744

III. For 08-09

630033578.8

= -----------------------

3722049629.52

= 0.1692

Year Liquid Asset to Total Deposit Ratio

2006-07 0.1404

2007-08 0.1744

2008-09 0.1692

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


2006-07 2007-08 2008-090.00%

0.02%

0.04%

0.06%

0.08%

0.10%

0.12%

0.14%

0.16%

0.18%

0.20%

Liquid Asset to Total Deposit Ratio

Interpretation:-

This ratio measures the liquidity available to the deposits of a bank. As

per the ratio the values calculated are the same within last three year.

Ratio analysis is an important quantitative technique, which is widely in

use for interpreting financial statements. The technique serves as a tool for assessing

the current and long- term financial soundness of a concern. It is also used to analyze

various aspects of operational efficiency and the degree of profitability. It is an

instrument for diagnosis of the overall financial health of enterprises. It functions as

a sort of health test.

The current ratio of the bank is 2:1. This ratio indicates that for every Rs.1

of current liabilities, there is Rs.2 of the current assets available for meeting its

obligations. The current assets are two times the current liabilities this signifies the

society’s ability to meet its current obligations.

Rule of thumb is 1:1 for the quick ratio so that, if a business has quick ratio

of at least 100 percent, it is considered to be in a fairly good current financial

position. This ratio is the true test of a business. If the quick assets exceeds of equal

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


to quick liabilities, it indicate that the financial position of the business is very

satisfactory. It is a measure of the extent to which the liquid assets are available to

meet the quick or immediate liabilities. It indicates ability of the business to meet its

commitment without delay.

Return on capital employed is the overall profitability ration. This ratio

judges the overall performance of the concern. This ratio establishes relationship

between profit earned and capital employed. During the current year the society

return on capital employed is going on decreases.

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


Findings:-

1. From the last three years dividend not paid.

2. Bank was not in profit from 2006-08 & in profit 2009.

3. Working capital of bank is increasing continuously from last three years.

4. Liquid position of bank is same.

5. Risk is same or slightly decreasing.

6. The banks fixed asset ratio is above 100% for last three year. It is a negative sign for a

bank.

7. The portion of proprietor fund acquiring current asset is coming down from 2006 to

2009.

8. After the deep observation we comes to know that the share capital as on 31.03.2007

was Rs.8,33,60,030/- & on 31.03.2009 is as on 31.03.2008 Rs. 7,82,29,250.00/- . The

provision made for reserve and other fund is also in increasing trend.

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


SUGGESTIONS.

1. The bank must control expenses for its good financial position.

2. No loan should give to the relatives of the directors without adequate security.

3. It appears that bank is taking some steps to improving profitability. It is suggested

that bank should continue to its efforts in this direction in future.

4. The recovery performance should be further improve so that bank will able to

consolidate its position.

5. Bank should try to increase the per employee business to improve profitability.

6. Bank should also take majors for cash management so profitability should be

improve.

7. Strict control over cost should be maintained in future also.

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.


CONCLUSIONS

After analyzing and interpreting the data with close observation of “Sangli

Urban Co-operative Bank ltd, Sangli Branch-Tasgoan” following conclusions can be

drawn.

The management of the bank is efficient. It uses various tools and techniques

for proper working of the bank. The position of bank appears to be increasing.

Therefore bank should continue its efforts in this direction. There is proper internal

control in the bank.

-------------------------------------------------------------------------------------- I.M.R.D.A, Sangli.

sangli urban bank fix project

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