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1.1 INDUSTRY PROFILE

BANK

A banker or bank is a financial institution whose primary activity is to act as

a payment agent for customers to borrow and lend.

The word Bank is used in the sense of commercial bank. It is of Germanic

origin though some persons trace its origin to the French word “Banqui”, and the

Italian word “Banca”, it referred to a bench for keeping, lending and exchanging of

money or coins in the market place by moneylenders and moneychangers. In fact

the early Jews in Lombardy transacted their banking business by sitting on

benches.

Banking Regulation Act of India, 1949 defines Banking as “accepting, for

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

repayable on demand or otherwise and withdrawal by cheques, draft, order or

otherwise”.

HISTORY OF BANKING IN INDIA:

Banking in India originated in the last decades of the 18th century. The

oldest bank in existence in India is the State Bank of India , a government-owned

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KARNATAKA STATE OPEN UNIVERSITY - 1 -

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

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



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bank that traces its origins back to June 1806 and that is the largest commercial

bank in the country. Central banking is the responsibility of the Reserve Bank of

India , which in 1935 formally took over these responsibilities from the then

Imperial Bank of India, relegating it to commercial banking functions. After India's

independence in 1947, the Reserve Bank was nationalized and given broader

powers. In 1969 the government nationalized the 14 largest commercial banks; the

government nationalized the six next largest in 1980.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public

sector banks (that is with the Government of India holding a stake), 29 private

banks (these do not have government stake; they may be publicly listed and traded

on stock exchanges) and 31 foreign banks. They have a combined network of over

53,000 branches and 17,000 ATMs . According to a report by ICRA Limited, a

rating agency, the public sector banks hold over 75 percent of total assets of the

banking industry, with the private and foreign banks holding 18.2% and 6.5%respectively.

Without a sound and effective banking system in India it cannot have a

healthy economy. The banking system of India should not only be hassle free but it

should be able to meet new challenges posed by the technology and any other

external and internal factors.

For the past three decades India's banking system has several outstanding

achievements to its credit. The most striking is its extensive reach. It is no longer

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


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

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



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

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



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confined to only metropolitans or cosmopolitans in India. In fact, Indian banking

system has reached even to the remote corners of the country. This is one of the

main reasons of India's growth process.

The government's regular policy for Indian bank since 1969 has paid rich

dividends with the nationalization of 14 major private banks of India.

Not long ago, an account holder had to wait for hours at the bank counters for

getting a draft or for withdrawing his own money. Today, he has a choice. Gone

are days when the most efficient bank transferred money from one branch to

other in two days.

The first bank in India, though conservative, was established in 1786. From

1786 till today, the journey of Indian Banking System can be segregated into three

distinct phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks:

Nationalization of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

New phase of Indian Banking System with the advent of Indian Financial

& Banking Sector Reforms after 1991.

To make this write-up more explanatory, I prefix the scenario as Phase I, Phase IIand Phase III.

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PHASEI

The General Bank of India was set up in the year 1786. Next came Bank of

Hindustan and Bengal Bank. The East India Company established Bank of Bengal

(1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units

and called it Presidency Banks. These three banks were amalgamated in 1920 and

Imperial Bank of India was established which started as private shareholders

banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by

Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at

Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of

Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up.

Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also

experienced periodic failures between 1913 and 1948. There were approximately

1100 banks, mostly small. To streamline the functioning and activities of

commercial banks, the Government of India came up with The Banking

Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as

per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested

with extensive powers for the supervision of banking in India as the Central

Banking authority.

During those day’s public has lesser confidence in the banks. As an

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http://finance.indiamart.com/investment_in_india/banking_in_india.html

http://finance.indiamart.com/investment_in_india/banking_in_india.html



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aftermath deposit mobilization was slow. Abreast of it the savings bank facility

provided by the Postal department was comparatively safer. Moreover, funds were

largely given to traders.

PHASEII

Government took major steps in this Indian Banking Sector Reform after

independence. In 1955, it nationalized Imperial Bank of India with extensive

banking facilities on a large scale specially in rural and semi-urban areas. It formed

State Bank of India to act as the principal agent of RBI and to handle banking

transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on

19th July, 1969, major process of nationalization was carried out. It was the effort

of the then PrimeMinister of India, Mrs. Indira Gandhi. 14 major commercial

banks in the country were nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in

1980 with seven more banks. This step brought 80% of the banking segment in

India under Government ownership.

The following are the steps taken by the Government of India to Regulate

Banking Institutions in the Country:

1949 : Enactment of Banking Regulation Act.

1955 : Nationalization of State Bank of India.

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1959 : Nationalization of SBI subsidiaries.

1961 : Insurance cover extended to deposits.

1969 : Nationalization of 14 major banks.

1971 : Creation of credit guarantee corporation.

1975 : Creation of regional rural banks.

1980 : Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India rose

to approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith

and immense confidence about the sustainability of these institutions.

PHASEIII

This phase has introduced many more products and facilities in the banking

sector in its reforms measure. In 1991, under the chairmanship of M Narasimham,

a committee was set up by his name which worked for the liberalization of banking

practices.

The country is flooded with foreign banks and their ATM stations. Efforts are

being put to give a satisfactory service to customers. Phone banking and net

banking is introduced. The entire System became more convenient and swift. Time

is given more importance than money.

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The financial system of India has shown a great deal of resilience. It is

sheltered from any crisis triggered by any external macroeconomics shock as other

East Asian Countries suffered. This is all Due to a flexible exchange rate regime,

the foreign reserves are high, the capital account is not yet fully convertible, and

banks and their customers have limited foreign exchange exposure.

Before the steps of nationalization of Indian banks, only State Bank of India

(SBI) was nationalized. It took place in July 1955 under the SBI Act of 1955.

Nationalization of Seven State Banks of India (formed subsidiary) took place on

19th July, 1960.

The State Bank of India is India's largest commercial bank and is ranked one

of the top five banks worldwide. It serves 90 million customers through a network

of 9,000 branches and it offers -- either directly or through subsidiaries -- a wide

range of banking services.

Structure

The Indian banking system can be classified into nationalized banks,

private banks and specialized banking institutions. The industry is highly

fragmented with 30 banking units contributing to almost 50% of deposits and 60%

of advances. The Reserve Bank of India is the foremost monitoring body in the

Indian Financial sector. It is a centralized body that monitors discrepancies and

shortcomings in the system.

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Industry estimates indicate that out of 274 commercial banks operating in

the country, 223 banks are in the public sector and 51 are in the private sector.

These private sector banks include 24 foreign banks that have began their

operations here. The specialized banking institutions that include cooperatives,

rural banks, etc. form a part of the nationalized banks category.

BANKING SECTOR IN BUDGET 2008

The Union Budget of India for the year 2008-2009 was announced by the

Indian Finance Minister, Mr. P Chidambaram, on 29th February 2008. The policies

and initiatives taken in the Union Budget of India 2008-2009 on the Indian

Banking sector were in tandem with the requirements of the Indian economy.

Small and marginal farmers have been relieved of all farm loans, disbursed till

March 2007 and also all loans, which are due till December 2007 and was unpaid

till February 2008. These farm loan waivers would be facilitated by all the

concerned Public Sector Banks and Regional Rural Banks of India. A total of Rs

60,000 crores would be waived-off under such scheme. The settlement of these

loan-waivers will be offered through special type of scheme.

Further, the Public Sector Banks and Regional Rural Banks of India were alsosuggested, to bring within their fold, a minimum of 250 rural household accounts

at every branch every year.

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The Indira Awas Yojana was brought under the ambit of Public Sector

Banks. Loan limit up to Rs 20,000 per unit at 4% interest was fixed under

differential rate of interest (DRI) scheme. The Finance Minister also advised the

Indian PSU Banks to open 288 branches in minority districts of India. Further, he

also asked the Indian banking industry to embrace total financial inclusion. In

another landmark decision, the Finance Minister, Mr. P. Chidambaram said that the

Ex-banking servicemen in India would be offered employment opportunities in the

banking sector.

Another major announcement was that, the much talked-about 'Banking

Cash Transaction Tax (BCTT)' would be withdrawn from the financial year 2009-

2010.

Experts believe the impact of the decisions and policies taken during the

Union Budget of India 2008-2009 on the Indian Banking sector would be mixed. Itis expected that the Indian PSU banks will face pressure on their net interest

margins due to the waiving-off of agricultural loans.

Further, the cumulative cost that will be incurred for opening up of new

Regional Rural Banks in India may substantially increase the operating cost for the

banks. The inclusion of the Indira Awas Yojana houses under the differential rateof interest scheme and at 4% interest will increase the proportion of sub-PLR

lending for the concerned banks.

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The major Public Sector Banks of India like the State Bank of India, Bank

of Baroda, and Punjab National Bank may see their net interest margins shrinking

till the subsidy for waiver of agricultural loans is being completely released.

Moreover, experts are skeptical about the long term benefit of such agricultural

loan waiver as offered through the Union Budget of India 2008-2009.

YEAR OF THE EVENTS:

1980 - The Bank came into existence on 15th April, as a consequence of the

Government of India taking over the undertaking of Vijaya Bank Ltd. The Bank is

engaged in transacts all types of banking business including foreign exchange and

is a Government of India undertaking.

1984 - Capital worth Rs 10 lakhs subscribed by Government.

1985 - The Bank sponsored its first Regional Rural Bank under the name and style

"Visweswaraya Grameena Bank" in March. This Regional Rural Bank would cater

to the needs of the target group belonging to Mandya district of Karnataka State.

- Capital worth Rs 772 lakhs subscribed by Government.

1986 - Capital worth Rs 1000 lakhs subscribed by Government.

1989 - Rs 800 lakhs subscribed by Government.


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- The bank has introduced automatic renewal facility up to four times inrespect of short term deposits accepted for periods from forty six days to

one year for the convenience of the stomers.


- The Bank has installed 68 ALPMs in 25 branches.


- The Bank had entered into the Memorandum of Understanding with the

Reserve Bank of India, undertaking to fulfill definite performance commitments.

- The Bank introduced the new schemes viz. Vijaya Gift Bond Scheme and

Vijaya Service Card for enlarging its services to its business clientele.

1995- - The Bank opened its third exclusive NRI branch at Mapuca (GAO) and

established special NRI Cells at the branches in Tiruvalla, Kottayam, Trivandrum

and Kozhencherry (all in the Kerala State).

- The Bank launched its "V-Invest" Scheme in January. 1995 - Rs 6231 lakhs

subscribed by Government.

- The Bank opened 33 new branches taking the total to 810 branches.

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- The Bank entered into strategic alliance with leading private sector banks and

branches of foreign banks in India viz City Bank, N. A. India, Catholic Syrian

Bank Ltd, HDFC Bank Ltd, Centurion Bank Ltd, UTI Bank Ltd, etc.

- The Bank introduced Office Automation by providing state-of-the-art word

processors at 45 branches, 13 Regional Offices and Head office departments.

1996 - The Bank opened its first subsidiary, VIBANK HOUSING FINANCE LTD

to add impetus to housing finance.

- Vijaya Bank introduced three new loan schemes, namely, 'Vijaya Nivruthi',

'Vijaya Krishi Vikas' and 'Vijaya Mangala' to cater to the credit needs of

pensioners, farmers and working women respectively.

1997 - Vijaya Bank has introduced a novel way to improve customer service.

- The bank has recently introduced a system of rating its branches once in sixmonths to evaluate the quality of service and the facilities extended to the clientele.

- Vijaya Bank has launched a special agriculture credit plan targeted

specifically at agriculture and other, rural advances.

- The Bank has recently introduced a new `trade finance' scheme.

1998 - Vijaya bank has introduced a jewel scheme under which loans are granted

by the bank to fund the purchase of jewellery by keeping the purchased item as

collateral till the loan has been repaid.

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1999 - Vijaya Bank has entered into a Rs 200-crore take-out financing agreement

with the Housing and Urban Development Corporation (HUD co) for funding

infrastructure projects.

- The Housing and Urban Development Corporation (HUD co) has entered into a

three-year reversible securitization deal with the public sector Vijaya Bank, to raise

funds for meeting some of its infrastructure financing commitments.

2000 - Vijaya Bank has introduced a new scheme named V-Star savings bank

account scheme.

- Vijaya Bank Chairman and Managing Director S Gopalakrishnan have

been elected as the president of Indian Banks' Association, Bangalore.

.

2002 -Vijaya Bank has informed BSE that Government of India appointed Sri M S

Kapur as the Chairman & Managing Director of the Bank and Mr. M S Kapur took charge as Chairman & Managing Director of the Bank w e f August 16, 2002.

Bank has further informed that Sri Michael Bastian, Executive Director of Bank

has been posted as the Chairman & Managing Director Syndicate Bank. Mr.

Michael Bastian was relieved as the Executive Director of the Bank on August 24,

2002.

2003 -Vijaya Bank signs a pact with LIC to offer Life insurance cover to all its

existing as well as its new deposit-holders.

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-Bank officials are undertaking road shows where senior officials carry placard,

giving reasons about their visit. This is an innovative way to deal with defaulters

for repaying loans without publicly naming them.

-Vijaya Bank has unveiled a new electronic fund remittance facility

called V-REMIT, under which the bank customers can electronically remit funds

to the account holders in any bank.

-P A Sethi has been appointed as the Executive Director of the Vijaya

Bank.

-Vijaya Bank has signed a Memorandum of Understanding with M/s

National Insurance Company Limited for marketing banc assurance products.

-Vijaya Bank decides to open training centre for employees in Bangalore

-The Union government has bought back Rs 240-crore high-yieldinggovernment securities from Vijaya Bank.

2004 -Vijaya Bank ties up with NIC to offer free insurance policy

-US-based Principal Group enters distributorship tie-ups with Vijaya Bank

-Delhi based Punjab National Bank (PNB) and Bangalore-based Vijaya Bank

enter into a four-way partnership with Principal Financial of the US and Berger

Paints to set up an insurance broking company

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-Vijaya bank Housing Finance Ltd. becomes wholly owned subsidiary of

Vijaya Bank

- Vijaya Bank has entered into a memorandum of understanding (MoU) with

two tractor manufacturers International Tractors and Mahindra Gujarat Tractors to

provide finance on softer terms to farmers for purchase tractors and power tillers

-VIJAYA Bank signs pact with Nabard to co-finance agriculture, agro

processing, hi-tech agriculture and rural development projects.

-Vijaya Bank too enters RTGS bandwagon

-Principal Asset Management Company (AMC) formally relaunches itself

as Principal PNB Asset Management Company in association with Vijaya Bank on

July 2, 2004

-Vijaya Bank launched the bank's second city specific credit card - the'Hyderabad Card'

2005 -Vijaya Bank ties up with TAFE

-Vijaya Bank sets up new branches

2007 - Vijaya Bank has informed that Shri G B Singh has been nominated as GOI

Nominee Director of the Bank vice Shri Atul Kumar Rai, vide letter dated August

20, 2007 received from Government of India, Ministry of Finance, Department of

Financial Services with immediate effect.

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2008 - Vijaya Bank inked a memorandum of understanding with credit rating

agency, Crisil, for rating its corporate customers.

- Vijaya Bank has inked a pact with Credit Analysis & Research Ltd

(CARE), one of the RBI accredited rating agency, to provide bank loan ratings to

its corporate clients at a concessional fee.

-Vijaya Bank has informed that Shri. Sridhar Cherukuri has been nominatedas part-time non-official Director of the Bank with immediate effect, vide letter

dated July 10, 2008 received from Government of India, Ministry of Finance,

Department of Financial Services.

Vijaya Bank is an India-based bank. During the fiscal year ended March 31, 2008,

the Bank opened 73 new branches, upgraded five extension counters into full-

fledged branches. As of March 31, 2008, the Bank had 1,051 branches across 28

states and four union territories. Total credit cards issued by the Bank was 1,

43,000 at March 31, 2008. As of March 31, 2008, it had issued 3,95,000 debit-

cum-automated teller machine (ATM) cards

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1.2 COMPANY PROFILE IN BRIEF

• INTRODUCTION:

Vijaya bank has been able to maintain a standard profile since it was born a

Detailed discussion on the profile of the organization is carried on below.

• ORIGIN AND GROWTH OF THE ORGANISATION:

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Vijaya Bank was founded by late Shri A.B Shetty. He was an ardent

Gandhian and he was closely associated with the Indian freedom movement.

Vijaya Bank was established in the year 1931, in Mangalore, Karnataka. The Bank

commenced its business operations on 23rd October 1931 with an authorized

capital of Rs.5 lakhs and a paid of capital of Rs.8670.

The bank was founded essentially to promote banking habit, thrift and

entrepreneurship among the farming community of Dakshina Kannada district,

Karnataka. The Bank became a scheduled Bank in 1958.Vijaya Bank steadily grew

into a major All India Bank, with nine smaller Banks merging with it during 1963-

1968. The credit for the successful execution of the merger plan should go to late

Shri M Sunder Ram Shetty, who was the then Chief Executive of the Bank. The

Bank was nationalized on 15th April 1980. The Bank has built a network of 1027

branches spread over 29 states of the country and 3 union territories. The Bank

took several initiatives for effective implementation of various Governmentsdirected lending schemes.

Vijaya Bank has the highest number of branches in its home state,

Karnataka. In recent years the Bank has opened 40 branches that offer specialized

banking for industrial finance, small scale industries, agricultural (hi-tech) finance,

capital market, commercial and personal banking, asset recovery management,overseas banking, corporate banking and funds transfer.

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Presently the Bank has 1027 branches spread over in 29 states of the country

and 3 union territories. Very few banks have spread their branch network in so

many states and union territories. The Bank has highest number of branches in the

state of Karnataka (406). In recent years the Bank has opened as many as 99

specialized branches via Industrial Finance Branch (3), SSI branches (7), Capital

Market Services Branch (4), Specialized Commercial and Personal Banking

Branches (71), Asset Recovery Management Branch (7), Overseas Branch (3),

Corporate Banking Branch (1), Regional Forex cell (2).In line with the prevailing

trends, the bank has been giving greater thrust toward technological up-gradation

of its operations. As on March 2003, 356 branches have been computerized,

covering 78.26% of the Banks total business. Besides this, the Bank has also

installed ATM.s at 18 of its branches.

The Vijaya Bank has diversified its services by entering several new areas

such as credit card, merchant banking, hire purchase, leasing and electronicremittance services.

Vijaya Bank is one among the few banks in the country to take up principal

membership of VISA International and Master Card International. The driving

force behind Vijaya Banks every initiative has been its strong dedicated workforce.

INTERNATIONAL BANKING DIVISION

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Vijaya Bank has obtained an AD License in 1971 and permanent license

after nationalization in 1980.The branches dealing in foreign business are called

“Overseas Branches” and are categorized into A,B and C Category Branches. All

the branches have SWIFT connectivity.34 designated branches have Core Banking

System (CBS).The Bank maintains 16 Nostro Accounts in ten currencies. The

vostro accounts are ten in number comprising of six private exchange houses and

four Banks. The Bank has entered in to agency arrangements with 156 Banks in 65

countries. It maintains exchange positions in 8 internationally quoted quotations.

The dealings operations handled at Forex and Treasury Management Division are

located in the Head Office.

MISSION:

“Our mission is to emerge as a prime national backed by modern technology,meeting

Customer’s aspirations with professional banking services and sustained growth

contributing to national development”

SERVICES:

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When the bank commenced operation in 1931, the banks services primarily

focused on the growth and development of the agricultural sector. Today a variety

of specialized banking services are offered through 43 branches.

The banks expertise now extends to the prime areas of capital market, corporate

banking, Industrial finance, small scale industries and hi-tech agriculture, apart

from personal banking, Funds transfer overseas banking and asset recovery

management. Vijaya bank has been Giving mainly two types of services, those are

enlisted below:

1) DEPOSIT SCHEMES:

!) SAVING BANK ACCOUNT:

• Save as much as you can.

• Spend as little as you can.

• And see your money grow.

!!) CURRENT ACCOUNT:

• Pool your cash here, pay conveniently trough cheques.

!!!) TERM DEPOSITS:

a) recurring deposits

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• save a definite sum every month for handsome gains with an option to vary

The monthly installments.

b) fixed deposits

• a safe way to high return, the only thing fixed is time

c) Vijaya shree units

• save lump sum and interest more than simple, stretches when you are in

need

d) jeevan nidhi deposits

• Helps you to save at your door steps, opens the gate way for bright future.

e) Vijaya cash certificates

• Your friend in need when it comes to education marriage of the benefit of

exemption from capital gains income to invest into capital gains account.

f) Vijaya raksha

• a life insurance scheme for deposit account holders

g) capital gains accounts scheme

• Income tax assessee can avail of the benefit of exemption from capital gains

income to invest into capital

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h) v-stock invest deposits scheme

• Earn a handsome return through invest in v-stock scheme as much as you

can

2) RETAIL LENDING SCHEMES

!) Vijaya home loan

• Own your dream home/ flat at the lowest interest rate 7.5% p a in the

banking industry

!!) Vijaya wheels

• Drive your dream vehicle at the affordable PLR rate

!!!) v-equip schemes

• A friend who can always equip you with your choicest consumer durables

and improve your life style at PLR +1 rate

!v) v- trade scheme

• Avail instant bank finance against business assets at the PLR rate (presently

11.5%p a) for loans up to Rs 2 lakh and as the of PLR+2 there

v) Jewel loan

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• a barrower friendly scheme against jewels to meet your urgent needs at the

PLR rate

V!) Loans to small road transport operators (SRTOs )

• right choice for the transport operators who want to make transport business

a success loans at PLR rate for priority sector and at PLR +1 rate for non

priority sector

\ (presently 12.5%p a)

V!!) V-rent schemes

• Take cash today at the PLR rate against tomorrows rent

V!!!) Education loan

• Avail our education loan and draw your wards life line. Loans up to Rs 4

lakh at PLR rate .loans above Rs 4 lakh at PLR + 1

!x) v-professionals scheme:

• Professional like doctors ,engineers, advocates, chartered accountants, etc

who Wish to set up their practice/business activity, in rural/semi –urban

areas can avail Loans up to Rs 15 lakh at 1% in metro urban areas

x) v-kanyadan scheme:

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• marriages are made in heaven, but v- kanyadan helps to celebrate this on

Earth Loans at the lowest affordable interest rate of PLR-1 (presently

10.5%p a)

X!) V-mangala scheme:

• Special scheme to fulfill the dreams of working women at the lowest rate

That is PLR -1 (presently 10.5%p a)

3) OTHER SERVICE:

The bank also offers various services in the areas of credit cards, merchant

Banking, hire purchasing, and leasing and NRI (non-resident Indians) services.

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Times-norms for various banking transaction:

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1) For cash payment

a) Trough teller

b) Trough cashier

3 to 8 minutes

8 to 15 minutes2) Receipt cash 10 to 20 minutes

For issuance of demand

raft/

Traveler cheques/ fixeddeposit receipt

15 to25 minutes

4) Payment of fixed

deposit receipt

15 to 20 minutes

5) Payment of demand

draft

10 to 20 minutes

6) Opening of an account 20 to 25 minutes7) Retirement of bills 20 to 30 minutes8) Updating of pass book 5 to 15 minutes9) Statement of accounts Within 1 days10) Collection of cheques

Local-

Out station-

1 to 2 days

5 to 7 days



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ORGANISATION CHART

Today living up to the ideals of the founding visionaries is the management

at Vijaya bank. The management includes dedicated professionals, who bring with

then a considerable amount of expertise and experience in the banking Indus

try. Currently the banks boards of directors consist of 10 directors.

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FUNCTIONAL DEPARTMENTS OF VIJAYA BANK:

PERSONNEL DEPARTMENT

TREASURY MANAGEMENT DEPARTMENT

GENERAL ADMINISTRATION DEPARTMENT

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PRAKASH P MALYA

Chairman and managing director

T.VALLIAPPANExecutive director

ASHOK KUMAR SHETTYDirector

ASHOK KUMAR Director

NISHANK KUMAR JAINDirector

K.VENKATAPPADirector

G.B.SINGHDirector

R.VAIDYANATHANDirector

SHANTHARAM SHETTYDirector

BRIJMOHAN SHARMADirector



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PLANNING DEPARTMENT

CREDIT DEPARTMENT

DEPARTMENT OF INFORMATIONAL TECHNOLOGY

RISK MANAGEMENT DEPARTMENT

CENTRAL ACCOUNT DEPARTMENT

CENTRAL INSPECTION DEPARTMENT

PERSONNEL DEPARTMENT:

The personnel department frames the various policies related to the

Recruitment, training, promotion and transfer. It is also instrumental in managing

the various activities regarding the training of employees with the help of the

Officers. Training college. It also manages the promotion and transfer procedures.It also helps in the management and control of industrial relations.

TREASURY MANAGEMENT DEPARTMENT:

Treasury department has two wings- Domestic and Forex treasury.

Domestic treasury handles the security liquidity ratio. Security that is required to

maintain security liquidity ratio is handled by the department. The Forex treasury

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maintains banks. Foreign accounts with the foreign banks called nostru accounts.

Forex treasury apart from covering merchant transactions also maintains trade in

foreign currency on behalf of bank. It also maintains mirror account of foreign

currency in all restrained bank accounts by the branches of the bank

GENERAL ADMINISTRATION DEPARTMENT:

General administration department looks after the matters related to

maintenance of head office building and other bank premises owned by bank. It

also deals with furnishing and purchase of furniture and fixtures for the bank

branches. It is also into matters relating to lease agreements of branch premises and

renewal of lease agreements and work related to printing of forms, ledgers,

statements and supply of computer stationary. It also maintains all the vehicles

owned by the bank.

PLANNING DEPARTMENT:

It prepares vision document for the bank. It also fixes targets to various

regional offices and branches to achieve corporate goals of the bank. For this

purpose the planning department follows a system of performance budgeting.

CREDIT DEPARTMENT:

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The credit department has 4 wings- Credit policy, Credit operations, Credit

supervision & monitoring and Credit Review & Recovery. Credit policy

department frames banks. Credit policy inline with the policy laid down by RBI

and Government of India. The Credit Operations department lays down procedures

and rules and also delegates power for sanction of loans by field functionaries.

Credit supervision & monitoring provides offset audit of credit portfolio by

obtaining reports and statements from sanctioning authorities at head office. The

main purpose of the department is to ensure that the credit portfolio of the bank

continues to be healthy. Credit Review & Recovery department handles recovery

matters in respect of nonperforming assets like irregular accounts.

DEPARTMENT OF INFORMATIONAL TECHNOLOGY:

The Bank has created a .Department of Information Technology. at its

head office. The primary objective of this department is to promote computer literacy among employees, to upgrade communication and information technology

and to develop electronic banking capabilities. The Bank has initiated action for

implementing Core Banking solution, Integrated Risk Management System and

Networking of ATMs with addition of 100 ATMs.

RISK MANAGEMENT DEPARTMENT:

The Bank recognizes that management of risk is fundamental to the

business of banking. The Bank’s approach to risk management is proactive. The

primary goal of risk management is not to avoid or minimize risks inherent in

_____________________________________________________________________________ _




CASH MANAGEMENT

business but to steer them consciously and actively. The basic objective is to strike

a balance between risk and rewards.

CENTRAL ACCOUNT DEPARTMENT:

Central account department is very instrumental in consolidation of

balance sheet. It is also involved in reviewing the Management, Financial

statements with special emphasis on accounting policies and practices, compliance

of accounting standards and other legal requirements concerning financial

statements, qualifications in the audit report, compliance with stock exchange and

legal requirements concerning financial institutions, related party transactions, etc.

CENTRAL INSPECTION DEPARTMENT:

Central Inspection Department involves audit, inspection & vigilance.

Inspection of branches is one of the tools for internal control in the Bank. Based on

the finding of the Inspection, every branch is rated on a prescribed rating scale.

The rating of branches also enables the Bank to ensure that sufficient attention is

paid to the performance of those branches that have been awarded unsatisfactory

ratings. The focus of the Vigilance Department has been to constantly intervene

and upgrade the Systems & Procedures of the Bank and prevent intrusions that

spread the malaise of permissiveness.

_____________________________________________________________________________ _




CASH MANAGEMENT

1.3 REVIEW OF LITERATURE

A Sound cash management is crucial to the survival and well-being of small enterprises of all types. Studies of reasons for small business failureinevitably show poor or careless cash management to be the most important cause

(see Berryman 1983, Peacock 1985 for reviews of the relevant literature). Statesthe case more succinctly. the clearest and most startling distinctions betweensuccessful and discontinued small businesses lie in their approach to the useswhich can be made of accounting information. In recognition of such findings,recent years have seen increased attention to cash management in small businesstraining and education programs and in the many books and articles written for small business.

It is not unreasonable to ponder whether this attention has had a visibleimpact on the way in which small businesses are operated. It seems appropriate toreview, and attempt to integrate, available empirical research findings concerningthe cash management practices of small business in North America. Such a reviewcan lead to improved understanding of both the research conducted to date and thecash management practices under scrutiny. Further more, it can act as a stimulus

for future research.

An additional function of this review is to identify and highlight trends in

the cash management practice of small firms. This will assist policy makers in

_____________________________________________________________________________ _




CASH MANAGEMENT

understanding the financial environment in which small firms operate and the

possible impact of the current and proposed policies directed at the small business

sector. Over the past decade there has been a significant increase in government

sponsored agencies and educational programs directed at the small business sector

and in interest in small firms, as illustrated by the President's annual report on

small business. Such attention warrants consideration as to whether these policies

have positively influenced the financial practices of small firms. This article

provides a concise summary of research evidence which indicates that financial

practice among small firms has not experienced any significant change over the

past fifteen years. This result should have impact on future policy decisions.

1.4 STATEMENT OF THE PROBLEM

Through the managing the cash organization can find out the present

financial Position with deficiency area for taking the right management actionthrough right way every organization needs to manage the cash effectively.

1.5 OBJECTIVES OF THE STUDY : Objectives may be classified into

1) PRIMARY OBJECTIVE :

a) To know the process of cash management in Vijaya bank.

2) SECONDARY OBJECTIVES:

b) TO meet the cash disbursement needs. (Payment schedule)

c) To minimize funds committed to cash balances.

_____________________________________________________________________________ _




CASH MANAGEMENT

d) To find out the ways for increasing the profit earning level.

e) To find out the financial growth rate over the last 3 years.

1.6 NEED OF THE STUDY.

• Synchronization of cash flows.

• The cost associated with a short fall in the firms cash needs

• Excess cash balance costs.

• Cost associated with the establishing an operating cash management staff

and activities.

• The impact of uncertainties on cash management strategy.

1.7 SCOPE OF THE STUDY

• The study was aimed at understanding and analyzing the management of

cash in vijaya bank.

• This study based on the area of managing cash.

_____________________________________________________________________________ _




CASH MANAGEMENT

• Review of project proposal provides them with suggestions and findings

to make the project effectively.

• The study reveals the different aspects.

1.8 RESEARCH METHODOLOGY OF THE STUDY:

The study is a desk top research work; it does not involve any field work. The

researcher has adopted casual research approach. Following methods has adopted

for this study

a) Consolidation of last 5 years balance sheet and income statement.

b) Comparative analysis of balance sheet and income statements.

c) Identification of parameters that is likely to reflect financial parameters.

d) Calculation of these parameters.

e) Silent conclusions and recommendations.

_____________________________________________________________________________ _




CASH MANAGEMENT

DATA COLLECTION TOOL

The study is based on secondary data that is published in annual report of the bank

Consisting of audited income statement, balance sheet, auditors report and

directors Report and other quantitative figures other necessary details required for

the study were obtained from the bank

Data are mainly classified into 2 types

1) primary data

2) secondary data

Primary data

The data originally collected by an investigator or agency for the first time

for the First time for any statistical investigation and used by them in the statistical

analysis are Formed as primary data. Primary data is collected through discussion

with concerned persons like assistant Officers of finance department.

Secondary data

The data published or unpublished which have already been collected and

processed by some agency or person and take over from there and used by any

agency for their statistical work are termed as secondary data as for as secondary

agency is concerned Secondary data has been collected from annual reports,academic book and world wide web.

_____________________________________________________________________________ _




CASH MANAGEMENT

1.9 LIMITATIONS OF THE STUDY

• The data collected which was available in the company records and annual

financial reports and other details

• This study is limited on 5 years

• This study is based on the data given by officials and annual reports of the

bank which are manipulated

•

The study is limited to financial department of vijaya bank • Other areas such as ratio analysis, capital budgeting, cost of capital ,risk

analysis were not looked into this study.

CHAPTER II

INTRODUCTION TO THE CASH MANAGEMENT

Cash management is one of the key areas of working capital

management. Apart from The fact that it is the most liquid current asset, cash is the

common denominator to which All current assets can be reduced because the other

_____________________________________________________________________________ _




CASH MANAGEMENT

major liquid assets, that is receivable And inventory get eventually converted into

cash. This underlines the significance of cash management.

Cash management involves preparation of cash budget. Cash budget is a

statement showing expected receipt and payment of cash during the given period

and its budget helps to forecast the balance of cash and also enable to make

arrangement of overdraft if there is shortage of cash.

MOTIVES FOR HOLDING CASH

A business enterprises has to maintain required amount of cash balance always as

such These are three motives of holding cash.

a) transaction motives

b) precautionary motives

c) speculative motivesd) Compensating motives

A) Transaction motives :

An important reason for maintaining cash balance is the transaction motives.

this refers to the holding of cash to meet routine cash requirement to finance

the transactions which a firm carries on in the ordinary cource of business. A firmenters into avarity of transactions to accomplish its objectives which have to be

paid for in the form of cash.

_____________________________________________________________________________ _




CASH MANAGEMENT

b) Precautionary motives

In addition to the non-synchronization of anticipated cash inflows and

outflows in the Ordinary course of business, a firm may have to pay cash for the

purpose which cannot be predicted or anticipated. The unexpected cash needs at

short notice may be the result of

1) floods strikes and failure of important customers

2) cancellation of some order for goods as the customer is not satisfied

3) Sharp increase in cost of raw materials.

The cash balance held in reserve for such random and unforeseen

fluctuations in cash Flows are called as precautionary balances.

c) speculative motive

It refers to the desire of a firm to take advantage of opportunities which present themselves at unexpected motives and which are typically outside the

normal course of business. Or keep required amount of cash to take the

advantage of prevailing price So that short term profit can be made.

Example: 1) make purchase of raw materials at favorable prices.

2) Delay in purchase of raw materials on the anticipation of decline in prices.

d) Compensating motive:

_____________________________________________________________________________ _




CASH MANAGEMENT

One more motive to hold cash balance is to compensate banks for

providing certain Services and loans. Bank provides a variety of services to

business firms, such as clearance of Cheque, supply of credit information,

transfers of funds and so on. Usually clients are required to maintain a minimum

balance of cash at the bank since this balance cannot be utilized by the

firm for transaction purposes, the banks themselves can use the amount to earn a

return, such balances are compensating balances.

OBJECTIVES OF CASH MANAGEMENT

Mainly there are two objectives of cash management:

1. TO meet cash disbursement needs as per payment schedule or meeting

payment schedule

2. To minimize the funds locked up as cash balance or minimize funds

committed to such balances.

_____________________________________________________________________________ _




CASH MANAGEMENT

Problems in managing cash

Cash is an important current asset, which is essential for the successful

operation of the operating cycle. A firm seeks to receive cash in shortest possible

time but does remain it for any longer period. Because that will entitle additional

cost to the firm. Adequate cash balance enables the firm to trade bills readily and

takes advantage of trade discounts besides, ample of cash is helpful to satisfy

unexpected advertise and exploit favorable opportunities that may come along

from time to time.

However keeping any excess stock of cash is largely wastage of resource.

Because it is non earning asset and some could be invested elsewhere to earn some

income. This means that the firm will be failing to maximize its profits at the

expenses of high liquidity.

There are four major problems in managing cash

!) Controlling inflow of cash

!!) Controlling out flow of cash

!!!) Controlling optimum investment of surplus cash

!v) control level of cash

!) Controlling inflow of cash

_____________________________________________________________________________ _




CASH MANAGEMENT

Through the preparation of cash budget the finance manager must be bale to

ensure that, there is no significant deviation in projected cash inflows and projected

cash out flows of cash .i e economizing cash

The over all purpose of the various methods is to reduce the time lag between

the moment a payment to the company is mailed and the moment the funds are

ready for redevelopment by the company.

!!) CONTROLING OF CASH OUT FLOWS

An effective control over cash out flows or cash disbursement also helps a

firm in concentrating cash and reducing financial requirement cash inflow

objectives is to accelerate the collections. While in case out flow the objective is to

show down the disbursement

The best combination of the fast collection and slow disbursement will result inmaximum availability of funds

!!!) OPTIMUM INVESTMENT OF SURPLUS CASH OR ALLOCATION

OF FUNDS BETWEEN CASH AND NEAR CASH ASSETS:

Short time highly liquid securities represent liquid earning assets, which may beconverted into cash without delay and appreciable loss.

_____________________________________________________________________________ _




CASH MANAGEMENT

The basic principle of governing allocation of funds between cash and near cash

assets :

1) Marketability.

2) Safety in assets.

3) Maturity.

4) Taxability.

!v) CONTROLING LEVEL OF CASH;

One of the basic objectives of cash management is to minimize the level of

cash

balances. Strategy to achieve above objectives is

1) Preparation of cash budget.

2) Consideration of short costs.

1) preparation of cash budget;

It is device to help a firm to plan and control the use of cash it is a statement

showing the estimated cash inflows and cash out flows over the planning

horizon. It reveals the timings and size of net cash flows as well as period

during which excess cash may be available for temporary investment.

2) Consideration of short costs.

_____________________________________________________________________________ _




CASH MANAGEMENT

it is the cost associated with a shortfall in the cash needs the cash forecast

presented in the cash budget would reveals of cash shortages.expences

incurred as a result of shortfall are called as “short casts.”

CASH MANAGEMNT MODELS

These models are used to determine optimum cash balance.

1) Baumol model

2) Miller ORR model

3) Orglers model

1) Baumol model: William j Baumol suggest this model. According to this model, optimum

cash level os that level Of cash where the carrying costs level is that level of cash

where the carrying costs and transaction costs are minimum

_____________________________________________________________________________ _




CASH MANAGEMENT

Carrying costs ; this is the cost of holding cash

Transaction cost : this is the cost involved in getting the marketable securities

converted into cash optimum cash level will be at that point where these two costs

are equal

2) Miller ORR model

When demand for cash is not studied and cannot known in advance, the miller

ORR model helps in determining optimum cash balance.

3) Orgler s model:

According this model optimum cash level can be determined by use of

multiple linear programming models. This consists of 3 sections.

1) Selection of the appropriate planning horizon.

2) Selection of the appropriate division variables.3) Formulating off the cash management strategy.

2.1 ANALYSIS AND INTERPRETATIONS:

Analysis and interpretation:

Collection, compilation, classification, tabulat ion and presentation of data

enables the researcher to make appropriate analysis and interpretation. Proper

analysis on the other hand, results in unambiguous observation, suggestions,

conclusions, inductions which may perhaps be the actual aid of the manager in this

decision making process

_____________________________________________________________________________ _




CASH MANAGEMENT

The process by which sense and meaning are made of the data gathered in

qualitative research, and by which the emergent knowledge is applied to clients'

problems. This data often takes the form of records of group discussions and

interviews, but is not limited to this. Through processes of revisiting and

immersion in the data, and through complex activities of structuring, re-framing or

otherwise exploring it, the researcher looks for patterns and insights relevant to the

key research issues and uses these to address the client's brief.

TABLE SHOWING THE PERCENTAGE OF CASH AND

CURRENT ASSETS:

_____________________________________________________________________________ _




CASH MANAGEMENT

Cash and current assets help to find the liquidity and bank position in

various years. And also it helps to find the bank performance. So it is the vital role

in the banking sector to managing appropriate cash and current assets in the bank

TABLE 2.1 (Rs. In Crores)

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61CURRENT

ASSETS

201.51 301.52 390.59

PERCENTAGE 11.15% 11.27% 14.49%

Source: Bank’s Balance Sheet

_____________________________________________________________________________ _




CASH MANAGEMENT

Exhibit 2.1

INTERPRETATION:

As the above table 2.2 is shows that the bank and cash balance increasing every

year More than 10 crores simultaneously. The current assets are increasing for 100

crores every year. Hence the liquidity position of the bank is good and whichassures the customers to provide good facility.

_____________________________________________________________________________ _


0

50

100

150

200

250

300

350

400

450

2009-10 2010-11 2011-12

R s i n c r o r e s

year

cash to current assets

CASH

CURRENT ASSETS



CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND CURRENTLIABALITIES

TABLE 2.2

(Rs in crores)

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61CURRENT

LIABALITY

112.38 119.04 166.70

PERCENTAGE 20% 28.55% 33.95%Source –

bank balance sheet

_____________________________________________________________________________ _




CASH MANAGEMENT

Exhibit 2.2

INTRPRETATION:

As above table 2.2 is showing that the cash balance with regarding to the current

liability of the bank. It indicates that the current liability is increasing every year

_____________________________________________________________________________ _




CASH MANAGEMENT

but not rapidly. While cash reserves also increasing this indicates the credit worthy

towards their customers.

TABLE SHOWING THE PERCENTAGE OF CASH AND OTHER CURRENT ASSETS

TABLE NO 2.3(Rs in

crores)YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61

OTHER CURRENTASSETS

179.03 267.53 333.98

PERCENTAGE 12.28% 12.70% 16.95%

Source -bank balance sheet

_____________________________________________________________________________ _




CASH MANAGEMENT

Exhibit 2.3

_____________________________________________________________________________ _


cash to other current assets

2009-10

2010-11

2011-12



CASH MANAGEMENT

INTERPRETATION:

As above table 2.3 is showing that every year cash balance increased and every

year other current assets increased rapidly because of increasing in balance with

reserve bank of India.

TABLE SHOWING THE PERCENTAGE OF CASH AND TOTAL LIABALITY

TABLE 2.4(Rs in crores)

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61TOTAL LIABALITY 3153.4 4235.74 5618.43PERCENTAGE 0.712 0.80 1.00

Source –bank balance sheet

Exhibit 2.4

_____________________________________________________________________________ _


cash to total liabality

2009-10

2010-11

2011-12



CASH MANAGEMENT

INTERPRETATION:

As above table showing that the cash balance of the bank which is able to repay the

total liability was 0.7% in the year 2009-10. which it has been increased to 1% in the

current year.

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND FIXED ASSESTS

TABLE 2.5(Rs in crores)

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61FIXED ASSETS 202.49 186.17 507.82

PERCENTAGE 11.10% 18.25% 11.14%Source-bank balance sheet

Exhibit 2.5

_____________________________________________________________________________ _


0

100

200

300

400

500

600

2009-102010-11

2011-12

R s i n c r o r e s

yearCASH FIXED ASSETS



CASH MANAGEMENT

INTERPRETATION:

_____________________________________________________________________________ _




CASH MANAGEMENT

As the above table 2.5 shows that the fixed assets dealing in the year 2010-11 with 8%

and rapid increase in the current year which indicates that even cash utilized to

purchase for fixed assets.

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND DEPOSITS

TABLE 2.6( Rs in crores)

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61DEPOSITS 277.09 376.04 479.52PERCENTAGE 8.11% 9.03% 11.43%

Source-bank balance sheet

Exhibit 2.6

_____________________________________________________________________________ _




CASH MANAGEMENT

INTERPRETATION:

As the above table 2.6 shows that the deposit rate increased by every year 35% which

indicates that the bank is attracting more customers by providing good facilities and

good interest rate to the customers. So comparing this deposits with the cash it has

been increased 3.32% of the current year compare to the last 2 years.

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND INVESTMENT

TABLE 2.7

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61INVESTMENT 111.79 120.18 186.17PERCENTAGE 20.10% 28.28% 30.40%

Source bank balance sheet

_____________________________________________________________________________ _




CASH MANAGEMENT

Exhibit 2.7

_____________________________________________________________________________ _




CASH MANAGEMENT

INTERPRETATION:

The investment has been increased for every year because bank is investing indifferent groups like,

a) Government securities.

b) Other approved securities.

c) Shares

d) Debentures and bonds.

e) Investment in subsidiaries/joint ventures.

f) Others (commercial paper, units of mutual fund, preference shares, venture

capital funds)

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND EXPENDITURE OF THE VIJAYABANK

TABLE 2.8

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61EXPENDITURE 246.87 276.65 405.92PERCENTAGE 9.10% 12.28% 13.94%


Exhibit 2.8

_____________________________________________________________________________ _


0

50

100

150

200

250

300

350

400

450

2009-102010-11

2011-12

R s i n c r o r e s

year

cash to expenditure

CASH

EXPENDITURE



CASH MANAGEMENT

INTERPRETATON:

As above table show 2.8 showing that the expenditure of the bank increasing in the

year 2009-10 is 12% compare to 2010-11 and it has been increased in the year 2011-

12 at 46.72% which indicates that banks diversification or expansion of its service to the

customers.

Bank need not to spend higher amount with a view of cost cutting of current years.

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND NET PROFIT

TABLE 2.9

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61 NET PROFIT 126.87 331.34 361.27PERCENTAGE 17.71% 10.25% 15.66%


Exhibit 2.9

_____________________________________________________________________________ _


2009-102010-11

2011-12

y e a r

Rs in crores

cash to net deposits

NET PROFIT

CASH



CASH MANAGEMENT

INTERPRETATION:

As the above table 2.9 shows that bank profit is increased more than double in

the year of 2010 to 2011. It indicates that banks position is good. Which fulfill the share

holders desire and also the bank is attracting new investors.

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND BARROWINGS

TABLE 2.10

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61

BARROWINGS 515.81 198.14 191.88PERCENTAGE 4.35% 17.15% 29.50%Source –bank balance sheet

_____________________________________________________________________________ _




CASH MANAGEMENT

Exhibit 2.10

INTERPRETATION:

As the above table showing that it indicates that barrowings rapidly from 2010 to 2011

which indicates that bank is more credit worthy. By this bank can attract more

customers and investors reserve bank of India to fulfill its necessary and emergency

requirement’s and also to maintain very good relationship with their stake holders.

_____________________________________________________________________________ _


0

100

200

300

400

500

600

2009-10 2010-11 2011-12

R s i n c r o r e s

year

cash to barrowings

CASH

BARROWINGS



CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND ADVANCES.

TABLE 2.11

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61ADVANCES 166.64 242.23 316.89

_____________________________________________________________________________ _




CASH MANAGEMENT

PERCENTAGE 13.49% 14.03% 17.86%Source –bank balance sheet

Exhibit 2.11

INTERPRETATION:

_____________________________________________________________________________ _


0 100 200 300 400

2009-10

2010-11

2011-12

Rs in crores

y e a r

cash to advances

ADVANCES

CASH



CASH MANAGEMENT

As the above table 2.11 showing that bank is providing more loan and advances to

their customers in order to fulfill the customers requirement and compute with other

banks.

It is suggested to bank to make keen observation before providing the loans and

advances to their customers.

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING THE PERCENTAGE OF CASH AND TOTAL BUSINESS

TABLE 2.12

YEAR 2009-10 2010-11 2011-12

CASH 22.48 33.99 56.61TOTAL BUSINESS 447.71 622.48 799.71PERCENTAGE 5.02% 5.4% 7.0%


Exhibit 2.12

_____________________________________________________________________________ _


20%

30%

50%

cash to total business2009-10 2010-11 2011-12



CASH MANAGEMENT

INTERPRETATION:

As the above table 2.12 shows that the rapid increase in the business for every year.

It indicates that the diversification of business and growth of the business is good by

providing good service to the customers and expectation of the business which helps

banks to grow rapidly.

_____________________________________________________________________________ _




CASH MANAGEMENT

FIXED ASSETS TURN OVER RATIO

This ratio indicates the extent to which the investment infixed assets contribute

towards sales if compared with a previous period it indicates whether the investment in

fixed assets has been judicious or not the ratio is calculated as fallows

TOTAL BUSINESSFIXED ASSETS TURN OVER RATIO =--------------------------*100

FIXED ASSETS

TABLE 2.13

YEAR TOTAL BUSINESS FIXED ASSETS RATIO

2009-10 447.71 202.49 2.21%2010-11 622.48 186.17 3.34%2011-12 799.71 507.82 1.57%


Exhibit 2.13

_____________________________________________________________________________ _


0%

24%

33%

43%

fixed asset turn over ratio

YEAR

2009-10

2010-11

2011-12



CASH MANAGEMENT

INTERPRETAION:

As the above table 2.13shows that the total business of 2009-12. it has been

increasing where as the fixed assets also increased rapidly from 2011 to 2012. it

indicates the strong stability of the bank with respective of its total business.

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING GROSS PROFIT RATIO

TABLE 2.14

YEAR GROSS PROFIT TOTAL BUSINESS RATIO

2009-10 633.01 44771.13 1.41%2010-11 696.02 62248.41 1.11%2011-12 660.08 79971.11 0.83%


Exhibit 2.14

_____________________________________________________________________________ _

KARNATAKA STATE OPEN UNIVERSITY - 77 -0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

2009-10 2010-11 2011-12

GROSS PROFIT RATIO

Series1



CASH MANAGEMENT

INTERPRETATION:

As the above table 2.14 shows that the gross profit for the 3 years is small vary but

the total business is increasing every year which indicates that he bank is not focusing

for the profit but it is business.

A high ratio of gross profit to business is assign of good management

_____________________________________________________________________________ _




CASH MANAGEMENT

TABLE SHOWING THE NET PROFIT RATIO

This ratio indicates net margin earned by the bank it is calculated as fallows

NET PROFIT

NET PROFIT RATIO =------------------------* 100TOTAL BUSINESS

TABLE 2.15

YEAR NET PROFIT TOTAL BUSINESS RATIO

_____________________________________________________________________________ _




CASH MANAGEMENT

2009-10 126.88 44771.13 0.28%2010-11 331.34 62248.41 0.53%2011-12 361.28 79971.11 0.45%


Exhibit 2.15

INTERPRETATION:

_____________________________________________________________________________ _


22%

42%

36%

NET PROFIT RATIO2009-10 2010-11 2011-12



CASH MANAGEMENT

As the above table 2.15 showing that the net profit increasing every year which

indicates its growth in the competition world and also it is increase in the total business

every year which indicates the service rendering to their customer is good

_____________________________________________________________________________ _




CASH MANAGEMENT

2.2 FINDINGS:

• The percentage of cash was little bit increased and contingent liability is also

increased from last 3 years.

• The gross profit is increased in the year 2010 and 2011 but in the year 2012 it

is decreased by 5%.

• The percentage of cash was little bit decreased a fixed assets are increasedcompared to last year.

• The percentage of cash is increased in last 3 years as well as the deposit is

also increased in 3 years.

• The net profit is increased from last 3 years but the percentage of cash is low

in 2006-07 and it is increased in 2008 by 34.54%

• The total business is increased from last 3 years and the percentage of cash

is also increased

• The gross profit ratio is decreasing from last 3 years.

• The net profit ratio is increased in2011 but it is decreased by 17.77% in 2012.

_____________________________________________________________________________ _




CASH MANAGEMENT

2.3 SUGGESTIONS:

• Bank need not to spend for higher amount with a view of cost cutting of

current years

• Bank makes keen observation before providing the loans and advances to

their customers.

• A high ratio of gross profit to business is a sign of good management

• Bank should increase its net profit to competate the customers.

• Bank should be suggested that to provide inter bank facility.

• It is to be suggested that bank should start mutual fund facility.

_____________________________________________________________________________ _




CASH MANAGEMENT

BALANCESHEET AS ON 31-3-2011

_____________________________________________________________________________ _




CASH MANAGEMENT

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31-3-2011

_____________________________________________________________________________ _


PARTICULARS Schedule no As on 31-3-2011

1) CAPITAL ANDLIABALITIESa) capital

b) reserves and surplusc) depositsd) barrowingse) other liabilities and

provisions.

TOTAL

2) ASSETSa) Cash and balance with

reserve bank of Indiab) Balance with bank

and money at call andshort notice.

c) investmentsd) advancese) fixed assetsf) other assets

TOTAL

a) Contingent liabilities b) bills for collection

1234

5

6

789

1011

12

43351,78146315,92

3760449,9319814,00

265817,62---------------4235749,25

339971,35

167040,911201840,552422355,22

18617,7385923,49

---------------4235749,25

904802,9679220,13



CASH MANAGEMENT

reservee) interim dividendf) proposed dividend

g) balance carriedforward to balance sheet

TOTAL

4943,195071,94

61088,62

-------------82438,50

_____________________________________________________________________________ _




CASH MANAGEMENT

BALANCESHEET AS ON 31-3-2012

PARTICULARS Schedule no As on 31-3-2012

1) CAPITAL ANDLIABALITIES

a) capitalb) reserves and

surplusc) depositsd) barrowingse) other liabilities

and provisions.

TOTAL

2) ASSETSa) Cash and balance

with reserve bankof India

b) balance with bankand money at call

And short notice.c) investmentsd) advancese) fixed assets

f) other assets TOTAL

a) Contingent liabilities

1

234

5

6

789

10

11

12

43351,78

202553,24479520133191887,20

385437,44--------------5618430,99

586154,94

43581,311861732,023168921,61

50782,20

85923,49----------------4235749,25

904802,96

_____________________________________________________________________________ _




CASH MANAGEMENT

b) bills for collection 79220,13

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31-3-2012

PARTICULARS Schedule no For the year ended 31-3-2012

1) INCOMEa) interest earnedc) other income

TOTAL

2) EXPENDITUREa) interest expendedb) operating

expensesc) provisions and

contingencies

TOTAL

3) PROFIT/ LOSSa)net profit for the year.

add: transfer frominvestment fluctuation

reserve.

add: profit broughtforward

1314

15

16

398341,4743715,37

-----------------442056,84

305841,76

70127,43

29959,82---------------

405929,01

36127,83

------

60612,77

_____________________________________________________________________________ _




CASH MANAGEMENT

Less: transferred fromvibank housing financeltd. TOTAL

4) APPROPRIATIONSa) Transfer to statutoryreserve.

b) Transfer to specialreserve in terms of sec31(1) of the income taxact.c) transfer to capitalreserve

d) transfer to generalreservee) interim dividendf) proposed dividendg) balance carriedforward to balance sheet

TOTAL

-----------------

96740,60

9031,96

2500,00

----

(463)-----

10143,88

75089,39 -------------

96740,60

deepak cah management

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