PREFACE

The management is primarily a human activity. For the effective managerial functions the professional art and the science of working with and through the people is very important. Managerial studies are hence, expected to be not only theoretical but also practical to equip the student with a sound knowledge only then the students coming, out of many managerial educational institution after having been shaped with knowledge of various managerial function could be able and efficient of plan , organize and control the five Ms that means men, machine, material, money and method in contributing their respective shape in achievement of both organizational and individuals motives. The banking sector is a servicing industry and it deals in providing financial services. Financial statements for banks present a different analytical problem than manufacturing and service companies. As a result, analysis of a bank's financial statements requires a distinct approach that recognizes a bank's somewhat unique risks. As one of the most highly regulated banking industries in the world, investors have some level of assurance in the soundness of the banking system. As a result, investors can focus most of their efforts on how a bank will perform in different economic environments. Comparative study of balance sheet makes us to know the amount of deposits, borrowings, availability of funds, reserves, and the cash position. The soundness of bank can be determined with the study of financial statements.

CONTENTS

CHAPTER
CHAPTER- I CHAPTER- II CHAPTER- III CHAPTER- IV CHAPTER- V CHAPTER- VI CHAPTER- VII CHAPTER- VIII CHAPTER-IX CHAPTER-X CHAPTER-XI CHAPTER-XII

CONTENT
INTRODUCTION BANKS PROFILE RESEARCH METHODOLOGY BALANCE SHEET OBJECTIVES & TOOLS OF STUDY BALANCE SHEET OF APEX BANKS DATA ANALYSIS AND INTERPRETATION LIMITATIONS OF THE STUDY FINDINGS AND SUGGESTIONS CONCLUSION ANNEXURE BIBLIOGRAPHY

PAGES
1-4 5-27 28-31 32-36 37 38-41 42-54 55 56-57 58 59-62 63

INTRODUCTION
MEANING OF BANK
An organization usually a corporation, chartered by a State or Federal government, which does most or all of the following: Bank receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; Discounts notes, Makes loans, And invests in securities; collects cheques, drafts, and notes;

Certifies depositors cheques; and issues drafts and cashier's cheques.

MEANING OF BANKING
Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time. Banking = holds an active account at a bank. Normally used in relation to depositing or cashing payroll checks. Non-Banking = Does not hold an active or open account at a bank. Normally referred to when one is cashing payroll checks at a check cashing location. Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated as the Bank of
1

Calcutta in June 1806, and immediately became the Bank of Bengal. This was one of the three presidency Banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India.

Types of banks
1. Retail bank
2. Commercial

bank

3. Investment bank 4. Central bank 5. Credit unions 6. Online banks 7. Savings and loans

1. A retail bank is a bank that works with consumers, otherwise known as 'retail customers'. Retail banks provide basic banking services to the general public, including:

Checking and savings accounts CDs Safe deposit boxes Mortgages and second mortgages Auto loans Unsecured and revolving loans such as credit cards
2

2.

A commercial bank is a bank that works with businesses. Commercial banks handle banking needs for large and small businesses, including:

Basic accounts such as savings and checking Lending money for real and capital purchases Lines of credit Letters of credit Lockbox services Payment and transaction processing Foreign exchange Commercial banks often function as retail banks as well, serving

individuals along with businesses. 3. Investment banks help organizations use investment markets. For example, when a company wants to raise money by issuing stocks or bonds, an investment bank helps them through the process. Investment banks also consult on mergers and acquisitions, among other things. Investment banks primarily work in the investment markets and do not take customer deposits. However, some large investment banks also serve as commercial banks or retail banks. 4. A central bank is an organization responsible for managing banking activity. Within the USA the central bank is the Federal Reserve, or 'the Fed'. Other countries have central banks as well. Their roles are similar, but they may have different objectives. In the US, the central bank has three primary goals:

Conduct monetary policy Supervise and regulate financial firms Provide financial services Credit unions are nonprofit organizations that strive for service over profitability. A credit union is an institution owned by the members or customers. Contrast this with banks where the customers are just customers. Banks answer to profitability.

5.

6.

Online banks are banks that you primarily (or exclusively) use on the Internet. Online banks allow you to have more choice and flexibility. You can do things on a computer, and you often get more competitive rates from online banks. They claim that they do not have the overhead and expenses associated with brick-and-mortar banks, so they can pass the savings on to you.

7.

Savings and Loans (S&L's) are specialized banks created to promote affordable homeownership. After World War II, the government helped build the Savings and Loans industry by insuring deposits on savings accounts. This encouraged people to save their money, despite federally-regulated low interest rates.

*******

History of Apex Bank

M.P. State Coop. Bank Ltd. had been registered on 02/04/1912 (Under Cooperative Act 1912, dhara 2) at Jabalpur naming Provisional Cooperative Bank Ltd. Central Provinces bar, later on its Head Office has been transferred to Nagpur. Bank has started its operations with the initial capital of Rs.5.00 lakhs aiming to provide finance in the field of Agriculture. Earlier individual shareholders were nominated as the representatives on the board of the Bank, to provide the democratic status to the Bank; maximum share has been transferred to cooperative societies and District Central Cooperative Banks, which started a movement to form a Board of Apex Bank with the representatives from Members Cooperative Institutions. In the year 1956 Madhya Pradesh Cooperative Bank Ltd. Nagpur has been divided and came into existence as Mahakaushal Coop Bank, Jabalpur with the affiliations of 14 District Banks. With the reorganization of the Indian state in the year 1956 and formation of new Madhya Pradesh state on 01 Nov, 1956 Mahakaushal Coop Bank has been renamed as M.P.RAJYA SAHAKARI BANK MYDT. (M.P.STATE COOP BANK LTD.)expanding their working with 56 District Central Coop Banks simply on the basis of one district one bank rule the number of District Central Coop. Banks come to 52 in 1956,48 in 1961,44 in 1966,43 in 1968 and finally 45 after division of Bhopal District Central Coop Bank, and Raisen District Central Coop Bank. again in November 2000 after the division of Madhya Pradesh State and formation of New Chattisgarh State 7 Districts Central Coop Banks has transferred to the new state and rest 38 districts Central Coop Banks has been remained with Madhya Pradesh State Coop Bank.

Apex Bank Profile

M.P.RAJYA SAHAKARI BANK MYDT.(Apex Bank) is a premier organization providing long term, medium term and short term Agriculture finance in the state with help of NABARD through District Central Coop Banks and Primary Agriculture Credit Cooperatives Societies (PACCs)to farmers & different strata of the society in order to the fulfill their financial requirements. Apex Bank is operating with their 20 Branches in the state serving through the attractive Loan and deposit schemes. Apex Bank is playing a pivotal in the field of providing rural finance in the M.P.State providing Agriculture/Non-Agriculture Loans and Advances with the help of NABARD under various schemes also offering commercial loans to customer under the Loan portfolio such as Consumer Loans. Housing Loan, Higher Education Loan, Project Loan, Vehicle Loan etc. to name a few.

Board of Directors
Consolidated Financial Status of District Central 1 2
3 4 5 6 7 8 9 10 11 12 13 14 15 16 Shri Bhanwar Singh Shekhawat Smt. Sarita Singh Shri Kailash Soni Shri Yashpal Singh Sisodia Shri Kailash Sharma Smt. Savatri Singh Shri Maniram Shri Asharam Shri Ram Vilas Patel Shri Ved Singh Thakur Smt. Sampatiya Bai Uike Shri Ramchandra Hirajee Shri Amrik Singh Shri Ranjeet Singh Chauhan Shri Rajpal Singh Sisodia Commissioner Cooperative & Registrar Cooperative Society M.P. Chief General Manager, National Agri. & Rural Development Bank, Regional office Bhopal. Managing Director, M.P. State Cooperative Bank, Bhopal.
9

Chairman Vice Chairman Vice Chairman Member Member Member Member Member Member Member Member Member Member Member Member Member Member Member

17 18

Co-operative Bank
s. No. 1 2 3 4 5 6 7 8 9 No. of DCCB Share Capital Reserves and Other Funds Deposits Borrowings Loans & Adv. O/S. Working Capital Profit for the year (Amt.) No. of Banks Loss for the year 38 342.77 1409.08 5226.25 1883.37 5262.44 8823.44 82.85 37 1.54 1 45.13 15 Loss 406.24 23 330.53 21 287.73 19 38 392.23 1568.16 6041.53 1810.75 5422.75 984 6.34 121.64 37 4.49 1 65.45 17
PARTICULARS

2007-08

2008-09

2009-10 Tentative 38 451.06 1725.65 7050.35 1919.40 5802.34 11027.90 175.70 38 0 0 94.90 19

10 (Amt.) 11 No. of Banks Accumulated Profit 12 (Amt.) 13 No. of Banks Accumulated 14 (Amt.) 15 No. of Banks Note: Above figures are in Crore

BRANCHES OF APEX BANK IN BHOPAL

10

1. Main Branch T.T. Nagar 2. Arera Colony 3. M.P. Nagar 4. Ibrahimpura 5. Indrapuri Piplani 6. Kotare Sultanabad 7. Malik Market Hamidia Road
.

11

The Reserve Bank of India, India's central banking authority, was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in]

In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India."

12

The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors. Commercial Banking Commercial Banking in India provides a full range of products and services: Loan Products, Corporate Finance, Financial Markets, Payments & Cash Management, Trade Finance Solutions and Debt Capital Market. RBI on Cooperative In 1935 Reserve Bank of India was established. A separate section for providing agricultural credit was opened. In 1937 this section studied various problems of Indian co-operative movement and submitted its report stating that development of co-operative societies should be given priority.

National

Bank

for

Agriculture

and

Rural

Development (NABARD)
(NABARD) is an apex development bank in India based in Mumbai, Maharashtra. NABARD was established on the recommendations of Shivaraman Committee, by an act of Parliament on 12 July 1982 to implement the National Bank for Agriculture and Rural Development Act 1981 NABARDS ROLE: 1: serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas
13

2: co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India, State Governments, Reserve Bank of India (RBI) and other national level institutions concerned with policy formulation undertakes monitoring and evaluation of projects refinanced by it. NABARD's refinance is available to State Co-operative Agriculture and Rural Development Banks (SCARDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs), Commercial Banks (CBs) and other financial institutions approved by RBI. While the ultimate beneficiaries of investment credit can be individuals, partnership concerns, companies, State-owned corporations or co-operative societies, production credit is generally given to individuals. NABARD's role in rural development in India is phenomenal.National Bank apex Development Bank by the Government of India with a mandate for facilitating credit flow for promotion and development of agriculture, cottage and village industries. For Agriculture & Rural Development (NABARD) is set up as an

NABARD SANCTIONS FOUR TYPES OF LIMITS

ST (SAO)
14

OTHER CROPS

OPP

NPDP

DTP

ST (SAO): SHORT TERM SEASONAL AGRICULTURAL OPERATION. OPP: OILSEED PRODUCTION PROJECT PROGRAMME NPDP: NATIONAL PULSES DEVELOPMENT PROGRAMME DTP: DEVELOPMENT OF TRIBAL POPULATION OTHER CROPS (EXCEPT OPP, NPDP, DTP)

ST (SAO) Production Loan Different lines of production credit limit under ST (SAO) are made available to the DCCBs for financing agriculture purposes viz. credit limit for oilseed (OPP), Pulses (NPDP), Development of tribal populace (DTP) and other crops (STN)

A.

ST Credit Limit for Other Crops During the year 2010-11, credit limit of Rs. 1586.02 crores was

sanctioned for financing in other crops to DCCBs for financing to member farmers other than oilseeds & pulses crop.
15

B.

Oilseed Production Programme During the year 2010-11 under Oilseed Production Programme, Apex Bank has sanctioned aggregate credit limit to the tune of Rs.965.19 crores to DCCBs for disbursing the crop loan to the farmer members of the PACS.

C. Credit limit for Pulses (NPDP) 3 DCCBs were sanctioned total credit limit of Rs.32.34 crores for disbursement in pulses crops for the year 2010-11. D. Credit limit for Development of Tribal Population

(DTP) In the year 1995-96, Govt. of India has started special programme for development of Tribal populace. Under the above programme, 19 tribal dominated districts of Madhya Pradesh have been selected and credit limit to the tune of Rs. 218.35 crores was sanctioned to 14 DCCBs in the year 2010-11.

THREE TIER STRUCTURE OF APEX BANK

S.C.B. D.C.C.B P.A.C.S

16

FARMERS
SCB DCCB PACS State Co-Operative Bank (Apex Bank) District Central Co-Operative Bank Primary Agriculture Co-Operative Society

In apex bank there is three tier structure in which first is S.C.B which is at state level, State Level Implementing and Monitoring Committee (SLIC) under the chairmanship of Secretary Finance and similarly at DCCB Level District Level Implementing and Monitoring Committees (DLICs) have been constituted under the chairmanship of District Collectors. PACS come under DCCB, Farmers are provided loan amount as a member of PACS. {The members are elected by PACS, as member of S.C.B.}NABARD finances only 45% remaining 55% is arranged by society, DCCB and apex bank.

Basically farmers go to PACS if not available then loan amount is forwarded to DCCB if again loan could not be sanctioned then case is forwarded to apex bank. Formation of co-operative bank to help the farmers in three distinct periods as for : 1. short term ( for less than one year) 2. medium term (between one to five years) 3. long term (more than five years)

17

NABARDS

ROLE

AND

FUNCTIONS

ARE

SUMMARISED BELOW:

Credit functions

Developmental & promotional functions Supervisory functions Institutional capacity building

Customer relationship management (CRM) helps to achieve goals.

LOANS
Agricultural Loans And Advances Provided By Apex Bank Are: 1.

ST (SAO) Production Loan.

2. Oilseed production programme. 3. Credit Limit for Oilseeds. 4. Credit Limit for Development Tribal Population. 5. ST Credit Limit for the other Crops. 6. Medium Term Conversion /Rephasement Loans.
18

7. Disbursement of Loan to small Marginal Farmers.

8.

Fertilizer Cash Credit limits.

9. Kisan Credit Card scheme. 10.Integrated Rural Development Programme/ Swarnjayanti gram Swarojgar(SGSY)

Non-Agricultural finance: 1. Financing for Purchase of Shares of Industrial Coop Units. 2. Finance for Distribution of Chemical Fertilizers. 3. Finance for Working Capital. 4. Financing of Agro-Industrial Coop Units. 5. C.C. Limits for procurement & marketing of agriculture Produce. 6. Financial Accommodation for Public Distribution Scheme. 7. Financial for working Capital Requirements of Coop Processing Units. 8. Financial Accommodation for Weavers & Ind Coop Units. 9. Financial Accommodation to Cooperatives and other institutions. 10. Loans against Pledge Ornament

VARIOUS TYPES OF LOANS

MADHYA PRADESH RAJYA SAHAKARI BANK MYDT; BHOPAL Home Banking - Individual Loan Rates w.e.f. 15.02.2010

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1. CONSUMER LOAN

Purpose For House hold items Max. Loan Rs. 60,000/Amount Margin Money Interest 25%, 10% (in group cases) , 15% (in case of Employees*) 12.50% , 9.5% p.a. (in case of Employees*)

Rate Insurance In case of vehicle. Repayment 5 years on monthly basis Period 2. VEHICLE LOAN Top Purpose For personal use and Commercial use Max. Loan Light- Rs.5.00 lacs (Personal) Amount Margin Money Interest Heavy-Rs.10.00 lacs (Commercial) 15.0% & 25.0% , 15% (in case of Employees*) 12.0%, 9.5% p.a. (in case of Employees*)

Rate Insurance Insurance of vehicle. Repayment 5 years on monthly basis Period Security:i) Salaried Guarantee of 1 person + Employer acceptance letter /authority letter/Advance Cheques Guarantee of 1 person + Collateral Security i.e. N.S.C. /

ii) Non

F.D.R./Advance Cheques Salaried 3. HOUSE LOAN Top Purpose For purchases/construction of Houses, Modernization Max. Loan Rs. 15.00 lacs Amount Margin Money 20.0% up to Rs. 25,000 25.0% up to Rs. 50,000
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********

RESEARCH METHODOLOGY
Research in common parlance refers to search for knowledge. Research is an art of scientific investigation. The advanced learners dictionary of current English lays down the meaning of research as a careful investigation or inquiry especially through search for new facts in any branch of knowledge.

21

Research is an academic activity and as such the term should be used in technical sense. According to CLIFFORD WOODY research comprises defining and redefining problems, formulating hypothesis or suggested solutions; collecting, organizing and evaluating data; making deduction and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis. The term approach refers to the system.

PURPOSE OF RESEARCH
The purpose of research is to discover answer to questions through the applications of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. Though which research study has its own specific purpose. We may think of research objectives as falling into no. of following broad grouping:To gain familiarity with a phenomenon or to achieve new insights into it.
1)

To portray accurately and characteristics of a particular individual,

situation or a group.
2)

To determine the frequency with which something occurs or with

which it is associated with something else.

3)

To test a hypothesis of a casual relation between variables.

RESEARCH PROCESS
Research Process Consists Of Series Of Actions Or Steps Necessary To Effectively Carry Out Research And The Desired Sequencing Of These Steps.
22

1) Formulating the research problem 2) Extensive literature survey 3) Development of working hypothesis 4) Preparing the research design 5) Determining sample design 6) Collecting the data 7) Execution of the project 8) Analysis of data 9) Hypothesis testing 10) Generalizations and interpretation 11) Preparation of report or thesis The last point is very important as it contains the layout of the report that is preliminary pages; the main ext; and the end matter. In preliminary pages report should carry title and data followed by acknowledgement and forward. Then there should be table of contents followed by a list of tables, graphs and charts, if any, given in the report. The main text includes introduction; summary of findings; main report; conclusion. The end part should be enlisted in kinds of bibliography, i.e. list of books, journals, reports, etc. index should be given specially in a published repo

HYPOTHESIS

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MEANING: - HYPOTHESIS means assumption or some supposition to be proved or disproved. But for a researcher hypothesis is a formal question that he intends to resolve research statement is a predictive statement, capable of being tested by scientific methods, it relates an independent variable to dependent variable.

METHODS OF DATA COLLECTION

The task of data collection begins after a research problem has been defined and research design. While deciding about the method of data collection to be used for study. The researcher should keep in mind two ways of data viz. primary and secondary. The primary data are those which are collected for the first time, and thus happen to be original in character. The secondary data , on the other hand are those which have already been collected by someone else and which are passed through the statistical process.

COLLECTION OF PRIMARY DATA:-

Collection of data is done during the course of doing experiments research of the descriptive type and sample surveys, thus in other words, means that there are several methods of collecting primary data , particularly in surveys as (i) observation method; (ii) interview method; (iii) Through questionnaires; (iv) through schedules.

COLLECTION OF SECONDARY DATA:24

Secondary data are those which are already collected and analyzed by someone else. Secondary data may either be published or unpublished data. Researcher can refer various publications of central, state and local governments. books and magazines, news papers reports and publications of various associations connected with business and industry, banks, stock exchange, etc; in different fields ; and public records and statistics. The sources of unpublished data may be in the form of diaries, letters, unpublished bibliographies and autobiographies and also may be available with scholars and research workers, trade associations. Researcher must be very careful in using secondary data.

********

MEANING OF FINANCIAL STATEMENT

Final accounts are those accounts which are prepared with the object to specify the trading results of a certain period and financial position on a specific date. these are called as final accounts because they are prepared at the end of financial year and after closing of the final account no records are done in that financial year. After closing of the account the next financial year begins. Final account consists of Trading A/C, Profit &Loss A/C And Balance Sheet.

BALANCE SHEET

25

Balance sheet is a statement or list of balances of account. It is generally prepared at the last day of that financial year. It is shown in summarized form the capital is employed and the sources from where the capital has been obtained and how that capital is employed, i.e. the various assets by which it is represented. PURPOSE The purpose of the balance sheet is to show a company's Assets, Liabilities and Equity at a given point in time, usually the company's fiscal year end. This is as opposed to an Income Statement, for example, which shows earnings throughout the year. A balance sheet is as of a given day. it does not show activity for a whole year, although you can compare year-toyear balance sheets to deduce some information.

A balance sheet is divided into two sides. On one side is the total assets of the Company, such as cash, working capital, fixed assets (machinery, land, equipment, autos, etc), and other assets. On the other side is the Liabilities, such as accounts payable, debt, and other liabilities. Assets minus liabilities equal equity, which is the remaining ownership in the company - that accorded to shareholders. BANKS BALANCE SHEET A bank's balance sheet is different from that of a typical company. You won't find inventory, accounts receivable, or accounts payable. Instead, under assets, you'll see mostly loans and investments, and on the liabilities side, you'll see deposits and borrowings

26

CASH surprisingly, cash represents only 2% of assets. That's because the bank wants to put its money to work earning interest. If the bank simply sticks its cash in a vault and forgets about it, it will have a hard time making a profit. Thus, a bank keeps most of its money tied up in loans and investments, which are called "earning assets" in bank-speak because they earn interest. SECURITIES Banks don't like putting their assets into fixed-income securities, because the yield isn't that great. However, investment-grade securities are liquid, and they have higher yields than cash, so it's always prudent for a bank to keep securities on hand in case they need to free up some liquidity. The purpose of holding securities is for the bank to have safe, liquid assets available, so the banks primarily hold Treasuries and agency debt (such as Fannie Mae- or Freddie Mac-issued debt), which yield around the rate of the current longterm U.S. Government yield, anywhere from 4%-6%. LOANS Loans represent the majority of a bank's assets. A bank can typically earn a higher interest rate on loans than on securities, roughly 6%-8%. You can find detailed information about the rates earned on loans and investments in the financial statements. Loans, however, come with risk. If the bank makes bad loans to consumers or businesses, the bank will take a hit when those loans aren't repaid. Because loans are a bank's bread and butter, it's critical to understand a bank's book of loans. OTHER ASSETS Other assets, including property and equipment, represent only a small fraction of assets. A bank can generate large revenues with very few hard assets.
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ASSESSING ASSETS A bank's assets are its meal ticket, so it's critical for investors to understand how its assets are invested, how much risk they are taking, and how much liquidity the bank has in securities as a shield against unforeseen problems. In general, investors should pay attention to asset growth, the composition of assets between cash, securities, and loans, and the composition of the loan book Now that we've looked at a bank's assets, we also need to understand the other side of the balance sheet -- its liabilities, which are how a bank finances its assets. In a previous article, we took a look at the asset side of a bank's balance sheet. Now we take a look at the other side If a bank's yield-producing earning assets are its meal ticket, then its liabilities and shareholder equity are its lifeblood. Basically, a bank borrows at low interest rates from depositors, creditors, and other banks, and it lends at a higher interest rate to real estate developers, homeowners and small businesses (which is why banks are referred to as "spread lenders"). As a result, a bank's financing base is critical. The more financing it gets at a lower rate, the more money it can make by lending that money out and collecting the spread. The best way to judge the strength of a bank's financing base is to check out its "sources of funds" footnote.

DEPOSITS Deposits are a bank's most important source of financing. Not only do most checking, demand, NOW, and savings deposits yield low or no interest rates, which means the bank is paying almost nothing for the use of this money, but they are often a stable and growing financing base.
28

BORROWINGS Banks tend to shun the use of other sources of borrowings, such as borrowings from other banks through federal funds purchases and repo agreements, bank notes, long-term debt, and commercial paper. Unlike core depositors, who for the most part are happy to receive any interest at all, these lenders demand and receive higher yield, so banks try not to use too much in the way of "other borrowings." Commerce, a bank renowned for its ability to attract deposits, used other borrowings for only 6.5% of its borrowing base. PNC, which has a more complicated mix of business requiring more diverse funding sources, had 15.1% of funds from other borrowings, with yields ranging from 3.9% to 6%.

SHAREHOLDER'S EQUITY Shareholder's equity is the part that you, the shareholder (as opposed to depositors and other creditors), are financing. Because banks, after paying depositors and creditors, only earn a small return on their assets, often only 0.75% to 1.5%, they must leverage each dollar of equity into $10 to $15 worth of assets to achieve a satisfactory return on equity of 10% to 15%. When investing with a bank, always make sure to take a glance at the sources of funds footnote. Check out what mix of its asset base is funded by noninterest-bearing deposits, as well as other low-cost sources, and check out the trend in the funding composition over time. A bank that can grow its low-cost deposit base over time should do well, but a bank that increasingly has to resort to offering high-yield CDs could see its margins squeezed.

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***********

OBJECTIVES OF THE STUDY

1) To analyze the financial statements of apex bank 2) To know the strength and weakness of the bank. 3) To find out profitability position of the bank. 4) To find out the liquidity position of the bank. 5) To take decisions for future as how much should be the investment by analyzing the profits/losses of the bank. 6) To interpret the results at the end of financial year.

TOOLS OF ANALYSIS
It is essential to use a systematic research methodology for the assessment of a project because without the use of a research methodology analysis of any company or organization will not be possible.

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In the present analysis of M.P. RAJYA SAHAKARI MYDT. BANK mostly secondary data has been used. It is worth a while to mention that I have used the following types of published data:

Balance sheet; Profit & loss account; Prospectus of the bank;

General body meeting reports;

BALANCE SHEET OF APEX BANK

MAJOR LIABILITIES OF THE BANK ARE: 1: SHARE CAPITAL 2: RESERVES AND FUNDS 3: DEPOSITS 4: BORROWINGS FROM OTHERS FOR BUSINESS 5: OTHER LIABILITIES 6: SURPLUS

1. SHARE CAPITAL
increment from past years.

Share capital of bank was 100 crore in the Share capital has basically two parts a)

year 2007-08 while in the year 2008-09 & 2009-10 is 200 crore so there is authorized ; and b) paid up capital ;

31

In year 2010, the structure of paid up capital is CCB having 126.77 crore ; STATE having 108 crore and nominal having 116 crore. Co-operative credit structure is apex bank; district cooperative bank; pacs .

2. RESERVES AND FUNDS

Agricultural credit stabilization fund is Rs. 68 crore.

Reserve is increasing

every year . in statutory reserve fund 25% yearly profit to this fund.

3. DEPOSITS

a) fixed deposits (FD)

b) Saving bank deposits (SB) c) Current deposit

FIXED DEPOSITS

central bank (2410 cr) institute (201 cr)

individual (214 cr)

TOTAL DEPOSITS

FD (2827 crore)

SB (262 crore)

current (200 crore)

SAVING BANK DEPOSITS (262 CRORE)

32

Individual (134 cr.) (128 cr.)

Other societies

CURRENT ACCOUNT:

current account has basically three pats one is

central bank (167 crore) , individual (23 crore), and other as 10 crore. 4. BORROWINGS (1861 CRORE) : Bank borrows funds from NABARD for short term , medium term and long term. 5. OTHER LIABILITIES: dividend. 6. BRANCH ADJUSTMENT A/C : If its credit is more, then recorded in liability side ; and if debit is more, then recorded in debit side. 7. INTER BRANCH ADJUSTMENT A/C: this is increasing every year which shows good sign. 8. OVERDUE INTEREST RESERVE: this interest is unchanged in all three years so no effect in any year. 9. INTEREST PAYABLE A/C: Its decreasing year by year so its good sign for bank as less interest is for pay. There are reasons for loss in branches due to deposit has been taken and loan is not granted. MAJOR ASSETS OF THE BANK ARE: 1: CASH AND BANK BALANCE 2: INVESTMENTS
33

it includes bills payable and unclaimed

3: LOANS AND ADVANCES 4: OTHER ASSETS 5: LOSSES; IF ANY 1: CASH AND BANK BALANCE: cash is 3 crore and cash with other bank i.e. RBI , SBI, nationalized banks as PNB commercial bank. 2: INVESTMENT: MONEY AT CALL AND SHORT NOTICE (2032 CRORE); investment in state & govt. securities (769 crore) and in other trustee securities (5861 lacs) Investment in cooperative & other shares (823 crore) i.e. (2032+ 823= 2855) crore is total investment amount. 3: LOANS & ADVANCES (2503 CRORE): it is divided into three parts short term (2389 crore) , medium term(97 crore) and long term(16 crore) ; loans are provided; a) to central bank (all kinds of short , mid and long term) b)to institutes c) to individuals {for individuals personal, house, car, education loans are provided} 4: OTHER ASSETS: It consists of building, furniture, vehicles, computers hardware & software, arms & ammunitions, library, staff advances, leave fare advance, medical advance, advocate advance, legal charges, cader officer (ceo manager), managers check (office advance), cto( central telegraph office), clearing house a/c, (daily at 10:30 all bank conduct at a place and interchange their checks) and at the last day of the month clearing house a/c review the checks. , One time settlement a/c, tds receivable(tax deduction)

34

REVIEW ON BALANCE SHEET OF APEX BANK

35

1.SHARE CAPITAL The authorized share capital of the bank is Rs..200 crore. The paid up share capital of the bank which was at Rs.122 crore as on 31st mar 2009 , increased and stood at Rs. 127.98 crore as on 31st mar 2010. The increase of Rs.5.96 crore in the paid up share capital during the year was mainly on account of investment by the DCCB of the state to fulfill the condition related to maintenance of prescribed ratio against borrowings from apex bank.

year 2007-08 2008-09 2009-10

SHARE CAPITAL 110.93 122.02 127.96

INTERPRETATION: from this chart it can be found out that there is increase of 10% share capital in year 2009 as compared to previous year and 15.35% in 2010.

2.RESERVE FUND & OTHER FUNDS

36

The reserve fund & other funds of the bank which amounted to Rs. 477.23 crore on 31st mar 2009 increased to Rs. 501.40 crore as on 31st mar 2010.

year 200708 200809 200910

RESERVES 458.98 477.23 501.4

INTERPRETATION: In reserves there is increment of 3.97% in year 2009 & about 5.26% of increase in 2010 so we can estimate that reserve amount has been raised due to cover losses for future it also reveals that there is some more profit.

3.DEPOSITS The deposits of the bank have increased by Rs. 367.49 crore during the year & stood at
37

Rs. 3290.70 crore as on 31st mar 2010 as against Rs. 2923.21 crore on 31st mar 2009.

year 200708 200809 200910

DEPOSITS 2923.21 2440.9 3290.7

INTERPRETATION: If we study for three years ,deposits amount is decreased by 16.5% in 2009 but raised by 12.57% in 2010 as fluctuating due to deposit done by public in bank.

4.BORROWINGS
38

The borrowings from the NABARD and other financial institutions were at Rs.1861.48 crores as on 31st mar 2010.
year 200708 200809 200910 BORROWINGS 1116.76 1417.27 1861.48

INTERPRETATION: there is continuous increment in amount by 26.9% in 2009 & 66.7% in 2010 which shows that borrowings have been done more year by year by bank from different sources and shows good sign from banks point of view.

5.INVESTMENTS
The investments of the bank have increased by Rs. 561.69 crore during the year and
39

stood at Rs. 2856.81 crore as on 31st mar 2010 as against Rs. 2295.12 crore as against 31st mar 2009. INVESTMEN
year

200708 200809 200910 1227.1 2295.12 2856.81

INTERPRETATION: More & more investments has been done by apex bank as we can calculate in percentage which is increased by 87% in 2009 as well as 132% from 2008 to 2010.

6.LOANS & ADVANCES

The outstanding loans and advances of the bank which were at Rs. 2293.42 crore as on
40

31st mar 2009 increased and stood at Rs. 2503.43 crore as on 31st mar 2010. Thus the increase of Rs. 210.01 crore has been recorded during the year.
LOANS & year 2007-08 200809 200910 ADVANCES 2450.12 2293.42 2503.43

INTERPRETATION: On comparison it was found out that loan amount has been decreased by 6.39% in 2009 but it was increased by 2.17% from year 2008 to 2010, It means there was shortfall in second year but again it was raised, depends upon the loan amount sanctioned during the year by S.CB.(Apex bank) , DCCB, PACS .

DATA ANALYSIS & INTERPRETATION

41

CURRENT ASSETS
PARTICULARS CASH IN HAND CASH IAT BANK SHORT TERM ADVANCES INTEREST RECEIVABLES DEBTORS TOTAL 2007-08 4233648708 7944020.02 24501240939 675748983.2 8957383.41 29427540034 2008-09 2752898429 8659459.09 22934219328 916621254.9 5056932.98 26617455404 2009-10 3031340898 9212025.75 25034271562 1078046943 2938139.63 29155809568

INTERPRETATION: In the year 2007-08, current assets were 294 crores , in 2008-09 , it was 266 crore and now its 291 crores which shows that there was continuous changes in assets every year. It shows that there was decrement in second year but sign for bank. again raised and reached to same level as was in 2007-08 so it is good

42

CURRENT LIABILITIES
CURRENT LIABILITIES

PARTICULARS SHORT TERM BORROWINGS INTEREST PAYABLE BILLS PAYABLE TOTAL

2007-08 11167647547 310913532.9 8957383.41 11487518463

2008-09 14172724398 308095053.2 5056932.98 14485876384

2009-10 18614822520 255779586.9 2938139.63 18873540247

INTERPRETATION: In the year 2007-08, liabilities of bank was 114 crore , in the year 144 crores and in current year reached to 188 crores as there is gradual increment every year .

Note: All Above Mentioned Amounts Are In Crores.

43

CURRENT RATIO
Year 2007-08 2008-09 2009-10 Current asset 29427540034 26617455404 29155809568 Current liabilities 11487518463 14485876384 18873540247 Current ratio 2.561697 1.837476 1.544798

CURRENT RATIO = CURRENT ASSETS / CURRENT LIABLITIES

INTERPRETATION:

current ratio reveals about the

current assets & liabilities, it compares the ratio of all the years and also known as working / solvency ratio. After studying it was found that the ratio of assets to liabilities here is 2.56:1 , 1.84:1 and 1.54:1 in corresponding years .

44

CASH RATIO
CASH+ BANK+ YEAR 200708 200809 200910 MAK SEC 4241592728 2761557888 3040552924 TOTAL CURRENT LIABILITIES 11487518463 14485876384 18873540247 CASH RATIO 0.3692349 0.19063795 8 0.16110135 6

CASH RATIO= (CASH+ BANK+ MARK. SECU.)/ TOTAL CURRENT LIAB

INTERPRETATION:

This ratio determines about the

cash position in terms of ratios and also called super quick ratio , it is clear while study that ratios is in decreasing order in all successive years & we can estimate that cask & bank balance is less when compared in all three years. So bank should focus on
45

cash availability & should try to take some measures to increase its cash viability.

WORKING CAPITAL
WORKING CAPITAL= CURRENT ASSETS CURRENT LIABLITIES
YEAR 200708 200809 200911 Current Asset Current Liabilities WOR. CAP.(in crores) 17940021571 12131579020 10282269321

29427540034 26617455404 29155809568

11487518463 14485876384 18873540247

46

PERCENTAGE OF GROWTH OVER

PREVIOUS YEAR

47

This chart is complete overview which reveals the exact and true picture of financial position of apex bank. There is increment in all the main items of balance sheet except reserves. This percentage shows that share capitals part is increased by 0.79%, deposit (12.57%), borrowings (27.74%), loans (9.16%), investments (24.47%), per employee business (11.78%).Borrowings has increased in large proportion while share capital in less; we can estimate that bank has done borrowings more as compared to all other items of bank. Therefore it needs to focus attention to other items mainly on reserves as well as needs growth in all the sectors specially to loans & advances.

***************

48

LIMITATIONS OF THE STUDY

1) The research work is mainly based on secondary data i.e. it is based on audited accounts and its audited accounts are ambiguous then the result will be misleading. 2) Less importance has been given to primary data which is actually the original data and more reliable.
3)

Time was the major constraint.

FINDINGS
It was found that the membership was reducing year by year. The reasons for the reluctance to join the cooperatives were due to non availability of
49

lucrative members.

wages and society was not in a position to attract the young

It is suggested that the society has to induct new members who can be useful to the development of the society. During the study about banks assets and liabilities , it was found that , there are so many fluctuations from previous years to this year , after studying profit & loss a/c , it has been revealed that the amount of profit in current year is less as compared to previous years due to increase in expenses in current year , the profitability is low . Bank mainly works for providing agricultural loans to farmers, and primary motive is to provide services to people. Apex bank helps to rural people and provide loan on less interest rates as compared to other banks. Its working is so systematic and to get membership of bank the individual needs to open account with Rs. 101 in bank.

50

SUGGESTIONS
Advances and deposit oriented advances should be increased following the bank norms and procedure. 1) Apex bank should try to increase its proportion of fixed assets to net worth.
2)

The proportion of current assets is more, it should be reduced.

3) The bank should pay attention towards the proper and efficient utilization of working capital. 4) The bank must increase its return. 5) It should also pay attention in increasing its net worth in comparisons to sales.
6)

The bank should try to reduce their expenses, particularly non parting so that the margin of profit can be increases.

7)

Bank should also concentrate on loans.

8) Number of customer account (deposit and advances) per employee to be increased.

9)

The bank should improve its sales strategy and should focus mainly on its promotional sector as many people are not aware about its various schemes, due to reason that apex banks primary motive is to provide agricultural loan to farmers that is why it needs marketing.

51

52

CONCLUSION
Banking in India is mainly governed by the banking regulation act, 1946 & the Reserve bank of India act, 1934, the RBI and the govt. of India exercise control over banks from the opening of banks to their winding up by virtue of the power conferred under their status. All the regulatory provisions are not uniformly applicable to all banks. The applicable of the bank depends on its constitution that is whether it is a statutory corporation, banking company or a co-operative society. We can draw the conclusion in following manner: Despite of limitations, balance sheet analysis is used as a major tool of financial analysis by investors, market analysis, commercial book, financial institutions and other financial analysts all over the world. It is used as an important indicator in making financial decisions as well as credit decisions by concerned institutions. The study of balance sheet and profit and loss account of apex bank was based on figures published in annual reports. This project is based on comparative study of balance sheet of last three years. Some major points have been highlighted during study: Bank has reduced their borrowings, since there has been an increase in their deposits. It helps in raising financial from its own sources. Lending of the bank has been reduced due to non recovery of loans. Share capital has been increased just doubled from previous year to current year.

53

ANNEXURE
BALANCE SHEET
FOR THE YEAR ENDING 31st MAR 2008 TO 31st MAR 2010

aAMOUNT IN PARTICULARS LIABILITIES

SHARE CAPITAL

(RS.) 2007-08

AMOU 2008-09 200000000 0 363602540 6 Nil 292321155 09 141727243 98 5056932.9 8 92131587. 77 311858.66 113628972 7 308095053 .2 455374225 .2 318571529 .6 5057691840 9 2009-10 2000000000

1000000000

RESERVE FUND & OTHER RESERVE PRINCIPAL/STATE PARTNERSHIP FUND A/C FOR SHARE CAPITAL DEPOSIT & OTHER A/C BORROWI NG BILLS FOR COLLECTING BILLS RECE. BRANCH ADJ A A/C OVERDUE INTT RESERVE INTEREST PAYABLE OTHER LIABILITIES PROFIT & LOSS A/C /C INTER BRANCH ADJ

3448507162 Nil 24409025935 11167647547 8957383.41 283012022.6 1352440.97 1136289727 310913532.9 235794710.9 276208608.7 42707051053
54

3877744302 Nil 32906985413 18614822520 2938139.63 147069804.9 422890.86 1136289727 255779586.9 300892547.5 208021183 58730750675

TOTAL

BALANCE SHEET
FOR THE YEAR ENDING 31st MARCH 2008 TO 31st MARCH 2010

PARTICULARS
ASSETS
CASH IN HAND BALANCE WITH OTHER BANK MONEY AT CALL & SHORT NOTICE INVESTMENT ADVANCES INTEREST RECEIVED B/R BEING BILL FOR COLLECTION BRANCH ADJ A/C PREMISES LAND & PREMISES BRANCH BUILD CONSTRUCTION A/C FURNITURE & FIXTURE MOTOR CAR COMPUTER HARDWARE A/C COMPUTER SOFTWARE A/C LIBRARY A/C ARMS & AMMUNITION OTHER ASSETS NON-BANKING ASSETS PROFIT & LOSS A/C

AMOUNT IN (RS.) 2007 200 200 -08

4233648708 7944020.02 6200000000 6070996450 2450124093 9 675748983.2 8957383.41 0 88270448.46 11414476.7 3603336.2 23544668.63 4832978.85 1552967.71 613572.5 632496.47 45837.04 854003784.3 0 0

8-09
2752898429 8659459.09 16100000000 6851193350 22934219328 916621254.9 5056932.98 0 800690184.5 11414476.7 12504852.2 22212838.65 4571998.87 2625528.71 278718.5 493175.98 55246.51 874052632.7 0 0

9-10
3031340898 9212025.75 2032999999 9 8238086000 2503427156 2 1078046943 2938139.63 0 81736615.88 11414476.7 8458574.2 23755461.86 8350112.49 3182440.71 826918.76 358272.48 55430.22 868716804.4 0 0

TOTAL

42707051053
55

50576918409 58730750675

56

PROFIT & LOSS A/C

31st MAR 2008 TO 31st MAR 2010

Dr. PARTICULAR S
EXPENDITURES

AMOUNT in (Rs._)
2007-08 1416907664 172954781.6 322444.78 159938099.6 1112696.15 2008-09 18688404502 214051723.9 281342.4 19418003.14 1594542 2009-10 2451911053 25544135.35 401630.11 20401325.91 1370752.79

interest on deposit &

borrowings
salaries & allowances directors local committee member fee & allowances rent,taxes,insurance &lighting legal charges postage,telegram,telephon e & tax charges audit fee dep. & repairing to property stationary, printing & property other expenditure loss from sale or dealing with non banking assets 1. NPA provision 2. other expenses balance profit
TOTAL

2558852.22 5200000 32847121.8 6214611.4 72659650.98 0 0 0 314078646.7 2184794569

2567909.24 1660657 32472761.83 8061242.27 45359048.76 0 0 0 263873224.3 2585580908

2527316.34 2019104 3440496.23 9856004.57 38280468.12 0 0 0 29667920.96 3256780491

57

PROFIT & LOSS A/C

31st MAR 2008 TO 31st MAR 2010

Cr. PARTICULARS
INCOMES
interest & discount commission, exchange & brokerage income tax refund received other receipts subsidies & donation income from non-banking assets & profit loss (any) 0 0 0

AMOUNT in (Rs._)
2007-08
2175805218 3866832.79 0 5122464.94

2008-09
2574708738 4406646.7 0 6465523.35

2009-10
3244334799 5330531.39 0 7115160.78

0 0 0

0 0 0

TOTAL

2184794516

2585580908

3256780491

BIBLIOGRAPHY
BOOKS:
58

.CORPORATE ACCOUNTING BY DR. S.M.SHUKLA KANPUR UNIVERSITY

2.

MANAGEMENT ACCOUNTING BY SHARMA & GUPTA KALYANI PUBLICATIONS

3.

MANAGEMENT ACCOUNTING & RATIO ANALYSIS BY S.P. GUPTA

4. 5.

BANKING REGULATION ACT BY R.B. SETHI BANKING & FINANCE BY H.R. SUNAJA

REPORTS: ANNUAL REPORT OF APEX BANK WEBSITES: WWW.GOOGLE.COM WWW.APEXBANK.IN WWW.RBI.COM

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