A PROJECT REPORT ON

“FINANCIAL ANALYSIS OF IDBI BANK”

A PROJECT SUBMITTED TO

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE DEGREE OF

BECHELOR IN COMMERCE (ACCOUNTING AND FINANCE)

BY
AMITKUMAR KAILASHNATH KANNOUJIYA

UNDER THE GUIDANCE OF

PROFESSOR BARKHA SHAMNANI

VPM’s R Z SHAH COLLEGE OF ARTS, SCIENCE & COMMERCE

MITHAGAR ROAD, MUMBAI EAST, MUMBAI-4000081

MARCH 2018-2019

1
CERTIFICATE

2
 DECLARATION

I the undersigned Mr. Amitkumar Kailashnath Kannoujiya here by , Declare that

the work embodied in this project work titled “ Fiancial Analysis Of IDBI
Bank”, forms my own contribution to the research work carried out under the
guidance of Prof. Barkha Shamnani is a result of my own research work and
has not been previously submitted to any other university for any other Degree/
Diploma to this or any other university .

Whenever reference has been made to previous works of others, it has been
clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical conduct.

Name and signature of the learner

Certified by

Name and signature of the Guiding Teacher

3
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions
in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my Principal, Dr.M.S.RAJE for providing the necessary facilities
required for completion of this project.

I take this opportunity to thank our Coordinator Prof.Om Dewani for his moral support and
guidance.

I would also like to express my sincere gratitude towards my project Guide Prof.Barkha
Shamnani whose guidance and care made the project successful.

I would also like to thank my College Library, for having provided various references books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my Parents and Peers who supported me
throughout my project.

4
Financial
Analysis of

5
 INDEX
CHAPTE PAGE
TOPIC
R No.: NO.:
1 INTRODUCTION 9-41
1.1.1 Definition of a Bank
1.1.2 Objective of Bank
1.2 BANKING INDUSTRY INTRODUCTION

1.2.1Current Scenario
1.2.2 Aggregate Performance of the Banking Industry
1.2.3 Interest Rate Scene
1.2.4 Government Policy
1.2.5 Implications of Some Recent Policy Measures
1.3 IDBI BANK : ALL ABOUT
1.3.1 The Objectives of Development Banks
1.3.2 In Addition, They are Assigned a Special Role
1.3.3 Industrial Development Bank of India (IDBI)
1.3.4 Industry/Bank Performance (Milestones)
1.4 CORRELATION BETWEEN INDUSTRY AND IDBI
BANK'S MOVEMENT
1.4.1 IDBI Bank Business Chart
1.4.2 IDBI Bank Organizational Chart
2 RESEARCH METHODOLOGY 42-45
2.1 Objective of the Study
2.2 Scope of the Study
2.3 LIMITATION OF THE STUDY
3 LITERATURE REVIEW 46-48
TOOLS AND TECHNIQUES, DATA ANALYSIS AND
4 49-72
INTERPRETATION
4.1 Tools and Techniques
4.2 Technological Tools
4.3 Applied Principles and Concepts

6
 4.4 Sources of Primary and Secondary Data

4.5 Statistical Analysis

4.6 Financial statement

4.7 Year in Retrospect
4.8 Outlook for the Current Year
4.9 Extract of Annual Return
4.10 Composition of Board
4.11 Ratio Analysis
5 FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 73-79
5.1 Findings
5.2 Conclusions
5.3 Recommendations

APPENDIX 79-81

Appendix 1 : Bibliography

Appendix 2 : Webliography

7
 IDBI Bank Ltd

Type Government Owned Bank

BSE: 500116
Traded as
NSE: IDBI

Industry Banking, Financial services

Predecessor IDBI

Founded 1 July 1964, 54 years ago

Headquarters Mumbai, India

Mr. B. Sriram
Key people (MD & CEO)
(Interim)

Consumer banking, corporate banking, finance and insurance, investment

Products banking, mortgage loans, private banking, private equity, wealth
management, Agriculture Loan

Revenue ₹28,043.10 Crore (2018)

Operating income ₹ 5,370 Crore (2018)

Net income ₹ -8,237.92 Crore (2018)

Total assets ₹ 3,50,313.65 Crore (2018)

Owner Government of India

Number of employees 17,570 (March 2018)

Capital ratio 10.41% (2018)

Website www.idbi.com

8
CHAPTER 1

INTRODUCTION

Finance is the life blood of the trade, commerce and industry. Now-a-days, banking sector

acts as the backbone of modern business. Development of any country mainly depends upon

the banking system.

A bank is financial institution which deals with deposits and

advances and other related services. It receives money from those who want to save in the

form of deposits and it lends money to those who need it.

Most nations have institutionalized a system known as fractional reserve

banking under which banks hold liquid assets equal to only a portion of their current
liabilities. In addition to other regulations intended to ensure liquidity, banks are generally
subject to minimum capital requirements based on an international set of capital standards,
known as the Basel Accords.

Banks are just one part of the world of financial institutions, standing
alongside investment banks, insurance companies, finance companies, investment managers
and other companies that profit from the creation and flow of money. As financial
intermediaries, banks stand between depositors who supply capital and borrowers who
demand capital. Given how much commerce and individual wealth rests on healthy banks,
banks are also among the most heavily regulated businesses in the world.

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  What is Financial Analysis?

Financial analysis is the process of evaluating businesses, projects,

budgets and other finance-related entities to determine their performance and suitability.
Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid or
profitable enough to warrant a monetary investment. When looking at a specific company, a
financial analyst conducts analysis by focusing on the income statement and balance sheet.

The role of financial reporting for companies is to provide information

about their fiscal health and financial performance. As investors, we use financial reports to
evaluate the past, current and prospective performance and financial position of a company.

 Definition of Financial Analysis:

According to “Lev”, “Financial Analysis is an information processing

system designed to provide data for decision making models, such as the portfolio selection
model, bank lending decision models, and corporate financial management models.”

 Objectives of Financial Analysis:

The major objectives of financial analysis is to provide decision makers

information about a business enterprise for use in decision making. Users of financial
statement information are the decision makers concerned with evaluating the economic
situation of the firm and predicting its future course.

Financial statement analysis can be used by the different users and

decision makers to achieve the following objectives:

i. Assessment of Past Performance and Current Position:

Past performance is often a good indicator of future performance.

Therefore, an investor or creditor is interested in the trend of past sales, expenses, net income,
cast flow and return on investment. These trends offer a means for judging management’s
past performance and are possible indicators of future performance.

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 Similarly, the analysis of current position indicates where the business
stands today. For instance, the current position analysis will show the types of assets owned
by a business enterprise and the different liabilities due against the enterprise. It will tell what
the cash position is, how much debt the company has in relation to equity and how reasonable
the inventories and receivables are.

ii. Prediction of Net Income and Growth Prospects:

The financial statement analysis helps in predicting the earning

prospects

and growth rates in the earnings which are used by investors while comparing investment

alternatives and other users interested in judging the earning potential of business enterprises.

Investors also consider the risk or uncertainty associated with the expected return.

The decision makers are futuristic and are always concerned with the

future. Financial statements which contain information on past performances are analyzed

and interpreted as a basis for forecasting future rates of return and for assessing risk.

iii. Prediction of Bankruptcy and Failure:

Financial statement analysis is a significant tool in predicting the

bankruptcy and failure probability of business enterprises. After being aware about probable
failure, both managers and investors can take preventive measures to avoid/minimize losses.
Corporate managements can effect changes in operating policy, reorganize financial structure
or even go for voluntary liquidation to shorten the length of time losses.

In accounting and finance area, empirical studies conducted have

suggested a set of financial ratios which can give early signal of corporate failure. Such a
prediction model based on financial statement analysis is useful to managers, investors and
creditors. Managers may use the ratios prediction model to assess the solvency position of
their firms and thus can take appropriate corrective actions.

Investors and shareholder can use the model to make the optimum
portfolio selection and to bring changes in the investment strategy in accordance with their

11
investment goals. Similarly, creditors can apply the prediction model while evaluating the
creditworthiness of business enterprises.

iv. Loan Decision by Financial Institutions and Banks:

Financial statement analysis is used by financial institutions, loaning

agencies, banks and others to make sound loan or credit decision. In this way, they can make
proper allocation of credit among the different borrowers. Financial statement analysis helps
in determining credit risk, deciding terms and conditions of loan if sanctioned, interest rate,
maturity date etc.

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1.1.1 Definition of a Bank:

Different Authors and Economists have given some structural and functional

definitions on Bank from different angles:

 “Bank is a financial intermediary institution which deals in loans and advances”. --

Cairn Cross
 “Bank is an institution which collects idle money temporarily from the public and

lends to other people as per need”. -- R.P. Kent

 “Bank provides service to its clients and in turn receives perquisites in different

forms”. -- P.A. Samuelson

 “Bank is such an institution which creates money by money only”.

-- W. Hock

 “Bank is such a financial institution which collects money in current, savings or fixed

deposit account; collects cheques as deposits and pays money from the depositors‟

account through cheques”. -- Sir John Pagette.

 Indian Company Law 1936 defines Bank as “a banking company which receives

deposits through current account or any other forms and allows withdrawal through

cheques or promissory notes”.

 Oxford Dictionary defines a bank as “an establishment for custody of money, which

it pays out on customer’s order”.

1.1.2 Objectives of Bank:

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  To establish as an institution for maximizing profits and to conduct overall economic

activities.
 To collect savings or idle money from the public at a lower rate of interests and lend

these public money at a higher rate of interests.

 To create propensity of savings amongst the people.
 To motivate people for investing money with a view to bringing solvency in them.
 To create money against money as an alternative for enhancing supply of money.
 To build up capital through savings.
 To expedite investments.
 To extend services to the customers.
 To maintain economic stability by means of controlling money market.
 To extend co-operation and advices to the Govt. on economic issues.
 To assist the Govt. for trade& business and socio-economic development.
 To issue and control notes and currency as a central bank.
 To maintain and control exchange rates as a central bank.

1.2 BANKING INDUSTRY INTRODUCTION

The Indian Banking industry, which is governed by the Banking Regulation

Act of India, 1949 can be broadly classified into two major categories, non-scheduled banks

and scheduled banks. Scheduled banks comprise commercial banks and the co-operative

banks. In terms of ownership, commercial banks can be further grouped into nationalized

banks, the State Bank of India and its group banks, regional rural banks and private sector

banks (the old/ new domestic and foreign). These banks have over 67,000 branches spread

across the country in every city and villages of all nook and corners of the land. The first
14
phase of financial reforms resulted in the nationalization of 14 major banks in 1969 and

resulted in a shift from Class banking to Mass banking. This in turn resulted in a significant

growth in the geographical coverage of banks. Every bank had to earmark a minimum

percentage of their loan portfolio to sectors identified as “Priority Sectors”. The

manufacturing sector also grew during the 1970s in protected environs and the banking sector

was a critical source. The next wave of reforms saw the nationalization of 6 more commercial

banks in 1980. Since then the number of scheduled commercial banks increased four-fold and

the number of bank branches increased eight-fold. And that was not the limit of growth. After

the second phase of financial sector reforms and liberalization of the sector in the early

nineties, the Public Sector Banks (PSBs) found it extremely difficult to compete with the new

private sector banks and the foreign banks. The new private sector banks first made their

appearance after the guidelines permitting them were issued in January 1993. Eight new

private sector banks are presently in operation. These banks due to their late start have access

to state-of-the-art technology, which in turn helps them to save on manpower costs.

During the year 2000, the State Bank of India (SBI) and its 7 associates accounted for a 25%

share in deposits and 28.1% share in credit. The 20 nationalized banks accounted for 53.2%

of the deposits and 47.5% of credit during the same period. The share of foreign banks

(numbering 42), regional rural banks and other scheduled commercial banks accounted for

5.7%, 3.9% and 12.2% respectively in deposits and 8.41%, 3.14% and 12.85% respectively in

credit during the year 2000. About the detail of the current scenario we will go through the

trends in modern economy of the country.

1.2.1 Current Scenario:

The industry is currently in a transition phase. On the one hand, the PSBs,

which are the mainstay of the Indian Banking system, are in the process of shedding their flab

15
in terms of excessive manpower, excessive Non-Performing Assets (NPAs) and excessive

governmental equity, while on the other hand the private sector banks are consolidating

themselves through mergers and acquisitions.

PSBs, which currently account for more than 78% of total banking industry

assets are saddled with NPAs (a mind-boggling Rs. 830 billion in 2000), falling revenues

from traditional sources, lack of modern technology and a massive workforce while the new

private sector banks are forging ahead and rewriting the traditional banking business model

by way of their sheer innovation and service. The PSBs are of course currently working out

challenging strategies even as 20% of their massive employee strength has dwindled in the

wake of the successful Voluntary Retirement Schemes (VRS) schemes.

The private players however cannot match the PSB’s great reach, great size

and access to low cost deposits. Therefore, one of the means for them to combat the PSBs has

been through the Merger & Acquisition (M&A) route. Over the last two years, the industry

has witnessed several such instances. For instance, HDFC Bank’s merger with Times Bank

ICICI Bank’s acquisition of ITC Classic, Anagram Finance and Bank of Madurai. Centurion

Bank, Indusind Bank, Bank of Punjab, Vysya Bank are said to be on the lookout. The UTI

bank- Global Trust Bank merger however opened a Pandora’s box and brought about the

realization that all was not well in the functioning of many of the private sector banks.

Private sector Banks have pioneered internet banking, phone banking,

anywhere banking, and mobile banking, debit cards, Automatic Teller Machines (ATMs) and

combined various other services and integrated them into the mainstream banking arena,

while the PSBs are still grappling with disgruntled employees in the aftermath of successful

VRS schemes. Also, following India’s commitment to the WTO agreement in respect of the

services sector, foreign banks, including both new and the existing ones, have been permitted

16
to open up to 12 branches a year with effect from 1998-99 as against the earlier stipulation of

8 branches.

Tasks of government diluting their equity from 51% to 33% in November

2000 have also opened up a new opportunity for the takeover of even the PSBs. The FDI

rules being more rationalized in Q1FY02 may also pave the way for foreign banks taking the

M& A route to acquire wiling Indian partners.

Meanwhile the economic and corporate sector slowdown has led to an

increasing number of banks focusing on the retail segment. Many of them are also entering

the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with

the retail investor are the best placed to enter into the insurance sector. Banks in India have

been allowed to provide fee-based insurance services without risk participation invest in an

insurance company for providing infrastructure and services support and set up of a separate

joint-venture insurance company with risk participation.

1.2.2 Aggregate Performance of the Banking Industry:

Aggregate deposits of scheduled commercial banks increased at a

Compounded Annual Average Growth Rate (CAGR) of 17.8% during 1969-99, while bank

credit expanded at a CAGR of 16.3% per annum. Banks’ investments in government and

other approved securities recorded a CAGR of 18.8% per annum during the same period.

In FY01 the economic slowdown resulted in a Gross Domestic Product (GDP) growth of only

6.0% as against the previous year’s 6.4%. The WPI Index (a measure of inflation) increased

17
by 7.1% as against 3.3% in FY00. Similarly, money supply (M3) grew by around 16.2% as

against 14.6% a year ago.

The growth in aggregate deposits of the scheduled commercial banks at 15.4%

in FY01 percent was lower than that of 19.3% in the previous year, while the growth in credit

by SCBs slowed down to 15.6 percent in FY01 against 23% a year ago.

The industrial slowdown also affected the earnings of listed banks. The net

profits of 20 listed banks dropped by 34.43% in the quarter ended March 2001. Net profits

grew by 40.75% in the first quarter of 2000-2001, but dropped to 4.56% in the fourth quarter

of 2000-2001.

On the Capital Adequacy Ratio (CAR) front while most banks managed to

fulfill the norms, it was a feat achieved with its own share of difficulties. The CAR, which at

present is 9.0%, is likely to be hiked to 12.0% by the year 2004 based on the Basle

Committee recommendations. Any bank that wishes to grow its assets needs to also shore up

its capital at the same time so that its capital as a percentage of the risk-weighted assets is

maintained at the stipulated rate. While the IPO route was a much-fancied one in the early

‘90s, the current scenario doesn’t look too attractive for bank majors.

Consequently, banks have been forced to explore other avenues to shore up

their capital base. While some are wooing foreign partners to add to the capital others are

employing the M&A route. Many are also going in for right issues at prices considerably

lower than the market prices to woo the investors.

1.2.3 Interest Rate Scene:

The two years, post the East Asian crises in 1997-98 saw a climb in the global

interest rates. It was only in the later half of FY01 that the US Fed cut interest rates. India has

however remained more or less insulated. The past 2 years in our country was characterized

by a mounting intention of the Reserve Bank of India (RBI) to steadily reduce interest rates

18
resulting in a narrowing differential between global and domestic rates.

The RBI has been affecting bank rate and CRR cuts at regular intervals to

improve liquidity and reduce rates. The only exception was in July 2000 when the RBI

increased the Cash Reserve Ratio (CRR) to stem the fall in the rupee against the dollar. The

steady fall in the interest rates resulted in squeezed margins for the banks in general.

1.2.4 Governmental Policy:

After the first phase and second phase of financial reforms, in the 1980s

commercial banks began to function in a highly regulated environment, with administered

interest rate structure, quantitative restrictions on credit flows, high reserve requirements and

reservation of a significant proportion of lendable resources for the priority and the

government sectors. The restrictive regulatory norms led to the credit rationing for the private

sector and the interest rate controls led to the unproductive use of credit and low levels of

investment and growth. The resultant ‘Financial Repression’ led to decline in productivity

and efficiency and erosion of profitability of the banking sector in general.

This was when the need to develop a sound commercial banking system was

felt. This was worked out mainly with the help of the recommendations of the Committee on

the Financial System (Chairman: Shri M. Narasimham), 1991. The resultant financial sector

reforms called for interest rate flexibility for banks, reduction in reserve requirements, and a

number of structural measures. Interest rates have thus been steadily deregulated in the past

few years with banks being free to fix their Prime Lending Rates (PLRs) and deposit rates for

most banking products. Credit market reforms included introduction of new instruments of

credit, changes in the credit delivery system and integration of functional roles of diverse

players, such as, banks, financial institutions and Non-Banking Financial Companies

(NBFCs). Domestic Private Sector Banks were allowed to be set up, PSBs were allowed to

19
access the markets to shore up their Cars.

1.2.5 Implications of Some Recent Policy Measures:

The allowing of PSBs to shed manpower and dilution of equity are moves that

will lend greater autonomy to the industry. In order to lend more depth to the capital markets

the RBI had in November 2000 also changed the capital market exposure norms from 05% of

bank’s incremental deposits of the previous year to 05% of the bank’s total domestic credit in

the previous year. But this move did not have the desired effect, as in, while most banks kept

away almost completely from the capital markets, a few private sector banks went overboard

and exceeded limits and indulged in dubious stock market deals. The chances of seeing banks

making a comeback to the stock markets are therefore quite unlikely in the near future.

The move to increase Foreign Direct Investment FDI limits to 49% from 20%

during the first quarter of this fiscal came as a welcome announcement to foreign players

wanting to get a foot hold in the Indian Markets by investing in willing Indian partners who

are starved of net worth to meet CAR norms. Ceiling for FII investment in companies was

also increased from 24% to 49% and have been included within the ambit of FDI investment.

1.3 IDBI BANK: ALL ABOUT

The economic development of any country depends on the extent to which its

financial system efficiently and effectively mobilizes and allocates resources. There are a

number of banks and financial institutions that perform this function; one of them is the

development bank. Development banks are unique financial institutions that perform the

special task of fostering the development of a nation, generally not undertaken by other

20
banks. Development banks are financial agencies that provide medium-and long-term

financial assistance and act as catalytic agents in promoting balanced development of the

country. They are engaged in promotion and development of industry, agriculture, and other

key sectors. They also provide development services that can aid in the accelerated growth of

an economy.

1.3.1 The Objectives of Development Banks:

 To serve as an agent of development in various sectors, viz. industry, agriculture, and

international trade.

 To accelerate the growth of the economy.

 To allocate resources to high priority areas.

 To foster rapid industrialization, particularly in the private sector, so as to provide

employment opportunities as well as higher production.

 To develop entrepreneurial skills.

 To promote the development of rural areas.

 To finance housing, small scale industries, infrastructure, and social utilities.

1.3.2 In Addition, They are assigned a Special Role:

Planning, promoting, and developing industries to fill the gaps in industrial

sector. Coordinating the working of institutions engaged in financing, promoting or

developing industries, agriculture, or trade, rendering promotional services such as

discovering project ideas, undertaking feasibility studies, and providing technical, financial,

and managerial assistance for the implementation of projects.

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1.3.3 Industrial development Bank of India (IDBI):

The Industrial Development Bank of India (IDBI) was established in 1964 by

parliament as wholly owned subsidiary of reserve bank of India. In 1976, the bank’s

ownership was transferred to the government of India. It was accorded the status of principal

financial institution for coordinating the working of institutions at national and state levels

engaged in financing, promoting, and developing industries.

IDBI has provided assistance to development related projects and contributed

to building up substantial capacities in all major industries in India. IDBI has directly or

indirectly assisted all companies that are presently reckoned as major corporate in the

country. It has played a dominant role in balanced industrial development.

IDBI set up the Small Industries Development Bank of India (SIDBI) as

wholly owned subsidiary to cater to specific the needs of the small-scale sector. IDBI has

engineered the development of capital market through helping in setting up of the Securities

Exchange Board of India (SEBI), National Stock Exchange of India Limited (NSE), Credit

Analysis and Research Limited (CARE), Stock Holding Corporation of India Limited

(SHCIL), Investor Services of India Limited (ISIL), National Securities Depository Limited

(NSDL), and Clearing Corporation of India Limited (CCIL).

In 1992, IDBI accessed the domestic retail debt market for the first time by

issuing innovative bonds known as the deep discount bonds. These new bonds became highly

popular with the Indian investor.

In 1994, IDBI Act was amended to permit public ownership up to 49%. In July 1995, it raised

over Rs. 20 billion in its first Initial Public Offer (IPO) of equity, thereby reducing the

government stake to 72.14%. In June 2000, a part of government shareholding was converted

to preference capital. This capital was redeemed in March 2001, which led to a reduction in

government stake. The government stake currently is 51%. In august 2000, IDBI became the

22
first all India financial institution to obtain ISO 9002: 1994 certification for its treasury

operations. It also became the first organization in the Indian financial sector to obtain ISO

9001:2000 certifications for its forex services.

1.3.4 Industry/Bank performance (Milestones):

1964:

 Set up under an Act of Parliament as a wholly-owned subsidiary of Reserve Bank of

India.

1976:

 Ownership transferred to Government of India. Designated Principal Financial

Institution for co-coordinating the working of institutions at national and State levels

engaged in financing, promoting and developing industry.

23
1982:

 International Finance Division of IDBI transferred to Export-Import Bank of India,

established as a wholly-owned corporation of Government of India, under an Act of

Parliament.

1990:

 Set up Small Industries Development Bank of India (SIDBI) under SIDBI Act as a

wholly-owned subsidiary to cater to specific needs of small-scale sector. In terms of

an amendment to SIDBI Act in September 2000, IDBI divested 51% of its

shareholding in SIDBI in favor of banks and other institutions in the first phase. IDBI

has subsequently divested 79.13% of its stake in its erstwhile subsidiary to date.

1992:

 Accessed domestic retail debt market for the first time with

innovative Deep Discount Bonds; registered path-breaking success.

1993:

 Set up IDBI Capital Market Services Ltd. as a wholly-owned subsidiary to offer a

broad range of financial services, including Bond Trading, Equity Broking, Client

Asset Management and Depository Services. IDBI Capital is currently a leading

Primary Dealer in the country.

1994:

 Set up IDBI Bank Ltd. in association with SIDBI as a private sector commercial bank

subsidiary, a sequel to RBI's policy of opening up domestic banking sector to private

participation as part of overall financial sector reforms.

1994:

 IDBI Act amended to permit public ownership upto 49%.

1995:

24
  Made Initial Public Offer of Equity and raised over Rs.2000 crore, thereby reducing

Government stake to 72.14%.

2000:

 Entered into a JV agreement with Principal Financial Group, USA for participation in

equity and management of IDBI Investment Management Company Ltd., erstwhile a

100% subsidiary. IDBI divested its entire shareholding in its asset management

venture in March 2003 as part of overall corporate strategy.

 Set up IDBI Intech Ltd. as a wholly-owned subsidiary to undertake IT-related

activities.

 A part of Government shareholding converted to preference capital, since redeemed in

March 2001; Government stake currently 58.47%.

 Became the first All-India Financial Institution to obtain ISO 9002:1994 Certification

for its treasury operations. Also became the first organization in Indian financial

sector to obtain ISO 9001:2000 Certification for its forex services.

2001:

 Set up IDBI Trusteeship Services Ltd. to provide technology-driven information and

professional services to subscribers and issuers of debentures.

2002:

 Associated with select banks/institutions in setting up Asset Reconstruction Company

(India) Limited (ARCIL), which will be involved with the Strategic management of

non-performing and stressed assets of Financial Institutions and Banks.

2003:

 IDBI acquired the entire shareholding of Tata Finance Limited in Tata Home finance

Ltd, signaling IDBI's foray into the retail finance sector. The housing finance

subsidiary has since been renamed 'IDBI Home finance Limited'.

25
  On December 16, 2003, the Parliament approved The Industrial Development Bank

(Transfer of Undertaking and Repeal Bill) 2002 to repeal IDBI Act 1964. The

President's assent for the same was obtained on December 30, 2003. The Repeal Act

is aimed at bringing IDBI under the Companies Act for investing it with the requisite

operational flexibility to undertake commercial banking business under the Banking

Regulation Act 1949 in addition to the business carried on and transacted by it under

the IDBI Act, 1964.

2004:

 The Industrial Development Bank (Transfer of Undertaking and Repeal) Act 2003

came into force from July 2, 2004.

 The Boards of IDBI and IDBI Bank Ltd. take in-principle decision regarding merger

of IDBI Bank Ltd. with proposed Industrial Development Bank of India Ltd. in their

respective meetings on July 29, 2004.

 The Trust Deed for Stressed Assets Stabilization Fund (SASF) executed by its

Trustees on September 24, 2004 and the first meeting of the Trustees was held on

September 27, 2004.

 The new entity "Industrial Development Bank of India" was incorporated on

September 27, 2004 and Certificate of commencement of business was issued by the

Registrar of Companies on September 28, 2004.

 Notification issued by Ministry of Finance specifying SASF as a financial institution

under Section 2(h)(ii) of Recovery of Debts due to Banks & Financial Institutions Act,

1993.

 Notification issued by Ministry of Finance on September 29, 2004 for issue of non-

interest bearing GOI IDBI Special Security, 2024, aggregating Rs.9000 crore, of 20-

year tenure.

26
  Notification for appointed day as October 1, 2004, issued by Ministry of Finance on

September 29, 2004.

 RBI issues notification for inclusion of Industrial Development Bank of India Ltd. in

Schedule II of RBI Act, 1934 on September 30, 2004.

 Appointed day - October 01, 2004 - Transfer of undertaking of IDBI to IDBI Ltd.

IDBI Ltd. commences operations as a banking company. IDBI Act, 1964 stands

repealed.

2005:

 The Board of Directors of IDBI Ltd., at its meeting held on January 20, 2005,

approved the Scheme of Amalgamation, envisaging merging of IDBI Bank Ltd. with

IDBI Ltd. Pursuant to the scheme approved by the Boards of both the banks, IDBI

Ltd. will issue 100 equity shares for 142 equity shares held by shareholders in IDBI

Bank Ltd. EGM has been convened on February 23, 2005 for seeking shareholder

approval for the scheme.

2006:

 IDBI signs MOU with Fortis.

 IDBI bags "IT Team of the Year Award 2005".

 IDBI sets up new branch in Andheri.

 IDBI - Tripartite MOU with Federal Bank & Forties Insurance International.

 IDBI bags Asia money’s "Best India Deal of the Year Award 2005.

 IDBI Launches No Frills 'Sabka' Savings Bank Account.

2007:

 Industrial Development Bank Of India Limited has informed that as per provisions of

Article 134 to 138 of the Articles of Association of IDBI Ltd., read with Sections 255

and 256 of the Companies Act, 1956, the shareholders have re-appointed the

27
 following two directors after retirement by rotation on the Board of Directors of IDBI

Ltd. in the 3rd Annual General Meeting of IDBI Ltd. held on June 22, 2007.

(1) Shri Hira Lal Zutshi and

(2) Shri A. Sakthivel

 IDBI Wins Three Awards at the ABCI.

 IDBI signs MOU with IFC for co-operation in Clean Development Mechanism

(CDM) Projects.

 IDBI, Federal Bank and Fortis Sign Joint Venture Agreement To Establish A New Life

Insurance Company In India.

 IDBI Launches new 600 days “A Suvidha Plus A”’ FD Scheme.

2008:

 Industrial Development Bank Of India Limited has submitted to a

copy of the Resolution passed by the Board by circulation on March 12, 2008 in

respect of change of name of the Bank to "IDBI Bank Limited" by passing a Special

Resolution through Postal Ballot in terms of Section 192A of the Companies Act,

1956.

 Company name has been changed from Industrial Development Bank of India Ltd to

IDBI Bank Ltd.

 IDBI bags two Special IT Awards from IBA -IDBI ties up with Motilal Oswal

Securities for online trading.

2009:

 IDBI Bank has slashed its benchmark prime-lending rate (BPLR) by 25 basis points

to 12.75 per cent. The reduction will come into effect from July 1 and will apply to all

loans linked to the BPLR, including home loans, according to a press release from the

bank. The bank cut deposit rates by 25-50 basis points earlier this week.

28
  IDBI Bank bags IBA's prestigious Banking Technology award.

 IDBI Bank Ltd and Tata Motors Limited (TML) sign MOU for Vehicle Loan

Financing.

2010:

 IDBI Bank has opened its first overseas branch at the Dubai International Financial

Centre.

2011:

 IDBI Federal Life launches new plan for senior citizens.

 IDBI bank has decided to opt for “A Mystery Shopping” method in

order to keep an eye on the feedback on customer experience, their

perception and expectations.

 IDBI Bank Ltd has informed BSE that Government of India (GOI) has, vide its letter

dated December 27, 2011, advised that GOI is actively considering the Bank's request

for capital support and intends to infuse capital funds in the Bank by way of

Preferential Allotment of Equity in favor of GOI, subject to necessary approvals from

the Board of Directors and various other statutory bodies.

 IDBI Bank Ltd has informed BSE that consequent upon posting of Shri. S N Baheti,

CGM & Company Secretary to Priority Sector Group of the Bank, Shri. Pawan

Agrawal, CGM, Board Department has been appointed as Company Secretary &

Compliance Officer of the Bank vide approval of the Board of Directors accorded by

Circular Resolution passed on May 18, 2011 in terms of the Provisions of Clause

47(a) of the Listing Agreement and Section 383A of the Companies Act, 1956 read

with Article 156 of the Articles of Association of the Bank.

 Despite the low fee quoted in the bid to match, IDBI bank managed to win the

mandate of the public offer (IPO) of National Building Construction Corp Ltd

29
 (NBCC). The bid invited was supposed to appoint two merchant bankers for the issue,

last month. Further, selection of the bankers was through a two stage-process of

technical and financial bids.

2012:

 IDBI Mutual Fund launched a new open ended fund of funds

scheme named “A IDBI Gold Fund & RDQuo”.

 IDBI Bank cuts interest rates on home loans, slashes deposit.

 IDBI Bank appoints B K Batra as whole time director.

 IDBI Bank has launched an online portal, IDBI Samriddhi, to sell its Certificate of

Deposits (CDs) to the individual and institutional investors, thus adding another

milestone in the increasing role of technology in the banking sector.

2013:

 IDBI inks MOC with Exim Bank to co-finance export oriented companies.

 IDBI Bank introduces online PPF Subscription Facility.

 IDBI Bank at the forefront of innovation Wins Finnoviti 2013 Award for IDBI

Samriddhi Portal.

 IDBI Bank and EXIM Bank sign MOC for Co-financing of Export-Oriented

Companies.

2014:

 IDBI Bank the 1st PSU Bank to Launch EIA facility.

 IDBI Bank Inaugurates Zonal Office in Chandigarh.

 Rajbhasha Shield Award to IDBI Bank Ltd.

 IDBI Bank Wins the Golden Peacock CSR Award.

2017:

 RBI puts 4 public sector banks under watch on NPA concerns.

30
  Latest achievement gets by IDBI Bank:

In tune with its philosophy of ‘Bank Aisa, Dost Jaisa’, IDBI Bank

strengthened its network and reach in the country by inaugurating its 3000th ATM at

Punjabi Bagh, New Delhi. The 3000th ATM was inaugurated by S. Ravi and Pankaj Vats,

Directors of IDBI Bank, in presence of M. S. Raghavan, CMD, IDBI Bank and other

dignitaries.

With this, the bank’s network is enhanced, reaching a mark of 1708

branches and 3000 ATMs across 1256 centers in India. IDBI Bank connects with its

customers through branches, ATMs, internet banking, social media, 24 X 7 call center, e-

lounge and mobile banking.

Speaking on the occasion, M. S. Raghavan, CMD, IDBI Bank said “With

every additional ATM, IDBI Bank strengthens its reach and offers banking benefits not

only to the bank’s customers but the population at large. The bank has always endeavored

31
in providing the best technology, customized banking services and lasting relationships to

it’s’ customers”.

1.4.CORRELATION BETWEEN INDUSTRY AND IDBI BANK’S

PERSONAL SAVING

MOVEMENT:
SAVING ACCOUNT

RETAIL BANKING

1.4.1 IDBI Bank Business Chart:

CORPORATE SAVING

CURRENT ACCOUNT

IDBI BANK
DEVELOPMENT BANK.
INVESTMENT

32
1.4.2 IDBI Bank Organizational Chart:

33
 Chairman

President

Vice president Vice president Vice president Vice president

Finance H. R. Marketing Operations

Regional Head

Zonal Head

Divisional Sales Manager

Territory In charge

1.5. NON DEPOSITORY SERVICES:

1.5.1. Consumer cards:

34
  Gold Debit-cum-ATM card:

 Features of Gold Debit-cum-ATM card:

o This card can be used to transact at IDBI Bank ATMs. It has also got international validity
and can be used abroad to make purchases at merchant locations and withdraw local
currency.
o In addition to the insurance cover for lost/stolen cards, this card also helps its customer to
avail of the following insurance covers:
* Personal accident cover- Rs.5 lakh
*Loss of checked baggage-Rs.50,000
* Purchase protection- Rs.20,000 for 90 days
* Fire and burglary for household contents- Rs.50,000
*This card enables its customer to withdraw cash up to Rs.75,000/- and make purchases
worth Rs.75,000 in a day.
* Loyalty redemptions: customer will gain 1 loyalty point for every Rs.100/- spent on the
Gold Debit-cum-ATM card. Each point can be redeemed for a cash credit of Re.1 to your
savings account.

 International Debit-cum-ATM card:

 Features:
o This card enables its customers to access their bank account not only in India but also in
abroad.
o Zero lost card liability insurance
o Loyalty points with great rewards
o Daily card limits:
* ATM Rs. 25,000
* POS Rs. 25,000

o This card can be used only at merchant locations that have an electronic data capture
machine or electronic point of sale machine.
 Gift Card:
 Features:
o This card enables its holders to purchase goods and services at over 4.70 lakh merchant
establishments in India, that accept Visa card.
o Its usable more then once, till the value on the card is exhausted.
o To apply for this service, one ha to fill an application form , deposit the amount to be loaded
on the card by paying cash or cheque.

 World Currency Card:

 Features:

35
o This card is accepted everywhere across the world at over 14 million merchant
establishments that accept visa cards and credit cards.
o It is cheaper then the credit cards as:
* The annual fee on most international credit cards is much higher than the nominal fee on
the World Currency card
* In case of credit cards, the rate of exchange depends on the rate applicable the day you
transact which may be unfavourable. Whereas, with the World Currency Card, the rate of
exchange is fixed the very day one purchases the card.
* Insurance cover is upto a maximum of Rs.2,00,000 per card.

 Cash Card:

 Features:
o This card is meant mainly for the corporate an easy solution for their employees for salary
disbursement & other reimbursements.
o The corporate opting for IDBI bank cash card can give this card to their employees for
getting their salary disbursed and they need not open their accounts with the bank for this.
o This card can be loaded for any amount up to Rs.25,000/- per card per month as per the
instructions from the corporate.

 Kids Debit Card:

 Features:
o Daily limit:
* Rs.2,000
o Customer stands to earn 2 loyalty points for every Rs.100 spent using the KIDS card for
purchases at merchant establishments.
o This card is valid for 5 years
o This card can be used only in India
o Free SMS alerts will be sent to the guardian/parents for the transactions above than
Rs.5,000/- on KIDS card.

 Platinum Debit-cum-ATM Card:

 Features:
o The Platinum Debit Card offers cash withdrawal limit of Rs.1 lakh and purchase at Point of
Sale(POS) limit of Rs.2 lakh in a day.
o In addition to the insurance cover for lost/stolen cards, the customer can also avail of the
following insurance covers:
* Personal Accident Cover- Rs.5 lakh
* Loss of checked baggage- Rs.50,000/-
* Purchase protection- Rs.20,000 for 90 days
* Fire and burglary for household contents- Rs.50,000
o With the help of this card, one can easily track spends on a regular basis.

36
1.5.2. Phone Banking:

IDBI Bank offers phone banking facility to its customers.

Mentioned below are the services that the customers can avail out of the Phone banking
facility:
Account related services:
* Updated balance enquiry
* Balance as on date
* Last five transactions
* Statement of account by fax
* Request for a cheque book
* Hotlisting of ATM or Debit Cards
* Bill payment details
* Status of cheques issued or deposited
* Funds in clearing

Demat account related services:

* Details of Demat account
* Holding details in ascending or descending order
* Holding statements by fax, mail or email
* Last five transactions
* Transaction statements by fax, mail or email
* Billing details
* Billing details by Fax, mail or email

Many other services like information about loan accounts, product information and related
services are also provided with the help of Phone banking facility.

1.5.3. SMS banking:

SMS banking provides its customer the luxury of banking anywhere, anytime.
SMS banking for NON-WAP Enabled Mobile phones:
The following services is available for NON-WAP enabled mobile phones on SMS banking
facility:
* Balance enquiry
* Last three transaction
* Cheque payment status
* Cheque book

* Statement request
* Demat-free balance holding
* Demat- last two transactions
* Bill payment
SMS banking for WAP enabled Mobile Phones:

37
If the customer is a WAP Enabled mobile phone user, the customer can do interactive banking
for eg. If the customer wants to withdraw cash then the mobile will show the nearest IDBI
branch and its phone number.

1.5.4. Account Alerts:

The customer with the help of Account alerts can get the alerts on the mobile in the form of
message on the customers inbox ie. when the account is credited or debited or what is the
current account status.
This days it has become quite popular and more and more users are switching to it because
the charges are quite low.

1.5.5. Internet Banking:

For getting the added advantage of Internet banking, the customer has to fill in the channel
registration form which is available at our branches and ATMs
The products and services that are available on the Internet banking are as follows:
* Account information
*Demat account information
* Online instructions and requests
* Customer service in the form of mails/messages, alerts etc
* Online payment services

1.6. CAPITAL MARKET PRODUCTS:

38
1.6.1. Initial Public Offerings:

ASBA IPO Payment option:

ASBA stands for Applications Supported by Blocked Amount which is an application for
subscribing to an issue, containing an authorization from the bank customer(who invests in a
particular IPO through ASBA) to block the application money in his bank account.
SCSB i.e. Self Certified Syndicate Bank is a bank which offers to its customers the facility of
applying to IPO through the ASBA process.
Only an investor who have an account with the SCSB can apply for an IPO using ASBA
payment option.

1.6.2. Demat Account:

With the help of Demat Account, the customers can convert their securities to dematerialsied
form.
Benefits of Demat account with IDBI:
* Minimum transaction Charges: Rs.30/-
* Account maintenance Charges: Rs.350/-
* Statements on E Mail
* Portfolio valuation on the statements
* Online execution of delivery instructions
* Service available at all branches
* Special rates for Stock Market Intermediaries

IDBI bank also provides an opportunity to the NRI to invest in shares, bonds, debentures of
Indian companies by opening a demat account.
Services offered:
* Dematerialisation: Converting physical shares into electronic form
* Rematerialization: Converting electronic shares into physical form
* Freeze and Defreeze: customer has the option to freeze or defreeze the operations in his/her
account
* Pledging: Customer also has the option of pledging the demat shares and availing loan
facility

1.6.3. 3-in-1 account:

39
This product is mainly designed for those customers who trade in securities. In 3-in-1 account
saving and demat account are linked to the online trading account. With this facility
customers can trade in securities at nominal rates and also stand to get invaluable investment
advice which will make their money grow.
Benefits offered:
* Trade without any hassles of writing transfer instruction/ cheques
* Can place orders from anywhere any time using phone or internet
* Online share quotes available
*Multiple product offering
*Speedy and secure trading
* Can open all 3 accounts in a single account opening form

1.7 NRI SERVICES:

IDBI also provides services to the NRI.

NRI – centric bank solutions are as follows:

1.7.1. Non Resident External Account:

Current/savings/term deposits accounts can be opened under thus scheme. Funds can be held
by NRIs/PIOs in convertible Indian rupees.
Minimum balance required:
1. Current Account: Rs.10,000
2. Savings Account: Rs. 5,000
3. Term Deposits: Rs. 10,000

A joint account can also be opened by two or more individuals, provided all of them are
NRIs. In case of account in the name of a minor, both the minor and the guardian has to be an
NRI.
Balance in the NRE account is exempted from Income tax under the provisions of Income
Tax Act in India.

1.7.2. Non Resident Ordinary Account (NRO):

40
This account has to be maintained in local currency.
 Features of this account are as follows:
* NRIs should have local income or expenses in India. The account can be savings, current or
fixed deposit account.
* Interest earned on this account is not exempt from Income tax under the provisions of
Income Tax Act.
*Joint account with Resident/ Non Resident can be opened

Minimum balance required:

1. Current account: Rs. 10,000
2. Savings Account: Rs.5,000
3. Term deposits: Rs. 10,000

1.7.3. Foreign Currency Non Resident Deposit Scheme:

This account has to be maintained in foreign currencies.

Main features of the account are:
* Funds can be held by Non Resident Indian/persons of Indian origin
* Fixed deposit accounts maintained only in US Dollars, Sterling Pounds, Japanese yen and
Euro
* The deposits can be accepted for a minimum period of 12 months and up to 36 months.
Minimum deposit amount is USD 1,000 or equivalent
*Interest payments would be at half yearly

1.7.4. Demat Account:

An NRI who has invested in shares, bonds and debentures of Indian companies or would like
to do so, can open a demat account under the appropriate category of NRI Repatriable or NRI
Non-Repatriable.

CHAPTER 2

41
 RESEARCH METHODOLOGY

2.1.1 Objective of the study:

Project study which is being conducted by me for the last two month is not

only a formality for the fulfillment of the two year full time Post Graduation in Master of

Commerce (M.Com). But being a commerce student and a good employee I tried my best to

extract best of the information available in the market for the use of society and people. The

objectives have been classified by me in this project form personal to professional, but here I

am not disclosing my personal objectives which have been achieved by me while doing the

project. Only professional objectives which are being covered by me in this project are as

following:-

 To know about environmental factors affecting IDBI Bank’s performance.

 To analyze the role of advertisement for bank performance.

 To know the perception and conception of customers towards banking products and

specially focused for IDBI Bank’s product.

 To explore the potential areas for the new bank branches which will provide both

price and people to the bank with constant promotion and placing strategy.

 To maintain price stability as its central goal.

 To support the stability and orderly activity of the financial system.

 To earning saving through demand and term deposit accounts.

 To provide custody services.

2.2 Scope of the Study:

42
 Each and every project study along with its certain objectives also has scope

for future. And this scope in future gives to new researches a new need to research a new

project with a new scope. Scope of the study not only consist one or two future business plan

but sometime it also gives idea about a new business which becomes much more profitable

for the researches then the older one.

Scope of the study could give the projected scenario for a new successful

strategy with a proper implementation plan. Whatever scope I observed in my project are not

exactly having all the features of the scope which I described above but also not lacking all

the features.

 Research study could give an idea of network expansion for capturing more market

and customer with better services and lower cost, with out compromising with quality.

 In future customer requirements could be added with the product and services for

getting an edge over competitors.

 Consumer behavior could also be used for the purpose of launching a new product

with extra benefits which are required by customers for their account (saving or

current) and/or for their investments.

 Factors which are responsible for the performance for bank can also be used for the

modification of the strategy and product for being more profitable.

 The banks loan mix is undergoing favourable change with a decline in the proportion

of term loans for a duration exceeding five years.

 IDBI Bank deliberately wants to reduce growth in advances to 16% this will help to

improving the assets quality.

 The increased branch network is also expected to help in the improvement of the

banks CASA.

 Factors which I observed while doing project study are following:-

43
 i. Competitors

ii. Customer Behavior

iii. Advertisement/promotional activities

iv. Attitude of manpower and

v. Economic conditions

These all could also be interchanged with each other for each other in banks

strategies for making a final business plan to affect the market with a positive way without

disturbing a lot to market, customers and competitors with disturbance in market shares.

2.3 LIMITATION OF THE STUDY

44
  Company is a joint venture of two more companies; market financial position cannot

be studied in a couple of month so time is considered as main constraint.

 The information given from the company was limited.

 The survey conducted was more of subjective kind and results will be completely

based on secondary data.

 The financial details of the bank are collected for current and previous year only.

 The data collected for the study depends on published financial statements of the

companies which may incorporate some drawbacks.

 The horizon of the study merely confined to very less number of variables as the

determinants of insurance company’s profitability and measuring financial

performance without considering any overall performance measurement tool.

CHAPTER 3

45
 LITERATURE REVIEW

 Malcom and Jeffrey Wurgler (2002) found that effects on capital structure are very

persistent. Results suggest that capital structure is the cumulative outcome of past

attempts to time the equity market.

 Zeitun (2007) investigated the effect which capital structure has had on corporate

performance using a panel data sample representing of 167 Jordanian companies

during 1989-2003. Results showed that a firm’s capital structure had a significantly

negative impact on the firm’s performance measures, in both the accounting and

market’s measures.

 Medhat Tarawneh (2006): Financial performance is a dependent variable and

measured by Return on Assets (ROA) and the intent income size. The independent

variables are the size of banks as measured by total assets of banks, assets

management measured by asset utilization ratio (Operating income divided by total

assets) operational efficiency measured by the operating efficiency ratio (total

operating expenses divided by net income).

 Ross et al., (2007) implied that the most researchers divide the financial ratios into

four groups i.e. profitability, solvency, liquidity and activity ratios for detailed

analysis.

 Abe De Jong, et al (2008) analyzed the importance of firm-specific and country-

specific factors in the leverage choice of firms around the world. Data suggested that

firm-specific determinants of leverage differ across countries, and that there is an

indirect impact of country-specific factors on the roles of firm-specific determinants

of leverage.

46
 Eugene F Brigham and Michael C Ehrhardt (2010) stated that financial ratios are

designed to help in evaluating financial statements and used as a planning and control

tool.

 Yusuf and Hakan, (2011) described the short term creditors of a company like

suppliers of goods of credit and commercial banks providing short-term loans are

primarily interested in knowing the company’s ability to meet its current or short-term

obligation as and when these become due.

 Dimitios Louzius (2012) In his study of Banking sector in Greece found that for all

loan categories, NPLs in the Greek banking system could be explained mainly by

macroeconomic variables (GDP, unemployment, interest rates, public debt) and

management quality.

 Vasant Desai, (2013): The performance of a bank can be assessed in there broad

dimension viz. business development, customer service and housekeeping. The

resources that a branch has are manpower, premises, planning, system procedure,

organizational structure and general administration. The efficiency of a branch would

be measured by the extent which it has balanced between three parameters.

 Nadia Zedek (2016) investigated the controlling shareholders affects product

diversification performance of 710 European commercial banks, it was found that

when banks have no controlling shareholder or have only family and state

shareholders diversification yields diseconomies, while the involvement of banking

institutions, institutional investors, industrial companies or any other combination of

these shareholder categories, produce diversification economies: they display higher

profitability, lower earnings volatility and lower default risk.

 Alpesh Gajera (2015): In his research article a financial performance evaluation of

private and public sector banks found that there in significance difference in the

47
 financial performance of these banks and private sector banks are performed better

than public sector banks in respect of capital adequacy ratio and financial

performance.

 Muhammad Saifuddin Khan, et al (2016) in his research paper examines the

relationship between funding liquidity and bank risk taking in the U.S. bank holding

companies from 1 986 to 2014, results showed that bank size and capital buffers

usually limit banks from taking more risk when they have lower funding liquidity

risk.

48
Chapter 4

TOOLS & TECHNIQUES, DATA ANALYSIS &

INTERPRETATION

4.1 Tools and Techniques:

As no study could be successfully completed without proper tools and

techniques, same with my project. For the better presentation and right explanation I used

tools of statistics and computer very frequently. And I am very thankful to all those tools for

helping me a lot. Basic tools which I used for project from statistics are:-

 Bar Charts

 Pie charts

 Tables

Bar charts and pie charts are really useful tools for every research to show the

result in a well clear, ease and simple way. Because I used bar charts and pie charts in project

for showing data in a systematic way, so it need not necessary for any observer to read all the

theoretical detail, simple on seeing the charts any body could know that what is being said.

49
4.2 Technological Tools:

 Ms- Excel

 Ms-Access

 Ms-Word

Above application software of Microsoft helped me a lot in making project

more interactive and productive. Microsoft-Excel had a great role in my project, it created for

me a situation of “you sit and get”. I provided it simply all the detail of data and in return it

given me all the relevant information.

Microsoft-Access did the performance of my personal assistant who organizes

my all the details of document without disturbing them even a single time in all the project

duration. And in last Microsoft-Word did help me for the documentation of the project in a

presentable form.

50
4.3 Applied Principles and Concepts:

While I started to do the project the main thing which was the matter of

concern was that around what principles I have to revolve my project. Because with out

having any hypothesis and objective we can not determine that what output or result we are

expecting form the project. And second thing is that having only tools and techniques for the

purpose of project is not relevant until unless we have the principals for which we have to use

those tools and techniques.

 Mathematical Averages

 Standard Deviation

 Correlation

51
 4.4 Sources of Primary and Secondary data:

For the purpose of project data is very much required which works as a food

for process which will ultimately give output in the form of information. So before

mentioning the source of data for the project I would like to mention that what type of data I

have collected for the purpose of project and what it is exactly.

1. Primary Data:

Primary data is basically the live data which I collected on field the

Main source for the primary data for the project was questionnaires which I got filled

by the branch head. I shown them list of question for which I had required their

responses.

2.Secondary Data:

Secondary data for the base of the project I collected from intranet of the Bank

and from internet, RBI Bulletin, Journal by ICFAI University.

52
4.5 Statistical Analysis:

In this segment I will show my findings in the form of graphs and charts. All the data which

I got form the market will not be disclosed over here but extract of that in the form of

information will definitely be here.

TABLE 1:

MARKET SHARES IN MUMBAI IN COMPARISION TO

COMPETITORS

BANK NAME % OF SHARE

SBI 30%
IDBI 15%
ICICI 25%
PNB 10%
HDFC 5%
HSBC 5%
OTHERS 10%

Object 3

53
TABLE 2:

FACTORS RESPONSIBLE FOR PERFORMANCE OF IDBI BANK IN

MUMBAI

PARAMETERS % OF SHARE
PRODUCT 50%
ADVERTISMENT 5%
MANPOWER 25%
NET-BANKING 2%
PHONE BANKING 5%
INVESTMENT SCHEME 10%
NETWORK 3%

Object 5

54
TABLE 3:

COMPARATIVE STUDY WITH MAJOR COMPETITORS ON BASIC

PARAMETERS

CANARA
PARAMETERS/BANKS IDBI ICICI SBI PNB HSBC
BANK
PRODUCT 20% 15% 30% 15% 10% 10%
ADVERTISMENT 3% 45% 15% 20% 7% 10%
MANPOWER 10% 50% 2% 3% 25% 10%
NET-BANKING 3% 50% 10% 12% 8% 17%
PHONE BANKING 10% 40% 5% 5% 30% 10%
INVESTMENT SCHEME 5% 25% 50% 10% 5% 5%
NETWORK 2% 40% 40% 5% 3% 10%
CREDIBILITY 20% 10% 40% 20% 5% 5%

Object 7

55
4.6 FINANCIAL STATEMENT

IDBI Bank Profit & Loss Account For The Year End 31 ST March

in Rs. Crore
Particulars
Mar-18 Mar-17 Mar-16
Income
Interest Earned 23,026.53 27,791.37 28,043.10
Other Income 7,008.88 3,967.60 3,410.36
Total Income 30,035.41 31,758.97 31,453.46

Expenditure
Interest Expended 17,386.21 22,039.71 21,953.81
Employee cost 1,781.08 2,203.59 1,674.05
Selling, Admin. & Misc. Expenses 18,733.31 12,314.87 11,276.23
Depreciation 372.73 358.94 214.18
Operating Expenses 4,744.68 5,140.14 4,129.59
Provision & Contingencies 16,142.44 9,736.59 9,034.87
Total Expenditure 38,273.33 36,917.11 35,118.27

Net Profit For the year -8,237.92 -5,158.14 -3,664.80

Profit brought forward -8,492.39 -2,827.28 912.19
Total -16,730.31 -7,985.42 -2,752.61

Equity Dividend 0.00 0.00 0.00

Corporate Dividend Tax 0.00 0.00 0.00
Earnings per Share (Rs.) -26.71 -25.05 -17.80
Equity Dividend (%) 0.00 0.00 0.00
Book Value (Rs.) 52.39 83.28 107.41

Transfers:
Transfer to Statutory Reserve 433.7 506.97 74.67
Transfer to Other Reserve 0.00 0.00 0.00
Proposed Dividend / Transfer to Govt. 0.00 0.00 0.00

Balance c/f to Balance Sheet -17,164.01 -8,492.39 -2,827.28

Total -16,730.31 -7,985.42 -2,752.61

 IDBI Bank Balance Sheet as at 31ST March

Particulars in Rs. Crore

56
 Mar-18 Mar-17 Mar-16

Capital & Liabilities

Equity Share Capital 3,083.86 2,058.82 2,058.82

Reserves & Surplus 13,071.98 15,087.09 20,055.15
Revaluation Reserve 5,053.88 5,417.75 5,607.83
Net Worth 21,209.82 22,563.66 27,721.80

Deposits 2,47,931.61 2,68,538.10 2,65,719.83

Borrowings 63,185.53 56,363.98 69,573.94
Total Debt 3,11,117.14 3,24,902.08 3,35,293.77

Other Liabilities & Provisions 17,986.77 14,302.18 11,356.57

Total Liabilities 3,50,313.63 3,61,767.92 3,74,372.14

Assets

Cash & Balances with RBI 13,163.69 13,346.92 13,822.91

Balance with Banks, Money at Call 20,522.40 19,337.16 2,757.63
Advances 1,71,739.95 1,90,825.92 2,15,893.45
91,60$$$$$$$$$$$
Investments $6.06 92,934.41 98,999.43

Gross Block 6,269.10 6,808.94 7,023.13

Accumulated Depreciation 0.00 0.00 0.00
Net Block 6,269.10 6,808.94 7,023.13

Capital Work in Progress 501.89 539.85 424.19

Other Assets 46,510.56 37,974.70 35,451.39

Total Assets 3,50,313.63 3,61,767.92 3,74,372.14

Contingent Liabilities 2,07,316.76 2,01,931.13 2,12,856.92

Book Value (Rs.) 52.39 83.28 107.41

4.7 Year in retrospect:

57
  The twin balance sheet problem (of banks and corporate) as well as the output gap

has resulted in weak investment & credit demand.

 The credit growth of the banking sector was at multi decade lows. However the

incremental demand for corporate financing was well served by the corporate

bond market.

 Demonetization as expected temporarily affected the economy, which has now

rebounded to its original trajectory of 7% plus growth.

4.8 Outlook for the Current year:

 As the output gap closes and with NPA resolution a focus area, corporate

investments are expected to pick up towards the end of the fiscal.

 The implementation of GST is expected to temporarily impact the economy for

a quar ter or two at best.

 Corporate bond market is expected to continue incremental financing to a

greater extent than the banking sector.

 The outlook for your company in 17-18 is therefore cautiously optimistic.

1. Dividend:

 Your Directors have recommended payment of dividend of 300% one equity

capital for the year ended 31st March, 2017, which if approved by the members

at the forth coming annua l general meeting, will be paid out of the current year's

profit to the equity shareholders of the Company.

2. Transf er to Reserves:

 An amount of Rs. 4,19,64,549 has been credited to General Reserves.

3. Share Capital:

 At the beginning of the year, the Authorized Share Capital was Rs.

58
 10,00,00,000, Issued, Subscribed and Paid-up Equity Share capital of the

Company was Rs. 6,03,27,600

dividend into 60,32,760 Equity Shares of Rs. 10/-. During the year under

review the Company there is no alteration to the equity share capital.

4. Debentures:

 During the year under review the Company has not issued and allotted

debentures.

5. Fixed Deposits

 During the year under review, the Company has not invited or accepted

any fixed deposits either from the public or from the shareholders of the

Company.

4.9 Extract of Annual Return

 The Extract of Annual Return as provided under Section 92(3) of the

Companies Act, 2013 and as prescribed in Form No. MGT-9 of the rules

prescribed under Chapter VII relating to Management and Administration

under the Companies Act, 2013 is appended as Annexure II.

4.10 Composition of Board:

 As on March 31, 2017, the total strength of the Board consists of 5 Directors

of which 1 is Non- Executive Chairman and 3 are Non-Executive Directors

and 1 Managing Director & CEO.

59
 4.11.RATIO ANALYSIS

 What is Ratio Analysis?

For most of us, accounting is not the easiest thing in the world to
understand, and often the terminology used by accountants is part of the problem. “Financial
ratio analysis” sounds pretty complicated. The analysis of the financial statements and
interpretations of financial results of a particular period of operations with the help of 'ratio' is
termed as "ratio analysis." Ratio analysis used to determine the financial soundness of a
business concern.

The term 'ratio' refers to the mathematical relationship between any two
inter-related variables. In other words, it establishes relationship between two items expressed
in quantitative form. According J. Batty, Ratio can be defined as "the term accounting ratio is
used to describe significant relationships which exist between figures shown in a balance
sheet and profit and loss account in a budgetary control system or any other part of the
accounting management.

 Classification of Ratios:

Accounting Ratios are classified on the basis of the different parties

interested in making use of the ratios. A very large number of accounting ratios are used for
the purpose of determining the financial position of a concern for different purposes. Ratios
may be broadly classified in to:

 Classification of Ratios on the basis of Balance Sheet.

 Classification of Ratios on the basis of Profit and Loss Account.
 Classification of Ratios on the basis of Mixed Statement (or) Balance Sheet and Profit
and Loss account.

To meet the objective the study groups ratios and divides three main
parts which are Liquidity Ratios, Profitability Ratios, and Asset Management Ratios.

60
 1. Liquidity Ratio:

Liquidity ratio refers to the ability of a company to interact its assets

that is most readily converted into cash. Assets are converted into cash in a short period of
time that are concerns to liquidity position. However, the ratio made the relationship between
cash and current liability.

a. Current Ratio:

Current Ratio = Current assets / Current liabilities

b. Cash Ratio:

Cash Ratio = Cash / Current Liabilities

c. Quick Ratio:

Quick Ratio = (Quick Assets - Inventories) / Quick Liabilities

**Quick Asset = Current Assets - (Stock + Prepaid Expenses)

**Quick Liabilities = Current Liabilities - Bank Overdraft

2. Profitability Ratio:

Profitability ratios designate a bank's overall efficiency and

performance. It measures how to use assets and how to control its expenses to generate an
acceptable rate of return. It also used to examine how well the bank is operating or how well
current performance compares to past records of bank.

a. Net Profit Margin:

Net Profit margin = Net Profit / Sales

b. Return on Common Stock Equity Ratio:

Return on Common Stock Equity Ratio = Net Income / Common

Stockholders' Equity

c. Return on Total Assets:

61
 Return on Total Assets = Net Profits / Total Assets

3. Asset Management Ratio:

Asset management ratios are most notable ratios of financial ratios

analysis. It measure how effectively any organization uses and controls its assets. It is
analysis how a company quickly converted to cash or sale on their resources. It is also called
Turnover ratios because it indicates the asset converted or turnover in to sales.

a. Current Asset Turnover Ratio:

Current Asset Turnover Ratio = Sales / Current Assets

b. Total Asset Turnover:

Total Asset Turnover = Sales / Total Assets

c. Debt Equity Ratio:

Debt Equity Ratio = Total Liabilities / Total Shareholder’s Equity

62
 Importance of Ratio Analysis:

1. Aid to measure General Efficiency.

2. Aid to measure Financial Solvency.

3. Aid in forecasting and planning.

4. Facilitate decision making.

5. Aid in corrective action.

6. Aid in intra-firm comparison.

7. Act as a good communication.

8. Evaluation of efficiency.

 Limitation of Ratio Analysis:

1. Differences in definitions.

2. Limitations of accounting records.

3. Lack of proper standards.

4. No allowances for price level changes.

5. Changes in accounting procedures.

6. Quantitative factors are ignored.

7. Limited use of single ratio.

8. Background is over looked.

9. Limited use & personal bias.

63
 A. Liquidity Ratio:

1. Current Ratio:

Current Assets
Current Ratio =
Current Liabilities

CURRENT RATIO
Table 6.1 Showing the Bank's Current Ratio
Current Assets Current Liabilities Ratio
Year
(A) (B) (A/B)
2015-16 3,44,044.55 3,29,103.91 1.0454
2016-17 3,54,958.96 3,39,204.26 1.0464
2017-18 3,67,349.00 3,46,650.34 1.0597

Current Ratio
1.0650

1.0600

1.0550
Ratio (A/B)
1.0500

1.0450

1.0400

1.0350
2015-16 2016-17 2017-18

 INTERPRETATION:

Table 6.1 presents Current Ratio of three years from 2016 to 2018. In
the above ratios the bank’s current ratio of 2016 is 1.0454, 2017 is 1.0464 and 2018 is 1.0597
it shows us that bank’s current ratio is increasing positive growth year by year.

64
 2. Cash Ratio:

Cash
Cash Ratio = Current Liabilities

CASH RATIO
Table 6.2 Showing the Bank's Cash Ratio
Cash Current Liabilities Ratio
Year
(A) (B) (A/B)
2015-16 33,686.09 3,29,103.91 0.1024
2016-17 32,684.08 3,39,204.26 0.0964
2017-18 16,580.54 3,46,650.34 0.0478

Cash Ratio
0.1200

0.1000

0.0800
Ratio (A/B)
0.0600

0.0400

0.0200

0.0000
2015-16 2016-17 2017-18

 INTERPRETATION:

Table 6.2 presents Cash Ratio of three years from 2016 to 2018. In the
above ratios the bank’s quick ratio of 2016 is 0.1024, 2017 is 0.0964 and 2018 is 0.0478 it
shows us that bank liquidity is too bad because it’s decreasing year by year.

65
 3. Quick Ratio:

Quick Assets
Quick Ratio =
Current Liabilties

QUICK RATIO
Table 6.3 Showing the Bank's Quick Ratio
Quick Assets Current Liabilities Ratio
Year
(A) (B) (A/B)
2015-16 3,44,044.55 3,29,103.91 1.0454
2016-17 3,54,958.96 3,39,204.26 1.0464
2017-18 3,67,349.00 3,46,650.34 1.0597

Quick Ratio
1.0650

1.0600

1.0550
Ratio (A/B)
1.0500

1.0450

1.0400

1.0350
2015-16 2016-17 2017-18

 INTERPRETATION:

Table 6.3 presents Quick Ratio of three years from 2016 to 2018. In the
above ratios the bank’s quick ratio (acid test ratio) of 2016 is 1.0454, 2017 is 1.0464 and
2018 is 1.0597 it shows us that bank liquidity increasing positive growth year by year.

66
 B. Profitability Ratio:

1. Net Profit Margin Ratio:

Net Profit
Net Profit Margin Ratio = Sales

NET PROFIT MARGIN RATIO

Table 6.4 Showing the Bank's Net Profit Margin Ratio
Net Profit Sales Ratio
Year
(A) (B) (A/B)
2015-16 16,730.31 23,026.53 0.7266
2016-17 7,985.42 27,791.37 0.2873
2017-18 2,752.61 28,043.10 0.0982

Net Profit Margin Ratio

0.8000
0.7000
0.6000
0.5000
Ratio (A/B)
0.4000
0.3000
0.2000
0.1000
0.0000
2015-16 2016-17 2017-18

 INTERPRETATION:

Table 6.4 presents Net Profit Margin Ratio of three years from 2016 to
2018. In the above ratios the bank’s net profit margin ratio of 2016 is 0.7266, 2017 is 0.2873
and 2018 is 0.0982 it shows us that bank profitability is not satisfactory because it’s
decreasing year by year.

67
 2. Return on Common Stock Equity Ratio:

Net Income
Current Ratio = Common Stock Equity

RETURN ON COMMON STOCK EQUITY RATIO

Table 6.5 Showing the Bank's Return on Common Stock Equity Ratio
Net Income Common Stock Equity Ratio
Year
(A) (B) (A/B)
2015-16 16,730.31 3,083.00 5.4266
2016-17 7,985.42 2,058.82 3.8786
2017-18 2,752.61 2,058.82 1.3370

Return on Common Stock Equity Ratio

6.0000

5.0000

4.0000
Ratio (A/B)
3.0000

2.0000

1.0000

0.0000
2015-16 2016-17 2017-18

 INTERTATION:

Table 6.5 presents Return on Common Stock Equity Ratio of three

years from 2016 to 2018. In the above ratios the bank’s net profit margin ratio of 2016 is
5.4266, 2017 is 3.8786 and 2018 is 1.3370 it shows us that bank profitability is not
satisfactory because it’s decreasing year by year.

68
 3. Return on Total Assets:

Net Profit
Return on Total Assets Ratio = Total Assets

RETURN ON TOTAL ASSETS

Table 6.6 Showing the Bank's Return on Total Assets Ratio
Net Profit Total Assets Ratio
Year
(A) (B) (A/B)
2015-16 16,730.31 3,50,313.63 0.0478
2016-17 7,985.42 3,61,767.92 0.0221
2017-18 2,752.61 3,74,372.14 0.0074

Return on Total Assets

0.0600

0.0500

0.0400
Ratio (A/B)
0.0300

0.0200

0.0100

0.0000
2015-16 2016-17 2017-18

 INTERPRETATION:

Table 6.6 presents Return on Asset Ratio of three years from 2016 to
2018. In the above ratios the bank’s return on asset ratio of 2016 is 0.0478, 2017 is 0.0221
and 2018 is 0.0074 it shows us that bank profitability is not satisfactory because it’s
decreasing year by year.

69
 C. Assets Management Ratio:

1. Current Assets Turnover Ratio:

Sales
Current Assets Turnover Ratio = Current Assets

CURRENT ASSETS TURNOVER RATIO

Table 6.7 Showing the Bank's Current Assets Turnover Ratio
Sales Current Assets Ratio
Year
(A) (B) (A/B)
2015-16 23,026.53 3,44,044.55 0.0669
2016-17 27,791.37 3,54,958.96 0.0783
2017-18 28,043.10 3,67,349.00 0.0763

Current Assets Turnover Ratio

0.0800
0.0780
0.0760
0.0740
0.0720 Ratio (A/B)
0.0700
0.0680
0.0660
0.0640
0.0620
0.0600
2015-16 2016-17 2017-18

 INTERPRETATION:

Table 6.7 presents Current Asset Turnover Ratio of three years from
2016 to 2018. In the above ratios the bank’s current asset turnover ratio of 20160 is 0.0669,
2017 is 0.0783 and 2018 is 0.0763 it shows us that bank current asset turnover ratio is not too
good as liquidity because it’s fluctuating year by year.

70
 2. Total Assets Turnover Ratio:

Sales
Total Assets Turnover Ratio =
Total Assets

TOTAL ASSETS TURNOVER RATIO

Table 6.8 Showing the Bank's Fixed Assets Turnover Ratio
Sales Total Assets Ratio
Year
(A) (B) (A/B)
2015-16 23,026.53 3,50,313.63 0.0657
2016-17 27,791.37 3,61,767.92 0.0768
2017-18 28,043.10 3,74,372.14 0.0749

Total Assets Turnover Ratio

0.0780
0.0760
0.0740
0.0720
0.0700 Ratio (A/B)

0.0680
0.0660
0.0640
0.0620
0.0600
2015-16 2016-17 2017-18

 INTERPRETATION:

Table 6.8 presents Total Asset Turnover Ratio of three years from 2016
to 2018. In the above ratios the bank’s total asset turnover ratio of 2016 is 0.657, 2017 is
0.0768 and 2018 is 0.0749 it shows us that bank total asset turnover ratio is not good as
liquidity because it’s fluctuating year by year.

71
 3. Debt Equity Ratio:

Total Liabilities
Debt Equity Ratio =
Total Shareholder ' s Equity

DEBT EQUITY RATIO

Table 6.9 Showing the Bank's Debt Equity Ratio
Total Liabilities Total Shareholder's Equity Ratio
Year
(A) (B) (A/B)
2015-16 3,50,313.63 3,083.86 113.60
2016-17 3,61,767.92 2,058.82 175.72
2017-18 3,74,372.14 2,058.82 181.84

Debt Equity Ratio

200.00
180.00
160.00
140.00
120.00 Ratio (A/B)
100.00
80.00
60.00
40.00
20.00
0.00
2015-16 2016-17 2017-18

 INTERPRETATION:

Table 6.9 presents Debt Equity Ratio of three years from 2016 to 2018.
In the above ratios the bank’s debt equity ratio of 2016 is 113.60, 2017 is 175.72 and 2018 is
181.84 it shows us that bank debt equity ratio is favorable as compare to previous two years.

72
CHAPTER 5

FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Findings:

 The trend analysis has analyzed that the performance of financial position of IDBI

Bank has been found satisfactory. The upward trend has been registered in both total

assets and total liabilities during the study period. The advances, investment, net

block, capital work in process, and other assets has shown continuous growth and

have upward trend.

 The Comparative Balance Sheet has studied that the performance of financial position

of IDBI Bank has been found satisfactory. It has found that there is 25.83% increase

in net worth from 2012 to 2016 year and 27.01% growth in total debt from 2012 to

2016 year. The total liabilities have registered 27.84% increase in the year 2016 as

compared to the year 2012 and the assets have also shown the same results.

 The Common-size Comparative Balance Sheet has studied that the performance of

financial position of IDBI Bank has been found satisfactory. The total debts are

91.50% of total liabilities which are greatest component of total liabilities during the

year 2012 have declined to 90.92% during the year 2016. The net worth has reduced

to 6.00% in the year 2016 from 6.09% in the year 2012. The advances is 62.60 which

is the greatest component of total assets during the year 2012 has declined to 58.55 in

the year 2016.

 It has been observed that the rising proportion of total debt in the total liabilities is

critical.

73
 In overall, the performance of financial position of IDBI Bank has been found

satisfactory.

 The profitability ratio analysis conducted in the study reveals that IDBI Bank have

shown the Downbeat tendency during 2005-07 and then has shown the positive trend

in the performance of profitability ratios during 2008-10.

 Total Assets as at March 2010 of IDBI were Rs. 2,33,572 crore and have declined by

20% when compared to previous FY. This is a serious matter and needs IDBI Bank’s

immediate remedial action.

 Total Deposits were Rs. 1,67,667 crore with a growth of 49.2% and Total Advances

were Rs. 1,38,202 crore recording a growth of 33.6%.over the previous year.

 Interest Income was Rs.15,272.6 crore and with the other income of Rs. 2,290.9 crore.

Total Gross income was Rs. 17,563.5 crore. PBT was Rs. 1,044.7 crore and PAT was

Rs. 1,031.1 crore.

 EPS stood at Rs.14.20 Book value per share stood at Rs. 113 and a Dividend of 30 %

recommended on fully paid up equity capital.

 Total CRAR 11.31% against RBI stipulated norms of 9%. Core CRAR 6.24% against

RBI stipulated norms of 6%.

 Another fact revealed by the study is that there has been the lack of strategic planning

by public sector banks and Management Information System (MIS) and also the skill

levels required especially in sales and marketing, service operations, risk management

and the overall performance of the organization.

 The analyses also reveal that majorly public sector banks are not technology

responsive. There are many public sector banks’ branches that are yet to be

computerized, which affects the business of the bank in comparison to their

counterpart’s private sector banks.

74
 The credibility of IDBI bank is good in comparison to its competitors as GOI

(Government of India) is a major share holder in the company.

 IDBI bank has potential a tapped market in Mumbai in region and hence has

opportunities for growth.

 The products of IDBI bank have good credibility in the region compare to its

competitors.

 The advertisement of the bank was very effective from the first day of its airing till

the fifth day and there after it starts declining.

 The initial balance for A/C opening is Rs, 5000/- and that’s why people are reluctant

in opening the same.

75
5.2 Conclusions:

Consumers of Mumbai have good awareness level about IDBI bank as well as about

its services and products.The advertising campaign has successfully been able to

increase the market share of IDBI in Mumbai.The modern day’s technology like

internet banking, phone banking, used by IDBI bank for providing banking services

has sent positive signals in the mind of consumes.The network of IDBI in Mumbai is

lagging behind a little than its competitors like ICICI bank and HDFC bank.It can be

distilled from data that IDBI bank has good market share as compared to its

competitors considering the amount of resources deployed by them in the market and

The solvency position of IDBI Bank and the employment of assets are in tune with

the industry averages.

The employment of shareholders’ funds and the

CASA which is relatively lower than the bellwether suggests that attention has to be

paid in these areas. Net profit margin of IDBI Bank indicates that the profits of the

bank is declining and is well below the industry averages suggesting that the

operations of the bank has to improve and The IDBI Bank should improve its deposits

that provide cheaper funds, which can translate into strong financial performance and

The ROA of IDBI Bank is showing a declining trend and the comparison with the

industry averages indicates that the IDBI Bank should pay attention towards the

utilization of its assets more effectively as well as The banking sector reforms have

provided the necessary platform for the Indian banks to operate based on operational

flexibility and functional autonomy, thereby enhancing efficiency, productivity and

profitability.

76
The reforms also brought about structural changes in the financial sector and

succeeded in easing external constraints on its operations, i.e. reduction in CRR and

SLR reserves, capital adequacy norms, restructuring and recapitulating banks and

enhancing the competitive element in the market through the entry of new banks.

77
5.3 Recommendations:

 Since there is only two branch of IDBI bank and only three ATMs in Mumbai, so it is

necessary for IDBI bank to open more branches and install more ATMs to serve the

vast market of Mumbai especially.

 More resources should be allocated in the market of Mumbai as there is big untapped

market in Mumbai, so it becomes necessary for IDBI bank for taking an edge over the

competitors.

 A short advertising campaign in Mumbai has produced good results in a short span of

times, so to gain long term benefits is very necessary for IDBI bank to carry on this

campaign with more intensity.

 Besides opening more branches it should also look for opening some extension

counter in Kutub near Meherauli and one in Khanpur.

 As Government is the majority share holder in the shares of IDBI bank, which makes

this bank more reliable than other private banks, this thing can be used in the favor of

IDBI bank by making people aware about this fact and winning their faith.

 The bank should close down the unviable bank branches by selling out the existing

business to some other bank which has been able to maintain a sustainable growth

rate.

 Increase the business volume at branches by adopting aggressive marketing strategies

and by redeployment of staff wherever necessary.

 Loan disbursing mechanism through proper and scientific evaluation of the quality of

assets for which bank has to finance.

 Speedy and timely Recovery through legal means and effective follow-up.

78
 Increase the volume of credit ensuring the quality of assets.

 Study the market trends and adjust the credit mix to various segments without

following the age-old methods.

 Control and restrict the advances to those sectors where the bank experience has not

been satisfactory.

79
  APPENDIX

1.BIBLIOGRAPHY

 Hand Book on Banking Awarness – N.K.GUPTA

 Indian financial system – BHARATI PATHAK

 Banking and Financial system – V.NITYANANDA SHARMA

 Aaker Kumar and Day, Marketing research, 6th Ed., John Willy & sons, 1997.

 The Economics times

 Datt R. and Sundaram K.P.M., 2006: ‘Indian Economy’, S. Chand & Company Ltd., New

Delhi, 781.

 Bhandari L, Dasgutpa S. and Gangopadhyay S., 2003: ‘Development Financial

Institutions, Financial Constraints and Growth: Evidence from the Indian Corporate

Sector’, Journal of Emerging Market Finance, Vol. 2, No. 1, 83-121.

 IDBI Annual Reports 2006-18.

 Nadia Zedek, 2016, Product diversification and bank performance: Does ownership

structure matter? Journal of Banking & Finance, 71, pp.154–167.

 Pathak B. V, The Indian Financial System – Markets. Institutions and Services, 2nd

Edition, Pearson Education, copyright New Delhi: Dorling Kindersley (India) Pvt. Ltd.

80
2.WEBLIOGRAPHY

 www.idbibank.com

 www.en.wikipedia.org/wiki/IDBI_Bank

 www.goodreturns.in/company/idbi-bank/history.html

 www.moneycontrol.com/idbi-bank/balancesheet

 www.moneycontrol.com/idbi-bank/profitandloss

 www.capitalmarket.com/financialanalysis/idbi-bank

81