CREDIT RISK MANAGEMENT: A STUDY WITH REFERENCE TO SOUTH INDIAN BANK LTD

Report of the Project Study submitted in partial fulfilment of the requirements for the MBA (Full time) Degree of the Mahatma Gandhi University

Submitted by YESMITHA A JAIN Reg. No: 2009-11 Batch

ALBERTIAN INSTITUTE OF MANAGEMENT (A UNIT OF ST. ALBERT’S COLLEGE)
Banerji Road, Cochin-682018.

JUNE 2011

TABLE OF CONTENTS
ACKNOWLEDGE DECLARATION

Sr. No.

Ratio

Pg. No.

1 1.1 1.2’ 1.3 1.4 1.5 1.6 1.7 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 3 3.1

Introduction Nature of Study Scope of Study Objective of the study Sources of data collection Tools used for Data Collection Period of Study Limitations of the study Industry Profile Recent Development in Global Banking Industry Historical Background of Banking in India Indian Banking Industry Current Scenario Highlights of the Banks Performance Challenges Facing Banking Industry in India Major Players in Indian Banking Industry Company Profile Introduction

1 2 2 3 3 4 4

5 6 6 7

10 11

3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.10 3.11 3.12 3.13

Vision Mission Objective Technology Promotion Drive of South Indian Bank Milestones Future Perfect Awards and Recognition The Structure of South Indian Bank Main Objectives and Business of the banks Various Departments of Bank Logo and Corporate Colour

12 12 12 12 12 12

13 13 15 15

4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 5 5.1 5.2 5.3 5.4 5.5

Credit Risk Management Theoretical Background Aim of Credit Risk Management Objective of Credit Risk Management Measurement of Risk through credit rating/scoring Committee for Credit Risk Management Credit Risk Management Department Methods of Credit Risk Analysis and Interpretation Analysis of Data Capital Adequacy Ratio Asset Quality Earning per Non Performing Assets Correlation

19

20 22 23 24

5.4 6 6.1 6.2 7

Analysis of Deposit Mix Findings and Suggestions Findings Suggestions Conclusion 41 42 42

LIST OF CHARTS

Sr. No.

PARTICULARS

Pg. No.

2.1 3.1 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13

Indian Top Five Players in Banking Organization Chart Capital Adequacy Ratio Total Advances to total Assets Total Investments to Assets Net NPA‟s to Total Assets Net NPA‟s to Total Advances Earning per Non Performing Assets Correlation between Deposits and Advances Correlation between Deposits and Net Profit Correlation between Advances and Net Profit Analysis of Deposit Mix Percentage of Demand Deposits to Total Deposit Percentage of Savings Deposits to Total Deposits Percentages of Term Deposits to Total Deposits

19 22 23 25 26 29 42 47 48 52 53 55 63 65

LIST OF TABLES
Sr. No.
5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13

PARTICULARS
Capital Adequacy Ratio Total Advances to total Assets Total Investments to Assets Net NPA‟s to Total Assets Net NPA‟s to Total Advances Earning per Non Performing Assets Correlation between Deposits and Advances Correlation between Deposits and Net Profit Correlation between Advances and Net Profit Analysis of Deposit Mix Percentage of Demand Deposits to Total Deposit Percentage of Savings Deposits to Total Deposits Percentages of Term Deposits to Total Deposits

Pg. No.
13 13 14 15

ACKNOWLEDGEMENT
First of all I express my sincere gratitude to God Almighty for giving me strength and power to complete my project. I extend my sincere thanks to Prof. George Sleeba, Director, Albertian Institute of Management, who gave me an opportunity to do an organization study.

I greatly acknowledge my indebtedness to my faculty guide Mrs. Shamsy Sukumaran, Faculty Lecturer, Albertian Institute of Management, Kochi, for her constant support and timely suggestions. I would also thank my Parents and friends whose cooperation, assistance and involvement was a constant source of inspiration for me.

Yesmitha A Jain

DECLARATION

I hereby declare that, the Research Project Report entitled “Credit Risk Management: A study with reference to South Indian Bank Ltd” is a record of bona-fide work done by me in South Indian Bank Ltd from June to August 2011 under the supervision of Mr. John Abraham, Manager, South Indian Bank Ltd, Ekm and Ms. Indu George, Faculty Lecturer, Albertian Institute of Management and that no part of this report has formed the basis for award of any degree, diploma, associateship, fellowship or any other similar title or recognition in any other institution.

Kochi 10-11-2010 Yesmitha A Jain

CHAPTER 1 INTRODUCTION

Introduction:
This project study has been undertaken under the Corporate Financial Management Department and Integrated Risk Management Department to develop an insight in to the risk management practices of the South Indian Bank Ltd with special references to Credit Risk Management. The study focuses on the implementation of tools like Maturity Gap Sensitivity

Scope of the Study
This study covers advance, loans, payables, receivables and income, and risk management system of South Indian Bank ltd and also an overall aspect of capital adequacy, Non Performing Asset and Asset quality.

Nature of the Study
 A descriptive study is conducted to study the “Credit Risk Management” of South Indian bank Limited, Ernakulam.

Objective of the Study
Primary Objectives:  To study the credit risk management operations (assessment & procedures) in South Indian Bank Ltd.  To study different kinds of risks existing in South Indian Bank Ltd.

Secondary Objectives:  To study the effect on risk management in capital adequacy ratio of South Indian Bank.  To identify the effect of Basel II norms regarding risk management in banks.  To study the impact of asset quality on credit risk management of the bank.  To analyze actual credit exposure of the bank.

Sources of data
Data collection from secondary sources  Annual Reports  Company Records  Data published on websites  Journals  Websites  Manual book of Bank  Brochures  RBI website

Tools used for Data Collection
 Capital Adequacy Ratio  Asset Quality  ENPA  Correlation  Bar diagram  Pie-chart

Period of Study
The period of study was completed in the month of June and August, 2011.

Limitation of the Study
 Availability of literature is limited. The data for the project is mainly compiled from the Credit Risk Management Statements of bank.  A comprehensive outlook of Credit Risk Management could be projected.  Lack of availability of confidential data  Unavailability of Financial Data restricted to know the financial status of the company  Time constraint

INDUSTRY PROFILE

BANK
A Bank is a financial institution that serves as a financial intermediary. Banker or Bank is a financial institution that acts as a payment agent for customers, and borrows and lends money. Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, Electronic Fund Transfer at Point Of Sales, and automated teller machine (ATM).

BANKING INDUSTRY
The Banking Industry was once a simple and reliable business that took deposits from investors at a lower interest rate and loaned it out to borrowers at a higher rate. However deregulation and technology led to a revolution in the Banking Industry that saw it transformed. Banks have become global industrial powerhouses that have created ever more complex products that use risk and securitization in models. Through technology development, banking services have become available 24 hours a day, 365 days a week, through ATMs, at online bankings, and in electronically enabled exchanges where everything from stocks to currency futures contracts can be traded .

The Banking Industry at its core provides access to credit. In the lenders case, this includes access to their own savings and investments, and interest payments on those amounts. In the case of borrowers, it includes access to loans for the creditworthy, at a competitive interest rate. Banking services include transactional services, such as verification of account details, account balance details and the transfer of funds, as well as advisory services that help individuals and institutions to properly plan and manage their finances. Online banking channels have become key in the last 10 years. Mortgage banking has been encompassing for the publicity or promotion of the various mortgage loans to investors as well as individuals in the mortgage business. Online banking services has developed the banking practices easier worldwide. The collapse of the Banking Industry in the Financial Crisis, however, means that some of the more extreme risk-taking and complex securitization activities that banks increasingly engaged in since 2000 will be limited and carefully watched, to ensure that there is not another banking system meltdown in the future.

RECENT DEVELOPMENTS IN THE GLOBAL BANKING INDUSTRY
A total asset of global banking industry is about hundred trillion in US $. Banking and Insurance industry was affected by financial crisis of 2008. The crisis began with the collapse of Lehman Brothers in the US, which rapidly spread all over the world resulting to great economic recession after post war era. The credit crunch and liquidity situation further worsen the market resulting too volatile market condition. Government and central banks all over the world took necessary steps to save global economy and market condition. Global banking and insurance industry is expected to recover rapidly from current economic recession supported by the growth in emerging market economies. BRIC nations offer great potential to insurance industry due to their huge population. Critical to success in the banking and insurance is the knowledge of market trends, product mix shifts, customer needs and effective market strategies. Our continuous networking with customers and competitors creates complete visibility thus helping our customers make confident business decisions. The global financial crisis will bring about the most significant changes to the American and European banks have seen in decades. There will be fundamental reregulation of the industry, ownership structures are shifting towards heavier state involvement and investor scrutiny is rising strongly. Equity ratios will be substantially higher. As a result, growth and profitability of the banking sector as a whole are likely to decline.

INDIAN BANKING INDUSTRY

The Indian banking sector has witnessed wide ranging changes under the influence of the financial sector reforms initiated during the early 1990s. The approach to such reforms in India has been one of gradual and non-disruptive progress through a consultative process. The emphasis has been on deregulation and opening up the banking sector to market forces. The Reserve Bank has been consistently working towards the establishment of an enabling regulatory framework with prompt and effective supervision as well as the development of technological and institutional infrastructure. Persistent efforts have been made towards adoption of international benchmarks as appropriate to Indian conditions. While certain changes in the legal infrastructure are yet to be effected, the developments so far have brought the Indian financial system closer to global standards.

Historical Background of Banking in India

From the early Vedic period the giving and taking of credit in one form or the other have existed in Indian Society. The bankers are the pillars of the Indian society. Early days bankers were called as indigenous bankers. The development of modern banking has started in India since the days of East India Company. These banks mostly had no capital of their own and depended entirely on deposits in India. Indian banking comprises of players who include public sector banks, State bank of India and its associates, private sector banks, scheduled banks, cooperative banks, regional rural banks, foreign banks etc. The banking industry worldwide is transformed concomitant with a paradigm shift in the Indian economy from manufacturing sector to nascent service sector. Indian banking as a whole is undergoing a change. Indian banks have always proved beyond doubt their adaptability to mould themselves into agile and resilient organizations. The first bank in India, General Bank of India was established in 1786. From 1786 till today, the journey of Indian banking system can be segregated into three distinct phases. They are as follows

Early phase from 1786 to 1969 of Indian Banks. Nationalization of Indian banks and up to 1991 prior to Indian banking sector reforms.

New phase of Indian banking system with the advent of Indian Financial & Banking sector Reforms after 1991.

Journey of Indian Banking system can be segregated into 3 distinct phases: PHASE I:
      

1786- The General Bank of India, Bank of Hindustan, Bengal Bank 1809- East India Company established Bank of Bengal 1840- Bank of Bombay 1843- Bank of Madras 1865- Allahabad Bank 1894- Punjab National Bank Ltd. 1906-1913- Bank of India, Central bank of India, Bank of Baroda, Canara Bank, Indian Bank, Bank of Mysore

     

1920- Imperial Bank of India 1935- RBI Growth was slow & experienced periodic failures b/w 1913- 1948. Approximately 1,100 banks, mostly small The Banking Companies Act, 1949 Banking Regulation Act, 1949

PHASE II:

Nationalization of Indian banks & up to 1991 prior to Indian Banking sector reforms.

    

1955- Nationalized Imperial Bank of India 1960- 7 subsidiaries of SBI nationalized 19th July, 1969- 14 banks nationalized 1980- 7 banks nationalized (80% of banking segment – Gov. owned) Nationalization lead to increase in deposits & advances.

PHASE III:

New phase of Indian Banking system with advent of Indian Financial & Banking Sector Reforms after 1991.

       

Introduced many products & facilities in banking sector. 1991- Narasimham Committee was setup New phase brought in many changes: Foreign banks ATM stations Customer service Phone banking Net banking

CURRENT SCENARIO
 Business Environment:

The Indian economy is on a growth path with the real GDP growth upwards of 9%. Industrial and services sectors have accelerated growth while growth in agricultural sector has continued to remain moderate. Inflation remained an area of concern. There was however robust build up of foreign exchange resources - close to $ 200 bn. Stock markets were buoyant while the Indian Rupee continued to appreciate against US Dollar.  Banking Scenario:

The future of the banking sector appears quite promising though there are quite a few challenges to contend with. The customer is more discerning and has a much wider access to technology and knowledge. Hence the imperative need to roll out innovative customized products which will be the key differentiator amongst banks. Time and distance have shrunk and the internet has greatly facilitated global reach and therefore, evolution of delivery channels and interactive services have been a boon to banking. The core banking solution platform is being increasingly adopted by the banks to fully realize the opportunity thrown up by technology. Unlike the previous year, credit growth of the system was not as profound but quite robust nonetheless and resources though not really scarce, were a bit expensive. RBI initiated various measures such as increase of reverse repo rate, higher CRR

prescriptions etc. which were aimed at moderating credit growth. To certain sector specific instructions have also been issued by RBI to rein in expansion of Bank credit to such sectors. All this ushered in a period of increasing cost, declining yields and consequently pressure on margins. Healthy rebalancing of the credit portfolio was the answer to this syndrome.

HIGHLIGHTS OF THE BANKS PERFORMANCE
The year gone by was an exceptional year for the Bank in terms of most parameters. Net profit surged by 60% from Rs. 701 crores to Rs. 1123 crores and the global business mix crossed the milestone mark of Rs. 200,000 crores to touch Rs. 207,000 crores. While deposits grew by 27.6% to Rs. 119882 crores, the share of low cost deposits hovered at 40% and your bank continues to be one of the few banks with such a large share of low cost deposits. Credit expansion was a robust 30% touching an aggregate level of Rs.86791 crores. The growth has been quite broad based encompassing various segments such as agriculture, industry, SME and retail. Foreign branches accounted for a smart rise of 34% in advances. Priority Sector not only constitutes the Bank's social commitment, but is recognized today as a profitable business opportunity. With almost two third branches in rural and semi urban areas, the bank has ably risen to the occasion. While agriculture clocked a growth of 25% and constituted 18.5% of net bank credit, priority sector grew by almost 23% and accounted for 45.5% of net bank credit. The Bank could for the first time record net NPA below 1%. In fact on the back of robust cash recoveries of Rs. 752 crores and upgradation of Rs. 132 core, gross NPA slid by Rs. 379 crores to Rs. 2100 crores. Recoveries together with prudent provisioning saw Net NPA falling sharply to Rs. 632 crores from Rs. 970 crores resulting in a healthy loan loss coverage ratio.3

Challenges facing Banking Industry in India
The banking industry in India is undergoing a major transformation due to changes in economic conditions and continuous deregulation. These multiple changes happening one after other has a ripple effect on a bank (Refer fig. 2.1) trying to graduate from completely regulated seller market to completed deregulated customers market.  Deregulation: This continuous deregulation has made the Banking market extremely competitive with greater autonomy, operational flexibility and decontrolled interest rate and liberalized norms for foreign exchange. The deregulation of the industry coupled with decontrol in interest rates has led to entry of a number of players in the banking industry. At the same time reduced corporate credit off take thanks to sluggish economy has resulted in large number of competitors batting for the same pie.  New rules: As a result, the market place has been redefined with new rules of the game. Banks are transforming to universal banking, adding new channels with lucrative pricing and freebees to offer. Natural fall out of this has led to a series of innovative product offerings catering to various customer segments, specifically retail credit.

 Efficiency: This in turn has made it necessary to look for efficiencies in the business. Banks need to access low cost funds and simultaneously improve the efficiency. The banks are facing pricing pressure, squeeze on spread and have to give thrust on retail assets.  Diffused Customer loyalty: This will definitely impact Customer preferences, as they are bound to react to the value added offerings. Customers have become demanding and the loyalties are diffused. There are multiple choices, the wallet share is reduced per bank with demand on flexibility and customization. Given the relatively low switching costs; customer retention calls for customized service and hassle free, flawless service delivery.  Misaligned mindset: These changes are creating challenges, as employees are made to adapt to changing conditions. There is resistance to change from employees and the Seller market mindset is yet to be changed coupled with Fear of uncertainty and Control orientation. Acceptance of technology is slowly creeping in but the utilization is not maximized.  Competency Gap: Placing the right skill at the right place will determine success. The competency gap needs to be addressed simultaneously otherwise there will be missed opportunities. The focus of people will be on doing work but not providing solutions, on escalating problems rather than solving them and on disposing customers instead of using the opportunity to cross sell.

Strategic options with banks to cope with the challenges
Leading players in the industry have embarked on a series of strategic and tactical initiatives to sustain leadership. The major initiatives include:  Investing in state of the art technology as the back bone to ensure reliable service delivery  Leveraging the branch network and sales structure to mobilize low cost current and savings deposits  Making aggressive forays in the retail advances segment of home and personal loans  Implementing organization wide initiatives involving people, process and technology to reduce the fixed costs and cost per transaction  Focusing on fee based income to compensate for squeezed spread, (e.g. CMS, trade services)  Innovating Products to capture customer „mind share‟ to begin with and later the wallet share  Improving the asset quality as per Base II norms

In this era of increasing competition, banks will have to benchmark themselves against the best in the world. For a resilient and strong banking and financial system, the banks need to tackle issues like increase in profitability, efficiency, and productivity while achieving economies of scale through consolidation and exploring available cost-effective solutions.

Major Players in the Indian Banking Industry:
Indian banking has grown much stronger than its Asian counterparts in recent years, in terms of both performance indices and product range. The continued deregulation of deposits and interest on loans have led to a greater understanding of capital structure, increased competition and autonomy, as well as technological upgradation. 56 of India‟s domestic banks account for 95% of assets. In terms of net profit, the State Bank of India is the main bank followed by ICICI bank, Punjab National bank and Canara Bank (Figure 7.30) .

Fig: 2.1 Indian Top Five Player in Banking

COMPANY PROFILE

SOUTH INDIAN BANK
One of the earliest banks in South India, "South Indian Bank" came into being during the Swadeshi movement. The establishment of the bank was the fulfillment of the dreams of a group of enterprising men who joined together at Thrissur, a major town (now known as the Cultural Capital of Kerala), in the erstwhile State of Cochin to provide for the people a safe, efficient and service oriented repository of savings of the community on one hand and to free the business community from the clutches of greedy money lenders on the other by providing need based credit at reasonable rates of interest. Translating the vision of the founding fathers as its corporate mission, the bank has during its long sojourn been able to project itself as a vibrant, fast growing, service oriented and trend setting financial intermediary.

Vision
To emerge as the most preferred bank in the country in terms of brand, values, principles with core competence in fostering customer aspirations, to build high quality assets leveraging on the strong and vibrant technology platform in pursuit of excellence and customer delight and to become a major contributor to the stable economic growth of the nation.

Mission
To provide a secure, agile, dynamic and conducive banking environment to customers with commitment to values and unshaken confidence, deploying the best technology, standards, processes and procedures where customer convenience is of significant importance and to increase the stakeholders‟ value.

Objectives
 To provide a secure, agile, dynamic and conducive banking environment to customers  To provide best technology  To provide standards, processes and procedures where customer convenience is of significant importance and to increase the stakeholders‟ value

The Bank’s shares are listed on
 

The Cochin Stock Exchange Ltd (CSE) The Stock Exchange Mumbai (BSE) The National Stock Exchange of India Ltd Mumbai (NSE)

Technology Promotion Drive of South Indian Bank

Our bank had embarked upon a massive technology up gradation drive by introduction of a Centralized Core banking solution. For this a modern Data Center has been set up at Kochi, connecting all branches with all the Departments at Head Office, all Regional Offices, the Treasury Dept at Mumbai and the IBD at Kochi. This robust network facilitates anywhere banking, Networked ATMs, Internet Banking, Mobile Banking, Global debit cum ATM card operations, Online trading, online shopping etc. The Sibertech project was launched with a target of connecting the 200 odd branches in two phases by March 2004. Towards this endeavor, the bank has concluded a technology partnership with M/s Infosys Technologies Ltd for Finacle, the Core Banking Solution, M/s HCL Infosystems

Ltd. for Network Integration and M/s WIPRO for Data Centre set up and Maintenance. The Sibertech Project was formally launched on January 17,2001 by Sri.N.R.Narayana Murthy, Chief Mentor, Infosys Technologies Ltd in a colorful function at Kochi. The state of the art Data Center of international standards at Kochi, is the only one of its kind in the banking industry in Kerala. A number of dignitaries have visited this Data Center, including Sri.Azim.H.Premji, Chairman & Managing Director, Wipro Ltd. Per se bank has achieved 100% Core Banking Solutions by 24th March, 2007.Further to strengthen the ATM reach and global acceptability Bank has introduced Master Card Global Debit- cum- ATM card, which can be used at ATMs and merchandise all over the world. We have launched internet banking primarily focusing the individual as well as corporate clients. The Bank has also introduced Mobile banking for customers as a value addition. The aim of the Bank is to offer the latest technology driven value added services to the customers without compromising our motto - Blending Tradition with Technology.

Milestones

The FIRST among the private sector banks in Kerala to become a scheduled bank in 1946 under the RBI Act.

The FIRST bank in the private sector in India to open a Currency Chest on behalf of the RBI in April 1992.

The FIRST private sector bank to open a NRI branch in November 1992.

The FIRST bank in the private sector to start an Industrial Finance Branch in March 1993.

The FIRST among the private sector banks in Kerala to open an "Overseas Branch" to cater exclusively to the export and import business in June 1993.

The FIRST bank in Kerala to develop an in-house, a fully integrated branch automation software in addition to the in-house partial automation solution operational since 1992.

 

The FIRST Kerala based bank to implement Core Banking System. The THIRD largest branch network among Private Sector banks, in India, with all its branches under Core banking System.

Future Perfect
The South Indian Bank with a new logo and image, marches on. With branches all over India and a clientele across the world, the bank is considered one of the most pro active banks in India with a competent tech savvy team of professional at the core of services.

Awards and Recognition
 South Indian Bank has bagged the Businessworld India‟s Best Bank 2010 Award  South Indian Bank has also bagged the best web site award from Kerala Management Association.  receives the award for the “Best Bank” in the old generation banks‟ category  receives the award for the best bank in asset quality among all private sector banks in India  South Indian Bank (SIB) bagged the best “Asian Banking Web Site” award from the Charlton Media Group, Singapore under the banner “Asian Banking & Finance Retail Banking Awards-2008”. Among the 100+ nominations for the Best Web Site category from various banks in Asia, SIB emerged victorious to receive this award as the owner of the Best Web Site  South Indian Bank has won a special award for excellence in Banking Technology from IDRBT (Institute for Development and Research in Banking Technology) – the technical arm of the Reserve Bank of India. This award was presented to our Bank as a national level recognition to the excellent contribution made in the area of Information Systems Security Policies and Procedures. Competing against top level banks in India across all categories such as Public Sector Banks, Private Sector Banks, Foreign Banks and Co-operative Banks, the recognition from IDRBT is really a feather in the cap.  In the “ASSOCHAM-ECO PULSE” study, the bank had been rated as a “Top NPA Manager” for having reduced Net NPA substantially within one year

The Structure of South Indian Bank
The structure of South Indian a bank is Head Office, Regional Office, Branch Office, Extension Counters and ATM Counters.  Head Office: South Indian Bank‟s functions are controlled and co-ordinated by the Head office. The Head Office of South Indian Bank is in Trichur, Kerala. It controls the activities of regional offices and branch offices. All most all the departments are there in the Head Office. Every decision is taken here. Since all the departments are there in the Head Office, every function is done here. The main functions of Head office are given below. It controls all the activities of bank: The managing Director‟s Secretariat is there in the head office. So all most all the decisions pertaining to the smooth administration of the bank is taken here. It checks all the accounts of different Regional Offices and Branch Offices through its accounts departments. Strong and sound DICT is there to make proper communication. It deals with all the legal issues of the bank through the legal departments. It checks the NRI account portfolio through its NRI division. It checks and reviews the customer relationship management.  Regional Office: To make the administration and functions easier, Regional Offices are set up for each region. It acts as a link between branches and head office. In each region, certain number of branches and extension counters are there. Administration is very difficult according to the increase of the branches. Regional office makes the function of head office lesser through its co

responsibility. The Regional Offices of South Indian Bank is given below: Bangalore, Chennai, Coimbatore, Delhi, Ernakulum, Hyderabad, Kolkata, Kottayam, Kozhikode, Mumbai, Pathanamthitta, Palakad, Trivandrum, Trichur, and Madurai.  Branch Office: There are 580 branches for South Indian Bank. They come under specific Regional office. To make personal contact with the customers, branches are very useful. In branch offices, we can‟t see all the departments. But every function of the bank such as accepting deposits, issuing loan and clearing is there. Job rotation is there in branch offices.  Extension Counter: It is same as branch. It also has the similar functions of branches except issuing of loans. As of now, there are only three extension counters are there. It is the preceding stage to make a branch.  ATM Counters: The main purpose of the bank is to reduce the burden of the customer. So the banks have opened ATM Counters at different places to avoid the wastage of time and different formalities. South Indian Bank has set up 375 ATM Counters all over India. South Indian Bank‟s Global ATM-Cum-Debit Cards are now acceptable in the Master Card International Network System as well as in the domestic National Financial Switch (NFS) Network System owned by IDRBT, the technical arm of RBI. Provide on-line access to Savings Bank or Current accounts of South Indian Bank. Tied up with the worldrenowned service provider, MasterCard International; can be used in 8,

30,000 ATMs & 7 million Point of Sale (POS) terminals worldwide. South Indian Bank being a member of NFS network, South Indian Bank cards are acceptable in other member banks ATMs. It can be used in 31000+ ATMs in India. The Maestro Debit card is a PIN based card and operates similar to ATM making it 100% secure, even in POS terminals. Global Cards are issued free of cost to the customers of South Indian Bank. Nominal fee is charged to the users at other Bank‟s ATMs. Cash withdrawal limits through ATMs is up to Rs.20, 000/- per day.

ORGANIZATION CHART

MAIN OBJECTIVES AND BUSINESS OF THE BANK
1. To establish and carry on the business of banking al registered office of the company and at such branches 2. Carrying on the business of accepting deposit of money on current account and to carry on the business of banking 3. The borrowing, raising or taking up money, the lending or advancing of money either upon or without security, the drawing, making, accepting, discounting, buying, selling, collecting and dealing in the Bill of exchange, promissory notes, coupons and other instruments and securities, the buying, selling and dealing in bullion and foreign exchange, dealing in other instruments like share, bond, etc. 4. Contracting for public and private loans and negotiating the issuing it 5. Acts as the agent of the Government or local authorities or any other than the business of managing agent. 6. Carrying out all such things as are incidental or conductive to te promotion or advancement of the business of the company 7. To undertake and carry on all other forms of business as may be permissible for banking company From the modest beginning of the bank in 1929, today the bank has reached to the status of one of the most performing private sector banks in the country working through network of 584 branches. Just like any other bank, reforms made its impacts on South Indian Bank also. There are a number of departments functioning in the working of the bank. Every department is having its own functional areas, powers and responsibilities.

The Various Departments Include:
 Human Resource Development Department  Training and Development Department  Support Service Department  Corporate Financial Management Department  Integrated Risk Management Department  Computer Department  Secretarial Department  Credit Control Department  Inspectiogn Department & Vigilance Department  Accounts Department  Marketing Department  Legal Department

Logo and Corporate colour
New logo and corporate colour of the bank was launched in 5 thMarch, 2007. The new logo should pronounce the birth of next generation bank and the corporate colour should match bank work to the stake holders and services to bank customers. „S‟ projects a Safe, Solid, Smart, Strong, Secular, Shinning, Schooled, Seasoned, and Straight forward bank, Cardinal Red represents Energy, Creativity, Warmth, and Love.

The credit rating system is essentially one point indicator of an individual credit exposure and is used to identify, measure, and monitor the credit risk of individual proposal. At the whole bank level, credit rating system enables tracking the health of banks entire credit portfolio.

Most banks in India have put in place the system of internal credit rating. While most of the banks have developed their own models, a few banks have adopted credit rating models designed by rating agencies. Credit rating models take into account various types of risks viz. financial, industry and management, etc associated with a borrowal unit. The exercise is generally done at the time of sanction of new borrowal account and at the time of review/renewal of exercising credit facilities.

CREDIT RISK MANAGEMENT

THEORITICAL BACKGROUND
In course of banks lending involves a number of risks. In addition to the risks related to creditworthiness of the counterparty, the banks are also exposed to interest rate, forex and country risks. Unlike market risks, where the measurement, monitoring, control etc. are to a great extent centralized. Credit risks management is a decentralized function or activity. This is to say that credit risk taking activity is spread across the length and breadth of the network of branches, as lending is a decentralized function. Proper a sufficient care has to be taken for appropriate management of credit risk.

Credit risk is an investor's risk of loss arising from a borrower who does not make payments as promised. Such an event is called a default. Another term for credit risk is default risk. Credit risk or default risk involves inability or unwillingness of a customer or counterparty to meet commitments in relation to lending, trading, hedging, settlement and other financial transactions.

Definition: Credit Risk may be defined as, “the risk of default on the part of the borrower”. The lender always faces the risk of the counter party not repaying the loan or not making the due payment in time. This uncertainty of repayment by the borrower is also known as default risk.

Aim of CRM:
The main aim of CRM is to maximize a bank's risk-adjusted rate of return by maintaining credit risk exposure within acceptable parameters.

Objective of CRM:
The objective of credit risk management is to minimize the risk and maximize banks risk adjusted rate of return by assuming and maintaining credit exposure within the acceptable parameters. The Credit Risk is generally made up of:1. Transaction risk or default risk, and 2. Portfolio risk. The portfolio risk in turn comprises intrinsic and concentration risk. The credit risk of a bank‟s portfolio depends on:1. External factors: The external factors are the state of the economy, rates and interest rates, trade restrictions, economic sanctions, wide swings in

commodity/equity prices, foreign exchange rates and interest rates, trade restrictions, economic sanctions, Government policies, etc. 2. Internal factors: The internal factors are deficiencies in absence of prudential credit concentration limits, loan policies/administration, inadequately defined lending limits for Loan Officers/Credit Committees, deficiencies in appraisal of borrowers financial position, excessive dependence on collaterals and inadequate risk pricing, absence of loan review mechanism and post sanction surveillance, etc.

Another variant of credit risk is counterparty risk. The counterparty risk arises from non-performance of the trading partners. The non-performance may arise from counterparty‟s refusal/inability to perform due to adverse price movements or from external constraints that were not anticipated by the principal. The counterparty risk is generally viewed as a transient financial risk associated with trading rather than standard credit risk. The management of credit risk should receive the top management‟s attention and the process should encompass:

Measurement of risk through credit rating/scoring:
(a) Quantifying the risk through estimating expected loan losses i.e. the amount of loan losses that bank would experience over a chosen time horizon (through tracking portfolio behavior over 5 or more years) and unexpected loss (through standard deviation of losses or the difference between expected loan losses and some selected target credit loss quantile); (b) Risk pricing on a scientific basis; and (c) Controlling the risk through effective Loan Review Mechanism and portfolio management.

Committee for CRM:
The credit risk management process should be articulated in the bank‟s Loan Policy, duly approved by the Board. Each bank should constitute a high level Credit Policy Committee, also called Credit Risk Management

Committee or Credit Control Committee etc. to deal with issues relating to credit policy and procedures and to analyze, manage and control credit risk on a bank wide basis. The Committee should be headed by the Chairman/CEO/ED, and should comprise heads of Credit Department, Treasury, Credit Risk Management Department (CRMD) and the Chief Economist. The Committee should, inter alia, formulate clear policies on standards for presentation of credit proposals, financial covenants, rating standards and benchmarks, delegation of credit approving powers, prudential limits on large credit exposures, asset concentrations, standards for loan collateral, portfolio management, loan review mechanism, risk concentrations, risk monitoring and evaluation, pricing of loans, provisioning, regulatory/legal compliance, etc.

Credit Risk Management Department (CRMD)

Concurrently, each bank should also set up Credit Risk Management Department (CRMD), independent of the Credit Administration Department. The CRMD should enforce and monitor compliance of the risk parameters and prudential limits set by the CPC. The CRMD should also lay down risk assessment systems, monitor quality of loan portfolio, identify problems and correct deficiencies, develop MIS and undertake loan review/audit. Large banks may consider separate set up for loan review/audit. The CRMD should also be made accountable for protecting the quality of the entire loan portfolio. The Department should undertake portfolio evaluations and conduct comprehensive studies on the environment to test the resilience of the loan portfolio.

The effective management of credit risk is essential to the long-term success of any banking organization.

Methods of Credit Risk:

Some of the commonly used methods to measure credit risk are:

1. Ratio of non performing advances to total advances; 2. Ratio of loan losses to bad debt reserves; 3. Ratio of loan losses to capital and reserves; 4. Ratio of loan loss provisions to impaired credit; 5. Ratio of bad debt provision to total income; etc.

Managing credit risk has been a problem for the banks for centuries. As had been observed by John Medlin, 1985 issue of US banker. “Balancing the risk equation is one of the most difficult aspects of banking. If you lend too liberally, you get into trouble. If you don‟t lend liberally you get criticized”. Over the tears, bankers have developed various methods for containing credit risk. The credit policy of the banks generally prescribes the criteria on which the bank extends credit and, inter alia, provides for standards.

ANALYSIS & INTERPRETATION

Analysis of Data

1) CAPITAL ADEQUACY RATIO

Capital adequacy ratios (CAR) are a measure of the amount of a bank's core capital expressed as a percentage of its risk-weighted asset. Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk, etc. In the most simple formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders. Banking regulators in most countries define and monitor CAR to protect depositors, thereby maintaining confidence in the banking system. CAR can be viewed from two aspects: a) Total advancement to total assets b) Total investment to total assets

Capital Adequacy Ratio is defined as, CAR = Capital Risk Weighted Assets

Table No:5.1Capital Adequacy Ratio YEAR BASEL I BASEL II 2006-2007 11.08 2007-2008 13.8 2008-2009 13.89 14.76 2009-2010 14.73 15.39 2010-2011 13.17 14.01

Interpretation: The CRAR has declined to 13.17 in 2010-11 which was 14.73 in 2009-10. Thus, it is showing slight inefficient management of credit risk as per Basel norms.

Chart No:5.1 Capital Adequacy Ratio
18 16 14 12 10 8 6 4 2 0 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 BASEL I BASEL II

a) Total Advances to Total Assets
Table No:5.2 Total Advances to total assets (Crore) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Advances 7,919 10,454 11,848 15,823 20,489 Assets 13,653 17,090 20,379 25,534 32,820 Ratio 0.58 0.61 0.58 0.62 0.62

Interpretation: The ratio is showing an increasing trend at 0.62 in 2010-11 which implies proper balancing of advances & assets. Chart No:5.2 Total Advances to total assets

Ratio
0.63 0.62 0.61 0.6 0.59 0.58 0.57 0.56 0.55 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 0.58 0.58 Ratio 0.61 0.62 0.62

b) Total Investment to Assets
Table No:5.3 Total Investments to Assets (Crore) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Investment 3430 4572 6075 7156 8924 Assets 13,653 17,090 20,379 25,534 32,820 Ratio 0.25 0.27 0.3 0.28 0.27

Interpretation: The ratio is showed an increasing trend till from 2006-07 to 200809 and from 2009-10 it decreased; it shows inefficiency in maintenance of investments & assets Chart No: 5.3: Total Investments to Assets

Ratio
0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Ratio 0.25 0.27 0.3 0.28 0.27

2) ASSET QUALITY

Asset quality is related to the left-hand side of the bank balance sheet. Bank managers are concerned with the quality of their loans since that provides earnings for the bank. Loan quality and asset quality are two terms with basically the same meaning. Government bonds and T-bills are considered as good quality loans whereas junk bonds, corporate credits to low credit score firms etc. are bad quality loans. A bad quality loan has a higher probability of becoming a non-performing loan with no return.

This can be calculated using two ratios: a) Net NPA‟s to total assets, and b) Net NP‟s to total advances.

a) Net NPA’s to Total Assets
This ratio helps in identifying the quality of the asset of the bank. It can be calculated by dividing Net NPA by Total assets. Lesser the ratio shows the good quality of the asset. Table No:5.4:Net NPA’s to Total Assets (Crore) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Net NPA 77.81 33.97 134.31 61.57 60.02 Total Assets 13,653 17,090 20,379 25,534 32,820 Percentage 0.56 0.19 0.66 0.24 0.18

Interpretation: The percentage of Net NPA to Total assets has decreased to 0.18% during 2010-11. This indicates a sound asset quality. Chart No:5.4: Net NPA‟s to Total Assets

Percentage
0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 0.24 0.19 0.18 Percentage 0.56 0.66

b) Net NPA’s to Total Advances
Net NPA shows the level of net NPA on net advances given by the bank. It can be calculated by dividing net NPA by net advances. Higher the ratio more will be the alarming situation for the bank and vice-versa. Table No:5.5: Net NPA’s to Total Advances (Crore) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Net NPA 77.81 33.97 134.31 61.57 60.02 Advances 7,919 10,454 11,848 15,823 20,489 Percentage 0.98 0.32 1.13 0.39 0.29

Interpretation: The percentage is showing an decreasing trend from the period 2008-2009 to 2010-11, 0.29% due to good management. Chart No: 5.5: Net NPA‟s to Total Advances

Percentage
1.2 1 0.8 0.6 0.4 0.32 0.2 0 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 0.39 0.29 Percentage 0.98 1.13

3) EARNING PER NON PERFORMING ASSETS
An NPA is defined as a loan asset, which has ceased to generate any income for a bank whether in the form of interest or principal repayment.

Exposure to Credit Risk
 The bank can quantify the credit risk on the basis of the level of NPA‟s. The following expression quantifies the credit risk of the bank.

Earning per Non Performing Asset ( ENPA) can be calculated using the following formulae: ENPA = (EBT/TA) / (NPA’s/ TA)

ENPA- Earning per Non Performing Assets NPA – Non Performning Assets TA - Total Assets EBT– Earnings before tax

Credit Risk ratio of South Indian Bank
Table No:5.6: Earning per Non Performing Assets (Crore)
Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 EBT 160.33 246.95 303.23 381.32 467.05 TA 13,653 17,090 20,379 25,534 32,820 NPA 77.81 33.97 134.31 61.57 60.02 ENPA 2.2 7 2.14 7.2 7

Interpretation: The ENPA during 2010-11 has come down to 7 from 7.2 Chart No:5.6: Earning per Non Performing Assets

ENPA
8 7 6 5 4 3 2 1 0 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2.2 2.14 ENPA 7 7.2 7

4) CORRELATION
Correlation refers to any of a broad class of statistical relationships involving dependence. The correlation coefficient is a measure of linear association between two variables. Use the Correlation transformer to determine the extent to which changes in the value of an attribute (such as length of employment) are associated with changes in another attribute (such as salary).

Following are some of the correlation analysis made: a) Correlation between deposits and advances: It shows the relationship between deposits and advances in the bank over a period of time.

b) Correlation between deposits and net profit: It shows the relationship between deposits and net profit in the bank over a period of time.

c) Correlation between net profit and advances: It shows the relationship between net profit and advances in the bank over a period of time.

a) Correlation between Deposits and Advances

Table No: 5.7: Correlation between Deposits and Advances (Crore) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Deposits 12240 15156 18093 23011 29720 Advances 7,919 10,454 11,848 15,823 20,489

Interpretation: The deposits have increased over the years thus leading to an increase in the advances.

Chart No: 5.7: Correlation between Deposits and Advances
35000 30000 25000 20000 15156 15000 10000 5000 0 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 12240 7,919 10,454 11,848 18093 15,823 Deposits Advances 23011 20,489 29720

b) Correlation between Deposits and Net Profit
Table No:5.8: Correlation between Deposits and Net Profit (Crore) Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Deposits 12240 15156 18093 23011 29720 Net Profit 104.12 151.62 194.75 233.76 292.56

Interpretation: Increase in deposits has also lead to an increase in the Net profit during 2010-11. Chart No: 5.8: Correlation between Deposits and Net Profit
35000 30000 25000 20000 15156 15000 10000 5000 104.12 0 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 151.62 194.75 233.76 292.56 12240 18093 Deposits Net Profit 23011 29720

c) Correlation between Advances and Net Profit
Table No:5.9:Correlation between Advances and Net Profit Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 Advances 7,919 10,454 11,848 15,823 20,489 Net profit 104.12 151.62 194.75 233.76 292.56

Interpretation: The Net profit has increased to 292.56 in 2010-11 while it was only 104.12 in 2006-07.

Chart No: 5.9: Correlation between Advances and Net Profit
22,500 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 104.12 151.62 194.75 233.76 292.56 7,919 11,848 10,454 Advances Net profit 15,823 20,489

5) Analysis of Deposit Mix

Table No:5:10: Analysis of Deposit Mix (Crore) Demand Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 deposits 619 773 846 1052 1201 Savings deposit 2311 2876 3460 4271 5203 Term deposits 9310 11507 13787 17688 23316 Total deposits 12240 15156 18093 23011 29720

Chart No: 5:10: Analysis of Deposit Mix
35000 30000 25000 20000 15000 10000 5000 0 Demand deposits Savings deposit Term deposits Total deposits

a) Percentage of Demand Deposits to Total Deposit
Table No:5.11:Percentage of Demand Deposits to Total Deposit (Crore) Demand Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 deposit 619 773 846 1052 1201 total deposit 12240 15156 18093 23011 29720 % of deposits 5.06 5.1 4.68 4.57 4.04

Interpretation: The proportion was 5.06% in 2006-07 & is 4.04% in 2010-11, which is shows an decreasing trend in percentage

Chart No: 5.11:Percentage of Demand Deposits to Total Deposit

% to total deposits
6 5 4 3 2 1 0 % to total deposits 5.06 5.1 4.68 4.57 4.04

b) Percentage of Savings Deposits to Total Deposits
Table No: 5.12:Percentage of Savings Deposits to Total Deposits (Crore) Saving Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 deposit 2311 2876 3460 4271 5203 Total deposit 12240 15156 18093 23011 29720 % of total deposit 18.88 18.98 19.12 18.56 17.51

Interpretation: The proportion was 18.88% in 2006-07 & has increased to 19.12 in 2008-09.and later during 2009-10 to 2010-2011 it has decreased.

Chart No: 5.12:Percentage of Savings Deposits to Total Deposits

% to total deposit
19.5 19 18.5 18 17.5 17 16.5 17.51 % to total deposit 18.88 18.98 19.12 18.56

c) Percentages of Term Deposits to Total Deposits
Table No: 5.13: Percentages of Term Deposits to Total Deposits (Crore) Term Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 deposit 9310 11507 13787 17688 23316 total deposit 12240 15156 18093 23011 29720 % of total deposit 76.06 75.92 76.2 76.87 78.45

Interpretation: The proportion is showing a consistent relation from 2006-07 from 76.06 to 2010-11 78.45.

Chart No: 5.13: Percentages of Term Deposits to Total Deposits

% of total deposit
79 78.5 78 77.5 77 76.5 76 75.5 75 74.5 78.45

76.87 76.06 75.92 76.2 % to total deposit

FINDINGS & SUGGESTIONS

FINDINGS  The CRAR has declined to 13.17 in 2010-11 which was 14.73 in 2009-10. Thus, it is showing slight inefficient management of credit risk as per Basel norms.  The ratio is showing an increasing trend at 0.62 in 2010-11 which implies proper balancing of advances & assets.  The ratio is showed an increasing trend till from 2006-07 to 2008-09 and from 2009-10 it decreased; it shows inefficiency in maintenance of investments & assets  The percentage of Net NPA to Total assets has decreased to 0.18% during 2010-11. This indicates a sound asset quality.  The percentage is showing a decreasing trend from the period 2008-2009 to 2010-11, 0.29% due to good management.  The ENPA during 2010-11 has come down to 7 from 7.2  The deposits have increased over the years thus leading to an increase in the advances.  Increase in deposits has also lead to an increase in the Net profit during 2010-11.  The Net profit has increased to 292.56 in 2010-11 while it was only 104.12 in 2006-07.  The percentage of demand deposits to total deposits was 5.06% in 2006-07 & is 4.04% in 2010-11, which is shows an decreasing trend in percentage  The percentage of savings deposits to total deposit was 18.88% in 2006-07 & has increased to 19.12 in 2008-09.and later during 2009-10 to 2010-2011 it has decreased.

 The percentage of term deposits to total deposits is showing a consistent relation from 2006-07 to 2010-11 from 76.06 to 78.45.

SUGGESTIONS  Bank should establish a system that helps identify problem loan ahead of time when there may be more options available for remedial measures.  Banks should disclose to the public, information on the level of risk and policies for risk management.  Bank should take measures to improve its asset quality, so that the credit risk can be minimized.  The bank must put maximum effort to attract the fixed deposits which contribute significantly towards the enhancement of banks profitability.  The bank should maintain a good proportion in their deposits and advances.

CONCLUSION

CONCLUSION
The South Indian Bank with a new logo and image marches on. With branches all over India and a clientele across the world, the bank is considered one of the most pro active banks in India with a competent tech savvy team of professional at the core of services. In 2009-10 South Indian Bank could present an outstanding performance which was beyond market expectations despite the challenging economic scenario where the bank operates. South Indian Bank, the bank that focuses on technology and service delivery, has always come up with innovative banking products to meet the growing demands of the customers.

Largely concentrated in the semi-urban areas of the Southern states of India, SIB's profitable, cost-efficient and technologically up-to-date network constitutes a reasonably attractive stand alone franchise. The Bank's Deposit franchise includes a niche NRI customer base that contributes a meaningful 17% of deposits and gives it a distinguishing cost advantage over several of its peers. At the same time, the Bank is trading at the cheapest valuations among peers.

Even though, the banking sector all over the world has been affected by the recession due to the global meltdown in economy, especially the US banking system, South Indian Bank proved its competence not only in terms of increased profit but also in providing boundless customer service. Among so many players and competitive products, South Indian Bank could maintain its premier and prestigious position only with the support of the customers. This show how bank functions and how the bank fulfills its mission and mission.

SIB's overall strategy and execution has been creditable over the past few years, with the Bank maintaining its market share even in CASA deposits. While bank expects a loss in market share for the peer group that the Bank belongs to, however, based on the Bank's track record, and keeping in mind the importance of customer loyalty in the Banking Industry, South Indian Bank expects the bank to deliver profitable growth above the average growth rate of its peer group  The effectiveness of credit risk management rests where the credit quality is maintained by the bank.  Basel III is likely to improve the risk management systems of banks as the banks aim for adequate capitalization to meet the underlying credit risks and strengthen the overall financial system of the country  Formerly, people were not much bothered about the banking services but now they are comparing banks based on the services offered.

Annexure – I
Mar 2011 Rs. Cr. INCOME : Interest Earned Other Income Total Total II. Expenditure Interest expended Payments to/Provisions for Employees Operating Expenses & Administrative Expenses Depreciation Other Expenses, Provisions & Contingencies Provision for Tax Fringe Benefit tax Deferred Tax Total Total III. Profit & Loss Reported Net Profit Extraordinary Items Adjusted Net Profit Prior Year Adjustments Profit brought forward IV. Appropriations Transfer to Statutory Reserve Transfer to Other Reserves Trans. to Government /Proposed Dividend Balance carried forward to Balance Sheet Equity Dividend % Earnings Per Share-Unit Curr Earnings Per Share(Adj)-Unit Curr Book Value-Unit Curr

Financial Statements
Mar 2010 Rs. Cr 1935.72 255.61 2191.33 1957.57 1367.43 226.32 85.19 16.76 128.35 142.92 0.00 -9.40 2191.33 1957.57 233.76 -0.03 233.79 0.00 14.67 58.45 120.24 52.71 17.03 40.00 20.02 20.02 129.83 Mar 2009 Rs. Cr 1686.92 167.62 1854.54 1659.79 1164.04 214.18 71.60 13.90 89.46 88.54 0.75 17.32 1854.54 1659.79 194.75 0.50 194.25 0.00 9.08 49.00 100.50 39.66 14.67 30.00 16.72 16.72 113.76 Mar 2008 Rs. Cr 1291.23 147.73 1438.96 1287.34 915.10 146.35 62.05 12.19 71.54 47.28 0.40 32.43 1438.96 1287.34 151.62 -0.11 151.73 0.00 8.19 38.00 81.00 31.73 9.08 30.00 16.26 13.01 126.34 Mar 2007 Rs. Cr 976.61 121.54 1098.15 994.03 609.09 133.23 51.93 11.78 145.71 25.29 0.75 16.25 1098.15 994.03 104.12 17.69 86.43 0.00 6.48 26.81 55.01 20.59 8.19 25.00 14.36 11.49 100.10

PROFIT AND LOSS A/C OF SOUTH INDIAN BANK LTD.

Annexure – II

BALANCE SHEET

BALANCE SHEET OF SOUTH INDIAN BANK LTD.
Mar 2011 Rs. Cr SOURCES OF FUNDS : Capital Reserves Total Equity Share Warrants Equity Application Money Deposits Borrowings Other Liabilities & Provisions TOTAL LIABILITIES APPLICATION OF FUNDS : Cash & Balances with RBI Balances with Banks & money at Call Investments Advances Fixed Assets Other Assets Miscellaneous Expenditure not written off TOTAL ASSETS Contingent Liability Bills for collection Mar 2010 Rs. Cr 113.01 1372.28 0.00 0.00 23011.52 330.96 706.27 25534.04 1390.94 596.73 7155.61 15822.92 152.54 415.30 0.00 25534.04 2729.74 257.46 Mar 2009 Rs. Cr 113.01 1191.00 0.00 0.00 18092.33 412.01 571.06 20379.41 997.74 1038.13 6075.20 11847.91 136.32 284.11 0.00 20379.41 2194.05 222.29 Mar 2008 Rs. Cr 90.41 1070.58 0.00 0.00 15156.12 27.58 745.24 17089.93 973.65 729.00 4572.23 10453.75 112.75 248.55 0.00 17089.93 2105.35 181.85 Mar 2007 Rs. Cr 70.41 653.55 0.00 0.00 12239.21 32.51 656.90 13652.58 699.67 1245.81 3430.13 7918.91 89.59 268.47 0.00 13652.58 1640.58 168.15

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