MBA 2ND SEM Date: 14.07.11


It is great pleasure to express my sense of gratitude to MISS SANGEETA SHARMA, IIAS School Of Management, Siliguri, without whose valuable guidance generous help and constant enthusiastic inspiration this assignment titled “CLASS PROJECT-AXIS BANK” would have never been a success. I was almost convinced that I was aware of the business & market forces that drive the Banking industry. However, once I started out working on the same, I realized how grossly inadequate my knowledge had been. I thank Miss Sangeeta Sharma (finance and human resource faculty) for giving us this assignment and guiding us to once again explore the sector I so much feel a part of.




Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process.

The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below:
• • •


- Early phase from 1786 to 1969 of Indian Banks

PHASE II - Nationalization of Indian Banks and up to 1991 PHASE III - Indian Financial & Banking Sector Reforms after 1991.

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority. During those day’s public has lesser

confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to the traders. PHASE II: Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership. The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country:
• • • • • • • •

1949: Enactment of Banking Regulation Act. 1955: Nationalization of State Bank of India. 1959: Nationalization of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalization of 14 major banks. 1971: Creation of credit guarantee corporation. 1975: Creation of regional rural banks. 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India raised to approximately 800% in deposits and advances took a huge jump by 11,000%.Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions. PHASE III This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalisation of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a

satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure. FIGURE: SCHEDULED COMMERCIAL BANK IN INDIA:


Axis Bank India, the first bank to begin operations as new private banks in 1994 after the Government of India allowed new private banks to be established. Axis Bank was jointly promoted by the Administrator of the specified undertaking of the  Unit Trust of India (UTI-I)  Life Insurance Corporation of India (LIC)  General Insurance Corporation Ltd. Also with associates viz. National Insurance Company Ltd., The New India Assurance Company, The Oriental Insurance Corporation and United Insurance Company Ltd. Axis Bank in India today is capitalised with Rs. 232.86 Crores with 47.50% public holding other than promoters. It has more than 200 branch offices and Extension Counters in the country with over 1250 Axis Bank ATM proving to be one of the largest ATM networks in the country. Axis Bank India commits to adopt the best industry practices internationally to achieve excellence. Axis Bank has strengths in retail as well as corporate banking. By the end of December 2004, Axis Bank in India had over 2.7 million debit cards. This is the first bank in India to offer the AT PAR Cheque facility, without any charges, to all its Savings Bank customers in all the places across the country where it has presence. With the AT PAR cheque facility, customers can make cheque payments to any beneficiary at any of its existence place. The ceiling per instrument is Rs. 50,000/-.The latest offerings of the bank along with Dollar variant is the Euro and Pound Sterling variants of the International Travel Currency Card. The Travel Currency Card is a signature based pre-paid travel card which enables traveler’s global access to their money in local currency of the visiting country in a safe and convenient way. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence


UTI was established in 1964 by an Act of Parliament; neither did the Government of India own it nor contributes any capital. The RBI was asked to contribute one-half of its initial capital of Rs 5 crore, and given the mandate of running the UTI in the interest of the unit-holders. The State Bank of India and the Life Insurance Corporation contributed 15 per cent of the capital each, and the rest was contributed by scheduled commercial banks which were not nationalized then. This kind of structure for a unit trust is not found anywhere else in the world. Again, unlike other unit trusts and mutual funds, the UTI was not created to earn profits.

In the course of nearly four decades of its existence, it (the UTI) has succeeded phenomenally in achieving its objective and has the largest share anywhere in the world of the domestic mutual fund industry.'' The emergence of a "foreign expert" during the setting up of the UTI makes an interesting story. The announcement by the then Finance Minister that the Government of India was contemplating the establishment of a unit trust caught the eye of Mr. George Woods, the then President of the World Bank. Mr. Woods took a great deal of interest in the Indian financial system, as he was one of the principal architects of the ICICI, in which his bank, First Boston Corporation Bank, had a sizeable shareholding. Mr. Woods offered, through Mr. B.K. Nehru, who was India's Executive Director on the World Bank, the services of an expert.

The Centre jumped at the offer, and asked the RBI to hold up the finalization of the unit trust proposals till the expert visited India. The only point Mr. Sullivan made was that the provision to limit the ownership of units to individuals might result in unnecessarily restricting the market for units. While making this point, he had in mind the practice in the US, where small pension funds are an important class of customers for the unit trusts. The Centre accepted the foreign expert's suggestion, and the necessary amendments were made in the draft Bill. Thus, began corporate investment in the UTI, which received a boost from the tax concession given by the government in the 1990-91 Budget. According to this concession, the dividends received by a company from investments in other companies, including the UTI, were completely exempt from corporate income tax, and provided the dividends declared by the investing company were higher than the dividends received.


The result was a phenomenal increase in corporate investment which accounted for 57 per cent of the total capital under US-64 scheme. Because of high liquidity the corporate sector used the UTI to park its liquid funds. This added to the volatility of the UTI funds. The corporate lobby which perhaps subtly opposed the establishment of the UTI in the public sector made use of it for its own benefits later. The Government-RBI power game started with the finalization of the UTI charter itself. The RBI draft of the UTI charter stipulated that the Chairman will be nominated by it, and one more nominee would be on the Board of Trustees. While finalizing the draft Bill, the Centre changed this stipulation. The Chairman was to be nominated by the Government, albeit in consultation with RBI. Although the appointment was to be made in consultation with the Reserve Bank, the Government could appoint a person of its choice as Chairman even if the Bank did not approve of him.

The Bank's principal activities are to provide commercial banking services which include merchant banking, direct finance, infrastructure finance, venture capital fund, advisory, trusteeship, forex, treasury and other related financial services. The Bank has 463 branches and 263 extension counters throughout India. During April, 2006 the Bank open-end 1 overseas branch in Singapore. PROMOTERS: UTI Bank Ltd. has been promoted by the largest and the best Financial Institution of the country, UTI. The Bank was set up with a capital of Rs. 115 crore, with  UTI contributing Rs. 100 crore,
 LIC - Rs. 7.5 crore

 GIC and its four subsidiaries contributing Rs. 1.5 crore each. SUUTI SHARE HOLDINGS-27.33% Erstwhile Unit Trust of India was set up as a body corporate under the UTI Act, 1963, with a view to encourage savings and investment. In December 2002, the UTI Act, 1963 was repealed with the passage of Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 by the Parliament, paving the way for the bifurcation of UTI into 2 entities, UTI-I and UTI-II with effect from 1st February 2003.

SHARE HOLDING PATTERN: AS on 30/06/2011 Sr. No. A. Name of the Shareholders Promoter Shareholding 1 Administrator of the Specified Undertaking of the Unit Trust of India (UTI - I) 2 Life Insurance Corporation of India 3 General Insurance Corporation of India and four PSU Insurance Companies. Total Promoter Shareholding A B. Domestic Shareholders 4 Indian FIs Bank 5 Mutual Funds 6 Others (Individuals/Corporate Bodies/HUF/Trusts/Banks) Total Domestic Shareholding B C. Foreign Shareholders 7 FDI Route GDR Issue 8 Foreign Financial Institutions (FIIs) 9 NRIs/OCBs Total Non-Promoter Foreign Shareholding C Total A+ B + C 1,44,062,290 7,441,710 16,140,674 24,365,389 47,947,773 41,106,843 146,017,493 7,83,243 1,87,907,579 3,79,917,642 34.97 1.81 3.92 5.92 11.67 9.98 35.45 0.19 45.62 92.26 39,262 ,917 7,575,000 9.53 1.84 No. of Shares Held % Stake to Total 97,224,373 23.60



The Bank has 12 members on the Board. Mr.Adarsh Kishore is the Chairman and Smt.Shikha Sharma is the Managing Director of the Bank. The members of the Board are: NAME Mr Adarsh Kishore and Smt. Shikha Sharma Shri S.K. Chakrabarti Shri V.R. Kaundinya Shri K.N. Prithiviraj Shri Prashad R Menon Dr. R.H. Patil Smt. Rama Bijapurkar Shri R.B.L. Vaish Shri S.B. Mathur Shri M.V. Subbiah Shri R.N. Bhattarcharya DESIGNATION Chairman & Managing Director Director Director Director Director Director Director Director Director Director Director

MISSION AND VALUES: OUR VALUES:  Customer Service and Product Innovation tuned to diverse needs of individual and corporate clientele.  Continuous technology upgradation while maintaining human values.  Progressive globalization and achieving international standards.

 Efficiency and effectiveness built on ethical practices. CORE VALUES:  Customer Satisfaction through o Providing quality service effectively and efficiently o "Smile, it enhances your face value" is a service quality stressed on o Periodic Customer Service Audits  Maximization of Stakeholder value
 Success through Teamwork, Integration

Balance Sheet of Axis Bank Mar '08

------------------- in Rs. Cr. ------------------Mar '09 Mar '10 Mar '11


12 mths

12 mths

12 mths

12 mths

Capital And Liabilities Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities 357.71 357.71 2.19 0.00 8,410.79 0.00 8,770.69 87,626.22 5,624.04 93,250.26 7,556.90 109,577.85 Mar '08 12 mths 359.01 359.01 1.21 0.00 9,854.58 0.00 10,214.80 117,374.11 10,185.48 127,559.59 9,947.67 147,722.06 Mar '09 12 mths 405.17 405.17 0.17 0.00 15,639.27 0.00 16,044.61 141,300.22 17,169.55 158,469.77 6,133.46 180,647.84 Mar '10 12 mths 410.55 410.55 0.00 0.00 18,588.28 0.00 18,998.83 189,237.80 26,267.88 215,505.68 8,208.86 242,713.37 Mar '11 12 mths

Assets Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs) 7,305.66 5,198.58 59,661.14 33,705.10 1,384.70 590.33 794.37 128.48 2,784.51 109,577.84 78,028.44 16,569.95 245.13 9,419.21 5,597.69 81,556.77 46,330.35 1,741.86 726.45 1,015.41 57.48 3,745.15 147,722.06 104,428.39 29,906.04 284.50 9,473.88 5,732.56 104,343.12 55,974.82 2,107.98 942.79 1,165.19 57.24 3,901.06 180,647.87 296,125.58 35,756.32 395.99 13,886.16 7,522.49 142,407.83 71,991.62 3,426.49 1,176.03 2,250.46 22.69 4,632.12 242,713.37 429,069.63 57,400.80 462.77


Profit & Loss account of Axis Bank Mar '08 12 mths Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalised Operating Expenses Provisions & Contingencies Total Expenses 4,419.96 670.25 952.61 158.11 1,483.94 0.00 2,454.03 810.88 7,684.87 Mar '08 12 mths Net Profit for the Year Extraordionary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Proposed Dividend/Transfer to Govt Balance c/f to Balance Sheet 294.60 -0.01 251.64 1,553.87 29.94 60.00 245.13 1,071.03 0.00 1,029.07 2,100.10 0.00 251.64 0.00 7,005.32 1,750.59 8,755.91

------------------- in Rs. Cr. ------------------Mar '09 12 mths Mar '10 12 mths Mar '11 12 mths

10,835.49 2,896.88 13,732.37 7,149.27 997.66 1,572.83 188.67 2,008.57 0.00 3,590.42 1,177.31 11,917.00 Mar '09 12 mths 1,815.36 0.00 1,553.87 3,369.23 0.00 420.52 0.00 50.57 100.00 284.50 600.62 0.00 420.52 2,348.09

11,638.02 3,945.78 15,583.80 6,633.53 1,255.82 2,443.05 234.32 2,502.55 0.00 5,066.76 1,368.98 13,069.27 Mar '10 12 mths 2,514.53 0.00 2,348.09 4,862.62 0.00 567.45 0.00 62.06 120.00 395.99 867.43 0.31 567.45 3,427.43

15,154.81 4,632.13 19,786.94 8,591.82 1,613.90 2,406.59 289.59 3,496.55 0.00 5,734.55 2,072.08 16,398.45 Mar '11 12 mths 3,388.49 0.00 3,427.43 6,815.92 0.00 670.36 0.00 82.54 140.00 462.77 836.95 338.84 670.36 4,969.77







Cash Flow of Axis Bank Mar '08 12 mths Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents 1646.27 5960.45 -4702.52 4325.79 5585.94 6918.31 12504.24

------------------- in Rs. Cr. ------------------Mar '09 12 mths 2785.19 10551.63 -9741.96 1692.32 2512.66 12504.24 15016.90 Mar '10 12 mths 3851.36 28.87 -5122.98 5304.07 189.54 15016.90 15206.44 Mar '11 12 mths 5135.66 11425.07 -13985.33 8769.69 6204.75 15203.91 21408.66

Key Financial Ratios of Axis Bank

------------------- in Rs. Cr. -------------------

Mar '08 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Interest Spread Adjusted Cash Margin(%) Net Profit Margin Return on Long Term Fund(%) 3.77 14.19 12.22 71.17 10.00 6.00 56.88 244.63 208.03 --

Mar '09

Mar '10

Mar '11

10.00 10.00 83.56 377.46 230.47 -4.24 14.76 13.31 97.35

10.00 12.00 97.29 380.27 325.87 -3.95 17.63 16.10 66.34

10.00 14.00 129.26 471.17 373.06

3.73 18.71 17.20 72.29


Return on Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Management Efficiency Ratios Interest Income / Total Funds Net Interest Income / Total Funds Non Interest Income / Total Funds Interest Expended / Total Funds Operating Expense / Total Funds Profit Before Provisions / Total Funds

12.21 12.38 245.13 245.13 9.57 4.74 0.02 4.83 2.51 2.07

17.77 17.85 284.50 284.50 10.53 4.98 0.06 5.56 2.64 2.25

15.67 15.69 395.99 395.99 9.38 5.34 0.12 4.04 2.94 2.38

17.83 17.87 462.77 462.77 9.14 5.08 0.17 4.06 2.57 2.54

Net Profit / Total Funds Loans Turnover Total Income / Capital Employed(%) Interest Expended / Capital Employed(%) Total Assets Turnover Ratios Asset Turnover Ratio Profit And Loss Account Ratios Interest Expended / Interest Earned Other Income / Total Income Operating Expense / Total Income Selling Distribution Cost Composition Balance Sheet Ratios Capital Adequacy Ratio Advances / Loans Funds(%) Debt Coverage Ratios Credit Deposit Ratio Investment Deposit Ratio Cash Deposit Ratio Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Leverage Ratios Current Ratio Quick Ratio Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times

1.17 0.18 9.59 4.83 0.10 6.32 63.09 0.16 26.20 0.85 13.73 75.89 65.94 41.39 8.17 9.99 1.46 1.28 0.03 9.23 23.49 20.47 76.84 79.78 70.42

1.41 0.19 10.60 5.56 0.11 7.78 65.98 0.60 24.95 0.34 13.69 73.87 68.89 39.04 8.16 11.49 1.43 1.28 0.03 9.52 23.16 20.98 76.94 79.11 58.33

1.53 0.17 9.51 4.04 0.09 7.31 57.00 1.30 30.96 0.30 15.80 72.96 71.87 39.55 7.30 8.81 1.62 1.41 0.03 19.19 22.56 20.64 77.47 79.39 51.33

1.60 0.16 9.30 4.06 0.09 5.65 56.69 1.78 27.65 0.40 12.65 76.16 74.65 38.71 7.07 9.96 0.66 1.43 0.02 19.60 19.78 18.22 80.26 81.81 51.35


Mar '08 Earnings Per Share Book Value 29.94 245.13

Mar '09 50.57 284.50

Mar '10 62.06 395.99

Mar '11 82.54 462.77


STRENGTH: • • • Support of various promoters High level of services Knowledge of Indian market

WEAKNESS: • • • Not having good image Market capitalization is very low Not been fully able to position itself correctly


Growing Indian banking sectors People are becoming more service oriented Global market in India

THREATS: • • • Increasing competitors Foreign banks Future market trends

OVERVIEW OF FINANCIAL AND BUSINESS PERFORMANCE The Bank has been able to turn in an impressive business performance and record good financial results for the fifth year in succession, owing to the efficacy of its business model which aspires to be customer-centric. Information technology is continuously leveraged in providing value added products and services as well as multiple-delivery channels to customers in a manner that is cost-effective and which offers the Bank’s customers easy, real-time and on-line access for all types of transactions. The strong performance, despite a tightening of overall liquidity leading to a hardening of interest rates in the closing stages of the fourth quarter, reflected the fact that the primary Goals of the Bank of increasing its market share in various businesses and improving its quality of earnings by enhancing its core income streams, is solidly anchored in the strategy adopted by it. The sizeable network of branches, extension counters and ATMs has equipped the Bank with an impressive reach across the country and is supported by channels such as the Internet and mobile phone banking. The steady widening of this reach to smaller cities and towns, including in district headquarters, is expected to sustain the momentum of growth of low cost deposits, as the Bank enjoys a first-mover advantage vis-à-vis other private sector banks in many of these centers. The key factors which contributed to the healthy performance of the Bank during the year were the
 Continued thrust on improvement in the quality of earnings through an emphasis on core

income streams such as net interest income and fee based income;

 The availment of opportunities emanating from the upswing in the corporate credit cycle;  A focus on improvement in asset quality through rigorous credit and risk appraisal, sound

treasury management, product diversification and internal control;
 Enhanced cost efficiency by leveraging on technology that is continuously upgraded;  Maintenance of high standards of customer service.



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