A Study On Financial Analysis At Indian Bank

Chapter - 1 Introduction
1.1. Introduction of Bank:
Bank is a business establishment that safeguards people s money and uses it to make loans and investments. People keep their money in banks rather than at home for several reasons. Money is safer in a bank than at home. A checking account with a bank provides an easy way to pay bills. Also, money deposited in many types of bank accounts earns additional money for the depositor. People who put money in a bank are actually lending it to the bank, which may pay them interest for the use of their funds. Banks are an essential part of business activity. Business companies borrow from banks to buy new equipment and build new factories. People who do not have enough money to pay the full price of a home, an automotive, or some other product also borrow from banks. In these ways, banks promote the sale of a wide range of goods and service. Banking is nearly as old as civilization. The ancient Romans developed an advanced banking system to serve their vast trade network. Which extended throughout Europe Asia, and much of Africa in A.D.395, the Roman Empire split into an eastern and a western section? The west Roman Empire fell in the late 400 s. And most of its trade and financial networks were destroyed. Banking almost disappeared from Western Europe. However, the Justinian code, a collection of laws issued in the 500 s in the east Roman Empire, included many banking laws.

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Meaning of Bank:
Modern banking began to develop between the 1200 s and the 1600 s in Italy. The word bank comes from the Italian word ban co or banca, meaning bench. Early Italian bankers conducted their business on benches in the street. Large banking firms were established in Florence, Rome, Venice, and other Italian cities, and banking activities slowly spread throughout Europe. Banks in the United States differ greatly from those in most other countries. Most of the sections of this article deal with banking practices and the history of banks in the United States.

Definition:
The banking companies act of India defines A bank is a financial institution which accepts money from the public for the purpose of lending or investment repayable on demand or otherwise withdraw able by cheques draft or otherwise

Bank Services:
Safeguards deposits. Money in a bank is safe. Banks keep cash in fire resistant vaults and are insured against the loss of money in a robbery. In the United States, Canada, and many other countries, the government also insures bank deposits. This insurance protects people from losing their money if the bank is unable to repay the funds. A bank is not only a safe place to keep money but also a profitable one, money placed in a savings account earns interest at a specified annual rate. Many
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banks also offer a special account for which they issue a document called a certificate of deposit. Most CD accounts pay a higher rate of interest than regular savings accounts do. However, the certificate must be held for a certain period, such as one or two years, to earn this high rate of interest. Banks also offer money market accounts. These accounts pay interest based on current conditions in the money market. Which deals in corporation and government short-term securities? Providing a mean of payment. People who have money in a bank checking account can pay bills by simply writing a check and mailing it. A check is a safe method of payment, the canceled check provides written proof that payment was made. Banks also offer negotiable order of withdrawal accounts, usually called NOW accounts. Like a savings account, a NOW account pays interest. But the depositor can transfer funds to someone else by writing a negotiable order of withdrawal, which is like a check. Many banks also offer credit cards as a means of payment. People can pay for their purchases at stores and other establishments by using the cards to charge sums up to a total amount determined by the bank. The billers are paid directly by the bank. The customer then receives a monthly bill from the bank to cover the amount charged. In many cases, the cardholder can choose to pay only part of the bill; however, cardholders must then pay a finance charge on the unpaid part. Banks may also issue debit cards, which resemble credit cards. When a cardholder uses a debit cards, the amount of the purchases is typically deducted directly from the cardholder s checking account. Some banks issue cards that can be used either as debit cards or credit cards.
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Electronic banking many banks have modernized their check-handling facilities with computers and other electronic equipment. However, an even more advanced system may completely eliminate the use of checks. This system called electronic funds transfer, transfers money from one account to another. EFT includes five types of facilities and systems: 1. Automated teller machines, 2. Telephone- banking systems, 3. Computer- banking systems, 4. Automated clearing houses, and 5. Point of sale terminals.

Careers in banking:
Most jobs in a bank are clerical positions that require a high school education. Employees in these positions includes tellers and proof machine operators. Tellers cash cheeks and accept deposits. Proof machine operators run the equipment that cancels and subtracts the amount from customers account. The machines also prepare bank statements, the records of deposits and withdrawals that are sent to customer regularly. In addition, banks employ book keepers and operators of data-processing equipment. For college graduate, banking offers a variety of careers. For example, loan officers arrange loans to business and individuals. Bond traders buy and sell securities. Trust officers handle trust funds. Banks also employ many accountants and lawyers.

Function of Bank:
Prof. Sayers in his book modern banking has desirable the functions of a modern bank in the following words. Ordinary banking business consist of
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changing cash from bank deposit for cash transferring bank deposits form one person to another and giving deposits in exchanger of bill of exchange government bonds the secured promised of businessmen to repay and so forth. The above quotation briefly some ups the main function for the banks. The various functions of modern bank are as followers:

1. Accepting deposits from the public:
Accepting various types of deposits is an important function of the commercial bank those who have cash balance want to keep them in safe place i.e., deposit the some in bank they protect as well as provide a convenient method of transfer found through cheques. The bank accepts three types of deposits. y Fixed deposit y Current deposit y Savings deposit A fixed deposit is one where a customer keeps a certain amount of money in a bank for specific period it carries higher rates of interest than that allowed to savings deposits the longer the period the higher the interest rate and vice versa. Current deposits are these deposits which can be withdrawals at any time by mean of cheques the bank does not pay interest on current account deposits. There are not restrictions on withdrawals generally trades and business keep their money in their account they can draw over and above their account balance this is called over draft.

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Savings deposits are those deposits on which the bank pays a certain rates of interest to the depositors subject to certain condition. A person can open the account with a small amount and go on depositing any amount the customers are expected to maintain a minimum balance in the account. There is certain restriction with regarding to withdrawals.

2. Making loans and advances:
Bank receives deposits with a view to lend it is one of the most important functions of banks direct loans and advances are given to all types of loans given by the banks are as follows: y Direct loans y Cash credits y Bill discounted y Over drafts

3. Agency services:
y Customers can arrange for dividend to be sent to their banks and paid in to their accounts. y Orders for the purchase of sale of stock exchange securities are excited through the banks. y Banks will make application on behalf of their customer for all assortments arising from new capital issues pay calls as they fall due. y Obtain the share certification or documents of title. y On certain agreed terms the banks will allow their hands to appear an approved prospectors or other document as bankers for the issue of new capital.

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y Banks under take payment of a) Subscriptions b) Premier c) Rents d) Collection of cheques, bills, promissory notes on behalf of customer. y It also acts as representative of customer to other banks and financial corporations. They aim to provide a complete charge of trustee, executor to adviser services for small charge. Most banks will undertake on behalf of their customer the preparation of income tax return and claims for recovery of over paid tax.

4. General utility services:
It includes the issue of credit instruments like letter of credit and traveler s cheque. y The acceptance of bills of exchange. y The safe custody of valuable and documents. y The transactions of foreign exchange business. y Acting as a refer as to the respectabilities and financial standing of customer and providing specialized advisory services to customers.

5. Overseas trading services:
Recognition of overseas trade has led modern banks to be set up branches specializing in the finance of foreign trade and some banks in some countries have been taken interest in export houses and factoring of organizations.

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They provide credit and enable the companies to release the capital, which would otherwise to tie up in the goods exported.

6. Information and other services:
y Some banks produce regular business on trade and economic conditions at home and abroad and special report on commodities markets. y Advice on appointment of suitable agents. y For businessmen traveling abroad letters of introduction. y On request banks obtain for customer for business purposes, confidential opinions in the financial standing of companies.

Achievements of Indian banking system:
y Banks have brought about organizational changes to meet customers changing need effectively. y Changes form wholesale character to retail character of banking. y Purpose orientation in lending. y Credit planning to calculate funds to priority sectors. y Reduction of regional imbalances. y Development of banking habit and deposit mobilization. y Increases in advances to priority sector and weaker sections.

Drawbacks of Indian banking system:
y Poor capital base. y The capital resources of Indian banks are very low when compared to international standard. y Inefficient organizational structure. y Institutional over lapping.
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Unhealthy competition  Double financing y Poor and declining customer service. y Declining profitability. y Poor recovery of advances.

1.2. Finance
Meaning of Finance:
Finance is one of the major elements, which activities the overall growth of the economy. Finance is the life blood of economic activity. A well knit financial system directly contributes to the growth of the economy. An efficient financial system calls for the effective performance of financial institutions, financial instruments and financial markets.

Definition of Finance:
Finance can be broadly defined as the activity concerned with the planning, raising, controlling and administering the funds used in the business. -Guttmann and Doug ale Finance deals primarily with raising, administering and disbursing funds by privately owned business units operating in non financial fields of industry. Prather and wert

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1.3 Classifications of Finance: The subject of finance has been traditional classified into two classes:  Public finance  Private finance

I.

Public finance:
It deals with the requirements, receipts and disbursements of funds in the government institutions like state, local self government and central government of funds in case of an individual, a profit seeking business organization and a non profit organization.

II.

Private finance:
It is concerned with requirements, receipts and disbursements of funds in cases of an individual a profit seeking business organization and non profit organization. Thus, private finance can be classified into: a. Personal finance b. Business finance c. Finance of non profit organization Personal finance deals with the analysis of principles and practices

involved in managing one s own daily need of funds. The study of principles, practices, procedures and problems concerning financial management of profit making organization engaged in the field of industry, trade and commerce is undertake under the discipline of business finance. The finance of non profit organization is concerned with the practices,
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procedures and problem involved in financial management of charitable, religious, educational, and social and the other similar organizations.

1.4. Scope of Finance:
The main objectives of financial management are to arrange sufficient finance for meeting short- term and long- term needs. These funds are procured at minimum costs so that profitability of the business is memorized with these things in mind, a financial manager with have to concentrate on the following areas of finance function.

1. Estimating financial requirement:
The first task of a financial manger is to estimate short-term and long-term financial requirement of his business for his purpose, he will prepare a financial plan for working capital will have to be ascertained the estimations should be based on sound financial the inadequacy of funds will adversely affect the day working of the concern whereas of funds may a management to indulge in extravagant spending/speculative activities.

2. Deciding capital structure:
The capital structure refers to the fund and proportion of different securities for raising funds. After deciding about the quantum of funds required it should be decided which type of securities should be raised it may be wise to finance fixed assets through long term debt. Even here if period is longer, than share capital may be most suitable long term should be employed to finance working capital also. If not then partially,

entirely depending upon over drafts and cash credits for meeting working capital needs may not be suitable. A decision about various sources for
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funds should be linked to the cost of raising funds. If cost of raising funds is very high then such sources may not be useful for long. A decision about the kind of securities to be employed and the proportion in which these should be used is an important decision which influences the short term and long term financial planning an enterprise.

3. Selecting a sources of finance:
After preparing a capital structure, an appropriate source of finance is selected various sources from which finance may be raised include share capital, debentures, financial instructions, commercial bank, public deposits etc. if finance are needed for short periods then banks, public deposits and financial institutions may be appropriate on the other hand. If long term finances are required then share capital and debentures may be useful. If the concern does not want to tie down assets as securities then public deposits may be suitable source. If management does not want to dilute ownership then debentures should be issued in to share. The need, purpose, object and cost involved may be the factors influencing the selection of and suitable source of financing.

4. Selecting a pattern of investment:
When finds have been procured than a decision about investment pattern is to taken. The selection of an investment pattern is related to the rise funds. A decision will have to be taken as which assets are to be purchased? The funds will have to be spent first on first assets and then an appropriate will be retained for working capital. Even in various categories of assets, a decision about the type of fixed/other assets will be essential. While selecting a plant and machinery, even different categories
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of them may be available. The decision making techniques such as capital budgeting, opportunity cost analysis etc. may be applied in making decisions about capital expenditures. While spending on various assets, the principles of safety, profitability and liquidity should not be ignored. A balance should be struck even in these principles. One may not like to invest on a project which may be risky even through there may be more profits.

5. Proper cash management:
Cash management is also an important task of finance manager. He has to assets various cash needs at different times and then make arrangement for arranging cash may be required to  Purchases raw materials,  Make payment to creditors,  Meet wages bills,  Meet day to day expenses. The usual sources of cash may be  Cash sales  Collection of debts  Short term arrangements will banks etc The cash management should be such that neither there is a shortage of it and nor it is idle. Any shortage of cash wills the credit worthiness of the

enterprise. The idle cash with the business will mean that it is not properly used. It will be better if cash flow statement is regularly prepaid so that one is able to find out various sources and applications. If cash is spent on avoidable expenses then such spending may be curtailed. A proper idea on sources. Some sources
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may not be providing that much cash which we should have thought. All this information will help in efficient management of cash.

6. Implementing financial controls:
An efficient system of financial management necessities the use of various control device financial control device generally used are  Return on investment,  Budgetary control,  Break even analysis.  Cost control,  Ratio analysis,  Cost internal audit, Returns on investment are the best control device to evaluate the performance of various financial policies. The higher this percentage better may be the financial performance. The use of various control techniques by the finance manager will help him in evaluating the performance in various areas and take corrective measures whenever needed.

7. Proper use of surpluses:
The utilization of profits/surplus is also important factor in financial management. A judicious use of surpluses is essential for expansion and diversification plans and also in protecting the increases of shareholders. The plugging back of profits is the best policy of further financing but it clashes with the interests of shareholders. A balance should be struck in using funds for paying dividend and retaining earning for financing expansion plans, etc the market value of shares will also be influenced by the declaration of dividend and expected profitability in
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future. If finance manager should consider the influence of various factors, such as  Trend of earning of the enterprise  Expected earning in future  Market value of shares  Need for funds for financing expansion etc. A judicious policy for distributing surpluses will be essential for maintaining proper growth of the unit. 1.5. Objectives or goals of Finance: Financial management is concerned with procurement & use of funds. It s that the firm is value / earnings are maximized. There are various alternative course has to be evaluated in detail. The pros & cons of various decisions have to look into before making a final selection. The decisions will have to take into consideration. The commercial strategy of this of the business. Financial management provides a frame work for selecting a proper course of action & deciding a viable commercial strategy. The main objectives of a business are to maximize the owner s economic welfare. The main objective of finance they are:  Profit Maximization  Wealth Maximization.

1. Profit Maximization:
Profit earning is the main aim of every economic activity. A business being an economic institution must earn profit to cover its costs and provide funds for
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growth. No business can survive without earning profit. Profit also serves as a protection against risks which cannot be ensured. 1) When profit earning is the aim of business then profit maximization should be the obvious objective. 2) Profitability is a barometer for measuring efficiency and economic prosperity of a business enterprise, thus, profit maximization is justified on the ground of rationality. 3) Economic and business conditions do not remain same at all the times. There may be adverse business conditions like recession, depression, and serve competition. 4) A business will be able to survive under unfavorable situation, only if it has some past earnings to rely upon. 5) Profits are the main sources of finance for the growth of a business. So, a business should aim at maximization of profits for enabling its growth and development. 6) Profitability is essential for fulfilling social goals also. A firm by pursuing the objectives of profit maximization also maximizes socioeconomic welfare. How ever, profit maximization objective has been criticized on many grounds. A firm pursuing the objective of profit maximization starts exploiting workers and the consumers. Hence, it is immoral and leads to a numbers of corrupt practices.

2. Wealth maximization:
The concept of wealth maximization refers to the gradual growth of the values of assets of the firm in terms of benefits it can produce. Any financial action can be judged in term of the benefits. It produces less cost
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of action. The wealth maximization attained by a company is reflected in the market value of shares. 

Implication s of wealth maximization: There is a rational in applying wealth maximizing policy as an operating financial management policy. It serves the interests of suppliers of loaned capital, employees, management and society. Besides shareholders, there are short term and long term suppliers of funds who have financial interests in the concern.

1.6. Functions of Finance: i. Investment decision:
The investment decision relates to the selection of asset in which funds will be invested by a firm. The assets which can be acquired fall into two broad groups. y Long term assets which will yield a return over a period of time in future. y Short term or current assets defined as those assets which are the normal cause of business are convertible into cash usually within a year.

a. Capital budgeting:
The long term investment decision is probably the most crucial financial decision of a firm. It relates to the selection of an asset or investment proposal or course of action whose benefits are likely to be available in future over the life time of the project. The long term assets can be either new or old existing ones. The concepts and measurements of
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the cost of capital are thus, other major aspects of the capital budgeting decision. The main elements of the capital budgeting decisions are. 1. The total assets and their composition. 2. The business risk complexion of the firm. 3. Concept and measurement of the cost of capital.

b. Working capital management:
Working capital management is an integral part of overall corporate management. To a financial manager; a working capital sphere throws a welcome challenge and opportunity. In view of the multiplicity of factors exerting varied degrees of influence on working capital studies, a management has to be alert to the internal, external and environmental developments and constantly plan and review its working needs and strategy.

ii.

Financial decision:
The following decision is broadly concerned with the asset mix or the composition of the assets of a firm. The concern of the following decision is with the financial mix or capital structure or leverage. The term capital structure refers to the proportion of debt and equity capital. The financial decision of a firm relates to the choice of the proportion of these sources to finance the investment requirements. A capital structure with a reasonable proportion of debt and equity capital is called the optimum capital structure.

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iii.

Dividend policy decision:
The third major decision of finance is the decision relating to the dividend policy. The dividend decision should be analyzed in relation to the financing decision of a firm. Two alternatives are available in dealing with the profits of a firm. They can be distributed to the shareholders in form of dividend or they can be retained in the business. One significant element in the dividend decision is, therefore the dividend pay out ratio. The modern approach has broadened the scope of financial management which involves the solutions of there major decisions, namely investment, financial and dividend.

1.7. Financial analysis and interpretation: Meaning:
The term financial analysis also known as analysis and interpretation of financial statements refers to the process of determining financial strength and weakness of the firm by establishing strategic relationship between the items of the balance sheet, profit and loss account and other operative data.

Definitions:
According to Metcalf and Titard It is a process of evaluating the relationship between component parts of financial statement to obtain a better understanding of a firm s position and performance.

1.8. Concept of financial statement analysis:
Financial statement analysis is basically a study of the relationship among various financial facts and figures provided in the financial statement. The
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complex figure as given in the financial statements are broke up or dissected into simple and valuable elements and significant relationships are established between the elements of the same statements or different financial statements. This process of dissection for establishing relationships and interpret there of to understand the working and financial position of a firm is called the financial analysis. Financial statement analysis is a process of evaluating of the relationship between components part of the financial statements to obtain a better understanding of firm s position and performance. The financial analysis includes both analysis and interpretation.

1.9. Types of financial analysis:
Different types of financial statement analysis can be made on the basis of.  The nature of the analyst and the material used by him.  The objective of the analysis.  The modus operandi of the analysis.

1. The nature of the analyst and the material used by him.
On the basis of financial statements analysis can be done by external and internal analysis. 

External analysis:
It is made by those persons who are not connected with the enterprise they do not have to the enterprise. They do not have access to the detail record of the co and have to depend mostly on published statements. Such type of analysis is made by investors, credit agencies, government agencies and research scollers.
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Internal analysis:
It is made by those persons who have access to the books accounts. Their members of the organization, analysis of financial statement or other financial data for managerial purpose is the internal type of analysis the internal analysis can be more receivable result than the external analyst because every type of information is at is disposal.

2. The objective of analysis:
On this basis the analysis can be long term and short term analysis. 

Long term analysis:
This analysis is made in order to study the long term financial stability, solvency and liquidity as well as profitability and earning capacity of a business concern. The purpose of making such type of analysis to know whether in the long term the concern will be able to earn a minimum amount which will sufficient to maintain a reasonable rate of investment and also to provide the funds require for modernization, growth and development of business to meet its cost of capital. 

Short term analysis:
This is made to determine the short term solvency, stability and liquidity as well as earning capacity of the business. The purpose of these analyses is to know whether in the short run a business concern will have adequate funds readily available to meet its short term requirement and sufficient borrowing capacity to meet contingences in the near future.

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3. Modus operandi analysis:
On the basis the analysis may be horizontal analysis and vertical analysis. 

Horizontal analysis:
This analysis is made to review and analysis financial statement of a number of year and therefore base on financial data taken from several years. This is very useful for long term trend analysis and planning. 

Vertical analysis:
This analysis is made to review and analysis the financial statements of one particular year only.

1.10. Procedure of financial analysis:
The following procedure is adopted for the analysis and interpretation of financial statements. 1. To analyst should acquaint himself with the principles and postulates of accounting. 2. The extent of analysis should be determined so that the sphere of work may be decided. 3. The financial data given in the statement should be re-organized and rearranged. 4. A relationship is established among financial statement with the help of tools and techniques of analysis such as ratios, trends, common size, fund flow etc.

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5. The information is interpreted in a simple and understandable way. The significance and utility of financial data is explained for helping decision taking. 6. The conclusions drawn from interpretation are presented to the management in the form of reports.

1.11 Methods/devices of financial analysis:
The following methods of analysis are generally used. 1. Comparative statements 2. Trend analysis 3. Common size statements 4. Fund flow analysis 5. Cash flow analysis 6. Ratio analysis 7. Cost volume profit analysis 1. Comparative statements: The comparative financial statements are statements of the financial position at different periods of time. The elements of financial position are shown in a comparative form so as to give an idea of financial position at two or more periods. It shows: y Absolute figures y Changes in Absolute figures y Absolute data in terms of percentages y Increases or decreases in terms of percentage
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2. Trend analysis: The financial statements may be analyzed by computing trends of series of information. This method determines the direction upwards or downwards and involves the computation of the percentage relationship that each statement items bears to the same items in base year. The information for a number of year is take n up and one year, generally the first year, is taken as a base year. 3. Common size statement: The Common size statement, balance sheet and income statement, are shown percentage of total assets, total liabilities and total sales. The total assets are taken as 100 and different assets are expressed as a percentage to the total. It may be prepaid in the following way: y The total of asset or liabilities is taken as 100. y The individual s assets are expressed as a percentage of total assets. 4. Fund flow analysis: It is statement has to be prepared to show the changes in the assets and liabilities from the end of one period of time to the end another period of time. The statement is called a statement of changes in financial position. 5. Cash flow analysis: Cash flow statement which describes the inflows and outflows of cash and cash requirements in an enterprise during a specific period of time.

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6. Ratio analysis: Account to accountants handbook by wixon, kell and bedfold, a ratio is an expression of the quantitative relationship between two numbers. 7. Cost

volume profit analysis:
Account to the technology of cost accountancy of the institute of

cost and management accountants, London, marginal cost represents. The amount of any given volume of output by which aggregate cost are changed if the volume of output is increased by one unit.

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Chapter: 2 Research Design
2.1 Research:
Research simply means a search for facts answers to questions and solutions to problems. It is a purposive investigation. It is an organized inquiry. It seeks to find explanations to unexplained phenomenon, to clarify the doubtful propositions and to correct the misconceived facts.

Definition:
According to Kerlinger defines research as a systematic, controlled, empirical and critical investigation of propositions about the presumed relations among natural phenomena. 2.2 Objective of Research: The objectives of research are varied. They are: 1. Research extends knowledge of human beings, social life and environment. Scientists and researchers build up the wealth of knowledge through their research findings. 2. Research unravels the mysteries of nature; brings to light hidden information that might never be discovered fully during the ordinary course of life. 3. Research establishes generalizations and general laws and contributes to theory building in various fields of knowledge. Our knowledge of

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isolated events is connected together to draw generalizations and general laws. 4. Research verifies and tests existing facts and theory and these help improving our knowledge and ability to handle situations and events. 5. General laws developed through research may enable us to make reliable prediction of events yet to happen. 6. Research aims to analysis inter-relationship between variables and to derive causal explanations; and thus enables us to have a better understanding of the world in which we live. 7. Research also aims at developing new tools, concepts, and theories for a better study of unknown phenomena. 8. Research aids planning and thus contributes to national development. Research social science research in particular.

2.3 Types/Methods of Research:
The quality of a research project depends, among the other things, upon the suitability of the method selected for it. Hence care should be taken in selecting the appropriate method of research for any project. A through knowledge of types and methods of research is essential for this purpose.

According to intent: 1. Pure research:
Pure research is undertaken for the sake of knowledge without any intention to apply it in practice, e. g., Einstein s theory of relativity, Newton s contributions, Galileo s contributions etc.

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2. Applied research:
Applied research is carried on to find solution to a real-life problem requiring an action or policy decision. It is thus problem-oriented and action directed. There is vast scope for applied research in the fields of technology, management, commerce, economics, and other social sciences.

3. Exploratory or Formulation research:
Exploratory research is preliminary study of an unfamiliar problem about which the researcher has little or no knowledge. It is similar to a doctor s initial investigation of a patient suffering from an unfamiliar malady for getting some clues for identifying it.

4. Descriptive research:
Descriptive study is a fact-finding investigation with adequate interpretation. It is the simplest type of research. It is more specific than an exploratory study, as it has focus on particular aspects or dimensions of the problem studied.

5. Diagnostic study:
This is similar to descriptive study but with a different focus. It is directed towards discovering what is happening, why it is happening and what can be done about. It aims at identifying the causes of a problem and the possible solutions for it.

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6. Evaluation studies:
Evaluation study is one type of applied research. It is made for assessing the effectiveness of social or economic programmers implemented or for assessing the impact of development projects on the development of the project area.

7. Action research:
Action research is a type of evaluation study. It is a concurrent evaluation study of an action programmers launched for solving a problem/for improving an existing situation.

According to methods of study: 1. Experimental research:
Experimental research is designed to assess the effects of particular variables on a phenomenon by keeping the other variables constant or controlled. It aims at determining whether and in what manner variables are related to each other.

2. Analytical study or statistical method: Analytical study is a system of procedures and techniques of analysis applied to quantitative data. It may consist of a system of mathematical models or statistical techniques applicable to numerical data.

3. Historical research:
Historical research is a study of past records and other information sources with a view to reconstructing the origin and development of an

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institution or a movement or a system and discovering the trends in the past. 4. Surveys: Survey is a fact finding study. It is a method of research involving collection of data directly from a population or a sample there of at particular time.

5. Case study:
A case study is an in-depth comprehensive study of a person, a social group, an episode, a process, a situation, a program me, a community, an institution or any other social unit.

6. Field studies:
Field studies are scientific enquiries aimed at discovering the relations and interactions among sociological, psychological and educational variables in social institutions and actual life situations like communities, schools, factories, organizations and institutions.

2.4 Process/Steps in Research:
Introduction
The task of research is a sequential process involving a number of clearly delineated steps. There are some variations in the number of steps, their names and their sequence suggested by different writers, but there is much similarity among their suggestions. No one however, claims that the research process is truly liner, moving from one step after another in an order.

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According to Emory, 1. Exploration of the situation: If the problem is in an area in which the investigator has previously conducted research, he may move quickly to the development of the research proposal including time and budget estimates. However, if the problem posed is an unfamiliar one, he may adopt two-stage approach; first to propose a separate exploratory study, Second, to move to development of the main study after the exploratory study is over. The feasibility, the availability of data, etc. will be explored at this stage.

2. Development of the research design:
At this stage, the formal research plan is developed.

3. Data collection:
Data are collected by adopting appropriate methods of data collection.

4. Analysis and interpretation of the results:
After the fieldwork is over, the data are processed, tabulated and analyzed. Then the findings are interpreted. Finally, a report is written for communicating the findings.

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2.5 Research Design
Meaning:
A research design is a logical and systematic plan prepared for directing a research study. It specifies the objectives of the study, the methodology and techniques to be adopted for achieving the objectives.

Definition:
According to Claire Selltiz A research design is the arrangement of

conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure.

2.6 Need of Research Design
Research design is essential because it facilities the smooth sailing of the various activities of a research program me. It makes research as efficient as possible yielding maximum information with minimum of expenditure. It saves a lot of effort, time, and money.

1. It provide the blueprint :
A researcher s face many problems like what sample is to be taken, what is to be asked, what method of data collection is to be used and so on.

2. It limits boundaries of research activity :
This refers to determining whether only one cause or man 7 causes do to be examined. Whether only one hypothesis is to be tested and so on.

3. It enables investigation to anticipate potential problems :

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The researcher studies new/alternative approaches, cost involved, solution of the problem etc. 4. Research can be conducted on scientific basis since advance designing provides precise guideline. 5. Wastage of time and money is minimized. 6. Optimum reliability is achieved. 7. Designing helps in giving useful conclusions.

2.7

Title of the study:
A study on financial performance analysis and interpretation of Indian Bank Limited with special reference to Tumkur.

2.8

Statement of the problem:
Financial analysis is an important aspect of financial management for any company. Financial analysis gives the first hand information about the financial aspects. Financial performance, growth of the company as well as the liquidity position and profitability of the banking institution. But whether the financial analysis is viable or feasible ascertain has been done.

2.9

Objectives of the study: 

To study the financial aspect of the company.  To know the different financial schemes of Indian Bank Ltd.  To analyze the financial performance of the bank for the last four year.  To study the performance highlights of the bank  To analyze what are the future strategies or measures that are takes by the bank to improve its services.

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To analyze what are the future strategies or measures that are taken by the bank to improve its financial performance.

2.10 Data collection: There are two sources of data collection as:  Primary sources of data: Primary data are those which are collected a fresh and for first time and thus happen to be original in character. Constitutes on the data collected study was started with the guide assigned from our college.  Secondary sources of data: The secondary data are already published data available in the books, articles, reports, periodicals, journals, interest and other sources. The data collected for purposes other than the specific research needs at hand. It was collected through annual reports of Indian bank tumkur. Collection of Company profile. Collection of profit or loss account and balance sheets.

2.11 Limitations of the study:  The study is limited to Indian Bank, in Tumkur only.  The study does not reveal details regarding low funds were raised and utilized.  The study is limited to calculating financial position and interpretation.  The study is not confirmed to only past 4 years financial data of the bank.
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The study concentrated only a financial position of Indian bank of past 4 years. It is ignoring other aspects of bank like Human Resources. 2.12 Methodology: It is a case study or historical study of secondary data obtained from past records, files and annual reports of the organization and also from other financial statements. 2.13 Scope of the study: The study of financial analysis and interpretation of Indian bank in tumkur the soundness and the overall financial performance of the company over past 4 years. The scope of the study also extends to understand whether rates analysis is an efficient in power sectors as it is an analytical tool measuring growth trend. 2.14 Chapter scheme: The project work is organized into the following chapters;

y Chapter 1: Introduction This chapter deals with introductory part of banking, introduction to finance, introduction to financial analysis and interpretation.

y Chapter 2: Research design This chapter deals with the research design of the study, nothing but the blue print of the research

y Chapter 3: Profile of the bank This chapter deals with the profile of Indian Bank Limited
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y Chapter 4: Analysis and interpretation This chapter deals with the analysis and interpretation of financial statement like balance sheet has been presented. y Chapter 5: Summary of Findings, Suggestions and Conclusions This chapter deals with the summary of findings and suggestions and conclusions

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Chapter -3 Company Profile
Indian Bank
Indian bank, established in 1907, is a major Indian commercial bank headquartered in Chennai (Madras), India. It has 22,000 employees, 1,657 branches and is one of the big public sector banks of India. It has overseas branches in Colombo, Srilanka, Singapore, and 229 correspondent banks in 69 countries. The government of India nationalized the bank, along with 13 other major commercial banks, on 19 July 1969.

History 
1907: Established on 15 August as part of the Swadeshi movement (Freedom Movement in India). Though not a Chettiar Bank, some of the founders were Chettiars. The key figure was V. Krishnaswamy Iyer, a lawyer in Madras, who had made a name for himself defending claimants on Arbuthnot and co, which had failed the previous year. In its early international expansion, Indian bank would open branches in cities with important Chettiar populations.  1932: Indian Bank opened a branch in Colombo.  1935: Indian opened a branch in Jaffna.  1939: Indian Bank closed the Jaffna branch.  1940: Indian Bank opened a branch in Rangoon (Yangon).  1941: Indian Bank closed the Rangoon branch but opened branches in Singapore (where future branch manager KB Pisharody (1915-1998) started his career in the same year), and in Kuala Lumpur, Ipoh, and

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Penang. The rapid advance of the Japanese army forced Indian bank to close all its branches in Malaya and Singapore.  1942: Indian Bank closed the Colombo branch.  Post-WWII: Indian Bank reopened its Malayan and Singapore branches.  1948: Indian Bank reopened its branch in Colombo.  1960s: Indian Bank acquired Mannargudi bank (est. 1932) and Salem bank (est. 1925).  1969: the government of India nationalized 14 top banks, including Indian Bank.  1973: Indian Overseas Bank, Indian Bank and united commercial Bank established united Asian Bank Berhad in which Indian overseas Bank held 16.67% of the paid up capital, as a result of a new banking law in Malaysia that prohibited foreign government banks from operating in the country.  1978: Indian Bank becomes a technical adviser to P T Bank Rama in Indonesia, the result of the merger of P T bank Masyarakat and P T Bank Ramayana.  1980: Indian Bank, Bank of Baroda, and union Bank of India established IUB international finance, a licensed deposit taker in Hong Kong. Each of the three Banks took an equal share in the joint venture.  1987: Indian Bank acquired Bank of Tanjore (Bank 0f Thanjavur) in Tamil Nadu in rescue.  1998: Bank of Baroda bought out its partners in IUB intl. fin. In Hong Kong. Apparently this was a response to regulatory changes following Hong Kong s reversion. IUB become Bank of Baroda (Hong Kong), a restricted license bank.  2007: Indian Bank celebrated its centenary year.

Diversified banking activities 3 subsidiary companies
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Indian Bank Merchant Banking Services ltd  Indian Bank Housing ltd.  Indian Fund Management ltd.

A Premier bank owned by the government of India 
Total business crossed Rs. 1,24,413crores as on 31.03.2009  Operating profit increased to Rs. 2228.83crores as on 31.03.2009  Net profit increased to Rs. 1245.32crores as on 31.03.2009

International presence 
Overseas branches in Singapore and Colombo a foreign currency Banking unit at Colombo  240 Overseas correspondent in 70 countries

A front runner in specialized banking 
90 Forex authorized branches inclusive of 1 specialized Overseas branch at Chennai exclusively for handling forex transactions arising out of export, import, Remittances and non resident Indian business  1 small scale industries branch extending finance exclusively to SSI units

Leadership in Rural Development 
Pioneer in introducing self help groups and financial inclusion project in the country  Award winner for excellence in agricultural lending from honorable Union Minister for finance  Best performer award for micro-finance activities in Tamil Nadu and union territory puducherry from NABARD

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Established 7 specialized exclusive microfinance branches called micro sate across the country to cater the needs of urban poor through SHG (Self Help Group)/JLG (Joint Liability Group) concepts  A special window for micro finance viz, micro credit Kendra s are functioning in 44 rural/semi urban branches  Harnessing ICT (information and communication technology) for rural development and inclusive banking  Provision of technical assistance and project reports in agriculture to entrepreneurs through Agricultural Consultancy and Technical Services (ACTS)

A pioneer in introducing the latest technology in Banking 
100% Core Banking Solution (CBS) Branches  100% Business computerization  168 centers throughout the country covered under Anywhere Banking  Core Banking Solution in 1657 branches and 61 extension counters.  786 connected automated teller machines in 260 cities/towns.  Internet and Tele Banking services to all core banking customers  E- payment facility for corporate customers  Cash management services  Depository services  Reuter screen, Telerate, Reuter monitors, dealing system provided at Overseas branch, Chennai  Indian Bank credit card launched  Indian Bank gold coin

Organization Structure of Indian Bank
Board of Directors
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Chairman & Managing Director

Executive Director

Head Office, Chennai

Domestic Operations

International Operations

Circle offices

Indian subsidiaries and RRBs

Domestic Overseas Business

Foreign Branches

Domestic Branch Banking

Board of Directors of Indian Bank

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Shri M S Sundara Rajan Chairman & Managing Director

Shri Anup Sankar Bhattacharya Executive Director

Shri V. Rama Gopal Executive Director

Shri Shaktikanta Das (GOI Nominee Director)

Shri C R Gopalasundaram Director (RBI Nominee)

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Mrs. Saria Khan Part time non official Director

Shri T T Natarajan Officer Employee Director

Shri C K Ranganathan Part time non official Director

Prof. Narendra Kumar Agrawal Part time non official Director

Shri G Charath Chandran Part time non official Director

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General Managing Director of Indian Bank

Shri. S K Bandyopadhyay T&I

Shri. V Srinivasan Human & Resource Management

Shri. C Gajapathirajan R&L/TMD

Shri M Damodar Kamath CVO

Shri Sri Ramanan RMD/I&C

Shri. Selvam Veeraraghavan Priority sector

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Shri. K Natarajan Circle Head, Chennai

Shri. D Bhuthalingam CEO Singapore

Shri. Savarimuthu. M. Circle Head, Mumbai

Shri. Satish Jagannath Misar Principal, IMAGE

Shri. Malay Mukherjee Circle Head, New Delhi

Shri. V Ganesan IED

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Shri. R Venkataramanan SME

Shri. V Adiarayana Somayajulu Circle Head, Kancheepuram

Shri. P Arivanandam Circle Head, Coimbatore

Shri. A Ramachandra Rao Circle Head, Kolkata

Shri. R Radhakrishnan Circle Head, Ernakulum

Shri. T S Bhaskaran CEO Colombo

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Shri. R Ravi Circle Head, Trichy

Shri. Srinivasan A General Manager

Shri. Maria Philip Joseph A T Circle Head, Puducherry

Shri Ganapati Narayana Hegde Circle Head, Bangalore

Main City Branches of Indian Bank 
AGRA  BANGALORE  CHENNAI  GOA  HYDERABAD  KERALA  KOLKATA
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MUMBAI  NEW DELHI 

PUNE Services Given By the Indian Bank  Indian Net banking  Indian Mobile banking  Indian Phone banking  E-Payment of indirect taxes  MCA Payment  Indian Jet Remit (RTGS)  NEFT  CMS Plus  Multicity Cheque Facility  Indian Bank Swarna Mudra  Credit Cards  ATM/Debit Cards  DP Services  Indian Bank Jeevan Kalyan  Jeevan Kalyan Plus
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Indian Bank Varishtha  Indian Bank Arogyaraksha  E-Payment of Direct Taxes  Indian Bank Jeevan Vidhya  Janashree Bhima Yojan (Launched in association with LIC)  Universal Health Care (Launched in association with UIIC Ltd)  Indian Bank Grihajeevan- Group Insurance Scheme for Mortgage Borrowers  Indian Bank Home Suraksha- Group Insurance for Mortgage Borrowers Indian Bank in Tumkur Branch Bank s Profile
A premier bank owned by the Government of India  Established on 29th September 1975, is a major Indian Commercial Bank  R. Rajshekar is the Managing Director of that Bank  The slogan of Indian bank is Common Man  One of the public sector banks of India and 229 correspondent banks in 69 countries  It is one of government of the India nationalized the bank, along with 13 other major commercial banks, on 19 July 1969
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Trading Banking Technology to the

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Map of Indian Bank in Tumkur

Map of Indian Bank in Bangalore

Features 
World wide acceptance
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Acceptance at over 30 million VISA Merchant Establishments across the world  Acceptance at over 150,000 VISA Merchant Establishments in India

Indian Bank s Glod/Classic Credit Card through Visa 
No joining fee, no renewal/annual fee  Free insurance coverage  Pay just 5% of the monthly outstanding and revolve the balance  Competitive pricing @ 1.99% pm on purchases  Access over 30 million VISA merchant establishments  Internet free credit period maximum of 45 days  Online shopping

Credit Period 
Interest free credit period usage of the credit card on the billing date of

the month would provide 45 days interest free credit where as using the card on previous day of the billing date would give only 15 days interest free credit.  Payment period with in 15 days from the billing date.

Cash Withdrawals 
Up to 40% of the stipulated credit limit
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Withdrawal at y Any of Indian Bank ATM y Any VISA enabled ATM across India y Any of VISA ATM worldwide y Ant of the more than 30000 specified ATMs under sharing arrangements like CASH TREE, MITR etc

Rewards Programme 
For every Rs 100 spent, Rs 0.50 is rewarded to the card member s account  Once Rs 500 is accumulated in the card member s account, it is given by way of credit to card member s account.

Indian Bank Management Academy for Growth and Excellence

Image which is the acronym for Indian bank management academy for growth and excellence is the prestigious training academy of Indian bank The academy stands at a quiet and peaceful locality of MRC Nagar Chennai India in a sprawling complex, with modern amenities like air-conditioned class rooms, seminar halls, indoor recreational facilities and a state-of-the-art auditorium. The academy caters to the training needs of Indian bank, its subsidiaries and other members of the banking fraternity. The academy also undertakes training of middle and senior management personnel of government, public
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sector and corporate companies. The infrastructure facilities are also available on payment of stipulated fees to select group of corporate companies and other bodies. The infrastructure facilities available at IMAGE are of international standards and this learning institute is considered Asia s finest. The following would substantiate the above:  Located in about 2 acres of land at the coziest of Chennai city enjoying serene atmosphere conducive to learning and intellectual pursuits.  Surrounded by lush greenery and a mere stone s throw away is the brilliant blue waters of the Bay of Bengal.  Centrally air conditioned class rooms to accommodate 35 to 40 participants each.  Advanced computer centre with state-of-the-art machines and facilities.  Two conference halls with a seating capacity of 67& 103 with specially designed audio system and microphone for each seat.  A cute small conference room with facilities for organizing mini conference and web conferencing with multi-media presentations to accommodate 15 at a time.  A massive acoustically designed auditorium with a seating capacity of 841 attached with a spacious lounge, two dining halls and independent kitchen.  Indoor recreational facilities like indoor badminton court, table tennis court, carom board room, chess table, gym and yoga sessions  A dispensary attended by a doctor every evening with at call facility for emergency.

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Hostel block with 67 air conditioned rooms for housing 134 trainees at a time.  Executive suites for VIP guests.  Uninterrupted power supply backed by an independent power transformer and a generator set of 750 KV capacities.  Clean potable drinking water.

Stock Report Indian Bank Board to consider interim dividend for 2009-10
Indian bank has announced that a meeting of the Board of Directors of the Bank will be held on February 20, 2010, inter alia, to consider declaration of interim dividend for the year 2009-10 and fixation of record date to take record of shareholders eligible for the interim dividend, if declared. The stock was trading at Rs. 175, up by Rs. 2 or 1.16%. The stock hit an intraday high of Rs. 172.50. The total traded quantity was 52264 compared to 2 week average of 26191.

Source: Equity Bulls Indian Banking System Robust: FICCI Survey
A sample survey by FICCI today out that Indian industry believes that the country s banking system is better in most parameters as compared to big economies as well as nations where the banking system is too well established. The survey brought out that Indian banks need to improve their customer service and travel some distance with regard to technology and risk management system.
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By and large, the view is that the Indian banks system is robust, having weathered the global financial storm with firmness and strength. The following are the other highlights of the survey findings:  Credit quality of banks has been rated above par than China, Brazil, Russia, the UK and the US, but at par with Hong Kong and Singapore and 85.72% of the respondents felt at par with Japan.  Technology system of Indian banks have been rated more advanced than Brazil and Russia, but below par with China, Japan, Hong Kong, Singapore, the UK and the US.  77.78% of public sector respondents were of the opinion that foreign banks should not be allowed to play a greater role in the consolidation process.

20 Indian Banks in Top 500 Global Banking List
They may not be bankers to the world yet, but Indian banks have clearly set their eyes on that. In a year that saw the worst recession for the global banking industry with several big daddies collapsing, resilient Indian banks have improved their brand value rapidly. There are 20 Indian banks in the brand finance global banking 500, an annual international ranking by UK based brand finance plc, this year. The state Bank of India became the first Indian bank to break into the world s top50 list, according to the brand finance study that saw HSBC retain its top slot for the third year in a row. The number of Indian banks in the global list had more than tripled last year to 19 from six in 2007. Differentiation through strong brand and customer

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base value is becoming a key economic lever for Indian banks. This is as true in financial services as in consumer products. Indian banks need to recognize their inherent brand value potential and SBI S remarkable performance by breaking into the top 50 financial services brands offers a lesson for others, said Unni Krishnan, MD of brand finance India. SBI seems to be fast transforming into a brand led business, with a broader, more holistic and sophisticated approach to managing the brand and stakeholder relationships.

Code of Conduct I. Needs and objective of the code:
Clause 49 of the listing agreement entered into with the stock exchanges, prescribes, as part of corporate governance listed entities to lay down a code of conduct for directions on the board of an entity and its senior management. Senior management team and functional heads excluding the board of directions. II.

Bank s Belief System
This code of conduct attempts to set forth the guiding principles on which the bank shall operate and conduct its daily business with its multitudinal stakeholders, government and regulatory agencies, media, and anyone else with whom it is connected. It recognizes that being banking company, the bank is a trustee and custodian of public money and in order to fulfill its fiduciary obligations and responsibilities, it has to maintain and continue to enjoy the trust and confidence of public at large.

III.

Philosophy of the code:

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A. Adherence to the highest standards of honest and ethical conduct, including proper and ethical procedures in dealing with actual or apparent conflicts of interest between personal and professional relationships. B. Full, fair, accurate, sensible, timely and meaningful disclosures in the periodic reports required to be filed by the bank with government and regulatory agencies. C. Compliance with applicable laws, rules and regulations D. To address misuse or misapplication of the bank s assets and resources. E. The highest level of confidentiality and fair dealing within and outside the bank.

Chapter- 4
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Analysis and Interpretation of Data
Meaning:
Analysis is the process by which, the whole body of gathered data, facts, figures and ideas, is converted into meaningful and usable information. The data is placed in its appropriate settings and consistent relationships, drawing general inferences. Facts and figures have to be seen in conjunction with the subjective reactions to them. Facts and figures, raw and bare, do not speak for themselves. Analysis, intends to yield answers to research questions or suggest hypotheses which involves, a number of closely related operations. The following are the procedures involved in the integrated operations of analysis of data:  Establishment of categories  Tabulation of data  Statistical analysis of data  Interpretation of findings and generalizations

Meaning of Interpretation:
Interpretation refers to the task of drawing inferences from the collected facts after analytical and experimental study. It is only through proper interpretation that the researcher can expose relations and processes that his/her findings.

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Indian Bank Common size balance sheet as on 31-03-2006 and 31-03-2007 Particulars 2006 Amount Assets:
Cash and balance with Reserve Bank of India Balance with banks & money at call &short notice Investments Advances Fixed assets Other assets 19017,00,00 22484,64,12 518,74,93 807,53,26 39.92 47.20 1.08 1.69 20877,73,24 29058,11,12 551,17,85 843,87,28 37.18 51.75 0.98 1.50 2504,36,18 5.25 1088,30,09 1.93 2302,98,58 4.83 3729,45,06 6.64

2007 % Amount %

Liabilities:
share capital preferences share capital Equity share capital Reserves and surplus Deposits Borrowings Other liabilities and provisions 743,82,00 00.0 743.82 1747,57,63 40805,52,48 1887,29,41 2451,05,55 1.56 0 1.56 3.66 85.66 3.96 5.14 829,77,00 400.00 429.77 3010,99,80 47090,90,63 1936,45,33 3280,51,88 1.47 0.71 0.76 5.36 83.86 3.44 5.84

Indian Bank

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Common size balance sheet as on 31-03-2007and 31-03-2008 Particulars Particulars Assets:
Cash and balance with Reserve Bank of India Balance with banks & money at call &short notice Investments Advances Fixed assets Other assets 20877,73,24 29058,11,12 551,17,85 843,87,28 37.18 51.75 0.98 1.50 21915,06,65 39838,71,38 539,27,06 1441,81,34 31.08 56.50 0.76 2.04 1088,30,09 1.93 339,87,83 0.48

2007 Amount 2008
3729,45,06

2008 % Amount 2009
6432,94,46

%

6.64

9.12

Liabilities:
share capital preferences share capital Equity share capital Reserves and surplus Deposits Borrowings Other liabilities and provisions 829,77,00 400.00 429.77 3010,99,80 47090,90,63 1936,45,33 3280,51,88 1.47 0.71 0.76 5.36 83.86 3.44 5.84 829,77,00 400.00 429.77 4330,72,49 61045,94,73 1283,23,98 3018,00,52 1.17 0.56 0.60 6.14 86.58 1.81 4.28

Indian Bank

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Amount Assets:
Cash and balance with Reserve Bank of India Balance with banks & money at call &short notice Investments Advances Fixed assets Other assets 21915,06,65 39838,71,38 539,27,06 1441,81,34 339,87,83 6432,94,46

%

Amount

%

9.12

62115751

7.38

0.48

472,24,36

0.56

31.08 56.50 0.76 2.04

22800,56,66 51465,28,10 1594,22,47 1577,85,49

27.10 61.17 1.89 1.87

Liabilities:
share capital preferences share capital Equity share capital Reserves and surplus Deposits Borrowings Other liabilities and provisions 829,77,00 400.00 429.77 4330,72,49 61045,94,73 1283,23,98 3018,00,52 1.17 0.56 0.60 6.14 86.58 1.81 4.28 829,77,00 400.00 429.77 6306,14,17 72581,83,10 530,78,30 3873,22,02 0.98 0.47 0.51 7.49 86.28 0.63 4.60

Common size balance sheet as on 31-03-2008 and 31-03-2009

Profit and Loss Account for the period of 2006 to 2007 Particulars Year ended Year ended

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31-03-2007 1. Income
Interest earned Other income Total 4284,64,97 733,21,04 5017,86,01

31-03-2006

3364,51,66 463,23,36 3827,75,02

2. Expenditure
Interest expended Operating expenses Provisions & contingencies Total 2412,61,67 1246,64,99 598,82,63 4258,09,29 1854,33,83 1079,76,10 389,17,36 3323,27,29

3. Profit/Loss
Net profit/loss for the year Loss brought forwards Less: set off against the capital Total 759,76,72 77,06,61 ----836,83,33 504,47,73 (3830,14,06) 3830,14,00 504,47,67

4. Appropriations
Transferred to statutory reserve Transferred to capital reserve- others Transferred to investment fluctuation reserve Transferred to revenue reserve Proposed equity dividend Proposed preference dividend Dividend distributed tax Balance of profit carried over to balance sheet Total 376,00,00 128,93,10 32,00,00 27,35,02 80,68,74 836,83,33 739,34,33 101,00,00 ----14,16,53 77,06,61 504,47,67 190,00,00 1,86,47 ------127,00,00 2,88,90 (556,98,70)

Profit and Loss Account for the period of 2008 to 2009
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Particulars

Year ended 31-03-2009

Year ended 31-03-2008

1. Income
Interest earned Other income Total 6830,32,99 1035,44,47 7865,77,46 5212,97,93 1005,68,78 6218,66,71

2. Expenditure
Interest expended Operating expenses Provisions & contingencies Total 4221,81,82 1415,12,62 983,50,72 6620,45,16 3159,07,67 1400,29,41 650,55,70 5209,92,78

3. Profit/Loss
Net profit/loss for the year Loss brought forwards Total 1245,32,30 84,26,09 132,58,39 1008,73,93 80,68,74 1089,42,67

4. Appropriations
Transferred to statutory reserve Transferred to capital reserve- others Special reserves u/s 36 (1) (viii) Investment reserves Transferred to revenue reserve Transferred to staff welfare fund Proposed equity dividend Proposed preference dividend Dividend distributed tax Balance of profit Total 313,00,00 24,12,72 54,00,00 110,9,19 531,00,00 15,00,00 214,88,50 37,50,00 42,89,28 86,08,70 1329,58,39 252,00,00 1,37,48 60,00,00 -----434,71,90 15,00,00 171,90,80 35,00,00 35,16,40 84,26,09 1089,42,67

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Table No. 4.1 Table showing Cash and Balances with Reserve Bank of India

Year
2005-06 2006-07 2007-08 2008-09

Amount
2302,98,58 3729,45,06 6432,94,46 6211,57,51

Percentage (%)
4.83 6.64 9.12 7.38

Interpretation:
The above table shows that there is an increase in the Cash and Balance with Reserve Bank of India. During the year 2007-08 (9.12%) when compare to 2005-06 (4.83%), 2006-07 (6.64%) and 2008-09 (7.38%) respectively.

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Graph No. 4.1 The Graph showing Cash and Balances with Reserve Bank of India

10 9 8 7 6 5 4 3 2 1 0 2005-06 2006-07 4.83 6.64

9.12

7.38

percentage

2007-08

2008-09

Years Interpretation:
The above table shows that there is an increase in the Cash and Balance with Reserve Bank of India. During the year 2007-08 (9.12%) when compare to 2005-06 (4.83%), 2006-07 (6.64%) and 2008-09 (7.38%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Table No. 4.2 Table showing Balance with Banks and Money at Call and Short Notice

Year
2005-06 2006-07 2007-08 2008-09

Amount
2504,36,18 1088,30,09 339,87,83 472,24,36

Percentage (%)
5.25 1.93 0.48 0.56

Interpretation:
The above table shows that there is an slight increases in the balance with banks and money at call and short notice during the year 2005-06 (5.25%) when compare to 2006-07(1.93%), 2007-08 (0.48%) and 2008-09 (0.56%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 66

A Study On Financial Analysis At Indian Bank

Graph No. 4.2 The Graph showing Balance with Banks and Money at Call and Short Notice

0.48

0.56

1.93 5.25

2005-06 2006-07 2007-08 2008-09

Interpretation:
The above table shows that there is an slight increases in the balance with banks and money at call and short notice during the year 2005-06 (5.25%) when compare to 2006-07(1.93%), 2007-08 (0.48%) and 2008-09 (0.56%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 67

A Study On Financial Analysis At Indian Bank

Table No. 4.3 Table showing Investments

Year
2005-06 2006-07 2007-08 2008-09

Amount
19017,00,00 20877,73,24 21915,06,65 22800,56,66

Percentage (%)
39.92 37.18 31.08 27.10

Interpretation:
The above table shows that there is a slight increase in the total investment during the year 2005-06 (39.92%) after 2006-07 (37.18%). There is a slight decrease on investment. When compare to 2007-08 (31.08%) and 200809 (27.10%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Graph No. 4.3 Graph showing Investments

40 35 30 25 20 15 10 5 0 percentage 2005-06 39.92 2006-07 37.18 2007-08 31.08 2008-09 27.1

Interpretation:
The above table shows that there is a slight increase in the total investment during the year 2005-06 (39.92%) after 2006-07 (37.18%). There is a slight decrease on investment. When compare to 2007-08 (31.08%) and 200809 (27.10%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 69

A Study On Financial Analysis At Indian Bank

Table No. 4.4 Table showing Advances Year
2005-06 2006-07 2007-08 2008-09

Amount
22484,64,12 29058,11,12 39838,71,38 51465,28,10

Percentage (%)
47.20 51.75 56.50 61.17

Interpretation:
The above table showing that there is an increases advances of year by year and during the year 2008-09 (61.17%) when compare to 2005-06 (47.20%), 2006-07 (51.75%) and 2007-08 (56.50%) respectively.

Graph No. 4.4

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Graph showing on Advances

70 60 50 40 30 20 10 0 2005-06 2006-07 47.2 51.75

56.5

61.17

percentage

2007-08

2008-09

Years

Interpretation:
The above table showing that there is an increases advances of year by year and during the year 2008-09 (61.17%) when compare to 2005-06 (47.20%), 2006-07 (51.75%) and 2007-08 (56.50%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 71

A Study On Financial Analysis At Indian Bank

Table No. 4.5 Table showing Fixed Assets

Year
2005-06 2006-07 2007-08 2008-09

Amount
518,74,93 551,17,85 539,27,06 1594,22,47

Percentage (%)
1.08 0.98 0.76 1.89

Interpretation:
The above table shows that there is a slight increase in fixed assets during the year 2008-09 (1.89%) and 2005-06 (1.08%) when compare to 2006-07 (0.98%) and 2007-08 (0.76%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 72

A Study On Financial Analysis At Indian Bank

Graph No. 4. 5 Graph showing Fixed Assets

2 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 2008-09 percentage

Years

Interpretation:
The above table shows that there is a slight increase in fixed assets during the year 2008-09 (1.89%) and 2005-06 (1.08%) when compare to 2006-07 (0.98%) and 2007-08 (0.76%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Table No. 4.6 Table showing Other Assets Year
2005-06 2006-07 2007-08 2008-09

Amount
807,53,26 843,87,28 1441,81,34 1557,85,49

Percentage (%)
1.69 1.50 2.04 1.87

Interpretation:
The table shows that there is a slight increase in other assets during the year 2007-08 (2.04%) and 2008-09 (1.87%) when compare to 2006-07 (1.56%) and 2005-06 (1.69%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Graph No. 4.6 Graph showing Other Assets

1.87

1.69

2005-06 2006-07 2007-08

1.56 2.04

2008-09

Interpretation:
The table shows that there is a slight increase in other assets during the year 2007-08 (2.04%) and 2008-09 (1.87%) when compare to 2006-07 (1.56%) and 2005-06 (1.69%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Table No. 4.7 Table showing Share Capital

Year
2005-06 2006-07 2007-08 2008-09

Amount
743,82,00 829,77,00 829,77,00 829,77,00

Percentage (%)
1.56 1.47 1.17 0.98

Interpretation:
The above table shows that there is a slight increase in the share capital during the year 2005-06 (1.56%) when compare to 2006-07 (1.47%), 2007-08 (1.17%) and 2008-09 (0.98%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 76

A Study On Financial Analysis At Indian Bank

Graph No. 4.7 Graph showing Share Capital

1.56 1.47 1.17 0.98

2005-06

2006-07

2007-08

2008-09

Years

Interpretation:
The above table shows that there is a slight increase in the share capital during the year 2005-06 (1.56%) when compare to 2006-07 (1.47%), 2007-08 (1.17%) and 2008-09 (0.98%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Table No. 4.8 Table showing Preference Share Capital

Year
2005-06 2006-07 2007-08 2008-09

Amount (in cr.)
0.00 400.00 400.00 400.00

Percentage (%)
0 0.71 0.56 0.47

Interpretation:
The above table shows that there is a slight increase in the preference share capital during the year 2006-07 (0.71%), 2007-08 (0.56%) and 2008-09 (0.47%) when compare to 2005-06 are the nil on preference share capital.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 78

A Study On Financial Analysis At Indian Bank

Graph No. 4.8 Graph Showing Preference Share Capital

percentage

0.71 0.56 0.47

0 2005-06 2006-07 2007-08 2008-09

Years

Interpretation:
The above table shows that there is a slight increase in the preference share capital during the year 2006-07 (0.71%), 2007-08 (0.56%) and 2008-09 (0.47%) when compare to 2005-06 are the nil on preference share capital.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 79

A Study On Financial Analysis At Indian Bank

Table No. 4.9 Table showing Equity Share Capital

Year
2005-06 2006-07 2007-08 2008-09

Amount (in cr.)
743.82 429.77 429.77 429.77

Percentage (%)
1.56 0.76 0.60 0.51

Interpretation:
The above table shows that there is a slight increase in equity share capital during the year 2005-06 (1.56%) and 2006-07 (0.76%) when compare to other two year are decrease i.e., 2007-08 (0.60%) and 2008-09 (0.51%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 80

A Study On Financial Analysis At Indian Bank

Graph No. 4. 9 Graph showing Equity Share Capital
1.8 1.6 1.4 1.2 1 0.8 precentage 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 2008-09

Years

Interpretation:
The above table shows that there is a slight increase in equity share capital during the year 2005-06 (1.56%) and 2006-07 (0.76%) when compare to other two year are decrease i.e., 2007-08 (0.60%) and 2008-09 (0.51%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Table No. 4.10 Table showing Reserves and Surplus

Year
2005-06 2006-07 2007-08 2008-09

Amount
1747,57,63 3010,99,80 4381,00,59 6306,14,17

Percentage (%)
3.66 5.36 6.14 7.49

Interpretation:
The above table shows that there is a slight increases of reserve and surplus during the year 2007-08 (6.14%) and 2008-09 (7.49%) when compare to other above two years i.e., 2005-06 (3.66%) and 2006-07 (5.36%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 82

A Study On Financial Analysis At Indian Bank

Graph No. 4.10 Graph showing Reserve and Surplus

8 6 4 2 0 2005-06 2006-07 2007-08 2008-09

percentage

Years

Interpretation:
The above table shows that there is a slight increases of reserve and surplus during the year 2007-08 (6.14%) and 2008-09 (7.49%) when compare to other above two years i.e., 2005-06 (3.66%) and 2006-07 (5.36%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 83

A Study On Financial Analysis At Indian Bank

Table No. 4.11 Table showing Deposits

Year
2005-06 2006-07 2007-08 2008-09

Amount
40805,52,48 47090,90,63 61045,94,73 72581,83,10

Percentage (%)
85.66 83.86 86.58 86.28

Interpretation:
The above table shows that there is an increase in the deposits during the year 2007-08 (86.58%) and 2008-09 (86.28%) when compare to 2005-06 (85.66%) and 2006-07 (83.86%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 84

A Study On Financial Analysis At Indian Bank

Graph No. 4.11 Graph showing Deposits

87 86.5 86 85.5 85 84.5 84 83.5 83 82.5 2005-06 2006-07 83.86 85.66

86.58 86.28

2007-08

2008-09 percentage

Years

Interpretation:
The above table shows that there is an increase in the deposits during the year 2007-08 (86.58%) and 2008-09 (86.28%) when compare to 2005-06 (85.66%) and 2006-07 (83.86%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 85

A Study On Financial Analysis At Indian Bank

Table No. 4.12 Table showing Borrowings Year
2005-06 2006-07 2007-08 2008-09

Amount
1887,29,41 1936,45,33 1283,23,98 530,78,30

Percentage (%)
3.96 3.44 1.81 0.63

Interpretation:
The above table shows that there is an increases in the borrowings during the year 2005-06 (3.96%) and 2006-07 (3.44%) when compare to other two years decreases in borrowings i.e., 2007-08(1.81%) and 2008-09 (0.63%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 86

A Study On Financial Analysis At Indian Bank

Graph No. 4.12 Graph Showing Borrowings

0.63 1.81

3.96

2005-06

3.

2006-07 2007-08 2008-09

Interpretation:
The above table shows that there is an increases in the borrowings during the year 2005-06 (3.96%) and 2006-07 (3.44%) when compare to other two years decreases in borrowings i.e., 2007-08(1.81%) and 2008-09 (0.63%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

  

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A Study On Financial Analysis At Indian Bank

Table No. 4.13 Table showing Other Liabilities and Provisions Year
2005-06 2006-07 2007-08 2008-09

Amount
2451,05,55 3280,51,88 2967,72,42 3873,22,02

Percentage (%)
5.14 5.84 4.28 4.60

Interpretation:
The above table shows that there is an increase in the other liabilities and provisions during the year 2005-06 (5.14%) and 2006-07 (5.84%) when compare to other two years i.e., 2007-08 (4.28%) and 2008-09 (4.60%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 88

A Study On Financial Analysis At Indian Bank

Graph No. 4.13 Graph Showing Other Liabilities and Provisions
7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09

percentage

Years

Interpretation:
The above table shows that there is an increase in the other liabilities and provisions during the year 2005-06 (5.14%) and 2006-07 (5.84%) when compare to other two years i.e., 2007-08 (4.28%) and 2008-09 (4.60%) respectively.

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 89

A Study On Financial Analysis At Indian Bank

Chapter: 5 Summary of Finding, Suggestions and Conclusions

Findings of the common size balance sheet statement on 2006-2007 
Cash and Balance with Reserves Bank of India are 4.83% and 6.64% of total assets of the Bank.  Balance with banks and money at call and short notice are 5.25% and 1.93% of total assets of the Bank.  Investments are 39.92% and 37.18% of total assets of the Bank.  Advances are 47.20% and 51.75% of total assets of the Bank.  Fixed assets are 1.08% and 0.98% of total assets of the Bank.  Other assets are 1.69% and 1.50% of total assets of the Bank.  Share capitals are 1.56% and 1.47% of total liabilities of the Bank.  Preference share capitals are 0.00% and 0.71% of total liabilities of the Bank.  Equity share capitals are 1.56% and 0.76% of total liabilities of the Bank.  Reserves and surplus are 3.66% and 5.36% of total liabilities of the Bank.  Deposits are 85.66% and 83.86% of total liabilities of the Bank.  Borrowings are 3.96% and 3.44% of total liabilities of the Bank.  Other liabilities and provisions are 5.14% and 5.84% of the total liabilities of the Bank.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Findings of the common size balance sheet statement on 2008-2009 
Cash and Balance with Reserves Bank of India are 9.12% and 7.38% of total assets of the Bank.  Balance with banks and money at call and short notice are 0.48% and 0.56% of total assets of the Bank.  Investments are 31.08% and 27.10% of total assets of the Bank.  Advances are 56.50% and 61.17% of total assets of the Bank.  Fixed assets are 0.76% and 1.89% of total assets of the Bank.  Other assets are 2.04% and 1.87% of total assets of the Bank.  Share capitals are 1.17% and 0.98% of total liabilities of the Bank.  Preference share capitals are 0.56% and 0.47% of total liabilities of the Bank.  Equity share capitals are 0.60% and 0.51% of total liabilities of the Bank.  Reserves and surplus are 6.14% and 7.49% of total liabilities of the Bank.  Deposits are 86.58% and 86.28% of total liabilities of the Bank.  Borrowings are 1.81% and 0.63% of total liabilities of the Bank.  Other liabilities and provisions are 4.28% and 4.60% of the total liabilities of the Bank.  The bank is deals with customers in a friendly.  The bank has providing number of services to its customer.  The deposits and other accounts are increased to year to year.  Bank is located in heart of the city; hence it can easily accessible to its customers.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Suggestions

1. Loans and advances are in better position they are than increasing year to year. It is advisable for the bank has maximizing the loans and advances for the future period. 2. Capital is decreasing year by year. So bank financial performance is not so good. Hence bank has no prefect future. 3. Reserves and surplus are decreasing year to year. So bank financial performance is so good. 4. The bank has to introduce more and more schemes for all sections particularly for low income groups. 5. In order to achieve substantial growth of the economy it has to encourage investments. 6. Bank should promote appropriate technology. 7. Bank has to improve its own infrastructure. 8. Bank should reduce rate of interest. 9. Bank has to introduce electronic machine like teller system, ATM and password system. 10. Bank has to maintain separate enquiry counter.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

CONCLUSIONS

Based on the findings recorded in the study the following conclusions are made. Banking personnel are relatively well placed in the society reasonably good work environment is made available to them. They are well qualified and have right motivation. When they get so much from the society, they are a duty to give best customers service. Indian Bank is one of the well-established financial institutions accepted by the community. This is the number one service bank in India. This bank Provides better customer service than other banks. The top management account for only 1% of work force and remaining staff in bank belong to award staff and supervisory staff category, right form counter cleric to Manager, everybody should share the collective responsibility of providing best customer service.

Dept. Of Commerce & Management, University Arts College, Tumkur

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A Study On Financial Analysis At Indian Bank

Dept. Of Commerce & Management, University Arts College, Tumkur

Page 94

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