Financial Analysis of

INDEX

CHAPTE PAGE
TOPIC
R No.: NO.:
1 INTRODUCTION
1.1.1 Definition of a Bank
1.1.2 Objective of Bank
1.2 BANKING INDUSTRY INTRODUCTION
1.2.1Current Scenario
1.2.2 Aggregate Performance of the Banking Industry
1.2.3 Interest Rate Scene
1.2.4 Government Policy
1.2.5 Implications of Some Recent Policy Measures
1.3 IDBI BANK : ALL ABOUT
1.3.1 Industrial Development Bank of India (IDBI)
1.3.2 Industry/Bank Performance (Milestones)
1.4 CORRELATION BETWEEN INDUSTRY AND
IDBI BANK'S MOVEMENT
1.4.1 IDBI Bank Business Chart
1.4.2 IDBI Bank Organizational Chart
2 RESEARCH METHODOLOGY
2.1 Objective of the Study
2.2 Scope of the Study
2.3​ ​ LIMITATION OF THE STUDY
3 LITERATURE REVIEW
 TOOLS AND TECHNIQUES, DATA ANALYSIS
4
AND INTERPRETATION
4.1 Tools and Techniques
4.2 Technological Tools

4.3 Sources of Primary and Secondary Data

4.4 Statistical Analysis

4.5 Financial statement

4.6 Ratio Analysis
FINDINGS, CONCLUSIONS AND
5
RECOMMENDATIONS
5.1 Findings
5.2 Conclusions
5.3 Recommendations
● APPENDIX
Appendix 1 : Questionnaire
Appendix 2(ii): Bibliography
Appendix 2(ii): Webliography
 IDBI Bank Ltd

Type Government Owned Bank

BSE​: ​500116
Traded as
NSE​: ​IDBI

Industry Banking, ​Financial services

Predecessor IDBI

Founded 1 July 1964, 55 years ago

Headquarters Mumbai​, ​India

 Rakesh Sharma
Key people (​MD​ & ​CEO​)
(Interim)

Consumer banking​, ​corporate banking​, ​finance and

Products insurance​, ​investment banking​, ​mortgage loans​, ​private
banking​, ​private equity​, ​wealth management​, Agriculture Loan

Revenue ₹25,371.54 Crore (2019)

Operating income ₹ 3,300.30 Crore (2019)

Net income ₹ -15,116.29 Crore (2019)

Total assets ₹ 3,13,556.80 Crore (2019)

Owner Government of India

Number of
18,000 (March 2019)
employees

Capital ratio 7.77% (2019)

Website www.idbi.com

CHAPTER 1

​ INTRODUCTION
Finance is the life blood of the trade, commerce and industry. Now-a-days,
banking sector acts as the backbone of modern business. Development of any
country mainly depends upon the banking system.
A bank is financial institution which deals with
deposits and advances and other related services. It receives money from those
who want to save in the form of deposits and it lends money to those who need
it.

Most nations have institutionalized a system known as ​fractional reserve

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

Banks are just one part of the world of financial institutions,

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

W​hat is Financial Analysis?

Financial analysis is the process of evaluating businesses, projects,

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

The role of financial reporting for companies is to provide

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

Definition of Financial Analysis:

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

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

Objectives of Financial Analysis:

The major objectives of financial analysis is to provide decision

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

Financial statement analysis can be used by the different

users and decision makers to achieve the following objectives:

i. Assessment of Past Performance and Current Position:

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

Similarly, the analysis of current position indicates where the

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

ii. Prediction of Net Income and Growth Prospects:

The financial statement analysis helps in predicting the earning

prospects
and growth rates in the earnings which are used by investors while comparing
investment alternatives and other users interested in judging the earning
potential of business enterprises. Investors also consider the risk or uncertainty
associated with the expected return.

The decision makers are futuristic and are always concerned

with the future. Financial statements which contain information on past
performances are analyzed and interpreted as a basis for forecasting future rates
of return and for assessing risk.

iii. Prediction of Bankruptcy and Failure:

Financial statement analysis is a significant tool in predicting the

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

In accounting and finance area, empirical studies conducted

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

Investors and shareholder can use the model to make the

optimum portfolio selection and to bring changes in the investment strategy in
accordance with their investment goals. Similarly, creditors can apply the
prediction model while evaluating the creditworthiness of business enterprises.

iv. Loan Decision by Financial Institutions and Banks:

Financial statement analysis is used by financial institutions, loaning

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

Different Authors and Economists have given some structural and

functional definitions on Bank from different angles:
● “Bank is a financial intermediary institution which deals in loans and
advances”. -- ​Cairn Cross
● “Bank is an institution which collects idle money temporarily from the
public and lends to other people as per need”. -- ​R.P. Kent
● “Bank provides service to its clients and in turn receives perquisites in
different forms”. -- ​P.A. Samuelson
● “Bank is such an institution which creates money by money only”.
-- ​W. Hock
● “Bank is such a financial institution which collects money in current,
savings or fixed deposit account; collects cheques as deposits and pays
money from the depositors‟ account through cheques”. -- ​Sir John
Pagette.
● Indian Company Law 1936​ defines Bank as “a banking company which
receives deposits through current account or any other forms and allows
withdrawal through cheques or promissory notes”.
● Oxford Dictionary​ defines a bank as “an establishment for custody of
money, which it pays out on customer’s order”.
1.1.2 Objectives of Bank:

● To establish as an institution for maximizing profits and to conduct

overall economic activities.
● To collect savings or idle money from the public at a lower rate of
interests and lend these public money at a higher rate of interests.
● To create propensity of savings amongst the people.
● To motivate people for investing money with a view to bringing solvency
in them.
● To create money against money as an alternative for enhancing supply of
money.
● To build up capital through savings.
● To expedite investments.
● To extend services to the customers.
● To maintain economic stability by means of controlling money market.
● To extend co-operation and advices to the Govt. on economic issues.
● To assist the Govt. for trade& business and socio-economic development.
● To issue and control notes and currency as a central bank.
● To maintain and control exchange rates as a central bank.
1.2 BANKING INDUSTRY INTRODUCTION

The Indian Banking industry, which is governed by the Banking

Regulation Act of India, 1949 can be broadly classified into two major
categories, non-scheduled banks and scheduled banks. Scheduled banks
comprise commercial banks and the co-operative banks. In terms of ownership,
commercial banks can be further grouped into nationalized banks, the State
Bank of India and its group banks, regional rural banks and private sector banks
(the old/ new domestic and foreign). These banks have over 67,000 branches
spread across the country in every city and villages of all nook and corners of
the land. The first phase of financial reforms resulted in the nationalization of 14
major banks in 1969 and resulted in a shift from Class banking to Mass banking.
This in turn resulted in a significant growth in the geographical coverage of
banks. Every bank had to earmark a minimum percentage of their loan portfolio
to sectors identified as “Priority Sectors”. The manufacturing sector also grew
during the 1970s in protected environs and the banking sector was a critical
source. The next wave of reforms saw the nationalization of 6 more commercial
banks in 1980. Since then the number of scheduled commercial banks increased
four-fold and the number of bank branches increased eight-fold. And that was
not the limit of growth. After the second phase of financial sector reforms and
liberalization of the sector in the early nineties, the Public Sector Banks (PSBs)
found it extremely difficult to compete with the new private sector banks and
the foreign banks. The new private sector banks first made their appearance
after the guidelines permitting them were issued in January 1993. Eight new
private sector banks are presently in operation. These banks due to their late
start have access to state-of-the-art technology, which in turn helps them to save
on manpower costs.
During the year 2000, the State Bank of India (SBI) and its 7 associates
accounted for a 25% share in deposits and 28.1% share in credit. The 20
nationalized banks accounted for 53.2% of the deposits and 47.5% of credit
during the same period. The share of foreign banks (numbering 42), regional
rural banks and other scheduled commercial banks accounted for 5.7%, 3.9%
and 12.2% respectively in deposits and 8.41%, 3.14% and 12.85% respectively
in credit during the year 2000. About the detail of the current scenario we will
go through the trends in modern economy of the country.

1.2.1 Current Scenario:

● IDBI Bank Repo Linked Retail loans to be effective from October

1, 2019
Mumbai, September 9, 2019: IDBI Bank vide its press release dated August 30,
2019 had announced that it would introduce Repo Rate linked Home and Auto
Loan with effect from September 10, 2019. However, in view of RBI directive
issued on September 4, 2019, to link all new floating rate retail loans (Personal
segments) to external benchmark with effect from October 1, 2019, the
introduction of Repo linked Home Loan and Auto Loan has been deferred.

● IDBI Bank introduces Repo Linked Suvidha Plus Home Loan and
Auto Loan
Mumbai, August 30, 2019: IDBI Bank introduces two Repo Linked Products
-Suvidha Plus Home Loan and Suvidha Plus Auto Loan. The products will be
benchmarked to the Reserve Bank of India’s (RBI) Repo rate and will be
available to customers effective from 10th September 2019.
The Suvidha Plus Home Loan and Suvidha Plus Auto Loan products will be
offered to new customers having good credit score and minimum income of Rs.
6 lakh per annum.
The Suvidha Plus Home Loan will be offered for up to Rs. 75 Lakh with a tenor
of up to 35 years. Bank will also be offering balance transfer with top up facility
under the new variant with NIL Processing fees. Currently, the interest rate on
Home loan will be from 8.30% p.a. onwards.
The Suvidha Plus Auto loan will be offered for up to Rs. 25 Lakh covering the
on road price with a tenor of up to 7 years. The loan will be extended
exclusively for new 4 wheeler loans. Currently, the interest rate on Auto loan
will be from 8.90% p.a. onwards.
To promote green initiative, additional discount of 10 bps will be offered for
purchase of electric car under Suvidha Plus Auto Loan. Speaking on the
occasion Shri Rakesh Sharma MD&CEO, said “Our retail segment loan book is
growing at 19% YOY and this measure will surely help us to improve the
business under the segment”
● IDBI Bank introduces Repo Linked Lending and Bulk Deposit
Rates
Mumbai, August 29, 2019: IDBI bank has launched a new Home Loan and
Auto Loan product linked to Reserve Bank of India’s repo rate.
The Bank has also introduced Bulk deposits linked to the Repo rate in select
Buckets. The Interest rate on the new Home loan and Auto Loan variant will be
directly linked to the repo rate and thereby help in quick monetary transmission.
The Bank’s customers will have the twin option of selecting either the MCLR
linked product or the newly launched repo rate linked product.
The revised rates are applicable w.e.f. September 10, 2019.
.
 ● IDBI Bank reduces Marginal Cost of funds-based Lending Rate
(MCLR)
Mumbai, August 08, 2019: IDBI Bank reduces Marginal Cost of Funds based
Lending Rates (MCLR) as under:
Tenor MCLR ( in % )
Overnight 7.85%
One Month 8.10%
Three Month 8.35%
Six Month 8.50%
One Year 8.85%
Two Year 8.95%
Three Year 9.10%

The above revised rates are applicable w.e.f. August 12, 2019. The bank has
reduced MCLR by 5 bps to 15 bps across various tenors
● Launch of Portfolio Management Services by IDBI Bank
Mumbai July 24, 2019: IDBI Bank has launched Portfolio Management
Services (PMS) for HNW Customers at Taj Lands End, Bandra, Mumbai on
17th July 2019. Bank has tied up with its own subsidiary IDBI Capital to
distribute PMS to the Bank’s HNW Clients.
This PMS will be served by our top 100 branches across 12 Cities. This will
enhance the distribution product portfolio of the Bank. The clients will be
benefited by getting professional PMS services of the fund manager to achieve
desirable investment goals.

1.2.2 Aggregate Performance of the Banking Industry:

Combination deposits of scheduled commercial banks multiplied at a
compounded annual average growth fee (cagr) of 17.​8​% all through 1969-​99​, at
the same time as financial institution credit score increased at a cagr of 16.3% in
step with annum. Banks’ investments in authorities and other authorized
securities recorded a cagr of 18.​8​% in keeping with annum at some point of the
same length.
In fy01 the financial slowdown led to a gross home product (gdp) growth of
best 6.​0​% as in opposition to the previous year’s 6.4%. The wpi index (a degree
of inflation) multiplied by using 7.1% as against 3.​3​% in fy00. Similarly, cash
deliver (m3) grew by round 16.2% as against 14.6% a yr in the past.
The growth in mixture deposits of the scheduled commercial banks at
15.​4​% in fy01 percent become lower than that of 19​.3% inside the previous
year, while the increase in credit by using scbs bogged down to 15.6 percent in
fy01 against 23% a year in the past.
The commercial slowdown additionally affected the earnings of listed
banks. The internet income of 20 listed banks dropped by way of 34.​43​% within
the sector ended march 2001. Net income grew through 40.​75​% in the first zone
of 2000-2001, however dropped to 4.56% within the fourth quarter of
2000-2001.
On the capital adequacy ratio (vehicle) the front whilst maximum
banks managed to fulfill the norms, it become a feat done with its very own
proportion of difficulties. The car, which at gift is 9​.0%, is probable to be hiked
to 12.0% by means of the year 2004 based on the basle committee
recommendations. Any bank that wishes to grow its assets wishes to also shore
up its capital on the same time in order that its capital as a percent of the
chance-weighted belongings is maintained at the stipulated rate. Whilst the ipo
route become a miles-fancied one within the early ‘90s, the contemporary state
of affairs doesn’t appearance too attractive for financial institution majors.
Consequently, banks have been forced to explore other avenues to shore up their
capital base. While some are wooing foreign partners to add to the capital others
are employing the M&A route. Many are also going in for right issues at prices
considerably lower than the market prices to woo the investors.
1.2.3 Interest Rate Scene:
The two years, publish the East Asian crises in 1997-98 saw a climb within the
international interest prices. It became handiest inside the later 1/2 of FY01 that
the usa Fed cut hobby quotes. India has however remained extra or much less
insulated. The beyond 2 years in our us of a become characterised via a
mounting aim of the Reserve bank of India (RBI) to steadily reduce interest
prices ensuing in a narrowing differential among global and domestic fees.
The RBI has been affecting financial institution price and CRR cuts
at ordinary periods to improve liquidity and decrease costs. The simplest
exception turned into in July 2000 while the RBI expanded the cash Reserve
Ratio (CRR) to stem the autumn in the rupee against the dollar. The steady fall
in the interest quotes resulted in squeezed margins for the banks in fashionable.

1.2.4 Governmental Policy:

The government isn't keen to provide any additional capital to IDBI Bank NSE
-3.35 %, which calls for round Rs 7,000 crore to meet regulatory necessities and
enhance its lending e-book.
The bank has indicated that it will need this money inside the contemporary
financial itself, consistent with official privy to the improvement. It had reported
a lack of Rs 4,918 crore inside the final area of FY19 and Rs 15,116 crore for
the overall year.
The financial institution is already monetising its non-core belongings to raise
capital. Any public offer will depend upon how a great deal lively participation
is there from the promoter and the second largest shareholder,” stated one of the
officers. since the government is not eager to participate in a rights problem,
that might not be a possible choice, he said.
IDBI and LIC didn’t reply to queries.
LIC and IDBI are discussing capital-raising plans with the government, the
second one official said.
The authorities might also are searching for the opinion of the regulation
ministry on whether or not the now privatised idbi banknse -3.35 % should be
taken into consideration a country-run financial institution, or be treated on a
par with non-public banks as categorized by the reserve financial institution of
india, a senior authentic stated.
The development comes after the crucial vigilance commission, in reaction to a
finance ministry question, stated idbi bank will continue to return below the
authorities’s vigilance oversight. Non-public banks do no longer fall below the
ambit of the vigilance fee.
Idbi, installation in 1964 underneath an act of parliament, is regarded as a public
monetary organization under the companies act, but the government has ceded
its control control inside the company. Therefore, the confusion.
“we continue to remember it a kingdom-run financial entity but may
additionally searching for in addition clarity if wanted,” a senior government
respectable told et. In respond to questions about public region banks in each
houses, the government has clarified that facts includes figures for idbi bank.
The union cabinet had, in august closing 12 months, authorised acquisition of
controlling stake inside the bank by way of state-run insurer life insurance
organization of india (lic) as promoter, and bringing down the authorities’s
stake within the f ..
1.2.5 Implications of Some Recent Policy Measures:
The allowing of PSBs to shed manpower and dilution of equity are moves in an
effort to lend more autonomy to the enterprise. with the intention to lend more
intensity to the capital markets the RBI had in November 2000 additionally
changed the capital marketplace publicity norms from 05% of financial
institution’s incremental deposits of the preceding yr to 05% of the bank’s total
domestic credit within the previous 12 months. but this circulate did no longer
have the preferred impact, as in, at the same time as most banks kept away
almost absolutely from the capital markets, some personal zone banks went
overboard and surpassed limits and indulged in doubtful inventory marketplace
deals. The possibilities of seeing banks making a comeback to the stock markets
are therefore quite unlikely in the near destiny.
The pass to boom overseas Direct investment FDI limits to forty
nine% from 20% all through the primary region of this financial came as a
welcome declaration to overseas players trying to get a foot keep in the Indian
Markets by means of investing in inclined Indian companions who are starved
of net worth to satisfy automobile norms. Ceiling for FII investment in
organizations become also accelerated from 24% to 49% and have been
blanketed within the ambit of FDI funding.

1.3 IDBI BANK: ALL ABOUT

The economic development of any U.S.A. Relies upon at the volume to which
its financial gadget successfully and successfully mobilizes and allocates assets.
There are a number of banks and financial establishments that carry out this
function; certainly one of them is the development bank. Development banks
are particular economic institutions that perform the unique assignment of
fostering the development of a kingdom, commonly now not undertaken with
the aid of different banks. Improvement banks are economic corporations that
provide medium-and lengthy-time period economic help and act as catalytic
marketers in selling balanced improvement of the united states. They're engaged
in promotion and improvement of enterprise, agriculture, and other key sectors.
In addition they provide improvement offerings which can useful resource
inside the expanded growth of an financial system.

1.3.1 Industrial development Bank of India (IDBI):

The Industrial Development Bank of India (IDBI) was established

in 1964 by parliament as wholly owned subsidiary of reserve bank of India. In
1976, the bank’s ownership was transferred to the government of India. It was
accorded the status of principal financial institution for coordinating the
working of institutions at national and state levels engaged in financing,
promoting, and developing industries.
IDBI has provided assistance to development related projects and
contributed to building up substantial capacities in all major industries in India.
IDBI has directly or indirectly assisted all companies that are presently
reckoned as major corporate in the country. It has played a dominant role in
balanced industrial development.
 IDBI set up the Small Industries Development Bank of India
(SIDBI) as wholly owned subsidiary to cater to specific the needs of the
small-scale sector. IDBI has engineered the development of capital market
through helping in setting up of the Securities Exchange Board of India (SEBI),
National Stock Exchange of India Limited (NSE), Credit Analysis and Research
Limited (CARE), Stock Holding Corporation of India Limited (SHCIL),
Investor Services of India Limited (ISIL), National Securities Depository
Limited (NSDL), and Clearing Corporation of India Limited (CCIL).
In 1992, IDBI accessed the domestic retail debt market for the first
time by issuing innovative bonds known as the deep discount bonds. These new
bonds became highly popular with the Indian investor.
In 1994, IDBI Act was amended to permit public ownership up to 49%. In July
1995, it raised over Rs. 20 billion in its first Initial Public Offer (IPO) of equity,
thereby reducing the government stake to 72.14%. In June 2000, a part of
government shareholding was converted to preference capital. This capital was
redeemed in March 2001, which led to a reduction in government stake. The
government stake currently is 51%. In august 2000, IDBI became the first all
India financial institution to obtain ISO 9002: 1994 certification for its treasury
operations. It also became the first organization in the Indian financial sector to
obtain ISO 9001:2000 certifications for its forex services.
1.3.2 Industry/Bank performance​ (​Milestones):
1964:
● Set up under an Act of Parliament as a wholly-owned subsidiary of
Reserve Bank of India.
1976:
● Ownership transferred to Government of India. Designated Principal
Financial Institution for co-coordinating the working of institutions at
 national and State levels engaged in financing, promoting and developing
industry.
1982:
● International Finance Division of IDBI transferred to Export-Import Bank
of India, established as a wholly-owned corporation of Government of
India, under an Act of Parliament.
1990:
● Set up Small Industries Development Bank of India (SIDBI) under SIDBI
Act as a wholly-owned subsidiary to cater to specific needs of small-scale
sector. In terms of an amendment to SIDBI Act in September 2000, IDBI
divested 51% of its shareholding in SIDBI in favor of banks and other
institutions in the first phase. IDBI has subsequently divested 79.13% of
its stake in its erstwhile subsidiary to date.
1992:
● Accessed domestic retail debt market for the first time with
innovative Deep Discount Bonds; registered path-breaking success.
1993:
● Set up IDBI Capital Market Services Ltd. as a wholly-owned subsidiary
to offer a broad range of financial services, including Bond Trading,
Equity Broking, Client Asset Management and Depository Services. IDBI
Capital is currently a leading Primary Dealer in the country.
1994:
● Set up IDBI Bank Ltd. in association with SIDBI as a private sector
commercial bank subsidiary, a sequel to RBI's policy of opening up
domestic banking sector to private participation as part of overall
financial sector reforms.
1994:
 ● IDBI Act amended to permit public ownership upto 49%.
1995:
● Made Initial Public Offer of Equity and raised over Rs.2000 crore,
thereby reducing Government stake to 72.14%.
2000:
● Entered into a JV agreement with Principal Financial Group, USA for
participation in equity and management of IDBI Investment Management
Company Ltd., erstwhile a 100% subsidiary. IDBI divested its entire
shareholding in its asset management venture in March 2003 as part of
overall corporate strategy.
● Set up IDBI Intech Ltd. as a wholly-owned subsidiary to undertake
IT-related activities.
● A part of Government shareholding converted to preference capital, since
redeemed in March 2001; Government stake currently 58.47%.
● Became the first All-India Financial Institution to obtain ISO 9002:1994
Certification for its treasury operations. Also became the first
organization in Indian financial sector to obtain ISO 9001:2000
Certification for its forex services.
2001:
● Set up IDBI Trusteeship Services Ltd. to provide technology-driven
information and professional services to subscribers and issuers of
debentures.
2002:
● Associated with select banks/institutions in setting up Asset
Reconstruction Company (India) Limited (ARCIL), which will be
involved with the Strategic management of non-performing and stressed
assets of Financial Institutions and Banks.
2003:
● IDBI acquired the entire shareholding of Tata Finance Limited in Tata
Home finance Ltd, signaling IDBI's foray into the retail finance sector.
The housing finance subsidiary has since been renamed 'IDBI Home
finance Limited'.
● On December 16, 2003, the Parliament approved The Industrial
Development Bank (Transfer of Undertaking and Repeal Bill) 2002 to
repeal IDBI Act 1964. The President's assent for the same was obtained
on December 30, 2003. The Repeal Act is aimed at bringing IDBI under
the Companies Act for investing it with the requisite operational
flexibility to undertake commercial banking business under the Banking
Regulation Act 1949 in addition to the business carried on and transacted
by it under the IDBI Act, 1964.
2004:
● The Industrial Development Bank (Transfer of Undertaking and Repeal)
Act 2003 came into force from July 2, 2004.
● The Boards of IDBI and IDBI Bank Ltd. take in-principle decision
regarding merger of IDBI Bank Ltd. with proposed Industrial
Development Bank of India Ltd. in their respective meetings on July 29,
2004.
● The Trust Deed for Stressed Assets Stabilization Fund (SASF) executed
by its Trustees on September 24, 2004 and the first meeting of the
Trustees was held on September 27, 2004.
● The new entity "Industrial Development Bank of India" was incorporated
on September 27, 2004 and Certificate of commencement of business was
issued by the Registrar of Companies on September 28, 2004.
 ● Notification issued by Ministry of Finance specifying SASF as a financial
institution under Section 2(h)(ii) of Recovery of Debts due to Banks &
Financial Institutions Act, 1993.
● Notification issued by Ministry of Finance on September 29, 2004 for
issue of non-interest bearing GOI IDBI Special Security, 2024,
aggregating Rs.9000 crore, of 20-year tenure.
● Notification for appointed day as October 1, 2004, issued by Ministry of
Finance on September 29, 2004.
● RBI issues notification for inclusion of Industrial Development Bank of
India Ltd. in Schedule II of RBI Act, 1934 on September 30, 2004.
● Appointed day - October 01, 2004 - Transfer of undertaking of IDBI to
IDBI Ltd. IDBI Ltd. commences operations as a banking company. IDBI
Act, 1964 stands repealed.
2005:
● The Board of Directors of IDBI Ltd., at its meeting held on January 20,
2005, approved the Scheme of Amalgamation, envisaging merging of
IDBI Bank Ltd. with IDBI Ltd. Pursuant to the scheme approved by the
Boards of both the banks, IDBI Ltd. will issue 100 equity shares for 142
equity shares held by shareholders in IDBI Bank Ltd. EGM has been
convened on February 23, 2005 for seeking shareholder approval for the
scheme.
2006:
● IDBI signs MOU with Fortis.
● IDBI bags "IT Team of the Year Award 2005".
● IDBI sets up new branch in Andheri.
● IDBI - Tripartite MOU with Federal Bank & Forties Insurance
International.
 ● IDBI bags Asia money’s "Best India Deal of the Year Award 2005.
● IDBI Launches No Frills 'Sabka' Savings Bank Account.
2007:
● Industrial Development Bank Of India Limited has informed that as per
provisions of Article 134 to 138 of the Articles of Association of IDBI
Ltd., read with Sections 255 and 256 of the Companies Act, 1956, the
shareholders have re-appointed the following two directors after
retirement by rotation on the Board of Directors of IDBI Ltd. in the 3rd
Annual General Meeting of IDBI Ltd. held on June 22, 2007.
(1) Shri Hira Lal Zutshi and
(2) Shri A. Sakthivel
● IDBI Wins Three Awards at the ABCI.
● IDBI signs MOU with IFC for co-operation in Clean Development
Mechanism (CDM) Projects.
● IDBI, Federal Bank and Fortis Sign Joint Venture Agreement To
Establish A New Life Insurance Company In India.
● IDBI Launches new 600 days “A Suvidha Plus A”’ FD Scheme.
2008:
● Industrial Development Bank Of India Limited has submitted to a
copy of the Resolution passed by the Board by circulation on March 12,
2008 in respect of change of name of the Bank to "IDBI Bank Limited"
by passing a Special Resolution through Postal Ballot in terms of Section
192A of the Companies Act, 1956.
● Company name has been changed from Industrial Development Bank of
India Ltd to IDBI Bank Ltd.
● IDBI bags two Special IT Awards from IBA -IDBI ties up with Motilal
Oswal Securities for online trading.
2009:
● IDBI Bank has slashed its benchmark prime-lending rate (BPLR) by 25
basis points to 12.75 per cent. The reduction will come into effect from
July 1 and will apply to all loans linked to the BPLR, including home
loans, according to a press release from the bank. The bank cut deposit
rates by 25-50 basis points earlier this week.
● IDBI Bank bags IBA's prestigious Banking Technology award.
● IDBI Bank Ltd and Tata Motors Limited (TML) sign MOU for Vehicle
Loan Financing.
2010:
● IDBI Bank has opened its first overseas branch at the Dubai International
Financial Centre.
2011:
● IDBI Federal Life launches new plan for senior citizens.
● IDBI bank has decided to opt for “A Mystery Shopping” method in
order to keep an eye on the feedback on customer experience, their
perception and expectations.
● IDBI Bank Ltd has informed BSE that Government of India (GOI) has,
vide its letter dated December 27, 2011, advised that GOI is actively
considering the Bank's request for capital support and intends to infuse
capital funds in the Bank by way of Preferential Allotment of Equity in
favor of GOI, subject to necessary approvals from the Board of Directors
and various other statutory bodies.
● IDBI Bank Ltd has informed BSE that consequent upon posting of Shri. S
N Baheti, CGM & Company Secretary to Priority Sector Group of the
Bank, Shri. Pawan Agrawal, CGM, Board Department has been
appointed as Company Secretary & Compliance Officer of the Bank vide
 approval of the Board of Directors accorded by Circular Resolution
passed on May 18, 2011 in terms of the Provisions of Clause 47(a) of the
Listing Agreement and Section 383A of the Companies Act, 1956 read
with Article 156 of the Articles of Association of the Bank.
● Despite the low fee quoted in the bid to match, IDBI bank managed to
win the mandate of the public offer (IPO) of National Building
Construction Corp Ltd (NBCC). The bid invited was supposed to appoint
two merchant bankers for the issue, last month. Further, selection of the
bankers was through a two stage-process of technical and financial bids.
2012:
● IDBI Mutual Fund launched a new open ended fund of funds
scheme named “A IDBI Gold Fund & RDQuo”.
● IDBI Bank cuts interest rates on home loans, slashes deposit.
● IDBI Bank appoints B K Batra as whole time director.
● IDBI Bank has launched an online portal, IDBI Samriddhi, to sell its
Certificate of Deposits (CDs) to the individual and institutional investors,
thus adding another milestone in the increasing role of technology in the
banking sector.
2013:
● IDBI inks MOC with Exim Bank to co-finance export oriented
companies.
● IDBI Bank introduces online PPF Subscription Facility.
● IDBI Bank at the forefront of innovation Wins Finnoviti 2013 Award for
IDBI Samriddhi Portal.
● IDBI Bank and EXIM Bank sign MOC for Co-financing of
Export-Oriented Companies.
2014:
 ● IDBI Bank the 1st PSU Bank to Launch EIA facility.
● IDBI Bank Inaugurates Zonal Office in Chandigarh.
● Rajbhasha Shield Award to IDBI Bank Ltd.
● IDBI Bank Wins the Golden Peacock CSR Award.
2018:
● RBI puts 4 public sector banks under watch on NPA concerns.
2019:

● The employees of IDBI Asset Management Company (AMC) have made

representations to the senior management of IDBI Bank and IDBI AMC.
● As the bank looks to divest its stake in the AMC business, and merger
with Life Insurance Corporation (LIC) of India AMC looks unlikely

Latest achievement gets by IDBI Bank:

In tune with its philosophy of ‘Bank Aisa, Dost Jaisa’, IDBI Bank
strengthened its network and reach in the country by inaugurating its 3000th
ATM at Punjabi Bagh, New Delhi. The 3000th ATM was inaugurated by S.
Ravi and Pankaj Vats, Directors of IDBI Bank, in presence of M. S. Raghavan,
CMD, IDBI Bank and other dignitaries.
With this, the bank’s network is enhanced, reaching a mark of 1708
branches and 3000 ATMs across 1256 centers in India. IDBI Bank connects
with its customers through branches, ATMs, internet banking, social media, 24
X 7 call center, e-lounge and mobile banking.
Speaking on the occasion,​ M​. S. Raghavan, CMD, IDBI
Bank​ ​said “With every additional ATM, IDBI Bank strengthens its reach and
offers banking benefits not only to the bank’s customers but the population at
large. The bank has always endeavored in providing the best technology,
customized banking services and lasting relationships to it’s’ customers”.

1.4.CORRELATION BETWEEN INDUSTRY AND IDBI BANK’S

MOVEMENT:

1.4.1 IDBI Bank Business Chart:

1.4.2 IDBI Bank Organizational Chart:
CHAPTER 2

RESEARCH METHODOLOGY

2.1.1 Objective of the study:

Project study which is being conducted by me for the last two

month is not only a formality for the fulfillment of the two year full time Post
Graduation in Master of Commerce (M.Com). But being a commerce student
and a good employee I tried my best to extract best of the information available
in the market for the use of society and people. The objectives have been
classified by me in this project form personal to professional, but here I am not
disclosing my personal objectives which have been achieved by me while doing
the project. Only professional objectives which are being covered by me in this
project are as following:-
● To know about environmental factors affecting IDBI Bank’s
performance.
● To analyze the role of advertisement for bank performance.
● To know the perception and conception of customers towards banking
products and specially focused for IDBI Bank’s product.
● To explore the potential areas for the new bank branches which will
provide both price and people to the bank with constant promotion and
placing strategy.
● To maintain price stability as its central goal.
● To support the stability and orderly activity of the financial system.
 ● To earning saving through demand and term deposit accounts.
● To provide custody services.
2.2 Scope of the Study:

Each and every project study along with its certain objectives also
has scope for future. And this scope in future gives to new researches a new
need to research a new project with a new scope. Scope of the study not only
consist one or two future business plan but sometime it also gives idea about a
new business which becomes much more profitable for the researches then the
older one.
Scope of the study could give the projected scenario for a new
successful strategy with a proper implementation plan. Whatever scope I
observed in my project are not exactly having all the features of the scope which
I described above but also not lacking all the features​.
● Research study could give an idea of network expansion for capturing
more market and customer with better services and lower cost, with out
compromising with quality.
● In future customer requirements could be added with the product and
services for getting an edge over competitors.
● Consumer behavior could also be used for the purpose of launching a new
product with extra benefits which are required by customers for their
account (saving or current) and/or for their investments.
● Factors which are responsible for the performance for bank can also be
used for the modification of the strategy and product for being more
profitable.
● The banks loan mix is undergoing favourable change with a decline in the
proportion of term loans for a duration exceeding five years.
 ● IDBI Bank deliberately wants to reduce growth in advances to 16% this
will help to improving the assets quality.
● The increased branch network is also expected to help in the
improvement of the banks CASA.
● Factors which I observed while doing project study are following:-
i. Competitors
ii. Customer Behavior
iii. Advertisement/promotional activities
iv. Attitude of manpower and
v. Economic conditions
These all could also be interchanged with each other for each other
in banks strategies for making a final business plan to affect the market with a
positive way without disturbing a lot to market, customers and competitors with
disturbance in market shares.

2.3 LIMITATION OF THE STUDY

● Company is a joint venture of two more companies; market financial

position cannot be studied in a couple of month so time is considered as
main constraint.
● The information given from the company was limited.
● The survey conducted was more of subjective kind and results will be
completely based on secondary data.
● The financial details of the bank are collected for current and previous
year only.
● The data collected for the study depends on published financial
statements of the companies which may incorporate some drawbacks.
 ● The horizon of the study merely confined to very less number of variables
as the determinants of insurance company’s profitability and measuring
financial performance without considering any overall performance
measurement tool.

CHAPTER 3

LITERATURE REVIEW

● Malcom and Jeffrey Wurgler (2002) found that effects on capital

structure are very persistent. Results suggest that capital structure is the
cumulative outcome of past attempts to time the equity market.
● Zeitun (2007) investigated the effect which capital structure has had on
corporate performance using a panel data sample representing of 167
Jordanian companies during 1989-2003. Results showed that a firm’s
capital structure had a significantly negative impact on the firm’s
performance measures, in both the accounting and market’s measures.
● Medhat Tarawneh (2006): Financial performance is a dependent variable
and measured by Return on Assets (ROA) and the intent income size. The
independent variables are the size of banks as measured by total assets of
banks, assets management measured by asset utilization ratio (Operating
income divided by total assets) operational efficiency measured by the
operating efficiency ratio (total operating expenses divided by net
income).
● Ross et al., (2007) implied that the most researchers divide the financial
ratios into four groups i.e. profitability, solvency, liquidity and activity
ratios for detailed analysis.
● Abe De Jong, et al (2008) analyzed the importance of firm-specific and
country-specific factors in the leverage choice of firms around the world.
Data suggested that firm-specific determinants of leverage differ across
countries, and that there is an indirect impact of country-specific factors
on the roles of firm-specific determinants of leverage.
● Eugene F Brigham and Michael C Ehrhardt (2010) stated that financial
ratios are designed to help in evaluating financial statements and used as
a planning and control tool.
● Yusuf and Hakan, (2011) described the short term creditors of a company
like suppliers of goods of credit and commercial banks providing
short-term loans are primarily interested in knowing the company’s
ability to meet its current or short-term obligation as and when these
become due.
● Dimitios Louzius (2012) In his study of Banking sector in Greece found
that for all loan categories, NPLs in the Greek banking system could be
explained mainly by macroeconomic variables (GDP, unemployment,
interest rates, public debt) and management quality.
● Vasant Desai, (2013): The performance of a bank can be assessed in there
broad dimension viz. business development, customer service and
housekeeping. The resources that a branch has are manpower, premises,
planning, system procedure, organizational structure and general
administration. The efficiency of a branch would be measured by the
extent which it has balanced between three parameters.
 ● Nadia Zedek (2017) investigated the controlling shareholders affects
product diversification performance of 710 European commercial banks,
it was found that when banks have no controlling shareholder or have
only family and state shareholders diversification yields diseconomies,
while the involvement of banking institutions, institutional investors,
industrial companies or any other combination of these shareholder
categories, produce diversification economies: they display higher
profitability, lower earnings volatility and lower default risk.
● Alpesh Gajera (2016): In his research article a financial performance
evaluation of private and public sector banks found that there in
significance difference in the financial performance of these banks and
private sector banks are performed better than public sector banks in
respect of capital adequacy ratio and financial performance.
● Muhammad Saifuddin Khan, et al (2017) in his research paper examines
the relationship between funding liquidity and bank risk taking in the U.S.
bank holding companies from 1 986 to 2014, results showed that bank
size and capital buffers usually limit banks from taking more risk when
they have lower funding liquidity risk.

Chapter 4
TOOLS & TECHNIQUES, DATA ANALYSIS & INTERPRETATION

4.1 Tools and Techniques:

As no study could be successfully completed without proper tools

and techniques, same with my project. For the better presentation and right
explanation I used tools of statistics and computer very frequently. And I am
very thankful to all those tools for helping me a lot. Basic tools which I used for
project from statistics are:-
● Bar Charts
● Pie charts
● Tables
Bar charts and pie charts are really useful tools for every research
to show the result in a well clear, ease and simple way. Because I used bar
charts and pie charts in project for showing data in a systematic way, so it need
not necessary for any observer to read all the theoretical detail, simple on seeing
the charts any body could know that what is being said.
4.2 Technological Tools:
● Ms- Excel
● Ms-Access
● Ms-Word
Above application software of Microsoft helped me a lot in making
project more interactive and productive. Microsoft-Excel had a great role in my
project, it created for me a situation of “you sit and get”. I provided it simply all
the detail of data and in return it given me all the relevant information.
Microsoft-Access did the performance of my personal assistant
who organizes my all the details of document without disturbing them even a
single time in all the project duration. And in last Microsoft-Word did help me
for the documentation of the project in a presentable form.
4.3 Sources of Primary and Secondary data:

For the purpose of project data is very much required which works
as a food for process which will ultimately give output in the form of
information. So before mentioning the source of data for the project I would like
to mention that what type of data I have collected for the purpose of project and
what it is exactly.

1. Primary Data:

Primary data is basically the live data which I collected on field while
doing cold calls with the customers and I shown them list of question for
which I had required their responses. In some cases I got no response form
their side and than on the basis of my previous experiences I filled those
fields.
Source: Main source for the primary data for the project was questionnaires
which I got filled by the customers or some times filled me on the basis of
discussion with the customers.

2. Secondary Data:

Secondary data for the base of the project I collected from intranet of the
Bank and from internet, RBI Bulletin, Journal by ICFAI University.

4.4 Statistical Analysis:

In this segment I will show my findings in the form of graphs and charts.
All the data which I got form the market will not be disclosed over here but
extract of that in the form of information will definitely be here.
Details:
Size of Data : 20
Area : Mumbai
Type of Data : Primary & Secondary
Industry : Banking
Respondent : Customers

TABLE 1:
Correlation between awareness of customers about IDBI bank & their Age

AGE NO. OF RESPONSE

20-25 10
25-30 18
30-35 14
35-40 9
40-45 8
45-50 9
 50-60 10
60-ABOVE 22
TABLE 2:
PERCEPTION OF IDBI AS A BANK

TYPE OF BANK RESPONSES

PRIVATE 20
PUBLIC 18
PRIVATE/PUBLIC 40
DON'T KNOW 22

TABLE 3:
RATING OF CUSTOMERS FOR IDBI BANK AS A GOOD BANK

PARAMETER RESPONSES
EFFICIENCY 75%
INTERNET BANKING/ATMs 25%
PRODUCT RANGE 95%
NETWORK 33%
PHONE BANKING 22%
TABLE 4:
MARKET SHARES IN MUMBAI IN COMPARISION TO
COMPETITORS

BANK NAME % OF SHARE

SBI 30%
IDBI 15%
ICICI 25%
PNB 10%
HDFC 5%
HSBC 5%
OTHERS 10%
TABLE 5:
FACTORS RESPONSIBLE FOR PERFORMANCE OF IDBI BANK IN
MUMBAI

PARAMETERS % OF SHARE
PRODUCT 50%
ADVERTISMENT 5%
MANPOWER 25%
NET-BANKING 2%
PHONE BANKING 5%
INVESTMENT SCHEME 10%
NETWORK 3%
TABLE 6:
COMPARATIVE STUDY WITH MAJOR COMPETITORS ON BASIC
PARAMETERS

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

TABLE 7:
THE EFFECTIVENESS OF COMMERCIALS OF IDBI BANK

DAYS AFTER THE AD IS SEEN POSITIVE RESPONSE

0-5 days 40
6-10 days 27
11-15 days 17
more than 15 days 16
4.6 FINANCIAL STATEMENT

IDBI Bank Profit & Loss Account For The Year End 31​ST​ March
 in Rs. Crore
Particulars
Mar-19 Mar-18 Mar-17
Income
Interest Earned 23,026.53 27,791.37 28,043.10
Other Income 7,008.88 3,967.60 3,410.36
Total Income 30,035.41 31,758.97 31,453.46

Expenditure
Interest Expended 17,386.21 22,039.71 21,953.81
Employee cost 1,781.08 2,203.59 1,674.05
Selling, Admin. & Misc. Expenses 18,733.31 12,314.87 11,276.23
Depreciation 372.73 358.94 214.18

Operating Expenses 4,744.68 4,129.59

5,140.14

Provision & Contingencies 16,142.44 9,034.87

9,736.59

Total Expenditure 38,273.33 35,118.27

36,917.11

Net Profit For the year -3,664.80

-8,237.92 -5,158.14

Profit brought forward -8,492.39 912.19

-2,827.28
 Total -16,730.31 -2,752.61
-7,985.42

Equity Dividend 0.00 0.00 0.00

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

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

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

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

● IDBI Bank Balance Sheet as at 31​ST​ March

in Rs. Crore
Particulars
Mar-19 Mar-18 Mar-17

Capital & Liabilities

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

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

2,65,719.8
Deposits 2,47,931.61 2,68,538.10 3
Borrowings 63,185.53 56,363.98 69,573.94
3,35,293.7
Total Debt 3,11,117.14 3,24,902.08 7

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

3,74,372.1
Total Liabilities 3,50,313.63 3,61,767.92 4

Assets

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

Balance with Banks, Money at Call 20,522.40 19,337.16 2,757.63
2,15,893.4
Advances 1,71,739.95 1,90,825.92 5
Investments 91,606.06 92,934.41 98,999.43

Gross Block 6,269.10 6,808.94 7,023.13

Accumulated Depreciation 0.00 0.00 0.00
Net Block 6,269.10 6,808.94 7,023.13
Capital Work in Progress 501.89 539.85 424.19
Other Assets 46,510.56 37,974.70 35,451.39

3,74,372.1
Total Assets 3,50,313.63 3,61,767.92 4

2,12,856.9
Contingent Liabilities 2,07,316.76 2,01,931.13 2
Book Value (Rs.) 52.39 83.28 107.41

1. Dividend:
● Your Directors have recommended payment of dividend of 300% one
equity capital for the year ended 31​st March, 2019, which if approved by
the members at the forth coming annual general meeting, will be paid
out of the current year's profit to the equity shareholders of the
Company.
2. Transfer to Reserves:
● An amount of Rs. 4,19,64,549 has been credited to General Reserves.
3. Share Capital:
● At the beginning of the year, the Authorized Share Capital was Rs.
10,00,00,000, Issued, Subscribed and Paid-up Equity Share capital of the
Company was Rs. 6,03,27,600
dividend into 60,32,760 Equity Shares of Rs. 10/-. During the year under
review the Company there is no alteration to the equity share capital.
 4. Debentures:
● During the year under review the Company has not issued and allotted
debentures.
5. Fixed Deposits
● During the year under review, the Company has not invited or accepted
any fixed deposits either from the public or from the shareholders of the
Company.

​4.11.RATIO ANALYSIS

What is Ratio Analysis?

For most of us, accounting is not the easiest

thing in the world to
understand, and often the terminology used by accountants is part of the
problem. “Financial ratio analysis” sounds pretty complicated. The analysis of
the financial statements and interpretations of financial results of a particular
period of operations with the help of 'ratio' is termed as "ratio analysis." Ratio
analysis used to determine the financial soundness of a business concern.

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

Classification of Ratios:

Accounting Ratios are classified on the basis of the different

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

● Classification of Ratios on the basis of Balance Sheet.

● Classification of Ratios on the basis of Profit and Loss Account.
● Classification of Ratios on the basis of Mixed Statement (or) Balance
Sheet and Profit and Loss account.
To meet the objective the study groups ratios and divides
three main parts which are Liquidity Ratios, Profitability Ratios, and Asset
Management Ratios.

1. Liquidity Ratio​:
Liquidity ratio refers to the ability of a company to interact
its assets that is most readily converted into cash. Assets are converted into cash
in a short period of time that are concerns to liquidity position. However, the
ratio made the relationship between cash and current liability.

a. Current Ratio:
 Current Ratio = Current assets / Current liabilities

b. Cash Ratio:

Cash Ratio = Cash / Current Liabilities

c. Quick Ratio:

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

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

**Quick Liabilities = Current Liabilities - Bank Overdraft

2. Profitability Ratio:
Profitability ratios designate a bank's overall efficiency and
performance. It measures how to use assets and how to control its expenses to
generate an acceptable rate of return. It also used to examine how well the bank
is operating or how well current performance compares to past records of bank.

a. Net Profit Margin:

Net Profit margin = Net Profit / Sales

b. Return on Common Stock Equity Ratio:

Return on Common Stock Equity Ratio = Net Income / Common Stockholders'

Equity

c. Return on Total Assets:

Return on Total Assets = Net Profits / Total Assets

3. Asset Management Ratio:

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

a. Current Asset Turnover Ratio:

Current Asset Turnover Ratio = Sales / Current Assets

b. Total Asset Turnover:

Total Asset Turnover = Sales / Total Assets

c. Debt Equity Ratio:

Debt Equity Ratio = Total Liabilities / Total Shareholder’s

Equity

A. Liquidity Ratio:

1. Current Ratio:

Current Assets
Current Ratio = Current Liabilities

CURRENT RATIO
Table 6.1 Showing the Bank's Current Ratio
Current Assets Current Liabilities Ratio
Year
(A) (B) (A/B)
2016-17 3,44,044.55 3,29,103.91 1.0454
2017-18 3,54,958.96 3,39,204.26 1.0464
 2018-19 3,67,349.00 3,46,650.34 1.0597

● INTERPRETATION:

Table 6.1 presents Current Ratio of three years from 2017 to

2019. In the above ratios the bank’s current ratio of 2017 is 1.0454, 2018 is
1.0464 and 2019 is 1.0597 it shows us that bank’s current ratio is increasing
positive growth year by year.

2. Cash Ratio:

Cash
Cash Ratio = Current Liabilities

CASH RATIO
 Table 6.2 Showing the Bank's Cash Ratio
Cash Current Liabilities Ratio
Year
(A) (B) (A/B)
2016-17 33,686.09 3,29,103.91 0.1024
2017-18 32,684.08 3,39,204.26 0.0964
2018-19 16,580.54 3,46,650.34 0.0478

● INTERPRETATION:

Table 6.2​ ​presents Cash Ratio of three years from 2017 to

2019. In the above ratios the bank’s quick ratio of 2017 is 0.1024, 2018 is
0.0964 and 2019 is 0.0478 it shows us that bank liquidity is too bad because it’s
decreasing year by year.

3. Quick Ratio:
 Quick Assets
Quick Ratio = Current Liabilties

QUICK RATIO
Table 6.3 Showing the Bank's Quick Ratio
Quick Assets Current Liabilities Ratio
Year
(A) (B) (A/B)
2016-17 3,44,044.55 3,29,103.91 1.0454
2017-18 3,54,958.96 3,39,204.26 1.0464
2018-19 3,67,349.00 3,46,650.34 1.0597

● INTERPRETATION:

Table 6.3​ ​presents Quick Ratio of three years from 2017 to

2019. In the above ratios the bank’s quick ratio (acid test ratio) of 2017 is
1.0454, 2018 is 1.0464 and 2019 is 1.0597 it shows us that bank liquidity
increasing positive growth year by year.
 B. Profitability Ratio:

1. Net Profit Margin Ratio:

N et P rof it
Net Profit Margin Ratio = Sales

NET PROFIT MARGIN RATIO

Table 6.4 Showing the Bank's Net Profit Margin Ratio
Net Profit Sales Ratio
Year
(A) (B) (A/B)
2016-17 16,730.31 23,026.53 0.7266
2017-18 7,985.42 27,791.37 0.2873
2018-19 2,752.61 28,043.10 0.0982
 ● INTERPRETATION:

Table 6.4 presents Net Profit Margin Ratio of three years

from 2017 to 2019. In the above ratios the bank’s net profit margin ratio of 2017
is 0.7266, 2018 is 0.2873 and 2019 is 0.0982 it shows us that bank profitability
is not satisfactory because it’s decreasing year by year.

2. Return on Common Stock Equity Ratio:

N et Income
Current Ratio = Common Stock Equity

RETURN ON COMMON STOCK EQUITY RATIO

Table 6.5 Showing the Bank's Return on Common Stock Equity Ratio
Net Income Common Stock Equity Ratio
Year
(A) (B) (A/B)
2016-17 16,730.31 3,083.00 5.4266
 2017-18 7,985.42 2,058.82 3.8786
2018-19 2,752.61 2,058.82 1.3370

● INTERPRETATION:

Table 6.5 presents Return on Common Stock Equity Ratio of

three years from 2017 to 2019. In the above ratios the bank’s net profit margin
ratio of 2017 is 5.4266, 2018 is 3.8786 and 2019 is 1.3370 it shows us that bank
profitability is not satisfactory because it’s decreasing year by year.

3. Return on Total Assets:

N et P rof it
Return on Total Assets Ratio = T otal Assets

RETURN ON TOTAL ASSETS

Table 6.6 Showing the Bank's Return on Total Assets Ratio
Year Net Profit Total Assets Ratio
 (A) (B) (A/B)
2016-17 16,730.31 3,50,313.63 0.0478
2017-18 7,985.42 3,61,767.92 0.0221
2018-19 2,752.61 3,74,372.14 0.0074

● INTERPRETATION:

Table 6.6 presents Return on Asset Ratio of three years from

2017 to 2019. In the above ratios the bank’s return on asset ratio of 2017 is
0.0478, 2018 is 0.0221 and 2019 is 0.0074 it shows us that bank profitability is
not satisfactory because it’s decreasing year by year.

C. Assets Management Ratio:

1. Current Assets Turnover Ratio:

Sales
Current Assets Turnover Ratio = Current Assets
 CURRENT ASSETS TURNOVER RATIO
Table 6.7 Showing the Bank's Current Assets Turnover Ratio
Sales Current Assets Ratio
Year
(A) (B) (A/B)
2016-17 23,026.53 3,44,044.55 0.0669
2017-18 27,791.37 3,54,958.96 0.0783
2018-19 28,043.10 3,67,349.00 0.0763

● INTERPRETATION:

Table 6.7 presents Current Asset Turnover Ratio of three

years from 2017 to 2019. In the above ratios the bank’s current asset turnover
ratio of 2017 is 0.0669, 2018 is 0.0783 and 2019 is 0.0763 it shows us that bank
current asset turnover ratio is not too good as liquidity because it’s fluctuating
year by year.
 2. Total Assets Turnover Ratio:

Sales
Total Assets Turnover Ratio = T otal Assets

TOTAL ASSETS TURNOVER RATIO

Table 6.8 Showing the Bank's Fixed Assets Turnover Ratio
Sales Total Assets Ratio
Year
(A) (B) (A/B)
2016-17 23,026.53 3,50,313.63 0.0657
2017-18 27,791.37 3,61,767.92 0.0768
2018-19 28,043.10 3,74,372.14 0.0749

● INTERPRETATION:

Table 6.8 presents Total Asset Turnover Ratio of three years

from 2017 to 2019. In the above ratios the bank’s total asset turnover ratio of
2017 is 0.657, 2018 is 0.0768 and 2019 is 0.0749 it shows us that bank total
asset turnover ratio is not good as liquidity because it’s fluctuating year by year.

3. Debt Equity Ratio:

T otal Liabilities
Debt Equity Ratio = T otal Shareholder′s Equity

DEBT EQUITY RATIO

Table 6.9 Showing the Bank's Debt Equity Ratio
Total Liabilities Total Shareholder's Equity Ratio
Year
(A) (B) (A/B)
2016-17 3,50,313.63 3,083.86 113.60
2017-18 3,61,767.92 2,058.82 175.72
2018-19 3,74,372.14 2,058.82 181.84
 ● INTERPRETATION:

Table 6.9 presents Debt Equity Ratio of three years from

2017 to 2019. In the above ratios the bank’s debt equity ratio of 2017 is 113.60,
2018 is 175.72 and 2019 is 181.84 it shows us that bank debt equity ratio is
favorable as compare to previous two years.
CHAPTER 5
FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Findings:

● The trend analysis has analyzed that the performance of financial position
of IDBI Bank has been found satisfactory. The upward trend has been
registered in both total assets and total liabilities during the study period.
The advances, investment, net block, capital work in process, and other
assets has shown continuous growth and have upward trend.
● The Comparative Balance Sheet has studied that the performance of
financial position of IDBI Bank has been found satisfactory. It has found
that there is 25.83% increase in net worth from 2012 to 2017 year and
27.01% growth in total debt from 2012 to 2017 year. The total liabilities
have registered 27.84% increase in the year 2017 as compared to the year
2012 and the assets have also shown the same results.
● The Common-size Comparative Balance Sheet has studied that the
performance of financial position of IDBI Bank has been found
satisfactory. The total debts are 91.50% of total liabilities which are
greatest component of total liabilities during the year 2012 have declined
to 90.92% during the year 2017. The net worth has reduced to 6.00% in
the year 2017 from 6.09% in the year 2012. The advances is 62.60 which
is the greatest component of total assets during the year 2012 has declined
to 58.55 in the year 2017.
● It has been observed that the rising proportion of total debt in the total
liabilities is critical.
● In overall, the performance of financial position of IDBI Bank has been
found satisfactory.
● The profitability ratio analysis conducted in the study reveals that IDBI
Bank have shown the Downbeat tendency during 2005-07 and then has
shown the positive trend in the performance of profitability ratios during
2008-10.
● Total Assets as at March 2010 of IDBI were Rs. 2,33,572 crore and have
declined by 20% when compared to previous FY. This is a serious matter
and needs IDBI Bank’s immediate remedial action.
● Total Deposits were Rs. 1,67,667 crore with a growth of 49.2% and Total
Advances were Rs. 1,38,202 crore recording a growth of 33.6%.over the
previous year.
● Interest Income was Rs.15,272.6 crore and with the other income of Rs.
2,290.9 crore. Total Gross income was Rs. 17,563.5 crore. PBT was Rs.
1,044.7 crore and PAT was Rs. 1,031.1 crore.
● EPS stood at Rs.14.20 Book value per share stood at Rs. 113 and a
Dividend of 30 % recommended on fully paid up equity capital.
● Total CRAR 11.31% against RBI stipulated norms of 9%. Core CRAR
6.24% against RBI stipulated norms of 6%.
● Another fact revealed by the study is that there has been the lack of
strategic planning by public sector banks and Management Information
System (MIS) and also the skill levels required especially in sales and
marketing, service operations, risk management and the overall
performance of the organization.
● The analyses also reveal that majorly public sector banks are not
technology responsive. There are many public sector banks’ branches that
 are yet to be computerized, which affects the business of the bank in
comparison to their counterpart’s private sector banks.
● The credibility of IDBI bank is good in comparison to its competitors as
GOI (Government of India) is a major share holder in the company.
● IDBI bank has potential a tapped market in Mumbai in region and hence
has opportunities for growth.
● The products of IDBI bank have good credibility in the region compare to
its competitors.
● The advertisement of the bank was very effective from the first day of its
airing till the fifth day and there after it starts declining.
● The initial balance for A/C opening is Rs, 5000/- and that’s why people
are reluctant in opening the same.
5.2 Conclusions:

Consumers of Mumbai have good awareness level about IDBI bank as well as
about its services and products.The advertising campaign has successfully
been able to increase the market share of IDBI in Mumbai.The modern
day’s technology like internet banking, phone banking, used by IDBI
bank for providing banking services has sent positive signals in the mind
of consumes.The network of IDBI in Mumbai is lagging behind a little
than its competitors like ICICI bank and HDFC bank.It can be distilled
from data that IDBI bank has good market share as compared to its
competitors considering the amount of resources deployed by them in the
market and The solvency position of IDBI Bank and the employment of
assets are in tune with the industry averages.
The employment of shareholders’ funds
and the CASA which is relatively lower than the bellwether suggests that
attention has to be paid in these areas. Net profit margin of IDBI Bank
indicates that the profits of the bank is declining and is well below the
industry averages suggesting that the operations of the bank has to
​ he IDBI Bank should improve its deposits that provide
improve and​ T
cheaper funds, which can translate into strong financial performance and
The ROA of IDBI Bank is showing a declining trend and the comparison
 with the industry averages indicates that the IDBI Bank should pay
attention towards the utilization of its assets more effectively as well as
The banking sector reforms have provided the necessary platform for the
Indian banks to operate based on operational flexibility and functional
autonomy, thereby enhancing efficiency, productivity and profitability.

The reforms also brought about structural changes in the financial sector and
succeeded in easing external constraints on its operations, i.e. reduction in
CRR and SLR reserves, capital adequacy norms, restructuring and
recapitulating banks and enhancing the competitive element in the market
through the entry of new banks.
5.3 Recommendations:

● Since there is only two branch of IDBI bank and only three ATMs in
Mumbai, so it is necessary for IDBI bank to open more branches and
install more ATMs to serve the vast market of Mumbai especially.
● More resources should be allocated in the market of Mumbai as there is
big untapped market in Mumbai, so it becomes necessary for IDBI bank
for taking an edge over the competitors.
● A short advertising campaign in Mumbai has produced good results in a
short span of times, so to gain long term benefits is very necessary for
IDBI bank to carry on this campaign with more intensity.
● Besides opening more branches it should also look for opening some
extension counter in Kutub near Meherauli and one in Khanpur.
● As Government is the majority share holder in the shares of IDBI bank,
which makes this bank more reliable than other private banks, this thing
can be used in the favor of IDBI bank by making people aware about this
fact and winning their faith.
● The bank should close down the unviable bank branches by selling out
the existing business to some other bank which has been able to maintain
a sustainable growth rate.
● Increase the business volume at branches by adopting aggressive
marketing strategies and by redeployment of staff wherever necessary.
● Loan disbursing mechanism through proper and scientific evaluation of
the quality of assets for which bank has to finance.
● Speedy and timely Recovery through legal means and effective
follow-up.
● Increase the volume of credit ensuring the quality of assets.
● Study the market trends and adjust the credit mix to various segments
without following the age-old methods.
● Control and restrict the advances to those sectors where the bank
experience has not been satisfactory.
 ● APPENDIX

1.QUESTIONNAIRE

NAME:
………………………………………………………………………………
AGE: ​……………………………………. SEX:
MALE/FEMALE
1.​ DO YOU KNOW ABOUT IDBI BANK LTD.?
YES
2​. IDBI BANK IS A –
PRIVATE BANK PRIVATE/PUBLIC BANK
PUBLIC BANK DON’T KNOW
3​. RANK THE IDBI BANK ON THE FOLLOWEING FEATURES:
(RANK 1 FOR BEST AND 5 FOR WORSE ON 1 TO 5 SCALES)
 EFFICENCY MANPOWER
INTERNET BANKING/ATMs NETWORK
PRODUCT RANGE PHONE BANKING
4.​ YOU WOULD LIKE TO BE A CUSTOMER OF BANK BECAUSE-
……………………………………………………………………………………
……………………………………………………………………………………
……………………

5​. YOU WOULD NOT LIKE TO BE A CUSTOMER BANK BECAUSE-

……………………………………………………………………………………
……………………………………………………………………………………
……………………

6​. NAME THE BANK WHICH COMES IN YOUR MIND AT VERY FIRST
AND WHY?
……………………………………………………………………………………
……………………………………………………………………………………
……………………
7.​ DO YOU THINK IDB IBANK IS A SAFE PLACE FOR YOUR MONEY?
YES NO
8​. DO YOU THINK IDBI BANK NEED MORE ADVERTISMENT?
YES NO
9​. YOUR LEVEL OF SATISFACTION WITH IDBI BANK-
VERY SATISFIED SATISFIED
NORMAL DISSATISFIED VERY DISATISFIED.
10​. IF YOU WILL HAVE OPTION AGAINEST IDBI BANK YOU WILL GO
FOR –
SBI PNB
ICICI OTHER ………………
11​. DO YOU REMEMBER THE COMMERCIAL OF IDBI BANK?
YES
12​. WHEN DID YOU LAST SEE THE ADVERTISEMENT OF IDBI BANK?
0-5 DAYS BACK 6-10 DAYS BACK
11-15 DAYS BACK MORE THAN 15 DAYS
BACK
13​. DO YOU KNOW WHERE THE BRANCH OF IDBI LOCATED IN
MUMBAI IS?
……………………………………………………………………………………
…

14​. IDBI BANK LTD. IN MUMBAI IS EFFECTIVE BECAUSE-

……………………………………………………………………………………
……….
15​. IDBI BANK LTD. IN MUMBAI IS NOT EFFECTIVE BECAUSE-
…………………………………………………………………………………….

16​. IDBI BANK LTD. IS A GOOD BANK FOR-

SERVICE PEOPLE BUSINESS
PERSONS POLITICIANS
GENERAL PUBLIC ALL OF ABOVE
17.​ NAME IDBI BANK LTD. GIVE BLUE-PRINT IN YOUR MIND OF-
 HIGH NETWORK FINANCILALLY EFFICIENT BANK
HI-TECH BANK CUSTOMER FRIENDLY
OTHER (PLEASE SPECIFY) ……………………………………………...

2(​ii​)​.BIBLIOGRAPHY

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

● Indian financial system – BHARATI PATHAK
● Banking and Financial system – V.NITYANANDA SHARMA
● Aaker Kumar and Day, Marketing research, 6​th Ed., John Willy & sons,
1997.
● The Economics times
● Datt R. and Sundaram K.P.M., 2006: ‘Indian Economy’, S. Chand &
Company Ltd., New Delhi, 781.

2(​ ii​).WEBLIOGRAPHY
● www.idbibank.com
● www.en.wikipedia.org/wiki/IDBI_Bank
● www.goodreturns.in/company/idbi-bank/history.html
● www.moneycontrol.com/idbi-bank/balancesheet
● www.moneycontrol.com/idbi-bank/profitandloss
● www.capitalmarket.com/financialanalysis/idbi-bank