A Study On Impact of Commercial Lending On Probability of Vijaya Bank

“A Study on Impact of Commercial Lending on Profitability of Vijaya Bank”
CHAPTER-01
INTRODUCTION
INTRODUCTION ABOUT BANKING INDUSTRY:
The English word 'Bank' came from the Italian word 'Bancab / Monte', French word '
Banque' & German word 'Banke' those mean bench or long tool or money transactions table.
During the barter system also, there existed traces of banking, i.e. people used to deposit
cattle and agricultural products in specified places get loans of some other form in exchange for
these. There is solid evidence found in records excavated from Mesopotamia, showing some bank
existed around 1700 B.C, During this time barley, silver, gold, copper, etc, were used as a standard
for valuation.
Soundarya Institute of Management and Science Page 1 of 86

BANK:
The organization which is engaged into money transaction is called bank.
According to
F.E. Perry --”Bank is establishment which deals in money, receiving it on deposit."
Peter Rose -- “Bank is a financial inter intermediary accepting deposits & granting loans.
A Bank is a financial institution that accepts deposits from the public and

creates credit. Lending activities can be performed either directly or indirectly through capital
markets. Due to their importance in the financial stability of a country, banks are highly regulated in
most countries. 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.
ORIGIN OF BANKING INDUSTY
Greece was the first country to introduce a satisfactory system of coinage. After the
invention of coins started m a meaningful system of banking came into existence taking into
account all the avenue of banking a credit system.
Rome was the first country to start a bank at the department of state level in the 4 th century
B.C. with transactions such as depositing and investments in other forms. In India ancient records
show that banking was popular and money lending was a common practice among the common
people.

In the olden days ‘Goldsmith, merchants and money lenders conducted the business. They
had transactions among themselves by which funds were transferred from one business firm to
another .They had no general or uniform principles of banking, lending, rate of interest, etc.

MEANING OF BANKING:
BANKING is the business of banker (any person carrying on the business of banking), the
keeping or management of a bank. More over banking is combination and accumulation of all the
activities performed effectively & efficiently by the banker.
Banking began with the first prototype banks of merchants of the ancient world, which
made grain loans to farmers and traders who carried goods between cities and this system is known
as a barter system. This began around 2000 BC in Assyria and Babylonia. Later, in ancient
Greece and during the Roman Empire, lenders based in temples made loans and added two
important innovations: they accepted deposits and changed money. Archaeology from this period
in ancient China and India also shows evidence of money lending activity.
INTRODUCTION TO BANKING IN INDIA
The Indian companies Act defines the term banking as “accepting for the purpose of lending
or investment of deposits of money from the public, repayable on demand or otherwise and
withdraw able by cheque, draft or otherwise”.
A Banker is a dealer in money and credit .The business of Banking consists of borrowing
and lending banks acts as financial intermediaries between savers (lenders) and investors
(borrowers) by accepting deposits of money from a large number of customers and lending a major
position of a accumulated ‘pool’ of money to those who wish to borrower . In this process banks
secure reasonable return for the savers, make funds available to the investors at a cost and earn a
profit for themselves after covering the cost of funds and providing for corporate taxes to the
government. Thus , the banking institutions in a country mobilizes savings by accepting monetary
deposits from the people, participate in the mechanism for the exchange of goods an services and
extend credit while lending money.

PRESENT SCENARIO OF BANKING INDUSTRY:
The Indian banking can be broadly categorized into nationalized (government oriented),
private banks and specialized banking institution. The TBI acts as a centralized body monitoring
any discrepancies and shortcoming in the system. Since the nationalized banks have required a
place of prominence and has then seen tremendous progress.
The need to become highly customer focused has forced the slow of moving public sector
banks to adapt a fast track approach.
The Indian Banking has come a long way from a sleepy business institution to a highly
proactive and dynamic activity, This transformation has been largely brought by the large close of
liberalization and economic reform that allowed banks to explore new business opportunities rather
than generating revenue groom conventional stream i.e. borrowing and lending .The Co-operative
banks too have invested heavily in information technology to after computerized banks services to
its clients.
NEW GENERATION BANKING:
The liberalized policy of government of India permitted of private sector in banking, the
industry has witnessed the entry of new generation private banks. The major that distinguish these
banks from the all the other banks in Indian Banking is the level of services that is offered to the
customer. Verifying the focus has always being centered on the customer understanding his needs
and delighting him with various configurations of benefits and a vide port folio of product and
services. The popularities of these banks can be gauged by the fact, that in as short span of time,
these banks have gained considerable customer confidence and consequently have shown
impressive growth sales. Banks also enable customer payments via other payment methods such as
telegraphic transfer, Electronic Fund Transfer Point of Sale (EFTPOS) and Automated Teller
Machine (ATM).
TYPES OF BANKING
Banks' activities can be divided into:

 Retail banking, dealing directly with individuals and small businesses.
 Business banking, providing services to mid-market business.
 Corporate banking, directed at large business entities.
 Private banking, providing wealth management services to high-net-worth individuals and

families.
 Investment banking, relating to activities on the financial markets.
FUNCTIONS OF BANKING
The most important functions of banking may be classified as follows:
 To assemble capital and make it effective.

 To receive deposits and make collections.
 To check out transfer funds.
 To discount or lend.
 To exercise fiduciary or trust powers.
 To issue circulating notes.
Every bank which expects to succeed must first of all prove its value to the community. The
services which a bank performs are so generally taken for granted that the public is unaware of the
real extent of the facilities offered. Banks are equipped to utilize fund, for either a short or long
period of time, safely, and with some profit.

Most banks are profit-making, private enterprises. However, some are owned by
government, or are non-profit organizations.
CLASSIFICATION OF BANKS:
Banks are classified into several types based on the function they perform. Generally the
banks are classified:
 Commercial Banks: the term used for a normal bank to distinguish it from an
investment bank. After the Great Depression, the U.S. Congress required that banks only
engage in banking activities, whereas investment banks were limited to capital
market activities. Since the two no longer have to be under separate ownership, some use the
term "commercial bank" to refer to a bank or a division of a bank that mostly deals with
deposits and loans from corporations or large businesses.

 Community Banks: locally operated financial institutions that empower employees to
make local decisions to serve their customers and the partners.
 Community Development Banks: regulated banks that provide financial services and
credit to under-served markets or populations.
 Land Development Banks: The special banks providing long-term loans are
called land development banks (LDB). The history of LDB is quite old. The first LDB was
started at Jhang in Punjab in 1920. The main objectives of the LDBs are to promote the
development of land, agriculture and increase the agricultural production. The LDBs provide
long-term finance to members directly through their branches.
 Credit unions or co-operative banks: not-for-profit cooperatives owned by the

depositors and often offering rates more favourable than for-profit banks. Typically,
membership is restricted to employees of a particular company, residents of a defined area,
members of a certain union or religious organizations, and their immediate families.
 Postal Savings Banks: savings banks associated with national postal systems.
 Private Banks: banks that manage the assets of high-net-worth individuals. Historically a
minimum of USD 1 million was required to open an account, however, over the last years many
private banks have lowered their entry hurdles to USD 350,000 for private investors.
 Offshore Banks: banks located in jurisdictions with low taxation and regulation. Many
offshore banks are essentially private banks.
 Savings Bank: in Europe, savings banks took their roots in the 19th or sometimes even in
the 18th century. Their original objective was to provide easily accessible savings products to
all strata of the population. In some countries, savings banks were created on public initiative;
in others, socially committed individuals created foundations to put in place the necessary
infrastructure. Nowadays, European savings banks have kept their focus on retail banking:
payments, savings products, credits and insurances for individuals or small and medium-sized
enterprises. Apart from this retail focus, they also differ from commercial banks by their

broadly decentralized distribution network, providing local and regional outreach – and by their
socially responsible approach to business and society.
 Building Societies and Landes Banks: institutions that conduct retail banking.
 Ethical banks: banks that prioritize the transparency of all operations and make only
what they consider to be socially responsible investments.
 A direct or internet-only bank is a banking operation without any physical bank

branches, conceived and implemented wholly with networked computers.
 Functions of Bank

THE FUNCTIONS OF BANKS ARE AS BELOW:
1. Primary Functions of Banks
The primary functions of a bank are also known as banking functions. They are the main
functions of a bank.
2. Accepting Deposits
The bank collects deposits from the public. These deposits can be of different types, such as:
a) Saving Deposits
b) Fixed Deposits
c) Current Deposits
d) Recurring Deposits
3. Granting of Loans and Advances
The bank advances loans to the business community and other members of the public .The rate
charged is higher than what it pays on deposits .The difference in the interest rates (lending rate and
the deposit rate) is its profit.
The types of bank loans and advances are:
a) Overdraft
b) Cash credits
c) Loans
d) Discounting of Bill of Exchange
4. Secondary Functions of Banks

The bank performs a number of secondary functions, also called as non- banking functions.
These important secondary functions of banks are explained below:
5. Agency Functions
The bank acts as an agent of its customers. The bank performs a number of agency functions
which includes:
a) Transfer of Funds
b) Collection of Cheques
c) Periodic Payments
d) Portfolio Management
e) Periodic collections
f) Other Agency Functions
6. General Utility Functions
The bank also performs general utility functions, such as:
a) Issue of Drafts, Letter of credits etc.

b) Locker Facility
c) Underwriting of Shares
d) Dealing in Foreign Exchange
e) Project Reports
f) Social welfare Programmers
g) Other Utility Functions
7. Economic Functions
The economic functions of banks include:
1. Issue of money- in the form of banknotes and current accounts subject to cheque or payment
at the customer's order. These claims on banks can act as money because they are
negotiable or repayable on demand, and hence valued at par. They are effectively

transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the
payee may bank or cash.
2. Netting and settlement of payments – banks act as both collection and paying agents for
customers, participating in interbank clearing and settlement systems to collect, present, be
presented with, and pay payment instruments. This enables banks to economize on reserves
held for settlement of payments, since inward and outward payments offset each other. It
also enables the offsetting of payment flows between geographical areas, reducing the cost
of settlement between them.
3. Credit intermediation – banks borrow and lend back-to-back on their own account as
middle men.
4. Credit quality improvement – banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers. The improvement
comes from diversification of the bank's assets and capital which provides a buffer to
absorb losses without defaulting on its obligations. However, banknotes and deposits are
generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise
the funding it needs to continue to operate, this puts the note holders and depositors in an
economically subordinated position.
5. Asset liability mismatch/Maturity transformation – banks borrow more on demand debt

and short term debt, but provide more long term loans. In other words, they borrow short
and lend long. With a stronger credit quality than most other borrowers, banks can do this
by aggregating issues (e.g. accepting deposits and issuing banknotes) and redemptions (e.g.
withdrawals and redemption of banknotes), maintaining reserves of cash, investing in
marketable securities that can be readily converted to cash if needed, and raising
replacement funding as needed from various sources (e.g. wholesale cash markets and
securities markets).
6. Money creation/destruction – whenever a bank gives out a loan in a fractional-reserve

banking system, a new sum of money is created and conversely, whenever the principal on
that loan is repaid money is destroyed.

BANKER AND A CUSTOMER
BANKER
A banker is a person or company carrying on the business of receiving money and collecting
drafts for customers subject to the obligation of honoring cheques drawn upon them time to time
by the extent of the available in their ‘current accounts’.
CUSTOMER
A person becomes a customer of a bank , when he makes a regular transaction with the bank and
has maintained his accounts regularly with the banker , the moment his cheques is accepted for
collection and there must be some recognizable course of habit of dealing between the person and
the bank .
Diagram: shows the Banking structure in India:

Indian Banking Structure:
The banking system in India can be broadly divided into three categories, viz, the central bank of
the country known as the Reserve Bank Of India (RBI), The commercial banks and the co –
operative banks. The Reserve Bank of India is the supreme monetary and banking authority in the
country and has the responsibility to control the banking system in the country. It keeps the reserves
of all scheduled banks and hence is known as the “Reserve Bank’’. Below figure shows the
structure of Indian banking.
Scheduled and Non – Scheduled Banks:
Under the Reserve Bank of India Act, 1934, banks were classified as scheduled banks and non –
scheduled banks. The scheduled banks are those which are entered in the second schedule of RBI
Act, 1934. Such banks are those which have a paid up capital and reserves of an aggregate value of
not less than Rs .5 lakhs and which satisfy RBI that their affairs are carried out in the interests of
their depositors. All commercial banks – Indian and foreign, regional rural banks and State co –

operative banks – are scheduled banks. Non – scheduled banks are those which have not been
include in the Second Schedule of RBI Act, 1934. At present, there are only three non – scheduled
banks in the country. Scheduled banks are divided into commercial Banks and Co – operative
Banks. Commercial banks are based on profit, while co – operative banks are based on co –
operative principle.
Commercial banks have been in existence for many decades. They mobilize savings in urban areas
and make them available to large and small industrial and trading units mainly for working capital
requirements. After 1969 commercial banks are broadly classified into nationalized or public sector
banks and private sector banks. The State Bank of India and its Associates banks along with another
20 banks are the public sector banks. The private sector banks include a small number of India
scheduled banks which have not been nationalized and branched of foreign banks operating in India
– commonly known as foreign exchange banks.
The Regional Rural Banks ( RRB ‘s ) came into existence since the middle of 1970 ‘s with the
specific objective of providing credit and deposit facilities particularly to the small and marginal
farmers , agricultural laborers and artisans and small entrepreneurs .The Regional Rural Banks
have the responsibility to develop agriculture , trade , commerce and industry in the rural areas .
The RRB’s are essentially commercial banks but their area of operation is limited to a district.
Roles of Banks in Financial Systems.
 The issue of Bank notes (Promissory notes issued by a banker and payable to bearer on
demand)
 Processing of payment s by way of telegraphic transfer, EFTPOS, Internet Banking or other
means.
 Issuing bank drafts and bank cheques
 Accepting money on term deposits
 Lending money by way of overdraft, installment loan or otherwise.
 Providing documentary and standby letters of credit, guarantees, performance bonds,
securities underwriting commitments and other forms of off balance sheet exposures.

 Safe keeping of documents and other items in safe deposit boxes
 Currency exchange
 Sale, Distribution or Brokerage, with or without advise, of insurance, unit trust and similar
financial products as a financial super market.
Banks perform various roles in the economy. First, they ameliorate the information problems
between investors and borrowers by monitoring the latter and ensuring a proper use of the
depositors' funds. ... Third, banks contribute to the growth of the economy.
Commercial lending
Commercial lending is a process that enables a business entity to activate and subsequently
obtain a finance stream, to help companies fund short-term expenditures or pay for capital
equipment. In most instances, commercial lending is made through the delivery of loans that are
backed by hard collateral.
Banks do this by requiring most of their loans to include a balloon repayment. This means

the borrower will pay interest and principal on his 30-year mortgage at the stated interest rate for
the first few years (generally 3, 5 or 10 years) and then repay the entire balance in one balloon
payment
Along with core products and services, commercial banks perform several secondary
functions. The secondary functions of commercial banks can be divided into agency functions and
utility functions.
Agency functions include:
 To collect and clear cheques, dividends and interest warrant
 To make payments of rent, insurance premium, etc.
 To deal in foreign exchange transactions

 To purchase and sell securities
 To act as trustee, attorney, correspondent and executor
 To accept tax proceeds and tax returns.
Utility functions include:
 To provide safety locker facility to customers
 To provide money transfer facility
 To issue traveller's cheque
 To accept various bills for payment: phone bills, gas bills, water bills, etc.
 To provide various cards: credit cards, debit cards, smart cards, etc.
Profit:
A financial gain, especially the difference between the amount earned and the amount spent
in buying, operating, or producing something.
Profitable Banking Sector
Bank Profitability. Like all businesses, banks profit by earning more money than what they
pay in expenses. The major portion of a bank's profit comes from the fees that it charges for its
services and the interest that it earns on its assets. Its major expense is the interest paid on its
liabilities.
A profitable banking sector is better able to withstand negative shocks and contribute to the
stability of the financial system. ... Among bank-specific variables, operational efficiency and
business diversification contribute to higher returns on assets, after controlling for differences in the
credit quality of loans..

Common profitability ratios used in analyzing a company's performance include gross
profit margin (GPM), operating margin (OM), return on assets (ROA) , return on equity (ROE),
return on sales (ROS) and return on investment (ROI).
How the Banking Sector Makes a Profit
These companies hold their customers' cash in accounts that pay out set interest rates below short-
term rates. They profit off of the marginal difference between the yield they generate with this cash
invested in short-term notes and the interest they pay out to customers. When rates rise, this spread
increases, with extra income going straight to earnings.
For example, a brokerage has $1 billion in customer accounts. This money earns 1% interest for
customers, but the bank earns 2% on this money by investing it in short-term notes. Therefore, the
bank is yielding $20 million on its customers' accounts but paying back only $10 million to
customers.
If the central bank brings up rates by 1%, and the federal funds rate rises from 2% to 3%, the bank
will be yielding $30 million on customer accounts. Of course, the payout to customers will still be
$10 million. This is a powerful effect. Whenever economic data or comments from central bank
officials hint at rate hikes, these types of stocks begin to rally first.

CHAPTER 2
REVIEW OF LITERATURE

CHAPTER 2
REVIEW OF LITERATURE
S.G. Shah (1979): in his paper analyzed weakness of the bank and pointed out the specific areas
where action could be taken to improve profitability. He revealed that rising expenses and overhead
increase in wasteful work practices, declines in productivity were major weakness. He suggested
these following areas for improving profitability of bank.

1. To evolve measures that could widen the spread between the cost of funds, services and
administration and the return on them.
2. To develop supplementary sources of income.
3. To find profit centers and cost centers in the bank.
4. To assess the extent to which these elements of the structure could be influence by policy
and planning or by changing the nature of operations
5. To recognize the element that controls or settles the income and cost structure at each such
center and for the bank as a whole.
M.N.Miahra (1992): in his paper evaluated the profitability of scheduled commercial banks taking
into account the interest and non – interest income and interest expenditure, manpower expenses
and other expenses . The Author has identified that the growing pre emption of funds in the form of
statutory liquidity ratio , cash reserve ratio , faster increase of expenses as compared to the income ,
advances and total investment than interest income and few more factors have contributed to the
declining profitability of Indian Commercial banks .
Zmcharias Thomas (1997) studied on ‘performance effectiveness of Nationalized Bank . A case

study of Vijaya Bank ‘This studied the performance effectiveness of Nationalized Bank b taking
Vijaya Bank as case study in his Ph. Stheseis . Thomas has examined various aspects like growth
and development of banking industry ,ACHIEVEMENTS OF Vijaya Bank in relation to capital
adequacy , quality of assets , profitability , social banking , growth , Productivity , Customer
Service and also made a comparative analysis of the performance effectiveness of Vijaya Bank in
relation to Nationalized bank . A period of ten years from 1984 to 1993-94 is taken for the study .
This study is undertaken to review and analyze the performance effectiveness of Vijaya Bank and
other Nationalized banks in India using an Economic Managerial – Efficiency Evaluation Model
(EMEE Model ) developed by researcher . Thomas in theis study found that Vijaya Bank got 5 th
position in Capital adequacy and quality of assets , 15 th in profitability , 14th position in Social
Banking ,8th in Growth , 7th in productivity and 15th position in Customer Service among the
nationalized banks . Further , he found that five nationalized banks showed low health performance
, seven low priority performance and eleven low efficiency performance in comparision with
Vijaya Bank .

Singh R(2003) “Profitability management in banks under deregulate environment ‘’ has analyzed
profitability management of banks under the deregulated environment with some financial
parameters of the major four bank groups i.e public sector banks ,old private banks , new private
sector banks and foreign banks , profitability has declined in the deregulated environment.He
emphasised to make the banking sector competative in the deregulated envirnoment . They should
preserve non interest income sources .
Ugo Albertazzi and Leonard Gambacorta (2009) have been studied on “Bank profitability and the
business cycle ‘’An important element of the macro – prudential analysis is the study of the link
between business cycle fluctuations and banking sector profitability and how this link is affected by
institutional and structural charcteristics .This work estimates asset of equation for net interest on
non – interest income operating cost provisions , and profit before taxes , for banks in the main
industralized countries and evaluates the effects on banking profitability of shocks to both
macroeconomic and financial factors , Distinguishing mainly the euro aresa from Anglo – Saxon
countries , the analysis also identifies differences in the resilience of the respective banking systems
and relates them to the characteristics of their financial structure.
Ade Salman and Riko Hendrawan (2008) Banks were knowned to have volatile capital structure
caused by their financial liquidity . This paper aims to examine the impact of capital structure
towards performance of two group of banks , conventional and Islamic banks , by using profit
efficiency approach . Two stages procedure were employed . In the first stage we measure profit
efficiency score for each bank in Indonesia during year 2002-2008 by using distribution free
approach (DFA ) .In the second stage we employ bank capital ratio to measure their impact towards
their performance .
Birla Institute of Scientific Research (1981) attempts to make comparative analysis of performance
of the public banks and the major private banks since nationalization. Comparisons are made in
terms of ratios and growth rates. The study brings out that the profitability ratios have been higher
for selected group of the private sector banks than for the nationalized banks. Though public sector
banks has vast network of branches and wide coverage ,yet the credit of taking banking services to
large mass of population goes to private sector banks .

Malhotra R N (1986) has highlighted the fact that nationalization of Indian Commercial banks has
brought dramatic changes in the profile of Indian banking . Banking has emerged as an effective
catalytic agent of socio – economic change. It has acquired a broad base and has also emerged as an
agent of development in the banking industry as a whole. The study covers 14 banks nationalized in
1969 .Theses were classified as large scale banks, medium scale banks and small banks in order to
make inter – bank comparisons. The study covers a period of 15 years from 1973 to 1987.
Zacharias Thomas (1997) This study is undertaken to review and analyze the performance
effectiveness of Vijaya Bank and other Nationalized banks in India using an Economic Managerial
– Efficiency Evaluation Model (EMEE Model ) developed by researcher . A period of ten years
from 1984-94 is taken for the study . Thomas in this study found that Vijaya Bank got 5th position in
capital adequacy and quality of assets 15th in profitability. 14th position in social banking, 8th in
growth , 7th in productivity and 15th position in customer service among the nationalized banks .
Further, he found that five nationalized banks shown low health performances ,seven low priority
performance and eleven low efficiency performance in comparision with Vijaya Bank .
Das Abhiman (1997) in paper examines the efficiency of Indian banking. Overall efficiency is
decomposed into allocative and technical efficiency. Technical efficiency is further decomposed
into pure technical efficiency and scale efficiency. Comparison of the efficiency of banks prior to
and after deregulation is done. A non – parametric frontier methodology has been utilized to derive
several efficiency measures for public sector banks in India for the years 1970,1978,1984,1990 and
1996. The results indicate that the State Bank of India and its Associates are more efficient that the
nationalized banks.
Prasad A & Ghosh Saibai (2005) in paper analyzed whether competition has yielded significant
benefits in terms of grater product sophistication and cost reduction. The study used annual data on
scheduled commercial banks for the period 1996-2004. The study considers 27 states – owned
banks, 15 old and 8 new private sector banks, 14 foreign banks. The study reveals that the
competitive nature of the Indian banking industry is not significantly different from the banking
system in other countries, particularly in view of the fact that nearly 75 percent of banking system
assets is with state – owned banks. Recent trend towards consolidation led to more rather than less

competition in the banking sector. The empirical evidence reveals that the Indian banking system
operates under competitive conditions and earns revenues as if under monopolistic competition.
CHAPTER-03
RESEARCH DESIGN

RESEARCH DESIGN
RESEARCH
Research is a human activity based on intellectual investigation and is aimed at discovering,

interpreting, and revising human knowledge on different aspects of the world. For Research we can
use the scientific method, but need to do so.
Scientific research relies on the application of the scientific method, a harnessing of curiosity. This
research provides scientific information and theories for the explanation of the nature and the
properties of the world around us. It makes practical applications possible. Scientific research is
funded by public authorities, by charitable organization and by private groups, including many
companies. Scientific research methodology can be subdivided into different classifications.
Research is a process through which we attempt to achieve systematically and with the support of
the data the answer to a question, the resolution of a problem, or a greater understanding of a
phenomenon, this process which is frequently called research methodology, has eight distinct
characteristics:
 Research originates with a question or a problem.

 Research requires a clear articulation of a goal.
 Research follows a specific plan of procedure.
 Research usually divides the principle problem into more manageable sub problems
 Research is guided by the specific research problem , question or hypothesis
 Research accepts certain critical assumptions.
RESEARCH DESIGN
The purpose of research design is both descriptive and explanatory research .In explanatory
research the purpose is to develop and evaluate casual theories. The probabilistic nature of the
causation in social science as opposed to deterministic causation was discussed.

Research design is not related to any particular method of collecting data or any other type of
data. Any research design can, principle use any type of data collection method and use any of
quantities or qualitative data. Research design refers to any of the structure of and enquiry. It is a
logical matter rather than a logistic one.
Design is a logical task to ensure that the evidence collected enables us to answer questions or to
test theories as unambiguously as possible. When we designing research that we identify the type of
evidence required to answer the research question in a convincing way.
Research Design Meaning:
The research design refers to the overall strategy that you choose to integrate the different
components of the study in a coherent and logical way, thereby, ensuring you will effectively
address the research problem.
Research Design Types and Subtypes
There are many ways to classify research designs, but sometimes the distinction is artificial
and other times different designs are combined. Nonetheless, the list below offers a number of
useful distinctions between possible research designs. A research design is an arrangement of
conditions or collections.
 Descriptive (e.g., case-study, naturalistic observation, survey)
 Correlation (e.g., case-control study, observational study)
 Semi-experimental (e.g., field experiment, quasi-experiment)
 Experimental (experiment with random assignment)
 Review (literature review, systematic review)
 Meta-analytic (meta-analysis)
Sometimes a distinction is made between "fixed" and "flexible" designs. In some cases, these types
coincide with quantitative and qualitative research designs respectively, though this need not be the

case. In fixed designs, the design of the study is fixed before the main stage of data collection takes
place. Fixed designs are normally theory-driven; otherwise, it is impossible to know in advance
which variables need to be controlled and measured. Often, these variables are measured
quantitatively. Flexible designs allow for more freedom during the data collection process. One
reason for using a flexible research design can be that the variable of interest is not quantitatively
measurable, such as culture. In other cases, theory might not be available before one starts the
research.
Title of the project:
“A STUDY ON IMPACT OF COMMERCIAL LENDING ON PROFITABILITY OF VIJAYA

BANK”
Data collection:
Data collection is a step in preparation of project report. The information is collection o n the
following manner .
PRIMARY DATA :
Direct and oral interaction with the bank officials, particularly the branch manager.
SECONDARY DATA:
 The training and guidance material supplied to staff of the branch.

 Online content of Vijaya Bank Ltd
 The material supplied by the faculty guide.
 Several websites on the profitability on Vijaya Bank
 Daily newspapers like Economic Times of India and Business Standard.
 Previous bank records.
TOOLS AND TECHNOLOGIES USED :

Statistical Techniques
 Percentages
 Averages and
 Tools like tables, bar charts and pie charts .
Hardware and Software Technologies:
 Home PC with internet access.

 World Wide Web or Internet.
 MS Word and Excel 2007.
Statement of the problem:
It is said that the banking sector is the mirror of the larger economy, its linkage to all sectors makes
it a proxy for what is happening in the economy as a whole. Indeed, the Syndicates banking sector
today is at boiling point. Questions frequently raised are: In a situation where most businesses are
struggling, how can banks achieve such large profits? Or if the banking sector mirrors these larger
economies, why is this inverse relationship in their performance? Banks and FIs can be evaluated
within Syndicate Rostra Bank’s regulatory framework, in which banks and FI’s are required to
maintain a standard set by VIJAYA BANK.
Scope of the study:
Financial sector has evolved as the biggest sector in the economy. In the entire sector, banks play a
crucial role in the overall development of an economy. After the economic reforms initiated by the
government, this sector has been going through measure changes. Increased, competition due to
mushrooming of financial institutions across the countries as in impacted the banking sector
negatively, so the financial performance of banks has to be evaluated properly to know the strength
and weaknesses of the bank . The period of past five years of the bank is analyzed and evaluated

simultaneously , The data are taken from the respective banks in order to evaluate their performance
and commercial lending’s and for doing the comparative analysis .
Objectives of the study:
The fundamental objective of the study is to analyze the impact of commercial lending on the
profitability of banks. The study has undertaken with the following specific objectives:
 To scrutinize the profit trends in commercial banks.

 To access the bondage between commercial lending and profitability.
 To analyze the possibilities of improving profitability.
 To evaluate the earning performance of the bank.
Methodology:
Five year balance sheet and profit and loss account stated in annual reports were used for the
analysis of an impact of commercial lending on profitability of Vijaya Bank Limited.
The concerned ration was used as tools of analysis based upon the lending position of the bank.
Regarding the commercial lending the methods were evaluated by extracting the balance sheet for 5
yrs and then comparing it with the Vijaya Bank as chosen for comparison.
Limitations of the study:
1. As every study is conducted within certain limitations the present study is not an expectional
. This is subject to limitations :
2. ONLY ONE commercial bank is taken as the sample of the study among commercial banks
in Syndicate which may not represent the whole group .
3. Only data of 5 yrs (F/Y 2015/18 to 2018/19) have been covered by the study .
4. The study has been based on secondary data only.

5. The qualitative and external variables that affect the performance of the bank have not been
considered in the study.
Chapter Scheme:
The entire research study will be present in six chapters.
1.Introduction:
In this chapter, Meaning and Definition of the Bank, History and evolution of banking in the world.
History of banking in India, Development of banks in India, Banking system in India, Functions of
bank, Types of banks, Role of banks in the growth of Indian economy, Present scenario of banking
in India, Global challenges in banking sector in India, Innovative services provided by the banks in
India and introduction to research problem are included.
2. Review of literature:
In this chapter, Introduction and profile of the researcher briefly mentioned previous research
conducted by them.
3. Research Design:
It explains the Title of the Study , Statement of the Problem , Objectives of the study , Scope of the
study , Tools for collection of data , Limitations of the study and Chapter Scheme .
4. Bank Profile :
The history , management , policies , Vision , mission , purpose and other details of the bank is
mentioned in this chapter.
5.Data Analysis and Interpretation:
This chapter explains the analysis and interpretation of data being tabulated and analyzed through
charts with reference to Vijaya Bank LTD .

6. Findings, Suggestions and Conclusion:
This chapter covers major findings and suggestions for the Profitability of company. So, we
can say that this chapter provides solid and useful information to the banking industry. And at
last conclusion of this research study will be included.

\\
CHAPTER 4
COMPANY PROFILE

Dr. T. M. A. PAI Sri. VAMAN.S.KUDVA
Sri UPENDRA ANANTH PAI

CHAPTER 4
COMPANY PROFILE
LOGO
Industry: Financial commercial banks.
Founded: 23rd Oct 1931, 87 years ago at Mangalore, India.
Founder: Sri Attavara Balakrishna Shetty
Attavara Balakrishna Shetty, Founder Chairman of Vijaya Bank

R.A.SANKARANARAYANAN
Managing Director and Chief Executive Officer
Key people: R A Sankara Narayanan
Headquarters: Bangalore, Karnataka, India
Owner: Government of India
Number of Employees: 15679[2016-2017]
Products: Consumer banking, corporate banking, finance and

insurance, investment banking, mortgage loans, private banking, wealth
management.
CONSUMER BANKING

CORPORATE BANKING
FINANCE AND INSURANCE
INVESTMENT BANKING

MORTGAGE LOAN
WEALTH MANAGEMENT
Revenue: Increase ₹12,379 crore (US$1.9 billion) (2017)
Operating income: Increase ₹2,421 crore (US$380 million) (2017)
Net income: Increase ₹750.48 crore (US$120 million) (2017)

Total assets: Increase₹154,881.57 crore (US$24 billion) (2017)
Total Equity: Increase 932.56 crore (us$140 million) (2016)
Capital ratio: 12.73% (2017)
Vijaya Bank is a Fastest Growing public sector bank with its corporate office in
Bangalore, Karnataka, India. It is one of the nationalized banks in India. The bank
offers a wide range of financial products and services to customers through its
various delivery channels. The bank has a network of 2031 branches (as of March
2017) throughout the country and over 4000 customer touch points including 2001
ATMs.
HISTORY
Vijaya Bank was established by a group of farmers led by Shri. Attavara on 23

October 1931 in Mangalore in Dakshina Kannada District of Karnataka State. Since
it was established on the auspicious Vijayadashami Day, it was named 'Vijaya
Bank'.
During the economic chaos created out of the Great Depression of 1927–30, Shri AB
Shetty approached leading Bunt personalities to start a bank with the objective of
extending credit facilities at a lower rate of interest to enable the farmers to cultivate
their lands and prevent them from falling into the clutches of money lenders.
Accordingly, Shri AB Shetty involved 14 Bunts and established Vijaya Bank on 23
October 1931. In the beginning the bank had an authorized capital of Rs. 5 lakh and
an issued capital of Rs. 2 lakh. The paid up capital was Rs. 8670.
YEAR OF EVENTS
2005

-Vijaya Bank ties up with TAFE
-Vijaya Bank sets up new branches
2007
- Vijaya Bank has informed that Shri G B Singh has been nominated as
GOI Nominee Director of the Bank vice Shri Atal Kumar Rai, vide
Letter dated August 20, 2007 received from Government of India,
Ministry of Finance, Department of Financial Services with immediate
Effect.
2008
- Vijaya Bank inked a memorandum of understanding with credit rating
Agency, Crisis, for rating its corporate customers.
- Vijaya Bank has inked a pact with Credit Analysis & Research Ltd
(CARE), one of the RBI accredited rating agency, to provide bank loan
Ratings to its corporate clients at a concessional fee.
-Vijaya Bank has informed that Shri. Sridhar Cherukuri has been
Nominated as part-time non-official Director of the Bank with
Immediate effect, vide letter dated July 10, 2008 received from
Government of India, Ministry of Finance, Department of Financial
Services.
-Vijaya Bank has informed that Shri. Ranjan Shetty has been nominated
As Officer Employee Director of the Bank with immediate effect, vide
Letter dated September 09, 2008 received from Government of India,
Ministry of Finance, Department of Financial Services.
2009
- Vijaya bank has plans to issue 1,000 biometric smart cards to

Account-holders residing in villages by the end of this fiscal.
- Vijaya Bank forged an alliance with VE Commercial Vehicles, a
Leading auto brand, to become a preferred financier for the latter's
Commercial vehicles.
2013
- The Company has recommended a dividend of Rs. 2.50 per Share on
Banks Equity Share Capital and at 8.50% p.a.
- B.S. Rama Rao has been appointed as Executive Director of the
Company.
2014
- Mr. V. Kannan, Executive Director, Oriental Bank of Commerce as

Chairman & Managing Director, of the Bank.
- The Bank has recommended a Final Dividend of Re. 1.00/- per Share
- Mr. Prakash Chandra Nalwaya has been appointed as, Non Official
Director of the Bank.
- Mr.Sanjay Kumar has been nominated as Government Nominee Director
On the Board of the Bank
GROWTH AND NATIONALISATION

The bank grew steadily since its inception. The bank became a scheduled bank in
1958. . Under the chairmanship of Shri. Mulki Sunder Ram Shetty, Vijaya Bank
steadily grew into a large All India Bank with 9 smaller banks merging with it
during 1963–1968. In 1965, the bank registered its own logo. The bank's head office
was shifted to Bangalore on November 11, 1969. The bank was nationalized on 15
April 1980. At the time of nationalization, the bank had 571 branches, with a total
business of Rs. 605.95 crore and staff strength of 9059.
The present head office building of the Bank at Mahatma Gandhi Road, Bangalore
was inaugurated on 26 October 1984
BUSINESS OPERATIONS
The bank's total business is over Rs.2, 29,000 crore comprising deposits of Rs. 1,
33,012 crore and advances of Rs. 96,821 crore as at 31 March 2017. Basically being
a retail bank, its top line growth owes quite a lot to the retail segments. Retail
advances of the bank constitute 30% of the gross credit.
NETWORK AND DISTRIBUTION

As on 31 March 2017, the bank had a wide branch network of 2031 branches.
Improving the presence and performance under alternative delivery channels,
especially internet and mobile banking channel are key focus areas of the bank. The
bank has 2001 ATMs as on 31 March 2017. Vijaya Bank provides access to over
2.21 lakh ATMs connected under National Financial Switch across the country.
FINANCIAL INCLUSION INITIATIVES

The Bank has been actively pursuing the agenda of financial inclusion. The bank's
initiatives in this direction aim at financial empowerment and reaching banking
services to the rural masses. The Bank has been opening Basic Savings Bank
Accounts under Pradhan Mantri Jan Dhan Yojana and providing all the account
holders with Rupay debit cards. The bank participates in promoting social security
schemes such as Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan
Jyoti Bima Yojana and Atal Pension Yojana. The bank is also implementing the
modified Direct Benefit Transfer (DBT) programme of the Government of India.
CORPORATE SOCIAL RESPONSIBILITY

The bank has provided sanitation facilities to 56 govt. schools mostly in rural areas.
The bank has established 32 rural health centers where patients are provided primary
healthcare and medicine free of cost.
UNIQUE CSR ACTIVITY: ADOPTION OF GIRL CHILD

As part of its corporate social Responsibility’ the Bank has devised a unique
programme to adopt girl children. The policy of Girl Child Adoption was introduced
by the bank in 2011 under which the bank adopts girl children from SC/ ST/ OBC/
economically weaker sections / backward areas/ poor families from the age of 5
years onwards to promote girl child education, mostly from rural and backward
areas. The bank has adopted 1163 girl children all over the country.
INITIATIVES

FREEBUZZ': missed call services to enable customers to know their account
balance easily
V-GYANSAGAR: a unique initiative taken by Vijaya Bank to impart financial
literacy to public. It is Android based mobile application that enables its subscribers
to receive regular updates on banking and financial news. It provides explanation of
banking terminologies.
V-ABACUS: This initiative enables the public to open a bank account by giving a
missed call. Tablet banking facility has been implemented.
V-QUICKPAY: a unique next generation bill payment service where bill payment
is made by scanning the QR code on the bill generated by the merchant. There is no
need to swipe credit or debit cards.
V-FEE HIVE: The bank's in-house software development team has developed an
application for collection of fees by educational institutions, collection of monthly
maintenance charges by housing societies, collection of fees by clubs.
This application was implemented in various prestigious institutions like IIM-

Kozhikode, Mount Carmel College -Bangalore, Army Public School-Delhi, MSRIT
Bangalore and Vasari Pearl Apartment.
V-EWALLET: a unique secured small payment collection system designed using
UNIQUE-pull technology.
UPI: Vijaya Bank has recently rolled out Unified Payment Interface (UPI) which is
introduced by the RBI.
VIJAYA BANK SECURE INTERNET PAYMENT

Verified by Visa (VBV) is an easy to use, secured online payment service from
Vijaya Bank that lets you shop securely online with your existing Vijaya Bank Visa
Credit/Debit Card. This service through a simple checkout process, confirms your
identity when you make purchases on the Internet.
MASTERCARD® SECURECODE™
It is an easy to use, secured online payment service from Vijaya Bank that lets you
shop securely online with your existing Vijaya Bank MasterCard Credit Card. This
service through a simple checkout process, confirms your identity when you make
purchases on the Internet. Through a personal assurance message displayed on the
screen and which is shared only between you and the Vijaya Bank, the authenticity
of the page requesting your authentication is assured. We suggest you to keep
changing your password at regular intervals for increased safety.
DIRECTORS’ REPORT 2016-17
The Board of Directors has pleasure in presenting the 37th Annual Report of the
Bank along with the audited Balance Sheet and Profit and Loss Account for the year
ended March 31, 2017.
PERFORMANCE HIGHLIGHTS OF THE BANK DURING THE YEAR

2016-17
CAPITAL, RESERVE & NET WORTH

The Authorized Capital of the Bank at present is `3000 Crore divided into 300 Crore
shares of `10 each. At present, Government of India holds 70.33% Equity Share
Capital of the Bank. The total paid up (equity share) capital of the Bank is ` 998.84
Crore. In March 2017 the Bank has allotted 6, 62, 85,025 equity shares of ` 10 each
to GOI at a premium of ` 23.19 per share on preferential basis with total inflow of `
220 Crore. For the year ended 31.03.2017, the total Reserves and Surplus is `
7152.64 Crore. The Net Worth of the Bank increased from ` 6550.50 Crore to `
6976.90 Crore this year.
WORKING RESULTS
Net profit for the year 2016-17 increased from ` 382 Crore as on 31.03.2016 to ` 750
Crore as on 31.03.2017, by registering a Y-o-Y growth rate of 96.56%. The
Operating Profit of the Bank has increased from ` 1549 Crore as on 31.03.2016 to `
2421 Crore as on 31.03.2017, there by recording a growth rate of 56.32%.
The Total Deposits of the Bank grew from ` 125441 Crore as on 31.03.2016 to
`133012 Crore as on 31.03.2017. The Retail Term Deposits of the Bank increased
from ` 44269 Crore as on 31.03.2016 to ` 47517 Crore as on 31.03.2017. The Gross
Advances of the Bank increased from ` 90,765 Crore as on 31.03.2016 to ` 96821
Crore as on 31.03.2017. The Retail Advance of the Bank grew from ` 23,593 Crore
as on 31.03.2016 to ` 29335 Crore as on 31.03.2017. The Total Business of the Bank
grew from ` 2, 16,206 Crore as on 31.03.2016 to ` 2, 29,833 Crore as on 31.03.2017.
The cost of deposits decreased from 7.34% in 2015- 16 to 6.50% in 2016-17. The
Net Interest Margin of the Bank improved from 2.27% as on 31.03.2016 to 2.77% as
on 31.03.2017.

THE TREND IN FINANCIAL RESULTS OF THE BANK IS AS UNDER. (Rs. in crore)
Sl. Item 2017-18 2018-19 Annual

No. increase
1 Interest Income 12084 12379 2.45%
2 Interest Expenditure 9323 8873 -4.82%
3 Net Interest Income(1-2) 2761 3506 27.01%
4 Non-interest income 874 1651 88.96%
I. Profit on sale of 182 769 321.57%
investments
Ii. Other non-interest 691 882 27.60%
income
5 Net Total Income 3635 5158 41.90%
(3+4)
6 Operating expense 2086 2737 31.20%
I. Staff Expenses 1247 1748 40.17%
ii. Other operating 839 989 17.86%
expenses
7 Operating profit 1549 2421 56.32%
8 Operating profit 1366 1652 20.91%
(excl. Treasury profit)
9 Provisions and 1167 1671 43.15%
Contingencies
10 Net Profit 382 750 96.56%
IMPORTANT PROFITABILITY RATIOS
Sl ITEMS 2017-18 2018-19

No. (%) (%)

1 Yield on Funds 8.77 8.14
2 Cost of Funds 6.77 5.83
3 Interest spread (1-2) 2.00 2.31
4 Yield on Advances 10.52 9.89
5 Cost of Deposits 7.34 6.50
6 Yield on Investments
(Excluding RIDF) 7.60 7.65
Excluding Trading Profit 8.07 9.32
Including Trading Profit
7 Other Operating Expenses 0.61 0.65

To Average Working Funds
8 Cost – Income ratio 57.39 53.06
9 Establishment cost to average 0.91 1.15

working Funds
The Listing Page of Vijaya Bank presents the Incorporation Date, Public Issue Date,
Book Closure dates, Face Value, Key Listing information, Indices it is a part of, and
the Exchanges where the company is listed.
KEY DATES
 Incorporation Date-01/05/1931
 Public Issue Date-27/11/2000
 Year Ending Month- March
 AGM Month -June
 Book Closure Start Date-17/06/2017
 Book Closure End Date-23/06/2017
 Face Value-10.0
 Market Lot Of Equity Shares-1
 BSE Code-532401
 BSE Group- A
THE COMPANY FORMS A PART OF FOLLOWING INDICES –

 Nifty 500
 BSE 500
LISTED ON
 Cochin Stock Exchange Ltd.
 MCX Stock Exchange
 National Stock Exchange of India Ltd.
 The Stock Exchange, Mumbai
You can view the entire product mix with sales quantity and value along with
percentage contribution from each individual product for Vijaya Bank.
Product Units Installed Production Sales Sales

Name Capacity Quantity Quantity Value
Interest and NA 0.00 0.00 0.00 8847.4623
discount on
advance and
bills
Income from NA 0.00 0.00 0.00 2955.2189
Investment

Interest NA 0.00 0.00 0.00 280.6604
Interest on NA 0.00 0.00 0.00 0.2374
balance with
RBI and other
interbank
funds
CHAPTER 5

DATA ANALYSING AND INTERPRETATION
CHAPTER 5

DATA ANALYSING AND INTERPRETATION
INTRODUCTION OF DATA ANALYSIS AND INTERPRETATION
The science of statistics involves four major stages: Collection of data, Presentation of data,
Analysis of data and interpretation of data. The presentation of general conclusion to the common
people on the basis of scientific analysis of data is the greatest work, which a statistician is known
as statistical interpretation. The interpretation of data is very difficult task requires a high degree of
skills, care, judgment and objectively. In the absence of all these, there is very likelihood of the data
being misused to prove things that are not at all true.
MEANING OF DATA ANALYSIS AND INTERPRETATION
It is the technique of interpretation of financial statements with the help of the accounting
ration derived from the financial statement.
According to Wallis and Roberts, “statistical data in the raw simply furnish facts for
someone to do the reason from. They can be extremely useful when carefully collected and
critically interpreted. But unless handled with care skill and above all objectively, statistical data
may seem to prove things which are not at all true.”
Interpretation refers to the composition of the various components and definite conclusion
may be drawn about the earning capacity, efficiency, profitability, liquidity, solvency, trend etc
comparison of therefore is very much essential for meaningful interpretation.
Table No.5.1
Table showing Net Profit of the bank:

Sl No Years Net Profit (rupees in % Growth (y-o-y)

crores)
1 2014-2015 2004 52%
2 2015-2016 1711 -15%
3 2016-2017 1523 -11%
4 2017-2018 -1643 -208%
5 2018-2019 359 -122%
Analysis:
From the above table it can be analyzed that for the financial year 2014-2015 the growth of
the net profit of the bank is 52% more than the previous year, rest of the years are showing the
decline %, although there is a positive profit in the year 2018-19.
Graph No.5.1
Graph showing the Net Profit of the bank

Interpretation:
Bank is doing its best to overcome against the loss and the same can been compared from the
financial year 2017-2018 to 2018-2019, as the bank earned the negative profit, by the next financial
year it over come through the loss and regained the profit of Rs 359 crores.
Table No 5.2
Table showing increase in Global Business:

Sl No Years Global Business % Growth (y-o-y)

(rupees in
crores)
1 2014-2015 3,34,779 18%
2 2015-2016 388,584 16%
3 2016-2017 4,61,192 19%
4 2017-2018 4,68,184 2%
5 2018-2019 4,67,626 0%
Analysis:
From the above table it can be analyzed that during the financial year 2014-2015 there is a
18% of growth and every year to year percentage of the progress level is increasing but in the
financial year 2018-2019 neither there is a positive growth not negative growth.
Graph No 5. 2
Graph showing the global business of the bank

Interpretation:
From the above graph it can be said as the bank is constant towards the global business, as there is
neither positive nor negative growth on the comparison between the financial years 2017-2018 and
2018-2019.
Table No 5.3
Table showing increase in Net Interest Income:

Sl No Years Net interst % Growth (y-o-y)

Income (rupees in
crores)
1 2014-2015 17121 12%
2 2015-2016 18,620 9%
3 2016-2017 21615 16%
4 2017-2018 23198 7%
5 2018-2019 29474 27%
Analysis:
From the above table it can be analyzed that the during the financial year 2014-2015 there is
a 12% of growth in Net Interest Income and during the financial year 2016-2017 there is a growth
of 16 % and every year to year percentage of the progress level is increasing and in the financial
year 2018-2019 there is a highest growth i.e of 27% by this it can be analyzed that the bank is
getting good income through the net interest.
Graph No 5. 3
Graph showing the Net Interest Income of the bank

Interpretation:
As indicated by the above graph there is a positive growth in the interest income sector, which
shows the banks is showing much interest in loan lending part and in the same sector its revenue is
increasing y-o-y.
Table No 5.4
Table showing regarding other incomes:
Sl No Years other income(amount in crores) % Growth (y-

o-y)
1 2014-2015 1174 12%
2 2015-2016 1,325 13%
3 2016-2017 2110 59%
4 2017-2018 2509 19%
5 2018-2019 3634 45%
Analysis:
From the above table it can be analyzed that the during the financial year 2014-2015 there is
a 12% of growth in Other Income and during the financial year 2016-2017 there is a highest growth
of 59 % and every year to year percentage of the progress level is increasing and in the financial
year 2018-2019 there is a growth of 45% by this it can be analyzed that the bank is getting good
other incomes.
Graph No 5. 4
Graph showing the other incomes of the bank

Interpretation:
As indicated by the above graph there is a positive growth in the other income as the revenue
towards the global deposit is improving by year to year.
Table No 5.5
Table showing regarding Global Deposits:

Sl No Years Global Deposits (amount % Growth (y-o-

in crores) y)
1 2014-2015 185356 12%
2 2015-2016 212,343 15%
3 2016-2017 255388 20%
4 2017-2018 261735 2%
5 2018-2019 261736 0%
Analysis:
Analysis: From the above table it can be analyzed that during the financial year 2014-2015
there is a 12% of growth and every year to year percentage of the progress level is increasing but in
the financial year 2018-2019 neither there is a positive growth not negative growth towards global
deposits.
Graph No 5. 5
Graph showing the Global Deposits of the bank

Interpretation:
As indicated by the above graph there is a positive growth in the Global Deposit, which states that
the bank is showing more interest in the global wise banking and also investing the money globally.
Table No 5.6
Table showing regarding Advances:

Sl No Years Advances (amount % Growth (y-o-y)

in crores)
1 2014-2015 149423 12%
2 2015-2016 176,241 18%
3 2016-2017 205804 17%
4 2017-2018 206449 0%
5 2018-2019 207065 0%
Analysis:
financial year 2017-2018 and 2018-2019 neither there is a positive growth not negative growth.
Graph No 5. 6
Graph showing the Advances of the bank:

Interpretation:
Above graph indicates that there is a progress towards the advances of the bank fro the financial
year 2015-2016 to 2016-2017 after the financial year 2016-17 the growth level of the advances of
the bank is constant.
Table No 5. 7
Equity shares

Sl No Years Earning on equity per % Growth (y-o-

share y)
1 2014-2015 33.3 49%
2 2015-2016 28 -15%
3 2016-2017 24.38 -14%
4 2017-2018 -33.27 -236%
5 2018-2019 1.15 -103%
Analysis:
From the above table it can be analyzed that the bank from financial year 2014-2015 to financial
year 2018-2019 all the 5 years there is decline in the price of equity share.
Graph No 5. 7
Graph showing per Equity Share price of the bank:\

Interpretation:
The graph states that there is a huge loss in the equity share which is performed by the bank and the
bank needs to give more importance towards the equity share growth of the bank.
Table No 5. 8
Gross NPA
Sl No Years Gross NPA (amount in % Growth (y-o-y)

crores)
1 2014-2015 2979 -6%
2 2015-2016 4,611 55%
3 2016-2017 6442 40%
4 2017-2018 13828 115%
5 2018-2019 17609 27%
Analysis:
decline in the progress level by 6% of the Gross NPA, but from the financial year 2016-2017 to
2018-2019 there is positive growth. In the financial year 2017-2018 there is a huge growth i.e more
than 100% in Gross NPA.
Graph No 5.8
Graph showing Gross NPA of the bank:

Interpretation:
The above graph states that there is a positive way towards the Gross NPA of the bank on the
comparison of the financial year from 2014-2015 to 2018-2019.
Table No 5.9
Table Showing Secured Loan of the bank :
Sl. No Years Secured Loan(amt in % Growth

crores )
1 2014-2015 12813.8
2 2015-2016 19224.51 33%
3 2016-2017 26502.99 27%
4 2017-2018 25501.2 -4%
5 2018-2019 17475.52 -46%
Analysis :
From the above table it can be analyzed that the bank for the financial year 2015-2016 there was a
positive growth in 33% but when it comes to financial year 2017-2018 and 2018-2019 there is a
decline in the % of secured loans.
Graph 5.9
Secured Loans of the bank

Interpretation:
The above graph states that there is a decline in growth of secured loans of the bank and the bank
needs to improve in the said sector.
Table No 5.10
Table Showing Unsecured Loan of the Bank :
Sl. No Years Unsecured Loans % Growth

(amt in crores )
1 2014-2015 185355.89
2 2015-2016 201243.3 8%
3 2016-2017 255388.1 21%
4 2017-2018 261735.34 2%
5 2018-2019 260560.86 0%
Analysis :
the financial year 2018-2019 neither there is a positive growth not negative growth towards
Unsecured loans of the bank.
Graph No 5. 10
Unsecured Loans of the Bank

Interpretation:
Above graph indicates that there is a random progress in the unsecured loans sector of the bank
which is lended through the bank.
Table No 5.11
Table showing Net Current Asset

Sl. No Years Net Current Assets (Rs . In Crores ) %

Growth
1 2014-2015 161629.41
2 2015-2016 186403.8 13%
3 2016-2017 224001.83 17%
4 2017-2018 229285.75 2%
5 2018-2019 224301.1 -2%
Analysis :
the financial year 2018-2019 there is negative result towards net current assets of the bank.
Graph 5.11
Net current Assets

Interpretation:
Above graph indicates that there is a random progress in the net current assets during the financial
year 2015-2016 to 2017-2018 but in but in the financial year 2018-2019 there is a decline in the net
current assets part of the bank.
Table No 5.12
Table showing Reserves and Surplus of bank :

Sl. No Years Reserves and Surplus (amt in crores) %

Growth
1 2014-2015 8963.64
2 2015-2016 10273.04 13%
3 2016-2017 11478.24 10%
4 2017-2018 10022.25 -15%
5 2018-2019 11684.02 14%
Analysis:
financial year 2017-2018 there is a negative growth and financial year 2018-2019 the bank has
again started towards the positive way, as there is a positive growth level of 14% towards reserves
and surplus.
Graph 5.12
Reserve and Surplus of the bank

Interpretation:
The above graph states that there is a positive growth in first 3 years and negative in the 4 th year and
5 year they have again started their growth towards reserve and surplus.
Table No 5.13
Table showing Capital work in progress of the bank :
Sl. No Years capital work in % Growth

progress (amt in
crores)
1 2014-2015 26.58
2 2015-2016 35.75 26%
3 2016-2017 97.64 63%
4 2017-2018 30.91 -216%
5 2018-2019 25.95 -19%
Analysis:
financial year 2017-2018 and 2018-2019 there is negative result capital work in progress of the
bank.
Graph No 5. 13
Capital Work in Progress

Interpretation:
As per the above graph it can be interrupted that the capital work in progress in the organization is
not in a good position.
Table No 5.14
Table showing investment of the bank

Sl. No Years Investment (amt in crores) %

Growth
1 2014-2015 45647.66
2 2015-2016 55539.38 18%
3 2016-2017 69339.67 20%
4 2017-2018 68621.87 -1%
5 2018-2019 65465.4 -5%
Analysis:
financial year 2017-2018 and 2018-2019 there is negative result Investment of the bank.
Graph No 5.14
Investment of the bank

Interpretation:
As per the above graph it can be interrupted that the Investment of the bank is not in good progress
as there is a negative growth towards the investment compare to the previous year.
Table No 5.15
Table showing Current Liabilities of the bank
Sl. No Years Current Liabilities (amt in crores) %

Growth
1 2014-2015 6411.3
2 2015-2016 8449.46 24%
3 2016-2017 8185.39 -3%
4 2017-2018 7652.92 -7%
5 2018-2019 6852.77 -12%
Analysis:
financial year 2017-2018 and 2018-2019 there is negative result Current liabilities of the bank.
Graph No 5.15
Current Liabilities

Interpretation:
As per the above graph it can be interrupted that the Current Liabilities of the bank is not in good
progress for the financial year 2018-2019 as the growth towards the current liabilities is indicating
the negative growth compare to the financial year 2017--2018
CHAPTER -6
FINDINGS, SUGGESTIONS AND CONCLUSIONS

CHAPTER -6
FINDINGS, SUGGESTIONS AND CONCLUSIONS

Findings, Suggestion and Conclusion:
Findings:
 Net profit for the financial year 2014-2015 stands to Rs 2004- crores so there is a positive
growth.
 Increase in Global Business for the financial year 2018-2019 stands to Rs 4, 67,626/--- crores so
there is a positive growth .
 Increase in Global Business for the financial year 2016-2017 stands to Rs 4.61,192/--- crores so
there is a positive growth.
 Increase in other income for the financial year 2018-2019 stands to Rs 29,474/--- crores so there is a
positive growth.
 Global Deposit for the financial year 2016-2017 stands to Rs 2,55,388/--- crores so there is a positive
growth .
 Advances for the financial year 2015-2016 stands to Rs 1,76,241/--- crores so there is a positive
growth .
 Equity per share rate for the financial year 2014-2015 stands to Rs 33.3/- so there is a positive
growth.
 Gross NPA for the financial year 2014-2015 stands to Rs 2,979/- Crores so there is a negative
growth.
 Secured Loan of the bank for the financial year 2018-2019 shows the negative growth as
there is a decline in 46% compare to previous year.
 Unsecured Loan of the banks stands same for the financial year 2016-2017 it can be
considered as there is no positive or negative growth towards Unsecured Loan.

 Net Current Assest of the bank stands towards negative of 2% compare to previous year of
2018-2019.
 Reserve Surplus of the bank is improved with positive 14% for the financial year 2018-
2019, as there was a negative growth in the previous year.
 Capital work in progress of the bank is decline towards year to year it can be considered as
the negative growth as there is a negative of 19% in the financial year 2018-2019.
 Investment of the bank also stands at the negative part as it is showing -5% for the financial
year 2018-2019.
 Current Liabilities of the bank indicates negative growth of 12% in the financial year 2018-
2019.
Suggestions:
 Trend analysis of profitability Ratio’s exhibits that Net profit of Vijaya Bank it is
decreasing from year to year .They should have to concentrate on profits how they can
earn more profit.
 In Global Deposits of the bank starting three years they were seeing the profit itself after
third year it is decreased and next year again they are improving in their global deposits.
 Banks should concern much on internal sources of financing in order to increase their
profitability.
 The return on equity by private sector banks is less than that of public sector banks. So,
Researcher may suggest to private sector banks to improve their profitability.

 The public sector banks are moving back in the sequence of earning per share ratio. It is
necessary for public sector banks to reduce their operating expenses and NPA to
increase the profit. So, as they can increase earnings per share up to the mark.
 An appropriate mix of capital structure should be adopted in order to increase the
profitability of banks.
 Develop service oriented internal processes.
 Right kind of reward to be provided to strong service provider.
 Include employees in the Banks vision.
Conclusion:
This project is carried out at Vijaya Bank LTD, With regard to A STUDY ON IMPACT OF
COMMERCIAL LENDING ON PROFITABILITY OF VIJAYA BANK To analyze the
profitability in commercial lending.
The banking system in India is significantly different from that of other Asian nations because
of the country‘s unique geographic, social and economic characteristics. The banking system
has had to serve the goals of economic policies enunciated in successive five year development
plans, particularly concerning equitable income distribution, balanced regional economic
growth and the reduction and elimination of private sector monopolies in trade and industry.
Bank is facing many problems in Net Profit and Equity per share value on the bank balance
sheet. To ensure proper functioning of the banking system in the economy. We need to see that

the level of NPA ‘S is kept down. Thus, these loan losses affect the bank’s profitability on the
large scale. Though complete elimination of such losses is not possible, banks can always aim
to keep the losses at a low level.
With this background the present study attempts to analyze the profitability of commercial
lending banks with special reference to Vijaya Bank.

A Study On Impact of Commercial Lending On Probability of Vijaya Bank

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“A Study on Impact of Commercial Lending on Profitability of Vijaya Bank”

INTRODUCTION ABOUT BANKING INDUSTRY:

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The organization which is engaged into money transaction is called bank.

F.E. Perry --”Bank is establishment which deals in money, receiving it on deposit."

A Bank is a financial institution that accepts deposits from the public and

ORIGIN OF BANKING INDUSTY

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INTRODUCTION TO BANKING IN INDIA

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NEW GENERATION BANKING:

Banks' activities can be divided into:

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 Business banking, providing services to mid-market business.

 Corporate banking, directed at large business entities.

 Private banking, providing wealth management services to high-net-worth individuals and

 Investment banking, relating to activities on the financial markets.

The most important functions of banking may be classified as follows:

 To assemble capital and make it effective.

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 Credit unions or co-operative banks: not-for-profit cooperatives owned by the

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 Building Societies and Landes Banks: institutions that conduct retail banking.

 A direct or internet-only bank is a banking operation without any physical bank

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THE FUNCTIONS OF BANKS ARE AS BELOW:

1. Primary Functions of Banks

3. Granting of Loans and Advances

The types of bank loans and advances are:

4. Secondary Functions of Banks

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6. General Utility Functions

The bank also performs general utility functions, such as:

a) Issue of Drafts, Letter of credits etc.

The economic functions of banks include:

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5. Asset liability mismatch/Maturity transformation – banks borrow more on demand debt

6. Money creation/destruction – whenever a bank gives out a loan in a fractional-reserve

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BANKER AND A CUSTOMER

Diagram: shows the Banking structure in India:

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Indian Banking Structure:

Scheduled and Non – Scheduled Banks:

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Roles of Banks in Financial Systems.

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Banks do this by requiring most of their loans to include a balloon repayment. This means

Agency functions include:

 To collect and clear cheques, dividends and interest warrant

 To make payments of rent, insurance premium, etc.

 To deal in foreign exchange transactions

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 To act as trustee, attorney, correspondent and executor

 To accept tax proceeds and tax returns.

Utility functions include:

 To provide safety locker facility to customers

 To provide money transfer facility

 To issue traveller's cheque

Profitable Banking Sector

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