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A Study On Analysis Of Loans And Deposits At Axis Bank

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 Solid State Technology
Volume: 63 Issue: 5
Publication Year: 2020

A Study On Analysis Of Loans And Deposits

At Axis Bank
Dr.M.Ganesan1 ,Kanagaraj, Dr.S.Raja2
1,2
Assistant Professor, Department of Management Studies, SRM Valliammai Engineering
College.

Abstract: The Project report deals with the research topic “A STUDY ON ANALYSIS
LOANS/ADVANCES AND DEPOSITS AT AXIS BANK”. The Project aims at analyzing
the Deposits and Advances of the bank; thereby it helps the bank to improve its leading
process. The main purpose of this research is to identify Loans and Deposits at AXIS BANK
to calculate the proportion of different Deposits to the total Deposits, to find the proportion of
different loans to the total loans. The study is analytical in nature; the study is done for the
period of five years. Deposits held at financial institute that has a fixed term. These are
generally short term with maturities ranging anywhere from a month to a few years. When a
term deposits is purchased, the lender (customer) understands that the money can only be
withdrawn after the term has ended or by giving the predetermined number of days’ notice. A
number of studies related to performance of Private banking sector in India related to
Deposits and Advances have been conducted. Here, an attempt is being made to provide an
overview of various aspects and issues of this study through the review of existing literature.
In Research Methodology the type of research is analytical in nature. It is a specific type of
research that involves critical thinking skills and the evaluation of facts and information
relative the research being conducted. The method of data collection is two types i.e. Primary
data & Secondary data collection. The tools used in calculation are Ratio analysis, Percentage
analysis, Trend analysis, Correlation, Regression, and Compound Growth & Time Series
Estimation. The study covers the period of the five accounting year from 2015-2019. Demand
Deposit collection can be increased more from members. Growth rate of Term Deposits is
low; hence Term Deposits should be increased. Friendly and courteous behavior of the
employees is expected and hence special training needs to be imparted to the employees. The
employee must try to improve the quality of service given. The study shows Axis Bank has
sound system for Deposits and Advances and the bank has good parameters to appraise the
project.

Keywords: Bank, Term Deposits, Loans and Advances, Customer, Financial Institute

I. INTRODUCTION

In Finance, a loan is a debt provided by one entity (Organization or Individual) to another

entity at an interest rate, and evidenced by a note which specifies, among other things, the

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principal amount, interest rate, and date of repayment. A loan entails the reallocation of the
subject assets for a period of time, between the lender and the borrower.

In a Loan, the borrower initially receives or borrows an amount of money, called the
principal, from the lender, and is obligated to pay back or repay an equal amount of money to
the lender at a later time.

The Loan is generally provided at a cost, referred to as interest on the debt, which provides an
incentive for the lender to engage in the loan. In a legal loan, each of these obligations and
restrictions is enforced by contract, which can also place the borrower under additional
restrictions know as loan covenants. Although this article focuses on monetary loans, in
practice any material object might be lent.

A Loan is money, property or other material goods given to another party in exchange for
future repayment of the loan value amount, along with interest or other finance charges. A
loan may be for a specific, one-time amount or can be available as an open ended line of
credit up to a specified limit or ceiling amount.

Objectives Of The Study

➢ To study different types of Loans and Deposits made by Axis Bank with specific
reference to West Tambaram Branch.
➢ To find the compound growth rate of various deposits.
➢ To predict the deposits for next 5 years.
➢ To study the process in sanctioning loans and deposits to a customer.
➢ To calculate the various proportion of different deposits and loans.
➢ To find out the correlation between net profit and various deposits.
➢ To access the bank’s contribution towards fulfilling the requirements of the borrower.

Scope Of The Study

The purpose of preparation of this report is to focus on the lending function of banks with
specific reference to Axis Bank West Tambaram branch. There are different types of loans
that are financed by the banks and their classification into fund and non-fund-based loans. It
also helps us to study the risk involved in sanctioning loans to a borrower. This makes us to
analyse the credit worthiness of the prospective borrower and estimate the net worth of the
assets owned by the customer, which assists the bank in ascertaining the amount that can be
sanctioned to the borrower. This study attempts in making analyses and prediction over
deposits and loans for the 5years.The study covers a variance analysis for interest related
expenses.

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Publication Year: 2020
Need For The Study

Savings and Lending are vital components of the modern age and the concept of banking has
been critical in improving the living standards of everyone. This study helps us to show the
analysis of loans and deposits with the period of time in Axis Bank at West Tambaram. The
study to know the increase or decrease of various deposits also analyzed in order to give a
true and clear picture of its performance. The study focuses only the views of the bank. But it
does include the views of the others who are directly or indirectly associated with bank.

II. REVIEW OF LITERATURE

ManishMittal and ArunnaDhademade (2015) they found that higher profitability is the
only major parameter for evaluating banking sector performance from the shareholders point
of view. It is for the banks to strike a balance between commercial and social objectives.
They found that public sector banks are less profitable than private sector banks. Foreign
banks top the list in terms of net profitability. Private sector banks earn higher non-interest
income than public sector banks, because these banks offer more and more fee-based services
to business houses or corporate sector. Thus, there is urgent 21 need for public sector banks
to provide such services to stand in competition with private sector banks

Vasantdesai (2015): The Reserve Bank of India plays a very vital role. It is known as the
banker’s bank. The Reserve Bank of India is the head of all banks. All the money
formulations of commercial banks are done under the Reserve Bank of India. The RBI
performs all the typical functions of a good central bank as it is involved in planning the
economy of the country. The main function is that the RBI should control their credit. It is
mandatory for the Bank to maintain the external value of the rupee. Major function is that it
should also control the currency.

Haron and Azmi (2016) asserted that, most business organizations, especially in developing
countries are highly dependent on bank loans as a source of capital and the ability of banks in
giving loans depends much on their ability to attract deposits. Freix as and Rochet (2008), as
cited in Fouopi-Djiogap and Ngomsi (2012), noted that bank loans are one of the most
important long-term financing sources in many countries.

Fernando Ferreng (2016) it is generally agreed that recent economic crisis intensified
worldwide competition among financial institution. This competition has direct impact on
how bank deal with their customer and achieve its objectives performance evaluation of
banks is the key function for improving banks performance. Banks profitability and success
to a large extent depends on bank branch financial performance.

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III. RESEARCH METHODOLOGY

Research Methodology is simply the frame work or plan for a study that guides the
collection and analysis of data. It is an inevitable factor before going for a research. It also
explains various steps that are generally adopted by the researcher in studying research
problem along with the logic behind them.

Types Of Research

This research is Analytical in nature. Analytical research is a specific type of research that
involves critical thinking skills and the evaluation of facts and information relative the
research being conducted. A variety of people including students, doctors and psychologists
use analytical research during studies to find the most relevant information.

Tools Used

❖ Ratio analysis ❖ Percentage analysis ❖ Trend analysis ❖ Correlation ❖ Regression ❖

Compound Growth ❖ Time Series Estimation.

Analysis Of Trend Values Of The Interest Paid On Deposits And Interest Received On
Advances For 5years

PARTICU YEARS
LARS 2015 2016 2017 2018 2019
Interest Paid on 21341.26 24344.23 26789.35 27603.69 33883.47
Deposits
Interest 26083.99 30410.19 33694.64 34909.73 42322.58
Received on
Advances

TREND%
2014-15 2015-16 2016-17 2017-18 2018-19
100 114.07 110.04 103.03 122.74
100 116.58 110.80 103.60 121.23

Interpretation

An attempt was made to find the Trend Percentage for the society’s Interest paid on Deposits,
the base value for the year 2014-2015 is Fixed as 100 and Trend value is 114.07 in 2015-16,
110.04 in 2016-17, 103.03 in 2017-18, 122.74 in 2018-19
Time Series Analysis Of Deposits For Five Years

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Volume: 63 Issue: 5
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YEAR DEPOSITS(Y) DEVIATION(X) X2 XY
2015 466842.24 -2 4 -933684.48
2016 527413 -1 1 -527413
2017 627429 0 0 0
2018 697475 1 1 697475
2019 791865 2 4 1583730

TOTAL 3111024.24 0 10 820107.52

Y=a+bx

a=∑y/n b=∑xy/∑x2

∑y= 3111024.24 xy=820107.52

n=5 X2=10

a=622204.848 b=82010.752

INTERPRETATION

An attempt was made to predict the Deposits using time series analysis. Data for past five
years was used to predict the deposits. The prediction is done for next five years.

IV. FINDINGS AND SUGGESTIONS

❖ On analyzing various Deposits, the Compound growth rates(G) Savings deposits is the
highest 11.79%, followed by the Fixed deposits 11.21% and Current deposits 9.73%

❖ On Comparing the growth rates of various deposits for the 5years periods (2015- 2019), it
is found that Savings deposits holds the top at the list and Fixed deposits at the second and
the Current deposits that is at next rank.

❖ On analyzing various Advances, the Compound growth rates(G) Retail loan is the highest
17.04%, followed by the Advances 11.97%,Non-Retail loan is at last ranking 8.04%

❖ On analyzing the Interest Earned from Deposits and Advances it has been found that the
interest value has fluctuated.

❖ On analyzing Average yield on Advances ratio for 5 years is, it has been decreasing.

❖ An attempt was made to find the Trend Percentage for the Deposits, the base value for the
year 2014-2015 is fixed as 100 and Trend value is 112.974 in 2015-2016, 118.963 in 2016-
2017, 111.163 in

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2017-2018, and 113.533 in 2018-2019.

❖ An attempt has made to find Correlation between Deposits and Net profit was made.
There is Very High positive Correlation is 0.994.

❖ An attempt was made to predict the Deposits using time series analysis. Data for past five
years was used to predict the deposits. The prediction is done for next five years.

❖ Time series method was used to predict the figures of Funds, Loans and Deposits for the
next three years.

❖ On analyzing the special loans. The Compound rate has been fluctuating year to year.

V. SUGGESTIONS

❖ Fixed Deposits attempts to be taken to increase cashflow.

❖ Growth rate of Current Deposits is low; hence Current Deposits should be increased.

❖ Based on the present study the researcher proposes the following steps.

❖ Banks should take steps to increase the Nonretail advances as the ratio of retail advances,
total advances is decreasing all over India.

❖ In comparison with other bank the performance of axis bank is quite good but no so
effective than its competitors.

❖ Upgrading schemes based on customers’ needs should be analyzed and developed.

❖ Faster and easier mode of transaction helps in reaching out its potential customers.

❖ The deposits interest rate of the bank should be increased than its competitive banks.
Hence, it attracts more people.

❖ Banks should increase the rate of saving account.

❖ Promptdealing with permanent customers and speedy transaction without harassing the
customers.

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VI. CONCLUSION

Axis Bank has developed manifold in short period of time due to facilities and services
provided to their customers and this growth can be increased if they concentrate more on
semi urban and rural areas. In last couple of years, they have opened many branches to reach
their customers in lending services. Axis bank provides net banking facilities by that
transactions are done faster and easier. Charges levied by the bank are less when compared to
the other banks. The bond with its customers is very strong because they mainly focus on
retaining its customers. In conclusion, this internship in Axis Bank has been an excellent and
rewarding experience. I have been able to meet and network with so many people that I am
sure will be able to help me with opportunities in future.

VII. REFERENCE

[1] Medhat Tarawneh, “A comparison of financial performance in the banking sector”

(2006), ISSN-1450-2887.
[2] Dadzie,Winston and Afriyie, “A determinant on customer satisfaction on rural savings”
(2006)
[3] K.C.Sharma, “Modern banking in India” (2007),ISBN 978-81-8450-019-6.
[4] HR Machirajn international publishers, “Modern commercial Banking” (2010)ISBN-10-
81-224-2091-5. ➢ Bologna, “A determinant of total long-termloans” (2011).
[5] Jha DK and D S Sarangi in Financial performance of public & private sector bank
(2011).
[6] NereruMundrai, kamniTandom, NidhiMalhotra study on the performance of SBI vs new
private sector banks ISBN 978-81-7446-983-0
[7] Dr Guruswamy, “Financial services in banking sector (2012) ISBN 9780070153349.
[8] Dangwal and Kapoor, “Financial performance of nationalized banks” (2014) ➢
FerandoFerreng, “indices for bank branch financial performance” (2016).

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