COMMERCIAL BANKING-

PART A&B

Submitted by:
Angad Anchit- 21F109
Meghna Sarda- 21F133
Rupel Vallen Gonsalves- 21F146
Shivansh Tiwari-21F151
Tanishqa Jogani-21F160
 PART A

History and Evolution of South Indian Bank

South Indian Bank is considered to be the oldest bank in South India. It was set up during the “Swadeshi
movement” and was incorporated as a Private Limited Company on 29 th January 1929 in a small town
called Thrissur in Kerala. It later changed into a Public Limited Company on 11 th August 1939. The aim of
the bank was to give a safe, efficient, and service-oriented repository of savings to the people while
saving them from the grasps of the moneylender who gave loans at a very high-interest rate.

In 1946, South Indian Bank was the first one to foray into the private sector in Kerala to become a
scheduled bank according to the second schedule of RBI Act, 1934. It also received the license under the
Banking Regulation Act, 1949.

It then started acquiring other banks to increase its portfolio. It took over Ambat Bank and
Kshemavilasam Banking Company Ltd in 1963. A year later, It created a milestone by acquiring 10 banks
in a single year. In the year 1992, it became the first private sector bank to open and operate a currency
chest for RBI. In the same year, it also opened an NRI branch in November and developed an in-house
fully integrated branch automated software. A year later, it started an Industrial Finance branch and an
Overseas Bank to handle the export-import business. The bank went public in 1998 by bringing out its
Initial Public Offering (IPO). It also launched the Sibertech project in 2001 which provided a
comprehensive and centralized banking solution. It also had a tie-up to add insurance products to its
portfolio. The facility catering to internet banking was introduced in the year 2003 to facilitate access to
banks from anywhere in the country.
It made a FPO in the year 2005, exactly a year after celebrating its 75 th year of existence. Currently, it has
a network of 877 branches and 1443 ATMs across the country.

Category and Structure of South Indian Bank

Type of Bank- South Indian Bank is a Private Sector Bank. It was the first bank from the Kerela region to
become a scheduled bank.

Shareholding pattern- As of June 2022, Foreign Institutional Investors ( hold 7.45% shares of South
Indian Bank. Acacia Banyan Partners and Acacia Partners are major FIIs for South Indian Bank. Domestic
Institutional Investors account upto 16.12% of the shareholding. SBI Life Insurance Ltd. and HDFC Life
Insurance Ltd. hold a major chunk of 4.23% each. Public holding accounts for 76.43% of shares. There is
no promoter holding in South Indian Bank.

Major Foreign Institutional Investors (FII) Holdings PERCENT HOLDING

ACACIA BANYAN PARTNERS 1.21%

ACACIA PARTNERS~LP 1.19%

Major Domestic Institutional Investors (DII) Holdings PERCENT HOLDING

HDFC LIFE INSURANCE COMPANY LIMITED 4.23%

SBI LIFE INSURANCE CO. LTD 4.23%

KOTAK MAHINDRA LIFE INSURANCE COMPANY LTD. 3.81%

LIFE INSURANCE CORPORATION ON INDIA 2.69%

 Top Public (Non-institutional) Holdings PERCENT HOLDING

Non-Resident Indian (NRI) 7.74%

YUSUFFALI MUSALIAM VEETTIL ABDULKADER 4.32%

Bodies Corporate 2.45%

HUF 1.98%

IEPF 0.45%

Changes in Shareholding pattern:

● FIIs have increased their holdings by 0.09% from 7.36% to 7.45% in June quarter
● Total numbers of FIIs have increased from 60 to 62 in the last quarter
● Institutional Investors has decreased their holdings to 23.57% from 23.88%
 Products and Services of South Indian Bank

1. Personal Banking Products

Type Name of the Unique Features

Product/Service

Accounts & Deposits KIOSK Banking ● SIB Kiosk caters to the underserved section of
society to promote financial inclusion. They
have launched this product with M/s Tata
Consultancy Services Ltd.
● The product is available in the village and
remote areas. They are not required to have
any minimum balance.

Loans SIB Pharma Plus The product caters to the pharmaceutical industry.
Loans range from INR 25 Lakhs to INR 1500 Lakhs. A
collateral of 50%-75% is required, depending upon the
experience.

SIB-Decor Provides loans amounting from INR 0.5-100 Lakhs to

individuals who want to furnish their house. The target
customers are the ones who already have a housing
loan.
They require a 25% margin

Mutual Funds Multiple mutual They have tie-ups with 18 major mutual fund houses
fund houses

Insurance Multiple They provide life insurance, health insurance, general

Insurances insurance, Export credit guarantee, and PM Social
 Security Schemes

Money Transfer International and Domestic Transfers- RTGS, NEFT and Demand Draft
Domestic International Transfers- Correspondent banks, Swift
Transfers Centers and Online Money Transfer

Value Added Services SIB Rewardz- Redeemable reward points for online
purchases
3 in 1 trading KIT- Combination of savings account,
Demat account, and SIBer trade account
Green Pin- Paperless generation of new passwords
Other services- Fastag, E-academia, Co-branded credit
cards, lockers, etc.

2. Business Banking

Type Name of the Product/ Unique features

Services

Business Accounts SIB Merchant Plus ● Provide accounts with no minimum balance,
free cash deposit, free unlimited cash
withdrawal, and other premium services.
● Provides flexible POS rental waiver on the
basis of average balance maintained.
● Other free services like issuance of Rupay
Platinum Debit card, SMS and E-mail facility,
25 free NEFT/RTGS transactions, and cheque
leaves per month.

Trader Smart Current Meeting the demand of Corporate

Account (TSCA) and retail clients, particularly those
 in the trading segment, SIB has
refined and personalized a product
specifically for use with a variety of
characteristics - like monthly
Average minimum balance, Sweep
facility, POS facility,etc

Domestic Finance SIB- API Banking ● Real-time information about SIB account
holders' accounts can be accessed. Helps
reduce the number of reversals and
unsuccessful transactions during the business
payment process.
● Developers can use SIB Payouts to diversify
the fund transfer options.
● Facilitates customer management and wealth
management
● Hassle-free services.

Value Added ● SIB TF online- Digital platform for trade

Services Finance Transaction
● SIB Collect- faster collection of international
instruments
● DIGI CAMPUS- provides SIB student card, SIB
Fee, SIB VAN.
● SIB TF Online- corporate internet banking
from your home or office, a platform for Trade
Finance transactions.
3. Priority Banking

Services SIB Prime SIB Prime Platinum

Lounge One per quarter One per quarter

Access

Locker Waiver on locker rent of upto 25% Waiver on locker rent of upto 50%

Insurance SIB Suraksha Kavach; gives cover upto SIB Suraksha Kavach; gives cover upto
Cover 10,00,000 10,00,000

Forex 50% waiver of issuance fees of SIB travel Full waiver of issuance fees of SIB travel
card card

Loan Discount of 0.10% on applicable loan rate Discount of 0.15% on applicable loan rate
Pricing

4. NRI Banking

Type Name of the Product/ Services Unique features

E-Service NRI newsletter Provides newsletter services from 2012

Value Added Hadi Express Exchange ● Instant credit to SIB accounts from
Services UAE is facilitated
● Officers deputed from SIB are
available at each branch to help the
exchange.
 Future Plans

● Under Vision 2024, South Indian Bank plans to have a loan book amounting to INR 1 lakh crore.
In this, they aim to have CASA of about 35%, NIM of about 3.5%, and PCR to be above 65%.
● The future strategy focuses on the 6Cs, that is raising Capital, CASA, Cost-to-Income,
Competency building, Customer focus, and Compliance, with a clearly articulated destination for
each of them
● Bank has gotten a nod from the shareholders for raising the equity capital of about INR 2000
crores segregated into different tranches. They even want to strengthen their tier 1 capital
structure.
● South Indian Bank is lowering its corporate exposure and building on its retail accounts as they
are struggling to maintain a healthy provision coverage ratio.
● The lender has also obtained approval from shareholders for increasing the authorized capital of
the Bank to Rs 350 crore.
● They want to re-organize structure and want to cater to a new vertical focusing on major parts
of Kerela
 PART B
Section 1: IMPACT OF PRODUCTS AND SERVICES ON BALANCE SHEET
The summarized view of South Indian Bank’s Balance Sheet is as follows:
As at March 31, As at March As at March
Balance Sheet 2022 31, 2021 31, 2020
` (‘000) ` (‘000) ` (‘000)
CAPITAL AND LIABILITIES      
Capital 20,92,741 20,92,741 18,09,722
Employees’ Stock Options Outstanding 12,905 20,824 25,472
Reserves and Surplus 5,64,38,590 5,59,78,867 5,29,38,283
Deposits 89,14,21,078 82,71,05,490 83,03,38,881
Borrowings 3,29,44,934 4,10,82,731 6,89,32,347
Other liabilities and provisions 1,76,13,967 1,52,11,081 1,62,84,301
TOTAL 1,00,05,24,215 94,14,91,734 97,03,29,006
ASSETS      
Cash and Balances with Reserve Bank of India 3,67,66,056 3,30,47,093 2,80,59,835
Balances with banks and money at call and
7,52,68,220 5,46,31,688 1,38,37,782
short notice
Investments 21,44,50,128 20,32,10,845 20,62,52,745
Advances 59,99,33,907 58,05,64,761 64,43,94,729
Fixed Assets 81,10,541 79,51,667 80,00,419
Other Assets 6,59,95,363 6,20,85,680 6,97,83,496
TOTAL 1,00,05,24,215 94,14,91,734 97,03,29,006
Contingent Liabilities 33,76,47,010 10,87,51,312 10,75,27,644
Bills for collection 1,75,29,647 1,75,81,919 1,78,00,924
Source: Annual Report South Indian Bank
From the above balance sheet, we can see that the liabilities side comprises of products and services like
deposits and borrowings whereas the asset side we have advances as our main product.

Capital & Liabilities Side

The products and services that contribute significantly to South Indian Bank’s capital and liabilities side
are:
i) Deposits
ii) Borrowings
As at March 31,
As at March 31, 2021 As at March 31, 2020
Excerpt of C&L Side 2022
` (‘000) ` (‘000)
` (‘000)
Deposits 89,14,21,078 82,71,05,490 83,03,38,881
Borrowings 3,29,44,934 4,10,82,731 6,89,32,347
i) Deposits
Schedule of Demand Deposits
2022 2021 2020
A. I. Demand Deposits      
(i) From Banks 1,23,699 1,35,269 98,205
(ii) From Others 4,84,91,545 4,30,75,591 3,19,81,053
II. Savings Bank Deposits 24,73,98,532 20,26,87,064 17,55,16,803
III. Term Deposits      
(i) From Banks 2,22,87,247 1,55,01,659 3,35,99,925
(ii) From Others 57,31,20,055 56,57,05,907 58,91,42,895
TOTAL 89,14,21,078 82,71,05,490 83,03,38,881
B. (i) Deposits of branches in India 89,14,21,078 82,71,05,490 83,03,38,881
(ii) Deposits of branches outside India Nil Nil Nil
TOTAL 89,14,21,078 82,71,05,490 83,03,38,881
Source: Annual Report South Indian Bank
From the above schedule we can see that Saving bank deposits and term deposits constitute to a large
portion of total deposits. The saving bank deposits and term deposits from banks have been increasing
contributing to the total deposits for the past 3 years.
South Indian Bank does have any deposits from its branches that are placed outside India. Another thing
to note here is the decrement in contribution of other term deposit to total deposits over the years from
71% in 2020 to 64.3% in 2022.

Deposit as a percentage of Total Capital & Liabilities

A. I. Demand Deposits 2022 2021 2020
(i) From Banks 0.012% 0.01% 0.0%
(ii) From Others 4.85% 4.58% 3.30%
II. Savings Bank Deposits 24.73% 21.53% 18.09%
III. Term Deposits
(i) From Banks 2.23% 1.65% 3.46%
(ii) From Others 57.28% 60.09% 60.72%
TOTAL 89.10% 87.85% 85.57%

From the above table, we can comprehend that the deposits contribute to significant part of the capital
and liabilities side of the balance sheet. The range is hovering around 85%-89% with a consistent
increase over the years.
Following comments can be made about the different line items in deposit side:
i) Term deposits from others contribute the most to the capital and liabilities side. Its share
accounts to 60.72% in 2020 and 57.28% in 2022.
ii) Savings Bank Deposit also contribute a large share to the total capital and liabilities of South
Indian Bank. The contribution has increase over the years from 18.09% in 2020 to 24.73% 2022.
iii) Demand deposits contribute less towards the total share of liabilities and the range hover s
around 3% to 5% of total capital and liabilities.

ii) Borrowings
Schedule of Borrowings
2022 2021 2020
I. Borrowings in India      
(i) Reserve Bank of India - - 55,20,000
(ii) Other Banks* 20,78,800 20,78,800 24,28,800
(iii) Other Institutions and Agencies# 2,87,38,169 3,60,44,000 3,85,33,790
II. Borrowings outside India - from other banks 21,27,965 29,59,931 2,24,49,757
TOTAL 3,29,44,934 4,10,82,731 6,89,32,347
Source: Annual Report South Indian Bank
From the above schedule, we can observe that the borrowings contribute to a less significant amount of
the total capital and liabilities. It was 7% in 2020 and 3% in 2022.
South Indian Bank has significant number of borrowings from other institutions and banks which
comprises of subordinated debt, convertible debentures and perpetual debt. However, it has been
lowering over the years
Deposit as a percentage of Total Capital & Liabilities
  2022 2021 2020
I. Borrowings in India      
(i) Reserve Bank of India - - 0.57%
(ii) Other Banks* 0.21% 0.22% 0.25%
(iii) Other Institutions and Agencies# 2.87% 3.83% 3.97%
II. Borrowings outside India - from other banks 0.21% 0.31% 2.31%
TOTAL 3.29% 4.36% 7.10%

Following comments can be made about the different line items in borrowing part:
i) The largest contributor from borrowing to the total capital and liabilities is borrowings from
other institutions and agencies. The contribution has decreased from 3.9% in 2020 to 2.8% in
2022.
ii) South Indian Bank borrowed some money in 2020 from RBI but in 2021 it was paid off and since
then there is no share of RBI borrowings.
iii) Contribution of borrowings from other banks has also decreased over the 3 years from 0.25% in
2020 to 0.21% in 2022.

Asset Side
The products and services that contribute significantly to South Indian Bank’s asset side are:
i) Balances with banks and money at call and short notice
ii) Advances

Excerpt of Asset Side 2022 2021 2020

Balances with banks and money at call and short
7,52,68,220 5,46,31,688 1,38,37,782
notice
Advances 59,99,33,907 58,05,64,761 64,43,94,729

i) Balances with banks and money at call and short notice

  2022 2021 2020

I. In India      
i) Balances with Banks      
(a) In Current Accounts 1,97,384 6,53,368 3,78,410
(b) In Other Deposit Accounts 2,89,417 33,639 2,41,967
ii) Money at call & short notice      
(a) With Banks - 30,00,000  
(b) With other Institutions - -  
(c) Lending under Reverse Repo (RBI and
Banks) 3,60,00,000 3,16,43,518 95,00,000

Sub total 3,64,86,801 3,53,30,525 1,01,20,377

II. Outside India      
(a) In Current Accounts 15,80,187 23,79,122 15,32,956
(b) In Other Deposit Accounts 3,52,43,512 1,42,56,450  
(c) Money at call & short notice - with banks 19,57,720 26,65,591 21,84,449
Sub total 3,87,81,419 1,93,01,163 37,17,405
TOTAL 7,52,68,220 5,46,31,688 1,38,37,782
Source: Annual Report South Indian Bank
From the above table, we can see that the current accounts and other deposit accounts have shown a
lot of fluctuation in the 3 years. The lending under Reverse Repo has also increased over the course of 3
years by 279% in India.
Outside India, other deposit accounts have gone on from a negligible or no balance to a balance to a
considerable balance.
Balances with banks and money at call and short notice as a percentage of Total Assets
  2022 2021 2020
I. In India      
i) Balances with Banks      
(a) In Current Accounts 0.02% 0.07% 0.04%
(b) In Other Deposit Accounts 0.03% 0.00% 0.02%
ii) Money at call & short notice      
(a) With Banks   0.32% 0.00%
(b) With other Institutions   - 0.00%
(c) Lending under Reverse Repo (RBI and Banks) 3.60% 3.36%
0.98%
Sub total 3.65% 3.75% 1.04%
II. Outside India      
(a) In Current Accounts 0.16% 0.25% 0.16%
(b) In Other Deposit Accounts 3.52% 1.51% 0.00%
(c) Money at call & short notice - with banks 0.20% 0.28% 0.23%
Sub total 3.88% 2.05% 0.38%
TOTAL 7.52% 5.80% 1.43%
Source: Annual Report South Indian Bank
Following comments can be made about the different line items in balances with banks’ side:
i) Lending under reverse repo contributes the most to the asset side of South Indian Bank. This
contribution has increased over the years from 0.98% in 2020 to 3.6% in 2022.
ii) Outside of India, other deposit accounts have started contributing to the total assets of South
Indian Bank
iii) The current accounts’ contribution amount to total assets have been decreasing over the years
from 0.04% to 0.02%.

ii) Advances
  2022 2021 2020
A. (i) Bills Purchased and Discounted 5,11,09,407 3,00,26,099 4,58,74,046
(ii) Cash Credits, Overdrafts and Loans 29,60,75,004 28,55,03,304
repayable on demand 29,78,28,474
(iii) Term Loans 25,27,49,496 26,50,35,358 30,06,92,209
TOTAL 59,99,33,907 58,05,64,761 64,43,94,729
B. (i) Secured by tangible assets* 52,35,50,632 51,65,06,506 59,68,88,419
(ii) Covered by Bank/Government 4,16,85,676 4,69,34,950
Guarantees 2,16,66,505
 (iii) Unsecured 3,46,97,599 1,71,23,305 2,58,39,805
TOTAL 59,99,33,907 58,05,64,761 64,43,94,729
*Includes advances against Book Debt: `
8,577.11 Crore (Previous year:    
` 9,573.80 Crore)  
C. I. Advances in India      
(i) Priority Sectors 29,49,32,182 31,30,17,919 27,29,84,839
(ii) Public Sector 31,35,817 18,59,072 58,60,881
(iii) Banks - -  
(iv) Others 30,18,65,908 26,56,87,770 36,55,49,009
TOTAL 59,99,33,907 58,05,64,761 64,43,94,729
II. Advances outside India Nil Nil  
TOTAL 59,99,33,907 58,05,64,761 64,43,94,729
Source: Annual Report South Indian Bank

Following comments can be made about the different line items in on the advances side:
  2022 2021 2020
A. (i) Bills Purchased and Discounted 5.11% 3.19% 4.73%
(ii) Cash Credits, Overdrafts and Loans repayable on 29.59% 30.32%
demand 30.69%
(iii) Term Loans 25.26% 28.15% 30.99%
TOTAL 59.96% 61.66% 66.41%
B. (i) Secured by tangible assets* 52.33% 54.86% 61.51%
(ii) Covered by Bank/Government Guarantees 4.17% 4.99% 2.23%
(iii) Unsecured 3.47% 1.82% 2.66%
TOTAL 59.96% 61.66% 66.41%
*includes advances against Book Debt: ` 8,577.11
Crore (Previous year:    
` 9,573.80 Crore)  
C. I. Advances in India      
(i) Priority Sectors 29.48% 33.25% 28.13%
(ii) Public Sector 0.31% 0.20% 0.60%
(iii) Banks     0.00%
(iv) Others 30.17% 28.22% 37.67%
TOTAL 59.96% 61.66% 66.41%
II. Advances outside India Nil Nil  
TOTAL 60% 62% 66%

i) Advances to Priority Sectors contribute the most to the asset side of South Indian Bank but the
contribution has been fluctuating over the 3 years from 28% in 2020 to 29% in 2022.
ii) There have been no advances given outside of India.
iii) Term loans contribution to assets have shown a drop from 30.99% in 2020 to 25.26% in 2022.
iv) A significant portion of secured loans also contribute to the total asset base which makes the
bank more trustworthy.

SECTION 2
Bank's capital

Tier 1 Capital-
It consists of shareholders’ equity and retained earnings. It is a bank’s core capital and a primary indictor
to check banks financial health. These funds hold all bank’s accumulated funds.

(In millions)
Common Equity Tier 1 capital: instruments and reserves

Directly issued qualifying common share capital plus related stock 17,361.70 19,761.70 19,761.70
surplus (share premium)
Retained earnings 32,171.10 32,815.44 31,620.16
Accumulated other comprehensive income (and other reserves) 3,227.72 3,529.56 5,207.13

Common Equity Tier 1 capital before regulatory adjustments 52,760.52 56,106.70 56,588.99

Common Equity Tier 1 capital: regulatory adjustments

Intangibles other than mortgage-servicing rights (net of related tax 799.26 791.88 828.85
liability)
Reciprocal cross-holdings in common equity 13.79 9.55 250.71
Total regulatory adjustments to Common equity Tier 1 813.05 801.44 1079.56
Common Equity Tier 1 capital 51,947.48 55,305.25 55,509.43

Additional Tier 1 capital: instruments

Directly issued qualifying Additional Tier 1 instruments plus related 5000 5000 5000
 stock surplus (share premium)

Tier 1 capital 56,947.48 60,305.25 60,509.43

Tier 2 Capital-
It is a bank’s supplementary Capital. Undisclosed reserves, hybrid financial products, subordinated term
debts also known as junior debt securities. Tier 2 capital is less reliable than tier1 capital

(In millions )
Tier 2 Capital 19-20 20-21 21-22
Directly issued qualifying Tier 2 instruments plus related 10,400 9,800 9,200
stock surplus
Provisions 3,186.00 2,628.45 2,867.96
Tier 2 capital regulatory adjustments 13,586 12,428.45 12,067.96

Tier 2 Capital 13,586 12,428.45 12,067.96

Total Capital 70,755.15 72,733.70 72,577.38

 As we have seen the bank profit numbers have decreased over the years and there has been a
continuous increase in the Tier 1 Capital and continuous decrease in Tier 2 Capital. Total capital
that is the summation of Tier 1 and Tier 2 is gradually increasing.
 Major contributor to increase capital is Directly issued share capital, this will protect from
unexpected losses.
 SIB is prepared to face any adverse losses as they there is a continuous increase in the Tier 1 and
the overall capital
 There have not been major changes in the constituents of capital though we can still see the
bank has reduced its share of retained earnings maybe because there is a continuous decrease
in profits.
 SECTION-3:

South Indian Bank offers various products and services for its customers. Among them, the most
prominent services which generates revenue are the advances provided by the banks while the services
which has high expenses are the deposits.
There are three major types of deposits and three types of advances:
Deposits:
1. Demand Deposits
2. Savings bank Deposits
3. Term Deposits

Advances:
1. Bills purchased and discounted
2. Cash credits, overdrafts, and loan repayable on demand
3. Term loans

According to the annual reports of South Indian Bank, the details of deposits and advances of the last 3
years are given as follows:

SL March 31, 2022 (in March 31, 2021 March 31, 2020
PRODUCTS
No. ‘000) (in ‘000) (in ‘000)
  DEPOSITS      
I) Demand Deposits      
  i) From Banks ₹ 1,23,699.00 ₹ 1,35,269.00 ₹ 98,205.00
  ii) From others ₹ 4,84,91,545.00 ₹ 4,30,75,591.00 ₹ 3,19,81,053.00
II) Savings Bank Deposits ₹ 24,73,98,532.00 ₹ 20,26,87,064.00 ₹ 17,55,16,803.00
III) Term Deposit      
  i) From Banks ₹ 2,22,87,247.00 ₹ 1,55,01,659.00 ₹ 3,35,99,925.00
  ii) From others ₹ 57,31,20,055.00 ₹ 56,57,05,907.00 ₹ 58,91,42,895.00
  TOTAL ₹ 89,14,21,078.00 ₹ 82,71,05,490.00 ₹ 83,03,38,881.00
         
  ADVANCES      
 Bills purchased and
I) discounted ₹ 5,11,09,407.00 ₹ 3,00,26,099.00 ₹ 4,58,74,046.00
Cash credits,
overdrafts, and loan
II) repayable on demand ₹ 29,60,75,004.00 ₹ 28,55,03,304.00 ₹ 29,78,28,474.00
III) Term loan ₹ 25,27,49,496.00 ₹ 26,50,35,358.00 ₹ 30,06,92,209.00
TOTAL ₹ 59,99,33,907.00 ₹ 58,05,64,761.00 ₹ 64,43,94,729.00

We can see that the value of deposits went down marginally in 2021 by 0.39% when it fell from Rs.
83,030 Cr to 82,710 Cr. It increased by 7.77% to Rs 89,140 Cr. in 2022. Similarly, the value of advances
fell by a whopping 9.9% from Rs 64,430 Cr to Rs 58,050 Cr. The reason for a drop during the financial
year 2020-21 might be attributed to the COVID-19 pandemic. When we take the percentage
contribution of various deposits and loans to the overall deposit and loan amount, we get the following
table:

SL
PRODUCTS March 31, 2022 March 31, 2021 March 31, 2020
No.
  DEPOSITS      
I) Demand Deposits      
  i) From Banks 0.01% 0.02% 0.01%
  ii) From others 5.44% 5.21% 3.85%
Savings Bank
II) Deposits 27.75% 24.51% 21.14%
III) Term Deposit 0.00% 0.00% 0.00%
  i) From Banks 2.50% 1.87% 4.05%
  ii) From others 64.29% 68.40% 70.95%
  TOTAL 100.00% 100.00% 100.00%
         
  ADVANCES      
Bills purchased and
I) discounted 8.52% 5.17% 7.12%
II) 49.35% 49.18% 46.22%
Cash credits,
 overdrafts, and loan
repayable on
demand
III) Term loan 42.13% 45.65% 46.66%
  TOTAL 100.00% 100.00% 100.00%

The deposits are considered as a liability for the banks while loans are considered as assets. When we
see the deposit bifurcation, the demand deposits made up only 3.86% of the total deposits while it was
5.21 and 5.44% in 2021 and 2022 respectively. The major portion of the deposits comes from term
deposits of individuals and non-bank entities. It constituted about 71%, 69% and 65% respectively. The
savings bank deposits contributed almost a quarter of the total deposits in 2021. Coming to the
advances, the revenue is classified into three main categories: Bills purchased & discounted, cash
credits, overdrafts, and loan repayable on demand, and term loan. Among these, cash credits, overdrafts
and loan repayable on demand contributed nearly half of the total advances received in 2021 and 2022
while its value was the same as term loan (46%) in 2020.
Net Interest Income: The Net Interest Income (NII) is the difference between the interest earned due to
the interest-bearing assets and the interest expensed due to the interest-bearing liabilities. The Interest-
bearing assets include loans, mortgages, and securities while the liabilities include customer deposits.
Net Interest Income (NI) = Interest Revenue-Interest Expenses
Net Interest Margin: The Net interest Margin (NIM) is the ratio of the difference between the interest
earned due to the interest-bearing assets and the interest expensed due to the interest-bearing
liabilities to the average earning assets of the bank. In other words, NIM is the ratio of NII divided by the
earning assets
Interest Revenue−Interest Expenses
Net Interest Margin (NIM) =
Earning assets

Sl. March 31, 2022 March 31, 2021 March 31, 2020
Description
No (in '000) (in '000) (in '000)
  INTEREST EARNED      
I) Interest on advance/bills ₹ 5,06,93,408.00 ₹ 5,76,76,290.00 ₹ 6,15,91,660.00
II) Income on investments ₹ 1,03,98,050.00 ₹ 1,30,90,027.00 ₹ 1,39,10,588.00

III) ₹ 33,37,314.00 ₹ 4,78,465.00 ₹ 3,99,702.00

Interest on balances with
 RBI and other banks
IV) Other ₹ 14,36,603.00 ₹ 18,09,665.00 ₹ 17,36,031.00
  TOTAL ₹ 6,58,65,375.00 ₹ 7,30,54,447.00 ₹ 7,76,37,981.00
         
  INTEREST EXPENDED      
I) Interest on deposits ₹ 4,06,23,714.00 ₹ 4,46,62,611.00 ₹ 5,05,24,137.00
Interest on RBI/inter-
II) bank borrowings ₹ 40,385.00 ₹ 12,03,977.00 ₹ 9,47,578.00
III) Others ₹ 28,03,704.00 ₹ 31,18,782.00 ₹ 29,91,276.00
  TOTAL ₹ 4,34,67,803.00 ₹ 4,89,85,370.00 ₹ 5,44,62,991.00
         
  EARNING ASSET      
Cash and bank balances
I) with RBI ₹ 3,67,66,056.00 ₹ 3,30,47,093.00 ₹ 2,80,59,835.00
II) Balances with banks ₹ 7,52,68,220.00 ₹ 5,46,31,688.00 ₹ 1,38,37,782.00
III) Investment ₹ 21,44,50,128.00 ₹ 20,32,10,845.00 ₹ 20,62,52,745.00
IV) Advances ₹ 59,99,33,907.00 ₹ 58,05,64,761.00 ₹ 64,43,94,729.00
  TOTAL ₹ 92,64,18,311.00 ₹ 87,14,54,387.00 ₹ 89,25,45,091.00

The Net Interest Income and the Net interest Margin are calculated as follows:
Sl. March 31, 2022 March 31, 2021 March 31, 2020
Description
No (in '000) (in '000) (in '000)
1 Net Interest Income ₹ 2,23,97,572.00 ₹ 2,40,69,077.00 ₹ 2,31,74,990.00
2 Net Interest Margin 2.42% 2.76% 2.60%

Other Income: The interest earned from its assets make up majority of the earnings of South Indian
Bank. But the bank also has other sources of income as well.
Sl. March 31, 2022 March 31, 2021 March 31, 2020
Description
No (in '000) (in '000) (in '000)
Commission, Exchange &
I) brokerage ₹ 4,71,836.00 ₹ 5,00,184.00 ₹ 5,27,291.00
 II) Net profit on investments ₹ 6,61,645.00 ₹ 46,32,311.00 ₹ 39,01,492.00
Net profit on sale of land,
III) buildings, and other assets ₹ 1,476.00 ₹ 3,081.00 ₹ 4,160.00
Profit/Loss on exchange
IV) transaction ₹ 6,01,233.00 ₹ 4,80,902.00 ₹ 4,47,488.00

V) Misc. Income ₹ 86,04,841.00 ₹ 66,75,209.00 ₹ 55,77,072.00

  TOTAL ₹ 1,03,41,031.00 ₹ 1,22,91,687.00 ₹ 1,04,57,503.00
The income from other sources makes up around 13-15% of the total income for the bank. The income
was higher in 2021 compared to other years. This can be attributed to high profits from investments.
The Misc. income increased from 6675 Cr to 8604 Cr in 2022. The other income category does have a
significant impact on the profitability of the company. The bank would no longer remain profitable and
would be in loss in case other income did not exist.
March 31, 2022 March 31, 2021 March 31, 2020
Sl. No Description
(in '000) (in '000) (in '000)
I) Total Gross NPA ₹ 3,64,80,940.00 ₹ 4,14,32,420.00 ₹ 3,26,17,660.00
II) Net NPA ₹ 1,77,77,700.00 ₹ 2,73,45,240.00 ₹ 2,15,07,800.00
Gross NPA added during
III) the year ₹ 2,15,92,270.00 ₹ 2,33,99,890.00 ₹ 1,36,95,900.00
Provisions made for the
IV) year ₹ 1,58,66,780.00 ₹ 1,53,95,150.00 ₹ 1,09,13,690.00
V) NPI ₹ 21,83,540.00 ₹ 26,77,470.00 ₹ 12,20,600.00
VI) Provision for NPI ₹ 18,99,670.00 ₹ 22,45,580.00 ₹ 8,32,000.00

Non-Performing Assets are the assets where the principle and the interest payments have remained
overdue for more than 90 days. Non-Performing Investments are the investments where the interest or
instalments have gone due for more than 90 days.
From the table, we can see that the provision made for the year accounted for 74% of gross NPA added
during 2022, 66% during 2021 and 80% added during 2020. The provision % constantly increased for
NPIs. For Non-performing investments, the provision accounted for 87% of NPI during 2022, 84% during
2021 and 68% during 2020
 Comments on Profitability
The bank’s profit number have decreased over the course of 3 years. The reason that may have
happened because of the following reasons:
 The terms loans have decreased over time and the interest earned would have been impacted due
to that
 Priority sector has been given more importance in the recent times and that requires significant
expenses.
 Less emphasis is given to advances and deposits outside of India and the bank majorly relies on
domestic product and services.
 The decrease in borrowings from financial institutions has also been decreasing and that may impact
the cash flow of the company.
 The net profit margin has consistently in past three years to covid impact and decrease in Repo rate
& Increase in Cash reserve ratio by RBI to tackle the slowdown in economy due to the pandemic.
 The bank had highest Net interest income in past three years in FY-21. This can be explained from
the fact during this financial year the RBI had lowered the rates thus banks had to increase their
interest rates.

Net Profit Margin

Mar '20 1.34

Non Interest Income / Total Loan Turnover

Interest Spread
Funds Net Interest income / Total
Mar '21 0.84 Funds
Mar '20 0.12
Mar '20 5.99
Mar '20 1.11Mar '22 0.68
Mar '20 2.46

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6

Mar '21 0.12

Mar
Mar '21
'21 6.94
1.24
Mar '21 2.53

Mar '22 1.07 6.27 Mar '22 0.11

Mar '22 2.31

0.95
5.4 5.61 5.8 1.05 6 1.1
6.2 1.15
6.4 6.61.2 6.8 1.257 1.3
7.2 0.104
2.2 0.106
2.250.1082.30.11 0.112
2.35 0.114
2.4 0.116 0.118 2.5
2.45 0.12 0.122
2.55
 Total percentage in
Advances to different sectors Total advances
1 Agriculture and allied activities
13,177.73 21%
2 Advances to industries sector eligible as priority sector lending
12,951.24 21%
2.a Textile
2,636.46 4%
2.b Basic Metal
1,758.22 3%
2.c Infra
1,908.71 3%
3 Services
23,220.97 38%
3.a Professional
4,162.27 7%
3.b Trade
8,026.22 13%
3.c NBFC
5,614.55 9%
4 Personal loans
12,465.82 20%
4.a Housing Loan
4,081.99 7%
4.b Other Personal loans incl. Gold Loans
8,383.83 14%

TOTAL 61,815.76 100%

Division of advances to different sectors

20% 21%

21%

38%

1 Agriculture and allied activities

2 Advances to industries sector eligible as priority sector lending
3 Services
4 Personal loans
As seen from the above table, South Indian Bank has provided most advances to the Services sector
which forms 38% of the total advances. Under services, sub-sector trade has the highest percentage of
advances at 13%.
We can see that advances to agriculture sector is the second highest after services sector and there is
not significant difference between advances to agriculture sector and advances to industries. Advances
to textile industry form the majority of advance to industries followed by infrastructure and basic metal.
Lastly, personal loans form the least percentage of advances at 20%.