A PROJECT REPORT

ON
"UNIVERSAL BANKING"
AT
INDIAN BANK
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF

BACHELOR OF COMMERCE (E-COMMERCE)

Submitted by
MIRZA IBRAHIM ALI BAIG
1062-20-411-034
MOHAMMED IDREES KHAN
1062-20-411-002
MOHD MUSTAFA ALI
1062-20-411-020
MOHD NAYEEM UDDIN
1062-20-411-018

Under the Guidance of

Mrs. BUSHRA FATIMA
(ASSISTANT PROFESSOR)

DEPARTMENT OF BUSINESS ADMINISTRATION

ANWAR-UL- ULOOM DEGREE COLLEGE (AUTONOMOUS)
(AFFILIATED TO OSMANIA UNIVERSITY)
NEW MALLEPALLY, HYDERABAD
(2020-2023)
ANWARUL ULOOM DEGREECOLLEGE
An Autonomous Muslim Minority Institution
(Affiliated to Osmania University)
# 11-3-918, New Mallepally, Hyderabad – 500 001., A.P., INDIA
Tel : 23340134, 30582660, 30582678, 30582666, 23342285 Fax: 23342750

Ref No………………………………. Date:……………………………..

CERTIFICATE

This is to certify that MIRZA IBRAHIM ALI BAIG bearing Roll No: 1062-20-
411-034 , MOHAMMED IDREES KHAN bearing Roll No: 1062-20-411-002 ,
MOHD MUSTAFA ALI bearing Roll No: 1062-20-411-020 & MOHD
NAYEEM UDDIN bearing Roll No: 1062-20-411-018 has successfully completed
they project work entitled “UNIVERSAL BANKING., and submitted in partial
fulfillment of the requirement for the award of the Degree of Bachelor of Commerce
(E-COMMERCE) Administration by Osmania University, Hyderabad.

This is a bonafide work completed under my guidance and supervision.

Signature of Internal Guide Signature of H.O.D

Signature of Principal
 DECLARATION

We, MIRZA IBRAHIM ALI BAIG bearing Roll No: 1062-20-411-034 ,

MOHAMMED IDREES KHAN bearing Roll No: 1062-20-411-002 ,
MOHD MUSTAFA ALI bearing Roll No: 1062-20-411-020 &
MOHD NAYEEM UDDIN bearing Roll No: 1062-20-411-018 the
undersigned, hereby declare that the project report entitled
"UNIVERSAL BANKING " carried out at INDIAN BANK is our
original work written and submitted by us in partial fulfillment of the
award of the degree of Bachelor of Commerce (E-COMMERCE) from
Anwar-Ul-Uloom Degree College, (Autonomous). We are also declare
that this project has not been submitted earlier in any other university
or institution.

Date:

MIRZA IBRAHIM ALI BAIG

1062-20-411-034

MOHAMMED IDREES KHAN

1062-20-411-002

MOHD MUSTAFA ALI

1062-20-411-020

MOHD NAYEEM UDDIN

1062-20-411-018
 ACKNOWLEDGEMENT
We would like to acknowledge, our sincere thanks to Mr. Mohammed Abdul
Razzak, Principal of "Anwar-UI-Uloom Degree College (Autonomous)" for the
extended helping hand for the development of our career.
We wish to express our sincere thanks to Dr. Mohammed Ahmed Mohiuddin
H.O.D and our express and sincere thanks to our Project Guide
Mrs. BUSHRA FATIMA for sharing her valuable dine in providing her valuable
Knowledge, guidance and excellent support for the successful completion of my
project.

We express our sincere thanks to Mr. K V R MURTHY of INDIAN BANK for

sharing his valuable time in providing his valuable suggestions, information and
excellent co-operation for the successful completion of my Project.

We would like to acknowledge, our sincere thanks to all faculty members of "Anwar-
UI-Uloom Degree College (Autonomous)" who have extended helping hand in
giving the information being part of the study. We would like to express our gratitude
for all the people, who extended unending support at all stages of the project.

MIRZA IBRAHIM ALI BAIG

1062-20-411-034

MOHAMMED IDREES KHAN

1062-20-411-002

MOHD MUSTAFA ALI

1062-20-411-020

MOHD NAYEEM UDDIN

1062-20-411-018
 ABSTRACT

It is a multipurpose and multi-functional financial supermarket providing both

'Banking and Financial Services' through a single window. As per the World Bank,"
In Universal Banking, large banks operate extensive network of branches, provide
many different services, hold several claims on firms (including equity and debt) and
participate directly in the Corporate Governance of firms that rely on the banks for
funding or as insurance underwriters."In a nutshell, a Universal Banking is a
superstore for financial products, under one roof. Corporates can get loans and avail
of other handy services, while individuals can bank and borrow. It includes not only
services related to savings and loans but also investment. However in practice the
term 'Universal Banking' refers to those banks that offer wide range of financial
services beyond the commercial banking functions like Mutual Funds, Merchant
Banking, Factoring, Insurance, Credit Cards, Retail loans, Housing Finance, Auto
Loans, etc.The entry of banks into the realm of financial services was followed very
soon after Liberalization in the economy. Since the early 1990s, structural changes of
profound magnitude came to be witnessed in global banking systems. Large scale
mergers, amalgamations and acquisitions among the banks and financial institutions
resulted in the growth in size and competitive strengths of the merged entities. There
thus emerged new financial conglomerates that could maximize Economies of Scale
and Scope by building the production of financial services organization called
Universal Banking.By the mid-1990s, all the restrictions on Project Financing were
removed and banks were allowed to undertake several activities in house. Reforms in
the insurance sector in the late 1990s, and opening up of this field to private and
foreign players also resulted in permitting banks to undertake sale of Insurance
products. At present, only an 'arm’s length' relationship between a bank and insurance
entity has been allowed by the regulatory authority, i.e.-IRDA (Insurance Regulatory
& Development Authority).

The phenomenon of Universal Banking as a distinct concept, as different from

Narrow Banking came to the forefront in the Indian context with II Narsimham
Committee (1998) and later the Khan Committee (1998) reports recommending
consolidation of the banking industry through mergers and integration of financial
activities.
 TABLE OF CONTENTS

CHAPTER NO DESCRIPTION PAGE NO

CHAPTER - I INTRODUCTION 1

CHAPTER - II REVIEW OF LITERATURE 9

CHAPTER - III RESEARCH METHODOLOGY 17

CHAPTER - IV THEORETICAL FRAME WORK 23

CHAPTER – V COMPANY PROFILE 26

CHAPTER - VI DATA ANALYSIS AND INTERPRETATION 31

48
CHAPTER - VII RESEARCH FINDINGS & SUGGESTIONS

CHAPTER -VIII SUGGESTIONS & RECOMMENDATIONS 52

BIBLIOGRAPHY 54
 CHAPTER -I
INTRODUCTION

1
 INTRODUCTION

Banking institutions are dominant operators in modern financial systems and important
business entities in an economy. They are divided into two separate types of institutions,
namely commercial banks and investment banks in some countries, while in other countries
such division is vague or even non-existent. The so-called universal banks engage in all
forms of commercial and investment banking, not only including lending and deposit taking,
but also underwriting securities and securities trading. In particular, some universal banks
may own significant equity interests in companies with voting rights.

Germany is the typical example running the universal banking system. Canada and
Switzerland, among others, are noteworthy examples moving towards universal banking.
Despite the growing popularity of universal banks in a global context, the United States
continues to block commercial banks from engaging in securities transaction and
underwriting. Hence, it is argued that the practice of universal banking may not be suitable
for all financial systems.

This project is designed to discuss primary practices of universal banks and their relevance to
banking activities in India. The objective is to analyze whether the concept of Universal
Banking, if implemented by Indian banks, have potential for Indian market consumers.

THE NEED OF UNIVERSAL BANKING

To make pace with the present need of corporates.

Now a day, there is a large market of General Insurance and Project Financing. As only a
bank is not able to fund it properly, due to insufficient asset base and net worth. So, to
overcome this, they form a consortium of lenders, for funding the Greenfield and Brownfield
projects. (In the month June a consortium of 20 lenders led by SBI has committed a 14 year
project finance term loan for a special purpose company promoted BPCL, which is starting a
Greenfield project in Madhya Pradesh) The point of consideration here is the consortium
partner – Bank of Baroda, Bank of Maharashtra, Central Bank of India, LIC, Indian Overseas
Bank. Most of the partners are nationalized banks.

It means there is a need of developing a strong domestic financial system to cater the need of
the corporate sector. It is possible if banks have strong capital/asset base. It fortifies the
2
 importance of Universal Banking. Along with that, the ongoing clamor of Mergers and
Acquisitions in the corporate sector, this needs financial assistance as well as consulting.
More financial institutional investors entering in India and several Joint Ventures are being
started between domestic companies and global firms. A number of issues may crop up
between from the signing up of the sale purchase document and the deal actually coming up.
Near about 4% could be getting aborted (e.g.-the failure of Jet Airways and Air Sahara is one
of that. So, the corporates are in need of takers to insure the associated transactions of
Mergers and Acquisitions)

Now International insurers are offering cover in India against the loss arising out of Mergers
and Acquisitions and Breakups. (E.g.-Howden India leading International brokers, which has
introduced transactional insurance of M & A, is now finding takers for their insurance cover)
Indian banking, with the help of Universal Banking has technology edge and better business
models, compared to pre-liberalizations era, today they are able to attract and gain more
volumes simply because they meet their customers' requirements better than anyone else.

THE NEED BEHIND THE ADVENT OF UNIVERSAL BANKING

1. To make pace with the present need of corporate.

Now a day, there is a large market of General Insurance and Project Financing. As only a
bank is not able to fund it properly, due to insufficient asset base and net worth. So, to
overcome this, they form a consortium of lenders, for funding the Greenfield and Brownfield
projects. (In the month June a consortium of 20 lenders led by SBI has committed a 14 year
project finance term loan for a special purpose company promoted BPCL, which is starting a
Greenfield project in Madhya Pradesh) The point of consideration here is the consortium
partner – Bank of Baroda, Bank of Maharashtra, Central Bank of India, LIC, Indian Overseas
Bank. Most of the partners are nationalized banks.

It means there is a need of developing a strong domestic financial system to cater the need of
the corporate sector. It is possible if banks have strong capital/asset base. It fortifies the
importance of Universal Banking. Along with that, the ongoing clamor of Mergers and
Acquisitions in the corporate sector, this needs financial assistance as well as consulting.
More financial institutional investors entering in India and several Joint Ventures are being
started between domestic companies and global firms. A number of issues may crop up
between from the signing up of the sale purcha3se document and the deal actually coming up.
 Near about 4% could be getting aborted (e.g.-the failure of Jet Airways and Air Sahara is one
of that. So, the corporate are in need of takers to insure the associated transactions of Mergers
and Acquisitions)

Now International insurers are offering cover in India against the loss arising out of Mergers
and Acquisitions and Breakups. (E.g.-HowdenIndia leading International brokers, which has
introduced transactional insurance of M & A, is now finding takers for their insurance cover)
Indian banking, with the help of Universal Banking has technology edge and better business
models, compared to pre-liberalizations era, today they are able to attract and gain more
volumes simply because they meet their customers' requirements better than anyone else. If
the newer and foreign players can do that, then why can't bigger DFIs try their hands on it?

Liberalization and the banking reforms have given new avenues to Development Finance
Institutions (DFIs) to meet the broader market. They can avail the options to involve in
deposit banking and short term lending as well. DFIs were set up with the objective of taking
care of the investment needs of industries. They have build up expertise in Merchant Banking
and Project Evaluation.
So, saddled with obligations to fund long gestation projects, the DFIs have been burdened
with serious mismatches between their assets and liabilities of the balance sheet. In this
context, the Narsimham Committee II had suggested DFIs should convert into banks or Non-
Banking Finance Companies. Converting of these DFIs into Universal Banks will grant them
ready access to cheap retail deposits and increase the coverage of the advances to include
short term working capital loans to corporate with greater operational flexibility. At that time
DFIs were in the need to acquire a lot of mass in their volume of operations to solve the
problem of total asset base and net worth. So, the emergence of Universal Banking was the
solution for the problem of banking sector.

2. Funds Mobilization and Credit Rationing

The traditional activities of banks are deposit taking and lending. Deposits are liabilities of
banks, while funds extended by banks to borrowers are their assets. The fundamental function
of banks is to mobilize available funds from the surplus units to the deficit units. A “must”
technique when banks reallocate funds is credit rationing.

Bank credit is extended to the “good” ones, who are more likely to settle their debt principals
4
and interests. Default risk is a primary conce rn of banks when financing the deficit units.
Asymmetric or imperfect information is the factor behind default risk. In reality, financial
markets are not necessarily efficient under prefect information. Information is costly as well
as not available to everyone. Under this circumstance, banks with their advantages in
collecting information could minimize default risk to certain level. To a further extent, some
banks would insist to monitor their borrowers and take certain control over their borrowers‟
businesses.

There are three basic mechanisms that banks apply in order to monitor their
borrowers. First, a bank can directly obtain information of the borrower‟s cash flowwhen
the bank itself handles the borrower‟s deposit account. The second arrangementis more
formal as restrictive covenants are stipulated in a loan contract. The borroweris required to
maintain a pre-set range of liquidity determined by the bank. Lastly, the bank is granted the
right to monitor the operation of the enterprises that borrowfrom them. Universal banks often
apply the last mechanism and maintain a close andextensive connection with borrowers. Such
connection will promise certain extent oflender control over those enterprises, and hence,
universal banks are argued to be inadvantageous position to overcome the problems led by
the absence of reliableinformation and facilitate effective funds mobilization

A SOLUTION OF UNIVERSAL BANKING COUPLED WITH SWOT

The solution of Universal Banking was having many factors to deal with which further
categorized under Strengths, Weaknesses, Opportunities and Threats.
STRENGTHS:

*Economies Of Scale:The main advantage of Universal Banking is that it results in greater

economic efficiency in the form of lower cost, higher output and better products. Various
Reserve Banks Committees and reports in favor of Universal Banking, is that it enables banks
to exploit economies of scale and scope. It means a bank can reduce average costs and
thereby improve spreads if it expands its scale of operations and diversifying activities.

*Profitable Diversions:By diversifying the activities, the bank can use its existing expertise
in one type of financial service in providing other types. So, it entails less cost in performing
all the functions by one entity instead of separate bodies.

* Resource Utilization:A bank possesses the information on the risk characteristics

5
of the clients, which it can use to pursue other activities with the same client. A data
collection about the market trends, risk and returns associated with portfolios of Mutual
Funds, diversifiable and non diversifiable risk analysis, etc are useful for other clients and
information seekers. Automatically, a bank will get the benefit of being involved in Research.

*Easy marketing on the foundation a of Brand name:A bank has an existing network of
branches, which can act as shops for selling products like Insurance, Mutual Fund without
much efforts on marketing, as the branch will act here as a parent company or source. In this
way a bank can reach the remotest client without having to take recourse ton an agent.

*One stop shopping: The idea of 'one stop shopping' saves a lot of transaction costs and
increases the speed of economic activities. It is beneficial for the bank as well as customers.

*Investor friendly activities:Another manifestation of Universal Banking is bank holding

stakes in a firm. A bank's equity holding in a borrower firm, acts as a signal for other
investors on to the health of the firm, since the lending bank is in a better position to monitor
the firm's activities.

WEAKNESSES:

*Grey area of Universal Bank:The path of Universal Banking for DFIs is strewn with
obstacles. The biggest one is overcoming the differences in regulatory requirements for a
bank and DFI. Unlike banks, DFIs are not required to keep a portion of their deposits as cash
reserves.

*No expertise in long term lending: In the case of traditional project finance an area where
DFIs tread carefully, becoming a bank may not make a big difference. Project finance and
Infrastructure Finance are generally long gestation projects and would require DFIs to borrow
long term. Therefore, the transformation into a bank may not be of great assistance in lending
long-term.

*NPA problem remained intact: The most serious problem of DFIs have had to encounter
is bad loans or Non Performing Assets (NPA). For the DFIs and Universal Banking or
installation of cutting-edge-technology in operations are unlikely to improve the situation
concerning NPAs. 6
Most of the NPAs came out of loans to commodity sectors, such as steel, chemicals, textiles,
etc. the improper use of DFI funds by project promoters, a sharp change in operating
environment and poor appraisals by DFIs combined to destroy the viability of some projects.
So, instead of improving the situation Universal Banking may worsen the situation, due to the
expansion in activities banks will fail to make thorough study of the actual need of the party
concerned, the prospect of the business, in which it is engaged, its track record, the quality of
the management, etc.

INDIAN BANK suffered the least in this section, but the IDBI has got worst hit of NPAs,
considering the negative developments at Dabhol Power Company (DPC)

THREATS:

*Big Empires:Universal Banking is an outcome of the mergers and acquisitions in the

banking sector. The Finance Ministry is also empathetic towards it. But there will be big
empires which may put the economy in a problem. Universal Banks will be the largest banks,
by their asset base, income level and profitability there is a danger of 'Price Distortion'. It
might take place by manipulating interests of the bank for the self interest motive instead of
social interest. There is a
threat to the overall quality of the products of the bank, because of the possibility of turning
all the strengths of the Universal Banking into weaknesses. (e.g. - the strength of economies
of scale may turn into the degradation of qualities of bank products, due to over expansion.
If the banks are not prudent enough, deposit rates could shoot up and thus affect profits. To
increase profits quickly banks may go in for riskier business, which could lead to a full in
asset quality. Disintermediation and securitization could further affect the business of banks.

OPPORTUNITIES:

*To increase efficiency and productivity:Liberalization offers opportunities to banks. Now,

the focus will be on profits rather than on the size of balance sheet. Fee based incomes will be
more attractive than mobilizing deposits, which lead to lower cost funds. To face the
increased competition, banks will need to improve their efficiency and productivity, which
will lead to new products and better services.
7
*To get more exposure in the global market:In terms of total asset base and net worth the
Indian banks have a very long road to travel when compared to top 10 banks in the world.
(SBI is the only Indian bank to appear in the top 100 banks list of 'Fortune 500' based on
sales, profits, assets and market value. It also ranks II in the list of Forbes 2000 among all
Indian companies) as the asset base sans capital of most of the top 10 banks in the world are
much more than the asset base and capital of the entire Indian banking sector. In order to
enter at least the top 100 segment in the world, the Indian banks need to acquire a lot of mass
in their volume of operations.

Pure routine banking operations alone cannot take the Indian banks into the league of the Top
100 banks in the world. Here is the real need of universal banking, as the wide range of
financial services in addition to the Commercial banking functions like Mutual Funds,
Merchant banking, Factoring, Insurance, credit cards, retail, personal loans, etc. will help in
enhancing overall profitability.

*To eradicate the 'Financial Apartheid:A recent study on the informal sector conducted by
Scientific Research Association for Economics (SRA), a Chennai based association, has
found out that, 'Though having a large number of branch network in rural areas and urban
areas, the lowest strata of the society is still out of the purview of banking services. Because
the small
businesses in the city, 34% of that goes to money lenders for funds. Another 6.5% goes to
pawn brokers, etc.

The respondents were businesses engaged in activities such as fruits and vegetables vendors,
laundry services, provision stores, petty shops and tea stalls. 97% of them do not depend the
banking system for funds. Not because they do not want credit from banking sources, but
because banks do not want to lend these entrepreneurs. It is a situation of Financial Apartheid
in the informal sector. It means with the help of retail and personal banking services
Universal Banking can reach this stratum easily.

8
 CHAPTER II
REVIEW OF LITERATURE

9
 REVIEW OF LITERATURE

Universal Banking is a multi-purpose and multi-functional financial supermarket (a company

offering a wide range of financial services e.g. stock, insurance and real-estate brokerage)
providing both banking and financial services through a single window.
As per the World Bank, “In Universal Banking, large banks operate extensive network of
branches, provide many different services, hold several claims on firms(including equity and
debt) and participate directly in the Corporate Governance of firms that rely on the banks for
funding or as insurance underwriters”.
In a nutshell, a Universal Banking is a superstore for financial products under one roof.
Corporate can get loans and avail of other handy services, while can deposit and borrow. It
includes not only services related to savings and loans but also investments.

However in practice the term 'universal banking' refers to those banks that offer a wide range
of financial services, beyond the commercial banking functions like Mutual Funds, Merchant
Banking, Factoring, Credit Cards, Retail loans, Housing Finance, Auto loans, Investment
banking, Insurance etc. This is most common in European countries.

For example, in Germany commercial banks accept time deposits, lend money, underwrite
corporate stocks, and act as investment advisors to large corporations. In Germany, there has
never been any separation between commercial banks and investment banks, as there is in the
United States.

OVERVIEW

Universal banking is the opposite of narrow banking. Narrow banking legislation would
require banks to back their liabilities with safe assets, such as government securities. All
other bank lending functions would be transferred to mutual-fund-like institutions that were
not insured by the government. This arrangement would allow the government to base its
costly deposit insurance programs without jeopardizing the safety of the banks. Narrow
banking is the modern and more elaborated version of the “100 percent reserve banking”
principle, invoked by early economists to correct the inadequacy of money reserve against the
stock of banknotes in circulation. The benefits of narrow banking are:
10
First, by locking bank assets in high-quality instruments, narrow banking regulation would
minimize bank liquidity and credit risk.

11
Second, since narrow banks would be prohibited from supplying risky loans and would
collateralize deposits with high-quality assets, confidence in the value of their liabilities is
tend to be increased.

Third, with payment system access restricted to narrow banks, payment would be fully
secure, because payment-system participants would be protected against liquidity, credit, and
settlement risks, and because any shock to non-banks would be isolated, with no systemic
fallout.

In the early nineties, the forces of globalization were unleashed on the hitherto protected
Indian environment. The public sector banks, which had monopoly earlier, then started facing
problems with deteriorating performance. Therefore, the sector was opened up for the private
sector in line with Narsimham Committee‟s recommendations. The protected environment
has given rise to several lacunae in the banking system. Most of the public sector banks were
inefficient in areas of liquidity management. In an administered interest regime, discretion of
management was limited and consequently, the risk parameters in these spheres were unclear
and not quantifiable. The share of private sector banks was not substantial while operations of
foreign banks were also restricted. Staff orientation especially at the branch level is a key
ingredient for success and neither the older private banks nor the nationalized banks were
successful in that respect. It would be pertinent to recapitulate that the nationalized sector had
outlived its utility; in fact they became burdened with unwelcome legacies; customer service
had become a casualty. Thus, there arose a need for computerization, including networking
among the vast branch network. Private banking in this context was viewed as an approach to
overcome the structural and operational shortcomings of the public sector.

The INDIAN BANK ‟s decision to turn itself into a universal bank ushered a new era in the
banking scenario. The second Narasimham Committee noted that the global trends in banking
industry towards consolidation and convergence led to the dismantling of boundaries among
suppliers of various financial products. The Khan Working Group also recommended a
progressive move towards universal banking and development of enabling regulatory
framework. It is contended that universal banking will result in greater economic efficiency
in the form of lower cost, higher output, and better products and therefore is believed to be
the panacea for beleaguered development financial institutions (DFIs).
12
There is a fear that such institutions, by virtue of their sheer size, would gain monopoly in the
market, which can have significant and undesirable consequences for economic efficiency.
Also, combining commercial and investment banking can give rise to conflict of interests.
Conflict of interests was one of the major reasons for introduction of Glass-Steagall Act of
1934 in United States. The Act prohibited commercial banks from collaborating with full-
service brokerage firms or participating in investment bank activities. The Glass-Steagall Act
was enacted during the Great Depression. It protected bank depositors from the additional
risks associated with security transactions. The Act was dismantled in 1999. Consequently,
the distinction between commercial banks and brokerage firms has blurred; many banks own
brokerage firms and provide investment services. Internationally, the concept was in the
financial segment. However, in India, the issue was more of access to short-term funds and
payment mechanism than access to long-term funds.

However, the enactment of the Gramm-Leach-Bliley Act (GLBA) in November 1999

effectively repealed the long-standing prohibitations on the mixing of banking with securities
or insurance businesses and thus permitting “broad banking”. The repeal of these prohibitions
are due to the increasingly persuasive evidence from academic studies of the pre Glass-
Steagall era, the recent favourable experience in the U.S. following partial deregulation of
banking activities, the experience of banking systems abroad with broader scopes for banking
activities, and rapid technological change in telecommunications and data processing.

THE CONCEPT OF UNIVERSAL BANKING

The entry of banks into the realm of financial services was followed very soon after the
introduction of liberalization in the economy. Since the early 1990s structural changes of
profound magnitude have been witnessed in global banking systems. Large scale mergers,
amalgamations and acquisitions between the banks and financial institutions resulted in the
growth in size and competitive strengths of the merged entities. Thus, emerged new financial
conglomerates, which could maximize economies of scale and scope by building the
production of financial services organization, called Universal Banking.
By the mid-1990s, all the restrictions on project financing were removed and banks were
allowed to undertake several in-house activities. Reforms in the insurance sector in the late
1990s, and opening up of this field to private and foreign players also resulted in permitting
banks to undertake the sale of insurance pr1o3ducts. At present, only an „arm‟s length
 relationship between a bank and an insurance entity has been allowed by the regulatory
authority, i.e. IRDA (Insurance Regulatory and Development Authority). Universal Banking,
means the financial entities – the commercial banks, DFIs, NBFCs, - undertake multiple
financial activities under one roof, thereby creating a financial supermarket
The entities focus on leveraging their large branch network and offer wide range of services
under single brand name Universal banking generally takes one of the three
forms: -
b. In-house Universal Banking. E.g. Germany
c. Through separately capitalized subsidiaries. E.g. England.
d. Operations carried through a holding company. E.g. USA. (Nair, 1998)

EXAMPLES OF UNIVERSAL BANKS

In line with the growing popularity in merging investment banking, insurance and
commercial banking operations, the number of universal banks have gradually increased.
Universal banks can be broadly categorized in forms of full universal banks, universal-
subsidiary, and holding company

Germany is one of the most commonly cited countries with a full universal banking system.
German universal banks have prevailed before the Second World War. Cable (1985) has an
impressive analysis of the country‟s banking system. German universal banks finance
enterprises mainly in two ways, i.e. current account credit and organization of issues of new
securities. External finance for investment is of great importance to German industrialization
since internal 14
financial resources are obviously inadequate for the development of capital-intensive
industries. As a result, universal banks prove to be a major source of external finance to
enterprises.
Edwards (1996) states that the supply of external finance in the model of universal banking
increases in line with the suppliers‟ controlling power over their borrowers‟ behaviours. In
the case of Germany, the representatives of universal banks on company boards of directors
increase profitability, as this arrangement makes the provision of external finance more
attractive. Edwards also argues that the universal nature enables German banks to improve
information flows within the economy. In other words, the contribution of universal banks to
the economy should not be only measured in terms of external funds they supply but also of
improved information flows as a result of banks‟ improved capability to compare companies
within an industry and across industries within the whole economy.

Supportive evidences show that the universal banking system in Germany benefits the
country‟s industrial development. Stiglitz (1985) points out that default risk generally
decreases in the presence of banks‟ control over enterprises but the concern of banks
might overshadow the profitability objective of enterprises. Banks‟ prime concern is the
repaying ability of enterprises and not necessarily the maximization of enterprise profitability.
As Stiglitz emphasizes: “Lenders are only concerned with the bottom part of the tail of the
distribution returns. Thus, they may require that the firm undertakes projects with relatively
little (bottom-tail) risk, even though the expected return is much lower.” To conclude, Stiglitz
suggests that the effects of universal banks in boosting industrialization might be overstated.

On the other hand, the story can be rewritten in other way. The prudent governance of
universal banks is not solely for their own good. Shareholders of large enterprises are not
necessarily the managers because shares are usually widely held by an enormous number of
individuals or institutions. Most large enterprises will hire managers, who usually are
financial experts, to handle daily business activities. The underlying problem is that these
managers may be less concerned about long-run prospects of the company while short-run
profitability is of their first priority. Their over-aggressiveness in maximizing short-run
profits could increase the risk of bankruptcy. The representation of banks thus acts as a buffer
and promotes the long-term financial health of enterprises.

Universal banks play a dominant role in the G1e5rman financial system. Yet not all financial
systems are as bank-oriented as the German‟s. For example, the United States has a financial
system where markets are of great importance. Boyd et al. (1998) investigate whether the
United States should be transformed into a universal banking system. It is argued that one
concern that could arise is the lack of control over moral hazard problems, which could easily
come up with the close relationship between banks and their borrowers. Furthermore, the
problems led by moral hazard might have negative impacts on the financial sector and also on
other economic sectors. As Boyd et al. (1998) argue, “…regulators have often expressed the
concern that the establishment of universal banking in the U.S. could extend the
„governmental safety net‟ far too broadly, that moral hazard problems could be exacerbated
as a consequence, and that they could, potentially, be transmitted beyond the financial
sector.” After investigating the severity of moral hazard problems in association with the
universal banking system, it is suggested that when banks are allowed to take equity positions
and participate in the decision-making process of the companies, their incentives to control
moral hazard problems could be attenuated seriously. In addition, banks with controlling
rights might sometimes lead enterprises to misallocate their funds for the sole benefits of the
banks.

Contrasts to the situation in the United States, universal banks are becoming more important
in the financial system of Switzerland. Rime and Strioh (2001) examine the production
structure of 290 banks from 1996 to 1999 through the performances of the following areas:
cost efficiency, profit efficiency, economies of scale, and economies of scope. However, their
empirical results indicate that around 40% of costs reflect cost inefficiency and about one-
half of potential profits are foregone because of profit inefficiency in their model, which
includes a “universal” measure of bank output. In addition, there is little evidence of
significant gains from either scale or scope economies for the largest banks in Switzerland.

The difficulty in monitoring large universal banks is also a major concern. The consequence
of inefficient monitoring could lead to financial instability. Benston (1994) states that
universal banks tend to be larger so that collapse of a single bank of this type could cause
substantial distress in the financial system. When several of those large universal banks are to
collapse, this will greatly increase the risk to the economy‟s payments system. At the same
time, it is more difficult to regulate universal banks because of their close and complex ties to
businesses. Hence, financial regulators either have to regulate universal banks very tightly,
6 ith the possibility of a taxpayer bailout.
thus hindering economic efficiency, or be faced1w
 CHAPTER III

RESEARCH METHODOLOGY

17
 OBJECTIVES OF THE STUDY

 Analytical observation of products related to day-to-day operation of INDIAN BANK

Bank Limited.
 Comparing and evaluating the real operation with the ideal one.
 To analyze the profitability of different products and services offered by INDIAN
BANK
 To come out with valuable suggestions for improvement.
 To position a bank in terms of the progress made by it in the direction of Universal
Banking.
 To examine the risk exposure of banks.
 To critically examine the existing debate on Universal banking in the context of the
samples studied.
 To study the importance and how banking change into a universal bank.

18
 NEED FOR THE STUDY

 Ever since the financial sector reforms were introduced in early 90's the banking sector
saw the emergence of new generation private sector banks. These banks gained at most
popularity as they have technology edge and better business models when compared to
public sector banks and the most important thing is they are able to attract more volumes
simply because they meet their customers requirements under one roof.
 If the newer players can do that then why cant the bigger players like the Development
Financial Institutions (DFIs) try their hands on it? Here comes the concept of universal
banking, its emergence, merits and related issues.
 The paper focuses on understanding the concept of universal banking in India and
attempts to explain the regulatory role, regulatory requirements, key duration and
maturity distinction and lastly the optimal transition path. The paper also gives an
overview of the international experience and argues in favour of developing a strong
domestic financial system in order to compete in the global market.

19
 SCOPE OF THE STUDY

 A system of banking where banks are allowed to provide a variety of services to

their customers. In universal banking, banks are not limited to just loans, checking
and savings accounts, and other similar activities, but are
allowed to offer investment services as well. Universal banking is less common in
the United States than in Europe.
 Universal Banking is a multi-purpose and multi-functional financial supermarket (a
company offering a wide range of financial services e.g. stock, insurance and real-
estate brokerage) providing both banking and financial services through a single
window.

 However in practice the term 'universal banking' refers to those banks that offer a
wide range of financial services, beyond the commercial banking functions like
Mutual Funds,

20
 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY USED IN PROJECT

Ho. There is no difference between observed and expected frequencies.

H1: there is difference between observation and expectation

Case study method has been adopted to carry out the study. Both primary and secondary data
have been used to complete the study.

Primary data: Primary data was collected through interaction with personnel who are
working in finance and Accounts Departments of the organization.

Secondary data: Secondary data was collected from the company annual reports &
other relevant records. Afterwards, the data collected is processed and analyzed by using
appropriate analytical tools and techniques so as to examine the efficiency. The present study
was carried out for a period of thirty days in a prestigious organization i.e. INDIAN BANK

Proposed statistical Tools for the study

Descriptive statistics- mode , percentages, frequencies, bar graphs and pie charts
Mann-Whitney Test
Correlation Analysis
Chi-square
Ratio Analysis

TOOLS USED IN THE ANALYSIS

 Statistical tools
 Financial tools

Research gap
Period of study
4 years data Time gap 2017 completed study from 2017_2021

21
 LIMITATIONS OF THE STUDY

1. As it is a public sector bank, the investigation faced delicacy of setting adequate information.

2. The bank has provided some information only due to confidentiality.

3. Time period specified for the study is limited.

4. The failure of a larger institution could have serious ramifications for the entire system in that

if one universal bank were to collapse, it could lead to a systemic financial crisis. Thus,

Universal Banking could subject the economy to the increased systemic risk.

5. Universal banks may tend to work primarily with large established customers and ignore or

discourage smaller and newly established businesses.

6. Universal banks could use such practices as limit pricing or predatory pricing to prevent

smaller specialized banks from serving the market. This argument mainly stems from the

economies of scale and scope.

22
 CHAPTER IV

THEORETICAL FRAME WORK

23
 THEORETICAL FRAME WORK

A universal bank participates in many kinds of banking activities and is both a commercial
bank and an
investment bank as well as providing other financial services such as insurance.
Banking history as a field of inquiry is the historical study of banks and other financial
intermediaries, of bankers and financiers, and of the business of banking and the banking of
business. Often considered a subfield of business history, scholars who self-identify as
banking historians traditionally craft context-rich descriptions of the operations of a single
bank or a country‟s entire banking sector, or write historical narratives recounting an
important chain of events at some critical juncture in the history of that bank or sector.
Banking historians usually rely on qualitative archival evidence and public sources written by
key decision-makers, and outside observers, contemporary to the events being described. This
scholarly tradition tends to be idiographic in nature, focusing on contingency and agency.
My aim here is to broaden the definition of banking history to include a wider set of
subject matters and epistemological traditions. In particular, I am keen for banking historians
to acknowledge and draw on social science approaches to history that are more nomothetic in
nature, that theorise and generalise. I attempt to do this by cataloguing and describing all
journal articles published since the year 2000 that in some way involve the history of
banking.
I include articles that many banking historians may themselves not identify as constituting
banking history, but nevertheless in my view touch on the history of banks, bankers and
banking in important ways. By systematically categorising all scholarly banking histories
along several dimensions, this essay serves as a map on which banking historians can plot
where their work fits in the broader research universe, and identify research niches that are
rife for scholarly exploration in the decades to come.
In a recent exchange on the future of business history between De Jong et al. (2016) and
Decker et al. (2016), the latter warn that business history should not uncritically adopt the
epistemological approach of the New Economic History. They advocate instead for a
plurality
in research methods. I agree with such sentiment, but wish to augment their conclusions by
pushing explicitly for a greater mutual understanding among scholars who use different
research approaches to write histories of banks, bankers and banking. Echoing Rowlinson et
24
al. (2015), theories from the social sciences can be very useful in the construction of
narratives that explain singular events, while narratives themselves can be analysed by social
scientist as data to inform generalisations. By working together or at least in tandem, there is
potential for both idiographic and nomothetic banking histories to have a greater impact on
other fields of study – a greater potential for our research to matter.
This essay proceeds as follows. Section 2 discusses the broader history of the field of
banking history in the twentieth century, and how it relates to other fields of study. Section 3
analyses my database of 247 banking history-related articles published in international
journals between 2000 and 2015, which I believe represents the entire population of
Englishlanguage academic banking history research output disseminated in the twenty-first
century.
Finally, section 4 concludes by highlighting different exemplar works of banking history
published since 2000, and by speculating on the future direction of the field.
While Gerschenkron inspired historical inquiry into banking and industrialisation, the
work of Friedman and Schwartz opened up a debate on the causes and consequences of
banking crises. Their work proved highly influential in policy spheres and helped to win
Friedman the Sveriges Riksbank Prize in Economic Sciences – the “Economics Nobel” – in
1976 „for his achievements in the fields of consumption analysis, monetary history and theory
and for his demonstration of the complexity of stabilization policy‟. The 1963 monograph is
not strictly a work of banking history; it documents a long span of US monetary
development,
in which banks play a key role as the suppliers of money. At the book‟s core is a chapter on
what the authors call the Great Contraction, and at the centre of that is a section on bank
failures in the 1930s. The decisions made by, and the relationship between, key players in
high finance and officials at the Federal Reserve come under particular scrutiny. It is this
context-rich historical narrative of banks, bankers and banking that makes A Monetary
History a work of banking as well as monetary history, of the history of the institutions that
create money alongside the story of the money they created. The links drawn between the
money supply and banking stability, and the role of monetary policy in particular, have
proven to be highly influential in subsequent monetary and banking history scholarship, such
as that of Capie and Webber (1985) for the case of Britain. And the context-rich
chronological
narrative methodological approach they adopted forms part of a long tradition of such
banking .
25
 CHAPTER V
COMPANY PROFILE

26
 COMPANY PROFILE

Bank’s Profile
A BRIEF HISTORY OF THE BANK SINCE ITS INCORPORATION
· Bank was incorporated on March 5, 1907 with an Authorized Capital of
Rs.20 lakhs and commenced its business on August 15, 1907.
1907 · In the year 1907, the Indian Bank Ltd. had the tree ‘Banyan’ as a part of its
emblem denoting an all around progress, growth (far and wide) and an ever
increasing prosperity.

1921 · Bank‟s capital was raised to Rs.60 lakhs from Rs.20 lakhs.

· Bank celebrated its Silver Jubilee.

1932
· Bank opened its first overseas operations in Colombo.

1941 · Singapore branch was opened.

1957 · Bank celebrated its Golden Jubilee.

1967 · Bank celebrated its Diamond Jubilee.

· Bank‟s logo comprising of three circling arrows arranged around a central

1978
point was approved.

1982 · Bank celebrated its Platinum Jubilee.

· Bank of Thanjavur Ltd. (BoT) with 157 branches was amalgamated with the
1990
Bank.

· The centenary year celebration was inaugurated by His Excellency the

2006
President of India Shri. A P J Abdul Kalam on 4th September.

2007 · Bank went in for Initial Public Offer in February, 2007.

2008 · Achieved 100 per cent Core Banking Solutions (CBS) compliant.

· ‘Tamil Nadu Grama Bank’ commenced operations on 1st April 2020

after a successful amalgamation of Pandyan Grama Bank of Indian Overseas
2020 Bank with Bank‟s Pallavan Grama Bank.
· Government of India announced Amalgamation of Allahabad Bank –
a bank with 155 years legacy into Indian Bank. On April 1, 2021, the
27
 amalgamated entity came into effect.

Vision And Mission Of The Bank

VISION:
 To be a Competitive and Strong Bank with commitment to excellence and focus on adding
value to customers, share holders and employees with adherence to best practices and core
institutional values shared throughout the organisation
MISSION:
The Bank‟s mission is “To be a Common Man‟s Bank” – to provide all financial products
and Services:
 Under one roof
 At affordable cost
 In a fair and transparent manner to all our customers.
Ms. PADMAJA CHUNDURU
Managing Director & Chief Executive Officer

Ms. Padmaja Chunduru is MD & CEO of Indian Bank since September 2019, after a 34 year
stint in SBI. At Indian Bank, Ms. Padmaja has successfully steered the amalgamation of
Allahabad Bank into Indian Bank amid the COVID challenges. With this merger, Indian
Bank doubled in Balance Sheet size and net work and today is among the top 10 banks in the
country, with 6000 branches, more than 40000 employees and business of more than Rs.8.5
tn. Post merger, the Bank has quickly moved to re-establish itself as one of the strongest
banks in terms of growth, profitability and capital strength.
As Dy. Managing Director, SBI, she headed the Digital Banking vertical. She was the
Country Head, US for SBI in New York from 2015 to 2018, overseeing strategic planning,
business growth, risk management and compliance. She was involved in critical discussions
with US Regulators on the Bank‟s operations in the US and was successful in placing the US
Operations on a steady growth path.
A Post Graduate in Commerce from Andhra University, Ms. Padmaja joined SBI in 1984 as a
Probationary Officer. In a career spanning more than 3 decades, with postings in India and
USA, she gained rich experience in Corporate lending and Credit management, Retail
operations and Digital Banking, Treasury and International operations.
28
Ms. Padmaja is a member on the Board of Life Insurance Corporation and the Managing
Committee of Indian Banks Association. She is also on the Board of Governors of the Madras
School of Economics and was part of the High Level Committee constituted by the Tamil
Nadu Government to combat the COVID crisis.

She is Non-Executive Chairman of the Universal Sompo General Insurance Company Ltd
and a member in the Governing Body of IBPS and NIBM. She is also a member of the
Insurance Advisory Committee of IRDAI
Shri Shenoy Vishwanath V
Shri Shenoy Vishwanath V assumed charge as Executive Director on 01.12.2019.
Is a Commerce Graduate from Mumbai University. Joined as Probationary Officer in Union
Bank of India on 17th January, 1985. Is also an Associate Member of Indian Institute of
Bankers and successfully underwent one year Management Education Programme conducted
internally by the Union Bank of India. Is a career banker since last 35 years.
Has worked in Branches in Rural, Semi Urban, Urban and Metro centres as well as
Administrative Offices in different geographies as Branch, Saral, Regional and Vertical
Head.. Worked in different verticals like Credit, Vigilance, Transaction Banking, Credit
Policy and MSME, Large Corporate as well as Chairman‟s Secretariat. Was a Core member
in Verticalisation and Centralisation of Credit functions. Is also a Nominee Director on the
Board of Central Registry of Securitisation Asset Reconstruction and Security Interest of
India.
Shri K Ramachandran
Shri K. Ramachandran has assumed the office of Executive Director of Indian Bank on
1st April, 2021, subsequent to Amalgamation of Allahabad Bank into Indian Bank
He has taken charge as Executive Director of Allahabad Bank with effect from 26th
December 2019. He is a Post Graduate in Science with Post Graduate Diploma in Computer
Application. He joined Corporation Bank as Probationary Officer in May 1985 and had
worked in Branches, Corporate Office and other Controlling Offices.
He was part of the core team involved in the design, development and implementation of the
total Branch Automation, Internet Banking and Mobile Banking application of Corporation
Bank. As Asst. General Manager, Priority Sector he had implemented the voice enabled Point
of Transaction, Hand Held Terminals used by Business Correspondents. Shri Ramachandran
held independent charge of Alternate Channels, Credit Monitoring verticals and had headed
29
Thane Zone of Corporation Bank. On elevation to General Manager Cadre, he was heading
Chennai Circle of Corporation Bank from April 2017.
Awards & Accolades
Indian Bank has been voted one of the most trusted brands in India by Reader‟s Digest under
the „Trusted Brands 2020‟
Indian Bank won Six SKOCH Technology Innovation Awards for Techno Products (Scan
and Pay in Indpay Mobile App ,Geo-Tagging in IB Staff App , Digital Challan in IB
Customer App , Green PIN for Credit / Debit Card / Net / Mobile Banking, Online Credit
Card Transaction view in IB Customer App, Online Branch / ATM Room Cleanliness
Feedback with photo from user in IB Customer App )
India‟s Best Bank award by Financial Express for Indian Bank for Strength and Soundness
.Shri M K Jain, MD & CEO receiving India‟s Best Bank Award for Strength & Soundness
from Shri Arun Jaitley Hon‟ble Union Minster of Finance

30
 CHAPTER VI
DATA ANALYSIS AND
INTERPRETATION

31
 FINANCIAL STATEMENT ANALYSIS:

1. COMPARATIVE BALANCE SHEET:

Comparative balance sheet analysis concentrates only the balance sheet of the concern
at different periods. Under this analysis, the balance sheets are compared with previous year‟s
figures or one-year balance sheet figures are compared with other years. Comparative balance
sheet analysis may be horizontal or vertical basis. This type of analysis helps to understand
the real financial position of the concern as well as how the assets, liabilities and capitals are
placed during a particular period.

Table-4.1.1.1 (Rupees in
crores)

INDIAN BANK COMPARATIVE BALANCE SHEET 2017&2018

Particulars 2017 2018 Change In Value Change In %
Inventories 2,224.99 3,101.50 876.51 39.39%
Sundry Debtors 1,276.17 1,714.20 438.03 34.32%
Cash and Bank Balances 2,217.74 199.32 -2,018.42 -91.01%
Total Current Assets 7735.9 7033.02 -702.88 -9.09%
Investment 7,408.67 6,162.90 -1,245.77 -16.82%
Fixed Assets 24,110.15 38,684.72 14,574.57 60.45%
Total Assets 39254.72 51880.64 12,625.92 32.16%
Current Liabilities 9,693.96 11,261.69 1,567.73 16.17%
Net Worth 23,941.01 25,923.02 1,982.01 8.28%
Long Term Liabilities 37.27 34.84 -2.43 -6.52%
Total Liabilities 33,672.24 37,219.55 3,547.31 10.53%

32
 60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
2017
10,000.00
2018
0.00

INTERPRETATION:
2017-2018

 The working capital of the company has been increased by Rs. 256.33 Cr. There has been an
increase in both the current assets and current liabilities of the company. However, the
increase in current assets has been more than the increase in the current liabilities.
 There is a decrease in the investments from Rs. 7,408.67 Cr. in 2016-2017 to Rs. 6,162.90 Cr.
in 2017-2018.
 The fixed assets have also been increased by 60.45% .the company is encouraging new
technology and adding assets for large production.
 The shareholder funds have also been increased by 8.28%, which means the shareholders are
investing money to expand the business activities.
 Hence, the overall position of the company is good, as they have generated good profits.

33
Table 4.1.1.2 (Rupees in
crores)

INDIAN BANK COMPARATIVE BALANCE SHEET 2018&2019

Particulars 2018 2019 Change In Value Change In %
Inventories 3,101.50 3,787.47 685.97 22.12%
Sundry Debtors 1,714.20 2,353.19 638.99 37.28%
Cash and Bank Balances 199.32 656.47 457.15 229.35%
Total Current Assets 7033.02 8816.13 1,783.11 25.35%
Investment 6,162.90 7,064.51 901.61 14.63%
Fixed Assets 38,684.7247,747.63 9,062.91 23.43%
Total Assets 51880.64 63628.27 11,747.63 22.64%
Current Liabilities 11,261.6915,623.62 4,361.93 38.73%
Net Worth 25,923.0233,297.36 7,374.34 28.45%
Long Term Liabilities 34.84 6.27 -28.57 -82.00%
Total Liabilities 37,219.55 48927.25 11,707.70 31.46%

70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00 2018
10,000.00 2019
0.00

34
 INTERPRETATION:

 The working capital of the company has been decreased by Rs. 147.20 Cr. There has been a
drastically decrease in cu There is an increase in the investments from Rs. 6,162.90 Cr. in
2017-2018 to Rs. 7,064.51Cr. in 2018-201
 The fixed assets have also been increased by 23.43%, the company is encouraging new
technology and adding assets for large production.
 The shareholder funds have also been increased by 28.45%, which means the shareholders
are investing money to expand the business activities.
 Hence, the overall position of the company was not good as they have generated high losses

35
Table 4.1.1.3 (Rupees in
crores)

INDIAN BANK COMPARATIVE BALANCE SHEET 2019&2020

Particulars 2019 2020 Change In Value Change In %
Inventories 3,787.47 3,833.88 46.41 1.23%
Sundry Debtors 2,353.19 1,848.28 -504.91 -21.46%
Cash and Bank Balances 656.47 310.52 -345.95 -52.70%
Total Current Assets 8816.13 8012.68 -803.45 -9.11%
Investment 7,064.51 10,082.62 3,018.11 42.72%
Fixed Assets 47,747.63 47,645.37 -102.26 -0.21%
Total Assets 63628.27 65740.67 2,112.40 3.32%
Current Liabilities 15,623.62 14,672.12 -951.50 -6.09%
Net Worth 33,297.36 38,296.32 4,998.96 15.01%
Long Term Liabilities 6.27 819.66 813.39 12972.73%
Total Liabilities 48927.25 53788.1 4,860.85 9.93%

70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00 2019
10,000.00 2020

0.00

36
 INTERPRETATION:

2018-2019 and 2019-2020

 The working capital of the company has been increased by Rs. 872.70 Cr., which is a good
sign for the company as it has been able to meet its currents liabilities as they mature using
their current assets.
 There is a decrease in the investment from Rs. 7,064.51Cr. in 2018-2019 to Rs. 10,082.62 Cr.
in 2019-2020.
 The fixed assets have also been decrease by -0.21% %.The company is encouraging new
technology and adding assets for large production.
 There has been a slight increase in the current liabilities as there has been an increase in the
short-term borrowings of the company.
 The shareholder funds have also been increased by 15.01%, as there has been an increase in
the reserves and surplus of the company.
 Hence, the overall position of the company is good, as they have generated good profits.

37
Table 4.1.1.4 (Rupees in
crores)

INDIAN BANK COMPARATIVE BALANCE SHEET 2020&2021

Particulars 2020 2021 Change In Value Change In %
Inventories 3,833.88 3,722.05 -111.83 -2.92%
Sundry Debtors 1,848.28 2,285.99 437.71 23.68%
Cash and Bank Balances 310.52 1,876.55 1,566.03 504.33%
Total Current Assets 8012.68 9905.59 1,892.91 23.62%
Investment 10,082.62 17,569.68 7,487.06 74.26%
Fixed Assets 47,645.37 46,993.91 -651.46 -1.37%
Total Assets 65740.67 74469.18 8,728.51 13.28%
Current Liabilities 14,672.12 21,312.91 6,640.79 45.26%
Net Worth 38,296.32 43,352.64 5,056.32 13.20%
Long Term Liabilities 819.66 1,242.92 423.26 51.64%
Total Liabilities 53788.1 65908.47 12,120.37 22.53%

80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00 2020
10,000.00
2021
0.00

INTERPRETATION:

2019-2020 and 2020-2021 38

 The working capital of the company has increased by Rs. 494.30 Cr. which is a good sign for
the company as there are enough current assets to pay of the liabilities and shows a good
working capital management by the company
 There is increase in investment from Rs. 10,082.62 Cr. in 2019-2020 to Rs. 17,569.68. in
2020- 2021. This means that the company has been making long term investments to increase
its profits.
 The fixed assets have also been decreased by -1.37% .The companies is encouraging new
technology and adding assets for large production.
 The current liabilities of the company have decreased. The company is paying off the short
term credits and liabilities. This means that the company is in a good liquidity position as it
has been able to meet its short term obligations.
 The shareholder funds have also been increased by 13.20% which means the shareholders are
investing more money to expand the business activities and also there has been an increase in
the reserves and surplus.
 Hence the overall position of the company is satisfactory as they has been an increase in
sales, generated good profits and there is a decrease in the current liabilities.

39
 2. COMPARATIVE PROFIT AND LOSS ACCOUNT:

Another comparative financial statement analysis is comparative profit and loss account
analysis. Under this analysis, only profit and loss account is taken to compare with previous
year‟s figure or compare within the statement. This analysis helps to understand the
operational performance of the business concern in a given period. It may be analyzed on
horizontal basis or vertical basis.

Table-4.1.2.1 (Rupees in
crores)

INDIAN BANK COMPARATIVE PROFIT AND LOSS ACCOUNT 2017&2018

Particulars 2017 2018 Change In Value Change In %
Net Sales 3343.89 3999.5 655.61 19.61
Stock Adjustments 93.87 64.1 -29.77 -31.71
Less: COGS 1921.08 2142.4 221.32 11.52
Gross Profit 1,516.68 1,921.20 404.52 26.67
Less: Selling and Administration Expenses 896.54 1117.9 221.36 24.69
Less: Miscellaneous Expenses 37.44 45.3 7.86 20.99
Operating Profit 582.70 758.00 175.30 30.08
Add: Non-Operating Incomes 197.29 212.2 14.91 7.56
Less: Non-Operating Expenses 0 0 0.00 0
Profit Before Depreciation, Tax and Interest 779.99 970.20 190.21 24.39
Less: Interest 14.69 27.4 12.71 86.52
Profit Before Depreciation and Tax 765.30 942.80 177.50 23.19
Depreciation 161.99 193.6 31.61 19.51
Other Written Off 20.71 19.7 -1.01 -4.88
Profit Before Tax 582.60 729.50 146.90 25.21
Less: Tax 108.88 168.6 59.72 54.85
Net Profit 473.72 560.90 87.18 18.40

40
 4500
4000
3500
3000
2500
2000
1500
1000
500
0

2017 2018

INTERPRETATION 2016-2017 and 2017-2018

 The net sales of the company have increased from last year to current year by Rest.
655.61 Cr.
 The cost of goods sold has also increased due to increase in sale.
 The expenses incurred on sale have increased but the company has to minimize the selling
expenses.
 The gross profit of the company has increased from Rs. 1516.68 Cr. to Rs. 1921.20 Cr. This
is a good sign for the company.
 There is just a slight increase in the net profited by Rs. 87.18 Cr. The company has to
minimize the indirect expenses and encourage more sales.
 Hence, the overall position of the company is satisfactory.

41
 Table-4.1.2.2 (Rupees in
crores)

INDIAN BANK COMPARATIVE PROFIT AND LOSS ACCOUNT 2018&2019

Particulars 2018 2019 Change In Value Change In %
Net Sales 3999.5 4395.6 396.10 9.90
Stock Adjustments 64.1 117.3 53.20 83.00
Less: COGS 2142.4 2337.2 194.80 9.09
Gross Profit 1,921.20 2,175.70 254.50 13.25
Less: Selling and Administration Expenses 1117.9 1036.6 -81.30 -7.27
Less: Miscellaneous Expenses 45.3 50.6 5.30 11.70
Operating Profit 758.00 1,088.50 330.50 43.60
Add: Non-Operating Incomes 212.2 254 41.80 19.70
Less: Non-Operating Expenses 0 0 0.00 0
Profit Before Depreciation, Tax and Interest 970.20 1,342.50 372.30 38.37
Less: Interest 27.4 16 -11.40 -41.61
Profit Before Depreciation and Tax 942.80 1,326.50 383.70 40.70
Depreciation 193.6 222.4 28.80 14.88
Other Written Off 19.7 19.3 -0.40 -2.03
Profit Before Tax 729.50 1,084.80 355.30 48.70
Less: Tax 168.6 238.7 70.10 41.58
Net Profit 560.90 846.10 285.20 50.85

42
 5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0

2018 2019

INTERPRETATION:

2017-2018 and 20182019

 The net sales of the company have increased from last year to current year by Rs. 396.10 Cr.
 The cost of goods sold has also been decreased which means the company is making efforts
to reduce selling expenses.
 The gross profit of the company has increased from Rs. 1921.20 Cr. to Rs. 2175.20 Cr. This
is a good sign for the company.
 There is an increase in the net profit. The net profit has increased by Rs. 285.20 Cr.
 Hence, the overall position of the company is satisfactory.

43
 Table-4.1.2.3 (Rupees in
crores)

INDIAN BANK COMPARATIVE PROFIT AND LOSS ACCOUNT 2019&2020

Particulars 2019 2020 Change In Value Change In %
Net Sales 4395.6 5,188.50 792.90 18.04
Stock Adjustments 117.3 79.00 -38.30 -32.65
Less: COGS 2337.2 2726.3 389.10 16.65
Gross Profit 2,175.70 2,541.20 365.50 16.80
Less: Selling and Administration Expenses 1036.6 1,256.70 220.10 21.23
Less: Miscellaneous Expenses 50.6 65 14.40 28.46
Operating Profit 1,088.50 1,219.50 131.00 12.03
Add: Non-Operating Incomes 254 117.00 -137.00 -53.94
Less: Non-Operating Expenses 0 0 0.00 0
Profit Before Depreciation, Tax and Interest 1,342.50 1,336.50 -6.00 -0.45
Less: Interest 16 9.9 -6.10 -38.13
Profit Before Depreciation and Tax 1,326.50 1,326.60 0.10 0.0075
Depreciation 222.4 247.9 25.50 11.47
Other Written Off 19.3 26.8 7.50 38.86
Profit Before Tax 1,084.80 1,051.90 -32.90 -3.03
Less: Tax 238.7 158.5 -80.20 -33.60
Net Profit 846.10 893.40 47.30 5.59

44
 6000
5000
4000
3000
2000
1000
0

2019 2020

INTERPRETATION:

2018-2019 and 2019-2020:

 The net sales of the company have increased by Rs. 792.90 Cr. in 2019-2020.
 The cost of goods sold has also increased due to increase in sale.
 The expenses incurred on sale have increased. Thus, the company has to minimize the selling
expenses.
 The gross profit of the company has increased from Rs. 2175.70 Cr. to Rs. 2541.20 Cr. This
is a good sign for the company.
 There is an increase in the net profit. The net profit has increased by Rs. 47.30 Cr. The
company has to minimize the indirect expenses and encourage more sales.
 Hence, the overall position of the company is satisfactory.

45
 Table-4.1.2.4

INDIAN BANK COMPARATIVE PROFIT AND LOSS ACCOUNT 2020&2021

Particulars 2020 2021 Change In ValueChange In %

Net Sales 5,188.50 6,686.30 1,497.80 28.87
Stock Adjustments 79.00 104.80 25.80 32.66
Less: COGS 2726.3 3294.7 568.40 20.85
Gross Profit 2,541.20 3,496.40 955.20 37.59
Less: Selling and Administration Expenses 1,256.70 1,554.40 297.70 23.69
Less: Miscellaneous Expenses 65 80.3 15.30 23.54
Operating Profit 1,219.50 1,861.70 642.20 52.66
Add: Non-Operating Incomes 117.00 0.00 -117.00 -100
Less: Non-Operating Expenses 0 191.9 191.90 100
Profit Before Depreciation, Tax and Interest 1,336.50 1,669.80 333.30 24.94
Less: Interest 9.9 69.2 59.30 598.99
Profit Before Depreciation and Tax 1,326.60 1,600.60 274.00 20.65
Depreciation 247.9 301.1 53.20 21.46
Other Written Off 26.8 40.3 13.50 50.37
Profit Before Tax 1,051.90 1,259.20 207.30 19.71
Less: Tax 158.5 346.8 188.30 118.80
Net Profit 893.40 912.40 19.00 2.13

46
 8,000.00
7,000.00
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
0.00

2020 2021

INTERPRETATION:

2019-2020 and 2020-2021

 The net sales of the company have increased from last year to current year by Rs. 1497.80 Cr.
 The cost of goods sold has also increased due to increase in sale.
 The expenses incurred on sale have increased and thus the company has to take steps to
minimize the selling expenses.
 The gross profit of the company has increased from Rs. 2541.20 Cr. to Rs. 3496.80 Cr. This
is a good sign for the company.
 There is a slight increase in the net profit. The net profit has increased by Rs. 19 Cr. The
company has to minimize the indirect expenses and encourage more sales.
 Hence, the overall position of the company is satisfactory.

47
 CHAPTER – VII
RESEARCH FINDINGS &
SUGGESTIONS

48
 FINDINGS

 After considering issues of financial stability, economic development, competition among

financial institutions, concentration of economic and political power, consumer choice, and
conflicts of interest, I find that universal banking can provide considerable benefits and
would pose few problems for the economy.
 It does not follow, though, that specialized providers of financial services should not or
would not also exist. Experience and logic indicate that these companies can do many things
better than can universal banks.
 In particular, specialized firms are more likely to handle many important aspects of
investment banking. Takeovers, leveraged buyouts, mergers, spin-offs, and other capital
restructurings often must be completed quickly and imaginatively.
 Commercial banks, which tend to be bureaucratically organized, often are not well-suited to
this kind of activity.
 Furthermore, companies not designated as "banks" and individuals provide a wide range and
considerable volume of financial services in countries characterized by universal or by
specialized banking. Thus, the adoption of universal banking is unlikely to result in these
banks dominating financial services.
 There is room for disagreement over what form of universal banking makes the most sense
for India. However, either approach would generate significant advantages over our present
system of specialized banking.
 We agree that the Glass-Steagall Act's separation of commercial and investment banking and
the Bank Holding Company Act's and other legislative restrictions against banks offering a
full range of financial services should be repealed. Restricting banks' securities activities was
either a misguided reaction to the financial crisis of the 1930s or a means of enhancing the
position of investment bankers (or punishing banks) at the expense of the general public
(Benston, 1990).
 The fact that the restrictions have not been repealed is evidence of the power of well-focused
suppliers to maintain their legal advantage over poorly organized competitors and consumers.

49
 RECOMMENDATIONS

Though, the above research results in Universal Banking being beneficial for India customers
offering various advantages, still, caution must be applied in implementing Universal banking
because of the following considerations:

1. Dis-intermediation (i.e. replacement of traditional bank intermediation between

savers and borrowers by a capital market process) is only a decade old in India and has badly
slowed down due to loss of investors' confidence.

2. There is an ample room for financial deepening (by banks & DFIs) since loan
market will continue to grow.

3. DFIs as a folder of equity in most of the projects promoted in the past have never
used the tool advantageously.

4. DFIs are now only moving into working capital finance, an area in which they need
to gain lot of expertise and this involves creation of network of services (including branches)
in all fields like remittances, collections etc.

5. Reforms in the Indian capital market are still in the half way stage. The priority will
be to ensure branch expansions, financial deepening of credit markets, and creation of an
efficient credit delivery mechanism that can compete with the capital market.

50
 SUGGESTIONS

The following are the steps suggested for successful implementation of Universal Banking in
India:

 Equalise the net regulatory burden across the financial system (including banks, DFIs, mutual
funds, NBFCs and Insurance companies).

 Lower the regulatory burden on the over regulated entities.

 Promote and encourage strong competition.

 Do not allow the merger of a weak bank with a viably strong DFI or vice-versa.

 DFIs should be permitted to set up a 100 percent owned banking subsidiaries.

 Need is felt to re-examine the minimum level of SLR requirement in order to meet the best of
international standards.

 The gross profit of the company is increasing year after year but it is not the same with net
profit. To improve profits, the company needs to cut down on expenses by applying more
effective costing and budgeting techniques.

 From ratio analysis, one can infer that the overall position of the company is good and all the
ratios have improved.

 2017-2018 seems to be the most profitable year as almost all the ratios in this year stand
strong in comparison to other years considered in the study.

 The high liquidity ratios reflect a very strong short-term financial structure. The company
should maintain current assets in the form of receivables and cash rather than in inventory to
meet its current obligation efficiency.

 On a long term, the company can be looked as good investment opportunity.

51
 CHAPTER -VIII
SUGGESTIONS &
RECOMMENDATIONS

52
 SUGGESTIONS & RECOMMENDATIONS
 INDIAN BANK is one of the most promising banks in India. The company has a bright
future because of its scientific and flexible management approach.

 The company is growing year after year.

 Quality of earnings has been good with minimum dependence on other income.

 The recession is passing off starting early.

 The company has shown strong increase in sales.

 The overall position of the company remains satisfactory.

 Finance has very close ties with most people. Numerous financial products and services have
penetrated our lives. The globe is ever-changing and financial products and services have to
keep up with the pace of people‟s demand.

 Banks, which assume a leading position in most financial systems, have to be prepared for
the growing need of their customers. In some countries, universal banks, which offer a wide
range of financial services, have proved responsive to customer demand and helpful in
facilitating economic developments.

 India‟s financial sector is relatively bank-oriented, and banks are the primary supplier of
financial services. With the regulatory allowance for universal banking, Indian banks
continue to expand its coverage of financial services in response to customer demand and
profitability concerns.

 In countries with universal banking system, banks usually serve as an important source of
external finance for enterprises.

 India‟s banking sector follows closely the global trend of financialdevelopments.

 It is believed that the concept of financial supermarkets could play a significant role in future
given that an increasing number of transnational companies have been set up in the region
and also by the opening of Indian Banking sector to foreign players.

53
BIBLIOGRAPHY

54
 BOOKS REFERRED
The Universal Banking‟: introduction, concept, Journal of Professional Banker, October 2006
pros and cons pg 24-27

Universal Banking by DFIs Handy But no solution to NPAs" "Sanjiv Sbankaran"

“Business Line"

Banking in the New Millennium M. GURUPRASAD" (ASST. PROF IN

ECONOMICS)

Universal Banking: the Road Ahead Kamal Sehgal (IIFT)

WEBSITES

 www.banknetindia.com/banking/ubfeature.htm Universal Banking: introduction, RBI rules

and regulations, Universal Banking in India
 "Approach to Universal Banking" www.banknetindia.com

 www.answers.com/topic/universal-banking: Universal Banking: definition

55