EXECUTIVE SUMMARY The object of any business is to earn profits.

The main factors affecting the profits of the business is the magnitude of the sales. But the sales cannot be converted into cash immediately. There is a time lag between the sales of goods and realization of cash. Hence there is a need of working capital in the form of current assets to fill up this time lag. Technically, this is called as Operating Cycle or Working Capital Cycle, which is the heart of the need for working capital. This working capital cycle may be defined as the intervening period from the time the goods and services enter the business till their realization in cash. This intervening period depends upon the combination of various steps: 1. Acquisition and shortage of raw materials. 2. Actual production process that takes place. 3. Shortage of finished goods awaiting sales. 4. Sale of finished goods and realization of cash. Working capital needs of the company arise to cover the requirement of funds during this time gap, and the quantum of working capital needs, varies as per the length of this time gap. Net Working Capital= Current Assets Current Liabilities. The major aspects of the working capital management are as follows: 1. Management of cash. 2. Management of receivables. 3. Management of inventory.

Hence, the study is based on the working capital management of a cooperative bank and also covers all important aspects related to it.

INTRODUCTION The working capital is commonly used for day to day working business. In simple words working capital means difference between current assets and current liabilities. Net Working Capital= Current Assets Current Liabilities. Working capital is also known as Circulating Capital, Fluctuating Capital, and Revo lving Capital. Bank prepares the working capital by source of deposit as well as other incomes like as; Commission on Drafts, Locker Rent, and Interest on Loan etc. The main source of working capital of bank is various types of deposits such as Fixed Deposit, Saving Deposit, and Term Deposit etc. If banks current assets do not exceeds its current liabilities then it may run in to trouble paying back creditors in the short term. The worst case scenario is bankruptcy. A declining working capital ratio over a longer time period could also be a red flag that warrants further analysis.

STRUCTURE OF WORKING CAPITAL

A.CURRENT ASSETS: 1. Stock 2. Debtors 3. Investments 4. Cash in Hand 5. Cash at Bank 6. Loan and Advances 7. Prepaid Expenses

B. CURRENT LIABILITIES: 1.Loans 2. Creditors 3. Dividends 4. Outstanding Expenses.

Net Working Capital = (A-B)

CONCEPT OF WORKING CAPITAL

Working Capital is most important pat in every business. Every bank required working capital for daily business. The concept o working capital can be broadly divided in to two categories as follow: 1] GROSS WORKING CAPITAL: It implies the firms investment in current assets. The current assets are that assets can be converted in to cash with in an accounting year or an operating cycle. The current assets included Cash and Bank Balance, Debtors, Bills Receivable, Stock, Prepaid Expenses etc. 2] NET WORKING CAPITAL: The concept o net working capital referred the difference between current assets and current liabilities. The net working can be positive or negative. If current assets exceed current liabilities the difference is positive net working capital and when current liabilities exceeds than current assets the difference is negative working capital.

Net Working Capital= Current Assets Current Liabilities.

TYPES OF WORKING CAPITAL The concepts of the working capital can be broadly divided into the following categories:

1. Gross Working Capital: This concept implies the total of all current assets of the business firm. A current asset is that asset which can be converted into cash within an accounting year or an operating cycle.

2. Net Working Capital: This concept of working capital is the difference between current assets and current liabilities. Current liabilities can be explained as those liabilities, which are expected to mature for payment within one accounting year.

3. Permanent Working Capital: There is always a minimum level of current assets, which is continuously required by the firm to carry out its business operations. Such current asset is referred to as permanent or fixed working capital.

4. Variable Working Capital: The extra working capital, need to support the changing production sales activities is called as fluctuating, variable or temporary working capital.

NATURE OF WORKING CAPITAL MANAGEMENT

1. Working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the inter relationship that exists between them.

2. Working capital if not maintained in sufficient amount has an ability to take the firm headlong into the depths of bankruptcy.

3. Working capital plays an important role in interaction between current assets and current liabilities.

4. Working capital when kept in an adequate amount makes money available for several operations.

WORKING CAPITAL MANAGEMENT

Cash or Bank

Raw Material

Sundry Debtors

Work in Progress

Finished Goods

The working capital cycle contains of current assets like cash, bank, raw material, work-in-progress, finished goods and debtors. Some part of the current assets may be financed by the current liabilities. Example:- Some raw material may be available on credit basis etcAll the expenses need not be paid immediately, workers are also to be paid periodically etcBut still the amounts required to be invested in these current assets is always higher than the funds available from current liabilities. This is the precise reason why the needs for working capital arise.

FACTORS AFFECTING WORKING CAPITAL The working capital needs of a firm are affected by numerous factors. The important factors are as follows:

1. Nature of Business: Working capital requirements of a firm are basically influenced by the nature of its business. Manufacturing industries have to make adequate investment in current assets depending upon the total asset structure and the variables.

2. Sales and Demand Conditions: The working capital needs are related to its sales. It is necessary to employ the current assets before growth takes place. Most of the firms experience seasonal and cyclical fluctuations in the demands for their products and services. These variations affect the working capital requirement of the firm.

3. Technologies and Manufacturing Policy: The manufacturing cycle comprises of the purchase and use of raw materials and the production of finished goods. Manufacturing cycle plays an important role in determining the working capital requirement and hence should be carefully selected and also it should be ensured that the manufacturing cycle is completed within specific period. In order to resolve the problems arising out of fluctuations as in demand a strategy of constant production can be adopted.

4. Credit Policy: While fixing the credit policy the firm may either follow the foot -steps of other firms belonging to same industry or it can fix its own credit policy. The firm should use different policies for different customers depending upon their credit
8

worthiness. In case if any customer makes delay payment, that act is to be thoroughly investigated.

5. Market Conditions: The degree of working capital plays an important role in determining the working capital needs of the firm. When the competition in the market is keen, the company obviously has to maintain adequate amount of inventory. If the company does not keep larger inventory then the company may loose its customers because the customers may shift over to other companies. Also, the company is required to follow the liberal credit policies so as to attract the customers. Thus, the company is required to maintain high working capital because of higher investment in inventories and accounts receivables.

6. Conditions of Supply: The inventory of raw materials, spares, and stores depend on the conditions of supply. If the supply is prompt and adequate, the firm can manage with small inventory. However, if the supply is unpredictable and scant then the firm, to ensure continuity of production, would have to acquire stocks as and when they are available and carry larger inventory on an average.

Other factors that affect the working capital requirement are such as: Nature of the industry, demand of industry, cash requirements, manufacturing time, volume of sales, terms of purchase and sales, inventory turnover, business turnover, business cycle, current assets requirements, production cycle, inflation or price level changes, profit planning and control, repayment ability, cash reserves operation efficiency, firms finance and dividend policy, attitude towards risk.

FACTORS AFFECTING ON WORKING CAPITAL OF BANK The working capital is important need of bank; as well as it is fluctuating factor. It means that it can be increased or decreased. There are some factors which are affecting on banks working capital this are as follow: 1] Deposit: Deposits are the main source of working capital of bank, some important types of deposit such are as below; 1) Fixed Deposit 2) Saving Deposit 3) Term Deposit

Bank can use this deposit as working capital like as deposit affects working capital. 2] Commission and Rents: Commission is also another important factor will be affect on working capital of bank. Banks are provided various facilities to customer like as; Discounting Of Bills, Demand Draft, R.T.G.S. System, Locker Facility etc. and banks are charged commission on it , Rent on locker facilities this are source of working capital. 3] Interest on loan: Bank provide loan to customer and charged interest on it so interest on loan is prime source of working capital. 4] Provide on demand cash: The account holders in bank can withdraw the cash when they have need of it. At that time bank must able to pay the amount of customer like this can make effect on working capital of bank. 5] Other factors : Staff Expenses, Administrative Expenses, Management Expenses, Net Profit, Growth Rate Of Deposit etc. this are some factors which can affect on working capital of bank.

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EXCESS OR INADEQUATE WORKING CAPITAL Every business concern should have adequate working capital to run its business operations. It should have neither redundant or excess working capital nor inadequate nor shortage of working capital. Both excess as well as shortage of working capital situations are bad for any business. However, out of the two, inadequacy or shortage of working capital is more dangerous from the point of view of the firm.

Disadvantages of Redundant or Excess Working Capital: Idle funds, non-profitable for business, poor ROI. Unnecessary purchasing and accumulation of inventories over required level. Excessive debtors and defective credit policy, higher incidence of B/D. Overall inefficiency in the organization. When there is excessive working capital, creditworthiness suffers. Due to low rate of return on investments, the market value of shares may fall.

Disadvantages or Dangers of Inadequate or Short Working Capital: Cant pay off its short-term liabilities in time. Economies of scale are not possible. Difficult for the firm to exploit favorable market situations. Day-to-day liquidity worsens. Improper utilization the fixed assets and ROA/ROI falls sharply.

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FORMAT OF WORKING CAPITAL BUDGET

Particulars Current Assets: 1.Inventory a. Raw Material b. Work in Progress c. Finished Goods d. Stores and Spares 2. Debtors 3. Cash and Bank Balance 4. Prepaid Expenses Total Current Assets (A) Current Liabilities: 1. Creditors 2. Delay in Payment of Expenses Total Current Liabilities (B) Net Working Capital (A-B) Add: Contingency margin if any Total Working Capital Required

Amount

Amount

XXX XXX XXX XXX XXX XXX XXX XXX XXX

XXX XXX XXX XXX XXX XXX

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MANAGEMENT OF BANK RELATED WITH WORKING CAPITAL As per banking regulation act the financial condition o bank must be good as well as the bank accept whatever deposit from customer it must be fully paid of at any condition. If in any case bank will not fulfill this condition then bank can be prohibited from fresh deposit so there is great importance to assets management and liabilities management in banking business. To earning the working capital the most important thing is that the bank must pay interest on deposit; there are 3 important things by view of banking management. 1] Cash Management: This is most important management system in bank. Bank always be ready to paid of Salary, Deposit, Rent, Bills etc. on demand at any time so there were great importance for cash management Bank should not get income on cash so that the bank should transfer the excess cash to another branch or Head Office A/c as per need. 2] Funds Management : The type of this management is related with investment when bank get excess amount then bank will be invest this amount and get income on it; at the time of investment and giving the loan bank use own funds (i.e. Working Capital) this transaction known as Fund Business. 3] Portfolio Management : Mainly the interest on loan and advances is the most important way of income for the bank so the portfolio management is most important management by view o bank. USE OF WORKING CAPITAL BY BANK 1) 70% used as Investments and Advances. 2) 30% used as for daily work. CASH MANAGEMENT Cash is both the beginning and the end of working capital management. Its effective management is the key determinant of efficient working capital management.

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Cash is the most important component of current assets. So like this cash is most important factors in working capital. Importance of cash The goal of cash management is to maintain the minimum cash balance which provides the bank with sufficient liquidity needed to meet its financial obligation at the same time it should enhance banks profitability without exposing it to under risk i.e. it involves trade of between risk and profitability. Management of cash is primarily concerned with following: Determination of minimum level of cash that a bank should hold. Controlling cash outflows. Controlling cash inflows. Matching cash inflows and cash outflows through cash budgeting. Proper investment of surplus cash.

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IMPORTANCE OF WORKING CAPITAL MANAGEMENT

The task of financial manager in managing working capital efficiency is to ensure sufficient liquidity in the operation of the enterprises. The liquidity of the business firm is a measured by its ability to satisfy short term obligation as they become due.

1. Importance for small firms:

Working capital management is particularly important for small firm. A small firm may minimize its investment in fixed assets by renting or by leasing plant and equipment, but there is no way it can avoid investment in cash, receivables and inventory. Therefore current assets are particularly significant for the financial manager of a small firm. Further, because a small firm has relatively limited access to the long term capital markets, it must necessarily rely on trade credit and short term bank loans, both of which affect net working capital by increasing current liabilities.

2. Exploitation of favorable market conditions:

Only concerns with adequate working capital that can exploit favorable market conditions such as purchasing its requirement in bulk when the prices are lower and by holding inventories for higher prices.

3. Investment in current assets:

Characteristically, current assets represent more than half of a business firm because they represent large investment and it tends to be relatively volatile. Current assets are the worth of financial managers careful attention.

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4. Time devoted to working capital management:

Surveys indicate that the largest portion of a financial manager time is devoted is the day to day internal operation of the firm, this may be appropriately subsumed under the head working capital management.

5. Goodwill:
Sufficient amount of working capital enables a firm to make prompt payments and makes and maintain the goodwill.

6. Easy loans:
Adequate working capital leads to high solvency and credit standing can arrange loans from banks and other on easy and favorable terms.

Regular Payment of Salaries, Wages And Other Day TO Day Commitments: It leads to the satisfaction of the employees and raises the morale of its employees, increases their efficiency, reduces wastage and costs and enhances production and profits.

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THE STRUCTURE OF INDIAN BANKING

The structure of Indian banking system can be categorized in two ways. The first divides bank in to three categories as below;

1] Reserve Bank Of India. 2] Commercial Banks. 3] Cooperative Banks.

The commercial banks divide in to two categories as below:

1] Scheduled Bank. 2] Non-scheduled Bank.

In both of these systems of categorization the Reserve Bank of India sits at the center of the banking structure. RBI holds the reserve capital of all commercial and scheduled banks in the country. The nationalization of banks in India took place in 1969 by Mrs. Indira Gandhi the then prime minister. It nationalized 14 banks then. These banks were mostly owned by businessmen and even managed by them.

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SCHEDULED BANK Scheduled banks are those who is member of Reserve Bank Of India and nationalized bank has Govt. controlling along with membership o RBI. Scheduled banks in India constitute those banks which have been included in the second schedule of Reserve Bank of India (RBI) act 1934. RBI in turns includes only those banks in this schedule which satisfy the criteria laid down vide section 2 (6) (a) of the Act. The banks include in this schedule list should fulfill two conditions: 1. The paid capital and collected funds of bank should not be less than 5 lacs. 2. Any activity of the bank will not adversely affect the interests of depositors. Every scheduled bank enjoys the following facilities: 1. Such bank becomes eligible for loans on bank rate from the RBI. 2. Such bank automatically acquires the membership of clearing house. The following are some example of scheduled banks in India:

1] State Bank of India. 2] State Bank Of Hyderabad 3] Bank Of India 4] Canara Bank 5] Central Bank Of India.

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LITERATURE REVIEW

Prasad (2000) in his paper titled, "Working Capital Management in Paper Industry", examined 21 paper mills during the period 1983-84 to 1992-93. It was revealed that the working capital was inadequate in all the units and the rate of return on current assets was negative in many years of the study. Further, the inventory level in some mills was excessive and there was poor planning of cash balances and the receivables were also not managed properly.

Pathania and Sharma (2001) analyzed the working capital management of Himachal Pradesh State Cooperative Marketing Federation (HIMFED) during the period 1990-91 to 1998-99. The study was based on both primary and secondary data and for analysis ratio analysis, linear regression equation and correlation techniques were used. The elements analyzed were liquidity position, components of working capital, composition of short and long term sources of funds and relationship between gross working capital and sales. The problem of working capital in the organization was related to surplus investment in current assets than of inadequacies, and working capital was mostly financed through long term sources of funds which was not a healthy sign. Further, the circulation of working capital was also not efficient. The study concluded that the financial position of HIMFED was satisfactory but it required an improved system of managing working capital.

Jayachandra (2005) in his paper studied financial management in Kovur Cooperative Sugar Factory Ltd., Nellore, Andhra Pradesh during the period of 5 years from 1999-00 to 2003-04. The study examined fixed assets management, inventory management, cash management and profitability. The study was based on both primary and secondary data sources of information. The techniques like ratio analysis, fund flow analysis, averages and percentages were used for the analysis of data. It was revealed that the amount of fixed assets increased but were not properly utilized, inventory formed major part in current assets, there were small proportion of cash and bank balances, liquidity position was not good and Kovur Cooperative Sugar Factory
19

was not in a position to meet its obligation out of cash flows. It was also found that cost of production and selling and administrative expenses increased but in last two years operating expenses were controlled due to which net operating profits were very high. It was recommended that the Kovur Cooperative Sugar factory should do proper evaluation of investment proposals on fixed assets, proper cash planning, set up a purchase committee for inventory, raise funds through long term sources of finance so as to reduce interest charges, control cost of production and operating expenses etc.

Amuthan (2010) in his research paper titled, "Performance of the Cuddalore District Central Cooperative Bank in Tamil Nadu--A Ratio Analysis", evaluated the financial performance of Cuddalore district central cooperative bank during the period from 1998-99 to 2007-08. The study was based on secondary sources of information and financial ratio analysis was used as tool to view the performance of bank. The key solvency, liquidity, efficiency, profitability and ratios of strength were calculated. The solvency and liquidity ratios revealed bank's inability to meet its short and long term obligations. The efficiency and profitability ratios found inefficiency and fewer profits. The ratio of strength further indicated weakness as the ratio of net worth to total liabilities was below standard norm and the total assets were also not sufficient to satisfy the total liabilities of the bank throughout the study period.

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METHODOLOGY RESEARCH PROBLEM Analysis of Working Capital Management in Karad Urban Co -Operative Bank.

OBJECTIVE OF RESEARCH To analyze the concept of working capital. To study the various elements of working capital. To determine the financial position of the bank.

SCOPE OF RESEARCH Working capital management is concern with the problem that arises in attempting to manage the current assets, current liabilities and the inter relationship that exists between them. The goal of working capital management is to manage the banks current assets and current liabilities in such a way that a satisfactory level of working capital is maintained. If there is no proper working capital management it is likely to force in to bankruptcy. Each of the short term sources of financing must be continuously managed to ensure that they are obtained and used in the possible way.

METHOD OF DATA COLLECTION SECONDARY DATA: It is collected from financial statements of bank as well as audit report of branch.

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LIMITATIONS OF THE RESEARCH

1. The main limitation of the research is the data source. The data is collected from the audited financial statements, which are prepared on the historical cost basis. 2. Some data due to the purpose of secrecy was not disclosed. 3. These financial statements are prepared at the end of financial year. So it gives a view on particular date. 4. Due to less time calculations are of some figures are taken only. 5. Period of research up to 5 years so the observation more than 5 years cannot be ascertained.

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DATA ANALYSIS AND INTERPRETATION BANKING BUSINESS Banking is referred as to collect the money from people as a deposit and use it as an investment and or giving loan this is banking. Laws: Banking Regulation Act, Indian Contract Act, Negotiable Instrument Act, Securitization Act, Maharashtra State Co-Op Act, Registration and Stamp Act etc. Banking Regulation Act defines what bank should do keeping to C.R.R; S.L.R; C.D.Ratio, licensing policy, issue of currency, role of RBI. etc. Trust: The money is given or borrowers belong to public hence repayment of loans must be proper and bank has to take utmost care in that respect i.e. loan must go in good hands. This is implied trust or faith while a customer keep deposit with the bank. Depositors keep faith that bank will return his deposit as and when he demands. Hence banker is the TRUSTY of each paisa of depositor. Depositors interest is having utmost importance in all walks of banking life and that is the main theme of banking.

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IMPORTANT RATIOS AS PER THE BANK VIEW

1. Cash Reserve Ratio (i.e. C.R.R.): Sec.42 of R.B.I. act 1934 enjoins the schedule commercial banks to maintain with the R.B.I. every forth night a minimum average a minimum average daily cash reserve equivalent to 3% of their demand and time liabilities (i.e.D.T.L.) in India outstanding as on the Friday of previous week . The ratio of cash reserves with R.B.I. to D.T.L. is known as Cash reserve ratio (i.e. C.R.R.) The R.B.I. is empowered to vary the C.R.R. between 3% to 15% now it is 4.75%. The C.R.R. is a highly effective instrument of monetary regulation. This is maintained on H.O. level.

2. Statutory Liquidity Ratio (i.e. S.L.R.): Central bank generally require commercial banks to hold liquid assets such as Govt. securities against their deposit liabilities in addition to cash reserve requirement this is known as supplementary or secondary reserve requirement. As per banking regulation act 1949 the banks are maintain at the close of business every day a minimum amount equal to not less than 25% of their total demand and time liabilities. The R.B.I. empowered to increase this ratio up to 40% now it is 25% it is also maintain on H.O. level.

24

SOME ADVANCED SYSTEMS OF TRANSACTION IN BANK Bank charged commission on this system so this is an important source of working capital. 1] R.T.G.S. SYSTEM : This transaction occurred on H.O level but branch can do it! The term R.T.G.S. is referred as Real Time Gross Settlement. It is the satellite system. In this system H.O. have an account in R.B.I. this is most important system in todays modern era. By using this service A/c holder can deposit/transfer amount above 2 lacs instantly in any bank and any branch. In this system bank required I.F.C code and A/c no. after completing this transaction customer gets U.T.R no. (i.e. Unit Transaction No.). By using this no. party get whole information about transaction. By providing this facility bank has been charged commission as per R.B.I. guideline so this commission is also source of working capital.

2] NIFTY: Nifty is also one of the important system which is provided by bank; in this system there is U.T.R. no. This system useful for amount below Rs.1 lacs bank charged commission on it so it is source of working capital.

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BANK PROFILE

Board of Directors:

1. Mr. Subhashrao Joshi. 2. Dr. Subhash Erram. 3. Dr. Anil Lahoti. 4. Mr. Dilip Gurav. 5. Mr. Vidyadhar Gokhale.

: : : : :

[Head of Urban Family] [Chairman] [Vice Chairman] [Chief Executive Officer] [Ex. Chief Executive Officer]

Vision and Mission: Bank has a network of 48 branches in 7 districts of Maharashtra and is planning for spreading network of 60 branches by the year 2013. Bank has a vision becoming a multi state scheduled co-operative bank and has targeted to achieve Rs. 3000 crs, of mix business tuning with competitive banking scenario, bank has plan for introducing core banking solution and ATM centers to offers integrated service to its customer. BANKS VISION IS BANKS MISSION IT Infrastructure: Information Technology and its infrastructure has been playing very vital role in all walks of our life. The banking sector is greatly benefited by modern technology The Karad Urban Co-operative Bank ltd. Karad knows the importance of computerization thus in the early of mid 87 management decided to computerize all the branches. Now a days all branches are computerized. The bank performance significantly improved after computerization in the last several years. The management of the bank is always forward looking in utilizing the latest technologies. After computerizing of branches, Information Technology department has been set up to look after this aspect.

26

The IT department is looking after entire maintenance of the hardware and development of the software modules in house.

HISTORY OF BANK

The beginning and progress: The Karad Urban Co-op. Bank Ltd., Karad is now a prominent name in Urban Banking Sector. The bank was established first as a Co-op. urban credit society in the year 1917 and was subsequently converted in to a bank who were from different walk of life, working in a various fields but having future out-look recognizing the need, established this bank way back 90 years ago. The late Dr. D.S.Erram who had vision and who along with dedicated co-operation from Mr. Shubhashrao Joshi and other board of members was able to achieve all round progress. Till 1993 the bank had only 8 branches spread over Satara district only. Since then it has expanded its wings in other prominent districts of Maharashtra viz. Sangli, Solapur, Kolhapur, Ratnagiri, Pune and Mumbai. The bank has made tremendous progress in all this districts and considering the need and demand has amended its bye-laws to cover other districts of Maharashtra viz. Raigad, Ahamadnagar and also planning to go Multi-State by opening branches in Ahmedabad and Belgaum in Gujarat and Karnataka state respectively. Scheduled Status: Due to its professional management dynamic leadership of late Dr. D.S.Erram and Mr. Shubhashrao Joshi the bank made tremendous progress in last 10 years and during the year 1999-2000 it was conferred with the Scheduled Status as mark o its financial health and confidence of the public. Computerization: In keeping with the technology developments in banking sector the bank had computerized all the branches providing quick and delightful service to its valued customers. Computerization was initiated in 1989, in phases we did all the branches
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computerized. Bank provides small collection and receipt print device to pigmy agents so agents can collect small deposit from customers door step. We have vision for centralized data storage for any storage for any time banking through core banking solutions. Social Obligation: Bank besides making all round progress in its activities, has forgotten its social obligation. Bank has established a public trust. Though this trust, timely financial help is provided to members suffering from chronic diseases and serious ailments like Heart-attacks, kidney failures and person who suffer due to accidents etc. members are also given financial aid for their higher studies in foreign countries members who make major achievement in special fields are also provided financial help needed by them. The trust has planned to establish a diagnosis center in association with other social institution and in near future CT scan, cardio logical help, pathology lab and allied services to the members at affordable rates.

SERVICES AND CHARGES OF BRANCH

Service Charges of Branch: Saving Bank A/c: Minimum Balance Rs.1000 with cheque book. Rs.500 without cheque book.

Duplicate Pass Book:

Rs.15

In operative A/c :

Rs. 20 per year.

D.D. Collection :

Rs. 50.

Charges for late payment of E.M.I.: Re.1 per day; per Rs.
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THE NORMS FOR VARIOUS SERVICE IN BRANCH

Cash payment Through Teller Cashier Receipt o cash Issue of drafts Payment of F.D. Rec. Operating an account Retirement of bill Updating of passbook Statement of A/c

Time in minutes 7 15 7 25 15 25 25 10 Within 7 days

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COLLECTION OF CHEQUE

Local (through clearing house):

1 day.

Outdoor (through counter present): Mumbai / Metro cheques:

1 day. 7 days/ 14 days.

Other cheques: Foreign Cheques:

21 days. 30 days.

LOANS AND ADVANCES Loans and advances are most important part in banking business. Branch provides this facility by way of mortgage. When bank give term loan to customer then bank kept machinery, vehicles as a mortgage .There were certain limit to this loan. Advances mean cash credit A/cs. There is a limit on advances also. Advances are beneficial for businessman and bank provide this facility to businessman by taking stock, building etc. as a mortgage .Bank provide loan and advances from its own funds (i.e. Working Capital) The daily limit of branch to retain cash up to Rs.20 lacs only because to retain excess cash is not good for bank because bank not generate the income on it.

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Interest rate of branch:-

1] Housing Loan 2] Current A/c Loan 3] Vehicle Loan 4] Gold Loan 5] Personal Loan

: : : : :

13.25% 14.50 to 15.25% 13.15% 12.50% 16 to 18%

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LOANS AND ADVANCES OF BRANCH (Rs. in lacs)

Loan and advances

Term loan

Cash credit

Total

31/3/2012

824.45

684.26

1508.71

% of total

54.65

45.35

100%

Avg.2010-11

534.55

542.65

1077.20

% of total

49.62

50.38

100%

Avg.2011-12

808.31

702.07

1510.38

% of total 2011-2012 avg. growth rate: 53.52 46.48 100%

Interest received on loan and advances: 199.98

Lending rate:

13.25

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Calculation of above table:-

1] Lending rate on advances =

. . %

2] Avg. Loan =

. . 12

3] Avg. growth rate =

(-)

Avg. figure of 2011. Avg. figure of 2010.

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BRANCH REGION AT GLANCE (Rs. in Lacs)

Particulars

31-3-2008

31-3-2009

31-3-2010

31-3-2011

31-3-2012

Deposit

692.34

1173.07

1680.52

1975.23

2259.81

Loan & advances

402.12

1008.06

1318.12

1423.19

1508.72

Profit

24.36

35.41

56.41

61.64

72.82

Borrow rate (A)

5.02

5.48

6.02

6.04

6.58

Lending rate (B)

11.24

12.21

13

13.23

13.25

Spread (BA)

6.22

6.73

6.98

7.19

6.67

No. of Employee

10

11

12

12

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Total Business

1094.46

2181.13

2998.64

3398.42

3768.53

Total Productivity

136.80

218.11

272.60

283.20

314.04

C.D Ratio

58.08%

85.93%

78.44%

72.05%

66.76%

N.P.A

1.No.of A/c

19

21

23

13

21

2.Amount

14.22

16.47

32.78

43.33

68.84

Interpretation: In above statement we can see that the borrow rate of interest on fixed deposit. It is required minimum 5% and lending rate throw light on interest rate on loan received from customer here % of interest received on loan is 13.25% in the year 2012. Spread is defined as difference between lending rate and borrowing rate. Spread show the profitability. In simple words extra spread = extra profit. Productivity is depending upon staffs business. It is tool of bank analysis. In case if there were extra staff in branch then management made transfer of extra staff in other branch where requirement of it. C.D Ratio shows relation between total deposit and loan. In year 2012 C.D Ratio decreased because loans and advances are decreased . Total Business = ( Deposit + Loan)

Total Productivity = (Deposit + Advances No. of employee )

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C.D Ratio

= (Loan Deposit 100)

BUSINESS PERFORMANCE OF BRANCH (Rs.in lacs)

1800 1600 1400 1200

Rs. in Lacs

1000 800 600 400 200 0

1 Fixed deposit 2 Saving deposit 3 Other deposit

2008

2009

2010 Years

2011

2012

Interpretation: The above graph shows that all types of deposits were increasing in the financial year 2009 but in the year 2010 the position of fixed deposit and other deposit was going down to some extent . After the financial year 2010 there were highly growth in the fixed deposit and on the other hand we can see that the position of saving deposit was increasing continuously in whole period. So from this graph we can conclude that there was found ups and downs in the types of fixed deposit and other deposit but saving deposit was show growth in whole period. The business performance of branch was on the right track since the financial year 2011.
36

MOVEMENT IN No. OF A/cs IN BRANCH

Particulars

31/3/2011

31/3/2012

Variation

1.SAVING: At the end of previous year: (-) Closed during the year: (+) New A/cs opened during the year: 259 359 100 6275 40 6494 93 219 53

Total No. of A/cs at the end of year: 6494 6760 266

2.CURRENT: At the end of previous year: (-) Closed during the year: (+) New A/cs opened during the year: 18 38 20 740 18 740 25 7

Total No. of A/cs at the e nd of year: 740 753 13

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3.TERM AND OTHER: At the end of previous year: (-) Closed during the year: (+) New A/cs opened during the year: 886 2329 1443 3328 951 3263 2042 (65) 1091

Total No. of A/cs at the end of year: 3263 3550 287

Total No. of depositors: [Saving+ Current+ T.D.]

10403

11063

660

38

STATISTICAL AND RATIO INFORMATION OF BRANCH

This information shows that the total no of customer are increased in the year 2012 as compared with the last year as well as Avg. total business also increased so like this above chart shows statically and ratio information of branch.

NON PERFORMING ASSETS OF BRANCH (i.e.N.P.A.) N.P.A.is referred as Non Performing Assets. Bank provides various types of loan by retaining certain mortgage or securities. The customer who has taken the loan he must paid installment on it. But those accounts which are not paid or not recovered interest and installment overdue more than 3 months (i.e. 90 days) this accounts referred as N.P.A. accounts as per income recognition and assets classification provision has been made. If the N.P.A. of bank is minimum then the position of bank is good or viceversa. The main cause of creating N.P.A. is no recovery of loan and advances.

Particulars

31/3/2009

31/3/2010

31/3/2011

31/3/2012

Total advances

loan

and 1008.06 1318.12 1423.19 1508.72

No. of A/cs

408

587

712

794

Gross N.P.A amt No. of A/cs Over dues: 1.No. of A/cs 2.Amount

16.47

32.78

43.33

68.84

21

23

13

21

110 19.84

125 18.82

159 38.33

116 59.89

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FINANCIAL POSITION OF BRANCH (Rs. in lacs)

Years

2008

2009

2010

2011

2012

Deposit

692.3

1173.07

1680.53

1975.23

2259.81

Loan

476.11

1008.06

1262.82

799.05

824.45

Income

79.38

118.73

169.13

205.83

235.57

Expenditure

65.02

83.32

112.72

144.18

162.75

Profit/Loss

14.36

35.40

56.40

61.64

72.82

40

2400 2200 2000 1800 1600

Rs.in lacs.

1400 1200 1000 800 600 400 200 0

Deposit Loan Income

Expenditure
Profit/Loss

2008

2009

2010 Years

2011

2012

Interpretation: The above graph shows the financial position o branch. by studding this graph we know that deposits are increasing continuously w.e.f. the financial year 2008 to 2012 As well as the income also show the position of growth in whole year. the position of loan increasing from 2008 to 2010 after that it was shows downwards position and then it was increased. The profit of branch was shown the growth position in whole financial year from 2008 to 2012 continuously The graph of expenditure also shows the position of growth in whole financial year. There were balance between income and expenditure in all years. like this branch manage the position of profit we know that profit means difference between income and expenditure if the value of difference is positive then this is profit and if it is negative then there are position of loss.
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PROFIT = INCOME EXPENDITURE

Sr.No. 1 2 Particulars Cash and bank bal. Loan and advances TOTAL 2010 18.67 1262.82 1280.1 2011 17.36 799.05 841.69 2012 16.94 824.45 839.27

From this graph we can conclude that the financial position of branch is very good. Because the graph of deposits, incomes, profits show the position of growth continuously in all years as well as there were balanced position of income and expenditure . Like this graph shows the good financial position of branch. Total Current Assets: (Rs.in lacs)

Total Current Assets

1400 1200 1000 800 600 400 200 0 2010 2011 Amt in lacs

2012

42

Interpretation: By analyzing this graph we can see that the position of total current assets shows decreasing position.

Total Current Liabilities: (Rs.in lacs) Sr.No. 1 Particulars Other liabilities TOTAL 2010 1.39 1.39 2011 1.99 1.99 2012 2.12 2.12

Total Current Liabilities

2.5 2 1.5 1 0.5 0 2010 2011 Amt in lacs

2012

Interpretation: By analyzing this graph we can see that the position of total current liabilities shows increasing position.
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STATEMENT SHOWING WORING CAPITAL. (Rs.in lacs) A]CURRENT ASSETS 2010 2011 2012

Cash and bank bal.

18.67

17.36

16.94

Loan and advances

1262.82

799.05

824.45

Total

1280.1

841.69

839.27

B]CURRENT LIABILITIES

Other liabilities

1.39

1.99

2.12

Total: Net working capital:[A-B]

1.39 1278.71

1.99 839.7

2.12 837.15

Net working capital

1400 1200 1000 800 600 Amt in lacs

400
200 0 2010 2011 2012

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ANALYSIS OF PROFIT AND LOSS ACCOUNT (Rs. in lacs)

Particulars

31/3/2011

31/3/2012

Increased/Decreased

I.INCOME: Interest Received H.O. Interest Other Income 151.95 45.42 08.46 186.72 43.04 05.81 34.76 (2.37) (2.65)

TOTAL I :

205.83

235.57

29.74

II.EXPENDITURE Interest on deposit Staff salary and allowances Deprecation and repairs Other expenses 17.41 02.17 10.76 17.25 09.26 17.47 (0.15) 07.08 06.70 113.84 118.76 04.92

TOTAL II :

144.18

162.74

18.56

PROFIT (I-II)

61.64

72.82

11.17

Interpretation: On the review of this details it is observed that there is a rise of Rs.11,17,477 in a net profit of the branch as compared to the to the last year the total income of the branch as on 31/3/2012 is Rs.1,62,74,895 the branch has made a profit of Rs.72,82,020 during the year 2012.

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By analyzing the Profit and Loss A/c of the branch we can conclude that branch has made excess profit of s.11,17,477 in the financial year 2012 as compared with the year 2011. In simple words we can say that bank is on right way of business.

BALANCE SHEET AS ON : 2010-2011-2012. [Rs. In Lacs]

Sr.No

LIABILITIES

2010

2011

2012

1.

Fixed deposit

1271.06

1481.27

1707.14

2.

Saving deposit

244.14

371.37

426.84

3.

Other deposit

165.33

122.59

125.82

4.

Interest payable and Borrowings)

(Deposit

20.61

18.61

20.71

5.

Other provisions

liabilities

and

1.39

1.99

2.12

6.

Outside liabilities TOTAL: ASSETS

59.15 1761.68

18.99 2014.82

30.87 2313.50

1. Cash and bank balance 2. Secured loan 3. Unsecured loan 4. Secured advances
46

18.67

17.63

16.94

1238.32

775.54

802.67

24.50

23.52

21.79

624.14

684.26

5. Fixed Assets 6. Mis.Assets 7. 8. Other Assets 9. Contra Items 10. H.O.Assets TOTAL: Electrical fittings and fixtures

14.94

15.36

17.13

0.57

0.62

0.69

2.32 42.78

2.40 24.08

1.63 14.49

6.17

7.15

17.62

413.41 1761.68

524.38 2014.82

736.28 2313.50

Interpretation: The statement which shows the financial position of business this is known as balance sheet. by observing the assets side and liabilities side we know the financial position of business. so balance sheet is also known as mirror of the business. By studding the balance sheet of bank the total deposit of branch is Rs.1975.23 lacs and Rs.2259.81 lacs as on 2011 and 2012 respectively there were growth of Rs.284.58 lacs in the amount o total deposit in the year 2012. From this we can say that there was growth in working capital of bank. Because deposit is the main source of working capital. On the other hand we can say that the goodwill of branch has been increased, goodwill is the main intangible assets which is on assets side of balance sheet. In other words we can say that the trust of people on the bank has been increased. Depositors keeps faith that bank will return his deposit as and when he demands. We know that the main source of the working capital of the bank is deposits. from this balance sheet we observed that the working capital of bank increased at every year. So from this it is cleared that there were growth in working capital of the bank at every financial year.

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FINDINGS

1. Movement in no. of A/cs in branch: By analyzing this statement we have been know that opening of new saving accounts on the year ended 2012 are increased as well as the same thing is happened with the Current A/cs and other accounts also, the most important thing is that total no. of depositors are shown the position of growth it is the best thing of the branch.

2. Business performance of the branch: By making study of the business performance of the branch we understand that there are ups and downs in the type of fixed deposit and other deposit but the position of the saving deposit was show growth in whole period.

3. Net working capital of branch: The statement of working capital shows that there are ups and downs in the position of working capital the graph of net working capital shows that decreasing position up to some extent so there is need of proper working capital management at branch level. 4. Financial position of branch: Analysis of the information about the financial position of the branch indicate that deposits, incomes, position of profit shows growth continuously in all year as well as there are balanced position between income and expenditure like this we found that financial position of branch is very good. 5. Deposits: The deposits are the main source of working capital by studying the financial statements of bank we can observed that the amount of Fixed deposits as well as the

48

amount of Saving deposits are increased. A continuous rise in the deposits is a positive sign by view of working capital of the bank.

SUGGESTIONS

1. Bank should use latest technologies in banking activities. 2. Attractive and competitive interest rates should be adopted since it is the main factor considered for taking loans by the customers. 3. The bank should adopt attractive and competitive rate of interest in order to induce customers to take personal loans. 4. Since all the banks are providing loans with the same features. It is recommended that bank should offer some unique features to the customers. 5. A suggestion is made to the bank to expand the business globally and offer more and more services to the people abroad. 6. Bank should follow guidelines towards priority sector and get benefits out of it. 7. Offer best customer services, lending on profitable ventures, diversifying the business to cope with the competition. 8. Need of proper working capital management. 9. Try to make fast services.

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CONCLUSION: 1. The working capital management classified in to gross working capital and net working capital. Net working capital is more important because in long run view of working capital management have to concentrate on the net value of the current assets. 2. Working capital protects the bank perishing due to sudden break out of strikes, natural calamities. 3. The working capital is essential for maintaining the financial position of the bank. 4. Working capital protects the bank from going bankrupt. So in such a way working capital plays a vital role in the banking business.

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REFERENCES

For the preparation of the project report following books and websites were referred. Financial Management by N. M. Vechalekar. www.karadurbanbank.com www.inwestorwords.com www.investopedia.com

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