1

INTRODUCTION OF BANK

BANK

There is no clear-cut definition of Bank, Banking, and Banker. A bank or banker or banking business is one in which is engaged in trading in money depositing and lending and serving the society in achieving its objectives of economic progress and social well-being. The Indian Banking egulation Act, !"#" defines the Banking $as accepting for the purpose of lending or investment of deposits of money from the public repayable on demand or otherwise and withdraw able by che%ue, draft, otherwise.&

INTRODUCTION OF BANKING SYSTEM:

Banking system occupies an important place in a nation's economy. In other words, the development is an inevitable precondition for the healthy rapid development of national economic structure. Banking institutions have contributed much in the development of the developed countries of the world and hence a banking institution is indispensable in a modern society. It plays a pivotal role in the economic development of a country and forms the core of the money market in an advanced country. In a society, banking is an important as blood in human body. Banks, as social organi(ation, have to go out to the people and assist weaker sections in achieving their aspirations) they are, thus, to act as catalytic agents for the development of the country. *obili(ing resources wherever these be a channeling them towards productive purposes. +ew strategies have to be evolved for industrial development, both in the small-scale and large-scale sectors and rather than confiding to the traditional way of storage and distribution finance of a short term nature, developmental finance and term lending have to be taken up by commercial banks, similarly, opening of branches in rural and urban areas and efficient customer services have assumed great importance. After independence the Indian ,overnment also has takes a series of steps to develop banking sector, because of considerable efforts of the government today we have number of banks in India. Indian banks contribute a lot in the development of agriculture, trade and industries.

BANKING SYSTEM IN INDIA AFTER INDEPENDENCE:

-hen the country attuned independence in !"#., there were /#0 commercial banks with #,0!" branches in India because of fre%uent failure of banks in the country. The ,overnment of India decided to regulate and reform the banking system. The eserve bank of India was nationali(ed in !"#". In addition, the banking companies Act was passed in the same year. The name of Act was 1ater it changed to banking regulation Act in !"/2. 3nactment of the banking companies act was an important landmark for the smooth progress of commercial banks in the country. A said earlier, state bank of India was created by nationali(ed of the imperial bank of India in !"22. The 4tate bank was opened a large number of branches in rural and semi-urban areas and has launched several schemes for the farmers, artisans and small-scale units. A scheme of social control on bank was enforced through statutory measures with effect from ! 5ebruary !"/". The banking industry saw a revolution after !# major commercial banks were nationali(ed in 6une !"/". *ore than "78 of the bank deposits came under the control of the government. 9reference was given to rural areas while opening branches. egional rural banks scheme was launched on : ;ctober !".2. 4i< more leading commercial banks were nationali(ed in !"07. Because of the recommendations of 4iva aman committee, agricultural credit department corporation were combined together to set up national bank for agriculture and rural development =+ABA >? I+ 6@1A !"0:. 1AT3 , TB3 3C9; T A+> I*9; T BA+D ;5 India =e<im bank? and the national housing bank were set up in !"0# and !"00 respectively.

STRUCTURE OF BANKING IN INDIA:

3

STRUCTURE OF INDIAN BANKING SYSTEM

Unorganized Organized

1. $.

i!en"ed Credi#or" Un%i!en"ed Indigeno&" 'one(%ender".

Co)o*erati+e Ban, Re"er+e Ban, o- India Co''er!ia% Ban,

P&/%i! Se!#or: 1. S#a#e Ban, oIndia $. S&/"idiarie" oS#a#e Ban, oIndia .. Na#iona%ized Indian S!2ed&%ed Co''er!ia% Ban,

Pri+a#e Se!#or: 1. Bran!2e" oBan," In !or*ora#e o&#"ide India $. O#2er Indian S!2ed&%ed Co''er!ia% Ban, .. Non S!2ed&%ed Co''er!ia% Ban,

1.

S#a#e Co) o*era#i+e Ban, a# S#a#e %e+e% $. Cen#ra% Co) o*era#i+e Ban, a# Di"#ri!# %e+e% .. R&ra% Pri'ar( Co) o*era#i+e /an, o- 0i%%age 1. Ur/an Co) o*era#i+e Ban,
4

INTRODUCTION OF PRIME COCOPERATI0E

5

BANK
9rime bank is !Eyears old Fooperative Bank which started from +ovember !""#. The Fhairman of prime Bank is *r. ,okul Bakshi. It's network is e<panded to +avsari, Bharuch, Bardoli, and Bilimora. It is authori(ed to accept $+ 1 >eposits&.

T3EIR MOTTO
4O*era#ion "#o* in #2e e+ening. 52a# Con#in&e" i" 66.O&r Re%a#ion"2i*.7

T3EIR 0ISION
A -&%%( e8&i**ed One 9 "#o* 2ig2 9 #e!2 4Ban,ing S&*er Mar,e#7

and'ar, a!2ie+e'en#
1::1 Bank was incorporated under the chairmanship of *r. ,okul Bakshi. Bank commenced business from a rented location. etail banking was the initial activity of the bank. 5ocus of strategy was stability, market penetration, resources build up and steady growth. 1::; 9roduct development strategy initiated. Bank started financing small scale industries as recommended by BI from ,oiporia Fommittee and +arsimha committee. 1::< $Fustomer is a king& approach initiated concept of information technology were used like T313 BankingG emote Banking with the advent of computeri(ed operations. ;fftime banking concept were introduced i.e. evening /H77 p.m. to 0H77 p.m. were provided for bank's retail customer to reduce their Fash risk and continue as on date. 1::= Branch 3<pansion 4trategy initiated and bank started its first branch Bhulka Bhavan Branch at Adajan in August !"". with in the very ne<t month i.e. 4ept.". bank had started another Branch at Datargam ,I>F. 1::> Branch 3<pansion had continued during the year and Erd branch was opened in 6une "0 at *.,. oad, #th branch was opened in oct-"0 at new sardar market I 2th branch was opened in >ec-"0 at bhatar char rasta. 1::: Bank has taken permission from BI to accept the + I deposits. Introducing $smart cash& J a smart alternative of cash named as $prime purse&. It is useful at !#E places in the entire 4urat area and response encouraging received from valuable class of people of 4urat. $??? Bank started with opening of a new millennium branch at navsari =millennium branch in feb.:777 first bank in south ,ujarat to open its out city branch. Bank has opened another outstation branch at Bharuch in sep:777, starting to open >-*AT aGc in +ovember :777

$??1 9rime Fompleted its !7th anniversary, and introduced schemes like 9rime 4arasvatee, 9rime Bealth Fard and 9rime Fiti(en for its valued customers. $??; 9rime joined its hands with -orlds +umber 2 raked Insurance 9rovider named AKIKA Insurance, providing 1ife Insurance and with I55F;-T;DI; for providing *arine Insurance and ,eneral Insurance to its customers. $??< Introduced 4chemes like 1oan for ,old in partnership with IFIFI Bank. Also opened a Bill Follection Fentre at its Bharuch Branch for collecting ,as Bills of ,ujarat ,as Fo. 1td. To make payment system %icker BI has launched T,4 scheme for scheduled bank, 9rime has joined hands with Dalupur Fommercial Bank to help its customers to have the advantages of T,4
Prime has done a remarkable job as Baroda District Industrial Co-operati e Bank!s mer"er #ith Prime Co-operati e Bank$ placin" its mana"ement on its % branches$ #hich has increased area o& its #orkin" upto Chotta 'daipur in (ujarat just %2 km a#a) &rom the *P border+

9rime started the process of 5ranking on :!st +ov. at 4urat I Baroda, whire customers can bring in their blank papers and convert them to a stamp paper without paying additional fees.

Ser+i!e"

i-e In"&ran!e
%

Bank has tied with Aviva 1ife Insurance Fo ltd. It is joint venture between >abur J Indian 5*F, Fo I AKIKA J @D's +o ! I world's +o 2 insurance co. All the branches are offering all the insurance products of AKIKA vi( for your child education, daughter's marriage, your retirement solution, term plan etc.

Genera% In"&ran!e

Bank has tied with I55F;-T;DIA; ,eneral Insurance. It is joint venture between I55F; a big fertili(er company in co-operative sector I T;DIA; ,eneral Insurance J 6apan's +o ! I world's +o 2 ,eneral Insurance Fo. All the branches are offering all the products vi( *ediclaim, Accident insurance, Kehicle Insurance, Bouse Insurance, factory I 4hop keeping Insurance.

M&#&a% F&nd

Bank has tied with 9rincipal 9+B *utual 5und, @TI, Benchmark, IFIFI 9rudential.

o!,er"

ent free locker facility are available in Baroda, at Bharuch, +avsari I at following branches of 4urat !. Bhulka Bhavan =Adajan? oad, :. 9alanpur oad E. Fitylight oad, #. Bhatar Fhar asta 2. 4ardar *arket Branch and /. 1algate Branch

0a%&e added "er+i!e"

,

Pri'e Ci#izen: 4enior Fiti(ens are provided e<tra ! 8 interest on their deposits, which can be directly transferred in their prescribed bank accounts other than 9rime, each month. Pri'e Ti'e: >eposits 4cheme which automatically gets renewed every !2 days. Pri'e Ge': basis. eceive Interest on >eposits based upon your needs every month, %uarter, half year or Aearly

Pri'e Band2an: A deposit scheme relieving you from buying gifts for those special regular occasions like Birthdays, anniversaries, >iwali, akshabandhan etc. Pri'e Sara"@a#i: A deposit scheme savings plan for the future education of your beloved ones. Pri'e Go%d: >eposits s. "!!G- for !2 months of s. /.EG- for /7 months and receive s. !,77,777G- at the end of the term. Pri'e P%&": eceive more than double at the end of !72 months. Pri'e Mone(: 9rovides all facilities with ;ver >raft facilities against the Time >eposits. Pri'e Si%+er: 5le<ible interest rates for affordable monthly savings plan. Pri'e Se+a: All the Branches are Interconnected and thus, customer can avail immediate >emand >raft facilities at any main branch. Luick receivals of che%ues at *ain Fenters. 4pecial 3<tra Insurance for 1arge >eposits. 4enior Fiti(ens get an added ! 8 e<tra on their deposits.

1.

1. Pri'ar( O/Ae!#i+e":
To find out the performance of the bank. To find out the increase in the net profitability of the bank in last four years. Se!ondar( O/Ae!#i+e:

To find out the Administrative Fost as against >eposits. To find out the income generated against 1oan I Advances. To find out the spread earned between >eposits I Advances. To find out the increase or decrease in assets and liabilities of the bank as compared to previous year. To find out the different ratios and compare it with ideal ratios.

$. Re"ear!2 De"ign
The analysis of the bank is done in which past data of financial statement is used to interpret the financial position of the bank and to find out the net profit earned between >eposits accepted and 1oan and Advances given. Re"ear!2 In"#r&'en# 5or the purpose of financial analysis and finding out net profit earned between >eposits accepted and 1oan and Advances given, secondary method.

B.C Period o- #2e "#&d(

The study based on the data of last four years that is from financial year :77.-:770 to :7!7-:7!!.

B1C So&r!e" o- da#a !o%%e!#ion

=aC Se!ondar( So&r!e" 4econdary data taken from annual balance sheet of the bank, Fooperative bankers hand book, 9rime Bank's E/2 days diary, Banking JTheory And 9ractice, Banking reforms in India.

B;C Me#2od o- Ana%("i"

5ollowing tools of analysis have been used to analyse the data collectedH Fomparative 5inancial 4tatement.
11

atio Analysis +et profit between >eposits and Advances.

B<C i'i#a#ion o- #2e "#&d(

=a? I have done analysis on the assumption that all the figures of balance sheet are correct. =b? I have taken many presumptions in my study, that the information revealed during the personal discussion with the staff was upto the mark. =c? As my time period of study was less, if study was e<tended for longer periodof time there are possible chances of deviations. =d? There are some figures which are not available in the balance-sheet which I have collected through personal discussion with the F.3.;. and I presume that they would be correct.

12

13

Ca%!&%a#ion O- S*read Earned Be#@een De*o"i#" And Ad+an!e" o- $?1?)11:

Par#i!&%ar De*o"i#" Ad+an!e" In+e"#'en# in Go+ern'en# Se!&ri#(

A'o&n# 1::1<.=?><.1. 1?.1?$;:.<.1: .?<?:<<...??

T(*e" O- De*o"i#" Term >eposits 4aving Bank deposits Furrent >eposits To#a%

A'o&n# Bin R".C 1$?:;1==:..1. ..1:;1:<1.;; 1;?1<=.$>.1? 1::1<.=?><.1.

In#ere"# on De*o"i#" ED*en"e" Interest on 4aving bank >eposits Interest on ecurring >eposits Interest on Term >eposits Interest on 9rime ,ifts To#a% A'o&n# o- In#ere"# =:=?=$..>$ .1.=>;$.1; >11<;1>=.?? $:11=1..?? :;;1;>?<.$=

A+erage Co"# o- De*o"i#" M =Interest paid on >epositsGAverage ;utstanding >eposits? N !77 M ="22!207/.:.G!./"."7272? N !77 M 2.#7 8

No#e: Average ;utstanding >eposits M =Flosing >eposits O ;pening >eposits? E :

14

F =!""#/E.70/.#EO!2##"#E":E.E.? E: F !./"."7272.

oan" and Ad+an!e"

T(*e" O- Ad+an!e" Fash Fredit Against 5i<ed >eposits Against ,ovt. 4ecurity Against ;ther eal 4ecurity @nsecured 3ducational loan 79ersonal loan Bill 9urchased G>eposits ,old 1oan 4taff loan 1ess 4uit 5ile ecovery To#a%

A'o&n# Bin R".C $11??;.$<.?: 1.$==:.<:.:< 1?1.:<1$.?: <11?<=>=<.>< 11=1?;?.<$ ?.?? :<1111:.:$ ><$:=1.?? 11.<<11..;? 1?111;?$.1. ).=$;??<.$> 1?.1?$;:.<

In#ere"# on oan" and Ad+an!e"

In!o'e A!!o&n#" Interest on ;verdraft A'o&n# o- in#ere"# 11?<.$?;.=1
15

Interest on Fash Fredit Interest on 1oan Against F1, Interest In+e"#'en# 9enal 4ecurity Interest ,overnment Int. 3arned on B> 4hare in Fentral Fo-;perative Bank Interest 5und on 4taff 1oan 4haresG*utual >iscount 3arned 5i<ed >eposits with a. b. Interest on Banker's Account 4tateGFentral Fo-;perative Bank ;ther InstituteGBanks +egotiating Fharges 1ess H Interest on ebate ,ratuity Investment To#a% To#a%

$1>=;???..> <1<;=;;...1 >$1.<;.$= A'o&n# Bin R".C =>1$<?.;1 .?<?:<<...?? 1=1:<;.??1<?;?.?? ;??<<>.?? 1=====>?.?? $=:$$>.?? .??.?? 1?;$>==.$.?? ;??.?? .=:?1:=?$.;< >$1.?:.?? $1$<=11.?? 1?$?>11.=.$ 111?<;1<.>.;<

A+erage Yie%d on Ad+an!e" M =Interest earned on Advances G Average ;utstanding Advances? N !77 M B!7:70##E..:G 0.!/"#/72.2? M !!..! 8 N !77

No#e: Average ;utstanding Advances M =Flosing Advances O ;pening AdvancesC E : M =!7E#7:2"E/O.7"E/E:.#."7?G: M 0.!/"#/72.2

In+e"#'en#

16

In#ere"# on In+e"#'en#

In+e"#'en# Interest on Banker's 5> Interest on Investment To#a%

A'o&n# Bin R".C 1=111<1$.1: $1:1?$>$..> <:.;1>:1.>=

A+erage Yie%d on In+e"#'en# M =Interest earned on Investment G Average ;utstanding Investments? N !77 M =/"E2!0"#.0.G!7:!/E0#2.? N !77 M /.." 8 No#e: Average ;utstanding Investment M =Flosing Investment O ;pening Investment? E : F =!!!7/2#/E0.2/ O "E:/:::./.77?G: F !7:!/E0#2.

Ad'ini"#ra#i+e Co"#

T(*e O- Co"#"

A'o&n# Bin R".C

1%

4alaries I Allowances ent, Insurance I 1ightning 1egal I Fonsultation Fharges Audit 5ee 9ostage, Telegram, I Telephone Fharges epairing I *aintenance >epreciation 9rinting 4tationary I Advertisement ;ther 3<penditure To#a%

$<1111?<.?? >>$1<>?.:; $::1$?.;? $?1???.?? >=.<1;.$< ..$?<$$.?? 1<;$?<1.?? $?11>$1.1=

:$?>;$;.1; ;;;?;;>>...

Ad'ini"#ra#i+e Co"# #o De*o"i#"

De*o"i#" !""#/E.70/.#E !77

Ad'ini"#ra#i+e Co"# 22272200.EE =P? :..0

In!o'e on Ad+an!e"

T(*e O- In!o'e Fommission I 3<change

A'o&n# Bin R".C ;;1:<1=.:=

1,

>ividend 9rocessing 5ees Incidental I ;ther Fharges 4hare Transfer fees Bill collection Fommission 9rofit on 4ales of 4ecurity 9rofit on 4ales of Assets Insurance Flaim *iscellaneous Income To#a%

;1:??.?? 11<1>.1.?? >=$?11?.1< 1$?.?? 1<>;.?? ;<;;??.?? 1=;1.?? 1.:<.1.?? $?;;.?? 1<1<1;?1.1.

In!o'e #o Ad+an!e"

Ad+an!e" !7E#7:2"E/ !77

In!o'e Earned !/#/#27#.#E =P? !.2"

Ra#io o- Di--eren# T(*e" o- De*o"i#" in To#a% De*o"i#"

5i<ed >eposits 4aving Bank >eposits Furrent >eposits Total >eposits /7./# !/.." ::.2. !778
1-

To#a% Co"# Administrative Fost 41 F M M M :..07 7.277 7.#:7

To#a%

E..7

SPREAD

Interest income on Advances and Investments M =Total AdvancesN Aield on it? O =Total Investment N yield on it? Total Advances and Total Investment

M =!7E#7:2"E/ N !!..#? O =!!!7/2#/E0.2/ N E.:E? =!7E#7:2"E/ O !!7/2#/E0.2/? M =!:7:2.:!/E/ O E20.#!##0E? =!!##/072.2? M !2/!E!E/!!" !!##/072.2 M !E./# 8

Income earned on Advances and Investments M !E./# 8 =1ess? Interest paid on >eposits M 2.:7 8

Ne# S*read Earned

F 0.## 8
2.

S*read: It shows the profit earned by the bank between the yield on investments I advances and cost of deposits. 4o it shows how much actually the bank is earning profit or incurring losses between the deposits accepted and loan and advances given.

Ra#io Ana%("i"

Sr. No.

Ra#io" :77.-

Year" :770:77":7!721

:770 ! Average Aield on Advances !:...

:77" !:.0:

:7!7 !:.2.

:7!! !!..!

Average Aield on Investment

".72

0.7/

/.2#

/.."

Average Fost of >eposits

..EE

/.0:

2.#E

2.#7

Aield on Assets

".!E

".:2

..0#

..E!

Fost of 5unds

/.:E

2.0:

#.#"

#.//

Fost of management as 8 to -orking 5unds

!..E

!."#

!..2

!..:

Fost of management as 8 to >eposits I Advances

!.E#

!.2!

!.#2

!.E0

Fost of management as 8 to Advances

E..E

#.!:

#./!

#.7E

"

Fost of management as 8 to 3arning Assets

7.:#

:.!7

!.0.

!.0#

!7

isk Fost

7."E

7.!E

7.22

-7.E#

!!

+et *argin

:.0"

E.#E

E.E2

:./2

!:

4alary as 8 to Total 3<penses

!7./E

!:.!0

!#.2.

!2."7
22

!E

Interest 9aid as 8 to Total 3<penses

.!.!E

//."0

/#.0"

20.:/

!#

;ther 3<penses as 8 to Total 3<penses

:../

#.7E

2.77

2./!

!2

4alary as 8 to Total Income

../2

!7.7/

!!.//

!E."7

!/

Advances to Assets

#/.7#

#..7"

E.."7

#:./E

!.

,overnment 4ecurity to Investment

:0.02

E7.0"

:/../

:..2/

!0

,overnment 4ecurity to Assets

!!.2/

!!.""

!E.E#

!:./:

!"

Interest Income to Total Income

0:.:E

00.0#

"!.."

"!.:#

:7

Income 5rom ;ther 4ources as 8 to total Income

!.../

!!.!/

0.:!

0../

:!

Interest 9aid as 8 to total Income

2!.!!

22.:"

2!."#

27.":

::

Fost of *anagement to Total Income

!2.":

:7.:.

:7.0:

::.!/

:E

Fredit >eposit atio

22..!

2...0

#2.":

2!.0#
23

:#

Average Aield on -orking 5und

"./"

".!0

0.:#

!#.!.

:2

Average cost of -orking 5und

/.7E

2..!

#.//

.."!

:/

5inancial *argin

:.0"

E.#E

E.E2

:./2

:.

Transaction Fost as 8 to -orking fund

!.00

!.".

!.00

E.##

1. A+erage Yie%d on Ad+an!e": This ratio indicates how much income the banks earn from interest on advances as against total advances given to others. This ratio was !:...8 in :77. J :770 which has increased to !:.0:8 in :770 J :77", but it has decreased in :77"-:7!7. This shows an increase in the income of the bank and its ratio has increased much more in year :770-:77"as compared to :77.-:770 and that compared to increase in ratio for year :77"-:7!7 and :7!7 -:7!!. $. A+erage Yie%d on In+e"#'en#: This ratio indicates how much interest is earned on investments, investment interest on bankers account, etc. as against total investment done by the bank. It was ".728 in :77.-:770, in :770-:77" it was 0.7/8 and /.2# 8 in :77"-:7!7 and /.."8 in :7!7-:7!!. The bank has to %uickly take precautionary steps to improve the yield on investment done by it. .. A+erage Co"# o- De*o"i#": This ratio indicates how much cost is incurred as against deposits taken from the public. It shows how much interest is paid on prime gift. It was ..EE8 in :77.-:7770 which has decreased to /.0:8 in :770-:77", 2.!" 8 in :77"-:7!7 and 2.#78 on :7!7-:7!!. Bank should try to reduce this cost to increase its profitability. 1. Yie%d on A""e#":
24

This ratio indicates the percentage of the interest earned as against the total assets of the bank. It was ".!E8 in :77.-:770 which has decreased to ..0#8 in :77"-:7!7 and ..E!8 in year :7!7-:7!! the assets have decreased as compared to previous year. ;. Co"# o- F&nd": This shows how much e<penditure is done in the form of interest for receiving funds in the form of deposits, other liabilities, own fund, etc. This cost was /.:E8 in :77.-:770 which has decreased to #.//8 in :7!7-:7!!. <. Co"# o- Manage'en# a" G #o 5or,ing F&nd: Fost of management includes the e<penses done for managing the bank like salary, rent, legal and audit fees, etc. The ideal ratio is between !-!.2. This ratio indicates that from working fund how much is the cost of management e<penditure. This ratio was !..E in :77.-:770, !."# in :77#-:772, !..2 in :77"-:7!7 I !..: in :7!7-:7!!. It has decreased in :7!7-:7!! but it's above the ideal ratio means the bank is liberal and should take steps to reduce the ratio. =. Co"# o- Manage'en# a" G De*o"i#" and Ad+an!e": This ratio indicates the proportion of management e<penditure in total deposits and advances. This ratio was !.E# 8 in :77.-:770 which has increased to !.E0 8 in :7!7-:7!! because the cost of management has shown increase in it as compared to previous year and deposits and advances has also increased.

>. Co"# o- Manage'en# a" G #o Ad+an!e": This ratio indicates the management cost as against advances. It was E..E 8 in :77.-:770 which has increased to #.7E 8 in :7!7-:7!! because both the cost and advances has increased as compared to previous years. :. Co"# o- Manage'en# a" G #o Earning A""e#": 3arning assets shows management cost as regards to earning assets. It was shows management cost as regards to earning assets. It was 7.:#8 in :77.-:770 which has increased to !.0#8 in :7!7-:7!!. 1?. Ri", Co"#: This ratio shows the performance of assets and also erosion of assets. It was 7."E8 in :77.-:770 which has increased to 7.228 in :77"-:7!7 and decreased to =-7.228? in :7!7-:7!!. As this ratio has decreased so it is a good signal for the bank. 11. Ne# Margin: This ratio indicates the difference between the yield earned and cost of management and the risk cost. It shows the whether the bank has earned profit or incurred loss. This ratio was :.0"8 in :77.-:770. It increased in :77#-:772 to E.#E, the bank has earned profit so it is a good signal for the bank as its profitability has increased. But it is bit decrease in :7!7-:7!! to:./28.
25

1$. Sa%ar( a" G #o ED*en"e": This ratio indicates the proportion of staff cost in total e<penses of the bank. This ratio was !7./E 8 in :77.:770 which has increased to !2."7 8 in :7!7-:7!!. Thus it shows increase in the salary e<penditure of the bank. 1.. In#ere"# Paid a" G #o ED*en"e": This ratio shows how much interest is paid on deposits as against total e<penses of the bank. The ideal ratio is .7-.2. The ratio in prime bank was .!.!E 8 in :77.-:770 which has decreased to 20.:2 8 in :7!7-:7!!. The decrease in this ratio indicates that deposits have decreased as compared to previous years. 11. O#2er ED*en"e" #o To#a% ED*en"e": This ratio shows the e<penses other than the interest e<penses incurred by the as regards to total e<penses. It was :../ 8 in :77.-:770 which has increased to 2./!8 in :7!7-:7!! which shows risky signal to the bank as its other e<penses are increasing so its profitability decreases. 1;. Sa%ar( a" G #o To#a% In!o'e: This ratio shows the proportion of staff cost in the total income of the bank. It was ../2 8 in :77.-:770 which has increased to !E."7 8 in :7!7-:7!!) it means that proportion of salary has increased more as compared to increase in total income.

1<. Ad+an!e" #o A""e#": This ratio shows aggressiveness in improving Fredit >eposit atio by higher advances which determines profitability. It was #/.7# 8 in :77.-:770 which has decreased to #:./E 8 in :7!7-:7!!. It is a warming signal for the bank as its advances are decreasing so steps should be taken to increase high yield advances. 1=. Go+ern'en# Se!&ri#( #o In+e"#'en#: Investment by bank in the government security is the best as it is risk free securities. If investment in the government security is more then bank has sound financial condition and it also indicates the li%uidity of the bank. Thus, higher the ratio higher is its li%uidity. It was :0.02 8 in :77.-:770 which has decreased to :..2/ 8 in :7!7-:7!!. But it is very less decrement but it must take some steps to increase this ratio. 1>. Go+ern'en# Se!&ri#( #o A""e#": This ratio shows aggressiveness in improving Fredit >eposit atio by keeping investment lower. It was !!.2/ 8 in :77.-:770 which has increased to !:./:8 in :7!7-:7!!. 1:. In#ere"# In!o'e #o To#a% In!o'e: This ratio indicates the proportion of interest income in total income. Bowever, this ratio has to be e<amined with reference to other ratios. The ideal ratio is "7-"2 8. It was 0:.:E 8 in :77.-:770 which has increased to
26

"!.:#8 in :7!7-:7!!. Thus, we can conclude bank's loan and advances has increased as compared to previous years $?. In!o'e -ro' O#2er So&r!e" #o To#a% In!o'e: This ratio shows the amount of other income in the total income. The ideal ratio is less than !7 8. Income 5rom other sources includes fees, charges, etc. This ratio indicates the e<tent of bank from these sources. It was !.../ 8 in :77.-:770 which has decreased to 0../ 8 in :7!7-:7!!. $1. In#ere"# Paid #o To#a% In!o'e: This ratio indicates the proportion of interest income utili(ed for meting the interest cost. It also indicates the spread available to the bank to meet the cost of management and other cost. It was 2!.!! 8 in :77.-:770 which has decreased to 27.": 8 in :7!7-:7!! even though the bank must take some steps to reduce the ratio. $$. Co"# o- Manage'en# #o To#a% In!o'e: This ratio indicates what part of total income goes towards cost of management. The ideal ratio is :2-E7 8. It was !2.": 8 in :77.-:770 which has increased to ::.!/ 8 in :7!7-:7!!.

$.. Credi# De*o"i# Ra#io: This ratio indicates management aggressiveness to improve income. It also indicates how well the lending business of the bank is going. The ideal ratio is /7-.7 8. It was 22..! 8 in :77.-:770 which has decreased to 2!.0# 8 in :7!7-:7!!. 5urther steps should be taken to improve it. $1. A+erage Yie%d on 5or,ing F&nd: This ratio indicates the proportion of yield in working fund by the bank. It was "./" 8 in :77.-:770 this has increased to !#.!. 8 in :7!7-:7!!. $;. A+erage Co"# o- 5or,ing F&nd: This indicates the proportion of cost i.e. interest e<penses in total working fund of the bank. It was /.7E 8 in :77.-:770 which has increased to .."! 8 in :7!7-:7!!. It shows that deposits and borrowing have increased so its interest e<penses have increased as compared to previous years. $<. Finan!ia% Margin: This ratio indicates the difference between average yield on working fund and average cost of working fund. It was :.0"8 in :77.-:770 which has increased to E.E28 in :77"-:7!7. This shows that the profit of the bank has increased as compared to previous years. But it decreased to:./2 in :7!7-:7!!. 4ome steps should be taken to improve it.
2%

$=. Tran"a!#ion Co"# a" G #o 5or,ing F&nd: This ratio indicates the truncation cost i.e. cost of management in total working fund. It was !.00 8 in :77.:770 which has increased to E.## 8 in :7!7-:7!!. This shows that the cost of bank has increased as compared to previous years.

Conclusion
!. The net spread of the bank has increased as compared to :77.-:770. It was E..!8 in :77.-:770 which has increased to 2.:78 in :7!7-:7!!. This shows increase in the profitability of the bank. :. Administrative cost has decreased as compared to the previous years. It was E.7!:8 in :77.-:770, :..078 in :7!7-:7!!. E. Average yield on advances has decreased, average yield on investment but average yield on working fund has increased. #. The interest payment by the bank is increased as compared to theprevious years. 2. The risk cost has decreased, that is good signal. The bank has aware about the nature of the customer that to whom we should give loan or not. /. The e<penses like salaries, 95, postages-telegram, rent-ta<es, printing-stationary, depreciation e<penses, interest on deposits and borrowings has showed a continuous rise in every year. .. Income in the form of commission-e<change, processing fees, bill collection, etc. has showed a continuous increment.
2,

0. Interest and discount earned has showed a continuous rise than previous years. ". 1iabilities like share capital, reserve fund and other fund, deposits and other accounts have shown a continuous rise than earlier years. !7. Fash in hand, current account with banks, bills receivables have continuous increased. !!. >eposits of the bank have increased as compared to previous years means interest e<penditure has increased. !:. 1oan and advances have also increased as compared to previous years means interest income also increased. But interest e<penditure has increased more than interest income. !E. +et margin of the bank has shown downward trend, so steps should be taken to improve it. !#. Investment in government securities have reduced compare to previous years so this investment ratio must be improved to increase the li%uidity of the bank. !2. 9resent F> is less than the ideal ratio so steps must be taken to reduce this ratio.

2-

After the study of this project the different things comes in my mind. According to my opinion, Karachha Fooperative bank is related with distribution of better service in 4urat. Also part of commitment, it also provides financial help to the society.
3.

Today, the Karachha Fo-operative bank has highly motivated work force with high sense of belonging and pride. Teamwork within and between departments is also very good. 9rovide better I fast service to customer. Bank continuously gets audit class $A& in every year. The staff members of bank are very well e<perience and trained enough. The profit of the bank is at increasing rate. The bank has fully computeri(ed system. The total deposit has been in high growth rate. Bank has a good image of its main branch as well as service provide that image can also be build up by providing that kind of service at all other branches. The bank can attract more customers through their well services.

31

32

=!? The bank can increase the profit by reducing the cost of deposits. =:? The cost of deposits can be reduced by mobili(ing the low cost deposits e.g. Furrent account, 4aving Bank account, deposits for short term=!-07days, for years ? etc. =E?The bank can increase the profit by reducing the cost of management. =#?The cost of management can be reduced by reducing the e<penses e.g. by saving electricity, rent etc. The bank can increase the profit by attracting customers through new short term deposits schemes.

33

34

Boo," Banking Theory I 9ractices By 9.D. 4hrivastava 9ublication By Bimalaya

*anagement Accounting - .4.+. 9illai I Bhagvati Indian 5inancial 4ystem - Bhai Bharti 9athak

i"# o- @e/)"i#e"
httpHGGwww.google.co.inGsearchP%MhistoryOofObankIieMutf-0IoeMutf-0Ia%MtIrlsMorg.mo(illaHen@4HofficialIclientMfirefo<-a httpHGGen.wikipedia.orgGwikiGBankQofQIndia httpHGGwww.primebankindia.comGhistory.html httpHGGwww.primebankindia.comG>eposit.html httpHGGwww.primebankindia.comGdeposite8:7calculator.html httpHGGwww.primebankindia.comG4ervices.html httpHGGwww.primebankindia.comGprofile.html

35

Co'*ara#i+e Finan!ia% S#a#e'en# o- Ba%an!e S2ee#

36

ia/i%i#ie" $??=)$??>

Year $??1)$??; $??:)$?1? $?1?)$?11

4hare Fapital 8

:/.EE"77

:0!7".#7 2.!2

:"E::/77 #.E!

E#7.0.77 !/.::

eserve 5und I ;ther 5und 8

!07..!/#.

!.:#0""/#.: -#.20

!"0.7.0E2.0 !2.:7

::0:!7./... !#.02

;ther 1iabilities 8

:22E227:.22

:"7#7!!".72 !E..:

:."":E:0.E2 -E./!

#/E7E"E!..E /2.#:

>eposits I;ther 5und 8

!E::/2"#E/

!EEE/7070/ 7.0E

!2##"#"":E !2.02

!""#/E.70/ :".!!

Bills for Follection 8

.7:0"02./#

2:72.!..E# -:2."#

#:2"/#/.:0 -!0.!.

2E/."0!..# :/.7:

9rofit I 1oss Account 8

:7//2!#2."2

E!".EE!..! 2#..:

E72.2."0.20 -#.E.!

:E/E/0#E.#! -::./"

A""e#"

Year
3%

$??=)$??>

$??1)$??;

$??:)$?1?

$?1?)$?11

Fash in hand 8

#02/!E7..2!

."E0E.#7.2. /E.#.

07!#7.E#.E" 7."2

/.E."E#".!0 -!2.":

Furrent Account with Bank 8

!!:/722E../

!7/".#0"7.. -2.77

!!!."!020." #.27

!7"02"#27.E -!..E

>eposits with Bank 8

#22/0/2E!."

#E."0"!:".2 -E.00

/0!7!##:2 22.#"

.0#EE.#E#./ !2.!.

Investments In ,overnment 4ecurity 8

!02:E7."7

!"/#2/E:0 /.7/

:#"/!7.#: :..7/

E7/7"//EE ::./E

Advances 8

.E/"!:/!2.E

..7..."!0." #./7

.7"E/E:.#." -..".

!7E#7:2"E/ #2...

;ther Assets 8

!#/E2#!/.7.

0E"!#":."2 -#:.//

2./EE20."" -E!.E:

!/".E70".7! !"#.27

Co'*ara#i+e Finan!ia% S#a#e'en# o- Pro-i# H o"" A!!o&n#

3,

ED*en"e" $??=)$??>

Year $??1)$??; $??:)$?1? $?1?)$?11

Interest on >eposits I Borrowings

00#!7E"E.7.

":!.!02:.":

0!/2"!27..:

"2/0#E#/.0 !

8 4alaries Allowance I 9rovident 5und !E:70"#E.27 !/.//E.7.27

#.:2 !0E:".#:.27

-!!.#!

!..!0 :/!!!7/.77

8 ent - Ta<es 02:.#22.#! 0##""##.2"

:/."E ."7#.0!.E.

".E:

-02..2 00:#/07."2

8 1egal Fharges :#::#2.77 /07./:./2

-7."! :2"/E/.77

-/.#2

!!./# :""!:7.27

8 9ostage J Telegram I Telephone Fharges .2:!.!.#0 !:2"E77.#7

!0!.7: .::02/.02

-/!.0/

!2.:! 0.E/#2.:/

8 9rinting J 4tationary I Advertisemen t !/!0207."7 !EEE#2.."#

/..#: !2".E!:.2.

-#:./7

:7.0/ :7!!0:#.#.

8 >epreciation #!7#0"E."! #00#E.E.77

-!../: #/#2E"0.2"

!".."

:2."2 #/2:7/#.77
3-

8 ;ther E#E2#E:.!: 22#!//".#:

!0."" /:0/!E2.0:

-#.0"

7.!# ":702:2.!2

4.

In!o'e $??=)$??>

Year $??1)$??; $??:)$?1? $?1?)$?11

Interest ->iscount 3arned 8

!#:7.707E.: !#0!!2::7.. #.:2 !##E7"".! -:.2. !.!#E/EE:.! !0.07

Fommission J 3<changed 8

2!E"!!.": E."::"..E" /E.."E #22/.!..00 :7.!/ 22!"/!..". :!.!E

9rocessing 5ees 8

2#:720

E2!#"7 -E2.!/

/0/.". "2.#7

!#/!0E# !!:.02

Incidental *iscellaneous Income E"2E:!/..# 8 #07/2E7."2 :!.2" /."/#7E.:# #!.#7 0.:7#!7.#/ :0.E!

9rofit on 4ales ;f 4ecurity

:!7E:#.7

"/:/!.7

/#:277

2/2277

-2#.:E

-"E.EE

-!!."0

41

A""e# and ia/i%i#ie" a" on .1"# Mar!2 $?11 BS#a#e'en# 1C

42

ia/i%i#ie" 4hare Fapital eserve >eposits Borrowing ;ther 1iabilities Total

A'o&n# E#7.0.77.77 ::0:!7./../" !""#/E.70/.#E /"E0!E#.E. #/E7E"E!..E :E!7!/0/:7

A""e#" Fash in Band Balance with Bank Investment 1oans ;ther Assets

A'o&n# /.E."E#".!0 !!#02"#27.:2 E7/7"//EE.77 !7E#7:2"E/.!" !/".E70".7! !2E"EE##20

43

In!o'e and ED*endi#&re a" on .1"# Mar!2 $?11 BS#a#e'en# $C

ED*en"e" Interest on >eposits I Borrowing 4alary

A'o&n# "2/0#E#/.0!

In!o'e Interest I >iscount

A'o&n# !.!#E/EE:.!!

:/!!!!7/.77

Fommission I 3<change

22!"/!..".

ent and Insurance 1egal Fharges Audit 5ees 9ostage epairing >epreciation 9rinting ;ther 3<penses Bad I >oubtful 9rovision 9rofits Total

00:#/07."2 :""!:7.27 :7#777.77 0.E/#2.:/ EE:7/::.77 #/2:7/#.77 :7!!0:#.#. ":702:2.!2 :E"#!0E.77 :E/E/0#E.#! !..::7"/!./7

;ther eceipts

!7"##00/."/

Total

!0."770E..7#

44