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INTERNSHIP PROJECT REPORT ON SOUTH INDIAN BANK LTD

Submitted in partial fulfilment of the requirement for the award of the
Degree of Bachelor of Business Management
Of Christ University

By
BEATRICE K VINCENT
Reg. No. - 1011214

Under the guidance of
Mrs. MALABIKA PURKAYASTHA



Department of Management Studies
Christ University
Bangalore
2012-2013


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DECLARATION

I declare that this summer internship project report with South Indian Bank Ltd is a record of
bonafide research carried out by me under the supervision of Mrs. Malabika Purkayustha,
Department of Management Studies, Christ University, Bangalore.

I further declare that this has not previously formed the basis of the award of any degree,
diploma or other similar title of recognition.






Place: BANGALORE BEATRICE K VINCENT
Date: 8/6/2012 1011214












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CERTIFICATE

This is to certify that this summer internship project report with South Indian Bank Ltd,
submitted to Christ University in partial fulfilment of the requirement for the award of the
Degree of Bachelor of Business Management, is a record of the original and independent
work carried out by BEATRICE K VINCENT under my guidance and supervision.
This has not previously formed the basis of the award of any degree, diploma or other similar
title of recognition.









Place: Bangalore Mrs. MALABIKA PURKAYUSTHA

Date: 8/6/2012









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PLACE COMPANY CERTIFICATE HERE














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ACNOWLEDGEMENT

I would like to express my profound gratitude to all those who have been instrumental in the
preparation of this project report. I wish to place on records, my deep gratitude to my project
guide Mrs. MALABIKA PURKAYUSTHA, a highly esteemed and distinguished guide for
her expert advice and help.
I would like to thank Dr (Fr) Thomas C. Mathew, Vice-Chancellor and Dr. Jain Mathew,
HOD for their support.
I am deeply grateful to (* Mr. ROSHAN JOSE, Company Guide , South Indian Bank Ltd,
Trichur* ), for the co-operation extended by his team for me to help on completing my
Summer Internship
Lastly, I would like to thank God, my Parents and Friends for their constant help and support.



BEATRICE K VINCENT
Register No. 1011214











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TABLE OF CONTENTS

Sl. No Contents Pg. No
1 Introduction 1-5
2 Objectives of studying the organization 6
3 Overview of the organization 7-17
4 Organizational structure 18-21
5 Structure of the finance department 22-29
6 Functions of the finance Department 30-33
7 Practical experiences 34-50
8 Short falls/ weaknesses of the finance department 51, 52
9 Conclusions & Recommendations 53-55
10 References & Sources 56
11 Annexure 57-60





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BANKING SECTOR
Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India, which started in 1786, and Bank of
Hindustan, which started in 1790; both are now defunct. The oldest bank in
existence in India is the State Bank of India, which originated in the Bank of
Calcutta in June 1806, which almost immediately became the Bank of Bengal .
This was one of the three presidency banks, the other two being the Bank of
Bombay and the Bank of Madras, all three of which were established under
charters from the British East India Company. For many years the Presidency
banks acted as quasi -central banks, as did their successors. The three banks
merged in 1921 to form the Imperial Bank of India, which, upon India' s
independence, became the State Bank of India in 1955.

SEVERAL FACTORS ARE RESPONSIBLE FOR LOWER
VALUATIONS OF PUBLIC SECTOR BANKS

1. Lower asset quality Gross NPA levels of PSU banks at 2.7%, compared to 1.9% for
new private banks and 1.8% for foreign banks
2. Slower growth CAGR in balance sheet for private banks over 2003-07 is 35%, more
than double that of PSU banks at 16%
3. Lower productivity Profit per branch for PSUs is only Rs 0.5 crores compared to Rs
2.5 crores for private banks. Profit per employee is also much lower at Rs 2.6 lakhs vs Rs
7.6 lakhs for the private sector
4. Different customer profile Foreign and private banks share of younger customers is
over 60% PSU banks have only 32% customers under the age of 40. Private sector banks
also have a much higher share of the more profitable mass affluent segment
5.Losing share in fee based wholesale and retail banking products ECM, M&A,
Institutional equities, transaction banking and cross-sell of investment products, and
insurance



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9

IMPERATIVES FOR BANKING SECTOR
Retail
Provide the new products demanded
Create infrastructure for new channel access
Provide financial advice.
Build stronger relationships
Leverage new technologies for customer value management

Rural
Capture fully the banking potential in the mass affluent and upwardsServe across
product categoriesRaise standards to match urban customers
Create a new model to reach the unbankedSavings as much as lendingNew
technology which does not need physical presencePartnerships a mustNew methods
of managing channels
Wholesale

Fund infrastructure growth pegged at excess of US$600 billion in the next 5 years
through variety of instruments
Provide cost efficient credit and services to the large and mid corporate sectorCredit
at the right time in the right quantumTrade intermediation services (factoring,
forfaiting, structured finance)Hedging services (interest rates, fx, commodities)
Investment/ Surplus management products (structured products)Transaction
intermediation services (local and global)
Provide capital raising and advisory servicesEquity raisingDCM as a viable
substitute to creditM&A/ PE advisory to large and mid corporate (help Indian
corporate in their quest to go global)

SME

Go beyond creditTransaction servicesPE advisoryCorporate structuring
Relationship management


10

Creation of a model which combines institutional skills and local touch points is
critical
Shift mindset from treating SME as priority sector to being business.




11

TRANSFORMATION OF THE INDIAN BANKING SECTOR HAS
SEVEN KEY ELEMENTS

A: Industry structure
B: Social development
C: Unified regulator
D: Corporate governance
E: Supporting infrastructure
F: Labour reforms
G: Real sector reforms

Indian banks, the dominant financial intermediaries in India, have made good progress over
the last five years, as is evident from several parameters, including annual credit growth,
profitability, and trend in gross non-performing assets (NPAs). While the annual rate of credit
growth clocked 23% during the last five years, profitability (average Return on Net Worth)
was maintained at around 15% during the same period, and gross NPAs fell from 3.3% as on
March 31, 2006 to 2.3% as on March 31, 2011. Good internal capital generation, reasonably
active capital markets, and governmental support ensured good capitalisation for most banks
during the period under study, with overall capital adequacy touching 14% as on March 31,
2011. At the same time, high levels of public deposit ensured most banks had a comfortable
liquidity profile. While banks have benefited from an overall good economic growth over the
last decade, implementation of SARFAESI1, setting up of credit information bureaus,
internal improvements such as upgrade of technology infrastructure, tightening of the
appraisal and monitoring processes, and strengthening of the risk management platform have
also contributed to the improvement. Significantly, the improvement in performance has been
achieved despite several hurdles appearing on the way, such as temporary slowdown in
economic activity (in the second half of 2008-09), a tightening liquidity situation, increases in
wages following revision, and changes in regulations by the Reserve Bank of India (RBI),
some of which prescribed higher credit provisions or higher capital allocations. Currently,
Indian banks face several challenges, such as increase in interest rates on saving deposits,
possible deregulation of interest rates on saving deposits, a tighter monetary policy, a large
government deficit, increased stress in some sectors (such as, State utilities, airlines, and


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microfinance), restructured loan accounts, unamortised pension/gratuity liabilities, increasing
infrastructure loans, and implementation of Basel III.



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THE MAIN OBJECTIVE OF SELECTING SOUTH INDIAN BANK LTD
FOR STUDYING IS:
To observe the finance system of the bank, to know how banks support the economy
of the country.
To implement theoretical knowledge in practical field.
To understand the management system of the bank which consists of experienced
professionals of the bank
Want to scrutinize newly and highly integrated computerized system for doing
banking transactions.
To know banks activities i.e. its services and products.
The bank is certainly one of the leading banks in South India, the reason being I
selected it for Internship and learning purpose.



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BRIEF HISTORY
One of the earliest banks in South India,South Indian Bank" came into being during the
Swadeshi movement. The establishment of the bank was the fulfilment of the dreams of a
group of enterprising men who joined together at Thrissur, a major town (now known as the
Cultural Capital of Kerala), in the erstwhile State of Cochin to provide for the people a safe,
efficient and service oriented repository of savings of the community on one hand and to free
the business community from the clutches of greedy money lenders on the other by providing
need based credit at reasonable rates of interest. Translating the vision of the founding fathers
as its corporate mission, the bank has during its long sojourn been able to project itself as a
vibrant, fast growing, service oriented and trend setting financial intermediary.
South Indian Bank Limited (SIB) is a private sector bank headquartered
at Thrissur in Kerala, India. It is headed by Dr VA Joseph, Managing Director & CEO of the
bank. South Indian Bank has 701 branches and 2 extension counters spread across more than
26 states and union territories in India. It has set up 665 ATMs all over India.
[1]
In the year
2010-11, the bank is planning to add 60 more branches throughout India, thus allowing it to
have a presence in all the states of India. The current growth plan of the bank is to establish
750 branches, 750 ATMs and 750 billion businesses by the end of financial year 2013. The
bank offers major services in various segments- accounts and deposits, loans, mutual funds,
insurance, money transfers and other value added services. The Kerala government had given
permission to SIB to accept commercial taxes. The bank has been appointed as the largest
service provider (point of sale) for the New Pension Scheme (India) launched by the
Government of India.
Business of SIB currently stood at about 50350 crore. However, the bank is in the top league
in terms of margins and asset quality. The bank operates primarily in South India. However,
it is expanding its reach in the other parts of the country as well.


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BRANCH NETWORK
The bank has been successful in spreading its coverage across the country from South to
North and West to East with 700 branches, 2 extension counters and 660 ATMs. The branch
network now covers 26 states & union territories.
TECHNOLOGY AS THE KEY DRIVER OF BUSINESS
The Banks ambitious technology up-gradation project named SIBERTECH by introducing a
Centralised Core Banking Solution Finacle in technology partnership with the Infosys
Technologies Limited is complete and all the branches/offices all over the country have been
linked to the Centralized Data Centre at Kochi and hence 100% of the Banks business is now
absolutely on-line. The Disaster Recovery Facility is functioning at Bangalore. Technology is
emerging as a key driver of Business in the banking and financial services industry. SIBs
Core Banking or Centralized Banking provides connectivity between branches and also
helps to offer a large number of Value-added products, benefiting a large number of
customers.
SIBs Global ATM cum Debit Card can be used at over 8 lakhs ATMs and 120 lakh
merchant establishments all over the world. The Global ATM cum Debit Card of South
Indian Bank, which recently became the first Kerala based bank to have directly joined the
National Financial Switch (NFS) of the institute for the development of research in Banking
Technology (the technical arm of the Reserve Bank of India), can also be used at over 20,000
ATMs all over India. In 2004 SIB kicks off Real Time Gross Settlement (RTGS) operations.
The Bank, as part of the global brand building exercise, has signed mega star padmashree
Bharat Mammootty as its Global Brand Ambassador
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Conscious of the corporate social responsibility, SIB has launched the Money Lender-Free
Village a pilot project at Meloor in Trichur District of Kerala. The main objective of the
project is replace the non-institutional, usurious, exploitative rural credit mechanism of
private lending with lending through Self-Help Groups (SHGs) and direct lending by SIB.
Under this initiative, SHGs act as extension of SIB to reach out to villages in even the
remotest locations. This project though started very recently could garner acclaim from many
quarters.


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The bank has also commenced a rural empowerment initiative in association with the Kerala
Agricultural University. While the bank would provide the necessary finance, the university
would impart the requisite skills and technology required for the sustainable development of
agriculture to the banks borrowers in the rural areas. The project would be executed through
the NGO called, organization for Women Empowerment & Rural Development. The Bank
has launched a new product, SIB JUNIOR to inculcate the savings habit among the children.
To achieve this corporate objective, the bank is targeting schools and colleges in the country
with this product.
BACKGROUND
Type: BSE 532218, SOUTHBANK-NSE
Founded: 1929 at Thrissur, India
Headquarter: Thrissur, Kerala, India
Key People: Dr V.A Joseph, Managing Director and Chief Executive Officer
Industry: Banking, Financial Services, Insurance, Capital Markets
Products: Loans, savings, Investment Vehicles, Insurance etc
Net Profit: Rs 2925641 crores
Staff Strength: 5750
Website: www.southindianbank.com





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NATURE OF THE ORGANIZATION
South Indian Bank is a private sector commercial bank. It seeks to serve its customers
through its wide network of branches, extension counters and ATMs. It offers a wide variety
of loans and deposits schemes. Non-resident Indians are also offered housing loans and loans
against shares, securities and immovable property. NRIs are also offered deposit facilities.
The Banks ambitious technology up-gradation project named SIBERTECH by introducing a
Centralised Core Banking Solution. The E-banking services of bank consist of RTGS and
NEFT Channels for transfer of funds and SMS alert banking services. Account holders who
have enrolled themselves for these services can view their account balances and take
printouts of their account statements, make online purchases, make E-payment of taxes and
transfer funds between approved accounts without visiting the branches. It issues domestic
and global credit cards. SIB is the first private sector bank from India to provide management
support to an exchange house in the Middle East. This enables SIB to Provide top quality
service, to NRIs looking at remittances to India, in a technology driven environment.
The bank safeguards money and provide loans, credit and payment services such as checking
accounts, debit card and cashiers cheques. It also offers investments and insurance products.
As a variety of models for cooperation and integration among finance industries have
emerged, some of the traditional distinctions between banks, insurance companies and
securities firms have demolished. In spite of these changes, it continues to maintain and
perform their primary role-accepting deposits and lending money. SIB is committed to
become a technology-driven, customer-oriented bank where passion for excellence is a way
of life, innovation is a tradition, commitment to values unshaken and customer loyalty is
abiding.
SLOGANS CHANGING WITH TIIMES
The South Indian Bank Ltd. - In Step With Progress
Growing To Serve You Everywhere
Your Interest Above Everything Else
A Bank For All Seasons
Blending Tradition with Technology
Experience Next Generation Banking


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VISION
To emerge as the most preferred bank in the country in terms of brand, values, principles
with core competence in fostering customer aspirations, to build high quality assets
leveraging on the strong and vibrant technology platform in pursuit of excellence and
customer delight and to become a major contributor to the stable economic growth of the
nation.
MISSION
To provide a secure, agile, dynamic and conducive banking environment to customers with
commitment to values and unshaken confidence, deploying the best technology, standards,
processes and procedures where customer convenience is of significant importance and to
increase the stakeholders value.
BUSINESS VOLUME
GROWTH (Last 3 Years)
Portfolio As on
31.03.09
Gr.
Amt
Gr.
%
As on
31.03.10
Gr.
Amt
Gr.
%
As on
31.03.11
Gr.
Amt
Gr.
%
Deposit 18070.73 2854.32 18.76 23051.53 4980.80 27.56 29755.20 6703.67 29.08
Advance 12126.15 1358.74 12.62 16138.33 4012.18 33.09 20805.45 4667.12 28.92
Total
Business
30196.88 4213.06 16.21 39189.86 8992.98 29.78 50560.65 11370.79 29.01
SB
amount
3459.67 583.96 20.31 4271.46 811.79 23.46 5202.62 931.16 21.80
CD
amount
827.35 57.86 7.52 1047.54 220.19 26.61 1197.68 150.14 14.33
CASA
amount
4287.02 641.82 17.61 5319.00 1031.98 24.07 6400.30 1081.30 20.33





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MILESTONES
First among the private sector banks in Kerala to become a scheduled bank in 1946.
First bank in the private sector in India to open a Currency Chest in April 1992.
First private sector bank to open a NRI branch in November 1992.
First bank in the private sector to start an Industrial Finance Branch in March 1993.
First among the private sector banks in Kerala to open an overseas branch in June 1993.
First bank in Kerala to develop an in-house, fully integrated branch automation software.
First Kerala based bank to implement Core Banking System.
Third largest branch network among private sector banks in India
AWARDS AND ACCOLADES
Best Bank in Asset Quality Award- Dun & Bradstreet.
No. 1 in Asset Quality- Business Today Ranking of Banks.
Best Performer in Asset Quality- Analyst 2008 Survey.
Top NPA Manager- ASSOCHAM- ECO Pulse Survey.
Best Old Private Sector Bank- Financial Express India's Best Banks 08-09.
Best Asian Banking Website- Asian Banking & Finance Magazine, Singapore.
Best private sector bank in India in the service quality segment-Outlook Money - CFore
Survey
Special award for excellence in Banking Technology from IDRBT (Institute for
Development & Research in Banking Technology) the technical arm of the Reserve
Bank of India as a national level recognition to the excellent contribution made in the
area of Information Systems Security Policies and Procedures.
South Indian Bank has bagged the Business world Indias Best Bank 2010 Award.
South Indian Bank received the award for the Best Bank in the old generation banks
category - fe Indias Best Bank Awards . Financial Express Awards for Indias Best
Banks were selected by Ernst &Young. The function was organized at the Taj Mahal
Hotel, Mumbai on 25th July, 2009.
South Indian Bank received the award for the best bank in asset quality among all private
sector banks in India from Mr.James E Thompson, GBS Chairman & Chief Executive,
Crown Group of companies on 18th February 2009 at Mumbai.


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OLD CORPORATE BRAND LOGO



BRAND AMBASSADOR
The bank, as part of a global brand-building exercise, has signed South Indian actor
Padmashree Bharath Mammootty as its brand ambassador banking on the film star's `pan
India appeal, clean image and popularity among the NRI community'. His tech savvy image
goes hand-in-hand with the bank which has always been at the forefront of embracing
technology. The initial contract between the bank and actor was for three years which was
later extended for five more years.
[4]
Currently SIB is the only bank in South India that has a
brand ambassador. By endorsing Mammootty as its global brand ambassador, SIB has
received a huge boost especially in the Middle East.
Financial results for the year 2010-11
Revenues: 2642.70 crores
Financial results for the year 2009-10
Total Business: 39125 crores
Revenues: 2144.18 crores
Profit After Tax: 233.76 crore (20% growth)
Stock Market Capitalization: 1,574.75 crore as on Feb 23, 2010.
The bank showed a consistent growth in its earnings and grew over 20% which is higher than
the industry average. The bank targeted a business of 360 billion for the financial year
2009-10, but the growth was so quick that it was achieved before time. Later the target was
increased to 380 billion and that too was exceeded before the quarter end. South Indian
Bank is targeting a total business of 480 billion for the FY 2010-11.



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NUMBER OF EMPLOYEES
South Indian Bank is now one of the leading scheduled commercial banks in India with a
strong focus on technology and customer service. SIB has a pan India presence with 700
Branches and 660 AMs across the India. The total number of Employees of the Bank as on
31-12-2008 is 4826.
The Bank has achieved a record net profit of Rs. 292.56 Crore during the year registering.
As per Reserve Bank of India guidelines, the Bank has migrated to new Capital Adequacy.
The total number of employees as at the yearend was 5879
As on March 31, 2012, the Bank had 5879 personnel on its rolls as against 5619 as on March,
31, 2011. Cadre wise break up is as under:

CADRE MALE FEMALE TOTAL
Officers 1925 753 2678
Clerk 1241 1154 2395
Peon 533 24 557
Part-time employees 96 153 249
Total staff 3795 2084 5879








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PRODUCT LINE

The products of the bank are essentially in the form of services. SIB Ltd has taken up product
development to attract customers from outside the present market, increasing sales to the
existing market and to reduce the cost of providing identical or similar services. The bank
mainly offers three types of services- Personal Banking, NRI Banking and Business Banking.
Loans
Housing Finance(SIB Home Loan)
Mortgage Finance(SIB Mortgage Loan)
Vehicle Finance(SIB Mobile Loan)
Personal Loans(SIB Personal Loan)
Educational Loans(SIB Vitjan Pradan Scheme)
Loan for multiple purpose(SIB-Flexi Loan Scheme)
Gold Loans
Loans For agricultural and allied activities(SIB Agriflex)
Loan for subscription to share issues(SIB-Fortune)
Loans for purchase of computer(SIBER Loan)
Loans for treatment of physical disorders(SIB Life line)
Loans to meet expenses of auspicious events(SIB Utasav)
Loans to employed women(SIB-Sthree-Sakthi)
Pravasi Swagath
Accounts & Deposits
a. Savings account
Regular savings-with normal cheque book facility
Privilege savings-with complete anywhere banking facility
Group salary saving account-for every employee to meet the expectations
Junior savings-for the students above the age 12
SARAL savings-no frill account-low minimum balance
Youth plus savings-an exclusive savings bank account exclusively for women.


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SB invest-an exclusive account for demat/trading account holders

b. Term deposit
Kalpanidhi-interest is compounded quarterly
SIB Flexi deposit-automatic part disclosure to cover savings account deficit
Fast cash deposit-short term deposit with part closure option
Fixed deposit-interest is paid out quarterly/monthly
Recurring deposit-fixed monthly instalment scheme

c. Financial inclusion smart card account

Value added services
a) Any branch banking\
SIB PRIVILEGE card for individuals
SIB PREMIUM for the business class
b) Global ATM cum credit card
Global ATM cum Debit card
Privilege card
Internet banking (all types of business concerns)
Mobile banking(proprietorship firms)
Credit card(personal use of individuals)
c) SIB-CITI bank co-branded international credit card
SIB collect(fast collection of cheques / drafts)
Demat services(online holding of shares)
New pension system
PAN service agency
M-commerce
Cash management services(CMS)
Money transfers
Insurance



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AREA OF OPERATION
The SIB has no overseas branch. The bank has built a network of 678 branches, 2 extension
counters and 634 ATMs as at 31.12.2010 that spans all 26 states and union territories in the
country. SIB plans 750 branches and 750 ATM by 2013.









25






26





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MAIN OFFICES

NO OF BRANCHES STATES
119 Andhra Pradesh
2 Assam
1 Bihar
1 Chandigarh
3 Chhattisgarh
21 Delhi
5 Goa
6 Gujarat
4 Haryana
1 Jammu & Kashmir
2 Jharkhand
14 Karnataka
386 Kerala
2 Madhya Pradesh
25 Maharashtra
1 Meghalaya
2 Nagaland
2 Orissa
2 Pondicherry
4 Punjab
2 Rajasthan
119 Tamil Nadu
1 Tripura
9 Uttar Pradesh
1 Uttaranchal
10 West Bengal




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AREA DISTRIBUTION OF BRANCHES & ATMs

Sl. No Classification No. of branches
as on 06.01.12
% to total no.
of branches
No. of ATMs % to total
No. of ATMs
1 Metro 99 14.67 103 16.72
2 Urban 1422 21.04 137 22.24
3 Semi urban 310 45.93 306 49.68
4 Rural 124 18.37 70 11.36
Bank total 675 100 616 100


COMMENTS ON ORGANIZATIONAL STRUCTURE

The organization structure of the bank consists of three tiers viz, Head office, Regional
Offices and branches. The bank has also set up 14 regional offices to exercise immediate
supervision and control over the branches under their jurisdiction. All regional offices are
headed by experienced executives in the senior/top management grade. Head office has
various functional departments that are instrumental in policy formulation and monitoring the
performance of regions.
SIB mainly Has a managing director and the Chairman who Directs all the activities in the
organization.
The firm has a very systematic Organization structure it a structure which helps each and
every person know their responsibilities and also they follow the vertical structure where the
lower level employee is answerable to his senior which is very important in the construction
industry since day to day progress in the business must be known and immediate action must
be taken if there is any error.




29


NUMBER OF EMPLOYEES WORKING IN THE FINANCE DEPARTMENT
The Finance Department is responsible for managing all the finances of the organization. The
finance team are responsible for dealing with all money coming into and going out of the
organization.SIB has 14 Employees working in the finance Department. The main role of this
department is maintaining Balance Sheet, Tax, SLR & CLR Ratios. The main duties of
finance department are:
Maintain financial accounts


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Payment of bills and expenses
Collection of accounts due
Monitoring of funds
Payment of wages & salaries
Provide information for managers and decision makers within business

General Manager & CFO

The main responsibility of this employee is to decide the cost centre of a
particular transaction to prepare the financial Statement , Profit And loss account of the
company.

Deputy General Manager:
A deputy general managers main duties include learning the manager or CEOs job, assisting
the manager or CEO with duties, monitoring policies and procedures and suggesting
improvements and function as a project manager.

Chief managers-2:

The main responsibility of this employee is paying the Service Tax, mai nt ai ni ng
bal ance s heet and cas h management Etc... The 1
st
CM is responsible for cash
management and the 2
nd
CM is responsible for tax and maintaining balance sheet.
Senior Managers-3:
He is responsible For Maintaining all the the books of accounts, balance sheet ,tax and to
check if error happened during the recording.
Clerks:

Bank clerks are responsible for carrying out the clerical and record-keeping functions at
banks and similar financial institutions. Although they share many of the same duties as
tellers, they generally perform routine, face-to-face transactions with customers, while clerks


31

perform more complex back-room work. The duties of bank clerks vary between jobs and
assignments, but there are a number of tasks common to most positions.


32

FINANCE & ACCOUNTING OPERATIONS






33

FINANCE OPERATIONS

Preparation of monthly MIS reports:

These reports are mainly prepared so that the directors can evaluate the current
financial position of the company. It mainly includes the balance sheet, profit and loss
statement, the collection from the debtors, the new order book. Pipe line orders, orders
achieved during the month, Cash flow, Consolidated Order books.

Invoicing:

The main source of funds for synergy is its debtors who are liable to pay them. So based on
the agreement which the company has had with its clients, invoices are raised And
the payment is collected this is a very important operation of synergy.

Taxation:

The Service tax, TDS, ESI needs to be paid to the government which requires through
analysis and day to day checking of bills Order book: Another important finance operation
which takes place is maintaining order book. Every agreement needs to be filed this
agreement mainly has the time period of the agreement and the amount to be raised every
month b y the company. This is a important function as it is the main source for the funds
company
Bank reconciliation:

Bank reconciliation statement is prepared and the reason for error is found so that there is
no problem during the closing of books and the company has the correct record. This
operations helps them to have proper supervision of their cash flow.



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ACCOUNTING OPERATIONS

SIB Follows Centralized System of accounting which is handled by its head office in
Bangalore. The Accounting operations which are carried on in synergy are the following:
Recruitment: One Important operation carried on by the Manager HR is preparation of offer
letter to the potential employees of the company. All the branch managers will send in the
Bio Data of the concerned employee after he is selected by them, then the head office would
prepare the offer letter to the potential employee who needs to send back the date of joining
to the head office.

Reimbursement of expenses:

All the expenses which are occurred by the employees in the organizations needs to
reimbursed and this is done twice a month. All expenses like travel, conveyance, food etc are
reimbursed.

Maintenance of Books:

Another important function of the accounting department is the maintenance of the journal
vouchers, reimbursement, agreements, and order books.

Pay roll:

The Manager HR also has to pay the salary to the employees every month, after monitoring
their attendance.


FINANCE PERFORMANCE IN SIB

Banks are major players in the accounting and finance operations of businesses of all sizes.
Therefore, to understand the operation of the accounting systems within or between
businesses, or the finance structures within which a business operates, it is important to be
aware of the nature of banks and how they operate. This section details a number of the many


35

banks that operate in various places around the world. It is no longer the case that banking is
restricted by geography and technology is making this true in practice for more and more
businesses, by opening up international banking opportunities to smaller enterprises.

PROFIT:

The Bank has achieved a record net profit of Rs. 292.56 Crore during the year registering a
growth of 25.15% over the previous year. The Bank could achieve this quantitative
enhancement in net profit essentially on account of higher scale of operations and better
management of assets and liabilities of the Bank. The Profit and Loss Account shows an
Operating Profit of Rs. 548.08 Crore before depreciation, tax and provision as per details
given below:
(Rs. in Crore)
Profit before depreciation, taxes & Provisions 548.08
Less: Depreciation 22.82
Provision for NPA/NPIs 28.84
Provision for depreciation on investments 9.37
Provision for contingencies 20.00
Provision for Income Tax/ Wealth Tax 152.94
Provision for standard advances 21.60
Provision for restructured advances (0.05) 255.52
Net Profit 292.56
Transfer from Investment Reserve 4.70
Brought forward from last year 17.03
Profit available for appropriation 314.29
Appropriations
Transfer to Statutory Reserve 73.15
Transfer to Revenue & Other Reserves 150.00
Transfer to Special Reserve u/s 36(i) (viii) of 7.00
Income Tax Act, 1961
Proposed Dividend 56.50
Dividend Tax on Proposed Dividend 9.17


36

Carried over to Balance Sheet 18.47
Total 314.29




37

ACCOUNTING SYSTEM OF THE ORGANIZATION
The accounting system consists of the following:

1. Basis of Preparation

2. Revenue Recognition

3. Investments

4. Advances

5. Fixed Assets

6. Transactions involving foreign exchange

7. Employee benefits

8. Segment Reporting

9. Earnings Per Share (EPS)

10. Taxes on Income

11. Impairment of Assets

12. Accounting for Provisions, Contingent Liabilities and Contingent
Assets

13. Net Profit





38

FINANCE SYSTEM OF THE ORGANIZATION

Monthly MIS reports are prepared which consists of :
Pipeline orders
Order achieved during the month
Order book
P&L account
Balance Sheet
Cash Flow
Above reports are prepared monthly, quarterly, half yearly and yearly.
These reports are then reviewed by the board of director every quarter.
Invoicing: SIB depends on its debtors for its working capital management.
The main source of funds for SIB is its debtors who are liable to pay them. So based on the
agreement which the company has had with its clients, invoices are raised And the payment is
collected this is a very important operation of sib.
ORDER BOOK:

Another important finance operation which takes place is maintaining order book. Every
agreement needs to be filed this agreement mainly has the time period of the agreement and
the amount to be raised every month by the company.
This is a important function as it is the main source for the funds company.
TAXATION:
The Service tax, TDS, ESI needs to be paid to the government which requires through
analysis and day to day checking of bills. This is done by the manager finance who needs
to pay the service tax on or before 5th and the TDS on or before 7th of every month.



39

USE OF ELECTRONIC DATA IN DECISION-MAKING

Electronic systems which have been used by sib have made their work easier and also free
from errors.
The main electronic systems they use are Tally and Relyon. Relyon is software for assessing
Salary; it will help the Manger HR to know how much salary the company has to pay during
the month. This software is used for computation of the Tax i.e.., TDS which has to be paid
by every individual employee working in the organization. It has the salary structure of each
and every employee the bank account number, their designation etc...
This software also can generate salary slip to each employee so that they know the reason
for deductions in their salary.
TALLY:
This system is used in the finance department for day to day recording of the transactions,
Preparation of cheques, journal entries. Tallying whether the entries have been previously
Made or not. This system helps the department to keep a track of the amount paid etc. Its
helps the management in decision making since with the help of tally we know the Cash flow
in the organization. The Profit and Loss Account, the balance sheet, ratio analysis, Sale of
services Etc... Are known which will help in decision making in the company.
Maintenance of staff records was streamlined under HRMSS (Human Resources
Management System Software). The personnel data can be accessed by all controlling offices
and various reports based on the data can be generated.




40

MOBILIZATION OF FUNDS

The funds are used mainly for the following purposes:
Payments of salary
Day to Day transactions
Travel Expenses
Conveyance Expenses
Petty cash maintenance
Staff welfare
Printing and stationery
Procurement of fixed Assets for the company
Also to pay tax to the government
These funds are got by raising the invoices to the debtors, there will be a cash flow which are the funds used
by the company.





















41


CHART SHOWING FUND MOBILIZATION


Inference
It is clear from the table that the main source of funds of the bank is deposits
and the least important one is borrowings. The total fund shows a steady
growth, which shows a minor growth from the year 200609. But it shows
sharp increase in 2010-11 ie.26.32 %. In the year 2006-07 the total fund is rs 10,
2202,327 thousands & in 2010-11 total fund is rs.248272032.


0
50000000
100000000
150000000
200000000
250000000
300000000
2006-07 2007-08 2008-09 2009-10 2010-11
250000000
150000000
100000000
50000000


42

SOURCES OF FUNDS
2010-11 total fund 248272032

ITEM

AMOUNT

% TO TOTAL FUND

Share Capital

1130065

0.45%

Reserves & Surplus

13717089

5.52%

Deposits

230115241

92.68%

Borrowings

3309637

1.33%




Sources of funds
Deposits
Share Capital
Borrowings
Reserves & Surplus


43

ALLOCATION OF FUNDS
The fund which the company mobilizes is used for various purposes like:
Payments of salary
Day to Day transactions
Travel Expenses
Conveyance Expenses
Petty cash maintenance
Staff welfare
Printing and stationery
Procurement of fixed Assets for the company
Also to pay tax to the government
Running expenses (bills)
Reimbursement of the expenses incurred
Bank charges
Insurance
Capital item procurement
Branch transfer
Petty cash






44

FINANCIAL ANALYSIS FOR THE LAST FIVE YEARS

Short term financial position of the bank includes changes in current assets and liabilities and
finally the working capital. Here current asset increased by 28.08% which includes the
increase in cash with Reserve Bank by 28%, decrease in balance with bank by 23.97% and
increase in advances by 33.55%. current liability is increased by 23.7% which includes the
increase in deposits by 27.18% and the decrease in borrowings by 19%. Long term financial
position of the bank includes increase in the fixed asset by 11.9% and increase in other assets
by 46.2% too. At the same time there is no increase or decrease in share capital. Whereas
reserve has been increased by 15.22% increasing in reserve shows the profit of the bank. By
analyzing the present financial analysis, it is very clear that the overall profitability of the
bank is good.

As we are going through the profit and loss account of South Indian Bank, we can see a
gradual growth. In 2008-09, the bank registered a net profit of 194.75 crore which is higher
than that of previous year. Despite recession, South Indian bank could achieve a profit of
Rs.233.76 Crore in the year 2009-10 registering a growth of 20.1% over the previous year.
The bank could achieve this improvement in net profit mainly on account of higher scale of
operations and better management of assets and liabilities of the Bank. The profit and loss
account shows an operating profit of Rs.427.33 crore, before depreciation, tax and provision.



From the above diagram, it is clear that the return on equity is increasing year by year. That
means, the bank is able to pay its equity shareholders. In 2006-07 it was only 13.62 and now
0
5
10
15
20
2006-07 2007-08 2008-09 2009-10 2010-11
Return on Equity(%)
Return on Equity(%)


45

it has been increased to 15.86%. Thus, the financial position of the bank is very good. Then
only it can pay dividend to its shareholders.


Above diagram shows the return on assets which explains the changes in the
percentages of return on assets for the last five years. We can see a gradual
growth in the percentage of return on assets from 2006 to 2009. But there is a
slight decrease in the percentage of return in the last year.

Capital Adequacy (%)

It is a ratio of banks capital to its risk. Capital adequacy is always dynamic. It has been increased
from year to year. In 2006 it was 11.08 whereas it has reached to 13.17.
0
0.2
0.4
0.6
0.8
1
1.2
2006-07 2007-08 2008-09 2009-10 2010-11
Return on Assets(%)
Return on Assets(%)
0
2
4
6
8
10
12
14
16
18
2006-07 2007-08 2008-09 2009-10 2010-11
Basel I
Basel II


46

Capitan adequacy ratio (CAR) refers to the ratio of capital to risk weighted assets computed in
accordance with the risk-based capital adequacy framework (patterned after the 1988 Basel Capital
Accord) that took into account credit risks, effective 1 july 2001 under BSP Circular No. 280 dated 29
March 2003, applying only to universal/commercial banks, computation of CAR incorporates market
risks in addition to credit risks.


The shareholders of bank are having great enthusiasm because the bank could maintain a good
earnings per share. It had been increasing gradually till 2011. Within 5 years, earning per share has
been doubled from 1.48 to 2.59.


0
0.5
1
1.5
2
2.5
3
2006-07 2007-08 2008-09 2009-10 2010-11
Earningts Per Share(in Rs.)
Earningts Per Share(in Rs.)
0
50
100
150
200
250
300
350
2006-07 2007-08 2008-09 2009-10 2010-11
Net Profit (Rs in Cr)
Net Profit (Rs in Cr)


47

In 2009-10, the bank registered a net profit of 233.76 crore which is higher than that of previous
year. Despite recession, South Indian Bank could achieve a profit of Rs.292.56 crore in the year 2010-
11 registering a growth of 58.8% over the previous year.

Banks net worth has doubled as compared to 2006. In 2006 it was 765 crore whereas now its 1845
crore. From this difference we can see the growth of the bank and the current financial position of
the bank.
RATIO ANALYSIS
Solvency Ratio
It can be defined as the relationship between total liabilities and total assets.

Total Liabilities
Solvency ratio= ____________________________
Total Assets
Generally, lower the solvency ratio, more satisfactory or stable is the long-term solvency position of
a firm.
YEAR TOTAL LIABILITIES
(Rs. In Crores)
TOTAL ASSETS
(Rs. In Crores)
RATIO IN PERCENTAGE
2006 8496.1 9477.52 .89
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2006-07 2007-08 2008-09 2009-10 2010-11
Capital & Reserves(Rs in Cr)
Capital & Reserves(Rs in Cr)


48

2007 9579.4 10827.43 .88
2008 12271.7 13652.57 .90
2009 15183.71 17089.92 .89
2010 24048.75 25534.04 .94


49


Analysis
In the year 2006, it was .88% and in the year 2007 it was 90%. In 2008, it was 89% and in the year
2009 it was 94%. We have noticed from the ratios calculated above that they have remained almost
the same in the four consecutive years.
Capital
Capital Adequacy Ratio= ___________________
Risk Weighted Assets
YEAR RATIO IN PERCENTAGE
2006 9.89
2007 13.02
2008 11.80
2009 13.80
2010 14.90


Sales
2006
2007
2008
2009


50





0
10
20
30
40
50
60
70
2006-07 2007-08 2008-09 2009-10 2010-11
Branch Productivity(Rs in Cr)
Branch Productivity(Rs in Cr)
0
5000
10000
15000
20000
25000
30000
35000
2006-07 2007-08 2008-09 2009-10 2010-11
Deposits (Rs in Cr)
Deposits (Rs in Cr)


51

0
5000
10000
15000
20000
25000
2006-07 2007-08 2008-09 2009-10 2010-11
Advances - Gross(Rs in Cr)
Advances - Gross(Rs in Cr)


52

ORGANIZATION ANALYSIS OF FIVE DIFFERENT BANKS

An Organizational Analysis is a process by which an organization's systems, capacity, and
functionality are assessed in order to increase its efficiency, performance, and output. With
the use of various models and theories, an Organizational Analysis aims to understand
behavioural relationships, structure, and technology.

SOUTH INDIAN BANK
According to the individual - Audited financial statement for the Year of 2011, total net
operating revenues increased with 23.25%, from INR 2,144.18 tens of millions to INR
2,642.71 tens of millions. The results of the period increased 25.15% reaching INR 292.56
tens of millions at the end of the period against INR 233.76 tens of millions last year. Return
on equity (Net income/Total equity) went from 15.74% to 17.25%, the Return On Asset (Net
income / Total Asset) went from 0.92% to 0.89% and the Net Profit Margin (Net Income/Net
Sales) went from 10.90% to 11.07% when compared to the same period of last year. The
Debt to Equity Ratio (Total Liabilities/Equity) was 1935.54% compared to 1719.79% of last
year.

HDFC BANK
According to the consolidated - Audited financial statement for the Year of 2011, total net
operating revenues increased with 21.52%, from INR 20,266.99 tens of millions to INR
24,628.38 tens of millions. The results of the period increased 32.47% reaching INR 4,017.69
tens of millions at the end of the period against INR 3,032.91 tens of millions last year.
Return on equity (Net income/Total equity) went from 14.03% to 15.70%, the Return On
Asset (Net income / Total Asset) went from 1.36% to 1.45% and the Net Profit Margin (Net
Income/Net Sales) went from 14.96% to 16.31% when compared to the same period of last
year. The Debt to Equity Ratio (Total Liabilities/Equity) was 1086.38% compared to
1031.41% of last year.
ICICI BANK


53

According to the Consolidated - Audited financial statement for the Year of 2011, total net
operating revenues increased with 3.35%, from INR 59,599.77 tens of millions to INR
61,594.7 tens of millions. The results of the period increased 30.45% reaching INR 6,318.19
tens of millions at the end of the period against INR 4,843.41 tens of millions last year.
Return on equity (Net income/Total equity) went from 9.44% to 11.42%, the Return On
Asset (Net income / Total Asset) went from 0.99% to 1.18% and the Net Profit Margin (Net
Income/Net Sales) went from 8.13% to 10.26% when compared to the same period of last
year. The Debt to Equity Ratio (Total Liabilities/Equity) was 965.18% compared to 953.96%
of last year.

AXIS BANK
According to the consolidated - Audited financial statement for the Year of 2011, total net
operating revenues increased with 27.07%, from INR 15,603.27 tens of millions to INR
19,826.31 tens of millions. The results of the period increased 34.97% reaching INR 3,344.67
tens of millions at the end of the period against INR 2,478.14 tens of millions last year.
Return on equity (Net income/Total equity) went from 15.50% to 17.70%, the Return On
Asset (Net income / Total Asset) went from 1.37% to 1.38% and the Net Profit Margin (Net
Income/Net Sales) went from 15.88% to 16.87% when compared to the same period of last
year. The Debt to Equity Ratio (Total Liabilities/Equity) was 1283.79% compared to
1129.45% of last year.
FEDERAL BANK
According to the consolidated - Audited financial statement for the Year of 2011, total net
operating revenues increased with 8.67%, from INR 4,205.79 tens of millions to INR
4,570.36 tens of millions. The results of the period increased 26.02% reaching INR 588.47
tens of millions at the end of the period against INR 466.97 tens of millions last year. Return
on equity (Net income/Total equity) went from 10.09% to 11.74%, the Return On Asset (Net
income / Total Asset) went from 1.07% to 1.15% and the Net Profit Margin (Net Income/Net
Sales) went from 11.10% to 12.88% when compared to the same period of last year. The
Debt to Equity Ratio (Total Liabilities/Equity) was 1024.38% compared to 941.78% of last
year.



54

TABLE SHOWING THE COMPANY ANALYSIS OF 5 DIFFERENT
BANKS


COMPANY MARKET
CAP
(RS. IN
CR.)
P/E
(TTM)
(X)
P/BV
(TTM)
(X)
EV/EBIDTA
(X)
ROE
(%)
ROCE
(%)
D/E
(X)
SIB
2,485.43 6.19 1.23 14.19 18.5 0.0 0.00
HDFC
BANK

116,785.24

22.61

3.90

19.25

16.7

0.0

0.00
ICICI
BANK

90,754.18

14.04

1.50

17.68

9.7

0.0

0.00
AXIS
BANK

39,309.88

9.27

1.72

17.96

19.3

0.0

0.00
FEDERAL
BANK



7,056.67


9.09


1.24


14.81


12.0


0.0


0.00




55


BEHAVIOR OF THE SIB IN ALLOCATION OF VARIOUS
FUNDS TO DIFFERENT ASSETS

Asset allocation is in an investment strategy that seeks to create a balanced portfolio in
which an investor holds different types of assets to actively manage risk and reward profiles.
Investments can broadly be divided into three asset classes, namely stocks, fixed income and
cash. Of these, stocks are the most volatile, offer the highest returns and have the highest risk
profile. Fixed income assets, such as bonds and certificates of deposit (COD), are less
volatile, but offer more modest returns. Cash assets are the safest and represent the lowest
risk profile.
Asset allocation depends on the income, risk appetite and circumstances of the investor.
While a conservative investor would prefer a high ratio of fixed income investments in the
portfolio, an aggressive investor would prefer to allocate more funds into stocks. The various
factors that can influence asset allocation are:

Time Horizon: This refers to the duration for which you can keep funds in your
investment account. Investors who can spare capital for a long term can opt for riskier,
long-term investments, whereas those who might need cash in the near term can seek
investments from which funds can be withdrawn without incurring losses.
Risk Tolerance: This factor takes into account an investors ability to take risks. A
conservative or risk averse investor would favour investments in which his/her capital is
preserved, whereas an aggressive investor can risk losing his investment to generate
higher profits
Rebalancing: This factor involves resetting the proportion of asset class to the original
ratio at regular intervals in case market fluctuations alter the initial distribution of money.

Each asset class represents a distinct level of risk and returns, and behaves differently with
time. By spreading investments over different asset classes, an investor can protect the capital
invested against significant losses in case the trends in a specific class move unfavorably.
Diversification is a risk management technique that aims at distributing investments over
various options. Diversification can be achieved by:


56

Spreading investments over asset classes, such as stocks, mutual funds, bonds and cash.

Spreading investments in one asset class over various options. For instance, investments
in stocks can be spread over various sectors, such as software, telecommunications,
pharmaceuticals and automobiles.

Spreading investments across geographies, such as investing in stocks from different
states and purchasing global bonds.


57

FUTURE PROSPECTS OF THE ORGANIZATION

Future thrust area of bank firstly would be their business target; secondly on the NPA
front, they always want to ensure that they dont exceed the net NPA above 0.50%
and thirdly, their provisioning coverage ratio should be above 70%, all with a
consistent growth in profit.

SIB is looking for globalization it has already made its presence in few countries and
wants to expand its operation to many more developing countries. South Indian bank
provides managerial service to Hadi Express Exchange since the year 2006. Instant
credit to your SIB account from UAE is facilitated by Hadi Express Exchange.

Diversification & Expansion: Non- Resident Indian (NRIs) can purchase or sell
shares/convertible debentures of Indian companies in Secondary Market through
Stock Exchanges under the Portfolio Investment Scheme up to the limits prescribed
by RBI. The investment of NRI funds in equity market is controlled by various
regulations/caps, and hence NRIs can participate in the Indian equity market through
the PIS route.

Expanding its business operations: The bank has a roadmap for expanding its network to 750 branches by
2013 with 60% of the new branches to be opened in non-south regions of India. They are planning to add
another 55 branches in 2012-12, which will take it to 750 branches by 2013.








58

SHORTFALLS / WEAKNESSES

Retaining the employees is one of the weaknesses in the company.
Employee retention, especially of your best, most desirable employees, is a key
challenge in organizations today. Use these tips, articles, tools and ideas to learn
employee retention strategies that will help you retain your best staff. Learn
loyalty strategies for employee retention.
Each function is handled by one concerned person so there are chances of error in accounting:
Errors may happen at any of the following stages of the accounting cycle
At Recording Stage
Errors of principle
Errors of omission
Errors of commission
At Posting Stage
Error of omission
Complete
Partial
Error of commission
Posting to wrong account
Posting on the wrong side
Posting of wrong amount
At Balancing Stage
Wrong totalling
Wrong balancing

Absence of one person may lead to prolonging work or delay in the work
which will affect the other department in the organization:
Centralisation creates loss of man-hours and delay in performance of work
because of transmission of records from and to the central control room. Quick
decision is not possible which also results delay in office work.
Less manpower in the finance department:
Severe staff constraints have affected services offered by banks as well as their
recovery and marketing processes, says All India Bank Officers Association


59

(AIBOA). "The problem with vacancies is huge," says AIBOA chairman R J
Sridharan, pointing out the all-India exam for recruitment has not been held for
the past 15 years consequent of the abolition of the Banking Services Recruitment
Board (BSRB).
Due to centralization of the accounts it may take long time to reimburse the
expenses:
1. It does not foster loyalty for departments
2. Delay in work






60

CONCLUSION

The Summer Internship Program that I have done at South Indian Bank Ltd was a general
study about the organization, its products and services and different functional areas of the
bank. The six week study that I conducted was a great experience in my life. I could
understand how the bank became an inevitable part of Indian banking industry. During this
period of time I could interact with employees of different departments of the bank. This
interaction helped me to understand different functions of various departments and
responsibilities have given to people at various levels. This rigid hierarchy helps to avoid
confusions regarding reporting relationships.

The employees in the bank are well treated by the management. The infrastructural facilities
available in the bank are incredible and the career growth in the bank is also appreciable. The
SIB with a new logo and image marches on. With branches all over India and a clientele
across the world, the bank is considered one of the most proactive banks in India with a
competent tech savvy team of professional at the core of services. In 2010-11 South Indian
Bank could present an outstanding performance which was beyond market expectations
despite the challenging economic scenario where the bank operates. South Indian Bank, the
bank that focuses on technology and service delivery, has always come up with innovative
banking products to meet the growing demands of the customers.

Largely concentrated in the semi-urban areas of the Southern States of India, SIBs
profitable, cost-efficient and technologically up-to-date network constitutes a reasonably
attractive stand alone franchise. The banks deposit franchise includes a niche NRI customer
base that contributes a meaningful 17% of deposits and gives it a distinguishing cost
advantage over several of its peers. At the same time, the bank is trading at the cheapest
valuations among peers.

Even though, the banking sector all over the world has been affected by the recession due to
the global meltdown in economy, especially the US banking system, South Indian Bank
proved its competence not only in terms of increased profit but also in providing boundless
customer service. Among so many players and competitive products, South Indian Bank


61

could maintain its premier and prestigious position only with the support of the customers.
This show how bank functions and how the bank fulfils its mission.

Sibs overall strategy and execution has been creditable over the past few years, with the
bank maintaining its market share even in CASA deposits. While bank expects a loss in
market share for the peer group that the Bank belongs to, however, based on the Banks track
record, and keeping in mind the importance of customer loyalty in the Banking Industry,
South Indian Bank expects the bank to deliver profitable growth above the average growth
rate of its peer group.

RECOMMENDATIONS

During the time of internship, it is clear that NPA have visible impact on the loan portfolio of
any financial institution and banks, affecting their balance sheets, which ultimately affects
their profits. But it is also seen that banks and financial institutions are trying their best to
reduce the percentage of NPA in their institutions and are taking effective measures towards
this cause.
The effort has been made to provide a few suggestions to SOUTH INDIAN BANK LTD in
the following ways.
1. SIB LTD NPA level is decreasing year by year which good for bank but bank should
follow the recovery policy strictly.
2. Bank should motivate the staff to do fast recovery NPA.
3. Bank have more NPA in small scale industry so, they should try to reduce that level
of NPA.
4. The monitoring department should up again to make credit monitoring functions more
effective
5. SIB should upgrade their system/technique of credit appraisal by imparting training to
their staff. Conducting in house training programme to motivate and educate officers
and also to make credit monitoring functions more effective.
6. Timely review /renewal of borrowed accounts should be given prominence so that
these are undertaken before expiry of their accounts.
7. Introduction of client profile reports should be made to have proper monitoring
system. This allows the recovery officer to know more on the performance of the


62

industry. A close and prompt watching system helps to prevent accounts becoming
irregular.
8. Prompt repayment of loans by borrowers should be recognized and rewarded by way
of rebate for prompt payment, which would act as a motivating factor.
9. Government agencies should be used in recovering NPAs.

There are various techniques for reducing NPAs. If one technique fails in dealing with a
particular NPA, institutions can try with other techniques for that case. Various steps in
reducing NPAs can be summarized as follows:
1. Study the problem of NPAs branch wise, amount wise.
2. Prepare a loan recovery policy and strategies for reducing NPAs.
3. Create special recovery cells at all offices.
4. Identify critical branches for recovery.
5. Fix targets of recovery and draw time bound action programme.
6. Select proper techniques for solving the problem of each NPA
7. Monitor implementation of the time bound action plan
8. Take corrective steps wherever found necessary and make changes in the original
plan, if necessary.
9. In personal loan schemes a differential maximum quantum of loan can be fixed
instead of the fixed Rs. 3 lakhs at present.
10. In personal loan scheme a differential repayment period can be fixed instead of the
present maximum of 4 years.
11. The upfront fee charged can be increased nominally and make half refundable on
repayment.
12. The rate of interest charged in personal loans can be reduced nominally.
13. Penal interest can be increased nominally.
14. The documents required to avail the loan can be mentioned in the website.
15. The bank can fix a minimum gross income to avail any loan.
16. The approximate time required by the bank to sanction any loan.
17. The website can have some information about the assessment criteria.





63

SOURCES

www.southindianbank.com
www.google.com
www.economictimes.com
www.rbi.org.com
www.wikipedia.com
www.scribd.com





64

ANNEXURE I
BALANCESHEET AS ON 31
ST
MARCH, 2011

As at
31.03.2011
Rs. (000)
As at
31.03.2011
Rs. (000)
Capital And Liabilities
Capital
Employees stock options (Grants) outstanding
Reserves and surplus
Deposits
Borrowings
Other liabilities AND PROVISIONS

1, 130, 065
21, 228
17, 321,525
297, 210, 752
2, 903, 468
9, 615, 167

1,130, 065
5, 745
13, 717, 089
230, 115,241
3, 309, 637
7,062,669
TOTAL 328, 202, 205 255, 340, 446
Assets
Cash and balances with RBI
Balances with banks and money at call and
short notice
Investments
Advances
Fixed Assets
Other assets

18, 281, 911

6, 379, 350
89, 237, 722
204, 887, 333
3, 568, 444
5, 847, 445

13, 909,488

5, 967,239
71, 556, 127
158, 229,174
1, 525, 377
4, 153, 041
TOTAL 328, 202, 205 255, 340, 446
Contingent liabilities
Bills for collection
24, 319, 781
2, 681, 342
27, 297, 348
2, 574, 632




65

ANNEXURE II
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31
ST

MARCH, 2011

YEAR
ENDED
31.03.2011
Rs. (000)
YEAR
ENDED
31.03.2010
Rs. (000)
INCOME
Interest earned
Other income

24, 460, 166
1, 966, 940

19, 357, 210
2, 084, 602
TOTAL 26, 427, 106 21, 441, 812
EXPENDITURE
Interest expended
Operating expenses
Provisions & contingencies

16, 549, 152
4, 625, 323
2, 326, 990

13, 674, 284
3, 661, 814
1, 768, 109
TOTAL 23, 501, 465 19, 104, 207
PROFIT/LOSS
Net profit for the year
Transfer from investment reserve
Profit brought forward from previous year

2, 925, 641

46, 938

170, 334

2, 337, 605

-

146, 670
PROFIT AVAILABLE FOR APPROPRIATION
3, 142, 913 2, 484, 275
APPROPRIATIONS
Transfer to statutory reserves
Transfer to capital reserves
Transfer to revenue and other reserves
Transfer to investment reserve
Transfer to special reserve of income tax

731, 500
-
1, 500, 000
-
70, 000

584, 500
6, 873
900, 00
202, 666
92, 800


66

Proposed dividend
Tax on proposed dividend
Balance carried over to balance sheet
565, 033
91, 663
184, 717
452, 026
75, 076
170, 334
TOTAL
3, 142, 913 2, 484, 275




67

ANNEXURE III
BANKS BUSINESS POSITION AS ON 01.05.2012
(Amt in Cr.)
Total deposit as on 31.03.12 36515.61
Total deposit (Incl. KND Int.) as on 01.05.12 36164.50
Growth from base figure -351.11
Deposit target 2012-13 44400.00
Gap/Excess to annual target -8235
Total advance as on 31.03.12 27573.95
Total advance as on 01.05.12 26620.85
Growth from base figure -953.10
Advance target 2012-13 33600.00
Gap/Excess to annual target -6979.15
Total business as on 31.03.12 64089.56
Total business as on 01.05.12 62785.35
Growth from base figure -1304.21
Total business target 2012-13 78000.00
GAP/Excess to annual target -15214.65
C-D Ratio 73.61