A

COMPREHENSIVE PROJECT REPORT

ON
“A COMPARATIVE STUDY OF COST BENEFIT ANALYSIS
OF PUBLIC AND PRIVATE SECTOR BANKS”

Submitted to
T.N.RAO COLLEGE OF MANAGEMENT STUDIES, RAJKOT

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

In
Gujarat Technological University

UNDER THE GUIDANCE OF

ASS.PROF. KOMAL VASANT

Submitted by
KARGATIYA VANDANA (127840592030)
VITHLANI DARSHNA (127840592078)
Year 2013-14
M.B.A-SEMESTER III/IV

T.N.RAO COLLEGE OF MANAGEMENT STUDIES, RAJKOT.

MBA PROGRAMME
Affiliated to Gujarat Technological University,
Ahmadabad

I
 DECLARATION

We Drshna vithlani and Vandana Kargatiya student of T.N.Rao College of mgt

studies, affiliated to Gujarat technological university, Ahmadabad hereby declares
that the grand project entitled a comparative study of cost Benefit Analysis of public
and private sector banks is our original work and has not been published elsewhere.
This has been undertaken for the purpose of partial fulfillment of Gujarat university
requirements of the award of the degree of master of business administration.

This project report is entirely an outcome of our own efforts and is not submitted to
either in part or whole to any other institute for any examination.

Date:22/04/2014

Place:Rajkot

Signature:

Kargatiya Vandana

Vithlani Darshna

II
III
 PREFACE

The banking activities play a crucial role in overall economic development, in case of

Developing country. This now progresses rapidly along with its various activities.

As a part of the curriculums, the MBA students have to undergo Grand project in
duration of fourth semester.

We have tried to collect the information during this period of grand project. We were
fortunate to get an opportunity to work with such a professional unit.

The bank provided me the golden opportunity for me to enrich my knowledge by

comparing theoretical knowledge with practical knowledge and also helped me to
understand how important it is too important aspect of any study. It to students
observe and analysis real life practical with the help of theoretical knowledge

IV
 ACKNOWLEDGEMENT

Words are the dress of thoughts, appreciating and acknowledge those who are
responsible for the successful completion of the project.

We begin by thanking our director prof Komal Vasant the treasure prove of
information who has relied strongly behind us to see our complete this project.

We thank her for this support and inspiration without which understanding the
intricacies of the project would have been exponentially difficult.

Lastly, we would also thank everyone who have been directly or indirectly associated
with us during this research study.

V
 TABLE OF COTENTS

SR. NO PARTICULARS Pg. no

1. GENERAL INFORMATION

Introduction 2

The origin of banks 4

Banking in India 5

Banking system in India 9

2. OVERVIEW OF BANKS IN INDIA

Public sector banks 16

Private sector banks 20

3. CONCEPTUAL FRAMEWORK OF COST

BENEFIT ANALYSIS

Introduction 24

History of CBA 25

Definition of CBA 26

CBA in banking sector 27

Parameters of CBA 28

4. RESEARCH METHODOLOGY

Introduction 31

Statement problem 33

Literature review 34

Research objective 42

VI
 Research plan 43

Tools & techniques 44

Future scope of the study 45

Limitation of the study 46

Sample of the study 47

Hypothesis 48

5. DATA ANALYSIS & INTERPRETATION

Cost of deposits 50
Cost of borrowings 58
Return on advances 60
Return on investment 62
Correlation coefficient analysis 64
Results 82
6. Findings 86
7. Conclusion 87
8. Suggestions 88
9. Bibliography 89
Appendix 90

VII
 EXECUTIVE SUMMARY

Today’s major problem of all the bank is how best to utilized their fund to earned
maximum income with the reduction in cost so as to complete and survive in the
emerging global competitive environment.

Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should
be able to meet new challenges posed by the technology and any other external and
internal factors.

For the past three decades India’s banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India.

In fact, Indian banking system has reached even to the remote corners of the
country. This is one of the main reasons of India’s. the government’s regular policy
for Indian bank since 1969 has paid rich dividends with the nationalization of 14
major private banks of India.

To start in the very first chapter, we are giving introduction to the banking overview of
the project which we are doing in the project. In this project in public and private
bank including SBI, PNB, BOB and private banks including HDFC BANK, ICICI
BANK, AXIS BANK in this chapter includes in introduction of bank history, bank
structure, current scenario of banking industry and its profile.

The second chapter, we have included the literature review of banking sector.

The third chapter, we have included the conceptual frame work of cost Benefit
analysis.

IN this chapter we have included introduction and parameters of cost benefit

analysis.

VIII
Cost-Benefit Analysis estimates and totals up the equivalent money value of the
benefits and costs to the community of projects to establish whether they are
worthwhile. These projects may be dams and highways or can be training programs
and health care systems.

A process by which you weigh expected costs against expected benefits to

determine the best course of action.

The fourth chapter ,we have included the research methodology. In this chapter we
have discussed point as identification of research topic in cost benefit analysis in
public and private banks, objectives, research design, limitation and scope of
research report.

Research means to collect the data analysis it with the help of graph, tabulate etc.
and give some findings which is useful to the research and other needy people etc.
and give some finding which is useful to the research and other needy people in their
research project.”

Research is thus, an original contribution to the existing stock of knowledge making

for its advancement. It is the pursuit of truth with the help of the study, observation,
comparison and experiment.

The fifth chapter we have included the research, data analysis & interpretation. We
have conducted in research report major four portion out of 9 portions such as cost
of deposit, cost of borrowing, return on advances and return on investment.

The sixth chapter, we have included conclusion of the research report.

Lastly, seventh chapter, we have included in respectively in findings and

suggestions.

IX
CHAPTER 1

GENERAL
INFORMATON

1
 INTRODUCTION

Traces of banking can be found in the early history of Egypt, Babyliia, and Greece.
The temples at these places practiced the early form of banking in the form of
approving loans. These temples provided gold and silver which were deposited for
safekeeping, as loans to the borrowers and charged high interest rates on those
items. The private banking which was started in 600 B>C. was modified by the
Greeks, Romans and Byzantines. Medieval banking was leaded mainly by the Jews
and Levantine.

Next, emerged some particular purpose oriented banks like the Bank of Venice
(1171) and the bank of England, which looked after the loans to the government, and
the bank of Amsterdam (1694) was formed to receive the gold and silver deposits.
With the development in the business sector, the banking sector also developed
proportionately and the eighteenth and nineteenth century experienced the repaid
growth in this sector.

Banking in India in the modern sense originated in the last decades of the 18th
century. The first banks were Bank of Hindustan (1770-1829) and The General Bank
of India, established 1786 and since defunct.

The largest bank, and the oldest still in existence, 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. 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. For many years the
presidency banks acted as quasi-central banks, as did their successors, until the
Reserve Bank of India was established in 1935.

In 1969 the Indian government nationalized all the major banks that it did not already
own and these have remained under government ownership. They are run under a
structure know as 'profit-making public sector undertaking' (PSU) and are allowed to
compete and operate as commercial banks. The Indian banking sector is made up of

2
four types of banks, as well as the PSUs and the state banks, they have been joined
since 1990s by new private commercial banks and a number of foreign banks.

3
 THE ORIGIN OF BANKS

The ‘word bank’ is derived from the Italian word ‘Banko’ signifying a bench, which
was erected in the market place, where it was customary to exchange money. The
Lombard Jews were the first to practice this exchange business; the first benches
have been established in Italy A.D. 808. Some authority asserts that the Lombard
merchant commenced the business of money-dealing, employing bills of exchange
as remittances, about the beginning of the thirteenth century.

About the middle of the twelfth century it became evident, as the advantage of
coined money was gradually acknowledged, that there must be some controlling
power, some corporation which would undertake to keep the coins that were to bear
the royal stamp up to a certain standard of value; as, independently of the ‘sweating’
which invention way place to the credit of the ingenuity of the Lombard merchants all
coins will, by wear or abrasion, become thinner, and consequently less valuable; and
it is of the last importance, not only for the credit of a country, but for the easier
regulation of commercial transactions, that the metallic currency be kept as nearly as
possible up to the legal standard.

Much unnecessary trouble and annoyance has been caused formerly by negligence
in this respect. The gradual merging of the business of a goldsmith into a bank
appears to have been the way in which banking, as we now understand the term,
was introduced into England; and it was not until long after the establishment of
banks in other countries for state purposes, the regulation of the coinage, etc. that
any large or similar institutions was introduced into England.

It is only within the last twenty years that printed cheque have been in use in that
establishment. First commercial bank was bank of Venice which was established in
1157 in Italy.

4
 BANKING IN INDIA

Growth process banking in India originated in the last decades of the 18 th 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 become the bank of Bengal. This was one
of the three presidency banks, the other two being the bank 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.

Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should
be able to meet new challenges posed by the technology and any other external and
internal factors. For the past three decades India’s banking system has several
outstanding achievements to its credit. The most striking is its extensive reach. It is
no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian
banking system has reached even to the remote corners of the country. This is one
of the main reasons of India’s. the government’s regular policy for Indian bank since
1969 has paid rich dividends with the nationalization of 14 major private banks of
India.

Not long ago, an account holder had to wait for hours at the bank counters for getting
a draft or for withdrawing his own money. Today, he has a choice. Gone are days
when the most efficient bank transferred money from one branch to other in two
days. Now it is simple as instant messaging or dials a pizza. Money has become the
order of the day. The first bank in India, through conservative, was established in
1786. From 1786 till today, the journey of Indian Banking System can be segregated
into three distinct phases. They are as mentioned below:

5
  Early phase from 1786 to 1969 of Indian Banks
 Nationalization of Indian banks and up to 1991 prior to Indian banking sector
reforms
 New phase of Indian banking system with the advent of Indian Financial &
Banking Sector Reforms after 1991.

To make this write up more explanatory, I prefix the scenario as Phase I, Phase II
and Phase III.

PHASE I (1786 to 1969)

The General Bank of India was set up in the year 1786. Next came Bank of
Hindustan and Bengal Bank. The East India Company established Bank of Bengal
(1809). Bank of Bombay (1804) and Bank of Madras (1843) as independent units
and called it Presidency Banks. These three banks were amalgamated in 1920 and
Imperial Bank of India was established which started as private shareholders banks,
mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians,
Punjab National Bank Ltd. was set up in 189 with headquarters at Lahore. Between
1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank,
Indian Bank and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic
failure between 1913 and 1948. There were approximately 1100 banks, mostly
small. To stream line the functioning and activities of commercial banks, the
Government of India came up with the banking companies Act, 1949 which was later
changed to Banking Regulation Act 1949 as per amending Act 1965 (Act No.23 of
1965). Reserve Bank of India was vested with extensive powers for the supervision
of banking in India as the Central Banking Authority.

During those days public has lesser confident in the banks. As an aftermath deposit
mobilization was slow. Abreast of it was savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.
6
PHASE II (169 to 1991)

Government took major steps ion this Indian Banking Sector Reform after
independence. In 1955, it nationalized Imperial Bank of India with extensive banking
facilities on a large scale especially in rural and semi urban areas. It formed State
Bank of India to act as the principal agent of RBI and to handle banking transaction
of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on
19th July, 1969, major process of nationalization was carried out. It was the effort of
the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in
the country were nationalized. Second phase of nationalization Indian banking sector
reforms was carried out in 1980 with seven more banks. This step brought 80% of
the banking segment in India under Government Ownership. The following are the
steps taken by the Government of India to Regulate Banking Institutions in the
country:

1. 1949: Enactment of Banking Regulation Act.

2. 1955: Nationalization of State Bank of India
3. 1959: Nationalization of SBI Subsidiaries.
4. 1061: Insurance cover extended to deposits.
5. 1969: Nationalization of 14 major banks.
6. 1971: Creation of credit guarantee corporation.
7. 1975: creation of regional rural banks.
8. 1980: Nationalization of seven banks with deposits over 200 crore

After the Nationalization of banks, the branches of the public sector bank India
rose to approximately 800% in deposits and advances took a huge jump by
11,000%.

7
PHASE III (1991 to present)

This phase has introduced many more products and facilities in the banking sector in
its reforms measure. In 1991, under the chairmanship of M Narasimham, a
committee was set up by his name which worked for the liberalization of banking
practices. The country is flooded with foreign banks and their ATM stations. Efforts
are being put to give satisfactory services to customers. Phone banking and net
banking is in the entire system became more convenient and swift. Time is given
more importance than money.

The financial system of India has shown a great deal of resilience. It is sheltered
from any crices triggered by any external micro economics shocks as other East
Asian Countries suffered. This is all due to a flexible exchange rate regime, the
foreign reserve are high, the capital account is not yet fully convertible, and banks
their customers have limited foreign exchange exposure.

8
 BANKING SYSTEM IN INDIA

RESERVE BANK OF INDIA (RBI)

The central bank of the country is the Reserve Bank of India (RBI). It was
established in April 1935 with a share capital of Rs. 5 crore on the basis of the
recommendation of the Hilton Young Commission. The share capital was divided
into shares of Rs. 100 each fully paid which was entirely owned by private
shareholders in the beginning. The Government held shares of nominal value of Rs.
2, 20,000.

Reserve Bank of India was nationalized in the year 1949. The general
superintendence and direction of the bank is entrusted to Central Board of Directors
of 20 members, the Governor and 4 Deputy Governors, one Government official
from the Ministry of Finance, ten nominated Directors by the Government to give
representation to important elements in the economic life of the country, and four
nominated Directors by the central Government to represent the four local Boards
with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local boards
consist of five members each Central Government appointed for a term of four years
to represent territorial and economic interests and the interest of co-operative and
indigenous banks.

The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act,
1934 (II of 1934) provides the statutory basis of the functioning of the bank.

The bank was constituted for the need of following:

The regulate the issue of banknotes to maintain reserves with a view to securing
monatory stability and to operate the credit and currency system of the country to its
advantage.

9
SCHEDULED COMMERCIAL BANKS IN INDIA

Scheduled banks in India constitute those banks which have been included in the
second schedule of Reserve Bank of India (RBI) Act, 1934. RBI in turn includes only
those banks in this schedule which satisfy the criteria laid down vide section 42(6)
(a) of the Act.

As on 30th June, 1999, there were 300 scheduled banks in India having a total
network of 64,918 branches. The scheduled commercial banks in India comprise of
State bank of India and its associates (8), nationalized banks (19), foreign banks
(45), private sector banks (32), co-operative banks and regional rural banks.

“Scheduled banks in India” means the State Bank of India constituted under the
State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State
Bank of India (subsidiary banks) Act, 1959 (38 of 1959), a corresponding new bank
constituted under section 3 of the banking companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970), of under section 3 of the banking companies
(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank
being a bank included in the second schedule to the Reserve Bank of India Act,
1934 (2 of 1934), but does not include a co-operative bank.

“Non-scheduled bank in India” means a banking company as define in clause © of

section 5 of the banking regulation Act, 1949 (10 of 1949), which is not a scheduled
bank.

PUBLIC SECTOR BANKS IN INDIA

Among the public sector banks in India, United Bank of India is one of the 14 major
banks which were nationalized on July 19, 1969. Its predecessor, in the public sector
banks, the united bank of India Ltd., was formed in 1950 with the amalgamation of
four banks viz. Camilla banking corporation Ltd. (1914), Bengal Central bank Ltd.
(1918). Camilla Union Bank Ltd. 91922) and Hooghly Bank Ltd. (1932).

Oriental Bank of commerce (OBC), a Government of India undertaking offers

domestic, NRI and commercial banking services. OBC is implementing a GRAMEEN
PROJECT in Dehradun District (UP) and Hanumangarh District (Rajasthan)
disbursing small loans. This public sector bank India has imp[lamented 14 point

10
action plan for strengthening of credit delivery to women and has designated 5
branches as specialized branches for women entrepreneurs

PRIVATE SECTOR BANKS

Private banking in India was practiced since the beginning of banking system in
India. The first private bank in India to be set up in private sector banks in India was
including bank. It is one of the fastest growing bank private sector banks in India.
IDBI ranks the tenth largest development bank in the world as private banks in India
and has promoted world class institutions in India.

The first private bank in India to receive an in principle approval from the Reserve
bank of India was Housing Development Finance Corporation Ltd., to set up a bank
in the private sector banks in India as part of RBI’s liberalization of the Indian
banking industry. It was incorporated in August 1994 as HDFC Bank Ltd., with
registered office in Mumbai and commenced operations as Scheduled Commercial
Bank in January 1995.

ING Vyaya, yet another private bank of India was incorporated in the year 1930.
Bangalore has a pride of place for having the first branch inception in the year 1934.
With successive years of patronage and constantly setting new standards in
banking. ING Vyaya Bank has many credits to its account.

CO-OPERATIVE BANKS IN INDIA

The co-operative banks in India started functioning almost 100 years ago. The co-
operative bank is an important constituent of the Indian Financial System, judging by
the role assigned to co-operative, the expectations the co operative is supposed to
fulfill their number and the number of offices the co operative bank operate. Through
the co operative movement originated in the West, but the importance of such banks
have assumed in India is rarely paralleled anywhere else in the world. The co
operative bank in India plays an important role even today in rural financing. The
business of co operative bank in the urban areas also has increased phenomenally
in recent years due to the sharp increase in the number of primary co operative
banks.

11
Co operative banks in India are registered under the co-operative societies Act. The
co-operative bank is also regulated by the RBI. They are governed by the Banking
Regulation Act 1949 and banking Laws (co operative societies) Act, 1965.

Co-operative banks in India finance rural areas under:

1. Farming
2. Cattle
3. Milk
4. Hatchery
5. Personal finance

Co-operative banks in India finance urban areas under:

1. self-employment
2. industries
3. small scale units
4. home finance
5. consumer finance
6. personal finance

Some facts about co-operative banks in India.

Some co-operative banks in India are forward than many of the state and private
sector banks.

According to NAFCUB the total deposits & landings of co-operative banks in India is
much more than old private sector banks and also the new private sector banks.

This exponential growth of co-operative banks in India is attributed mainly to their

much better local reach, personal interaction with customers, their ability to catch the
never of the local clientele.

12
REGIONAL RURAL BANKS IN INDIA

Rural banking in India started since the establishment of banking sector in India.
Rural banks in those days mainly focused upon the agro sector. Regional rural
banks in India penetrated every corner of the country and extended a helping hand
in the growth process of the country.

SBI has 30 Regional Rural Banks in India known as RRBs. The rural bank of SBI is
spread in 13 states extending from Kashmir to Karnataka and Himachal Pradesh to
North East. The total number of SBIs regional rural banks in India branches is 2349
(16%). Till date in rural banking in India, there are 14,475 rural banks in the country
of which 2126 (91%) are located in remote rural areas.

FOREIGN BANKS IN INDIA

Foreign banks in India always brought an explanation about the prompt services to
customers. After the set up foreign banks in India, the banking sector in India also
become competitive and accusative.

New rules announced by the Reserve Bank of India for the foreign banks in India in
this budget have put up great hopes among foreign banks which allow them to grow
unfettered. Now foreign banks in India are permitted to set up local subsidiaries. The
policy conveys that foreign banks in India may not acquire Indian ones (except for
weak banks identified by the RBI, on its terms) and their Indian subsidiaries will not
be able to open branches freely. Please see the list of foreign banks in India.

13
 CHEPTER 2

OVER VIEW OF

BANKS IN INDIA

14
PUBLIC BANKS

STATE BANK OF INDIA

State bank of India (SBI) is the largest banking and financial services company in
India by revenue and total assets. It’s a state owned corporation with its
headquarters in Mumbai, Maharashtra. As of march 2011, it had assets of US$ 370
billion with over 13,000 outlets including 150 overseas branches and agents globally.
The bank traces its ancestry to British India, through the imperial bank of India, to the
founding in 1806 of the bank of Calcutta, making it the oldest commercial bank in the
Indian subcontinent. Bank of madras merged into the other two presidency banks,
bank of Calcutta and bank of Bombay to from imperial bank of India, which is turn
became state bank of India. The government of India nationalized the imperial bank
of India in 1955, with the reserve bank of India taking a 60% stake, and renamed it
the state bank of India. In 2008 the government looks over the stake held by the
reserve bank of India. State bank of India is ranked #1 in banking sector and overall
ranked #4 in top companies in India in fortune India 500 list in 2011.

SBI provides a range of banking products through its vast network of branches of
India and obverses, including products aimed at non resident Indians (NRIs). The
state bank group, with over 16000 branches, has the largest banking branch network
in India. SBI has 14 local head offices situated at Chandigarh, Delhi, Lucknow,
Patna, Kolkata, Guwahati (north east circle), Bhubaneswar, Hyderabad, Chennai,
Trivandrum, Bangalore, Mumbai, Bhopal & Ahmadabad and 57 zonal officers that
are located at important cities throughout the country. It also has around 130
branches overseas.

SBI is a regional banking behemoth and is one of the largest financial institutions in
the world. It has a market share among Indian commercial banks of about 20% in
deposits and loans. State bank of India is the 29th most reputed company in the
world according to Forbes. Also SBI is the only bank featured in the coveted ‘ top 10
brands of India” list in an annual survey conducted by brand finance and economic
times in 2010.

The State Ban k of India is the largest of the big four banks of India, along with ICICI
Bank, Punjab National Bank and HDFC Bank- its main compete

15
PUNJAB NATIONAL BANK

Punjab National Bank (PNB) is an Indian financial services company based in New
Delhi, India. PNB is the third largest bank in India by assets. It was founded in 1894
and is currently the second largest state-owned commercial bank in India ahead of
bank of Baroda with about 5000 branches across 764 cities. It serves over 37 million
customers. The bank has been ranked 148th biggest bank in the world by the
bankers Almanac, London. The Bank’s total assets for financial year 2007 were
about US$60 billion. PNB has a banking subsidiary in the UK, as well as branches in
Hong Kong, Dubai and Kabul, and representative offices in Almaty, Dubai, Oslo, and
Shanghai.

Punjab National Bank with 4497 offices and the largest nationalized bank is serving
its 3.5 crore customers with the following wide variety of banking services.

1. Corporate banking
2. Personal banking
3. Industrial finance
4. Agricultural finance
5. Financing of trade
6. International banking
Punjab National Bank has been ranked 38th among top 500 companies by the
Economic Times. PNB has earned 9th position among top 50 trusted brands in India.

Punjab National Bank India maintains relationship with more than 200 leading
international banks worldwide. PNB India Rupee Drawing arrangements with 15
exchange companies in UAE and 1 in Singapore.

PNB Online

Punjab National Bank of India is also a member of SWIFT and more than 150 PNB
Branches are connected with terminals in Mumbai. It promotes ‘Anytime, Anywhere
banking”.

PNB offers internet banking services for both to the corporate and individuals. It
provides 24 hours, 365 days banking for PC of the user. A user can operate anytime

16
and from anywhere its accounts. The following are some of the services available
online.

 Access to account
 Complete details of transactions and statement of account
 Online information of deposits, loans overdraft accounts etc.
 Online payment facility for railway reservation through IRCTC payment
Gateway project.

BANK OF BARODA

Bank of Baroda (BOB) is the third largest bank in India, after the state bank of india
and the Punjab national bank and ahead of ICICI bank, BOB is ranked 763 in Forbes
global 2000 list. BOB has total, assets in excess of Rs. 3,583 billion, a network of
over 3,409 branches and offices, and about 1657 ATMs. It plans to open 400 new
branches in the coming year. It offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery channels and
through its specialized subsidiaries and affiliates in the areas of investment banking,
credit cards and assets management. Its total business was Rs. 5,452 billion as of
June 30.

As of august2010, the bank has 78 branches abroad and by the end of FY11 this
number should climb to 90. In 2010, BOB opened a branch in Auckland, New
Zealand, and its tenth branch in the United Kingdom. The bank also plans to open
five branches in Africa. Besides branches, BOB plans to open three outlets in the
Persian Gulf region that will consist of ATMs with a couple of people.

The Maharajah of Baroda, Sir Sayajirao Gaekwad |||, founded the bank on 20 July
1908 in the princely state of Baroda, in Gujarat. The bank, along with 13 other major
commercial banks of India, was nationalized on 19 July 1969, by the government of
India.

17
Bank of Baroda Key Services

Apart from the different types of loan solutions, deposits credit and debit cards, bank
of Baroda also offers other services to make financial dealing easy and convenient
for customers. They are as follows:

 Remittance (Baroda Money Express)

 Collection services
 ECS (Electronic Clearing Services)
 Government Business (PPF< DSRGE< Tax Collections and Saving Bonds)

BOB Credit card customer relation

A successful business depends upon long lasting relationship with customers. Bank
of Baroda has setup a separate customer Grievances and Redresser cell to take
care of its customer’s enquiries, queries and complaints.

18
PRIVATE BANKS

HDFC BANK LIMITED

HDFC Banks Limited is an Indian financial services company and was incorporated
in August 1994, after the reserve bank of india allowed establishing private sector
banks. The bank was promoted by the Housing Development Finance Corporation, a
primier housing finance company (set up in 1977) of India. HDFC Bank has 1,986
branches and over 5,471 ATMs, in996 cities in india, and all branches of the bank
are linked on an online real-time basis. It is one of the big four banks of India, along
with:

 ICICI Bank
 Punjab National Bank
 State Bank of India

HDFC Bank limited is a banking company. The bank is engaged in providing a range
of banking and financial services. The bank operates in four segments: treasury,
retail banking, wholesale banking and other banking business. The treasury segment
primarily consists of net interest earning from the bank’s investments…

Balance Sheet: As of December 31, 2011

The board of directors of HDFC Bank Limited approved the banks accounts for the
quarter ended December 31, 2011 at its meeting held in Mumbai on Thursday,
January 19, 2012. The accounts have been subject to a ‘Limited Review” by the
statutory auditors of the bank.

The banks total balance sheet size increased to 335,487 crore as of December 31,
2011. Total deposits were 232,508 crore, up by 21.0% over December 31, 2010
primarily driven by a 15.2% growth in savings deposits to 70,330 crore. Core CASA
deposits adjusted for one off current account balance of approx 4000 crore was at
47.7% of total deposits as at December 31, 2011. Gross advances grew by 21.9%
over December 31, 2010 to 195,778 crore, with the retail loans accounting for 51.3%
of total assets.

19
ICICI BANK

ICICI Bank Ltd. Is India’s second largest financial services company headquartered
in Mumbai, Maharashtra. It offers a wide range of banking products and financial
services to corporate and retail customers through a variety of delivery channels and
through its specialized subsidiaries in the areas of investment banking, life and non-
life insurance, venture capital and assets management. The bank has a network of
2,533 branches and 6,800 ATMs in India, and has a presence in 19 countries,
including India.

The bank has subsidiaries in the United Kingdom, Russia and Canada: branches in
United states, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai
International Finance center; and representative offices in United Arab Emirates,
China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The companies
UK subsidiary has established branches in Belgium and Germany.

ICICI Bank’s equity shares are listed in India on Bombay Stock Exchange and the
National Stock exchange of India limited and its American Depositary Receipts
(ADRs) are listed on the New York stock exchange (NYSE).

ICICI Bank is India’s second-largest bank with total assets of Rs. 4,062.34 billion
(US$91 billion) at March 31, 2011. And profit after tax Rs. 51.51 billion (US$ 1,155
million) for the year ended March 31, 2011. The bank has a network of 2,610
branches and 8,003 ATMs in India, And has a presence in 19 countries, including
India.

ICICI Bank offers a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its
specialized subsidiaries in the areas of investment banking, life and non-life
insurance, venture capital and assets management.

20
AXIS BANK LIMITED

Axis Bank was the new private banks to have begun operations in 1994, after the
government of India allowed new private banks to be established. The bank was
promoted jointly by the administrator of the specified under taking of the unit trust of
India (UTI-|). Life insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC) and other four PSU insurance companies, i.e. National
Insurance Company ltd., the new India Assurance Company ltd., the oriental
insurance company Ltd. And united India insurance company ltd.

The bank was promoted jointly by the administrator of the specified undertaking of
the unit trust of India, LIC, GIC, NIC, the new India assurance company, the oriental
insurance corporation and united India insurance company holds a special position
in the Indian capital markets and has promoted many lending financial institutions of
the country. The bank changed its name to Axis Bank in April 2007 to avoid
confusion with other unrelated entities with similar name. After the retirement of Mr.
P. J. Nayak, Sikha Sharma was named as the banks managing director and CEO on
20 April 2009.

On 24 February 2010, Axis Bank announced the launch of “AXIS CALL & PAY” on
atom, a unique mobile payments solutions using Axis Bank debit.

The bank as on 31st December, 2011 is capitalized to the extent of Rs. 412.57 crore
with the public holding at 53.63%.

The bank’s registered office is at Ahmadabad and its Central office is located at
Mumbai. The bank has a very wide network of more than 1281 branches. The bank
has a network of over 7591 ATMs providing 24 hours a day banking convenience to
its customers. This is one of the largest ATM network in the country.

The bank has strengths in both retail and corporate banking and is committed to
adopting the best industry practices internationally in order to achieve excellence.

21
 CHAPTRE 3
CONCEPTUAL
FRAMEWORK OF
COST BENEFIT

22
Cost benefit analysis

Introduction

Cost-benefit Analysis is often used by governments and others, e.g. business, to

evaluate the desirability of a given policy. It is an analysis of the expected balance of
benefits and costs, including an account of foregone alternatives and the status quo,
helping predict whether the benefits of a policy outweigh its costs by how much (i.e.
one can rank alternate policies in terms of the ratio of costs and benefit). Altering the
status quo by choosing the lowest cost benefit ratio can improve pareto efficiency, in
which no alternative policy can improve one group’s situation without damaging
another.generally accurate cost-benefit analysis identifies choices that increase
welfare from a utilitarian prospective. Otherwise, cost benefit analysis offers no
guarantees of increased economic efficiency. Generally positive microeconomic
theory is moot when it comes to evaluating the impact on social welfare of a policy.

Cost-Benefit Analysis (CBA) estimates and totals up the equivalent money value of
the benefits and costs to the community of projects to establish whether they are
worthwhile. These projects may be dams and highways or can be training programs
and health care systems.

The idea of this economic accounting originated with Jules Dupuit, a French
engineer whose 1848 article is still worth reading. The British economist, Alfred
Marshall, formulated some of the formal concepts that are at the foundation of CBA.
But the practical development of CBA came as a result of the impetus provided by
the Federal Navigation Act of 1936. This act required that the U.S. Corps of
Engineers carry out projects for the improvement of the waterway system when the
total benefits of a project to whomsoever they accrue exceed the costs of that
project. Thus, the Corps of Engineers had created systematic methods for
measuring such benefits and costs. The engineers of the Corps did this without
much, if any, assistance from the economics profession. It wasn't until about twenty
years later in the 1950's that economists tried to provide a rigorous, consistent set of
methods for measuring benefits and costs and deciding whether a project is
worthwhile. Some technical issues of CBA have not been wholly resolved even now
but the fundamental presented in the following are well established

23
History of cost Benefit Analysis

The concept of CBA dates back to an 1848 article by jules dupont and was
formalized in subsequent works by Alfred marshall. The corps of engineers initiated
the use of cba in the us, after the federal navigation act 1936 effectively required
cost benefit analysis for proposed federal waterway infrastructure.The flood control
act of 1939 was instrumental in establishing cba as federal policy.it demanded that
“the benefits to whomever they accrue in excess of the estimated costs.

CBA has its origins in the water development projects of the U.S. Army Corps of
Engineers. The Corps of Engineers had its origins in the French engineers hired by
George Washington in the American Revolution. For years the only school of
engineering in the United States was the Military Academy at West Point, New York.

In 1879, Congress created the Mississippi River Commission to "prevent destructive

floods." The Commission included civilians but the president had to be an Army
engineer and the Corps of Engineers always had veto power over any decision by
the Commission.

In 1936 Congress passed the Flood Control Act which contained the wording, "the
Federal Government should improve or participate in the improvement of navigable
waters or their tributaries, including watersheds thereof, for flood-control purposes if
the benefits to whomsoever they may accrue are in excess of the estimated costs."
The phrase if the benefits to whomsoever they may accrue are in excess of the
estimated costs established cost-benefit analysis. Initially the Corps of Engineers
developed ad hoc methods for estimating benefits and costs. It wasn't until the 1950s
that academic economists discovered that the Corps had developed a system for the
economic analysis of public investments. Economists have influenced and improved
the Corps' methods since then and cost-benefit analysis has been adapted to most
areas of public decision-making.

24
Definition of cost Benefit analysis

A process by which you weigh expected costs against expected benefits to

determine the best course of action.

When it comes to goal setting or deciding on the best plan of attack , working up a
cost benefits analysis will help you deciding just which route would be best for you
.And a cost benefit analysis doesn’t have to be complicated. You simply draw a line
down the middle of a piece of paper to be complicated. You simply draw a line down
the middle of a piece of paper to create two columns .on the left, list the benefits of
achieving a given goal. On the right, list what it will cost you to get there.

Once you have done that, you can simply add up the benefits and costs columns
and see which has more , or assign weighted scores to each entry and total them at
the ,bottom of course. You may not want to let this quick and easy analysis make the
final decision for you. And it may sometimes be the nearest thing to a tossup. But
even a simple cost benefit analysis can give you an idea of whether a given goal is
worth investigating further.

An example is a sales director who needs to decide whether to implement a new

computer based contact mgt and sales processing system. The sales department
currently has only a few computers .and its salespeople aren’t computer savvy. Any
system upgrade would require extensive employee training. The company is likely to
experience a drop in sales during the transition period.

25
Cost benefit analysis in banking sector

Today’s major problem of all the banks is how best to utilize their funds to earn
maximum income with the reduction in costs so as to compete and survive in the
emerging global competitive environment. The commercial banks mobilize a major
part of their funds through deposits and borrowings with deposits having a
dominating share. These funds are disbursed in investments and advances to get
returns in the form of interest and dividends.

The present paper deals with cost benefit analysis of bank funds and concludes that
the public sector banks and private sector banks are the beneficiary to mobilize
funds through borrowing rather than go for public deposits as the cost of borrowing is
almost half the cost of deposits.

Similarly, in the case of utilization of these funds, the public sector banks are the
beneficiary if they concentrate more on investments in different instrument rather
than disburse loans to their customers as return on investments is higher but foreign
banks and private sector banks get more returns on advances. Hence, they are at an
advantage if they disburse loans rather than invest elsewhere. Correlation coefficient
among cost of funds and return is positive and significant in almost all the bank
groups.

26
Parameters of cost benefit analysis

Cost of deposit(interest on deposit as percentage of total deposit) cost of borrowings

funds (interest on borrowing funds as percentage of total borrowing fund) cost of
total funds ie. deposits + borrowing funds(int on total funds as percentage of total
fund ) return on advances (interest on advances as percentage of total advances)
return on investments (interest on investment as percentage of total investment) total
deposit a percentage of total liability. Total credit as percentage of total deposit. Total
investment as percentage of total deposit. Credit+ investment as percentage of total
deposit.

1. Cost of deposit (interest on deposit as percentage of total deposit)

Interest cost paid by a financial institution for the use of money. brokerage firm’s
cost of funds are comprised of the total interest expense to carry on inventory of
stocks and bonds. In the banking and savings and loan industry, the cost
of funds is the amount of interest the bank must pay on money market accounts,
Cost passbook CDs and other liabilities. Many adjustable rate mortigage loans are
tied to a cost of funds index, which rises and falls in line with the banks interest
expenses.

2 cost of borrowing funds

The final cost of borrowing money often involves much more than just the interest
rate’s verify of other monetary and nonmonetary cost should be considered in
determining the real cost of borrowing funds is ratio of interest paid on
borrowings to total borrowings.

27
3, cost of total funds

Cost of funds is a aggregate of cost of deposits and cost of borrowings. Therefore,

the ratio of cost of funds is calculated as interest paid on deposit plus interest paid
on borrowings.

4 return on investment

A performance measure used to evaluate the efficiency of an investment or to

compare the efficiency of a number of different investments. To calculate ROI, the
benefit of an investment is divided by the cost of the investment. The result is
expressed as a percentage or a ratio. It is a ratio of interest on investment paid on
total investment.

5 return on advances

Advances are an extension of money for a bank to another party with the agreement
that the money will repaid. Nearly all advances are made at interest. Meaning
borrowers pay a certain percentage of an principal amount to the lender as
composition for borrowing. And for banks it is a return on advances. It is a ratio of
interest on advances paid on total advances.

6 Total deposits as percentage of total liability

Deposits product include traditional savings account, money market savings

accounts CDs and IRAS checking accounts and debit cards.

Deposits provide a relatively stable source of funding and liquidity, allowing the
company to earn net interest spread revenues from investing the liquidity in earning
assets through lending and asset liability management activities.

Through deposits, the bank also receives various account fees. Such as non
sufficient fund fees. Overdraft charges and account service fees such as non
sufficient fund fees overdraft charges and account service fees and interchange fees
from debit cards.

28
7 Total credit as percentage of total deposits

The borrowing capacity provided to an individual by the banking system, in the form
of credit or a loan. The total bank credit the individual has is the sum of borrowing
capacity each tender bank provides to the individual.

8 total investment as percentage of total deposit

In finance the purchase of financial product or other item of value with an expectation
of favorable future returns. In general terms investment means the use of money in
the hope of making more money. In business, the purchase by a producer of a
physical good, such as durable equity or inventory ,in the hope of improving future
business.

29
 CHAPTER 4
RESEARCH
METHODOLOGY

30
 Introduction

“Research means to collect the data analysis it with the help of graph, tabulate etc.
and give some findings which is useful to the research and other needy people etc.
and give some finding which is useful to the research and other needy people in their
research project.”

Research is thus, an original contribution to the existing stock of knowledge making

for its advancement. It is the pursuit of truth with the help of the study, observation,
comparision and experiment.

Here we have collected primary and secondary data of the bank. Financial statement
of the sample unit is required to calculate cost of capital of the sample unit we have
found out the last three year cost benefit analysis with the help of correlation we
have interpreted it.

This information gives quite useful information to the bank to improve their position
as well as to the mgt for investing their money in the various sectors.

Research methodologies are generally used in academic research to test

hypotheses or theories. A good design should ensure the research is valid, i.e. it
clearly tests the hypothesis and not extraneous variables, and that the research is
reliable, i.e. It yields consistent results every time.

Part of the research methodology is concerned with the how the research is
conducted. This is called the study design and typically involves research conducted
using questionnaires, interviews, observation and/or experiments.

The term research methodology, also referred to as research methods, usually

encompasses the procedures followed to analyze and interpret the data gathered.
These often use a range of sophisticated statistical analyses of the data to identify
correlations or statistical significance in the results.
Objective, representative research can be difficult to conduct because tests can
normally only be conducted on a small sample (e.g. You cannot test a drug on every

31
person in the world so a sample needs to be used in research). This means that
researchers need to have a very detailed understanding of the types and limitations
of research methodologies which they are using.

A research methodology defines what the activity of research is, how to proceed,
how to measure progress, and what constitutes success. AI methodology is a
jumbled mess. Different methodologies define distinct schools which wage religious
wars against each other.

32
 Statement of research problem

The topic for the research is “A comparative study of cost benefit analysis of public
&private sector banks.” This research basically a descriptive research study.

33
 Literature review

1. R k Uppal and rimpi kaur (2009):

Today’s major problem of all the banks is how best to utilize their funds to earn
maximum income with the reduction in costs so as to compete and survive in the
emerging global competitive environment. The commercial banks mobilize a major
part of their funds through deposits and borrowings with deposits having a
dominating share. The ICFAI universe journal of bank mgt vol. no’s,3&4, 2009

2 Diana Bonfim, Francesco,franco and 15 june 2009:

This paper provides new evidence on the effect of bank competition on the cost Of
lending , in an environment of reduced information asymmetries between firm And
banks . using a unique data set from Portugal, we find that when a firm borrows from
one additional bank ,the interest rent on bank loans for this firm becomes 9 to 20
basis points lower on average. In addition , we find that when local bank competition
is more intense firms can benefit more from simultaneously engaging in several
banking relationships. hence providing evidence complementarily between
competition and the number of bank relationships. However ,we don’t observe this
effects for the smallest and youngest firms.

3 Bhide , M G Prasad , A and ghosh saibal Stanford university

This is a study of activity based cost benefit analysis practices. Undertaken a cost
benefit analysis of funds mobilized as deposits and loans and found that public
sector and private banks are the “ beneficiary of mobilized funds through
borrowings” ,as it is found to be half the cost of deposit mobilization. “emerging
challenges in Indian banking MRPA paper no. 1711,posted07,November 2007.

4 Andrew Holder : “cost benefit Analysis workshop , 14-15 july 2005”

Monetary and financial statistics September 2005:

The bank of England’s monetary and financial statistics division (mfsd) hosted a
workshop on cost benefit analysis of statistics, attended by representatives from a

34
range of central banks and statistical institutions. This article reports on the
presentations and discussion at the workshop. Overall, however , the uncertainty
around estimates of costs and benefits meant that CBA was likely to inform
decisions rather than offer a simple decision making rule.

5 Charles Bean chief Economist and Executive director for monetary policy
,bank of England . Monetary and financial data contribute to meeting the inflation
target, maintaining financial stability and understanding the behavior of the UK
economy . the cost benefit analysis project has developed ways of assessing the
cost and benefits has proved elusive but estimation of relative costs and benefits has
been more tractable.

6 Robert H. Frank and Cass R. Sunstein , AEI-Brookings joint center for

Regulatory studies research paper no. 00-5 May 2000:

We have also suggested that it is entirely legitimate for government to take account
of positional externalities, which creates a prisoner’s dilemma for those subject to
them. People care about relative position not only and not even mostly because
the position of others sets a general frame of reference within which economic and
social activities takes place.

7 massimo florio centro study luca D’agliano development studies working

paper n.182 december 2003

The focus of the paper is on the evaluation of the variability of ex-ante economic rate
of return of financial rate of return re-estimated economic rates of return .we propose
a framework of analysis of rate of return .We propose a framework of analysis of
rates of return variations across project. Sectors, financing institution, of the wedge
between economic and financial and of the gap between ex ante and ex post
returns.

35
8 Boardman, Anthony, Devid Greenberg, Aidan vining and Devid weimer
(1996):

Cost benefit analysis is well developed topic and most authors agree in the question
how it should be performed. For example, Boardman in the first chapters identify
nine steps that are crucial for CBA. Later he expands these steps and discusses
different pitfalls and complications. This book is a positioned as a guide for practice
as well as for academic and scientific work. However, it seems that author prefer to
discuss academic issues and heavily use social benefit and social loss curves which
are rarely observed in practice.

10 Luigi Guiso , Paola Sapienza, Luigi Zingales , august 2006:

We find that restriction to competition reduce the supply of credit but also cost
Benefit Analysis in Nationalized banks reduce the percentage of bad loans. By
contrast, deregulation increases the supply of credit and increases the percentage of
bad loans. Overall, restriction on competition have negative effects on aggregate
growth, effects that are undergone when bank regulation is lifted. We also find that in
areas where competition was restricted. After deregulation the percentage of bank
loans raises above the level of competitive areas, suggesting that lack of competition
has a long lasting effect on a bank ability to grant credit in an efficient way.

11 Devid M.Drisen – J.D., Yale Law school professor and Syracuse university
college of Law Adjunct professor 2003.

The argument that CBA is a neutral rationalizing reform that all should favor as a
pragmatic measure ignores most of the relevant history. That sort of argument
should be laid to rest. But many important environmental, health and safety effects
can’t be quantified at all. So CBA of environmental, health and safety decisions
typically includes a long list of benefits that could not be Quantified many of which
are significant in the view of experts in the area.

36
12 Monika Binder. 2002, The Role of risk and cost Benefit Analysis in
Determining Quarantine Measures, productivity commission staff Research
paper, Auslnfo, Canberra.:

It involves evaluating from a community wide perspective all the expected costs and
benefits of alternative measures and choosing that measure with the highest cost
benefit analysis in public and private banks expected net benefit. It can be
undertaken at increasing levels of complexity and accommodate community attitudes
towards risk. However, like many analytical tools, it is dependent on the availability of
data and on the underlying assumptions.

13 The Sarbanes –Oxley ACT: A cost benefit Analysis using the U.S Banking
industry, Philip H. Siegel , john O’Shaughnessy and David p. Franz; April 12
,2009:

The act is relatively new , research has been limited; thus conclusions drawn by this
paper have a major limitation concerning the effect of Sarbanes-Oxley on the
banking industry. A possible follow up study would be to determine to what extent
updating the Exchange Act registration shareholder would have on the banking
industry . Also future research could determine to what extent debt financing has
been utilized to smooth return on assets registered banks.

14 Charles Bean ,Chief Economist and executive director for monetary

policy bank of England .

Monetary and financial data contribute to meeting the inflation target , maintaining
financial stability and understanding the behavior of the UK Economy . The cost
benefit analysis project has developed ways of assessing the costs benefits of this
data. Monetary valuation of both costs and benefits has proved elusive , but
estimation of relative costs and benefits has been more tractable.

37
15 Matthew D. Adler and Eric A. Posner:

It allows agencies to take into account all relevant influences on overall well-being ,
unlike simpler decision procedures like risk-risk; and it enables agencies to weigh the
advantages and disadvantages of projects in a clear and systematic way, unlike
more complex decisions procedures .Because maximizing overall well being is an
important role of the government in all major political theories and is consistent with
widespread intuitions . it is a worthy goal of agency action .JOHN M. OLIN LAW
&ECONOMICS WORKING PAPER NO 2D SERIES.

16 Dr. RAJENDRA PANDEY & SANJIBAN BANDYOPADHAYA (2004):

The no of factors remain the same for a profit earning bank’s as well as a losing
bank but the degree of influence with certainly vary cost-Benefit analysis and bank’s
performance in this paper an attempt has been made by way of break even analysis
to ascertain how margin of safety of banks can be improved. In this study the CBA
helps in determining the optimum level of bank’s performance.

17 Peter G. SASSONEL (1988):

Cost justification has become one of the most important factors influencing the pace
of January , 1988 business automation, particularly end user computing. The primary
difficulty in cost justification is the evaluation of benefits. This paper identifies discuss
eight methodologies which have evolved to quantify the benefits of information
system. These are decision analysis . cost displacement , structural models , cost
effectiveness analysis , break even analysis , subjective analysis , time saving time’s
salary and the work value model.

38
18 Mark SCHREINER A cost-Effectiveness Analysis of the GRAMEEN Bank
of Bangladesh:

This paper compares output with subsidy for GRAMEEN in a present value frame
work. For the time frame 1983-97, subsidy per person year of membership in
GRAMEEN was about $0.22. Although the paper does not measure consumer
surplus for GRAMEEN users. The evidence in the literature suggests that surplus
probably exceeds subsidy. GRAMEEN if not necessarily other micro lenders was
probably a worthwhile social investment center for social development Washington
university in St. LOUIS CAMPUS BOX 1196, one Brookings Drive , St .LOUIS ,MO
63130-4899 ,U.S.A.

19 NANCY R. MEAD NOVEMBER 2004:

This report is one of the a series of reports resulting from research conducted by the
system Quality Requirements Engineering Team as part of an independent research
and development project of the software Engineering institute within this scope ,we
show that unmitigated risks can be translated into cost and we demonstrate the
estimation methods for calculating costs of implementation for architectural and
policy recommendations. The reduction of risk exposures in turn enables small
companies to have less volatility in their total system value. The increase in
predictability of results by implementing optimal security solutions will enable small
companies to profit from security improvements and to plan for future growth.

20 HARSHA ATURUPANE , SRI LANKA ECONOMIC JOURNAL , VOL. 5,NO.1,

JUNE 2004.

The analysis concludes that , over a wide range of alternative cost benefit scenarios,
the has the potential to yield considerable economic and social benefits. The project
has potential to yield considerable economic and social benefits. The paper also
examines the fiscal impact and sustainability of the project and shows that under
relatively modest assumptions about public expenditure on university education , the
project has a high degree of fiscal sustainability . The actual economic and social
impact, in contrast to the potential benefits , depends operation and implementation

39
experience of the project sound economic research and analysis is needed to
measure these actual benefits.

21 JUKKA VAUHKONEN , BANK OF FINLAND DISCUSSION PAPERS

13/2003:

In light of the theoretical literature , this is surprising . For example , according to

agency cost models, allowing banks to hold equity would seem to alleviate firm’s
asset substitution moral hazard problem associated with debt financing . This idea is
formalized in john , john and Saunders in a model where banks are modeled as
passive investors and bank loans are the only source of outside finance for firms . In
this paper investors and bank loans are the only source of outside finance for firms.
In this paper, we argue that this alleged benefit of banks equity holding is small or
non existent when banks are modeled explicity as active monitors and firms have
access also to market finance.

22 ROMA MITRA, SHANKAR RAVI (2008)

A stable and efficient banking sector is an essential precondition to increase the

economic level of a country. This paper tries to model and evaluate the efficiency the
efficiency of 50 Indian banks. The inefficiency can be analyzed and quantified for
every evaluated unit. The aim of this paper is to estimate and compare efficiency of
the banking sector in India. The analysis is supposed to verify or reject the
hypothesis whether the banking sector fulfils its intermediation function sufficiently to
compete with the global players. The result are insightful to the financial policy
planner as it identifies priority areas for different banks, which can improve the
performance. This paper evaluates the performance of banking sectors in India.

23 B.SATISH KUMAR (2008)

In his article on an evaluation of the financial performance of Indian private sector

banks wrote private sector banks play an important role in development of Indian
economy. After liberalization the banking industry underwent major changes. The
economic reforms totally have changed the banking sector. RBI permitted new banks
to be started in the private sector as per the recommendation of NARASHIMAN

40
committee. The Indian banking services was dominated by public sector banks. But
now the situations have changed new generation banks with used of technology and
professional management has gained a reasonable position in banking industry.

24 PETYA KOEVA ( July 2003)

In his study on the performance of Indian banks. During financial Liberalization

states that new empirical evidence on the impact of financial liberalization on the
performance of Indian commercial banks. The analysis focuses on examining the
behavior and determinants of bank intermediation costs and profitability during the
liberalization period. The empirical results suggests that ownership type has a
significant effect on some performance indicators and that the observed increase in
competition during financial liberalization has been associated with lower
intermediation costs and profitability of the Indian banks.

25 VRADI, VIJAY, MAULURI, NAGARJUNA (2006)

In his study on measurement of efficiency of bank in India concluded that in modern

world performance of banking is more important to stable the economy in order to
see the efficiency of Indian banks. We have see the four indicators ie. Profitability,
productivity, assets, quality and financial mgt for all banks includes public sector,
private sector banks in India for the period 2002 and 1999 to 2002-2003. For
measuring efficiency of banks we have adopted development envelopment analysis
and found that public sector banks are more efficient than other bank in India.

41
 Research objective

The purpose of research is discovering answers to questions through the

application of scientific procedures. The main aim of research is to find out the truth
which is hidden and which has not been discovered as yet. Through each research
study has its own specific purpose. Following to objective which is useful to the bank.

The objectives of the study are to:

1 Study and analysis the cost of fund to get the cheapest source of funds.
2 Study and analysis the return from funds invested to identify the highest
beneficial investment.
3 Compare the cost of funds with the returns to find out the most profitable
investment and.
4 Suggest suitable strategies for the efficient mgt of funds.

42
 Research plan

Universe:

The Indian banking industry is taken as universe and the major six banks are taken
for the interbank group comparison of the cost benefit analysis of their funds.

Methods of data collection:

The secondary data are those which have already been collected by someone else
and which have already been passed through the statistical process. As the research
study is totally dependent for the study would be data collection method. The data on
the subject is collected from various sources such as annual reports of the banks,
bank’s balance sheets and profit and loss statement, journal of banking studies, IUP
journals , journal of accounting and finance and ICFAI journals , internet
has been important source of secondary data.

43
 Tools and techniques

As no could be successfully completed without proper tools and techniques, the

same has happened with the researcher study also. For the better presentation and
right explanation the researcher used tools of statistics and computer very
frequently. Basic tools which the researcher used for project from statistics are:
Mean, Average, correlation.

Average and simple growth rate are used to achieve desired objectives. Further,
correlation coefficient is used to test the hypothesis. All the calculation is based on
spss 1”000 version.

44
 Future scope of research

1. There are a few studies related to cost benefit analysis of banks different
portfolios. There is a need to study some of the following important aspects in
this context to make the fund mgt sound.
2. Study of cost benefit analysis for each and every aspect of bank funds ,i.e.
Deposits, borrowing funds, advances, investments and even capital at each
bank level and group level.

3 study of best preferred mode of deposits, advances and investments among

the
Customers, especially in rural and semi urban areas.
5 study of alternative portfolios to suggest the optimum one according to the
needs
of each banks.

45
 LIMITATIONS OF THE STUDY

• The study is limited to six banks so, it will not give proper information about
whole Indian banking industry.

• Time and resource constrains.

• The method discussed pertains only to banks though it can be used for
performance evaluation of other financial institution also.

• The study depends on the accuracy of secondary data, so the limitations of

the secondary data are also applicable.

• The study is based on correlation coefficient aspect so that it can suggest

proper guideline.

• It is difficult to decide among all available instruments of funds, which is more

profitable and risk-free.

46
 Sample of the Study

Here, in this project report the researchers have selected four sampled banks out of
the above mentioned universe as follows:

 State bank of India (SBI),

 Punjab National Bank (PNB),

 Bank of Baroda(BOB)

 Industrial Credit and Investment Corporation of India Bank (ICICI )

 Axis Bank

 Housing & Developing Financial Corporation(HDFC)

(i.e., three public banks and three private banks) out of the universe. They have
selected SBI because it is the biggest public bank in the India and PNB because it is
also one the banks which is doing its business in well manner. The reason behind
the selection of the ICICI Bank and the Axis Bank is that both are performing well at
private sectors.

Sources of the Data

This research study is totally based on the secondary sources of the data. To make
the research study a successful one, the researchers have collected the needed and
relevant data from the sampled Banks’ websites, published annual reports, research
articles, journals, books, and other websites.

Period of Research Study

The researchers have undertaken the research for three consecutive years starting
from 1st April, 2010 to 31st March, 2013. This duration is normal years as any of the
policy level changes have not taken place during these three years.

47
 HYPOTHESIS

H0: There is no significant correlation between the cost of deposits and return on
advances and investments in public and private banks.

H1: There is significant correlation between the cost of deposits and return on
advances and investments in public and private banks.

H0: There is no significant correlation between the cost of borrowing funds and return
on advances and investments in public and private banks.

H1: There is significant correlation between the cost of borrowing funds and return on
advances and investments in public and private banks.

48
 Chapter 5

DATA ANALYSIS
AND
INTERPRETATION

49
 Cost of deposit

Year

BANKS 2012-13 2011-12 2010-11 Overall average Standard

growth deviation
SBI 6.26 6.06 5.23 19.69 5.85 0.6708
PNB 6.90 6.06 4.85 42.26 5.94 1.0296
BOB 5.04 5.03 4.29 17.48 4.79 0.4243
ICICI 8.96 8.93 7.52 19.15 8.47 0.8215
AXIS 6.93 6.35 4.54 52.64 5.94 1.2469
HDFC 6.50 6.08 2.10 20.95 4.89 2.4279

10
Cost of deposit ratio
9

6
2012-13
5
2011-12
4 2010-11

0
SBI PNB BOB ICICI AXIS HDFC

50
CALCULATIONS:

SBI bank

COST OF DEPOSITE= INTEREST EXPENDED × 100

TOTAL DEPOSITES

2013-12 = 75325.80 × 100 = 6.26

1202739.57

2012-11 = 63230.37 × 100 = 6.06

1043647.30

2011-10 = 933932.81 × 100 = 5.23

225602.11

Growth = 3rd year’s cod- 1st year’s cod × 100

1st year’s cod

= 6.26 – 5.23 × 100

5.23

= 0.1969

AVERAGE = total of deposit × 100

No of year

= 6.26+6.06+5.23 × 100

= 5.85

51
PNB BANK’S COD

2012-13 = 27036.82 × 100 =6.90

391560.06

2011-12 = 23013.59 × 100 =6.06

379588.48

2010-11 = 15179.14 × 100 =4.85

312898.73

Growth = 6.90-4.85 × 100

4.85

Average = 6.90+6.06+4.85

= 5.94

52
BANK OF BARODA’S COST OF DEPOSIT

2012-13 = 23881.39 × 100 = 5.04

473883.44

2011-12 = 19356.71 × 100 = 5.03

384871.11

2010-11 = 13093.66 × 100 = 4.29

305439.48

OVER ALL GROETH = 5.04-4.29 × 100

4.29

= 17.48

AVERAGE = 5.04+5.03+4.29

= 14.36

= 4.79

53
Axis bank’s cod

2012-13 = 1751631 × 100 = 6.93

252613.59

2011-12 = 13976.90 × 100 = 6.35

220104.30

2010-11 = 8591.82 × 100 = 4.54

189237.80

Overall growth=

6.93-4.54 × 100

4.54

= 52.64

Average = 6.93+6.35+4.54

= 5.94

54
ICICI BANK’S COST OF DEPOSIT

2012-13 = 26209.18 × 100

29261.63

2011-12 = 22808.50 × 100

255499.96

2010-11 = 16956.15 ×100

225602.11

OVERALL GROWTH = 8.96-7.52 × 100

7.52

= 19.15

AVERAGE = 7.52+8.93+8.96

= 8.47

55
HDFC’S BANK COST OF DEPOSIT

2012-13 = 19253.75 × 100 = 6.50

296246.98

2011-12 = 14989.58 × 100 = 6.08

246706.45

2010-11 = 4385.08 × 100 = 2.10

208586.41

OVER ALL GROWTH

= 5.04-4.29 × 100

4.29

= 20.95

AVERAGE = 76.50+6.08+2.10

= 4.89

56
INTERPRETATION

Table 1. Shows that all banks have a declining trend in their cost of deposits during
the period 2010-11.

On the average it is the highest in ICICI bank with 8.47% followed by AXIS BANK &
PNB bank with 5.94% and least average IN BOB BANK 4.79%.

The bob bank shows the highest overall least increase 17.48% in their cost of
deposits where as axis bank shows growth near highest as 42.26%. axis bank
growth is most highest as compare all banks as 52.64%.

57
 COST OF BORROWINGS

Year

BANKS 2012-13 2011-12 2010-11 Overall average Standard

growth deviation
SBI 44.52 49.79 40.87 8.93 45.06 4.4842
PNB 68.24 61.76 48.05 42.02 59.36 10.3085
BOB 89.85 82.11 58.69 53.09 76.88 16.2242
ICICI 18.03 16.27 15.48 16.47 16.59 1.3038
AXIS 39.85 41.02 32.71 21.83 37.86 4.4983
HDFC 58.33 62.66 30.46 91.49 50.55 17.5454

100
Cost of Borrowing ratio
90

80

70

60
2012-13
50
2011-12
40 2010-11
30

20

10

0
SBI PNB BOB ICICI AXIS HDFC

COST OF BORROWINGS = INT ON BORROWINGS × 100

TOTAL BORROWINGS

58
INTERPRETATION

Table 2 shows a increasing trend in cost of borrowings of all the banks during the
study period

With the highest increase of HDFC bank 91.49%. ON the average cost high is bob
bank 76.88%.

Here, borrowing are more of two public bank PNB and BOB .in private sector banks
borrowing are HDFC is high than also public sector banks.

59
 RETURN ON ADVANCES

Year

BANKS 2012-13 2011-12 2010-11 Overall average Standard

growth deviation
SBI 11.44 12.28 10.76 6.32 11.49 0.7641
PNB 13.57 12.39 11.15 10.92 11.70 1.2101
BOB 10.72 10.33 9.57 12.02 10.21 0.5849
ICICI 13.81 13.22 12.00 15.08 13.01 0.9188
AXIS 13.80 12.96 10.64 29.69 12.47 1.6367
HDFC 14.63 13.96 12.46 17.42 13.68 1.1112

16 Return on Advances ratio

14

12

10
2012-13
8 2011-12
2010-11
6

0
SBI PNB BOB ICICI AXIS HDFC

RETURN ON ADVANCES = INT OF ADVANCES × 100

TOTAL ADVANCES

60
INTERPRETATION

Table 3 shows increasing in return growth banks during the study period where there
is least increase IN SBI growth it is 6.34 .and highest increase in axis bank as
29.69% & ICICI bank and HDFC banks growth is nearest 15.08% , 17.42%.

On the AVERAGE return on HDFC bank is the highest as 13.68% followed BY ICICI
bank with 13.01%.

Return on advances is highest in private sector banks growth mainly due to reason
that their priority sector lending to the poor parties are negligible & hence, reduce
their NPAS & secondly better control on NPAS.

The decline growth in public sector is not a sign of sound system of credit control &
the main reason is INCREASING NPAS.

61
 RETURN ON INVESTMENT

Year

BANKS 2012-13 2011-12 2010-11 Overall average Standard

growth deviation
SBI 4.02 3.75 2.49 64.45 3.42 0.8166
PNB 3.65 3.98 4.66 -21.67 4.09 0.5149
BOB 3.69 6.02 5.94 -37.87 5.22 1.3228
ICICI 4.86 4.05 3.82 27.23 4.24 0.5463
AXIS 4.55 4.55 4.71 -3.39 4.60 0.0923
HDFC 6.03 5.30 5.54 8.84 5.62 0.3719

7
Return on Investment ratio
6

4 2012-13
2011-12
3
2010-11

0
SBI PNB BOB ICICI AXIS HDFC

RETURN ON INVESTMENT = PROFIT × 100

INVESTMENT

62
INTERPRETATION

Table 4 shows a fluctuating trend in return on investment in return on investment in

all the banks bob shows highest declined at -37.87% rate followed by PNB bank with
21.67%.

SBI shows the highest growth 61.45% and ICICI bank also growth with 27.23%.

On the average return on investment in HDFC is the highest with 5.62% followed by
bob bank 5.22%. SBI is least as 3.42%. In all the banks.

On the whole it can be concluded that return on investment is the highest in public
sector banks for the public sector banks .it is more beneficial to disburse their funds
in investment which yield superior returns rather than advance loans as their return
is lower.

63
 Correlation Coefficient Analysis

TABLE-1

Public sector banks Mean Variance

SBI 5.85 0.6708
PNB 5.94 1.0296
BOB 4.79 0.4243

Private Sector Banks

ICICI 8.47 0.8215
AXIS 5.94 1.2469
HDFC 4.89 2.4279

Calculations:

SBI BANK

Xi xi- (xi- )2
6.26 0.41 0.17
6.06 0.21 0.04

5.23 -0.62 0.38

17.55 0 0.59

=∑
n

= 17.55
3
= 5.85

64
S2 =√∑
n-1

= 0.59
3-1

= √0.265

= 0.54

PNB BANK

Xi xi- (xi- )2
6.90 0.96 0.92
6.06 0.12 0.014

4.85 -1.09 1.19

17.81 0 2.12

=∑
n

= 17.81
3
= 5.94

S2 =√∑
n-1

= 2.12
3-1

= √1.06

= 1.0296

65
BOB BANK

Xi xi- (xi- )2
5.04 0.26 0.0676
5.03 0.24 0.0576

4.29 -0.5 0.25

14.36 0 0.36

=∑
n

= 14.36
3
= 4.79

S2 =√∑
n-1

= 0.36
3-1

= √0.18

= 0.4243

ICICI BANK

Xi xi- (xi- )2
8.96 0.49 0.24
8.93 0.46 0.21

7.52 -0.95 0.90

25.41 0 1.35

66
 =∑
n

= 25.41
3
= 8.47

S2 =√∑
n-1

= 1.35

3-1

= √0.675

= 0.8215

AXIS BANK

Xi xi- (xi- )2
6.93 0.99 0.98
6.35 0.41 0.17

4.54 -1.4 1.96

17.82 0 3.11

=∑
n

= 17.82
3
= 5.94

S2 =√∑
n-1

= 3.11

3-1
= √1.555

= 1.2469

67
HDFC BANK

Xi xi- (xi- )2
6.50 -1.61 2.59
6.08 1.19 1.42

2.10 -2.79 7.78

14.68 0 11.79

=∑
n

= 14.68
3
= 4.89

S2 =√∑
n-1

= 11.79
3-1

= √5.895

= 2.4279

TABLE-2

Public sector banks Mean Variance

SBI 45.06 4.4844
PNB 59.35 10.3085
BOB 76.88 16.2242

Private Sector Banks

ICICI 16.59 1.3038
AXIS 37.86 4.4983
HDFC 50.55 17.5454

68
Calculations:

SBI BANK

Xi xi- (xi- )2
44.52 -0.54 0.29
49.79 4.73 22.37

40.87 -4.19 17.56

135.18 0 40.22

=∑
n

= 135.18
3
= 45.06

S2 =√∑
n-1

= 40.22

3-1

= √20.11

= 4.4842

PNB BANK

Xi xi- (xi- )2
68.24 8.89 79.03
61.76 2.41 5.81

48.05 -11.3 127.69

178.05 0 212.53

69
 =∑
n

= 178.05
3
= 59.35

S2 =√∑
n-1

= 212.53

3-1

= √106.265

= 10.30

ICICI BANK

Xi xi- (xi- )2
18.03 1.44 2.07
16.27 -0.32 0.10

15.48 -1.11 1.23

49.78 0 3.4

=∑
n

= 49.78
3
= 16.59

S2 =√∑
n-1

= 3.4

3-1

= √1.7

= 1.3038

70
BOB BANK

Xi xi- (xi- )2
89.85 12.97 168.22
82.11 5.23 27.35

58.69 -18.19 330.88

230.65 0 526.45

=∑
n

= 230.65
3
= 76.88

S2 =√∑
n-1

= 526.45
3-1

= √263.65

= 16.2242

AXIS BANK

Xi xi- (xi- )2
39.85 199 3.96
41.02 3.16 9.99

32.71 -5.15 26.52

113.58 0 40.47

=∑
n

= 113.58
3
= 37.8

71
S2 =√∑
n-1

= 40.47
3-1

= √20.235

= 4.4983

HDFC BANK

Xi xi- (xi- )2
58.33 -7.78 60.53
62.86 12.31 151.54

30.46 -20.09 403.61

151.65 0 615.68

=∑
n

= 151.65
3
= 50.55

S2 =√∑
n-1

= 615.68

3-1

= √30.784

= 17.5454

72
 TABLE -3

Public sector banks Mean Variance

SBI 11.49 0.7614
PNB 12.37 1.2101
BOB 10.21 0.4849

Private Sector Banks

ICICI 13.01 0.9188
AXIS 12.47 1.6367
HDFC 13.68 1.1112

Calculations:

SBI BANK

Xi xi- (xi- )2
11.44 -0.05 0.0025
12.28 0.79 0.6241

10.76 -0.74 0.5329

34.48 0 1.1595

=∑
n

= 34.48
3
= 11.49

S2 =√∑
n-1

= 1.1595

3-1
= √0.5797

= 0.7614

73
PNB BANK

Xi xi- (xi- )2
13.57 -1.2 1.44
12.39 0.02 0.0004

11.15 -1.22 1.4884

37.11 0 2.9288

=∑
n

= 37.11
3
= 12.37

S2 =√∑
n-1

= 2.9288
3-1

= √1.4644

= 1.2101

BOB BANK

Xi xi- (xi- )2
10.72 0.5133 0.2635
10.33 01233 0.0152

9.75 -0.6367 0.4054

30.62 0 0.6841

=∑
n

= 30.62
3
= 10.2

74
S2 =√∑
n-1

= 0.6841
3-1

= √0.3420

= 0.5849

ICICI BANK

Xi xi- (xi- )2
13.81 0.79 0.6241
13.22 0.21 0.0441

12 -1.01 1.0201

39.03 0 1.6883

=∑
n

= 39.03
3
= 13.01

S2 =√∑
n-1

= 1.6883

3-1
= √0.8441

= 0.9188

75
AXIS BANK

Xi xi- (xi- )2
13.80 1.33 1.7689
12.96 0.49 0.2401

10.64 -1.83 3.3489

37.4 0 5.3489

=∑
n

= 37.04
3
= 12.47

S2 =√∑
n-1

= 5.3579

3-1

= √2.6789

= 1.6367

HDFC BANK

Xi xi- (xi- )2
14.63 0.9467 0.8962
13.96 02767 0.0766

12.46 -1.2233 1.4965

41.05 0 2.4693

=∑
n

= 41.05
3
= 13.6833

76
S2 =√∑
n-1

= 2.4693
3-1

= √1.2346

= 1.1111

TABLE-4

Public sector banks Mean Variance

SBI 3.42 0.8166
PNB 4.09 0.5149
BOB 5.22 103228

Private Sector Banks

ICICI 4.24 0.5463
AXIS 4.60 0.0923
HDFC 5.62 0.3719

CALCULATIONS:

SBI BANK

Xi xi- (xi- )2
4.02 0.6 0.36
3.75 0.33 0.1089

2.49 -1.93 0.8649

10.26 0 1.3338

=∑
n

= 10.26
3
= 3.42

77
S2 =√∑
n-1

= 1.3338
3-1

= √0.6669

= 0.8166

PNB BANK

Xi xi- (xi- )2
3.65 -0.4467 0.1995
3.98 -0.1166 0.0135

4.66 0.5633 0.3173

12.29 0 0.5303

=∑
n

= 12.29
3
= 4.0967

S2 =√∑
n-1

= 0.5303

3-1

= √0.2651

= 0.5149

78
BOB BANK

Xi xi- (xi- )2
3.69 -1.5267 2.3308
6.02 0.8034 0.6455

5.49 0.7233 0.5232

15.65 0 3.4995

=∑
n

= 15.65
3
= 5.2167

S2 =√∑
n-1

= 3.4995
3-1

= √1.7498

= 1.3228

ICICI BANK

Xi xi- (xi- )2
4.86 0.6167 0.3803
4.05 -0.1934 0.0374

3.82 -0.4233 0.1792

12.73 0 0.5969

=∑
n

= 12.73
3
= 4.2433

79
S2 =√∑
n-1

= 0.5969
3-1

= √0.2985

= 0.5463

AXIS BANK

Xi xi- (xi- )2
4.55 -0.0533 0.0028
4.55 -0.0534 0.0028

4.71 0.1068 0.0114

13.81 0 0.017

=∑
n

= 13.81
3
= 4.6033

S2 =√∑
n-1

= 0.017

3-1

= √0.0085

= 0.0923

80
HDFC BANK

Xi xi- (xi- )2
6.03 0.4066 0.1653
5.30 -0.3233 0.1045

5.54 -0.0833 0.0069

16.87 0 0.2767

=∑
n

= 16.87
3
= 5.6233

S2 =√∑
n-1

= 0.2767

3-1

= √0.1384

= 0.3719

81
 CORRELATION COEFFICIENT ANALYSIS

Factor Results Hypothesis

X1 & X3 -0.14 Ho: is Rejected

X1 & X4 -0.024 Ho: is accepted

X2 & X3 -0.68 Ho: is Rejected

X2 & X4 - 0.27 Ho: is Rejected

X1 & X3
X y X2 Y2 Xy

5.85 11.49 34.22 132.0201 67.22

5.94 11.70 35.28 136.89 69.50

8.47 13.01 71.74 155.5009 110.19

4.79 10.21 22.94 169.2601 48.91

4.89 13.68 23.91 104.2441 66.90

5.94 12.47 35.28 187.1424 70.07

35.88 72.56 223.37 885.0576 432.79

r= n∑ -(∑ (∑ )

√ ∑ 2
–( ∑ 2
×√ ∑ 2
- ∑ 2

= -0.14

82
 X1 & X4
X y X2 Y2 Xy

5.85 3.42 34.22 11.6064 20.007

5.94 4.09 35.28 16.7281 24.2946

8.47 4.60 71.74 21.16 38.962

4.79 4.24 22.94 17.9776 20.3096

4.89 5.22 23.91 27.2484 25.5258

5.94 5.62 35.28 31.5844 33.3828

35.88 27.19 223.37 126.3949 162.4818

r= n∑ -(∑ (∑ )

√ ∑ 2
–( ∑ 2
×√ ∑ - ∑
2 2

= -0.024

83
 X2 & X3
X y X2 Y2 Xy

45.06 11.49 2030.4036 132.0201 517.7394

59.36 11.70 3523.6096 136.89 694.512

37.86 12.47 1433.3796 155.5009 472.1142

16.59 13.01 275.2281 169.2601 215.8359

76.88 10.21 5910.5244 104.2441 784.9448

50.55 13.68 2555.3025 187.1424 691.524

286.3 72.56 15728.4578 885.0576 3376.6703

r= n∑ -(∑ (∑ )

√ ∑ 2
–( ∑ 2
×√ ∑ - ∑
2 2

= -0.68

84
 X2 & X4

X y X2 Y2 Xy

45.06 3.42 2030.4036 11.6064 154.1052

59.36 4.09 3523.6096 16.7281 242.7824

37.86 4.60 1433.3796 21.16 76.314

16.59 4.24 275.2281 17.9776 325.9712

76.88 5.22 5910.5244 27.2484 263.871

50.55 5.62 2555.3025 31.5844 212.7732

286.3 27.19 15728.4578 126.3949 1275.817

r= n∑ -(∑ (∑ )

√ ∑ 2
–( ∑ 2
×√ ∑ - ∑
2 2

= -0.2664

Table shows the rejection of all the null hypothesis that test Correlation
Coefficient among the cost of fund. But the return there from is not significant hence,
show that cost and return of funds are significantly correlated with each other at
different coefficients.

Overall, it can be concluded that cost and returns are positively and
significantly correlated with each other, which shows that with the increasing the
cost, return also increase because the more the funds generated either through
deposits or borrowings, the more will be the investment either on terms of credits or
securities.

85
 FINDINGS

Public banks have attracted more funds of a short term nature in the form of demand
deposits because the business class is attracted towards better services of other
banks.

Hence, public banks prefer to advance loans rather than invest in securities.

From the whole discussion, it is clear that public banks get their deposit at least cost
as compared to borrowing funds because they themselves decide the interest rate of
deposit are more costly as compared to their borrowing funds.

The private banks mobilize a major part of their funds through deposit and
borrowings, with deposits having a dominating share.

Cost of Cost of Return on Return on

deposits borrowings advances investment
SBI 19.69 8.93 6.32 64.45

PNB 42.26 42.02 10.92 -21.67

BOB 17.48 53.09 12.02 -37.87

ICICI 19.15 16.47 15.08 27.23

AXIS 52.64 21.83 29.69 -3.39

HDFC 20.95 91.49 17.42 8.84

86
 CONCLUSION

In private banks prefer deposits as cheaper mode of funds mobilization and

advances as more profitable utilization of funds, just because of their efficient market
strategies and sophisticated risk management but, public sector bank prefer
borrowing funds i.e., from the RBI to mobilize funds and invest the maximum share
of their funds in the government securities as these are less risky with more returns.

But the main reason for more cost of deposit is because the fixed rules of
the government bind them not to make deposits at flexible rates of interest according
to the market situation.

But for the efficient management of funds, banks should be given full
autonomy and they should set their benchmark for each type of portfolio separately
according to the market conditions.

They has most successful banks are those that combine visionary
technology and very competitive pricing with strong relationships and brands build on
trust with the experience of the client business.

Banks would have adopted the effective, practical and competitive strategies
to survive in the high-tech banking environment.

87
 SUGGESTIONS

On the basis of the above analysis, it may be suggested that public sector
banks and private sector banks benefit by mobilizing funds through borrowing rather
go to public deposit as the cost of borrowing is almost half of the cost of deposits.

Similarly, in the case of utilization of these funds, public sector banks

benefit if they concentrate more on investments in different instruments rather then
disburse loans to their customers as return on investments higher.

But private sector banks get more returns on advances; hence, they are at
an advantage if advances loans rather than invest elsewhere.

However, the banks, especially public sector banks, will be able to reduce and
manage cost of deposit only when the political parties do not interfere

88
 BIBLIOGRAPHY
Websites:

www.moneycontrol.com

www.boi.org//http://boi.org+annual+report

http://www.bankofbaroda.com+annual+report

www.denabank.com

http://www.iupindia.in/bank_management.asp

www.boi.org//http://boi.org+annual+report

https://sbiforsme.sbi.co.in/SME/smeLiabilityProduct.htm;jsessionid=BEE370A98BDD
9D1FF918F15A8492803B.node1?execution=e1s1

https://www.pnbindia.in/En/ui/Interstrates-LoansandAdvances.aspx

https://www.pnbindia.in/En/ui/Profile.aspx

http://www.bobcards.com/aboutus.htm

http://www.axisbank.com/personal/itsallaboutmoney/itsallaboutmoney.aspx

http://www.icicibank.com/Personal-Banking/account-deposit/personal-banking-
accounts-deposits.html

http://www.hdfcbank.com/personal/products/accounts-and-deposits

Reference books:
Shekhar K.C. Banking theory and practices. New delhi Vikas publishing house pvt ltd

Bedi H.L.: Hardikar V.K. practical Banking advances. New delhi: institute of banking
studies

Cost accounting : Charles T Horngren: published by pearson

Management accounting: paresh shah: india published by oxford university press

Journals:
the IUP journal of applied finance

the IUP journal of financial risk management

89
Balance Sheet of ICICI Bank ------------------- in Rs. Cr. -------------------

Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths

Capital and Liabilities:
Total Share Capital 1,153.64 1,152.77 1,151.82
Equity Share Capital 1,153.64 1,152.77 1,151.82
Share Application Money 4.48 2.39 0.29
Preference Share Capital 0.00 0.00 0.00
Reserves 65,547.84 59,250.09 53,938.82
Revaluation Reserves 0.00 0.00 0.00
Net Worth 66,705.96 60,405.25 55,090.93
Deposits 292,613.63 255,499.96 225,602.11
Borrowings 145,341.49 140,164.91 109,554.28
Total Debt 437,955.12 395,664.87 335,156.39
Other Liabilities & Provisions 32,133.60 17,576.98 15,986.35
Total Liabilities 536,794.68 473,647.10 406,233.67
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Assets
Cash & Balances with RBI 19,052.73 20,461.29 20,906.97
Balance with Banks, Money at Call 22,364.79 15,768.02 13,183.11
Advances 290,249.44 253,727.66 216,365.90
Investments 171,393.60 159,560.04 134,685.96
Gross Block 4,647.06 9,424.39 9,107.47
Accumulated Depreciation 0.00 4,809.70 4,363.21
Net Block 4,647.06 4,614.69 4,744.26
Capital Work In Progress 0.00 0.00 0.00
Other Assets 29,087.07 19,515.39 16,347.47
Total Assets 536,794.69 473,647.09 406,233.67
Contingent Liabilities 727,858.44 858,566.64 883,774.77
Bills for collection 74,512.60 64,457.72 47,864.06
Book Value (Rs) 578.21 524.01 478.31
Source : Dion Global Solutions Limited

90
Profit & Loss account of icici Mar '13 Mar '12 Mar '11
bank
12 mths -------------------
12 mths in Rs. Cr. -------------------
12 mths
Income
Interest Earned 40,075.60 33,542.65 25,974.05
Other Income 8,345.70 7,908.10 7,108.91
Total Income 48,421.30 41,450.75 33,082.96
Expenditure
Interest expended 26,209.18 22,808.50 16,957.15
Employee Cost 3,893.29 3,515.28 2,816.93
Selling and Admin Expenses 0.00 2,888.22 3,785.13
Depreciation 490.16 524.53 562.44
Miscellaneous Expenses 9,503.20 5,248.97 3,809.93
Preoperative Expenses 0.00 0.00 0.00
Operating Expenses 9,012.89 8,843.63 8,594.16
Provisions & Contingencies 4,873.76 3,333.37 2,380.27
Total Expenses 40,095.83 34,985.50 27,931.58
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Net Profit for the Year 8,325.47 6,465.26 5,151.38
Extraordionary Items -0.25 -0.43 -2.17
Profit brought forward 7,054.23 5,018.18 3,464.38
Total 15,379.45 11,483.01 8,613.59
Preference Dividend 0.00 0.00 0.00
Equity Dividend 2,307.23 1,902.04 1,612.58
Corporate Dividend Tax 292.16 220.35 202.28
Per share data (annualised)
Earning Per Share (Rs) 72.17 56.09 44.73
Equity Dividend (%) 200.00 165.00 140.00
Book Value (Rs) 578.21 524.01 478.31
Appropriations
Transfer to Statutory Reserves 2,877.78 2,306.07 1,780.29
Transfer to Other Reserves 0.00 0.32 0.26
Proposed Dividend/Transfer to Govt 2,599.39 2,122.39 1,814.86
Balance c/f to Balance Sheet 9,902.29 7,054.23 5,018.18
Total 15,379.46 11,483.01 8,613.59
Source : Dion Global Solutions Limited

91
Profit & Loss account of Axis ------------------- in Rs. Cr. -------------------
Balance Sheet of Axis Bank
Bank ------------------- in Rs. Cr. -------------------

Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 467.95 413.20 410.55
Equity Share Capital 467.95 413.20 410.55
Share Application Money 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00
Reserves 32,639.91 22,395.34 18,588.28
Revaluation Reserves 0.00 0.00 0.00
Net Worth 33,107.86 22,808.54 18,998.83
Deposits 252,613.59 220,104.30 189,237.80
Borrowings 43,951.10 34,071.67 26,267.88
Total Debt 296,564.69 254,175.97 215,505.68
Other Liabilities & Provisions 10,888.11 8,643.27 8,208.86
Total Liabilities 340,560.66 285,627.78 242,713.37
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Assets
Cash & Balances with RBI 14,792.09 10,702.92 13,886.16
Balance with Banks, Money at Call 5,642.87 3,230.99 7,522.49
Advances 196,965.96 169,759.54 142,407.83
Investments 113,737.54 93,192.09 71,991.62
Gross Block 2,355.64 3,583.67 3,426.49
Accumulated Depreciation 0.00 1,395.12 1,176.03
Net Block 2,355.64 2,188.55 2,250.46
Capital Work In Progress 0.00 70.77 22.69
Other Assets 7,066.56 6,482.93 4,632.12
Total Assets 340,560.66 285,627.79 242,713.37
Contingent Liabilities 525,314.30 449,976.11 429,069.63
Bills for collection 50,696.47 64,895.87 57,400.80
Book Value (Rs) 707.50 551.99 462.77
Source : Dion Global Solutions Limited

92
Balance Sheet of HDFC ------------------- in Rs. Cr. -------------------
Bank
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 475.88 469.34 465.23
Equity Share Capital 475.88 469.34 465.23
Share Application Money 0.00 0.30 2.91
Preference Share Capital 0.00 0.00 0.00
Reserves 35,738.26 29,455.04 24,911.13
Revaluation Reserves 0.00 0.00 0.00
Net Worth 36,214.14 29,924.68 25,379.27
Deposits 296,246.98 246,706.45 208,586.41
Borrowings 33,006.60 23,846.51 14,394.06
Total Debt 329,253.58 270,552.96 222,980.47
Other Liabilities & Provisions 34,864.17 37,431.87 28,992.86
Total Liabilities 400,331.89 337,909.51 277,352.60
Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths

Assets
Cash & Balances with RBI 14,627.40 14,991.09 25,100.82
Balance with Banks, Money at Call 12,652.77 5,946.63 4,568.02
Advances 239,720.64 195,420.03 159,982.67
Investments 111,613.60 97,482.91 70,929.37
Gross Block 2,703.08 2,347.19 2,170.65
Accumulated Depreciation 0.00 0.00 0.00
Net Block 2,703.08 2,347.19 2,170.65
Capital Work In Progress 0.00 0.00 0.00
Other Assets 19,014.41 21,721.64 14,601.08
Total Assets 400,331.90 337,909.49 277,352.61
Contingent Liabilities 746,226.39 883,985.32 588,550.98
Bills for collection 0.00 0.00 0.00
Book Value (Rs) 152.20 127.52 545.46

93
Profit & Loss account of ------------------- in Rs. Cr. -------------------
HDFC Bank
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Income
Interest Earned 35,064.87 27,286.35 19,928.21
Other Income 6,852.62 5,243.69 4,335.15
Total Income 41,917.49 32,530.04 24,263.36
Expenditure
Interest expended 19,253.75 14,989.58 4,385.08
Employee Cost 3,965.38 3,399.91 2,836.04
Selling and Admin Expenses 0.00 0.00 0.00
Depreciation 651.67 542.52 497.41
Miscellaneous Expenses 11,320.41 8,430.96 7,618.43
Preoperative Exp Capitalised 0.00 0.00 0.00
Operating Expenses 11,236.12 8,590.07 7,152.91
Provisions & Contingencies 4,701.34 3,783.32 3,798.97
Total Expenses 35,191.21 27,362.97 20,336.96
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Net Profit for the Year 6,726.28 5,167.09 3,926.40
Extraordionary Items 0.00 0.00 0.00
Profit brought forward 8,399.65 6,174.24 4,532.79
Total 15,125.93 11,341.33 8,459.19
Preference Dividend 0.00 0.00 0.00
Equity Dividend 1,309.08 1,009.08 767.62
Corporate Dividend Tax 222.48 163.70 124.53
Per share data (annualised)
Earning Per Share (Rs) 28.27 22.02 84.40
Equity Dividend (%) 275.00 215.00 165.00
Book Value (Rs) 152.20 127.52 545.46
Appropriations
Transfer to Statutory Reserves 1,789.56 1,252.20 1,000.16
Transfer to Other Reserves 672.63 516.71 392.64
Proposed Dividend/Transfer to Govt 1,531.56 1,172.78 892.15
Balance c/f to Balance Sheet 11,132.18 8,399.65 6,174.24
Total 15,125.93 11,341.34 8,459.19

94
 Balance Sheet of State Bank of ------------------- in Rs. Cr. -------------------
India

Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 684.03 671.04 635.00
Equity Share Capital 684.03 671.04 635.00
Share Application Money 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00
Reserves 98,199.65 83,280.16 64,351.04
Revaluation Reserves 0.00 0.00 0.00
Net Worth 98,883.68 83,951.20 64,986.04
Deposits 1,202,739.57 1,043,647.36 933,932.81
Borrowings 169,182.71 127,005.57 119,568.96
Total Debt 1,371,922.28 1,170,652.93 1,053,501.77
Other Liabilities & Provisions 95,455.08 80,915.09 105,248.39
Total Liabilities 1,566,261.04 1,335,519.22 1,223,736.20
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Assets
Cash & Balances with RBI 65,830.41 54,075.94 94,395.50
Balance with Banks, Money at Call 48,989.75 43,087.23 28,478.65
Advances 1,045,616.55 867,578.89 756,719.45
Investments 350,927.27 312,197.61 295,600.57
Gross Block 7,005.02 14,792.33 13,189.28
Accumulated Depreciation 0.00 9,658.46 8,757.33
Net Block 7,005.02 5,133.87 4,431.95
Capital Work In Progress 0.00 332.68 332.23
Other Assets 47,892.04 53,113.02 43,777.85
Total Assets 1,566,261.04 1,335,519.24 1,223,736.20
Contingent Liabilities 799,706.34 698,064.74 585,294.50
Bills for collection 193,312.11 201,500.44 205,092.29
Book Value (Rs) 1,445.60 1,251.05 1,023.40
Source : Dion Global Solutions Limited

95
Profit & Loss account of ------------------- in Rs. Cr. -------------------
State Bank of India

Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths
Income
Interest Earned 119,657.10 106,521.45 81,394.36
Other Income 16,034.84 14,351.45 14,935.09
Total Income 135,691.94 120,872.90 96,329.45
Expenditure
Interest expended 75,325.80 63,230.37 48,867.96
Employee Cost 18,380.90 16,974.04 14,480.17
Selling and Admin Expenses 0.00 15,625.18 12,141.19
Depreciation 1,139.61 1,007.17 990.50
Miscellaneous Expenses 26,740.65 12,350.13 12,479.30
Preoperative ExpCapitalised 0.00 0.00 0.00
Operating Expenses 29,284.42 37,563.09 31,430.88
Provisions & Contingencies 16,976.74 8,393.43 8,660.28
Total Expenses 121,586.96 109,186.89 88,959.12
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Net Profit for the Year 14,104.98 11,686.01 7,370.35
Extraordionary Items 0.00 21.28 0.00
Profit brought forward 0.34 6.05 0.34
Total 14,105.32 11,713.34 7,370.69
Preference Dividend 0.00 0.00 0.00
Equity Dividend 2,838.72 2,348.66 1,905.00
Corporate Dividend Tax 375.97 296.49 246.52
Per share data (annualised)
Earning Per Share (Rs) 206.20 174.15 116.07
Equity Dividend (%) 415.00 350.00 300.00
Book Value (Rs) 1,445.60 1,251.05 1,023.40
Appropriations
Transfer to Statutory Reserves 10,890.29 3,531.35 2,488.96
Transfer to Other Reserves 0.00 5,536.50 2,729.87
Proposed Dividend/Transfer to Govt 3,214.69 2,645.15 2,151.52
Balance c/f to Balance Sheet 0.34 0.34 0.34
Total 14,105.32 11,713.34 7,370.69
Source : Dion Global Solutions Limited

96
Balance Sheet of Punjab ------------------- in Rs. Cr. -------------------
National Bank

Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 353.47 339.18 316.81
Equity Share Capital 353.47 339.18 316.81
Share Application Money 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00
Reserves 32,323.43 26,028.37 19,720.99
Revaluation Reserves 0.00 1,449.53 1,470.76
Net Worth 32,676.90 27,817.08 21,508.56
Deposits 391,560.06 379,588.48 312,898.73
Borrowings 39,620.92 37,264.27 31,589.69
Total Debt 431,180.98 416,852.75 344,488.42
Other Liabilities & Provisions 15,019.15 13,524.18 12,328.27
Total Liabilities 478,877.03 458,194.01 378,325.25
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Assets
Cash & Balances with RBI 17,886.25 18,492.90 23,776.90
Balance with Banks, Money at Call 9,249.13 10,335.14 5,914.32
Advances 308,725.21 293,774.76 242,106.67
Investments 129,896.19 122,629.47 95,162.35
Gross Block 3,357.68 5,265.08 4,981.60
Accumulated Depreciation 0.00 2,096.22 1,876.01
Net Block 3,357.68 3,168.86 3,105.59
Capital Work In Progress 0.00 0.00 0.00
Other Assets 9,762.58 9,792.88 8,259.42
Total Assets 478,877.04 458,194.01 378,325.25
Contingent Liabilities 231,810.55 173,768.84 101,465.73
Bills for collection 0.00 50,981.22 37,449.53
Book Value (Rs) 924.45 777.39 632.48
Source : Dion Global Solutions Limited

97
Profit & Loss account of ------------------- in Rs. Cr. -------------------
Punjab National Bank

Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths
Income
Interest Earned 41,893.33 36,428.03 26,986.48
Other Income 4,215.92 4,202.60 3,612.58
Total Income 46,109.25 40,630.63 30,599.06
Expenditure
Interest expended 27,036.82 23,013.59 15,179.14
Employee Cost 5,674.72 4,723.48 4,461.10
Selling and Admin Expenses 0.00 3,353.59 2,813.45
Depreciation 318.50 292.26 255.85
Miscellaneous Expenses 8,331.53 4,363.51 3,456.02
Preoperative ExpCapitalised 0.00 0.00 0.00
Operating Expenses 8,165.05 9,405.85 8,367.96
Provisions & Contingencies 6,159.70 3,326.99 2,618.46
Total Expenses 41,361.57 35,746.43 26,165.56
Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths
Net Profit for the Year 4,747.67 4,884.20 4,433.50
Extraordionary Items 0.00 7.88 0.00
Profit brought forward 0.00 0.00 0.00
Total 4,747.67 4,892.08 4,433.50
Preference Dividend 0.00 0.00 0.00
Equity Dividend 954.38 746.19 696.99
Corporate Dividend Tax 162.20 121.05 113.07
Per share data (annualised)
Earning Per Share (Rs) 134.31 144.00 139.94
Equity Dividend (%) 270.00 220.00 220.00
Book Value (Rs) 924.45 777.39 632.48
Appropriations
Transfer to Statutory Reserves 3,631.10 1,390.32 1,258.39
Transfer to Other Reserves -0.01 2,634.53 2,365.05
Proposed Dividend/Transfer to Govt 1,116.58 867.24 810.06
Balance c/f to Balance Sheet 0.00 0.00 0.00
Total 4,747.67 4,892.09 4,433.50
Source : Dion Global Solutions Limited

98
Balance sheet of
BOB Bank
12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 422.52 412.38 392.81
Equity Share Capital 422.52 412.38 392.81
Share Application Money 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00
Reserves 31,546.92 27,064.47 20,650.73
Revaluation Reserves 0.00 0.00 0.00
Net Worth 31,969.44 27,476.85 21,043.54
Deposits 473,883.34 384,871.11 305,439.48
Borrowings 26,579.28 23,573.05 22,307.85
Total Debt 500,462.62 408,444.16 327,747.33
Other Liabilities & Provisions 14,703.38 11,400.46 9,606.31
Total Liabilities 547,135.44 447,321.47 358,397.18
Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths

Assets
Cash & Balances with RBI 13,452.08 21,651.46 19,868.18
Balance with Banks, Money at Call 71,946.83 42,517.08 30,065.89
Advances 328,185.76 287,377.29 228,676.36
Investments 121,393.72 83,209.40 71,396.59
Gross Block 2,453.12 2,341.50 2,299.72
Accumulated Depreciation 0.00 0.00 0.00
Net Block 2,453.12 2,341.50 2,299.72
Capital Work In Progress 0.00 0.00 0.00
Other Assets 9,703.93 10,224.73 6,090.44
Total Assets 547,135.44 447,321.46 358,397.18
Contingent Liabilities 230,581.15 175,269.81 146,008.59
Bills for collection 0.00 0.00 0.00
537.45
Book Value (Rs) 758.91 668.34

99
Profit & loss account of ------------------- in Rs. Cr. -------------------
Bank Of Baroda

Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths
Income
Interest Earned 35,196.65 29,673.72 21,885.92
Other Income 3,630.62 3,422.33 2,809.19
Total Income 38,827.27 33,096.05 24,695.11
Expenditure
Interest expended 23,881.39 19,356.71 13,083.66
Employee Cost 3,449.65 2,985.58 2,916.78
Selling and Admin Expenses 0.00 0.00 0.00
Depreciation 300.64 276.57 243.04
Miscellaneous Expenses 6,714.88 5,470.24 4,209.94
Preoperative Exp Capitalised 0.00 0.00 0.00
Operating Expenses 5,946.74 5,158.72 4,629.83
Provisions & Contingencies 4,518.43 3,573.67 2,739.93
Total Expenses 34,346.56 28,089.10 20,453.42
Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths

Net Profit for the Year 4,480.72 5,006.96 4,241.68
Extraordionary Items 0.00 0.00 0.00
Profit brought forward 0.00 0.00 0.00
Total 4,480.72 5,006.96 4,241.68
Preference Dividend 0.00 0.00 0.00
Equity Dividend 905.74 694.32 646.05
Corporate Dividend Tax 153.89 117.97 107.30
Per share data (annualised)
Earning Per Share (Rs) 106.37 121.79 108.33
Equity Dividend (%) 215.00 170.00 165.00
Book Value (Rs) 758.91 668.34 537.45
Appropriations
Transfer to Statutory Reserves 2,051.63 1,740.81 1,387.87
Transfer to Other Reserves 1,369.46 2,453.86 2,100.46
Proposed Dividend/Transfer to Govt 1,059.63 812.29 753.35
Balance c/f to Balance Sheet 0.00 0.00 0.00
Total 4,480.72 5,006.96 4,241.68

100