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A
Project Repot
On
A study on Financial Performance and Deposits and Loans & Advances ofBavla Nagrik bank
At
Bavla
Under the Guidance of (in Company)
Mr. H. J. Trivedi
Under the Guidance of (College)
Ms. Arpita Vaghela
Institution
Submitted toGujarat Technological University - Ahmedabad
Prepared By
Poonam J. ThakkarMBA- 2nd semSeat No. 13929
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K. K. Parekh Institute of Management Student Amreli
Dr. Jivraj Mehta Vidhya Vihar Campus Lathi road Amreli
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Ph: (02792) 223509 fax: (02792) 223509
E-mail: [email protected]
Web: kkpimsamreli.com
DIRECTORS RECOMMENDATION
TO,
The Registrar
Gujarat Technological University
Ahmedabad
Subject: MBA Summer Training Project Report
Respected Sir,
I am recommending the Summer Training Project entitled-
Financial Performance and deposits and loan & advances of the Bavla nagrik Bank
prepared by POONAM J. THAKKAR at THE BAVLA NAGRIK CO-OPERATIVE BANK,
BAVLA. As the partial fulfillment of the University requirement for the award of MBA
degree of Gujarat Technology UniversityAhmedabad
Date: - Thanking You,
Place: - Amreli Yours Faithfully,
Director
S T U D E N T D E C L A R A T I O N
I the undersigned student of POONAM J. THAKKAR K. K. Parekh Institute of
Management Studies Amreli M.B.A. II Semester, hereby declare that, the project on -
Financial Performance and deposits and loan & advances of the Bavla nagrik Bank
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I am really oblidged to the bank and all those Manager, officers, other staff
members of the bank who heartily give me information about the bank by answering question. I have
done sincere efforts in making this project as an implement-able and intelligent task. Most of all and
more than ever, I would like to thanks my parent, for their support, encouragement, kindness and
patience. At last, I am also thankful to all the members of Nagrik Co-operative bank ltd. for their
honest support and also to the staff members of our college.
Date: Sincerely and with Regards, Place
Thakkar Poonam J.
INDEX
Sr. no Particular Page no.
1 Industry profile 1
1.1 Brief History 2
1.2 Banking 3
1.3 Characteristic of Banking 3
1.4 Structure of the Banking Industry in India 4
1.5 RBI Overview 7
2 Company Profile 11
2.1 History and Development 12
2.2 Vision & Mission 14
2.3 Competitors 15
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2.4 Bank Profile 16
2.5 Organization Structure 17
2.6 Board of Directors 18
2.7 Branch managers 19
2.8 Bankers 19
2.9 SWOT Analysis 20
3 Study of four functional area 21
3.1 Finance Department 22
3.2 Human Resources Department 30
3.3 Operation Department 34
3.4 Marketing Department 38
4 Research methodology 41
4.1 Introduction 42
4.2 Define the problem 44
4.3 Literature review of report 45
4.3.1 Maintenance of Deposit accounts 45
4.3.2 Maintenance of loan & advances 47
4.3.4 Sources 49
4.3.4 IT (Info. Technology) 61
4.3.5 Time value of money 61
4.3.6 Investment 62
4.3.7 Investment policy 63
4.4 Objectives of the study 66
4.5 Rationale of the study 67
4.6 Limitations of the study 68
4.7 Variables & Hypothesis formulation 69
4.8 Data collection 71
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4.9 Data Analysis & interpretation 72
4.10 Social responsibility 80
4.11 Findings 81
4.12 Suggestions 82
4.13 conclusion 83
4.14 Bibliography 84
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1.1 BriefHistory
Many years ago economic advancement was unknown. Consequently, the use of money for buying
and selling was very much restricted. With the development of
Communication,
- Economic progress
- Spread of science, and
- Political institutions, the use of money, the use of credit instruments also
developed. Finance became a powerful instrument for any change.
The origin of the word bank can be traced back to the German word bank which translated means
help or mound or joint stock fund. The Italian word banco was derived from this to mean heap of
money.
In French bancus or banque means a bench. Business was transited by the Jews in farce on
benches in the market place. The benches resembled banking counters. If a banker tailed his bench
was broken up by the people leading to the word bankrupt which means one who has lost all
money, wealth or financial resources. Bank as it is largely understood in English today is an
institution that accepts money as a deposit to further lend it out for profit.
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1.2 Banking
In India, the banking regulation act, 1949, under which banks are regulated by the
reserve bank of India, defines a banking company and banking as:
Section 5(b) of BR act, 1949 banking as accepting for the purpose of lending or
investment of deposits of money from the public, repayable on element or otherwise and withdrawal
by cheque, draft order or otherwise section 49 a of the act prohibits any institution other than a
banking company to accept deposit money from public withdrawal by cheque.
In other words, the combination of the functions of acceptance of public deposits and
withdrawal of money by cheque by any institution can not be pertained without the approval of
reserve bank. "Banking in the most general sense, is meant the business of receiving, conserving &
utilizing the funds of community or of any special section of it."
"A banker of bank is a person, a firm, or a company having a place of business where
credits are opened by deposits or collection of money or currency or where money is advanced and
waned.
1.3 Characteristic of Banking: -
The characteristic of capture the essential features of banking are as under,
I. DEALING IN MONEY:
Banks main transaction is to monetary dealing. it accept deposits from the public and
advancing them as loans to the needy people.
II. DEALING WITH CREDIT:
The banks are the institution that can create credit i.e. creation of additional money
for lending thus creation of credit is the unique feature of banking.
III. COMMERCIAL IN NATURE :
Since all the banking functions are carried on with the aim of making profit, it is
regarded as a commercial institution.
IV. NATURE OF AGENT:
The basic function of accepting deposits and lending money as loans bank possesses
the character of and agent because of its various agency services.
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1.4 Structure of the Banking Industry in India: -
Financial requirements in a modern economy are of a diverse nature, distinctive variety and large
magnitude. Hence different types of banks have been instituted to eater to the varying needs of the
community.
The following chart depicts the structure of the banking industry in India:
1. SCHEDULED COMMERCIAL BANKS:-
The second schedule of the reserve bank of India act contains a list of banks which
are described as scheduled Banks. A bank in order to be designated as a schedule bank should
have a paid up capital and reserved as prescribed by the act. In terms of Sec. 42(6) of RBI act, its
prescribed a minimum capital of Rs.100crore and its business must be managed in a manner
which, in the opinion of the RBI is not detrimental to the interest of its depositors. The scheduled
banked required to maintain with the RBI a deposit in the form of cash reserve ratio, based on its
demand and time liabilities at a prescribed rate.
Scheduled commercial banks are:
- public sector banks
- private sector banks
- foreign banks
- local area banks
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2. NON SCHEDULED COMMERCIAL BANKS: -
The commercial banks not included in the second schedule of the RBI act are known
as Non-scheduled banks. They are not entitled to facilities like refinance and rediscounting of
bills, etc. from RBI they do not get the prestige as do scheduled banks. They are mainly engaged
in lending money, discounting and collecting bills and various agency services. They insist
higher security for loan
3. REGIONAL RURAL BANKS: -
In the Indian banking structure the regional rural banks occupy a government place
The RRBs are government sponsored, regionally based and rural oriented banking. They are
virtually commercial banks in character, operating in rural areas, and providing banking facilities
for rural development regional rural banks combines the local feel and familiarity with local
problems which co-operatives possess and the degree of business organization, ability to
mobilize deposits, access to central money markets and a modified outlook which thecommercial banks have.
In the regional banks have shareholding pattern is.
- 50% central government
- 15% concerned state govt.
- 35% sponsor bank.
4. CO-OPERATIVE BANKS: -
Co-operative banks are distinct entities by themselves with separate jurisdiction and an
independent board of directors. the co-operative banks are organized on a co-operative basis and are
governed by their members according to the co-operative laws.
There are various types of co-operative banks:
Primary urban co-operative banks
District central co-operative banks
State co-operative agricultural & rural development banks.
Primary co-operative agricultural and rural development banks.
Primary agricultural credit societies.
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5. FINANCIAL INSTITUTION OR DEVELOPMENT BANKS: -
For the development of small scale industries in each state, specialized institutions
like small scale industries development corporations and have been established. Firstly in 1964,
the government of India set up a central bank of development banks called industrial
development banks of Indian (IDBI).
There are several wide development banks in India like:
IFCI: - Industrial Finance Corporation of India.
BOB: - Industrial Credit & Investment Corporation of India
IDBI: - Industrial. Development Banks of India
SFCS: - State Finance Corporations
SIDCS: - State Industrial Development Corporation.
SIDBI: - Small Scale Industrial Development Banks of India
EIBI: - Export Import Banks of IndiaLIC: - Life Insurance Corporation of India
GIC: - General Insurance Corporation of India
UTI: - Unit Trust of India
NABARD: - National Bank of Agriculture and Rural
Development.
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1.5 RBI OVERVIEW:
Brief Introduction
The reserve bank of India was constituted under the reserve banks of India act,1934
to regulate the issue of bank notes and the maintained of reserves with a view to securing the
monetary stability in India and generally to operate in currency and credit system of the country to
its advantage.
FUNCTIONS OF THE RESERVE BANK OF INDIA: -
The functions of the RBI can be classified into:
Traditional
Promotional and
Supervisory.
The RBI functions the traditional liner for the following activities.
a. Monopoly of note issue.
b. Banker to the government
c. Agent and advisor of the govt.
d. Banker to the banks.
e. Acts as national clearing house
f. Lender of the last resort
g. Acts as the controller of credit.
h. Maintaining the value of currency.
i. Publisher the economic satieties and other international.
j. Fights against economic crises.
The promotional function of the reserve banks of India includes:a.Promotions of banking habits.
b.Provider refinance for export promotion.
c.Facilities for agriculture
d.Facilities to small scale industries.
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e.Helps co-operative sector.
f.prescription of minimum statuary requirement for banker
The RBI controls and administer as the entire financial and banking systems in India
through its wide supervisorypower key among them are:
a. Granting licenses to banks.
b. Inspection and enquiry.
c. Administers the deposit insurance scheme.
d. Periodical review of the working of commercial banks in India.
e. Control of the non-banking financial companies.
ORGANIZATIONAL STRUCTURE OF RBI: -
The affairs of the RBI are managed by a central board of directors which consists of:
1. The governors and not more than tour deputy governors appointed by the centralgovernment.
2. Four directors nominated by the central government one from each of the four local
boards.
3. Ten directors and one government official nominated by the govt. of India.
The RBI has four local boards with head quarters at
- Mumbai
- New Delhi
- Chennai
- Kolkata.
The chairman of the central board of directors in the chief executives authority of the
bank also known as the governor. The governor has the powers of general superintendence and
direction on the affairs and business of the bank.
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CO-OPERATIVE BANKING
Co-operative banks are group of financial institutions organized under the provisions
of the co-operative societys act of the states. These banks are essentially co-operative credit
societies organized by members to meet their short term and medium term financial requirements.The main object of co-operative banks is to provide cheap credit to their members.
They are based on the principles of self reliance and mutual co-operation. The co-operative banking
system in India is, however small razed in comparison to the commercial banking system. Its credit
outstanding is just less than one fifth of the total credit outstanding of the commercial banks.
Nonetheless, co-operative credit system is the main institutional source of rural, especially
agricultural finance in India. Co-operative banking system in India has the shape of a pyramid, i.e. a
three tire structure, constructed by:
1. Primary credit societies
2. Central cooperative banks and
3. State co-operative banks.
Primary credit societies lie at the local on base level. in rural areas there are primary
agricultural credit societies (PACS), which cater to the short and medium term credit needs of the
farmers. In urban areas, urban banks usually provide short term loans to they also accept deposits
from members and non members too thus, their functions and working are more or less similar to
those of commercial banks. But by nature, their from a major destination between these and
commercial banks which are joint stock companies.
The central co-operative banks (CCBs) are federation of primary societies belonging
to a specified district. By furnishing credit to the primary societies, central co-operative banks serve
as an important link between these societies and the money market of the country. No central co-
operative bank lends to individuals it lends to societies only.
The state co-operative banks (SCBs) lie at the apex of the entire co-operative credit
structure. Every state co-operative banks basic function is to furnish loans to the central co-operative
banks order to enable then to promote the lending activities of the primary credit societies.
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BRANCH BANKING
Over the years, the structure of banking also has undergone tremendous changes.
Consequently, several systems of banking have emerged in the branch banking.
Branch banking is a system in which every bank work is a legal entity having one
board of directors and one group of shareholders and operates through a network of branches spread
throughout the country. The head office of the bank is located in a big city or state capital the
braches operate throughout the country. Thus branch banking is another name for de-localized
banking which arise on business through a number of offices.
SERVICES PROVIDED BY BANK
Demat Account
Lockers
Cash Management
Insurance Product
Mutual Fund Product
Loans
ECS(Electronic clearance system)
Taxes
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2.1 HISTORY & DEVELOPMENT:
Because of high developed areas and crowd of Nagrik people, and mutual co-
operation of some visionary personalities, the Nagrik co-operative bank was started by taking license
no UBD Guj. 1153-P on 22nd
September 1980. It was became the first giant and fast developed
computerized and well staffed bank in Bavla area. During its work bank get splendid respect and
honor and also account holder get more satisfaction by better services.
Bavlas leading co-operative banks, established in 1980 with the help of local
known and established Rice Mill owners, Cotton Merchants and other well known personalities. I
has been near 29 years since inception. Silver Jubilee function was celebrated in the presence of
Shri Narendra Modi, Chief Minister of Gujarat who appreciated banks performance.
It is to be noted that board member personally took interest in building
present premise of the Bank. Due to their dedication and paying personal attention by remaining
present at the time of construction, bringing best material at the cheapest price, todays tall building
could be build. The inauguration of the building was also done by Shri Amarsinh Chaudhry, Chief
Minister, in the year 1988. Thereby bank has proud on both occasions when Gujarat Chief Mister
could remain present and join hand in appreciating progress of the bank.
Shri Purshottam Priyadasji, Acharya Swamiji of Maninagar Gadi Sansthan
visited personally to the bank during silver jubilee year 2004 and blessed too all Directors, Staff and
Members of the Bank. He handed over divine light (Mashal) to the Chairman of the Bank who then
travelled through Bavla town with other members of the Bank and staff.
We maintain financial discipline with utmost care and insist that our clients also to maintain
good financial discipline. Bank is running with ZERO OVERDUE OR ZERO NPA since 1s
April 2007. This is our major achievement.
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The main characteristics of Nagrik co-operative bank are:
Faith
Service
Transparent
Success
And also Nagrik co-operative get rank in top co-operative bank of Bavla area. In
short, we can say that Nagrik bank is the bless for uneducated people of Bavla area.
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2.2 VISION & MISION
Vision :-To provide required financial services to local community, in particular to paddy and
cotton industry.
Mission :-
To provide best and cheapest banking services to industrial units located at Bavla, and
see that Depositors also get value return of their money deposited with the Bank with THE BEST
services for their problems like TDS solution etc.
Group Values :-
From inception three vales have driven all the activities of the Nagrik
bank group. They are central to our operations worldwide and will continue to be at the core of all
our banks.Trust We will deliver all services on all our promises.
Our word is our bond.
Courage-We will support our decisions and actions with conviction.
InnovationWe will think laterally & never fight shy of embracing big ideas.
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2.3 COMPETITORS:
MAIN COMPETITORS FOR BANKING SECTOR
Post offices
Mutual fund
Share market
Insurance
Money lenders
Family and Friends
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2.4 BANK PROFILE:
NAME & ADDRESS :-
THE BAVLA NAGRIK CO-OPERATIVE BANK LTD.
Near, R.A.Patel market,
BAVLA-382220.
Tel.: (02714)232719 /232819
Fax : 230714
YEAR OF ESTABLISHMENT :-
The year of establishment is 1980.
WEB-SITE :-
www.bavlabank.com
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2.5 ORGANIZATIONAL STRUCTURE:
MANAGEROF
DEPT.
FINANCIALMANAGER
HUMAN RESOURCEMANAGER
MARKETINGMANAGER
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2.6 BOARD OF DIRECTORS
Name Post
Shri Ramubhai Govindlal Patel Chairman
Shri Rameshbhai Baldevbhai Patel Vice Chairman
Shri Vinodchandra Jayantilal Patel Managing Director
Shri Narsinhbhai Zinabhai Amin Director
Shri Balvantbhai Karansinh Desai Director
Shri Ajiikumar Govindlal ShahDirector
Shri Anilkumar Kanubhai Desai Director
Shri Baldevbhai Amrutlal Patel Director
Shri Girishkumar Manubhai Patel Director
Shri Ghanshyambhai Manilal Thakkar Director
Shri Harshilbhai Kaushikbhai Patel, C.A. Director
Shri Ramubhai Govindlal Patel Chairman
Shri Rameshbhai Baldevbhai Patel Vice Chairman
Shri Vinodchandra Jayantilal Patel Managing DirectorShri Narsinhbhai Zinabhai Amin Director
Shri Balvantbhai Karansinh Desai Director
Shri Ajiikumar Govindlal Shah Director
Shri Anilkumar Kanubhai DesaiDirector
Shri Baldevbhai Amrutlal Patel Director
Shri Girishkumar Manubhai Patel Director
Shri Ghanshyambhai Manilal Thakkar Director
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2.7 BRANCH MANAGER
Name Post
Shri Harshadbhai J. Trivedi GENERAL MANAGER
Shri Harshadbhai K. Patel BRANCH MANAGER
(NARANPURA)
Shri Harshadbhai J. Trivedi BAVLA SHAKHA
Shri Hiteshbhai Manharlal Pomal, C.A., Ahmedabad AUDITORS
2.8 BANKERS
The Gujarat State Co-operative Bank Ltd.
The Ahmedabad District Co-op. Bank Ltd.
State Bank of India
HDFC Bank Ltd.
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2.9 SWOT ANALYSIS:
During the project work two months at Nagrik co-operative bank, I find out some
strength, weaknesses, opportunities and threats by SWOT analysis are as under:
Strength:-
Customer segmented well staff and effective implementation of Customer Relationship
Management and Quality Management System.
In the uneducated area of Nagrik bank is the bless for uneducated people by friendly advice
and better services and really it yield lump sum amount of profit and deposits.
Nagrik bank got award of excellence of the best co-operative bank in bavla area it shows
the best banking operation.
Weakness:-
Rules for deposits and loans are very strict opening deposit is high and they require perfect
documents, it can be limitation for slow inflow of deposits.
In recent competitive era, Nagrik bank not provide some modern facilities like ATM service,
debit card credit card and even not website on intent for show the growth of bank.
There are lack of linking performance and reward.
.
Opportunities:-
Its great opportunity to cover most power area of Bavla because of continues growthstrategy, it build good image among the customers and public and reliance on Nagrik co-
operative bank, so it has opportunity to prove the proved growth pulls growth
Threats :-
There are strict rules and deposit for opening saving or current account is high in compare to
other co-operative banks, so it can create bed image among customers and public and it can
be limitation for slow inflow of opening account.
In the modern era, Nagrik bank is not providing ATM facility, internet banking and also
credit and debit card, so it can be dangerous threats for Nagrik bank.
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INTRODUCTION
Finance is the science of funds management. The general areas of finance are business
finance, personal finance, and public finance includes saving money and often includes lending
money. The field of finance deals with the concepts of time, money and risk and how they are
interrelated. It also deals with how money is spent and budgeted. Finance works most basically
through individuals and business organizations depositing money in a bank. The bank then lends the
money out to other individuals or corporations for consumption or investment, and charges interest
on the loans.
Finance is regarded as the life blood of a business organization. The study of financial
management relates to the process of procuring financial resources and its judicious utilization with
a view of maximizing the shareholders wealth. Efficient management of every business enterprises.
In financial management, two functions are considered to be importance.
1. The procurement of funds.
2. The effective utilization of funds
According to Guthman and DGoulFinancial management means managerial function
like planning, controlling, pertaining to acquisition and using of funds needed in the business.
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SCHEDULE ACCORDING TO RBI
RBI is the main central bank of India objectives of RBIs are to regulate the issue of
bank notes and the keeping of reserves with a view to securing monetary stability in India and
generally to operate country to its advantage.every scheduled commercial bank has to operate the commercial bank has to operate
the bank account and follow the bank format for account according to RBI schedule.
According to section 29, schedule of RBI banking taken from the final accounts are
as under:
Balance sheet format
Capital Schedule
Reserve & Surplus Schedule
Deposits Schedule
Advances Schedule
Fixed asset Schedule
Other asset Schedule
Borrowings Schedule
Liabilities & Provisions Schedule
Cash and balance with RBI Schedule
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FORM OF BALANCE SHEET
Particulars Schedule
no.
As on 31.3.
(current year)
As on 31.3.
(previous year)
CAPITAL & LIABILITIES
Capital
Reserve & surplus
Deposit
Borrowings
Other liabilities & provisions
P & L A/C
TOTAL:
ASSETS
Cash and balance with
Reserve bank of India
Balance with banks & money
call and short term
Other assets
Investment
Advances
Fixed assets
Contingent liabilities
TOTAL:
1
2
3
4
5
6
7
8
9
10
21380100.00
117746645.05
608024666.66
00
6736562.00
12538326.91
766426300.62
50909147.00
5117216.78
467967500.00240699917.84
1732519.00
766426300.62
22015900.00
114780403.58
508345234.64
00
2761021.00
8556795.47
656459354.69
66679329.97
4751636.23
333438750.00250259041.49
1330597.00
656459354.69
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SCHEDULE 1: CAPITAL
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
I. FOR NATIONAL BANKS
Capital (fully owned by central Govt.)
II. FOR OTHER BANKSAuthorized capital
(300000 shares of Rs. _100 each)
issued capital
( shares of Rs. 100 each)
subscribed capital
( shares of Rs. 100 each)
TOTAL:
30000000.00
21380100.00
21380100.00
30000000.00
22015900.00
22015900.00
SCHEDULE 2: RESERVES & SURPLUS
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
Dividend equalization fund
Statutory reserve
Building Fund
Bad-debt reserve fund
Agriculture credit fund
Investment dep. Reserve fund
Other funds
TOTAL:
5156344.00
44746413.25
24150258.00
00
00
33071750.00
10621879.80
117746645.05
4716026.00
39348963.25
24115547.00
10594349.00
00
16000000.00
20005518.33
114780403.58
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SCHEDULE 3: DEPOSITS
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
A. I. Demand Deposits
(i) from banks
(ii) from others
II. Savings Bank Deposits
III. term deposits
IV. Current deposits
TOTAL :
( I, II, & III)
B. (I) deposits of branches in India
(ii) Deposits of branches outside
India.
TOTAL:
341924851.29
165203441.36
159246.42
100737127.59
608024666.66
00
00
00
317397664.93
111914097.09
1320928.81
77712543.81
508345234.64
00
00
00
SCHEDULE 4: BORROWINGS
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
I. Borrowing In India
(i) reserve bank of India
(ii) other institutions of
agencies
II. Borrowings Outside India
Secured borrowing in I & II above
00 00
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SCHEDULE 5: OTHER LIABILITIES AND PROVISIONS
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
I. bills payable
II. inter office adjustments (net)
III. interest accrued
IV. others (including provisions)
TOTAL:
597808.00
00
654602.00
5484152.00
6736562.00
634976.00
00
00
2126045.00
2761021.00
SCHEDULE 6: CASH AND BALANCE WITH RESERVE BANK OF INDIA
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
I. cash in hand
II. cash in banks
III. cash in other bank
i). in current account
ii) in other account
3537062.91
35170915.65
12201168.44
2201168.44
10000000.00
50909147.00
6803179.90
34077651.25
25798498.82
5798498.82
20000000.00
66679329.97
SCHEDULE 7: OTHER ASSETS
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
I. interest accrued
II. stationery
III. non banking assets acquired in
satisfaction of claims
TOTAL
4358027.78
597808.00
161381.00
5117216.78
3817967.23
634976.00
213693.00
4751636.23
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SCHEDULE 8: INVESTMENTS
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
I. Investment In India In
(i) government securities
(ii) other approved
securities
(iii) shares
(iv) debentures and bonds
(v) call and short term
investment
457462500.00
505000.00
00
00
10000000.00
00
467967500.00
467463500.00
525000.00
00
0072500000.00
00
488169500.00
SCHEDULE 9: ADVANCES
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
A. (I) bills purchase and disco.
(i) cash credits, overdrafts
and loans, repayable on
demand
(iii) terms loan
TOTAL
B. SHORT TERM :-(i) secured by tangible assets& Covered by bank/govt.
Guarantees.
(iii) unsecured
TOTAL
C. MIDDLE TERM :-(i) secured by tangible assets& Covered by bank/govt.
Guarantees.
00
187147910.67
1630475.20188778385.87
37647666.00
00
189352857.49
2350865.00191703722.49
47404342.00
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(iii) unsecured
TOTAL
D. LONG TERM :-(i) secured by tangible assets
& Covered by bank/govt.
Guarantees.
TOTAL
GRANT TOTAL (C.I. & II.)
140052.00
37787718.00
14133813.97
14133813.97
240699917.84
161711.00
47566053.00
10989266.00
10989266.00
250259041.49
SCHEDULE 10: FIXED ASSETS
Particulars As on 31.3
(Current year)
As on 31.3
(previous year)
I. Premises
At cost as on 31st March of the
preceding year
Additions during the year
Deductions during the year
Depreciation to date
II. other fixed article (including
furniture & fixture)
at cost as on 31st
March of the
preceding year
additions during the year
deductions during the year
depreciation to date
TOTAL:
00
1732519.00
1732519.00
00
1330597.00
1330597.00
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INTRODUCTION
Organizations have become increasingly aware of the importance
human resource. This awareness is generated by the realization that people-sub-system is a critical
dimension in organizational effectives. Real life experiences substantiate the assumption that no
matter how sophisticated and modern the business activities of an organization become, it will be
extremely difficult to sustain its growth and effectiveness unless its human resource are
complementary to its operations.
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This realization has propelled human resource mangers into a major field of activity in
recent years, and the renewed interest has further facilitated in developing newer approaches in
managing human resource. The emerging concerns about new values of humanism and
humanization have also added to this renewed interest in human resource management.
Human resource (or personnel) management, in the sense of getting things done through
people. It's an essential part of every manager's responsibilities, but many organizations find it
advantageous to establish a specialist division to provide an expert service dedicated to ensuring that
the human resource function is performed efficiently.
"People are our most valuable asset" is a clich which no member of any senior management team
would disagree with. Yet, the reality for many organizations is that their people remain
under valued
under trained
under utilized
poorly motivated, and consequently
perform well below their true capability
The rate of change facing organizations has never been greater and organizations must
absorb and manage change at a much faster rate than in the past. In order to implement a successful
business strategy to face this challenge, organizations, large or small, must ensure that they have the
right people capable of delivering the strategy. The market place for talented, skilled people iscompetitive and expensive. Taking on new staff can be disruptive to existing employees. Also, it
takes time to develop 'cultural awareness', product/ process/ organization knowledge and experience
for new staff members.
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RECRUITMENT :
Recruitment is understood as the process of searching for and obtaining applicants for jobs,
from among whom the right people can be selected. A formal definition of recruitment is: it is
process of finding and attracting capable candidates for employment. The process begins when the
new recruits are sought and ends when their applicant are submitted. The result is pool of applicant
from which new employees are selected.
TRAINING:
Training and development means it is any attempt to improve current or future employee
performance by increasing an employees ability to perform, through learning, usually by changing
the employees attitude or increasing his or her skill and knowledge. The need for training and
development is determine by the employees performance deficiency, computed as follow;
Training and development need = Standard performanceActual Performance
T in
Interview
Written test
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THE BANKING SYSTEM, PROCESS AND PRODUCTS:-
To understand the computerized system which is essentially computerized implementation of the
functionfirst, it is necessary to understand function in their own respects.
SERVICE GIVEN TO THE CUSTOMER:-
1. clearing service
2. Current account
3. Saving account
4. Fix deposit account
5. Clearing service
6. Insurance service
7. Mobile banking service
8. Draft facility at all over India
9. Locker facility
10.ECS facility
11.loan service
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CLEARING:
Clearing is the process related to the payment system in the Banking Industry. Cheque
and DD is the major instrument of the payment system. Clearing is the process through which
customer are able to pay/receive the money through cheque, DD, Dividend warrant and others such
instruments. Clearing involve the processing of outward cheque and inward cheque.
ECS:
The RBI has asked the banks in October 2005, to
provide the required details to the customers in their pass
book/account statement regarding the credits affected
through ECS.
Electronic Clearing service (ECS) is increasingly
being used by various users like Govt. Departments,
corporate bodies, etc. for repetitive payments like salary,
pension, dividends, interest, etc
The Electronic Clearing Service (ECS) from BNB entails automatic payment of utility and
routine monthly bills / installments from your savings / current account subject to your prior one
time approval. Similarly, refunds of IPO, Interest Warrants, and Dividend etc. can also be credited to
your account automatically. Here you do not have to go to anywhere to pay for the utility services or
stand in long queues for any kind of Bill Payment. Based on the standing instructions, payments will
be debited in your account
Safe deposit:
BNB provide safe deposit volt service also. there deposited amount then no
charge on it. The bank offers safe deposit lockers for safety of valuable things like
gold, silver, hard cash, diamonds, and important documents. Bank offers to its
customers safe deposit vault or locker at a large number of branches. . Basically use of lockers is to
make most valuable thing secure.
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Quality management system:
Simply quality management system (QMS) means,
1. Managing systems qualitatively.
2. Managing quality through systems.
Quality is the totality of features and characteristic of a product or service that bears
on its ability to satisfy stated and implied needs
Quality is
Quality is every ones job.
Quality comes from prevention not from correction.
Quality means meeting the needs of customers.
Quality demands term work
Quality demands strategic planning
Quality means results.
Quality management system is to direct and control an organization with regard to
quality.
Features of Strong QMS:-
understanding of roles & responsibility
understanding of authority & accountable
clarity on decision making effective communication
proper planning
Nagrik Bank Focus towards QMS:-
system strengthening
reduction in complains
increasing customer satisfaction
cost reduction
new product development
serving to new customers
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proactive suggestions for improvement
continual improvement
Principles Considering For QMS: -
customer focus
leadership
involvement of people
process approach
system approach to management
continual improvement
factual approach to decision making
mutually beneficial supplier relationship
CONTINUOUS IMPROVEMENT OF QMS IN NAGRIK BANK :
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INTRODUCTION
Marketing department is core of base of any corporate. Marketing means the process of
distribution. Marketing involves two important things.
1. The matching of an article of trade with markets.
2. The process of exchange.
P. Kotler defined Marketing as, The set of human activities directed at facaliting and
consummating of exchanges.According to American Marketing Association, Marketing
Management is the process of planning and executing the conception, pricing, promotion and
distribution of idea, goods and services to created exchanges that satisfy individual and
organizational goals.
A product is something that is made in a factory, A brand is something that is bought by
customers, A product can be copied by a competitor. But brand is unique. A product can be quickly
outdated, a success brand is timeless. Marketing deals with identifying and meeting human and
social needs. One of the shortest definitions of marketing is meeting needs profitably.
Marketing research is the function which links the Depositors and Borrowers and publicto the bank through information used to identify and define marketing opportunities and problems:
generate and evaluate marketing actions: monitor performance: and improve understanding as a
process. The bank is done marketing for getting more advances \ from the public.
CUSTOMER RELATIONSHIP MANAGEMENT:-
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In the banking world CRM has come to mean a customer-centric business strategy
The strategy exploits information technology to detect and project customer financial needs. It seeks
to utilize all the business lines in the bank to satisfy the said needs.
Bankers have traditionally used the branch system and mass marketing techniques to
attract deposit account and advance loans. Technology driven banks with their super computers can
manipulate customer information in any number of ways and at lighting speed. Customers have
more disposable incomes and increasingly comfortable with technology. Today the competition in
the banking industry has forced every bank to opt for this novel tool to hold on to their customers, le
alone attracting new ones. Before long the Indian banks should take on their foreign counterparts
head on. There is scope for improvement. Each bank should eventually design its own foundation
most appropriate to its customers.
For effective customer relationship management and HRD Nagrik co-operative bank is focused on
following points.
Managers should be friendly with his employees and exchange friendly greetings.
Formal acknowledgement of his staff achievements.
Feedback about staff performance.
Accept quality suggestions of staff and try to implement.
Assigning job with more responsibility.
Adapting job rotation.
Provide all possible opportunity to staff to participate in management of the branch
Conduct periodical performance appraisal of staff and make than understand their
weakness if any.
Employees should be friendly with customers and give guideline and information.
Employees should listen customer complaint and suggestions and try to remove the
services as per customer requirement.
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Extra services provided by Nagrik co-operative bank according to 9th
annual report:
Account holders can get 20,000 from current account and 10,000 from through
taller payment.
D-mat account is provided by bank.
Account holders can know their balance through tale banking.
Any account holder can get bank statement through tax from anywhere.
Balance can be shown through VAT machine.
All Indias draft can be issued quickly and with reasonable commission
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4.1 INTRODUCTION
In fact research is an art of scientific investigation research is the systematic &
intensive study directed towards a more complete knowledge of subject study and if start due to
some specific question or problem.Research is essentially an investigation a recording & analysis of evidence for the
purpose of gaining knowledge. Research methodology defines what the activity of research is
how to proceed, how to measure progress, and what constitutes success. A specific way of
performing an operation that implies precise deliverables at the end of each stage. According to
Clifford woody research comprises defining and redefining problems, formulating hypothesis or
suggested solutions, collecting organizing and evaluating data, making deductions and reaching
conclusions and at lest carefully testing the conclusions to determine weather they fit the formulating
hypothesis.
Research is common parlance refers to a search for knowledge. Once can also define
as a scientific and systematic search for pertinent information on a specific topic. In fact research is
an art of scientific investigation. The advanced learners dictionary of current English lays down the
meaning of research a careful investigation or inquiry specially through search for new facts in any
branch of knowledge. Redman and more define research as a systematized effort to gain new
knowledge. Some people consider research as a movement, a movement from the known to the
unknown. It is actually a voyage discovery. The data will be collected through the annual reports of
the bank. It also collected through the different bank websites, different published books by the
authors and magazines & Bulletins of RBI. It is also collected from the Master circular of RBI. The
data is also to be collected from the practical work and opinions of the staff-members.
It refers to the rearrangement of the data given in the Financial statement. The data is
analysed by the various financial statement analysis. It is analysed by the Ratio Analysis, Leverage,
Common size statement. It is analysed by the various methods. .Analysis of financial statements
Judging the Profitability of the business, liquidity of the business, long term solvency of the
business It helps to show the financial situation of bank and from this statement they can take
appropriate Decisions. It refers to the meaning and significance of the data so simplified.. It helps to
showIntra-firm and Inter-firm comparison. Ratio Analysis helps
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To judge the earning capacity, financial soundness and operating efficiency of an
enterprise
To simplify the accounting information.
To help in comparative analysis.
Data interpretation is used for to understand easily in the mind of public. It helps
to know the results of bank to the share-holders and to revaluate the performance of any bank. It will
fairly good idea about various aspect financial position.
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4.2 Define the problem :-
The Problem of the study is why the deposits and loan & advances is increase or
decrease every year.
Title of the Project:-
Financial Performanceand Deposits and Loans & Advances of Bavla Nagrik bank
Itincludes the lending & borrowing of money in the bank and how the functions work
in the bank.
Description of the Project:-
This is mainly done to avail loan from the bank by the public, which is must for the
sanction of loan. Other main aspect of the project was to get the loan sanction from the bank, which
is entailed fulfilling requirements of the bank for the same.
The project also involves Ratio Analysis and Sensitivity Analysis of Nagrik Bank.
With the help of Ratio Analysis a firm can get the idea about its liquidity, profitability, proportion of
long term liabilities, working capital, risk factors. And with sensitivity analysis a firm can study the
changes in various ratios in proportion with changes in other factors.
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4.3 LITERATURE REVIEW OF REPORT:
I have select the secondary data for the research purpose. secondary data are
selected because I want to collect all the information about bank activity and try to do changes and
provide require facilities to the account holders and give satisfaction to them.
4.3.1 Maintenance of Deposit Accounts
Acceptance of deposits and maintenance of deposit accounts is the core activity
in any bank. The very basic legal interpretation of the word 'banking" as defined in the Banking
Regulation Act, 1949 means accepting deposits of money, for the purpose of lending or investment
from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or
otherwise. Thus, deposits are the major resource and mainstay of a bank and the main objective of a
bank is to mobilise adequate deposits. Products/services are provided with the focus, which include
the satisfaction of wants and needs of the customers. Without such focus, no product/service canexist for a long period of time.
Safeguards:
PAN/GIR Number
The banks are required to obtain PAN/GIR number of a depositor
opening an account with an initial deposit of Rs.50,000/- and above.
Authorization
The opening of new accounts should be authorised only by the BranchManager or by the Officer-in-Charge of the concerned deposit accounts department at
bigger branch.
Completion of Formalities
The banks should ensure that all account opening formalities are
undertaken at the bank's premises and no document is allowed to be taken out for
execution.
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Types of Deposit Accounts:
Saving Account
Safe Deposit Locker Account
Joint Account
Current Account
Recurring Account
Saving Account:-
Any individual can open this account maximum 4 names are allowed in joint
account in this account but it is not rule of RBI that minimum balance Rs.500 for this account is
require. If there is not minimum balance of Rs 500 then Rs 50 is charged every 6 month. Any
institution co-operative society can also open this account moreover minor can also open thisaccount withdraw are allowed maximum 8 times in a month & 50 times in 6 month. in this
account nomination facility are also available.
In this account current interest rate is 3.5% but it change any time as per
RBIs rules. Cheque book charge is not charge for regular usage but for extra cheque book there
is some charge. when person open his saving account at that he had given a pass-book which is
free of charge but if this pass book is loss by mistake then new pass book is chargeable with Rs
10.if this account is closed within one year then Rs.20.is charged for pass book. moreover if
there is not enough balance in account than Rs.25 are charged on every return cheque.
Safe Deposit Locker Accounts:-
In order to facilitate the identification of locker keys by the Income-tax
officials, the banks should emboss on all locker keys an identification code which would
indicate the bank and the branch which had hired the lockers.
Joint Accounts:-While there are no restrictions on the number of account holders in a joint
account, it is incumbent upon the banks to examine, every request for opening joint accounts
very carefully. In particular, the purpose, nature of business handled by the parties and other
relevant aspects relating to the business, and the financial position of the account holders, need to
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be looked into before opening such accounts. Care has also to be exercised when the number of
account holders is large.
Current Accounts:-
This account can be open for only business establishment like
proprietorship business, partnership business, private limited, company limited .any other
institution, trust, co operative sector etc i.e. service men cannot open this account & minimumbalance require in this account is Rs 3000 and if balance is less then Rs 3000 than Rs. 25 is
charged per every return cheques. services charge in this account is Rs. 10 which is the lowest
charge in the banking industries. in this account nomination facility is available. cheque book is
also issued in this book. in this account person can withdraw or deposit at any time he want in
this account no restriction like saving account that only 8 time withdraw in one month.
Recurring account:-
Any person can open this account on the name of his firm, institution etc
in this account daily credited decided amount whether Rs.30, Rs.50 or Rs.100.in this account the
agent recognized by bank collect the money at the address given by account holder. One
passbook is given to account holder in which daily transaction are noted by agent and account
holder,after communicating one month check it and sign it bank given and identify card to its
recognized agent with the help of this card account holder become sure that he is banks agent
this account are open for 1 year on which annually 7% interest is given.
4.3.2 Management of Loans and Advances
Types of Loan & Advances :-
Loans and Advances against Shares, Debentures and Bonds
Advances against Fixed Deposit Receipts (FDRs) Issued by Other Banks
Financing Infrastructure/ Housing ProjectsAdvances against Gold Ornaments & Jewellery
Loans and advances to Small Scale Industries
Grant of Loans for acquisition of Kisan Vikas Patras (KVPs)
Working Capital Finance to Information Technology and Software Industry
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Loans and Advances against Shares, Debentures and Bonds:-
Banks are required to strictly observe regulatory restrictions on grant of loans and advances
against shares, debentures and bonds which are detailed in the Master Circular on 'Bank Finance
Against Shares and Debentures' dated August 28, 1998 read with the Master Circular dated July 1,
2009 on Exposure Norms and the Circular on Financing of acquisition of equity in overseas
companies dated June 7, 2005. The restrictions, inter alia, on loans and advances against shares and
debentures, are no loans to be granted against partly paid shares. No loans to be granted to
partnership/proprietorship concerns against the primary security of shares and debentures.
Advances against Fixed Deposit Receipts (FDRs) Issued by Other
Banks:-
There have been instances where fake term deposit receipts, purported to have been issued by
some banks, were used for obtaining advances from other banks. In the light of these happenings, thebanks should desist from sanctioning advances against FDRs, or other term deposits of other banks.
Financing Infrastructure/ Housing Projects:-
Any credit facility in whatever form extended by lenders (i.e. banks, FIs or NBFCs) to an
infrastructure facility as specified below falls within the definition of "infrastructure lending". In
other words, a credit facility provided to a borrower company engaged in
developing or
operating and maintaining, or
developing, operating and maintaining any infrastructure facility.
Advances against Gold Ornaments & Jewellery:-
Hallmarking of gold jewellery ensures the quality of gold used in the jewellery as to caratage
fineness and purity. Therefore, banks would find granting of advances against the security of such
hallmarked jewellery safer and easier. Preferential treatment of hallmarked jewellery is likely to
encourage practice of hallmarking which will be in the long-term interest of consumer, lenders and
the industry. Therefore, banks while considering granting advances against jewellery may keep in
view the advantages of hallmarked jewellery and decide on the margin and rates of interest thereon.
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Mainly there are sources of inflow described as under.
Deposit creation
Interest on loans
Income on investments
Commission and incidental changes
Notice, share transfer and locker entrance fee.
NOTE: - this theorical portion is taken by considering Nagrik banks operation.
The explanation of various sources of inflow is as under:-
Deposit Creation
Deposit creation is an important function of commercial banks. Deposit creation is by
two types, when the banks receive cash from the customers deposits are created. These deposits may
be saving bank deposit or current bank deposits. Any amount deposited in these accounts could be
withdrawal, by issuing cheque.if there is no limit for withdrawal, then that deposit is called current
account. if there is any restriction for withdrawal, then it is called saving bank account saving
deposits may be of several types such as fixed deposits, recurring deposits etc. in the case of current
deposits the depositor wants the bank to offer facilities to withdraw in the torn of cheque as many
times as possible. so for getting deposits, bank attracts deposits from the people either by means of
offering interest or other facilities.
Interest on Loans
Loan is the outflow or credit creation of bank. Bank always provides the different
types of loan against some valuable property with 15% or 20% margin. Various types of loan are
provided to different motive against the loans, bank get higher interest from loan holder. In concern
with Nagrik co-operative bank its provide mainly 9 or 12 types of loan like
mortgagee loan
vehicle loan
cash credit loan
machinery loan
FD loan
NSC loan
self employed loan
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term loan
Gold loan etc.
Against these loan, bank get 13% to 15% interest per annum so its wide and vast
inflow for the bank so high loan issue means high profit for bank. the figure of Nagrik bank of last
three years are given below.
Year Interest of loan
2008 53012873
2009 55629285
2010 61018325
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
1 2 3
Interest of loan
Year
Commission ExchangeBank also provide various other services like colleting light bill, issuing draft and pay order, bill of
exchange purchase of load & foreign current etc.
By providing these types services, banks can get commission its also one type of income for bank
The following figure share the commission flow of Nagrik bank for 3 years.
Years Commission Exchange
2008 1356625
2009 1243396
2010 407268
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0
200000
400000
600000
800000
1000000
1200000
1400000
1 2 3
Commiss ion Exchange
Years
Incidental Charges & Dividend
Incidental charges are those charges against bank provides various types of extra
services to the customer.
Services provides like:- Guarantee such as performance quite and financial guarantee.
- Rate custody of deed & securities.
- safe deposit volts
- Remittance of fund such as bank drafts mail target telegraphic transfer.
- Emergency vouchers etc
The figure shown below the incidental charges & dividends of Nagrik bank.
Years Charges & dividend
2008 167825
2009 204723
2010 183986
0
50000
100000
150000
200000
250000
1 2 3
Charges & dividend
Years
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Notice Fee, Share Transfer Fee, Locker Entrance Fee
Notice fee charged by bank against they send any notice to customer for loan
installation or for any banking transaction Share transfer transaction like bank is a broker who helps
to shareholder for buying and selling against these banks take share transfer fees. Bank provide
service of rate deposit vault or locker facility for this becoming a local holder, they take the local
entrance fees.
Following figure indicates the fees taken by Nagrik bank for 3 years.
Years Fees
2008 216480
2009 275400
2010 281385
0
50000
100000
150000
200000
250000
300000
1 2 3
Fees
Years
CREDIT CREATION OR OUTFLOW
In the sense of bank outflow means the flow of finance or money from the bank to
the outside customers. As per the operation of bank of lending and borrowing money to thecustomers and by the customer. Its main requirement of bank to know that which sources are for
credit creation or outflow from the bank. outflow of the bank mainly depends on the RBI regulation
as per the service sector, its main duties of bank to lending the money in the from of loans, cash
credit overdrafts for development of business and other purposes there are main sources of out flow
are as under:
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- Interest on deposits.
- salary and other expenses
- primary expenses
- fees
- fund and cost
Detail information of these outflows is as given below:
Interest on Deposits
Interest on deposit is based on the RBI regulation and banks actual rate. More depositor
required payment of more interest. In the bank there are mainly three or four types of deposit
provided to customer. It there is more flexible amount in the bank means low interest like current
deposit Because of more transaction in the current deposit the bank pay less interest of 0% per 6
month.in the saving deposit and recurring deposit, interest is paid to customer are regimentally 3.%and 3.5% there high stake or amount with steely movement in fixed deposit holder get more interest
like 7%to 7.5% so bank provide these interest against different deposits which outflow for bank.
Figure shown below indicate the interest on deposit and debts:
Years Interest on dep. & debt.
2008 25735420
2009 29070511
2010 33500262
DEPOSIT RATESSAVING BANK 3.50%
FIX DEPOSIT (APPLICABLE FROM DATE : 17-08-2009)
31 Days to 180 Days 4.00%
181 to 364 Days 5.00%
12 months to 23 months 7.00%
For 2 years 7.50%
Above 2 years and up to 5 years 7.00%
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0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
1 2 3
Interest on dep. & debt.
Years
Salary and Other Expenses
Now days mostly banks are a computerized, yet for maintain computer and for other
manual works, there are requirement of worker and professional persons for customer. Attending
management and for banking practices so against these banks have to provide salute for professional
person and wages for worker or peon. Bank also pays finance for provident funds. There are also
other expenses and allowances provides by bank like traveling and vehicle flue expenses for etc.
Bank also expenses for staff recruitment and on the training of bank staff. For these
expenses, the figures are shown below.
Years Salary & other expenses
2008 5243074
2009 5936689
2010 6927424
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
1 2 3
Salary & other expenses
Years
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Primary Expenses
Primary expenses are those which mainly spend on for banking operation and facility
provides to staff of bank and customers both.
Primary expenses mainly include:
Tax, rent insurance, light bill, telephone & comm. expenses.
Stationary, printing and advertisement cost.
Annual meeting expenses and celebration expenses.
Library sanitary & water expenses.
Deposit insurances etc.
Figures of all these primary expenses for 3 years are shown below:
Years Primary expenses
2008 1696872
2009 1920797
2010 2165721
0
500000
1000000
1500000
2000000
2500000
1 2 3
Primary expenses
Years
Fees
Fees are paid for RBI rules and regulation for,
auditing on bank account,
legal fees,
membership fees,
Clearing house expenses etc.
Following figure indicates the fees are paid of volume bank for last 3 years.
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Years Fees
2008 185950
2009 116350
2010 107100
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
1 2 3
Fees
Years
Fund and Other Cost
Banks make some reserve for future uncertainties like:
depreciation fund on investment deposit insurance premium,
bed debts fund,
Accident fund etc.
There are also other costs like computer, machinery, building repairing cost etc.
Expenses for these all sources are graphically shown below:
Years Fund & Cost
2008 30838911
2009 31994349
2010 33071750
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
1 2 3
Fund & Cost
Years
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CIRCULATION CLEARING OF A CHEQUE
cheque is defined as an instrument in writing containing an unconditional order
signed by the maker directing a certain person to pay certain ram of money only to or to the order of
a certain person or to the bearer of the instrument. The banks have developed and popularized the
cheque system through, which transfer of money is made possible. The cheque system has reduced
the use of cash to a considerable extent. The cheque system is a highly developed system of credit
instrument through, which money can be transferred from one bank to another bank. Circulation of
clearing cheque that how the cheque circulates for clearing the payment, which shown below:
BOBche ue
Customer gives chequeof BOB bank to Nagrik
bank for converting inMoney. Nagrik bank enters the
data of cheque than send
to clearing house.
Record the data asper bank code than
inform to BOBbank.
Bank checks the figure, ifsufficient than inform to
Nagrik bank for clearing.
Customer withdrawsthe money form Nagrik
bank.
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CIRCULATION OR DISTRIBUTION OF CASH FLOW
Co-operative bank are form is on the co-operative principles and as such they are
more service oriented than profit oriented. So main motive of co-operative banks is to distribute the
profit for public welfare and in other part by the portion of profit decided by board of directors
Nagrik Co-operative Bank distribute its net profit by RBI regulations and some portion is by board
of directors. Proportion of distribution the profit is as described below:
Reserve Fund (38.71%)
Share Dividend (12%)
Dividend equalization fund (2%)
Education fund (2.5%)
Bad-debt A/c (15%)
Urban Bank Credit equalization fund (15%)
Building Fund (60%) Bad-debt reserve fund (35%)
Co-operative prachar fund (5%)
Religious fund (0%)
Now the distribution of profit for year ended 31st
March 2010, are as below:
PARTICULARS AMOUNT
Net Profit 12504756.35
Reserve Fund (38.71%) 4853586.35Share Dividend (12%) 2442185.00
Dividend equalization fund (2%) 427602.00
Education fund (2.5%) 2,00,000.00
Bad-debt A/c (15%) 4500000.00
Urban Bank Credit equalization fund (15%) 81383.00
Religious Fund (0%) 00000.00
Net Profit -33750.56
Co-operative prachar fund (5%) 1678.56
Building Fund (60%) 20142.00
Bad-debt reserve fund (35%) 11750.00
Net Profit Appropriation 12538326.91
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CRR (CASH RESERVE RATIO)
In terms of Section 42(1) of the RBI Act 1934, Scheduled Commercial Banks are required to
maintain with RBI an average cash balance, the amount of which shall not be less than three percent
of the total of the Net Demand and Time Liabilities (NDTL) in India. At present, effective from the
fortnight beginning June 14, 2003, the rate of CRR is 4.50 percent of the NDTL.
NPA (NON-PERFORMING ASSETS)
If any advance or credit facilities granted by bank to a borrower become non-performing
then the bank will have to treat all the advances/credit facilities granted to that borrower as non-
performing without having any regard to the fact that there may still exist certain advances / credit
facilities having performing status.
Undoubtedly the world economy has slowed down, recession is at its peak, globally stock
markets have tumbled and business itself is getting hard to do. The Indian economy has been much
affected due to high fiscal deficit, poor infrastructure facilities, sticky legal system, cutting of
exposures to emerging markets by FIIs, etc.
SLR (STATUTORY LIQUIDITY RATIO)
In terms of Section 24 (2-A) of the B.R. Act, 1949 all Scheduled Commercial Banks, in addition
to the average daily balance which they are required to maintain under Section 42 of the RBI Act,
1934, are required to maintain in India,
a. in cash, or
b. in gold valued at a price not exceeding the current market price, or
c. in unencumbered approved securities valued at a price as specified by the RBI from time to
time.
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4.3.4 IT (INFORMATION TECHNOLOGY) :
In banking sector, an information system consists of an organized combination of
people computer hardware, software, communications network, and data resources that collect
transaction and spread information through banking, modern banking relies on computer based
information systems and on information technology. Education of staff on IT should be taken up on
priority. The training establishments of banks should be suitably strengthened with adequate
personnel and other infrastructure to import IT related training to the at all level.
It serves three vital roles in banking
Support of banking operations. This includes maintenance of charges stores of
saving current and fixed deposits data, inflow and outflow of finance.
Support of management decisions. by analyzing deposit, equity debts, loan,
performance of staff and departments,
Support of banking competitive advantages. Information analysis can help a bank to
make decision that will give it an advantage over the competition like addition of
services, effective banking products etc.
4.3.5 Time value of money
Is one rupee today the same as one rupee 10 years from now?
The simple question raises one of the most important concepts in finance the time
value concepts of money. In essence the certainly of having a given sum of money today is worth
more than the certainty of having an equivalent sum at a later date.
For example, the sooner you collect your accounts receivable the sooner you will be
able to deposit the money and earn interest on these funds likewise, the longer you delay your
account likewise, the longer you will earn on those funds as they sit in the bank. in the banking
sector also, this strategy is used when the customer issue the outside cheque than its not directly get
the amount it requires few days and within those days, bank can get interest from that money which
is called float money.
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4.3.6Investment
Bank is financial intermediaries and lending is an important function of a bank. The
bank collects deposits of various kinds from people by means of giving reasonable and sometimes
attractive interest and lends the same to industries trade and transport people at a higher rate of
interest and thus makes some profit. Banks have to earn money if they want functions effectively
their role interest is not to make profit and declare higher dividends to the shareholders. They are
guided by the stators regulations while employing bank funds the banking regulation act and the
credit regulation policy of the reserve bank of India and the social responsibility imposed by the
government on banks are some of the parameters sets in motion a chain of economic activities both
direct and taster new services which are conducive to accelerated socio economic growth.
Bank Finance Results In,
Increased production of goods and services
Creation of more employment and
Income generation in the countries.
BANK CAN INVEST THEIR DEPOSITS OR FINANCE IN VARIOUS WAYS LIKE:
Lending of Funds
Overdrafts
Cash-credit
Term Loans
Semi Government
Securities
Bonds of port
trust
Municipal
Council
Treasury
Bills
Guilt edged
Securities
Industrial
Securities
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4.3.7 INVESTMENT POLICY
The investment policy of a commercial bank deals with the technicalities of investment the
investment of bank funds especially the deposits is a difficult and risky task because of the bank
investing some bodies money namely the depositors. Whenever the depositors present cheque forencashment, they must be immediately honored. it the payment is delayed, the confidence of the
public with the bank is threatened infect the activities of the bank depend upon the confidence with
which the depositors are having with the bank. The banks have to pay reasonable rate of interest in
order to attract fixed deposits. If the banks mobilize more or fixed deposits it can invest in profitable
ventures. The bank has the responsibility of paying handsome dividend to shareholders of
administrations, is required to appoint different categories of officers and assistance the
administration charges in the found of salaries, and bonus and incentives are also on the neither side
all these compulsions make the banker to invest the funds in different type of assets.
The investment policy of banks is not uniform throughout the world. The nature and
availability of funds also play a critical role in acquiring different types of assets. The problem that
banks face in rural areas is different from urban areas. Though all these conditions exert influence in
the formulation of an investment policy year. There are some technical conditions which govern the
investment policy of bank. The guiding principles of investment policy of a commercial bank are
profitability
security
Two other sub policies are
Productivity
Diversity
Profitability
Profitability is the important objective of a commercial bank. a commercial of a bank
is a very much concerned with making as high a profit as possible in acquiring money the roleconsideration of a commercial bank is to earn an income. The ban must earn sufficient income form
its assets in order to meet all expenses of the bank including dividend to the shareholder. The
income will be greater if the yield from the assets higher. The bank known that all depositors do not
come to the bank to encase the cheque simultaneously. Therefore it takes the liberty in making
investment on profitable assets. The main profit earning assets are loan and advances. Even here
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some reservations are made by the bank. Only a reasonable percentage of deposits are used to lend
against bill of exchange and overdraft.
Profitability means earning profits on the assets acquired whenever the banks obtain deposits
they have pay interest to shareholders. Beside this the shareholders of the bank should receive some
return on their investment. It is the responsibility of the bank management to have some surplus to
declare dividend to shareholders. Hence banks have to make profit.
Security or Safety
The second principle is security or safety. Since the bank deals in other peoples
money, it has to give greater consideration for security. Unsecured assets are always dangerous. In
order to safeguard the funds of the depositors, a bank should invest its fund on safe-assets. The bank
should never under estimate the safety principle while deciding on investment of funds. It the bank
lends to credit unworthy borrowers, it has to safer very heavy losses. That is why; the banking
principle prohibits the banks in granting advance to unsecured assets.
When the banker advances withdrew security, he will run the risk of losing the
money. If the loans are prompt in repayment than there will be no worry. But it is essential that the
banker should have substantial security for his advances. The banker is not advancing without
sufficient security. Because he will be managing the public money and it the confidence of the
public is lost there will be run on the bank. The security should cover the money advanced interest
there on and other charges. Thus, the banker should also keep in mind the security principle while
lending.
Diversity
The principle of diversity implies that inevitable funds should be invested in a
diversified manner. It means that funds should be provided for all types of activities. According to
this principle, the banks should as for as possible invest its surplus fund in different types of business
enterprises. The reason is that if particular business organization collapses. The bank should not be
made to suffer terrible losses. It the investment evenly distributed among several economic
activities, than the risk also is distributed properly if the bank invests in diversified securities or
makes loans to different types of business enterprises; it ensures for itself a regular flow of cash with
the help of which it can meet the demands of its customers.
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Productivity
This is another important principle put forth by banking expert. According to them,
the bank should invest its surplus funds in such a way as to secure for itself an adequate and
permanent income. The objective of the bank is to earn maximum profits and its income must be
acquired from productive in investments. If the asset are productive. The income to the bank will
also be stable. This principle implies that under no circumstance. The bank should advance funds for
speculative purposes.
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4.4 Objectives of the study :-
To analysis the financial performance of the organization
To Study the financial statement of the organization
To study the loan application and documentation Process
To analyze the trend of the loan and advances
To know the trend of deposits
To study the relationship between interest rate and loan and advances
To study the relationship between interest rate and deposits
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4.5 Rationale of the study :-The study report is useful to understand the knowledge about the performance of
finance in bank and how the functions work. It is helpful to know the quality management system
and how the technology used in bank. it also help to know the deposit creation and loan & advances
in the bank and to measure the profitability of the bank.
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4.6 Limitations of the study :-
Though carrying out the project work was quite thrilling, we admit that we did face certain
limitations like:-
The time given to me was only 6 weeks that was not sufficient to study in deep to the
project.
The secondary data which are to be provided for study may not be reliable.
My study for analysis includes only some years data so it may affect the result of the
analysis.
The unit under study is co-operative sector and it possesses the limitation of the co-
operative sector.
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4.7 VARIABLE & HYPO.FORMULATION :-
(1). Ho: There is no relationship between Deposits and Interest rate.
Ha: There is relationship between Deposits and Interest rate.
(2) Ho: There is no relationship between Loans and Interest rate.
Ha: There is relationship between Loans and Interest rate.
Financial Institutions
Financial intermediaries: institutions through which savers can indirectly provide funds to
borrowers. Examples:
Banks
Mutual fundsinstitutions that sell shares to the public and use the proceeds to buy
portfolios of stocks and bonds.
financial market :
All savers deposit their saving in this market.
All borrowers take out loans from this market.
There is one interest rate, which is both the return to saving and the cost of
borrowing.
The Slope of the Supply Curve
SAVING, INVESTMENT, AND THE FINANCIAL SYSTEM 18
The Slope of the Supply Curve
InterestRate
Loanable Funds($billions)
Supply
An increase in
the interest rate
makes saving
more attractive,
which increases
the quantity of
loanable funds
supplied.
40
4%
60
9%
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An increase in the interest rate makes saving more attractive, which increases the quantity
of loanable funds supplied.
An decrease in the interest rate makes saving less, which also increases the quantity of
loanable funds supplied
Interest rates directly affect to the savings, it will increases or decreases the savings. But i
do not affect to the quantity of loans.
The Slope of the Demand Curve
SAVING, INVESTMENT, AND THE FINANCIAL SYSTEM 20
The Slope of the Demand Curve
InterestRate
Loanable Funds($billions)
Demand
A fall in the interest
rate reduces the cost
of borrowing, which
increases the quantityof loanable funds
demanded.
20
7%
5%
40
Like many other markets, financial markets are governed by the forces of supply and
demand.
Markets are usually a good way to organize an economic activity.
Financial markets help allocate the economys scarce resources to their most efficient
uses. Financial markets also link the present to the future: They enable savers to convert
current income into future purchasing power, and borrowers to acquire capital to produce
goods and services in the future.
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4.8 DATA COLLECTION:
Data collection is a very important part for any project. It is stepwise procedure adopted to
carry out this research project. It is felt that the procedure adopted here is sufficiently effectives and
most limitation.
Sources of data:
- Primary source
- Secondary source
- primary sources:
Primary details about the bank of main branch were collected through the interviews
and personal talk with manager to collect the financial information of bank.
- secondary sources:
The sources of my collection were secondary sources. The information has been
taken from balance sheet, income- statements and audit report of the company.
PROGRESS REPORT OF THE BANK :
PROGRESS REPORT Rupees in Lakh
2007-2008 2008-2009 2009-2010
Paid Of Capital 204.32 220.15 213.80
Reserve & Other Funds 1018.99 1103.51 1177.47
Deposits 4521.95 5083.45 6080.25
No. of Share Holders 3039 3029 2997
Advances 3061.20 2502.59 2406.99
Dividend Paid 15% 15% 12%
Gross Profit 126.16 137.73 171.82
Net Profit After TAX 86.16 85.56 125.38
Working Capital 5895.48 6564.59 7664.26
Audit Class 'A' 'A' 'A'
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4.9 DATA ANALYSIS & INTERPRETATION:
FINANCIAL POSITION
Profit Graph of Nagrik Bank for 3 year:
0
0.5
1
1.5
2007-08 2008-09 2009-10
Profit (in crore)
Profit (in crore)
Profit (in crore)
0.861
0.856
1.254
2007-08
2008-09
2009-10
Profit of the Nagrik ba