INDIAN_BANK

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					EXECUTIVE SUMMARY
It is widely admitted and appreciated that Indian Banking system not much affected
by the recent recession in the global economy. This is all because of sound banking
policies and procedures of Indian banking industry. Banks in India are developing at
very rapid rate. Advancement in technology changes the phase of banking sector. In
past customer had to wait for long time to transact in a bank branch, now the same
work is done in less than a minute. Customer service has improved due to presence
of too many players providing spectrum of services.

INDIAN BANK is one of the first 14 Public Sector Bank nationalized in the year 1969.
The Bank was established in the year 1907. INDIAN BANK has emerged as a strong
and efficient player in the finance sector with its product and services like deposits,
loans, advances, ancillary services like remittance facilities, locker facility, e-banking,
insurance schemes etc. INDIAN BANK has a tie up with HDFC Standard life
insurance Company for insurance coverage to the customers. INDIAN BANK in
2008-09 is growing at the rate of 23.45% in respect to net profit. Total branch
network of the bank in India increased to 1644 as on 31.3.2009 and all the branches
are under Core Banking Solution (CBS). Net NPA ratio of 0.18 % as on 31.03.2009
is one of the lowest in the banking industry. All the branches/offices of the bank are
fully technology oriented. Total number of ATMs increased to 765 which included
205 offsite ATMs and customers can have access to 32000 ATMs in the shared
network. Bank has also overseas branches in Colombo and Singapore. In all,
performance of INDIAN BANK is healthy in all respect.

This project is an attempt to describe and throw light on the Indian banking sector
with special reference to INDIAN BANK. The project shows the types of banks and
product and services offered by them. Comparison between interest rates of different
loan products by different banks and those of INDIAN BANK. Study also covers
working of loan department of the bank branch and how bank analyse the
statements of the loan applicant. In last the analysis of financial statements of the
INDIAN BANK to check the performance and profitability of the INDIAN BANK.
Whole analysis findings show that INDIAN BANK is customer oriented bank having
high goodwill based on its performance.




                                            [1]
INDIAN BANKING INDUSTRY




           [2]
INDIAN BANKING INDUSTRY
   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 reason of India's growth process. The government's regular policy for Indian
bank since 1969 has paid rich dividends with the nationalisation 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 dial a
pizza. Money has become the order of the day.
       The Indian Banking industry, which is governed by the Banking Regulation Act
of India, 1949 can be broadly classified into two major categories, non-scheduled
banks and scheduled banks. Scheduled banks comprise commercial banks and the
co-operative banks. In terms of ownership, commercial banks can be further grouped
into nationalized banks, the State Bank of India and its group banks, regional rural
banks and private sector banks (the old/ new domestic and foreign). These banks
have over 67,000 branches spread across the country.
       The Scheduled Commercial Banks (SCBs) in India have shown an impressive
growth from FY04 to the mid of FY09. Total deposits, advances and net profit grew
at CAGR of 19.6%, 27.4% and 20.2% respectively from FY03 to FY08. Banking
sector recorded credit growth of 33.3% in FY05 which was highest in last 2 and half
decades and credit growth in excess of 30% for three consecutive years from FY04
to FY07, which is best in the banking industry so far. A significant improvement in
recovering the NPAs, lowest ever increase in new NPAs combined with a sharp
increase in gross advances for SCBs translated into the best asset quality ratios for
banking sector in last two decades.




                                         [3]
         The first bank in India, though conservative, was established in 1786. From
         1786 till today, the journey of Indian Banking System can be segregated into
         three distinct phases


         PHASE 1
             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 (1840) 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. During the first phase the growth was very
         slow and banks also experienced periodic failures between 1913 and 1948. There
         were approximately 1100 banks, mostly small. The Government of India came up
         with The Banking Companies Act in1949 which was later changed to Banking
         Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). During those
         days public has lesser confidence in the banks.

         PHASE 2

         Government took major steps in this Indian Banking Sector Reform after
         independence. In 1955, it nationalised 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 transactions
         of the Union and State Governments all over the country. Second phase of
         nationalisation Indian Banking Sector Reform was carried out in 1980 with seven
         more banks. This step brought 80% of the banking segment in India under
         Government ownership.

         PHASE 3
         This phase has introduced many more products and facilities in the banking sector in
         its reforms measure. In 1991, under the chairmanship of M. Narasimha Rao, a
         committee was set up by his name which worked for the liberalisation of banking
         practices. The country is flooded with foreign banks and their ATM stations. Efforts
         are being put to give a satisfactory service to customers. Phone banking and net
         banking is introduced. The entire system became more convenient and swift.




                                                  [4]
Reference: Indiamart.com
         CURRENT SCENERIO OF INDIAN
         BANKING INDUSTRY
                  Banking industry in India has evolved lately under the impact of the stimulus
         packages announced by the Government. According to the Annual Policy 2008-09 of
         the Reserve Bank of India (RBI), the central bank, key monetary aggregates have
         witnessed some growth in 2008-09. This is reflected in the changing liquidity
         positions arising from domestic and global financial conditions and the policy
         initiatives taken by the government. Also, reserve money variations during 2008-09
         have largely reflected an increase in currency in circulation and reduction in the cash
         reserve ratio (CRR) of banks.
                  According to a study by Dun & Bradstreet (an international research body)—
         "India's Top Banks 2008"—there has been a significant growth in the banking
         infrastructure. Taking into account all banks in India, there are overall 56,640
         branches or offices, 893,356 employees and 27,088 ATMs. Public sector banks
         made up a large chunk of the infrastructure, with 87.7 per cent of all offices, 82 per
         cent of staff and 60.3 per cent of all automated teller machines (ATMs).

         Earlier banking was only concerned with accepting deposits and providing
         advances but these days’ different services are provided by different
         commercial banks. They are:



               1) Deposits                           10) Cash Management

               2) Loans                              11) Investment Products

               3) Credit Card                        12) Tax Advisory Services

               4) Debit Card                         13) Mobile Banking

               5) ATM facility                       14) e-Banking

               6) Life insurance                     15) Depository Services

               7) Mutual funds                       16) International Business

               8) Internet banking                   17) Remittances

               9) Gold coins                         18) Safe Custody, etc.



                                                   [5]
Reference: Indiamart.com
        SWOT ANAYSIS OF INDIAN
        BANKING INDUSTRY
             STRENGHTS The basic strength of Indian bank industry is its reforms (e.g.
              CRR and SLR) which enable Indian economy to exist even in situation of
              recession in the world market. India has power to ride the crisis without
              destabilising the financial sector as it is a fundamentally strong macro
              economy including prudent foreign debt management, high savings rate,
              solid financial sector health, and a pro-active monetary policy management.
              Secondly IT sector has developed a lot in the Indian market which has
              redefined the role and structure of banks in India. With the use of CBS (Core
              banking solution) for operations, it has resulted in reducing costs, increasing
              volumes, and facilitating customised products.

             WEAKNESS Major weakness of Indian banking industry lies in PSBs (Public
              sector banks), where more than 78% of total banking assets are burdened
              with excessive NPAs (Non performing assets) , inadequate manpower, lack
              of working conditions and lack of technology.
             OPPORTUNITIES Banking sector has achieved a lot in past few years and
              has various opportunities to explore. The ATM outlets in India increased at a
              CAGR of 53.99% to reach 20,000 in 2006 from 2000. Pension fund industry in
              India grew at a CAGR of 122.44% from 1999-00 to 2006-07. Indian Mutual
              Fund industry witnessed a growth of 49.88% from May 2006 to May 2007.
              Increasing number of millionaires in India is increasing the scope of Wealth
              Management Services. Bankable household India is anticipated to grow at a
              CAGR of 28.10% during 2007-2011. Banking sector investment in
              Information Technology is expected grow at 20% in 2008 from last year. The
              Reserve Bank of India in its ‘road map’ for the banking industry has indicated
              that the Indian market will be opened for international banks by 2009. These
              banks with the help of advanced technology, adequate capital for investment,
              and their customer centric approach will be able to attract the profitable
              customers.

             THREATS The corporate sector expects the period of downturn in the Indian
              economy to continue till May 2010 before bouncing back in response to the
              fiscal and monetary policy stimulus and abatement of recession in the
              international economy, an ASSOCHAM Business Barometer (ABB) Survey of
              237 CEOs has revealed. In the ABB Survey, 84 percent of the CEOs polled
              across various business segments were unanimous about the view that poor
              Business Confidence in India may extend till the middle of the next year.
              Secondly competition with foreign banks and advancement of technology
              poses a major threat to Indian banks today. The Reserve Bank of India has
              drawn out a road map for the presence of foreign banks in India. In the first
              stage, from 2005 to 2009, foreign banks will be allowed to set up wholly
              owned subsidiaries as well as get greater freedom to set up new branches.
              After 2009, the local subsidiaries of foreign banks will be treated on par with
              domestic banks, though they will have to sell at least 26 per cent of their
              equity to the Indian public. And they will have greater freedom to acquire
              private sector banks in India.
                                                           [6]
Reference: Mc Kinsey & company report on banking sector 2010
           GOOD PERFORMANCE,
           QUESTIONABLE HEALTH

            Indian banks have compared favourably on growth, asset quality and profitability
           with other regional banks over the last few years. The banking index has grown at
           a compounded annual rate of over 51 percent since April 2001 as compared to
           a 27 per cent growth in the market index for the same period. Policy makers
           have made some notable changes in policy and regulation to help strengthen the
           sector. These changes include strengthening prudential norms, enhancing the
           payments system and integrating regulations between commercial and co-operative
           banks.

                    However, the cost of intermediation remains high and bank penetration
           is limited to only a few customer segments and geographies. While bank
           lending has been a significant driver of GDP growth and employment, periodic
           instances of the “failure” of some weak banks have often threatened the stability of
           the system. Structural weaknesses such as a fragmented industry structure,
           restrictions on capital availability and deployment, lack of institutional support
           infrastructure, restrictive labour laws, weak corporate governance and
           ineffective regulations beyond Scheduled Commercial Banks (SCBs), unless
           addressed, could seriously weaken the health of the sector. Further, the inability
           of bank managements (with some notable exceptions) to improve capital allocation,
           increase the productivity of their service platforms and improve the performance
           ethic in their organisations could seriously affect future performance.




                                                   [7]
Reference: Business World, tradeindia.com
         India Banking 2010 towards a High-
         performing Sector
               The interplay between policy and regulatory interventions and management
         strategies will determine the performance of Indian banking over the next few years.
         Legislative actions will shape the

         Regulatory stance through six key elements: industry structure and sector
         consolidation; freedom to deploy capital; regulatory coverage; corporate
         governance; labour reforms and human Capital development; and support for
         creating industry utilities and service bureaus.

                Management success will be determined on three fronts: fundamentally
         upgrading organisational capability to stay in tune with the changing market;
         adopting value-creating M&A as an avenue for growth; and continually innovating to
         develop new business models to access

         untapped opportunities. Through these scenarios, we paint a picture of the events
         and outcomes that will be the consequence of the actions of policy makers and bank
         managements. These actions will have dramatically different outcomes; the costs of
         inaction or insufficient action will be high. Specifically, at one extreme, the sector
         could account for over 7.7 per cent of GDP with over Rs. 7,500 billion in market cap,
         while at the other it could account for just 3.3 per cent of GDP with a market cap of
         Rs. 2,400 billion. Banking sector intermediation, as measured by total loans as a
         percentage of GDP, could grow marginally from its current levels of ~30 per cent to
         ~45 per cent or grow significantly to over 100 per cent of GDP. In all of this, the
         sector could generate employment to the tune of 1.5 million compared to 0.9 million
         today.

                 Availability of capital would be a key factor — the banking sector will require
         as much as Rs. 600 billion (US$ 14 billion) in capital to fund growth in advances,
         non-performing loan (NPL) write offs and investments in IT and human capital up
         gradation to reach the high-performing scenario. Three scenarios can be defined to
         characterise these outcomes:




                                                               [8]
Reference: Mc Kinsey & company report on banking sector 2010
           High performance: In this scenario, policy makers intervene only to the extent
           required to ensure system stability and protection of consumer interests, leaving
           managements free to drive far-reaching changes. Banking becomes an even greater
           driver of GDP growth and employment and large sections of the population gain
           access to quality banking products. Management is able to overhaul bank
           organisational structures, focus on industry consolidation and transform the banks
           into industry shapers.

           In this scenario we witness consolidation within public sector banks (PSBs) and
           within private sector banks. Some M&A activity also begins to take place between
           private and public sector banks. As a result, foreign and new private banks grow
           at rates of 50 percent, while PSBs improve their growth rate to 15 per cent.



           Evolution: Policy makers adopt a pro-market stance but are cautious in liberalising
           the industry. As a result of this, some constraints still exist. Processes to create
           highly efficient organisations have been initiated but most banks are still not best-in-
           class operators. Thus, while the sector emerges as an important driver of the
           economy and wealth in 2010, it has still not come of age in comparison to developed
           markets. In this scenario, M&A activity is driven primarily by new private banks,
           which take over some old private banks and also merge among themselves. As a
           result, growth of these banks increases to 35 per cent. The share of private sector
           banks increases to 30 per cent of total sector assets, from current levels of 18
           per cent, while that of foreign banks increases to over 12 per cent of total
           assets. The share of banking sector value adds to GDP increases to over 4.7
           percent.



           Stagnation: In this scenario, policy makers intervene to set restrictive conditions and
           management is unable to execute the changes needed to enhance returns to
           shareholders and provide quality products and services to customers. As a result,
           growth and productivity levels are low and the banking sector is unable to support a
           fast-growing economy.

           This scenario sees limited consolidation in the sector and most banks remain sub-
           scale. New private sector banks continue on their growth trajectory of 25 per
           cent. There is a slowdown in PSB and old private sector bank growth. The
           share of foreign banks remains at 7 per cent of total assets. Banking sector value
           adds, meanwhile, is only 3.3 per cent of GDP.



                                                               [9]
Reference: Mc Kinsey & company report on banking sector 2010
        OPPORTUNITIES AND CHALLENGES
        FOR PLAYERS

        The bar for what it means to be a successful player in the sector has been
        raised. Four challenges must be addressed before success can be achieved.




             The market is seeing discontinuous growth driven by new products and
              services that include opportunities in credit cards, consumer finance and
              wealth management on the retail side, and in fee based income and
              investment banking on the wholesale banking side. These require new skills
              in sales & marketing, credit and operations.
             Banks will no longer enjoy windfall treasury gains that the decade - long
              secular decline in interest rates provided. This will expose the weaker banks.
             With increased interest in India, competition from foreign banks will only
              intensify.
             Given the demographic shifts resulting from changes in age profile and
              household income, consumers will increasingly demand enhanced
              institutional capabilities and service levels from banks.




                                                [10]
Reference: Business World, The road to 2009
PROFILE OF INDIAN BANK




           [11]
      INDIAN BANK is a premier public sector bank. It is in earlier stage known as
‘SWADESHI BANK’ as it is the part of Swadeshi movement. In the very beginning of
Swadeshi bank it fails due to widespread misery caused to depositors by the failure
of M/s Arbuthnot & Co in 1906. INDIAN BANK was established on 15th August 1907
with an authorised capital of Rs.20lakh.In 1969, the Bank was nationalized along
with 13 other commercial banks. INDIAN BANK is serving the nation with a team of
over 22000 dedicated staff upto 4th June and as on 31.03.2009 total business
crossed RS. 1, 24, 413 crores.

        Its Operating Profit increased from1659.30 Crores in 2008 to Rs. 2228.83
Crores as on 31.3.2009 and Net Profit increased to Rs.1245.32 Crores as on
31.03.2009. INDIAN bank is now working with 1644 branches spread all over INDIA
and also has overseas operations with overseas branches in Singapore and
Colombo including a Foreign Currency Banking Unit at Colombo. It has 240
correspondent banks in 70 countries.



INDIAN BANK has diversifies its working and operations having 3 subsidiary
companies:



      Indbank Merchant Banking Services Ltd
      IndBank Housing Ltd.
      IndFund Management Ltd




        INDIAN BANK is front runner in specialised banking having 90 Forex
authorised branches inclusive of 1 Specialised Overseas Branch at Chennai
exclusively for handling forex transactions arising out of Export, Import, Remittances
and Non Resident Indian business and 1 Small Scale Industries Branch extending
finance exclusively to SSI units.




                                         [12]
      TOP MANAGEMENT OF INDIAN BANK




                       M S SUNDARA
                          RAJAN
                       CHAIRMAN AND
                     MANAGING DIRECTOR




A SUBRAMANIAN                                  AS
EXECUTIVE DIRECTOR                        BHATTACHARYA
                                         EXECUTIVE DIRECTOR




                             [13]
BANK’S MISSION STATEMENT

To be a “common man’s bank” to provide all financial products and
services to all our customers:



     Under one roof
     At an affordable cost and
     In a fair and transparent manner




                                   [14]
INDIAN BANK @ 2009


  100% Business Computerisation
  168 Centres throughout the country covered under 'Anywhere Banking'
  Core Banking Solution (CBS) in 1644 branches and 61 extension
  counters.
  765 connected Automated Teller Machines(ATM) in 250 cities/towns
  24 x 7 Service through 40000 ATMs under shared network
  Internet and Tele Banking services to all Core Banking customers
  e-payment facility for Corporate customers
  Cash Management Services
  Depository Services
  Reuter Screen, Telerate, Reuter Monitors, Dealing System provided at
  Overseas Branch, Chennai
  I B Credit Card
  I B Gold Coin




                                [15]
LEADER IN KEY SECTORS


  Pioneer in introducing Self Help Groups and Financial Inclusion Project
  in the country
  Award winner for Excellence in Agricultural Lending from Honourable
  Union Minister for Finance
  Best Performer Award for Micro-Finance activities in Tamil Nadu and
  Union Territory of Puducherry from NABARD
  Established 7 specialized exclusive Microfinance branches called "Micro
  sate" across the country to cater the needs of Urban poor through SHG
  (Self Help Group)/JLG (Joint Liability Group) concepts
  A special window for Micro finance viz., Micro Credit Kendras are
  functioning in 44 Rural/Semi Urban branches
  Harnessing ICT (Information and Communication Technology) for Rural
  Development and Inclusive Banking
  Provision of technical assistance and project reports in Agriculture to
  entrepreneurs through Agricultural Consultancy & Technical Services
  (ACTS)




                                [16]
INDIAN BANK TIE UPS


  Indian Bank enters into a strategic tie-up with HDFC Standard Life
   Insurance Company Ltd. A Memorandum of understanding has been signed
   by the Bank with the Insurance Company on 8th February 2001 to this effect.
   The Bank has to its strength 1377 branches spread across the country with
   ready built infrastructure and the expertise in marketing financial products.
   Initially the insurance products will be marketed through select branches in
   the South where the Bank has strong presence.


  United India Insurance Company has launched `Arogya Raksha', a scheme
   to provide mediclaim coverage in association with Indian Bank. The scheme
   provides coverage for all Indian Bank account holders. It gives them
   compensation benefits for hospitalization. The insured person and three
   family members (spouse and two children) are covered under the scheme. .
   These policies are marketed by Indian Bank at all its branches.



  Small Industries Development Bank of India (SIDBI) and Indian Bank has
   signed a memorandum of understanding to co-finance projects in the small
   and medium enterprise and services sectors. The agreement involves co-
   financing of infrastructure projects, extending assistance to units in industrial
   clusters in the southern region, especially those in and around Chennai,
   Pondicherry and Hyderabad.



  Indian Bank has tied-up with Times Online money for money remittance from
    the U.S to India. This online service called 'IndRemit' helps in transferring
    funds without transaction costs associated with conventional money transfer
    services. IndRemit will use Automated Clearing House network in the U.S to
    effect transfer of funds.




                                       [17]
PRODUCTS & SERVICES OF BANK




                         PRODUCTS
                         &SERVICES



           DEPOSITS                          LOANS




 SAVINGS    CURRENT     TERM      PERSONAL
                      DEPOSITS      LOAN                    OTHERS
  BANK      ACCOUNT                          AGRICULTURAL
                                                 LOAN




                           [18]
           DEPOSITS
                        INDIAN BANK provides deposit facility to their customers. People
           having money excess to their needs can deposit it into the bank and in return get
           interest on that amount. INDIAN BANK offers fixed deposits, reinvestment plan,
           recurring deposit, facility deposit, capital gain deposit and also saving bank products
           like normal SB(SAVING BANK), SB smart kid, SB power, SB platinum, SB gold, SB
           silver, SB NRE(Non resident external), SB NRO(Non resident ordinary) and many
           more from small deposit to lump sum deposit for the common man need.

                     As on 27th march 2009, aggregate deposits of all scheduled Commercial
           banks grew by 19.8 per cent year-on-year as against 22.4 per cent in the
           corresponding period in the previous year.

                     Global deposits of INDIAN BANK improved to Rs. 72,582 crore as on
           31.3.2009 from Rs. 61,046 crore as on 31.3.2008, with an accretion of Rs. 11,536
           crore and growth of 18.9 per cent.

                      Domestic deposits of the bank increased by Rs. 10,374 crore to Rs.
           69,659 crore as on 31.3.2009 from Rs. 58,905 crore as on 31.3.2008 registering
           growth of 18.26 per cent.

                      Current deposits reached a level of Rs. 5,252 crore as on 31.3.2009 as
           against Rs. 4,704 crore as on 31.3.2008, an increase of 11.65 per cent.

                      Saving bank deposits grew by 17.69 per cent to Rs.17,667 crore as on
           31.3.2009 as against Rs. 15,011 crore as on 31.3.2008. The share of low cost
           deposit in total was at 31.58 per cent as on 31.3.2009.




                                                     [19]
Reference: Indian Bank annual report 2008-2009
       LOANS
                    Loan is type of credit or advances to the customer who are in need of
       funds to carry on their activities. Loan may be for personal or for industrial or
       agricultural use. Bank give loan to customers on the credit worthiness of the
       customer and have own norms to issue or sanction loan to customer.

                     INDIAN BANK offers various types of loans to its customers according
       to their need like personal loans which include home loan, NRI home loan, plot loan
       vehicle loan, education loan, salary loans, pension loans, jewel loans and SME like
       doctor plus, professional special, IND art tools, IND star rice mill and some other like
       agricultural loans, trade loans, transport, corporate credit, export credit and many
       more.

                   Aggregate credit growth rate of all scheduled banks on 27th march
       2009 was 17.3 per cent as against 22.3 per cent in the previous year which
       shows a negative slope. In declining growth of aggregate banks. INDIAN BANK
       gross advances touched a level of Rs. 51,831 crore as on 31.3.2009 as against Rs.
       40,228 crore as on 31.3.2008 recording a growth of 28.84 per cent.

                    Domestic credit increased by Rs. 10,657 crore (27.89%) to Rs.
       48,861 crore as on 31.3.2009 as against Rs. 38,304 crore as on 31.3.2008. The
       growth mainly accrued from Non-food credit.

                    Domestic non-food credit increased by Rs. 10,626 crore (28.63%)
       to Rs. 47,744 crore as on 31.3.2009 as against Rs. 37,118 crore as on 31.3.2008.

                    The CD ratio of the bank as on 31.3.2009 stood at 71.14%. The
       bank continues its thrust on improving its yield on advances and asset quality.

                     Priority sector advances with an outstanding of Rs. 18,426 crore
       constituted 48.23% of the Adjusted Net bank credit and registered an increase of Rs.
       3,297 crore.

                   Bank’s retail credit grew at 22.95% and the outstanding as on
       31.3.2009 was at Rs. 9.664.14 crore.

                    Export credit recorded a growth of Rs. 246.91 crore or 19.23% from
       Rs. 1,284.27 crore to Rs. 1.531.18 crore as on 27.3.2009.




                                                 [20]
Reference: Indian Bank annual report 2008-2009
          ORGANISATIONAL STRUCTURE OF A BANK


                                   A Bank works under 3-tier system




                                               HEAD
                                              OFFICE


                                            CIRCLE
                                            OFFICES


                                          BRANCHES

          HEAD OFFICE is the place where the operations of whole of the bank are managed
          and controlled. Deposits made by the bank, loans given, how each branch is
          operating, appraisal of employee’s performance, analysis of performance of the
          bank, decision regarding merger, tie-ups, fixation of interest rates etc all are taken at
          the head office level.

          CIRCLE OFFICES manage and control the branches under them. How a particular
          branch is working. All sort of assistance is given to the branches by Circle Offices.
          They do not deal with public but only manage the operations of branches under
          them.

          BRANCHES are that organ of the bank without which it cannot operate. Like heart is
          to the body, a branch is to the bank. Branches have direct dealing with the public. It
          is through the branches that a bank operates i.e. accept deposits, lends loans
          provide various services and the banking products to the customers.




                                                    [21]
Reference: Branch official
STRATEGIES ADOPTED BY
INDIAN BANK
Marketing Strategy: Indian Bank has embarked on a major image building-cum-
marketing exercise by roping in young MBA students to create a fresh image for the
bank besides helping it bring new business. The bank has also set up a high level
team to completely restructure its marketing plans in view of the increasing
competition and fast changing business environment. The idea of this initiative is to
basically to strengthen the marketing process of the bank besides creating an
awareness of the products offered to various target groups. “In 2007 marketing drive
with the help of MBA students has been a major success. They have been able to
contact over 59,000 customers and have created a huge database. This year again,
the selected students would be given proper training for marketing our products”.
“The idea of selling is over. Today’s market calls for constant change in the strategy
and the team would be constantly updating the plans” by Indian Bank.

Financial strategy: Indian bank as its newly financial strategy adopted a new
and fresh service of “Wealth Management services.” It will help customers o see our
investments growing, to meet our liabilities fully and timely, optimising tax liability,
marriage or Higher education for children ,having a peaceful retired life, protect our
families from any unforeseen events, to insure our health as well as our assets.
INDIAN BANK will share with you expertise that we gained over the last 100 years of
banking. We have a dedicated team of Customer Relationship Managers (CRMs) to
assist you in your Financial Planning.

Human resource strategies: Indian bank for its recruitment hold written test
followed by interview for the vacant senior posts and also new vacancies at regular
interval of time. Bank uses HR strategy to employ senior people with experience in
same field. Structure of Indian bank is hieratically from head office to circle offices
and to branches. Employees are recruited and appraised by the regions circle office.
Holidays benefit is also given to employees which are set at reasonable rate. Fringe
benefits are also available with Managers.




                                          [22]
SWOT ANALYSIS OF INDIAN BANK
Strengths:         Major strength for INDIAN BANK is its staff. INDIAN BANK is the
financial institution having all their employees experienced in their fields. Indian bank
recruit employees on the basis of their experience which promotes efficiency in the
Bank’s working. Secondly it is one of the 14 scheduled nationalised banks which
enjoys privileges of the Government policies and help. With the use of CBS (Core
banking solution) for operations, it has resulted in reducing costs, increasing
volumes, and facilitating customised products. In the period of global meltdown
INDIAN BANK is not survived much and it shows increase rate of profit in 2008-09.



Weakness: INDIAN BANK’s weakness lies in its controlling i.e. government.
INDIAN BANK is public sector bank and in PSU’s condition is worst in the country.
Reasons are that the PSU’s are not developing with the current world and there is
lack of technology, lack of managerial skills etc.



Opportunities: INDIAN BANK tied hands with HDFC insurance company,
so INDIAN BANK is diversifying its working in insurance sector also which is one of
the greater opportunity for the bank. Given the demographic shifts resulting from
changes in age profile and household income, consumers will increasingly demand
enhanced institutional capabilities and service levels from banks.



Threats:       As due to globalisation foreign banks are giving stiff competition to
banking sector specially public sector banks are affected by this. Another threat is
that INDIAN BANK has less goodwill and brand is not well known to most of young
generation. As other financial institutions i.e. private lenders are also coming to the
market which is the major threat to the INDIAN BANK.




                                           [23]
 What are Financial Statements?
 Financial statements can be referred to as representation of the financial
 status of a company in a systematically documented form. There are different
 types of financial statements. Financial statements are required to be audited
 by authentic, efficient audit firms to avoid manipulation of numbers.
 Statements are usually audited by the accounting firms after a thorough study
 of the company records. The accounting and the audit firms make sure that
 the company is obeying and operating as per norms laid down by the
 Generally Accepted Accounting Principles or GAAP Basically, there are four
 different types of financial statements. The different types of financial
 statements indicate the different activities occurring in a particular business
 house.




                             FINANCIAL
                            STATEMENTS


                                          STATEMENT              STATEMENT
BALANCE            INCOME                     OF                  OF CASH
 SHEET           STATEMENT                 RETAINED                FLOW
                                           EARNINGS




                                   [24]
What is financial analysis?
Financial statements are prepared primarily for decision making. The information
provided in the financial statements is of immense use in decision making through
analysis and interpretation of financial statements. Financial analysis is ‘the process
of identifying financial strengths and weaknesses of the firm by properly establishing
relationship between the items of the balance sheet and profit and loss account.’

The purpose of financial analysis is to diagnose the information contained in the
financial statements to judge the profitability and financial soundness of the firm.

The term ‘financial statement analysis includes both ‘analyses and ‘interpretation’. to
analyse is to simplify the data by methodical classification of the data given in
financial statements. Interpretation is to explain the meaning and significance of the
data so simplified. Thus, financial statement analysis results in simplification of the
data and extracting the useful information from it.



METHODS OR TOOLS OF FINANCIAL ANALYSIS.
The analysis and interpretation of financial statements is used to determine the
financial position and results of operations as well. The following are the methods of
analysis generally used:

      Comparative statements
      Trend analysis
      Common-size statements
      Ratio analysis
      Inter firm analysis




                                         [25]
COMPARATIVE STATEMENTS
   The comparative financial statements are statements of the financial position at
   different periods; of time. The elements of financial position are shown in a
   comparative form to give an idea of financial position at two or more periods. It
   not only shows the comparison of the figures but also the relationship between
   different periods enables in depth study of financial position and operative results.
   The comparative statement show:

        i. absolute figures (rupees amount)
       ii. changes in absolute figure i.e. increase or decrease in absolute figure
      iii. absolute data in terms of percentages
     iv.   increase or decrease in terms of percentages
    The financial data will be comparative only when same accounting
principles are used

   In preparing the accounting statements. In case of any deviation in the use of
accounting principles, this fact must be mentioned at the foot of financial statement.

  The two Comparative Statements are:

   1. Comparative Balance Sheet
   2. Comparative Income Statement



COMPARATIVE BALANCE SHEET


The comparative balance sheet analysis is the study of the trend of the same items,
group of items and computed items in two or more balance sheets of the same
business enterprise on different dates. It shows the conduct and progress of the
enterprise.




                                         [26]
           BALANCE SHEET OF INDIAN BANK
                              (Rs. In crores)

CAPITAL AND                               As on 31.03.2009   As on 31.03.2008
 LIABILITIES
               Total share capital              829.77           829.77
               Equity share capital             429.77           429.77

                Preference share                  400              400
                     capital
                    Reserves                  5,050.53           4,330.72
 NET WORTH                                    7,135.92           5,160.49
                    Deposits                 72,581.83          61,045.95
                   Borrowings                  530.78            1,283.24
 TOTAL DEBT                                  73,112.61          62,329.19
               Other liabilities and          3,873.22            3,018
                   provisions
   TOTAL                                     84,121.75          70,507.68
 LIABILITIES

  ASSETS
                Cash with RBI                 6,211.58           6,432.94
               Balance with bank               472.24             339.88
 ADVANCES                                    51,465.28          39,838.71

INVESTMENTS                                  22,800.56          21,915.07

FIXED ASSETS                                    1,594.22         539.27

OTHER ASSETS                                    1,577.85         1,441.81

TOTAL ASSETS                                 84,121.75          70,507.68




                                   [27]
COMPARATIVE BALANCE SHEET OF INDIAN BANK
                                                                             (Rs. In crores)
       Particulars           Year ending 31 march    Increase/decrease   Increase/decrease
                                                          (amount)          (percentage)
                               2008        2009
        ASSETS

      Fixed assets            539.27      1,594.22        1054.95             195.62

      Investments            21,915.07   22,800.56        885.49               4.04

        Advances             39,838.71   51,465.28       11,626.57             29.18

Cash with reserve bank of    6,432.94     6,211.58        (221.36)             3.44
          India

 Balance with banks and       339.88       472.24         132.36               38.94
      money at call
                             1,441.81     1,577.85        136.04
      Other assets                                                             9.43


      Total assets

      LIABILITIES

         Capital             70,507.68   84,121.75       13,614.07             19.30

   Reserves & surplus
                              829.77       829.77            -                   -
        Deposits
                             4,330.72     6,306.14        1,975.42             45.61
       Borrowings
                             61045.95    72,581.83       11,535.88             18.89
      Bills payable
                             1283.24       530.78         (752.46)             58.63
    Interest accrued
                              257.24       165.20         (92.04)              35.77
 Other current liabilities
    Total liabilities
                              247.90       283.53          35.63               14.37

                             2,512.86     3,424.50        911.64
                                                                               36.27

                             70507.68    84,121.75       13,614.07             19.30




                                            [28]
KEY FINDINGS

   1. According to INDIAN BANKING REFORMS by RBI each bank has to
      keep some cash reserve with RBI which in need can be taken from RBI
      as a help in difficult situation. Data shows that this figure is 6211.58
      crores as on 31.03.2009 against 6432.94 as on 31.03.2008 which is
      less in 2009 as comparative to 2008 due to recent decrease in
      CRR (CAPITAL RESERVE RATIO) by RBI. Otherwise liquidity of cash
      with RBI is good enough for any good reputed bank.

   2. Balance with bank and money at call and short notice is also
      increased by growth of 38.94 % or 132.36 crores which is 339.88
      crores as on 31.3.2008 and turn to Rs. 472.24 crores in the 1
      financial year which shows the positive flow of liquidity situation of the
      bank.

   3. Fixed assets of the INDIAN BANK also shows a tremendous growth of
      approx 195 per cent in the year 2008-2009 as against last financial
      year i.e. 2007-2008 with an increase of Rs. 1054.95 crores.

   4. Net worth of the bank has also show positive results. Net worth is
      raised from 5160.49 crores as on 31.3.2008 to Rs.7135.92 crores
      as on 31.3.2009 which shows growth of 38.27 per cent and this is
      because of ploughing back of net profits.

   5. Deposits with the bank has also risen with a growth rate of 18.89
      percent from Rs. 61,045.95 as on 31.3.2008 to Rs. 72,581.83 as on
      31.3.2009 which clearly shows the growing business of the bank and
      increasing customers at rapid rate.

   6. Overall there is increase of business by 19.30 percent as base year
      is 2007-2008 which figure out a sound bank.




                                  [29]
   COMPARATIVE INCOME STATEMENT
   The income statement gives the result of the operations of a business. The
   comparative gives an idea of the progress of the concern over a period of time.
   The change in the absolute data in the money values and percentage can be
   determined to analyse the profitability of the concern.



          INCOME STATEMENT OF INDIAN BANK
                                 (Rs. In crores)

PARTICULARS                31.03.2009                 31.03.2008

INCOME
   Interest earned         6830.32                    5212.97

   Other income            1035.44                    1005.68

Total income               7865.77                    6218.65

EXPENDITURE
  Interest expended        4221.81                    3159.07

   Operating expenses      1415.12                    1400.29


   Provisions          & 983.50                       650.55
contingencies

Total expenditure          6620.45                    5209.91

PROFIT/LOSS

   Net profit or loss for 1245.32                     1008.74
the year




                                        [30]
COMPARATIVE PROFIT & LOSS ACCOUNT OF INDIAN BANK
                                                                     (Rs. In crores)

 PARTICULARS         For the year ending     Increase/decrease   Increase/decrease
                          31 march               ( amount)          (percentage)
                       2008       2009
 Interest earned     5212.97     6830.32          1617.35              31.02

  Other income
                     1005.68    1035.44            29.76               2.96
  Total income
                     6218.65    7865.77           1647.12              26.48
 Less : Interest
   expended
                     3159.07    4221.81           1062.74              33.64
    Operating
    expenses
                     1400.29    1415.12            14.83               1.06
  OPERATING
    PROFIT

Less Provisions
                     1659.29    2228.84           569.55               34.32
& contingencies



                      650.55     983.50           332.95               5.06
Net profit or loss
for the year



                     1008.74   1245.32            236.58               23.45




                                           [31]
KEY FINDINGS


 1. Interest earned by the INDIAN BANK in 2008-2009 financial year shows the
    growth of approx 31 % with increase in total interest earned by Rs.
    1617.35 crores from the base financial year 2007-2008 to financial year
    2008-2009.

 2. Other income of the bank has also gives low but positive slope with an
    increase approx 3 per cent or by Rs. 29.76 crores which is in favour of
    INDIAN BANK.

 3. Total income of the bank grown at rapid rate of 26.48 % which is Rs. 6218.65
    crores as on 31.3.2008 and raised to 7865.77 crores as on 31.3.2009 with a
    margin of Rs. 1647.12 crores.

 4. Operating expenses has risen at nominal rate of only 1.06% whereas there is
    high increase in operating profit at the rate of 34.32 % or increased in 2009
    with Rs. 569.55 crores which is good for better banking business.

 5. Income statement also shows that profitability of the INDIAN BANK is also
    growing at the rate of 23.45 %or by Rs. 236.58 crores which acts as
    positive figure for any bank.




                                      [32]
TREND ANALYSIS

In financial analysis the direction of changes over a period of years is of crucial
importance. Time series or trend analysis of ratios indicates the direction of change.
This method of financial analysis helps to determine whether business is going in
upward position or having negative results. For the use of trend analysis, the use of
index number is generally advocated. It helps the analyst to form an opinion as to
whether favourable or unfavourable tendencies have been developed. It also helps
analysts to know about the future prospects available with the company to develop in
particular area.




HOW TO CALCULTE?


          1. First step is to take one year as base on whose basis trend is to
             be found.



          2. Trend of that base year is 100 and on that basis further trend is
             found.

          3. Third step is to divide the figure of further year with the base year
             figure and trend is found accordingly of all the years of business.



Further trend analysis is done of the INDIAN BANK on the basis of:

      Deposits
      Advances
      Interest earned
      Net profit
      Earnings per share



                                         [33]
TREND ANALYSIS OF DEPOSITS
                                               DEPOSITS
                                                                            (base year =2004-05 )
                                       YEAR                       Amount            Trend
                                                                                    percentage


2004-05                                                           34808.44          100
2005-06                                                           40805.52          117
2006-07                                                           47090.91          135
2007-08                                                           61045.95          175
2008-09                                                           72581.83          209

                                  DEPOSITS TREND GRAPH

                                                   DEPOSITS
                          80000
Deposits(Rs. in crores)




                          70000

                          60000

                          50000

                          40000

                          30000

                          20000

                          10000

                              0
                                   2004-2005   2005-2006    2006-2007   2007-2008     2008-2009
                                                             YEAR



                                                           [34]
KEY FINDINGS

The trend percentage of deposits of Indian bank shows that deposits of the bank
have an increasing trend. The deposit curve of the bank is moving upward and has
not shown downward movement in any of the year. Total deposits has increased in
very increasing mode from the base year i.e. 2004-2005 in which deposits were Rs.
34808.44 crores which raised to Rs. 72581.83 crores in the financial year 2008-2009
which clearly shown in diagram an increase in trend of deposits from 2004 to 2009 at
the rate from 100% to 209% which clearly shows the increase trend of deposits of
INDIAN BANK.




      TREND ANALYSIS OF ADVANCES

                                ADVANCES

                                                       (base year =2004-05 )
                      YEAR                     Amount             Trend
                                                                  percentage

2004-05                                        18380.1            100
2005-06                                        22484.64           122
2006-07                                        29058.11           129
2007-08                                        39838.71           217

2008-09                                        51465.28           280




                                        [35]
                                     ADVANCES TREND GRAPH


                                                   ADVANCES
                            60000
  ADVANCES(Rs. in crores)




                            50000

                            40000

                            30000

                            20000

                            10000

                                0
                                    2004-2005   2005-2006    2006-2007   2007-2008   2008-2009
                                                              YEAR



KEY FINDINGS
The trend percentage shows the movement of advances of the INDIAN BANK to its
customers in last five years. Figure shows that there is greater upward movement in
the advances by the INDIAN BANK which from the year 2004-2005 where it is 100%
raised to 280% in the financial year 2008-2009 i.e.it has risen from Rs. 18380.1
crores to Rs. 51465.28 crores in the year 2008-2009 which clearly shows that with
deposits advances are made to the customers in need of finance for their
functioning.




                                                            [36]
TREND ANALYSIS OF
INTEREST EARNED

                                             INTEREST EARNED

                                                                     (base year =2004-05 )
                                       YEAR                      Amount      Trend
                                                                             percentage

2004-05                                                          2,870.66          100
2005-06                                                          3,364.52          117
2006-07                                                          4,284.65          149
2007-08                                                          5,150.78          179
2008-09                                                          6,830.33          238



  INTEREST EARNED TREND GRAPH

                                           INTEREST EARNED
                          8,000.00
 INTEREST EARNED(Rs. in




                          7,000.00

                          6,000.00

                          5,000.00
        crores)




                          4,000.00

                          3,000.00

                          2,000.00

                          1,000.00

                              0.00
                                     2004-2005   2005-2006     2006-2007   2007-2008   2008-2009
                                                               YEAR

                                                        [37]
KEY FINDINGS

Trend percentage shows that as advances increasing which results in further
increase of interest earned by the INDIAN BANK which rises from 2004-2005 at the
rate of 100 % to 238 % as on 31.3.2009 which is more than enough for any bank.
Interest earned shows that how the business trend of the INDIAN BANK is growing
at rapid rate with constancy in its workings. It grows its interest income from Rs.
2870.66 crores in 2004-05 to Rs. 6830.33 crores as on 31.3.2009 which clearly
elaborates the trend increase in interest earned by the bank.




      TREND ANALYSIS OF NET PROFIT

                                 NET PROFIT

                                                   (base year =2004-05 )
                      YEAR                     Amount      Trend
                                                           percentage

2004-05                                        408.49             100
2005-06                                        504.48             123
2006-07                                        759.77             186
2007-08                                        1,008.74           247
2008-09                                        1,245.32           305




                                        [38]
                                      NET PROFIT TREND GRAPH


                                                     NET PROFIT
                               1400
   NET PROFIT(Rs. in crores)




                               1200

                               1000

                               800

                               600

                               400

                               200

                                  0
                                      2004-2005   2005-2006     2006-2007   2007-2008   2008-2009
                                                                YEAR




KEY FINDINGS
The trend percentage of Net Profit of Indian bank shows that the profits of the
bank have an increasing trend. It rises a lot in last 5 financial years from 2004-
2005 at the trend percentage of 100 % to 305 % in the financial year 2008-
2009 as on 31.3.2009.It give rise to profit in year 2008-2009 to Rs.1245.32
crores which is good for any bank to carry on its activities effectively.




                                                              [39]
TREND ANALYSIS OF EPS

                      EARNING PER SHARE(EPS)

                                           (base year =2004-05 )
                      YEAR             Amount      Trend
                                                   percentage

2006-07                                16.93        100
2007-08                                22.66        134
2008-09                                28.10        166




             EARNING PER SHARE TREND GRAPH

                               EPS
            30

            25

            20
 EPS(Rs.)




            15

            10

             5

             0
                 2006-2007       2007-2008         2008-2009
                                 YEAR




                                [40]
KEY FINDINGS
The trend percentage of EPS(EARNING PER SHARE) of INDIAN BANK
shows that shareholders earnings has also in increasing trend which earlier in
the year 2006-2007 is 16.93 % raised to 28.10 in financial year 2008-2009 as
on 31.3.2009 which shows an increasing trend of 166 in 2008-2009 financial
year. It clearly elaborates that shareholders wealth is also increasing which is
good from the point of view of growth of INDIAN BANK.




COCLUSION
As we have studies all the important parts of the banking system and in the
case of INDIAN BANK it shows positive or upward moving trend in deposits
with bank, advances by the bank, net profit of the bank, interest earned by the
bank and also the wealth share of the shareholders i.e. EPS (Earning per
share) which analysed that BANK is in healthy position.




                                      [41]
COMMON-SIZE STATEMENT
The common-size statements, balance sheet & income statement are shown in
analytical percentages. The figures are shown as percentages of total assets, total
liabilities, and total sales. A statement in which balance sheet items are expressed
as the ratio of each asset to total assets and the ratio of each liability is expressed as
a ratio of total liabilities is called common-size balance sheet.

BALANCE SHEET OF INDIAN BANK
(Rs. In crores)

 CAPITAL AND                                      As on 31.03.2009   As on 31.03.2008
  LIABILITIES
                       Total share capital            829.77               829.77
                          Equity share                429.77               429.77
                             capital
                       Preference share                 400                  400
                             capital
                           Reserves                   5,050.53             4,330.72
   NET WORTH                                          7,135.92             5,160.49
                            Deposits                 72,581.83            61,045.95
                           Borrowings                  530.78              1,283.24
  TOTAL DEBT                                         73,112.61            62,329.19
                       Other liabilities and          3,873.22              3,018
                           provisions
     TOTAL                                           84,121.75           70,507.68
   LIABILITIES
     ASSETS
                        Cash with RBI                 6,211.58             6,432.94
                       Balance with bank               472.24               339.88
   ADVANCES                                          51,465.28            39,838.71

 INVESTMENTS                                         22,800.56            21,915.07

 OTHER ASSETS                                         1,577.85            1,441.81
TOTALASSETS                                          84,121.75           70,507.68




                                           [42]
COMMON SIZE BALANCE SHEET OF INDIAN
BANK                              (Rs. In crores)


   PARTICULARS                As on 31.03.08     As on 31.03.09
(Rs. In crores)
         ASSETS              Amount       %     Amount       %
       Fixed assets          539.27      0.76   1,594.22    1.90
     Investments            21,915.07   31.08   22,800.56   27.10
      Advances              39,838.71   56.50   51,465.28   61.18
  Cash with reserve          6,432.94    9.13    6,211.58    7.38
     bank of India
  Balance with banks         339.88      0.49    472.24     0.56
   and money at call
     Other assets           1,441.81     2.04   1,577.85    1.88

     Total assets           70,507.68    100    84,121.75   100
     LIABILITIES
         Capital             829.77      1.17     829.77     0.99
  Reserves & surplus        4,330.72     6.15    6,306.14    7.5
        Deposits            61045.95    86.58   72,581.83   86.28
     Borrowings             1283.24      1.82     530.78     0.63
    Bills payable            257.24      0.36     165.20     0.20
     Interest                247.90      0.36     283.53     0.33
accrued
Other current liabilities   2,512.86     3.56   3,424.50    4.07

     Total liabilities      70,507.68    100    84,121.75   100




                                 [43]
KEY FINDINGS

In common size balance sheet it is found that there is constancy in deposits
of the firm as it contributes major portion of balance sheet i.e. 86.28
% in the year 2008-2009. The analysis shows that increase in advances
from 56.5 per cent to 61.18 per cent in the financial year 2008-2009 is in
correspondence with increase in deposits that means bank is using deposits
for lending to their customers. Borrowings as a percentage of total
liabilities has reduced from Rs. 1283.24 crores to Rs. 530.78 crores,
which means bank has sufficient funds at its disposal. Reserves and
surpluses has also increased from past year and contributed 7.5 % of
the total liabilities which is 1.35 % above the reserves percentage in 2007-
2008 financial year. Infrastructure of the INDIAN BANK has also been
improved in the financial year 2008-2009 as fixed assets increased
by1.14 per cent of total assets against 0.76 % in the financial year 2007-2008.




                                      [44]
RATIO ANALYSIS
MEANING OF RATIO


Ratio is the arithmetical expression of relationship between two related items. Ratio
is the process of determining and interpreting numerical relationship between two
variables which are interrelated. An absolute figure often does not convey meaning.
Therefore, the other information is required to test the relationship of these variables.
The ratio analysis involves comparison for a useful interpretation of financial
statements. The use of ratios is not confined to financial managers only. There are
different parties interested in ratio analysis for knowing the financial position of the
firm for different purposes. With the use of ratio analysis, one can measure the
performance of the firm so as to judge whether a firm is prospering or deteriorating.

MEANING OF RATIO ANALYSIS


Ratio, by themselves, is not an end but only one of the means of understanding the
financial health of a business entity. Ratio analysis is not capable of providing
precise answers to all the problems faced by any business unit.



RATIO ANALYSIS IS BASICALLY A TECHNIQUE OF:


   1. Establishing meaningful relationship between significant variables of
      financial statements, and
   2. Interpreting the relationship to form judgment regarding the financial
      affairs of the unit.

DEFINITION


“Ratio analysis is a study of relationship among
various financial factors in a business.”

                                          [45]
     The ratios analysed for the performance appraisal of a bank are
     different from those analysed for a company

     TYPES OF RATIOS IN A BANK ARE:



       A. CREDIT QUALITY                     GROSS NPA =TOTAL GROSS NPA

                                                           TOTAL LOAN ASSET




        GROSS NON PERFORMING ASSETS
          Non-performing assets are that part of the loan amount, which could not be
          recovered and has become completely bad debt. Analysis of NPA shows the
          asset quality management of the bank. Consistent focus on quality assets
          along with prudent risk management improves the bank’s asset quality.
                    GROSS NPA RATIO OF INDIAN BANK

FOR 2007-08                                      FOR 2008-09

Gross NPA = Rs.486.87 Crores                     Gross NPA = Rs.459.18 Crores


Total loan asset = Rs.39838.71 crores Total loan asset = Rs.51465.28


Gross NPA ratio = 486.87 X100=1.22% Gross NPA ratio= 459.18X100=.89%
                 39838.71                           51465.28

Lower the NPA ratio better it is. In the case of INDIAN BANK it goes down
from 1.22% to 0.89% in the financial year 2008-09 which is good for the bank.




                                          [46]
                                         NET NPA RATIO=TOTAL NET NPA

                                                        TOTAL LOAN ASSET




        NET NPA RATIO
       Net NPA are the gross non-performing assets from which provision against NPA
       are deducted.


                       NET NPA RATIO OF INDIAN BANK


For 2007-08                                     For 2008-09
Net NPA = Rs.97.59 crores                       Net NPA = Rs.93.81 crores


Total loan assets=Rs.39838.71 crore Total loan assets=Rs.51465.28 crores


Net NPA ratio = 97.59 X100=0.24%            Net NPA ratio = 93.81 X100=0.18%
              39838.71                                    51465.28


Lower the net NPA ratio better it is. Decline in net NPA from 0.24% to 0.18%
shows the INDIAN BANK is working efficiently in managing its advances.




                                         [47]
       B. STRENGTH & SOUNDNESS



                                     CREDIT DEPOSIT =TOTAL CREDIT

                                                      TOTAL DEPOSITS




        CREDIT DEPOSIT RATIO
        Deposits are one of the main functions performed by any bank so
    credit deposit ratio is important in bank to analyse.
                 CREDIT DEPOSIT RATIO OF INDIAN BANK


For 2007-08                                  For 2008-09
Total credit = Rs.39838.71 crores            Total credit = Rs.51465.28 crores


Total deposits=Rs.61045.95                   Total deposits=Rs. 72581.83


C.D. ratio= 39838.71 X100=65.26%             C.D. ratio = 51465.28 X100=70.9%
            61045.95                                      72581.83



 Credit ratio of any bank should be moderate neither to high nor to low. INDIAN
     BANK’s CD ratio is reasonable as it increases with approx 5 % only.




                                      [48]
        C. PROFITABILITY



                                               ROE = NET PROFIT AFTER TAX

                                                              NET WORTH




         RETURN ON EQUITY
           It tells about the return on the capital employed by the shareholders

                         .RETURN ON EQUITY OF INDIAN BANK
For 2007-08                                         For 2008-09
Net PAT = Rs.1089.43 crores                         Net PAT = Rs.1329.59 crores


Net worth=Rs. 5210.78 crores                        Net worth=Rs.7135.92 crores


ROE = 1089.43 X100=20.9%                            ROE = 1329.59 X100=18.63%
       5210.78                                            7135.92




Return on equity is important ratio expressing profitability of the company. In the
case of INDIAN BANK it is decreasing in 2008-09 on which bank has to work
upon to get it increase.




                                             [49]
                                           EPS = NET PROFIT AFTER TAX

                                                       NO. OF SHARES




        EARNING PER SHARE
          This ratio tells about the shareholders earning on the shares hold by them.
          This is one of the best profitability shown ratio.
                                  EPS OF INDIAN BANK

For 2007-08                              For 2008-09
Net PAT for equity = 973.74 crores        Net PAT for equity = Rs.1207.82 crores


No. of shares= 429770000                  No. of shares= 429770000


ROE = 9737393000 = Rs. 22.66              ROE = 12078230000 = Rs.28.10
      429770000                                  429770000


Earnings per share of the shareholders have increased from last year by Rs.
5.44 which is sign of good profitability. It also attracts more number of
shareholders.




                                          [50]
                                       PROFIT/EMPLOYEE =       PROFIT

                                                       TOTAL EMPLOYEES




        PROFIT PER EMPLOYEE
          This ratio tells about the average profit generated by an employee in one
          financial year.
                     PROFIT PER EMPLOYEE OF INDIAN BANK


For 2007-08                                     For 2008-09
Profit = Rs.1008.74 crores                      Profit = Rs.1245.32 crores


No. of employees= 20465                         No. of employees= 19990


P/E = 1008.74 X100 = 4.92%                      P/E = 1245.32 X100 = 6.23%
       20465                                         19990


Profit per employee has increased from past years. Employees decreased due to
technology improvement but working is ever increasing of INDIAN BANK.




                                         [51]
                                       BUSS./EMPLOYEE= BUSINESS

                                                        TOTAL EMPLOYEES




        Business per employee
         How business is growing in respect with the employees is judged through this
         ratio.
                   BUSINESS PER EMPLOYEE OF INDIAN BANK


For 2007-08                                  For 2008-09
Total business= Rs.100884.66 crores Total business = Rs.124047.11crores


No. of employees= 20465                      No. of employees= 19990


B/E = 100884.66 X100 = 492.9%                B/E = 124047.11 X100 = 620.5%
        20465                                         19990


Business per employee has also increased in 2008-09 against 492.9% in 2007-
08 Employees decreased due to technology improvement but business is ever
increasing of INDIAN BANK.




                                          [52]
INTER FIRM ANALYSIS

A firm would like to know its financial standing in comparison with its major
competitors and the industry group. The analysis of the financial performance of all
firms in an industry and their comparison at given point of time is referred to the
cross-section analysis or the inter firm analysis. To ascertain the relative financial
standing of a firm, its financial ratios are compared either with its immediate
competitors or with the industry average. Here comparison analysis is done for
INDIAN BANK financial position with other competitors like SBI, PNB, BANK OF
INDIA, BANK OF BORODA, UNION BANK, CANARA BANK, IDBI, CORPORATION
BANK, IOB on the following basis:



    MARKET PRICE
        2000 1847.05
        1800
        1600
        1400
        1200
        1000
         800         704.5
         600                          438.05
                             336.95                                            346.75
         400                                   234.05 287.45
         200                                                   108.35 149.35            90
           0




                                           MARKET PRICE

        From above graph we can clearly analyse the rank of INDIAN
        BANK in accordance with its market price of shares as comparison
        with its immediate competitors in the market. INDIAN bank market
        price as on date is Rs.149.35 as on 2.8.2009.




                                          [53]
  MARKET CAPTALISATION
   It means the capital introduced by any company in the
   market to run its activities.




140000


120000 117265.55


100000


 80000


 60000


 40000

               22213.06
                          17695.78 15956.69
 20000
                                              11822.28 11785.45
                                                                  7853.01 6418.61
                                                                                  4973.78 4903.2
     0




                                   MARKET CAPITALISATION

This above graph shows that how much each player in banking sector has
capitalised its place. In this graph it is analysed that INDIAN BANK is on
rank 8th in market capitalisation among other players of banking as
on 2.8.2009.




                                          [54]
   NET INTEREST INCOME


70000

        63788.43

60000




50000




40000




30000



                   19326.16
20000                                                          17119.06
                              16347.36
                                         15091.58
                                                    11889.38              11631.62
                                                                                                       9641.4
10000
                                                                                     6830.33 6067.35



    0




                                           NET INTEREST INCOME

From above graph it is analysed that rank in respect of net interest
income earned by the INDIAN BANK is 9th among nationalised banks.
Highest net interest income earned is by SBI i.e. Rs. 63788.43 crores.




                                                     [55]
  NET PROFIT


10000

        9121.24
 9000


 8000


 7000


 6000


 5000


 4000

                  3090.88 3007.35
 3000
                                    2227.2
                                                       2072.42
 2000                                        1726.55
                                                                          1245.32            1325.79
                                                                 858.53             892.77
 1000


    0




                                             NET PROFIT

Net profit is taken as base in above graph. It shows INDIAN BANK net
profit as on 31.3.09 is Rs. 1245.32 crores and among other
nationalised banks it is on 8th position which is good as per the
standings in banking sector.




                                             [56]
   TOTAL ASSETS


1200000




1000000 964432.08




 800000




 600000




 400000


               246918.62
                               227406.73
                       225501.75              219645.8
 200000                               160975.51      172402.33
                                                                     121073.4
                                                             84121.74         86905.8


      0




                                    TOTAL ASSETS

Analysis of total assets of different firms in banking sector shows that
INDIAN BANK is weak in total assets i.e. balance sheet figure is
smaller as comparison to others, but if we find ratio with profits to its
assets than it is same as with other firms.




                                           [57]
CONCLUSION
At last by the above study and analysis it can be concluded that overall performance
of INDIAN BANK is up to the mark. Bank can be considered as financial healthy
bank having good goodwill in the market. Some key findings are made from the
whole study that is following:



      NET PROFIT for 2008-09 was at Rs. 1,245.32 crore as compared to Rs.
       1,008.74 crore for 2007-08, showing a growth of 23.45% in the current
       year. It means bank is developing at rapid rate.

      RETURN ON NET WORTH for 2008-09 was at 23.45% as against
       24.51% for 2007-08.

      EARNINGS PER SHARE as of March 2009 was Rs. 27.96 and book
       value per share was Rs. 127.52 during the current year which attracts
       more shareholders.

      GLOBAL BUSINESS of the bank stood at Rs. 1, 24,413 crore registering
       a growth of 22.85% which clearly shows the scope of INDIAN BANK.

      TOTAL DEPOSITS grew by Rs. 11,536 crore to Rs. 72,582 crore, a
       growth of 18.90% for the year 2008-09. It increases the liquidity position of
       the INDIAN BANK.

      GROSS ADVANCES in financial year 2008-09 is at Rs. 51,831 crore,
       which registering growth of 28.84% as on 31.03.09. Overall credit ratio
         was at 70.9%




                                        [58]
     NET INTEREST MARGIN improved from 3.45% to 3.54% which is little
    increasing but positive for the bank.

 THE BANK’S NET INTEREST income improved to Rs. 2,608.52 crores
 in 2008-09 from Rs. 2,053.90 crore in 2007-08 thereby registering a growth of
 27%. The increase is attributed to the substantial increase in interest income
 arising from volume growth in advances.

 Financial Inclusion: During 2008-09, 17.04 lakh accounts were
  opened under the scheme, of which Overdraft was extended in 52,545
  accounts for Rs. 10.91 crore.

 TOTAL BRANCH NETWORK of the bank in India increased to 1644 as
  on 31.3.2009 and all the branches are under CBS.

 TOTAL NUMBER OF ATMs increased to 765 which included 205 offsite
  ATMs and customers can have access to 32000 ATMs in the shared network.




                                       [59]
FUTURE PLANS OF THE INDIAN BANK


  Indian Bank has plans to open biometric ATMs in 100 places across the
  country to facilitate withdrawal of cash by members of self-help groups. The
  biometric ATMs have been introduced in 11 places, including one at
  Pallavaram near Chennai. The ATM card is developed by taking the thumb
  impressions of two authorised signatories of the self-help group concerned to
  facilitate the operation.
  For outsourcing plans, Mr Sundara Rajan said: “Banks are governed by the
  Reserve Bank of India guidelines and not all jobs can be outsourced.” The
  initiative is only in its early stages and as of now, outsourcing is not
  significantly done. With core banking system in place and with application of
  technology, the aim is to utilise the services of staff in a better manner.
  Indian Bank plans to set up more central processing units (CPUs) to appraise
  loans for small and medium enterprises, as its pilot in Chennai proved to be
  effective. While most big foreign banks have either set up huge captive back-
  office processing centres in low-cost locations, or outsourced such activities to
  third parties, Indian PSU banks have preferred to set up central processing
  units in each city to get at least some of the benefits of scale at lower costs
  and risks.
  Recently Indian bank has introduced the new service i.e. “Wealth
  management Services” which to develop and implement successfully is the
  major plan with INDIAN BANK.




                                     [60]
       SECTION - B



 WORK STUDY OF COMPARISON OF
LOAN RATES OF INDIAN BANK WITH
        OTHER PLAYERS




              [61]
AIM OF THE STUDY
“To know about interest rates on loan products and to analyse which
player is most competent”




OBJECTIVE OF THE STUDY
         To have a comparative study of INTERST RATES
         To know CUSTOMER PREFERENCES
         To know excellence of loan products of INDIAN BANK




SCOPE OF THE STUDY
The study of comparison of loan rates of INDIAN BANK with others has been
done in INDIAN BANK Branch Kalsi Nagar, Ludhiana main branch under the
leadership of the bank staff.




                                   [62]
SUMMARY

In this work study comparison between the different prominent players loan rate is
done with an objective to know excellence in the rates by different banks and to find
out that which bank is good in what type of product. This project also shows the
position of Indian bank in the row o good reputed bank who offers loan products. In
this project data about the interest rates are collected by personal visits to bank and
from the websites of different banks.

After collecting the data it is tabulated so that it becomes easy to compare. In this
project study of 3 loan products is studied. Home loan, car loan and education loan.
These three types of products are selected because these three are the main
demanded products from the bank and the major source for bank to generate
income in the form of interest over the loans.

After analysing findings are made and it is found that on average interpretation
Indian bank ranks 3rd among the banks for lower rate of interest and it is also found
out that Indian bank is good in loan term and high amount loan products. At high
amount and long tenure its rate of interest is less as comparison to other players. It
is also found that INDIAN BANK rate of interest on loan are constant i.e. not
fluctuating much with change in amount or tenure of loan.




                                         [63]
RESEARCH METHODOLOGY
Research is defined as human activity based on intellectual application in the
investigation of matter. The primary purpose for applied research is discovering,
interpreting, and the development of methods and systems for the advancement of
human knowledge on a wide variety of scientific matters of our world and the
universe. Research methodology is the attempt to validate the rationale behind the
selected research design and provide justification of why it is appropriate in solving
the selected research problem.



TYPES OF RESEARCH


This research employed two types of research:



DESCRIPTIVE RESEARCH OR EX-POST FACT RESEARCH

Descriptive research has been conducted to describe the various characteristics
related to financial analysis. It includes the facts finding inquiries of different kinds. It
has done to know the following facts:

    How financial analysis is done by loan department while giving corporate loan

    Comparison of the financial performance of the bank with previous year

    Trend analysis of deposits, advances, profits and NPAs are analysed

    What are the important ratios in the bank




                                             [64]
QUANTITATIVE RESEARCH

Quantitative research is obtained to evaluate the different parameters relating to the
financial position of the bank. It includes the study of,

    How efficiently is the bank using its deposits
    What has been increase/decrease in net profit and NPA
    What has been the change in different ratios




DATA COLLECTION METHODS


PRIMARY DATA

    Through conversation with the Branch Manager and the staff of loan and
       accounts department of Indian bank.

SECONDARY DATA

      Annual report
      Financial statements
      Newspapers
      Business Magazines
      Internet
      Information from the accounts section
      Books on financial analysis by different authors




                                           [65]
Comparison of interest rates on three products
of loan has been done. These are:


            HOME LOAN
            EDUCATION LOAN
            CAR LOAN

    Likewise every bank INDIAN BANK offers its customers loan to purchase home,
loan for the education of their children and also loan to buy a car. Loan on different
product differs from each other with respect to rate of interest, period of maturity,
period of repayment, security held against loan and it also differs from one bank to
other in all respect because each bank has its own norms and rules and policies to
set interest rates.

   Irrespective of their own norms banks has to look upon RBI (RESERVE BAK OF
INDIA) an apex body of the banking sector to set rate of interest on loan to be set by
RBI in the form of bank rate.

    Bank rate is the rate at which a central bank of a country gives loans and
advances to the commercial banks; it is the only rate which helps the economy in
controlling inflation and deflation. Bank rate as on 5.7.2009 is 6.0%.

    PLR (PRIME LENDING RATE) is the Prime Lending Rate. It is defined as the
rate of interest on lending decided by Reserve Bank of India above which no Bank is
allowed to charge to a Customer. PLR as on 5.7.2009 is 12.75%-13.25%.




                                         [66]
      HOME LOAN MART
                           Upto Rs.20 Lakhs                   More than                          Above Rs.30
                                                              Rs. 20 Lakhs upto                  Lakhs upto Rs.200 Lakhs
                                                              Rs.30 Lakhs

                                                                                                                         (Rate in %)

BANK / TENURE              5 yrs 10yrs 15yrs      20yrs       5 yrs   10yrs 15yrs       20yrs    5 yrs       10yrs       15yrs 20yrs




INDIAN BANK                9       9.25   9.50      9.75      9.25    9.50     9.75      10      9.75        10          10.25 10.75
                Floating
                           10.50 11        _        _         11.50 11.50       _         _      11.50 11.50              _          _
                Fixed

PUNJAB          Floating   9       9.25    10     10.50       9       9.25     10       10.50    9       9.25            10         10.50
NATIONAL
BANK
                Fixed      10.25 11       11.25 11.25         10.25 11         11.25 11.25       10.25 11            11.25 11.25



STATE BANK                 9.25 9.50       9.75     9.75      9.25    9.50     9.75 9.75         9.75        10      10.25 10.25
OF INDIA        Floating
                           10.75 10.75     _        _         10.75 10.75 _              _       11.75 11.75              _          _
                Fixed


INDIAN                     8.25 8.50      8.75      8.75      8.25    8.50     8.75 8.75         9.75    10.25 10.25 10.25
 OVERSEAS       Floating
 BANK
                           9       9.50    _        _         9       9.50      _        _       11.50 12                 _          _
                Fixed


BANK OF                    8.50 8.75      8.75      9         8.50    8.75     8.75       9      9.25    9.50            9.50       9.75
BARODA          Floating
                           9.50 9.75       10      _          9.50    9.75      10           _   10.25 10.50 10.75                   _
                Fixed


ORIENTAL                   9.25 9.25      9.50     9.50       9.75    9.75      10       10      10.25 10.25             10.50 10.50
BANK OF         Floating
COMMERCE
                           11      11     11.25   11.25       12      12       12.2512.25        12.25 12.25             12.50 12.50
                Fixed


CANARA                     9.50 9.75       10       10        9.50    9.75      10       10      10.25 10.50             10.75 10.75
BANK            Floating

                Fixed          _    _      _        _             _        _        _    _               _           _          _          _




                                                           [67]
FINDINGS
After analysing the interest rate on house loan by different competitive banks and
studying the floating and fixed rate of interest it is found that all the players have
almost same rate of interest or differs with small percentages. Indian bank is good in
fixed rate of interest for higher credit limit i.e. 11.50 % which is constant with
respect o tenure of loan period. Bank of Baroda has lower rate of interest in fixed
and floating category and is leader in the housing loan section.
            The Reserve Bank of India attempted to minimize the economic crisis of
the country by bringing down the repo and the reverse repo rates by 50 basis points
each. Falling of economic growth to 5.6 percent in the third quarter is the lowest
since 2003. According to the reports, the RBI has cut repo rate by a total of 350
basis points since October, 2008 and the reverse repo rate by 200 basis points. It is
also expected that reduction in interest rates will encourage banks to offer loans for
productive purposes and that too at feasible interest rates. A new monetary stimulus
declared by the Reserve Bank of India include further cut in home loans, auto loans
and other loan rates.
            This makes the banks to reduce the rates which are higher 2 months back
by 0.5 to 1.5% in most of the loan tenures and amount. Banks in recent past has cut
its BPLR rate as PLR is declined by the apex body of finance in India i.e. RBI.
According to the Reserve Bank of India (RBI), banks are free to fix the Benchmark
Prime Lending Rate (BPLR) with the approval of their respective Boards. Banks are
free to decide the BPLR but their interest rates have to have a reference to the BPLR
fixed. The BPLR is the interest rate that commercial banks charge their most credit-
worthy customers and PLR is prime lending rate of RBI to commercial banks i.e. as
on 1st August 2009 is 12.75% to 13.25%. No bank is allowed to charge interest
more than PLR fixed by the RBI.
             To conclude e can say that lending rates on homes are changing very
quickly because as the market is not stagnant. Period of recession has upset the
whole market and to meet the demands and to won back old economy Government
of India is taking steps with respect to home loans.




                                         [68]
CAR LOAN MART
   BANK / TENURE   Upto 3 years     More than 3 years

   INDIAN BANK
                            11%            11.25%


   PUNJAB
   NATIONAL               10.75%           11.25%
   BANK


   STATE BANK
   OF INDIA               11.25%           11.50%


   INDIAN
    OVERSEAS              11. 50%          11.50%
    BANK


   BANK OF
   BARODA                 10.50%           10.50%


   ORIENTAL
   BANK OF                  11%            11.50%
   COMMERCE


   CANARA
   BANK                   12.50%           12.50%




                           [69]
FINDINGS
As in today’s world two wheeler in a house becomes necessary thing for travel from
one place to another. Report shows that India holds 1 % of total Global car
population from which we can imagine how much car is important in one’s daily
routine. So common man can’t buy cars through hard cash in hands. They finance
cars from banks and different players in banking industry offer different schemes to
their customers for car finance.

    Above study shows that car loan is moderate and near to 11% approx. Indian
bank is good in long term and high finance amount and similarly it is also Bank of
Baroda is top in the list at lesser rate of interest for car loan to its customers. Indian
bank ranks 3rd in the row of car loan preference by the customers while
comparison with the other players. During the period of recession sale of new cars
doesn’t much affected due to good in high tenure loan i.e. 11.25% for above 3
years slowdown in the economy.

    So result is that if you want to go for a new car as upswing in the market is ready
to take off for long term you should go for INDIAN BANK because loan is easily
available there as comparison with other players because Indian bank deals at high
scale and have contacts with big players in this corporate world.




                                           [70]
EDUCATION LOAN MART

BANK / TENURE   Upto Rs. 4 Lakh           Above 4 Lakhs upto   Above 7.5 Lakhs upto
                                         7.5 Lakhs             20 Lakhs



                                                               (For education in India)


INDIAN BANK
                        12%                      12%                    12.25%

PUNJAB
NATIONAL              11.50%                   12.50%                     13%
BANK

STATE BANK
OF INDIA              11.25%                   12.75%                   11.75%

INDIAN
 OVERSEAS             10.25%                   11.50%                   11.50%
 BANK

BANK OF
BARODA                  10%                      12%                      12%

ORIENTAL
BANK OF               10.75%                   11.50%                   11.50%
COMMERCE

CANARA
BANK                    12%                    12.50%                     13%




                                  [71]
FINDINGS
Education is becoming must activity for every child. Expenses on study starts from
the child enter into pre nursery. So to give child the best education at best schools
and colleges finance is required which is given by banks at rate of interest which
varies with the amount of loan. Rate of interest on higher education is higher than
other loan products like housing loan and car loan. INDIAN BANK has constancy
in this rate at 12 % which slightly changes by 0.25% in higher amount of loan.

          Bank of Baroda is good enough amongst all in loan upto 4 lakh rupees and
overall we can say Indian overseas bank is good with loan interest not increasing
11.50% even for highest amount of loan.

          One more thing which is being noticed that different bank has different way
of setting loan interest. As some banks have higher rate of interest for higher loan
amount whereas banks like State bank of India has lower rate 1.e. 11.75% for higher
loan amount.

          At last from the whole study of loan products like home loans, car loans,
education loans comparison with different players shows that INDIAN BANK has a
constant flow of rates throughout the loan products with slight change in rates which
benefits customers to easily grab the price and calculate EMI’s on the loan products.
Customers feel ease to budget their finance by simply remembering these rates. So
convenience is must in today’s world which can be seen most in INDIAN BANK. On
the other hand these rates also shows that INDIAN BANK is on right track not
fluctuating interest rates much and has a reliable and stable growth.




                                         [72]
WORKING OF LOAN SECTION OF
      BANK BRANCH




            [73]
AIM OF THE STUDY


“To know how bank analyse the financial position of the company while
sanctioning loan”




OBJECTIVE OF THE STUDY

    To know about analysis of the company by bank


    To acquaint to the working of loan department in a Bank branch


    To know the bank’s policies to sanction loan




SCOPE OF STUDY

The study has been conducted in INDIAN BANK, Kalsi Nagar, Ludhiana main
branch’s loan department under the leadership of Bank manager and experienced
staff of loan department of the branch.




                                       [74]
SUMMARY
In this project it is studied that how bank performs its analysis over the financial
statements of the company seeking loan from the bank. Company seeking loan
comes to the bank and fill loan application for the specific credit limit for the bank.
Along with application form it attached all financial statements of past years and also
the projected financial statement of the company. Bank official check and analyse
the financial statements and draw out findings that is that beneficial to give credit
limit? And whether the statements are true according to the company’s record.

In the project made there is a balance sheet and income statement of the ABC ltd.
seeking loan from the INDIAN BANK or credit limit of Rs. 40 Crores is given for the
year 2008-09,2007-08, 2006-07 and also the projected balance sheet for the
financial year 2009-10 for which loan requirement is there.

For sanctioning loan to ABC ltd. its financial statement analysis is done by firstly
finding key financial indicators for appraisal and then after 3 different methods is
applied to find out the actual capital requirement by the company.

And at last whole study reveals that all the facts and figures are positive and limit
demanded is actually needed so by completing all the formalities loan is sanctioned
to the ABC ltd. as per the company’s rules and norms and policies.



Following is the actual study done over the sanction of loan to the ABC
ltd. with its previous year balance sheets and Profit and loss account
and also projected for 2010 Balance Sheet and P & L account...




                                          [75]
               BALANCE SHEET OF ABC LTD.
                                     (Rs. in crores)


LIABILITIES                         March 2007         March 2008   March 2009
 Net worth      Share capital             9.82            9.82        15.22

                  Reserves               99.01           122.71       208.37

    Term        Secured loan              0.00            0.00         0.00
 liabilities
               Unsecured loan             0.65            1.51        21.75

  Current          Creditors             17.57           56.20        97.14
 liabilities

                    Bank                 24.77           79.23        136.94
                 borrowings
   Total                                151.82          269.47      479.42

 ASSETS

Fixed assets   Net block (GB-            32.46           87.64        150.90
               DEPR.)
Investments                              27.82           32.05        55.86

  Current        Inventories             28.75           58.40        72.86
  assets
                   Debtors              58.25            63.87        150.61

               Cash and bank              1.21            4.61        54.43

                Other assets              1.08           30.57        37.98

                Advances and             10.44           18.88        39.19
                    loans
               -Provisions and           (8.19)          (27.06)      (82.41)
               others liabilities
   Total                            151.82              269.46       479.42




                                           [76]
Profit and loss account of ABC Ltd.                       (Rs. In crores)

(Rs. In crores)
     INCOME         March 2007          March 2008   March 2009
    Gross sales       121.61              185.58       357.39


 Less excise duty     (0.05)              (0.28)       (0.07)

     Net sales        121.56              185.30       357.32
   Other income       (53.79)             28.54        43.12
TOTAL INCOME          67.77              213.84       400.44
 EXPENDITURE
   Raw material       28.26               137.84       270.69
  Power and fuel       0.00               10.98        17.26

 Employees cost        2.11                8.57         9.59
      Other            7.99                5.65         9.46
  manufacturing
    expenses
  Misc expenses       5.35                9.94         14.93

    TOTAL             43.71              172.98       321.93
 EXPENDITURE
GROSS PROFIT          24.06               40.86        78.51


Less depreciation      6.28               12.36        23.18
   and others

         Tax           3.37                4.89        10.34

    Net profit        14.41               23.61        44.99




                                 [77]
 PROJECTED BALANCE SHEET OF ABC LTD FOR
                   2010
              (Rs. in crores)
  LIABILITIES                              March 2010
    Net worth           Share capital        24.72

                          Reserves           342.52

 Term liabilities       Secured loan          0.00

                       Unsecured loan        41.23

Current liabilities       Creditors          145.63


                      Bank borrowings        205.28

      Total                                 759.38

    ASSETS

  Fixed assets        Net block (GB-         267.45
                      DEPR.)
  Investments                                100.33

 Current assets          Inventories         90.84

                           Debtors           212.21

                       Cash and bank         90.09

                        Other assets         48.01

                        Advances and         50.56
                            loans
                      -Provisions and       (100.11)
                      others liabilities
      Total                                 759.38




                                [78]
  Projected Profit and loss account of ABC Ltd.
        For 2010                 (Rs. In crores)

INCOME                                    March 2010
              Gross sales                   550.00


         Less excise duty                   (0.10)

               Net sales                    549.90
             Other income                   48.18
TOTAL INCOME                               598.08
EXPENDITURE
             Raw material                   404.29
             Power and fuel                 25.78

          Employees cost                    14.32
   Other manufacturing expenses             14.12

             Misc expenses                  22.28

TOTAL EXPENDITURE                          480.79

GROSS PROFIT                               117.29


    Less depreciation and others            33.14

                  Tax                       15.72

Net profit                                  68.43




                                   [79]
    KEY FINANCIAL INDICATORS
          Particulars     2007     2008     2009     Projected
                                                        2010
Gross sales               121.61   185.58   357.39    550.00
Less : excise duty        (0.05)   (0.28)   (0.07)     (0.10)
Net sales                 121.56   185.30   357.32    549.90
Purchases(RMC)             28.26   137.84   270.69    404.29
Gross profit               24.06    40.86    78.51    117.29
Net profit                 14.41    23.61    44.99     68.43
Net profit/sales           11.84    12.72    12.58     12.45
Depreciation                2.78     5.04     9.10     14.34
Interest – bank             3.26     7.33    14.10     22.15
Capital                     9.82     9.82    15.22     24.72
Reserves & surplus         99.01   122.71   208.37    337.52
Total net worth           108.83   132.53   223.59    362.24
Unsecured loans             0.65     1.51    21.75     41.23
Fixed assets               32.46    87.64   190.75    319.45

Securities/investments    27.82     32.05    85.86    112.33
Current assets            91.54    149.77   272.81    391.6
Stock                     28.75     58.40    72.86    90.84

Debtors                   58.25    63.87    150.61    212.21

Current liability         42.34    135.43   234.08    350.91
Creditors                 17.57     56.20    97.14    145.63
Bank borrowing            24.77     79.23   136.94    205.28
Net working capital        49.2     14.34    38.73    40.69
Current ratio              2.16      1.1      1.2       1.1
Current asset/sales%      75.27      80.7    76.33      70
Interest coverage ratio    1.61      2.01     2.17     2.29




                            [80]
Appraisal of financial indicators
       √ Gross sales of the firm has increased by 52.6% from the year 2007 to
         the year 2008 with margin of 63.97 crores and further from the year
         2008 to 2009 gross sales shows tremendous increase in sales with a
         record breaking growth of 92.58% which is much higher than previous
         financial year sales growth rate. And projected gross sales for the
         financial year ending 2010 is shown to be grow up to 550 crores which
         is at 53.89% which the company shows willingly less so that there will
         be less chances of being wrong. Therefore projected sales seem to be
         reasonable & achievable as per past trend & up to date performance of
         the unit. Hence, the projected sales submitted by the party are
         accepted.

 √ Gross profit and net profit of the firm is also showing increasing trend from
   2007 to 2009 with an increased growth of approximately 70% from 2007 to
   financial year 2008 in gross and on that base and trend projected gross profit
   at 50% approx in the financial year 2010. And Net profit as per trend of
   previous financial years increase in profit for financial year 2010 at 52%
   approx.

 √ Firm has also has tremendous increased in its capital in the year from 2008 to
   financial year 2009 i.e. from 9.82 crores in 2008 to 15.22 as on 31.3.2009
   which shows the company’s expanding business trend.

 √ As the firm is run by the family itself or we can say ABC Ltd. is a family based
   manufacturing unit so all unsecured loans is from within the family or from
   relatives or close friends, which may be considered as quasi capital.

 √ Current assets holding is less in previous year as it rises from financial year
   2007 to 2008 at 64% approx and in the financial year 2009 it gives growth of
   82% approx which is due market capitalization and keeping of various types
   of components of stock for various models of finished product produced which
   are increasing day by day to meet market requirement. As it gives proper
   cash flow in the business which act as helping hand in day to day working.

 √ Further debtor has also shows an increasing trend in the financial year as on
   31.3.2008 increase in debtors is only 10% approx which in financial year 2009
   gives a growth of 135% approx in debtors from 63.87 crores as on 31.3.2008
   and 150.61 crores as on 31.3.2009, which shows the increasing trend in the
   sales turnover of the firm.




                                      [81]
Calculation of Financial requirement
   Justification of acceptance of sales projections.
  1. Gross sales of the firm has increased by 52.6% from the
     financial y year 2007 to the financial year 2008 with growth of
     Rs. 63.97 crores from Rs.121.61 crores as on 31.3.2007 to Rs.
     185.58 as on 31.3.2008 and further from the year 2008 to 2009
     gross sales shows tremendous increase in sales with a
     record breaking growth of 92.58% or Rs. 171.81 crores which
     is much higher than previous financial year sales growth rate. And
     projected gross sales for the financial year ending 2010
     which the company has analysed and presented shows to be
     grow up to 550 crores of gross sales which is at 53.89% or
     192.61 crores which the company shows willingly less so that there
     will be less chances of being wrong. Therefore projected sales seem to
     be reasonable & achievable as per past trend & up to date
     performance of the unit. Hence, the projected sales submitted by the
     party are accepted



  2. Computation on the basis of 20% of sales

a) Estimated accepted sales during 2009-2010 Rs.550 crores.
b) Working capital requirement = 25% of (a) i.e. Rs. 137.5 crores.
c) Less promoter’s contribution = 5% of (a) i.e. Rs. 27.5 crores.

                                    Or

 Projected net working capital, whichever is higher Rs. 40.69 crores
       (Excess NWC shall be used for contingency expenses)

d) Eligible working capital from bank=Rs.137.5 – Rs.27.5= Rs. 110 crores
e) Limit applied – Rs. 40 crores




                                [82]
         3. Computation with STBC Method




                         STBC TABLE
                              (Rs. In crores)

   A. Accepted Sales                                     550

   B. Level of Current Assets(projected)                 391.6
   B1. 45% of A or projected level, whichever is
   lower                                                 247.5
   B2. Highest in last three years                       55%
   B3. B2 * A                                            302.5
   B4. Accepted level of current assets (B1 or B3        247.5
   whichever is lower)

   C. Net Working Capital
   C1. 25% of B4 less AMTC                               61.87
   C2. 16.66% of B4                                      41.23
   C3. Projected Net Working Capital                     40.69
    C4. (C1,C2,C3 whichever is higher)                   61.87


   D. Current liability(except borrowings)               145.63


   E. STBC = B4-C4-D                                     40.00


Final recommended Working capital limit: Rs. 40 Crores




                                     [83]
    CONCLUSION
Hence past trends of financial years of the firm have
analysed and show positive results thereof. This all
justifies that the projected sales and balance sheet
is true and fair and requests need for limit of Rs. 40
crores is genuine. Thus, limit is enhanced to Rs. 40
crores. Issue the sanction ticket stipulating the
securities and other terms as per HO guidelines.




                                    Assistant General Manager



                         [84]
BENEFITS OF THE STUDY TO INDIAN BANK

 √ With this study bank comes to know about the areas in which it is weaker and
   in which they have to improve upon.
 √ Bank comes to know that whether they are growing at the same level as the
   other players are growing or not. To rank itself this report is beneficial.
 √ To educate about the company’s history and working of loan department bank
   take this report as a helping hand by off loading burden the existing
   employees of the Indian bank.
 √ This study shows that bank is improving its business but not like other banks
   improving. It made clear to bank that which bank has good in what so that to
   follow their strategy to make own goals for future years.
 √ Bank likely to accrue the benefit of summary of latest interest rates and
   current position of the Indian bank industry for increase in knowledge.
 √ While helping through the project norms and rules are reviewed by the bank
   officials which make them upto date.




                                     [85]
LIMITATIONS
  Analysis is only a means and not the end. The analysis
   has been done on the basis of my own interpretations
   and upto best of my knowledge but every analyst have
   his or her own interpretations and suggestions.

  Only quantitative factors are taken into account while
   making the project not qualitative.

  The non-monetary factors are not taken into
   consideration


  The stipulated time was not sufficient to understand
   each and every aspect of the system but I have tried to
   balance and cover each aspect within the stipulated
   time.

  Restricted finance was also one of the limitations.

  As to have an real life practical experience everything
   in real and original is required which is not available
   due to confidential norms and rules which limits the
   study.

 .




                                      [86]
SUGGESTIONS
    Return on equity has been declined from 20.9% in 2007-08 to 18.63% in
     2008-09 to which bank has to work upon to retain its efficiency in working.
    As comparison with other banks INDIAN BANK’s developing rate is much
     lesser than other players. Expenditure on infrastructure is also less. Bank
     management have to taken under this problem so that progress should be in
     right order and direction.
    INDIAN BANK has also to spend money on advertisement. Commonly bank
     requires nominal or no advertisement because customers come to place of
     their convenience. But INDIAN BANK is not well known brand so it has to give
     advertisement as a tool of promotion.
    This study on loan sanction also helps to new employees to understand the
     methods to issue loan which is much beneficial to off load the burden from old
     employees. Thus the scope of this study is remarkable.

Thus at last above suggestions which comes out of the whole study by analysing
different factors of INDIAN BANK whether it is related to loan sanction or interest
rates or financial standings of the INDIAN BANK in Indian bank industry will show all
the pitfalls in the road map of development of the bank so that bank can improve on
their standings and have ever increasing profits in hand.




                                        [87]
                    ACKNOWLEDGMENT
        Project is said incomplete if any of its alphabet is missing. A project is the
combined effort by all alphabets of it, which means, Parents Rabb (GOD) Officials
Journals Entrepreneurs Company Teachers. So I hereby want to thank all of these
for acting as a helping hand to me during my 8 weeks training in INDIAN BANK,
Ludhiana.

        Firstly I express my gratitude towards GOD who has given me such potential
that I can do my work with ease with blessings given by him. Then GOD on earth i.e.
my parents who supported me throughout the difficult stages of my working. My
writing in this project has also been influenced by a number of standard and popular
text books and journals by prominent authors and analysts and groups of financial
magazines.

My sincere thanks to the bank officials at Kalsi Nagar branch of INDIAN BANK for
giving and attending me time to time from their busy schedule. I specially thank
respected sir, Mr. M.L. Madan who acts as a guide and trainer for me throughout my
training and who impart me the valuable        knowledge    and exposures, which
helped me towards the project.

 I would also like to thank to my respective teachers of my institute CHITKARA
SCHOOL OF MANAGEMENT STUDIES who help me whenever I am in need of
their help. I also express sincere thanks to my seniors who not only provided moral
support but also helped me from time to time without whom guidance this project
can’t be complete.




                                         [88]
PROPOSED IMPLEMENTATION METHODOLOGY




                       [89]
TABLE OF CONTENTS
      WAHEGURU JI KA KHALSA WAHEGURU JI KI FATEH




                         [90]

				
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