Urban Co-op Bank (Analysis of Financial Statment)

APROJECT REPORT

ON

ANALYSIS OF FINALCIAL STATEMENT

THE PANIPAT URBAN CO-OPERATIVE BANK

SUBMITTED IN THE PARTIAL FULFILLMENT FOR THE DEGREE

OF BACHELOR OF BUSINESS ADMINISTRATION

(SESSION 2014-15)

SUBMITTED TO: SUBMITTED BY:

MISS NISHA GUPTA PRIYANKA

, B.B.A. III YEAR

CLASS ROLL No 78O7.

UNIVERSITY ROLL No..

I.B. (P.G.) COLLEGEAFFILIATED BY KURUKSHETRA UNIVERSISTY, KURUKSHETRA

DECLARATION

I PRIYANKA student of B.B.A. III year in I.B.(P.G.) College, Panipat hereby declare

that the project report entitled “ANALYSIS OF FINALCIAL STATEMENT” submitted for the degree of B.B.A. III year is my original work and the project report has not formed the basis for the award of any diploma, degree, associate ship, fellowship or similar other titles. It has not been submitted to any other university or institution for the award of any degree or diploma.

(PRINCIPAL SIGNATURE) PRIYANKA

ACKNOWLEDGEMENT

Survey is an excellent tool for learning and exploration. No classroom routine can

substitute which is possible while working in real situations. Application of theoretical

knowledge to practical situations is the bonanzas of this survey.

Without a proper combination of inspection and perspiration, it’s not easy to achieve

anything. There is always a sense of gratitude, which we express to others for the help

and the needy services they render during the different phases of our lives. I too would

like to do it as I really wish to express my gratitude toward all those who have been

helpful to me directly or indirectly during the development of this project.

I would like to thank my professor MISS.NISHA GUPTA who was always there to

help and guide me when I needed help. Her perceptive criticism kept me working to

make this project more full proof. I am thankful to her for his encouraging and

valuable support. Working under her was an extremely knowledgeable and enriching

experience for me. I am very thankful to her for all the value addition and enhancement

done to me.

No words can adequately express my overriding debt of gratitude to my parents whose

support helps me in all the way. Above all I shall thank my friends who constantly

encouraged and blessed me so as to enable me to do this work successfully.

PRIYANKA

TO WHOM SO EVER IT MAY CONCERN

Certified that the project on “ANALYSIS OF FINALCIAL STATEMENT “ has been completed by GOVIND AGGARWAL student of B.B.A .III year ,I.B.(P.G.) College ,Panipat under my guidance . She has submitted the report in the partial fulfillment of the requirement for the degree bachelor of business administration from Kurukshetra University, Kurukshetra

It is his original research and I recommend that this should be sent for evaluation

CHAPTER 1

Profile of bank

2.1 –Introduction to Banking Industry

2.2 –Growth of Indian Financial Sector

2.3 –Panipat co-operative banks in India

2.4 -About PanipatPanipat co-operative bank Ltd.

2.5 –Financial Highlights of Panipat Panipat co-operative bank Ltd.

2.6 –Retail Banking of PanipatPanipat co-operative bank Ltd.

2.7 –Introduction of Corporate Governance by OSCB Ltd.

2.1-Introduction to Banking Industry

Introduction:

Modern banking in India is said to be developed during the British era. In the 1st half of the 18th century, the British East India Company established three banks -the Bank of Bengal in 1809, the Bank of Bombay in 1840 and the Bank of Madras in 1843. But in the course of time these three banks were amalgamated to a new bank called Imperial Bank and later it was taken over by the State Bank of India in 1955. Allahabad Bank was the first fully Indian owned bank. The Reserve Bank of India was established in 1935 followed by other banks like Punjab National Bank, Bank of India, Canara Bank and Indian Bank.

In 1969, 14 major banks were nationalized and in 1980, 6 major private sector banks were taken over by the government. Today, commercial banking system in India is divided into following categories.

Types of Banking:

1. Central Bank

The Reserve Bank of India is the central Bank that is fully owned by the government. It is governed by a central board (Headed by a Governor) appointed by the Central Government. It issues guidelines for the functioning of all banks operating within the country.

2. Public Sector Banks

A. State Bank of India and its associate banks called the State Bank Group

B. 19 Nationalized Banks

C. Regional Rural Banks mainly sponsored by public sector banks

3. Private Sector Banks

A. Old generation private banks

B. New generation private banks

C. Foreign banks operating in India

D. Scheduled panipat co-operative banks

E. Non-scheduled banks

4. Co-operative Sector

The co-operative sector is very much useful for rural people. The panipat co-operative banking sector is divided into the following categories:

A. State panipat co-operative banks

B. Central panipat co-operative banks

C. Primary Agriculture Credit Societies

5. Development Banks/Financial Institutions

A. IFCIB. IDBIC. ICICID. IIBIE. SCICI Ltd.F. NABARDG. Export-Import Bank of IndiaH. National Housing BankI. Small Industries Development Bank of IndiaJ. North Eastern Development Finance Corporation

Banking Services:

Banking in India is so convenient and hassle free that one (individual, groups or whatever the case may be) can easily process transactions as and when required. The most common services offered by banks in India are as follow:

" Bank Accounts: It is the most common service of the banking sector. An individual can open a bank account which can be either savings, current or term deposits.

" Loans: You can approach all banks for different kinds of loans. It can be a home loan, car loan, and personal loan, loan against shares and educational loans.

" Money Transfer: Banks can transfer money from one corner of the globe to the other by issuing demand drafts, money orders or cheques.

" Credit and Debit cards: Most of the banks offer credit cards to their customer which can be used to purchase goods and services on credit. On the other hand debit card also used to draw cash easily.

" Lockers: Most banks have safe deposit lockers which can be used by the customers for storing valuable, important documents or jewellery.

Banking Services for NRIs:

Non Resident Indians or NRIs can open accounts in almost all Indian banks. The three types of accounts that NRIs can open are:

" Non-Resident (Ordinary) Account - NRO A/c

" Non-Resident (External) Rupee Account - NRE A/c

" Non-Resident (Foreign Currency) Account - FCNR A/c

Banking and Finance:

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).

The Credit Scenario

The year-on-year (y-o-y) aggregate bank deposits stood at 21.2 per cent as on January 2, 2009. Bank credit touched 24 per cent (y-o-y) on January 2, 2009 as against 21.4 per cent on January 4, 2008. The year-on-year (y-o-y) growth in non-food bank credit at 23.9 per cent as on January 2, 2009 was higher than that of 22.0 per cent as on January 4, 2008. Increase in total flow of resources from the banking sector to the commercial sector was also higher at 23.4 per cent as compared with 21.7 per cent a year ago. The incremental credit-deposit ratio rose to 81.4 per cent as on January 2, 2009, as against 63.1 per cent as on January 4, 2008. Also, during 2008-09 so far, the total flow of resources to the commercial sector from banks stood at US$ 58.83 billion up to January 2, 2009. Scheduled commercial banks' credit to the commercial sector expanded by 27.0 per cent (y-o-y) as on November 21, 2008, as compared with 23.1 per cent a year ago.

There has been variation in credit expansion across bank groups. Credit expansion as on January 2, 2009 for public sector banks stood at 28.6 per cent, scheduled commercial banks (SCBs) including the regional rural banks (RRBs) at 24 per cent, foreign banks at 6.9 per cent and private sector banks at 11.8 per cent, according to the Annual Policy for 2008-09 of Reserve Bank of India.

Several measures initiated by the Reserve Bank have resulted in banks reducing their deposit and lending rates between November 2008 and January 2009. The range for deposit rates for public sector banks varied from 5.25 to 8.5 per cent, foreign at 5.25 to 7.75 per cent and private sector banks at 4 to 8.75 per cent. In the post-crisis quarter caused due to collapse of Lehman Brothers, large corporate like Infosys moved their deposits to State Bank of India (SBI), the country's largest bank. Infosys has revealed that it transferred deposits of nearly US$ 200.61 million from ICICI Bank to SBI last year.

Deposits as on January 2, 2009 for public sector banks stood at 24.2 per cent, scheduled commercial banks (SCBs) including the regional rural banks (RRBs) at 21.2 per cent, foreign banks at 12.1 per cent and private sector banks at 13.4 per cent, according to the Annual Policy for 2008-09 of the Reserve Bank of India.

The prime lending rates of public sector banks stood at 12 to 12.5 per cent, private sector banks at 14.75 to 16.75 per cent and foreign banks 14.25 to 15.50 per cent as on January 2009.

Bank loans rose 18.1 per cent on year-on-year basis as on March 13, the RBI has said in its Weekly Statistical Supplement released on March 27, 2009. Outstanding loans rose to US$ 541.82 billion in the two weeks to March 13. The non-food credit rose to US$ 530.19 billion in the two weeks, while food credit stood at US$ 9.61 billion in the same period.

Since October 2008, the central bank has cut the cash reserve ratio, or the proportion of deposits that banks set aside, and the repo rate, or the rate at which it lends to banks, by 400 basis points each to inject liquidity into the system and activate a lower interest rate regime. Also, the reverse repo rate has been lowered by 200 basis points to discourage banks from parking surplus funds with RBI. Till April 7, 2009, the CRR had further been lowered by 50 basis points, while the repo and reverse repo rates have been lowered by 150 basis points each. Public sector banks have pruned their benchmark prime lending rates (BPLRs) by 150-200 basis points. Also, in April 2009, private sector banks such as Axis and Bank of Rajasthan have reduced their BPLRs by 50 basis points. Only few foreign banks such as Citibank have pared home loan rates by 50 basis points to 13.75 per cent.

The rupee depreciated during 2008-09, reflecting varied developments in international financial markets and portfolio outflows by foreign institutional investors (FIIs). The rupee exchange rate was between 48.37 to 49.19 against the US dollar and 63.60-68.09 against the Euro in January 2009.

Government Initiatives

Apart from the bank rate cuts announced in the stimulus packages, cash withdrawals from bank will not attract tax from April 1, 2009 following abolition of the banking cash transaction tax (BCTT) in the Union Budget

2008-09. The total collection of BCTT stood at US$ 120.36 million in 2008-09. Also, inter-ATM usage transaction became free of charges effective April 1, 2009.

Exchange rate used: 1 USD = 49.8417 INR

2.2-GROWTH OF INDIAN FINANCIAL SECTOR

The Indian economy continued to record strong growth during 2007-08, albeit with some moderation. Real gross domestic product (GDP) growth rate at 9.0 per cent during 2007-08 moderated from 9.6 per cent during 2006-07, reflecting some slow down in industry and services. A positive feature during the year was a recovery in the growth of real GDP originating in the agricultural sector, after the slowdown experienced in the previous year. Despite this moderation, the overall growth rate of the Indian economy during 2007-08 was noteworthy in the global context.

During 2007-08, the growth of real GDP originating from the industrial sector decelerated to 8.2 per cent as against 10.6 per cent in 2006-07. In terms of Index of Industrial Production (IIP), industrial growth was at 8.5 per cent as against 11.5 per cent in 2006-07. Manufacturing sector growth at 9.0 per cent during 2007-08 (12.5 per cent during 2006-07) was the lowest in the last four years. The mining and electricity sectors also grew at a slower pace during 2007-08. In terms of use-based classification, the performance of the capital goods sector was particularly impressive with 18.0 per cent growth.

However, the basic goods, intermediate goods and consumer goods sectors recorded decelerated growth of 7.0 per cent, 8.9 per cent and 6.1 per cent, respectively, during 2007-08. The performance of the industrial sector was also affected by the subdued performance of the infrastructure sector, registering 5.6 per cent growth during 2007-08. The services sector recorded double digit growth consistently in the last three years. It grew by 10.7 per cent during 2007-08, on top of 11.2 per cent growth in 2006-07

The Reserve Bank during 2007-08 had to contend with large variations in liquidity not only due to swings in cash balances of the Central Government, but also on account of large and volatile capital flows. The Reserve Bank judiciously used the CRR, LAF and MSS to manage such swings in liquidity conditions, consistent with the objectives of price and financial stability. As a whole, there was a net absorption of liquidity on 171 days and net injection of liquidity on 75 days during 2007- 08. The average daily net outstanding balances under LAF varied between injection of Rs.10,804 crore during December 2007 to absorption of Rs.36,665 crore in October 2007. Net issuances under the Market Stabilisation Scheme (MSS) during 2007-08 amounted to Rs.1,05,691 crore.

In the foreign exchange market, the Indian rupee exhibited two-way movements in the range of Rs.39.26-43.15 per US dollar during 2007-08. The Indian rupee depreciated to Rs.41.58 per US dollar on August 17, 2007 from Rs.40.43 per US dollar on July 31, 2007. The exchange rate of the rupee appreciated thereafter up to January 2008. The rupee moved in a range of Rs.39.26-39.84 per US dollar during October 2007- January 2008. However, the rupee started depreciating against the US dollar from the beginning of February 2008 on account of FII outflows, rising crude oil prices and heavy dollar demand by oil companies. The exchange rate of the rupee was Rs.39.99 per US dollar at end-March 2008.

2.3-Panipat co-operative banks in India

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

Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Cooperative banks in India finance rural areas under:

i. Farming

ii. Cattle

iii. Milk

iv. Hatchery

v. Personal finance

Cooperative banks in India finance urban areas under:

i. Self-employment

ii. Industries

iii. Small scale units

iv. Home finance

v. Consumer finance

vi. Personal finance

Some facts about Cooperative banks in India

i. Some cooperative banks in India are more forward than many of the state and private sector banks.

ii. According to NAFCUB the total deposits & landings of Cooperative Banks in India is much more than Old Private Sector Banks & also the New Private Sector Banks.

iii. This exponential growth of Co operative Banks in India is attributed mainly to their much better local reach, personal interaction with customers, and their ability to catch the nerve of the local clientele.

2.4-About Panipat co-operative bank Ltd.

The PanipatPanipat co-operative bank, a Scheduled Bank under RBI Act was registered in the year 1948 as the Apex Bank of the short term Coop. Credit structure of Panipatwith an objective of Development of the agrarian economy of Panipatby catching the credit equipment of the terms of the state.

The OSCB had made a humble beginning with a Share Capital of Rs. 1.76 lakhs and a borrowing of Rs.25.50 lakhs to address the problem of farm credit dispensation. The OSCB, in its own way has contributed in providing farm credit and inputs to bring the desired change over the years. The Bank has been trying to develop the primary societies viz. PACS (Primary Agricultural Co-operative Society) which constitutes of schemes as LAMPS (Large Scale Agriculture Multipurpose Co-operative Society) / FSS (Farmers Service Co-operative Society).

The activities of the OSCB are not confined to dispensation of farm credit alone. As a schedule bank, it has responded to the sweeping change in banking service in view of advancement in Information Techchnology.

The Bank has assumed the role of leader of the Coop - Credit Structure to develop the lower tiers to cope with the emerging challenges of banking activities. The activities of OSCB are

General Banking Business Re-finance to the DCCB Dispensation of farms credit Production Credit

Who's Who

MEMBERS OF THE MANAGING COMMITTEE OF PANIPATPANIPAT CO-OPERATIVE BANK LIMITED, BHUBANESWAR

Sri Jagneswar President

Smt. Kamalini Mohanty

Sri R.N. Dash, IAS

Vice President

Our Inception and Corporatization

General Banking Business:

The Bank has been accepting deposits from the public and offering all banking facilities to its customers through its fully computerized branches and extension counts at Bhubaneswar, Cuttack, Paradeep, Sambalpur. The Banking services offered by the banks include acceptance of all types of deposits, bills, and exchange, issues of letter of credit, advancing loans to farm and non-farm sector.

Provision of locker facilities. The bank has made a humble beginning in providing ATM facility in its Main Branch at Pandit Jawarharlal Nehru Marg.Bhubaneswar for providing Any Time Banking. This facility shall be provided in all the served cities soon. Integration of all the branches and extension counters are on the anvil to provide Anywhere Banking Services.

Refinance to DCCBs:

The OSCB came into existence to support the lending activities of its affiliated DCCBs. The Bank provides refinance to them to pursue the following activities.

(i) Dispensation of farm Credit:

Product Credit:

In Orissa, 39.48 lakh farmers have been enrolled as members of the primary Agriculture Coop. Societies (PACS)/Large Sized Agriculture

And Multi Purpose Co-operative Societies (LAMPS)/Farmers Services Societies (FSS).The Farm credit requirement of the farmer is met by these societies by availing loans from the DCCBs. The OSCB extends

Refinance facilities to the DCCBs for financing the PACS. During 1999-2000, Rs. 426.23 Crores were disbursed to 6.76 lakhs farmers in the state.

The Indian Banking Scenario:

SCB (State Panipat co-operative bank)

CCB (Cental Panipat co-operative bank)

UCB (Urban Panipat co-operative bank)

PCB (Primary Panipat co-operative bank)

SCARDB (State Co-operative Agro-Rural Development Bank)

Our Inception and Corporatization

General Banking Business:

The Bank has been accepting deposits from the public and offering all banking facilities to its customers through its fully computerized branches and extension counts at Bhubaneswar, Cuttack, Paradeep, Sambalpur. The Banking services offered by the banks include acceptance of all types of deposits, bills, and exchange, issues of letter of credit, advancing loans to farm and non-farm sector.

Provision of locker facilities. The bank has made a humble beginning in providing ATM facility in its Main Branch at Pandit Jawarharlal Nehru Marg.Bhubaneswar for providing Any Time Banking. This facility shall be provided in all the served cities soon. Integration of all the branches and extension counters are on the anvil to provide Anywhere Banking Services.

Refinance to DCCBs:

The OSCB came into existence to support the lending activities of its affiliated DCCBs. The Bank provides refinance to them to pursue the following activities.

(i) Dispensation of farm Credit:

Product Credit:

In Orissa, 39.48 lakh farmers have been enrolled as members of the primary Agriculture Coop. Societies (PACS)/Large Sized Agriculture

And Multi Purpose Co-operative Societies (LAMPS)/Farmers Services Societies (FSS).The Farm credit requirement of the farmer is met by these societies by availing loans from the DCCBs. The OSCB extends

Refinance facilities to the DCCBs for financing the PACS. During 1999-2000, Rs. 426.23 Crores were disbursed to 6.76 lakhs farmers in the state.

Direct Finance by OSCB

The OSCB has directly financed the Sugar Industries in the state to help the cultivators to get remunerative prices for their sugarcane crop. It has also financed the PanipatCoop Marketing Federation for fertilizers business. Besides the following large units are also financed by the bank.

a. Neelachal Ispat Nigam –Large Scale Steel Industryb. Kalinga Hospital- Corporate Hospital

c. Bilati (Orissa) Ltd. – Tropical Food processing Unit.

d. Flour Mills

e. Press

f. Mass Media

Chairman and MD of OSCB in a discussion with MD NABARD Mr. Y.C. Nanda about Credit Expantion

Promotional and Development Role

As The Apex Bank of the Coop Credit Structure, the bank has assumed the role of leadership to develop the structure to face the emerging challenge in banking business. The Following activities have been taken by the bank in these regards.

i. Introduction of Kisan Credit Card: - The OSCB has been facilitated dispensation of entire farm credit through Kisan Credit Card only to enable the farmer members to get instant credit. The DCCBs with the help of the Bank have transformed 813 primary societies as Mini Banks who have mobilized Rs. 250 crores from the rural areas.

ii. Information Technology in DCCBs :- The OSCB has taken the responsibility to computerize the operation of the DCCBs to face the challenge from their commercial counterparts. The software package is finalized for the purpose.

iii. Face lift of the branches of DCCBs and the Mini Bank: - The Bank has been providing regular assistance for the face-lift of the DCCB Branches and PACS. The NABARD has also help 200 PACS with financial assistance for improvement of infrastructure facilities.

iv. Organization and linkage of self-help Groups:-The Banks has been patronizing and close monitoring organization of self help groups at primary level and monitoring the progress.

http://www.oscb.coop/aboutUs/who.asp

v. Human Resources Development: - The OSCB has been maintaining a Training Institute to impart training to the personnel of DCCBs and PACS/ LAMPS/FSS. Regular Training programs is conducted by the institute for the purpose.

vi. Conduct of Study:- To find out the reasons for low off- take of farm Credit, the bank had appointed all four Universities of the states. They have given their reports basing on which corrective actions have been taken. The bank has also undertaken a study on functioning of SHGs in West Bengal to emulate their experience in the state.

vii. Preparation of development Action Plan and Signing Of MOU:-At the behest of OSCB, the DCCBs have been preparing DAPs and Signing MOU with the Bank and NABARD. This effort of the banks has created a cost consciousness among the lowest tiers and their turn over has increased manifold.

viii. Image Building: The Bank has been undertaking advertisement through hoarding and electronics media to boost up the images of the entire credit structure.

ix. NABARD as partner of the Bank: - The NABARD has been extending required support to the Bank to accomplish its objectives.The assistance include liberal and confessional refinance, assistance from Coop Development Fund, Support to the women Development cell, Technical, monitoring and Evaluation Cell, Faculty support to the Training Institute Etc.

x. Excellence Recognized:- The National Federation of state Coop Banks (NAFSCOB) has awarded the Bank for its outstanding performance for consecutive four years. The NABARD has also awarded the bank for its performance during 1997-98. The Bank has been achieving all the MOU Parameters.

xi. Profits since Inception: - The Bank has been earning profit since its inception and paying divided to its shareholders uninterruptedly.

xii. Corporate Vision:- The Bank aims at a vibrant Coop. Credit Structure by strengthening PACS and DCCBs , best customer services through computerization and anytime-anywhere Banking and above all a satisfied clientele.

OSCB Ltd. Network

Angul United CCB

Aska CCB

Balasore Bhadrak CCB

Banki CCB

Berahampur CCB

http://www.oscb.coop/network/Anugulnew.asp

http://www.oscb.coop/network/oscbnetwork.asp

http://www.oscb.coop/network/Banki.asp

http://www.dccb-balasore.com/

http://www.oscb.coop/network/aska.asp

Bhawanipatana CCB

Bolangir DCCB

Boudh CCB

Cuttack CCB

Keonjhar CCB

Khurda CCB

Koraput CCB

Mayurbhanj CCB

Nayagarh CCB

Sambalpur DCCB

Sundaragarh CCB

United Puri Nimapara CCB

Short Term Credit Panipat co-operative banking Sector

http://www.oscb.coop/network/puri.asp

http://www.oscb.coop/network/sundergarh.asp

http://www.oscb.coop/network/sambalpur.asp

http://www.oscb.coop/network/Nayagarh.asp

http://www.oscb.coop/network/mayurbhanj.asp

http://www.oscb.coop/network/koraput.asp

http://www.oscb.coop/network/khurda.asp

http://www.oscb.coop/network/Keonjhar.asp

http://www.oscb.coop/network/cuttacknew.asp

http://www.oscb.coop/network/Boudh.asp

http://www.oscb.coop/network/bolangir.asp

http://www.oscb.coop/network/Bhabanipatana.asp

STATUS PAPER ON SHORT TERM COOPERATIVE CREDIT STRUCTURE IN PANIPAT

The short term cooperative credit in Panipatcomprising 2714 PACS (including 218 LAMPS and 6 FSS) at the grass roots level, 17 District Central Cooperative Banks at the middle rung and PanipatCooperative Bank at the apex level have been rendering yeomen’s service to the farming community. From out of around 50 lakh agricultural families, 44.98 lakh families have become members of the PACS taking the coverage to 90%.

Progress in coverage of members during past 5 years :

(No. in lakhs)

(* As per the 2001 census)

Mobilisation of resources and strategy to minimize resource cost:

Although the short term cooperative credit structure in Panipatis dispensing 66% of the crop loan disbursed in the State, the market share in total deposit resources mobilised in the State is only 5%. When the credit deposit ratio of the banks of the entire State was 81.42% as on 31.12.2006, the same is 154% in case of OSCB and DCCBs together. The picture clearly tells that whereas the entire deposits mobilised by the OSCB and DCCBs are deployed inside the State, other banks deploy only a part of their resources. Although the Chief Secretary has advised all govt. departments and PSUs to deploy their surplus resources with OSCB, the response has not been very positive. The comparative picture is given below:

Market share of Cooperative Banks/Commercial Banks in Deposit Mobilisation. (Rs. In crores)

Year Commercial Banks

Coop. Bank Total Deposit

Share of Coop. Banks

Share of Commercial Banks.

1998-99 10640.75 766.21 11406.96 6.71% 93.28%

Year No. of Agril. families)

No. of members enrolled

% of coverage of membership to total no. of Agril. families

No. of indebted members

1997-98

39.48 34.60 87.06 13.66

1998-99

39.48 36.58 92.65 14.78

1999-00

39.48 37.72 95.50 14.97

2000-01*

50.14 38.89 77.78 16.10

2001-02*

50.14 39.33 78.66 16.09

2002-03

50.14 39.33 79.44 15.57

2003-04

50.14 40.56 80.89 17.21

2004-05

50.14 44.75 89.25 22.91

2005-06

50.14 44.98 89.70

2006-07

50.14 44.98 89.70

1999-00 12653.12 951.33 13604.45 6.99% 93.01%

2000-01 14818.66 1180.95 15999.61 7.38% 92.62%

2001-02 18689.18 1406.85 20112.91 7.08% 92.92%

2002-03 21006.85 1591.85 22598.70 7.04% 92.95%

2003-04 23359.86 1761.25 25121.11 7.01% 92.99%

2004-05 27372.64 1863.49 29226.13 6.38% 93.62%

2005-06 31966.97 1955.75 33922.72 5.76% 94.22%

2006-07 (31.12.06)

36434.39 1985.96 38420.35 5.16% 94.84%

CD Ratio (As on 31.12.2006):

CD Ratio

Entire State 81.42

Commercial Banks 75.94

OSCB/ CCBs 154.29

2.5-Financial Highlights PanipatPanipat co-operative bank Ltd.

The PanipatPanipat co-operative bank has made strides in many key areas and achieved all targets setup in the Development Action Plan (DAP). The funds comprising of paid of capital and resource, deposit and borrowing are the main resource of the bank. A Major chunk of this resources are deployed under the loans and advances

to the affiliated central Cooperative Banks, Member society and individuals for different purpose under farm and non-farm sectors.

The Statutory investment requirement under RBI Act and BR Act are met by investment in Central/State Governance Securities and others approved trustee securities, seasonal investible surpluses are deployed in call and short term deposits with commercial banks, to maximize as yield on assets.

Besides remaining vigilant over judicious deployment of funds, the banks is also making concerted efforts to bring down the level of non earning assets of the banks and increase the financial margin.

Seasonal investible surplus are deployed in call and short terms deposits with commercial banks and DFHI etc. to maximise the yields on assets. Beside remaining vigilant over judicious deployment of funds, the bank is also making concerted efforts to bring down the level of non-earning assets of the bank and increase the financial margin. Also see the Profit & Dividend of OSCB

The Bank since its inception operated above the break even level and attained sustainable viability long since. As a result the bank continued to build up its Reserves and Funds as per the provision of the bye-laws. The total Reserves at the end of 1997-1998 stood at Rs.5752.52 Lakh as against Rs.4711.00 Lakh in 1996-97 .Quantumwise, the reserves incresed by Rs.1041.52 Lakh during the year, recording growth rate of 22.11 % .

Sources And Uses of Funds

Important financial indicators of OSCB and DCCBs during past 4 years.OSCB (Rs. in Lakhs)

http://www.oscb.coop/FinHighlights/prof&dev.htm

Sl. Particulars 2003-04 2004-05 2005-06 2006-07 (Provisional)

2007-08 Percentage of growth over

previous year

1 Share Capital 4958.32 5168.62 6437.98 6976.86 7137.58 8.37%

2 Reserve Fund 13917.91 16749.31 18492.47 20173.87 21530.15 9.09%

3 Own Fund 18876.23 21917.93 24930.45 27150.73 --8.91%

4 Deposits 102601.38 107850.94 121315.98 129586.23 156626.806.82%

5 Borrowings 75573.56 69151.18 95434.17 125141.36 166593.2431.13%

6 Working Fund 212573.39 214139.32 257252.88 295086.90 --14.71%

7 Loans outstanding

109908.08 127898.44 168220.52 193761.25 --15.18%

8 Investments 83288.41 68195.11 71145.27 88822.10 56455.6724.84%

9 Per employee business

952.96 1106.80 1385.34 1562.06 --12.76%

10 Net profit 1347.51 1744.43 1969.39 916.00 --8.37%

11 Dividend 6% 7% 7%

CCBs (Rs. in Crores

Particulars 2002-03 2003-04 2004-05 2005-06

1. Own fund

2. Deposits

3. Loans & Advances

4. Working Capital

5. Cost of Management(COM)

6. % of COM to WC

7. CCBs earning operating profit

8. Profit/Loss

9. Accumulated Losses

181.571569.251820.992897.44

49.631.71

13-7.25/ +9.75

105.95

212.181749.582102.263224.43

51.721.60

15-1.95+17.25

94.77

231.131830.352346.143577.53

53.831.50

17+46.33

53.90

266.231940.352746.354141.60

55.561.34

16-2.40 +13.23

46.61

Reserves:

The Bank since its inception operated above the break even level and attained sustainable viability long since. As a result, the bank continued to build up its Reservers and Funds as per the provision of the bye-laws. The total Reserves at the end of 1998-99 stood at Rs.7092.22 Lakh as against Rs. 5752.52 Lakh in 1997-98. Quantumwise, the reserves increased by Rs. 1339.70 Lakh during the year, recording growthrate of 23.29 % .

Composition of Reserves and Funds of the Bank from 1996-97 along with year-wise growth rate are indicated below.

Types of Reservers Rs in Lakh

1996-97 1997-98 1998-99

Statutory Reserve Fund 404.07 439.18 484.68

Agril,Credit Stabilisation 1803.83 1966.45 2050.64

Other Reservers 2503.10 3346.89 4556.90

Total : 4711.00 5752.52 7092.22

Year

Growth Rate of Reserves ( In Lakh)

Amount Amount wise Increase over Last Year

Percentage of Growth

1996 - 97 4711.00 193.25 4.28%

1997 - 98 5752.52 1041.52 22.11%

1998 - 99 7092.22 1339.70 23.29%

Deposits

Deposit Mobilisation. (Rs. in Crores

Year PACS CCB OSCB

Total Deposit % of Growth during the yr.

Total Deposit

% of Growth during the yr.

Total Deposit

% of Growth during the yr.

1999-2000

238.97 42 951.33 24 560.06 34

2000-2001

321.58 30 1188.96 25 731.27 31

2001-2002

425.47 10 1406.85 18 874.82 20

2002-2003

432.75 2 1569.25 13 886.12 1

2003-2004

446.82 3 1761.25 12 1026.01 16

2004-2005

494.85 11 1853.48 5 1078.32 5

2005-2006

516.33 4 1955.75 6 1213.16 12

2006-2007

557.07 8 2126.80 9 1295.86 7

Borrowings

Disbursement of schematic loans:

The short term cooperative credit structure is not lagging behind in financing investment credit for acquisition of capital assets by the farmer members to increase agriculture production and productivity by adopting modern technology. The DCCBs and PACS with the assistance of OSCB have been financing activities like plantation and horticulture, sericulture, pisciculture, farm mechanisation, small road transport operators, small business, small scale industries, etc. both under farm and non farm sector. The financing for the purpose during last 8 years is given as follows:

Schematic finance during last five years (Rs. in Crores

Year Finance under Farm Sector Finance under Non-farm Sector Total

Target Achievement Target Achievement Target Achievement

No. Amt. No. Amt. No. Amt.

1999-00 4700.00 6430 2031.88 5300.00 3153 2092.69 10000.00 9583 4124.57

2000-01 6300.00 13291 3765.41 3700.00 3581 1905.20 10000.00 16872 5670.61

2001-02 5560.00 13287 2793.90 2440.00 4677 1219.39 8000.00 17964 4013.29

2002-03 5310.00 5330 2001.55 2095.00 70.72 1950.73 7405.00 12342 3952.28

2003-04 5000.00 2566 1114.54 2500.00 13306 3402.41 7500.00 15872 4516.95

2004-05 5000.00 5661 1693.82 5000.00 24225 3247.66 10000.00 29886 4941.48

2005-06 9500.00 8672 2736.39 5000.00 15679 3717.40 14500.00 24351 6453.79

2006-07 12800.00 10766 3937.78 10000.00 19030 3992.71 22800.00 29796 7930.49

2.6-Retail Banking of PanipatPanipat co-operative bank Ltd. :

Housing loans : The bank is financing Housing Loan under its "APNA GHAR " scheme. Maximum amount under this head is Rs.500000.00 for purchase of readymade house or construction. For repair, renovation or addition/ alteration the limit is Rs.50000.00. The rate of interest is 13% on reducing balance. Maximum repayment period is 15 years with 18 months moritorium period.

Consumer Durable Requirement / Formalities

1. Maximum limit Rs. 50000.00 or 75% of the cost of the item. 2. Subject to five times monthly gross income.

3. Repayable in maximum 40 monthly installments in reducing balance.

Motor Vehicle Finance

For any sort of Surface Transport and Water Transport vehicle both for commercial and personal pupose.

Requirement / Formalities

1. 75% of the total cost of vehicle, including insurance and registration. 2. Repayable in 60 monthly installments reducing balance.

Business Enterprise

Terms Loan for

1. Fixed Assets for Projects. 2. Commercial Complex and Kalyan Mandap

3. Hotels, Tourist Resorts, Health Care units.

4. Equipment and Machinaries.


1. Maximum 75% of the fixed Assets 2. Maximum repayable periods – 10 years.

3. Interest in reduced balance method.

Working Capital Loans

1. Retail Business 2. Trader

3. Wholesaler

4. Project Solution


1. Maximum 75% of working capital requirement subject to Stock Holding. 2. Quarterly Interest on days balance.

2.7-Introduction of Corporate Governance by PanipatPanipat co-operative bank Ltd. :

PanipatCooperative Bank is the first bank in the cooperative sector in the country to introduce sound practices of corporate governance to ensure transparency in its functioning. During the last three years, the following initiatives have been taken to follow good corporate practices by addressing a range of issues such as, protection of shareholders rights, enhancing shareholders value, disclosure requirements, integrity of accounting practices and strengthening the control system.

The employees of the bank can now expose any wrongdoing of the top management of the bank without any fear of reprisal. The Board of Management of the bank in its meeting held on 30.06.2003 has accepted the system for protection of whistleblowers adopted in USA and in Indian Companies like Wipro and Infosys. This facility would give protection to the staff, who expose irregularities, corruption, mal-practices etc. by the top management of the bank. Under this system, where any staff of the bank discovers information, which he believes shows serious mal-practice, impropriety, abuse or wrongdoing, then the information should be disclosed without fear of reprisal. Following the spirit of the Sarbanes Oxley Act of the USA, which envisages protection for whistleblowers (staff who expose corruption), a similar policy has been adopted to enable the employees to raise concern about any irregularity and impropriety at an early stage and in the right way without fear of victimisation, subsequent discrimination or disadvantage. OSCB has become the first bank in the country to have adopted such a policy. Employees are normally the first to realise that there are irregular or illegal practices being followed by any colleague/ management. Hence a policy which affords protection to the employees who expose irregularities, corruption, malpractice etc. will go a long way in ensuring transparent management, setting standards, which the DCCBs shall be encouraged to emulate.

Besides, the PanipatCooperative Bank has adopted the following sound practices of corporate governance.

1. Timely audit of accounts has been ensured. The audit for the year 2005-06 was completed by 30.06.06.

2. The bank has been paying uninterrupted dividend to the shareholders.

3. Common coding of accounting heads has been introduced in the State to integrate the accounting practices of the OSCB and all affiliated DCCBs. This has facilitated the computerisation process in the Central Cooperative Banks.

4. Organisation of annual customer meets to understand their changed perception and to reorient the policies and procedures of the bank. Such meets are also being organised at the level of the DCCBs as well as the PACS.

5. A transparent transfer policy have been formulated and adopted in the bank. Transfers are now being effected on the basis of the policy without any other consideration.

6. A bi-monthly house journal entitled “Sampark” is published with effect from January, 2001, which not only provides a forum to the employees to express their views, but also the management is also able to explain the justification for taking important decisions.

7. Each branch of the OSCB, DCCBs as well as the PACS is being visited by a supervisory officer every month to inspect the functioning and also impart guidance.

8. Loans Manual for the Bank has been prepared by NABCON- the consultancy arm of NABARD.

9. Systems Audit of the Bank has been conducted by M/s Haribhakti & Co., Mumbai.

10. A comprehensive HRD policy is being evolved for the Bank by the National Institute of Bank Management, Pune.

CHAPTER 2

2.1 INTRODUCTION OF BANK

banks in India were founded by Indian entrepreneurs and visionaries in the pre-

independence era to provide financial assistance to traders, agriculturists and budding Indian

industrialists. The origin of banking in India can be traced back to the last decades of the 18th

century. The General Bank of India and the Bank of Hindustan, which started in 1786 were the first

banks in India. Both the banks are now defunct. The oldest bank in existence in India at the moment

is the State Bank of India. The State Bank of India came into existence in 1806. At that time it was

known as the Bank of Calcutta. SBI is presently the largest commercial bank in the country. The role

of central banking in India is looked by the Reserve Bank of India, which in 1935 formally took over

these responsibilities from the then Imperial Bank of India. Reserve Bank was nationalized in 1947

and was given broader powers. In 1969, 14 largest commercial banks were nationalized followed by

six next largest in 1980. But with adoption of economic liberalization in 1991, private banking was

age in allowed. The commercial banking structure in India consists of: Scheduled Commercial Banks

and Unscheduled Banks. Scheduled commercial Banks constitute those banks, which have been

included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934. RBI includes only those

banks in this schedule, which satisfy the criteria laid down vide section 42 (6) (a) of the Act.

1949 : Enactment of Banking Regulation Act.

1955 : Nationalization of State Bank of India.

1959 : Nationalization of SBI subsidiaries.

1961 : Insurance cover extended to deposits.

1969 : Nationalization of 14 major banks.

1971 : Creation of credit guarantee corporation.

1975 : Creation of regional rural banks.

1980 : Nationalization of seven banks with deposits over 200 crore.

Banking during British period before independence.

Ancient Hindu scriptures provided enough evidence of the existence of money lending business

in India. Mahajans, Shroffs, Shakers, etc. were enjoyed in banking business. In the beginning of the

18th century, the East India Company set up a few commercial banks on modern lines. In 1970, first

India bank knows as the “Bank of Hindustan” was started and was closed down twenty years later.

Later on bank of Hindustan and Bengal Bank also came into existence in 1809. Bank of Hindustan

carried on the business till 1900. The first joint stock bank, namely the General Bank of India was

established in 1786. Later, the East India Company started three presidency banks with government

participation. These were:

1). Bank of Calcutta (1806)

2). The Bank of Bombay (1840)

3). The Bank of Madras (1843)

These banks had the financial participation by the government also.

During the 18th century, these entire banks were also opened by Agency house in Madras and

Calcutta. These entire banks failed, the need of banking regulation in India was seriously felt. As a

result companies Act, 1833 was brought into force. The impact of the agency house got slowly

reduced.

Allahbad Bank came into existence in 1865 and Alliance Bank of Simla in 1875. The first

purely Indian joint stock bank known as the Oudh Commericial Bank was set up in 1906 encouraged

the Indian entrepreneurs to start many new banks. There were as many 648 commercial banks in

India by the end of 1947. As many as 161 banks failed in quick succession during 1913-1914 and

people’s faith in the banks system was shaken. Thus there was a great need of an institution to control

and regulate banking in the country. As a result, the reserve bank if India was established as the

central bank of country in 1935 under an act called Reserve Bank of India Act. Later on with the

passage of the banking regulation Act passed in 1949. RBI was brought under government control.

Under this act, RBL was conferred with supervision and control of the banks and licensing powers

and the authority to conduct inspections was also given to it.

The three presiding banks were amalgamated in 1920 and new bank called Imperial Bank of

India, this bank played an important role in the economy of the country. After independence, it was

nationalized in 1955 and renamed as the State Bank of India. The SBI opened a large number of

branches in rural and semi-urban areas. The RBI acts as a centralized body monitoring any

discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian

financial sector. The nationalized banks (i.e. government owned banks) continue to dominate the

India banking arena. Industry estimates indicated that out of 274 commercial banks operating in

India, 223 banks are in the public sector and 51 are in the private sector. The private sector bank grid

also includes 24 foreign banks that have started their operations here.

2.2 Definition of Bank and Banking

Bank

Banking

2.3Types of Banks

3)Specialized Banks: There are specialized forms of banks catering to some special needs with

unique nature of activities. These

are ,thus ,foreign exchange bank, individual banks

2.4 STRUCTURE OF RESERVE BANK OF INDIA:

Reserve bank of IndiaReserve bank of India

Indian bankIndian bank

State co-

operative

bank

State co-

operative

bank

RRBSRRBS

NABARDNABARD

Development

bank

Development

bankExim bankExim bankCommercial BankCommercial Bank

Foreign bankForeign bank

Private sectorPrivate sectorPublic sectorPublic sector

Nationalized bankNationalized bankState BankState Bank

Indian banking system comprises of both organized and unorganized banks. Unorganized banking

includes indigenous bankers and village moneylenders. Organized banking includes the followed,

Reserve bank of India (central bank)

Commercial banks

Development banks

Exim banks

Panipat co-operative banks

Regional rural banks

Land development banks

National Bank for agriculture and rural development (NABARD)

2.5 Introduction of panipat co-operative bank

MEANING OF PANIPAT CO-OPERATIVE BANK:

Panipat co-operative bank are based on the value of self-responsibility,Democracy,equit and

solidarity.In the world panipat co-operative bank activities was stated in December1844 in Britician

social development is the role aim of the Co-operative activities.

A. DEFINITION:

“Co-operation is an effective self-reliance done by organism.”

-Sir Horas Planket.

“Co-operation is the step taken for equal profit or loss under mutual management.Management by

mutually using their own resources and factors willingly.

-Herick M. T.

B. PANIPAT CO-OPERATIVE BANK:

The word of co-operative was (being) recognized in 1904 (when the co-operative societies Act 1904

was enacted) When the co-operative credit society was passed. The activities of co-operative was

started with the main purpose of providing the advance to the member with a low interest rates, and

providing advance to farmer and lower class and to make the people interested in savings.

2.6 Role of banks in Economics development

2.6 STRUCTURE OF CO-OPERATIVE BANK:

1) State co-operative bank:

The state panipat co-operative bank is a federation of central panipat co-operative banks and acts as a

watchdog of the panipat co-operative banking structure in the state. Its funds are obtained from share

capital from Reserve Bank of India.The state panipat co-operative banks lend money to central panipat

co-operative banks and primary societies and not directly to farmers The principle one being the

institution of provincial panipat co-operative banks to serve as apex banks in the hierarch of co-

operative pyramid.

2) central co-operative bank:

There are the federations of primary credit societies in a district and are of two types those having a

membership of primary societies only and those having a membership of societies as well as

individuals. The funds of the bank consist of share capital, deposits and overdrafts from state panipat

co-operative banks and joint stocks. These banks finance member societies within the limits of the

borrowing capacity of societies. They also conduct all the business of a ointstock bank.

3) primary panipat co-operative bank:

Primary panipat co-operative bank is also known as credit society. The primary co-operative credit

society is an association of borrows and number derived from the share capital and deposits of and

members and loans from central panipat co-operative banks. The borrowing power of the members well

as of the society is fixed. The loans are given to members for the purpose of cattle, folder fertilizer,

pesticides, implements, etc

There are three types of panipat co-operative banks and the urban panipat co-operative bank is one

type of panipat co-operative bank, panipat bank is urban panipat co-operative bank.

FUNCTION OF PANIPAT CO-OPERATIVE BANK:

Panipat co-operative banks are formed on the principle of Co-operative to Extend Credit

facilities to farmers and small scale industrial concerns and promotes in general the habit of

thrift and self help among the low and middle income groups of the society.

Co-operative has been putting more weight on their lending activities than on deposit

mobilization.

The main function of Co-operative credit society was to provide cheap credit to the members

who are small people with small means and small needs and finance.

The Panipat co-operative banks have a three tier set up. The state panipat co-operative bank,

while central district panipat co-operative banks function at the district level and primary

credit societies work of the village level.

Panipat co-operative banks proceed on the principle of co-operation. Panipat co-operative

banks maintain the cash reserve and liquid assets in relation to deposit only.

To arrange the programs regarding the Economic welfare of its members.

This bank supervises the functioning of primary credit society and gives training, guidance

and advice to the employee of credit society only.

CHAPTER 3

3.1 Research problem:

3.2Objective of financial department:

To analyses the present financial system of Panipat Panipat co-operative bank Ltd.

To study financial strength and weakness of Panipat Panipat co-operative bank Ltd.

To get basis for financial planning, analysis and decision making through financial

information.

3.3 Period of coverage:

I have chooses the period of coverage for the financial years i.e. 2006-2007 to 2010-2011

3.4 Source of Data:

Primary data: primary data will collect through discussion with executive & staff of the

bank.

Secondary data: annual report, magazine, and data from the bank borrow itself.

3.5 Scope of the Study:

3.6 Research Design

There are three main types of research design

1. Exploratory design

In exploratory design the emphasis is on discovery of new ideas. The main objective of this

design is to generate new idea. The two ways of doing exploratory design is the focus group

interview & the case studies.

2. Descriptive studies

When a researcher is interested in knowing the characteristics of certain group such as age,

gender, education level, occupation, income, descriptive may be necessary. Descriptive

studies are factual and are very simple.

3. Causal design

As the name implies a causal design investigates the cause and effect relationship between

two or more variables. The two types of the causal designs are:

a) Natural experiments

b) Controlled experiments

The study report “Analysis of a financial Statement” is consider the descriptive research design.

3.7 Important of study:

3.8 Limitation of study:

3.9 Review of literature

CHAPTER 4

4.1Introduction of Financial Statement analysis:

4.2 Objectives of Financial Statement:

4.3 Limitation of Financial Statement :

4.4 Financial Statement of Panipat co-operative bank:

1] Profit & Loss Account:

Profit & Loss Account

Particulars 2009-2010 2010-2011

Expences

Interest on deposit and Borrowing 9,44,99,998.76 12,06,75,486.13

Salaries allowance & Provident Fund 2,57,25,152 2,73,86,632

Direct fees ----------------- -----------------

Rent ,Tax ,Insurance, Electricity 35,29,646.49 49,93,714.50

Law Fees 1,83,161 2,43,011.84

Postage ,Telegram ,Telephone Expences 11,85,577.24 13,75,327.87

Audit Fee 4,80,090 3,95,517

Depreciation Fund 91,37,412.80 1,22,72,036

Stationary ,Printing 36,91,981.73 21,81,375.83

other Expense 2,80,33,592 4,32,28,357.91

Income Tax 1,87,02,860 2,05,00,000

Profit 3,14,80,142.42 4,05,77,583.46

Total 21,66,49,615.25 27,38,29,042.46

Income

Interest & Discount 19,97,72,678 25,68,04,312.37

Commission Exchange 34,28,143.35 42,51,304.65

Donation ----------------- ------------------

Other Income 93,91,392 1,27,73,425.52

Total 21,66,49,615.25 27,38,29,042.46

Panipat panipat co-operative bank Ltd.

of balance sheet for year 2009-2010 & 2010-2011.

Balance Sheet

Particular 2009-2010 2010-2011

Liability

Share capital 5,91,32,500 7,28,65,400

Reserve fund 40,99,81,617 26,07,59,206.11

Subsidiary Fund -----

Deposit:

- Fixed Deposit 79,05,92,313 93,86,53,426.84

- Saving Deposit 76,00,70,549 93,43,53,950.77

- Current Deposit 55,49,46,207 71,67,94,729.78

Call & Short Time Deposit -----

Borrowing -----

Bills Payable 44,24,274 38,27,498

Interest Overdue 5,80,51,785 335,61,147.97

Interest payable 13,60,00,222 14,97,24,949

Other liability 7,88,68,009 9,82,13,380.70

Profit and Loss A/c 3,14,80,142 4,05,77,583.46

Total 2,88,35,47,600 3,44,23,72,149.87

Assets

Cash 8,65,50,365 8,82,44,531.98

Bank 48,83,88,452 35,34,85,910.13

Call & Short time Investment -----

Investment 117,95,03,022 1,67,11,43,767

Subsidiary Fund Invest -----

Loans and Advances

- Short term 31,56,02,553 31,43,99,482.44

- Moderate term 30,46,65,311 38,75,76,985.41

- Long term 32,85,98,967 45,68,21,245.85

Interest receivable 9,22,37,735 7,41,53,273.97

Bills Receivable 44,24,274 38,27,498

Branch adjustment -----

Building premises 2,45,05,702 3,71,90,031.97

Furniture & Fixture 1,16,70,414 1,78,92,950.86

Other Asset 4,74,00,800 3,68,36,472.26

Total 2,88,35,47,600 3,44,23,72,149.87

CHAPTER 5

INRTODUCTION OF FINANCIAL DEPARTMENT:-

Meaning:-

According to Himpton John “A financial statement is an organized collection of data according to

logical and consistent accounting procedures. Its purpose is to convey an understanding of some

financial aspects of a business firm. It may show a position at a moment of time as in the case of a

balance sheet, or may reveal a series of activities over a given period of time as in the case on income

statement.”

TOOLS OF FINANCIAL STATEMENTS

As Kennedy and McMuller have,said,”The analysis and interpretation of financial statements are an

attempt to determine the significance and meaning of the financial statement data so that a forecast

may be made of the prospects for further earnings, ability to pay interest and debt maturities both

current and long term and probability of a sound dividend policy” .

The analysis consists of the study of inter relationship between various items comprised in

financial statements to determine whether the earnings and the financial position of the company are

satisfactory. A number of devices are used in the analysis of financial statements, some of which are

as follows:

(i) Comparative Statements

(ii) Common size statements

(iii) Trend Percentages

(iv) Cash flow Analysis

(v) Fund flow Analysis

(vi) Ratio Analysis

Comparative financial statement:

When financial statements of a few years are presented in columnar form, it indicates the trend of

changes taking place in business. The method of presenting both financial statements in columnar

form and of judging the trend of profitability and financial condition of business is known as

Comparative Statement Analysis. Generally form, though theoretically any other statement can be do

presented

If useful data is to be gathered from the analysis of financial statement, one must go beyond a single

year’s balance sheet and profit and loss account, as they suffer from following limitations.

(1) The balance sheet or profit and loss account of a single year does not show the nature and trend of

changes taking place in business.

(2) It does not give any idea about the position of incomes and expenses of current year in

comparison to those of previous year.

(3) Balance sheet of a single period fails to disclose whether the financial position of a company is

improving or deteriorating.

(4) If the reader of financial statements is interested in knowing financial and operating trends over a

period of years, it is necessary that the figures for different years, must be Presented together.

The comparative statements may also be presented in a manner that will show the percentages of

various figures with some significant item e.g. the percentage of gross profit to sales of the

previous year may be presented along with such percentage for the current year.

(a)Comparative Profit and Loss Accounts: The various items of profit and loss accounts may

be presented side by side which will show the trend of increasing or decreasing expenses or

incomes. Such changes may be shown in absolute figures of in percentage forms. While

examining the comparative examined.

(b) Comparative balance sheet: the change taking place in assets and liabilities over a period of

years are revealed by comparative balance sheets. Such comparative balance sheets may show

absolute figures or even percentage of various figures may be shown. Such percentages are

generally based on value of total assets.

Fund flow statement:

In a statement which shown the inflow and outflow of funds during the year, the meaning of the word

“fund” is working capital. The objective of preparing such a statement is to show to the management

and other interested parties, what funds have come into the business and how they have been applied.

A balance sheet is a static statement showing the conditions of assets and liabilities on a particular

date only. While the flow statement is dynamic statement showing changes that have taken place

during the year. E.g. if funds have been raised during the year by issuing further shares, the amount is

shown as source of funds in the statement. If any fixed asset is bought during the year, it is shown as

use or application of funds. The fund statement is therefore necessary to supplement the two basis

financial statement

This statement consist of two parts

i) Sources of Funds

ii) Application of Funds

Uses of fund flow statement

1. The fund flow statement acts as supplementary statement to the traditional financial statement

viz., balance sheet and profit and loss account

2. The funds flow statement furnishes the information about the sources from which the

company has mobilized the resources or fund during the year;

3. It also presents the detail which spell out clearly the manner in which the mobilized fund has

been utilized or employed during the year;

4. It also sheds light on the efficiency of management in the working capital management.

Cash flow statement:

The fund flow statement indicates changes in working capital which have taken place during the

year. But the management is more interested in the changes in cash inflow and outflow in the short

run. It is a historical statement which indicates the cash inflows and outflows during the last year and

would guide the management in framing policy regarding cash management. The cash budget shows

the projected inflows and outflows of cash for the future budget period, which the cash flow

statement is prepared on the basis of the basis of historical financial statements.

Use of cash flow statement

1. Cash flow statement facilitates to prepare sound financial policies. It also helps to evaluate the

current cash position.

2. A projected cash flow statement can be prepared in order to know the future cash position of a

concern so as to enable a firm to plan and coordinate its financial operations properly.

3. it helps the management in taking short-term financial decisions.

4. The statement explains the causes for poor cash position in spite of substantial profits in firms

by throwing light on various applications of cash made by the firm.

Common size Statements:-

Financial statements when read with absolute figures are not easily understandable. They are even

misleading the figures shown in profit & loss account and balance sheet are converted to percentage

so as to establish each element to the total figure of the statement and there statement are called

commonsize statements. When balance sheet and profit & loss account of the same concern for

several years or when balance sheet and profit & loss account of two or more than two concerns for

the same year are converted in to percentage form and presented as such, they are known as

comparative commonsize statement.

Interpretation:-

Profit & loss account figure is assumed to be equal to 100 and all other figure or expressed as

percentage to sales. Similarly, in balance sheet the total of assets and liability is taken as 100 and all

the figures are expressed as percentage of the total. The statement prepared is called “Commonsize

Statement.”

Trend Analysis:-

The comparative and Commonsize statements suffer from a major limitation that is absence of basic

standard to indicate whether the proportion of an item is normal or abnormal. Trend analysis

overcomes this limitation. This technique is also an important and useful of financial statement

analysis. The calculation of trend ratio involves the ascertainment of arithmetical relationship which

each item of several years to the same of base year.

This trend ratio is calculated only for some important item which can be logically converted with

other.

Common size statement analysis of Profit and loss account for year 2010 & 2011 in Panipat

panipat co-operative bank Ltd.

Profit and loss account

Particular 2009-2010 2010-2011

Expense

Interest on deposit and borrowing 43.62 44.07

Salaries allowance & Provident Fund 11.87 10.00

Director Fees -----

Rent, Tax, Insurance, Electricity 1.62 1.82

Law Fees 0.085 0.09

Postage, Telegram, Telephone Exp.s 0.55 0.05

Audit Fee 0.22 0.14

Depreciation Fund 4.22 4.48

Stationary, Printing 1.70 0.80

Other Expense 12.94 15.80

Income Tax 8.63 7.50

Profit 14.53 14.82

Total 100.00 100.00

Income

Interest & Discount 92.21 93.78

Commission Exchange 1.58 1.55

Donation ----- ------

Non Banking Income ----- ------

Other Income 6.21 4.67

Total 100.00 100.00

Common size statement analysis of balance sheet for year 2010 & 2011 in Panipat panipat co-

operative bank Ltd.

Balance Sheet

Particular 2009-2010 2010-2011

Liability

Share capital 2.05 2.12

Reserve fund 7.81 7.57

Subsidiary Fund ----- ------

Deposit:

- Fixed Deposit 37.55 27.27

- Saving Deposit 36.10 27.14

- Current Deposit 26.36 20.82

Call and short term loans ----- ------

Borrowing ----- ------

Bills Payable 0.15 0.11

Interest Overdue 2.01 0.97

Interest payable 4.73 4.35

Other liability 2.74 2.85

Profit and Loss A/c 1.09 1.18

Total 100.00 100.00

Assets

Cash 3.00 2.56

Bank 16.94 10.27

Call & Short time Investment ----- ------

Investment 40.91 48.55

Subsidiary Fund Invest ----- ------

Loans and Advances 32.91 33.57

Interest receivable 3.20 2.15

Bills Receivable 0.15 0.11

Branch adjustment ----- ------

Building premises 0.85 1.08

Furniture & Fixture 0.40 0.52

Other Asset 1.64 1.07

Total 100.00 100.00

Comparative statement analysis of profit and loss account for year 2010 & 2011 in Panipat

panipat co-operative bank Ltd.

Profit and loss account

Particular 2009-2010 2010-2011 Absolute %

2010-2011 2010-2011

Expense

Interest on deposit and borrowing 9,44,99,998 12,06,75,486 2,61,75,488 27.70

Salaries allowance & Provident Fund 2,57,25,152 2,73,86,632 16,61,480 6.46

Director Fees

Rent, Tax, Insurance, Electricity 35,29,643, 49,93,714 14,64,071 41.48

Law Fees 1,83,161 2,43,012 59,851 32.68

Postage, Telegram, Telephone Exp. 11,85,577 13,75,328 1,89,751 16.01

Audit Fee 4,80,090 3,95,517 (84,573) (17.62)

Depreciation Fund 91,37,412 1,22,72,036 31,34,624 34.30

Stationary, Printing 36,91,981 21,81,376 (15,10,605) (40.92)

Other Expense 2,80,33,592 4,32,28,358 1,51,94,766 54.20

Income Tax 1,87,02,592 2,05,00,000 17,97,408 9.61

Profit 3,14,80,142 4,05,77,583 90,97,441 28.90

Total 21,66,49,615 27,38,29,042 5,71,79,427 126.39

Income

Interest & Discount 19,97,72,678 25,68,04,312 5,70,31,634 28.55

Commission Exchange 34,28,143 42,51,305 8,23,162 24.01

Donation ----- -----

Non Banking Income ----- -----

Other Income 1,34,48,792 1,27,73,426 (6,75,366) (5.02)

Total 21,66,49,615 27,38,29,042 5,71,79,427 126.39

Comparative statement analysis of balance sheet for year 2010 & 2011 in Panipat panipat co-

operative bank Ltd.

Balance Sheet

Particular 2009-2010 2010-2011 Absolute %

2010 2010

Liability

Share capital 5,91,32,500 7,28,65,400 1,37,32,900 23.22

Reserve fund 22,53,32,015 26,07,59,206 3,54,27,191 15.72

Subsidiary Fund ----- -----

Deposit:

- Fixed Deposit 79,05,92,313 93,86,53,427 14,80,61,114 18.73

- Saving Deposit 76,00,70,549 93,43,53,951 17,42,83,402 22.92

- Current Deposit 55,49,46,207 71,67,94,730 16,18,48,523 29.16

Call & Short Time Deposit ----- -----

Borrowing ----- -----

Bills Payable 44,24,274 38,27,498 (5,96,776) (13.49)

Interest Overdue 5,80,51,785 3,35,61,148 (2,44,90,637) (42.19)

Interest payable 13,60,00,222 14,97,24,949 1,37,24,727 10.09

Other liability 7,88,68,009 9,82,13,381 1,93,45,372 24.53

Profit and Loss A/c 3,14,80,142 4,05,77,583 90,97,441 28.90

Total 2,88,35,47,600 3,44,23,72,150 55,88,24,550 119.40

Assets

Cash 8,65,50,365 8,82,44,532 16,94,167 1.96

Bank 48,83,88,452 35,34,85,910 (13,49,02,542) (0.27)

Call & Short time Investment ----- -----

Investment 117,95,03,022 1,67,11,43,767 49,16,40,745 41.70

Subsidiary Fund Invest ----- -----

Loans and Advances

- Short term 31,56,02,553 31,43,99,482 (12,03,071) (O.38)

- Moderate term 30,46,65,311 38,75,76,985 8,29,11,674 27.21

- Long term 32,85,98,967 45,68,21,246 12,82,22,279 39.02

Interest receivable 9,22,37,735 7,41,53,274 (1,80,84,461) (19.61)

Bills Receivable 44,24,274 38,27,498 (5,96,776) (13.49)

Branch adjustment ----- -----

Building premises 2,45,05,702 3,71,90,032 1,26,84,330 51.76

Furniture & Fixture 1,16,70,414 1,78,92,951 62,22,537 53.31

Other Asset 4,74,00,800 3,68,36,472 (1,05,64,328) (22.29)

Total 2,88,35,47,600 3,44,23,72,150 55,88,24,550 119.40

RATIO ANALYSIS:

A Ratio is only a comparison of the numerator with the denominator. The term ratio refers to the

numerical or quantitative relationship between two figures, and obtained by dividing the former by

the latter. Ratios are designed to show how one number is related to another. It is worked out by

dividing one number by another.

Ratio analysis is an important and age old technique of financial analysis. Ratios are relative form of

financial data and very useful technique to cheque upon the efficiency of firm. Some ratios indicate

trend or progress or downfall of the firm.

MEANING OF RATIO:-

A ratio is only a comparison of the numerator with the denominator. The tern ratio reefers to the

numerical or quantitative relationship between two figures and obtained by dividing the former by the

latter.

Ratio analysis is an important and age old technique of financial analysis. The data given in financial

statements ratio are relative form of financial data and very useful techniques to cheek upon the

efficiency of a firm. Some ratio indicates the trend or progress or downfall of the firm.

Classification of Ratios:-

Ratio can be classified into different categories depending upon the basic of classification as under:

Profit & Loss Account Ratio:-

In this ratio accumulated on the basis of all items of the profit & loss account only Ex. Net profit

ratio, operating profit ratio, expenses ratio.

Balance sheet Ratio:-

In this ratios calculated on the basis of the figures of balance sheet only.Ex. Current ratio, liquid ratio,

debt-equity ratio, proprietary ratio.

Composite Ratio or inter statement ratio:

In this ratio is the based on figures of profit & loss account as well as balance sheet.Ex. Fixed assets

turnover ratio.

IMPORTANCE OF RATIO ANALYSIS:

Aid to measure general Efficiency: ratios enable the mass of accounting data to be summarized and

simplified. They act as an index of the efficiency of the enterprise. As such they serve as an

instrument of management control.

Aid to measure financial solvency: ratios are useful tools in the hands of management and other

concerned to evaluate the firm’s performance over a period of time by comparing the present ratio

with the past ones. They point out firm’s liquidity position to meet its short term obligations and long

term solvency.

Facilitate decision-making: it throws light on the degree of efficiency of the management and

utilization of the assets and that is why it is called surveyor of efficiency. They help management in

decision-making.

Aid in intra firm comparison: intra firm comparisons are facilitated. It is an instrument for

diagnosis of financial health of an enterprise. It facilitates the management to know whether the

firm’s financial position is improving or deteriorating by setting a trend with the help of ratios.

Evaluation of efficiency: ratio analysis is an effective instrument which, when properly used, is

useful to assess important characteristics of business liquidity, solvency, profitability etc. a study of

these aspects may enable conclusions to be drawn relating to capabilities of business.

effective tool: ratio analysis helps in making effective control of the business measuring

performance, control of cost etc, effective control is the keynote of better management. Ratio ensures

secrecy.

LIMITATION OF RATIO ANALYSIS:

Ratio analysis a widely used tool of financial analysis, it is because ratios are simple and easy to

understand. But they must be used very carefully. They suffer from various limitations:

Differences in Definitions: Comparisons are made difficult due to differences in definitions of

various financial terms. Lack of standard formula for working out ratios makes it difficult to compare

them. They are worked out on the basis of different items in different industries.

Limitation of accounting records: ratio analysis is based on financial statements which are

themselves subject to limitations. Thus, ratios calculated on the figures given in the financial;

statements, also suffers from similar limitations.

Qualitative factors are ignored: ratios are tools of quantitative analysis only and normally

qualitative factors which may generally influence the conclusions derived are ignored while

computing ratios.

Limited use of single ratio: a single ratio would not be able to convey anything. Ratios can be useful

only when they are computed in a sufficient large number. If too many ratios are calculated, they are

likely to confuse instead of revealing meaningful conclusions.

Background is overlooked: when inter-firm comparison is made, they differ substantially in age,

size, nature of product etc. when an inter-firm comparison is made, these factors are not considered.

Therefore, ratio analysis cannot give satisfactory results.

Arithmetical Window dressing: window-dressing means manipulation of account in a way so as to

conceal vital facts and present the statements in a way to show better position than what it actually is.

By doing so, it is possible to cover up bad financial position. Therefore, ratios based on such figures

are not reliable.

Lack of proper standards: it is very difficult to ascertain the standard ratio in order to make proper

comparison. Because, it differs from firm to firm, industry to industry. Apart from this, it may have

happened that in one firm, a current of 2:1 is found to be quite satisfactory, whereas in another firm

2.5:1 may be unsatisfactory. Again, a high current ratio may not necessarily mean liquid position

when current assets large inventory or inventory consisting of obsolete items.

CURRENT RATIO:

Meaning:

Current ratio is the most common ratio for measuring liquidity. Being related to working capital

analysis it is also called the working capital ratio. Current ratio expresses relationship between current

assets and current liabilities

Purpose:

The current ratio of a firm measures in short term solvency. i.e. its ability to meet short term

obligation. As a measure of short term current financial liquidity.

It is calculated by dividing current asset by current liabilities

Current Ratio = Current assets

Current Liabilities

Current Ratio : = 71,90,01,628 2,14,97,10,680

1,59,23,61,046 1,93,64,75,655

= 0.45 =1.11

Particulars 2009-10 2010-2011

Current Asset

Cash 8,65,50,366 8,82,44,531

Bank 48,83,88,452 35,34,85,910

Advance -----

Other Asset 4,74,00,800 3,68,36,472


Interest 9,22,37,736 1,67,11,43,767

Total 71,90,01,628 2,14,97,10,680

Current Liability

Bills Payable 44,24,274 38,27,498

Interest Payable 13,60,00,222 14,97,24,949

Saving Deposit 76,00,70,549 93,43,53,950

Current Deposit 55,49,46,207 71,67,94,730

Interest Overdue 5,80,51,785 335,61,148

Other Liability 7,88,68,009 9,82,13,380

Total 1,59,23,61,046 1,93,64,75,655

Interpretation:

here, it shows that the bank has been decrease in 2010 current ratio is 0.45:1 to in 2011 current ratio

is 1.11 which is not satisfactory so, can be Improved by better turnover and profit.

CASH POSITION RATIO:

Meaning:

It is a variation of quick ratio. When liquidity is highly restricted in terms of cash and cash

equivalent, this ratio should be relationship between cash and near cash items on the one hand.

Purpose:

The purpose of computing the ratio to measure e more rigorous of a firm’s liquidity position.

Particulars 2009-2010 2010-2011

Cash 8,65,50,365 8,82,44,532

Marketable Securities 117,95,03,022 1,67,11,43,767

Total 1,26,60,53,387 1759388300

Current Liabilities 1,59,23,61,046 1,93,64,75,655

Cash Position Ratio = Cash + Marketable Securities

Current Liabilities

= 1,26,60,53,388 = 1,75,93,88,300

1,59,23,61,046 1,93,64,75,655

= 0.80 = 0.91

PROPRIETARY RATIO:

Meaning:

This relates the shareholders fund to total assets. It is a variant of the debt equity ratio. This ratio

shows the long term or future solvency of the business. It is calculated by dividing shareholders funds

by the total asset.

Purpose:

The purpose of proprietary ratio is indicate available to creditors and general financial strength of the

firm.

Proprietary Ratio= Shareholders Fund

Total Asset

Particulars 2009-2010 2010-2011

Shareholders Fund

Capital 5,91,3,2500 7,28,65,400

Reserve 9,65,59,375 10,49,50,670

Subsidiary Fund ----- --------

P&L Account 3,14,80,142 4,05,77,583

Total 53,20,74,401

Total Asset 2,88,35,47,600

Proprietary Ratio = 32,64,98,777 53,20,74,401

2,26,90,56,555 2,88,35,47,600

= 0.14:1 0.18:1

Interpretation:

The proprietary ratio is increase by 0.13:1 to 0.17:1 in the 2010 which is shown by the general

strength of the bank or company. It is very important to creditors as it helps them to find out the

proportion of shareholders funds in the total assets used in the business. In this ratio is always down

from the good position and low ratio indicate greater risk to creditors. A ratio below 50% may be

alarming for the creditors and heavily lose for company and its account is liquidation.

DEBT EQUITY RATIO:

Meaning:

The financing of total asset of a business concern is done by owner’s equity as well as outside debts.

This ratio indicates the relative proportions of debt and equity in financing the asset of a firm.

It is also known as external internal equity ratio. Debt equity ratio is determined to ascertain

soundness of the long term financial policies of a company.

Debt Equity Ratio = Long Term Debt

Shareholders Fund

Particulars 2009-2010 2010-2011

Long Term Debt

Fixed Deposit 79,05,92,313

Other Borrowing -----

Total 79,05,92,313

Shareholders Fund 46,91,14,117

Debt Equity Ratio:

= 57, 90, 47,751 = 79,05,92,313

43,10,13,335 46,91,14,117

= 1.34 = 1.69

Interpretation:

Debt equity ratio has been increase in year 2009 to 2010 that is 11.05 and 13.37 respectively. It

indicates the margin of safety to long term creditors. A high ratio shows the claim of creditors is

greater than those of owners.

SOLVENCY RATIO:

Meaning: It is also known as debt ratio. It is difference of 100 and proprietary ratio. This

ratio is found out between total asset and external liabilities of the company.

Purpose:

This generally refers to the capacity or ability of the business to meet its short term and long term

obligations. If a company in a position to pay its long term liabilities easily it is said to possess long

term solvency.

Solvency Ratio = Outside Liabilities

Total Asset

= Total Liability – Shareholder Fund

Total Assets

Particulars 2009-2010 2010-2011

Outside Liability

Total Liabilities 2,88,35,47,600


Total 2,79,29,34,958

Total Asset 2,88,35,47,600

Solvency Ratio: = 2,18,64,17,069 = 2,79,29,34,958

2,26,90,56,555 2,88,35,47,600

= 0.96:1 = 0.97:1

Interpretation:

In this ratio total assets are for more than external liabilities the company is treated solvent. In

solvency ratio in 2009, 0.976% decrease in 2010 0.979:1 it means that outside liability is always less

than total assets.

NET PROFIT RATIO:

Meaning:

It is also called net profit to sales ratio (= profit margin). The profit margin is indicative of

management’s ability to operate the business with sufficient success not only to recover from revenue

of the period, the expense of operating the business and the cost of borrowed fund.

Purpose:

this ratio is used to measure the overall profitability and hence it is very useful to proprietors. It is an

index of efficiency and profitability when used with gross profit ratio and operational efficiency of

the concern.

Net Profit Ratio = Net Sales X 100

Net Profit

Particulars 2009-2010 2010-2011

Net Sales

Interest Receivable 9,22,37,735

Commission 34,28,143

Total 9,56,65,878

Net Profit 3,14,80,142

Net Profit Ratio:

= 3,02,24,486 = 3,14,80,142

7,55,32,888 9,56,65,878

= 40.02 = 32.91

Interpretation:

In this ratio, in 2009, 40.02% and 2010 decrease in 2010, 32.91%. It is more useful for the further

condition of the firm.

Expenses Ratio:

This ratio indicates the efficiency or otherwise in the incurrence of administrative expense. It

is expressed as a percentage.

The purpose of this ratio is that income is rise than expenditure it is also raised.

Particular 2009-2010 2010-2011

Total expenses

Staff, salaries, allowance 2,57,25,152

Director fees -

Legal fees 1,83,161

Rent, tax, insurance 35,29,646

Postage, telegram 11,85,577

Audit fees 4,80,090

Stationary, printing 36,91,981

Other expenses 2,80,33,593

Total 6,28,29,199

Total income 21,66,49,615

Expenses ratio = Total expenses X 100

Total incomes

= 6,68,56,334 X 100 = 6,28,29,200 X 100

19,92,78,464 21,66,49,615

= 33.55% = 29.00%

RETURN ON EQUITY HOLDER FUND:

Meaning:

The term net profits as used here, means net income after payment of interest and tax including net

non-operating income (i.e. non-operating income minus non-operating expenses). It is the final

income that is available for distribution as dividends to shareholders. Shareholder’s funds include

both preference and equity share capital and all reserves and surplus belonging to shareholders.

Return of Share Holder equity = Net Profit X 100

Shareholders Fund

Particulars 2009-2010 2010-2011

Net Profit 3,14,80,142


Return of Share Holder

equity:

= 3,02,24,486 = 3,14,80,142

43,10,13,335 46,91,14,117

=7.01% =6.71%

Interpretation:

In this ratio, in 2009, 57.66% and 2010 decrease in 2010, 53.24%. The term net profit as used here

means net income after payment of interest and tax including net non operating income. It is the final

income that is available for distribution as dividend to shareholders.

CAPITAL TURNOVER RATIO

Sometimes the efficiency and effectiveness of the operations are judged by comparing the cost of

sales or sales with amount of capital invested in the business and not with assets held in the business,

though in both cases the same result is expected. Capital invested in the business may be classified as

long term and short term capital or as fixed capital and working capital or owned capital and loaned

capital. All capital turnovers are calculated to study the uses of various types of capital.

Ratio = Net Profit

Capital Employed

Particular 2009-2010 2010-2011

Net Sales 9,56,65,878

Capital Employed

Equity 5,91,32,500

Reserves 40,99,81,617

Total 46,91,14,117

Return on Asset =

7,55,32,888 = 9,56,65,878

26,60,49,805 46,91,14,117

= 28.39% = 20.39%

Interpretation:

In this ratio, decrease the percentage in 2009, 28.39% to in 2010, 20.39%. Lower ratio shows lower

profit and higher ratio shows higher profit.

CREDITORS TURNOVER RATIO:

This is also known as accounts payable or creditors velocity. Creditors turnovers indicates the number

of times the payable rotate in a year. It signifies the credit period enjoyed by the firm paying

creditors. Accounts payable include sundry creditors and bills payable.

Ratio = Creditors + Interest payable + bills payable

Interest on deposit and borrowing

Creditor turnover ratio: = 1,72,06,78,495 = 2,10,56,09,070

10,68,37,058 13,60,00,222

Particular 2009-2010 2010-2011

Creditors

Fixed Deposit 79,05,92,313

Saving Deposit 76,00,70,549

Current Deposit 55,49,46,207

Bills payable 44,24,274

Interest Payable 13,60,00,222

Total 2,10,56,09,070

Interest on deposit and

borrowing

13,60,00,222

= 16.11 = 15.48

Interpretation:

In this ratio creditors are decrease in all year. In year 2009, 20.51 times and increase in year

2010 is 22.08 times. It will be good for the bank. A higher ratio shows that the creditors are not paid

in time.

CHAPTER 6

FINDINGS

Panipat Panipat co-operative bank have good image in the co-operatice society because

panipat Panipat co-operative bank provides speedy, effective and good interest rate on

deposit.

Bank has continuously got the audit class ‘A’ in every year.

The varchha panipat co-operative bank get award in district co-operative society for

providing good service to their customer in 2000 – 2001 and Rashtriya Viskas Rattan gold

award from International Integration and growth, and highest blood donation collection

award in 2008 once more best co-op bank in surat dist. For the year 2007-2008.

The profit of the bank is at increasing rate. By honoring the social welfare concept the bank

is providing to the society welfare at a large scale.

The bank has good market potential so that it can enhance or expand its business in future.

Net profit of bank is in 2009, 3.02 crores and in increasing manner in 2010 i.e. 3.15 crores

Share capital is in 2009, 5.24 crores and in 2010 5.91 crores. Working capital in 2009,

226.96 crores and in 2010 279.11 crores.

SUGGESTIONS

Panipat Panipat co-operative bank is required to increase its network.

Panipat Panipat co-operative bank is required to open his branches out of city.

Bank is needed to provide ATM facility for his account holder, so the account holder can

easily receive money from his account.

In the bank there should be a proper man power planning.

SWOT ANALYSIS:-

STRNGTH:-

The staff member of the concern is well-experienced and trained enough.

The bank is providing training to new employees.

The accounts of share holders as well as customers are fully secured by insurance.

The bank has good brand image.

The turnover of men power in the bank is very less and staff members are well satisfied with

the facilities given to them.

The profit of the bank is at increasing rate.

Customers are serviced in the best manner.

By honoring the social welfare concept the bank is providing to the society welfare at a large

scale.

WEAKNESS:-

There is lack of linking performance.

In recent competitive era, varachha bank not provide some modern facilities like ATM

service, debit card, credit card and even not website on intent for show the growth of bank.

Rules for deposits and loans are very strict opening deposit is high and they require perfect

documents, it can be limitation for slow inflow of deposits.

OPPORTUNITY:-

The bank has good market potential so that it can enhance or expand its business in future.

The bank has to start its branches in the areas like City Light, Adajan, and Sachin and out of

city or state should pick up the opportunity to discover the market.

THREAT:-

If there will be any union, it will cause problem for the bank.

If there will be any opening of new bank with more facilities than other banks, it will hinder

the progress of the bank.

If there will any political pressure on the banking sector it will lead to decrease in productivity

and efficiency.

The Bank should provide rent to peons who go daily from branch to head office. So that the

efficiency of peons of working will increase and they will be satisfied.

CHAPTER 7

Profit & Loss Account

Particulars 2009-2010 2010-2011

Expences

Interest on deposit and Borrowing 9,44,99,998.76 12,06,75,486.13

Salaries allowance & Provident Fund 2,57,25,152 2,73,86,632

Direct fees ----------------- -----------------

Rent ,Tax ,Insurance, Electricity 35,29,646.49 49,93,714.50

Law Fees 1,83,161 2,43,011.84

Postage ,Telegram ,Telephone Expences 11,85,577.24 13,75,327.87

Audit Fee 4,80,090 3,95,517

Depreciation Fund 91,37,412.80 1,22,72,036

Stationary ,Printing 36,91,981.73 21,81,375.83

other Expense 2,80,33,592 4,32,28,357.91

Income Tax 1,87,02,860 2,05,00,000

Profit 3,14,80,142.42 4,05,77,583.46

Total 21,66,49,615.25 27,38,29,042.46

Income

Interest & Discount 19,97,72,678 25,68,04,312.37

Commission Exchange 34,28,143.35 42,51,304.65

Donation ----------------- ------------------

Other Income 93,91,392 1,27,73,425.52

Total 21,66,49,615.25 27,38,29,042.46

Panipat panipat co-operative bank Ltd.

of balance sheet for year 2009-2010 & 2010-2011.

Balance Sheet

Particular 2009-2010 2010-2011

Liability

Share capital 5,91,32,500 7,28,65,400

Reserve fund 40,99,81,617 26,07,59,206.11

Subsidiary Fund -----

Deposit:

- Fixed Deposit 79,05,92,313 93,86,53,426.84

- Saving Deposit 76,00,70,549 93,43,53,950.77

- Current Deposit 55,49,46,207 71,67,94,729.78

Call & Short Time Deposit -----

Borrowing -----

Bills Payable 44,24,274 38,27,498

Interest Overdue 5,80,51,785 335,61,147.97

Interest payable 13,60,00,222 14,97,24,949

Other liability 7,88,68,009 9,82,13,380.70

Profit and Loss A/c 3,14,80,142 4,05,77,583.46

Total 2,88,35,47,600 3,44,23,72,149.87

Assets

Cash 8,65,50,365 8,82,44,531.98

Bank 48,83,88,452 35,34,85,910.13

Call & Short time Investment -----

Investment 117,95,03,022 1,67,11,43,767

Subsidiary Fund Invest -----

Loans and Advances

- Short term 31,56,02,553 31,43,99,482.44

- Moderate term 30,46,65,311 38,75,76,985.41

- Long term 32,85,98,967 45,68,21,245.85

Interest receivable 9,22,37,735 7,41,53,273.97


Branch adjustment -----

Building premises 2,45,05,702 3,71,90,031.97

Furniture & Fixture 1,16,70,414 1,78,92,950.86

Other Asset 4,74,00,800 3,68,36,472.26

Total 2,88,35,47,600 3,44,23,72,149.87

Web Site / Books name Author name

www.google.com Website

www.varachhabank.com Website

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Management Accounting By R. S. N. Pillai Bagavathi

Management Accounting By Ravi M. Kishore

Date post:	15-Dec-2015
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Urban Co-op Bank (Analysis of Financial Statment)

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