Prepared By: KOMAL MAHESHWARI
Enrollement No: 14BSP2540
A project is based on
Overall Banking Operations And
Assessment Of Working Capital
A project is based on
Banking Operations
Banking Operations
Working Capital Provided by
Banks
Working Capital Provided by
Banks
Methods for Assessment of Working Capital
Methods for Assessment of Working Capital
Observation & Discussion with
Manager
Observation & Discussion with
Manager
Read Company Profile, Annual
Reports of Companies
Read Company Profile, Annual
Reports of Companies
Referred RBI guidelines,
Sanction Proposals
Referred RBI guidelines,
Sanction Proposals
A BANK IS A FINANCIAL INSTITUTION WHICH ACCEPTS MONEY FROM THE PUBLIC FOR THE PURPOSE OF LANDING OR INVESTMENT REPAYABLE ON DEMAND OR OTHERWISE WITHDRAWALS BY CHEQUE DRAFTS OR ORDER OR OTHERWISE.
About Axis Bank
Axis Bank Limited (formerly UTI Bank) is the third largest private sector bank in India.
Axis Bank began its operations in 1994, after the Government of India allowed new private banks to be established.
The Bank was promoted in 1993 jointly by the Administrator of the
1) Unit Trust of India (UTI-I) 2) Life Insurance Corporation of India (LIC)
3) General Insurance Corporation Ltd. 4) National Insurance Company Ltd.
5) The New India Assurance Company 6) The Oriental Insurance Corporation 7) United India Insurance Company
Axis Bank (erstwhile UTI Bank) opened its registered office in Ahmedabad and corporate office in Mumbai in December 1993. The first branch was inaugurated on 2 April 1994 in Ahmedabad by Dr. Manmohan Singh, then Finance Minister of India.
It offers financial services to customer segments covering Large and Mid-Sized Corporates, MSME, Agriculture and Retail Businesses.
Axis Bank operates in four segments:
1) Treasury operations2) Retail banking3) Corporate/Wholesale banking4) Other banking
As on 31-Mar-2014, the Bank had a network of 2402 branches and extension counters and 12922 ATMs.
Functions of Axis Bank
Service Functions
Service Functions
Representative Functions
Representative Functions
Development Functions
Development Functions
General FunctionsGeneral
FunctionsCollecting deposits, Lending loan,
Money transfer, Honouring ChequesCollecting deposits, Lending loan,
Money transfer, Honouring Cheques
Creation of savings & formation of capital, HR and investment
development
Creation of savings & formation of capital, HR and investment
development
Selling of shares & securities, Receive & payment as the representative of
clients
Selling of shares & securities, Receive & payment as the representative of
clients
Transaction of foreign currencies, Information sharing consulting & other
service functions
Transaction of foreign currencies, Information sharing consulting & other
service functions
Saving Account
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Current Account
..\images\current1.png..\images\current.png
Cash Receipt
Cash Payment
Cancellation Cheque
Cash Balancing
Checking Cash in Hand
Cash Safe keeping
Cash Receipt
Cash Payment
Cancellation Cheque
Cash Balancing
Checking Cash in Hand
Cash Safe keeping
Assessment of Working Capital
Process
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What should be the amount of WC ?
What should be the form of WC?
What should be the security that should be obtained for extending the WC?
What should be the amount of WC ?
What should be the form of WC?
What should be the security that should be obtained for extending the WC?
Non-Fund based Facility:-
1. Bank Guarantee
The contract of guarantee has three principal parties as under:
a) Principal debtor
b) Principal creditor
c) Guarantor or Surety
Non-Fund based Facility:-
1. Bank Guarantee
The contract of guarantee has three principal parties as under:
a) Principal debtor
b) Principal creditor
c) Guarantor or Surety
Assessment of Limit of Letter of Guarantee
Outstanding Bank Guarantee as per audited
balance sheet
A
Add bank guarantee required during the
period
B
Less estimated maturity or cancellation of
bank guarantee during the period
C
Requirement of bank guarantee D = A + B - C
2. Letter of Credit
The contract of guarantee has three principal parties as under:
I.Applicant/Opener
II.Opening bank/issuing bank
III.Beneficiary
IV.Advising Bank
V.Confirming Bank
VI.Negotiating Bank
2. Letter of Credit
The contract of guarantee has three principal parties as under:
I.Applicant/Opener
II.Opening bank/issuing bank
III.Beneficiary
IV.Advising Bank
V.Confirming Bank
VI.Negotiating Bank
Assessment of Limit of Letter of Credit
Annual Raw Material Consumption A
Annual Raw Material Procurement
through ILC/ FLC
B
Monthly Consumption C
Usance D
Lead Time E
Total Time F = D + E
LC Time Required G = F * C
Fund based Facility:-
Maximum Permissible Banking Finance Method (Tandon Committee)
Fund based Facility:-
Maximum Permissible Banking Finance Method (Tandon Committee)
Current Liabilities Current Assets
Creditors for
purchase
100 Raw material 200
Other current liability 50 Stock in process 20
Bank Borrowings 200 Finished Goods 90
Receivables 50
Other current assets 10
350 370
1st Method 2nd Method 3rd Method
Total CA 370 Total CA 370 Total CA 370
Less Total CL -
Bank
Borrowing
150 Less 25% of CA 92 Less Core CA from
long term sources
95
WCG 220 278 275
25% of WCG
from long term
sources
55 Less Total CL -
Bank
Borrowings
150 Less 25% from
long term
sources
Total CL - Bank
Borrowings
69
150
MPBF 165 MPBF 128 MPBF 56
Current Ratio 1.17:1 Current Ratio 1.33:1 Current Ratio 1.79:1
Form 1: - particulars of the existing/proposed limit
from the banking system.
Form 2: -Operating statement.
Form 3: - Analysis of balance sheet.
Form 4: - Comparative statement of current asset and
liabilities.
Form 5: - Computation of maximum permissible bank
finance for working capital.
Form 6: - Fund flow statement
Form 1: - particulars of the existing/proposed limit
from the banking system.
Form 2: -Operating statement.
Form 3: - Analysis of balance sheet.
Form 4: - Comparative statement of current asset and
liabilities.
Form 5: - Computation of maximum permissible bank
finance for working capital.
Form 6: - Fund flow statement
Banks need some security from the borrowers against the credit facilities extended to them to avoid any kind of losses. Securities can be created in various ways. Banks provide credit on the basis of the following modes of security from the borrowers.
Hypothecation
Mortgage
Pledge
Lien
Banks need some security from the borrowers against the credit facilities extended to them to avoid any kind of losses. Securities can be created in various ways. Banks provide credit on the basis of the following modes of security from the borrowers.
Hypothecation
Mortgage
Pledge
Lien
Pre sanction processPre sanction process
Post sanction processPost sanction process