MUMBAI UNIVERSITY

SUMMER INTERNSHIP REPORT

ON

“COMPARATIVE ANALYSISI OF PROFIT & LOSS ACCOUNT OF PARSIK JANATA

SAHAKARI BANK”

NAME: SHEKHAR BHASKAR NIKALJE

SEAT NO: MB33572012002

CLASS: THIRD SEMESTER MMS

SUBMITTED TO:

Dr. ASHOK A.R.GOWDA

(DIRECTOR)

S.A.V ACHARYA INSTITUTE OF MANAGEMENT STUDIES (SHELU) 2013-2014

S.A.V. Acharya Institute of Management StudiesShelu, Karjat Raigad- 410101

DECLARATION

I SHEKHAR BHASKAR NIKLAJE hereby declare that this Project titled “COMPARATIVE ANALYSIS OF PROFIT & LOSS ACCOUNT OF PARSIK JANATA SAHAKARI BANK” in the partial fulfillment of the requirement of the award for Master in Management Studies to The College “S.A.V. Acharya Institute of Management Studies” is my original work and not submitted for award of any degree or diploma fellowship or for similar title or prizes.

I further certify that I have no objection and grant the right to S.A.V. Acharya Institute of Management Studies, to publish any chapter / project if they deem fit in Journals / Magazines and newspapers etc. without my permission.

Place: Shelu Name: SHEKHAR NIKALJE

Date: Class: MMS, Sem-III

Roll No: MB33572012002

CERTIFICATE

S.A.V. Acharya Institute of Management StudiesShelu, Karjat Raigad- 410101

This is to certify that the dissertation submission in partial fulfillment for the award

of Master of Management Studies of S A V Acharya Institute of Management

Studies is a result of the bonafide research work carried out by SHEKHAR

BHASKAR NIKALJE , under the supervision and guidance of Prof.Dr Ashok

A.R.Gowda (Director). No part of this report has been submitted for award of any

other similar titles or prizes. The work has also not been published in any

Journals/Magazines.

__________________ _______________

(Prof. Sunita Gowda.) (Dr. Ashok A.R.Gowda.)

Course Co-ordinator Director

ACKNOWLEDGEMENT

I would like to give special acknowledgement to Dr. Ashok Gowda Director of S.A.V. Acharya Institute of Management Studies for his consistent support and motivation.

I am grateful to Prof. Sunita Gowda, course co-ordinator and my project guide, Prof. Nikhil Ubale, Prof. Rekha Gadav, S.A.V. Acharya Institute Of Management Studies for their technical expertise, advice and excellent guidance. They not only gave my project a scrupulous critical reading, but added many examples and ideas to improve it.

I am indebted to my other faculty members who gave time and again reviewed portions of this project and provide many valuable comments.

I would like to express my appreciation towards my friends for their encouragement and support throughout this project.

Date: Signature

SHEKHAR B.NIKALJE

History of Banking in India

Banking in India originated in the last decades of the 18th century. The first

banks were The General Bank of India, which started in 1786, and Bank of Hindustan,

which started in 1790; both are now defunct. The oldest bank in existence in India is the

State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost

immediately became the Bank of Bengal. This was one of the three presidency banks,

the other two being the Bank of Bombay and the Bank of Madras, all three of which

were established under charters from the British East India Company.

For many years the Presidency banks acted as quasi-central banks, as did their

successors. The three banks merged in 1921 to form the Imperial Bank of India, which,

upon India's independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in

1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank,

established in 1865 and still functioning today, is the oldest Joint Stock bank in India.

(Joint Stock Bank: A company that issues stock and requires shareholders to be held

liable for the company's debt) It was not the first though. That honor belongs to the Bank

of Upper India, which was established in 1863, and which survived until 1913, when it

failed, with some of its assets and liabilities being transferred to the Alliance Bank of

Simla.

When the American Civil War stopped the supply of cotton to Lancashire from

the Confederate States, promoters opened banks to finance trading in Indian cotton.

With large exposure to speculative ventures, most of the banks opened in India during

that period failed. The depositors lost money and lost interest in keeping deposits with

banks. Subsequently, banking in India remained the exclusive domain of Europeans for

next several decades until the beginning of the 20th century.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The

Comptoired'Escompte de Paris opened a branch in Calcutta in 1860, and another in

Bombay in 1862; branches in Madras and Puducherry, then a French colony, followed.

HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in

India, mainly due to the trade of the British Empire, and so became a banking center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank,

established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National

Bank, established in Lahore in 1895, which has survived to the present and is now one

of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a

relative period of stability. Around five decades had elapsed since the Indian Mutiny,

and the social, industrial and other infrastructure had improved. Indians had established

small banks, most of which served particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some

exchange banks and a number of Indian joint stock banks. All these banks operated in

different segments of the economy. The exchange banks, mostly owned by Europeans,

concentrated on financing foreign trade. Indian joint stock banks were generally under

capitalized and lacked the experience and maturity to compete with the presidency and

exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking

it seems we are behind the times. We are like some old fashioned sailing ship, divided

by solid wooden bulkheads into separate and cumbersome compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by

the Swadeshi movement. The Swadeshi movement inspired local businessmen and

political figures to found banks of and for the Indian community. A number of banks

established then have survived to the present such as Bank of India, Corporation Bank,

Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in

Dakshina Kannada and Udupi district which were unified earlier and known by the name

South Canara ( South Kanara ) district. Four nationalised banks started in this district

and also a leading private sector bank. Hence undivided Dakshina Kannada district is

known as "Cradle of Indian Banking".

Post-Independence:

The partition of India in 1947 adversely impacted the economies of Punjab and

West Bengal, paralyzing banking activities for months. India's independence marked the

end of a regime of the Laissez-faire for the Indian banking. The Government of India

initiated measures to play an active role in the economic life of the nation, and the

Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed

economy. This resulted into greater involvement of the state in different segments of the

economy including banking and finance. The major steps to regulate banking included:

The Reserve Bank of India, India's central banking authority, was nationalized on

January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public

Ownership) Act, 1948 (RBI, 2005b).[Reference www.rbi.org.in]

History

In the year 1971 the Government of Maharashtra acquired all agricultural land of 68 villages of Thane-Belapur belt in Thane district of Maharashtra, for the purpose of setting up a new city i.e. New Bombay. Acquisition of land for New Bombay project means compulsorily depriving several thousands of people of their means of livelihood. Though Government was paying them money as compensation, but they were away their land which was the only mean of livelihood for them.

To equip the project affected persons and their family members with strength and ability, to survive with new urban means of livelihood, it was necessary to provide them financial assistance. CIDCO (City Industrial Development Corporation) was established by Government of Maharashtra for the purpose of development of infrastructure and city of New Bombay.

Development of infrastructure requires plenty of resources like men, machines, earthmover, vehicles & money.

The idea of formation of Urban Co-operative Bank for the area was visualized in 1971 by a group of youngsters of Kalwa village, which is on the boundary of Thane Belapur Belt. This group of youngsters were successful in running a Consumer Co-operative Society by name Kalwa Consumer Co-operaive Society. This group of youngsters, on their study-tour to Western Maharashtra, for study of co-operation, was fascinated by network and growth of cooperative societies and the role played by Urban Cooperative Banks in the development of that region.The group of youngsters called a meeting of residents from Kalwa and nearby villages when they came back from their study tour. They collect the Share Money in December 1971 for the formation of the bank. Collection of share money was the most difficult task at that time. In a village where there were no banking facility available these youngsters started collection Rs. 50/- as contribution towards share capital. In year 1971 Rs.50/- was also a substantial amount, it took lot of efforts and hardship to collect the require numbers of members. In all 360 members came together for the formation of bank. The registration of Parsik Janata Sahakari Bank Ltd. was approved by Co-operative Department in the month of April, 1972, with registration number TNAK/BNK/160 dated 24th April, 1972. The first branch office at Kalwa Naka was opened on 21st May, 1972.The bank was named as Parsik because active jurisdiction of bank was the west side area of Parsik Hill, which has range from Kalwa to Belapur (the famous Parsik Railway Tunnel is situated in the same range). Parsik is also mean Parshwanath ( Lord Shiva), whose temple was existed on the hill as per history.The principles of cooperation always keeps community or society to the fore front. What ever is done through cooperation is done for the welfare and upliftment of the community. The board of parsik bank until now has undertaken following activities towards the betterment of the society .The founder of Parsik Janata Sahakari Bank Ltd. Mr. Gopinath Shivram Patil had initiated a proposal through their consumer co-operative society in October, 1985 to Forest Department, Pune. Through which they sought permission for a project, which included allotment of one hill, called Parsik Hill, which is situated nearby Kalwa Village and the well known Parsik Railway Tunnel passes through it, for plantation. Forest Department gave permission for the plantation on the Parsik Hill only after 1990. For last 20 years the work of plantation and other related activities like minor irrigation ,

forest conservation are going on. The employees of Parsik Bank with their Board of Directors has been regularly visiting the Parsik Hill , due to their hard work and consistency the land admeasuring 70 hectare came under plantation. Once a barren hill is now covered with fifty to fifty five thousand plants. The Board of Directors of Parsik Bank has taken tremendous efforts for last 20 years for this project , which is a huge successes. Other organizations has also started similar project by taking inspiration from Mr. Gopinath Shivram Patil.In the year 1988-89 Parsik Bank has been allotted one plot of land, adjoining to Kalwa bridge for development of garden by Thane Muncipal Corporation.

1. At the request of CIDCO LTD. in the year 1993, Parsik Bank has undertaken the development of garden on 14 acres of land situated near Belapur in Navi Mumbai area. The said garden was also named as Parsik Hill Garden. The employees and members of Board has given their total commitment for the development of garden.

2. Parsik Bank in the year 1998-99 has planted nearly 1200 plants in Kalwa Vitawa region under scheme called Clean Thane Green Thane, which was initiated by Thane Muncipal Corporation. It also included decoration of one traffic island and building a bus stop.

3. Other activities1. Educational help2. Medical help3. Building of shed for funeral & other religious activities4. Sports5. Financial assistance to social organizations

4. Bank has maintained a fund called Member Welfare Fund. Every year a considerable amount is contributed to this fund out of net profit earned by the bank.

BOARD OF DIRECTORS

No. Director's Name Designation

 1   Mr. Ranjit G. Patil  Chairman

 2   Mr. Narayan G. Gawand  Vice- Chairman 3   Mr. Jayram K. Patil  Director 4   Mr. Devraj B. Patil  Director 5   Adv. P. C. Patil  Director 6   Mr. Dashrath D. Gharat  Director 7   Mr. Namdev B. Patil  Director 8   Mr. Kayyum R. Cheulkar  Director 9   Mr. Gopinath B. Patil  Director

 10   Mr. Pandurang D. Bunde  Director 11   Mr. Prakash N. Patil  Director 12   Mr. Ravindra K. Patil  Director 13   Mr. Rupaji S. Khulat  Director 14   Mrs. Rajashree P. Patil  Director 15   Mrs. Shashikala D. Patil  Director 16   C.A. R. R. Lahoti  Banking Expert 17   Mr. Kesarinath B. Gharat  Banking Expert 18   Mrs. Priyanka K. Chavan  Staff Representative19   Mr. Manoj D. Patil  Staff Representative

20   Mr. Sadanand Krishna Nayak Chief Executive Officer.

Why human resource management is important for Banks

Human Resource Management is important for banks because banking is a service industry. Management of people and management of risk are two key challenges facing banks. How you manage the people and how you manage the risks determines your success in the banking business. Efficient risk management may not be possible without efficient and skilled manpower. Banking has been and will always be a "People Business". Though pricing is important, there may be other valid reasons why people select and stay with a particular bank. Banks must try to distinguish themselves by creating their own niches or images, especially in

transparent situations with a high level of competitiveness. In coming times, the very survival of the banks would depend on customer satisfaction. Those who do not meet the customer expectations will find survival difficult. Banks must articulate and emphasize the core values to attract and retain certain customer segments. Values such as "sound", "reliable", "innovative", "international", "close", "socially responsible", "Indian", etc. need to be

emphasized through concrete actions on the ground and it would be the bank’s human resource that would deliver this. 2 BIS central bankers’ speeches .It is a common complaint among bank executives that skilled manpower is in short supply. No two arguments on this, HR resources are becoming scarce – both in quality and quantity. And, it is quite elementary that any resource that is in short supply needs to be properly managed for the benefit of society and, therefore, you need to pay attention to the entire Human Resource Management process. What do I mean when I say this? You need to manage the people – and for this you need to discriminate between the people, I mean positive discrimination. The entire spectrum of HR practice requires revolutionary changes if the banks have to survive. Managing the people is the key challenge. And, in my opinion, discrimination is the key word when dealing with people. You will notice that I will use this word very frequently during my discussion.

How to Manage Human Resources

I would like to highlight the following key challenges faced in HR management in any organization and which is all the more relevant for public sector banks today:

Planning

(a) Acquiring the right people

(b) Retaining/ Developing the people

(c) Managing people separation / exit

(d) I would attempt at sharing my thoughts on each of the above areas:

(a) Planning

As the economy grows at a steady rate of around 7–8%, incomes rise and demographic dividends start accruing, the Banking industry is expected to take a quantum leap forward. But this growth will need a large number of people and considering that there are retirements in lakhs, a defining moment is being presented before the Nationalized Banks to transform. Are the banks ready to handle the new bunch of employees who will be culturally so different from their predecessors of the post nationalization era? It all begins with having a manpower plan. How many banks can claim to have a proper manpower plan that captures the type of people it requires, the level at which they are required, clearly defined roles for everyone, etc. Manpower plans should follow a lifecycle approach, that is, from the time of recruitment of an employee to his retirement. Further, this needs to be integrated with the Business Plan and strategy of the bank. Are we having a Business Strategy or Business Plan needs to be addressed first. While planning your people requirement it is very important for you to develop your “employer brand”, that is, your reputation as an employer to attract, engage and retain talented candidates and employees. Banks will have to plan for the following:

• A steady, carefully calibrated recruitment programme,

• As rapid technological changes transform business – continuous skill up-gradation.

• A new generation of the workforce will be working alongside an older generation as a team. Banking, in my opinion is a team work and this new situation will require cultural adjustments and therefore, change management

(b) Acquiring the right people:

What kind of talent is required by the banks? Discrimination is the key. Do we need good people? Or do we need suitable people? I think we require good but suitable people. Is the mad rush to top campuses justified? Will the people recruited from top management institutes understand the Financial In inclusion drive? Will these people have empathy towardsManaging people separation / exit: Except maybe a last few years,

so far most of the people leaving us were due to retirements. Things will change, unless we are doing all the other things that I spoke out earlier, properly, people will also leave us for other opportunities – and believe me, there are going to be plenty of them – not only from competitor banks and financial sector but also from outside the financial sector. We need to introduce a system of exit interviews to determine why people are leaving our organization – whether there are any inherent system/ structure failures? Have we not been able to empower the people enough? We should not try to block their exit but, as a part of the manpower planning process, should be able to identify substitutes who can step in and ensure non-disruption of important functions, in the event of the exit of a key person. The place of an experienced person could always be filled in through lateral recruitment of a person with matching skills/ experience.Systems/ Processes: The hallmark of any effective HR system/ process is that it should be objective and transparent. These traits are essential for the manpower to repose trust in the organization’s systems/ processes. No HR function can be effective if it does not enjoy the trust and confidence of its constituents.

Two key stakeholders in the HR management process are Board/ Senior Management and Unions. How much time do Board members spend on HR related issues? Perhaps, not enough. Structurally, it is important that Board/ senior management is actively involved in HR matters involving all its manifestations. Organized employee unions are an important part of the democratic process and form an effective channel for communicating with employees down the line. It is important to involve them in the HR process without allowing them to have an overbearing influence.

Communication:

Communication with employees is a vital part of the HR process as it helps enhance transparency in HR practices, thereby imparting credibility to them. When dealing with human beings, it is important to be objective, transparent and non-discriminatory and this must be effectively communicated. The employee must say that the management has all the above qualities. The Board must spend time on devising ways and means for this communication – lay down appropriate structures for the purpose. All forms of modern communication channels including intranet, corporate e mails, etc. can be adopted to reach out to employees. However, despite these developments, the traditional channel of communicating through unions continues to be relevant as

employees attribute greater credibility and reliability to messages received through their unions. The Banks have a clear cut advantage in this respect – they a already have a participative process.

Representatives of the employees sit on the Board itself and hence, it requires better practice of participative management in the real sense of the term.

(d) Managing people separation / exit:

Except maybe a last few years, so far most of the people leaving us were due to retirements. Things will change, unless we are doing all the other things that I spoke out earlier, properly, people will also leave us for other opportunities – and believe me, there are going to be plenty of them – not only from competitor banks and financial sector but also from outside the financial sector. We need to introduce a system of exit interviews to determine why people are leaving our organization – whether there are any inherent system/ structure failures? Have we not been able to empower the people enough? We should not try to block their exit but, as a part of the manpower planning process, should be able to identify substitutes who can step in and ensure non-disruption of important functions, in the event of the exit of a key person. The place of an experienced person could always be filled in through lateral recruitment of a person with matching skills/ experience.

Conclusion

The public sector banking system in India is standing at an important cross road. There are critical choices to be made and initiatives to be taken. The time is ripe for leaving the old baggage and taking bold measures. These measures would determine the future path of public sector banks and whether they would continue to retain their position of preeminence in the banking space or would they yield to the pressure from their peers in the private sector. Considering the importance that banks have in the nation building process, the choices made now could have a bearing on the economic future of the country and on the lives of crores of our fellow countrymen, many of whom are yet to be touched by the formal financial system. We must succeed. Not only for ourselves but also for the society and for the nation. I hope that some of the issues raised by me here today are dwelled upon during the course of this Conference and concrete action plans emerge to tackle the HR challenges facing our banks.

Financial Function Of Bank

A. Primary Functions of Banks:The primary functions of a bank are also known as banking functions. They are the main functions of a bank.These primary functions of banks are explained below.

1. Accepting Deposits

The bank collects deposits from the public. These deposits can be of different types, such as :-

Saving Deposits

Fixed Deposits

Current Deposits

Recurring Deposits

a. Saving Deposits

This type of deposits encourages saving habit among the public. The rate of interest is low. At present it is about 5% p.a. Withdrawals of deposits are allowed subject to certain restrictions. This account is suitable to salary and wage earners. This account can be opened in single name or in joint names.

b. Fixed Deposits

Lump sum amount is deposited at one time for a specific period. Higher rate of interest is paid, which varies with the period of deposit. Withdrawals are not allowed before the expiry of the period. Those who have surplus funds go for fixed deposit.

c. Current Deposits

This type of account is operated by businessmen. Withdrawals are freely allowed. No interest is paid. In fact, there are service charges. The account holders can get the benefit of overdraft facility.

d. Recurring Deposits

This type of account is operated by salaried persons and petty traders. A certain sum of money is periodically deposited into the bank. Withdrawals are permitted only after the expiry of certain period. A higher rate of interest is paid.

2. Granting of Loans and Advances

The bank advances loans to the business community and other members of the public. The rate charged is higher than what it pays on deposits. The difference in the interest rates (lending rate and the deposit rate) is its profit.

The types of bank loans and advances are :-

Overdraft

Cash Credits

Loans

Discounting of Bill of Exchange

a. Overdraft

This type of advances are given to current account holders. No separate account is maintained. All entries are made in the current account. A certain amount is sanctioned as overdraft which can be withdrawn within a certain period of time say three months or so. Interest is charged on actual amount withdrawn. An overdraft facility is granted against a collateral security. It is sanctioned to businessman and firms.

b. Cash Credits

The client is allowed cash credit upto a specific limit fixed in advance. It can be given to current account holders as well as to others who do not have an account with bank. Separate cash credit account is maintained. Interest is charged on the amount withdrawn in excess of limit. The cash credit is given against the security of tangible assets and / or guarantees. The advance is given for a longer period and a larger amount of loan is sanctioned than that of overdraft.

c. Loans

It is normally for short term say a period of one year or medium term say a period of five years. Now-a-days, banks do lend money for long term. Repayment of money can be in the form of installments spread over a period of time or in a lumpsum amount. Interest is charged on the actual amount sanctioned, whether withdrawn or not. The rate of interest may be slightly lower than what is charged on overdrafts and cash credits. Loans are normally secured against tangible assets of the company.

d. Discounting of Bill of Exchange

The bank can advance money by discounting or by purchasing bills of exchange both domestic and foreign bills. The bank pays the bill amount to the drawer or the beneficiary of the bill by deducting usual discount charges. On maturity, the bill is presented to the drawee or acceptor of the bill and the amount is collected.

B. Secondary Functions of Banks

The bank performs a number of secondary functions, also called as non-banking functions.

These important secondary functions of banks are explained below.

1. Agency Functions

The bank acts as an agent of its customers. The bank performs a number of agency functions which includes :-

Transfer of Funds

Collection of Cheques

Periodic Payments

Portfolio Management

Periodic Collections

Other Agency Functions

a. Transfer of Funds

The bank transfer funds from one branch to another or from one place to another.

b. Collection of Cheques

The bank collects the money of the cheques through clearing section of its customers. The bank also collects money of the bills of exchange.

c. Periodic Payments

On standing instructions of the client, the bank makes periodic payments in respect of electricity bills, rent, etc.

d. Portfolio Management

The banks also undertakes to purchase and sell the shares and debentures on behalf of the clients and accordingly debits or credits the account. This facility is called portfolio management.

e. Periodic Collections

The bank collects salary, pension, dividend and such other periodic collections on behalf of the client.

f. Other Agency Functions

They act as trustees, executors, advisers and administrators on behalf of its clients. They act as representatives of clients to deal with other banks and institutions.

2. General Utility Functions

The bank also performs general utility functions, such as :-

Issue of Drafts, Letter of Credits, etc.

Locker Facility

Underwriting of Shares

Dealing in Foreign Exchange

Project Reports

Social Welfare Programmes

Other Utility Functions

a. Issue of Drafts and Letter of Credits

Banks issue drafts for transferring money from one place to another. It also issues letter of credit, especially in case of, import trade. It also issues travellers' cheques.

b. Locker Facility

The bank provides a locker facility for the safe custody of valuable documents, gold ornaments and other valuables.

c. Underwriting of Shares

The bank underwrites shares and debentures through its merchant banking division.

d. Dealing in Foreign Exchange

The commercial banks are allowed by RBI to deal in foreign exchange.

e. Project Reports

The bank may also undertake to prepare project reports on behalf of its clients.

f. Social Welfare Programmes

It undertakes social welfare programmes, such as adult literacy programmes, public welfare campaigns, etc.

g. Other Utility Functions

It acts as a referee to financial standing of customers. It collects creditworthiness information about clients of its customers. It provides market information to its customers, etc. It provides travellers' cheque facility.

Marketing Functions Of Bank

Currency option

Currency option gives the buyer the option, a right but not the obligation, to buy or sell a specific quantity of the currency called option amount at an agreed rate called strike price and for a specific period. The buyer pays the seller a premium which is collected upfront, for the privilege of being able to buy or sell the currency without actually being committed to do so Interest rate

cap Interest rate cap stats a maximum or cap on the interest payable. The bank here agrees to compensate the purchase of the cap if interest rate rises over a certain level. Thus the buyer is protected from adverse movement in interest rate.

Interest rate floor

Interest rate floor provides an effective guaranteed minimum interest rate. If the interest rate falls below the floor level agreed between the bank and the customer, the customer is compensated by the bank.

Interest rate collar

Interest rate collar is the simultaneous purchase of a cap agreement and sale of floor.

Forward rate agreement

Forward rate agreement is another product of the commercial banks. It is an agreement between a bank on the one hand and a borrower or depositor on the other, the former guaranteeing the latter the interest rate on an agreed future date. The agreement specifies that the difference between the agreed interest rate and the actual rate that may be ruling on the specified date will be made good by the bank to the other party. The recent years witnessed Indian banking on a technological upswing. Some of the innovations that are made possible on account of infusion of technology are

Total Branch Automation Total Branch Automation (TBA) enables customers to transact all their banking needs through a single counter instead of going to different counters in the premises. TBA helps significantly in improving the efficiency of operations.

Automated Teller Machine (ATM)

ATMs are capable of performing the. function of a bank-teller or a cashier that is dispensing cash, answering account related enquiries, ordering a new cheque book, providing statements of

account etc. Electronic Fund Transfer Banks through the technique of net-working are able to transmit messages at the push of a button. Now the mail transfers and telegraphic transfers are effected within a matter of seconds.

Anywhere banking

Thanks to the networking of computerised branches, customers can choose to operate their account through any branch of the bank once they become the account holder of a branch.

Anytime Banking

The ATM facilities enable customers to transact with the bank anytime of the day all through the 24 hours.

Home banking

Under home banking customer can, route most of the transactions through the personal computer, which will be up-linked with the main frame computer of the bank.

Tele banking

'Tele banking facilities enable the customer to use Automatic voice recorder for simpler queries, like balance in the account, request for a cheque book, and standing instructions. The customer can do many of their non-cash transaction over phone.

Plastic Card

Credit Card as a method of payment without the use of cash or cheque is gradually giving way to debit cards and Smart Cards. In the emerging scenario, a professional banker has to understand the dynamics of new developments taking place in the field of commercial banking and has to equip himself with the professional skill and competence to operate successfully in the changing competitive environment.

Banking is essential to a modem economy But due to the new economic policy, revolutionary changes are going on in the financial sector of the nation and for performing banking functions, commercial banks alone need not be essential. Non-commercial banks and non- banking institutions come to compete with commercial banks in rendering banking actions. The financial markets are fully ready to bestow this new on the co-operative banks and non-banking financial institutions. Financial liberalisation, internationalisation and technological advances have made possible this shift of intermediation from commercial banks 110 other financial institutions.

Co-operative banking system consists of rural and urban co- operative banks. It supports the efforts of commercial banks in mobilising savings, meeting the credit needs of the local population. The history of co-operative banking started with the passing of the Co- operative Societies Act 1904. The objective of the Act was to establish Co-operative Credit Societies to encourage thrift, self help and co- operation among agriculturists, artisan and persons of limited means36. Many co-operative credit societies were set up under this Act. The Co- operative Societies Act 1912 .

Operational Functions Of Banking

Funds Transmission

Retail of consumer banking

Commercial banking

Client records and account maintenance

Capital markets & treasury

Treasury

Foreign exchange

COMPARATIVE PROFIT & LOSS ACCOUNT OF GOPINATH PATIL PARSIK

BANK LTD. FOR THE YEAR ENDED 30st March,2010. And 30st March, 2011.

EXPENDITURE AS ON

31.03.2010

AS ON

31.03.2011

% OF

2010

% OF

2011

PRODUCT NAME

INTEREST PAID ON DEPOSITS :

INT. PAID ON SAVINGS DEPOSITS

INT.PAID ON SAVING DEPOSIT

SOCIETY

INT.PAID ON C.A SOCIETY

INT.PAID ON FIXED DEPOSITS

INT.PAID ON MONTHLY INT SCHEME

INT. PAID ON QUARTERLY

INT.SCHEME

INT.PAID ON 30D/STAR F5”S

INT.PAID ON RE-INVESTMENT

INT.PAID ON R.D

INT.PAID ON F.D.I.T.EXEMPTED

INT.PAID WITHOUT INTEREST

INT.PAID ON MATURITY DEPOSIT

INT.PAID ON SPL FD SCHEME

INT.PAID ON SPL QUARTERLY INT

SCHEME

INT.PAID ON SPL MONTHLY INT

SCHEME

62,81,831.95

3,27,259.00

2,487.00

60,70,285.00

12,16,673.00

11,34,680.00

40,338.00

4528574.00

551702

34164

29067

151363

------------

87,23,057.00

3,76,622.00

9,241

61,76,291.50

12,99,863.00

13,09,817.75

34,423

46,70,384.75

7,05,955

55,216

8,976

48,947

27,470

10,870

6,631

14.00

0.72

0.005

13.55

2.7

2.5

0.08

10.09

1.23

0.076

0.064

0.33

-----

-----

------

17.45

0.75

0.018

12.36

2.6

2.62

0.06

9.34

1.41

0.11

0.01

0.009

0.05

0.02

0.01

2,03,68,424.

45

2,34,63,765.00 45.41 46.96

SALARY AND WAGES:

SALARY & ALLOWANCES 39,72,758 5173736 8.85 10.35

PROVIDEND FUND

BANK CONTACT TO STAFF FPF

LABOUR WELFARE FUND

2,65,525

89,528

792

3,53,941

1,09,200

828

0.59

0.19

0.001

0.70

0.21

0.001

43,28,603 56,37,705 9.65 11.28

RENT,RATES,INSURANCE

&ELECTRICITY:

RENT,RATES&TAXES

ELECTRICITY BILL

TELEPHONE BILLS

PROPERTY TAX

WATER CHARGES

41,400

3,40,140

45,785

40,824

1,395

85,292

3,26,960

41,009

________

3,957

0.092

0.75

0.10

0.09

0.0031

0.17

0.65

0.08

-----

0.007

4,69,544 4,57,218 1.04 0.91

POSTAGE & TELEGRAM:

PRINTING,STATIONERY,ADVERTISE

MENT

STATIONERY ACCOUNT

PRINTING ACCOUNT

46,762

1,86,734

93,765

1,77,563

0.1

0.41

0.18

0.35

2,33,496.35 2,71,328 0.52 0.54

OTHERS:

TRAVELLING EXPENSES

VEHICLE EXPENSES

MISC REPAIRS

MISC. EXPENSES

SERVICING CHARGES

SECURITY SERVICE CHARGES

1,953

8,552

3,693

90,736.61

11,935

1,29,236

2,623

9,501

25,860

83,668.50

22,400

1,52,214

0.004

0.010

0.008

0.20

0.02

0.28

0.005

0.01

0.05

0.16

0.04

0.30

2,46,105.61 2,96,266.50 0.54 0.59

PROVISIONS:

DEPRECIATION ON VEHICLE

DEPRECIATION

ON FURNITURE&FIXTURE

DEPRECIATION ON COMPUTER

DEPRECIATION ON BUILDING

9,016.05

2,38,779.52

1,05,486.57

1,55,876.66

6,762

2,46,211.08

45,284.06

1,40,288.99

0.02

0.53

0.23

0.34

0.01

0.49

0.09

0.28

5,09,158.80 4,38,546.17 1.13 0.87

EXCESS OF INCOME OVER

EXPENDITURE

18694268.54 19397985.78 41.68 38.82

TOTAL EXPENDITURE 44849600.75 49962814.45 100 100

INCOME:

PRODUCT NAME

INTEREST ON LOANS

INT.RECD EMI MONTHLY

EDUCATION LOAN

INT.RECD ON CC HYPON LOAN

INT.RECD ON GOLD LOAN(202)

INT.RECD ON O.D

INT.RECD ON S.T.LOAN

INT.RECD ON GOLD LOAN

MONTHLY

INT.RECD ON MT LOAN MONTHLY

INT.RECD ON LT LOAN MONTHLY

INT.RECD ON EMI MONTHLY

67,526

5,34,915.15

3,44,293.35

3,25,776.70

3,72,135

5,82,677.70

18,86,465

1,13,95,474

85,05,339.25

1,33,11,067

1,35,615

5,29,264

5,64,926

4,88,082

2,97,060

5,40,940.60

17,04,918

95,21,959.45

68,91,628

1,84,00,665

0.15

1.19

0.760.72

0.82

1.294.20

25.4018.96

29.37

0.27

1.05

1.13

0.97

0.59

1.08

3.41

19.05

13.79

36.82

INT.RECD ON DEPOSIT

INT.RECD ON EMI MONTHLY

INT.RECD ON LT HOUSING LOAN

INT.RECD ON MT HOUSE REPAIR &

DEP

INT.RECD ON MT PROFESSIONAL

LOAN

INT.RECD ON MT EDUCATIONAL

LOAN

INT.RECD ON MT VEHICLE LOAN

INT.RECD ON MT VEHICLE

LOAN(BM)

INT.RECD ON MT VEHICLE LOAN

INT.RECD ON MT PERSONAL

LOAN(BM)

INT RECD ON MT UNSECURED

LOAN

INT.RECD ON MT MONTHLY

56,97,497

3,80,080

1,24,122

8,266

54,175

2,14,551

1,92,684

37,059

5,70,331

54,366

3,39,068

4,35,12,208.

45

4,87,19,740.05 97.01 97.51

COMMISSION,EXCHANGE&

BROKERAGE

COMMISSION ON B.D

COMMISSION ACCOUNT

PENAL INTEREST

LOCKER RENT

SERVICE CHARGES

ATM CARD COMMISSION

REFERAL

COMMISSION(INSURANCE)

50,265

5,15,054

1,864

76,887

6,01,572

4,000

87,749

46,475

4,69,956

87,905

5,36,900.27

15,200

86,638

0.11

11.48

0.004

0.17

1.340

0.008

0.19

0.09

0.94

----

0.17

1.07

0.03

0.17

13,37,392.30 12,43,074.40 2.98 2.48

TOTAL INCOME 44849600.75 49962814.45 100 100

1)PROFIT OF THE BANK

Year Profit inRs.

2010 18694268.54

2011 19397985.78

2010 201118200000

18400000

18600000

18800000

19000000

19200000

19400000

19600000Profit in Rs.

Profit in Rs.

Interpretation:

By comparing above statement, we can see that the profit of the

bank are increasing year by year. In the year of 2010 the profit of

the bank were 1,86,94,268.54 and in the year of 2011,it is

1,93,97,985.78 2)EXPENSES OF THE BANK (IN

PERCENTAGE):

Year Expenses inRs.

2010 2,61,55,332.21

2011 3,05,64,828.00

2010 201123000000

24000000

25000000

26000000

27000000

28000000

29000000

30000000

31000000

Expenses in Rs

Interpretation

By comparing above

statement, i.e. profit

& loss account,I got that with the increasing of profit of the bank, the

expenses of bank have also been increasing day by day. In the

comparative analysis of P & L A/C,Ifound that the expenses of the bank in

the year of 2010 was 58.29 % and in the year 2011 it is 61.15%.

In the comparative analysis of profit &loss A/C I got that some

kind of interest received to the bank were reduced.

THE FOLLOWING INTEREST ALSO DECREASES

INT.RECD ON HYPOTHICATIONLOAN IN (%)

2010 1.19%

2011 1.05%

20102011

0.95

1

1.05

1.1

1.15

1.2

Int Recvd on Hypothica-tion loan

1.19 %

1.05%

Interpretation:-

The interest received on hypothecation loan in the year 2010 were

1.19 and in the year of 2011 it is 1.05.The Banks interest rate on

hypothecation loan was low in the year 2010, and in the year 2011,

bank increased rate of interest on such kind of loan.

Reasons for reducing interest on Hypothecation loan:-

The rate of interest on Hypothecation loan was less in the year 2010.

In the year 2011, Bank increases the rate of interest more than the

previous year.

In this region, there are number of competing banks.

INTREST RECEIVED ON SHORT TERM LOAN

Interest on short term loan has been a decrease due to some reasons.Interest

which is received on short term loan in the financial year 2010 is RS. 372135

which is more than the financial year 2011.In the year 2011 the interest received

on ST Loan is 297060. The percentage of such interest is reduced by

0.23%.The amount of interest on the above loan in the year 2010 is 0.89% and in

the year 2011 is 0.59.

INTREST RECEIVED ON SHORT TERM LOAN

Year PERCENTAGE(

%)

2010 0.89

2011 0.59

2010 20110

0.10.20.30.40.50.60.70.80.9

1Int.received on Short Term Loan

Short Term Loan

0.89 %

0.59 %

The following reasons are found for decreasing the interest on S

T Loan:

1) Bank increases the interest rate on short term loan in the year 2011.

2) In the financial year 2009-10 ,the interest on ST loan was less than the year

2010-11.

3) Due to the low interest rate in the year 2010, customer was attracted on that

type of loan .

4) Competitor bank in the same area was offer the same loan with low interest

rate than this bank.

2) INT.RECD ON GOLD LOAN MONTHLY

The interest received on Gold Loan Monthly in the year 2010 is

582677.70.And in the year of 2011 it is 540940.60. It is mean that the interest received

on gold loan in the year 2010 is more than the financial year 2011.

In percentage form it is 1.29% in the year 2010 and in the year 2011 it is 1.08%.

In above case I found that some customer doesn’t pay interest when they repay half

amount of the loan .

THE REASONS FOR GETTING LESS INTEREST ON GOLD LOAN:

The bank havegive less loan on gold in the year 2011.

The market price of 10gmsgold is 21000/- and bank give loan only 70-75% of that

amount.

The procedure is big for getting Gold loan. so, Customer attracts on other banks.

After half payment of gold loan ,customer are not paying any EMI ,When bank send

them the notice that time they paid the installment.

The following figure shows the interest received in %

YEAR PERCENTAGE( %)

2010 1.29%

2011 1.08%

2010 20110.95

1

1.05

1.1

1.15

1.2

1.25

1.3

1.35

Int.Recvd On Gold Loan

Int.Recvd On Gold Loan 1.29 %

1.08 %

INT.RECD ON MT LOAN MONTHLY

The interest received on medium term loan monthly is 1886465 in the year 2010.and in the year of 2011 it is 1704818.the figure says that ,theamt is decreases due to some reasons.

Reasons are as follows:

YEAR PERCENTAGE( %)

2010 4.20

`2011 3.41

2010 20110

0.51

1.52

2.53

3.54

4.5

Int.Received On M.T. Loan

Int.Received On M.T. Loan4.20 %

3.41%

INT.RECD ON LT LOAN MONTHLY

The interest received on Long Term monthly loan in the year 2010 is 1,13,95,474.00

and in the year of 2011 its till reduced by 95,21,959.45.in the percent form it is 25.40%

in the year 2010.and in the year 2011 it is 19.05 . its reduces because of increase of

interest rate of the bank in such type of loan.

YEAR PERCENTAGE( %

)

2010 25.40 %

2011 19.5 %

Int. Recvd On L.T Loan

20102011

25.42 19.5%

25.40%

Limitations of Financial Statement Analysis:

Though financial statement analysis is quite helpful in determining financial

strengths and weaknesses of a firm, it is based on the information available in financial

statements. As such, the financial statement analysis also suffers from various

limitations of financial statements. Hence, the analyst must be conscious of the impact

of price level changes, window dressing of financial statements, changes in accounting

policies of a firm, accounting concepts and conventions, personal judgments, etc.

Some other limitations of financial statement analysis are:

1. Financial statement analysis does not consider price level changes.

2. Financial statement analysis may be misleading without the knowledge

of the changes in accounting procedure followed by a firm.

3. Financial statement analysis is just a study of interim reports.

4. Monetary information alone is considered in financial statement analysis while non-

monetary aspects are ignored.

5. The financial statements are prepared on the basis of on-going concept, as such, it

does not reflect the current position.

CHAPTER – 5

FINDINGS&CONCLUSION

5.1 FINDINGS

1. The Bank doesn’t decrease their interest rate on some kind of loan.

2. The banks interest rate on loan is less in the year of 2010.

3. In case of Gold loan, Bank fixed the requisite amount ( Fore.g. For 10

gm. Market price is 22,000/- and bank fixed only 16000-17000/-

amount .Bank give only 70% amount which is quite low than others.

4. Interest rates on different types of FD is lower than other bank. that’s

why customer close their FD and keep their FD in the other bank.

5. In case of Personal loan ,in the year 2011 bank stop to give the

personal loan to the Salary A/C holder(namely idiotmetallic’s& thane

municipal transport) because of chances of closing the idiotmetallic’s.

5.2 CONCLUSION

My project turned out to be moderately profitable. In case of rate of interest on loan, the

bank should have to keep interest rate as such as other banks interest rate, or less than

it. For increasing Deposits of the bank, Bank should have to increase their interest rate

on Deposits. The rate of Fixed Deposit should also keep as others banks interest rate or

more than other bank.