Krishna Grameena Bank

KRISHNA GRAMEENA BANK
Executive Summary
INTRODUCTION
Working capital management is typically seen as the managing the

money. Working capital management is one of the business firms and it
is an economic activity concerned with the production and sale of goods
and services for the purpose of earning profit.
Broadly defined, working capital management is a life and blood

of a business firm. Working capital management concerned with
problems that rise in attempting to manage current asset, current
liabilities and the exist between them.
Today, co-operative societies are found in rural as well as urban

areas. In rural areas they are known as primary credit societies and in
urban areas, they are known as co-operative banks.
Working capital management is an activity concerned with the

conversion of raw materials or semi finished goods into finished goods,
but in broad sense, it is a branch of business activity which is concerned
with the raising, production, processing or fabrication of products.
INSTITUTE OF BUSINESS MANAGEMENT &RESEARCH HUBLI Page 1

Working capital management has its own significance in the day to day
operations of the business working capital in the industry indicates the
effective utilization of working capital is the format requirement of any
industry.
OBJECTIVES OF THE STUDY
1) To study aims to achieve the following objectives
2) To study and understand financial statement of the bank
3) To study the utilization of a working capital in the bank
4) To achieve unit of direction in accomplishment of corporate goals at

all levels in the area of over all credit management
5) To meet all genuine credit needs of existing clients

RESEARCH METHDOLOGY
The study assumes great significance because it has an impact

on all the activities of the bank. Its primarily responsibility is to discharge
the credit function successfully . It touches on all the banking function.
And also assumes a great contribution because of the fact that the bank
requires certain strategic inputs into boost not only in the place of
function but also the service factor.
Sources of data
The source of information is collected from primary and secondary data.
1) Primary Data:
The information was collected by communicating with the

officers and employees observation and visiting all departments.
2) Secondary Data;
The secondary data has been collected from the annual reports of
the bank, last three years balance sheet and profit loss account.
Also information collected from text, bank annual reports, websites

etc and from the financial statement analysis which helps in calculating
different ratio

SCOPE OF THE STUDY
The scope of the study is to identify the areas of the control to have
better over various components of working capital management are
operating in nature and not our time decision.
So it is an attempt is to be made to identify the optimum working

capital requirement for corporation bank the manner in which they utilize
the current assets in a better way.
1.5 LIMITAION OF THE STUDY
1) Managers and employees were relevant in providing information
2) This study concentrates only on working capital aspects.
3) The information data collected and analyzed is restricted to the

researches knowledge and ability.

BANK PROFILE

BANK PROFILE
HEAD OFFICE
GULBARGA

Krishna Grameena Bank was established in the year 1978. The bank has
completed 29 years of its meaningful service to the people of Gulbarga
and Bidar districts. Since inception the bank is striving hard to achive its
set objectives in its area of operation. The bank has now extended its
coverage to all the urban and semi urban centers in both the districts.
The head office building has been well equipped with centralized air
conditioning, computerized, functioning, solar lighting, modern gadgets
and a sprawling well maintained garden. The head office premises is
regarded as one of the BEST CORPORATE OFFICE not only in
Gulbarga city but also in the entire Hyderabad Karnataka Area. The bank
enjoys the popularity as the PEOPLE’S BANK in the area.
During the year 2007-2008 the bank crossed a major milestone by

surpassing Rs.1566 crores of business by registering a growth of 29.68%
over the previous year. Further the bank has doubled its total business
during the last 3 years from Rs.777 crores as on March 2005 to Rs.1566
crores as on March 2008. Systematic, proactive and sustained efforts are
continued to accomplish all round excellence

The Krishna Grameena Bank is based on the traditional Indian value of services to
the community, bank is reputed as one of the well run banks in the community of
public sector banks in the country.
The bank has been richly endowed with a relatively young, dynamic and efficient
manpower, which is the key factor of the bank success. Excellence in performance
and uniqueness in customer service form the central core of the banks
organizational culture. The growing confidence of its clientele is well reflected in
the banks performance in all critical areas of its operations all through the years.
Krishna Grameena Bank is pioneer in promoting & extending financial

assistance to self help group so far the Bank has Credit linked 8042 SHG’s out
total 8841 SHGs who are having SB A/c with Bank. The aggregate quantum of
micro finance to SHGs is Rs.40.69 Crores.
The bank has bagged third prize from NABARD for best performances in
SHG Bank linkage programme in Karnataka State during 2005- 2006.
The Bank is one of the two RRBs in India selected by NABARD for
implementation of smart credit pilot project were in processor card are used by
SHG member to know balance in their SB A/c and to draw the money without
bothering to Branch Manager /Rural Development Officer.

ANNUAL REPORT OF FIVE YEARS
1. Directors Report:
The board of directors have pleasure in presently the annual report together
with balance sheet and profit and loss account of the bank for the five years
The bank has put in place a well articulated frame work of 3 P’s (people,
process, products) to identify and execute new initiatives to accelerate business
growth on sound and sustainable lines. This frame work is also designed to
improve customer engagement at all customer touch points.
Innovation is actively encouraged people initiatives include new programmes for

leadership development, succession planning, appointment of execute coach,
incentives for high performance, performance enhancement programmers through
counselors etc process initiative include centralized of back office functions,
separation of credit marketing and approved process and feed forward MIS to
branches. New product like branchless inclusion strategies. The bank is actively
chalking out strategies to take the bank to higher growth trajectory.

2. Branch Network:
As at the end of the financial year, the bank is having a well spread out
network of 109 branches, 76 in Gulbarga districts and remaining 33 in Bidar
district.
During the financial year 2007-2008, the bank has opened 4 new branches
two in Gulbarga district and two in Bidar districts. There are 4 area officer of
which 3 are in Gulbarga districts situated at Gulbarga, Sedam, and Shahapur and
one in Bidar.
3. Share Capital:
The bank has an authorized share capital of Rs.50000/- and an issued and
paid up capital of Rs.10000 thousands contributed by the three share holders viz,
 Govt. of India : 50%
 Sponsor Bank State of India : 35%
 Govt. of Karnataka : 15%

4. Share Capital Deposit:
During the year 1997-1998 the bank was taken up for restructing and a sum
of Rs.251800 thousands was sanctioned to cleanse the ‘Balance Sheet’. According
an aggregate sum of Rs.187577 thousands has been received from all the three
share holders proportionately in two branches. The balance amount, in spite of our
best efforts was not released till date. As on 31/03/2008 the position of share
capital deposit was as under:
Sl. NO. Name of the Share Holders Amount Released
1 Govt. of India (50%) 93788
2 Govt. of Karnataka (15%) 28137
3 State Bank of India (35%) 187577
5.

The bank has achieved a growth of Rs.1686786 thousands during the year.
The break up of existing level of deposits is as under:
Sl. 2008-2009 2009-2010

Category of
No Amt
Deposit No. of A/c No. of A/c Amt %
. %
1 Demand Deposits 739592 48.65 591970 53.52
2 Time Deposits 103201 51.35 101309 46.48
Total 842793 100.00 693279 100.00
1. The growth in deposits during the year was a nefty 28.85% when compared
to the p.y. This is higher than all scheduled commercial banks growth rate of
23.10% during the year 2007-2008.
2. The percentage of demand deposits has came down during the year on
account of some of the state government departments preferring banks with core
bank facility and shifted their accounts from Krishna Grameena Bank.
3. Pre-branch deposits a raise from Rs.55129 thousands as on March 2007 to

Rs.69110 thousands as on March 2008.
4. Pre-employed deposits increased from Rs.12073 thousands as on March

2007 to Rs.15792 thousands as on March 2008

6. Borrowings:
Borrowings from NABARD and sponsor bank are the major sources of
funds for our bank besides deposits. The detailed of limit sanctioned and refinance
outstanding as on 31/03/2009 are as under The bank continued to make prompt
repayments to NABARD and the sponsor bank.
From NABARD From SBI

Sl. Limit Amt. Limit Amt.
Particulars
No Sanctio Outstandin Sanctio Outstandi
n g n ng
1 Short term , seasonal 389720 273710 168000 1319484
agricultural operation 0
2 Short term, other than - 640000 366288
seasonal agricultural
operation
3 Short term, development 304580 191515 126000 778492
of tribal population 0
4 Short term, national oil 150757 83965 660000 519106
seed development
programme
5 Short term, marketing of - - - -
crops
6 Medium term (schematic) 595035 595035 - -
7 Medium term (conversion) - - - -
Total 1440092 1144225 424000 2983370
0
Investment:

As on 31/03/2009 the total investment of the bank stood at Rs.1747497

thousands.
Loans and Advances Outstanding:
The bank has recorded a growth of Rs.1409695 thousands during 2007-2008

as against Rs.1349083 thousands achieved during the p.y 2006-2007. During the
year the bank has disbursed Rs.4966578 thousands as against ACP target
Rs.3711996 thousands.
Schemes of Krishna Grameena Bank:
1. Krishna Krishi Card (KKC) Scheme:
Kisan credit cards under KGB brand name Krishna Krishi card, the bank has
disbursed an amount of Rs.3611500 thousands to formers. During the year the
bank has issued new KKC card to 6514 formers with this the total number of KKC
issued by the bank has shot up to 142500.
All eligible borrowers have been issued with the credit cards and personal
accident insurance cover has been provided to all eligible card holders (i.e. below
the stipulated age of 70 years) under personal accident insurance scheme (PAIS).
The share of premia borne by the bank is Rs.1361 thousands as against Rs.681
thousands contributed by borrowers.

Swarojgar Credit Cards (SCC):
The bank has sanctioned 432 SCC during the year 2007-2008 taking the
cumulative number of cards issued to 9858 as against 9426 as on 31/03/2007.
Amount outstanding also increased to Rs.2329.83 lakhs as on 31/03/2009 from
2150.55 lakhs as on March 2008.
Spread Analysis:
The following tables shows various financial ratio:
Sl. No. Particulars 2007-08 2008-09

Average working funds 8471005 10382014
1 Financial Return 9.00% 8.99%
2 Financial Cost 4.03% 4.47%
3 Financial Margin (I-II) 4.97% 4.52%
4 Operating Margin 2.86% 2.41%
5 Miscellaneous Income 0.78% 0.74%
6 Operating Profit 2.90% 2.85%
7 Risk Cost 0.04% 0.03%
8 Net Margin 2.86% 2.82%
The financial cost has increased by 0.44% on account of aggressive

mobilization of term deposits during the year and reduction of demand deposits
shares in total deposits as same of the government. Departments preferred to bank,

with bank having core banking facility for keeping their deposits. However, it is
gratifying to note management substantially from 2.85% as on 31/03/2007 to
2.41% as on 31/03/2008 variation in all other ratio are marginal.
Transfer Price Mechanism:
The bank has adopted a fair transfer price mechanism on funds lent to and
borrowed from internally as under;
1. Interest rate on funds that lent to head office on total monthly average
deposits at 9.50% p.a.
2. Interest rate on funds borrowed from head office on total monthly average
advances at 3.00% p.a.

BRANCHES COMING UNDER OUR VARIOUS AREA OFFICES

SBRANCHES OF AREA –I :Gulbarga area of branches
Area Manager, Area Office: Aland Road, Shahbazar,
GULBARGA
PIN- 585101 Tel :08472-242069

OFFICE
SL. Name of The Taluk & PIN
Telephone
NO. BRANCH. District CODE
Numbers
1. NehruGunj GULBARGA 958472- 585104
268263
2. Harsoor. Taluka & 958478- 585102
District- 222754
Gulbarga
3. Dongargaon. Taluka & 958478- 585313
District- 224059
Gulbarga
4. Sonth. Taluka & 958478- 585324
District- 225808
Gulbarga
5. Hagargundgi. Taluka & 958472- 585308
District- 213259
Gulbarga
6. Aland. Taluk- Aland, 958477- 585302
Dist- Gulbarga 202530
7. SalgeraVK Taluk- Aland, 958477- 585316
8. Bhusnoor. Taluk- Aland, 958440- 585268
9. Khajuri Taluk- Aland, 958477- 585314
10. Madiyal. Taluk- Aland, 958440- 585336


11 Sarasamba. Taluk- Aland, 958477- 585302
12. Chinchansur. Taluk- Aland, 958477- 585104
13. Ladmugali. Taluk- Aland, 958477- 585316
14. Tadakal. Taluk- Aland, 958477- 585343
15. Narona. Taluk- Aland, 958477- 585311
16. Athnoor. Tq Afzalpur, 958470- 585301
17. Revoor-B Tq Afzalpur, 958470- 585301
18. Udachan. Tq Afzalpur, 958471- 585301
19. GobburB Tq Afzalpur, 958470- 585265
20. Bandarwad. Tq Afzalpur, 958470- 585265
21. Stn.Ghangapur. Tq Afzalpur, 958470- 585213
22. Desai.Kallur. Tq Afzalpur, 958470- 585301
23. Nelogi. Tq Jewargi, 958442- 585310
24. Aralgundagi. Tq Jewargi, 958442- 585310
25. Ankalga. Tq Jewargi, 958442- 585212

BRANCHES OF AREA –II SHAHAPUR AREA

Area Manager, Area Office: B B Road SHAHAPUR
PIN- 585223 Tel :08479-244607

SL. OFFICE
Name of The PIN
NO Taluk & District Telephone
BRANCH. CODE
. Numbers
1. Andola. Tq Jewargi, Dist- 958442- 585303
Gulbarga 221691
2. Ijeri. Tq Jewargi, Dist- 958442- 585310
Gulbarga 223974
3. Malli. Tq Jewargi, Dist- 958442- 585325
Gulbarga 220027
4. Balbatti. Tq Jewargi, Dist- 958442- 585309
Gulbarga 280409
5. Dornalli. Tq Shahapur Dist- 958479- 585223
Gulbarga 212753
6. Wanadurga. Tq Shahapur Dist- 958479- 585309
Gulbarga 221073
7. Wadagera. Tq Shahapur Dist- 958479- 585368
Gulbarga 219127
8. Bendebimbli. Tq Shahapur Dist- ……. 585368
Gulbarga
9. Shorapur. Tq Shorapur. Dist- 958443- 585224
Gulbarga 256069
10. Devapur. Tq Shorapur. Dist- 958443- 585290
Gulbarga 275350
11 Pethammapur. Tq Shorapur. Dist- 958443- 585290
Gulbarga 273002
12. Rajankollur. Tq Shorapur. Dist 958443- 585291
Gulbarga 223907
13. Kodekal. Tq Shorapur. Dist 958444- 585237
Gulbarga 222850
14. Vajjal. Tq Shorapur. Dist 958443- 585215

Gulbarga 200207
15. Naganoor. Tq Shorapur. Dist 958443- 585215
Gulbarga 271073
16. Malagatti. Tq Shorapur. Dist 958443- 585216
Gulbarga 329784
17. Hunsagi. Tq Shorapur. Dist 958444- 585215
Gulbarga 200087
18. Yergol. Tq Yadgir. Dist 958473- 585218
Gulbarga 215566
19. Gajarkot. Tq Yadgir. Dist 958473- 585214
Gulbarga 225605
20. Putpak. Tq Yadgir. Dist 958473- 585214
Gulbarga 225429
21. Kadechur. Tq Yadgir. Dist 958473- 585374
Gulbarga 281055
22. Konkal. Tq Yadgir. Dist 958473- 585321
Gulbarga 213737
23 Gurmitkal. Tq Yadgir. Dist 958441- 585214
Gulbarga 225363



BOARD OF DIRECTORS
SHRI V. M. HAGARAGI
CHAIRMAN
DIRECTORS
1.SHRI P. THOMAS
ASSISTANT GENERAL MANAGER
Rural Planning and Credit Department
Reserve Bank of India
BANGALORE
2.SHRI P. G. SHET
District Development Manager
National Bank for Agriculture and
Rural Development (NABARAD)
GULBARGA
3. SMT. GURAMMA SIDDA REDDY

MIG-19, K H B Colony
BIDAR
4. SHRI ISHWAR B KHANDRE

C/O SHIR BHIMRAO KHANDRE
KHANDRE GALLI, GUNJ
BHALKI (DT. BIDAR)

5. SALMA K FAHIM I.A.S.

Chief Executive Officer
Zilla Panchayat
GULBARGA
6.SMT. GURNEET TEJ I.A.S.

Chief Executive Officer
Zilla Panchayat
BIDAR
7. SHRI.P.P.G.Muni Subba Reddy

Assistant General Manager
(RBU II), State Bank of India
Local Head Office
BANGALORE
8. SHRI.U.N.Narayana Maiya
Assistant General Manager
State Bank of India
Regional Business Office
GULBARGA

RATE OF INTEREST ON ADVANCES W.E.F.01.08.2009

Sl
Revised Rate
. TtTYPES OF LOANS AND EXISTING
ADVANCE RATES Wef01-08-2009
no
ACC
Upto Rs.50000/- 7% 7% *
1 Rs.50001/- to Rs.2 lakhs 7% 7% *
Above Rs.2 lakhs to 3 lakhs 7% 7% *
Above Rs.3 lakhs 14% 14.5%
ATL/AATL
Upto Rs.25000/- 13% 13.5%
2 Rs.25001/- to Rs.50000/- 13% 13.5%
Rs.50001/- to Rs.200000/- 14% 14.5%
Above Rs.2 lakhs 14% 14.5%
GCC/GTL/COMPOSITE LOAN
(Rural artisns & craftsman)

3 Upto Rs.25000/- 13% 13.5%
Rs.25001/- to Rs.50000/- 13% 13.5%
Rs.50001/- to Rs.200000/- 14% 14.5%
Above Rs.2 lakhs 14.50% 15.00%
Gcc/tlc
To Other than Rural Artisans,

Craftsmen
4 13% 13.5%
Upto Rs.25000/-
Rs.25001/- to Rs.50000/- 13% 13.5%
Rs.50001/- to Rs.200000/- 14% 14.5%
Above Rs.2 lakhs 14.50% 15.00%
House building loans
5 Upto Rs.2.00 lakhs 12.75% 13.25%
Above Rs.2.00 lakhs 13.00% 13.50%
6 S.R.T.O 14.50% 15.00%
7 Gold loans 14.50% 15.00%
8 Ware house receipts

Up to Rs.50,000/- 9.00% 9.50%

Above Rs.50,000/- 9.50% 10.00%
Clean Demand Loans
Salaried persons (with check-off
9 14.00% 14.50%
facility)
Others 15.00% 15.50%
Government Sponsored Schemes
As per the As per the
Upto Rs.25000/- type of loan type of loan
10 (ATL/AATL (ATL/AATL
Rs.25001 to Rs.2.00 lakhs
/GTL/GCC) /GTL/GCC)
Above Rs.2.00 lakhs

SL NO PARTICULARS SERVICE CHARGES

Up to Rs.5000/-Rs.25/-
For Rs.5001/- upto
Collectioof Cheques/Instruments Rs.20,000/-
(Out of pocket expenses of Rs.15/- per Rs.4.50 per Rs.1000
cheque/instruments need to be recovered in Min: Rs.30/-
1
addition to commission) For>Rs.20000/- Rs.5/-
per 1000/-

Min: Rs.100/-
Max: Rs.12500/-
Up to Rs.1000/- -
Collection of bills pocket expenses of Rs.65/-
Rs.30/- per bill need to be recovered in Up to Rs.10000/ -
2 addition to commission) Rs.100/-
> Rs.10000/-Rs.10/- per
1000/-
Max: Rs.12500/-
Upto Rs.10,000/-: Rs.30/-
For>Rs.10,000/-
3 Bankers' Cheques/ Demand Drafts Rs.3.50 per Rs.1000/-
Min: Rs.50/-
Max: Rs.12,500/-
Rs.3/- per thousand
subject to a minimum of
4 Local Bankers' Cheque
Rs.30/- maximum
Rs.12,500/-
Duplicate Bankers' Cheque/Drafts
5 Rs.100/- per instrument.
Cancellation/revalida- -tion of Bankers'
5A Rs.100/- per instrument
cheque/Drafts

Returned cheques/bills

6 Local
Rs.55/- per instrument
Outstation
Rs.110/- per instrument

No due certificate
7 Rs.150/-
(Other than Agriculture)
Rs.250/- per lac
8 Solvency certificate Min: Rs.1000/-
Max: Rs.15000/-
Minimum balance Service charges
-Nil-
Rs.150/- per quarter
9 SB Acs. (ordinary)
SB Acs. (Ch.Book)
C.A. (Individual)
C.A. (Others)
Account closing before 12 months
10 Rs.200/-
Safe Deposit Locker

11 Rs.750/- p.

Overview of the Bank:
Krishna Grameena Bank is pioneer in promoting & extending financial

assistance to self help group so far the Bank has Credit linked 8042 SHG’s out
total 8841 SHGs who are having SB A/c with Bank. The aggregate quantum of
micro finance to SHGs is Rs.40.69 Crores.
The bank has bagged third prize from NABARD for best performances in
SHG Bank linkage programme in Karnataka State during 2005- 2006.
The Bank is one of the two RRBs in India selected by NABARD for
implementation of smart credit pilot project were in processor card are used by
SHG member to know balance in their SB A/c and to draw the money without
bothering to Branch Manager /Rural Development Officer.
Vision of the Bank:
“To be the preferred banking institution of the people of our area,

committed to improve the living standard of the mass so as to achieve inclusive
growth with sustained viability”

Our Mission for 2009-2010:
 To Surpass Rs.2000 Crores of total Business by 31-03-2012
 To earn a minimum net profit of Rs. 25 Crores.
 To bring down gross NPV to 1%
Our Values:
 Integrity
 Commitment
 Passion
 Seamlessness
 Speed

Achievement in 2008-2009:
 Business turnover crossed Rs.1566 crores surpassing the MoU signed with
state bank of India. Growth over the previous year was to the extant of 24.68%
 ADVANCES: Aggregate advances crossed Rs.8 13.05 crores a growth of

20.97% over the previous year achievement being 136.86% of MoU target.
 DEPOSITS: The level as on 3 1.03.2009 was Rs.753.30 crores a growth of

28.90% over the previous year achievement being 13 8.84% of MOU Target.
 PROFIT: Net profit earned was Rs.19.54 crores as against the target of
Rs18.00 crores.
 100% computerization of the bank has been completed. All the branches
completed annual closing work successfully using computer.
 Adequate training was provided to staff of computerized branches.
 No loss making branch as on 3 1.03.2009.
 Ghorchincholi branch has been merged with Bhatambra branch.

 Four New branches were opened at Omnagar, Karuneshwar nagar, Kamalnagar

& Naubad.
Organization Structure:
The Bank’s head officer is located at Kusnoor Road Gulbarga in It’s own
Building with centralized air conditioning the Bank is headed by chairman a TEG
Scale V officer on deputation from state Bank of India & is of the rank of asst
general manager. The manager (Audit & vigilance) has responsibility of Audit &
vigilance of all Branches / area officers and various Department Head office
Manager are as under Head office.
 Personal Department
 Credit Management Department
 Assert Management Department
 Fund Management Department
 General Banking Department

 Computer cell / Information Technology Department
The Branch network is spread in to four Areas
1. Gulbarga Area : 25 branches
2. Shahapur Area : 24 branches
3. Sedam Area : 23 branches
4. Bidar Area : 24 branches
5. Under GM’s control : 10 branches
TOTAL : 106 branches

Organizational structure of KG Bank of Chittapur Branch
The main reason to open this branch in Gulbarga was as this region was not
represented by the banks and the town was very much potential for the banking
service. Hence the branch was opened so as to improve this area with new things
by providing services to the customers easily. Initially at the starting stage when
this bank was opened lit has started with the numbers of 100 customers. The main
aim or the main motive is that for opening a branch in Gulbarga is to provide a
value based banking service to the customers and the development of bank from
strength to strength.
Following strategies are adopted by the bank
 Identifying the customers needs
 Lending the required loan to the customer.
 Giving the polite service.
 Systematic and up to date working of the bank etc.
The bank’s Head Office is located at Kusnoor road Gulbarga in the own building
with centralized air-conditioning. The bank is headed by a chairman.TEG Scale-V
officer on deputation from state bank of India the General Manager is an also on
deputation from SBI and is of the rank of asset General Manager (audit and
vigilance) has responsibility of audit vigilance of all branches /areas officers and
various department at head office.
Organizational structure of KG Bank of Chittapur Branch
Chairman/board of directors
General Manager
Department
Area manager
heads
Clerical staff
Branch manger

SWOT ANALYSIS
S  Strength
W  Weakness
O  Opportunit
STRENGTH:
 The utilizing the time according to the situation effectively.
 Bank have taken up wide ranging corporate social responsibilities. To

mention a few, establishing village libraries, malaria.
 The total income of bank has increased from Rs.828692 to Rs.1011800.

 All the branches of the bank have been brought under computerized
environment.
WEAKNESS:
 Management because of the disproportent power, even to the employees,

the management could not have proper administration over the work.
 Non resident India account are dependent on other banking sector.
OPPORTUNITIES:
 Increased branch and ATM network will enable the bank to improve the
client base.
 Sharing the ATM network with other banks will facilitate optimum use
of the banks infrastructure and resources.

 Financial requirement coupled with accelerated economic activity will

necessitate a healthy bank credit which in turn increases the operational
income of the banks.
 Integration to global market expands the position of oversea banking.
THREATS:
 The interest rates have continued to decline over the past few years. In
conditions of excess liquidity, interest earnings of banks may be affected.
 Bank like any other industry are exposed to credit, market and operational
risks in the day to day operation.
 Thinking of interest spread affects the profitability structure of the bank.

THEORETICAL BACKGROUND
Working capital management
Introduction:
Working capital management refers to management of the working capital or to be

more precise, the management of current assets. A firms Working capital consist of
its investment in current assets which include short term assets such as cash and
bank balance, inventories receivables ( including debtors and bills ) and marketable
securities. So, the Working capital management refers to the management of level
of all individual current assets.
Working capital management includes the management of level of the all

individual current assets as well as the management of total working capital.
However, each individual current asset has unique characteristics which the
financial manager must consider in deciding how much money should be invested
in each of these current assets.

Concept of working capital:
These are two types of working capital. They are
1)Gross working capital
2)Net working capital
Gross Working Capital
Gross working capital refers to the firm’s investment in current assets which can be
concerned into and within an accounting year (or operating cycle) and include
cash, short term securities, debtors (accounts receivable or book debts) bills
receivable and stock (inventory).
Gross working capital points to the arranging of funds to finance current assets.
Net working capital
Net working capital refers to the difference between current assets and current
liabilities current liabilities are those claims of outsiders, which are expected to
mature for payment within accounting year and include creditors (account
payable), bills payable and outstanding expenses Networking capital can be

positive or negative. A positive networking capital will rise when current asset
liabilities are in excess of current asset.
Determinants of working capital
The firm should plan its operations in such a way that it should have neither
too much nor too little working capital. The total working capital requirement is
determined by a wide variety of factors. These factors however effect differently.
They also vary from time to time. The following factors are involved in the proper
assessment of the working capital.
 Nature of business
The production policies pensive by the management have a Bearing on their

working capital needs. On the other hand trading and manufacturing concern
required torque amount of working capital to maintain a sufficient amount of cash,
inventories and books debts.
 Production cycle
The production policies pensive by the management have significant effect on

the requirements of working capital of the business. The production schedule has a
great influence on the level of inventories. The decisions of the management
regarding auto motion etc will also its effects on working capital requirements.
 Business cycle
The business fluctuation influence the size of working capital mainly during
the upward phase when boom conditions prevail, the need for working capital is

likely to grow to cover the bag between increased sales and receipt of cash as well
as invest in plant and machinery to meet the increased demand.
 Credit policy
The credit policy concern to the sales and purchase also the working capital.
The credit policy influences the requirements of working capital in two ways,
 Through credit terms granted by the firm to its customers/buyers of goods
 Credit terms available to the firm from its creditors.
 Operating Efficiency
The operating efficiency of the management is most important determinant of the

level of working capital. The operating efficiency of the firm relates to the
optimum utilization of resources at minimum cost. The firm will be effectively
contribute to its working capital of it is efficient the controlling the operating cost
and utilizing fixed and current assent leads to operating efficiency.

 Marketing Cycle
Longer the manufacturing process, the higher be the requirements of working

capital and vice versa. This is because of the fact that highly capital structure
intensive industries require a large amount of working capital to run their
sophisticated (complicated) and long production process.
Objective of working capital
The need for working capital to run day to day business activities cannot be
overemphasized. We will hardly find, a business firm, which doesn’t required any
amount of working capital.Indeed,firm differ in their requirements of the working
capital.
The firm has to invest enough funds in current assets for cash instantaneously. This
is always an operating cycle involved in the conversion of sales into cash.
Sources of working capital
The need of working capital is increased by raising prices of products and relative
inputs. On the other hand, the government and monitoring authorities pray their
own role to runs the malice in period of inflation. The control measures often take
the firm of deal money policy and restrictions credit.
Financing of additional working capital in such an assessment becomes a real

problem to problem to finance manager of a concerned unit; commercial banks

play the most significant role in providing working capital finance. The sources of
finance that may be two type of financing.
Long term financing
Loan from financing institution the option is normally rules out, because
financial institutions do not provide finance for working capital requirements.
1. FLOATING OF DEBENTURES:
In Indian capital market, floating of debentures has still to gain popularly

debentures issues of companies in private sector not associated with certain reputed
groups generally failed to attract investors to invest funds in companies.
2. ACCEPTING PUBLIC DEPOSITS:
The issue of tapping public deposits is directly related to the image of the
company seeking to invite private deposits.
3. ISSUES OF SHARES:
With a view to financing additional working capital needs, issue of

additional equity share could be considered.

Raising funds by internal financing:
Raising funds from operational profit poses problems for any banks. sufficient
requirements to finance additional working assets, still a largely feasible solution
has increase profitability through cost control and cost reduction measures
managing the cash operating cycle, rationalizing investor stock and so on.
Types of working capital
1) Permanent working capital
2) Temporary working capital
1) Permanent working capital
The permanent working capital is the minimum level of current assets. Depending
upon the changes in production and sales, the need for working capital, over and
above permanent working capital, will Fluctuate.
2) Temporary working capital
The over and above the permanent working capital, the firm may also require
additional working capital in order to meet the requirements arising fluctuation in
sales volume. This extra working capital needed to support the increased volume of
sales.

Assessment of working capital requirements:
In view of the freedom given by RBI, banks make their own assessment of credit
requirement of borrowers based on a comprehensive study of borrowers business
options i.e. taking into account the production/processing cycle of the industry as
well as the financial and other relevant parameters of the borrowers. Accordingly,
banks can decide the levels of holdings of each item of inventory as also of
receivables, which in their would represent a reasonable build up of current assets

for being supported by bank finance. Reserve bank of India (RBI) will not
prescribe detailed norms for each item of inventory as also of receivables, it would
only advice the overall levels of inventory and receivable for different industry for
the guidance of banks to serve as broad indicators. Banks may also consider
evolving suitable internal guidelines for accepting the projections made by their
borrowers relating to the items, sundry creditors (goods) appearing as an item
under other current liabilities in the balance sheet.

RATIO ANALYSIS

RATIO ANALYSIS
Definition of ratio
Ratio is a wealth immaterial expression showing relationship between the items of

the financial statement
Definition of ratio analysis
Ratio analysis is a widely used tool financial analysis. It is a defined as the

systematic use of ratio interact the financial statement so that the strength or
weakness of a firm as well as it historic performance and current financial
conditions can be determined.
Advantage of ratio analysis:
1) Ratio analysis simplified the understanding of financial statement
2) It is a device to analyze and interpret the financial of the enterprise
3) Ratio facilitates inter firm and intra firm comparison, their by bringing out the
strength weakness and efficiency of the firm
4) Ratio’s makes its possible to estimate the other figure is known
5 )Investment decision can at times be based on the conditions revealed by ratio’s

Limitations of the ratio analysis:
While ratios are compared on a historical basis, though the time periods may be of
equivalent duration, the price level changes between the periods which may distort
the result if no allowances is made for this factor.
Since analysis is made on the basis of financial statement, this will have all the
limitations such as window dressing, improper valuation of assets, inclusion of
value of fiction assets etc
There is no reliable way of the measuring the profit potential of business so as to

compare the reported profit with the profit that could have been earned under the
circumstances.
Nevertheless, ratio analysis is a useful too and could be used along with other
quantitative techniques in financial management to assess the financial health of an
organization.

Classification of Ratio Analysis
The third step in analysis and interpretation of balance sheet is to calculate various
ratios. The various ratios can broadly classify into four categories namely:
1) Profitability Ratio
2) Liquidity Ratio
3) Leverage Ratio
4) Activity Ratio
A) Profitability Ratio
These ratios indicate whether the business has utilized the resources profitability.
The important profitability ratios are:
Gross profit
1. Gross profit ratio = x 100
Gross collection

Net profit
2. Net profit ratio = x 100
Gross collection
Operating cost
3. Operating ratio = x 100
Gross collection
Operating profit
4. Operating profit ratio = x 100
Gross collection
Profit before interest &tax
5. Return on investment ratio = x 100
Capital employed
Capital employed = net fixed assets + total current asset

Net profit after Tax
6. Net profit to net worth ratio = x 100
Net Worth
Net profit available to equity share holders
7. Earning per share (EPS) = x 100
Gross collection
Dividend equity share
8. Dividend payout ratio = x 100
Earning per equity share

B) Liquidity ratio
Liquidity refers to the company’s ability to meet its current obligations. The
liquidity ratios, therefore, have to do with the size and relationship of current
liabilities which represent the obligations due and current assets, which presumably
provide the source from which these obligations will be met. A company is not
sounds financially unless it has adequate liquidity. The liquidity ratios gibe us the
liquidity position of the concern.
The two important liquidity ratios used by the bankers are:
1) Current Ratio
2) Acid Test Ratio
Current ratio:
The current ratio of a concern is the ratio of its current assets and its current
liabilities such as creditors for materials and supplies, rates and taxes etc. it
indicates the ability to meet maturing current liabilities from amount realized out
of current assets.
It is calculated as follows
Current assets
CURRENT RATIO =
Current liabilities

This ratio is not only a measure of the company’s liquidity but also shows
the margin the company has for its current assets to shrink before it gets into
difficulty in meeting current obligations.
Though the rule of thumbs is that the current ratio should be around 2:1
banks leading policy norms stimulate the bench mark current ratio of 1.25:1.00
while considering all new proposals, with satisfactory credit ratings, for working
capital limits. However, its applicability depends on such things as the type
industry and outlook for the industry. If the company has a rapid turnover of
inventory and can easily collect its dues, the ratio can be somewhat lower. If the
ratio drops to 1:1 caution should exercised when the current liabilities exceed the
current asset the concern is in an unstable situation. Caution should also be
exercised if the current ratio has been dropping over a period of several years.
In this ratio 1:1 or below 1:1, it indicates that the company is

undercapitalized and that it may delay paying its creation due to liquidity problem.
It may also be due to unsound practice of buying fixed assets with short term
borrowing. In many such cases the concern will be only marginally profitable or
even unprofitable
For interpreting current ratio one has to be guided by the composition,

reliability and reliability of the current assets.

Acid test or Quick Ratio
This is very similarly to the current ratio. It id more sever test as it

compares only very liquid assets with total current liabilities. It is calculated as
follows:
Current asset- inventory
Acid test or Quick ratio =
Current liabilities
The rule of thumb is that the quick ratio should not be below 1:1 if the quick ratio
is low but the current ratio is high. It may bean that the company is carrying a very
high level of inventory and is not able to sell its finished products.
In interpreting this liquidity ratio the composition of the current assets is very
important. It is necessary that proportion of different current asset to the total as
well as their condition should be taken into account before concluding that the ratio
is favorable or unfavorable. It indicates the ability to meet maturing current
liabilities from readily reliable current asset.

C) Leverage Ratios
These ratios measure the owner’s contribution to the business as compared

to the outsiders. These ratios help us in knowing the stake of the
owners in the business in relation to long term liabilities are secured by fixed assets
and whether the company’s earning are sufficient to pay the loan installments and
the interest on the due dates.
The importance leverage ratios are:
1) Debt equity ratio
2) Fixes assets coverage ratio
3) Debt service coverage ratio
Debt equity ratio
The debt equity ratio is the relationship between the owner’s contribution
(capital, undistributed reserves and surpluses, etc) and the long term liabilities of
an enterprise, this ratio can be calculated asunder:

Debt (Long Term Debt)
Debt equity ratio =
Equity (Tangible Net worth)
The amount of equity in accompany can be considered as “Company

Cushion” by which it can absorb its initial losses and whether the lead times. The
ratio, thus, indicates the financial stability of a company to absorb losses and still
pay its obligations. Our lending policy guidelines indicates the healthy debt equity
ratio to be 2:1
The ratio is especially important because now day’s companies prefer to

borrow rather then to obtain more money through capital. The reason for this is
simple; borrowing is cheaper than raising the capital.Morever, the interest on
borrowing reduces the taxable profits.
The ratio should be such that there is a higher capital or equity base. In these
situations when the concern is wound up, the creditors have a bigger protection
buffer. Also banks lending policy stipulates promoters contribution for term loan
@ 25% while giving indication that the ratio of total outside liability to tangible net
worth shall not normally go beyond 3:1.

Fixed assets coverage ratio
Term loans are usually secured by fixed assets. This ratio’s shows the
coverage of long term uses by long term sources. It is computed as follows:
Net fixed assets (i.e. after depreciation) + other non current assets
Long term liabilities + tangible net worth
The reason is that, when a concern is in liquidation, its fixed assets should be
able to realize the amount to pay its long term debts. If this ratio is too low, it
implies that the assets of the concern are worth very little.
Activity Ratio
This ratio indicates how effectively the funds have been utilized in the
business. If the business keeps large funds idle, there is no written on these funds.
If all the funds available are invested than there will not be cash balances to meet
various contingencies in future as and when they occur.
A balance is therefore, to be struck between liquidity and profitability.

Activity ratios help us the funds are made available and whether they are properly
deployed.

The important activity ratios are:
1. Inventory Turnover Ratio
2. Debtors Velocity Ratio
3. Creditors Velocity Ratio
4. Assets Turnover Ratio
Cost of Goods Sold
Inventory Turnover ratio = x 100
Average Inventory
However, it can also be expressed in terms of so many months, weeks or

days holding. In this case it can be calculated as follows:
Average Inventory x No. of Months\weeks\Days in a year
Cost of Goods Sold

Uses of inventory turnover ratio
This ratio indicates the number of times the average stock of finished goods
is turned over or sold during a year. It also indicates the extent of overstocking or
under stocking of finished goods and the presence of non moving stock.
It helps to determine even the liquidity of a concern as it indicates the rate at

which stock is converted into sales and then into cash. (The stock turnover of 8
times a year is considered ideal).
Debtors Velocity Ratio
Net Annual Credit Sales
Debtors velocity ratio=
Average Debtors (Debtors and Bills Receivables Uses:
This ratio indicates the rate at which amounts are collected from debtors. It
indicated even the liquidity of the concern. The average realization period of the
business unit is being expressed in terms of number of sales (credit)

Creditors Velocity Ratio
Net Annual Credit purchases
Creditors velocity ratio=
Average Creditors (Creditors and Bills Payable)
Uses:
This ratio indicates the rate of which creditors are being paid by the unit i.e.
average payment period is expressed in terms of number of day’s purchases
(credit).
Assets Turnover Ratio
Net Sales
1. Fixed asset turnover ratio =
(Ideal 5 times) Fixed Assets

DATA ANALYSIS
AND
INTERPRETATION

DATA ANALYSIS AND INTERPRETATION
A. PROFITABILITY RATIO
Gross Profit
1. Gross Profit Ratio = x 100
Net Sales
Note:
In bank their will be no gross profit and as well as net sales, when their will
be purchase and sell it than the gross profit will be calculated. So, it is considered
as non trading activities.

Net Profit
2. Net Profit Ratio = x 100
Gross Collection
Year Net Profit Gross Collection Ratio
2005-06 21,67,50 65,79,20 32.95
2006-07 14,06,60 66,78,64 21.06
2007-08 16,50,17 828692 19.91
2008-09 19,54,05 1011800 19.31
2009-10 11,50,34 119,83,54 9.59
Table showing net profit ratio

Net profit
250000
216750
195405
200000
165017
140660
150000
115034
100000
50000
0
2004-05 2005-06 2006-07 2007-08 2008-09
Net profit

Operating cost
3. Operating Ratio = x 100
Gross collection
Year Operating Cost Gross Collection Ratio

2005-06 441170 657920 67.05
2006-07 527204 667864 78.93
2007-08 663675 828692 80.08
2008-09 816396 1011800 80.68
2009-10 1083320 1198354 90.40

1200000
1000000
800000
600000
Operating Cost
Gross Collection
400000 Ratio
200000
0
2005-06
2006-07
2007-08
2008-09
2009-10
Operating Profit

4. Operating Profit Ratio = x 100
Gross Collection
Gross Collection
Table showing Operating Profit Ratio
Year Operating Profit Gross Collection Ratio
2005-06 216750 657920 32.94

2006-07 140660 667864 21.06
2007-08 165017 828692 19.91
2008-09 195405 1011800 19.31
2009-10 115034 1198354 9.59

250000
200000
150000
216750
100000 195405
165017
140660
115034
50000
0
2004-05 2005-06 2006-07 2007-08 2008-09
Operating profit
Profit before Interest
5. Return on Investment Ratio = x 100
Capital Employed

Table showing Return on Investment Ratio
Operating
Year Profit Interest Capital Employed Ratio
& Tax
2005-06 441170 657920 67.05
2006-07 527204 667864 78.93
2007-08 165017 828692 19.91
2008-09 195405 1011800 19.31
2009-10 1083320 1198354 90.40
a. Calculation of profit interest and tax for the year 2007-2008.
Profit before interest tax = Interest expended + Net profit
= 341829 + 165017
= 506346

Year 2009-2009
Profit before interest tax = 464432 + 195405
= 659837
a. Capital employed = Net fixed assets + total current assets
Year 2005-06 = 5817693+ 243546 + 401531
= 6462770
Year 2006-07 = 7681909+ 306176+ 779801
= 8767886
Year 2007-08 = 10038077 + 409091 + 1236108
= 11683276

Year 2008-09 = 12464576 + 715351 + 1412380
= 14592307
Year 2009-10 = 15443942+ 652427+ 2628196
= 18724565

Return on investment ratio
1200000
1083320
1000000
800000
600000 527204
441170
400000
195405
165017
200000
0
2004-05 2005-06 2006-07 2007-08 2008-09
Return on investment ratio

Interpretation:
The above table shows that the profit before interest and tax increased in
year 2008-09 and as well as capital employed also. Ratio is highest in the year
2008-09. It shows that in year 2008-09 bank earned more profit.
Net Profit after Tax
6. Net Profit to Net worth Ratio = x 100
Net Worth
Table showing Net Profit to Net worth Ratio
Net Profit After

Year Net Worth Ratio
Tax
2005-06 441170
2006-07 527204
2007-08 165017 11683276 1.41
2008-09 195405 14592307 1.33
2009-10 1083320

Calculation of Net Worth
Year 2005-06
Net Worth = 243546+ 401531+ 5817693
= 6462770
Year 2006-07
Net Worth = 306176+ 779801+ 7681909
= 1854886
Year 2007-08
Net Worth = Cash on hand + Money at call + Total assets
= 409091 + 1236108 + 10038077
= 11683276

Year 2008-09
Net Worth = 715351 + 1412380 + 12464576
= 14592307
Year 2009-2010
Net Worth = 652427+ 2628196+ 15443942
= 18724565

1200000
1083320
1000000
800000
600000 527204
441170
400000
195405
165017
200000
0
2004-05 2005-06 2006-07 2007-08 2008-09
Net profit to net worth ratio

Net Profit available to equity share holders
7. Earning Per Share = x 100
No. of Equity Shares
Table showing Earning per Share
Net profit
available to No. of equity
Year Ratio
equity share shares
holders
2005-06 216750 10000
2006-07 140660 10000
2007-08 165017 10000 16.50
2008-09 195405 10000 19.54
2009-10 115034 10000

250000
216750
195405
200000
165017
150000 140660
100000
50000
0
2004-05 2005-06 2006-07 2007-08
Earning per share
B. LIQUIDITY RATIO
Current Assets
1. Current Ratio =

Current Liabilities
Note : This ratio is also non-trading activities. So, it is not applicable to banks.
Current Assets Inventory
2. Acid Test or Quick Ratio =
Current Liabilities
Note : In bank inventory will be not calculated, this is non trading activities.
C. LEVERAGE RATIO
Debt (Long Term Debts)
1. Debt Equity Ratio =
Equity (Tangible Net Worth)

Table showing Debt Equity Ratio
Year Debt Net Worth Ratio

2005-06 5014099
2006-07 5249273
2007-08 7967114 11683276 0.68
2008-09 9799661 14592307 0.67
2009-10 11830372
Calculation of long term debts
Years 2007-08
Long term debt = Investments + Advances
= 1365924 + 6601190
= 7967114
Years 2008-09

Long term debt = 1747497 + 8052164
= 9799661
Years 2009-10
Long term debt = 1084775+3929324
= 5014099
Years 2006-07
Long term debt = 1176151+5237512
= 6413663
Years 2008-09
Long term debt = 2307626+9522746
= 11830372


Debt equity ratio
5014099
11830372
5249273
7967114
9799661

D. ACTIVITY RATIO
Cost of Goods Sold
1. Inventory Turnover Ratio = x 100

Average Inventory
Note: In bank cost of goods sold and average inventory will be non trading
activities. In bank their will be no cost of goods sold, so it is not calculated.
2. Debtor Velocity Ratio =
Average Debtors (debtors & receivable)
Note: It is non trading activities in bank, so it is not applicable.

3. Creditor Velocity Ratio =
Average Creditors (creditors & bill payable)
Note: Firstly, in bank no purchase, so it is considered as non trading activities.
4. Assets Turnover Ratio
Net Sales
a. Fixed Assets Turn Over Ratio =
Fixed Assets
Note: Current assets turnover ratio considered as ideal 2 times but there will be no
nil sales and fixed assets, how could be possible in bank, so it is considerable as
non-trading activities.
PROFIT AND LOSS STATEMENT FOR THE YEAR ENDING 2004 -05

Particulars Schedule As on 31-3-2005 As on 31-03-2004

No.
Income
Interest Earned 13 623547 473516
Other Income 14 34373 39231
TOTAL 657920 512747
EXPENDITURE
Interest expended 15 248717 269006
Operating Expenses 16 172458 158616
Provisions & Contingencies 19995 14795
TOTAL 441170 442417
PROFIT/LOSS
Net Profit/Loss (-) for the year 216750 70330
Profit/Loss brought forward ----- -----
Total Surplus /deficit(-) 216750 70330
available for appropriation
APPROPRAIATIONS
Transfer to statutory reserves 216750 7033
Transfer to other reserves ----- -----
Transfer to ----- -----
government/Proposed dividend
Carried over to bal. Sheet ----- -----
TOTAL 216750 70330
BALANCE SHEET AS ON 31/03/2005

Particulars Schedule As on 31-3-2005 As on 31-

No. 03-2004
CAPITAL &
LIABILITIES
Capital 1 10000 10000
Share Capital Deposit 1A 187577 187577
and Surplus
Deposits 2 387805 174068
Borrowings 3 3745804 3105962
4 1066877 800175
Other Liabilities and 419633 374057
5
Provisions
TOTAL 5817693 4651839
ASSETS
Cash and Balance with 243546 260539
6
reserve Bank of India
Balance with Banks and 401531 360275
Money at Call and Short 7
Notice
Investments 8 1084775 1146431
Advances 9 3929324 2668868
Other Assets 10 22406 18045
Fixed Assets 11 136111 197681
TOTAL 5817693 4651839
Contingent Liabilities 12 36487 40889
Bills for Collection ----- -----
BALANCE SHEET AS ON 31/03/2007
Particulars Schedul As on 31-03 As on 31-

e No. 2007 03-2006
CAPITAL AND 1 10000
LIABILITIES:
1A 1000 187577
Capital
2 187577 528462
Share Capital Deposit.
3 4628355
Reserves and Surplus
4 693478 1915376
Deposits
5 5846278 0
Borrowings
6 2789469 412140
Deferred Tax Laibility
7 693 7681909
Other Liabilities and
8 510581
Provisions
9 100038077 306176
Total Rs.
10 779801
ASSETS:
11 409091 1176151
Cash and Balance with
Reserve Bank of India. 12 1236108 5237512
Balance with Banks and 1365924 21618
Money at Call and Short 6601190 160651

Notice
31936 7681909

Advances 393828 52797
Fixed Assets 10038077 --
Other Assets 44369
Total Rs. ..
Contingent Liabilities
Bills for Collection
BALANCE SHEET FOR THE YEAR 2007- 08
Particulars 31st march 2007 31st march 2008

Capital and liabilities
Capital 1000 1000

Share capital deposits 187577 187577
Reserve and surplus 693478 888883

Deposits 5846278 7533064
Borrowings 2789469 3131796
Other liabilities and 510581 711844
provision
Deferred tax liability 693 1412
Total 10038077 12464576

Assets
Cash and balanced 409091 715351
with RBI
Balance with banks 1236108 1412380
and money at call and
short notice
Investment 1365924 1747497
Advances 6601190 8052164
Fixed assets 31936 46427
Other assets 393828 490757
TOTAL 10038077 12464576

Contingent liabilities 44369 53130
Capital 1 10,000 10,000

Share capital deposit. 1A 18,75,77 18,75,77
Reserve And Surplus 2 10,09,121 88,88,83
Deposits 3 957,55,21 753,30,64
Borrowings 4 412,75,96 313,17,96
Deferred Tax Liability 14 1,412
Other Liabilities And 5 53,41,13 7,11,844
Provisions.
Total Rs. 154,43,942 124,64,576
ASSETS
Cash And Balance with 6 65,24,27 71,53,51
Reserve Bank of India.
Balance with Banks and 7 262,81,96 141,23,80

Money at Call and Short
Notice.
Investments 8 230,76,26 174,74,97
Advances 9 952,27,47 805,21,64
Fixed Assets 10 39,610 46,427
Other Assets 11 29,33,37 49,07,57
Total Rs. 154,43,942 124,64,576
Contingent Liabilities 12 59,114 53,130
BALANCE SHEET 2008-09
BALANCE SHHEET AS ON 31-03-2009 -2010
Particulars Schedule As on 31-03- AS on 31-03-

No. 2009 2008
INCOME:
Interest Earned 13 109,87,03 93,41,49
Other Income 14 99,651 77,651
Total Rs. 119,83,54 101,18,00
EXPENDITURE:
Interest Expended 15 65,83,20 46,44,32
Operating Expenses 16 37,50,31 26,97,16

Provisions & 49,969 82,248

Contingencies
Total Rs. 108,33,20 81,63,95
PROFIT/LOSS: _ _
Net Profit For the year _ _
Profit Brought Forward _ _
Total Surplus available for 11,50,34 19,54,05
appropriation
APPROPRIATIONS: _ _
Transfer to Statutory 25,346 26,303
Reserve
Transfer to Other 89,687 16,91,02
Reserves.
Transfer to _ _
Government/Proposed
Dividend
Balance Carried over to _ 12.02
Balance Sheet
Capital adequacy ratio _ _
NPA 18,10,71 14,26,35
Gross 1.89 0.02
Gross% 76,128 55,034
Net NPA Amount 0.79 0.01
Net NPA % _ _ _

FINDINGS, CONCLUSION AND SUGGESTION
FINDINGS:
 It is found that the bank is efficient in achieving the budgeted target. The
bank is efficient in mobilizing the funds from customers.
 It is found that the amount of loan outstanding is gradually increasing

year after, it shows that bank is inefficient in proper appraisals, inefficient
control system.

 From the last five years data analyzed, it is found that the net movements
of Non performing of assets are in cyclic order. In the year 2002-2003 it was
high and it decreased in the year 2004-05, from 2005-06 it is again increasing
 This shows that bank was efficient in recovery in the year 2004-05. This
could be due to recovery camps, recovery awareness camps etc adopted during
that year.
 It is observed that the external reasons that contribute to increase in Non

performing of assets are natural calamities, political interference, Vitilated
recovery climate, failure of activity due to economic and managerial reasons.
 It is noticed that the borrower related reasons that contribute to increase in

non performing of assets are Misultilisation of loans, diversification of funds,
lack of technical and managerial skills, failure of activity of economic
reasons, poor maintenance of assets, etc
 Others reasons are personal accident death, shifting of place of residence

and business place, willful default, geographical factors, changes in policy

environment, changes in technology, changes in economic conditions, lack of

risk cover availability.
 It is noticed found that the bank related reasons that contribute to increase
in non performing assets are improper identification of borrower of activity,
inadequate appraisal, delay in loan sanctioning, under and over financing,
insufficient gestation or repayment period, lack of post-disbursement follow-up
,etc
 Some of the other bank related problems are lack of borrower contact,
inadequate understanding of clientele, lack of recovery efforts, inefficient
internal control systems, low motivation and commitment of staff,
perception of bank as charity institution, poor industrial relations climate, lack
of information to borrower on due dates, amount etc.

SUGGESTIONS:
During the study it was convincingly proved that NPA’s have viable impact
on the loan portfolio of any financial institutions and banks affecting their balance
sheet, which ultimately affects their profits.
But it is also seen that banks and financial institutions are trying their best of
reduce the percentage of NPA’s in their banks. While the ratio of NPA’s to loan
assets can be brought down through the various measures, the biggest contribution
must be through recovery, up gradation and selective write off.
Few Suggestions are:

 When ever any borrowing units face problems may be the beyond the
control of management, the bank should immediately find out the possibility where
the unit can be brought back to normal health by giving some concessions like
cutoff in interest appropriate rehabilitation package be released in time otherwise
early action for recovery of entire loan be taken in order to minimize the expected
losses in future.
 The bank should make improvements in existing systems of appraisals.
 They should create their own data bank of various type of information
and do unbiased appraisals, which should cover technical, commercial,
financial, economic and management aspects.
 Securitization is another way which transforms non-performing assets to

performing. So the bank shall go for securitization of the assets.
 Bank employees need to give more attention on the activities of the

NPA’s and slow recovery of overdue loans.
 If the customers intentionally try to become NPA then take serious or

legal action. If they do this the other NPA’s account which are slow in
payment will be recovered fast.

 Bank should properly evaluate all loan applications and analysis

project feasibility. Bank staff should be property trained in this regard.
 Try to deal softly with NPA customers and motivate them to repay the
loan.
CONCLUSION:
Non-performing asset is one which does not generate income for the bank.
In other words, an advance account which ceases to yield income is a non-
performing asset.
NPA is not just a problem for banks, but also bad for the economy of the
country. The money which is locked in NPA is not available for productive
activities. It adversely affects the, profit of bank and results in higher rate of
interest to their diligent credit customers. Steps should be taken appropriately on
time to avoid NPAs. Qualitative appraisal, supervision and follow ups should be

taken for the present advances to avoid further NPAs .It is essential to restructure
the strategies for recovery process, this will improve banks general capabilities and
meets the prudential requirements.
BIBLIOGRAPHY
BIBLIOGRAPHY
Books:
Books Referred
 “Financial Management” (Theory and Practice) Prasanna Chandra Tata Mc

Graw Hill, Pg.no.657, 658, 659
 “Financial Management” I.M.Pandey, Vikas Publishing House Pvt Ltd.,
Pg.No.584, 585, 586, 587.

Websites
 Company’s annual reports

 www.Krishna Grameena bank

Krishna Grameena Bank

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KRISHNA GRAMEENA BANK

Working capital management is typically seen as the managing the

Broadly defined, working capital management is a life and blood

Today, co-operative societies are found in rural as well as urban

Working capital management is an activity concerned with the

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OBJECTIVES OF THE STUDY

1) To study aims to achieve the following objectives

2) To study and understand financial statement of the bank

3) To study the utilization of a working capital in the bank

4) To achieve unit of direction in accomplishment of corporate goals at

5) To meet all genuine credit needs of existing clients

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The study assumes great significance because it has an impact

The source of information is collected from primary and secondary data.

The information was collected by communicating with the

Also information collected from text, bank annual reports, websites

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SCOPE OF THE STUDY

So it is an attempt is to be made to identify the optimum working

1.5 LIMITAION OF THE STUDY

1) Managers and employees were relevant in providing information

2) This study concentrates only on working capital aspects.

3) The information data collected and analyzed is restricted to the

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During the year 2007-2008 the bank crossed a major milestone by

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Krishna Grameena Bank is pioneer in promoting & extending financial

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ANNUAL REPORT OF FIVE YEARS

Innovation is actively encouraged people initiatives include new programmes for

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 Govt. of India : 50%

 Sponsor Bank State of India : 35%

 Govt. of Karnataka : 15%

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4. Share Capital Deposit:

Sl. NO. Name of the Share Holders Amount Released

1 Govt. of India (50%) 93788

2 Govt. of Karnataka (15%) 28137

3 State Bank of India (35%) 187577

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Sl. 2008-2009 2009-2010

3. Pre-branch deposits a raise from Rs.55129 thousands as on March 2007 to

4. Pre-employed deposits increased from Rs.12073 thousands as on March

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From NABARD From SBI

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As on 31/03/2009 the total investment of the bank stood at Rs.1747497

Loans and Advances Outstanding:

The bank has recorded a growth of Rs.1409695 thousands during 2007-2008

Schemes of Krishna Grameena Bank:

1. Krishna Krishi Card (KKC) Scheme:

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Swarojgar Credit Cards (SCC):

The following tables shows various financial ratio:

Sl. No. Particulars 2007-08 2008-09

The financial cost has increased by 0.44% on account of aggressive

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Transfer Price Mechanism:

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BRANCHES COMING UNDER OUR VARIOUS AREA OFFICES