WORKING CAPITAL MANAGEMENT OF SBI

PROJECT UNDERTAKEN AT
 TABLE OF CONTENT

PAGE
CHAPTER TOPICS COVERERD
NO.

CHAPTER 1. INTRODUCTION 3

CHAPTER 2. COMPANY PROFILE 16

CHAPTER3 REVIEW OF LITERATURE 36

CHAPTER 4. OBJECTIVES 41

CHAPTER 5. RESEARCH METHODOLOGY 43

CHAPTER65. DATA ANALYSIS 47

CHAPTER7. LIMITATION 56

CHAPTER 8. CONCLUSION 57

CHAPTER9. QUESTIONNAIRE 59

CHAPTER 10. BIBLIOGRAPHY 63

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INTRODUCTION:-

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 The working capital is the life-blood and nerve centre of a business
firm. The importance of working capital in any industry needs no special
emphasis. No business can run effectively without a sufficient quantity of
working capital. It is crucial to retain right level of working capital.
Working capital management is one of the most important functions of
corporate management. A business enterprise with ample working
capital is always in a position to avail advantages of any favorable
opportunity either to buy raw materials or to implement a special order or
to wait for enhanced market status. Working capital can be utilized for
the payment of lease, employee's payroll, and pretty much any other
operating costs that are involved in the everyday life of business. Even
very successful business owners may need working capital funds when
the unexpected circumstances arise. The overall success of the
company depends upon its working capital position. So, it should be
handled properly because it shows the efficiency and financial strength
of company.

Working capital management is highly important in firms as it is used

to generate further returns for the stakeholders. When working capital is
managed improperly, allocating more than enough of it will render
management non-efficient and reduce the benefits of short term
investments. On the other hand, if working capital is too low, the
company may miss a lot of profitable investment opportunities or suffer
short term liquidity crisis, leading to degradation of company credit, as it
cannot respond effectively to temporary capital requirements. Efficient
management of working capital means management of various
components of working capital in such a way that an adequate amount of
working capital is maintained for smooth running of a firm and for
fulfillment of objectives of liquidity and profitability. But, it is very difficult
for the management too to estimate working capital properly because,

amount of working capital varies across firms over the periods

depending upon the nature of the business, nature of raw material used,
process technology used, nature of finished goods, degree of
competition in the market, scale of operation, credit policy etc. Therefore,
a significant amount of fund is required to invest permanently in the form
of different current assets.

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 Keeping in view the pragmatic importance of working capital
management in finance, an attempt is made in this study to look into the
working capital management of seven associates of State Bank of India.

The specific purposes of the study are:

To examine the efficiency of working capital management practices of

state bank of India’ associates.

To test how fast the banks have been able to improve their respective
level of efficiency in working capital management with respect to a
targeted level (average among the banks).

Capital required for a business can be classified under two main

categories via,

1) Fixed Capital

2) Working Capital

Every business needs funds for two purposes for its establishment and
to carry out its day- to-day operations. Long terms funds are required to
create production facilities through purchase of fixed assets such as
p&m, land, building, furniture, etc. Investments in these assets represent
that part of firm’s capital which is blocked on permanent or fixed basis
and is called fixed capital. Funds are also needed for short-term
purposes for the purchase of raw material, payment of wages and other

day – to- day expenses etc. These funds are known as working capital.
In simple words, working capital refers to that part of the firm’s capital
which is required for financing short- term or current assets such as
cash, marketable securities, debtors & inventories. Funds, thus, invested
in current assts keep revolving fast and are being constantly converted in
to cash and this cash flows out again in exchange for other current
assets. Hence, it is also known as revolving or circulating capital or short
term capital.

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CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

1. Gross working capital

2. Net working capital

The gross working capital is the capital invested in the total current
assets of the enterprises current assets are those Assets which can
convert in to cash within a short period normally one accounting year.

CONSTITUENTS OF CURRENT ASSETS

1) Cash in hand and cash at bank

2) Bills receivables

3) Sundry debtors

4) Short term loans and advances.

5) Inventories of stock as:

a. Raw material

b. Work in process

c. Stores and spares

d. Finished goods

6. Temporary investment of surplus funds.

7. Prepaid expenses

8. Accrued incomes.

9. Marketable securities.

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 In a narrow sense, the term working capital refers to the net working.
Net working capital is the excess of current assets over current liability,
or, say:

NET WORKING CAPITAL = CURRENT ASSETS – CURRENT

LIABILITIES.

Net working capital can be positive or negative. When the current

assets exceeds the current liabilities are more than the current assets.
Current liabilities are those liabilities, which are intended to be paid in the
ordinary course of business within a short period of normally one
accounting year out of the current assts or the income business.

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CONSTITUENTS OF CURRENT LIABILITIES

1. Accrued or outstanding expenses.

2. Short term loans, advances and deposits.

3. Dividends payable.

4. Bank overdraft.

5. Provision for taxation , if it does not amt. to app. Of profit.

6. Bills payable.

7. Sundry creditors.

The gross working capital concept is financial or going concern

concept whereas net working capital is an accounting concept of
working capital.Both the concepts have their own merits.

The gross concept is sometimes preferred to the concept of working

capital for the following reasons:

1. It enables the enterprise to provide correct amount of working capital

at correct time.

2. Every management is more interested in total current assets with

which it has to operate then the source from where it is made available.

3. It take into consideration of the fact every increase in the funds of the
enterprise would increase its working capital.

4. This concept is also useful in determining the rate of return on

investments in working capital. The net working capital concept,
however, is also important for following reasons:

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 It is qualitative concept, which indicates the firm’s ability to meet to its
operating expenses and short-term liabilities.

IT indicates the margin of protection available to the short term

creditors.

It is an indicator of the financial soundness of enterprises.

It suggests the need of financing a part of working capital requirement

out of the permanent sources of funds.

CLASSIFICATION OF WORKING CAPITAL:-

Working capital may be classified in to ways:

On the basis of concept.

On the basis of time.

On the basis of concept working capital can be classified as gross

working capital and net working capital. On the basis of time, working
capital may be classified as:

Permanent or fixed working capital.

Temporary or variable working capital

PERMANENT OR FIXED WORKING CAPITAL:-

Permanent or fixed working capital is minimum amount which is

required to ensure effective utilization of fixed facilities and for
maintaining the circulation of current assets. Every firm has to maintain a
minimum level of raw material, work- in-process, finished goods and
cash balance. This minimum level of current assts is called permanent or

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fixed working capital as this part of working is permanently blocked in
current assets.

As the business grow the requirements of working capital also

increases due to increase in current assets.

TEMPORARY OR VARIABLE WORKING CAPITAL:-

Temporary or variable working capital is the amount of working capital

which is required to meet the seasonal demands and some special
exigencies. Variable working capital can further be classified as seasonal
working capital and special working capital. The capital required to meet
the seasonal need of the enterprise is called seasonal working capital.
Special working capital is that part of working capital which is required to
meet special exigencies such as launching of extensive marketing for
conducting research, etc.

Temporary working capital differs from permanent working capital in the

sense that is required for short periods and cannot be permanently
employed gainfully in the business.

IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING

CAPITAL:-

SOLVENCY OF THE BUSINESS: Adequate working capital helps in

maintaining the solvency of the business by providing uninterrupted of
production.

Goodwill: Sufficient amount of working capital enables a firm to make

prompt payments and makes and maintain the goodwill.

Easy loans: Adequate working capital leads to high solvency and

credit standing can arrange loans from banks and other on easy and
favorable terms.

Cash Discounts: Adequate working capital also enables a concern to

avail cash discounts on the purchases and hence reduces cost.

Regular Supply of Raw Material: Sufficient working capital ensures

regular supply of raw material and continuous production.

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 Regular Payment Of Salaries, Wages And Other Day TO Day
Commitments: It leads to the satisfaction of the employees and raises
the morale of its employees, increases their efficiency, reduces wastage
and costs and enhances production and profits.

Exploitation Of Favorable Market Conditions: If a firm is having

adequate working capital then it can exploit the favorable market
conditions such as purchasing its requirements in bulk when the prices
are lower and holdings its inventories for higher prices.

Ability To Face Crises: A concern can face the situation during the
depression.

Quick And Regular Return On Investments: Sufficient working capital

enables a concern to pay quick and regular of dividends to its investors
and gains confidence of the investors and can raise more funds in future.

High Morale: Adequate working capital brings an environment of

securities, confidence, high morale which results in overall efficiency in a
business.

EXCESS OR INADEQUATE WORKING CAPITAL:-

Every business concern should have adequate amount of working

capital to run its business operations. It should have neither redundant or
excess working capital nor inadequate nor shortages of working capital.
Both excess as well as short working capital positions are bad for any
business. However, it is the inadequate working capital which is more
dangerous from the point of view of the firm.

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DISADVANTAGES OF REDUNDANT OR EXCESSIVE
WORKING CAPITAL:-

1. Excessive working capital means ideal funds which earn no profit for
the firm and business cannot earn the required rate of return on its
investments.

2. Redundant working capital leads to unnecessary purchasing and

accumulation of inventories.

3. Excessive working capital implies excessive debtors and defective

credit policy which causes higher incidence of bad debts.

4. It may reduce the overall efficiency of the business.

5. If a firm is having excessive working capital then the relations with

banks and other financial institution may not be maintained.

6. Due to lower rate of return n investments, the values of shares may

also fall.

7. The redundant working capital gives rise to speculative transactions

DISADVANTAGES OF INADEQUATE WORKING CAPITAL:-

Every business needs some amounts of working capital. The need for
working capital arises due to the time gap between production and
realization of cash from sales. There is an operating cycle involved in
sales and realization of cash. There are time gaps in purchase of raw
material and production; production and sales; and realization of cash.

Thus working capital is needed for the following purposes:

For the purpose of raw material, components and spares.

To pay wages and salaries

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 To incur day-to-day expenses and overload costs such as office
expenses.

To meet the selling costs as packing, advertising, etc.

To provide credit facilities to the customer.

To maintain the inventories of the raw material, work-in-progress,

stores and spares and finished stock.

For studying the need of working capital in a business, one has to

study the business under varying circumstances such as a new concern
requires a lot of funds to meet its initial requirements such as promotion
and formation etc. These expenses are called preliminary expenses and
are capitalized. The amount needed for working capital depends upon
the size of the company and ambitions of its promoters. Greater the size
of the business unit, generally larger will be the requirements of the
working capital.

The requirement of the working capital goes on increasing with the

growth and expensing of the business till it gains maturity. At maturity the
amount of working capital required is called normal working capital.

There are others factors also influence the need of working capital in
a business.

FACTORS DETERMINING THE WORKING CAPITAL

REQUIREMENTS:-

1. NATURE OF BUSINESS: The requirements of working is very limited

in public utility undertakings such as electricity, water supply and
railways because they offer cash sale only and supply services not
products, and no funds are tied up in inventories and receivables. On the
other hand the trading and financial firms requires less investment in
fixed assets but have to invest large amt. of working capital along with
fixed investments.

2. SIZE OF THE BUSINESS: Greater the size of the business, greater is

the requirement of working capital.

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3. PRODUCTION POLICY: If the policy is to keep production steady by
accumulating inventories it will require higher working capital.

4. LENTH OF PRDUCTION CYCLE: The longer the manufacturing time

the raw material and other supplies have to be carried for a longer in the
process with progressive increment of labor and service costs before the
final product is obtained. So working capital is directly proportional to the
length of the manufacturing process.

5. SEASONALS VARIATIONS: Generally, during the busy season, a firm

requires larger working capital than in slack season.

6. WORKING CAPITAL CYCLE: The speed with which the working cycle
completes one cycle determines the requirements of working capital.
Longer the cycle larger is the requirement of working capital.

7. RATE OF STOCK TURNOVER: There is an inverse co-relationship

between the question of working capital and the velocity or speed with
which the sales are affected. A firm having a high rate of stock turnover
wuill needs lower amt. of working capital as compared to a firm having a
low rate of turnover.

8. CREDIT POLICY: A concern that purchases its requirements on credit

and sales its product / services on cash requires lesser amt. of working
capital and vice-versa.

9. BUSINESS CYCLE: In period of boom, when the business is

prosperous, there is need for larger amt. of working capital due to rise in
sales, rise in prices, optimistic expansion of business, etc. On the
contrary in time of depression, the business contracts, sales decline,
difficulties are faced in collection from debtor and the firm may have a
large amt. of working capital.

10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we

shall require large amt. of working capital.

11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have

more earning capacity than other due to quality of their products,
monopoly conditions, etc. Such firms may generate cash profits from
operations and contribute to their working capital. The dividend policy
also affects the requirement of working capital. A firm maintaining a
steady high rate of cash dividend irrespective of its profits needs working

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capital than the firm that retains larger part of its profits and does not pay
so high rate of cash dividend.

12. PRICE LEVEL CHANGES: Changes in the price level also affect the
working capital requirements. Generally rise in prices leads to increase
in working capital.

Others factors: These are:

Operating efficiency.

Management ability.

Irregularities of supply.

Import policy.

Asset structure.

Importance of labor.

Banking facilities, etc.

MANAGEMENT OF WORKING CAPITAL:-

Management of working capital is concerned with the problem that

arises in attempting to manage the current assets, current liabilities. The
basic goal of working capital management is to manage the current
assets and current liabilities of a firm in such a way that a satisfactory
level of working capital is maintained, i.e. it is neither adequate nor
excessive as both the situations are bad for any firm. There should be no
shortage of funds and also no working capital should be ideal.
WORKING CAPITALMANAGEMENT POLICES of a firm has a great on
its probability, liquidity and structural health of the organization. So
working capital management is three dimensional in nature as

1. It concerned with the formulation of policies with regard to profitability,

liquidity and risk.

2. It is concerned with the decision about the composition and level of

current assets.

3. It is concerned with the decision about the composition and level of

current liabilities.

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COMPAMY PROFILE

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The origin of the State Bank of India goes back to the first decade of the nineteenth century
with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later
the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A
unique institution, it was the first joint-stock bank of British India sponsored by the
Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July
1843) followed the Bank of Bengal. These three banks remained at the apex of modern
banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence either as a
result of the compulsions of imperial finance or by the felt needs of local European commerce
and were not imposed from outside in an arbitrary manner to modernise India's economy.
Their evolution was, however, shaped by ideas culled from similar developments in Europe
and England, and was influenced by changes occurring in the structure of both the local
trading environment and those in the relations of the Indian economy to the economy of
Europe and the global economic framework.

Bank of Bengal H.O.

Establishment

The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock
banking in India. So was the associated innovation in banking, viz. the decision to allow the
Bank of Bengal to issue notes, which would be accepted for payment of public revenues
within a restricted geographical area. This right of note issue was very valuable not only for
the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an
accretion to the capital of the banks, a capital on which the proprietors did not have to pay
any interest. The concept of deposit banking was also an innovation because the practice of

17
accepting money for safekeeping (and in some cases, even investment on behalf of the
clients) by the indigenous bankers had not spread as a general habit in most parts of India.
But, for a long time, and especially up to the time that the three presidency banks had a right
of note issue, bank notes and government balances made up the bulk of the invertible
resources of the banks.

The three banks were governed by royal charters, which were revised from time to time. Each
charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned
by the provincial government. The members of the board of directors, which managed the affairs of
each bank, were mostly proprietary directors representing the large European managing agency
houses in India. The rest were government nominees, invariably civil servants, one of whom was
elected as the president of the board.

Group Photograph of Central Board (1921)

Business

The business of the banks was initially confined to discounting of bills of exchange or other
negotiable private securities, keeping cash accounts and receiving deposits and issuing and
circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation
confined to three months only. The security for such loans was public securities, commonly
called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature'
and no interest could be charged beyond a rate of twelve per cent. Loans against goods like
opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also
granted but such finance by way of cash credits gained momentum only from the third decade
of the nineteenth century. All commodities, including tea, sugar and jute, which began to be

18
financed later, were either pledged or hypothecated to the bank. Demand promissory notes
were signed by the borrower in favour of the guarantor, which was in turn endorsed to the
bank. Lending against shares of the banks or on the mortgage of houses, land or other real
property was, however, forbidden.
Indians were the principal borrowers against deposit of Company's paper, while the business
of discounts on private as well as salary bills was almost the exclusive monopoly of
individuals Europeans and their partnership firms. But the main function of the three banks,
as far as the government was concerned, was to help the latter raise loans from time to time
and also provide a degree of stability to the prices of government securities.

Old Bank of Bengal

Major change in the conditions

A major change in the conditions of operation of the Banks of Bengal, Bombay and Madras
occurred after 1860. With the passing of the Paper Currency Act of 1861, the right of note
issue of the presidency banks was abolished and the Government of India assumed from 1
March 1862 the sole power of issuing paper currency within British India. The task of
management and circulation of the new currency notes was conferred on the presidency banks
and the Government undertook to transfer the Treasury balances to the banks at places where
the banks would open branches. None of the three banks had till then any branches (except
the sole attempt and that too a short-lived one by the Bank of Bengal at Mirzapore in 1839)
although the charters had given them such authority. But as soon as the three presidency
bands were assured of the free use of government Treasury balances at places where they
would open branches, they embarked on branch expansion at a rapid pace. By 1876, the
branches, agencies and sub agencies of the three presidency banks covered most of the major
parts and many of the inland trade centres in India. While the Bank of Bengal had eighteen
branches including its head office, seasonal branches and sub agencies, the Banks of Bombay
and Madras had fifteen each.

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 Bank of Madras Note Dated 1861 for Rs.10

Presidency Banks Act

The presidency Banks Act, which came into operation on 1 May 1876, brought the three
presidency banks under a common statute with similar restrictions on business. The
proprietary connection of the Government was, however, terminated, though the banks
continued to hold charge of the public debt offices in the three presidency towns, and the
custody of a part of the government balances. The Act also stipulated the creation of Reserve
Treasuries at Calcutta, Bombay and Madras into which sums above the specified minimum
balances promised to the presidency banks at only their head offices were to be lodged. The
Government could lend to the presidency banks from such Reserve Treasuries but the latter
could look upon them more as a favour than as a right.

Bank of Madras

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The decision of the Government to keep the surplus balances in Reserve Treasuries outside
the normal control of the presidency banks and the connected decision not to guarantee
minimum government balances at new places where branches were to be opened effectively
checked the growth of new branches after 1876. The pace of expansion witnessed in the
previous decade fell sharply although, in the case of the Bank of Madras, it continued on a
modest scale as the profits of that bank were mainly derived from trade dispersed among a
number of port towns and inland centres of the presidency.
India witnessed rapid commercialisation in the last quarter of the nineteenth century as its
railway network expanded to cover all the major regions of the country. New irrigation
networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence
crops into cash crops, a portion of which found its way into the foreign markets. Tea and
coffee plantations transformed large areas

of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par
excellence. All these resulted in the expansion of India's international trade more than six-
fold. The three presidency banks were both beneficiaries and promoters of this
commercialisation process as they became involved in the financing of practically every
trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal
and Bombay were engaged in the financing of large modern manufacturing industries, the
Bank of Madras went into the financing of large modern manufacturing industries, the Bank
of Madras went into the financing of small-scale industries in a way which had no parallel
elsewhere. But the three banks were rigorously excluded from any business involving foreign
exchange. Not only was such business considered risky for these banks, which held
government deposits, it was also feared that these banks enjoying government patronage
would offer unfair competition to the exchange banks which had by then arrived in India.
This exclusion continued till the creation of the Reserve Bank of India in 1935.

21
 Bank of Bombay

Presidency Banks of Bengal

The Presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in
1921 to form the Imperial Bank of India. The triad had been transformed into a monolith and
a giant among Indian commercial banks had emerged. The new bank took on the triple role of
a commercial bank, a banker's bank and a banker to the government.

But this creation was preceded by years of deliberations on the need for a 'State Bank of
India'. What eventually emerged was a 'half-way house' combining the functions of a
commercial bank and a quasi-central bank.

The establishment of the Reserve Bank of India as the central bank of the country in 1935
ended the quasi-central banking role of the Imperial Bank. The latter ceased to be bankers to
the Government of India and instead became agent of the Reserve Bank for the transaction of
government business at centres at which the central bank was not established. But it
continued to maintain currency chests and small coin depots and operate the remittance
facilities scheme for other banks and the public on terms stipulated by the Reserve Bank. It
also acted as a bankers' bank by holding their surplus cash and granting them advances
against authorised securities. The management of the bank clearing houses also continued
with it at many places where the Reserve Bank did not have offices. The bank was also the
biggest tendered at the Treasury bill auctions conducted by the Reserve Bank on behalf of the
Government.

The establishment of the Reserve Bank simultaneously saw important amendments being
made to the constitution of the Imperial Bank converting it into a purely commercial bank.

22
The earlier restrictions on its business were removed and the bank was permitted to undertake
foreign exchange business and executor and trustee business for the first time.
Imperial Bank

The Imperial Bank during the three and a half decades of its existence recorded an impressive
growth in terms of offices, reserves, deposits, investments and advances, the increases in
some cases amounting to more than six-fold. The advances, the increases in some cases
amounting to more than six-fold. The financial status and security inherited from its
forerunners no doubt provided a firm and durable platform. But the lofty traditions of banking
which the Imperial Bank consistently maintained and the high standard of integrity it
observed in its operations inspired confidence in its depositors that no other bank in India
could perhaps then equal. All these enabled the Imperial Bank to acquire a pre-eminent
position in the Indian banking industry and also secure a vital place in the country's economic
life.

Stamp of Imperial Bank of India

When India attained freedom, the Imperial Bank had a capital base (including reserves) of
Rs.11.85 crores, deposits and advances of Rs.275.14 crores and Rs.72.94 crores respectively
and a network of 172 branches and more than 200 sub offices extending all over the country.

First Five Year Plan

In 1951, when the First Five Year Plan was launched, the development of rural India was
given the highest priority. The commercial banks of the country including the Imperial Bank

23
of India had till then confined their operations to the urban sector and were not equipped to
respond to the emergent needs of economic regeneration of the rural areas. In order, therefore,
to serve the economy in general and the rural sector in particular, the All India Rural Credit
Survey Committee recommended the creation of a state-partnered and state-sponsored bank
by taking over the Imperial Bank of India, and integrating with it, the former state-owned or
state-associate banks. An act was accordingly passed in Parliament in May 1955 and the State
Bank of India was constituted on 1 July 1955. More than a quarter of the resources of the
Indian banking system thus passed under the direct control of the State. Later, the State Bank
of India (Subsidiary Banks) Act was passed in 1959, enabling the State Bank of India to take
over eight former State-associated banks as its subsidiaries (later named Associates).

The State Bank of India was thus born with a new sense of social purpose aided by the 480
offices comprising branches, sub offices and three Local Head Offices inherited from the
Imperial Bank. The concept of banking as mere repositories of the community's savings and
lenders to creditworthy parties was soon to give way to the concept of purposeful banking sub
serving the growing and diversified financial needs of planned economic development. The
State Bank of India was destined to act as the pacesetter in this respect and lead the Indian
banking system into the exciting field of national development

The Bank is actively involved since 1973 in non-profit activity called Community Services
Banking. All SBI branches and administrative offices throughout the country sponsor and
participate in large number of welfare activities and social causes. SBI business is more than
banking because we touch the lives of people anywhere in many ways. SBI commitment to
nation-building is complete & comprehensive.

TECHNOLOGY UPGRADATION

SBI’s Information Technology Programme aims at achieving efficiency in operations,

meeting customer and market expectations and facing competition. SBI achievements are
summarized below:
FULL BRANCH COMPUTERISATION (FCBs): All the branches of the Bank are now fully computerised.

This strategy has contributed to improvement in customer service.

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ATM SERVICES: There are 5290 ATMs on the ATM Network. These ATMs are located in 1721 centers

spread across the length and breadth of the country, thereby creating a truly national network of
ATMs with an unparalleled reach. Value added services like ATM locator, payment of fees for college
students, multilingual screens, voice over and drawl of cash advance by SBI credit card holders have
been introduced.

INTERNET BANKING (INB): This on-line channel enables customers to access their account information

and initiate transactions on a 24x7, boundary less basis. 2225 branches, covering 555 centers are
extending INB service to their customers. All functionalities other than Cash and Clearing have been
extended to individual retail customers. A separate Internet Banking Module for Corporate
customers has been launched and available at 1305 branches. Bulk upload of data for Corporate,
Inter-branch funds transfer for Retail customers, Online payment of Customs duty and Govt. tax,
Electronic Bill Payment, SMS Alerts, E-Poll, IIT GATE Fee Collection, Off-line Customer Registration
Process and Railway Ticket Booking are the new features deployed.

GOVT. BUSINESS : Software has been developed and rolled out at 7785 fully computerised
branches. Electronic generation of all reports for reporting, settlement and reconciliation of Govt.
funds is available.

STEPS: Under STEPS, the bank's electronic funds transfer system, the Products offered are eTransfer
(eT), eRealisation (eR), eDebit (CMP) and ATM reconciliation. STEPS handles payment messages and
reconciliation simultaneously.

SEFT: SBI has launched the Special Electronic Fund Transfer (SEFT) Scheme of RBI, to facilitate
efficient and expeditious Inter-bank transfer of funds. 241 branches of our Bank in various LHO
Centres are participating in the scheme. Security of message transmission has been enhanced.

MICR Centre: MICR Cheque Processing systems are operational at 16 centre viz. Mumbai, New
Delhi, Chennai, Kolkata, Vadodara, Surat, Patna, Jabalpur, Gwalior, Jodhpur, Trichur, Calicut, Nasik,
Raipur, Bhubaneswar and Dehradun.

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Core Banking: The Core Banking Solution provides the state-of-the-art anywhere anytime banking for

our customers. The facility is available at 1012 branches.

Trade Finance : The solution has been implemented, providing efficiency in handling Trade Finance
transactions with Internet access to customers and greatly enhances the bank's services to Corporate
and Commercial Network branches. This new Trade Finance solution, EXIMBILLS, will be
implemented at all domestic branches as well as at Foreign offices engaged in trade finance business
during the year.

WAN : The bank has set up a Wide Area Network, known as SBI connect, which provides
connectivity to 4819 branches/offices of SBI Group across 385 cities as at 31st March 2014. This
network provides across the board benefits by providing nationwide connectivity for its business
applications

Directors on the Bank's Central Board

BOARD OF DIRECTORS

Central Board Of State Bank Of India

Sl.No. Name of Director Sec. of SBI Act, 1955

Shri O.P. Bhatt

1. 19(a)
Chairman

Shri S.K.Bhattacharyya
2. 19(b)
MD & CC&RO

3. Shri Suman Kumar Bery 19(c)

4. Dr. Ashok Jhunjhunwala 19(c)

.5 Dr. Deva Nand Balodhi 19(d)

6. Prof. Mohd. Salahuddin Ansari 19(d)

7. Dr.(Mrs.) Vasantha Bharucha 19(d)

8. Shri Arun Ramanathan 19(e)

9. Smt. Shyamala Gopinath 19(f)

26
ASSOCIATE BANKS

State Bank of India has the following seven Associate Banks (ABs) with controlling interest ranging
from 75% to 100%.

1. State Bank of Bikaner and Jaipur (SBBJ)

2. State Bank of Hyderabad (SBH)
3. State Bank of Indore (SBIr)
4. State Bank of Mysore (SBM)
5. State Bank of Patiala (SBP)
6. State Bank of Saurashtra (SBS)
7. State Bank of Travancore (SBT)

As on 31st march, 2014 the financial information of State bank of India is given as under

Financial Details RS (in crore)

Capital 631.47
Borrowings 51,727.41
Deposits 5,37,403.94
Investments 1,89,301.27
Advances 4,16,768.19
Profit 6,729.55

Source : balance sheet and profit and loss accounts schedule of state bank of

India from annual reports of year ending 31st march, 2014

27
 General Shareholder Information
Number of shareholders as on 30.9.2004 was 5.61 lacs. The shareholding pattern was as under.

SSHHAARREE HHOOLLDDEERRSS PPEERRCCEENNTTAAGGEESS

Reserve Bank of India 59.73 %
Non-residents (FIIs, OCBs, NRIs) 19.83 %
Banks, FIs including insurance companies 6.21 %
Mutual funds/UTI 6.47 %
Domestic companies/private corporate 1.79 %
bodies/trusts
Resident individuals 5.97 %

5.97%
6.47%1.79%
6.21%

19.83% 59.73%

Reserve Bank of India

Non-residents (FIIs, OCBs, NRIs)
Banks, FIs including insurance companies
Mutual funds/UTI
Domestic companies/private corporate bodies/trusts
Resident individuals

28
 MISSION

To retain the Bank’s Position as the Premier Indian Financial

Services Group, with world class standards and significant Global
business, committed to excellence in customer, shareholder and
employee satisfaction and to play a leading role in the expanding and
diversifying financial services sector while continuing emphasis, on its
development banking role.
 DR. KALAM TALKS ABOUT SBI PLAN AND MISSON

EW DELHI : President A.P.J. Abdul Kalam on Tuesday chalked out a seven-point action plan
for the State Bank of India (SBI) while urging the country's premier bank to create a Rs.
5,000-crore venture capital fund and hike lending to the farm sector.

In his address at the SBI's Bicentennial Celebrations here, Mr. Kalam noted that within the
next three years, the bank should raise the credit to the farm and agro-processing sector from
10 to 20 per cent of its total loan disbursal.

Agricultural growth, he said, was lagging behind while sectors such as manufacturing and
services were showing robust increases. A higher credit disbursal, he said, was essential to
hike farm growth to over four per cent as it was a vital requirement for increasing the overall
Gross Domestic Product growth to 10 per cent.

Unveiling his plan, Mr. Kalam asked the SBI to allocate Rs. 5,000 crores as venture capital
from 2007-08 for the purposes of funding innovative scientists and technologists for speedier
societal transformation. This would include the development of ICT products, software
development and software services.

The President also advised the bank to create and nurture five rural development projects, on
the lines of the bio-fuel project and seaweed project, as it had the potential to provide
employment to 50 lakh persons in the rural areas at the least.

Mr. Kalam also asked the SBI to adopt and innovatively fund at least one lakh sick units in
the small-scale sector to infuse the latest technology and turn them into profitable ventures.

Another sector with great potential, Mr. Kalam said, was medical tourism in which the bank
could extend funds at competitive interest rates for setting up corporate hospitals which
would also serve the rural areas. Likewise, yet another sector for the bank's participation, he
said, was infrastructure development, including provision of 50 million quality houses with
basic infrastructure in rural areas in association with state and Central entities.

29
Turning to the plight of villagers caught in the ``vicious cycle of borrowing,'' Mr. Kalam
asked the SBI to adopt a ``villager-friendly'' banking system to free them from the clutches of
money-lenders.

Mr. Kalam also lamented that hassle-free loans were being extended by the SBI to students of
only the best engineering colleges, medical colleges and business schools. ``I would request
the SBI to examine the possibility of providing loans to students who would like to pursue
science and commerce as a career," he said.

Besides, ways should be found to fund the education of those meritorious students who could not
get admission to top engineering, medical and B-schools owing to stringent competition, Mr. Kalam
said.

30
 SBI has bagged SBI is placed at
the awards for 70th in Top 1000
The only
“Most Preferred
Indian Bank to Banks Survey by
Bank” and “Most
preferred brand” find a place in Banker
for home Loan in
Today,
the Fortune Magazine, July
CNBC Awaaz
SBI/SBI
Global 500 2007, (up from
SBI ranked 6th
Consumer No.1 in mergers
CAP
Listis the No.1 107 last year)
inAwards
the Economicsin & Acquisition
Times Market
August 2007 syndicator of Deals (31
Cap List, (up domestic debt in Deals of US $
from 50 last year) Asia Pacific 19.8bn)
REGION.
.

SBI is No 1
provider of SBI is market Readers digest
AGRI Finance Leader in May 07 Golden
and No. 1 in financing SSIs Award for being
Credit Linking with a market among the two
of Rs 9.35 lacs share of 29% most trusted
SHGS banks in India

31
Up gradation of 3rd in the Business
ratings by citi Economic Times Standard has
group/ Morgan brand Equity Awarded the
Stanley Ranking Top 50 Best Banker of
Moodys’s S&P most trusted the Year Award
service brands in to Shri O.P.Bhatt
the service for his initiative
sector to reenergize the
Bank

CNN IBN network Asian centre for

18 has selected shri. corporate Governance &
O.P.Bhatt as Indian Sustainability and Indian
of the Year Merchants Chamber has
Business 2007 for awarded the
showing how a public Transformational Leader
sector behemoth can Award 2007 to Shri
flex its muscle in the O.P.Bhatt for leadership,
ferociously charisma, inspiration and
competitive Banking intellectual stimulation for
sector the entire SBI team

32
 CHAIRMAN

DMD & CCO DMD (I & MA)

(Located at Hyderabad)

DMD RURAL & AGRI BUSINESS

DMD & CFO
GROUP

DMD CORPORATE
DMD & CDO
STRATEGY & NEW BUSINESS

CHIF ECONOMIC ADVISOR

DMD (IT)

CVO

MD & GE MD & GE (NB) DMD & GE DMD & GE

(CB) (TRESASURY &
MARKETS (ASSOCIATES &
SUBSIDIARIES

DMD: DEPUTY MANAGING CCO: CHIEF CORPORATE

DIRECTOR OFFICER
CFO: CHIEF FINANE CB: CORE BANKING
OFFICER
NB: NON BANKING IB: INTERNATIONAL BANKING

33
State bank of India has been facing great rivalry and major competition with other public sector
banks and some of private commercial banks. State bank of India has many banks as art rival. Some
of its art rival.

List of major competitors of SBI

I. ICICI Bank
II. Bank of Baroda
III. Canara Bank
IV. Punjab National Bank
V. Bank of India
VI. Union Bank of India
VII. Central Bank of India
VIII. HDFC Bank
IX. Oriental Bank of Commerce.
Here especially some of the public sector and private sector banks are giving hardcore
competition to the state bank of India. So let us have some of the best banks which is
also mentioned above and mentioned below in detail.

ICICI BANK

ICICI bank stands for Industrial Credit and Investment Corporation of India. This
ICICI bank is one of the heavyweight banks of private sector of India. It is providing
the core competition to the state bank of India. Especially in lending money,
Investment.

But in profit making state bank of India is standing ahead. And when and where social
responsibility of concern state bank of India is heading high than any other banks in
India

34
HDFC BANK
HDFC stands for Housing Development and Finance Corporation ltd. This is also one
of the leading banks of India in private sector. This bank is also providing hardcore
competition to all the banks as well as state bank of India

But we mention earlier that state bank of India is ahead in banking India. So HDFC
bank has to work hard to reach at the milestone achieved by state bank of India.

BANK OF BARODA
Bank of Baroda is also one of the leading public sector banks in India. Bank of Baroda
is known as BOB. This PSU bank is also providing the tough competition to all other
banks in India. The BOB bank is very renowned banks of India today. It is very
changed and very professionally working public sector banks

BOB has got professional in recent time so. It has to work very hard to achieve
position and reputation which are achieved by State Sank of India.

35
REVIEW OF LITERATURE

36
 The corporate finance literature has traditionally focused on the study
of long-term financial decisions. However, short-term assets and
liabilities are important components of total assets and needs to be
carefully analyzed. Management of these short-term assets and liabilities
warrants a careful investigation since the working capital management
plays an important role for the firm’s profitability and risk as well as its
value. The optimal level of working capital is determined to a large extent
by the methods adopted for the management of current assets and
liabilities.

A research study on working capital management of paper industries

in India was conducted by R. Sivarama and Prasad (2001). They
reported that the chief executives properly recognized the role of efficient
use of working capital in liquidity and profitability, but in practice they
could not achieve it. Again they reported a clear reveal of a suboptimum
utilization of working capital in paper industry.

A study on working capital management of horticulture industry in

himachal Pradesh by Joginder Singh Dulta (2001) observed the size of
current assets and current liabilities with all variations, registered a slight
increase, but due to inefficient use of the various components of working
capital of Himachal Pradesh Horticulture Produce Marketing and
Processing Corporation Ltd, the current liabilities increased
proportionately at a faster rate than current assets and net working
capital position was worsened continuously.

A study on working capital management is done by me Prakash Kumar

Sharma on State Bank Of India on 12 june 2016. I had taken into
consideration the current assets and the current liabilities of the State
Bank Of India. It shows that in the year 2007 and 2014 the net working
capital is so high but in the year 2015 it was so low , but in the year 2016
SBI is able to manage the working capital properly.

37
State Bank of Bikaner and Jaipur:

State Bank of Bikaner and Jaipur was established in 1963 after

amalgamation of erstwhile State Bank of Jaipur (established in 1943)
with State Bank of Bikaner (established in 1944) as a subsidiary of State
Bank of India. The Bank took over the business of the Govind Bank Pvt.
Ltd. on 25.04.1966. The Bank's main area of operation is Rajasthan, with
presence at all important centers in the country.

The Bank follows transparent corporate governance policies and is

preparing itself for smooth migration to Basel II. On technology front,
during 2005-06, the Bank migrated all branches to Core Banking
Solution (CBS). The Bank has installed 336 ATMs and all ATMs are the
part of over 5500 ATMs of State Bank Group. The Bank has been
earning profit continuously since its inception and the Bank's business
crossed the level of Rs. 49,245 crores with a net profit of Rs. 305.80
crores at the end of March, 2007.

State Bank of Hyderabad:

State Bank of Hyderabad of India was established on August 8, 1941.

It was then known as Hyderabad State Bank. The bank was the central
bank of the erstwhile princely State of Hyderabad during pre-
independence days. Hyderabad State Bank was responsible for
managing Osmania Sikka-the currency of Hyderabad state in those
days. The first branch of Hyderabad State Bank opened at Gunfoundry,
Hyderabad on April 5, 1942. Hyderabad State Bank came under
operational control of Reserve Bank of India (RBI) in 1953. The bank
became RBI's subsidiary. Hyderabad State Bank was also renamed
State Bank of Hyderabad in the same year. It became an associate of
State Bank of India on October 1, 1959.
Current business turnover is Rs. 88600 crores in the Financial Year
ending March 31, 2014.

38
State Bank of Mysore:

State Bank of Mysore was established in the year 1913 as Bank of

Mysore Ltd. under the patronage of the erstwhile Govt. of Mysore, at the
instance of the banking committee. Subsequently, in March 1960, the
Bank became an Associate of State Bank of India. State Bank of India
holds 92.33% of shares. The Bank's shares are listed in Bangalore,
Chennai, and Mumbai stock exchanges.

State Bank of Patiala:

State Bank of Patiala was founded by Late Bhupinder Singh, Maharaja

of erstwhile Patiala state, with one branch by the name of 'Chowk Fort to
the year 1917.’Patiala State Bank' was state owned and setup for the
explicit purpose of fostering growth of agriculture, trade and industry.
The constitution, scope and operations of the Bank underwent a sea
change with the formation of the Patiala and east Punjab States Union
(PEPSU) in 1948.The Bank was then reorganized and brought under the
control of Reserve Bank of India. Another milestone in history of the
Bank was its becoming a subsidiary of the State Bank of India on 1st
April,1960 when it was named as the State Bank of Patiala and since
then it has grown significantly both in size and volume of business.
During these glorious years, the Bank has been playing an important role
in banking sphere. The bank has now added a golden chapter to its
history by fully computerizing all its branches on 24th January 2003 and
became the first fully computerized Public Sector Bank in the country.

Bank of Saurashtra:

The origins of State Bank of Saurashtra can be traced to Bhavnagar

Darbar Bank, which was established in the year 1902. In 1948, when
princely states were integrated to form Saurashtra state, the Bhavnagar
Darbar Bank was formed into a statutory corporation, called State Bank
Of Saurashtra, and the four Darbar Banks - Rajkot State Bank,
Porbandar State Bank, Palitana Darbar Bank and Vadia State Bank -
were merged with it with effect from 1st July, 1950 as its branches. In
1960, the State Bank of Saurashtra joined the State Bank family as one
of its fully owned subsidiaries. At the close of 1950, the Bank had only 9
branches and deposits of Rs.7 crores. By 31.03.2005, the total deposits
amounted to Rs. 12613.04 crores and total advances reached the level
of Rs. 6714.07 crores. Presently, the Bank has a network of 423

39
branches spread over 15 states and the Union Territory of Daman and
Diu.

State Bank of Travancore:

State Bank of Travancore (SBT) was originally established as

Travancore Bank Ltd. in 1945 sponsored by the erstwhile Princely State
of Travancore. Under a special statute of the Indian Parliament (SBI
subsidiary Banks Act 1959) it has been made an Associate of the State
Bank of India and a member of the State Bank Group. Now it has
network of 712 branches with total business of Rs. 66644 Crores.

State Bank of Indore:

State Bank of Indore popularly known as Indore Bank in Malwa

Region, originally known as Bank of Indore Ltd. was incorporated under
a special charter of His Highness Maharaja Tukojirao Holker-III, the then
ruler of this region. In terms of State Bank of India (Subsidiary Banks)
Act, 1959 the Bank of Indore Ltd. became a subsidiary of State Bank of
India w.e.f. 1st January 1960 and was renamed as State Bank of Indore
The Bank acquired business of The Bank of Dewas Ltd. in 1962 and The
Dewas Senior Bank Ltd. in 1965 and was up-graded to class 'A' category
bank in 1971. Ever since, the Bank has been making steady progress
and at the end of September 2014, the business turnover has crossed
Rs.45000 crore.

LIMITATIONS:-

1) The survey was conducted in the Bangalore.

2) Managers were too busy persons, so it was difficult to get their

time and view for specific questions.

3) Area covered for the project while doing job also was very large
and it was very difficult to correlate two different customers /
respondents’ views in a one.

40
OBJECTIVE

41
Every business needs some amount of working capital. It is
needed for following purposes-

• For the purchase of raw materials, components and

spares.
• To pay wages and salaries.
• To incur day to day expenses and overhead costs such as
fuel, power, and office expenses etc.
• To provide credit facilities to customers etc.

42
RESEARCH METHODOLOGY

43
 RESEARCH METHODOLOGY:

The Research and Methodology adopted for the present study has
been systematic and was done in accordance to the objectives set which
has been detailed as below.

Research Definition:-
Research is a process in which the researcher wishes to find out the
end result for a given problem and thus the solution helps in future
course of action.

According to Redman & Mory, research is defined as a “Systemized

effort to gain new knowledge”.

Nature of Research:
Research is basically of two types.

1. Descriptive research

2. Explorative research

44
1. Descriptive Research:
.

My research design is descriptive as descriptive research –

• Describe the characteristics of certain groups/ samples / populations.

• Estimate proportions in specified populations.

• Make specific predictions.

Determining sources of Data:

There are two main sources of data

1. Primary data

2. Secondary data

Primary Data:
It consists of original information’s collected for specific Purpose.
Primary data for this research, data are collected through a direct source
like survey to obtain the first hand information is others resources are
written below.

 Survey.

 Face to face interaction.

Secondary Data:

45
 It consists of information that already exists somewhere and has
been collected for some specific purpose in the study. The secondary
data for this study is collected from various sources like,

 Books.

 Website.

 Newspaper.

 Financial Magazine. ( weekly , business world etc)

Questionnaire Development:
Questionnaire is the most common instrument in collecting primary
data. In order to gather primary data from viewers. The present
questionnaire consists closed ended type of questions.

Sampling:-
Sampling is that part of statistical practice concerned with the selection
of individual observations intended to yield some knowledge about a
population of concern, especially for the purposes of statistical inference.

In my survey, I have taken convenience sampling.

My sampling is probability sampling as probability sampling that has

been selected using simple random selection each unit in the population
has a known chance of being selected.

Moreover, my sampling technique is simple random technique as in

simple Random sampling; each unit of the population has an equal
probability of inclusion in the sample. In my survey, each respondent
have equal opportunity to be selected and the data, which I collected,
was from customers of SBI who had taken loan.

46
Data Analysis

47
 Project findings reveal that SBI is sanctioning less Credit to agriculture,
as compared with its key competitor’s viz., Canara Bank, Corporation
Bank, Syndicate Bank
·
Recovery of Credit: SBI recovery of Credit during the year 2006 is
62.4% Compared to other Banks SBI ‘s recovery policy is very good,
hence this reduces NPA

· Total Advances: As compared total advances of SBI is increased year

by year. State Bank Of India is granting credit in all sectors in an
Equated Monthly Installments so that any body can borrow money easily
· Project findings reveal that State Bank Of India is lending more credit or
sanctioning more loans as compared to other Banks.
· State bank Of India is expanding its Credit in the following focus areas:

1. SBI Term Deposits

2. SBI Recurring Deposits

3. SBI Housing Loan

4. SBI Car Loan

5. SBI Educational Loan

6. SBI Personal Loan …etc

Working capital Management in State Bank Of India In case of

indirect agriculture advances, SBI is granting 3.1% of Net Banks
Credit, which is less as compared to Canara Bank, Syndicate Bank and
Corporation Bank. SBI has to entertain indirect sectors of agriculture so
that it can have more number of borrowers for the Bank.
·

SBI’s direct agriculture advances as compared to other banks is 10.5%

of the Net Bank’s Credit, which shows that Bank has not lent enough
credit to direct agriculture sector.
·

48
 Credit risk management process of SBI used is very effective as
compared with other banks.

SBI
43.25 CURRENT
% ASSETS
CURRENT
56.75LIABILITIES
%
From the finding I found that STATE BANK OF INDIA is able to
manage the Working capital . from the above graph we can see that
the bank is having 56.75% of current assets and 43.25% of current
liabilities, it means that the bank is good in working capital
management.

49
 2014 2015 2016
ASSETS
31st March 31st March 31st March
CURRENT ASSETS
Cash and cash equivalents \159,007 \126,313 \142,582
Time deposits 1,518 1,141 1,233
Cash required to be
313,817 266,267 318,909
segregated under regulations
Trade notes and accounts
10,985 7,915 8,484
receivable
Operational investment
115,717 105,236 121,576
securities
Valuation allowance for
operational investment (4,967) (6,207) (8,424)
securities
Operational loans receivable 66,261 47,868 34,694
Real estate inventory 32,895 36,515 28,768
Trading assets 1,728 7,725 3,515
Margin transaction assets:
Receivables from customers 274,887 134,792 221,107
Cash deposits as collateral
17,995 46,009 40,534
for securities borrowed
Loans secured by securities - 1 -
Short-term guarantee
13,414 8,846 5,944
deposits
Deferred tax assets—current 1,053 5,921 7,667
Prepaid expenses and other
66,723 46,951 55,767
current assets
Allowance for doubtful
(1,762) (2,703) (2,033)
accounts
TOTAL CURRENT ASSETS 1,069,271 832,590 980,323

50
PROPERTY AND
12,652 8,578 20,614
EQUIPMENT-Net

INVESTMENTS AND OTHER ASSETS

Investment securities 15,972 10,088 11,248
Investments in unconsolidated
subsidiaries and affiliated 25,923 23,781 29,956
companies
Software, net of accumulated
8,816 9,370 11,671
amortisation
Rental deposits 6,801 7,375 7,144
Goodwill 60,874 136,354 133,088
Long-term trade receivables 50 47 10
Deferred tax assets-non-
10,595 10,602 14,197
current
Other assets 12,109 47,093 31,536
Allowance for doubtful
(4,769) (6,644) (9,767)
accounts
TOTAL INVESTMENTS AND
136,371 238,066 229,003
OTHER ASSETS
TOTAL ¥1,219,247 ¥1,079,234 \1,229,940
2014 2015
LIABILITIES AND 2016
31st 31st
SHAREHOLDERS' EQUITY 31st March
March March
CURRENT LIABILITIES
Short-term borrowings ¥53,832 ¥54,658 \55,615
Current portion of long-term
112,743 63,033 125,968
debt
Income taxes payable 9,352 2,625 4,954
Margin transaction liabilities:

51
Payables to financial
81,583 56,726 48,813
institutions
Proceeds of securities sold for
62,531 89,545 101,224
customers' accounts
Loans secured by securities-
repurchase agreement 35,441 46,588 63,781
transactions
Consignment guarantee money
received for margin 272,006 229,184 222,530
transactions
Customers' deposits as
collateral for commodity 39,574 28,885 59,844
futures
Customers' deposits for
20,147 23,488 31,176
securities transactions
Unearned income 1,893 2,085 2,049
Accrued expenses 3,280 3,035 2,897
Contingent reserve 22 - -
Deferred tax liabilities-current 8,867 6 2,960
Other current liabilities 39,363 23,5914 25,280
TOTAL CURRENT
740,634 623,449 747,091
LIABILITIES
LONG-TERM LIABILITIES
Long-term debt, less current
77,149 13,894 27,620
portion
Deferred tax liabilities-non-
300 566 540
current
Other long-term liabilities 5,431 15,043 18,855
TOTAL LONG-TERM
82,880 29,193 47,015
LIABILITIES
NET ASSETS
Common stock 55,158 55,215 55,284

52
Capital surplus 116,762 219,012 218,969
Retained earnings 112,339 86,866 87,276
Treasury stock-at cost (53,064) (636) (247)
Unrealised gain on available-
10,134 (5,946) (559)
for-sale securities
Foreign currency translation
(122) (966) (1,507)
adjustments
Deferred hedged profit/loss 9 (26) 15
Stock acquisition right 4 12 12
Minority Interest 146,546 65,808 69,372
TOTAL NET ASSETS 387,766 419,338 428,615
TOTAL ¥1,219,247 ¥1,079,234 \1,229,940

53
Working Capital of SBI for last 4 years

WORKING CAPITAL
60.00%
WORKING
CAPITAL
50.00%

40.00%

Reason for increasing in working capital from 2007

to 2014 and reason for decreasing working capital
in 2015 and again increasing in working capial in
2016:-
In the year 2007 SBI has the equal distribution of assets and
liabilities so working capital is accurate.

In the year 2014, due to ression all the people were

withdrawling their money so the liabilities of the bank was very
low so the working capital was increased double of 2007.

Again in the year 2015 the working capital is very low because
after the ression people ware want to deposite the money in

54
bank , so thi liabilities of the Bank was increased and the
working capital was decreased more than half of the year 2014.

In the year 2016 SBI is able to manage the working capital

properly so it is able to balance both assets and liabilities.

55
 Limitation

 There are limitation for primary data collection because of confidentiality.

 Company does not show their data because many things were confidential and can’t
be shown to everyone.

 IN banking sector is not possible to apply all the ratios.

 There is require actul facts and figures for analysis.

 Estimation of future prosparity of companies is not exactly based on present data.

56
QUESTIONNAIRE

57
Dear Sir/ Madam,

1) Name: 2) Profession:

3) Age group :( plz tick)

A)18-30 yrs. B)31-40 yrs. C)41-50 yrs. D)51-60 yrs.

How do you manage the working capital?

1) How much current Assets do you have?

2) How do you distribute the current assets ?

3) How much current liabilities do you have?

4) In which area do you distribute the current liabilities?

5) Can you give me the net working capital of last four years?

6) Why in the year 2007 the working capital is in the good level?

7) Why in the year 2014 it was increased so much?

8) Why in the year 2015 net working capital is decreased more

than half?

9) How in the year 2016 SBI is able to manage the net working
capital?

58
CONCLUSION

59
 In this study I investigated the efficiency of managing working capital
of seven associate banks of State Bank of India for the period from
1990-91 to 2003-04. But traditional methods of analyzing working capital
ratios are not used here. Three index values, Performance index,
Utilization index and efficiency index have been used to find individual
bank’s efficiency in working capital management. Regression analysis
also has been done to find the comparative speed of achieving targeted
level of efficiency by individual banks during the study period.

This report will be very helpful for my future career because this
project is going to give me a broad idea about the working capital
management which is one of the most important part of an organisation
as well as SBI.

Working capital is a very vital part of an organisation weather it is

a Bank or any other organisation and this project is going to help me in
my future a lot.

From this study, it is observed that the associates’ average efficiency

level was satisfactory. Average of average values of all the years for the
group of banks is showing good position (greater than 1). But it does not
mean that most of the banks performed well through out the period.
Rather, all the banks except state bank of Travancore were not
satisfactory. In my study period no bank has shown steady improving
state of efficiency in managing working capital. Fluctuation was a
common trend for all the banks.

In the case of achieving the target level (all the banks’ average) of
efficiency by the banks, State Bank of Patiala was the most successful
bank followed by State bank of Indore, Saurashtra, Hydrabad,
Travancore, Mysore and Bikaner and Jaipur. Observing banks’ beta
values, suggestion can be given to all the banks except state bank of
Patiala and Indore to take necessary steps in order to improve their
efficiency in managing working capital. Again, a further study can be

60
conducted to find the problems of the individual banks in managing
working capital efficiently.

The project undertaken has helped a lot in gaining knowledge of the

“Credit Policy and working capital Management” in Nationalized Bank
with special reference to State Bank Of India. Credit Policy and Credit
Risk Policy of the Bank has become very vital in the smooth operation of
the banking activities. Working capital of the Bank provides the
framework to determine (a) whether or not to extend credit to a customer
and (b) how much credit to extend. The Project work has certainly
enriched the knowledge about the effective management of “Working
capital” and “Working capital Management” in banking sector.

· “Working capital Management” is a vast subject and it is very difficult to

cover all the aspects within a short period. However, every effort has
been made to cover most of the important aspects, which have a direct
bearing on improving the financial performance of Banking Industry.

To sum up, it would not be out of way to mention here that the State
Bank Of India has given special inputs on “Credit Policy” and “Working
capital management”. In pursuance of the instructions and guidelines
issued by the Reserve Bank of India, the State bank Of India is granting
and expanding credit to all sectors. The concerted efforts put in by the
Management and Staff of State Bank Of India has helped the Bank in
achieving remarkable progress in almost all the important parameters.
The Bank is marching ahead in the direction of achieving the Number-1
position in the Banking.

This group comprises of the State Bank of India and its seven
subsidiaries viz., State Bank of Patiala, State Bank of Hyderabad, State
Bank of Travancore, State Bank of Bikaner and Jaipur, State Bank of
Mysore, State Bank of Saurashtra, State Bank of India State Bank of
India (SBI) is the largest bank in India. If one measures by the number of
branch offices and employees, SBI is the largest bank in the world.

Established in 1806as Bank of Bengal it is the oldest commercial bank in

the Indian subcontinent. SBI provides various domestic, international and
NRI products and services, through its vast network in India and
overseas. With an asset base of $126 billion and its reach, it is a regional

61
banking behemoth. The government nationalized the bank in1955, with
the Reserve bank of India taking a 60% ownership stake. In recent years
the bank has focused on two priorities, 1), reducing its huge staff through
Golden handshakeschemes known as the Voluntary Retirement
Scheme, which saw many of its best and brightest defect to the private
sector, and 2), computerizing its operations. Credit Risk Management in
State Bank Of India The State Bank of India traces its roots to the first
decade of19th century, when the Bank of culcutta, later renamed
theBank of bengal, was established on 2 jun 1806. The government
amalgamatted Bank of Bengal and two other Presidency banks, namely,
the Bank of Bombay and the bank of Madras, and named the
reorganized banking entity the Imperial Bank of India. All these
Presidency banks were incorporated ascompanies, and were the result
of theroyal charters. The Imperial Bank of India continued to remain a
joint stock company. Until the establishment of a central bank in India the
Imperial Bank and its early predecessors served as the nation's central
bank printing currency. The State Bank of India Act 1955, enacted by the
parliament of India, authorized the Reserve Bank of India, which is the
central Banking Organisationof India, to acquire a controlling interest in
the Imperial Bank of India, which was renamed the State Bank of India
on30th April 1955. In recent years, the bank has sought to expand its
overseas operations by buying foreign banks. It is the only Indian bank to
feature in the top 100 world banks in the Fortune Global 500 rating and
various other rankings. According to the Forbes 2000 listing it tops all
Indian companies.

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63
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