A Project Repot On

A study on Financial Performance and Deposits and Loans & Advances of Bavla Nagrik bank
At

Bavla
Under the Guidance of (in Company)

Mr. H. J. Trivedi
Under the Guidance of (College)

Ms. Arpita Vaghela

Institution

Submitted to Gujarat Technological University - Ahmedabad

Prepared By

Poonam J. Thakkar MBA- 2nd sem Seat No. 13929

K. K. Parekh Institute of Management Student Amreli

Dr. Jivraj Mehta Vidhya Vihar Campus Lathi road Amreli

Ph: (02792) 223509 fax: (02792) 223509 E-mail: kkpimsa@yahoo.com Web: kkpimsamreli.com

DIRECTORS RECOMMENDATION

TO, The Registrar Gujarat Technological University Ahmedabad

Subject: MBA Summer Training Project Report

Respected Sir,

I am recommending the Summer Training Project entitledFinancial Performance and deposits and loan & advances of the Bavla nagrik Bank prepared by POONAM J. THAKKAR at THE BAVLA NAGRIK CO-OPERATIVE BANK, BAVLA. As the partial fulfillment of the University requirement for the award of MBA degree of Gujarat Technology University Ahmedabad

Date: Place: - Amreli

Thanking You, Yours Faithfully,

Director

STUDENT DECLARATION

I the undersigned student of POONAM J. THAKKAR K. K. Parekh Institute of Management Studies Amreli M.B.A. II Semester, hereby declare that, the project on Financial Performance and deposits and loan & advances of the Bavla nagrik Bank 3

In the partial fulfillment of Master Degree of Business Administration, I had undergone project work at THE BAVLA NAGRIK CO-OPERATIVE BANK, BAVLA. Under the guidance of KRUPALI MADAM,K. K. Parekh Institute of Management Studies Amreli and submitted to Gujarat Technological University, Ahmedabad.

This project work is my original work and has not been submitted to any where earlier.

Date: Signature:

PRE-FACE

Experience is the best Teacher .

Books enlightened us only the knowledge of the article aspect of management but practical implementation and execution enables us to use this half-backed knowledge discernibly prudentially and above all diplomatically. Theory without practice has no fruit and practice without

Theory has no root. & Discernible exercise of knowledge is wisdom. Practical knowledge of theory is great valuable not only for the M.B.A. students but also for the entire student community. It develops feeling about the difficult and challenges in the business world only theory knowledge does not impart complete education practical experience must all company theoretical knowledge to add meaning to education. To fulfill these objectives industrial visit is a part of the programme. Small opportunities are often the beginning of great industries. This project report is a small opportunity seized by me in this trial.

ACKNOWLEDGEMENT

I take this opportunity to humbly express thanks to all those people concerned with the project- FINANCIAL PERFORMANCE AND DEPOSITS AND LOAN & ADVANCES OF THE BAVLA NAGRIK BANK. I express a very sincere thanks to my guide, my mentor, Mr. Harshad J. Trivedi for providing me such a remarkable project to work with and a platform where I could give my true potential towards the project. Without him, I could not have accomplished such a project successfully. His guidance and impeccable support provided me the confidence. I required to overcome the several challenges faced while making the project. Furthermore, I deeply express a sense of gratitude to all for rendering their aids.

I am really oblidged to the bank and all those Manager, officers, other staff members of the bank who heartily give me information about the bank by answering question. I have done sincere efforts in making this project as an implement-able and intelligent task. Most of all and more than ever, I would like to thanks my parent, for their support, encouragement, kindness and patience. At last, I am also thankful to all the members of Nagrik Co-operative bank ltd. for their honest support and also to the staff members of our college.

Date: Thakkar Poonam J.

Sincerely and with Regards,

Place:

INDEX
Sr. no Particular Page no.
1 2 3 3 4 7 11 12 14 15

1 Industry profile 1.1 Brief History 1.2 Banking 1.3 Characteristic of Banking 1.4 Structure of the Banking Industry in India 1.5 RBI Overview 2 Company Profile 2.1 History and Development 2.2 Vision & Mission 2.3 Competitors

2.4 Bank Profile 2.5 Organization Structure 2.6 Board of Directors 2.7 Branch managers 2.8 Bankers 2.9 SWOT Analysis 3 Study of four functional area 3.1 Finance Department 3.2 Human Resources Department 3.3 Operation Department 3.4 Marketing Department 4 Research methodology 4.1 Introduction 4.2 Define the problem 4.3 Literature review of report 4.3.1 Maintenance of Deposit accounts 4.3.2 Maintenance of loan & advances 4.3.4 Sources 4.3.4 IT (Info. Technology) 4.3.5 Time value of money 4.3.6 Investment 4.3.7 Investment policy 4.4 Objectives of the study 4.5 Rationale of the study 4.6 Limitations of the study 4.7 Variables & Hypothesis formulation 4.8 Data collection

16 17 18 19 19 20 21 22 30 34 38 41 42 44 45 45 47 49 61 61 62 63 66 67 68 69 71

4.9 Data Analysis & interpretation 4.10 Social responsibility 4.11 Findings 4.12 Suggestions 4.13 conclusion 4.14 Bibliography

72 80 81 82 83 84

1.1 Brief History

Many years ago economic advancement was unknown. Consequently, the use of money for buying and selling was very much restricted. With the development of Communication, Economic progress Spread of science, and Political institutions, the use of money, the use of credit instruments also developed. Finance became a powerful instrument for any change. The origin of the word bank can be traced back to the German word bank which translated means help or mound or joint stock fund. The Italian word banco was derived from this to mean heap of money. In French bancus or banque means a bench. Business was transited by the Jews in farce on benches in the market place. The benches resembled banking counters. If a banker tailed his bench was broken up by the people leading to the word bankrupt which means one who has lost all money, wealth or financial resources. Bank as it is largely understood in English today is an institution that accepts money as a deposit to further lend it out for profit.

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1.2 Banking
In India, the banking regulation act, 1949, under which banks are regulated by the reserve bank of India, defines a banking company and banking as: Section 5(b) of BR act, 1949 banking as accepting for the purpose of lending or investment of deposits of money from the public, repayable on element or otherwise and withdrawal by cheque, draft order or ot herwise section 49 a of the act prohibits any institution other than a banking company to accept deposit money from public withdrawal by cheque. In other words, the combination of the functions of acceptance of public deposits and withdrawal of money by cheque by any institution can not be pertained without the approval of reserve bank. "Banking in the most general sense, is meant the business of receiving, conserving & utilizing the funds of community or of any special section of it." "A banker of bank is a person, a firm, or a company having a place of business where credits are opened by deposits or collection of money or currency or where money is advanced and waned.

1.3 Characteristic of Banking: The characteristic of capture the essential features of banking are as under, I. DEALING IN MONEY: Banks main transaction is to monetary dealing. it accept deposits from the public and advancing them as loans to the needy people. II. DEALING WITH CREDIT: The banks are the institution that can create credit i.e. creation of additional money for lending thus creation of credit is the unique feature of banking. III. COMMERCIAL IN NATURE : Since all the banking functions are carried on with the aim of making profit, it is regarded as a commercial institution. IV. NATURE OF AGENT: The basic function of accepting deposits and lending money as loans bank possesses the character of and agent because of its various agency services.

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1.4 Structure of the Banking Industry in India: -

Financial requirements in a modern economy are of a diverse nature, distinctive variety and large magnitude. Hence different types of banks have been instituted to eater to the varying needs of the community. The following chart depicts the structure of the banking industry in India:

1. SCHEDULED COMMERCIAL BANKS:The second schedule of the reserve bank of India act contains a list of banks which are described as scheduled Banks. A bank in order to be designated as a schedule bank should have a paid up capital and reserved as prescribed by the act. In terms of Sec. 42(6) of RBI act, its prescribed a minimum capital of Rs.100crore and its business must be managed in a manner which, in the opinion of the RBI is not detrimental to the interest of its depositors. The scheduled banked required to maintain with the RBI a deposit in the form of cash reserve ratio, based on its demand and time liabilities at a prescribed rate. Scheduled commercial banks are: public sector banks private sector banks foreign banks local area banks

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2. NON SCHEDULED COMMERCIAL BANKS: The commercial banks not included in the second schedule of the RBI act are known as Non-scheduled banks. They are not entitled to facilities like refinance and rediscounting of bills, etc. from RBI they do not get the prestige as do scheduled banks. They are mainly engaged in lending money, discounting and collecting bills and various agency services. They insist higher security for loan

3. REGIONAL RURAL BANKS: In the Indian banking structure the regional rural banks occupy a government place. The RRBs are government sponsored, regionally based and rural oriented banking. They are virtually commercial banks in character, operating in rural areas, and providing banking facilities for rural development regional rural banks combines the local feel and familiarity with local problems which co-operatives possess and the degree of business organization, ability to mobilize deposits, access to central money markets and a modified outlook which the commercial banks have. In the regional banks have shareholding pattern is. 50% central government 15% concerned state govt. 35% sponsor bank.

4. CO-OPERATIVE BANKS: Co-operative banks are distinct entities by themselves with separate jurisdiction and an independent board of directors. the co-operative banks are organized on a co-operative basis and are governed by their members according to the co-operative laws.

There are various types of co-operative banks: Primary urban co-operative banks District central co-operative banks State co-operative agricultural & rural development banks. Primary co-operative agricultural and rural development banks. Primary agricultural credit societies.

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5. FINANCIAL INSTITUTION OR DEVELOPMENT BANKS: For the development of small scale industries in each state, specialized institutions like small scale industries development corporations and have been established. Firstly in 1964, the government of India set up a central bank of development banks called industrial development banks of Indian (IDBI).

There are several wide development banks in India like: IFCI: - Industrial Finance Corporation of India. BOB: - Industrial Credit & Investment Corporation of India IDBI: - Industrial. Development Banks of India SFCS: - State Finance Corporations SIDCS: - State Industrial Development Corporation. SIDBI: - Small Scale Industrial Development Banks of India EIBI: - Export Import Banks of India LIC: - Life Insurance Corporation of India GIC: - General Insurance Corporation of India UTI: - Unit Trust of India NABARD: - National Bank of Agriculture and Rural Development.

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1.5 RBI OVERVIEW:

Brief Introduction
The reserve bank of India was constituted under the reserve banks of India act,1934 to regulate the issue of bank notes and the maintained of reserves with a view to securing the monetary stability in India and generally to operate in currency and credit system of the country to its advantage. FUNCTIONS OF THE RESERVE BANK OF INDIA: The functions of the RBI can be classified into: Traditional Promotional and Supervisory. The RBI functions the traditional liner for the following activities. a. Monopoly of note issue. b. Banker to the government c. Agent and advisor of the govt. d. Banker to the banks. e. Acts as national clearing house f. Lender of the last resort g. Acts as the controller of credit. h. Maintaining the value of currency. i. j. Publisher the economic satieties and other international. Fights against economic crises.

The promotional function of the reserve banks of India includes: a. Promotions of banking habits. b. Provider refinance for export promotion. c. Facilities for agriculture

d. Facilities to small scale industries. 15

e. Helps co-operative sector. f. prescription of minimum statuary requirement for banker

The RBI controls and administer as the entire financial and banking systems in India through its wide supervisory power key among them are: a. Granting licenses to banks. b. Inspection and enquiry. c. Administers the deposit insurance scheme. d. Periodical review of the working of commercial banks in India. e. Control of the non-banking financial companies.

ORGANIZATIONAL STRUCTURE OF RBI: The affairs of the RBI are managed by a central board of directors which consists of: 1. The governors and not more than tour deputy governors appointed by the central government. 2. Four directors nominated by the central government one from each of the four local boards. 3. Ten directors and one government official nominated by the govt. of India. The RBI has four local boards with head quarters at Mumbai New Delhi Chennai Kolkata.

The chairman of the central board of directors in the chief executives authority of the bank also known as the governor. The governor has the powers of general superintendence and direction on the affairs and business of the bank.

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 CO-OPERATIVE BANKING

Co-operative banks are group of financial institutions organized under the provisions of the co-operative societys act of the states. These banks are essentially co -operative credit societies organized by members to meet their short term and medium term financial requirements. The main object of co-operative banks is to provide cheap credit to their members. They are based on the principles of self reliance and mutual co-operation. The co-operative banking system in India is, however small razed in comparison to the commercial banking system. Its credit outstanding is just less than one fifth of the total credit outstanding of the commercial banks. Nonetheless, co-operative credit system is the main institutional source of rural, especially, agricultural finance in India. Co-operative banking system in India has the shape of a pyramid, i.e. a three tire structure, constructed by: 1. Primary credit societies 2. Central cooperative banks and 3. State co-operative banks. Primary credit societies lie at the local on base level. in rural areas there are primary agricultural credit societies (PACS), which cater to the short and medium term credit needs of the farmers. In urban areas, urban banks usually provide short term loans to they also accept deposits from members and non members too thus, their functions and working are more or less similar to those of commercial banks. But by nature, their from a major destination between these and commercial banks which are joint stock companies. The central co-operative banks (CCBs) are federation of primary societies belonging to a specified district. By furnishing credit to the primary societies, central co-operative banks serve as an important link between these societies and the money market of the country. No central cooperative bank lends to individuals it lends to societies only. The state co-operative banks (SCBs) lie at the apex of the entire co-operative credit structure. Every state co-operative banks basic function is to furnish loans to the central co-operative banks order to enable then to promote the lending activities of the primary credit societies.

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 BRANCH BANKING

Over the years, the structure of banking also has undergone tremendous changes. Consequently, several systems of banking have emerged in the branch banking. Branch banking is a system in which every bank work is a legal entity having one board of directors and one group of shareholders and operates through a network of branches spread throughout the country. The head office of the bank is located in a big city or state capital the braches operate throughout the country. Thus branch banking is another name for de-localized banking which arise on business through a number of offices.

SERVICES PROVIDED BY BANK Demat Account Lockers Cash Management Insurance Product Mutual Fund Product Loans ECS(Electronic clearance system) Taxes

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19

2.1 HISTORY & DEVELOPMENT:

Because of high developed areas and crowd of Nagrik people, and mutual cooperation of some visionary personalities, the Nagrik co-operative bank was started by taking license no UBD Guj. 1153-P on 22nd September 1980. It was became the first giant and fast developed computerized and well staffed bank in Bavla area. During its work bank get splendid respect and honor and also account holder get more satisfaction by better services. Bavlas leading co-operative banks, established in 1980 with the help of local known and established Rice Mill owners, Cotton Merchants and other well known personalities. It has been near 29 years since inception. Silver Jubilee function was celebrated in the presence of Shri Narendra Modi, Chief Minister of Gujarat who appreciated banks performance. It is to be noted that board member personally took interest in building present premise of the Bank. Due to their dedication and paying personal attention by remaining present at the time of construction, bringing best material at the cheapest price, todays tall building could be build. The inauguration of the building was also done by Shri Amarsinh Chaudhry, Chief Minister, in the year 1988. Thereby bank has proud on both occasions when Gujarat Chief Mister could remain present and join hand in appreciating progress of the bank. Shri Purshottam Priyadasji, Acharya Swamiji of Maninagar Gadi Sansthan visited personally to the bank during silver jubilee year 2004 and blessed too all Directors, Staff and Members of the Bank. He handed over divine light (Mashal) to the Chairman of the Bank who then travelled through Bavla town with other members of the Bank and staff.

We maintain financial discipline with utmost care and insist that our clients also to maintain good financial discipline. Bank is running with ZERO OVERDUE OR ZERO NPA since 1 st April 2007. This is our major achievement.

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The main characteristics of Nagrik co-operative bank are: Faith Service Transparent Success And also Nagrik co-operative get rank in top co-operative bank of Bavla area. In short, we can say that Nagrik bank is the bless for uneducated people of Bavla area.

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2.2 VISION & MISION

Vision :To provide required financial services to local community, in particular to paddy and cotton industry.

Mission :To provide best and cheapest banking services to industrial units located at Bavla, and see that Depositors also get value return of their money deposited with the Bank with THE BEST services for their problems like TDS solution etc.

Group Values :-

From inception three vales have driven all the activities of the Nagrik bank group. They are central to our operations worldwide and will continue to be at the core of all our banks. Trust We will deliver all services on all our promises. Our word is our bond. Courage-We will support our decisions and actions with conviction. Innovation We will think laterally & never fight shy of embracing big ideas. 22

2.3 COMPETITORS:
MAIN COMPETITORS FOR BANKING SECTOR Post offices Mutual fund Share market Insurance Money lenders Family and Friends

23

2.4 BANK PROFILE:

NAME & ADDRESS :THE BAVLA NAGRIK CO-OPERATIVE BANK LTD.

Near, R.A.Patel market, BAVLA-382220. Tel.: (02714)232719 /232819 Fax : 230714

YEAR OF ESTABLISHMENT :The year of establishment is 1980.

WEB-SITE :www.bavlabank.com

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2.5 ORGANIZATIONAL STRUCTURE:

MANAGER OF DEPT.

FINANCIAL MANAGER

HUMAN RESOURCE MANAGER

MARKETING MANAGER

25

2.6 BOARD OF DIRECTORS

Name Shri Ramubhai Govindlal Patel Shri Rameshbhai Baldevbhai Patel Shri Vinodchandra Jayantilal Patel Shri Narsinhbhai Zinabhai Amin Shri Balvantbhai Karansinh Desai Shri Ajiikumar Govindlal Shah Shri Anilkumar Kanubhai Desai Shri Baldevbhai Amrutlal Patel Shri Girishkumar Manubhai Patel Shri Ghanshyambhai Manilal Thakkar Shri Harshilbhai Kaushikbhai Patel, C.A. Shri Ramubhai Govindlal Patel Shri Rameshbhai Baldevbhai Patel Shri Vinodchandra Jayantilal Patel Shri Narsinhbhai Zinabhai Amin Shri Balvantbhai Karansinh Desai Shri Ajiikumar Govindlal Shah Shri Anilkumar Kanubhai Desai Shri Baldevbhai Amrutlal Patel Shri Girishkumar Manubhai Patel Shri Ghanshyambhai Manilal Thakkar Chairman Vice Chairman Managing Director Director Director Director Director Director Director Director Director Chairman Vice Chairman Managing Director Director Director Director Director Director Director Director Post

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2.7 BRANCH MANAGER

Name Shri Harshadbhai J. Trivedi Shri Harshadbhai K. Patel Shri Harshadbhai J. Trivedi Shri Hiteshbhai Manharlal Pomal, C.A., Ahmedabad Post GENERAL MANAGER BRANCH MANAGER (NARANPURA) BAVLA SHAKHA AUDITORS

2.8 BANKERS

The Gujarat State Co-operative Bank Ltd. The Ahmedabad District Co-op. Bank Ltd. State Bank of India HDFC Bank Ltd.

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2.9 SWOT ANALYSIS:

During the project work two months at Nagrik co-operative bank, I find out some strength, weaknesses, opportunities and threats by SWOT analysis are as under: Strength: Customer segmented well staff and effective implementation of Customer Relationship Management and Quality Management System. In the uneducated area of Nagrik bank is the bless for uneducated people by friendly advice and better services and really it yield lump sum amount of profit and deposits. Nagrik bank got award of excellence of the best co -operative bank in bavla area it shows the best banking operation.

Weakness: Rules for deposits and loans are very strict opening deposit is high and they require perfect documents, it can be limitation for slow inflow of deposits. In recent competitive era, Nagrik bank not provide some modern facilities like ATM service, debit card credit card and even not website on intent for show the growth of bank. There are lack of linking performance and reward. . Opportunities: Its great opportunity to cover most power area of Bavla because of continues growth strategy, it build good image among the customers and public and reliance on Nagrik cooperative bank, so it has opportunity to prove the proved growth pulls growth

Threats : There are strict rules and deposit for opening saving or current account is high in compare to other co-operative banks, so it can create bed image among customers and public and it can be limitation for slow inflow of opening account. In the modern era, Nagrik bank is not providing ATM facility, internet banking and also credit and debit card, so it can be dangerous threats for Nagrik bank.

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29

 INTRODUCTION
Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated. It also deals with how money is spent and budgeted. Finance works most basically through individuals and business organizations depositing money in a bank. The bank then lends the money out to other individuals or corporations for consumption or investment, and charges interest on the loans. Finance is regarded as the life blood of a business organization. The study of financial management relates to the process of procuring financial resources and its judicious utilization with a view of maximizing the shareholders wealth. Efficient management of every business enterprises. In financial management, two functions are considered to be importance. 1. The procurement of funds. 2. The effective utilization of funds According to Guthman and DGoul Financial management means managerial function like planning, controlling, pertaining to acquisition and using of funds needed in the business.

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 SCHEDULE ACCORDING TO RBI

RBI is the main central bank of India objectives of RBIs are to regulate the issue of bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate country to its advantage. every scheduled commercial bank has to operate the commercial bank has to operate the bank account and follow the bank format for account according to RBI schedule. According to section 29, schedule of RBI banking taken from the final accounts are as under: Balance sheet format Capital Schedule Reserve & Surplus Schedule Deposits Schedule Advances Schedule Fixed asset Schedule Other asset Schedule Borrowings Schedule Liabilities & Provisions Schedule Cash and balance with RBI Schedule

31

FORM OF BALANCE SHEET Particulars Schedule no. CAPITAL & LIABILITIES Capital Reserve & surplus Deposit Borrowings Other liabilities & provisions P & L A/C TOTAL: ASSETS Cash and balance with Reserve bank of India Balance with banks & money call and short term Other assets Investment Advances Fixed assets Contingent liabilities TOTAL: 7 8 9 10 5117216.78 467967500.00 240699917.84 1732519.00 766426300.62 6 4751636.23 333438750.00 250259041.49 1330597.00 50909147.00 66679329.97 12538326.91 766426300.62 8556795.47 656459354.69 1 2 3 4 5 21380100.00 117746645.05 608024666.66 00 6736562.00 22015900.00 114780403.58 508345234.64 00 2761021.00 As on 31.3. (current year) As on 31.3. (previous year)

656459354.69

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SCHEDULE 1: CAPITAL

Particulars

As on 31.3 (Current year)

As on 31.3 (previous year)

I.

FOR NATIONAL BANKS Capital (fully owned by central Govt.) 30000000.00 30000000.00

II.

FOR OTHER BANKS Authorized capital (300000 shares of Rs. _100 each) issued capital ( shares of Rs. 100 each) subscribed capital ( shares of Rs. 100 each) 21380100.00 21380100.00 22015900.00 22015900.00

TOTAL:

SCHEDULE 2: RESERVES & SURPLUS

Particulars

As on 31.3 (Current year)

As on 31.3 (previous year) 4716026.00 39348963.25 24115547.00 10594349.00 00 16000000.00 20005518.33 114780403.58

Dividend equalization fund Statutory reserve Building Fund Bad-debt reserve fund Agriculture credit fund Investment dep. Reserve fund Other funds TOTAL:

5156344.00 44746413.25 24150258.00 00 00 33071750.00 10621879.80 117746645.05

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SCHEDULE 3: DEPOSITS Particulars As on 31.3 (Current year) A. I. Demand Deposits (i) (ii) from banks from others 165203441.36 159246.42 100737127.59 111914097.09 1320928.81 77712543.81 341924851.29 As on 31.3 (previous year) 317397664.93

II. Savings Bank Deposits III. term deposits IV. Current deposits

TOTAL : ( I, II, & III) B. (I) deposits of branches in India (ii) Deposits of branches outside India.

608024666.66

508345234.64

00

00

00 TOTAL: 00

00 00

SCHEDULE 4: BORROWINGS Particulars As on 31.3 (Current year) I. (i) (ii) Borrowing In India reserve bank of India other agencies II. Borrowings Outside India institutions of 00 00 As on 31.3 (previous year)

Secured borrowing in I & II above

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SCHEDULE 5: OTHER LIABILITIES AND PROVISIONS Particulars As on 31.3 (Current year) I. II. III. IV. TOTAL: bills payable inter office adjustments (net) interest accrued others (including provisions) 597808.00 00 654602.00 5484152.00 6736562.00 As on 31.3 (previous year) 634976.00 00 00 2126045.00 2761021.00

SCHEDULE 6: CASH AND BALANCE WITH RESERVE BANK OF INDIA Particulars As on 31.3 (Current year) I. II. cash in hand cash in banks 3537062.91 35170915.65 As on 31.3 (previous year) 6803179.90 34077651.25

III.

cash in other bank i). in current account ii) in other account

12201168.44 2201168.44 10000000.00 50909147.00

25798498.82 5798498.82 20000000.00 66679329.97

SCHEDULE 7: OTHER ASSETS Particulars As on 31.3 (Current year) I. II. III. interest accrued stationery non banking assets acquired in satisfaction of claims TOTAL 5117216.78 4751636.23 4358027.78 597808.00 161381.00 As on 31.3 (previous year) 3817967.23 634976.00 213693.00

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SCHEDULE 8: INVESTMENTS Particulars As on 31.3 (Current year) I. (i) (ii) securities (iii) (iv) (v) shares debentures and bonds call and short term investment 467967500.00 488169500.00 Investment In India In government securities other approved 457462500.00 467463500.00 As on 31.3 (previous year)

505000.00 525000.00 00 00 00 72500000.00 10000000.00 00 00 00

SCHEDULE 9: ADVANCES Particulars As on 31.3 (Current year) A. (I) bills purchase and disco. (i) cash credits, overdrafts and loans, repayable on demand (iii) terms loan TOTAL B. SHORT TERM :(i) secured by tangible assets & Covered by bank/govt. Guarantees. (iii) unsecured TOTAL C. MIDDLE TERM :(i) secured by tangible assets & Covered by bank/govt. Guarantees. 00 00 As on 31.3 (previous year)

187147910.67

189352857.49

1630475.20 188778385.87

2350865.00 191703722.49

37647666.00

47404342.00

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(iii) unsecured TOTAL D. LONG TERM :(i) secured by tangible assets & Covered by bank/govt. Guarantees. TOTAL GRANT TOTAL (C.I. & II.)

140052.00 37787718.00

161711.00 47566053.00

14133813.97 14133813.97 240699917.84

10989266.00 10989266.00 250259041.49

SCHEDULE 10: FIXED ASSETS Particulars As on 31.3 (Current year) I. Premises At cost as on 31st March of the preceding year Additions during the year Deductions during the year Depreciation to date II. other fixed article (including furniture & fixture) at cost as on 31st March of the preceding year additions during the year deductions during the year depreciation to date TOTAL: 1732519.00 1330597.00 1732519.00 1330597.00 00 As on 31.3 (previous year) 00

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 INTRODUCTION
Organizations have become increasingly aware of the importance human resource. This awareness is generated by th e realization that people-sub-system is a critical dimension in organizational effectives. Real life experiences substantiate the assumption that no matter how sophisticated and modern the business activities of an organization become, it will be extremely difficult to sustain its growth and effectiveness unless its human resource are complementary to its operations.

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This realization has propelled human resource mangers into a major field of activity in recent years, and the renewed interest has further facilitated in developing newer approaches in managing human resource. The emerging concerns about new values of humanism and humanization have also added to this renewed interest in human resource management. Human resource (or personnel) management, in the sense of getting things done through people. It's an essential part of every manager's responsibilities, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently. "People are our most valuable asset" is a clich which no member of any senior management team would disagree with. Yet, the reality for many organizations is that their people remain under valued under trained under utilized poorly motivated, and consequently perform well below their true capability The rate of change facing organizations has never been greater and organizations must absorb and manage change at a much faster rate than in the past. In order to implement a successful business strategy to face this challenge, organizations, large or small, must ensure that they have the right people capable of delivering the strategy. The market place for talented, skilled people is competitive and expensive. Taking on new staff can be disruptive to existing employees. Also, it takes time to develop 'cultural awareness', product/ process/ organization knowledge and experience for new staff members.

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 RECRUITMENT :

Recruitment is understood as the process of searching for and obtaining applicants for jobs, from among whom the right people can be selected. A formal definition of recruitment is: it is process of finding and attracting capable candidates for employment. The process begins when the new recruits are sought and ends when their applicant are submitted. The result is pool of applicant from which new employees are selected.

Typing test

Interview

Written test
TRAINING:

Training and development means it is any attempt to improve current or future employee performance by increasing an employees ability to perform, through learning, usually by changing the employees attitude or increasing his or her skill and knowledge. The need for training and development is determine by the employees performance deficiency, computed as follow; Training and development need = Standard performance Actual Performance

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 PROMOTION: Promotion means an improvement in pay, prestige, position and responsibilities of an employee within his organization. The new job is a promotion for the employee only when it carries increased responsibilities and enhanced pay.

Promotion is based on merits and seniority in this bank. 70% on merits and 30% on seniority. Promotions are given on the basis of oral interview. The purpose of promotions is to recognize the efficiency of an employee, to fill up higher vacancies from within the organization and to build loyalty, morale and a sense of belongingness in the employee.

TOTAL MAN-POWER STRENGTH IN THE BANK : The human department plays an important role in every unit The HR dept.is concern with the persons who are related with the bank. It has more than 30 workers including staff. WORKERS SELECTION : Selection includes the various tests and process the best vacancies selection is done very effetely by the effective process. The selection procedure us initiate with receiving applications by giving the advertisement we will get proper candidate. SKILLS : Such skills and qualification are required for being the part of the bank. Person can get job by giving the interview.

41

 THE BANKING SYSTEM, PROCESS AND PRODUCTS:To understand the computerized system which is essentially computerized implementation of the function first, it is necessary to understand function in their own respects. SERVICE GIVEN TO THE CUSTOMER:1. clearing service 2. Current account 3. Saving account 4. Fix deposit account 5. Clearing service 6. Insurance service 7. Mobile banking service 8. Draft facility at all over India 9. Locker facility 10. ECS facility 11. loan service

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 CLEARING: Clearing is the process related to the payment system in the Banking Industry. Cheque and DD is the major instrument of the payment system. Clearing is the process through which customer are able to pay/receive the money through cheque, DD, Dividend warrant and others such instruments. Clearing involve the processing of outward cheque and inward cheque. ECS: The RBI has asked the banks in October 2005, to provide the required details to the customers in their pass book/account statement regarding the credits affected through ECS. Electronic Clearing service (ECS) is increasingly being used by various users like Govt. Departments, corporate bodies, etc. for repetitive payments like salary, pension, dividends, interest, etc The Electronic Clearing Service (ECS) from BNB entails automatic payment of utility and routine monthly bills / installments from your savings / current account subject to your prior one time approval. Similarly, refunds of IPO, Interest Warrants, and Dividend etc. can also be credited to your account automatically. Here you do not have to go to anywhere to pay for the utility services or stand in long queues for any kind of Bill Payment. Based on the standing instructions, payments will be debited in your account Safe deposit: BNB provide safe deposit volt service also. there deposited amount then no charge on it. The bank offers safe deposit lockers for safety of valuable things like gold, silver, hard cash, diamonds, and important documents. Bank offers to its customers safe deposit vault or locker at a large number of branches. . Basically use of lockers is to make most valuable thing secure.

43

 Quality management system: Simply quality management system (QMS) means, 1. Managing systems qualitatively. 2. Managing quality through systems. Quality is the totality of features and characteristic of a product or service that bears on its ability to satisfy stated and implied needs Quality is Quality is every ones job. Quality comes from prevention not from correction. Quality means meeting the needs of customers. Quality demands term work Quality demands strategic planning Quality means results. Quality management system is to direct and control an organization with regard to quality. Features of Strong QMS: understanding of roles & responsibility understanding of authority & accountable clarity on decision making effective communication proper planning Nagrik Bank Focus towards QMS: system strengthening reduction in complains increasing customer satisfaction cost reduction new product development serving to new customers

44

 proactive suggestions for improvement continual improvement Principles Considering For QMS: customer focus leadership involvement of people process approach system approach to management continual improvement factual approach to decision making mutually beneficial supplier relationship

CONTINUOUS IMPROVEMENT OF QMS IN NAGRIK BANK :

45

 INTRODUCTION
Marketing department is core of base of any corporate. Marketing means the process of distribution. Marketing involves two important things. 1. The matching of an article of trade with markets. 2. The process of exchange. P. Kotler defined Marketing as, The set of human activities direc ted at facaliting and consummating of exchanges.According to American Marketing Association, Marketing Management is the process of planning and executing the conception, pricing, promotion and distribution of idea, goods and services to created exchanges that satisfy individual and organizational goals. A product is something that is made in a factory, A brand is something that is bought by customers, A product can be copied by a competitor. But brand is unique. A product can be quickly outdated, a success brand is timeless. Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing is meeting needs profitably. Marketing research is the function which links the Depositors and Borrowers and public to the bank through information used to identify and define marketing opportunities and problems: generate and evaluate marketing actions: monitor performance: and improve understanding as a process. The bank is done marketing for getting more advances \ from the public. CUSTOMER RELATIONSHIP MANAGEMENT:46

In the banking world CRM has come to mean a customer -centric business strategy. The strategy exploits information technology to detect and project customer financial needs. It seeks to utilize all the business lines in the bank to satisfy the said needs. Bankers have traditionally used the branch system and mass marketing techniques to attract deposit account and advance loans. Technology driven banks with their super computers can manipulate customer information in any number of ways and at lighting speed. Customers have more disposable incomes and increasingly comfortable with technology. Today the competition in the banking industry has forced every bank to opt for this novel tool to hold on to their customers, let alone attracting new ones. Before long the Indian banks should take on their foreign counterparts head on. There is scope for improvement. Each bank should eventually design its own foundation most appropriate to its customers.

For effective customer relationship management and HRD Nagrik co-operative bank is focused on following points. Managers should be friendly with his employees and exchange friendly greetings. Formal acknowledgement of his staff achievements. Feedback about staff performance. Accept quality suggestions of staff and try to implement. Assigning job with more responsibility. Adapting job rotation. Provide all possible opportunity to staff to participate in management of the branch Conduct periodical performance appraisal of staff and make than understand their weakness if any. Employees should be friendly with customers and give guideline and information. Employees should listen customer complaint and suggestions and try to remove the services as per customer requirement.

47

Extra services provided by Nagrik co-operative bank according to 9th annual report: Account holders can get 20,000 from current account and 10,000 from through taller payment. D-mat account is provided by bank. Account holders can know their balance through tale banking. Any account holder can get bank statement through tax from anywhere. Balance can be shown through VAT machine. All Indias draft can be issued quickly and with reasonable commission

48

49

4.1 INTRODUCTION

In fact research is an art of scientific investigation research is the systematic & intensive study directed towards a more complete knowledge of subject study and if start due to some specific question or problem. Research is essentially an investigation a recording & analysis of evidence for the purpose of gaining knowledge. Research methodology defines what the activity of research is, how to proceed, how to measure progress, and what constitutes success. A specific way of performing an operation that implies precise deliverables at the end of each stage. According to Clifford woody research comprises defining and redefining problems, formulating hypothesis or suggested solutions, collecting organizing and evaluating data, making deductions and reaching conclusions and at lest carefully testing the conclusions to determine weather they fit the formulating hypothesis. Research is common parlance refers to a search for knowledge. Once can also define as a scientific and systematic search for pertinent information on a specific topic. In fact research is an art of scientific investigation. The advanced learners dictionary of current English lays down the meaning of research a careful investigation or inquiry specially through search for new facts in any branch of knowledge. Redman and more define research as a systematized effort to gain new knowledge. Some people consider research as a movement, a movement from the kno wn to the unknown. It is actually a voyage discovery. The data will be collected through the annual reports of the bank. It also collected through the different bank websites, different published books by the authors and magazines & Bulletins of RBI. It is also collected from the Master circular of RBI. The data is also to be collected from the practical work and opinions of the staff-members. It refers to the rearrangement of the data given in the Financial statement. The data is analysed by the various financial statement analysis. It is analysed by the Ratio Analysis, Leverage, Common size statement. It is analysed by the various methods. .Analysis of financial statements. Judging the Profitability of the business, liquidity of the business, long term solvency of the business It helps to show the financial situation of bank and from this statement they can take appropriate Decisions. It refers to the meaning and significance of the data so simplified. . It helps to show Intra-firm and Inter-firm comparison. Ratio Analysis helps

50

 To judge the earning capacity, financial soundness and operating efficiency of an enterprise To simplify the accounting information. To help in comparative analysis. Data interpretation is used for to understand easily in the mind of public. It helps to know the results of bank to the share-holders and to revaluate the performance of any bank. It will fairly good idea about various aspect financial position.

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4.2 Define the problem :The Problem of the study is why the deposits and loan & advances is increase or decrease every year. Title of the Project:Financial Performance and Deposits and Loans & Advances of Bavla Nagrik bank It includes the lending & borrowing of money in the bank and how the functions work in the bank.

Description of the Project:This is mainly done to avail loan from the bank by the public, which is must for the sanction of loan. Other main aspect of the project was to get the loan sanction from the bank, which is entailed fulfilling requirements of the bank for the same. The project also involves Ratio Analysis and Sensitivity Analysis of Nagrik Bank. With the help of Ratio Analysis a firm can get the idea about its liquidity, profitability, proportion of long term liabilities, working capital, risk factors. And with sensitivity analysis a firm can study the changes in various ratios in proportion with changes in other factors.

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4.3 LITERATURE REVIEW OF REPORT:

I have select the secondary data for the research purpose. secondary data are selected because I want to collect all the information about bank activity and try to do changes and provide require facilities to the account holders and give satisfaction to them.

4.3.1 Maintenance of Deposit Accounts Acceptance of deposits and maintenance of deposit accounts is the core activity in any bank. The very basic legal interpretation of the word 'banking" as defined in the Banking Regulation Act, 1949 means accepting deposits of money, for the purpose of lending or investment, from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise. Thus, deposits are the major resource and mainstay of a bank and the main objective of a bank is to mobilise adequate deposits. Products/services are provided with the focus, which include the satisfaction of wants and needs of the customers. Without such focus, no product/service can exist for a long period of time. Safeguards: PAN/GIR Number The banks are required to obtain PAN/GIR number of a depositor opening an account with an initial deposit of Rs.50,000/- and above. Authorization The opening of new accounts should be authorised only by the Branch Manager or by the Officer-in-Charge of the concerned deposit accounts department at bigger branch.

Completion of Formalities The banks should ensure that all account opening formalities are undertaken at the bank's premises and no document is allowed to be taken out for execution.

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Types of Deposit Accounts: Saving Account Safe Deposit Locker Account Joint Account Current Account Recurring Account

Saving Account:Any individual can open this account maximum 4 names are allowed in joint account in this account but it is not rule of RBI that minimum balance Rs.500 for this account is require. If there is not minimum balance of Rs 500 then Rs 50 is charged every 6 month. Any institution co-operative society can also open this account moreover minor can also open this account withdraw are allowed maximum 8 times in a month & 50 times in 6 month. in this account nomination facility are also available. In this account current interest rate is 3.5% but it change any time as per RBIs rules. Cheque book charge is not charge for regular usage but for extra cheque book there is some charge. when person open his saving account at that he had given a pass-book which is free of charge but if this pass book is loss by mistake then new pass book is chargeable with Rs 10.if this account is closed within one year then Rs.20.is charged for pass book. moreover if there is not enough balance in account than Rs.25 are charged on every return cheque. Safe Deposit Locker Accounts:In order to facilitate the identification of locker keys by the Income-tax officials, the banks should emboss on all locker keys an identification code which would indicate the bank and the branch which had hired the lockers. Joint Accounts:While there are no restrictions on the number of account holders in a joint account, it is incumbent upon the banks to examine, every request for opening joint accounts very carefully. In particular, the purpose, nature of business handled by the parties and other relevant aspects relating to the business, and the financial position of the account holders, need to

54

be looked into before opening such accounts. Care has also to be exercised when the number of account holders is large. Current Accounts:This account can be open for only business establishment like, proprietorship business, partnership business, private limited, company limited .any other institution, trust, co operative sector etc i.e. service men cannot open this account & minimum balance require in this account is Rs 3000 and if balance is less then Rs 3000 than Rs. 25 is charged per every return cheques. services charge in this account is Rs. 10 which is the lowest charge in the banking industries. in this account nomination facility is available. cheque book is also issued in this book. in this account person can withdraw or deposit at any time he want in this account no restriction like saving account that only 8 time withdraw in one month. Recurring account:Any person can open this account on the name of his firm, institution etc. in this account daily credited decided amount whether Rs.30, Rs.50 or Rs.100.in this account the agent recognized by bank collect the money at the address given by account holder. One passbook is given to account holder in which daily transaction are noted by agent and account holder,after communicating one month check it and sign it bank given and identify card to its recognized agent with the help of this card account holder become sure that he is banks a gent this account are open for 1 year on which annually 7% interest is given.

4.3.2 Management of Loans and Advances

Types of Loan & Advances :Loans and Advances against Shares, Debentures and Bonds Advances against Fixed Deposit Receipts (FDRs) Issued by Other Banks Financing Infrastructure/ Housing Projects Advances against Gold Ornaments & Jewellery Loans and advances to Small Scale Industries Grant of Loans for acquisition of Kisan Vikas Patras (KVPs) Working Capital Finance to Information Technology and Software Industry

55

Loans and Advances against Shares, Debentures and Bonds:Banks are required to strictly observe regulatory restrictions on grant of loans and advances against shares, debentures and bonds which are detailed in the Master Circular on 'Bank Finance Against Shares and Debentures' dated August 28, 1998 read with the Master Circular dated July 1, 2009 on Exposure Norms and the Circular on Financing of acquisition of equity in overseas companies dated June 7, 2005. The restrictions, inter alia, on loans and advances against shares and debentures, are no loans to be granted against partly paid shares. No loans to be granted to partnership/proprietorship concerns against the primary security of shares and debentures. Advances against Fixed Deposit Receipts (FDRs) Issued by Other Banks:There have been instances where fake term deposit receipts, purported to have been issued by some banks, were used for obtaining advances from other banks. In the light of these happenings, the banks should desist from sanctioning advances against FDRs, or other term deposits of other banks. Financing Infrastructure/ Housing Projects:Any credit facility in whatever form extended by lenders (i.e. banks, FIs or NBFCs) to an infrastructure facility as specified below falls within the definition of "infrastructure lending". In other words, a credit facility provided to a borrower company engaged in developing or operating and maintaining, or developing, operating and maintaining any infrastructure facility. Advances against Gold Ornaments & Jewellery:Hallmarking of gold jewellery ensures the quality of gold used in the jewellery as to caratage, fineness and purity. Therefore, banks would find granting of advances against the security of such hallmarked jewellery safer and easier. Preferential treatment of hallmarked jewellery is likely to encourage practice of hallmarking which will be in the long-term interest of consumer, lenders and the industry. Therefore, banks while considering granting advances against jewellery may keep in view the advantages of hallmarked jewellery and decide on the margin and rates of interest thereon.

56

Loans and advances to Small Scale Industries:SSI units having working capital limits of up to Rs. 5 crore from the banking system are to be provided working capital finance computed on the basis of 20 percent of their projected annual turnover. The banks should adopt the simplified procedure in respect of all SSI units (new as well as existing). Grant of Loans for acquisition of Kisan Vikas Patras (KVPs):Applicant can get loan against kisan vikas patras of maximum 70% of the face value.Applicant can get loan against kisan vikas patra because name of applicant is written on the kisan vikas patra. Applicant can get loan against kisan vikas patra because name of applicant is not written on the indra vikas patra. Working Capital Finance to Information Technology and Software Industry:Following the recommendations of the National Task force on Information Technology and Software development, Reserve Bank has framed guidelines for extending working capital to the said industry. Banks are however free to modify the guidelines based on their own experience without reference to the Reserve Bank of India to achieve the purpose of the guidelines in letter and spirit.

4.3.3 SOURCES : DEPOSIT CREATION OR INFLOW

In the sense of bank inflow means the flow of finance or money towards bank. Banks is an institution which doing business on lending and borrowing money to the customers and by the customers. So, its main requirement of bank is from which sources money can be gathered as inflow. Bank has to maintain a balance between inflow and outflow, and in this the ratio of inflow should be more than outflow.

57

Mainly there are sources of inflow described as under. Deposit creation Interest on loans Income on investments Commission and incidental changes Notice, share transfer and locker entrance fee. NOTE: - this theorical portion is taken by considering Nagrik banks operation.

The explanation of various sources of inflow is as under:Deposit Creation Deposit creation is an important function of commercial banks. Deposit creation is by two types, when the banks receive cash from the customers deposits are created. These deposits may be saving bank deposit or current bank deposits. Any amount deposited in these accounts could be withdrawal, by issuing cheque.if there is no limit for withdrawal, then that deposit is called current account. if there is any restriction for withdrawal, then it is called saving bank account saving deposits may be of several types such as fixed deposits, recurring deposits etc. in the case of current deposits the depositor wants the bank to offer facilities to withdraw in the torn of cheque as many times as possible. so for getting deposits, bank attracts deposits from the people either by means of offering interest or other facilities. Interest on Loans Loan is the outflow or credit creation of bank. Bank always provides the different types of loan against some valuable property with 15% or 20% margin. Various types of loan are provided to different motive against the loans, bank get higher interest from loan holder. In concern with Nagrik co-operative bank its provide mainly 9 or 12 types of loan like mortgagee loan vehicle loan cash credit loan machinery loan FD loan NSC loan self employed loan

58

 term loan Gold loan etc. Against these loan, bank get 13% to 15% interest per annum so its wide and vast inflow for the bank so high loan issue means high profit for bank. the figure of Nagrik bank of last three years are given below. Year 2008 2009 2010 Interest of loan 53012873 55629285 61018325

70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 1 2 3

Int erest of loan Year

Commission Exchange Bank also provide various other services like colleting light bill, issuing draft and pay order, bill of exchange purchase of load & foreign current etc. By providing these types services, banks can get commission its also one type of income for bank. The following figure share the commission flow of Nagrik bank for 3 years. Years 2008 2009 2010 Commission Exchange 1356625 1243396 407268

59

1400000 1200000 1000000 800000 600000 400000 200000 0 1 2 3 Commission Exchange Years

Incidental Charges & Dividend Incidental charges are those charges against bank provides various types of extra services to the customer. Services provides like: Guarantee such as performance quite and financial guarantee. Rate custody of deed & securities. safe deposit volts Remittance of fund such as bank drafts mail target telegraphic transfer. Emergency vouchers etc

The figure shown below the incidental charges & dividends of Nagrik bank. Years 2008 2009 2010 Charges & dividend 167825 204723 183986

250000

200000

150000 Charges & dividend Years 100000

50000

0 1 2 3

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Notice Fee, Share Transfer Fee, Locker Entrance Fee

Notice fee charged by bank against they send any notice to customer for loan installation or for any banking transaction Share transfer transaction like bank is a broker who helps to shareholder for buying and selling against these banks take share transfer fees. Bank provide service of rate deposit vault or locker facility for this becoming a local holder, they take the local entrance fees.

Following figure indicates the fees taken by Nagrik bank for 3 years. Years 2008 2009 2010 Fees 216480 275400 281385

300000

250000

200000 Fees Years

150000

100000

50000

0 1 2 3

CREDIT CREATION OR OUTFLOW

In the sense of bank outflow means the flow of finance or money from the bank to the outside customers. As per the operation of bank of lending and borrowing money to the customers and by the customer. Its main requirement of bank to know that which sources are for credit creation or outflow from the bank. outflow of the bank mainly depends on the RBI regulation as per the service sector, its main duties of bank to lending the money in the from of loans, cash credit overdrafts for development of business and other purposes there are main sources of out flow are as under: 61

Interest on deposits. salary and other expenses primary expenses fees fund and cost Detail information of these outflows is as given below: Interest on Deposits

DEPOSIT RATES SAVING BANK 3.50% FIX DEPOSIT (APPLICABLE FROM DATE : 17-08-2009) 31 Days to 180 Days 4.00% 181 to 364 Days 5.00% 12 months to 23 months 7.00% For 2 years 7.50% Above 2 years and up to 5 years 7.00% Interest on deposit is based on the RBI regulation and banks actual rate. More depositor required payment of more interest. In the bank there are mainly three or four types of deposit provided to customer. It there is more flexible amount in the bank means low interest like current deposit Because of more transaction in the current deposit the bank pay less interest of 0% per 6 month. in the saving deposit and recurring deposit, interest is paid to customer are regimentally 3.% and 3.5% there high stake or amount with steely movement in fixed deposit holder get more interest like 7%to 7.5% so bank provide these interest against different deposits which outflow for bank.

Figure shown below indicate the interest on deposit and debts: Years 2008 2009 2010 Interest on dep. & debt. 25735420 29070511 33500262

62

35000000 30000000 25000000 20000000 Interest on dep. & debt. 15000000 10000000 5000000 0 1 2 3 Years

Salary and Other Expenses Now days mostly banks are a computerized, yet for maintain computer and for other manual works, there are requirement of worker and professional persons for customer. Attending management and for banking practices so against these banks have to provide salute for professional person and wages for worker or peon. Bank also pays finance for provident funds. There are also other expenses and allowances provides by bank like traveling and vehicle flue expenses for etc. Bank also expenses for staff recruitment and on the training of bank staff. For these expenses, the figures are shown below. Years 2008 2009 2010 Salary & other expenses 5243074 5936689 6927424

7000000 6000000 5000000 4000000 Salary & other expenses 3000000 2000000 1000000 0 1 2 3 Years

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Primary Expenses Primary expenses are those which mainly spend on for banking operation and facility provides to staff of bank and customers both. Primary expenses mainly include: Tax, rent insurance, light bill, telephone & comm. expenses. Stationary, printing and advertisement cost. Annual meeting expenses and celebration expenses. Library sanitary & water expenses. Deposit insurances etc. Figures of all these primary expenses for 3 years are shown below: Years 2008 2009 2010 Primary expenses 1696872 1920797 2165721

2500000

2000000

1500000 Primary expenses Years 1000000

500000

0 1 2 3

Fees Fees are paid for RBI rules and regulation for, auditing on bank account, legal fees, membership fees, Clearing house expenses etc. Following figure indicates the fees are paid of volume bank for last 3 years.

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Years 2008 2009 2010

200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0

Fees 185950 116350 107100

Fees Years

Fund and Other Cost Banks make some reserve for future uncertainties like: depreciation fund on investment deposit insurance premium, bed debts fund, Accident fund etc. There are also other costs like computer, machinery, building repairing cost etc. Expenses for these all sources are graphically shown below: Years 2008 2009 2010 Fund & Cost 30838911 31994349 33071750

35000000 30000000 25000000 20000000 15000000 10000000 5000000 0 1 2 3

Fund & Cost Years

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 CIRCULATION CLEARING OF A CHEQUE

cheque is defined as an instrument in writing containing an unconditional order, signed by the maker directing a certain person to pay certain ram of money only to or to the order of a certain person or to the bearer of the instrument. The banks have developed and popularized the cheque system through, which transfer of money is made possible. The cheque system has reduced the use of cash to a considerable extent. The cheque system is a highly developed system of credit instrument through, which money can be transferred from one bank to another bank. Circulation of clearing cheque that how the cheque circulates for clearing the payment, which shown below: Customer gives cheque of BOB bank to Nagrik bank for converting in Money.

Nagrik bank enters the data of cheque than send to clearing house.

BOB cheque

Customer withdraws the money form Nagrik bank.

Record the data as per bank code than inform to BOB bank. Bank checks the figure, if sufficient than inform to Nagrik bank for clearing. 66

 CIRCULATION OR DISTRIBUTION OF CASH FLOW Co-operative bank are form is on the co-operative principles and as such they are more service oriented than profit oriented. So main motive of co-operative banks is to distribute the profit for public welfare and in other part by the portion of profit decided by board of directors Nagrik Co-operative Bank distribute its net profit by RBI regulations and some portion is by board of directors. Proportion of distribution the profit is as described below: Reserve Fund (38.71%) Share Dividend (12%) Dividend equalization fund (2%) Education fund (2.5%) Bad-debt A/c (15%) Urban Bank Credit equalization fund (15%) Building Fund (60%) Bad-debt reserve fund (35%) Co-operative prachar fund (5%) Religious fund (0%) Now the distribution of profit for year ended 31st March 2010, are as below: PARTICULARS Net Profit Reserve Fund (38.71%) Share Dividend (12%) Dividend equalization fund (2%) Education fund (2.5%) Bad-debt A/c (15%) Urban Bank Credit equalization fund (15%) Religious Fund (0%) Net Profit Co-operative prachar fund (5%) Building Fund (60%) Bad-debt reserve fund (35%) Net Profit Appropriation AMOUNT 12504756.35 4853586.35 2442185.00 427602.00 2,00,000.00 4500000.00 81383.00 00000.00 -33750.56 1678.56 20142.00 11750.00 12538326.91

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 CRR (CASH RESERVE RATIO)

In terms of Section 42(1) of the RBI Act 1934, Scheduled Commercial Banks are required to maintain with RBI an average cash balance, the amount of which shall not be less than three percent of the total of the Net Demand and Time Liabilities (NDTL) in India. At present, effective from the fortnight beginning June 14, 2003, the rate of CRR is 4.50 percent of the NDTL.

NPA (NON-PERFORMING ASSETS)

If any advance or credit facilities granted by bank to a borrower become non-performing, then the bank will have to treat all the advances/credit facilities granted to that borrower as nonperforming without having any regard to the fact that there may still exist certain advances / credit facilities having performing status. Undoubtedly the world economy has slowed down, recession is at its peak, globally stock markets have tumbled and business itself is getting hard to do. The Indian economy has been much affected due to high fiscal deficit, poor infrastructure facilities, sticky legal system, cutting of exposures to emerging markets by FIIs, etc.

SLR (STATUTORY LIQUIDITY RATIO)

In terms of Section 24 (2-A) of the B.R. Act, 1949 all Scheduled Commercial Banks, in addition to the average daily balance which they are required to maintain under Section 42 of the RBI Act, 1934, are required to maintain in India, a. in cash, or b. in gold valued at a price not exceeding the current market price, or c. in unencumbered approved securities valued at a price as specified by the RBI from time to time.

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4.3.4 IT (INFORMATION TECHNOLOGY) :

In banking sector, an information system consists of an organized combination of people computer hardware, software, communications network, and data resources that collect, transaction and spread information through banking, modern banking relies on computer based information systems and on information technology. Education of staff on IT should be taken up on priority. The training establishments of banks should be suitably strengthened with adequate personnel and other infrastructure to import IT related training to the at all level. It serves three vital roles in banking Support of banking operations. This includes maintenance of charges stores of saving current and fixed deposits data, inflow and outflow of finance. Support of management decisions. by analyzing deposit, equity debts, loan, performance of staff and departments, Support of banking competitive advantages. Information analysis can help a bank to make decision that will give it an advantage over the competition like addition of services, effective banking products etc.

4.3.5 Time value of money

Is one rupee today the same as one rupee 10 years from now? The simple question raises one of the most important concepts in finance the time value concepts of money. In essence the certainly of having a given sum of money today is worth more than the certainty of having an equivalent sum at a later date. For example, the sooner you collect your accounts receivable the sooner you will be able to deposit the money and earn interest on these funds likewise, the longer you delay your account likewise, the longer you will earn on those funds as they sit in the bank. in the banking sector also, this strategy is used when the customer issue the outside cheque than its not directly get the amount it requires few days and within those days, bank can get interest from that money which is called float money.

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4.3.6 Investment
Bank is financial intermediaries and lending is an important function of a bank. The bank collects deposits of various kinds from people by means of giving reasonable and sometimes attractive interest and lends the same to industries trade and transport people at a higher rate of interest and thus makes some profit. Banks have to earn money if they want functions effectively their role interest is not to make profit and declare higher dividends to the shareholders. They are guided by the stators regulations while employing bank funds the banking regulation act and the credit regulation policy of the reserve bank of India and the social responsibility imposed by the government on banks are some of the parameters sets in motion a chain of economic activities both direct and taster new services which are conducive to accelerated socio economic growth. Bank Finance Results In, Increased production of goods and services Creation of more employment and Income generation in the countries.

BANK CAN INVEST THEIR DEPOSITS OR FINANCE IN VARIOUS WAYS LIKE:

Lending of Funds Overdrafts Cash-credit

Semi

Government Treasury Bills Guilt edged

Industrial Securities

Securities Bonds of port trust Municipal Council

Term Loans

Securities

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4.3.7 INVESTMENT POLICY

The investment policy of a commercial bank deals with the technicalities of investment the investment of bank funds especially the deposits is a difficult and risky task because of the bank investing some bodies money namely the depositors. Whenever the depositors present cheque for encashment, they must be immediately honored. it the payment is delayed, the confidence of the public with the bank is threatened infect the activities of the bank depend upon the confidence with which the depositors are having with the bank. The banks have to pay reasonable rate of interest in order to attract fixed deposits. If the banks mobilize more or fixed deposits it can invest in profitable ventures. The bank has the responsibility of paying handsome dividend to shareholders of administrations, is required to appoint different categories of officers and assistance the administration charges in the found of salaries, and bonus and incentives are also on the neither side all these compulsions make the banker to invest the funds in different type of assets. The investment policy of banks is not uniform throughout the world. The nature and availability of funds also play a critical role in acquiring different types of assets. The problem that banks face in rural areas is different from urban areas. Though all these conditions exert influence in the formulation of an investment policy year. There are some technical conditions which govern the investment policy of bank. The guiding principles of investment policy of a commercial bank are profitability security Two other sub policies are Productivity Diversity

Profitability
Profitability is the important objective of a commercial bank. a commercial of a bank is a very much concerned with making as high a profit as possible in acquiring money the role consideration of a commercial bank is to earn an income. The ban must earn sufficient income form its assets in order to meet all expenses of the bank including dividend to the shareholder. The income will be greater if the yield from the assets higher. The bank known that all depositors do not come to the bank to encase the cheque simultaneously. Therefore it takes the liberty in making investment on profitable assets. The main profit earning assets are loan and advances. Even here 71

some reservations are made by the bank. Only a reasonable percentage of deposits are used to lend against bill of exchange and overdraft. Profitability means earning profits on the assets acquired whenever the banks obtain deposits, they have pay interest to shareholders. Beside this the shareholders of the bank should receive some return on their investment. It is the responsibility of the bank management to have some surplus to declare dividend to shareholders. Hence banks have to make profit.

Security or Safety
The second principle is security or safety. Since the bank deals in other peoples money, it has to give greater consideration for security. Unsecured assets are always dangerous. In order to safeguard the funds of the depositors, a bank should invest its fund on safe-assets. The bank should never under estimate the safety principle while deciding on investment of funds. It the bank lends to credit unworthy borrowers, it has to safer very heavy losses. That is why; the banking principle prohibits the banks in granting advance to unsecured assets. When the banker advances withdrew security, he will run the risk of losing the money. If the loans are prompt in repayment than there will be no worry. But it is essential that the banker should have substantial security for his advances. The banker is not advancing without sufficient security. Because he will be managing the public money and it the confidence of the public is lost there will be run on the bank. The security should cover the money advanced interest there on and other charges. Thus, the banker should also keep in mind the security principle while lending.

Diversity
The principle of diversity implies that inevitable funds should be invested in a diversified manner. It means that funds should be provided for all types of activities. According to this principle, the banks should as for as possible invest its surplus fund in different types of business enterprises. The reason is that if particular business organization collapses. The bank should not be made to suffer terrible losses. It the investment evenly distributed among several economic activities, than the risk also is distributed properly if the bank invests in diversified securities or makes loans to different types of business enterprises; it ensures for itself a regular flow of cash with the help of which it can meet the demands of its customers.

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Productivity
This is another important principle put forth by banking expert. According to them, the bank should invest its surplus funds in such a way as to secure for itself an adequate and permanent income. The objective of the bank is to earn maximum profits and its income must be acquired from productive in investments. If the asset are productive. The income to the bank will also be stable. This principle implies that under no circumstance. The bank should advance funds for speculative purposes.

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4.4 Objectives of the study : To analysis the financial performance of the organization To Study the financial statement of the organization To study the loan application and documentation Process To analyze the trend of the loan and advances To know the trend of deposits To study the relationship between interest rate and loan and advances To study the relationship between interest rate and deposits

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4.5 Rationale of the study :The study report is useful to understand the knowledge about the performance of finance in bank and how the functions work. It is helpful to know the quality management system and how the technology used in bank. it also help to know the deposit creation and loan & advances in the bank and to measure the profitability of the bank.

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4.6 Limitations of the study :Though carrying out the project work was quite thrilling, we admit that we did face certain limitations like: The time given to me was only 6 weeks that was not sufficient to study in deep to the project. The secondary data which are to be provided for study may not be reliable. My study for analysis includes only some years data so it may affect the result of the analysis. The unit under study is co-operative sector and it possesses the limitation of the cooperative sector.

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4.7 VARIABLE & HYPO.FORMULATION :(1). Ho: There is no relationship between Deposits and Interest rate. Ha: There is relationship between Deposits and Interest rate.

(2)

Ho: There is no relationship between Loans and Interest rate. Ha: There is relationship between Loans and Interest rate. Financial Institutions Financial intermediaries: institutions through which savers can indirectly provide funds to borrowers. Examples: Banks Mutual funds institutions that sell shares to the public and use the proceeds to buy portfolios of stocks and bonds. financial market :

All savers deposit their saving in this market. All borrowers take out loans from this market. There is one interest rate, which is both the return to saving and the cost of borrowing.

The Slope of the Supply Curve

The Slope of the Supply Curve

Interest Rate

Supply

9%

4%

An increase in the interest rate makes saving more attractive, which increases the quantity of loanable funds supplied.

40

60

Loanable Funds ($billions)

18

SAVING, INVESTMENT, AND THE FINANCIAL SYSTEM

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 An increase in the interest rate makes saving more attractive, which increases the quantity of loanable funds supplied. An decrease in the interest rate makes saving less, which also increases the quantity of loanable funds supplied Interest rates directly affect to the savings, it will increases or decreases the savings. But it do not affect to the quantity of loans.

The Slope of the Demand Curve

The Slope of the Demand Curve

Interest Rate

7%

5%

A fall in the interest rate reduces the cost of borrowing, which increases the quantity of loanable funds demanded.

Demand

20

40 Loanable Funds
($billions)
20

SAVING, INVESTMENT, AND THE FINANCIAL SYSTEM

Like many other markets, financial markets are governed by the forces of supply and demand. Markets are usually a good way to organize an economic activity. Financial markets help allocate the economys scarce resources to their most efficient uses. Financial markets also link the present to the future: They enable savers to convert current income into future purchasing power, and borrowers to acquire capital to produce goods and services in the future.

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4.8 DATA COLLECTION:

Data collection is a very important part for any project. It is stepwise procedure adopted to carry out this research project. It is felt that the procedure adopted here is sufficiently effectives and most limitation.

Sources of data: - Primary source - Secondary source primary sources: Primary details about the bank of main branch were collected through the interviews and personal talk with manager to collect the financial information of bank. secondary sources: The sources of my collection were secondary sources. The information has been taken from balance sheet, income- statements and audit report of the company.

PROGRESS REPORT OF THE BANK :

PROGRESS REPORT

Rupees in Lakh 2007-2008 2008-2009 204.32 1018.99 4521.95 3039 3061.20 15% 126.16 86.16 5895.48 'A' 220.15 1103.51 5083.45 3029 2502.59 15% 137.73 85.56 6564.59 'A' 2009-2010 213.80 1177.47 6080.25 2997 2406.99 12% 171.82 125.38 7664.26 'A'

Paid Of Capital Reserve & Other Funds Deposits No. of Share Holders Advances Dividend Paid Gross Profit Net Profit After TAX Working Capital Audit Class

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4.9 DATA ANALYSIS & INTERPRETATION:

FINANCIAL POSITION

Profit Graph of Nagrik Bank for 3 year: Year 2007-08 2008-09 2009-10 Profit (in crore) 0.861 0.856 1.254

Profit (in crore) 1.5 1 Profit (in crore) 0.5 0 2007-08 2008-09 2009-10

Profit (in crore)

0.861 1.254 2007-08 2008-09 2009-10

0.856

Profit of the Nagrik bank in 2007-08 is 0.861and it decrease in 2008-09 to 0.856 it isnt good for the bank. But in 2009-10 it goes to 1.254 so it shows sound position of the bank.

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 Comparative Figure of Share Capital and Profit Last 3 years. Particular Members Share Capital Income per share 31-3-2008 3039 2.04 (crore) 15%
Member s

31-3-2009 3029 2.20 (crore) 15%

31-3-2010 2997 2.14 (crore) 12%

3040 3030 3020 3010 Member s 3000 2990 2980 2970 2008 2009 2010

2.2

2.15

2.1 shar e capit al 2.05

1.95 2008 2009 2010

16% 14% 12% 10% 8% 6% 4% 2% 0% 2008 2009 2010 Income per shar e

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In 2007-08 the share capital of the bank is 2.04crore and it increasing in 2008-09 to 2.20crore it is good for the bank. But in 2009-10 it decrease by 0.16crore and goes to 2.04crore.and the income per share of the bank is 15% in 2007-08 and 2008-09 in both year it is to be same. But in 2009-10 it will be decrease by 3% and it also affect to the profit so it is not good for the bank. Banking Operation and Customer Services of Last 3 year Particular No. of depositor No. of loan holder Working capital 2007-08 19255 640 58.95(cr.) 2008-09 19015 632 65.64(cr.) 2009-10 19208 631 76.64(cr.)

No. of deposit ers

19300 19250 19200 19150 19100 19050 19000 18950 18900 18850 2008 2009 2010 No. of deposit ers

No. of loan holders

640 638 636 634 No. of loan holders 632 630 628 626 2008 2009 2010

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80 70 60 50 40 30 20 10 0 2008 2009 2010 w orking capital

In 2007-08 the depositors are 19255 it shows good image & position of the bank. But in 2008-09 it will be decrease and go down to 19015 because of decreasing the interest rate. And in 2009-10 it come back to the same situation as in 2007-08 so it helps to the bank to give loans to the public. In 2007-08 the loan holders are 640 and it decrease in 2008-09 and goes to 632 because of the high interest rate.

DEPOSITES, LOAN & ADVANCES :-

Rs. In Crores
2001 DEPOSITES LOANS 47.03 2002 42.99 26.70 2003 40.74 24.56 2004 43.72 20.79 2005 49.56 22.53 2006 45.70 25.61 2007 47.56 23.86 2008 45.22 30.61 2009 50.83 25.83 2010 60.80 24.07

& 28.37

ADVANCES

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Trend Analysis Plot for DEPOSITES

Linear Trend Model Yt = 40.45 + 1.27*t 60
Variable Actual Fits Accuracy Measures MAPE 6.4958 MAD 3.1567 MSD 14.8937

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DEPOSITES

50

45

40 1 2 3 4 5 6 Index 7 8 9 10

The resulting expression contains that irregular fluctuation between years of deposits. So we find that deposits received by the banks are fluctuating over the years. The maximum value of deposits is 60.80 in 2010 and minimum value is 40.74 in 2003.

Trend Analysis Plot for LOANS

Linear Trend Model Yt = 25.37 - 0.013636*t

32 30 28
LOANS

Variable Actual Fits Accuracy MAPE MAD MSD Measures 8.46516 2.12691 7.20893

26 24 22 20 1 2 3 4 5 6 Index 7 8 9 10

The resulting expression contains that irregular fluctuation between years of loans & advances. So we find that loans and advances given by the banks are fluctuating over the years. The maximum value of loan & advances is 30.61 in 2008 and minimum value is 20.79 in 2004.

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70 60 50 40 DEPOSITES 30 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LOANS

Tabulated statistics: DEPOSITES, LOANS Correlations: DEPOSITES, LOANS Pearson correlation of DEPOSITES and LOANS = -0.132 P-Value = 0.717

The negative correlation coefficient (r= -0.132) evaluates above indicates that there is a negative association between the Deposits and Loans & Advances. It indicates that if the deposits go up the demand of loans & advances go down. It shows that the deposits and loans & advances move in opposite direction.

Regression Analysis: Year versus DEPOSITES, LOANS The regression equation is Year = 1986 + 0.377 DEPOSITES + 0.083 LOANS

PREDICTOR

COEF

SE COEF

Constant 1985.54 10.98 180.82 DEPOSITES 0.3770 0.1495 2.52 LOANS 0.0825 0.2952 0.28 S = 2.48490 R-Sq = 47.6% R-Sq(adj) = 32.6%
Obs DEPOSITES Year Fit SE Fit

0.000 0.040 0.788

Residual

St Residual

47.0

2001.00 2005.61

1.20

-4.61

-2.12R

R denotes an observation with a large standardized residual

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RATIO ANALYSIS
Employee productivity Staff cost ratio Int. income as a % of working funds Non- Int. income as a % of working funds Operating profit as a % of working funds Return on Assets Return on equity share capital ratio Profit per employee Deposits per employee Advances per employee Employee productivity :- Avg. business / No. of employees = 6080.25+7664.26 /25 = 16974.5 Staff cost ratio :- Staff cost / Total income = 78.55 /640.73 = 12.26% Int.income as a % of working funds :- Int.income / working funds = 610.31 /7664.26 = 7.96% Non- Int.income as a % of working funds :- Non- Int.income/working funds = 6.43 /7664.26 = 0.084% Operating profit as a % of working funds :- Operating profit/working funds = 171.82 /7664.26 = 2.24% Return on Assets :- Net Profit / Assets =125.38 /7664.26 = 1.64% 86

Return on equity share capital ratio :- Net Profit/ equity sharecapital = 125.38 /213.80 = 58.64% Profit per employee :- Net Profit/ No.of employees = 125.38 /25 = 5.01 Deposits per employee :- Deposits / No.of employees = 6080.25 /25 = 243.21 Advances per employee :- / No.of employees = 7664.26 /25 = 306.57 INTERPRETATION: This ratio shows the relationship between profit and capital employed. Term capital employed includes share capital, reserves and long term loans such as debenture. it must noted that in this ratio net profit is profit before deducting interest is judged with the help of this ratio . It is perhaps he vie point of management the ratio gives over all everything capacity of the company that can be rewarded to the long term capital provider. The ratio shows the efficiency of the company to give a profit per share to the share holder. The ratio is computed by the dividing the amount of net profit by no. of shares. It help in determining the price of stock in the market place. It is a yard stick that increases the performance of a company Mgt. from year of year. This ratio shows the relationship between profit and capital employed. Includes share capital, reserves and long term loans such as debenture. It must note that in this ratio net profit is profit before deducting interest is judged.

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4.10 SOCIAL RESPONSIBILITY

The social responsibility also an important part of the Nagrik bank. It increases the relationship between the bank and public and keeping with its philosophy concentrating on social responsibility programs that are relevant and useful to the communication in and around its service facilities of bank continued activities aimed at improving their environment. We organize blood donation dives equip community centre health camp. The bank also provides them snack facility. They also provide the training program to train about the different work and extra knowledge. When some natural disaster likes dynode earthquakes flood etc.occurs the ambulance rashes at the place and helps the needy and poor people.

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4.11 FINDINGS
In 2007-08 the deposits are 47.56crore it shows good image & position of the bank. But in 2008-09 it will be decrease and go down to 45.22crore because of decreasing the interest rate. And in 2009-10 it comes back to 50.83crore thats the very good situation so it helps to the bank to give more loans to the public. In 2007-08 the loan & advances are 23.86crore and it increase in 2008-09 and goes to 30.61crore because of decrease the interest rate. Profit of the Nagrik bank in 2007-08 is 0.861and it decrease in 2008-09 to 0.856 it isnt good for the bank. But in 2009-10 it goes to 1.254 so it shows sound position of the bank. The income per share of the bank is 15% in 2007-08 and 2008-09 in both years it is to be same. But in 2009-10 it will be decrease by 3% and it also affecting to the profit so it is not good for the bank. Working capital is increase in year to year for maintaining day to day expenses. Financial markets also link the present to the future: They enable savers to convert current income into future purchasing power, and borrowers to acquire capital to produce goods and services in the future.

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4.12 SUGGESTIONS
Though Nagrik bank provides me good support and guidance for effective project work, yet as a student of management and at a neutral position I would like to suggest to Nagrik bank for effective banking operation and take off high growth. Nagrik bank should be more customers segmented by providing better services immediately, so customer can save their time and satisfied by bank. second thing is that bank should make reliable and necessary documents for opening account, it should be not strict the amount of deposits in comparison of other co-operative bank is high, so it should be low as suitable to customer Bank not should but must start modern service for standing with competitor like ATM, credit card, debit card internet banking etc. There should be linking of performance and reward for motivate to staff and workers. Top management should provide effective salary to staff members for increase performance. Challenges Competition Customer Retention Globalization Shrinking Margin

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4.13 CONCLUSION
After visiting the Bavla Nagrik Co-operative Bank Ltd. I think that is the best financial bank. So that I conclude that it is the best comparing to other banks. I am thanking full of the bank that they give me chance to visit the bank and give me a great response. Number of shareholder is increased year to year which show the trust of people in the bank. Which show good result for feature of the bank. Banks also try to adopt a new modern banking technology to give better services to account holder.

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4.14 BIBLIOGRAPHY
Research Methodology, by C.R.Kothari, Business statistics, by Ken Black, Pearson, 4th edition Money, banking and Financial Performance, by D.M. Mithani, Himalaya Publication, 2004 Master circulars of RBI, 2009 Maintenances of Deposit A/c UCBs Management of Advances Nagrik Bank Annual Report www.rbi.com www.google.com www.bankingpicture.com www.bavlabank.com

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