INTRODUCTION

Banking sector is playing most important role in development of Indian economy. Indian bank can be broadly classified as commercial banks & cooperative banks, commercial banks can be grouped into three categories. Public sectors banks, Regional rural banks, Private sector banks. These banks have over 67,000 branches spread wide across the country. After initiation of financial sector reforms competition in the banking sector has been increased. The co-operative banks in India started functioning almost 100 years ago. The co-operative banks is an important constituent of the Indian financial system, judging by the role assigned to co-operative, the expectations the cooperative is supposed to fulfill, their number, and the number of offices the co-operative bank operate. Though the co-operative movement originated in the West but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The co-operative banks in India play an important role even today in rural financing. The businesses of co-operative bank in the urban areas also have increased phenomenally in recent years due to the sharp increase in the number of primary co-operative banks. Co-operative banks in India are registered under the Co-operative Societies Act. The co-operative bank is also regulated by the RBI. They are governed by the Banking Regulation Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Co-operative is nothing but a group of people, who have gathered with the same objectives, voluntarily, and by internal agreement work for the welfare of one another. Mr.H.Calvert:Co-operation is such an organization of individuals joining hands voluntarily on the basis of equality for the betterment of general economics interest.

GENERAL INFORMATION OF SAMPLED UNIT

Name of the unit Year of establishment Address The Veraval Mercantile Co-operative Bank Ltd, 02/03/1972 The Veraval Mercantile Co-operative Bank Ltd, University road, Kalakruti complex, Behind gondhiya hospital, Rajkot 360007. The Veraval Mercantile Co-operative Bank Ltd, Suvidha, Second floor, Subhash road, Veraval 362265. (0281)2589235 9879107966 (02876)220209 9879107962 Co-operative 6 days 10:00 to 19:00 Veraval (Regd) Veraval (Rayon) Una Junagadh Rajkot Keshod Manavadar Sutrapada

Registered office -

Phone no Registered office no Form of organization Working Days Time keeping system Branches -

Salaries -

Manager Officer Clerk Cashier Peon A

- 15000 to 20000 - 10000 to 15000 - 8000 to 10000 - 8000 to 10000 - 4000 to 6000

Audit class RBI license no Email -

GJ 670 P. vmcbl@yahoo.co.in.

GENERAL INFORMATION OF SAMPLED UNIT

Name of the unit Year of establishment Address The Co-operative Bank of Rajkot Ltd. 24/11/1980 Sahakar Sarita Panchnath Road, Rajkot 360001 (0281) 2224120 2234454 Co-operative 6 days 10:00 to 19:00 Rajkot Jasdan Morbi Jetpur Upleta Gondal Junagadh A ACD.GJ.219.P rajbank@yahoo.com www.rajbank.net

Phone no Form of organization Working Days Time keeping system Branches -

Audit class RBI license no Email Website -

INTRODUCTION

The banking sectors are necessary for the general public. Each & every financial activities done through banking organization, without banking facility so many difficulties can arise. The Indian banking industry is passing through a phase customers market. The customers have more choices in choosing the bank. A competition has been established with in the banks operation in India. Bank is provides many services with the help of stiff competition and advancement of technology, so that services becomes more easy& convenient. Bank provides many facilities like loan against share, education loan, personnel loan, home loan, etc. then banking sector plays role in the development of India. The VMC bank has also provided to services their potential customers like home loan, personnel loan, vehicle loan, business & profession loan, locker facility etc.

HISTORY & DEVELOPMENT

The veraval mercantile bank established in veraval since 1972for the main purpose of leading business & trade. At the initial stage the VMC bank start with 307 members & Rs 1,26,500 share capital. At that time the banks deposits Rs 7,39,492,92. Since, 11-5-1984 the VMC bank has been constructed the new building namely SUVIDHA for the purpose of banking activity. The VMC bank has creates 1st new branch in UNA. The VMC bank has a create 2nd branch in rayon in veraval since 27-09-1984 and also provide to the entire customer self deposit. The VMC bank has also established 3rd branch in sutrapada since14-12-1988 for main agricultural & business. Since 23-1-1995, the VMC bank established 4th branch in JUNAGADH in the present of Shree Rajubhai Adani. The VMC bank take the best decision for the changing new computerized system with the help of technology of computer the accuracy of bank is increased. And save the time and speedy & quick transaction are made. After the some definite period of time other two branches Rayon & Regd. Office is installed the computerized technology. Reserve bank of India has give to permission to VMC bank for established 4 new branches like keshod, porbandar, manavadar & Rajkot. RBI give permit to first Rajkot. Rajkot branches established in 15-8-1996 with computerized system & centralized air condition. After completion of establishment of rajkot branch. The VMC bank has takes quick decision for the establishment of 6th branch in keshod on 30-081996. and 7th branch in manavadar on 04-09-1996.

FUTURE PLAN

1) The VMC bank wants to start new branches in different area or different district also. 2) VMC bank may also provide ATM facility 3) VMC bank also wants to maintain the growth and wants to expand the growth. 4) VMC bank may provide various types of bank loan Student computer loan NRI loan Education loan

OBJECTIVES

Achieve net profit about 46,00,000 Bring customer satisfaction 100% Reduce the customer complains Educated customers to bring banking awareness Train staff to become more effective Update present software

RESEARCH METHODOLOGY
INTRODUCTION

After the preparation of financial statements that is trading account, p & l account, balance sheet. The ratio analyses will give the relationship between two related items of financial statement. It expresses in a proportion between two figures and measure the financial strength of the company. The ratio analyses does not only calculate ratios but also give result & interpreted the result. A ratio is customarily expressed in three different ways. It may be expressed as a proportion between two figures. For example, If the current assets are twice the current liabilities. It can be said that the current ratio 2:1. the second method is to expressed it in the form of percentage. For example, the ratio of return on capital employed is 30%. The third method is to expressed it as ratio, for example_ stock turnover is 6 or stock turnover 6times a year. The use of ratios has become increasing popular during last few year only. Originally the bankers used the current ratio of judge the capacity of the borrowing business enterprise to repay the loan and make regular interest payment. A banker or other creditors will measure the repaying capacity & financial strength on the basis of accounting ratio.

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SAMPLING

The aggregate of units drawn from the lot by some scientific method for setting information regarding the characteristic. Under study is called sample and the method of selecting a sample is called sampling. The total lot of the unit is known as our census and selected few unit from total lots is known as sample. Researcher has to select the co-operative banking census and researcher has to select 2 co-operative bank out of several banks in Saurashtra region the selected bank namely, 1) Veraval Mercantile Co-operative Bank. 2) Raj Co-operative Bank Ltd.

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DATA COLLECTION

Data collection is nothing but the collection of information, regarding, tabulation, & analysis of particular data is known as data collection. Generally the data collections are main two sources at A. Primary source/data B. Secondary source/data In primary data collection, the data is collected from the general public to have taken some Exams, Interview, Test, Survey, Questionnaires, Telephonic contact etc. the of primary data are most important but in the collection of primary , the lots of time are consuming & cost is also high In secondary data collection that all the data related to the selected unit are recovered by the published data or readymade data by the organization, in secondary data collection the data are already published by the organization and it is easy to collect the various data for the purpose analysis and less time consuming & not costs are incurred. Researcher has to collect all the financial data of the bank by secondary method, Researcher has to collect the last 3 years data from the bank for the purpose of calculation of ratio and other financial position of the selected unit. Researcher has to collect the financial information of the last three years by annual report and profit & loss account of the bank.

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LIMITATION OF STUDY

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RESEARCH TECHNIQUE

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OBJECTIVE OF STUDY

To check the profitability of both the sampled unit. To check the solvency of both the sampled unit. To check the liquidity of both the sampled unit. To check the efficiency of the sampled unit.

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HYPOTHESIS

There is no significant difference in profitability during the last 3 years in sampled unit. There is no significant difference in solvency during the last 3 years in sampled unit. There is no significant difference in liquidity during the last 3 years in sampled unit.
There is no significant difference in efficiency during the last 3 years

in sampled unit.

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ANALYSIS OF DATA
H0: There is no significant difference in profitability during the last 3 years in sampled unit. GRASS PROFIT RATIO

GROSS PROFIT RATIO

GROSS PROFIT X 100 INCOME

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 24.91% 26.72% 31.73%

VMC BANK 5.91% 9.43% 11.80%

GROSS PROF IT RATIO

35.00% 30.00% 25.00% (%) 20.00% 15.00% 10.00% 5.00% 0.00% 2005-06 2006-07 YEAR 2007-08 RAJ VMC

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ANALYSIS

It is express the relationship between gross profits earned to net income. It is a useful indication of the profitability of business, if the ratio is low than cost is high where as the ratio is high the cost is less. Above ratio and graphical presentation indicates the gross profit of RAJ Bank and VMC Bank is continuous increases. In 2005-06 gross profit of RAJ Bank is 24.91% and n 2006-07 the ratio is slightly increase up to 26.72%, and the last year 2007-08 the ratio is increase up to 31.73%. In same the gross profit ratio of VMC Bank in 2005-06 5.91%, 2006-07 9.43% and the last year 2007-08 11.80%.

H0: HYPOTHESIS IS REJECTED

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H0: there is no significant difference in profitability during the last 3 years in sampled unit. NET PROFIT RATIO

NET PROFIT RATIO

NET PROFIT X 100 INCOME

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 8.56% 8.14% 13.72%

VMC BANK 4.10% 3.94% 4.48%

NET PROFIT RATIO

14.00% 12.00% 10.00% (%) 8.00% 6.00% 4.00% 2.00% 0.00% 2005-06 2006-07 YEAR 2007-08 RAJ VMC

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ANALYSIS

The ratio is valuable for purpose of ascertaining the overall profitability of business and shows the efficiency. Increase the ratio better will be the profitability and decrease the ratio pure will be the profitability, In above graph indicates that the profitability of both the bank are fluctuating, in 2005-06 both bank earn good profit and, in 2006-07 profit is slightly decrease & last year 2007-08 profit is again increase.

H0: HYPOTHESIS IS REJECTED

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H0: there is no significant difference in profitability during the last 3 years in sampled unit. RETURN ON CAPITAL EMPLOYED RETURN ON CAPITAL EMPLOYE = NET PROFIT (EBIT) X 100 CAPITAL EMPLOYED VMC BANK 4.40% 7.55% 10.28%

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 14.47% 14.32% 18.36%

RETURN ON CAPITAL EM PLOY ED

20.00% 15.00% (%) 10.00% 5.00% 0.00% 2005-06 2006-07 YEAR 2007-08 RAJ VMC

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ANALYSIS

It is an index of profitability of business and it is obtained by comparing of net profit with capital employed. This ratio is helpful to take a decision. In above graph indicates the RAJ Bank is fluctuating ratio where as VMC Bank is continues increases at increasing rate to every year. H0: HYPOTHESIS IS REJECTED

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H0: there is no significant difference in profitability during the last 3 years in sampled unit.

RETURN ON SHARE HOLDERS FUND RETURN ON SHARE HOLDERS FUND = NET PROFIT X 100 SHARE HOLDERS FUND

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 4.97% 4.36% 7.94%

VMC BANK 2.40% 2.49% 3.00%

RETURN ON SHARE HOLDERS FUND

8.00% 7.00% 6.00% 5.00% (% 4.00% ) 3.00% 2.00% 1.00% 0.00% 2005-06 2006-07 YEAR 2007-08 RAJ VMC

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ANALYSIS

In order to judge the efficiency with which the proprietors funds are employed in business. In above graphical presentation indicates that the ratio of share holders funds the RAJ Bank is fluctuate in nature where as VMC Bank has continuous increasing n every year, in 2005-06 the RAJ Bank 4.97% and next year 2006-07 are decrease up to 4.36% but last year 2007-08 ratio is increase up to 7.94%, the difference between last two years is 3.58%. Another side the VMC Bank the ratio of share holders funds are increase at a decreasing rate

H0: HYPOTHESIS IS REJECTED

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H0: there is no significant difference in profitability during the last 3 years in sampled unit.

RETURN ON EQUITY SHARE HOLDERS FUND RETURN ON EQUITY SHARE HOLDERS FUND PARTICULAR 2005-06 2006-07 2007-08 = NET PROFIT X 100 EQUITY SHARE CAPITAL VMC BANK 15.02% 14.52% 17.94%

RAJ BANK 54.03% 33.25% 53.60%

RETURN ON EQUITY SHARE HOLDERS FUND

60.00% 50.00% 40.00% (%) 30.00% 20.00% 10.00% 0.00% 2005-06 2006-07 YEAR 2007-08 RAJ VMC

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ANALYSIS

It shows what percentage of profit is earned on the capital invested by ordinary share holders. In above graph and ratio indicates the equity share holders fund ratio of both the bank at the year 2005-06 is increase then next year 206-07 the ratio of both bank again decrease and last year 2007-08 ratio of both the banks are increase.

H0: HYPOTHESIS IS REJECTED

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H0: there is no significant difference in profitability during the last 3 years in sampled unit.

EARNING PER SHARE

EARNING PER SHARE

NET PROFIT NO OF EQUITY SHARE

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 19.05 17.62

VMC BANK 15.02 14.52 17.94

EARNING PER SHARE

20 18 16 14 12 RS. 10 8 6 4 2 0

RAJ VMC

2005-06

2006-07 YEAR

2007-08

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ANALYSIS

It is shows the relationship between profit and share equity, if the earning per share is increases the more beneficial to the company as well as share holders, where as the earning per share is lower than may be negative effect in the mind of share holders. In above graph indicates the both the banks earning per share are fluctuates, the highest EPS of RAJ Bank is 19.05 per share, when the VMC Bank 17.94 is the highest EPS during the last 3 years.

H0: HYPOTHESIS IS REJECTED

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H0: There is no significant difference in solvency during the last 3 years in sampled unit. PROPRIETORS RATIO

PROPRIETORS RATIO

PROPRIETORS FUNDS X 100 TOTAL ASSETS

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 14.25% 15.79% 15.63%

VMC BANK 9.99% 9.80% 9.46%

PROPRIETOR RATIO
16.00% 14.00% 12.00% 10.00% (%) 8.00% 6.00% 4.00% 2.00% 0.00% 2005-06 2006-07 YEAR 2007-08

RAJ VMC

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ANALYSIS

This ratio shows the proportion of proprietors funds to the total assets employed in the business, the proprietors funds on share holders equity consist of share capital and reserves & surplus. The higher the ratio, the stronger the financial position of the bank and lower the ratio, pure the financial position of the bank. Above ratios and graphical presentation indicates the proprietors ratio of RAJ Bank is continue fluctuate, In 2005-06 proprietors ratio is 14.25% after one year in 2006-07 the ratio increases 15.79% and last year the ratio are slightly decrease at 15.63%. As the same proprietors ratio of VMC Bank are continuously decreases by year to year. In 2005-06 the ratio 9.99% after one year in 2006-07 9.80% and last year 2007-08 the ratio is 9.46%, so the VMC Bank is used mostly out side fund.

H0: HYPOTHESIS IS REJECTED

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H0: There is no significant difference in liquidity during the last 3 years in sampled unit . CURRENT ASSETS RATIO CURRENT ASSETS RATIO = CURRENT ASSETS CURRENT LIABILITY

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 89.69 : 1 43.80 : 1 48.11 : 1

VMC BANK 10.39 : 1 9.54 : 1 10.48 : 1

CURRENT ASSETS
90 80 70 60 50 40 30 20 10 0

RAJ VMC

2005-06

2006-07 YEAR

2007-08

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ANALYSIS

This reflects proportion of current assets to current liabilities. It is also known as working capital ratio. In 2005-06 RAJ Bank current assets 89.69 times more, in 2006-07 the ratio is decrease at 43.80 and last year 2007-08 the ratio is increase as decreasing rate there is a 48.11. In 2005-06 VMC Bank current assets ratio 10.39 times more than liabilities and 2006-07 the ratio is decrease up to 9.54 and last year 2007-08 the current assets ratio is increases up to 10.48 Above ratio and graph indicates the current assets ratio of RAJ Bank and VMC Bank are fluctuate continuously, so try to maintain their ratio and increase the ratio so, finally working capital is increased.

H0: HYPOTHESIS IS REJECTED

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H0: There is no significant difference in turnover during the last 3 years in sampled unit. FIXED ASSETS TURNOVER RATIO FIXED ASSETS TURNOVER RATIO = FIXED ASSETS INCOME VMC BANK 2.71 3.38 3.72

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 2.69 1.54 1.96

FIXED ASSETS TURN OVER

4 3.5 3 2.5 2 1.5 1 0.5 0 2005-06 2006-07 YEAR 2007-08 RAJ VMC

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ANALYSIS

To ascertain the efficiency and profitability of the business, the total fixed assets are comparing to sales. If the ratio is low, it indicates that investment in fixed assets is more where as if the ratio is found higher, it means the fixed assets are being used effectively to earn profit. In above graph the ratio indicates the RAJ Bank is fluctuating and VMC Bank is increasing by every year.

H0: HYPOTHESIS IS REJECTED

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H0: There is no significant difference in liquidity during the last 3 years in sampled unit. TOTAL ASSETS TURNOVER RATIO TOTAL ASSETS TURNOVER RATIO = TOTAL ASSETS INCOME VMC BANK 0.070 0.080 0.082

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 0.083 0.085 0.090

TOTAL ASSETS TURN OVER

0.1 0.08 0.06 0.04 0.02 0 2005-06 2006-07 YEAR 2007-08 RAJ VMC

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ANALYSIS

The amounts invested in business are invested in all assets jointly and sales are affected through them to earn profit. If higher the ratio, it shows that with les amount of investment in total assets, where as the lower the ratio, then more amount of investment in total assets. Above graphical presentation indicates that the flow of both the banks are increase continuously, total assets ratio RAJ Bank increase at a decreasing rates, where as VMC Bank increase the ratio at increasing rate.

H0: HYPOTHESIS IS REJECTED

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H0: there is no significant difference in profitability during the last 3 years in sampled unit.

EXPENSE RATIO EXPENSE RATIO = EXPENSE X 100 INCOME

PARTICULAR 2005-06 2006-07 2007-08

RAJ BANK 75.09% 73.28% 68.27%

VMC BANK 94.09% 90.56% 88.20%

EXPEN SE RATIO
1 0 0.0 0 % 8 0 .0 0 % (%) 6 0 .0 0 % 4 0 .0 0 % 2 0 .0 0 % 0 .0 0 % 2 00 5 -0 6 2 0 06 -0 7 YEAR 2 00 7 -0 8 R AJ VMC

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ANALYSIS

Expense ratio is computed for the purpose of ascertaining relationship between operating and net income. Above graph indicates the expense ratio of both the banks are decrease, in 2005-06 the RAJ Bank ratio is 75.09%, in 2006-07 73.28% and last year 2007-08 68.27%, the difference between 2005-06 & 2007-08 is 6.82% decrease. As the same expense ratio of VMC Bank in 2005-06 is 94.09%, in 2006-07 90.56%, and the last year 88.20%, so the difference between 2005-06 & 2007-08 is 5.89% decrease.

H0: HYPOTHESIS IS REJECTED

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SUGGESTION

RAJ Bank should maintain or increase their net profit. RAJ Bank should try to increase the long term funds against their fixed assets. VMC Bank should increase the proprietors fund (owned) and decrease outside funds.

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CONCLUSION

I am very thankful to VMC bank for giving me required information during my visit for study purpose. I visit your organization. I had found that all the staff members and worker are working in co-ordinate manner. The cooperation of members and customers as well as continuous efforts of the staff. VMC bank has been able to reach the new heights of the success I am very thankful to the manager and also thankful to MS Monika, who has given me the lots of information regarding the overall organization.

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BIBLIOGRAPHY

My project work is done with the help of following books and annual reports. BOOKS BUSINESS ENVIRONMENT ACCOUNTING MANAGEMENT FORMS OF BUSINESS ORGANISATION REPORT ANNUAL REPORT (2005-06) (2006-07) (2007-08) www.rajbank.net CHERUNILEM B.S.SHAH MAHAJAN PUBLICATION

WEB SITE

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