Profile of Banking Industry

Banking in India the modern sense originated in the last decades of the 18 th century. The
first banks were Bank of Hindustan (1770-1829) and The General Bank of India,
established 1786 and since defunct.
The largest bank, and the oldest still in existence, is the State Bank of India, which
originated in the Bank of Calcutta in June 1806, which almost immediately became the
Bank of Bengal. This was one of the three presidency banks, the other two being the Bank
of Bombay and the Bank of Madras, all three of which were established under charters
from the British East India Company. The three banks merged in 1921 to form the
Imperial Bank of India, which, upon India's independence, became The State Bank of
India in 1955. For many years the presidency banks acted as quasi-central banks, as did
their successors, until the Reserve Bank of India was established in 1935.
In 1969 the Indian government nationalized all the major banks that it did not already
own and these have remained under government ownership. They are run under a
structure know as 'profit-making public sector undertaking' (PSU) and are allowed to
compete and operate as commercial banks. The Indian banking sector is made up of four
types of banks, as well as the PSUs and The State Banks; they have been joined since the
1990s by new private commercial banks and a number of foreign banks.
Banking in India was generally fairly mature in terms of supply, product range and reach-
even though reach in rural India and to the poor still remains a challenge. The government
has developed initiatives to address this through the State Bank of India expanding its
branch network and through the National Bank for Agriculture and Rural Development
with things like microfinance.
Indian Banking Industry currently employees 1,175,149, employees and has a total of
109,811 branches in India and 171 branches abroad and manages an aggregate deposit of
67504.54 billion (US$1.1 trillion or €840 billion) and bank credit of 52604.59 billion
(US$890 billion or €650 billion). The net profit of the banks operating in India was
1027.51 billion (US$17 billion or €13 billion) against a turnover of 9148.59 billion
(US$150 billion or €110 billion) for the fiscal year 2012-13.

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 CURRENT PERIOD

All banks which are included in the Second Schedule to the Reserve Bank of India Act,
1934 are Scheduled Banks. These banks comprise Scheduled Commercial Banks and
Scheduled Co-operative Banks. Scheduled Commercial Banks in India are categorized
into five different groups according to their ownership and/or nature of operation. These
bank groups are:
 State Bank of India and its Associates
 Nationalized Banks
 Private Sector Banks
 Foreign Banks
 Regional Rural Banks

In the bank group-wise classification, IDBI Bank Ltd. is included in Nationalized Banks.
Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and
Scheduled Urban Cooperative Banks.

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 State Bank of India

State bank of India is the largest bank in India. It provides a range of banking products
through its vast network in India and overseas, including products aimed at NRIs. The
State Bank Group, with over 16000 branches, has the largest branch network in India.
With an asset base of $250 billion and $195 billion in deposits, it is a regional banking
behemoth. It has a market share among Indian commercial banks of about 20% in
deposits and advances, and SBI accounts for almost one-fifth of the nation’s loans.

Key Dates:
1806: The Bank of Calcutta is established as the first Western-type bank.
1809: The bank receives a charter from the imperial government and changes its name to
Bank of Bengal.
1840: A sister bank, Bank of Bombay, is formed.
1843: Another sister bank is formed: Bank of Madras, which, together with Bank of
Bengal and Bank of Bombay become known as the presidency banks, which had the right
to issue currency in their regions.
1861: The Presidency Banks Act takes away currency issuing privileges but offers
incentives to begin rapid expansion, and the three banks open nearly 50 branches among
them by the mid-1870s.
1876: The creation of Central Treasuries ends the expansion phase of the presidency
banks.
1921: The presidency banks are merged to form a single entity, Imperial Bank of India.
1955: The nationalization of Imperial Bank of India results in the formation of the State
Bank of India, which then becomes a primary factor behind the country's industrial,
agricultural, and rural development.
1969: The Indian government establishes a monopoly over the banking sector.
1972: SBI begins offering merchant banking services.
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1986: SBI Capital Markets is created.
1995: SBI Commercial and International Bank Ltd. are launched as part of SBI's stepped-
up international banking operations.
1998: SBI launches credit cards in partnership with GE Capital.
2002: SBI networks 3,000 branches in a massive technology implementation.
2004: A networking effort reaches 4,000 branches.

History

The roots of the State Bank of India lie in the first decade of the 19th century, when the
Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The
Bank of Bengal was one of three Presidency banks, the other two being the Bank of
Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July
1843). All three Presidency banks were incorporated as joint stock companies and were
the result of royal charters. These three banks received the exclusive right to issue paper
currency till 1861 when, with the Paper Currency Act, the right was taken over by the
Government of India. The Presidency banks amalgamated on 27 January 1921, and the
re-organised banking entity took as its name Imperial Bank of India. The Imperial Bank
of India remained a joint stock company but without Government participation.

Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of
India, which is India's central bank, acquired a controlling interest in the Imperial Bank of
India. On 1 July 1955, the Imperial Bank of India became the State Bank of India. In
2008, the government of India acquired the Reserve Bank of India's stake in SBI so as to
remove any conflict of interest because the RBI is the country's banking regulatory
authority.

In 1959, the government passed the State Bank of India (Subsidiary Banks) Act. This
made SBI subsidiaries of eight that had belonged to princely states prior to their
nationalization and operatonal take-over between September 1959 and October 1960,
which made eight state banks associates of SBI. This acquisition was in tune with the first
Five Year Plan, which prioritised the development of rural India. The government
integrated these banks into the State Bank of India system to expand its rural outreach. In
1963 SBI merged State Bank of Jaipur (est. 1943) and State Bank of Bikaner (est.1944).
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SBI has acquired local banks in rescues. The first was the Bank of Bihar (est. 1911),
which SBI acquired in 1969, together with its 28 branches. The next year SBI acquired
National Bank of Lahore (est. 1942), which had 24 branches. Five years later, in 1975,
SBI acquired Krishnaram Baldeo Bank, which had been established in 1916 in Gwalior
State, under the patronage of Maharaja Madho Rao Scindia. The bank had been the
Dukan Pichadi, a small moneylender, owned by the Maharaja. The new bank's first
manager was Jall N. Broacha, a Parsi. In 1985, SBI acquired the Bank of Cochin in
Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank of
Travancore, already had an extensive network in Kerala.

There has been a proposal to merge all the associate banks into SBI to create a "mega
bank" and streamline the group's operations.

The first step towards unification occurred on 13 August 2008 when State Bank of
Saurashtra merged with SBI, reducing the number of associate state banks from seven to
six. Then on 19 June 2009 the SBI board approved the absorption of State Bank of
Indore. SBI holds 98.3% in State Bank of Indore. (Individuals who held the shares prior
to its takeover by the government hold the balance of 1.7%.)

The acquisition of State Bank of Indore added 470 branches to SBI's existing network of
branches. Also, following the acquisition, SBI's total assets will inch very close to the 10
trillion mark (10 billion long scale). The total assets of SBI and the State Bank of Indore
stood at 9,981,190 million as of March 2009. The process of merging of State Bank of
Indore was completed by April 2010, and the SBI Indore branches started functioning as
SBI branches on 26 August 2010.

On October 7, 2013, Arundhati Bhattacharya became the first woman to be appointed

Chairperson of the bank.

Operations

SBI provides a range of banking products through its network of branches in India and
overseas, including products aimed at non-resident Indians (NRIs). SBI has 14 regional
hubs and 57 Zonal Offices that are located at important cities throughout India.

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Domestic presence

SBI has 14,816 branches in India, as on 31 March 2013, of which 9,851 (66%) were in
Rural and Semi-urban areas. In the financial year 2012-13, its revenue was INR 200,560
Crores (US$36.9 billion), out of which domestic operations contributed to 95.35% of
revenue. Similarly, domestic operations contributed to 88.37% of total profits for the
same financial year.

Under the Pradhan Mantri Jan Dhan Yojana of financial inclusion launched by
Government in August 2014, SBI held 11,300 camps and opened over 30 lakhs accounts
by September, which included 21.16 lakh accounts in rural areas and 8.8 lakh accounts in
urban areas.

International presence

As of 28 June 2013, the bank had 190 overseas offices spread over 36 countries. It has
branches of the parent in Moscow, Colombo, Dhaka, Frankfurt, Hong Kong, Tehran,
Johannesburg, London, Los Angeles, Male in the Maldives, Muscat, Dubai, New York,
Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and
Singapore, and representative offices in Bhutan and Cape Town.

The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It has seven
branches, four in the Toronto area and three in the Vancouver area.

SBI operates several foreign subsidiaries or affiliates. In 1990, it established an offshore

bank: State Bank of India (Mauritius). SBI (Mauritius) has 15 branches in major
cities/towns of the country including Rodrigues.

SBI Sri Lanka now has three branches located in Colombo, Kandy and Jaffna. The Jaffna
branch was opened on 9 September 2013. SBI Sri Lanka, the oldest bank in Sri Lanka,
celebrated its 150th year in Sri Lanka on 1 July 2014.

In 1982, the bank established a subsidiary, State Bank of India (California), which now
has ten branches – nine branches in the state of California and one in Washington, D.C.
The 10th branch was opened in Fremont, California on 28 March 2011. The other eight

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branches in California are located in Los Angeles, Artesia, San Jose, Canoga Park,
Fresno, San Diego, Tustin and Bakersfield.

In Nigeria, SBI operates as INMB Bank. This bank began in 1981 as the Indo-Nigerian
Merchant Bank and received permission in 2002 to commence retail banking. It now has
five branches in Nigeria.

In Nepal, SBI owns 49% of SBI Nepal (State Bank in Nepal) share with Nepal
Government owing the rest and SBI NEPAL has branches throughout the country in each
and every city as banking has become the major part of daily life for Nepalese people. In
Moscow, SBI owns 60% of Commercial Bank of India, with Canara Bank owning the
rest. In Indonesia, it owns 76% of PT Bank Indo Monex.

The State Bank of India already has a branch in Shanghai and plans to open one in
Tianjin.[15]

In Kenya, State Bank of India owns 76% of Giro Commercial Bank, which it acquired for
US$8 million in October 2005.

Associate banks

SBI now has five associate banks, down from the eight that it originally acquired in 1959.
All use the State Bank of India logo, which is a blue circle, and all use the "State Bank
of" name, followed by the regional headquarters' name:

 State Bank of Bikaner & Jaipur

 State Bank of Hyderabad
 State Bank of Mysore
 State Bank of Patiala
 State Bank of Travancore

The State Bank of India and all its associate banks are identified by the same blue keyhole
logo. The State Bank of India wordmark usually has one standard typeface, but also
utilises other typefaces.

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Non-banking subsidiaries

Apart from its five associate banks, SBI also has the following non-banking subsidiaries:

 SBI Capital Markets Ltd

 SBI Funds Management Pvt Ltd
 SBI Factors & Commercial Services Pvt Ltd
 SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)
 SBI DFHI Ltd
 SBI Life Insurance Company Limited
 SBI General Insurance

In March 2001, SBI (with 74% of the total capital), joined with BNP Paribas (with 26%
of the remaining capital), to form a joint venture life insurance company named SBI Life
Insurance company Ltd. In 2004, SBI DFHI (Discount and Finance House of India) was
founded with its headquarters in Mumbai.

Other SBI service points

As of 31 March 2014: SBI has 43,515 ATMs and SBI group (including associate banks)
has 51,491 ATMs. SBI has become the first bank to install an ATM at Drass in the
Jammu & Kashmir Kargil region. This was the Bank's 27,032nd ATM on 27 July 2012.

Logo and slogan

 The logo of the State Bank of India is a blue circle with a small cut in the bottom
that depicts perfection and the small man the common man - being the center of
the bank's business. The logo came from National Institute of Design(NID),
Ahmedabad and it was inspired by Kankaria Lake, Ahmedabad.
 Slogans: "PURE BANKING, NOTHING ELSE", "WITH YOU - ALL THE
WAY", "A BANK OF THE COMMON MAN", "THE BANKER TO EVERY
INDIAN", "THE NATION BANKS ON US"

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Listings and shareholding

As on 31 March 2014, Government of India held around 58.59% equity shares in SBI.
Life Insurance Corporation of India is the largest non-promoter shareholder in the
company with 14.99% shareholding.

Shareholders Shareholding
Promoters: Government of India 58.60%
Banks & Insurance Companies 16.79%
FIIs/GDRs/OCBs/NRIs 12.04%
Mutual Funds & UTI 03.78%
Private Corporate Bodies 02.87%
Others 5.92%
Total 100.0%

The equity shares of SBI are listed on the Bombay Stock Exchange, where it is a
constituent of the BSE SENSEX index, and the National Stock Exchange of India, where
it is a constituent of the CNX Nifty. Its Global Depository Receipts (GDRs) are listed on
the London Stock Exchange.

Employees

SBI is one of the largest employers in the country having 222,033 employees as on 31
March 2014, out of which there were 45,132 female employees (20%) and 2,610 (1%)
employees with disabilities. On the same date, SBI had 42,744 Schedule Caste (19%) and
17,243 Schedule Tribe (8%) employees. The percentage of Officers, Assistants and Sub-
staff was 36%, 46% and 18% respectively on the same date Hiring drive: 1,776 Assistants
and 1,394 Officers joined the Bank in FY 2013-14, for expansion of the branch network
and to mitigate staff shortage, particularly at rural and semi-urban branches. Staff
productivity: As per its Annual Report for FY 2013-14, each employee contributed net
profit of INR 4.85 lakhs.

Recent awards and recognitions

 SBI was ranked 73rd largest bank in the world, according to 2014 SNL financial
data.

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 SBI won the Best Bank award in the 'ASiAMONEY FX POLL OF POLLS 2014’
for best overall performance as domestic provider of Forex services over the last
10 years.
 SBI was ranked as the top bank in India based on tier 1 capital by The Banker
magazine in a 2014 ranking.
 SBI was ranked 298th in the Fortune Global 500 rankings of the world's biggest
corporations for the year 2012.
 SBI won "Best Public Sector Bank" award in the D&B India's study on 'India's
Top Banks 2013'.
 State Bank of India won three IDRBT Banking Technology Excellence Awards
2013 for “Electronic Payment Systems”, “Best use of technology for Financial
Inclusion”, and “Customer Management & Business Intelligence” in the large
bank category.
 SBI won National Award for its performance in the implementation of Prime
Minister’s Employment Generation Programme (PMEGP) scheme for the year
2012.
 Best Online Banking Award, Best Customer Initiative Award & Best Risk
Management Award (Runner Up) by IBA Banking Technology Awards 2010
 SKOCH Award 2010 for Virtual corporation Category for its e-payment solution
 SBI was the only bank featured in the "top 10 brands of India" list in an annual
survey conducted by Brand Finance and The Economic Times in 2010.
 The Bank of the year 2009, India (won the second year in a row) by The Banker
Magazine
 Best Bank – Large and Most Socially Responsible Bank by the Business Bank
Awards 2009
 Best Bank 2009 by Business India
 The Most Trusted Brand 2009 by The Economic Times.
 SBI was named the 29th most reputed company in the world according to Forbes
2009 rankings
 Most Preferred Bank & Most preferred Home loan provider by CNBC
 Visionaries of Financial Inclusion By FINO
 Technology Bank of the Year by IBA Banking Technology Awards

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  SBI was 50th Most Trusted brand in India as per the Brand Trust Report 2013, an
annual study conducted by Trust Research Advisory, a brand analytics company
and subsequently, in the Brand Trust Report 2014, SBI finished as India's 19th
Most Trusted Brand in India.

Major competitors

Some of the major competitors for SBI in the banking sector are Axis Bank, ICICI Bank,
HDFC Bank, Punjab National Bank, Bank of Baroda, IndusInd Bank, Canara Bank, Bank
of India and Union Bank of India. However in terms of average market share, SBI is by
far the largest player in the market.

PUNJAB NATIONAL BANK

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Punjab National Bank (PNB) was registered on
19 May, 1894 under the Indian Companies Act,
with its office in Anarkali Bazaar, Lahore. Punjab National Bank (PNB) is an
Indian financial services company based in New Delhi, India. With more than 120 years
of strong existence and 6081 total branches including 5 foreign branches, 6940 ATMs as
on Mar’14, Punjab National Bank is serving more than 8.9crore esteemed customers.
PNB, being one of the largest nationalized banks, has continued to provide prudent and
trustworthy banking services to its customers. The Bank enjoys strong fundamentals,
large franchise value and good brand image. To meet the growing aspirations of the
people and compete in these tough conditions, the Bank offers wide range of products and
services. It is the third largest bank in India in terms of asset size (US$6.6 billion by the
end of FY 2012-13). The bank has been ranked 248th biggest bank in the world by the
Bankers' Almanac.

The branch network comprises 2047 rural, 1154 semi-urban, 1111 urban & 877 metro
Politian branches. During the review period 210 domestic branches were opened. With
5189 branches, including 28 extension counters, the bank has the largest network amongst
the nationalized banks.

Awards and Recognitions: 

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Owing to its performance during the year 2013, Bank earned many laurels and accolades
in recognition to its service towards doing good to society and on its overall performance.
Recently, PNB was awarded with Golden Peacock Innovative Product/Service Award
2014 by Institute of Directors, “Vigilance Excellence Award” by Institute of Public
Enterprises, ‘Global CSR Excellence and Leadership Award’ for Organizations with Best
CSR Practices’ and ‘Bank with leading Financial Inclusion Initiatives Award’ by ABP
News. Apart from these, the Bank has been conferred with ‘IBA Banking Technology
Awards’ under the category of Best Risk Management and Security Initiatives and
‘Banking Technology Excellence Award’ under Customer Management and Business
Excellence Initiatives by IDBRT, Hyderabad. Further the Bank has been recognized as
‘Best Banker’ under Agriculture Credit and Inclusion by The Sunday Standard.

 In terms of accolades, PNB has been adjudged as the ‘Most profitable Bank’ amongst
Public sector banks by Financial Express and Ernst & young survey on India’s Best Bank.
Globally, 'The Banker' Magazine, London has ranked PNB at 170th position amongst
World's Top 1000 Banks in 2013, up from 175th position in 2012. Forbes Magazine has
placed PNB at 668th place amongst 2000 global giants.

Vision:
“To be a Leading Global Bank with Pan India footprints and become a household brand in
the Indo-Gangetic Plains providing entire range of financial products and services under
one roof”

Mission:

 To provide excellent professional services and improve its position as a leader in

financial and related services.
 Build and maintain a team of motivated workforce with high work ethos.

SWOT Analysis
Strengths
 Brand name of Punjab National Bank (PNB) is established over the years.

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  Single window clearance - a single employee provides wide variety of facilities to
the borrower, minimizing the hassle of wastage of time.
 Appraisal techniques are used.
 Specialized software's are big assets.
 There is no penalty for prepayment from borrowers own service.

Weaknesses
 High interest rates as compared to other housing finance institutions.
 Top management takes large amount of time to approve high value seeking
loan borrowers. No publicity.
 No marketing managers work, only through direct sales agent.
 People are not aware of wide variety of schemes offered by the company; tend
to think the company as only providing home loans.
 There is the shortage of staff at almost all branches which does not ensure easy
addressable of the customers problems.
 Delegation of authority and responsibility is not proper.

Opportunities
 Special rates of interest are offered during exhibitions.
 Special rates of interest can be introduced for employees of PSU'S & reputed
national or multinational companies'
 Product life cycle is to be reviewed.
 The growing category of the builders ensure that good, high value&
qualitative projects, providing them home loans with the new and innovative
schemes can lead to over all development of the company.

Threats
 The competition in market is very high due to the private players.
 The rates of interest of other players are quite low.
 Innovative schemes with home loan from other players.
 The processing process is quite slow which leads to low housing finance.

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Punjab National Bank (PNB) is the second largest government-owned commercial bank in
India. Having more than 3.5 crore customer, Punjab National Bank has one of the largest
branch networks in India. The bank's assets for financial year 2007 were about US$60 billion.

History:

1895: PNB commenced its operations in Lahore. PNB has the distinction of being the first
Indian bank to have been started solely with Indian capital that has survived to the present.
(The first entirely Indian bank, the Oudh Commercial Bank, was established in 1881 in
Faizabad, but failed in 1958.) PNB's founders included several leaders of the Swadeshi
movement such as Dyal Singh Majithia and Lala HarKishen Lal, Lala Lalchand, Shri Kali
Prosanna Roy, Shri E.C. Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan
Dass. Lala Lajpat Rai was actively associated with the management of the Bank in its early
years.

Awards and Distinctions

 Ranked among top 50 companies by the leading financial daily, Economic Times.
 Ranked as 323rd biggest bank in the world by Bankers Almanac (January 2006),
London.
 Earned 9th place among India's Most Trusted top 50 service brands in Economic
Times- A.C Nielson Survey.
 Included in the top 1000 banks in the world according to The Banker, London.
 Golden Peacock Award for Excellence in Corporate Governance - 2005 by Institute
of Directors.
 FICCI's Rural Development Award for Excellence in Rural Development – 2005

Punjab national bank Overseas Offices PNB has a banking subsidiary in the United
Kingdom, as well as branches in Hong Kong and Kabul. It has representative offices in
Almaty Shanghai, and Dubai.

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 BANK OF BARODA

Bank of Baroda is one of the most prominent banks in India, having its total assets as Rs.
1,43,146 Crores as on 31st of March 2007. The bank was founded by Maharaja Sayajirao
Gaekwad III (also known as Shrimant Gopalrao Gaekwad), the then Maharaja of Baroda on
20th of July 1908 with a paid capital of Rs. 10 Lacs. From its introduction in a small building
of Baroda, the bank has come a long way to achieve its current position as one of the most
important banks in India. On 19th of July 1969, Bank of Baroda was nationalized by the
Government of India along with 13 other commercial banks.
Financial Details
As of March 2007, the bank had total deposits worth Rs. 1,24,915 Crores while it had a total
number of 2956 branches located worldwide as on April 2009, out of which 626 were located
in Metro cities, 524 in Urban areas, 642 in Semi-Urban locations, 1092 in Rural areas and 72
were located outside India. The bank has 10 Zonal Offices and 43 Regional Offices which
help it control its operations nationally.
International Presence
Along with a huge network of its branches spread across India, Bank of Baroda has its
overseas branches located in 14 other countries, which include Bahamas, Bahrain, Belgium,
China, Fiji Islands, Hong Kong, Mauritius, Republic of South Africa, Seychelles, Singapore,
Sultanate of Oman, United Arab Emirates, United Kingdom and United States of America.
Apart from it, the bank has established its subsidiaries in 7 countries viz. Botswana, Ghana,
Guyana, Kenya, Tanzania, Trinidad & Tobago and Uganda, and its representative offices in 3
countries which are Australia, Malaysia and Thailand.

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 HISTORY

1908–1959

In 1908, Maharaja Sayajirao Gaekwad III, one of the knights of the Maratha Kingdom, set up
the Bank of Baroda (BoB), with other stalwarts of industry such as Sampatrao Gaekwad,
Ralph Whitenack, Vithaldas Thakersey, Tulsidas Kilachand and NM Chokshi. Two years
later, BoB established its first branch in Ahmedabad. The bank grew domestically until after
World War II. Then in 1953 it crossed the Indian Ocean to serve the communities of Indians
in Kenya and Indians in Uganda by establishing a branch each in Mombasa and Kampala.
The next year it opened a second branch in Kenya, in Nairobi, and in 1956 it opened a branch
in Tanzania at Dar-es-Salaam. Then in 1957 BoB took a giant step abroad by establishing a
branch in London. London was the center of the British Commonwealth and the most
important international banking center. In 1958 BoB acquired Hind Bank (Calcutta; est.
1943), which became BoB's first domestic acquisition.

1960s

In 1961, BoB merged in New Citizen Bank of India. This merger helped it increase its branch
network in Maharashtra. BoB also opened a branch in Fiji. The next year it opened a branch
in Mauritius. Bank of Baroda In 1963, BoB acquired Surat Banking Corporation in Surat,
Gujarat. The next year BoB acquired two banks: Umbergaon People’s Bank in southern
Gujarat and Tamil Nadu Central Bank in Tamil Nadu state.

In 1965, BoB opened a branch in Guyana. That same year BoB lost its branch in Narayanjanj
(East Pakistan) due to the Indo-Pakistani War of 1965. It is unclear when BoB had opened
the branch. In 1967 it suffered a second loss of branches when the Tanzanian government
nationalised BoB’s three branches there at (Dar es Salaam, Mwanga, and Moshi), and
transferred their operations to the Tanzanian government-owned National Banking
Corporation.

In 1969 the Indian government nationalised 14 top banks, including BoB. BoB incorporated
its operations in Uganda as a 51% subsidiary, with the government owning the rest.

17
1972s

In 1972, BoB acquired Bank of India's operations in Uganda. Two years later, BoB opened a
branch each in Dubai and Abu Dhabi.

Back in India, in 1975, BoB acquired the majority shareholding and management control of
Bareilly Corporation Bank (est. 1928) and Nainital Bank (est. in 1954), both in Uttar Pradesh.
Since then, Nainital Bank has expanded to Uttarakhand state.

International expansion continued in 1976 with the opening of a branch in Oman and another
in Brussels. The Brussels branch was aimed at Indian firms from Mumbai (Bombay) engaged
in diamond cutting and jewellery having business in Antwerp, a major center for diamond
cutting.

Two years later, BoB opened a branch in New York and another in the Seychelles. Then in
1979, BoB opened a branch in Nassau, the Bahamas.

1980s

In 1980, BoB opened a branch in Bahrain and a representative office in Sydney, Australia.
BoB, Union Bank of India and Indian Bank established IUB International Finance, a licensed
deposit taker, in Hong Kong. Each of the three banks took an equal share. Eventually (in
1998), BoB would buy out its partners.

A second consortium or joint-ventrue bank followed in 1985. BoB (20%), Bank of India
(20%), Central Bank of India (20%) and ZIMCO (Zambian government; 40%) established
Indo-Zambia Bank in Lusaka. That same year BoB also opened an Offshore Banking Unit
(OBU) in Bahrain.

Back in India, in 1988, BoB acquired Traders Bank, which had a network of 34 branches in
Delhi.

1990s

In 1990, BoB opened an OBU in Mauritius, but closed its representative office in Sydney.
The next year BoB took over the London branches of Union Bank of India and Punjab &
Sind Bank (P&S). P&S’s branch had been established before 1970 and Union Bank’s after

18
1980. The Reserve Bank of India ordered the takeover of the two following the banks'
involvement in the Sethia fraud in 1987 and subsequent losses.

Then in 1992 BoB incorporated its operations in Kenya into a local subsidiary with a small
tranche of shares quoted on the Nairobi Stock Exchange. The next year, BoB closed its OBU
in Bahrain.

In 1996, BoB Bank entered the capital market in December with an Initial Public Offering
(IPO). The Government of India is still the largest shareholder, owning 66% of the bank's
equity.

In 1997, BoB opened a branch in Durban. The next year BoB bought out its partners in IUB
International Finance in Hong Kong. Apparently this was a response to regulatory changes
following Hong Kong’s reversion to the People’s Republic of China. The now wholly owned
subsidiary became Bank of Baroda (Hong Kong), a restricted license bank. BoB also
acquired Punjab Cooperative Bank in a rescue. BoB incorporate wholly owned subsidiary
BOB Capital Markets Ltd for broking business.

In 1999, BoB merged in Bareilly Corporation Bank in another rescue. At the time, Bareilly
had 64 branches, including four in Delhi. In Guyana, BoB incorporated its branch as a
subsidiary, Bank of Baroda Guyana. BoB added a branch in Mauritius and closed its Harrow
Branch in London.

2000s

In 2000 BoB established Bank of Baroda (Botswana). The bank has three banking offices,
two in Gaberone and one in Francistown.

In 2002 BoB acquired Benares State Bank (BSB) at the Reserve Bank of India’s request.
BSB was established in 1946 but traced its origins back to 1871 and its function as the
treasury office of the Benares state. In 1964, BSB had acquired Bareilly Bank (est. 1934),
with seven branches in western districts of Uttar Pradesh; BSB also had taken over Lucknow
Bank in 1968. The acquisition of BSB brought BoB 105 new branches. Lucknow Bank, a unit
bank with its only office in Aminabad, had been established in 1913. Also in 2002, BoB
listed Bank of Baroda (Uganda) on the Uganda Securities Exchange (USE). The next year
BoB opened an OBU in Mumbai.

19
In 2004 BoB acquired the failed Gujarat Local Area Bank. BoB also returned to Tanzania by
establishing a subsidiary in Dar-es-Salaam. BoB also opened a representative office each in
Kuala Lumpur, Malaysia, and Guangdong, China.

 2005: BoB built a Global Data Centre (DC) in Mumbai for running its centralised
banking solution (CBS) and other applications in more than 1,900 branches across
India and 20 other counties where the bank operates. BoB also opened a
representative office in Thailand.
 2006: BoB established an Offshrore Banking Unit (OBU) in Singapore.
 2007: In its centenary year, BoB’s total business crossed 2.09 trillion (short scale), its
branches crossed 2000, and its global customer base 29 million people.
 2008: BoB opened a branch in Guangzhou, China (02/08/2008) and in Kenton,
Harrow United Kingdom. BoB opened a joint venture life insurance company with
Andhra Bank and Legal and General (UK) called IndiaFirst Life Insurance Company.

2010s

In 2010, Malaysia awarded a commercial banking licence to a locally incorporated bank to be

jointly owned by Bank of Baroda, Indian Overseas Bank and Andhra Bank. That same year,
BoB also opened a branch in New Zealand.

In 2011, BoB opened an Electronic Banking Service Unit (EBSU) was opened at Hamriya
Free Zone, Sharjah (UAE). It also opened four new branches in existing operations in
Uganda, Kenya (2), and Guyana. BoB closed its representative office in Malaysia in
anticipation of the opening of its consortium bank there. BoB received 'In Principle' approval
for the upgrading of its representative office in Australia to a branch.

The Malaysian consortium bank, India International Bank Malaysia (IIBM), finally opened in
Kuala Lumpur, which has a large population of Indians. BOB owns 40%, Andhra Bank owns
25%, and IOB the remaining 35% of the share capital. IIBM seeks to open five branches
within its first year of operations in Malaysia, and intends to grow to 15 branches within the
next three years.

20
Subsidiaries

BOB Capital Markets (BOBCAPS) is a SEBI-registered investment banking company based

in Mumbai, Maharashtra. It is a wholly owned subsidiary of Bank of Baroda. Its financial
services portfolio includes initial public offerings, private placement of debts, corporate
restructuring, business valuation, mergers and acquisition, project appraisal, loan syndication,
institutional equity research, and brokerage.

International presence

In its international expansion, the Bank of Baroda followed the Indian diaspora, especially
that of Gujaratis. The Bank has 104 branches/offices in 24 countries including 61
branches/offices of the bank, 38 branches of its 8 subsidiaries and 1 representative office in
Thailand. The Bank of Baroda has a joint venture in Zambia with 16 branches.

Among the Bank of Baroda’s overseas branches are ones in the world’s major financial
centres (e.g., New York, London, Dubai, Hong Kong, Brussels and Singapore), as well as a
number in other countries. The bank is engaged in retail banking via the branches of
subsidiaries in Botswana, Guyana, Kenya, Tanzania, and Uganda. The bank plans has
recently upgraded its representative office in Australia to a branch and set up a joint venture
commercial bank in Malaysia. It has a large presence in Mauritius with about nine branches
spread out in the country.

The Bank of Baroda has received permission or in-principle approval from host country
regulators to open new offices in Trinidad and Tobago and Ghana, where it seeks to establish
joint ventures or subsidiaries. The bank has received Reserve Bank of India approval to open
offices in the Maldives, and New Zealand. It is seeking approval for operations in Bahrain,
South Africa, Kuwait, Mozambique, and Qatar, and is establishing offices in Canada, New
Zealand, Sri Lanka, Bahrain, Saudi Arabia, and Russia. It also has plans to extend its existing
operations in the United Kingdom, the United Arab Emirates, and Botswana.

The tagline of Bank of Baroda is "India's International Bank".

21
Affiliates

IndiaFirst Life Insurance Company is a joint venture between Bank of Baroda (44%) and
fellow Indian state-owned bank Andhra Bank (30%), and UK’s financial and investment
company Legal & General (26%). It was incorporated in November, 2009 and has its
headquarters in Mumbai. The company started strongly, achieving a turnover in excess of 2
billion in its first four and half months.

22
 Topic introduction

Financial Performance

Financial statements (or financial report) is a formal record of the financial activities and
position of a business, person, or other entity.

Relevant financial information is presented in a structured manner and in a form easy to

understand. They typically include basic financial statements, accompanied by a management
discussion and analysis:

1. A balance sheet, also referred to as a statement of financial position, reports on a

company's assets, liabilities, and owners equity at a given point in time.
2. An income statement, also known as a statement of comprehensive income, statement
of revenue & expense, P&L or profit and loss report, reports on a company's income,
expenses, and profits over a period of time. A profit and loss statement provides
information on the operation of the enterprise. These include sales and the various
expenses incurred during the stated period.
3. A Statement of changes in equity, also known as equity statement or statement of
retained earnings, reports on the changes in equity of the company during the stated
period.
4. A cash flow statement reports on a company's cash flow activities, particularly its
operating, investing and financing activities.

For large corporations, these statements may be complex and may include an extensive set of
footnotes to the financial statements and management discussion and analysis. The notes
typically describe each item on the balance sheet, income statement and cash flow statement
in further detail. Notes to financial statements are considered an integral part of the financial
statements.

23
Key Factors Affecting Financial Performance
Our financial performance is affected by several external factors outside of our control,
including:
 
  •   general economic conditions;
 
  •   customer demand for our products and services;
 
  •   competitor pricing on similar products and services;
 
  •   interest rates and the shape of the interest rate yield curve; and
 
  •   the performance of the equity and capital markets.
 
In addition to the items noted above, our success for the remainder of 2005 will depend
upon, among other things:
 
  •   continuing our success in the acquisition, growth and retention of customers;
 
•   deepening customer acceptance of E*TRADE Complete, which includes our investing,
 
deposits and lending products;

  •   disciplined expense control and improved operational efficiency;

 
  •   maintaining strong overall asset quality; and
 

THEORETICAL FRAMEWORK

24
CONSTRUCT:-

“To Study the Impact of Operating Efficiency, Non-performing Assets and Bank Size on

Financial Performance : A comparative Study of 3 Public Sector Banks(State Bank of India,

Punjab National Bank and Bank of Baroda) for 3 Years ”

VARIABLES :-There are basically two types of variables, as follows:

 Independent variable

 Dependent variable

The following are the variables of the study:

Dependent variables:

 Financial Performance (return on assets)

Independent variables:

 Operational Efficiency (operating efficiency ratio)

 Nonperforming Assets

 Bank Size (total assets)

LITERATURE REVIEW

25
Kaura, M. N and Bala Subramanian (1979) analyzed ten cement units during the period of
study 1972 to 1977 shows that the financial performance of the selected cement companies
evidenced by Profitability, Liquidity and capital structure ratios has declined. The non
availability of funds has affected the modernization of plants and periodic rehabilitation of
the kilns. Besides, the bottlenecks in supply of raw materials and power and non
remunerative prices have reduced the capacity utilization, profits and cash flows. The
profitability and liquidity position in many cement companies have been affected adversely
because of the problems in supply of raw materials , transport and power.

Nagarajrao B.S and Chandar K (1980) analyzed the financial efficiency of cement
companies for the selected period of the study 1970 -71 to 1977-78. It can be analyzed
profitability of selected cement companies has been found downward trend from 1970-71 to
1974-75 because the reason of inflation, rising of manufacturing cost, continuous fall in
capacity utilization due to many reasons.

Kumar B. Das (1987) has made an analysis of the financial performance of the cement
industry. it can be analyzed that the net fixed assets as a percentage of total assets decreased
for the period 1970-71 to 1977-78 that was 553.5% to 44.04 % respectively. Current
liabilities have increased than the current assets. Liquidity performance of the cement
industry is not healthy during period of the study. The Debt Asset ratio has downward During
the period of the study and Debt Equity ratio has slightly increased while net worth ratio has
decreased over the years.

Nair N.K. (1991) has focused the productivity aspect of Indian Cement Industry. This study
emphasised that cement, being a construction material, occupied a strategic place in the
Indian economy. This study has revealed that, in 1990-91, the industry had an installed
capacity of 60 million tonnes with a production of 48 million tonnes. In this study, the cement
industry was forecasted to have a capacity growth of about 100 million tonnes by the year
2000. This study has also analyzed the productivity and financial performance ratios of the
cement industry with a view to identifying the major problem areas and the prospects for
solving them.

Dr. Dinesh A. Patel (1992) have analyzed Financial Analysis - A Study of Cement Industry
of India for the period of 1979-80 to 1988-89. He can analyzed the profitability of the cement

26
industry, to examine the short term financial strength of the cement industry through the
analysis of working capital management and to analyzed the long term financial strength
through the analysis of capital structure.

Subir Cokavn and Rejendra Vaidha (1993) have analyzed to evaluate the performance of
cement industry after decontrol. They found that the performance of the cement industry after
decontrol was characterized by outcomes that were generally competitive and welfare
enhancing. This study has revealed that the structure of the industry changed significantly
with large magnitude of relative technologically and superior capacity being created by many
new entrants into the industry. It was also noticed in this study that there were significant real
price increase and an associated increase in profitability. The performance of firms across the
strategic group was different with firms operating relatively new and large plants appeared to
have an advantage. Further, the study has dealt with the nature and effect of inter-firm
heterogeneities in the cement industry.

Chandrasekaran N (1993) has made an attempt to examine determinants of profitability in

cement industry. He identified that profitability was determined by structural, as well as,
behavioural variables. He also identified that the other variables
which influenced profitability were growth of the firm, capital turnover ratio, management of
working capital, inventory turnover ratio etc. Some of the main changes in the cement
industry environment during 1980's identified in this study were: from complete control to
decontrol, number of new entrants and substantial additions of capacity, changing technology
from inefficient wet process to efficient dry process and from conditions of scarcity of
cement to near gloat in the market.

Chandrasckaran N (1994) has studied about the market structure of the Indian Cement
industry like demand and supply. It was analyzed in that study that the demand and supply
gap has been considerably reduced and supply of cement during the period of study has
increased due to creation of additional capacity and capacity utilization.

Srinivasa Rao.G and Indrasena Reddy.P (1995), in their study, analyzed the financial
strength of paper industry had been improving from year to year. The company's performance
in relation to generating internal funds in the form of reserves and surplus was excellent and
also the company was doing well in mobilizing outsiders' funds. The liquidity position of the

27
company was sound as revealed by current ratio and quick ratio which were above the
standard. The solvency ratio showed that the company had been following the policy of low
capital gearing from the 1990-91 as these ratios had been decreasing from this year. The
performance of the company in relation to its profitability was not up to the expected level.
The company's ability to utilize assets for generation of sales had not been improved much
during the period of study period as revealed by its turnover ratios.

Govind Rao and Rao (1999) studied the impact of working capital on profitability in Indian
cement industry. It can be analyzed both positive as well as negative correlations between
working capital related ratios and profitability.

Rajeswari. N (2000), in her study on liquidity management of Tamil Nadu Cement

Corporation Ltd., Alangulam, identified that the liquidity position of the Tamil Nadu
Cements Corporation Ltd. (TANCEM) was not satisfactory in terms of Quick ratio and
Current ratio. She concluded that necessary steps ought to be taken to improve the liquidity
position of the company.

Nand Kishore Sharma (2002), in his Study on financial appraisal of cement industry in
India, has found that the liquidity position was decreasing, current ratio and quick ratio
showed a decreasing trend and also these ratios varied from time to time. On comparing the
current ratio and quick ratio of cement industry, six companies were found higher than the
industry average and four companies lower than industry average. The solvency position in
term of debt-equity ratio has showed a decreasing trend in the first 4 years of study, after that,
it registered an increasing trend. The ratio of fixed assets to total debt always showed more
than 100 percent which indicated that the claims of outsiders were covered by the fixed assets
of the cement companies.

Ghosh S.K., and Maji S.G. (2004), in their paper, to examine the efficiency of Working
capital management of the Indian cement companies from the year 1992-1993 to 2001-2002.
They conclude from the study indicated that the Indian cement industry, as a whole, did not
perform good perform during the selected period of the study.

28
Bardia (2006), in his study on Liquidity Management of Steel Authority of India Limited,
has analyzed the overall performance of liquidity maintained by steel sector and the amount
tied-up in various components of working capital. This study has found that there was a
positive relationship between liquidity and profitability.

Amalendu Bhunia (2007), studied on liquidity management, analyzed the the short term
financial strength through the analysis of the working capital management of selected iron
and steel companies in India. The study revealed that actual values of working capital have
been found to be lower than the estimated values of working capital for the companies, such
as Steel Authority of India Limited (SAIL) and Indian Iron and Steel Corporation (IISCO).
There was a poor liquidity performance existed in case of both SAIL and IISCO, inefficient
inventory management in case of SAIL and inefficient receivable management in case of
both the enterprises. It suggested that increase in additional investment in raw materials,
reduction in the burden of current liabilities were necessary in order to improve the inventory
management and liquidity position of these steel companies.

Sudipta Ghosho (2008) has analyzed the liquidity performance of Tata Iron and Steel
Company (TISCO). During the selected period of the study, it was found that the liquidity
position of the company, on the basis of current ratio as well as quick ratio, was not
satisfactory. It indicated that the share of current assets in total assets of the company, on an
average, was 29.1 percent during the period of study. It was suggested that to maintain
overall control of liquidity position, the company should give special attention to the
management of current assets. He found that the degree of influence of liquidity on its
profitability was low and insignificant.

Rajamohan .S and Vijayaragavan T. (2008) have studied on production performance of

Madras Cement Limited. it can be analyzed the comparative production performance of
Madras cement and all other cement companies in India. Statistical method Mann-Whitney
U-test was applied. The results of analysis indicated that the production performance of
selected unit was equal to production performance of all other cement units in India.

Dharmendra S (2011) analyzed that Liquidity is in closely relation with the profitability of
the Indian Cement Industry as compared to the solvency ratios like Total Assets Ratio,
Inventory Turnover Ratio, Debt-Equity Ratio and Operating Expenses Ratio.

29
Harshad R. Tandel (2013) Analyzed that the Financial Analysis of selected Plastic
Manufacturing Industrial Units of Gujarat for the period 2000-01 to 2009-10. The main
objective of this study was to analysis and evaluate the financial performance of selected
companies in particular and the plastic industry in general with the help of composited such
ratios like Profitability, Activity, Liquidity and solvency. He judge the financial performance
with the help of Trend Analysis and Analysis of Variance. He can concluded that the
liquidity and profitability performance was not good, but in terms of activity and solvency
performance of industry was satisfactory.

Alovsat Muslumov (2005) analyzed that the privatization was associated with a declining
value added and shareholders’ profitability in Turkish cement industry. A decline in the value
added and shareholders’ profitability were mainly caused by the decrease in return on assets.
The decline in the return on asset was traced to declining asset productivity. These results are
not consistent with previous cross-sectional privatization studies and number of country
studies.

Adolphus J. Toby (2008) has conducted a study on liquidity performance relationship of

Nigerian manufacturing companies. The results of the study have revealed a significant
relationship between liquidity, .profitability, efficiency and leverage measures. The study has
also made an attempt to suggest that in order to target money supply, monetary policy could
be used to facilitate monetary transmission mechanism by integrating a minimum liquidity
requirement for the manufacturing industry. Rationale for the present study.

Haq and Sohail and Zaman and Alam (2011) analyzed The relationship between Working
Capital Management and Profitability: A Case Study of Cement Industry in Pakistan. In this
study to analyzed the relationship between working capital management and profitability.
Researcher selected 14 companies in cement industry in the Khyber Pakhton khuwa Province
(KPK) of Pakistan. The study is totally depend on secondary data collected from the audited
financial statements of these companies which are listed in Karachi Stock Exchange for the
period spaning 2004-2009. The data was analyzed using the statistical techniques of
correlation coefficient and multiple regression analysis.

30
Hajihassani (2012) A Comparison of Financial Performance in Cement Sector in Iran. This
study exhibited comparison of financial performance for the period study 2006 to 2009. It can
be analyzed comparison of financial performance of selected cement companies by using
various financial ratios and measures of cement companies working in Iran. Financial ratios
are divided into three categories In this concludes that the performance of cement companies
on the basis of profitability ratios different than on the basis of liquidity ratio and leverage
ratio.

Dr. Abdul Ghafoor Awan, Pervaiz Shahid, Jahanzeb Hassan, Waqas Ahmad
(2014) have analyzed the impact of Working Capital Management on performance of cement
sector in Pakistan. The period of the study spanning from 2009 to 2013. The study is totally
depend on secondary data collected from the audited financial statements of these companies
which are listed in Karachi Stock Exchange. Return on was used as the dependent variable in
order to test the impact of Working Capital Management on firm’s profitability and
independent variables were, Inventory
Turnover in Days, Cash Conversion Cycle, Current Ratio, Quick Ratio, Gross Working
Capital, Average Payment, size of firm, and Funds allocated by government in Public Sector
Development Program. Panel Data method is used to study the impact of Working Capital
Management on profitability of Cement sector of Pakistan. He can concluded that cash
conversion cycle, Inventory turnover in Days and Average Payment Period have negative
relation with firm performance and their probability is significant. Current Ratio has proved
statistically insignificant and has negative impact on Return on Equity in this study.

These Literature reviews were related to various industries such as cement, steel and sugar in
India and abroad. Of these reviews, there are the major research conducted on the liquidity
and profitability management through the accounting tools. But no comprehensive study was
carried out on Financial Analysis of cement industry of India- A statistical Approach to
analyze the financial performance of cement industry.

RESEARCH OBJECTIVES

 To analyze the financial position of public sector banks.

31
 To study the impact of operating efficiency on performance of public sector banks.

 To study the impact of non-performing asset on performance of public sector banks.

 To analyze the Total assest for seeing the impact of bank size on performance of public

sector banks.

 To offer suggestions for improving the performance of the banks.

RESEARCH METHODOLOGY

A research design is the game plan or blue print and specifications for conducting a research
investigation. The term research Methodology here comprises of all research activities carried
on in connection with the "impact of working capital on profitability in panipat refinary".

THE RESEARCH PROCESS:

32
 1
OBSERVATION
Broad area of research interest identified

3
PROBLEM DEFINITION
Research Problem Delineated 4 5 7
6
THEORETICAL FRAMEWORK
GENERATION OF HYPOTHESES DATA COLLECTION,
SCIENTIFIC RESEARCH DESIGN
ANALYSIS AND INTERPRETA

Variables clearly identified and labelled

8
DEDUCTION
2 Hypotheses substantiated? Research questio
PRELIMINARY DATA GATHERING
Interviewing Literature Survey

NO Yes

10 11
Managerial decision making
Report Presentation
9
Report writing

As stated by Julian Simon: There is never a single, standard, correct method of carrying out a
piece of research.  Do not wait to start your research until you find out the proper approach,
because there are many ways to tackle a problem--some good, some bad, but probably several
good ways.  There is no single perfect design.  A research method for a given problem is not
like the solution to a problem in algebra.  It is more like a recipe for beef stroganoff; there is
no one best recipe.
 Exploratory Qualitative Research
 Descriptive Quantitative Research
 Causal Quantitative Research

33
34
 TYPES OF INVESTIGATION

 CAUSAL STUDY
 CORRELATIONAL STUDY
A Researcher should determine whether a Causal & Correlational Study to find an Answer
to the issue at hand. The former is done when it is necessary to establish Cause-Effect
Relationship. However, if all that the researcher wants is mere the identification of the
important factors “associated with the problem then, then Correlational study.
In this study, Correlational Study is to be done, because I am interested in delineating the
important associated variables.

STUDY SETTING:

Contrived Non-contrived

As We know that Research can be done in the natural environment where work proceeds
normally or in artificial settings.
“A Contrived Setting with researcher interference to an excessive degree.”
Whereas, A Non contrived Setting with researcher interference with minimal degree or
moderate extent.
In this Study, the study setting used by the researcher is Non Contrived Setting due to
minimal degree of interference of researcher .

35
TIME HORIZON:

Longitudinal Cross-
Sectional

A study can be done in which data are gathered just once, perhaps a period of days or weeks
or month, in order to answer a research question. Such studies are called one shot or Cross-
Sectional Studies.
On the other hand, when the researcher tries to collect Data at more than one point of time it
is known as longitudinal studies.
Here, in this study Cross-Sectional Design is to be used as data for study will be gathered
just once.

36
 SAMPLE AND SAMPLING DESIGN

A sample design is a definite plan for obtaining a sample from the sampling frame. It refers to
the technique or the procedure that is adopted in selecting the sampling units from which
inferences about the population is drawn. Sampling design is determined before the collection
of the data.
Several decisions have to be taken in context to the decision about the appropriate sample
selection so that accurate data is obtained and efficient results are drawn.

Following questions have to be considered while sampling design-

 What is the relevant population?

 What is the parameter of interest?
 What is the sampling frame?
 What is the type of sample?
 What sample size is needed?
 How much will it cost?

The sample size of last three years data is taken for present study.

37
 DATACOLLECTION

p
s
e
y
T
P
S
a
m
i
r
d
n
o
c
f
t
a
y
r
d
o

S
T
P eyp
rco
imen
a
sd
r
oaf y
rd
yata

Secondary data: It is the data, which has already collected by some organization for some
purpose or research study. The data for my study will be collected from various. Secondary
data means that data that are already available i.e. refers to data which has already been
collected and analyzed by someone else. The sources used in this case are-

1. Books
2. Journals
3. Magazines
4. Internet sources
5. Newspapers

38
 ANALYTICAL TOOLS

An analytical tool is something used to analyze or "take a closer look at" something. It is
normally a way to review the effectiveness of something.

ANALYTICAL TOOLS THAT RESEARCHER WILL APPLY ARE:

 RATIO ANALYSIS
 MEANING OF RATIO ANALYSIS

 Ratio - A ratio is the mathematical relationship between two quantities in the form of
a fraction or percentage.

 Ratio analysis: - Ratio analysis is essentially concerned with the calculation of

relationships which after proper identification and interpretation may provide
information about the operations and state of affairs of a business enterprise.

 The analysis is used to provide indicators of past performance in terms of critical

success factors of a business. This assistance in decision-making reduces reliance on
guesswork and intuition and establishes a basis for sound judgment.

Steps involved in the Ratio Analysis

i) Selection of relevant data from the financial statements depending upon the
objective of the analysis.

ii) Calculation of appropriate ratios from the above data.

iii) Comparison of the calculated ratios with the ratios of the same firm in the past, or
the ratios developed from projected financial statements or the ratios of some
other firms or the comparison with ratios of the industry to which the firm
belongs.

iv) Interpretation of the ratios.

39
Significance of Ratio Analysis

i) Helps in decision making

ii) Helps in financial forecasting and planning

iii) Helps in communicating

iv) Helps in co-ordination

v) Helps in Control

40
 Return on Asset

 Return on Assets (ROA) measures how profitable a company is relative to its total
assets. In turn, it measures how efficiently a company uses its assets. There are a few
different ways to calculate the RoA ratio (also called the Return on Investment ratio)

ROA = (Net Income + Interest Expense) ÷ (Average Assets during the period)

Year PNB SBI BOB

2016 777.39 1,251.05 668.34

2015 632.48 1,023.40 536.16

2014 514.77 1,038.76 414.71

1400

1200

1000

800 Pnb
Sbi
600 Bob

400

200

Interpretation:
Return on assets is an indicator of how profitable a company is. This ratio is highest in SBI
bank but in PNB this ratio is decreasing, that shows the decreasing income as compared to
the assets of the company. This ratio is also increasing in the BOB bank which shows the
growing income as compared to the assets of the bank

41
 Total Assets

The sum of current and long-term assets owned by a person, company, or other entity.
the sum of all cash, investments, furniture, fixtures, equipment, receivables, intangibles, and
there items of value owned by a person or a business.

Year PNB SBI BOB

2016 458194 1335519 447321.5

2015 378325.3 1223736 358397.2

2014 296632.8 1053414 278316.7

1600000

1400000

1200000

1000000
Year
PNB
800000
SBI
BOB
600000

400000

200000

Interpretation:-
Here it is showing that the total assets of SBI bank is higher than two banks and the total
assists of all the banks is increasing .It is showing the sound position of the all the banks.

42
 Operating Efficiency Ratio

Operating efficiency ratios are mostly used by banks to calculate their efficiency. All
banks use different efficiency ratio in different way. The ratio can be calculated in four
different ways:-

Non interest expenses divide by the total revenue after deducting interest expenses.

Year PNB SBI BOB

2016 0.54613 0.54613 0.51182

2015 0.55402 0.654462 0.501475

2014 0.47897 0.623037 0.515152

0.7

0.6

0.5

0.4 PNB
SBI
0.3 BOB

0.2

0.1

Interpretation :

This graph shows that sbi operating efficiency is higher than the other two bank. It shows that
sbi bank actual turnover of receivables is good for other two banks. The bank quantity and
usage of company’s equity is showing the sound position of the all the bank.

43
 NON PERFORMING ASSETS

Non-performing assets, also called non-performing loans, are loans,made by a bank or

finance company, on which repayments or interest payments are not being made on time.

A loan is an asset for a bank as the interest payments and the repayment of the principal
create a stream of cash flows. It is from the interest payments than a bank makes its profits.

Year PNB SBI BOB

2016 1.52 1.76 0.54

2015 0.85 1.49 0.34

2014 0.55 1.5 0.3

2
1.8
1.6
1.4
1.2
PNB
1
SBI
0.8 BOB
0.6
0.4
0.2
0
2012 2013 2014

Interpretation:
Net non performing assets of the total of the advances is higher in SBI in comparison of other
two banks. The non performing assets in also increasing in PNB. and BOB that is good for
the banks.sbi bank is non recovery loan is higher than two banks.

44
 Current Ratio = Current Assets/Current Liabilities

Year PNB SBI BOB

2016 0.02 0.04 0.05

2015 0.03 0.04 0.05

2014 0.03 0.04 0.05

0.06

0.05

0.04

PNB
0.03
SBI
BOB
0.02

0.01

0
PNB SBI BOB

Interpretation:
Current Ratio of the total of the advances is higher in SBI in comparison of other two banks.
The Current Ratio in also increasing in PNB. and BOB that is good for the banks.sbi bank is
non recovery loan is higher than two banks.

45
 Quick Ratio = Quick Assets/Current Liabilities

Year PNB SBI BOB

2016 31.92 21.94 16.85

2015 22.03 17.65 10.86

2014 19.69 17.94 8.46

35

30

25

20
PNB
SBI
15
BOB

10

0
PNB SBI BOB

Interpretation:
This graph shows that sbi Quick Ratio is higher than the other two bank. It shows that sbi
bank actual turnover of receivables is good for other two banks. The bank quantity and usage
of company’s equity is showing the sound position of the all the bank

RESULTS AND FINDINGS

46
 Financial performance of SBI and PNB is good as returned on assest is increasing .
And total assest shows the sound position of all bank.
 bank actual turnover of receivables is good for SBI banks. The bank quantity and
usage of company’s equity is showing the sound position of the all the bank.
 SBI bank is non recovery loan is higher than the PNB and bob banks.
 The total assest of SBI bank is higher than PNB and bob.
 Operational efficiency has positive moderate degree correlation with return on assest
and it is significant in relation in case of PNB.
 Bank size has negative moderate degree correlation with return on assest and it is
significant in relation in case of SBI.
 NPA has positive high degree correlation with return on assest and it is significant in
relation in case of bob.

SUGGESTIONS

47
 Management of NPA:-The banks should give more attention on the management of the
nonperforming assets so that it can be reduced by theses banks and the financial
efficiency can be improved.
 Better Inspection : We shall keep a close watch on the manner in which NPA reduction is
taking place.
 Cash Recovery:- We should also insist that cash recoveries should more than offset the
fresh write –off in NPAs..
 Perception:- The mindset of the borrowers need to change so that a culture of proper
utilization of credit facililities and timely repayment is developed.
 Financial system- As you are aware, one of the main reason for corporate default is
on account of diversion of funds and corporate entities should come forward
of avoid this practice in the interest of strong and sound financial system.
 Credit administration - A bank have to strengthen their credit administrative
machinery and put in place effective credit risk management systems to reduce the fresh
incidence of NPAs.
 Coordinator:- E x t e n d i n g c r e d i t i n v o l v e s l e n d e r s a n d b o r r ow e r s a n d b o t h
s h o u l d realize their role and responsibilities. They should appreciate the difficulties of
each other.

 Gain the public interest :-The banks should gain the public interest so that the total
deposits of the banks can be increased.

LIMITATIONS OF THE STUDY

48
However I have tried my best in collecting the relevant information yet there are always
present some limitations under which research has to work. Financial analysis is a powerful
mechanism to determining financial strength and weakness of a firm. But, the analysis is
based on the information available in the financial statements. Thus, the financial analysis
suffers from serious inherent limitations of financial statements, changes in accounting
policies of the firm, accounting concepts & conventions and personal judgment etc. Here
following are some limitations under which I had to work as show below:

 Sample Size: The sample size analyzed was limited over three years, which may
not be fully represented of the universe. A large sample size could not be taken due to
time & cost constraints.
 Do Not give exact position: The financial statement is expressed in monetary
values so that they appear to give final and accurate position. The value of fixed assets
in the balance sheet neither represent the value for which the fixed assets are shown at
cost less depreciation. So the statement does not provide exact position.
 Information not sufficiently available :-The source of data collection is secondary
so the information available is not sufficient..

 Lack of Experience: The lack of experience may have caused some errors in
administration of this research.

 Non-coverage of certain aspects: Due to confidential nature of some

documents the same were not available for the study.
 Only Interim Report: Financial statements do not give a final picture of the
concern the data given in these statements in only approximately the actual position
can only be determined when the business is solid or liquidated.
 

CONCLUSION

49
Researcher suggested various policies to organization which researcher think that if they
implemented in the right manner increase the earnings of the firm which in turn increases the
goodwill of the firm. If the goodwill of firm is good in the market, then it will raise funds at
low interest rates.

The various policies that should be applied in an organization on the basis of my study of
financial analysis of organization are as follows:

 The banks should give more attention on the management of the nonperforming assets
so that it can be reduced by theses banks and the financial efficiency can be improved.
 The banks should keep a close watch on the manner in which NPA reduction is taking place.
 The banks should also insist that cash recoveries should more than offset the fresh write –off in
NPAs.

 Health, Safety and Welfare of employees and others affected by the business
undertaking will be treated with a level of importance equal to that of any other function
 The management of the banking sector is efficient enough but the further improvement
should be made so that the Indian banking sector can face the competition from the
foreign banks
 The Indian banking sector should do the efficient management of the non performing
assets of whole of the banking sector

BIBLIOGRAPHY

50
BOOKS

1. Khan M Y., “Indian Financial Sysemt,” Tata McGraw Hill, New Delhi, P.N.13.22-
13.32.
2. Maheshwari S.N,“Advanced Accounting”, Sultan Chand & Sons Publication, New
Delhi, 2004, P.No. (b40-b48).
3. Donald R. Cooper and Pamela S. Schindler, “Business Research Methodology”
Tata McGraw Hill Publishing Company Limited, New Delhi. Chapter 3, Page 82, 86,
87. Chapter 4, Page 101,102
4. Kothari C.R., “Research Methodology Methods and Techniques” New Age
International Publishers, Ansari Road, Daryaganj, New Delhi-110002. Chapter 4,
Page 55-58. Chapter 6, Page 95,100,111.
5. Uma Sekaran (2000), “Business Research” 4th edition John Wiley & Sons PP. 25-45.
6. Vohra M. (2006), “Indian Financial System” Avichal Publication Company, Nagpur
P.P. 153-157.
7. Bhalla V.K. (2006) “Management of Financial services”, 3rd Revised and Enlarged
edition New Delhi , Anmol Publication Pvt Ltd. ,P.P. 390.
8. Gupta Shashi K.(2008) “Management Accounting”, New Delhi, Kalyani Publishers,
P.P. 4.63-4.79.
9. Gupta Shashi K., Aggarwal Nisha , Gupta Neeti ,(2008), “Financial Institutions
and Markets”, 4th Edition, New Delhi, Kalyani Publication P.P.10.12-10.23.
10. Sharma (2008) ,“Management of Financial Institution (with Emphasis on Bank and
Risk management)” ,New Delhi, Prentice –Hall of India Private Limited P.P.79-93.
11. Pandey, I.M., (2005) “Financial Management”, New Delhi, Vikas Publication
House Pvt. Ltd. P.P 528- 533.
12. Bhole L.M.(2009) “Financial Institution and Markets”, New Delhi, Tata Mc graw
Hill Education Private Limited P.P.314.
13. Gurusamy S. (2009) “Indian Financial System”,New delhi,Tata Mc graw Hill
Education Private Limited, P.P.509-510.
14. Machiraju H R (2007) “Indian financial System”, New Delhi, Vikas Publication
House Pvt. Ltd. P.P.126.
15. Beri GC (2006) “Marketing research ”,New delhi , P.P 528- 533

51
JOURNALS
16. Gunjan M. Sanjeev,“vision-The Journal of Business Perspective”, 10. No.1. January-March
(2006)
17. Milind Sathye, “VIKALPA “- VOLUME 30 • NO 1 • JANUARY – MARCH( 2005)
18. Medhat Tarawneh “International Research Journal of Finance and Economics ISSN 1450-
2887“ Issue 3 (2006)
19. Rao D. Suryachandra,”International Journal of Multidisciplinary Research Vol.2 Issue
2001
20. Pacha Malyadri, S. Sirisha, “ International Journal of Economic Practices and
Theories ”, Vol. 1, No. 2, 2011
21. Dr. N. Sundram, E.n. Kanjana & S.Geetha, “Indian journal of finance”, June 08,
Vol: II, No.2 P.No.15.
22. Parkash tiwari and Verma Hemraj. (Nov.2009) “ Indian Journal of Finance”,
P.P.24-32
23. Arora Usha and Verma Richa, (Mar 2007) “Finance India”, Vol XXI, P.P. 167-
176
24. Pathak Bharti , (Dec 2003) “ Finance India”, Vol. XVII , P.P. 1345-1356
25. Kaur Harash Vineet, (Feb.2010) “Global Business Review, P.P.257-280
26. Rao D. Suryachandra , (June 2007) Study Finance India, Vol.XXI ,P.P.591-597
27. Raju M. Appala, (Oct-Dec 2006), “The Indian Journal of commerce”,Vol.59
no:4,P.P.98-104

NEWSPAPERS AND MAGZINES:-

28. Business standard,23 sep 2011-“Higher rate to hit banks' asset quality: Crisil” by
BS reporter.

29. Business standard,15 nov 2011“HDFC pips SBI to become most valued lender” by
Press Trust of India / Mumbai-

30. Business line,8 nov 2011“Rising NPAs not posing threat to banking system” by
Gokarn:

31. Business line,9 oct 2011“New NPA classification norms may push up NBFCs’ cost of
lending” by trust press of india

52
 32. The times of india 10 nov 2011“ Profit up, but NPAs a worry for SBI ”
33. Dilip Chenoy“Business world” May .201i Pg.no. 22.

WEBSITES:

34. www.:moneyterms.co.uk/npa
35. http://kalyan-city.blogspot.com/2011/07/non-performing-assets-npa-meaning-
types.html
36. http//www.rbiindia.com
37. http://www.iloveindia.com/finance/bank/nationalised-banks/bank-of-baroda.html
38. http//www.pnbindia.in/english_web/profile.htm
39. www.sbibank.com/pfsuser/aboutus/.../history/history.htm
40. http://www.iloveindia.com/finance/bank/nationalised-banks/punjab-national-
bank.html
41. http://www.iloveindia.com/finance/bank/private-banks/hdfc-bank.html
42. http://www.cemla.org/pdf/redviii/chile_fuentes_vergara.pd
43. http://www.bankingindiaupdate.com/car.htm
44. http//www.iloveindia.com/.../bank/...banks

ANNEXURE

53
 Balance Sheet of State Bank Of India
------------------- in Rs. Cr. -------------------

Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 312.10 309.27 295.39
Equity Share Capital 312.10 309.27 295.39
Share Application Money 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00
Reserves 27,643.09 24,690.73 18,722.19
Networth 27,955.19 25,000.00 19,017.58
Secured Loans 70,815.47 65,564.39 64,899.16
Unsecured Loans 41,708.32 43,227.31 31,084.82
112,523.7
Total Debt 108,791.70 95,983.98
9
140,478.9
Total Liabilities 133,791.70 115,001.56
8
Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths

Application Of Funds
Gross Block 628.63 576.41 551.17
Less: Revaluation Reserves 0.00 0.00 0.00
Less: Accum. Depreciation 348.15 338.47 317.22
Net Block 280.48 237.94 233.95
Capital Work in Progress 0.00 0.00 0.00
Investments 13,912.65 13,613.46 12,207.00
Inventories 0.00 0.00 0.00
Sundry Debtors 84.52 1.32 60.21
Cash and Bank Balance 7,715.52 5,751.14 5,472.85
Total Current Assets 7,800.04 5,752.46 5,533.06
203,764.2
Loans and Advances 175,926.89 149,545.93
2
Fixed Deposits 0.00 0.00 0.00
211,564.2
Total CA, Loans & Advances 181,679.35 155,078.99
6
Deferred Credit 0.00 0.00 0.00
Current Liabilities 81,224.43 57,321.90 48,445.41
Provisions 4,053.98 4,417.15 4,072.97
Total CL & Provisions 85,278.41 61,739.05 52,518.38
126,285.8
Net Current Assets 119,940.30 102,560.61
5
Miscellaneous Expenses 0.00 0.00 0.00
140,478.9
Total Assets 133,791.70 115,001.56
8

54
Contingent Liabilities 3,356.95 1,124.22 3,537.10
Book Value (Rs) 179.14 161.67 128.76

Balance Sheet of BANK OF

BARODA
------------------- in Rs. Cr. -------------------

Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 1,155.04 1,153.64 1,152.77
Equity Share Capital 1,155.04 1,153.64 1,152.77
Share Application Money 6.57 4.48 2.39
Preference Share Capital 0.00 0.00 0.00
Reserves 72,051.71 65,547.84 59,250.09
Net Worth 73,213.32 66,705.96 60,405.25
331,913.6
Deposits 292,613.63 255,499.96
6
154,759.0
Borrowings 145,341.49 140,164.91
5
486,672.7
Total Debt 437,955.12 395,664.87
1
Other Liabilities & Provisions 34,755.55 32,133.60 32,998.69
594,641.5
Total Liabilities 536,794.68 489,068.81
8
Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths

Assets
Cash & Balances with RBI 21,821.83 19,052.73 20,461.29
Balance with Banks, Money at Call 19,707.77 22,364.79 15,768.02
338,702.6
Advances 290,249.44 253,727.66
5
177,021.8
Investments 171,393.60 159,560.04
2
Gross Block 4,678.14 4,647.06 4,614.69
Revaluation Reserves 0.00 0.00 0.00
Accumulated Depreciation 0.00 0.00 0.00
Net Block 4,678.14 4,647.06 4,614.69
Capital Work In Progress 0.00 0.00 0.00
Other Assets 32,709.39 29,087.07 34,937.10
Total Assets 594,641.6 536,794.69 489,068.80

55
 0

794,965.3
Contingent Liabilities 802,383.84 923,037.16
5
Bills for collection 0.00 0.00 0.00
Book Value (Rs) 633.92 578.21 524.01

Balance Sheet of
Punjab National ------------------- in Rs. Cr. -------------------
Bank
Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 353.47 339.18 316.81
Equity Share Capital 353.47 339.18 316.81
Share Application Money 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00
Reserves 32,323.43 27,477.89 21,191.75
Net Worth 32,676.90 27,817.07 21,508.56
Deposits 391,560.06 379,588.48 312,898.73
Borrowings 39,620.92 37,264.27 31,589.69
Total Debt 431,180.98 416,852.75 344,488.42
Other Liabilities & Provisions 15,019.15 13,524.18 12,328.27
Total Liabilities 478,877.03 458,194.00 378,325.25
Mar '16 Mar '15 Mar '14

12 mths 12 mths 12 mths

Assets
Cash & Balances with RBI 17,886.25 18,492.90 23,776.90
Balance with Banks, Money at Call 9,249.13 10,335.14 5,914.32
Advances 308,725.21 293,774.76 242,106.67
Investments 129,896.19 122,629.47 95,162.35
Gross Block 3,357.68 3,168.86 3,105.60
Revaluation Reserves 0.00 0.00 0.00
Accumulated Depreciation 0.00 0.00 0.00
Net Block 3,357.68 3,168.86 3,105.60

56
Capital Work In Progress 0.00 0.00 0.00
Other Assets 9,762.58 9,792.88 8,259.42
Total Assets 478,877.04 458,194.01 378,325.26

Contingent Liabilities 231,810.55 224,750.05 138,915.26

Bills for collection 0.00 0.00 0.00
Book Value (Rs) 924.45 820.13 678.91

57