Final Project

AN ANALYTICAL STUDY ON DIVIDEND POLICY AT SUCB
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CHAPTER-1
INTRODUCTION
Today banks have become a part & parcel of our life. There was a time the dwellers of city alone could enjoy their services. In the past economic advancement was unknown. Consequently the use of money for buying and selling was very much restricted. Banks cater to the needs of agriculture, industrialists, and traders and to all the other section s of the society. In fact, the innovations in the fields of transport & communication, development of energy and manufacturing has resulted in innovation in the sphere of banking. Banking is one of the forms or another was in existence even in ancient times. The writing of Manu (The maker of old Hindu law) and Kautilya (The Minister of Chandragupta Maurya) contained reference to banking. Insurance, capital markets, competitions and various services sectors. Reserve bank of India (RBI) established in 1935 is the Central bank. RBI is regulator for financial and banking system formulates monetary policy and prescribes exchange control norms. The banking Regulation Act, 1949 and the RBI Act 1935 authorized the RBI to regulate the banking sector in India. India has commercial banks, Co-operative banks and Regional Rural banks. The commercial banking sector comprises of public sectors banks, private banks and foreign banks. The public sector banks comprise the State Bank of India and its Seven associate banks and Nineteen other banks owned by the Government and associates for almost three fourth of the banking sector. So people keep their money in the banks as deposits, which provides some amount of interest and also provides security for their money.
Dept. of commerce, Vidyavahini PG college, Tumkur-572103 Page 1
LTD Sl. No 1 2 3 4 5 6 7 8 Divisions Members Paid-up share capital Reserves & surplus Deposits 2001 3243 2002 3315 2003 3370 2004 3463 2005 3577 2006 3525 2007 3558 2008 2009 2010 3591 3631 3656 147. 00 380. 49 2922 .47 2234 .68 1082 .64 3449 .96 32.4 7 89.9 3 0.94 172.79 405.49 3991.2 2 2781.0 9 1057.3 8 4569.5 0 38.15
90.12 92.74 80.18 97.90
96.14 101.71 104.12 104.28 114.79 128. 45 147.98 229.92 264.71 308.86 357. 09 2116.3 2157.2 2343.4 2212.3 2568 2 5 3 0 .70 1449.4 1327.8 1243.1 1534.4 1828 6 5 5 6 .86 889.98 1072.5 1405.1 1110.1 1166 3 8 8 .14 2366.0 2491.2 2712.4 2635.9 3054 1 9 2 5 .24 65.42 44.12 42.73 31.92 42.8 6/26. 86 92.08 94.29 93.98 90.19 84.00 90.7 4 1.49 A 2.76 15% A 1.77 10% A 1.57 10% A 1.21 10% A 0.88
125.9 6 1573. 1850.3 1912. 62 3 48 Loans 1038. 1084.3 1173. 53 8 03 Investment 645.9 860.4 963.5 6 5 Working 1743. 2038.3 2211. capital 92 5 85 Profit 33.24 48.42 32.87
9 10 11 12
Loan 90.73 93.22 recovery in % Profit % 2.00 2.37 Dividend 15% in % Classificati A on of audit report 15% A
88.70 0.83
10% 10% 10% A A A
LTD Statement showing performance of the Siddaganga Urban Co-operative Bank Ltd from 2001 to 2010
1. Need of the study:

The table shows that, the statistical information provided by the bank about its growth indicates increasing tendency in case of members, paid-up-capital, reserves and surplus deposits and loans. However dividend shows a stability which creates interest to know about the dividend aspect of the bank. So I have taken this subject as a topic for my research work.
2. Selection of the organization and the problems:

This bank is an urban co-operative bank established by Dr.Sree, Sree.Shivakumar Swamiji which makes me feel proud to under take a project work. This bank is well known to every one in Tumkur district as well as in the state because of Dr.Sree, Sree.Shivakumar Swamiji. This bank is situated in Tumkur city rendering a valuable service to shareholders, customers and the general public. The staff of the ban the management bodies are known to me and hence I decided to study one of these issues in the bank as a topic for my project work.
Problems:
The banking industry in the current period is facing lot of challenges due to globalization. The co-operative banks are not exceptional. Lot of changes in
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management, administration and rendering of services are taking place. This bank has achieved growth and maintains stability in dividend over the past 3 years. The co-operative banks comes under co-operative societies act hence, the payment of the dividends on shares depends on the guidelines issued by the act time to time, irrespective of its financial strength and profitability hence, it is a challenging job for the bank to take dividend decision which not only satisfied the guidelines of the act and also the financial position of the bank. The exceptions of the share holders now a days is very sensitive issue which is to be care of without which it be difficult for the bank to attract new investors in future. The inflationary condition in the economy is challenge for the co-operative bank to fulfill desires of the shareholders on one hand and maintain profitability and financial condition stable on the other hand.
3. Selection of the methodology:

Since the primary data is not available, hence secondary data from the published financial statement of the published financial statement of the banks is taken as a basis for the study.
4. Societal Benefits:
This study helps to know the dividend policy of the bank in specific and also helps to understand the dividend policy of the co-operative banks which provides sufficient information to invest in co-operative banks. The study helps to take right decision as to investment in co-operative banks on the basis of the study
5. Benefits to the organization: Dept. of commerce, Vidyavahini PG college, Tumkur-572103 Page 4
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The study helps the organization in evaluating its dividend policy or practices of the bank for the past 3years which serves as a guide line in framing the future dividend policy.
Benefits to the researcher:

The study helps the researcher to know about the urban co-operative banks, the dividend decision and its impact on various aspects of the bank. It helps to understand the contribution of a co-operative bank in promoting and creating awareness about urban co-operative banks in recent years, It is a topic stated in the Master degree syllabus which not only helps in understanding the theoretical aspects but also the practical issues.
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CHAPTER-2 RESEARCH DESIGN
1. Title of the project: An analytical study on dividend policy at SUCB 2. Statement of the problem:
The topic is selected to analysis the dividend policy of Siddaganga urban co-operative bank ltd. The study is to evaluate the present practice of the bank has to payment of dividend and to suggest ideal dividend policy for the purpose of maintaining stability has to dividend decision.
3. Objectives of the study:

1. To understand the impact of the dividend declaration on the working capital position and liquidity of the bank. 2. To identify the factors influencing dividend policy. 3. To study the trends in dividend. 4. To suggest ideal dividend policy.
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5. To know how the SUCB is maintain a balance between RE and declared of dividend.
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1. Scope of the study:

The study helps to know about the awareness and satisfaction level of shareholders about the services render by urban co-operative banks. It also helps to analyze the attitude of the urban people towards the urban co-operative bank. The study also helps the commerce graduates and researcher who would like to increase there knowledge specification about the dividend policy of the urban co-operative banks.
2. Research methodology:
The data collected for the studies dividend into following two ways are: 1. Primary data 2. Secondary data
1. Primary data: Primary data is collected through observation methods and by

with bank official (manager).
2. Secondary data: Secondary data most of the information is gathered by using

secondary data mainly from internal published source like bank annual report and other operational records of bank. Analysis period was 3years.
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Tools used in data analysis and interpretation:

Simple statistical tools will be used for the analysis of the data interpretation.
Limitation of the study:

Following limitations include in the study: 1. The findings are based on information given by the guide in the bank only. 2. The figures of dividend policy are limited to last 3years. 3. The study concentrates only within Tumkur. 4. As there are some fact and figures which are considered to be confidential on the part of the bank those are not disclosed. 5. Due to time constraints the project study has conducted with duration of 3months.
Sampling Design:
The research as identified this Siddaganga Urban Co-operative Bank ltd Tumkur for the present study little information has been collected from distinct SUBC ltd through the interview to auditor and the staff. The analysis of
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dividend policy based on various parameters through interviews further applying simple statistical tools to arrive valid conclusion.
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Geographical area of the study:

The geographical area of the study is SUBC ltd Tumkur
At the administration office:

Administration office section- looks after conducting board meeting Share section. Management information and planning development section. Management section. Recovery department section. Election data processing section. Stores section. Each department function under the control of manager who ensures effective functioning their respective duel assistant by manager etc.
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CHAPTRE-3 INDUSTRY PROFILE Origin of banking:

Since the banking activities were started in different periods in different Countries there is no unanimous view regarding the origin of the word Bank
Meaning of World Bank and Banking: Bank:

The word Bank is derived from the French word Banco or Bancus or Banque or Banquest that is a bench. The early bankers, the Jews in Italy transacted their business on benches in the market place, when a banker failed his bench was broken into pieces by the people which indicated the bankrupts of the individual banker. A bank is a financial institute which deals with a money and credit. It accepts deposits from the people and distributes loan to needy people.
Banking:
The Regulation Act of 1949 under section 5(b) defines the term banking as Accepting for the purpose of leading or investment of deposits from the public repayable on demand or otherwise and with darwable by cheques, drafts and odes.
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Co-operatives Banks in India:

The co-operative banks in India started functioning almost 100 years ago. The cooperative bank is an important constitute of the Indian Financial System, judging by the role assigned to co-operative, the expectations the co-operative is supported to fulfill their number and the number of offices the co-operative bank operate. Though the cooperative movement originated in the west, but the importance of such bank have assumed in India is rarely parallel anywhere else in the world. The co-operative banks in India play an important role even today in rural financing. The business of co-operative bank in the urban areas also has 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 banks also regulated by the RBI. They are governed by the Banking Regulation Act 1949 and Banking laws (co-operative societies) Act 1965.
Co-operative banks in India finance rural areas under:

Farming Cattle Milk Hatchery Personal finance
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Co-operative banks in India finance urban areas under:

Self- employment. Industries. Small scale unit. Home finance. Consumer finance. Personal finance.
Introduction of banking in India: History of banking:

The history of banking is closely related to the history of money. As a society became more civilized the need for more efficient methods for Barter was developed organically. Leaders, such as wars can trace most origins of money back to the building of large structures such as temples or large undertakings. The concept of an I Owe you (IOU) preceded the idea of a paper check by several thousand years. The world Bank just means Bench, because a lender or borrower needs to display wars on a flat surface in order to determine value. A money changer is a person who either changes currencies or changes good into coins, like a pawnshop. Considering the biblical story of Christ driving the money changers from the temple, they haven been around the long time. With the concept of banking and money comes the question of dependability banking as w known it today is a fairly low risk business for an investor of a saving account. From ancient times, the value of money was determined by its weight in gold, as to the invention of the
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paper check, or paper money, in the early 1600s, although much lighter to transport, paper money was much less dependable for the carrier. The paper was only worth the reputation of the money changer that signed it. Paper money was not only earlier to carry, it was easier to steal. For this reason, professional money changes dial all they could to ensure the appearance of liquidity and dependability.
Earliest Banks:
The very first banks were probably the religious temples of the ancient world. In them were stored gold in the form of easy to carry compressed plates. Their owners justify felt that temples were the safety places to store their gold as they were constantly attended, well built and were sacred, thus deterring would be thieves. There are extent records of loans from the 18th century B.C. in Babylon that were made by temple priests to merchants. Ancient Greece holds further evidence of banking Greek temples as well as private and civic entities conduction financial such as loans, deposits, currency exchanges and validation of coinage. Interesting, there is evidence too of credit, where by in returns for a payment from a client, a money lender in one Greek port would write a credit note for the client who called Cash the note in another city, savings the clients the danger of carting with in his journey. Ancient Rome perfected the administrative aspect of banking and saw greater regulation of financial practices charging interest on loans and paying interest on deposits became more highly developed and competitive.
Western Banking History:
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Modern western economic and financial history is usually traced back to the houses of London. The London royal exchange was established in 1565. At that money charges were already called bankers. Though the term Bank usually referred to their offices and did not carry the meaning it does today. There was also a hierarchical order among professional, at the top were the bankers who did business with heads of state. Next was the pawn the city par shop or Lombard. Most European cites today have Lombard street where the pawn shop was located.
Christian sculptures:
The ascent of Christianity in Rome and its influence restricted banking as the charging of interest and usually were seen as immoral. Jewish entrepreneurs, free of Christian taboo about money, established themselves in the provision of financial services increasingly demanded by the expansion of European trade and commerce. Ironically, the people bankers were the most successful of the western world. When Pope John XII (born) Jacques DEuse (1249-13340 was crowned in Lyon in 1316, he set up residency in Avignon. During this papal, schism which lasted until 1378, the central Vatican citied were in the area surrounding Avignon. The companying growth of Italian banking in France was start of Lombard money changers. In Europe, who moved from city to city along the busy pilgrim routes important for trade. Key cities in this period were Cashors, the birthplace of Pope John XII and Figeac. Perhaps it was because of these origins that the term LOMBAR is synonymous with Cahors in medieval Europe and means Pawn Brokers.
Banking in India:
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Banking in India originated in the first decade of 18th century with the general bank of India comes into existence in 1786. This is followed by bank of Hindustan. Both these banks are now different. The oldest bank in existence in India is the State Bank of India (SBI) being established as The Bank of Calcutta in June 1806. A couple of decades later, foreign banks like HSBC and Credit Lyonnais started their Calcutta was the most active trading port, Calcutta operation in the 1850s mainly due to the trade of the British Empire and due to which banking activity took roots there and proposed. The first Indian owned bank was Allahabad bank set up in 1865. By the 1900s, the market expanded with the establishment of bank like Punjab National Bank in 1895. In Lahore, Bank of India in 1906 in Mumbai both of which were founded under private ownership. Indian banking sector was formally regulated by RBI from 1935. After Indias Independence in 1947, the Reserve Bank of India was nationalized and given broader powers.
Private Banks:
Private banks are banks that are not incorporated. A non-incorporated ban is owned by either an individual or a general partner with limited partners. In any such case, the creditor can look to both the entirely of (the banks) assets as well as the entirely of the sub-proprietor general partners assets. These banks have a long tradition in Switzerland, dating bank to at least the revocation of the edict of Nantes (1685). However, most have now become incorporated companies, so the term is rarely true anymore. There are relatively few private banks remaining in the US but there are a few such as brown brothers. Harriman and company, which is a general partnership with about 30 members.
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Private banking in India was practices since the beginning of banking system in India. The first private bank in India to be set up in private sector bank in India was Indu Ind bank. It is one of the fastest growing bank private sectors in India. IDBI ranks the tenth largest development bank in the world as private banks in India and has promoted a world class institution in India. The first private bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks. In India as part of the RBIs liberalization of the India banking industry. It was incorporated in August 1994 HDFC Bank Limited with registered office in Mumbai and commenced operation as scheduled commercial bank in January 1995.
Economic importance of Banks:

Banks play a significant role in the economic development of a country. This is evident from the following aspects: Banks provide place of safety to the surplus money or people. By offering attractive schemes of savings banks promote the habit of saving among the people. Banks to analyze mobility of capital. Banks direct the flow of funds into production channels. Banks mobilize small scattered and idle saving of the people in the process they help the capital information. Banks helps trade, industry, commerce and agriculture by meeting their financial requirement of these sectors. It provides convenient and economical means of payment.
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It also provides a convenient and economical means of transfer of funds from one place to another. Banks contribute to generation of economical in the country. Banks render numerous merchant banking services which are great help to the corporate world. Banks provide activities between savers and investors.
Types of Banking:
Generally, banks are classified on the basis of their functions accordingly are classified into the following categories. banks
1. Commercial Banks.
2. Industrial Banks. 3. Agricultural Banks. 4. Exchange Banks. 5. Savings Banks. 6. Central Banks.
Co-operative Banks:
Are small sized units organized in co-operative sectors which operate both in industrial and trade sectors besides professional and salary classes. Regulated by the RBI they are governed by the banking regulations act 1949 and banking laws (co-operative societies) Act, 1965. The co-operative banking structure in India is dividend into 4 components.
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The primary co-operative credit society Central co-operative banks State co-operative banks Land Development banks
History of Co-operative Banking in General:

Germany is the birthplace of co-operative credit movement in the world. Herr.P.W.Rasiffesen and Herr Franz Schulze of Germany are the pioneers in the fields of co-operative. Co-operative societies in the rural areas of Germany similarly Herr Franz Schulze promotes co-operative credit societies in the area of Germany. These types of cooperative credit societies worked successfully. The successful working of these types of co-operative societies in Germany contributed to the emergence of co-operative credit societies as co-operative banks in the other countries of the world including India.
Definition and Meaning of Co-operative Banking:

Devine defines a co-operative bank as A mutual society formed, composed and governed by working people themselves for encouraging regular saving and granting small loans on easy terms of interest and repayment.
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Co-operative banks are basically rural oriented Co-operative banks are established under the co-operative societys acts.
Co-operative banks are democratic institutions. In the sense that they follow the
principle of one-vote in their management. A co-operative bank is an association of persons and not of capital. Co-operative banks mainly finance agriculture and allied activities.
Principles of Co-operative Banking:

Co-operative banks include the following principles: Principles of one man voice in management Principles of thrift and saving Principles of services and not profit Principles of laying emphasis on credit worthiness Principles of co-operative and mutual help.
Types of Co-operative Banks:

Co-operative bank in India may be dividend into 2 distinct types: They are follows: Co-operative Banks
Agriculture
Non-agriculture
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Short-term & Long-term credit Employees Central Central District Medium-term institution co-operative co-operative co-op. ind. Credit institution credit societies House mortgage urban bank co-op Mortgage bank Bank bank State co-op.bank Operative bank Village bank State co-op. land Primary co-operative Primary House mortgage bank Y Indus trial City co-operative central co-op
Banking Regulation Act 1949(As applicable to co-operative societies)

As amended banking laws act 1983 and banking regulation act 1991. The Banking Regulation Act 1948 had come into force from March 1996 has vested the RBI various statutory power of control and supervision over the co-operation banks. The powers in regard to incorporation management etc of these banks however, continue to vest in registration of co-operative societies of the states concerned further the provisions of the banking regulations act 1949 shall be in addition to land not save as expressly provided in the act, in derogation of any other law time being in force. This means that the cooperative banks regulation act also other laws applicable to them. In respect of matters specifically provided for in the banking regulation act, the provision of the said act will prevail over the provisions over the co-operative societies act.
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Co-operative bank in India
Primary credit societies at bank
Central co-operative bank in the middle
State cooperati ve
Fund credit societies , agricultu
Urban credit societies (or) urban co-operative banks
Pure state cooperati
Pure central cooperativ e bank (or) co-
Mixed central cooperativ e banks
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CHAPTER-4 BANK PROFILE
Profile of the SUCB ltd
SIDDAGANGA URBAN CO-OPERATIVE BANK LTD BH ROAD TUMKUR-572102 PH: 0816-2277267 FAX 0816-2277273 RBI LICENCE NO: UBD KA 1105:12-12-94 SUCB banking transaction as follows:Bank shall be kept open Monday to Saturday 10.30am to 4.30pm
Cash transaction hours:

Monday to Saturday 10.30 am to 2.30 pm.
1.30 pm to 4.30pm
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3.1 History:
Siddaganga urban co-operative bank limited is a leading urban co-operative bank in the city. Functioning with its own head quarter. The bank is sponsored by SUCB of Tumkur city and is established on 1994, bank as been established by Dr.Shri Shiva Kumara Swamy. It is established since from 15 years. Tumkur city as been developed as a major business center in Karnataka state, in that period the city as so many industries societies and financial institution. In this substantial growth time the Tumkur city we are facing the lack of proper banking facilities and services as in those days a few nationalized banks were functioning and services as in that to having lack of imbalance in their service to the customer by observing this pathetic condition, the leading Siddaganga co-operative and limited of Tumkur Dr.Shri Shiva Kumara Swamy. Dr.Shri Shiva Kumara Swamy and other swamis discussed and decided to open UCB in the city. By an inspiration from RBI as released one mission document banks procedure of merger and amalgamation of tax post from that RBI and Karnataka state government with providing banking facilities and servicing and business people of the city. For the shri T.K.Nanjundappa elected as president and the bank was register on 26/09/1994 with register number A.R.T/R.C.S/20357/1994/1995. With an initial capital 60000.
3.2. Bank expansion:
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In the year 1994 the bank mark it growth and stability by opening its branch at Siddaganga urban co-operative bank limited. Siddaganga high school B.H Road , Tumkur-572102, Karnataka.
BANK LOGO-
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Organization chart
SUCB Board of director President Vice president General Manager Manager Assistant Manager Assistant accountant First division clerk Second division clerk
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Work flow model of the bank
Customer identification
Deposits
Lending
Other services
Satisfaction of the customers
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3.3. Silent features of bank:

1. Attractive deposit schemes with higher rate of interest than commercial and nationalized bank. 2. One of the leading co-operative banks in tumkur/ Karnataka
3. Safe deposit lockers facilities are available at Siddaganga urban co-operative bank
ltd. 4. Deposit are recovered by deposit insurance scheme 5. The total banking transactions are fully computerized with LAN system. 6. Prompt quick and efficient service. 7. Different kinds of deposit schemes on attractive rate of interest. 8. All types of loans and advances given at competitive rates of interest. 9. Gift check facility is offered.
10.Gold loan facilities available at Siddaganga urban co-operative bank ltd
3.4. Aim and Objectives of bank:

To build up quality loan assets portfolio. To reduce cost of deposits. To step up net interest margin. To increase non interest income To reduce the cash holding and banking balance
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To reduce operating cost To Focus on recovery To increase net profit To observe technology at a faster face Innovate services To increase customer satisfaction To improve operational efficiency To focus on skill development To maintain personal integrity
3.5 Product of the bank:

The bank is offering its customers most of all the facilities of the banking industry. The product or services of the bank can be classified into broad ways:1. Deposit account 2. Loan and advances account 3. Other special services 4. Fixed deposit
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Sl.no 1. 2. 3. 4. Particulars 46 days to 90 days 91 days to 1year 1year to 3years 3years above Interest rate 5% 7% 10.5% 9%
Feature of prospectus:
Intended to pen a new branch in Mysore Intention to open ATM service EMI system reducing, non reducing system Intension to do ABB(Anywhere banking business) Working capital loan facility
Board of management of SUCB ltd 3656 Members
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President
Vice president
Directors
The election win be held to appoint the board of management of the bank all the share holders/members of the bank are eligible to stand for election. Each member cans one vote. Through democratic process 3591 members will be board management will be constituted, those 3591 members will be choice one president and vice president among them. The tuner of the board of the management is for five years. Annual general body meeting of bank is preceded by those members. The members can also resign from their past before completion of the terms if they desire to do so president is supreme authority in the board of management.
Various committees of SUCB ltd:

The following sub committees are formed to carry out administrative affairs of bank. President T.K.Nanjundappa and vice president K.S.Shankaraiah are part of it.
The bank has formed following 7 sub committees

1. Joint loan committee 2. Missionary loan committee 3. Investment committee 4. Administrative committee 5. Audit committee 6. Hypothecation and pledge loan committee
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7. Vehicle, building, housing, education loan, loan on NSC, loan on deposit
Department or sections in SUCB ltd

The various department and sections at the branch level as follows Deposition section Loan section Bill/clearing/DD/pay order section Cash section Saving bank or current account section Miscellaneous section
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To provide joint loan facility To provide demand drafts facilities Economic functions and facilities Social functions Collection of check To provide short term and medium term loans to various sectors number of employees and salary structures of SUCB ltd on 31 March 2008.
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Sl.no
Job title
Number of employees
Salary scale(pm)
1 2
Manager Branch manager
2 2
13,000 12,500
3 4
Accountant Junior accountant
1 7
10,500 9,500
First clerk
division
10,000
Second clerk
division
Attainder
7,000
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Monthly salary is provided to employees it various with grade and level of management they represent.
CHAPTER-5 THEORITICAL BACKGROUND
Introduction to Dividends:
Dividends are payments made by a bank to its share holders. It is the portion of bank profits paid out to shareholders. When a bank earns a profit or surplus that money can be put to two uses: it can either be re-invested in the business (called Retained Earnings), or it can be paid to shareholders of the bank as a Dividend. Paying dividends is not an expense; rather it is the division of assets among shareholders. Many banks retain a portion of their earnings and pay the remainder as dividend. Publicly traded banks usually pay dividend s on a fixed schedule, but may declare a dividend at any time, sometimes called a Special Dividend to distinguish it from a regular one. Dividends are usually settled on a cash basis, as a payment from the bank to the shareholder. They can also take the form of shares in the bank (either newly- created shares or existing shares bought in the market) and many banks offer dividend reinvestment plans which automatically use the cash dividend to purchase additional shares for the share holders.
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The profits of a bank can either be reinvested in the business or paid to its shareholders as a dividend. The frequency of these varies by country. In the United States dividends of publicly-traded banks are usually declared quarterly by the board of directors. In some other countries dividend are paid biannually, as an interim dividend of the board of directors. Shareholders are explicitly forbidden from introducing shareholders resolutions involving specific amounts of dividends where a bank makes a loss during a year, it may opt to continue paying dividends from the retained earnings from previous years or to discontinue the dividend. Where a company receives a non-recurring gain, e.g. from some assets and no plans to reinvest the proceeds, the money is often returned to shareholders in the form of a special dividend. This type of dividend is often larger than usual and occurs outside of the normal dividend distribution schedule.
Forms of payment 1. Cash dividends:

Cash dividends (most common) are those paid out in form of cheques. Such dividends are a form of investment income and are usually taxable to the recipient in the year they are paid. This is the most common method of sharing corporate profits with the shareholders of the bank.
2. Stock dividends:
Stock or Scrip dividends are those paid out in form of additional stock shares of the issuing corporation, or other corporation (e.g. its subsidiary corporation). They are usually issued in proportion to share owned (e.g. for every 100 share of stock owned, 5% stock dividend will yield 5 extra shares). This is very similar to a stock split in that it
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increases the total number of shares while lowering the price of each share and does not change the market capitalization or the total value of the shares held.
3. Property dividend:
Property dividend or dividends in Specie (Latin for in kind) are those paid out in form of assets from the issuing corporation or another corporation, such as a subsidiary corporation. They are relatively rare and most frequently are securities of other banks owned by the issue, however they can take other forms. Ex: - Products or Services.
4. Other divisions:
Other dividends can be used in structured finance. Financial assets with a known market value can be distributed as dividends; warrants are sometimes distributed in this way. For large banks with subsidiaries, dividends can take the form of shares in a subsidiary bank. A common technique for Spinning off a bank from its parent is to distribute in the new bank to the old banks shareholders. The new shares can then be traded independently.
5. Dividend Dates:
Dividends must be declared (approved) by banks Board of Directors each time they are paid. There are four important dates to remember regarding dividends.
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The declaration date is the day the Board of directors announces its intension to pay a dividend. On this day, a liability is created and the bank records that liability on its books, it now owes the money to stockholders. On the declaration date, the Board will also announce a date of record and a payment date.
7. Ex-Dividend Date:
The ex-dividend date is the day on which all shares brought and sold no longer come attached with the right to be paid the most recently declared dividends. This is an important date for any bank that has many stockholders, including those that trade on exchanges, as it makes reconciliation of who is to be paid the dividend easier. Existing holders of the stock will receive the dividend even if they now sell the stock, where as anyone who now buys the stock will receive the dividend, where as any holders selling the stock loses their right to the dividend. On and after this date the stock becomes exdividend.
8. Record Date:
Shareholders who properly registered their ownership on or before the date of record will receive the dividend. Shareholders who are not registered as of this date will not receive the dividend. Registration in most countries is essentially automatic for shares purchased before the ex-dividend date.
9. Payment Date:
The payment date is the day when the dividend checks will actually be mailed to the shareholders of a bank or credited to brokerage accounts.
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Shareholders have their own personal cash needs and self-select the banks whose dividends satisfy these. Preferred shareholders like common share dividends because it creates a cushion that must be cut before their own dividends are. Shareholders feel that the risk of returns form reinvestment earning at a later date is higher than the risk of cash received today.
DIVIDEND POLICY
Corporate dividend policy has captured the interest of economists of this century and over the last five decades has been the subject of intensive theoretical modeling and empirical examination. A number of conflicting theoretical models (all lacking strong empirical support) define current attempts to explain corporate dividend behavior. Initial forays into theorizing corporate dividend policy are divided as to their prediction of the dividend payments effect on share price. Over the last century, three schools of thought have emerged. One faction sees dividends as attractive and as a positive influence on stock prices. A second block believes that stock prices are negatively corrected with dividend payout levels. The third group of theories maintains that firm dividend policy is irrelevant in stock price valuation. Theoretical and empirical models of corporate dividend policy of late better separate into a different taxonomy. The qualifying criterion is the nature of the market structure and/or the underlying rationale of the investor. Accordingly, recent models are broadly segregated, based on their rationale, into models formulated in states with full
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information, models in states with information, models in states with information asymmetries and models using behavioral principles.
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DIVIDENDTHEORIES: A. Full information Models- The Tax Factor

Tax-adjusted models surmise that investor requires and secure higher expected returns on shares of dividend-policy stocks. The imposition of a tax liability on dividends causes the dividend payment to be grossed up to increase the shareholders per-tax return. Under capital assets pricing theory, investors offer a lower price for the share because of the future tax liability of the dividend payment. One consequence of the tax-adjusted model is the division of investors into dividend tax clienteles, an argument first proposed in the seminal work of Miller and Modigliani. In later research, Modigliani finds that the clientele effects is responsible for only nominal alterations in portfolio composition rather than the major differences predicted by Miller. Masulis and Trueman model cash dividend payment as products of deferred dividend costs. Their model predicts that investors with differing tax liabilities will not be uniform in their ideal firm investment/dividend policy.
B. Models of information Asymmetries Signaling models:

The model imperfection of asymmetric information is the basis of three distinct efforts to explain corporate dividend policy. The mitigation of the information asymmetries between manager and owners via unexpected changes in dividend policy is the cornerstone for dividend signaling models. Agency cost theory uses dividend policy
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to better align the interests of share holders and corporate mangers. The free cash flow hypothesis is an ad hoc combination of the signaling and agency costs paradigms; the payment of dividends can decrease the level of funds available for perquisite consumption by corporate mangers. Akerlofs model of the used car market as a pooling equilibrium in the absence of signaling activities illuminates the costs of information asymmetries. The generalization of Akerlofs model by Spence became the prototype for all financial models of signaling.
1. Agency Cost:
The recognition of potential agency costs associated with the separation of management and ownership is not new; differences in managerial and shareholder priorities have been recognized for more than three centuries. Adam Smith adjudged the management of early joint stock companies to be negligent in many of their activities. These problems were especially prevalent in the British East Indies Company and attempts to monitor managers were largely unsuccessful because of inefficiencies and costs associated with shareholder monitoring. Scott and Carlos question this assertion while control and organization were less than ideal, the continued success and long life of the corporation imply generally sound managerial practices. Although some fraud no doubt existed, the majority of the managerial activities coincided with shareholder desires. Modern Agency theory seeks to explain corporate capital structure as the results of attempts to minimize the costs associated with the separation of corporate ownership and control.
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Agency costs are lower in firms with high managerial ownership stakes because of the better alignment of shareholders and manager goals (Jensen and Meckling) and in firms with large block shareholders that are better able to monitor managerial activities ( Shleifer and Vishney). Agency problems results from information asymmetries, potential wealth transfers from bondholders to stockholders that the acceptance of high-risk and high-returns projects by managers, and failure to accept positive net present managers (Barnea, Haugen and Senbet). Dividend policy influences these relations in two ways. Fama and Jensen espouse that potential shareholder and bondholder conflicts can be mitigated by covenants governing claim priority. These orderings can be circumvented by large dividend payment to stockholders. Debt covenants to minimize dividend payment are necessary to prevent bondholder wealth transfers to shareholder (John and Kalay). Although potentially substantial in precipitation of agency costs, its dividend policy is not a major source of bondholder wealth expropriation. In firms where dividend payouts are limited by bondholder covenants, dividend payout levels are still bellow the maximum levels by the constraints. value projects and perquisite consumption in excess of the level consumed by prudent corporate
The second way dividend policy affects costs is the reduction of these costs through increased monitoring by capital markets. Large dividend payments reduce funds available for perquisite consumption and investments opportunities and require managers to seek financing in capital markets. The efficient monitoring of capital markets reduces less than optimal investment activity and excess perquisite consumption and hence reduces the costs associated with ownerships and control separation (Easterbrook).
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2. The Cash Flow Hypothesis:

Prudent manager working in the shareholders best interests should invest in all profitable opportunities. Management and owner separation affords corporate managers the temptation however to consume or other view waste surplus funds. The inefficient use of funds in excess of profitable investment opportunities by management was first recognized by Berle and Means. Jensens free cash flow hypothesis updated this assertion, combining market information asymmetries with agency theory. The funds remaining after financing all positive net present value projects cause conflicts of interest between managers and shareholders. Dividend and debt interest payments decrease the free cash flow available to manager perquisite consumption. This combination of agency and signaling theory should better explains dividend policy than either theory alone, but the free cash flow hypothesis does a better job of rationalizing the corporate takeover frenzy of the 1980s (Myers) than it does of providing a comprehensive and observable dividend policy.
Behavioral Models
No paradigm discussed thus far completely explains observed corporate dividend behavior is substantially influenced by financial theorists for the most part because unfortunately, this motivation has been ignored by financial theorists for the most part because of the difficulty of introducing investor behavior into traditional financial pricing models (Arbel, Carvell and Postnieks). According to Shiller, including these influences in
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modeling efforts can enrich the development of a theory to explain the endurance of corporate dividend policy. Ordinary investors are faced not with risk, but with uncertainty- -a lack of concise judgment and sense of objectives evidence (Knights). Social pressures can lead to errors in judgment and trading activities by shareholders that cannot be logically explained. These errors in judgment are only mistakes, not lapses of rational investment activity. Mass investors psychology profoundly influences aggregate market activity (Shiller). Dividend policy is inconsistent with maximization of the shareholders and is better explained by the addition of a socioeconomic-behavior paradigm into economic models. Dividend payouts can be viewed as the socioeconomics repercussion of corporate evolution the information asymmetries between manager s and shareholders causes dividend to be paid to increase the attractiveness of equity issues the systematic relation between industry type and dividend policy reported by Michel implies that managers are influenced by the actions of executives from competitive firms when determining dividend payouts levels. Managers, realizing that shareholders desire dividends, pay or increases dividend to mollify investors (Frankfurter and Lane). Dividend payouts to shareholders should help increase the corporations stability by serving as a ritualistic reminder of the managerial and owner relationship (Ho and Robinson). As Frankfurter and Lane contend, dividends are partially a tradition and a method to allay investor anxiety.
Managerial Surveys:
Lintner surveyed corporate chief executive officers and chief financial officers and found that dividend policy is an active decision variable because managers believes that stable dividends lessen negative inventor reactions. The active determination of dividend
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policy implies that the level of retained earnings and savings is a dividend decision byproduct. Darling, Turnovsky, Fama and Babiak find empirical support for Lintners findings; dividends are a function of current and past profit levels, and expected future earnings and are negatively correlated with changes in the levels of sales. Current income remains the critical determinant of corporate deveined policy 25 years after Lintners original survey (DeAngelo, DeAngelo and Skinner). Other factors not considered by Lintner (regulatory constraints, investment magnitude, debt and firm size) also affect dividend policy. Variations in dividend policy are primarily due to a combination of endogenous and exogenous element (Dhrymes and Kurz). Harkins and Walsh find that shareholder dividend desires and management need have retained earning for investment opportunities conflict. A compromise policy partially satisfying both parities is chosen. Managers consider current and expected earnings, dividend payment history, dividend level stability, cash flows and investment opportunities, and shareholder desires in their determination of the payout level. Surveys of chief financial officers (CFOs) by Baker, Farrelly, and Edelman and Baker and Farelly confirm the Lintner results. The CFOs cite the importance of dividend continuity, the belief that share prices are affected by dividend policy, and the difference in classification of regular and unusual cash flows as important determinants of dividend policy. Managerial views of dividend policy are essential unchanged 30 years after Lintners study dividends are paid because shareholders expect continued dividend growth and managers believe investors want to receive dividends. Managers believe that dividend payments are necessary to maintain or increase share price and to attract new
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investors. Dividend payout policy in determined using criteria including sustainability, current firm profitability, future cash flow expectations and industry norms.
Theoretical Behavioral Models:

Feldstein and Green model the corporate dividend decision as the last step in a process the evaluates inputs from five sources. First, dividend policy is a consequence of investors consumption needs. The tax liabilities from dividend payment are less than the transaction costs of selling shares to provide income if earnings are retained. Second, the market value of retained earnings is less than the market value of dividends. Third, dividend payment is consists with steady state growth and an optimal debt/equity ratio. Fourth, dividend payment are a byproduct of the separation of corporation owners and managers; dividend payments help to diminish agency costs arising from separation of corporate owners and managers and are used for signaling activities. Finally, although asymmetric information and agency costs are present in the model, the paradigm is not dependent on these market imperfections. The involvement of shareholders with diverse tax liabilities and diversification goals in an equilibrium with uncertainty results in dividend payments. Shefrin and Statman explain dividend preference by using the theory of self control (Thaler and Shefrin) and the descriptive theory of choice under uncertainty (Kahenman and Tversky). Information models are used to justify the presence of corporate dividend while the tax liability of dividends is used as a counter argument. This model is also consistent with dividend clienteles. Dividend and capital gains are not always perfect substitutes (even in a world without taxes and transaction costs) because of a lack of self-control to delay gravitation (Thaler and Shefrin). In financial theory, dividends and capital gains have the same
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value; this is not the case in a world modeled using the theory of self-control. Dividend checks are appreciated more than capital gains provide an automatic control device on spending levels (Thaler). Risky alternatives, costs, and payoffs are evaluated separately. The greater effects show following dividend decreases also supports this contention; losses are more significant than gains. Kahneman and Tversky posit that the sale of shares of stock causes more investor regret and anxiety than the spending of the cash received from dividend payments. A subsequent prices rise of shares sold for income needs increases the shareholders contribution. Clearly, in this model, capital gains and dividend are not perfect substitutes. Regret aversion can induce a preference for dividends through the use of a consumption rule based on the utilization of dividends, not invested capital. Dividend yields are positively correlated with the planed dissaving rate. If dissaving is positively related to age and negatively related to incomes, portfolio dividend yields will be positively correlated with age and negatively correlated with income. Marsh and Merton develop a rational expectations model of dividend policy as managements response to permanent earnings. In equilibrium, dividend levels are determined using future earnings expectations. Using dividends as signals is incompatible with this model.
Determinants of dividend policy

The payment of dividend involves some legal as well as financial considerations. It is difficult to determine a general dividend policy which can be followed by different firms at different times because the dividend decision has to be taken considering the special circumstances of an individual case. The following are the important factors which determine the dividend policy of a firm.
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Legal provisions relating to dividends as laid sections 93,205,205A, 206 and 207 of the Companies Act, 1956 are significant because they lay down a framework within which dividend policy is formulated. These provisions requires that the dividend can be paid only out of current profits or past profits after providing for depreciation or out of the moneys provided by Government for the payment of dividends in pursuance of a guarantee given by the Government. The companies (Transfer of profits to Reserves) Rules, 1975 requires a company providing more than ten percent dividend to transfer certain percentage of the current years profits to reserves.
2. Magnitude and Trend of Earnings:

The amount and trend of earnings in an important aspect of dividend policy. It is rather the starting point of the dividend policy. As dividends can be paid only out of present or past years profits earnings of a company fix the upper limits on dividend.
3. Desire and Type of Shareholders:

Although, legally, the discretion as to whether to declare dividend or not has been left with the Board of Directors, the directors should give the importance to the desires of the shareholders in the declaration of dividends are the representatives of shareholders. Desires of shareholders for dividend depend upon their economic status. Investors, such as retried persons, widows and other economically weaker persons view dividends depend upon their economic status.
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4. Nature of Industry:
Nature of industry to which the company is engaged also considerably affects the dividend policy. Certain industries have a comparatively steady and stable demand irrespective of the prevailing economics conditions. For instance, people used to drink liquor both in boom as well as in recession. Such firms expect regular earnings and hence can follow a consistent dividend policy. On the other hand, if the earnings are uncertain, as in the case of luxury goods, conservative policy should be followed.
5. Age of the company:

The age of the company also influences the dividend decision of a company. A newly established concern has to limit payment of dividend and retain substantial part of earnings for financing its future growth and development, while older companies which have established sufficient reserves can afford to pay liberal dividends.
6. Governments Economic Policy:

The dividend policy of a firm has also to be adjusted to the economic policy of the Government as was the case when the Temporary Restriction on Payment of Dividend Ordinance was in force. In 1974 and 1975, companies were allowed to
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pay dividends not more than 33 percent of their profits or 12 percent on the paidup value of the shares, whichever was lower.
7. Taxation policy:
The taxation policy of the Government also affects the dividend decision of a firm. A high or low rate of business taxation affects the net earnings of company (after rax) and thereby its dividend policy. Similarly, a firms dividend policy may be dictated by the income-tax status of its shareholders. If the dividend income of shareholders is heavily taxed being in high income bracket, the shareholders may forego cash dividend and prefer bonus shares and capital gains.
8. Inflation:
Inflation acts as a constraint in the payment of dividends. Profits as arrived from the profit and loss accounts on the basis of historical cost have a tendency to be overstated in times of rise in prices due to over valuation of stocks-in-trade and writing off depreciation on fixed assets at lower rates. As a result, when prices rise, funds generated by depreciation would not be adequate to replace fixed assets, and hence to maintain the same assets and capital intact, substantial part of the current earning would be retained. Otherwise, imaginary and inflated book profits in the days of rising prices would amount to payment of dividend much more than warranted by the real profits, out of the equity capital resulting in erosion of capital.
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CHAPTER-6 DATA ANALYSIS AND INTERPRETATION

1. Impact of dividend policy on working capital position:
As per the started objectives following data has been collected to assess the impact on working capital position out of the present policy of dividend declaration.
Table-1 Table showing the details of dividend declaration and working

Rate of dividend Working Years 2007-08 2008-09 2009-10 Net profit declaration position capital
26,86,000 32,47,000 38,15,000
10% 10% 10%
3,05,400 3,44,900 4,56,900
capital position:
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AnalAnalysis:
It is observed from the above table that net profit is increasing from 2007-08 onwards, but bank has declared a constant rate of dividend even though it can capable of declaring high rate of dividend. This results in increasing the working capital since 3years. It can be shown in the following data.
Chart-1: showing Net profit:
Chart-2: showing Working capital
Interpretation: Dept. of commerce, Vidyavahini PG college, Tumkur-572103 Page 57
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Since the stable dividend policy is being maintained by the bank, there will be a great impact on working capital position which indicates the banker to go with further investment objective (can increase lending) because of increasing in the retained earning position.
Table-2 On Liquidity position

As per the stated objectives of the bank, the followed information has collected to assess the impact on liquidity position out of the present
Years 2007-08 2008-09 2009-10
Rate of dividend 10% 10% 10%
Cash 29,32,897 62,16,346 89,76,002
policy of dividend declaration.
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Analysis:
It is observed from the above table that net profit is increasing from 2007-08 onwards, but bank has declared a constant rate of dividend even though it can capable of declaring high rate of dividend. This results in increasing the liquidity position since 3years. It can be shown in the following data.
Chart-3: showing Cash
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Chart-4: Showing Rate of dividend
Interpretation:
Since the stable dividend policy is being maintained by the bank, there will be a great impact on cash position which indicates the banker to go with further investment objective (can increase lending) because of increasing in the retained earning position.
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2. Identify the factors influencing dividend policy:

As per the stated objectives information collected from the bank to identify the factors influencing dividend policy of the bank. Since no published records and data is available to know the factors influencing dividend policy of the bank hence oral conversation with the management members, shareholders of the bank the following factors influencing the dividend policy of the bank:1. Past dividend rate. 2. Profitability of the bank. 3. Dividend rate of other co-operative banks in Tumkur city. 4. Age of the bank. 5. To maintain stability in dividend rate. 6. Shareholders desire for constant income.
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1. To study the trends in dividend:

As per the third stated objective the information collected from the annual report of the bank to study the trend in dividend declaration of the bank over the past 3years.
Table-3 3 years dividend rate table
Years
Net profit
Dividend rate
Dividend Amount
EPS
2007-08 2008-09 2009-10
26,86,000 32,47,000 38,15,000
10% 10% 10%
12,73,557 14,22,095 16,72,689
6.72 8.12 9.54
Analysis:
1. It is observed from the above table that the total net profit of the bank shows increasing tendency over the past 3years. The rate of dividend declaration by the bank is constant i.e. 10% on the net profit of the bank. However the total amount
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of dividend paid by the bank shows increasing tendency over the past 3years even though the rate of dividend is fixed. 2. The EPS increase over the past 3years shows an increasing tendency. For the purpose of analysis the total net profit, rate of dividend, amount of dividend and EPS are calculated and competitive statement is prepared to observe the trend of the dividend.
Chart-5: showing Net profit
Chart-6: showing Dividend amount

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Chart-7: showing EPS
Interpretation:
The analysis indicates that the amount of dividend and EPS shows increasing tendency but the rate of dividend shows constant trend. The total profitability of the bank shows increasing tendency hence, the bank may takes steps to increase the rate of dividend gradually.
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1. To suggest ideal dividend policy:

To suggest ideal dividend policy which not only satisfy the desires of the shareholders but at the same time increases shareholders but at the same time increases shareholders net worth, profitability and liquidity position of the bank.
Table-4 Table showing profit and net worth

Years 2007-08 2008-09 2009-10 Net profit 26,86,000 32,47,000 38,15,000 Net worth 485.54 527.49 578.28
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Analysis:
It is observed from the table that the total net worth of the bank shows increasing tendency over the past 3years. The profitability of the bank shows increasing tendency. The amount of dividend declared shows increasing tendency. Share capital of the bank also indicates increasing tendency. Hence the bank may increase the rate of dividend gradually based the factors stated above which helps to satisfy growth, objectives of the bank and the desired of the shareholders which protect the interest of the bank and the shareholders.
Chart-9: showing Net worth
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Interpretation:
1. The analysis indicates that the net profit and net worth shows increasing tendency. 2. The rate of increase in terms of value and the percentage increases at an increasing rate. However the net profit increase rate is much higher than the rate of increase in net worth.
3. The performance level in the terms of profitability is considered good during the year
2008 & 09 but the net worth increase rate is better in the year 2009 & 10 compare to the year 2007 & 08.
4. To know how the bank is maintaining the balance between retained earnings and declared dividend:
Table: 5
Years
Net profit
Dividend amount
Retained earnings
Working capital
2007-08 2008-09
26,86,000 32,47,000
12,73,557 14,22,095
14,12,443 18,24,905
3,05,400 3,44,900
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2009-10 38,15,000 16,72,689 21,42,311 4,56,900
Analysis:
A comparative statement has been prepared showing net profit, dividend declared, retained earnings and working capital from 2007-08 to 2009-10 for the purport of studying how the bank is maintaining a balance between retained earning and dividend. The information were collected from the annual report of the bank for the purpose of analysis which shows increasing trend in case of net profit, dividend, retained earnings and working profit. The profitability of the bank and the retained earnings increases at a constant rate and at the same time net working capital position of the bank also shows increasing tendency which indicates that the bank management body has succeeded in maintaining a balance between the retained earnings and dividend paid. It is a positive signal that the profitability and the profitability and the dividend paid increasing year by year over the past 3years and at the same time working capital position of the bank also increases proportionality. It is applicable matter of fact, that retained earning and the declared dividend with working capital and profitability are all shows a positive change, which is because of efficiency of the management in operating as well as financing activities.
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Chart-11: showing Dividend amount:-
Chart-12: showing Retained earnings
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Chart-13: showing Working capital
Interpretation:
Since the rate of dividend is stable with helps to maintain stability and at the same time profitability, retained earnings, working capital position shows increasing tendency, the bank may take necessary steps to expand its operation and adopt new schemes and plans in investing of funds which will promote long terms growth and prosperity of bank.
CHAPTER-7
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SUMMERY OF FINDINGS, SUGGESSIONS AND CONCLUSIONS
FINDINGS:
As per the stated objective:1. The impact of dividend declaration on working capital from the analysis it is
very clear that the bank has followed stable dividend policy has declared 10% on net profit as dividend for the past 5yaers. The working capital increases by 13% in the year 2008 & 09 & by 50% in the year 2009 & 10 compare to the year 2007 & 08. It is due to stable/fixed rate of dividend on profit as a result of increase in profit & stable dividend rate on profit both dividend & working capital increases which helps the bank to maintain stability & liquidity position, not only state but also year by year. 2. Object No.2 is to identify the factor influencing the dividend policy & as per the analysis, the important factor into account by the bank informing the dividend policy are as follows: a. Profitability of the bank b. Past dividend rate c. Working capital of the bank
d. Liquidity of the bank
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1. As per the stated objective No.3, the study of the trends in dividend it is clear from the analysis that the bank has followed stable dividend policy for the past 3years (10% on net profit)
2. The 4th objective of the study is to suggest the ideal dividend policy. The
analysis indicates that the profitability, liquidity, working capital position and EPS shows increasing tendency, so the bank has followed stable dividend policy (10% on net profit) over the profit 3years.
3. The 5th objective of the study is to know the relationship between retained
earnings and declaration dividend. The rate of increase is much higher than the rate of increasing dividend amount. It reveals that there is a direct relationship between dividend declared and the retained earnings. The overall position of the bank shows improving tendency and the rate of dividend is constant, however the EPS increases and the amount of dividend is also shows increasing tendency.
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Suggestion:
1. The capital position of the profitability of the bank shows increasing tendency, hence the bank may identify new investment avenues which increases the profitability without affecting the liquidity position of the bank. 2. The present dividend policy of the bank is 10% on net profit which may be kept as a standard dividend policy and an additional amount of dividend may be declared which will help the bank to raise further capital by winning the confidence of the shareholders.
3. Shareholders net worth, profitability, liquidity and retained earnings shows increasing tendency and it is the right time for the bank to go for expansion of the branch and also identify the sector in the urban area which is not covered by any other U.C.B in Tumkur, which will promote the neglected sector of the urban society and which also helps the bank in promoting the economic condition of the urban population. 4. Since Tumkur is a developing city considered as center for learning, hence the bank may think of lending money to educational institute who will support the poor community of the urban population in the educational field.
LTD Conclusions:
The dividend issue is one of the major decisions for the banking industry in India. The RBI which is the Apex bank and the co-operative societies act are issuing guidelines and norms for the bank regarding the dividend issue. The bank has not listed in recognized stock exchange hence the bank need not worry about market value of shares but to build a good image about the ban, it is the need of the hour to maintain stability in respect of dividend decision. This bank has maintained a satisfaction position over the period of the study which is highlighted in analysis and interpretation chapter of this project. Profitability measures the overall efficiency of banking finance and administration and co-operative bank are not an exception. The co-operative banks shall tune up adopt their system of functioning, operations on services in tune with the sweeping changes taking place in the socio-economic and technological environment of the country. I hereby conclude that a researcher after keen observation in the area of dividend at Tumkur Siddagana Urban Co-operative Bank Limited, at main Branch Tumkur district. It is having good infrastructure and staff. The bank under took sincere efforts to maintain stability, liquidity and profitability at a satisfactory level.

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AN ANALYTICAL STUDY ON DIVIDEND POLICY AT SUCB

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90.12 92.74 80.18 97.90

10% 10% 10% A A A

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1. Need of the study:

2. Selection of the organization and the problems:

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3. Selection of the methodology:

5. Benefits to the organization: Dept. of commerce, Vidyavahini PG college, Tumkur-572103 Page 4

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Benefits to the researcher:

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CHAPTER-2 RESEARCH DESIGN

3. Objectives of the study:

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1. Scope of the study:

1. Primary data: Primary data is collected through observation methods and by

2. Secondary data: Secondary data most of the information is gathered by using

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Tools used in data analysis and interpretation:

Limitation of the study:

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Geographical area of the study:

At the administration office:

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CHAPTRE-3 INDUSTRY PROFILE Origin of banking:

Meaning of World Bank and Banking: Bank:

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Co-operatives Banks in India:

Co-operative banks in India finance rural areas under:

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Co-operative banks in India finance urban areas under:

Introduction of banking in India: History of banking:

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Western Banking History:

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Economic importance of Banks:

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History of Co-operative Banking in General: