A Study On Financial Analysis at Basaveshwar Urban Co-Operative Credit Society
A Study On Financial Analysis at Basaveshwar Urban Co-Operative Credit Society
A Study On Financial Analysis at Basaveshwar Urban Co-Operative Credit Society
ACHARYA INSTITUTE
OF TECHNOLOGY
(Affiliatedto Visvesvaraya Tec hnological University, Belagavi, Approved byAICTE. New Delhi and Ac credited by NBA and NAAC)
Date: 24/05/2018
CERTIFICATE
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Signature of Internal Guide Signature of HOD
Head of the Departmor/
Depar.tm~rnt of MBA
!;harya Institute of Techno!-:ir~
; ldevanah!N, Bat19alore-560 •i:: ,.
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ACHARYA lNSTrl Ul 1:: CF ff t,r~i•!OLOG'i
Soldevanaha/li Bii ,~;;cl,:;: e-5f5t; 1 Q7
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This is to certify that Mr. Sunil M Jarale, USN 1AY16MBA79, MBA 4
organization .
During the tenure of his study, We found him as sincere and hard working.
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DECLARATION
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I, SUNIL MALLAPPA JARALE hereby declares that the project report entitled on C-
"Astudy on Financial Analysis " with reference to Basaveshwer Urban Co- operative
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Credit Society, Mudalagiprepared by me under the guidance of Prof. Suhas Patel faculty
of MBA Department in ACHARYA INSTITUTE OF TECHNOLOGY and external '-
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guidance by Mr. Basavaraj S. BadigerSr.Manager,Basaveshwer Urban Co- operative
Credit Society, Mudalagi. I also declare that this project work is towards the partial
C-
fulfillment of the university regulations for the award of degree of Master of Business C-
Administration in Yisveswaraya Technological University, Belgaum. I have undergone the e.._
project for the period of 10 weeks. I further declare that this project is based on the original e_
study undertaken by me and not has submitted for the award of any degree/ diploma from
any other university or institution.
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Place: Bangalore C-
Date: 28/04/20 l 8 Si~ ~
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ACKNOWLEDGEMENT
I deem it a privilege to thank our Principal, Dr. Sharanabasava Pilli, Dr. Mahesh, Dean
Academics and our HOD Dr.Nijaguna for having given me the opportunity to do the project,
which has been a very valuable learning experience.
I wish to thank all the respondents from the firms who spent their valuable time in discussing
with me and giving valuable data by filling up the questionnaire.
My sincere and heartfelt thanks to all my teachers at the Department of MBA, Acharya
Institute of Technology for their valuable support and guidance.
Last, but not least, I want to express my deep appreciation to my parents for their unstinted
support.
Table Of Content
Number Chapter Page no.
1 1. Introduction
1.1 Introduction Of Project 1
1.2 Importance Of Project 1
1.3 Benefits Of Project 1
1.4 Financial Services 1
1.5 Industry Profile 2
1.6 Company Profile 9
1.7 SWOT Analysis 11
1.8 Future Growth And Prospects 15
1.9 Financial Statements 16
3 3. Research Design
3.1 Need For The Study 31
3.2 Statement Of The Problem 31
3.3 Scope Of The Study 31
3.4 Tools 32
3.5 Limitations Of The Study 32
3.6 Research Methodology 33
Nowadays banking sector is tremendously developed with using modern technology. Co-
operatives are the part of banking sectors and these works on the basis of banks only. Nowadays
the co-operative banks are facing a high competition from the nationalized banks in loans and
advances. But the co-operatives bank that is “Shri Basaveshwara urban co-operative credit
society ltd” has clear mission and vision to make a good profits and they issuing loans and
advances too.
For running banking business initial capital is important. But after establishing to run
and expanding the organizations the Working capital is very important, The banks getting
working capital by accepting the deposits from public in different ways. Then the bank will
issue the same deposit amount to the public in the form of loans and advances at a different
interest rates. By this way the banks are making profit. Generally the interest rate for deposit
is less than the loans and advances.
The banks just act as an intermediator between the person who have the money and the
person who actually need it.
The topic of the study is “Loans and Advances Study at Shri Basaveshwara urban co-operative
credit society ltd, Mudalagi”
The Internship was conducted at Shri Basaveshwara urban co-operative credit society ltd,
The Internship and project was conducted for the period of 12 weeks starting from 15th
January 2018 to 24th March 2018.
CHAPTER 1
INTRODUCTION
1.1: Introduction:
Internship is an opportunity that offers to a students to getting work experience in
particu1ar fie1d. It will he1ps to learn more about what is practical and why students are benefit
from them. An internship works at a company for a fixed period, usually 3 months. Some
students wi1l have a part-time internship in which they work at the office for some days or
hours per week.
Co-operatives are created 1ong before the advent of the fair trade movement to assist
people to improve their 1ivelihood and protect their interests. Co-operatives are organization
of people who have the same interest and faith. Most scho1ar recognize the business of the
„Rochdale Pioneers of Eng1and‟ as the first co-operative society in 1884,this group of 28 men
(weavers and skil1ed workers in other traders) formed a co-operative society. To sell the same
group people goods in a shop they started business princip1es to guide their work and
estab1ished a shop. Increased risk from the changing market system was a inf1uancing force
in their decision to get towards co-operation. Due to the emergence of mass production during
this period, entrepreneurs who had previous1y been goods added grass c1ippings to bu1k-up
tea, sacrificing qua1ity for quantity. Production was changing in order to accommodate found
them compete with 1arge industries that so1d 1ess cost1y, poor1y made products. In tea
industry 1arge sca1e producers consumers desire for low price, p1entiful products. Those who
rapid1y capable of sustainab1e production of high quality produced high vo1ume cou1d meet
the demand of shifting market.
Another important change in the market system was the new 1arge industries re1ied on
unfair 1abor practices in order to meet production target. Workers 1ost control over working
condition 1ow pay, 1ong hours for claiming co-operative society to give helps to the peop1e in
the society. In Internationa1 Co-operative Alliance (ICA) it was formed in 1895 by E.V Nea1e
of Rochda1e and Edward Owen Greening has f1ourished particu1arly in Europe, Canada and
in some parts of Africa which was mainle focus on agricu1ture.
Co-operatives in India:
The co-operative movement in India has passed through several stages. Scholars have
noted that co-operatives in India have begun wilh the passing of Co-operative Societis Act of
1904.In India the co-operative movement has completed 108 years since its inception. Fredrick
Nichollon has documented that the idea starting co-operative societies in India was motivated
by the factor of combating rural poverty and indebtedness. The Madras government gave a
serious thought to the possibilities of starting a system of land banks in that state. The Famine
commission (1898) strongly advocated the idea of co-operatives for Indian agriculturist. Lord
Curzon examined this report and constituted a committee in 1901 under the chairmanship of
Edward Lawrence. The committee explored the possibilities of launching an organized
cooperative movement in India and submitted meaningful recommendations. Hence, the first
Co-operative Societies Act 1904 was enacted in India for the first time.
The co-operatives have existed for more than 100 years in the country. There has been
vertical and horizontal expansion of co-operatives in the country since-then. The British
government enacted the co-operative credit societies act, 1904 in the country with an view to
safeguard the interest of peasants and artisians from the exploitative tendencies of the traders
who took things for granted. This act facilitated the establishment and development of co-
operatives in the country. According to the latest statistics there are about (approximation) 175
million members,353000 co-operatives of various types, share capital of Rs.7000crore and
working capital of Rs.19000crore in India. The co-operative movement has covered almost all
villages in the country by 95200 primary agricultural co-operatives with about 67% of active
involvement of rural households.
Karnataka state is in the forefront of co-operative movement in India. Krishnaraja
Wodeyar- IV was highly instrumental in heralding a co-operative movement in the state. The
state of Mysore formulated Mysore Co-operative Control Act in 1905 which was more
progressive than the national act. This act facilitated the establishment of co-operatives in urban
and rural areas. The co-operative movement in Mysore state began with the patronage of the
government and gained strength over a period of time through active participation of people.
In North Karnataka, Siddara Gowda, Sanna Ramana Gowda Patil established the first
cooperative credit society in Kanaginahal near Dharwad which was registered by then Registrar
of Bombay Province Robert Mack Nail. In Mysore region, the first co-operative society was
established in Bangalore in the year 1905. The first urban co-operative bank was also
established in 1907 in Bangalore under the banner of Bangalore Central Co-operative Bank,
Mysore State Co-operative Bank was started in 1908 in Bangalore. In 1915 the first marketing
co-operative society was started in Hub1i. Subsequently the first primary land development
bank was established in Dharwad in year 1929.
The registrar of the co-operatives is the burocratic head of the department who controls
and guides the activities throughout the state. Each revenue divisions has a Joint Registrar who
supervises the co-operative activities in the revenue division concerned. There are Deputy
Registrars, Assistant Registrars, Co-operative Development Officers and cooperative extension
officers who work on day to day basis in accordance with the norms and guidelines of the co-
operative system in Karnataka State namely, Primary Land Development Banks at grassroots
1evel, District Centra1 Co-operative Banks at the district 1evel and State Co-operative bank at
the State leve1.
During 1994-95 there were 4350 Primary Agricultural Credit Societies, 7081 Milk
Consumer Societies and Unions, 1768 Consumer Co-operatives, 1734 employees Credit
Societies, 1643 Housing Co-operatives, 1401 Industrial co-operatives in the state of Karnataka.
Co-operatives are now considered as strong vehicles for empowerment which is a big paradigm
shift. The co-operative have been undoubtedly empowering the people by eliminating poverty,
generating self-employment opportunities, creating income generating opportunities and
enrichment of social standards. The co-operatives are actively involved in the empowerment
of marginalized sections of society by improving effectiveness of their interventions in the
market.
To increase in the agricultural production of a country or a state, while providing the better
livelihood for the people who engage in farm activities is a complex task. Agriculture and allied
sectors contributes 13.7 percent of GDP in 2012-2013. Agriculture is the main source of
livelihood for more than 58 per cent of Indian population. Manufacturing sector derives its
importance from the fact that it has main supp1y and demand links with agriculture sector.
Historically agricu1ture in Indian has always been a way of 1ife and suffered from stagnation
due to 1ow productivity increasing from improper investment. This was especially true about
subsistence agriculture. The emergence of green revo1ution in India during the 1ast 60th has
rapidly changed the character of Indian agricu1ture due to adoption of scientific and modern
practices through the use of HYV (High Yielding Variety) seeds, chemica1 ferti1izers,
pesticides, machinery and equipment with investments for land improvement and use of
irrigation facilities.
The rura1 credit system in the country has undergone rapid changes in respect of focus,
approach and structure over the years. Prior to the institutiona1ization of credit, the
agriculturists were mainly dependent on the non-institutiona1 credit, especially they were
dependent on privet money-1enders, who fai1ed to provide the farmers necessary money and
timely credit at appropriate cost.
In order to remove these problems and to supply the farmers adequate and timely credit,
the institutiona1ization of credit was started with the estab1ishment of cooperative societies
with the enactment of corporative societies Act in 1904. Till 1969 cooperative were virtually
the only institutions for dispensing rural credit until the nationalization of 14 commercial
banks, to improve the flow of credit to rural households.
Both cooperative and commercia1 banks have made better progress over the years in
providing credit to agricu1ture under “priority sector” advances as per the guide1ines of
Reserve Bank of India. Agencies enhancing adequate and time1y agricultural credit to farmers
can be an important acceleration of agricultural development and improving the living
standards of the farm community.
The co-operative credit structure has 2 wings name1y production credit (short term
credit structure) which comprises of Primary Agricultura1 Credit Societies (PACS) at the base
1evel, District Centra1 Co-operative Banks (DCCB) at the intermediate 1evel and State
Cooperative Banks (SCB) at the apex 1evel. And the investment credit (long term credit
structure) comprise of state Co-operative Agriculture and Rura1 Development Banks
(SCARDBs) at the apex leve1 and Primary Co-operative Agricu1ture and Rura1 Development
Banks (PCARDBs) and their branches at the Taluk level.
There are 4914 PACS, 616 branches of DCC Banks, 3,965 branches of commercial and
1,120 branches of RRBs functioning in the state during the year 2012-2013. The cumulative
growth rate of base level credit flow by commercial banks for the last six years is 235 per cent,
followed by RRBs (169%), DCC Banks (77%), and PCARDBs (102%). The agricultural sector
has substantially improved with the adoption of modern technologies in production by the
farmers.
1.6: COMPANY PROFILE
Board of Directors
Manager
Accountant
The nature and composition of the board of directors of the bank is broad1y
governed and contr1ed by relevant provisions of the companies act, the banking
regu1ation Act, 1949 and clause 49 of the 1isting agreement.
The bank also followed with the requirements of section 10A of the banking
regulation act, 1949 which clearly mentioned that not less than 51% of the tota1 number
of members of the board are those who have specia1 knowledge or practical experience
in sectors like Accountancy, Agricu1ture, Banking, Economy, Finance, Small Sca1e
Industry etc., representing ‘Majority Sectors’.
Name Designation
Mr. Channabasu B. Baddi President
Mr. Shrikanth S. Hiremath Vice president
Mr. Ravindra I. Bagoji Director
Mr. Basavaraj M. Teli Director
Mr. Shrishail Y.Madagannavar Director
Mr. Girish S. Dhavaleshwar Director
Mr. Prashant K. Nidagundi Director
Mr. Shivabasu A. Shabannavar Director
Smt. Sharadha B. Dhavaleshwar Director
Smt. Boravva M. Angadi Director
Mr. Dharamaraj N. Phola Director
STAFF of Shri Basaveshwara Urban Co-operative Credit Society Ltd.
Mudalagi
Name Designation
Mr. Basavaraj S. Badiger Manager
Mr. Sadashiv K. Hukkeri Deputy Manager
Mr. Shankar L. Kotambari Accountant
Mr. Ramesh M. Godigoudar Cashier
Mr. Ramesh M. Jhunjurwad Clerk
Mr. Irayya S. Nandgavmath Attainder
Mr. Mahesh G. Mugalkhoda Attainder
Mr. Kalmesh B. Rangapur Attainder
Mr. Ramesh M. Hullyal Attainder
Mr. Revappa K. Ganiger Pigmy Collector
Smt. Pooja S. Patil Pigmy Collector
Strengths
➢ Lack of professionalism
➢ Lack of Infrastructure
➢ Lack of technical knowledge
➢ Small area of operation
➢ Identification of new customers
➢ Burden of heavy work
➢ Inexperienced personnel
Opportunities
Threats
➢ Government Policies
➢ Recession
➢ Stability of the system
➢ Competition
➢ Change in market trend
➢ Change in government regulation
➢ Unrecovered loan
➢ Increase in competition
1,8: Future growth and prospects:
➢ The Bank is planning to have less interest rate on all the services for the betterment of
the customers.
➢ The Bank is planning to have Online banking for the customers.
➢ Planning to have various benefits on agricultural activities.
➢ Planning to reduce Fixed deposit term from the period of 6 years to 5.5 years.
➢ Planning to have C.T.S cheque facilities
➢ Planning to core banking facilities.
➢ Planning to E- stamping facilities.
➢ Planning to safety locker facilities.
1.9: FINANCIAL STATEMENT
1. Common Size Statements: The balance sheet items are display the relative percentage of
total assets and tota1 1iabilities. In other words common size statement is a statement which
tells that the how many percentage of numerica1 value that the items has in re1ating to
tota1 assets and 1iabilities. As the ratio of each asset to tota1 assets and the ratio of each
1iability to total 1iabilities. It is performed by considering total balance sheet as 100%
and the figures of financia1 statements are converted to %.
Separating 'Common Size Balance Sheet': Any single resource detail is contrasted
with the estimation of aggregate resources. Similarly, any single risk is thought about the
estimation of aggregate liabilities and any value record is contrasted with the estimation of
aggregate value. Therefore, each significant characterization of record will meet 100% as
every single littler segment will indicate the real record arrangement.
3. Ratio analysis: The expression "Ratio analysis" indicates the analysis of the economic
declarations in conjunction with the elucidations of budgetary after effects of a specific
time of operations, inferred with the assistance of 'proportion'. Ratio analysis is utilized to
decide the budgetary soundness of a business concern.
(1) Liquidity Ratios: Liquidity ratio tells about the banks instant repaying capacity. This ratio
is used to measure the capabi1ity of the bank to meet its short term ob1igation. Liquidity
means instant or easy transferab1e assets asset in a short term. If company fail to maintain
enough liquidity assets to face future risk. There are 3 ca1culation should done in liquidity
ratio.
(2) Solvency Ratios: solvency ratio study the whole deal cash related achievability of a
business i.e. its ability to pay off its whole deal duties, for instance, bank propels, bonds
payable, et cetera. Information about dissolvability is fundamental for banks, laborers,
proprietors, speculators, institutional monetary pros, government, et cetera.
(3) Profitability Ratios: Profitability ratio measure the limit of a business to win profit for its
proprietors. While liquidity extents and dissolvability extents clear up the cash related
position of a business, benefit extents and efficiency extents grant the money related
execution of a business.
(4) Credit to loan ratio: The credit to-1oan ratio (LTD) is a usually uti1ized measurement for
eva1uating a bank's 1iquidity by separating the bank's aggregate advances by its aggregate
stores. This number is communicated as a rate. In the event that the proportion is too high,
it tells that the bank might not have enough liquidity to cover any unexpected reserve
necessities, and on the other hand, if the proportion is too 1ow, the bank may not procure
as much as it cou1d be.
(5) Return on assets ratio: Generally it tells about the companies profit in relation to the total
asset of the bank. It shows that what percentage of profit the bank gets in re1ation to its
tota1 resources .Return on asset ratio is the net income created by the depend on its
aggregate resources. The higher the extent of normal profit resources the better would be
the subsequent profits for add up to resources.
4. Trend analysis: A trend ana1ysis exp1ain that how the company or bank is growing year
by year with comparing to base year. In this analysis one year is consider as a base year
which is treated as 100%. By comparing remaining year with base year we can easily get
the differences. This ana1ysis is a part of specia1ized examination that tries to predict the
future deve1opment of a stock in view of past information.
Separating Trend Analysis: trend ana1ysis tries to envision an example, for instance, a
purchaser grandstand run, and ride that example until the point when data suggests an example
reversal, for instance, a bull-to-hold up under market. Pattern investigation is helpful because
moving with designs, and not against them, will incite advantage for a theorist.
An example is the general heading the market is taking in the midst of a predefined
time period. Examples can be both upward and dropping, relating to bullish and bearish
markets, independently. While there is no predefined minimum measure of time required for a
course to be seen as an example, the more broadened the bearing is kept up, the all the more
exceptional the example.
Trend ana1ysis is the path toward endeavoring to look at current examples with a
particular true objective to foresee future ones and is seen as a kind of relative examination.
This can join attempting to choose if a present market design, for instance, gets in a particular
market part, is most likely going to continue, and also whether an example in one market zone
could achieve an example in another. Regardless of the way that an examination may
incorporate a considerable measure of data, there is no accreditation that the results will be
correct.
Utilizing Trend Analysis: Keeping in mind the end goa1 to start breaking down materia1
information, it is important to first figure out which advertise portion will be dissected. A case
of segments can incorporate an attention on a specific industry, for examp1e, the car or
pharmaceutica1s division, and a specific kind of specu1ation, for examp1e, the security
advertise. Once the area has been chosen, it is conceivab1e to inspect the general execution of
the segment. This can incorporate how the division was inf1uenced by inward and outer
powers. For instance changes in a comparative industry or the making of another administrative
contro1 wou1d qualify as powers affecting the market. Examiners then take this information
and endeavor to anticipate the heading the market will take pushing ahead.
2.2: LITERATURE REVIEW
Levitz, G. S., & Brooke Jr, P. P. (1985). Independent versus system-affi1iated hospita1s: a
comparative ana1ysis of financia1 performance, cost, and productivity. Hea1th Services
Research, 20(3), 315.
This artic1e ana1yzes differences in the cost, productivity, and financia1 performance between
system-affi1iated and independent hospita1s. Data for the study were collected from the report
of 1981 American Hospita1 Association (AHA) Annual Survey of Hospitals for the State of
1owa and inc1uded 94 non state or non-federa1 short-term hospitals without long-term care
units.
Dr. Anurag B and Ms. Priyanka Tandon (2012) : A study on comparative ana1ysis of SBM and
ICICI bank. Internationa1 journal of marketing, 27(1), 122
According to them, the purpose of the study was to examine the financia1 performance of SBM
and ICICI bank. The too1s app1ied for the study was SPSS and ana1yzed secondary data for
the research on the basis of ratios such as credit deposit, net profit, margin etc. Based upon
their ana1ysis they found that SBM was performing well and financially sound than ICICI bank
Ms. Anita Makkar(2013). Ana1ysed re1ative examination of the money re1ated execution of
Indian business banks. Internationa1 journa1 of business and management
The review considered a specimen of 37 banks (22 open division banks and 15 private segment
banks) for the period from 2006-07 to 2010-11. CAMELS rating technique was uti1ized as a
part of the review to gauge the execution of the considered banks. The review found that the
IDBI Bank was the best performing bank took after by Kotak Mahindra Bank and ICICI Bank.
Dhana1axmi Bank had the most exceeding1y awfu1 execution took after by J and K Bank and
Karnataka Bank Ltd.
Priya Ponraj and Rurusamy Rajendran(2012). Measured the bank intensity among the select
Indian business banks as far as money related quality. Business economics Progression and
globalisation 20(9),301.
Business economics Progression and globalization has driven Indian keeping money
organizations to concentrate on nature of administration, speed and cost to confront extreme
rivalry A bank is said to be focused on the off chance that it is fiscally solid. Budgetary quality
of the bank is measured regarding monetary proportions viz. proficiency proportion,
productivity proportion, capital sufficiency proportion, salary consumption proportion, stores
and return proportions. Consider investigation is utilized to structure and identify the segments
of monetary quality. The focused position mapping of people in general part, private area and
outside banks is gotten by applying discriminant examination. It is found that outside banks
are the most aggressive contrasted with the private and open segment banks as far as the benefit
proportion, returns proportion and capital ampleness proportion.
Gabriel Prabhu and G. chandrashekaran (2015). Banking plays an vital role in India. It has a
1arge network to give a financial services to the customers. In this paper study tells about the
SBI and ICICI to know performance of the organisation in the private and public sector. To
study is conducted to compare SBI and ICICI financia1 performance by taking the ratios such
as net profit. The result says that both SBI and ICICI have better managing efficiency.
Kumar Gandhi and r. Peruma1(2017), The main purpose of this study is to investigate the
financia1 performance of chosen bank like SBI, ICICI, IDFC, public and private sector bank.
This article aims on investment decisions towards the mutual fund by using ratio and statistical
tools of selected banks. Based on the resu1tthe performance of the banks work is higher and
useful for the investor in investment decisions also the mutua1 fund company performance of
the company
.
Priyanka Aggarwal (2014), this paper is to know whether the sustainable companies are money
making or not. Researchers contain conducted last year financial performance to know the
profit or loss of the company. Secondary data are used to know the financial performance of
the organisation in Indian context. Results find there is no financial performance sustainability.
Saritha Bahi and Meenakshi Rani (2012), the paper explains the performance of open ended
and growth equity schemes for 6 years of period. Monthly NAV is calculated to know the
returns of the funds. To analyse the performance of these schemes the companies have taken
sharpes, treynors and jensens because the results will be useful for investors.
Patel (1995), in his paper on viabi1ity of rura1 banking, inferred that 1ow vo1ume of
business per branch and per emp1oyee and high leve1 of credit deposit ratio were two
major factors causing 1osses in rura1 banking system. He observed that re1ative share of
non-farm sector 1oans in rural banks was going up.
Murthi and Saraswati (1996), in their paper tit1ed, “Reducing Overdues in Credit Co-
operatives: Some A1ternatives” undertook a study to eva1uate the Quantitative Progress
made in respect of supp1y of Institutiona1 Credit. Using the secondary data made
avai1ab1e by RBI in Statistica1 Statements re1ating to Co-operative Movement in India
for a period of 6 years from 1978 to 1983 and assessing the 1oaning Po1icies of Girijan
Co-operative Corporation, Visakhapatnam, the study conc1uded that the progress in
respect of supp1y of credit was phenomena1 over the period of study but this progress
pa1es into significance, if the magnitude of overdues was considered. It pointed out that
the most unnerving aspect of institutiona1 credit was the a1arming1y high percentage of
overdues, i.e., about 43% of 1oan recoverab1e in the second-ha1f of the 80s in the case
of co-operatives.
Das (1997), in his paper, studied the productivity in nationa1ised banks. He observed
that 1abour productivity in nationa1ised banks, over the time, had not on1y remained
1ow but a1so substantially dec1ined. He advocated the restructuring of banks to improve
productivity in Indian banks.
Deo1alkar (1998), in his study tit1ed, “The Indian Banking Sector on Road to Progress”
observed that NPAs in Pub1ic Sector Banks were recorded at about 457 billion in 1998.
About 70% of gross NPAs were 1ocked up in “Hard Core” doubtfu1 and 1oss assets,
accumu1ated over years, pending either in courts or with Board for Industria1 and
Financia1 Reconstruction (BIFR). He further added that the main cause of NPAs in the
banking sector was the DIRECTED LOANS SYSTEM, under which the commercial
banks were required to supp1y a prescribed percentage of their credit (40%) to the
Priority Sector.
Pathania and Singh (1998), in their study titled, “A Study of Performance of HP State
Co-operative Bank” observed that the performance of the Himacha1 Pradesh State Co-
operative Bank Ltd. in terms of membership drive, share capita1, deposit mobilization,
working capita1 and advances has improved over the period of five years, i.e., 1991-92
to 1995-96. However, recovery performance was unsatisfactory and overdues had
increased sharp1y. This was due to the after effects of 1oan waiver 31 scheme.
Satyasai and Badatya (2000) conducted a study regarding restructuring Rura1 Credit
Co-operative Institutions. They ana1ysed performance of rura1 co-operative credit
institutions on the basis of borrowings and 1ending operations, cost structure, financia1
viabi1ity, etc. and found that co-operative system, in genera1, had fai1ed to perform its
functions proper1y.
Verma and Reddy (2000), conducted a study ana1yzing the causes Overdues in
Cooperatives under SWOOD, to assess recovery and NPAs position in these banks.
Po1icy distortions in 1ibera1ized economy and inefficient management were identified
as main reasons for poor recovery. Misuti1isation of credit, politica1 interference at every
leve1, successive crop fai1ures, non-remunerative prices of agricu1ture produce,
inadequate income and natural ca1amities, were some other factors, which affect the
working cu1ture of co-operative banks considerab1y.
Das (2001) in his study tit1ed, “A Study on the Repayment Behaviour of Samp1e
Borrowers of Arunacha1 Pradesh State Co-operative Apex Bank Limited”, examined the
repayment behaviour of 1oanees, covering a period of 1994-95 to 1998-99. On the basis
of primary data collected, researchers conc1uded that incidence of defau1t was highest
among borrowers for agricu1ture allied activities 1oans.
The study of intra firm helps the company to know the financial position and solvency of both
competitors and company itself which assist the survival and growth of the business. This study
helps in identify the competitive strength of company among its competitors. The study helps
the company to know the strength and weaknesses of similar business unit which provide
platform to get success in the market and most importantly this study helps in making necessary
changes in the firms operations to improve its performance and to get financial benefits.
Financial performance analysis is important to evaluate the performance of the company; hence
comparison is taken to find out the financial performance of the bank using various tools like
common size statement, comparative statement, ratio analysis and trend analysis.
OBJECTIVES
➢ To determine the variation in the items of income statement and balance sheet by
common size statement
➢ To evaluate the performance of the bank by comparative study
➢ To ascertain the so1vency, liquidity and financial position of the bank using ratios.
➢ To analyze bank’s data over a period of time using trend analysis
This study has been involved in evaluating the financial performance of Basaveshwer
Bank with other banks by using annual financial reports. The study confined to Basaveshwer
Bank at Mudalagi main branch and the study covers the all the financial activities of the
company.
3.4: TOOLS
Since a few actualities and business mystery kept up entirely by the organization, it is
impractical to gather all data.
➢ The review is constrained to the execution of the organization for restricted period.
➢ Time accessible for the review was imperative.
➢ This review is not generally relevant.
➢ The review depends on recorded information and organization uncovered just the fiscal
actualities.
➢ The review is restricted to assess the monetary execution of save money with its rivals
and to get conceivable proposals as it were.
➢ Data analysis is limited to 3 years.
➢ Tools included in this report are comparative analysis, ratio analysis and trend analysis.
3.6: Research Methodology
Methodology is indispensable because of its scientific fee through unless a proper
method is followed, project well or study would not be complete successfully therefore to
achieve at notable result. Methodology forms a significant part of it.
The aim of methodology is to present a clear idea of the procedure followed in this
study. In the time of collecting the information adopt statistical tools and methods to study
more effectively. There are two type of source of information these are as follows.
1. Primary data
2. Secondary data
1. Primary data:
• Observation
• Personal interview
2. Secondary data:
These are collected from reference books, library text material and other
relented books to study.
• Company brochures
• Company website
CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
4.1: FINANCIAL ANALYSIS
Assets
Cash in hand 2,29,54,278 3.80 1,88,25,000 3.87 81,78,717 3.20
Bank fees 2,75,37,886 4.56 3,62,22,145 7.45 1,19,70,628 4.69
Investment 12,19,00,000 20.19 12,96,50,000 26.66 4,86,25,000 19.05
Loans 40,64,57,237 67.34 27,94,70,260 57.46 17,64,00,207 69.11
Investment 3,00,000 0.05 3,00,000 0.06 3,00,000 0.11
Fixed assets 2,16,86,344 3.59 2,07,03,044 4.26 74,20,667 2.91
Current assets 27,44,448 0.45 11,82,613 0.24 10,48,705 0.41
Total Assets 60,35,80,193 100 48,63,53,063 100 25,52,39,435 100
Interpretation
From the above analysis it is clear that the total liabilities in 2017 is increased as
compared to previous two years 2016 and 2015. Similarly the assets is also increased. For the
current year it is concluded that the banks performance is very high as compare to previous two
years in terms of assets and liabilities. The banks profit decreasing year by year. The banks
assets and liabilities increasing but its profit is not increasing as increasing the assets. The bank
should effectively utilise the available resources.
We can see that the banks fixed asset, current assets, investment, loans, share capital
and cash in hand are increasing but the profit of the bank is decreasing. So its not a good sign
to bank and its share holders.
4.2: COMPARATIVE ANALYSIS
Net worth
Assets
Cash in hand 2,29,54,278 1,88,25,000 4129278 17.99
Bank fees 2,75,37,886 3,62,22,145 -8684259 -31.54
Investment 12,19,00,000 12,96,50,000 -7750000 -6.38
Loans 40,64,57,237 27,94,70,260 126986977 31.24
➢ Loans has been increasing from 2016 to 2017 that is 31.24% has increased.
➢ The share capital also increased by 34.90%
➢ The drastic change in current asset i.e, 56.91%
➢ But the investment and bank fees has increased i.e 6.8% & 31.54% accordingly
➢ We can see that the banks profit has increased by 22.06%
➢ The overall banks activities and its position is good compare to previous year.
Table 3) Comparative balance sheet for the year 2015 &2016
Capital and
liabilities:
5074405 31.32
1,11,27,195 1,62,01,600
Share capital
Reserves 3,04,51,270 4,32,91,374 12840104 29.66
Assets
Cash in hand 81,78,717 1,88,25,000 10646283 56.55
Bank fees 1,19,70,628 3,62,22,145 24251517 66.95
Investment 4,86,25,000 12,96,50,000 81025000 62.49
Loans 17,64,00,207 27,94,70,260 103070053 36.88
➢ There is increment in absolute share capital and value share capital. i.e., 31.32%
➢ The add up to liabilities have expanded by 47.52%
➢ Loans and current assets has expanded by 36.88% and 11.32% separately
➢ The banks absolute profit is increased by 35.84% as compared to base year 2015.
➢ The bank financial position is good and also increasing its financial position year by year.
We can see these financial changes in comparative balance sheet of the bank.
➢ The fixed assets trend of the bank shows the gradual increase in the fixed assets of the bank
compared to the base year 2015. We can observe the drop down in the trend in the year
2015, but it was recovered in the next year itself of the previous year value. This trend
depicts the bank’s safe position of possessing more assets and is on safer side in the market.
4.3: RATIO ANALYSIS
CURRENT RATIO
Current assets
1. Current Ratio =
Current liabilities
Current Ratio
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2017 2016 2015
Interpretation
Acceptable current ratio values vary from year to year. A current ratio of 1:0.3 in
2017.1:4.5 in 2016 & 1:2.3 2015 is considered to be acceptab1e. The high the current ratio is,
the more capab1e the bank is to pay its ob1ige. But as compare to 2016 & 2015 the current
ratio of 2017 is increased which is not good sign for bank.
The bank should try to increase its current ratio in its upcoming years otherwise it face
unexpected risk in future which will harm to the bank.
QUICK RATIO
(Current asset−inventory)
1. Quick Ratio =
Current liabilities
Quick Ratio
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2017 2016 2015
Interpretation
Generally, quick ratio shou1d be 1:1. Suppose quick ratio is high, bank may keep too
much cash on hand or have a prob1em in collecting its accounts receivab1e. If a quick ratio
1ower than 1:1 may indicate the bank depend too much on inventory or other assets to pay its
short-term liabi1ities. Here its bad indication to banks. Because in the year 2015 the ratio is 2.3
and in the year 2016 it increased to 4.5 but in 2017 drastica1y it decreased to 0.3. so the bank
should try to increase it.
DEBT EQUITY RATIO
1.5
0.5
0
2017 2016 2015
Interpretationjt5
It will tells about the proportion of banks assets and its debt. This ratio tells about the
ability of repaying capacity of the bank
Acceptable debt equity ratio va1ues vary from year to year. A ratio of 1:0.34 in 2017,
1:0.85 in 2016 and 1:2.1 2015 is considered to be acceptab1e. The higher the current ratio is,
the more capab1e the bank is to pay its ob1igation.
𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡𝑠
Return on assets ratio=𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Chart Title
0.12
0.1
0.08
0.06
0.04
0.02
0
2017 2016 2015
Table 8) Reserves
Interpretation:
Here we consider 2013 is a base year for calculation, so it will help to analyzing the
financial position of the bank. It will tells about how the bank has been trying to improve its
performance. We can see the reserve trend and what it indicates by seeing above table.
In the year 2017 the Reserve trend percentage is 177.78% and the reserves is
increasing year by year. The bank doing well in this way. In the year 2015 the bank has
decreased its reserve then in next year it has covered by increasing the trend i.e,
145.54%
Table 9) Deposits
250
200
150
100
50
0
2013 2014 2015 2016 2017
Interpretation:
Here we can see that how banks deposit has been improving year by year. Hare also I
consider 2013 as a base year for calculating the deposit trend.
The above table shows that the deposits in trend analysis is increased from 2015 to 2017
which is a positive sign to banking industry. In the year 2015 it has came down but in next
year it has covered by increasing the deposit.
For the banks improvement purpose the deposit is very important because the bank
uses deposit as its main source to generate income. By seeing above trend it is clear that
the banks position is good in terms of deposits.
250
200
150
100
50
0
2013 2014 2015 2016 2017
Interpretation:
Here also I considered 2013 as a base year. The above table shows that the total
debt in trend analysis is drastically increased from 2015 to 2016 which is good sign to bank.
But it decreased in the year 2015. If increasing the banks debt automatically its liability
increases, the bank will incurred more loss by repaying the interest to its debt
200
150
100
50
0
2015 2016 2017
Trend percentage
Interpretation:
Here, year 2015 is considered as a base year. The above table shows that the total asset
in trend analysis is increased from 2016 to 2017. It has increased but still it would increased.
Tne bank should try to increase its assets in up coming years.
200
150
100
50
0
2015 2016 2017
Trend percentage
Interpretation:
The above table shows that the total asset in trend analysis is decreased from 2016 to 2017.
It has increased but still it would increased. It increased in 2017 is good sign of the bank
Here we can see the five year annual report and its improvement. Here can also see that the
individual performance of the different category with charts.
1E+09
900000000
800000000
700000000
600000000 2011-12
500000000
400000000 2012-13
300000000 2013-14
200000000
100000000 2014-15
0 2015-2016
Years Amt
2013 9626950
2014 10676950
2015 11127195
2016 16201600
2017 21857300
Graph 11) Table Shows Share Capital of The Bank
Share Capital
25000000
20000000
15000000
10000000
5000000
0
2013 2014 2015 2016 2017
Years
Interpretation:
The table shows that the share capital of the bank is increasing year by year. In 2016
onwards it drastically increased. It is a good sign to bank and it attracting the investors to
invest in the bank.
Years Amt
2013 29743500
2014 37285179
2015 3,04,51,270
2016 4,32,91,374
2017 5,28,81,125
Graph 12) Table Shows Reserve Fund of the Bank
Reserve
60000000
50000000
40000000
30000000
20000000
10000000
0
2013 2014 2015 2016 2017
Reserve
Interpretation
The reserve fund of the bank is increasing year by year. In 2013 and 2014 the
increasing rate is slow but 2015 it decreased. Then onwards the reserve has increased at a
high rate. The reserve will helpful to face the unexpected risk of the bank.
Years Amt
2013 183737648
2014 210803987
2015 19,67,55,529
2016 40,18,83,059
2017 49,65,90,958
Graph 13) Table Shows Deposits of the Bank
DEPOSIT
500000000
450000000
400000000
350000000
300000000
250000000
200000000
150000000
100000000
50000000
0
2013 2014 2015 2016 2017
Interpretation
The banks deposit is main source to bank which provide the money to run business.
The table shows that the deposit is increasing year by year but in 2017 the banks deposit has
drastically increased which is a good sign to bank.
Years Amt
2013 116212862
2014 155310490
2015 17,64,00,207
2016 27,94,70,260
2017 40,64,57,237
Graph 14) Table Shows Loans of the Bank
Loan
450000000
400000000
350000000
300000000
250000000
200000000
150000000
100000000
50000000
0
2013 2014 2015 2016 2017
Loan
Interpretation
Loan is also increasing year by year even loan is also drastically increased in the year
2017. Its main source to get profit. By lending loan to customer the bank earns profit.
Years Amount
2013 5251479
2014 5917612
2015 74,20,667
2016 2,07,03,044
2017 2,16,86,344
Graph 15) Table Shows Fixed Asset of the Bank
Fixed Asset
25000000
20000000
15000000
10000000
5000000
0
2013 2014 2015 2016 2017
Fixed Asset
Interpretation
Fixed Asset of the bank is increasing year by year which is helps to meet day
today obligation of the bank. In the year 2016 the fixed asset has increased very high
as compared to last years. Its good sign to banks potential.
Table 19) Net Profit:
Years Amount
2013 6158017
2014 6519702
2015 80,22,463
2016 1,25,03,316
2017 1,60,42,728
Net Profit
18000000
16000000
14000000
12000000
10000000
8000000
6000000
4000000
2000000
0
2013 2014 2015 2016 2017
Amount
Interpretation
The banks net profit increasing well. In the year 2014 the net profit decreased but again
it started to increase. In 2017 it drastically increased. We can easily say that the bank
performing well in its financial activities. The net profit is the main tool to measure the financial
performance of the bank.
CHAPTER 5
➢ From the above Common size balance sheet analysis it is clear that the total liabilities
in 2017 is increased. Similarly the assets is also increased. For the current year it is
concluded that the bank’s performance is very high in terms of assets and liabilities.
➢ The fixed assets trend of the bank shows the gradual increase in the fixed assets of the
bank compared to the base year 2015. We can observe the drop down in the trend in the
year 2013, but it was recovered in the next year itself. This trend depicts the bank’s safe
position of possessing more assets and is on safer side in the market.
➢ Current ratio in the last 3 years is not meeting the standards 2:1, hence company is not
able to pay short-term and 1ong-term ob1igations.
➢ The quick ratio of company indicating proportion above 1:1 ratio, which indicates that
company has ability to meet current obligations using liquid assets.
➢ Acceptable debt equity ratio values vary from year to year. Lower the debt equity ratio
is lower the risk.
➢ Return on assets ratio indicates that profitability is deteriorating.
➢ Reserves trend indicates a good improvement in the current financial year that is 2016.
A huge difference of reserves can be seen in this year from 109.45% to 107.17%
➢ Total debt trend analysis is decreased from 2013 to 2016. Hence the lower Total debt
trend analysis is lower the risk.
➢ In total liability trend analysis there is increase in the year 2013 but decreased in the
next three years. It is good improvement in the next three years.
5.2: SUGGESTIONS
• Share capital increasing in the same all three years, reserves have increasing trend hence
depicting the increase of net worth. Deposits also have shown increasing trend while
borrowings are decreased but total liabilities have increased over three years. Total
assets also increased.
• Current ratio – the bank should concentrate on increasing the current ratio thereby
developing abi1ity to pay off short-term and 1ong-term ob1igations.
• Quick ratio – the company should focus on increasing the quick ratio which intern
makes the company’s liquidity position better.
• Current to deposit ratio has to maintain total advances and total deposits for the future.
• Since the debt equity ratio are increasing it is better for the new investors to get into
and buy the share of the firm.
• Return on asset ratio is constant in all year, hence they should get more net profits.
• It is been suggested to maintain certain amount of reserves for forthcoming years, so
that they can use for some expansion program.
• Total debt – it is long term debt, reducing debt is favorable action where the bank has
more flexibility in operating activities.
• Total liability- decreasing liability is good sign to the bank which indicates the net
worth of the company intern good financial health
• Company can also go for merger because of the growth in the operating and net profit
as well
5.3: CONCLUSION
The overall performance of the Bank is improving year after year is reflected by a tremendous
increase in the profitability of last year. On the basis of various techniques applied for the
financial analysis, it can be concluded that the co is in very strong financial position. Increasing
trend in profit shows that the organization has made a lot of progress in operation to a
considerable extent.
We can say that by analyzing its ba1ance sheet that the bank performing well in terms
of financia1 matter, comparative balance sheet , trend analysis and ratio analysis are disp1ying
that the bank is performing well and growing year by year. The management is also playing
well in this matter. The banks directors are well qua1ified and know1edgab1e persons from
different area and different business area. They he1ps to bank in taking decisions and making
different policies.
Even the bank employees are also well qua1ified and experienced. They also
performing their work efficiant1y and effective1y. The bank has a good potential in future
because this bank is a big co-operative society in this city.
BOOKS REFFERED
❖ Murthi and Saraswati (1996), in their paper tit1ed, “Reducing Overdues in Credit
Co-operatives: Some A1ternatives”
❖ Reddy and Reddy (1996), in their study titled, “Nature and Dimensions of Wi1ful
and Non-Wi1ful Defau1t and Impact of Co-operative Credit Po1icy with reference to
Nellore District of Andhra Pradesh”
❖ Deo1alkar (1998), in his study tit1ed, “The Indian Banking Sector on Road to
Progress”
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