OBJECTIVE OF THE STUDY

The main objective of the study is:

1) A Study the concept of Working Capital

2) Analyzed the various sources of working capital management in pravara sahakari bank

3) To study the changes Working Capital last Three Years

1
CHAPTER – 1 EXECUTIVE SUMMARY

2
  EXECUTIVE SUMMARY

PROJECT TITLE: To Study of Working Capital Management of Pravara sahakari bank loni

COMPANY NAME: The Pravara Sahakari bank loni.

INTRODUCTION:

This summer training is an integral part of the MBA course and its successful completion is a
pre-requisite for the fulfillment of the postgraduate degree in management. On visiting
Pravara co-operative bank Loni. I tried to highlight the whole balance sheet of bank and
working procedure of bank. The pravara co-operative bank loni is one amongst the well-
known Co-operative Bank working. To satisfy customer's need is the mission and purpose of
every business. Lending of funds to the constituents, mainly traders’ business and industrials
enterprises, constitutes the main business of the banks. The major portion of the bank funds is
employed by way of loans and advances. Which is the most profitable employment of its
funds. The major part of income is earned from interest and discount on the funds so lent.
Rolling over of advances would be possible only if there is timely recovery of money lent.
Recovery of loans and advances increase banks liquidity and profitability.

3
CHAPTER – 2 INTRODUCTION

4
  INTRODUCTION

 Introduction of The Topic:

Selection of the topic is one of the important things before starting with the project
work. It is, however, difficult to decide which topic should be selected so that it
would be beneficial for both organization as well as me to gain maximum knowledge.
The LPG phenomenon (Liberalization, Privatization and Globalization) have given
rise to immense competition in various sectors of Indian economy. In order to sustain
itself in such competitive market, any organization has to be well aware of its
strengths, weaknesses, opportunities and threats. It helps to estimate the capacity and
possible hurdles for its satisfactory performance.
While selecting the topic rapid changes which are taken in the economy, opportunities
and threats in front of an organization, changing environment and many other things
which an organization has to be aware with, are considered. Taking into consideration
all these things I selected the subject WORKING CAPITAL MANAGEMENT.

Capital is what makes or breaks a business, and no business can run successfully
without enough capital to cover both short- and long-term needs. Maintaining
sufficient levels of short-term capital is a constantly ongoing challenge, and in today’s
turbulent financial markets and uncertain business climate external financing has
become both harder and costlier to obtain. Companies are therefore increasingly
shifting away from traditional sources of external financing and turning their eyes
towards their own organizations for ways of improving liquidity. One efficient but
often overlooked way of doing so is to reduce the amount of capital tied-up in
operations, that is, to improve the working capital management of the company.
Working capital is a financial metric of operating liquidity which describes the
amount of cash tied up in operations and defines the short-term condition of a
company. A positive working capital position is required for the continuous running
of a company’s operations, i.e. to pay short term debt obligations and to cover
operational expenses. A company with a negative working capital balance is unable to
cover its short-term liabilities with its current assets.

5
 WORKING CAPITAL MANAGEMENT
Working Capital Management is concerned with the problems that arise in
attempting to manage the Current Assets, Current Liabilities and the inter-
relationship that exists between them. It refers to the deployment of current assets
and current liabilities efficiently so as to maximize short-term liquidity. The capital
of a business which is used in its day to day operations.
Working capital management entails short term decisions - generally, relating to the
next one-year period.

Definition:
“The capital which is required to finance current assets is called as working
capital. Calculated as the current assets minus current liabilities”.

There are two concepts of working

capital. 1.Gross working capital.
2.Net working capital.

1. Gross working capital: The sum total of all current assets of a business concern
is termed as gross working capital.
Gross working capital = Stock+ Debtors +Receivable+ cash.

2. Net Working Capital: Net working capital means the difference between
current assets and current liabilities.
Net working capital = Stock+ Debtors +Receivable +Cash- Creditors- Payable.
The result of net working capital may be Positive or also be Negative.
If CA > CL = Positive net working capital

If CA < CL = Negative Working Capital

“Every firm has to operate its business with the help of working capital”.

6
 WORKING CAPITAL OPERATING CYCLE:

Working capital cycle or “operating cycle” consist of following steps:

Step 1. Conversion of cash into raw material.
Step 2. Conversion of raw material into work – in- progress.
Step 3. Conversion of work- in – progress into finished goods.
Step 4. Time for sale of finished goods. (Cash sale and Credit sale.)
Step 5. Credit period allowed by creditors for credit purchase of raw material and
inventory.

7
 3. Types of Working capital management:

Working Capital Management

Cash Inventory management Debtors management Short – Term

8
4. Sources of Working Capital Management:

Mainly there are two sources of working capital:

1. Long Term Sources

2. Short Term Source

In any concern, a part of the working capital investments is as investment in fixed assets. This
is so because there is always a minimum level of current assets, which are copiously required
by the enterprise to carry out day-day-day business operation and this minimum, cannot be
expected to reduce at any time. The fixed proportion of working capital should be generally
financed from the fixed capital sources while the temporary or variable working capital
equipment may be met from the short-term sources of capital.

1. Long Term sources:

Long term sources can also be divided into internal and external sources. Long term internal
sources of financed are retained profits and provision for depreciation whereas external
sources are share capital, long term loan, and debentures. They are utilizing for expansion as
well as working capital finance. Long term external sources of finance like share capital is a
cheaper source of finance but are not commonly used for working capital finance.

2. Short Term Sources:

Short term sources can be further divided into internal and external sources of working
capital finance. short term internal sources include tax provisions, dividend provisions etc.
short term external sources include short term working capital working capital from banks
such as bank overdrafts, cash credit, trade deposits, bills discounting, short term loans, inter-
corporate loans, commercial paper, etc.

9
5.List of Current Assets and Current Liabilities:

Current Assets Current liabilities

Inventory (Raw material, WIP, Creditors, Outstanding Expenses, Bills

Inventory), Debtors, Cash and Bank Payable, Bank Overdraft, loans &
balance, prepaid Expenses, Investment Advances, Short term loans, Provision
etc. etc.

10
CHAPTER – 3 INDUSRTY PROFILE

11
 INDUSTRY PROFILE

 Introduction:
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised
and well-regulated. The financial and economic conditions in the country are far superior to
any other country in the world. Credit, market and liquidity risk studies suggest that Indian
banks are generally resilient and have withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative banking models
like payments and small finance banks. RBI’s new measures may go a long way in helping
the restructuring of the domestic banking industry.
The digital payments system in India has evolved the most among 25 countries with India’s
Immediate Payment Service (IMPS) being the only system at level 5 in the Faster
Payments Innovation Index (FPII).
Indian banks are increasingly focusing on adopting integrated approach to risk management.
The NPAs (Non-Performing Assets) of commercial banks has recorded a recovery of Rs
400,000 crore (US$ 57.23 billion) in FY2019, which is highest in last four years. Banks have
already embraced the international banking supervision accord of Basel II, and majority of
the banks already meet capital requirements of Basel III, which has a deadline of March 31,
2019. As per Union Budget 2019-20, investment-driven growth requires access to low cost
capital which a requires investments of Rs 20 lakh crore (US$ 286.16 billion) every year.
Reserve Bank of India (RBI) has decided to set up Public Credit Registry (PCR) an
extensive database of credit information which is accessible to all stakeholders. The
Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill has been passed and is
expected to strengthen the banking sector. In June 2019, RBI sets average base rate of 9.18
per cent for non-banking financial companies and micro finance institutions borrowers for
quarter beginning of July. The digital payments revolution will trigger massive changes in
the way credit is disbursed in India. Debit cards have radically replaced credit cards as the
preferred payment mode in India, after demonetisation. Debit cards garnered a share of
87.14 per cent of the total card spending (as of September 2018).
As per Union Budget 2019-20, the government has proposed fully automated GST refund
module and an electronic invoice system that will eliminate the need for a separate e-way bill.

12
Market Size:
The Indian banking system consists of 27 public sector banks, 21 private sector banks, 49
foreign banks, 56 regional rural banks. In FY07-18, total lending increased at a CAGR of
10.94 per cent and total deposits increased at a CAGR of 11.66 per cent. India’s retail credit
market is the fourth largest in the emerging countries. It increased to US$ 281 billion on
December 2017 from US$ 181 billion on December 2014.

BANKS

27
public sector banks private sector banks fore
56 regional rural banks
21

49

Pie Chart

13
Meaning of Co-Operative Bank: -

A co-operative Bank is a bank which is based on the principles of cooperation. This bank has
no aim of making profit. Co-operative banks are the banks operating in the economy under
co-operative model of ownership. Co-operatives are based on the values of self-help, self-
responsibility, democracy, equality, equity and solidarity. In the tradition of their founders,
co-operative members believe in the ethical values of honesty, openness, social
responsibility and caring for others. Co-operative banks are organized & managed on the
principle of co- operation, self-help& mutual help.co-operative bank work on the basis of
"One Member One Vote".

Structure of Co-Operative Bank: - Co-operatives banks are important constitution of

Indian financial system. The co-operatives movement originated in west, but the important
that such bank has assume in India is rarely parallel in the world.co-operative is voluntary
association of members of self-help, catering to the financial needs on a mutual basis. The
cooperative banking system is federal in nature / structure. structure of co-operative banking
system is three tier structures in India.

1) Primary credit societies

3) State co-operatives banks

3) Central co-operatives banks

State co-operatives bank

Central co-operatives banks

Primary credit societies

14
CHAPTER – 4 COMPANY PROFILE

15
  COMPANY PROFILE

 NAME OF COMPANY: PRAVARA SAHAKARI BANK LTD.

(scheduled bank)

Address: Main Office, Loni (Bk) – 413736, Tal: Rahata Dist. Ahmednagar

Cell no: (02422) 275471,273516 or 18, 273616,273450

Fax no: (02422) 273715

Registration No: ANR/BNK/132 Dt.11-12-1974

Lic.no and Date: ACD.MH.55PDt.07-05-1975.

Contact Details:

Head Office: Pravara sahakari bank, Loni (bk).

Tal-Rahata Dist.-Ahmednagar. Pincode: 413736

Telephone:02422-273516, 273517, 273518

Email: [email protected]

16
 • VISION:

Main Vision is to become first in customer satisfaction. The adoption of all modern
technologies for Better, Fast and Squired service will be priority of the bank.

• MISSION:

The mission statement of Pravara Sahakari Bank is, “BIG BANK FOR SMALL PEOPLE”.

• HISTORY OF THE BANK:

Pravara Sahakari Bank was established in June 1975 by a group of persons committed to
social cause, with a view to needs of weak and Lower-class people. The mission statement of
pravara sahakari bank is, “BIG BANK OF SMALL PEOPLE”.

• ABOUT BANK:

The formation of Pravara Cooperative Sugar Factory and successful working of it has shared
a new area in the history of the Cooperative movement in India in general and in Maharashtra
in particular. The foresight of Late Dr. Padmashri Vithalrao Vikhe Patil has transformed the
way of life of agriculturists, collective efforts through cooperation has given new dimension
and in course of time the area of river Pravara has grown up in to a big complex where
multiple activities viz Sugar Factory, Paper Mill, Distillery, Milk Chilling Plant, Soil Testing
Laboratory. Seed Farms, Transport Operators Society, Consumers Society, PVP College of
Arts, Science and Commerce, College of Engineering, Polytechnic, Pravara Rural Medical
Hospital College and many more are in existence.

We are living in an environment that is full of paradoxes and contradictions. Whereas man
achieved splendid success in the sphere of science and technology, his attainments in the field
of social justice, economic uplift and human relations lag far behind. The benefits of science
and technology reached certain parts of the world, certain parts of the country and certain
sections of society. But the going is not just a walk over. It is hazardous, challenging and
rewarding if one really means it. Only question now posed for an answer is who should take
up this challenge and how to go about.

17
  ORGANIZATIONAL CHART:

Board of Directors

Deputy General
Manager

Head Office

Administrati Accounts
Loan credit Recovery Audit
on manager manager
manager Branches manager manager

Assistant
Assistant Assistant Assistant Assistant
manager
manager manager manager manager

All 19 branches All 11 extension

managers counter officers

Other staff
Other bank staff
18
  BOARD OF DIRECTOR:
For Year (Date-29-07-2015) To (28-07-2020)

Sr no Names Designation
1 Shri Bhavar B. G Chairman
2 Shri Aasawa. S. A Vice chairman
3 Adv. Tambe. G. R Director
4 Shri Mhase. A. B Director
5 Shri Pulate. C. B Director
6 Shri Nalkar. S. B Director
7 Shri Gholap. R. B Director
8 Shri Gunjal. J. B Director

9 Shri Ghogare. B. D Director

10 Shri Raut. A. B Director
11 Shri Gore. M. G Director
12 Shri Mokashi. S. W Director
13 Shri Rahane. P. D Director
14 Shri Bhalerao. K. S Director
15 Shri Pardhe. C. R Director
16 Shri Elag. L. R Director
17 Shri Wani. M. S Director
18 Shri Shirsath. P. G Director
19 Shri Waditake. B. D Director
20 Adv. Kharde. U. B Director
21 Adv. Kotkar. K. S Director
22 Shri Edke. U. S Deputy General Manager
23 Shri. Balote. S. P Deputy General Manager
(source Annual report of pravara sahakari bank)

Table no:3.1

19
  Board of Executives:
Sr no Names Designation

1 Shri. Balote. S. P Deputy General Manager

2 Shri. Maghade. A. N Administrator Officer

3 Shri. Kanade K.S. EDP Manager

4 Shri. Udavant D.G. Accounting Officer

5 Shri. Gholap A. P Credit Officer

6 Shri. Wadile S.H Recovery Manager

(source Annual report of pravara sahakari bank)

Table no:3.2

No of Branches: 19 No of extension counters: 11

Total: 30

 No of employees: Employees 201

 Financial position of the bank:

Financial position of the bank i.e. funds, deposit loans, working capital rupees in lakh in the
Table.

Particulars 2019 2020 2021

Funds 3299 3734 4198
Deposit 49423 50180 53064
Loans 28030 28653 31984
Working capital 55644 57354 61908
Net Profit 204.13 308.76 335.86
(source Annual report of pravara sahakari

Table no: 3.3

20
 70000

61908
60000 57354
55344
53064
49423 50180
50000

40000 Funds

31984 Loans
28563 Deposit Working Capital
30000 28030

20000

10000

0
2019 2020 2021

(source Annual report of pravara sahakari bank)

Graph no: 3.1

 ANALYSIS:

The above graph shows the funds of bank, deposits, loans and working capital of the bank. In
year 2019 the fund amount is (amt in lakhs) 3299 in year 2020 the amount is 3734 and 2021
4198 in that observation the funds are increasing in every year. In year 2019 the deposit
amount is 49423 in year 2021 the amount is 50180 and 2019 53064 in that observation the
deposits are increasing in every year. As same the loans and working capital increasing year
to year.

21
  Banking Product of Pravara Co-operative bank ltd:

Sr No Banking Product Interest Rate

1. Home loan (10% interest Rate)

2. Gold Loan (10% interest Rate)
3. Agriculture Loan (15% interest Rate)
4. Vehicle loan (11% interest Rate)
5. Cash Credit /Business man/Without Businessman (15% interest Rate)
Loan
6. Pravara Bank Exclusive Loan Policy for Chartered
Account, Doctors, Architectures and Employee (11.75% interest Rate)
having salary more than 50,000/- plus
(*terms and condition Apply)
7. Loan for medium, small scale Business (15% interest Rate)
8. Education Loan (15% interest Rate)

9. Without mortgage Loan . (16% interest Rate)

(source Annual report of pravara sahakari bank)

Table no: 3.5

22
CHAPTER – 4 TASK ASSIGNMENT

23
 CHAPTER 4

TASK ASSIGNMENT

 TASK 1:

I have guided the customer to fill the form for account opening.

 TASK 2:
I have guided the customer to filling deposit and withdrawal slip.

 TASK 3:
I have guided the customer regarding which department they should visit.

 TASK 4:
To understand the ratios for working capital management analysis.

24
CHAPTER – 5 RELEVANT ACTIVITIES

25
 RELEVANT ACTIVITIES
1 I have guided the customer to fill the form for account opening.
Fill up bank accounting opening from proposal from necessary details regarding
name, address, occupation and other detail must be filled in whenever required. Two
or three specimen signatures are required on the specimen signature and account
opening from submitted regarding department.

26
2 I have guided the customer to filling deposit and withdrawal slip.

1. Deposit Slip:

1. During Internship guide to the customer regarding filling Deposit slip including your
name and your account number. such as today’s date and branch information
required. List the cash amount of your deposit. This is the total amount of cash.
Signing deposit slip if you are getting cash from your deposit.

27
2. Withdrwal Slip:

A withdrawal slip is printed piece of paper used in bank to withdraw money in cash from
account. The slip contains certain particulars such as name of customer, date, amount to be
withdrawn in words and figure, signature of customer etc.

28
3 I have guided the customer regarding which department they should
visit.

 Head office:
Head office is the main office of an organization. The principle office of a business
organization, constitution the center for administration.

 Administration department:
Administration department is backbone of an organization. An effective administrator
is an asset to an organization. He aur she is the link between an organizations various
department and ensures the smooth flow of information from one part to the other.

 Information technology:
Information technology department details are also provided on the basic information
of a customer.

 Accounting department:
Accounting department preparing the financial statements, maintaining the general
ledger, paying bills, billing customers, payroll, cost accounting, financial analysis and
more.

 Audit & Inspection department:

Auditing involves gathering and assessment of factual information from various
sources. All assets & liabilities of a bank are properly recorded. All Exps properly
accounted for. Inspection is a crucial element of direct control mechanism over
branches by management. Auditing is essentially a review of financial records by an
independent person.

 Cash department:
Cash department should be placed in a branch from his table either clients or the
vault. It is the most important of the bank since from desk cash department has direct
interaction with customer.

29
 HR department:
HR department of an organization performs human resource management, overseeing
various aspects of employment, such as compliance with labor law and employment
standards, administration of employee benefits, organizing of employee’s files with
the required documents for future reference.

This all department available in pravara sahakari bank. I have guided to customer
regarding information this department.

30
4 To understand the ratios for working capital management analysis.
 This was one of the basic tasks that are assigned to internship. Working capital
management, ratios analysis.

1. Current Ratio: Current ratio is the ratio of total current assets to total current
liabilities.
Current Ratio = Total current assets
Total current liabilities
Prepaid expenses are also included in current assets as they represent the
payments that will not be made by the firm in the future. Hence, any adverse trend
in current ratio should be carefully examined. It should be kept in mind that it does
not reflect the quality of non-cash current assets that is the frequency of noncash
current assets turning over to cash.
Year 2020 2021

Ratios 1.78 1

2
1.8 1.78
1.6
1.4
1.2
1
1
0.8
0.6
0.4
0.2
0

2020 2021
Ratios

31
2. Quick Ratio: It is the ratio between quick liquid assets and quick liabilities.
The normal value for such ratio is taken to be 1:1. It used as an assessment tool for
testing the liquidity position of the firm. Liquid assets comprise all current assets
minus stock.

Quick ratio = Quick Assets

Quick liabilities

Year 2020 2021

Ratios 4.73 3.65

5 4.73
4.5
4 3.65
3.5
3
2.5
2
1.5
1
0.5
0

20202021
Quick Ratio

32
 3. Net Working Capital: The difference between current assets and current
liabilities is et net working capital.

Year 2021

Working capital 61,908 lakhs

The table shown is working capital (61,908 lakh).

 Capital & Reserves:

There is growth of Rs 798.01 lakhs in Capital & Reserves as compare to last year
i.e. 14.25% growth during the year under review. However, the capital Adequacy
ratio is 13.67% against a stipulation of 9% as per RBI guidelines, which area of
concerns to the management.

Capital to Risk Assets Ratio:

Capital to Risk Assets Ratio 2020 2021

Capital adequacy ratio- Tier 1 capital 3086.14 3464.91

Capital adequacy ratio- Tier 2 capital 437.17 546.452

33
CHAPTER – 6 LEARNING FROM SIP

34
 CHAPTER 6

LEARNING FROM

SIP
 To understand the what is working capital at pravara sahakari bank.

 Bank using Different types of capital for development.

 Calculation of working capital of pravara sahakari bank (61,908 lakh).

 Learning of ratios analysis working capital. (Current, Quick).

 Learning annual report of pravara sahakari bank.

 Bank provide Different types of loan for different interest rate (i.e.10%,11.75%,16%).

 To learn total current assets and total current liabilities of pravara sahakari bank.

35
 CHAPTER – 7
CONTRIBUTION TO THE HOST ORGANIZATION

36
 CHAPTER 7

 CONTRIBUTION TO THE HOST ORGANIZATION

 To support the bank customers.

 Transfer file one department to another.

 I suggest bank manager develop its website to provide more information to the
customer.

 Making improvement in systematically transaction.

 I have guided the customer regarding which department they should visit.

37
 CHAPTER 8
FINDINGS

From the current ratio and quick ratio, it is concluded that the liquidity of the company has increased.
The quick ratio has increased because of increase in loan an advance.
Increase in Debtors is more than increase in creditors for the year of 2018.
It was the main factor which affected working capital requirement increased.
Other current assets which include various taxes increases as the assets also have increases.

38
SUGGESTIONS

I suggest bank manager develop its website to provide more information to the customer.
Making improvement in systematically transaction.
Increase more different type of capital for development

39
  CONCLUSION

From the current ratio and quick ratio, it is concluded that the liquidity of the company has
increased. The quick ratio has increased because of increase in loan an advance. Increase in
Debtors is more than increase in creditors for the year of 2018. It was the main factor which
affected working capital requirement increased. Other current assets which include various
taxes increases as the assets also have increases.

40
 9. BIBLIOGRAPHY
WEBSITES

1. www.pravarabank.com

2. www.wikipedia.com
3. www.rbi.com, 18 June 2020 7:00 p.m.

4. www.google.com, 22 June 2020, 5:30 p.m.

5. www.rrb.com, 26th July 2020,7:30 p.m.

41