Escolar Documentos
Profissional Documentos
Cultura Documentos
Summer Training
Project Report
On
OF
SUBMITTED TO
RIMS, ROURKELA (B.P.U.T)
In partial fulfillment of the requirement for the award of degree of
Master of Business Administration.
(2008-2010)
UNDER THE GUIDANCE OF
Corporate Guide : Internal Guide :
Mr. Sarada Kanta Das Prof. Narayan Chandra Samal
Faculty of ACSTI, Lecture in Finance
Orissa State Cooperative Bank Ltd. RIMS, Rourkela.
Bhubaneswar.
SUBMITTED BY:
JYOTI PRAKASH BARIK
Regd. No.:0806260005
Session: 2008-2010
RIMS, Rourkela.
.
BIJU PATNAIK UNIVERSITY OF TECHNOLOGY, ROURKELA
Rourkela Institute of Management Studies, Rourkela Page |
1
Rourkela Institute of Management Studies, Rourkela Page |
2
Rourkela Institute of Management Studies, Rourkela Page |
3
CERTIFICATE OF THE INTERNAL GUIDE:
This is to certify that the project entitled “Financial Statement Analysis of Orissa
State Co-operative Bank Ltd.” is a bonafide record of interim report carried out by Mr.
Jyoti Prakash Barik a student of Rourkela Institute of Management Studies, Rourkela, bearing
University Registration Number 0806260005 (Session 2008-2010), has successfully completed
his Summer Project for the partial fulfillment of the requirements of the award of the degree of
Master of Business Administration of Biju Patnaik University of Technology, Orissa, Rourkela.
To the best of my knowledge and belief, this project is the original effort and contribution which
he has worked sincerely under my guidance in this duration. The summer project report has not
been submitted earlier to this University or to any other University/Institutions.
Wishing him good luck for a successful career and all future endeavors.
I sincerely thank my corporate guide Mr. Sarada Kanta Das (Faculty of ACSTI, Orissa
State Cooperative Bank Ltd. Bhubaneswar) for giving me this opportunity to work in their
esteemed organization and helping me for completing the project in a successful manner.
Without their encouragement and help, this project would have been incomplete.
I also want to say my sincere thanks to my team members for their co-operation and co-
ordination during the training.
I extend my thanks and gratitude to my internal faculty guide Prof. Prof. Narayan
Chandra Samal who has provide me continuous and constant support in the way of the
accomplishment of my project .
Last but not the least I am thankful to almighty God, my family and my friends for their
love and moral support.
Chapter-1 INTRODUCTION
1.1 –Introduction of the Study 9
1.2- Purpose of Study 9
1.3 -Place of Study 10
1.4 -Scope of Study 10
1.5 -Objective of the study 11
1.6 –Methodology 11
1.7 -Data collection 12
1.8 –Tools 12
1.9 –Limitation 12
Chapter-6 CONCLUSION 71
BIBLIOGRAPHY 72
Introduction
1.1 –Introduction of the Study
1.2- Purpose of Study
1.3 -Place of Study
1.4 -Scope of Study
1.5 -Objective of the study
1.6 -Methodology
1.7 -Data collection
1.8 -Tools
1.9 -Limitation
First task is to analyze and select the information which is requiring taking
decision.
The present study is made as a part of the MBA programme for training in
the form of on the job training with the following activities.
Performance of OSCB ltd. for granting credit, providing loan and making
investment.
All the activities are carried out in the Orissa State Co-operative Bank
Ltd. Bhubaneswar.
1.6- Methodology:
The research involved extensive and intensive studies of Orissa State Co-
operative Bank ltd. Bhubaneswar. In this project report a sincere effort has
been made to study the financial statements analysis of the bank. During
this study, I study the financial position and performance of the bank. At last, I
have given interpretation and conclusion of the study.
1.8- Tools:
There are some of the tools, which are relevant for the study of ratio analysis
and performance of OSCB Ltd. are
Comparative statements;
Trend Analysis;
Common-size statements;
Funds flow Analysis;
Cash flow Analysis;
Cost volume profit Analysis;
Ratio analysis.
1.9- Limitation:
CHAPTER-2
Profile of bank
Introduction:
Modern banking in India is said to be developed during the British era. In the 1st half of
the 18th century, the British East India Company established three banks -the Bank of Bengal in
1809, the Bank of Bombay in 1840 and the Bank of Madras in 1843. But in the course of time
these three banks were amalgamated to a new bank called Imperial Bank and later it was taken
over by the State Bank of India in 1955. Allahabad Bank was the first fully Indian owned bank.
The Reserve Bank of India was established in 1935 followed by other banks like Punjab National
Bank, Bank of India, Canara Bank and Indian Bank.
In 1969, 14 major banks were nationalized and in 1980, 6 major private sector banks
were taken over by the government. Today, commercial banking system in India is divided into
following categories.
Types of Banking:
1. Central Bank
The Reserve Bank of India is the central Bank that is fully owned by the government. It is
governed by a central board (Headed by a Governor) appointed by the Central Government. It
issues guidelines for the functioning of all banks operating within the country.
2. Public Sector Banks
A. State Bank of India and its associate banks called the State Bank Group
B. 19 Nationalized Banks
C. Regional Rural Banks mainly sponsored by public sector banks
4. Co-operative Sector
The co-operative sector is very much useful for rural people. The co-operative banking
sector is divided into the following categories:
A. State co-operative Banks
B. Central co-operative banks
C. Primary Agriculture Credit Societies
A. IFCI
B. IDBI
C. ICICI
D. IIBI
E. SCICI Ltd.
F. NABARD
G. Export-Import Bank of India
H. National Housing Bank
I. Small Industries Development Bank of India
J. North Eastern Development Finance Corporation
Banking Services:
Banking in India is so convenient and hassle free that one (individual, groups or whatever
the case may be) can easily process transactions as and when required. The most common
services offered by banks in India are as follow:
" Bank Accounts: It is the most common service of the banking sector. An individual can
open a bank account which can be either savings, current or term deposits.
" Loans: You can approach all banks for different kinds of loans. It can be a home loan, car
loan, and personal loan, loan against shares and educational loans.
" Money Transfer: Banks can transfer money from one corner of the globe to the other by
issuing demand drafts, money orders or cheques.
" Credit and Debit cards: Most of the banks offer credit cards to their customer which can
be used to purchase goods and services on credit. On the other hand debit card also used to draw
cash easily.
" Lockers: Most banks have safe deposit lockers which can be used by the customers for
storing valuable, important documents or jewellery.
Banking Services for NRIs:
Non Resident Indians or NRIs can open accounts in almost all Indian banks. The three types of
accounts that NRIs can open are:
" Non-Resident (Ordinary) Account - NRO A/c
Rourkela Institute of Management Studies, Rourkela Page |
16
" Non-Resident (External) Rupee Account - NRE A/c
" Non-Resident (Foreign Currency) Account - FCNR A/c
Banking industry in India has evolved lately under the impact of the stimulus packages
announced by the Government. According to the Annual Policy 2008-09 of the Reserve Bank of
India (RBI), the central bank, key monetary aggregates have witnessed some growth in 2008-09.
This is reflected in the changing liquidity positions arising from domestic and global financial
conditions and the policy initiatives taken by the government. Also, reserve money variations
during 2008-09 have largely reflected an increase in currency in circulation and reduction in the
cash reserve ratio (CRR) of banks.
According to a study by Dun & Bradstreet (an international research body)-"India's Top Banks
2008"-there has been a significant growth in the banking infrastructure. Taking into account all
banks in India, there are overall 56,640 branches or offices, 893,356 employees and 27,088
ATMs. Public sector banks made up a large chunk of the infrastructure, with 87.7 per cent of all
offices, 82 per cent of staff and 60.3 per cent of all automated teller machines (ATMs).
The Credit Scenario
The year-on-year (y-o-y) aggregate bank deposits stood at 21.2 per cent as on January 2, 2009.
Bank credit touched 24 per cent (y-o-y) on January 2, 2009 as against 21.4 per cent on January 4,
2008. The year-on-year (y-o-y) growth in non-food bank credit at 23.9 per cent as on January 2,
2009 was higher than that of 22.0 per cent as on January 4, 2008. Increase in total flow of
resources from the banking sector to the commercial sector was also higher at 23.4 per cent as
compared with 21.7 per cent a year ago. The incremental credit-deposit ratio rose to 81.4 per cent
as on January 2, 2009, as against 63.1 per cent as on January 4, 2008. Also, during 2008-09 so
far, the total flow of resources to the commercial sector from banks stood at US$ 58.83 billion up
to January 2, 2009. Scheduled commercial banks' credit to the commercial sector expanded by
27.0 per cent (y-o-y) as on November 21, 2008, as compared with 23.1 per cent a year ago.
There has been variation in credit expansion across bank groups. Credit expansion as on January
2, 2009 for public sector banks stood at 28.6 per cent, scheduled commercial banks (SCBs)
including the regional rural banks (RRBs) at 24 per cent, foreign banks at 6.9 per cent and
private sector banks at 11.8 per cent, according to the Annual Policy for 2008-09 of Reserve
Bank of India.
Several measures initiated by the Reserve Bank have resulted in banks reducing their deposit and
lending rates between November 2008 and January 2009. The range for deposit rates for public
sector banks varied from 5.25 to 8.5 per cent, foreign at 5.25 to 7.75 per cent and private sector
banks at 4 to 8.75 per cent. In the post-crisis quarter caused due to collapse of Lehman Brothers,
large corporate like Infosys moved their deposits to State Bank of India (SBI), the country's
Deposits as on January 2, 2009 for public sector banks stood at 24.2 per cent, scheduled
commercial banks (SCBs) including the regional rural banks (RRBs) at 21.2 per cent, foreign
banks at 12.1 per cent and private sector banks at 13.4 per cent, according to the Annual Policy
for 2008-09 of the Reserve Bank of India.
The prime lending rates of public sector banks stood at 12 to 12.5 per cent, private sector banks
at 14.75 to 16.75 per cent and foreign banks 14.25 to 15.50 per cent as on January 2009.
Bank loans rose 18.1 per cent on year-on-year basis as on March 13, the RBI has said in its
Weekly Statistical Supplement released on March 27, 2009. Outstanding loans rose to US$
541.82 billion in the two weeks to March 13. The non-food credit rose to US$ 530.19 billion in
the two weeks, while food credit stood at US$ 9.61 billion in the same period.
Since October 2008, the central bank has cut the cash reserve ratio, or the proportion of deposits
that banks set aside, and the repo rate, or the rate at which it lends to banks, by 400 basis points
each to inject liquidity into the system and activate a lower interest rate regime. Also, the reverse
repo rate has been lowered by 200 basis points to discourage banks from parking surplus funds
with RBI. Till April 7, 2009, the CRR had further been lowered by 50 basis points, while the
repo and reverse repo rates have been lowered by 150 basis points each. Public sector banks have
pruned their benchmark prime lending rates (BPLRs) by 150-200 basis points. Also, in April
2009, private sector banks such as Axis and Bank of Rajasthan have reduced their BPLRs by 50
basis points. Only few foreign banks such as Citibank have pared home loan rates by 50 basis
points to 13.75 per cent.
The rupee depreciated during 2008-09, reflecting varied developments in international financial
markets and portfolio outflows by foreign institutional investors (FIIs). The rupee exchange rate
was between 48.37 to 49.19 against the US dollar and 63.60-68.09 against the Euro in January
2009.
Government Initiatives
Apart from the bank rate cuts announced in the stimulus packages, cash withdrawals from bank
will not attract tax from April 1, 2009 following abolition of the banking cash transaction tax
(BCTT) in the Union Budget 2008-09. The total collection of BCTT stood at US$ 120.36 million
in 2008-09. Also, inter-ATM usage transaction became free of charges effective April 1, 2009.
Exchange rate used: 1 USD = 49.8417 INR
The Indian economy continued to record strong growth during 2007-08, albeit with some
moderation. Real gross domestic product (GDP) growth rate at 9.0 per cent during 2007-08
moderated from 9.6 per cent during 2006-07, reflecting some slow down in industry and
services. A positive feature during the year was a recovery in the growth of real GDP originating
in the agricultural sector, after the slowdown experienced in the previous year. Despite this
moderation, the overall growth rate of the Indian economy during 2007-08 was noteworthy in the
global context.
During 2007-08, the growth of real GDP originating from the industrial sector decelerated to 8.2
per cent as against 10.6 per cent in 2006-07. In terms of Index of Industrial Production (IIP),
industrial growth was at 8.5 per cent as against 11.5 per cent in 2006-07. Manufacturing sector
growth at 9.0 per cent during 2007-08 (12.5 per cent during 2006-07) was the lowest in the last
four years. The mining and electricity sectors also grew at a slower pace during 2007-08. In
terms of use-based classification, the performance of the capital goods sector was particularly
impressive with 18.0 per cent growth.
However, the basic goods, intermediate goods and consumer goods sectors recorded decelerated
growth of 7.0 per cent, 8.9 per cent and 6.1 per cent, respectively, during 2007-08. The
performance of the industrial sector was also affected by the subdued performance of the
infrastructure sector, registering 5.6 per cent growth during 2007-08. The services sector
recorded double digit growth consistently in the last three years. It grew by 10.7 per cent during
2007-08, on top of 11.2 per cent growth in 2006-07
The Reserve Bank during 2007-08 had to contend with large variations in liquidity not only due
to swings in cash balances of the Central Government, but also on account of large and volatile
capital flows. The Reserve Bank judiciously used the CRR, LAF and MSS to manage such
swings in liquidity conditions, consistent with the objectives of price and financial stability. As a
whole, there was a net absorption of liquidity on 171 days and net injection of liquidity on 75
days during 2007- 08. The average daily net outstanding balances under LAF varied between
injection of Rs.10,804 crore during December 2007 to absorption of Rs.36,665 crore in October
In the foreign exchange market, the Indian rupee exhibited two-way movements in the range of
Rs.39.26-43.15 per US dollar during 2007-08. The Indian rupee depreciated to Rs.41.58 per US
dollar on August 17, 2007 from Rs.40.43 per US dollar on July 31, 2007. The exchange rate of
the rupee appreciated thereafter up to January 2008. The rupee moved in a range of Rs.39.26-
39.84 per US dollar during October 2007- January 2008. However, the rupee started depreciating
against the US dollar from the beginning of February 2008 on account of FII outflows, rising
crude oil prices and heavy dollar demand by oil companies. The exchange rate of the rupee was
Rs.39.99 per US dollar at end-March 2008.
The Co operative banks in India started functioning almost 100 years ago. The Cooperative bank
is an important constituent of the Indian Financial System, judging by the role assigned to co
operative, the expectations the co operative is supposed to fulfil, their number, and the number of
offices the cooperative bank operate. Though the co operative movement originated in the West,
but the importance of such banks have assumed in India is rarely paralleled anywhere else in the
world. The cooperative bank in India plays an important role even today in rural financing. The
businesses of cooperative bank in the urban areas also have increased phenomenally in recent
years due to the sharp increase in the number of primary co-operative banks.
Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative
bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and
Banking Laws (Co-operative Societies) Act, 1965.
The Orissa State Co-operative Bank, a Scheduled Bank under RBI Act was registered in
the year 1948 as the Apex Bank of the short term Coop. Credit structure of Orissa with an
objective of Development of the agrarian economy of Orissa by catching the credit equipment of
the terms of the state.
The OSCB had made a humble beginning with a Share Capital of Rs. 1.76 lakhs and a
borrowing of Rs.25.50 lakhs to address the problem of farm credit dispensation. The OSCB, in
its own way has contributed in providing farm credit and inputs to bring the desired change over
the years. The Bank has been trying to develop the primary societies viz. PACS (Primary
Agricultural Co-operative Society) which constitutes of schemes as LAMPS (Large Scale
Agriculture Multipurpose Co-operative Society) / FSS (Farmers Service Co-operative Society).
The activities of the OSCB are not confined to dispensation of farm credit alone. As a
schedule bank, it has responded to the sweeping change in banking service in view of
advancement in Information Techchnology.
The Bank has assumed the role of leader of the Coop - Credit Structure to develop the
lower tiers to cope with the emerging challenges of banking activities. The activities of OSCB
are
General Banking Business
Re-finance to the DCCB
Dispensation of farms credit
Production Credit
Who's Who
The Bank has been accepting deposits from the public and offering all banking facilities to
its customers through its fully computerized branches and extension counts at Bhubaneswar,
Cuttack, Paradeep, Sambalpur. The Banking services offered by the banks include acceptance of all
types of deposits, bills, and exchange, issues of letter of credit, advancing loans to farm and non-
farm sector.
Provision of locker facilities. The bank has made a humble beginning in providing ATM
facility in its Main Branch at Pandit Jawarharlal Nehru Marg.Bhubaneswar for providing Any Time
Banking. This facility shall be provided in all the served cities soon. Integration of all the branches
and extension counters are on the anvil to provide Anywhere Banking Services.
Refinance to DCCBs:
The OSCB came into existence to support the lending activities of its affiliated DCCBs.
The Bank provides refinance to them to pursue the following activities.
Product Credit:
In Orissa, 39.48 lakh farmers have been enrolled as members of the primary Agriculture Coop.
Societies (PACS)/Large Sized Agriculture
And Multi Purpose Co-operative Societies (LAMPS)/Farmers Services Societies (FSS).The Farm
credit requirement of the farmer is met by these societies by availing loans from the DCCBs. The
OSCB extends
Refinance facilities to the DCCBs for financing the PACS. During 1999-2000, Rs. 426.23 Crores
were disbursed to 6.76 lakhs farmers in the state.
The Bank has been dispensing investment credit for Minor Irrigation, Farm Mechanization, Dairy,
Poultry, Horticulture, Plantation, Sericulture etc. through the DCCBs and PACS/LAMPS/FSS. The
dispensation of investment credit and closely monitor the financing, utilization etc.
The OSCB has facilitated the DCCBs diversifying into financing of non-farm sectors. The DCCBs
have been dispensing non-farm credit to small-scale industries in shape of block capital and
working capitals. Loans are also advanced for trading activities, purchase of commercial vehicles,
housing etc. With refinance support from the OSCB. The branches of the banks are also proving
these loans directly.
f. Mass Media
As The Apex Bank of the Coop Credit Structure, the bank has assumed the role of
leadership to develop the structure to face the emerging challenge in banking business.
The Following activities have been taken by the bank in these regards.
i. Introduction of Kisan Credit Card: - The OSCB has been facilitated dispensation of
entire farm credit through Kisan Credit Card only to enable the farmer members to
get instant credit. The DCCBs with the help of the Bank have transformed 813
primary societies as Mini Banks who have mobilized Rs. 250 crores from the rural
areas.
ii. Information Technology in DCCBs :- The OSCB has taken the responsibility to
computerize the operation of the DCCBs to face the challenge from their commercial
counterparts. The software package is finalized for the purpose.
iii. Face lift of the branches of DCCBs and the Mini Bank: - The Bank has been
providing regular assistance for the face-lift of the DCCB Branches and PACS. The
NABARD has also help 200 PACS with financial assistance for improvement of
infrastructure facilities.
vi. Conduct of Study:- To find out the reasons for low off- take of farm
Credit, the bank had appointed all four Universities of the states. They have given
their reports basing on which corrective actions have been taken. The bank has also
undertaken a study on functioning of SHGs in West Bengal to emulate their
experience in the state.
viii. Image Building: The Bank has been undertaking advertisement through hoarding
and electronics media to boost up the images of the entire credit structure.
ix. NABARD as partner of the Bank: - The NABARD has been extending required
support to the Bank to accomplish its objectives.
The assistance include liberal and confessional refinance, assistance from Coop
Development Fund, Support to the women Development cell, Technical, monitoring
and Evaluation Cell, Faculty support to the Training Institute Etc.
xii. Corporate Vision:- The Bank aims at a vibrant Coop. Credit Structure by
strengthening PACS and DCCBs , best customer services through computerization
and anytime-anywhere Banking and above all a satisfied clientele.
Keonjhar CCB
Khurda CCB
Koraput CCB
Mayurbhanj CCB
Nayagarh CCB
Sambalpur DCCB
Sundaragarh CCB
United Puri Nimapara CCB
The short term cooperative credit in Orissa comprising 2714 PACS (including 218 LAMPS
and 6 FSS) at the grass roots level, 17 District Central Cooperative Banks at the middle rung and
Orissa State Cooperative Bank at the apex level have been rendering yeomen’s service to the
farming community. From out of around 50 lakh agricultural families, 44.98 lakh families have
become members of the PACS taking the coverage to 90%.
The Orissa State Co-operative Bank has made strides in many key areas and achieved all targets
setup in the Development Action Plan (DAP). The funds comprising of paid of capital and
resource, deposit and borrowing are the main resource of the bank. A Major chunk of this
The Statutory investment requirement under RBI Act and BR Act are met by investment in
Central/State Governance Securities and others approved trustee securities, seasonal investible
surpluses are deployed in call and short term deposits with commercial banks, to maximize as
yield on assets.
Besides remaining vigilant over judicious deployment of funds, the banks is also making
concerted efforts to bring down the level of non earning assets of the banks and increase the
financial margin.
Reserves:
The Bank since its inception operated above the break even level and attained
sustainable viability long since. As a result, the bank continued to build up its Reservers and
Funds as per the provision of the bye-laws. The total Reserves at the end of 1998-99 stood at
Rs.7092.22 Lakh as against Rs. 5752.52 Lakh in 1997-98. Quantumwise, the reserves increased
by Rs. 1339.70 Lakh during the year, recording growthrate of 23.29 % .
Rs in Lakh
Types of Reservers
1996-97 1997-98 1998-99
Statutory Reserve Fund 404.07 439.18 484.68
Agril,Credit
1803.83 1966.45 2050.64
Stabilisation
Other Reservers 2503.10 3346.89 4556.90
Total : 4711.00 5752.52 7092.22
Deposits
(Rs. in Crores
Deposit Mobilisation.
Year PACS CCB OSCB
Borrowings
The short term cooperative credit structure is not lagging behind in financing investment credit
for acquisition of capital assets by the farmer members to increase agriculture production and
Rourkela Institute of Management Studies, Rourkela Page |
35
productivity by adopting modern technology. The DCCBs and PACS with the assistance of
OSCB have been financing activities like plantation and horticulture, sericulture, pisciculture,
farm mechanisation, small road transport operators, small business, small scale industries, etc.
both under farm and non farm sector. The financing for the purpose during last 8 years is given
as follows:
Crop Loan
The season-wise disbursement of crop loans by the PACS with effect from 1998-99 is given
below for the appreciation of the pivotal role played by the structure.
(Rs. In crores)
Season wise credit delivery/short term (seasonal agricultural
(Membership in
operation) [ST(SAO)]
lakhs
After careful cosideration of the trend and to mobile sizeable deposits as per target, the rate of
intrest on term deposit has been revised. The revised rate of intres shall be effect to from
11.02.2002. The eisting rate of intrest is given as under :
Additional intrest @ 0.25% on single deposit of Rs 255.00 lakhs and above in the term deposit
slab of 91 days shall be admissible w.e.f. 11.02.2002.
Months Payble
12 1268
24 2679
36 4241
48 5974
60 7896
72 10029
84 12394
96 15017
108 17927
120 21155
Housing loans : The bank is financing Housing Loan under its "APNA GHAR " scheme.
Maximum amount under this head is Rs.500000.00 for purchase of readymade house or
construction. For repair, renovation or addition/ alteration the limit is Rs.50000.00. The rate of
interest is 13% on reducing balance. Maximum repayment period is 15 years with 18 months
moritorium period.
Consumer Durable Requirement / Formalities
1. Maximum limit Rs. 50000.00 or 75% of the cost of the item.
2. Subject to five times monthly gross income.
3. Repayable in maximum 40 monthly installments in reducing balance.
Business Enterprise
Requirement / Formalities
1. Retail Business
2. Trader
3. Wholesaler
4. Project Solution
Requirement / Formalities
Orissa State Cooperative Bank is the first bank in the cooperative sector in the country to
introduce sound practices of corporate governance to ensure transparency in its functioning.
During the last three years, the following initiatives have been taken to follow good corporate
practices by addressing a range of issues such as, protection of shareholders rights, enhancing
shareholders value, disclosure requirements, integrity of accounting practices and strengthening
the control system.
The employees of the bank can now expose any wrongdoing of the top management of the bank
without any fear of reprisal. The Board of Management of the bank in its meeting held on
30.06.2003 has accepted the system for protection of whistleblowers adopted in USA and in
Indian Companies like Wipro and Infosys. This facility would give protection to the staff, who
expose irregularities, corruption, mal-practices etc. by the top management of the bank. Under
this system, where any staff of the bank discovers information, which he believes shows serious
mal-practice, impropriety, abuse or wrongdoing, then the information should be disclosed
without fear of reprisal. Following the spirit of the Sarbanes Oxley Act of the USA, which
envisages protection for whistleblowers (staff who expose corruption), a similar policy has been
adopted to enable the employees to raise concern about any irregularity and impropriety at an
early stage and in the right way without fear of victimisation, subsequent discrimination or
disadvantage. OSCB has become the first bank in the country to have adopted such a policy.
Employees are normally the first to realise that there are irregular or illegal practices being
followed by any colleague/ management. Hence a policy which affords protection to the
employees who expose irregularities, corruption, malpractice etc. will go a long way in ensuring
transparent management, setting standards, which the DCCBs shall be encouraged to emulate.
Besides, the Orissa State Cooperative Bank has adopted the following sound practices of
corporate governance.
1. Timely audit of accounts has been ensured. The audit for the year 2005-06 was
completed by 30.06.06.
Rourkela Institute of Management Studies, Rourkela Page |
41
2. The bank has been paying uninterrupted dividend to the shareholders.
3. Common coding of accounting heads has been introduced in the State to integrate the
accounting practices of the OSCB and all affiliated DCCBs. This has facilitated the
computerisation process in the Central Cooperative Banks.
4. Organisation of annual customer meets to understand their changed perception and to
reorient the policies and procedures of the bank. Such meets are also being organised at
the level of the DCCBs as well as the PACS.
5. A transparent transfer policy have been formulated and adopted in the bank. Transfers are
now being effected on the basis of the policy without any other consideration.
6. A bi-monthly house journal entitled “Sampark” is published with effect from January,
2001, which not only provides a forum to the employees to express their views, but also
the management is also able to explain the justification for taking important decisions.
7. Each branch of the OSCB, DCCBs as well as the PACS is being visited by a supervisory
officer every month to inspect the functioning and also impart guidance.
8. Loans Manual for the Bank has been prepared by NABCON- the consultancy arm of
NABARD.
9. Systems Audit of the Bank has been conducted by M/s Haribhakti & Co., Mumbai.
10. A comprehensive HRD policy is being evolved for the Bank by the National Institute of
Bank Management, Pune.
PROJECT OVERVIEW
a. EXTERNAL ANALYSIS: This analysis is done by outsiders who do not have access to the
detailed internal accounting records of the business firm. These outsiders include investors,
potential investors, creditors, potential creditors, credit agencies, government agencies and
general public. For financial analysis, thus serves only a limited purpose. However, the recent
changes in the government regulations requiring business firms to make available more
detailed information to the public through audited published accounts have considerably
improved the position of the external analysis.
b. INTERNAL ANALYSIS: This analysis is done by persons who have access who have access
to the detailed internal accounting records of the business firm is known as internal analysis.
Such an analysis can, therefore, be performed by executives and employees of the employees
of the organization as well as government agencies which have statutory powers vested in
them. Financial analysis for managerial purposes is the internal type of analysis that can be
effected depending upon the purpose to be achieved.
The first step involves selection of information (data) relevant to the purpose of analysis of
financial statements. The second step involved is the methodical classification of the data and the
third step includes drawing of inferences and conclusions.
The following procedure is adopted for the analysis and interpretation of financial statements.
1. The analyst should acquaint himself with principles and postulates of accounting. He
should know the plans and policies of the management so that he may be able to find out
whether these plans are properly executed or not.
2. The extent of analysis should be determined so that the sphere of work may be decided. If
the aim is to find out the earning capacity of the enterprise then analysis of income
statement will be undertaken. On the other hand, if the financial position is to be studied
then balance sheet analysis will be necessary.
3. The financial data given in the statements should be re-organised and re-arranged. It will
involve the grouping of similar data under same heads, breaking down of individual
components of statements according to nature. The data is reduced to a standard form.
4. A relationship is established among financial statements with the help of tools and
techniques of analysis such as ratios, trends, common size, funds flow etc.
5. The information is interpreted in a simple and understandable way. The significance and
utility of financial data is explained for helping decision-taking.
6. The conclusions drawn from interpretation are presented to the management in the form
of reports
Comparative statements:
The comparative financial statements are statements of the financial position at different
periods of time. The elements of financial position are shown in a comparative form so as to give
an idea of financial position at two or more periods. Any statement prepared in a comparative
form will be covered in comparative statements. From practical point of view generally, two
financial statements
1. Balance Sheet
2. Income Statement
While interpreting comparative balance sheet the interpreter is expected to study the
following aspects:
1. Current Financial Position and Liquidity Position
2. Long term Financial Position
3. Profitability of the Concern
1. For studying the Financial Position and short term Financial Position of a concern, one
sees the working capital in both the years. The excess of current assets over current
liabilities will give the figure of working capital. The increase in working capital means
improvement in the current financial position of the business. An increase in current
assets accompanied by the increase in current liabilities of the same amount will not show
any improvement in short term financial position. One should study the increase or
decrease in current assets and current liabilities and this will enable him to analyse the
current financial position.
The second aspect which should be studied in current financial position is the
liquidity position of the concern. If liquid assets like cash in hand, cash at bank, bills
receivable, debtors, etc. show an increase in the second year over the first year, this will
improve the liquidity position of the concern. The increase in inventory can be on account
of accumulation of stocks for want of customers, decrease in demand or inadequate sales
The analysis and interpretation of income statement will involve the following steps:
1. The increase or decrease in sales should be compared with the increase or decrease in
costs of goods sold. An increase in sales will not always mean an increase in profit. The
profitability will improve if increase in sales is more than increase in costs of goods sold.
The amount of gross profit should be studied in the first step.
2. The second step of analysis should be the operational profits. The operating expenses
such as office and administrative expenses, selling and distribution expenses should be
deducted from gross profit to find out operating profits. An increase in operating profit
will result from the increase in sales position and control of operating expenses. A
decrease in operating profit may be due to an increase in operating expenses or decrease
in sales. The change in individual expenses should also be studied. Some expenses may
Classification of Ratios:
The use of ratio analysis is not confined to financial manager only. There are different
parties interested in the ratio analysis for knowing the financial position of a firm for different
purposes. In view of various users of ratios, there are many types of ratios which can be
calculated from the information given in the financial statements. The particular purpose of the
user determines the ratios that might be used for financial analysis.
Liquidity Ratios:
(A) .
1. Current Ratio
2. Liquid Ratio
3. Cash Ratio
Profitability Ratio:
(A) In relation to Sales
1. Gross Profit Ratio
2. Operating Ratio
3. Operating Profit Ratio
4. Net Profit Ratio
5. Expense Ratio
(B) In relation to investments
1. Return on investments
2. Return on capital
3. Return on Equity Capital
4. Return on Total Resources
5. Earnings per share
6. Price-Earning Ratio
I have studied the financial statements of Orissa State Co-operative Bank Ltd. by
using comparative statements device. It shows as under:
Cash in hand
with RBI/SBI/Other 1095019529.56 1389999078.42 294979548.86 26.94
Banks
Fixed Assets:
Other Assets:
Liabilities and 31st March 2007 31st March 2008 Increase/Decrease Increase/Decrease
Capital Rs. Percentage
Current Liabilities:
Short-term Loan
From 5658399000.00 8878069000.00 3219670000.00 56.90
RBI/NABARD
Commission,
Exchange & 8295349.24 10936979.41 2641630.17 32.00
Brokerage
1. Return on Assets:
It states the relationship between net profit and total assets.
Interpretation:
The return on assets of OSCB is not satisfactory. The assets are not utilized properly.
Capital Employed:
Share Capital
Reserve fund & other reserves
Interpretation:
Interpretation:
The return on equity share capital of OSCB provides a higher rate of dividend to its
equity share holders.
It is small variation of return on equity capital. It shows the profit available to each
share holder.
Interpretation:
CHAPTER-5
Findings and Suggestions
5.1 -Findings
5.2 -Suggestions
5.1-FINDINGS:
I. The current assets have increased in 2008 by Rs.8450552873.26 i.e.
45.22%.
II. The cash in hand ha increased by 26394%.
III. The DD Ex-advice, Audit & other recoveries and house rent
8.13% respectively.
V. The fixed deposit liabilities have increased by 21.09%.
VI. The current liabilities have increased by 47.12%.
VII. The number of defaulter is going up year after year.
VIII. Released the house journal “SAMPARK”.
IX. Strengthening of Kissan Credit Card Scheme.
X. Introduction of Swarojagar Credit Card Scheme.
XI. The NPA position has been come down compared to previous year.
XII. The total income has increased by Rs.366040674.50 i.e. 21.00%.
XIII. The Bank has introduced sound practices of corporate governance.
XIV. The profit has been increased by 6.14%.
5.2-Suggestions:
From all the studies we can suggest some point to improve the
profitability of the organization.
The bank should focus more on advancing loans and money from
depositors.
It should reduce the cost of management.
It should recover its money from defaulters in a limited time.
It should control the non operation expenses and other expenditure.
It should ready for the coming competitive as all banks are going to be
privatized.
It should diversify its business and should give loans to non agricultural
sectors.
To increase the net profit at higher rate, carefully designed risk
management systems and increasingly higher aspiration levels of
customer services should be taken.
CHAPTER-6
Conclusion
Conclusion:
If properly analyzed and interpreted, financial statements can provide
valuable insight into a firm’s performance. Analysis of financial statements is
of interest to lenders (short term as well as long term) investors, security
analysts, managers and others. Financial statement analysis may be done for a
variety of purpose, which may range from a simple analysis of the short term
liquidity position of the firm to a comprehensive assessment of the strength and
weakness of the firm in various areas. It is helpful in assessing corporate
excellence, judging credit worthiness, forecasting bond ratings, predicting
bankruptcy and assessing market risk.
I have studied the attached Balance Sheet and Profit and Loss Account of
Orissa State Co-operative Bank Ltd. as at 31st March 2008.
The financial Statements are the responsibility of the banks management.
The analysis and interpretation of financial statements is essential to bring out
the mystery behind the figure in financial statement.
The transactions of Bank, which have come to my notice, have been
within the powers of Bank.
Proper books of account as require by law have been kept by the Bank
in so far as it appears from my observation of those books.
Proper returns have been received from the Bank’s branches.
The balance sheet and profit and loss account are in agreement with the
books of account.
BIBILIOGRAPHY
Reference Books:
1. Gupta Shashi K. & Sharma R. K.: Management Accounting ;
Kalyani Publisher, New Delhi.
2. Prasanna Chandra: Financial Management Theory and Practice; Hill
Publishing Company Ltd, New Delhi.
3. Jawahar Lal & Srivastava Seema,: Financial Accounting;
Sultan Chand & Company Ltd.New Delhi.
4. Gordon E. & Natarajan K.: Banking Theory Law & Practice; Himalaya
Publishing House.
WEBSITE
www.oscb.coop/
www.rbi.com
www.managementparadise.com