SWATI SAHAY

A
Summer PROJECT REPORT
ON
WORKING CAPITAL IN ICICI BANK OF INDIA
In Partial Fulfllment of the Post Graduate Diploma in
Management RCMA, Bhubaneswar Bat!h" #$%$"%#&

SUBMITTED TO SUBMITTED BY
FACULTY GUIDE SWATI SAHAY
Mr. R.K.MISHRA
REG NO:- !!"#$"%
LECT&ER IN FINANCE
RCMA 'BH&BANESWAR(
CORPORATE GUIDE:-
Mr.RAJESH SRIVASTAV
(MANAGER IN FINANCE)
ICICI Bank, PATNA
1
SWATI SAHAY

Plot No. GD 2/12 & 13, Chakadola Vihar, Chandra!khar"#r, $h#%an!&ar '
()1*23, +diha,India.
PREFACE
MANAGEMENT HAS TWO FACES: ONE IS THEORETICAL AND OTHER IS MANAGEMENT HAS TWO FACES: ONE IS THEORETICAL AND OTHER IS
PRACTICAL ASPECT.THE THEORETICAL ASPECT OF MANAGEMENT ,WE PRACTICAL ASPECT.THE THEORETICAL ASPECT OF MANAGEMENT ,WE
LEARN AT OUR INSTITUTE AND THE PRACTICAL ASPECT IS PROVIDED IN LEARN AT OUR INSTITUTE AND THE PRACTICAL ASPECT IS PROVIDED IN
FORM OF SUMMER INTERNSHIP. FORM OF SUMMER INTERNSHIP.
THE MAIN IDEA BEHIND THE INTERNSHIP IS TO BRING A MANAGEMENT THE MAIN IDEA BEHIND THE INTERNSHIP IS TO BRING A MANAGEMENT
STUDENT TO THE ACTUAL ENVIRONMENT OF THE BUSINESS SCENARIO, SO STUDENT TO THE ACTUAL ENVIRONMENT OF THE BUSINESS SCENARIO, SO
THAT HE IS ABLE TO JUDGE THE THEORETICAL AND PRACTICAL ASPECTS THAT HE IS ABLE TO JUDGE THE THEORETICAL AND PRACTICAL ASPECTS
AND KNOW THE DIFFERENCE BETWEEN THE TWO. IT ALSO HELPS TO HAVE AND KNOW THE DIFFERENCE BETWEEN THE TWO. IT ALSO HELPS TO HAVE
A GLIMPSE OF A CORPORATION IN WAY OF PRACTICAL TRAINING BEFORE A GLIMPSE OF A CORPORATION IN WAY OF PRACTICAL TRAINING BEFORE
FINALLY MOVING INTO THE CORPORATE WORLD AND PROFESSIONALISM. FINALLY MOVING INTO THE CORPORATE WORLD AND PROFESSIONALISM.
THE INTERNSHIP AT ICICI BANK LIMITED WAS REALLY A GREAT THE INTERNSHIP AT ICICI BANK LIMITED WAS REALLY A GREAT
OPPORTUNITY FOR ME TO LEARN ABOUT THE CORPORATE WORLD. THE OPPORTUNITY FOR ME TO LEARN ABOUT THE CORPORATE WORLD. THE
STUDY OF WORKING CAPITAL MANAGEMENT IS DIRECTED TOWARDS STUDY OF WORKING CAPITAL MANAGEMENT IS DIRECTED TOWARDS
REPORTING THE FACTS GATHERED FROM THE SECONDARY DATA. THE REPORTING THE FACTS GATHERED FROM THE SECONDARY DATA. THE
REMAINING PARTS DEALS WITH THE OUTCOME TO COMPLETE THE STUDY. REMAINING PARTS DEALS WITH THE OUTCOME TO COMPLETE THE STUDY.
I HOPE MY STUDY WILL HELP THE ORGANIZATION TO TAKE PROPER I HOPE MY STUDY WILL HELP THE ORGANIZATION TO TAKE PROPER
MARKETING STRATEGIES TO CONTROL THE OPERATIONS.IF MY STUDY MARKETING STRATEGIES TO CONTROL THE OPERATIONS.IF MY STUDY
CAN HELP PEOPLE TO GO FOR FURTHER RESEARCH IN THIS FIELD THAN CAN HELP PEOPLE TO GO FOR FURTHER RESEARCH IN THIS FIELD THAN
MY CHERISH DESIRE WILL BE FULFILLED.IN THIS STUDY, EFFORTS HAVE MY CHERISH DESIRE WILL BE FULFILLED.IN THIS STUDY, EFFORTS HAVE
BEEN MADE TO PREPARE THE REPORTS AS JUDICIALLY AS BEEN MADE TO PREPARE THE REPORTS AS JUDICIALLY AS
POSSIBLE.ERRORS &OMISSION,IF ANY MAY KINDLY BE TAKEN AS POSSIBLE.ERRORS &OMISSION,IF ANY MAY KINDLY BE TAKEN AS
UNINTENTIONAL & BE PARDONED. UNINTENTIONAL & BE PARDONED.
2
SWATI SAHAY

ACKNOWLWLEDGEMENT
IF WORDS ARE CONSIDERED TO BE SIGNS OF GRATITUDE THEN LET IF WORDS ARE CONSIDERED TO BE SIGNS OF GRATITUDE THEN LET
THESE WORDS CONVEY THE VERY SAME MY SINCERE GRATITUDE TO THESE WORDS CONVEY THE VERY SAME MY SINCERE GRATITUDE TO
ICICI BANK FOR PROVIDING ME WITH AN OPPORTUNITY TO WORK WITH ICICI BANK FOR PROVIDING ME WITH AN OPPORTUNITY TO WORK WITH
BANK AND GIVING NECESSARY DIRECTIONS ON DOING THIS PROJECT TO BANK AND GIVING NECESSARY DIRECTIONS ON DOING THIS PROJECT TO
THE BEST OF MY ABILITIES. THE BEST OF MY ABILITIES.
I AM HIGHLY INDEBTED TO I AM HIGHLY INDEBTED TO MR. RAJESH SRIVASTAV MR. RAJESH SRIVASTAV, BRANCH , BRANCH
MANAGER, WHO HAS PROVIDED ME WITH THE NECESSARY MANAGER, WHO HAS PROVIDED ME WITH THE NECESSARY
INFORMATION AND ALSO FOR THE SUPPORT EXTENDED OUT TO ME IN INFORMATION AND ALSO FOR THE SUPPORT EXTENDED OUT TO ME IN
THE COMPLETION OF THIS REPORT AND HIS VALUABLE SUGGESTION THE COMPLETION OF THIS REPORT AND HIS VALUABLE SUGGESTION
AND COMMENTS ON BRINGING OUT THIS REPORT IN THE BEST WAY AND COMMENTS ON BRINGING OUT THIS REPORT IN THE BEST WAY
POSSIBLE. POSSIBLE.
I AM ALSO OBLIGED I AM ALSO OBLIGED DR.PRABIR PAL DR.PRABIR PAL (DIRECTOR OF RCMA, (DIRECTOR OF RCMA, DR. SUJATA DR. SUJATA
MANGARAJ MANGARAJ (DEAN OF M.B.A. DEPARTMENT RCMA & (DEAN OF M.B.A. DEPARTMENT RCMA & PROF. PROF.
RAMAKRISHNA MISHRA RAMAKRISHNA MISHRA WHO INSPIRED TO GO AHEAD WITH WHO INSPIRED TO GO AHEAD WITH
FULFILLING THE PROJECT REPORT . FULFILLING THE PROJECT REPORT .
I EXPRESS MY GRATITUDE TOWARDS EMPLOYEE OF ICICI BANK, THOSE I EXPRESS MY GRATITUDE TOWARDS EMPLOYEE OF ICICI BANK, THOSE
WHO HAVE HELPED ME DIRECTLY OR INDIRECTLY IN COMPLETING THE WHO HAVE HELPED ME DIRECTLY OR INDIRECTLY IN COMPLETING THE
TRAINING TRAINING
SWATI SAHAY SWATI SAHAY
PGDM (2010-2012) PGDM (2010-2012)
ROLL NO-10012!12" ROLL NO-10012!12"
3
SWATI SAHAY

CERTIFICATE CERTIFICATE
THIS IS TO CERTIFY THAT THE PROJECT ENTITLED ! THIS IS TO CERTIFY THAT THE PROJECT ENTITLED !WORKING CAPITAL WORKING CAPITAL
MANAGEMENT# MANAGEMENT# OF ICICI BANK OF LIMITED HAS BEEN CARRIED OUT BY OF ICICI BANK OF LIMITED HAS BEEN CARRIED OUT BY
MISS. SWATI SAHAY MISS. SWATI SAHAY HAVING HAVING REGISTRATION NO-10012!12" REGISTRATION NO-10012!12" FROM "#ST FROM "#ST
MAY TO $TH JULY %&##, UNDER MY SUPERVISION IN PARTIAL MAY TO $TH JULY %&##, UNDER MY SUPERVISION IN PARTIAL
FULFILLMENT OF HER PGDM %&#&'%&#% AT REGIONAL COLLEGE OF FULFILLMENT OF HER PGDM %&#&'%&#% AT REGIONAL COLLEGE OF
MANAGEMENT (AUTUNOMOUS ,BHUBANESWAR. MANAGEMENT (AUTUNOMOUS ,BHUBANESWAR.
I AM SATISFIED WITH HIS SINCERE PERFORMANCE AND STUDY I AM SATISFIED WITH HIS SINCERE PERFORMANCE AND STUDY
CONDUCTED BY HER IN ICICI BANK OF LIMITED. CONDUCTED BY HER IN ICICI BANK OF LIMITED.
I RECOMMEND SUBMITTING THE PROJECT REPORT. I WISH HIM ALL I RECOMMEND SUBMITTING THE PROJECT REPORT. I WISH HIM ALL
SUCCESS IN LIFE. SUCCESS IN LIFE.
THIS IS ALSO CERTIFIED THAT THE PROJECT WORK IS ORIGINAL AND HAS THIS IS ALSO CERTIFIED THAT THE PROJECT WORK IS ORIGINAL AND HAS
NOT BEEN SUBMITTED TO ANY OTHER PLACE. NOT BEEN SUBMITTED TO ANY OTHER PLACE.
DATE: DATE:
R.K. MISHRA R.K. MISHRA
FACULTY IN FINANCE FACULTY IN FINANCE
RCMA(BHUBANESWAR RCMA(BHUBANESWAR





-
SWATI SAHAY


DECLARATION
I HEREBY DECLARE THAT THE FOLLOWING DOCUMENTED PROJECT I HEREBY DECLARE THAT THE FOLLOWING DOCUMENTED PROJECT
REPORT TITLED ! REPORT TITLED !WORKING CAPITAL MANAGEMENT IN BANKING WORKING CAPITAL MANAGEMENT IN BANKING
SECTOR SECTOR( IS AN AUTHENTIC WORK DONE BY ME AS A PART OF MY STUDY ( IS AN AUTHENTIC WORK DONE BY ME AS A PART OF MY STUDY
ON FINANCE. ON FINANCE.
I ALSO FURTHER STATE THAT THE PROJECT HAS BEEN PREPARED BY MY I ALSO FURTHER STATE THAT THE PROJECT HAS BEEN PREPARED BY MY
OWN WITH THE SECONDARY DATA PROVIDED IN THE REPORTS OF THE OWN WITH THE SECONDARY DATA PROVIDED IN THE REPORTS OF THE
COMPANY, WHICH WERE ESSENTIAL FOR THE COMPLETION OF THE COMPANY, WHICH WERE ESSENTIAL FOR THE COMPLETION OF THE
PROJECT. THE PROJECT WAS UNDERTAKEN AS A PART OF THE COURSE PROJECT. THE PROJECT WAS UNDERTAKEN AS A PART OF THE COURSE
CURRICULUM OF PGDM PROGRAMME, RCMA,BHUBANESWAR. THIS HAS CURRICULUM OF PGDM PROGRAMME, RCMA,BHUBANESWAR. THIS HAS
NOT BEEN SUBMITTED TO ANY OTHER EXAMINATION BODY EARLIER. NOT BEEN SUBMITTED TO ANY OTHER EXAMINATION BODY EARLIER.

SWATI SAHAY SWATI SAHAY
)
SWATI SAHAY

INDE$
CONTENTS PAGE NO.
1. E$ECUTIVE SUMMARY %%%%%%%%%%.. %%%% !.
2. INTRODUCTION TO INDUSTRY%%%%%%%%%%% 11.
&. COMPANY PROFILE%%%%%%%%%%%%%%%%%&1.
&.1 PRODUCTS AND SERVICES%%%%%%%%%. 2
&.2 SWOT ANLYSIS%%%%%%%%%%%%%%% '
&.& FINANCIAL STATEMENT%%%%%%%%. %%!
. REVIEW OF LITERATURE
.1 WORKING CAPITAL OVERVIEW%%%%%%...'1
.2 CASH MANAGEMENT%%%%%%%%%%% '(
'. RATIO ANALYSIS%%%%%%%%%%%%%%%%%%((
(. FINDINGS AND SUGGESSTION %%%%%%%%%%%...!)
!. CONCLUSION%%%%%%%%%%%%%%%%%%%.. )1
). BIBILOGRAPHY%%%%%%%%%%%%..%%%%%%.)2
.
SWATI SAHAY

E$ECUTIVE SUMMARY
INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA BANK INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA BANK
(ICICI IS THE LEADING PRIVATE BANK IN INDIA. ESTABLISHED IN #)**(AS (ICICI IS THE LEADING PRIVATE BANK IN INDIA. ESTABLISHED IN #)**(AS
INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA.#))+, INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA.#))+,
ICICI ESTABLISHED BANKING CORPORATION AS A BANK SUBSIDIARY ICICI ESTABLISHED BANKING CORPORATION AS A BANK SUBSIDIARY
FORMERLY INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF FORMERLY INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF
INDIA. LATER ICICI BANKING CORPORATION RENAMED AS ,ICICI BANK INDIA. LATER ICICI BANKING CORPORATION RENAMED AS ,ICICI BANK
LIMITED-. ICICI BANK-S E.UITY SHARE IS LISTED IN NSE AND BSE, AND LIMITED-. ICICI BANK-S E.UITY SHARE IS LISTED IN NSE AND BSE, AND
ITS AMERICAN DEPOSITORY RECEIPTS ARE LISTED IN NEW YORK STOCK ITS AMERICAN DEPOSITORY RECEIPTS ARE LISTED IN NEW YORK STOCK
EXCHANGE. ICICI BANK-S IS INDIA SECOND LARGEST BANK WITH TOTAL EXCHANGE. ICICI BANK-S IS INDIA SECOND LARGEST BANK WITH TOTAL
ASSETS OF RS. +,&/%."+ BILLION (US0 )# BILLION AT MARCH "#, %&## AND ASSETS OF RS. +,&/%."+ BILLION (US0 )# BILLION AT MARCH "#, %&## AND
PROFIT AFTER TAX RS. *#.*# BILLION (US0 #,#** MILLION FOR THE YEAR PROFIT AFTER TAX RS. *#.*# BILLION (US0 #,#** MILLION FOR THE YEAR
ENDED MARCH "#, %&##. THE BANK HAS A NETWORK OF %,*+" BRANCHES ENDED MARCH "#, %&##. THE BANK HAS A NETWORK OF %,*+" BRANCHES
AND ABOUT $,&"$ ATMS IN INDIA, AND HAS A PRESENCE IN #) COUNTRIES, AND ABOUT $,&"$ ATMS IN INDIA, AND HAS A PRESENCE IN #) COUNTRIES,
INCLUDING INDIA. ICICI BANK IS LARGEST ISSUER OF CREDIT CARD IN INCLUDING INDIA. ICICI BANK IS LARGEST ISSUER OF CREDIT CARD IN
INDIA. INDIA.
THE BANK IS EXPANDING RAPIDLY IN OVERSEAS MARKETS. THE BANK IS EXPANDING RAPIDLY IN OVERSEAS MARKETS.
IT HAS OPERATIONS IN THE UK, HONG KONG AND CANADA. IT AC.UIRED IT HAS OPERATIONS IN THE UK, HONG KONG AND CANADA. IT AC.UIRED
A SMALL BANK IN RUSSIA RECENTLY. IT HAS TIE'UPS WITH MAJOR A SMALL BANK IN RUSSIA RECENTLY. IT HAS TIE'UPS WITH MAJOR
BANKS IN THE US AND CHINA. THE BANK IS AGGRESSIVELY TARGETING BANKS IN THE US AND CHINA. THE BANK IS AGGRESSIVELY TARGETING
THE NRI POPULATION FOR EXPANDING ITS BUSINESS. IT ALREADY THE NRI POPULATION FOR EXPANDING ITS BUSINESS. IT ALREADY
OFFERS MONEY TRANSFER FACILITIES TO INDIA FROM MOST MAJOR OFFERS MONEY TRANSFER FACILITIES TO INDIA FROM MOST MAJOR
COUNTRIES ACROSS THE GLOBE. ICICI ALONG WITH UTI SETS UP CREDIT COUNTRIES ACROSS THE GLOBE. ICICI ALONG WITH UTI SETS UP CREDIT
RATING INFORMATION RATING INFORMATION SERVICES OF INDIA LIMITED, (CRISIL INDIA1S SERVICES OF INDIA LIMITED, (CRISIL INDIA1S
FIRST PROFESSIONAL CREDIT RATING AGENCY FIRST PROFESSIONAL CREDIT RATING AGENCY
(
SWATI SAHAY

THE WORKING CAPITAL RATIO IS CALCULATED AS: THE WORKING CAPITAL RATIO IS CALCULATED AS:
POSITIVE WORKING CAPITAL MEANS THAT THE COMPANY IS ABLE TO POSITIVE WORKING CAPITAL MEANS THAT THE COMPANY IS ABLE TO
PAY OFF ITS SHORT'TERM LIABILITIES. NEGATIVE WORKING CAPITAL PAY OFF ITS SHORT'TERM LIABILITIES. NEGATIVE WORKING CAPITAL
MEANS THAT A COMPANY CURRENTLY IS UNABLE TO MEET ITS SHORT' MEANS THAT A COMPANY CURRENTLY IS UNABLE TO MEET ITS SHORT'
TERM LIABILITIES WITH ITS CURRENT ASSETS (CASH, ACCOUNTS TERM LIABILITIES WITH ITS CURRENT ASSETS (CASH, ACCOUNTS
RECEIVABLE AND RECEIVABLE AND INVENTORY.WORKING CAPITAL ALSO GIVES INVENTORY.WORKING CAPITAL ALSO GIVES
INVESTORS AN IDEA OF THE COMPANY-S UNDERLYING OPERATIONAL INVESTORS AN IDEA OF THE COMPANY-S UNDERLYING OPERATIONAL
EFFICIENCY. MONEY THAT IS TIED UP IN INVENTORY OR MONEY THAT EFFICIENCY. MONEY THAT IS TIED UP IN INVENTORY OR MONEY THAT
CUSTOMERS STILL OWE TO THE COMPANY CANNOT BE USED TO PAY OFF CUSTOMERS STILL OWE TO THE COMPANY CANNOT BE USED TO PAY OFF
ANY OF THE COMPANY-S OBLIGATIONS. ANY OF THE COMPANY-S OBLIGATIONS.
TO MEASURE EFFICIENCY WE HAVE USED RATIO ANALYSIS AS TO MEASURE EFFICIENCY WE HAVE USED RATIO ANALYSIS AS
A TECHNI.UE AND THE MAIN RATIO WE HAVE USED ARE LI.UIDITY A TECHNI.UE AND THE MAIN RATIO WE HAVE USED ARE LI.UIDITY
RATIO AND ACTIVITIES RATIO. ONE MORE TOOL WE HAVE USED IS RATIO AND ACTIVITIES RATIO. ONE MORE TOOL WE HAVE USED IS
CALCULATION OF OPERATING CYCLE WHICH SHOWS HOW EFFECTIVELY CALCULATION OF OPERATING CYCLE WHICH SHOWS HOW EFFECTIVELY
THE FIRM IS USING ITS RESOURCES OR HOW MUCH TIME ITS TAKE TO THE FIRM IS USING ITS RESOURCES OR HOW MUCH TIME ITS TAKE TO
CONVERT ITS INVESTMENT BACK INTO CASH. CONVERT ITS INVESTMENT BACK INTO CASH.


/
SWATI SAHAY

OBJECTIVE OF STUDY
TO FIND OUT THE EFFICIENCY OF WORKING CPITAL TO FIND OUT THE EFFICIENCY OF WORKING CPITAL
MANAGEMENT. MANAGEMENT.
TO HAVE A PRACTICAL EXPERIENCE OF THE FUNCTIONING OF THE TO HAVE A PRACTICAL EXPERIENCE OF THE FUNCTIONING OF THE
FINANCE DEPARTMENT OF A BANKING COMPANY. FINANCE DEPARTMENT OF A BANKING COMPANY.
TO STUDY HOW WORKING CAPITAL MANAGEMENT PRACTICES PLAYS AN TO STUDY HOW WORKING CAPITAL MANAGEMENT PRACTICES PLAYS AN
IMPORTANT ROLE IN SUPPORTING OTHER ACTIVITIES OF AN BANKING IMPORTANT ROLE IN SUPPORTING OTHER ACTIVITIES OF AN BANKING
INDUSTRY. INDUSTRY.
TO GAIN FAMILIARITY WITH THE VARIOUS COMPONENTS OF WORKING TO GAIN FAMILIARITY WITH THE VARIOUS COMPONENTS OF WORKING
CAPITAL IN ICICI BANK OF INDIA. CAPITAL IN ICICI BANK OF INDIA.
TO FIND OUT THE DIFFERENCE BETWEEN THE THEORETICAL AND TO FIND OUT THE DIFFERENCE BETWEEN THE THEORETICAL AND
PRACTICAL ASPECT OF WORKING CAPITAL MANAGEMENT. PRACTICAL ASPECT OF WORKING CAPITAL MANAGEMENT.

TO STUDY AND COME OUT WITH ANY SOLUTION FOR IMPROVEMENT OF TO STUDY AND COME OUT WITH ANY SOLUTION FOR IMPROVEMENT OF
WORKING CAPITAL MANAGEMENT AT ICICI BANK OF INDIA. WORKING CAPITAL MANAGEMENT AT ICICI BANK OF INDIA.
TO KNOW THE LI.UIDITY POSITION OF THE COMPANY WITH THE HELP OF TO KNOW THE LI.UIDITY POSITION OF THE COMPANY WITH THE HELP OF
CURRENT RATIO. CURRENT RATIO.

0
SWATI SAHAY

METHODOLOGY
THE DATA WHICH I HAVE COLLECTEDFOR MAKING THIS PROJECT IS THE DATA WHICH I HAVE COLLECTEDFOR MAKING THIS PROJECT IS
COMBINATION OF BOTH PRIMARY AND SECONDARY DATA. COMBINATION OF BOTH PRIMARY AND SECONDARY DATA.
PRIMARY DATA* PRIMARY DATA*
T234 5676 265 899: ;<==9;795 72><?@2 A9973:@4 6:5 3:79>B39C4 C372 B6>3<?4 T234 5676 265 899: ;<==9;795 72><?@2 A9973:@4 6:5 3:79>B39C4 C372 B6>3<?4
A6:6@9>4 6:5 9AD=<E994 <F 729 F3:6:;9 59D6>7A9:7 <F ICICI B6:G OF A6:6@9>4 6:5 9AD=<E994 <F 729 F3:6:;9 59D6>7A9:7 <F ICICI B6:G OF
I:536. D676 6>9 6=4< ;<==9;795 72><?@2 79=9D2<:9 ;<:B9>4673<:4. I:536. D676 6>9 6=4< ;<==9;795 72><?@2 79=9D2<:9 ;<:B9>4673<:4.
SECONDARY DATA SECONDARY DATA: :
AD6>7 F><A 729 D>3A6>E 5676 ;9>763: 49;<:56>E 5676 C9>9 >9H?3>95 F<> 7234 AD6>7 F><A 729 D>3A6>E 5676 ;9>763: 49;<:56>E 5676 C9>9 >9H?3>95 F<> 7234
D><I9;7. F<==<C3:@ 6>9 729 4<?>;94 <F 49;<:56>E 5676:' D><I9;7. F<==<C3:@ 6>9 729 4<?>;94 <F 49;<:56>E 5676:'
A::?6= >9D<>74 A::?6= >9D<>74
C<47 & 8?5@97 >9D<>74 C<47 & 8?5@97 >9D<>74
C>9537<>4 >9D<>74 C>9537<>4 >9D<>74
D987<>4 >9D<>74 D987<>4 >9D<>74
I:B9:7<>E >9D<>74 I:B9:7<>E >9D<>74
C642 >9D<>74 C642 >9D<>74
1*
SWATI SAHAY


INTRODUCTION
INTRODUCTION TO BANKING INDUSTRY INTRODUCTION TO BANKING INDUSTRY
BANKS ARE IN THE BUSINESS OF ACCEPTING DEPOSITS FOR BANKS ARE IN THE BUSINESS OF ACCEPTING DEPOSITS FOR
THE PURPOSE OF LENDING. THEY ACT AS FINANCIAL INTERMEDIARIES THE PURPOSE OF LENDING. THEY ACT AS FINANCIAL INTERMEDIARIES
BETWEEN DEPOSITORS WITH SURPLUS FUNDS AND BORROWERS WHO BETWEEN DEPOSITORS WITH SURPLUS FUNDS AND BORROWERS WHO
ARE IN NEED OF FUNDS. BANKS OCCUPY A PIVOTAL PLACE IN THE ARE IN NEED OF FUNDS. BANKS OCCUPY A PIVOTAL PLACE IN THE
PAYMENT SYSTEM FOR GOVERNMENT, BUSINESS AND HOUSEHOLDS. PAYMENT SYSTEM FOR GOVERNMENT, BUSINESS AND HOUSEHOLDS.
THUS, THEY PLAY A VITAL ROLE IN THE ECONOMIC AND FINANCIAL LIFE THUS, THEY PLAY A VITAL ROLE IN THE ECONOMIC AND FINANCIAL LIFE
OF COUNTRY. OF COUNTRY.
THE BANKING SECTOR IN THE COUNTRY HAS UNDERGONE A THE BANKING SECTOR IN THE COUNTRY HAS UNDERGONE A
METAMORPHIC PERSUADE THE POLICIES OF INTEREST RATE METAMORPHIC PERSUADE THE POLICIES OF INTEREST RATE
DEREGULATION AND FINANCIAL LIBERALIZATION IN A BID TO DEREGULATION AND FINANCIAL LIBERALIZATION IN A BID TO
SUPPLEMENT THE GOVERNMENT POLICIES OF ECONOMIC SUPPLEMENT THE GOVERNMENT POLICIES OF ECONOMIC
LIBERALIZATION. THE MOST IMPORTANT CHANGE THAT HAS LIBERALIZATION. THE MOST IMPORTANT CHANGE THAT HAS
OVERTAKEN THE NATION-S BANKING INDUSTRY, RELATES TO THE FACT OVERTAKEN THE NATION-S BANKING INDUSTRY, RELATES TO THE FACT
THAT THE COMPETITIVE FORCES ARE SOUGHT TO BE INTRODUCED THAT THE COMPETITIVE FORCES ARE SOUGHT TO BE INTRODUCED
CONSCIOUSLY IN THE FINANCIAL SERVICE SECTOR WIDE TO FACILITATE CONSCIOUSLY IN THE FINANCIAL SERVICE SECTOR WIDE TO FACILITATE
THE ENTRY OF FOREIGN BANKS AND NEW PRIVATE SECTOR BANKS. THE ENTRY OF FOREIGN BANKS AND NEW PRIVATE SECTOR BANKS.
AFTER THE NATIONALIZATION OF #+ MAJOR COMMERCIAL AFTER THE NATIONALIZATION OF #+ MAJOR COMMERCIAL
BANKS IN THE YEAR #)/), NO NEW PRIVATE BANKS WERE LICENSED BY BANKS IN THE YEAR #)/), NO NEW PRIVATE BANKS WERE LICENSED BY
RBI IN THE COUNTRY THOUGH THERE WAS NO LEGAL BANK ON THE RBI IN THE COUNTRY THOUGH THERE WAS NO LEGAL BANK ON THE
11
SWATI SAHAY

ENTRY OF PRIVATE SECTOR BANKS. THE NARASIMHAM COMMITTEE ENTRY OF PRIVATE SECTOR BANKS. THE NARASIMHAM COMMITTEE
REPORT OF #))#, HAS ENVISAGED A LARGER ROLE FOR PRIVATE SECTOR REPORT OF #))#, HAS ENVISAGED A LARGER ROLE FOR PRIVATE SECTOR
BANKS. BANKS.
HISTORICAL OF BANKING IN INDIA HISTORICAL OF BANKING IN INDIA
WITHOUT A SOUND AND EFFECTIVE BANKING SYSTEM, INDIA CANNOT WITHOUT A SOUND AND EFFECTIVE BANKING SYSTEM, INDIA CANNOT
HAVE A HEALTHY ECONOMY. THE BANKING SYSTEM OF INDIA SHOULD HAVE A HEALTHY ECONOMY. THE BANKING SYSTEM OF INDIA SHOULD
NOT ONLY BE HASSLE FREE BUT IT SHOULD BE ABLE TO MEET NEW NOT ONLY BE HASSLE FREE BUT IT SHOULD BE ABLE TO MEET NEW
CHALLENGES POSED BY THE TECHNOLOGY AND ANY OTHER EXTERNAL CHALLENGES POSED BY THE TECHNOLOGY AND ANY OTHER EXTERNAL
AND INTERNAL FACTORS. . AND INTERNAL FACTORS. .
FOR THE PAST THREE DECADES INDIA1S BANKING SYSTEM HAS SEVERAL FOR THE PAST THREE DECADES INDIA1S BANKING SYSTEM HAS SEVERAL
OUTSTANDING ACHIEVEMENTS TO ITS CREDIT. THE MOST STRIKING IS OUTSTANDING ACHIEVEMENTS TO ITS CREDIT. THE MOST STRIKING IS
ITS EXTENSIVE REACH. IT IS NO LONGER CONFINED TO ONLY ITS EXTENSIVE REACH. IT IS NO LONGER CONFINED TO ONLY
METROPOLITANS OR COSMOPOLITANS IN INDIA. IN FACT, INDIAN METROPOLITANS OR COSMOPOLITANS IN INDIA. IN FACT, INDIAN
BANKING SYSTEM HAS REACHED EVEN TO THE REMOTE CORNERS OF BANKING SYSTEM HAS REACHED EVEN TO THE REMOTE CORNERS OF
THE COUNTRY. THIS IS ONE OF THE MAIN REASONS OF INDIA1S GROWTH THE COUNTRY. THIS IS ONE OF THE MAIN REASONS OF INDIA1S GROWTH
PROCESS. PROCESS.
NOT LONG AGO, AN ACCOUNT HOLDER HAD TO WAIT FOR HOURS AT THE NOT LONG AGO, AN ACCOUNT HOLDER HAD TO WAIT FOR HOURS AT THE
BANK COUNTERS FOR GETTING A DRAFT OR FOR WITHDRAWING HIS BANK COUNTERS FOR GETTING A DRAFT OR FOR WITHDRAWING HIS
OWN MONEY. TODAY, HE HAS A CHOICE. GONE ARE DAYS WHEN THE OWN MONEY. TODAY, HE HAS A CHOICE. GONE ARE DAYS WHEN THE
MOST EFFICIENT BANK TRANSFERRED MONEY FROM ONE BRANCH TO MOST EFFICIENT BANK TRANSFERRED MONEY FROM ONE BRANCH TO
OTHER IN TWO DAYS. NOW IT IS SIMPLE AS INSTANT MESSAGING OR OTHER IN TWO DAYS. NOW IT IS SIMPLE AS INSTANT MESSAGING OR
12
SWATI SAHAY

DIAL A PIZZA. MONEY HAS BECOME THE ORDER OF THE DAY. DIAL A PIZZA. MONEY HAS BECOME THE ORDER OF THE DAY.
THE FIRST BANK IN INDIA, THOUGH CONSERVATIVE, WAS ESTABLISHED THE FIRST BANK IN INDIA, THOUGH CONSERVATIVE, WAS ESTABLISHED
IN #$J/. FROM #$J/ TILL TODAY, THE JOURNEY OF INDIAN BANKING IN #$J/. FROM #$J/ TILL TODAY, THE JOURNEY OF INDIAN BANKING
SYSTEM CAN BE SEGREGATED INTO THREE DISTINCT PHASES. THEY ARE SYSTEM CAN BE SEGREGATED INTO THREE DISTINCT PHASES. THEY ARE
AS MENTIONED BELOW: AS MENTIONED BELOW:
EARLY PHASE FROM #$J/ TO #)/) OF INDIAN BANKS EARLY PHASE FROM #$J/ TO #)/) OF INDIAN BANKS
NATIONALIZATION OF INDIAN BANKS AND UP TO #))# PRIOR TO INDIAN NATIONALIZATION OF INDIAN BANKS AND UP TO #))# PRIOR TO INDIAN
BANKING SECTOR REFORMS BANKING SECTOR REFORMS. .
PHASE I* PHASE I* . .
THE GENERAL BANK OF INDIA WAS SET UP IN THE YEAR #$J/. NEXT BANK THE GENERAL BANK OF INDIA WAS SET UP IN THE YEAR #$J/. NEXT BANK
OF HINDUSTAN AND BENGAL BANK. THE EAST INDIA COMPANY OF HINDUSTAN AND BENGAL BANK. THE EAST INDIA COMPANY
ESTABLISHED BANK OF BENGAL (#J&), BANK OF BOMBAY (#J+& AND ESTABLISHED BANK OF BENGAL (#J&), BANK OF BOMBAY (#J+& AND
BANK OF MADRAS (#J+" AS INDEPENDENT UNITS AND CALLED IT BANK OF MADRAS (#J+" AS INDEPENDENT UNITS AND CALLED IT
PRESIDENCY BANKS. THESE THREE BANKS WERE AMALGAMATED IN #)%& PRESIDENCY BANKS. THESE THREE BANKS WERE AMALGAMATED IN #)%&
AND IMPERIAL BANK OF INDIA WAS ESTABLISHED WHICH STARTED AS AND IMPERIAL BANK OF INDIA WAS ESTABLISHED WHICH STARTED AS
PRIVATE SHAREHOLDERS BANKS. PRIVATE SHAREHOLDERS BANKS.
IN #J/* ALLAHABAD BANK WAS ESTABLISHED AND FIRST TIME IN #J/* ALLAHABAD BANK WAS ESTABLISHED AND FIRST TIME
EXCLUSIVELY BY INDIANS, PUNJAB NATIONAL BANK LTD. WAS SET UP IN EXCLUSIVELY BY INDIANS, PUNJAB NATIONAL BANK LTD. WAS SET UP IN
#J)+ WITH HEAD.UARTERS AT LAHORE. BETWEEN #)&/ AND #)#", BANK #J)+ WITH HEAD.UARTERS AT LAHORE. BETWEEN #)&/ AND #)#", BANK
OF INDIA, CENTRAL BANK OF INDIA, BANK OF BARODA, CANADA BANK, OF INDIA, CENTRAL BANK OF INDIA, BANK OF BARODA, CANADA BANK,
13
SWATI SAHAY

INDIAN BANK, AND BANK OF MYSORE WERE SET UP. RESERVE BANK OF INDIAN BANK, AND BANK OF MYSORE WERE SET UP. RESERVE BANK OF
INDIA CAME IN #)"*. INDIA CAME IN #)"*.
DURING THE FIRST PHASE THE GROWTH WAS VERY SLOW AND BANKS DURING THE FIRST PHASE THE GROWTH WAS VERY SLOW AND BANKS
ALSO EXPERIENCED PERIODIC FAILURES BETWEEN #)#" AND #)+J. THERE ALSO EXPERIENCED PERIODIC FAILURES BETWEEN #)#" AND #)+J. THERE
WERE APPROXIMATELY ##&& BANKS, MOSTLY SMALL. WERE APPROXIMATELY ##&& BANKS, MOSTLY SMALL.
PHASE II* PHASE II* . .
GOVERNMENT TOOK MAJOR STEPS IN THIS INDIAN BANKING SECTOR GOVERNMENT TOOK MAJOR STEPS IN THIS INDIAN BANKING SECTOR
REFORM AFTER INDEPENDENCE. IN #)**, IT NATIONALIZED IMPERIAL REFORM AFTER INDEPENDENCE. IN #)**, IT NATIONALIZED IMPERIAL
BANK OF INDIA WITH EXTENSIVE BANKING FACILITIES ON A LARGE BANK OF INDIA WITH EXTENSIVE BANKING FACILITIES ON A LARGE
SCALE ESPECIALLY IN RURAL AND SEMI'URBAN AREAS. IT FORMED SCALE ESPECIALLY IN RURAL AND SEMI'URBAN AREAS. IT FORMED
STATE BANK OF INDIA TO ACT AS THE PRINCIPAL AGENT OF RBI AND TO STATE BANK OF INDIA TO ACT AS THE PRINCIPAL AGENT OF RBI AND TO
HANDLE BANKING TRANSACTIONS OF THE UNION AND STATE HANDLE BANKING TRANSACTIONS OF THE UNION AND STATE
GOVERNMENTS ALL OVER THE COUNTRY. . GOVERNMENTS ALL OVER THE COUNTRY. .
SEVEN BANKS FORMING SUBSIDIARY OF STATE BANK OF INDIA WAS SEVEN BANKS FORMING SUBSIDIARY OF STATE BANK OF INDIA WAS
NATIONALIZED IN #)/& ON #)TH JULY, #)/), MAJOR PROCESS OF NATIONALIZED IN #)/& ON #)TH JULY, #)/), MAJOR PROCESS OF
NATIONALIZATION WAS CARRIED OUT. IT WAS THE EFFORT OF THE THEN NATIONALIZATION WAS CARRIED OUT. IT WAS THE EFFORT OF THE THEN
PRIME MINISTER OF INDIA, MRS. INDIRA GANDHI. #+ MAJOR PRIME MINISTER OF INDIA, MRS. INDIRA GANDHI. #+ MAJOR
COMMERCIAL BANKS IN THE COUNTRY WERE NATIONALIZED. COMMERCIAL BANKS IN THE COUNTRY WERE NATIONALIZED.
1-
SWATI SAHAY

THE FOLLOWING ARE THE STEPS TAKEN BY THE GOVERNMENT OF INDIA THE FOLLOWING ARE THE STEPS TAKEN BY THE GOVERNMENT OF INDIA
TO REGULATE BANKING INSTITUTIONS IN THE COUNTRY: TO REGULATE BANKING INSTITUTIONS IN THE COUNTRY:
#)+): ENACTMENT OF BANKING REGULATION ACT. #)+): ENACTMENT OF BANKING REGULATION ACT.
#)**: NATIONALIZATION OF STATE BANK OF INDIA. #)**: NATIONALIZATION OF STATE BANK OF INDIA.
#)*): NATIONALIZATION OF SBI SUBSIDIARIES. #)*): NATIONALIZATION OF SBI SUBSIDIARIES.
#)/#: INSURANCE COVER EXTENDED TO DEPOSITS. #)/#: INSURANCE COVER EXTENDED TO DEPOSITS.
#)/): NATIONALIZATION OF #+ MAJOR BANKS. #)/): NATIONALIZATION OF #+ MAJOR BANKS.
#)$#: CREATION OF CREDIT GUARANTEE CORPORATION. #)$#: CREATION OF CREDIT GUARANTEE CORPORATION.
#)$*: CREATION OF REGIONAL RURAL BANKS. #)$*: CREATION OF REGIONAL RURAL BANKS.
#)J&: NATIONALIZATION OF SEVEN BANKS WITH DEPOSITS OVER %&& #)J&: NATIONALIZATION OF SEVEN BANKS WITH DEPOSITS OVER %&&
CRORE. CRORE.
PHASE III* PHASE III* . .
THIS PHASE HAS INTRODUCED MANY MORE PRODUCTS AND FACILITIES THIS PHASE HAS INTRODUCED MANY MORE PRODUCTS AND FACILITIES
IN THE BANKING SECTOR IN ITS REFORMS MEASURE. IN #))#, UNDER THE IN THE BANKING SECTOR IN ITS REFORMS MEASURE. IN #))#, UNDER THE
CHAIRMANSHIP OF M NARASIMHAM, A COMMITTEE WAS SET UP BY HIS CHAIRMANSHIP OF M NARASIMHAM, A COMMITTEE WAS SET UP BY HIS
NAME WHICH WORKED FOR THE LIBERALIZATION OF BANKING NAME WHICH WORKED FOR THE LIBERALIZATION OF BANKING
PRACTICES. PRACTICES.
THE COUNTRY IS FLOODED WITH FOREIGN BANKS AND THEIR ATM THE COUNTRY IS FLOODED WITH FOREIGN BANKS AND THEIR ATM
STATIONS. EFFORTS ARE BEING PUT TO GIVE A SATISFACTORY SERVICE STATIONS. EFFORTS ARE BEING PUT TO GIVE A SATISFACTORY SERVICE
1)
SWATI SAHAY

TO CUSTOMERS. PHONE BANKING AND NET BANKING IS INTRODUCED. TO CUSTOMERS. PHONE BANKING AND NET BANKING IS INTRODUCED.
THE ENTIRE SYSTEM BECAME MORE CONVENIENT AND SWIFT. TIME IS THE ENTIRE SYSTEM BECAME MORE CONVENIENT AND SWIFT. TIME IS
GIVEN MORE IMPORTANCE THAN MONEY. . GIVEN MORE IMPORTANCE THAN MONEY. .
THE FINANCIAL SYSTEM OF INDIA HAS SHOWN A GREAT DEAL OF THE FINANCIAL SYSTEM OF INDIA HAS SHOWN A GREAT DEAL OF
RESILIENCE. IT IS SHELTERED FROM ANY CRISIS TRIGGERED BY ANY RESILIENCE. IT IS SHELTERED FROM ANY CRISIS TRIGGERED BY ANY
EXTERNAL MACROECONOMICS SHOCK AS OTHER EAST ASIAN EXTERNAL MACROECONOMICS SHOCK AS OTHER EAST ASIAN
COUNTRIES SUFFERED. THIS IS ALL DUE TO A FLEXIBLE EXCHANGE RATE COUNTRIES SUFFERED. THIS IS ALL DUE TO A FLEXIBLE EXCHANGE RATE
REGIME, THE FOREIGN RESERVES ARE HIGH, THE CAPITAL ACCOUNT IS REGIME, THE FOREIGN RESERVES ARE HIGH, THE CAPITAL ACCOUNT IS
NOT YET FULLY CONVERTIBLE, AND BANKS AND THEIR CUSTOMERS NOT YET FULLY CONVERTIBLE, AND BANKS AND THEIR CUSTOMERS
HAVE LIMITED FOREIGN EXCHANGE EXPOSURE HAVE LIMITED FOREIGN EXCHANGE EXPOSURE. .
1.
SWATI SAHAY

RESER)E BANK OF INDIA
THE CENTRAL BANK OF THE COUNTRY IS THE RESERVE BANK OF INDIA THE CENTRAL BANK OF THE COUNTRY IS THE RESERVE BANK OF INDIA
(RBI. IT WAS ESTABLISHED IN APRIL #)"* WITH A SHARE CAPITAL OF RS. * (RBI. IT WAS ESTABLISHED IN APRIL #)"* WITH A SHARE CAPITAL OF RS. *
CRORES ON THE BASIS OF THE RECOMMENDATIONS OF THE HILTON CRORES ON THE BASIS OF THE RECOMMENDATIONS OF THE HILTON
YOUNG COMMISSION. THE SHARE CAPITAL WAS DIVIDED INTO SHARES YOUNG COMMISSION. THE SHARE CAPITAL WAS DIVIDED INTO SHARES
OF RS. #&& EACH FULLY PAID WHICH WAS ENTIRELY OWNED BY PRIVATE OF RS. #&& EACH FULLY PAID WHICH WAS ENTIRELY OWNED BY PRIVATE
SHAREHOLDERS IN THE BEGINNING. THE GOVERNMENT HELD SHARES SHAREHOLDERS IN THE BEGINNING. THE GOVERNMENT HELD SHARES
OF NOMINAL VALUE OF RS. %, %&,&&&. . OF NOMINAL VALUE OF RS. %, %&,&&&. .
RESERVE BANK OF INDIA WAS NATIONALIZED IN THE YEAR #)+). THE RESERVE BANK OF INDIA WAS NATIONALIZED IN THE YEAR #)+). THE
GENERAL SUPERINTENDENCE AND DIRECTION OF THE BANK IS GENERAL SUPERINTENDENCE AND DIRECTION OF THE BANK IS
ENTRUSTED TO CENTRAL BOARD OF DIRECTORS OF %& MEMBERS, THE ENTRUSTED TO CENTRAL BOARD OF DIRECTORS OF %& MEMBERS, THE
GOVERNOR AND FOUR DEPUTY GOVERNORS, ONE GOVERNMENT GOVERNOR AND FOUR DEPUTY GOVERNORS, ONE GOVERNMENT
OFFICIAL FROM THE MINISTRY OF FINANCE, TEN NOMINATED OFFICIAL FROM THE MINISTRY OF FINANCE, TEN NOMINATED
DIRECTORS BY THE GOVERNMENT TO GIVE REPRESENTATION TO DIRECTORS BY THE GOVERNMENT TO GIVE REPRESENTATION TO
IMPORTANT ELEMENTS IN THE ECONOMIC LIFE OF THE COUNTRY, AND IMPORTANT ELEMENTS IN THE ECONOMIC LIFE OF THE COUNTRY, AND
FOUR NOMINATED DIRECTORS BY THE CENTRAL GOVERNMENT TO FOUR NOMINATED DIRECTORS BY THE CENTRAL GOVERNMENT TO
REPRESENT THE FOUR LOCAL BOARDS WITH THE HEAD.UARTERS AT REPRESENT THE FOUR LOCAL BOARDS WITH THE HEAD.UARTERS AT
MUMBAI, KOLKATA, CHENNAI AND NEW DELHI. LOCAL BOARDS CONSIST MUMBAI, KOLKATA, CHENNAI AND NEW DELHI. LOCAL BOARDS CONSIST
OF FIVE MEMBERS EACH CENTRAL GOVERNMENT APPOINTED FOR A OF FIVE MEMBERS EACH CENTRAL GOVERNMENT APPOINTED FOR A
TERM OF FOUR YEARS TO REPRESENT TERRITORIAL AND ECONOMIC TERM OF FOUR YEARS TO REPRESENT TERRITORIAL AND ECONOMIC
INTERESTS AND THE INTERESTS OF CO'OPERATIVE AND INDIGENOUS INTERESTS AND THE INTERESTS OF CO'OPERATIVE AND INDIGENOUS
BANKS. . BANKS. .
THE RESERVE BANK OF INDIA ACT, #)"+ WAS COMMENCED ON APRIL #, THE RESERVE BANK OF INDIA ACT, #)"+ WAS COMMENCED ON APRIL #,
#)"*. THE ACT, #)"+ (II OF #)"+ PROVIDES THE STATUTORY BASIS OF THE #)"*. THE ACT, #)"+ (II OF #)"+ PROVIDES THE STATUTORY BASIS OF THE
FUNCTIONING OF THE BANK. . FUNCTIONING OF THE BANK. .
THE BANK WAS CONSTITUTED FOR THE NEED OF FOLLOWING: THE BANK WAS CONSTITUTED FOR THE NEED OF FOLLOWING:
#. TO REGULATE THE ISSUE OF BANKNOTES #. TO REGULATE THE ISSUE OF BANKNOTES
1(
SWATI SAHAY

%. TO MAINTAIN RESERVES WITH A VIEW TO SECURING MONETARY %. TO MAINTAIN RESERVES WITH A VIEW TO SECURING MONETARY
STABILITY AND STABILITY AND
". TO OPERATE THE CREDIT AND CURRENCY SYSTEM OF THE COUNTRY ". TO OPERATE THE CREDIT AND CURRENCY SYSTEM OF THE COUNTRY
TO ITS ADVANTAGE. TO ITS ADVANTAGE.
FUNCTIONS OF RESERVE BANK OF INDIA FUNCTIONS OF RESERVE BANK OF INDIA
THE RESERVE BANK OF INDIA ACT OF #)"+ ENTRUST ALL THE IMPORTANT THE RESERVE BANK OF INDIA ACT OF #)"+ ENTRUST ALL THE IMPORTANT
FUNCTIONS OF A CENTRAL BANK,THE RESERVE BANK OF INDIA. FUNCTIONS OF A CENTRAL BANK,THE RESERVE BANK OF INDIA.
BANK OF ISSUE* BANK OF ISSUE* . .
UNDER SECTION %% OF THE RESERVE BANK OF INDIA ACT, THE UNDER SECTION %% OF THE RESERVE BANK OF INDIA ACT, THE
BANK HAS THE SOLE RIGHT TO ISSUE BANK NOTES OF ALL BANK HAS THE SOLE RIGHT TO ISSUE BANK NOTES OF ALL
DENOMINATIONS. THE DISTRIBUTION OF ONE RUPEE NOTES AND COINS DENOMINATIONS. THE DISTRIBUTION OF ONE RUPEE NOTES AND COINS
AND SMALL COINS ALL OVER THE COUNTRY IS UNDERTAKEN BY THE AND SMALL COINS ALL OVER THE COUNTRY IS UNDERTAKEN BY THE
RESERVE BANK AS AGENT OF THE GOVERNMENT. THE RESERVE BANK RESERVE BANK AS AGENT OF THE GOVERNMENT. THE RESERVE BANK
HAS A SEPARATE ISSUE DEPARTMENT WHICH IS ENTRUSTED WITH THE HAS A SEPARATE ISSUE DEPARTMENT WHICH IS ENTRUSTED WITH THE
ISSUE OF CURRENCY NOTES. THE ASSETS AND LIABILITIES OF THE ISSUE ISSUE OF CURRENCY NOTES. THE ASSETS AND LIABILITIES OF THE ISSUE
DEPARTMENT ARE KEPT SEPARATE FROM THOSE OF THE BANKING DEPARTMENT ARE KEPT SEPARATE FROM THOSE OF THE BANKING
DEPARTMENT. DEPARTMENT.
1/
SWATI SAHAY

BANKER TO GOVERNMENT BANKER TO GOVERNMENT: : . .
THE SECOND IMPORTANT FUNCTION OF THE RESERVE BANK OF THE SECOND IMPORTANT FUNCTION OF THE RESERVE BANK OF
INDIA IS TO ACT AS GOVERNMENT BANKER, AGENT AND ADVISER. THE INDIA IS TO ACT AS GOVERNMENT BANKER, AGENT AND ADVISER. THE
RESERVE BANK IS AGENT OF CENTRAL GOVERNMENT AND OF ALL STATE RESERVE BANK IS AGENT OF CENTRAL GOVERNMENT AND OF ALL STATE
GOVERNMENTS IN INDIA EXCEPTING THAT OF JAMMU AND KASHMIR. GOVERNMENTS IN INDIA EXCEPTING THAT OF JAMMU AND KASHMIR.
THE RESERVE BANK HAS THE OBLIGATION TO TRANSACT GOVERNMENT THE RESERVE BANK HAS THE OBLIGATION TO TRANSACT GOVERNMENT
BUSINESS, VIA. TO KEEP THE CASH BALANCES AS DEPOSITS FREE OF BUSINESS, VIA. TO KEEP THE CASH BALANCES AS DEPOSITS FREE OF
INTEREST, TO RECEIVE AND TO MAKE PAYMENTS ON BEHALF OF THE INTEREST, TO RECEIVE AND TO MAKE PAYMENTS ON BEHALF OF THE
GOVERNMENT AND TO CARRY OUT THEIR EXCHANGE REMITTANCES GOVERNMENT AND TO CARRY OUT THEIR EXCHANGE REMITTANCES
AND OTHER BANKING OPERATIONS. THE RESERVE BANK OF INDIA HELPS AND OTHER BANKING OPERATIONS. THE RESERVE BANK OF INDIA HELPS
THE GOVERNMENT ' BOTH THE UNION AND THE STATES TO FLOAT NEW THE GOVERNMENT ' BOTH THE UNION AND THE STATES TO FLOAT NEW
LOANS AND TO MANAGE PUBLIC DEBT. IT ACTS AS ADVISER TO THE LOANS AND TO MANAGE PUBLIC DEBT. IT ACTS AS ADVISER TO THE
GOVERNMENT ON ALL MONETARY AND BANKING MATTERS. GOVERNMENT ON ALL MONETARY AND BANKING MATTERS.
BANKERS+ BANK AND LENDER OF THE LAST RESORT BANKERS+ BANK AND LENDER OF THE LAST RESORT
THE RESERVE BANK OF INDIA ACTS AS THE BANKERS1 BANK. THE RESERVE BANK OF INDIA ACTS AS THE BANKERS1 BANK.
ACCORDING TO THE PROVISIONS OF THE BANKING COMPANIES ACT OF ACCORDING TO THE PROVISIONS OF THE BANKING COMPANIES ACT OF
#)+), EVERY SCHEDULED BANK WAS RE.UIRED TO MAINTAIN WITH THE #)+), EVERY SCHEDULED BANK WAS RE.UIRED TO MAINTAIN WITH THE
RESERVE BANK A CASH BALANCE E.UIVALENT TO *K OF ITS DEMAND RESERVE BANK A CASH BALANCE E.UIVALENT TO *K OF ITS DEMAND
LIABILITIES AND % PER CENT OF ITS TIME LIABILITIES IN INDIA. LIABILITIES AND % PER CENT OF ITS TIME LIABILITIES IN INDIA.
THE SCHEDULED BANKS CAN BORROW FROM THE RESERVE BANK OF THE SCHEDULED BANKS CAN BORROW FROM THE RESERVE BANK OF
INDIA ON THE BASIS OF ELIGIBLE SECURITIES OR GET FINANCIAL INDIA ON THE BASIS OF ELIGIBLE SECURITIES OR GET FINANCIAL
10
SWATI SAHAY

ACCOMMODATION IN TIMES OF NEED OR STRINGENCY BY ACCOMMODATION IN TIMES OF NEED OR STRINGENCY BY
REDISCOUNTING BILLS OF EXCHANGE. SINCE COMMERCIAL BANKS CAN REDISCOUNTING BILLS OF EXCHANGE. SINCE COMMERCIAL BANKS CAN
ALWAYS EXPECT THE RESERVE BANK OF INDIA TO COME TO THEIR HELP ALWAYS EXPECT THE RESERVE BANK OF INDIA TO COME TO THEIR HELP
IN TIMES OF BANKING CRISIS THE RESERVE BANK BECOMES NOT ONLY IN TIMES OF BANKING CRISIS THE RESERVE BANK BECOMES NOT ONLY
THE BANKER1S BANK BUT ALSO THE LENDER OF THE LAST RESORT. THE BANKER1S BANK BUT ALSO THE LENDER OF THE LAST RESORT.
CONTROLLER OF CREDIT CONTROLLER OF CREDIT. . . .
THE RESERVE BANK OF INDIA IS THE CONTROLLER OF CREDIT I.E. IT HAS THE RESERVE BANK OF INDIA IS THE CONTROLLER OF CREDIT I.E. IT HAS
THE POWER TO INFLUENCE THE VOLUME OF CREDIT CREATED BY BANKS THE POWER TO INFLUENCE THE VOLUME OF CREDIT CREATED BY BANKS
IN INDIA. IT CAN DO SO THROUGH CHANGING THE BANK RATE OR IN INDIA. IT CAN DO SO THROUGH CHANGING THE BANK RATE OR
THROUGH OPEN MARKET OPERATIONS. ACCORDING TO THE BANKING THROUGH OPEN MARKET OPERATIONS. ACCORDING TO THE BANKING
REGULATION ACT OF #)+), THE RESERVE BANK OF INDIA CAN ASK ANY REGULATION ACT OF #)+), THE RESERVE BANK OF INDIA CAN ASK ANY
PARTICULAR BANK OR THE WHOLE BANKING SYSTEM NOT TO LEND TO PARTICULAR BANK OR THE WHOLE BANKING SYSTEM NOT TO LEND TO
PARTICULAR GROUPS OR PERSONS ON THE BASIS OF CERTAIN TYPES OF PARTICULAR GROUPS OR PERSONS ON THE BASIS OF CERTAIN TYPES OF
SECURITIES. AS SUPREME BANKING AUTHORITY IN THE COUNTRY, THE SECURITIES. AS SUPREME BANKING AUTHORITY IN THE COUNTRY, THE
RESERVE BANK OF INDIA, THEREFORE, HAS THE FOLLOWING POWERS: RESERVE BANK OF INDIA, THEREFORE, HAS THE FOLLOWING POWERS:
(A IT HOLDS THE CASH RESERVES OF ALL THE SCHEDULED BANKS. (A IT HOLDS THE CASH RESERVES OF ALL THE SCHEDULED BANKS.
(B IT CONTROLS THE CREDIT OPERATIONS OF BANKS THROUGH (B IT CONTROLS THE CREDIT OPERATIONS OF BANKS THROUGH
.UANTITATIVE AND .UALITATIVE CONTROLS. . .UANTITATIVE AND .UALITATIVE CONTROLS. .
(C IT CONTROLS THE BANKING SYSTEM THROUGH THE SYSTEM OF (C IT CONTROLS THE BANKING SYSTEM THROUGH THE SYSTEM OF
LICENSING, INSPECTION AND CALLING FOR INFORMATION. . LICENSING, INSPECTION AND CALLING FOR INFORMATION. .
2*
SWATI SAHAY

(D IT ACTS AS THE LENDER OF THE LAST RESORT BY PROVIDING (D IT ACTS AS THE LENDER OF THE LAST RESORT BY PROVIDING
REDISCOUNT FACILITIES TO SCHEDULED BANKS. REDISCOUNT FACILITIES TO SCHEDULED BANKS.
CUSTODIAN OF FOREIGN RESERVES CUSTODIAN OF FOREIGN RESERVES: :
THE RESERVE BANK OF INDIA HAS THE RESPONSIBILITY TO MAINTAIN THE RESERVE BANK OF INDIA HAS THE RESPONSIBILITY TO MAINTAIN
THE OFFICIAL RATE OF EXCHANGE. ACCORDING TO THE RESERVE BANK THE OFFICIAL RATE OF EXCHANGE. ACCORDING TO THE RESERVE BANK
OF INDIA ACT OF #)"+, THE BANK WAS RE.UIRED TO BUY AND SELL AT OF INDIA ACT OF #)"+, THE BANK WAS RE.UIRED TO BUY AND SELL AT
FIXED RATES ANY AMOUNT OF STERLING IN LOTS OF NOT LESS THAN RS. FIXED RATES ANY AMOUNT OF STERLING IN LOTS OF NOT LESS THAN RS.
#&,&&&. THE RATE OF EXCHANGE FIXED WAS RE. # L SH. /D. SINCE #)"* THE #&,&&&. THE RATE OF EXCHANGE FIXED WAS RE. # L SH. /D. SINCE #)"* THE
BANK WAS ABLE TO MAINTAIN THE EXCHANGE RATE FIXED AT LSH./D. BANK WAS ABLE TO MAINTAIN THE EXCHANGE RATE FIXED AT LSH./D.
THOUGH THERE WERE PERIODS OF EXTREME PRESSURE IN FAVOUR OF THOUGH THERE WERE PERIODS OF EXTREME PRESSURE IN FAVOUR OF
OR AGAINST THE RUPEE. OR AGAINST THE RUPEE. AFTER INDIA BECAME A MEMBER OF THE AFTER INDIA BECAME A MEMBER OF THE
INTERNATIONAL MONETARY FUND IN #)+/, THE RESERVE BANK HAS THE INTERNATIONAL MONETARY FUND IN #)+/, THE RESERVE BANK HAS THE
RESPONSIBILITY OF MAINTAINING FIXED EXCHANGE RATES WITH ALL RESPONSIBILITY OF MAINTAINING FIXED EXCHANGE RATES WITH ALL
OTHER MEMBER MCOUNTRIES OF THE I.M.F.BESIDES MAINTAINING THE OTHER MEMBER MCOUNTRIES OF THE I.M.F.BESIDES MAINTAINING THE
RATE OF EXCHANGE OF THE RUPEE, THE RESERVE BANK HAS TO ACT AS RATE OF EXCHANGE OF THE RUPEE, THE RESERVE BANK HAS TO ACT AS
THE CUSTODIAN OF INDIA1S RESERVE OF INTERNATIONAL CURRENCIES. THE CUSTODIAN OF INDIA1S RESERVE OF INTERNATIONAL CURRENCIES.
SUPERVISORY FUNCTIONS* SUPERVISORY FUNCTIONS* . .
IN ADDITION TO ITS TRADITIONAL CENTRAL BANKING FUNCTIONS, THE IN ADDITION TO ITS TRADITIONAL CENTRAL BANKING FUNCTIONS, THE
21
SWATI SAHAY

RESERVE BANK HAS CERTAIN NON'MONETARY FUNCTIONS OF THE RESERVE BANK HAS CERTAIN NON'MONETARY FUNCTIONS OF THE
NATURE OF SUPERVISION OF BANKS AND PROMOTION OF SOUND NATURE OF SUPERVISION OF BANKS AND PROMOTION OF SOUND
BANKING IN INDIA. THE RESERVE BANK ACT, #)"+, AND THE BANKING BANKING IN INDIA. THE RESERVE BANK ACT, #)"+, AND THE BANKING
REGULATION ACT, #)+) HAVE GIVEN THE RBI WIDE POWERS OF REGULATION ACT, #)+) HAVE GIVEN THE RBI WIDE POWERS OF
SUPERVISION AND CONTROL OVER COMMERCIAL AND CO'OPERATIVE SUPERVISION AND CONTROL OVER COMMERCIAL AND CO'OPERATIVE
BANKS, RELATING TO LICENSING AND ESTABLISHMENTS, BRANCH BANKS, RELATING TO LICENSING AND ESTABLISHMENTS, BRANCH
EXPANSION, LI.UIDITY OF THEIR ASSETS, MANAGEMENT AND METHODS EXPANSION, LI.UIDITY OF THEIR ASSETS, MANAGEMENT AND METHODS
OF WORKING, AMALGAMATION, RECONSTRUCTION, AND LI.UIDATION. OF WORKING, AMALGAMATION, RECONSTRUCTION, AND LI.UIDATION.
THE RBI IS AUTHORIZED TO CARRY OUT PERIODICAL INSPECTIONS OF THE RBI IS AUTHORIZED TO CARRY OUT PERIODICAL INSPECTIONS OF
THE BANKS AND TO CALL FOR RETURNS AND NECESSARY INFORMATION THE BANKS AND TO CALL FOR RETURNS AND NECESSARY INFORMATION
FROM THEM. FROM THEM.
THE NATIONALIZATION OF #+ MAJOR INDIAN SCHEDULED BANKS IN JULY THE NATIONALIZATION OF #+ MAJOR INDIAN SCHEDULED BANKS IN JULY
#)/) HAS IMPOSED NEW RESPONSIBILITIES ON THE RBI FOR DIRECTING #)/) HAS IMPOSED NEW RESPONSIBILITIES ON THE RBI FOR DIRECTING
THE GROWTH OF BANKING AND CREDIT POLICIES TOWARDS MORE THE GROWTH OF BANKING AND CREDIT POLICIES TOWARDS MORE
RAPID DEVELOPMENT OF THE ECONOMY AND REALIZATION OF CERTAIN RAPID DEVELOPMENT OF THE ECONOMY AND REALIZATION OF CERTAIN
DESIRED SOCIAL OBJECTIVES. DESIRED SOCIAL OBJECTIVES.
22
SWATI SAHAY

PROMOTIONAL FUNCTIONS* PROMOTIONAL FUNCTIONS* . .
THE BANK NOW PERFORMS A VARIETY OF DEVELOPMENTAL AND THE BANK NOW PERFORMS A VARIETY OF DEVELOPMENTAL AND
PROMOTIONAL FUNCTIONS, WHICH, AT ONE TIME, WERE REGARDED AS PROMOTIONAL FUNCTIONS, WHICH, AT ONE TIME, WERE REGARDED AS
OUTSIDE THE NORMAL SCOPE OF CENTRAL BANKING. THE RESERVE OUTSIDE THE NORMAL SCOPE OF CENTRAL BANKING. THE RESERVE
BANK WAS ASKED TO PROMOTE BANKING HABIT, EXTEND BANKING BANK WAS ASKED TO PROMOTE BANKING HABIT, EXTEND BANKING
FACILITIES TO RURAL AND SEMI'URBAN AREAS, AND ESTABLISH AND FACILITIES TO RURAL AND SEMI'URBAN AREAS, AND ESTABLISH AND
PROMOTE NEW SPECIALIZED FINANCING AGENCIES. IT SET UP THE PROMOTE NEW SPECIALIZED FINANCING AGENCIES. IT SET UP THE
DEPOSIT INSURANCE CORPORATION IN #)/%, THE UNIT TRUST OF INDIA IN DEPOSIT INSURANCE CORPORATION IN #)/%, THE UNIT TRUST OF INDIA IN
#)/+, THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ALSO IN #)/+, THE #)/+, THE INDUSTRIAL DEVELOPMENT BANK OF INDIA ALSO IN #)/+, THE
AGRICULTURAL REFINANCE CORPORATION OF INDIA IN #)/" AND THE AGRICULTURAL REFINANCE CORPORATION OF INDIA IN #)/" AND THE
INDUSTRIAL RECONSTRUCTION CORPORATION OF INDIA IN #)$%. THESE INDUSTRIAL RECONSTRUCTION CORPORATION OF INDIA IN #)$%. THESE
INSTITUTIONS WERE SET UP DIRECTLY OR INDIRECTLY BY THE RESERVE INSTITUTIONS WERE SET UP DIRECTLY OR INDIRECTLY BY THE RESERVE
BANK TO PROMOTE SAVING HABIT AND TO MOBILIZE SAVINGS, AND TO BANK TO PROMOTE SAVING HABIT AND TO MOBILIZE SAVINGS, AND TO
PROVIDE INDUSTRIAL FINANCE AS WELL AS AGRICULTURAL FINANCE. PROVIDE INDUSTRIAL FINANCE AS WELL AS AGRICULTURAL FINANCE.
THE RBI HAS SET UP THE AGRICULTURAL REFINANCE AND THE RBI HAS SET UP THE AGRICULTURAL REFINANCE AND
DEVELOPMENT CORPORATION TO PROVIDE LONG'TERM FINANCE TO DEVELOPMENT CORPORATION TO PROVIDE LONG'TERM FINANCE TO
FARMERS FARMERS.

23
SWATI SAHAY

FACTS FIES OF BANK IN INDIA FACTS FIES OF BANK IN INDIA
THE FIRST, OLDEST, LARGEST, THE BIGGEST ALL SUCH THE FIRST, OLDEST, LARGEST, THE BIGGEST ALL SUCH
INFORMATION IN THIS SECTION: INFORMATION IN THIS SECTION:
THE FIRST BANK IN INDIA TO BE THE FIRST BANK IN INDIA TO BE
GIVEN A ISO CERTIFICATION GIVEN A ISO CERTIFICATION
CANARA CANARA
BANK BANK
THE FIRST BANK IN NORTHERN INDIA THE FIRST BANK IN NORTHERN INDIA
TO GET ISO CERTIFICATION FOR TO GET ISO CERTIFICATION FOR
THEIR SELECTED BRANCHES THEIR SELECTED BRANCHES
PUNJAB AND PUNJAB AND
SIND BANK SIND BANK
THE FIRST INDIAN BANK TO BE HAVE THE FIRST INDIAN BANK TO BE HAVE
STARTED SOLELY WITH THE INDIAN STARTED SOLELY WITH THE INDIAN
CAPITAL CAPITAL
PUNJAB PUNJAB
NATIONAL NATIONAL
BANK BANK
THE FIRST AMONG PRIVATE SECTOR THE FIRST AMONG PRIVATE SECTOR
BANK IN KERALA TO BECOME A BANK IN KERALA TO BECOME A
SCHEDULED BANK IN #)+/ UNDER SCHEDULED BANK IN #)+/ UNDER
THE RBI ACT#)+/. THE RBI ACT#)+/.
SOUTH SOUTH
INDIAN INDIAN
BANK BANK
INDIA-S OLDEST, LARGEST AND MOST INDIA-S OLDEST, LARGEST AND MOST
SUCCESSFUL COMMERCIAL BANK, SUCCESSFUL COMMERCIAL BANK,
OFFERING THE WIDEST POSSIBLE OFFERING THE WIDEST POSSIBLE
RANGE OF DOMESTIC, RANGE OF DOMESTIC,
INTERNATIONAL,AND NRI PRODUCTS INTERNATIONAL,AND NRI PRODUCTS
AND SERVICES THROUGH ITS VAST AND SERVICES THROUGH ITS VAST
NETWORK IN INDIA AND OVERSEAS. NETWORK IN INDIA AND OVERSEAS.
STATE BANK STATE BANK
OF INDIA. OF INDIA.
THE OLDEST PUBLIC SECTOR BANK IN THE OLDEST PUBLIC SECTOR BANK IN
INDIA HAVING BRANCHES ALL OVER INDIA HAVING BRANCHES ALL OVER
THE INDIA. AND SERVING THE THE INDIA. AND SERVING THE
CUSTOMERS FROM THE LAST #"% YRS. CUSTOMERS FROM THE LAST #"% YRS.
ALLABAHAD ALLABAHAD
BANK OF BANK OF
INDIA INDIA
2-
SWATI SAHAY

Publi! 'e!tor Ban(s in India)
AMONG THE PUBLIC SECTOR BANKS IN INDIA, UNITED BANK OF INDIA IS AMONG THE PUBLIC SECTOR BANKS IN INDIA, UNITED BANK OF INDIA IS
ONE OF THE #+ MAJOR BANKS WHICH WERE NATIONALIZED ON JULY #), ONE OF THE #+ MAJOR BANKS WHICH WERE NATIONALIZED ON JULY #),
#)/). ITS PREDECESSOR, IN THE PUBLIC SECTOR BANKS, THE UNITED #)/). ITS PREDECESSOR, IN THE PUBLIC SECTOR BANKS, THE UNITED
BANK OF INDIA LTD., WAS FORMED IN #)*& WITH THE AMALGAMATION BANK OF INDIA LTD., WAS FORMED IN #)*& WITH THE AMALGAMATION
OF FOUR BANKS VIZ. CAMILLA BANKING CORPORATION LTD. (#)#+, OF FOUR BANKS VIZ. CAMILLA BANKING CORPORATION LTD. (#)#+,
BENGAL CENTRAL BANK LTD. (#)#J, COMILLA UNION BANK LTD. (#)%% BENGAL CENTRAL BANK LTD. (#)#J, COMILLA UNION BANK LTD. (#)%%
AND HOOGHLY BANK LTD. (#)"%. AND HOOGHLY BANK LTD. (#)"%.
THE FOLLOWING ARE THE LIST OF PUBLIC SECTOR BANKS IN INDIA THE FOLLOWING ARE THE LIST OF PUBLIC SECTOR BANKS IN INDIA
ALLAHABAD BANK ALLAHABAD BANK
ANDHRA BANK ANDHRA BANK
BANK OF BARODA BANK OF BARODA
BANK OF INDIA BANK OF INDIA
BANK OF MAHARASTRA BANK OF MAHARASTRA
CANARA BANK CANARA BANK
CENTRAL BANK OF INDIA CENTRAL BANK OF INDIA
CORPORATION BANK CORPORATION BANK
DENA BANK DENA BANK
2)
SWATI SAHAY

LIST OF STATE BANK OF INDIA AND ITS SUBSIDIARY, A PUBLIC SECTOR LIST OF STATE BANK OF INDIA AND ITS SUBSIDIARY, A PUBLIC SECTOR
BANKS BANKS
STATE BANK OF INDIA STATE BANK OF INDIA
STATE BANK OF BIKANER & JAIPUR STATE BANK OF BIKANER & JAIPUR
STATE BANK OF HYDERABAD STATE BANK OF HYDERABAD
STATE BANK OF INDORE STATE BANK OF INDORE
STATE BANK OF MYSORE STATE BANK OF MYSORE
STATE BANK OF SAURASTRA STATE BANK OF SAURASTRA
STATE BANK OF TRAVANCORE STATE BANK OF TRAVANCORE
PRIVATE SECTOR BANKS IN INDIA: PRIVATE SECTOR BANKS IN INDIA:
PRIVATE BANKING IN INDIA WAS PRACTICED SINCE THE BEGINING OF PRIVATE BANKING IN INDIA WAS PRACTICED SINCE THE BEGINING OF
BANKING SYSTEM IN INDIA. THE FIRST PRIVATE BANK IN INDIA TO BE SET BANKING SYSTEM IN INDIA. THE FIRST PRIVATE BANK IN INDIA TO BE SET
UP IN PRIVATE SECTOR BANKS IN INDIA WAS INDUSIND BANK. IT IS ONE OF UP IN PRIVATE SECTOR BANKS IN INDIA WAS INDUSIND BANK. IT IS ONE OF
THE FASTEST GROWING BANK PRIVATE SECTOR BANKS IN INDIA. IDBI THE FASTEST GROWING BANK PRIVATE SECTOR BANKS IN INDIA. IDBI
RANKS THE TENTH LARGEST DEVELOPMENT BANK IN THE WORLD AS RANKS THE TENTH LARGEST DEVELOPMENT BANK IN THE WORLD AS
PRIVATE BANKS IN INDIA AND HAS PROMOTED WORLD CLASS PRIVATE BANKS IN INDIA AND HAS PROMOTED WORLD CLASS
INSTITUTIONS IN INDIA. . INSTITUTIONS IN INDIA. .
LIST OF PRIVATE BANKS IN INDIA LIST OF PRIVATE BANKS IN INDIA
DHANALAKSHMI BANK DHANALAKSHMI BANK
DEVELOPMENT CREDIT BANK DEVELOPMENT CREDIT BANK
FEDERAL BANK FEDERAL BANK
HDFC BANK HDFC BANK
ICICI BANK ICICI BANK
IDBI BANK IDBI BANK
2.
SWATI SAHAY

INDUSIND BANK INDUSIND BANK
CO-OPERATIVE BANKS IN INDIA CO-OPERATIVE BANKS IN INDIA: :
THE CO OPERATIVE BANKS IN INDIA STARTED THE CO OPERATIVE BANKS IN INDIA STARTED
FUNCTIONING ALMOST #&& YEARS AGO. THE COOPERATIVE BANK IS AN FUNCTIONING ALMOST #&& YEARS AGO. THE COOPERATIVE BANK IS AN
IMPORTANT CONSTITUENT OF THE INDIAN FINANCIAL SYSTEM, JUDGING IMPORTANT CONSTITUENT OF THE INDIAN FINANCIAL SYSTEM, JUDGING
BY THE ROLE ASSIGNED TO CO OPERATIVE, THE EXPECTATIONS THE CO BY THE ROLE ASSIGNED TO CO OPERATIVE, THE EXPECTATIONS THE CO
OPERATIVE IS SUPPOSED TO FULFILL, THEIR NUMBER, AND THE NUMBER OPERATIVE IS SUPPOSED TO FULFILL, THEIR NUMBER, AND THE NUMBER
OF OFFICES THE COOPERATIVE BANK OPERATE. THOUGH THE CO OF OFFICES THE COOPERATIVE BANK OPERATE. THOUGH THE CO
OPERATIVE MOVEMENT ORIGINATED IN THE WEST, BUT THE OPERATIVE MOVEMENT ORIGINATED IN THE WEST, BUT THE
IMPORTANCE OF SUCH BANKS HAVE ASSUMED IN INDIA IS RARELY IMPORTANCE OF SUCH BANKS HAVE ASSUMED IN INDIA IS RARELY
PARALLELED ANYWHERE ELSE IN THE WORLD. PARALLELED ANYWHERE ELSE IN THE WORLD.
THE COOPERATIVE BANKS IN INDIA PLAY AN IMPORTANT ROLE EVEN THE COOPERATIVE BANKS IN INDIA PLAY AN IMPORTANT ROLE EVEN
TODAY IN RURAL FINANCING. THE BUSINESSES OF COOPERATIVE BANK TODAY IN RURAL FINANCING. THE BUSINESSES OF COOPERATIVE BANK
IN THE URBAN AREAS ALSO HAS INCREASED PHENOMENALLY IN RECENT IN THE URBAN AREAS ALSO HAS INCREASED PHENOMENALLY IN RECENT
YEARS DUE TO THE SHARP INCREASE IN THE NUMBER OF PRIMARY CO' YEARS DUE TO THE SHARP INCREASE IN THE NUMBER OF PRIMARY CO'
OPERATIVE BANKS. CO OPERATIVE BANKS IN INDIA ARE REGISTERED OPERATIVE BANKS. CO OPERATIVE BANKS IN INDIA ARE REGISTERED
UNDER THE CO'OPERATIVE SOCIETIES ACT. THE COOPERATIVE BANK IS UNDER THE CO'OPERATIVE SOCIETIES ACT. THE COOPERATIVE BANK IS
ALSO REGULATED BY THE RBI. THEY ARE GOVERNED BY THE BANKING ALSO REGULATED BY THE RBI. THEY ARE GOVERNED BY THE BANKING
REGULATIONS ACT #)+) AND BANKING LAWS (CO'OPERATIVE SOCIETIES REGULATIONS ACT #)+) AND BANKING LAWS (CO'OPERATIVE SOCIETIES
ACT, #)/*. ACT, #)/*.
REGIONA RURA BANKS IN INDIA: REGIONA RURA BANKS IN INDIA:
RURAL BANKING IN INDIA STARTED SINCE THE RURAL BANKING IN INDIA STARTED SINCE THE
ESTABLISHMENT OF BANKING SECTOR IN INDIA. RURAL BANKS IN THOSE ESTABLISHMENT OF BANKING SECTOR IN INDIA. RURAL BANKS IN THOSE
DAYS MAINLY FOCUSED UPON THE AGRO SECTOR. REGIONAL RURAL DAYS MAINLY FOCUSED UPON THE AGRO SECTOR. REGIONAL RURAL
BANKS IN INDIA PENETRATED EVERY CORNER OF THE COUNTRY AND BANKS IN INDIA PENETRATED EVERY CORNER OF THE COUNTRY AND
EXTENDED A HELPING HAND IN THE GROWTH PROCESS OF THE EXTENDED A HELPING HAND IN THE GROWTH PROCESS OF THE
COUNTRY. COUNTRY.
2(
SWATI SAHAY

SBI HAS "& REGIONAL RURAL BANKS IN INDIA KNOWN AS RRBS. THE SBI HAS "& REGIONAL RURAL BANKS IN INDIA KNOWN AS RRBS. THE
RURAL BANKS OF SBI ARE SPREAD IN #" STATES EXTENDING FROM RURAL BANKS OF SBI ARE SPREAD IN #" STATES EXTENDING FROM
KASHMIR TO KARNATAKA AND HIMACHAL PRADESH TO NORTH EAST. KASHMIR TO KARNATAKA AND HIMACHAL PRADESH TO NORTH EAST.
THE TOTAL NUMBER OF SBIS REGIONAL RURAL BANKS IN INDIA THE TOTAL NUMBER OF SBIS REGIONAL RURAL BANKS IN INDIA
BRANCHES IS %"+) (#/K. TILL DATE IN RURAL BANKING IN INDIA, THERE BRANCHES IS %"+) (#/K. TILL DATE IN RURAL BANKING IN INDIA, THERE
ARE #+,+$* RURAL BANKS IN THE COUNTRY OF WHICH %#%/ ()#K ARE ARE #+,+$* RURAL BANKS IN THE COUNTRY OF WHICH %#%/ ()#K ARE
LOCATED IN REMOTE RURAL AREAS. LOCATED IN REMOTE RURAL AREAS.
NABARD NABARD
NATIONAL BANK FOR AGRICULTURE AND RURAL NATIONAL BANK FOR AGRICULTURE AND RURAL
DEVELOPMENT (NABARD IS A DEVELOPMENT BANK IN THE SECTOR OF DEVELOPMENT (NABARD IS A DEVELOPMENT BANK IN THE SECTOR OF
REGIONAL RURAL BANKS IN INDIA. IT PROVIDES AND REGULATES REGIONAL RURAL BANKS IN INDIA. IT PROVIDES AND REGULATES
CREDIT AND GIVES SERVICE FOR THE PROMOTION AND DEVELOPMENT CREDIT AND GIVES SERVICE FOR THE PROMOTION AND DEVELOPMENT
OF RURAL SECTORS MAINLY AGRICULTURE, SMALL SCALE INDUSTRIES, OF RURAL SECTORS MAINLY AGRICULTURE, SMALL SCALE INDUSTRIES,
COTTAGE AND VILLAGE INDUSTRIES, HANDICRAFTS. IT ALSO FINANCES COTTAGE AND VILLAGE INDUSTRIES, HANDICRAFTS. IT ALSO FINANCES
RURAL CRAFTS AND OTHER ALLIED RURAL ECONOMIC ACTIVITIES TO RURAL CRAFTS AND OTHER ALLIED RURAL ECONOMIC ACTIVITIES TO
PROMOTE INTEGRATED RURAL DEVELOPMENT. IT HELPS IN SECURING PROMOTE INTEGRATED RURAL DEVELOPMENT. IT HELPS IN SECURING
RURAL PROSPERITY AND ITS CONNECTED MATTERS. RURAL PROSPERITY AND ITS CONNECTED MATTERS.
FOREIGN BANKS IN INDIA: FOREIGN BANKS IN INDIA:
FOREIGN BANKS IN INDIA ALWAYS BROUGHT AN FOREIGN BANKS IN INDIA ALWAYS BROUGHT AN
EXPLANATION ABOUT THE PROMPT SERVICES TO CUSTOMERS. AFTER EXPLANATION ABOUT THE PROMPT SERVICES TO CUSTOMERS. AFTER
THE SET UP FOREIGN BANKS IN INDIA, THE BANKING SECTOR IN INDIA THE SET UP FOREIGN BANKS IN INDIA, THE BANKING SECTOR IN INDIA
ALSO BECOME COMPETITIVE AND ACCURATIVE.NEW RULES ANNOUNCED ALSO BECOME COMPETITIVE AND ACCURATIVE.NEW RULES ANNOUNCED
BY THE RESERVE BANK OF INDIA FOR THE FOREIGN BANKS IN INDIA IN BY THE RESERVE BANK OF INDIA FOR THE FOREIGN BANKS IN INDIA IN
THIS BUDGET HAS PUT UP GREAT HOPES AMONG FOREIGN BANKS WHICH THIS BUDGET HAS PUT UP GREAT HOPES AMONG FOREIGN BANKS WHICH
ALLOWS THEM TO GROW UNFETTERED. ALLOWS THEM TO GROW UNFETTERED.
NOW FOREIGN BANKS IN INDIA ARE PERMITTED TO SET UP NOW FOREIGN BANKS IN INDIA ARE PERMITTED TO SET UP
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SWATI SAHAY

LOCAL SUBSIDIARIES. THE POLICY CONVEYS THAT FOREIGN BANKS IN LOCAL SUBSIDIARIES. THE POLICY CONVEYS THAT FOREIGN BANKS IN
INDIA MAY NOT AC.UIRE INDIAN ONES (EXCEPT FOR WEAK BANKS INDIA MAY NOT AC.UIRE INDIAN ONES (EXCEPT FOR WEAK BANKS
IDENTIFIED BY THE RBI, ON ITS TERMS AND THEIR INDIAN SUBSIDIARIES IDENTIFIED BY THE RBI, ON ITS TERMS AND THEIR INDIAN SUBSIDIARIES
WILL NOT BE ABLE TO OPEN BRANCHES FREELY. . WILL NOT BE ABLE TO OPEN BRANCHES FREELY. .
LIST OF FOREIGN BANKS IN INDIA LIST OF FOREIGN BANKS IN INDIA
ABU DHABI COMMERCIAL BANK ABU DHABI COMMERCIAL BANK
ANZ GRINDLAYS BANK ANZ GRINDLAYS BANK
BANK OF AMERICA BANK OF AMERICA
CITI BANK CITI BANK
CHINA TRUST COMMERCIAL BANK CHINA TRUST COMMERCIAL BANK
HSBC HSBC
STANDARD CHARTERED BANK STANDARD CHARTERED BANK
ABN'AMRO BANK ABN'AMRO BANK
DEUTSCHE BANK DEUTSCHE BANK
JPMORGAN CHASE BANK JPMORGAN CHASE BANK
INDIAN BANKING INDUSTR! INDIAN BANKING INDUSTR!
CURRENT SCENARIO: . CURRENT SCENARIO: .
THE GROWTH IN THE INDIAN BANKING INDUSTRY HAS THE GROWTH IN THE INDIAN BANKING INDUSTRY HAS
BEEN MORE .UALITATIVE THAN .UANTITATIVE AND IT IS EXPECTED TO BEEN MORE .UALITATIVE THAN .UANTITATIVE AND IT IS EXPECTED TO
REMAIN THE SAME IN THE COMING YEARS. BASED ON THE PROJECTIONS REMAIN THE SAME IN THE COMING YEARS. BASED ON THE PROJECTIONS
MADE IN THE (INDIA VISION %&%&( PREPARED BY THE PLANNING MADE IN THE (INDIA VISION %&%&( PREPARED BY THE PLANNING
COMMISSION AND THE DRAFT #&TH PLAN, THE REPORT FORECASTS THAT COMMISSION AND THE DRAFT #&TH PLAN, THE REPORT FORECASTS THAT
THE PACE OF EXPANSION IN THE BALANCE'SHEETS OF BANKS IS LIKELY THE PACE OF EXPANSION IN THE BALANCE'SHEETS OF BANKS IS LIKELY
TO DECELERATE. TO DECELERATE.
THE TOTAL ASSETS OF ALL SCHEDULED COMMERCIAL BANKS BY END' THE TOTAL ASSETS OF ALL SCHEDULED COMMERCIAL BANKS BY END'
MARCH %&#& IS ESTIMATED AT MARCH %&#& IS ESTIMATED AT N+&,)&,&&& CRORES. THAT WILL COMPRISE N+&,)&,&&& CRORES. THAT WILL COMPRISE
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SWATI SAHAY

ABOUT /* PER CENT OF GDP AT CURRENT MARKET PRICES AS COMPARED ABOUT /* PER CENT OF GDP AT CURRENT MARKET PRICES AS COMPARED
TO /$ PER CENT IN %&&%'&". BANK ASSETS ARE EXPECTED TO GROW AT AN TO /$ PER CENT IN %&&%'&". BANK ASSETS ARE EXPECTED TO GROW AT AN
ANNUAL COMPOSITE RATE OF #".+ PER CENT DURING THE REST OF THE ANNUAL COMPOSITE RATE OF #".+ PER CENT DURING THE REST OF THE
DECADE AS AGAINST THE GROWTH RATE OF #/.$ PER CENT THAT EXISTED DECADE AS AGAINST THE GROWTH RATE OF #/.$ PER CENT THAT EXISTED
BETWEEN #))+')* AND %&&%'&". IT IS EXPECTED THAT THERE WILL BE BETWEEN #))+')* AND %&&%'&". IT IS EXPECTED THAT THERE WILL BE
LARGE ADDITIONS TO THE CAPITAL BASE AND RESERVES ON THE LARGE ADDITIONS TO THE CAPITAL BASE AND RESERVES ON THE
LIABILITY SIDE. LIABILITY SIDE.
THE INDIAN BANKING INDUSTRY CAN BE CATEGORIZED INTO NON' THE INDIAN BANKING INDUSTRY CAN BE CATEGORIZED INTO NON'
SCHEDULED BANKS AND SCHEDULED BANKS. SCHEDULED BANKS SCHEDULED BANKS AND SCHEDULED BANKS. SCHEDULED BANKS
CONSTITUTE OF COMMERCIAL BANKS AND CO'OPERATIVE BANKS. CONSTITUTE OF COMMERCIAL BANKS AND CO'OPERATIVE BANKS.
THERE ARE ABOUT /$,&&& BRANCHES OF SCHEDULED BANKS SPREAD THERE ARE ABOUT /$,&&& BRANCHES OF SCHEDULED BANKS SPREAD
ACROSS INDIA. AS FAR AS THE PRESENT SCENARIO IS CONCERNED THE ACROSS INDIA. AS FAR AS THE PRESENT SCENARIO IS CONCERNED THE
BANKING INDUSTRY IN INDIA IS GOING THROUGH A TRANSITIONAL BANKING INDUSTRY IN INDIA IS GOING THROUGH A TRANSITIONAL
PHASE. PHASE.
THE PUBLIC SECTOR BANKS(PSBS, WHICH ARE THE BASE OF THE THE PUBLIC SECTOR BANKS(PSBS, WHICH ARE THE BASE OF THE
BANKING SECTOR IN INDIA ACCOUNT FOR MORE THAN $J PER CENT OF BANKING SECTOR IN INDIA ACCOUNT FOR MORE THAN $J PER CENT OF
THE TOTAL BANKING INDUSTRY ASSETS. UNFORTUNATELY THEY ARE THE TOTAL BANKING INDUSTRY ASSETS. UNFORTUNATELY THEY ARE
BURDENED WITH EXCESSIVE NON PERFORMING ASSETS (NPAS, MASSIVE BURDENED WITH EXCESSIVE NON PERFORMING ASSETS (NPAS, MASSIVE
MANPOWER AND LACK OF MODERN TECHNOLOGY. ON THE OTHER HAND MANPOWER AND LACK OF MODERN TECHNOLOGY. ON THE OTHER HAND
THE PRIVATE SECTOR BANKS ARE MAKING TREMENDOUS PROGRESS. THE PRIVATE SECTOR BANKS ARE MAKING TREMENDOUS PROGRESS.
THEY ARE LEADERS IN INTERNET BANKING, MOBILE BANKING, PHONE THEY ARE LEADERS IN INTERNET BANKING, MOBILE BANKING, PHONE
BANKING, ATMS. AS FAR AS FOREIGN BANKS ARE CONCERNED THEY ARE BANKING, ATMS. AS FAR AS FOREIGN BANKS ARE CONCERNED THEY ARE
LIKELY TO SUCCEED IN THE INDIAN BANKING INDUSTRY. LIKELY TO SUCCEED IN THE INDIAN BANKING INDUSTRY.
3*
SWATI SAHAY

COMPAN! PROFIE COMPAN! PROFIE
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SWATI SAHAY

ICICI BANK ICICI BANK: :
ICICI BANK (FORMERLY INDUSTRIAL CREDIT AND ICICI BANK (FORMERLY INDUSTRIAL CREDIT AND
INVESTMENT CORPORATION OF INDIA IS INDIA1S SECOND LARGEST INVESTMENT CORPORATION OF INDIA IS INDIA1S SECOND LARGEST
PRIVATE BANK OF COUNTRY. ICICI BANK HAS TOTAL ASSETS OF ABOUT PRIVATE BANK OF COUNTRY. ICICI BANK HAS TOTAL ASSETS OF ABOUT
RS.%&.&*BN (END'MAR %&&*, A NETWORK OF OVER %*%) BRANCHES, %% RS.%&.&*BN (END'MAR %&&*, A NETWORK OF OVER %*%) BRANCHES, %%
REGIONAL OFFICES,AND +) REGIONAL PROCESSING CENTRES, ABOUT REGIONAL OFFICES,AND +) REGIONAL PROCESSING CENTRES, ABOUT
/#&% ATM(AT THE END OF SEPTEMBERAND %+ MILLION CUSTOMERS. ICICI /#&% ATM(AT THE END OF SEPTEMBERAND %+ MILLION CUSTOMERS. ICICI
BANK OFFERS A WIDE RANGE OF BANKING PRODUCTS AND FINANCIAL BANK OFFERS A WIDE RANGE OF BANKING PRODUCTS AND FINANCIAL
SERVICES TO CORPORATE AND RETAIL CUSTOMERS THROUGH A VARIETY SERVICES TO CORPORATE AND RETAIL CUSTOMERS THROUGH A VARIETY
OF DELIVERY CHANNELS AND THROUGH ITS SPECIALIZED SUBSIDIARIES OF DELIVERY CHANNELS AND THROUGH ITS SPECIALIZED SUBSIDIARIES
AND AFFILIATES IN THE AREAS OF INVESTMENT BANKING, LIFE AND AND AFFILIATES IN THE AREAS OF INVESTMENT BANKING, LIFE AND
NON'LIFE INSURANCE, VENTURE CAPITAL AND ASSET MANAGEMENT NON'LIFE INSURANCE, VENTURE CAPITAL AND ASSET MANAGEMENT
ICICI BANK1S E.UITY SHARES ARE LISTED IN INDIA ON STOCK ICICI BANK1S E.UITY SHARES ARE LISTED IN INDIA ON STOCK
EXCHANGES AT EXCHANGES AT KOLKATA KOLKATA AND AND VADODARA VADODARA, THE STOCK EXCHANGE, , THE STOCK EXCHANGE,
MUMBAI MUMBAI AND THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED AND AND THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED AND
ITS ITS ADRS ADRS ARE LISTED ON THE NEW YORK STOCK EXCHANGE (NYSE. ARE LISTED ON THE NEW YORK STOCK EXCHANGE (NYSE.
FORMATION: FORMATION:
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SWATI SAHAY

THE THE WORLD BANK WORLD BANK, THE , THE GOVERNMENT OF INDIA GOVERNMENT OF INDIA AND AND
REPRESENTATIVES OF INDIAN INDUSTRY FORM ICICI LIMITED AS A REPRESENTATIVES OF INDIAN INDUSTRY FORM ICICI LIMITED AS A
DEVELOPMENT FINANCE INSTITUTION TO PROVIDE MEDIUM'TERM AND DEVELOPMENT FINANCE INSTITUTION TO PROVIDE MEDIUM'TERM AND
LONG'TERM PROJECT FINANCING TO INDIAN BUSINESSES IN LONG'TERM PROJECT FINANCING TO INDIAN BUSINESSES IN #)** #)**. .
#))+ #))+, ICICI ESTABLISHES ICICI BANK AS A SUBSIDIARY. , ICICI ESTABLISHES ICICI BANK AS A SUBSIDIARY.
#))) #))), ICICI BECOMES THE FIRST INDIAN COMPANY AND THE FIRST , ICICI BECOMES THE FIRST INDIAN COMPANY AND THE FIRST
BANK OR FINANCIAL INSTITUTION FROM NON'JAPAN ASIA TO LIST ON BANK OR FINANCIAL INSTITUTION FROM NON'JAPAN ASIA TO LIST ON
THE THE NYSE NYSE. .
%&&# %&&#, ICICI AC.UIRED , ICICI AC.UIRED BANK OF MADURAI BANK OF MADURAI (EST. (EST. #)+" #)+". . BANK OF BANK OF
MADURAI MADURAI WAS A WAS A CHETTIAR CHETTIAR BANK, AND HAD AC.UIRED BANK, AND HAD AC.UIRED CHETTINAD CHETTINAD
MERCANTILE BANK MERCANTILE BANK (EST. (EST. #)"" #)"" AND AND ILLANJI BANK ILLANJI BANK (ESTABLISHED (ESTABLISHED #)&+ #)&+ IN IN
THE THE #)/&S #)/&S. .
%&&% %&&% ,THE BOARDS OF DIRECTORS OF ICICI AND ICICI BANK APPROVE ,THE BOARDS OF DIRECTORS OF ICICI AND ICICI BANK APPROVE
THE MERGER OF ICICI, THE MERGER OF ICICI, ICICI PERSONAL FINANCIAL SERVICES LIMITED ICICI PERSONAL FINANCIAL SERVICES LIMITED
AND AND ICICI CAPITAL SERVICES LIMITED ICICI CAPITAL SERVICES LIMITED, WITH ICICI BANK. AFTER , WITH ICICI BANK. AFTER
RECEIVING ALL NECESSARY REGULATORY APPROVALS, ICICI RECEIVING ALL NECESSARY REGULATORY APPROVALS, ICICI
INTEGRATES THE GROUP1S FINANCING AND BANKING OPERATIONS, BOTH INTEGRATES THE GROUP1S FINANCING AND BANKING OPERATIONS, BOTH
WHOLESALE AND RETAIL, INTO A SINGLE ENTITY. WHOLESALE AND RETAIL, INTO A SINGLE ENTITY.
IN %&&J, FOLLOWING THE IN %&&J, FOLLOWING THE %&&J FINANCIAL CRISIS %&&J FINANCIAL CRISIS, CUSTOMERS , CUSTOMERS
RUSHED TO ATM1S AND BRANCHES IN SOME LOCATIONS DUE TO RUMORS RUSHED TO ATM1S AND BRANCHES IN SOME LOCATIONS DUE TO RUMORS
OF ADVERSE FINANCIAL POSITION OF ICICI BANK. THE RESERVE BANK OF ADVERSE FINANCIAL POSITION OF ICICI BANK. THE RESERVE BANK
OF INDIA ISSUED A CLARIFICATION ON THE FINANCIAL STRENGTH OF OF INDIA ISSUED A CLARIFICATION ON THE FINANCIAL STRENGTH OF
ICICI BANK TO DISPEL THE RUMORS. ICICI BANK TO DISPEL THE RUMORS.
INTERNATIONAL EXPANSION INTERNATIONAL EXPANSION
%&&%, ICICI ESTABLISHES REPRESENTATIVE OFFICES IN NY AND %&&%, ICICI ESTABLISHES REPRESENTATIVE OFFICES IN NY AND
LONDON LONDON. .
%&&" %&&", ICICI OPENS SUBSIDIARIES IN , ICICI OPENS SUBSIDIARIES IN CANADA CANADA AND THE AND THE UNITED UNITED
KINGDOM KINGDOM (UK, AND IN THE UK IT ESTABLISHES ALLIANCE WITH (UK, AND IN THE UK IT ESTABLISHES ALLIANCE WITH LLOYDS LLOYDS
33
SWATI SAHAY

TSB TSB. IT ALSO OPENS AN OFFSHORE BANKING UNIT (OBU IN . IT ALSO OPENS AN OFFSHORE BANKING UNIT (OBU IN SINGAPORE SINGAPORE
AND REPRESENTATIVE OFFICES IN AND REPRESENTATIVE OFFICES IN DUBAI DUBAI AND AND SHANGHAI SHANGHAI. .
%&&+ %&&+, ICICI OPENS A REP OFFICE IN , ICICI OPENS A REP OFFICE IN BANGLADESH BANGLADESH TO TAP THE TO TAP THE
EXTENSIVE TRADE BETWEEN THAT COUNTRY, INDIA AND SOUTH AFRICA. EXTENSIVE TRADE BETWEEN THAT COUNTRY, INDIA AND SOUTH AFRICA.
%&&* %&&*,ICICI AC.UIRES INVESTITSIONNO'KREDITNY BANK (IKB, A ,ICICI AC.UIRES INVESTITSIONNO'KREDITNY BANK (IKB, A
RUSSIA BANK WITH ABOUT US0+MN IN ASSETS, HEAD OFFICE IN RUSSIA BANK WITH ABOUT US0+MN IN ASSETS, HEAD OFFICE IN
BALABANOVO IN THE KALUGA REGION, AND WITH A BRANCH IN BALABANOVO IN THE KALUGA REGION, AND WITH A BRANCH IN
MOSCOW. ICICI BANK OFFERS A HIGH'INTEREST (*.+K GROSS INTERNET MOSCOW. ICICI BANK OFFERS A HIGH'INTEREST (*.+K GROSS INTERNET
SAVINGS ACCOUNT TO UK CUSTOMERS SAVINGS ACCOUNT TO UK CUSTOMERS
ABOUT ICICI BANK ABOUT ICICI BANK
ICICI BANK IS ARGUABLY THE MOST AGGRESSIVE BANK IN THE ICICI BANK IS ARGUABLY THE MOST AGGRESSIVE BANK IN THE
COUNTRY AND CAN RIGHTFULLY CLAIM CREDIT FOR THE SPREAD OF COUNTRY AND CAN RIGHTFULLY CLAIM CREDIT FOR THE SPREAD OF
RETAIL FINANCING IN THE COUNTRY. FORMED BY THE REVERSE MERGER RETAIL FINANCING IN THE COUNTRY. FORMED BY THE REVERSE MERGER
OF FORMER ICICI WITH ITS BANKING SUBSIDIARY, THE BANK HAS BEEN OF FORMER ICICI WITH ITS BANKING SUBSIDIARY, THE BANK HAS BEEN
HIGHLY FOCUSED ON EXPANDING ITS RETAIL PORTFOLIO WHICH IT HIGHLY FOCUSED ON EXPANDING ITS RETAIL PORTFOLIO WHICH IT
BELIEVES WOULD BE THE MAJOR GROWTH DRIVER IN FUTURE. BELIEVES WOULD BE THE MAJOR GROWTH DRIVER IN FUTURE.
THE BANK HAD TO OVERCOME SEVERAL LEGACY ISSUES AFTER THE THE BANK HAD TO OVERCOME SEVERAL LEGACY ISSUES AFTER THE
MERGER WITH ICICI. THE ERSTWHILE FINANCIAL INSTITUTION HAD MERGER WITH ICICI. THE ERSTWHILE FINANCIAL INSTITUTION HAD
STOCKPILE OF BAD LOANS IN ITS BOOKS, A RESULT OF LIBERAL STOCKPILE OF BAD LOANS IN ITS BOOKS, A RESULT OF LIBERAL
FINANCING TO LARGE INDUSTRIAL PROJECTS LIKE STEEL UNITS IN THE FINANCING TO LARGE INDUSTRIAL PROJECTS LIKE STEEL UNITS IN THE
1)&S. TO ITS CREDIT, THE BANK HAS SUCCESSFULLY CLEANED ITS 1)&S. TO ITS CREDIT, THE BANK HAS SUCCESSFULLY CLEANED ITS
BALANCE SHEET AND NET BAD LOANS AS A PERCENTAGE OF ADVANCES BALANCE SHEET AND NET BAD LOANS AS A PERCENTAGE OF ADVANCES
HAVE GONE DOWN SIGNIFICANTLY. HAVE GONE DOWN SIGNIFICANTLY.
BESIDES THE WELL ESTABLISHED CORPORATE BANKING DIVISION, ICICI BESIDES THE WELL ESTABLISHED CORPORATE BANKING DIVISION, ICICI
BANK HAS THE LARGEST MARKET SHARE AMONG ALL BANKS IN RETAIL BANK HAS THE LARGEST MARKET SHARE AMONG ALL BANKS IN RETAIL
OR CONSUMER FINANCING. ITS GROWTH RATE IN HOME LOANS EXCEEDS OR CONSUMER FINANCING. ITS GROWTH RATE IN HOME LOANS EXCEEDS
MORE ESTABLISHED HDFC AND ITS TOTAL HOME LOAN PORTFOLIO MORE ESTABLISHED HDFC AND ITS TOTAL HOME LOAN PORTFOLIO
WOULD GO PAST HDFC IN A FEW YEARS AT CURRENT GROWTH RATES. WOULD GO PAST HDFC IN A FEW YEARS AT CURRENT GROWTH RATES.
3-
SWATI SAHAY

ICICI BANK IS THE LARGEST ISSUER OF CREDIT CARDS IN THE COUNTRY. ICICI BANK IS THE LARGEST ISSUER OF CREDIT CARDS IN THE COUNTRY.
IT WAS THE FIRST BANK TO OFFER A WIDE NETWORK OF ATM1S AND HAD IT WAS THE FIRST BANK TO OFFER A WIDE NETWORK OF ATM1S AND HAD
THE LARGEST NETWORK OF ATM1S TILL RECENTLY, BEFORE SBI CAUGHT THE LARGEST NETWORK OF ATM1S TILL RECENTLY, BEFORE SBI CAUGHT
UP WITH IT. UP WITH IT.
THE BANK IS EXPANDING RAPIDLY IN OVERSEAS MARKETS. IT HAS THE BANK IS EXPANDING RAPIDLY IN OVERSEAS MARKETS. IT HAS
OPERATIONS IN THE UK, HONG KONG AND CANADA. IT AC.UIRED A OPERATIONS IN THE UK, HONG KONG AND CANADA. IT AC.UIRED A
SMALL BANK IN RUSSIA RECENTLY. IT HAS TIE'UPS WITH MAJOR BANKS SMALL BANK IN RUSSIA RECENTLY. IT HAS TIE'UPS WITH MAJOR BANKS
IN THE US AND CHINA. THE BANK IS AGGRESSIVELY TARGETING THE NRI IN THE US AND CHINA. THE BANK IS AGGRESSIVELY TARGETING THE NRI
POPULATION FOR EXPANDING ITS BUSINESS. IT ALREADY OFFERS MONEY POPULATION FOR EXPANDING ITS BUSINESS. IT ALREADY OFFERS MONEY
TRANSFER FACILITIES TO INDIA FROM MOST MAJOR COUNTRIES ACROSS TRANSFER FACILITIES TO INDIA FROM MOST MAJOR COUNTRIES ACROSS
THE GLOBE. THE GLOBE.
FOR THE OVERSEAS MARKETS, ICICI HAS A UNI.UE STRATEGY. THE FOR THE OVERSEAS MARKETS, ICICI HAS A UNI.UE STRATEGY. THE
BANK HAS SUCCESSFULLY REDUCED OPERATING COSTS BY DOING ALL BANK HAS SUCCESSFULLY REDUCED OPERATING COSTS BY DOING ALL
PROCESSING AND BACK OFFICE WORK IN INDIA. IT MAINTAINS ONLY A PROCESSING AND BACK OFFICE WORK IN INDIA. IT MAINTAINS ONLY A
FRONT OFFICE CUSTOMER INTERFACE IN OVERSEAS LOCATIONS. THESE FRONT OFFICE CUSTOMER INTERFACE IN OVERSEAS LOCATIONS. THESE
COST SAVINGS HELP THE BANK TO OFFER HIGHER RATES ON DEPOSITS. COST SAVINGS HELP THE BANK TO OFFER HIGHER RATES ON DEPOSITS.
HISTORY OF ICICI HISTORY OF ICICI
1"'' 1"'': THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF : THE INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF
INDIA LIMITED (ICICI INCORPORATED AT THE INITIATIVE OF THE WORLD INDIA LIMITED (ICICI INCORPORATED AT THE INITIATIVE OF THE WORLD
BANK, THE GOVERNMENT OF INDIA AND REPRESENTATIVES OF INDIAN BANK, THE GOVERNMENT OF INDIA AND REPRESENTATIVES OF INDIAN
INDUSTRY, WITH THE OBJECTIVE OF CREATING A DEVELOPMENT INDUSTRY, WITH THE OBJECTIVE OF CREATING A DEVELOPMENT
FINANCIAL INSTITUTION FOR PROVIDING MEDIUM'TERM AND LONG' FINANCIAL INSTITUTION FOR PROVIDING MEDIUM'TERM AND LONG'
TERM PROJECT FINANCING TO INDIAN BUSINESSES. MR.A.RAMASWAMI TERM PROJECT FINANCING TO INDIAN BUSINESSES. MR.A.RAMASWAMI
MUDALIAR ELECTED AS THE FIRST CHAIRMAN OF ICICI LIMITED MUDALIAR ELECTED AS THE FIRST CHAIRMAN OF ICICI LIMITED
1"'(* 1"'(* ICICI DECLARED ITS FIRST DIVIDEND AT ".*K. ICICI DECLARED ITS FIRST DIVIDEND AT ".*K.
1"') 1"'): MR.G.L.MEHTA WAS APPOINTED THE %ND CHAIRMAN OF ICICI LTD. : MR.G.L.MEHTA WAS APPOINTED THE %ND CHAIRMAN OF ICICI LTD.
1"(0 1"(0: ICICI BUILDING AT #/", BACK BAY RECLAMATION WAS : ICICI BUILDING AT #/", BACK BAY RECLAMATION WAS
INAUGURATED. INAUGURATED.
3)
SWATI SAHAY

1"(1 1"(1: THE FIRST WEST GERMAN LOAN OF DM * MILLION FROM : THE FIRST WEST GERMAN LOAN OF DM * MILLION FROM
KREDIANSTALT WAS OBTAINED BY ICICI. KREDIANSTALT WAS OBTAINED BY ICICI.
1"(! 1"(!: ICICI MADE ITS FIRST DEBENTURE ISSUE FOR RS./ CRORE, WHICH : ICICI MADE ITS FIRST DEBENTURE ISSUE FOR RS./ CRORE, WHICH
WAS OVERSUBSCRIBED. WAS OVERSUBSCRIBED.
1"("* 1"("* FIRST TWO REGIONAL OFFICES IN CALCUTTA AND MADRAS WERE FIRST TWO REGIONAL OFFICES IN CALCUTTA AND MADRAS WERE
OPENED. OPENED.
1"!2 1"!2: MR. H. T. PARIKH APPOINTED AS THE THIRD CHAIRMAN OF ICICI. : MR. H. T. PARIKH APPOINTED AS THE THIRD CHAIRMAN OF ICICI.
1"!! 1"!!: ICICI SPONSORS THE FORMATION OF HOUSING DEVELOPMENT : ICICI SPONSORS THE FORMATION OF HOUSING DEVELOPMENT
FINANCE CORPORATION. MANAGED ITS FIRST E.UITY PUBLIC ISSUE FINANCE CORPORATION. MANAGED ITS FIRST E.UITY PUBLIC ISSUE
1"!) 1"!): MR. JAMES RAJ APPOINTED AS THE FOURTH CHAIRMAN OF ICICI. : MR. JAMES RAJ APPOINTED AS THE FOURTH CHAIRMAN OF ICICI.
1"!" 1"!": MR.SIDDHARTH MEHTA APPOINTED AS THE FIFTH CHAIRMAN OF : MR.SIDDHARTH MEHTA APPOINTED AS THE FIFTH CHAIRMAN OF
ICICI. ICICI.
1")2 1")2: BECOMES THE FIRST EVER INDIAN BORROWER TO RAISE : BECOMES THE FIRST EVER INDIAN BORROWER TO RAISE
EUROPEAN CURRENCY UNITS. EUROPEAN CURRENCY UNITS.
1") 1"): MR. S. NADKARNI APPOINTED AS THE SIXTH CHAIRMAN OF ICICI. : MR. S. NADKARNI APPOINTED AS THE SIXTH CHAIRMAN OF ICICI.
1")' 1")': MR.N.VAGHUL APPOINTED AS THE SEVENTH CHAIRMAN AND : MR.N.VAGHUL APPOINTED AS THE SEVENTH CHAIRMAN AND
MANAGING DIRECTOR OF ICICI. MANAGING DIRECTOR OF ICICI.
1")( 1")(: ICICI FIRST INDIAN INSTITUTION TO RECEIVE ADB LOANS. FIRST : ICICI FIRST INDIAN INSTITUTION TO RECEIVE ADB LOANS. FIRST
PUBLIC ISSUE BY AN INDIAN ENTITY IN THE SWISS CAPITAL MARKETS. PUBLIC ISSUE BY AN INDIAN ENTITY IN THE SWISS CAPITAL MARKETS.
ICICI ALONG WITH UTI SETS UP CREDIT RATING INFORMATION ICICI ALONG WITH UTI SETS UP CREDIT RATING INFORMATION
SERVICES OF INDIA LIMITED, (CRISIL INDIA1S FIRST PROFESSIONAL SERVICES OF INDIA LIMITED, (CRISIL INDIA1S FIRST PROFESSIONAL
CREDIT RATING AGENCY. CREDIT RATING AGENCY.
THE CORPORATION MADE A PUBLIC ISSUE OF SWISS FRANC $* THE CORPORATION MADE A PUBLIC ISSUE OF SWISS FRANC $*
MILLION IN SWITZERLAND, THE FIRST PUBLIC ISSUE BY ANY INDIAN MILLION IN SWITZERLAND, THE FIRST PUBLIC ISSUE BY ANY INDIAN
E.UITY IN THE SWISS CAPITAL MARKET. E.UITY IN THE SWISS CAPITAL MARKET.
1")! 1")!: ICICI SIGNED A LOAN AGREEMENT FOR STERLING POUND #& : ICICI SIGNED A LOAN AGREEMENT FOR STERLING POUND #&
MILLION WITH COMMONWEALTH DEVELOPMENT CORPORATION (CDC, MILLION WITH COMMONWEALTH DEVELOPMENT CORPORATION (CDC,
3.
SWATI SAHAY

THE FIRST LOAN BY CDC FOR FINANCING PROJECTS IN INDIA. THE FIRST LOAN BY CDC FOR FINANCING PROJECTS IN INDIA.
1"))* 1"))* ICICI PROMOTES TDICI ' INDIA1S FIRST VENTURE CAPITAL ICICI PROMOTES TDICI ' INDIA1S FIRST VENTURE CAPITAL
COMPANY. COMPANY.
1""& 1""&: ICICI SETS'UP ICICI SECURITIES AND FINANCE COMPANY LIMITED : ICICI SETS'UP ICICI SECURITIES AND FINANCE COMPANY LIMITED
IN JOINT VENTURE WITH J. P. MORGAN. ICICI SETS UP ICICI ASSET IN JOINT VENTURE WITH J. P. MORGAN. ICICI SETS UP ICICI ASSET
MANAGEMENT COMPANY. MANAGEMENT COMPANY.
1""* 1""* ICICI SETS UP ICICI BANK. ICICI SETS UP ICICI BANK.
1""(* 1""(* ICICI BECOMES THE FIRST COMPANY IN THE INDIAN FINANCIAL ICICI BECOMES THE FIRST COMPANY IN THE INDIAN FINANCIAL
SECTOR TO RAISE GDR. SECTOR TO RAISE GDR.
MR.K.V.KAMATH APPOINTED THE MANAGING DIRECTOR AND CEO MR.K.V.KAMATH APPOINTED THE MANAGING DIRECTOR AND CEO
OF ICICI LTD OF ICICI LTD
1""! 1""!: ICICI WAS THE FIRST INTERMEDIARY TO MOVE AWAY FROM SINGLE : ICICI WAS THE FIRST INTERMEDIARY TO MOVE AWAY FROM SINGLE
PRIME RATE TO THREE'TIER PRIME RATES STRUCTURE AND INTRODUCED PRIME RATE TO THREE'TIER PRIME RATES STRUCTURE AND INTRODUCED
YIELD'CURVE BASED PRICING. YIELD'CURVE BASED PRICING.
THE NAME (THE INDUSTRIAL CREDIT AND INVESTMENT THE NAME (THE INDUSTRIAL CREDIT AND INVESTMENT
CORPORATION OF INDIA LIMITEDO WAS CHANGED TO (ICICI LIMITED(. CORPORATION OF INDIA LIMITEDO WAS CHANGED TO (ICICI LIMITED(.
1"") 1""): INTRODUCED THE NEW LOGO SYMBOLIZING A COMMON : INTRODUCED THE NEW LOGO SYMBOLIZING A COMMON
CORPORATE IDENTITY FOR THE ICICI GROUP. CORPORATE IDENTITY FOR THE ICICI GROUP.
1""" 1""": ICICI LAUNCHES RETAIL FINANCE ' CAR LOANS, HOUSE LOANS : ICICI LAUNCHES RETAIL FINANCE ' CAR LOANS, HOUSE LOANS
AND LOANS FOR CONSUMER DURABLES. AND LOANS FOR CONSUMER DURABLES.
ICICI BECOMES THE FIRST INDIAN COMPANY TO LIST ON THE ICICI BECOMES THE FIRST INDIAN COMPANY TO LIST ON THE
NYSE THROUGH AN ISSUE OF AMERICAN DEPOSITARY SHARES. NYSE THROUGH AN ISSUE OF AMERICAN DEPOSITARY SHARES.
2000 2000: ICICI BANK BECOMES THE FIRST COMMERCIAL BANK FROM INDIA : ICICI BANK BECOMES THE FIRST COMMERCIAL BANK FROM INDIA
TO LIST ITS STOCK ON NYSE. ICICI BANK ANNOUNCES MERGER WITH TO LIST ITS STOCK ON NYSE. ICICI BANK ANNOUNCES MERGER WITH
BANK OF MADURA. BANK OF MADURA.
2001 2001: THE BOARDS OF ICICI LTD AND ICICI BANK APPROVED THE MERGER : THE BOARDS OF ICICI LTD AND ICICI BANK APPROVED THE MERGER
OF ICICI WITH ICICI BANK. OF ICICI WITH ICICI BANK.
3(
SWATI SAHAY

2002 2002: MOODY-S1 ASSIGN HIGHER THAN SOVEREIGN RATING TO ICICI. : MOODY-S1 ASSIGN HIGHER THAN SOVEREIGN RATING TO ICICI.
200&* 200&* THE FIRST INTEGRATED CURRENCY MANAGEMENT CENTRE THE FIRST INTEGRATED CURRENCY MANAGEMENT CENTRE
LAUNCHED IN PUNE. ICICI BANK ANNOUNCED THE SETTING UP OF ITS LAUNCHED IN PUNE. ICICI BANK ANNOUNCED THE SETTING UP OF ITS
FIRST EVER OFFSHORE BRANCH IN SINGAPORE.ICICI BANK BECAME THE FIRST EVER OFFSHORE BRANCH IN SINGAPORE.ICICI BANK BECAME THE
MARKET LEADER IN RETAIL CREDIT IN INDIA. MARKET LEADER IN RETAIL CREDIT IN INDIA.
200* 200*MOBILE BANKING SERVICE IN INDIA LAUNCHED IN ASSOCIATION MOBILE BANKING SERVICE IN INDIA LAUNCHED IN ASSOCIATION
WITH RELAINCE INFOOCOM KISSAN LOANCARD AND INNOVATIVE , LOW WITH RELAINCE INFOOCOM KISSAN LOANCARD AND INNOVATIVE , LOW
COST ATMS UN RURAL INDIA LAUNCHED. COST ATMS UN RURAL INDIA LAUNCHED.
OVERVIEW OVERVIEW
ICICI BANK IS INDIA1S SECOND'LARGEST BANK. ICICI BANK HAS A ICICI BANK IS INDIA1S SECOND'LARGEST BANK. ICICI BANK HAS A
NETWORK OF ABOUT RS. +,&/%."+ BILLION (US0 )# BILLION AT MARCH "#, NETWORK OF ABOUT RS. +,&/%."+ BILLION (US0 )# BILLION AT MARCH "#,
%&## AND PROFIT AFTER TAX RS. *#.*# BILLION (US0 #,#** MILLION FOR %&## AND PROFIT AFTER TAX RS. *#.*# BILLION (US0 #,#** MILLION FOR
THE YEAR ENDED MARCH "#, %&##. THE BANK HAS A NETWORK OF %,*+" THE YEAR ENDED MARCH "#, %&##. THE BANK HAS A NETWORK OF %,*+"
BRANCHES AND ABOUT $,&"$ ATMS IN INDIA, AND HAS A PRESENCE IN #) BRANCHES AND ABOUT $,&"$ ATMS IN INDIA, AND HAS A PRESENCE IN #)
COUNTRIES, INCLUDING INDIA.ICICI BANK OFFERS A WIDE RANGE OF COUNTRIES, INCLUDING INDIA.ICICI BANK OFFERS A WIDE RANGE OF
BANKING PRODUCTS AND FINANCIAL SERVICES TO CORPORATE AND BANKING PRODUCTS AND FINANCIAL SERVICES TO CORPORATE AND
RETAIL CUSTOMERS THROUGH A VARIETY OF DELIVERY CHANNELS AND RETAIL CUSTOMERS THROUGH A VARIETY OF DELIVERY CHANNELS AND
THROUGH ITS SPECIALIZED SUBSIDIARIES. ICICI BANK SET UP ITS THROUGH ITS SPECIALIZED SUBSIDIARIES. ICICI BANK SET UP ITS
INTERNATIONAL BANKING GROUP IN FISCAL %&&% TO CATER TO THE INTERNATIONAL BANKING GROUP IN FISCAL %&&% TO CATER TO THE
CROSS BORDER NEEDS OF CLIENTS AND LEVERAGE ON ITS DOMESTIC CROSS BORDER NEEDS OF CLIENTS AND LEVERAGE ON ITS DOMESTIC
BANKING STRENGTHS TO OFFER PRODUCTS INTERNATIONALLY. ICICI BANKING STRENGTHS TO OFFER PRODUCTS INTERNATIONALLY. ICICI
BANK CURRENTLY HAS SUBSIDIARIES IN THE UNITED KINGDOM, BANK CURRENTLY HAS SUBSIDIARIES IN THE UNITED KINGDOM,
CANADA AND RUSSIA, BRANCHES IN SINGAPORE AND BAHRAIN AND CANADA AND RUSSIA, BRANCHES IN SINGAPORE AND BAHRAIN AND
REPRESENTATIVE OFFICES IN THE UNITED STATES, CHINA, UNITED ARAB REPRESENTATIVE OFFICES IN THE UNITED STATES, CHINA, UNITED ARAB
EMIRATES, BANGLADESH AND SOUTH AFRICA. EMIRATES, BANGLADESH AND SOUTH AFRICA.
ICICI BANK1S E.UITY SHARES ARE LISTED IN INDIA ON THE BOMBAY ICICI BANK1S E.UITY SHARES ARE LISTED IN INDIA ON THE BOMBAY
STOCK EXCHANGE AND THE NATIONAL STOCK EXCHANGE OF INDIA STOCK EXCHANGE AND THE NATIONAL STOCK EXCHANGE OF INDIA
3/
SWATI SAHAY

LIMITED AND ITS AMERICAN DEPOSITARY RECEIPTS (ADRS ARE LISTED LIMITED AND ITS AMERICAN DEPOSITARY RECEIPTS (ADRS ARE LISTED
ON THE NEW YORK STOCK EXCHANGE (NYSE. ON THE NEW YORK STOCK EXCHANGE (NYSE.
AT SEPTEMBER %&, %&&*, ICICI BANK, WITH FREE FLOAT MARKET AT SEPTEMBER %&, %&&*, ICICI BANK, WITH FREE FLOAT MARKET
CAPITALIZATION OF ABOUT RS. +&&.&& BILLION (US0 ).&& BILLION CAPITALIZATION OF ABOUT RS. +&&.&& BILLION (US0 ).&& BILLION
RANKED THIRD AMONGST ALL THE COMPANIES LISTED ON THE INDIAN RANKED THIRD AMONGST ALL THE COMPANIES LISTED ON THE INDIAN
STOCK EXCHANGES. STOCK EXCHANGES.
ICICI1S SHAREHOLDING IN ICICI BANK WAS REDUCED TO +/K THROUGH A ICICI1S SHAREHOLDING IN ICICI BANK WAS REDUCED TO +/K THROUGH A
PUBLIC OFFERING OF SHARES IN INDIA IN FISCAL #))J, AN E.UITY PUBLIC OFFERING OF SHARES IN INDIA IN FISCAL #))J, AN E.UITY
OFFERING IN THE FORM OF ADRS LISTED ON THE NYSE IN FISCAL %&&&, OFFERING IN THE FORM OF ADRS LISTED ON THE NYSE IN FISCAL %&&&,
ICICI BANK1S AC.UISITION OF BANK OF MADURA LIMITED IN AN ALL' ICICI BANK1S AC.UISITION OF BANK OF MADURA LIMITED IN AN ALL'
STOCK AMALGAMATION IN FISCAL %&&#, AND SECONDARY MARKET STOCK AMALGAMATION IN FISCAL %&&#, AND SECONDARY MARKET
SALES BY ICICI TO INSTITUTIONAL INVESTORS IN FISCAL %&&# AND SALES BY ICICI TO INSTITUTIONAL INVESTORS IN FISCAL %&&# AND
FISCAL %&&%. ICICI WAS FORMED IN #)** AT THE INITIATIVE OF THE FISCAL %&&%. ICICI WAS FORMED IN #)** AT THE INITIATIVE OF THE
WORLD BANK, THE GOVERNMENT OF INDIA AND REPRESENTATIVES OF WORLD BANK, THE GOVERNMENT OF INDIA AND REPRESENTATIVES OF
INDIAN INDUSTRY. INDIAN INDUSTRY.
THE PRINCIPAL OBJECTIVE WAS TO CREATE A DEVELOPMENT FINANCIAL THE PRINCIPAL OBJECTIVE WAS TO CREATE A DEVELOPMENT FINANCIAL
INSTITUTION FOR PROVIDING MEDIUM'TERM AND LONG'TERM PROJECT INSTITUTION FOR PROVIDING MEDIUM'TERM AND LONG'TERM PROJECT
FINANCING TO INDIAN BUSINESSES. IN THE #))&S, ICICI TRANSFORMED FINANCING TO INDIAN BUSINESSES. IN THE #))&S, ICICI TRANSFORMED
ITS BUSINESS FROM A DEVELOPMENT FINANCIAL INSTITUTION ITS BUSINESS FROM A DEVELOPMENT FINANCIAL INSTITUTION
OFFERING ONLY PROJECT FINANCE TO A DIVERSIFIED FINANCIAL OFFERING ONLY PROJECT FINANCE TO A DIVERSIFIED FINANCIAL
SERVICES GROUP OFFERING A WIDE VARIETY OF PRODUCTS AND SERVICES GROUP OFFERING A WIDE VARIETY OF PRODUCTS AND
SERVICES, BOTH DIRECTLY AND THROUGH A NUMBER OF SUBSIDIARIES SERVICES, BOTH DIRECTLY AND THROUGH A NUMBER OF SUBSIDIARIES
AND AFFILIATES LIKE ICICI BANK. IN #))), ICICI BECOME THE FIRST AND AFFILIATES LIKE ICICI BANK. IN #))), ICICI BECOME THE FIRST
INDIAN COMPANY AND THE FIRST BANK OR FINANCIAL INSTITUTION INDIAN COMPANY AND THE FIRST BANK OR FINANCIAL INSTITUTION
FROM NON'JAPAN ASIA TO BE LISTED ON THE NYSE FROM NON'JAPAN ASIA TO BE LISTED ON THE NYSE. .
MAJOR COMPETITORS MAJOR COMPETITORS
HDFC HDFC
30
SWATI SAHAY

AXIS BANK AXIS BANK
HSBC BANK HSBC BANK
SBI BANK SBI BANK
BANK OF INDIA BANK OF INDIA
CITI BANK CITI BANK
BANK OF AMERICA BANK OF AMERICA
DETUSCHE BANK DETUSCHE BANK
ABN'AMRO BANK ABN'AMRO BANK
BANK OF INDIA BANK OF INDIA
DEUTCHE BANK DEUTCHE BANK
UNION BANK OF INDIA UNION BANK OF INDIA
YES BANK YES BANK
UCO BANK OF INDIA UCO BANK OF INDIA
JAMMU AND KASHMIR BANK JAMMU AND KASHMIR BANK
BANK OF MAHRASHTRA BANK OF MAHRASHTRA
ALLAHABAD BANK ALLAHABAD BANK
BOARDS OF MEMBERS: BOARDS OF MEMBERS:
MS CHANDA KOCCHAR' MANAGING DIRECTOR ANDCHIEF EXECUTIVE MS CHANDA KOCCHAR' MANAGING DIRECTOR ANDCHIEF EXECUTIVE
OFFICER. OFFICER.
MR. N.S. KANNAN P EXEUTIVE DIRECTOR AND CFO MR. N.S. KANNAN P EXEUTIVE DIRECTOR AND CFO
-*
SWATI SAHAY

MR.K RAMKUMAR P EXEUTIVE DIRECTOR MR.K RAMKUMAR P EXEUTIVE DIRECTOR
MR. RAJIV SABHARWAL P EXECUTIVE DIRECTOR MR. RAJIV SABHARWAL P EXECUTIVE DIRECTOR
A"ARDS AND RECOGNISTION A"ARDS AND RECOGNISTION
FOR SECOND YEAR IN A ROW, ICICI BANK WAS AWARDED THE (MOST FOR SECOND YEAR IN A ROW, ICICI BANK WAS AWARDED THE (MOST
TECH'FRIENDLY BANK(, BY BUSINESSWORLD TECH'FRIENDLY BANK(, BY BUSINESSWORLD
MR. N. VAGHUL, FORMER CHAIRMAN, ICICI BANK, RECEIVED THE MR. N. VAGHUL, FORMER CHAIRMAN, ICICI BANK, RECEIVED THE
(LIFETIME ACHIEVEMENT AWARD(, BY BUSINESSWORLD (LIFETIME ACHIEVEMENT AWARD(, BY BUSINESSWORLD
MS. CHANDA KOCHHAR, MANAGING DIRECTOR & CEO WAS RANKED MS. CHANDA KOCHHAR, MANAGING DIRECTOR & CEO WAS RANKED
#&TH IN THE LIST OF (TOP *& WOMEN IN WORLD BUSINESS %&##(, BY #&TH IN THE LIST OF (TOP *& WOMEN IN WORLD BUSINESS %&##(, BY
FINANCIAL TIMES FINANCIAL TIMES
MS. CHANDA KOCHHAR, MANAGING DIRECTOR & CEO TOPS THE LIST MS. CHANDA KOCHHAR, MANAGING DIRECTOR & CEO TOPS THE LIST
OF (INDIA1S *& MOST POWERFUL BUSINESSWOMEN (, BY FORTUNE OF (INDIA1S *& MOST POWERFUL BUSINESSWOMEN (, BY FORTUNE
INDIA INDIA
ICICI BANK WAS RANKED %ND IN THE BANKING SECTOR AND #&TH IN ICICI BANK WAS RANKED %ND IN THE BANKING SECTOR AND #&TH IN
THE OVERALL (BT *&& INDIA1S MOST VALUABLE COMPANIES(, BY THE OVERALL (BT *&& INDIA1S MOST VALUABLE COMPANIES(, BY
BUSINESS TODAY BUSINESS TODAY
FOR THE SECOND CONSECUTIVE YEAR, ICICI BANK WAS RANKED FOR THE SECOND CONSECUTIVE YEAR, ICICI BANK WAS RANKED
SECOND IN THE (INDIA1S *& BIGGEST FINANCIAL COMPANIES( , IN THE SECOND IN THE (INDIA1S *& BIGGEST FINANCIAL COMPANIES( , IN THE
BW REAL *&& BY BUSINESSWORLD BW REAL *&& BY BUSINESSWORLD
MS.CHANDA KOCHHAR, MANAGING DIRECTOR & CEO WAS MS.CHANDA KOCHHAR, MANAGING DIRECTOR & CEO WAS
CONFERRED WITH (WOMEN OF POWER( AWARD, BY THE ASIAN CONFERRED WITH (WOMEN OF POWER( AWARD, BY THE ASIAN
BUSINESS LEADERSHIP FORUM (ABLF BUSINESS LEADERSHIP FORUM (ABLF
MS.CHANDA KOCHHAR, MANAGING DIRECTOR & CEO, WAS THE FIRST MS.CHANDA KOCHHAR, MANAGING DIRECTOR & CEO, WAS THE FIRST
WOMAN TO BE NAMED AS THE (BUSINESS LEADER OF THE YEAR(, BY WOMAN TO BE NAMED AS THE (BUSINESS LEADER OF THE YEAR(, BY
THE ECONOMIC TIMES THE ECONOMIC TIMES
-1
SWATI SAHAY

MS.CHANDA KOCHHAR, MANAGING DIRECTOR & CEO WAS RANKED *TH MS.CHANDA KOCHHAR, MANAGING DIRECTOR & CEO WAS RANKED *TH
IN THE INTERNATIONAL LIST OF (*& MOST POWERFUL WOMEN IN IN THE INTERNATIONAL LIST OF (*& MOST POWERFUL WOMEN IN
BUSINESS(, BY FORTUNE. SHE WAS RANKED #&TH IN %&#&. BUSINESS(, BY FORTUNE. SHE WAS RANKED #&TH IN %&#&.
ICICI BANK TOPS THE LIST OF (MOST TRUSTED PRIVATE SECTOR BANK( ICICI BANK TOPS THE LIST OF (MOST TRUSTED PRIVATE SECTOR BANK(
AND RANKS #&TH IN THE LIST OF (INDIA1S MOST TRUSTED SERVICE AND RANKS #&TH IN THE LIST OF (INDIA1S MOST TRUSTED SERVICE
BRANDS( BY BRAND E.UITY, MOST TRUSTED BRANDS %&## BRANDS( BY BRAND E.UITY, MOST TRUSTED BRANDS %&##
MS. CHANDA KOCHHAR, MANAGING DIRECTOR & CEO, WAS NAMED MS. CHANDA KOCHHAR, MANAGING DIRECTOR & CEO, WAS NAMED
AMONG THE *& MOST INFLUENTIAL IN GLOBAL FINANCE BY AMONG THE *& MOST INFLUENTIAL IN GLOBAL FINANCE BY
BLOOMBERG MARKETS MAGAZINE BLOOMBERG MARKETS MAGAZINE
MS. CHANDA KOCHHAR, MANAGING DIRECTOR & CEO, WAS RANKED MS. CHANDA KOCHHAR, MANAGING DIRECTOR & CEO, WAS RANKED
+"RD IN THE FORBES LIST OF MOST POWERFUL WOMAN IN THE WORLD +"RD IN THE FORBES LIST OF MOST POWERFUL WOMAN IN THE WORLD
ICICI BANK RECEIVED THE BEST MANPOWER EFFICIENT AWARD ICICI BANK RECEIVED THE BEST MANPOWER EFFICIENT AWARD
AMONGST PRIVATE SECTOR BANKS BY FICCI P IBA AMONGST PRIVATE SECTOR BANKS BY FICCI P IBA
ICICI BANK WON THE BEST LOCAL BANK P GOLD BY TRADE AND ICICI BANK WON THE BEST LOCAL BANK P GOLD BY TRADE AND
FORFAITING AWARDS, UK FORFAITING AWARDS, UK
ICICI BANK RANKED SECOND IN THE FINANCIAL SERVICES SECTOR IN ICICI BANK RANKED SECOND IN THE FINANCIAL SERVICES SECTOR IN
BUSINESSWORLD1S,(MOST RESPECTED COMPANY AWARDS %&##( BUSINESSWORLD1S,(MOST RESPECTED COMPANY AWARDS %&##(
ICICI BANK HAS WON THE (BANKING TECHNOLOGY AWARDS %&#&( AT ICICI BANK HAS WON THE (BANKING TECHNOLOGY AWARDS %&#&( AT
THE INDIAN BANKS ASSOCIATION IN THE FOLLOWING CATEGORIES: THE INDIAN BANKS ASSOCIATION IN THE FOLLOWING CATEGORIES:
O O (BEST FINANCIAL INCLUSION INITIATIVE( (FIRST PRIZE (BEST FINANCIAL INCLUSION INITIATIVE( (FIRST PRIZE
O O (BEST ONLINE BANK( ( RUNNER UP (BEST ONLINE BANK( ( RUNNER UP
O O (BEST USE OF BUSINESS INTELLIGENCE( ( RUNNER UP (BEST USE OF BUSINESS INTELLIGENCE( ( RUNNER UP
O O (TECHNOLOGY BANK OF THE YEAR( ( RUNNER UP (TECHNOLOGY BANK OF THE YEAR( ( RUNNER UP
PRODUCTS AND SERVICES
-2
SWATI SAHAY

THE BANK PROVIDES A WIDE RANGE OF BANKING PRODUCTS AND THE BANK PROVIDES A WIDE RANGE OF BANKING PRODUCTS AND
FINANCIAL SERVICES TO ITS RETAIL AND CORPORATE CUSTOMERS. ICICI FINANCIAL SERVICES TO ITS RETAIL AND CORPORATE CUSTOMERS. ICICI
BANK PRODUCTS AND SERVICES INCLUDE PERSONAL BANKING, NRI BANK PRODUCTS AND SERVICES INCLUDE PERSONAL BANKING, NRI
BANKING, BUSINESS BANKING, AND OTHER FINANCIAL SERVICES. BANKING, BUSINESS BANKING, AND OTHER FINANCIAL SERVICES.
ICICI BANK PRODUCTS & SERVICES ICICI BANK PRODUCTS & SERVICES
PERSONAL BANKING PERSONAL BANKING
DEPOSITS:' DEPOSITS:'
ICICI BANK PROVIDES THE FOLLOWING DEPOSITS: ICICI BANK PROVIDES THE FOLLOWING DEPOSITS:
SAVINGS ACCOUNT SAVINGS ACCOUNT
ADVANTAGE DEPOSIT ADVANTAGE DEPOSIT
FIXED DEPOSITS FIXED DEPOSITS
SECURITY DEPOSITS SECURITY DEPOSITS
RECURRING DEPOSITS RECURRING DEPOSITS
TAX'SAVER FIXED DEPOSIT TAX'SAVER FIXED DEPOSIT
SPECIAL SAVINGS ACCOUNT SPECIAL SAVINGS ACCOUNT
LIFE PLUS SENIOR CITIZENS SAVINGS ACCOUNT LIFE PLUS SENIOR CITIZENS SAVINGS ACCOUNT
YOUNG STARS SAVINGS ACCOUNT YOUNG STARS SAVINGS ACCOUNT
SALARY ACCOUNT SALARY ACCOUNT
ADVANTAGE WOMAN SAVINGS ACCOUNT ADVANTAGE WOMAN SAVINGS ACCOUNT
EEFC ACCOUNT EEFC ACCOUNT
RESIDENT FOREIGN CURRENCY (DOMESTIC ACCOUNT RESIDENT FOREIGN CURRENCY (DOMESTIC ACCOUNT
CHILD EDUCATION PLAN CHILD EDUCATION PLAN
BANKQCAMPUS BANKQCAMPUS
PRIVILEGE BANKING PRIVILEGE BANKING
FAMILY BANKING FAMILY BANKING
RURAL SAVINGS ACCOUNT RURAL SAVINGS ACCOUNT
PEOPLE-S SAVINGS ACCOUNT PEOPLE-S SAVINGS ACCOUNT
SELF HELP GROUP ACCOUNTS SELF HELP GROUP ACCOUNTS
OUTWARD REMITTANCE OUTWARD REMITTANCE
-3
SWATI SAHAY

FREEDOM SAVINGS ACCOUNT FREEDOM SAVINGS ACCOUNT
LOANS LOANS
ICICI BANK OFFERS THE FOLLOWING LOAN FACILITIES: ICICI BANK OFFERS THE FOLLOWING LOAN FACILITIES:
HOME LOANS HOME LOANS
PERSONAL LOANS PERSONAL LOANS
TWO WHEELER LOANS TWO WHEELER LOANS
CAR LOANS CAR LOANS
COMMERCIAL VEHICLE LOANS COMMERCIAL VEHICLE LOANS
PRE'APPROVED LOANS PRE'APPROVED LOANS
LOAN AGAINST PROPERTY LOAN AGAINST PROPERTY
LOANS AGAINST SECURITIES LOANS AGAINST SECURITIES
LOAN AGAINST GOLD ORNAMENTS LOAN AGAINST GOLD ORNAMENTS

CARDS CARDS
ICICI BANK OFFERS VARIOUS CARDS SUCH AS: ICICI BANK OFFERS VARIOUS CARDS SUCH AS:
CREDIT CARDS CREDIT CARDS
DEBIT CARDS DEBIT CARDS
CONSUMER CARDS CONSUMER CARDS
COMMERCIAL CARDS COMMERCIAL CARDS
TRAVEL CARDS TRAVEL CARDS
CORPORATE CARDS CORPORATE CARDS
PREPAID CARDS PREPAID CARDS
BUSINESS CARDS BUSINESS CARDS
PURCHASE CARDS PURCHASE CARDS
DISTRIBUTION CARDS DISTRIBUTION CARDS
MERCHANT SERVICES MERCHANT SERVICES
INVESTMENTS INVESTMENTS
--
SWATI SAHAY

ICICI BANK OFFERS THE FOLLOWING RANGE OF INVESTMENT ICICI BANK OFFERS THE FOLLOWING RANGE OF INVESTMENT
PRODUCTS: PRODUCTS:
ICICI BANK TAX SAVING BONDS ICICI BANK TAX SAVING BONDS
MUTUAL FUNDS MUTUAL FUNDS
SENIOR CITIZENS SAVINGS SCHEME SENIOR CITIZENS SAVINGS SCHEME
GOVERNMENT OF INDIA BONDS GOVERNMENT OF INDIA BONDS
FOREIGN EXCHANGE SERVICES FOREIGN EXCHANGE SERVICES
INITIAL PUBLIC OFFERS (IPO BY CORPORATES INITIAL PUBLIC OFFERS (IPO BY CORPORATES
ICICI BANK PURE GOLD ICICI BANK PURE GOLD
INSURANCE INSURANCE
ICICI BANK OFFERS VARIOUS TYPES OF INSURANCE SUCH AS: ICICI BANK OFFERS VARIOUS TYPES OF INSURANCE SUCH AS:
HOME INSURANCE HOME INSURANCE
HEALTH INSURANCE HEALTH INSURANCE
HEALTH ADVANTAGE PLUS HEALTH ADVANTAGE PLUS
FAMILY FLOATER FAMILY FLOATER
STUDENT MEDICAL INSURANCE STUDENT MEDICAL INSURANCE
PERSONAL ACCIDENT PERSONAL ACCIDENT
TWO WHEELER INSURANCE TWO WHEELER INSURANCE
TRAVEL INSURANCE TRAVEL INSURANCE
INDIVIDUAL OVERSEAS TRAVEL INSURANCE INDIVIDUAL OVERSEAS TRAVEL INSURANCE
ICICI PRU LIFESTATE RP ICICI PRU LIFESTATE RP
MOTOR INSURANCE MOTOR INSURANCE
CAR INSURANCE CAR INSURANCE
LIFE INSURANCE LIFE INSURANCE
NRI BANKING NRI BANKING
-)
SWATI SAHAY

NRIS GET BENEFIT FROM THE FOLLOWING SERVICES: NRIS GET BENEFIT FROM THE FOLLOWING SERVICES:
MONEY TRANSFER MONEY TRANSFER
BANK ACCOUNTS BANK ACCOUNTS
INVESTMENTS INVESTMENTS
PROPERTY SOLUTIONS PROPERTY SOLUTIONS
INSURANCE INSURANCE
LOANS AGAINST FD LOANS AGAINST FD
BUSINESS BANKING BUSINESS BANKING
CORPORATE NET BANKING CORPORATE NET BANKING
CASH MANAGEMENT CASH MANAGEMENT
ONLINE TAXES ONLINE TAXES
TRADE SERVICES TRADE SERVICES
CUSTODIAL SERVICES CUSTODIAL SERVICES
FXONLINE FXONLINE
SME SERVICES SME SERVICES

S"OT ANA!SIS: S"OT ANA!SIS:
STRENGTH STRENGTH
O O ICICI BANK HAS TODAY EMERGED AS SECOND LARGEST BANK IN INDIA ICICI BANK HAS TODAY EMERGED AS SECOND LARGEST BANK IN INDIA
AND IS AMONG THE TOP %*& BANKS IN THE WORLD WITHIN THE DECADE AND IS AMONG THE TOP %*& BANKS IN THE WORLD WITHIN THE DECADE
OF ITS OPERATION. OF ITS OPERATION.
O O ICICI BANK OFFER WIDE RANGE OF PRODUCTS AND SERVICES FROM ICICI BANK OFFER WIDE RANGE OF PRODUCTS AND SERVICES FROM
BANKING ACTIVITIES TO GENERAL INSURANCE. BANKING ACTIVITIES TO GENERAL INSURANCE.
O O ICICI BANK HAS EXPANDED ITS MARKET CAPITALISATION THROUGH ICICI BANK HAS EXPANDED ITS MARKET CAPITALISATION THROUGH
ENLISTMENT NOT ONLY IN BSE AND NSE, BUT ALSO IN BECOMING THE ENLISTMENT NOT ONLY IN BSE AND NSE, BUT ALSO IN BECOMING THE
FIRST NON'JAPENSE ASIAN BANK TO GET ENLISTED IN NYSE. FIRST NON'JAPENSE ASIAN BANK TO GET ENLISTED IN NYSE.
-.
SWATI SAHAY

WEAKNESS WEAKNESS
O O I IT PRIMARLY TARGETS UPPER ,MIDDLE CLASS OF THE SOCIETY, THEREBY T PRIMARLY TARGETS UPPER ,MIDDLE CLASS OF THE SOCIETY, THEREBY
LOSING THE BUSINESS OPPORTUNTIES CONCENTRATED AT MIDDLE AND LOSING THE BUSINESS OPPORTUNTIES CONCENTRATED AT MIDDLE AND
BOTTOM SECTIONS OF THE ECONOMICAL PYRAMID. BOTTOM SECTIONS OF THE ECONOMICAL PYRAMID.
O O ICICI LEVIES HIGHER SERVICESCHARGE FOR VARIOUS TRANSCATIONS ICICI LEVIES HIGHER SERVICESCHARGE FOR VARIOUS TRANSCATIONS
MAKING IT EXPENSIVETO AFFORD BY THE MAJOR SECTIONS OF THE MAKING IT EXPENSIVETO AFFORD BY THE MAJOR SECTIONS OF THE
SOCIETY. SOCIETY.
OPPORTUNTIES OPPORTUNTIES
O O BRANCH EXPANSION FOR RAPID GROWTH BRANCH EXPANSION FOR RAPID GROWTH
O O IMPROVE SHAREHOLDERS RETURN IMPROVE SHAREHOLDERS RETURN
O O BROADENING OF THE DEMOGRAPHIC BASE BROADENING OF THE DEMOGRAPHIC BASE
O O GROWTH IN GENERAL INSURANCE INDUSTRY WILL HELP IN INCREASING GROWTH IN GENERAL INSURANCE INDUSTRY WILL HELP IN INCREASING
THE MARKET SHARE OF ICICI BANK. THE MARKET SHARE OF ICICI BANK.
THREATS THREATS
O O C COMPETIVE PRODUCTSAND OFFERS FROM IDBI AND HDFC OMPETIVE PRODUCTSAND OFFERS FROM IDBI AND HDFC
O O MORE AND MORE BANKING COMING IN THE PRIVATE AND PUBLIC MORE AND MORE BANKING COMING IN THE PRIVATE AND PUBLIC
SECTOR WITH ONLINE BANKING SYSTEM. SECTOR WITH ONLINE BANKING SYSTEM.
O O GLOBAL AND DOMESTIC ECONOMIC SLOW DOWNCOULD AFFECT GLOBAL AND DOMESTIC ECONOMIC SLOW DOWNCOULD AFFECT
FINANCIAL PERFORMANCE OF ICICI. FINANCIAL PERFORMANCE OF ICICI.
-(
SWATI SAHAY

FINANCIAL STATEMENT FINANCIAL STATEMENT
Proft * +oss A!!ount for the ,ear ended -%st De!, #$%%
Current
.ear -%
De! %%
In +a!es&
Pre/ious
.ear -%
De! %$
In +a!es&
In!ome
Sal! 0*3.02 113-.22
+th!r In1o2! 3-.*0 2).32
0/(.*- 11)0.)-
01penditure
3at!rial Con#2!d .21.23 (3/.(3
P!ronn!l 45"!n! 1*-.)/ /(.33
367 +th!r !5"!n! 1(2.-/ 1...2(
D!" / A2ortiation 3-.3/ 3*.*1
8inan1ial Char7! 3*.)( 2..(2
451i! d#t9 12*.*- 13*./(
3i 45"!ndit#r! W/o: 2*.2/ 1/.33
%##23-# %%453#6
;o 6or th! 9!ar %!6or! !5tra
ordinar9 it!2 and "rior "!riod
ad<#t2!nt
=11..//> =3/.(2>
45tra ordinar9 it!2?
45"!n! on a%andon!d "ro<!1t ,, ,,
-/
SWATI SAHAY

W/o:
A!t W/o: ,, ,,
P!nion lia%ilit9 ,, ).1-
Prior "!riod ad<#t2!nt ,, *.3*
;o a6t!r "rior "d. 45". & !5tra,
ord. It!2.
=11..//> =--.1.>
;o %/6 6ro2 !arl9 9!ar =3./.30> =32-.23>
+ess) Amt3 Ad7usted against
Cap3 Redu!tion-$$
=./.30> ,,,
;o? 1/6 to $/S =1/).2(> =3./.30>
Balan!e 'heet as at -% De! #$%$
'our!es 8f Funds -% De! %% -% De! %$3
'hareholders Fund
Ca"ital -3-.2* (3-.2*
@!!rA! & S#r"l# 21.** 21.**
-)).2* ()).2*
+oan Funds
S!1#r!d loan 3.*.-. 10/.*0
Bn!1#r!d loan ,, *.*-
Appli!ation of Funds
Fi1ed Assets
-0
SWATI SAHAY

Gro $lo1k )3*.)0 )2*.0-
;!? D!". 1)3.)) 12).*0
N!t $lo1k 3((.*- 30)./)
Ca"ital &ork in "ro7r! in1.
1a"ital adAan1!.
3.2) 1.)/
-5$3#4 -4932-
InA!t2!nt *.1* *.1*
Current assets, +oans *
Ad/an!es
InA!ntori! 1-..3. 03./(
S#ndr9 D!%tor 11-.(1 123.22
Cah & $ank $alan1! )..3 1*..-
+th!r 1#rr!nt A!t. 21... 2*.1-
;oan & AdAan1! --.30 -(.*.
+ess) Current liabilities *
Pro/isions
;ia%iliti! 11..*( 13(.*2
ProAiion 1-.11 1).(3
N!t C#rr!nt A!t %-$3%5 %:#39:
3i1. 45"!ndit#r! -(.-3 -).23
ProCt & ;o A/1 1/).2( 3./.30
;otal) 5%:366 4:-3--
)*
SWATI SAHAY

"ORKING CAPITA MANAGEMENT
REVIEW OF LITERATURE
WORKING CAPITAL MANAGEMENT IS THE MANAGEMENT OF ASSETS WORKING CAPITAL MANAGEMENT IS THE MANAGEMENT OF ASSETS
THAT ARE CURRENT IN NATURE. CURRENT ASSETS, BY ACCOUNTING THAT ARE CURRENT IN NATURE. CURRENT ASSETS, BY ACCOUNTING
DEFINITION ARE THE ASSETS NORMALLY CONVERTED IN TO CASH IN A DEFINITION ARE THE ASSETS NORMALLY CONVERTED IN TO CASH IN A
PERIOD OF ONE YEAR. HENCE WORKING CAPITAL MANAGEMENT CAN BE PERIOD OF ONE YEAR. HENCE WORKING CAPITAL MANAGEMENT CAN BE
CONSIDERED AS THE MANAGEMENT OF CASH, MARKET SECURITIES CONSIDERED AS THE MANAGEMENT OF CASH, MARKET SECURITIES
RECEIVABLE, INVENTORIES AND CURRENT LIABILITIES. IN FACT, THE RECEIVABLE, INVENTORIES AND CURRENT LIABILITIES. IN FACT, THE
MANAGEMENT OF CURRENT ASSETS IS SIMILAR TO THAT OF FIXED MANAGEMENT OF CURRENT ASSETS IS SIMILAR TO THAT OF FIXED
ASSETS IN THE SENSE THAT IS BOTH IN CASES THE FIRM ANALYSES ASSETS IN THE SENSE THAT IS BOTH IN CASES THE FIRM ANALYSES
THEIR EFFECT ON ITS PROFITABILITY AND RISK FACTORS, HENCE THEY THEIR EFFECT ON ITS PROFITABILITY AND RISK FACTORS, HENCE THEY
DIFFER ON THREE MAJOR ASPECTS: DIFFER ON THREE MAJOR ASPECTS:
#. #. IN MANAGING FIXED ASSETS, TIME IS AN IMPORTANT FACTOR IN MANAGING FIXED ASSETS, TIME IS AN IMPORTANT FACTOR
DISCOUNTING AND COMPOUNDING ASPECTS OF TIME PLAY AN DISCOUNTING AND COMPOUNDING ASPECTS OF TIME PLAY AN
IMPORTANT ROLE IN CAPITAL BUDGETING AND A MINOR PART IN THE IMPORTANT ROLE IN CAPITAL BUDGETING AND A MINOR PART IN THE
MANAGEMENT OF CURRENT ASSETS. MANAGEMENT OF CURRENT ASSETS.
%. %. THE LARGE HOLDINGS OF CURRENT ASSETS, ESPECIALLY CASH, MAY THE LARGE HOLDINGS OF CURRENT ASSETS, ESPECIALLY CASH, MAY
STRENGTHEN THE FIRM-S LI.UIDITY POSITION, BUT IS BOUND TO STRENGTHEN THE FIRM-S LI.UIDITY POSITION, BUT IS BOUND TO
REDUCE PROFITABILITY OF THE FIRM AS IDEAL CAR YIELD NOTHING. REDUCE PROFITABILITY OF THE FIRM AS IDEAL CAR YIELD NOTHING.
". ". THE LEVEL OF FIXED ASSETS AS WELL AS CURRENT ASSETS DEPENDS THE LEVEL OF FIXED ASSETS AS WELL AS CURRENT ASSETS DEPENDS
UPON THE EXPECTED SALES, BUT IT IS ONLY CURRENT ASSETS THAT ADD UPON THE EXPECTED SALES, BUT IT IS ONLY CURRENT ASSETS THAT ADD
FLUCTUATION IN THE SHORT RUN TO A BUSINESS. FLUCTUATION IN THE SHORT RUN TO A BUSINESS.
TO UNDERSTAND WORKING CAPITAL BETTER WE SHOULD HAVE BASIC TO UNDERSTAND WORKING CAPITAL BETTER WE SHOULD HAVE BASIC
KNOWLEDGE ABOUT THE VARIOUS ASPECTS OF WORKING CAPITAL. TO KNOWLEDGE ABOUT THE VARIOUS ASPECTS OF WORKING CAPITAL. TO
START WITH, THERE ARE TWO CONCEPTS OF WORKING CAPITAL: START WITH, THERE ARE TWO CONCEPTS OF WORKING CAPITAL:
GROSS WORKING CAPITAL GROSS WORKING CAPITAL
NET WORKING CAPITAL NET WORKING CAPITAL
)1
SWATI SAHAY

GROSS WORKING CAPITAL GROSS WORKING CAPITAL: GROSS WORKING CAPITAL, WHICH IS ALSO : GROSS WORKING CAPITAL, WHICH IS ALSO
SIMPLY KNOWN AS WORKING CAPITAL, REFERS TO THE FIRM-S SIMPLY KNOWN AS WORKING CAPITAL, REFERS TO THE FIRM-S
INVESTMENT IN CURRENT ASSETS: ANOTHER ASPECT OF GROSS INVESTMENT IN CURRENT ASSETS: ANOTHER ASPECT OF GROSS
WORKING CAPITAL POINTS OUT THE NEED OF ARRANGING FUNDS TO WORKING CAPITAL POINTS OUT THE NEED OF ARRANGING FUNDS TO
FINANCE THE CURRENT ASSETS. THE GROSS WORKING CAPITAL FINANCE THE CURRENT ASSETS. THE GROSS WORKING CAPITAL
CONCEPT FOCUSES ATTENTION ON TWO ASPECTS OF CURRENT ASSETS CONCEPT FOCUSES ATTENTION ON TWO ASPECTS OF CURRENT ASSETS
MANAGEMENT, FIRSTLY OPTIMUM INVESTMENT IN CURRENT ASSETS MANAGEMENT, FIRSTLY OPTIMUM INVESTMENT IN CURRENT ASSETS
AND SECONDLY IN FINANCING THE CURRENT ASSETS. THESE TWO AND SECONDLY IN FINANCING THE CURRENT ASSETS. THESE TWO
ASPECTS WILL HELP IN REMAINING AWAY FROM THE TWO DANGER ASPECTS WILL HELP IN REMAINING AWAY FROM THE TWO DANGER
POINTS OF EXCESSIVE OR INADE.UATE INVESTMENT IN CURRENT POINTS OF EXCESSIVE OR INADE.UATE INVESTMENT IN CURRENT
ASSETS. WHENEVER A NEED OF WORKING CAPITAL FUNDS ARISES DUE ASSETS. WHENEVER A NEED OF WORKING CAPITAL FUNDS ARISES DUE
TO INCREASE IN LEVEL OF BUSINESS ACTIVITY OR FOR ANY OTHER TO INCREASE IN LEVEL OF BUSINESS ACTIVITY OR FOR ANY OTHER
REASON THE ARRANGEMENT SHOULD BE MADE .UICKLY, AND REASON THE ARRANGEMENT SHOULD BE MADE .UICKLY, AND
SIMILARLY IF SOME SURPLUSES ARE AVAILABLE, THEY SHOULD NOT BE SIMILARLY IF SOME SURPLUSES ARE AVAILABLE, THEY SHOULD NOT BE
ALLOWED TO LIE IDEAL BUT SHOULD BE PUT TO SOME EFFECTIVE USE. ALLOWED TO LIE IDEAL BUT SHOULD BE PUT TO SOME EFFECTIVE USE.
NET WORKING CAPITAL* NET WORKING CAPITAL* THE TERM NET WORKING CAPITAL REFERS TO THE TERM NET WORKING CAPITAL REFERS TO
THE DIFFERENCE BETWEEN THE CURRENT ASSETS AND CURRENT THE DIFFERENCE BETWEEN THE CURRENT ASSETS AND CURRENT
LIABILITIES. NET WORKING CAPITAL CAN BE POSITIVE AS WELL AS LIABILITIES. NET WORKING CAPITAL CAN BE POSITIVE AS WELL AS
NEGATIVE. POSITIVE WORKING CAPITAL REFERS TO THE SITUATION NEGATIVE. POSITIVE WORKING CAPITAL REFERS TO THE SITUATION
WHERE CURRENT ASSETS EXCEED CURRENT LIABILITIES AND NEGATIVE WHERE CURRENT ASSETS EXCEED CURRENT LIABILITIES AND NEGATIVE
WORKING CAPITAL REFERS TO THE SITUATION WHERE CURRENT WORKING CAPITAL REFERS TO THE SITUATION WHERE CURRENT
LIABILITIES EXCEED CURRENT ASSETS. THE NET WORKING CAPITAL LIABILITIES EXCEED CURRENT ASSETS. THE NET WORKING CAPITAL
HELPS IN COMPARING THE LI.UIDITY OF THE SAME FIRM OVER TIME. HELPS IN COMPARING THE LI.UIDITY OF THE SAME FIRM OVER TIME.
FOR PURPOSES OF THE WORKING CAPITAL MANAGEMENT, THEREFORE FOR PURPOSES OF THE WORKING CAPITAL MANAGEMENT, THEREFORE
WORKING CAPITAL CAN BE SAID TO MEASURE THE LI.UIDITY OF THE WORKING CAPITAL CAN BE SAID TO MEASURE THE LI.UIDITY OF THE
FIRM. IN OTHER WORDS, THE GOAL OF WORKING CAPITAL FIRM. IN OTHER WORDS, THE GOAL OF WORKING CAPITAL
MANAGEMENT IS TO MANAGE THE CURRENT ASSETS AND LIABILITIES IN MANAGEMENT IS TO MANAGE THE CURRENT ASSETS AND LIABILITIES IN
SUCH A WAY THAT A ACCEPTABLE LEVEL OF NET WORKING CAPITAL IS SUCH A WAY THAT A ACCEPTABLE LEVEL OF NET WORKING CAPITAL IS
MAINTAINED. MAINTAINED.
IMPORTANCE OF WORKING CAPITAL MANAGEMENT* IMPORTANCE OF WORKING CAPITAL MANAGEMENT*
MANAGEMENT OF WORKING CAPITAL IS VERY MUCH IMPORTANT FOR MANAGEMENT OF WORKING CAPITAL IS VERY MUCH IMPORTANT FOR
THE SUCCESS OF THE BUSINESS. IT HAS BEEN EMPHASIZED THAT A THE SUCCESS OF THE BUSINESS. IT HAS BEEN EMPHASIZED THAT A
BUSINESS SHOULD MAINTAIN SOUND WORKING CAPITAL POSITION AND BUSINESS SHOULD MAINTAIN SOUND WORKING CAPITAL POSITION AND
ALSO THAT THERE SHOULD NOT BE AN EXCESSIVE LEVEL OF ALSO THAT THERE SHOULD NOT BE AN EXCESSIVE LEVEL OF
)2
SWATI SAHAY

INVESTMENT IN THE WORKING CAPITAL COMPONENTS. AS POINTED OUT INVESTMENT IN THE WORKING CAPITAL COMPONENTS. AS POINTED OUT
BY RALPH KENNEDY AND STEWART MC MULLER, !THE INADE.UACY OR BY RALPH KENNEDY AND STEWART MC MULLER, !THE INADE.UACY OR
MISS'MANAGEMENT OF WORKING CAPITAL IS ONE OF A FEW LEADING MISS'MANAGEMENT OF WORKING CAPITAL IS ONE OF A FEW LEADING
CAUSES OF BUSINESS FAILURE. CAUSES OF BUSINESS FAILURE.
CURRENT ASSETS, IN FACT, ACCOUNT FOR A VERY LARGE PORTION OF CURRENT ASSETS, IN FACT, ACCOUNT FOR A VERY LARGE PORTION OF
THE TOTAL INVESTMENT OF THE FIRM. THE TOTAL INVESTMENT OF THE FIRM.
CURRENT ASSETS AS PERCENTAGE OF TOTAL ASSETS CURRENT ASSETS AS PERCENTAGE OF TOTAL ASSETS
.0AR P0RC0<;AG0
2**0 31D
2*1* 2.D
2*11 3)D
IT CAN BE VISUALIZED FROM THE TABLE THAT IN THE FIRST YEAR OF IT CAN BE VISUALIZED FROM THE TABLE THAT IN THE FIRST YEAR OF
OUR STUDY I.E. %&&) IT WAS "#K WHICH WAS REDUCED TO %/K IN THE OUR STUDY I.E. %&&) IT WAS "#K WHICH WAS REDUCED TO %/K IN THE
NEXT YEAR AND IN %&#& IT IS "*K SHOWS FLUCTUATING TREND. NEXT YEAR AND IN %&#& IT IS "*K SHOWS FLUCTUATING TREND.
DETERMINANTS OF WORKING CAPITAL* DETERMINANTS OF WORKING CAPITAL*
)3
SWATI SAHAY

THERE IS NO SPECIFIC METHOD TO DETERMINE WORKING CAPITAL THERE IS NO SPECIFIC METHOD TO DETERMINE WORKING CAPITAL
RE.UIREMENT FOR A BUSINESS. THERE ARE A NUMBER OF FACTORS RE.UIREMENT FOR A BUSINESS. THERE ARE A NUMBER OF FACTORS
AFFECTING THE WORKING CAPITAL RE.UIREMENT. THESE FACTORS AFFECTING THE WORKING CAPITAL RE.UIREMENT. THESE FACTORS
HAVE DIFFERENT IMPORTANCE IN DIFFERENT BUSINESSES AND AT HAVE DIFFERENT IMPORTANCE IN DIFFERENT BUSINESSES AND AT
DIFFERENT TIMES. SO A THOROUGH ANALYSIS OF ALL THESE FACTORS DIFFERENT TIMES. SO A THOROUGH ANALYSIS OF ALL THESE FACTORS
SHOULD BE MADE BEFORE TRYING TO ESTIMATE THE AMOUNT OF SHOULD BE MADE BEFORE TRYING TO ESTIMATE THE AMOUNT OF
WORKING CAPITAL NEEDED. SOME OF THE DIFFERENT FACTORS ARE WORKING CAPITAL NEEDED. SOME OF THE DIFFERENT FACTORS ARE
MENTIONED HERE BELOW:' MENTIONED HERE BELOW:'
NATURE OF BUSINESS* NATURE OF BUSINESS* NATURE OF BUSINESS IS AN IMPORTANT FACTOR NATURE OF BUSINESS IS AN IMPORTANT FACTOR
IN DETERMINING THE WORKING CAPITAL RE.UIREMENTS. THERE ARE IN DETERMINING THE WORKING CAPITAL RE.UIREMENTS. THERE ARE
SOME BUSINESSES WHICH RE.UIRE A VERY NOMINAL AMOUNT TO BE SOME BUSINESSES WHICH RE.UIRE A VERY NOMINAL AMOUNT TO BE
INVESTED IN FIXED ASSETS BUT A LARGE CHUNK OF THE TOTAL INVESTED IN FIXED ASSETS BUT A LARGE CHUNK OF THE TOTAL
INVESTMENT IS IN THE FORM OF WORKING CAPITAL. THERE BUSINESSES, INVESTMENT IS IN THE FORM OF WORKING CAPITAL. THERE BUSINESSES,
FOR EXAMPLE, ARE OF THE TRADING AND FINANCING TYPE. THERE ARE FOR EXAMPLE, ARE OF THE TRADING AND FINANCING TYPE. THERE ARE
BUSINESSES WHICH RE.UIRE LARGE INVESTMENT IN FIXED ASSETS AND BUSINESSES WHICH RE.UIRE LARGE INVESTMENT IN FIXED ASSETS AND
NORMAL INVESTMENT IN THE FORM OF WORKING CAPITAL. NORMAL INVESTMENT IN THE FORM OF WORKING CAPITAL.
SI,E OF BUSINESS* SI,E OF BUSINESS* IT IS ANOTHER IMPORTANT FACTOR IN DETERMINING IT IS ANOTHER IMPORTANT FACTOR IN DETERMINING
THE WORKING CAPITAL RE.UIREMENTS OF A BUSINESS. SIZE IS THE WORKING CAPITAL RE.UIREMENTS OF A BUSINESS. SIZE IS
USUALLY MEASURED IN TERMS OF SCALE OF OPERATING CYCLE. THE USUALLY MEASURED IN TERMS OF SCALE OF OPERATING CYCLE. THE
AMOUNT OF WORKING CAPITAL NEEDED IS DIRECTLY PROPORTIONAL TO AMOUNT OF WORKING CAPITAL NEEDED IS DIRECTLY PROPORTIONAL TO
THE SCALE OF OPERATING CYCLE I.E. THE LARGER THE SCALE OF THE SCALE OF OPERATING CYCLE I.E. THE LARGER THE SCALE OF
OPERATING CYCLE THE LARGE WILL BE THE AMOUNT WORKING OPERATING CYCLE THE LARGE WILL BE THE AMOUNT WORKING
CAPITAL AND VICE VERSA. CAPITAL AND VICE VERSA.
BUSINESS FLUCTUATIONS BUSINESS FLUCTUATIONS: MOST BUSINESS EXPERIENCE CYCLICAL AND : MOST BUSINESS EXPERIENCE CYCLICAL AND
SEASONAL FLUCTUATIONS IN DEMAND FOR THEIR GOODS AND SEASONAL FLUCTUATIONS IN DEMAND FOR THEIR GOODS AND
SERVICES. THESE FLUCTUATIONS AFFECT THE BUSINESS WITH RESPECT SERVICES. THESE FLUCTUATIONS AFFECT THE BUSINESS WITH RESPECT
TO WORKING CAPITAL BECAUSE DURING THE TIME OF BOOM, DUE TO AN TO WORKING CAPITAL BECAUSE DURING THE TIME OF BOOM, DUE TO AN
INCREASE IN BUSINESS ACTIVITY THE AMOUNT OF WORKING CAPITAL INCREASE IN BUSINESS ACTIVITY THE AMOUNT OF WORKING CAPITAL
RE.UIREMENT INCREASES AND THE REVERSE IS TRUE IN THE CASE OF RE.UIREMENT INCREASES AND THE REVERSE IS TRUE IN THE CASE OF
RECESSION. FINANCIAL ARRANGEMENT FOR SEASONAL WORKING RECESSION. FINANCIAL ARRANGEMENT FOR SEASONAL WORKING
CAPITAL RE.UIREMENTS ARE TO BE MADE IN ADVANCE. CAPITAL RE.UIREMENTS ARE TO BE MADE IN ADVANCE.
)-
SWATI SAHAY

PRODUCTION POLICY* PRODUCTION POLICY* AS STATED ABOVE, EVERY BUSINESS HAS TO AS STATED ABOVE, EVERY BUSINESS HAS TO
COPE WITH DIFFERENT TYPES OF FLUCTUATIONS. HENCE IT IS BUT COPE WITH DIFFERENT TYPES OF FLUCTUATIONS. HENCE IT IS BUT
OBVIOUS THAT PRODUCTION POLICY HAS TO BE PLANNED WELL IN OBVIOUS THAT PRODUCTION POLICY HAS TO BE PLANNED WELL IN
ADVANCE WITH RESPECT TO FLUCTUATION. NO TWO COMPANIES CAN ADVANCE WITH RESPECT TO FLUCTUATION. NO TWO COMPANIES CAN
HAVE SIMILAR PRODUCTION POLICY IN ALL RESPECTS BECAUSE IT HAVE SIMILAR PRODUCTION POLICY IN ALL RESPECTS BECAUSE IT
DEPENDS UPON THE CIRCUMSTANCES OF AN INDIVIDUAL COMPANY. DEPENDS UPON THE CIRCUMSTANCES OF AN INDIVIDUAL COMPANY.
FIRM-S CREDIT POLICY* FIRM-S CREDIT POLICY* THE CREDIT POLICY OF A FIRM AFFECTS THE CREDIT POLICY OF A FIRM AFFECTS
WORKING CAPITAL BY INFLUENCING THE LEVEL OF BOOK DEBTS. THE WORKING CAPITAL BY INFLUENCING THE LEVEL OF BOOK DEBTS. THE
CREDIT TERM IS FAIRLY CONSTANT IN AN INDUSTRY BUT INDIVIDUALS CREDIT TERM IS FAIRLY CONSTANT IN AN INDUSTRY BUT INDIVIDUALS
ALSO HAVE THEIR ROLE IN FRAMING THEIR CREDIT POLICY. A LIBERAL ALSO HAVE THEIR ROLE IN FRAMING THEIR CREDIT POLICY. A LIBERAL
CREDIT POLICY WILL LEAD TO MORE AMOUNT BEING COMMITTED TO CREDIT POLICY WILL LEAD TO MORE AMOUNT BEING COMMITTED TO
WORKING CAPITAL RE.UIREMENTS WHEREAS A STERN CREDIT POLICY WORKING CAPITAL RE.UIREMENTS WHEREAS A STERN CREDIT POLICY
MAY DECREASE THE AMOUNT OF WORKING CAPITAL RE.UIREMENT MAY DECREASE THE AMOUNT OF WORKING CAPITAL RE.UIREMENT
APPRECIABLY BUT THE REPERCUSSIONS OF THE TWO ARE NOT SIMPLE. APPRECIABLY BUT THE REPERCUSSIONS OF THE TWO ARE NOT SIMPLE.
HENCE A FIRM SHOULD ALWAYS FRAME A RATIONAL CREDIT POLICY HENCE A FIRM SHOULD ALWAYS FRAME A RATIONAL CREDIT POLICY
BASED ON THE CREDIT WORTHINESS OF THE CUSTOMER. BASED ON THE CREDIT WORTHINESS OF THE CUSTOMER.
AVAILABILITY OF CREDIT AVAILABILITY OF CREDIT: THE TERMS ON WHICH A COMPANY IS ABLE : THE TERMS ON WHICH A COMPANY IS ABLE
TO AVAIL CREDIT FROM ITS SUPPLIERS OF GOODS AND DEVICES TO AVAIL CREDIT FROM ITS SUPPLIERS OF GOODS AND DEVICES
CREDITRALSO AFFECTS THE WORKING CAPITAL RE.UIREMENT. IF A CREDITRALSO AFFECTS THE WORKING CAPITAL RE.UIREMENT. IF A
COMPANY IN A POSITION TO GET CREDIT ON LIBERAL TERMS AND IN A COMPANY IN A POSITION TO GET CREDIT ON LIBERAL TERMS AND IN A
SHORT SPAN OF TIME THEN IT WILL BE IN A POSITION TO WORK WITH SHORT SPAN OF TIME THEN IT WILL BE IN A POSITION TO WORK WITH
LESS AMOUNT OF WORKING CAPITAL. HENCE THE AMOUNT OF WORKING LESS AMOUNT OF WORKING CAPITAL. HENCE THE AMOUNT OF WORKING
CAPITAL NEEDED WILL DEPEND UPON THE TERMS A FIRM IS GRANTED CAPITAL NEEDED WILL DEPEND UPON THE TERMS A FIRM IS GRANTED
CREDIT BY ITS CREDITORS. CREDIT BY ITS CREDITORS.
GROWTH AND E$PANSION ACTIVITIES GROWTH AND E$PANSION ACTIVITIES: THE WORKING CAPITAL NEEDS : THE WORKING CAPITAL NEEDS
OF A FIRM INCREASES AS IT GROWS IN TERM OF SALE OR FIXED ASSETS. OF A FIRM INCREASES AS IT GROWS IN TERM OF SALE OR FIXED ASSETS.
THERE IS NO PRECISE WAY TO DETERMINE THE RELATION BETWEEN THE THERE IS NO PRECISE WAY TO DETERMINE THE RELATION BETWEEN THE
AMOUNT OF SALES AND WORKING CAPITAL RE.UIREMENT BUT ONE AMOUNT OF SALES AND WORKING CAPITAL RE.UIREMENT BUT ONE
THING IS SURE THAT AN INCREASE IN SALES NEVER PRECEDES THE THING IS SURE THAT AN INCREASE IN SALES NEVER PRECEDES THE
))
SWATI SAHAY

INCREASE IN WORKING CAPITAL BUT IT IS ALWAYS THE OTHER WAY INCREASE IN WORKING CAPITAL BUT IT IS ALWAYS THE OTHER WAY
ROUND. SO IN CASE OF GROWTH OR EXPANSION THE ASPECT OF ROUND. SO IN CASE OF GROWTH OR EXPANSION THE ASPECT OF
WORKING CAPITAL NEEDS TO BE PLANNED IN ADVANCE. WORKING CAPITAL NEEDS TO BE PLANNED IN ADVANCE.
PRICE LEVEL CHANGES* PRICE LEVEL CHANGES* GENERALLY INCREASE IN PRICE LEVEL MAKES GENERALLY INCREASE IN PRICE LEVEL MAKES
THE COMMODITIES DEARER.HENCE WITH INCREASE IN PRICE LEVEL THE THE COMMODITIES DEARER.HENCE WITH INCREASE IN PRICE LEVEL THE
WORKING CAPITAL RE.UIREMENTS ALSO INCREASES. THE COMPANIES WORKING CAPITAL RE.UIREMENTS ALSO INCREASES. THE COMPANIES
WHICH ARE IN A POSITION TO ALTER THE PRICE OF THESE COMMODITIES WHICH ARE IN A POSITION TO ALTER THE PRICE OF THESE COMMODITIES
IN ACCORDANCE WITH THE PRICE LEVEL CHANGES WILL FACE FEWER IN ACCORDANCE WITH THE PRICE LEVEL CHANGES WILL FACE FEWER
PROBLEMS AS COMPARED TO OTHERS. THE CHANGES IN PRICE LEVEL PROBLEMS AS COMPARED TO OTHERS. THE CHANGES IN PRICE LEVEL
MAY NOT AFFECT ALL THE FIRMS IN SAME WAY. THE REACTIONS OF ALL MAY NOT AFFECT ALL THE FIRMS IN SAME WAY. THE REACTIONS OF ALL
FIRMS WITH REGARDS TO PRICE LEVEL CHANGES WILL BE DIFFERENT FIRMS WITH REGARDS TO PRICE LEVEL CHANGES WILL BE DIFFERENT
FROM ONE OTHER.. FROM ONE OTHER..
WORKING CAPITAL - OVERALL VIEW
CASH MANAGEMENT
CASH IS THE IMPORTANT CURRENT ASSET FOR THE OPERATIONS OF THE CASH IS THE IMPORTANT CURRENT ASSET FOR THE OPERATIONS OF THE
BUSINESS. CASH IS THE BASIC INPUT NEEDED TO KEEP THE BUSINESS BUSINESS. CASH IS THE BASIC INPUT NEEDED TO KEEP THE BUSINESS
RUNNING ON A CONTINUOUS BASIS. IT IS ALSO THE ULTIMATE OUTPUT RUNNING ON A CONTINUOUS BASIS. IT IS ALSO THE ULTIMATE OUTPUT
EXPECTED TO BE REALIZED BY SELLING THE SERVICE OR PRODUCT EXPECTED TO BE REALIZED BY SELLING THE SERVICE OR PRODUCT
MANUFACTURED BY THE FIRM. THE FIRM SHOULD KEEP SUFFICIENT MANUFACTURED BY THE FIRM. THE FIRM SHOULD KEEP SUFFICIENT
CASH, NEITHER MORE NOR LESS. CASH SHORTAGE WILL DISRUPT THE CASH, NEITHER MORE NOR LESS. CASH SHORTAGE WILL DISRUPT THE
FIRM-S OPERATIONS WHILE EXCESSIVE CASH WILL SIMPLY REMAIN IDLE, FIRM-S OPERATIONS WHILE EXCESSIVE CASH WILL SIMPLY REMAIN IDLE,
WITHOUT CONTRIBUTING ANYTHING TOWARDS THE FIRM-S WITHOUT CONTRIBUTING ANYTHING TOWARDS THE FIRM-S
PROFITABILITY. THUS A MAJOR FUNCTION OF THE FINANCIAL MANAGER PROFITABILITY. THUS A MAJOR FUNCTION OF THE FINANCIAL MANAGER
IS TO MAINTAIN A SOUND CASH POSITION. IS TO MAINTAIN A SOUND CASH POSITION.
CASH IS THE MONEY WHICH A FIRM CAN DISBURSE IMMEDIATELY CASH IS THE MONEY WHICH A FIRM CAN DISBURSE IMMEDIATELY
WITHOUT ANY RESTRICTION THE TERM CASH INCLUDES CURRENCY AND WITHOUT ANY RESTRICTION THE TERM CASH INCLUDES CURRENCY AND
CHE.UES HELD BY THE FIRM AND BALANCES IN ITS BANK ACCOUNTS. CHE.UES HELD BY THE FIRM AND BALANCES IN ITS BANK ACCOUNTS.
SOMETIMES NEAR CASH ITEMS, SUCH AS MARKETABLE SECURITIES OR SOMETIMES NEAR CASH ITEMS, SUCH AS MARKETABLE SECURITIES OR
BANK TIME DEPOSITS ARE ALSO INCLUDED IN CASH. THE BASIC BANK TIME DEPOSITS ARE ALSO INCLUDED IN CASH. THE BASIC
CHARACTERISTICS OF NEAR CASH ASSETS ARE THAT THEY CAN READILY CHARACTERISTICS OF NEAR CASH ASSETS ARE THAT THEY CAN READILY
BE CONVERTED INTO CASH. CASH MANAGEMENT IS CONCERNED WITH BE CONVERTED INTO CASH. CASH MANAGEMENT IS CONCERNED WITH
).
SWATI SAHAY

MANAGING OF: MANAGING OF:
I I CASH FLOWS IN AND OUT OF THE FIRM CASH FLOWS IN AND OUT OF THE FIRM
II II CASH FLOWS WITHIN THE FIRM CASH FLOWS WITHIN THE FIRM
III III CASH BALANCES HELD BY THE FIRM AT A POINT OF TIME BY CASH BALANCES HELD BY THE FIRM AT A POINT OF TIME BY
FINANCING DEFICIT OR INVESTING SURPLUS CASH. FINANCING DEFICIT OR INVESTING SURPLUS CASH.
SALES GENERATE CASH WHICH HAS TO BE DISBURSED OUT. THE SALES GENERATE CASH WHICH HAS TO BE DISBURSED OUT. THE
SURPLUS CASH HAS TO BE INVESTED WHILE DEFICIT CASH HAS TO BE SURPLUS CASH HAS TO BE INVESTED WHILE DEFICIT CASH HAS TO BE
BORROWED. CASH MANAGEMENT SEEKS TO ACCOMPLISH THIS CYCLE BORROWED. CASH MANAGEMENT SEEKS TO ACCOMPLISH THIS CYCLE
AT A MINIMUM COST. AT THE SAME TIME IT ALSO SEEKS TO ACHIEVE AT A MINIMUM COST. AT THE SAME TIME IT ALSO SEEKS TO ACHIEVE
LI.UIDITY AND CONTROL. THEREFORE THE AIM OF CASH MANAGEMENT LI.UIDITY AND CONTROL. THEREFORE THE AIM OF CASH MANAGEMENT
IS TO MAINTAIN ADE.UATE CONTROL OVER CASH POSITION TO KEEP IS TO MAINTAIN ADE.UATE CONTROL OVER CASH POSITION TO KEEP
FIRM SUFFICIENTLY LI.UID AND TO USE EXCESS CASH IN SOME FIRM SUFFICIENTLY LI.UID AND TO USE EXCESS CASH IN SOME
PROFITABLE WAY. PROFITABLE WAY.
THE CASH MANAGEMENT IS ALSO IMPORTANT BECAUSE IT IS DIFFICULT THE CASH MANAGEMENT IS ALSO IMPORTANT BECAUSE IT IS DIFFICULT
TO PREDICT CASH FLOWS ACCURATELY, PARTICULARLY THE INFLOWS TO PREDICT CASH FLOWS ACCURATELY, PARTICULARLY THE INFLOWS
AND THAT THERE IS NO PERFECT COINCIDENCE BETWEEN THE INFLOWS AND THAT THERE IS NO PERFECT COINCIDENCE BETWEEN THE INFLOWS
AND OUTFLOWS OF THE CASH. DURING SOME PERIODS CASH OUTFLOWS AND OUTFLOWS OF THE CASH. DURING SOME PERIODS CASH OUTFLOWS
WILL EXCEED CASH INFLOWS BECAUSE PAYMENT FOR TAXES, WILL EXCEED CASH INFLOWS BECAUSE PAYMENT FOR TAXES,
DIVIDENDS OR SEASONAL INVENTORY ETC., BUILD UP. ON THE OTHER DIVIDENDS OR SEASONAL INVENTORY ETC., BUILD UP. ON THE OTHER
HAND CASH INFLOWS WILL BE MORE THAN CASH PAYMENT BECAUSE HAND CASH INFLOWS WILL BE MORE THAN CASH PAYMENT BECAUSE
THERE MAY BE LARGE CASH SALES AND MORE DEBTORS- REALIZATION THERE MAY BE LARGE CASH SALES AND MORE DEBTORS- REALIZATION
AT ANY POINT OF TIME. CASH MANAGEMENT IS ALSO IMPORTANT AT ANY POINT OF TIME. CASH MANAGEMENT IS ALSO IMPORTANT
BECAUSE CASH CONSTITUTES THE SMALLEST PORTION OF THE CURRENT BECAUSE CASH CONSTITUTES THE SMALLEST PORTION OF THE CURRENT
ASSETS, YET MANAGEMENT-S CONSIDERABLE TIME IS DEVOTED IN ASSETS, YET MANAGEMENT-S CONSIDERABLE TIME IS DEVOTED IN
MANAGING IT. AN OBVIOUS AIM OF THE FIRM NOW'A'DAYS IS TO MANAGING IT. AN OBVIOUS AIM OF THE FIRM NOW'A'DAYS IS TO
MANAGE ITS CASH AFFAIRS IN SUCH A WAY AS TO KEEP CASH BALANCE MANAGE ITS CASH AFFAIRS IN SUCH A WAY AS TO KEEP CASH BALANCE
AT A MINIMUM LEVEL AND TO INVEST THE SURPLUS CASH FUNDS IN AT A MINIMUM LEVEL AND TO INVEST THE SURPLUS CASH FUNDS IN
)(
SWATI SAHAY

PROFITABLE OPPORTUNITIES. IN ORDER TO RESOLVE THE UNCERTAINTY PROFITABLE OPPORTUNITIES. IN ORDER TO RESOLVE THE UNCERTAINTY
ABOUT CASH FLOW PREDICTION AND LACK OF SYNCHRONIZATION ABOUT CASH FLOW PREDICTION AND LACK OF SYNCHRONIZATION
BETWEEN CASH RECEIPTS AND PAYMENTS, THE FIRM SHOULD DEVELOP BETWEEN CASH RECEIPTS AND PAYMENTS, THE FIRM SHOULD DEVELOP
APPROPRIATE STRATEGIES REGARDING THE FOLLOWING FOUR FACETS APPROPRIATE STRATEGIES REGARDING THE FOLLOWING FOUR FACETS
OF CASH MANAGEMENT. OF CASH MANAGEMENT.
#. CASH PLANNING CASH PLANNING: ' CASH INFLOWS AND CASH OUTFLOWS SHOULD : ' CASH INFLOWS AND CASH OUTFLOWS SHOULD
BE PLANNED TO PROJECT CASH SURPLUS OR DEFICIT FOR EACH PERIOD BE PLANNED TO PROJECT CASH SURPLUS OR DEFICIT FOR EACH PERIOD
OF THE PLANNING PERIOD. CASH BUDGET SHOULD PREPARED FOR THIS OF THE PLANNING PERIOD. CASH BUDGET SHOULD PREPARED FOR THIS
PURPOSE. PURPOSE.
2. 2. MANAGING MANAGING THE CASH FLOWS THE CASH FLOWS: ' THE FLOW OF CASH SHOULD BE : ' THE FLOW OF CASH SHOULD BE
PROPERLY MANAGED. THE CASH INFLOWS SHOULD BE ACCELERATED PROPERLY MANAGED. THE CASH INFLOWS SHOULD BE ACCELERATED
WHILE, AS FAR AS POSSIBLE DECELERATING THE CASH OUTFLOWS. WHILE, AS FAR AS POSSIBLE DECELERATING THE CASH OUTFLOWS.
& &. . OPTIMUM CASH LEVEL OPTIMUM CASH LEVEL: ' THE FIRM SHOULD DECIDE ABOUT THE : ' THE FIRM SHOULD DECIDE ABOUT THE
APPROPRIATE LEVEL OF CASH BALANCES. THE COST OF EXCESS CASH APPROPRIATE LEVEL OF CASH BALANCES. THE COST OF EXCESS CASH
AND DANGER OF CASH DEFICIENCY SHOULD BE MATCHED TO AND DANGER OF CASH DEFICIENCY SHOULD BE MATCHED TO
DETERMINE THE OPTIMUM LEVEL OF CASH BALANCES. DETERMINE THE OPTIMUM LEVEL OF CASH BALANCES.
+. +. INVESTING SURPLUS CASH INVESTING SURPLUS CASH: ' THE SURPLUS CASH BALANCE SHOULD : ' THE SURPLUS CASH BALANCE SHOULD
BE PROPERLY INVESTED TO EARN PROFITS. THE FIRM SHOULD DECIDE BE PROPERLY INVESTED TO EARN PROFITS. THE FIRM SHOULD DECIDE
ABOUT THE DIVISION OF SUCH CASH BALANCE BETWEEN BANK ABOUT THE DIVISION OF SUCH CASH BALANCE BETWEEN BANK
DEPOSITS, DEPOSITS, MARKETABLE SECURITIES AND INTER CORPORATE LENDING. MARKETABLE SECURITIES AND INTER CORPORATE LENDING.
THE IDEAL CASH MANAGEMENT SYSTEM WILL DEPEND ON THE FIRM-S THE IDEAL CASH MANAGEMENT SYSTEM WILL DEPEND ON THE FIRM-S
PRODUCTS, ORGANIZATION STRUCTURE, COMPETITION, CULTURE AND PRODUCTS, ORGANIZATION STRUCTURE, COMPETITION, CULTURE AND
)/
SWATI SAHAY

OPTIONS AVAILABLE. THE TASK IS COMPLEX AND DECISION TAKEN CAN OPTIONS AVAILABLE. THE TASK IS COMPLEX AND DECISION TAKEN CAN
AFFECT IMPORTANT AREAS OF THE FIRM. AFFECT IMPORTANT AREAS OF THE FIRM.
F./0123/4 35 C647 M6/689:9/1*
CASH MANAGEMENT FUNCTIONS ARE INTIMATELY, INTERRELATED AND CASH MANAGEMENT FUNCTIONS ARE INTIMATELY, INTERRELATED AND
INTERTWINED LINKAGE AMONG DIFFERENT CASH MANAGEMENT INTERTWINED LINKAGE AMONG DIFFERENT CASH MANAGEMENT
FUNCTIONS HAVE LED TO THE ADOPTION OF THE FOLLOWING METHODS FUNCTIONS HAVE LED TO THE ADOPTION OF THE FOLLOWING METHODS
FOR EFFICIENT CASH MANAGEMENT: FOR EFFICIENT CASH MANAGEMENT:
USE OF TECHNI.UES OF CASH MOBILIZATION TO REDUCE OPERATING USE OF TECHNI.UES OF CASH MOBILIZATION TO REDUCE OPERATING
RE.UIREMENT OF CASH RE.UIREMENT OF CASH
MAJOR EFFORTS TO INCREASE THE PRECISION AND RELIABILITY OF MAJOR EFFORTS TO INCREASE THE PRECISION AND RELIABILITY OF
CASH FORECASTING. CASH FORECASTING.
MAXIMUM EFFORT TO DEFINE AND .UANTIFY THE LI.UIDITY RESERVE MAXIMUM EFFORT TO DEFINE AND .UANTIFY THE LI.UIDITY RESERVE
NEEDS OF THE FIRM. NEEDS OF THE FIRM.
DEVELOPMENT OF EXPLICIT ALTERNATIVE SOURCES OF LI.UIDITY DEVELOPMENT OF EXPLICIT ALTERNATIVE SOURCES OF LI.UIDITY
AGGRESSIVE SEARCH FOR RELATIVELY MORE PRODUCTIVE USES FOR AGGRESSIVE SEARCH FOR RELATIVELY MORE PRODUCTIVE USES FOR
SURPLUS MONEY ASSETS. SURPLUS MONEY ASSETS.
THE ABOVE APPROACHES INVOLVE THE FOLLOWING ACTIONS WHICH A THE ABOVE APPROACHES INVOLVE THE FOLLOWING ACTIONS WHICH A
FINANCE MANAGER HAS TO PERFORM. FINANCE MANAGER HAS TO PERFORM.
#. TO FORECAST CASH INFLOWS AND OUTFLOWS #. TO FORECAST CASH INFLOWS AND OUTFLOWS
%. TO PLAN CASH RE.UIREMENTS %. TO PLAN CASH RE.UIREMENTS
". TO DETERMINE THE SAFETY LEVEL FOR CASH. ". TO DETERMINE THE SAFETY LEVEL FOR CASH.
+. TO MONITOR SAFETY LEVEL FOR CASH +. TO MONITOR SAFETY LEVEL FOR CASH
*. TO LOCATE THE NEEDED FUNDS *. TO LOCATE THE NEEDED FUNDS
/. TO REGULATE CASH INFLOWS /. TO REGULATE CASH INFLOWS
$. TO REGULATE CASH OUTFLOWS $. TO REGULATE CASH OUTFLOWS
J. TO DETERMINE CRITERIA FOR INVESTMENT OF EXCESS CASH J. TO DETERMINE CRITERIA FOR INVESTMENT OF EXCESS CASH
). TO AVAIL BANKING FACILITIES AND MAINTAIN GOOD RELATIONS WITH ). TO AVAIL BANKING FACILITIES AND MAINTAIN GOOD RELATIONS WITH
)0
SWATI SAHAY

BANKERS BANKERS
MOTIVES FOR HOLDING CASH: MOTIVES FOR HOLDING CASH:
THERE ARE FOUR PRIMARY MOTIVES FOR MAINTAINING CASH THERE ARE FOUR PRIMARY MOTIVES FOR MAINTAINING CASH
BALANCES: BALANCES:
#. TRANSACTION MOTIVE #. TRANSACTION MOTIVE
% .PRECAUTIONARY MOTIVE % .PRECAUTIONARY MOTIVE
". SPECULATIVE MOTIVE ". SPECULATIVE MOTIVE
+. COMPENSATING MOTIVE +. COMPENSATING MOTIVE
1. TRANSACTION MOTIVE TRANSACTION MOTIVE: ' THE TRANSACTION MOTIVE REFERS TO : ' THE TRANSACTION MOTIVE REFERS TO
THE HOLDING OF CASH TO MEET ANTICIPATED OBLIGATIONS WHOSE THE HOLDING OF CASH TO MEET ANTICIPATED OBLIGATIONS WHOSE
TIMING IS NOT PERFECTLY SYNCHRONISED WITH CASH RECEIPTS. IF THE TIMING IS NOT PERFECTLY SYNCHRONISED WITH CASH RECEIPTS. IF THE
RECEIPTS OF CASH AND ITS DISBURSEMENTS COULD EXACTLY COINCIDE RECEIPTS OF CASH AND ITS DISBURSEMENTS COULD EXACTLY COINCIDE
IN THE NORMAL COURSE OF OPERATIONS, A FIRM WOULD NOT NEED IN THE NORMAL COURSE OF OPERATIONS, A FIRM WOULD NOT NEED
CASH FOR TRANSACTION PURPOSES. ALTHOUGH A MAJOR PART OF CASH FOR TRANSACTION PURPOSES. ALTHOUGH A MAJOR PART OF
TRANSACTION BALANCES ARE HELD IN CASH, A PART MAY ALSO BE IN TRANSACTION BALANCES ARE HELD IN CASH, A PART MAY ALSO BE IN
SUCH MARKETABLE SECURITIES WHOSE MATURITY CONFORMS TO THE SUCH MARKETABLE SECURITIES WHOSE MATURITY CONFORMS TO THE
TIMING OF THE ANTICIPATED PAYMENTS. TIMING OF THE ANTICIPATED PAYMENTS.
%. %. PRECAUTIONARY MOTIVE* PRECAUTIONARY MOTIVE* ' PRECAUTIONARY MOTIVE OF HOLDING ' PRECAUTIONARY MOTIVE OF HOLDING
CASH IMPLIES THE NEED TO HOLD CASH TO MEET UNPREDICTABLE CASH IMPLIES THE NEED TO HOLD CASH TO MEET UNPREDICTABLE
OBLIGATIONS AND THE CASH BALANCE HELD IN RESERVE FOR SUCH OBLIGATIONS AND THE CASH BALANCE HELD IN RESERVE FOR SUCH
RANDOM AND UNFORESEEN FLUCTUATIONS IN CASH FLOWS ARE RANDOM AND UNFORESEEN FLUCTUATIONS IN CASH FLOWS ARE
CALLED AS PRECAUTIONARY BALANCES. THUS, PRECAUTIONARY CASH CALLED AS PRECAUTIONARY BALANCES. THUS, PRECAUTIONARY CASH
BALANCE SERVES TO PROVIDE A CUSHION TO MEET UNEXPECTED BALANCE SERVES TO PROVIDE A CUSHION TO MEET UNEXPECTED
CONTINGENCIES. THE UNEXPECTED CASH NEEDS AT SHORT NOTICE MAY CONTINGENCIES. THE UNEXPECTED CASH NEEDS AT SHORT NOTICE MAY
BE THE RESULT OF VARIOUS REASONS AS: UNEXPECTED SLOWDOWN IN BE THE RESULT OF VARIOUS REASONS AS: UNEXPECTED SLOWDOWN IN
COLLECTION OF ACCOUNTS RECEIVABLE, CANCELLATIONS OF SOME COLLECTION OF ACCOUNTS RECEIVABLE, CANCELLATIONS OF SOME
PURCHASE ORDERS, SHARP INCREASE IN COST OF RAW MATERIALS ETC. PURCHASE ORDERS, SHARP INCREASE IN COST OF RAW MATERIALS ETC.
THE MORE UNPREDICTABLE THE CASH FLOWS, THE LARGER THE NEED THE MORE UNPREDICTABLE THE CASH FLOWS, THE LARGER THE NEED
FOR SUCH BALANCES. ANOTHER FACTOR WHICH HAS A BEARING ON THE FOR SUCH BALANCES. ANOTHER FACTOR WHICH HAS A BEARING ON THE
LEVEL OF PRECAUTIONARY BALANCES IS THE AVAILABILITY OF SHORT LEVEL OF PRECAUTIONARY BALANCES IS THE AVAILABILITY OF SHORT
TERM CREDIT. PRECAUTIONARY CASH BALANCES ARE USUALLY HELD IN TERM CREDIT. PRECAUTIONARY CASH BALANCES ARE USUALLY HELD IN
THE FORM OF MARKETABLE SECURITIES SO THAT THEY EARN A RETURN. THE FORM OF MARKETABLE SECURITIES SO THAT THEY EARN A RETURN.
.*
SWATI SAHAY

". ". SPECULATIVE MOTIVE SPECULATIVE MOTIVE: ' IT REFERS TO THE DESIRE OF A FIRM TO : ' IT REFERS TO THE DESIRE OF A FIRM TO
TAKE ADVANTAGE OF OPPORTUNITIES WHICH PRESENT THEMSELVES AT TAKE ADVANTAGE OF OPPORTUNITIES WHICH PRESENT THEMSELVES AT
UNEXPECTED MOVEMENTS AND WHICH ARE TYPICALLY OUTSIDE THE UNEXPECTED MOVEMENTS AND WHICH ARE TYPICALLY OUTSIDE THE
NORMAL COURSE OF BUSINESS. THE SPECULATIVE MOTIVE REPRESENTS NORMAL COURSE OF BUSINESS. THE SPECULATIVE MOTIVE REPRESENTS
A POSITIVE AND AGGRESSIVE APPROACH. FIRMS AIM TO EXPLOIT A POSITIVE AND AGGRESSIVE APPROACH. FIRMS AIM TO EXPLOIT
PROFITABLE OPPORTUNITIES AND KEEP CASH IN RESERVE TO DO SO. THE PROFITABLE OPPORTUNITIES AND KEEP CASH IN RESERVE TO DO SO. THE
SPECULATIVE MOTIVE HELPS TO TAKE ADVANTAGE OF: OPPORTUNITY SPECULATIVE MOTIVE HELPS TO TAKE ADVANTAGE OF: OPPORTUNITY
TO PURCHASE RAW MATERIALS AT A REDUCED PRICE ON PAYMENT OF TO PURCHASE RAW MATERIALS AT A REDUCED PRICE ON PAYMENT OF
IMMEDIATE CASHS CHANCE TO SPECULATE ON INTEREST RATE IMMEDIATE CASHS CHANCE TO SPECULATE ON INTEREST RATE
MOVEMENTS BY BUYING SECURITIES WHEN INTEREST RATES ARE MOVEMENTS BY BUYING SECURITIES WHEN INTEREST RATES ARE
EXPECTED TO DECLINES DELAY PURCHASES OF RAW MATERIALS ON THE EXPECTED TO DECLINES DELAY PURCHASES OF RAW MATERIALS ON THE
ANTICIPATION OF DECLINE IN PRICESS ETC. ANTICIPATION OF DECLINE IN PRICESS ETC.
+. +. COMPENSATION MOTIVE COMPENSATION MOTIVE: ' YET ANOTHER MOTIVE TO HOLD CASH : ' YET ANOTHER MOTIVE TO HOLD CASH
BALANCES IS TO COMPENSATE BANKS FOR PROVIDING CERTAIN BALANCES IS TO COMPENSATE BANKS FOR PROVIDING CERTAIN
SERVICES AND LOANS. BANKS PROVIDE A VARIETY OF SERVICES TO SERVICES AND LOANS. BANKS PROVIDE A VARIETY OF SERVICES TO
BUSINESS FIRMS, SUCH AS CLEARANCES OF CHE.UES, SUPPLY OF BUSINESS FIRMS, SUCH AS CLEARANCES OF CHE.UES, SUPPLY OF
CREDIT INFORMATION, TRANSFER OF FUNDS, ETC. WHILE FOR SOME OF CREDIT INFORMATION, TRANSFER OF FUNDS, ETC. WHILE FOR SOME OF
THE SERVICES BANKS CHARGE A COMMISSION OF FEE FOR OTHERS THEY THE SERVICES BANKS CHARGE A COMMISSION OF FEE FOR OTHERS THEY
SEEK INDIRECT COMPENSATION. USUALLY CLIENTS ARE RE.UIRED TO SEEK INDIRECT COMPENSATION. USUALLY CLIENTS ARE RE.UIRED TO
MAINTAIN A MINIMUM BALANCE OF CASH AT THE BANK. SINCE THIS MAINTAIN A MINIMUM BALANCE OF CASH AT THE BANK. SINCE THIS
BALANCE CAN NOT BE UTILIZED BY THE FIRMS FOR TRANSACTION BALANCE CAN NOT BE UTILIZED BY THE FIRMS FOR TRANSACTION
PURPOSES, THE BANK THEMSELVES CAN USE THE AMOUNT FOR PURPOSES, THE BANK THEMSELVES CAN USE THE AMOUNT FOR
SERVICES RENDERED. TO BE COMPENSATED FOR THEIR SERVICES SERVICES RENDERED. TO BE COMPENSATED FOR THEIR SERVICES
INDIRECTLY IN THIS FORM, THEY RE.UIRE THE CLIENTS TO ALWAYS INDIRECTLY IN THIS FORM, THEY RE.UIRE THE CLIENTS TO ALWAYS
KEEP A BANK BALANCE SUFFICIENT TO EARN A RETURN E.UAL TO THE KEEP A BANK BALANCE SUFFICIENT TO EARN A RETURN E.UAL TO THE
COST OF SERVICES. SUCH BALANCES ARE COMPENSATING BALANCES. COST OF SERVICES. SUCH BALANCES ARE COMPENSATING BALANCES.
COMPENSATING BALANCES ARE ALSO RE.UIRED BY SOME LOAN COMPENSATING BALANCES ARE ALSO RE.UIRED BY SOME LOAN
AGREEMENTS BETWEEN A BANK AND ITS CUSTOMER. AGREEMENTS BETWEEN A BANK AND ITS CUSTOMER.
CASH MANAGEMENT* OBJECTIVES CASH MANAGEMENT* OBJECTIVES
THE BASIC OBJECTIVE OF CASH MANAGEMENT IS TWOFOLD: THE BASIC OBJECTIVE OF CASH MANAGEMENT IS TWOFOLD:
(A TO MEET THE CASH DISBURSEMENT NEEDS (PAYMENT SCHEDULES (A TO MEET THE CASH DISBURSEMENT NEEDS (PAYMENT SCHEDULES
(B TO MINIMIZE FUNDS COMMITTED TO CASH BALANCES. THESE ARE (B TO MINIMIZE FUNDS COMMITTED TO CASH BALANCES. THESE ARE
CONFLICTING AND MUTUALLY CONTRADICTORY AND THE TASK OF CASH CONFLICTING AND MUTUALLY CONTRADICTORY AND THE TASK OF CASH
MANAGEMENT IS TO RECONCILE THEM. MANAGEMENT IS TO RECONCILE THEM.
.1
SWATI SAHAY

MEETING THE PAYMENTS SCHEDULE: A BASIC OBJECTIVE OF THE CASH MEETING THE PAYMENTS SCHEDULE: A BASIC OBJECTIVE OF THE CASH
MANAGEMENT IS TO MEET THE PAYMENT SCHEDULE, I.E. TO HAVE MANAGEMENT IS TO MEET THE PAYMENT SCHEDULE, I.E. TO HAVE
SUFFICIENT CASH TO MEET THE CASH DISBURSEMENT NEEDS OF THE SUFFICIENT CASH TO MEET THE CASH DISBURSEMENT NEEDS OF THE
FIRM. THE IMPORTANCE OF SUFFICIENT CASH TO MEET THE PAYMENT FIRM. THE IMPORTANCE OF SUFFICIENT CASH TO MEET THE PAYMENT
SCHEDULE CAN HARDLY BE OVER EMPHASIZED. THE ADVANTAGES OF SCHEDULE CAN HARDLY BE OVER EMPHASIZED. THE ADVANTAGES OF
ADE.UATE CASH ARE : (I IT PREVENTS INSOLVENCY OR BANKRUPTCY ADE.UATE CASH ARE : (I IT PREVENTS INSOLVENCY OR BANKRUPTCY
ARISING OUT OF THE INABILITY OF THE FIRM TO MEET ITS OBLIGATIONSS ARISING OUT OF THE INABILITY OF THE FIRM TO MEET ITS OBLIGATIONSS
(II THE RELATIONSHIP WITH THE BANK IS NOT STRAINEDS (III IT HELPS (II THE RELATIONSHIP WITH THE BANK IS NOT STRAINEDS (III IT HELPS
IN FOSTERING GOOD RELATIONS WITH TRADE CREDITORS AND IN FOSTERING GOOD RELATIONS WITH TRADE CREDITORS AND
SUPPLIERS OF RAW MATERIALS, AS PROMPT PAYMENT MAY ALSO HELP SUPPLIERS OF RAW MATERIALS, AS PROMPT PAYMENT MAY ALSO HELP
THEIR CASH MANAGEMENTS (V IT LEADS TO A STRONG CREDIT RATING THEIR CASH MANAGEMENTS (V IT LEADS TO A STRONG CREDIT RATING
WHICH ENABLES THE FIRM TO PURCHASE GOODS ON FAVORABLE TERMS WHICH ENABLES THE FIRM TO PURCHASE GOODS ON FAVORABLE TERMS
AND TO MAINTAIN ITS LINE OF CREDIT WITH BANKS AND OTHER AND TO MAINTAIN ITS LINE OF CREDIT WITH BANKS AND OTHER
SOURCES OF CREDITS (VI TO TAKE ADVANTAGE OF FAVORABLE SOURCES OF CREDITS (VI TO TAKE ADVANTAGE OF FAVORABLE
BUSINESS OPPORTUNITIES THAT MAY BE AVAILABLE PERIODICALLYS AND BUSINESS OPPORTUNITIES THAT MAY BE AVAILABLE PERIODICALLYS AND
(VI FINALLY THE FIRM CAN MEET UNANTICIPATED CASH EXPENDITURE (VI FINALLY THE FIRM CAN MEET UNANTICIPATED CASH EXPENDITURE
WITH A MINIMUM OF STRAIN DURING EMERGENCIES, SUCH AS STRIKES , WITH A MINIMUM OF STRAIN DURING EMERGENCIES, SUCH AS STRIKES ,
FIRES OR A NEW MARKETING CAMPAIGN BY COMPETITORS. FIRES OR A NEW MARKETING CAMPAIGN BY COMPETITORS.
MINIMIZING FUNDS COMMITTED TO CASH BALANCES: THE SECOND MINIMIZING FUNDS COMMITTED TO CASH BALANCES: THE SECOND
OBJECTIVE OF CASH MANAGEMENT IS TO MINIMIZE CASH BALANCES. IN OBJECTIVE OF CASH MANAGEMENT IS TO MINIMIZE CASH BALANCES. IN
MINIMIZING CASH BALANCES TWO CONFLICTING ASPECTS HAVE TO BE MINIMIZING CASH BALANCES TWO CONFLICTING ASPECTS HAVE TO BE
RECONCILED. A HIGH LEVEL OF CASH BALANCE WILL, ENSURE PROMPT RECONCILED. A HIGH LEVEL OF CASH BALANCE WILL, ENSURE PROMPT
PAYMENT TOGETHER WITH ALL THE ADVANTAGES, BUT IT ALSO IMPLIES PAYMENT TOGETHER WITH ALL THE ADVANTAGES, BUT IT ALSO IMPLIES
THAT LARGE FUNDS WILL REMAIN IDLE ULTIMATELY RESULTS LESS TO THAT LARGE FUNDS WILL REMAIN IDLE ULTIMATELY RESULTS LESS TO
THE EXPECTED. A LOW LEVEL OF CASH BALANCES, ON THE OTHER THE EXPECTED. A LOW LEVEL OF CASH BALANCES, ON THE OTHER
HAND, MAY MEAN FAILURE TO MEET THE PAYMENT SCHEDULE THAT AIM HAND, MAY MEAN FAILURE TO MEET THE PAYMENT SCHEDULE THAT AIM
OF CASH MANAGEMENT SHOULD BE TO HAVE AN OPTIMAL AMOUNT OF OF CASH MANAGEMENT SHOULD BE TO HAVE AN OPTIMAL AMOUNT OF
CASH BALANCES CASH BALANCES
CASH MANAGEMENT TECHNI$UES % PROCESSES CASH MANAGEMENT TECHNI$UES % PROCESSES
THE FOLLOWING ARE THE BASIC CASH MANAGEMENT TECHNI.UES AND THE FOLLOWING ARE THE BASIC CASH MANAGEMENT TECHNI.UES AND
PROCESS WHICH ARE HELPFUL IN BETTER CASH MANAGEMENT: PROCESS WHICH ARE HELPFUL IN BETTER CASH MANAGEMENT:
SPEEDY CASH COLLECTION SPEEDY CASH COLLECTION: IN MANAGING CASH EFFICIENTLY THE : IN MANAGING CASH EFFICIENTLY THE
CASH IN FLOW PROCESS CAN BE ACCELERATED THROUGH SYSTEMATIC CASH IN FLOW PROCESS CAN BE ACCELERATED THROUGH SYSTEMATIC
PLANNING AND REFINED TECHNI.UES. THESE ARE TWO BROAD PLANNING AND REFINED TECHNI.UES. THESE ARE TWO BROAD
.2
SWATI SAHAY

APPROACHES TO DO THIS WHICH ARE NARRATED AS UNDER: APPROACHES TO DO THIS WHICH ARE NARRATED AS UNDER:
PROMPT PAYMENT BY CUSTOMER: ONE WAY TO ENSURE PROMPT PROMPT PAYMENT BY CUSTOMER: ONE WAY TO ENSURE PROMPT
PAYMENT BY CUSTOMER IS PROMPT BILLING WITH CLEARLY DEFINED PAYMENT BY CUSTOMER IS PROMPT BILLING WITH CLEARLY DEFINED
CREDIT POLICY. ANOTHER AND MORE IMPORTANT TECHNI.UE TO CREDIT POLICY. ANOTHER AND MORE IMPORTANT TECHNI.UE TO
ENCOURAGE PROMPT PAYMENT THE BY CUSTOMER IS THE PRACTICE OF ENCOURAGE PROMPT PAYMENT THE BY CUSTOMER IS THE PRACTICE OF
OFFERING TRADE DISCOUNTRCASH DISCOUNT. OFFERING TRADE DISCOUNTRCASH DISCOUNT.
EARLY CONVERSION OF PAYMENT INTO CASH EARLY CONVERSION OF PAYMENT INTO CASH: ONCE THE CUSTOMER : ONCE THE CUSTOMER
HAS MAKES THE PAYMENT BY WRITING ITS CHE.UES IN FAVOR OF THE HAS MAKES THE PAYMENT BY WRITING ITS CHE.UES IN FAVOR OF THE
FIRM, THE COLLECTION CAN BE EXPEDITED BY PROMPT ENCASHMENT FIRM, THE COLLECTION CAN BE EXPEDITED BY PROMPT ENCASHMENT
OF THE CHE.UE. IT WILL BE RECALLED THAT THERE IS A LACK BETWEEN OF THE CHE.UE. IT WILL BE RECALLED THAT THERE IS A LACK BETWEEN
THE TIME AND CHE.UE IS PREPARED AND MAILED BY THE CUSTOMER THE TIME AND CHE.UE IS PREPARED AND MAILED BY THE CUSTOMER
AND THE TIME FUNDS ARE INCLUDED IN THE CASH RESERVOIR OF THE AND THE TIME FUNDS ARE INCLUDED IN THE CASH RESERVOIR OF THE
FIRM. FIRM.
CONCENTRATION BANKING CONCENTRATION BANKING: IN THIS SYSTEM OF DECENTRALIZED : IN THIS SYSTEM OF DECENTRALIZED
COLLECTION OF ACCOUNTS RECEIVABLE, LARGE FIRMS WHICH HAVE A COLLECTION OF ACCOUNTS RECEIVABLE, LARGE FIRMS WHICH HAVE A
LARGE NO. OF BRANCHES AT DIFFERENT PLACES, SELECT SOME OF LARGE NO. OF BRANCHES AT DIFFERENT PLACES, SELECT SOME OF
THESE WHICH ARE STRATEGICALLY LOCATED AS COLLECTION CENTERS THESE WHICH ARE STRATEGICALLY LOCATED AS COLLECTION CENTERS
FOR RECEIVING PAYMENT FOR CUSTOMERS. INSTEAD OF ALL THE FOR RECEIVING PAYMENT FOR CUSTOMERS. INSTEAD OF ALL THE
PAYMENTS BEING COLLECTED AT THE HEAD OFFICE OF THE FIRM, THE PAYMENTS BEING COLLECTED AT THE HEAD OFFICE OF THE FIRM, THE
CHE.UES FOR A CERTAIN GEOGRAPHICAL AREAS ARE COLLECTED AT A CHE.UES FOR A CERTAIN GEOGRAPHICAL AREAS ARE COLLECTED AT A
SPECIFIED LOCAL COLLECTION CENTERS. UNDER THIS ARRANGEMENT SPECIFIED LOCAL COLLECTION CENTERS. UNDER THIS ARRANGEMENT
THE CUSTOMERS ARE RE.UIRED TO SEND THEIR PAYMENTS AT LOCAL THE CUSTOMERS ARE RE.UIRED TO SEND THEIR PAYMENTS AT LOCAL
COLLECTION CENTER COVERING THE AREA IN WHICH THEY LIVE AND COLLECTION CENTER COVERING THE AREA IN WHICH THEY LIVE AND
THESE ARE DEPOSITED IN THE LOCAL ACCOUNT OF CONCERNED THESE ARE DEPOSITED IN THE LOCAL ACCOUNT OF CONCERNED
COLLECTION, AFTER MEETING LOCAL EXPENSES, IF ANY. FUNDS BEYOND COLLECTION, AFTER MEETING LOCAL EXPENSES, IF ANY. FUNDS BEYOND
A PREDETERMINED MINIMUM ARE TRANSFERRED DAILY TO A CENTRAL A PREDETERMINED MINIMUM ARE TRANSFERRED DAILY TO A CENTRAL
OR DISBURSING OR CONCENTRATION BANK OR ACCOUNT. A OR DISBURSING OR CONCENTRATION BANK OR ACCOUNT. A
CONCENTRATION BANKING IS ONE WITH WHICH THE FIRM HAS A MAJOR CONCENTRATION BANKING IS ONE WITH WHICH THE FIRM HAS A MAJOR
ACCOUNT USUALLY A DISBURSEMENT ACCOUNT. HENCE THIS ACCOUNT USUALLY A DISBURSEMENT ACCOUNT. HENCE THIS
ARRANGEMENT IS REFERRED TO AS CONCENTRATION BANKING. ARRANGEMENT IS REFERRED TO AS CONCENTRATION BANKING.
LOCK-BO$ SYSTEM LOCK-BO$ SYSTEM: THE CONCENTRATION BANKING ARRANGEMENT IS : THE CONCENTRATION BANKING ARRANGEMENT IS
INSTRUMENTAL IN REDUCING THE TIME INVOLVED IN MAILING AND INSTRUMENTAL IN REDUCING THE TIME INVOLVED IN MAILING AND
COLLECTION. BUT WITH THIS SYSTEM OF COLLECTION OF ACCOUNTS COLLECTION. BUT WITH THIS SYSTEM OF COLLECTION OF ACCOUNTS
RECEIVABLE, PROCESSING FOR PURPOSES OF INTERNAL ACCOUNTING IS RECEIVABLE, PROCESSING FOR PURPOSES OF INTERNAL ACCOUNTING IS
.3
SWATI SAHAY

INVOLVED I.E. SOMETIME IN ELAPSES BEFORE A CHE.UE IS DEPOSITED INVOLVED I.E. SOMETIME IN ELAPSES BEFORE A CHE.UE IS DEPOSITED
BY THE LOCAL COLLECTION CENTER IN ITS ACCOUNT. THE LOCK'BOX BY THE LOCAL COLLECTION CENTER IN ITS ACCOUNT. THE LOCK'BOX
SYSTEM TAKES CARE OF THIS KIND OF PROBLEMS, APART FROM SYSTEM TAKES CARE OF THIS KIND OF PROBLEMS, APART FROM
EFFECTING ECONOMY IN MAILING AND CLEARANCE TIMES. UNDER THIS EFFECTING ECONOMY IN MAILING AND CLEARANCE TIMES. UNDER THIS
ARRANGEMENT, FIRMS HIRE A POST OFFICE BOX AT IMPORTANT ARRANGEMENT, FIRMS HIRE A POST OFFICE BOX AT IMPORTANT
COLLECTION CENTERS. THE CUSTOMERS ARE RE.UIRED TO REMIT COLLECTION CENTERS. THE CUSTOMERS ARE RE.UIRED TO REMIT
PAYMENTS TO LOCK'BOX. PAYMENTS TO LOCK'BOX.
SLOWING DISBURSEMENTS SLOWING DISBURSEMENTS: A BASIC STRATEGY OF CASH : A BASIC STRATEGY OF CASH
MANAGEMENT IS TO DELAY PAYMENTS AS LONG AS POSSIBLE WITHOUT MANAGEMENT IS TO DELAY PAYMENTS AS LONG AS POSSIBLE WITHOUT
IMPAIRING THE CREDIT RATINGRSTANDING OF THE FIRM. IN FACT, SLOW IMPAIRING THE CREDIT RATINGRSTANDING OF THE FIRM. IN FACT, SLOW
DISBURSEMENT REPRESENTS A SOURCE OF FUNDS RE.UIRING NO DISBURSEMENT REPRESENTS A SOURCE OF FUNDS RE.UIRING NO
INTEREST PAYMENTS. THERE ARE SEVERAL TECHNI.UES TO DELAY INTEREST PAYMENTS. THERE ARE SEVERAL TECHNI.UES TO DELAY
PAYMENT OF ACCOUNTS PAYABLE NAMELY (# AVOIDANCE OF EARLY PAYMENT OF ACCOUNTS PAYABLE NAMELY (# AVOIDANCE OF EARLY
PAYMENTSS (% CENTRALIZED DISBURSEMENTSS (" FLOATSS (+ PAYMENTSS (% CENTRALIZED DISBURSEMENTSS (" FLOATSS (+
ACCRUALS. ACCRUALS.
AVOIDANCE OF EARLY PAYMENTS* AVOIDANCE OF EARLY PAYMENTS* ONE WAY TO DELAY PAYMENTS IS TO ONE WAY TO DELAY PAYMENTS IS TO
AVOID EARLY PAYMENTS. ACCORDING TO THE TERMS OF CREDIT, A FIRM AVOID EARLY PAYMENTS. ACCORDING TO THE TERMS OF CREDIT, A FIRM
IS RE.UIRED TO MAKE A PAYMENT WITHIN A STIPULATED PERIOD. IT IS RE.UIRED TO MAKE A PAYMENT WITHIN A STIPULATED PERIOD. IT
ENTITLES A FIRM TO CASH DISCOUNTS. IF HOWEVER PAYMENTS ARE ENTITLES A FIRM TO CASH DISCOUNTS. IF HOWEVER PAYMENTS ARE
DELAYED BEYOND THE DUE DATE, THE CREDIT STANDING MAY BE DELAYED BEYOND THE DUE DATE, THE CREDIT STANDING MAY BE
ADVERSELY AFFECTED SO THAT THE FIRMS WOULD FIND IT DIFFICULT ADVERSELY AFFECTED SO THAT THE FIRMS WOULD FIND IT DIFFICULT
TO SECURE TRADE CREDIT LATER. BUT IF THE FIRM PAYS ITS ACCOUNTS TO SECURE TRADE CREDIT LATER. BUT IF THE FIRM PAYS ITS ACCOUNTS
PAYABLE BEFORE THE DUE DATE IT HAS NO SPECIAL ADVANTAGE. THUS PAYABLE BEFORE THE DUE DATE IT HAS NO SPECIAL ADVANTAGE. THUS
A FIRM WOULD BE WELL ADVISED NOT TO MAKE PAYMENTS EARLY I.E. A FIRM WOULD BE WELL ADVISED NOT TO MAKE PAYMENTS EARLY I.E.
BEFORE THE DUE DATE. BEFORE THE DUE DATE.
CENTRALI,ED DISBURSEMENTS CENTRALI,ED DISBURSEMENTS: ANOTHER METHOD TO SLOW DOWN : ANOTHER METHOD TO SLOW DOWN
DISBURSEMENTS IS TO HAVE CENTRALIZED DISBURSEMENTS. ALL THE DISBURSEMENTS IS TO HAVE CENTRALIZED DISBURSEMENTS. ALL THE
PAYMENTS SHOULD BE MADE BY THE HEAD OFFICE FROM A PAYMENTS SHOULD BE MADE BY THE HEAD OFFICE FROM A
CENTRALIZED DISBURSEMENT ACCOUNT. SUCH AN ARRANGEMENT CENTRALIZED DISBURSEMENT ACCOUNT. SUCH AN ARRANGEMENT
WOULD ENABLE A FIRM TO DELAY PAYMENTS AND CONSERVE CASH FOR WOULD ENABLE A FIRM TO DELAY PAYMENTS AND CONSERVE CASH FOR
SEVERAL REASONS. FIRSTLY IT INVOLVES INCREASE IN THE TRANSIT SEVERAL REASONS. FIRSTLY IT INVOLVES INCREASE IN THE TRANSIT
TIME. TIME.
FLOAT FLOAT: A VERY IMPORTANT TECHNI.UE OF SLOW DISBURSEMENTS IS : A VERY IMPORTANT TECHNI.UE OF SLOW DISBURSEMENTS IS
FLOAT. THE TERM FLOAT REFERS TO AMOUNT OF MONEY TIED UP IN THE FLOAT. THE TERM FLOAT REFERS TO AMOUNT OF MONEY TIED UP IN THE
.-
SWATI SAHAY

CHE.UE THAT HAVE BEEN WRITTEN, BUT HAVE YET TO BE COLLECTED CHE.UE THAT HAVE BEEN WRITTEN, BUT HAVE YET TO BE COLLECTED
AND ENCASHED. ALTERNATIVELY, FLOAT REPRESENTS THE DIFFERENCE AND ENCASHED. ALTERNATIVELY, FLOAT REPRESENTS THE DIFFERENCE
BETWEEN THE BANK BALANCE AND BOOK BALANCE OF CASH OF A FIRM. BETWEEN THE BANK BALANCE AND BOOK BALANCE OF CASH OF A FIRM.
THE DIFFERENCE BETWEEN THE BALANCE AS SHOWN IN THE FIRM-S THE DIFFERENCE BETWEEN THE BALANCE AS SHOWN IN THE FIRM-S
RECORD AND THE ACTUAL BANK BALANCE IS DUE TO TRANSIT AND RECORD AND THE ACTUAL BANK BALANCE IS DUE TO TRANSIT AND
PROCESSING DELAYS. PROCESSING DELAYS.
ACCRUALS ACCRUALS: FINALLY, A POTENTIAL TOOL FOR STRETCHING ACCOUNTS : FINALLY, A POTENTIAL TOOL FOR STRETCHING ACCOUNTS
PAYABLE IS ACCRUALS WHICH ARE DEFINED AS CURRENT LIABILITIES PAYABLE IS ACCRUALS WHICH ARE DEFINED AS CURRENT LIABILITIES
THAT REPRESENT A SERVICE OR GOODS RECEIVED BY A FIRM BUT NOT THAT REPRESENT A SERVICE OR GOODS RECEIVED BY A FIRM BUT NOT
YET PAID FOR. FOR INSTANCE, PAYROLL, I.E., REMUNERATION TO YET PAID FOR. FOR INSTANCE, PAYROLL, I.E., REMUNERATION TO
EMPLOYEES, WHO RENDER SERVICES IN ADVANCE AND RECEIVE EMPLOYEES, WHO RENDER SERVICES IN ADVANCE AND RECEIVE
PAYMENT LATER. PAYMENT LATER.
CIRCUATION S!STEM OF "ORKING CAPITA CIRCUATION S!STEM OF "ORKING CAPITA
IN THE BEGINNING THE FUNDS ARE OBTAINED BY ISSUING SHARES, IN THE BEGINNING THE FUNDS ARE OBTAINED BY ISSUING SHARES,
OFTEN SUPPLEMENTED BY LONG TERM BORROWINGS. MUCH OF THESE OFTEN SUPPLEMENTED BY LONG TERM BORROWINGS. MUCH OF THESE
COLLECTED FUNDS ARE USED IN PURCHASING FIXED ASSETS AND COLLECTED FUNDS ARE USED IN PURCHASING FIXED ASSETS AND
REMAINING FUNDS ARE USED FOR DAY TO DAY OPERATION AS PAY FOR REMAINING FUNDS ARE USED FOR DAY TO DAY OPERATION AS PAY FOR
RAW MATERIAL, WAGES OVERHEAD EXPENSES. AFTER THIS FINISHED RAW MATERIAL, WAGES OVERHEAD EXPENSES. AFTER THIS FINISHED
GOODS ARE READY FOR SALE AND BY SELLING THE FINISHED GOODS GOODS ARE READY FOR SALE AND BY SELLING THE FINISHED GOODS
EITHER ACCOUNT RECEIVABLE ARE CREATED AND CASH IS RECEIVED. IN EITHER ACCOUNT RECEIVABLE ARE CREATED AND CASH IS RECEIVED. IN
THIS PROCESS PROFIT IS EARNED. THIS ACCOUNT OF PROFIT IS USED FOR THIS PROCESS PROFIT IS EARNED. THIS ACCOUNT OF PROFIT IS USED FOR
PAYING TAXES, DIVIDEND AND THE BALANCE IS PLOUGHED IN THE PAYING TAXES, DIVIDEND AND THE BALANCE IS PLOUGHED IN THE
BUSINESS. BUSINESS.
WORKING CAPITAL IS CONSIDERED TO EFFICIENTLY CIRCULATE WHEN IT WORKING CAPITAL IS CONSIDERED TO EFFICIENTLY CIRCULATE WHEN IT
TURNS OVER .UICKLY. AS CIRCULATION INCREASES, THE INVESTMENT TURNS OVER .UICKLY. AS CIRCULATION INCREASES, THE INVESTMENT
IN CURRENT ASSETS WILL DECREASE. CURRENT ASSETS TURNOVER IN CURRENT ASSETS WILL DECREASE. CURRENT ASSETS TURNOVER
RATIO SPEAKS ABOUT THE EFFICIENCY OF ICICI BANK IN THE RATIO SPEAKS ABOUT THE EFFICIENCY OF ICICI BANK IN THE
UTILIZATION OF CURRENT ASSETS. FAST TURNOVER CURRENT ASSETS UTILIZATION OF CURRENT ASSETS. FAST TURNOVER CURRENT ASSETS
RESULTS IN A BETTER RATE ON INVESTMENT. RESULTS IN A BETTER RATE ON INVESTMENT.
.)
SWATI SAHAY

TABLE SHOWING CURRENT ASSETS TURNOVER RATIO TABLE SHOWING CURRENT ASSETS TURNOVER RATIO
.ear Ratio in times&
2**0 1.(/
2**1* 2.0/
2*11 1.0/
A/erage) #3#2
ICICI BA<= 8F I<DIA
RATIO ANALYSIS*
RATIO ANALYSIS
LI;UIDITY RATIO*
LI.UIDITY RATIO SHOWS THE FIRM-S SHORT TERM SOLVENCY AND ITS LI.UIDITY RATIO SHOWS THE FIRM-S SHORT TERM SOLVENCY AND ITS
ABILITY TO PAY OFF THE LIABILITIES. IT HAS BEEN DEVISED TO KEEP A ABILITY TO PAY OFF THE LIABILITIES. IT HAS BEEN DEVISED TO KEEP A
TRACK OF THEIR FIRM-S EXPOSURE THE RISK THAT IT WILL NOT BE ABLE TRACK OF THEIR FIRM-S EXPOSURE THE RISK THAT IT WILL NOT BE ABLE
TO MEET ITS SHORT TERM OBLIGATIONS. IT PROVIDES A .UICK TO MEET ITS SHORT TERM OBLIGATIONS. IT PROVIDES A .UICK
..
SWATI SAHAY

MEASURE OF LIABILITY OF THE FIRM BY ESTABLISHING A RELATIONSHIP MEASURE OF LIABILITY OF THE FIRM BY ESTABLISHING A RELATIONSHIP
BETWEEN ITS CURRENT ASSETS AND ITS CURRENT LIABILITIES. BETWEEN ITS CURRENT ASSETS AND ITS CURRENT LIABILITIES.
SOME OF THE LI.UIDITY RATIO: SOME OF THE LI.UIDITY RATIO:
A A CURRENT RATIO CURRENT RATIO: :
THE CURRENT RATIO GIVES THE MARGIN BY WHICH THE VALUE OF THE THE CURRENT RATIO GIVES THE MARGIN BY WHICH THE VALUE OF THE
CURRENT ASSETS MAY GO DOWN WITHOUT CREATING AND PAYMENTS CURRENT ASSETS MAY GO DOWN WITHOUT CREATING AND PAYMENTS
THE FIRMS. THE TOTAL CURRENT ASSETS INCLUDE PREPAID EXPENSES THE FIRMS. THE TOTAL CURRENT ASSETS INCLUDE PREPAID EXPENSES
AND SHORT TERM INVESTMENTS. WHEREAS THE CURRENT LIABILITY AND SHORT TERM INVESTMENTS. WHEREAS THE CURRENT LIABILITY
INCLUDES ALL TYPES OF LIABILITY WHICH WILL MATURE FOR INCLUDES ALL TYPES OF LIABILITY WHICH WILL MATURE FOR
PAYMENTS WITHIN A PERIOD OF ONE YEAR E.G. BANK OVERDRAFT, PAYMENTS WITHIN A PERIOD OF ONE YEAR E.G. BANK OVERDRAFT,
BILLS PAYABLE, TRADE CREDITOR, OUTSTANDING ETC. THE CURRENT BILLS PAYABLE, TRADE CREDITOR, OUTSTANDING ETC. THE CURRENT
RATIO THROW LIGHT ON THE FIRMS ABILITY TO PAY ITS CURRENTS RATIO THROW LIGHT ON THE FIRMS ABILITY TO PAY ITS CURRENTS
LIABILITIES OUT OF ITS CURRENTS ASSETS. LIABILITIES OUT OF ITS CURRENTS ASSETS.
THE CURRENT RATIO IS COMPARED WITH THE STANDARD RATIO OF TWO THE CURRENT RATIO IS COMPARED WITH THE STANDARD RATIO OF TWO
TIMES FOR %: # TIMES FOR %: #
B B ;UICK RATIO < ACID TEST RATIO < LI;UID RATIO ;UICK RATIO < ACID TEST RATIO < LI;UID RATIO: :
THIS RATIO ESTABLISHES RELATIONSHIP BETWEEN .UICK CURRENT THIS RATIO ESTABLISHES RELATIONSHIP BETWEEN .UICK CURRENT
ASSETS AND CURRENT LIABILITIES. A CURRENT ASSETS IS CONSIDERED ASSETS AND CURRENT LIABILITIES. A CURRENT ASSETS IS CONSIDERED
TO BE LI.UID IF IT I CONVERTIBLE INTO CASH WITHOUT LOSS OF TIME TO BE LI.UID IF IT I CONVERTIBLE INTO CASH WITHOUT LOSS OF TIME
AND VALUE. THEREFORE AND VALUE. THEREFORE
LI.UID ASSETS L CURRENTS ASSETS P (INVENTORY M PREPAID EXPENSES LI.UID ASSETS L CURRENTS ASSETS P (INVENTORY M PREPAID EXPENSES
THE INVENTORY IS SINGLED OUT OF THE TOTAL CURRENT ASSETS AS THE INVENTORY IS SINGLED OUT OF THE TOTAL CURRENT ASSETS AS
THE INVENTORY IS CONSIDERED TO BE THE POTENTIAL ILLI.UID. THE THE INVENTORY IS CONSIDERED TO BE THE POTENTIAL ILLI.UID. THE
REASON FOR KEEPING INVENTORY OUT IS THAT IT MAY BECOME REASON FOR KEEPING INVENTORY OUT IS THAT IT MAY BECOME
ABSOLUTE, UN SALEABLE OR OUT OF FASHION AND ALWAYS RE.UIRES ABSOLUTE, UN SALEABLE OR OUT OF FASHION AND ALWAYS RE.UIRES
TIME FOR REALIZING INTO CASH. GENERALLY A .UICK RATIO OF #:# IS TIME FOR REALIZING INTO CASH. GENERALLY A .UICK RATIO OF #:# IS
CONSIDERED TO BE SATISFACTORY BECAUSE THIS MEAN THAT THE CONSIDERED TO BE SATISFACTORY BECAUSE THIS MEAN THAT THE
.UICK ASSETS OF THE FIRM ARE JUST E.UAL TO THE .UICK LIABILITY .UICK ASSETS OF THE FIRM ARE JUST E.UAL TO THE .UICK LIABILITY
AND THERE HAS NOT BEEN SEEN TO BE A POSSIBILITY OF DEFAULT IN AND THERE HAS NOT BEEN SEEN TO BE A POSSIBILITY OF DEFAULT IN
PAYMENTS BY THE FIRM. PAYMENTS BY THE FIRM.
C C NET WORKING CAPITAL RATIO NET WORKING CAPITAL RATIO: :
IT INDICATES THE FIRMS- POTENTIAL RESERVOIR OF FUND. IT INDICATES THE FIRMS- POTENTIAL RESERVOIR OF FUND.
.(
SWATI SAHAY

NET WORKING CAPITAL RATIOL NET WORKING CAPITALR NET ASSETS NET WORKING CAPITAL RATIOL NET WORKING CAPITALR NET ASSETS
ACTIVIT! & TURNOVER & PERFORMANCE RATIO: ACTIVIT! & TURNOVER & PERFORMANCE RATIO:
IT IS MEASURE OF MOVEMENT AND THUS INDICATES AS TO HOW IT IS MEASURE OF MOVEMENT AND THUS INDICATES AS TO HOW
FRE.UENTLY AN ACCOUNT HAS MOVED OVER DURING A PERIOD. IT FRE.UENTLY AN ACCOUNT HAS MOVED OVER DURING A PERIOD. IT
SHOWS AS TO HOW EFFICIENTLY AND EFFECTIVELY THE ASSETS OF THE SHOWS AS TO HOW EFFICIENTLY AND EFFECTIVELY THE ASSETS OF THE
FIRM ARE BEING UTILIZED. THESE RATIOS ARE USUALLY CALCULATED FIRM ARE BEING UTILIZED. THESE RATIOS ARE USUALLY CALCULATED
WITH REFERENCES TO SALES R COST OF GOODS SOLD AND ITS WITH REFERENCES TO SALES R COST OF GOODS SOLD AND ITS
EXPRESSED IN TERMS OF RATE OR TIMES. EXPRESSED IN TERMS OF RATE OR TIMES.
A) WORKING CAPITAL TURNOVER RATIO A) WORKING CAPITAL TURNOVER RATIO: :
THE WCT RATIO STUDIES THE VELOCITY OR UTILIZATION OF THE THE WCT RATIO STUDIES THE VELOCITY OR UTILIZATION OF THE
WORKING CAPITAL OF THE FIRM DURING A YEAR. THE WC HERE REFERS WORKING CAPITAL OF THE FIRM DURING A YEAR. THE WC HERE REFERS
TO THE NET WORKING CAPITAL WHICH IS E.UAL TO THE TOTAL TO THE NET WORKING CAPITAL WHICH IS E.UAL TO THE TOTAL
CURRENT ASSETS LESS TOTAL CURRENT LIABILITIES. CURRENT ASSETS LESS TOTAL CURRENT LIABILITIES.
THE HIGHER THE WCT RATIO THE LOWER IS THE INVESTMENT IN THE THE HIGHER THE WCT RATIO THE LOWER IS THE INVESTMENT IN THE
WORKING CAPITAL AND HIGHER WOULD BE THE PROFITABILITY. A HIGH WORKING CAPITAL AND HIGHER WOULD BE THE PROFITABILITY. A HIGH
WCT RATIO REFLECTS THE BETTER UTILIZATION OF THE WC OF THE WCT RATIO REFLECTS THE BETTER UTILIZATION OF THE WC OF THE
FIRM. HOWEVER, A HIGH WCT RATIO IMPLIES A LOW NET WORKING FIRM. HOWEVER, A HIGH WCT RATIO IMPLIES A LOW NET WORKING
CAPITAL IN RELATION TO THE SALES VOLUME AND THEREFORE IMPLIES CAPITAL IN RELATION TO THE SALES VOLUME AND THEREFORE IMPLIES
OVER TRADING BY THE FIRM IN RELATION TO ITS NET WC. OVER TRADING BY THE FIRM IN RELATION TO ITS NET WC.
B) FI$ED ASSETS TURNOVER RATIO* B) FI$ED ASSETS TURNOVER RATIO*
THIS RATIO SHOWS THE CONTRIBUTION OF AVERAGE FIXED ASSETS TO THIS RATIO SHOWS THE CONTRIBUTION OF AVERAGE FIXED ASSETS TO
NET SALES. HIGHER THE RATIO BETTER WILL BE THE SALES PER UNIT OF NET SALES. HIGHER THE RATIO BETTER WILL BE THE SALES PER UNIT OF
FIXED ASSETS. FIXED ASSETS.
FA TURNOVER RATIO L (NET SALES R AVERAGE FIXED ASSETS FA TURNOVER RATIO L (NET SALES R AVERAGE FIXED ASSETS
C) CAPITAL TURNOVER RATIO C) CAPITAL TURNOVER RATIO: :
CAPITAL TURNOVER RATIO L (NET SALES R AVERAGE CAPITAL CAPITAL TURNOVER RATIO L (NET SALES R AVERAGE CAPITAL
EMPLOYED. EMPLOYED.
./
SWATI SAHAY

RATIOS USEFUL TO ANALY,E WORKING CAPITAL MANAGEMENT RATIOS USEFUL TO ANALY,E WORKING CAPITAL MANAGEMENT
(A EFFICIENCY RATIOS (A EFFICIENCY RATIOS %&& %&&
) )
%&# %&#
& &
%&# %&#
# #
IDEAL IDEAL
RATIO RATIO
#. WORKING CAPITAL #. WORKING CAPITAL
TURNOVER (TIMES TURNOVER (TIMES
+.J+ +.J+ #&. #&.
%" %"
*.$ *.$
# #
' '
%. CURRENT ASSETS %. CURRENT ASSETS
TURNOVER (TIMES TURNOVER (TIMES
#.$J #.$J %.) %.)
J J
#.) #.)
$ $
' '
". INVENTORY TURNOVER ". INVENTORY TURNOVER
(TIMES (TIMES
).+) ).+) ).% ).%
& &
$.J $.J
J J
' '
(B LI.UIDITY RATIO (B LI.UIDITY RATIO
#. CURRENT RATIO #. CURRENT RATIO %.#% %.#% #.J #.J
& &
%.+ %.+
# #
%.& %.&
%.ACIDTESTRATIO %.ACIDTESTRATIO #.#* #.#* &.) &.)
J J
#.& #.&
" "
#.& #.&
". CASH RATIO ". CASH RATIO &.*$ &.*$ &.& &.&
J J
&.& &.&
* *
&.* &.*

CURRENT RATIO AND ;UICK RATIO CURRENT RATIO AND ;UICK RATIO
YEAR YEAR CURRENT RATIO CURRENT RATIO .UICK RATIO .UICK RATIO
.0
SWATI SAHAY

%&&) %&&) %.#% %.#% #.*# #.*#
%&#& %&#& #.J& #.J& &.)$ &.)$
%&## %&## %.+# %.+# #.&" #.&"
(C STRUCTURAL HEALTH OF WORKING CAPITAL (C STRUCTURAL HEALTH OF WORKING CAPITAL
RATIORYEAR RATIORYEAR %&&) %&&) %&#& %&#& %&## %&##
#. CA #. CA &."# &."# &.%/ &.%/ &."* &."*
%. CL %. CL &.#* &.#* &.#+ &.#+ &.#+ &.#+
". CASH TO CA ". CASH TO CA &.%$ &.%$ .&+ .&+ &.&% &.&%
+. RECEIVABLES TO CA +. RECEIVABLES TO CA &.%$ &.%$ &.*& &.*& &.+& &.+&
*. LOANS AND ADVANCES TO *. LOANS AND ADVANCES TO
CA CA
&.#* &.#* &.#) &.#) &.#* &.#*
/. INVENTORY TO CA /. INVENTORY TO CA &.+% &.+% &."J &."J &.*& &.*&
$. RM TO INVENTORY $. RM TO INVENTORY &.++ &.++ &.+/ &.+/ &."& &."&
J. STOCK SPARES TO J. STOCK SPARES TO
INVENTORY INVENTORY
&.#% &.#% &.#+ &.#+ &.## &.##
). WIP TO INVENTORY ). WIP TO INVENTORY &.&/ &.&/ &.&J &.&J &.&" &.&"
(*
SWATI SAHAY

#&. FINISHED GOODS TO #&. FINISHED GOODS TO
INVENTORY INVENTORY
&."J &."J &."% &."% &.*/ &.*/
INTERPRETATION (RATIO ANALYSIS) INTERPRETATION (RATIO ANALYSIS)
THE UTILIZATION RATE OF NET WORKING CAPITAL AS DEPICTED BY THE UTILIZATION RATE OF NET WORKING CAPITAL AS DEPICTED BY
WORKING CAPITAL TURNOVER RATIO IS FLUCTUATING DURING THE WORKING CAPITAL TURNOVER RATIO IS FLUCTUATING DURING THE
PERIOD. IT SHOWS THAT WORKING CAPITAL HAS NOT BEEN EFFECTIVELY PERIOD. IT SHOWS THAT WORKING CAPITAL HAS NOT BEEN EFFECTIVELY
USED OVER THE PERIOD OF YEARS EXCEPT IN THE YEAR %&&/. USED OVER THE PERIOD OF YEARS EXCEPT IN THE YEAR %&&/.
AS SHOWN BY CURRENT ASSETS TURNOVER RATIO, THE UTILIZATION OF AS SHOWN BY CURRENT ASSETS TURNOVER RATIO, THE UTILIZATION OF
CURRENT ASSETS IN TERMS OF SALES HAS SHOWN A DECREASING CURRENT ASSETS IN TERMS OF SALES HAS SHOWN A DECREASING
TREND WHICH SHOWS THAT CURRENT ASSETS HAS BEEN EFFECTIVELY TREND WHICH SHOWS THAT CURRENT ASSETS HAS BEEN EFFECTIVELY
USED TO ACHIEVE SALES. USED TO ACHIEVE SALES.
AGAIN IF WE LOOK AT THE EFFICIENCY WITH WHICH INDIVIDUAL AGAIN IF WE LOOK AT THE EFFICIENCY WITH WHICH INDIVIDUAL
ELEMENTS OF WORKING CAPITAL HAVE BEEN UTILIZED, THE PICTURE OF ELEMENTS OF WORKING CAPITAL HAVE BEEN UTILIZED, THE PICTURE OF
INVENTORY TURNOVER IS NOT VERY BRIGHT. INVENTORY TURNOVER IS NOT VERY BRIGHT.
RECEIVABLES TURNOVER ALSO SHOWS A DECLINING TREND. RECEIVABLES TURNOVER ALSO SHOWS A DECLINING TREND.
GENERALLY SUCH A SITUATION DOES NOT SUIT THE COMPANY. GENERALLY SUCH A SITUATION DOES NOT SUIT THE COMPANY.
AS WE LOOK AT THE EXTENT OF LI.UIDITY OF WORKING CAPITAL, WE AS WE LOOK AT THE EXTENT OF LI.UIDITY OF WORKING CAPITAL, WE
NOTICE THAT THE RATIO SHOWS AN INCREASING TREND. THIS INDICATES NOTICE THAT THE RATIO SHOWS AN INCREASING TREND. THIS INDICATES
IMPROVEMENT ON THE LI.UIDITY FRONT. IMPROVEMENT ON THE LI.UIDITY FRONT.
IF WE ANALYZE THE STRUCTURAL HEALTH OF WORKING CAPITAL, THE IF WE ANALYZE THE STRUCTURAL HEALTH OF WORKING CAPITAL, THE
PROPORTION OF CURRENT ASSETS TO TOTAL ASSETS HAS BEEN PROPORTION OF CURRENT ASSETS TO TOTAL ASSETS HAS BEEN
APPROPRIATE DURING THIS PERIOD. APPROPRIATE DURING THIS PERIOD.
(1
SWATI SAHAY

SUCH A HIGHER PROPORTION OF CURRENT ASSET IN THE ASSETS SUCH A HIGHER PROPORTION OF CURRENT ASSET IN THE ASSETS
PORTFOLIO OF ICICI BANK OF INDIA. IS .UITE ACCEPTABLE. PORTFOLIO OF ICICI BANK OF INDIA. IS .UITE ACCEPTABLE.
OUR ANALYSIS ABOVE INDICATES THE AREAS OF CONCERN TO OUR ANALYSIS ABOVE INDICATES THE AREAS OF CONCERN TO
MANAGEMENT IN MAKING BEST POSSIBLE USE OF RESOURCES. MANAGEMENT IN MAKING BEST POSSIBLE USE OF RESOURCES.
DECREASING EFFICIENCY IN THE USE OF CURRENT ASSETS HINTS OF THE DECREASING EFFICIENCY IN THE USE OF CURRENT ASSETS HINTS OF THE
POSSIBILITY OF PROBLEMS IN WORKING CAPITAL MANAGEMENT. POSSIBILITY OF PROBLEMS IN WORKING CAPITAL MANAGEMENT.
ON FURTHER ANALYSIS, INVENTORY CONSTITUTES A MAJOR ON FURTHER ANALYSIS, INVENTORY CONSTITUTES A MAJOR
PROPORTION OF TOTAL CURRENT ASSETS. AMONG ITS VARIOUS PROPORTION OF TOTAL CURRENT ASSETS. AMONG ITS VARIOUS
COMPONENTS, RAW MATERIALS, STOCKS, SPARED AND FINISHED GOODS COMPONENTS, RAW MATERIALS, STOCKS, SPARED AND FINISHED GOODS
IN PARTICULAR NEED FURTHER ANALYSIS AS HERE STAND OUT TO THE IN PARTICULAR NEED FURTHER ANALYSIS AS HERE STAND OUT TO THE
PROBLEM AREAS. PROBLEM AREAS.
CASH FLOW STATEMENT (%&#&'## CASH FLOW STATEMENT (%&#&'##
SOURCES SOURCES AMOUNT A AMOUNT A
( IN LACS ( IN LACS
APPLICATIO APPLICATIO
N N
AMOUNT B AMOUNT B
(IN LACS (IN LACS
PROCEEDS PROCEEDS
FROM FROM
BORROWIN BORROWIN
GS GS
#/%."$ #/%."$ LOSS FROM LOSS FROM
OPERATION OPERATION
#J*.%$ #J*.%$
SALE OF SALE OF
ASSETS ASSETS
%$."+ %$."+ CHANGE IN CHANGE IN
CASH CASH
*.&# *.&#
TOTAL TOTAL #)&.%J #)&.%J #)&.%J #)&.%J
SUMMARY OF CASH FLOW ANALYSIS SUMMARY OF CASH FLOW ANALYSIS
A A CASH FROM OPERATION TO TOTAL CASH AVAILABLE CASH FROM OPERATION TO TOTAL CASH AVAILABLE
L #J*."#R#)&.%J L )$."JK L #J*."#R#)&.%J L )$."JK
(2
SWATI SAHAY

B B CASH FROM LONG TERM SOURCES TO TOTAL CASH AVAILABLE CASH FROM LONG TERM SOURCES TO TOTAL CASH AVAILABLE
L #/%."$R#)&.%J L J*.""K L #/%."$R#)&.%J L J*.""K
C C PROCEEDS FROM SALE OF NON'CURRENT ASSETS TO TOTAL CASH PROCEEDS FROM SALE OF NON'CURRENT ASSETS TO TOTAL CASH
L #$ #+R#)&%J L &.)&K L #$ #+R#)&%J L &.)&K
SCHEDULE OF CHANGES IN WORKING CAPITAL SCHEDULE OF CHANGES IN WORKING CAPITAL
PA@TICB;A@S PA@TICB;A@S A3+BNT A3+BNT
=IN ;ACS> =IN ;ACS>
CHANG4S IN W+@EING CHANG4S IN W+@EING
CAPITA; CAPITA;
D4CF2*1 D4CF2*1
* *
D4CF2 D4CF2
*11 *11
INC@4AS4 INC@4AS4
=D4$IT> =D4$IT>
D4C@4 D4C@4
AS4 AS4
=C@4DI =C@4DI
T> T>
CB@@4NT ASS4TS CB@@4NT ASS4TS
INV4NT+@I4S INV4NT+@I4S 03./( 03./( 1-..3. 1-..3. )2.-/ )2.-/ , ,
SBND@Y SBND@Y
D4$T+@S D4$T+@S
123.22 123.22 11-.(1 11-.(1 , , /.)1 /.)1
CASH CASH AND AND
$ANE $ANE
$A;ANC4S $A;ANC4S
1*..- 1*..- )..3 )..3 , , ).*1 ).*1
(3
SWATI SAHAY

+TH4@ CB@@4NT +TH4@ CB@@4NT
ASS4TS ASS4TS
2*.1- 2*.1-
2-(./( 2-(./(
21... 21...
2//.3. 2//.3.
1.)2 1.)2 , ,
CB@@4NT CB@@4NT
;IA$I;ITI4S ;IA$I;ITI4S
13(.*2 13(.*2 11..*( 11..*( 2*.0) 2*.0) , ,
W+@EING W+@EING
CAPITA; =CA,C;> CAPITA; =CA,C;>
11*./) 11*./) 1(2.20 1(2.20
INC@4AS4 IN INC@4AS4 IN
W+@EING W+@EING
CAPITA; CAPITA;
.1.-- .1.-- , , .1.-- .1.--
1(2.20 1(2.20 1(2.20 1(2.20
(-.0. (-.0. (-.0. (-.0.
FUND FLOW STATEMENT (2010-11) FUND FLOW STATEMENT (2010-11)
SOURCES SOURCES AMOUNT A AMOUNT A
(IN LACS (IN LACS
APPLICATION APPLICATION AMOUNT B AMOUNT B
(IN LACS (IN LACS
INCREASE IN INCREASE IN
LOAN LOAN
#/%."$ #/%."$ INCREASE IN WORKING INCREASE IN WORKING
CAPITAL CAPITAL
/#.++ /#.++
SALE OF ASSET SALE OF ASSET %%.)+ %%.)+ LOSS FROM OPERATION LOSS FROM OPERATION #%".J$ #%".J$
TOTAL TOTAL #J*."# #J*."# #J*."# #J*."#
AVERAGE COLLECTION PERIOD AVERAGE COLLECTION PERIOD
YEAR YEAR DAYS DAYS
%&&) %&&) "J "J
%&#& %&#& +& +&
%&## %&## +/ +/
(-
SWATI SAHAY

DEBTOR TURNOVER RATIO DEBTOR TURNOVER RATIO
YEAR YEAR DEBTORS TURNOVER DEBTORS TURNOVER
RATIO RATIO
AVERAGE COLLECTION AVERAGE COLLECTION
PERIOD (IN DAYS PERIOD (IN DAYS
%&&) %&&) ).+) ).+) "J "J
%&#& %&#& ).%& ).%& +& +&
%&## %&## $.JJ $.JJ +/ +/
()
SWATI SAHAY

SUMMARY OF FUND FLOW ANALYSIS SUMMARY OF FUND FLOW ANALYSIS
#. #. INCREASE IN NET WORKING CAPITAL T /#.++ INCREASE IN NET WORKING CAPITAL T /#.++
%. %. FUNDS FROM OPERATIONS TO FINANCE PERMANENT ADDRESS (#%".J$ FUNDS FROM OPERATIONS TO FINANCE PERMANENT ADDRESS (#%".J$
". ". RATIO OF FUND FLOW FROM OPERATIONS TO TOTAL FUNDS IN THE RATIO OF FUND FLOW FROM OPERATIONS TO TOTAL FUNDS IN THE
BUSINESS (' #%".J$RJ*."# L (//.J* BUSINESS (' #%".J$RJ*."# L (//.J*
INTERPRETATION (FUND FLOW STATEMENT) INTERPRETATION (FUND FLOW STATEMENT)
#. #. NETWORKING CAPITAL HAS BEEN INCREASED OVER THE YEARS, NETWORKING CAPITAL HAS BEEN INCREASED OVER THE YEARS,
WHICH HAS INCREASED LI.UIDITY WHICH HAS INCREASED LI.UIDITY
%. %. COMPANY SHOULD TAKE CORRECTIVE ACTIONS TO COVERT LOSS FROM COMPANY SHOULD TAKE CORRECTIVE ACTIONS TO COVERT LOSS FROM
OPERATION TO FUNDS FROM OPERATION. OPERATION TO FUNDS FROM OPERATION.
(.
SWATI SAHAY

FI<DI<G' A<D '>GG0';I8<'
THE BASIC OBJECTIVE FOR WHICH THE STUDY WAS CARRIED OUT HAS THE BASIC OBJECTIVE FOR WHICH THE STUDY WAS CARRIED OUT HAS
BEEN FULFILLED IN THE EARLIER CHAPTER, BASED ON THE OBJECTIVE BEEN FULFILLED IN THE EARLIER CHAPTER, BASED ON THE OBJECTIVE
INTERVIEW SCHEDULE WAS DESIGNED. DATA COLLECTED BASED ON INTERVIEW SCHEDULE WAS DESIGNED. DATA COLLECTED BASED ON
SCHEDULE WAS ANALYZED AND SOME FINDINGS HAVE EMERGED. SCHEDULE WAS ANALYZED AND SOME FINDINGS HAVE EMERGED.
MAJOR FINDINGS OF THE STUDY MAJOR FINDINGS OF THE STUDY
THE BANK CALCULATES WORKING CAPITAL RE.UIREMENTS, LOAN THE BANK CALCULATES WORKING CAPITAL RE.UIREMENTS, LOAN
RE.UIREMENTS,LI.UIDITY RATIO, ACTVITY RATIO,AND FINANCE RE.UIREMENTS,LI.UIDITY RATIO, ACTVITY RATIO,AND FINANCE
POSTION RATIO BEFORE SANCTIONING POSTION RATIO BEFORE SANCTIONING
THE LEAD TIMES BETWEEN THE APPLICATION AND SANCTIONING OF THE LEAD TIMES BETWEEN THE APPLICATION AND SANCTIONING OF
LOAN VARIES FROM ONE TO THREE WEEKS. LOAN VARIES FROM ONE TO THREE WEEKS.
((
SWATI SAHAY

THE ICICI BANK ASK FOR THREE YEARS AUDITEDBALANCE SHEET, THE ICICI BANK ASK FOR THREE YEARS AUDITEDBALANCE SHEET,
PRL ACCOUNT,INCOME TAX ASSESMENT FOR THERE EVALUATION PRL ACCOUNT,INCOME TAX ASSESMENT FOR THERE EVALUATION
PURPOSES. PURPOSES.
IN CASE OF NEW UNIT OF ICICI BANK LOOKS INTO. THE TECHNICAL IN CASE OF NEW UNIT OF ICICI BANK LOOKS INTO. THE TECHNICAL
FEASBILITY AS WELL AS ECONOMIC VIABILITY OF THE PROJECT. FEASBILITY AS WELL AS ECONOMIC VIABILITY OF THE PROJECT.
THE NET PROFIT OF THE BANK OF THE IS INCREASED FROM %&#& TO THE NET PROFIT OF THE BANK OF THE IS INCREASED FROM %&#& TO
&## &##
THE EXPENDITURE OF THE COMPANY IS GRADUALLY INCREASE THE EXPENDITURE OF THE COMPANY IS GRADUALLY INCREASE
FRONM %&#& TO %&#& WHICH IS BAD SIGN FOR THE COMPANY FRONM %&#& TO %&#& WHICH IS BAD SIGN FOR THE COMPANY
ICICI BANK MUST ADOPT EFFECTIVE CREDIT MANGEMENT ICICI BANK MUST ADOPT EFFECTIVE CREDIT MANGEMENT
TECHNI.UES TO MINIMIZES DEFAULTING LOANERS. TECHNI.UES TO MINIMIZES DEFAULTING LOANERS.
THE INCOME OF THE COMPANY IS ALSO INCREASED FROM %&#& TO THE INCOME OF THE COMPANY IS ALSO INCREASED FROM %&#& TO
%&##. %&##.
ICICI BANK SHOULD TAKE INTITATIVE TO ACHIEVE THERE FUTURE ICICI BANK SHOULD TAKE INTITATIVE TO ACHIEVE THERE FUTURE
PLANS. PLANS.
THE COMPANY CURRENTS ALSO DECREASED FROM %&#& TO %&##. THE COMPANY CURRENTS ALSO DECREASED FROM %&#& TO %&##.
ICICI CURRENT LIABILTIES IN %&#& IS#*%..%+ TO %&## IS #*%.$* WHICH IS ICICI CURRENT LIABILTIES IN %&#& IS#*%..%+ TO %&## IS #*%.$* WHICH IS
INCREASED. INCREASED.
RECEVIABLE TURNOVER OF THE COMPANY IS ALSO DECREASING IN RECEVIABLE TURNOVER OF THE COMPANY IS ALSO DECREASING IN
TREND WHICH IS NOT SUIT FOR THE COMPANY. TREND WHICH IS NOT SUIT FOR THE COMPANY.
THE RATIO USED FOR ANALYSIS OF LI.UIDITY POSITION IS CURRENT THE RATIO USED FOR ANALYSIS OF LI.UIDITY POSITION IS CURRENT
RATIO AND .UICK RATIO. THESE RATIOS REVEAL THAT COMPANY RATIO AND .UICK RATIO. THESE RATIOS REVEAL THAT COMPANY
HAS SOUND LI.UIDITY POSITION THROUGHOUT THE PERIOD OF HAS SOUND LI.UIDITY POSITION THROUGHOUT THE PERIOD OF
STUDY. BOTH THE RATIO SHOWS FLUCTUATING TREND WITHIN STUDY. BOTH THE RATIO SHOWS FLUCTUATING TREND WITHIN
REASONABLE LIMIT BUT THESE RATIO ARE HIGHER THAN REASONABLE LIMIT BUT THESE RATIO ARE HIGHER THAN
CONVENTIONALLY ACCEPTED NORMS I.E. %:# IN CASE OF CURRENT CONVENTIONALLY ACCEPTED NORMS I.E. %:# IN CASE OF CURRENT
RATIO & #:# IN CASE OF .UICK RATIO, WHICH SHOWS RATIO & #:# IN CASE OF .UICK RATIO, WHICH SHOWS
(/
SWATI SAHAY

INEFFECTIVENESS OF THE MANAGEMENT IN MANAGING INEFFECTIVENESS OF THE MANAGEMENT IN MANAGING
CURRENTR.UICK ASSETS IN RELATION TO CURRENT LIABILITIES. CURRENTR.UICK ASSETS IN RELATION TO CURRENT LIABILITIES.
SUGGESTIONS SUGGESTIONS
KEEPING IN VIEW OF DETAILED ANALYSIS OF OUR STUDY AND OUR KEEPING IN VIEW OF DETAILED ANALYSIS OF OUR STUDY AND OUR
FINDINGS MENTIONED IN ABOVE PARAGRAPHS, THE FOLLOWING FINDINGS MENTIONED IN ABOVE PARAGRAPHS, THE FOLLOWING
SUGGESTIONS SHALL BE HELPFUL IN INCREASING THE EFFICIENCY IN SUGGESTIONS SHALL BE HELPFUL IN INCREASING THE EFFICIENCY IN
WORKING CAPITAL MANAGEMENT. WORKING CAPITAL MANAGEMENT.
COMPANY SHOULD MAKE A POLICY IN RESPECT OF INVESTMENT OF COMPANY SHOULD MAKE A POLICY IN RESPECT OF INVESTMENT OF
EXCESS CASH, IF ANYS IN MARKETABLE SECURITIES AND OVERALL CASH EXCESS CASH, IF ANYS IN MARKETABLE SECURITIES AND OVERALL CASH
POLICY SHOULD BE INTRODUCED. POLICY SHOULD BE INTRODUCED.
MANAGEMENT SHOULD DEVELOP A CREDIT POLICY AND PROPER MANAGEMENT SHOULD DEVELOP A CREDIT POLICY AND PROPER
SELF REALIZATION SYSTEM FROM CUSTOMERS SO THAT EFFICIENT AND SELF REALIZATION SYSTEM FROM CUSTOMERS SO THAT EFFICIENT AND
EFFECTIVE MANAGEMENT OF ACCOUNTS RECEIVABLE CAN BE ENSURED. EFFECTIVE MANAGEMENT OF ACCOUNTS RECEIVABLE CAN BE ENSURED.
THIS WILL SIGNIFICANTLY IMPROVE THE PROFITABILITY AND LI.UIDITY THIS WILL SIGNIFICANTLY IMPROVE THE PROFITABILITY AND LI.UIDITY
OF THE COMPANY. OF THE COMPANY.
PURCHASE POLICY REGARDING RAW MATERIAL, CONSUMABLES, PURCHASE POLICY REGARDING RAW MATERIAL, CONSUMABLES,
AND TOOLS AND PACKING MATERIALS ETC. SHOULD BE INTRODUCED AND TOOLS AND PACKING MATERIALS ETC. SHOULD BE INTRODUCED
WHICH ULTIMATELY HELPS IN PLANNING OF INVENTORY, AVAILMENT OF WHICH ULTIMATELY HELPS IN PLANNING OF INVENTORY, AVAILMENT OF
MAXIMUM TRADE CASH DISCOUNT AND AVAILMENT OF MAXIMUM MAXIMUM TRADE CASH DISCOUNT AND AVAILMENT OF MAXIMUM
CREDIT PERIOD FROM SUPPLIERS. CREDIT PERIOD FROM SUPPLIERS.
(0
SWATI SAHAY

C8<C+>'I8<
FROM THE ABOVE STUDY THE MAJOR FINDINGS ARE OVERALL FINANCE FROM THE ABOVE STUDY THE MAJOR FINDINGS ARE OVERALL FINANCE
POINT OF VIEW, BANKING IS PERFORMING WELL. THIS STUDY INDICATES THAT POINT OF VIEW, BANKING IS PERFORMING WELL. THIS STUDY INDICATES THAT
IN ORDER TO IMPROVE THE OVER ALL PERFORMANCE OF ICICI BANK THE IN ORDER TO IMPROVE THE OVER ALL PERFORMANCE OF ICICI BANK THE
MANGEMENT MUST TAKE ALLPOSSIBLE STEPS,REVIEW AND MODIFY VARIOUS MANGEMENT MUST TAKE ALLPOSSIBLE STEPS,REVIEW AND MODIFY VARIOUS
POLICIES, FINANCIAL TRADING, BY USING SOUND INFORMATION POLICIES, FINANCIAL TRADING, BY USING SOUND INFORMATION
MANAGEMENT SYSTEM TO ENABLE MANAGEMENT TO HAVE A CONTROL MANAGEMENT SYSTEM TO ENABLE MANAGEMENT TO HAVE A CONTROL
OVER THE VARIOUS OPERATIONS. OVER THE VARIOUS OPERATIONS.
THOUGH THIS STUDY MAY BE ACADEMIC IN NATURE IT MAY THOUGH THIS STUDY MAY BE ACADEMIC IN NATURE IT MAY
SERVE A STARTING POINTFOR THE MANGERIAL ACTION PLANS TOWARDS SERVE A STARTING POINTFOR THE MANGERIAL ACTION PLANS TOWARDS
ENHANCING NOT ONLY THE OPERATIONAL EFFICENCY BUT ALSO WILL PROVE ENHANCING NOT ONLY THE OPERATIONAL EFFICENCY BUT ALSO WILL PROVE
A GREAT HELP IN UNDERSTANDING AND DETERMING APPORPRIATE A GREAT HELP IN UNDERSTANDING AND DETERMING APPORPRIATE
STRATEGIC PLANS TO BRING VARIOUS IMPORTANT FINANICIALRATIO TO THE STRATEGIC PLANS TO BRING VARIOUS IMPORTANT FINANICIALRATIO TO THE
LEVELOF BANK STANDARDS. LEVELOF BANK STANDARDS.
/*
SWATI SAHAY

BIBIOGRAPH!
BOOKS= REFERENCES*
M.Y. G26: 6:5 P.K. I63:, F3:6:;36= M6:6@9A9:7
I.M. P6:59E F3:6:;36= M6:6@9A9:7
A::?6= R9D<>74 %&#&'%&##
WEBSITES*
CCC.463=.;<.3:
CCC.@<<@=9.;<.3:
CCC.A6:6@9A9:7D6>65349.;<A
CCC.3;3;386:G.;<A
/1