PROJECT REPORT

ON
WORKING CAPITAL MANAGEMENT
OF
PUNJAB & SINDH BANK

ROPAR INSTITUTE OF MANAGEMENT

Affiliated To
PUNJABI UNIVERSITY PATIALA

In the partial fulfillment of requirement for the award of

Degree of Masters of Business Administration (MBA)

Submitted To: Submitted By:

Lect. Mrs. Harpreet Kaur Tarandeep Kaur
Roll No-16415

1
 STUDENT DECLARATION

I hereby declare that the project report entitled, WORKING CAPITAL

MANAGEMENT submitted in partial fulfillment of the requirements for the
degree of management to, ROPAR INSTITUTE OF MANAGEMENT, Shekhupur is
my original work and not submitted for the award of any other degree, diploma,
fellowship, or any other similar title or prizes.

Tarandeep Kaur
Roll No-16415

2
 PREFACE
India is a developing country and we all know that banking sector plays a very important role. In
development with the increasing use of banking and finance in every field, new trends in their
technology and modern use are being evolved day to day to meet the requirements. Infact
BANKING has become the need of today.

The purpose of PROJECT REPORT is to expose the students in the market and in the field of
banking, finance and investments and to develop the ability in the students to deal with all types
of customers.

Preparing project report in the summer vacations and under going the summer training is the
indispensable part of the college period. It provides the opportunity to review what we have
gained in the training period and also provides the way to convey the knowledge and ideas to
others.

The present project provides the information on the PUNJAB & SIND BANK.

Learning is not possible in solitude and has to have the support and able guidance of some
people around us in various roles and capacities. The satisfaction and euphoria that accompanies
the successful completion of any task would be incomplete without the mention of the people
who made it possible because success is the epitome of hard work, undeterred missionary zeal,
fast determination, and consideration.

Therefore, we consider it a pleasant duty to express our heartiest appreciation, gratitude, and
indebtedness to our project guide Ms. Neha for his keen interest, sincere extortion, invaluable
and pain taking excellent guidance, continuous calm endurance, inspiration and encouragement
during each phase of the present project.

3
 ACKNOWLEGEMENT

Success is not a description, but a journey. While I reach towards the end of this journey, I
realized I may not have come this far without the guidance, help and support of the people who
acted as guides, friends and torch bearers along the way.
I take this opportunity to thank Mrs. Harpreet Kaur without their cooperation I would not have
been able to complete this project.

Tarandeep Kaur
Roll No-16415

4
 INDEX

STUDENT DECLARATION 2
PREFACE 3
ACKNOWLEDGEMENT 4
INTRODUCTION 6-33
FINANCE DEPARTMENT 34-38
ANALYSIS OF WORKING CAPITAL 39-60
RATIO ANALYSIS 61-65
FUND FLOW ANALYSIS 66-72
OBJECTIVES & SCOPE OF STUDY 73-75
RESERCH METHODOLOGY 76-83
RESULT, ANALYSIS & DISCUSSION 84-85
LIMITATIONS 86-87
OBSERVATIONS RECOMMENDATION 88-90
BIBLIOGRAPHY 91

5
 INTRODUCTION

The main idea of the project is to carry out a research for the working captal

management of Punjab & Sind Bank . The bank attained market leadership in Premium

salary accounts and second largest seller of regular salary account in a record time.The

situation is similar now. Will the company be able to repeat the same performance for

all the category of this product?

It has developed its products with better service, new and best management
information system. The project aims to find out the response of the
corporate through a research process.

The project was done in various phases:

The first phase comprises gathering information related to the product

and population,

In the second phase a survey is to be conducted on corporate customers

of Gurdaspur region through direct questionnaire.

The findings and representation of the research is done in the third phase

And in the last phase all the findings and analysis along with conclusions and

recommendation has been submitted in report format for further use.

It was also necessary to do a competitor analysis as well to know the strength and

weakness of the various competitors as the segment has a lot of players and more global

players will join the competition soon. Various marketing tools have been used to

analyze the current situation of Punjab& Sind Banks salary account segment and find

out its position among the competitors in order to form a strategy for the Punjab & Sind

Bank in salary account segment.

6
 Changes in Banking Sector

The face of banking is changing rapidly. Competition is going to be tough and with
financial liberalisation under the WTO, banks in India will have to benchmark
themselves against the best in the world. For a strong and resilient banking and financial
system, therefore, banks need to go beyond peripheral issues and tackle significant issues
like improvements in profitability, efficiency and technology, while achieving economies
of scale through consolidation and exploring available cost-effective solutions. These are
some of the issues that need to be addressed if banks are to succeed, not just survive, in
the changing milieu.
Challenges Ahead

(i) Improving profitability: The most direct result of the above changes is increasing
competition and narrowing of spreads and its impact on the profitability of banks. The
challenge for banks is how to manage with thinning margins while at the same time
working to improve productivity which remains low in relation to global standards. This
is particularly important because with dilution in banks equity, analysts and shareholders
now closely track their performance. This will require tremendous efforts in the area of
technology and for banks to build capabilities to handle much bigger volumes.

(ii) Reinforcing technology: Technology has thus become a strategic and integral
part of banking, driving banks to acquire and implement world class systems that enable
them to provide products and services in large volumes at a competitive cost with better
risk management practices.
The pressure to undertake extensive computerizations is very real as banks that adopt the
latest in technology have an edge over others. Customers have become very demanding
and banks have to deliver customized products through multiple channels, allowing
customers access to the bank round the clock.

(iii) Risk management : The deregulated environment brings in its wake risks along
with profitable opportunities, and technology plays a crucial role in managing these risks.

7
In addition to being exposed to credit risk, market risk and operational risk, the business
of banks would be susceptible to country risk, which will be heightened as controls on the
movement of capital is eased. In this context, banks are upgrading their credit assessment
and risk management skills and retraining staff, developing a cadre of specialists and
introducing technology driven management information systems.

(iv) Sharpening skills: The far-reaching changes in the banking and financial sector
entail a fundamental shift in the set of skills required in banking. To meet increased
competition and manage risks, the demand for specialized banking functions, using IT as
a competitive tool is set to go up. Special skills in retail banking, treasury, risk
management, foreign exchange, development banking, etc., will need to be carefully
nurtured and built.

8
Thus, the twin pillars of the banking sector i.e. human resources and IT will have to be
strengthened.
(v) Greater customer orientation: In todays competitive
environment, banks will have to strive to attract and retain customers by introducing
innovative products, enhancing the quality of customer service and marketing a variety of
products through diverse channels targeted at specific customer groups.

(vi) Corporate governance: Besides using their strengths and strategic initiatives
for creating shareholder value, banks have to be conscious of their responsibilities
towards corporate governance. Following financial liberalisation, as the ownership of
banks gets broadbased, the importance of institutional and individual shareholders will
increase. In such a scenario, banks will need to put in place a code for corporate
governance for benefiting all stakeholders of a corporate entity.

(vii) International standards: Introducing internationally followed best practices

and observing universally acceptable standards and codes is necessary for strengthening
the domestic financial architecture. This includes best practices in the area of corporate
governance along with full transparency in disclosures. In todays globalised
world,focusing on the observance of standards will help smooth integration with world
financial markets.

9
 Technology in Banking Sector
Technology is having a major impact on the banking industry. For example, many
routine bank services that once required a teller, such as making a withdrawal or deposit,
are now available through ATMs that allow people to access their accounts 24 hours a
day. Also, direct deposit allows companies and governments to electronically transfer
payments into various accounts. Further, debit cards, which may also used as ATM
cards, instantaneously deduct money from an account when the card is swiped across a
machine at a stores cash register. Electronic banking by phone or Computer allows
customers to pay bills and transfer money from one account to another. Through these
channels, bank customers can also access information such as account balances and
statement history. Some banks have begun offering online account aggregation, which
makes available in one place detailed and up-to date information on a customers
accounts held at various institutions. Advancements in technology have also led to
improvements in the ways in which banks process information. Use of check imaging,
which allows banks to store photographed checks on the computer , is one such example
that has been implemented by some banks. Other types of technology have greatly
impacted the lending side of banking. For example, the availability and growing use of
credit scoring software allows loans to be approved in minutes, rather than days, making
lending departments more efficient. Other fundamental changes are occurring in the
industry as banks diversify their services to become more competitive. Many banks now
offer their customers financial planning and asset management services, as well as
brokerage and insurance services, often through a subsidiary or third party. Others are
beginning to provide investment banking services that help companies and governments
raise money through the issuance of stocks and bonds, also usually through a subsidiary.
As banks respond to deregulation and as competition in this sector grows, the nature of
the banking industry will continue to undergo significant change.

10
 COMPANY PROFILE

Profile:-

The Bank was founded in 1908 at Amritsar by eminent persons like Bhai Saheb
Veer Singh, Sunder Singh Majithia and S.Tarlochan Singh.At the time of partition,
all excepts Ludhiana and Amritsar branches were in Pakistan.
2000 - The Bank has launched its bullion trading scheme on persistent demand from
North Indian traders, especailly in view of the Diwali festival season.
- The Bank has been appointed as arranger and collecting banker for State Bank of
India's India Millennium Deposit scheme slated to open on October 21
2001 - NS Gujaral has been appointed as the chairman and managing director of
the Delhi-based Punjab & Sind Bank.
2003
-The bank has launched a special festival loan scheme for meeting the expenditure for
items such as purchase of consumer goods or furnishing of house or shops
2004
-Mr. V K Chopra, CMD, Small Industries Development Bank of India, appointed
as CMD of Punjab & Sind Bank
-P&SB appoints new chairman R S Gujral

11
-Punjab and Sind Bank (PSB) and ICICI Bank on July 02 announced the launch of
co-branded credit card that will be available in three variants - Gold, Silver and Blue
credit card
-Punjab and Sind Bank ties up with Aviva Life

Punjab & Sind Bank, established in 1908, is headquartered at New Delhi. Having more
than 800 branches across the country, the bank has around 10,000 employees dedicated
to the banking services and customer care. The bank offers usual banking services along
with innovative banking methods including Internet and phone banking, international
banking, merchant banking, hire, purchase, leasing and credit cards.

Objective

The bank was founded by luminaries like Bhai Vir Singh, Sir Sunder Singh Majitha and
Sardar Tarlochan Singh in the holy city of Amritsar on the principle of social
commitment to help the weaker section of the society in their economic endeavours to
raise their standard of life.

Achievements and Activities

Punjab & Sind Bank is the first bank in Northern India to obtain ISO 9002 certification
for its selected branches. Its Housing Finance Branch caters to the credit need of the
house aspirants. The bank has entered into agreements for Non Life insurance business
with M/s Bajaj Allianz General Insurance Company and Life Insurance business
arrangements with M/s Aviva Life

12
Insurance Company India Pvt. Ltd. Its customers can now avail insurance related
services under one roof.

Nationalisation
Punjab & Sind Bank was nationalized in 1980 along with six other banks by the
Government of India.

Products & Services

Deposits Savings Account

Recurring Deposit
Fixed Deposits
Current Accounts
Loans Priority Sector Loans
Housing Loan
Home Enhancement Loans
Personal Loan
Education Loan
Car Loans
Business Loans
Other Services NRI Services
Punjab & Sind Bank-ICICI Bank Credit Card
Gold Card Schemes
RBI Citizens' Charter including cash and deposits
Locker Facilities
RTGS
NEFT
PSB e-funds Transfer
Tax Payment
E-bill Payments
PSB- Aviva Allianz Insurance
MISSION
To put in place the effective Risk Management and Internal Control

13
Systems.
To adopt and operationalise high-level technology standards.
To strive to achieve excellence in Customer Service.
To achieve the highest standards of transparency and accountability in the conduct of
banking business.
To adopt professional approach in effectively managing financial as well as non-
financial risks.
To maximize profitability and profits of the Bank with due compliance of prudential
guidelines.
To maximize competitive risk adjusted return on capital, through planned reduction
in the average cost of funds, increased yield on advances and investments besides
reduction in cost of operations.

The bank has collaborated with the leading credit card player in the country to
offer the privileges of state of art technology to its cardholders with all the features to
compete well in the card industry.
Our Bank has been making efforts to provide value added products & Services to our
esteemed clients. It is our quest to provide the very best to our esteemed Customers.
The launch of new Co-branded Credit card with ICICI Bank is a step towards this
mission.
Vision
We envision to emerge as a strong vibrant Bank through synchronization of the human,
financial and technological resources.

The bank also offers a wide range of general banking services to its

14
customers including debit cards, cash management, remittance services and
collection services. Investment Rationale
PSB to establish its pan India presence by opening new branches throughout
the country to increase its customer base and business. Expanding of branch
network is expected to help the bank to improve CASA ratio going forward.
PSB plans to open specialised industrial finance branches and aims at
expanding its credit portfolio, by growing its corporate & retail loan
segment.
PSB has been able to reduce its net NPA ratio significantly from
8.11% (which was highest amongst the public sector banks) in FY05 to
0.36% in FY10. Going ahead bank is likely to maintain NPA
ratios around this level.
PSB will continue developing its technological capabilities to enhance its
value offering to customers while optimizing its costs. From a total of 17
branches on the CBS platform, PSB seeks to bring around 500 branches on
the CBS platform by Nov 2012 enabling it to have incremental CASA
growth and profitability in future.
PSB has maintained capital adequacy ratio (CAR) at 13.04% with the tier-I
capital at 7.9% and the tier-II capital at 5.1% as on September 2010. The
bank plans to meet its future capital adequacy requirement through this issue
.
Concern

A major part of their branch network is concentrated in North India and

thereby exposing them to regional risks.
PSBs exposure to the real estate segment has witnessed substantial increase
in the last 3 fiscal years. Any significant downturn in
the real estate sector may lead to an increase in nonperforming loans.

15
Valuation
In terms of valuation, the stock is offered at 0.9x and 0.8x book value (post
issue) at upper and lower band, respectively. Its peer group valuation is in the
range of 0.8-1-4x. The banks growth plans to expand its business, products &
services to benefit bank in long term. Also, the strong Indian economic growth is
likely to benefit the overall banking industry which would inturn benefit the
Punjab & Sind bank.

MANAGEMENT

SHRI A. BHATTACHARYA DIRECTOR (Ministry of Finance, Deptt.

of Financial Services, New Delhi)
SHRI B. P. KANUNGO (RBI Nominee Director)
NON- OFFICIAL DIRECTORS

SHRI MATTA VENKATA SIVA PRASAD

SHRI KRISHAN MURARI GANGAWAT
SHRI HARI CHAND BAHADUR SINGH
SHRI A.K. SURANA (C.A. Category)
SHRI KARANPAL SINGH SEKHON

Punjab & Sind Bank IPO

he initial public offering (IPO) of State-owned Punjab & Sind Bank will be opening
for subscription from December 13, reports CNBC-TV18. The bank will offer 4
crore equity shares through IPO. The issue comprises a net issue to the public of
3.8 crore equity shares and a reservation of 20 lakh equity shares for subscription
by eligible employees. The issue shall constitute 17.93% of the post-issue share
capital of the bank.
Its subscription will close on December 15 for qualified institutional investors (QIB)
and on December 16 for other investors.
The objective of the issue is to augment capital base to meet the future capital
requirements arising out of the growth in assets due to the growth of the Indian
economy.
President of India, acting through the Ministry of Finance, Government of India,
holds 100% stake in the bank, which will be reduced to 82.07% post issue.
SBI Capital Markets Limited, Enam Securities Pvt Ltd and ICICI Securities Limited
are the book running lead managers to the issue

16
GOLD CARD SCHEME FOR EXPORTERS
Exports play a crucial role in a developing economy like India which attaches
considerable importance to export promotion. With a view to further simplify access of
Bank credit to exporters especially small and medium exporters and make it borrower
friendly in terms of procedure and credit terms, the Minister of Commerce and Industry
had proposed issuance of a Gold Card to Credit Worthy Exporters with good track record
for easy availability of export credit on best terms. Accordingly, a Gold Card Scheme has
been worked out by RBI in consultation with select banks and exporters. The scheme
envisages certain additional benefits based on the record of performance of exporters.
The Gold Card holders would enjoy simpler and more efficient credit delivery
mechanism in recognition of his good track record. The Gold Card Scheme has been
introduced in our Bank, the details of which are as under:

1. The card offered by the bank will be known as "PSB EXPO GOLD CARD
SCHEME

Fixation of Credit Limits :

1. Application for credit will be processed faster than other exporters. The time frame
fixed for disposal of applications received for sanction of credit under the scheme is as
follows:-

For disposal of fresh applications 25 days

Renewal of limits 15 days
Sanction of adhoc limits 07 days

2. Bank is already following a liberal approach in respect of export finance. Bank will
allow 'In-principle' sanction of limits for three years with a provision for automatic
renewal subject to fulfillment of terms and conditions of sanction. Sanctioning
Authority will also introduce a clause in the terms & conditions of sanction that party
will be submitting all the financial papers and other information required by the bank for
the renewal and reviewal of account periodically.

3. PCFC requirements of the PSB Expo Gold Card holders will be met by giving
them priority. Their FCDL requirements will also be given priority over non-export
borrowers subject to availability of funds.

17
4. Export credit in foreign currency will be provided on priority basis at LIBOR +
0.75% p.a. subject to availability of funds. In case sufficient dollars are not available
with the bank to lend to the exporter at a particular time, service charges at flat rate of
0.1% will be charged by the bank on the inter-bank foreign currency borrowings for the
purpose, subject to availability of funds.

5. Bank will consider granting Term Loan in Foreign Currency in deserving cases out
of their FCNR(B), RFC, etc. funds subject to availability of funds.

6. Sufficient powers have already been vested with the field functionaries for sanction of
adhoc limits to meet urgent credit requirements of exporters. Urgent credit requirements
of PSB Expo Gold Card holders will be met on priority basis. In the case of exporters of
seasonal commodities, the peak and off-peak levels will be appropriately specified.

7. With a view to capture only those particulars which are relevant for sanctioning
export credit, the Loan Application Form for export credit for Gold Card Holder
devised by Indian Banks Association has been adopted.

8. In case of unanticipated export orders, norms for inventory may be relaxed,

taking into account the size and nature of export order.

9. Since the bonafides of the Gold Card holder is already established based on credit
worthiness and track record, the same will be given due consideration by the
sanctioning authority in respect of security and collaterals while granting export credit
under the PSB Expo Gold Card scheme.

18
Rate of Interest :
1. Rate of interest charged on Rupee Export Credit to the Gold Card Holders will be
lower than the normal rate of interest charged by the bank as under:-

lower by 0.5% than the normal rate of

For exporters having credit rating 1 & 2
interest charged by the bank
lower by 0.25% than the normal rate of
For exporters having credit rating 3 & 4
interest charged by the bank

19
 2. In respect of PSB Expo Gold Card holders, the concessive rate of interest on post-
shipment rupee export credit applicable upto 90 days will be extended for a maximum
period of 365 days.

Service Charges :

1. All PSB Expo Gold Card holders will be offered discount of 15% in service charges
and fee structure for various services/ transactions subject to compliance of FEDAI
guidelines.

2. PSB Expo Gold Card holders, in view of their credit worthiness will be considered
for exemption from ECGC policy at the discretion of the bank.

Tenure :

1. The Gold Card will be issued for a period of 3 years and will be automatically
renewed for a further period of 3 years, unless there are adverse features/irregularities in
the account. In case of any misuse of the card or observance of any violation of the
terms & conditions, the bank will have the right to recall the card any time.

2. The exporter's record of performance will be reviewed periodically with a view to

pass on the benefit of better terms and conditions including rate of interest for better
performance.

The following additional facilities/benefits will be allowed to the holders of PSB Expo Gold
Card :-
i. Waiving of Annual Fee for the first year on the Credit Card and 50% discount for
second year onwards subject to satisfactory utilisation of Credit Card.

ii. Better exchange rates & exchange rates on daily basis will be provided by the
branches through E-Mail wherever feasible.

iii.Customer Education Programme will be conducted by the bank for them in which
International developments and latest RBI guidelines will be discussed.

iv. Problems of the Gold Card Holders will be discussed and immediate remedial
measures will be taken."

Till the Gold Card is finalised, Zonal Managers may issue letters to the exporters
considered eligible by them under 'PSB Expo Gold Card' Scheme. They may submit
their requirement of 'PSB Expo Gold Card' and Loan Application Form for 'PSB Expo
Gold Card' holders to H.O. Stationery Deptt. and obtain the same from them.

20
Zonal Managers are advised to take keen interest in the scheme in order to popularise
the same and implement in true spirit. Banners be also displayed at the concerned
Branches.

One of the criteria of Eligibility for PSB Expo Gold Card was that exporters enjoying
export credit limits (excluding FOBLC) of Rs.1 crores & above and annual export sales
routed through our bank not less than Rs.5 crores during the preceding one calendar
year/financial year will be eligible for PSB Expo Gold Card.

With a view to extend the scheme to all credit worthy exporters including those in Small
and Medium Enterprises segment and to simplify credit access, it has been decided to
waive the condition of export credit limits and turnover stipulated earlier.

21
About the Card:

The "PUNJAB & SIND BANK-ICICI BANK Credit Card" comes in three variants :
Blue, Silver and Gold card. The eligibility criteria in terms of Annual Income of the
applicant is as follows:

Eligibility Blue Card Silver Card Gold Card

Salaried Rs.60000/-p.a Rs.60000/- Rs.120000/-p.a

p.a
Self Employed Rs.50000/-p.a Rs.50000/- Rs.100000/-p.a

p.a

Business Focus

Punjab & Sind Bank's mission is to be a World-Class Indian Bank. The objective is to
build sound customer franchises across distinct businesses so as to be the preferred
provider of banking services for target retail and wholesale customer segments, and to
achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank
is committed to maintain the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. P & S Bank's business philosophy is
based on four core values - Operational Excellence, Customer Focus, Product Leadership
and People.

22
 CAPITAL STRUCTURE:-

The authorized capital of Punjab & Sind Bank is Rs.1.83 Billion. The paid-
up capital is Rs.1.6 billion.
The HDFC Group holds 14.00% of the bank's equity and about 13.50%
of the equity is held by the ADS .
Net profit Rs. 437.18 Cr (Up by 14.34%).
Operating Profit Rs. 727.71 Cr. (up by 34.10%)
The shares are listed on the The Stock Exchange, Mumbai and the National
Stock Exchange.
Business per employee Rs. 6.56 Cr
Return on Assets 1.26 %
Capital Adequacy Ratio 11.88 %
Gross NPAs 161.04 Cr

Distribution Network:-

Punjab & Sind Bank is headquartered in New delhi. The Bank at present has an enviable
network of over 813 branches and 76 extension counters spread over India and 400 in
Punjab. All branches are linked on an online real-time basis. Customers in over 120
locations are also serviced through Telephone Banking. The Bank's expansion plans take
into account the need to have a presence in all major industrial and commercial centres
where its corporate

23
customers are located as well as the need to build a strong retail customer base for both
deposits and loan products. Being a clearing/settlement bank to various leading stock
exchanges, the Bank has branches in the centres where the NSE/BSE have a strong and
active member base. As a part of International banking it offers NRI services, swift
branches, IBDs and gold card scheme. The bank has launched the facility of online
request for education loan to make it easier for the customers. It has tied up with ICICI
bank for a co-branded credit card. It also has tie-up with Aviva Life Insurance Company
and Bajaj Allianz General Insurance Company. It has attained ISO 9002 certification for
its selected branches.
Management:-

Mr. V K Chopra took over as the bank's Chairman. Prior to this, Mr. Kapoor was a
Deputy Governor of the Reserve Bank of India.The Managing Director, Mr V K Chopra
has been a professional banker for over 25 years and before joining Punjab & Sind Bank
in 1994 was heading Citibank's operations in Malaysia. The Bank's Board of Directors is
composed of eminent individuals with a wealth of experience in public policy,
administration, industry and commercial banking. Senior banking professionals with
substantial experience in India and abroad head various businesses and functions and
report to the Managing Director. Given the professional expertise of the management
team and the overall focus on recruiting and retaining the best talent in the industry, the
bank believes that its people are a significant competitive strength.

24
Corporate Governance Rating :-

The bank was one of the first four companies, which subjected itself to a Corporate
Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating
Information Services of India Limited (CRISIL). The rating provides an independent
assessment of an entity's current performance and an expectation on its "balanced value
creation and corporate governance practices" in future. The bank has been assigned a
'CRISIL GVC Level 1' rating which indicates that the bank's capability with respect to
wealth creation for all its stakeholders while adopting sound corporate governance
practices is the highest.

Investment Rationale

Wide Distribution Network and diversification of products & services PSB has a pan
India presence through 926 branches and 63 ATMs as on October 31, 2010. It has a
large presence in northern India with 623 branches, which is believed to be rich in
resources and offer great opportunity for resource mobilization. Out of these 920
branches it has 49 specialised branches including specialised agriculture branches,
personal banking branches and MSME branches. PSB plans to expand its branch
network which would result in increasing the customer base, CASA ratio and business.
It intends to focus on the technology including the rollout of the core banking system
and the launch of customer-centric and multi-channel solutions like internet banking,
telephone banking and mobile banking, to support its network of branches. Thus, PSB
within the periphery of banking business is venturing and offering newer products and
services which would augment growth and aid in client acquisition.

Strong asset quality & financial growth PSB has been able to increase its business
operations significantly, while improving its asset quality. In fiscal 2005, PSB had net
NPA ratio of 8.11% (highest amongst the public sector banks) has been reduced to
0.36% in FY10 (group average of the public

25
sector banks at 0.91%). Also the bank is likely to maintain NPA ratios around this
level. The bank has registered a CAGR of 21.1% in net total income, 35.6% in
operating income and 15.1% in net profit over the period 2006-2010. During the last
five fiscals, it has been able to achieve a CAGR of 36.24% in its net advances in spite of
a reduction in net NPA ratio. Also, it has registered strong RoA for fiscal 2010 at
1.06% and NIMs for fiscal 2010 was at 2.67%.

Comfortable capital adequacy ratio , The banks capital adequacy ratio (CAR) as on
September 2010 stood at 13.04% with the tierI capital at 7.98% and the tier-II capital at
5.06%. The bank plans to meet its future capital adequacy requirement through this
issue. During FY08 the equity capital of the bank was restructured by converting an
amount of INR 1.6 Bn into Innovative Perpetual Debt Instrument (IPDI), INR 2 Bn into
Perpetual Non-cumulative Preference Shares (PNCPS) and INR 2 Bn into Perpetual
Cumulative Preference Shares (PCPS), while retaining INR 1.83 Bn as the equity capital.
The primary purpose of capital restructuring was to enable the bank to raise fresh equity
capital from the market.

Accelerate growth in loans and advances to the retail and corporate sectors Advances
growth has been robust over the years & in FY10 PSB recorded 32.6% to INR 326.39
Bn growth YoY. PSB proposes to strengthen its relationship with large corporate and
public sector organizations by increasing funding to infrastructure sector. In order to
expand corporate banking services, it has recently forayed into syndication of loans. PSB
aims at expanding its credit portfolio by growing its corporate & retail loan segment.
PSB also plans to open specialised industrial finance branches to focus on project
appraisal, to maintain and enhance its franchise in the MSME.Continue to develop our
technological capabilities PSB will continue developing its technological capabilities to
enhance its value offering to customers while optimizing its costs. From a total of 17
branches on the CBS platform, PSB seeks to bring around 500 branches on the CBS
platform by Nov 2012. This would enable PSB to have incremental CASA growth in
future. The key objectives behind it is to build a cost-efficient distribution network to
accelerate the development of its retail and rural franchise, enhancing cross selling &
client segmenting capability by using analytical tools & efficient data storage & retrieval
systems, improving credit risk and market risk Management.

26
 CORPORATE GOVERNANCE:-

Punjab & sind Bank's Corporate Governance Policy has been adopted keeping in mind
the importance of attaining fairness for all stakeholders, as well as achieving
organizational efficiency. Punjab & Sind Bank recognizes the importance of good
corporate governance, which is generally accepted as a key factor in attaining fairness for
all stakeholders and achieving organizational efficiency. This Corporate Governance
Policy, therefore, is established to provide a direction and framework for managing and
monitoring the bank in accordance with the principles of good corporate governance.

WORK PROCESS IN PUNJAB & SIND BANK

In Punjab & Sind Bank, work process for corporate salary accounts is divided in

4 stages.

MAPPING

PROFILING

DOCUMENTATION

CLOSING

27
 In the first stage of this process which is MAPPING, we have to do MAPPING and

in this we have to collect data of our prospect customers. It was like cold calling. We

went to various area of the city to find our target company. In this process we have

to collect following information about the company or prospect customer.

Name of the company.

Complete address of the company.

Name of the concerned person who looks after payroll of the

company.

His designation.

His contact number or visiting card.

Existing bank with which they are banking.

Total number of employees on the payroll of the company.

After this we have to report to the corporate sales manager to show him data and

after that we have to make a call to the concerned person to take an appointment.

And once appointment is fixed, we have to go with senior sales officer or with

corporate sales manager on the call.

Second step in this was profiling. In this we have to get some of information from

the corporate at the time of meeting. And according to

28
 that we can offer him the best deal because before each and every offer, criteria has

been made by the bank and in which criteria that company is coming we have to

decide and according to that we use to offer them best deal. In this we used to ask

questions which are as follows

Number of employees on the payroll of the company.

Last month net salary disbursement of the company (to decide criteria in

which they are coming)

Nature of business.

Name and numType of the company, where it is public limited, private

limited, solo ownership etc

Name of the concerned person, who looks after payroll of the

company.

Number of branches.

Third process starts when deal has been closed or finalized. Than we could start

documentation process as per the banking requirements. Which included

following documents of the company

Memorandum of association.

Partnership deed.

Directors photo ID proof. (PAN card/ passport/ driving license/ voter ID)

29
 Employees detail.

Current account detail.

And in the fourth stage which is closing, we have to start opening salary

accounts of each and every employees to disburse salary in their accounts.

For that matter sales officers use to go to the employees of the company and

get form fill and collect required documentsof the directors.

BUISNESS CYCLE

A strategy can be described as a collection of activities that will enable the

organization to reach its objective. A cost reduction strategy may involve staff

redundancies and the development of more efficient supply chains as well.

Marketing strategy is a cyclical process consisting of four main phases.

30
 Research

Measurem
ent Planning

Implementatio
n

31
Research

Successful business relies on informed decision making. Managers with access to

information on the market, competitors and their own business will

be better placed to set goals and devise strategies, than those who are less well

informed.

Planning

After analyzing the business intelligence to identify the most important internal and

external factors affecting the organization, managers can begin to formulate appropriate

strategies for meeting their goals. Throughout the planning process, managers should

constantly consult with other heads of department and with employees further down the

line who will be responsible for implementing the strategy activities.

Implementation

Strategy implementation involves the delivery of a number of inter-related activities to

an agreed standard and schedule. This is often referred to as project management.

Implementation is the most important of all the processes as it ensures that the

planning is not just in papers and has been used to obtain results.

Measurement

Once implementation of the strategy is complete, it is important to assess the degree to

which it enabled the objective to be achieved. Without proper measurement it will be

difficult to accurately understand what worked and

what improvements might be needed for future strategies. After

measurement, if it is found that the planning has not been effective to

achieve the desired goal the research process is carried out again to find out

32
anomalies of the planning and forming new strategies. This completes the

strategy cycle.

33
 FINANCE DEPARTMENT

Introduction:

Finance department plays a major role in the working of any organization as

for all-purpose, money is required, which is arranged, procured and
disbursed as the finance department. They only make budget go for cost
control and maintain to optimum balance of cash for smooth operations. As
such the finance department in Punjab & Sind Bank is looking after only
some of the aspects insurance aspects of the unit.

Hierarchy of the finance department:

It is a line organization having a full-fledged department to manage the
finance budget, costing and other matter of this department. The Punjab &
Sind Bank has to manage two departments mainly i.e. works and Finance

Manager Finance

Assistant Manager

Senior Officer Senior Officer Senior Officer

(Cost) (Assets) (Cash)

Clerks

Fixed Asset Cost Employee salary Transportation

34
FINANCE DEPARTMENT

Account Section

The accounts section deals all the general accounting, employee payroll, billing

and matter related to taxation etc. The department activities are coordinate by

Assistant Manager-Accounts that report to Manager-Finance

Cost Section

The Cost Section does Accounting relating to preparation of Monthly Cost Data and Bill

Provisioning.Assistant Manager-Cost coordinates the departmental activities and reports to

Manager-Finance.

ACCOUNTS SECTION

Accounting Procedure
The accounting procedure of Punjab & Sind Bank is not a new
complicated one. They follow a standardized rule of making entries in
there declared free. books of accounts or posting or making their trial
balance, Punjab & Sind Bank make its Trial Balance in the monthly basis

35
 transaction and rent it to the Head Office. Head Office prepares final
accounts for all units not individual unit.

Punjab & Sind Bank follows the following

procedure

Step1: The quotations are called for acquiring or procuring the particular
assets, liabilities etc.

Step2: After then estimate decide/fixed through CESS.

(CAPITAL EXPENDITURE SECTION SCHEME)
Step3: After then allocation of budget for different requirements.

Step4: Then order replace, R.M/Assets be procured, inspected by the

concerned department.

Step5: Then GR No. After quality check etc. is sent to finance department
where the cashier makes the payment.

Step6: The ledger department debits this in the books.

Step7: Finally at the wish of finance department assets is charged.

36
 FINANCE MANAGER
Finance Manager is totally responsible for all
activities to payment/receipts of cash and fund Management of the unit. His
decision on payment will be final as personal manual, account manual
directives laid by the organization. Under Finance Manager the financial
activities is disciplined in the manner as per smooth functionary of all
activities of payment such as salary and wages, payment to sundry creditors
which include all pretty payments to local contractors, reputations, workers
and officers of all grade in working unit.
In detail it can be said that under finance manager their will be
payment of salary and wages, allocation of various financial activities such
as disbursement of cash by cashier, the payment like contractors bill, local
bill, raw material bill, stores and spares payment of raw material and
packing material, traveling bills, outstation allowances. All the various
miscellaneous payments sanctioned are being made.
The financial activities are on summation of inputs information system
department (I.S.D.) provides various financial, copying outputs available on
daily report, weakly report and monthly reports. It also provides information
like cash payment, voucher, cash receipt voucher, and various types of bills
also. Various type inventory output summary of transaction bills of output
(local, contractor, raw material etc.) various type of finance ledgers of the
month and monthly trial balance.
Account staff to routs all payment in account department:-
To section the payment to staff, officer, mgt & to verify correction

37
FINANCIAL MANAGEMENT PREPARATION
Payroll of employee.
Accounting of sales.
Financial accounts.
Supply bills.
Material Accounting.
COST SECTION
The Cost Section is a branch of accounting and has been developed due to
limitations of financial accounting. Financial accounting is primarily
concerned with record keeping directed towards the preparation of profit and
loss account and balance sheet. It provides information regarding the profit
and loss that the business enterprise is making and also its financial position
on a particular date. The information concerning the business enterprise is
helpful to the management to control in a general way the major function of
business viz., finance, administration, production and distribution but details
regarding operating efficiency of these divisions are lacking. Infect, the
development in the field of cost accounting is so quick and fields covered by
it are expanding so much in magnitude that it becomes difficult for the
management to lay down management policies, to guide the management
decisions or evaluate
operating management performance with the information provided by
financial accounting.

38
SUMMARY OF

WORKING

CAPITAL
ANALYSIS

39
WORKING CAPITAL ANALYSIS CAN BE
STUDIED UNDER THE FOLLOWING
THREE HEADS:-

RATIO ANALYSIS :- Under the ratio analysis It is urgent to find

out short term ratios that will effect working capital of every company

FUND FLOW ANALYSIS :- Under the fund flow analysis it is

urgent to find out changing in working capital and its operation and sources
and application of funds.

WORKING CAPITAL BUDGET :- It helps in forecasting the

short term requirement for every company.

WORKING CAPITAL

INTRODUCTION:-
Working capital refers to that part of firms
capital which is required for financing short term or current Assets such as
cash, debtors, marketable security and inventories. Thus funds invested in
current assets keep revolving fast and are being constantly converted in cash
and this cash flows out again in exchange for other current assets. It is also
known as revolving or circulating capital or short term capital.
Working capital may be regarded as the life blood of business. Working
capital is of major importance to internal and external analysis because of its

40
close relationship with the current day to day operations of a business. Every
business needs funds for two purposes.
* Long term funds are required to create production facilities through
purchase of fixed assets
such as plants, machineries, lands, buildings & etc
* Short term funds are required for the purchase of raw materials, payment
of wages, and other day-to-day expenses.

41
It is other wise known as revolving or circulating capit.l
It is nothing but the difference between current assets and
current liabilities. i.e.
Working Capital = Current Asset Current Liability.
Businesses use capital for construction, renovation, furniture, software,
equipment, or machinery. It is also commonly used to purchase inventory, or
to make payroll. Capital is also used often by businesses to put a down
payment down on a piece of commercial real estate. Working capital is
essential for any business to succeed. It is becoming increasingly important
to have access to more working capital when we need it.

Concept of working capital

Gross Working Capital = Total of Current Asset

Net Working Capital = Excess of Current Asset over

Current Liability

42
 Current Assets Current Liabilities

Cash in hand / at bank Bills payable

Bills Receivable Sundry Creditors
Sundry Debtors Outstanding Expenses
Short term loans Accured expenses
Investors/ stock Bank Over draft
Temporary investment
Prepaid expenses
Accrued incomes

Working capital in terms of five components:

1. Cash and equivalents: - This most liquid form of working

capital requires constant supervision. A good cash budgeting and forecasting
system provides answers to key questions such as: Is the cash level adequate to
meet current expenses as they come due? What is the timing relationship
between cash inflow and outflow? When will peak cash needs occur? When
and how much bank borrowing will be needed to meet any cash shortfalls?
When will repayment be expected and will the cash flow cover it?

2. Accounts receivable: - Many businesses extend credit

their customers. If you do, is the amount of accounts receivable reasonable
relative to sales? How rapidly are receivables being collected? Which
customers are slow to pay and what should be done about them?

43
3. Inventory: - Inventory is often as much as 50 percent of a firm's
current assets, so naturally it requires continual scrutiny. Is the inventory
level reasonable compared with sales and the nature of your business?
What's the rate of inventory turnover compared with other companies in
your type of business?
4. Accounts payable:- Financing by suppliers is common in
small business; it is one of the major sources of funds for entrepreneurs. Is
the amount of money owed suppliers reasonable relative to what you
purchase? What is your firm's payment policy doing to enhance or detract
from your credit rating?
5. Accrued expenses and taxes payable: -
These are obligations of your company at any given time and represent a
future outflow of cash.

Two different concepts of working capital

are:-

Balance sheet or Traditional concept

Operating cycle concept.

44
 Balance sheet or Traditional concept: - It shows
the position of the firm at certain point of time. It is calculated in the basis of
balance sheet prepared at a specific date. In this method there are two type of
working capital:-

Gross working capital

Net working capital

Gross working capital:- It refers to the firms investment in

current assets. The sum of the current assets is the working capital of the
business. The sum of the current assets is a quantitative aspect of working
capital. Which emphasizes more on quantity than its quality, but it fails to
reveal the true financial position of the firm because every increase in
current liabilities will decrease the gross working capital.

Net working capital:- It is the difference between current assets

and current liabilities or the excess of total current assets over total current
liabilities.

45
Types of Working Capital:-

TYPES OF
WORKING
CAPITAL

ON THE
BASIS OF ON THE
B/S BASIS OF
CONCEPT TIME

GROSS NET REGULAR TEMPORARY

WORKING WORKING WORKING WORKING
CAPITAL CAPITAL CAPITAL CAPITAL

SEASONAL
WORKING
CAPITAL

SPECFIC
WORKING
CAPITAL

46
SIGNIFICANCE OF WORKING CAPITAL: -

PAYMENT
TO
SUPPLIERS

EASY LOAN
FROM
DIVIDEND
BANKS
DISTRIBUTION

SIGNIFICANCE
OF
WORKING
CAPITAL

INCREASE INCREASE
EFFECIENCY DEBT
CAPACITY

INCREASE
IN
FIX ASSETS

47
 Factors requiring consideration while
estimating working capital
The average credit period expected to be allowed by suppliers.

Total costs incurred on material, wages.

The length of time for which raw material are to remain in stores
before they are issued for production.

The length of the production cycle (or) work in process.

The length of sales cycle during which finished goods are to be

kept waiting for sales.

The average period of credit allowed to customers.

The amount of cash required to make advance payment.

Importance of Working Capital Ratios

Ratio analysis can be used by financial executives to check upon the

efficiency with which workingcapital is being used in the enterprise. The
following are the important ratios to measure the efficiency of working
capital. The following, easily calculated, ratios are important measures of
working capital utilization.

48
Ratios Formulae Result Interpretation
Stock turnover Average Stock * = x days On average, you turn over the
365/ value of your entire stock every x
(in days) Cost of Goods days. You may need to break this
down into product groups for
Sold effective stock management.
Obsolete stock, slow moving lines
will extend overall stock turnover
days. Faster production, fewer
product lines, just in time ordering
will reduce average days.
Receivables Debtors * 365/ = x days It takes you on average x days to
Ratio Sales collect monies due to you. If your
(in days) official credit terms are 45 day
and it takes you 65 days. One or
more large or slow debts can drag
out the average days. Effective
debtor management will minimize
the days.
Payables Ratio Creditors * 365/ = x days On average, you pay your
(in days) Cost of Sales (or suppliers every x days. If you
Purchases) negotiate better credit terms this
will increase. If you pay earlier,
say, to get a discount this will
decline. If you simply defer
paying your suppliers (without
agreement) this will also increase
- but your reputation, the quality
of service and any flexibility
provided by your suppliers may
suffer.
Current Ratio Total Current = x times Current Assets are assets that you
Assets - can readily turn in to cash or will
Inventory)/ do so within 12 months in the
Total Current course of business. Current

49
 Liabilities Liabilities are amount you are due
to pay within the coming 12
months. For example, 1.5 times
means that you should be able to
lay your hands on $1.50 for every
$1.00 you owe. Less than 1 times
e.g. 0.75 means that you could
have liquidity problems and be
under pressure to generate
sufficient cash to meet oncoming
demands.
Quick Ratio (Total Current = x times Similar to the Current Ratio but
Assets - takes account of the fact that it
Inventory)/ may take time to convert
Total Current inventory into cash.
Liabilities
Working (Inventory + As % A high percentage means that
Capital Ratio Receivables - Sales working capital needs are
Payables)/ high relative to your sales.
Sales

50
Statement showing change in working
capital for Punjab & Sind Bank

(Rs .AS ON in crore)

Particulars 2010 2009 Increase ( + ) Decrease
(- )
Current Assets
Investments 12627429 84726329 41547961
0
Cash & Bank 19576665 19550906 25759
Loan & advances 24615348 183433034 62720448
2
Total(A) 39200443 287710269
7

Current
liabilities
Reserves & 17572855 13502573 4070282
surplus
Provisions 18363147 10477571 7885576
Total (B) 35936002 23980144

(A-B) 35606843 263730125

5
in working 92338310 92338310
capital
TOTAL 35606843 356068435 104294168 104294168
5

51
 Sources of Additional Working Capital

Sources of additional working capital include the

following:

Existing cash reserves

Profits (when you secure it as cash !)
Payables (credit from suppliers)
New equity or loans from shareholders
Bank overdrafts or lines of credit
Long-term loans

ANALYSIS OF VARIOUS COMPONENTS OF

WORKING CAPITAL

INVENTORY ANALYSIS

Inventory is total amount of goods and materials content in a store of factory

at any given time.
Inventory means stock of three things :-
1. Raw materials
2. Semi finished goods.
3. Finished goods.

52
Position of Income in Punjab & Sind Bank
Limited
(Rs..)
Particulars 31.03.10 31.03.09
Commission,Exchange & 588357 519047
Brokerage
Profit on sale of 1189038 175129
investments
Profit on sale of 716 1402
land,buildings & other
assets
Profit on exchange 399142 300117
transaction
TOTAL 2177253 995695

53
SUNDRY DEBTORS ANALYSIS
Debtors or an account receivable is an important component of working
capital and fall under current assets. Debtors will arise only when credit
sales are made.

Position of Sundry Debtors in Pu njab & Sind

Bank
Particulars 2010 2009
Secured,considered 1370557 6624870
Goods
Unsecured,considere 7350000 3800000
d Goods
8720557 10424870
INTERPRETATION

In the table we see that there is continuous rise in the debtors of Punjab &
Sind Bank in the successive years. A simple logic is that debtors increase
only when sales increase and if sales increases it is good sign for growth. We
can see 21% and 17% growth in 08-09 and 09-10 respectively from previous
years. We can say that it is a good sign as well as negative also. Company
policy of debtors is very good but a risk of bad debts is always present in
high debtors. when sales is increasing with a great speed the profit also
increases. If company decreases the Debtors they can use the money in many
investment plans.

54
CASH AND BANK BALANCE ANALYSIS
Cash is called the most liquid asset and vital current assets, it is an important
component of working capital. In a narrow sense, cash includes notes, bank
draft, cheque etc while in a broader sense it includes near cash assets such as
marketable securities and time deposits with bank.

Position of Cash and Bank Balance in

Punjab & Sind Bank
( Rs. AS on)

Particulars 2010 2009

Cash Balance in 939122 1029890
Hand
Bank Balance-
With Scheduled 18631543 18521016
Banks
19570665 19550906

INTERPRETATION

If we analyze the above table we find that it follows a decreasing trend. In

the year 2010 it had maintained a huge amount of cash and bank balance

55
which has fallen hugely in the year 2009 but there is slight fall between the
year 2009 and 2010. Although companys cash is decreasing but this is very
good sign for company because they are not holding the cash in hand
but using the cash for better projects. The analysis shows that the fix
deposits of company are rapidly fallen in last three years as 72% and 74% in
08-09 and 09-10 respectively from previous year. Company is utilizing the
fixed cash for exploding the projects that is good for growth,

LOANS AND ADVANCES ANALYSIS

Loans and Advances here refers to any to amount given to different parties,
company, employees for a specific period of time and in return they will be
liable to make timely repayment of that amount in addition to interest on that
loan.

56
Position of Other Loans & Advances
in Punjab & Sind Bank
(Rs.AS on)
Particulars 2010 2009
Bills Purchased & 8113510 6491446
discounted
Cash 73199602 60533847
creditors,overdrafts
& loans repayable
on demand
Term loans 164840370 116407741
Total 246153482 183433034

INTERPRETATION

If we analyze the table we can see that it follows an increasing trend which
is a good sign for the company. We can see that from the year 2009 to 2010
it increased more than double.We can see that the increase of 145% and 55%
in 08-09 and 09-10 respectively from previous year. The increasing pattern
shows that company is giving advances for the expansion of plants and
machinery which is good sign for better production of cement and other
goods. Although companys cash is blocked but this is good that company is
doing modernization of plants In time to compete with other competitors in
market.

57
CURRENT LIABILITIES ANALYSIS

Current liabilities are any liabilities that are incurred by the firm on a short term
basis or current liabilities that has to be paid by the firm with in one year.

osition of Other Current Liabilities in Punjab &

Sind Bank

Year 2010 2009

Current Liabilities
Inter-office 680981 33605
adjustment
Interest accured 1370557 624870
Deffered tax 582611 28100
liability
Total 2634149 686575

INTERPRETATION

If we analyze the above table then we can see that it follow an uneven trend.
The important component of current liabilities is sundry creditors and other
liabilities. In 08-09 it decreased by 7% and in 09-10 it increased by 25%. In
08-09 it was increased because of growth in other liabilities by 32%.This is
liability for company so this should be less. when company have minimum
liabilities it creates a better goodwill in market. High current liabilities
indicate that company is using credit facilities by creditors.

58
PROVISIONS ANALYSIS

Position of Other Provisions in Punjab & sind Bank

(Rs. in crore)
Year 2009-2010 2008-2009
Provision for Non 64.46 69.97
Performing Advances
Provision for Non -1.63 -4.48
Performing
Investments
Provision for -0.16 3.30
Depreciation in the
value of Investments
Provision for 11.95 30.87
Standard Asset
Provision for Income 92.56 121.10
Tax
Provision for Deferred 55.45 -0.31
Tax
Provision for Fringe 1.53 1.24
Benefit Tax
MAT Credit 58.03 -58.03
Entitlement
Others 8.34 -2.76
Total 290.53 160.30

INTERPRETATION

From the above table we can see that provision shows an increasing trend
and the huge amount is being kept in these provisions. Though the profits of

59
the company are increased income tax is also increased which is good that
company is creating goodwill in market by paying income tax in time.
The income tax is increased by 588% and 101% in 08-09 and 09-10
respectively from previous year. Although company is paying more income
tax but also they are earning more. Other provisions are also for the benefit
of employees and public. This is good sign for Company growth.

Working Capital Ratios and its Interpretation

A Ratio is a simple arithmetical expression of the relationship of one number

to another. In simple language ratio is one number expressed in terms of
another and can be worked out by dividing one number into the others. A
Ratio is known as a symptom like blood pressure, the pulse rate or the
temperature of an individual.
Example=current assets/current liabilities
.

60
RATIO ANALYSIS
A Ratio analyses is one of the most powerful tools of financial analyses. it is
used as device to analyze and interpret the financial help of enterprise. Just like
a doctor examines his patient by recording his body temperature, blood
pressure etc before his conclusion regarding the illness and before giving
him treatment. With the help of ratio analyses one can measure the financial
condition of the firm and point out whether the condition is strong good or
poor. one can arrive at a decision of how the performance of a firm is
deteriorating and can find out short term financial position or liquidity
position and suggest what a company must do for improving its working
capital.

Business Ratios

Items 2009-2010 2008-2009

(i) Interest Income as a percentage to 9.35% 8.67%
average working funds
(ii) Non-InterestIncomeasa 1.17% 1.24%
percentage to average working
funds
(iii) Operating Profit as a percentage to 2.09% 2.12%
average working funds
(iv) Return on Assets 1.26% 1.49%
(v) Business [Deposits plus Advances] 655.58% 466.87%
per employee (Rs. in lacs)
(vi) Profit per employee (Rs. in lacs) 5.03% 4.24%

61
Position of RECEIVABLE RATIO in Punjab &
Sind Bank

FORMULA
Receivable Ratio(In days) = DEBTORS/Sales *365

Year 2010 2009

Ratios 5.72 5.53

INTERPRETATION

Generally a low debtors turnover ratio implies that it considered congenial

for the business as it implies better cash flow. The ratio indicates the time at
which the debts are collected on an verage during the year. Needless to say
that a high Debtors Turnover Ratio implies a shorter collection period which
indicates prompt payment made by the customer,if we analyze the three year
data we can say that it holds a good position while receiving its money from
its debtors. The ratios are in an increasing trend, which implies that recovery
position good and company should maintain these positions.

62
Position of PAYABLE RATIO in Punjab &
Sind Bank

Formula
Payable Ratio = Creditors
Cost of Sales

Year 2010 2009

Payable ratios( in 9.35 8.67
days)

INTERPRETATION
Actually this ratio reveals the ability of the firm to avail the credit facility from
the suppliers throughout the year Generally creditors turnover ratio implies
favorable since the firm enjoys lengthy credit period Now if we analyze the
three years data we find that in the year 2010 ratio was very high which
means that its position of creditors that year was not good, but in the next two
years it is seen that it has followed a decreasing trend which is very good sign
for the company. So we can say it enjoys a very good credit facility from the
from the suppliers.

63
Position of CURRENT RATIO in Punjab & Sind
Bank

Formula

Current Ratio = Total Current Assets

Total Current Liabilities

Year 2010 2009

Current Ratio 10.9 11.9

INTERPRETATION
This ratio reflects the financial stability of the enterprise. The standard of the
normal ratio is 2:1 Now if we analyze the three years data it can be predicted
that it holds a stable position all through out period but it is seen that it holds
a low position than the standard one and the company is required to improve
its position.

64
 Position of QUICK RATIO in Punjab & Sind Bank

FORMULA

Quick Ratio = Total Current assets - Inventories

Total current Liabilities

Year 2010 2009

Quick ratio 8.64 9.63

INTERPRETATION
INTERPRETATION
It is the ratio between quick liquid assets and quick liabilities. The normal
value for such ratio is taken to be 1:1. It is used as an assessment tool for
testing the liquidity position of the firm. It indicates the relationship between
strictly liquid assets whose realizable value is almost certain on one hand
and strictly liquid liabilities on the other hand. Liquid assets comprise all
current assets minus stock. By analyzing the three years data it can be said
that its position was weak in the year 2008 but it improved significantly in
the next two years and was stable during that year.

65
 FUND FLOW ANALYSIS

A fund flow analysis is a technical device used to study the sources from
which additional funds were derived and the use to which these sources were
put. It is an effective management tool to study changes in the working
capital of business enterprises between beginning and ending financial
statements dates. The fund flow analysis consists of:
Preparing schedule of change in working capital.

State of sources and application of funds.

66
 FLOW OF FUNDS ?

CURRENT ASSETS NO CURRENT LIABILITIES

YES
YES
YES YES

NON-CURRENT ASSETS NON-CURRENT LIABILITIES

NO

STATEMENT OR SCHEDULE OF CHANGE

IN WORKING CAPITAL:-
Working capital means the excess of current
assets over current liabilities. There are following four rules to kept in
mind while preparing schedule of change in working capital given as
under :-
An increase in current assets increases working capital.

A decrease in current assets decreases working capital.

An increase in current liabilities decreases working capital.

A decrease in current liabilities increases working capital.

67
 Cash Flow Statement for the year
ended 31st March, 2009

A. CASH FLOW FROM 2009-2010 2008-2009

OPERATING ACTIVITIES
Net Profit/ (Loss) as per Profit & 4371781 382358`
Loss Account

Adjustments for:
Provisions & Contingencies 2905356 1603007
Depreciation (Net) 106315 71948
Profit on sale of assets -716 -1402
Interest on subordinated debts 531111 257485
Staff Welfare Fund -60000 -60000
Operating Profit before 7853847 5694619
working capital changes
Adjustments for:
Increase / (Decrease) in Deposits 98442463 56126524
Increase / (Decrease) in -4652416 27716420
Borrowings
Increase / (Decrease) in Other 2543571 -28629
Liabilities

(Increase) / Decrease in -41520092 -17824399

Investments
(Increase) / Decrease in -63375041 -66778284
Advances
(Increase) / Decrease in Other -3090613 -558997

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Assets
Cash Flow from Operating -3798281 3347254
Activities (A)

B. CASH FLOW FROM

INVESTING ACTIVITIES
Increase in Fixed Assets -215810 -118811
Profit on sale of assets 716 1402
Cash Flow from Investing -215094 -117409
Activities (B)

C. CASH FLOW FROM

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FINANCING ACTIVITIES
Issue of Subordinated Bonds 4000000 1000000
Redemption of Subordinated -450000 -1050000
Bonds
Interest on Subordinated Bonds -531111 -257485
Cash Flow from Financing 3018889 -307485
Activities (C )

Cash from Operating Activities -3798281 3347254

Cash from Investing Activities -215094 -117409

Cash from Financing Activities 3018889 -307485

Increase in Cash & Cash -994486 2922360
Equivalens

Cash and Cash equivalents at the 293398873 26476513

beginning of the year
Cash and Cash equivalents at the 28404387 29398873
end of the year

INTERPRETATION:-

Statement of changes in working capital is prepared to show the changes in

the working capital between the two balance sheet dates. The difference is
recorded for each individual current assets & current liabilities. If we talk
about current assets like cash & bank balances, sundry debtors, inventory
and other current assets have left positive effect on working capital except
only prepaid expenses. On the other hand all current liabilities have shown
increase in balances with comparing from the previous balances.

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Asset Quality
Non-Performing Assets

(Rs. In crores)
ITEMS 2009-2010 2008-2009
(i) Net NPAs to Net Advances 0.32 0.37
(ii) Movement of Gross NPA
(a) Opening Balance 135.53 290.84
(b) Additions during the year 141.87 105.84
(c) Reductions during the year 116.36 261.15
(d) Closing balance 161.04 135.53

(iii) Movement of Net

NPAs
(a) Opening Balance 66.97 77.04
(b) Additions during the year 77.35 64.66
(c) Reductions during the year 66.29 74.73
(d) Closing balance 78.03 66.97

(iv) Movement of
provisions for NPAs
(a) Opening Balance 65.71 210.55
(b) b) Add: provisions made 85.72 77.71
during the year
( c) Less: write off, write back 72.48 222.55
of excess provisions
(d) Closing balance 78.95 65.71

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Investments
Rupees in crore)
Items 2008-2009 2007-2008
Value of Investments
(i) Gross Value of Investments
(a) In India 12656.43 8524.92
(b) Outside India Nil Nil
(ii) Provisions for Depreciation
(a) In India 29.00 51.29
(b) Outside India Nil Nil
(iii) Net Value of Investments
(a) In India 12627.43 8473.63
(b) Outside India Nil Nil

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 OBJECTIVES OF THE STUDY
SCOPE AND OBJECTIVE

Every project has a scope which defines the areas of research

and the parameters that need to be studied. The scope also tells us the

purpose of the project. Branding is an important issue in the strategy

formation process. Poor firms ignore their competitors; average firms copy

their competitors; winning firms lead their competitors-Philip Kotler

The above quote from the marketing guru aptly sums up the

importance of the study of competition in the present world. The various

steps involved in it are mentioned below.

1. Identifying competitors.

2. Analyzing competitors strategies, objectives, strength and weakness.

3. Designing the competitive intelligence system

Collecting the data

Evaluating and analyzing the data

Disseminating information and responding.

Designing competitive strategies interpreting with data.

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OBJECTIVE

The objective of the project is to carry out a market research for

the Punjab & Sind Bank Ltd. to evaluate the market for working capital

management and to study the various parameters.

The main objectives are discussed below.

1) To analyze the feedback given by corporate.

2) To analyze the parameters considered for the sale of these product.

3) To get a better understanding of the customers wants, needs and desires.

4) To carry out a benefit deficiency analysis (BDA) to find out what

customers want from Punjab & Sind Bank and what they get from PSB.

5) To understand the various stages that goes into the making of a

loyal customer.

6) To do a comb analysis to find the opinion of customers about

different products of competitor.

7) Finally to formulate a strategy for the Punjab & Sind Bank based on the

above findings.

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Management objective:

1) To identify useful insights for the conduct of similar market research at

other Branches of the company

2) To generate initial response of corporate about the products to improve

the product parameters studied.

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 RESEARCH METHODOLOGY
Research is the process of Systematic and in depth study or research for any
particular topic, subject or area of investigation backed by collection,
compilation, Presentation, and interpretation of relevant details or
data. It is a careful research or enquiry into any Subject, which is an
endeavor to discover or find out valuable fact, which would be useful
for further application or utilization .Research is carried out by
different methodologies, which have their own pros and cons.
Research methodology is a way to solve research by studying and
solving a research problem along with the logic behind it. Thus when
we talk of research methodology we not only talk of the research
method but also consider the logic behind the method used in context
of research study and explain why we are using a particular method or
techniques so that research result are capable of being evaluated.

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 DATA COLLECTION

The Sources of Data Collection are of two types:-

Primary Data:

Primary data is that which are collected afresh and is supposed to be original
in Character. Primary data is gathered in such a way so that need
of the researcher can be fulfilled .On the basis of primary data researcher
withdraw some important conclusion and gives suggestion according.

Secondary Data:-

Secondary Data is that data, which is, collected Prior to the Present Study
work. Any data that is available prior to the commencement of the research
Project is called Secondary data and therefore Secondary is also called as
Historical data.
I have collected my secondary data from various broachers of the
banks, Printed Annual Report books and website like psbindia.com,
google.com etc.

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 RESEARCH METHODOLOGY AND INFORMATION

ANALYSIS:-

Marketing research is the systematic and objective identification, collection,

analysis dissemination and use of information for the purpose of improving

decision making related to the identification and solution of problems and

opportunities in marketing. Each phase of this process is important. We

define or identify the marketing research problem or opportunity and then

determine what information is needed to investigate it. Because every

marketing opportunity translates into a research problem to be investigated

in terms of problem and opportunity. Next, the various sources of

information are identified and a range of data collection methods, varying in

report that allows the information to be used for the purpose of management

decision making. The main issue being discussed here is the emerging trends

of corporate salary account business. For this purpose data was collected

using both the primary and secondary sources. The secondary data was

collected from the various product catalogues and internet while the primary

data was collected from the field from builders, architects, dealers and

customers. Information was collected by using a carefully prepared

questionnaire which was designed keeping in mind all the aspects of the

issue. The questionnaire was used to find out the following information:

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 To get personal as well as the companys detail.

To get information about the employees like how many employees

are working on the payroll of the company.

To know that how they are paying salary to there employees.

With which bank they are banking and why?

Are they aware of corporate salary accounts?

What is the level of their satisfaction with the current salary account?

What kind of services they expect from the bank?

How far their expectations are met?

The degree of loyalty of the customer towards their bank.

A separate schedule was designed for the corporate to carry out project

mapping in order to find out the prospect of the salary accounts. The

following information was obtained from them:

Name and number of the directors.

Type of the company, where it is public limited, privet limited, solo

ownership etc.

Name of the concerned person, who looks after payroll of

the company.

The number of branches.

The number of employees on the payroll of the company.

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 The name of current bank with which they are banking.

Reasons for choosing that bank.

Last month net salary disbursement to find out average salary

per employee.

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Conducting an experiment or organizing a survey and doing research has

become the part of life in modern times. Research methodology refers to the

various sequential steps to be adopted by a researcher in studying a problem

with certain object/objects in view.

The research was carried out in various phases. The first few phases were

used to collect information. Based on this information, a hypothesis was

assumed that with the use of appropriate strategy in customer service and

use of proper elements of marketing mix the sales of salary accounts can be

increased to garner a bigger pie of the market share. The final few phases

were used to analyze the information so collected from various quarters.

The research process carried out in various phases is discussed below:-

Phase I. Understanding the company and its products. The various

parameters considered in the sale of these salary accounts. Getting

knowledge about the competitors in the area and knowing about the

various promotion and technique of selling.

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Phase II. This phase include visits to various companies to collect relevant

data. The primary data was collected through Questionnaire and interviews

with corporate. This data was further extended through dialogues with

company officials. The secondary data was collected through websites,

company files and brochures and other documents of past and present.

Phase III. In this phase the data so collected is analyzed using various

statistical and market research tools to draw inference for the purpose of

decision making. The analysis consists of product mapping, project

mapping, competitor analysis, new opportunities, developing a brand equity

etc.

Phase IV. In this phase actual reporting of the findings and analysis will

be prepared and submitted the same to the company.

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Sample Size

he customer survey has been done in the Shri Hargobind Pur city. And
sample size for this survey was 75. Data are correlated from different areas
of Janakpuri,Delhi, which are reported by names. .

83
RESULTS, ANALYSIS AND DISCUSSIONS

The basic purpose of the study conducted was to find the emerging trends in
the Corporate salary market and based on those trends a formulating strategy
for the Corporate salary accounts segment. Data was collected based on the
above aim in mind, regarding the purpose of the salary accounts in the
company and the various parameters on the basis of which these salary
accounts are evaluated etc. According to survey, ICICI Bank is largest share
holder in this segment. Whereas ICICI Bank, Citi Bank are the banks which
dont take much time to do it. It is also fact that HDFC Bank are having
strong customer base and tie up with most of the Big companies of India
including TCS, Wipro, TATA Motors, Reliance communications, EXL,
Bharti Airtel, Loreal, Idea cellular and many others.. Customer satisfaction
level is also high as compare to other banks.

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 WHY PEPOLE ARE NOT SATISFIED?

In the following diagram, we can see that 72% people are satisfied by the
existing banks like ICICI, AXIS, PNB and other cooperative banks.
Dissatisfaction is 12% and closing of the account is 3% and other reasons are
10%. In KAM, we found that existing clients did not want to change there bank
because their bank are giving them customized services and changing the bank
takes long time.

85
 LIMITATIONS:-

The project is based on certain factors which also have their own
shortcomings. These factors need to be looked into. Since the report
proposes to study the Financial institution in Punjab & Sind Bank there may
be certain factors which limit the scope of the project. These are discussed
below.
Non serious attitude of the customer.
We cannot force corporate to tell why they are using our competitors
product, there can be various reasons like they have taken loan from
those bank, or near by the company, etc.
This product is valuable and for long term with no charges. So we can
not force each and every company to get it with Punjab & Sind Bank
without knowing about the reputation of the company.

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 This research is only limited to Gurdaspur city and near by area only.

Some time some of the people can give wrong or incomplete information
so that to find out actual result we can not fully believe on the
questionnaire.

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 OBSERVATIONS
RECOMMENDATIONS:-

To work on this project I have find out some of the points where Salary
managers should think. And by which they can increase customer base as
well as they can give better service to the customers. They are as follows.

(1) Local toll free customer care numbers should be there to solve the
queries and problems as well as for new inquiry of the customer for
corporate salary accounts.
(2) Informative advertising should be started because lots of new entrants
and traditional business houses are not aware about corporate salary
accounts so that they can come to know about it.
(3) Necessity to decrease processing time because Punjab & Sind Bank
takes too much time for its process as compared to its competitors and in
present scenario customer wants less processing time and less
documentations to make banking easy. So it is very important to decrease
processing time.
4) Weekly feedback to each and every sales officer and daily dual reporting
system can increase work efficiency. Sometimes sales people dont do work
properly and they dont achieve targets. Some of the sales people do better
job and they deserve appreciation. So for that matter, timely feedback can
play important role to enhance the sales and work efficiency of the sales
team.

(5) There is a need to make documentation process more flexible because

Punjab & Snid Bank wants 4 Photo identities (Driving license, Passport,
Voter ID, PAN card) as a documentary proof of the employee to open his

88
salary account and if person is not carrying any one of the above then it
becomes difficult to open his salary account because bank cannot accept
other documents due to rules even if the company is ready to give in writing
that a particular person is working with us.
(6) Necessary to motivate team to improve there performance. This is
corporate sales, which is tough job. Some time team members become
frustrated due to work pressure and high targets. So to get best from the
team, salary manager should use various managerial techniques to reduce
pressure and to create good work environment.
(7) After tie up with any company, service should be even better so that
customer base can increase and percentage of unsatisfied customer can be
reduced.

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(8) Ability to solve the query and difficulties of the customer is essential
aspect of the business. For this matter sales team should be properly train
and all the formalities they must know, otherwise approach to corporate
many times is not possible and creates bad impression about the bank.
Training programs for sales executive should be conducted every month.

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 BIBLIOGRAPHY

Websites:-

www.psbindia.com

www.google.com
www.moneycontrol.com

www.16anna.com

Annual Reports of Punjab & Sind Bank 2008-2009

Financial Management M.K. Sharma

Asst. Manager Finance S. Tarlok Singh

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