FUNDS FLOW

MANAGEMENT
at
ICICI BANK

Project report submitted to Osmania University

In partial fulfillment for award of degree of
Master of Business Administration

By
B.MANOHAR
H.T.NO.072-07-126

(2007 - 2009)

DEPATRMENT OF BUSINESS ADMINISTRATION

MOTHER THERESA PG COLLEGE

(AFFILIATED TO OSMANIA UNIVERSITY)

CHOWDARY GUDA

(2007-2009)
 DECLARATION
I hereby declare that this project report title ‘‘FUNDS FLOW
STATEMENT ” by me to the Department of Business Management O.U,
Hyderabad, is a bonafide work undertaken by me and it is not submitted to
any other University of Institution for the award of any degree diploma /
certificate or published anytime before.

Date: (B.MANOHAR)

Place
 ACKNOWLEDGEMENT

The presentation of the project report in the way required has been made
possible by the way of various people. The completion of this project reports
brings to the time to express my thanks to all those helped
Along the way.

I convey my sincere thanks to Mrs. J. MADHAVI Head of the

department for his encouragement and my guide to the MOTHER TERESA
P.G College enabled me to complete my project successfully

(B.MANOHAR)
 CONTENTS
Chapter-1

a) Introduction
a) Need of the study
b) Objectives of the study
c) Scope of the study

Chapter-2

Research Methodology

Chapter-3

Review of Literature

a) Funds Management
b) Sources & Applications of Funds
c) Sours & employment of funds
d) Approaches to Bank Funds

Chapter-4

Company Profile

Chapter-5

FUNDS MANAGEMENT OF ICICI BANK

a) Data Analysis & Interpretation
b) Graphical Representation

Chapter-6

Conclusions and Suggestions

Bibliography
 CHAPTER
-I
 INTRODUCTION

The basic financial statements i.e., the balance sheet and profit and
loss account to income statement of business reveal the net effect of the
various transactions on the operational and financial position of the
company. The balance sheet gives a summitry of the assets and liabilities of
an undertaking at a particular point of time. It reveals the financial status of
the company. The assets side of a balance sheet shows the development of
resources of an undertaking while the liabilities side indicates its obligation,
i.e., the manner in which these resources were obtained. The profit and loss
account reflects the results of the business operation for a period of time. It
contains a summary of expenses incurred and the revenue realized in an
accounting period. Both these statements provide the essential basic
information on the financial activities of business, but their usefulness is
limited for analysis and planning purpose.
The balance sheet gives a static view of the resources (liabilities) of
business and used (assets) to which these resources have been put at a
certain point of time. It does not disclose the causes for profit and loss
account, in a general way, indicates the resources provided by undertaking
and which do not operate through profit and loss account. Thus, another
statement has to be prepared to show the change in the assets and liabilities
from the end of one period of time to the end of another period of time. The
state is called a statement of changes in financial position or a funds flow
statement.
 The funds flow statement is a statement, which shows the movement of
funds and is a report of the financial operations of the business undertaking.
It indicates various means by which funds were obtained during a particular
period and the ways in which these funds were employed. In simple words,
it is a statement of sources and application of funds.

MEANING OF THE FINANCIAL STATEMENT

A financial statement is a collection of data organized according to

logical and consistence accounting process .Its purpose is to conveyer an
understanding of some financial aspects of a business firm. Its may show a
position at a moment in time, as in the case of an income statement. Thus the
term “Financial statements” generally refers the statements.

i) The position statement or the balance sheet and

ii) The income statement or profit and loss account

These statements are used to convey to management and other

interests outsiders the profitability and financial position of a firm.
NATURE OF THE FINANCIAL STATEMENTS:

The financial statements are prepared on the basis of recorded facts.

The recorded facts are those, which can be expressed, in monitory terms.

I) RECORDED FACTS: The terms and ‘recorded facts’ refer to the

date taken out from the accounting records. The records are maintained on
the basics of actually cost data.

II) ACCOUNTAING CONVENTIONS: certain accounting

conventions are followed while preparing financial statements. The
conventions of valuing inventory at cost are market price, which ever is
lower, is followed.

III) POSTULATES: The accounting makes certain assumption

assumptions while making accounting records. One of these assumptions is
that the enterprise while making accounting records. One of these
assumptions is that enterprise is treated as a going concern. The other
alternative to this postulate is that the concern is to be liquidated. Another
important assumption is to presume that the value of money will remain the
same in different periods. While remain the remain the same in different
periods. While preparing profit and loss account the revenue is treated in the
year in.
 FINANCIAL STATEMENTS

Position of Income Statement

Financial of changes Statement
statement
statement in owner’s of changes
or profit &
equity or in financial
loss
refined position
Account
earnings

Fund flow Cash flow

statement statement
 1. BALANCE SHEET:

The American institute of certified public contents defines balance

sheet as” A tabular statement of summary of (Debits and Credits) carried
forward after an actual and constructive closing or books of account and
kept accounting to principles of accounting”.

2. INCOME OF STATEMENT (PROFIT AND LOSS

ACCOUNT):

Income statement is prepared to determine the operational position of

the concern. It is a statement of revenue earned and expenses, incurred for
earning that revenue.

3. STATEMENT OF CHANGES IN OWNERS’EQUITY

(RETAINED EARNINGS):

The terms’ owners equity’ refers to the claims of the owners’ of the
business (share holders) against the assets of the firm. It consists of two
elements 1) paid up share capital,2) retained earnings or reserves and
surplus.
4. STATEMENT OF FINANCIAL POSITION:

The basic financial position i.e.., the balance sheet and the profit and
loss account are income statement of a business reveals the net effect of the
various the transactions operational and financial position of the company.

A) FUNDS FLOW STATEMENTS:

The Funds flow statements is designed to analyze the changes in the

financial condition of business two periods. The word “Fund” is used
to denote working capital. This statement will show the sources from
each the funds are received and the uses to which these have been put.

B) CASH FLOW STATEMENTS:

A statement of changes in the financial position of a firm on cash

basis is called cash flow statements. It summarizes the causes of changes in
cash position of a business enterprises between dates of two balance sheets
This statement is very much similar to the statement of changes in working
capital i.e. Funds flow statements.
OBJECTIVES OF THE STUDY

The following are the basic objectives of the present study.

* To identify the application of Funds of the Bank.

* To know how the funds are being utilized.
* To know the liquidity position of the bank.
* To find out the reasons behind the losses/ profits of the Bank
* To suggest a good method of fund allocation

SCOPE OF THE STUDY

The magnitude and scope of a project ids generally defined by its

objectives. Constrains and methodology that has adapted to analysis the
information. However the scope of the present project is at macro level i.e.,
the over all performance of the ICICI Bank.
CHAPTER-II
METHODOLOGY OF THE STUDY

►The period selected for the study is five years from 2002-2003 to 2006-
2007. The methodology adopted for this study includes Primary data and
Secondary Data.
►More than this personal interviews are conducted with the Finance
Manager and other officials to elicit the necessary information. Interviews
are very effective and they have provided needed information particularly to
complete this report discussions are held to verify the data obtained
secondary sources.

PRIMARY DATA

Primary data will be through regular interaction with the officials of

ICICI. Ration relationships will be established basing on the theoretical
literature available from the “Finance” text books and ICICI balance sheets
and Profit and Loss A/c’s.

SECONDARY DATA

* Annual reports of the ICICI 2003- 2004 to 2007-2008

* Financial statements of the ICICI.
* Collectively the relevant information for the standard text books and
Financial magazines
* Required information is collected from lecturers, friends.
CHAPTER-III
 FUNDS MANAGEMENT

Theoretical Concepts:

Management may be defined as optimum utilization of available

resources keeping in view the overall objectives of the firm. Here fund
management is nothing but, utilization of available funds at optimum level
with a view to achieve the overall objectives of the organization. This
includes mobilizing or rising of funds from different available sources and
investing or allocating these funds in an efficient way, which yields the
optimum returns, so that the firm can achieve its overall objectives.

MEANING OF FUNDS
According to the international Accounting standard No. 7, the term Fund
generally refers to cash and cash equivalents, or to working capital, of these,
the last definition of the term (i.e., working capital) is by far the most
common definition of fund.

There are also two concepts of working capital – Gross concept and
Net concept. Gross working capital refers to the firm’s investment in current
assets. Net working capital means, excess of current assets over current
liabilities. It is in the later sense in which the term funds is generally used.
 According to the American Institute of Certified public Accounts
(AICPA),the meaning of two terms current assets and current assets and
current liabilities are as follows;

CURRENT ASSETS:

The term current asset’s includes assets, which acquired with the
intention of converting them into cash during the normal business operations
of the firm.

CURRENT LIABILITIES:

The term current liabilities is used principally to designate such

obligations whose liquidation is reasonably expected to require the use of
assets classified as current asses in the same balance sheet or creating of
other current liabilities or those expected to be satisfied with in a relatively
short period of time usually one year (AICPA).

FUNDS FLOW:

The term flow means change, and therefore, the term Flow of funds
means change in Funds or change in working capital. In other words, any
increase or decrease in working capital means Glow of funds.

In business several transactions take place. Some of these

transactions increase the fund while others decrease the funds. Some may
not take any change in funds position. In case a transaction results in
increase of funds, it will be termed as a source funds In the same way,
decrease of funds would result as an application or use of funds.

THERE WILLBE FLOW OF FUNDS OF A TRANSACTION

INVOLVES:

• Current assets and fixed assets (e.g. Purchase of building for cash).
• Current assets and capital (e.g. Issue of shares for cash )
• Current assets and fixed liabilities (e.g. Redemption of long term
borrowings in cash).
• Current Liabilities and fixed liabilities (e.g. Creditors paid off in
debentures)
• Current Liabilities and fixed liabilities (e.g. Creditors paid off in
debentures)
• Current Liabilities and capital (eg.Creditors paid off in shares).
• Current Liabilities and fixed assets (e.g. Buildings transferred to
creditors in satisfaction of their claims).
SOURCES AND APPLICATION OF FUNDS

SOURCES OF FUNDS:
The sources of funds can both internal as well as external.

INTERNAL SOURCES
Funds from business operations are the only internal sources of
funds. This can be arrived by deducting the non – operating expenses (e.g.
Depreciation) and adding the non -operating incomes (e.g. are Profit from
sale of fixed assets).

EXTERNAL SOURCES
These funds include
FUNDS FROM LONG-TERM LOANS:
Long term loans such as debentures, borrowing from financial
institutions will increase the working capital and therefore there will be flow
of funds. However, if the dentures have been issued in consideration of some
fixed assets, there will be no flow.

SALE OF FIXED ASSETS:

Sale of land, buildings, long-term investments will result in generation
of funds.
INCREASE IN SHARE CAPITAL:
Issue of shares for cash or for any other current asset result in
increase in working capital
is hence there will be flow f funds.
THE FLOW OF FUNDS CAN BE BETTER
EXPLAINED WITH THE FOLLOWING
DIAGRAM

Current Assets Fixed Assets

Cash in hand and Bank Land and buildings plant

Marketable securities & Machinery and Long-
Accounts receivables term investments Etc.,
Etc.,

Current Liabilities Fixed Liabilities

Bank O.D.
Share Capital Reserve
Out standing exp. and surplus Debentures
and ling-term loans etc.,
Accounts payable etc

Flow of funds No flow of funds

APPLICATION OF FUNDS:
The used to which funds are put are called application funds.
Following are some of the purposes for which, funds may be used.

PURCHASE OF FIXED ASSETS:

Purchase of fixed assets such as land, plant, machinery, long-term
investments etc., and result in decrease of current assets with out any
decrease in current assets with out any decrease in current liabilities. Hence
there will be a flow of funds.

PAYMENT OF DIVIDENDS:
Payment of dividends results in decrease of a fixed liability and
therefore, it affects funds.

PAYMENT OF FIXED LIABILITY:

Payment of long-term liability, results in reduction of working
capital and hence it is taken as an application of fund.

SOURCES AND EMPLOYMENT OF BANK FUNDS PAID –

UP CAPITAL ANS RESERVES
The paid – u capital and cash reserved of a commercial bank
constitute by far the most dependable source of bank liquidity. The paid-up
capital comprises of the cash amount contributed in cash by public on their
shares to the bank. The paid – up capital is less than authorized capital and it
is either equal to or less than the subscribed capital.
 Authorized capital is the maximum, which a bank can issue for
public subscription under its Memorandum of Association. Generally, the
board of Directors of a bank does not issue the entire authorized capital for
subscribed by the public. If the entire subscribed capital is not paid-up
capital. A part of the subscribed capital may be paid subsequently, when
asked by the board of Directors. The among which is subject to call is
known as the Reserve Liability.

For the sake of safety, a commercial bank keeps a reserves fund,

which is created out of the undistributed profits every year. The bank draws
upon the resources of its reserved funds in periods of losses. In India, every
commercial bank is legally required to set apart of its profit for the resave
fund, until the fund becomes equal to its paid-up capital. Besides,
commercial banks also maintain secret reserves, for bad and doubtful debts
and depositor equalization fund crated out of profits.

The paid-up capital and reserves of bank provide protection to

the depositors of a bank, when it faces the danger of liquidation. To the
extent, these funds represent the owned funds of the bank, it is this source of
bank liquidity upon which the bank fails in times of financial crises when its
capacity to meet its financial commitments toward is depositors is impaired.
Infect, the ability of a commercial bank to withstand successfully any crisis
of confidence of its depositors in its credit worthiness depends largely upon
the size of its paid-up capital and cash reserved that are available to it as a
cushion to absorb any shock it might receive at the hands of its scared
depositors. Low paid – up capital and meager cash reserves and a bank ill go
together.
DEPOSITS:

Next to the paid – up capital and cash reserves, the other most
importance sources of supply of commercial bank liquidity is the deposits
which banks receive from their depositors comprising of individuals,
corporate form of business enterprise, firms and other including educational
institutions, local bodies and government. The depositors of a bank are
drawn from all walks of life residing in the urban, Simi urban and rural areas
of the country pursuing allsorts of conceivable vocations, so much important
are the single source of bank liquidity supply that banks often engage in
keen competition for deposits mobilization because the capacity to mobilize
deposits. But for the large funds, which banks receive as deposits their
investment and lending activities would have been on considerably smaller
scale than these, in fact, are.

Bulk of the total earnings of commercial banks in derived in the

form of interest income derived from loans and advances made by the banks
to trade, industry and other borrowers and the interest earned from
investments made in the government and other securities. The extent to
which banks can grant loans to their constituents depends in the amount of
liquidity they command and deposits are the single largest source of the
composite supply of their total liquidity.
OTHER LIABILITIES:

A part form the paid up capital, cash reserves and deposits, the
other principal components of the liabilities portfolio of banks are the
borrowings, which the commercial banks make from the central bank is
barometer of the degree of the borrower – lender relationship which exists
between the banks and the central bank and consequently of the dependence
of the former upon the latter in the country. This relationship is very
significant in the matter of enabling then central bank to exercise an
effective control over the credit creation activities of the banks in the
economy. The degree to which the member banks depends for financial
accommodation on the central bank is a measure of the degree of
effectiveness of the latter in influencing the lending or credit – creating
activities of the former and consequently of the effectiveness of central
banks monetary and credit policy in achieving the desired economic goals.
In India, the banks borrow from the Reserve bank of India and the sum
borrowed varies depending upon the busy stack season and the liquidity
position of the banks.
ASSET PORTFOLIO

Having briefly discussed the main sources of supply of funds of banks.

Let us now very briefly discuss the uses to which these funds are it by the
banks. The most profitable activity of banks consists of lending surplus cash
either by way of making loans or granting overdraft facilities of their
customers. While banks are anxious to utilize their funds in such a manner
so as to optimizes their net income from the use of these Responsible bank
personnel bank manager and other), Who look after the manner of utilization
of the surplus funds have always to remember the hard fact that the
ownership of such funds as they have acquired (barring paid up capital and
reserves ) vests in the depositors whose autonomous decision to with draw
their deposits as and when they please(subject to certain bank rules which
they have agreed to abide by) have to a scrupulously respected by refunding
then their deposits promptly on demand the acquired funds to their owners
or persons named by them.

A part from cash in hand, cash balances held with the

central bank and balances held with the other banks which, constitute the
first defense for banks as these can be acquired immediately without any
cost, the other asset ranking next to cash money at call and short –notice
comprising of short-term loans callable at very short notice. As money at
call convertible into cash without notice, it commands on attribute of high
liquidity ranking next to cash. It earns a very low rate of interest for the
bank. So also is the case with money callable at short notice. However,
 since compared with money at call it is relatively less liquid the
yield is slightly higher. Money at call and short notice constitutes a larger
money markets compared with those countries which have developed money
markets compared with those whose money markets are either not developed
or not properly functioning. Such is the situation in most developing
countries.

A part from cash in hand and balances with the

central bank balances with the central bank, balances with other banks and
call and short notice, the two principal items of the asset0 portfolio of banks
are the advances or bank credit and investment made in government
securities includes the treasury bills, which habe of 91 days, in India, banks
make investments both in the central government and state governments
securities of differing maturities.

APPROACHES TO FUNDS MANAGEMENT OF BANKS

There are now two broad or general approaches to the bank fund
utilization. These are the pooled- funds approach and the asset allocation
approach.

The pooled – funds approach is based upon the belief that the
commercial banks employ their funds in creating different types of assets
assorted assets comprising of different land, securities, of supply of their
funds . Where most of the commercial bank are derived from a single soured
this approach works our satisfactorily.
 For instance, in the past when bulk of the commercial bank
funds constitutes the demand deposits it was need less of differentiate
between the different sources of supply of bank funds .But now a days, it is
argued by the critics off this approach, when the deposit –mix of commercial
banks has radically changed and keeps in continuously changing under the
impact of dynamics of growth, the pooled funds approach is absolute and is
detrimental top the realization of optimum yield from bank funds as it ties
liquidity to total deposits among which can do without maintaining the same
high ratio of liquidity which they might consider essential to maintain
against the demand deposits deposit. Consequently, the pooled- funds
approaches, which take no notice of the changing pattern of the total deposit
– mix of commercial banks, is faulty and lead to in efficient conduct of
banks asset portfolio management.

The Asset – allocation approach to which has been developed in

recent years, stresses that the investments made in different types of Assets
have to be directly related to the different sources.
From which funds are derived by the bank thus, the fundamental
criteria which must be followed in allocated funds for acquiring different
sources of applying of funds determine the appropriate maturity of the assets
acquired through funds utilizations. For instance, while relatively stable
funds, Like fixed deposits and paid – up capital, could be used to buy along
dated high-yield for giving securities, demand deposits, saving deposits,
which are most volatile, could be used to acquire relatively liquid assets like
cash or money at all call and short notice on which little or of no return is
made by the banks.
CHAPTER-IV
A) INTRODUCTION OF BANKING

“Bank is an institution whose Debts widely accepted in settlement

of other people’s debts to each other”.

The banking company in India defined the Band , in the

companies Act.1949, as the one “which transacts the business of banking
which means the accepting for the purpose of lending to invests of deposits
of money form the public. The deposits, which repayable on demand
withdrawal by check, draft orders.

TYPES OF BANKING

Several types of banks have come in to existence performing different

specialized functions based upon the functions performed by them; banks
may be classified into different types;

1) COMMERCIAL BANKS:

They are a joint stock bank which acts as different kinds of

deposits from the public and grant short term loans. There main aims Is to
provide security of funds to depositors and make profits for their share
holders. As their deposits are mainly for short periods, they can not lend
money for long periods. They mainly finance business and trade for short
periods to meet their day – to – day transactions. They may provide finance
in the form of cash credits our drafts or loans. They also provide finance by
discounting bills of exchange.

2) INDUSTRIAL BANKS

These banks are also called investment banks. They provide long
terms finance to industries ranging over a few decades. They finance long
term projects and developmental plans. T hey receives long term projects
deposits from the public. They may also raise funds by the issue of shares
debentures. They specialized in the undertake industrial finance the new
issue of shares, debentures and securities of new enterprises.

3) AGRICULTURE BANKS

The commercial industrial banks are not able to meet the financial
requirements of agriculture. Agriculture requires both short term and long
term finance. Frames requires short term finance to buy seeds, fertilizers,
implements etc.,

4) CO-OPERATIVE BANKS:

The banks are formed to supply credit to members on easy terms.

They do not aim at profit in their operations. They attract depositors from
the farmers and promote thrift by offering slightly higher rates of interests
than commercial banks. They provide credit facility to needy framers and
small scale industries.

5) EXCHANGE BANKS:

The specialized in financing the import and export trade of the country.
They purchase bills from exporters and sell them to importers. They provide
remittance facilities and trade information to their clients.

6) SAVEINH BANKS:

These banks collect small and scattered savings of the low and middle
income group people. These banks receive small amounts, deposits and
withdrawals are restricted. Bank offer minimum interest on these deposits.

7) CENTRAL BANK:

The central bank controls the entire banking system in the country. It
operates the currency and credit system in the country. It acts as an agent
and adviser to the government and works in the best interests of the nation
with out any profit motive in ts operations.
INDUSTRY PROFILE

Historically, a bank has been a place where depositors could park

money and borrowers could borrow. The typical spread of the bank was
raising money through deposits and leading it to corporate clients. This
made the relationship with the retail consumer rather passive. But with
banks recognizing the power of the country’s middle class, this relationship
is becoming very active.

The commercial banking structure in India consists of:

• Scheduled Banks in India

• Unscheduled Banks in India

Scheduled Banks in India constitute those banks which have been

included in the Second Schedule of Reserve Bank of India (RBI) Act, 1934.
RBI in turn includes only those banks in this schedule which sof theriria laid
down vide section42 (6)(a) of the act.

As on 30 th June, 1999, there were 300 scheduled banks in India

having a total network of 64,918 branches. The scheduled commercial
banks in India comprises of State bank of India and its associates (8),
nationalized banks (19), foreign banks (45), private sector banks (32), co-
operative banks and regional rural banks.
 “Scheduled banks in India” means the State Bank of India
constituted under the State Bank of India Act,1955(23 of 1955), a
subsidiary bank as defined in the State Bank of India (Subsidiary Banks)
Act, 1959 (38 of 1959), a corresponding new bank constituted under section
3 of the Banking Companies(Acquisition and Transfer of Undertakings)
Act, 1970 (5 of1970),

“ Under section 3 of the banking companies (acquisition and

transfer of undertakings) act, 1980 (40 of 1980), or any other bank being a
bank included in the second schedule to the reserve bank of India act, 1934
(2 of 1934), but does not include of a co-operative bank”.

“Non-schedule bank in India” means a banking company as in clause

(c) of section 5 of the banking regulation act, 1949 (10 of 1949). Which is
not a schedule bank”
 The following are the schedule public sector banks in
India:

● State bank of India

● State bank of banker and Jaipur
● State bank of Hyderabad
● State bank of Indore
● State bank of Mysore
● State bank of Patiala
● State bank of Saurashtra
● State bank of Travancore
● Andhra bank
● Allahabad bank
● Bank of Baroda
● Bank of India
● Bank of Maharashtra
● Canara bank
● Central bank
● Central bank of India
● Corporation bank
● Dean Bank
● Indian overseas bank
● Indian Bank
● Oriental Bank of Commerce
● Punjab National Bank
● Punjab State and Sind Bank
● Syndicate Bank of India
● Unit Bank of India
● UCO Bank
● Vijaya Bank
The Following are the scheduled private sector Banks in India:

● Vysya Bank Ltd

● UTI Bank Ltd
● Indusind Bank Ltd
● ICICI Banking Corporation Bank Ltd
● Global trust Bank Ltd
● HDFC Bank Ltd
● Bank of Punjab Ltd
● IDBI Bank Ltd

The following are the scheduled foreign banks in India:

● American Express Bank Ltd

● ANZ Gridlays Bank Ple
● Bank of America NT&SA
● Bank of Tokyo Ltd
● Baque National Plc
● Citi Bank N.C
● Deutsche Bank A.G
● Hong Kong and Shanghai Banking Corporation
● Standard Charted Bank
● The Chase Manhattan Bank Ltd
● Dresdner Bank A.G

Current scenario:

The Indian banking sector during the December quarter posted

mixed results. Although this was on expected lines, some of the banks
showed a huge variation. We have tried to understand the trend in the
December quarter results. We have informed four analytic groups to
understand the result pattern. These are the public sector (PSU), public
sector ex-SBI, private sector and private sector ex-ICICI bank. Our universe
of banks for the said study is as follows:

Top 10 large Banks in INDIA:

2005 2004 Rank Bank

Rank

1 1 HDFC

2 7 HSBC

3 3 ANB Amro

4 6 Corporation
bank

5 15 Andhra bank

6 2 City bank NA

7 21 Punjab
national Bank
8 9 Standard
charted

9 13 UTI Bank

10 12 Vysya bank

( Source: KPMG Annual Bank Survey)

INSURANCE IN INDIA
The insurance sector in India has come a full circle from being on
open competitive market to nationalization and back to a liberalized market
again. Tracing the development in the Indian insurance sector reveals the
360 degree turn witnessed over a period of almost two centuries.

A BRIET HISTORY OF THE INSURANCE SECTOR

The business of life insurance in India in its existing from started in
India in the year 1818 with the establishment of the oriental life insurance
company in Calcutta.

Some of the important milestones in the life insurance business

in India are:

►1912: The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
►1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non – life
insurance businesses.
COMPANY PROFILE
ICICI Bank is India’s second –largest bank with total assets of about
Rs.1, 676.59 bn (US$ 38.5 bn) at March 31, 2005 and profit after tax of Rs.
20.05 bn (US$ 461 mn) for the year ended March 31,2005 (Rs. 16.37 bn(US
$376 mn)in fiscal 2004).

ICICI Bank has a network of about 573 branches and extension

counters and over 2,000 ATMs. ICICI Bank offers a wide range of banking
products and financial services to corporate and retail customers through a
variety of delivery channels and through its specialized subsidiaries and
affiliates in the asset management.

ICICI bank set up its international banking group in fiscal 2002 to

cater to the cross border needs of clients and leverage on its domestic
banking strengths to offer products internationally. ICICI bank currently has
subsidiaries in the United Kingdom, Canada and Russia, branches in
Singapore and Bahrain and representative offices in the United States,
China, United Arab Emirates, Bangladesh and South Africa.

ICICI Bank’s equity shares are listed in India on he Bombay Stock

Exchange and the National Stock Exchange of India Limited and it
American Depositary Receipts (ADRs) are listed on the New York Stock
Exchange (NYSE).
History:

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian

financial institution, and was it’s wholly – owned subsidiary. ICICI’s
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed
on the NYSE in fiscal 2000, ICICI Bank’s acquisition of Bank of Madura
Limited in an all – stock amalgamation in fiscal 2001. And secondary
market sale by ICICI to institutional investors in fiscal 2001 and fiscal 2002.
ICICI was formed in 1955 at the initiative of the world Bank, the
Government of India and representatives of Indian industry.

Objective:

The principal objective was to create a development financial

institution for providing medium-tem and ling – term project financing to
Indian businesses. In the 1990s, ICICI transformed its business from a
development financial institution offering only project finance to a
diversified financial services group offering a wide variety of products and
services, both directly and through a number of subsidiaries and affiliates
like ICICI Bank
 In the 1990s, ICICI transformed its business from a development
financial institution offering only project finance to a diversified financial
services group offering a wide variety of products and services, both directly
and through a number of subsidiaries and affiliates like ICICI Bank. In 1999,
ICICI become the firs Indian company and the first bank or financial
institution from non – Japan Asia to be listed o the NYSE.

Structure:

After consideration of various corporate structuring alternatives in the

context go the emerging competitive scenario in the Indian banking industry,
and the move towards universal banking, the managements of ICICI and
ICICI formed the view that the merger of ICICI Bank would be the optimal
strategic alternative for the both entities, and would create the optimal legal
structure for the ICICI Groups universal banking strategy. The merger would
enhance value for ICICI shareholders through the merged entity access to
low-cost deposits, greater opportunities for earning fee-based income and
the ability to participate in the payments systems and provide transaction
banking service. The merger would enhance value for ICICI Bank
shareholders through a large capital base and scale of operations , scam less
access to ICICI‘ s strong corporate relationship built up over fie decades,
entry into view business segments, higher market share in various business
segments, particularly fee-based service, and access to the vast talent pool of
ICICI and its subsidiaries. In October 2001, the boards of Directors of ICICI
retail finance subsidiaries, ICICI personal financial services limited and
ICICI capital service Limited, with ICICI Bank.
ICICI Bank at the present scenario:

India has never had it good before booming economy reflects in the
rise of SENSEX past the 10,000 mark, projections of an 8-plus percent GDP
growth, the revival of manufacturing and rising foreign investments have
delivered growth in the banking sector.
During the recent survey conducted by the KPMG with respect to the India’s
top banks, ICICI bank holds its slot in the list of top banks.

Top 10 Banks By Growth In Business

BANK %Growth
UTI Bank 53
ICICI Bank 47
ABN Amro 38
State Bank of Indore 34

Allahabad Bank 32
Oriental Bank Of 32
Commerce
HDFC Bank 30

Nainital Bank 29

Union Bank Of India 28

State Bank of Mysore 27

(KPMG Annual Survey)

ICICI Bank Executive Director CHANDRA KOCHHAR the

royal challenge award in February 2006 for standing 2nd in
growth in Business. She says “Ninety Seven Per cent of
request of are fulfilled with in our promised period”
TOP 10 BANKS BY GROWTH IN PAT

BANK %GROWTH
Centurion 459
BNP Paribas 213

American express Bank 170

HSBC 71

HDFC Bank 31

Indian overseas Bank 27

Punjab national Bank 27

ICICI Bank 22

UTI Bank 20

Union Bank of India 19

ICICI Bank in News: Chairman Speaks

They say elephants dance. DUNDAPUR VAMAN KAMATH

thinks otherwise. Since leading ICICI bank’s first foray into the retail
business five years ago. Managing Director and CEO Klamath has turned
ICICI Bank into the fastest growing bank in the industry. At Rs.62, 063
corers, the bank has the largest retail portfolio and is the leader in home and
car loans. The most diversified universal ankh, it boasts more than 15
million customer accounts. 600 branches and a network of 2000 ATM’s
across the country. Its life and general insurance subsidiaries have become
the biggest private insurers in just five years. Similarly, ICICI bank’s asset
management business, with a corpus of Rs. 22,600 corer, is among the
fastest growing mutual funds and second only to UTI Mutual fund in terms
of size.

In fact, the bank’s growth emanates from every business segment it

is in. no wonder, it turns up as the fastest growing (large) bank on the study
of best banks in India. ICICI bank’s growth be affected by a sudden
tightening of liquidity? “Factors driving the growth in retail are very
fundamental like affordability, rising income levels and the buoyancy in the
overall economy.” Says Chanda Kochhar , executive director, ICICI Bank.
Going forward, the bank is also betting big on its international operations. In
just one year of its launch, ICICI Bank became the biggest Indian Bank in
Singapore.. In the UK too, the bank has turned profitable in the first full
years of its operations.
 “The last four year have seen dramatic changes, making customer’s
convenience a critical aspect of baking “. No wonder that banks are today
emerging as payment gateways, investment advisors and providers of
convenience. So whatever be your need spending or saving you can get it
under a single roof. “Banking is an evolutionary process, and with more
experience, banks will undergo greater change so as to evolve as transaction
partners and advisors to their clients. And quality of service will be a key
fermentation”. KV.KAMATH CEO ICICI Bank Groups

ICICI Bank Ltd

ICICI Prudential Life Insurance

Company

ICICI Lombard General Insurance

Company

Prudential ICICI AMC & Trust

ICICI Securities

ICICI Venture
CHAPTER-V
 STATEMENT OF SOURCE AND APPLICATION OF FUNDS FOR

FOR THE YEAR OF 2003-2004

Particular Amount (laks)

77.71
(Total source  Total application)
(Source: Annual reports of ICICI)

INTERPRETATION:
The above table shows that the sources and used of the funds during
the period of 2003-04. It shows the total source of the funds during the year
were Rs.716.13 Lac. The funds are mainly from the long term deposits
Rs.675.12Lac and increase in share capital that Rs.9.00 Lac.

The application of funds in this year was Rs.638042 Lac. they are
mainly from long term advances Rs. 201.06 Lac and investment in bonds
Rs.435.02 Lac. During these the bank acquired from it business Rs. 25.01
Lac.

ADJUSTED PROFIT AND LOSS ACCOUNT

FOR THE YEAR 2003-2004
(Rs. In lakhs)
Dr. Cr.

Particular Amount Particular Amount

To Balance B/F 46.56 By Balance C/F 33.47

To Depreciation 5.50 By funds from 25.01

business
To Reserve 6.42

58.48 58.48

SCHEDULE OF CHANGES IN WORKING CAPITAL

FOR THE YEAR 2003-2004

Increase Decrease
in in working
Particular 2004 2003 working capital
capital
CURRENT ASSETS

Cash in hand 65.01 69.56 - 4.55

Balance with bank 70.27 36.76 33.51 -

Short term advances 90.26 202.68 - 112.42

Interest receivable 25.11 24.12 0.99 -

Other current assets 29.57 23.36 6.21 -

CURRENT LIBILITIES

Short term deposits 220.87 120.21 - 100.66

Interest payable 90.60 187.28 96.68 -

Creditors 6.96 4.26 - 2.7

Other current liabilities 0.96 1.09 - 0.13

Increase in working capital 83.07

220.46 220.46

INTERPRETATION:
The above table shows that the schedule of changes in working

capital from the year of 2003-2004. It shows the working capital was
decrease Rs. 83.07 Lac. The current assets were some what increase Rs.6.21

Lac and short advance are also decrease Rs. 112.42 Lac. The current

liabilities the short term deposits increase Rs. 100.66 Lac and the creditors

was increase Rs.2.7 Lac. The other current liabilities was increased Rs. 0.13

Lac.
 Statement of source and Application of Funds for the
year of 2004-2005

Particulars Amount

Sources of funds
Increase in share capital 5.23

Sale of fixes Assets 4.71

Funds from Business 45.62

55.56
TOTAL

Application of funds

Increase in investment
42.77
Long term Loans
40.62
Term Deposit
39.90

TOTAL 123.29

Decrease in working capital 67.73

(Total sources – total Application)
(Source: Annual report of ICICI)

Interpretation:-
 The above table shows that the sources and used of the funds
during the period of 2004-2005. It shows the total sources of the funds
during the year were Rs.55.56sac the funds are mainly from the share capital
Rs.5.23 lack. Fixes assets Rs.4.71 lack.

The application of the funds in this year Ts. 123.29lac. The

funds are mainly coming in to Increase in Investment Rs.42.77Lac. Term
loans Rs.40.62 and term deposits Rs.39.90 lack.

ADJUSTED PROFIT AND LOSS ACCOUNT

FOR THE YEAR 2004-2005

Dr Cr

Particulars Amount Particulars Amount

To Balance B/F 81.40 By Balance 46.06

To Depreciation 10.78 By Funds from business 46.12

92.18 92.18

SCHEDULE OF CHANGES IN WORKING CPITAL FROM

THE YEAR OF 2004-2005
 Increase Decrease
in in
Particular 2005 2004 working working
capital capital

CURRENT ASSETS
Cash in hand 81.84 65.01 16.83 -

Balance with bank 52.78 70.27 - 17.54

Short term advances 125.68 90.26 35.42 -

Interest receivable 20.09 25.11 - 5.02

Other current assets 24.06 29.57 - 5.51

CURRENT LIBILITIES
Short term advances 225.06 220.87 - 4.19
Interest payable 50.10 90.60 40.50 -
Creditors 26.92 6.96 - 19.96
Other current liabilities 1.26 0.96 - 0.3

(Decrease in working capital) 40.23

92.75 92.75

Interpretation:
 The above table shows that the schedule of changes in working

capital from the year of 2004-2005. It shows the working capital increase

Rs.40.23lak, the current assets decrease 5.51lak, short term advances

increase Rs.35.42. the interest receivable Rs.5.02lak.

The current liabilities the short – term deposits increase Ts.

4.19lak, Interest payable decrease Ts.40.50lak, creditors increase Rs. 19.96

lack and other current liabilities increase Rs.0.3lak

 STATEMENT OF SOURCE AND APPLICATION
FUNDS FOR THE YEAR 2005-2006

Particulars Amount

Sources of funds

Increase in share capital 8.26

Sale of fixes assets 8.72

Funds from business 59.64

TOTAL 76.62

Total application of funds

Increase in investment 20.04

Long – term loans 70.06
Term – deposits 20.90

TOTAL 111.00

Decrease in working capital 34.38

( Total source – total application)

(Source: annual report on ICICI)

Interpretation:
 The above table shows that the source and used off the funds
during the period of 2005-06. It show the total source of the funds during the
year was Rs.34..38. The funds are mainly from share capital Rs. 8.26lsk,the
sale of field assets Rs. 8.72 lack and funds from business Rs. 42.66 rack.

The total Application of the funds isRs.111.00 lack .the funds

are mainly coming in to increase in investment Rs. 20.04lac. Long –term
loans Rs.70.06lac and term – deposits are 20.90 lack,

ADJUSTED THE PROFIT AND LOSS ACCOUNT

FOR THE YEAR OF 2005-06

Dr Cr

Rs/-
particulars Rs/- Particulars

To Balances B/F 86.97 By Balance C/F 81.4

By Depreciation 1.0
To Reserves 38.09 By Funds from business 42.66

125.06 125.06

SCHEDULE OF CHANGES IN WORKING CAPITAL

FOR THE YEAR OF 2005-06
 Increase
in Decrease in
particulars 2006 2005 working working
capital capital

Current Assets
Cash on land 106.24 81.84 24.40 -

Balance with Bank 130.27 52.73 77.54 -

Short term advances 132.68 125.68 7.00 -

Interest receivable 30.90 20.09 10.81 -

Other current assets 24.06 24.06 - -

Current liabilities

Short term deposits - 45.9

270.96
225.06
Interest payable 4.44 -
45.66
50.10
Creditors - 4.00
30.92
26.92 -
Other current liabilities 0.96
2.22
1.26

Decrease in working capital 73.33

124.19 124.19

INTERPRETATION:
 The above table shows that the schedule of changes in working

capital for the year of 2005-2006. It shows the working capital decrease Rs.

73.33lad.In the current assets cash in land was somewhat increase Rs.

24.40lac.Balance with the bank increase Rs.77.54 lad, Interest Revisable on

Rs. 10.81 lack, and the other current assets are Both years is same.

The current liabilities the short term deposits are decrease

Rs.45.9 lad, Interest payable Increase Rs.4.44lac.creditors decrease Rs. 4

lack other current liabilities are decrease Rs.0.96 lack.

STATEMENT OF SOURCE AND APPLICATION OF

FUNDS FOR THE YEAR 2006-07
 Particulars Amount

Sources of funds

Long term deposits 250.44

Increase in share capital 15.26

Sale of fixes assets 5.22

Funds from business 66.27

TOTAL 337.19

Applications of funds
42.30
Increase in Investment
220.42
Long – term loans
226.72
TOTAL 110.47
Decrease in working capital(total sources – applications)

Interpretation:-
 The above table shows that the sources and application of the
funds during the period of 2006-2007.It shows the total sources of the funds
Rs. 337.19lacd. the funds are mainly from the long – term deposits Rs .
250.44lack, Increase in share capital Rs 15.26 lack ,sale of fixed assets Rs.
5.22 lack, Funds from business Rs.66.27lsck.

The total applications of the funds are Rs.226.72lack. The

applications are mainly increase in investment Rs.42.30lack, and long-term
loans Rs.220.42lack It shows the decrease in working capital Rs.110.47lack.

ADJUSTES PROFIT AND LOSS ACCOUNT FOR THE

YEAR OF 2006-07

Dr Cr

particulars Amount particulars Amount

To Balance B/F 65.07 By Balance C/F 86.97

To Reserve 90.20 By depreciation 2.03

By Funds from Business 66.27

155.27 155.27

SCHEDULE OF CHANGES IN WORKING CAPITAL

 FOR THE YEAR OF 2006-07

Increase Decrease
Particulars 2007 2006 in in
working working
capital capital

Current assets
100.27 106.24 - 5.97
Cash on hand
90.22 130.27 - 40.05
Balance in Bank
127.22 132.68 - 5.46
Short-Term advances
42.19 30.90 11.29 -
Interest receivable
3021.02 2050.28 970.74 -
Interest on loan
44.28 24.06 20.22 -
Other current assets

Current liabilities
Short-Term deposits 302.02 270.96 - 31.06

Interest payable 30.06 45.66 -

15.6
Creditors 40.02 30.92 9.1
-
Other current liabilities 4.66 2.22 2.44
-

Decrease in working capital 923.77

1017.85 1017.85

INTREPREATION:
 The above shows that the schedule of changes in working capital in
the year of 2006-07.It shows the working capital in decrease Rs.923.77lac
.In the current assets ,the cash on hand was decreased Rs.5.97lac,short term
advances decreased Rs.5.46lac,intreast receivable was increased
Rs.11.29lac, interest on loan increasers.970.74
The current liabilities the short term deposits are increased
Rs.31.06lac, interest payable was decreased Rs.15.6lac, creditors increase
Rs.901lac, other current liabilities are increased Rs.2.44lac. (Any the total
statement the work capital was decreased Rs.923.477Lac)

STATEMENT OF SOURCES AND APPLICATIONS OF

FUNDS FOR THE YEAR 2007-08

Particulars Amount

SOURCE OF FUNDS 142.08

Long term depositors 13.02
Increase in share capital 5.09
Sale of fixed assets 62.99
Funds from business
223.18
Total
Applications of Funds
Increase in Investments
Long term loans 40.26
150.92

Total 191.18

(Decrease in working capital) 32.00

(Source of Annual reports of ICICI)

INTREPRETATION:
 The above table shows that that source and applications of the funds
during the year of 2007-08.It shows the total sources of the funds
Rs.223.18lac.The funds are mainly from the long term depositors
Rs.142.08lac, Increase in share capital Rs. 13.02lacm Funds from business
Rs.62.99lac.

The total application of funds are Rs.191.18lac, the application are

mainly Increase in Investment Rs.40.26las, long-term loans Rs.150.92lac.
Totally the statement shows the decrease in working capital Rs.32.00lac.

ADJUST PROFIT AND LOSS ACCCOUNT FOR THE

YEAR OF 2007-08
Dr Cr

Particulars Amount particulars Amount

To Balance B/F 33.66 By Balance C/F 65.07

To Reserve 97.82 By Depreciation 3.42

By funds from business 62.99

131.48 131.48
SCHEDULES OF CHANGES IN WORKING CAPITAL FOR
THE YEAR 2007-2008

Increase Decrease
Particulars 2008 2007 in in
working working
capital capital

Current assets

Cash on hand 121.56 100.27 21.29 -

-
Balance in bank 110.11 90.22 19.89
-
Short-term advances 132.02 127.22 4.8
11.53
Interest receivable 30.66 42.19 -
-
Interest on loan 3027.01 3021.02 5.99
2.00
Other current assets 46.28 44.28 -

Current liabilities

Short – term deposits 116.26 -

6.16 -
Interest payable -
Creditors 5
- 1.44
Other current liabilities 154.42

174.39 174.39
CREDIT DEPOSIT RATIO ANALYSIS

The credit –deposit – ratio[C-D Ratio] provide and Indication of

the Extent of credit deployment for every unit of resource raised through
deposits.

Credit Extends
C-D Ratio = X 100
Deposits Raised

C-D
Year Credit Extended Deposits Raises Ratio

2003 – 2004 1027.21 1532.61 67%

2004 - 2005 1327.22 1656.72 80%

2005 – 2006 1262.72 1642.89 77%

2006 – 2007 1186.13 1794.34 66%

2007 - 2008 1472.45 1672.34 88%

Interpretation:

The credit extended for the years 2003-04, 2004-05, 2005 –

06, 2006 – 07, 2007 - 08 is follows 67%, 80%, 77%, 66% , 88%.
 GRAPHICAL REPRESENTATION

1. Growth of Deposits and Advances

LOANS AND
YEAR DEPOSITS ADVANCES

2003 – 2004 1742.19 1294.65

2004 – 2005 1764.26 1364.26

2005 – 2006 1642.94 1096.73

2006 – 2007 1666.62 1146.43

2007 - 2008 1786.49 1225.27

2000
1800
1600
1400
1200
DEPOSITS
1000
LOANS AND ADVANCES
800
600
400
200
0
8
00
-2
07
20
 INTREPRETATION:

The graph showing the Growth in deposits, which is

requires and loans and advances, which are granted there is
tremendous growth in the getting of deposits and providing loan
and advances.

In the 2003-04 deposits. Loans and advances were Rs. 1742.19 and
1294.65, and 2004-05 deposits, loans and advances were
Rs.1764.26 and 1364.26 the 2005-06 Deposits, loans and advances
were Rs.1642.94 and 1096.73 The 2006-07 deposits, loans and
advances were rs.1666.62 and 1146.43, the 2007 – 08 deposits,
loans and advances were 1786.49 and 1225.27.
 2. NET PROFIT

YEAR NET PROFIT

2003 – 2004 35.56

2004- 2005 38.49

2005– 2006 43.62

2006– 2007 54.27

2007– 2008 78.20

NET PROFIT

90
80
70
60
50
NET PROFIT
40
30
20
10
0
Interpretation:

The graph indicating the growth in net profit 2003- 04 to

2007 -08. The result of the net profit are very glad some, the
following result achieved by the bank.

In 2003-04 Rs.35.56lakhs, 2004-05 Rs, 38.49, 2005-06

Rs45.62, 2006-07 Rs54.27, 2007-08 Rs.78.20

The net profits for all year are good.

According to the result of audited reports are showing

excellent. So that the bank is growing day by day.
 3. WORKING CAPITAL

YEAR WORKING CAPITAL

[Rs.in lakhs]

2003-2004 1915.00

2004-2005 1955.98

2005-2006 1842.68

2006-2007 1956.99

2007-2008 2090.27

2500

2000

1500

1000

500

0
R
A

05
04

06

07

08
E

20

20

20

20

20
Y

4-
3-

5-

6-

7-
0

0
20

20

20

20

20
Interpretation:

The graph is Indicating the growth in working capital from 2003-04

to 2007-08. The result of working capital is very glad some. The bank is

achieves the following result. In 2003 – 2004 Rs.1915.00,2004-05 Rs.

1955.98, 2005 – 06 Rs. 1842.68,2006-07 Rs.1956.99,2007-08 Rs.2090.27

CHAPTER-
VI
 FINDINGS

• In the year 2003-04, the total sources of the funds were

Rs.716.13lakhs.the main source of the funds was long term deposits
rs.675.12lakhs, the funds from business were Rs.25.01lakhs total
application of the funds in the year 2003-2004 was Rs.638.42lakhs, the
main application component was long-term advances s.201.06lakhs and
Increase In Investment Rs.435.02lakhs.

• In the year of 2004-05 the total source of the funds were an Rs

55.56lakhs.The main source of the funds was increase in share capital
Rs.5.23lakhs, Fixes assets rs.4.71lakhs and funds from business
Rs.45.62lakhs. The total application of the funds were Rs.123.29lakhs, the
main application funds are investment Rs.42.77lakhs, long-term loans
Rs.40.62lakhs,and term deposits were Rs.39.90lakhs.

• In the year 2005-06 the total sources of the funds were Rs.59.64lakhs.The
main sources of the funds were increase in share capital Rs.8.26lakhs, Fixed
assets Rs.8.72lakhs.and funds from business were Rs 42.66lakhs. The total
application of the funds was rs.111.00lakhs the main application funds are
investment Rs.20.04lakhs, long-term long were Rs.70.06lakhswere
Rs.220.42lakhs.
.In the year 2006-07 the total sources of the funds were Rs.337.19lakhs.the
main sources of the funds were long – term deposits were Rs.250.44lakhs,
Increase in share capital Rs.15.26lakhs, fixed assets were Rs.5.22lakhs, and
funds from the business were rs.66.27lakhs. The total applications of the
funds were Rs 226.72lakhs, the application funds mainly coming from
investment Rs.42.30lakhs.and long –tem long Bases on the annual reports of
the bank during period 2003-04 to 2007-08 the funds flow has down
according to the above statement, the following conclusions can be down,
term deposits Rs.20.90lakhs.

In the year of 2007-08.the total sources of the funds were

223.18lakhs the main sources of the funds were long-term deposits were
Rs.142.08lakhs share capital were Rs.13.02lakhs and funds from business
were Rs.62.99lakhs the total application of the funds were Rs.191.18lakhs,
the main application of the funds were increase in investment were
Rs.40.26lakhs and long-term long were Rs.150.92lakhs.
 SUGGESTIONS

The bank has to follow the asset allocation approach to bank

fund utilization, which says that the investment made in different types
assets have to be directly related to the different sources from which funds
are deriving by banks.

Thus the fundamental criterion, which must be followed in

allocation funds for acquiring different type of assets is sources of supply of
funds determines the appropriate turnover rate of different sources of supply
of funds determines the appropriate maturity of the assets acquiring through
fund utilization. For borrowing and paid of capital could be used to boy long
dated high yield giving securities, could not be used to acquire relatively
liquid assets like cash or money at can and short notice on which little or no
return is made.

The bank raises its funds from many sources viz., term deposits.
long term borrowing and through capital but these sources were not
employed to the extent required sometimes much fund were kept idle stocks
in the from of cash and other liquid assets to increase the returns otherwise
those idle assets earn nothing and also has to consider the liquidity position.
It is suggested that the bank should raise the funds to the extent
required or It should invest all the available long term funds at a higher rate
if return investment advances.
Liquidity is mostly concerned to the banks because they should be
in a position to repay all it deposits at any time. So it has to maintain total
liquidity regardless of the purposes of met in such liquidity so it has to
maintain good liquidity ratio. He banks should improve as liquidity.

BIBILIOGRAPHY

R.K. Sharma Shashi K. Guptha ----- Management Accounting

P.V. Varshney ---- Banking Law and practices

S.N. Maheshwari ---- Financial Management

Web sites:

WWW.ICICIBANK.COM
WWW.RBI.ORG.COM