TABLES OF CONTENTS

CHAPTER NO. CHAPTER NAME PAGE NO.

I. Introduction 7

1.1 Objectives of the Study 22

1.2 Scope of the study 23

1.3 Limitations of the study 25

II. Company profile 28

III. 3.1 Review of literature 55

3.2 Research Methodology 57

IV. Analysis and Interpretation 60

V. 5.1 Findings 86

5.2 Suggestions 88

5.3 conclusion 90

Bibliography 92

Annexure 93

1
 INTRODUCTION

The institutional training gives the students, as practical knowledge about the functioning of the
company as such there is a wide difference between doing things practically and learning the same
things theoretically.

The institutional training enlightens the mind of the students about various policies, procedures
and program of the organization. In addition, it helps to keep in touch with the person holding high
position which enriches.

Institutional training may be described as process of placing the students before an organization,
making them familiar with its line of function and asking them to perform some duties, which involves
technical skills.

This training bridges of group between for fetch theory and down to earth really in an
organization. Such training is an added significance because kinds of jobs. So the students are become
more adaptable and efficient in the future.

The subject of institution training is almost very important among the entire subject that a
student comes across during their course.

2
FINANCE (MEANING)
Finance is the life blood and nerve centre of a business, just as circulation of blood is essential in the
human body for maintaining life. Finance is very essential for smooth running of business. Right from
the very beginning i.e., conceiving an idea to business, finance is needed to promote or establish the
business, acquire fixed assets, make investigations such as market surveys etc., develop product, keep
men and machines at work, encourage management to make progress and create values. Even an
existing firm may require further finance for making improvement or expanding the business.

ORGANIZATION OF THE FINANCE FUNCTION

Many tasks of financial management and allied areas (like accounting) which are specialised in
nature and which are attended to by specialists. These tasks will be performed by two financial officers
of the firm, the treasurer and the controller. The treasurer is responsible mainly for financing and
investment activities and the controller is concerned primarily with accounting and control.

3
FUNCTIONS OF TREASURER AND THE CONTROLLER

TREASURER CONTROLLER

Obtaining finance Financial accounting

Banking relationship Internal auditing

Cash management Taxation

Credit administration Management accounting

Capital budgeting And control

4
5
ORGANIZATION OF FINANCE FUNCTION FINANCIAL SYSTEM

The financial system comprises of a variety of intermediaries, markets, and instruments. It provides the
principal means by which savings are transformed into investments.

The financial system is divided into six sections

 Functions of the financial system

 Financial assets

 Financial markets

 Financial market returns

 Financial intermediaries

 Regulatory infrastructure

FUNCTIONS OF THE FINANCIAL SYSTEM

• It provides a payment system for the exchange of goods and services.

• It enables the pooling of funds for undertaking large scale enterprises.

• It provides a mechanism for spatial and temporal transfer of resources. It provides a

way for managing uncertainty and controlling risk
• It generates information that helps in coordinating decentralized decision making.

• It helps in dealing with the incentive problem when one party has an informational
advantage.

6
 FINANCIAL MANAGEMENT

In order to manage finance, a new management discipline was conceived. Such discipline is known as
financial management. Financial management was a branch of Economics till 1890. Later it was
developed into a separate subject. Financial management refers to the management of flow of funds in
the firm.

DEFINITION
SOLOMON financial management is concerned with the efficient use of an important economic
resource, namely capital funds. PHILLIOPPATUS financial management is concerned with the managerial
decisions that result in the acquisition and financing of short term and long term credits for the firm.

IMPORTANCE OF FINANCIAL MANAGEMENT

 The importance of financial management cannot be overemphasized. In every organization,

where funds are involved, sound financial management is necessary.

 Finance manager must realize that when a firm makes a major decision, the effect of the action
will be felt throughout the enterprise.

 Sound financial management is essential in both profit and non-profit organizations.

 The financial managements help in monitoring the effective deployment of fund in fixed assets
and in working capital.

 Financial management also helps in ascertaining how the company would perform in future.

 It helps in indicating whether the firm will generate enough funds to meet its various obligations.

7
 OBJECTIVES OF FINANCIAL MANAGEMENTS

1. Basic objectives

2. Other objectives

Basic Objectives

• Maintenance of liquid assets

• Profit maximization

• Wealth maximization

Other objectives

1. Ensuring a fair return to shareholders.

2. Building up reserves for growth and expansion.

3. Ensuring maximum operational efficiency by efficient and effective utilization of finances.

4. Ensuring financial discipline in the organization.

8
Methods of financial management
Financial management is concerned with raising financial resources and their effective utilization
towards achieving the organization’s goals. This requires application of appropriate financial methods
or tools. The term „financial method‟ refers to any logical method or technique to be employed for the
purpose of accomplishing the following two goals

1. Measuring the effectiveness of firm’s actions and decisions

2. Measuring the validity of the decisions regarding accepting or rejecting future projects
The important financial tools or methods used by the financial manager in perform of
his job

• Cost of capital

• Financial leverage or trading on equity

• Capital budgeting appraisal methods

• Abc analysis

• Ratio analysis

• Fund flow analysis and cash flow analysis

9
Financial statement (meaning)
Financial statements refer to formal and original statement prepared by a business concern to
disclose its financial information. AICPA (American Institute of Certified Public Accountants) says
“financial statements are prepared for the purpose of presenting a periodical review or report on the
progress by the management and deal with

1. The status of investments in the business and

2. The results achieved during the period under review

Nature of financial statement

Financial statements are prepared to review the state of investment in a business and result achieved
during a specific period. The reflect recorded facts, accounting conventions and personal judgments.

Functions or Important of financial statements

Financial statements provide meaningful, useful and valuable information periodically regarding
financial position and future prospects of the business concern. Various parties interested can utilise
the information provided by the financial statements for analysis and interpretation

10
For management

Management will be able to take effective decisions only when correct and reliable
information is at its disposal. If information is not available management can neither
plan nor fulfil the functions of operations and control.

For financiers

Financial statements are also of great importance to the financiers and lenders. Lenders
need information regarding customer’s financial position, solvency, credit standing,
profitability, etc. Financial statements help the banker and lenders to decide whether
to extend loans to the customers.

For creditors

Trade creditors are another class for whom financial statements are important. Trade
credit implies extending facilities of deferred payment for credit purchase by seller to
buyer. Financial position of a creditor can be revealed by financial statements with a
help of solvency ratios, cash and fund flow analysis, etc.

For investors

Present and prospective investors are interested in studying financial statements to

assess earning capacity, growth potential and efficiency of management.

11
Limitation of financial statements

1. Information show in financial statements is not precise.

2. Financial statements do not always disclose the correct financial positions of business concerns.

3. Balance sheet of concern is a static document as it discloses the financial position of a concern on
a particular date.

4. Information disclosed by profit and loss account may not be real profit.

5. Financial statement of one period may not be comparable as such with the statement of other
periods.

FINANCIAL STATEMENT ANALYSIS DEFINITION

According to Myers, “financial statements analysis is largely a study of the relationship among
the various financial factors in a business as disclosed by a single set of statements and a study
of the trend of these factors as shown in a series of statements.”

OBJECTIVES
i. To interpret the profitability and efficiency of various business activities with the help of
profit and loss account.

ii. To measure managerial efficiency of the firm

iii. To measure short-term and long-term solvency of the business. iv. To ascertain
earning capacity in future period.

v. To determine the future potential of the concern.

vi. To measure utilization of various assets during the period.

12
 vii. To compare operational efficiency of similar concerns engaged in the same industry.

LIMITATIONS

a. Based on past data

b. Financial statement analysis cannot be a substitute for judgment.

c. Reliability of figures

d. Different interpretations

e. Change in accounting methods

f. Price level changes

g. Limitations of the tools of analysis

OBJECTIVES OF THE STUDY

The objectives of the study are furnished below:

PRIMARY OBJECTIVES

• To study and analyse the financial performance of the ING VYSYA BANK LTD.

• To analyse the profitability and solvency position of the bank.

SECONDARY OBJECTIVES

• To study the working capital management of the bank.

• To access the factors influencing the financial performance of the organization.

• To study financial strengths and weaknesses of the firm.

• To find out the performance of the study through ratio analysis.

• To understand the overall financial position of the bank.

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 SCOPE OF THE STUDY

 This study clearly defines the financial status of the concern during the working period.

 The study report being made here brings out the financial structure and the position of
the ING VYSYA BANK comparing from different years.

 The financial study helps us to analyse the financial background and the utilization of
the income earned through the organization process.

NEED FOR THE STUDY

 To understand the meaning, significance and limitation of financial statement analysis.

 To calculate liquidity, solvency, profitability and activity ratios of the organization.

 To make a comparative study and give solutions for the organisational improvement.

14
LIMITATIONS

The limitations of the study are furnished below:

• The financial details of the bank are collected for 4 years only.

• ING Vysya Bank is a multinational company cannot be studied in a month so time is considered
as main constrain.

• The information given from the bank was limited.

• Time is 6 weeks, so much of economic fluctuations are not seen.

• In this study, only selected ratios are used.

• Since the study relates only to the financial performance of ING VYSYA BANK, the findings and
suggestions cannot be generalised.

15
COMPANY PROFILE

16
 INTRODUCTION

The Origin of ING Group

ING group originated in 1990 from the merger between “Nationale Nederlanden” the largest Dutch
Insurance Company and “NMB Post Bank” Group.

Combining roots and ambitions, the newly formed company called Internationale
Nederland Group Market circles soon abbreviated the name to I-N-
G. The company followed suit by changing the stat utory name to ING Group. ING is a global financial
services company providing banking, investments, and life insurance and retirement services and
operates in more than 50 countries.

PROFILE
The ING VYSYA bank is a premier player in the Indian private banking sector. It operates 530
branches in all over the country. With more than 28000employees.
ING is a global financial institution of Dutch origin offering banking, investments, life insurance
and retirement services. ING serve more than 85 million private, corporate and institutional customers
in Europe, North and Latin America, Asia and Australia. They draw on their experience and expertise,
their commitment to excellent service and their global scale to meet the needs of a broad customer
base, comprising individuals, families, small businesses, large corporations, institutions and
governments

STRATEGY

ING‟s over all mission is to help customers manage

their financial future. Capitalizing on changing customer preferences and building on our solid business
capabilities, ING‟s strategic focus is on banking, investments, and life insurance and retirement
services. They provide retail customers with the products they need during their lives to grow savings,
manage investments and prepare for retirement with confidence. With wide range of products,

17
innovative distribution models and strong footprints in both mature and developing markets, ING has
the long-run economic, technological and demographic trends on their side. ING aligns its business
strategy around a universal customer ideal saving and investing for the future should be easier. While
steering the business through turbulent times, ING will execute efforts across all its business lines to
strengthen customer confidence and meet their needs, preserve a strong capital position, further
mitigate risks and bring its costs in line with revenue expectations.

STRATEGIC INTENT VISION

We are committed to providing quality and door step banking service to our customer, service
quality being our paramount importance.

CORPORATE RESPONSIBILITY

ING wants to pursue profit on the basis of sound business ethics and respect for its
stakeholders. Corporate responsibility is therefore a fundamental part of ING‟sstrategy ethical, social
and environmental factors play an integral role in business decisions

ING Vysya Bank Ltd., is an entity formed with the coming together of erstwhile, Vysya Bank Ltd,
a premier bank in the Indian Private Sector and a global financial powerhouse, ING of Dutch origin,
during Oct 2002.

The origin of the erstwhile Vysya Bank was pretty humble. It was in the year 1930 that a team of
visionaries came together to form a bank that would extend a helping hand to those who weren’t
privileged enough to enjoy banking services.

It’s been a long journey since then and the Bank has grown in size stature to encompass every
area of present-day activity and has carved a distinct identity of being India’s Premier Sector Bank.

18
 In 1980, the bank completed 50 years of services to nation and the post 1985; the bank made
rapid strides to reach the coveted position of being the number one private sector bank. In 1990, the
bank completed its Diamond Jubilee year. At the Diamond Jubilee Celebrations, the Finance Minister
Prof. Madhu

Dandavate, had termed the performance of the bank „Stupendous‟. The 75th anniversary, the Platinum
Jubilee of the bank was celebrated during 2005.

The long journey of seventy-five years has had several milestones……

1930 Set up in Bangalore

1948 Scheduled Bank

1985 Largest Private Sector Bank

1897 The Vysya Bank Leasing Ltd Commenced

1988 Pioneered the concept of Co branding of Credit cards

1990 Promoted Vysya Bank housing finance ltd

1962 Deposits cross Rs.100 Crores

1993 Number of Branches crossed 300

1996 Signs Strategic Alliance with BBL., Belgium. Two National Awards by Gem &
Jewellery Export Promotion Council for excellent performance in Export
Promotion

19
1998 Cash management Services & Commissioning of VSAT, Golden Peacock
Award – for the best HR Practices by institute of Directors. Rated as Best
Domestic Bank in India by Global Finance (International Finance Journal –
June 1998)

2000 State – of – the – art Date centre art ITPL, Bangalore

RBI clears setting up off ING Vysya Life Insurance Company

2001 ING Vysya Bank commenced Life Insurance Company

2002 The Bank launched a range of products & services like the Vys Vyapar Plus,

the range of loan schemes for traders, ATM services, Smartest, personal assistant service, Save &
secure, an account that provides accident hospitalization and insurance cover, Sam bandh, the
international debt card and the mi-bank net banking service.

2002 ING takes over the Management of the Bank from October 7th, 2002

RBI clears the new name of the Bank as ING Vysya Bank Ltd, vide their letter of 17.12.02

2003 Introduced customer friendly products like Orange Savings, Orange

Current and Protected Home Loans

2004 Introduced Protected Home Loans – a housing loan product

2005 Introduced Solo – My own Account Youth and Customer Service Line – Phone
Banking
Service

2006 Bank has networked all the branches to facilitate „AAA‟ transactions i.e. Anywhere, Anytime &
Anyhow Banking

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In terms of pure numbers, the performance over the decades can better be appreciated from the following table

Rs. In Millions

YEAR NETWORTH DEPOSITS ADVANCES PROFITS OUTLETS

1940 0.001 0.400 0.400 0.001 4

1950 1.40 5.30 3.80 0.09 16

1960 1.60 20.10 13.50 0.13 19

1970 3.00 91.50 62.80 0.74 39

1980 11.50 1414.30 813.70 1.13 228

1990 162.10 8509.40 4584.80 50.35 319

2000 5900 74240 39380 443.10 481

2001 6527 81411.10 43163.10 371.90 484

2002 6863.24 80680 44180 687.50 483

2003 7067.90 91870 56120 863.50 456

2004 7473.20 104780 69367 590.01 523

2005 7094 125693.10 90805.90 (381.80) 536

2006 10196.90 133352.50 102315.20 90.60 562

2007 11101.90 154185.70 119761.70 889 626

2008 14260 204980 146500 1569 677

2009 15940 248900 167510 1888 857

2010 2223 258650 185070 2422 866

21
 Outlets comprises of 468 branches, 13 ECs, 28 Satellite Offices and 357 ATMS as of March
31st 2010. Additionally the bank also has Internet Banking, Mobile Banking Customer Service Line
for Phone Banking Services.

THE ORIGIN OF ING GROUP

On the other hand, ING Group originated in 1990 from the merger between
Nationale - Nederland

NV the largest Dutch Insurance Company and NMB Post Bank Group NV.
Combining roots and ambitions, the newly formed company called “Internationale Nederlanden Group”.
Market circles soon abbreviated the name to I-N-G. the company followed suit by changing name to
“ING Group N.V.”

PROFILE
ING has gained for its, integrated approach of banking, insurance and asset management.
Furthermore, the company differentiates itself from other financial service providers by successfully
establishing life insurance companies in countries with emerging economies, such as Korea, Taiwan,
Hungary, Poland, Mexico and Chile. Another specialization is ING Direct, an Internet and direct
marketing concept with which ING is rapidly winning retail marketing share in mature markets. Finally,
ING distinguishes itself internationally as a provider of
„employee benefits‟ i.e. arrangements of nonwage benefits, such as pension plans for companies and
their employees.

MISSION
ING‟s mission is to be a leading, global, client-focused, innovative and low cost provider of financial
services through the distribution channels of the client’s preference in markets where ING can create
value.

22
THE NEW IDENTITY
The immediate benefit to the bank, ING Vysya Bank, has been the pride of having become a Member
of the global financial giant ING. As at the end of the year December 2010, ING‟s total assets exceeded
1247 billion Euros, with a underlying net profit of 3893 million Euros, employed around 105000 people,
serves over 85 million customers, across 40 countries. This global identity coupled with the backup of a
financial power house and the status of being the first Indian International Bank, would also help to
enhance productivity, profitability, to result in improved performance of the bank, for the benefit of all
the stake holders.

ING VYSYA MANAGEMENT TEAM

Name (Sri)

Arun Thiagarajan part-time

Chairman

Shailendra Bhandari
Managing Director & Chief Executive Officer

Aditya Krishna
Director

Richard Cox
Director
Santhosh Ramesh Desai
Director

M. Damodaran
Director

Vaughn Nigel Richtor

Director

23
Peter Henri Maria Stall
Director

Lars Kramer
Director

Vikram Talwar
Director

Mark Edwin Newman

Director

24
EXECUTIVE MANAGEMENT COUNCIL (IN ALPHABETICAL
ORDER) (UPDATED AS OF 28.07.10)

NAMES DESIGNATION SBU/FUNCTION PLACE

Ashok Rao B Chief of Staff Legal and compliance Bangalore

Jan Van Chief Risk Officer Credit Optional & Bangalore

Wellen Market Risk

Janak Desai Country Head – Treasury & Mumbai

wholesale Banking
Wholesale Banking

Jayant Chief Financial Finance & Bangalore

Mehrotra Officer Accounts

Meenakshi A Head-Operations Operations Bangalore

MSR Chief Audit Internal Audit Bangalore

Manjunatha Executive Department

Prasad C V G Chief Information Information & Bangalore

Officer Technology

25
 SWOT ANALYSIS

STRENGTHS WEAKNESS

 ING as one on the biggest financial  Very few branches

MNC. 7th in 500 fortunes  Less variety of financial/banking
 Only foreign bank which has acquired products
an Indian Private Bank (ING Vysya  location
Bank)

 Higher rate of interest than other

private banks

 Most of the financial plans are legalized

under 80 (ccc)

 Top notch customer care and staff

behavior

 Unique features with different kinds of

accounts

 Working hours

26
 OPPORTUNITIES THREATS

 New segments of Doctors, Students

and CAs as they like innovation in  Presence of two top private
their financial needs and like to banking players in the market (ICICI
enjoy the services & HDFC)
 High class (upper strata) population  Large market share already
of city captured
 Increase in different kind of  Non willingness of Muzaffarnagar
financial products citizens to change for something
new, or to try innovation in their
 NGO and public relations banking

27
 BRANCHES OF ING VYSYA BANK

STATE BRANCH NAME

ANDHRA PRADESH ADONI, AMALAPURAM, ARYA VYSYA

SANGHAM ,ANAKAPALLE

UTTAR PRADESH AGRA, ALLAHABAD, BAREILLY

GUJARAT AHMEDABAD, MANI NAGAR, BARODA

MAHARASHTRA AHMED NAGAR, AURANGABAD

RAJASTAN ALWAR

UTTAR PRADESH ALAHABAD, ALIGARH, MATHURA

RAJASTAN ALWAR

WEST BENGAL ASANSOL

TAMIL NADU ADYAR, ANNA NAGAR, ASHOK NAGAR, G.N.

STREET, GUINDY, KILPAUK, MADIPAKKAM,
MOUNT ROAD, MYLAPORE, PERUNGUDI,

KARNATAKA BANGALKOT, BAGDAL, AVENUE ROAD,

BANASHANKARI (DEVAGIRI) BRANCH,
BANGALORE TURF CLUB, BOMMANAHALLI

ORISSA BARBIL, BERHAMPUR, BHUBANESWAR

28
 PRODUCT PROFILE

ING Vysya Bank Ltd

The ING Vysya Bank Ltd is one of the well-known financial organizations in India. It is applicable
for both short term and long term financial solutions. It is mainly an entity or a venture which has been
formed with the global financial giant ING of Netherlands. The ING Vysya Bank Ltd is a trusted name in
the banking and commercial sector of the country.

GROWTH OF ING Vysya Bank Ltd

The ING Vysya Bank Ltd was established in the month of October in the year 2002. The bank
came into existence when the Vysya Bank Ltd went into a venture with global financial giant ING. Vysya
Bank Ltd was one of the first private sector banks in the country and was set up in the year 1930. The
main objective of setting up the bank was to provide financial support to the various sectors of the
economy. In the year 1948, the Vysya Bank was listed among the Scheduled Banks.

In order to increase its profit and add to its operations, the Vysya Bank Ltd merged with ING.
Currently, it is one of the well known banks in the country and has around 677 branches across various
parts of the country. The headquarters of the bank is located in the city of Bangalore. Among the total
number of branches, there are 407 regular branches, 28 satellite offices, 39 extension counters. The
number of ATMs is around 203 which are expected to increase within the next few years. The deposit of
the bank amounts to around ` 204980.00 millions while the net worth is around` 14260.00 millions. The
profits of the bank amount to around ` 1569.00 million.

PRODUCTS AND SERVICES OF ING Vysya Bank Ltd

Being a well known name in the domain of financial and banking services in the country, the ING
Vysya Bank Ltd has come up with a number of financial solutions and services in a number of areas.
Some of the well known segments in which the bank offers customized and specialized services are

• Accounts and deposits

• Short and long term loans
• Private banking

29
• NRI services

Personal Banking The personal banking department of ING Vysya Bank Ltd offers high quality services
and solutions to cater to the financial needs and preferences. The high end solutions make them a one
stop organization to fulfil the needs and requirements of the customers. Some of the well known
services offered in the segment of personal banking are

 Mutual Funds

 Tax Savings Bonds

 NRI Services

 Internet Banking

 Phone Banking

 Mobile Banking

 Self-Banking

 Term deposits

 Demat accounting

 Wealth management
Wealth Management services the wealth management services of the ING Vysya Bank Ltd offers the
best services in order to take care of the needs and preferences of the consumers in various wealth
management sectors. The secure services offered by the bank also minimize the risk processes.

In addition to these, ING Vysya Bank Ltd also offers business banking facilities and services of high
standards. The services are meant to take care of the business needs and also provide high degree of
financial stability to the various corporate organizations and business sectors. Some of the well known
services that are offered include

• Long and term loans in the agro based sector

• SME- Power Business account and loans
• Financial market analysis
• Market trading
• Asset liability management services
• Financial market sales
• Cash management services

30
• Corporate and investment banking services
• Off shore borrowing services
• Trade and community finance services

In addition to these, ING Vysya Bank Ltd also carries out research and development to add more
stability to the Indian economic scenario. The customers are also given useful guidance about investing
their assets and funds.

Accounts & Deposits

Savings

 Orange Saving

 Advantage Salary

 Aspira Corporate Salary Solution

 Orange Salary

 Solo

 Saral

 General

 Freedom

 ING Formula Savings Account

31
 Current Accounts

 Orange Current

 Advantage Current

 General Current

 Comfort Current

 Flexi Current Account

Term Deposits
 Fixed Deposit

 Cumulative Deposit

 Akshaya

 Tax Advantage Deposit

 Demat Account

 Jiyo Easy Hand Book – Terms & Conditions

Loans
 Home Loan

 Home Equity Loan

 Personal Loans

 NRI Loan

32
 Education Loan

 Model Policy

Private Banking
 Features

 Products & Services

 Special Services

NRIs
 Country Head Speaks

 Latest Market Updates

 Private Banking Program

 Our Team

 Contact us

 About us

Wealth Management
 General Insurance

 Life Insurance

 Investment Products

 Wealth Management process

33
 NRI Services
 Accounts and Deposits

 RSA

 NRE Savings Account

 NRO Savings Account

 RCA

 NRE Current Account

 NRO Current Account

 RFD

34
 NRE Fixed Deposit

NRO Fixed Deposit

NRE Akshaya Deposit

NRO Akshaya Deposit

 NRE Cumulative Deposit

 NRO Cumulative Deposit

 FCD

 FCNR Akshaya Deposits

 FCNR Fixed Deposits

 ARI

 RFC Savings Account

 RFC Fixed Deposit

 RFC Akshaya Deposit

 Downloadable CIF & NRI A/C opening Forms

 NRI Home Loan

 Mi-remit

 Telegraphic / Wire Transfers

 Funds Transfer cheques / DDs / TCs

 NRI FAQs

 Access Points

35
 ATM

 Branch

 Customer Service Line

Net Banking

Self Banking

SMS

Contact Us

 Business Continuity Management

Cards
 ING Gold Credit Card

 Debit Card

 Most Important Terms & Conditions [MITC]

 Card member Terms & Conditions

 Fair practice code for credit card operation

 DSA's code of conduct

 Master Circular on Credit Card Operations of Banks

 Debit Collection Standards in India

36
 Easy Banking
 Internet Banking

 mi-bank Features

 Become mi-bank User

 Log into mi-bank

 Online Security Guidelines

 Phone Banking

Current Functionalities How to use

IVR?

Mobile Banking

ATM Kiosks

 FAQs on ATMs

 Payment Services

 Electronic Funds Transfer

 RTGS

 NEFT

 Bill Pay

 Smartserv

 Collection Service

 Doorstep Banking Service

 Important Policies

37
 Cheque Collection Policy

 Compensation Policy

 Safe Deposit Locker Policy

 Interest Rates

 Domestic & NRO Term Deposit Rates

 NRE Deposit Rate

 FCNR & RFC Rates

38
 Service Charges
 Savings Bank Accounts

 Orange, Salary, Solo & Freedom Accounts

 Saral, General Savings Bank Account & its variants

 Current Accounts

 Demat Account

 DD PO TT Charges

 Term Deposit Accounts

 Safe Deposit Lockers Rental

 Safe Custody of Articles

 Cheques /DD/ Bills Purchased

 Credit Card

 Miscellaneous

 Loans Processing Fee

 Retail Assets

 Agri & Social Banking

 Wealth Management Services - Charges and Commissions

 Trade Finance Products & Services

39
BUSINESS

SME
 Business Loans- M Power BLT

 Business Loans - Rent

 Business Loans (Small Scale Industries) - CGTSI

 Business Loans (Small Scale Industries) –M Power SSI

 M Power Business Account

 Code of Commitment to Micro & Small Enterprises

 Policy for Lending to Micro and Small Enterprises(MSE)

 Micro and Small enterprises (MSE) Rehabilitation Policy

 OTS for MSMEs

 Contact Us

 About us

Agri
 Term Loan

 Short term Loan

 Wholesale Banking

 Corporate & Investment Banking

 Emerging Corporates

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REVIEW OF LITERATURE

REVIEW RELATED TO LITERATURE

This part provides a review of some notable, theoretical and empirical research works done by
various institutions and authors in evaluating the financial performance.

Mr. K. Veerakumar in his study on “An evaluation of the Performance of the Ramanathapuram
District Central Co- operative Bank Limited” mainly concluded that for improving the
Performance of the Bank , its reserves and capital should be strengthened.

Miss. H. Rehana Praveen in her study on “ Performance Evaluation of Ponnambalam Finance ,

Coimbatore” mainly suggested that for improving the performance of the Finance the firm
must recovered all its bad debts within time.

Miss. P. Uchimahali in her study on “ Performance Analysis of Lakshmi Engineering Works ,

Kovilpatti ” analysed and suggested that the company must take efforts to reduce the stock
level and utilize investments in fixed and current assets to strengthen the position of the
company.

43
 RESEARCH METHODOLOGY

Methodology is usually a guideline system for solving a problem, with specific

components such as phases, tasks, methods, techniques and tools. It can be defined
also as follows

1. “The analysis of the principles of methods rules and postulates

employed by a discipline.”

2. “The systematic study of methods that are, can be, or have been

applied within a discipline”;

3. “The study or description of methods”

A methodology can be considered to include multiple methods, each as applied to

various facets of the whole scope of the methodology. The research can be divided
between two parts; they are qualitative research and quantitative research

PRIMARY DATA
Data that has been collected from first-hand-experience is known as primary data.
Primary data has not been published yet and is more reliable, authentic and objective.
Primary data has not been changed or altered by human beings, therefore its validity is
greater than secondary data.

IMPORTANCE OF PRIMARY DATA

 Primary data can’t be neglected

 A research can be conducted without secondary data. But a research based on

only secondary data is least reliable and may have biases

 In statistical surveys it is necessary to get information from primary sources and

work on Primary data

44
SECONDARY DATA
Data collected from a source that has already been published in any form is called as
secondary data. The review of literature in any research is based on secondary data.
Mostly from books, journals and periodicals.

IMPORTANCE OF SECONDARY DATA

 Secondary data can be less valid but its importance is still there.

 Sometimes it is difficult to obtain primary data.

 In these cases getting information from secondary sources is easier and possible.

 Sometimes the primary data is present but the respondents are not willing to
reveal it.

PURPOSE
The main purpose of this study is to study the financial performance of ING
VYSYA BANK LTD.

METHOD OF DATA COLLECTION

The information needed for this study was collected from the organization in the
form of secondary data.

TOOLS USED IN ANALYSIS

Ratio analysis

PERIOD OF STUDY
The study covers the period of (2011-12 to 2012-13) ING VYSYA BANK

45
 RATIO ANALYSIS

Ratio analysis is one of the techniques of financial analysis where ratios are used as a
yardstick for evaluating the financial condition and performance of a firm. Ratio analysis
was pioneered by Alexander wall who presented a system of ratio analysis in the year
1909.

RATIO (MEANING)
A ratio is a mathematical relationship between two items expressed in a
quantitative form.

MODES OF EXPRESSION OF RATIOS

a. In proportion

b. In rate or times or coefficient

c. In percentage

ADVANTAGES OF RATIO ANALYSIS

a) Forecasting

b) Managerial control

c) Facilitates communication

d) Measuring efficiency

e) Facilitating investment decisions

f) Useful in measuring financial solvency

g) Inter firm comparison

LIMITATIONS
a. Practical knowledge

b. Ratios are means

c. Inter-relationship

d. Non availability of standards or norms

e. Accuracy of financial information

46
 f. Consistency in preparation of financial statements

g. Detachment from financial statements

h. Time lag

i. Change in price level

CLASSIFICATION OF RATIOS
A. CLASSIFICATION OF RATIOS BY STATEMENTS

• Liquidity Ratio • Gross Profit • Return on

• Current ratio Ratio Investment
• Proprietary • Operating • Return on
Ratio Ratio Shareholders
• Debt-Equity • Operating Funds
Ratio Profit Ratio • Stock Turnover
• Fixed Asset • Expense Ratio • Debtors
Ratio • Net Profit Turnover
• Capital Ratio • Creditors
Gearing Ratio Turnover
• Fixed assets
Turnover
• Earnings Per
Share

BALANCE SHEET PROFIT&LOSS B/S AND P&L

RATIOS A/C RATIOS A/C RATIOS

47
B. CLASSIFICATION BY RELATIVE IMPORTANCE

This classification is being adopted by the British Institute Of Management

where there are three types of ratios

1. PRIMARY RATIOS

a) Return on capital employed

b) Assets turnover

c) Profit ratios

2. SECONDARY PERFORMANCE RATIOS

a) Working capital turnover

b) Stock to current assets

c) Current asset to fixed assets

d) Stock to fixed assets

e) Fixed assets to total assets

3. SECONDARY CREDIT RATIOS

a) Debtors Turnover

b) Liquid Ratio

c) Current Ratio

d) Creditors Turnover

e) Average Collection Period

4. GROWTH RATIOS

a) Growth Rate in Sales

b) Growth Rate in Net Assets

48
 ANALYSIS AND INTERPRESTATION

RATIO ANALYSIS OF ING VYSYA BANK

CURRENT RATIO

Current ratio is an indicator of firm’s commitment to meet its short term

liabilities. Current ratio is an index of the concern’s financial stability since it shows the
extent of the working capital which is the assets exceeds the current liabilities. As
stated earlier a higher current ratio would indicate inadequate employment of funds
while a poor current ratio is a danger signal the management.

It shows the business is trading beyond its sources. The idea ratio is 2:1.

Current ratio = Current Assets / Current Liabilities

CURRENT RATIO
YEAR CURRENT RATIO

2009 0.07

2010 0.05

2011 0.04

2012 0.05

49
 CURRENT RATIO
0.08

0.07

0.06

0.05

0.04
CURRENT RATIO
0.03

0.02

0.01

0
2009 2010 2011 2012

Sources: Secondary Data

INTREPRETATION:

The ideal current ratio is 2:1

From the above calculation it is inferred that current assets for meeting current
liabilities are more during the year 2009 and later starts decreasing during the year
2010 and 2011. But, later it starts increasing during the year 2012 which shows that
current assets are more than current liabilities.

50
 LIQUID RATIO OR CASH POSITION RATIO
Liquid Ratio is also known as Acid test ratio. This is the ratio of liquid assets and liquid
liabilities. The liquid assets are the assets that are converted into cash and include cash
balances, bills receivables, Debtors and short term investments. Inventory and prepare
expenses are not including in liquid ratio. Liquid liability includes all liability except bank
over draft the ideal ratio is 0.5:1.

Liquid Ratio = Liquid Assets / Liquid Liabilities

LIQUID RATIO
YEAR LIQUID RATIO

2009 6.57

2010 11.04

2011 13.25

2012 15.28

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 LIQUID RATIO
18

16

14

12

10

8 LIQUID RATIO

0
2009 2010 2011 2012

Sources: Secondary Data

INTERPRETATION

The ideal liquid ratio is 1:1

From the above said table reveals that the liquid ratio during the year 2009- 2012
generally shows increasing trend. Liquid assets are sufficient to meet the current
liabilities. This shows the liquid position of assets is found to be very good.

DEBT-EQUITY RATIO

This ratio is ascertained to determine long- term solvency position of a company. Debt
equity ratio is also called “external internal equity ratio” . The ratio is calculated to
measure the relative portion of outsider’s funds and shareholders‟ funds invested in
the company. The best equity ratio shows the long- term financial position of an
organization. A lower debt equity ratio implies that a company as a better capacity to
meet in commitments.

52
Debt Equity Ratio = Long – Term Debts / Shareholders
Funds

DEBT-EQUITY RATIO
YEAR DEBT EQUITY RATIO

2009 15.66

2010 11.65

2011 11.99

2012 9.08

DEBT-EQUITY RATIO
18

16

14

12

10

8 DEBT-EQUITY RATIO

0
2009 2010 2011 2012

Sources: Secondary Data

53
INTERPRETATION

An ideal debt equity ratio is “1”

From the above calculation it is observed that debt equity ratio is declined
during the year 2010 and later it starts increasing during the year 2011 and at last it
decreased in the year 2012. This reveals that the debt is less when compared the
owners fund in the year 2012.

NET PROFIT MARGIN RATIO

Net profit margin (or profit margin, net margin, return on

revenue) is a ratio of profitability calculated as after-tax net
income (net profits) divided by sales (revenue). Net profit
margin is displayed as a percentage. Net profit margin is a
key ratio of profitability. It is very useful when comparing
companies in similar industries. A higher net profit margin
means that a company is more efficient at converting sales
into actual profit.

Net Profit Margin Ratio = Profit (After Tax) / Revenue

54
NET PROFIT MARGIN RATIO
YEAR NET PROFIT MARGIN RATIO

2009 6.77

2010 8.48

2011 9.56

2012 10.08

NET PROFIT MARGIN RATIO

12

10

6
NET PROFIT MARGIN RATIO

0
2009 2010 2011 2012

Sources: Secondary Data

INTERPRETATION

From the above said table it is revealed that during the year 2009 there is a
low net profit ratio and there is a upward trend in the net profit ratio which shows
the ING VYSYA BANK is earning more profits in the years 2011 and 2012 when
compared to the previous years.

55
EARNING RETENTION RATIO
Earning Retention Ratio is also called as Plowback Ratio. As per definition, Earning
Retention Ratio or Plowback Ratio is the ratio that measures the amount of earnings
retained after dividends have been paid out to the shareholders. The prime idea behind
earnings retention ratio is that the more the company retains the faster it has chances
of growing as a business. There is always a conflict when it comes to calculation of
Earnings retention ratio, the managers of the company want a higher earnings
retention ratio or plowback ratio, while the shareholders of the company would think
otherwise, as the higher the plowback ratio the uncertain their control over their shares
and finances are. This ratio shows the amount that has been retained back into the
business for the growth of the business and not being paid out as dividends. The
investors prefer to have a higher retention ratio in a fast growing business, and lower
retention ratio in a slower growing business.

Earnings Retention Ratio = Retained Earnings /

Net Profit After tax and
Preference Dividend * 100

EARNING RETENTION RATIO

YEAR EARNING RETENTION RATIO

2009 86.97

2010 85.51

2011 86.11

2012 82.53

56
 EARNING RETENTION RATIO
88

87

86

85

84
EARNING RETENTION RATIO
83

82

81

80
2009 2010 2011 2012

Sources: Secondary Data

INTERPRETATION

From the above calculation it is analysed that during the year 2009, earning
retention ratio is increased to 86.97 and in 2010 it is declined to 85.51 and in the year
2011 it is increased to 86.11 and in the year 2012 it is decreased to 82.53. it indicates
that the bank is not following uniform policy in retaining the funds.

EARNINGS PER SHARE

EPS measures the profit available to the equity shareholders on a per share basis, that
is, the amount that they can get on every share held. It is calculated by dividing the
profits available to the equity shareholders are represented by net profits after taxes
and preference dividend. Thus,

EPS = Net Profit available to equity-holders / Number of

Ordinary Shares outstanding

57
EPS is a widely used ratio. Yet, EPS as a measure of profitability of a firm form the
owner’s point of view should be cautiously as it does not recognize the effect of
increase in equity capital as a result of retention of earnings.

EARNINGS PER SHARE

YEAR EARNINGS PER SHARE

2009 18.40

2010 20.19

2011 26.34

2012 30.40

EARNINGS PER SHARE

35

30

25

20

EARNINGS PER SHARE

15

10

0
2009 2010 2011 2012

Sources: Secondary Data

58
INTERPRETATION

From the above said table it is observed that during the year 2009, the earnings per
share is decreasing and later it starts increasing. In other words, the EPS has increased
over the years. It shows that the firm’s profitability has improved.

ASSETS TURNOVER RATIO

Asset turnover (total asset turnover) is a financial ratio that measures the efficiency of a
company's use of its assets to product sales. It is a measure of how efficiently
management is using the assets at its disposal to promote sales. The ratio helps to
measure the productivity of a company's assets.

Assets Turnover = Revenue / Average Total Assets OR

In Days = 365 / Assets Turnover

The numerator of the asset turnover formula shows revenues which are found on a
company's income statement (statement of comprehensive income) and the
denominator shows total assets which is found on a company's balance sheet
(statement of financial position). Asset turnover is a financial ratio that measures the
efficiency of a company's use of its assets in generating sales revenue or sales income to
the company. Companies with low profit margins tend to have high asset turnover,
while those with high profit margins have low asset turnover.

ASSETS TURNOVER RATIO

YEAR ASSETS TURNOVER RATIO

2009 0.10

2010 0.09

2011 0.10

2012 0.11

59
 ASSETS TURNOVER RATIO
0.12

0.1

0.08

0.06
ASSETS TURNOVER RATIO

0.04

0.02

0
2009 2010 2011 2012

Sources: Secondary Data

INTERPRETATION

From the above calculation it is obtained that the ratio during the year 2009, it is
increased and later it starts diminishing during the year 2010 and the next year 2011
and 2012 it begins increasing which indicates that there is an efficient utilization of
assets of a business concern.

FIXED CHARGES COVERAGE RATIO

A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest
and leases. It is calculated as the following:

Fixed Charges Coverage Ratio = EBIT + Fixed Charge

(before tax) / Fixed Charge
(before tax) + Interest

60
FIXED CHARGES COVERAGE RATIO
YEAR FIXED CHARGES COVERAGE RATIO

2009 1.23

2010 0.32

2011 0.30

2012 0.28

FIXED CHARGES COVERAGE RATIO

1.4

1.2

0.8
FIXED CHARGES COVERAGE
0.6 RATIO

0.4

0.2

0
2009 2010 2011 2012

Sources: Secondary Data

61
INTERPRETATION

From the above calculation it is inferred that during the year 2009 the fixed
charges coverage ratio is high and later it started declining. It shows the firm’s inability
to satisfy fixed financing expenses.

CAPITAL ADEQUACY RATIO

According to the present norm, the Capital Adequacy Ratio of bank as defined earlier
should be at least 9%. Capital Adequacy Ratio (CAR), also called Capital to Risk
(Weighted) Assets Ratio (CRAR), is a ratio of a bank's capital to its risk. National
regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss
and complies with statutory Capital requirements.
Capital adequacy ratios (CARs) are a measure of the amount of a bank's core capital
expressed as a percentage of its risk-weighted asset. Capital adequacy ratio is defined
as:

TIER 1 CAPITAL - (paid up capital + statutory reserves + disclosed free reserves)

- (equity investments in subsidiary + intangible assets + current & b/f losses)

TIER 2 CAPITAL -A) Undisclosed Reserves, B) General Loss reserves, C) hybrid debt
capital instruments and subordinated debts where Risk can either be weighted assets (
) or the respective national regulator's minimum total capital requirement. If using
risk weighted assets,

The percent threshold varies from bank to bank (10% in this case, a common
requirement for regulators conforming to the Basel Accords) is set by the national
banking regulator of different countries.

Two types of capital are measured: tier one capital ( above), which can absorb

losses without a bank being required to cease trading, and tier two capital (
above), which can absorb losses in the event of a winding-up and so provides a

62
lesser degree of protection to depositors.

Capital adequacy ratio is the ratio which determines the bank's capacity to meet the
time liabilities and other risks such as credit risk, operational risk etc. In the most simple
formulation, a bank's capital is the "cushion" for potential losses, and protects the
bank's depositors and other lenders. Banking regulators in most countries define and
monitor CAR to protect depositors, thereby maintaining confidence in the banking
system.

CAR is similar to leverage; in the most basic formulation, it is comparable to the

inverse of debt-to-equity leverage formulations (although CAR uses equity over
assets instead of debt-to-equity; since assets are by definition equal to debt plus
equity, a transformation is required). Unlike traditional leverage, however, CAR
recognizes that assets can have different levels of risk.

Capital Adequacy Ratio = (Tier I Capital + Tier II Capital) /

Risk Weighted Assets (RWA)

CAPITAL ADEQUACY RATIO

YEAR CAPITAL ADEQUACY RATIO

2009 11.65

2010 14.91

2011 12.94

2012 14.00

63
 CAPITAL ADEQUACY RATIO
16

14

12

10

8
CAPITAL ADEQUACY RATIO
6

0
2009 2010 2011 2012

Sources: Secondary Data

INTERPRETATION

From the above said table it is inferred that during the year 2009, the capital
adequacy ratio is 11.65 and in the year 2010 it is increased to 14.91 in the year 2011 it
is diminished to 12.94 and in the year 2012 it is increased to 14.0. It shows that the
capital adequacy ratio is not stable it is fluctuating and in the year 2012 the capital
adequacy ratio is 14. It indicates that bank has a capacity to meet the liabilities and
other risks.

64
 FINDINGS

The important findings recorded in this research report are consolidated as follows:

 On comparative study of current ratio and liquid ratio it is observed that there is
an adequate current assets and liquid assets to meet the current obligations, and
it is revealed that the firm is in a good liquidity position.

 The debt equity ratio is declining from the year 2009 to 2012 where it is indicating
the bank has lowered the investments in Long-Term Debt.

 From the study, it is noted that there is a tremendous increase in the net profit
margin ratio which shows that the bank is earning more profits.

 From the analysis of assets turnover ratio it is observed that the bank has
effective utilization of assets in the years 2011 and 2012 when compared to the
previous years.

 The bank has effectively increased earnings per share over the years, which
indicates that bank profitability is very good and it is a positive indicator for the
equity shareholders and they will get more earnings per share.

 The bank has negative effect on the earning retention ratio and capital adequacy
ratio which was fluctuating. The bank can have a uniform retention policy of the
profits.

 The fixed charges coverage ratio is dissatisfied, the bank is unable to meet all
fixed payment obligations in time. Hence the bank can plan accordingly to suit
the circumstance so as to meet the fixed charges in time.

65
SUGGESTIONS

 The bank’s current and liquid asset is sufficient to meet the current liabilities of
the bank which shows the sound liquid position. This has to be maintained for
the following years.

 The bank should make efforts to increase the earning retention ratio for its
further business growth and development.

 The bank has to take necessary steps to improve the capital adequacy ratio.
 The debt capital is not utilized effectively and efficiently. So the bank can extend
its debt capital in the years to come.

 The bank earnings per share is tremendously increased and it is advised that it
should be continued for the following years.

66
 CONCLUSION

 Indian Banking sector contributes 8.6% for the Indian economy in 2010

 The phenomenal growth of the banking industry is the positive sign for
the growth and development of the country as the more number of
investors are interested to operate the banks.

 In this current economic scenario ING vysya bank is performing

outstanding manner its consistent profit from the last 4 years and it is
performing well in the sector.

MY LEARNING

 I got to know in detail about Banking products and services

 Practical exposure to the corporate world

 It also helped me enhance my knowledge in banking sector

 Time management skills and working in a team

 Preparation and presentation of the research reports

 I got to meet a lot of people and have learnt a lot during this period

67
 BIBILIOGRAPHY

• A. Murthy , financial management , margham publishers.

• Prasanna Chandra , financial management(theory & practice ) , Tata mc grew hill

publishers.

• Rds. maheshwari , elements of financial management , sultan chand & sons

publishers.

• Dr.S.N. maheshwari , financial management(principles &practice) , sultan chand

& sons publishers.

• M.Y. khan, P.K. jain, management accounting(text problems & cases) the Mc
Graw Hill publishers.

• T.S.Reddy, Y.Hari Prasad Reddy, management accounting, margham publishares.

• Saravanavel , Research Methodology, Kitab Mahal publishers.

• Ravilochan , Research Methodology, margham publishers.

WEBSITES:
REPORTS

Annual Report of ING VYSYA Bank 2010-2011.

Annual Report of ING VYSYA Bank 2011-2012.

68