WORKING CAPITAL MANAGEMENT of Axis Bank Finance Research 2014 2

SUMMER TRAINING PROJECT REPORT
On
“Working Capital Initiatives at AXIS BANK Limited”.
(A project undertaken at the AXIS BANK BRANCH –BIHARSARIF-BIHAR- India.)
AXIS BANK LIMITED
SUBMITTED TO
(Lloyd Institute of Management and Technology- LIMT- in partial fulfillment of the degree of
Master's of Business Administration, of Uttar Pradesh Technical University, Lucknow- India)
Faculty Guide :- Submitted by-
PORF. RAHUL MISHRA MD WASIM AKRAM

ASTT. PROFESSOR M.B.A. 3rd Semester
ROLL NO.1317270037
A Project Report On Working Capital Management 1

PART-1
DECLARATION
I, “MD WASIM AKRAM to declare that the Dissertation report entitled “WORKING CAPITAL
MANAGEMENT OF AXIS BANK” being submitted to the UTTAR PRADESH TECHNICAL
UNIVERSITY for the partial fulfillment of the requirement for the degree of Master of Business
Administration is my own endeavors and it has not been submitted earlier to any
institution/university for any degree.
Place:
Date: MD WASIM AKRAM

ACKNOWLEDGMENT
I have benefited a lot from summer training project for our course of MBA, this project has been a
rewarding knowledge. I have got into the various aspect of AXIS BANK.
I take this opportunity to acknowledge the invaluable assistance of those people who helped me in
successful completion of this Dissertation project report.
I also thank Nishikant Singh and Murtuza ali for steering my confidence and capability for giving me
insight into training by giving me exposure to the arena of competitive and real world.
Last but not the least, I express my thanks to all the department of axis bank who always encourage
me and provided me support at all times.
MD WASIM AKRAM
MBA (III Sem)

PREFACE
This project has been prepared in partial fulfillment for the degree of Masters of Business
Administration.
A project is a work plan devised through investigation and analysis to achieve a set object within a
specified time period. A student is assigned a topic and required to prepare a report after making a
study of working of any organization.
I was assigned to prepare a Dissertation project report on Working Capital Management of AXIS
BANK. Financial Management has emerged as interesting and exiting areas for academic studies as
well as for the practical financial managers. Financial Management covers the decision taken by
individuals or a business firm, which have financial implications. In case of corporate form of
organization where there is a separation of ownership and management, as well as in other forms, the
financial implications of decisions are evaluated in terms of maximization of the value of the firm.
So the decision process is oriented towards the objective of maximization of wealth of shareholders
as reflected in the market price of the share.
Working Capital or net current assets is the excess of current assets over current liabilities. In a
different perspective we can say Working Capital as that part of current assets financed by long term
funds. All organizations have to carry Working Capital in one form or the other. The efficient
management of Working Capital is important from the point of view of both liquidity and
profitability. Poor management of Working Capital means that firms are unnecessary tied up in idle
assets, hence, reducing the liquidity and also reducing the ability to invest in productive assets such
as plant and machinery .

MD WASIM AKRAM
EXECUTIVE SUMMARY
Working capital management or simply the management of capital invested in current assets is the
focus of my study. My topic is to study WORKING CAPITAL MANAGEMENT IN AXIS
BANK.
Working capital is the fund invested by a firm in current assets. Now in a cut throat competitive era
where each firm competes with each other to increase their production and sales, holding of
sufficient current assets have become mandatory as current assets include inventories and raw
materials which are required for smooth production runs. Holding of sufficient current assets will
ensure smooth and un interrupted production but at the same time, it will consume a lot of working
capital. Here creeps the importance and need of efficient working capital management. Working
capital management aims at managing capital assets at optimum level, the level at which it will aid
smooth running of production and also it will involve investment of nominal working capital in
capital assets.
For my study I have mainly gathered information by interacting with executives and employees of
WORKING CAPITAL MANAGEMENT IN AXIS BANK.

S.No. CONTENTS PAGE NO.
1. CHAPTER-1 INTRODUCTION 08
2. CHAPTER-2 REVIEW OF RELATED
LITRATURE 33
3. CHAPTER-3 DESIGN OF STUDY 69

4. THE STUDY 71
5. OBJECTIVES OF STUDY 72
6. DATA COLLECTION METHOD 74
7. DATA COLLECTION SOURCES 75
8. CHAPTER- 4 ANALYSIS OF DATA 76
9. CHAPTER- 5 FINDINGS 92
10. CHAPTER- 6 CONCLUSION AND
RECOMMENDATION 100
11. REFERENCES 101

12. BIBILIOGRAPHY 102
13. ANNEXURE 103

INTRODUCTION

CHAPTER- 1. INTRODUCTION
AXIS BANK - BRIEF HISTORY
Axis Bank was the first of the new private banks to have begun operations in 1994, after the
Government of India allowed new private banks to be established. The Bank was promoted jointly
by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance
Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU
insurance companies, i.e. National Insurance Company Ltd., The New India Assurance Company
Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd.
The Bank today is capitalized to the extent of Rs. 986.63 crore with the public holding (other than
promoters) at 21.55%
The Bank's Registered Office is at Biharsarife and its Central Office is located at Mumbai.
Presently, the Bank has a very wide network of more than 2402 branch offices and Extension
Counters. The Bank has a network of over 12922 ATMs providing 24 hrs a day banking convenience
to its customers. This is one of the largest ATM networks in the country.
The Bank has strengths in both retail and corporate banking and is committed to adopting the best
industry practices internationally in order to achieve excellence

ACHIEVEMENTS
AXIS bank one of the biggest banks in private sector in India. As on the year ended March 31, 2013
the Bank had a net worth of Rs. 48922 Crore with the public holding (other than promoters) at
48.65%. Net Profit for the year was up 34.98% to Rs 1267.08 crores. At the end of july 2014, the
Bank has a very wide network of more than 2402 branch offices and Extension Counters. The
Bank has a network of over 12922 ATMs. The Bank's Registered Office is at biharsarife and its
Central Office is located at Mumbai.
MISION OF THE BANK
Customer Service and Product Innovation tuned to diverse needs of individual and corporate
clientele Continuous technology up gradation while maintaining human values.
Progressive globalization and achieving international standards.
Efficiency and effectiveness built on ethical practices.
Values
Customer Satisfaction through providing quality service effectively and efficiently
 Smile, it enhances your face value" is a service quality stressed on
 Periodic Customer Service Audits
 Maximization of Stakeholder

CURRENT SITUATION OF THE BANK
Today, more than a century after those tentative first steps, AXIS BANK fairy tale is not only going
strong but blazing new standards, and that minuscule initial investment has grown by leaps and
bounds to crores of rupees in wealth for AXIS BANK shareholders. The company’s offerings are
spread across the spectrum with service. Having succeeded in garnering the trust of almost one-third
of India’s one billion populations and a strong management at the helm means axis will continue to
dream big on its path of innovation. And millions of customer will favour the results, happily ever
after.

STRUCTURE OF ORGANISATION
DR.SANJIV MISRA CHAIRMAN
SHIKHA SHARMA MD & CEO
K.N PRITHVIRAJ DIRECTOR
V.R KAUNDINYA DIRECTOR
S.B MATHUR DIRECTOR
PRASAD MENON DIRECTOR
Prof. SAMIR K BARUE DIRECTOR
SOM MITTAL DIRECTOR
IREENA MITTAL DIRECTOR
ROHIT BHAGAT DIRECTOR
V SRINIVASAN DIRECTOR
USHA SANGWAN DIRECTOR

BOARD OF DIRECTORS
During the year, Shri SHIKHA SHARMA, Executive Director (whole-time Director) retired from the
services of the Bank w.e.f. 31 December 2010. The Board of Directors place on record their
appreciation and gratitude to Shri S. Chatterjee for the valuable services rendered by him during his
Tenure as Executive Director of the Bank. In accordance with the provisions of the Companies Act,
1956 and the Articles of Association of the Bank, Shri K.N PRITHVIRAJ, Shri S.B MATHUR and
Smt. PRASAD MENON retire by rotation at the Thirteenth Annual General Meeting and, being
eligible, offer themselves for re-appointment as Directors of the Bank.
SUBSIDIARIES The Bank has set up two wholly owned subsidiaries viz.
UBL Sales Ltd. and UBL Asset Management Company Ltd. UBL Sales Ltd have been set up for
marketing credit cards and other retail asset products.
The objective of this subsidiary is to build a specialized force of sales personnel, optimize
operational efficiency and productivity and thereby reduce costs. The sales subsidiary also seeks to
provide greater control and monitoring of the sales effort vis-à-vis the current DSA model. The
second subsidiary of the Bank, UBL Asset Management Company Ltd. has been formed primarily to
carry on the activities of managing (directly or indirectly) investments, venture capital funds, off-
shore funds etc.
The performance of these subsidiaries along with their Directors' Report and financial statements are
enclosed as Annexures to this report. In line with the Accounting Standard 21 (AS 21) issued by the
Institute of Chartered Accountants of India, the consolidated financial results of the Bank along with
its subsidiaries for the year ended 31 March 2012 are enclosed as an Annexure to this report.

DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors hereby declares and confirms that:
► The applicable accounting standards have been followed in the preparation of the annual
accounts and proper explanations have been furnished, relating to material departures.
► Accounting policies have been selected, and applied consistently and reasonably, and prudent
judgements and estimates have been made so as to give a true and fair view of the state of
affairs of the Bank and of the Profit & Loss of the Bank for the financial year ended 31
March 2014.
► Proper and sufficient care has been taken for the maintenance of adequate accounting records,
in accordance with the provisions of the Companies (Amendment) Act, 2000, for
safeguarding the assets of the Bank and for preventing and detecting fraud and other
irregularities.
► The annual accounts have been prepared on a going concern basis.
PART-2
STATUTORY DISCLOSURE

Considering the nature of activities of the Bank, the provisions of Section 217(1)(e) of the
Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to
the Bank. The Bank has, however, used information technology extensively in its operations.
The statement containing particulars of employees as required under Section 217(2A) of the
Companies Act, 1956 and the rule made there under, is given in an Annexure appended hereto and
forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are
being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in
obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the
Bank.
AUDITORS
M/s S. R. Batliboi & Co., Chartered Accountants, statutory auditors of the Bank since 2006 retire on
the conclusion of the Thirteenth Annual General Meeting and are eligible for re-appointment, subject
to the approval of Reserve Bank of India, and of the shareholders. As recommended by the Audit
Committee, the Board has proposed the appointment of S.R. Batliboi & Co., Chartered Accountants
as statutory auditors for the financial year 2013-14. The shareholders are requested to consider their
appointment.
PERFORMANCE OF THE ORGANISATION

Net interest income up 45.34% to RS 2,876.08 Core s
Network of branches and extension counters increased from 1832 to 2402.
Total number of ATMs went up from2768 to 12922.
Net NPA ratio as a percentage of net customer assets down to0.61% from 0.75%.
Capital Adequacy Ratio stood at12.57% as against the minimum regulatory norm of 8.75%.
Proposed Dividend up from 45% to55%
Fee & Other income up 60.72 earning per share (Basic) increased from Rs. 17.45 to Rs.22.50. % to
Rs. 1065.39 Crores.
Deposits up 46.55% to Rs. 78,785.60 Crores
Advances up 65.26% to Rs. 67,876.48 Crores.

Retail assets up 37.56% to Rs. 98827.54 Crores.
Demand deposits up 46.11% to Rs. 34,430.19 Crores.
Profit after tax up 34.96% to Rs. 1267.08 Crores.
Both business and earnings continued to display high growth in 2013-2014. And the Bank earned a
net profit of Rs. 1267.08 crores against Rs. 960.05 crores in the previous year, registering a
growth of 34.86%.
The total income of the Bank increased by 53.95% to Rs. 8,570.52 crores from Rs. 4,618.42
crores last year, while the operating profit rose by 43.11% to Rs. 1,662.60 crores from Rs.
1003.81crores last year.

OVERVIEW OF FINANCIAL AND BUSINESS PERFORMANCE
During the year 2013-2014, the Bank has witnessed a strong growth in business volumes as well as
profits, with the net profit increasing by 34.96% to Rs. 1267.08 crores from Rs. 960.08 crores the
previous year.
The total income of the Bank rose by 53.95% to Rs. 8,570.52 crores from Rs. 4,618.42 crores the
previous year.
During the same period, the operating revenue increased by 42.55% to Rs. 3952.19 crores, while
operating profit increased by 36.11% to Rs. 1,762.60 crores. On 31 March 2014, the Bank's total
assets increased by 44.31% to Rs.83, 277 crores.
The total deposits of the Bank grew by 46.55% to Rs.58, 786 crores, while the total advances grew
by 65.26% to Rs. 36,876crores.
The total demand deposits (savings bank and current account deposits) have increased by 46.11% to
Rs. 23,430.19 crores, constituting39.86% of total deposits.
The Bank has increased its market share of aggregate deposits in All Scheduled Commercial Banks
(ASCB), which rose from 1.76% as on 31 March 2013 to 2.08% on 30 March 2014, While its share
of advances rose from 1.50% to 1.78% during the same period.
In the financial year 2013-14, the Bank's incremental market share of aggregate deposits in ASCB
was 3.39% while its incremental share in advances was 2.75%. The solid performance of the Bank
despite higher provisioning on standard assets, increase in risk weights on select asset classes,
reduction on interest paid on CRR and a hardening of interest rates due to tightening of the overall
liquidity situation underscores the efficacy of the business model adopted by the Bank.

The Bank continued to enhance shareholder value and the diluted earnings per share for the year
2013-14 increased to Rs. 27.79 from Rs. 22.08 the previous year. As on 31 March 2014, the book
value per share of the Bank has increased to Rs. 135.50 from Rs. 111.06 as on 31 March 2013.
The Bank will continue to derive benefit from the infrastructure created Over the years and will
continue to pursue a strategy of profitable growth through stronger corporate relationships and an
accelerated retail customer expansion programmed driven by the Bank's multiple channels. In 2013-
14, the Bank's strategy. The Bank will continue to emphasize growth opportunities through higher
Levels of customer satisfaction and loyalty, and deepening relationships with existing customers. It
seeks to maintain and enhance a strong retail and corporate franchise, strengthen the structures and
delivery channels for increasing SME and agricultural businesses, exploit cross-sell opportunities,
offer private banking for high-net worth customers, consolidate new business initiatives such as
Credit Cards, Wealth Management and Banc assurance for Life Insurance, and encase opportunities
through overseas offices for cross-border trade finance, syndication of debt and NRI business
development.
The Bank will continue to focus on high-quality earnings growth through an emphasis on core
income streams such as NII and fee-based income and on maintaining a high standard of asset
quality by providing emphasis on rigorous risk-management practices. The Bank will continue to use
Technology extensively to maintain competitive advantage and continue to up-grade the technology
platform to provide leverage for bringing in higher cost efficiencies.

1

Performance Summary
Interest income grows by 55% YoY on the back of 50% YoY growth in advances. Net interest
margin improves to 3.3% due to lower cost of funds and higher proportion of CASA.
Cost to income ratio remains stable at 50%.
Bottom line grows by 66% YoY aided by strong traction in fee income, despite higher
provisioning.
Capital adequacy ratio (CAR) comfortable at 16.9%.
Rs (m) 3QFY12 3QFY13 Change 9mFY12 9mFY13 Change

Interest income 11,648 18,023 54.7% 31,201 49,898 59.9%
Interest expense 7,737 10,550 36.4% 20,908 32,329 54.6%
Net Interest
3,911 7,473 91.1% 10,293 17,569 70.7%
Income
Net interest
2.9% 3.3%
margin (%)
Other Income 2,797 4,879 74.4% 7,090 12,390 74.8%
Other Expense 3,369 5,629 67.1% 8,715 14,928 71.3%
Provisions and
515 2,001 288.5% 1,864 4,154 122.9%
contingencies
Profit before tax 3,339 6,723 101.3% 9,668 16,031 60.4%
Tax 977 1,654 59.3% 2,333 3,780 62.0%
668 1268 52.68% 4,471 7,097 58.7%

Profit after tax/
(loss)
Net profit margin
15.9% 17.0% 14.3% 14.2%
(%)
No. of shares (m) 281.2 357.4
Book value per
234.3
share (Rs)
P/BV (x)* 4.7
Axis Bank touched the 50% mark in its advance growth for the tenth consecutive quarter in 3QFY08.
What makes the growth more sustainable is that the bank has not concentrated its exposure to any
single segment but has been altering its asset mix depending upon the industry scenario and its risk

appetite. Also, a rise in the proportion of CASA (current and savings accounts) suggests a cost
conscious strategy with respect to deposit accretion.
Cost centric growth..
% of % of
(Rs m) 9mFY12 9Mfy13 Change
total total
Advances 323,370 486,320 50.4%
Agriculture 23,370 7.2% 36,790 7.6% 57.4%
Retail 91,780 28.4% 120,090 24.7% 30.8%
SMEs 57,210 17.7% 90,080 18.5% 57.5%
Large corporates 151,010 46.7% 239,360 49.2% 58.5%
Deposits 509,200 685,510 34.6%
CASA 188,830 37.1% 310,320 45.3% 64.3%

Term deposits 320,370 62.9% 375,190 54.7% 17.1%
Credit deposit
63.5% 70.9%
ratio
Continuing with the trend seen in the past few quarters, Axis Bank's fee income registered a strong
growth of 81% YoY during 3QFY013 and 71% YoY during 9mFY13. The proportion of fee income
to total income remained stable at 30%. Although the trading profits grew by 65% YoY, the share of
trading profits to operating revenue decreased marginally to 11% in 3QFY13 from 12% in 3QFY12.
While the bank's net NPAs as a percentage of advances have shrunk to 0.4% in 3QFY13
against 0.7% in 3QFY12, the bank has also succeeded in arresting the incremental delinquencies (in
absolute terms) this quarter. The provisions held together with accumulated write-offs as a proportion
of gross NPAs amounted to 83.1% in 9mFY13. If the accumulated write-offs are excluded, then the
provisions held as a proportion of gross NPAs amounted to 47.7%.
During 2QFY12, Axis Bank successfully raised US$ 218 m by way of a GDR offering, Rs 17 bn
through a QIP and Rs 19 bn through a preferential allotment to promoters. This made the bank well
equipped to sustain its growth in the medium term.

PRODUCTS & SERVICES OF THE ORGANISATION
Types of Deposit Accounts
While various deposit products offered by the Bank are assigned different names. The deposit
products can be categorised broadly into the following types.
"Demand deposits" means a deposit received by the Bank which is withdraw able on demand.
"Savings deposits" means a form of demand deposit which is subject to restrictions as to the
number of withdrawals as also the amounts of withdrawals permitted by the Bank during any
specified period.

" Term Deposit" means a deposit received by the Bank for a fixed period withdraw able only after
the expiry of the fixed period and include deposits such as Recurring/Reinvestment Income
Certificate/ Encash 24/Short term Deposits/ Fixed Deposits/ Monthly Income Certificate/ Quarterly
Income Certificate etc.
"Current Account" means a form of demand deposit wherefrom withdrawals are allowed any
number of times depending upon the balance in the account or up to a particular agreed amount and
will also include other deposit accounts which are neither Savings Deposit nor Term Deposit.
Account Opening and Operation of Deposit Accounts
► The Bank before opening any deposit account will carry out due diligence as required under
"Know Your Customer" (KYC) guidelines issued by RBI and or such other norms or procedures
adopted by the Bank. In the Bank, the authority to open a Deposit Account is vested in the Branch
Head. In very rare case clarifications are required to be sought from the higher authority.
► The account opening forms and other material would be provided to the prospective depositor
by the Bank. The same will contain details of information to be furnished and documents to be
produced for verification and or for record, it is expected of the Bank official opening the account.

► For deposit products like Savings Bank Account and Current Deposit Account, the Bank will
normally stipulate certain minimum balances to be maintained as part of terms and conditions
governing operation of such account. For Saving Bank Account the Bank may also place restrictions
on number of transactions, cash withdrawals, etc., for given period. Similarly, the Bank may specify
charges for issue of cheques books, additional statement of accounts, duplicate pass book, folio
charges, etc. All such details, regarding terms and conditions for operation of the accounts and
schedule of charges for various services provided will be communicated to the prospective depositor
while opening the account.
Savings Bank Accounts can be opened for eligible person / persons and certain organizations /
agencies (as advised by Reserve Bank of India (RBI) from time to time)
Current Accounts can be opened by individuals / proprietorship firms/ partnership firms / Private and
Public Limited Companies / HUFs / Associations / Societies / Trusts, etc.
Term Deposits Accounts can be opened by individuals / proprietorship firms/ partnership firms /
Private and Public Limited Companies / HUFs/ Associations / Societies / Trusts, etc.
► The due diligence process, while opening a deposit account will involve satisfying about the
identity of the person, verification of address, satisfying about his occupation. Obtaining introduction
of the prospective depositor from a person acceptable to the Bank or through self introduction by
way of production of certain documentary evidence and obtaining recent photograph of the person/s
opening / operating the account are part of due diligence process.
► In addition to the due diligence requirements, under KYC norms the Bank is required by law to
obtain Permanent Account Number (PAN) or General Index Register (GIR) Number or alternatively
declaration in Form No. 60 or 61 as specified under the Income Tax Act / Rules.
Deposit accounts can be opened by an individual in his own name (known as account in single name)
or by more than one individual in their own names (known as Joint Account) .

Savings Bank Account can also be opened by a minor jointly with natural guardian or with mother as
the guardian (known as Minor's Account). Minors above the age of 12 will also be allowed to open
and operate saving bank account independently.
► Operation of Joint Account - The Joint Account opened by more than one individual can be
operated by single individual or by more than one individual jointly. The Savings Bank Account
opened by minor jointly with natural guardian / guardian can be operated by natural guardian only.
► The joint account holders can give any of the following mandates for the disposal of balance in
the above accounts:
Either or Survivor : If the account is held by two individuals say, A & B, the final balance along
with interest, if applicable, will be paid to survivor on death of anyone of the account holders.
► Anyone or Survivor/s : If the account is held by more than two individuals say, A, B and C, the
final balance along with interest, if applicable, will be paid to the survivor on death of any two
account holders.
The above mandates will be applicable to or become operational only on or after the date of maturity
of term deposits. This mandate can be modified by the consent of all the account holders.
► At the request of the depositor, the Bank will register mandate / power of attorney given by him
authorizing another person to operate the account on his behalf.
The term deposit account holders at the time of placing their deposits can give instructions with
regard to closure of deposit account or renewal of deposit for further period on the date of maturity.
In absence of such mandate, the Bank will seek instructions from the depositor/s as to the disposal of
the deposit by sending intimation before 15 days of the maturity date of term deposit.

Advertising and Marketing
Axis will make sure that all advertising and promotional material is clear, fair, reasonable and not
misleading.
Axis will seek your specific consent for giving details of your name and address to any third party,
including other entities in our group, for marketing purposes.
Axis would like to provide you with the entire range of financial services products, some of which
are our own products while some others are the products of our group/associate/entities or companies
with whom we have tie-up arrangements.
Axis will however tell you about our associate / group entities or companies having business tie-up
arrangements with us and if you so desire, direct their staff / agents for marketing their products.

EMPLOYEE STOCK OPTION PLAN (ESOP)
To enable employees including whole-time Directors of the Bank to participate in the future growth
and financial success of the Bank, the Bank has instituted an Employee Stock Option Scheme under
which 2,98,00,000 options can be granted to employees. The employee stock option scheme is in
accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee
Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an
employee is determined on the basis of the employee's work Performance and is approved by the
Board of Directors.
The Bank's shareholders approved plans in February 2001, June 2004 and June 2006 for the issuance
of stock options to employees. Under the first two plans and up to the grant made on 29 April 2004,
the option conversion price was set at the average daily high-low price of the Bank's equity shares
traded during the 52 weeks preceding the date of grant at the Stock Exchange which has had the
maximum trading volume of the Bank's equity share during that period (presently the NSE). Under
the third plan and with effect from the grant made by the Company on 10 June 2005, the pricing
formula has been changed to the closing price of the previous day of the grant date. The
Remuneration and Nomination Committee granted options under these plans on six occasions, of
options of 11,18,925; 17,79,700; 27,74,450; 38,09,830; 57,08,240 and 46,95,860 during 2007-08,
2008-09, 2009-10, 2010-11, 2011-12 and 2012-13 respectively. The options granted, which are non-
transferable, vest at the rate of 30%, 30% and 40% on each of three successive anniversaries
following the granting, subject to standard vesting conditions, and must be exercised within three
years of the date of vesting. As of 31 March 2012, 89, 64,083 options had been exercised and
108,72,910 options were in force. Other statutory disclosures as required by the revised SEBI
guidelines on ESOPs are given in the Anne.

REVIEW OF
RELATED
LITRATURE

CHAPTER- 2. REVIEW OF RELATED LITRATURE
The banking industry has come under increasing pessimism of late because of rising short and long-
term interest rates. The banking industry's market capitalization made a substantial decline. Most
investors are concerned with whether the industry can sustain continued profitability as a result of
these factors. Banks have responded in recent years to these problems by diversifying away from
interest sensitive products and services. But interest rates are the fundamental aspect of any financial
services. Therefore, I believe the financial services industry will be deeply affected by rising interest
rates. Banks have experienced good business factors over the past two years. Interest rates were low,
credit quality was good, and inflation was low. These factors are usually predictive of the types of
earnings banks should report. But good times can't continue because interest rate hikes because
reduced lending activity, damaged credit quality, and reduced values of bond portfolios. Porter's Five
Forces Analysis: 1. Rivalry among competing sellers: The banking industry is continuing to
restructure and position itself for our changing economy as a result, many mega-mergers have
occurred in recent years. Citicorp and Travelers Insurance agreed to merge in April 1998 at a value of
$70 billion. Bank of America and Nation's Bank also agreed to merge shortly afterwards which
became the largest bank in the United States. Bank mergers are usually consummated as a cost-
cutting measure but also to compete with non-bank providers of financial services. Bank rivalries are
very strong, and as we've seen many of the largest banks are merging to increase their power. In fact,
Charlotte, NC is practically owned by Bank of America and First Union. 2. Potential entry of new
competitors: There is virtually no chance of a new entrant significantly affecting the major banks'
market share. The only place that new entrants may have a chance in the industry is through Internet

banking, because of its low cost. 3. Firms offering substitute products: This is not really an issue
within the banking industry, because there aren't really any legal alternatives, except buying a safe
and borrowing from a loan shark 4. Competitive pressures stemming from supplier and buyer
bargaining power: I grouped these two categories together because in the banking industry the buyers
are the suppliers and vice versa, so I might as well just discuss the situation as a whole. Interest rates
are the single most important aspect of bank profitability they are the bargaining power. Most bank
profits are derived from net interest income. This is interest income received on loans minus interest
expense for borrowed funds. Interest rates determine the amount of money a bank can earn. Another
measure is a banks' net interest margin which is a bank's net interest income divided by its average
earning assets. This is a common measure of a bank's ability to squeeze profits from its loans. When
interest rates fall, they have a positive effect on a bank. First, net interest margin can expand. Second,
the value of a bank's fixed rate of investment portfolio is enhanced by declining rates, since a bond
with a higher stated interest rate becomes more valuable as prevailing rates drop. Third, falling rates
lower the cost of credit, which stimulates loan demand and reduces delinquency rates. Opportunities:
1. Because of the increasing amount of technology Internet banking will begin to replace traditional
banking, thus cutting personnel costs. 2. Incorporating investment banking into the banking industry,
as some major companies are doing, lets the bank increase profits and promote economic growth
while improving company image. Threats: 1. An increase in interest rates causing a decline in bank
activity. 2. A collapse of the Fed leading to bank failures, a repeat of the crash of 1929. 3. A decline
in the US economy leading to a fall in the value of the dollar, thus causing an instable economy.
From there the US banking system would be less secure in terms of dollar values that many people
would move their money overseas into a more stable economic situation. Similar to the situation in
many South American countries. (a little far-fetched, but possible) Key Success Factors: · Capability
to use the internet for banking, investing, and general e-commerce · Size of company, name
recognition, innovative local marketing · Best rates (loans, checking, savings, etc.) ·The capability to
have the fastest and simplest banking through design, innovation, and location
MEANING OF WORKING CAPITAL MANAGEMENT
Working Capital is commonly defined as the difference between current assets and current liabilities.
Efficient working capital management requires that firms should operate with some amount of
working capital, the exact amount varying from firm to firm and depending, among other things on
the nature of industry.
Capital required for a business can be classified in two main categories viz.
1) Fixed capital, and
2) Working capital.
Every business needs funds for two purposes-for establishments and to carry out its day-to-day
operations. Long-term funds are required to create production facilities.
Through purchase of fixed assets such as plants and machinery, land, building, furniture, etc.
Investments in these assets represents that part of firm’s capital which is blocked on permanent or
fixed basis and is called fixed capital. Funds are also needed for short-term purpose for the purchase
of raw material, payment of wages and other day-to-day expenses, etc. These funds are known
working Capital. In simple words, working capital refers to that part of the firm’s capital, which
is required for financing short-term or current assets such as cash, marketable securities,
debtors and inventories. Funds thus invested in current assets keep revolving fast and are being
constantly converted into cash and this cash flows out again in exchange for other current assets.
Hence, it is also known as revolving or circulating capital or short-term capital.

CLASSIFICATION OF WORKING CAPITAL
Working Capital may be classified on two basis: -
a) On the basis of Concept: -
On the basis of concept, working capital can be classified as,
 Gross Working Capital
 Net Working Capital
b) On the basis of Time: -
On the basis of time, working capital can be classified as,
 Permanent or Fixed Working Capital
 Temporary or Variable Working Capital
Gross Working Capital: -
The Gross Working Capital is the Capital invested in the total current assets of the enterprises.
Current assets are those assets, which can be converted into cash within a short period, normally an
accounting year.
Gross Working Capital = Total Current Assets
Net Working Capital: -
The term Net Working Capital refers to the excess of current assets over current liabilities, or say,
Net Working Capital = Current Assets – Current Liabilities
Net Working Capital can be positive or negative. When the current assets exceed the current
liabilities the working capital is positive and the negative working capital results when the current
liabilities are more than the current assets. Current liabilities are those liabilities, which are intended

to be paid in the ordinary course of business within a short period of normally one accounting year
out of the current assets of the income of the business. The gross working capital concept is
financial or going concern concept whereas net working capital is an accounting concept of working
capital. Both the concepts have their own merits.
The gross concept is sometime preferred to the concept of working capital for the following reasons:
 It enables the enterprise to provide correct amount of working capital at correct time.
 Every management is more interested in total current assets with which it has to operate then the
sources from where it is made available.
 It takes into consideration of the fact every increase in the funds of the enterprise would increase
its working capital.
 The concept is also useful in determining the rate of return on investments in working capital.
 The net working capital concept, however, is also important for the following reasons:-
 It is a qualitative concept, which indicates the firm’s ability to meet its operating expenses the
short-term liabilities.
 It indicates the margin of protection available to short term creditors.
 It is an indicator of financial soundness of enterprise.
 It suggests the need of financing a part of working capital requirement out of the permanent
sources of funds.

Permanent or Fixed Working Capital: -
Permanent or fixed capital is the minimum amount, which is required to ensure effective utilization
of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a
minimum level of current assets is called permanent or fixed working capital as this part of working
capital is permanently blocked in current assets. As the business, grow the requirement of working
capital also increases due to increase in current assets.
Temporary or Variable Working Capital: -
Temporary or variable working capital is the amount of working capital, which is required to meet
the seasonal demands and some special exigencies. Variable working capital can further be classified
as seasonal working capital and special working capital. The capital required to meet the seasonal
need of the enterprise is called the seasonal working capital. Special working capital is that part of
working capital which is required to meet special exigencies such as launching of extensive
marketing campaign for conducting research etc.
Temporary working capital differ from permanent working capital in the sense that it is required for
short periods and cannot be permanently employed gainfully in business
Calculate current assets to fixed asset ratio
A firm needs current and fixed assets to support a particular level of output. However, to support the
same level of output the firm can have different levels of current assets. As the firm’s output and
sales increases, the need for current asset increases. Generally the current assets do not increase in
direct proportion to output ; current assets may increase at a decreasing rate with input. This
relationship is based upon the notion that it takes a greater proportional investment in current assets

when only a few units of output are produced than it does later on when the firm can use its current
assets more efficiently.
The level of the current assets can be measured by relating current assets to fixed assets.
There are three policies:-
1) conservative current assets policy:
CA/FA is higher. It implies greater liquidity and lower risk.
2) aggressive current assets policy:
CA/FA is lower . it implies higher risk and poor liquidity.
3) moderate current assets policy:
CA/FA ratio falls in the middle of conservative and aggressive policies.

ESTIMATING WORKING CAPITAL NEEDS
1. Liquidity Vs. Profitability: Risk Return Trade Off.
The firm would make just enough investment in current assets if it were possible to estimate working
capital needs exactly. Under perfect certainty, current assets holdings would be at the minimum level.
A larger investment in current assets under certainty would mean a low rate of return of investment
for the firm, as excess investment in current assets will not earn enough return. A small invest in
current assets, on the other hand, would mean interrupted production and sales, because of frequent
stock-cuts and inability to pay to creditors in time due to restrictive policy.
As it is not possible to estimate working capital needs accurately, the firm must decide about levels
of current assets to be carried.
2. The Cost Trade Off:
A different way of looking into the risk return trade off is in terms of the cost of maintaining a
particular level of current assets. There are two types of cost involved:-
I. Cost of liquidity
II. cost of illiquidity
 --If the firm’s level of current assets is very high , it has excessive liquidity. Its return on
assets will be low, as funds tied up in idle cash and stocks earn nothing and high level of
debtors reduce profitability. Thus, the cost of liquidity increases with the level of current
assets.

 --the cost of illiquidity is the cost of holding insufficient current assets. The firm will not be
in a position to honour its obligations if it carries to little cash. This may force the firm to
borrow at high rates of interests. This will also adversely affect the credit-worthiness of the
firm and it will face difficulties in obtaining funds in the future. All this may force the firm
into insolvency.
Similarly, the low levels of stock will result in loss of sales and customers may shift to
competitors. Also, low level of debtors may be due to right credit policy, which would impair
sales further. Thus the low level of current assets involves cost that increase as this level falls.
Policies for financing current assets
-Public deposits
LONG TERM FINANCING:

The sources of long term financing include ordinary shares capital, preference share capital
debentures, long term borrowings from financial institutions and reserves and surplus. The manages
its long term financing from capital reserve, share premium A/C, foreign project reserve, bonds
redemption reserve and general reserve.
SHORT TERM FINANCING:
The short term financing is obtained for a period less than one year. It is arranged in advance from
banks and other suppliers of short-term finance include working capital funds from banks, public
deposits, commercial paper, factoring of receivables etc.
The Manages secured loans as:-
1) Loans and advances from banks
2) Other loans and advances:
a)Debebtures/bonds
b)Loans from State Govt.
c)Loans from financial institutions(secured by pledge of PSU
bonds and bills accepted guaranteed by banks)
3) Interest accrued and due on loans
(a) from State Govt.
(b) from financial institutions bonds and other
The Manages unsecured loans as: -
1) Public deposits
2) Short term loans and advances:
a)From banks
b)Commercial papers
c)From campanies
d)From financial institutions
3)Other loans and advances
a)From banks
b)From others
-from govt. of India
-from state govt.
-from financial institutions
-from foreign financial institution
-post shipment credit exim bank
-credit for assets taken on lease
4)Interest accured and due on
-Post shipment credit
-Govt. credit
-State Govt. loans
-Credits for assets taken on lease
-Financial institutions and others
-Foreign financial institutions
Spontaneous financing refers to the automatic sources of short term funds arising in the normal
course of a business. Trade Credit and outstanding expenses are examples of spontaneous financing.
A firm is expected to utilise these sources of finances to the fullest extent. The real choice of
financing current assets, once the spontaneous sources of financing have been fully utilized, is
between the long term and short term sources of finances.
What should be the mix of short and long term sources in financing current assets?
Depending on the mix of short and long term financing, the approach followed by a company may be
referred to as :
1. Matching Approach
2. Conservative Approach
3. Aggressive Approach
Matching approach
The firm can adopt a financial plan which matches the expected life of assets with the
expected life of the source of funds raised to finance assets. Thus, a ten year loan may be raised to
finance a plant with an expected life of ten year; stock of goods to be sold in thirty days may be
financed with a thirty day commercial paper or a bank loan. The justification for the exact matching
is that, since the purpose of financing is to pay for assets, the source of financing and the asset should
be relinquished simultaneously. Using long term financing for short term assets is expensive as funds
will not be utilized for the full period. Similarly, financing long term assets with short term financing
is costly as well as inconvenient as arrangement for the new short term financing will have to be
made on a continuing basis.
When the firm follows matching approach (also known as hedging approach) long term
financing will be used to finance fixed assets and permanent current assets and short term financing
to finance temporary or variable current assets. How ever, it should be realized that exact matching is
not possible because of the uncertainty about the expected lives of assets.
The firm fixed assets and permanent current assets are financed with long term funds and as
the level of these assets in increases, the long term financing level also increases. The temporary or
variable current assets are financed with short term funds and as their level increases, the level of
short term financing also increases. Under matching plan, no short term financing will be used if the
firm has a fixed current assets need only.

Conservative approach
A firm in practice may adopt a conservative approach in financing its current and fixed assets.
The financing policy of the firm is said to be conservative when it depends more on long term funds
for financing needs. Under a conservative plan, the firm finances its permanent assets and also a part
of temporary current assets with long term financing. In the period when the firm has no need for
temporary current assets, the idle long term funds can be invested in the tradable securities to
conserve liquidity. The conservative plan relies heavily on long term financing and, therefore, the
firm has less risk of facing the problem of shortage of funds. The conservative financing policy is
shown below. Note that when the firm has no temporary current assets, the long term funds released
can be invested in marketable securities to build up the liquidity position of the firm.

Aggressive Approach
A firm may be aggressive in financing its assets. An aggressive policy is said to be followed
by the firm when it uses more short term financing than warranted by the matching plan. Under an
aggressive policy, the firm finances a part of its permanent current assets with short term financing.
Some extremely aggressive firms may even finance a part of their fixed assets with short term
financing. The relatively more use of short term financing makes the firm more risky. The aggressive
financing is Illustrated in fig below.

NEEDS AND OBJECTIVES FOR WORKING CAPITAL
Every business needs some amount of working capital. The needs for working capital, arises due to
time gap between production and realization of cash from sales. There is an operating cycle
involved in sales and realization of cash. There are time gaps in purchase of raw material and
production, production and sales, and realization of cash.
Thus, working capital is needed for the following purposes: -
 For the purchase of raw material, component and spares.
 To pay wages and salaries.

 To incur day- to- day expenses and overhead costs such as fuel, power and office expenses etc.
 To meet the selling costs such as packing, advertising etc.
 To provide credit facilities to the customers.
 To maintain the inventories of raw material, work in progress, store, spares, and finished stock
.For studying the need of working capital in a business, one has to study the business under varying
circumstances such as new concern, as a growing and one, which has attained maturity. A new
concern requires a lot of funds to meets its initial requirement such as promotion and formation etc.
These expenses are called preliminary expenses and are capitalized. The amount needed for working
capital depends upon the size of the company and the ambition of its promoters. Greater the size of
the business unit, generally will be the requirement of the working capital. The requirement of the
working capital goes on increasing with the growth and expansion of the business until its gains
maturity. At maturity, the amount of working capital required is called normal working capital.
IMPORTANCE OF WORKING CAPITAL
1.Time devoted to working capital management:-
The largest portion of financial manager 's time is devoted to day to day internal operation the firm.
This may be appropriately sum up under the heading "WORKING CAPITAL MANAGEMENT".
2.Investment in current assets :- current assets represent more than half of the total assets of a
business firm. Because they represent largest investment and because this investment tends to
relatively volatile,current assets are worthy for the financial manager's careful attention.
3.Importance for small firm:-

current assets are similarly important for the financial manager's of small firm.Further small firm are
relatively limited access to the long term markets,it must necessarily rely on the trade credit and
short term bank loan , both of net effect on net working capital by increased current liabilities.
FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENT
1. NATURE OF BUSINESS: -
The requirement of working capital is very limited in public utility undertaking such as Electricity,
Water Supply and Railways because they offer cash sales only and supply services not products and
no funds are tied up in inventories and receivables. On the other hand, the trading and financial firm
requires less investment in fixed assets but have to invest large amounts in current assets. The
manufacturing undertaking requires sizable amount of working capital along with fixed investments.
2. PRODUCTION POLICY: -

The determination of working capital needs depends upon the production policy of the business. The
demand for certain products is seasonal i.e.; such products are purchased in certain months of a year.
For such industries, two types of production policy can be followed. Firstly they can produce the
goods in the months of demand or secondly, they produce for the whole year. If the second
alternative were followed, it would mean that until the time of demand finishes, product would have
to be kept in stock. It would require additional working capital.
3. LENGTH OF PRODUCTION CYCLE: -
The longer the manufacturing time, the raw material and other supplies have to be carried for a
longer time in the process with progressive increment of labor and service costs before the final
product is obtained. Therefore, working capital is directly proportional to the length of the
manufacturing process.
4. RATE OF STOCK TURNOVER: -
There is an inverse co-relationship between the quantum of working capital and the velocity or speed
with which the sales are affected. A firm having a higher rate of stock turnover will need lower
amount of working capital as compared to a firm having a low rate of turnover.
5. CREDIT POLICY: -
Credit policy affects the working capital requirements in two ways:
(a) Terms of credit allowed by customer to the firm,
(b) Terms of credit available to the firm.
A concern that purchases its requirements on credit and sells its product/services on cash
requires lesser amount of working capital and vice-versa.
6. WORKING CAPITAL CYCLE: -
The speed with which the working cycle completes one cycle determines the requirements of
working capital. Longer the cycle larger is the requirement of working capital.

DEBTORS
CASH FINISHED
GOODS
WORK IN
RAW MATERIAL
PROGRESS
Each component of working capital (namely inventory, receivables and payables) has two
dimensions ... TIME ......... and MONEY. When it comes to managing working capital - TIME IS
MONEY. If you can get money to move faster around the cycle (e.g. collect monies due from
debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels relative to
sales), the business will generate more cash or it will need to borrow less money to fund working
capital. As a consequence, you could reduce the cost of bank interest or you'll have additional free
money available to support additional sales growth or investment. Similarly. if you can negotiate
improved terms with suppliers e.g. get longer credit or an increased credit limit, you effectively
create free finance to help fund future sales
If you ... Then ...
Collect receivables (debtors)

You release cash
faster
from the cycle
 Collect receivables (debtors)
Your receivables
slower
soak up cash
 Get better credit (in terms of
You increase your
duration or amount) from
cash resources
suppliers
7. RATE OF GROWTH AND EXPANSION OF BUSINESS: -
The larger size businesses require more permanent and variable working capital in comparison to
small business. If a company is growing, its working capital requirements will also go on increasing.
Thus, the growing concerns require more working capital as compared to the stable industries.
8. SEASONAL VARIATION: -

Generally, during the busy season, a firm requires larger working capital than in the slack season.
9. BUSINESS FLUCTUATION: -
In period of boom, when the business is prosperous, there is a need for larger amount of working
capital due to rise in sales, rise in prices, optimistic expansion of business etc. On the contrary in
time of depression, the business contracts, sales decline, difficulties are faced in collection from
debtors and the firm may have a large amount of working capital idle.
10. EARNING CAPACITY AND DIVIDEND POLICY :-
Some firms have more earning capacity than other due to quality of their products, monopoly
conditions, etc. Such firms may generate cash profits from operations and contribute to their working
capital. The dividend policy also effects the requirement of
working capital. A firm maintaining a steady high rate of cash dividend irrespective of its profit
needs more working capital than the firm that retain larger part of its profits and does not pay so high
rate of cash dividend.
11.PRICE LEVEL CHANGES: -
Price level changes also affect working capital needs. If the prices of different goods increase, to
maintain same level of production, more working capital is needed.
12.AVAILABILITY OF RAW MATERIAL: -
Availability of raw material on the continuos basis affects the requirement of working capital. There
are certain types of raw materials, which are not available regularly. In such a situation firm requires
greater working capital to meet the requirements of production. Some raw materials are available in
particular season only for example wool, cotton, oil seeds, etc. They have to keep greater working
capital.
13. MAGNITUDE OF PROFIT: -

Magnitude of profit is different for different businesses. Nature of product, control on the market and
ability of managers etc. determine the quantum of profit. If the profit margin is high, it will help to
arrange funds internally, which will also increase the working capital.
14. OTHER FACTOR: -
a) Operating efficiency
b) Management ability
c) Irregularities of supply
d) Import policy
e) Asset structure
f) Importance of labor

CAPITAL MANAGEMENT
The Bank strives for the continual enhancement of shareholder value. Its capital management
framework helps to optimise the use of capital by ensuring the right composition of capital in relation
to business growth and the efficient use of capital through an optimal mix of products and services.
During the year, the Bank continued to attract investor interest from domestic and foreign
institutional investors, with a sizeable increase in trading volume and price. During 2013-14, the
Bank has raised capital aggregating Rs. 1,962.81 crores through Innovative Perpetual Debt
Instrument (IPDI), eligible as Tier I capital and Tier II capital in the form of Upper Tier II and
subordinated bonds (unsecured redeemable nonconvertible debentures). Of this, the Bank has raised
US Dollars 226 million (equivalent to Rs. 1023.01 crores) by way of Hybrid Tier I capital and Upper
Tier II capital from Singapore under the MTN Programme. This additional capital enabled the Bank
to reinforce its growth strategy and shore up its capital adequacy ratio. Consequently, as on 31 March
2014, the Bank's capital adequacy ratio rose to 11.57% from 11.08% last year.
The following table sets forth the risk-based capital, risk-weighted assets and capital
adequacy ratios computed in accordance with the applicable RBI guidelines 20. The Bank has always
focused on innovation and differentiation. In this direction, during the year, the Bank has opened
specialised Priority Banking branches for the high networth customer segment. Priority Banking
branches have been conceived as a single stop shop for affluent Customers, catering to all their
banking and investment needs, and the Bank is the first to launch such a concept in India.
These branches are exclusive boutique banking branches with a plush ambience catering to high
networth individuals, that takes the Priority Banking product to an experiential level, offering service
in a discreet manner while maintaining comfort and confidentiality for the customers. During 2013-
14, three such branches were opened in the cities of Pune, Mumbai and Kolkata, with plans to open
more such branches at other urban centers in 2011-12.
The Bank is very sensitive to the privacy of its customers and does not engage in unsolicited
tale-calling. In this regard, the Bank has taken proactive measures to seek positive customer consent
on cross-selling initiatives. The Bank launched project 'Sampark', which involves meeting customers
face-to-face at branch locations, or outside ATMs and seeking their written consent for cross-selling
initiatives. The project is an intensive logistical exercise and by end-March 2011, 8 lacs customer
consents have been acquired. This gives the Bank a fully compliant internal database for cross-sell
initiatives such as for investment advisory services and insurance products. This will facilitate in
boosting the fee income from cross-sell of various products. In its constant endeavor to provide
convenience to its customers, the Bank has been aggressively developing its alternative banking
channels, namely the ATM network, Internet Banking and Mobile Banking. These channels have
received overwhelming response from its customers with registration and transaction figures
increasing substantially over the previous year. During the year, the Bank added 12922 ATMs,
thereby taking the network size to 2402 on 31 March 2013. The Bank offers access to its customers
to over 19,000 ATMs across the country through bilateral and multilateral ATM sharing
arrangements. Beginning 2001, the Bank had identified the ATM channel as a strong tool for
customer acquisition and convenience. At 4.70 ATMs per branch, the Bank has the highest ATM to
branch ratio in the country. The high ATM to branch ratio has been part of the growth strategy and
has been a major factor in the high growth of savings bank deposits accounts and balances.

Continuing with its efforts in providing the utmost in convenience and safety to its customers, the
Bank has promoted its mobile banking services to enable customers to access their accounts on their
mobile phones. The service also sends out specific transaction alerts on the mobile phones of
registered customers, informing the customer of the activity in the account, thereby giving an added
level of safety to the customer. The mobile channel has found increasing acceptance among the
Bank's customers. During the financial year, 40% of the incremental customers signed on for mobile
banking services. With 1.10 million customers registered for mobile banking, the Bank has among
the highest mobile registration penetration levels among bank customers. The Bank is uniquely
poised to take advantage of the growth of mobile commerce in the country. On the Internet Banking
front, the registered user base of the Bank rose from 1.89 million accounts as on 31 March 2012 to
3.85 million accounts as on 31 March 2013. To give the customers more reliable service, the Internet
Banking platform was revamped in the current year. To counter phasing attacks on our customers, the
Bank has;
Introduced an added security measure whereby the customer has to enter certain additional details
from his debit card number in addition to his Login Identification and password for conducting a
financial transaction.
The Bank has set up a Call Centre, available 24/7, providing assistance in 11 languages. The Call
Centre as of March 2013 handled over 30,000 calls per day. With 708 branches, 63 extension
counters, 12922 ATMs, 3.85 million internet banking customers and 1.10 million mobile registered
customers, the Bank provides one of the best networks in the country with real time on-line access to
it customers.

CORPORATE BANKING
Corporate Banking business of the Bank provides quality products to large and mid-sized clients.
The products include credit, trade finance for domestic as well as international transactions,
structured finance, and project finance and syndication services.
The Bank continues to pursue a two-pronged strategy of widening the customer base as well as
deepening existing client relationships. Careful choice of new customers based on appropriate risk-
return guidelines forms the basis for the strategy of widening the customer base. The deepening of
existing client relationships is achieved by a careful account strategy focusing on increasing the
cross-sell of various corporate banking products, as also products from other divisions of the Bank
including investment banking and retail products.
During the year, large corporate advances grew by 60% to Rs. 19,346 crores from Rs. 11,286 crores
in the previous year. The Bank took steps to focus on fee income mainly from trade finance facilities
and document handling. This method of fee generation is stable and sustaining. Given the Increasing
overseas presence of the Bank, the trade finance business is set to grow significantly over the coming
years. The Bank takes selective Exposure to project financing in areas of infrastructure as well as
manufacturing projects set up by reputed industry groups. It constantly works to upgrade its skills in
financial structuring to be able to continue providing value to its corporate customers.

The overseas presence has enabled the Bank to leverage its existing relationships further by granting
loans towards ECBs by Indian corporate as well as to enable acquisition financing. The Bank has
also contributed towards financing infrastructure projects and other forms of project finance through
its overseas branches. Channel finance also grew on the back of strong corporate demand. The
centralised Channel Finance Hub continued to deliver seamless service to various channel finance
customers. Syndication and underwriting of corporate debt also increased in volumes and resulted in
rising fee income. Corporate Banking increased its focus on Risk Management and on improving
portfolio quality. The identification, measurement, monitoring, management and pricing of client risk
are the key activities that enable all corporate banking business. The Bank has in place procedures
and practices to ensure regular updation of risks taken by the Bank on various client accounts.
Portfolio diversification remains the key for managing asset quality and preventing concentration
risks. The credit risk in corporate banking is evaluated and managed by groups organized with an
industry sector focus. The Bank also has a Risk Management Department, whose views are critical
for decision-making with regard to credit exposures. Overall, the risk control mechanism adopted by
the Bank has continued to serve the Bank well, as is observed in the ratio of net NPA to net customer
assets being at 0.61%. Corporate Banking scrupulously adheres to all statutory, regulatory and
related guidelines for all its businesses.

TREASURY
The integrated Treasury manages the global funding of the balance sheet, domestic and foreign
currency resources of the Bank, compliance with statutory reserve requirements, as well as optimizes
on opportunities in the markets through managing proprietary positions in foreign exchange and
interest rate markets. With the expansion of the Bank overseas, the Treasury will look to leverage on
the network to widen product scope as well as increase revenue generation from opportunities in the
global markets.
The continued thrust on maximizing returns from customer relationships in the Treasury has resulted
in growth of 51% in customer exchange turnover and 60% in revenues. The Treasury offered
structured solutions to customers using foreign exchange and derivatives offerings, which has
resulted in significant value addition to customer relationships. In its continued effort to offer top of
the line payment solutions to customers, the Bank has offered Real Time Gross Settlement (RTGS)
and National Electronic Funds Transfer (NEFT) through 470 branches and extension counters across
the country. Throughput in RTGS grew by 251% over the previous year. Despite a challenging
interest rate environment, the Bank's holding in government securities has been substantially
protected from market risk as it is held as per specified guidelines of RBI. The portfolio gave a return
of 7.64%. The Bank established a Medium Term Note (MTN) Programme for Euro One billion as a
part of the funding plan for its overseas operations.
During the year, the Bank raised USD 150 million as Upper Tier-II (the first hybrid capital issuance
out of India) and USD 46 million as Hybrid Tier-I capital in terms of recent guidelines issued by
RBI. The Bank also raised senior debt through the issuance of USD 250 million of three-year
floating rate notes (FRN) under the MTN programme. The Asset Magazine published in Hong Kong
voted the Bank's Upper Tier-II issue as “Best Deal, India”. While the Upper Tier-II issue was
oversubscribed six times, the Floating Rate Note (FRN) issue was priced at the lowest coupon ever
for an Indian bank debt issuance.

BUSINESS BANKING
Business Banking has consistently focused on procuring low cost funds by offering a range of
current account products and cash management solutions across all business segments covering
corporate, institutions, Central and State Government Ministries and Undertakings as well as small
business customers. Cross selling of transactional banking products to develop account relationships,
aided by product innovation and a customer-centric approach have borne fruit in the form of growing
current account deposit balances and increasing realisation of transaction banking fees. Sourcing of
current account deposits is a focus area for growth. As of 31 March 2011, current account deposits
grew by 41.83% to Rs. 11,304.31 crores from Rs. 7,970.08 crores in the previous year. On a daily
average basis, current account deposits grew from a level of Rs. 4,428 crores for the year 2009-10 to
Rs. 7,193 crores for the year 2010-11. During 2012-13, the Bank sourced 97,857 new current
accounts as against 77,264 in the previous year. There was a greater focus on acquisition of high
value current accounts, thus accelerating the pace of growth in current account deposit balances

CASH MANAGEMENT
Cash Management Services (CMS) initiatives leveraged the Bank's growing branch net work and
robust technology to provide a wide range of customised solutions to suit the dynamic requirements
of its clients. The Bank offers CMS solutions for collections and payments with an ideal blend of
structured MIS and funds movement so that clients are able to enhance their fund management
capabilities. Also the Bank's Web CMS initiative allows them to view their daily transactions on a
real time basis. The strong correspondent bank alliance with partner banks offers corporate clients a
wide geographical coverage. CMS foray is not only emerging as an important source of fee income
but is also contributing significantly towards garnering zero cost funds, forging large relationships.
The Bank has established a strong presence by offering collecting bank services in the IPO/FPO
segment and Dividend/Refund Warrant segments.
During the year, the CMS throughput grew by 80% to Rs. 3, 79,067 crores compared to Rs. 2,10,977
crores last year. During the same period, the number of CMS clients has grown to 2,164 clients from
1,432 clients. The Bank has acted as an Agency Bank for transacting Government Business for the
last 6 years, offering banking services to various Central Government Ministries and Departments
and other State Governments and Union Territories. Currently, the Bank accepts Income Tax and
Other Direct Taxes through its 214 Authorized Branches at 137 locations, and Central Excise and
Service Taxes through its 56 Authorised Branches at 13 locations. The Bank also handles
disbursement of Civil Pension through 218 Authorised Branches and Defence Pension through 151
Authorised Branches. Additionally, the Bank is providing collection and payment services to four
Central Government Ministries and Departments and seven State Governments and Union
Territories. The Bank has further strengthened its association with the e-Governance initiatives of
various State Governments in India aimed at providing better citizen services by setting up integrated
citizen facilitation centers. During the year, the Bank associated with the 'Choices' Project of the
Government of Chhattisgarh and the 'e-Suvidha' initiative of Government of Uttar Pradesh. During

2010-11, the Bank has also extended the business of Stamp Duty Collection through franking in
Rajasthan, in addition to Maharashtra and Gujarat. The Bank also launched an e-Tax Payment
Facility for payment of Direct Taxes on behalf of the Central Board of Direct Taxes (CBDT) through
the internet for its customers. Additionally, the Bank also launched an e-Payment facility for payment
of Commercial Taxes on behalf of the Department of Commercial Taxes, Government of
Chhattisgarh. During 2010-11, the total Government business throughput registered a growth of 36%
to Rs. 37,932 crores against Rs. 27,888 crores in the previous year.

LENDING TO AGRICULTURE, SME AND MID CORPORATES
To fully exploit the business potential of the Small and Medium Enterprises (SME) and Mid
Corporate segments, to bring greater focus on priority sector lending, to achieve the small scale
industry and agricultural lending targets fixed by RBI and to explore new avenues of lending like
microfinance, a separate business focus was provided during the year. Further, a separate business
group was formed to target specific segments in SME and Mid Corporate business by rolling out
schematic loan products where the appraisal is based on systematically designed scoring sheets and
simple appraisal techniques so as to reduce turnaround time and quickly increase the customer base.
Advances Cells located at important business centers in the country have given a fillip to the Bank's
SME, Mid-corporate and Agricultural lending business. During 2011-12, the Bank added 5 more
Advances Cells, bringing the total number to 15. This has resulted in significant improvement in
performance and portfolio quality. Dedicated marketing teams at the Advances Cells and in certain
branches have given an impetus to new business relationships.
The Bank's focus on SSI lending was amply demonstrated by a 72% growth during the year. The
Bank gave priority sector lending paramount importance and for the sixth year in a row, the Bank
was compliant with the overall priority sector norms stipulated by RBI.
The Bank has also laid down a well thought out strategy to grow the retail agricultural lending
business. The Bank categorised centres across the country based on agricultural productivity,
irrigation potential, infrastructure facilities and loan repayment track record, and chose districts with
the good potential for agricultural lending. Further, the Bank is bringing branches in a district or even
nearby districts under the umbrella of an 26 agriculture cluster for focused agriculture lending. The
Bank has so far opened 18 such agriculture clusters. In keeping with the focus of the government on
increasing direct agricultural lending, the Bank rolled out several new loan products for the farming

community. The Bank also fine-tuned its existing loan products to fully suit the varied requirements
of its agriculture business clientele. During the year, the total agricultural advances of the Bank grew
by an impressive 115%, with direct agricultural lending recording a 91% growth over the previous
year. Thus, for the second year in succession, the Bank's direct agricultural lending has grown by
over 90%. At the end of the year, direct agricultural advances stood at 9.59% of the net bank credit,
which is the highest ever achieved by the Bank. The Bank would continue the focus on building up
its agriculture business on profitable lines and is recruiting agriculture business personnel to sustain
growth plans and maintain portfolio quality.
The micro-finance business of the Bank witnessed increasing outreach through 64 micro-finance
relationships. The portfolio under micro-finance increased by 161% during the year, which
corresponds to a client outreach of 6.62 lacs, the majority being poor women in rural areas. The Bank
also initiated the process of extending micro credit to self-help groups through village organisations.
The Bank has also been implementing various government-sponsored schemes. With a view to
expanding our reach in the Northeastern region of the country, the Bank has signed a Memorandum
of Understanding with South Asia Enterprises Development Facility, a multi-donor facility managed
by the International Finance Corporation of the World Bank. The scope of the collaboration includes
developing a profitable micro, small and medium enterprises business model supporting service
based marketing linkages and export oriented operations, particularly to enterprises involved in value
added agricultural production.

INTERNATIONAL BANKING
With increasing integration of the Indian economy globally and consequent two way flows of funds
and services, the Bank had identified international banking as a key opportunity to leverage the skills
and strengths built in its domestic operations in serving the requirements of its clients in the areas of
trade and corporate banking, as also investment banking by establishing presences at strategic
international financial hubs in Asia. In this direction, the first overseas branch of the Bank was
opened in Singapore in April 2010 and, subsequently, a branch in Hong Kong and a representative
office in Shanghai in China commenced operation during the year 2010-11. In addition, the Bank has
also set up a branch in the Dubai International Financial Centre, UAE in early April 2011. The
Bank's presence at these locations, through which the bulk of the trade in
Asia gets routed, would enable the Bank to provide services at every cycle of the trade finance
products, besides providing an opportunity to foray in the international investment banking markets.
In its first year of operations, the Singapore branch has been active in the area of corporate banking
and has been able to participate in and facilitate the debt raising activities of Indian corporates in the
international markets. The Singapore branch also provides trade finance and treasury solutions. As of
March 31, 2007 the total assets at the overseas branches stood at US Dollars 731 million.

DESIGN OF
STUDY

CHAPTER- 3. DESIGN OF STUDY
RESEARCH METHODOLGY
The methodology describes the process of research work. This contains the overall research design,
the data collection methods, the sampling procedure, the field survey method and the analysis
procedure.
 Descriptive Research
 Primarily based on primary data collection.
 Follow questionnaire method.
 Quantitative Research
 Non- Probabilistic convenience sampling.

THE STUDY
RESEARCH DESIGN
A Research design is a framework or blueprint for conducting the marketing research project.
Exploratory Research
Purpose Exploratory Research
 Formulating a problem or define a problem more precisely.

 Identify alternative courses of action.
 Development hypothesis.
 Isolate key variables and relationships for further examination.
 Gain insights for developing an approach to the problem.
 Establish priorities for further research.
Exploratory research design has been used.
SAMPLE
 SAMPLING UNIT: The sampling units selected were all above 18 years of age with diverse
socio-economic background.
 SAMPLING TECHNIQUE: Samples were collected by way of convenient sampling and
questions were asked to the respondents when they were coming out of their respective banks
after availing the services there.
 SAMPLE SIZE: A total sample size of 40 was selected.
OBJECTIVES OF THE STUDY

The following are the objectives of research conducted:
 To understand the strategies of bank.
 To understand the banking industry.
 To understand the company’s functions.
 To suggest ways for improving the market share, profit margin.
 To make an effective advertising campaign.

LITERATURE REVIEW
'Doing a Literature Review' is a practical and comprehensive guide to researching, preparing and
writing a literature review, a major component of research projects. It is an essential tool not only
for postgraduate students but also for undergraduate and novice researchers across the social
sciences and humanities.
A literature review is an examination of the research that has been conducted in a particular field of
study. Hart (1998) defines it as:
 The selection of available documents (both published and unpublished) on the topic, which
contain information, ideas, data and evidence. [This selection is] written from a particular
standpoint to fulfil certain aims or express certain views on the nature of the topic and how it
is to be investigated, and
 The effective evaluation of these documents in relation to the research being proposed

DATA COLLECTION METHODS
Data Collection is an important aspect of any type of research study. Inaccurate data collection can
impact the results of a study and ultimately lead to invalid results.
Data collection methods for impact evaluation vary along a continuum. At the one end of this
continuum are quantatative methods and at the other end of the continuum are Qualitative methods
for data collection
Quantitative and Qualitative Data collection methods
The Quantitative data collection methods, rely on random sampling and structured data collection
instruments that fit diverse experiences into predetermined response categories. They produce results
that are easy to summarize, compare, and generalize.
Quantitative research is concerned with testing hypotheses derived from theory and/or being able to
estimate the size of a phenomenon of interest. Depending on the research question, participants may
be randomly assigned to different treatments. If this is not feasible, the researcher may collect data
on participant and situational characteristics in order to statistically control for their influence on the
dependent, or outcome, variable. If the intent is to generalize from the research participants to a
larger population, the researcher will employ probability sampling to select participants.
Typical quantitative data gathering strategies include:
 Experiments/clinical trials.
 Observing and recording well-defined events (e.g., counting the number of patients waiting in
emergency at specified times of the day).

 Obtaining relevant data from management information systems.
 Administering surveys with closed-ended questions (e.g., face-to face and telephone
interviews, questionnaires etc).
DATA COLLECTION SOURCES
Poverty maps are not only influenced by the selection of a conceptual approach to define poverty and
by the choice of a specific poverty indicator. The data collection method itself can determine the
resolution of the poverty map and the type of analysis to conduct.
A brief review of different data collection methods will highlight the pros and cons of various
subjective and objective methods and the trade-off between survey and census data. A short section
summarizing major sources for international poverty maps will show that the pool of existing data
for a global poverty map is limited. Additional investments in data collection and modeling need to
be made to produce maps with higher resolution, more comprehensive poverty measures, and a wider
international country coverage.

ANALYSIS
OF
DATA

CHAPTER- 4. ANALYSIS OF DATA
MANAGEMENT DISCUSSION AND ANALYSIS
MACRO-ECONOMIC ENVIRONMENT
While macro-economic fundamentals have generally been strong in 2012-13, inflation, largely due to
supply-side constraints, had become an overriding concern in the closing months of fiscal 2012-13.
The GDP is expected to show a growth of 9.2% for the fiscal 2010-11 against 9% last fiscal year.
Agriculture and allied sectors are expected to grow at a rate of 2.7% in 2012-13, while industrial
production is expected to grow by about 10%.
growth in industrial production was driven mainly by the manufacturing sector, which grew by
11.3% in 2012-13 following a growth of 9.1% in the previous fiscal. The momentum of growth in the
services sector continued with a growth of 11.2% in fiscal 2010-11. Among the three sub-sectors of
services, 'trade, hotels, transport and communication services' has continued to boost the sector by
growing at double-digit rates for the fourth successive year. Inflation, with its roots in supply-side
factors, was accompanied by buoyant growth of money and credit in the last two years. Starting with
a rate of 3.98%, the rate of inflation in 2010-11 has been on a generally upward trend with
intermittent falls. However, average inflation during 2010-11 remained at 5%, with continuing fiscal
and monetary policy interventions aimed at controlling price levels. Liquidity conditions remained

fairly comfortable up to early September 2010. With year-on-year inflation stubbornly above 5% in
the second half of the year, RBI announced further measures to stem inflationary expectations and
also to contain the credit growth that put pressure on the liquidity position, thereby hardening interest
rates in the economy.
Growth trends were accompanied by robustness of overall macro-economic fundamentals,
particularly with tangible progress towards fiscal consolidation and a strong balance of payments
position. With an upsurge in investment, the outlook is distinctly upbeat. However, the major
challenges lie in taking macro-economic level corrective action to tackle the supply side constraints
to keep inflation at an acceptable level. Interest rates have already shown signs of hardening, which
may affect further investments in the industrial sector. In order to maintain the GDP growth over 9%
in the coming years, the major challenge lies in balancing of current pace of growth with non-
accelerating inflation. The current policy measures adopted by monetary authorities to tighten
liquidity in order to fight inflation led to an increase in interest rates, which could slow down
economic growth in the coming year, particularly in respect of infrastructure and other core sector
projects.
Against the backdrop of generally strong economic fundamentals in the last year, the banking system
seems to have done well during 2010-11, reflected in the growth of business in the form of aggregate
deposits and advances. In terms of the Weekly Statistical Supplement published by RBI, the
aggregate deposits of All Scheduled Commercial Banks (ASCB) as on 30 March 2013 have grown
by 24.27% from 31 March 2012, while bank credit has grown by 28.51%. However, there continue
to be areas of concern, primarily hardening interest rates that may result in pressure upon the net
interest margins. The continuing rise in interest rates may make various projects economically
unviable, resulting in higher NPAs and also affect valuations. Lastly, the sharp increase in provisions
on standard assets will impact the profitability of banks.

COMPETITOR ANALYSIS
Axis Bank stands apart from its private sector competitors — ICICI Bank and HDFC Bank — in one
crucial respect. While the other two banks have envisaged retail banking as a key area of strategic
emphasis — with the share of the retail business (both on the funding and asset sides) growing
strongly year after year— the share of retail business, particularly retail assets, has actually come
down quite sharply in the case of Axis Bank.
The numbers here are quite interesting. For ICICI Bank, retail loans now (as of June 2011) account
for as much as 70 per cent of the bank’s total loan book of Rs 2,00,000 crore. For HDFC Bank, retail
assets are around 57 per cent (Rs 28,000 crore) of the total loans as of March 2011.
In the case of Axis Bank, retail loans have declined from 30 per cent of the total loan book of Rs
25,800 crore in June 2010 to around 23 per cent of loan book of Rs.41,280 crore (as of June 2011).
Even over a longer period, while the overall asset growth for Axis Bank has been quite high and has
matched that of the other banks, retail exposures grew at a slower pace.
If the sharp decline in the retail asset book in the past year in the case of Axis Bank is part of a
deliberate business strategy, this could have significant implications (not necessarily negative) for the
overall future profitability of the business.

Despite the relatively slower growth of the retail book over a period of time and the outright decline
seen in the past year, the bank’s fundamentals are quite resilient. With the high level of mid-corporate
and wholesale corporate lending the bank has been doing, one would have expected the net interest
margins to have been under greater pressure. The bank, though, appears to have insulated such
pressures. Interest margins, while they have declined from the 3.15 per cent seen in 2003-04, are still
hovering close to the 3 per cent mark. (The comparable margins for ICICI Bank and HDFC Bank are
around 2.60 per cent and 4 per cent respectively. The margins for ICICI Bank are lower despite its
much larger share of the higher margin retail business, since funding costs also are higher).
Such strong emphasis and focus on lending also does not appear to have had any deleterious impact
on the overall asset quality. The bank’s non-performing loans are even now, after five years of
extremely rapid asset build-up, below 1 per cent of its total loans.
From a medium-term perspective, it appears that Axis Bank could be charting out a niche for itself in
the private bank space. It appears to be following a business strategy quite different from the high-
volume and commodity-style approach of ICICI Bank and HDFC Bank. That strategy also has its
pluses in terms of the relatively higher margins in some segments of the retail business and the in-
built credit risk diversification (and mitigation) achieved through a widely dispersed retail credit
portfolio. But, as indicated above, Axis Bank has been to able to maintain the quality of its loan
portfolio despite the concentrated nature of wholesale corporate lending

GRAPHS
RATE OF DIVEDEND DECLAIRED BY AXIS BANK
YEAR DIVEDEND
2003-2004 12%
2004-05 15%
2005-06 20%
2006-07 22%
2007-08 25%
2008-09 28%
2009-10 35%
2010-11 45%
2011-12 60%
`

RETAIL LIABILITIES
SB DEPOSIT (RS.
YEAR CRORE)
2006-2007 1423
2007-2008 2585
2008-2009 4891
2009-2010 8061
2010-2011 12165

RETAIL LIABILITIES
RETAIL
YEAR DEPOSIT(RS.CRORE)
2006-2007 4941
2007-2008 6296
2008-2009 8616
2009-2010 13618
2010-2011 19220

ENHANCING SHARE HOLDER VALUE OF AXIS BANK
TABLES

RATIO ANALYSIS OF AXIS BANK
Mar ' 08 Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04
Capital Adequacy
0.00 11.57 11.08s 12.66 11.21
Ratio
EARNINGS
RATIOS
Income from
Fund Advances as
0.00 49.48 42.51 42.56 36.28
a % of Op
Income
Operating
Income as a % of 14.81 16.10 14.73 22.59
Working Funds
Fund based
income as a % of 100.00 85.58 86.07 85.28 91.28
Op Income
Fee based income
as a % of Op 0.00 14.41 13.92 14.71 8.71
Income
PROFITABLITY
RATIOS
Yield on Fund
7.32 6.84 6.27 8.19
Advances
Break-Even Yield
8.11 8.11 7.64 10.90
Ratio
Cost of Funds 4.73 4.67 4.23 3.56 4.75

Ratio
Net Profit
12.17 12.01 13.47 14.33 13.14
Margin
Adjusted Return
12.21 19.50 16.94 13.54 24.01
On Net Worth
Reported Return
12.21 19.42 16.88 13.89 24.49
On Net Worth
BORROWING
RATIOS
Borrowings from
RBI as % to Total 0.00 0.00 0.00 0.00 0.00
Borrowings
Borrowings from
other banks as a
0.00 11.54 32.37 9.55 18.61
% to Total
Borrowings
Borrowings from
others as a % to 100.00 23.17 45.64 63.42 57.36
Total Borrowings
Borrowings
within India as a
100.00 34.71 78.02 72.98 75.97
% to Total
Borrowings
Borrowings from
outside India as a 0.00 65.28 21.97 27.01 24.02
% to Total

Borrowings
DEPOSIT
RATIOS
Demand Deposit
100.00 19.22 19.86 22.56 25.74
of Total Deposits
Saving Deposit
0.00 20.62 20.10 15.42 12.33
of Total Deposits
Time Deposit of
0.00 60.14 60.02 62.01 61.92
Total Deposits
Deposits within
India as % to 99.63 100.00 100.00 100.00
Total Deposits
Deposits Outside
India as % to 0.36 0.00 0.00 0.00
Total Deposits
PER BRANCH
RATIOS
Operating
Income Per 9.74 7.99 6.78 8.39
Branch
Operating Profit
2.13 2.11 1.82 1.96
Per Branch
Net Profit Per
1.18 1.08 0.96 1.08
Branch
Personnel
Expenses Per 0.68 0.53 0.52 0.48
Branch
Administrative 1.54 1.28 0.89 1.86

Expenses Per
Branch
Financial
Expenses Per 5.34 4.02 3.52 4.05
Branch
Borrowings Per
9.26 5.96 5.25 2.09
Branch
Deposits Per
104.79 89.14 93.55 83.15
Branch
PER
EMPLOYEE
RATIOS
(Rs. in Units)
Operating
Income Per 5,472,542.38 5,485,206.78 4,829,294.06 6,137,279.66
Employee
Operating Profit
1,195,476.65 1,451,095.07 1,293,245.96 1,430,794.89
Per Employee
Net Profit Per
663,264.93 742,839.77 685,089.48 791,634.17
Employee
Personnel
Expenses Per 382,110.32 366,552.42 371,465.66 351,755.15
Employee
Deposits Per
58,903,407.92 61,213,995.57 66,607,855.70 60,788,809.11
Employee
Fund Advances
36,950,383.97 34,051,931.02 32,772,362.74 27,162,590.66
Per Employee

SWOT ANALYSIS FOR THE AXIS
STRENGTHS:
 High quality service provide
 Strong and well management.
 Second largest private bank all over India

 AXIS Bank has been to able maintain the quality of its loan portfolio
WEAKNESSES:
 Strengthening of rupee hitting profits
 Ability to pass through price increases in various markets due to
 Intense competition.
 Manpower problem is big problem.
OPPORTUNITIES:
 Development of modern banking.
 Potential for growth through increased penetration.
 Opportunity to no:1 bank all over india
 Increasing popularity in overseas markets
THREATS/CHALLENGES:
 Environment with diverse players
 Rising competitors for private banking
 Change in fiscal benefits/laws
 People attraction & retention
 Management of country risk.

FINDINGS
CHAPTER- 5. FINDINGS
 Here lot of things I find to make this project report.
 Firstly know to how they manage there banking system.

 Secondly known there operation system.
 Thirdly known there controlling risk management.
 Fourthly I know it that how to manage there financial system.
 How to operate their share holder.
 Know how to control competitors.
 Growth banking industry.
 Growth of axis bank.
LIMITATIONS
Credit risk management
The changing operating environment for banks entails managing complex and variable risks in a
disciplined fashion. The key challenges for effective management of variegated risks emanate from
creation of skill sets within the Bank with appropriate domain knowledge and developing a

functional framework to monitor risks with triggers in cases of breaches in the pre-accepted levels of
identified risks. The Bank, since the inception of the Risk Department, has developed in-house skills
to manage key areas of risk viz., credit risk, market risk and operational risk.
Credit Risk
Credit risk covers the inability of a borrower or counter-party to honour commitments under an
agreement and any such failure has adverse impact on the financial performance of the Bank.
Accordingly, the Bank strives to effectively assess, administer, monitor and enforce recovery of loans
to various clients.
The Additional measures of risk containment at the individual exposures and at the portfolio level
are:
• Rating linked exposures norms adopted by the Bank are conservative in comparison to the
regulatory prudential exposure norms.
• Industry-wise exposure ceilings are based on the industry performance, prospects and the
competitiveness of the sector.
• Exposures with bullet repayments, long gestation projects, longer tenor exposures, and longer
moratorium are assessed with additional care.
Committee of Directors Risk Management Committee
Audit Committee Board of Directors
Credit Committees & ALCO Operational Risk
Investment Committees Management Committee
28 Distributions of Credit Risk Assets by Asset Quality
Industry analysis plays an important part in assessing the potential concentration risk from within the
loan portfolio. Particular attention is given to industry sectors where the Bank believes there is a high
degree of risk or potential for volatility in the future..

Consumer Credit Risk Management
The Bank's continuing aggressive foray into retail banking has resulted in a sharp build up in the
retail asset portfolio. The key challenge for a healthy retail asset portfolio is to ensure a stable risk
adjusted earnings stream by maintaining customer defaults within acceptable levels. The Bank
periodically carries out a comprehensive portfolio level analysis of retail asset portfolio with a risk
return perspective. Risk measurement for the retail portfolio is assessed primarily on a credit scoring
basis. During the year, the Bank has initiated a project to revamp its existing credit scoring models
for retail assets with external support from a reputed international vendor.
Market Risk
Market risk is the risk to the Bank's earnings and capital due to changes in the market level of
interest rates or prices of securities, foreign exchange and equities, as well as the volatilities of those
changes. The Bank is exposed to market risk through its trading activities, which are carried out both
for customers and on a proprietary basis. The Bank adopts a comprehensive approach to market risk
management for its trading, investment and asset/liability portfolios. The Bank uses various risk
metrics, both statistical and non-statistical, including non-statistical measures like position, gaps and
sensitivities (duration, PVBP, option Greeks); Value at Risk (VaR); sensitivity of net interest income
(EaR); and sensitivity of the Economic Value of Equity (EVE).
Liquidity Risk
Liquidity risk arises in any bank's general funding of its activities. As part of the liquidity
management contingency planning, the Bank assesses potential trends, demands, events and
uncertainties that could reasonably result in an adverse liquidity condition. The Bank considers the
impact of these potential changes on its sources of short term funding and long term liquidity

planning. The Bank's ALM policy defines the gap limits for the structural liquidity and the liquidity
profile of the Bank is analysed on a static as also a dynamic basis by tracking all cash inflows and
outflows in the maturity ladder based on the expected occurrence of cash flows. The Bank
undertakes behavioural analysis of the non-maturity products viz. savings and current deposits and
cash credit/ overdraft accounts, on a periodic basis to ascertain the volatility of residual balances in
those accounts. The renewal pattern and premature withdrawals of term deposits and draw downs of
unavailed credit limits are also captured through behavioural studies.
Country Risk
The Bank has put in place a risk monitoring system for the management of country risk. The Bank
uses the seven-category classification viz. insignificant, low, moderate, high, very high, restricted
and off-credit followed by the Export Credit Guarantee Corporation of India Ltd. (ECGC) and
ratings of international rating agency Dun & Bradstreet for monitoring the country exposures. The
ratings of countries are being undertaken at monthly intervals or at more frequent intervals if the
situation so warrants i.e. in case of a significant change in the condition of a country involving sharp
deterioration of its ratings. Exposure to a country includes all credit-related lending, trading and
investment activities, whether cross border or locally funded. The Bank has set up exposure limits for
each risk category as also individual country exposure limits, and the exposure limits are generally
monitored at weekly intervals.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or
systems, or normal external events. The Bank is in the process of rolling out a software solution for
an operational risk management framework with emphasis on identification of key risk indicators at

the unit level, monitoring identified risk at the unit level and then aggregating at a higher
organizational level. The business units put in place the baseline internal controls as approved by the
Product Management Committee to ensure a sound and well controlled operating environment
throughout the organization. Each new product or service introduced is subject to a rigorous risk
review and signoff process where all relevant risks are identified and assessed by departments
independent of the risk taking unit proposing the product. Variations of existing products, as well as
outsourcing, are also subject to a similar process.
Risk Management framework for Overseas Operations.
The Bank has put in place a comprehensive Risk Management policy for its global operations and
has also formulated country specific risk policy for these operations based on the host country
regulators' guidelines. The Asset Liability Management and all the risk exposures for the overseas
operations are monitored centrally by implementing sound systems and controls, and also by
adopting the norms as specified by the regulators in the host country.

CONCLUSION
CHAPTER- 6. CONCLUSION

The banking industry's market capitalization made a substantial decline. Most investors are
concerned with whether the industry can sustain continued profitability as a result of these factors.
Banks have responded in recent years to these problems by diversifying away from interest sensitive
products and services. But interest rates are the fundamental aspect of any financial services.
I believe the financial services industry will be deeply affected by rise Interest rates have
already shown signs of hardening, which may affect further investments in the industrial sector. In
order to maintain the GDP growth over 9% in the coming years, the major challenge lies in balancing
of current pace of growth with non-accelerating inflation. The current policy measures adopted by
monetary authorities to tighten liquidity in order to fight inflation led to an increase in interest rates,
which could slow down economic growth in the coming year, particularly in respect of infrastructure
and other core sector projects.ng interest rates.
Axis Bank stands apart from its private sector competitors — ICICI Bank and HDFC Bank
-in one crucial respect. While the other two banks have envisaged retail banking as a key area of
strategic emphasis — with the share of the retail business (both on the funding and asset sides)
growing strongly year after year— the share of retail business, particularly retail assets, has actually
come down quite sharply in the case of Axis Bank.

SUGGESTIONS
 An increase in interest rates is the reason of decline in bank activity so interest rate should
appropriate.
 Technology should improve in banking sector because new technology replace traditional
banking and reduced personnel cost.
 Bank should solved the problem of lack of efficient employees , so that man power could not
become a hurdle in success of bank.

REFERENCES
REFERENCES & BIBILIOGRAPHY

Web sites.
www.google.com
www.axisbank.com
www.ragadirect.com
www.altavista.com
www.answers.com
www.slideshare.com
www.managementparadise.com

ANNEXURE
QUESTIONNAIRE
1. What is your full time profession?

a) Business b) Govt. Service
c) Private Jobs d) Retired
e) Housewife
2. What efforts can be made to bring about more awareness amongst people?
a) Media Ads b) Banners
c) Newspaper d) Agents
e) Event Sponsorship f) Any Other
3. You like to work in market/field and want to interact with people?
a) Yes b) No
4. From how many years you live in NCR?
a) Below 6 months b) 6 months – 1 year
c) 1 year- 2 year d) more than 2 years
5. How many people do you know in NCR?
a) Less than 200 b) 200-500
c) 500-1000 d) Above 1000
6. Do you like to earn some extra money?
a) Yes b) No
7. Are you involved in Banking Service?
a) Yes b) No
If YES, than answer the following question:
A. Duration of working?
a) Below 6 months b) 6 months – 1 year
c) 1 – 2 years d) 2 – 3 years
e) Above 3 years
B. Annual Productivity given to company?
a) Below 50,000 b) 50,000 – 1, 00,000
c) 1, 00,000 – 2, 00,000 d) 2, 00,000 – 3, 00,000
e) 3, 00,000 – 4, 00,000 f) Above 3, 00,000
C. Are you satisfied with your company?
a) Yes b) No
D. Which age group do you belong?
a) Below 25 b) 25 – 30
c) 30 – 35 d) Above 35
E. Are you married?
a) Yes b) No
F. What is your Educational Background?
a) 10+2 b) Graduation
c) Post Graduation d) Professional
e) Other
G. What is your Household income?
a) Below 2 lacks b) 2 – 5 lacks
c) 5 – 8 lacks d) Above 8 lacks
H. How much time you provide easily besides your job hours?
a) 0-2 hrs - 22 b) 2-4 hrs
c) 4-6 hrs - 15 d) Time Full
CASH FLOW STATEMENT
(FOR THE YEAR ENDED 31 MARCH 2012)

Year ended Year ended
31-03-2012 31-03-2011
(Rs. in 000) (Rs. in 000)
Cash flow from operating activities
Net profit before taxes 9,962,386 7,313,011
Adjustments for:
Depreciation on fixed assets 1,118,640 921,933
Depreciation on investments 669,666 34,158
Amortisation of premium on 987486 875457
Held to Maturity investments
Provision for Non Performing
Advances/Investments (net off bad debts) 737,370 1,270,497
General provision on
Securitised assets 25,400 (4,000)
Provision on standard assets 1,223,500 446,800
General provision for retail assets 17,700 800
Provision for wealth tax 2,487 1,457
Loss on sale of fixed assets 29,101 16,992
Amortisation of deferred
employee compensation 27,067 63,235
TOATAL 14,800,803 10,940,340
Adjustments for:
(Increase)/Decrease
in investments (21,042,997) (46,298,353)

(Increase)/Decrease
in advances (146,307,497) (68,244,549)
Increase/ (Decrease)
In borrowings 25,146,713 8,995,203
Increase/ (Decrease)
In deposits 186,720,698 84,015,312
(Increase)/Decrease
In other assets (1,318,740) 4,598,124
Increase/(Decrease) in
Other liabilities & provisions (914,451) 11,543,386
Direct taxes paid (4,129,261) (3,147,781)
Net cash flow from
Operating activities 52,955,268 2,401,682
Cash flow from investing activities
Purchase of fixed assets (2,225,963) (1,473,932)
(Increase)/Decrease in Held to
Maturity Investments (34,364,646) (19,542,984)
Proceeds from sale
of fixed assets 34,855 42,235
Net cash used in
Investing activities (36,555,754) (20,974,681)
Cash flow from financing activities

Proceeds from issue of
Subordinated debt (net of repayment) 3,393,000 10,000,000
Proceeds from issue of Perpetual
Debt and Upper Tier II instruments 13,735,120 -
Proceeds from issue of Share Capital 29,401 48,943
Proceeds from Share Premium
(Net of share issue expenses) 330,025 800,524
Payment of Dividend (1,117,416) (887,410)
Net cash generated from
Financing activities 16,370,130 9,962,057
39
CASH FLOW STATEMENT
(FOR THE YEAR ENDED 31 MARCH 2012)
Year ended Year ended
31-03-2012 31-03-2011
(Rs. in 000) (Rs. in 000)
Effect of exchange fluctuation
Translation reserve (5,015) -
Net increase in cash and
cash equivalents 32,764,629 (8,610,942)
Cash and cash equivalents
as at 1 April 2011 36,418,422 45,029,364
Cash and cash equivalents
As at 31 March 2012 69,183,051 36,418,422

PROFIT AND LOSS ACCOUNT
Schedule No. (Rs. in Thousands)
I INCOME
Interest earned 13 45,603,943
Other income 14 10,099,065
TOTAL 55,703,008
II EXPENDITURE
Interest expended 15 29,931,767
Operating expenses 16 12,193,592
Provisions and contingencies 17(5.1.1) 7,035,173
TOTAL 49,160,532
Proposed Dividend (includes tax on dividend) 1,487,919 III CONSOLIDATED NET
PROFIT
ATTRIBUTABLE TO GROUP 6,542,476
Balance in Profit & Loss account brought
forward from previous year 7,310,390
Utilization for Employee Benefits Provision under
Accounting Standard (AS)-15 (Revised) 17 (4.10) (318,028)
IV AMOUNT AVAILABLE FOR
APPROPRIATION 13,534,838
V APPROPRIATIONS:
Transfer to Statutory Reserve 1,647,571
Transfer to Capital Reserve 156,415
Balance in Profit & Loss account carried forward 10,242,933
TOTAL 13,534,838
VI EARNINGS PER EQUITY SHARE 17 (5.1.4)
(Face value Rs. 10/- per share) (Rupees)
Basic 23.33
Diluted 22.63
Significant Accounting Policies
and Notes to Accounts 17

Schedules referred to above form an integral part of the
Consolidated Profit and Loss Account
As per our report of even date For UTI BANK LTD.
For S. R. BATLIBOI & Co.
Chartered Accountants
DR.SANJIV MISRA
Chairman
SHIKHA SHARMA
Managing Director

BALANCESHEET AS ON 31ST MARCH 2013
CAPITAL AND schedule as on 31-3-13
LIABILITIES no: (Rs in,000)
Capital 1 2,816,308
Reserves & Surplus 2 31,068,175
Employees' Stock
Options Outstanding (Net) 17(4.15) 89,783
Deposits 3 587,850,227
Borrowings 4 51,956,030
Other liabilities and provisions 5 58,779,259
TOTAL 732,559,782
ASSETS
Cash and Balances with
Reserve Bank of India 6 46,610,303
Balances with banks and
money at call and short notice 7 22,572,748
Investments 8 268,871,605
Advances 9 368, 764,60

Fixed Assets 10 6,778,359
Other Assets 11 18,962,161
TOTAL 732,559,782
Contingent liabilities 12 1,841,653,501
Bills for collection 62,746,332
Significant Accounting Policies
And Notes to Accounts 17
Schedules referred to above form an integral part of the Consolidated Balance SheetAs per our report
of even date For UTI BANK LTD.

WORKING CAPITAL MANAGEMENT of Axis Bank Finance Research 2014 2

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SUMMER TRAINING PROJECT REPORT

AXIS BANK LIMITED

Faculty Guide :- Submitted by-

PORF. RAHUL MISHRA MD WASIM AKRAM

A Project Report On Working Capital Management 1

MANAGEMENT OF AXIS BANK” being submitted to the UTTAR PRADESH TECHNICAL

institution/university for any degree.

Date: MD WASIM AKRAM

A Project Report On Working Capital Management 2

successful completion of this Dissertation project report.

me and provided me support at all times.

MBA (III Sem)

A Project Report On Working Capital Management 3

study of working of any organization.

as reflected in the market price of the share.

as plant and machinery .

A Project Report On Working Capital Management 4

focus of my study. My topic is to study WORKING CAPITAL MANAGEMENT IN AXIS

WORKING CAPITAL MANAGEMENT IN AXIS BANK.

A Project Report On Working Capital Management 5

3. CHAPTER-3 DESIGN OF STUDY 69

11. REFERENCES 101

A Project Report On Working Capital Management 6

A Project Report On Working Capital Management 7

AXIS BANK - BRIEF HISTORY

industry practices internationally in order to achieve excellence

A Project Report On Working Capital Management 8

Central Office is located at Mumbai.

MISION OF THE BANK

clientele Continuous technology up gradation while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness built on ethical practices.

Customer Satisfaction through providing quality service effectively and efficiently

 Smile, it enhances your face value" is a service quality stressed on

 Periodic Customer Service Audits

A Project Report On Working Capital Management 9

A Project Report On Working Capital Management 10

DR.SANJIV MISRA CHAIRMAN

SHIKHA SHARMA MD & CEO

K.N PRITHVIRAJ DIRECTOR

V.R KAUNDINYA DIRECTOR

S.B MATHUR DIRECTOR

PRASAD MENON DIRECTOR

Prof. SAMIR K BARUE DIRECTOR

SOM MITTAL DIRECTOR

IREENA MITTAL DIRECTOR

ROHIT BHAGAT DIRECTOR

USHA SANGWAN DIRECTOR

eligible, offer themselves for re-appointment as Directors of the Bank.

marketing credit cards and other retail asset products.

shore funds etc.

A Project Report On Working Capital Management 12

The Board of Directors hereby declares and confirms that:

► The annual accounts have been prepared on a going concern basis.

A Project Report On Working Capital Management 13

PERFORMANCE OF THE ORGANISATION

Network of branches and extension counters increased from 1832 to 2402.

Total number of ATMs went up from2768 to 12922.

Proposed Dividend up from 45% to55%

Rs. 1065.39 Crores.

Deposits up 46.55% to Rs. 78,785.60 Crores

Advances up 65.26% to Rs. 67,876.48 Crores.

A Project Report On Working Capital Management 15