A Project Report on

CASH FLOW STATEMENT ANALYSIS of AXIS BANK

BRANCH HANUMAN TEKDI, HYDERABAD.
A Project Report submitted in partial fulfillment of the requirements for the
award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By

SHAIK JAMEEL AHMED

Reg.No.09721E0020

Under the guidance of

Asst. Prof. MISS B.G. NAGAMANI (MBA)

DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION

JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY

ANANTAPUR
MADINA ENGINEERING COLLEGE
KADAPA 516003
2009 2011

MADINA ENGINEERING COLLEGE, KADAPA

(BUKHARIA EDUCATIONAL SOCIETY)

Affiliated to JNTU Anantapur, approved by AICTE New Delhi.

DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION

CERTIFICATE
This is to certify that the project report titled Cash Flow
Statement Analysis Carried out at Axis bank Hanuman tekdi branch
koti. is being submitted by SHAIK JAMEEL AHMED Roll No- 09721e0020 in
partial fulfillment for the award of the degree of MASTER OF BUSINESS
ADMINISTRATION to the Jawaharlal Nehru Technological University
Anantapur, Anantapur is a record of confide work carried out by him/her
under my guidance and supervision during 2009-11. The results embedded
in this thesis have not been submitted to any other University or institute for
the award of any degree or diploma.

Project Guide

Head of the Department

B.G. NAGAMANI

G. SUDARSANA REDDY

Asst. Prof (MBA)

M.Tech. F.I.E. M.I.S.T.E.

External Examiner

ACKNOWLEDGEMENT
I express my deepest sense of gratitude for Mr. B. SARFARAZ
AHMED
BRANCH SALES MANAGER
for Providing me an
opportunity to undertake my Industrial Training-cum-Project
Work with Principal AXIS BANK HYDERABAD My tenure has been
a very enriching experience and helped me to get a firsthand
experience of the industry and prepare myself for tomorrows
managerial trysts.
I owe a profound
intellectual debt to Faculty OF M.B.A
M/S
B.G, NAGAMANI who has been a guiding force and a source of
encouragement, advice and help for me throughout the course of
this project. Evaluate my project proceedings on a timely basis
and provide me with his valuable Suggestions. His suggestions
are the foundation on which my project is based.

I would also like to take this opportunity to thank the staff of

AXIS BANK BRANC HANUMAN TEKDI HYDERABAD for their help
and co-operation. And Last but not least I want to thank to all
those who are directly and indirectly helped me in this project.

With Thanks
SHAIK JAMEEL AHMED
Roll no: 09721e0020
MADINA ENGENEERING COLLEGE
KADAPA.

DECLARATION

I declare that the project entitled CASH FLOW STATEMENT

ANALYSIS

done

at

AXIS

Bank

Hanuman

Tekdi

Branch,

Hyderabad.

Submitted by one as partial fulfillment for the award of Master of Business

Administration, at JNTU ANANTAPUR, Andhra Pradesh under the faculty
guidance of Prof. B.G.NAGAMANI is a record of bonafied work written by me
and that it has not previously formed the basis for the award of any degree,
diploma, associate ship or other similar titles.

Place:
Date:
Signature:

COMPANY PROFILE:
Commercial banking services which includes merchant banking, direct
finance infrastructure finance, venture capital fund, advisory, trusteeship,
forex, treasury and other related financial services. As on 31-Mar-2009, the
Group has 827 branches, extension counters and 3,595 automated teller
machines (ATMs).
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. 359.76 crores with the public holding (other
than promoters) at 57.79%.The Bank's Registered Office is at Ahmedabad
and its Central Office is located at Mumbai. The Bank has a very wide
network of more than 853 branches and Extension Counters (as on 30th
June 2009). The Bank has a network of over 3723 ATMs (as on 30th June
2009) 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.

EARLY HISTORY
Banking in India originated in the last decades of the 18 th
banks were

century

. The first

The General Bank of India which started in 1786, and The

Bank of Hindustan, both of which are now defunct. The oldest bank in
existence in India is the State Bank of India, which originated in Calcutta in
JUNE 1806, which almost immediately became the Bank of Bengal. This was
one of the three presidency bank, the other two being the Bank of Bombay
and the Bank of Madras, all three of which were established under charters
from the British East
India Company. For many years the Presidency banks acted as quasi-central
banks, as did their successors. The three banks merged in 1925 to form the
Imperial Bank of India, which upon Indias independence, became the State
Bank of India. Indian merchants in Calcutta Established the Union Bank in
1839, but it failed in 1848 as a consequence of the economic crisis of 184849. The Allahabad Bank, established in 1865 and still functioning today, is
the oldest Joint Stock bank in India. It was not the first though. That honour
belongs to the Bank of Upper India, which was established in 1863, and
which survived until 1913, when it failed, with some of its assets and
liabilities being transferred to the Alliance Bank of Shimla
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s.
The Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860,
and another in Bombay in 1862; branches in Madras and Pondicherry, then a
French colony, followed. HSBC established itself in Bengal in 1869. It failed
in 1958. The next was the Punjab National Bank, established in Lahore in
1895, which has survived to the present and is now one of the largest banks
in India. Around the turn of the 20th Century, the Indian economy was
passing through a relative period of stability. Around five decades had

elapsed since the Indian Mutiny, and the social, industrial and other
infrastructure had improved. Indians had established small banks, most of
which served particular ethnic and religious communities.
NATIONALISATION:
The next significant milestone in Indian Banking happened in the late 1960s
when the Indira Gandhi government nationalized, on 19th July, 1969, 14
major commercial Indian banks, followed by nationalization of 6 more
commercial Indian banks in 1980. The stated reason for the nationalization
was more control of credit delivery. After this, until the 1990s, the
nationalized banks grew at a leisurely pace of around 4%-also called as the
Hindu growth of the Indian economy.
To understand the Indian banking sector more easily a diagram is shown
regarding the name of the bank, its numbers shown in the bracket and also
the category of bank under which it falls.
INDUSTRIAL PROFILE:
Rural Bank in India was started since the establishment of banking sector in
India. In these days Regional Rural Banks (RRBs) mainly focused upon the
agro sector. Rural bank in India penetrate every corner of the country and
extended helping having in the country. The government of India setup
Regional Rural Bank on October 2nd 1975,the bank provide credit to the
weaker section of the rural area, particularly the small and marginal former,
agricultural labor, artisans and small enterprises.
MISSION AND VALUES:
Mission of Axis 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.
Core Values of Axis Bank:
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
Objectives:

To assess the ability of the company.

To know how much cash will be available to meet obligation to trade

creditors.

To plan and coordinate the financial operations properly.

To know how much cash is needed from which source it will be

derived, how much can be generated internally and how much could
be obtained from outside

Introduction to Cash flow :

An analysis of cash flow of a concern during a specified period,
presented in the form of a statement can be for the past or can be a
projection for the past or can be projection for the future. The cash flow of

the concern in the near future, say for a period of six months or in year, can
be prepared based on the past trends and expectations of the concern
regarding factors that would affect its cash receipts and cash payments.
Such an estimate of future cash flows is better termed cash budget. Cash
flow statement generally refers to the statement showing the receipts and
payment or cash during the period covered by two consecutive balance
sheets.
Cash flow analysis enables the management to plan and co-ordinate
the financial operations of the enterprise, an furnish the basis for evaluating
financing policies. It provides a barometer for ensuring the profitabililty of
the business, and makes financing problems of the business much more
manageable.
CASH FLOW MANAGEMENT:
Cash flow management is the process of monitoring, analyzing, and
adjusting businesss cash flows. The most important aspect of cash flow
management is avoiding extended cash shortages, caused by a time gap
between cash inflows and outflows. Firm cannot stay in business if it is not
able to pay its bills on time. Therefore, a cash flow analysis is required on as
regular basis so that so that it can take the necessary steps to meet cash
flow problems. Today, even in the large business organizations cash is mot
as readily available as it was before, so companies are looking into ways to
gain better visibility into future cash flows and to monitor it for better
planning. There is a growing need for companies to forecast more accurately
because in addition to tightened cash flow, there is an increasing need for
timely forecasts as market conditions have become volatile. One of the best
way to manage cash in the business is to fully understand cash flow
patterns. These helps a firm in avoiding cash deficiencies as well as
excessive idle cash balances. Moreover, cash flow analysis is needed:To

ensure that the cash balance always remains above the desired minimum
level
To predict when cash levels will rose sufficiently above the
minimum level to facilitate investment of idle balances.
GEORGE PHILIPATOS is of the view that, in its generic sense, a cash
flow is the receipt and the payment of amount of money and that it
implies more than our accrual or a financial obligation, hence cash
flow is a movement of cash which is a real one. L Leon Simons
observes that cash flow is frequently and erroneously assumed to
include only current operations.
CASH FLOW CONCEPTS
In its simplest form, cash flow is the movement of money in
and out of the business uses cash to generate goods or services for
the sale to its customers, collects the cash from the sales, and then
completes this cycle all over again.
CASH INFLOWS
Cash Inflows are the movement of money into the business.
Inflows are most likely from the sale of goods or services to the
customers. If credit extended to its customers, then an inflow occurs
as the firm collects on the customers accounts. Normally the main
sourced of cash inflows to a business are receipts from sales,
increases in bank loans, proceeds if share issues and asset disposals,
and other income such as interest earned.
CASH OUTFLOWS
Cash Outflows are the movement of money out of the
business. Outflows are generally the result of paying expenses. If the

business involves reselling goods, then its largest outflow is of the

purchases of raw materials and other components needed for the
manufacturing of the final product. Salaries and wages to staff,
purchasing fixed assets, and paying accounts payable are also cash
outflows.

DEFINITIONS: The following are used in this statement with the

meaning specified:
Cash comprises cash on hand and demand deposits with banks

CASH

EQUIVALENTS

ARE

SHORT-TERM

HIGHLY

LIQUID

INVESTMENTS, THAT ARE READILY CONVERTIBLE INTO KNOW

AMOUNTS OF CASH

AND WHICH ARE SUBJECT TO AN

INSIGNIFICANT RISK OF CHANGES IN VALUE.

CASH FLOWS ARE INFLOWS AND OUTFLOWS OF CASH AND

CASH EQUIVALENTS.

CASH FLOW STATEMENT

In a business in a perfect world there is no time gap between a
cash inflow and a cash outflow. But in real world, cash outflows and inflows

occur at different times, and never actually occur together. Usually, cash
inflows lag behind the cash outflows, leaving the business short of cash. This
shortage is termed as cash flow gap. The cash flow gap represents and
excessive outflow of cash that may not be covered by a cash inflow for a
definite period of time say a few weeks, few months, or even few years.
Managing the cash flow allows a firm to bridge the cash flow gap. It does
this by examining the different items that affect the cash flow of the
business.
The cash flow statement provides information regarding a
companys cash receipts and cash payments. The statement complements
the profit & Loss Account and Balance Sheet. Over the life of a company,
total net profits or income and net cash inflow will equal.
All companies provide the cash flow statements as part of their
financial statements, but cash flow can also be calculated net income plus
depreciation and other non-cash items.
A company not generating the same amount of cash as
competitors is bound to lose out when there are difficult times. Short-term
liquidity can also be achieved by deferring payments of current obligations;
however, companys ability to generate cash flow through the deferred
payments of current liabilities will be exhausted. This statement is useful for
decision making because it provides relevant and reliable information for
predicting future cash flows.
The cash flow statement is an important analytical tool that
the trade creditor, can use to determine if a customer is able to generate
sufficient cash to meet its trade obligations. Using the cash flow statement in
the credit analysis process can help to users evaluate a customers solvency,
liquidity position, and its financial flexibility.
In the cash flow statement, cash receipts and payments are classifies as
operating, investing and financing activities. The cash flow statement

explains the change during the period in cash and cash equivalents. Cash
equivalents are short-term, highly liquid investments that are readily
convertible to cash. The cash flow statement must summarize the cash flows
so that net cash provided or used by each of the three types of activities is
reported. Beginning and ending cash must be reconciled based on the net
effect of these activities.
STEPS IN PREPARATION OF CASH FLOW STATEMENT:
Before preparing cash flow statement, first of all, the following three
steps have to be completed

Determining cash flows from operations or operating

activities

Determining cash flows from investing activities.

Determining cash flows from financing activities.

LIMITATIONS OF THE CASH FLOW STATEMENT

Cash flow statement has its limitations too. For example, cash flow
does not reveal the profit earned or lost during a particular period. Cash flow
also does not indicate the overall financial health of the company. Though,
the statement of cash flow gives a good indication of what the company is
doing with its cash and from where cash is being generated, but these do
not directly reflect true financial condition. The cash flow statements does
not account for liabilities and assets, which are recorded in the balance
sheet. Accounts receivable and accounts payable, each of which can be very
large for a company, are also not reflected in the cash flow statement. In
other words, it is a compressed version of the companys cashbook that

includes a few other items, like the financing section, which tells the amount
of money the company sent or collected from the repurchase or sale of
stock, the amount of issuance or retirement of debt, and the amount the
company paid out in dividends. In conclusion, interpreting the cash
statement is not a very easy and simple task. Analyzing the cash flow
together with the other statement gives a glimpse into the short-term
financial position of company.
Objectives

To assess the ability of the enterprise.

To know how much cash will be available to meet obligation to trade

creditors.

To plan and coordinate the financial operations properly.

To know how much cash is needed from which source it will be

derived, how much can be generated internally and how much could
be obtained from outside.

METHODOLOGY
For the calculations of cash flows AXIS BANK. The primary data
has not been taken only the secondary data that is, the annual reports of
the company from the year 2009-2010 are taken into consideration.
The theoretical contents are gathered from eminent text book and reference
library at AXIS BANK BRANCH KOTI.
The financial data & information is gathered from annual reports of the
company internal records.
Interpretations & conditions are purely based on my opinion.

SUGGESTIONS:

The following are the suggestions suggested for the smooth running of
the bank:

The bank should try to reduce the expenses on purchasing the fixed
assets because it decreases the profit.

The bank shall increase the investment position by issuing shares

and debenture and the bonds of the MNCs.

The bank has to implement online technology and various services

to their customer.

The bank has to provide more agriculture and small business loans
to all sectors of the society as to increase the employment of the
pupil.

The bank expanded their branches more and more in the district
particularly and in India in general.

EXECUTIVE
SUMMARY

INDUSTRIAL PROFILE
Banks are the most significant players in the Indian financial market. They are the biggest
purveyors of credit, and they also attract most of the savings from the population. Dominated by
public sector, the banking industry has so far acted as an efficient partner in the growth and the
development of the country. Driven by the socialist ideologies and the welfare state concept,
public sector banks have long been the supporters of agriculture and other priority sectors. They
act as crucial channels of the government in its efforts to ensure equitable economic

development. The Indian banking can be broadly categorized into nationalized (government
owned), private banks and specialized banking institutions. The Reserve Bank of India acts a
centralized body monitoring any discrepancies and shortcoming in the system. Since the
nationalization of bank in 1969, the public sector bank or the nationalized bank have acquired a
place of prominence and has since then seen tremendous progress. The need to become highly
customer focused has forced the slow-moving public sector banks to adopt a fast track approach.
The unleashing of products and services through the net has galvanized players at all levels of
the banking and financial institutions market grid to look anew at their existing portfolio
offering. Conservative banking practices allowed Indian banks to be insulated partially from the
Asian currency crisis. Indian banks are now quoting at higher valuation when compared to banks
in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems
linked to huge Non-Performing Assets (NPAs) and payment default. Co-operative banks are
nimble footed in approach and armed with efficient branch networks focus primarily on the high
revenue niche retail segments. The Indian banking has finally worked up to the competitive
dynamics of the new Indian market and is addressing the relevant issues to take on the
multifarious challenges of globalization. Banks that employ IT solutions are perceived to be
futuristic and proactive players capable of meeting the multifarious requirements of the large
customers base. Private Banks have been fast on the uptake and are reorienting their strategies
using the internet as a medium The Internet has emerged as the new and challenging frontier of
marketing with the conventional physical world tenets being just as applicable like in any other
marketing medium.
The Indian banking has come from a long way from being a sleepy business institution to
a highly proactive and dynamic entity. This transformation has been largely brought about by the
large dose of liberalization and economic reforms that allowed banks to explore new business
opportunities rather than generating revenues from conventional streams (i.e. borrowing and
lending). The banking in India is highly fragmented with 30 banking units contributing to almost
50% of deposits and 60% of advances. Indian nationalized banks (banks owned by the
government) continue to be the major lenders in the economy due to their sheer size and
penetrative networks which assures them high deposit mobilization. The Indian banking can be
broadly categorized into nationalized, private banks and specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any discrepancies and
shortcoming in the system. It is the foremost monitoring bodies in the Indian financial sector.
The nationalized banks (i.e. government-owned banks) continue to dominate the Indian banking
arena. Industry estimates indicate that out of 274 commercial banks operating in India, 223 banks
are in the public sector and 51 are in the private sector. The private sector bank grid also includes
24 foreign banks that have started their operations here. The liberalize policy of Government of
India permitted entry to private sector in the banking, the industry has witnessed the entry of nine
new generation private banks.

COMPANY PROFILE

AXIS bank completed the 5th year of its operation at the end of March 99. The
bank witnessed good growth in its business and profit and also came out with a
public issue of its quality for the 1st time during the year, which evoked excellent
retail response. The bank made significant progress during the year in line with its
committed business targets, despite difficult market condition the bank spread
over different states, there by enlarging its client based substantially. The bank
continue to introduce new products, upgrade the technology support system to
improve operational efficiencies and strengthen its human resource based on the
whole, 2002-2003 has been a productive years for the bank in terms of both growth
and consolidation of business as well as strengthening of its infrastructure. The
bank ended the year 2002-2003 conducting business in 80 cities and towns, with
192 branches and extension counters and 822 ATMs. The AXIS bank will spread
out across the country with operation in 23 states and 1 union territory.

STATEMENT OF THE PROBLEM

Banks are the main financial sources to the public. They are the providers
and mobilizes of the finance from the public. But they are facing different
problems such as dissatisfaction of the customer regarding banking services,
improper cash management, financial performance and the like. Among the
problems faced by RRBs. Cash management is a very important technique to be
adopted in any bank. Hence, this study concentrates on cash flow analysis of AXIS
BANK BRANCH HANUMAN TEKDI, HYD.

OBJECVTIES OF STUDY
The main intention of this study is to analysis the financial position of the
AXIS BANK BRANCH HANUMAN TEKDI, HYD. The following are the main
objectives of the study:
To measure the profitability and liquidity position in the organization.
To evaluate the cash position of the bank through cash flow analysis.
To analyze total cash deposits, loan syndication position of the bank
To elicit the sources of cash income and cash payments.
NEED FOR THE STUDY
It is the common obligation to every financial institution to know
its strengths and weaknesses. Though the company has several departments, the
under researched area is finance. But there is number of studies have been
conducted on the cash flow analysis in AXIS BANK BRANCH HANUMAN
TEKDI, HYD in A.P. So, the study is needed to help the bank for its smooth
financial transactions effectively.
RESEARCH METHODOLOGY AND DESIGN

There are five main branches in Andhra Pradesh one in Hyderabad

Branches, one in Prakasham District, one in Kurnool district, one in Ananthapur
district, one in Nellore district. The Head Office located in Hyderabad, district and
it has various branches throughout the district. Among all these branches, the
selected branch is AXIS Bank Branch hanuman tekdi is located in Hyderabad koti
in Andhra Pradesh. The executives and financial department officials are enquired
for the purpose of the study... The study is mainly based on the analytical research
design. This design largely interprets the already available information.
DATA SOURCES
The data for the present study is collected through primary and secondary
sources. Secondary data is obtained from annual reports of the company and
primary data was collected by interacting financial executives of the company.
Primary Data
The primary data of this study was collected by consulting the accounting
officer, financial Executive of that bank.
Secondary Data
The study is mainly based on the sources of secondary data. The secondary data for
this study was collected from the published sources i.e., annual reports and
WWW.AXISBANK.COM
SCOPE OF THE STUDY
The present study is confined to only AXIS Bank Branch hanuman tekdi
Hyderabad. The study is limited to cash flow analysis and it has been analyzed by
taking the information related to both the present and past data into consideration
with reference to the performance of the bank.
TOOLS FOR THE STUDY

The data relating to the performance of the AXIS Bank Branch hanuman
tekdi from different activities that is operating activities, investing activities and
financing activities have been carefully analyzed and also cash flow statement,
column and bar charts.
LIMITATIONS OF STUDY
The major limitations of the study are:
Due to constraint of time, the researcher unable to collect detailed
analysis of the financial data.
There are some differences in collected data as of data collected from
different secondary sources.
Finance is also an important constraint for the detailed analysis.

PROJECT SCHEME
The study is mainly divided into six chapters

Chapter 1- Introduction to Banks

Chapter 2- AXIS Bank - A Profile

Chapter 3- Methodology and Model of Research

Chapter 4- Cash Flow Statement Analysis- A Review

Chapter 5- Data Analysis and Implementation

Chapter 6- Findings and Suggestions

INTRODUCTION
TO
BANKS

INTRODUCTION OF BANK
Regional Banks in India are integral part of the rural credit structure of
the country. Since the very beginning, when the Regional Banks in India (RRBs)
were established in October 2nd, 1975, these banks played a pivotal role in the
economic development of the rural India. The main goal of establishing regional
rural banks in India was to provide credit to the rural people who are not
economically strong enough, especially the small and marginal farmers, artisans,

agricultural labors and even small entrepreneurs. Regional Rural Banks in India are
an integral part of the rural credit structure of the country. Since the very
beginning, when the Regional Rural Banks in India (RRBs) were established in
October 2nd 1975, these banks played a pivotal role in the economic development
of the rural India. The main goal of establishing regional rural banks in India was
to provide credit to the rural people who are not economically strong enough,
especially the small and marginal farmers, artisans, agricultural labors, and even
small entrepreneurs.
The Concept and The Brief History
The history of regional rural banks in India dates back to the year 1975. Its
the Narsimham committee that conceptualized the foundation of regional rural
banks in India. The committee felt the need of regionally oriented rural banks that
would address the problems and requirements of the rural people with local feel,
yet with the same level of professionalism of commercial banks. Five regional
rural banks were set up on October 2nd with a total authorized capital of Rs.1 crore,
which later augmented to Rs.5 crores.
There were five commercial banks, viz. Punjab National Bank, State Bank of
India, Syndicate Bank, United Bank of India and United Commercial Bank, which
sponsored the regional rural banks. The equities of rural banks were divided in a
proportion of 50:35:15 among the Central Government, the sponsor bank and the
Concerned State Government.
The following years have not been so easy for the regional rural banks in
India, as there were major concern of financial viability. A number of committees
were formed to find out solution. Studies were conducted to find out the factors
that influence RRBs performance. The roles played by the sponsor banks were also
analyzed.
FORMATION
The Govt. of India, in July 1975, appointed a working group to study in
depth the problem of devising alternative agencies to provide institutional credit to

the rural people in the context of steps then initiated under the 29 Point Economic
Program. The Narsimham Committee Conceptualized the creation of RRBs in
1975 as a new set of regionally oriented rural banks, which would combine the
local feel and familiarity of rural problems characteristic of cooperatives with the
professionalism and large resource base of commercial banks. The Government of
India promulgated the Regional Rural Banks Ordinance on 26 th September 1975,
which was later replaced by the Regional Rural Bank Act 1976.
OBJECTIVES
The RRBs have following objectives:
To develop rural economy.
To provide credit for agriculture and allied activities.
To encourage village industries, artisans, carpenters, craftsmen, etc.
To reduce dependence of weaker sections on money-lenders.
To identify a specific and functional gap in the present institutional structure.
To supplement the other institutional agencies in credit delivery to rural
areas,
To make backward and tribal areas economically better by opening new
branches.
Every RRBs is authorized to carry on to transact the business of
banking as defined in the Banking Regulation Act and may also engage in other
business specified in Section 6(1) of the said Act. In particular, a RRB is farmers
and agricultural laborers, whether individually or in groups, and to cooperative
societies, including agricultural marketing societies, agricultural processing
societies, cooperative farming societies, primary agricultural credit societies or
farmers service societies, primary agricultural purposes or agricultural operations
or other related purposes, and granting loans and advances to artisans, small
entrepreneurs and persons of small means engaged in trade, commerce, industry or
other productive activities, within its area its area of operation.

The Reserve Bank of India has brought RRBs under the ambit of priority sector
lending on par with the commercial banks. They have to ensure that forty percent
of their advances are accounted for the priority sector. Within the 40% priority
target, 25% should go to weaker section or 10% of their total advances to go to
weaker section.
CAPITAL STURCTURE
Their equity is held by the Central Government, concerned State Government and
the Sponsor Bank in the proportion of 50:15:35. A Regional Rural Bank is jointly
owned by the Govt. of India, the Government of concerned state and public sector
bank, which sponsored it. Each bank carries the banking business within the local
limits specified by the Govt. Notification.
ORGANISATIONAL STRUCTURE
The management of a RRB is vested in a nine-member Board of Directors headed
by chairman who is an officer deputed by a sponsor bank but appointed by the
Govt. of India. Three directors to be nominated by the central Government. Two
directors to be nominated by the sponsor bank.
The sponsor bank, besides subscribing to the capital and deputing
one of its official as chairman, provides assistance to RRB in several ways as
financial accommodation, deputing managerial and other staff and arranging the
recruitment of staff and their training.
Role of Regional Rural Banks in Economic Development
The importance of the rural banking in the economic development
of a country cannot be overlooked. As Gandhiji said Real India lies in villages
and village economy is the backbone of Indian economy. Without the up liftment
of the rural economy as well as the rural people of our country, the objectives of
economic planning cannot be achieved. In fact, the real growth of Indian economy
lied in the emancipation of rural masses from acute poverty, unemployment, and
socio-economic backwardness. Keeping this end in view, various important plans
and programmers of rural development have been conceived and implemented by

the government of India since the commencement of first five-year plan from
1951-56. But an appraisal of the achievement of these programmers clearly reveals
that many programmers failed to achieve the desired objectives due to the
backward economic condition and lack of adequate finance to the poor people in
the rural areas. Hence, bank and other financial institutions are of vital importance
for development of rural economy of a country. The present study is a modest
attempt to make an appraisal of the credit needs of the rural people and the way
Regional Rural meet the same in the state of Arunachal Pradesh. It deals with the
performance evaluation of Arunachal Pradesh. Rural Bank (APRB) for the
economic development of the state. Further, an attempt has also been made to
study the growth and performance of Scheduled Commercial Banks with special
emphasis on Regional Rural Banks (RRBs) in India and North-East Region.

Balance Sheet of Axis Bank

------------------- in Rs. Cr. -------------------

Capital and Liabilities:

Total Share Capital

Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

12 mths

12 mths

12 mths

12 mths

12 mths

281.63

357.71

359.01

405.17

410.55

Equity Share Capital

Share Application Money
Preference Share Capital
Reserves
Revaluation Reserves
Net Worth
Deposits
Borrowings
Total Debt
Other Liabilities & Provisions
Total Liabilities

281.63
357.71
359.01
405.17
410.55
0.00
2.19
1.21
0.17
0.00
0.00
0.00
0.00
0.00
0.00
3,120.58 8,410.79 9,854.58 15,639.27 18,588.28
0.00
0.00
0.00
0.00
0.00
3,402.21 8,770.69 10,214.80 16,044.61 18,998.83
58,785.60 87,626.22 117,374.11 141,300.22189,237.80
5,195.60 5,624.04 10,185.48 17,169.55 26,267.88
63,981.20 93,250.26 127,559.59 158,469.77215,505.68
5,873.80 7,556.90 9,947.67 6,133.46 8,208.86
73,257.21 109,577.85 147,722.06 180,647.84242,713.37
Mar '07
Mar '08
Mar '09
Mar '10 Mar '11
12 mths

12 mths

12 mths

12 mths

12 mths

4,661.03

7,305.66

9,419.21

9,473.88 13,886.16

2,257.27

5,198.58

5,597.69

5,732.56

Assets
Cash & Balances with RBI
Balance with Banks, Money at
Call
Advances
Investments
Gross Block
Accumulated Depreciation
Net Block
Capital Work In Progress
Other Assets
Total Assets

36,876.48 59,661.14 81,556.77 104,343.12142,407.83

26,897.16 33,705.10 46,330.35 55,974.82 71,991.62
1,098.93 1,384.70 1,741.86 2,107.98 3,426.49
450.55
590.33
726.45
942.79 1,176.03
648.38
794.37 1,015.41 1,165.19 2,250.46
24.82
128.48
57.48
57.24
22.69
1,892.07 2,784.51 3,745.15 3,901.06 4,632.12
73,257.21 109,577.84 147,722.06 180,647.87242,713.37

Contingent Liabilities
Bills for collection
Book Value (Rs)

55,993.04 78,028.44 104,428.39 296,125.58429,069.63

11,751.83 16,569.95 29,906.04 35,756.32 57,400.80
120.80
245.13
284.50
395.99
462.77

7,522.49

AXIS BANK
PROFILE

BRIEF HISTORY OF AXIS BANK

INTRODUCTION
Banking in India originated in the last decade of the 18 th century. The oldest
bank in existence in India is the State Bank of India , a government owned
bank that traces its origins back to June 1806 and that is the largest commercial bank in
the country. Central banking is the responsibility of the Reserve Bank of India, which in
1935 formally took over these responsibilities from the Imperial Bank of India, relegating
it to commercial banking functions. After Indias independence in 1947 the Reserve
Bank of India was nationalized and given broader powers. In 1969 the government
nationalized the 14 largest commercial banks, and again 6 next in 1980.

EARLY HISTORY
Banking in India originated in the last decades of the 18 th

century

. The first banks were

The General Bank of India which started in 1786, and The Bank of Hindustan, both
of which are now defunct. The oldest bank in existence in India is the State Bank of
India, which originated in Calcutta in JUNE 1806, which almost immediately became
the Bank of Bengal. This was one of the three presidency bank, the other two being
the Bank of Bombay and the Bank of Madras, all three of which were established
under charters from the British East
India Company. For many years the Presidency banks acted as quasi-central banks, as
did their successors.
\The three banks merged in 1925 to form the Imperial Bank of India, which upon
Indias independence, became the State Bank of India.

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as
a consequence of the economic crisis of 1848-49. The Allahabad Bank, established in
1865 and still functioning today, is the oldest Joint Stock bank in India.
It was not the first though. That honour belongs to the Bank of Upper India, which was
established in 1863, and which survived until 1913, when it failed, with some of its
assets and liabilities being transferred to the Alliance Bank of Shimla
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The
Comptoire d'Escompte de Paris opened a branch in Calcutta in 1860, and another
in Bombay in 1862; branches in Madras and Pondicherry, then a French colony,
followed. HSBC established itself in Bengal in 1869. Calcutta was the most active
trading port in India, mainly due to the trade of the British Empire, and so became a
banking centre.
The first entirely Indian joint stock bank was the Oudh Commercial Bank,
Established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National
Bank, established in Lahore in 1895, which has survived to the present and is now one
of the largest banks in India.
Around the turn of the 20th Century, the Indian economy was passing through a relative
period of stability. Around five decades had elapsed since the Indian Mutiny, and the
social, industrial and other infrastructure had improved. Indians had established small
banks, most of which served particular ethnic and religious communities.

NATIONALISATION
The next significant milestone in Indian Banking happened in the late 1960s when the
Indira Gandhi government nationalized, on 19th July, 1969, 14 major commercial Indian
banks, followed by nationalization of 6 more commercial Indian banks in 1980. The
stated reason for the nationalization was more control of credit delivery. After this, until
the 1990s, the nationalized banks grew at a leisurely pace of around 4%-also called as
the Hindu growth of the Indian economy.
To understand the Indian banking sector more easily a diagram is shown regarding the
name of the bank, its numbers shown in

BACKGROUND
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. 359.44 corers with the public holding
(other than promoters) at 57.74%.
The Bank's Registered Office is at Ahmedabad and its Central Office is located at
Mumbai. The Bank has a very wide network of more than 838 branches and
Extension Counters (as on 31st May 2009). The Bank has a network of over 3674 ATMs
(as on 31st May 2009) 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.

MISSION AND VALUES

Mission of Axis 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.

Core Values of Axis Bank

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
Maximisation of Stakeholder value
Success through Teamwork, Integrity and People.

PROMOTERS
Axis Bank Ltd. has been promoted by the largest and the best Financial Institution of the
country, UTI. The Bank was set up with a capital of Rs. 115 corers, with UTI contributing
Rs. 100 corers, LIC - Rs. 7.5 corers and GIC and its four subsidiaries contributing Rs.
1.5 corers each.

THE COMPANY AND ITS PRODUCT LINE

Axis Bank Limited (Axis Bank) offers a broad range of retail & corporate banking
products and services in India. The bank was earlier known as UTI Bank Limited.

The company offers several products including accounts, deposits, cards,

credits, advisory services, treasury, mutual funds, cash management, international
banking and transaction services. The bank operates 827 branches and extension
counters, as on 31 March 2009. Axis Bank has operations in 29 States and 3 Union
Territories in India. The bank has a network of 3595 ATM machines. Axis Bank is the
third largest ATM network provider in India. It also has branches in China, Hong Kong,
Singapore and UAE. The bank is headquartered at Mumbai in India.

The company reported revenues of (Rupee) INR 108,291.13 million during the
fiscal year ended March 2009, an increase of 54.59% over 2008. The operating
profit of the company was INR 36,801.90 million during the fiscal year 2009, an
increase of 42.35% over 2008. The net profit of the company was INR 18,129.32 million
during the fiscal year 2009, an increase of 71.17% over 2008.
Axis bank offers banking and financial services in India. The companys services and
Brands include the following:
Services:
Personal Banking:
Accounts
Deposits
Loans
Cards
Investments
Insurance
Payments
Other Services
Corporate Banking:
Accounts
Credit

Capital Market

Treasury
Cash Management Services
Govt Business
NRI services:
Accounts
Deposits
Remittances

COMPETITORS OF AXIS BANK LIMITED

Central bank of India

Corporation bank
HDFC bank limited
ICICI bank limited
State bank of India
Union bank of India
Bank of Baroda

BOARD OF DIRECTORS
The members of board are :

Smt. Shikha Sharma

Managing Director & CEO

Shri N.C. Singhal

Director

Shri. J.R. Varma

Director

Dr. R.H. Patil

Director

Smt. Rama Bijapurkar

Director

Shri R.B.L. Vaish

Director

Shri M.V. Subbiah

Director

Shri Ramesh

Director

Ramanathan
Shri K. N. Prithviraj

Director

METHODOLOGY
AND
MODEL OF RESEARCH

STATEMENT OF THE PROBLEM

Banks are the main financial sources to the public. They are the providers
and mobilizes of the finance from the public. But they are facing different
problems such as dissatisfaction of customer regarding banking services, improper
cash management financial performance and the like. Among these problems faced
by RRBs Cash management is very important technique to be adopted in any bank.
Hence, this study concentrates on cash flow analysis of AXIS BANK HANUMAN
TEKDI BRANCH HYD.

OBJECTIVES OF STUDY
The main intension of this study is to analyze the financial position of the
AXIS BANK HANUMAN TEKDI BRANCH HYD. The following are the main
objectives for the study:

To measure the profitability and liquidity position in the organization.

To evaluate the cash position of the bank through cash flow analysis.
To analyze total cash deposits, loan syndication position of the bank
To elicit the sources of cash income and cash payments.

NEED FOR THE STUDY

It is the common obligation to every financial institution to know its
strengths and weaknesses. Though the company has several departments, the under
researched area is finance. But there is less number of studies have been conducted
on the cash flow analysis in AXIS BANK HANUMAN TEKDI BRANCH HYD.
A.P. So, the study is needed to help the bank for its smooth financial transactions
with effectively.
RESEARCH METHODOLOGY AND DESIGN
There are Some Important branches in Andhra Pradesh one in hyderabad,
one in Prakasham District, one in Kurnool district, one in Ananthapur district, one
in Nellore district. The Head Office located in Hyderabad, district and it has
various branches through out the district. Among all these branches, the selected
branch is AXIS BANK MAIN BRANCH . is located in HYDERABAD in Andhra
Pradesh. The executives and financial department officials are enquired for the
purpose of the study. The study is mainly based on the analytical research design.
This largely interprets the already available information.
DATA SOURCES
The data for the present study is collected through primary and
secondary sources. Secondary data is obtained from annual reports of the company

and primary data was collected by interacting financial executives of The

Company.
Primary Data
The primary data of this study was colleted by consulting the accounting
officer, financial Executives of that bank.
Secondary Data
The study is mainly based on the sources of secondary data. The
secondary data for this study was collected from the published sources i.e., annual
reports and WWW.APGBANK.COM
SCOPE OF THE STUDY
The present study is confined to only AXIS BANK HANUMAN
TEKDI BRANCH HYD. The study is limited to cash flow analysis and it has been
analyzed by taking the information related to both the present and past data into
consideration with reference to the performance of the bank.
PERIOD OF STUDY
TOOLS FOR THE STUDY
The data relating to the performance of he AXIS BANK HANUMAN
TEKDI BRANCH HYD. from different activities that is operating activities,
investing activities and financing activities have been carefully analyzed and also
cash flow statement, column and bar charts.
LIMITATIONS OF STUDY
The major limitations of the study are:
Due to constraint of time, the researcher unable to collect detailed analysis
of the financial data.

 There are differences in collected data as of data collected from different

secondary sources.
Finance is also an important constraint for the detailed analysis.

CASH FLOW
STATEMENT ANALYSIS
A REVIEW

INTRODUCTION
An analysis of cash flow of a concern during a specified period, presented in
the form of a statement can be for the past or can be a projection for the past or can
be projection for the future. The cash flow of the concern in the near future, say for
a period of six months or in year, can be prepared based on the past trends and
expectations of the concern regarding factors that would affect its cash receipts and

cash payments. Such an estimate of future cash flows is better termed cash budget.
Cash flow statement generally refers to the statement showing the receipts and
payment or cash during the period covered by two consecutive balance sheet.
Cash flow analysis enables the management to plan and co-ordinate the
financial operations of the enterprise, an furnish the basis for evaluating financing
policies. It provides a barometer for ensuring the profitability of the business, and
makes financing problems of the business much more manageable.
CASH FLOW MANAGEMENT
Cash flow management is the process of monitoring, analyzing, and
adjusting businesss cash flows. The most important aspect of cash flow
management is avoiding extended cash shortages, caused by a time gap between
cash inflows and outflows. Firm cannot stay in business if it is not able to pay its
bills on time. Therefore, a cash flow analysis is required on as regular basis so that
so that it can take the necessary steps to meet cash flow problems. Today, even in
the large business organizations cash is mot as readily available as it was before, so
companies are looking into ways to gain better visibility into future cash flows and
to monitor it for better planning. There is a growing need for companies to forecast
more accurately because in addition to tightened cash flow, there is an increasing
need for timely forecasts as market conditions have become volatile. One of the
best way to manage cash in the business is to fully understand cash flow patterns.
These helps a firm in avoiding cash deficiencies as well as excessive idle cash
balances. Moreover, cash flow analysis is needed:
To ensure that the cash balance always remains above the desired
minimum level
To predict when cash levels will rose sufficiently above the minimum
level to facilitate investment of idle balances.
GEORGE PHILIPATOS is of the view that, in its generic sense, a cash
flow is the receipt and the payment of amount of money and that it implies
more than our accrual or a financial obligation, hence cash flow is a
movement of cash which is a real one. L Leon Simons observes that cash
flow is frequently and erroneously assumed to include only current
operations.
CASH FLOW CONCEPTS

In its simplest form, cash flow is the movement of money in and out
of the business uses cash to generate goods or services for the sale to its
customers, collects the cash from the sales, and then completes this cycle
all over again.
CASH INFLOWS
Cash Inflows are the movement of money into the business.
Inflows are most likely from the sale of goods or services to the customers.
If credit extended to its customers, then an inflow occurs as the firm
collects on the customers accounts. Normally the main sourced of cash
inflows to a business are receipts from sales, increases in bank loans,
proceeds if share issues and asset disposals, and other income such as
interest earned.
CASH OUTFLOWS
Cash Outflows are the movement of money out of the business.
Outflows are generally the result of paying expenses. If the business
involves reselling goods, then its largest outflow is of the purchases of raw
materials and other components needed for the manufacturing of the final
product. Salaries and wages to staff, purchasing fixed assets, and paying
accounts payable are also cash outflows.
NET CASH FLOWS
Net Cash Flow is the difference between the inflows and
outflows within a given period. A projected cumulative positive net cash
flow over several period highlights the capacity of a business to generate
surplus cash and, in the same manner, a cumulative negative cash flow
indicates he amount of additional cash required to sustain the business.
FREE CASH FLOWS
Some financial analysts give much importance to concept of cash flow
called Free Cash Flow. The cash is considered free if it can be used for
any desirable purpose. The large is the amount, the more a firm has
flexibility and investment strength because it can use the money
immediately to take advantage of an opportunity. The accumulation of free

cash comes from free cash flows which are calculated as cash flow from
operations, less capital expenditure for ongoing production needs and
payment of dividends. Free cash may be accumulating in liquidity but it is
not intended to be used for financing working capital requirement. Instead,
it is used for long-term purposes such as capital budgeting expenditure on
asset, mergers, acquisitions etc.
DEFINITIONS:
The following are used in this statement with the meaning specified:
Cash comprises cash on hand and demand deposits with banks
Cash equivalents are short-term highly liquid investments, that are
readily convertible into know amounts of cash and which are subject
to an insignificant risk of changes in value.
Cash flows are inflows and outflows of cash and cash equivalents.
Operating activities are the principal revenue-producing activities of
the enterprise and other activities and are not investing or financing
activities.
Investing activities are the acquisition and disposal of long-term
assets and other investments not included in cash equivalents.
Financing activities are activities that result in changes in the size
and composition of the owners capital (including preference share
capital in the case of a company) and borrowings of the enterprise.
CLASSIFICATION OF CASH FLOWS
The model prescribed in AS-3, Cash Flow Statement, classifies cash flow
into three categories cash flow from operating activities, cash flow from investing
activities, cash flow from financing activity.
CASH FLOW FROM OPERATING ACTIVITIES
The statement provides information about the cash generated from a
companys primary operating activities. A companys operating activities services.
Operating activities that generate cash inflow include customer other operating
cash receipts. Operating activities that create cash outflows include payments to

suppliers, payment to employees, interest payments, payment of income taxes and

other operating cash payments.
CASH FLOWS FROM INVESTING ACTIVITIES
This area lists all the cash used or provided by the purchase on sale of
income producing assets. Investing activities include giving loans and advances,
collection from those loans and advances, buying and selling and buying and
selling securities not classifies as cash equivalents. Cash inflows generated by
investing activities include sales of fixed assets such as property, plant,
equipments, sale of debt/equity instruments and the collection of loans.
CASH FLOWS FROM FINANCING ACTIVITIES
This section measures the flow of cash between a firm and its owners
and creditors. Financing activities include borrowing and repaying funds from
suppliers of funds, a return on their investments. The return on investment is
provided in the form of dividends and interest. If the firm uses debt or equity to
expand its operations, it is disclosed in the financing activities. Also, if the firm
uses cash to retire debt, it appears in the statement. Negative numbers can mean the
company is servicing debt bur can also mean the company is making dividend
payments and share buyback, which is good news for investors.

CASH FLOW STATEMENT

In a business in a perfect world there is no time gap between a cash
inflow and a cash outflow. But in real world, cash outflows and inflows occur at
different times, and never actually occur together. Usually, cash inflows lag behind
the cash outflows, leaving the business short of cash. This shortage is termed as
cash flow gap. The cash flow gap represents and excessive outflow of cash that
may not be covered by a cash inflow for a definite period of time say a few weeks,
few months, or even few years. Managing the cash flow allows a firm to bridge the
cash flow gap. It does this by examining the different items that affect the cash
flow of the business.

The cash flow statement provides information regarding a companys

cash receipts and cash payments. The statement complements the profit & Loss
Account and Balance Sheet. Over the life of a company, total net profits or income
and net cash inflow will equal.
All companies provide the cash flow statements as part of their financial
statements, but cash flow can also be calculated net income plus depreciation and
other non-cash items.
A company not generating the same amount of cash as competitors is
bound to lose out when there are difficult times. Short-term liquidity can also be
achieved by deferring payments of current obligations; however, companys ability
to generate cash flow through the deferred payments of current liabilities will be
exhausted. This statement is useful for decision making because it provides
relevant and reliable information for predicting future cash flows.
The cash flow statement is an important analytical tool that the trade
creditor, can use to determine if a customer is able to generate sufficient cash to
meet its trade obligations. Using the cash flow statement in the credit analysis
process can help to users evaluate a customers solvency, liquidity position, and its
financial flexibility?
In the cash flow statement, cash receipts and payments are classifies
as operating, investing and financing activities. The cash flow statement
explains the change during the period in cash and cash equivalents. Cash
equivalents are short-term, highly liquid investments that are readily
convertible to cash. The cash flow statement must summarize the cash
flows so that net cash provided or used by each of the three types of
activities is reported. Beginning and ending cash must be reconciled based
on the net effect of these activities.
STEPS IN PREPARATION OF CASH FLOW STATEMENT
Before preparing cash flow statement, first of all, the following
three steps have to be completed
Determining cash flows from operations or operating activities
Determining cash flows from investing activities.
Determining cash flows from financing activities.

Cash from operation

The profit and loss account focuses on net income determination from
operating activities. However, it does not show cash inflow and outflow relating to
operating activities because the profit and loss account is prepared on accrual basis.
In preparing profit and loss account, revenues are recorded even though cash for
them has not been received. Similarly, expenses are recorded even though they
may not been paid. Therefore, to find cash flows from operations, one need to
convert accrual basis income statement figures to cash basis making adjustments.
By way of adjustments, earned revenues will be converted into cash received from
sales or customers and incurred expenses will be converted into cash expended,
i.e., expenses actually pain to cash.

Reporting Cash Flows from Operating Activities:

An enterprise should report cash flows from operating activities using either:
Direct method: the direct method, whereby major classes of gross cash
receipts and gross cash payments are disclosed; or
Indirect method: The indirect method, whereby net profit or loss is adjusted
for the effects of transaction of non-cash nature, any deferrals or accruals of
past or future operating cash receipts or payments and item of income or
expenses associated with investing or financing cash flows.
The direct method provides information which may be useful in estimating future
cash flows and which is not available under the indirect method and is, therefore,
considered more appropriate than the indirect method. Under the direct method,
information about major classes of gross cash receipts and gross cash payments
may be obtained either:
From the accounting records of the enterprise; or
By adjusting sales, cost of sale (interest and similar income expenses and
similar charges for a financial enterprise) and other items in the statement
of profit and loss for:
Changes during the period in inventories and operating receivable and
payable.
Other non-cash items and

 Other items for which the cash effects are investing or financing cash flows
Under the indirect method, the net cash flow from operating activities is
determined by adjusting net profit or loss for the effects of:
Changes during the period inventories and operating receivable and
payables;
Non-cash items such as depreciation, provisions, deferred taxes, and
unrealized foreign exchanges gains and losses and
All other items for which the cash effects are investing or financing cash
flows.
Alternatively, the net cash flow from operating activities may be presented under
the indirect method by showing the operating revenues and expenses, excluding
non-cash items disclosed in the statement of profit and loss and changes during the
period in inventories and operating receivables and payables.
Investing Activities:
The separate disclosure of cash flows arising from investing activities is
important because the cash flows represent the extent to which expenditures have
been made for resources intended to generate future income and cash flows.
Example of cash flows arising from investing are:
Cash payments to acquire fixed assets (including intangible). These
payments include those relating to capitalized research and development cost
and self-constructed fixed assets.
Cash receipts from disposal of fixed assets.
Cash payments to acquire share. Warrants or debt instruments of other
enterprises and interests in joint ventures.
Cash receipts from disposal of shares, warrants or debt instruments of other
enterprises and interests in joint ventures.
Cash advances and loans made to third parties.
Cash receipts from the repayment to advances and loans made to third
parties.
Cash payments for futures contracts, forward contracts and swap contracts
except when the contracts are held for dealing or trading purposes or the
payment are classified as financing activities and

 Cash receipts from futures contracts, forward contracts, option contract,

swap contracts except when the contracts are held for dealing or trading
purposes, or the receipts are classified as financing activities.
When a contract is accounted for as a hedge of an identifiable position, the cash
flows of the contract are classified in the same manner as the cash flows of the
position being hedged.
Financing Activities:
The separate disclosure of cash flow arising from financing activities is
important because it is useful in predicting claims on future cash flows by
providers of funds to enterprise. Examples of cash flows arising from financing
activities are:
Cash proceeds from issuing shares or other similarly instruments;
Cash proceeds from issuing debentures, loans, notes, bonds, and other short
of long-term borrowings, and cash repayments of amounts borrowed
USES OF CASH FLOW STATEMENT
A cash flow statement is an important financial tool for management
efficient short-term financial planning. It enables the management to plan and coordinate the financial operation of the concern and furnish the basis for evaluating
financing policies. It helps the management in making the financing problems of
the business much more manageable. The following are the uses of cash flow
analysis.
Helpful in efficient cash management: It is very helpful in understanding
the cash position of a firm. Since cash is the basis for carrying on business
operations, the cash flow statement is very useful in evaluating the current
cash position.
Planning of Programmes: The repayment of loans, replacement of assets
and other such programmes can be planned on its basis.
Helpful in short-term financial decisions: The cash flow statement is
helpful in making short term financial decisions relating to liquidity, and the
ways and means position of the firm.

Useful of Capital budgeting: Cash flow statement is also useful for making
appraisal of different capital investment projects in order to determine their
viability and profitability.
Useful as a control device: It helps the management to understand the past
behavior of the cash cycle, and to control the uses of cash in future. A
comparison of the projected cash flow statement helps to management in
appraising the inflows and outflows of cash according to the plan and taking
the necessary remedial measures.
Useful to outsiders: Cash flow statement the short-term solvency of a
business concern as well as its capacity to meet its short-term obligation.

LIMITATIONS OF THE CASH FLOW STATEMENT

Cash flow statement has its limitations too. For example, cash flow does
not reveal the profit earned or lost during a particular period. Cash flow also does
not indicate the overall financial health of the company. Though, the statement of
cash flow gives a good indication of what the company is doing with its cash and
from where cash is being generated, but these do not directly reflect true financial
condition. The cash flow statements does not account for liabilities and assets,
which are recorded in the balance sheet. Accounts receivable and accounts payable,
each of which can be very large for a company, are also not reflected in the cash
flow statement. In other words, it is a compressed version of the companys
cashbook that includes a few other items, like the financing section, which tells the
amount of money the company sent or collected from the repurchase or sale of
stock, the amount of issuance or retirement of debt, and the amount the company
paid out in dividends. In conclusion, interpreting the cash statement is not a very
easy and simple task. Analyzing the cash flow together with the other statement
gives a glimpse into the short-term financial position of company.

CLASSIFIED CASH FLOW STATEMENT:

The cash flow statements are classified into three
classes.

 Cash flow from operating activities.

Cash flow from investing activities.
Cash flow from financing activities.
Thought this format calls for more details. It provides useful
information on how cash flows have been influenced by
different kinds of decisions. Given the greater informational
content of such a format, the discussion paper on cash flow
statement prepared by the accounting principles board of
the institute of chartered accountants of India recommends
this format. Incidentally the listed companies must include a
cash flow statement prepared according to the format
suggested in the discussion paper in their annual reports.

Format of a cash flow statement

Cash flow statement
For the year ending on.. Balance as on 1-1-2000

---------------------------------------------------------------------

Cash

Bank
..
Add: Sources of cash

balance
balance

Issue

of

shares

.
Raising

of

long

term

loans

..
Sale of fixed assets

Short-term operations:

Cash

from

operations

.
Profit

as

.
Add/less:
Adjusted

Add:
increase

per

profit

for
in
Decrease

Less:
increase
..

in
Decrease

and

loss

account

non-cash

items

current
in

liabilities

current

current
in

current

Total

cash

assets
assets
assets

..
available

..
Less: application of cash:
Redemption of redeemable preference shares
.. ..
Redemption of long term loans
..
Purchase
of
fixed
assets
.
Decrease in deferred payment
liabilities
..

Cash outflow on account of operation

..
Tax

paid

Dividend

paid

..
..
Decrease in unsecured loans, deposits etc

Total applications

Closing balance
Cash balance
Bank balance

....

*it should tally with the bank balance as shown (1)-(2)

DATA ANALYSIS
AND
IMPLEMENTATION

NET CASH FLOW

The total cash flow can be calculated by adding operating, investing and
financing activities of the bank.
Total cash flow = operating + financing + investing activities
The total cash flow is being described in the table per the period of 5
years from 2011-2007

TOTAL NET CASH FLOW

Mar-11

Mar-10

Mar-09

Mar-08

Mar-07

Net cashflowoperating
activity

11,425.07

28.87

10,551.63

5,960.45

5,295.53

Net cash used

in investing
activity

-13,985.33

-5,122.98

-9,741.96

-4,702.52

-3,655.58

Net cash used

in fin. activity

8,769.69

5,304.07

1,692.32

NET CASH FLOW-OPERATING ACTIVITY

Interpretation:

4,325.79

1,637.01

This can be calculated by taking total operating, investing and financial

activities. This shows that in the year 2010 the total cash flow will be increased
from Rs.1271529 to Rs.4090303. This shows that the bank had spent fewer
amounts for expense.

TOTAL OPERATING ACTIVITIES:

The total operating activities can be calculated by taking the values of
increased/decreased in assets and liabilities.
This can be shown in the table for the period of 5 years from 2007-2011.
TOTAL OPERATING ACTIVITY
Total
Liabilities
Total Assets
Total Income
Mar-11
73,257.21
73,257.21
Mar-10
109,577.85
109,577.84
Mar-09
147,722.06
147,722.06

155838.03
137323.64
88008.04

TOTAL OPERATING ACTIVITY

Interpretation
There can be calculated by taking net profit minus increase/decrease assets and
liabilities. This shows that in the years 2008 and 2010, negative values will occur.
For this purpose, there is a mutual increase and decrease
in assets and liabilities.

Total investing activities:

This can be calculated by taking the difference between the cash inflow
and outflow.
Investing activity = Cash Inflow Cash Outflow

Total Investing Activity

YEAR
ENDED
2007
2008
2009
2010
2011

CASH
CASH
IN
OUT
CASH FROM
FLOW FLOW
INVESTING ACTIVITY
11,425.07
-13,985.33
8,769.69
28.87
-5,122.98
5,304.07
10,551.63
-9,741.96
1,692.32
5,960.45
-4,702.52
4,325.79
5,295.53
-3,655.58
1,637.01

TOTAL INVESTING ACTIVITIES

Interpretation:
This can be calculated by taking Cash inflow and Cash Outflow. This shows
that the bank has spent fewer amounts for purchasing the assets, so there is a
decrease in 2009-10 when compared to 2007-08.

Total Financing Activities

In this activities can be calculated by taking the financial activity.
This can be show in the table for the year 2006-2010.
Total financing activities
BORROWINGS

Net financial
income

2009

171696

876969

2010

155199

530407

2011

562404

169232

Interpretation:
This graph shows that the bank borrowing position. This shows that the bank had
decreased to money from others. So the position is good in the bank.

Net profit:
The net profit can be calculated by taking total income and total expenses.
Net profit = Total income Total expenses
Total income = Interest expended + other expenses

NET PROFIT
TOTAL
TOTAL
EXPENSE
INCOME S
2009 155838.03
151781.7
2010 137323.64 109468.85
2011 88008.04
71545.25

NET
PROFIT
4056.33
18153.58
10710.29

Interpretation:
This can be calculated by taking total income and total expended.
This shows that the bank can earn more profit in 2008 and 2010. This shows that
the bank can spend more expenses in that years and the profit position will be
decreased.

APPENDICES

Particulars
A CASH FLOW FROM OPERATING ACTIVITIES
Interest Earned during the year
Other income
Less:
Interest paid during the year on deposits, borrowings etc.,
Operating Expenses including Provision & Contingencies
NET PROFIT
Add:
Depreciation on Fixed Assets
Depreciation adjusted on leased assets
Provisions & Contingencies
I CASH PROFIT GENERATED FROM OPERATIONS
(Prior to changes in operating Assets & Liabilities
II CASH FLOW FROM OPERATING ASSETS & LIABILITIES
Increase/(Decrease) in Liabilities
Deposits
Other Liabilities and Provisions
(Increase)/Decrease in assets
Advances
Investments
Other Assets
Total of II
A. NET CASH FLOW FROM OPERATING ACTIVITIES(I+II)
B. CASH FLOW FROM INVESTING ACTIVITIES
Sale/Disposal of Fixed Assets
1337
Purchase of Fixed Assets
B. NET CASH FLOW FROM INVESTING ACTIVITIES

For
the
ye
ended (31/3/2010
3175171
310780
1607363
973680
20605
925513

4442850
1310379
-5901723
-741844
-332390
-1222728
297215

-49892
-48555

C. CASH FLOW FROM FINANCING ACTIVITIES

Share Capital
Share premium
Other Reserves & Surplus
Borrowings

1617299

Amount paid off on redemption of sub-ordinate debt

Amount raised through fresh issue of Sub-ordinated Debt
Dividend paid: Previous year dividend, paid during the current year
C. NET CASH FLOW FROM FINANCING ACTIVITIES

1617299

TOTAL CASH FLOW DURING THE YEAR (A+B+C)

1271529

Increase/(Decrease) in Cash flow

I

Cash and Cash Equivalents at the Beginning of the year

C) Cash and Balances with the RBI

1680083

D) Balances with Banks and Money at Call and Short Notice

2522384

Total I
II

4202467

CASH AND CSH EQUIVALENTS AT THE END OF THE YEAR

C) Cash and Balances with RBI

2407030

D) Balance with Banks and Money at Call Short Notice

3066966

Total II

5473996

TOTAL CASH FLOW DURING THE YEAR

Increase / (Decrease) in Cash flow (II I)

1271529

BALANCE SHEET AS AT 31.03.2010

Particulars BALANCE SHEET 2008-09
(Amount in 000s)
Capital and Liabilities
Share capital
Reserve and surplus
Deposits
Borrowing
Other liabilities and provision
Total
Assets
Cash and Balance with RBIs
Balance with banks and money at
call and short notices
Investments
Net advances
Fixed assets
Other assets
Total
Contingent liabilities

(Amount in 000s)
2009-10

423426
4191468
23678077
5935922
1419557
35648450

423426
5096376
28120927
7553221
2729936
43923886

1680083

240730

2522384
6020381
23471434
52032
1902116
35648450
103999

3066966
6762225
29373177
79982
2234506
43923886
155023

Profit and Loss Account

Particulars
Income
Interest Earned
Other income

2008-09

2009-10

2808486
259653

3175171
310780

Total
3485951
Expenditure
Interest expended
1150059
Operating Expenses
985922
Provision
and 56044
Contingencies
Profit
876114

3068139

Total

3068139

3485951

1607363
950101
23578
904909

STATEMENT OF CASH FLOW

Particulars
A

For the year ended

(3/31/2010)

CASH FLOW FROM OPERATING ACTIVITIES

Interest Earned during the year

3876666

Other income

322676

Less:
Interest paid during the year on deposits, borrowings etc.,

2224977

Operating Expenses including Provision & Contingencies

1214811

NET PROFIT

759554

Add:
Depreciation on Fixed Assets

29354

Depreciation adjusted on leased assets

I

Provisions & Contingencies

-250000

CASH PROFIT GENERATED FROM OPERATIONS

538908

(Prior to changes in operating Assets & Liabilities

II

CASH FLOW FROM OPERATING ASSETS & LIABILITIES

Increase/(Decrease) in Liabilities
Deposits

2256149

Other Liabilities and Provisions

-1025393

(Increase)/Decrease in assets
Advances

-1067158

Investments

-630611

Other Assets

740446

Total of II

273433

A. NET CASH FLOW FROM OPERATING ACTIVITIES(I+II)

812341

B. CASH FLOW FROM INVESTING ACTIVITIES

Sale/Disposal of Fixed Assets

2261

Purchase of Fixed Assets

-57375

B. NET CASH FLOW FROM INVESTING ACTIVITIES

-55114

C. CASH FLOW FROM FINANCING ACTIVITIES

Share Capital
Share premium
Other Reserves & Surplus
Borrowings

365274

Amount paid off on redemption of sub-ordinate debt

Amount raised through fresh issue of Sub-ordinate Debt
Dividend paid: Previous year dividend, paid during the current year
C. NET CASH FLOW FROM FINANCING ACTIVITIES
TOTAL CASH FLOW DURING THE YEAR (A+B+C)
Increase/(Decrease) in Cash flow

365274
1122501

Cash and Cash Equivalents at the Beginning of the year

C) Cash and Balances with the RBI

2407030

D) Balances with Banks and Money at Call and Short Notice

3066966

Total I
II

5473996

CASH AND CSH EQUIVALENTS AT THE END OF THE YEAR

C) Cash and Balances with RBI

1872135

D) Balance with Banks and Money at Call Short Notice

4724362

Total II

6596497

TOTAL CASH FLOW DURING THE YEAR

Increase / (Decrease) in Cash flow (II I)
BALANCE SHEET AS AT 31.03.2010
Particulars
Capital and Liabilities
Share capital
Reserve and surplus
Deposits
Borrowing
Other liabilities and provision
Total
Assets
Cash and Balance with RBIs
Balance with banks and
money at call and short notices
Investments
Net advances
Fixed assets
Other assets
Total
Contingent liabilities

1122501
(Amount in 000s)

2009-10

2010-11

423426
5096376
28120927
7553221
2729936
43923886

423426
6672809
35173369
11808394
1725141
55803139

240730

2511725

3066966
6762225
29373177
79982
2234506
43923886
155023

8175075
8926999
35052791
95390
1041159
55803139
116768

Profit and Loss Account

Particulars
2009-10
Income
Interest Earned
3175171
Other income
310780
Total
3068139
Expenditure
Interest expended
1607363
Operating Expenses
950101
Provision
and 23578
Contingencies
Profit
904909
Total
3068139

2010-11
4463958
412900
4876858
2442690
1165992
201297
2148449
4876858

STATEMENT OF CASH FLOW

Cash flow
Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

Mar ' 07

Profit before tax

5,135.66

3,851.36

2,785.19

1,646.27

996.24

Net cashflow-operating activity

11,425.07

28.87

10,551.63

5,960.45

5,295.53

Net cash used in investing activity

-13,985.33

-5,122.98

-9,741.96

-4,702.52

-3,655.58

Netcash used in fin. activity

8,769.69

5,304.07

1,692.32

4,325.79

1,637.01

Net inc/dec in cash and equivlnt

6,204.75

189.54

2,512.66

5,585.94

3,276.46

Mar ' 11

Mar ' 10

Mar ' 09

Mar ' 08

Mar ' 07

Cash and equivalnt begin of year

15,203.91

15,016.90

12,504.24

6,918.31

3,641.84

Cash and equivalnt end of year

21,408.66

15,206.44

15,016.90

12,504.24

6,918.31

FINDINGS

FINDINGS
The major findings and conclusions of the study are:
Of the bank Income is increased from Rs.34,85,951 to Rs.41,99,342
thousands. So, the maintenance is good in the bank.
Interest on deposits and borrowings and other expenses also increased from
2008-09 to 2009-10 Rs.25,81,043 to Rs.34,39,788 thousands. So, it pays
more interest to the depositors.
Net profit of bank is increased in the study period that is Rs.20,605 to
Rs.29,354 thousands
Investment is also decreased from year to year i.e., Rs.7,41,844 to
Rs.6,30,611 thousands.
Advances also decreased from Rs.59,01,723 to Rs.10,67,158 thousands.
Total cash flow from operating activities is Rs.12,22,728 to Rs.2,73,433.
The bank can purchase the fixed asset and they are increased from Rs.49,
892 to Rs.57,375 crores and the sale of asset will be increased from Rs.1,337

to Rs.2,265 thousands so the investing activity will be increased from

previous year to current year.
Financing activities will be maintained in a good way that is Rs.16, 17,299
to Rs.3,65,274 thousands.
The maintenance of cash and balance with RBI from opening and ending of
the year will be good. So, the maintenance of cash from opening and closing
is increased from Rs.42,02,467 to Rs.54,72,996 in 2008-09 and Rs.5,47,399
to Rs.65,95,497 in 2009-10.

SUGGESTIONS
The following are the suggestions suggested for the smooth running of
the bank:
The bank should try to reduce the expenses on purchasing the fixed assets
because it decreases the profit.
The bank shall increase the investment position by issuing shares and
debenture and the bonds of the MNCs.
The bank has to implement online technology and various services to
their customer.
The bank has to provide more agriculture and small business loans to all
sectors of the society as to increase the employment of the pupil.
The bank expanded their branches more and more in the district
particularly and in India in general.