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Final Research Project Report

on

“RATIO ANALYSIS OF BANKING INDUSTRY”

(With Special reference to SBI, Canara Bank & BOI)

Submitted to

I.K. GUJRAL PUNJAB TECHNICAL UNIVERSITYKAPURTHALA

In partial fulfilment of the requirement for the

award of degree of
Master of Business Administration (MBA)

Submitted by Supervisor
Ravneet Kaur Ms. Shivani Vij
2218036 Assistant Professor

MBA DEPARTMENT

CHANDIGARH BUSINESS SCHOOL OF ADMINISTRATION.

LANDRAN, MOHALI

(2022-2024)
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STUDENT DECLARATION
I, “Ravneet Kaur”, hereby declare that I have completed a research project tilted “Ratio Analysis of Banking Industry”

under the guidance of Ms. Shivani Vij (Assistant Professor)

Further I hereby confirm that the work presented herein is genuine and original and has not been published elsewhere.

__________________

Ravneet Kaur
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FACULTY DECLARATION

I hereby declare that the student Ms. Ravneet Kaur of MBA (IV) has undergone his/her project under my periodic guidance

on “Ratio Analysis of Banking Industry”

Further I hereby declare that the student was periodically in touch with me during his/her research work and the work done

by student is genuine & original.

________________________

(Signature of Supervisor)
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ACKNOWLEDGEMENT

The satisfaction of successful completion of any task wouldn’t be complete without the expression of gratitude
to the people who made it possible. I am very thankful to Ms. Shivani Vij (Assistant professor in Chandigarh
Business School of Administration) for the guidance and interest evinced throughout the preparation of the
project. I also extend my gratitude to the respondents of my survey for their kind cooperation.
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PREFACE

Master of Business Administration is a course, which combines both theory and its applications as bits
contents of study in the field of management. As part and parcel of this course. Every aspirant must
cover the research project. The purpose of this research project is to expose the student of management
science real life situations existing in the organization and to provide an insight into various functions
who can visualize things what they have been taught in classrooms. It is the life force of management.

The advantage of this sort of integration, which promotes guide to corporate culture, functional, Social
and norms along with formal teaching are numerous.

• bridge the gap between theory and practical.

• To install the feeling of belonging and acceptance.
• To help the student to develop the better understanding of the concept and questions already raised
or to be raised subsequently during their research period.

The present report gives a detailed view of training and development. The research is going to play an
important role in developing an aptitude for hard self- confidence. I was fortunate enough to get this opportunity to
prepare dissertation report on (RATIO ANALYSIS OF BANKING INDUSTRY)
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TABLE OF CONTENTS
CHAPTER NO. CHAPTER TITLE PAGE
NO.
1 Introduction 1-4
2 Review of Literature 5-27
3 Need, Scope and Objectives of the Study 28-29
4 Research Methodology 30-34
5 Data Analysis and Interpretation 35-50
6 Findings & Conclusion of the Study 51-54
References and Bibliography 55
Annexures/Appendices (Questionnaire used etc.)
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CHAPTER – 1
INTRODUCTION
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INTRODUCTION TO BANKING INDUSTRY

DEFINITION OF BANKING: -

Banking Means "Accepting Deposits for the purpose of lending or Investment of deposits of money from
the public, repayable on demand or otherwise and withdrawn by cheque, draft or otherwise."

Banking Companies (Regulation) Act, 1949

WHAT IS A BANK: -

As per the regulations of Banking Companies Act of 1949, a bank is termed to be a financial organization
that channels banking and various financial operations. Banks are the ―Backbone of a
Nation‘s economy.‖

HISTORY OF BANKING IN INDIA

Banking in India has its origin as early or Vedic period. It is believed that the transitions from lending to
banking must have occurred even before Manu, the great Hindu furriest, who has devoted a section of
his work to deposit and advances and laid down rules relating to the rate of interest. During the mogul
period, the indigenous banker played a very important role in lending money and financing foreign trade
and commerce.

The first bank in India was established in 1786. From 1786 till today, the journey of the Indian Banking
System can be segregated into three distinct phases. These areas mentioned below:

● Early phase from 1786 to 1969 of Indian Banks

● Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.
● New phase of Indian Banking System with the arrival of Indian Financial & Banking Sector
Reforms after 1991.

Phase I
The General Bank of India was set up in the year 1786. The East India Company established Bank of
Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it
Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was
established which started as private shareholders banks, mostly Europeans shareholders. Between 1906
and 1913, Bank of India, Central Bank of India, Bank of Baroda, was set up.
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During the first phase the growth was very slow, and banks also experienced periodic failures between
1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and
activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949
which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of
1965). The Reserve Bank of India was vested with extensive powers for the supervision of banking in
India as the Central Banking Authority.

Phase II
Government took major steps in this Indian Banking Sector Reform after independence. In1955, it
nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural
and semi-urban areas. It formed the State Bank of India to act as the principal agent of RBI and to handle
banking transactions of the Union and State Governments all over the country.

Seven banks forming a subsidiary of State Bank of India were nationalized in 1960. On 19th July 1969, a
major process of nationalization was carried out. It was the effort of the then Prime Minister of India, Mrs.
Indira Gandhi. 14 major commercial banks in the country were nationalized. Second phase of
nationalization in Indian Banking Sector Reform was carried out in 1980 with six more banks. These
nationalized banks are most lenders in the Indian economy. After the nationalization of banks, the branches
of the public sector bank rose to approximately 800% in deposits and advances took a huge jump by
11,000%.

Besides nationalizing, the Indian Government established a few financial institutions to fulfil specific
objectives: -

● EXIM Bank - for promoting export as well as export.

● National Housing Board - for funding housing projects

● National bank for Agriculture and rural development (NABARD) - for supporting agricultural
activities.

● Small Industries Development Bank of India (SIDBI) – for providing financial assistance to small-
scale industries.
Phase III

This phase has introduced many more products and facilities in the banking sector in its reform measure.
In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked
for the liberalization of banking practices.
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From 1991 onwards, there was a sea change in the Indian economy. The government invited private
investors to invest. Ten private banks were approved by the RBI. A few prominent names which exist even
today from the liberalization are HDFC, Axis Bank, ICICI and IndusInd Bank.

Other notable changes and developments during this era were:

● Foreign banks like Citibank, HSBC and Bank of America set up branches in India.

● RBI and the government treated public and private sector banks equally.

● Payments banks came into existence.

● Small finance banks were permitted to set up their branches throughout India.

● Banks began to digitalise transactions and various other related banking operations.
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CHAPTER – 2
REVIEW OF
LITERATURE
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BANKING INDUSTRY

Competition in banking is entirely different from other sectors of the economy due to the special function
of banks in the financial system. The standard competition paradigm in favour of competition regarding
cost minimization and allocative efficiency is not entirely valid for banking because many market failures
distort the nature of competition and its outcomes. This paper presents an overview of competition in the
banking sector for developed markets and its characteristics. The uniqueness and fragility of banks,
business models in banking, competition paradigm in banking, and historical overview of competition in
banking is discussed. Finally, the different measures of competition frequently used in the empirical
literature on banking are introduced. Banking competition and four types of competition are defined:
banking competition, competition between the state and non-state banks, competition between banks and
non-banking credit institutions, and competition between banks and non-financial organization.
INDIAN BANKING STRUCTURE

Reserve Bank of India is the central bank of the country and regulates the banking system of India. The
structure of the banking system of India can be broadly divided into scheduled banks, non-scheduled
banks, and development banks.

Banks that are included in the second schedule of the RBI Act, 1934 are scheduled banks. These banks are
eligible for debts/loans on a bank rate from the RBI. On the other hand, banks that are not included in the
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second schedule of RBI Act, 1934 are Non-scheduled banks. They are not eligible to borrow from the RBI
for normal banking purposes except for emergencies.

Scheduled Commercial Banks are further divided into commercial and cooperative banks.

● Commercial Banks: - the institutions that accept deposits from the public and advances loans with the
purpose of earning profits are known as commercial banks. These can be further divided as: -

1. Public Sector Banks

Public sector banks are a major type of government-owned banks in India, where a majority stake (i.e.,
more than 50%) is held by the Ministry of Finance (India) of the Government of India. Welfare is their
primary objective. Currently there are 12 public sector banks, namely: -

Bank of Baroda Indian Bank

Bank of India Indian Overseas Bank

Bank of Maharashtra Punjab & Sind Bank

Canara Bank Punjab National Bank

Central Bank of India UCO Bank

Union Bank of India State Bank of India

2. Private Sector Banks

These banks are owned and run by the private sector. An individual has control over their banks in
preparation to the share of the banks held by him. At present, there are 21 private sectors banks namely:

1
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Axis Bank Ltd. IndusInd Bank Ltd.

ICICI Bank Ltd. Jammu & Kashmir Bank Ltd.

Bandhan Bank Ltd. Karnataka Bank Ltd.

CSB Bank Ltd. Kotak Mahindra Bank Ltd.

City Union Bank Ltd. IDFC First Bank Ltd.

Dhan Laxmi Bank Ltd. Nainital Bank Ltd.

DCB Bank ltd. RBL Bank Ltd.

Federal Bank Ltd. Karur Vysya Bank Ltd.

HDFC Bank Ltd YES Bank Ltd.

Tamilnad Mercantile Bank Ltd. IDBI Bank Ltd.

South Indian Bank Ltd.

3. Foreign Banks in India

Abu Dhabi Commercial Sonali Bank

Bank Ltd Standard Chartered Bank

American Express Bank Société Générale

AB Bank State Bank of Mauritius

DBS Bank Shinhan Bank

Bank of America Bank of Ceylon

Citibank Deutsche Bank

Bank of Nova Scotia • HSBC (Hong Kong

& Shanghai Banking
Bank of China
Corporation)
Barclays Bank Mizuho Corporate Bank
Bank of Bahrain & Kuwait

1
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4. Rural banks in India: -

Rural banking in India started after the establishment of the banking sector in India. Rural Banks in
those days mainly focussed upon the agro sector. Regional rural banks in India penetrated every
corner of the country and extended a helping hand in the growth process of the country.

SBI has 30 Regional Rural Banks in India known as RRBs. The rural banks of SBI are spread in 13
states extending from Kashmir to Karnataka and Himachal Pradesh to Northeast. The total number
of SBIs Regional Rural Banks in India branches is 2349 (16%). Till date in rural banking in India,
there are 14,494 rural banks in the country.

● Cooperative banks: -

A Cooperative Bank is a financial entity that belongs to its members, who are also the owners as well
as the customers of their bank. They provide their members with numerous banking and financial
services. They are the primary supporters of agricultural activities, some small-scale industries, and
self-employed workers. They are governed by the Banking Regulations Act 1949 and Banking Laws
(Co-operative Societies) Act, 1965

1
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These are further divided into two categories- Rural Cooperative Banks and Urban CooperativeBanks.

Development Banks: -
Financial institutions that provide long-term credit in order to support capital-
intensive investments spread over a long period and yielding low rates of return with considerable social
benefits are known as Development Banks. The major development banks in India are: -

● Industrial Finance Corporation of India (IFCI Ltd), 1948

● Industrial Development Bank of India' (IDBI) 1964

● Export-Import Banks of India (EXIM) 1982

● Small Industries Development Bank of India (SIDBI) 1989

● National Bank for Agriculture and Rural Development (NABARD) 1982.

Fact Files of Banks in India
The first Bank in India to be given an ISO certification Canara Bank.

The first Bank in Northern India to get ISO 9002 certification for Punjab and Sind Bank

their selected branches.

The first Indian Bank to have been started solely with Indian Punjab National Bank
capital

The first among the Private Sector Banks in Kerala to become South Indian Bank

Scheduled Bank in 1946 under the RBI act

India‘s oldest, largest and the most successful commercial bank State Bank of India
offering the widest possible range of domestic, international and
NRI products and services, through its vast network in India and
overseas

1
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India‘s second largest Private Sector Bank and is now the largest The FederalBank

scheduled commercial bank in India Limited

The oldest Public Sector Bank in India having branches all over Allahabad Bank

India and serving the customers for the last 132 years

The first Indian Commercial Bank which was wholly owned and Central Bank of India

managed by Indians

Canara Bank Limited is one of the largest public sector banks owned by the Government of India. It is
headquartered in Bengaluru. It was established at Mangalore in 1906 by Ammembal Subba Rao Pai and
later the government nationalized the bank in 1969. The bank also has offices abroad in London, Hong
Kong, Moscow, Shanghai, Dubai, Tanzania, and New York. As per the announcement made by the finance
minister Nirmala Sitharaman on 30 August 2019, Manipal based Syndicate Bank merged with Canara
bank on 1 April 2020, making it the fourth largest bank in the country. Ammembal Subba Rao Pai, a
philanthropist, established the Canara Hindu Permanent Fund in Mangalore, India, on 1 July 1906. The
bank changed its name to Canara Bank Limited in 1910 when it incorporated. Canara Bank's first
acquisition took place in 1961 when it acquired Bank of Kerala. This had been founded in September 1944
and at the time of its acquisition on 20 May 1961 had three branches. The second bank that Canara Bank
acquired was Seasia Midland Bank (Alleppey), which had been established on 26 July 1930 and had seven
branches at the time of its takeover.

A BRIEF PROFILE OF THE BANK

Widely known for customer centricity, Canara Bank was founded by Shri Ammembal Subba Rao

1
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Pai, a great visionary and philanthropist, in July 1906, at Mangalore, then a small port town in Karnataka.
The Bank has gone through the various phases of its growth trajectory over hundred years of its existence.
Growth of Canara Bank was phenomenal, especially after nationalization in the year 1969, attaining the
status of a national level player in terms of geographical reach and clientele segments. Eighties was
characterized by business diversification for the Bank. In June 2006, the Bank completed a century of
operation in the Indian banking industry. The eventful journey of the Bank has been characterized by
several memorable milestones. Today, Canara Bank occupies a premier position in the comity of Indian
banks.
Canara Bank has several firsts to its credit. These include:

• Launching of Inter-City ATM Network

• Obtaining ISO Certification for a Branch

• Articulation of Good Banking – Banks Citizen Charter

• Commissioning of Exclusive Mahila Banking Branch

• Launching of Exclusive Subsidiary for IT Consultancy

• Issuing credit card for farmers

• Providing Agricultural Consultancy Services

Over the years, the Bank has been scaling up its market position to emerge as a major Financial
Conglomerate with as many as thirteen subsidiaries/sponsored institutions in India and abroad. As at June
2023, Canara Bank services over 11.04 crore customers through a network of 9,653 branches and 12,114
ATMs/Recycler spread across all Indian states and Union Territories.
Not just in commercial banking, the Bank has also carved a distinctive mark, in various corporate social
responsibilities, namely, serving national priorities, promoting rural development, enhancing rural self-
employment through several training institutes, and spearheading financial inclusion objective. Promoting
an inclusive growth strategy, which has been formed as the basic plank of national policy agenda today, is
in fact deeply rooted in the Banks founding principles. "A good bank is not only the financial heart of the
community, but also one with an obligation of helping in every possible manner to improve the economic
13 | P a g e

conditions of the common people". These insightful words of our founder continue to resonate even today
in serving the society with a purpose. The growth story of Canara Bank in its first century was due, among
others, to the continued patronage of its valued customers, stakeholders, committed staff and uncanny
leadership ability demonstrated by its leaders at the helm of affairs. We strongly believe that this century
is going to be equally rewarding and eventful not only in service of the nation but also in helping the
Bank emerge as the ―Best Bank to Bank with‖ by pursuing industry benchmarks in profitability,
operational efficiency, asset quality, risk management and digital innovation.

State Bank of India (SBI) is an Indian multinational public sector bank and financial services statutory
body headquartered in Mumbai, Maharashtra. State Bank of India is the 48th largest bank in the world by
total assets and ranked 221st in the Fortune Global 500 list of the world's biggest corporations of 2020,
being the only Indian bank on the list.[10] It is a public sector bank and the largest bank in India[11] with a
23% market share by assets and a 25% share of the total loan and deposits market.[12] It is also the tenth
largest employer in India with nearly 250,000 employees.[13][14][15] In 2023, the company‘s seat in Forbes
Global 2000 was 77.[16]

On 14 September 2022, State Bank of India became the third lender (after HDFC Bank and ICICI Bank)
and seventh Indian company to cross the ₹ 5-trillion market capitalisation on the Indian stock exchanges
for the first time.[17] The largest public lender in the country reached a milestone on February 7, 2024,
when its market capitalization surpassed ₹6 lakh crore, making it the second public sector undertaking
(PSU) to do so, after Life Insurance Corporation.[18] The Reserve Bank of India (RBI) has identified the
SBI, HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs), which are often
referred to as banks that are ―too big to fail‖.[19][20]

The bank descends from the Bank of Calcutta, founded in 1806 via the Imperial Bank of India, making it
the oldest commercial bank in the Indian subcontinent. The Bank of Madras merged into the other two
presidency banks in British India, the Bank of Calcutta and the Bank of Bombay, to form the Imperial
Bank of India, which in turn became the State Bank of India in 1955.[21] Overall the bank has been formed
from the merger and acquisition of more than twenty banks over the course of its 200-year history.[22][23]
14 | P a g e

The Government of India took control of the Imperial Bank of India in 1955, with Reserve Bank of India
(India's central bank) taking a 60% stake, renaming it State Bank of India .

On 16 August 2022, in an attempt to facilitate and support India's start-ups, SBI announced the launch of
its first "state-of-the-art" dedicated branch for start-ups in Bengaluru.[24]
History

The roots of the State Bank of India lie in the first decade of the 19th century when the Bank of Calcutta
(later renamed the Bank of Bengal) was established on 2 June 1806. The Bank of Bengal was one of three
Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank
of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock
companies and were the result of royal charters. These three banks received the exclusive right to issue
paper currency till 1861 when, with the Paper Currency Act, the right was taken over by the Government
of India. The Presidency banks amalgamated on 27 January 1921, and the re-organised banking entity
took as its name Imperial Bank of India. The Imperial Bank of India remained a joint- stock company but
without Government participation.

Under the provisions of the State Bank of India Act of 1955, the Reserve Bank of India, which is
India's central bank, acquired a controlling interest in the Imperial Bank of India. On 1 July 1955, the
Imperial Bank of India became the State Bank of India . In 2008, the Government of India acquired the
Reserve Bank of India's stake in State Bank f India to remove any conflict of interest because the RBI is
the country's banking regulatory authority.

State bank of India has acquired local banks in rescues. The first was the Bank of Bihar (est. 1911), which
state bank of India acquired in 1969, together with its 28 branches. The next year State Bank of India
acquired the National Bank of Lahore (est. 1942), which had 24 branches. Five years later, in
1975, State Bank of India acquired Krishnaram Baldeo Bank, which had been established in 1916 in
Gwalior State, under the patronage of Maharaja Madho Rao Scindia. The bank had been the Dukan
Pichadi, a small moneylender, owned by the Maharaja. The new bank's first manager was Jall N. Broacha.
In 1985, State Bank of India acquired the Bank of Cochin in Kerala, which had 120 branches. State Bank
of India was the acquirer as its affiliate, the State Bank of Travancore, already had an extensive network
in Kerala.

National Institute of Design, Ahmedabad designed the State Bank of India logo in 1971.[25]

There was, even before it happened, a proposal to merge all the associate banks into State Bank of India
to create a single very large bank and streamline operations.[26]
15 | P a g e

The first step towards unification occurred on 13 August 2008 when State Bank of Saurashtra merged with
State Bank of India, reducing the number of associate state banks from seven to six. On 19 June 2009, the
State Bank of India board approved the absorption of State Bank of Indore, in which State Bank of India
held 98.3%. (Individuals who held the shares before their takeover by the government held the balance of
1.7%.)[27]

On 7 October 2013, Arundhati Bhattacharya became the first woman to be appointed chairperson of the
bank.[29] Mrs. Bhattacharya received an extension of two years of service to merge into State Bank of India
the five remaining associate banks.

In February 2024, State Bank of India began a partnership with Flywire Corporation to make student fees
and compliance with the Reserve Bank of India‘s Liberalised Remittance Scheme (LRS) more transparent.

Bank of India (BOI) is an Indian public sector bank headquartered in Bandra Kurla Complex, Mumbai.
Founded in 1906, it has been government-owned since nationalisation in 1969. Bank of India is a founding
member of SWIFT (Society for Worldwide Inter Bank Financial Telecommunications), which facilitates
provision of cost-effective financial processing and communication services.

As on 31 March 2021, Bank of India's total business stands at ₹1,037,549 crore (US$130 billion),[2] has
5,108 branches and 5,551 ATMs around the world (including 24 overseas branches).[2]

History

Bank of India was founded on 7 September 1906 by a group of eminent businessmen from Mumbai,
Maharashtra, India. The Bank was under private ownership and control till 19 July 1969 when it was
nationalised along with 13 other banks.[4]

Beginning with one office in Mumbai, with a paid-up capital of ₹5 million (US$63,000) and 50 employees,
the Bank has made a rapid growth over the years and blossomed into a mighty institution with a strong
16 | P a g e

national presence and sizable international operations. In business volume, the Bank occupies a premier
position among the nationalised banks.

The bank has over 5,084 branches in India spread over all states and union territories including specialized
branches. These branches are controlled through 54 zonal offices. There are 60 branches, 5 subsidiaries,
and 1 joint venture abroad.

The Bank came out with its maiden public issue in 1997 and follow-on Qualified Institutions Placement
in February 2008.[4]

The current bank

The earlier holders of the Bank of India name had failed and were no longer in existence by the time a
diverse group of Hindus, Muslims, Parsees, and Jews helped establish the present Bank of India in 1906
in Bombay. At the time, banks in India were either owned by Europeans and served mainly the interests
of the European merchant houses, or by different communities and served the banking needs of their own
community.
In 1921, Bank of India entered into an agreement with the Bombay Stock Exchange to manage its clearing
house.

Bank of India's international expansion began in 1946 when the bank Bank of India opened a branch in
London, the first Indian bank to do so. This was also the first post-World War II overseas branch of any
Indian bank.

Then came nationalizations abroad, and at home. The Government of Tanzania nationalised Bank of
India's operations in Tanzania in 1967 and folded them into the government-owned National Commercial
Bank, together with those of Bank of Baroda and several other foreign banks. Two years later, in 1969,
the Government of India nationalised the 14 top banks, including Bank of India. In the same year, the
People's Democratic Republic of Yemen nationalised Bank of India's branch in Aden, and the Nigerian
and Ugandan governments forced Bank of India to incorporate its branches in those countries. The next
year, National Bank of Southern Yemen incorporated Bank of India's branch in Yemen, together with those
of all the other banks in the country; this is now National Bank of Yemen.
Bank of India was the only Indian bank in the country.

In 1972 Bank of India sold its Uganda operation to Bank of Baroda. The next year Bank of India opened
a representative office in Jakarta.

In 1980 Bank of India (Nigeria), changed its name to Allied Bank of Nigeria to reflect the fact that it was
no longer a subsidiary of Bank of India.
17 | P a g e

In 1986 Bank of India acquired Parur Central Bank in (Ernakulam District, Kerala State) in a rescue. Parur
Central Bank had been founded in 1930, and at the time of its failure had 51 branches. Bank of India
amalgamated Parur Central Bank in 1990.

The next year, 1987, Bank of India took over the three UK branches of Central Bank of India (CBI). CBI
had been caught up in the Sethia fraud and default and the Reserve Bank of India required it to transfer its
branches.

In 1994, Bank of India acquired Bank of Karad in a rescue under the directions of the Reserve Bank of
India.Bank of Karad was involved in the 1992 Indian stock market scam and as a result was liquidated
and merged with Bank of India.

● 2003: Bank of India opened a representative office in Shenzhen.

● 2005: Bank of India opened a representative office in Vietnam.
● 2006: Bank of India plans to upgrade the Shenzhen and Vietnam representative offices to branches,
and to open representative offices in Beijing, Doha, and Johannesburg. In addition, Bank of India plans
to establish a branch in Antwerp and a subsidiary in Dar-es-Salaam, marking its return to Tanzania
after 37 years.
In 2007 Bank of India acquired 76% of Indonesia-based PT Bank Swadesi.

Bank of India established a wholly owned subsidiary, Bank of India (New Zealand) Ltd., in Auckland,
New Zealand on 6 October 2011. Then Bank of India established a wholly owned subsidiary, Bank of
India (Uganda) Ltd., on 18 June 2012. Most recently, Bank of India opened its wholly owned subsidiary
Bank of India (Botswana) Ltd., on 9 August 2013.

CMDs since nationalisation[edit]

● 1969–1970 : Tribhovandas Damodardas Kansara

● 1970–1975 : J.N.Saxena
● 1975–1977 : C.P.Shah
● 1977–1980 : H C Sarkar
● 1981–1984 : N Vaghul
● 1984–1986 : T. Tiwari
● 1987–1991 : R. Srinivasan
● 1992–1995 : G. S. Dahotre
● 1995–1997 : G. Kathuria
● 1997–1998 : M.G.Bhide
18 | P a g e

● 1998–2000 : S Rajagopal
● 2000–2003 : K.V.Krishnamurthy
● 2003–2005 : M.Venugopalan
● 2005–2007 : M Balachandran
● 2007–2009 : T. S. Narayanswami
● 2009–2012 : Alok Kumar Misra
● 2012–2015 : Ms. V.R.Iyer [5]
● 2015–2015 : B.P. Sharma [Executive Director with Additional charge as MD & CEO]
● 2015–2017 : Melwyn Rego [MD & CEO]
● 2017–2019 : Dinabandhu Mohapatra [MD & CEO] [6]
● 2019–2023: Atanu Kumar Das
● 2023–Present: Rajneesh Karna
RATIO ANALYSIS

Ratio analysis is a widely used tool of financial analysis. The term ratio in it refers to the relationship
expressed in mathematical terms between two individual figures or groups of figures connected in some
logical manner and selected from the financial statement of concern. The ratio analysis is based on the fact
that a single accounting figure by itself may not communicate any meaningful information but when we
expressed it as a relative to some other figures, it may provide some significant information on the
relationship between two or many accounting figures groups is called a financial ratio helps to express the
relationship between two accounting figures in such a way that users can conclude the performance,
strengths, and weakness of a firm.

Meaning

Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency,
and profitability by studying its financial statements such as the balance sheet and income statement. Ratio
analysis is a cornerstone of fundamental equity analysis.

Advantages and uses of Ratio analysis:

● Helps in forecasting and planning by performing trend analysis.

● Helps in estimating the budget for the firm by analysing previous trends.

● It helps in determining how efficiently a firm or an organization is operating.

19 | P a g e

● It provides significant information to users of accounting information regarding the performance of

the business.
● It helps in the comparison of two or more firms.

● It helps in determining both the liquidity and long-term solvency of the firm.

Disadvantages of Ratio analysis:

● Financial statements seem to be complicated.

● Several organizations work in various enterprises each possessing different environmental positions
such as market structure, regulation, etc., Such factors are important that a comparison of two
organizations from varied industries might be ambiguous.

● Financial accounting data is influenced by views and hypotheses. Accounting criteria provide
different accounting methods, which reduces comparability and thus ratio analysis is less helpful in
such circumstances.
● Ratio analysis illustrates the associations between prior data while users are more concerned about
current and future data.

CLASSIFICATION OF RATIOS

Ratio Analysis is a simple arithmetical expression of the relationship of one number to another. In simple,
language ratio is one number expressed in terms of another and can be worked out by dividing one number
into the other. i.e., ratio is an expression of the quantitative relationship between two numbers. The ratio
20 | P a g e

analysis is one of the most powerful tools of financial analysis. It is the process of stabling and interpreting
various ratios. It is with the help of ratios that the financial statements can be analyzed more clearly and
decision made from such analysis. A financial ratio is the relationship between two accounting figures
expressed mathematically.

LEVERAGE RATIOS

Liquidity ratios are an important class of financial metrics used to determine a debtor's ability to pay off
current debt obligations without raising external capital. Liquidity ratios measure a company's ability to
pay debt obligations and its margin of safety through the calculation of metrics including the current ratio,
quick ratio, and operating cash flow ratio.

For example, internal analysis regarding liquidity ratios involves using multiple accounting periods that
are reported using the same accounting methods. Comparing previous periods to current operations allows
analysts to track changes in the business. In general, a higher liquidity ratio shows a company is more
liquid and has better coverage of outstanding debts.
TYPES OF LIQUIDITY RATIOS

Current Ratio

The current ratio is a liquidity ratio that measures a company‘s ability to pay short-term obligations or
those due within one year. It tells investors and analysts how a company can maximize the current assets
on its balance sheet to satisfy its current debt and other payables.

The current ratio is called current because, unlike some other liquidity ratios, it incorporates all current
assets and current liabilities. The current ratio is sometimes called the working capital ratio. The current
ratio compares all a company‘s current assets to its current liabilities.

To calculate the ratio, analysts compare a company‘s current assets to its current liabilities. Current assets
listed on a company‘s balance sheet include cash, accounts receivable, inventory, and other current assets
(OCA) that are expected to be liquidated or turned into cash in less than one year. A ratio under 1.00indicates
that the company‘s debts due in a year or less are greater than its assets—cash or other short- term assets
expected to be converted to cash within a year or less. A current ratio of less than 1.00 may seem alarming,
although different situations can negatively affect the current ratio in a solid company.
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Quick Ratio
The quick ratio is an indicator of a company‘s short-term liquidity position and measures a company‘s
ability to meet its short-term obligations with its most liquid assets.

The quick ratio is calculated by dividing a company's most liquid assets like cash, cash equivalents,
marketable securities, and accounts receivables by total current liabilities.
A result of 1 is the normal quick ratio. It indicates that the company is fully equipped with exactly enough
assets to be instantly liquidated to pay off its current liabilities.
There are a few different ways to calculate the quick ratio. The most common approach is to add the most
liquid assets and divide the total by current liabilities:

Quick Ratio = Quick Assets

Current Liabilities

Quick assets are defined as the most liquid current assets that can easily be exchanged for cash. For most
companies, quick assets are limited to just a few types of assets:
Quick Assets= Cash+ CE+MS+NAR where:
CE = Cash equivalents

MS = Marketable securities

NAR = Net accounts receivable

Quick Assets = Cash+ CE+ MS+ NAR

where:
CE = Cash equivalents

MS = Marketable securities

NAR = Net accounts receivable

Depending on what type of current assets a company has on its balance sheet, a company may also
calculate quick assets by deducting illiquid current assets from its balance sheet. For example, consider
that inventory and prepaid expenses may not be easily or quickly converted to cash, a company may
calculate quick assets as follows:

Quick Assets = TCA−Inventory−PE where:

TCA= Total current assets
PE = Prepaid expenses
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Quick Assets =TCA−Inventory−PE

SOLVENCY RATIOS

Solvency ratios represent the extent to which a business is utilizing borrowed money. It also evaluates
company solvency and capital structure. Having high leverage in a firm ‗s capital structure can be risky,
but it also provides benefits.

Solvency ratios also known as leverage ratios determine an entity's ability to service its debt. Liquidity
ratios compare current assets with current liabilities, i.e., short-term debt. Whereas solvency ratios analyze
the ability to pay long-term debt.

The use of leverage is beneficial during times when the firm is earning profits, as they become amplified.
On the other hand, a highly levered firm will have trouble if it experiences a decline in profitability and
may be at a higher risk of default than an unlevered or less levered firm in the same situation.
Debt-Equity Ratio
This ratio is ascertained to determine long- term solvency position of a company. Debt equity ratio is also
called ―external internal equity ratio‖. The ratio is calculated to measure the relative portion of outsider‘s
funds and shareholder‘s funds invested in the company. The best equity ratio shows the long- term
financial position of an organization. The debt-to-equity ratio measures the relationship between long-
term debt of a firm and its total equity.
This ratio is calculated to measure the relative claims of outsiders and the owners against the firm ‗s assets.
This ratio indicates the relationship between the external equities or the outsider ‗s funds and the internal
equities or the shareholder ‗s funds.

Debt to Capital Ratio

A company's debt-to-capital ratio or D/C ratio is the ratio of its total debt to its total capital, its debt and
equity combined. The ratio measures a company's capital structure, financial solvency, and degree of
leverage, at a particular point in time. The data to calculate the ratio are found on the balance sheet. This
ratio establishes a link between the long-term funds raised from outsiders and total long tern funds
available in the business.

The higher the debt-to-capital ratio, the more debt the company has compared to its equity. This tells
investors whether a company is more prone to using debt financing or equity financing. A company with
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high debt-to-capital ratios, compared to a general or industry average, may show weak financial strength
because the cost of these debts may weigh on the company and increase its default risk.

Proprietary Ratio

A variant to the debt-equity ratio is the proprietary ratio which is also known as Equity Ratio or
shareholders to total equities ratio or net worth to total assets ratio. This ratio establishes the relationship
between shareholder‘s funds to total assets of the firm. The ratio of proprietor‘s funds to total funds is an
important ratio for determining long- term solvency of a firm.

The proprietary ratio shows the contribution of stockholders in total capital of the company. A high
proprietary ratio, therefore, indicates a strong financial position of the company and greater security for
creditors. A low ratio indicates that the company is already heavily depending on debts for its operations.
A large portion of debts in the total capital may reduce creditor‘s interest, increase interest expenses and
the risk of bankruptcy. Having a very high proprietary ratio does not always mean that the company has
an ideal capital structure.
Fixed Asset to Total Long Term Fund Ratio
Fixed assets to long term funds ratio establish the relationship between fixed assets and long- term funds
and is calculated by dividing fixed assets by long term funds. This shows the number of times the earnings
of the firms can cover the fixed interest liability of the firm. This ratio complements the assessment of
company's debt coverage capabilities. It indicates the extent to which long-term liabilities can be covered
with company's tangible fixed assets. Tangible fixed assets constitute the potential source of financing of
company's liabilities.

The fixed asset turnover ratio reveals how efficient a company is at generating sales from its existing fixed
assets. A variant to the ratio of fixed assets to net worth is the ratio of fixed assets to total long-term funds.
Current Assets to Proprietor‘s Fund
Current Assets to Proprietors ‗Fund Ratio establishes the relationship between current assets and
shareholder ‗s funds. The purpose of this ratio is to calculate the percentage of shareholder ‗s funds
invested in current assets. The ratio is calculated by dividing the total of current assets by the amount of
shareholder ‗s funds.
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PROFITABILITY RATIOS

Profitability means the ability of a company to earn a profit. Firm ‗s profitability is very important both
for stockholders and creditors because revenue in the form of dividends is being derived from profits, as
well as profits are one source of funds for covering debts. Profitability ratio analysis is a good way to
measure the company‘s performance. Profitability ratios can be divided into two types: margins, indicating
the firm‘s ability to transform money from sales into profits, and returns, showing the ability of a company
to generate returns for its shareholders.

Profitability ratio is used to evaluate the company‘s ability to generate income as compared to its expenses
and other cost associated with the generation of income during a particular period. This ratio represents
the result of the company. Profitability represents final performance of company i.e., how profitable
company. It also represents how profitable owner ‗s funds have been utilized in the company. Profitability
ratios are a class of financial metrics that are used to assess a business's ability to generate earnings relative
to its revenue, operating costs, balance sheet assets, or shareholders' equity over time, using data from a
specific point in time.
Return on Assets
Profitability is assessed relative to costs and expenses and analysed in comparison to assets to see how
effective a company is deploying assets to generate sales and profits. The use of the term "return" in the
ROA ratio customarily refers to net profit or net income—the value of earnings from sales after all costs,
expenses, and taxes. ROA is net income divided by total assets.

The more assets a company has amassed, the more sales and potential profits the company may generate.
As economies of scale help lower costs and improve margins, returns may grow at a faster rate than assets,
ultimately increasing ROA. This ratio measures the earning per rupee of assets invested in the company.
A high ratio represents better the company is.

Return on Equity
ROE is a key ratio for shareholders, as it measures a company's ability to earn a return on its equity
investments. ROE is net income divided by shareholders' equity. ROE may increase without additional
equity investments, as the ratio can rise due to higher net income due to a larger asset base funded with
debt. Return on equity (ROE) is a measure of financial performance calculated by dividing net income by
shareholders' equity.
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The higher the ROE, the more efficient a company's management is at generating income and growth from
its equity financing. ROE is a gauge of a corporation's profitability and how efficiently it generates those
profits. To calculate ROE, divide net income by the value of shareholders' equity.
ROEs will vary based on the industry or sector in which the company operates.

Debt- Assets Ratio

A debt-to-assets ratio is a type of leverage ratio that compares a company's debt obligations (both short-
term debt and long-term debt) to the company's total assets.

If the debt-to-assets ratio is greater than one, a business has more debt than assets. If the ratio is less than
one, the business has more assets than debt. A company with a high ratio of total debt to total assets has a
relatively high degree of leverage (DOL) and may lack the financial flexibility of a business where assets
outweigh debts.

A company's debt-to-assets ratio can reveal information about its capital structure and offer a window into
the company's leverage. The more leveraged a business is, the more it relies on its lenders for continued
solvency.
OTHER BANKING RATIOS

Credit- Deposit Ratio

Credit means loans given out to borrowers by the banks. Credits are assets of the Bank. Deposits are the
amount received from customers as deposits in the banks. Deposits are a liability to the bank. So; the
credit-deposit ratio broadly means the ratio of assets and liabilities of the banks. The credit-to- deposit
(CTD) or loan-to-deposit ratio (LTD) is used for measuring a bank‘s liquidity by dividing the bank‘s total
loans disbursed by the total deposits received. It indicates how much of a bank‘s core funds are being used
for lending which is the main banking activity.

CD ratio helps in assessing a bank‘s liquidity and indicates its financial health. A higher ratio indicates
that the loans disbursed are more than the deposits and vice-versa.

If the ratio is too low, banks may not be earning as much as they should and it also indicates that banks
are not mobilizing their resources fully. If the ratio is too high, it means that banks might not have enough
liquidity to cover any unforeseen fund requirements, which may cause an asset- liability mismatch.

A very high ratio is considered alarming because, in addition to indicating pressure on resources, it may
also hint at capital adequacy issues, forcing banks to raise more capital. Ideally, there is no range in which
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the ratio should be, but it should be neither too high nor too low hence it should be kept in a balanced
range.

This ratio is a measure of banks‘ financial health. When the interest rate increases, deposits grow at a faster
pace than loans because higher interest rates push investors to invest more money. Conversely, when rates
are lower, deposits reduce. These changes affect the CTD ratio. But the Reserve Bank has voiced concerns
over the current ratio of banks as it could have financial stability implications at the systemic level.

Investment-Deposit Ratio
The investment deposit ratio is a financial metric that measures the proportion of a bank‘s total investments
to its total deposits for a given period. It is used to assess the bank‘s investment strategy and its ability to
generate returns on its investment.

In simple terms, the investment-to-deposit ratio refers to the proportion of funds invested by a bank in
various investment opportunities as compared to the total deposits received by the bank. This ratio is used
to measure the efficiency and stability of a bank‘s operations and to assess the risk associated with lending
activities.
The investment-to-deposit ratio is calculated as the total investments made by a bank divided by its total
deposits. This ratio is expressed as a percentage and provides an indication of how much of a bank‘s assets
are being invested, and how much is being held in reserve in the form of deposits.

Cash-Deposit Ratio
Cash Deposit ratio (CDR) is the ratio of how much a bank lends out of the deposits it has mobilised. It
indicates how much of a bank‘s core funds are being used for lending, the main banking activity. It can
also be defined as Total of Cash in hand and Balances with RBI divided by Total deposits.
The cash deposit ratio is a financial metric that measures the amount of cash that banks should have
available as a percentage of the total amount of money their customers have deposited. The cash deposit
ratio indicates how much cash banks maintain for each rupee of deposit they accept. This ratio will always
be higher than the Cash Reserve Ratio (CRR) as settlement balance is also included.
The ratio includes:
1. Cash and Cash Equivalents: The cash deposit ratio considers the sum of actual physical cash held
by the bank (in its vaults) and cash equivalents. Cash equivalents are highly liquid and low-risk assets that
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can be quickly converted into cash, such as short-term government securities or highly rated commercial
paper.
2. Total Deposits: The denominator of the ratio is the total amount of deposits held by the bank. This
includes various types of deposits, such as savings accounts, checking accounts, certificates of deposit
(CDs), and other customer deposits.

A higher cash deposit ratio indicates that a larger portion of a bank's deposits is held in liquid form, which
can be used to meet customer withdrawal requests and other short-term obligations. This can enhance the
bank's ability to manage liquidity risks. Conversely, a lower cash deposit ratio means that the bank has a
larger proportion of its deposits invested in longer-term, less liquid assets, such as loans and securities.
While these assets may generate higher returns, they are less readily available to cover immediate cash
needs. Banks typically aim to strike a balance between holding sufficient cash to meet withdrawal demands
and earning a return on their assets.
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CHAPTER- 3
NEED SCOPE AND
OBJECTIVE
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SCOPE OF THE STUDY

It became quite difficult to make a judgment about the position of any bank by analysing the ratios of one
year.

The present study has been undertaken to analyse the ratio that is being managed in the bank and how far
it contributes to the overall objectives of maximizing shareholder wealth and organizational wealth.

This project report main objective is analysed and study the financial position of the selected banking
companies (State Bank of India, Canara And Bank of India) through ratio analysis.

OBJECTIVES OF STUDY:

The following are the objectives of the project:

1. To analyse and study the financial position of the State Bank of India, Bank of India and Canara Bank
through ratio analysis.
2. To evaluate the profitability position of the State Bank of India, Bank of India and Canara Bank.
3. To study the long term and short-term solvency position of the banks.
4. To analyse and compare the financial performance of SBI, BOI and Canara bank over a specified
period.

LIMITATIONS OF THE STUDY

Following are some limitations of the project that are:

1. The accuracy of the data can‘t be achieved due to various restrictive policies of the bank.
2. In this study, only selected ratios are calculated.
3. It considers only monetary factors; non-monetary factors are not considered.
4. The study is purely based on secondary data which were taken primarily from published annual reports
of Banking Industry.
5. There is no set industry comparison and hence comparisons are made on general standards.
6. The ratios are calculated from past financial statements, and these are not indicators of the future.
30 | P a g e

CHAPTER-4
RESEARCH
METHODOLOGY
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RESEARCH METHODOLOGY

Research Methodology aims at discovering the truth. It is an essential and powerful tool in leading men
towards progress. It is an original contribution to the existing stock of knowledge. It is the search for
knowledge through objective and systematic method of finding solution to problems. Therefore, research
is a process of systematic and in-depth study of search of any topic, subject or area of investigation backed
by collection, computation, presentation, and interpretation of relevant data.
Research methodology is a systematic way to solve a problem. Essentially, the procedures by which
researchers go about their work of describing, explaining, and predicting phenomena are called research
methodology. It aims to give the work plan of research.
Research methods are the various procedures, schemes, algorithms, etc. used in research. All the methods
used by a researcher during a research study are termed research methods. They include theoretical
procedures, experimental studies, numerical schemes, statistical approaches, etc. Research methods help
us collect samples and data and find a solution to a problem.
In short, it can be said that research methods aim at finding solutions to research problems. Research
methodology is the beginning whereas research methods are the end of any scientific or non-scientific
research.

RESEARCH PROBLEM:
To analyse and compare the financial ratios of selected Banking Companies that are State Bank of India,
Bank of India and Canara Bank.
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RESEARCH DESIGN

Research design is a framework to conduct research. It is a method and technique chosen by a researcher to
combine various components of research in a reasonably logical manner so that the research problem is
efficiently handled. In this study, type of research design used is exploratory research.
The research can be divided into the following types that are:

1. Descriptive Research:
Descriptive research has been conducted to describe the various characteristics related to Ratio
analysis. It includes the facts finding inquiries of different kinds. It has been done to know the
following facts:
✔ What is the position of ratio analysis in the company? ✔ What are the various
sources of raising the funds are adopted by the company?

2. Exploratory Research:
Exploratory research is a methodology approach that investigates research questions that have not
previously been studied in depth. This research is qualitative and primary in nature.

3. Quantitative Research:
Quantitative research is obtained to evaluate the different parameters relating to ratio analysis. It
includes the study of

✔ How effectively the company deals in its collection policies. ✔ How many
times do the companies rotate their inventory during the year?

4. Experimental Research:
Experimental research is a practical route to take, as it allows the researcher to find exactly what is working
and what is not a research social science and in the medical field and account for these changes accordingly
to solve problem.

STEPS OF METHODOLOGY

1. Collection of data
2. Organization of data
3. Presentation of data
4. Analysis of data
5. Interpretation of data
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1. COLLECTION OF DATA

Data collection is the process of gathering and measuring information on targeted variables in an
established system, which then enables one to answer relevant questions and evaluate outcomes. The data
is collected by two methods that are primary data and secondary data. The secondary data was provided
through the annual report, website, etc. of the company and the primary data was collected through the
medium of face-to-face interactions and interviews.
METHODS OF DATA COLLECTION:

● PRIMARY DATA

Primary data refers to the first-hand data gathered by the researcher himself. It is real-time data. Its source
is surveys, observations, experiments, questionnaires, personal interviews, etc. collecting primary data is
quite expensive both in terms of time and money. These data are original because they are collected for
the first time.

● SECONDARY DATA

Secondary data refers to those data that have already been collected by some other person. These are not
original because someone else has collected these for his purpose. Secondary data require less time and
money. These data are less reliable and less suitable.

In this study, I have used Secondary data from various books, internet, and financial statements i.e.
Balance sheets and P&L account.

2. ORGANISATION OF DATA

Data once collected needed to be organized for further processing. The Secondary Data collected by me
was carefully gone through then the relevant and useful matter was assorted and properly organized.

3. PRESENTATION OF DATA

The data collected needed to be organized for further processing form. Thus, after proper organization,
the data is given in a presentable form with complete details with the help of bar diagrams, charts, and
tables.

35
34 | P a g e

4. ANALYSIS OF DATA

The data is carefully analysed keeping into consideration both the pros and cons to arrive at a concrete
conclusion. The ratios analysis technique is adopted for the analyses.

5. INTERPRETATION OF DATA

After carefully analysing the data, it has been interpreted to give concrete conclusions and proper
recommendations. Proper interpretation interprets the position of the company relating to the ratios.
SAMPLING DESIGN

MEANING

A sample design is a definite plan for obtaining a sample from a given population. A sample design is a
framework or road map that serves as the basis for the selection of a survey sample and affects many other
important aspects of a survey as well.

SAMPLE AREA

In this study, the sample area is the three banks of Banking Industry that is State Bank of India, Bank of
India and Canara Bank.

SOURCE OF DATA

In this study, I have used Secondary Data.

Data Analysis Tools •

Ratio Analysis

The most convincing & appealing ways in which data may be presented are tables, charts & pictures.
Pictorial representation helps in quick understanding of the data. Charts have greater memorizing effect
as the impression is created by the figure. A chart can take the shape of either a diagram or a graph. To
analyse the collected data, simple tool of percentage methods issued. The study diagram representations
are adopted. The data are presented through different types of diagrams are as follows:

1. Table
2. Charts
3. Bar diagram
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CHAPTER –5
DATA ANALYSIS AND
INTERPRETATION
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RATIO ANALYSIS

A. LIQUIDITY RATIO

Current Ratio Current ratio = Current Assets

Current Liabilities

BANKS CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO

SBI 39969030796 50614984297 0.78

CANARA 10178029405 1243998899 0.81

BOI 6011967353 6916059771 0.87

Table 1: Current Ratio

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CURRENTRATIO
0.88
0.87
0.86

0.84

0.82 0.81
0.8
0.78
0.78

0.76
0.74

0.72
SBI CANARA BOI

Fig 1: Current Ratio

INTERPRETATION: - As per the above table we observe that current ratio of SBI is 0.78, Canara is
having 0.81 and BOI is having 0.87. A higher current ratio indicates more liquidity and financial
flexibility, while a lower current ratio indicates less liquidity and financial stress. The ideal ratio of current
ratio is 2:1 considered to be satisfactory. By comparing the ratios of SBI, BOI and Canara with the
standard ratio it shows that all three banks position are not satisfactory.
Quick Ratio Quick ratio = Quick Assets Current liabilities

BANKS QUICK ASSETS CURRENT QUICK RATIO

LIABILITIES

SBI 3183119097 5061984297 0.06

CANARA 9216205554 1243998899 0.11

BOI 843953185 6916059771 0.12

Table 2: Quick Ratio

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ǪUICKRATIO
0.12 0.12
0.11
0.1

0.08
0.06
0.06

0.04

0.02

SBI CANARA BOI

Fig 2: Quick Ratio

INTERPRETATION: - As per above table, we observe that SBI exhibits the lowest quick ratio at 0.06,
indicating a relatively lower ability to cover its short-term liabilities with its quick assets. Canara Bank
follows with a quick ratio of 0.11, have a slightly better position in liquidity compared to SBI but still not
exceptionally robust. On the other hand, BOI has the highest quick ratio among the three at 0.12, implying
a relatively healthier liquidity position in promptly covering its short-term obligations.
B. SOLVENCY RATIO
Debt Equity Ratio Debt equity ratio = Debt
Equity

BANKS DEBT EQUITY DEBT EQUITY RATIO

SBI 5211519498 3589313181 1.45

CANARA 580731729 780537533 0.74

BOI 649790232 589706140 1.10

Table 3: Debt Equity Ratio

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DEBTEǪUITYRATIO
1.6
1.45
1.4

1.2 1.1

0.74
0.8

0.6

0.4

0.2

SBI CANARA BOI

Fig 3: Debt Equity Ratio

INTERPRETATION: - As from the above table the debt-equity ratio of SBI is having 1.45ratio, Canara is
having 0.74 and BOI is having 1.10ratio. A higher D/E ratio means that the company has more debt than
equity, which implies that it has a higher financial risk and a lower solvency. A lower D/E ratio means that
the company has more equity than debt, which implies that it has a lower financial risk and a higher
solvency. From the comparison we can see that Canara is having satisfactory ratio.
Proprietary ratio

Proprietary ratio or equity ratio = Shareholders funds *100

Total assets

BANKS SHAREHOLDER TOTAL ASSETS PROPRIETARY RATIO

FUNDS ( %)

SBI 3589313181 59544183170 6.02

CANARA 780537533 13810295621 5.65

BOI 589706140 8155556143 7.23

Table 4: Proprietary Ratio

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PROPRIETARRYATIO (%
7.23
7

6 6.02 5.65
5

4
3

0
SBI CANARA BOI

Fig 4: Proprietary Ratio

INTERPRETATION: - As per the above table we see that proprietary ratio of all three banks. A higher
proprietary ratio means less dependence on external sources of funds, such as debt. A lower ratio means
more reliance on borrowed money, which may increase the risk of insolvency. As from the above table,
the proprietary ratio of SBI is 6.02, Canara is having 5.65 and BOI is having 7.23.
Thus, from comparison we cans see that BOI is having satisfactory ratio.
Current assets to proprietor’s fund

Current assets to proprietor’s fund = Current assets

Shareholders Fund

BANKS CURRENT SHAREHOLDERS CURRENT ASSETS TO

ASSETS FUND PROPRIETARY FUND
RATIO

SBI 39969030796 3589313181 11.14

CANARA 10178029405 780537533 13.03

BOI 6011967353 589706140 10.19

Table 5: Current Asset to Proprietary Fund Ratio

4
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CURRENTASSETSTO
PROPRIETARFYUNDRATIO
14

12 13.03
10 11.14
10.19
8

6
4

2
0
SBI CANARA BOI

Fig 5: Current Asset to Proprietary Fund Ratio

INTERPRETATION: - As per the table we observe that the current assets to proprietor‘s fund ratio of
STATE BANK OF INDIA is having 11.14 ratio, Canara is having 13.03 and BANK OF INDIA is
having 10.19 ratio. A higher ratio means that the business has more current assets than debt and can
meet its short-term obligations easily. A lower ratio means that the business has more debt than current
assets and may face liquidity problems. From comparison we can see that Canara is having satisfactory
ratio because business has more current assets.
Debt to Capital Ratio

Debt to capital ratio = Debt

Total Capitalization
Total Capitalization = Total Debt + Total Equity

BANKS DEBT TOTAL DEBT TO CAPITAL

CAPITALIZATION RATIO

SBI 5211519498 8800832679 0.59

CANARA 580731729 1361269262 0.42

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BOI 649790232 1239496372 0.52

Table 6: Debt to Capital Ratio

DEBTTOCAPITALRATIO
0.6 0.59
0.52
0.5
0.42
0.4

0.3

0.2

0.1

SBI CANARA BOI

Fig 6: Debt to Capital Ratio

INTERPRETATION: - As per the above table, we observe that the funded debt to total capitalization ratio of
STATE BANK OF INDIA is 0.59, Canara is having 0.42 and BANK OF INDIA is 0.52. The higher the debt
to capital ratio, the more debt the company has as compared to equity. A company with lower debt to capital
ratio have greater flexibility in terms of raising additional capital via Debt. The analysis reveals that all three
banks are satisfactory.
Fixed Asset to Total Long Term Fund Ratio

Fixed Assets Ratio = Fixed Assets (after Depreciation)

Total Long-Term Funds

BANK FIXED ASSETS DEBTS FIXED ASSET TO

LONG TERM
FUND RATIO
SBI 444073810 5211519498 0.08

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CANARA 103339667 580731729 0.17

BOI 99610019 649790232 0.15

Table 7: Fixed Asset to Long Term Fund Ratio

FIXEDASSETTOLONGTERM
FUNDRATIO
0.18
0.17
0.16 0.15
0.14
0.12
0.1 0.08
0.08
0.06
0.04
0.02

SBI CANARA BOI

Fig 7: Fixed Asset to Long Term Fund Ratio

INTERPRETATION: - As from the above table, we can see that the fixed assets ratio of SBI is 0.08,
Canara is having 0.17 and BOI is having 0.15. A ratio of more than one means that some of the fixed assets
are financed by short-term funds, which may indicate a higher risk of liquidity problems. A ratio of less
than one means that some of the long-term funds are used for current assets, which may indicate a lower
return on investment. From comparison we can see that Canara appears to have the highest Fixed Asset
to Total Long-Term Fund Ratio, indicating a relatively higher allocation towards fixed assets
compared to SBI and BOI. SBI has the lowest ratio among the three banks.
C. PROFITABILITY RATIO

Debt Asset Ratio Debt Asset Ratio = Total Debt*100

Total Asset

BANK DEBTS TOTAL DEBT ASSET RATIO (%)

ASSETS

SBI 5211519498 59544183170 8.75

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CANARA 580731729 13810295621 4.20

BOI 649790232 8155556143 7.97

Table 8: Debt Asset Ratio

DEBTASSETRATIO(%)
9 8.75
8 7.97

7
6
5 4.2
4
3
2
1
0
SBI CANARA BOI

Fig 8: Debt Asset Ratio

INTERPRETATION: - From the above table we see that the Debt asset ratio of SBI is 8.75, Canara is
4.20 and BOI is 7.97. A higher ratio means the company has more debt relative to its assets, which may
indicate a higher risk of default or insolvency. A lower ratio means has less debt relative to its assets and
is safe. From comparison we can found out that Canara is having low debts but still it is not satisfactory
as compared to other banks.
Return on asset ratio

Return on asset ratio = Net Income*100

Total Assets

BANKS NET INCOME TOTAL ASSETS RETURN ON ASSET

RATIO

SBI 760425233 59544183170 1.28

CANARA 112547457 13810295621 0.81

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BOI 60215903 8155556143 0.74

Fig 9: Return on Asset Ratio

RETURNON ASSETRATIO
1.4
1.28
1.2

0.81
0.8 0.74

0.6

0.4

0.2

SBI CANARA BOI

Fig 9: Return on Asset Ratio

INTERPRETATION: - As from the above table the return on asset ratio of SBI is 1.28, Canara is having
0.81 and BOI is having 0.74. A higher ROA ratio means that a company is more efficient and productive
at using its assets to generate profit. A lower ROA ratio indicates that the company has a lower return on
its investment in assets, which may imply that it is wasting resources or not managing them well. The
analysis reveals that the ratio of SBI is high but still it is not satisfactory as compared to other banks.
Return on equity ratio

Return on equity ratio = Net income*100

Shareholder’s equity

COMPANIES NET INCOME SHAREHOLDERS RETURN ON EQUITY

EQUITY

SBI 760425233 3589313181 21.18

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CANARA 112547457 780537533 14.41

BOI 60215903 589706140 10.2

Fig 10: Return on Equity Ratio

RETURNON EǪUITY
25

21.18
20

14.41
15
10.2
10

SBI CANARA BOI

Fig 10: Return on Equity Ratio

INTERPRETATION: - As from the above table the Return on Equity of SBI is 21.18, Canara is having
14.41 and BOI is having 10.2 ratio. A higher ROE ratio means that the company is using its investors'
money more efficiently. A lower ROE ratio means that the company earns relatively little compared to its
to its shareholders equity. The analysis reveals that the return on equity ratio of SBI banks is more
satisfactory as compared to BOI and Canara bank.

OTHER BANKING RATIOS

Credit- Deposit Ratio

Credit to Deposit ratio (%) = Total Advances *100

Total Deposits
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BANKS TOTAL TOTAL CREDIT

ADVANCES DEPOSITS DEPOSIT
RATIO (%)
SBI 32679021273 44685355068 73.13

CANARA 8309291750 11790864806 70.47

BOI 4858996352 6695857713 72.57

Table 11: Credit-Deposit Ratio

CREDITDEPOSIT
RATIO(%)
73.5
73.13
73
72.57
72.5
72
71.5
71 70.47
70.5
70
69.5
69
SBI CANARA BOI

Fig 11: Credit- Deposit Ratio

INTERPRETATION: - From the above table the credit- deposit ratio of SBI is 73.13%, Canara is 70.47%
and BOI is 72.57%. If the ratio is too high, it means that banks might not have enough liquidity to cover
any unforeseen fund requirements, which may cause an asset-liability mismatch. If the ratio is too low,
banks may not be earning as much as they should and it also indicates that banks are not mobilizing their
resources fully. SBI has the highest Credit-Deposit Ratio among the three banks, indicating a higher
utilization of deposits for lending activities. Canara and BOI also have sufficient Credit-Deposit Ratios.
Investment Deposit Ratio

Investment-Deposit Ratio = Investment *100

Total deposit
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BANK INVESTMENT TOTAL DEPOSITS INVESTMENT

DEPOSIT RATIO
(%)
SBI 19131078564 44685355068 42.81

CANARA 3528926549 11790864806 29.92

BOI 2043978771 6695857713 30.52

Table 12: Investment-Deposit Ratio

INVESTMEND
TEPOSIT
RATIO(%)
45
42.81
40
35
29.92 30.52
30
25
20
15
10
5
0
SBI CANARA BOI

Fig 12: Investment Deposit Ratio

INTERPRETATION: As from the above table the Investment deposit ratio of SBI is 42.81%, Canara ratio
is 29.92% and BOI ratio is 30.52%. A higher investment-deposit ratio indicates that the bank is investing
more money in securities than it is receiving in deposits. A lower investment-deposit ratio indicates that
the banks are holding a higher proportion of their deposits in cash or low-yielding assets, rather than
investing them in higher-yielding assets such as loans and securities. SBI has the highest Investment-
Deposit Ratio among the three banks, indicating a relatively higher proportion of its deposits being
invested. Canara and BOI have lower Investment-Deposit Ratios compared to SBI

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Cash Deposit Ratio

Cah Deposit Ratio = Cash *100

Total Deposit

BANK CASH TOTAL DEPOSITS CASH DEPOSIT

RATIO (%)
SBI 3183119097 44685355068 7.12

CANARA 550452941 11790864806 4.66

BOI 843953185 6695857713 12.6

Table 13: Cash Deposit ratio

CASHDEPOSITRATIO(%)
14
12.6
12

10

8 7.12

6 4.66

0
SBI CANARA BOI

Fig 13: Cash Deposit Ratio

Interpretation: As from the table, the Cash deposit ratio of SBI 7.12%, Canara ratio is 4.66% and BOI ratio
is 12.6%. A higher CD ratio can be viewed as a sign of insufficient cash management and could also imply
that the bank is not realizing the potential benefit of short-term investments. A lower CD ratio can be
viewed as a sign of efficient cash management. BOI has the higher Cash Deposit Ratio among the three
banks. SBI follows with a moderate Cash Deposit Ratio. Canara has lowest Cash Deposit Ratio.
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CHAPTER - 6

FINDING, SUGGESTION

AND CONCLUSION
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FINDINGS
After analysis I am able to observe the following: -

• From the above analysis we observe that the SBI has the lowest current ratio, indicating less liquidity.
• In terms of quick ratio, SBI exhibits the lowest, while BOI shows the highest among the three banks.
• The analysis reveals that the SBI has a higher debt-equity ratio compared to Canara and BOI, implying
higher financial risk.
• During the studied ratios it has been noted that the BOI has the highest proprietary ratio, indicating
less dependence on external sources.
• From the study it has been find out that the Canara demonstrates a satisfactory current asset to
proprietor‘s fund ratio.
• It has been noted that the SBI shows higher debt asset ratio indicating higher risk.
• By analysis the data I found that the SBI also demonstrates a higher return on asset and return on
equity ratios compared to Canara and BOI.
• The analysis reveals that the SBI has the highest credit-deposit ratio, indicating higher utilization of
deposits for lending activities.
• By analysis it has been noted that the SBI also has the highest investment-deposit ratio, indicating
more investment in securities compared to Canara and BOI.
• From the analysis it has been find out that the BOI has the highest cash deposit ratio among the three
banks.
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SUGGESTIONS

I would like to suggest: -

• All three banks have current ratios below the ideal threshold of 2:1, suggesting the need for better
management of short-term assets and liabilities.
• State Bank of India needs to address its high debt-equity ratio by reducing debt or increasing equity.
• Bank of India should maintain its lower debt-equity ratio for better solvency.
• State Bank of India should maintain its high credit-deposit and investment-deposit ratios but also
ensure proper liquidity management.
• Bank of India should review its high cash deposit ratio for more efficient cash management.

• For improving return on asset ratio, the Bank of India and Canara bank have to increase their revenues,
reducing their expenses and reducing asset costs.
• For improving return on equity banks have to increase profit margins, improve asset turnover, lower
taxes and distribute idle cash.

• Canara Bank shows satisfactory performance across various ratios but could focus on enhancing
profitability to further strengthen its position.
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CONCLUSION

In conclusion, ratio analysis provides valuable insights into the financial health and performance of
companies, such as banks. Through the examination of liquidity, solvency, profitability, and other key
ratios, it becomes evident where strengths lie and where improvements are needed. From the analysis
of State Bank of India (SBI), Canara Bank, and Bank of India (BOI), it is clear that each institution has
its own set of strengths and weaknesses. While SBI demonstrates robust lending activities and
investment utilization, it faces challenges in liquidity and debt management. Canara Bank shows
satisfactory performance across various ratios but could enhance profitability further. On the other
hand, BOI exhibits strength in solvency and cash management but needs to focus on improving
liquidity and profitability. Ultimately, ratio analysis serves as a vital tool for stakeholders to make
informed decisions, identify areas for improvement, and formulate strategic plans to ensure the long-
term financial sustainability of banks and other organizations. For making this dissertation report we
were taken the Balance Sheet and Profit & Loss statements of Banks from their official websites.
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BIBLIOGRAPHY
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BIBLIOGRAPHY/REFERENCES
REFERENCES

• C.R. Kothari, ―Research Methodology‖, New Delhi, New age International Publication, 2nd Edition.

• Bhunia, A., MukhutI, S., (2011) identified that understanding financial statements is a key to
fundamental stock analysis and overall investment research.

• A study by Reddy and Babu (2018) analyzed the financial performance of Wipro using
ratio analysis.

• Shrivastava and Singh (2017) analyzed the financial performance of HCL and Tech
Mahindra
using ratio analysis.

• Lermack (2003) showed the benefits of financial ratios analysis. He showed that financial ratios are
an important and well-established technique of financial analysis. As for the benefits of financial ratios
analysis.

• Brigham (2010) stated that financial ratios are designed to help evaluate financial statements.
Financial ratios are used as a planning and control tool, and financial ratios analysis is used to evaluate
the performance of an organization

WEBSITES

• https://en.wikipedia.org/wiki/State_Bank_of_India
• https://en.wikipedia.org/wiki/Bank_of_India

• https://canarabank.com
• https://www.investopedia.com/terms/r/ratioanalysis.asp#:~:text=Investopedia%20%2F%20There
sa%20Chiechi-
,What%20Is%20Ratio%20Analysis%3F,cornerstone%20of%20fundamental%20equity%20analy
sis
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