1. SRI KRISHNA ADITHYA COLLEGE OF
ARTS AND SCIENCE
Banking Theroy
( Balance Sheet of Commercial bank )
Presented By:
• SIVA SELVAN B
• KIRUTHICK ROSAN R
• ABDUL SHIHAAB A F
• TOUFIQ AHMED A
• VARUN RAJ R
• GOPI CHANDDAR K
2. Introduction of Balance Sheet of
Commerical bank
Balance Sheet is a financial record of all the assets,
Liabilities and Capital.
Asset are anything of Value that is Owned by
Commercial bank. Assets are anything that can be
easily and quickly converted into cash.
Liabilities is anything that Commerical bank Owes .
To need to pay or repay.
Anything which owned Somebody Else
The Best Example is Deposits.
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3. Capital is a section within the liabilities component of
the balance Sheet.
Balance Sheet gives an idea about the health of
commercial Bank.
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Capital
Shareholder’s Fund
Reserves
( Retained Profit )
4. The balance sheet of a commercial bank provides a
picture of its functioning. It shows its assets and
liabilities on a particular date at the end of one year.
The assets are shown on the right- hand side and the
liabilities on the left-hand side of the balance sheet.
The assets and liabilities of a bank must balance.
The balance sheet which every commercial bank in
India is required to publish once in a year.
Assets= Liabilities + Capital
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5. The Distribution of Assets:
• The assets of a bank are those items from which it
receives income and profit. The first item on the
assets side is the cash in liquid form consisting of
coins and currency notes lying in reserve with it and
in its branches.
• The second item is in the form of balances with the
central bank and other banks. The commercial banks
are required to keep a certain percentage of their
time and demand deposits with the central bank.
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6. They are the assets of the bank because it can
withdraw from them in cash in case of emergency.
• The third item, money at call and short notice, relates
to very short-term loans advanced to bill brokers,
discount houses and acceptance houses. They are
repayable on demand within fifteen days. The banks
charge low rate of interest on these loans.
• The fourth item of assets relates to bills discounted
and purchased.
• The fifth item, investments by the bank in
government securities, state bonds and industrial
shares, yields a fixed income to the banks.
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7. The bank can sell its securities when there is need for
more cash.
• The sixth item relating to loans and advances is the
most profitable source of bank assets as the bank
changes interest at a rate higher than the bank rate.
• In the seventh item are included liabilities of the
bank’s customers which the bank has accepted and
endorsed on their behalf. They are the assets of the
bank because the liabilities of customers remain in the
custody of the bank.
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8. • The eighth item relates to the value of permanent
assets of the bank in the form of property, furniture,
fixtures, etc. They are shown in the balance sheet
after allowing for depreciation every year.
• The last item includes profits retained by the bank
after paying corporation tax and profits to
shareholders.
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9. The Distribution of Liabilities:
• The liabilities of commercial banks are claims on it.
These are the items which form the sources of its
funds. Of the liabilities, the share capital of the bank
is the first item which is contributed by its
shareholders and is a liability to them.
• The second item is the reserve fund. It consists of
accumulated resources which are meant to meet
contingencies such as losses in any year.
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10. • The bank is required to keep a certain percentage of
its annual profits in the reserve fund. The reserve
fund is also a liability to the shareholders.
• The third item compresses both the time and demand
deposits. Deposits are the debts of the bank to its
customers.
• Borrowings from other banks are the fourth item. The
bank usually borrows secured and unsecured loans
from the central bank.
• The fifth item bills payable refer to the bills which the
bank pays out of its resources.
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11. • The sixth items relates to bills for collection. These
are the bills of exchange which the bank collects on
behalf of its customers and credits the amount to
their accounts. Hence it is a liability to the bank.
• The seventh item is the acceptance and endorsement
of bills of exchange by the bank on behalf of its
customers.
• The eighth item contingents liabilities relate to those
claims on the bank which are unforeseen such as
outstanding forward exchange contracts, claims on
acknowledge debts, etc.
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12. • In the last item, profit and loss, are shown profits
payable to the shareholders which are a liability on the
bank.
• Financial Position.
• Advancing Position.
• Profitabitly.
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Importance Of Balance Sheet
13. Form of Balance Sheet:
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Liabilities Assets
1) Share Capital. 1) Cash.
2) Reserve Fund. 2) Balance with central bank and other bank.
3) Deposits. 3) Money at Call and Short Notice.
4) Borrowings from other banks. 4) Bills Discounted and Purchased.
5) Bills Payable. 5) Investments.
6) Bills for Collection. 6) Loans, Advance, Cash credits and Overdraft.
7) Acceptance, Endorsements and other
Obligations.
7) Liabilities of Customer for acceptance,
endorsement and other obligations.
8) Contingent Liabilities. 8) Property, Furniture, Fixture less Depreciation.
9) Profit & Loss. 9) Profit & Loss