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Prepared By: KOMAL MAHESHWARI
A project is
based on
Overall Banking
Operations And
Assessment Of Working
Capital
A project is
based on
Banking
Operations
Banking
Operations
Working Capital
Provided by
Banks
Working Capital
Provided by
Banks
Methods for
Assessment of
Working Capital
Methods for
Assessment of
Working Capital
Observation &
Discussion with
Manager
Observation &
Discussion with
Manager
Read Company
Profile, Annual
Reports of
Companies
Read Company
Profile, Annual
Reports of
Companies
Referred RBI
guidelines,
Sanction Proposals
Referred RBI
guidelines,
Sanction Proposals
A BANK IS A FINANCIAL INSTITUTION
WHICH ACCEPTS MONEY FROM THE
PUBLIC FOR THE PURPOSE OF LANDING
OR INVESTMENT REPAYABLE ON
DEMAND OR OTHERWISE WITHDRAWALS
BY CHEQUE DRAFTS OR ORDER OR
OTHERWISE.
About Axis Bank
Axis Bank Limited (formerly UTI Bank) is the third largest
private sector bank in India.
Axis Bank began its operations in 1994, after the Government
of India allowed new private banks to be established.
The Bank was promoted in 1993 jointly by the Administrator of
the
1) Unit Trust of India (UTI-I)
2) Life Insurance Corporation of India (LIC)
3) General Insurance Corporation Ltd.
4) National Insurance Company Ltd.
5) The New India Assurance Company
6) The Oriental Insurance Corporation
7) United India Insurance Company
Axis Bank (erstwhile UTI Bank) opened its registered office in
Ahmedabad and corporate office in Mumbai in December 1993.
The first branch was inaugurated on 2 April 1994 in
Ahmedabad by Dr. Manmohan Singh, then Finance Minister of
India.
It offers financial services to customer segments covering Large
and Mid-Sized Corporates, MSME, Agriculture and Retail
Businesses.
Axis Bank operates in four segments:
1) Treasury operations
2) Retail banking
3) Corporate/Wholesale banking
4) Other banking
As on 31-Mar-2014, the Bank had a network of 2402 branches
Assessment of Working Caipital
Functions of
Axis Bank
Service
Functions
Service
Functions
Representative
Functions
Representative
Functions
Development
Functions
Development
Functions
General
Functions
General
Functions
Collecting deposits, Lending loan,
Money transfer, Honouring Cheques
Collecting deposits, Lending loan,
Money transfer, Honouring Cheques
Creation of savings & formation of
capital, HR and investment
development
Creation of savings & formation of
capital, HR and investment
development
Selling of shares & securities, Receive
& payment as the representative of
clients
Selling of shares & securities, Receive
& payment as the representative of
clients
Transaction of foreign currencies,
Information sharing consulting & other
service functions
Transaction of foreign currencies,
Information sharing consulting & other
service functions
Assessment of Working Caipital
Assessment of Working Caipital
Assessment of Working Caipital
Saving Account
..imagessaving.png
Current Account
..imagescurrent1.png..imagescurrent.png
Cash Receipt
Cash Payment
Cancellation Cheque
Cash Balancing
Checking Cash in Hand
Cash Safe keeping
Cash Receipt
Cash Payment
Cancellation Cheque
Cash Balancing
Checking Cash in Hand
Cash Safe keeping
Assessment of Working Caipital
Assessment of
Working Capital
Process
..imagesWCProcess.png
What should be the amount of WC ?
What should be the form of WC?
What should be the security that should be obtained
for extending the WC?
What should be the amount of WC ?
What should be the form of WC?
What should be the security that should be obtained
for extending the WC?
Non-Fund based Facility:-
1. Bank Guarantee
The contract of guarantee has three principal parties as under:
a) Principal debtor
b) Principal creditor
c) Guarantor or Surety
Non-Fund based Facility:-
1. Bank Guarantee
The contract of guarantee has three principal parties as under:
a) Principal debtor
b) Principal creditor
c) Guarantor or Surety
Assessment of Limit of Letter of Guarantee
Outstanding Bank Guarantee as per audited
balance sheet
A
Add bank guarantee required during the
period
B
Less estimated maturity or cancellation of
bank guarantee during the period
C
Requirement of bank guarantee D = A + B - C
2. Letter of Credit
The contract of guarantee has three principal parties as under:
I.Applicant/Opener
II.Opening bank/issuing bank
III.Beneficiary
IV.Advising Bank
V.Confirming Bank
VI.Negotiating Bank
2. Letter of Credit
The contract of guarantee has three principal parties as under:
I.Applicant/Opener
II.Opening bank/issuing bank
III.Beneficiary
IV.Advising Bank
V.Confirming Bank
VI.Negotiating Bank
Assessment of Limit of Letter of Credit
Annual Raw Material Consumption A
Annual Raw Material Procurement
through ILC/ FLC
B
Monthly Consumption C
Usance D
Lead Time E
Total Time F = D + E
LC Time Required G = F * C
Fund based Facility:-
Maximum Permissible Banking Finance Method (Tandon
Committee)
Fund based Facility:-
Maximum Permissible Banking Finance Method (Tandon
Committee)
Current Liabilities Current Assets
Creditors for
purchase
100 Raw material 200
Other current liability 50 Stock in process 20
Bank Borrowings 200 Finished Goods 90
Receivables 50
Other current assets 10
350 370
1st Method 2nd Method 3rd Method
Total CA 370 Total CA 370 Total CA 370
Less Total CL -
Bank
Borrowing
150 Less 25% of CA 92 Less Core CA from
long term sources
95
WCG 220 278 275
25% of WCG
from long term
sources
55 Less Total CL -
Bank
Borrowings
150 Less 25% from
long term
sources
Total CL - Bank
Borrowings
69
150
MPBF 165 MPBF 128 MPBF 56
Current Ratio 1.17:1 Current Ratio 1.33:1 Current Ratio 1.79:1
Form 1: - particulars of the existing/proposed limit
from the banking system.
Form 2: -Operating statement.
Form 3: - Analysis of balance sheet.
Form 4: - Comparative statement of current asset and
liabilities.
Form 5: - Computation of maximum permissible bank
finance for working capital.
Form 6: - Fund flow statement
Form 1: - particulars of the existing/proposed limit
from the banking system.
Form 2: -Operating statement.
Form 3: - Analysis of balance sheet.
Form 4: - Comparative statement of current asset and
liabilities.
Form 5: - Computation of maximum permissible bank
finance for working capital.
Form 6: - Fund flow statement
Banks need some security from the borrowers against the credit
facilities extended to them to avoid any kind of losses. Securities
can be created in various ways. Banks provide credit on the basis
of the following modes of security from the borrowers.
Hypothecation
Mortgage
Pledge
Lien
Banks need some security from the borrowers against the credit
facilities extended to them to avoid any kind of losses. Securities
can be created in various ways. Banks provide credit on the basis
of the following modes of security from the borrowers.
Hypothecation
Mortgage
Pledge
Lien
Pre sanction processPre sanction process
Post sanction processPost sanction process
Assessment of Working Caipital

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Assessment of Working Caipital

  • 1. Prepared By: KOMAL MAHESHWARI
  • 3. Overall Banking Operations And Assessment Of Working Capital A project is based on
  • 4. Banking Operations Banking Operations Working Capital Provided by Banks Working Capital Provided by Banks Methods for Assessment of Working Capital Methods for Assessment of Working Capital
  • 5. Observation & Discussion with Manager Observation & Discussion with Manager Read Company Profile, Annual Reports of Companies Read Company Profile, Annual Reports of Companies Referred RBI guidelines, Sanction Proposals Referred RBI guidelines, Sanction Proposals
  • 6. A BANK IS A FINANCIAL INSTITUTION WHICH ACCEPTS MONEY FROM THE PUBLIC FOR THE PURPOSE OF LANDING OR INVESTMENT REPAYABLE ON DEMAND OR OTHERWISE WITHDRAWALS BY CHEQUE DRAFTS OR ORDER OR OTHERWISE.
  • 8. Axis Bank Limited (formerly UTI Bank) is the third largest private sector bank in India. Axis Bank began its operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted in 1993 jointly by the Administrator of the 1) Unit Trust of India (UTI-I) 2) Life Insurance Corporation of India (LIC) 3) General Insurance Corporation Ltd. 4) National Insurance Company Ltd. 5) The New India Assurance Company 6) The Oriental Insurance Corporation 7) United India Insurance Company
  • 9. Axis Bank (erstwhile UTI Bank) opened its registered office in Ahmedabad and corporate office in Mumbai in December 1993. The first branch was inaugurated on 2 April 1994 in Ahmedabad by Dr. Manmohan Singh, then Finance Minister of India. It offers financial services to customer segments covering Large and Mid-Sized Corporates, MSME, Agriculture and Retail Businesses. Axis Bank operates in four segments: 1) Treasury operations 2) Retail banking 3) Corporate/Wholesale banking 4) Other banking As on 31-Mar-2014, the Bank had a network of 2402 branches
  • 11. Functions of Axis Bank Service Functions Service Functions Representative Functions Representative Functions Development Functions Development Functions General Functions General Functions Collecting deposits, Lending loan, Money transfer, Honouring Cheques Collecting deposits, Lending loan, Money transfer, Honouring Cheques Creation of savings & formation of capital, HR and investment development Creation of savings & formation of capital, HR and investment development Selling of shares & securities, Receive & payment as the representative of clients Selling of shares & securities, Receive & payment as the representative of clients Transaction of foreign currencies, Information sharing consulting & other service functions Transaction of foreign currencies, Information sharing consulting & other service functions
  • 17. Cash Receipt Cash Payment Cancellation Cheque Cash Balancing Checking Cash in Hand Cash Safe keeping Cash Receipt Cash Payment Cancellation Cheque Cash Balancing Checking Cash in Hand Cash Safe keeping
  • 20. What should be the amount of WC ? What should be the form of WC? What should be the security that should be obtained for extending the WC? What should be the amount of WC ? What should be the form of WC? What should be the security that should be obtained for extending the WC?
  • 21. Non-Fund based Facility:- 1. Bank Guarantee The contract of guarantee has three principal parties as under: a) Principal debtor b) Principal creditor c) Guarantor or Surety Non-Fund based Facility:- 1. Bank Guarantee The contract of guarantee has three principal parties as under: a) Principal debtor b) Principal creditor c) Guarantor or Surety
  • 22. Assessment of Limit of Letter of Guarantee Outstanding Bank Guarantee as per audited balance sheet A Add bank guarantee required during the period B Less estimated maturity or cancellation of bank guarantee during the period C Requirement of bank guarantee D = A + B - C
  • 23. 2. Letter of Credit The contract of guarantee has three principal parties as under: I.Applicant/Opener II.Opening bank/issuing bank III.Beneficiary IV.Advising Bank V.Confirming Bank VI.Negotiating Bank 2. Letter of Credit The contract of guarantee has three principal parties as under: I.Applicant/Opener II.Opening bank/issuing bank III.Beneficiary IV.Advising Bank V.Confirming Bank VI.Negotiating Bank
  • 24. Assessment of Limit of Letter of Credit Annual Raw Material Consumption A Annual Raw Material Procurement through ILC/ FLC B Monthly Consumption C Usance D Lead Time E Total Time F = D + E LC Time Required G = F * C
  • 25. Fund based Facility:- Maximum Permissible Banking Finance Method (Tandon Committee) Fund based Facility:- Maximum Permissible Banking Finance Method (Tandon Committee) Current Liabilities Current Assets Creditors for purchase 100 Raw material 200 Other current liability 50 Stock in process 20 Bank Borrowings 200 Finished Goods 90 Receivables 50 Other current assets 10 350 370
  • 26. 1st Method 2nd Method 3rd Method Total CA 370 Total CA 370 Total CA 370 Less Total CL - Bank Borrowing 150 Less 25% of CA 92 Less Core CA from long term sources 95 WCG 220 278 275 25% of WCG from long term sources 55 Less Total CL - Bank Borrowings 150 Less 25% from long term sources Total CL - Bank Borrowings 69 150 MPBF 165 MPBF 128 MPBF 56 Current Ratio 1.17:1 Current Ratio 1.33:1 Current Ratio 1.79:1
  • 27. Form 1: - particulars of the existing/proposed limit from the banking system. Form 2: -Operating statement. Form 3: - Analysis of balance sheet. Form 4: - Comparative statement of current asset and liabilities. Form 5: - Computation of maximum permissible bank finance for working capital. Form 6: - Fund flow statement Form 1: - particulars of the existing/proposed limit from the banking system. Form 2: -Operating statement. Form 3: - Analysis of balance sheet. Form 4: - Comparative statement of current asset and liabilities. Form 5: - Computation of maximum permissible bank finance for working capital. Form 6: - Fund flow statement
  • 28. Banks need some security from the borrowers against the credit facilities extended to them to avoid any kind of losses. Securities can be created in various ways. Banks provide credit on the basis of the following modes of security from the borrowers. Hypothecation Mortgage Pledge Lien Banks need some security from the borrowers against the credit facilities extended to them to avoid any kind of losses. Securities can be created in various ways. Banks provide credit on the basis of the following modes of security from the borrowers. Hypothecation Mortgage Pledge Lien
  • 29. Pre sanction processPre sanction process
  • 30. Post sanction processPost sanction process