The document is a project report submitted to the University of Mysore in partial fulfillment of an MBA degree. It examines the assistance provided by Punjab National Bank regarding working capital management. The report includes a certificate, declaration, acknowledgements, contents, and introduction sections. It was conducted under the guidance of Mr. Yadhunand.H at the Haranahalli Ramaswamy Institute of Higher Education in Hassan, Karnataka, India in 2009-2010.

1. REPORT ON WORKING CAPITAL MANAGEMENT
ASSISTANCE PROVIDED BY PUNJAB NATIONAL BANK
A Project report Submitted to the University of Mysore, Mysore.
in partial fulfillment of the requirement for the award of the
Degree in Master of Business Administration.
by
Savitha Bai P
Reg.No.08MB3741
Guide
Mr. Yadhunandan H
HARANAHALLI RAMASWAMY
INSTITUTE OF HIGHER EDUCATION, HASSAN, 573 201
2009-10
HARANAHALLI RAMASWAMY

2. INSTITUTE OF HIGHER EDUCATION
HASSAN
CERTIFICATE
Certified that, the project entitled “REPORT ON WORKING
CAPITAL MANAGEMENT ASSISTANCE PROVIDE BY PNB”
conducted at Punjab National Bank, Hassan, is a bonafide work carried
out by Miss. SAVITHA BAI P in partial fulfillment for the award of
degree in Master of Business Administration of the University of
Mysore, Mysore during the year 2009-10.
(Mr. Yadhunand.H) (S.R. Jayaram)
Guide Principal

3. DECLARATION
I hereby declare that, this project report entitled “REPORT ON
WORKING CAPITAL MANAGEMENT ASSISTANCE PROVIDE
BY PNB” conducted at Punjab National Bank, Hassan prepared by
me under the guidance of Mr. Yadhunand.H Lecturer, Department of
Business Administration, Haranahalli Ramaswamy Institute of Higher
Education, Hassan.in partial fulfillment of the requirement for the award
Master of Business Administration.
I further declare that this project report is prepared from the information
collected from the PUNJAB NATIONAL BANK and that the same is
purely for academic purpose and that the report has not been submitted to
any other institution of higher learning for the award of any degree,
diploma or other similar title.
Date: -5-2010 SAVITHA BAI .P
Place: Hassan Reg. No. 08MB3741

4. ACKNOWLEDGEMENT
I, express my deep sense of gratitude and sincere thanks to, Mr.
Pattabiraman Manager of. Punjab National Bank, who gave me an
opportunity to conduct this Research Project. I state with great pleasure
this report would not have been possible without the wonderful help from
various quarters, the list of which is quite too long.
I will take this opportunity to express my deep sense of gratitude to
Mr. Yadhunand.H Lecturer, HRIHE, Hassan for his guidance,
continuous encouragement and valuable suggestions at every stage of the
Project.
I would also like to extend my deep sense of gratitude to my parents
and all my family members, friends, who have directly or indirectly
supported and helped me in the completion of my project successfully
Last, but not the least I would like to extend my thanks to all the
unseen hands that have made this project possible.
Date: -5-2010 SAVITHA BAI P
Place: Hassan Reg. No. 08MB3741

5. SL. NO CONTENT PAGE
NO
Introduction 1-5
CHAPTER-1 Literature Review 6-
CHAPTER-2 Company P rofile
CHAPTER-3 Data Interpretation & Analysis
CHAPTER-4 Summary of finding suggestion
CHAPTER - 5 conclusion
Bibliography

6. INTRODUCTION
a. EXECUTIVE SUMMARY
The prime objective of any business is to maximize the value of the company and to
maximize the wealth of its shareholders. Working capital management has its own
role to play in attaining this goal. Working capital is the funds required for day to day
working in a business concern. The working capital management involves deciding
upon the amount and composition of current assets and how to finance those assets.
There should be a proper trade off between risk and profitability in each decision
relating to it.
This project work has been undertaken to know the procedures involved in the
working capital management in PUNJAB NATIONAL BANK. An attempt is made to

7. study the factors contributing towards working capital and the sources on which the
company is depending for funds. The research study was also conducted to derive
working capital ratios, to know the performance and efficiency of working capital
management and to know the kind of policy adopted in this part of the management.
For analyzing the factors and conditions influencing working capital tables and graphs
were drawn based on the study.
Based on this study the major findings are that from the overall finance point
view, company is not performing well. Some of the symptoms may be great deal of
time is taken in managing current assets and liabilities, arranging short-term
financing, negotiating favorable credit terms, controlling movement of cash,
receivables, inventory etc. It is also been found that important financial ratios like all
the liquidity position, current ratio, working capital ratio comparatively below the
industry standards and are causing concern.
This research study indicates that in order to improve the over all performance
of PNB the management must take all possible steps, review and modify various
policies, cash budgets and inventory status by using sound information management
system to enable management to have a close control over the various operations.
b. STATEMENT OF THE PROBLEM:
A strong banking sector is important for flourishing economy. The failures of
the banking sector may have an adverse impact on other sectors. The skill for working
capital is some what unique and novel, through the goals are to make an efficient use
of funds for minimizing the risk of loss to attain project objective. It involves deciding
upon the amount and composition of current assets and how to finance these assets.
Working capital management is not a simple one. It enables an enterprise to start and
conduct its operations. Working capital requirements is estimate under optimistic
assumptions, but what the expectations come true, the firm may be confronted with a
difficult situation.
The optimum working capital investment to be determined by decision on the level of
capacity utilization. We have human and natural resources in abundance but our

8. capital resources are limited and arresting the pace of development, storage of funds
for working capital has caused many business to fail and in many cases has restarted
their growth. Working capital which is concerned with short term financial decision,
have been relatively neglected in the literature of finance. From the banker’s point of
view, it is working capital gap (total current assets minus total current liabilities
excluding bank borrowing). This is actually needed by a borrower for working capital.
It is the successful play with finance traders that generally decides the fortune of any
business enterprise.
c. OBJECTIVE OF THE STUDY:
 To understand and analysis how far the theoretical issues of financial
management have been practically used in the bank where the present
study is made.
 To ascertain the financial appraisal of working capital by using
selected ratios.
 To study the assessment of working capital involving computation of
maximum permissible bank finance and sanctioning of credit limits.
 To study the need for analyzing working capital management.
 To suggest modification of existing system of working capital
appraisal.
SOURCE OF DATA:
PRIMARY DATA
The study is based on collection of primary as well as secondary data. There are
several method of primary data collection
1. Interview Method
2. Public Method
SECONDARY DATA
Secondary data are those, which have already been collected by some one else
which have been passed through statistical process, previous Bank Records,

9. Records and files etc.
d. SCOPE OF STUDY:
The present study is conducted keeping in view the working capital financing to
ten selected companies in Hassan by Punjab National Bank.
SAMPLING UNIT:
Manager and employees of the PNB, Hassan.
e. RESEARCH METHODOLOGY:
Research design is a conceptual structure. In which research is conducted. It
constitutes the blue print for the collection, measurement, analysis of data.
The quality of the project work depends on the methodology adopted for the study.
Research methodology is a way to systematically solving the research
problems allotting procedures, steps of plans. It explains the various steps that are
generally adopted by the researcher in studying the research problem along with logic
behind them. In simple words, research methodology means the way in which we
would complete our prospected task.
f. LIMITATION OF THE STUDY:
Because of heavy work, the external guide cannot spend more time for interaction.
As time uses limiting factors a detailed study is not possible.
The study is limited to the selected number of firm located in Hassan only.
Since the bank is so wide so it was not possible for me to cover all the branches of
PNB.

11. CHAPTER - 1
LITERARY OF REVIEW
1.1 WORKING CAPITAL MANAGEMENT:
Capital required for a business can be classified under two main categories:
Fixed capital
Working capital
Fixed capital: funds are required to every business for two purposes for its
establishment and carry on its day to day operation. At time of long term funds are
required to create production facilities through purchase of fixed assets such as plant
and machinery, land, building, furniture, etc., funds invested are for permanent or
fixed basis which are called “ Fixed capital”

12. Working capital: To carry out daily operation short term funds are required to take
care purchase of raw materials, payment of wages, transportation expenses, etc, these
funds are known as “Working capital”.
INTRODUCTION OF WORKING CAPITAL:
Working capital may also be regarded as lifeblood of business. In other words of
“SHUBIN” working capital is the amount of funds necessary to cover the cost of
operating the enterprise”.
Working capital represents both current assets and liabilities. It is know as
“Circulating capital”. The term circulate indicates the change or flow of current assets
and liabilities, which are fluctuate not constant.
Fig : 1.1 shows the working capital in circulating

13. 1.2 NEED OF WORKING CAPITAL:
A study of working capital is of major importance to internal and external analysis
because of its close relationship with the day- to- day operation of business. It has to
obtain raw material, pay wages, transportation expenses, warehousing expensing,
grant credits to its customers. The sale of goods will not immediately be converted
into cash. It may have to pass through various stage to complete its operating cycles:
In case of manufacturing firm:
Conversion of cash into raw material
Conversion of raw material into working progress
Conversion of work in progress into finished goods
Conversion of finished goods into debtors and bills receivable through sales
Conversion of debtors and bills receivable into cash
Fig 1.2 Show the operating cycle of manufacturing firm
In case of trading firms:

14. Conversion of cash into inventories
Conversion of inventories into account receivable
Conversion of account receivable into cash
Fig: 1.3 Shows the operating cycles of trading firm
1.3 TYPES OF WORKING CAPITAL:
1. PERMANENT WORKING CAPITAL:
It means the minimum amount of investment in all current assets which is regarded at
all time to carry on minimum level of business activities . The magnitude of current
assets increases and decreases over a period of time due to increase in the level of
activity.
There is always a minimum level of current assets required at all time by the firm to
carry on its business operation. Tandon committee named it as “Core current assets”.
It has the following features:
 It classified on the basis of time factors
 It constantly changes from one assets to another
 Its size increase with the growth of business operation
 It changes from firm to firm

15. 2. TEMPORARY WORKING CAPITAL:
It is also known as “fluctuating or variable working capital”. here the working capital
keeps on changing depending upon the changes in production and sales. The extra
working capital required to support the changes in production and sales is known as
temporary working capital.
3. GROSS WORKING CAPITAL:
It is also known as “guess working capital”. the amount of funds invested in the
various components of current assets.
4. NET WORKING CAPITAL:
The amount difference between current assets and current liabilities is called net
working capital. The concept of net working capital enables a firm to determine the
exact amount available for operational requirements.
5. NEGATIVE WORKING CAPITAL:
When current liabilities exceeds current assets, negative working capital emerges.
This happens when a firm is nearing crisis which might arise due to inefficiency of
operative force.
6. CASH WORKING CAPITAL:
It is one, which is calculated from the item appearing in the profit & loss a/c. it shows
the real flow of money or value at a particular time is considered to the most reliable
approach in working capital. The cash working capital indicates the adequacy of cash
flow, which is an essential pre-requisite of business.
1.4 OBJECTIVE OF WORKING CAPITAL:
The basic objective of working capital management is to manage the firm’s current
assets and liabilities in such a way that the satisfactory level of working capital of
business is maintained.

16. 1.5 DETERMINANTS OF WORKING CAPITAL:
A large number of factors influence working capital needs of a firm.
1. Nature of industry:-
The composition of current assets is a function of the size of a business and the
industry to which it belongs. Small companies have smaller proportions of cash,
receivables and inventory than large corporation. A public utility concerns mostly
employ fixed assets in its operations, while a merchandising department depends
generally on inventory and receivables.
2. Size of Business:-
Size means not in length and width but, size means which is measured in term of
a scale of operation. A firm with larger scale of operation will need more working
capital than a small firm.
3. Manufacture cycle:-
It means the manufacturing process. Depending upon the duration of
manufacturing process the working capital is determined. Longer the manufacturing
process, the higher will be the requirement of working capital and vice -versa.
4. Production policy:-
The production policies pursued by the management have a significant effect on
the requirement of working capital in the business, in case of labour intensive
industries the working capital requirement will more but in case of highly automatic
plant, the requirement of long term funds will be more and working capital will be
less.
5. Volume of sales:-
This is an important factors affecting the size and components of working
capital. The volume of sales and the size of working capital are directly related to

17. each other. As the volume of sales increase, there is an increase in the investment of
working capital or vice - versa.
6. Term of purchase & sales:-
A concern that purchases its requirement on credit and sells its products/services
on cash requires lesser amount of working capital.
7. Business Cycle:-
Business expands during the period of prosperity and declines during the period
of depression. Consequently more working capital is required during the period of
depression.
8. Rate of Stock Turnover:-
A firm having high rate of stock turnover will need lower amount of working
capital as compared to a firm having a low rate turnover.
9. Seasonal Variation:-
Generally during the busy season a firm required larger working capital, than in
the slack season.
10. Earning capacity & dividend policy:-
Firms having more earning capacity than others due to quality of their products,
monopoly condition etc., and also firms which maintain a steady high rate of cash
dividend in respective of its generation of profits need more working capital.
11. Price level changes:-
The rising prices will acquire the firms to maintain larger amount of working capital
as more funds will be required to maintain the same current assets. The effect of rising
prices may be different firms. Some firms may be affected much while some others
may not be affected at all by the rise in prices.
12. Operating efficiency:-

18. The operating efficiency of the firm relates to the optimum utilization of
resources at minimum cost. The firms will efficiently contributing to its working
capital is proved & pace of the cash cycle is accelerated with operating efficiency.
Although it may not be possible for a firm to control the prices of material or the
labour. It can certainly ensure efficient and effective use of its material, labour and
other resources.
13. Taxes:-
Prevalent rate of taxes of the country play a vital role if the rate of tax is low, then
need of working capital is also low otherwise it will be more because a major chunk
of the cash goes to the government in the form of tax.
14. Other Factors:-
Certain other factors such as management ability, irregularities of supply,
import facility, asset structure, importance of labour, banking facilities etc,. also
influence the requirements of working capital.
1.6 SOURCES OF WORKING CAPITAL

19. 1.7 DANGERS OF INADEQUATE WORKING CAPITAL:
• It stagnates growth. It becomes difficult for the firm to undertaking
profitable projects due to non-availability of the working capital funds.
• It becomes difficult to implement operating plans and achieve the firm’s
profit target.
• Operating inefficiencies creep in when it becomes difficult even to meet
day to day commitments funds, thus the rate of return on investment
slumps.
• Paucity of working capital funds renders the firm unable to avail of
attractive credit opportunities etc.,
• The firm losses its reputation when it is not in position to honour it’s short
term obligations. As a result, the firm face tight credit terms.
• Because of inadequacy of working capital, the firm might lose its orders
and ultimately leads to insolvency.
3.8 DANGERS OF EXCESS WORKING CAPITAL:
• It result in unnecessary accumulation of inventories. Thus, the chances of
inventory mishandling, waste, and theft and losses increases.
• It is an indication of defective credit policy and slack collection period.
Consequently, higher incident of bad debts adversely affects profits.
• Excessive working capital makes the management complacent, which
degenerates into, managerial inefficiency.
• Tendencies of accumulating inventory to make speculative profit grow. This
may tend to make dividend policy liberal and difficult to cope with the future
when the firm is unable to make speculative profits.
• This leads to deceptive values of real assets of the company.

20. PNB FOR TRADERS
CONSOLIDATD SCHEME FOR FINANCING TO TRADERS FOR
FINANCING
STOCK/RECEIVABLES /OTHER BLOCK ASSETS
(RBD 21 dt O8.O4.09, 33/05,51/05,33 dt 18.06.09, SME 18 DT 12.10.09,
SME 9 DT 03.07.09, SME 17 DT 25.09.09)
OBJECTIVE:-
To meet the working capital and term loan requirements of retail and
wholesale traders, distributors/agencies, who deal in goods/commodities (indigenous
or imported) and term loan for furnishing of the shop/showroom . Fair price shops
and consumer cooperative stores, etc. shall also be covered under the scheme.
SANCTION (SME 18 DT 12.10.09) :-
Now, it has been decided that hence forth all application of trading advances

21. (including retail trade) as well as advances to doctors/gramin chiktsak will be
processed/ sanctioned as in the case of other SME advances. (described in general
guidelines on SME advances).
CLASSIFICATION (SME 9 DT 03.07.09):
Now the ministry of micro, small & medium enterprises has issued the
clarification no 5(6)/2/2009-MSME. POL dated 12th June 2009 inter-alia clarifying
that “Retail Trade” is a service enterprises under the definition of MSMED Act 2006.
Therefore all retail trade advances as falling within the service enterprises definition,
i.e., micro enterprises having investment in equipment up to Rs. 10Lakh, small
enterprises having investment in equipment above Rs. 10 Lakh & up to Rs. 2 Crore
and medium enterprises having investment in equipment above Rs.2 Crore & up to
Rs.5 Crore are to be classified accordingly. This is one of the significant and major
clarification. We are sure that branches will immediately take steps to correctly
classify all retail trade advances under the respective categories, i.e., micro, small &
medium and also make efforts to take advantage and further improve the lending.
Besides retail trade, certain other activities are specifically clarified by the ministry to
be included under the definition of service enterprises as per the act.
CLARIFICATION: (SME/17 DT 25.09.09):-
Collateral Security :- Vide our circular No.9/09 of 3rd july 2009 followed by
letter dated 10th August 2009 addressed to circle heads, it was clarified that retail trade
(as well as loans to education institutions/training institutes) though are part of MSME
yet credit guarantee under CGTMSE scheme is not available. Therefore, it was
advised that the collateral security norms to retail trade financing shall continue to be
as per circulars mentioned under para I above.
Classification:
Advances to retail traders will be classified under different segments of
MSME as per following criteria:
Units having investment in equipment:
I) Upto Rs 10 Lakh-- micro enterprises;
ii) Above Rs 10 Lakh & upto Rs 2 Crore -- small enterprises;
iii) Above Rs 2 Crores & up to Rs 5 Crore -- medium enterprises

22. * investment in equipment (original cost of land & building, furniture &
fittings and other items not directly related to the service rendered or as may be
notified under the MSME Act, 2006. Since report of SME advances viz., PNBREP
1/23 is being amended, it may not pick up retail trade advances. As such, we shall
continue to obtain outstanding of retail trade separately though PNBREP 1/16c for
monitoring outstanding vis-à-vis budgets under retail trade. Report 1/23 shall continue
to be generated separately for monitoring MSME advances other than retail trade.
(i) As advised above, advances under the scheme are not covered under
credit guarantee scheme of CGTMSE till further instructions as the matter is still
under consideration of guarantee trust.
(ii) circles to ensure achievement of budgets allocated by RBD HO for
advances to traders for the year 2009-10 which are over and above the budgets
allocated by the SME Division for achievement under SME sector.
While discontinuing the super trade scheme, the branches were advised to
follow the following procedure in respect of existing loans sanctioned under super
trade scheme, as conveyed vide RBD Advances circular No.21 AND 33 dated
8.04.2009 and 18.06.2009 respectively:
(i) The existing term loan account under the super trade scheme may be
allowed to continue under the scheme till adjustment
(ii) The existing working capital advances to retail trade categories of traders
be brought under the purview of modified and consolidated scheme for financing to
traders within a period of six months;
(iii) Similarly, existing working capital accounts under super trade scheme
relating to service sector, professional and self employed category may be converted
to normal scheme for financing working capital to such sectors within six months
from 08.04.2009. We hope that this process has since been completed by the branches
otherwise these loans would be treated under the category of commercial real estate
and will attract higher slab of rate of interest as applicable to commercial real estate
category.
ELIGIBILITY:-
(i) Traders, who are individuals, firms, HUFs, cooperative societies
registered under any law relating to cooperative societies and companies etc.
promoters/co-obligants must have existing satisfactory relationship of minimum/ at
least six months with the bank.

23. (ii) Traders should comply with applicable statutory requirements, such as
state/ central sales tax registration certificate, licence under shops & commercial
establishment act, registration with excise department, etc.
(iii) Advances against goods or any other item prohibited by RBI/GSWOT
analysis is a tool for auditing an organization and its environment. It is the first stage of
planning. And helps marketers to focus and key issue. Swot analysis it is an effective the
organization potential by identifying strength, weakness and to examine the opportunities and
threats which may affect the organization, carrying out an analysis using SWOT tool will be
enough to reveal the changes which can be implemented easily and gain result G ovt. from
time to time will not be covered under this scheme.
(iv)Advances is to be considered for genuine trade transactions and not
utilized for hoarding/ speculative purposes.
Circle heads may consider advances under the scheme within their powers
and give administrative clearance to the proposals vested within the power of the
lower authorities permitting deviations with regard to existing satisfactory
relationship of at least six months of the promoter/ co-obligants with the bank on
merits of the case. While considering /permitting deviations, they shall have to
personally satisfy themselves about the KYC issues, credit worthiness and past
conduct of the party with the existing bank, if any.(RBDA33 dt 18.06.2009)
PURPOSE:-
i) Financing of stock in trade, book debts( not older than four months) and
other assets to be used in the trade.
ii) Acquiring of assets for furnishing of shop & show room like partition,
fixture and furnishing etc, purchase of air-conditioners, other gadgets and delivery
van required for running the business.
NATURE & EXTENT OF LOAN: Working capital/term loan (fund based
& non-fund based)-need based
METHOD OF ASSESSMENT:
i) For fund based working capital limits up to rs.200lac-as per NAYAK
committee recommendations

24. ii) For fund based working capital limits above rs.200lac-on the basis of
CMA data applicable for traders (maximum permissible bank finance system);
iii) Term loan for acquiring of assets for furnishing of shop & show room
like partition, fixture and furnishing etc, purchase of air- conditioners, other gadgets
and delivery van required for running the business should be restricted to a maximum
of Rs. 100 lac for metro and urban centre and Rs.25lac for SU and rural centre.
However, advance be restricted up to 20% of the entitlement (as mentioned above ),
in case the shop/show room is rented/leased.
MARGIN: -
1) Term Loan --30% ;
2) Working capital limits:-
a) Against stock : 30% - 40%, keeping in view nature of stock, price
fluctuation, shelf life etc. higher margins may be fixed in cases where commodities
financed are perishable or life span is short. Such higher margins may be decided by
sanctioning authority on case-to-case basis.
b) * Against Receivables: 40%. * To avoid double financing, DP against paid
up stock and receivables be calculated after netting of receivables and creditors as
advised in the guidelines.
SECURITY:
For working Capital Limit/ Term loan :-
i) Primary security:- Legally enforceable charge by way of Hypothecation /
Pledge/ Assignment, etc. on Stock/Book/Debts/Fixed assets/Block assets of the
borrower;
ii) collateral security:- Legally enforceable equitable/registered mortgage of
IP/ pledge or creation of charge on liquid security having realizable/surrender value
equal to the amount of loan/credit facilities;
However, in case of loans/limits up to rs.5lac, advance should be collaterally
secured by way of suitable third party guarantee and mortgage of IP may not be
insisted upon.

25. In case the mortgage of IP is offered by third party, the mortgagor must be made
guarantor in the account.
The revised security norms, as stipulated above will be applicable, in case of
fresh sanctions/enhancements. However, keeping in view the satisfactory conduct of
the account, sanctioning authority may renew/review the limits with the existing
collateral securities provided by way of mortgage of IP/liquid security/guarantee etc.
Circle heads may permit relaxation in amount of collateral security by way of
mortgage of IP liquid security to the extent of 50% of the loan/limit of the proposals
vested within their powers within the powers of the lower authorities on merits of the
case, where loan/limit is Rs.50 Lac & above, risk rating of the party is BB & above
subject to slippage to NPA of the circle during the year 2008-2009 under trading
advances not exceeding 1% of the O/S in this category as at the end of previous year
(RBDA/33 dt18/06/09)
CALCULATION OF DRAWING POWER IN CASE OF WORKING
CAPITAL LIMITS:
a) Sanctioning Authority may stipulate the periodicity of obtaining inventory/
stock statement on monthly/quarterly basis, depending on nature and merit of
individual case. the quarters for this purpose will be May, August, November and
February. Incumbents to ensure checking of inventory/stock statement, as per extant
guidelines.
Drawing power in the account will be worked out on the basis of
inventory/stock statement, inclusive of debtors, (not more than 4 months old) of the
preceding month/quarter.
b) In case of borrower who are whole-sellers/distributors, circle head may
permit DP against advance payment made by them to PSUs/Blue Chip companies (the
companies which are financially sound and have good track record of earning ) pin
private sector for procurement of goods. However, such drawings be restricted up to
50% of CC limits sanctioned or up to powers for sanction of unsecured advance,
whichever is lower.
Regarding netting of sundry debtors against sundry creditors for calculating
Drawing power, following instructions may be followed:
i) Borrowers to provide, as on the date of inventory, complete statement of
stocks, sundry creditors for purchase of stocks and sundry debtors (receivables)

26. ii) The actual amount of sundry creditors may be netted against sundry
debtors and the excess amount of sundry creditors, if any, may be deducted from the
value of stocks to arrive at the value of security and the Drawing Power may be
calculated after providing for the stipulated margin. Sundry debtors (receivables older
than four months should not be considered for netting against sundry creditors.
iii) Further, all the sundry debtors including those considered for netting
against sundry creditors shall be got hypothecated to the bank.
iv) The amount of sundry debtors, if any, after netting, may be considered for
financing under post sales limit, such as DD,BD,ABC,CC, book debts, etc., as per
terms of sanction.
v) While netting the sundry debtors and sundry creditors, it should be
ensured that there is no double financing from the financial system I.e. traders should
not avail loan against unpaid stocks.
The above facility in regard to netting of sundry debtors against sundry
creditors to be provided only to those traders who are maintaining regular books of
account which are subject to audit.
REPAYMENT:-
(i) working capital limit up to rs.5 Lac granted by way of term loan
(WCTL) will be repayable in equal monthly/quarterly installments within a period of
3 to 5 years. Commencement of repayment be linked with generation of revenue by
the business with in a maximum period of 3 months of 1st disbursement.
(ii) The term loan for acquiring fixed assets will be repayable in equal
monthly/quarterly installments within a period of 5 to 7 years including moratorium
period of 3-6 months.
(iii) working capital limits shall be sanctioned for a period of one year and
shall be renewed / reviewed annually.
RATE OF INTEREST:
Existing concession in rate of interest, which was linked to availability of
collateral security by way of mortgage of IP / liquid security in respect of advances up
to Rs.2 Crore stands withdrawn. Rate of interest in such interest rate is linked to credit
risk rating of the borrower.

27. i. up to Rs.2 lac BPLR (11.50%)
ii. Above Rs.2 lac & up to Rs. 50 lac BPLR + 1.00%
(12.50%)
iii. Above Rs.50 lac BPLR + 1.00%
(as per credit risk rating given below)
AAA BPLR + 1.00%
AA BPLR + 1.50%
A BPLR + 2.00%
BB BPLR + 2.50%
C BPLR + 3.00%
D BPLR + 3.00%
B BPLR + 3.00%
C BPLR + 3.00%
D BPLR + 3.00%
Further, term premia of 0.50% is to be charged for loans repayable in 3 years
& above.
Sanctioning authority may allow 0,50% rebate in rate of interest to the
borrowers securing above 75 score under PNB score model, for advances above Rs.2
lac & up to Rs.50 lac
Circle head are empowered to relax rate of interest by 100 basis points in
cases, where applicable rate of interest has increased by 200 basis points or above due
to charge in structure of levying rate of interest I.e. from availability of collateral
security (earlier scheme) to credit risk rating of the party (modified scheme) up to
limit of Rs. 200 lac on merit of the case subject to minimum of BPLR (RBDA/33 dt
18.06.09).
Note :- 1) Rate of interest on existing advances under erstwhile super trade scheme
for a period of three months will continue to be charged as advised vide RMD:
L&A Cir. No. 17 dated 31.01.09 and subsequent circulars issued on the subject.
Meanwhile, it is advised to get the credit risk rating of the party done based on their
latest balance sheet for arriving at the applicable rate of interest after 6 months
(RBDA/33 dt 18.06.09).

28. 2. Existing concession in rate of interest, which was linked to
availability of collateral security by way of mortgage of IP/28id security in respect of
advances up to Rs. 2 crores under erstwhile trading scheme (primarily stock based).
Stands withdrawn. Hence, rate of interest in such cases will also be linked to credit
risk rating of the borrower. Suitable changes in the respective interest codes be made
immediately.
LOANING POWERS:- Advances under the scheme will be considered
at the Hub/CCPC (expect where relaxation has been accorded by RBD, HO in term of
the loaning powers for working capital and term loan as delegated vide L&A Circular.
No. 57 dated 28.04.08 and subsequent circulars issued on the subject.
INSURANCE:- Stocks/Assets charged be got comprehensively insured
with agreed bank clause at borrower’s cost and the policy to remain with the Bank.
Circle head may relax/ waive the condition on merit of the case.
CONFIDENTAL REPORTS:- Confidential reports on borrowers/
guarantors shall be prepared on bank’s prescribed forms before sanction/ renewal of
limits.
DOCUMENTATION:
i) Loan documents as prescribed by the bank be obtained, depending upon
nature of facility sanctioned and advised by the bank with regard to financing of
stocks and debtors from time to time.
ii) In case of financing by way of working capital term loan branches to
obtain the working capital term loan agreement, in addition to the other relevant
documents.
iii) Guarantee deed- PNB 58H
Iv) Necessary document for creation of equitable mortgage and tripartite
agreement wherever required shall be obtained.
v) Any other document as required under law/sanction
MONITORING & FOLLOW UP :
i) The existing system of preparation of Quarterly Review sheets and PMS

29. (wherever applicable) by the branches be followed.
ii) Forms under quarterly monitoring system (QMS) as applicable for traders
and merchant exporters, would be obtained and submitted to sanctioning authority in
case of fund based/ NFB facilities in terms of the extant guidelines of the bank.
iii) the stocks should be checked as per periodicity stipulated in sanction and
in accordance with guidelines issued by HO from time to time regarding verification
of stocks.
GENERAL GUIDELINES
1. Branches while opening accounts under the scheme will capture the
following code in Finance, working capital- CCOTH & term loan - TLERT, sub -
sector code- 70010, purpose of advance- RETTD
2. Borrowers to deal with the bank exclusively.
3. Sanctioning authority to ensure that realistic sales projections are taken for
assessment of the limit.
4. Advances will be classified under retail segment for the purpose of
segment reporting under accounting standard- 17, up to the exposure as defined in
L&A Cir. No. 100 dated 21.08.07
5. Working capital limits up to Rs. 5 lac can be granted by way of working
capital term loan (WTCL) depending upon repaying capacity of the borrower.
6. Existing advances under super trade scheme will be brought under this
scheme of advances to trades within a period of three months from the issuance of the
above guidelines and drawings in the account be allowed on the basis of monthly /
quarterly inventory report (stocks & receivables) after maintaining the required
margin.
In case, borrower does not comply with the guidelines of the scheme, his
account will be categorized under commercial real estate advance and rate of interest
will be levied accordingly as circulated by RMD, HO: from time to time. A
communication to this effect be sent to the party and record thereof be maintained in
the document file.
7. It is advised that risk rating of all advance under erstwhile super trade
scheme should be got done based on their latest balance sheet for arriving at the
application rate of interest after 3 months.

30. 8. Penal interest for non-compliance of term & conditions be charged as per
extant guidelines of the bank.
9. Where interest is linked with value of collateral security by way of
mortgage of IP/ liquid security, applicable interest rate code linked with credit risk
rating of the borrower be captured immediately in the CBS system.
10. Extant guidelines of PNB score model issued by RMD,HO: on the
subject are to be strictly complied with.
11. Guidelines for advance against commodities covered under selective
credit control of reserve bank of India advised from time to time should strictly be
adhered to.
12. Other instructions issued by the bank on the subject be adhered to
including the following:
i) Guidelines of pre sanction and post sanction follow up circulated vide
L&A cir. No. 58 dated 01.06.06 and subsequent circulars issued on the subject are to
be complied with.
ii) Guidelines for financing debtors issues vide L&A circular 55 dated
10.05.07 and subsequent circular issued on the subject are to be complied with.
iii) Guidelines for financing to HUFs including L&A Cir. 11 dated 05.02.07
and subsequent circular issued on the subject are strictly complied with.
Iv) Guidelines for advance against stocks issued by L&A circulars 84 dated
12.06.04 and subsequent circular on the subject are strictly complied with.
Status of Existing Accounts under PNB Super Trade Scheme:-
1. Fresh advances under Super Trade Scheme of the bank were kept in
abeyance vide RBD: ADV: Cir No. 18/08 dated 10.04.08. it has now been decided to
discount the scheme. Existing advances under super trade scheme shall no be brought
under the purview of the modified scheme within a period of three months, falling
which such advances will be categorized under commercial real estate. A
communication to this effect be sent to the concerned borrowers and record thereof be
maintained in document file.
2. Existing working capital accounts under super trade scheme relating to
services sector, professionals & self-employment category may be converted to
normal scheme for financing working capital finance to such sectors within six

31. months w.e.f. 08.04.09.
3. Exiting term loan accounts under super trade scheme may be allowed to
continue under the same scheme till adjustment of these accounts.
Further, it has been decided to extend the period for conversion of account of
erstwhile super trade scheme to the consolidated scheme for financing to traders from
the existing three months to six months.
(Term loan for purchase/ construction of shop/ show-room or purchase of
plot & construction as circulated vide L&A circular No. 33/05 dated 04.04.2005 and
L&A Circular No. 51/05 dated 30.04.2005 is kept in abeyance for the time being. No
fresh advance under the scheme be considered till further instructions)
TERM LOAN FOR PURCHASE OF SHOP/ SHOWROOM
(LA 33 dt 4/4/05)
Term loan may be allowed to traders for purchase of shop/showroom subject to
following terms and conditions:
Amount: Rs.100 lacs. Loan for furnishing of show room be also allowed upto 20% of
cost of shop/showroom.
Margin: Minimum 25% circle head may reduce it upto 15% on selective basis.
Security:
(i) Equitable/registered mortgage of shop/showroom. In case where mortgage can not
be created immediately tripartite agreement (be got drafted from local council/law
officer of RO/ZO) among bank, borrower and vendor be obtained. OR collateral

32. security of another property valuing at least 100% of loan amount.
(ii) Suitable guarantee. Circle head may waive obtaining of guarantee on merits.
Rate of interest: as per interest rate chart on retail lending schemes annexed.
In case the borrower does not start trading business within 6 months of purchase of
shop/possession, whichever is earlier, penal interest at 2% above the applicable rate of
interest from the date of disbursement of loan is to be charged.
Repayment: 3-10 years including moratorium of 6-12 months. However,
interest may be recovered of monthly basis during the moratorium period.
Misc Guidelines:
(i) in case loan is given only for purchase of shop/showroom sanctioning
authority may waive stipulation of exclusive dealing with the bank if advance cheques
towards repayment of loan instalment are obtained.
(ii) proposal appraisal including comfortable DSCR etc shall be ensured.
Documentation: term loan agreement - Annexed with the circular, guarantee deed -58
H, necessary documents for creation of mortgages & tripartite agreement wherever
required be obtained.
All other guidelines for financing of traders shall remain unchanged.
TERM LOAN FOR PURCHASE OF LAND/PLOT AND
CONSTRUCTION THEREON (LA 51 dt 30/4/05):
Term loan for purchase of land/plot and construction thereon may be allowed under
the above scheme subject to following additional terms and conditions:
Margin: 40%, circle head may reduce it up to 25% on selective basis.
Penal interest: in case the borrower does not start construction within six months from
the purchase of plot and does start business within 12 months from the purchase of
plot, penal interest at 2% above the applicable rate of interest from the date of
disbursement of loan is to be charged.
Other term & condition of the scheme I.e. extent of loan, rate of interest,
security, loaning powers, etc. shall remain unchanged.
ADMINISTRATIVE CLEARANCE FOR FINANCE TO
JEWELERS:- (RBDA/50 dt 18.10.08);- In view of increasing incidence of

33. impairment in the accounts of jewellers dealing in trading of gold, gem and jewellery,
it has been decided that administrative clearance from the respective circle head will
be obtained before sanction of fresh advance to such jewellers by the concerned
sanctioning authority within his/her discretionary powers, under the captioned
scheme. Proposals for such advance within the powers of circle head will, however,
be dealt with at his/her level independently, without clearance from any authority.
Further, it has been decided that the sanctioning authority/ hub In charge must verify
the mortgage document carefully before sanction of advance
CHAPTER -2
COMPANY PROFILE

34. INTRODUCTION
The banking section will navigate through all the aspects of the Banking System in
India. It will discuss upon the matters with the birth of the banking concept in the country to
new players adding their names in the industry in coming few years. The banker of all banks,
Reserve Bank of india (RBI), Indian Banks Association (IBA) and top 20 banks like IDBI,
HSBC, ICICI, ABN AMRO, etc.
2.1 Industry scenario
Punjab National Bank(PNB) was registered on May 19, 1894 under the Indian
Companies Act with its office in Anarkali Bazaar Lahore. The Bank is the second
largest government-owned commercial bank in India with about 4,500 branches
across 764 cities. It serves over 37 million customers. The bank has been ranked

35. 248th biggest bank in the world by Bankers Almanac, London. The bank's total assets
for financial year 2007 were about US$60 billion PNB has a banking subsidiary in the
UK, as well as branches in Hong Kong and Kabul, and representative offices in
Almaty, Dubai, Oslo, and Shanghai.
o 1895: PNB commenced its operations in Lahore. PNB has the
distinction of being the first Indian bank to have been started solely
with Indian capital that has survived to the present. (The first entirely
Indian bank, the Oudh Commercial Bank, was established in 1881 in
Faizabad, but failed in 1958.) PNB's founders included several leaders
of the Swadeshi movement such as Dyal Singh Majithia and Lala
HarKishen Lal, Lala Lalchand, Shri Kali Prosanna Roy, Shri E.C.
Jessawala, Shri Prabhu Dayal, Bakshi Jaishi Ram, and Lala Dholan
Dass. Lala Lajpat Rai was actively associated with the management of
the Bank in its early years.
o 1904: PNB established branches in Karachi and Peshawar.
o 1940: PNB absorbed Bhagwan Dass Bank, a scheduled bank located in
Delhi circle.
o 1947: Partition of India and Pakistan at Independence. PNB lost its
premises in Lahore, but continued to operate in Pakistan.
o 1951: PNB acquired the 39 branches of Bharat Bank (est. 1942);
Bharat Bank became Bharat Nidhi Ltd.
o 1961: PNB acquired Universal Bank of India.
o 1963: The Government of Burma nationalized PNB's branch in
Rangoon (Yangon).
o September 1965: After the Indo-Pak war the government of Pakistan
seized all the offices in Pakistan of Indian banks, including PNB's
headoffice, which may have moved to Karachi. PNB also had one or
more branches in East Pakistan (Bangladesh).

36. o 1960s: PNB amalgamated Indo Commercial Bank (est. 1933) in a
rescue.
o 1969: The Government of India (GOI) nationalized PNB and 13 other
major commercial banks, on July 19, 1969.
o 1976 or 1978: PNB opened a branch in London.
o 1986 The Reserve Bank of India required PNB to transfer its London
branch to State Bank of India after the branch was involved in a fraud
scandal.
o 1986: PNB acquired Hindustan Commercial Bank (est. 1943) in a
rescue. The acquisition added Hindustan's 142 branches to PNB's
network.
o 1993: PNB acquired New Bank of India, which the GOI had
nationalized in 1980.
o 1998: PNB set up a representative office in Almaty, Kazakhstan.
o 2003: PNB took over Nedungadi Bank, the oldest private sector bank
in Kerala. At the time of the merger with PNB, Nedungadi Bank's
shares had zero value, with the result that its shareholders received no
payment for their shares.
o PNB also opened a representative office in London.
o 2004: PNB established a branch in Kabul, Afghanistan.
o PNB also opened a representative office in Shanghai.
o PNB established an alliance with Everest Bank in Nepal that permits
migrants to transfer funds easily between India and Everest Bank's 12
branches in Nepal.
o 2005: PNB opened a representative office in Dubai.

37. o 2007: PNB established PNBIL - Punjab National Bank (International) -
in the UK, with two offices, one in London, and one in South Hall.
Since then it has opened a third branch in Leicester, and is planning a
fourth in Birmingham.
o 2008: PNB opened a branch in Hong Kong.
o 2009: PNB opened a representative office in Oslo, Norway, and a
second branch in Hong Kong, this in Kowloon.
o 2010: PNB received permission to upgrade its representative office in
the Dubai International Financial Centre to a branch.
2.2 COMPANY PROFILE:
Established in 1895 in Lahore, Punjab National Bank is one of the oldest
banks in India having a virtual presence in every important center of the country. The
bank has over 35 million customers through 4540 offices including 421 extension
counters, out of which 2/3 of its branches in rural and semi rural areas-the largest
among nationalized banks, which makes it enjoy one of the highest penetration rate of
banking activities in the country.
Punjab National Bank caters to a wide variety of audience through spectrum of
services including corporate and personal banking, industrial finance, agricultural

38. finance and international finance. Sitting on a vast banking resources and significant
presence in almost every lending sphere, the bank has a capital adequacy ratio (CAR),
well above the Basel-2 regulatory requirement, at 12.96% as on June 2008, despite
being exposed to numerous market and credit risk elements.
Constantly strengthening the capital adequacy ratio through internal accruals
and a regular increase in Tier 1 capital has put the bank on a very comfortable and
formidable position. Punjab National Bank has a net interest margin (NIM) higher
than the industry average due to a mix of improving yields and low cost funding base
and has one of the healthiest low cost current account saving account (CASA) ratio of
41.31%. It also enjoys the highest rating by all four domestic rating agencies and one
of the few banks to boast a AAA rating on its perpetual debt issue.
The bank has ambitious plans of major technological up-gradation to establish
capability of having 100,000 terminals under the Core Banking Solutions (CBS) with
a greater thrust on increasing international footprints. The bank has successfully
migrated to the Basel 2 accord in February this year. With over 38 million satisfied
customers and 4668 offices, PNB has continued to retain its leadership position
among the nationalized banks. The bank enjoys strong fundamentals, large franchise
value and good brand image. Besides being ranked as one of India's top service
brands, PNB has remained fully committed to its guiding principles of sound and
prudent banking. Apart from offering banking products, the bank has also entered the
credit card & debit card business; bullion business; life and non-life insurance
business; Gold coin & assets management business etc., Since its humble beginning in
1895 with the distinction of being the first Indian bank to have been started with
Indian capital, PNB has achieved significant growth in business which at the end of
March 2009 amounted to Rs 3,64,463 crore. Today, with assets of more than Rs
2,46,900 crore, PNB is ranked as the 3rd largest bank in the country (after SBI and
ICICI Bank) and has the 2nd largest network of branches (4668 including 238
extension counters and 3 overseas offices).During the FY 2008-09, with 39% share of
low cost deposits, the bank achieved a net profit of Rs 3,091 crore, maintaining its
number ONE position amongst nationalized banks. Bank has a strong capital base
with capital adequacy ratio as per Basel II at 14.03% with Tier I and Tier II capital
ratio at 8.98% and 5.05% respectively as on March’09. As on March’09, the Bank has

39. the Gross and Net NPA ratio of only 1.77% and 0.17% respectively. During the FY
2008-09, its’ ratio of priority sector credit to adjusted net bank credit at 41.53% &
agriculture credit to adjusted net bank credit at 19.72% was also higher than the
respective national goals of 40% & 18%.
PNB has always looked at technology as a key facilitator to provide better
customer service and ensured that its ‘IT strategy’ follows the ‘Business strategy’ so
as to arrive at “Best Fit”. The bank has made rapid strides in this direction. Along with
the achievement of 100% branch computerization, one of the major achievements of
the Bank is covering all the branches of the Bank under Core Banking Solution
(CBS), thus covering 100% of it’s business and providing ‘Anytime Anywhere’
banking facility to all customers including customers of more than 2000 rural
branches. The bank has also been offering Internet banking services to the customers
of CBS branches like booking of tickets, payment of bills of utilities, purchase of
airline tickets etc. Towards developing a cost effective alternative channels of
delivery, the bank with more than 2150 ATMs has the largest ATM network amongst
Nationalised Banks. With the help of advanced technology, the Bank has been a
frontrunner in the industry so far as the initiatives for Financial Inclusion is
concerned. With it’s policy of inclusive growth in the Indo-Gangetic belt, the Bank’s
mission is “Banking for Unbanked”. The Bank has launched a drive for biometric
smart card based technology enabled Financial Inclusion with the help of Business
Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile
customer. The BC/BF will address the outreach issue while technology will provide
cost effective and transparent services. The Bank has started several innovative
initiatives for marginal groups like rickshaw pullers, vegetable vendors, diary farmers,
construction workers, etc. The Bank has already achieved 100% financial inclusion in
21,408 villages. Backed by strong domestic performance, the bank is planning to
realize its global aspirations. In order to increase its international presence, the Bank
continues its selective foray in international markets with presence in Hongkong,
Dubai, Kazakhstan, UK, Shanghai, Singapore, Kabul and Norway. A second branch in
Hongkong at Kowloon was opened in the first week of April’09. Bank is also in the
process of establishing its presence in China, Bhutan, DIFC Dubai, Canada and
Singapore. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal.
Under the long term vision, Bank proposes to start its operation in Fiji Island,

40. Australia Amongst Top 1000 Banks in the World, ‘The Banker’ listed PNB at 250th
place. Further, PNB is at the 1166th position among 48 Indian firms making it to a list
of the world’s biggest companies compiled by the US magazine ‘Forbes’.
Financial Performance Punjab National Bank continues to maintain its
frontline position in the Indian banking industry. In particular, the bank has retained
its NUMBER ONE position among the nationalized banks in terms of number of
branches, Deposit, Advances, total Business, operating and net profit in the year
2008-09. The impressive operational and financial performance has been brought
about by Bank’s focus on customer based business with thrust on SME, Agriculture,
more inclusive approach to banking; better asset liability management; improved
margin management, thrust on recovery and increased efficiency in core operations of
the Bank. The performance highlights of the bank in terms of business and profit are
shown below:
Parameters Mar'07 Mar'08 Mar'09 CAGR
Operating Profit* 3617 4006 5744 26.02
Net Profit* 1540 2049 3091 41.67
Deposit 139860 166457 209760 22.47
Advance 96597 119502 154703 26.55
Total Business 236456 285959 364463 24.15
Outlook:
Punjab National Bank has always stood with the time even in the most dire of
circumstances. The bank is facing stiff challenges from its private sector counterparts.
According to the RBI data, the banking business composition breakup between
private sector banks and nationalized banks stood at 4% and 60% respectively, But the
equation has taken a paradigm shift in favor of private sector banks owing to phased
liberalizations of the BFSI sector, the composition stood at 21% as against
nationalized banks share with reduced 49% in 2007.
In a macro-prudential analysis of the Indian economy, it seems as the Indian
banking industry has come a long way and entered in its ever challenging growth

41. phase in a very prominent time as more than 49% of population financially excluded
offers immense opportunity to the bank. Pursuing its financial inclusion, Punjab
National Bank has opened more than 7.86 lakh No frills Accounts and intends to
cover 30,000 villages, 75 million people by 2010 through Biometric Technology apart
from comprehensive scheme launched for covering finance and insurance (health and
life) for rickshaw pullers, project for empowering women weavers, vegetables
vendors, etc.
The core focus of the bank will be on retaining and further improving low cost
deposits, lending to agriculture and small and medium enterprises and repositioning of
subsidiaries and joint ventures.
At the time of global financial turmoil, where the banks all over the world are
creeping under tremendous pressure, Punjab National Bank has managed to insulate
itself away from fatal transactions and has strictly adhered to the RBI guidelines.
2.3 PRODUCT AND SERVICE:
Savings Fund Account - Total Freedom Salary Account, PNB Prudent Sweep,
PNB Vidyarthi SF Account, PNB Mitra SF
Account Current Account - PNB Vaibhav, PNB Gaurav, PNB Smart Roamer
Fixed Deposit Schemes - Spectrum Fixed Deposit Scheme, Anupam Account,
Mahabachat Schemes, Multi Benefit Deposit
Scheme Credit Schemes - Flexible Housing Loan, Car Finanace, Personal Loan,
Credit Cards
Social Banking - Mahila Udyam Nidhi Scheme, Krishi Card, PNB Farmers Welfare

42. Trust
Corporate Banking - Gold Card scheme for exporters, EXIM finance
Business Sector – PNB Karigar credit card, PNB Kushal Udhami, PNB Pragati
Udhami. PNB Vikas Udhami Apart from these , the PNB also offers locker facilities,
senior citizens schemes, PPF schemes and various E- services
Industrial finance
Agricultural finance
Financing of trade
International banking
Personal banking
Home loan
Auto loan
ATM/ Debit card
Deposit interest rate
Credit interest rate
Other services:
Locker facilities, senior citizen schemes, merchant banking, electronic fund
transfer & clearing services, etc.
2.4 VISION AND MISSION :-
Vision:-
To evolve and position the bank as a world class, progressive, cost effective and
customer friendly institution providing comprehensive financial and related services.
Integrating frontiers of technology and serving various segments of society
especially weaker section.
Committed to excellence in serving the public and also excelling in corporate
values.
Mission:-
To provide excellent professional services and improve its position as a leader in
financial and related services.

43. Build and maintain a team of motivated workforce with high work ethos.
Use latest technology aimed at customer satisfaction and act as an effective
catalyst for socio economic development.
2.5 VALUES AND ETHICS:-
Bonding and Integrity
Ethical conduct
Periodic disclosure
Confidentiality and fair dealing
Compliance with rules and regulations
2.6 AWARDS:-
Awards & Achievements of
Punjab National Bank in
Recent Times
"Best IT Team of tYear At the IDRBT Banking Technology awards for the year
Award" 2005-06.

44. SKOTCH Challenger
for Change Management for the year 2005-06
Award
Best IT User in Banking
& Financial Services by NASSCOM in partnership with Economic Times
Industry - 2004
for Excellence in Corporate Governance – 2005 by
Golden Peacock Award
Institute of Directors
FICCI's Rural
for Excellence in Rural Development - 2005
Development Award
Skotch Challenger
Award for Exemplary for becoming a pioneer in Public Banks - 2005
use of Technology
Golden Peacock
National Training - 2004 by Institute of Directors
& 2005
National Award for
Ranked 2nd for 4 consecutive years - 2002, 2003, 2004
Excellence in SSI
& 2005
Lending
Banking Technology
Awards 2004
Runner up in 'Best IT Jointly Adjudged by IBA, Finacle & TFCI
Team of the Year Award
2005'
Money Outlook Award -
2004
Runner up in 'Best Bank
(public Sector) of the
year Award' -2005
for excellence in export perforamnce for 3 consecutive
Niryat Bandhu Gold
years 2001, 2002 & 2003
Trophy
by Federation of Indian Exporters Organization (FIEO)
21st Amongst Top 500 by the leading Financial Daily The Economic Times,
Companies June 2005
9th amongst India's Top
50 Most Trusted Service A.C Nielson Survey, The Economic Times Dec 2004
Brands
3rd Rank amongst
Banking Sector in India The Bankers' Almanac, January 2006
323rd Rank in the World
368 amongst Top 1000
The Banker, London July 2005
Global Banks
Skoch Challenger Award
Winner for becoming a pioneer in public banks by
for Exemplary Use of
Skoch consultancy services pvt ltd, Gurgaon 2005
Technolgy

45. FICCI's Rural
Award for excellence in rural development 2005
Development Award
Amity Business School, Noida has conferred the Award
to PNB, after an in-depth research to analyse the
strengths and core competencies of the Global 500
Amity Global Corporate
companies and banks which have already made an
Excellence Award
indelible most admired impression on the Indian
economy. 2008
& 2007 & 2005
Banking Technology IBA, Finacle & TFCI jointly adjudged PNB as runner up
Awards in "Best IT Team of the year Award" 2005
PC Quest Users’ Choice Best IT Implementation 2007
Award & 2005
Symantec Visionary
Information Security Impact 2005
Award
Money Outlok adjudged PNB as runner up in "Best
Money Outlook Award
Bank (Public Sector) of the year Award" 2005
Banking Technology IBA, Finacle & TFCI runner up Award for Outstanding
Awards Achiever of the Year (Individual). 2005
Golden Peacock
Innovative
Product/Service Award 2010 (for BCP implementation)
Golden Peacock Award
Winner in the ‘Large Joint Entry’.2009 &
for Excellence in
2007 & 2005
Corporate Governance
Skoch Challenger Award
For upliftment of Weaker sections of society 2006
for Change Management
IDRBT Banking
Best IT Team of the Year Award 2006
Technology Awards
National Award For
First Prize by By Ministry of Small Scale
Excellence in lending to
Industries.2006
Tiny sector
Skoch Challenger Award
for capacity building for Skoch Consultancy Services Pvt Ltd 2007
FTC initiative
Computer Associates
Excellence in EMS Roll Out. 2007
Excellence Award
For Best IT Implementation by IDG Media Pvt.
CIO 100 Award
Ltd.2007, 2008 & 2009
National Award for
Excellence in Lending to For Lending to Micro enterprises 2007
Micro Enterprises
Award for the use of Institute for Development and Research in Banking
Technology for Financial Technology (IDRBT), Hyderabad. 2008

46. Inclusion.
Dun & Bradstreet Award
for “Priority Sector
Dun & Bradstreet 2009
Lending including
Financial Inclusion”.
National Award for
Excellence in Lending Khadi & Village Industry Commission, Ministry of
for Institutional Finance Micro, Small & Medium Enterprises, Govt. of India
in Propagating KVI (Interest Subsidy Eligibility Certificate Scheme)
Programmes in NORTH 2009
ZONE
National Award for
Excellence in Lending Khadi & Village IndustryCommission, Ministry of
for Institutional Finance Micro, Small & Medium Enterprises, Govt. of India
in Propagating KVI (Interest Subsidy Eligibility Certificate Scheme)
Programmes in 2009
CENTRAL ZONE
National Award for
Excellence in Lending
Khadi & Village IndustryCommission, Ministry of
for Institutional Finance
Micro, Small & Medium Enterprises, Govt. of India
in Propagating KVI
(Interest Subsidy Eligibility Certificate Scheme) 2009
Programmes in
NATIONAL LEVEL
National Award for
Excellence in Lending Khadi & Village IndustryCommission, Ministry of
for Institutional Finance Micro, Small & Medium Enterprises, Govt. of India
for Propagating KVI (Prime Minister Employment Generation Programme)
Programmes in 2009
NORTH ZONE
National Award for
Excellence in Lending Khadi & Village IndustryCommission, Ministry of
for Institutional Finance Micro, Small & Medium Enterprises, Govt. of India
for Propagating KVI (Prime Minister Employment Generation Programme)
Programmes in 2009
CENTRAL ZONE
India Pride Award by
dainik Bhaskar and Daily Excellence in PSU 2009
News analysis
Indira Gandhi Rajbhasha
Promoting Hindi 2009
Shield
Emerson Uptime
2009
Champion Awards
“Best InfoSphere
2009 (for implementation of Enterprise Wide Data
Warehouse Solution”
Warehouse)
Award by IBM

47. ORGANISATION STRUCTURE

48. HIERARCHY

49. 2.7 SWOT ANALYSIS:-
SWOT analysis is a tool for auditing an organization and its environment. It is the

50. first stage of planning. And helps marketers to focus and key issue. Swot analysis it is an
effective the organization potential by identifying strength, weakness and to examine the
opportunities and threats which may affect the organization, carrying out an analysis using
SWOT tool will be enough to reveal the changes which can be implemented easily and gain
result Govt. from time to time will not be covered under this scheme.
STRENGTHS
 Wide network.
 Large number of customers.
 Fast adaptability to technology.
 Brand recognition.
 Excellent training.
WEAKNESS
 Casual behavior.
 High gross NPA.
 Corruption and red tapism.
 Slow decision making due to large hierarchy.
OPPORTUNITIES
 Fast growing Indian economy.
 High growth in banking sector.
 Liberal markets.
 Micro financing.
 Home to home banking service.
 Diversification towards other fields.
 Globalization.
 Decentralized decision making.
 Awards & incentives.
THREATS
 Large number of market players.
 Provide better services.
 Building a long term customer.
 Fast decision making.
 Competitive edge.
 Changing culture.

51. CHAPTER - 3
DATA ANALYSIS & INTERPRETATION
PROVISIONAL
BALANCE SHEET AS AT 31st MARCH 2010

52. LIABILITIES 31-3-2009 31-3-2010
Rs. Ps. Rs. Ps.
a. DEPOSITS
1) Demand Deposits
a. current account from others (firms institutions etc) 10262766.19 6807796.77
b. current account from banks 0.00 0.00
c. cash credit (credit balance) 1928373.37 915828.81
d. call deposits on demand from public 0.00 0.00
e. inoperative accounts 10years and above 222253.05 279405.05
f. inoperative accounts –others 3280845.13 2957608.77
Sub Total 1 (a) (a to f) 15694246.74 10960639.40
(b) Refund payable accounts 0.00 0.00
(c) Saving fund accounts 74590628.15 76050297.02
(d) Term deposits 0.00 0.00
a. MBFD/Sugam/Anupam from others 4194499.00 2080611.00
b. Special fixed deposits from others 576255.00 234010.00
c. Other fixed deposits from others 3876582.00 4579494.00
d. Spectrum – Fixed Deposits 94231542.00 105933640.00
e. Fixed deposits from banks 0.00 0.00
f. Mini deposits 0.00 0.00
g. Cash certificate 0.00 0.00
h. DRI Deposits 0.00 0.00
i. Recurring Deposits 207331030.00 2813341.00
Sub Total 1 (d) ( I to ix) 104952208.00 115641096.00
b. BORROWING
1) In india-from banks
a. Reserve bank of india 75573.40 0.00
b. Other bank (overdrafts)
c. Call/short term money
2) Other institutions and agencies
Sub total 1(a to c) 75573.40 0.00
3, BILL PAYABLE
a) Cash order 299587.30 485352.10
b) Draft payment 0.00 0.00
c) Gift cheque payment 1817.00 1817.00
d) Rupees travellers cheque payment 0.00 0.00
Sub total 3(a to d) 301404.30 487169.10
4. INTER BRANCH BALANCE
a) Balance due to H.O
b) Balance due to other officer (imprest)

53. c) Intersol account
5. INTEREST ACCURED ON DEPOSITS/ BORROWINGS 193070.00 192670.00
a) Saving fund -3.00
b) MBFD/ Sugam /Anupam/Spectum 39155.30 41582.50
c) Other term deposits
d) Borrowings
232225.30 234249.50
Sub total 5 (a to d)
6. OTHER LIABILITIES
a) Sundries 0.00 9000.00
7000.00
b) Provision for expenses-paid through suspense
24289.00
c) Provision for expenses-payable to others 58760.00 -1.00
d) Tax deducted at sources by bank but not deposited
e) Other items
65760.00 33288.00
Sub total 6 (a to e)
10742.00 -
B) other
a. Suspended interest
b. Sundry provision NPA
- -
7. ACCEPTANCES,ENDORSEMENT AND OTHER
- -
OBLIGATION
(A) Inland letter of credit Outward (parties & other banks)
(B) foreign letter of credit - -
(i) import credits
(ii) export credits
(C) Guarantees on behalf of constituents
171000.00 469700.00
a. In india
b. Out side India
c. Stock invest 247502.00 502988.00
8. BILLS FOR COLLECTION BEING BILLS RECEIVED
(A) Payable in india
99602.00 557900.00

54. a. Received from parties
b. Received from branches
(B) payable out side india
9. OTHER CONTRAITEMS 99602.00 557900.00
196193389.89 222006839.38
GRAND TOTAL (Item 1 to 9)

55. PROVISION AL BALANCE SHEET AS AT 31st MARCH 2010
PROPERTY & ASSETS 31-3-2009 31-3-2010
Rs. Ps. Rs. Ps.
1. CASH IN HAND
Cash in hand in India 1658517.67 676263.00
Foreign currency notes (converted in to rupees)
Balance with RBI in current account
Sub total 1 (a to c) 1658517.67 676263.00
2. BALANCE WITH SBI AND OTHER BANKS
In current account 3857556.43 239743.37
In India
Outside India
In deposit account
In India
Outside India
Sub total 2 (a to b) 3857556.43 239743.37
3. MONEY AT (ALL AND SHORT NOTICE)
In India - -
With banks
With financial institution - -
Outside India
4. ADVANCES
(A) Advances (other than protested)
Bills purchased & discounted
Payable in India 24920.00 -
Payable outside India
Cash credit, overdrafts & loans repayable on demand 31135531.57 37706742.08
Term loan 74672136.28 77154551.32
Sub total 4 (a to e) 105832588.28 114861293.40
(B) Protested advances
730741.30 683376.30
5. PREMISES (After depreciation)
6. OTHER FIXED ASSETS (After depreciation)
Safe, furniture & fixture 333369.00 527047.12
Motor car ,cycle & other vehicles
Software capitalised
7.OTHER ASSETS:
Interest accrued & outstanding on advances 293099.00 347066.00
Interest accrued on deposits with other banks
Stationery in hand
Stamps in hand
8.REFUND PAID ACCOUNT
9.SUSPENSES ACCOUNT

56. Advance payment made but recoverable/ adjustment 23919.00 30842.00
10.INTER BRANCH BALANCE
Balance with head office 23390898.08 23462009.08
Intersol account 60065799.13 65118888.94
Sub total 10 (a to b) 83456697,21 88580898.02
11.NON BANKING ASSETS
Acquired in satisfaction of claims
12.ACCEPTANCE, ENDORSEMENT & OTHER 171000.00 469700.00
OBLIGATIONS
13.BILLS RECEIVABLE
Being for bills for collection 99602.00 557900.00
14. OTHER CONTRAITEMS - -
15. EXPENDITURE - 15032710.17
GRAND TOTAL (item 1 to 14) 196193389.89 222006839.38
PROVISIONAL PROFIT AND LOSS ACCOUNT FOR THE YEAR

57. ENDED 31st MARCH 2010

58. EXPENDITURE 31-3-2009 31-3-2010
Rs. Ps. Rs. Ps.
1, Interest paid on deposits
(i) Fixed deposits 7505704.10 8635177.20
(ii) Saving fund 2342981.00 2236774.00
(iii) Inter – bank deposits 4000.00
(iv) Recurring deposits 134351.00 210829.00
Sub Total 1(I to iv) 9987036.10 11082780.20
2. interest paid on borrowing
(i) bank overdraft & discount paid on TT’s 21143.00 21263.49
3.interest paid on others - -
4. payment to and provision for employees
a. Basic pay 1657429.32 1549227.97
b. Special allowance 75594.76 75241.77
c. Dearness allowance 741870.48 952224.95
d. Other allowance 141243.08 129341.55
e. Overtime 9929.70 0.00
f. City compensatory allowance 0.00 278.71
g. Employer’s contribution to PF 136115.81 120750.16
h. House rent allowance 101787.13 73519.80
i. Medical aid 27309.00 69732.00
j. Leave fare concession 20649.00 8782.07
k. Leave encashment 68979.79 17149.36
l. Conveyance allowance 9179.63 8146.82
m. Uniform 1634.40 0.00
n. Rent paid for residential premises 30555.00 48764.54
o. Bank’s contribution to pension fund 50294.85 53906.87
Sub total 4 (a to o) 3093714.95 3127772.64
5. rent ,taxes & lighting
a) Rent paid for office premises 115396.00 115396.00
b) Water lighting & electrical charges 44892.66 63209.99
c) Miscellaneous taxes 30678.00 15.00
Sub total 5 (a to c) 190966.66 178620.99
6. stationery used 139.00 535.00
(i) stationery locally purchased/printed 43493.00 26504.00
Sub total 6 (I to ii) 43632.00 27039.00
7.depreciation on
(i) S.F.F 73472.00 94314.00
8.Law charges 8864.00 0.00
9.Postage, Telegrams, Telephones etc
a. Postage 9533.00 7643.00
b. Telegrams 60.00 0.00
c. Telephones 45435.20 102058.00
Sub total 9 (a to c) 55028.20 94415.00
10. Repairs maintenance (including AMC)
S.F.F 27380.00 51309.00
11. Insurance of any kind at banks cost
Others 900.00 240.00
12. Other expenditure
a. Repair/renovation to rented premises 40.00 10384.00
b. Subscription to news paper & periodicals 11656.00 10990.00

59. PROVISIONAL PROFIT AND LOSS ACCOUNT FOR THE YEAR
ENDED 31st MARCH 2010
INCOME 31-3-2009 31-3-2010
Rs. Ps. Rs. Ps.
1.Interest earned
a. Cash credit 1223157.73 1175001.00
b. Demand loan 682454.00 742654.00
c. Overdraft 1245754.00 1223092.00
d. Term loan 7653633.15 6886469.50
e. Miscellaneous interest 3306.00 1329.00
f. Hundian 57496.00 29441.00
Sub total 1 (a to f) 10865800.88 10057986.50
2. commission exchange & brokerage
a. Collection charge on outward instruments/ bills 60716.49 33102.50
b. IDBC&IUBC 56182.00 38964.00
c. Issue/ cancellation of drafts/ transfers 211300.02 152892.10
d. Inland letters of guarantee 2918.00 5044.00
e. Incidental charges (on deposit accounts) 154440.66 242345.36
f. Services charges/processing fee/documentation 146496.00
charges 141470.00
g. Inland documentary credits 0.00 259.00
h. All others 0.00 16599.00
i. ECGC insurance agency commission 0.00 9548.00
j. CBS intersol service charges 0.00 106550.00
k. Rent on safe deposit vaults (locker rent) 72234.00 81999.00
l. Issue of duplicate pass book/statement of
accounts/ drafts/ pay orders 156.00 1176.00
m. ATM/ kiosk charges 153712.00 22811.00
n. RTGS/NEFT/ECS 167.00 3632.00

60. o. Insurance business 0.00 1602.00
Sub total 2 (a to o) 853296.17 863019.96
3. miscellaneous income
Rent recovered from officers for use of furniture 575.00 756.40
Godown rent 0.00 62.00
Miscellaneous income – retail banking 92741.83 48524.50
Miscellaneous income – agency service 13995.55 0.00
4.interest/subsidy received from H.O 107312.38 49342.90
5889230.73 6602151.00
GRAND TOTAL (1 to 4)
17715640.16 17572500.36
3.1 CUSTOMERS EVALUATION
Type Total Percentage
Proprietorship 6 60%
Partnership 4 40%
Company - -
Total 10 100

61. 7
6
5
4 Proprietorship
3 Partnership
2
1
0
1 2 3
Interpretation
According to this table 60% of the clients are proprietorship, 40% are
partnership. Thus we can say that clientele of the PNB, consist of smaller concerns
which are proprietorship, partnership etc, in nature.
3.2 NATURE OF BUSINESS
Type Total Percentage
Manufacturing - -
Services 02 20%
Trading 06 60%
Other 02 20%
Total 10 100

62. 7
6
5
4 Series1
Series2
3 Series3
2
1
0
Services Trading Other
Interpretation:
The above table shows that the nature of business carried by the clientage.
According to the table 60% are trading concerns, 0% are manufacturing, 20% are
services, whereas 20% is in other business. Thus we can conclude that majority
clientele are those engaged in trading.
3.3 ANALYSIS OF QUANTUM OF WORKING CAPITAL
REQUIREMENT BY THE CLIENTAGE
Ranges Rs. Total Percentage
Less than 1 lakh - -
1,00,000 to 5,00,000 1 10%
5,00,000 to 2 20%
10,00,000
10,00,000 to 1 10%
15,00,000
15,00,000 to 1 10%
20,00,000

63. 20,00,000 to above 5 50%
Total 10 100%
6
5
4
-
3
-
2
1
0
0
0
0
ve
0
0
0
0
0
,0
,0
,0
,0
o
0
0
0
b
0
,0
,0
a
,0
,0
0
5
to
0
5
1
2
1
to
0
to
to
to
0
,0
0
0
0
0
0
0
0
0
,0
,0
,0
0
,0
,0
0
0
0
0
,0
,0
2
0
,0
,0
0
5
1
1
1
5
Interpretation
The above table shows the range of working capital required. According to the
table 10% of the organization falls between the range of 1 lakhs, 20% falls between 5
lakhs to 10 lakhs, 10% falls between 10 lakhs to 15 lakhs, 10% falls between 15 lakhs
to 20 lakhs and remaining 50% falls between 20 lakhs and above. Thus we can
conclude that the majority of the working capital required is by clients is over 50
lakhs.
3.4 OPINION REGARDING QUANTUM APPROVED BY PNB
FOR WORKING CAPITAL FINANCE:
Opinion Total no. of Percentage
companies
Yes 08 80%
Acceptable 01 10%
No 01 10%
Total 10 100%

64. 9
8
7
6
5 Series1
4 Series2
3
2
1
0
Yes Acceptable No
Interpretation:
The above table shows the customers opinion regarding Punjab National
Bank Ltd. Working capital criteria according to it 80% opinion is that the financial
working capital is yes 10% opinion is that the criteria of the financial working capital
is no. thus we can say that the working capital is at satisfactory level.
3.5 PROPORTION OF WORKING CAPITAL FINANCED BY PNB
Range Total no. of Percentage
companies
Less than 15% 03 30%
15% to 25% 02 20%
25% to 50% 04 40%
50% to 100% 01 10%
Total 10 100%

65. 4.5
4
3.5
3
2.5 Series1
2 Series2
1.5
1
0.5
0
Less than 15% 15% to 25% 25% to 50% 50% to 100%
Interpretation:
The above table shows the proportion of working capital financed by Punjab National
Bank. The table shows that PNB, Finance 30% of working capital range of less than
15% to 20%of working capital range between 15% 25%, 40% of working capital
range is between 25% to 50% and the remaining 10% of working capital range is
between 50% to 100%. Thus we can conclude that mostly 25% to 50% of working
capital is financed by PNB.
SECTION B:
EVALUATION OF OPERATIONAL EFFECT OF THE BANK
3.6 RATIO OF INDICATION OF PRODECTIVITY, LIQUIDITY AND
PROFITABILITY:
A) OPERATIONAL RATIO
1. Interest earned to total income:
Interest earned / total income

66. PARTICULARS 2007-2008 2008-2009 2009-10
Interest Earned 869 1086 1013
Total Income 1569 1961 2220
Ratio 0.57 0.55 0.46
2500
2000
1500 Interest Earned
Total Income
1000 Ratio
500
0
1 2 3
Interpretation:
The above table shows the amount of interest earned out of earning
of the bank. It can be seen that the income from interest has constituted a
major portion of the total income. And more over it keeps fluctuating
from 57 in 2007-08 to 46 in 2009- 10 also.
2. Interest paid to total income:
Interest paid / total income
PARTICULARS 2007-2008 2008-2009 2009-10
Interest paid 865 1000 1200
Total Income 1569 1961 2220
Ratio 0.55 0.51 0.54

67. 2500
2000
1500 Interest paid
Total Income
1000 Ratio
500
0
2007-2008 2008-2009 2009-10
Interpretation:
The interest paid in comparison to total income earned is seen to be fluctuated
over three years, rising during 2009 - 2010 and falling in the subsequent year.
B. Profitability ratios :
1. Net profit to total income:
Net profit / total income
Rs. In lakhs
PARTICULARS 2007-2008 2008-2009 2009-10
Net profit 481 401 253
Total income 1569 1961 2220
Ratio 0.31 0.20 0.11

68. 2500
2000
1500 Net profit
Total income
1000 Ratio
500
0
2007-2008 2008-2009 2009-10
Interpretation:
This ratio indicates the profitability of the bank by dividing net profit by total
income. It can be seen that the net profit has increased from 2007-2008 to 2008-2009
and decreased in 2009-10 when compared to total income. This indicates that the
expenditure has increased year to year compared to last year.
C. productivity ratio:
1. Per employee deposits:
Total deposits / No. of Employees
Rs. In lakhs
PARTICULARS 2007-2008 2008-2009 2009-10
Total deposits 1561 1952 2011
No. of 12 10 10
Employee

69. Ratio 0.130 0.195 0.201
2500
2000
1500 Total deposits
No. of Employee
1000 Ratio
500
0
2007-2008 2008-2009 2009-10
Interpretation:
This ratio indicates about how much deposit is being catered by an employee in the
bank. The performance of employees is very good in this regard as it can be seen in
the above table it shows an increasing trend from 130% in 2007-2008 to 195% to
201% in 2009-10.
2. Per employee advances:
Total advances / No. of Employees
Rs. In lakhs
PARTICULARS 2007-2008 2008-2009 2009-10
Total advance 1277 1066 1155
No. of Employee 12 10 10
Ratio 0.106 0.107 0.115

70. 1400
1200
1000
800 Total advance
No. of Employee
600 Ratio
400
200
0
2007-2008 2008-2009 2009-10
Interpretation:
The ratio discloses clearly from the above table that the bank has taken effective steps
in the profitable development of funds. The average capacity, capability and
efficiency of the employees has considerably increased in handing more advances in
2009 - 2010 as compared to the position in 2008-2009.
3. Per employee income:
Total income/ No. of Employee
Rs. In lakhs
PARTICULAR 2007-2008 2008-2009 2009-2010
S
Total income 1569 1961 2220
No. of 12 10 10
Employees
Ratio 0.130 0.196 0.222