ROLE OF ICICI BANK & SFCS BANK IN INDIAN ECONOMY

ROLE OF ICICI BANK & SFCS BANK IN INDIAN ECONOMY DR. GARGI SRIVASTAVA Asst. professor in Department of Commerce and Management, Vidya jyoti eduversity Derabassi JANU GODAK Department of Commerce and Management, Vidya jyoti eduversity Derabassi ABSTRACT The world of banking has assumed a new dimension at dawn of the 21st century with the advent of tech banking, thereby lending the industry a stamp of universality. In general, banking may be classified as retail and corporate banking. Retail banking, which is designed to meet the requirement of individual customers and encourage their savings, includes payment of utility bills, consumer loans, credit cards, checking account and the like. So, here we will discussed and analyses about ICICI bank and State Financial Corporation that which one is playing an vital role for our common people specially(indian) where 85% are still jobless and comes under BPL. Today we need to know that about these two financial institute because both them are same core function and goals i.e. development of industrial sector equally within the country. So, these are the major and basic objectives that we are going to discuss briefly so, our innocent citizens of our country could choose the best one for their benefits as per their capacity for better and equal development of the country. INTRODUCTION ICICI Bank ( Industrial credit and investment corporation of India) is an Indian multinational banking and financial services company headquartered in Mumbai, Maharashtra, India, with its registered office in Vadodara. IN 2014, It was the second largest bank in India in terms of assets and third in term of market capitalization. It offers a wide range of banking products and financial services for corporate and retail customers through a variety of delivery channels and specialized subsidiaries in the areas of investment banking, life, non life insurance, venture capital and asset management. The bank has a network of 4,450 branches and 13,995 ATMs in India, and has a presence in 19 countries including India.ICICI Bank is one of the big banks of India, along with State bank of India, Bank of Baroda and Punjab National bank. The bank has subsidiaries in United Kingdom and Canada; branches in United states, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar, Oman, Dubai International finance centre, China and south Africa; and representative offices in United Arab Emirates, Bangladesh, Malaysia and Indonesia. The company s UK subsidiary has also established branches in Belgium and Germany. HISTORY ICICI bank was established by the industrial credit and investment Corporation of India, an Indian financial institution, as a wholly owned subsidiary in 1994. The parent company was formed in 1995 as a joint venture of the World Bank. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group, offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-japan Asia to be listed on the NYSE. And in 2001, ICICI bank became the first Indian bank to listed on the New York stock exchange. 45

OBJECTIVES OF THE STUDY:- Study about ICICI bank within India. Study about SFCs. Major role of ICICI. Major role of SFCs. Comparison the both. ICICI BANK-PROFILE:- ICICI Bank is second largest and leading bank of private sector in India. It s headquarter is in Mumbai, India. According to Forbes State Bank of India is the 29th most reputed company in the world. The Bank has 2,533 branches and 6,800 ATMs in India. In 1998 ICICI Bank launched internet banking operations. The Bank offers a wide range of banking products and financial services to the corporate and retail customers. It also provides services in the areas of venture capital investment banking, asset management and life and non-life insurance. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) and its American Depositary Receipts (ADRs) are also listed on the New York Stock Exchange (NYSE).ICICI Bank limited is major banking and financial services organization in India. The bank is the second largest bank in India and the largest private sector bank in India by market capitalization. They are publicly held banking company engaged in providing a wide range of banking and financial services including commercial banking and treasury operations. The bank and their subsidiaries offers a wide range of banking and financial services including commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking and treasury products and services. They offer through a variety of delivery channels and through their specialized subsidiaries in the area of investment banking, life and non-life insurance, venture capital and assets management. The bank has a network of 2035 branches and about 5518 ATMs in India and presence in 18 countries. They have subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong-Kong, Srilanka, Qatar and Dubai International finance centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. The bank equity shares are listed in India on Bombay Stock Exchange and National stock exchange of India Limited and their American Depository Receipts (ADRs) are listed on NYSE. The bank is first Indian banks listed NYSE. SUBSIDIARIES OF ICICI BANK (NATIONAL & INTERNATIONAL) i. ICICI Lombard. ii. ICICI Bank UK PLC. iii. ICICI Prudential Life Insurance Company Ltd. iv. ICICI Bank Canada. v. ICICI Securities Limited. vi. ICICI Bank Eurasia LLC. vii. ICICI Prudential Asset Management Company Limited. viii. ICICI Venture. ix. ICICI direct.com. x. ICICI Foundation. 46

PRODUCTS AND SURVICES:- Personal banking. Wealth and management. NRI Banking. Online services. Fund transfer. Bill payment. Ticket booking. CURRENT FINANCIAL STATUS OF ICICI BANK 28% increase in net profit. Total income declined to 32,621.95 crores. Deposit grew by 26%. Advantages grew by 19%. COMPETITOR OF ICICI BANK HDFC BANK. AXIX BANK. KARUR VYSYA BANK. KOTAK BANK. YES BANK. RATIO FOR ICICI BANK PARAMETERS MAR 16 MAR 15 MAR'14 MAR'13 MAR'12 PER SHARE Adjusted E P S (Rs.) 70.93 71.11 85.04 72.22 56.13 Adjusted Cash EPS (Rs.) 72.13 72.25 90.04 76.48 60.69 Reported EPS (Rs.) 16.73 19.28 85.04 72.22 56.13 Reported Cash EPS (Rs.) 17.93 20.41 90.04 76.48 60.69 Dividend Per Share 5.00 5.00 23.00 20.00 16.50 Operating Profit Per Share (Rs.) 15.89 14.15 58.45 46.36 29.59 Book Value (Excl Rev Res) Per Share (Rs.) Book Value (Incl Rev Res) Per Share (Rs.) Net Operating Income Per Share (Rs.) 149.47 138.72 634.60 578.65 524.43 154.31 138.72 634.60 578.65 524.43 90.70 84.68 382.96 347.66 291.23 47

Free Reserves Per Share (Rs.) PROFITABILITY Operating Margin (%) 17.51 16.70 15.26 13.33 10.16 Gross Profit Margin (%) 16.19 15.36 13.95 12.11 8.59 Net Profit Margin (%) 18.44 22.76 22.20 20.77 19.27 Adjusted Cash Margin (%) 61.62 68.36 19.02 18.20 17.02 Adjusted Return On Net Worth (%) 47.45 51.26 13.40 12.48 10.70 Reported Return On Net Worth (%) 11.19 13.89 13.40 12.48 10.70 Return On long Term Funds (%) 86.55 94.40 56.92 56.37 52.33 LEVERAGE Long Term Debt / Equity Total Debt/Equity 6.86 6.64 6.65 6.57 6.55 Owners fund as % of total Source 17.09 18.19 18.07 18.56 19.12 Fixed Assets Turnover Ratio 0.08 0.08 0.08 0.08 0.07 LIQUIDITY Current Ratio 1.66 0.78 0.94 0.90 1.11 Current Ratio (Inc. ST Loans) 0.12 0.06 0.08 0.08 0.07 Quick Ratio 14.97 13.81 11.31 10.53 16.71 Inventory Turnover Ratio PAYOUT Dividend payout Ratio (Net Profit) 29.89 25.93 27.07 27.71 29.41 Dividend payout Ratio (Cash Profit) 27.89 24.49 25.57 26.17 27.21 Earning Retention Ratio 92.96 92.97 72.93 72.29 70.59 Cash Earnings 93.07 93.08 74.43 73.83 72.79 48

Retention Ratio COVERAGE Adjusted Cash Flow Time Total Debt Financial Charges Coverage Ratio Fin. Charges Cov.Ratio (Post Tax) COMPONENT Material Cost Component(% earnings) Selling Cost Component Selling Cost Component Exports as percent of Total Sales Exports as percent of Total Sales Import Comp. in Raw Mat. Consumed Long term assets / Total Assets Bonus Component In Equity Capital (%) 10.05 8.63 31.96 33.19 36.55 1.78 1.68 1.62 1.52 1.48 1.33 1.39 1.37 1.34 1.31 0.74 0.88 0.84 0.85 0.89 PROFIT & LOSS FOR ICICI BANK PARAMETERS MAR 16 MAR 15 MAR'14 MAR'13 MAR'12 Income : 52,739.43 49,091.14 44,178.15 40,075.60 33,542.65 Operating Income Expenses Material Consumed Manufacturing Expenses 3,012.69 4,749.88 4,220.11 3,893.29 3,515.28 Personnel Expenses Selling Expenses 8,972.36 6,087.01 5,512.79 4,629.44 3,810.63 Administrative 49

Expenses Expenses Capitalized 43,500.45 40,888.41 37,435.48 34,731.91 30,134.41 Cost Of Sales 9,238.99 8,202.73 6,742.67 5,343.69 3,408.24 Operating Profit 15,323.05 12,176.13 10,427.87 8,345.70 7,502.76 Other Recurring Income 56,077.44 50,430.39 44,873.13 39,898.57 33,719.50 Adjusted PBDIT 31,515.39 30,051.53 27,702.59 26,209.18 22,808.50 Financial Expenses 698.51 658.95 575.97 490.16 524.53 Depreciation Other Write offs 43,711.11 45,871.45 13,968.17 11,396.69 8,803.43 Adjusted PBT 2,469.43 4,644.57 4,157.69 3,071.22 2,338.17 Tax Charges 41,241.68 41,226.88 9,810.48 8,325.47 6,465.26 Adjusted PAT Non Recurring Items Other Non Cash adjustments 9,726.29 11,175.35 9,810.48 8,325.47 6,465.26 Reported Net Profit 58,503.10 54,545.47 19,712.76 15,379.71 11,483.44 Earnings Before Appropriation 2,628.14 2,627.66 2,425.04 2,015.07 1,681.69 Equity Dividend Preference Dividend 279.37 271.15 231.25 292.16 220.35 Dividend Tax 55,595.58 51,646.66 17,056.48 13,072.47 9,581.40 Retained Earnings 52,739.43 49,091.14 44,178.15 40,075.60 33,542.65 Source: Financial year report of ICICI Bank 2010-11 to 2014-15. BALANCE SHEET OF ICICI BANK MAR 16 MAR 15 50 MAR'14 MAR'13 MAR'12 PARAMETERS SOURCES OF FUNDS Owners' Fund Equity Share Capital 1,163.17 1,159.66 1,155.04 1,153.64 1,152.77 Share Application Money 6.70 7.44 6.57 4.48 2.39 Preference Share Capital Reserves & Surplus 85,748.24 79,262.26 72,051.71 65,547.84 59,250.09 Loan Funds Secured Loans Unsecured Loans 421,425.71 361,562.73 331,913.66 292,613.63 255,499.96 Total 508,343.82 441,992.09 405,126.98 359,319.58 315,905.20

USES OF FUNDS Fixed Assets Gross Block 7,576.92 4,725.52 4,678.14 4,647.06 4,614.69 Less: Revaluation Reserve 2,817.47 0.00 0.00 0.00 0.00 Less: Accumulated Depreciation Net Block 4,759.45 4,725.52 4,678.14 4,647.06 4,614.69 Capital Work-inprogress Investments 160,411.80 186,580.03 177,021.82 171,393.60 159,560.04 Net Current Assets Current Assets, Loans & Advances 57,573.70 24,997.05 32,709.39 29,087.07 19,515.39 Less : Current Liabilities & 34,726.43 31,719.86 34,755.55 32,133.60 17,576.98 Provisions Total Net Current Assets 22,847.27-6,722.81-2,046.16-3,046.53 1,938.40 Miscellaneous Expenses not written Total 188,018.51 184,582.75 179,653.79 172,994.13 166,113.13 Note Book Value of Unquoted Investment Market Value of Quoted Investment Contingent liabilities Number of Equity shares outstanding (in Lacks) 922,453.51 868,190.58 794,965.35 802,383.84 923,037.16 58,147.68 57,972.45 11,535.82 11,527.14 11,517.72 Source: Financial year report of ICICI Bank 2010-11 to 2014-15. CASHFLOW FOR ICICI BANK PARAMETERS MAR 16 MAR 15 MAR'14 MAR'13 MAR'12 Profit Before Tax 12,195.72 15,819.92 13,968.17 11,396.69 8,803.42 Net Cash Flow-Operating Activity 22,428.47-4,824.49 4,668.60 11,102.01 9,683.82 Net Cash Used In Investing Activity -3,949.98-9,199.56-12,246.48-9,431.56-12,280.17 Net Cash Used in Fin. Activity -585.07 15,005.67 6,838.37 2,989.72 3,829.95 51

Net Inc/Dec In Cash And Equivalent 17,564.13 775.02 112.08 5,188.21 2,139.23 Cash And Equivalent Begin of Year 42,304.62 41,529.60 41,417.52 36,229.31 34,090.08 Cash And Equivalent End Of Year 59,868.74 42,304.62 41,529.60 41,417.52 36,229.31 Source: Financial year report of ICICI Bank 2010-11 to 2014-15. TABLE:- COMPARATIVE STUDY OF ICICI s INCOME ANALYSIS ON THE BASIS OF 2010-11 AS BASE 100% (Increase / decrease in %) PARTICULAR YEARS Total Income Total Expenses Interest Income Interest Expenses Profit Before Tax Profit After Tax Net Interest Income 2010-11 0 0 0 0 0 0 0 2011-12 25.8 25.9 29.1 34.5 30.2 25.5 33.1 2012-13 48.4 46 54.3 54.6 68.5 65.5 36.3 2013-14 67.4 63.1 70.1 63.4 106.6 90.4 51.5 2014-15 87.8 82.3 89 77.2 134 116.9 69.1 Source- Annual Report of Banks. DATA ANALYSIS & INTERPRETITION GRAPH OF ICICI s INCOME ANALYSIS ON THE BASIS OF 2010-11 AS BASE 100% (Increase / decrease in %) income and expenses 160 140 120 100 80 60 40 20 0 years Total Income Total Expenses Interest Income Interest Expenses Profit Before Tax Profit After Tax Net Interest Income STUDY OF MARKET TEST RATIO OF ICICI BANKS 52

(Figures in Rs.) PARTICULARS YEARS Earnings Per Share Price Earnings Ratio Dividend Pay Out Dividend Yield Ratio 2010-11 9.05 124.42 0.31 0.00027 2011-12 11.22 84.9376 0.29 0.00031 2012-13 14.44 78.8781 0.28 0.00024 2013-14 17 74.0588 0.27 0.00021 2014-15 19.32 18.0642 0.26 0.00074 Source- Annual Report of Banks. GRAPH OF MARKET TEST RATIO OF ICICI BANK income and expenses 140 120 100 80 60 40 20 0 earnings per share price earning ratio dividend pay out dividend yield ratio years FUTURE PLANS OF ICICI BANK Plan to open 1500 branches in 4 years. Will recruit 6000 people this fiscal. Plans to expired its branches overseas. STATE FINANCIAL CORPORATIION(SFCs) INTRODUCTION A central industries finance corporation was set up under the industrial finance corporation Act, 1948 in order to provide medium and long term credit to industrial undertakings which fall outsides normal activities of commercial banks. The state government expressed their desire that the state corporations be set up in states to supplement the work of the industrial financial corporation. 53

State government also expressed that the state corporations be established under a special statue in order to make it possible to incorporate in the constitutions necessary provisions in regard to majority control by the government, guaranteed by the states government in regard to the payment principal. In order to implement the views expressed by the state financial corporation bill was introduced in the parliament. STATE FINANCIAL CORPORATION (SFCs): State financial corporation(sfcs) are the state level financial institutions which play a vital role in the growth of small & medium enterprises in the concerned states. They offer financial assistance in the form of direct subscription to debenture/equity, term loans, guarantees, discounting of bills of exchange & seed/ special capital, etc. SFCs have been set up with the purpose of catalyzing higher investment, engendering greater employment and extending the ownership base of industries. They have also started offering assistance to newer type of business activities like tissue culture, floriculture, poultry farming, services related to engineering, marketing and commercial complexes. At present there are 18 state financial corporation(out of which 17 SFCs were established under SFC ACT 1951). Tamil Nadu industrial investment corporation ltd. Established under company Act 1949, is also working as state financial corporation. These are:- Andhra Pradesh state financial corporation(apsfc) Himachal Pradesh financial corporaton(hpfc) Madhya Pradesh financial corporation(mpfc) North eastern development finance corporation(nedfi) Rajasthan finance corporation(rfc) Tamil Nadu industrial investment corporation limited. Uttar Pradesh financial corporation(upfc) Delhi financial corporation(dfc) Gujarat state financial corporation(gsfc) The economic development corporation of Goa(EDC) Haryana financial corporation(hfc) Jammu & Kashmir state financial corporation(jksfc) Karnataka state financial corporation(ksfc) Kerala financial corporation(kfc) Maharashtra state financial corporation(msfc) Odisha state financial corporation(osfc) Punjab financial corporation(pfc) West Bengal financial corporation(wbfc) FINANCIAL RESOURCES OF THE SFCs:- The SFCs mobilize their financial resources from the following sources: 1. Their own share capital. 2. Income from investment and repayment of loans. 3. Sales of bonds. 4. Loans from the IDBI (to some extend). 5. Borrowings from the reserve bank of India. 6. Deposits from the public. 7. Loans from state government. 54

INSTITUTIONS SUPPORTING SMALL SCALE INDUSTRIES CENTRAL LEVEL SSI BOARD KVIC SIDO NSIC NPC IIE EDI NISIET NIESBUD NSTEDB SSIs STATE LEVEL: DIs DICs SFCs SIDs/SIICs SSIDCs OTHERS: Industry Association Non Government Organization R & D Laboratories ORGANIZATON AND MANAGEMENT:- The state financial corporation management is vested in a board of ten directors. The state government appoints the managing directors generally in consultation with the reserve bank and nominates three other directors. The insurance companies, schedules banks, investment trusts, co-operative banks and other financial institutions elect three directors are nominated by the government and quasi-government institutions MAJOR OBJECTIVES:- To established uniformity in regional industries. To bring efficient in regional industries units Provides finance to small scales, medium, and cottage industries. To develop regional financial resources. MAJOR FUNCTION:- Provides loans to small and medium and cottage industries. Granting industrial undertaking repayment within 20 years. Discounting the bill of small and medium. Providing loans for new and for expansion. COMPARISION BETWEEN ICICI BANK SFCs:- SERIAL ICICI BANK SFCs NO. 1 It is a private sector bank. It is a government financial institutions runs by state government 55

2 Major roles for industrial development. 3 Appraise for any types of loan. 4 Loan amount minimum 50,000 to maximum 5 crores with interest rate of 11.49% to 18.49%. Main purpose for small and medium and cottage industries development. Only for industrial development. Allows 50 lacks to maximum 5 crores with the interest rate of 13%. 5 Loan tenure 1 to 5 years Up to 20 years. CONCLUSION:- After completing of RESEARCHED WORK on ICICI bank and SFCs, it needs to conclude that I have earns valuable practical knowledge about banking sector as well as government financial institutions. And if we needs to discuss about ICICI bank, then it is a most powerful and nationalized bank in our country which has the largest private sector bank in our country and branch has been established maximum areas of our country weather it may be of urban or rular areas. ICICI bank is functioning as a major role in our state as well as country, Because of this bank our citizen are getting great helps by developing themselves or entire state like, taking a loan for industrial development, taking a loan for education purpose, taking loan for self development, and having good facilities for customers by giving internet banking system and received their money for safe and security with good rates of interest. In other hand state financial corporation has also playing a vital role towards the people of our country which runs under state government by the RBI concern. Its interest rate is also cheaper as compared to ICICI bank which is a huge benefit for our common people who want to establish a small and medium and cottage industries. But fact is that ICICI bank has high interest of rate which is a negatives ways for the common people and also their period for return are also very short as compare to SFCs but they has reached every regional of the country whereas SFCs has yet not reached at urban area for better and equal development and still we have 18 SFCs whereas in our country we have 29 states. So, finally we had learned about these two financial institutes which has same core competence but way of performance are different, that s all. REFERENCES &BIBLIOGRAPHY:- Financial year report of ICICI Bank 2010-11 to 2014-15. http://wwwicicibank.com/ http://www.icicibank.com/aboutus/annual.html http://www.moneycontrol.com/ http://equitymaster.com/ ICICI Bank bulletin publication 2014-15. RBI statistical table relating to banks 2014-15. www.yourarticlelibrary.com. googleweblight.com. www.slideshare.net indiankanoon.org 56