CENTRAL UNIVERSITY OF KARNATAKA

KALABURAGI

DISSERTATION REPORT

ON

CASH FLOW STATEMENT – A COMPARATIVE STUDY OF SBI BANK

AND ICICI BANK

Prepared in fulfilment of Bachelor of Business Administration,

DEPARTMENT OF BUSINESS STUDIES, CENTRAL UNIVERSITY OF KARNATAKA,

KALABURAGI

SUBMITTED BY

UDAYAKUMAR
BBA VI SEMESTER

2015SBA092

UNDER THE GUIDENCE

VEENA I BHAVIKATTI, M.Phil, (Ph.D.)

April, 2018
 ACKNOWLEDGEMENT

With immense gratitude, I acknowledge my sincere thanks to all those whose

guidance made my efforts a success. First of all, I would like to thank my project guide

Veena I Bhavikatti faculty of the Department of Business Studies for providing me such an

innovative topic and providing me a base to start off with my dissertation work. I would also

like to thank all the faculty members of CENTRAL UNIVERSITY OF KARNATAKA for

their critical advice and guidance without which this dissertation would not have been

possible.

I further declare that this project has not been submitted earlier in any other

university or institution for the award of any degree or diploma.

DATE: UDAYAKUMAR

PLACE: [Reg.No.2015SBA092]
 GUIDE CERTIFICATE

This is to certify that UDAYAKUMAR student of BBA VI Semester Department of Business

Studies has completed his Project Work on the topic “CASH FLOW STATEMENT – A

COMPRATIVE STUDY OF SBI BANK AND ICICI BANK” under my guidance, and that

no part of this report has been submitted for the award of any other Degree or Diploma to any

other Board or University by anyone else.

DATE: VEENA I BHAVIKATTI

PLACE: M.Phil (PhD)

Faculty

Department of Business Studies

 HEAD OF THE DEPARTMENT CERTIFICATE

This is to certify that UDAYAKUMAR student of BBA VI Semester of Department of

Business studies has completed the Project Work on the topic “CASH FLOW

STATEMENT – A COMPARATIVE STUDY OF SBI BANK AND ICICI BANK” under

the guidance of VEENA BHAVIKATTI M.Phil (PhD), Faculty, Department of Business

Studies and that no part of this report has been submitted for the award of any other Degree

or Diploma to any other Board or University by anyone else.

DATE: Head of the Department

PLACE: Dept. of Business Studies

Central University of Karnataka
 DECLARATION

I hereby declare that, this project work entitled, A Study on ‘CASH FLOW

STATEMENT – A COMPARATIVE STUDY OF SBI BANK AND ICICI BANK”, at

Department of Business Studies, Central University of Karnataka, Kalaburagi. The

analysis in this project is based on the information and data collected by me is true and the

best of my Knowledge. The matter presented in this report has not been previously submitted

to any other university for the award of any degree or diploma.

PLACE: UDAYAKUMAR

DATE: [Reg. No. 2015SBA092]

 CONTENTS:

Sl.No CONTENTS Page No

I. Introduction
1.1 Introduction
1.2 Objective of study
1.3 Scope of study
1.4 Limitation of study
1.5 Research methodology
II. Literature review
III. over view of banking sector
3.1 industry scenario of banking industry
3.2 Govt. policies
3.3 Implementation of some recent measures
IV. Company profile
4.1 SBI BANK
4.2 ICICI BANK
V. Data analysis and interpretation
5.1 statistical analysis
5.2 trend analysis
5.3 Paired T-test
VI. Finding, suggestion and conclusion
6.1 Finding
6.2 Suggestion
6.3 Conclusion
Bibliography
 ABSTRACT:

From the financial year 2004-05, it has become mandatory for all the Indian companies to

present cash flow statement in their Annual Report. Institute of chartered account of India

(ICAI) has issued accounting standard-3 (AS-3) for the cash flow statement. According to

this, all the cash transactions of the company are divided in three activity i.e. operating,

investing and financial activities. Such classification helps the investors and other

stakeholders in analysing the cash flow data. In this Study, a comparative study has been

undertaken between two banks: state bank of India (Public sector bank) and ICICI bank

(Private sector bank).

CHAPTER-1

INTRODUCTION
 1.1 INTRODUCTION

“The Statement of Cash Flows is a financial statement that provides an overview of the cash

inflows and outflows of the organisation during a certain period of time.” It studies the effect

of changes of each and every item of balance sheet on the cash position of the organisation. It

helps the management to predict and analyze the cash inflow and outflow situations when

organisation has huge profits but still deficiency of cash to distribute to shareholders, and

cash flow statement predicts the planning of cash where it is going to use and how it is going

to use. It discloses the increase or decrease in the cash and cash equivalent.

Understanding the cash flows generated by the company is crucial, both for the company, as

well as for other users of financial statement. Information about cash flow is useful in

providing users of financial statement with a basis to assess the ability of the company to

generate cash and its need to utilise those cash flows. The economic decisions that are taken

by users require an evaluation of the ability of a company to generate cash and the timing and

certainty of their generation.

Cash flow statement completes the standard set of financial statements. In recent years, is

utility and need to provide cash flow information has been emphasised so much that the

capital market regulator SEBI made mandatory in1995 for all listed companies to include a

cash flow statement in the annual report. It is to be understood that the cash flow statement is

a ‘derived’ statement –derived from balance sheet and profit and loss.

Cash basis financial statements were very common before accrual basis financial statements.

The "flow of funds" statements of the past were cash flow statements.

In 1863, the Dowlais Iron Company had recovered from a business slump, but had no cash to

invest for a new blast furnace, despite having made a profit. To explain why there were no
funds to invest, the manager made a new financial statement that was called a comparison

balance sheet, which showed that the company was holding too much inventory. This new

financial statement was the genesis of cash flow statement that is used today.

In the United States in 1973, the Financial Accounting Standards Board (FASB) defined rules

that made it mandatory under Generally Accepted Accounting Principles (US GAAP) to

report sources and uses of funds, but the definition of "funds" was not clear. Net working

capital might be cash or might be the difference between current assets and current liabilities.

From the late 1970 to the mid-1980s, the FASB discussed the usefulness of predicting future

cash flows. In 1987, FASB Statement No. 95 (FAS 95) mandated that firms provide cash

flow statements. In 1992, the International Accounting Standards Board issued International

Accounting Standard 7 (IAS 7), Cash Flow Statement, which became effective in 1994,

mandating that firms provide cash flow statements.

US GAAP and IAS 7 rules for cash flow statements are similar, but some of the differences

are:

 IAS 7 requires that the cash flow statement include changes in both cash and cash

equivalents. US GAAP permits using cash alone or cash and cash equivalents.

 IAS 7 permits bank borrowings (overdraft) in certain countries to be included in cash

equivalents rather than being considered a part of financing activities.

 IAS 7 allows interest paid to be included in operating activities or financing activities. US

GAAP requires that interest paid be included in operating activities.

 US GAAP (FAS 95) requires that when the direct method is used to present the operating

activities of the cash flow statement, a supplemental schedule must also present a cash

flow statement using the indirect method. The IASC strongly recommends the direct
 method but allows either method. The IASC considers the indirect method less clear to

users of financial statements. Cash flow statements are most commonly prepared using

the indirect method, which is not especially useful in projecting future cash flows.

Success of every business depends on its cash management, it is necessary to study the

composition of cash of an organization to know the impact of its cash flow decision on its

liquidity, profitability and solvency. It does not include non-cash items such as depreciation.

This makes it useful for determining the short-term viability of an organization, particularly

its ability to pay bills. Cash flow statements are provided with the other financial statements

in the annual reports of the companies.

 1.2 OBJECTIVES OF STUDY:

There are three important activities which are the significant parts of Cash Flow

Statements. The analysis of all these activities is undertaken with the following

objectives:

 To study the trend of various activities such as Operating, Investing and

Financing activity of SBI and ICICI bank.

 To analyze the variation amongst three activities i.e. Operating, Investing and

Financing activities of SBI and ICICI bank.

 To examine and give suggestions to improvement in Cash Management.

1.3 SCOPE OF THE STUDY:

A cash flow statement helps the users in a number of ways as like: It is useful in checking the

accuracy of past assessment of future cash flows, And also it helps in examining the

relationship between profitability and net cash flow And it also study the cash flow statement

enables to users to evaluate the changes in net assets of an organisation. Historical cash flow

information is often used as an indicator of the amount, timing and certainty of future cash

flow.
 1.4 LIMITATIONS OF STUDY:

 The research work is mainly based on secondary data that is, it is based on audited

accounts and its audited accounts are ambiguous then the result will be misleading.

 Time is the major constraint in this study. The time allotted for the project has been

only 1 month; the study could be done only for the past 5 years.

 Cash flow statement gives the main item of inflow and out flow of cash only and

doesn’t show the liquidity position of organisation

 The face value of figure is given in cash flow statement was used for the study.

 The data which is collected for project is past data and we cannot predict the future

through past data.

 1.5 RESEARCH METHODOLOGY

 Data Collection Methods: The relevant data are collected from secondary resources.

Data has been collected from SBI Bank and ICICI Bank for five years from the

various sources like websites, brochures, books, magazines, journals and annual

reports of the organisation etc.

 Annual report of bank

 Financial statement

 Book reference

 Websites

 Statistical tools and techniques: The statistical analysis technique is selected to

analyze the Cash Flow Statements of the SBI and ICICI banks understudy. For

this, following techniques are being used

1. Mean: expected value are used synonymously to refer to one measure of

the central tendency either of a probability distribution or of the random

variable characterized by that distribution.

2. Median: It is a set of values is the middle most value when they are arranged in the

ascending order of magnitude.

3. Standard deviation: It is set of values are the positive square root of mean of the

squared deviations of the values from their arithmetic mean.

It is denoted by sigma

4. Co-variance: covariance is a measure of the joint variability of two random

variables. If the greater values of one variable mainly correspond with the greater

values of the other variable, and the same holds for the lesser values.
 5. T-test: A t-test is a analysis of two populations mean through the use of statistical

examination; a t-test with two samples is commonly used with small sample sizes,

testing the differences between the samples when the variances of two normal

distributions are not known.

 Period of study: The study is conducted for a period of five financial years i.e. from

2013-2017.

 Sample selection: For the purpose of the study two banks has been selected i.e. State

Bank of India (SBI) and ICICI Bank.

 Hypothesis: Considering the objectives of the study the following hypothesis were

formed under investigation:

(1) There is no significant difference between the trends of Operating activities of the

SBI and ICICI banks.

(2) There is no significant difference between the trends of investing activities of the

SBI and ICICI banks.

(3) There is no significant difference between the trends of financing activities of the

SBI and ICICI banks.

(4) There is no significant difference between the means of Operating activities of the

SBI and ICICI banks.

(5) There is no significant difference between the means of investing activities of the

SBI and ICICI banks.

(6) There is no significant difference between the means of financing activities of the

SBI and ICICI banks.

 CHAPTER-2

LITERATURE REVIEW
 LETURATURE REVIEW:

As per the study of research on cash flow statement of SBI bank and ICICI bank: A

comparative analysis of operating activity, investing activity and financing activities” an

attempt has made to study the different studies in SBI bank and ICICI bank to assess the

performance of banks in India.

Harbir Singh(1990),his study has stated that the financial health of a company can be

improved if stringent control is exercised on raw materials, stores and spares, and also by

reducing the unprofitable investment blocked in current assets. The cash flow can be

regulated if the companies prepare weekly cash flow statement and also cash budget on a

regular basis.

V. Srikanth (2014) investigates the financial performance of an investment company in

INDIA for a three-year period from 2010 to 2013, which is assessed using cash flow

statement. The findings pointed out that overall company performance reduced remarkably in

the last year of the analysis.This study principally emphasizes on how accounting information

aids budgetary decision-makers to evaluate the company financial performance, determine its

future obligations, and make better investment decisions.

Sen Mitali (2010)in her empirical work makes an exploratory attempt to study the liability

structure of Indian Commercial Banks. The sample of 82 Indian Commercial Banks is drawn

for which consistent data is available over the period 1995-96 to 2003-04. The major findings

of the study are that set of six critical factors that is profitability, size, liquidity, risk and asset

quality, fee based earnings and efficiency influence the liability structure of commercial

banks. From empirical analysis it can be inferred that banks should concentrate more on fee

based activities.
 CHAPTER-3

OVERVIEW OF BANKING SECTOR

 3. OVERVIEW OF BANKING SECTOR

Indian banking is the lifeline of the nation and its people. Banking has helped in

developing the vital sectors of the economy and user in a new dawn of

progress on the Indian horizon. The sector has translated the hopes and aspirations

of millions of people into reality. But to do so, it has had to control miles and miles

of difficult terrain, suffer the indignities of foreign rule and the pangs of partition.

Today, Indian banks can confidently compete with modern banks of the world.

Before the 20th century, usury or lending money at a high rate of interest was widely

prevalent in rural India. Entry of Joint stock banks and development of Co-operative

movement have taken over a good deal of business from the hands of the Indian

money lender, who although still exist, have lost his menacing teeth. In the

Indian Banking System, Co-operative banks exist side by side with commercial

banks and play a supplementary role in providing need-based finance, especially

for agricultural and agriculture-based operations including farming, cattle, milk,

hatchery, personal finance, Along with some small industry and self-employment

driven activities.

Generally, co-operative banks are governed by the respective co-operative acts of

state governments. But, since banks began to be regulated by the RBI after 1 st March

1966, these banks are also regulated by the RBI after amendment to the Banking

Regulation Act 1949. The Reserve Bank is responsible for licensing of banks and
branches, and it also regulates credit limits to state co -operative banks on behalf

of primary co-operative banks for financing SSI units.

Banking in India originates in the first decade of 18th century with The General Bank

of India coming into existence in 1786. This was followed by Bank of Hindustan.

Both these banks are now different. After this, the Indian government established

three presidency banks in India. The first of three was the Bank of Bengal, which

obtains charter in 1809, the other two presidency bank, viz., the Bank of Bombay and

the Bank of Madras, were established in 1840 and 1843, respectively. The three

presidency banks were subsequently amalgamated into the Imperial Bank of India

(IBI) under the Imperial Bank of India Act, 1920 which is now known as the State

Bank of India.

A couple of decades later, foreign banks like Credit Lyonnais started their

Calcutta operations in the 1850s. At that point of time, Calcutta was the most active

trading port, mainly due to the trade of the British Empire, and due to which

banking activity took roots there and prospered. The first fully Indian owned bank

was the Allahabad Bank, which was established in 1865.

By the 1900s, the market expanded with the establishment of banks such as

Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in

Mumbai – both of which were founded under private ownership. The Reserve Bank

of India formally took on the responsibility of regulating the Indian banking

sector from 1935. After India’s independence in 1947, The Reserve Bank was

nationalized and given broader powers. As the banking institutions expand and

become increasingly complex under the impact of deregulation, innovation and

technological up gradation, it is crucial to maintain balance between efficiency and

stability. During the last 30 years since nationalization tremendous changes have
taken place in the financial markets as well as in the banking industry due to financial

sector reforms. The banks have shed their traditional functions and have been

innovating, improving and coming out with new types of services to cater

emerging needs of their customers. Banks have been given greater freedom to

frame their own policies. Rapid advancement of technology has contributed to

significant reduction in transaction costs, facilitated greater diversification of

portfolio and improvements in credit delivery of banks. Prudential norms, In line

with international standards, have been put in place for promoting and enhancing the

efficiency of banks. The process of institution building has been strengthened with

several measures in the areas of debt recovery, asset reconstruction and

securitization, consolidation, convergence, mass banking etc.

Despite this commendable progress, serious problem have emerged reflecting in a

decline in productivity and efficiency, and erosion of the profitability of the banking

sector. There has been deterioration in the quality of loan portfolio which, in

turn, has come in the way of banks income generation and enhancement of

their capital funds. Inadequacy of capital has been accompanied by inadequacy

of loan loss provisions resulting into the adverse impact on the depositors and

investors confidence. The Government, therefore, set up Narasimham Committee

to look into the problems and recommend measures to improve the health of the

financial system. The acceptance of the Narasimham Committee

recommendations by the Government has resulted in transformation of hitherto

highly regimented and over bureaucratized banking system into market driven

and extremely competitive one.

The massive and speedy expansion and diversification of banking has not been

without its strains. The banking industry is entering a new phase in which it will be
facing increasing competition from non-banks not only in the domestic market

but in the international markets also. The operational structure of banking in

India is expected to undergo a profound change during the next decade. With

the emergence of new private banks, the private bank sector has become enriched and

diversified with focus spread to the wholesale as well as retail banking. The existing

banks have wide branch network and geographic spread, whereas the new private

banks have the clout of massive capital, lean personnel component, the expertise in

developing sophisticated financial products and use of state-of-the-art technology.

Gradual deregulation that is being ushered in while stimulating the competition would

also facilitate forging mutually beneficial relationships, which would ultimately

enhance the quality and content of banking. In the final phase, the banking

system in India will give a good account of itself only with the combined

efforts of co-operative banks, regional rural banks and development banking

institutions which are expected to provide an adequate number of effective retail

outlets to meet the emerging socio -economic challenges during the next two decades.

The electronic age has also affected the banking system, leading to very fast

electronic fund transfer. However, the development of electronic banking has also led

to new areas of risk such as data security and integrity requiring new techniques of

risk management. Co-operative (mutual) banks are an important part of many

financial systems. In a number of countries, they are among the largest financial

institutions when considered as a group. Moreover, the share of co-operative banks

has been increasing in recent years; in the sample of banks in advanced economies

and emerging markets analyzed in this project, the market share of co-operative banks

in terms of total banking sector assets increased from about 9 percent in mid-1990s to

about 14 percent in 2004.

 3.1 INDUSTRY SCENARIO OF INDIAN BANKING INDUSTRY:

The growth in the Indian Banking Industry has been more qualitative than

quantitative and it is expected to remain the same in the coming years. Based on the

projections made in the "India Vision 2020" prepared by the Planning

Commission and the Draft 10th Plan, the report forecasts that the pace of

expansion in the balance-sheets of banks is likely to decelerate. The total assets of all

scheduled commercial banks by end-March 2010 is estimated at Rs 40,90,000

crore. That will comprise about 65 per cent of GDP at current market prices as

compared to 67 per cent in 2002-03. Bank assets are expected to grow at an annual

composite rate of 13.4 per cent during the rest of the decade as against the

growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is expected

that there will be large additions to the capital base and reserves on the liability side.

The Indian Banking industry, which is governed by the Banking Regulation Act of

India, 1949 can be broadly classified into two major categories, non-scheduled

banks and scheduled banks. Scheduled banks comprise commercial banks and the

co-operative banks. In terms of ownership, commercial banks can be further grouped

into nationalized banks, the State Bank of India and its group banks, regional rural

banks and private sector banks (the old/ new domestic and foreign). These banks have

over 67,000 branches spread across the country.

The Public Sector Banks(PSBs), which are the base of the Banking sector in

India account for more than 78 per cent of the total banking industry assets.

Unfortunately they are burdened with excessive Non Performing assets (NPAs),

massive manpower and lack of modern technology. On the other hand the Private

Sector Banks are making tremendous progress. They are leaders in Internet
banking, mobile banking, phone banking, ATMs. As far as foreign banks are

concerned they are likely to succeed in the Indian Banking Industry.

In the Indian Banking Industry some of the Private Sector Banks operating are IDBI

Bank, ING Vyasa Bank, SBI Commercial and International Bank Ltd, Bank of

Rajasthan Ltd. and banks from the Public Sector include Punjab National bank,

Vijaya Bank, UCO Bank, Oriental Bank, Allahabad Bank among others. ANZ

Grindlays Bank, ABN-AMRO Bank, American Express Bank Ltd, Citibank are

some of the foreign banks operating in the Indian Banking Industry.

As far as the present scenario is concerned the Banking Industry in India is

going through a transitional phase. The first phase of financial reforms resulted in

the nationalization of 14 major banks in 1969 and resulted in a shift from

Class banking to Mass banking. This in turn resulted in a significant growth in the

geographical coverage of banks. Every bank had to earmark a minimum percentage

of their loan portfolio to sectors identified as “priority sectors”. The manufacturing

sector also grew during the 1970s in protected environs and the banking sector was a

critical source. The next wave of reforms saw the nationalization of 6 more

commercial banks in 1980. Since then the number of

scheduled commercial banks increased four-fold and the number of bank

branches increased eight-fold. After the second phase of financial sector reforms

and liberalization of the sector in the early nineties, the Public Sector Banks (PSB) s

found it extremely difficult to compete with the new private sector banks and

the foreign banks.

The new private sector banks first made their appearance after the guidelines

permitting them were issued in January 1993. Eight new private sector banks are

presently in operation. These banks due to their late start have access to state-
of-the-art technology, which in turn helps them to save on manpower costs and

provide better services.

During the year 2000, the State Bank Of India (SBI) and its 7 associates

accounted for a 25 percent share in deposits and 28.1 percent share in credit.

The 20 nationalized banks accounted for 53.2 percent of the deposits and 47.5 percent

of credit during the same period. The share of foreign banks (numbering 42), regional

rural banks and other scheduled commercial banks accounted for 5.7 percent, 3.9

percent and 12.2 percent respectively in deposits and 8.41 percent, 3.14 percent

and 12.85 percent respectively in credit during the year 2000.

 3.2 GOVERNMENTAL POLICY:

After the first phase and second phase of financial reforms, in the 1980s

commercial banks began to function in a highly regulated environment, with

administered interest rate structure, quantitative restrictions on credit flows, high

reserve requirements and reservation of a significant proportion of lendable resources

for the priority and the government sectors. The restrictive regulatory norms led to

the credit rationing for the private sector and the interest rate controls led to the

unproductive use of credit and low levels of investment and growth. The resultant

financial repression to led decline in productivity, efficiency and erosion of

profitability of the banking sector in general.

This was when the need to develop a sound commercial banking system was

felt. This was worked out mainly with the help of the recommendations of the

Committee on the Financial System (Chairman: Shri M.Narasimham) 1991. The

resultant financial sector reforms called for interest rate flexibility for banks,

reduction in reserve requirements, and a number of structural measures.

Interest rates have thus been steadily deregulated in the past few years with

banks being free to fix their Prime Lending Rates(PLRs) and deposit rates for most

banking products. Credit market reforms included introduction of new

instruments of credit, changes in the credit delivery system and integration of

functional roles of diverse players, such as, banks, financial institutions and

non-banking financial companies (NBFCs). Domestic Private Sector Banks were

allowed to be set up, PSBs were allowed to access the markets to shore up their Cars.
3.3 IMPLICATIONS OF SOME RECENT POLICY MEASURES:

The allowing of PSBs to shed manpower and dilution of equity are moves that will

lend greater autonomy to the industry. In order to lend more depth to the capital

markets the RBI had in November 2000 also changed the capital market exposure

norms from 5 percent of banks incremental deposits of the previous year to 5 percent

of the bank’s total domestic credit in the previous year. But this move did not have the

desired effect, as in, while most banks kept away almost completely from the capital

markets, a few private sector banks went overboard and exceeded limits and indulged

in dubious stock market deals. The chances of seeing banks making a comeback to the

stock markets are therefore quite unlikely in the near future. The move to increase

Foreign Direct Investment FDI limits to 49 percent from

20 percent during the first quarter of this fiscal came as a welcome announcement to

foreign players wanting to get a foot hold in the Indian Markets by investing in

willing Indian partners who are starved of net-worth to meet CAR norms. Ceiling for

FII investment in companies was also increased from 24.0 percent to 49.0 percent and

have been included within the ambit of FDI investment.

The abolishment of interest tax of 2.0 percent in budget 2001-02 will help banks pass

on the benefit to the borrowers on new loans leading to reduced costs and easier

lending rates. Banks will also benefit on the existing loans wherever the interest tax

cost element has already been built into the terms of the loan. The reduction of

interest rates on various small savings schemes from 11 percent to 9.5 percent in

Budget 2001-02 was a much awaited move for the banking industry and in

keeping with the reducing interest rate scenario, however the small investor is

not very happy with the move.

Some of the not so good measures however like reducing the limit for tax

deducted at source (TDS) on interest income from deposits to Rs 2,500 from the

earlier level of Rs 10,000, in Budget 2001-02, had met with disapproval from the

banking fraternity who feared that the move would prove counterproductive and lead

to increased fragmentation of deposits, increased volumes and transaction costs.

The limit was thankfully partially restored to Rs 5000 at the time of passing the

Finance Bill in the Parliament. Public Sector banks that imbibe new concepts in

banking, turn tech savvy, leaner and meaner post VRS and obtain more

autonomy by keeping governmental stake to the minimum can succeed in

effectively taking on the private sector banks by virtue of their sheer size.

Weaker PSU banks are unlikely to survive in the long run. Consequently, they

are likely to be either acquired by stronger players or will be forced to look out for

other strategies to infuse greater capital and optimize their operations.

Foreign banks are likely to succeed in their niche markets and be the innovators in

terms of technology introduction in the domestic scenario. The outlook for the

private sector banks indeed looks to be more promising vis-à-vis other banks.

While their focused operations, lower but more productive employee force etc

will stand them good, possible acquisitions of PSU banks will definitely give

them the much needed scale of operations and access to lower cost of funds. These

banks will continue to be the early technology adopters in the industry, thus

increasing their efficiencies. Also, they have been amongst the first movers in the

lucrative insurance segment. Already, banks such as ICICI Bank and HDFC Bank

have forged alliances with Prudential Life and Standard Life respectively. This is one

segment that is likely to witness a greater deal of action in the future. In the near term,

the low interest rate scenario is likely to affect the spreads of majors. This is likely to
result in a greater focus on better asset-liability management procedures.

Consequently, only banks that strive hard to increase their share of fee-based revenues

are likely to do better in the future.

 CHAPTER-4

COMPANY PROFILE
 Company profile

4.1

FOUNDED : 2 JUNE 1806 BANK OF CALCUTA

: 27 JANUARY 1921 IMPERIAL BANK OF INDIA

: 1 JULY 1955 STATE BANK OF INDIA

: 2 JUNE 1956 NATIONALIZATION

Head quarters : Mumbai Maharashtra

Area served : worldwide

Key people : Rajneesh Kumar (Chairman

Total employees : 278872

Total revenue : $32 billion

Vision statement of SBI bank: Be The Bank of Choice for a Transforming India.
Mission statement of SBI bank: Committed to Provide Simple, Responsive and Innovative

Financial Solution.

Value statement of SBI bank: Service, Transparency, Ethics, Politeness and Sustainability.

State bank of India is an Indian multinational, public sector banking and financial

services company. It is a govt - owned corporation with its headquarters in Mumbai,

Maharashtra. On April 1, 2017, the State Bank of India, which was India's largest bank,

merged with five of its associate banks (State Bank of Bikaner & Jaipur, State Bank of

Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore), and

with the Bharatiya Mahila Bank. This was the first ever large scale consolidation in the

Indian banking industry. With the merger, SBI became one of the 50 largest banks in the

world (balance sheet size of ₹33 trillion, 278,000 employees, 420 million customers, and

more than 24,000 branches and 59,000 ATMs). SBI's market share was projected to increase

to 22 percent from 17 per cent. It has 198 offices in 37 countries; 301 correspondents in 72

countries. The company is ranked 232nd on the Fortune Global 500 list of the world's biggest

corporations as of 2016. The bank descends from the Bank of Calcutta, founded in 1806, via

the Imperial Bank of India, making it the oldest commercial bank in the Indian subcontinent.

The Bank of Madras merged into the other two "presidency banks" in British India, the Bank

of Calcutta and the Bank of Bombay, to form the Imperial Bank of India, which in turn

became the State Bank of India in 1955. The Government of India took control of the

Imperial Bank of India in 1955, with Reserve Bank of India (India's central bank) taking a

60% stake, renaming it the State Bank of India. In 2008, the government took over the stake

held by the Reserve Bank of India.

 4.2

Founded : 1994

Headquarters : Mumbai Maharashtra

Area served : worldwide

Key people : Mr. M.K Sharma (chairman)

Mrs. Chanda kochhar (MD&CEO)

No of employee: 84096

Total revenue : $11 billion

Vision statement of ICICI bank: To Be The Leading Provider Of Financial Services In

India And A Major Global Bank.

Mission statement of ICICI bank: We Will Leverage Our People, Technology and Speed

and Financial Capital To:

Be the banker of first choice for our customers by delivering high quality, world-class

products and services.

 Expand the frontiers of our business globally.

 Play a proactive role in the full realisation of India’s potential.

 Maintain a healthy financial profile and diversify our earnings across businesses and

geographies.
  Maintain high standards of governance and ethics.

 Contribute positively to the various countries and markets in which we operate.

 Create value for our stakeholders.

Value statement of ICICI bank: Integrity, Customer First, Boundary less, Humility and

Passion.

ICICI bank stands for Industrial Credit and Investment Corporation of India; it is

an Indian multinational banking and financial services company headquartered

in Mumbai, Maharashtra, India, with its registered office in Vadodara. In 2017, it is the third

largest bank in India in terms of assets and fourth in term of market capitalisation. It offers a

wide range of banking products and financial services for corporate and retail

customers through a variety of delivery channels and specialised subsidiaries in the areas

of investment banking, life, non-life insurance, venture capital and asset management. The

bank has a vast network of 4,850 branches and 14,404 ATMs in India, and has a presence in

19 countries including India. The bank has subsidiaries in the 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. ICICI's shareholding in ICICI Bank was

reduced to 46 percent, through a public offering of shares in India in 1998, followed by an

equity offering in the form of American Depositary Receipts on the NYSE in 2000. ICICI

Bank acquired the Bank of Madura Limited in an all-stock deal in 2001 and sold additional

stakes to institutional investors during 2001-02. 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 became the

first Indian company and the first bank or financial institution from non-Japan Asia to be

listed on the NYSE. In 2000, ICICI Bank became the first Indian bank to list on the New

York Stock Exchange with its five million American depository shares issue generating a

demand book 13 times the offer size. In 2008, following the 2008 financial crisis, customers

rushed to ICICI ATMs and branches in some locations due to rumours of adverse financial

position of ICICI Bank. The Reserve Bank of India issued a clarification on the financial

strength of ICICI Bank to dispel the rumours

 CHAPTER-5

DATA ANALYSIS AND

INTERPRETATION
 5.1 Statistical Analysis:

Table no-1

YEAR Operating activities Investing activities Financial activities

SBI ICICI SBI ICICI SBI ICICI

2013 2165.26 785.25 199.08 252.36 325.97 104.01
2014 1410.74 334.70 310.56 593.81 381.11 266.90
2015 2762.10 482.44 325.80 919.95 228.91 1500.56
2016 1119.65 2242.84 374.83 394.99 450.58 581.39
2017 1106.03 5263.55 314.84 160.57 178.02 3546.95
Total 8563.79 9108.79 1525.14 2321.69 1564.61 5999.82
Average 1712.75 1821.75 305.02 464.33 312.92 1199.96
Rank 2 1 2 1 2 1
S.D 727.49 2067.77 64.52 302.64 110.71 1418.89
Rank 1 2 1 2 1 2
Median 1410.74 785.25 314.84 394.99 325.97 581.39
Rank 1 2 2 1 2 1
C.V 42.475 113.505 21.156 65.177 35.380 118.245
Rank 1 2 1 2 1 2
 1. OPERATING ACTIVITY OF SBI AND ICICI BANK

From the above table no: 1, depicts that Cash generated by production and sales of business is
reflecting under this head. It comparatively denotes inflow of cash from operating activities
and out flow of cash for business operating expenses. E.g. cash from operating is the revenue
net of expenses.

2. INVESTING ACTIVITY OF SBI AND ICICI BANK

From the above table no: 1 this section denotes cash invested in long term assets. E.g.
purchase of machinery and other long term assets such as purchase of equity shares of other
companies etc. and cash receipts from such investing activities E.g. dividend received,
interest received sales of machinery and scrap etc.

3. FINANCING ACTIVITY OF SBI AND ICICI

From the above table no: 1 this section of cash flow statement denotes cash generated from
activities to finance the business operation. E.g. cash receipt on account of issue of equity
shares or debentures etc. and cash paid to such stakeholders. Dividend to equity shares,
interest on debenture etc.
 Chart no-1

6000

5000

4000

3000

2000

1000

0
2013 2014 2015 2016 2017
SBI 2165.26 1410.74 2762.1 1119.65 1106.03
ICICI 785.25 334.7 482.44 2242.84 5263.55

Interpretation: chart No 1 denotes comparative weight of cash generated from operating

activity of SBI and ICICI bank, Total cash operating expenses includes unpaid expenses.
This figure reflects that total cash operating expenses of SBI is 8563.79 and ICICI is 9108.79.
Operating expenses of ICICI bank in 2017 is 3.75 times more than SBI bank; in 2016 ICICI
is 1.01 times more than ICICI. Operating activity of SBI more than ICICI 4.73, 3.22, 1.76
times more during 2015, 2014, 2013 respectively.

Chart no-2

1000
900
800
700
600
500
400
300
200
100
0
2013 2014 2015 2016 2017
SBI 199.08 310.56 325.8 374.83 314.84
ICICI 252.36 593.81 919.95 394.99 160.57
Interpretation: chart No 2 denotes the comparative weight of investing activity of SBI and
ICICI bank. During the five year of cash flow of total operating activity of SBI is 1525.14
and total operating activity of ICICI bank is 2321.69. In 2015 ICICI banks more invested
comparing to five years and lowest invested in 2017.SBI banks investment is 0.98 time more
than ICICI bank; ICICI bank more than SBI during 2016,2015,2014,2013, is
0.52,1.42,0.96,0.64 respectively. ICICI banks investing activity was lower from 2013-2014
and vice versa.

Chart no-3

4000

3500

3000

2500

2000

1500

1000

500

0
2013 2014 2015 2016 2017
SBI 325.97 381.11 228.91 450.58 178.02
ICICI 104.01 266.9 1500.56 581.39 3546.95

Interpretation: Chart No 3 represents the financing activity of SBI bank and ICICI bank,
from 2013-2017 During the year 2017 ICICI banks financing activity is more than the SBI
bank.2013-2017 the lower finance in 2013 from ICICI bank and higher is ICICI bank in the
year 2017.comaring to SBI and ICICI bank total financing activity 7564.43.ICICI banks
financing money more than SBI bank is 9.97, 0.65, 6.56 during 2017, 2016, 2015 respectively.
In the year 2013 and 2014 SBI banks financing activities are 0.72, 1.57 times more than ICICI
bank.
 5.2 Trend analysis of SBI AND ICICI from operating activity of average,
median, SD, CO-variance

Chart no-4

2500

2000

1500

1000

500

0
AVERAGE MEDIAN SD CO-VARIANCE
SBI 1712.75 1410.74 727.49 42.475
ICICI 1821.75 785.25 2067.77 113.505

Interpretation: From the chart No-4 it can be seen that the average of cash flow from
operating activities of ICICI is higher than that of SBI Theoretically, higher the
average, higher will be the rank and vice versa. So, ICICI is given 1st rank and SBI is given
2nd rank.

In case of median higher the values, higher the rank so in above chart median of the SBI bank
is higher than the ICICI bank so SBI bank obtained 1st rank and ICICI bank obtained 2nd rank.
SBI bank values are 0.89 times more than ICICI bank.

In case of Standard Deviation, lower the value, higher will be the rank and vice
versa. Considering this aspect, it is observed that the S.D. for operation activities of SBI bank
is lower than the ICICI Bank. So, for the operation activities, SBI bank obtained 1st rank and
ICICI obtained 2ndrank.

In case of Co-variance also, lower the value, higher will be the rank and vice versa. Situation
remains same in Co-variance also. Co-variance for operation activities of SBI bank is lower
than the ICICI bank. So, for operation activities, SBI bank obtained 1st rank and ICICI
obtained 2nd rank.
 Trend analysis of SBI AND ICICI from investing activity of average,
median, SD, CO-variance

Chart no-5

500
450
400
350
300
250
200
150
100
50
0
Average Median S.D C.V
SBI 305.02 314.84 64.52 21.156
ICICI 464.33 394.99 302.64 65.177

Interpretation: From the chart No-5 it can be seen that the average of cash flow from
operating activities of ICICI is higher than that of SBI , higher the average, higher will
be the rank and vice versa. So, ICICI is given 1st rank and SBI is given 2nd rank.

Median is same as average like higher the value, higher the rank; so in chart no-5 ICICI bank
median value more than SBI bank. The value of ICICI bank is 0.77 times more than the SBI
bank. ICICI bank obtained 1st rank and SBI bank obtained 2nd rank.

In case of Standard Deviation, lower the value, higher will be the rank and vice
versa. Considering this aspect, it is observed that the S.D. for investing activities of SBI bank
is lower than the ICICI Bank. So, for the operation activities, SBI bank obtained 1st rank and
ICICI obtained 2ndrank.

In case of Co-variance also, lower the value, higher will be the rank and vice versa. Situation
remains same in Co-variance also. Co-variance for investing activities of SBI bank is lower
than the ICICI bank. So, for operation activities, SBI bank obtained 1st rank and ICICI
obtained 2nd rank.
 Trend analysis of SBI AND ICICI from financing activity of average,
median, SD, CO-variance

Chart no-6

1600

1400

1200

1000

800

600

400

200

0
Average Median S.D C.V
SBI 312.92 325.97 110.71 35.38
ICICI 1199.96 581.39 1418.89 118.245

Interpretation: From the chart No-6 it can be seen that the average of cash flow from
financing activities of ICICI is higher than that of SBI , higher the average, higher will
be the rank and vice versa. So, ICICI is given 1st rank and SBI is given 2nd rank.

In case of median, higher the value, higher the rank and comparing to SBI and ICICI bank
above chart shows that the value of ICICI bank 0.89 times more than SBI bank: so ICICI
bank obtained 1st rank and SBI bank obtained 2nd rank in chart no-6.

In case of Standard Deviation, lower the value, higher will be the rank and vice
versa. Considering this aspect, it is observed that the S.D. for finance activities of SBI bank is
lower than the ICICI Bank. So, for the operation activities, SBI bank obtained 1st rank and
ICICI obtained 2ndrank.
In case of Co-variance also, lower the value, higher will be the rank and vice versa. Situation
remains same in Co-variance also. Co-variance for finance activities of SBI bank is lower
than the ICICI bank. So, for operation activities, SBI bank obtained 1st rank and ICICI
obtained 2nd rank.

Table no-2

Level of Operating activity Investing activity Financing activity

performance
Best ICICI bank ICICI bank ICICI bank
Poor SBI BANK SBI BANK SBI BANK
 5.3 PAIRED T-TEST BETWEEN TWO MEANS

Table no-3

t-Test: Paired Two Sample for Means for Operating Activities

SBI ICICI
MEAN 1712.75 1821.75
S.D 727.49 2067.77
Observation 5 5
Hypothesized Mean 109
Difference

Degree of freedom 4

T stat -23.74

t Critical two-tail 2.78

Table no-4

t-Test: Paired Two Sample for Means for investing Activities

SBI ICICI
MEAN 305.02 464.33
S.D 64.52 302.64
Observation 5 5
Hypothesized Mean Difference -159.31

Degree of freedom 4
T stat -34.7
t Critical two-tail 2.78
 Table no-5

t-Test: Paired Two Sample for Means for financing Activities

SBI ICICI
MEAN 312.92 1199.96
S.D 110.71 1418.89
Observation 5 5
Hypothesized Mean Difference -887.04

Degree of freedom 4
T stat -193.25
t Critical two-tail 2.78

Table No: 6

Result of Hypothesis
Activity t-test calculation t-test value Hypothesis
accepted/rejected
Operational -23.74 2.78 Accepted
Investing -34.7 2.78 Accepted
Financing -193.25 2.78 Accepted

Hypothesis Testing:

From the T-table, it is observed that the calculated value of t for operating activities

(-23.74) is less than the table value (2.78), the hypothesis is accepted. It means that there is

no significant difference between the means of operating activities of selected banks.

For Investing activities also, calculated value of t for operating activities (-34.7) is

less than the table value (2.78), the hypothesis is accepted. It means that there is no

significant difference between the means of investing activities of selected banks.

For Financing activities also, calculated value of t for operating activities (-193.25) is

less than the table value (2.78), the hypothesis is accepted. It means that there is no

significant difference between the means of financing activities of selected banks.

 CHAPTER-6

FINDING, SUGGESTION AND

CONCLUSION
 6.1 FINDING

 The operating activity of ICICI bank in 2017 is the highest amount comparing to SBI

bank

 ICICI banks lowest operational flow of money is low comparing to 2013-2017.

 In the cash flow statement of five years data the investing flow of money of ICICI

banks is highest in 2015 and lowest in 2017.

 The financing flow of money of ICICI banks is highest in 2017 and lowest in 2013.

 In the calculation of data analysis, operating activity of SBI is highest considering

through standard deviation and co-variance.

 The financing activity of financial statement of five years, during the year 2017 ICICI
banks financing activity is more than the SBI bank; in 2013 the financing flow of

ICICI bank is lowest.

6.2 SUGGESTION FOR BANKS OR FINANCIAL INSTITUTIONS:

 Net C as h i s t he cas h t hat i s res erv ed i n t he ban k for an y i nv est i ng or

financing activities. The cash should be increasing in any business to maintain it

sound and healthy bank. The Net cash should increase on a yearly basis and the net

cash is the life blood of any company or bank for diversification or expansion of

it respectively.

 The adjusted cash flow is decreasing for the past five years of SBI bank and this cash

flow is considered as operating or working capital of SBI bank. But the cash flow is

neither stable nor increase as it is fluctuating the adjusted cash flow should be and the

cash flow should be planned in such a way that the cash flow should increase on a

yearly basis.

 The di vi dend pa you t rat i o shou l d be mai nt ai ned as t h e sha reh ol d ers

would prefer to invest only if the dividend payout increases.

 Opening cash and cash equivalent is the initial investment or opening

balance of any business. But in this case it is for bank, so as per that the

opening cash is increasing for bank and this should be maintained as this will have a

drastic impact on the balance and the bank should also keep up this performance to

improve in positive direction.

 Through cash flow analysis, an organization can identify the unproductive use of fund

as well as to ascertain and plan future cash flow. As well as financing flow of cash of

SBI bank and ICICI banks there is not more difference they can improve the financial

flow through issuing stocks to investors who purchase the stock for a share in the

organisation, and more money flowing into the company than flowing out which

increase the asset of company.

 Liberalisation, privatisation and globalization have given way to many foreign banks

to set up their business unit in a developing country like India. Cash flow analysis is

important to identify weaknesses and performance of an organisations operation that

can lead the organization towards liquidity crunch.

 6.3 CONCLUSION:

On the basis of the study, Cash Flow Statement is a powerful mechanism of determining cash

position and solvency position of the firm. Cash flow statement provides information about

the inflow and outflow of cash. It is very useful in the evaluation of cash position of the firm.

It helps in planning the repayment of loans, repayment of fixed assets. Through cash flow

analysis, company can identify the unfertile use of fund as well as to determine and plan

future cash flow. The most mutual pattern is a progressive operating activities cash flow and

negative cash flows from investing and financing activities. In conclusion, showing financial

statement analysis using information from the statement of cash flows is more challenging

than analyses by information from the profit & loss Account and the balance sheet. The

primary reason is that it is common for cash flows for certain categories to be negative,

thereby forming interpretation difficult. However, an analysis the association among the

groups on the statement of cash flows can provide perception into a company’s performance.
 BIBLIOGRAPHY:

 Dr. S.N. Maheshwari, financial management (principles &practice), sultan Chand &

sons publishers.

 S.N. Maheshwari and S.K. Maheshwari – a textbook of accounting for management

2006 (1stedition).
 Khan MY, Jain PK. Financial Management 2001, Third Edition, Tata McGraw –
Hill, Publishing Company Ltd.
 Pro. Raj Mohan – a text book of basics of statistics.
 Ambrish gupta- financial accounting for management, third edition, Pearson.

Websites
o Annual report of SBI bank (https://sbi.co.in)
o Annual report of ICICI bank (https://www.icicibank.com)
o SBI bank Wikipedia
o ICICI bank Wikipedia
o Investpedia
o Moneycontrol.com
o Scribd.com