“A study on financial statement by using camel ration with special reference to

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“A STUDY ON FINANCIAL STATEMENT BY USING
CAMEL RATION WITH SPECIAL REFERENCE TO
SBT”
PROJECT REPORT
Submitted in the Partial Fulfillment of Requirement for the Award of the
Degree of
DEPARTMENT OF MANAGEMENT STUDIES

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INTRODUCTION:
Finance is regarded as the lifeblood of a business enterprise. This is because in the modern
money-oriented economy, finance is one of the basic foundations for all kinds of economic
activities. It is the master key, which provides access to all the sources for being employed in
manufacturing and merchandising activities. It is rightly been said that business needs money
to make more money. However, it is also true that money begets more money, only when it is
properly managed. Hence, efficient management of every business enterprise is closely linked
with efficient management of its finances.
The banking sector has been undergoing a complex, but comprehensive phase of
restructuring since 1991, with a view to make it sound, efficient, and at the same time forging
its links firmly with the real sector for promotion of savings, investment and growth. Although
a complete turnaround in banking sector performance is not expected till the completion of
reforms, signs of improvement are visible in some indicators under the CAMEL framework.
Under this, bank is required to enhance capital adequacy, strengthen asset quality, improve
management, increase earnings and reduce sensitivity to various financial risks. The almost
simultaneous nature of these developments makes it difficult to disentangle the positive impact
of reform measures.
CAMELS Framework
Supervisory framework, consistent with international norms, covers risk-monitoring factors for
evaluating the performance of banks. This framework involves the analyses of six groups of
indicators reflecting the health of financial institutions. The indicators are as follows:
CAPITAL ADEQUACY
ASSET QUALITY
MANAGEMENT SOUNDNESS
EARNINGS & PROFITABILITY

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LIQUIDITY
SENSITIVITY TO MARKET RISK
The whole banking scenario has changed in the very recent past on the recommendations
of Narasimham Committee. Further BASELL II Norms were introduced to internationally
standardize processes and make the banking industry more adaptive to the sensitive market
risks. The fact that banks work under the most volatile conditions and the banking industry as
such in the booming phase makes it an interesting subject of study. Amongst these reforms and
restructuring the CAMELS Framework has its own contribution to the way modern banking is
looked up on now. The attempt here is to see how various ratios have been used and interpreted
to reveal a bank’s performance and how this particular model encompasses a wide range of
parameters making it a widely used and accepted model in today’s scenario.
OBJECTIVES OF THE STUDY
 To understand the financial performance of the bank.
 To understand the importance of rating banks in the competitive environment.
 To find out how Capital adequacy, Asset quality, Management soundness, Earnings
& profitability, Liquidity and Systems & control affects the performance of the bank.
 To analyze the liquidity position of the bank.
 To analyze the banks performance through CAMEL model and give suggestion for
improvement if necessary.
SCOPE OF THE STUDY
Performance evaluation of State bank of Travancore. lt based on various parameters of
CAMELS rating system is useful for the banks as well as for those who deal with the bank in
order to identify their weakness and take corrective measures. This also helps the prospective
investors as they can evaluate the bank, based on this study and take decision about their
investment

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METHOD OF DATA COLLECTION:
a) Primary Data:
Primary data are those which are collected for the first time which is original in
character. They are collected directly and are reliable. In this study primary data are collected
by taking personal visit to the employees of the bank.
b) Secondary Data:
Secondary data is those which have already been collected by someone else.
Secondary data may collected from
1.Annual reports of the State bank of Travancore.
2.Bulletins
3. Periodicals
4. News letters
5.Internal reports of the bank
PERIOD OF STUDY:
The study was done in State bank of Travancore, pioneer from 01-05-2014to
15-06-2014.

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INDUSTRY PROFILE
The Bank
The word bank means an organization where people and business can invest or borrow
money; change it to foreign currency etc. According to Halsbury “A Banker is an individual,
Partnership or Corporation whose sole pre-dominant business is banking, that is the receipt of
money on current or deposit account, and the payment of cheque drawn and the collection of
cheque paid in by a customer.’’
The Origin and Use of Banks
The Word ‘Bank’ is derived from the Italian word ‘Banko’ signifying a bench, which
was erected in the market-place, where it was customary to exchange money. The Lombard
Jews were the first to practice this exchange business, the first bench having been established
in Italy A.D. 808. Some authorities assert that the Lombard merchants commenced the business
of money-dealing, employing bills of exchange as remittances, about the beginning of the
thirteenth century.
About the middle of the twelfth century it became evident, as the advantage of coined
money was gradually acknowledged, that there must be some controlling power, some
corporation which would undertake to keep the coins that were to bear the royal stamp up to a
certain standard of value; as, independently of the ‘sweating’ which invention may place to the
credit of the ingenuity of the Lombard merchants- all coins will, by wear or abrasion, become
thinner, and consequently less valuable; and it is of the last importance, not only for the credit
of a country, but for the easier regulation of commercial transactions, that the metallic currency
be kept as nearly as possible up to the legal standard. Much unnecessary trouble and annoyance
has been caused formerly by negligence in this respect. The gradual merging of the business of
a goldsmith into a bank appears to have been the way in which banking, as we now understand
the term, was introduced into England; and it was not until long after the establishment of banks
in other countries-for state purposes, the regulation of the coinage, etc. that any large or similar
institution was introduced into England. It is only within the last twenty years that printed

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cheques have been in use in that establishment. First commercial bank was Bank of Venice
which was established in 1157 in Italy.
Origin of banking in India
The history of Indian banking industry begins from the performance of money lending
business by a small number of money lenders with limited financial resources and limited area
of operations and extends to the growth of large number of big commercial banks with huge
financial resources and diversified banking activities spread over all parts of the country.
The history of Indian banking system can be considered under the following heads.
1. Banking Business in Ancient Times
In India, as early as Vedic period, banking, in the crudest from, existed. The books of
Manu contained reference regarding deposits, pledges and policy of loan and rate of interest.
True, banking on those days largely meant money lending and they did not know the
complicated mechanism of modern banking.
2. Banking in Pre-Independence period
During pre-Independence period, banking business was primarily carried on by
indigenous bankers and money lenders.
Indigenous bankers have been operated in India since very ancient times. No doubt,
indigenous banking was carried on by people of all castes. But it is generally the monopoly of
certain banking castes such as Martinis, Mewari’s, Jains, Gujarat is, Chatters etc. The
indigenous bankers are known by different names in different parts of the country.
Money lenders have existed side by side with indigenous bankers in our society. They
generally operated in villages. Money lenders are those persons who lend their own money
mainly for consumption or other domestic purposes. As they do not accept deposits from the
public, but merely lend their own funds, they are called money lenders not bankers.
The indigenous bankers and money lenders played a very important role in
development of banking in India. But the Britishers, i.e. the British Agency Houses in India,
could not make much use of their services on account of differences of language and banking
practices. So, in the last quarter of 18th century, many British Agency Houses in India started
their own banks on modern pattern. This was the beginning of modern banking in India. The

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earliest European bank started by the British Agency Houses in India in 1770 was the bank of
Hindustan. This was followed by other European banks, viz., the bank of Bengal in 1774 and
the General Bank of India 1786. However all the European banks were failed sooner or later
for various reasons. In order to cater the needs of the foreign rules, number of quasi government
banking institutions was established by the Britishers in the name of presidency banks. They
include the Presidency Bank of Bengal in 1806, the presidency bank of Bombay in 1840 and
presidency bank of Madras in 1846.
The Swadeshi movement in 1905 gave great stimulus to the starting of several Indian
joint stock banks. They include the Bank of India set up in 1806, the Bank of Baroda set up in
1908, the Central Bank of India Ltd set up in 1911 etc. But during 1913-17 most o these banks
failed.
The Imperial Bank of India, a privately owned commercial bank was formed on 27th
January 1921 through the amalgamation of the Presidency Bank o Bengal, Bombay and
Madras. The Imperial Bank of India was allowed to perform both commercial banking
operations as well as some of the central banking functions.
The Reserve Bank of India also was established during the Pre- Independence period.
The RBI was set up on 1th April 1935 as the central bank of the country.
3. Development of Indian Banking Industry in the post-Independence Period
Before independence, the Indian banking industry had to pass through a series of crises
and bank failure. But after India attained independence, the situation is changed completely.
There has been a massive growth of banking system in the post independence period. The
various developments are as follows,
The Reserve Bank of India, the central bank of the country was nationalised on 1th
January 1949.
The banking regulation act of 1949 was passed. This act has enlarged the control of the
RBI over the Indian banking system and has also introduced several regulating measures for
ensuring sound and balanced growth of the Indian banking industry.
The Imperial Bank of India was nationalised and converted in to the State Bank of India
on 11th July 1955. The information of the State Bank of India has led to considerable
development in the field of commercial banking.

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Fourteen major Indian commercial banks were nationalised on 19th July 1969, and 6
more Indian commercial banks were nationalised on 15th April 1980.
Several regional rural banks were established to cater to the credit needs of rural areas.
Several Land development banks were set up to cater to the long term credit needs of
agriculturalists.
Besides the above the banking institutions, a number of special financial institution
were set up for meeting the specialist needs of certain sectors of the economy.
Today Indian banking system compromises public sector banks (which includes State
bank of India and its associate banks called State bank group and 20 nationalised banks), private
sector banks, co-operative banks, foreign banks and several development banks
CHALLENGES THE INDIAN BANKS FACE
It is by now well recognized that India is one of the fastest growing economies in the
world. Evidence from across the world suggests that a sound and evolved banking system is
required for sustained economic development. India has a better banking system in place vis a
vis other developing countries, but there are several issues that are needed to be ironed out.
INTEREST RATES
Interest rate risk can be defined as exposure of banks net interest income to adverse
moments in interest rates. A banks balance sheet consists mainly of rupee assets and liabilities.
Any move4ment in domestic interest rates is the main sources of interest rate risk.
Over the last few years the treasury departments of the banks have been responsible for
a sustainable part of profits made by bank. Between July 1997 and October 2003, as interest
rates fell, the yield on ten year government bonds fell, from 13% to 4.9%. with yields falling
the banks make huge profits on their bond portfolios.
Now as yields go up with the rising inflation, bond yields go up and bond prices fall as
the debt market starts factoring a possible interest rate hike, the banks will have to set aside
funds to market their investment.
This will make it difficult to show huge profits from treasury operations. This concern
becomes much stronger because a substantial percentage of banks deposit remains invested in
government bonds.

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Competition in retail banking
Theentry of new generation private sector banks has changed the entire scenario. Earlier
the household savings went into banks and the banks then lent out money to corporate. Now
they need sell banking. The consumer has never been so lucky with so many banks offering so
many products to choose from. With supply far exceeding demand it has been a race to the
bottom, with the banks undercutting one another. A lot of foreign banks have already burnt
their fingers in the retail game and have now decided to get out of a few retail segments
completely.
The urge to merge
In the recent past there has been a lot of talk about Indian Banks lacking in scale and
size. The State bank of India is the only bank from India to make it to the list of Top 100 banks,
globally. Most of the PSBs are either looking to pick up a smaller bank or waiting to be picked
up by a larger bank.
The central government also seems to be game about and is seen to be encouraging
PSBs to merge or acquire other banks. Global evidence seems to suggest that even though there
is a great enthusiasm when companies merge or get acquired, majority of the
mergers/acquisitions do not really work.
THE BANKING REFORMS
In 1991, the Indian economy went through a process of economic liberalization, which
was followed up by the initiation of fundamental reforms in the banking sector in 1992. The
banking reform package was based on the recommendations proposed by the Narasimham
Committee Report (1991) that advocated a move to a more market oriented banking system,
which would operate in an environment of prudential regulation and transparent accounting.
One of the primary motives behind this drive was to introduce an element of market discipline
into the regulatory process that would reinforce the supervisory effort of the Reserve Bank of
India (RBI). Market discipline, especially in the financial liberalization phase, reinforces
regulatory and supervisory efforts and provides a strong incentive to banks to conduct their
business in a prudent and efficient manner and to maintain adequate capital as a cushion against
risk exposures. Recognizing that the success of economic reforms was contingent on the
success of financial sector reform as well, the government initiated a fundamental banking
sector reform package in 1992.

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Banking sector, the world over, is known for the adoption of multidimensional
strategies from time to time with varying degrees of success. Banks are very important for the
smooth functioning of financial markets as they serve as repositories of vital financial
information and can potentially alleviate the problems created by information asymmetries.
From a central bank’s perspective, such high-quality disclosures help the early detection of
problems faced by banks in the market and reduce the severity of market disruptions.
Consequently, the RBI as part and parcel of the financial sector deregulation, attempted to
enhance the transparency of the annual reports of Indian banks by, among other things,
introducing stricter income recognition and asset classification rules, enhancing the capital
adequacy norms, and by requiring a number of additional disclosures sought by investors to
make better cash flow and risk assessments.
During the pre economic reforms period, commercial banks & development financial
Institutions were functioning distinctly, the former specializing in short & medium term
financing, while the latter on long term lending & project financing. Commercial banks were
accessing short term low cost funds thru savings investments like current accounts, savings
bank accounts & short duration fixed deposits, besides collection float.
Development Financial Institutions (DFIs) on the other hand, were essentially
depending on budget allocations for long term lending at a concessionary rate of interest. The
scenario has changed radically during the post reforms period, with the resolve of the
government not to fund the DFIs through budget allocations. DFIs like IDBI, IFCI & ICICI
had posted dismal financial results. Infect, their very viability has become a question mark.
Now, they have taken the route of reverse merger with IDBI bank & ICICI bank thus converting
them into the universal banking system.
Major Recommendations by the Narasimham Committee on Banking Sector
Reforms
Strengthening Banking System
 Capital adequacy requirements should take into account market risks in addition to the
credit risks.
 In the next three years the entire portfolio of government securities should be marked
to market and the schedule for the same announced at the earliest (since announced in
the monetary and credit policy for the first half of 1998-99); government and other

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approved securities which are now subject to a zero risk weight, should have a 5 per
cent weight for market risk.
 Risk weight on a government guaranteed advance should be the same as for other
advances. This should be made prospective from the time the new prescription is put in
place.
 Foreign exchange open credit limit risks should be integrated into the calculation of
risk weighted assets and should carry a 100 per cent risk weight.
 Minimum capital to risk assets ratio (CRAR) be increased from the existing 8 per cent
to 10 per cent; an intermediate minimum target of 9 per cent be achieved by 2000 and
the ratio of 10 per cent by 2002; RBI to be empowered to raise this further for individual
banks if the risk profile warrants such an increase. Individual banks' shortfalls in the
CRAR are treated on the same line as adopted for reserve requirements, viz. uniformity
across weak and strong banks. There should be penal provisions for banks that do not
maintain CRAR.
 Public Sector Banks in a position to access the capital market at home or abroad be
encouraged, as subscription to bank capital funds cannot be regarded as a priority claim
on budgetary resources.
Asset Quality
 An asset is classified as doubtful if it is in the substandard category for 18 months in
the first instance and eventually for 12 months and loss if it has been identified but not
written off. These norms should be regarded as the minimum and brought into force in
a phased manner.
 For evaluating the quality of assets portfolio, advances covered by Government
guarantees, which have turned sticky, be treated as NPAs. Exclusion of such advances
should be separately shown to facilitate fuller disclosure and greater transparency of
operations.
 For banks with a high NPA portfolio, two alternative approaches could be adopted.
One approach can be that, all loan assets in the doubtful and loss categories should be
identified and their realisable value determined. These assets could be transferred to an
Assets Reconstruction Company (ARC) which would issue NPA Swap Bonds.
 An alternative approach could be to enable the banks in difficulty to issue bonds which
could from part of Tier II capital, backed by government guarantee to make these

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instruments eligible for SLR investment by banks and approved instruments by LIC,
GIC and Provident Funds.
 The interest subsidy element in credit for the priority sector should be totally
eliminated and interest rate on loans under Rs. 2 lakhs should be deregulated for
scheduled commercial banks as has been done in the case of Regional Rural Banks and
cooperative credit institutions.
Prudential Norms and Disclosure Requirements
 In India, income stops accruing when interest or instalment of principal is not paid
within 180 days, which should be reduced to 90 days in a phased manner by 2002.
 Introduction of a general provision of 1 per cent on standard assets in a phased manner
be considered by RBI.
 As an incentive to make specific provisions, they may be made tax deductible.
Systems and Methods in Banks
 There should be an independent loan review mechanism especially for large borrowal
accounts and systems to identify potential NPAs. Banks may evolve a filtering
mechanism by stipulating in-house prudential limits beyond which exposures on
single/group borrowers are taken keeping in view their risk profile as revealed through
credit rating and other relevant factors.
 Banks and FIs should have a system of recruiting skilled manpower from the open
market.
 Public sector banks should be given flexibility to determined managerial remuneration
levels taking into account market trends.
 There may be need to redefine the scope of external vigilance and investigation
agencies with regard to banking business.
 There is need to develop information and control system in several areas like better
tracking of spreads, costs and NPSs for higher profitability, , accurate and timely
information for strategic decision to Identify and promote profitable products and
customers, risk and asset-liability management; and efficient treasury management.
Structural Issues
 With the conversion of activities between banks and DFIs, the DFIs should, over a
period of time convert them to bank. A DFI which converts to bank be given time to

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face in reserve equipment in respect of its liability to bring it on par with requirement
relating to commercial bank.
 Mergers of Public Sector Banks should emanate from the management of the banks
with the Government as the common shareholder playing a supportive role. Merger
should not be seen as a means of bailing out weak banks. Mergers between strong
banks/FIs would make for greater economic and commercial sense.
 ‘Weak Banks' may be nurtured into healthy units by slowing down on expansion,
eschewing high cost funds/borrowings etc.
 The minimum share of holding by Government/Reserve Bank in the equity of the
nationalised banks and the State Bank should be brought down to 33%. The RBI
regulator of the monetary system should not be also the owner of a bank in view of the
potential for possible conflict of interest.
 There is a need for a reform of the deposit insurance scheme based on CAMELs ratings
awarded by RBI to banks.
 Inter-bank call and notice money market and inter-bank term money market should be
strictly restricted to banks; only exception to be made is primary dealers.
 Non-bank parties are provided free access to bill rediscounts, CPs, CDs, Treasury
Bills, and MMMF.
 RBI should totally withdraw from the primary market in 91 days Treasury Bills.
BASEL - II ACCORD
Bank capital framework sponsored by the world's central banks designed to promote
uniformity, make regulatory capital more risk sensitive, and promote enhanced risk
management among large, internationally active banking organizations. The International
Capital Accord, as it is called, will be fully effective by January 2008 for banks active in
international markets. Other banks can choose to "opt in," or they can continue to follow the
minimum capital guidelines in the original Basel Accord, finalized in 1988. The revised accord
(Basel II) completely overhauls the 1988 Basel Accord and is based on three mutually
supporting concepts, or "pillars," of capital adequacy. The first of these pillars is an explicitly
defined regulatory capital requirement, a minimum capital-to-asset ratio equal to at least 8% of
risk-weighted assets. Second, bank supervisory agencies, such as the Comptroller of the
Currency, have authority to adjust capital levels for individual banks above the 9% minimum

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when necessary. The third supporting pillar calls upon market discipline to supplement reviews
by banking agencies.
Basel II is the second of the Basel Accords, which are recommendations on banking
laws and regulations issued by the Basel Committee on Banking Supervision. The purpose of
Basel II, which was initially published in June 2004, is to create an international standard that
banking regulators can use when creating regulations about how much capital banks need to
put aside to guard against the types of financial and operational risks banks face. Advocates of
Basel II believe that such an international standard can help protect the international financial
system from the types of problems that might arise should a major bank or a series of banks
collapse. In practice, Basel II attempts to accomplish this by setting up rigorous risk and capital
management requirements designed to ensure that a bank holds capital reserves appropriate to
the risk the bank exposes itself to through its lending and investment practices. Generally
speaking, these rules mean that the greater risk to which the bank is exposed, the greater the
amount of capital the bank needs to hold to safeguard its solvency and overall economic
stability.
The final version aims at:
 Ensuring that capital allocation is more risk sensitive,
 Separating operational risk from credit risk, and quantifying both,
 Attempting to align economic and regulatory capital more closely to reduce the scope
for regulatory arbitrage.
While the final accord has largely addressed the regulatory arbitrage issue, there are
still areas where regulatory capital requirements will diverge from the economic.
Basel II has largely left unchanged the question of how to actually define bank capital,
which diverges from accounting equity in important respects. The Basel I definition, as
modified up to the present, remains in place.
The Accord in operation

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Basel II uses a "three pillars" concept – (1) minimum capital requirements (addressing
risk), (2) supervisory review and (3) market discipline – to promote greater stability in the
financial system.
The Basel I accord dealt with only parts of each of these pillars. For example: with
respect to the first Basel II pillar, only one risk, credit risk, was dealt with in a simple manner
while market risk was an afterthought; operational risk was not dealt with at all.
The First Pillar
The first pillar deals with maintenance of regulatory capital calculated for three major
components of risk that a bank faces: credit risk, operational risk and market risk. Other risks
are not considered fully quantifiable at this stage.
The credit risk component can be calculated in three different ways of varying degree
of sophistication, namely standardized approach, Foundation IRB and Advanced IRB. IRB
stands for "Internal Rating-Based Approach".
For operational risk, there are three different approaches - basic indicator approach,
standardized approach and advanced measurement approach. For market risk the preferred
approach is VaR (value at risk).

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As the Basel II recommendations are phased in by the banking industry it will move from
standardized requirements to more refined and specific requirements that have been developed
for each risk category by each individual bank. The upside for banks that do develop their own
bespoke risk measurement systems is that they will be rewarded with potentially lower risk
capital requirements. In future there will be closer links between the concepts of economic
profit and regulatory capital.
Credit Risk can be calculated by using:
1. Standardized Approach
2. Foundation IRB (Internal Ratings Based) Approach
3. Advanced IRB Approach
The standardized approach sets out specific risk weights for certain types of credit risk.
The standard risk weight categories are used under Basel 1 and are 0% for short term
government bonds, 20% for exposures to OECD Banks, 50% for residential mortgages and
100% weighting on commercial loans. A new 150% rating comes in for borrowers with poor
credit ratings. The minimum capital requirement (the percentage of risk weighted assets to be
held as capital) has remains at 8%.
For those Banks that decide to adopt the standardized ratings approach they will be
forced to rely on the ratings generated by external agencies. Certain Banks are developing the
IRB approach as a result.
The Second Pillar
The second pillar deals with the regulatory response to the first pillar, giving regulators
much improved 'tools' over those available to them under Basel I. It also provides a framework
for dealing with all the other risks a bank may face, such as systemic risk, pension risk,
concentration risk, strategic risk, reputation risk, liquidity risk and legal risk, which the accord

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combines under the title of residual risk. It gives banks a power to review their risk management
system.
The Third Pillar
The third pillar greatly increases the disclosures that the bank must make. This is
designed to allow the market to have a better picture of the overall risk position of the bank
and to allow the counterparties of the bank to price and deal appropriately.
The new Basel Accord has its foundation on three mutually reinforcing pillars that
allow banks and bank supervisors to evaluate properly the various risks that banks face and
realign regulatory capital more closely with underlying risks. The first pillar is compatible with
the credit risk, market risk and operational risk. The regulatory capital will be focused on these
three risks. The second pillar gives the bank responsibility to exercise the best ways to manage
the risk specific to that bank. Concurrently, it also casts responsibility on the supervisors to
review and validate banks’ risk measurement models. The third pillar on market discipline is
used to leverage the influence that other market players can bring. This is aimed at improving
the transparency in banks and improves reporting.

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COMPANY PROFILE AND HISTORY
State Bank of Travancore was originally established as Travancore Bank Ltd. In
1945 sponsored by the erstwhile Princely State of Travancore. Under a special statute of the
Indian Parliament(SBI subsidiary Banks Act1959) it has been made an Associate of the State
Bank of India and a member of State Bank Group, the largest banking group in india. The
Regd.office/ Head Office at Poojapura, Trivandrum. Their objective was primarily to
extend financial assistance to the local weavers who were crippled by a crisis in the handloom
industry through mobilising small savings from the community. The bank collected as low as
2 annals daily at the doorsteps of the depositors through its Agents under its Pigmy Deposit
Scheme started in 1948. This scheme is the Bank's brand equity today and the Bank collects
around Rs. 2 crore per day under the scheme.
The progress of State Bank of Travancore has been synonymous with the phase of progressive
banking in India. Spanning over 60 years of pioneering expertise, the Bank has created for
itself a solid customer base comprising customers of two or three generations. Being firmly
rooted in rural India and understanding the grassroot realities, the Bank's perception had vision
of future India. It has been propagating innovations in Banking and also has been receptive to
new ideas, without however getting uprooted from its distinctive socio-economic and cultural
ethos. Its philosophy of growth by mutual sustenance of both the Bank and the people has paid
rich dividends. The Bank has been operating as a catalyst of development across the country
with particular reference to the common man at the individual level and in rural/semi urban
centres at the area level.
The Bank is well equipped to meet the challenges of the 21st century in the areas of information
technology, knowledge and competition. A comprehensive IT plan is being put in place and
the skills and knowledge of the Bank's personnel are being upgraded through a variety of
training programmes to promote customer delight in every sphere of its activity. The Bank has
launched an ambitious technology plan called Centralised Banking Solution (CBS) whereby

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500 of our strategic branches with their ATMs are being networked nationwide over a 4 year
period.
MEMORABLE MILESTONES IN AN YEAR JOURNEY
Growing Far
And Wide 1945
On 10.11.1945, the business of the Bank commenced in Travancore
with the name "Travancore Bank Ltd.," .
1948 First branch of the Bank opened at Travancore Dakshina .
1957 Bank became a member of the Clearing House for the first time at
Bombay.
1959 SBT acquired the assets and liabilities of Indo-Mercantile Bank,
which Sri Popatlal Goverdhan Lalan had helped found in Cochin in
1937.
1961 SBT acquired Travancore Forward Bank (est. 1929), Kottayam
Orient Bank (est. 1926), and Bank of New India (est. 1944) after
the Reserve Bank of India put the banks under moratorium
1963 SBT acquired Vasudeva Vilasam Bank (est. 1930).
1964 SBT acquired Cochin Nayar Bank (est. 1929) and Latin Christian
Bank (est. 1928 in Ernakulam), after the Reserve Bank of India put
the banks under moratorium. It also acquired Champakulam
Catholic Bank, which had been established in 1929 in Alleppey.
1969 29 branches opened in a single day in rural areas.
1971 200th branch opened at Trisshur in Kerala
1972 Entered Foreign Exchange business by opening Foreign Exchange
Department at Bombay.
1974 Name of the Bank changed from "Travancore Bank Ltd." to "State
Bank of Travancore".

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1976 Economic Research Department set up. One of the first few Banks
to emphasise on research in Banking even before nationalisation.
1979 Bank had 306 branches at the time of nationalisation of which 66%
State Bank of Travancore in Rural and Semi Urban centres.
1980 First Staff Training College started at Head Office
1981 First specialised branch in Foreign Exchange opened at Kerala.
1982 Opened a branch Centralised NRE Saving Bank Account Opening at
NRI Branch Ernakulam.
1986 First overseas branch opened at Saudi on 17.8.86.
1991 First Specialised Industrial Finance Branch opened at Mumbai.
1999 Bank raised Capital of Rs.125 Crore in Oct.1999 from more than 4
lakh shareholders
2000 First Specialised Capital Market Services branch opened at Mumbai
2001 First branch under CBS (Core Banking Solution) started operation at
Bangalore.
2002 Centralised Banking Solution under the brand name "SBT-e-
banking" launched at
2003 SBT slashes deposit rates on FCNR deposits on US dollar, pound
sterling and Euro.
2004
 State Bank of Travancore (SBT) has launched a new personal
loan scheme for the employees of institutions and companies. Under
the scheme, namely Akshaya, rated institutions and companies such
as universities, Maruti Udyog Ltd, Kochi Refineries, Kerala
Minerals and Metals Ltd, Travancore Titanium Products and
Cochin Shipyard can get into an agreement with SBT to enable their
employees avail themselves of loans from the bank.
 SBT 's SSI (Small Scale Industry sector) branches at
Thiruvananthapuram, Thrissur and Alappuzha, and the non-resident
Indian branch at Attingal have received the ISO 9001:2000
recognition.

21
2005
 SBT inks pact with Punjab Tractors on Jan 18, 2005
 SBT ties up with UAE Exchange Centre
 State Bank of Travancore unveils Malayalam website
 SBT launches new loan scheme for road transport operators on
April 26, 2005
 SBT join hands with Almoayyed for exchange house in Bahrain
 State Bank of Travancore (SBT) launches an all-India toll-free
info line (1600 425 5566) here on Nov 11. To be `live' 8 a.m.
through 8 p.m. seven days a week
2007 Thiruvananthapuram: State Bank of Travancore (SBT) has inked a
memorandum of understanding with Crisil for rating of small and
medium enterprises. As per the MoU, Crisil will give rating services
to the clients of SBT at a concessional fee.
2008  State Bank of Travancore has set up an extension counter with
core banking facilities at Malikappuram Buildings in
Sabarimala.
 The Company has splits its face value from Rs100/- to Rs10/-.
2009 State Bank of Travancore (SBT) has announced the opening of its
branch at Kukatpally, whixh is the seventh of SBT in Andhra
Pradesh.
2010 State Bank of Travancore (SBT) has signed a memorandum of
understanding (MoU) with the Unique Identification Authority of
India (UIDAI) and thus becomes the first bank in Kerala to be a
registrar for the Aadhaar project.

22
2011 State Bank of Travancore has declared a final dividend of Rs 10 per
share.
2012 State Bank of Travancore has declared a final dividend of Rs. 2/- per
share n addition to the interim dividend of Rs. 16/- per share
STATE BANK OF TRAVANCORE MANAGEMENT INSTITUTE(SBTMI) SBTMI-
An Overview
STATE Bank of Travancore Management Institute (SBTMI), located at
ERNAKULAM, in the backdrop of luxuriant SeaSide, is the apex training institution of SBT
for honing skills in banking and management for the bank's executives and senior personnel.
The Institute was set up in November 1987 . The institute has a sprawling campus of 15 acres,
offering a panoramic view of the green valley on the east and Arabian Sea in the west. The
fully residential Institute, with all modern infrastructure expected in an Institution of this
nature, like well-equipped classrooms, library, computer laboratory, conference hall and
auditorium, also offers a variety of recreation facilities, including a modern gymnasium , 5-
hole golf course, mini-cricket ground, volleyball courts, indoor games, jogging track and so
on. Shady fruit bearing trees, medicinal plants, rose garden and other recreational facilities are
provided to rejuvenate the body and mind the hostel has 65 fully air-conditioned and tastefully
furnished rooms.
Training Centres & their activities

23
SBT, under its wings, has Two Training Centres, at Trivandrum and Ernakulam, apart from a
Training Manager. While Training Centres cater to the training needs of Middle Management,
Junior Management and Workmen employees, Training Manager imparts training mainly to
Workmen employees. Like SBT, Training Centres are also well equipped with all modern
learning aids, like computer lab, library, multi-media projectors, seating arrangements to
facilitate "Adult Learning Principles"
Training Programmes
Training activities of the Bank are governed by the policies and procedures laid down in the
Training Manual. Training programs are classified into two categories, general programmes
and special programmes. 40 General Programmes, in branches like Risk Management, Credit
Management, Recovery Management, Internal Control Management, Human Resource
Management, Marketing and Quality Improvement, Foreign Exchange, Information
Technology, are identified and their course contents, target groups are listed in the Training
Manual. Special programmes are designed based on the recommendations of the Departments
at Head Office and Corporate Office, taking into account the Corporate Goals, Policies,
requirements, business plans and strategies, target group etc.
Training Methodology
"Adult Learning Principles" is practised in all training programmes, where the emphasis is on
group synergy through activities like group discussion, case studies, problem-solving exercises
etc.
E-Learning Initiatives
Bank has taken its first step in e-learning initiative with the uploading of reading The materials
on "Export Finance", Agricultural Lending and Financing SSI on its Intranet.
MOU with M/s CMC Limited
The Bank has signed a MOU with M/s CMC Ltd., a Tata Consultancy Services Group
company, to make State Bank of Travancore Institute Management (SBTIM) a Centre of
Excellence of global standards. Under the tie-up high quality management training in Banking
and Finance will be offered with specialisation in Financial Management, Marketing, Human
Resource Management, Communication, Information Technology etc.
PRODUCTS & SERVICES
Bank offers a number of varied products under Deposits, Advances to suit the needs of all types
of customers. Details of products are available in each category under this head. We offer other
services for our customers like Cash Management Services and Gift Cheques.

24
Bank also have various delivery channels like ATM, Telebanking, Internet Banking offering
specialised products and services at selected branches / centres under Centralised Banking
Solution.
DEPOSIT PRODUCTS
A) Operative Deposit Products
i. Savings Bank Account
 These accounts are designed to help the individuals (personal customers) to inculcate
the habit of saving money and to meet their future requirement of money. Amounts can
be deposited/withdrawn from these accounts by way of cheques / withdrawal slips. It
helps the customers to keep minimum cash at home besides earning interest.
 These accounts can be opened by eligible person/s and certain organisations / agencies
(as approved by the Reserve Bank of India (RBI)
 As required by law, while opening SB account, the Bank will satisfy itself about the
identity. including verification of address, of a person/s seeking to open an account, to
assist in protecting the prospective customer/s, members of the public and ourselves
against fraud and other misuses of the banking system
 The Bank requires a satisfactory introduction of the person/s opening the account by
a person acceptable to the Bank
 The Bank is required to obtain two recent photographs of the person/s opening the
account, as per RBI directives
 The Bank is required to obtain Permanent Account Number (PAN) or General Index
Register (GIR) Number or alternatively obtain declaration in Form No.60 or 61 as per
the Income Tax Act (vide Section 139 A) from the person/s opening the account
 The Bank will provide to the prospective customers details of the documents required
for identification of the person/s opening the account in addition to a satisfactory
introduction. Documents normally accepted are the current gas / telephone / electricity
bill or voter's identity card or driving license or passport etc
 The account holder is required to maintain certain minimum balance in the account, as
specified by the Bank from time to time, separately for computerized and non-
computerized branches and also depending on, whether account holder wants to avail
the cheque book facility or not. Non-compliance of this would attract service charges.

25
Interest at 3.50% p.a. is presently paid on half yearly basis depending on minimum
balance between the 10th day and last day of the month, with a minimum of Re.1/-.
 Cheques, dividend warrants drawn in the name of account holder/s will only be
collected through this account. Instruments endorsed in favour of the account holder/s
will not be collected through savings bank account
 Business transactions shall not be routed through Savings Bank Account. If routed, the
Bank will recover the interest paid and may also close the account. The Bank has the
right to close any undesirable/un remunerative account without giving any reason by a
simple notice to the account holders.
ii. Current Accounts
 Current Accounts can be opened by individuals, partnership firms, private and public
limited companies, HUFs/specified associates, societies, trusts, etc
 As required by law, while opening this account, the Bank will satisfy itself about the
identity, including verification of address, of a person/s seeking to open an account, to
assist in protecting the prospective customer/s, members of the public and ourselves
against fraud and other misuses of the banking system
 The Bank requires a satisfactory introduction of the person/s opening the account by
a person acceptable to the Bank.
 The Bank is required to obtain two recent photographs of the person/s opening /
operating the account, as per R B I directives
 The Bank is required to obtain Permanent Account Number (PAN) or General Index
Register (GIR) Number or alternatively obtain declaration in Form No.60 or 61 as per
the Income Tax Act (vide Section 139 A) from the person/s opening the account (i.e.
including partners of Registered / Unregistered partnership as also Registered /
Incorporated bodies / companies.
 Minimum balance as stipulated from time to time will be required to be maintained.
 No interest is paid on credit balances kept in current account.
 Service charges are levied for Ledger folio used, Cheque books issued, Non-
maintenance of minimum balance, Return of cheques etc.
 For opening special types of current accounts like for Executors, Administrators,
Trustees, Liquidators etc., the Branch Manager may be contacted who will help in
opening these types of accounts.

26
 As per RBI directive, the applicant (i.e. account opener) should declare in the account
opening form or separately that he is not enjoying any credit facility with any Bank and
if he does enjoy any facility / facilities, he should declare full particulars thereof
indicating the name of the bank and name of the branch wherefrom he has availed these
facilities.
iii) SBT-Super Premium Savings Bank Account
The salient features of the new scheme are furnished below:
 All person(s) / associations who are eligible to open a Savings Bank Account can open
accounts under this scheme.
 Monthly average minimum balance of Rs.1,00,000/- is to be maintained under the
scheme.
 Sweep-in / sweep-out facility at all our e-banking branches.
B) Special products in SBT E-banking
i) Premium Savings Account
The Bank has introduced a Premium Savings Account at e-banking branches that combines full
safety, easy liquidity and highest possible interest. The salient features of the scheme are as
under
 A unique 'Sweep out, Sweep in' facility offered at our e-banking branches ensures that
while the customer's money earns solid interest as a fixed deposit, it turns liquid to
meet his urgent needs. That too at no extra cost.
 Average monthly balance of Rs.10000/-to be maintained in the Premium Savings
Account.
 Balance available in the account in excess of Rs.10000/-on any day gets automatically
swept out into a fixed deposit for 180 days in units of Rs.1000/-.
 In the event of shortfall in SB for meeting your clearing cheques or for other urgent
needs, the fixed deposit is swept back into the Premium Savings Account in required
number of units of Rs. 1000/- free of cost.
 No penalty is charged for breaking the fixed deposit prematurely. However, the amount
swept out earns interest for the period run at the applicable rate.

27
 Even while breaking the fixed deposit, only the most recently converted fixed deposit
is first broken to minimize interest loss to the customer.
 Only those amounts swept out of your Premium Savings Account are eligible for sweep
in and not other fixed deposits.

28
 When fixed deposits mature at the end of 180 days, the Bank will renew the principal
every 180 days while crediting the interest to the savings account. Rs.100/-per month
is levied as service charges whenever the monthly average balance in the Premium
Savings Account goes below Rs.10000/-
ii) Special Premium Savings Account
The Bank has introduced a Special Premium Savings Account at e-banking
branches that combines full safety, easy liquidity and highest possible interest. The salient
features of the scheme are as under
 A unique 'Sweep out, Sweep in' facility offered at our e-banking branches ensures that
while the customer's money earns solid interest as a fixed deposit, it turns liquid to
meet his urgent needs. That too at no extra cost.
 Average monthly balance of Rs.20000/-to be maintained in the Special Premium
Savings Account.
 Balance available in the account in excess of Rs.20000/-on any day gets automatically
swept out into a fixed deposit for 1 year 1 day in units of Rs.1000/-.
 In the event of shortfall in SB for meeting your clearing cheques or for other urgent
needs, the fixed deposit is swept back into the Special Premium Savings Account in
required number of units of Rs. 1000/- free of cost.
 No penalty is charged for breaking the fixed deposit prematurely. However, the amount
swept out earns interest for the period run at the applicable rate.
 Even while breaking the fixed deposit, only the most recently converted fixed deposit
is first broken to minimise interest loss to the customer.
 Only those amounts swept out of your Special Premium Savings Account are eligible
for sweep in and not other fixed deposits.
 When fixed deposits mature at the end of 1 year 1 day, the Bank will renew the principal
every 1 year 1 day while crediting the interest to the savings account. Rs.100/-per
month is levied as service charges whenever the monthly average balance in the Special
Premium Savings Account goes below Rs.20000/-

29
iii. Multi-City Current Account
2 variants of Multi-City Current Accounts are SBT Silver Current
Account and SBT Platinum Current Account.
iv) SBT Flexi Current Account
“SBT Flexi Current Account” combines the liquidity of Current Account
with the earning capacity of Term Deposits. The account is available at SBT Branches and
provides for Sweep-out Sweep-in Facility. Amounts in excess of the prescribed threshold
amount of Rs. 1.00 lakh is automatically swept out to Term Deposit and funds from the Term
Deposit is Swept in to the Flexi Current Account as and when there is a shortfall in the balance
in the account.
v) Multi-City SB Account
This facility is to be offered to high net-worth Savings Bank customers of
the Bank.
 The minimum average balance(MAB) to be maintained in the account is Rs.25,000/-.
 All third party cheques shall be crossed ‘Account Payee’ and will be payable at par at
all our CBS branch centres.
 No upper limit for transaction through A/C Payee cheques.
 Self-cheques can be paid in cash upto an aggregate limit of Rs.50,000/- in a day at all
the SBT branches other than the home branch.
C) Term Deposit Products
i) Fixed Deposit
A regular interest earning scheme. A flexible and convenient deposit
scheme which ensures that your money never remains idle. Even very small amounts earn
interest for very short periods. Yes. You can deposit an amount of just Rs.1000/- for a period
as short as 15 days and make it grow.
Salient features of the scheme are:
 Minimum deposit Rs.1000/-
 Option available for receiving monthly interest at discounted rates or quarterly interest.
 Premature withdrawal of deposit is permitted any time subject to payment of prescribed
penalty.

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 Loans available up to a maximum of 95% of the deposit amount depending on the
length of the unexpired period of the deposit.
 Senior Citizens (above 60 years of age) are eligible for an additional interest of 1%.
 Nomination facility available.
 The rates of interest on deposits are as fixed by the Bank from time to time.
ii) Exchange Earner’s Foreign Currency Accounts – Term Deposit (EEFC A/cs)
o EEFC a/c can also be opened as Term deposit
o Exporters to earn interest on EEFC accounts to the extent of outstanding of USD 1 Mio per
exporter.
o Term Deposits are opened as per RBI guidelines from time to time. At present the maturity
period of Term Deposits are upto 31st October 2008 only.
 Loans against this Term Deposits are not permitted
 Designated currencies are US Dollars (USD), Great Britain Pounds (GBP) and Euro.
Interest Rates on EEFC Term Deposits are notified 1st of every month
iii) SBT Tax Shield Deposit Scheme
The new product SBT Tax Shield is drawn on the lines of the Union Government
notification on Bank Term Deposit Scheme, 2006 for the purpose of Sec 80C(2)(xxi) of
the Income Tax Act. The Deposit under the Scheme has to be in the prescribed form with
the Fixed Deposit Receipt bearing Permanent Account Number (PAN) and signature of
the assesse along with the name and address of the account holder and other details.
iv) Vikas Cash Certificate
A Money Multiplier scheme - Vikas Cash Certificate is a convenient and attractive
reinvestment plan where interest earns interest every quarter to provide a tidy sum on maturity.
An ideal and fast growing scheme for those with big future commitments in mind viz.,
children's education, daughter's marriage, house purchase etc.
 Minimum deposit Rs.1000/- and thereafter in multiples of Rs.100/-
 Period of deposit ranges from 6 months to 10 years in completed quarters.
 Interest compounded every quarter.
 Premature withdrawal of the deposit is permitted any time on payment of the prescribed
penalty.

31
 Loans up to a maximum of 95% of the balance available depending on the length of the
unexpired period of the deposit.
 The rates of interest are as fixed by the Bank from time to time.
v) SBT Suvidha Deposit
A Fixed Deposit with partial withdrawal facility - A flexible and convenient scheme whereby
a deposit is made for a fixed period from which amounts can be withdrawn as and when needed.
It is ideally designed for those who desire the high interest on their fixed deposit with the
operational convenience of withdrawals in times of need.
 Deposit accepted for periods ranging from 15 days to 120 months.
 Deposit accepted in multiples of Rs.1000/- with a minimum of Rs.1000/-
 Interest is payable every quarter.
 Option is available to withdraw a portion of the deposit in multiples of Rs.1000/-
whenever needed.
 No penalty is payable on such partial withdrawals.
vi) Social Security Deposit
An ideal monthly income plan - Nothing provides greater comfort and peace of mind than a
guaranteed, regular income. This is particularly true of the aged and the pensioners who desire
a monthly income through periodical investment of their accumulated savings. This periodical
income can be utilized in several ways like gifting a part to near and dear ones, donating to
noble causes etc.

32
Our Social Security Deposit is ideally designed to meet such needs. All you need to do is to
invest a lump sum amount for a fixed period that provides regular monthly interest for meeting
various commitments during the period of the deposit.
 Minimum amount of deposit is Rs.1000/-
 Deposits accepted from 1 year to 10 years in completed quarters.
 Option to earn interest either at discounted rates at the end of every calendar month or
on quarterly basis during the period of the deposit.
 Loan available up to 95% of the deposit amount depending on the length of the
unexpired period of the deposit.
 Rate of interest are as fixed by the Bank from time to time.
vii) Senior Citizens' Security Deposit
A highly beneficial value added scheme, specifically designed for the benefit of our respected
Senior Citizens (above 60 years of age), this deposit scheme is truly special in character,
carrying an interest of 0.5% over and above the normal rate besides offering numerous value
additions.
 Minimum amount of deposit is Rs.1000/-
 Period of Deposits is 12 to 120 months.
 Interest on the deposit is 1% above the normal rate.
 Interest payable at monthly (discounted rates) or quarterly intervals.
o Premature withdrawal of deposit is permitted any time without levy of
penalty. Accounts closed before completion of 12 months are not eligible
for additional interest of 1%.
o Exemption from maintaining prescribed minimum balance in savings Bank
account.
 Free Remittance Facility to any of our branches upto a specified limit.

33
 The rates of interest are subject to change and are as fixed by the Bank from
time to time
viii) Cumulative Deposit
An ideal scheme of monthly savings for salaried people, businessmen,professionals etc.Small
amounts saved every month for a long period come in handy to meet large financial
commitments in the future.
 Minimum deposit is Rs.100/-per month.
 Period of deposit ranges from 12 months to 10 years.
 Delayed payment of instalments is accepted with nominal penalty.
 Monthly minimum balance in the account earns compound interest every quarter.
 No tax is deducted from the interest on the deposit
o Loans up to maximum of 95% of the deposit amount available depending on the length
of the unexpired period of the deposit.
ix) Pigmy Deposit
Little drops of water make a mighty ocean - This deposit scheme suits the needs of everyone
viz. businessmen, professionals, wage earners, teachers, salaried personnel, traders,
housewives etc. You can save money with the Bank regularly depending on your convenience.
And you need not visit the Bank for doing so. The Bank's authorised Agent collects your
savings at your doorsteps at regular intervals. And your money silently grows over 63 months
into a lumpsum for meeting your future commitments e.g. daughter's marriage, children's
education, family functions, house purchase etc.
 Period of the scheme is 63 months.
 Amount as low as Re.1/- per day can be saved daily / weekly / monthly.
 No penalty even if depositor is unable to pay instalments regularly.

34
 Deposit account can be closed prematurely subject to certain conditions.
 Loans upto a maximum of 75% of the balance in the Pigmy account
available.
 No tax will be deducted for the interest on the deposit.
 The rates of interest are as fixed by the Bank from time to time
x) SBT Corporate Suvidha Deposit Scheme
Bank is launching of a new deposit scheme namely “SBT Corporate Suvidha Deposit Scheme”
.
The salient features of the scheme are as follows
 Amount of deposit : The minimum quantum of deposit under the scheme is fixed at
Rs.500 lacs and thereafter in multiples of Rs.100 lac.
 Period of deposit : 7 days to 180 days.
 Rate of interest : As applicable to other domestic term deposits. No special or extra
rate can be offered.
 Payment of interest : Simple interest is payable at quarterly intervals at the contracted
rate.
 Premature refunds : Premature withdrawal in multiple of Rs.100 lac permitted subject
to one day notice. However minimum balances of Rs.5 crores should be retained after
such partial withdrawal.
 There is no restriction regarding frequency and number of withdrawals.
 No penalty is to be charged on partial withdrawals . Interest payable on such portion
shall be the interest applicable at the time of accepting the deposit for the period the
amount remained with the Bank.
 Loans on Deposit : LD can be arranged only on the balance amount held with the Bank
and under no circumstances withdrawals beyond the margin stipulated for the LD, shall
be permitted.

35
D) LOAN PRODUCTS
A) Personal Loan Products
The Bank is meeting varied personal credit requirements of different classes of people through
the following loan schemes under personal banking.
i) SBT Saral
Purpose : To meet urgent personal credit requirements
ii) SBT Senior - An exclusive personal loan scheme for pensioners
Purpose: Any bonafide personal / business credit requirement
iii) SBT Rent
Purpose : To meet urgent personal expenses/credit need
iv) SBT Car & Bike Loan
Purpose : To buy new / second hand 4-wheeler or new 2-wheeler
v) SBT Gold Loan - Loan against Gold Jewels
Purpose: Jewel loans/Overdraft for any genuine business/personal credit requirement
vi) SBT Pigmy
Purpose: To meet any contingent requirement of pigmy depositors .
vii) SBT Kisan
Purpose: To meet urgent personal needs / purchase consumer durables like TV, Fridge,
Washing Machine, Audio / Video Equipment etc
viii) SBT Housing Loan Scheme
Purpose : For construction/acquisition of a house/flat or for acquiring a site and building a
house thereon.
 For acquiring a new house or existing house not more than 25 years old.
 For making extensions/additions to existing house. For NRIs, loan available for
acquisition of house for self-occupation on return to India.
For acquisition of furniture/fixtures including air conditioners, geysers, fridge, cots, tables,
sofas etc which form part of improvements to the home purchased or constructed out of the
Housing Loan.
ix) SBT Nivas Plus - A Pre approved personal loan for Housing Loan customers with
good payment record
x) SBT Vidya- A State Bank's Education Loan Scheme

36
Purpose : State Bank's involvement in education dates back to the decades prior to the
Nationalization of Banks. The Bank was also the first to set up a string of Rural Training
Institutes aimed at empowering the young India in rural areas through entrepreneurial
education and training.
xi) SBT Vidyarthi- A Standby Overdraft facility for students of professional courses
Purpose : To meet the recurring expenses of contingent nature that may have to be incurred by
students pursuing professional courses .
B) Agricultural Loan Products
i) SBT Swarna- A facility of Term Loan or Overdraft against the security of gold ornaments.
ii) SBT KRISHI
Purpose : A HASSLE FREE MULTIPURPOSE, COMPOSITE, LONG TERM FARM
CREDIT SCHEME FOR AGRICU LTURISTS
iii) Jewel Loans for Agriculture (JL Agri)
Bank provides jewel loans to agriculturists for their agricultural credit needs on easy terms and
at low cost
iv)SBT Farm House Scheme
The scheme is meant for farmers to enable them to have a decent dwelling house which also
takes care of other requirements such as cattle shed, drying yard, farm implements shed v)
KRISHI VAHAN Schemes - For efficient and timely farming
Medium to long term loans are extended to farmers for
 Purchase of Tractors.
 Power Tillers and Small H.P. Tractors.
 Combine Harvesters.

37
THEORETICAL REVIEW:
Introduction to CAMELS models
During an on-site bank exam, supervisors gather private information, such as
details on problem loans, with which to evaluate a bank's financial condition and to monitor its
compliance with laws and regulatory policies. A key product of such an exam is a supervisory
rating of the bank's overall condition, commonly referred to as a CAMELS rating. This rating
system is used by the three federal banking supervisors (the Federal Reserve, the FDIC, and the
OCC) and other financial supervisory agencies to provide a convenient summary of bank
conditions at the time of an exam.
The acronym "CAMEL" refers to the five components of a bank's condition that are assessed:
Capital adequacy, Asset quality, Management, Earnings, and Liquidity. A sixth component, a
bank's Sensitivity to market risk was added in 1997; hence the acronym was changed to
CAMELS. Ratings are assigned for each component in addition to the overall rating of a bank's
financial condition. The ratings are assigned on a scale from 1 to 5. Banks with ratings of 1 or 2
are considered to present few, if any, supervisory concerns, while banks with ratings of 3, 4, or 5
present moderate to extreme degrees of supervisory concern.
In 1994, the RBI established the Board of Financial Supervision (BFS), which operates as a unit
of the RBI. The entire supervisory mechanism was realigned to suit the changing needs of a
strong and stable financial system. The supervisory jurisdiction of the BFS was slowly extended
to the entire financial system barring the capital market institutions and the insurance sector. Its
mandate is to strengthen supervision of the financial system by integrating oversight of the
activities of financial services firms. The BFS has also established a sub-committee to routinely
examine auditing practices, quality, and coverage.
In addition to the normal on-site inspections, Reserve Bank of India also conducts off-site
surveillance which particularly focuses on the risk profile of the supervised entity. The Off-site
Monitoring and Surveillance System (OSMOS) were introduced in 1995 as an additional tool for
supervision of commercial banks. It was introduced with the aim to supplement the on-site
inspections. Under off-site system, 12 returns (called DSB returns) are called from the financial
institutions, which focus on supervisory concerns such as capital adequacy, asset quality, large

38
credits and concentrations, connected lending, earnings and risk exposures (viz. currency,
liquidity and interest rate risks).
In 1995, RBI had set up a working group under the chairmanship of Shri S. Padmanabhan to
review the banking supervision system. The Committee certain recommendations and based on
such suggestions a rating system for domestic and foreign banks based on the international
CAMELS model combining financial management and systems and control elements was
introduced for the inspection cycle commencing from July 1998. It recommended that the banks
should be rated on a five point scale (A to E) based on the lines of international CAMELS rating
model.
All exam materials are highly confidential, including the CAMELS. A bank's CAMELS rating
is directly known only by the bank's senior management and the appropriate supervisory staff.
CAMELS ratings are never released by supervisory agencies, even on a lagged basis. While exam
results are confidential, the public may infer such supervisory information on bank conditions
based on subsequent bank actions or specific disclosures. Overall, the private supervisory
information gathered during a bank exam is not disclosed to the public by supervisors, although
studies show that it does filter into the financial markets.
CAMELS ratings in the supervisory monitoring of banks
Several academic studies have examined whether and to what extent private supervisory
information is useful in the supervisory monitoring of banks. With respect to predicting bank
failure, Barker and Holds worth (1993) find evidence that CAMEL ratings are useful, even after
controlling for a wide range of publicly available information about the condition and
performance of banks. Cole and Gunter (1998) examine a similar question and find that although
CAMEL ratings contain useful information, it decays quickly. For the period between 1988 and
1992, they find that a statistical model using publicly available financial data is a better indicator
of bank failure than CAMEL ratings that are more than two quarters old.
Hurtle and Lopez (1999) examine the usefulness of past CAMEL ratings in assessing banks'
current conditions. They find that, conditional on current public information, the private
supervisory information contained in past CAMEL ratings provides further insight into bank
current conditions, as summarized by current CAMEL ratings. The authors find that, over the
period from 1989 to 1995, the private supervisory information gathered during the last on-site
exam remains useful with respect to the current condition of a bank for up to 6 to 12 quarters (or

39
1.5 to 3 years). The overall conclusion drawn from academic studies is that private supervisory
information, as summarized by CAMELS ratings, is clearly useful in the supervisory monitoring
of bank conditions.
CAMELS ratings in the public monitoring of banks
Another approach to examining the value of private supervisory information is to examine
its impact on the market prices of bank securities. Market prices are generally assumed to
incorporate all available public information. Thus, if private supervisory information were found
to affect market prices, it must also be of value to the public monitoring of banks.
Such private information could be especially useful to financial market participants, given
the informational asymmetries in the commercial banking industry. Since banks fund projects
not readily financed in public capital markets, outside monitors should find it difficult to
completely assess banks' financial conditions. In fact, Morgan (1998) finds that rating agencies
disagree more about banks than about other types of firms. As a result, supervisors with direct
access to private bank information could generate additional information useful to the financial
markets, at least by certifying that a bank's financial condition is accurately reported.
The direct public beneficiaries of private supervisory information, such as that contained in
CAMELS ratings, would be depositors and holders of banks' securities. Small depositors are
protected from possible bank default by FDIC insurance, which probably explains the finding by
Gilbert and Vaughn (1998) that the public announcement of supervisory enforcement actions,
such as prohibitions on paying dividends, did not cause deposit runoffs or dramatic increases in
the rates paid on deposits at the affected banks. However, uninsured depositors could be expected
to respond more strongly to such information. Jordan, et al., (1999) find that uninsured deposits
at banks that are subjects of publicly-announced enforcement actions, such as cease-and-desist
orders, decline during the quarter after the announcement.
The holders of commercial bank debt, especially subordinated debt, should have the most
in common with supervisors, since both are more concerned with banks' default probabilities
(i.e., downside risk). As of year-end 1998, bank holding companies (BHCs) had roughly $120
billion in outstanding subordinated debt. De Young, et al., (1998) examine whether private
supervisory information would be useful in pricing the subordinated debt of large BHCs. The
authors use an econometric technique that estimates the private information component of the
CAMEL ratings for the BHCs' lead banks and regresses it onto subordinated bond prices. They

40
conclude that this aspect of CAMEL ratings adds significant explanatory power to the regression
after controlling for publicly available financial information and that it appears to be incorporated
into bond prices about six months after an exam. Furthermore, they find that supervisors are more
likely to uncover unfavourable private information, which is consistent with managers' incentives
to publicize positive information while de-emphasizing negative information. These results
indicate that supervisors can generate useful information about banks, even if those banks already
are monitored by private investors and rating agencies. The market for bank equity, which is
about eight times larger than that for bank subordinated debt, was valued at more than $910
billion at year-end 1998. Thus, the academic literature on the extent to which private supervisory
information affects stock prices is more extensive. For example, Jordan, et al., (1999) find that
the stock market views the announcement of formal enforcement actions as informative. That is,
such announcements are associated with large negative stock returns for the affected banks. This
result holds especially for banks that had not previously manifested serious problems.
Focusing specifically on CAMEL ratings, Berger and Davies (1998) use event study
methodology to examine the behaviour of BHC stock prices in the eight-week period following
an exam of its lead bank. They conclude that CAMEL downgrades reveal unfavourable private
information about bank conditions to the stock market. This information may reach the public in
several ways, such as through bank financial statements made after a downgrade. These results
suggest that bank management may reveal favourable private information in advance, while
supervisors in effect force the release of unfavourable information.
Berger, Davies, and Flannery (1998) extend this analysis by examining whether the
information about BHC conditions gathered by supervisors is different from that used by the
financial markets. They find that assessments by supervisors and rating agencies are
complementary but different from those by the stock market. The authors attribute this difference
to the fact that supervisors and rating agencies, as representatives of debt holders, are more
interested in default probabilities than the stock market, which focuses on future revenues and
profitability. This rationale also could explain the authors' finding that supervisory assessments
are much less accurate than market assessments of banks' future performances.

41
CAMELS is basically a ratio-based model for evaluating the performance of banks. Each
component of CAMELS model is briefly explained below.
C- Capital Adequacy:
Capital base of financial institutions facilitates depositors in forming their risk
perception about the institutions. Also, it is the key parameter for financial managers to
maintain adequate levels of capitalization. Moreover, besides absorbing unanticipated shocks,
it signals that the institution will continue to honour its obligations. The most widely used
indicator of capital adequacy is capital to risk-weighted assets ratio (CRWA). According to
Bank Supervision Regulation Committee (The Basle Committee) of Bank for International
Settlements, a minimum 9 percept CRWA is required.
Capital adequacy ultimately determines how well financial institutions can cope with
shocks to their balance sheets. Thus, it is useful to track capital-adequacy ratios that take into
account the most important financial risks—foreign exchange, credit, and interest rate risks—
by assigning risk weightings to the institution’s assets. A sound capital base strengthens
confidence of depositors. This ratio is used to protect depositors and promote the stability and
efficiency of financial systems around the world.
The following ratios measure capital adequacy:
1. Capital Risk Adequacy Ratio
2. Debt Equity Ratio
A – Asset Quality:
Asset quality determines the healthiness of financial institutions against loss of
value in the assets. The weakening value of assets, being prime source of banking problems,
directly pour into other areas, as losses are eventually written-off against capital, which
ultimately expose the earning capacity of the institution. With this backdrop, the asset quality
is gauged in relation to the level and severity of non-performing assets, adequacy of
provisions, recoveries, distribution of assets etc. Popular indicators include nonperforming
loans to advances, loan default to total advances, and recoveries to loan default ratios.

42
The solvency of financial institutions typically is at risk when their assets become
impaired, so it is important to monitor indicators of the quality of their assets in terms of over
exposure to specific risks, trends in nonperforming loans, and the health and profitability of
bank borrowers— especially the corporate sector. Share of bank assets in the aggregate
financial sector assets: In most emerging markets, banking sector assets comprise well over 80
percent of total financial sector assets, whereas these figures are much lower in the developed
economies. Furthermore, deposits as a share of total bank liabilities have declined since1990
in many developed countries, while in developing countries public deposits continue to be
dominant in banks. In India, the share of banking assets in total financial sector assets is around
75 per cent, as of end-March 2008. There is, no doubt, merit in recognizing the importance of
diversification in the institutional and instrument-specific aspects of financial intermediation
in the interests of wider choice, competition and stability. However, the dominant role of banks
in financial intermediation in emerging economies and particularly in India will continue in the
medium-term; and the banks will continue to be “special” for a long time. In this regard, it is
useful to emphasize the dominance of banks in the developing countries in promoting non-
bank financial intermediaries and services including in development of debt-markets. Even
where role of banks is apparently diminishing in emerging markets, substantively, they
continue to play a leading role in non-banking financing activities, including the development
of financial markets. One of the indicators for asset quality is the ratio of non-performing loans
to total loans. Higher ratio is indicative of poor credit decision-making.
NPA: Non-Performing Assets:

43
Advances are classified into performing and non-performing advances (NPAs) as per
RBI guidelines. NPAs are further classified into sub-standard, doubtful and loss assets based
on the criteria stipulated by RBI. An asset, including a leased asset, becomes nonperforming
when it ceases to generate income for the Bank.
An NPA is a loan or an advance where:
 Interest and/or instalment of principal remains overdue for a period of more than 90
days in respect of a term loan;
 The account remains "out-of-order'' in respect of an Overdraft or Cash Credit (OD/CC);
 The bill remains overdue for a period of more than 90 days in case of bills purchased
and discounted;
 A loan granted for short duration crops will be treated as an NPA if the instalments of
principal or interest thereon remain overdue for two crop seasons; and
 A loan granted for long duration crops will be treated as an NPA if the instalments of
principal or interest thereon remain overdue for one crop season.
The Bank classifies an account as an NPA only if the interest imposed during any quarter
is not fully repaid within 90 days from the end of the relevant quarter. This is a key to the
stability of the banking sector. There should be no hesitation in stating that Indian banks have
done a remarkable job in containment of non-performing loans (NPL) considering the overhang
issues and overall difficult environment.
The following ratios are necessary to assess the asset quality.
1. Net NPA to Total Advances
2. Net NPA to Total Asset
3. Gross NPA to Total Advances
4. Advance Yield Ratio
5. Total investment to Total Asset
6. % change in Net NPA
M – Management:

44
Management of financial institution is generally evaluated in terms of capital adequacy,
asset quality, earnings and profitability, liquidity and risk sensitivity ratings. In addition,
performance evaluation includes compliance with set norms, ability to plan and react to
changing circumstances, technical competence, leadership and administrative ability.
Sound management is one of the most important factors behind financial institutions’
performance. Indicators of quality of management, however, are primarily applicable to
individual institutions, and cannot be easily aggregated across the sector. Furthermore, given
the qualitative nature of management, it is difficult to judge its soundness just by looking at
financial accounts of the banks.
Nevertheless, total advance to total deposit, business per employee and profit per
employee helps in gauging the management quality of the banking institutions. Several
indicators, however, can jointly serve—as, for instance, efficiency measures do—as an
indicator of management soundness.
The ratios used to evaluate management efficiency are described asunder:
1. Total Advances to Total Deposits
2. Profit per Employee
3. Business per Employee
4. Return on Net worth
E – Earning & Profitability:

45
Earnings and profitability, the prime source of increase in capital base, is examined
with regards to interest rate policies and adequacy of provisioning. In addition, it also helps to
support present and future operations of the institutions. Strong earnings and profitability
profile of banks reflects the ability to support present and future operations. More specifica lly,
this determines the capacity to absorb losses, finance its expansion, pay dividends to its
shareholders, and build up an adequate level of capital. Being front line of defence against
erosion of capital base from losses, the need for high earnings and profitability can hardly be
overemphasized.
However, for in-depth analysis, another indicator Interest Income to Total Income and
Other income to Total Income is also in used. Compared with most other indicators, trends in
profitability can be more difficult to interpret—for instance, unusually high profitability can
reflect excessive risk taking. The following ratios try to assess the quality of income in terms
of income generated by core activity – income from landing operations.
1. Spread to Total Asset
2. % growth in Net profit
3. Dividend payout ratio
4. Interest income to Total income
5. Net profit to Average Asset
6. Noninterest income to Total Income
7. Operating profit by Average Working fund
L – Liquidity:

46
An adequate liquidity position refers to a situation, where institution can obtain sufficient
funds, either by increasing liabilities or by converting its assets quickly at a reasonable cost. It
is, therefore, generally assessed in terms of overall assets and liability management, as
mismatching gives rise to liquidity risk. Efficient fund management refers to a situation where
a spread between rate sensitive assets (RSA) and rate sensitive liabilities (RSL) is maintained.
The most commonly used tool to evaluate interest rate exposure is the Gap between RSA and
RSL, while liquidity is gauged by liquid to total asset ratio.
Initially solvent financial institutions may be driven toward closure by poor
management of short-term liquidity. Indicators should cover funding sources and capture large
maturity mismatches. The term liquidity is used in various ways, all relating to availability of,
access to, or convertibility into cash. An institution is said to have liquidity if it can easily meet
its needs for cash either because it has cash on hand or can otherwise raise or borrow cash. A
market is said to be liquid if the instruments it trades can easily be bought or sold in quantity
with little impact on market prices. An asset is said to be liquid if the market for that asset is
liquid.
The common theme in all three contexts is cash. A corporation is liquid if it has ready
access to cash. A market is liquid if participants can easily convert positions into cash— or
conversely. An asset is liquid if it can easily be converted to cash.
The liquidity of an institution depends on:
 The institution's short-term need for cash;
 Cash on hand;
 Available lines of credit;
 The liquidity of the institution's assets;
 The institution's reputation in the marketplace.
The ratios suggested to measure liquidity under CAMELS Model are as follows:
1. Liquidity Assets to Total Assets
2. Liquidity Assets to Total Deposits
3. Govt. securities to Total Assets

47
4. Approved securities to Total Assets
5. Liquidity Assets to Demand Deposits
S – Sensitivity to Market Risk:
It refers to the risk that changes in market conditions could adversely impact earnings
and/or capital. Market Risk encompasses exposures associated with changes in interest rates,
foreign exchange rates, commodity prices, equity prices, etc. While all of these items are
important, the primary risk in most banks is interest rate risk (IRR), which will be the focus of
this module. The diversified nature of bank operations makes them vulnerable to various kinds
of financial risks. Sensitivity analysis reflects institution’s exposure to interest rate risk, foreign
exchange volatility and equity price risks (these risks are summed in market risk).
Risk sensitivity is mostly evaluated in terms of management’s ability to monitor and
control market risk. Banks are increasingly involved in diversified operations, all of which are
subject to market risk, particularly in the setting of interest rates and the carrying out of foreign
exchange transactions. In countries that allow banks to make trades in stock markets or
commodity exchanges, there is also a need to monitor indicators of equity and commodity price
risk.

48
DATA ANALYSIS AND INTERPRETATION:
Capital Adequacy
Capital adequacy ratio is used to evaluate, how State Bank of Travancore ltd meets its capital
adequacy requirements.
Capital Adequacy Ratio (CAR)
The idea of capital adequacy norms is that the long run source of finance in a bank should be a
descent % of the assets of the bank after considering their risk realization. As per the prudential
norms, all Indian scheduled commercial banks as well as foreign banks operating in India are
required to achieve 9% capital adequacy ratio by 31thmarch 2000.
Capital Adequacy Ratio Basel I
CAR= Capital Fund / Risk weighted assets and off balance sheet items*100
Capital fund in the formula are bifurcated in to two parts viz, Tier I and Tier II capital.
Table -Capital Adequacy Ratio (Basel I)
Year 2009 2010 2011 2012 2013
Tier –I 7.43% 8.00% 7.77% 7.72% 6.83%
Tier –
II
4.70% 3.89% 3.05% 3.46% 2.61%
CAR 12.13% 11.89% 10.82% 11.18% 9.44%
Graph -Capital Adequacy Ratio (Basel I)

49
Interpretation:
Reserve Bank of India prescribes Banks to maintain a minimum Capital to risk-weighted
Assets Ratio (CRAR) of 9 % with regard to credit risk, market risk and operational risk on an
ongoing basis, as prescribed in Basel I documents.
During the last 5years, State Bank of Travancore is in a position to maintain more than this
minimum requirement. In 2009 it was 12.13% and shows and its shows a decreasing trend up
to 2013. But2012 it shows a increasing trend. The reason of decrease the ratio of CAR in
previous year the bank has reduced capital.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2009 2010 2011 2012 2013
12.13% 11.89%
10.82% 11.18%
9.44%
CAR
YEAR
Series1

50
Capital adequacy ratio of State Bank of TravancoreBank (as per Basel II norms),
Table - Capital Adequacy Ratio (Basel II)
Year 2009 2010 2011 2012 2013
Tier -I 7.43% 8.00% 9.00% 9.35% 8.46%
Tier -II 4.70% 3.89% 3.54% 4.20% 3.24%
CAR 12.13% 11.89% 12.54% 13.55% 11.70%
Graph -Capital Adequacy Ratio (Basel II)
Interpretation:
Reserve Bank of India prescribes Banks to maintain a minimum Capital to risk-weighted
Assets Ratio (CRAR) of 9 % with regard to credit risk, market risk and operational risk on an
on-going basis, as prescribed in Basel II documents.
Capital adequacy ratio of the State Bank of Travancore was well with 13.5% for the
year 2012, above the level prescribed by RBI. Even though it has dropped to 11.70% in
2013, the Bank is maintaining the prescribed level.
12.13%
11.89%
12.54%
13.55%
11.70%
10.50%
11.00%
11.50%
12.00%
12.50%
13.00%
13.50%
14.00%
2009 2010 2011 2012 2013
Series1

51
Debt Equity Ratio
This ratio indicates the degree of leverage of a bank. It indicates how much of the bank
business is financed through debt and how much through equity. This is calculated as the
proportion of total asset liability to net worth. ‘Outside liability’ includes total borrowing,
deposits and other liabilities. ‘Net worth’ includes equity capital and reserve and surplus.
Higher the ratio indicates less protection for the creditors and depositors in the banking system.
Debt Equity Ratio =Borrowings/ (Share Capital + reserves)
Table - Debt Equity Ratio
Year 2009 2009 2010 2011 2012
Borrowings 64591.64 122074.6 142470.8 157991.4 203723.2
Share
capital
634.88 634.88 635 671.04 684.03
Reserves 71755.51 82500.7 82836.25 105559 124349
Ratios 0.89226816 1.468379 1.706824 1.487257 1.629355
Graph -Debt Equity Ratio
Interpretation:
0.892268159
1.468379363
1.706824446
1.48725732
1.62935519
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2008 2009 2010 2011 2012
DEBTEQUITYRATIO
YEAR
Series1

52
The Debt to Equity Ratio measures how much money a bank should safely be able to
borrow over long periods of time. Generally, any bank that has a debt to equity ratio of
over40% to 50% should be looked at more carefully to make sure there are no liquidity
problems.
. Debt Equity ratio of State Bank of Travancore during 2009 to 2013 is very low (safe
period).In 2013 shows higher and decrease to 0.148 in 2012. Therefore the bank is able to keep
the liquidity position
ASSET QUALITY
Asset quality determines the healthiness of financial institutions against loss of value
in the assets. The weakening value of assets, being prime source of banking problems, directly
pour into other areas, as losses are eventually written-off against capital, which ultimately
expose the earning capacity of the institution. The following importance ratios are used to
measure the asset quality of State Bank of Travancore Bank Ltd,
The following ratios are necessary to assess the asset quality.
Net NPA to Total Asset
Net NPAs are gross NPAs net of provisions on NPAs and interest in suspense account.
This ratio shows the percentage of non-performing asset with regard to Total Asset. Increase
in such percentage indicates decrease in asset quality.
Net NPA As percentage to Total Asset = Net NPA/ Total Asset
Table -Net NPA As percentage to Total Asset
Year 2009 2010 2011 2012 2013
Net
NPA
187.54 350.4 450.99 853.57 488.53
Total
asset
16749.58 20993.44 24932.53 30603.39 34095.71
Ratios 0.0111967 0.016691 0.018088 0.027891 0.014328
Graph -Net NPA As percentage to Total Asset

53
Interpretation:
The ratio of Net NPAs to Total Asset in 2009 was .0016,and it keep a increasing trend
up to 2012,after decreasing,. This indicates that the State Bank of Travancore is able to manage
the NPAs to Total Asset. Decreasing trend over the last six years indicates increase in the asset
quality.
Net NPA to Total Advances
Net NPAs reflect the performance of banks. A high level of NPAs suggests high
probability of a large number of credit defaults that affect the profitability and net-worth of
banks and also wear down the value of the asset. Loans and advances usually represent the
largest asset of most of the banks. It monitors the quality of the bank’s loan portfolio. The
higher the ratio, the higher the credits risk.
Net NPA to Total Advances = Net NPA/ Total Loan
Table -Net NPA to Total Advances
Year 2009 2010 2011 2012 2013
Net NPA 187.54 350.4 450.99 853.57 488.53
Advancess 32601.45 38461.26 46044.22 55345.95 67483.61
Ratios 0.0057525 0.00911 0.009795 0.015422 0.007239
Graph -NPA to Total Advances
0.0161342520.016691601
0.018139736
0.026898987
0.025930444
0
0.005
0.01
0.015
0.02
0.025
0.03
2009 2010 2011 2012 2013
Ratios
Year
Series1

54
Interpretation:
During 2009 the ratios of Net NPAs to Total Advance s was .0005.and it keep an increasing
trend up to 2012 after decreasing. . This indicates that the bank is able to manage the credit
risk. Lower the ratio, lower the credit risk.
Gross NPA to Total Advances
This ratio is used to check whether the bank's gross NPAs are increasing quarter on
quarter or year on year. If it is, indicating that the bank is adding a fresh stock of bad loans. It
would mean the bank is either not exercising enough caution when offering loans or is tool a
in terms of following up with borrowers on timely repayments.
Gross NPA to Total Advances = Gross NPA/ Total Loan
Table – Gross NPA to Total Advances
Year 2009 2010 2011 2012 2013
Gross
NPA
526 641.98 835.23 1488.75 1749.88
Total
Loan
32601.45 38461.26 46044.22 55345.95 67483.61
Ratios 0.01613425 0.016692 0.01814 0.026899 0.02593
0.0057525
0.00911
0.009795
0.015422
0.007239
0
0.002
0.004
0.006
0.008
0.01
0.012
0.014
0.016
0.018
2009 2010 2011 2012 2013
Series1

55
Graph - Gross NPA to Total Advances
Interpretation:
In 2009, State Bank of Travancore’s gross NPA is 0.0161 and it has keep a increasing
trend up to 2012 after that decreased to 025 till 2013. It means this ratio is Increased year by
year from 2009to 2012 because of Bank inefficiency in recovering the outstanding dues. But
in 2013 bank get efficiency in recovering the outstanding dues then, we can say that a bank's
business is making loans and world over, some percentage of the loans always turn bad.
Advances Yield Ratio
Yield on advances, is another important ratio, which helps us to measure the quality of
advances. Here yield means interest income received on the advances of the bank. Increases in
advance yield ratio is an indicator of sound asset quality.
Advances Yield Ratio = Interest income on advances / Total advances
Table -Advances Yield Ratio
Year 2009 2009 2010 2011 2012
Interest
income
on
advances
31733.987 33630.75 40278.59 52971.68 67460.96
0.0161342520.016691601
0.018139736
0.0268989870.025930444
0
0.005
0.01
0.015
0.02
0.025
0.03
2009 2010 2011 2012 2013
Gross npa
net npa

56
Total
advances
32601.45 38461.26 46044.22 55345.95 67483.61
Ratios 0.9733919 0.874406 0.874781 0.957101 0.999664
Graph- Advances Yield Ratio
Interpretation:
Advance yield ratio of State Bank of Travancore in 2009 was 0.97, and then reached
the highest value in 2013. Here this shows a mixed trend a highest Advance yield ratio indicates
that the firm was able to make an optimal decision. So here bank get a satisfactory position.
Percentage change in Net NPA
0.8
0.82
0.84
0.86
0.88
0.9
0.92
0.94
0.96
0.98
1
2009 2010 2011 2012 2013
0.973391889
0.8744057530.874780613
0.957101233
0.999664393
Series1

57
This measure gives the movement in Net NPAs on year-on-year basis. This is
calculated using the following formula given below.
% change in Net NPAs =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡𝑦𝑒𝑎 𝑟𝑠𝑁𝑃𝐴 −𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠𝑦𝑒𝑎𝑟𝑠𝑁𝑃𝐴
𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠𝑦𝑒𝑎𝑟𝑠𝑁𝑃𝐴
*100
Table -% change in Net NPAs
Year 2009 2010 2011 2012 2013
Current year
NPA
188.38 350.4 450.99 835.57 988.58
Previous Year
NPA
267.71 188.38 350.4 450.99 835.57
Ratios -29.632 86.00701 28.70719 85.27462 18.31205
Graph -% change in Net NPAs
Interpretation:
-29.63281162
86.00700711
28.70719178
85.27461806
18.31205046
-40
-20
0
20
40
60
80
100
1 2 3 4 5
Series1

58
The ratios change in NPA becomes negative during 2009 and after that it shows a
positive during in 2010. 2013 it was 18.3 % . Net NPA shows the actual burden of banks so
here ratio of changes in NPA keep a lower level its favorable to the bank. When comparing
previous year ratio was high so in 2013 it shows appositive sign.
Total Investment to Total Asset
This ratio is used as a tool to measures the ratios of total assets locked up in investments.
Total investments to total assets indicate the extent of deployment of assets in investments as
against advances. The higher level of investment indicates the lack of credit off-take in the
market.
Table - Total Investment to Total Asset
Year 2009 2010 2011 2012 2013
Total
Investment
13231.707 16023.989 17926.987 22437.5839 27225.502
Total Asset 36228.805 43430.716 53049.766 63571.1754 74353.824
Ratios 0.3652261 0.3689552 0.3379277 0.35295216 0.3661614

59
Graph - Total Investment to Total Asset
Interpretation:
Total investment to total assets ratio shows a mixed trend. The highest ratio of .368
recorded in the year 2010 and the lowest ratio of 0.33 in the year 2011. When compared with
the last five years State Bank of Travancore has maintained around the investment to Total
Assets.
MANAGEMENT SOUNDNESS
Management is the most important ingredient that ensures sound functioning of banks.
With increased competition in the Indian banking sector, efficiency and effectiveness have
become the rule as banks constantly strive to improve the productivity of their employees. The
ratios in this segment measure the efficiency and effectiveness of management.
The ratios used to evaluate management efficiency are described asunder:
Total Advance to Total Deposits
0.365226145
0.368955203
0.33792773
0.352952163
0.366161417
0.32
0.325
0.33
0.335
0.34
0.345
0.35
0.355
0.36
0.365
0.37
0.375
2009 2010 2011 2012 2013

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