Project report of accounting in banks and balance sheet

1. INTRODUCTION A banking company means and includes any company which carries on business
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Project report of accounting in banks and balance sheet
2. DEFINITION AND FUNCTIONS OF A BANK Banking has been defined by section 5 of the Banking
(b) Granting loans and advances (cash credits, overdraft, term loans,
etc.).
(c) Dealing in securities on its own account or on behalf of its
customers. (d) Opening letters of credits. (e) Issuing guarantees. (f) Dealing in foreign e
(g) Transferring money from one place to another through demand
draft, telegraphic transfers, traveler’s cheques, bills, etc.
(h) Merchant banking, i.e. acting as managers to public issues, etc.
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Project report of accounting in banks and balance sheet
However, any company which is engaged in the manufacturer of goods or carries on any trade
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Project report of accounting in banks and balance sheet
(vii) acquiring and holding and generally dealing with any property or any right, title or
Project report of accounting in banks and balance sheet
3. Banking; 4. Co-operation; 5. Economics; 6. Finance; 7. Law; 8. Small scale industry. It
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Project report of accounting in banks and balance sheet
3.
REQUIRMENTS ACCOUNTS • Bank Accounting
OF
BANKING
COMPANIES
AS
TO
The book-keeping system of a banking company is substantially different from that of a trad
Project report of accounting in banks and balance sheet
Thus the cash book gives a bird s-eye view each day of all the work of the bank. Some banks
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Project report of accounting in banks and balance sheet
1. The keys of all loose-leaf ledgers and transfer binders are kept in the custody of the m
Project report of accounting in banks and balance sheet
Audit (Section 30) Accounts must be audited by a person duly qualified under any law, for
4. SIGNIFICANT FEATURES OF ACCOUNTING SYSTEMS OF BANKS Page9
Project report of accounting in banks and balance sheet
Banks, like most of the other large-sized institutions, follow the mercantile system of acc
Vouchers
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Project report of accounting in banks and balance sheet
Both the debit and credit operations on all accounts, either by customers or by the banks i
1. Cheques issued by customers.
2. Cheques/ Pay orders issued by banks.
3. Withdrawal of money by saving bank account holders.
4. Drafts issued by another branches of banks payable at branch.
5. Draft issued by another banks on branch, in terms of an approved
arrangement between the two banks.
6. Dividend / Interest warrants issued by bank’s customers and
payable by branch in terms of an approved arrangement. 7. Traveler’s cheques issued by any
10. Instruments like traveler’s cheques/gift cheques, etc.of other banks
which are paid by branch in terms of an approved arrangement.
11. Debit vouchers prepared by the branch on its printed stationary
which are authorized by a designated official of the bank and may also carry authority from
Project report of accounting in banks and balance sheet
different names in different banks) prepared by the other branch may itself as a debit vouc
2. Applications for issue of demand drafts, mail transfer telegraphic
transfer, banker’s cheques, pay orders, gifts cheques, traveler’s cheques, and other simila
3. Credit vouchers prepared by the branch on its printed stationary
which are authorized by an official of the bank. Normally theses vouchers are signed on beh
4. Challans for deposit into the account of Central/State Government,
e.g. on account of Direct/Indirect taxes or under schemes like public provident fund, etc.
5. On payment of collection instruments from other branches of the
bank, a credit advice (which may be known by different names in different banks) or copy of
Project report of accounting in banks and balance sheet
of periodic payment of interest to depositors), it is a common practice among the banks to
Project report of accounting in banks and balance sheet
Ledger Book General Ledger contains the total accounts of each ledger. Besides the GL, th
Project report of accounting in banks and balance sheet
A teller should arrange his entries, debit, and credit to conform with the general system o
Project report of accounting in banks and balance sheet
If the savings ledger contains a large number of accounts, it will be found of great advant
The principal books of accounts, subsidiary books and statistical records generally maintai
Project report of accounting in banks and balance sheet
1. Old Style Although bank book-keeping is supposed to be very simple, there are many ways
Project report of accounting in banks and balance sheet
the lower part. When the postings have been made and the balances struck and proved, a comp
Balance Ledger
Assets Monday, July 12, 2009 Memo. Dr. Memo. Cr . Balance Tuesday, July 13, 2009 Memo. Dr.
Debit Credi t
Balance
Boston Ledger
A very simple point overlooked by most general ledger keepers using a Boston ledger may pro
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Project report of accounting in banks and balance sheet
each side of the resulting statement for charges and credits made directly to profit and lo
Project report of accounting in banks and balance sheet
Separate registers are maintained to record the particulars of term deposits (including der
BANK Sheet No. Name Address Date Particulars
Account No.
Debit
Credit
Dr. or Cr.
Balance
Date
Particulars
Debit
Credit
Dr. or Cr.
Balance
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Project report of accounting in banks and balance sheet Current Deposit Ledger
Bills Registers Details of different types of bills are kept in separate registers which
Project report of accounting in banks and balance sheet
As has been mentioned earlier, two vouchers are generally made for each transaction by tran
Other Registers/Records There are different Registers/Records to record the detail partic
(a)
(b) Drafts paid (separate registers may be maintained on the same pattern as an in case of
3. Bankers cheques 4. 5.
Letters of credit. Letters of guarantee
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Project report of accounting in banks and balance sheet
Entries in these registers are made from original documents which are also summarized on vo
Project report of accounting in banks and balance sheet
f) g)
h)
Fixed Assets Stationary consumed/in hand
Interest payable to and receivable from head office, in respect of advances and depositors
i)
Separate Registers are maintained to record summaries the transactions relating to a partic
OTHER MEMORANDA BOOKS
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Project report of accounting in banks and balance sheet
Besides the books mentioned above, various departments of the bank have to maintain a numbe
Project report of accounting in banks and balance sheet
vouchers, distinctive colored paper or printing should be used; for instance, yellow, debit
Project report of accounting in banks and balance sheet
and posted into ledgers, their number is independently agreed with the Memo Book. If any ch
Project report of accounting in banks and balance sheet
General (a) Signature book of bank’s officers. (b) Private Telegraphic Code and Cyphers.
STATISTICAL BOOKS Statistical records kept by different banks are in accordance with thei
A banking company is not required to prepare financial statements in accordance with Schedu
7. FORMS OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT Page28
Project report of accounting in banks and balance sheet
With the nationalisation of major commercial banks and changes brought about in the economi
THIRD SCHEDULE: FORM A Page29
Project report of accounting in banks and balance sheet
Form of balance sheet Balance Sheet as on 31st March……….. (000’s omitted) Particulars CAPTI
(current year)
As on 31.3.__
(pervious year)
6 7 8 9 10 11 12
The Following schedules are required to be furnished with The Balance Sheet of Banking Comp
Project report of accounting in banks and balance sheet
PARTICULARS Schedule 1 Capital I. For nationalized banks Capital (fully owned central gover
RS.
Rs.
… … … … … … … … … … …
… … … … … … … … Page31
…
II Capital Reserves Opening balance Additions during the year Deductions during the year II
…
Project report of accounting in banks and balance sheet
Deductions during the year IV Revenue and the other reserves Opening balance Additions duri
… … … …
…
… … …
… … … … … …
… … … … … …
Grand total ( A and B ) Schedule 4 Borrowings I. Borrowings in India i) Reserve Bank of Ind
… … … …
…
Project report of accounting in banks and balance sheet
ii) Inter office adjustment (net) iii) Interest accrued iv) Others ( including provisions)
… … … …
… … … …
… … … …
… … … … … … … …
… Page33
Project report of accounting in banks and balance sheet
iv) Debentures and Bonds v) Subsidiaries and/or joint ventures vi) Others to be specified T
… … … …
II. Investments outside India in i) Government Securities ( including local authorities ) …
… …
… … … … … … … … … … … … … … … … … Page34
Project report of accounting in banks and balance sheet
Schedule 10 Fixed Assets I Premises At cost as on 31st March of the preceding year Addition
… … … … … …
…
…
Project report of accounting in banks and balance sheet
Schedule 1 : Capital I. Nationalized Banks a) Capital (fully owned by central government) :
Project report of accounting in banks and balance sheet
IV. Revenue and other reserves: The expression ‘Reserve Revenue’ shall mean any reserve oth
i) From banks ii) From others: includes all bank deposits, repayable on demand, of non-bank
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Project report of accounting in banks and balance sheet
a) Interest payable on deposits which is accrued in but should not show under others liabil
Schedule 4 : Borrowings I Borrowings in India: Reserve bank of India: Includes the borrowin
Notes: General: Page38
Project report of accounting in banks and balance sheet
a) The total of I and II will agree with the total of borrowing shown in the balance sheet.
IV Others (Including provisions) : It includes net provision for income tax and other taxes
Project report of accounting in banks and balance sheet
proposed dividend/transfer to Government, other liabilities which are not disclosed under a
Project report of accounting in banks and balance sheet
ii) Money at Call and Short notice a) With banks b) With other institutions. This item main
Project report of accounting in banks and balance sheet
a) Government Securities (including local authorities): All foreign Government securities i
Project report of accounting in banks and balance sheet
credits his deposits account with the money advanced. Repayments may be made in installment
Project report of accounting in banks and balance sheet
advances to Central and State Government Companies and Corporation which are according to s
Project report of accounting in banks and balance sheet
iv) Depreciation to the date. Motor vehicles and all other fixed assets other than premises
Schedule 11 : Other Assets They include following: 1) Inter-office Adjustment (Net): The in
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Project report of accounting in banks and balance sheet
6) Others: This will include items like claims which have not been met, for instance, clear
Bills for collection A banking company receives a large number of bills of exchange for col
Project report of accounting in banks and balance sheet
for collection, an entry is made in this register. On collection of exchange, besides makin
Account
At the end of accounting period the amount of bills yet to be collected is ascertained from
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Project report of accounting in banks and balance sheet
PREPARATION OF PROFIT AND LOSS ACCOUNT Form B Third Schedule Page48
Project report of accounting in banks and balance sheet
Form of Profit and Loss Account Profit and Loss Account for the year ended 31st March …… Pa
Project report of accounting in banks and balance sheet
(V) Profit on Exchange transactions Less: Loss on Exchange transactions (VI) Income earned
1. interest/Discount on Advances/Bills: includes interest and discount
on all types of loans and advances like cash-credit, demand loans, overdrafts, exports loan
Project report of accounting in banks and balance sheet
purchased and discounted (including those rediscounted), overdue interest and also interest
1. Commission, Exchange and Brokerage: Includes all remuneration
2. 3. 4.
5.
6.
7.
on services as a commission on collection, commission/exchange on remittance and transfers,
Project report of accounting in banks and balance sheet
Schedule 15 C Interest Expenses
1. Interest on deposits: Includes interest paid on all types of deposits
from banks and other institutions. 2. Interest on RBI/Inter-Bank Borrowings: Includes disco
1. Payments to and provisions for employees: Include staff salaries
2.
3.
4.
5.
6.
7.
wages, allowances, bonus, other staff benefits, like provident fund, pension, gratuity, lea
Project report of accounting in banks and balance sheet
audits and other services, expenses incurred in that context including fees may not be incl
E Provisions and Contingencies Includes all the provisions made for bad debts and doubtful
8. ACCOUNTING TREATMENT OF SPESIFIC ITEMS Accounting treatment of some specific items in th
Project report of accounting in banks and balance sheet
both bad debts and provisions for bad debts. It may be noted the banks collect from their b
Customer’s account is credited with the net amount remaining after deducting the amount of
Project report of accounting in banks and balance sheet
deducted from the total discount in the profit and loss account and will also appear as a l
9. IMPORTANT ITEMS OF BALANCE SHEET Let us consider some of the peculiar items of assets an
Project report of accounting in banks and balance sheet
1. Money at Call and Short Notice These are related to inter-bank transactions. Under this
3. Bills Receivable being Bills for Collection as Per Contra Customers deposit into bank th
Project report of accounting in banks and balance sheet
It is contra item in the balance sheet. The first account denotes the amount receivable and
5. Non-Banking Assets A bank cannot acquire certain assets but it can always lend against t
Project report of accounting in banks and balance sheet
7. Lockers or Safe Deposits Vaults These are assets and are included are included under fur
Project report of accounting in banks and balance sheet
These are explained in the above point’s number 3 and 4 10. DISCLOSURE REQUIRMENTS OF BANKS
Project report of accounting in banks and balance sheet
A loan classified as doubtful has all the weaknesses inherent in that classified as sub-sta
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Project report of accounting in banks and balance sheet
Up to 1 year More than 1 year and up to 3 years More than three years i. Outstanding stock
20% 30% 50% 60% 75% 100%
ii. Advances classified as doubtful for more than three years on or after 01.04.2004 w.e.f.
Project report of accounting in banks and balance sheet
needs to be noted that such exemption from classification of advances as NPA is only for th
Project report of accounting in banks and balance sheet
ECGC/DICGC, the realizable value of the security should be deducted from the outstanding ba
3 Movement of provisions held towards Depreciation on Investments Particulars As on 31-3-20
Project report of accounting in banks and balance sheet
Closing Balance 4. Asset Classification, Income Recognition and Provision Norms Assets clas
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Project report of accounting in banks and balance sheet
Category Definitional requirements
Standard Assets A performing asset with just normal risk attached 0.40%
Provisioning requirement
SubStandard Assets Which has remained NPA for a period not exceeding eighteen months 10% of
Doubtful Assets
Loss Assets
Which has Which has been remained identified by NPA for a internal and period external audi
(d) Investment Classification 1. 2. 3. 4. 5. Investment by banks include as under: Governme
Project report of accounting in banks and balance sheet
securities and entire non-SLR securities were to be written down to market value. This lead
THIRD SCHEDULE: FORM A BALANCE SHEET OF STATE BANK OF INDIA Page66
Project report of accounting in banks and balance sheet
AS ON 31ST MARCH 2009 (000’s omitted) Particulars CAPTIAL AND LIABILITES Capital Resaves an
2228,27,31 2028,12,09 1011988,32,63 776416,51,88 64591,64,43 66023,17,07 153627ffl,37 12156
Schedules to be annexed with balance sheet (000’s omitted)
PARTICULARS As on 31.3.09 As on 31.3.08
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Project report of accounting in banks and balance sheet (Current Year) RS. 10,00,00,000 634
Schedule 1 Capital Authorized capital (100,00,00,000 shares of Rs. 10 each) Issued capital
634,88,02 634,88,02
631,47,04 631,47,04
Rs. 25218,10,9 1 5508,57,95
Rs.
Rs. 20379,03,6 8 4839,07,23
Rs.
30726,68,86 422,58,37 844,72,32 1267,30,69 III Share premium Opening balance Additions duri
25218,10,91
422,58,37
20098,96,75
62,17,87
2419,8314
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Project report of accounting in banks and balance sheet 3085,71,33 33,93 57312,81,62 2419,8
VII
Balance in Profit and Loss Account
Total ( I + II + III + IV + V+ VI + VII ) Schedule 3 Deposits A I. Demand Deposits From ban
107,61,84,16 99991,73,42 198224,26,85 13657,16,00 419438,12,37 742073,12,80 710031,51,22 32
12313,40,67 85820,12,34 154229,28,65 7065,47,74 277975,64,69 537403,94,09 514676,06,76 2272
Total ( i and ii ) Schedule 4 Borrowings I. Borrowings in India i) Reserve Bank of India ii
---919,9460 2758,35,89 50035,37,72 53713,68,21 2871,60,35
1300,00,00 7853,58,39 3648,95,17 38924,87,17 51727,41,13 4367,87,76
18929,87,60 5706,71,55 6981,15,56 79142,82,71 110697,57,42
19159,90,43 5092,21,85 59110,17,56 83362,29,84
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Project report of accounting in banks and balance sheet I. Cash in hand (including foreign
926,20,81 10688,99,53 13207,17,33 … 24822,37,67 13656,54,41 1326,93,90 9051,76,61 24035,24,
1105,19,38 2608,31,90 6559,00,00 … 10472,51,28 1252,31,93 749,15,34 3457,73,37 5459,20,64 1
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Project report of accounting in banks and balance sheet iii) Other investment (shares, debe
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Project report of accounting in banks and balance sheet Deduction during the year Depreciat
6561,73,29 1345,72,26 20,92,03 5271,32,20 2615,21,32
5493,19,27 1145,34,90 76,80,88 4397,99,28 2163,74,01
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Project report of accounting in banks and balance sheet II. Liability for partly paid inves
4644,40,41 2417,29,03 109093,49,09 250020,71,54 7233699,75,70
35159,13,45 14503,88,10 74706,09,41 375167,32,35 810796,48,07
Form B Third Schedule PROFIT AND LOSS ACCOUNT OF STATE BANK OF INDIA FOR YEAR ENDED ON 31ST
Project report of accounting in banks and balance sheet
(000’s omitted)
Particulars I. Income: Interest Earned Other income TOTAL II. Expenditure: Interest Expende
15 16 …
42915,29,37 15648,70,44 8793,99,82 567357,99,63
31929,07,69 12608,60,60 6378,42,79 50916,11,08
9121,22,65 33,93 … 9121,56,58
6729,12,47 33,93 9,37 6792,55,77
5291,79,28 … 826,55,32 306,89,30 1841,15,26 248,03,47 606,80,02 33,93 9121,56,58
4839,07,23 62,17,87 4,43,98 300,00,00 1357,66,13 165,86,63
33,93 6792,55,77
Schedules to be annexed with Profit and Loss Account (000’s omitted) Particulars As on As o
Schedule 13: Interest Earned Page74
Project report of accounting in banks and balance sheet
(I) Interest/ Discounts on Advances/Bills (II) Income on Investments (III) Interest on bala
46404,71,49 15574,71,51 1474,37,74 335,22,64 63788,43,38
35228,11,19 11944,16,36 1200,07,40 577,95,76 48950,30,71
7617,23,54 2567,29,02 (56,50) (2,95,42) 1179,24,92 409,60,28 26,67,00 894,78,06 12690,78,90
5914,25,45 16498391 (703,50,07) 11,04,09 692,69,81 197,40,55 31,86,36 901,32,74 8694,92,84
37936,84,73 27072,58,10 2555,01,04 3938,43,98 2423,43,60 1918,05,63 42915,29,37 319292,07,6
Project report of accounting in banks and balance sheet
(IX) Postage, Telegrams, Telephones, etc. (X) Repairs and Maintenance (XI) Insurance (XII)
279,73,25 160,58,83 529,01,89 2210,41,68 15648,70,44
216,57,72 235,82,73 415,84,36 1759,95,29 12608,60,60
11. ADDITIONAL DISCLOSURE PRESCRIBED BY RBI In addition to the disclosure to be made in the
Project report of accounting in banks and balance sheet
• Capital adequacy ratio • Capital adequacy ratio-tier T capital • Capital adequacy ratio-t
Project report of accounting in banks and balance sheet
• Related party disclosure — AS 18 • Other disclosures as required under the relevant accou
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