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Project report of accounting in banks and balance sheet


A banking company means and includes any company which carries on business or which transacts
banking business in India. A banking business is generally governed by the provisions of the
Companies Act 1956 and specifically by the Banking Regulation Act. The Banking regulation Act of
1949 came into force on 16th March 1949 as a result of long-felt need to regulate the banking business
in India and protect the interest of number of depositors.

The existence of well- organized, regulated and efficient banking system is pre-requisite for economic
growth. Banks are agencies responsible for mobilizing and channeling of funds in a country. The major
institutions carrying business,

in India, include:

(a) Nationalized banks

(b) State bank of India and Associates banks
(c) Foreign banks having branches in India
(d) Co-operative banks
(e) Rural banks and
(f) Private sector banks.


Project report of accounting in banks and balance sheet

Banking has been defined by section 5 of the Banking Regulation Act and means:

(a) accepting deposits of money from public

(b) for the purpose of lending or investment and deposits are repayable on demand or otherwise by
cheque, draft, and order or otherwise. It should be noted that company which is engaged in
manufacturing goods and for the purpose of financing business accepts deposits from the public should
not be deemed to transact business of banking.

In addition to banking business, a bank is permitted under Section 6 of the Banking Regulation Act to
engage in certain class of business which is incidental to the business of banking. Section 8 of the
Banking Regulation Act prohibits a bank from buying and selling or dealing in goods except in
connection with realization of a security held by it or in connection with the business of collections or
negotiating bills of exchange.

Some of the main functions of modern commercial banks are:

(a) Accepting deposits and providing facilities to depositors of payment by cheques.

(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 exchange.

(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.

However, any company which is engaged in the manufacturer of goods or carries on any trade and
which accepts deposits of money from the public merely for the purpose of financing its business as
manufacturer or trader shall not be deemed to transact the business of banking. It may be mentioned
that the Banking Regulation Act, 1949 is not applicable to a primary agricultural society, a co-operative
land mortgage bank and any other co-operative society except in the manner and to the extent specified
in Part V of the Act.

Some banks are included in the Second Schedule to the Reserve Bank of India Act, 1934; these are
called Scheduled Banks. The Reserve Bank includes a bank in this schedule if it fulfils certain
conditions. The Reserve Banks gives certain facilities to schedule banks including the following:

(a) The purchase, sale, and re-discounting of certain bills of exchange, or promissory notes;
(b) Purchase and sale of foreign exchange;
(c) Purchase, sale and re-discounting of foreign bills of exchange;
(d) Making of loans and advances to scheduled banks;
(e) Maintenance of accounts of the scheduled bank in its banking department and issue department;

Project report of accounting in banks and balance sheet

(f) Remittance of money between different branches of scheduled banks through the offices, branches
or agencies of Reserve Bank free of cost or at nominal rates.
Section 6 of the Banking Regulation Act, 1949 specifies the forms of business in which a banking
company may engage. These are :
(i) borrowing, raising or taking up of money; lending or advancing of money; drawing, making,
accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory
notes, etc.;
(ii) acting as agents for any government or local authority or any other person;
(iii) directing for public and private loans and negotiating and issuing the same;
(iv) effecting, insuring, guaranteeing, under-writing, participating in managing and carrying out of any
issue of shares, stock, debentures etc.;
(v) carrying on and transacting every kind of guarantee and indemnity business;
(vi) managing, selling and realising property which may come into the possession of the banking
company in satisfaction of its claim;
(vii) acquiring and holding and generally dealing with any property or any right, title or interest in such
property which may form the security for any loans and advances;
(viii) underwriting and executing trusts;
(ix) establishing and supporting or aiding in the establishment and support of institutions, funds, trusts
(x) acquisition, construction, maintenance and alteration of any building and works necessary for the
purpose of the banking company;
(xi) selling, improving, managing, developing, exchanging, leasing, mortgaging, depositing of or
turning into account or otherwise dealing with all or any part of the property and rights of the company;
(xii) acquiring and undertaking whole or any part of the business of any person or company;
(xiii) doing all such other things as are incidental or conductive to the promotion or advancement of the
business of the banking company;
(xiv) any other business which the Central Government may specify by notification in the Official
No banking company shall engage in any form of business other than those referred to above.


A banking company cannot directly or indirectly deal in the buying or selling or bartering of goods.
However, it may buy, sell or barter in connection with the bills of exchange received for collection or
negotiation or can undertake the administration of estates as executors, trustees or otherwise.


A banking company can only acquire immovable property for its own use. Other immovable properties
acquired must be disposed off within seven years from the date of acquisition. However, in any
particular case, the Reserve Bank of India may extend such period of seven years if it is satisfied, that
such extension would be in the interest of the depositors of the banking company.


Under section 10(a), not less than 51% of the total number of members of the board of directors of a
banking company shall consist of persons having special knowledge or practical experience in one or
more of the following fields :
1. Accountancy;
2. Agriculture and rural economy;
3. Banking;
4. Co-operation;

Project report of accounting in banks and balance sheet

5. Economics;
6. Finance;
7. Law;
8. Small scale industry.

It is also required that not less than two directors should have special knowledge or practical experience
in respect of agriculture and rural economy and co-operation or small-scale industry. Under section
10(b)(1), every banking company shall have one of its directors as Chairman of its board of directors.
The Chairman is entrusted with the management of the whole of the affairs of the banking company.
Such Chairman is the whole-time employee of the banking company and can hold office for a period
not exceeding five years. Other directors who are whole-time directors can hold office continuously for
a period not exceeding eight years.


• Bank Accounting

The book-keeping system of a banking company is substantially different from that of a trading or
manufacturing enterprise. A bank maintains a large number of accounts of various types for its
customers. As a safeguard against any payment being made in the account of a customer in excess of
the amount standing to his credit or a cheque of a customer being dishonoured due to a mistake in the
balance in his account, it is necessary that customers’ accounts should be kept up-to-date and checked
regularly. In many other mercantile enterprises, books of primary entry (i.e., day books) are generally
kept up-to- date while their ledgers including the general ledger and subsidiary ledgers for debtors,
creditors etc. are written afterwards. A bank cannot afford to ignore its ledgers particularly those
concerning the accounts of its customers and has to enter into the ledgers every transactions as soon as
it takes place. In bank accounting, relatively less emphasis is placed on day books. These are merely
treated as a means to an end-the end being to keep up-to-date detailed ledgers and to balance the trial
balance everyday and to keep all control accounts in agreement with the detailed ledgers.

Project report of accounting in banks and balance sheet

In this Unit, we shall concentrate on accounting system followed in, bank and books of accounts
maintained for that purpose. That apart, we shall take a stock of the returns which a bank is required to
file with the Reserve Bank. Another important aspect in the bank accounts is preparation of final
accounts. The third schedule to the Banking Regulation Act provides formats for that purpose. Formats
of bank final accounts are also covered

The tendency of modern accounting is to adapt the books to a business, rather than the business to the
books, and this practice is particularly noticeable in bank bookkeeping. Systems and devices may differ
among banks, and even between branches of the same bank, but the basic principles are the same. Once
a clear understanding of bank bookkeeping in general is obtained, there will be found little or no
difficulty in mastering any of the methods or systems in use by banks.

To grasp thoroly all the underlying principles of bank accounting, it is necessary to bear in mind that
practically everything handled by a bank, in the ordinary course of its business, is either money itself,
or a written claim or right to money. Consequently the cash book in a bank is the principal book, and
thru its pages must pass a record of every transaction made by the bank, either in detail or as a total
from a supplementary book. Thus the cash book gives a bird's-eye view each day of all the work of the
bank. Some banks still use, in addition to the cash book, a modified form of the old-fashioned journal,
but it is preferable to make the cash book the only posting medium of the general ledger.

It would be quite possible for a newly-opened branch to conduct its business for the first six months or
so with the aid of a cash book and a ledger, which would serve for all accounts. A register would,
however, soon be necessary.

As the business grew it would be found convenient to have a special ledger for individual accounts,
with the control or key account carried in the original led-ger, and to have the checks and deposits
entered in a supplementary cash book, with only the totals entered in the general cash book. Similarly,
it would be found necessary in time to open up a discount register and a liability ledger to look after the
increased number of loans.
As the volume of business increases, the deposit ledger is capable of being indefinitely subdivided,
either alphabetically or numerically. Generally, the ordinary deposit ledger is divided alphabetically
and the savings bank ledger numerically.

From the above it will be noticed that bank bookkeeping, although based primarily on the cash book
and ledger, is susceptible of indefinite expansion in any direction to meet increased volume of business
or other local exigencies.

 Loose-Leaf Accounting

The vast increase in the number and volume of commercial transactions during the past twenty years
has made the use of loose-leaf ledgers and other books a practical necessity in modern accounting. In
Canadian banks, particularly, the system has been in successful operation for many years. The principal
objection urged against loose-leaf ledgers - the question of their validity in a court of law - appears to
have died a natural death. The courts rule so plainly and the logic is so clear, that it is the original entry
that counts and not the assembly of entries in the ledger, that it is now generally conceded that the
loose-leaf ledger is just as acceptable as evidence in a court as a bound ledger. In fact, with the
precautions observed by the banks in their use of loose-leaf books, the evidence might be considered
even more competent. The following rules are generally observed:

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 manager or of
the accountant or other officer specially authorized, by whom blank sheets are inserted as required, and
the used sheets removed and filed in the transfer binder.

2. After removing the sheets, the officer who has custody of the key must place a paper seal bearing his
signature in the sealing device on the front of the ledger, and, when opening the book again, must
satisfy himself that his last seal has not been tampered with.

3. A separate sheet must be used for each account, and each sheet must be signed in the upper right-
hand corner by the manager or accountant when the first entry is made. The officer who signs the sheet
must see that the account is properly indexed.

4. A few blank sheets may be locked in the current ledger for emergency use, but all others must be
kept under lock in the custody of the officer who holds the key of the ledger.

Bound books have not prevented manipulation and fraud, and the above precautions combined with the
comprehensive checking system of a bank should practically eliminate the danger of fraudulent
substitution of pages. If a man is determined to be dishonest there are easier and less evident methods
of defrauding than by switching ledger leaves.

 Preparation of Financial Statements and Accounting Date

(Section 29)

A Company registered under the Companies Act 1956 is required to present its financial statements, i.e.
balance sheet and profit and loss account in the format laid down in Schedule VI annexed to the
Companies Act. Similarly, banking company, (since it is a company) is also required to prepare and
submit its accounts in specified format. The Banking Regulation Act gives the format of balance sheet
and the profit and loss account in which accounts of banks should be presented and this format is given
in the third schedule annexed to the Banking Regulation Act. RBI has issued guidelines to follow the
new form A (proforma balance sheet) and form B (proforma profit and loss account) by all companies
doing banking business in India. The government has notified that the books of accounts of the banking
companies shall be closed on 31st March every year as against 31st December earlier. In practice, banks
also close books on 30th September for internal purpose.

 Audit (Section 30)

Accounts must be audited by a person duly qualified under any law, for the time being in force, to be an
auditor of companies. However every banking company is before appointing, reappointing or removing
any auditor, required to obtain the prior approval of Reserve Bank of India.

Submission of Accounts (Sec 31 and 32)

Three copies of the balances sheet and profit and loss account prepared under Section 29 together with
auditors’ report under Section 30 must be submitted to the Reserve Bank of India within three months
from the period to which they refer. However, it can be extended up to the period of further three
months by RBI.

 Publication of Accounts

Project report of accounting in banks and balance sheet

Rule 15 of the Banking Regulating (Companies) Rules, 1949 prescribed that accounts and auditors’
report shall be published in newspaper circulating in a place where a banking company has its principal
office, within six months from the end of period to which they relate.


Banks, like most of the other large-sized institutions, follow the mercantile system of accounting. Thus,
the system of recording classifying and summarizing the transactions in bank is in substance no
different from that followed in other entities having similar volume of operations. However in the case
of banks the need for the ledger accounts, especially those of customers, being accurate and up to date
is much stronger than most of other types of enterprises. A bank cannot afford to ignore its ledgers
particularly those containing the accounts of its customers and has to enter into the ledgers every
transaction as soon as it takes place. In the case of banks, relatively lesser emphasis is placed on books
of prime entry such as cash books or journals. This is unlike most other types of enterprises where
books of prime entry are generally kept up to date while ledgers, including the general ledger and
subsidiary books ledgers for debtors, creditors are written up afterwards.

Banks follow the accounting procedure of ‘voucher posting’ under which the vouchers are straightway
posted to the individual accounts in the subsidiary ledgers. (Only in case of Personal Ledger) At the end
of each day, the debit and credit vouchers relating to a particular type of transactions (e.g. savings bank
accounts, current accounts, demand loans cash credit account etc.) are entered on separate vouchers
summery sheets and the total thereof is posted to the respective control account in the general ledger.
The general ledger trial balance is prepared every day.

 Types of Transactions

The transactions in banks are of two types, cash and non-cash. In the case of letter, also called ‘transfer
transactions’, one or both of account concerned may be of customers or internal accounts of bank. For
example, if ‘A’ deposits a cheque drawn in his favor by ‘B’, who is also customer of the branch, the

Project report of accounting in banks and balance sheet

accounts of the two customers will be affected. On the other hand, if ‘A’ deposits a draft drawn on
branch the ‘Draft Account, an internal account of bank, will be debited’. Likewise, on payment of
interest on deposit accounts, the ‘Interest Account’ at the branch will be debited and various personal
accounts will be credited.
 Vouchers

Both the debit and credit operations on all accounts, either by customers or by the banks itself, are
made by means of vouchers. There are two kind of vouchers, one, which evidences only debit to an
account and which other, which contains both debit and credit in different accounts. For the sake of
convenience, the latter kinds of vouchers may be called ‘composite vouchers’.

The debit vouchers are of many kinds, broadly following:

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

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 branch of the bank which presented to the branch for payment.

8. Drafts / Pay orders issued by the branch itself which are cancelled at the request of customer and
amount is refunded to him.

9. Letters of authority signed by the customers, containing standing instructions.

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 the customers in some cases to debit
his account at the branch.

12. In respect of realization of collection instrument sent to other branches of the bank, a debit advice
(which may be known by different names in different banks) prepared by the other branch may itself as
a debit voucher.

13. In case of remittance of funds by one branch to the other branch by means of telegraphic
transferor mail transfer, the bank may treat the advice of transfer itself as debit voucher or may prepare
a separate debit voucher.

The credit vouchers are also of many kinds, broadly the following:

Project report of accounting in banks and balance sheet

1. Pay –in-slip filled by customers (depositors as well as borrowers) for deposit the amounts in their
accounts. Generally, the pay-in-slips are in standard format adopted by the bank but there may be cases
of a special kind of pay-in-slips in respect of some customers pursuant a formal agreement between the
bank and customer.

2. Applications for issue of demand drafts, mail transfer telegraphic transfer, banker’s cheques, pay
orders, gifts cheques, traveler’s cheques, and other similar instruments. Some of these application may
be made on behalf of the branch itself it has to make.

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 behalf of the branch only but there may be
some instance where the customer concerned also signs on the voucher as evidence that the transaction
actually pertains to him. Examples are: deposits of locker charges (credit to an income account of the
bank), deposits of money for purchase of non-judicial stamps requires for execution of document in
favor of the bank, etc.

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 the collection schedule received from
the other branch may itself be treated as a credit voucher.

It may be stated here in case of debits or credits of similar nature to a large no. of accounts in the same
ledger or group of ledgers (e.g. debit on account of periodic interest, inspection charges, etc. or credit
on account of periodic payment of interest to depositors), it is a common practice among the banks to
prepare a consolidated voucher on their stationary and enclosed thereto a list containing details of
accounts debited/credited and the amount of debit/credit.

As stated earlier apart from debit vouchers and credit vouchers, there is also category of ‘composite
vouchers’. These vouchers record the particulars of both debit and credit accounts. Most of the
transactions covered by composite vouchers pertain to the internal accounts to the bank, i.e. non-
customers accounts. Examples are: bills received for collection, letters of credit issued by the branch,
guarantee issued by the branch, etc. Such vouchers may also be prepared to rectify an error while
debiting or crediting accounts. For example, in case of current account is debited in general ledger
instead of cash credit account by mistake, the composite vouchers will show debit to cash credit
account with corresponding credit to current account.

All entries in personal ledgers and the summary sheets are checked by persons other than those who
have made entries. Most clerical errors are thus detected immediately.

A trial balance of personal ledgers is prepared periodically, usually every two weeks and agreed with
general ledger control accounts. In banking parlance, this exercise is referred to as ‘balancing of

 Banker’s Books

According to Section 2 (3) of the Banker’s Books Evidence Act, ‘Bankers Books’ include ledgers,
day book, cash books, account books and all other books used in ordinary business of a bank.

Project report of accounting in banks and balance sheet

Generally the following books are maintained by the bank to keep up-to-date records of its customers.

 Cash Book

All cash receipts and payments are recorded in the receiving cashier’s cash book and paying cashier’s
cash respectively. After this on the basis of pay-in slips received by receiving cashier and cheques and
withdrawal slips received by paying cashier, these transactions are entered first in the accounts of
customers and after that Day Book are written. This is called ‘Slip System’ of posting.

 Ledger Book

General Ledger contains the total accounts of each ledger. Besides the GL, the following ledger books
are maintained:

1. Current Accounts Ledger

2. FD Accounts Ledger

3. RD Accounts Ledger

4. Loan Ledger

5. Investment Ledger

6. Bills discounted and purchased Ledger

 Other Books

1. Clearing Register

2. Securities Register

3. Draft Register

4. Bills for collection Register

5. Dishonored cheques Register

6. Safe deposit vault Register

7. Letter of credit Register

 Teller's Records

The teller's cash book or blotter consists of a skeleton ruling with no printed headings, these being
written in daily by the teller according to his requirements. Were the headings printed it would require a

Project report of accounting in banks and balance sheet

specially printed book for each class of teller, and even then it might not be suitably spaced for local

A teller should arrange his entries, debit, and credit to conform with the general system of the office.
Cheque should be sorted out and entered according to the divisions of the ledger, thus balancing with
the various supplementaries. If the checks are very numerous, separate sheets, suitably ruled, can be
used; these can be entered on an adding machine or by an assistant.

A teller's book is, in reality, a skeleton cash book, and the entries should be so arranged that the books
of the various departments should balance with the combined entries of the tellers.

All parcels of money received are acknowledged, and entered in a special book. If the advice comes in
first it should be at once entered in this book, and the parcel inquired for if necessary. Money parcels
dispatched are also entered in a book. Great care is necessary in handling money parcels. Both sent and
received parcels should be counted by two men in each other's presence and, in the case of the former,
it is necessary to have the parcel in the uninterrupted custody of two men from the time it is counted
and sealed until it is delivered to the express company or post office.

The relative advices and acknowledgments should be carefully watched and any delay immediately
inquired into.

 Supplementary Cash Book

In this book are entered all the deposit slips, checks, and other vouchers pertaining to the ordinary
deposit and savings bank ledgers. The ruling is simple, requiring no printed headings, and consists of
columns for folio, names of customers and amount of vouchers - two sets of columns to a page. Two
pages will easily contain a day's entries for a small branch, the first or left-hand column being used for
deposits and the remaining three for checks, the latter being much more numerous. The savings
deposits and checks, being comparatively few in number, are entered at the end of the day under their
own headings at the foot of the ordinary checks and deposits respectively, though in some
small branches they are entered in the general cash book.

In offices where it is found necessary to split up the deposit ledger into two or more alphabetical
divisions, a special "supplementary" is devoted to each division including the savings bank ledger. It is
not necessary to open up an account in the general ledger for each division of the deposit ledgers.

If the savings ledger contains a large number of accounts, it will be found of great advantage to split it
up into several sections or blocks of accounts, as this greatly facilitates the location of errors when
balancing. A special form of supplementary cash book should be used with a money column for each
block of accounts.

In the case of a current account which has an unusual number of checks at a certain period of the month
or year - for instance, payroll or dividend checks - it is permissible to detail a day's checks once, either
in the supplementary cash book or ledger, and enter the total only with a reference in the other book.

In the larger offices of some of the banks, where the volume of checks is unusually heavy, a loose-leaf
form of supplementary cash book is used in connection with the adding machine, the names being

Project report of accounting in banks and balance sheet

typewritten in afterward. Where this form is adopted, care should be taken to see that the sheets are
consecutively numbered and filed, and that each sheet is signed by the two checking officers.


The principal books of accounts, subsidiary books and statistical records generally maintained by banks
are described in the following. It may, however, be emphasized that the exact nature of such books may
differ from one book to another, depending upon the individual requirement of each bank.

 General Ledger

The general Ledger contains the control accounts of all personal ledgers, the profit and loss account and
different asset and liabilities accounts. There are certain additional accounts also (known as contra
accounts) which are kept with the view to keeping control over transactions which have no direct effect
on the asset and liabilities of bank and represent agency business handled by bank on which it earns
service charges, (or commission) e.g. Letters of credit opened, bills received or sent for collection,
guarantees given, etc.

 Types of General Ledger:

1. Old Style

Although bank book-keeping is supposed to be very simple, there are many ways of doing the same
thing and therefore every bank may find something in the methods of some other bank, which would be
worth its while to adopt.

The general ledger most often found is the old-fashioned ledger, this ledger needs no explanation. It is
sometimes ruled with two columns on each side, the inside columns being used to bring down the totals
from day to day, instead of directly under the day's work. These additional columns prove a blessing,
when an analysis of previous work is desired. The footings are usually made in a hurry and are often so
large and heavy that it is hard to tell them from the actual debits and credits. It should be borne in mind
that the general ledger is continually used to prepare statements of all kinds. Every item of unusual
nature should be properly explained on the ledger. For example, the profit and loss account frequently
contains debits representing loans, discounts, or overdrafts charged off. Money subsequently recovered
from these losses is credited to this account. The record on each side should be so plain that any item
may be traced back, in order to show both debit and credit without referring to tickets or journal of any
kind. It is worth while to itemize the expense account in the same way unless a detailed expense
account is kept separately. Do not debit expense with "Hargood & Co.'s bill, $122.30," but "Stationery,
$122.30." A few years hence the bank may be dealing with another stationer.

Three Column Ledger

Another form of ledger has the money columns together, making it much easier to strike the balance.
The debit balances should be struck in red and the credit balances in black ink when using this form.

Project report of accounting in banks and balance sheet

Boston Ledger

A ledger on the style of the Boston ledger, a thorough explanation of which will follow later, is used in
many banks and found satisfactory. In this ledger the names of the accounts are written or printed down
the middle or side of the page. The days are placed side by side, across the page. A small column may
be left for remarks beside each of the debit and credit columns as noted in the figure. It is preferable to
arrange the asset accounts in proper order on the upper part of the page and the liabilities on the lower
part. When the postings have been made and the balances struck and proved, a complete daily
statement will be made on the ledger it-self.

The objection to this style of general ledger is that an analysis of any account is a very trying task
because of the meager explanations of debits and credits. A large New York bank has adopted a form
which does away with this objection. The front part of the ledger is a two column Boston. The back
part of the ledger is ruled like the old style ledger. The postings are all made first in one section and
then in the other. The bookkeeper takes off a trial balance of the old style section at frequent intervals
and compares the balances in each account with the balances in his skeleton section. If this duplication
of the ledger should seem useless, the desired results can be obtained by keeping a skeleton ledger and
an analytical account for such accounts as "profit and loss," "expense," etc. The Boston ledger and the
old style each have their advantages as a general ledger. A union of the two combines all the good
points of both, and when bound in the same cover furnishes, with a very small amount of extra work, as
comprehensive a volume as one could wish.

Date MemorandaDebit Credit Balance

Balance Ledger

Assets Monday, July 12, 2009 Tuesday, July 13, 2009

Memo. Dr.Memo.
Cr.Balance Memo. Dr.Memo.
Cr. Balance

Boston Ledger

A very simple point overlooked by most general ledger keepers using a Boston ledger may prove
valuable. When closing the books at the end of a fiscal period, enter a trial balance of the ledger in the
statement book before any closing entries are made, and another after closing the earning and expense
accounts into profit and loss. If a statement of earnings and charges is desired, covering a period dating
from before the closing of the books to a period after the closing, it may be very easily prepared by
simply deducting the balances in the accounts chargeable to profit and loss on the first day of the period
from the balances shown as of the closing date, and adding to the differences obtained, the balances in
the same accounts on the last day of the period. Proper addition must be made to each side of the
resulting statement for charges and credits made directly to profit and loss account.

 Profit and Loss Ledger

Some banks maintain a profit and loss account in the general ledger and maintain separate books for
each revenue and expense heads/sub-heads. Some banks maintain columnar books having separate

Project report of accounting in banks and balance sheet

columns for each revenue and expense heads/sub-heads. These books are prepared from vouchers. The
total of debits and credits of each day are posted on profit and loss account in general ledger from
voucher summery sheets. In some banks, the revenue accounts too maintained in general ledger itself,
while in others, board revenue heads are kept in general ledger and their details are kept in subsidiary

For managerial purpose, the accounts in profit and loss ledgers are more detailed than those shown in
published profit and loss accounts of banks. For example, there are separate accounts for basic salary,
dearness allowance, and various others allowances, which are grouped together in published accounts.
Similarly various accounts comparing general charges, interest paid, and interest received, etc. are
maintained in the profit and loss ledgers.

 Subsidiary Books

 Personal ledgers

Each control account in the general ledger is supported by a subsidiary ledger (or more than one
subsidiary ledger if the number of accounts is large). Thus in respect to control accounts relating to
accounts relating to accounts of customers, subsidiary ledgers are maintained for:
a) Various types of deposits accounts (saving bank accounts, recurring account, current accounts,
etc) which contains accounts of individuals customers. Each account holder is allotted a separate folio
in the ledger:
b) various types of loans and advances related accounts (cash credit, term loans, demand loans, bills
purchased and discounted, letters of credit, bank guarantees issued, etc.) wherein the liability of each
customer is reflected. Generally there is no separate ledger for overdraft accounts which are granted in
current account. However some branches maintain these accounts in separate ledgers depending upon
the number of regular borrowers under the facility.

Separate registers are maintained to record the particulars of term deposits (including derivatives like
call deposits, certificate of deposits, etc.) Banks generally do not allot separate folios to each customer.
The register divided in to various sections, each section for particular period of deposits and/or the rate
of interest payable on deposits. As mentioned earlier, postings to these ledgers are made directly from
summary sheets. The voucher summary sheets prepared in the department which originates the
transactions, by the persons other than who writes the legers they are subsequently checked with the
vouchers by persons generally unconnected with writing of ledgers/registers or the voucher summery

 Current Deposit Ledger

The ordinary or current deposit ledger is a very active and important book in a bank, and one which
calls for both accuracy and dispatch on the part of the clerk in charge, as errors can easily be made,
involving the bank in serious loss. The deposit ledger is invariably a loose-leaf book and ruled as
shown in Figure 22. This form is invariably used by all the banks. The so-called Boston ledger has been
tried several times, but was not found practicable in Canada, owing perhaps to the method of marking
or accepting checks by a direct debit to the account. The accounts are arranged alphabetically, and are
therefore self-indexing, but an index is usually kept on the tagged sheet dividing the alphabet.

Project report of accounting in banks and balance sheet

In small offices there is usually only one current ledger used, A-Z. As work increases and becomes too
much for one ledger-keeper, a second ledger can be opened divided A-K and L-Z. For three ledgers the
divisions generally run A-G, H-O, and P-Z, and for four the divisions are A-C, D-K, L-R and S-Z.

As the ledger is loose-leaf there is no accumulation of dead leaves, but the general regulations
regarding loose-leaf ledgers given in Section 3 of this chapter should be observed closely.

Sheet No. Account No.
or Cr.

Current Deposit Ledger

 Bills Registers

Details of different types of bills are kept in separate registers which have suitable columns. For
example, bill purchased inward bills for collection; outward bills for collection, etc. are entered serially
on a daily basis in separate registers. In the case of bill purchased or discounted party-wise details are
also kept in normal ledger form this is done to ensure that sanctioned limits of parties are not exceeded.

Entries in registers are made by reference to the original documents. A voucher of the total amount of
the transactions of each day is prepared in respect of each register. This voucher is entered in the day
book. When the bill is realized or returned its original entry in register is marked off. A daily summery
of such realization or returns is prepared in separate registers whose totals are taken to vouchers which
are posted in day book.
In respect of bills for collection, contra vouchers reflecting both sides of transactions are the prepared at
the time of the original entry is reversed on realization.

Outstanding entries are summarized at stipulated intervals and their totals agreed with the balance of
the respective control accounts in general ledger.


Each department of the Bank maintains a journal to note the transfer entries passed by it. These journals
are memoranda books only, as all the entries made there are also made in the Day Book through
Voucher Summary Sheets. Their purpose is to maintain a record of all the transfer entries originated by
each department. For example, the Loans and Overdraft Section will pass transfer entries for interest
charged on various accounts every month, and as all these entries will be posted in the journal of that
department, the office concerned can easily find out the accounts in respect of which the interest entry
has been passed. Since all vouchers passed during the day are entered into the Day Book only in a
summary form, it may not be possible to get this information from the Day Book without looking into

Project report of accounting in banks and balance sheet

the individual vouchers. Moreover, as the number of departments in a banks is quite large, the Day
Book may not be accessible at all times to all departments.
As has been mentioned earlier, two vouchers are generally made for each transaction by transfer entry,
one for debit and the other for credit. The vouchers are generally made by and entered into the journal
of the department which is affording credit to the other department. For example, if any amount is to be
transferred from Current Account of a customer to his Saving Bank Account, the voucher will be
prepared by the Current Accounts Department and entered in the journal of that department.

 Other Registers/Records

There are different Registers/Records to record the detail particulars of various types of transactions.
These Registers/Records do not from part of the books of accounts but support the entries/balances in
the various accounts some of the important Registers/Records relate to the following:

(a) Drat issued (separated registers may be maintained for drafts issued by the branch on other
branches of same bank and those on the branch of its correspondents in India or abroad). Depending
upon the value of business, some branches may have separated registers on some other basis also like
weather the draft issued advised is prepared or not, registers exclusively for some high volume
customers of the bank, the range, within which amount of draft falls, e.g. below Rs. 1 lakh, Rs 1-10
lakh, Rs 10 -100 lakhs, etc.

(b) Drafts paid (separate registers may be maintained on the same pattern as an in case of draft

(c) Issue and payment of:

1. Telephonic transfers

2. Mail transfers

3. Bankers cheques/Pay orders/traveler’s cheques/Gift cheques

4. Letters of credit.

5. Letters of guarantee

Entries in these registers are made from original documents which are also summarized on vouchers
every day. These vouchers are posted in Day book.

Outstanding entries are summarized at stipulated intervals and their totals are agreed with respective
control accounts in the ledger.

There are frequent transactions amongst the branch of bank which are settled through the mechanism of
inter-office accounts. The examples of such transaction include payment/realization of bills/cheques,
etc. sent for the collection by one branch to other e.g. for government related business. All such
transfers of funds are canalized through nodal account (this has different names in different banks such
as Head-office account, Inter-office account, and so on.). This is a circular account for the banks as
well as the auditors for two reasons: first many funds have been prepared on banks through this account

Project report of accounting in banks and balance sheet

and second, banks are now required to make provision for entries routed through this account which
remain unreconciled beyond a time period specified by Reserve Bank of India.

Banks maintain a Suspense Ledger to record various suspense accounts. As mentioned earlier a trial
balance is prepared in banks every day. Sometimes due to clerical errors e.g. preparing the voucher
summery sheet balance and the trial balance may not tally. In such situation the difference is
temporarily transferred to a suspense account (in case of short debit) or to sundry deposits account (in
case of short credit).
Similarly transaction of transitory nature e.g. travel advance to employees, Are also recorded in
suspense account pending their adjustment related income/expenses account. Some banks maintains
separate ledger for suspense account and sundry deposit accounts. The amounts lying in theses
accounts need regular monitoring to clear them.

Suitable registers with back-up registers to record classification under numerous sub-heads are
maintained for:

a) Establishment expenses

b) Interest and discount income

c) Incomes by way of commission

d) Interest expenditure

e) Provision for interest accrued but not due on deposits

f) Fixed Assets

g) Stationary consumed/in hand

h) Interest payable to and receivable from head office, in respect of advances and depositors
respectively. A peculiar feature of accounting systems in banks is that the branches, nationally, have no
funds of their own. All deposits accepted at branch are deemed to have been passed on bank’s head
office and all loans made at branch are deemed to have been made out of funds received from the head
office. The head office pays interest to branch for its deposits and charges interest from the branch for
its loans and advances. The rates of such interest charged and paid by head office are decided by the
head office during the course of the year and are an important factor in calculating profit and loss of
branch. The mechanism may be known by different names in different banks. All calculation in this
regard is done at the branches only and suitable entries are passed, generally at year end. These entries
however get offset in the process of consolidation of accounts and have no effect on financial statement
of the bank as a whole.

i) Instruments received from customers for payment/collection by branch. Clearing of locally

payable instruments is an important function of banks. Some banks maintains separate registers to
maintain details of various types of instruments lodged by customers where as some other banks use a
common book to record all kind of instruments lodged by customers.

Separate Registers are maintained to record summaries the transactions relating to a particular head of
account like Current Account, Saving Bank Account, Cash Credit, Term loans. Such books may be
called ‘Log Books’, ‘Day Book’, etc. The totals of these books are carried over to Cash book.

Project report of accounting in banks and balance sheet

Some other registers may be: Stop Payment Register, Locker Access Register, Demat Register,
Drawing Power Register used for monitoring of CC Accounts etc.


Besides the books mentioned above, various departments of the bank have to maintain a number of
memoranda books to facilitate their work. Some of the important books are described below:-

Cash Department
(a) Receiving Cashiers’ cash book
(b) Paying Cashiers’ cash book
(c) Main cash book
(d) Cash Balance book

The main Cash Book is maintained by persons other than the cashiers. Each cashier keeps a separate
cash book. When cash is received, it is accompanied by pay-in-slip or other similar document. The
cashier makes the entry in this book

This book contains a record of all the vouchers and entries representing the transactions of each day.
Theoretically, the particulars of every item in the cash book should be entered in detail, but owing to
the wide extension of banking facilities and the constantly increasing volume of checks and other
entries, it has been found necessary to use supplementary books for recording particulars of any class of
items whose volume is sufficient to warrant a separate book - only the day's totals are carried into the
general cash book. The majority of entries, especially in a large office, are therefore in the form of
totals, and very few detailed entries have to be made; but all entries, when made, should be definite as
to source and sufficiently self-explanatory to be understood by any one at any time - ten years after, if

In the larger offices, the officers in charge of the different departments after balancing their books hand
to the cash-book clerk the totals in the form of a signed memorandum, and even in the smaller offices it
is advisable to have the clerks entering up the various supplementary books, give a similar
memorandum of their totals. This limits the responsibility and adds to the efficiency of the staff.

Debit and credit entries for cash book, other than the totals referred to above, are represented by
vouchers giving the necessary particulars, signed by the manager, accountant or other authorized
officer, and it should be an imperative rule that any slip, which does not contain sufficient particulars or
which lacks the necessary signature, should be refused by the cash-book clerk and referred back to the
teller for completion. In order to facilitate the sorting and checking of these vouchers, distinctive
colored paper or printing should be used; for instance, yellow, debit slips and white, credit slips.

It should constantly be borne in mind that as the cash book and its supplementary books are recognized
in a court of law as the books of original entry, faulty or meager particulars might cause serious trouble.
Verbal explanation, even if available, would not be admitted. Examine a bank cash book of twenty or
thirty years ago: there could be no better object lesson of what a cash book should be. Copper-plate
writing and ample particulars are characteristic.

Quick Payment System - Banks introduce different systems so that their customers may receive
payment of cash etc. quickly. The most prevalent system is the teller system. Under this system tellers
keep cash as well as ledger cards and the specimen signature cards of each customer in respect of

Project report of accounting in banks and balance sheet

Current and Saving Bank Accounts. A teller is authorised to make payment up to a particular amount,
say, Rs. 1,000. On receipt of the cheque, he checks it, passes it for payment, enters it in the ledger card
and makes the payment to customer. The teller also receives cash deposited in these accounts.

Outward Clearing:

(a) A Clearing Cheques Received Book for entering cheques received from customers for clearing.

(b) Bank wise list of the above cheques, one copy of which is sent to the Clearing House together with
the cheques.

A person checks the vouchers (foil of pay-in slips) and lists with the Clearing Cheque Received Book.
The vouchers are then sent to appropriate departments, where customers’ accounts are immediately
credited. If any cheque is received back unpaid the entry is reversed. Normally, no drawings are
allowed against clearing cheques deposited on the same day but exceptions are often made by the
manager in the case of established customers.
Inward Clearing

Cheques received are checked with the accompanying lists. They are then distributed to different
departments and the number of cheques given to each department is noted in a Memo Book. When the
cheques are passed and posted into ledgers, their number is independently agreed with the Memo Book.
If any cheques are found unplayable, they are returned back to the Clearing House. The cheques
themselves serve as vouchers. Book which is checked by the chief cashier. The pay-in-slip then goes to
the Main Cash Book writer who makes an entry in his books. The cash book checker checks the entry
with the slip and then the counter-foil of the slip is returned back to the customer and the foil is sent to
the appropriate department for entering into the ledger. The foil is used as a voucher. Cash is paid
against a cheque or other document (e.g. traveller’s cheque, demand draft, pay order, etc.) after it has
been duly passed and entered in the appropriate account in the ledger. Cheques, demand drafts, pay
orders, etc. are themselves used as vouchers.

Loans & Overdraft Departments

(a) Registers for shares and other securities held on behalf of each customer.
(b) Summary Books of Securities giving details of Government securities, shares of individual
companies etc.
(c) Godown registers maintained by the godown-keeper of the bank.
(d) Price register giving the wholesale price of the commodities pledged with the bank.
(e) Overdraft Sanction registers.
(f) Drawing Power book.
(g) Delivery Order books.
(h) Storage books.

Deposits Department

(a) Account Opening & Closing registers.

(b) For Fixed Deposits, Rate registers giving analysis of deposits according to rates.
(c) Due Date Diary.
(d) Specimen signature book.

Establishment department

Project report of accounting in banks and balance sheet

(a) Salary and allied registers, such as attendance register, leave register, overtime register, etc.
(b) Register of fixed assets, e.g., furniture and fixtures, motor cars, vehicles, etc.
(c) Stationery registers.
(d) Old records register.


(a) Signature book of bank’s officers.

(b) Private Telegraphic Code and Cyphers.


Statistical records kept by different banks are in accordance with their individual needs. For example,
there may be books for recording
(i) Average balance in loans and advances etc.
(ii) Deposits received and amount paid out each month in the various departments,
(iii) Number of cheques paid,
(iv) Number of cheques, bills and other items collected.
The above is not an exhaustive list of accounting records kept by a bank.


A banking company is not required to prepare financial statements in accordance with Schedule VI of
the Companies Act, 1956.
Form A of third schedule gives the format of a balance sheet and form B gives the format of a profit
and loss account. These formats have been revised w.e.f. 1st April 1991 and the profit and loss account
and balance sheet of banking company for the year ended 31st March 1992 and onwards have to be
prepared in new form as discussed below.


With the nationalisation of major commercial banks and changes brought about in the economic and
financial policies by the Government, the environment in which the banks operate has undergone a
complete change. However, there was little effort to bring about a change in the financial statements of
banks to reflect the reality of the impact of the environment. There were suggestions emphasising a
need for revising formats in which banks publish their financial statements as prescribed under the
Banking Regulation Act, 1949. A Committee under the Chairmanship of Shri A. Ghosh, Deputy
Governor, RBI, was constituted to examine, inter alia the desirability of greater or full disclosure in the
published accounts of banks having regard to the need for disclosure, public accountability of banks,
requirement and maintenance of confidentiality between banker and customer and the requirement of
maintaining the reputation and credit-worthiness of banks. The Committee after due deliberation has
suggested suitable changes/amendments in the forms of balance sheet and profit and loss account of
banks, having regard to :

1. Need for better disclosure

Project report of accounting in banks and balance sheet

2. Expansion of banking operations both area-wise and sector-wise over the period, Need for improving
the presentation of accounts etc. The revised formats are given below which include Form A for
Balance Sheet, Form B for Profit and Loss Account and eighteen other schedules of which two relates
to notes and accounting policies.


Form B

Third Schedule

Form of Profit and Loss Account

Profit and Loss Account for the year ended 31st March ……
Particulars Schedule Number Year ended
I. Income:
Interest Earned 13 ….
Other income 14 ….
II. Expenditure:
Interest Expended 15 ….
Operating Expenses 16 ….
Provisions and Contingencies … ….
III. Profit/Loss:
Net Profit/(Loss) of the year ….
Total ….
IV. Appropriations:
Transfer to Statutory Reserves …..
Transfer to other Reserves ….
Transfer to Government Proposed Dividend ….
Balance Carried over to Balance Sheet ….
Total ….

Schedules to be annexed with Profit and Loss Account

Project report of accounting in banks and balance sheet

Particulars Rs.

Schedule 13: Interest Earned

(I) Interest/ Discounts on Advances/Bills ...
(II) Income on Investments …
(III) Interest on balances with RBI and other inter bank funds …
(IV) Others …
Total …

Schedule 14: Other Incomes

(I) Commission, Exchange and Brokerage …

(II) Profit on Sale of investment
Less: Loss on Sale of investment
(III) Profit on revaluation of Investment
Less: Loss on revaluation of Investment
(IV) Profit on Sale of Land/Building and Other Assets
Less: Loss on Sale of Land/Building and Other Assets
(V) Profit on Exchange transactions
Less: Loss on Exchange transactions
(VI) Income earned by way of dividend, etc., from subsidiaries
Companies and/or joint ventures abroad/in India.
(VII) Misc. Income
Note: Under items II to V loss figures be shown in brackets

Schedule 15 : Interest Expended

(I) Interest on Deposits
(II) Interest on RBI/Inter-Bank Deposits
(III) Others

Schedule 16: Operating Expenses

(I) Payment to and Provisions for Employees
(II) Rent, Taxes and Lighting
(III) Printing and Stationary
(IV) Advertisement and Publicity
(V) Depreciation on Banks Property
(VI) Directors’ Fees, Allowances and Expenses
(VII) Auditors’ Fee and Expenses
(Including Branch Auditors)
(VIII) Law Charges
(IX) Postage, Telegrams, Telephones, etc.
(X) Repairs and Maintenance
(XI) Insurance
(XII) Other Expenditure

Project report of accounting in banks and balance sheet

Note: Corresponding figures for the immediately preceding financial year should be shown in separate


Schedule 13 A Interest 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 loans, term loans, domestic and foreign
bills purchased and discounted (including those rediscounted), overdue interest and also interest
subsidy, if any relating to such advances/bills.
2. Income on Investments: Includes all income derived from the investment portfolio by way of
interest and dividend
3. Interest on balances with Reserve Bank of India and other inter-bank funds: Includes the interest
on balances with Reserve Bank of India and other banks, call loans, money market placements, etc.
4. Others: Includes any other interest/discount income not included in the above heads.

Schedule 14 B Other Incomes

1. Commission, Exchange and Brokerage: Includes all remuneration on services as a commission on

collection, commission/exchange on remittance and transfers, commission on letter of credits, letting
out lockers and guarantees, commission on Government business, commission on other permitted
agency business including consultancy and other services, brokerage etc. on securities It does not
include foreign exchange income.
2. Profit on sale of investment: Less loss on sale of investment
3. Profit on revaluation of investment: Less loss on revaluation of investment.
4. Profit on sale of land, building and other assets: Less loss on sale of land, building and other
assets. Includes profit/loss on the sale of securities, furniture land and buildings, motor vehicle, gold,
silver, etc. Only the net position should be shown. If the net position is a loss, the amount should be
shown as a deduction. The net profit/loss on revaluation of assets may also be shown under this item
5. Profit on Exchange transactions: Less loss on exchange transactions Includes profit/loss on
dealing in foreign exchange, all income earned by way of foreign exchange commission and charges on
foreign exchange transactions excluding interest which will be shown under interest. Only the net
position should be shown. If the net position is a loss, the amount should be shown as a deduction.
6. Income earned by way of dividends, etc. from subsidiaries, companies, joint ventures, abroad/in
7. Miscellaneous Income: Includes recoveries from constituents for godown rents, income from the
banks properties, security charges, insurance, etc. and any other miscellaneous income. In case any
item under this head exceeds one percentage of the total income, particulars may be given in the notes.

Schedule 15 C Interest Expenses

1. Interest on deposits: Includes interest paid on all types of deposits from banks and other
2. Interest on RBI/Inter-Bank Borrowings: Includes discounts/interest on all borrowings and
refinance from the Reserve Bank of India and other banks.
3. Others: Includes discount/interest on all borrowings and refinance, penal interest paid, etc. may
also be included here.

Project report of accounting in banks and balance sheet

Schedule 16 D Operating Expenses

1. Payments to and provisions for employees: Include staff salaries wages, allowances, bonus, other
staff benefits, like provident fund, pension, gratuity, leave fare concessions staff welfare medical
allowances to staff, etc.
2. Rent, taxes and Lighting: Includes rent paid by the banks on buildings and municipal and other
taxes paid excluding income tax and interest tax, electricity and other similar charges and levies. House
allowance and all similar payments to staff should appear under head ‘Payments and provisions for
3. Printing and Stationary: Includes books and forms and stationary used by bank and other printing
which are not incurred by way of publicity expenditure.
4. Advertisement and Publicity: Includes expenditure incurred by the bank for advertisement and
publicity purpose including printing charges of publicity matter.
5. Depreciation on Banks Property: Includes depreciation on bank’s own property, motor cars and
other vehicles, furniture, electric fittings, vaults, lifts, leasehold properties, non banking assets, etc.
6. Director’s fees, allowances and expenses: Includes sitting fees and all other items of expenditure
incurred on behalf of directors. It includes the daily allowances, hotel charges, conveyance charges, etc.
which though in the nature of reimbursement of expenses incurred may include under this head. Similar
expenses of local committee members may also be included in this head.
7. Auditors’ fees and expenses: (including branch auditor’s fees and expenses) Includes the fees paid
to the statutory auditors and branch auditors for professional services rendered and all expenses for
performing their duties, even though they may be in the nature of reimbursement of expenses. If
external auditors have been appointed by the bankers themselves for internal inspection and audits and
other services, expenses incurred in that context including fees may not be included this head but
shown under ‘ Other Expenses’.
8. Law Charges: All legal expenses and reimbursement of expenses, incurred in connection with
legal services are to be included here.
9. Postage, telegrams, telephones, etc: Includes all postage charges like stamps, telegram,
telephones, teleprinters, etc.
10. Repairs and maintenance: Includes repairs to bank’s property, their maintenance charges, etc.
11. Insurance: Includes insurance charges premium paid to DICGC, etc. to the extent they are not
recovered from the concerned parties.
12. Other expenditure: All expenses other than those which are not included in any other heads like,
licences fees, donation, subscription of papers, periodicals, entertainment expenses, travel expenses,
etc. may be included in this head. In case any particular item under this head exceeds one percent of the
total income particulars may be given in the notes.

E Provisions and Contingencies

Includes all the provisions made for bad debts and doubtful debts, provision for taxation, provisions for
diminution in the value of investments, transfer to contingencies and other similar items.

Project report of accounting in banks and balance sheet

Form B

Third Schedule



(000’s omitted)

Particulars Project report of accountingSchedule
in banks and balance
As on sheet
31.3.09As on 31.3.08 (pervious
Number (current year) year)
I. Income:
Interest Earned 13 63788,43,38 48950,30,71
Other income 14 12690,78,90 8694,92,84
TOTAL 76479,22,28 57645,23,55

II. Expenditure:
Interest Expended 15 42915,29,37 31929,07,69
Operating Expenses 16 15648,70,44 12608,60,60
Provisions and Contingencies … 8793,99,82 6378,42,79
TOTAL 567357,99,63 50916,11,08

III. Profit/Loss:
Net Profit/(Loss) of the year 9121,22,65 6729,12,47
Profit brought forward
Transfer form general reserve
TOTAL 9121,56,58 6792,55,77

IV. Appropriations:
Transfer to Statutory Reserves 5291,79,28 4839,07,23
Transfer to investment reserves 62,17,87
Transfer to Capital reserves 826,55,32 4,43,98
Transfer to Revenue reserve and 306,89,30 300,00,00
Other reserves
Transfer to Proposed Dividend 1841,15,26 1357,66,13
Tax on Dividend 248,03,47 165,86,63
Loss from 606,80,02
State Bank of Saurashtra
Balance Carried over
to Balance Sheet
TOTAL 9121,56,58 6792,55,77

Schedules to be annexed with Profit and Loss Account

(000’s omitted)

Particulars As on 31.3.09 As on 31.3.08 (pervious

(current year)
Schedule 13: Interest Earned
(I) Interest/ Discounts on Advances/Bills 46404,71,49 35228,11,19
(II) Income on Investments 15574,71,51 11944,16,36
(III) Interest on balances with RBI and other inter bank funds 1474,37,74 1200,07,40
(IV) Others 335,22,64 577,95,76
Total 63788,43,38 48950,30,71

Schedule 14: Other Incomes

(I) Commission, Exchange and Brokerage 7617,23,54 5914,25,45

Project report of accounting in banks and balance sheet

(II) Profit on Sale of investment (net) 2567,29,02 16498391

(III) Profit on revaluation of Investment (net) (56,50) (703,50,07)
(IV) Profit on Sale of Land/Building and Other Assets (net) (2,95,42) 11,04,09
(V) Profit on Exchange transactions (net) 1179,24,92 692,69,81
(VI) Income earned by way of dividend, etc., from subsidiaries 409,60,28 197,40,55
Companies and/or joint ventures abroad/in India.
(VII) Income from financial lease 26,67,00 31,86,36
(VIII) Misc. Income 894,78,06 901,32,74
Total 12690,78,90 8694,92,84
Note: Under items II to V loss figures be shown in brackets

Schedule 15 : Interest Expended

(I) Interest on Deposits 37936,84,73 27072,58,10
(II) Interest on RBI/Inter-Bank Deposits 2555,01,04 3938,43,98
(III) Others 2423,43,60 1918,05,63
Total 42915,29,37 319292,07,69

Schedule 16: Operating Expenses

(I) Payment to and Provisions for Employees 9747,31,23 7785,86,94
(II) Rent, Taxes and Lighting 1295,13,73 993,41,81
(III) Printing and Stationary 232,82,08 188,87,76
(IV) Advertisement and Publicity 251,22,95 173,23,16
(V) Depreciation on Banks Property (other than leased assets) 739,12,43 651,04,24
Depreciation on leased assets 24,01,69 28,93,67
(VI) Directors’ Fees, Allowances and Expenses 1,23,20
(VII) Auditors’ Fee and Expenses 103,69,68 97,34,58
(Including Branch Auditors)
(VIII) Law Charges 74,61,19 60,45,14
(IX) Postage, Telegrams, Telephones, etc. 279,73,25 216,57,72
(X) Repairs and Maintenance 160,58,83 235,82,73
(XI) Insurance 529,01,89 415,84,36
(XII) Other Expenditure 2210,41,68 1759,95,29
Total 15648,70,44 12608,60,60


In addition to the disclosure to be made in the balance sheet and profit and loss account, in pursuance of
the requirements of the Third Schedule to the Act, the RBI has directed, Circular NO. BDOD.BP.BC.
NO.59/21.04.018/2005-06, dated January 30, 2006 that the following information should be disclosed
by way of notes on accounts:

List of Disclosure Items

• Capital adequacy ratio

• Capital adequacy ratio-tier T capital
• Capital adequacy ratio-tier II capital
• Percentage of shareholding of the Government of India in nationalized banks

Project report of accounting in banks and balance sheet

• Amount of subordinated debt raised as tier II capital

• Gross value of investments, etc.
• Provisions made towards depreciation in the value of investments
• Movement of provisions held towards depreciation on investments
• Repo transactions
• Non-SLR investment portfolio
• Forward rate agreement/interest rate swap
• Exchange traded interest rate derivatives
• Disclosures on risk exposure m derivatives
• Percentage of net NPAs to net advances
• Movement in NPAs
• Amount of provisions made towards NPAs
• Movement of provisions made towards NPAs
• Details of Loan assets subjected to restructuring
• Restructuring under CDR
• Details of financial assets sold to a SC/RC for asset reconstruction
• Provision on standard assets
• Interest income as a percentage to working funds
• Non-interest Income as a percentage to working funds
• Operating profit as a percentage to working funds
• Return on assets
• Business (deposits plus advances) per employee
Profit per employee
• Maturity pattern of loans and advances
• Maturity pattern of investment securities
• Maturity pattern of deposits
• Maturity pattern of borrowings
- • Foreign currency assets and liabilities
• Exposure to real estate sector
• Exposure to capital market: investment in equity shares, etc.
• Bank financing for margin trading
• Exposure to country risk
• Details of single borrower/group borrower limit exceeded by the bank
• Provision made towards income tax during the year
• Disclosure of penalties imposed by RBI
• Consolidated financial statements —AS 21
• Segment reporting —AS 17
• Related party disclosure — AS 18
• Other disclosures as required under the relevant accounting standards