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Executive Summary
The link between sound and well-developed financial systems and economic
growth is a fundamental one. Empirical evidence, both in developing and
advanced economies, has shown that countries with developed financial systems
grow at faster rates. Efficient and prudent allocations of resources by the financial
system is crucial for increasing productivity, boosting economic development,
enhancing equality of opportunity, and reducing poverty. Getting the financial
systems of developing countries to function more effectively in providing the full
range of financial services is thus a task that will be well rewarded with economic
growth.
The banking system is still by far the most important part of the financial system,
accounting for more than 75 percent of the assets. It is very hard to imagine a
modern national economy without a financial sector without functioning banks
the supply of money would collapse. A smooth-running financial sector is
therefore an essential requirement for a prospering national economy.
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Legal provisions
Definition of banking:
“ Banking is one of the key drivers of the U.S. economy. Why? It provides the
liquidity needed for families and businesses to invest for the future. Bank loans
and credit means families don't have to save up before going to college or buying
a house, and companies can start hiring immediately to build for future demand
and expansion. Credit has gotten a bad name, thanks to the 2008 financial crisis,
but that's only because it was unregulated, used for consumption instead of
investment, and allowed to create a bubble.”
Definition of Banking company :
A financial institution that accepts deposits and channels the money into lending
activities; "he cashed a check at the bank"; "that bank holds the mortgage on my
home."
Statues Governing Banking Companies:
The law governing banks, bank accounts, and lending in the United States is a
hybrid of federal and state statutory law. Consumers and businesses may
establish bank accounts in banks and savings associations chartered under state or
federal law. The law under which a bank is chartered regulates that particular
bank. A mix of state and federal law, however, governs most operations and
transactions by bank customers.
Article 3 of the Uniform Commercial Code, as adopted by the various states,
governs transactions involving negotiable instruments, including checks. Article 4
of the Uniform Commercial Code governs bank deposits and collections,
including the rights and responsibilities of depository banks, collecting banks,
and banks responsible for the payment of a check. Other provisions of the
Uniform Commercial Code are also relevant to banking and lending law,
including Article 4A (related to funds transfers), Article 5 (related to letters of
credit), Article 8 (related to securities), and Article 9 (related to secured
transactions).
A number of regulations govern a check when it passes through the Federal
Reserve System. These regulations govern the availability of funds available to a
depositor in his or her bank account, the delay between the time a bank receives a
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deposit and the time the funds should be made available, and the process to follow
when a check is dishonored for non-payment. Federal law also provides
protection to bank customers. Prompted by banking crises in the 1930s, the
federal government established the Federal Deposit Insurance Corporation, which
insures bank accounts of individuals and institutions in amounts up to $100,000.
A number of laws have been passed affecting banks, banking, and lending. A
brief summary of these is as follows:
 National Bank Act of 1864 established a national banking systems and
chartering of national banks.
 Federal Reserve Act of 1913 established the Federal Reserve System.
Banking Act of 1933 (Glass-Steagall Act) established the Federal Deposit
Insurance Corporation (FDIC), originally intended to be temporary.
 Banking Act of 1935 established the FDIC as a permanent agency.
 Federal Deposit Insurance Act of 1950 revised and consolidated previous
laws governing the FDIC.
 Bank Holding Company Act of 1956 set forth requirements for the
establishment of bank holding companies.
 International Banking Act of 1978 required foreign banks to fit within the
federal regulatory framework.
 Financial Institutions Regulatory and Interest Rate Control Act of 1978
created the Federal Financial Institutions Examination Council; it also
established limits and reporting requirements for insider transactions
involving banks and modified provisions governing transfers of electronic
funds.
 Depository Institutions Deregulation and Monetary Control Act of 1980
began to eliminate ceilings on interest rates of savings and other accounts
and raised the insurance ceiling of insured account holders to $100,000.
 Depository Institutions Act of 1982 (Gar-St. Germain Act) expanded the
powers of the FDIC and further eliminated ceilings on interest rates.
Competitive Equality Banking Act of 1987 established new standards for
the availability of expedited funds and further expanded FDIC authority.
 Financial Institutions Reform, Recovery, and Enforcement Act of 1989 set
forth a number of reforms and revisions, designed to ensure trust in the
savings and loan industry.
 Crime Control Act of 1990 expanded the ability of federal regulators to
combat fraud in financial institutions.
 Federal Deposit Insurance Corporation Act of 1991 expanded the power
and authority of the FDIC considerably.
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 Housing and Community Development Act of 1992 set forth provisions to
combat money laundering and provided some regulatory relief to certain
financial institutions.
 Riegle Community Development and Regulatory Improvement Act of
1994 established the Community Development Financial Institutions Fund
to provide assistance to community development financial institutions.
 Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
permitted bank holding companies that were adequately capitalized and
managed to acquire banks in any state.
 Economic Growth and Regulatory Paperwork Reduction Act of 1996
brought forth a number of changes, many of which related to the
modification of regulation of financial institutions.
 Gramm-Leach Bliley Act of 1999 brought forth numerous changes,
including the restriction of disclosure of nonpublic customer information
by financial institutions. The Act provided penalties for anyone who
obtains nonpublic customer information from a financial institution under
false pretenses.
Numerous federal agencies promulgate regulations relevant to banks and banking,
including the Federal Deposit Insurance Corporation, Federal Reserve Board,
General Accounting Office, National Credit Union Administration, and Treasury
Department.
The ability for bank customers to engage in electronic banking has had a
significant effect on the laws of banking in the United States. Some laws that
govern paper checks and other traditional instruments are difficult to apply to
corresponding electronic transfers. As technology develops and affects the
banking industry, banking law will likely change even more.
Functions of Banks:
How is money created? Other than the currency and bills that are made in a
national mint, the money that our nation uses on a daily basis is actually created
by commercial banks in the form of deposits and other things.
A bank depends on the misfortune of its customers to create money. Someone
must be in debt to commercial banks in order for money and credit systems to
work. When a borrower spends the money he or she has been loaned, the recipient
deposits it in another bank. That deposit represents the creation of new money. A
bank pays its bills by borrowing if people don't pay their taxes. The interest that a
bank charges customers on the loans it gives becomes that bank's profit. A
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customer's assets and liabilities add up equally. When a bank makes unnecessary
profit, it makes for a burden on taxpayers.
The Federal Reserve processes checks and cash. Banks order cash from the Fed
when they need it, and ship it cash when they have too much. Checks can even be
processed cross-country; for instance, if someone from Los Angeles writes a
check in Philadelphia, the Philly bank credits the person's account and sends the
check to the Federal Reserve of Philadelphia, then the check is sent to the Federal
Reserve of Los Angeles where it goes to the bank of Los Angeles. The Fed
processes one third of all checks written in America. Many of them are deposited
electronically. High-tech machines are used for all sorts of transactions. Fedwire
is a program that allows money to be transferred over seconds. ACH allows for
constant, direct payments. There are also machines designed to detect bill
denominations, extent of use, and authenticity.
Banks can borrow money from the Fed as well, although it is considered a last
resort lender. It acts to prevent too much borrowing. Types of loans are
adjustment credit, for overnight loans or short-term problems; seasonal loans,
which are extended up to nine months to help in seasonal swings in deposits and
loans; and extended loans, which are prolonged because of financial difficulties if
banks have a plan to correct the problems. Banks aren't allowed to take advantage
of interest or discount rates and make profits by borrowing, either.
The Fed keeps the banking system competitive by creating new banks and
mergers frequently. It examines bank information for security, and the banks
themselves for safety. The Fed will fine banks, suspend employees, or pass new
laws if they feel the need to.
There are 12 Fed district banks, member banks, and the Board of Governors,
which heads the Federal Reserve. Each member of the Board is appointed to 14-
year terms so the members are well insulated from outside political pressures. It is
financially self-sufficient as a bank; it doesn't rely on Congress appropriations,
but rather on interest from large holdings on US government securities.
The Board gives the Treasury the excess of what it took as opposed to what it
spent. It sets reserve requirements (a monetary policy tool, along with discount
rates and open-market operations); this is important because it affects the amount
of loans and bank money commercial banks have. (Commercial banks are those
that take deposits and give loans on an individual basis.) Reserve requirements are
percentages of money or credit banks must keep on hand or on deposit at the
Federal Reserve Bank.
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System of book keeping in banks
Obectives & System
An accounting system can be defined as the series of tasks in an entity by
which transactions are processed as a means of maintaining financial records.
Such a system recognizes, calculates, classifies, posts, analyses, summarizes
and report Transaction.
The auditor of a bank needs to obtain a thorough understanding of the
accounting system of the bank to assess the relevance and reliability of the
accounting records and other source data underlying the financial statements.
He should gain an understanding of the books of account and other related
records maintained by the auditee. He should also understand the flow of
various kinds of transactions. The auditor can gain such understanding through
enquiries of appropriate personnel, by making reference to documents such as
accounting manual, procedures manual and flow charts, and by observing the
actual conduct of operations.
It may be stated here that even in a fully computerised branch, some work is
presently carried out manually, e.g., preparation of vouchers, preparation of
letters of credit and guarantees, preparation of some returns and statements,
etc. In partly computerised branches, generally the back-office work (i.e. the
internal processing of transactions of the branch) is carried out on computers
whereas the customers transactions (i.e. the front-office work) are processed
manually. Many of the banks in the private sector have networked all or most
of their branches in the country; this has given them the capability of handling
most of the transactions of their customers at any of the branches.
Banks, like most other large-sized institutions, follow the mercantile system of
accounting. Thus, the system of recording, classifying and summarizing the
transactions in a 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 in most 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
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ledgers, including the general ledger and subsidiary ledgers for debtors,
creditors, etc., are written up afterwards
Banks follow the accounting procedure of voucher posting under which the
vouchers are straightaway posted to the individual accounts in the subsidiary
ledgers. 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 accounts, etc.) are entered on separate voucher
summary 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.
Books of Accounts
General ledger
General ledger contains all the accounts for recording transactions relating to a
company's assets, liabilities, owners' equity, revenue, and expenses. In modern
accounting software or ERP, the general ledger works as a central repository for
accounting data transferred from all subledgers or modules like accounts payable,
accounts receivable, cash management, fixed assets, purchasing and projects. The
general ledger is the backbone of any accounting system which holds financial
and non-financial data for an organization. The collection of all accounts is
known as ledger account. This may be a large book.
The statement of financial position and the statement of income and
comprehensive income are both derived from the general ledger. Each account in
the general ledger consists of one or more pages. The general ledger is where
posting to the accounts occurs. Posting is the process of recording amounts as
credits (right side), and amounts as debits (left side), in the pages of the general
ledger. Additional columns to the right hold a running activity total (similar to a
checkbook).
The listing of the account names is called the chart of accounts. The extraction of
account balances is called a trial balance. The purpose of the trial balance is, at a
preliminary stage of the financial statement preparation process, to ensure the
equality of the total debits and credits.
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The general ledger should include the date, description and balance or total
amount for each account. It is usually divided into at least seven main categories.
These categories generally include assets, liabilities, owner's equity, revenue,
expenses, gains and losses. The main categories of the general ledger may be
further subdivided into subledgersto include additional details of such accounts as
cash, accounts receivable, accounts payable, etc.
Because each bookkeeping entry debits one account and credits another account
in an equal amount, the double-entry bookkeeping system helps ensure that the
general ledger is always in balance, thus maintaining the accounting equation:
The accounting equation is the mathematical structure of the balance sheet.
Although a general ledger appears to be fairly simple, in large or complex
organizations or organizations with various subsidiaries, the general ledger can
grow to be quite large and take several hours or days to audit or balance.
Subsidiary Books
Subsidiary Books refers to books meant for specific transactions of similar nature.
Subsidiary Books are also known as Special journals or day books. To overcome
shortcoming of the use of the journal only as a book of original entry, the journal
is subdivided into specific journals or subsidiary books .
NEED OF SUBSIDIARY BOOKS
To avoid repetition.
To provide information on a prompt basis.
To facilitate internal check system.
To classify transactions.
To avoid bulky & voluminous records
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TYPES OF SUBSIDIARY BOOKS
CASH BOOKS
A cash book is a special journal which is used for recording all cash receipts &
cash payments .
TYPES OF CASH BOOKS
1 ) Single- column cash books .
2) Double-column cash books.
3) Triple-column cash books.
4) Petty cash books.
DATE RECEIPT RECEIPT No. L.F AMOUNT DATE PAYMENT VOUCHER
No. L.F AMOUNT DATE RECEIPT CASH BANK DATE PAYMENTS CASH
BANK
DATE RECEIPT DISCOUNT CASH BANK DATE PAYMENT DISCOUNT
CASH BANK
PURCHASE BOOKS
These are the b ooks used for recording purchases on credit .
Things purchased on credit for personal use are not recorded in this
book. It also does not record the fixed assets purchased .
DATE PARTICULAR INVOICE NO. L.F AMOUNT
SALES BOOKS Books used for recording goods sold on credit. DATE
PARTICULAR OUTWARD INVOICE NO. L.F AMOUNT
PURCHASE RETURN BOOKS Books used for recording goods returned to the
seller. DATE PARTICULARS L.F DEBIT NOTES AMOUNT
SALES RETURN BOOKS Books used for recording the goods returned by the
buyer. DATE PARTICULARS L.F CREDIT NOTE AMOUNT
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BILLS RECEIVABLE BOOKS(B/R)
This is used for the purpose of recording the details of bills receivable. The
individual accounts of parties from whom bills are received will be credited with
the amount in the bills receivable book.
DATE FROM WHOM READ ACCEPTOR DATE OF BILLS TERM DATE OF
MATURITY WHERE PAYABLE AMOUNT HOW DEPOSED
BILLS PAYABLE BOOK (B/P)
This is used for the purpose of recording the details of bills payable. The
individual accounts of the parties to whom the bills are issued will be debited with
the corresponding amount in the bills payable book. The periodic total is posted to
the credit of bills payable account in the ledger by writing “By Sundries as per
Bills Payable Book”.
Example:
S.NO. DATE NAME OF DRAWER PAYEE DATE OF BILL TERM DATE OF
MATURITY WHERE PAYABLE AMOUNT REMARK 16 May S&Co. Arya
mills 16 may 2006 30 days 16 June 2006 Central bank 5000
PETTY CASH BOOK
This book keeps account of all the miscellaneous spending. This might include:
child fees, window-cleaning bills, stationery, postage, cleaning supplies and any
other sundry item.
AMT. RECEIVED DATE PARTICULAR AMOUNT POSTAGE CARRIAGE
TRAVELLING SUNDRY EXP.
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Memorandum Books
To maintain the records of company in proper way, accountant needs lots of
books. One of them is memorandum book or waste book. Memorandum or waste
book is that note book which is used to write the transactions when it happened
before writing all these transactions in journal. It is needed where there
are thousands of transactions are done within one day on the sale point. This book
is very helpful to record in journal. Its other name is rough book, long book and
rough copy book.
Final Accounts
Legal provisions
Section 29 in BANKING REGULATION ACT,1949
 Accounts and balance-sheet.—
(1) At the expiration of each calendar year 1[or at the expiration of a period of
twelve months ending with such date2 as the Central Government may, by noti-
fication in the Official Gazette, specify in this behalf,] every banking company
incorporated 3[in India], in respect of all business transacted by it, and every
banking company incorporated 4[outside India], in respect of all business
transacted through its branches 3[in India], shall prepare with reference to 5[that
year or period, as the case may be,] a balance-sheet and profit and loss account as
on the last working day of 6[that year or the period, as the case may be,] in the
Forms set out in the Third Schedule or as near thereto as circumstances admit:
7[Provided that with a view to facilitating the transition from one period, of
accounting to another period of accounting under this sub-section, the Central
Government may, by order published in the Official Gazette, make such
provisions as it considers necessary or expedient for the preparation of, or for
other matters relating to, the balance sheet or profit and loss account in respect of
the concerned year or period, as the case may be.]
(2) The balance-sheet and profit and loss account shall be signed—
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(a) in the case of a banking company incorporated 3[in India], by the manager or
the principal officer of the company and where there are more than three directors
of the company, by at least three of those directors, or where there are not more
than three directors, by all the directors, and
(b) in the case of a banking company incorporated 4[outside India] by the
manager or agent of the principal office of the company 3[in India].
(3) Notwithstanding that the balance-sheet of a banking company is under sub-
section (1) required to be prepared in a form other than the form 3[set out in Part I
of Schedule VI to the Companies Act, 1956 (1 of 1956)], the requirements of that
relating to the balance-sheet and profit and loss account of a company shall, in so
far as they are not inconsistent with this Act, apply to the balance-sheet or profit
and loss account, as the case may be, of a banking company. 9[(3A)
Notwithstanding anything to the contrary contained in sub-section (3) of section
210 of the Companies Act, 1956 (1 of 1956), the period to which the profit and
loss account relates shall, in the case of a banking company, be the period ending
with the last working day of the year immediately preceding the year in which the
annual general meeting is held.] 10[Explanation.—In sub-section (3A), “year”
means the year or, as the case may be, the period referred to in sub-section (1).]
(4) The Central Government, after giving not less than three months’ notice of its
intention so to do by a notification in the Official Gazette, may from time to time
by a like notification amend the Form set out in the Third Schedule.
Section 33 in BANKING REGULATION ACT,1949
 Display of audited balance-sheet by companies incorporated outside
India.—Every banking company incorporated 1[outside India] shall, not
later than the first Monday in August of any year in which it carries on
business, display in a conspicuous place in its principal office and in every
branch office 2[in India] a copy of its last audited balance-sheet and profit
and loss account prepared under section 29, and shall keep the copy so
displayed until replaced by a copy of the subsequent balance-sheet and
profit and loss account so prepared, and every such banking company shall
display in like manner copies of its complete audited balance-sheet and
profit and loss account relating to its banking business as soon as they are
available, and shall keep the copies so displayed until copies of such
subsequent accounts are available.
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COMPANY’S PROFILE
DEVELOPMENT CREDIT BANK
DCB Bank (Formerly Development Credit Bank Ltd.) is private sector
scheduled commercial bank in India. It has a network of 130 branches[5] and 236
ATMs in the country.[6] It offers products to individuals, small and medium
businesses, rural banking and corporates in selective regions. The Bank is present
in 16 states and 2 Union Territories. Metros having DCB Bank branches are
Ahmedabad, Bengaluru, Chennai, Delhi, Gurgaon, Hyderabad Kolkata, Mumbai
and Pune. The Bank has dedicated rural banking branches in Andhra Pradesh,
Chhattisgarh, Gujarat, Madhya Pradesh, Odisha and Rajasthan. Other DCB Bank
locations are; State of Gujarat - Ahmedabad, Ankleshwar, Bhuj, Daman (Union
Territory), Gandhinagar, Rajkot, Sidhpur, Silvassa (Union Territory), Surat, Vapi
and Vadodara. Branches in the state of Goa - Mapusa, Margao, Panjim and
Vasco. Branches in Rajasthan - Jaipur and Jodhpur. DCB Bank has recently
inaugurated a branch at Minjur, Tamil Nadu. The Aga Khan Fund for Economic
Development (AKFED) in the promoter of the Bank with around 18% stake.
Public shareholding under the Resident Individual category is approximately
39.4%. The Bank received the Scheduled Commercial Bank licence from the
Reserve Bank of India on 31 May 1995.[7]
DCB Bank's financial products and services range from loans for Small and
medium enterprises, Wealth Management, banking for Non Resident Indians,
Internet Banking, Mobile Banking, Business Finance, Home Loans .[2] It also
offers banking solutions for resident Indians such as savings account, current
account, fixed deposit, recurring deposit, PayLess Credit Card, international Debit
cum ATM card, insurance products and financial services like Electronic funds
transfer (NEFT & RTGS), online income tax payment, online bill payment for
utilities, card to card money transfer, DCB on the Go - instant mobile banking,
SMS banking, telephone banking, Visa money transfer, foreign exchange
remittance service amongst others.
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DCB Bank is a modern emerging new generation private sector bank with 130
plus branches across 17 states and 2 union territories. It is a scheduled commercial
bank regulated by the Reserve Bank of India. It is professionally managed and
governed. DCB Bank has contemporary technology and infrastructure including
state of the art internet banking for personal as well as business banking
customers.
DCB Banks business segments are Retail, micro-SMEs, SMEs, mid-Corporate,
Agriculture, Commodities, Government, Public Sector, Indian Banks, Co-
operative Banks and Non Banking Finance Companies (NBFC). DCB Bank has
approximately 450,000 customers.
DCB Bank has deep roots in India since its inception in 1930s. Its promoter and
promoter group the Aga Khan Fund for Economic Development (AKFED) &
Platinum Jubilee Investments Ltd. holds over 19% stake. AKFED is an
international development enterprise. It is dedicated to promoting
entrepreneurship and building economically sound companies.
History
Founded in the1930s, in Mumbai from a series of Co-operative bank mergers with
the Ismailia Co-operative Bank Limited and the Masalawala Co-operative Bank
respectively. These 2 banks later merged to form Development Co-operative
Bank, that changed to Development Credit Bank after it was granted the
scheduled bank license by the Reserve Bank of India in May 1995. The Bank
went on to successfully offer shares to the public by an Initial Public Offering
(IPO) in 2006. DCB Bank Limited is the new name of the Bank, changed with
due regulatory approval in January 2014.
Development Credit Bank (DCB) is the only co-operative bank which has
successfully attained prosperity in the face of change. On May 31, 1995 bank was
converted into a Scheduled Commercial Bank. The bank has considerably
expanded the DCB network by 2008 through shared networks. It is not just a bank
butafinancialsupermarket.
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Bank offers an extensive range of products through its branches. The low-cost
products have been designed to cater the needs of small and medium businesses in
selective regions. asic products like savings and current accounts and innovative
products like ‘DCB Trio’ and ‘Easy Business,’ are also being offered. Bank also
offers demat account and a range of investment products like mutual funds,
insurance and bonds make the product offering complete.
Development Credit Bank (DCB) is emerging private sector banks in India has
the Network of 80 state-of-the-art branches and extension counters spread across
the states of Maharashtra, Gujarat, Andhra Pradesh, Karnataka, New Delhi,
Rajasthan, Goa, Tamil Nadu, Haryana, West Bengal, Union Territories of Daman
& Diu and Dadra & Nagar Haveli.
The terms of the banking license issued to the Bank under Section 22 of the
Banking regulation Act stipulated, amongst others, that:
a) the Bank must comply with the Guidelines on Entry of Private Sector Banks
dated January 22, 1993 issued by the Reserve Bank of India;
b) on the date of conversion, the unimpaired value of the paid up capital and
reserves of the Bank together with the share application money received by it
should not be less than Rs.1000 million;
c) the Bank must make a public issue of its equity and arrange to have its shares
listed on stock exchanges immediately after one year of its operations;
d) the Bank must comply with the priority sector lending norms of 40% as
applicable to private sector banks; and that
e) the Bank must ensure that not less than 25% of its branches are in rural/semi-
urban areas within three years of its operations.
The Guidelines on Entry of Private Sector Banks which chalk out the scheme for
permitting the entry of new private sector banks, prescribe, in relation to such a
new private sector bank that:
a) the new bank may be listed in the Second Schedule of the Reserve Bank, 1934;
b) shares of the banks should be listed on stock exchanges;
c) voting rights of the shareholders of the bank shall be governed by the ceiling of
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1% (now increased to 10%) of the total voting rights as stipulated in Section 12(2)
of the Banking Regulations Act;
d) the new bank must not have as its director any person who is a director of any
other banking company or of companies which are entitled to exercise voting
rights in excess of 20% of the total voting rights of all the shareholders of the
banking company as laid down in the Banking Regulation Act, 1949;
e) the bank must achieve capital adequacy of 8% (now increased to 9%) of the
risk weighted assets from the beginning. Similarly norms for income recognition,
asset classification, and provisioning will also be applicable to it from the
beginning. The bank must also comply with the single borrower and group
borrower exposure limits that will be in force from time to time;
f) though the bank must comply with the norms for priority sector lending, some
modification in the composition of the priority sector lending may be considered
by the RBI for an initial period of three years;
g) the bank may be issued an authorised dealer’s license to deal in foreign
exchange when applied for;
h) it shall be governed by the policy that banks are free to open branches at
various centres including that banks are free to open branches at various centres
including urban/metropolitan centres without the prior approval of the RBI once
they satisfy the capital adequacy and prudential accounting norms. However, to
avoid over-concentration of their branches in metropolitan areas and cities, a new
bank must open rural and semi-urban branches also; and that
i) such a new bank must make full use of modern infrastructural facilities in office
equipment, computer, telecommunications etc. in order to provide good customer
service.
2007
- Development Credit Bank Ltd (DCB) has appointed Mr. D E Udwadia as an
Additional Director of the Bank.
2009
- Development Credit Bank Ltd (DCB) has appointed Mr. Suhail Nathani as an
Additional Director of the Bank at the Meeting of the Board of Directors of the
17
Bank held on January 29, 2009.
- Development Credit Bank Ltd (DCB) has appointed Mr. Murali M Natrajan as
an Additional Director of the Bank w.e.f April 29, 2009. Further, pursuant to
approval of the Reserve Bank of India, Mr. Murali M Natrajan has been appointed
as Managing Director (MD) & CEO of the Bank for a period of three years from
April 29, 2009.
2010
- DCB Appoints Mr J.K Vishwanath as Chief Credit Officer.
- Development Credit Bank Ltd. and ICICI Lombard GIC Ltd. in Bancassurance
partnership.
- DCB received permission to open two Semi-Urban / Rural branches in Gujarat.
The locations are Netrang, a Rural branch in Bharuch district and Mandvi, a Semi
Urban branch in Surat district.
2011
- Development Credit Bank (DCB) inaugurated its newest branch in Gujarat at
Vadodara . The branch is located at Ground floor of Startrek Building, Opposite
ABS Tower, OP Road, Vadodara.
- DCB Bank inaugurates 81st branch at Mandvi, Surat District, Gujarat.
- DCB presents Aga Khan Hockey Tournament May 15, 21, 2011.
2012
- Development Credit Bank Ltd has informed BSE regarding updates on Capital
raising plan - QIP issue and preferential issue.
- DCB Bank inaugurates new branches in Itarsi and Pipariya, Madhya Pradesh.
-DCB Bank and ITZ Cash launch Freedom Pre-Paid Card.
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DCB’S vision is to be the most innovative and responsive neighbourhood
community bank in India serving entrepreneurs, individuals and businesses.
DCB’s Value
 Treat Everyone with Dignity - Respect
 Do What is Right - Ethical
 Be Open & Transparent - Fair
 Sense of Urgency, Passion & Energy - Dynamic
 Go the Extra Mile & Find Solutions - Stretch
 Improve Continuously - Excellence
 Play as a Team, To Win - Teamwork
 Support the Society – Contribute
Quick Facts
 DCB Bank reported full year Net Profit of 151 Cr. in FY 2014 as against
full year Net Profit of 102 Cr. in FY 2013. The Banks Net Profit for Q4
FY 2014 was 39 Cr. as against Net Profit of 34 Cr. in Q4 FY 2013 and 36
Cr. in Q3 FY 2014.
 As on March 31, 2014, the Balance Sheet was at 12,923 Cr. as against
11,279 Cr. as on March 31, 2013, a growth rate of 15%.
 Retail Deposits (Retail CASA and Retail Term Deposits) continued to
provide a stable resource base to the Bank. Retail Deposits were at 77% of
Total Deposits as on March 31, 2014.
 CASA ratio as on March 31, 2014 was at 25% as against 27% as on March
31, 2013.
 Net Advances grew to 8,140 Cr. as on March 31, 2014 from 6,586 Cr. as
on March 31, 2013 a growth rate of 24%.
 Capital Adequacy Ratio (CAR) was at 13.71% as on March 31, 2014 with
Tier I at 12.86% and Tier II at 0.85% as per Basel III norms.
 Crisil Ratings assigned "CRISIL A1+" (pronounced as "CRISIL A one
plus") rating for Short Term Fixed Deposit Programme (with a contracted
maturity of upto 1 year).
 Share Holding Pattern (as on March 31, 2014)
19
 Key non-promoter shareholders %
 *AKFED and PJI
 18.46%
 ***Institutions
 Others (Non-Institutions)** 28.55%
 8.35%
 Individuals
 31.96%
 Bodies Corporate
 12.68%
 *AKFED – Aga Khan Fund for Economic Development and PJI –
Platinum Jubilee Investment Ltd.
 **Includes Clearing Members (0.75%), Non Resident Indians (2.39%),
Foreign Corporate Bodies (4.69%), Trusts (0.34%) & Directors and their
 relatives (0.18%)
 ***Institutions includes 12.31% held by FII
 Tano Mauritius India FVCI II 4.76%
 WCP Holdings III 4.69%
 Ambit Corporate Finance Pvt. Ltd. 4.18%
 The South India Bank Ltd 3.31%
 Tata Capital Financial Services Ltd 2.63%
 TVS Shriram Growth Fund India 2.51%
Sundaram Mutual Fund A/c Sundaram Select Midcap 2.19%
Code of Conduct For Members of the Board of Directors
This Code of Conduct (the “Code”) has been adopted by DCB's Board of
Directors and summarizes the standards that must guide their actions. While
covering a wide range of business practices and procedures, these standards
cannot and do not cover every issue that may arise, or every situation where
ethical decisions must be made, but rather set forth key guiding principles that
represent the DCB's policies, regulators intent and Clause 49 requirements in this
regard. Reference to the Code set forth below and reliance on common sense and
good judgment will help resolve issues not specifically dealt with in the Code.
20
However, for interpretation / understanding the wider meaning or scope of the
terms “Clause 49”, “Confidential Information”, Insider Trading” and “Conflict of
Interest”, a reference may be made to the Chairman who may consult his advisors
/ Head Legal and Compliance or seek any general advice. In particular, following
should be observed as a code;
1. Board members should observe the highest standards of ethical conduct
and abide by all applicable laws and regulations (including on insider
trading) to which they are subject.
2. When exercising the powers and carrying out the tasks and duties
conferred upon them, Board members are expected to act in the interests
of DCB to the best of their ability and judgement, consistent with their
responsibilities to the regulators.
3. As a part of good corporate governance practices, the members of the
Board are expected to attend the Board meetings regularly and participate
in the deliberations and discussion effectively.
4. As Directors on the Board be providing broad directions to the
management team and would undertake such steps as necessary for good
corporate governance and compliance of all regulatory requirements. They
will monitor the performance of the bank on a periodic basis and provide
guidance to the Management on key aspects relating to key policy matters.
5. Board Members are expected to maintain the Confidentiality of non-public
information about the DCB or its activities or operation to which they
have access by virtue of their functions as Board Members (Confidential
Information). If Board members are required to disclose “Confidential
Information” by reason of legal requirements, they should inform the
Chairman of any such requirement, if practicable in advance, who may, if
appropriate, raise the matter with the Board.
6. When making public statements on DCB related matters, Board members
will refrain from making any statements on behalf of the Bank and in case
there is a need, they will consult the Chairman
7. If a conflict of interest or appearance of a conflict of interest, with the
DCB arises, the Board members are expected to take action, as
appropriate, to address the conflict. The Board member should inform the
Chairman, who may, if appropriate raise the matter with the Board.
21
8. The members of the Board of Directors may seek information in the
interest of the Bank from the CEO directly and from the members of the
management committee of the Bank if necessary.
9. It is expected from the members of the Board of Directors that they would
not involve themselves in general or personal administration or day to day
functioning of the Bank, in conformance with Clause 49 of the Listing
Agreement entered into with the stock exchanges.
10. The obligations set out in paragraph 6 of this Code shall continue after the
Board member steps down or ceases to be on the Board.
22
23
24
25
26
27
28
29
30
31
32
SCHEDULE 17 – SIGNIFICANT ACCOUNTING POLICIES
1. BACKGROUND
DCB Bank Limited (“DCB” or “the Bank”), incorporated in Mumbai, India is a
publicly held banking company engaged in providing banking
and fi nancial services. DCB is a banking company governed by the Banking
Regulation Act, 1949.
Pursuant to the approval received from the Registrar of Companies, Maharashtra
-Mumbai and from the Reserve Bank of India (‘RBI’) vide
their letter no. DBOD.No.Ret.BC/ 83 /12.06.097/2013-14 dated 10 January, 2014
the Bank has changed its name from Development Credit
Bank Limited to ‘DCB Bank Limited’ with effect from 24 October, 2013.
2. BASIS OF PREPARATION
The fi nancial statements have been prepared and presented under the historical
cost convention on the accrual basis of accounting, and comply
with the Generally Accepted Accounting Principles in India (‘GAAP’), statutory
requirements prescribed under the Banking Regulation Act,
1949, circulars and guidelines issued by the RBI from time to time and the notifi
ed Accounting Standards under the Companies (Accounting
Standards) Rules, 2006, (as amended) to the extent applicable and the current
practices prevailing within the banking industry in India.
3. USE OF ESTIMATES
The preparation of the fi nancial statements in conformity with GAAP requires
the management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at the date
of the fi nancial statements and the results of operations during the reporting
period.Although these estimates are based upon the management’s best
33
knowledge of current events and actions, actual results could differ from these
estimates. Any revisions to the accounting estimates are recognised prospectively
in the current and future periods.
4. INVESTMENTS
4.1 Classifi cation:
The investment portfolio comprising approved securities (predominantly
Government Securities) and other securities (Shares, Debentures and Bonds, etc.)
are classifi ed at the time of acquisition in accordance with the RBI guidelines
under three categories viz. ‘Held to Maturity’ (‘HTM’), ‘Available for Sale’
(‘AFS’) and ‘Held for Trading’ (‘HFT’). For the purposes of disclosure in the
Balance Sheet, they are classifi ed under six groups viz. Government Securities,
Other Approved Securities, Shares, Debentures and Bonds, Subsidiaries and/or
joint ventures and Other Investments. The Bank follows ‘Settlement Date’
accounting for recording purchase and sale transactions.
4.2 Basis of Classifi cation:
Investments that are held principally for resale within 90 days from the date of
purchase are classifi ed as HFT securities. As per the RBI guidelines, HFT
securities, which remain unsold for a period of 90 days are reclassifi ed as AFS
securities as on that date. Investments which the Bank intends to hold till maturity
are classifi ed as HTM securities. Investments which are not classifi ed in the
above categories are classifi ed under AFS category.
4.3 Transfer of Securities between Categories:
The transfer/shifting of securities between categories of investments is accounted
as per the RBI guidelines.
4.4 Valuation:
Held for Trading and Available for Sale categories: Investments classifi ed under
HFT and AFS are marked to market as per the RBI guidelines. These securities
are valued scrip-wise and any resultant depreciation or appreciation is aggregated
for each category. The net depreciation for each category is provided for, whereas
the net appreciation for each category is ignored. The book value of individual
34
securities is not changed consequent to periodic valuation of investments. Traded
investments are valued based on the trades / quotes from the recognised stock
exchanges, price list of RRBI guidelines, HFT securities, which remain unsold for
a period of 90 days are reclassifi ed as AFS securities as on that date. Investments
which the Bank intends to hold till maturity are classifi ed as HTM securities.
Investments which are not classifi ed in the above categories are classifi ed under
AFS category.
4.3 Transfer of Securities between Categories:
The transfer/shifting of securities between categories of investments is accounted
as per the RBI guidelines.
4.4 Valuation:
Held for Trading and Available for Sale categories: Investments classifi ed under
HFT and AFS are marked to market as per the RBI guidelines. These securities
are valued scrip-wise and any resultant depreciation or appreciation is aggregated
for each category. The net depreciation for each category is provided for, whereas
the net appreciation for each category is ignored. The book value of individual
securities is not changed consequent to periodic valuation of investments.
Traded investments are valued based on the trades / quotes from the recognised
stock exchanges, price list of RBI or prices declared by Primary Dealers
Association of India (‘PDAI’) jointly with Fixed Income Money Market and
Derivatives Association (‘FIMMDA’), periodically. The market value of
unquoted government securities which qualify for determining the Statutory
Liquidity Ratio (‘SLR’) included in the AFS and HFT categories is computed as
per the Yield-to-Maturity (‘YTM’) rates published by FIMMDA.The valuation of
other unquoted fi xed income securities (viz. State government securities, Other
approved securities, Bonds and debentures) wherever linked to the YTM rates, is
computed with a mark-up (refl ecting associated credit and liquidity risk) over the
YTM rates for government securities with similar maturity profi le published by
FIMMDA. Unquoted equity shares are valued at the break-up value, if the latest
Balance Sheet is available or at `1 as per the RBI guidelines. Units of mutual
funds are valued at the latest repurchase price / net asset value declared by the
mutual fund. Treasury bills, commercial papers and certifi cate of deposits, being
discounted instruments, are valued at carrying cost.DC.
35
36
37
Conclusion:
DCB banks should adapt themselves quickly to the changing norms. The system
is getting internationally standardized with the coming of BASELL II accords
sothe DCB bank and Indian banks should strengthen internal processes so as to
cope withthe standards.
DCB bank should maintain a 0% NPA by always lending and investing or
creating qualityassets which earn returns by way of interest and profits. DCB
bank should find more avenues to hedge risks as the market is very sensitive to
risk of any type. Have good appraisal skills, system, and proper follow up to
ensure that DCB bank is above the risk. And DCB bank should always tries to
keep their customers aways from risk.
38
Bibliography:
 http://useconomy.about.com/od/glossary/g/Banking.htm
 http://www.thefreedictionary.com/banking+company
 http://bankinglaw.uslegal.com/
 http://indiankanoon.org/doc/1817338/
 http://indiankanoon.org/doc/1817338/
 http://www.dcbbank.com/
 ww.rupeetimes.com/banks/development_credit_bank_ltd.html
 http://economictimes.indiatimes.com/development-credit-bank-
ltd/infocompanyhistory/companyid-4940.cms
 http://www.dcbbank.com/about/financials.html.

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Financial Systems and Economic Growth

  • 1. 1 Executive Summary The link between sound and well-developed financial systems and economic growth is a fundamental one. Empirical evidence, both in developing and advanced economies, has shown that countries with developed financial systems grow at faster rates. Efficient and prudent allocations of resources by the financial system is crucial for increasing productivity, boosting economic development, enhancing equality of opportunity, and reducing poverty. Getting the financial systems of developing countries to function more effectively in providing the full range of financial services is thus a task that will be well rewarded with economic growth. The banking system is still by far the most important part of the financial system, accounting for more than 75 percent of the assets. It is very hard to imagine a modern national economy without a financial sector without functioning banks the supply of money would collapse. A smooth-running financial sector is therefore an essential requirement for a prospering national economy.
  • 2. 2 Legal provisions Definition of banking: “ Banking is one of the key drivers of the U.S. economy. Why? It provides the liquidity needed for families and businesses to invest for the future. Bank loans and credit means families don't have to save up before going to college or buying a house, and companies can start hiring immediately to build for future demand and expansion. Credit has gotten a bad name, thanks to the 2008 financial crisis, but that's only because it was unregulated, used for consumption instead of investment, and allowed to create a bubble.” Definition of Banking company : A financial institution that accepts deposits and channels the money into lending activities; "he cashed a check at the bank"; "that bank holds the mortgage on my home." Statues Governing Banking Companies: The law governing banks, bank accounts, and lending in the United States is a hybrid of federal and state statutory law. Consumers and businesses may establish bank accounts in banks and savings associations chartered under state or federal law. The law under which a bank is chartered regulates that particular bank. A mix of state and federal law, however, governs most operations and transactions by bank customers. Article 3 of the Uniform Commercial Code, as adopted by the various states, governs transactions involving negotiable instruments, including checks. Article 4 of the Uniform Commercial Code governs bank deposits and collections, including the rights and responsibilities of depository banks, collecting banks, and banks responsible for the payment of a check. Other provisions of the Uniform Commercial Code are also relevant to banking and lending law, including Article 4A (related to funds transfers), Article 5 (related to letters of credit), Article 8 (related to securities), and Article 9 (related to secured transactions). A number of regulations govern a check when it passes through the Federal Reserve System. These regulations govern the availability of funds available to a depositor in his or her bank account, the delay between the time a bank receives a
  • 3. 3 deposit and the time the funds should be made available, and the process to follow when a check is dishonored for non-payment. Federal law also provides protection to bank customers. Prompted by banking crises in the 1930s, the federal government established the Federal Deposit Insurance Corporation, which insures bank accounts of individuals and institutions in amounts up to $100,000. A number of laws have been passed affecting banks, banking, and lending. A brief summary of these is as follows:  National Bank Act of 1864 established a national banking systems and chartering of national banks.  Federal Reserve Act of 1913 established the Federal Reserve System. Banking Act of 1933 (Glass-Steagall Act) established the Federal Deposit Insurance Corporation (FDIC), originally intended to be temporary.  Banking Act of 1935 established the FDIC as a permanent agency.  Federal Deposit Insurance Act of 1950 revised and consolidated previous laws governing the FDIC.  Bank Holding Company Act of 1956 set forth requirements for the establishment of bank holding companies.  International Banking Act of 1978 required foreign banks to fit within the federal regulatory framework.  Financial Institutions Regulatory and Interest Rate Control Act of 1978 created the Federal Financial Institutions Examination Council; it also established limits and reporting requirements for insider transactions involving banks and modified provisions governing transfers of electronic funds.  Depository Institutions Deregulation and Monetary Control Act of 1980 began to eliminate ceilings on interest rates of savings and other accounts and raised the insurance ceiling of insured account holders to $100,000.  Depository Institutions Act of 1982 (Gar-St. Germain Act) expanded the powers of the FDIC and further eliminated ceilings on interest rates. Competitive Equality Banking Act of 1987 established new standards for the availability of expedited funds and further expanded FDIC authority.  Financial Institutions Reform, Recovery, and Enforcement Act of 1989 set forth a number of reforms and revisions, designed to ensure trust in the savings and loan industry.  Crime Control Act of 1990 expanded the ability of federal regulators to combat fraud in financial institutions.  Federal Deposit Insurance Corporation Act of 1991 expanded the power and authority of the FDIC considerably.
  • 4. 4  Housing and Community Development Act of 1992 set forth provisions to combat money laundering and provided some regulatory relief to certain financial institutions.  Riegle Community Development and Regulatory Improvement Act of 1994 established the Community Development Financial Institutions Fund to provide assistance to community development financial institutions.  Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 permitted bank holding companies that were adequately capitalized and managed to acquire banks in any state.  Economic Growth and Regulatory Paperwork Reduction Act of 1996 brought forth a number of changes, many of which related to the modification of regulation of financial institutions.  Gramm-Leach Bliley Act of 1999 brought forth numerous changes, including the restriction of disclosure of nonpublic customer information by financial institutions. The Act provided penalties for anyone who obtains nonpublic customer information from a financial institution under false pretenses. Numerous federal agencies promulgate regulations relevant to banks and banking, including the Federal Deposit Insurance Corporation, Federal Reserve Board, General Accounting Office, National Credit Union Administration, and Treasury Department. The ability for bank customers to engage in electronic banking has had a significant effect on the laws of banking in the United States. Some laws that govern paper checks and other traditional instruments are difficult to apply to corresponding electronic transfers. As technology develops and affects the banking industry, banking law will likely change even more. Functions of Banks: How is money created? Other than the currency and bills that are made in a national mint, the money that our nation uses on a daily basis is actually created by commercial banks in the form of deposits and other things. A bank depends on the misfortune of its customers to create money. Someone must be in debt to commercial banks in order for money and credit systems to work. When a borrower spends the money he or she has been loaned, the recipient deposits it in another bank. That deposit represents the creation of new money. A bank pays its bills by borrowing if people don't pay their taxes. The interest that a bank charges customers on the loans it gives becomes that bank's profit. A
  • 5. 5 customer's assets and liabilities add up equally. When a bank makes unnecessary profit, it makes for a burden on taxpayers. The Federal Reserve processes checks and cash. Banks order cash from the Fed when they need it, and ship it cash when they have too much. Checks can even be processed cross-country; for instance, if someone from Los Angeles writes a check in Philadelphia, the Philly bank credits the person's account and sends the check to the Federal Reserve of Philadelphia, then the check is sent to the Federal Reserve of Los Angeles where it goes to the bank of Los Angeles. The Fed processes one third of all checks written in America. Many of them are deposited electronically. High-tech machines are used for all sorts of transactions. Fedwire is a program that allows money to be transferred over seconds. ACH allows for constant, direct payments. There are also machines designed to detect bill denominations, extent of use, and authenticity. Banks can borrow money from the Fed as well, although it is considered a last resort lender. It acts to prevent too much borrowing. Types of loans are adjustment credit, for overnight loans or short-term problems; seasonal loans, which are extended up to nine months to help in seasonal swings in deposits and loans; and extended loans, which are prolonged because of financial difficulties if banks have a plan to correct the problems. Banks aren't allowed to take advantage of interest or discount rates and make profits by borrowing, either. The Fed keeps the banking system competitive by creating new banks and mergers frequently. It examines bank information for security, and the banks themselves for safety. The Fed will fine banks, suspend employees, or pass new laws if they feel the need to. There are 12 Fed district banks, member banks, and the Board of Governors, which heads the Federal Reserve. Each member of the Board is appointed to 14- year terms so the members are well insulated from outside political pressures. It is financially self-sufficient as a bank; it doesn't rely on Congress appropriations, but rather on interest from large holdings on US government securities. The Board gives the Treasury the excess of what it took as opposed to what it spent. It sets reserve requirements (a monetary policy tool, along with discount rates and open-market operations); this is important because it affects the amount of loans and bank money commercial banks have. (Commercial banks are those that take deposits and give loans on an individual basis.) Reserve requirements are percentages of money or credit banks must keep on hand or on deposit at the Federal Reserve Bank.
  • 6. 6 System of book keeping in banks Obectives & System An accounting system can be defined as the series of tasks in an entity by which transactions are processed as a means of maintaining financial records. Such a system recognizes, calculates, classifies, posts, analyses, summarizes and report Transaction. The auditor of a bank needs to obtain a thorough understanding of the accounting system of the bank to assess the relevance and reliability of the accounting records and other source data underlying the financial statements. He should gain an understanding of the books of account and other related records maintained by the auditee. He should also understand the flow of various kinds of transactions. The auditor can gain such understanding through enquiries of appropriate personnel, by making reference to documents such as accounting manual, procedures manual and flow charts, and by observing the actual conduct of operations. It may be stated here that even in a fully computerised branch, some work is presently carried out manually, e.g., preparation of vouchers, preparation of letters of credit and guarantees, preparation of some returns and statements, etc. In partly computerised branches, generally the back-office work (i.e. the internal processing of transactions of the branch) is carried out on computers whereas the customers transactions (i.e. the front-office work) are processed manually. Many of the banks in the private sector have networked all or most of their branches in the country; this has given them the capability of handling most of the transactions of their customers at any of the branches. Banks, like most other large-sized institutions, follow the mercantile system of accounting. Thus, the system of recording, classifying and summarizing the transactions in a 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 in most 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
  • 7. 7 ledgers, including the general ledger and subsidiary ledgers for debtors, creditors, etc., are written up afterwards Banks follow the accounting procedure of voucher posting under which the vouchers are straightaway posted to the individual accounts in the subsidiary ledgers. 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 accounts, etc.) are entered on separate voucher summary 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. Books of Accounts General ledger General ledger contains all the accounts for recording transactions relating to a company's assets, liabilities, owners' equity, revenue, and expenses. In modern accounting software or ERP, the general ledger works as a central repository for accounting data transferred from all subledgers or modules like accounts payable, accounts receivable, cash management, fixed assets, purchasing and projects. The general ledger is the backbone of any accounting system which holds financial and non-financial data for an organization. The collection of all accounts is known as ledger account. This may be a large book. The statement of financial position and the statement of income and comprehensive income are both derived from the general ledger. Each account in the general ledger consists of one or more pages. The general ledger is where posting to the accounts occurs. Posting is the process of recording amounts as credits (right side), and amounts as debits (left side), in the pages of the general ledger. Additional columns to the right hold a running activity total (similar to a checkbook). The listing of the account names is called the chart of accounts. The extraction of account balances is called a trial balance. The purpose of the trial balance is, at a preliminary stage of the financial statement preparation process, to ensure the equality of the total debits and credits.
  • 8. 8 The general ledger should include the date, description and balance or total amount for each account. It is usually divided into at least seven main categories. These categories generally include assets, liabilities, owner's equity, revenue, expenses, gains and losses. The main categories of the general ledger may be further subdivided into subledgersto include additional details of such accounts as cash, accounts receivable, accounts payable, etc. Because each bookkeeping entry debits one account and credits another account in an equal amount, the double-entry bookkeeping system helps ensure that the general ledger is always in balance, thus maintaining the accounting equation: The accounting equation is the mathematical structure of the balance sheet. Although a general ledger appears to be fairly simple, in large or complex organizations or organizations with various subsidiaries, the general ledger can grow to be quite large and take several hours or days to audit or balance. Subsidiary Books Subsidiary Books refers to books meant for specific transactions of similar nature. Subsidiary Books are also known as Special journals or day books. To overcome shortcoming of the use of the journal only as a book of original entry, the journal is subdivided into specific journals or subsidiary books . NEED OF SUBSIDIARY BOOKS To avoid repetition. To provide information on a prompt basis. To facilitate internal check system. To classify transactions. To avoid bulky & voluminous records
  • 9. 9 TYPES OF SUBSIDIARY BOOKS CASH BOOKS A cash book is a special journal which is used for recording all cash receipts & cash payments . TYPES OF CASH BOOKS 1 ) Single- column cash books . 2) Double-column cash books. 3) Triple-column cash books. 4) Petty cash books. DATE RECEIPT RECEIPT No. L.F AMOUNT DATE PAYMENT VOUCHER No. L.F AMOUNT DATE RECEIPT CASH BANK DATE PAYMENTS CASH BANK DATE RECEIPT DISCOUNT CASH BANK DATE PAYMENT DISCOUNT CASH BANK PURCHASE BOOKS These are the b ooks used for recording purchases on credit . Things purchased on credit for personal use are not recorded in this book. It also does not record the fixed assets purchased . DATE PARTICULAR INVOICE NO. L.F AMOUNT SALES BOOKS Books used for recording goods sold on credit. DATE PARTICULAR OUTWARD INVOICE NO. L.F AMOUNT PURCHASE RETURN BOOKS Books used for recording goods returned to the seller. DATE PARTICULARS L.F DEBIT NOTES AMOUNT SALES RETURN BOOKS Books used for recording the goods returned by the buyer. DATE PARTICULARS L.F CREDIT NOTE AMOUNT
  • 10. 10 BILLS RECEIVABLE BOOKS(B/R) This is used for the purpose of recording the details of bills receivable. The individual accounts of parties from whom bills are received will be credited with the amount in the bills receivable book. DATE FROM WHOM READ ACCEPTOR DATE OF BILLS TERM DATE OF MATURITY WHERE PAYABLE AMOUNT HOW DEPOSED BILLS PAYABLE BOOK (B/P) This is used for the purpose of recording the details of bills payable. The individual accounts of the parties to whom the bills are issued will be debited with the corresponding amount in the bills payable book. The periodic total is posted to the credit of bills payable account in the ledger by writing “By Sundries as per Bills Payable Book”. Example: S.NO. DATE NAME OF DRAWER PAYEE DATE OF BILL TERM DATE OF MATURITY WHERE PAYABLE AMOUNT REMARK 16 May S&Co. Arya mills 16 may 2006 30 days 16 June 2006 Central bank 5000 PETTY CASH BOOK This book keeps account of all the miscellaneous spending. This might include: child fees, window-cleaning bills, stationery, postage, cleaning supplies and any other sundry item. AMT. RECEIVED DATE PARTICULAR AMOUNT POSTAGE CARRIAGE TRAVELLING SUNDRY EXP.
  • 11. 11 Memorandum Books To maintain the records of company in proper way, accountant needs lots of books. One of them is memorandum book or waste book. Memorandum or waste book is that note book which is used to write the transactions when it happened before writing all these transactions in journal. It is needed where there are thousands of transactions are done within one day on the sale point. This book is very helpful to record in journal. Its other name is rough book, long book and rough copy book. Final Accounts Legal provisions Section 29 in BANKING REGULATION ACT,1949  Accounts and balance-sheet.— (1) At the expiration of each calendar year 1[or at the expiration of a period of twelve months ending with such date2 as the Central Government may, by noti- fication in the Official Gazette, specify in this behalf,] every banking company incorporated 3[in India], in respect of all business transacted by it, and every banking company incorporated 4[outside India], in respect of all business transacted through its branches 3[in India], shall prepare with reference to 5[that year or period, as the case may be,] a balance-sheet and profit and loss account as on the last working day of 6[that year or the period, as the case may be,] in the Forms set out in the Third Schedule or as near thereto as circumstances admit: 7[Provided that with a view to facilitating the transition from one period, of accounting to another period of accounting under this sub-section, the Central Government may, by order published in the Official Gazette, make such provisions as it considers necessary or expedient for the preparation of, or for other matters relating to, the balance sheet or profit and loss account in respect of the concerned year or period, as the case may be.] (2) The balance-sheet and profit and loss account shall be signed—
  • 12. 12 (a) in the case of a banking company incorporated 3[in India], by the manager or the principal officer of the company and where there are more than three directors of the company, by at least three of those directors, or where there are not more than three directors, by all the directors, and (b) in the case of a banking company incorporated 4[outside India] by the manager or agent of the principal office of the company 3[in India]. (3) Notwithstanding that the balance-sheet of a banking company is under sub- section (1) required to be prepared in a form other than the form 3[set out in Part I of Schedule VI to the Companies Act, 1956 (1 of 1956)], the requirements of that relating to the balance-sheet and profit and loss account of a company shall, in so far as they are not inconsistent with this Act, apply to the balance-sheet or profit and loss account, as the case may be, of a banking company. 9[(3A) Notwithstanding anything to the contrary contained in sub-section (3) of section 210 of the Companies Act, 1956 (1 of 1956), the period to which the profit and loss account relates shall, in the case of a banking company, be the period ending with the last working day of the year immediately preceding the year in which the annual general meeting is held.] 10[Explanation.—In sub-section (3A), “year” means the year or, as the case may be, the period referred to in sub-section (1).] (4) The Central Government, after giving not less than three months’ notice of its intention so to do by a notification in the Official Gazette, may from time to time by a like notification amend the Form set out in the Third Schedule. Section 33 in BANKING REGULATION ACT,1949  Display of audited balance-sheet by companies incorporated outside India.—Every banking company incorporated 1[outside India] shall, not later than the first Monday in August of any year in which it carries on business, display in a conspicuous place in its principal office and in every branch office 2[in India] a copy of its last audited balance-sheet and profit and loss account prepared under section 29, and shall keep the copy so displayed until replaced by a copy of the subsequent balance-sheet and profit and loss account so prepared, and every such banking company shall display in like manner copies of its complete audited balance-sheet and profit and loss account relating to its banking business as soon as they are available, and shall keep the copies so displayed until copies of such subsequent accounts are available.
  • 13. 13 COMPANY’S PROFILE DEVELOPMENT CREDIT BANK DCB Bank (Formerly Development Credit Bank Ltd.) is private sector scheduled commercial bank in India. It has a network of 130 branches[5] and 236 ATMs in the country.[6] It offers products to individuals, small and medium businesses, rural banking and corporates in selective regions. The Bank is present in 16 states and 2 Union Territories. Metros having DCB Bank branches are Ahmedabad, Bengaluru, Chennai, Delhi, Gurgaon, Hyderabad Kolkata, Mumbai and Pune. The Bank has dedicated rural banking branches in Andhra Pradesh, Chhattisgarh, Gujarat, Madhya Pradesh, Odisha and Rajasthan. Other DCB Bank locations are; State of Gujarat - Ahmedabad, Ankleshwar, Bhuj, Daman (Union Territory), Gandhinagar, Rajkot, Sidhpur, Silvassa (Union Territory), Surat, Vapi and Vadodara. Branches in the state of Goa - Mapusa, Margao, Panjim and Vasco. Branches in Rajasthan - Jaipur and Jodhpur. DCB Bank has recently inaugurated a branch at Minjur, Tamil Nadu. The Aga Khan Fund for Economic Development (AKFED) in the promoter of the Bank with around 18% stake. Public shareholding under the Resident Individual category is approximately 39.4%. The Bank received the Scheduled Commercial Bank licence from the Reserve Bank of India on 31 May 1995.[7] DCB Bank's financial products and services range from loans for Small and medium enterprises, Wealth Management, banking for Non Resident Indians, Internet Banking, Mobile Banking, Business Finance, Home Loans .[2] It also offers banking solutions for resident Indians such as savings account, current account, fixed deposit, recurring deposit, PayLess Credit Card, international Debit cum ATM card, insurance products and financial services like Electronic funds transfer (NEFT & RTGS), online income tax payment, online bill payment for utilities, card to card money transfer, DCB on the Go - instant mobile banking, SMS banking, telephone banking, Visa money transfer, foreign exchange remittance service amongst others.
  • 14. 14 DCB Bank is a modern emerging new generation private sector bank with 130 plus branches across 17 states and 2 union territories. It is a scheduled commercial bank regulated by the Reserve Bank of India. It is professionally managed and governed. DCB Bank has contemporary technology and infrastructure including state of the art internet banking for personal as well as business banking customers. DCB Banks business segments are Retail, micro-SMEs, SMEs, mid-Corporate, Agriculture, Commodities, Government, Public Sector, Indian Banks, Co- operative Banks and Non Banking Finance Companies (NBFC). DCB Bank has approximately 450,000 customers. DCB Bank has deep roots in India since its inception in 1930s. Its promoter and promoter group the Aga Khan Fund for Economic Development (AKFED) & Platinum Jubilee Investments Ltd. holds over 19% stake. AKFED is an international development enterprise. It is dedicated to promoting entrepreneurship and building economically sound companies. History Founded in the1930s, in Mumbai from a series of Co-operative bank mergers with the Ismailia Co-operative Bank Limited and the Masalawala Co-operative Bank respectively. These 2 banks later merged to form Development Co-operative Bank, that changed to Development Credit Bank after it was granted the scheduled bank license by the Reserve Bank of India in May 1995. The Bank went on to successfully offer shares to the public by an Initial Public Offering (IPO) in 2006. DCB Bank Limited is the new name of the Bank, changed with due regulatory approval in January 2014. Development Credit Bank (DCB) is the only co-operative bank which has successfully attained prosperity in the face of change. On May 31, 1995 bank was converted into a Scheduled Commercial Bank. The bank has considerably expanded the DCB network by 2008 through shared networks. It is not just a bank butafinancialsupermarket.
  • 15. 15 Bank offers an extensive range of products through its branches. The low-cost products have been designed to cater the needs of small and medium businesses in selective regions. asic products like savings and current accounts and innovative products like ‘DCB Trio’ and ‘Easy Business,’ are also being offered. Bank also offers demat account and a range of investment products like mutual funds, insurance and bonds make the product offering complete. Development Credit Bank (DCB) is emerging private sector banks in India has the Network of 80 state-of-the-art branches and extension counters spread across the states of Maharashtra, Gujarat, Andhra Pradesh, Karnataka, New Delhi, Rajasthan, Goa, Tamil Nadu, Haryana, West Bengal, Union Territories of Daman & Diu and Dadra & Nagar Haveli. The terms of the banking license issued to the Bank under Section 22 of the Banking regulation Act stipulated, amongst others, that: a) the Bank must comply with the Guidelines on Entry of Private Sector Banks dated January 22, 1993 issued by the Reserve Bank of India; b) on the date of conversion, the unimpaired value of the paid up capital and reserves of the Bank together with the share application money received by it should not be less than Rs.1000 million; c) the Bank must make a public issue of its equity and arrange to have its shares listed on stock exchanges immediately after one year of its operations; d) the Bank must comply with the priority sector lending norms of 40% as applicable to private sector banks; and that e) the Bank must ensure that not less than 25% of its branches are in rural/semi- urban areas within three years of its operations. The Guidelines on Entry of Private Sector Banks which chalk out the scheme for permitting the entry of new private sector banks, prescribe, in relation to such a new private sector bank that: a) the new bank may be listed in the Second Schedule of the Reserve Bank, 1934; b) shares of the banks should be listed on stock exchanges; c) voting rights of the shareholders of the bank shall be governed by the ceiling of
  • 16. 16 1% (now increased to 10%) of the total voting rights as stipulated in Section 12(2) of the Banking Regulations Act; d) the new bank must not have as its director any person who is a director of any other banking company or of companies which are entitled to exercise voting rights in excess of 20% of the total voting rights of all the shareholders of the banking company as laid down in the Banking Regulation Act, 1949; e) the bank must achieve capital adequacy of 8% (now increased to 9%) of the risk weighted assets from the beginning. Similarly norms for income recognition, asset classification, and provisioning will also be applicable to it from the beginning. The bank must also comply with the single borrower and group borrower exposure limits that will be in force from time to time; f) though the bank must comply with the norms for priority sector lending, some modification in the composition of the priority sector lending may be considered by the RBI for an initial period of three years; g) the bank may be issued an authorised dealer’s license to deal in foreign exchange when applied for; h) it shall be governed by the policy that banks are free to open branches at various centres including that banks are free to open branches at various centres including urban/metropolitan centres without the prior approval of the RBI once they satisfy the capital adequacy and prudential accounting norms. However, to avoid over-concentration of their branches in metropolitan areas and cities, a new bank must open rural and semi-urban branches also; and that i) such a new bank must make full use of modern infrastructural facilities in office equipment, computer, telecommunications etc. in order to provide good customer service. 2007 - Development Credit Bank Ltd (DCB) has appointed Mr. D E Udwadia as an Additional Director of the Bank. 2009 - Development Credit Bank Ltd (DCB) has appointed Mr. Suhail Nathani as an Additional Director of the Bank at the Meeting of the Board of Directors of the
  • 17. 17 Bank held on January 29, 2009. - Development Credit Bank Ltd (DCB) has appointed Mr. Murali M Natrajan as an Additional Director of the Bank w.e.f April 29, 2009. Further, pursuant to approval of the Reserve Bank of India, Mr. Murali M Natrajan has been appointed as Managing Director (MD) & CEO of the Bank for a period of three years from April 29, 2009. 2010 - DCB Appoints Mr J.K Vishwanath as Chief Credit Officer. - Development Credit Bank Ltd. and ICICI Lombard GIC Ltd. in Bancassurance partnership. - DCB received permission to open two Semi-Urban / Rural branches in Gujarat. The locations are Netrang, a Rural branch in Bharuch district and Mandvi, a Semi Urban branch in Surat district. 2011 - Development Credit Bank (DCB) inaugurated its newest branch in Gujarat at Vadodara . The branch is located at Ground floor of Startrek Building, Opposite ABS Tower, OP Road, Vadodara. - DCB Bank inaugurates 81st branch at Mandvi, Surat District, Gujarat. - DCB presents Aga Khan Hockey Tournament May 15, 21, 2011. 2012 - Development Credit Bank Ltd has informed BSE regarding updates on Capital raising plan - QIP issue and preferential issue. - DCB Bank inaugurates new branches in Itarsi and Pipariya, Madhya Pradesh. -DCB Bank and ITZ Cash launch Freedom Pre-Paid Card.
  • 18. 18 DCB’S vision is to be the most innovative and responsive neighbourhood community bank in India serving entrepreneurs, individuals and businesses. DCB’s Value  Treat Everyone with Dignity - Respect  Do What is Right - Ethical  Be Open & Transparent - Fair  Sense of Urgency, Passion & Energy - Dynamic  Go the Extra Mile & Find Solutions - Stretch  Improve Continuously - Excellence  Play as a Team, To Win - Teamwork  Support the Society – Contribute Quick Facts  DCB Bank reported full year Net Profit of 151 Cr. in FY 2014 as against full year Net Profit of 102 Cr. in FY 2013. The Banks Net Profit for Q4 FY 2014 was 39 Cr. as against Net Profit of 34 Cr. in Q4 FY 2013 and 36 Cr. in Q3 FY 2014.  As on March 31, 2014, the Balance Sheet was at 12,923 Cr. as against 11,279 Cr. as on March 31, 2013, a growth rate of 15%.  Retail Deposits (Retail CASA and Retail Term Deposits) continued to provide a stable resource base to the Bank. Retail Deposits were at 77% of Total Deposits as on March 31, 2014.  CASA ratio as on March 31, 2014 was at 25% as against 27% as on March 31, 2013.  Net Advances grew to 8,140 Cr. as on March 31, 2014 from 6,586 Cr. as on March 31, 2013 a growth rate of 24%.  Capital Adequacy Ratio (CAR) was at 13.71% as on March 31, 2014 with Tier I at 12.86% and Tier II at 0.85% as per Basel III norms.  Crisil Ratings assigned "CRISIL A1+" (pronounced as "CRISIL A one plus") rating for Short Term Fixed Deposit Programme (with a contracted maturity of upto 1 year).  Share Holding Pattern (as on March 31, 2014)
  • 19. 19  Key non-promoter shareholders %  *AKFED and PJI  18.46%  ***Institutions  Others (Non-Institutions)** 28.55%  8.35%  Individuals  31.96%  Bodies Corporate  12.68%  *AKFED – Aga Khan Fund for Economic Development and PJI – Platinum Jubilee Investment Ltd.  **Includes Clearing Members (0.75%), Non Resident Indians (2.39%), Foreign Corporate Bodies (4.69%), Trusts (0.34%) & Directors and their  relatives (0.18%)  ***Institutions includes 12.31% held by FII  Tano Mauritius India FVCI II 4.76%  WCP Holdings III 4.69%  Ambit Corporate Finance Pvt. Ltd. 4.18%  The South India Bank Ltd 3.31%  Tata Capital Financial Services Ltd 2.63%  TVS Shriram Growth Fund India 2.51% Sundaram Mutual Fund A/c Sundaram Select Midcap 2.19% Code of Conduct For Members of the Board of Directors This Code of Conduct (the “Code”) has been adopted by DCB's Board of Directors and summarizes the standards that must guide their actions. While covering a wide range of business practices and procedures, these standards cannot and do not cover every issue that may arise, or every situation where ethical decisions must be made, but rather set forth key guiding principles that represent the DCB's policies, regulators intent and Clause 49 requirements in this regard. Reference to the Code set forth below and reliance on common sense and good judgment will help resolve issues not specifically dealt with in the Code.
  • 20. 20 However, for interpretation / understanding the wider meaning or scope of the terms “Clause 49”, “Confidential Information”, Insider Trading” and “Conflict of Interest”, a reference may be made to the Chairman who may consult his advisors / Head Legal and Compliance or seek any general advice. In particular, following should be observed as a code; 1. Board members should observe the highest standards of ethical conduct and abide by all applicable laws and regulations (including on insider trading) to which they are subject. 2. When exercising the powers and carrying out the tasks and duties conferred upon them, Board members are expected to act in the interests of DCB to the best of their ability and judgement, consistent with their responsibilities to the regulators. 3. As a part of good corporate governance practices, the members of the Board are expected to attend the Board meetings regularly and participate in the deliberations and discussion effectively. 4. As Directors on the Board be providing broad directions to the management team and would undertake such steps as necessary for good corporate governance and compliance of all regulatory requirements. They will monitor the performance of the bank on a periodic basis and provide guidance to the Management on key aspects relating to key policy matters. 5. Board Members are expected to maintain the Confidentiality of non-public information about the DCB or its activities or operation to which they have access by virtue of their functions as Board Members (Confidential Information). If Board members are required to disclose “Confidential Information” by reason of legal requirements, they should inform the Chairman of any such requirement, if practicable in advance, who may, if appropriate, raise the matter with the Board. 6. When making public statements on DCB related matters, Board members will refrain from making any statements on behalf of the Bank and in case there is a need, they will consult the Chairman 7. If a conflict of interest or appearance of a conflict of interest, with the DCB arises, the Board members are expected to take action, as appropriate, to address the conflict. The Board member should inform the Chairman, who may, if appropriate raise the matter with the Board.
  • 21. 21 8. The members of the Board of Directors may seek information in the interest of the Bank from the CEO directly and from the members of the management committee of the Bank if necessary. 9. It is expected from the members of the Board of Directors that they would not involve themselves in general or personal administration or day to day functioning of the Bank, in conformance with Clause 49 of the Listing Agreement entered into with the stock exchanges. 10. The obligations set out in paragraph 6 of this Code shall continue after the Board member steps down or ceases to be on the Board.
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  • 32. 32 SCHEDULE 17 – SIGNIFICANT ACCOUNTING POLICIES 1. BACKGROUND DCB Bank Limited (“DCB” or “the Bank”), incorporated in Mumbai, India is a publicly held banking company engaged in providing banking and fi nancial services. DCB is a banking company governed by the Banking Regulation Act, 1949. Pursuant to the approval received from the Registrar of Companies, Maharashtra -Mumbai and from the Reserve Bank of India (‘RBI’) vide their letter no. DBOD.No.Ret.BC/ 83 /12.06.097/2013-14 dated 10 January, 2014 the Bank has changed its name from Development Credit Bank Limited to ‘DCB Bank Limited’ with effect from 24 October, 2013. 2. BASIS OF PREPARATION The fi nancial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting, and comply with the Generally Accepted Accounting Principles in India (‘GAAP’), statutory requirements prescribed under the Banking Regulation Act, 1949, circulars and guidelines issued by the RBI from time to time and the notifi ed Accounting Standards under the Companies (Accounting Standards) Rules, 2006, (as amended) to the extent applicable and the current practices prevailing within the banking industry in India. 3. USE OF ESTIMATES The preparation of the fi nancial statements in conformity with GAAP requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the fi nancial statements and the results of operations during the reporting period.Although these estimates are based upon the management’s best
  • 33. 33 knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognised prospectively in the current and future periods. 4. INVESTMENTS 4.1 Classifi cation: The investment portfolio comprising approved securities (predominantly Government Securities) and other securities (Shares, Debentures and Bonds, etc.) are classifi ed at the time of acquisition in accordance with the RBI guidelines under three categories viz. ‘Held to Maturity’ (‘HTM’), ‘Available for Sale’ (‘AFS’) and ‘Held for Trading’ (‘HFT’). For the purposes of disclosure in the Balance Sheet, they are classifi ed under six groups viz. Government Securities, Other Approved Securities, Shares, Debentures and Bonds, Subsidiaries and/or joint ventures and Other Investments. The Bank follows ‘Settlement Date’ accounting for recording purchase and sale transactions. 4.2 Basis of Classifi cation: Investments that are held principally for resale within 90 days from the date of purchase are classifi ed as HFT securities. As per the RBI guidelines, HFT securities, which remain unsold for a period of 90 days are reclassifi ed as AFS securities as on that date. Investments which the Bank intends to hold till maturity are classifi ed as HTM securities. Investments which are not classifi ed in the above categories are classifi ed under AFS category. 4.3 Transfer of Securities between Categories: The transfer/shifting of securities between categories of investments is accounted as per the RBI guidelines. 4.4 Valuation: Held for Trading and Available for Sale categories: Investments classifi ed under HFT and AFS are marked to market as per the RBI guidelines. These securities are valued scrip-wise and any resultant depreciation or appreciation is aggregated for each category. The net depreciation for each category is provided for, whereas the net appreciation for each category is ignored. The book value of individual
  • 34. 34 securities is not changed consequent to periodic valuation of investments. Traded investments are valued based on the trades / quotes from the recognised stock exchanges, price list of RRBI guidelines, HFT securities, which remain unsold for a period of 90 days are reclassifi ed as AFS securities as on that date. Investments which the Bank intends to hold till maturity are classifi ed as HTM securities. Investments which are not classifi ed in the above categories are classifi ed under AFS category. 4.3 Transfer of Securities between Categories: The transfer/shifting of securities between categories of investments is accounted as per the RBI guidelines. 4.4 Valuation: Held for Trading and Available for Sale categories: Investments classifi ed under HFT and AFS are marked to market as per the RBI guidelines. These securities are valued scrip-wise and any resultant depreciation or appreciation is aggregated for each category. The net depreciation for each category is provided for, whereas the net appreciation for each category is ignored. The book value of individual securities is not changed consequent to periodic valuation of investments. Traded investments are valued based on the trades / quotes from the recognised stock exchanges, price list of RBI or prices declared by Primary Dealers Association of India (‘PDAI’) jointly with Fixed Income Money Market and Derivatives Association (‘FIMMDA’), periodically. The market value of unquoted government securities which qualify for determining the Statutory Liquidity Ratio (‘SLR’) included in the AFS and HFT categories is computed as per the Yield-to-Maturity (‘YTM’) rates published by FIMMDA.The valuation of other unquoted fi xed income securities (viz. State government securities, Other approved securities, Bonds and debentures) wherever linked to the YTM rates, is computed with a mark-up (refl ecting associated credit and liquidity risk) over the YTM rates for government securities with similar maturity profi le published by FIMMDA. Unquoted equity shares are valued at the break-up value, if the latest Balance Sheet is available or at `1 as per the RBI guidelines. Units of mutual funds are valued at the latest repurchase price / net asset value declared by the mutual fund. Treasury bills, commercial papers and certifi cate of deposits, being discounted instruments, are valued at carrying cost.DC.
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  • 37. 37 Conclusion: DCB banks should adapt themselves quickly to the changing norms. The system is getting internationally standardized with the coming of BASELL II accords sothe DCB bank and Indian banks should strengthen internal processes so as to cope withthe standards. DCB bank should maintain a 0% NPA by always lending and investing or creating qualityassets which earn returns by way of interest and profits. DCB bank should find more avenues to hedge risks as the market is very sensitive to risk of any type. Have good appraisal skills, system, and proper follow up to ensure that DCB bank is above the risk. And DCB bank should always tries to keep their customers aways from risk.
  • 38. 38 Bibliography:  http://useconomy.about.com/od/glossary/g/Banking.htm  http://www.thefreedictionary.com/banking+company  http://bankinglaw.uslegal.com/  http://indiankanoon.org/doc/1817338/  http://indiankanoon.org/doc/1817338/  http://www.dcbbank.com/  ww.rupeetimes.com/banks/development_credit_bank_ltd.html  http://economictimes.indiatimes.com/development-credit-bank- ltd/infocompanyhistory/companyid-4940.cms  http://www.dcbbank.com/about/financials.html.