FINAL ACCOUNTS OF
BANKING COMANIES
Sec 5(b) of Banking regulation Act defines
banking as “ accepting for the purpose of
lending or investment of deposits of money
from the public repayable on demand or
otherwise withdrawable by cheque, draft,
order or otherwise
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No banking Co shall directly or indirectly deal
in the buying, selling or bartering of goods
except in connection with the realisation of
security given to or held by it
No banking Co can engage in any trade,or
buy, sell or barter goods or others otherwise
than in connection with bills of exchange
received for collection or negotiation or with
such of its business specified in sec 6(1)
Interest on loans and overdraft
 Discount on bolls discounted
 Dividend and interest on its own
investment
 Profit on overseas exchange
transactions
 Commission on transfer of funds,
issue of bank draft and charges for
various service rendered
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 Interest
on deposits
 General expenses of
management
 Maintenance of premises and
equipments
 Taxation
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Non Banking Assets: These are the assets which
are not used in the ordinary course of business
of banking, but they are such immovable and
movable properties which come in the
possession of the banking company for
recovering the amount due from customers.
These will be shown on the asset side of the B/S
under the head ‘Other Assets’
Such assets should be disposed within 7
years and the profit or loss on sale will be shown
under the sub-head ‘miscellaneous income’ in
Schedule 14 ‘Other Income’
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Minimum Capital and reserves (Sec 11):
In case of banking co Incorporated Outside India, but not having a
place of business in the city of Kolkatta or Mumbai, the sum of its
paid up capital and reserves shall not be less than Rs. 15 Lakhs, and
if it has a place of business in Mumbai or Kolkatta or in both , Rs. 20
lakhs.
In the case of Banking Companies incorporated in India the sum
of paid up capital and reserves shall not be less than
If it has a place of business in more than one states and Rs. 5 lakhs
if such place of business is Mumbai or Kolkatta Rs. 10 lakhs.
If it has all its place of business in one state other than Mumbai or
Kolkatta Rs. 1 lakh in case of its principal place of business plus Rs.
10000 for each additional place of business.
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Commission, brokerage etc on shares: (sec13)
No banking co shall pay commission, brokerage,
discount etc exceeding 2.5% of its paid up value.
Dividend: (sec 15) A banking co can not pay
dividend until its capitalised expenses like
preliminary expenses, share selling commission etc
have been completely written off. But can pay
dividend without writing off depreciation, bad debt
etc , where adequate provision has been made.
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Statutory reserve: (Sec 17) banking co
incorporated in India shall transfer every year
at least 25% 0f its profits before dividend to a
statutory reserve until the amount of reserve
together with Security Premium Account is
equal to the paid up capital.
Cash Reserve: (Sec 18) Banks are required to
maintain with RBI a cash reserve of at least 3%
of its deposits. At present it is ---%. RBI can
raise CRR up to 15%
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Statutory Liquidity ratio: banks are required
to maintain at least 25% of its time and
demand liabilities in the form of liquid assets
such as gold etc. SLR may vary between 25%
to 40%.
Loans and Advances restrictions: no Banking
Co can advance loans on the security of its
own shares.
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Receiving Cashier’s Counter cash Book
Paying Cashier’s Counter Cash Book
Sectional csh Book
Cash balance Book
Current Accounts ledger
Saving Accounts Ledger
Fixed Deposit Accounts Ledger
Investment Ledger
Loans ledger
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Bills Discounted and purchased ledger
Cash credit ledger
Private or profit and loss Ledger
The important memorandum books and
Registers are
Bill registers and Diaries
Short bills recievable for collection register
Acceptances, registers and diaries
Safe Custody register
Securities reister
Standing Orders book
Specimen Signature register
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Posting:entries are posted in the personal ledger
directly from slips ie pay in slip, withdrawal slips
and cheques. This system is known as slip
system. The slips themselves act as loose journal
entries.
Daily Trial Balance: TB is prepared every day from
the balance of accounts in the general ledger.
Self balancing: personal ledgers are kept under
self balancing system
Daily Summary Sheets: the slips posted into
different personal ledgers are summarised on
daily summary sheets totals of which are posted
to the control accounts in the general ledger.
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Continuous Check: All entries in the personal
ledgers and summary sheets are checked by
persons other than those who have recorded
entries.
Double Voucher System: Two vouchers are
prepared for non cash transactions. They are
debit voucher and credit voucher.
According to Sec 29, a Banking Co
incorporated in india, is required to prepare
at theend of each accounting year , a Balance
Sheet and profit & Loss A/c in respect of all
business transacted by it in the form sets out
in the Third Schedule of the Act.
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Prepared in Vertical form
‘Form B’ of Third Schedule of banking
regulation Act is used.
Divided into 4 Sections.
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1. Income:
First item is interest earned.
Details are shown in Schedule 13
Bad debts and other provisions are not
deducted. They are shown as a seperate
item.
Second item is Other Income.
The details are shown in schedule 14
3. Profit / loss:
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Profit or loss of the current year (difference
between 1&2) and profit or loss forwarded
from the last year are shown
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2. Expendeture:
First item is interest expended.
Details are shown in SCHEDULE 15
Second item is Operating Expenses.
Details are shown in SCHEDULE 16
Third item is Provisions and Contngencies
4. Appropriations:
Amounts transferred to statutory Reserve,
other reserves, dividend etc are shown.
The balance is transferred to balance sheet.
schedule
No
(1) Income
Interest Earned
Other Income
13
14
Total
(2) Expenditure
Interest Expended
Operating Expenses
Provisions and Contingencies
Total
(3) Profit/loss
For current year ( 1-2)
brought forward from previous year
Total
(4) Appropriations
Transfer to reserves
Transfer to proposed dividend
Balance carried over to Balance Sheet
(current
year)
(Previous
year)
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15
16
particulars
1.Interest on Advances
2.Discount on Bills
3.Interest on balances with RBI and
other inter bank Funds
4.Others
Total
Current
Year
Previous
Year
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Current
year
Particulars
Previous
year
1. Commission, Exchange and Brokerage
2. Profit on sale of investment
less loss on sale of investment
3. Profit on revaluation of investment
less loss on revaluation of investment
4. Profit on sale of land, building and other
assets
less loss on sale of land and other assets
5. Profit on exchange transactions
less loss on exchange transactions
6. Income earned by way of dividends etc from
subsidiaries/ companies or joint ventures
abroad / in India
7. Miscellaneous income
Total
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particulars
Current
year
Previous
Year
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1. Interest on Deposits
2. Interest on RBI borrowings/ inter
bank borrowings
3. Others
Total
particulars
1. Payment to and provision for
employees
2. Rent, taxes and lightings
3. Printing and stationary
4. Advertisement and publicity
5. Depreciation on banks property
6. Director’s fees , allowances and
expenses
7. Auditors fees and expenses
8. Law charges
9. Postage, telegram, telephones etc
10.Repairs and maintenance
11.Insurance
12.Other Expenses
Current year Previous year
particulars
Capital & liabilities
Capital
Reserves & Surplus
Deposit
Borrowing
Other liabilities
Total
Assets
Cash and Balance with RBI
Balances with Banks & Money at Call & Short
notice
Investments
Advances
Fixed Assets
Other Assets
Total
Contingent Liabilities
Bills for Collection
Schedule
No
1
2
3
4
5
6
7
8
9
10
11
12
Current
Year
Previous
year
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Particulars
1. For Nationalised banks
capital (fully owned by central Govt)
2. For banks incorporated outside India
capital (the amt brought by banks as start up
capital as prescribed by RBI)
Amount of deposit kept with RBI u/s1(2)of
the Act
Total
3. For other banks
Autherised capital (---shares of Rs --each)
issued Capital (---shares of Rs --- each)
Subscribed capital (---shares of Rs --each)
Called up Capital (---shares of Rs----each)
less calls unpaid
Add forfeited shares
Total
Current
year
Previous
year
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Particulars
Current
year
1. Statutory Reserves
Opening balance
Additions during the year
Deductions during the year
2. Capital reserves
Opening balance
Additions during the year
Deductions during the year
3. Share premium
Opening balance
Additions during the year
Deductions during the year
4. Revenue and Other reserves
Opening balance
Additions during the year
Deductions during the year
5. Balance in profit & loss A/C
Total
Previous
year
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Particulars
Current
year
Previous
year
A. 1. Demand Deposits
(i) From banks
(ii) from Others
2. Savings bank Deposits
3. term Deposits
(i) From banks
(ii) from Others
Total
B. 1. Deposits of Branches in India
2. Deposits of Branches outside India
Total
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Particulars
Current
year
Previous
year
A. Borrowings in India
1. Reserve Bank of India
2. other banks
3. Other Institutions and
Agencies
B. Borrowings Outside India
total
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Particulars
Current
year
Previous
year
1. Bills payable
2. Inter Office Adjustments (Net)
3. Interest Accrued
4. Others (including provisions)
total
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Particulars
Current
year
Previous
year
1. Cash in hand (including foreign
currency notes)
2. Balance with RBI
(i) In current account
(ii) In other accounts
Total
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Particulars
Current
Year
1. In India
(i) Balances with banks
(a) In Current Accounts
(b) In other Deposit Accounts
(ii) Money at Call and Short Notice
(a) With banks
(b) With other institutions
Total
2. Outside India
(i) In Current Accounts
(ii) In other Deposit Accounts
(iii) Money at Call and Short notice
Grand Total
Previous
Year
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Particulars
1. Investments in India
(i) Govt Securities
(ii) Other approved Securities
(iii) Shares
(iv) Debentures and Bonds
(v) Subsidiaries or joint ventures
(vi) Others (to be specified)
Total
2. Investment out side India
(i) Govt Securities (including local authorities)
(ii) Subsidiaries or joint ventures abroad
(iii) other investments (to be specified)
Total
Grand total(1&2)
Current
Year
Previous
Year
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Particulars
1. (i) Bills Purchased and Discounted
(ii) Cash credits, overdrafts and loans repayable
on demand
(iii) Term loans
Total
2. (i) Secured by tangible assets
(ii) Covered by bank/ Govt guarantee
(iii) Unsecured
Total
3. (i) Advances in India
(a) priority Sectors
(b) public Sector
(c) banks
(d) Others
Total
(ii) Advances Outside India
(a) Due from banks
(b) Due from Others
Bills purchased and discounted
Syndicated Loans
Current
Year
Previous
Year
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Particulars
Current
Year
Previous
Year
1. Premises
At cost on 31st March of the preceding year
Additions during the year
Deductions during the year
Depreciation to Date
2. Other Fixed Assets
(Including Furniture and fixtures)
At cost on 31st March of the preceding year
Additions during the year
Deductions during the year
Depreciation to Date
Total
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Particulars
Current
Year
Previous
Year
1.Inter office Adjustments(net)
2.Interest Accrued
3.Tax paid in advance/ Tax
deducted at Source
4.Stationary and Stamps
5.Non Banking Assets Accured in
Satisfaction of Claims
6. Others
Total
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Particulars
Current
Year
Previous
Year
1. Claims against the Bank not
1.
2.
3.
5.
6.
acknowledged as Debt
Liability for partly paid Investments
Liability on account of outstanding
forward exchange contracts
Guarantee given on behalf of
constituents
(a) in India
(b) outside india
Acceptance, endorsments and other
Obligations
Other Items for which the bank is
contingently liable
Total
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