Balance sheet of a bank is made with the rules and regulations of banking laws. In India, banking regulation act 1949 has given some rules for making balance sheet of any bank who is working in India or whose corporate office in India. This law's schedule III and its form A will be given as guide for making balance sheet of a bank. We are explaining liabilities and assets according to this.
Liabilities Side of Balance Sheet of a Bank
Schedule 1 : Capital of a Bank
We have to show paid up capital of bank. If bank is incorporated outside India, then its start up capital will be shown under this schedule in balance sheet's liabilities side.
Schedule 2 : Reserves and Surplus
a) Statutory reserve
b) Capital reserve
c) Share premium
d) Revenue and other reserve
e) balance of profit and loss account
Schedule 3 : Deposits
Deposits of customers in bank will be the liability of bank. This liability will be classified in saving banks deposit, term deposits, demand deposits.
Schedule 4 : Borrowing
Sometime bank takes loan from RBI or other banks. All these borrowings are the liabilities of bank.
Schedule 5 : Other Liabilities and Provisions
In these liabilities, we can include bill payable, outstanding interest and provision for taxes.
Assets Side of Balance Sheet of a Bank
Schedule 6 : Cash and Balance with RBI
RBI has made rule of depositing some money with him. So, cash and balance with RBI will be the asset of a bank.
Schedule 7 : Balance with Banks and Money at Call and Short Notice
Above schedule 3 is deposit liability. But some of these deposit bank keeps in his pocket in cash form or money at call or short notice. So, this is the asset of bank.
Schedule 8 : Investment
Bank is not doing social activities. It is doing business. Most of his deposit is invested in good and profitable schemes. All investment of bank will be the asset of bank. It will be shown under schedule 8. In investment of bank, we can include investment in govt. securities, investment in shares, bonds, debentures and investment in subsidiaries.
Schedule 9 : Advances
Bank gives advance to other banks in the form of cash credit, bank overdraft and loan payable on demand. All these advances are the assets of a bank and will be shown under schedule 9 in the asset side of balance sheet of a bank.
Schedule 10 : Fixed Assets
Banks all branch offices building and land will be part of its fixed asset, if these are own of bank. Bank may have other fixed assets like furniture, fixtures, equipment, computers and ATM Machines. All addition in it will add in the opening balance of fixed asset. All deduction will deduct from the balance of fixed asset. We deduct depreciation of each fixed asset except land.
Schedule 11 : Other Assets
In other assets, we can show stock of stationery and stamps, tax paid in advance, interest receivables, and bills for collections.
Now we are showing you the balance sheet of State bank of India. Its five years balance sheet has been made according to above schedules.
Liabilities Side of Balance Sheet of a Bank
Schedule 1 : Capital of a Bank
We have to show paid up capital of bank. If bank is incorporated outside India, then its start up capital will be shown under this schedule in balance sheet's liabilities side.
Schedule 2 : Reserves and Surplus
a) Statutory reserve
b) Capital reserve
c) Share premium
d) Revenue and other reserve
e) balance of profit and loss account
Schedule 3 : Deposits
Deposits of customers in bank will be the liability of bank. This liability will be classified in saving banks deposit, term deposits, demand deposits.
Schedule 4 : Borrowing
Sometime bank takes loan from RBI or other banks. All these borrowings are the liabilities of bank.
Schedule 5 : Other Liabilities and Provisions
In these liabilities, we can include bill payable, outstanding interest and provision for taxes.
Assets Side of Balance Sheet of a Bank
Schedule 6 : Cash and Balance with RBI
RBI has made rule of depositing some money with him. So, cash and balance with RBI will be the asset of a bank.
Schedule 7 : Balance with Banks and Money at Call and Short Notice
Above schedule 3 is deposit liability. But some of these deposit bank keeps in his pocket in cash form or money at call or short notice. So, this is the asset of bank.
Schedule 8 : Investment
Bank is not doing social activities. It is doing business. Most of his deposit is invested in good and profitable schemes. All investment of bank will be the asset of bank. It will be shown under schedule 8. In investment of bank, we can include investment in govt. securities, investment in shares, bonds, debentures and investment in subsidiaries.
Schedule 9 : Advances
Bank gives advance to other banks in the form of cash credit, bank overdraft and loan payable on demand. All these advances are the assets of a bank and will be shown under schedule 9 in the asset side of balance sheet of a bank.
Schedule 10 : Fixed Assets
Banks all branch offices building and land will be part of its fixed asset, if these are own of bank. Bank may have other fixed assets like furniture, fixtures, equipment, computers and ATM Machines. All addition in it will add in the opening balance of fixed asset. All deduction will deduct from the balance of fixed asset. We deduct depreciation of each fixed asset except land.
Schedule 11 : Other Assets
In other assets, we can show stock of stationery and stamps, tax paid in advance, interest receivables, and bills for collections.
Now we are showing you the balance sheet of State bank of India. Its five years balance sheet has been made according to above schedules.
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