PROJECT PROJECT

ON

LOAN & CREDIT FACILITY"

AMAR SHAHEED BABA AJIT SINGH JUJHAR SINGH MEMORIAL
COLLEGE
Affiliated To
PUNJABI UNIVERSITY PATIALA

In the partial fulfillment of requirement for the award of

Degree of Bachelor of Business Administration (BBA)

Submitted To:
Submitted By:
Punjabi University Patiala
Pal Singh
Roll.No. 21313

Jatinder

DECLARATION

I am a student of BBA 6th Semester of AMAR SHAHHED BABA AJIT SINGH

JUJHAR SINGH MEMORIAL COLLEGE, BELA declare that the Project Report
entitled LOAN & CREDIT FACILITY is the outcome of my own work and the same
has not been submitted to any university/institute for the award of any degree or any
Professional Degree

Date:

Jatinder Pal Singh

ACKNOWLEGEMENT

Success is not a description, but a journey. While I reach towards the end of this journey, I
realized I may not have come this far without the guidance, help and support of the people who
acted as guides, friends and torch bearers along the way.
I take this opportunity to thank Prof. Geetika without their cooperation I would not have been
able to complete this project.
I express my deepest and most sincere thanks to my organization guide, Mr. Harish Oberoi
(C.A) from who I had the opportunity to learn a lot, I would like to thank him for giving me
valuable suggestion and guidance with which, my project would have been complete.

Table of Contents

DECLARATION

ACKNOWLEDGEMENT

Chapter No.1 Introduction

5-47

Chapter No.2. Research Methodology

48-50

Chapter No.3. Data Analysis and interpretation

51-64

Chapter No.4. Limitations and conclusions

65-67

Bibliography

68

Annexure

69-71

CHAPTER-1
INTRODUCTION

INDUSTRY INTRODUCTION

WHAT IS BANKING?
Banking in a traditional sense is the business of accepting deposits of money from public For the
purpose of lending and investment. These deposits can have a distinct feature like being
withdrawn able by cheques, which no other financial institution can offer. In Addition, banks also
offer financial services, which include:
The Issue of demand draft & travelers cheque.
Credit cards
Collection of cheques, bill of exchange.
Safe deposit lockers
Custodian services.
Investment and Insurance Services.
The business of banking is highly regulated since banks deal with money offered to them by the
public and ensuring the safety of this public money is one of the prime responsibilities of any
bank. That is why banks are expected to be prudent in their leading and investment activities.
Every bank has a compliance department, which is responsible to ensure that all the services
offered by the bank, and the processes followed are in compliance with the local regulations and
the Banks corporate policy.
The major regulations and act govern the banking business are: Banking Regulation Act, 1949
Foreign Exchange Management Act, 1999
Indian Contract Act
Negotiable Instruments Act, 1881
Bank lends money either for productive purposes to individual, firms, Corporate etc. for buying
house property, cars and other consumer durables and for investment Purposes to individuals and
the others. However, banks do not finance any Speculative activity. Lending is risk taking. The
depositors of banks are also assured of safety of their money by deploying some percentage of
deposit in statutory Reserves like SLR & CLR.

STANDARD ACTIVITIES OF BANK

Banks act as payment agents by conducting checking or current accounts for customers, paying
cheques drawn by customers on the bank, and collecting cheques deposited to customers' current
accounts. Banks also enable customer payments via other payment methods such as telegraphic
transfer, and ATM.
Banks borrow money by accepting funds deposited on current accounts, by accepting term
deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by
making advances to customers on current accounts, by making installment loans, and by investing
in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered indispensable by
most businesses, individuals and governments. Non-banks that provide payment services such as
remittance companies are not normally considered an adequate substitute for having a bank
account.
Banks borrow most funds from households and non-financial businesses, and lend most funds to
households and non-financial businesses, but non-bank lenders provide a significant and in many
cases adequate substitute for bank loans, and money market funds, cash management trusts and
other non-bank financial institutions in many cases provide an adequate substitute to banks for
lending savings too.

REVENUE GENERATION
A bank can generate revenue in a variety of different ways including interest, transaction fees and
financial advice. The main method is via charging interest on the capital it lends out to customers.
The bank profits from the differential between the level of interest it pays for deposits and other
sources of funds, and the level of interest it charges in its lending activities.
This difference is referred to as the spread between the cost of funds and the loan interest rate.
Historically, profitability from lending activities has been cyclical and dependent on the needs and
strengths of loan customers and the stage of the economic cycle. Fees and financial advice
constitute a more stable revenue stream and banks have therefore placed more emphasis on these
revenue lines to smooth their financial performance.

RISK AND CAPITAL

Banks face a number of risks in order to conduct their business, and how well these risks are
managed and understood is a key driver behind profitability, and how much capital a bank is
required to hold. Some of the main risks faced by banks include:

Credit risk:

risk of loss arising from a borrower who does not make payments as

promised.

Liquidity risk: risk that a given security or asset cannot be traded quickly enough in the
market to prevent a loss (or make the required profit).

Market risk: risk that the value of a portfolio, either an investment portfolio or a trading
portfolio, will decrease due to the change in value of the market risk factors.

Operational risk: risk arising from execution of a company's business functions.

The capital requirement is a bank regulation, which sets a framework on how banks and
depository institutions must handle their capital. The categorization of assets and capital is highly
standardized so that it can be risk weighted

ECONOMIC FUNCTIONS OF BANKS

The economic functions of banks include:
Issue of money, in the form of banknotes and current accounts subject to cheque or
payment at the customer's order. These claims on banks can act as money because they are
negotiable or repayable on demand, and hence valued at par. They are effectively
transferable by mere delivery, in the case of banknotes, or by drawing a cheque that the
payee may bank or cash.
Netting and settlement of payments banks act as both collection and paying agents for
customers, participating in interbank clearing and settlement systems to collect, present, be
presented with, and pay payment instruments. This enables banks to economies on
reserves held for settlement of payments, since inward and outward payments offset each
other. It also enables the offsetting of payment flows between geographical areas, reducing
the cost of settlement between them.
Credit intermediation banks borrow and lend back-to-back on their own account as
middle men.
Credit quality improvement banks lend money to ordinary commercial and personal
borrowers (ordinary credit quality), but are high quality borrowers. The improvement

comes from diversification of the bank's assets and capital which provides a buffer to
absorb losses without defaulting on its obligations. However, banknotes and deposits are
generally unsecured; if the bank gets into difficulty and pledges assets as security, to raise
the funding it needs to continue to operate, this puts the note holders and depositors in an
economically subordinated position.

BANKING IN INDIA:Banking means accepting for the purpose of landing or investment of deposits of money from the
public repayable on demand or otherwise one withdraw able by cheque, draft or otherwise.
Banking in India has its origin as early as the Vedic period. It is believed that the transaction
From money lending to money banking must have occurred even before Manu, the great Hindu
Jurist, who has devoted a section of his work to deposits and advances and laid down the rules
relating to rate of interest, During Mugal Period, the native bankers played a very important role
in lending money and finance foreign trade and commerce. During the days of the east- India
Company, it was the turn of the agency house to carry on the banking business the general bank of
India was the first joint stock bank to be established in the year 1786. The others that followed
were the Bank of Hindustan and the Bengal Bank. The Bank of Hindustan is reported to have
continued till 1906 while the other two failed in the meantime. In the first half of the 19th century
the east-India company established three banks, the Bank of Bengal in 1809, the Bank of Bombay
in 1840 and the banks of Madras in 1843.
These three banks are also known as the presidency banks were amalgamated in 1920 and a new
Bank the imperial bank of India established ion 27th January 1921. With the passing of the state
bank act 1955 the under taking of the imperial Bank of India is taken over by the newly
constituted the state bank of India.

NATIONALIZATION
The GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from
the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step
as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the
Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it
received the presidential approval on 9 August 1969.
A second dose of nationalization of 6 more commercial banks followed in 1980. The stated reason
for the nationalization was to give the government more control of credit delivery. With the
second dose of nationalization, the GOI controlled around 91% of the banking business of India.
Later on, in the year 1993, the government merged New Bank of India with Punjab National
Bank. It was the only merger between nationalized banks and resulted in the reduction of the
number of nationalized banks from 20 to 19. After this, until the 1990s, the nationalized banks
grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

LIBERALIZATION
In the early 1990s, the then Narsimha Rao government embarked on a policy of liberalization,
licensing a small number of private banks. These came to be known as New Generation techsavvy banks, and included Global Trust Bank (the first of such new generation banks to be set up),
which later amalgamated with Oriental Bank of Commerce, Axis Bank(earlier as UTI Bank),
ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India,
revitalized the banking sector in India, which has seen rapid growth with strong contribution from
all the three sectors of banks, namely, government banks, private banks and foreign banks.
The next stage for the Indian banking has been set up with the proposed relaxation in the norms
for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights
which could exceed the present cap of 10%, at present it has gone up to 74% with some
restrictions.
The new policy shook the Banking sector in India completely. Bankers, till this time, were used to
the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave
ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led
to the retail boom in India. People not just demanded more from their banks but also received
more.

Currently (2007), banking in India is generally fairly mature in terms of supply, product range and
reach-even though reach in rural India still remains a challenge for the private sector and foreign
banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have
clean, strong and transparent balance sheets relative to other banks in comparable economies in its
region. The Reserve Bank of India is an autonomous body, with minimal pressure from the
government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without
any fixed exchange rate-and this has mostly been true.
With the growth in the Indian economy expected to be strong for quite some time-especially in its
services sector-the demand for banking services, especially retail banking, mortgages and
investment services are expected to be strong. One may also expect M & As, takeovers, and asset
sales.
In March 2006, the Reserve Bank of India allowed Warburg Pinups to increase its stake in Kotak
Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed
to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any
stake exceeding 5% in the private sector banks would need to be vetted by them.
In the Indian Banking Industry some of the Private Sector Banks operating are IDBI Bank, ING
Vyasa Bank, SBI Commercial and International Bank Ltd, Bank of Rajasthan Ltd. and banks from
the Public Sector include Punjab National bank, Vijaya Bank, UCO Bank, Oriental Bank,
Allahabad Bank among others. ANZ Grindlays Bank, ABN-AMRO Bank, American Express
Bank Ltd, Citibank are some of the foreign banks operating in the Indian Banking Industry.

INDIAN BANKING INDUSTRY

ORGANISED BANKS

UNORGANISED BANKS

RBI

INDIGENOUS

COMMERCIAL
BANKS
NON SHEDULED
COMM. BANKS

MONEY LENDERS

SHEDULED
COMM. BANKS
STATE BANK GROUP
NATIONALISED
BANK

UNREGULED
NON BANKERS

INDIAN BANK
FOREIGN BANK

COOPERATIVE
BANK
STATE COOPERATIVE BANK
CENTERAL COOPERATIVE BANK

PRIMARY AGRICULTURE CREDIT

SOCIETY

INDIAN BANKING INDUSTRY

The Indian Banking system has the Reserve Bank of India (RBI) as the apex body for all Matters
relating to the banking system. It is the Combination of Banks of India and bankers to all others
banks as well.
The Indian Banking industry, which is governed by the Banking Regulation Act of India, 1949
can be broadly classified into two major categories, non-scheduled banks and scheduled banks.

1. Schedule Banks:These banks must have paid-up capital and reserve of mot less than Rs. 50, 00,000. They must
satisfy the RBI than its affairs are mot conducted in a manner detrimental to the interests of its
depositors. These are further classified as follow:
State co-operative Banks
Commercial Banks
Scheduled banks comprise commercial banks and the co-operative banks. In terms of ownership,
commercial banks can be further grouped into nationalized banks, the State Bank of India and its
group banks, regional rural banks and private sector banks (the old/ new domestic and foreign).
These banks have over 67,000 branches spread across the country in every city and villages of all
nook and corners of the land.

2. Non-Schedule Banks:These are banks, which are not included in the second schedule of the Banking Regulations Act,
1965. It means they do not satisfy the conditions laid down by that schedule. They are further
classified as back:
Central co-operative banks and primary credit societies
Commercial Banks

COMMERCIAL BANKS
Commercial Banks in India are broadly categorized into Scheduled Commercial Banks and
Unscheduled Commercial Banks. The Scheduled Commercial Banks have been listed under the
Second Schedule of the Reserve Bank of India Act, 1934. The selection measure for listing a bank
under the Second Schedule was provided in section 42 (60 of the Reserve Bank of India Act,
1934. The modern Commercial Banks in India cater to the financial needs of different sectors.
The main functions of the commercial banks comprise:

transfer of funds

acceptance of deposits

offering those deposits as loans for the establishment of industries

Purchase of houses, equipments, capital investment purposes etc.

The banks are allowed to act as trustees. On account of the knowledge of the financial
market of India the financial companies are attracted towards them to act as trustees to
take the responsibility of the security for the financial instrument like a debenture.

The Indian Government presently hires the commercial banks for various purposes like tax
collection and refunds, payment of pensions etc.

CURRENT SCENARIO
The industry is currently in a transition phase. On the one hand, the PSBs, which are the mainstay
of the Indian Banking system, are in the process of shedding their flab in terms of excessive
manpower, excessive non Performing Assets (NPAs) and excessive governmental equity, while on
the other hand the private sector banks are consolidating themselves through mergers and
acquisitions. PSBs, which currently account for more than 78 percent of total banking industry
assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling revenues from
traditional sources, lack of modern technology and a massive workforce while the new private
sector banks are forging ahead and rewriting the traditional banking business model by way of
their sheer innovation and service. The PSBs are of course currently working out challenging
strategies even as 20 percent of their massive employee strength has dwindled in the wake of the
successful Voluntary Retirement Schemes (VRS) schemes. Private sector Banks have establish
internet banking, phone banking, anywhere banking, and mobile banking, debit cards, Automatic
Teller Machines (ATMs) and combined various other services and integrated them into the
mainstream banking arena, while the PSBs are still grappling with disgruntled employees in the
aftermath of successful VRS schemes. Also, following Indias commitment to the W To
agreement in respect of the services sector, foreign banks, including both new and the existing
ones, have been permitted to open up to 12 branches a year with effect from 1998-99 as against
the earlier stipulation of 8 branches.

CO-OPERATIVE BANKS:Co-operative banks are small-sized units organized in the co-operative sector which operate both
in urban and non-urban centers. These banks are traditionally centered on communities, localities
and work place groups and they essentially lend to small borrowers and businesses.
The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary
cooperative banks located in urban and semi-urban areas. These banks, until 1996, could only
lend for non-agricultural purposes.
However, today this limitation is no longer prevalent. While the co-operative banks in rural areas
mainly finance agricultural based activities including farming, cattle, milk, hatchery, personal
finance, et cetera, along with some small scale industries and self-employment driven activities,
the co-operative banks in urban areas mainly finance various categories of people for selfemployment, industries, small scale units and home finance.
Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative
bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and
Banking Laws (Co-operative Societies) Act, 1965.
These banks provide most services such as savings and current accounts, safe deposit lockers,
loan or mortgages to private and business customers. For middle class users, for whom a bank is
where they can save their money, facilities like Internet banking or phone banking is not very
important.
Co-operative banks function on the basis of 'no-profit no-loss'. Co-operative banks, as a principle,
do not pursue the goal of profit maximization. Therefore, these banks do not focus on offering
more than the basic banking services. So, co-operative banks finance small borrowers in industrial
and trade sectors, besides professional and salary classes.
Co-operative banks differ from stockholder banks by their organization, their goals, their values
and their governance. In most countries, they are supervised and controlled by banking authorities
and have to respect prudential banking regulations, which put them at a level playing field with
stockholder banks. Depending on countries, this control and supervision can be implemented
directly by state entities or delegated to a co-operative federation or central body.
Even if their organizational rules can vary according to their respective national legislations, cooperative banks share common features:

 Customer-owned entities: in a co-operative bank, the needs of the customers meet the needs of
the owners, as co-operative bank members are both. As a consequence, the first aim of a cooperative bank is not to maximize profit but to provide the best possible products and services to
its members. Some co-operative banks only operate with their members but most of them also
admit non-member clients to benefit from their banking and financial services.
Democratic member control: co-operative banks are owned and controlled by their members,
who democratically elect the board of directors. Members usually have equal voting rights,
according to the co-operative principle of one person, one vote.
Profit allocation: in a co-operative bank, a significant part of the yearly profit, benefits or
surplus is usually allocated to constitute reserves. A part of this profit can also be distributed to the
co-operative members, with legal or statutory limitations in most cases. Profit is usually allocated
to members either through a patronage dividend, which is related to the use of the co-operatives
products and services by each member, or through an interest or a dividend, which is related to the
number of shares subscribed by each member.
Co-operative banks are deeply rooted inside local areas and communities. They are involved in
local development and contribute to the sustainable development of their communities, as their
members and management board usually belong to the communities in which they exercise their
activities. By increasing banking access in areas or markets where other banks are less present
SMEs, farmers in rural areas, middle or low income households in urban areas - co-operative
banks reduce banking exclusion and foster the economic ability of millions of people. They play
an influential role on the economic growth in the countries in which they work in and increase the
efficiency of the international financial system. Their specific form of enterprise, relying on the
above-mentioned principles of organization, has proven successful both in developed and
developing countries.
The Co operative banks in India started functioning almost 100 years ago. The Cooperative bank
is an important constituent of the Indian financial system judging by the role assigned to co
operative, the expectations the co operative is supposed to fulfill, their number, and the number of
offices the cooperative bank operate Though the co operative movement originated in the West,
but the importance of such banks have assumed in India is rarely paralleled anywhere else in the
world.
The cooperative banks in India play an important role even today in rural financing the Businesses
of cooperative bank in the urban areas also have increased phenomenally in recent years due to

the

sharp

increase

in

the

number

of

primary

co-operative

banks.

Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative
bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and
Banking Laws (Co-operative Societies) Act, 1965.

Cooperative banks in India finance rural areas under:

Farming
Cattle
Milk
Hatchery
Personal finance

Cooperative banks in India finance urban areas under:

Self-employment

Industries

Small scale units

Home finance

Consumer finance

Personal finance

Some facts about Cooperative banks in India

Some cooperative banks in India are more forward than many of the state and private

sector

banks.

According to NAFCUB the total deposits & landings of Cooperative Banks in India is much

more than Old Private Sector Banks & also the New Private Sector Banks.

This exponential growth of Co operative Banks in India is attributed mainly to their much

better local reach, personal interaction with customers, and their ability to catch the nerve of the
local clientele.
There are two main categories of the co-operative banks.

(a)Short term lending oriented co-operative Banks - within this category there are
three sub categories of banks viz state co-operative banks, District co-operative banks and
Primary Agricultural co-operative societies.

(b) Long term lending oriented co-operative Banks - within the second category there
are land development banks at three levels state level, district level and village level.

The cooperation banking structure is divided into following five categories

1. Primary urban cooperative banks
2. Primary agriculture credit societies
3. District central cooperation bank
4. State cooperative bank
5. Land development bank

Primary urban cooperative bank:

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary
cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to
lend money only for non-agricultural purposes. This distinction does not hold today. These banks
were traditionally centered around communities, localities work place groups. They essentially
lent to small borrowers and businesses. Today, their scope of operations has widened
considerably.

Primary agriculture credit societies:

Agriculture continues to be the most vital sector of Indian economy, contributing a major share to
our national income and also providing livelihood to the majority of our population. A strong base
of agriculture growth is must for the overall economic development in a country like India. So to
help the farmers and make the financial help for them these cooperative societies are established
.these societies finance farmers not only for their short term requirements (use of improved seeds,
fertilizers, insecticides, etc)but for medium and long term(irrigation and land development
activities)activities also.

District central cooperation bank:

These are the principal co-operative societies in the districts, in a state, the primary object of
which is financing other co-operatives, particularly the PCAs in the district. The DCCBs came in
to existence after the passing of Co-operative Societies Act1912. These institutions also undertake
banking business.
These institutions act as Balancing Centers of Finance at the district level. They provide the short
term and medium term credit to the agriculturists. They also supervise the PCAs in the districts.

State cooperative bank:

The state cooperative bank is the apex body of cooperative bank in any state. The long-term
cooperative credit structure has two tiers in many states with Primary Cooperative Agriculture and
Rural Development Banks (PCARDB) at the primary level and State Cooperative Agriculture and
Rural Development Bank at the state level. under the Banking Regulation Act 1949, only State
Cooperative Apex Banks, District Central Cooperative Banks and select Urban Credit
Cooperatives are qualified to be called as banks in the cooperative sector

Land development bank:

The long term credit needs of the agricultural sector are met by another type of co-operative
institutions known as Land Development Banks. The Land Development Banks meet the
requirements of the farmers for developmental purposes viz., provision of equipment like pumpsets, tractors and machinery and land improvement in the form of leveling, bundling, reclamation
of land, fencing, sinking of new wells and repairs to old wells, Loans are granted on the security
of mortgage of immovable property of the farmers.
Credit cooperatives are the oldest and most numerous of all the types of cooperatives in India. The
cooperative credit institutions in the country may be broadly classified into urban credit
cooperatives and rural credit cooperatives. There are about 2090 urban credit cooperatives and
these societies together constitute for about 10 percent of the aggregate banking business and
therefore regarded as an important segment of the banking system. The urban credit cooperatives
are also popularly known as Urban Cooperative Banks. The rural credit cooperatives may be
further divided into short-term credit cooperatives and long-term credit cooperatives. With regard
to short-term credit cooperatives, at the grass-root level there are around 92,000 Primary
Agricultural Credit Societies (PACS) dealing directly with the individual borrowers. At the central
level (district level) District Central Cooperative Banks (DCCB) function as a link between
primary societies and State Cooperative Apex Banks (SCB).

INTRODUCTION
TO
THE PROJECT

WHAT IS CREDIT FACILITY?

Unlike personal loans (where people borrowing the funds and the collateral are not likely to
change), loans in the world of business require additional flexibility in order to meet the needs of
the business as well as satisfy the requirement of the lender. Accomplishing this seemingly
difficult task is done by using a credit facility which is an overall credit line that can be broken
into multiple credit lines and collateral.
The term credit can be understood by giving light on following points:

CREDIT (LOANS AND ADVANCES)

The profit of a bank depends primarily on the utilization of its fund. But Bank cannot lend its fund
fully. As per Banking Company Act 1991 every banking company has to maintain a specified
minimum (presently 25%) of the total of its demand and time liabilities in the form of cash and
approved securities with RBI. This percentage or ratio is termed Statutory Liquid Ratio. Further
every scheduled bank has to maintain with RBI an average daily balance, the amount of which has
not to be less than a particular percentage (presently 6%) of the total of its demand and time
liabilities. As such Bank generally goes for short-term finance although a small portion of its total
deposit is invested as long term lending. Banks allow different forms advance.

CREDIT DEPARTMENT
CD Banking business primarily involves accepting deposits from the public and investing or
lending the same and thereby making profit out of it. However, lending money is not without risk
and therefore banks make loans and advances to farmers, traders, businessmen and industrialist
against either tangible (land, building, stock etc.) or intangible security. Even then, the banks run
the risk of default in repayment. Therefore, the banks follow cautious measures while lending
money to others. This core function of a bank is performed by the Credit Department of the bank.
In this case, the relationship of bank and customer is that of the creditor and debtor.
Unlike personal loans where the person borrowing the funds and the collateral are not likely to
change, loans in the world of business require additional flexibility in order to meet the needs of
the business as well as satisfy the requirement of the lender. Accomplishing this seemingly
difficult task is done by using a credit facility which is an overall credit line that can be broken
into multiple credit lines and collateral.

TYPES OF CREDITS OFFERED BY A BANK

Banks usually provides following types of credit:
1. CASH CREDIT (hypo.)
2. CASH CREDIT(pledge)
3. LTR
4. TERM LOAN
5. LEASE FINENCING
6. SECURED OVERDRAFT (SOD)
7. OTHERS

1. CASH CREDIT (HYPO.)-:

Cash Credit or continuing credits are those that form continuous debits and credits up to a limit
and have and expiration date. A service charge that is effect an interest charge is normally made as
a percentage of the value of purchases. These credits may be of the nature of pledged and /or
hypothecated and banks should report these in separate heads incorporated under the main head
cash credit.
Under this arrangement a credit is sanctioned against hypothecation of the raw materials or
finished goods. The letter of hypothecation creates a charge against the goods in favor of the Bank
but neither the ownership nor its possession is passed on to it; only a right or interest in the goods
is created in favor of the Bank and the borrower binds himself to give possession of the goods to
the bank when called upon to do so. When the possession is handed over, the charge is converted
into pledge. This type of facility is generally given to the reputed borrowers of undoubted
integrity.

2. CASH CREDIT (PLEDGE)-:

Under this arrangement a cash credit is sanctioned against pledge of goods or raw materials. By
signing the letter of pledge, the borrower surrenders the physical possession of the goods under
the Banks effective control as security for payment of Bank dues. The ownership of the goods,
however, remains with the borrower. The pledge creates an implied lien in favor of the Bank on
the underlying merchandise. In the event of failure of the borrower to honor his commitment the

Bank can sell the goods for recovery of the advance. No collateral security is normally asked for
grant of such credit.

3. LOAN AGAINST TRUST RECEIPTS (LTR)-:

This is a loan facility up to a satisfactory limit to the traders / customers by a Bank against
security of the value of the imported merchandise. This item also includes loan against Trust
Receipts.

4. TERM LOAN-:
A Bank advance for a specific period repaid with interest under fixed schedules. The term loans
may be as follow:
Short Term: Up to and including 12 months.
Medium Term: More than 12 months up to and including 60 months.
Long Term: More than 60 months. [This item includes lease financing]

5. LEASE FINENCING-:
An entrepreneur, under this Scheme, may avail of the lease facilities to procure industrial
machinery (without having to purchase it by down payment) with easy repayment schedule. The
clients also get special rebate in their income-tax payment under the scheme.

6. SECURED OVERDRAFTS (SOD)-:

A loan facility on a customers current account at a Bank permitting him to overdraw up to a
certain agreed limit for an agreed period. The terms of the loan are normally that it is repayable on
demand or at the expiration date of the agreement.

7. OTHERS-:
Any loan that does not fall in any of the above facilities is considered as other. Blocked /
Segregated continuing credits (Pledge, Hypothecation or Overdraft) when re-scheduled by the
Banks for payments over a number of periods should also be reported against the head other.

THE BANK USE EIGHT CS RULE WHILE GIVING LOAN

1. Credit (must be god)
2. Capacity(ability to pay)
3. Capital(money that going into business)
4. Collateral(assets that secure the loan)
5. Character(the person)
6. Commitment(ability and willingness to succeed)
7. Cash flow(can it support business debt and expense)
8. Conditions(economic, finance anything that effect the business)

LOAN AND CREDIT FACILITY

The Jodhpur central cooperative bank provided following loan and credit facilities

PERSONAL LOAN SCHEME:-

Under this scheme the loan is provided for fulfillment of personal and family needs by taking care
of refund capacity of applicant. The applicant can enjoy this facility by following two types Term loan for maximum 5 years.
Renewal of Credit limit each year according to last years transactions.

ELIGIBILITY: Domicile of bank operation area.

whose age is between 21to 55 years.
Employee of Government/ self governed, semi government, leading banks, urban
cooperative bank/court, financial institution, education institutes etc.
The self employed person who earns fixed income and files income tax return also
having PAN card.
Organizer of standing committee.

LOAN/ CREDIT LIMIT: Maximum loan amount is 2 lacks.

8 times of Gross Monthly salary or rs.2 lacks whichever is less.
In the case of businessman/ professionals the calculation of average monthly salary is to
be done according to the IT return of past three years.
15 times of monthly salary of manager of selection committee or 2 lacks
Whichever is less

INTEREST RATE:According to the decision taken by bank the rate of interest is 12%.

RECOVERY OF LOAN:

Maximum 5ve years, in the case of employee 5 ve years or date of retirement whichever is
earlier.

The advance cheque is taken according to EMI installments of other banks.

FOR SECURITY OF LOAN:

The bank requires the guaranty of 2 persons having creditability of loan amount who are
recognized by bank.

The collateral security is also accepted by bank in the case of non remunerated and
employer who having loan of more than 50000 and lake of contract of direct recovery.

DOCUMENTS REQUIRED FROM APPLICANT:Photo of applicant

Residential proof
Two guarantors
Income certificate of applicant and guarantor
In the case of salaried employee the guarantee certificate passes by his employer.
In case of loan amount which is more than 50 lacks the evaluated rate of fixed assets for
mortgage.
The nominal membership fee and deposit amount.

EXECUTION OF DOCUMENTS AFTER SENCTION OF LOAN:Promissory note.

Loan contract.
Deed of security papers.
Mortgage letter (in the case of mortgage of fixed assets)
Advanced cheque (according to the installments)
Other documents.

LOAN FOR PURCHASE OR CONSTRUCTION:Under this scheme an applicant may apply for loan related to purchase of a plot, construction of a
building, purchase and repairs of building.

ELIGIBILITY: Domicile of bank operation area whose age is between 21to 55 years.
Employee of Government/ self governed, semi government, leading banks, urban
cooperative bank/court, financial institution, education institutes etc.
The self employed person who earns fixed income and files income tax return also
having PAN card.
Standing committee admin

LOAN/ CREDIT LIMIT:Maximum loan amount is 15 lacks for loan related to purchase of a plot, construction of a
building, purchase and repairs of building.

INTEREST RATE:The interest rate is 10.50% in the case of normal purchase or repairs of plot and in the case of
purchase or repairs of commercial building, shops the rate of interest is 14%.

TIME PERIOD OF LOAN:This loan can be taken Maximum for 15 years.

FOR SECURITY OF LOAN:-

The bank requires the guaranty of 2 persons having creditability of loan amount who are
recognized by bank.

DOCUMENTS REQUIRED FROM APPLICANT:Photo of applicant

Populated area plot strap which is on the name of applicant
Cost estimate and construction cost map which is approved by official engineer
Income certificate of applicant.
Two guarantors and their income statement with photo.
The nominal membership fee and deposit amount.

VEHICLE LOAN (for personal use):Under this scheme the loan is to be given for four wheeler (car, jeep etc.) for personal use only.

ELIGIBILITY: Domicile of bank operation area.

Employee of Government/ self governed, semi government, leading banks, urban
cooperative bank/court, financial institution, education institutes etc.
The self employed person who earns fixed income and files income tax return also
having PAN card.
Standing committee admin

LOAN/ CREDIT LIMIT:The loan provides up to 5 lacks for purchasing of four wheeler for personal use.

INTEREST RATE:The rate of interest for four wheeler is 12%.

TIME PERIOD OF THE LOAN:The time limit set by the bank authority for this kind of loan is maximum 5 years.

FOR SECURITY OF LOAN:The bank requires the guaranty of 2 persons having creditability of loan amount who are
recognized by bank.

DOCUMENTS REQUIRED FROM APPLICANT:Photo of applicant and his legal license.

Vehicle quotation and income statement of applicant.
Fixed assets for mortgage.
Two guarantors with their income statement and photo.
The nominal membership fee and deposit amount.

VEHICLE LOAN (for commercial use):Under this scheme the loan is provide for purchase vehicle for commercial use.

ELIGIBILITY: Domicile of bank operation area.

Employee of Government/ self governed, semi government, leading banks, urban
cooperative bank/court, financial institution, education institutes etc.
The self employed person who earns fixed income and files income tax return also
having PAN card.
Standing committee admin

LOAN/ CREDIT LIMIT:The loan provides up to 10 lacks for purchasing of four wheeler for commercial use.

INTEREST RATE:The rate of interest for four wheeler is 12%.

TIME PERIOD OF THE LOAN:The time limit set by the bank authority for this kind of loan is maximum 5 years.

FOR SECURITY OF LOAN:The bank requires the guaranty of 2 persons having creditability of loan amount who are
recognized by bank.

DOCUMENTS REQUIRED FROM APPLICANT:Photo of applicant and his legal license.

Vehicle quotation and income statement of applicant.
Fixed assets for mortgage.
Two guarantors with their income statement and photo.
The nominal membership fee and deposit amount.

HOME LOAN:This loan scheme is for:

Purchase or construction of plot/building for the persons having regular income and loan
for take over the current loan account for different financial institutes.
Construction or purchase of building for Commercial use, business use, shops,
showrooms, warehouse etc.
Repairing, expansion, and renovation of Home/ commercial building.

ELIGIBILITY: Domicile of bank operation area.

who wants to purchase/ construct the building or house within the district.
Employee of Government/ self governed, semi government, leading banks, urban
cooperative bank/court, financial institution, education institutes etc.
Business man who fills income tax return for last 3 years.
Normally the age limit for applicant is 50 years but it can be extent up to 55 years in
certain special cases.

LOAN/ CREDIT LIMIT: The loan limit is up to 15 lakes.

Rs. 2 lakes in the case of repairs.
The margin would be 15% up to 2 lakes and 25% in the case of above 2 lakes
There should be no margin in fee cost in the case of plot replacement and tere should be
repayment in 3 installments after fully utilization of his contribution of loan in the case
of construction.

INTEREST RATE:FIXED RATE OF INTEREST:

Up to 5 years

10%

From 5 to 10 years

10.50%

Above 10 years

11%

FLEXIBLE RATE OF INTEREST:

Up to 5 years

9.50%

From 5 to 10 years

10%

Above 10 years

10.50%

TIME PERIOD OF THE LOAN:The time period for loan is maximum 15 years or date of retirement whichever is earlier,

DOCUMENTS REQUIRED FROM APPLICANT:Loan application form.

Photo of applicant and co applicant.
Copy of document of plot which is to be purchased or constructed.
Construction approval from office in the case of construction.
The cost estimation and approved map of building going to be constructed.
Salary statement in case of salaried applicant and income tax return of last 3 years in case
of non salaried applicant.
Domicile certificate of applicant.
Income statement and identity card of two gaunter etc.

EXECUTION OF DOCUMENTS AFTER SENCTION OF LOAN:Promissory note.

Loan contract.
Grantee deed of two grunters.
Mortgage letter of fixed assets
Advance cheque
Acknowledgment according to selected interest rate.
Prescribed document from bank advocate.
Other related documents.

EDUCATION LOAN:
This loan is for pursuing higher studies by their children.

ELIGIBILITY:Students who have got admission to some professional or other courses and whose prospects of
getting employment are very good.

LOAN/ CREDIT LIMIT:The maximum limit of loan is Rs. 5.00 lakes for studie in India 10.00 lakes for studies in abroad..
50 times of the gross monthly salary of the applicant or Rs. 10.00 lakes whichever is less ensuring
35% take home salary by the loanee after payment of installment of loan.

INTEREST RATE:The rate of interest on such loan is 12%.

TIME PERIOD:5 years after the borrower gets employment or one year after completion of course whichever is
earlier.

DOCUMENTS REQUIRED FROM APPLICANT:Attested copies of documents for proof of age/date of birth and proof of residential
address.
Passport size photo of the applicant, co-obligates and guarantors.
Copy of mark sheets/degree certificates of previous academic qualifications.
Income proof/latest income tax return of parents/co-obligates, guarantors. (if any)
Details of collateral security along with valuation certificate of Govt. approved valuer (if
any).
Details/statements of Bank accounts held by the student applicant/coobligate(s)/guarantors (if any) for the last six months.
Copy of Passport/Visa, cost of air fare (documentary detail) in case of studies abroad.

COMMERCIAL/WORKING CAPITAL MORTGAGE/CREDIT ON

PLEDGE
ELIGIBILITY:The eligible candidates who can apply for such loan are private firm, commercial, partnership
firm.

AMOUNT OF LOAN:The amount of loan that can apply by eligible candidates is maximum 25 lacks.

RATE OF INTEREST:-

The rate of interest which is charge by bank is 13%.

TIME PERIOD:The time period for loan is not fix but renewal of time period can held according to transaction
made in between the month of July to June of previous year.

Margin:On mortgage =40%

On pledge =25%
OTHER LOAN FACILITY
All the loan schemes we have been seen above shows that cooperative bank provided all kind of
loans at nominal rate of interest. The cooperative bank provides loan only to hits members hence
if a person wants loan from that bank he has to
The Ropar cooperative bank provides some other kind of loans also like
Loan for Self employment (@14%).
Loan for farm sector (@13%),
Loan for cooperative society/marketing society (@14%),
Computer loan (@8%),
Loan for farm sector (@13%)
Loan for non farm sector (@14%)
Krishak mitra cooperative credit (@7%)
Cooperative society/marketing society credit limit (@ 14%)
National saving certificate/ kisaan vikas patra (@ 12%)
National saving certificate/ kisaan vikas patra (for staff)(@8%)
Loan to bank staff for computer (@12%)
Agriculture loan (up to 50000/-) (@12%)
Non agriculture loan (up to 50000/-) (@13%) etc.

THE REPORT OF PROGRESS IN LOAN AMOUNT AND

FINANCIAL SUPPORT TO WOMEN SELF EMPLOYMENT

YEAR

GROUP

MEMBERS

AMOUNT
(lacks)

2003-04

18

189

2.80

2004-05

79

796

50.21

2005-06

155

1598

29.97

2006-07

161

1757

52.87

2007-08

238

2585

85.45

2008-09

320

3427

158.76

2009-10

184

1940

130.39

2010-11

212

2215

157

2011-12

185

1950

166.50

2012-13

191

1992

178.25

The Bank has variety of credit schemes specially suitable to individuals based on the Needs and
personal repayment capacity. The chart shows the increments in loan amount given by bank to
women self employment groups. The amount of loan increases and the no. of groups also increase
due to fait and reasonable rate of interest on loan provided by bank.

The recovery following table shows the total amount of loan outstanding:
YEAR

LOAN OUTSTANDING
(amount in thousands)

2000-01

6335.15

2001-02

6309.14

2002-03

8192.45

2003-04

9275.02

2004-05

11915.09

2005-06

14533.26

2006-07

14816.09

2007-08

19757.01

2008-09

20563.05

2009-10

23861.38

The chart shows the total amount of loan which will have recovere by bank,the increament shows
the that trend to take loan from cooperative bank increses ,it was a little bit constant in year 2005
and 2006 but then increase which shows the interest of individual in taking loan from cooperative
bank.

The loan amount provided by bank increase as compare to last 4 years, the interest of different
sectors in taking loan from cooperative bank can be seen in following table:

Sectors

2011-12

2012-13

(amount in lakes)

(amount in lakes)

Agriculture

162.21

470.98

Non agriculture

691.36

809.77

other

814.28

1029.50

The chart shows the increment in the loans provided by banks and it is clear that the bank not only
focus on agriculture loan but on other loan also which includes loans for Self employment,
commercial/working capital mortgage etc. it shows cooperative bank is not bounded in providing
loan in agriculture area only and can be a good source of fulfill short and medium term
requirement of finance in rural area.

RECOVERY OF LOAN:
The banks have introduced various deposits schemes which induce the common man to save more
money. The Urban Co-op. Banks accept deposits for the purpose of lending. It is the primary
duty and function of the Urban Co-op. Banks to safeguard the interest of depositors. Whenever
deposits are accepted, the bank agrees and undertakes to repay the amount of deposits with
interest to the depositor on maturity. The ownership of the deposit amount vests with the
customer and the custody of the deposit amount are with the Banker. So whenever Advances and
Loans are sanctioned to shareholders / members of the Bank, the Banker has to take extreme care
to see that the Borrower repays the amount of loan with interest so as to enable the Banker to
repay the amount of deposit with interest to the customer.
Points which are to be taken care by bank while giving loan:
This is necessary to ensure that every borrower has a proper repaying capacity for repayment of
the amount of loans and advances that would be sanctioned. Securities are also taken to ensure
that in case the borrower fails to repay the amount of loan, the securities can be attached and sold
out and the debts can be liquidated.
Even with this background, though there is a detailed scrutiny of loan application, it is observed
that there are very few cases, where the judgment of the bankers fails. In such 'Fail Cases' the
borrowers are not ready and willing to repay the amount of loan, the securities can be attached
and sold out and the debts can be liquidated.
Following are some points which bank takes care while lending money:

Date of sanction of loan.

Amount of loan sanctioned.

Rate of Interest that would be charged.

Last date of repayment of loan.

Period for which loan is granted.

Details regarding securities offered.

Normal measures to be adopted by bank officials for

recovery of dues
Whenever, a borrower commits breach of agreement in respect of repayment of schedule of the
amount of loans with interest etc., we safely say that there are 'OVERDUES ' in the Loan
Account. Once the Loan A/c is an overdue A/c i.e. the borrower has committed default in
repayment of loan amount as per the dates specified in the Agreement, then the Banker has
necessarily to adopt measures which will result into recovery of overdue amounts.
Whenever the borrower commits default in repayment of loan amount, immediately the bank
should serve ' Preliminary Notices' on the principal borrower and the sureties advising them to
repay the amount of overdue with interest etc. Such Preliminary Notices should invariably
mention information which is of factual nature relating to
(i) Amount of loan sanctioned.
(ii) Date of sanction of loan.
(iii)

Names of the sureties.

(iv)Amount of the loan sanctioned.

(v) Amount of over dues with interest etc. on a particular date.
Addition to the above it must also be communicated the bank shall proceed to take further action
against the principal borrower and sureties in case of failure to repay the amount of loan/over
dues. It has been often said 'A' stitch in time saves nine'. Thus, the banker must be vigilant, right
from the disbursement of loan amount till the recovery of the entire loan amount. There should be
effective supervision over the amount of loan sanctioned.
Recovery through salary / wages
After issue of such preliminary notices, there may be a positive response from the principal
borrower and he may repay the amount of defaulted loan installment, or the principal borrower
and the surety may approach the authorities of the bank and may explain their genuine difficulties
regarding repayment of loan amount or there may offer to repay the dues partially. There may be
cases where there is no response from the borrower / sureties.
With this background, the bank should precede further to devise such steps which will result in
recovery of dues. Under various State Cooperative Acts (e.g. Section 49 of M.C.S. Act 1960) it
has been provided that if a member of a society. /Bank authorizes his Employer to make deduction

from his salary/wages, in order to satisfy the claims of the society/Bank, and then on receipt of
requisition letter from the concerned Bank, the Employer shall proceed to make deduction from
the salary/wages from the concerned employee/member to meet the claims of the Bank. The
Employer must remit the amount so deducted immediately to the Bank concerned.
Non-compliance of these provisions under the State Cooperative Act shall be constructed as
'offence' and further Civil and Criminal action can be instituted against such Erring Employer.
In addition to the above, there are provisions under the Indian Payment of Wages Act 1936 (vide
Section 7(2) and Section 7(2) (j) which stipulates that the Employer shall make deduction from
the salary/wages of an Employee to satisfy the claims of the Cooperative Society / Banks.
Settlement of Disputes
Based on the noting of the Management, the Board of Directors may pass a Resolution
authorizing the Manager/or such other officer to file "Dispute Application in the Co-op. Court
against the defaulting principal borrower and his sureties. Section 91 of the MCS Act empowers
the co-operative courts to decide on Disputes and Section 95 further empowers the court to
direct attachment of property before announcement of the award which is called Attachment
before award or order and interlocutory order if it is satisfied that the parties to the dispute are
likely to remove/ dispose of whole or part of his property. Section 95 similarly empowers the
Registrar / Officer authorized by him to take the above measures in case of disputes referred to
him.
The prayer clause normally consists of following important points

The opponents may be held responsible to repay the entire amount of loan with interest.

If the opponents fail to pay the amount of loan, the disputant may be entitled to attach the
movable and immovable property of the opponents.

The disputant may be entitled to sell the attached property and recover the amount due
from the opponents.

Any other orders to meet the ends of justice.

PROCEDURE TO BE FOLLOWED:
Under Section 13(2) of the Act, a 60 days notice has to be served by the bank on the borrower
with a request to discharge the loan liability The notice must contain details of:

amount payable by the borrower;

Security interest intended to be enforced.

On receipt of notice, if the borrower makes a representation or raises an

objection, the secured creditor must consider such representation or objection.
If the secured creditor comes to the conclusion that the said representation

or objection is not acceptable or tenable, he must communicate the reasons for non-acceptance
of representation or objection within one week of receipt of the above.
Modes of recovery available (s.13(4))

If borrower fails to discharge the liability, secured creditor has the following options

Take possession of secured asset

Take over the management of the business of the borrower including

The right to transfer by way of lease, sale, assignment, etc.

The said rights must be exercised only where substantial part of business of
borrower is held as security for the debt.

Appoint a manager to manage the security asset taken over.

Issue notice to persons who acquired the secured asset from the borrower or
from whom money is due.

The CMM( chief metropolitan magistrate)or DM

(District magistrate) is empowered even to use force necessary for taking steps towards securing
compliance

RIGHT TO APPEAL:
Under the Act, the borrower can appeal before DRT by paying the fee within 45 days (S.17). The
appeal can be entertained only when the borrower deposits fifty per cent of the amounts claimed
in the notice.
DRT can consider the legality of action taken by the bank. If it finds it wrongful, it can restore the
business or management to the borrower. If, however, the DRT finds that the action taken by the
bank is as per the provisions of the law, then the bank/ secured creditor can proceed to take action
under Section 13(4) of the Act. The application has to be disposed of by the DRT within 60 days
and if its pending for four months, either the bank or the borrower can appeal to the Appellate
Tribunal for expeditious Tribunal.
An application for recovery of balance amount, if any, by secured creditor can be presented to the
debt recovery tribunal by the authorized officer (AO)of the bank or can be sent by registered post
addressed to the registrar of debt recovery tribunal.

Appeal to the appellate tribunal under Section 18:

Persons aggrieved by the order of DRT to prefer an application before the appellate tribunal
within 30 days.

The appellate tribunal is vested with power to reduce the deposit amount to not less than 25
percent.

lowing table shows the comparative analysis of recovered and overdue loan of bank:
year

Total claim(in

2008-09
2009-10

lakes)
22540.20
17427.05

recovery

(in

lakes)
19179.32
9884.09

Recovery in
percentage
85.08
56.72

The table shows that recovery of loan reduces as compare to last year. Hence the bank needs to
try to recover the very old and overdue loans. For the recovery of over dues bank formed a flying
squad which starts working from 8-03-2010.

DEBT FORGIVEN BY BANK

Agriculture remains the predominant sector in terms of employment and livelihood with more
than half of Indias workforce engaged in it as the principal occupation. However, Agriculture
remains the predominant sector in terms of employment and livelihood with more than half of
Indias workforce engaged in it as the principal occupation In addition, the rural poverty is getting
concentrated in agricultural labor and artisanal households which account for over 40% of the
rural poor. Recent trends that have raised concern regarding food security, farmers income, and
poverty include :
(i) widening economic disparities between irrigated and rain-fed areas,
(ii) increased vulnerability to world commodity price volatility,

(iii)

inefficient use of available technology and inputs with low crop productivity,

(iv) degradation of natural resource base,

(v) rapid decline in groundwater, with particularly adverse impact on small and marginal
farmers, and
(vi)Increased non-agricultural demand for land and water. Aggravation in social distress as a
cumulative impact of the above reflected in an upsurge in farmers suicides.
With taken above factors in consideration Jodhpur central cooperative bank and 207 rural services
cooperative committees (work under this bank) forgone debt amount of some members which can
be seen as follows:
Types of members
marginal farmers
Small farmers
Others

No. of members
1484
3543
19805

Amount (in lakes)

185.77
415.79
2552.51

From the above claim an amount of RS. 610.56 lakes received from marginal and small farmers
and RS. 1922.52 lakes from others have been received on 6-04-2010.

Chapter 2
RESEARCH METHEDOLOGY

RESEARCH METHEDOLOGY
TITLE OF STUDY: Title of study is loans and credit facility of different bank
The entire banks generally give loan for short and medium term requirement in both rural and
urban sectors.

DURATION OF TRAINING:Duration of project is 45 days from 19th June to 4th august. Though the time available for the study
is too less but efforts to the fullest capacity have been put into this result for efficient and effective
analysis of the data.

FORMAT OF PROJECT REPORT:The report is exploratory and descriptive in nature.

This report is going to describe various loans provided by different banks hence it is a descriptive
in nature but it suggests some important points to improve the services of the bank so it is
exploratory in nature also.

SOURCE OF PRIMARY AND SECONDRY DATA

For the purpose of project data is very much required which works as a food for process which
will ultimately give output in the form of information. So before mentioning the source of data for
the project I would like to mention that what type of data I have collected for the purpose of
project and what it is exactly.

PRIMARY DATA:Primary data is basically the live data which I collected on field while talking with the Employees.
In some cases I got no response from their side and then on the basis of my previous Experiences
I filled those fields.

SOURCE:
Main source for the primary data for the project was my face-to-face conversation which I got by
the employees or sometimes filled myself on the basis of discussion with the employees.

SECONDRY DATA:Secondary data is already published data. It is the data which is funded or collected by someone
else before and presently used by further research work. Secondary data for the base of the project
I collected from annual report of bank, bank pamphlets and internet etc.

SCOPE OF THE STUDY:Each and every project study along with its certain objectives also has scope for future. And this
scope in future gives to new researches a new need to research a new project with a new scope.
Scope of the study not only consist one or two future business plan but sometime it also gives idea
about a new business which becomes much more profitable for the researches then the older one.

The scope of this research is as follows:

1. Research study could give an idea of network expansion for capturing more market and
customer with better services and lower cost without compromising with quality.
2. In future customer requirement could add with the product and services for getting the edge
over competitors.
3. Different parameters could be used for the purpose of new products with extra benefits which
are required by the customers.
4. Factors which are responsible for the performance of the bank can also be used for the
modification of the strategy and product for being more profitable.

CHAPTER-3
Data Analysis and Interpretation

1.Different types of loan taken by customers from PSCB

TABLE-7

Loan type

respondents

House loan

10

20%

Personal loan

20

40%

Consumer loan

10

16%

Educational loan

10%

Vehicle loan

10%

InterpretationFrom the total number of respondent 20% people have taken house loan bz the interest rate is
reasonable than the other banks.40% people have taken personal loan people to fulfill their basic
needs .16% of people have taken consumer loan to buy consumer durables such as tv,freeze,AC
.only 4% of people have taken vehicle loan. Most of people have taken personal loan than other
types of loans

2 .Amount of loan
TABLE-8

Loan amount

respondent

Less than 2o,ooo

10%

20,000-50,000

12

24%

50,000-1lakh

10%

More than 1 lac

28

56%

InterpretationFrom the total no of people 5 people have taken loan less than 20000 ,they said that they require
loan to fulfill their short term financial needs in emergency.12 people have taken loan between
amounts 20000-50000 bz they to fulfill their needs related to luxury thing such as TV, freeze.
Mostly people have taken loan more than1 lac no of respondent is 28 which is more than other
conditions, most of people in this category have taken education loans and vehicle loans. Only 5
people have taken loan from the amount 50000-1 lakh, respondent in this category have taken 2
wheeler vehicle loan

3. Time period of loan

TABLE-9

Time period

No. of
%
respondent

Less than 1 year

19

38%

1 to 3 year

16

32%

More than 3 years

15

30%

InterpretationFrom the total no of respondent 30% people have taken loan for the time period more than 3 years
to fulfill their long term funds requirements, most of people among them have taken house loan
,educational loan.32%people have taken loan from the time period from 1 year to 3 year i. e
medium term loan . 38% people have taken loan less than 1 year, they said that they require it to
fulfill their short fund requirements.

4.Interest rate paid by customer

TABLE-10

Rate of interest paid

No. of
respondent

Less than 9

11

22%

9%-12%

20

40%

More than 12%

19

38%

InterpretationInterest rate is different acc to the the type of loans. 20 people are paying interest rate 9%-12% no
of respondent are high in this case b/z they have taken loan from 50000-1 la c and20000-50000
and 22% people are paying interest less than 9 they have taken loan 1 lace 5 lace. Acc to the
different amount of loan different interest rate will be charged. In some cases, if the amount of
loan is big then the interest rate is less so that the applicant can repay back the loan amount.

5. Different number of times loan taken by customer

TABLE-11

No of times loan taken

No of respondent

Only once

14

28%

1 -3 times

24

52%

More than 3 times

12

24%

Interpretation28%people have taken loan only once b/z they have taken long term loan i.e. more than 3 years
and acc to rule they have to payback that loan first than they can take another loan.52% people
have taken loan 1 to 3 times b/z they have taken loan for short term fund requirements such as t v,
freeze, ac, vehicle .24%people have taken loan more than three times b/z they have taken loan less
than 200000 and they can easily repay back it and can apply for another loan easily

6. Reason behind preference to take loan

TABLE-12

Reason for taking loan

No of respondent

Reasonable interest rate

15

30%

More schemes

20

40%

Easy payments

10

20%

Any other

10%

Interpretation20% people said that the bank provide a easy repayment for loans thats why they have prefer this
bank than other banks .10%people have other reasons for their preference such as Good service
delivery by employees. 30% respondent said that the interest rate is reasonable than other banks
and rate of interest is also different acc to the amount of loan taken.40% said that this bank offers
different types of schemes under different type of loans

7.Time taken by bank in document processing

TABLE-13

Average time

No of
respondent

Less than 5 days

32

64%

5-10 days

14

28%

More than 10 days

8%

InterpretationAbove table reveal that 64% of respondent experienced that bank have taken less than 5 days in
documentation processing if all required documents are properly submitted eg pan card, salary
slips, documents related to security etc. But 28% said it takes 5-10 days in document processing
b/z in such cases applicant

have not proper documents to take loan such as pan card, payment

slips of salary that why bank have delayed in processing the service. Only 5% people said that it
takes more than 14 days to process the loan .this category of respondent also have some problems
such no permanent address in that area, unproved documents related to security.

8. Time taken by bank to process loan

TABLE-14

Average time

No of respondent

Less than 7 days

30

60%

7-14 days

16

32%

More than 14 days

8%

Interpretation
Above table shows that 60% of respondent have received their amount of loan in less than 7
days .reason behind this is that they have submitted all required documents in proper way and at
right time. The other reason is that most of people have taken short term loans which takes less
time to process.32% people have get their loan amount in 7 to 14 days b/z most of them have
taken medium term loans more than 1 year and the amount of loan was also big i.e more than 1
lace . 8% of people have got their loan amount in the time period of more than 14 days. Reason
behind is that they have not properly fulfill the requirements related to documentation process

9. Customer

satisfaction towards loan services

TABLE-15

RESPONSE

No of respondent

yes

32

64%

No

16%

Cant say

10

20%

Interpretation
Above table reveal that 32 satisfied with the services of the bank b/z they have easy repayments
and also provide a reasonable interest rate than other banks and employees behavior towards
customer is good .only 8 people from the total number of respondent are not satisfied with the
loan services b/z they have faced many problems in their loan sanction .the reason behind this is
that they have not proper documents to take the loan. 20% of people have not responded about it.

10.Rank given by customer to bank technology

TABLE-16

RANK

No of respondent

good

28

56%

Average

20

40%

poor

4%

InterpretationFrom the total no of people 56% people have said that the this bank is working well than other
banks b/z it uses latest technology in their branches than other public banks. It has also given the
best performance award in 2012 by nabard.40% people said that this bank have average
performance b/z most of this bank branches outside the Chandigarh are not up to dated they are
still using manual based systems for their working which causes many problems in delivering
services. only 4% people experienced that the bank have poor performance b/z even bank is using
technology in most of its branches but the employees in these branches dont have proper
technical skills.

11.Experience of the customer towards customer services of the bank

TABLE-17

response

No of respondent

excellent

14

28%

Good

26

52%

Average

16%

poor

4%

Interpretation:
Above table reveal that from the total no of respondent28%people are properly satisfied with the
customer services of the bank b/z acc. to them they are treated very well at this bank and they
said that employees are very well behaved towards customers and they also give them required
information about the services of the bank .52% people bank experienced that this bank have
good customer services.20% are in favors that the bank have an average level of customer
services b/z in case of rural area branches there is a lack of interaction b/w the customer and bank
employees b/z of more burden of work .in rural areas most of branches are not CBS they to do
manual work thats why they not so much time to interact with customer. Only 4% people find the
services poor b/z they think that govt. banks dont interact well with their customer as the private
sector banks interact. They also said that there is no online help services for the customers by this
bank

12.Customer preference o take loan in future from PSCB

TABLE-18

response

No of
respondent

Yes

26

Sometimes

24

no

InterpretationAbove table shows that 52% of respondent will prefer PSCB to take loan in future b/z their
experience with this bank is good and they are properly satisfied with their services such as
reasonable interest rate, easy repayments and good customer services than other banks.48% of
respondent have said that in future ,if they require, they can also prefer other banks in order to
have a experience of services of other banks but their first preference will be PSCB. Only 2%
people dont want to take loan from again b/z they are not satisfied with the services .they said
that bank have taken more time in processing the loan .and if you have taken loan from any other
bank PSCB will not pass your loan.

13.Customer reference level to other towards PSCB

TABLE-19

reference

No of
respondent

always

26

52%

sometimes

20

40%

never

8%

InterpretationAbove table shows that 52% of total respondent have properly satisfied with the services of this
bank and they always refer this bank to othetrs especially people from rural areas b/z PSCB is
mainly devloped for the improvement of rural area.They provides different type of loans on
reasonable rate of interest which is easy for a comman person to pay.40% of people said that they
will some time refer it to others b/z other people have different banking requirments such as
online banking but in the case of PSCB its not available.8% of people dont want to refer this
banks to others acc to them all bank branches are not up to dated properly and there is also lack of
technological skills amoung the employees thats why their working is slow b/z of lack of
training.

Chapter 4
LIMITATIONS AND CONCLUSION

LIMITATIONS:

The rate of interest may vary according to market environment.

These figures are according to publish in annual report and according to employees of Jodhpur
central cooperative bank.

The report is according to my perception only and cant be taken as final decision.

This study only relates to one organization, so conclusions drawn may not be finding its utility
in all the other banks.

Even the employees of the bank hesitated to give the complete & accurate data.

RECOMMENDATION AND SUGGESTIONS:

1. More mass awareness campaigns should be organized in order to enhance market share of
bank. So Bank should concentrate on its advertisement itself.
2. Bank should refocus on its interest rate as responded by people. Periodic review of the interest
rate should be done.
3. There should be computerized system in the bank as it will reduce the time wastage of manual
work and will lead to the better performance of the bank.
4. Training of the employees should be there to meet the needs of the time.
5. Proper posting of the staff should be done.
6. Customers satisfaction must be the top priority of the bank.
7. Maximum practical exposure should be provided to the job trainees so that they may handle
the various enquiries of customer effectively.
8. Communication gap within the bank and with the head-office should be reduced.

CONCLUSION
The study concludes that Cooperative Bank, which was established for mainly for the
service of rural sector, still is not on the line to its goal. It is lacking at various elements,
particularly at the branch levels, which reveals the edge of other public and private sector banks
over the Cooperative bank, the lines at which the bank is lacking behind. Indiscipline and lack of
commitment in these banks make peoples trust in the cooperative sector a casualty.
Some of the co-operative banks are quite forward looking and have developed sufficient
core competencies to challenge state and private sector banks. But there is shortage of staff in this
bank and the traditional manual banking which is affecting the business and customer services.
People are still unaware of the services provided by the Cooperative Banks due to lack of
advertisement.
There is a need to analyze and pick up early warning signals. A change is needed today in
the cooperative banks which is built on confidence in human capital - the most important of all
resources - in commitment, creativity and innovation brought about by proactive management,
membership and employees. The ability to capture knowledge and wisdom gives cooperative
banks their competitive advantage. A prerequisite is that participants from all parts of a
cooperative organization know and understand its purpose, core values and visions.
In this way, by keeping in mind the certain shortcomings, appropriate measures to
overcome them should be adopted. So that the real purpose of the Cooperative bank must be
realized with a competitive advantage and the gap between the customer perception of the
Cooperative Bank and the other private and public sector bank, can be reduced.

BIBLIOGRAPHY
Articals:

Annual report of banks.

Documents provided by banks.

Various circulars issue by the banks.

Web Sites:

Ccb.jodhpur@gmail.com

www.wikipedia.com

www.docstoc.com

www.cooperativebank.co.uk

www.cab.org.in> knowledge bank

www.citeman.com

www.ehow.com

www.nabard.com

www.rbi.org.in

ANNEXURE

ANNEXURE
Name .
1.

Have you taken any loan from bank?

a. Yes

2.

b. No
2. Which type of loan have you taken from Bank?

a.
b.
c.
d.
e.
3.

House loan
Personal loan
Consumer loan
Educational loan
Vehicle loan
What is your Amount of loan?

a. Less than 20,000

b. 20,000-50,000
c. 50,000-1lakh
d. More than 1 lac
4. What is the time period of loan?
a. Less than 1 year
b. 1 to 3 year
c. More than 3 years
5. How much Interest rate you pay on loan?
a. Less than 9
b. 9%-12%
c. More than 12%
6. How many numbers of times you take the loan?
a. Only once
b. 1 -3 times
c. More than 3 times
d. good
e. Average
f. poor
7. What is the Reason behind preference to take loan?
a. Reasonable interest rate

b. More schemes

d.

d. Any other

Easy payments

8. Time taken by bank in document processing

a. Less than 5 days

b. 5-10 days
c. More than 10 days
9. How much time the banks take to process the loan?
a. Less than 7 days
b. 7-14 days
c. More than 14 days
10. Are you satisfied from the services provided by Banks?
a. yes
b. No
c. Cant say
11. What rank will you like to give to bank technology?
a. good
b. Average
c. poor
12. What you experience about services of Banks?
a.
b.
c.
d.

excellent
Good
Average
poor

13. Will you like to take loan again from the banks?
a. Yes
b. Sometimes
c. No
14. Customer reference level to other towards PSCB
a.
b.
c.
d.

Rreference
always
sometimes
never