CHAPTER-1 INTRODUCTION

1.1 Introduction about the sector:-

BANKING
Banking, the business of providing financial services to consumers and
business. The basic services a bank provides are checking accounts, savings
accounts and time deposits that can be used to save money for future use
loans that consumers and businesses can use to purchase goods and services
and basic cash management services such as check cashing and foreign
currency e!change.
T"#$%
Four types of banks speciali&e in offering these basic banking services'
() *ommercial banks,
+) %avings and loan associations,
,) %avings banks, and
-) *redit unions.
A broader definition of a bank is any financial institution that receives, collects,
Transfers, pays, e!changes, lends, invests, or safeguards money for its
customers. This broader definition includes many other financial institutions that
are not usually thought of as banks. These institutions include finance
companies, investment companies, investment banks, insurance companies,
pension funds, security brokers and dealers, mortgage companies, and real
estate investment trusts.
1

#./#0%$
Banking services serve t1o primary purposes.
2irst, by supplying customers 1ith the basic mediums3of3e!change 4cash,
checking accounts, and credit cards),
%econd, by accepting money deposits from savers and then lending the money
to borro1ers, banks encourage the flo1 of money to productive use and
investments. This in turn allo1s the economy to gro1. $nabling the flo1 of
money from savers to investors is called financial intermediation, and it is
e!tremely important to a free market economy.
1.2 Industr Pro!i"e:-
a. Ori#in and De$e"o%&ent o! industr:-
Banking in India
Banking in India originated in the first decade of (5th century. The General
Bank of India came into e!istence in (657. This 1as follo1ed by Bank of
8industan. Both these banks are no1 defunct. The oldest bank in e!istence in
India is the %tate Bank of India being established as 9The Bank of Bengal9 in
*alcutta in :une (5;7. A couple of decades later, foreign banks like *redit
<yonnais started their *alcutta operations in the (5=;s. At that point of time,
*alcutta 1as the most active trading port, mainly due to the trade of the British
$mpire, and due to 1hich banking activity took roots there and prospered. The
first fully Indian o1ned bank 1as the Allahabad Bank, 1hich 1as established in
(57=. By the (>;;s, the market e!panded 1ith the establishment of banks such
as #un?ab National Bank, in (5>= in <ahore and Bank of India, in (>;7, in
@umbai 3 both of 1hich 1ere founded under private o1nership. The /eserve
2

Bank of India formally took on the responsibility of regulating
the Indian banking sector from (>,=. After IndiaAs independence in (>-6, the
/eserve Bank 1as nationali&ed and given broader po1ers. The banking in India
1as controlled and dominated by the presidency banks, namely, the Bank of
Bombay, the Bank of Bengal, and the Bank of @adras 3 1hich later on merged
to form the Imperial Bank of India, and Imperial Bank of India, upon IndiaAs
independence, 1as renamed the %tate Bank of India. The presidency banks
1ere like the central banks and discharged most of the functions of central
banks. They 1ere established under charters from the British $ast India
*ompany. The e!change banks, mostly o1ned by the $uropeans, concentrated
on financing of foreign trade. Indian ?oint stock banks 1ere generally under
capitali&ed and lacked the e!perience and maturity to compete 1ith the
presidency banks, and the e!change banks. There 1as potential for many ne1
banks as the economy 1as gro1ing. .nder these circumstances, many Indians
came for1ard to set up banks, and many banks 1ere set up at that time, and a
number of them set up around that time continued to survive and prosper even
no1 like Bank of India and *orporation Bank, Indian Bank, Bank of Baroda, and
*anara Bank.
3

b. 'ro(th and Present )tatus o! the Industr:-
By the (>7;s, the Indian banking industry has become an important tool to
facilitate the development of the Indian economy. At the same time, it has
emerged as a large employer, and a debate has ensued about the possibility to
nationali&e the banking industry. Indira Gandhi, the3then #rime @inister of India
e!pressed the intention of the G0I in the annual conference of the All India
*ongress @eeting in a paper entitled 9%tray thoughts on Bank Nationalisation.9
The paper 1as received 1ith positive enthusiasm. Thereafter, her move 1as
s1ift and sudden, and the G0I issued an ordinance and nationalised the (-
largest commercial banks 1ith effect from the midnight of :uly (>, (>7>.
:ayaprakash Narayan, a national leader of India, described the step as a
9masterstroke of political sagacity.9 Bithin t1o 1eeks of the issue of the
ordinance, the #arliament passed the Banking *ompanies 4AcCuition and
Transfer of .ndertaking) Bill, and it received the presidential approval on >th
August, (>7>. A second dose of nationalisation of 7 more commercial banks
follo1ed in (>5;. The stated reason for the nationalisation 1as to give the
government more control of credit delivery. Bith the second dose of
nationalisation, the G0I controlled around >(D of the banking business of
India. After this, until the (>>;s, the nationalised banks gre1 at a pace of
around -D, closer to the average gro1th rate of the Indian economy.
4

c. *uture o! the Industr:-
A healthy banking system is essential for any economy striving to achieve good
gro1th and yet remain stable in an increasingly global business environment.
The Indian banking system, 1ith one of the largest banking net1orks in the
1orld, has 1itnessed a series of reforms over the past fe1 years like the
deregulation of interest rates, dilution of the government stake in public sector
banks 4#%Bs), and the increased participation of private sector banks. The
gro1th of the retail financial services sector has been a key development on the
market front. Indian banks 4both public and private) have not only been keen to
tap the domestic market but also to compete in the global market place. Ne1
foreign banks have been eCually keen to gain a foothold in the Indian market.
The momentum in credit gro1th has been maintained during +;;=3;7 due to
t1o factors' The corporate sector has stepped up its demand for credit to fund
its e!pansion plans there has also been a gro1th in retail banking. 8o1ever,
even as the opportunities increase, there are some issues and challenges that
Indian banks 1ill have to contend 1ith if they are to emerge successful in the
medium to long term. This report discusses these issues and challenges 33 both
intrinsic and e!ternal, such as
Conso"idation
*onsolidation, 1hich has been on the counter over the last year or so, is likely
to gather momentum in the coming years. #ost April +;;>, 1hen the restrictions
on operations of foreign banks 1ill go, the banking landscape is e!pected to
change dramatically. 2oreign banks, 1hich currently account for =D of total
deposits and 5D of total advances, are devising ne1 business models to
5

capture the Indian market. Their full3fledged entry is e!pected to transform the
business of banking in many 1ays, 1hich 1ould be reflected in terms of greater
breadth of products, depth in delivery channels and efficiency in operations.
Thus Indian banks have less than three years to consolidate their position.
Eespite the stiff resistance from certain segments, consolidation holds the key
to future gro1th. This vie1 is underpinned by the follo1ing'
F 01ing to greater scale and si&e, consolidation can help save costs and
improve operational efficiency.
F Banks 1ill also have to e!plore different avenues for raising capital to meet
norms under Basel3II
F 01ing to the diversified operations and credit profiles of merging banks,
consolidation is likely to serve as a risk3mitigation e!ercise as much as a gro1th
engine.
Though there is no confirmation yet, speculative signals arising from the market
point to the prospect of consolidation involving banks such as .nion Bank of
India, Bank of India, Bank of Baroda, Eena Bank, %tate Bank of #atiala, and
#un?ab and %ind Bank. 2urther, the case for merger bet1een stronger banks
has also gained ground G a clear deviation from the past 1hen only 1eak
banks 1ere thrust on stronger banks. There is a case being made for mergers
bet1een banks 1ith a distinct geographical presence coming together to
leverage their respective strengths.
6

CHAPTER-2 PRO*I+E O* THE OR'ANI,ATION
2.1 Ori#in o! the Or#ani-ation:-
Dena .an/ 1as !ounded on 20th 1a2 1345 by the family of De$/aran
Nan6ee under the name De$/aran Nan6ee .an/in# Co&%an +td.
It became a #ublic <td. *ompany in Eecember (>,> and later the name 1as
changed to Dena .an/ +td.
In :uly (>7> Dena .an/ +td. along 1ith (, other ma?or banks 1as nationali&ed
and is no1 a #ublic %ector Bank constituted under the Banking *ompanies
4AcCuisition H Transfer of .ndertakings) Act, (>6;. .nder the provisions of the
Banking /egulations Act (>->, in addition to the business of banking, the Bank
can undertake other business as specified in %ection 7 of the Banking
/egulations Act, (>->.
7

1i"estones
0ne among si! #ublic %ector Banks selected by the Borld Bank for
sanctioning a loan of /s.6+., crores for augmentation of Tier3II
*apital under 2inancial %ector Eevelopmental pro?ect in the year
(>>=.
0ne among the fe1 Banks to receive the Borld Bank loan for
technological upgradation and training.
<aunched a Bond Issue of /s.>+.(, crores in November (>>7.
@aiden #ublic Issue of /s.(5; *rores in November (>>7.
Introduced Tele banking facility of selected metropolitan centers.
Dena .an/ has been the !irst .an/ to introduce:
@inor %avings %cheme.
*redit card in rural India kno1n as 9E$NA K/I%8I %AK8 #AT/A9
4EK%#).
Erive3in AT@ counter of :uhu, @umbai.
%mart card at selected branches in @umbai.
*ustomer rating system for rating the Bank %ervices.
8

2.2 'ro(th and De$e"o%&ent o! the Or#ani-ation:-
To evolve and position the bank as a 1orld class, progressive, cost3effective
and customer friendly institution providing comprehensive financial and related
services' integrating frontiers of technology and serving various segment of
society especially the 1eaker section of the society' committed to e!cellence in
serving the public and also e!celling in the corporate values. *orporate
e!cellence emanate from good corporate governance e!ercised by adopting
standard of transparency, accountability, professionalism, social
responsiveness, and ethical business practices 1ith this in vie1, the has been
making efforts for adopting the best practices. The bank commitment to1ards
corporate governance is to besto1 greater transparency and openness in the
management and to ensure best performance by staff at all the levels to
ma!imi&e the operational efficiency. Adopting the corporate governance as a
1ork ethos, the bank is committed to enhancing the stakeholders value.
2.4 Present )tatus o! Or#ani-ation:-
Eena bank might ?ust be another case of bank in trouble. Going by the recent
observations of the accounting department of the bank itself, the bankIs capital
adeCuacy ratio 4*A/) and profitability in serious doubts.
An analysis of the financial position of the bank for the year +;;+3;,, by the
accounts department of dena bank, copy of 1hich is in the possession of Indian
$!press, sho1ed that the bankIs *A/ stood at >.,,D 1ould go do1n as lo1 as
7.;+D as per the latest /BI guidelines. In simple terms, a lo1 *A/ implies that
the bank 1ould be trouble there is a run on it since it has overe!posed itself.
9

2urther, miscellaneous income, 1hich also accounted for the
increase in profits, 1ent up by /s. ,+.>+ crore to /s. 57.;7 crore for the year
+;;+3;,. 8o1ever, the revie1 sho1ed that /s. (>.=; crore of the
miscellaneous income 1as due to
transfer of old credits over five years lying 1ith the bank in suspense receiptsJ
unclaimed credits.
Another element of doubts in the results is the fact that the bank had reversed
an amount of /s. (5.-; crore to the balance sheet as disputed ta! liability. This
1as based on the e!pert opinions received by bank on ta! consultants and also
on a high court decision in the case of American $!press Bank. The above
three aspects are taken together accounted for /s. 5,.-; crore of profit.
2.7 *unctiona" De%art&ents o! the Or#ani-ation:-
Eena Bank deals 1ith the follo1ing functional departments'
1. Persona"
In the Dena .an/ Persona" .an/in# section, the organi&ation offer its services
1ith a personal touch by reaching out to all in various manners, one of them is
through offering a basket of our De%osit )che&es 1hich delivers a strong
return on all your personal savings and our +oan )che&es 1hich provides the
reCuired financial assistance in your times of need.
10

2. Cor%orate
Cor%orate *inance
Eena Bank provides financial assistance to the business entities engaged in
various activities of manufacturing, trading and service.
The 2inancial assistance is provided for setting up ne1 pro?ects, acCuiring
assets and also for meeting day to day 1orking capital reCuirements of the
constituents. These assistances are termed as <ong Term 2inance H %hort
Term 2inance respectively.

Ter& *inance
Term <oanJ2inance covers funds reCuired for acCuiring means of production
such as land, building and plant and machinery etc. These could be for setting
up ne1 pro?ects or e!panding the present activities. Term finance is generally
given for a longer period and is repayable in installments over the period 1ith or
1ithout @oratorium. The period and the installments are determined based on
the repayment capacity of the pro?ect J borro1er.

8or/in# Ca%ita" *inance
11

Borking *apital 2inance 4B*2) is e!tended for carrying out
normal tradingJ manufacturing activities.The 1orking capital finance is provided
for a relatively shorter period generally for a period of ( year and rene1ed on
yearly basis considering the performance of the borro1er.
The B*2 is considered only after pro?ect nearing completion and after full tie up
of term loan reCuirement.
The Borking *apital limits of the borro1er are assessed by adopting various
methods such as #ro?ected Turnover @ethod 4Nayak *ommittee
/ecommendation), #ermissible Bank 2inance @ethod, *ash Budget @ethod
etc. depending upon the aggregate 1orking capital limit reCuired J en?oyed from
the banking system, nature of activity, production cycle etc. Borking *apital
finance is in the form of pre3sale and post3sale limits. In Pre )a"e *inance the
advance is granted for acCuiring Inventory for production J processing or
Trading purpose 1hile the Post-)a"e *inance is e!tended against the
receivables. Eena Bank encourages #ost3sale finance in the form of
purchaseJdiscounting of bills etc.
Pre )a"es *inance :
(. *ash *redit 8ypothecation J #ledge against %tocks
+. #acking *redit 8ypothecation J #ledgeagainst %tocks
,. *lean #acking *redit <imit
-. Trust /eceipts
=. Borking *apital <oan 4Eemand J Term)
Post )a"es *inance :
(. Bills discounting J purchase K Inland J 2oreign
+. *ash *redit 8ypothecation against Book Eebts
12

,. Advances against $!port Incentives
-. #urchase of *heCuesJEemand Eraft
Non *und .ased Credit Assistance
The Business units also reCuire *redit Assistance for procurement of Goods,
1here the funds are not involved.%uch facilities are available against the
assured commitments J guarantee from the <ending Institutions.
Eena Bank is e!tending such Non 2und Based assistance to the eligible units in
the form of '
(. Issuance of Guarantee of various types like #erformance, 2inancial, Bid
Bond, Tender Eeposit J $arnest @oney etc. and
+. Issuance of <etter of *redit
,. Eeferred #ayment Guarantee

E9%ort Credit
Bank e!tends credit to $!porters at *ompetitive rates, at both #re3shipment
and #ost3shipment stages.
/ecently, Bank has introduced Gold *ard %cheme 1hich provides cheaper
e!port credits to the eligible borro1ers. %elected *lients engaged in e!ports are
also suitably re1arded in the form of $!port *redit Eenominated in 2oreign
*urrency vi&. #*2* 4#re %hipment) J /$BA 4#ost %hipment *redit).

)%eci!ic )che&es
The Bank has devised specific schemes for the follo1ing %ectors '
(. $ducational Institutions,
+. Builders H Eevelopers,
13

,. 8ospitals,
-. 8otels H /estaurants H
=. $ntertainment Industry.
3. NRI Des/
Bith over ((;; branches spread across the country, Dena .an/ is your ideal
banking partner if you are a Non3/esident Indian.
All transactions by N/Is in Indian Banks are governed by /BI /ules and
/egulations .
7. Priorit : )1E
These are the sectors 1here Dena .an/ has taken special care to ensure
instant sanctions and approvals for all applicants.
14

Priorit )ector )che&es:
(. Eena /ural Internet Kiosk %cheme
+. Eena %hakti %cheme
,. Eena <aghu .dyami *ard %cheme
-. Eena /ural Artisan *redit *ard %cheme
=. Eena %1aro&gar *redit *ard %cheme
;. Dena .i""%a:-

AutoPa
:ust give us your bill details, specify your bank account and 1e 1ill pay your bill
for you every month from that account. "ou can specify an upper limit and bills
above this limit 1ill be paid only on your specific instructions.
PhonePa
Get a %@% alert 1hen bill is due and issue payment instructions in accordance.
Internet
If you have access to the internet, you can vie1 and pay your bills online at
111.denabank.com. "ou 1ill receive ne1 bill notifications, due date reminders
and payment confirmations via email.
15

0. Dena AT1 )er$ices


Eena Bank al1ays stands in forefront in understanding it customerIs need.
Eena Bank Eebit cum AT@ *ard offers you an easy and convenient 1ay to do
all your transactions and that too 1ithin a fraction of seconds. #resently 1e
have more than ,5; AT@s all across India. Eena Eebit cum AT@ *ard is your
Bank Account in your pocket. Get your Eena Bank Eebit cum AT@ *ard today
and avail round the clock uninterrupted service. Belo1 is the simple procedure
to use this facility'
(. *ontact your Branch.
+. If you donIt have %aving or *urrent Account, first open your account.
,. Get the EebitJAT@ *ard Application form from the Branch, fill it up and
submit it to your Branch.
-. Bithin (; days, you 1ill receive your Eebit cum AT@ *ard along 1ith #IN
4#ersonal Identification Number) and Eebit cum AT@ *ard Booklet.
=. Activate your card immediately by 1ithdra1ing cash from from Eena
Bank AT@. After that you can use your card on #0% Terminal 4 @erchant
$stablishments)
16

<. Other )er$ices:-
Dena .an/, your trusted family bank, no1 is proud to offer a range of
sophisticated banking services by 1ay of Any3branch banking, @ulti *ity
cheCue, Eena AT@As, Eena *ards, online remittance, Internet Banking, @obile
banking, Tele banking, 0nline utility Bill #ayment, Lalue added %ervice through
AT@, Kiosks, loans and many more. Bith over ((;; branches across the
country, 1e are al1ays ready to serve our customers, and to offer them the
best of the technology3enabled banking products and services.
2.; Or#ani-ation )tructure and Or#ani-ation Chart:-
Or#ani-ation )tructure:-
8$AE 022I*$
/$GI0NA< 022I*$
B/AN*8$%
17

Executive cards of the organization. They are Executive Director,
General Manager (GM, De!uty General Managers (DGM, assistant
General Managers
("GM, #hief Managers (#M, Managers and other o$cers are in the
hierarchy at the head o$ce level functioning in various De!art%ents.
The regional Managers heads the &egional '$cers (ho are assisted
)y other do(n in the hierarchy. The Branch is headed )y "GM*#M*
+enior Managers*Managers de!ending u!on the size of the Branch
activities and rendering of satisfactory custo%er service. The )ank
has a very good syste% of delegating !o(er to the di,erent
functionaries in the hierarchy to facilitate s!eedy decision- %aking
!rocess even u! to the )ranch .evel.
Or#ani-ation Chart:-
As mentioned above, the organi&ation chart for a regional office is different from
organi&ation charts of a 8ead 0ffice as 1ell as Branches. The organi&ation
chart for the regional office 1here the training has taken place consists of
various designations and responsibilities. The various designations and the
persons responsible for that designationIs responsibilities are described as
under through the charts.
18


2.0 Product and )er$ice Pro!i"e o! the Or#ani-ation Co&%etitors:-
)tate .an/ O! India:-
The Bank is actively involved since (>6, in non3profit activity called *ommunity
%ervices Banking. All our branches and administrative offices throughout the
19
%.:. @a?umdar
4AG@)
A. *. Katial
4EG@)
Eevi %ingh *hannokar
4*hief @anager)
G.E. %inha
4%enior @anager)
8akeem Alam
4@anager)
Eeepika Kansal
40fficer)

country sponsor and participate in large number of 1elfare
activities and social causes. 0ur business is more than banking because 1e
touch the lives of people any1here in many 1ays. 0ur commitment to nation3
building is complete H comprehensive.
Pun6ab Nationa" .an/:-

$stablished in (5>= at <ahore, undivided India, #un?ab National Bank 4#NB)
has the distinction of being the first Indian bank to have been started solely 1ith
Indian capital.The bank 1as nationalised in :uly (>7> along 1ith (, other
banks. 2rom its modest beginning, the bank has gro1n in si&e and stature to
become a front3line banking institution in India at present.
A professionally managed bank 1ith a successful track record of over
((; years.
<argest branch net1ork in India 3 -=+= 0ffices including -,+ $!tension
*ounters spread throughout the country.
%trategic business area covers the large Indo3Gangetic belt and the
metropolitan centres.
/anked as +-5th biggest bank in the 1orld by Bankers Almanac ,
<ondon.
%trong correspondent banking relationships 1ith more than +(6
international banks of the 1orld.
@ore than =; reno1ned international banks maintain their /upee
Accounts 1ith #NB.
Bell eCuipped dealing rooms +; different foreign currency accounts are
maintained at ma?or centres all over the globe.
20

.an/ o! India:-
Bank of India 1as founded on 6th %eptember, (>;7 by a group of eminent
businessmen from @umbai. The Bank 1as under private o1nership and control
till :uly (>7> 1hen it 1as nationalised along 1ith (, other banks.
Beginning 1ith one office in @umbai, 1ith a paid3up capital of /s.=; lakh and
=; employees, the Bank has made a rapid gro1th over the years and
blossomed into a mighty institution 1ith a strong national presence and si&able
international operations. In business volume, the Bank occupies a premier
position among the nationalised banks.
The Bank has ,;+( branches in India spread over all statesJ union territories
including (,7 specialised branches. These branches are controlled through -5
Monal 0ffices . There are +5 branchesJ offices 4including three representative
offices) abroad.
The Bank came out 1ith its maiden public issue in (>>6 and follo1 on Nualified
Institutions #lacement in 2ebruary +;;5. . Total number of shareholders as on
,(J;,J+;;> is +,,==5>.
Bhile firmly adhering to a policy of prudence and caution, the Bank has been in
the forefront of introducing various innovative services and systems. Business
has been conducted 1ith the successful blend of traditional values and ethics
and the most modern infrastructure. The Bank has been the first among the
nationalised banks to establish a fully computerised branch and AT@ facility at
21

the @ahala!mi Branch at @umbai 1ay back in (>5>. The Bank
is also a 2ounder @ember of %BI2T in India. It pioneered the introduction of the
8ealth *ode %ystem in (>5+, for evaluatingJ rating its credit portfolio.
.an/ o! baroda:-
Bank of Baroda believes in the strength and integrity of relationships built 1ith
its customers like you. Bith over (;( years of e!perience in the banking
industry and a 1ide net1ork of over ,;;; branches all over the country, it has
al1ays been active in e!tending financial support and adapting to customerIs
changing needs.
Its Eeposit #roducts2 /etail <oans2 *redit *ards and Eebit *ards help the
customers 1ith their gro1ing financial needs. Bith facilities like <ockers it
ensure that customerIs valuables are safe 1ith it. Its country1ide branches offer
the customers convenience and ease in operating them account 1herever they
are. Its +-3hour AT@s enable them to 1ithdra1 cash, check their account
balance and reCuest for a ne1 cheCue book even after banking hours.
*aster techno"o# !or better ser$ice:-
Baroda Internet Banking J Baroda @obile Banking, its latest Internet and @obile
banking initiatives enable them to operate their account ?ust as they 1ould in
any of its branches. The customers can through the Internet check their
balance, reCuest for cheCuebooks and print account details. *hoose from its
22

various products and services, that the bank sincerely feel 1ill
put a smile on customers face an investment it 1ould like to bank on forever.
Di!!erent .an/ Para&eters:-
Name of the Bank <ast
#rice
@arket *ap.
4/s. *r.)
Net Interest
Income
Net #rofit Total Assts
%BI +,+77.-= (-,,5>+.-, 7,,655.-, >,(+(.+- >7-,-,+.;5
#NB >(6.-= +5,>+6.-, (>,,+7.(7 ,,;>;.55 +-7,>(5.7+
Bank 0f India ,56.=; +;,,=;.=- (7,,-6.,7 ,,;;6.,= ++=,=;(.6=
Bank 0f Baroda ->>.=; (5,(>=.(( (=,;>(.=5 +,++6.+; ++6,-;7.6,
Table No3 (

2.< 1ar/et Pro!i"e O! The Or#ani-ation:-
Eena Bank is an India3based company 1hich is engaged in treasury,
corporateJ1holesale banking, retail banking, and other banking operations. The
deposit schemes offered by the *ompany include #remium %avings Account
%cheme, #remium *urrent Account %cheme, Eena %avifi! Eeposit %cheme,
Eena 2reedom Eeposit %cheme, Eena %amruddhi Eeposit %cheme, Eena
2i!ed Eeposit %cheme, Eena %enior *iti&en %cheme, Eena /ecurring Eeposit
%cheme, Eena <oan <inked /ecurring Eeposit %cheme, Eena @inor %avings
%cheme, and Eena Alpa Bachat Khata. It offers services, such as any branch
banking, multi city cheCue, automated teller machines 4AT@s), Eena *ards,
online remittance, Internet banking, mobile banking, tele3banking, online utility
bill payment, and value3added service. Euring the fiscal year ended @arch ,(,
+;;>, the total number of branches comprised of ((5-.
23

Eena Bank. The *ompanyAs principal activity is to provide
commercial banking and other related services. The *ompany also provides in
merchant banking, asset management and other related services. The
companyAs banking products and services are provided through ((5- branches
offices, ,56 AT@s all over India. The *ompany operates only in India.
The *ompanyAs principal activity is to provide commercial banking and other
related services. The *ompany also provides in merchant banking, asset
management and other related services. The companyAs banking products and
services are provided through ((5- branches offices, ,56 AT@s all over India.
The *ompany operates only in India.
Eena Bank3 Key Eata'3
Ticker: 532121 Country: INDIA
Exchanges: BOM Major Industry: Financial
Sub Industry: Commercial Banks
2009 Sales
38,783,302,000
(Year n!in" #an 2010$%
Emloyees: &,883
Currency: In!ian '()ees Market Ca: 25,3*0,82&,720
!iscal "r Ends: Marc+ Shares #utstanding: 28,,823,200
Share Tye: Or!inar- Closely $eld Shares: 1*,,820,000
Table No3 +
24

CHAPTER-4 DI)CU))ION) ON TRAININ'
4.1 )tudent=s 8or/ Pro!i"e:- The summer training 1as held in the /egional
office of Eena Bank. The 1ork profile at the office 1as based on the loans and
advances given to small and median enterprises 4%@$). 8ence the 1hole 1ork
1as based on the #re3sanction formalities of credit given to a particular
enterprise. The responsibilities handled at the office 1ere started from reading
the companyIs pro?ect file 4sent by the company to 1hom the loan is to be
sanctioned) and continued till the loan is sanctioned by the responsible
authority according to the limit to be sanctioned. The loan is sanctioned by
keeping in mind the various instructions and conditions.
'enera" Instructions on +oans and Ad$ances:-
$fficient management of loans and advances portfolio has assumed
greater significance as it is the largest asset of the bank having direct
impact on its profitability. In the 1ake of the continued tightening of
norms of income recognition, asset classification and provisioning,
increased competition and emergence of ne1 types of risks in the
financial sector, it has become imperative that the credit functions are
strengthened. /BI has also been emphasi&ing banks to evolve suitable
guidelines for effective management and control of risk credits.
Bith a vie1 to ensure a healthy loan portfolio, our bank has taken
various steps to bring its policies and procedures in line 1ith the
changing scenario 1hich also aim at effective management H dispersal
of credit risks, strengthening of pre3sanction appraisals and post3
25

sanction monitoring systems. 2urther, bank has been
continuously endeavoring to strengthen the organi&ational set up by opening
%peciali&ed Branches to meet the credit reCuirements of specific types of
borro1ers, imparting intensive credit management training to staff and
deployment of the trained staff at branchesJoffices having potential for credit
gro1th. Bank has laid do1n detailed guidelines to be follo1ed 1hile
considering credit proposals, some of the important ones are listed as
under'
(. All loan facilities be considered after obtaining loan applications from the
borro1er and compilation of *onfidential /eport on him and guarantors.
The borro1ers should have the desired background, e!perience to run
their business successfully.
+. #ro?ect for 1hich the finance has been granted should be technically
feasible and economically viable i.e. it should be able to generate
enough surplus as to service the debts 1ithin a reasonable period of
time.
,. *ost of the pro?ect and means of financing the same should be properly
assessed and tied up. Both under3financing and over3financing can have
an adverse impact on the successful implementation of the pro?ect.
-. Borro1ers should be financially sound, en?oy good market reputation and
must have their stake in the business i.e. they should possess adeCuate
liCuid resources to contribute to the margin reCuirement.
=. <oan should be sanctioned by the competent sanctioning authority as
per the delegating loaning po1ers and should be disbursed only after
e!ecution of all the reCuired documents.
26

7. #ro?ects financed must be closely monitored during implementation
stage to avoid time and cost overruns and thereafter till the ad?ustments
of the bankIs loan.
Bank e!tends loan facilities by 1ay of fund based facilities andJor non
fund based facilities. The fund based facilities are usually allo1ed by 1ay
of term loans, cash credit, bills discountedJpurchased, demand loans,
overdrafts etc. 2urther, the bank also provides non fund facilities by 1ay
of issuance of guarantees, deferred payment guarantees, bills
acceptance facility under various schemes.
The foregoing list contains the usual types of facilities undertaken by the
bank. In case loan application is received for any particular facility 1hich
is not specifically mentioned above, the same should be for1ard to
controlling offices for considerations, provided the same can be
transacted 1ithin the overall policy of the bank.
The usual types of facilities sanctioned by the bank to the borro1ers, as
also other aspects like #ro?ect appraisal, #ost3sanction follo1 up,
@anagement of N#As, Eocumentation, and <imitation etc. are discussed
later. These are the briefly e!planations hereunder'
TER1 +OAN):- Term loans are sanctioned for acCuisition of
fi!ed assets like land, building, plant, machinery, office eCuipments,
furnitureJfi!ture etc. for purchase of transport vehicles and other vehicles,
for purchase of agriculture eCuipments, machinery and other movable
27

assets, under various schemes of agriculture advances
introduced from time to time for purchase of house, consumer durables,
under special schemes. The term loan 1ould be a loan, 1hich is not a
demand loan and is repayable in terms i.e. in installments irrespective of
period or security cover.
Term loans are normally granted for periods varying from ,36 years and
in the e!ceptional cases beyond 6 years. Term loans for infrastructure
pro?ects can be allo1ed even 1ith a longer repayment period.

CA)H CREDIT AD>ANCE):- *ash credit account is a dra1ing
account against credit granted by the bank and is operated in e!actly the
same 1ay as a current account on 1hich an overdraft has been
sanctioned. The various types of securities against 1hich the cash
credits are allo1ed are pledgeJhypothecation of goods or produce,
pledge of documents of title to goods, mortgage of immovable property,
book debts, trust securities etc. in cash credit accounts the borro1er is
allo1ed to dra1 on account 1ithin the prescribed limit, as and 1hen
reCuired.
PAC?IN' CREDIT:- #acking credit is an advance given to an
e!porter 1ho holds a code number assigned to him by the Eirectorate
General 0f 2oreign Trade 4EG2T), for financing the purchase,
processing, manufacturing or packing of goods prior to shipment, on the
basis of letter of credit opened in his favor on in favor of some other
person by an overseas buyer or a confirmed order for the e!port of
28

goods from India or any other evidence of an order for
e!port from India having been placed on the e!porter or some other
persons, unless lodgment of e!port orders or letter of credit 1ith the bank
has been 1aived.

+ETTER O* CREDIT:- <etter of credit is issued by the bank at
the reCuest of its customers on favour of a third party informing him that
the Bank undertakes to accept the bills dra1n on its customers upto the
amount stated in the <*, sub?ected to the fulfillment of the conditions
stipulated therein. Therefore, 1hen bank issues <*, it assumes
responsibility to pay its beneficiary on production of bills dra1n in
accordance 1ith terms and conditions of <*.
'UARANTEE):- Guarantees is a contract to perform the
promise or discharge the liability of third person in case of his default. In
the ordinary course of business, banks often issues guarantees on
behalf of its customers in favour of third parties. Bhen bank issues such
a guarantee, it assumes a responsibility to pay the beneficiary, in the
event of a default made by the customers.
NON PER*OR1IN' A))ET) @NPAsA:- N#As act as drag on
bankIs profitability and need urgent attention at all levels. The action
points and strategies for reducing N#As has to be t1o pronged 4i)
recoveryJ reduction in e!isting N#A accounts and 4ii) checking slippage
of fresh accounts from performing 4%tandards) to N#A category. The
29

action points may vary depending upon the area, nature of activity and
intention of borro1er etc.

4.2 Descri%tion o! +i$e E9%eriences:-
Training in *redit Eepartment 4%@$) of the bank is very much informative. I felt
glad 1hen first time I got a companyIs pro?ect file. @y senior handover it to me
to read it carefully and analy&e it. After reading the file, I started completing the
#re3sanctioned formalities of making a credit proposal for that company. The
proposal 1as to be made on the bankIs specific format. I handled my
responsibilities carefully and made the proposal as my kno1ledge and
perceptions according to the pro?ect file. I transferred the data to my senior. 8e
read the proposal and made necessary corrections in it. Then he again gave
me the proposal to come to kno1 about the mistakes. I analy&ed the proposal
made by my senior sincerely and 1rote do1n the doubts in a diary. I learnt a lot
from this first e!perience. After this I got about =37 proposals in my 1hole
training and learning period and completed the training 1ith a great e!pertise
and kno1ledge.

30

CHAPTER-7 )TUDB O* )E+ECTED RE)EACH PRO.+E1)
7.1 )tate&ent o! Research Prob"e&:-
E$NA Bank is po1ering its 1ay through a market that is still to unleash its true
potential, as barely t1o percent of the population has been penetrated so farO
It is not surprising that the bank is not in the mood to take its hands off the
throttle. At Eena Bank, our goal is to satisfy the customers in every 1ay
1hatever a customer 1ants. The goal is to help the customers in every step of
the 1ay in making their 1orld a better place to live in. Besides its 1ill is to
provide a high Cuality service to all of its customers, Eena Bank takes a stand
as a socially responsible enterprise respectful to its environment and respectful
of the important issues. Eena bank has been strongly committed not only to
environmental conservation programmes but also e!presses the increasingly
inseparable balance bet1een the economic concerns and the environmental
and social issues faced by a business. A bank must not gro1 at the e!pense of
mankind and manAs future but rather must serve mankind.
7.2 )tate&ent o! Research Ob6ecti$es:-
The pro?ect 1as done 1ith the ob?ective to study effective management of
<oans and Advances. As the <oans and Advances portfolio is the largest asset
of the bank having direct impact on its profitability. Bith a vie1 to ensure a
healthy loan portfolio, my study is concerned to ensure various steps to bring
the policies and procedures in line 1ith changing scenario 1hich also aim at
31

effective management and dispersal of credit risks, strengthening of pre3
sanction appraisals and post sanction monitoring system.
The ob?ective is to study the various types of facilities appraised by the bank to
the borro1er such as Term <oan, *ash *redit <imit, #acking *redit <imit, Bank
Guarantee etc. After this the ob?ective is to learn about the 1hole procedure
adopted by the bank to sanction a loan, such as Eocumentation, *redit /isk
@anagement, *IBI< /eport, @ortgages3 Immovable properties, #ricing of *redit
4Interest /ates) and *redit /ating %ystem etc.
7.4 Research Desi#n and 1ethodo"o#:-
The research process or methodology is the approach to the entire study K it is
the master plan. It is the blueprint for achieving your ob?ectives, one of 1hich is
the production of the dissertation.
The Process
(. 2ormulating a research problem
+. *onceptuali&ing a research design
,. *onstructing an instrument for data collection
-. %electing a sample
=. Briting a research proposal
7. *ollecting the data
6. #rocessing the data
5. Briting a research report.
32

This is the simple 1ay to perform the functions of research design and
methodology. But in the premises of the bank, no such research has been taken
place. The 1hole research has been done on the credit appraisal procedures
on the bankIs specific format.

7.7 Ana"sis o! Data:-
DENA .AN?2 )1E CE++2 RE'IONA+ O**ICE2 NE8 DE+HI
PROPO)A+ NO.: ROCNDRC)1EC12C2DD3 Date: 12.1D.2DD3
#roposal
received at Branch
#roposal
received at /0
*omplete
#roposal received at 80
Eate ';5.(;.;> Eate +,.(;.;> Eate
*OR APPRO>A+- 'ENERA+ 1ANA'ER
'I)T O* THE PROPO)A+:
Pro%osa" !or :
a. Rene(a" o! e9istin# CCH @)toc/s-cu&-.oo/ DebtsA "i&it
o! Rs.2;D.DD "acs
b. Rene(a" o! e9istin# Ne#otiation o! .i""s under +C "i&it o! Rs. 1;D.DD
"acs.
c. Rene(a" o! e9istin# Per!or&anceC*inancia"C.id .ond 'uarantee
"i&it o! Rs. 4;D.DD "acs.
1. PROFILE
Na&e
o! borro(er
@Js #aragon *able India.
33

Address
@Re#d. O!!ice
+>, /a?asthan .dhyog Nagar,
G T Karnal /oad, Ne1 Eelhi3((;;,,
Tel3 ;((3 +67>(,,,, +67>+,,,
2a!3 ;((3+67>((+>
$3mail' pciPvsnl.net, mailPelektron.com
.ranch: 8a-ir%ur Re#ion: Ne( De"hi
$stablished on ;=.;,.(>>( 8hether a%%earin# in
Eealing
1ith us since
(>>( %tandard B <ist No
Group' No. Billful Eefaulter <ist No
<ine of Activity
@anufacturing,
Trading and :
ob Bork of
$lectric Bires
H #o1er
*ables
Eefaulter J *IBI< <ist No
Key
#ersonJ#romoter
Key #erson %h. Likas Nagpal
#romoter
%h. Likas Nagpal
@ultiple J *onsorti
um
%ole EEI)TIN' PROPO)ED
<eader Bank N.A. Asset *lassification %tandard %tandard
0ur share' FRs. In +a/hsG
Asset
Cate#or as %er C1C 'ui
de"ines
#( #(
2B 3 D -;;.;; D2? Codes : Descri%tion
34

N2B3 D ,=;.;; Activity
5;(;
Insulated
Bires H *ables
K $lectrical.
%T<3 Nil %ector (= %@$
T<3 Nil %pecial *ategory
#riority No
B%/ *ode' Basel II *ode'
/isk Beightage (;;D #rovisioning' ;.+=D
*r *redit /isk /ating QBBBR
/isk
Grade as per AB% Et ,(.;,.+;;>
QBestR B#</S ;
.6=D
4. NA1E) O* PARTNER) : NET 8ORTH @Rs. in +acsA
)r. Na&e Net 8orth As on .asis
( %hri Likas Nagpal -57.67 ,(.;,.;> Audited BJ%
+ %mt An?ana Nagpal (=(.55 ,(.;,.;> Audited BJ%
Bhether #roprietor J #artnerJ Eirector J Guarantor
has any relationship 1ith any Eirector or
%enior 0fficial 4%cale IL H above) of
the Bank. If so give details 4/efer to Guidelines)
No
7. 1a6or )hareho"ders: N.A. 4%ince it is #artnership AJc)
;. .RIE* HI)TORB O* )ANCTION) INC+UDIN' RE>IE8)
AND ADHOC) DURIN' THE PA)T T8E+>E 1ONTH).
)anctions Dt.
Gist
;5.;=.+;;5
/ene1al of e!isting limits by G@4*redit)
35

0. PRE)ENT PROPO)A+:
/ene1al of the e!isting limits, as under '
4/s in lacs)
*aci"it E9istin# Outstandin#
as on 22-1D-
2DD3
DRA8IN'
PO8ER
Irre#u"arC
O$erdue
a&ount
Pro%osed >ariation
+i&it 1ar#in @HA +i&it 1ar#in @HA
aA *und .ased
(
**84%tock
cum
Book EebtsA
+=;.;;
%tock3+=D
Book
Eebts3-;D
(,=.5+ +=;.;; +=;.;;
%tock3+=D
Book
Eebts3-;D
Nil
+. Negotiation of
Bills under <J*
(=;.;; ;.;; (=;.;; (=;.;; Nil
Tota" 7DD.DD 14;.52 7DD.DD 7DD.DD Ni"
bA Non
- *und .ase
d
( .an/
'uarantee
,=;.;;
#er3(;D,
2inJBidBond3
+=D
-6.(; ,=;.;; ,=;.;;
#er3(;D,
2inJBidBond3
+=D
Nil
Tota" 4;D.DD 7<.1D 4;D.DD 4;D.DD Ni"
cA *or(ard
co$er
Nil Nil Nil Nil Nil
dA 'rand
Tota" @aIbIcA
<;D.DD 152.32 <;D.DD <;D.DD Ni"
eA In$est&ent
E9%osure
Nil Nil Nil Nil Nil
TOTA+ EEPO)URE <;D.DD 152.32 <;D.DD <;D.DD Ni"
II. )ECURITB C DOCU1ENTATION:-
Pri&e securit 4/s. in lacs)
Nature >a"ue .asis
36

Pro%osed
8yp. of %tock and Book Eebts
/s.,(+.,7.;;4Inventory)
/s.(>=.>5
4/eceivables)
%tock %tatement as of
Aug.+;;>
Book Eebt %tatement as
of Aug +;;>.
Co""atera" )ecurit
Nature o! )ecurit T%e o!
Char#e
>a"ue .asis C )ource 8hether
e"i#ib"e
under
CR1
@.ase" II
Nor&sA
(. $Cuitable @ortgage
of <and and Building at
plot No. ((, %ector37, I@T
@aneshar, 8%IE*,
Gurgoan, 8aryana adme
asuring 7D;D )J 1tr in
the name of %hri Likas
Nagpal partner of
@Js #aragon *able India.
$Cuilate
ral
@ortgag
e
The market
value of the
property is
/s. 7=,.-7
lacs 1hereas
the Eistress
value P5;D
is /s.=++.65
lacs
Laluation
/eport by our #anel
Laluer, @Js Accurate
Laluers dated +,.;,.
;>.
%earch /eport by
our #anel Advocate,
%hri Lineet %harma
dated ;>
th
April +;;>
states that the
sub?ect property is
unencumbered
and marketable.
No
+.8ypothecation
of #lant and @achinery,
2urniture H 2i!ture and
other eCuipments e!isting
as 1ell to be acCuired in
future.
8ypothe
cation
/s. +(.6-
lacs
BEL as per
Audited BJ% as of ,(.
;,.;>
No
A##re#ate Co""atera"
)ecurit
Rs. ;77.;2
"acs
iA Percenta#e co$era#e o! co""atera" securit:
( Total value of *ollateral %ecurity /s. =--.=+ <akhs
+ 0f 1hich our share /s. =--.=+ <akhs
, Total limits proposed from our Bank /s. 6=;.;; <akhs
- *ollateral coverage 6+.;7D
37

iiA Reasons in case o! di"ution o! securit co$era#e:
*ollateral *overage at the time of last rene1al 1as 66.+;D. /eason for
dilution of security coverage is that @arket value of property 4collateral) 1as
considered 1hereas distress sale value of property is considered in the
present case. In case @arket value is considered in the present case,
collateral coverage 1ould be >;.;,D
cA Date o! creation o! Char#e: N.A. since partnership firm.
dA Date o! subseJuent &odi!ication o! char#e: N.A.
eA Date o! $ettin# o! docu&ents b "e#a" o!!icer CPane" Ad$ocate:(53;63
+;;5
!A Na&e o! 'uarantors : their net (orth 4/s. in lakh)
Na&e Re"ationshi% Net 8orth As o! .asis
%hri Likas Nagpal #artner -57.67 ,(.;,.;> Audited BJ%
%mt An?ana Nagpal #artner (=(.55 ,(.;,.;> Audited BJ%
%hri E < Nagpal Guarantor (;;;.;; +7.((.;6 Anne!ure **
%hri #rem Nagpal Guarantor ,;; +7.((.;6 Anne!ure **
T Branch to obtain and keep on record *.A. certified #ersonal Balance %heetJ Net
Borth %tatement of the guarantors as of ,(3;,3+;;> and ensure there is no significant
decline in Net Borth of the individual persons vis3a vis last sanction.
III. CREDIT RATING & Pricing:
Pricing Existing Proposed
*redit /ating %core Based on AB% U @arch ;>V WAI QBBBR
Applicable interest rate as per *redit /ating B#</S;.=;D B#</S;.6=D
Interest rate presently *harged and #roposed B#</S;.6=D B#</S;.6=D
*oncession if any N.A. N.A.
Interest /ate charged by <ead Bank N.A.
38

*ommission on N2B <imits As per norms
#rocessing *harges (.+=D of the
sanctioned
limit.
*actors contributin# to the u% #radation C s"i%%a#e in credit ratin#'
@a?or factor contributing to decline in credit rating is due to decline in collateral
coverage on account of factors already discussed in the note.
Kusti!ication !or %ro%osin# "o(er rate o! interestCconcession in char#esC
%rocess !ees: N.A.
I>.Per&issions !or De$iations2 Issue o! NOCsetc : Concessions in
ser$ice char#es
No E9istin# Pro%osed
1 N.A., since no concessionsJdeviations are proposed.
3. Rati!ications reJuired !or actions2 e9ceedin#
%er&itted etc. beond discretionar %o(ers' N.A.
1D. CO1PANB PRO*I+E @in brie!A
@DETAI+) O* 1ANA'E1ENT2 PRODUCT) 1ANU*ACTURED2 U)ER
INDU)TRIE) : CO1PANB=) 1AKOR CU)TO1ER)A
@Js #aragon *able India a #artnership 2irm, established in (>>(, is engaged in
manufacturing, trading and ?ob 1ork of electric 1ires and po1er cables.
@anaging #artner %hri Likas Nagpal is having good e!perience of (= years in
the line of business. The 2irm is selling its product to various %tate $lectricity
Boards ,#o1er *orporations and various *entral Govt. Eepartments.
2urther, the 2irm also sells itIs ma?or products to private organi&ationJ
institutions vi& /eliance Group,Tata Group,IL/*<, A/$LA.
The firm is en?oying credit facilities 1ith our Bank since :anuary (>>(. The
conduct of the account is satisfactory.
39

11. INDU)TRB )CENARIO
I Industry *ategorisation Insulated Bires and *ables.
Eemand and supply situation of the
product K present and pro?ected
4source of information)
Eemand for the product
is satisfactory.
@a?or players H their market share There are various
manufacturers in this line
but the company is kno1n for i
ts products.
BankIs e!posure in this industry
/s. +6+>.-6 lacs
N#A position
/s. 7.>( lacs i.e. ;.+=D of the
aggregate e!posure
f. *yclical trends There are no cyclical trends
affecting the industry.
Govt. policies The policy of Govt. is
favourable.
Bhether the product is an import
substitute, if so, 1hat is the landed cost of
import and 1hat is the production cost
of the indigenous manufacture
N.A.
Availability of ra1 materials, labour,
infrastructural advantages
/a1 material, labour etc.
easily available at the site.
Bhat are internal H e!ternal advantages of
the borro1erJtechnology used
The company is using latest
technology.
Bhat are the 1eaknesses @arket uncertainties.
Bhat are the relative opportunities The firm is looking for Govt.
order H better opportunities.
m. Bhat are the threats *hinese imports of cheaper
Cuality goods, market
uncertainties and fluctuations.
40

Any other information Nil
12. PRODUCTION CAPACITB
Production Cpcit! Existing Proposed
Installed +;;; K@ +;;;K@
.tilised (;;;K@ (;;;K@
D .tilisation =;D =;D
14. 1AR?ET CAP: N.A. @)ince it is a %artnershi% account.A
17. *INANCIA+ INDICATOR) FRs in "a/hsG
Audited Audited Esti&ate Pro6ection
As on 41.D4.D5 41.D4.D3 41.D4.1D 41.D4.11
i. *apital ,-+.,= ,-,.(= ,5;.;; -+=.;;
ii. /eserves H %urplus ;.;; ;.;; ;.;; ;.;;
iii. Intangible Assets ;.;; ;.;; ;.;; ;.;;
Tangible Net 1orth ,-+.,= ,-,.(= ,5;.;; -+=.;;
Net Borking *apital ++6.>+ +,-.-, ,+;.;; ,6-.;;
*urrent /atio (.-- (.,> (.=5 (.7+
Gross Block
Net Block (-,.-5 (76.;, (=-.;; (-=.;;
Net %ales +>-6.;- ,,-6.67 +>;;.;; ,+;;.;;
3 of 1hich e!ports
41

#BEIT (+,.7> (=5.,=
(-6.;; (--.;;
Gross #rofit 3 #BET 65.=+ ((7.6( ((+.;; ((-.;;
Net #rofit J <oss K #AT 7,.>( (;(.>( 66.;; 5;.;;
Eepreciation 7.,6 >.(> (;.;; >.;;
*ash Accruals 6;.+5 (((.(; 56.;; 5>.;;
#BEITJ Gross %ales ;.;- ;.;= ;.;= ;.;=
Gross #rofit @argin +.77 ,.-> ,.57 ,.=7
Net #rofit @argin +.(6 ,.;- +.77 +.=;
TE$/ 4T0<JTNB) (.>; +.(5 (.6> (.6+
Interest *overage /atio +.=7 ,.76 ,.-> ,.>6
*urrent Assets to
Turnover /atio -.,6 -.+= ,.5> ,.6>
Co&&ents on !inancia" %er!or&ance:
)a"es :
The e!isting 2und Based limit of /s -;;.;; and Non32und Based <imit of /s +=;.;;
lacs 1as earlier assessed on an estimated %ales Turnover of /s +5=;.;; during 2"
+;;63;5 against 1hich the actual achievement is /s +>-6.;- lacs i.e. achievement
inde! of (;,.-;D. %ales registered (=.=+D during 2" +;;63;5 over the previous
financial year, 1hile the gro1th registered during 2" +;;53;> is (,.7;D.
The borro1er has no1 estimated and pro?ected a sales turnover of /s +>;;.;; lacs
and /s ,+;;.;; lacs during 2" +;;>3(; and 2" +;(;3(( respectively.
The borro1er has attributed lo1er ra1 material as conseCuently lo1er finished good
prices as the main reason for lo1er sales pro?ections during 2" +;;>3(;. The global
financial crisis leading to depressed market conditions also partly contributed to the
lo1er sales pro?ections.
Euring the first half of the current financial year i.e. %eptI;>, the borro1er has achieved
a sales turnover of /s (;6=.;; lacs. The same translates into annuali&ed turnover of
42

/s +(=;.;; lacs i.e. 6-.(-D vis3X3vis target. 8o1ever, based on
orders on hand and improving market sentiments, the borro1er is optimistic of
achieving the estimatedJpro?ected sales turnover. In fact, the borro1er has a track
record of surpassing the pro?ections.
In vie1 of the above, the estimated and pro?ected sales turnover is considered realistic
and achievable and is hence accepted by us.
Ca%ita"CNet 8orth '
The *apitalJNet Borth of the borro1er stood at /s ,-,.(= lacs as of ,(.;,.;> and
sho1s increasing trend over the years due to induction of capitalJplough3back of profits
in business.
Unsecured +oans '
As per e!isting terms of sanction, .nsecured <oans 1ere stipulated to be maintained
at the level of /s =(.;; lacs against 1hich the level of .nsecured <oans stood at /s
56.6= lacs as of ,(.;,.;>. The same is estimated and pro?ected to be maintained at the
level of /s 5;.;; lacs during 2" +;;>3(; and 2" +;(;3((.
Branch should obtain and keep on record an undertaking from the borro1er to the
effect that level of unsecured loans 1ould be maintained at least at the level of /s
5;.;; lacs during the currency of bank finance and 1ould not be 1ithdra1n 1ithout the
e!press consent of the Bank. The .nsecured <oans 1ould also remain subordinated to
Bank 2inance.
Pro!itabi"it :
Gross #rofit and Net #rofit @argin registered increase to ,.->D and ,.;-D
respectively.during the 2" +;;53;> over the previous financial year.
Gist of 2inancial indicator of the 2irm as of ,;3;>3+;;> is as under3
4/s. In lacs)
%ales (;6=.;;
*apital ,7+.;;
.nsecured loan 5+.;;
2i!ed Assets (7+.;;
Net #rofit ,7.;;
Auditor=s re&ar/s and 1ana#e&ent re%"ies : No such CualificationsJremarks.
43

Current %er!or&ance trends' /s in lacs
$stimated sales turnover for the year +,>;;.;;
Achievement till %eptember +;;> (;6=.;;
#ro3rata achievement 6-.(,D
INTER-*IR1 CO1PARI)ON @PEER 'ROUPA
N.A. 4%ince the proposed credit e!posure is less that /s =;;;.;; lacs )
10. A))E))1ENT O* 8OR?IN' CAPITA+ RELUIRE1ENT)
A. #ro?ection of sales as per last *@A EATA for the year ended ,(;,.;>3 /s.+5=;.;;
lacs
Actual sales for the year ended ,(.;,.;>YY/s.,,-6.67 lacs
+ast Bear
Actua" as
%er audited
.a"ance
)heet
Current
Bear
Esti&ates
Re#u"ar
*o""o(in#
Bear
Pro6ections
Pea/ +e$e"
Bear endin#
Net %ales ,,-6.67 +>;;.;; ,+;;.;;
Total *urrent Assets 5-,.(= 56;.;; >6-.;;
<ess *urrent <iabilities 4other than Bank
borro1ing for 1orking capital) ,7>.-6 ,;;.;; ,=;.;;
Borking *apital Gap -6,.75 =6;.;; 7+-.;;
@inimum %tipulated margin +=D of current
assetsJpro?ected NB* 41hichever is
higher) +(;.6> +(6.=; +-,.=;
@a!. #ermissible Bank 2inance +,>.-; +=;.;; +=;.;;
Total $!isting Borking *apital limits +,>.-; +=;.;; +=.;;
$!cess borro1ing, if any, to be converted
into Borking *apital Term <oan
Nil Nil Nil
. IN>ENTORB AND RECEI>A.+E +E>E+): 4/s in lakh)
In$entor +ast
acce%ted
Actua"
41.4.2DD3
Esti&ate
41.4.2D1D
Pro6ection
41.4.2D11
+e$e" 1ths >a"ue 1ths >a"ue 1ths >a"ue
/a1 @aterials
Bork in #rogress
44

2inished Goods (.++ ,+;.-= (.+6 +>;.;;
(.+6 ,+;.;;
Recei$ab"es
3 Eomestic (.75 -76.=, (.55 -==.;; (.>6 =+=.;;
3 $!port
)tores : )%ares
*reditors (.+- ,+=.(, (.,, +5-.;; (.,> ,,,.;;
C. CO11ENT) ON A))E))1ENT O* 8OR?IN' CAPITA+ 8ITH
KU)TI*ICATION
The e!isting 2und Based limit of /s -;;.;; and Non32und Based <imit of /s +=;.;;
lacs 1as earlier assessed on an estimated %ales Turnover of /s +5=;.;; during 2"
+;;63;5 against 1hich the actual achievement is /s +>-6.;- lacs i.e. achievement
inde! of (;,.-;D. %ales registered (=.=+D during 2" +;;63;5 over the previous
financial year, 1hile the gro1th registered during 2" +;;53;> is (,.7;D.
The borro1er has no1 estimated and pro?ected a sales turnover of /s +>;;.;; lacs
and /s ,+;;.;; lacs during 2" +;;>3(; and 2" +;(;3(( respectively. The borro1er
has attributed lo1er ra1 material as conseCuently lo1er finished good prices as the
main reason for lo1er sales pro?ections during 2" +;;>3(;. The global financial crisis
leading to depressed market conditions also partly contributed to the lo1er sales
pro?ections.
Euring the first half of the current financial year i.e. %eptI;>, the borro1er has achieved
a sales turnover of /s (;6=.;; lacs. The same translates into annuali&ed turnover of
/s +(=;.;; lacs i.e. 6-.(-D vis3X3vis target. 8o1ever, based on orders on hand and
improving market sentiments, the borro1er is optimistic of achieving the
estimatedJpro?ected sales turnover. In fact, the borro1er has a track record of
surpassing the pro?ections.
In vie1 of the above, the estimated and pro?ected sales turnover is considered realistic
and achievable and is hence accepted by us.
The borro1er has no1 estimated holding levels as under '
).N. Particu"ars 1onths
A&ount
@Rs in "acsA
(. 2inished Goods (.+6 +>;.;;
+. /eceivables (.55 -==.;;
45

,. *reditors (.,, +5-.;;
The holding levels as above are in tune 1ith the actual holding levels of 2" +;;53;>
and are considered need3based and reasonable. 8ence, the same is accepted by us.
Based on the accepted levels of inventory and receivables as above, the Era1ing
#o1er is calculated as under '
Particu"ars 1onths
A&ount
@Rs in "acsA
1ar#in
D.P.
@Rs in "acsA
2inished Goods (.+6 +>;.;; +=D -.=;
<ess ' %undry *reditors (.,, +5-.;;
#aid %tocks 7.;;
/eceivables (.55 -==.;; -;D +6,.;;
Tota" 2<<.;D
The borro1er has reCuested for rene1al of the e!isting **8 limit of /s +=;.;; lacs
and the same has been recommended by the Branch. As per assessment of limits
under @odified @#B2 @ethod, the permissible limit of /s +=;.;; lacs. The reCuisite
E.#. is also available, as per the aforesaid table.
In vie1 of the above, 1e recommend for rene1al of the e!isting **8 4%tocks3cum3
Book Eebts) limit of /s +=;.;; lacs.
Rene(a" o! Ne#otiation o! .i""s under +CC +i&it '
The borro1er is presently en?oying Bills Negotiation 4under <J*) limit of /s (=;.;; lacs,
outside the overall @#B2, 1hich it has reCuested for continuation. Branch has informed
that no Bills have being negotiated under the aforesaid limit during 2" +;;53;>.
8o1ever, looking to contingent reCuirement and based on the borro1erIs reCuest,
Branch has recommended for rene1al of the Bills Negotiation under <J* limit of /s
(=;.;; lacs. Be endorse the Branch recommendation.
1<. A))E))1ENT O* TER1 +OANC DE*ERRED PAB1ENT
'UARANTEE: N.A.
A. +ETTER O* CREDIT: N.A.
.. .AN? 'UARANTEE
46

#urpose of the <imit #articipation in Bidding #rocess for Tenders
b. Nature H amount of limit sanctioned #erformanceJ 2inancial JBid Bond Guarantee
limits of /s. ,=;.;; lacs.
0utstanding as on ,;3;>3+;;> /s -6.(; lacs
Bhether the e!isting limit is proposed
to be continued, if so, ?ustification
The Borro1er is reCuired to furnish Bank
Guarantee for participation in Tenders. The
borro1er has reCuested for the /ene1al of
the e!isting B.G. limit.
In vie1 of the above H since there has been
no instances of invocation of B.G. in the past,
1e recommend for the rene1al of e!isting
B.G. limit of /s. ,=;.;; lacs.
Name of the beneficiary J ies in 1hose
favour guarantees to be issued
Larious beneficiaries such as /eliance,
Tata Group, IL/*<, A/$LA,etc
Nature
of the guarantee limit reCuired i.e.
performanceJ financialJ Bid Bond etc.
#erformanceJ2inancialJBid Bond Guarantee
Assessment
and ?ustification for the limit proposed
No. of BG s issued during 2" +;;53;> (;
Amount of Bank Guarantees 4/s in lacs) -6.(;
Instances of invocation of BG,if any No
In vie1 of the above and based on Branch
recommendation, 1e recommend for rene1al of
e!isting Bank Guarantee <imit of /s ,=;.;; lacs.
@argin proposed
(;D on #erformance Bank Guarantee
+=D on 2inancial Bank Guarantee
[HO, vide its sanction note no.
DCC/SME/26/2!!" dated 2".!.2!!" #y $enera%
Mana&er, 'as sanctioned (it' t'e )ar&in of
*+, to on%y specific institute -S.C
in t'e for) of Financia%/Ot'er $uarantee and t'e
sa)e is proposed to #e continued/.
%ecurity $!tension of charge over the stock,
47

receivables and fi!ed assets of the borro1er.
$*G* cover for e!port performance
guarantees
N.A.
Asset coverage for Non3
2und Based limits
Net 2i!ed Assets as of ,(3;,3;>3 /s. (76.;, lacs.
B.G. limit 3 /s. ,=;.;; lacs
Asset coverage'-6.6+D
>ie(sCco&&ents on the conduct o! the account
A. Co&&ents on uti"isation o! both !und and Non !und based "i&its
Bhether stock statements are submitted every month.
If not submitted regularly mention the date of last stock statement
"es
Bhether operations are 1ithin sanctioned limits
"es
Bhether limits are utilised optimally Jsatisfactorily
"es
2reCuency of inspection of stocks. Eate of the
last inspection and irregularityJadverse features,
if any observed and steps taken to set right the same.
Insurance cover 3 Bhether securities adeCuately insured
and in force
"es, as reported by the
Branch.
Branch to ensure that the
securities charged to the
Bank 4both #rime and
*ollateral) are
adeCuately and
comprehensively insured
41ith Bank *lause) and
copy of the #olicy should
be kept on Branch
record.
48

Bhether terms and conditions of previous sanction
have been complied 1ith, if not, specify
time frame to complete 41ith e!planation)
H permission obtained from competent authority
"es, as reported by
Branch
Bhether certificate from #ollution *ontrol Board has
been obtained.
N.A.
Bhether the borro1er is facing any litigation
from banks J2IsJcreditorsJ Govt. Eeptt.J
%tatutory bodies etc., if so, state in brief.
No.
In case of consortium advance, 1hether our
bank is getting proportionate share of business
N.A.
Additional J temporary limits sanctioned subseCuent to
the last regular sanction and 1hether
same is liCuidated on due date or not
N.A.
0utstanding
amount of unhedged 2oreign *urrency $!posures
N.A.
.. Inco&e >a"ue o! account 4/s. in <akh)
<ast year *urrent year
Lalue of account 4Eeposits)
#rocess 2ee recovered
Interest earned (5.5+ ((.+;
$!change income nil Nil
*ommission earned ;.5+ +.=7
Income from Third party products J insurance
49

0thers 4<ead Bank 2ee, *ommitment fee, #enal
Interest, %yndication fee)
Tota" (>.7- (,.67
Turnover in 2oreign $!change Business
Eeposits placed 401ner EirectorsJ partners or 2amily
@embers, /elatives H 2riends)
3 *urrent
3 %avings
3 Term Eeposits
a. Ad$erse !eatures a!!ectin# credit decision and action
%ro%osed @inc"udin# non compliance to terms and conditions of
sanction and present position)
)r No Pendin# 1atters Present %osition )te%s ta/en C Re&ar/s
Nil
b. 1AKOR IN)PECTION C AUDIT IRRE'U+ARITIE) POINTED OUT
IN THE +A)T IN)PECTION REPORT
Credit Audit Re%ort dated D;-D2-2DD3 :
).N Obser$ations in Credit Audit Re%ort .ranch re%"
(. *ertificate of Eocumentation and compliance
of terms and conditions of sanction not
submitted
%crutiny of Eocuments carried out by %hri
Kalim .r /ehman 4BankIs #anel
Advocate) on (5.;6.;5.
*ompliance of terms and conditions have
been submitted.
+. .nit inspected but report not prepared. Give
the date of report preparation and report any
adverse observations if any
<atest %tock Inspection /eport dated
No ma?orJadverse observations.
,. 0bservations in 22/ to be analy&ed and
reported to /egional 0ffice
22/ is being obtainedJscrutini&ed and
for1arded to /egional 0ffice.
-. Laluation of *ollateral not done once in t1o
years as per guidelines
Laluation done on +,3;,3+;;>
=. InadeCuate Insurance of %tocks and Insurance taken from (63,3+;;>
50

insurance e!pired on (-J,J+;;>
7. 8alf3 yearly revie1 of *redit rating not done
as per e!tant guidelines.
Branch to do credit rating e!ercise on the
basis of Audited Balance %heet for the year
+;;63;5.
*redit /ating based on the Audited BJ%
as of ,(.;,.;> is being carried out 1ith
the present proposal.
6. Branch to get the $!ternal *redit rating
done, inform the status of $!ternal *redit
rating
The borro1er has obtained *redit /ating
from %@$/A 4%@$/A *,) on ;=.(+.;5.
8o1ever, in terms of BA%$<3II guidelines,
the borro1er has been advised to obtain
$!ternal *redit /ating from any of the
approved /ating Agencies i.e. */I%<,
*A/$, I*/A, 2IT*8..
5. Branch to ensure ostentation of *A *ertified
Book Eebts %tatement age31ise and ensure
periodical inspection
received on ,;3-3+;;>
)toc/ Ins%ection Re%ort dated 27-1D-2DD5 !ro& 1Cs D.P. 'u%ta :
Co. Charted Accountant.
Auditor Re&ar/s .ranch Re%"
(. 8ypothecation agreement for collateral
security for #lant and @achinery , furniture
and fi!tures and other eCuipments e!isting
as 1ell as to be acCuired in future is not
obtained by the branch. Insurance of the
same has also not been taken.
+. Audited BJs of the march, +;;5 1as not
available for verification
Audited BJ% as of ,(3;,3+;;5 and,(3;,3
+;;> has been obtained and kept on
Branch /ecord.
,. Eetails of *ollateral %ecurity of property
at @anesar is not recorded in Title Eeed
/egister.
Eetails of *ollateral %ecurity of property at
@anesar is recorded in Title Eeed
/egister.
-. Banks name plate sho1ing Qstock
hypothecated 1ith Eena BankR not
displayed
Banks name plate sho1ing Qstock
hypothecated 1ith Eena BankR is no1
being displayed.
=. Letting of latest documents has not
been done.4 Eocuments vetted ;=3;73
+;;5)
Letting of latest documents has been
done.
7. 0ne Bank guarantee of /s. +.7> lacs
issued on behalf of the party has e!pired
on (,3;63+;;5.
6. 22/3I H 22/3II has not been obtained
by the branch from the 2irm
22/3I H 22/3II is no1 being obtained and
scrutini&ed by the branch and submitted to
51

/egional 0ffice has not been obtained by
the branch from the 2irm
c. EirectorsI name figuring in /BIJ Bilful EefaultersI J
*IBI< J %A< K $*G* list and comments
thereon. Impact on taking e!posure 1here
names are appearing in the defaulters list' NI<
d. #osition of statutory dues and incentives receivables'3
#rovident 2und, $%I and %uperannuation contribution paid upto Branch is
advised to
obtain and
keep in record
the %tatutory
Eue *ertificate
from the
borro1er duly
certified by the
*.A. of latest
date and
Branch
@anager
should ensure
that there are
no %tatutory
overdues.
Bages and salaries paid upto
%ales Ta! paid upto
%ervice Ta! paid upto
Income Ta! Assessment completed upto and for the year ending Z
Advance Ta! paid for the year ending
$!cise duty paid upto
@unicipal Ta!, 0ctroi etc.
Incentives from the Government and other agencies
Eisputes not ackno1ledged as debts
*ontingent <iabilities 4<ikely to turn into <iabilities)
/econciliation of EebtorsJ creditors
C0 certificate to #e o#tained and 1ept on record
Z 1herever borro1ers encounter ta! disputes, searches, raids by ta! authorities, details
along 1ith proceedings and present status should be reported.
e. 'rou% dea"in#sCe9%erience : desirabi"it o! !urther e9%osure:
!. RI)? A))E))1ENT
Ris/ Ris/ *actor Ris/ 1iti#ation
1.IndustrCActi$it
Ris/
There are large numbers of
manufacturers both in
the organi&ed as 1ell as
unorgani&ed sector and the
e!pansion in their capacity
could lead to recessionJoversupply.
0n account of gro1ing
economy and infrastructure
development, the demand is likely
to absorb the supply on account
of capacity increase.
52

2..orro(erC.orro(er
Ris/
The firm may face competition
from the unorgani&ed sector
in the regular cable products.
The firm 1ill be able to 1ithstand
the competition on the basis of
Cuality and business e!perience.
4.)ecurit Ris/ The product is prone to theft and
fire.
The firm to take comprehensive
insurance, 1ith Bank clause, to
cover such type of risk.
7. Other Ris/ Nil
2D. Co&%"iance o* R.I C .an/ +oan Po"ic #uide"ines
De$iation i! an (ith 6usti!ication
The proposal is as per /BI J BankIs <oan #olicy guidelines.
21. 1ODI*ICATION IN EEI)TIN' TER1) O* )ANCTION I* ANB:N.A.
22. >IE8)CRECO11ENDATION) O* THE CREDIT CO11ITTEE:
N.A. since it is a rene1al proposal.
24. DI)CRETIONARB PO8ER *OR )ANCTION AND *OR APPRO>A+
O* DE>IATION2 I* ANB:
The proposal falls 1ithin the overall discretionary po1ers of G@ 4*redit).
27. RECO11ENDATION:
Branch has recommended for rene1al of e!isting fund based limit of /s. -;;.;;
lacs and Non fund based limit of /s. ,=;.;; lacs as per e!isting terms and
conditions.
2;. RE'IONA+ O**ICE RECO11ENDATION:
It is an e!isting %@$ client of the branch. %@$ sector is
presently one of the thrust areas of finance of the Bank.
The Borro1er is dealing 1ith us since (>>( and the
overall track record is satisfactory.
The partners have e!perience of more than (= years in
the line of business.
The borro1er is having profit making track record.
*ollateral base of the e!posure is 6+.7;D, 1hich may be
considered satisfactory.
53

The limits are ?ustified under @odified @#B2
method.
Branch has recommended for rene1al of the e!isting limits.
PUT UP *OR APPRO>A+.
O!!icer 1ana#er )r. 1ana#er A'1 D'1
)1E )1E )1E )1E )1E
ANNEEURE MAM
/ef No. NE/JI*2EJ%%J ;(
Eate ' +,3(;3+;;>
Name of the unitJborro1er ' @Js #aragaon *able India
() Nature of arrangement ' *ash *redit 8ypothecation
4%tock3cum3Book Eebts)
+) <imit ' /s. +=;.;; lacs U/upees T1o 8undred H 2ifty <acs3
/ene1al of e!isting limit
,) @argin ' +=D 4Against stock of ra1 material and finished goods)
,,.,,D4Against 1ork in progress)
-) Interest ' B#</S;.6=D3;.=;D 4concession in terms of 8.0.
circular no. +5+J;7J+;;53;> dated (5.(+.;5) i.e. at present
(+.6=D p.a. presently, sub?ect to change in B#</ from
time to time. The concessional interest of ;.=;D is at the
sole discretion of the Bank and may be 1ithdra1n at any
point 1ithout notice.

TER1) AND CONDITION):-
(. 0ur usual documents to be e!ecuted by the firm and all the partnersJproprietor in
their personal capacity. In the case of limits companies, documents are to be
e!ecuted under the common seal of the company backed by proper resolution.
+. 0ur advance to be guaranteed by the partners Li&. %hri Likas Nagpal and %mt.
An?ana Nagpal in their personal capacity along1ith %hri E.<.Nagpaland, and %hri
#rem Nagpal
,. All the assets charged to the Bank to be fully insured against fire, theft, burglary,
%/**, breakdo1n of machinery 1ith bank clause.
-. The unitJcompany to submit stock statement and monthly selected operational
data 4@%0E) every month.
=. The unitJcompany to submit NI%J22/ statement regularly.
54

7. 0ur advance is restricted to manufacturingJtrading activities.
6. InterestJ*ommisison rates are sub?ect to revision as per /BIJ80 guidelines or as
decided by consortium.
5. #rocess fee and %upervision *harges to be recovered as per 80 guidelines.
>. Branch to ensure that there are no inter3firm transfer of funds e!cept for genuine
sales transactions.
(;. Bank 1ill have a right to e!amine all the times firmAsJcompanyAs books of accounts,
assets etc. and have the companyAs 1orkings and operations e!amined from time
to time by the officers of the bankJor technical e!perts andJor management
consultancy and fees to be borne by the firmJcompany.
((. Bank may charge penal rate of interest over and above the rate applicable under
the follo1ing circumstances'3
a) delay in submission of stock statement, @%0E, NI% statement.
b) delay in submission of rene1al papers.
(+. Guidelines issued by 80J/A from time to time are to be strictly adhered to.
(,. The borro1er be informed of the terms and conditions of sanction and the
confirmation be obtained to the effect thereof in 1riting.
(-. Eate of reconsideration 3 one year after sanction.
YYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYY
)ENIOR 1ANA'ER
7.; )u&&er o! *indin#s:-
2rom the above analysis, it is found ho1 a credit limit has been appraised to a
borro1er. %tarting from the loan application from the borro1er till the
disbursement of the loan and after it the close monitoring till the ad?ustment of
the bankIs loan.
The procedure 1hich is to be follo1ed to sanction a loan in an %@$ department
is some1hat lengthy process, but it is the best method to sanction a loan as it
goes as a parallel to the safe side of the bank as in case of the borro1erIs
default or inability to repay the loan.
55

CHAPTER-; )U11ERB AND CONC+U)ION)
;.1 )u&&er o! +earnin# E9%erience:-
The summery ?ust states that it 1as a great e!perience to ?oin a Nationali&ed
Bank for training and learning things. I learnt a lot in the *redit Eepartment
4%@$) of Eena Bank. 8ere I 1orked on many appraisals, 1hich are beyond the
scope of this pro?ect. The ne1 day in the premises of the bank 1as started 1ith
a ne1 pro?ect report in the hands. After reading carefully the 1hole pro?ect
report, I had to make proposals on a format of crediting appraisal of the bank.
Larious proposals 1ere look after by me. After making the proposals, I handed
over all the 1ork done to my senior. 8e used to make necessary corrections in
the 1ork done and hence it 1as an opportunity for me to learn more and more.
$ven for more learning, my senior gave me an opportunity to attend a NCredit
Co&&ittee-1eetin#O held by other persons of the bank to clear the doubts
about a particular proposal.
56

8ence the 1hole e!perience of 1orking in such a place 1as
ama&ing. I leant here to a great e!tant about the 1hole procedures to sanction
a limit to the different different borro1ers.
;.2 Conc"usions and Reco&&endations:-
Conc"usions:-
The pro?ect gives the detailed kno1ledge of the 1hole process of sanction a
limit 1hich Eena Bank performs.
%tarting from the loan application from the borro1er and compilation of
*onfidential /eports on him and the guarantor, the process continues till the
disbursement of loan and after it the close monitoring till the ad?ustments of
BankIs <oan.
The pro?ect 1as an attempt to understand and perform the 1ork in the credit
transaction and the credit appraisal 1hich I had included in this pro?ect is ?ust an
e!ample of it.
I had 1orked on many such appraisals, 1hich are beyond the scope of this
pro?ect. 8ence the 1hole e!perience of 1orking in such a Nationali&ed Bank
1as ama&ing. I found lots of things to learn and understand here. 8ence to
57

conclude, I ?ust state that it 1as a great ?ob done in a
Nationali&ed Bank 1ith the e!perienced employees.
Reco&&endations:-
The bank is 1ell doing in its field and having good reputation in Eomestic as
1ell as International @arket. There are some of the recommendations that I
1ould like to suggest to the Bank' These are'
The head office, regional office and the branches should 1ork on $EI
4$lectronic Eata Interchange), since transaction of letters bet1een these
offices is still manual 1hich lead to repetition of 1ork as 1ell as 1astage
of time.
Eena Bank is too conservative in its dealing and hence people are
attracted to1ards private sector banks. Thus an Aggressive @arketing is
recommended to the Bank.
Eena bank should also appoint *ustomer /elation 0fficer so as to solve
various problems of customers 1hich 1ill help in retaining the customers.
58

There is also lack in the initiation of officers. The officers
should take initiative to 1ork 1ith ne1 changes.
APPENDIE
AA Credit Ratin#:-
De!inition o! Credit Ris/:- *redit /isk is the risk of default by borro1er due to
inability or un1illingness to repay his debts in accordance 1ith the agreed terms
and conditions.
Need !or Credit Ris/ 1ana#e&ent:-
The liberali&ation of the Indian $conomy has brought about s1eeping
changes in the economic environment. *hanges in the economic
environment have induced ne1 anticipated and unforeseen risks in
lending. The assessment of these risks is essential to facilitate prudent
credit decisions.
The terms and conditions of loans and advances sanctioned to
borro1ers determine the profit that accrues to the bank from that loan. If
59

the terms are decided 1ithout proper assessment of the
credit risk, the bank might be charging lo1 interest rates from poor
Cuality customers thereby sustaining losses due to default and charging
high rates from good Cuality customers thereby driving them a1ay to
other banks.
Credit Ris/ Ratin#:- *redit risk rating is a rating assigned to borro1ers,
based on an analysis of their ability and 1illingness to repay the debt taken
from the bank. This rating is assigned on a scale, 1hich generally have 735
levels. *ompanies falling in the same credit risk category have similar
probability of default. Better the rating, lo1er is the probability of default. The
probability of default increases in an e!ponential manner as the credit risk
rating deteriorates.
Uses o! Credit Ris/ Ratin#:-
8hether to "end to a borro(er or not:- The credit risk rating of a
borro1er determines the appetite of the bank in determining e!posure
level. A bank 1ould be 1illing to lend to highly rated borro1ers but
1ould not like to e!posure to borro1ers 1ith very poor credit rating.
Pricin#:- The risk premium to be charged to a borro1er should be
determined by its credit risk rating. Borro1ers 1ith poor credit rating
should be priced high and vice3versa.
Ris/ 1iti#ates:- The e!tent of collateral security reCuired and need
to step up margin reCuirement are linked to credit risk rating of a
60

borro1er. The higher the risk category, the greater
should be the value of collateral and margins.
Assess&ent o! Credit Ris/ Ratin#:-
*redit risk rating tools involve analysis of a company on various
parameters such as financials, industry characteristics, business
performance, management Cuality etc. different scales can be used and
the above parameters can be combined 1ith the appropriate 1eightages
to arrive at a final score. The credibility of credit risk rating to a large
e!tent depends on the skills of the persons using the rating tools and his
integrity in using the model eCuitable for all concerns.
.A )u&&er De!initions o! Ratios:-
1. Current Ratio:-
*urrent Assets
*urrent <iability
*urrent Assets[ cash and bank balancesS investment in Government
securitiesS sundry debtorsS bills discountedS inventoriesS loans and
advancesS advance payment of ta!S pre3paid e!pensesS other current assets.
*urrent <iabilities[ short term bank borro1ingsS commercial paperS loan from
corporate bodiesS bills discountedS sundry creditorsS unmatured financial
chargesS advance against 1ork in progressS other current liabilities.
2. Debt EJuit Ratio:-
Eebt
$Cuity
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Eebt[ total borro1ingsS preference capital3 short term bank
borro1ing3 commercial paper3 loans from corporate bodies.
$Cuity[ Tangible net 1orth.
4. Interest Co$era#e Ratio:-
$BIET
Total Interest
$BIET 4$arning before interest, depreciation and ta!) [ profit before
depreciation, interest and ta!S e!tra ordinary e!penses3 e!tra ordinary income.
Total Interest[ Gross interestS interest capitali&ed.
+ist o! Tab"es
). No. Tab"e No. Tab"e Tit"e Pa#e No.
(.
+.
(.
+.
Eifferent bank #arameters
Eena Bank3 Key Eata
+,
+-
62

.I.+IO'RAPHB
Larious internal circulations issued by bank from time to time.
Larious sites such as
111.denabankindia.com
111.sebi.gov.in
111.moneycontrol.com
111.pnbindia.com
111.bobindia.com
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