Shakuntala Project

A Study on Credit Loans to SME of Nationalised Bank
CHAPTER 1 INTRODUCTION PART-A

Introduction to finance
Finance is the study of funds and management. Its general areas are business finance, personal finance, and public finance. It also deals with the concepts of time, money, risk, and the interrelation between the given factors. It is one of the most important aspects in handling business. Finance addresses the methods wherein business entities used their financial resources on a certain period of time. It is the application of a set of techniques used by organizations in managing their financial affairs. The income and expenditure are emphasized in finance and its differences can easily be indicated. The banks serve as facilitators to companies in the provision of credit and mutual funds. A bank provokes the activities of both borrowers and lenders. The central banks are the last resorts that handle the monetary funds. Studying finance will help in making wiser decisions about financial funds. It can assist to identify benefits and risks while planning business activities effectively. Finally, it will give an optimum control over the financial assets which will certainly help in attaining a financially secured life.
Indian financial system:The financial system of financial sector of any country consists of specialized and non-specialized financial institutions, organized and unorganized financial markets, and financial instruments and services. The word, system in the term financial system implies a set of complex and closely connected or
Page 1
intermixed institution, markets, transactions, claims, agents practices, and liabilities in the economy. The financial system is concerned about credit, money, and finance-the terms intimately related yet somewhat different from each other. The financial system provides the intermediation between investors and institutions and helps the process of investment leading to greater financial development that is pre-requisite for faster economic development.
Page 2
FINANCIAL SYSTEM
FINANCIAL INSTITUTIONS
FINANCIAL MARKET
FINANCIAL INSTRUMENTS (Claims, Assets, securities)
FINANCIAL SERVICES
Regulatory Inter-
Non-
Other Primary Secondary
Mediaries Inter Mediaries
Banking
Non-Banking
Organized
Unorganized Short Medium Long Term
Term Term
Primary
Secondary
Capital Market
Money Market Secondary
Page 3
Financial institutions:Financial institutions are those institutions which are dealing in the financial market. Their main aim is to mobilize and transfer the savings or funds from surplus units to deficit units. They are the back bone of financial system. These institutions unlike commercial organizations deals with only financial assets like deposits, securities, loan, etc., these institutions participate in financial markets and mobilize the savings from the surplus units either directly or indirectly.
Financial markets:Financial markets refer to the institutional arrangements for dealing in financial assets and credit instruments of different types such as currency, cheques, bank deposits, bills, bonds, etc. The financial markets are the credit markets catering to the various credit needs of the individuals, firms and institutions. Credit is supplied both on a short as well as a long term basis. Classification of Financial Markets:On the basis of credit requirement for short-term and long term purposes, financial markets are divided into two categories: Organized Markets Unorganized Markets Organized Markets:In the organized markets, there are standardized rules and regulations governing their financial dealings. There is also a high degree of
institutionalization and instrumentalization. These markets are subject to strict supervision and control by the RBI or other regulatory bodies. These organized markets can be further classified into two. They are: Capital Market Money Market
Page 4
Capital Market is a market for financial assets which have a long or indefinite maturity. Generally, it deals with long term securities which have a maturity period of above one year. Money Market is the centre for dealing mainly in short-term money assets. It meets the short-term requirements of borrowers and provides liquidity or cash to lenders. Unorganized Markets: In unorganized markets there are a number of money lenders, indigenous bankers, and traders etc., who lend money to the public. Indigenous bankers also collect deposits from public. There are also private finance companies, chit funds etc., whose activities are not controlled by the RBI.
Financial instruments:The commodities that are traded or dealt in a financial market are financial assets or securities or financial instruments. There are various types of securities which are traded in the financial market as the requirements of lenders and borrowers are varied. Financial instrument represent a claim on the repayment of principal at a future date and or payment of a periodic or terminal sum in the form of interest or dividend. Some of the examples of these financial instruments are equity shares, preference shares, debentures, bonds, etc.
Financial services:Financial Services include the services offered by financial institutions. They include the leasing companies, mutual funds, merchant bankers, issue/portfolio managers, bill discounting houses and acceptance houses. The financial services help not only to raise the required funds but also ensure their efficient use. The various financial services provided includes, leasing, credit cards, factoring, banking, insurance etc.
Page 5
Classification of Financial Sector Industry:The financial sector industry is classified into two. They are: Capital Market Intermediaries Money Market Intermediaries Capital Market Intermediaries mainly provide long term funds to individuals and corporate customers. They consist of term lending institutions like financial
corporations and investing institutions like LIC. Money Market intermediaries supply only short term funds to individuals and corporate customers. They consist of commercial banks, co-operative banks, etc. In the past economic advancement was unknown. Consequently, the use of money for buying and selling was very much restricted. With the development of modern means of communication, economic progress and growth, the use of money also increased. Along with the use of money, the use of credit instrument also developed. The origin of modern financial institutions can be traced to antiquity. Where the individuals used to accept money in the firm as deposits and lend it to people who need for their requirements. Banking in India is mainly governed by the banking regulations act 1934. The reserve bank of India and government of India exercise control over bank from the opening of bank to their winding up by virtue of the powers conferred under this act All the regulatory provisions are not uniformly applicable to all banks. The applicability of the provisions of these acts to a bank depends on its constitution that is whether it is statutory corporation, a banking company or a cooperative society.
Page 6
Origin of the bank

Since, the banking activities were started in different periods no unanimous view regarding the origin of the word bankcan be found. According to authors, the English word bank is derived from the Italian word Banco. The Latin word Bancus and the French word Banque which means bench. According to some author the term bank is derived from the German word Banck which means a joint stock fund or a common fund raised from a large number of the public. Of these two views the latter view seems to be more convincing, because the word bank is generally associated with an institution dealing in money raised from the public.
Banking in India:
Banking in Indian was originated in the last decade of the 18th century. The first bank was The General bank of India, which started in 1786, and bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the state bank of India, which originated in the bank of Calcutta in June 1806, which almost immediately became bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years presidency banks acted as quasicentral banks, as did their successors. The three banks merged in 1921 to from the imperial bank of India, which, upon Indias independence, became the state bank of India.
Page 7
Meaning of bank
A bank is an institution, which deals with the money. It means that a bank receives money in the form of deposits from the public and lends money for the development of trade and commerce. Therefore the bank is called purveyors of credit (i.e. buying and lending of money) and creators of money.
Definition of Bank
According to Indian banking regulation act 1949 (sec 5 (b) defines the term bank as accepting of deposits from the public for the purpose of lending money to the public and repayable on demand and withdrawal by cheque, draft, and orders.
Features of bank
Accepting the deposits from the public on current, fixed and saving bank accounts. Allowing of withdrawals of those deposits by cheques, drafts and orders. Utilization of deposits in hand for the purpose of lending or investment in securities. Performance of banking as the main business.
Objectives of banking act.

1) To promote and develop in India sound and progressive banking principle, practices and convictions and to contribute to the development of creative banking. 2) To render assistance and to provide various common services to members and to the banking industries.
Page 8
3) It has an objective of developing and implementing new ideas and innovations in banking services operations and procedures. 4) To initiate advance planning for introduction of new systems or services in the banking industry. 5) To collect, classify and circulate statistical and other information on the structure and working of the banking system. 6) To promote education and knowledge about the law and practice of banking. 7) To project a good public image of banking as a services industry and develop good public relations. 8) To explore, plan, co-ordinate and organize detailed surveys on banking, business, resources, personal and management development programs of banks and banking industry. 9) To developed the backward areas It also supports to agricultural and rural development.
Reserve bank of India (RBI)

Reserve Bank of India, as a central bank of the country occupies a significant place in the Indian banking and financial system. As an apex
institution, it acts as a guide, regulator, controller and promoter of the financial system. Reserve Bank of India was established in 1935, under the Reserve Bank of India Act, 1934. With the objectives as stated in the Preamble of the RBI Act, to regulate the issue of bank notes and for keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage. Till 1949, it was a private shareholders institution but became a stateowned institution after its nationalization. The ban besides acting as a regulator of financial system also performs developmental role. It is said to be the banker to the banks and controller of activities of banking, non-banking and the financial institutions in the Country.
Page 9
The RBI Act empowers the Central Government to issue such directions to it as they might consider necessary in the interest of general public after consulting the Governor of the Bank.
Functions of the RBI bank

The functions of the Reserve Bank of India are as follows:-
1) Monopoly of note issue:

The RBI has the sole right of note issue. All currency notes except one rupee note and coins are issued by the government of India. The RBI follows
the minimum reserves system under which the bank has to maintain a Minimum reserve of Rs.200 crores of which a minimum of Rs.115 crores in gold and bullion and the rest in foreign securities. This function helps the Central Bank to control money supply in the economy.
2) Banks to the Government:

The RBI is the Banker's agent and adviser to the government. It accepts deposits and makes payments on behalf of the Government. It provides short term loans namely "ways and means advances" to the Central Government and State Government. These loans have to be repaid within a period of 3 months. It represents the government in various international organizations like IMF, World Bank etc. It sends its official as representative of the government for international seminars and conferences. All important policy decision is taken by the government in consultation with the RBI. It advises the government on important matters like agricultural credit, devaluation of rupee, credit policy for the industrial and export sectors etc.
3) Banker's Bank:
RBI acts as a banker for all the commercial banks. All scheduled banks come under the direct control of RBI. All commercial as well as schedule bank has to keep a minimum reserve with the RBI.
Page 10
They have to submit weekly reports to RBI about their transactions. By performing 3 functions, the RBI helps the member banks significantly. They are given below such as: a) it acts as the lender of the last resort. b) It is the custodian of cash reserves of commercial banks. c) It clears the transaction. It acts as the central clearing house.
4) Management of foreign exchange reserves:

RBI is the custodian of the foreign exchange reserves of the country. It is the responsibility of the RBI to stabilize external value of rupee and carry out transactions in foreign currencies. The Foreign Exchange Regulation Act (FERA) passed by the government empowered RBI to have full control over management of foreign exchange.
5) Credit control:
The central bank uses the quantitative and qualitative tools to control credit. It is one of the principal functions of RBI. It helps the bank to ensure exchange rate stability and price stability. In quantitative credit control, the volume of credit is controlled and in qualitative credit control, the direction of credit is regulated. Bank rate, open market operations and cash reserve ratio are used under the quantitative method.
Functions of modern banking

Modern banking measures of the money supply, functions and types of financial institutions, and modern E-banking.
A) Measuring the money supply.

To understand the modern banking, an understanding of what constitutes the money Supply, the money available in the economy is needed. The money supply can be divided into two categories.
Page 11
1) Liquid assets those are easily accessed and immediately used to purchase goods and services. 2) The assets that cannot be used directly as cash, but it can be easily converted to cash.
B. Functions of financial institutions.

1) storing money:One of the basic functions of a bank is to provide a safe, and convenient, storage Location for valuables. These generally cover fireproof and nearly impenetrable and banks are insured against loss due to theft.
2) Saving money:Banks are offer a variety of means of saving money such as saving account, checking account, money market accounts and certificates of deposit. Banks generally pay interest, an amount paid for the use of public money, on these accounts.
3) Loans:Banks offer loans, money given out for a period of time in exchange for fees and interest charges. The banks are limited in the total amount of loan that they issue because of the fractional reserve system
4) Mortgages:Mortgages are specific types of loans used to buy real estate. They generally come in term length of 15, 25, or 30 years. A key determining factor in determining the interest rate and the term on the mortgage is the borrowers creditworthiness.
5) Credit cards:Credit cards are those cards that allow their holder to make purchase of goods and service in exchange for credit cards provider immediately paying for the goods and services, and the card holder promising to pay back the amount of the purchase to the card with interest. It also consist the credit worthiness of credit card holder.
Page 12
6) Conveying interest:The banks are earning income through the interest that they charge on their lending. As we known, the interest is the price paid to use barrowed money.
7) Earning profit:Banks exists to earn money the same as any other business. They do this through charging interest on their lending and through charging various fees for their service.
c) Modern E-commerce.
Modern banks utilize electronic formats to complete many of their functions. These electronic formats can include:1) Automated teller machines (ATM):ATM replace human bank teller in performing basic banking functions such as deposits, withdrawals, account inquires. Key advantage of ATMs are 24 hours availability, elimination of labors cost and convenience of location.
Evaluation of modern banking

The growth of banking in England in the 19th century paved the way for Establishment of systematized in the world. Bank institution in the past, performed limited functions such as, receiving deposits against bank notes and then issuing notes in the country. As time advanced and industry expand and the scope of the bank also expanded. Banking institutions deal with a large number of services to the customers. They serve as custodians of stock and shares and other valuables. They finance import and export. They dealt not only with bill of exchange, but also with bills of lading, railway receipts, warehouse warrant and receipts, marine insurance policies and so on. As brokers, they advance money on securities and issue letter of credit, travelers cheques and circular notes.
Page 13
Page 14
On the basis of functional classification

1) Commercial banks:Commercial banks are those banks which accept deposits from the public and lend them mainly to commerce for short period.
2)
Industrial or development banks:Industrial banks are the banks which provide the fixed capital to industries Because they invest their funds in
and they also called investment banks.
subscribing to shares and debentures of industrial concern with objective of providing long term finance to industries.
3)
Agricultural bank:Agricultural banks are those banks which provide finance to agricultural
activities. This kind of banks are found in many countries like India , England , Germany, France, USA etc in most of countries agricultural banks are
organized on co-operative banks which provide short term finance to the agricultural activities for a purchase of fertilizers, pesticides and seeds for the payment of wages.
4)
Exchange banks:Exchange banks are performing the foreign exchange activities between
two or more countries. A small portion of Indias foreign exchange business is done by Indian commercial banks.
5) Savings bank:Saving banks are special banks which specialize in the mobilization of small savings of the middle and low income groups. As they are concerned with the mobilization of small savings if the people they are called savings bank.
Page 15
6) Central bank:A central bank is a bankers bank and monitory institutions found in a country. As it occupies a central position in the banking structure of country, it is known as central bank.
On the basis of structured classification

1) Branch banking:It is a system where the banking business is carried on by a single bank with a net work of branches throughout the length and breadth of the country. The bank will have head office in one town and branches in different parts of the country. The affairs of the branch are directed by the branch manager in accordance with the regulations and policies of the head office.
2) Unit banking;In the unit banking system, the bank operations are carried through a single office and confined to a particular area. The banks are maintaining no branches. In some exceptional cases the banks are allowed to have branches with in limited area.
3) Corresponding banking system:The unique feature of unit banking system is the correspondent banking system. This is an arrangement with which banks carry accounts with banks in the neighboring cities and these banks in turn have accounts with larger cities like New York.
4) Deposit banking:Receiving deposit and making advances for short period is called deposit banking. The underplaying principle of this system is that banks cannot lockup their deposits in long term investments as the deposits are repayable on demand.
Page 16
5) Universal bank:Universal bank is a name given to banks engaged in diverse kind of banking activates. The activities include making loan and advances for long term, providing working capital, insurance, depository services, brokerage and venture capital etc
6) Local area bank:-This is a new type of regional bank set up in rural and
semi urban center under private sector. These banks require a low capital base of rs.5 Crores only. They are permitted to operate in two or three districts only.
Page 17
Part- B
Meaning of credit:Credit is the trust which allows one party to provide resource to another party. Where that second party does not reimburse the first party
immediately, but instead arranges either to repay or return that resource at a later date. The resources provided may be financial or they may consist of goods and services. Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender, to a debtor or as barrower. Credit does not necessarily require money. The credit concept can apply in barter economies as well, based on the direct exchange of goods and service. However, in modern societies credit usually denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account. Movement of financial capital is normally dependent on either credit or equity transfers. Credit is in turn dependent on the reputation or credit worthiness of the equity which takes responsibility for the funds. Credit is also is also traded in financial markets. The purest form is the credit default swap market, which is essentially a trade market in credit insurance. A credit default swap represents the price at which two parties exchange the risk the protection seller takes the risk of default of the credit in return for a payment, commonly denoted in basis points of the national amount to be referenced, while the protection buyer pays this premium and in the case of default of the underlying, delivers this receivable to the protection seller the pa r amount.
Credit management
Credit management is mainly concerned with using banks resources both productively and profitably to achieve a preferable economic growth. At a same time it also seeks a fair distribution among the various segments of the economy so that the economic fabric grows without any hindrance as stipulated in the national objectives, in general and the banking objectives, in particular. Credit
Page 18
management concerned with planning selection analysis budgeting designing and implementing of schemes and plans. It is interwoven into the fabric to the management itself.
Objectives of credit management

Credit management evaluates how funds are used. In all cases, it involves a sound judgment of men and project, combined with a logical approach to decision making. The core of credit policy is to channelize the flow of funds into the various sectors in accordance with the socio-economic objectives and also to maximize earnings in the long run and optimize them in the short run. This calls for an evaluation of the condition of production and marketing.
Banks and institutional management:

Credit management is concerned with the efficient use of records, mainly of capital funds and deposits. The objectives of credit management are in consonance with the banks objectives Sectoral flow of credit Giving support to agriculture, industry, and exports. Ensuring productive utilization of funds Maximization of profits Monitoring the end use of funds at the micro-level Minimizing the risk and ensuring the safety Recovery and flow of funds productively Increasing the earning of the bank Credit planning and control at macro level Credit management is important because it has as on all the activities of the bank. Its primary responsibility is to discharge the credit function successfully. It touches on all other banking functions. Credit management may concern to be the management of credit function.
Page 19
Credit analysis:
A cardinal principle of the management of bank assets is to conduct it in a profitable and safe manner. Lending is the most profitable as well as the most risky functioned performed by the banks. Therefore, it must be done efficiently and with a minimum risk factor. To manage the funds effectively, credit management must be operative and credit analysis should be perfect. The objective of credit analysis is to determine the capacity of the applicant to borrow and his ability and willingness to repay requested advances in accordance with the term of advance contract. Credit analysis must be sufficiently complete to ascertain the risk associated with the advances and willingness and ability of borrower to repay. It implies engaging in economic forecasting. Economic
forecasting is necessary because we live in a dynamic rather than static society. Other influencing factors will be the size of credit, the structure of the business, the risk factor involved, the purpose of the advances the length of time the advance will be outstanding, the sources of funds for repayment and the principals involved. The amount and type of security also will influence the credit analysis. This apart, location, product, market, infrastructural facility will also influence credit analysis and credit rating. The amount of time devoted to credit analysis by a bank varies considerably with each advance application. And each will require meticulous investigation and evaluation for better and effective credit management.
Credit appraisal:
The objective of a revised system should be to examine the financial, technical and managerial viability of firms operations in order to determine the need and end use of short term funds and attempt to justify pre-conceived decision on a credit demand. After all, the best risk to a banker is a well- managed firm rather than the goodwill alone or quantum of assets the firm commands. From the bankers point of view, credit appraisal involves a detailed financial analysis of the past and projected viability of a firms operations, determination of needs,
Page 20
purpose of quantum of short-term credit and what follow up and control measures require stipulation to ensure that the firms operations continue to be viable and short term funds are utilized by it for approved purposes.
Knowledge of borrower:
The lender with a close knowledge of his borrower has as offensive and defensive edge, provided his relationship is not so close as to cause him to overemphasize the customers interest so much that it is difficult for him to shift the tone of his relationship when problems arise. Loan officers often find that they know more about their credit when business turns down or other difficulties develop than they did when they approved them. But there radar dishes are expected to detect, in timely fashion: y Weak financial and management controls y Losses in one part of the business obscured by profits else where y One man shows , headstrong mismanagement y Fad products y Marginal products y Brilliant but erratic behavior y Over-reaching y Poor business strategy y A lack of appreciation of business fundamentals on the part of the borrower. Success does not necessarily last, and size is no guarantee of good performance or survival. Factors such as technology and changing consumer tastes frequently must be dealt with.
Credit risk:Credit risk is an investors risk of loss arising from a borrower who does not make payments as promised. Such an event called a default
Page 21
Types of credit risk

Credit default risk:The risk of loss when the bank considers that the obligor is unlikely to pay its obligations in full or the obligor is more than 90 days past due on any material credit obligation default risk may impact all credit sensitive transactions, include loans, securities and derivatives .
Concentration risk: The risk associated with any single exposure or group of exposures with the potential to produce large enough losses to threaten a banks core operations. It may arise in the form of single name concentration or industry concentration.
Country risk:The risk of loss arises when a sovereign state freezes foreign currency payments or when it defaults on its obligation.
Meaning of Loans
A loan is a type of debt like all debt instrument, a loan entails the redistribution of financial assets over time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called principal, from the lender, and his obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money paid back in regular installments, or partial repayments; in any annuity, each installment is the same amount.
A loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In legal loan, each of these obligations and restrictions is enforced by contract, which can also
Page 22
place the borrower under additional restrictions loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent. Acting as a provider of loan is one of the principal task for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.
Types of loans: Secured loan:

A secured loan is a loan which the borrower pledges some assets as collateral. A subsidized loan is a loan that will not gain interest before you begin to pay it. It is known to be used at multiple colleges. An unsubsidized loan is a loan that gains interest the day of disbursement. A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing.
Unsecured loan:
Unsecured loans are monetary loans that are not secured against the borrowers assets. These may available from financial institutions under many different marketing packages. They are:
1) Credit card debt

2) Personal loans 3) Bank overdraft 4) Credit facilities 5) Corporate bonds The interest rates applicable to those different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the consumer credit act 1974. Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured lenders options for recourse against the borrower in the event of default are severely limited.
Page 23
Period sanctioned
1) Short term loan:
Short term loans are loans which are granted for a period not exceeding one year. These are advanced to meet the working capital requirements, against security of movable assets like goods, commodities, shares, debentures etc...
2) Term loans:
Medium and long term loans are usually called term loans. In other words, when a loan granted for a fixed period exceeding one year and is repayable according to a schedule of repayment, as against on demand and at a time, it is known as a term loam. A term loan for longer period repayment schedule when a loan repayable with in a period of over 3 to 5 years it is called medium term loan. And, when a loan is granted and repayable for a period of over 5 to 10 years, they are called term loans.
3) Demand loan:
A demand loan is a onetime advance for fixed an amount and no debits to the account may be made subsequent to the initial advance expect for interest, insurance premium and other sundry charges. Demand loans are sanctioned against goods and documents of title thereto banks own fixed deposits, gold ornaments, etc These loans are repayable with in a period of 36 months to 48 months
on the basis of purpose;

Consumption loans:
Traditionally, banks used to focus on loans for productive purpose, but during the recent past banks have increasingly started giving loan for consumption purpose like education, medical needs and automobiles. Page 24
Meaning of small and medium enterprises:

It can be divided into two types as industry sector and services sector.
A). on the base of industry sector;

Micro enterprises:
Micro enterprises can be define as where the investment in plant and machinery does (original cost) does not exceed Rs 25 lakhs in an organization.
Small enterprises:
The investment in plant and machinery is more than Rs 25lakhs but does not exceed Rs 500 Lakhs, is called as small enterprises.
Medium enterprises:
Medium enterprise refers that the cost of investment in plant and machinery is more than Rs 500 Lakhs; but does not exceed Rs 1000 Lakhs is known as medium enterprises.
B). on the base of services sector;

Micro enterprises:
It refers that where the investment in equipment does not exceed Rs 10 Lakhs is known as micro enterprises.
Small enterprises:
The investment in equipment is more than Rs 10 Lakhs but does not exceed Rs 200 Lakhs is called as small enterprises.
Medium enterprises:
Medium enterprise refers that the cost of investment in equipment is more than Rs200 Lakhs but does not exceed Rs 500 Lakhs is known as medium enterprises.
Page 25
Role of Small and Medium Enterprises in our Economy.

In developing country like ours, small and medium enterprises assume an important status. They play a vital role in the economic development, more so in a developing economy like India. The promotion and growth of SME sector has been a cardinal feature of the industrial policy over the years. Its employment potential is huge. In India, the small enterprises sector alone employs over 30 million people and is next only to agriculture sector in employment generation. Its as a foreign exchange earner through exports is quite significant. It is established that SME sector contributes a substantial share to Indias total exports.
SME are best suited to Indian conditions for the following reasons: 1) They can be set up with lower to fairly medium investment.
2) Growth of SME can be evenly spread throughout the country giving boost to industrialization of the regions. 3) The SME act as a supplement to the agriculture activity as many industrial activities under SME are agro-based and agro-related 4) Labor intensity in this sector provides an employment opportunity which is one of the foremost in the national agenda.
Page 26
CHAPTER -2
RESERCH DESIGNE
Introduction
In the chapter the design of the analysis has been explained. It gives an insight into the statement of problem, the objective of analysis, research methodology, and the limitation of the analysis and an overview of the chapter scheme.
Title of the study

A Study on Credit Loans to Small and Medium Enterprises provided by the Canara bank.
Statement of the problem

In todays modern world the globalization playing a vital role with plenty of competition. In order to sustain in this competition the banks needs to serve with more efficiently and effectively. The credit loan to small medium enterprises is one of the major functions in Canara bank. The bank has to face that fluctuation in fixing interest rates. Small and medium enterprises are facing stiff competition with large scale enterprises in the global market.
Scope of analysis
The analysis mainly concerned that credit loans provided by Canara bank to small and medium enterprises. And it also consist that period limitation for loan, interest rates and overall performance of the bank.
Page 27
Objectives of the analysis

1) To know the results of SME sulabh. 2) To know the customer tendency about loans in Canara bank. 3) To know the bank fluctuations in interest rates. 4) Helps to take effective measures. 5) To know the overall performance of the bank. 6) To offer suitable suggestion.
Review of literature:
Introduction
The literature of review starts with the selection of the problem for research and continuous through the various stages of the research and ends with writing. Previously no one had undertaken the study of the problem with help of review literature of various investigations; the research has been completed with findings and suggestions for the company. Hence my research is very beneficial for the bank as it contributes appropriate that that help the bank in solving its problem.
Purpose of review:
To gain background knowledge of the credit loans to SME To identify appropriate methodology research development method of measuring concept and technique of analysis.
Methodology:
Methodology are carried out with help of the following method Visiting various internet website. Visiting our own library (CMRIMS) and the bank. Skimming through some reports on similar lines. Latest publication of the Canara bank.
Page 28
Research Methodology
A) Type of research: The research undertaken is an analytical type of research. B) Data sources: Data has been obtained through primary and secondary sources of research. Primary data: Data has been collected through interview schedules with the help of manager and his subordinates in SEM section. Secondary data: Data has been obtained from secondary source like Canara bank manuals, accounting records and through internet.
Research instrument:
The data has been obtained through interviews and from secondary sources of books of accounts.
Sample size:
The sample size of the analysis was current years result from the books of accounts.
Plan of analysis:
The data has been organized, tabulated and analysis with the help of charts and inferences are drawn based on it.
Limitation:
The analysis confined only to the SME section. The success of the project depends on the data made available. It consists the limited period.
Operational Definition:
1) Operational definitions identifies one or more specifies observable Conditions or events and then tells the researcher how to measured those events.
Page 29
2) A very clear and very precise explanation of the items being measured of the items that are used to ensures. 3) Operationalization the transformation of an abstract, theoretical concept, observable, and measurable
Definition of the Bank:

According to Indian banking regulation act 1949 (sec 5 (b) defines the term bank as accepting of deposits from the public for the purpose of lending money to the public and repayable on demand and withdrawal by cheque, draft, and orders.
Definition of Credit:
Credit is the trust which allows one party to provide resource to another party. Where that second party does not reimburse the first party immediately, but instead arranges either to repay or return that resource at a later date.
Definition of Loans:
A loan is a type of debt like all debt instrument, a loan entails the redistribution of financial assets over time, between the lender and the borrower.
Definition of small and medium enterprises:

It can be divided into two types as industry sector and services sector.
A). on the base of industry sector; Micro enterprises:

Micro enterprises can be define as where the investment in plant and machinery does (original cost) does not exceed Rs 25 Lakhs
Page 30
Small enterprises:
The investment in plant and machinery is more than Rs 25 Lakhs but does not exceed Rs 500 Lakhs is called as small enterprises.
Medium enterprises:
Medium enterprise refers that the cost of investment in plant and machinery is more than Rs 500 Lakhs; but does not exceed Rs 1000 Lakhs is known as medium enterprises.
B). on the base of services sector; Micro enterprises:

It refers that where the investment in equipment does not exceed Rs 10 Lakhs is known as micro enterprises.
Small enterprises:
The investment in equipment is more than Rs 10 Lakhs but does not exceed Rs 200 Lakhs is called as small enterprises.
Medium enterprises:
Medium enterprise refers that the cost of investment in equipment is more than Rs200 Lakhs; but does not exceed Rs 500 Lakhs is known as medium enterprises.
Page 31
Chapter scheme:
Chapter-1: introduction
This chapter includes the subject background of the research topic.
Chapter -2: research design.

This chapter has brief introduction about subject background, statement of the problem, scope of the analysis, objectives of the analysis, research methodology, research instrument, sampling method, sampling size, plan of analysis; review of literature, operational definition and limitation and over view of chapter scheme.
Chapter-3: profile of Canara bank.

This chapter deals with detail profile about Canara bank.
Chapter-4: analysis of credit loans to small and medium enterprises

This chapter contains the tabulation and analysis of data collected for the purpose of ascertaining the performance of Canara bank regarding loans to SME hub.
Chapter-5: summary of the findings, conclusion and suggestions.

This chapter gives the summery of findings of the analysis, suggestions and bibliography.
Page 32
CHAPTER-3
PROFILE OF THE BANK
Canara bank is a state-owned financial services company in India. It was established in1906, making it one of the oldest banks in the country. As on 2011 November, the bank had a network of 3257 branches, spread across India. The bank also has offices abroad in London, Hong Kong, Moscow, shanghai, Doha, and Dubai. Ammembal Subba Rao Pai, a philanthropist, established the Canara Hindu Permanent Fund in Mangalore, India; on 1st July 1906. The bank changed its name to Canara bank limited in 1910 when it incorporated.
Logo of Canara bank:
The rich blue represents stability, scale and depth. Bright yellow represents optimism, warmth and energy. The new brand identity is based on the idea of a bond and is a presentation of the close tie between the bank and its stakeholders- from customers and employees to investors, institutions and society at large.
Corporate vision of the bank:

To emerge as a best practices bank by pursuing global benchmarks in profitability, operational efficiency, asset quality, risk management and expanding the global reach.
Page 33
Corporate mission:
To provide quality banking services with enhanced customer orientation, higher value creation for stakeholders and to continue as a responsive corporate social citizen by effectively blending commercial pursuits with social banking.
The founding principles of the bank:

1. To remove superstition and ignorance 2. To spread education among all to sub-serve the first principle. 3. To inculcate the habit of thrift and savings. 4. To transform the financial institution not only as the financial heart of the community but also the social heart as well. 5. To assist the needy. 6. To work with a sense of services and dedication 7. To develop concern for fellow human beings and sensitivity to the surroundings with a view to make changes \ remove hardships and sufferings.
Significant Milestones
1906- At first the Bank was established as Canara Hindu Fund limited by Sri Ammembal subba rao pai, as president. The first balance sheet contains with the capital- 50000, deposits-40000, advances-84000, net profit-2420. 1910 Renamed as Canara bank limited. 1945- Women made entry into the bank. 12 women employees recruited. 1954- The administrative offices shifted from Mangalore to Bangalore.
Page 34
1958-The Reserve bank of India has been order Canara bank to acquire G.Raghumathmul bank in Hyderabad. 1969-The Government of India has Nationalized Canara Bank, along with 13 other major commercial banks of India. 1976- The Canara bank inaugurated its 1000th branch. 1983- The Canara bank opened its first overseas office, a branch in London. 1984-The bank was emerging as No.1 Bank in assets Growth, Deposits Capital and Net interest income. 34th in the World in Real Growth of Assets 1985- Canara bank established a subsidiary in Hong Kong, indo Hong Kong international finance. 1996- The Canara bank became the first Indian bank to get ISO certification for total branch banking for its Seshadripuram branch in Bangalore. Now it has stopped opting for ISO certification of branches. 2002- First public offer of shares by the bank. 2006- Centenary year- global business crossed 200000 Crore. 2008-09- Canara bank opened its third foreign operation in shanghai. 2010- The bank achieved global business 400000 Crore; and record net profit3000crore.
Mergers of other banks into Canara bank;

1. 2. 1961: the bank of Kerala limited, Trivandrum. The seasia midland bank limited, alleppey.
Page 35
3. 4. 5. 6. 7. 8. 9. 10.
The C.Raghunathmal bank limited, Hyderabad. The Trivandrum permanent bank limited. 1963: the Sri Poornathrayeesa vilas bank ltd, tripunithura. The Arnad bank ltd, tiruchirapally. The Cochin commercial bank ltd, Cochin. The Pandyan Bank Limited, Madurai. 1968: The Pangal Nayak Bank Limited, Udupi, 1985 The Lakshmi Commercial Bank Limited with 230 branches and 3500 employees which is the biggest merger in the Indian banking history.
Specialized Branches/ Business Units

1. 2. 3. 4. 5. 6. 7. 8. Agricultural finance branch Agricultural consultancy services Industrial finance branch. Overseas branches. NRI branches Professionals branch Assets recovery management branch Mahila banking branch
Page 36
9. 10. 11.
Prime corporate branch SME Sulabh branch Housing finance branch.
Subsidiary companies of Canara bank

Confine homes Limited Canbank Factors Limited Canbank venture capital fund limited. Canbank computer services limited. Canara bank securities limited Canara Robeco asset management company limited Canbank financial services limited Canara HSBC oriental life insurance company.
Branches and Offices Abroad

1. 2. 3. 4. Branch at London and Leicester Branch at Hong Kong Branch at Shanghai, china A joint venture bank in Moscow- COMMERCIAL BANK OF INDIA LLC. With state bank of India.
Page 37
Regional rural banks

1. 2. 3. Shreyas Gramin Bank South Malabar Gramin Bank. Pragathi Gramin bank.
Development projects
Canara bank made partnership with UNEO to initiate a successful solar loan programmed. It was a four- year $7.6 million effort, launched in April 2003 to help accelerate the market for financing solar home systems in southern India.
Major IT initiative
Canara bank had a major IT initiative to network all branches and move them to a single software platform. Canara bank chose flex cube from oracle financial services software as the application. The bank entered into agreement with IBM for rolling out flex cube to over 1000 branches as a part of phase 1.
Products and services provided by Canara bank.

The bank providing various products and services as favor to public, in order to expansion its growth. These are all as under: Loans and Advances Savings and Deposits Technology. Card services. Mutual funds Consultancy services Depository services Accounts and deposits
Page 38
ORGANISATIONAL STRUCTURE
BOARB OF DIRECTORS.
CHAIRMAN AND MANAGING DIRECTOR
EXCUTIVE DIRECTORS
CHIFE VIGILANCE OFFICER
WINGS AT HEAD OFFICE HEADED BY GENERAL MANAGER.
CIRCLES HEADED BY GENERAL MANAGER/DEPUTY GENERAL MANAGERS
Page 39
Wings at Head office

1. personal wing 2. strategic planning and development wing 3. prime corporate credit wing 4. corporate wing 5. priority credit wing 6. MSME wing 7. Credit administration wing 8. Credit monitoring wing 9. Department of information and technology wing 10. Transaction banking wing 11. Financial management and subsidiary wing 12. General administration wing 13. Retail banking wing 14. Recovery wing 15. Inspection wing 16. Vigilance wing 17. Treasury and international operation wing 18. Risk management 19. Compliance department
Specialized branches /business units

1. Agricultural finance bank 2. Agricultural consultancy services 3. Industrial financial branch 4. Overseas branch 5. NRI branches 6. Professional branch 7. Assets recovery management branch
Page 40
8. Mahila banking branch 9. Prime corporate branch 10. SME sulabh branch 11. Housing finance branch
Social banking initiatives

1. Rural services volunteer 2. Rural clinic services 3. Cangrama sikshana Kendra 4. Hari kalyana yojna 5. Jala yoga yojna 6. Term campaign 7. Blood bank 8. Book bank 9. Canara bank jubilee education fund 10. Ced for women 11. Canara bank relief and welfare socity A. Sevakshetra hospital; B. matruchhaya 12. Trible counseling and coordination center 13. Rudseti(24)
Page 41
Number of branches of Canara bank
Month/year Dec\1976 Dec\1985 Dec\1990 Dec\1995 Mar\1998 Mar\1999 Mar\2001 Mar\2002 Ma\r2003
Branches 1000 1800 2000 2136 2312 2379 2404 2409 2424
Month/year Mar\2004 Mar\2005 Mar\2006 Mar\2007 Mar\2008 Mar\2009 Mar\2010 Mar\2011
Branches 2468 2512 2530 2578 2678 2729 3000 3257
In the earlier 1976 the bank had 1000 branches; gradually it does expand its business to 3257 branches as the year of March 2011.
Page 42
Number of employees
year Inception 1956 1960 1970 1980 1990 1996 1999 Employees 4 1000 2000 10000 30000 51000 54000 55097 year 2001 2002 2003 2004 2006 2008 2009 2010 2011 Employees 48400 47796 47566 47613 46893 45260 44090 43380 43000
in the initial stage the bank had started with 4 employees and the in the year it raised to 55097 employees with the expansion of business but in the year 2011 the number of employees reduces to 43000 due to advancement in technology.
Page 43
Canara bank offering loan schemes for SME

Scheme for energy savings for SME sector. Loan scheme for financing power tools cantools Simplified open cash credit Open cash credit scheme Composite loan scheme Term loan Mahila Udyam Nidhi scheme Technology up gradation fund scheme for textile and jute industries in SSIs Loan for ISO 9000 Export financing schemes Artisans credit card schemes Non fund based limits Scheme for standby credit for capital expenditure of SMEs. Standby term loan scheme for sectors Debt restructuring mechanism for small and medium enterprises 15% margin money subsidy scheme under TUFS (MMS@15%-TUFS) for SE textiles and jute units. Margin money subsidy @20% under technology up gradation fund scheme for power looms in SSI sector. apparel exporters in small medium
Page 44
Loan scheme for reimbursement of investment made in fixed assets by SMEs Doctors choice Laghu Udyam credit card scheme. The above points represent that the Canara bank offering various kinds of loans schemes for development of small scale and medium scale enterprises. The loans are sanctioned by applying terms and conditions. Say for example if a person wants loan scheme for energy savings for SME sector, he need to follow terms and conditions as mentioned bellow To get above loan scheme first of all the business unit should comes under small scale sector and medium enterprises and cost of energy for the unit should constitute not less than 20% of the total cost of production, and the unit should possess energy audit report by an approved energy consultant. The current account holders of the unit have dealings exclusively with Canara bank satisfactorily for a period of last one year. The business unit can get loan amount maximum 100 lakhs with the margin of 10% of project cost. The interest rate on loan amount is 1% less than prevailing rate applicable for loans of similar tenure. And the business has to keep the security as primarily- assets created out of the credit facility, and collateral- no need of security up to 5 lakhs. To getting loans above Rs 5 lakhs it has to determine by bank on merits. The bank allowed to repayment of loan for maximum 5 to 7 years including moratorium of 6 months. In the same way the respective terms and conditions are applied for various schemes those are offering by the bank.
Page 45
Rate of interest
Types of loan Loan amount Interest rate on working capital p/a Up to 50000 Loan at BPRL (presently) Loan under national equity fund scheme & Mahila Udyama Nidhi scheme Short & long term loan 1) Over 2 lakhs Inclusive 10 lakhs 2)Over 10 lakhs inclusive 100 lakhs 3)Over 100 lakhs Between 10.50% to 13.50% Between 10.75% to 13.50% Between 11% to 13% Between 11.25% to 13.75% Between 10.75% to 13.75% Between 11% to 13.75%. Over 50000 Inclusive 2 lakhs 1) Up to 50000 2)Above 50000 Inclusive 2 lakhs 9.75% 10.60% 10.25% 10.60% 9.75% 11.75% Interest rate on term loan p/a 10.25% 11.75%
Rates of interest above Rs.2 lakhs are on graded basis as per scoring norms in respect of working capital and term loans. In respect of term loans above Rs.2 lakhs, rates of interest depend on period of repayment (3 to 5 years and above 5 years)
Page 46
Corporate goals of the bank 2011-12.

y Aiming at a Total Business Growth of over 20% year after year by March 2012. y Over 250 new branches to be opened during FY12 Out of which 100 rural branches will be opened to implement Financial Inclusion Plan. y Significantly increase ATM strength. y Steps for commencing Data Warehousing initiated. y Thrust on growing Retail Business- Retail Deposits and Retail Advances. y Plans to open Branches at Manama, Bahrain, QFC-Qatar, South Africa, Germany, the USA, Brazil, Tanzania and Representative Office in Tokyo, Japan.
SWOT analysis of the bank.

It is the overall evaluation of the strengths, weakness, opportunities and threats involved in a project, business venture, company or organization or in any other situation requiring a decision. There are several strengths that can be found in the banking. It is due to the strengths that have made the bank to become what it is today Canara bank has been able to succeed and to become a strong bank of today, facing challenges from the time it started and to become a strong bank of today. Facing challenges from the time it started till today, the bank has accomplished so much in such a way that it has acquired a good reputation in the country. The strengths found of the bank are as follows:
Strength
1. Innovative schemes: Canara bank providing various innovative schemes to its customers in the form of various loan schemes deposits schemes with attractive interest rates etc...
Page 47
Principles: Canara bank has succeeded to be one of the best banks in the country due to its founding principles, which have been implemented by the founder. Among the principles includes to work with a sense of service and dedication and to transform the financial institution not only as the financial heart of the community but also the social heart as well. 2. Technologically advance: In the modern world the competition is
gradually increased between the various banks. To sustain in this competition the bank has adopted advanced technology in the operating activities of the bank Goodwill; The bank has been able to provide and maintain goodwill to its customers, Canara bank gives a welcome gesture to all the customers as well as other people, it is due to this the bank has been accepted by everyone and people feel secure about the bank. Size of the bank: At present the Canara bank has been increased its operation across the India with 3257 branches and 44000 employees.
Weaknesses
Low International presence: The Canara bank does not have much publicity at international level. It has limited branches at international level. Therefore it facing the problem to serve more effectively in other countries. Communication: Having many branches in the interior and the hilly areas, in terms of development it becomes a weakness as far as penetrating and operating the banks is concerned. The bank lacks a high technology communication system in terms of computerization and networking. Thus not providing social justice to the people in the villages.
Page 48
Opportunities
Creating needs: Canara bank is able to create needs to the people still do not know the advantages of banking. Therefore, Canara bank ensures that the people understand the need for banking and also attract other people at large. Galore: India is developing country, which continues to grow day by day, therefore Canara bank has chance to attract people in order to invest in banks since not all people are aware of banking services.
Threats
Competitors: nowadays there are many banks that have been established having advanced technologies. Since Canara bank has been in existence for so many years, it faces competition in coping with the new generating banks like the foreign banks, which are highly, recognized world wide Private Banks: There is a booming of the establishment of private banks in India. Canara bank being nationalized bank faces challenges in trying to compete with the private banks. As a result, it becomes a great threat to Canara bank. Rules and regulations: there are some rules and regulations, which only appear to the nationalized banks. Therefore, for the other banks like the foreign and private banks the rules and regulations are less implemented making them a threat to Canara bank in terms of moving forward. Economic crisis: The bank has facing the fluctuations in fixing interest rates due to uncertain economic crisis like inflation and deflation in economic operations.
Page 49
CHAPTER-4 ANALYSIS AND INTERPRETATION
Page 50
Table showing time norms for disposal of loan applications

Loan applications from units under SME sector will be disposed off within reasonable time as mentioned bellow; provide such applications are complete in all respects.
Loan amount
25000 25000 to 5 lakhs 5 lakhs to 25 lakhs Over 25 lakhs
Periods(in weeks)
Within 2 weeks Within 4 weeks Within 6 weeks Within 8 weeks
The above table represents that if a person going to take loan amount of Rs 25000 he has repay within 2 weeks. If a person going to take loan amount beyond 25000 and up to 5 lakhs the time duration is given as 4 weeks .if a loan sanctioned of above 5 lakhs up to 25 lakhs and over of 25 lakhs the person has to repay within period of 6 and 8 weeks respectively.
Page 51
Chart showing time norms for disposal of loan applications
period (in weeks )

8 7 6 5 4 3 2 2 1 0 25000 25000 to 5 lakhs Over 25 lakhs 4 25000 25000 to 5 lakhs 5 lakhs to 25 lakhs 6 8
5 lakhs to 25 lakhs
Over 25 lakhs
The above chart represent that period in weeks to disposal of respective loan amount SME schemes.
Page 52
Table showing rate of interest on loan at BPRL scheme
Loan amount
interest rate on working capital
interest rate on term loan
Up to 50000
9.75%
10.25%
Above 50000 inclusive 2 lakhs
11.75%
11.75%
The above table showing that interest on working capital 9.75%, interest rate on term loan 10.25% will charge if the loan amount is 50000. If the loan amount above 50000 and up to 200000 the interest rates will applicable 11.75% for both on working capital and term loan.
Page 53
Chart showing rate of interest on loan at BPRL scheme
12.00% 10.25% 10.00% 9.75%
11.75%
11.75%
8.00%
6.00%
interest ra te on working capita l interest on term loa n
4.00%
2.00%
0.00% 50000 up to 200000 loan at BPRL
The chart showing that previous table results of interest rates.
Page 54
Table showing rate of interest for Loan under national equity fund scheme & Mahila Udyama Nidhi scheme
Loan amount
interest rate on term loan 10.25% 10.60%
Up to 50000 Above 50000 inclusive 2 lakhs
9.75% 10.60%
This table showing the interest rates under special scheme of Loan under
national equity fund scheme & Mahila Udyama Nidhi. The interest rates up to loan amount of 50000 will charge 9.75% on working capital and 10.25% on term loan. If the loan amount is above 50000 and bellow 2 lakhs the interest charges will be 10.60% for both terms.
Page 55
Chart showing rate of interest for Loan under national equity fund scheme & Mahila Udyama Nidhi scheme
10.60% 10.40% 10.25% 10.20% 10.00% 9.75% 9.80% 9.60% 9.40% 9.20% up to 50000
10.60%
10.60%
interest rate on working capital interest rate on term loan
above 50000 inclusive 2 lakhs
The chart showing the result of interest rate of Loan under national equity fund scheme & Mahila Udyama Nidhi scheme.
Page 56
Chart showing Interest rate on short term and long term loans
Loan amount
interest rate on term loan 11.25% to 13.75%
Over2 lakhs inclusive 10 lakhs Over 10 lakhs inclusive 100 lakhs Over 100 lakhs
11% to 13%
10.50% to 13.50%
10.75% to 13.75%
10.75% to 13.50%
11% to 13.75%
The table representing that interest rate on working capital is between 11% to 13% when the loan amount is above 2 lakhs inclusive 10 lakhs, between 10.50% to 13.5%, when the loan amount above 10 lakhs and inclusive 100 lakhs and if the loan amount is above 100 lakhs the rate of interest will be 10.75% to 13.50%. In the same way interest rate under term loans will be between 11.25% to 13.75%, 10.75% to 13.75%, and 11% to 13.75% in respective specified amount as above.
Page 57
Chart showing Interest rate on short term and long term loans
11% 11%
11.25%
11% 11% 11% 11% 10% 10% 10% above 2 lakhs inclusive 10 lakhs over 10 lakhs inclusive 100 lakhs 10.75%
11%
10.75% interest rate on working capital
10.50%
interest rate on term loan
over 100 lakhs
The chart representing the rate of interest on the short term loans and term loans
Page 58
Application for SMEs
Application form NF 836 NF 837
To SSIs. Up to 10 lakhs. Over Rs 10 lakhs & up to Rs 50 lakhs.
To MEs. Up to 2 lakhs. Over Rs 2 lakhs & up to Rs 15 lakhs. Over Rs 15 lakhs & up to Rs 100 lakhs. Rs 1crore & above.
NF 838
Over Rs 50 lakhs & up to Rs 100 lakhs.
NF 903*
Rs 1 Crore & above.
The above table indicates that when, an industrial person wants to take loan, and he needs to apply through respective application forms. All the
applications are to be accompanied with project report, Audited/ unaudited financial statements for the preceding 3 years, copies of licenses, permits, sales tax assessment orders' income tax/wealth tax assessment orders, projected financial statements, cash/fund flow statements, wherever required/insisted.
Page 59
Table showing number of accounting holders at canara bank of SME sulabh Bangalore metro as at march 2011
Sector Micro and small enterprises Medium enterprises
No... of accounts
Percentage
17767
95.72%
794
4.28%
Total
18561
100%
With the help of above table we can come to know that SME sulabh of canara bank has been hold 18561 accounts in that 17767 accounts are micro and small enterprises and rest of that as medium enterprises.
Page 60
Chart Showing number of accounting holders at canara bank of SME sulabh Bangalore metro as at march 2011
20000
17767
18561
15000
10000 No.. Of accounts 5000 0 Micro and medium Small enterprises enterprise s 95.72% 4.28% 794 100% perecentage No.. Of accounts Total perecentage
In the above chart we can came to know that bank has more accounts as micro and small enterprises than the medium enterprises.
Page 61
Table showing targeted loan of SME sulabh Bangalore metro as at march 2011
Sector Micro and small enterprises Medium enterprises Total 3100 100% 1100 35.5% Target (Rs in crores) 2000 Percentage 64.5%
The table showing that the bank has had a target of 2000 crores loans for micro and small enterprises and 1100 crore for medium enterprises total it had fixed 3100 crore of loans to MSME in this branch.
Page 62
Chart showing targeted loan of SME sulabh Bangalore metro as at march 2011
3500
3100
3000
2500
2000
2000 target (Rs in crores) 1500 1100 percentage
1000
500
64.50%
35.50%
100%
0 micro & small enterprises medium enterprises total
The chart showing that target of micro and small enterprises and medium enterprises as an the report of march 2011.
Page 63
Table showing Actual loans issued by SME sulabh as at March 2011
Sector Micro & small enterprises Medium enterprises
Amount (in crores) 2653.77 1131.31
percentage 70.% 30%
Total
3785.08
100%
The above table represents that the bank has reached 2653.77 crores by issuing loans to micro and small enterprises. And issued Rs 1131.31 crores to medium enterprises, the overall achievement is 3785.08 crores.
Page 64
Chart showing actual loans issued by SME sulabh as at March 2011
4000 3500 3000 2500 2000 1500 1000 500 70% 0 Micro and small enterprises medium enterprises 30%
3785.08
2653.77
Amount (in crores ) percentage 1131.31
100%
Total
The above chart showing actual achievement of turnover of loans issued by the bank.
Page 65
Table showing comparison of Actual loans issued with the Target amount of loan
Sector
Targeted loans ( Rs in crores)
Actual loans ( Rs in crores)
Difference ( in crores)
Micro and small enterprises
2000
2653.77
653.77
Medium enterprise Total
1100 3100
1131.31 3785.08
31.31 685.08
This table represents that the comparison of actual loans issued with the targeted loans estimated by the bank. The bank had estimation of 3100 crores but the actually achieved 3785.08 crores it means it issued additional of 685.08.
Page 66
Chart showing comparison of actual loans issued with the target amount of loan
4000 3785.08 3500 3100 2653.77 2500 2000 2000 1500 1000 653.77 500 0 Micro & small enterprises 31.31 685.08 1131.31 1100 Target (in crores) Actual ( in crores) Diffrences ( in crores)
3000
medium enterprises
Total
The chart showing that the bank has achieved more than the target what they had, in
different sectors.
Page 67
Table showing crossed Rs 600 Crore mark in new sanctions as at March 2011
Particulars
No of accounts
Amount ( in crores)
New sanctions
289
609.13
Enhancement Additional / Adhoc.
113
94.87
86
1471.33
Total sanctioned
488
2175.33
This table showing that loans are issued by crossing 600 crores marks in loan sanctioned. In that 289 accounts as new sanctioned with Rs 609.13 crore, for enhancement 113 accounts Rs of 94.87 crores and as additional of 86 accounts of Rs 1471.33 crores.
Page 68
Chart showing crossed Rs 600 Crore mark in new sanctions as at March 2011
1600 1400 1200 1000 800 609.13 600 400 200 0 New sanctions Enhancement
1471.33
No of accounts Amount ( in crores)
289 113 94.87 86
Additional / Adhoc.
The chart showing of previous table results, In that we can observe that bank issued more amount of loan with less accounts in additional sanctioned.
Page 69
Table showing disbursement of loans in SME sulabh as at March 2011
Particulars New sanctions Enhancement Additional / Adhoc. Total sanctioned
No of accounts 272 113 86 471
Amount ( in crores) 492.70 94.87 1465.58 2053.15
Page 70
Chart showing disbursement of loans in SME sulabh as at March 2011
1600 1456.58 1400
1200
1000
800
No of accounts Amount ( in crores)
600
492.7
400 272 200 113 94.87 86
0 New sanctions Enhancement Additional / Adhoc.
Page 71
Table showing Renewal of limits and NFB limits sanctioned
particulars
No of accounts
Amount ( in crores) 563.58 980.34
Renewal of the limits Non fund based
212 221
Page 72
Chart showing Renewal of limits and NFB limits sanctioned
980.34 1000 900 800 563.58 700 600 500 400 300 200 100 0 Renewal of the limit Non fund based Amount (in crores) No of accounts 212 221 No of accounts Amount (in crores)
Page 73
Table showing details of meetings / camps conducted
Particular MSME credit camps MSME meet Seminar / work shop
No of camps 7 4 2
Page 74
Chart showing details of meetings / camps conducted
No of camps
2
MSME credit camps MSMe meet 7 4 Seminar / workshop
Page 75
Page 76

Shakuntala Project

Caricato da

Informazioni sul documento

Descrizione originale:

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Shakuntala Project

Caricato da

Copyright:

Formati disponibili

A Study on Credit Loans to SME of Nationalised Bank

CHAPTER 1 INTRODUCTION PART-A

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

FINANCIAL INSTRUMENTS (Claims, Assets, securities)

Other Primary Secondary

Mediaries Inter Mediaries

Unorganized Short Medium Long Term

Money Market Secondary

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

Origin of the bank

A Study on Credit Loans to SME of Nationalised Bank

Objectives of banking act.

A Study on Credit Loans to SME of Nationalised Bank

Reserve bank of India (RBI)

A Study on Credit Loans to SME of Nationalised Bank

Functions of the RBI bank

1) Monopoly of note issue:

2) Banks to the Government:

A Study on Credit Loans to SME of Nationalised Bank

4) Management of foreign exchange reserves:

Functions of modern banking

A) Measuring the money supply.

A Study on Credit Loans to SME of Nationalised Bank

B. Functions of financial institutions.

A Study on Credit Loans to SME of Nationalised Bank

Evaluation of modern banking

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

On the basis of functional classification

and they also called investment banks.

A Study on Credit Loans to SME of Nationalised Bank

On the basis of structured classification

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

Objectives of credit management

Banks and institutional management:

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

Types of credit risk

A Study on Credit Loans to SME of Nationalised Bank

Types of loans: Secured loan:

1) Credit card debt

A Study on Credit Loans to SME of Nationalised Bank

 on the basis of purpose;

A Study on Credit Loans to SME of Nationalised Bank

Meaning of small and medium enterprises:

A). on the base of industry sector;

B). on the base of services sector;

A Study on Credit Loans to SME of Nationalised Bank

Role of Small and Medium Enterprises in our Economy.

A Study on Credit Loans to SME of Nationalised Bank

Title of the study

Statement of the problem

A Study on Credit Loans to SME of Nationalised Bank

Objectives of the analysis

A Study on Credit Loans to SME of Nationalised Bank

A Study on Credit Loans to SME of Nationalised Bank

Types of loans: Secured loan:

on the basis of purpose;