Submitted to: Dr.

Sandeep Singh Virdi

Submitted by: Loveleen Kaur Mangat Roll no. 120426005 M.B.A 3rd semester

COMMERCIAL BANKS are concerned with accepting deposits of money from the public at large, repayable on demand or otherwise and withdraw able by cheques , drafts and employing the deposits in the form of loans and investment to meet the financial needs of business and other classes of society.

The functions of a commercial banks are divided into two categories:

i) Primary functions, and ii) Secondary functions

The primary functions of a commercial bank include: a) accepting deposits; and b) granting loans and advances

Issuing letters of credit, circular notes etc. Undertaking safe custody of valuables, important documents, and securities by providing safe deposit vaults or lockers;

Providing customers with facilities of foreign exchange.

Standing guarantee on behalf of its customers,

for making payments for purchase of goods, machinery, vehicles etc.

Issuing demand drafts and pay orders; and,

Providing reports on the credit worthiness of customers.

HDFC Bank was incorporated in August 1994 The Bank started operations as a scheduled commercial bank in January 1995 under the RBIs liberalization policies Registered office in Mumbai, India HDFC Bank is one of the Big Four banks of India, along with: State Bank of India, ICICI Bank and Punjab National Bank.

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's business philosophy is based on four core values Operational Excellence, Customer Focus, Product Leadership and People

HDFC Bank has always prided itself on a highly automated environment, be it in terms of information technology or communication systems. All the branches of the bank boast of online connectivity with the other, ensuring speedy funds transfer for the clients. At the same time, the bank's branch network and Automated Teller Machines (ATMs) allow multi-branch access to retail clients. The bank makes use of its up-to-date technology, along with market position and expertise, to create a competitive advantage and build market share.

 The

borrowing capacity provided to an individual by the banking system, in the form of credit or a loan is known as a bank credit. The total bank credit the individual has is the sum of the borrowing capacity each lender bank provides to the individual.

Bank in India provide mainly short term credit for financing working capital needs although, as will be seen subsequently, the term loans have increased over the years. The various types of advances provide by them are:

RETAIL LOANS WORKING CAPITAL / CASH CREDIT TERM LOANS BILL DISCOUNTING EXPORT FINANCE

The banker fixes a limit for a customer, called the cash credit limit. This Limit is given to meet working capital requirements of the company on the basis on company turnover, company financials, value of stock having by company. This loan given against collateral security i.e.: Residence, Industrial or Commercial Property. A limit is given in current account where the client can withdraw amount upto the limit sanctioned.

Flexibility Operative convenience

WEAKNESS OF THE CASH CREDIT SYSTEM:

Fixation of Credit limits Bank's inability to verify the end use of funds Lack of proper management of funds

Limits start from Rs. 10.00 lacs & above. The loans are generally approved within 15 working days of submission of complete documentation. The interest charged only on the utilized amount. No minimum Monthly repayment required This loan can be used for business purpose only

Research Methodology is a way to systematically solve the problem. It may be understood as a science of studying how research is done scientifically.

OBJECTIVES OF STUDY:

1.To know in detail about the techniques and process of lending credit by bank. 2.To know about the awareness of cash credit limit in public

Research Design: - Descriptive Descriptive research aims at describing the characteristics of particular individual, or group with specific narration of facts, characteristics and situation.

Geographical Area:

Machhiwara

Sample unit: Money lenders

Sample

size: 20

Data Collection:Research is based on both primary &secondary data Primary data:o Making enquires from the money lenders. o Visiting bank for information regarding cash credit system. Secondary data: It is taken from the companys website and the HDFC bank brouchers. Data Analysis and Interpretation method:In this tabulation method is used to analyze the data. Tools and techniques: Various statistical tools have been applied: percentages , Pie charts

Every work has its own limitations. Limitations of this project are: The project was constrained by time limit of two months. Mindset of people may vary depending upon their age, income etc. Getting appointment from the concern person was very difficult. Respondents were very busy in their schedule. So it was very time consuming for information & positive interaction, them to answer all the questions properly.

1.VINTAGE ( NO. OF YEARS OLD)

10%
15%

less than 10 years

between 10 and 30 years more than 30 years

75%

2.ANNUAL SALES
20% 35% less than 3 crores more than 3 crores but less than 5 crores more than 5 crores

45%

3.BANKING PREFERENCE

35%

35%

oriental bank of commerce (OBC) bank of india

10%

state bank of india

20% bank of baroda

4.ANY LIMIT OR TERM LOAN

0%

yes
no

100%

5.AWARE OF ALL THE CHARGES LEVIED INTO CURRENT ACCOUNT:

0%

yes no 100%

6.SATISFIED WITH THE BANK SERVICES

0%

yes

no
100%

7.NUMBER OF FARMERS DOING BANKING WITH SAME BANK AS OF YOU:

25%

yes 75% no

8.BANK WITH PRIVATE BANKS :

0%

yes

no
100%

9. SHIFT TO PRIVATE BANKS OF BETTER RATES AND SERVICES:

10% 25% already banking 65%

want to shift
don't want to shift

10.NUMBER OF FARMERS ASSOCIATED WITH YOU:

10% 50% 40% Less Than100 More Than 100 But Less Than 200 More Than 300

11.ASSOCIATION WITH AGENCY:

5% 30% 20% 25%

20%
FCI PUNGRAIN MARKFED WAREHOUSE

PUNJABI AGRO

10. AGENCIES PAY COMMISSION:

40% 60% through cheques

through rtgs

More number of commission agents are performing between 10 and 30 years Majority of commission agents have annual sale of more than 3 crores but less than 5 crores and others have annual sale of less than 3 crores but only few commission agents have annual sale of more than 5 crores. Same numbers of commission agents are banking in OBC (Oriental Bank Of Commerce) and Bank of Baroda and others are banking with BOI (Bank of India), SBI (State Bank of India). All commission agents have limit or term loan. All commission agents are satisfied with their bank services.

All commission agents are aware of all the charges levied into their current account. All commission agents also bank with private banks. Major numbers of commission agents dont want to shift their banking with private banks of better rates and services only few commission agents want to shift to private banks. Only few commission agents are associated with more than three hundred farmers and major numbers of commission agents are associated with less than hundred farmers. Same numbers of commission agents are associated with FCI and PUNGRAIN, whereas other commission agents are associated with MARKFED and PUNJABI AGRO. Majority of agencies pay commission through cheques and fewer agencies pay through RTGS.

Banks work on capturing faith of the existing customers. They should work on growing the existing customers. Better cash credit software can help in growing the existing customers, increasing the customer base, acquiring new customers. Banks need to implement a more effective cash credit which shares relevant customer information across all interface units.

Cash credit system is the most convenient from the point of the borrower as this provides him the maximum flexibility by allowing withdrawal and repayments at his convenience. Interest is charged only on the utilized amount. However, a commitment charge is levied on the unutilized limits as the bank is committed to providing him financing when called upon. Customize cash credit to a high degree so that banks are able to handle a rapidly scaling call workload without any disruption in services and allow call centre agents to have an always connected view of the database.

Bank lending process in case of cash credit limit is very much fast after compiling with all the criteria of bank. It is extremely important for lender bank to assess the risk associated with credit, thereby ensure the security for fund deposited by depositors. In case of retail lending, bank strictly follow its circular and fulfils all requirement of necessary documents required for different types of loan so that bank do not suffer any types of loss.

Banks need to find and implement the implementation tools to support interactive solutions for customer profitability analysis, customer segmentation, customer problem solving, and measuring cash credit performance would be the next level of solution sought by most enterprises. It is on basis of credit risk level, a collateral security to be given by borrower is determined.