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APROJECT REPORT
ON
STUDY OF LOANS & ADVANCES IN CO-OP. BANKING SECTOR
AT
THE THANE JANATA SAHAKARI BANK LTD.
SUBMITTED BY
Mr.Ganesh S. Dayma
SUBMITTED TO
Dr. Babasaheb Ambedkar University,AurangabadIN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE
M.COM. II (BATCH 2012-2013)
UNDER THE GUIDANCE OFProf. Rathi Madam
Swami Ramanand Teerth Mahavidyalaya Ambajogai
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ACKNOWLEDGEMENT
The project is never an individual effort. It is contributory effort of many
hearts, hands & brains. For the completion of this project. This project would not
be possible if not aided by few kind souls.
First & foremost I would like to take this opportunity to thank
“The Thane Janata Sahakari Bank Ltd. Pune” for giving me such opportunity
to do this project in such esteem organization.
I would also like to thanks Mrs Rathi Madam, (Project Guide) & all other
faculty members for providing valuable suggestion in preparing my project without
them this project would not have been possible.
DATE: - / /2013 Mr. Ganesh Dayma
PLACE: - Ambajogai (M.Com II)
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INDEX:-SR.
NO.
PARTICULAR PAGE
NO.1. Introduction 4
2. Objective of the study 8
3. Company Profile 10
4. Review of Literature 16
5. Research Methodology 44
6. Data Analysis and Interpretation 47
7. Limitation of the Study 56
8. Findings 57
9. Suggestions 58
10. Conclusion 59
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INTRODUCTION
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INTRODUCTION
A period of less than a year. Under the loans system, the loan amount is given to the borrower normally in one installment and further drawings in the loan account are permitted. The amount is given for a predetermined period.
Normally loans are repayable in installments. Funds are required for single non-repetitive transaction. As the period of repayment of the loan or its installments ate fixed in advances, the loans system ensures greater degree of discipline on the part of the borrower. Interest on the full amount of the loan is available Banking system occupies in an important place in every nation’s economy. A good banking system with strong banking institutions is indispensable for the economic growth of a country. In India, we have an organized banking structure comprising
Co-op. banks and private scheduled / non-scheduled banks, foreign banks, commercial and co-operative banks, development banks etc. This complex structure has developed over a period of last 150 years. The objectives and methods of working of banks have undergone significant changes.
In the case of Co-op. banks, it was necessary to pass laws in order to control their irregularities and mushroom growth. However, in the case of ‘Co-op bank’ it was found necessary to make legal provisions so that the bank will be encouraged to come into existence.After doing this project I have come to know that now a day’s banking sector or any financial institute plays very important role in the society. As in this topic we can see the various types of loans and what is the procedure for sanctioning the loan.
Loan constitutes the major form of intermediate term financing. Unlike short-term loans, which are self-liquidating over able to the bank under this system and it is, therefore, profitable from the bank’s point of view
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IMPORTANCE OF THE TOPIC:-
Banking system occupies an important place in every nation’s Economy.
Good banking system with strong banking institutions is Indispensable for the
economic growth of a country. In India, we have an organized banking structure
comprising Co-op banks and private scheduled / non-scheduled banks, foreign
banks, commercial and co-operatives, development banks etc. This complex
structure has developed over a period of last 150 years. The objectives and methods
of working of banks have undergone significant changes.
In the case of commercial banks, it was necessary to pass laws in order to
control their irregularities and mushroom growth. However, in the case of banks’ it
was found necessary to make legal provisions so that the national banks will be
encouraged to come into existence.
Generally the banks grant loans against different types of securities like fixed
deposits, shares, goods, machineries etc. Certain special precautions have to be taken
while granting the loans. Term loans is emerging as an important source of business
financing in recent years because of added advantage of easy availability of the loan,
its cheapness and flexibility. A firm with assured credit for a stipulated period of
time can go ahead with plans and projects benefiting the firm. Since the terms of the
outcome direct negotiation between the lender and the borrower, the same can be
tailed to satisfy the needs of the borrower. Furthermore, term loan is available
quickly and at less expense as compared to public issue of debentures. If a firm
decides to float debentures of loan funds from the market, it must seek the
permission of SEBI, prepare prospectus and registrations statement and file with
Registrar of Joint Stock Companies and allot debentures to then applicants. All this
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costs to the firm about 3% of the borrowing amount. This can be avoided in bank
terms loans.
A Bank is an institution, which is engaged in the business of accepting
deposits and giving loans & Advances. Bank accepts deposits from various
peoples, institutions that have surplus funds and advance the loans to those who
need them. Thus, the main function of bank is to accept deposits by mobilizing the
savings and give loans & Advances to needy people for different purposes. There
are different definitions stated by different authorities, which make the nature and
important functions of bank very closer.
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OBJECTIVES OF THE STUDY:-
The aims and objectives of the study can be summarized under the
Following points.
1. The aim of the study is to analyze the different types of loans and studying the
procedure of granting the loans.
2. To secure information regarding the documents required for acquiring the loan
3. To analyze the education loan scheme in respect of eligibility, quantum of
finance, security, interest rates, repayment, etc.
4. Aim of the study is to understand the concept of loan under Co-op banking sector
in the small places.
5. The mail objective of the study is to analyze and interpret the data which has
given through financial statements and through the annual financial report of the
bank.
6. This study is required for every shareholder, who is the real owner of the
organization. The shareholder should know how the items in the balance sheet
are varying and inter relationship with other components in the statement.
7. The aim of the study is to analyze the different types of loans and studying the
procedure of granting the loans.
8. To secure information regarding the documents required for acquiring the loan
9. To analyze the education loan scheme in respect of eligibility, quantum of
finance, security, interest rates, repayment, etc.
10.Aim of the study is to understand the concept of loan under Co-op banking sector
in the small places.
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11.The mail objective of the study is to analyze and interpret the data which has
given through financial statements and through the annual financial report of the
bank.
12.This study is required for every shareholder, who is the real owner of the
organization. The shareholder should know how the items in the balance sheet
are varying and inter relationship with other components in the statement.
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COMPANY PROFILE
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INTRODUCTION TO ORGANISATION:-
The Birth
Registered on 04th Feb 1972 with an authorized capital of Rs 10.00 lakh and commenced business on 8th Feb 1936.
The Childhood
Known as a common man's bank since inception, its initial help to small units has given birth to many of today's industrial houses. After nationalization in 1969, the bank expanded rapidly. It now has 1421 branches all over India. The Bank has the largest network of branches by any Public sector bank in the state of Maharashtra.
The Adult
The bank has fine tuned its services to cater to the needs of the common man and incorporated the latest technology in banking offering a variety of services.
Organization vision
To be a vibrant, forward looking, techno-savvy, customer centric bank serving diverse sections of the society, enhancing shareholders’ and employees’ value while moving towards global presence.
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The Deepmal
With its many lights rising to greater heights.
The Pillar
Our institution- Symbolizing strength.
The Diyas
Our Branches- Symbolizing service.
The 3 M's
Mobilization of Money Modernization of Methods and Motivation of Staff.
Organizations Aims:-
The bank wishes to cater to all types of needs of the entire family, in the whole country. Its dream is "One Family, One Bank, Bank of Maharashtra ".
The Autonomy:-
The Bank attained autonomous status in 1998. It helps in giving more and more services with simplified procedures without intervention of Government.
Our Social Aspect:-
The bank excels in Social Banking, overlooking the profit aspect; it has a good share of Priority sector lending having 38% of its branches in rural areas.
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Other Attributes:-
Bank is the convener of State level Bankers committee.
Bank offers Depository services and Demat facilities at 131 branches.
Bank has a tie up with LIC of India and United India Insurance Company for
sale of Insurance policies.
All the branches of the Bank are fully computerized.
It’s Quest for excellence through exploring new horizons Banking.
The bank has been committed to its quality policy which is to strive to meet the
expectations of their Customers, to be reliable provider of their services and
facilities in respect of several schemes launched by the bank.
Due to its wide scope and spectrum I looked forward towards the opportunity
to work with the bank as a summer trainee. It is my privilege having achieved the
same. With the presence of a well established management and supportive and co-
operative employee network, I could perform my study successfully at the bank.
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ACHIVEMENTS:-
Date of Establishment of Bank : 16.09.1935
Date of Commencement of Business : 08.02.1936
First Branch Open at Bajirao Road, Pune : 06.02.1936
100th branch opened at Swargate, Pune : 17.12.1965
Nationalization of bank along with 13 other : 19.07.1969Major Banks
500th branch opened at Allahabad : 21.06.1977
500th opened in Maharashtra state : 14.05.1980(Nariman point, Mumbai)
100th branch opened in Madhya Pradesh (sehore) : 10.03.1983
100th branch opened in Pune district : 12.03.1983(Kale colony, district-Pune)
1000th branch opened at Indri Vaasa, Pune : 27.12.1987
Bank’s IPO opened for subscription of 10 core : 25.02.2004Equity shares at a premium of RS.13/- each
(Over subscribed 10 times)
Listing of bank’s shares on stock exchanges : 12.04.2004
Bank entered into an agreement with Western : 21.10.2005Union Money Transfer to enable NRIs to remit
Funds from abroad to India
Banc assurance (non-life) launched for selling : 18.05.2006Non-life insurance products of united IndiaInsurance co. ltd.
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Banc assurance (life) launched for selling : 26.07.2006Life insurance products of life insurance corp.Of India.
Bank tied-up with Franklin Templeton Mutual : 05.10.2006Fund for selling mutual fund products
Bank surpassed Business landmark of : 01.12.2006RS. 50000 crores
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REVIEW OF LITERATURE
Definition of Bank:-
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Definition by the Indian Regulation Act 1949:
This act defines a banking company under section 5c as a company, which
transacts business of banking. This definition makes it clear that bank can be
defined only with reference to the business, which goes with the term banking. The
act also define the term banking in section 5b according to which
“Banking means acceptance, for the purpose of lending or investment of
deposits of money from public repayable on demand or otherwise, withdrawal by
Cheques, Draft or order.”
Definition by Prof. R. S. Sayers:-
“A Bank is an institution whose debts, usually referred to as bank deposits
are commonly accepted in final settlement of other people debts.”
Origin of the concept of Banking:-
We have understood the meaning & scope of the term ‘Bank’ in the light of the
various functions that a bank performed today. But the present character of a bank
has evolved through time. It is therefore, necessary to follow this process of the
evolution banking.
According to one view, the English word bank owes its origin to the Italian
words Banco, Bancus, Banque or Banc. All these words means a ‘Bench’ upon
which the mediaeval European moneylenders & moneychangers used to display
their coins. The Jews in Europe practiced this business. These Jews possibly
flourished most in Italy in the early years; & hence the Italian word came into
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vogue. In England, Banking as an independent business dates back to the
fourteenth century. In those days the Jews of Lombardy, in England used to
transact their business on benches at market places. One can further point to a
historical fact in support of this view. When a banker was unable to meet his
obligations to his customers, according to the custom, his ‘banco’. Were destroyed
or broken to pieces. Hence, the word ‘Bankrupt’ was derived. Thus it appears that
the word bank is derived from the Italian words Banco, Bancus etc.
Here are others however, who trace the word bank is derived from the Italian word
Monte, which means a ‘mound’ or a ‘heap’. This word implies that one requires a
heap of money for carrying on the banking business.
We are obviously not interested in the controversy over the etymology of the
word ‘bank’. We are interested in the origin of banking & whichever view is
accepted, the fact remains that this derivation takes banking back to the Middle
Ages.
Classification of Bank :-
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Bank can be classified on different basis clarity demand that the basis of
classification should be determined first & then classifications should be made. On
the basis of direct dealing with the public, banks can be divided into central &
other banks. Banks are also divided on the basis of their day to day transaction
means as per heavy transaction they are classified under particular categories.
A] Central Bank:-
In the banking system of any country, there is a central bank & a number of
other types of banks. Central banks are different from all the other types of banks.
All the distinctive features of a central bank are a partly & precisely
summarized in this quotation. A central bank has the monopoly of note-issue. It
acts as bank to the government. It acts as a friend, philosopher & guide to the
entire bank in the country. Regulation & control of credit is an important
responsibility of a central bank. Thus, the central bank is an apex institution, which
stands out as the supreme bank above all other banks.
A central bank does not directly deal with public. It does not accept the public
deposits; nor does it grant loans to individuals. Indirectly, it can help agriculture,
industry, and etc. by augmenting the resources of the other banks.
B] Commercial Banks:-
Commercial banking is, by far, the most important type of banking, so much
so that the term ‘bank’ unqualified by any objective, is taken to mean a commercial
bank. Like any other, receipt of deposits & provision of credit are primary
functions of a commercial bank. However, the major part of the working capital
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with a commercial bank comes from public deposit. This is why commercial banks
are called deposit banks, because commercial banks have a commitment to return
the deposits as & when required by the deposits they provide mainly short-term
credit. Thus, for example, British banks do not provide industrial credit, but
Japanese commercial bank provides it. Indian commercial banks are playing an
increasingly important role in agricultural credit. Thus though commercial banks
are basically deposit banks normally providing only commercial credit, they also
called as investment banks, saving banks, etc.
C] Industrial Banks:-
Industrial banks as the term indicates specialize in industrial finance.
Modem industries require long-term credit for the exaction of factories & plants.
They also require medium-term loans for the purchases of equipment, import of
spares & so on. The function of making long term investment is left to investment
banks .which is another name for industrial banks. Industrial credit also requires
different types of banking expertise. An industrial bank maintains this expertise &
specialized in this type of activity Thus the role played by industrial banks is very
important in planning, promoting & developing industrial units.
D] Agricultural banks:-Financing of agricultural poses special problem. The credit needs of agriculture
are three folds:
1) Short term 2) Medium term 3) Long term
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1) Short-term credit: Short-term credit is requires for carrying out the day in
day agriculture operations and for the purchase of manure, seeds, etc.
2) Medium term credit: Medium term credit serves the purpose of buying
cattle, etc.
3) Long term credit: Long term credit is require for purchase of agriculture
machinery, for effecting permanent like digging wells, leveling land etc. &
for buying additional land.
Since agriculture is followed as personal or family occupation, the loan
virtually becomes a personal loan. But many times, as in India, the credit
worthiness of an agriculturist is limited.
E] Co-operative banks:-
Co-operative bank means a state co-operative bank, a central co-operative
society. The primary object of which is to provide financial accommodation to its
members & includes a co-operative Land Mortgage Bank. Director, in relation to
co-operative society, includes a member of any committee or body, for the time
being wasted with the management of the affairs of their society. Primary
agricultural credit society is distinguished from other societies in that it finances
agricultural purpose. Primary co-operative bank means a co-operative society
carrying out banking with a paid-up capital reserve of more than one lack. With
less than one lack it becomes primary credit society.
F] Exchange banks:-
Just as a trader needs a credit in internal trade, they need it in international
trade as well. The traders in the field of international trade are import & export
trade. They provide facilities for the remittance of money from one country to
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another country. They discount bills of exchange, which arise in international
trade. They also issue letters of credit. Due to the nature of exchange banking some
very big banks dominates this field. These banks have branches in all the important
centers of the world. Now a day, however commercial banks are also participating
in the foreign exchange business in India.
H] International Banks:-
International banks are a class by themselves. the fun timing of these banks ,
unlike that of all other banks enumerated so far , is on an official level in the sense
that the government of various countries are involve in their formation , working &
control.
G] Consumer banks:-
Consumer banks came in to existence in the U.S.A they became popular
these & then spread to other advance countries, these banks provide credit to
consumer for buying car furniture & other durable consumer goods. Credit for
housing is an important aspect of these banks. People can borrow money a long
term basis from these banks for purchasing or constructing houses. The repayment
of is spread over a long periods in easy monthly installment.
THEORY RELATING TO TOPIC:-
Under the loans system, the loan amount is given to the borrower normally in
one installment and further drawings in the loan account are permitted. The amount
is given for a predetermined period. Normally loans are repayable in installments.
Funds are required for single non- repetitive transactions. As the period of
repayment of the loan or its installments are fixed in advances, the loans system
ensures greater degree of the loan is available to the bank under this system and it is,
therefore, profitable from the bank’s point of view.
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Loans are given short, medium and long term basis according to the purpose
of the loan. Short term loans are up to a period of 15 months. Medium term loan are
up to the period of 5 years. As the borrower gets a lump-sum he is able to purchase
consumer articles like TV, fridge, vehicle or a flat for his residence. Installments are
fixed for repayment of the loans on the basis of repaying capacity of the borrower.
As loans are given only once, and no further drawings in these accounts are
permitted, the management cost of loans is less. At times loan amount is made
available to the borrowers in installments as per the programmed of this project and
till the full amount is drawn by him, repayment installments are not fixed. For
examples, if a loan is given for the constructions of the house, the loan amount is
released in installments taking into account the progress of constructions. This
procedure ensures that the loan amount is used for the purpose for which it is
sanctioned. Term loan constitute the major form of intermediate term financing.
Unlike short-term loans are given for a period of more than one year but less than
ten years. Such loans are generally employed to finance more a permanent portion of
working capital requirements. As a result, most of these loans are paid in the regular
and periodic installments, through there are exceptions to the rule. Term loan may
take form of an ordinary loan or a revolving credit. In ordinary term loan the lender
lends funds as per the agreement outright for a period of more than a year and up to
ten year. A revolving credit, on the other hand, is a formal commitment by a lender
to lend up to a certain amount of money to a concern over a specified period of time.
This is thus a guaranteed time of credit where by the lender agrees to lend the money
on demand in a future period, frequently for two to three years.
MATURITY:-
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Term loan bear a maturity period of more than one year but not more than
ten year. In India commercial banks generally grants term loans mostly for a period
of five to seven years.
PURPOSE:-
Term loans are sought for financing core portion of working capital, minor
additions to stock of plant and equipments and research and development
activities. Term loans are also used for meeting all expenses, including those for
repairs, replacement of equipment and others due to modernization of the plant.
COLLATERAL:-
Term loans are more frequently secured than short term loans due to greater
risks involved in term lending. Term loans are usually secured against mortgage
secured loans does not exceed the appraised value of the property. In India,
commercial banks and the other financial institutions are subject to regulations
imposed by the Reverse Bank of India which limit these mortgages to certain
specified portion of the appraised value of the property.
Different Types of Loan
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Educational Loan:-
Who is eligible?
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Students enrolled with an approved educational institute and desirous of
availing the education loan can make an application, with the earning
parent/guardian being the co-applicant to the loan. Currently, new entrants and
existing students of only selected leading national educational institutions are
eligible to apply for education loans.
Terms & Conditions:-
Loans are given to students who are citizens of India. The student should
have a consistently good academic record, and admission to an approved
educational institute for pursing a recognized course. Loans can be availed up to a
maximum of 90% of the total cost as determined by Maharashtra Bank. The costs
would generally cover expenses incurred towards the course fee, library charges,
hostel and mess charges, cost of books and equipment. Maharashtra Bank lends up
to a maximum of Rs 7,50,000 (studies in India) & Rs.15,00,000(studies outside
India) on an educational loans.
The repayment period of the loan is determined on the merits of each case but
would not exceed 5 years. The repayment can be accelerated on completion of the
course, considering the earning capacity of the student. Maharashtra bank’s main
concern is to help individuals comfortably repay the borrowed amount.
You repay the loan in Equated Monthly Installments (EMI) comprising
principal and interest. EMI commence three months after the completion of the
course Pending commencement of EMI, you pay simple interest on the portion of
the loan disbursed. This is payable every month from the date of each
disbursement up to the date of commencement of EMI. This interest is called pre-
~ 26 ~
EMI interest. Prepayment of the loan in full or parts is possible. In the event where
the student plans to leave the country for any reason, the loan would generally be
required to be in full, however, the same would be considered on a case-to-case
basis depending on the merits of each case and on such terms as May required.
The security for the loan would normally comprise personal guarantees and such
other security acceptable to Maharashtra bank.
MARGIN:-
No margin up to : Rs. 4.00 lakhs
For loan above : Rs. 4.00 lakhs
For studies in India : 5 %
For studies outside India : 15%
Rate of Interest:-
Up to 4.00 lakhs- BPLR at present 12.00%p.a
Above 4.00 lakhs- BPLR +1 at present 13.00%p.a
PROCESSING FEE :-
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0.50% of Loan amount with a cap of Rs.10,000/-(including Service Tax)
MAXIMUM REPAYMENT PERIOD :-
For applicants up to 45 years of age: 25 years For applicants over 45 years of age: 15 years
SECURITY:-
No security up to 4.00 lakhs Above 4.00 lakhs & 7.50 lakhs –collatereral in the form of third party Equitable mortgage of the property 2 additional guarantors acceptable by bank.
How to apply:-
The loan application forms are available at your nearest Maharashtra Bank
office. The completed application form, together with all supportive documents,
needs to be submitted through your Educational Institute. Maharashtra bank will
make inquiries as are necessary or call the applicant for a discussion.
The loan would be disbursed in suitable installments on the compliance of
necessary formalities such as providing personal guarantees; execution of loan
documents etc. further, disbursement of the loan would also be subject to review of
progress reports from the concerned Educational Institute.
Consumer Loan:-
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Finance your consumer goods purchases with the Maharashtra Bank
consumer loan The consumer loan will facilitate the purchase of a wide range of
consumer durables like TV’s washing machines, refrigerators, air-conditioners,
pc’s branded furniture, new two wheelers and new cars. In addition, the loan
can be also be used to refinance a purchase made in the last six month and/or to
repay an outstanding car/two wheeler/consumer durable loan taken from any
other institution or bank. To top it all, the Maharashtra bank consumer loan can
be used to purchase more than one product and can be availed over a period of
time.
Terms & Conditions:-
Maharashtra bank’s consumer loans are easy to apply for and repayable
in comfortable monthly installments all the applicants of the housing loan
availed from Maharashtra Bank, (including co-applicants) are required to apply
for the consumer loan if they wish to also take this loan.
Amount:-
Loans can be availed up to 100% of the cost of the products.
Maharashtra Bank will determine the loan amount based on the repayment
capacity of the individual. Maharashtra bank’s main concern is to help
individuals comfortably repay the borrowed amount.
Fees:-
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An administrative fee of 0.30 % of the amount disbursed is payable at
the time of & Minimum Rs 100/-, Maximum Rs. 300/-
However, the administrative fees are being waived for loans disbursed
before March 31, 2009.
Rate of Interest and Repayment Term:-
Prepayment:-
You can repay your loan ahead of schedule. In the case of a consumer
durable/ two-wheeler loan, you can prepay only the entire loan amount. In case of
a car loan, you may make a part prepayment (subject to minimum amount of 25%
of the outstanding loan amount). There is a charge of 9.25% payable only if the
loan is prepaid within one year from the date of disbursement.
Security for loan:-
Security for the consumer loan will be the extension of the existing security
on your housing loan. In case the current value of the security is not adequate, then
you may be required to provide to provide additional security.
How to apply:-
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It’s simple! You can get the application form by head office of Maharashtra
Bank. Alternately, you can collect the application from any of your nearest branch
of Maharashtra bank in Nasik district.
You need to submit the application form along with the supporting
documents.
Supporting Documents to be attached:-
With the application form:
1. Proof of ID having your photograph
2. latest salary slip/certificate (if employed)
3. latest balance sheet, P&L account and income-tax return (if self-employed)
4. clean loan to be guaranteed by 1 acceptable guarantor
At the time each disbursement:-
1. Applicable administrative fee
2. Proof of ID having your photograph
3. Copy of perform invoice(s)
After each disbursement:-
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1. Copy of final invoice(s)
2. Copy of registration book (for two-wheelers and cars only)
Home Loan:-
Terms & Conditions:-
Home loans offers you various unique benefits and are easy to arrange and
repayable in easy monthly installments. The term of the loan can be structured
according to your unique requirements. Home loans can be applied for by either
individually or jointly. Proposed owners of the property, in respect of which the
loan is being sought, will have to be co-applicants. However, the co-applicants
need not to be co-owners.
Loans can be availed up to a maximum of 85% of the cost of the property
(Including the cost of the land) on a home loan to an individual. You can repay the
loan over a we will determine the loan amount after evaluating the repayment
capacity of the individual. Maharashtra bank’s main concern is to help individuals
comfortably repay the borrowed amount.
Fees:-
A processing fee of 15% of the loan amount applied for i.e. up to
Rs.5,00,000 RS. 1000/- of the loan applied for is payable when the application
forms submitted to the bank. This fee is in respect of costs incidental to the
application.
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For example:
Loan applied for Fees
RS.5,00,000 RS. 1000/-
On approval of the loan, a loan offer is made to you. On acceptance of the
offer, you will have to pay an administrative fee of 2% of the loan approved. You
can also pay the processing fee and administrative fees upfront i.e. 1% of the loan
at the time of submission of the loan application itself.
Rate of Interest:-
The current applicable fixed rate of interest in respect of the total loan
approved is are as follows.
Annual Rest Option:-
Term of Loan (No. of years) Rate of Interest (%p.a.)
Up to 5 9.00%
6-10 9.50%
11-20 9.75%
You repay the loan in Equated Monthly Installments (EMI) comprising
principal and interest.
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RS. EMI per 1, 00,000 for Annual Rest Option
Term of loan (No. of Years) Rupees
5 2416
10 1208
20 604
Pending final disbursement, you pay interest on the portion of the loan
disbursed. This interest is called pre-EMI interest.
Security for the loan:-
Security for the loan is a first mortgage of the property to be financed,
normally by way of deposit of title deeds and/or such other collateral security as
may be necessary. Interim security may be required, if the property is under
construction.
How to apply:-
It’s simple! You can get the application form by the bank itself or form any
of its branches.
You need to submit it along with supporting documents and the processing
fee at any head office of the bank or to any branch that convenient to you. You can
make payments by cheque marked “Payee’s account only” drawn on a bank in a
city where Maharashtra bank has an office, by demand draft (payable at par to
Maharashtra bank) or by cash. You can make an application at any time after you
~ 34 ~
have decided to acquire a house, even if the house has not been selected or the
construction has not commenced.
Maharashtra bank will consider your application, make enquires as it deems
necessary and convey its decision to you. On acceptance of the offer, you will have
to pay an administrative fee for the loan approved. You can take disbursement of
the loan after the property has been technically appraised, all legal documentation
has been completed and you have invested your own contribution in full (own
contribution is the total cost of the property less Maharashtra bank loan). The loan
will be disbursed in full or in suitable installments (normally not exceeding three in
number) taking into account the requirement of funds and the progress of
construction, as assessed by Maharashtra bank and not necessarily according to a
builder’s agreements.
DOCUMENTS REQUIRED FOR HOME LOAN:-
Completed application form.
Passport size photograph.
Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License.
Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property
tax receipt/Passport / Voters ID.
Proof of business address in respect of businessmen/ industrialist
Supporting Documents to be attached
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a) Common for all applicants:-
1. Allotment letters of the national bank/ associations of apartment others.
2. Copy of approved drawings of proposed construction/ purchase.
3. Agreement for sale/ sale deed/ detailed from architects/ engineers for the
property to be purchased or conducted.
4. If you have been in your present employment / business or profession for
less than a year mention details of occupations for the previous 5 years,
giving position held, reasons for change and period of the same.
5. Application processing fees.
6. Any other information regarding your repayment that is necessary and will
assist Maharashtra bank in appraising the case.
7. Passport size photograph for security purpose.
Additionally
If You Are Employed:-
1. Latest salary slip/salary certificate showing all deductions.
2. If your job is transferable, permanent address where correspondence relating
to the application can be mailed.
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3. A letter from your employer agreeing to deduct monthly installment towards
repayment of the loan from your loan salary. This will expedite the
processing of your loan application
If You Are Self-Employed:-
1. Balance Sheets and Profit & Loss Accounts of the business/ profession along
with copies of individual income tax returns for the three years certified by a
Chartered Accountant.
2. A note giving information on the nature of your business/ profession, from of
organization, clients, suppliers, etc.
Home Equity loans:-
With an Maharashtra bank Home Equity Loan, you can cash your
investment in a dwelling unit without having to dispose it off. The end usage of the
funds will not be monitored by Maharashtra bank. However, the funds should not be
used for speculation or any illegal purposes. Loans can be advanced against any
freehold or leasehold properties that have a clear marketable title. Loans can be
repaid on an EMI basis or on a simple interest basis. Moreover, the loan shall be
approved only in respect of units that are self occupied; units which are rented out
are not covered under this scheme.
Terms & Conditions:-
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Maharashtra bank’s Home Equity Loans are easy to arrange and repayable in
easy monthly installments. The terms of the loan can be structured according to your
unique requirements. Home Equity Loans can be applied either individually or
jointly. Owners of the current property, in respect of which the loan is being sought,
will have to be co-applicants. However, the co-applicants need not be co-owners.
Maharashtra bank’s technical officers at the branch offices would ascertain
the market value of the unit. Valuations could also be carried out by government
approved value/ external agency acceptable to/ recommended by Maharashtra bank.
Loans can be availed up to a maximum of 40% of the market value of the
property (including the cost of the land). You can repay the loan over a maximum
period of 5 years for a loan on an EMI basis and 2 years for a loan on a simple
interest basis. We will determine the loan amount after determining the repayment
capacity of the individual. At Maharashtra bank, our main concern is to help
individuals comfortably repay the borrowed amount.
Fess:-
A processing fee of 2% of the loan amount applied for, i.e. Rs. 20 per Rs. 1000
of the loan applied for, is payable when the application form is submitted to
Maharashtra bank. This fee will cover the valuation fee for valuations undertaken.
In case of closures/cancellations, the processing fee less valuation fee would be
refunded. No refund is entertained in case the valuation fees exceed the processing
fee.
Rate of Interest
Annual Rest:-
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The rate of interest on the home equity loan (simple interest) on a fixed rate
basis is 12.00% p.a. while the interest on home equity loan (EMI) on a fixed rate is
11.00% p.a.
Monthly Rest:-
The rate of interest on the home equity loan (simple interest) on a fixed rate
basis is 12.00% p.a. While the interest on home equity loan (EMI) on a fixed rate
basis is 11.00% p.a.
Maharashtra bank wills advances funds in the form of a term loan. The loan
will be repayable by way of (EMI) comprising principal and interest. Pending final
disbursement, you pay interest on the portion of the loan disbursed. This interest is
called pre-EMI interest.
However, in case loans with simple interest rates, the principal repayments
would be in equal quarterly installments with interest payments being made on a
monthly basis. Post-dated cheques for repayment of loan will be required in all
cases. No early redemption charge would be charged if the loan is prepaid ahead of
schedule.
Security for the loan:-
Security for the loan is a first mortgage of the property against which
Maharashtra bank has advanced the loan. In addition, Maharashtra bank may
request for additional/interim/collateral security. Liquid securities in the nature of
shares, fixed deposits etc. may be accepted as additional securities on a selective
basis.
~ 39 ~
How to apply:-
Maharashtra bank will consider your application, make enquiries as it deems
necessary and convey its decision to you. On approval of the loan, a loan offer is
made to you. On acceptance of the offer, you will have to pay an administrative fee
for the loan approved.
Supporting Documents to be attached
For approval of loan
a) Common for all applicants:-
1. Allotment letter of the national bank / associations of apartment owners.
2. Agreement for sale /sale deed for the property.
3. If you have been in your present employment/ business or profession for less
than a year, mention details of occupation for previous 5 years, giving position
held reasons for change and period of the same.
4. Applicable processing fees.
5. Any other information regarding your repayment capacity that is necessary and
will Assist Maharashtra bank in appraising the case.
b) Additionally
If you are Employed:-
1. Latest salary slip/salary certificates showing all deductions.
2. If your job is transferable, permanent address where correspondence relating to
the application can be mailed.
~ 40 ~
3. A letter from your employer agreeing to deduct the monthly installments
towards repayment of the loan salary. This will expedite the processing of your
loan application.
If you are Self-Employed:-
1. Balance sheets and profit & loss accounts of the business/profession along with
copies of individual income tax returns for the last three years certified by C.A.
2. A note giving information on the nature of your business/profession, form of
organization, clients, suppliers, etc.
3. Please take photocopies of all documents that are submitted to Maharashtra bank
(including the application form) for your personal record.
4. Personal Loan:-
These loans are generally granted without obtaining any specific from
the borrower. However, the bank may ask for the security if it feels it necessary to
do so in the case of borrowers with a financially weaker status. The following
procedure and precautions are normally taken.
Who is eligible?
1. The prospective borrower should have dealings with the bank for a period of at
least 3 years or more.
2. The loan should be guaranteed by two independent guarantors (who should be
Members or nominal members).
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3. The borrower and guarantors should be working or serving in the area of
operation of the branch.
4. Where necessary, the bank may ask the borrower to furnish adequate security by
way of gold ornaments, shares, life policies etc.
Security:
If necessary the bank may order for good security in that case the borrower
should give the security.
Guarantors:
For personal loan the borrower should have minimum two guarantors with
him/her. These people should be member or the nominal member of urban bank.
Limitation:
Normally, loans for consumption purpose should not exceed an amount of
RS.50000/-. For other purposes, the limit may be fixed at RS.200000/- depending
on the purpose of the advance.
If the borrower is an employee of any institution, the maximum loan amount
should not normally exceed 5 times his monthly total emoluments. If he has any
other source of income a larger, amount of advances could be considered.
The loan should be repaid within a period of 3 to 5 years in monthly
installments. If advances are granted by way of cash credit, the limit will have to
be renewed every year.
Rate of interest:
The rate of interest will be governed by the directives, if any, I issued by the
Reserve Bank of India from time to time. The interest will be calculated on daily
~ 42 ~
product basis and debited to the borrower’s loan account in March, June,
September and December. If it is not paid within month, the bank may charge
penal interest at 2% over the normal rate of interest both for overdue installment
and interest.
BPLR+ 2% i.e. 14% p.a.
Other conditions:
The borrower should utilize the loan amount for the purpose for which it
is granted and may be asked to provide a proof of having done so if the borrower
has taken a loan from any other bank or institution, normally no loan may be
granted. However, if the other institution gives a “No Objection Certificates” and if
the bank is satisfied about the need and creditworthiness of the borrower, it may
consider grant of loan to him.
How to apply:
The loan application forms are available at your nearest Maharashtra bank
office. The completed application form, together with all supportive documents.
Maharashtra bank will make all such enquiries as are necessary or call the
applicant for a discussion.
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RESEARCH METHODOLOGY
RESEARCH METHODOLOGY:-
Research in common parlance refers to a search for knowledge. One can
also define research as a scientific and systematic search for pertinent information
on a specific topic.
~ 44 ~
The word research has been derived from French word Researcher means to
search.
FRANCIES RUMMER defined “Research: It is a careful inquiry or examination
to discover new information or relationship and to expand or verify existing
knowledge.
Research is the solution of the problem, whether created or already
generated. When research is done, some new outcome, so that the problem
(created or generated) to be solved.
RESEARCH OBJECTIVES:
The main objectives of research in management are: -
1.To verify and to test the existing facts and theories.
2.To gain familiarity with a phenomenon or to achieve new insights into it.
3.To establish generalization in various fields of knowledge.
4.To bring to limelight information that could have never been brought to the
knowledge under normal course.
~ 45 ~
RESEARCH DESIGN:-
Research Design is the conceptual structure within which research is
conducted. It constitutes the blueprint for collection, measurement and analysis of
data. The design used for carrying out this research is Descriptive.
DATA TYPE: - In this research the type of data collection is
Primary data
The primary sources of information collection were through discussion with the
faculties and the advisors in the company.
Secondary data
The main source of information is taken from annual reports of the companies and
through related websites which has enabled in analyzing the equities.
Internet sources
Annual Reports
Text Books
DATA SOURCE: - The sources of collection of secondary data are:
Books
Websites
Brochure
Annual Reports
~ 46 ~
DATA ANALYSIS
~ 47 ~
Data analysisUnder this chapter I have discussed about loans, advances, investments and
working capital. In which whatever data I have collected from the organization
Interest on loans is the first income of any financial institute or may
bank so loan plays very important loan in banking sector. From last three years
what are the positions of loans, deposits, investment and working capital in the
bank of Maharashtra we can analyze below.
DEPOSITS:-
YEAR AMOUNT.
2007-08 26906,18,75
2008-09 33919,33,85
2009-10 41758,33,23
2010-11 52254 ,91 ,96
Under this table I have shown the amount as per the year. As per this table the
amount of deposit has increased comparatively last year. The graph has shown in
the next page.
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2007-08 2008-09 2009-10 2010-110
10000
20000
30000
40000
50000
60000
Deposits
Deposits means saving a sum of amount in the bank for a fixed period of the time
bank gives the same amount including the interest as per the bank’s rate of interest.
From last five years the deposits have increased drastically as in the this bar graph
in 1997 the deposit was 1405.09 lakhs and after five years that is in 2001 the
deposit is 5315.04 lakhs. From this bar d diagram we can understand that the bank
is increasing its goodwill in market.
~ 49 ~
Working capital:-
YEAR AMOUNT.
2007-08 312,394,14
2008-09 325,90,28
2009-10 354,24,93
2010-11 394,001,42
2007-08 2008-09 2009-10 2010-110
50
100
150
200
250
300
350
400
450
Working capital
~ 50 ~
Under this table I have shown the amount of working capital. This amount has
shown in thousands, & even in this table the amount has increased comparatively
last year. The graph has shown in next page.
Working capital can be defined in two ways.
1. Working capital means the difference between the current assets and current
liabilities.
2. Working capital is the portion of current assets which is financed in long
term funds.
Under the working capital the capital has increased very fast because of the
daily transaction of the bank.
The working capital of the bank in the last year ended 2009-2010 is 394,001,42
Thousand RS
~ 51 ~
Loans:-
YEAR AMOUNT.
2007-08 488,38,04
2008-09 200,90,08
2009-10 199,24,83
2010-11 190 ,01 ,32
As loan is very important role in any banking firm. So even of this bank the
loan which has given to the customer is very high comparatively every year.
Even in this graph the amount has shown in thousand and the graph is shown in
the next page.
2007-08 2008-09 2009-10 2010-110
1
2
3
4
5
6
7
8
9
Loans
~ 52 ~
Under the loan system, the loan amount is given to borrower in one installment
and further drawings in the loan account are permitted.
Getting interest loan is the first and basic income of any bank or financial
institution. So receiving the proper interest on loan is very necessary. For any
bank. In this bank the bank has given the loan very efficiently. In the above
table bank has given the loan in year ended 2005-06 488,38,04And after 5 years
2008-09 the bank has given 190 ,01 ,32
~ 53 ~
Investment:-YEAR AMOUNTPER YEAR
2007-08 11354,26,19
2008-09 11298,39,55
2009-10 12282,95,24
2010-11 18382 ,14 ,36
Under this table I have shown the how much is the investment of the bank in
other financial institute. According to this table the investment has decrease in the
year end of the year.
The amount has shown in thousand and the graph is shown on next page.
2007-08 2008-09 2009-10 2010-110
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Investment
~ 54 ~
Investment is very third category of fixed assets. It represents the investments of
funds in the securities of the companies. They are long term assets outside the
business of the firm. The purpose of such investment is either to earn return or
control other company. It customarily shown in the balance sheet at cost with value
shown in the parenthesis.
~ 55 ~
LIMITATIONS OF THE STUDY:-
Although every effort has been made to study the “STUDY OF LOANS &
ADVANCES IN NATIONALISE BANKING SECTOR” in detail, in an
organization of MAHARASHTRA BANK, it is not possible to make exhaustive
study in a limited duration of 2 months.
Financial matters. Apart from the above constraint, one serious limitation of
the study is that it is not possible to reveal some of the financial data owing to the
policies and procedures laid down by MAHARASHTRA BANK. However the
available data is analyzed with great effort to get an insight into Loans and
Advances Company generally cannot disclose its internal policies to outsiders. In
such case, it is very difficult to find out and gather complete and true information
in the forms of figures regarding
~ 56 ~
FINDING & SUGGESTIONS
~ 57 ~
Findings:-
1. Bank has concentrated only on the part of deposits rather than advances which
is the most important area of the whole banking. Rate growth of deposit is much
higher than the rate of advances. Management should understand that the deposits
are the liabilities of the bank and advances are the real income of the bank.
2. For the purpose of attracting the customers bank has undertaken a deposit
scheme of the higher rate of interest. Due this bank’s deposit rises tremendously.
Bank become famous but in the coming year’s bank will have to pay the interests
on their deposits.
3. At the stage when the bank is having a plenty of funds in their hands, it has
seen that the management is not taking any serious step towards increasing the
level of advances. When an organization is having surplus funds, it should try to
invest it to earn maximum possible returns on it.
4. As far as banks activities are concern it looks like bank is really working to
provide maximum customer service which is one of the most important object of
any bank, so that object is very well served by the bank.
5. Thus bank’s social images are well settled. Goodwill which is the most
precious asset, is with the bank even the financial growth of the bank is very much
satisfactory as the employees has got the bonus as their salaries.
~ 58 ~
Suggestions:-
1. It is suggested that the bank should concentrate on higher amount of advances,
rather than high amount of deposits.
2. Advances should be profitable advances in the sense it should contain those
advances which can be repayable in the specified time of period.
3. To attract the customer for availing advances, there are certain types of loans
which I have mentioned in this project i.e. educational loan, home loan, home
equity loan, personal loan, consumer loan. Thus the bank should concentrate more
on these loans other than other than other types of clean loans.
~ 59 ~
Conclusion:-
The study of project reveals that the Bank of Maharashtra ware in the analysis
& interpretation of the project states that the bank provides various types of loan’s
& advances to the society. The bank makes various steps in reducing loss again the
loan’s & advances provided to the society.
As compare to the private financial organization the Bank of Maharashtra
had more efficient and valuable changes in the facilities to the common people
with less of charges.
Different types of loan like Personal loan, Consumer loan, House loan,
Education loan etc. are made available by bank in the same manner crop loan for
the farmer are provided as per the NABARD and RBI NORMS. The KISAN credit
card facility is also made available to the farmer.
The overall study reveals back customer connect to the Bank of Maharashtra
are made over satisfied with the bank. The Bank of Maharashtra play very
important role in the development of rural areas by lending funds.
~ 60 ~
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