Loans-and-Advances-Bbm-Project(2)

8/7/2019 Loans-and-Advances-Bbm-Project(2)

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Analysis of loans and advances

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INDIAN FINANCIAL SYSTEM

The financial system or the financial sector of any country consists of specialized and non-specializedfinancial institutions of organized and unorganized financial markets of financial instruments and services,

which facilitate transfer of funds procedures and practises adopted in the markets and financial

interrelationship, are also part of the system. The structure of a financial system in any economy is as

follows:

UNORGANISED MARKETS

In these markets consist of many lenders, indigenous bankers, transfers and private chit funds etc. whose

activities are not controlled by RBI. Recently the RBI has taken steps to bring private function companies

and chit funds its strict control but using non banking financial companies directions in 1998.

ORGANISED MARKETS

In these markets there are standardized rules and regulations by Reserve Bank of India or other

regulatory bodies. The organized markets can be further classified into two. They are:

1) Capital markets.2) Money markets.

CAPITAL MARKET: It is a market for long term funds which have a long or indefinite maturity. Capital

market further divided into three mainly:

a) Industrial Security market: It is a market for industry security namely equity shares or ordinaryshares, preference share, debentures or bonds. It is a market where industrial concern raises their

capital or debt by assuring appropriate instruments. It can be further subdivided into two. They are:

yPrimary market: It is a market for new issue or new financial claims.

y Secondary market: It is a market for existing securities and those already issued and quoted instock exchange.

*Information has been collected from the book A Hand book of banking by N. S. Toor


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b) Government Securities Market: It is also called gilt-edged securities market. It is a market wheregovernment securities are traded (long term securities)

FINANCIAL INSTRUMENTS

A financial instrument refers to these documents which represent financial claims on assets.

Financial instrument can also be called financial securities. These instruments are classified into

a) PRIMARY SECURITIES: Shares and debentures issued directly to Public.b) SECONDARY SECURITIES: These securities issued by some intermediaries ex; UTI and

Mutual fund again these securities may be classified on the basis of duration as follows.

y Short Term Securities: Within one year ex; bills of exchange. y Medium Term Security: Maturity period between 1-5 years ex; debentures.y Long Term Securities: Maturity period more than 5 years ex; Gilts.

FINANCIAL SERVICES

a) MERCHANT BANKING: A merchant banker is a financial intermediary who helps to transfercapital from those it to those who needit.

b) LOAN SYNDICATION: Much number of banks joins together and forms a syndicate to provideloan as big sum to corporate.

c) LEASING: A lease is an agreement under which a company acquires a right to make use of capitalassets like machinery for agreed period in return for periodic payment of rentals.

d) HIRE PURCHASE: It is an agreement relating to transaction in which goods are let on hire.e) FACTORING: It is an agreement under which a financial intermediary assumes the credit risk in

the collection ofbook debt passes for its client.

f) VENTURE CAPITAL: A venture capitalist finances a project based on the potentialities of newinnovative projects for new entrepreneurs.

g) MUTUAL FUND: A mutual fund refers to a fund raised by a financial services company bypooling the savings of the public.


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MEANING OF BANK

Banking is one of the most important sectors of business and finance that assists the world of commerce to

keep on running. Without banks and the banking services that they provide, commerce and trade would

collapse and credit would become virtually extinct. As the decades progress many new concepts are being

introduced into banking. At their most basic, banks hold money on behalf of customers, which is payable to

the customer on demand, either by appearing at the bank for a withdrawal or by writing a check to a third

party. Banks use the money they hold to finance loans, which they make to businesses and individuals to pay

for operations, mortgages, education expenses, and any number of other things. Many banks also perform

other services for a fee; for instance they offer certified checks to customers guaranteeing payment to third

parties. In some countries they may provide investment and insurance services. With the exception of

Islamic banks, they pay interest on deposits and receive interest on their loans. Banks are regulated by the

laws and central banks of their home countries; normally they must receive a charter to engage in business.

Banks are usually organized as corporations.

DEFINATION OF BANK

An organization, usually a corporation, chartered by a state or federal government, which does most or all of

the following: receives demand deposits and time deposits, honours instruments drawn on them, and pays

interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes;

certifies depositor's checks; and issues drafts and cashier's checks.

CLASSIFICATION OF BANK

Banks are classified into various types based on the function they perform. They are as follows:

1. COMMERCIAL BANK:Commercial banks perform all the business transactions of a typical bank. They accept saving

bank deposits, fixed deposits and current deposits which are repayable on demand or on short notice.



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Likewise, they lend or invest only for short durations. They provide funds only for short term needs

of trade and commerce. These banks cannot invest credits and overdrafts as they are expected to meet

the immediate requirement of depositors. The commercial banks provide a vital service to its

customers, a simple means of medium of exchange called cheques. They also perform a large number

of agency functions to their customers for which they charge a commission.

2. INDUSTRIAL/ INVESTMENTS BANKS:Investment banks, also called industrial banks, are those banks which provide funds on a long

for industries. They are specialized in providing long term loans to industries with a view to buy

plant, machineries, etc. These banks obtain funds through share capital, debenture and long term

deposits from the public. The bank floats bonds for the sake of mobilizing funds to provide funds for

big industrial corporations. They also underwrite or issue new shares and debenture of industrial

companies. They also purchase entire issue of new securities of company and later sell them to public

at higher prices.

3. EXCHANGE BANKS:Exchange banks are known as foreign banks or foreign exchange banks. These banks also

provide foreign exchange for import trade. Their main function is to make international payment

through the purchase and sale of exchange bills. The exchange bank provides assistance in the

conversion of currencies. They discount foreign exchange bills which are used in foreign trade.

4. CO-OPERATIVE BANKS:Co-operative banks are performed to meet the meet the banking requirements of consumers.

They are established in urban as well as rural areas. In rural areas, the bank provides finance to

agriculture and in urban area it provides finance to buy consumer goods. These banks function like

commercial banks receiving deposits and lending money. They provide short and medium term loans.

As they are formed on cooperative principles, they are more service oriented rather than profit. The

bank provides credit at lower rates of interest to people of small means like small cultivators,


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artisans, petty shop-keepers etc. They have been classified into land development banks or land

mortgage banks and urban credit-oriented banks.

5. SAVINGS BANK:Savings banks are specialized financial institution establishment to mobilize savings from

the people. They pool the savings of the small incomes of the community. The savings banks

accounts have been provided by all commercial and co-operative banks and even post offices. Saving

bank business has become more prominent than others forms of accounts as it provide various

facilities like frequent withdrawals, attractive rate of interest, the use of cheques etc.

6. CENTRAL BANK (RBI):Central bank is an apex bank in the country. It brings the entire banking system unified,

controlled and regulated. It is the main source of an efficient banking system in the country. The

monetary policy of a country is formulated and enforced by the central bank. It is responsible for

monetary stability in the country. The expansion and contraction of note issue are managed by the

central bank. It functions as a banker to the government and commercial banks. It assists the

government in the implementation of various economies policies.


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FUNCTIONS OF BANKS

Prof. Sayers in his book Modern Banking has described the functions of a modern bank in the following

words: Ordinary banking business consists of changing cash from bank deposits and bank deposits for cash,

transferring bank deposits for cash, transferring bank deposits from one person to another and giving bank

deposits in exchange of bills of exchange, government bonds, the secured promises of businessmen to repay

and so forth.

The various functions of a modern bank are as follows:

1.Accepting deposits from public:

The major function of the commercial banks is accepting various types of deposits such as fixed

deposits, current deposits and savings deposits. People want to keep their cash balances safe for which they

deposit it with a bank. The commercial bank protects the cash of the customers and provides a convenient

method of transferring funds through the use of cheques. It is the obligation of bank to honour cheques

drawn upon the bank, making payment across the counter on demand by the customers to the extent of

money available at the credit of customers account.

y Fixed deposits:A fixed deposit is one where a customer keeps a certain amount of money in a bank for a

specific period. It may be 6months, 1 year, 2 years 3 years or 5 years. The fixed deposit is not

expected to be withdrawn before the expiry of the period.

y Saving deposits:Saving deposits are those deposits on which the bank pays a certain conditions. The customers

are expected to maintain a minimum balance in the account.

y Current deposits:Current deposits are those deposits which can be withdrawn at any time by means of cheques.

The bank does not pay interest on current deposit. A customer who opens a current account has to



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maintain a minimum credit balance of Rs. 500. At the same time current holders has to pay service

charge.

2. Making loans and advances-

The second main function of the commercial banks is to provide loans and advances out of the

money the bank receives by the way of deposits. The bank receives deposits in order to lend the same. It is

this function of a bankers activities which is the largest contributor to the banks profit. Commercial banks

provide various types of loans such as direct loans, cash credit, bills discounted and overdrafts etc. Direct

loans and advances are provided to all types of persons against the security of movable properties.

3. Agency services-

Another important function of a banker is the services offered by them as an agent. The commercial banks render

a significant service by providing to its customers a simple means of medium of exchange called cheques. The cheque

system is considered to be the most developed type of credit instrument. The banks perform miscellaneous functions

such as undertaking the payment subscriptions, insurance premium, rent, etc. On the behalf of the customers they

collect cheques, bills, salaries, pensions, dividends, interests, etc that belongs to the respective accounts of the

customers. The banks perform these functions as per the instructions given by the customers and make payments as

and when directed. For these services they charge a certain amount of fee by means of commission.

4. General utility services-

A banker performs many general utility personal or miscellaneous services for his customers. The

general utility services include the safe- keeping of valuables and documents, the issue of credit instrument

for easy transfer of funds, collection of credit information regarding the customers, transaction in foreign

exchange and provision of specialized advisory services to the customers.


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EVOLUTION OF BANKING

Banking is an ancient business with its history dated back to the 13th century. When the first bill of exchange

was used as money in the medieval trade. Banking in India as its origin as early has the Vedic period. During

the days of east India Company, it was the turn of the agency house to carry out the banking business. The

general bank of India was the first joint stock bank to be established in the year of 1886. The others that

followed are the Bank of Hindustan and the Bengal Bank. In 1891 the first purely Indian Bank that is United

Commercial Bank came into being. The setting up of Punjab National Bank in 1894 followed it. In 1920,

three bank namely Bank of Bengal (1809), Bank of Bombay (1840), Bank of Madras (1843) were

amalgamated and a new bank, Imperial Bank of India was established. The Reserve Bank of India, which is

the Central bank, was created in 1935, with the passing Reserve Bank of India act in 1934. Later with the

passing of State Bank of India in 1955 the undertaking of Imperial Bank of India was taken over by newly

constituted State Bank of India. In the wake of Swadeshi Movement in 1905 no. of Bank with Indian

Management were established in the country namely Punjab National Bank Ltd. The Bank of Baroda (1908),

Bank of India (1906) Canara Bank Ltd. Indian Bank Ltd, Central Bank of India Ltd. (1911). ON July 19th

1969, 14 major Banks of the country were nationalized and on 15th

April 1980 six more Commercial Private

Banks were also taken over by the government of India. Banking Industry has achieved a tremendous

progress during the past few years; many Banks and Financial Institution haveentered into the market and

have made a rapid growth towards achieving the ultimate object of attaining leadership in Banking Industry.

y Information has been collected from the website www.wikipedia.com


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BANKING PROFILE:

The Indian Banking System can be broadly classified into:

1) Nationalized (Government Owned)2) Private Banks3) Specialized Banking Institutions

The RBI as a centralized body monitoring any discrepancies and short coming in the system. Private

Banks has been fast on the uptake and are reorienting their strategies using the internet as the

medium.

BANKING SECTOR REFORMS:

A radical re-structuring of the economic system consisting of industrial deregulation. Liberalization

of policies relating to Foreign Direct Investment (FDI), Public Enterprise Reforms, of taxation

system, trade liberalization and financial sector has been initiated in 1992-93. Financial sector

reforms in the area of commercial banking, capital markets and non-banking finance companies have

been undertaken. Improving financial sounds and credibility of banks is a part of banking reforms

undertaken by the RBI, a regulatory and supervisory agency over commercial banks under the

Banking companies Regulation Act 1949. In the areas of capital markets of SEBI was set up in 1992

to protect the interest of the investors in the securities and to promote development and regulation of

security market. In regard to non-banking finance companies the RBi has issued several measures

aimed at encouraging disciplined NBFCs, which run on sound business principles. The economic

reforms also aimed at improved financial viability and institutional strengthening, to improve the

effective implementation of monetary policy, linkages among money anf foreign exchange markets

have been enforced.


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THE ROLE OF BANKS IN ECONOMIC DEVELOPMENT

Commercial Banks are playing a crucial role in the economic development of the country. In

fact, without the development of commercial banking in 18th

and 19th

centuries. In the modern

economy, banks considered not only merely as dealers in money but also as reservoirs of resources

necessary for the economic development.

Banks provide short-term loans which serve as a capital for industrial establishment. Banks

also create credit, which enables the industry and commerce to expand economic activities. Banks

are contributing very significantly for the expansion of industrialization. Expansion will provide

more funds for the entrepreneurs to start new industries, which results in more employment and

income generation. A very important service that banks render to the community is the creation of

demand deposits in exchange of debts of short-term and long-term securities. Banks promote capital

by means of pooling of savings from people. These are the important services rendered by the bank


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FOUNDATION OF MODERN BANKING

After the nationalization of some big commercial banks in India, there has been an immense

growth in banking industry with the establishment of more number of banking offices. Today the banking

business has become very competitive. Various types of banks provide large number of services not only on

national but international ground as well. The growing trade and commerce has made banks to modernize

their operations in order to satisfy the customers. Indian banks have also felt the need for modernization of

their operations like their counterparts in western countries. This was very essential as well to deal with

extremely increased volume of business in an appropriate and efficient manner and to do effective business.

Modern banking institutions have sought to automation like introduction of computers and other equipmentsas well as the wealth of information technology.

The major objective of modernizing banking system is to improve bank operations while maintaining

high level of standards in banking sector.

Banks are viewed as development agents instead of providers of credit to large industries and big business

companies. In India, the banks apart from providing credit to agriculture, trade industry and commerce are

offering a large number of services to the customers. They make payments, collects electricity and water

bills, telephone bills, take buy and sell decisions on behalf of their customers and so on.

Today more and more number of business functions is entrusted on banks. They provide their services to

labourers, petty wage earners, small traders, etc. With the appearance of modern banking system, the rural

credit system with the money lender nearly collapsed.

The modern banks have developed strategies to meet the requirements of common men in achieving

economic and social development.


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NATIONALIZATION OF 14 MAJOR COMMERCIAL BANKS

In the history of commercial banking, the nationalization of the Imperial Bank of India was a great

achievement. In February 1969, the social control of commercial banks came into force. The government

made suitable organizational changes in order to implement the provisions of the Amended Act. The banks

were directed to grant loans to agriculture, small scale industries and self employment in an increasing

manner. The boards of managements of bank were reconstituted. Yet the industrialists who were on the

Board of management continued to exert their influence on the lending policies of the big banks. The

Reserve Bank of India started exercising its power to direct the banks when necessary to adopt new

regulations. In fact, the social control was in stage of infancy. The government felt that that the social control

was not sufficient in a planned economy. The government further said that under the private ownership,

social objectives cannot be achieved. Therefore on 19th

July 1969, the government announced the

nationalization of 14 major banks, whose deposits were not less than 50 crores, through an ordinance. The

14 banks controlled 72 percent of total scheduled bank deposits. The banks that were nationalized are as

follows:

1. The Central Bank of India, Ltd.2. The Bank of India, Ltd.3. The Punjab National Bank, Ltd4. The Bank of Baroda, Ltd5. The United Commercial Bank, Ltd.6. Canara Bank, Ltd.7. United Bank of India, Ltd.8. Dena Bank, Ltd.


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9. Syndicate Bank of India, Ltd.

10. The Union Bank of India, Ltd

11. Allahabad Bank, Ltd.

12. The Indian Bank, Ltd.

13. The Bank of Maharastra, Ltd.

14. The Indian Overseas Bank, Ltd.

Objectives of Nationalization

As stated in the Act, the objective of nationalization is to control the heights of the economy

and to meet gradually and enhance the needs of other development of the economy with respect to National

Policy and the objectives. Except this main objective, other specific objectives were:

yRemoval of the control of banks by a few persons

y Provision of adequate credit for agriculturey Small scale industry and exportsy Professional outlook to bank managementy Encouragement of new classes of entrepreneursy Provide adequate training to staff

The government said that nationalization is a major step in the process of public control over the principal

institution. This would mobilize the peoples savings


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and direct it towards productive purposes. After the nationalization the banks will be more focused on the

serving farmers, promoting agricultural production and developing rural sectors. Public ownership of

banking will utilize the credit facility towards speculative and other unproductive purposes. Nationalization

will also bring right atmosphere for the development of an adequate amount of professional management in

the field of banking.

Nationalization of six more banks in 1980

Continuing the policy of nationalization, in 1980 the government nationalized six more banks. They were the

Andhra Bank, the Corporation Bank, the New Bank of India, the Oriental Bank ofCommerce, the Punjab and

Sind Bank and the Vijaya Bank. By nationalization of these banks, the government has been able to exercisecontrol over 91 percent of the resources of the entire banking system. Remaining 9 percent is held by foreign

banks and private sector banks.

Achievements :

After nationalization, the government introduced suitable administrative changes to implement the

objectives enshrined in the Act. The banks started diversifying lending policies. Government set up different

department to handle the proposals. Training centres were established to train the staff. Field officers were

recruited to make contact with the prospective customers. Since nationalization, the performance of banking

system is outstanding in a lot of respects.

RESERVE BANK OF INDIA

The RBI was established on 1st

April 1935 under the reserve bank of India act, which was passed in the year

1934. The reserve bank of India is the central bank of our country. The RBI was started originally as a

scheduled bank and its paid up capital was Rs.5 crores. When RBI was established, it took over the function

of currency issue

y Information has been collected from the website www.rbi.org.in


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The reserve bank of India was nationalized in the year 1948. The instruments used by reserve bank of India

are.

y Bank ratey Open market operationsy Variable cash reserve requirements.

Functions ofRBI are :

y The reserve banks of India issues and regulates the issue of currency in India.y The RBI acts as banker to government. The RBI looks after the derent financial transactions of

the government and manages the public debt of government

y The RBI acts as banker to the commercial bank. Commercial banks keep and maintain theiraccounts with the reserve bank of India. Commercial bank keep deposits with RBI and they

borrow money from RBI when necessary. RBI acts as lender to last resort to commercial banks.

y The RBI exercises the control over the volume of credit created by the commercial banks inorder to ensure price stability

The Reserve Bank Of India And Its Promotional Role:

y The RBI established the bill market scheme in 1952.

y The RBI has tried to help the establishment of financial corporation to provide credit to theagricultural sector of the economy.

y The RBI has promoted regional rural banks with the help of commercial banks to extendbanking facilities to rural areas.

y The RBI has taken steps to enable the commercial banks to open branch in foreign countries.y The RBI encourages and provides research in areas of banking


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INTRODUCTION TO LOANS

One of the primary functions of the commercial bank is lending. Through lending commercial banks meet

their objective of making profits. The deposits collected from the public cannot be kept idle. It has to be

utilized in order to derive benefits out of it. The bank collects deposits with the objective of lending and

makes profit out of the interest received and paid. Their main aim is to deal in money and provide for those

who need it. The banker performs the job of lending within the framework of statues governing the banking

business, the government policy and guidelines issued by the authorities of the country (RBI in India).The

basic objective of nationalization of commercial banks was to provide funds to the neglected sectors like

agriculture, tiny industries and other weaker sections of the society. Today nearly 40% of the total

commercial bank advances are the priority sectors. Greater part of the commercial bank funds are employedin the form of loans and advances. Loans bring good money to the bank in the form of profit by charging

interest. Lending function of a commercial bank benefits the bank in the form of profit and the one who

takes loans enjoy the benefit of money required for their activities. The wheels of industry cannot run

without the bank advances. The bank needs to assess the condition of industry or trade or any business

enterprise while making advances.

SHORT TERMS LOANS FINANCED BY COMMERCIAL BANKS

Commercial banks are the most important source of short-term capital. The major portion of working capital

loans are provided by commercial banks. They provide a wide variety of loans tailored to meet the specific

requirements of a concern. The different forms in which the banks normally provide loans and advances are

loans and advances are loans, cash credit, overdrafts, purchasing and discounting of bills.

LOANS:

When a bank makes an advance in lump-sum against some security it is called a loan. Here, a specified

amount is sanctioned by the bank to the customers. The loan amount so sanctioned is paid to the borrower

either in cash or by credit to his account. A certain amount of interest has to be paid by the borrower for the

loan that has to be borrowed. A loan can be repaid in lump-sum or in installements. Commercial banks

generally provide short term loans up to one year for meeting the working capital requirements. But these

days, term loans exceeding one year are also provided by banks. The term loans may be either medium term

or long term loans.


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TERM FINANCING BY COMMERCIAL BANKS

Commercial banks normally provided short term financial assistance to industrial sector. The assistance

provided by them provided by them fulfilled the working capital requirement of the industrial enterprises. A

massive investment in industries during second plan and after changed the priority of bank lending. The

industrial required high funds for long term financing. The financial institutions failed to meet the increasing

demands of the industries. Then the entry of commercial banks came into existence and filled the gap

between the demand and supply of long term requirements. The banks started giving term loans to meet the

long term needs of the industry. The refinance scheme of IDBI encouraged more term lending by

commercial banks. The commercial banks are assisting industrial units by granting term loans, subscribing

to shares and debentures of corporate units and underwriting securities issued of these companies.

General lending policy

General Lending Policy in Relation to the business of the borrowers and the purposes for which the advance

is required. In handing a proposal relating to a particular nature of facility, apart from the general guidelines

that have given, the branches should refer to the detailed instruction as contained in the respective instruction

circulars so as to ensure that all instructions relating to a particular type of advance are compiled with. The

bank sanctions various kinds of clean / unsecured credit facilities as well as secured credit loans, details of

which the security there for and the security documents to be obtained are elaborately explained in the

security documents to be obtained are elaborately explained in the guide documentation.It is the nature of the

business of the borrowers. In handling a proposal relating to a particular nature of , apart from the general

guideline that have been given, the branches should refer to the detailed instructions as contained in the

respective instruction circulars so as to ensure that all instruction relating to a particular type of advances are

complied with.

1) Housing

Purchase of house/flat, construction of house/ flat , repairs/improvement/extension, Repayment of loan

availed from other agency/bank/NBFC. Indian citizen not below 21 years, singly or jointly with other co-

owners. Maximum Rs.50 lacks depends on repayment capacity subject to net, take home salary


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being35% of gross income. Maximum Rs.10 lacks for repairs. However, maximum loan amount in

Mumbai and New Delhi may be considered up to Rs.50 lacks. Maximum amount of loan may be

calculated 4 times the annual gross salaryor 5 times the annual net salary of the applicant and his/her

spouse whichever is higher in the case of salaried people. The margin for purchase of new

house/flat/construction 15% of cost. And for repair 30% of cost.

1.1Security Documenty Equitable Mortgage or simple mortgage of house/flat.y If under construction, interim security in the form of LIC/shares/national savings

certificate/Kissan vikas pattra/ mortgage of other property.

y One/two guarantors whenever possible.y Loan agreement.y Letter of authority to employer in case of salaried employee.y Letter of guarantee.

Repayment of moratorium upto18 months. Maximum period should not exceed 15 years and 10 years

for house repairs in equated monthly instalments. Free insurance benefits such as insurance of property

against fire allied perils including earth quake and personal accident (death) as per negotiated terms and

conditions to be offered.

Other conditions finance can be extended for purchase of existing flats/house of not older than 15 years.

House loan outside salaried sector can be granted only to income tax assesses in urban areas.

2) Vehicle loansPurchase of new two/four wheeler for personal/professional use. Purchase of old cars of less 3 years old.

The eligibility is 18 years and above. Permanent employee of central state/defence/police/force/

autonomous bodies/public or joint sector under taking/ reputed firms/ Established Educational

Institutions. Professionals having regular income. Net take home pay (after deduction of instalment) is

rs.2500 for 2 wheeler & branch and irrevocable letter from employer to remit instalments to bank till

liability is liquidated. The borrower should be customer of the bank. Loan amount will be three times of


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net income/net annual salary subject to maximum of rs.10 lacks 2of the cost of new vehicle. 50% for old

cars certified by a reputed automated certification agency. The security document should be

Hypothecation of vehicle financed by the bank. Banks lien to be noted with the Transport Authorities.

Guarantee of the spouse. In case unmarried third party guarantee of sufficient means D.P note letter of

guarantee hypothecation of vehicle.

3) Market Makers :-To meet requirement for buying and selling securities by offering 2 way quotes. The eligibility for the

market marker who are having minimum net worth of rs.1 crore and are approved by SEBI(Securities and

Exchange Board of India) stock exchange. The loan amount for 3 times the net worth or rs.5 crores

whichever is lower. Advance should be fully secured by way of collateral security in the form of immovable

property or any other security in addition to the securities which are held as part of Market Making operation

4) Industries (other than small scale):-

To establishing a new industrial unit or for expansion of the existing unit or for modernization, a detailed

project feasibility report should be obtained. Industrial concerns are usually limited companies or public

sector undertakings, although individuals or partnerships owning small and medium industries cannot be

riled out. An industrial concern may be engaged in more than one industrial activity and may also beengaged in other activities such as trade, import, export etc. if the borrower is engaged in more than one type

of activity for which finance is required. Credit facilities may be extended by way of cash credit/bills

discounting for working capital and by way of term loans for acquiring capital assets namely, construction of

factory building purchase and installation of machinery, replacement of machinery etc. If the advance is

required for establishing a new industrial unit or for expansion of the existing unit or for modernization, a

detailed project feasibility report should be obtained. The feasibility plan and how advances are proposed to

be used to get with a view to satisfy about the technical feasibility, commercial viability, financial stability

and management competency.


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5. Trade and commerce (other than small traders):

Trade and commerce is usually carried on by partnership firm, joint families and individuals, limited

liability companies and co-operative societies. The trade may be wholesale or retail and principals or as

distribution agents or commission agents. The business may be confined to one or more articles of trade. The

finance may be required by way of pledge or hypothecation of commodities, for buying or holding the stocks

or by way of purchase and discount of bills for quick receipt of sale proceeds of the goods sold. It has to be

ensured that the finance is not required or used for speculative purposes or for hoarding or for socially

undesirable purposes.

6) International trade:-

Manual of foreign exchange published by international banking division, central office explains in detail

various types of import and export transaction together with exchange control requirement to be observed by

bank officials as also the systems and procedures prescribed for handling such transaction at branch level.

We will see in brief, credit facilities usually extended to the exporter/importer customers.

Import trade

Finance for import trade could be either fund based or non-fund based or both. The non-fund based credit

facility is in the form of letters of credit. Since such letters of credit (L/C) contain an undertaking by the

bank to pay against presentation documents conforming to the terms and conditions stipulated in the letter of

credit, opening a letter of credit involves a credit decision for which purpose, the proposal has to be

processed in the same manner as it would be, if the proposal were for grant of an advance for an equal

amount. Since the bank relies on goods being imported under letter of credit as a security for payment of

relative bill, the marketability of such goods, taking into account the licensing conditions should also be

considered.

a) The import of goods is controlled by government of India through import trade control regulation.The import licenses are issued in 2 copies-customer copy is for the purpose of clearing the imported

goods through customs and exchange control copy to facilitate remittance of foreign exchange in

respect of relative import bill.


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b) The funds based import finance generally takes of a back up limits to the letter of credit limitsanctioned to a customer. Such limits are considered where import of goods is made in economic

order quantities for use in production over a period of time.

7) Export trade:-

Credit facilities to exporters are broadly classified as pre-shipment and post-shipment. As the term

indicates, financial assistance extended up to the time of shipping the goods is called pre-shipment advance,

which is controlled in the books under the head Packing credit

Packing credit finance oriented finance and is granted to exporters or manufacturers or sub-suppliers for the

specific purpose of procuring raw materials/ purchasing/manufacturing/ processing/ transporting/

warehousing/ packing and shipping the good

8) Retail Products:-

In our corporate objectives for business growth retail banking is identified as a thrust area. It is also the

need of the hour to mobilize a good portfolio of retails banking, business, as it provides a major source for

sustaining growth in the industry and will thus ensure our position in the market place. Towards this, our

personal loan products under retails banking have repackaged and re-launched.

Retails banking are a combination of product development and selling strategies, essentially focused on

personal banking segment. It is a great opportunity for banks that already have a wide branch banking and a

large manpower base. The wider reach and staff to support intensive marketing give us an edge to develop

the business. It is an opportunity for branches to improve profitability and develop there own loan book to

generate attractive income. Hence, retail banking is the source that will support branches across the country

in a more sustaining way.

9) Financing Farmers for purchase of land for Agriculture Purpose:-

Term loans for development purposes and short term loans for production purposes. Now, there is need to

finance farmers for purchase of land to expand activities and make existing small and marginal units


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Economically viable which would enable farmers to diversity their present activities and take up allied

activities. The main objective is to make small and marginal holdings economically viable. To bring follow

lands and waste lands under cultivation. To step up agricultural production and productivity. To increase the

income of share croppers/ tenant farmers/ small and marginal farmers. The eligibility for the small and

marginal farmers who are having less than 5 acres non-irrigated land or less than 2.5 acres of irrigated land.

Share croppers/ tenant farmers. The farmer should have adequate surplus income from his production

activities on the land being financed and other income to repay the bank loan with interest.

The purpose of financing the farmers by way of term loan for purchase of land. (Agriculture/ fallow/ waste

land) and also finance to meet their working capital requirements of cultivation. Financing can also be done

for purchase of land for establishing or diversifying into other allied activities like dairy, poultry etc.

The quantum of loan to be sanctioned depends on:-

y Area of the land to be purchasedy Its value in the market. (for the purpose of valuation of land. For fixing the quantum of finance, the

price indicated by the farmer may be cross-checked with the register/ sub-register of the area).

Quantum of loan should include land purchase cost, development cost and cultivation expenses. The

margin should be:-

1) Mortgage of purchase land

2) Hypothecation of crops/ asset

3) D. P Note

4) Hypothecation agreement

5) Mortgage of purchased land


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The repayment period is 5 to 7 years in half yearly/ yearly instalments depending upon Cropping

pattern including a maximum moratorium period of 12 months In case of any longer period, it will be

referred to regional offices with justification.


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TITLE OF THE STUDY:

Analysis of loans and advances of United Bank of India.

INTRODUCTION:

Research design here refers to the methods used to collect the required data for the survey. It is the outline of

the total project. It contains the information stating the objectives of the study, scope of the study

methodology of the study, tools and techniques used for the survey, methods of data collection, limitation of

the study etc. in short research design is the chapter in which the blue print of the whole project is explained.

The research design includes an outline of the study which was conducted at United Bank of India. There

are various types of products and a service offered by UBI, and providing loans to people are one of the

important functions of the bank does. As this research study is mainly based on these schemes, we will

discuss more on the loan schemes provided by United Bank of India.

OBJECTIVES OF THE STUDY

1. To understand the terms and conditions of various loan schemes provided.2. To study and evaluate the performance of each loan scheme.3. To study about the respondent and their varying interest.4. .To makes suggestion based on findings.

SCOPE OF THE STUDY:

The operational jurisdiction of the research is limited to United Bank of India. The scope

covers all loan schemes of UBI.

1. The study is mainly concentrated on the lending practises pattern and influence in theorganisation performance.

2. This project is mainly concerned with the lending practises in the nationalised bank of issuingvarious securities.

3. The study enables the company to know its current position.


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4. To know and to set its objectives and goals.5. The study helps in ascertaining peoples response on bank lending .STATEMENT OF THE PROBLEM:

The financial management of public units has been a grinding issue before the mobility of

resources. Even after the findings and intensive industries in the sector face huge cash crush and in

inadequacy in the mobility of resources. Even after the findings and recommendation of so many

committee appointed by the government to enquire into the working capital issues of public sector

units.

REVIEW OF LITERATURE:

It is mandatory to scan through the literature which has already gone through the proposed study

subject. Various research works on lending practises of UBI has been very helpful in the successful

conduct of the study. However all such studies concentrate on certain issues and suggest piecemeal

solution. Therefore, a comprehensive study is elusive. The text and academics literature which

helped the study in details are:

y A Hand Book of Banking by N. S. Toory Ramman Finance management.y Finance management and policies by James C. Van Horne.y Management accounting principle and practises by R. K. Sharma.y Accounting for managers S. P Jain and K.L. Narang.y Research methodology by C.R. Kothari.y Business Research Methods by Appannaiah Reddy and Ramnath


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RESEARCH METHODOLOGY:

This refers to the method of data description. Descriptive research includes surveys and fact findings

enquire of different kinds. The major purpose of descriptive research is description of the state of affair as it

exists at present. In business research we quite often use the term export facto research for descriptive

research studies.

The main characteristics of this method is that the researcher has no control over the variable, he can only

report what has happened or what is happening. Themethod of research utilised in descriptive research are

survey methods of all kinds including comparative and correlation methods.

DATA COLLECTION TOOLS:

Data mainly collected from both primary and secondary sources.

1. PRIMARY DATA: Primary data are freshly gathered for a specific purpose or for a specificresearch project. Primary data was collected by way of discussion with company officials.

Mainly with bank manager. It has colled through the interim schedule, discussion and by

interacting with the officials of the organization or therespondents.

2. SECONDARY DATA: Secondary data that were collected through published materials likepamphlets, company books and from the official website that is www.unitedbankofindia.com

TOOLS AND TECHNIQUES:

Information has to be collected on the basis of the questionnaire distributed to the borrowers

Internet/ prominent search engines have been used for collecting the Data, market watch is

also used to some extent for interpretation analysis.

All data collected are carefully classified, tabulated for the purpose of research and

interpreted on the basis of charts and tables.


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LIMITATION OF THE STUDY:

1. Confined to one financial institution i.e. United Bank of India.

2. On account of time constraint whole spectrum of long term lending practises was not possible.

3. Inaccurate and inadequate information might have resulted to wrong interpretation.4. Only a very few no. of respondent were interviewed to get the information.5. Accounting information is another constraint.


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OVERVIEW OF THE REPORT

1.INTRODUCTION : The first chapter gives the detail introduction on the lending.

2. RESEARCH OF THE STUDY: The second chapter states the objectives scope, source of data, research

methodology.

3. COMPANY PROFILE OF THE ORGANIZATION: The third chapter gives the profile of the

organization where the project is conducted. It also explains about the future plans of the company.

4. ANALYSIS AND INTERPRETATION: The chapter gives detail regarding the analysis and

interpretation of data after collection. It comprises of brief notes regarding analysis and various methods

through which they may be carried out. It also consists of the data in form of tables, graphs and pie-charts

and its interpretation.

5. SUMMARY OF FINDINGS, CONCLUSIONS AND SUGGESTIONS: The chapter concluded the

project report it comprises of the findings and conclusion draw from the above analysis based on the data

collected and also includes suggestion.

6. QUESTIONAIRRE:

7. ANNEXURE:

8. BIBLIOGRAPHY:


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COMPANY PROFILE

History :

United Bank of India was constituted under the Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1970 on July 19, 1969. The Head Office of the Bank was set up at 4 Clive Ghat Street

(presently known as N. C. Dutta Sarani, Kolkata 700 001 which was shifted to its present location at 11

Hemanta Basu Sarani, Kolkata 700001 in 1972 for operational efficiency.

United Bank of India is one of the 14 banks which were nationalised on July 19, 1969. On October 12, 1950,

the name of Bengal Central Bank Limited (established in 1918 as Bengal Central Loan Company Limited)was changed to United Bank of India Limited for the purpose of amalgamation and on December 18, 1950,

Comilla Banking Corporation Limited (established in 1914), the Camilla Union Bank Limited (established

in 1922), the Hooghly Bank (established 1932) stood amalgamated with the Bank. Subsequently, other banks

namely, Cuttack Bank Limited, Tezpur Industrial Bank Limited, Hindustan Mercantile Limited and Narang

Bank of India Limited were merged with the Bank.

Changes in our Head Office

The Head Office of our Bank was set up at 4 Clive Ghat Street (presently known as N. C. Dutta Sarani,

Kolkata 700001 which was shifted to its present location at 11 Hemanta Basu Sarani, Kolkata 700001 in

1972 for operational efficiency.

y Information has been collected from the website www.unitedbankofindia.com


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Key Milestones

Sr. No. Year Details

1 1961 The Cuttack Bank Limited and The Tezpur Bank Limited merged with our Bank

2 1964 Staff Training college at Kolkata (then Calcutta) was setup

3 1969 Our Bank was nationalised by GoI

4 1970 Mobile branches were set up by our Bank

5 1973 Hindusthan Mercantile Bank Limited merged with our Bank

6 1976 Narang Bank of India Limited merged with our Bank

71980 Appointed as convenor of State Level Bankers Committee in West Bengal, Tripura and

Manipur

8 1993 First branch brought under total branch mechanism

9 1995 Crossed business level of Rs. 10,000 crore


11 2007 Rolled out first CBS branch

12 2007 Setup United Bank Socio Economic Development Foundation Trust in 2007 for renderingassistance to the weaker and under priviledge sections of the society

132007 Setup the first Rural Development & SelfEmployment Training Institute to provide

residential training to small farmers and unemployed youth free of cost

14 2009 Achieved 100% CBS for all its branches



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Awards/ certifications received by the Bank

Year Award and Recognition

2006National Award for the second best performance in financing small scale units by Ministry

of Small Scale Industries, Government of India

2007Golden Jubilee Award for the best bank in north east zone for excellence in the field of

khadi and village industries from the Ministry of MSME, Government of India

2007-2008 Best Banc assurance partner by Tata AIG

2008National Award for the best bank for excellence in field of Khadi and village industries for

east and north east zones from the Ministry of MSME, Government of India

2008-2009 Pinnacle Partner of the year by Tata AIG

2008-2009 Highest contributor to lives insured by Tata AIG

2009National Award under Prime MinisterEmployment Guarantee Programme in north east

zone from the Ministry of MSME, Government of India


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OVERVIEW

United Bank of India (UBI) is one of the 14 major banks which were nationalised on July 19, 1969. Its

predecessor the United Bank of India Ltd., was formed in 1950 with the amalgamation of four banks viz.

Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd.

(1922) and Hooghly Bank Ltd. (1932) (which were established in the years indicated in brackets after the

names). The origin of the Bank thus goes back as far as 1914. As against 174 branches, Rs. 147 crores of

deposits and Rs. 112 crores of advances at the time of nationalisation in July, 1969, today the Bank has 1484

branches, over Rs. 54,536 crores of deposits and Rs. 35,727 crores of gross advances as on 31-03-09.

Presently the Bank has a three-tier organisational set-up consisting of the Head Office, 28 Regional Officesand 1510 branches.

After nationalisation, the Bank expanded its branch network in a big way and actively participated in the

developmental activities, particularly in the rural and semi-urban areas in conformity with the objectives of

nationalisation. In recognition of the role played by the Bank, it was designated as Lead Bank in several

districts and at present it is the Lead Bank in 30 districts in the States ofWest Bengal, Assam, Manipur and

Tripura. The Bank is also the Convener of the State Level Bankers' Committees (SLBC) for the States of

West Bengal and Tripura.

UBI played a significant role in the spread of banking services in different parts of the country, mor

particularly in Eastern and North-Eastern India. UBI has sponsored 4 Regional Rural Banks (RRB) one

each in West Bengal, Assam, Manipur and Tripura. These four RRBs together have over 1000 branches.

United Bank of India has contributed 35% of the share capital/ additional capital to all the four RRBs in

four different states. In its efforts to provide banking services to the people living in the not easily

accessible areas of the Sunderban in West Bengal, UBI had established two floating mobile branches on

motor launches which moved from island to island on different days of the week. The floating mobile

branches were discontinued with the opening of full-fledged branches at the centres which were being

served by the floating mobile branches. UBI is also known as the 'Tea Bank' because of its age-old

association with the financing of tea gardens. It has been the largest lender to the tea industry.


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The Bank has three full fledged Overseas Branches one each at Kolkata, New Delhi and Mumbai with fully

equipped dealing room and SWIFT terminal . The operations of 500 branches have been computerised eitherfully or partially and Electronic Fund Transfer System came to be implemented in the Bank's branches at

Kolkata, Delhi, Mumbai and Chennai. The Bank has ATMs all over the country and having Cash Tree

arrangement with 11 other Banks.


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PRODUCT PROFILE

(1)United Housing Loan SchemeA shelter which you can call your own has been eluding you so far? Not anymore. With the United Housing

Loan Scheme, almost anyone can now fulfil his long cherished dream of owning a house or a flat of his/ her

choice at most attractive terms.

Eligibility:

Any individual aged 21 years or above having regular income.

Purpose:

y Purchase of land, purchase or construction of house/ flat.

y Purchase of up to 35 years old house/ flat.

y Renovation/ extension/ repair/ furnishing of house/ flat.

y Taking over of existing Housing Loan form other Bank/ Financial Institution.

y The loan is now extended to those cases also where flats are being constructed by promoters/developers where immediate mortgage of the property may not be possible.

Quantum of loan:

Quantum of loan depends on the cost of house/flat, applications age, income, repayment capacity etc


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(2)United Car Loan SchemeUnited Bank of India joins Hands with Maruti Udyog Ltd. For Financing Purchase of Maruti Cars

Purpose:

Purchase of any Maruti Brand Car from authorized Maruti Dealer.

Eligibility :

y Any individual with gross income of Rs.10,000/- and minimum net income of Rs.5,000/- per month.

y To be eligible the applicant will be required to get minimum score as per structured scoring Model ofUBI.

Quantum of Loan :

Max. Rs.6 lack.

Margin: 10%

Security:

y In case of salaried person: Nil, if employer ensures repayment.

y In case of professional & Self-employed person :

To be secured by personal guarantee of 1 to 2 persons having adequate worth, otherwise at least 60% of loan

amount to be covered by liquid security in the form of Term Deposits, NSCs, KVPs, LIPs (SV), and Relief

Bonds etc


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Eligibility Criteria

For purchase of new car as well as old car

Your Savings/ Current Deposit/ Term Deposit A/c holder with the Bank and fulfill the following criteria -

y A minimum net income (take home salary for salaried person) of Rs 5,000/- per month.

y In respect of working couple, net income of the spouse is considered for the purpose of computingnet income and monthly instalments, provided the spouse joins as co-borrower and monthly

instalment may be realised from the salaries of either of them. In case of salaried person, the

applicant should be in regular service for at least 2 years. Professional and self-employed persons

who are at least 2 years in their profession.

Quantum of Loan:

y In case of individuals

Maximum amount of loan is 12.00 lacs in case of new car and Rs. 6.00 lacs in case of old car.

Margin:

y New Car:- 10%y Old Car:- 30% of the valuation amount in case of old car

Processing Charge: 0.50%


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(3)United Personal Loan Scheme for Salaried PersonsDaughters marriage, major surgical operation, repairing of old house, passage money for sons education

abroad or any other social pecuniary liability. You can now heave a sigh of relief. Our Personal loan Scheme

has been designed just to meet such eventualities.

Eligibility:

y If you are a salaried person, with permanent service for at least 3 years, you may apply for the loan.

Quantum of Loan:

y The maximum amount of loan shall be Rs 3 lac or 40 months' net salary, whichever is less.

Period of Loan:

y The loan is to be repaid within a period not exceeding 36 months.


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(4)United Personal Loan Scheme for PensionersAs a senior citizen of the society, you command a special respect from United Bank of India. The Bank is

offering you a loan scheme for assisting you to meet your various family and personal needs after retirement.

The salient features of the Revised Scheme are as under:

Objective:

To extend term loan to you to meet your family and personal expenses.

Eligibility:

If you are a pensioner of Central and State Governments, Central and State Governments' Undertakings,

Defence Services, reputed Companies, Educational Institutions (Universities, Institutes, Schools and

Colleges) and drawing pension from the Branches of the United Bank, you are eligible for loan under the

Scheme from the Branch, where your pension is paid.

Age of the Borrower:

Your age at the time of availing loan should be such that the entire loan is repaid before your attaining

seventy five years of age.

Quantum of Loan:

A maximum of Rs 2 lakhs subject to 12 months' gross pension.

Margin: Nil

Processing Charge: 1%

Disbursement of Loan:


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The loan shall be disbursed through your Savings Bank A/c other than the account in which your pension is

credited every month. If you are not having any other Savings Bank A/c with the branch, you may open aSavings A/c with the Branch jointly with another member of your family, preferably with family pensioner

for the purpose of availing of the loan under the Scheme.

(5)United Housing Loan for PensionersUnited Bank of India takes care of your Housing and related requirements at post retirement stage. You will

also find us your companion in securing Shelter in any Old-Age Home. Salient features of the Scheme are

given below

Eligibility :

1. All pensioners ofCentral and State Governments, Central and State Governments Undertakings,Defense Services, reputed Companies, Educational Institutions (Universities, Institutes, Schools and

Colleges) including pensioners (VR and VRS) of United Bank .

2. YourMonthlyNetPensionshouldbeMinimumofRs.5,000/-

3. Your age at the time of availing the loan must be 70 years

4. You must be physically fit and mentally alert to execute the documents. Person(s) in paralyticcondition or bed-ridden is/are not eligible for the loan

Purpose :

y Renovation/extension/repair/furnishing of self-occupied house/ flat.y Purchase/construction of new house/ flat.

y Purchase of old house/ flat not old over 35 years from the date of completion of construction.


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y Securing shelter in any Old-Age Home

Quantum of Loan :

Max. Rs. 2 lac provided total deduction including EMI of the loan must not exceed 40% of your net monthly

pension. If your spouse joins as co-borrower and if he/ she is also pensioner drawing pension from the our

branch, pension of both of you shall be considered for determining the quantum of loan within the overall

ceiling.

Repayment Period :

Entire loan has to be liquidated before your attaining 75 years of age. The age of the 1st pensioner or from

whose income (also pensioner), the major recovery of loan will be made, shall be the deciding factor for the

period of loan (subject to maximum repayment period of 10 years). However, where loan is extended for

getting shelter in Old -Age Home total repayment period must not exceed 10 years (120 EMI).


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(6)United Cash RentalUnited Bank of India has come out with a loan scheme against future rent receivables for the owners of

house properties who have leased out or rented the same to bank, insurance company, multinationals,

company of good market standing, reputation and financial position, financial institutions, financially sound

public sector undertakings, Government of India offices.

The Salient features of the loan scheme are indicatedbelow:

Eligibility

If you are an individual (single or joint) or firm or a company owning house, flat or godown and letting or

leasing it out to bank, insurance company, multinational company, company of good market standing,

reputation and sound financial position, financial institution, financial sound PSU of Govt. of India (not

individuals) and you are interested to take loan against future rentals you may apply for the loan.

Quantum of Loan calculation

Max. Rs. 10 Crore where EMI should not exceed 80% of post tax monthly rent / lease rent receivable (85%

when our bank is tenant) & 80% valueof property t o be mortgaged.

Repayment

The loan is to be repaid within the unexpired period of lease/ tenancy or 8 years whichever is lower.

Security

y Mortgage of the unencumbered property and/ ory LIP/ KVP/ Relief Bond/ Bank's Term Deposit etc.y Assignment of future rent receivables.


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Margin

20% of the amount of rent receivables or 20% of the value of the house property or on accrued/ surrender

value of other securities.

Processing Charge: 1%

(7)United Demand Loan SchemeUnited Bank of India introduces a unique loan scheme against your savings in the form of NS Cs/ KVPs/ Life

Insurance Policies (Surrender Value). You can avail up to 100% of the face value of your savings

instruments or even more than that in case of NSCs/ KVPs. The salient features of the scheme are as under:

Eligibility:

Any individual having investment in the form of LIP (Surrender Value)/ NSC/ KVP to cover the loan

amount in his/ her name and be introduced to the bank.

Purpose:

For meeting all types of personal expenses.

Demand loan - Quantum of loan:

a) Against LICI Policy -- 90% of Surrender Value

b) Against NSCs/ KVPs /Relief Bond etc


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(8)United Education Loan Scheme

We are now at your doorstep to support your pursuit for excellence. OurEducational Loan Scheme has been

designed to meet your expenses for higher studies in India and abroad.

If you are an Indian National and secured an admission to any of the following academic/ professional/

technical courses through Entrance Test/ Selection process in a Board/ Institution/ University.

Courses Eligible for Study in India:

y Graduation Courses: B.A., B.Com, B.Sc., etc.y Post Graduation Courses: Masters and Ph.D.y Professional Courses: Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management,

Computer, etc.

y ComputerCertificate Courses of reputed Institutes accredited to Dept. ofElectronics or Institutesaffiliated to University.

y Courses like ICWA, CA, CFA, etc.y Courses conducted by IIM, IIT, IISC, XLRI, NIFT, etc.y Courses offered in India by reputed foreign Universities.y Evening Courses of approved Institutes.y OtherCourses leading to Diploma/ Degree, etc. conducted by Colleges/ Universities approves by

UGC/ Govt./ AICTE/ AIBMS/ ICMS, etc.

Courses Eligible for Study Abroad:

y Graduation : For job-oriented professional/ technical courses offered by reputed Universities.y Post Graduation: MCA, MBA, MS, etc.y Courses conducted by CIMA - London, CPA in USA etc.


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Quantum of Loan:

1. For study in India: Max. Rs. 10 lack.2. For study abroad: Max. Rs. 20 lacks

Other Rules:

Expenses covered by the Loan :

i. Fees payable to College/ School/ Hostel.ii. Examination/ Library/ Laboratory Fee.

iii. Purchase of Books/ Equipments/ Instruments/ Uniforms.iv. Caution Deposit/ Building Fund/ Refundable Deposit supported by Institution Bills/ Receipts.v. Travel Expenses/ Passage Money for studies abroad.

vi. Purchase ofComputers: Essential for completion of the Course.vii. Any other expenses required to complete the Course like study tours, project work, thesis, etc.Repayment of Loan:

The loan is to be repaid in 5 to 7 years after commencement of repayment. The repayment will

commence after a moratorium/ repayment holiday which is Course period plus 2 years or 6 months

after getting job whichever is earlier.

Life Insurance Coverage:

To ensure security to student's and borrower's life and against their loan liability and additional loan

component for payment of one-time premium for such insurance coverage may be sanctioned by

bank on request from the customer.


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(9)United Mortgage Loan SchemeObjectives:

Providing loan against mortgage of property to the owner of the property. The property may be House/ Flat

or any other commercial property but not agricultural land of any other vacant land.

Purpose:

The loan is meant for general purpose of the borrower to meet any personal/ business requirement except

speculations.

Eligibility:

Any individual in the age bracket of 21-65 years having property to be mortgaged and income to repay the

loan. Company, Partnership firm, Co-operative Society and Trust are, however, not eligible of the loan.

Third party property also cannot be mortgaged for taking a loan.

Quantum of loan:

Term Loan - Maximum Rs.15.00 Lac & OD facility - Max Rs.25.00 lac subject to

1. 24-times of monthly net income.2. 50% of the value of property.

Total monthly deduction including proposed EMI / Intt on OD should not exceed 50% of the gross monthly income of

the borrower


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value of the property minus margin.

2. Qualifying Amount shall be restricted to Rs. 50 lakhs.3. Property will be revalued at an interval of every five years &

the Qualifying Amount and thus loan amount shall be

revised based on such revaluation of property.

4. The quantum of lumpsum payment (if any) and periodicpayment shall be decided in such a manner so that the total

lump sum payment and total periodic payment to the borrower

together with the accrued interest and other charges in the loan

account during the sanctioned tenor will not be more than the

Qualifying Amount so arrived at after latest valuation of the

property (realizable value of the property minus margin).

Margin 20% of the value of the property

Disbursement of

Loan

1. Periodicity: The loan shall be disbursed as regular monthly orperiodic cash advances and/or a lump sum payment (upon

request). However, lump sum disbursal shall be restricted to

end use of the fund. Further, lump sum disbursement should be

restricted to loan amount calculated on 40% of the

Qualifying and thereafter period payment shall be fixed on

the remaining 60% of the Qualifying Amount.

2. Tenor: The tenor of disbursement shall be of 15 years or tillthe death of the last surviving borrower, whichever is earlier.

3. Extension of the loan period:The Bank may consider extensionof loan tenor for additional 5 years at its discretion depending

on the market value of the property, its status, purpose of

extension and approval from appropriate authority.


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(11) Kisan Credit Card

1. Objective

The scheme aims at providing adequate and timely credit for the comprehensive credit requirements of

farmers for taking up agriculture and allied activities under single window, with flexible and simplified

procedure, adopting whole farm approach, including the short-term credit needs and a reasonable component

for consumption needs, through Kisan Credit Card including repayment of farmer's dues to non-institutional

lenders.

2. Area of operation

Through all rural and semi urban branches.

3. Eligibility

i. Short term crop loans to farmers those who are owner cultivators/share-croppers/bargadars.

ii. KCC can also be issued for meeting the short term production need/working capital needs

in respect of the allied activities like poultry, dairy, pisciculture, floriculture, horticultureetc.

iii. KCC schemes also covers the term credits for agriculture and allied activities.

iv. KCC is issued to individual borrower only on merit and not to corporate body society,

association, club, group etc.

v. Illiterate and blind persons intending to avail of this facility may be allowed after taking

proper safeguard against misuse and tampering.


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4. Purpose

It is intended that both term as well as short term/working capital credit facilities will be provided through

single Kisan Credit Card. The passbook provided to KCC holders are to be divided into three separate

portions for maintaining the records of :-

a) short term credit / crop loans, b) working capital credit for activities allied to agriculture and c) term credit

(repayable beyond 12 months)

However, it is to be ensured that transaction records of different loan facilities are kept distinct.

5. Credit limit

i. Minimum credit limit should be Rs.25000/- and maximum Rs.10.00 lac in the form of

working capital and term loan. However, in deserving cases the upper limit may be

enhanced above Rs.10.00 lac which has to be disposed of under the D.P. of the General

Manager in charge of Priority Sector Lending.

ii. Working capital will be in the form of revolving cash credit and any number of withdrawals

and repayments in the account is allowed with a view to provide flexibility to the borrower

in deciding the appropriate time for withdrawal of the sanctioned limit and reducing his

loan and interest burden.(For ST Crop Loan, Consumption Loan and repayment of non-

institutional loans)

iii. Term Loan to be sanctioned for purchase of agricultural implements , plant and machinery

and land developing including construction of different types of storage facilities.

iv. While fixing the limit and sub-limits, entire year's production credit requirement is

reckoned, including those of ancillary activities such as storing, marketing, electricexpenses etc.

v. Credit limit is fixed on the basis of land holding under cultivation, cropping pattern and the

scale of finance recommended by District/State level technical committee. In the absence of


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such recommendation, the branch may fix appropriate scale of finance for the crop after

getting permission from the concerned Regional Office.

vi. The branch should also fix season-wise sub-limits within the overall credit limit.

vii. Contingency expenses, including consumption loan should not exceed 10% of the ST loan

sub-limit subject to maximum Rs.10,000/- till harvesting the benefit of production linking

with family need.

viii. Repayment of loan availed from non-institutional lenders by the farmer borrowers in

addition to consumption/contingency credit limit should not exceed 25% of the ST loan

sub-limit subject to maximum Rs.25,000/-.


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Page 52

Table:1

Table showing total advances from the year 2006 2009

Year Amount ( in Crores) Percentage (%)

2006 - 2007 22,156.11 25.95

2007 - 2008 27,868.11 32.62

2008 - 2009 35,393.55 41.43

Total 85,417.77 100

ANALYSIS:

From the above table it can be analysed that in the year 2006 2007 the total no. of advances was 22,156.11

crore with a 25.95%; in 2007 2008 the total no. of advances was 27,868.11 crore 32.62% and in the year

2008 2009 the amount is 35,393.55 with 41.43%.


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Analysis loans and advances

Page 53

Graph: 1

Graph showi total advances from the year 2006 2009

INTE ET TION:

From t above pie- chartit can be inferred thatin the year 2007 2008 showed the maximum

advances.

26%

33%

41%

Total advances

2006 - 2007

2007 - 2008

2008 - 2009


54/102


Page 54

Table 2

Table showing outstanding amount of loan for the years2006 - 2009.

(a)Housing finance

ANALYSIS:

From the above table it is analysed that when we compare the year 2006 2007 the amount outstanding was

1,418.57 crore with 31.80%. In the year 2007 2008 the amount was 1,453.67 crore with 32.50 % and in the

year 2008 2009 it was 1,591.42 crore with 35.70%.

Year Amount (in crore) Percentage (%)

2006 - 2007 1,418.57 31.80

2007 - 2008 1,453.67 32.50

2008 - 2009 1,591.42 35.70

Total 4463.66 100


55/102


Page 55

Graph 2

Graph showing outstanding amount of the loan for the years 2006 - 2009.

(a)Housing finance

INTE ET TION:

From the above pie- chart it can be inferred that there is continuous growth every year in the housing

finance segment. There is a noticeable growthin the home loan segment which is very profitable to the bank

fortheir further financialimprovement.

32%

32%

36%

Housing finance

2006 - 2007

2007 - 2008

2008 - 200


56/102


Page 56

Table 3

Table showing outstanding amount of loan for the years2006 - 2009.

(b) Car loans

ANALYSIS:

From the above table it is analyzed that when we compare the year 2006 2007 the amount outstanding was

70.18 crore with 23.62% . In the year 2007 2008 the amount was 80.02 crore which shows 26.96% and in

the year 2008 2009 the amount was 146.81 crore with 49.42%.


2006 - 2007 70.18 23.62

2007 - 2008 80.07 26.96

2008 - 2009 146.81 49.42

Total 297.06 100


57/102


Page 57

Graph3

Graph showing outstanding loan for the year 2006 2009.

(b) Car loan.

INTE ET TION:

From the above graph it can be inferred thatin the year 2008 2009 there is a substantial growth in the car

loans as against all previous years.

0

50

100

150

00

-

00

00

-

008

008 -

009

Year

car loan

Amountoutstandingin Rs.Crore

Percentage


58/102


Page 58

Graph 4:

Table showing outstanding loan for the year2006 2009.

(c) Personal loan

Year Amount( in Crore) Percentage (%)

2006 - 2007 384.46 28.31

2007 - 2008 425.11 31.32

2008 - 2009 548.24 40.37

Total 1357.81 100

ANALYSIS:

From the above table it is analyzed that when we compare the year 2006 2007 the amount was 384.46

crore which shows 28.31%. In the year 2007 2008 the amount was 425.11 crore which shows 31.32% and

in the year 2008 2009 the amount was 548.24 crore which shows the percentage of 40.37.


59/102


Page 59

Graph 4:

Graph showing outstanding loan for the year 2006 - 2009.

(c) Personalloan

INTE PRET TION:

From the above mentioned graph it can be interpreted thatthere is a substantial growth every year in the

personalloans.

0

100

200

300

400

500

600

2006 - 2007

2007 - 2008

2008 - 2009

personalloan

Amountoutstandingin Rs

Per entage


60/102


Page 60

Table 5

Table showing outstanding loan for the years 2006 - 2009.

(d) Educational loan


2006 - 2007 224.99 26.88

2007 - 2008 276.84 33.09

2008 - 2009 335.07 40.03

Total 836.9 100

ANALYSIS:

From the above table it is analysed that when we compare the year 2006 2007 the amount

outstanding is 224.99 crore with 26.88%. In the year 2007 2008 the outstanding amount is 276.84 crore

with 33.09% and in the year 2008 2009 the outstanding amount is 335.07 crore with 40.03%.


61/102


Page 61

Graph

Graph showing outstanding loan for the year 2006 - 2009.

(d) Educationalloan

INTERPRET TION:

From the above graph itis seen thatthere is a constant growth in the education loan of United Bank of India.

There is a noticeable growth in the education loan segment which is very profitable to the bank fortheir

further financialimprovement

0

50

100

150

200

250

300

350

2006 - 20072007 - 2008

2008 - 2009

Outstanding education loans

Amountoutstandingin Rs.Crore

Percentage


62/102


Page 62

Table 6

Table showing outstanding loans to retail sector for the year 2006 - 2009


2006 - 2007 3,469.72 30.28

2007 - 2008 3,727.22 32.54

2008 - 2009 4,260.36 37.18

Total 11,457.3 100

ANALYSIS:

From the above table it is analyzed that when we compare the year 2006 2007 the amount was 3,469.72

crore with 30.28%. In the year 2007 2008 the amount was 3,727.22 crore with 32.54% and in the year

2008 2009 the amount was 4,260.36 crore with 37.18% .


63/102


Page 63

Graph 6

Graph showing outstanding loans to retail sector for the year 2006 - 2009.

INTERPRET TION:

From the above graph it can be inferred thatthere is a moderate growth in the loans ofthe retailsector from 2006 - 2009.The maximum growth is in the year 2008 2009.

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

3,500.00

4,000.00

4,500.00

200

- 200

200 - 20082008 - 2009

Outstanding loans to retail sector

Amountin

rore

Per

entage


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Page 64

Table 7

Table showing outstanding loans to corporate sector for the year 2006 2009.


2006 - 2007 13,032.09 26.05

2007 - 2008 15,661.44 31.29

2008 - 2009 21,349.41 42.66

Total 50,042.94 100

ANALYSIS:

From the above table it is analysed that when we compare the year 2006 2007 the amount was 13,032.09

crore which shows a percentage of 26.05. In the year 2007 2008 the amount was15,661.44 in crore which

shows the percentage of 31.29 and in the year 2008 2009 the amount was 21,349.41 in crore which shows

the percentage of 42.66.


65/102


Page 65

Graph

Graph showing outstanding loans to corporate sector for the year 2006 - 2009.

INTERPRET TION:

From the above pie-chartitis inferred thatthere is constant growth in the outstanding loans in

corporate sector.

26%

31%

43%

Outstanding loansto orporate se tor

2006 - 2007

2007 - 2008

2008 - 2009


66/102


Page 66

Table 8

Table showing outstanding loans to others which includes priority sector for the year

2006 - 2009.


2006 - 2007 6,138.64 24.53

2007 - 2008 8,763.02 35.03

2008 - 2009 10,118.47 40.44

Total 25,020.14 100

ANALYSIS:

From the above table it is analyzed that when we compare the year 2006 2007 the amount was 6,138.64

crore with 24.53%. In the year 2007 2008 the amount w

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