Shakuntala Project

8/2/2019 Shakuntala Project

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A Study on Credit Loans to SME of Nationalised Bank

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CHAPTER 1

INTRODUCTION

PART-A

Introduction to finance

Finance is the study of funds and management. Its general areas are

business finance, personal finance, and public finance. It also deals with the

concepts of time, money, risk, and the interrelation between the given factors. It is

one of the most important aspects in handling business. Finance addresses the

methods wherein business entities used their financial resources on a certain

period of time. It is the application of a set of techniques used by organizations in

managing their financial affairs. The income and expenditure are emphasized in

finance and its differences can easily be indicated.

The banks serve as facilitators to companies in the provision of credit and

mutual funds. A bank provokes the activities of both borrowers and lenders. The

central banks are the last resorts that handle the monetary funds.

Studying finance will help in making wiser decisions about financial

funds. It can assist to identify benefits and risks while planning business activities

effectively. Finally, it will give an optimum control over the financial assets

which will certainly help in attaining a financially secured life.

Indian financial system:-

The financial system of financial sector of any country consists of

specialized and non-specialized financial institutions, organized and unorganized

financial markets, and financial instruments and services. The word, system in

the term financial system implies a set of complex and closely connected or


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intermixed institution, markets, transactions, claims, agents practices, and

liabilities in the economy. The financial system is concerned about credit, money,and finance-the terms intimately related yet somewhat different from each other.

The financial system provides the intermediation between investors and

institutions and helps the process of investment leading to greater financial

development that is pre-requisite for faster economic development.


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FINANCIAL

INSTITUTIONS

Regulatory Inter- Non- Other

Mediaries Inter Primary Secondary

Mediaries

Banking Non-Banking Organized Unorganized

Short Medium Long

Term Term Term

Primary Secondary

Capital Market Money Market Secondary

FINANCIAL

SYSTEM

FINANCIAL

MARKET

FINANCIAL

INSTRUMENTS

(Claims, Assets,

securities)

FINANCIAL

SERVICES


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Financial institutions:-

Financial institutions are those institutions which are dealing in the

financial market. Their main aim is to mobilize and transfer the savings or funds

from surplus units to deficit units. They are the back bone of financial system.

These institutions unlike commercial organizations deals with only financial

assets like deposits, securities, loan, etc., these institutions participate in financial

markets and mobilize the savings from the surplus units either directly or

indirectly.

Financial markets:-

Financial markets refer to the institutional arrangements for dealing in

financial assets and credit instruments of different types such as currency,

cheques, bank deposits, bills, bonds, etc. The financial markets are the credit

markets catering to the various credit needs of the individuals, firms and

institutions. Credit is supplied both on a short as well as a long term basis.

Classification of Financial Markets:-

On the basis of credit requirement for short-term and long term purposes,

financial markets are divided into two categories:-

Organized Markets Unorganized Markets

Organized Markets:-

In the organized markets, there are standardized rules and regulations

governing their financial dealings. There is also a high degree of

institutionalization and instrumentalization. These markets are subject to strict

supervision and control by the RBI or other regulatory bodies.

These organized markets can be further classified into two. They are:-

Capital Market Money Market


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Capital Market is a market for financial assets which have a long or

indefinite maturity. Generally, it deals with long term securities which have amaturity period of above one year.

Money Market is the centre for dealing mainly in short-term money assets.

It meets the short-term requirements of borrowers and provides liquidity or cash

to lenders.

Unorganized Markets:

In unorganized markets there are a number of money lenders, indigenous

bankers, and traders etc., who lend money to the public. Indigenous bankers also

collect deposits from public. There are also private finance companies, chit funds

etc., whose activities are not controlled by the RBI.

Financial instruments:-

The commodities that are traded or dealt in a financial market are financial

assets or securities or financial instruments. There are various types of securities

which are traded in the financial market as the requirements of lenders and

borrowers are varied. Financial instrument represent a claim on the repayment of

principal at a future date and or payment of a periodic or terminal sum in the form

of interest or dividend. Some of the examples of these financial instruments are

equity shares, preference shares, debentures, bonds, etc.

Financial services:-

Financial Services include the services offered by financial institutions.

They include the leasing companies, mutual funds, merchant bankers,

issue/portfolio managers, bill discounting houses and acceptance houses. The

financial services help not only to raise the required funds but also ensure their

efficient use. The various financial services provided includes, leasing, credit

cards, factoring, banking, insurance etc.


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Classification of Financial Sector Industry:-

The financial sector industry is classified into two. They are:-

Capital Market Intermediaries Money Market Intermediaries

Capital Market Intermediaries mainly provide long term funds to individuals and

corporate customers. They consist of term lending institutions like financial

corporations and investing institutions like LIC.

Money Market intermediaries supply only short term funds to individuals and

corporate customers. They consist of commercial banks, co-operative banks, etc.

In the past economic advancement was unknown. Consequently, the use of

money for buying and selling was very much restricted. With the development of

modern means of communication, economic progress and growth, the use of

money also increased. Along with the use of money, the use of credit instrument

also developed.

The origin of modern financial institutions can be traced to antiquity.

Where the individuals used to accept money in the firm as deposits and lend it topeople who need for their requirements.

Banking in India is mainly governed by the banking regulations act 1934.

The reserve bank of India and government of India exercise control over bank

from the opening of bank to their winding up by virtue of the powers conferred

under this act

All the regulatory provisions are not uniformly applicable to all banks.

The applicability of the provisions of these acts to a bank depends on its

constitution that is whether it is statutory corporation, a banking company or a co-

operative society.


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Origin of the bank

Since, the banking activities were started in different periods no

unanimous view regarding the origin of the word bankcan be found. According

to authors, the English word bank is derived from the Italian word Banco. The

Latin word Bancus and the French word Banque which means bench.

According to some author the term bank is derived from the German

word Banck which means a joint stock fund or a common fund raised from a

large number of the public.

Of these two views the latter view seems to be more convincing, because

the word bank is generally associated with an institution dealing in money raised

from the public.

Banking in India:

Banking in Indian was originated in the last decade of the 18

th

century.The first bank was The General bank of India, which started in 1786, and bank of

Hindustan, which started in 1790; both are now defunct. The oldest bank in

existence in India is the state bank of India, which originated in the bank of

Calcutta in June 1806, which almost immediately became bank of Bengal. This

was one of the three presidency banks, the other two being the Bank of Bombay

and the Bank of Madras, all three of which were established under charters from

the British East India Company. For many years presidency banks acted as quasi-

central banks, as did their successors. The three banks merged in 1921 to from the

imperial bank of India, which, upon Indias independence, became the state bank

of India.


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Meaning of bank

A bank is an institution, which deals with the money. It means that a bank

receives money in the form of deposits from the public and lends money for the

development of trade and commerce. Therefore the bank is called purveyors of

credit (i.e. buying and lending of money) and creators of money.

Definition of Bank

According to Indian banking regulation act 1949 (sec 5 (b) defines the

term bank as accepting of deposits from the public for the purpose of lending

money to the public and repayable on demand and withdrawal by cheque, draft,

and orders.

Features of bank

Accepting the deposits from the public on current, fixed and saving bankaccounts.

Allowing of withdrawals of those deposits by cheques, drafts and orders.Utilization of deposits in hand for the purpose of lending or investment in

securities.

Performance of banking as the main business.

Objectives of banking act.

1)To promote and develop in India sound and progressive banking principle, practices and convictions and to contribute to the development of creative

banking.

2)To render assistance and to provide various common services to members andto the banking industries.


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3)It has an objective of developing and implementing new ideas and innovationsin banking services operations and procedures.

4)To initiate advance planning for introduction of new systems or services in thebanking industry.

5)To collect, classify and circulate statistical and other information on thestructure and working of the banking system.

6)To promote education and knowledge about the law and practice of banking.7)To project a good public image of banking as a services industry and develop

good public relations.

8)To explore, plan, co-ordinate and organize detailed surveys on banking, business, resources, personal and management development programs of

banks and banking industry.

9) To developed the backward areas

It also supports to agricultural and rural development.

Reserve bank of India (RBI)

Reserve Bank of India, as a central bank of the country occupies a

significant place in the Indian banking and financial system. As an apex

institution, it acts as a guide, regulator, controller and promoter of the financial

system. Reserve Bank of India was established in 1935, under the Reserve Bank

of India Act, 1934. With the objectives as stated in the Preamble of the RBI Act,

to regulate the issue of bank notes and for keeping of reserves with a view to

securing monetary stability in India and generally to operate the currency and

credit system of the country to its advantage.

Till 1949, it was a private shareholders institution but became a state-

owned institution after its nationalization. The ban besides acting as a regulator

of financial system also performs developmental role. It is said to be the banker

to the banks and controller of activities of banking, non-banking and the financial

institutions in the Country.


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The RBI Act empowers the Central Government to issue such directions to it as

they might consider necessary in the interest of general public after consulting theGovernor of the Bank.

Functions of the RBI bank

The functions of the Reserve Bank of India are as follows:-

1) Monopoly of note issue:

The RBI has the sole right of note issue. All currency notes except one

rupee note and coins are issued by the government of India. The RBI follows

the minimum reserves system under which the bank has to maintain a Minimum

reserve of Rs.200 crores of which a minimum of Rs.115 crores in gold and bullion

and the rest in foreign securities. This function helps the Central Bank to control

money supply in the economy.

2) Banks to the Government:

The RBI is the Banker's agent and adviser to the government. It accepts

deposits and makes payments on behalf of the Government. It provides short term

loans namely "ways and means advances" to the Central Government and State

Government. These loans have to be repaid within a period of 3 months. It

represents the government in various international organizations like IMF, World

Bank etc. It sends its official as representative of the government for international

seminars and conferences. All important policy decision is taken by the

government in consultation with the RBI. It advises the government on important

matters like agricultural credit, devaluation of rupee, credit policy for the

industrial and export sectors etc.

3) Banker's Bank:

RBI acts as a banker for all the commercial banks. All scheduled banks

come under the direct control of RBI. All commercial as well as schedule bank

has to keep a minimum reserve with the RBI.


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They have to submit weekly reports to RBI about their transactions. By

performing 3 functions, the RBI helps the member banks significantly.They are given below such as:

a) it acts as the lender of the last resort.

b) It is the custodian of cash reserves of commercial banks.

c) It clears the transaction. It acts as the central clearing house.

4) Management of foreign exchange reserves:

RBI is the custodian of the foreign exchange reserves of the country. It is

the responsibility of the RBI to stabilize external value of rupee and carry out

transactions in foreign currencies. The Foreign Exchange Regulation Act (FERA)

passed by the government empowered RBI to have full control over management

of foreign exchange.

5) Credit control:

The central bank uses the quantitative and qualitative tools to control

credit. It is one of the principal functions of RBI. It helps the bank to ensure

exchange rate stability and price stability. In quantitative credit control, the

volume of credit is controlled and in qualitative credit control, the direction of

credit is regulated. Bank rate, open market operations and cash reserve ratio are

used under the quantitative method.

Functions of modern banking

Modern banking measures of the money supply, functions and types of

financial institutions, and modern E-banking.

A) Measuring the money supply.

To understand the modern banking, an understanding of what constitutes

the money Supply, the money available in the economy is needed. The money

supply can be divided into two categories.


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1)Liquid assets those are easily accessed and immediately used to purchasegoods and services.

2)The assets that cannot be used directly as cash, but it can be easily converted tocash.

B. Functions of financial institutions.

1)storing money:-One of the basic functions of a bank is to provide a safe, and convenient,

storage Location for valuables. These generally cover fireproof and nearly

impenetrable and banks are insured against loss due to theft.

2) Saving money:-

Banks are offer a variety of means of saving money such as saving

account, checking account, money market accounts and certificates of deposit.

Banks generally pay interest, an amount paid for the use of public money, on

these accounts.

3) Loans:-

Banks offer loans, money given out for a period of time in exchange for

fees and interest charges. The banks are limited in the total amount of loan that

they issue because of the fractional reserve system

4)Mortgages:-Mortgages are specific types of loans used to buy real estate. They

generally come in term length of 15, 25, or 30 years. A key determining factor in

determining the interest rate and the term on the mortgage is the borrowers

creditworthiness.

5)Credit cards:-Credit cards are those cards that allow their holder to make purchase of

goods and service in exchange for credit cards provider immediately paying for

the goods and services, and the card holder promising to pay back the amount of

the purchase to the card with interest. It also consist the credit worthiness of credit

card holder.


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6)Conveying interest:-The banks are earning income through the interest that they charge on

their lending. As we known, the interest is the price paid to use barrowed money.

7)Earning profit:-Banks exists to earn money the same as any other business. They do this

through charging interest on their lending and through charging various fees for

their service.

c) Modern E-commerce.

Modern banks utilize electronic formats to complete many of their

functions. These electronic formats can include:-

1)Automated teller machines (ATM):-ATM replace human bank teller in performing basic banking functions

such as deposits, withdrawals, account inquires. Key advantage of ATMs are 24

hours availability, elimination of labors cost and convenience of location.

Evaluation of modern banking

The growth of banking in England in the 19th

century paved the way for

Establishment of systematized in the world. Bank institution in the past,

performed limited functions such as, receiving deposits against bank notes and

then issuing notes in the country. As time advanced and industry expand and the

scope of the bank also expanded.

Banking institutions deal with a large number of services to the customers.

They serve as custodians of stock and shares and other valuables. They finance

import and export. They dealt not only with bill ofexchange, but also with bills

of lading, railway receipts, warehouse warrant and receipts, marine insurance

policies and so on. As brokers, they advance money on securities and issue letter

of credit, travelers cheques and circular notes.


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On the basis of functional classification

1) Commercial banks:-Commercial banks are those banks which accept deposits from the public

and lend them mainly to commerce for short period.

2) Industrial or development banks:-Industrial banks are the banks which provide the fixed capital to industries

and they also called investment banks. Because they invest their funds in

subscribing to shares and debentures of industrial concern with objective ofproviding long term finance to industries.

3) Agricultural bank:-Agricultural banks are those banks which provide finance to agricultural

activities. This kind of banks are found in many countries like India , England ,

Germany, France, USA etc in most of countries agricultural banks are

organized on co-operative banks which provide short term finance to the

agricultural activities for a purchase of fertilizers, pesticides and seeds for the

payment of wages.

4) Exchange banks:-

Exchange banks are performing the foreign exchange activities between

two or more countries. A small portion of Indias foreign exchange business is

done by Indian commercial banks.

5) Savings bank:-

Saving banks are special banks which specialize in the mobilization of

small savings of the middle and low income groups. As they are concernedwith

the mobilization of small savings if the people they are called savings bank.


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6) Central bank:-

A central bank is a bankers bank and monitory institutions found in a

country. As it occupies a central position in the banking structure of country, it is

known as central bank.

On the basis of structured classification

1) Branch banking:-

It is a system where the banking business is carried on by a single bank

with a net work of branches throughout the length and breadth of the country.The bank will have head office in one town and branches in different parts of the

country. The affairs of the branch are directed by the branch manager in

accordance with the regulations and policies of the head office.

2) Unit banking;-

In the unit banking system, the bank operations are carried through a

single office and confined to a particular area. The banks are maintaining no

branches. In some exceptional cases the banks are allowed to have branches with

in limited area.

3) Corresponding banking system:-

The unique feature of unit banking system is the correspondent banking

system. This is an arrangement with which banks carry accounts with banks in the

neighboring cities and these banks in turn have accounts with larger cities like

New York.

4) Deposit banking:-

Receiving deposit and making advances for short period is called deposit

banking. The underplaying principle of this system is that banks cannot lockup

their deposits in long term investments as the deposits are repayable on demand.


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5) Universal bank:-

Universal bank is a name given to banks engaged in diverse kind of

banking activates. The activities include making loan and advances for long term,

providing working capital, insurance, depository services, brokerage and venture

capital etc

6) Local area bank:-This is a new type of regional bank set up in rural andsemi urban center under private sector. These banks require a low capital base of

rs.5 Crores only. They are permitted to operate in two or three districts only.


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Part- B

Meaning of credit:-

Credit is the trust which allows one party to provide resource to

another party. Where that second party does not reimburse the first party

immediately, but instead arranges either to repay or return that resource at a later

date. The resources provided may be financial or they may consist of goods and

services. Credit encompasses any form of deferred payment. Credit is extended by

a creditor, also known as a lender, to a debtor or as barrower.

Credit does not necessarily require money. The credit concept can

apply in barter economies as well, based on the direct exchange of goods and

service. However, in modern societies credit usually denominated by a unit of

account. Unlike money, credit itself cannot act as a unit of account.

Movement of financial capital is normally dependent on either credit or

equity transfers. Credit is in turn dependent on the reputation or credit worthiness

of the equity which takes responsibility for the funds. Credit is also is also traded

in financial markets. The purest form is the credit default swap market, which is

essentially a trade market in credit insurance. A credit default swap represents the

price at which two parties exchange the risk the protection seller takes the risk

of default of the credit in return for a payment, commonly denoted in basis points

of the national amount to be referenced, while the protection buyer pays this

premium and in the case of default of the underlying, delivers this receivable to

the protection seller the pa r amount.

Credit management

Credit management is mainly concerned with using banks resources both

productively and profitably to achieve a preferable economic growth. At a same

time it also seeks a fair distribution among the various segments of the economy

so that the economic fabric grows without any hindrance as stipulated in the

national objectives, in general and the banking objectives, in particular. Credit


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management concerned with planning selection analysis budgeting designing and

implementing of schemes and plans. It is interwoven into the fabric to themanagement itself.

Objectives of credit management

Credit management evaluates how funds are used. In all cases, it involves

a sound judgment of men and project, combined with a logical approach to

decision making. The core of credit policy is to channelize the flow of funds into

the various sectors in accordance with the socio-economic objectives and also to

maximize earnings in the long run and optimize them in the short run. This calls

for an evaluation of the condition of production and marketing.

Banks and institutional management:

Credit management is concerned with the efficient use of records, mainly

of capital funds and deposits.

The objectives of credit management are in consonance with the banks

objectives

Sectoral flow of creditGiving support to agriculture, industry, and exports.Ensuring productive utilization of fundsMaximization of profitsMonitoring the end use of funds at the micro-levelMinimizing the risk and ensuring the safetyRecovery and flow of funds productivelyIncreasing the earning of the bankCredit planning and control at macro level

Credit management is important because it has as on all the activities of

the bank. Its primary responsibility is to discharge the credit function

successfully. It touches on all other banking functions. Credit management may

concern to be the management of credit function.


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Credit analysis:

A cardinal principle of the management of bank assets is to conduct it in a

profitable and safe manner. Lending is the most profitable as well as the most

risky functioned performed by the banks. Therefore, it must be done efficiently

and with a minimum risk factor. To manage the funds effectively, credit

management must be operative and credit analysis should be perfect. The

objective of credit analysis is to determine the capacity of the applicant to borrow

and his ability and willingness to repay requested advances in accordance with the

term of advance contract. Credit analysis must be sufficiently complete to

ascertain the risk associated with the advances and willingness and ability of

borrower to repay. It implies engaging in economic forecasting. Economic

forecasting is necessary because we live in a dynamic rather than static society.

Other influencing factors will be the size of credit, the structure of the

business, the risk factor involved, the purpose of the advances the length of time

the advance will be outstanding, the sources of funds for repayment and the

principals involved. The amount and type of security also will influence the credit

analysis. This apart, location, product, market, infrastructural facility will also

influence credit analysis and credit rating. The amount of time devoted to credit

analysis by a bank varies considerably with each advance application. And each

will require meticulous investigation and evaluation for better and effective credit

management.

Credit appraisal:

The objective of a revised system should be to examine the financial, technical

and managerial viability of firms operations in order to determine the need and

end use of short term funds and attempt to justify pre-conceived decision on a

credit demand. After all, the best risk to a banker is a well- managed firm rather

than the goodwill alone or quantum of assets the firm commands. From the

bankers point of view, credit appraisal involves a detailed financial analysis of the

past and projected viability of a firms operations, determination of needs,


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purpose of quantum of short-term credit and what follow up and control

measures require stipulation to ensure that the firms operations continue to beviable and short term funds are utilized by it for approved purposes.

Knowledge of borrower:

The lender with a close knowledge of his borrower has as offensive and

defensive edge, provided his relationship is not so close as to cause him to

overemphasize the customers interest so much that it is difficult for him to shift

the tone of his relationship when problems arise.

Loan officers often find that they know more about their credit when

business turns down or other difficulties develop than they did when they

approved them. But there radar dishes are expected to detect, in timely fashion:

yWeak financial and management controlsyLosses in one part of the business obscured by profits else whereyOne man shows , headstrong mismanagementyFad productsy

Marginal productsyBrilliant but erratic behavioryOver-reachingyPoor business strategyyA lack of appreciation of business fundamentals on the part of the borrower.

Success does not necessarily last, and size is no guarantee of good

performance or survival. Factors such as technology and changing consumer

tastes frequently must be dealt with.

Credit risk:-

Credit risk is an investors risk of loss arising from a borrower who

does not make payments as promised. Such an event called a default


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Types of credit risk

Credit default risk:-The risk of loss when the bank considers that the obligor is unlikely to pay

its obligations in full or the obligor is more than 90 days past due on any material

credit obligation default risk may impact all credit sensitive transactions, include

loans, securities and derivatives .

Concentration risk: -The risk associated with any single exposure or group of exposures with

the potential to produce large enough losses to threaten a banks core operations.

It may arise in the form of single name concentration or industry concentration.

Country risk:-The risk of loss arises when a sovereign state freezes foreign currency

payments or when it defaults on its obligation.

Meaning of Loans

A loan is a type of debt like all debt instrument, a loan entails the

redistribution of financial assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called

principal, from the lender, and his obligated to pay back or repay an equal amount

of money to the lender at a later time. Typically, the money paid back in regular

installments, or partial repayments; in any annuity, each installment is the same

amount.

A loan is generally provided at a cost, referred to as interest on the debt,

which provides an incentive for the lender to engage in the loan. In legal loan,

each of these obligations and restrictions is enforced by contract, which can also


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place the borrower under additional restrictions loan covenants. Although this

article focuses on monetary loans, in practice any material object might be lent.Acting as a provider of loan is one of the principal task for financial

institutions. For other institutions, issuing of debt contracts such as bonds is a

typical source of funding.

Types of loans:-

Secured loan:A secured loan is a loan which the borrower pledges some assets as

collateral.

A subsidized loan is a loan that will not gain interest before you begin to

pay it. It is known to be used at multiple colleges.

An unsubsidized loan is a loan that gains interest the day of disbursement.

A mortgage loan is a very common type of debt instrument, used by many

individuals to purchase housing.

Unsecured loan:Unsecured loans are monetary loans that are not secured against the

borrowers assets. These may available from financial institutions under manydifferent marketing packages. They are:

1) Credit card debt

2) Personal loans

3) Bank overdraft

4) Credit facilities

5) Corporate bonds

The interest rates applicable to those different forms may vary depending

on the lender and the borrower. These may or may not be regulated by law. In the

United Kingdom, when applied to individuals, these may come under the

consumer credit act 1974. Interest rates on unsecured loans are nearly always

higher than for secured loans, because an unsecured lenders options for recourse

against the borrower in the event of default are severely limited.


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Period sanctioned1) Short term loan:

Short term loans are loans which are granted for a period not exceeding

one year. These are advanced to meet the working capital requirements, against

security of movable assets like goods, commodities, shares, debentures etc...

2) Term loans:

Medium and long term loans are usually called term loans. In other words,

when a loan granted for a fixed period exceeding one year and is repayable

according to a schedule of repayment, as against on demand and at a time, it is

known as a term loam.

A term loan for longer period repayment schedule when a loan repayable

with in a period of over 3 to 5 years it is called medium term loan.

And, when a loan is granted and repayable for a period of over 5 to 10

years, they are called term loans.

3) Demand loan:

A demand loan is a onetime advance for fixed an amount and no debits to

the account may be made subsequent to the initial advance expect for interest,

insurance premium and other sundry charges. Demand loans are sanctioned

against goods and documents of title thereto banks own fixed deposits, gold

ornaments, etc These loans are repayable with in a period of 36 months to 48

months

on the basis of purpose;Consumption loans:

Traditionally, banks used to focus on loans for productive purpose, but during the

recent past banks have increasingly started giving loan for consumption purpose like

education, medical needs and automobiles.


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Meaning of small and medium enterprises:

It can be divided into two types as industry sector and services sector.

A). on the base of industry sector;

Micro enterprises:

Micro enterprises can be define as where the investment in plant and

machinery does (original cost) does not exceed Rs 25 lakhs in an organization.

Small enterprises:

The investment in plant and machinery is more than Rs 25lakhs but does

not exceed Rs 500 Lakhs, is called as small enterprises.

Medium enterprises:

Medium enterprise refers that the cost of investment in plant and

machinery is more than Rs 500 Lakhs; but does not exceed Rs 1000 Lakhs is

known as medium enterprises.

B). on the base of services sector;

Micro enterprises:

It refers that where the investment in equipment does not exceed Rs 10

Lakhs is known as micro enterprises.

Small enterprises:

The investment in equipment is more than Rs 10 Lakhs but does not

exceed Rs 200 Lakhs is called as small enterprises.

Medium enterprises:

Medium enterprise refers that the cost of investment in equipment is more

than Rs200 Lakhs but does not exceed Rs 500 Lakhs is known as medium

enterprises.


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Role of Small and Medium Enterprises in our Economy.

In developing country like ours, small and medium enterprises assume an

important status. They play a vital role in the economic development, more so in a

developing economy like India. The promotion and growth of SME sector has

been a cardinal feature of the industrial policy over the years. Its employment

potential is huge.

In India, the small enterprises sector alone employs over 30 million

people and is next only to agriculture sector in employment generation. Its as a

foreign exchange earner through exports is quite significant. It is established that

SME sector contributes a substantial share to Indias total exports.

SME are best suited to Indian conditions for the following reasons:

1) They can be set up with lower to fairly medium investment.

2) Growth of SME can be evenly spread throughout the country giving boost to

industrialization of the regions.

3) The SME act as a supplement to the agriculture activity as many industrial

activities under SME are agro-based and agro-related

4) Labor intensity in this sector provides an employment opportunity which is oneof the foremost in the national agenda.


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CHAPTER -2

RESERCH DESIGNE

Introduction

In the chapter the design of the analysis has been explained. It gives an

insight into the statement of problem, the objective of analysis, research

methodology, and the limitation of the analysis and an overview of the chapter

scheme.

Title of the study

A Study on Credit Loans to Small and Medium Enterprises provided by

the Canara bank.

Statement of the problem

In todays modern world the globalization playing a vital role with plenty

of competition. In order to sustain in this competition the banks needs to serve

with more efficiently and effectively.

The credit loan to small medium enterprises is one of the major functions

in Canara bank. The bank has to face that fluctuation in fixing interest rates. Small

and medium enterprises are facing stiff competition with large scale enterprises in

the global market.

Scope of analysis

The analysis mainly concerned that credit loans provided by Canara bank

to small and medium enterprises. And it also consist that period limitation for

loan, interest rates and overall performance of the bank.


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Objectives of the analysis

1) To know the results of SME sulabh.2) To know the customer tendency about loans in Canara bank.

3) To know the bank fluctuations in interest rates.

4) Helps to take effective measures.

5) To know the overall performance of the bank.

6) To offer suitable suggestion.

Review of literature:

Introduction

The literature of review starts with the selection of the problem for research

and continuous through the various stages of the research and ends with writing.

Previously no one had undertaken the study of the problem with help of

review literature of various investigations; the research has been completed with

findings and suggestions for the company. Hence my research is very beneficial

for the bank as it contributes appropriate that that help the bank in solving its

problem.

Purpose of review:

To gain background knowledge of the credit loans to SMETo identify appropriate methodology research development method of

measuring concept and technique of analysis.

Methodology:

Methodology are carried out with help of the following method

Visiting various internet website.Visiting our own library (CMRIMS) and the bank.Skimming through some reports on similar lines.Latest publication of the Canara bank.


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Research Methodology

A) Type of research: The research undertaken is an analytical type of research.

B) Data sources: Data has been obtained through primary and secondary sources

of research.

Primary data: Data has been collected through interview schedules with thehelp of manager and his subordinates in SEM section.

Secondary data: Data has been obtained from secondary source like Canarabank manuals, accounting records and through internet.

Research instrument:

The data has been obtained through interviews and from secondary

sources of books of accounts.

Sample size:

The sample size of the analysis was current years result from the books of

accounts.

Plan of analysis:

The data has been organized, tabulated and analysis with the help of charts

and inferences are drawn based on it.

Limitation:

The analysis confined only to the SME section.

The success of the project depends on the data made available. It consists

the limited period.

Operational Definition:

1) Operational definitions identifies one or more specifies observableConditions or events and then tells the researcher how to measuredthose events.


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2) A very clear and very precise explanation of the items being measured of the

items that are used to ensures.3) Operationalization the transformation of an abstract, theoretical concept,

observable, and measurable

Definition of the Bank:

According to Indian banking regulation act 1949 (sec 5 (b) defines the

term bank as accepting of deposits from the public for the purpose of lending

money to the public and repayable on demand and withdrawal by cheque, draft,

and orders.

Definition of Credit:

Credit is the trust which allows one party to provide resource to another

party. Where that second party does not reimburse the first party immediately,

but instead arranges either to repay or return that resource at a later date.

Definition of Loans:

A loan is a type of debt like all debt instrument, a loan entails the

redistribution of financial assets over time, between the lender and the borrower.

Definition of small and medium enterprises:

It can be divided into two types as industry sector and services sector.

A). on the base of industry sector;

Micro enterprises:

Micro enterprises can be define as where the investment in plant and

machinery does (original cost) does not exceed Rs 25 Lakhs


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Small enterprises:

The investment in plant and machinery is more than Rs 25 Lakhs but does

not exceed Rs 500 Lakhs is called as small enterprises.

Medium enterprises:

Medium enterprise refers that the cost of investment in plant and

machinery is more than Rs 500 Lakhs; but does not exceed Rs 1000 Lakhs is

known as medium enterprises.

B). on the base of services sector;

Micro enterprises:

It refers that where the investment in equipment does not exceed Rs 10

Lakhs is known as micro enterprises.

Small enterprises:

The investment in equipment is more than Rs 10 Lakhs but does not

exceed Rs 200 Lakhs is called as small enterprises.

Medium enterprises:

Medium enterprise refers that the cost of investment in equipment is more

than Rs200 Lakhs; but does not exceed Rs 500 Lakhs is known as medium

enterprises.


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Chapter scheme:

Chapter-1: introduction

This chapter includes the subject background of the research topic.

Chapter -2: research design.

This chapter has brief introduction about subject background, statement of

the problem, scope of the analysis, objectives of the analysis, research

methodology, research instrument, sampling method, sampling size, plan of

analysis; review of literature, operational definition and limitation and over view

of chapter scheme.

Chapter-3: profile of Canara bank.

This chapter deals with detail profile about Canara bank.

Chapter-4: analysis of credit loans to small and medium

enterprises

This chapter contains the tabulation and analysis of data collected for the

purpose of ascertaining the performance of Canara bank regarding loans to SME

hub.

Chapter-5: summary of the findings, conclusion and suggestions.

This chapter gives the summery of findings of the analysis, suggestions

and bibliography.


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CHAPTER-3

PROFILE OF THE BANK

Canara bank is a state-owned financial services company in India. It was

established in1906, making it one of the oldest banks in the country. As on 2011

November, the bank had a network of 3257 branches, spread across India. The

bank also has offices abroad in London, Hong Kong, Moscow, shanghai, Doha,

and Dubai.

Ammembal Subba Rao Pai, a philanthropist, established the Canara

Hindu Permanent Fund in Mangalore, India; on 1st July 1906. The bank

changed its name to Canara bank limited in 1910 when it incorporated.

Logo of Canara bank:

The rich blue represents stability, scale and depth. Bright yellow

represents optimism, warmth and energy. The new brand identity is based on the

idea of a bond and is a presentation of the close tie between the bank and its

stakeholders- from customers and employees to investors, institutions and society

at large.

Corporate vision of the bank:

To emerge as a best practices bank by pursuing global benchmarks in

profitability, operational efficiency, asset quality, risk management and expanding

the global reach.


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Corporate mission:

To provide quality banking services with enhanced customer orientation,

higher value creation for stakeholders and to continue as a responsive corporate

social citizen by effectively blending commercial pursuits with social banking.

The founding principles of the bank:

1. To remove superstition and ignorance2. To spread education among all to sub-serve the first principle.3. To inculcate the habit of thrift and savings.4. To transform the financial institution not only as the financial heart of the

community but also the social heart as well.

5. To assist the needy.6. To work with a sense of services and dedication7. To develop concern for fellow human beings and sensitivity to the

surroundings with a view to make changes \ remove hardships and

sufferings.

Significant Milestones

1906- At first the Bank was established as Canara Hindu Fund limited by

Sri Ammembal subba rao pai, as president. The first balance sheet contains with

the capital- 50000, deposits-40000, advances-84000, net profit-2420.

1910 Renamed as Canara bank limited.

1945- Women made entry into the bank. 12 women employees recruited.

1954- The administrative offices shifted from Mangalore to Bangalore.


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1958-The Reserve bank of India has been order Canara bank to acquire

G.Raghumathmul bank in Hyderabad.

1969-The Government of India has Nationalized Canara Bank, along with 13

other major commercial banks of India.

1976- The Canara bank inaugurated its 1000th branch.

1983- The Canara bank opened its first overseas office, a branch in London.

1984-The bank was emerging as No.1 Bank in assets Growth, Deposits Capital

and Net interest income. 34th

in the World in Real Growth of Assets

1985- Canara bank established a subsidiary in Hong Kong, indo Hong Kong

international finance.

1996- The Canara bank became the first Indian bank to get ISO certification for

total branch banking for its Seshadripuram branch in Bangalore. Now it

has stopped opting for ISO certification of branches.

2002- First public offer of shares by the bank.

2006- Centenary year- global business crossed 200000 Crore.

2008-09- Canara bank opened its third foreign operation in shanghai.

2010- The bank achieved global business 400000 Crore; and record net profit-

3000crore.

Mergers of other banks into Canara bank;

1. 1961: the bank of Kerala limited, Trivandrum.2. The seasia midland bank limited, alleppey.


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3. The C.Raghunathmal bank limited, Hyderabad.4. The Trivandrum permanent bank limited.5. 1963: the Sri Poornathrayeesa vilas bank ltd, tripunithura.6. The Arnad bank ltd, tiruchirapally.7. The Cochin commercial bank ltd, Cochin.8. The Pandyan Bank Limited, Madurai.9. 1968: The Pangal Nayak Bank Limited, Udupi,10. 1985 The Lakshmi Commercial Bank Limited with 230 branches and

3500 employees which is the biggest merger in the Indian banking

history.

Specialized Branches/ Business Units

1. Agricultural finance branch2. Agricultural consultancy services3. Industrial finance branch.4. Overseas branches.5. NRI branches6. Professionals branch7. Assets recovery management branch8. Mahila banking branch


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9. Prime corporate branch10. SME Sulabh branch11. Housing finance branch.Subsidiary companies of Canara bank

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

insurance company.

Branches and Offices Abroad

1. Branch at London and Leicester2. Branch at Hong Kong3. Branch at Shanghai, china4. A joint venture bank in Moscow- COMMERCIAL BANK OF

INDIA LLC. With state bank of India.


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Regional rural banks

1. Shreyas Gramin Bank2. South Malabar Gramin Bank.3. Pragathi Gramin bank.

Development projects

Canara bank made partnership with UNEO to initiate a successful solar

loan programmed. It was a four- year $7.6 million effort, launched in April 2003

to help accelerate the market for financing solar home systems in southern India.

Major IT initiative

Canara bank had a major IT initiative to network all branches and move

them to a single software platform. Canara bank chose flex cube from oracle

financial services software as the application. The bank entered into agreement

with IBM for rolling out flex cube to over 1000 branches as a part of phase 1.

Products and services provided by Canara bank.

The bank providing various products and services as favor to public, in

order to expansion its growth. These are all as under:

Loans and Advances Savings and Deposits Technology. Card services. Mutual funds Consultancy services Depository services Accounts and deposits


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ORGANISATIONAL STRUCTURE

BOARB OF DIRECTORS.

CHAIRMAN AND MANAGING DIRECTOR

EXCUTIVE DIRECTORS

CHIFE VIGILANCE OFFICER

WINGS AT HEAD OFFICE HEADED BY

GENERAL MANAGER.

CIRCLES HEADED BY GENERAL

MANAGER/DEPUTY GENERAL MANAGERS


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Wings at Head office

1. personal wing2. strategic planning and development wing3. prime corporate credit wing4. corporate wing5. priority credit wing6. MSME wing7. Credit administration wing8. Credit monitoring wing9. Department of information and technology wing10.Transaction banking wing11.Financial management and subsidiary wing12.General administration wing13.Retail banking wing14.Recovery wing15.Inspection wing16.Vigilance wing17.Treasury and international operation wing18.Risk management19.Compliance department

Specialized branches /business units

1. Agricultural finance bank2. Agricultural consultancy services3. Industrial financial branch4. Overseas branch5. NRI branches6. Professional branch7. Assets recovery management branch


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8. Mahila banking branch9. Prime corporate branch10.SME sulabh branch11.Housing finance branchSocial banking initiatives

1. Rural services volunteer2. Rural clinic services3. Cangrama sikshana Kendra4. Hari kalyana yojna5. Jala yoga yojna6. Term campaign7. Blood bank8. Book bank9. Canara bank jubilee education fund10.Ced for women11.Canara bank relief and welfare socity

A. Sevakshetra hospital; B. matruchhaya12.Trible counseling and coordination center13.Rudseti(24)


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Number of branches of Canara bank

Month/year Branches Month/year Branches

Dec\1976 1000 Mar\2004 2468

Dec\1985 1800 Mar\2005 2512

Dec\1990 2000 Mar\2006 2530

Dec\1995 2136 Mar\2007 2578

Mar\1998 2312 Mar\2008 2678

Mar\1999 2379 Mar\2009 2729

Mar\2001 2404 Mar\2010 3000

Mar\2002 2409 Mar\2011 3257

Ma\r2003 2424

In the earlier 1976 the bank had 1000 branches; gradually it does expand

its business to 3257 branches as the year of March 2011.


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Number of employees

year Employees year Employees

Inception 4 2001 48400

1956 1000 2002 47796

1960 2000 2003 47566

1970 10000 2004 47613

1980 30000 2006 46893

1990 51000 2008 45260

1996 54000 2009 44090

1999 55097 2010 43380

2011 43000

in the initial stage the bank had started with 4 employees and the in the

year it raised to 55097 employees with the expansion of business but in the year

2011 the number of employees reduces to 43000 due to advancement in

technology.


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Canara bank offering loan schemes for SME

Scheme for energy savings for SME sector.Loan scheme for financing power tools cantoolsSimplified open cash creditOpen cash credit schemeComposite loan schemeTerm loanMahila Udyam Nidhi schemeTechnology up gradation fund scheme for textile and jute industries in

SSIs

Loan for ISO 9000Export financing schemesArtisans credit card schemesNon fund based limitsScheme for standby credit for capital expenditure of SMEs.Standby term loan scheme for apparel exporters in small medium

sectors

Debt restructuring mechanism for small and medium enterprises15% margin money subsidy scheme under TUFS (MMS@15%-TUFS)

for SE textiles and jute units.

Margin money subsidy @20% under technology up gradation fundscheme for power looms in SSI sector.


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Loan scheme for reimbursement of investment made in fixed assets bySMEs

Doctors choiceLaghu Udyam credit card scheme.The above points represent that the Canara bank offering various kinds of

loans schemes for development of small scale and medium scale enterprises. The

loans are sanctioned by applying terms and conditions.

Say for example if a person wants loan scheme for energy savings for

SME sector, he need to follow terms and conditions as mentioned bellow

To get above loan scheme first of all the business unit should comes under

small scale sector and medium enterprises and cost of energy for the unit should

constitute not less than 20% of the total cost of production, and the unit should

possess energy audit report by an approved energy consultant. The current

account holders of the unit have dealings exclusively with Canara bank

satisfactorily for a period of last one year.

The business unit can get loan amount maximum 100 lakhs with the

margin of 10% of project cost. The interest rate on loan amount is 1% less than

prevailing rate applicable for loans of similar tenure. And the business has to keep

the security as primarily- assets created out of the credit facility, and collateral- no

need of security up to 5 lakhs. To getting loans above Rs 5 lakhs it has to

determine by bank on merits. The bank allowed to repayment of loan for

maximum 5 to 7 years including moratorium of 6 months.

In the same way the respective terms and conditions are applied for

various schemes those are offering by the bank.


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Rate of interest

Rates of interest above Rs.2 lakhs are on graded basis as per scoring

norms in respect of working capital and term loans. In respect of term loans above

Rs.2 lakhs, rates of interest depend on period of repayment (3 to 5 years and

above 5 years)

Types of loan Loan amount Interest rate on

working capital

p/a

Interest rate

on term loan

p/a

Up to 50000 9.75% 10.25%

Loan at BPRL

(presently)

Over 50000

Inclusive 2 lakhs

11.75% 11.75%

Loan under

national equity

fund scheme &

Mahila Udyama

Nidhi scheme

1) Up to 50000

2)Above 50000

Inclusive 2 lakhs

9.75%

10.60%

10.25%

10.60%

Short & long

term loan

1) Over 2 lakhs

Inclusive 10

lakhs

Between

11% to 13%

Between

11.25% to

13.75%

2)Over 10 lakhs

inclusive 100

lakhs

Between

10.50% to

13.50%

Between

10.75% to

13.75%

3)Over 100 lakhs Between

10.75% to

13.50%

Between

11% to

13.75%.


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Corporate goals of the bank 2011-12.

yAiming at a Total Business Growth of over 20% year after year by March 2012.yOver 250 new branches to be opened during FY12Out of which 100 rural branches will be opened to implement Financial

Inclusion Plan.

ySignificantly increase ATM strength.ySteps for commencing Data Warehousing initiated.yThrust on growing Retail Business- Retail Deposits and Retail Advances.yPlans to open Branches at Manama, Bahrain, QFC-Qatar, South Africa,

Germany, the USA, Brazil, Tanzania and Representative Office in Tokyo,

Japan.

SWOT analysis of the bank.

It is the overall evaluation of the strengths, weakness, opportunities and

threats involved in a project, business venture, company or organization or in any

other situation requiring a decision.

There are several strengths that can be found in the banking. It is due to

the strengths that have made the bank to become what it is today Canara bank has

been able to succeed and to become a strong bank of today, facing challenges

from the time it started and to become a strong bank of today. Facing challenges

from the time it started till today, the bank has accomplished so much in such a

way that it has acquired a good reputation in the country. The strengths found of

the bank are as follows:

Strength

1. Innovative schemes: Canara bank providing various innovative schemes toits customers in the form of various loan schemes deposits schemes with

attractive interest rates etc...


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Principles: Canara bank has succeeded to be one of the best banks in thecountry due to its founding principles, which have been implemented by thefounder. Among the principles includes to work with a sense of service and

dedication and to transform the financial institution not only as the financial

heart of the community but also the social heart as well.

2. Technologically advance: In the modern world the competition isgradually increased between the various banks. To sustain in this competition

the bank has adopted advanced technology in the operating activities of the

bank

Goodwill; The bank has been able to provide and maintain goodwill to itscustomers, Canara bank gives a welcome gesture to all the customers as well as

other people, it is due to this the bank has been accepted by everyone and

people feel secure about the bank.

Size of the bank: At present the Canara bank has been increased its operationacross the India with 3257 branches and 44000 employees.

Weaknesses

Low International presence: The Canara bank does not have much publicityat international level. It has limited branches at international level. Therefore it

facing the problem to serve more effectively in other countries.

Communication: Having many branches in the interior and the hilly areas, interms of development it becomes a weakness as far as penetrating and

operating the banks is concerned. The bank lacks a high technology

communication system in terms of computerization and networking. Thus not

providing social justice to the people in the villages.


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Opportunities

Creating needs: Canara bank is able to create needs to the people still do notknow the advantages of banking. Therefore, Canara bank ensures that the

people understand the need for banking and also attract other people at large.

Galore: India is developing country, which continues to grow day by day,therefore Canara bank has chance to attract people in order to invest in banks

since not all people are aware of banking services.

Threats

Competitors: nowadays there are many banks that have been establishedhaving advanced technologies. Since Canara bank has been in existence for so

many years, it faces competition in coping with the new generating banks like

the foreign banks, which are highly, recognized world wide

Private Banks: There is a booming of the establishment of private banks inIndia. Canara bank being nationalized bank faces challenges in trying to

compete with the private banks. As a result, it becomes a great threat to Canara

bank.

Rules and regulations: there are some rules and regulations, which onlyappear to the nationalized banks. Therefore, for the other banks like the foreign

and private banks the rules and regulations are less implemented making them

a threat to Canara bank in terms of moving forward.

Economic crisis: The bank has facing the fluctuations in fixing interest ratesdue to uncertain economic crisis like inflation and deflation in economic

operations.


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CHAPTER-4

ANALYSIS AND INTERPRETATION


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Table showing time norms for disposal of loan

applications

Loan applications from units under SME sector will be disposed off within

reasonable time as mentioned bellow; provide such applications are complete in

all respects.

Loan amount Periods(in weeks)

25000 Within 2 weeks

25000 to 5 lakhs Within 4 weeks

5 lakhs to 25 lakhs Within 6 weeks

Over 25 lakhs Within 8 weeks

The above table represents that if a person going to take loan amount of Rs

25000 he has repay within 2 weeks. If a person going to take loan amount beyond

25000 and up to 5 lakhs the time duration is given as 4 weeks .if a loan

sanctioned of above 5 lakhs up to 25 lakhs and over of 25 lakhs the person has to

repay within period of 6 and 8 weeks respectively.


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Chart showing time norms for disposal of loan

applications

0

1

2

3

4

5

6

7

8

2500025000 to 5

lakhs 5 lakhs to 25

lakhsOver 25

lakhs

2

4

6

8

period (in weeks )

25000

25000 to 5 lakhs

5 lakhs to 25 lakhs

Over 25 lakhs

The above chart represent that period in weeks to disposal of respective

loan amount SME schemes.


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Table showing rate of interest on loan at BPRL

scheme

Loan amount interest rate on

working capital

interest rate on term

loan

Up to 50000 9.75% 10.25%

Above 50000

inclusive 2 lakhs

11.75% 11.75%

The above table showing that interest on working capital 9.75%, interest

rate on term loan 10.25% will charge if the loan amount is 50000. If the loan

amount above 50000 and up to 200000 the interest rates will applicable 11.75%

for both on working capital and term loan.


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Chart showing rate of interest on loan at BPRL

scheme

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

50000

up to 200000 loan at

BPRL

9.75%

11.75%

10.25%11.75%

interest rate on working

capital

interest on term loan

The chart showing that previous table results of interest rates.


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Table showing rate of interest for Loan under

national equity fund scheme & Mahila Udyama

Nidhi scheme


working capital


loan

Up to 50000 9.75% 10.25%

Above 50000

inclusive 2 lakhs

10.60% 10.60%

This table showing the interest rates under special scheme of Loan under

national equity fund scheme & Mahila Udyama Nidhi. The interest rates up to

loan amount of 50000 will charge 9.75% on working capital and 10.25% on term

loan. If the loan amount is above 50000 and bellow 2 lakhs the interest charges

will be 10.60% for both terms.


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Chart showing rate of interest for Loan under

national equity fund scheme & Mahila Udyama

Nidhi scheme

9.20%

9.40%

9.60%

9.80%

10.00%

10.20%

10.40%

10.60%

up to 50000

above 50000

inclusive 2 lakhs

9.75%

10.60%

10.25%

10.60%


capital

interest rate on term loan

The chart showing the result of interest rate of Loan under national equity

fund scheme & Mahila Udyama Nidhi scheme.


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Chart showing Interest rate on short term and long

term loans


working capital


loan

Over2 lakhs inclusive

10 lakhs

11% to 13% 11.25% to 13.75%

Over 10 lakhs

inclusive 100 lakhs

10.50% to 13.50% 10.75% to 13.75%

Over 100 lakhs 10.75% to 13.50% 11% to 13.75%

The table representing that interest rate on working capital is between 11%to 13% when the loan amount is above 2 lakhs inclusive 10 lakhs, between

10.50% to 13.5%, when the loan amount above 10 lakhs and inclusive 100 lakhs

and if the loan amount is above 100 lakhs the rate of interest will be 10.75% to

13.50%. In the same way interest rate under term loans will be between 11.25% to

13.75%, 10.75% to 13.75%, and 11% to 13.75% in respective specified amount as

above.


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Chart showing Interest rate on short term and long

term loans

10%

10%

10%

11%

11%

11%

11%

11%

above 2 lakhs

inclusive 10

lakhs

over 10 lakhs

inclusive 100

lakhs

over 100 lakhs

11%

10.50%

10.75%

11.25%

10.75%

11%


capital

interest rate on term loan

The chart representing the rate of interest on the short term loans and term

loans


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Application for SMEs

Application form To SSIs. To MEs.

NF 836 Up to 10 lakhs. Up to 2 lakhs.

NF 837 Over Rs 10 lakhs & up

to Rs 50 lakhs.

Over Rs 2 lakhs &

up to Rs 15 lakhs.

NF 838 Over Rs 50 lakhs &

up to Rs 100 lakhs.

Over Rs 15 lakhs & up

to Rs 100 lakhs.

NF 903* Rs 1 Crore & above. Rs 1crore & above.

The above table indicates that when, an industrial person wants to take

loan, and he needs to apply through respective application forms. All theapplications are to be accompanied with project report, Audited/ unaudited

financial statements for the preceding 3 years, copies of licenses, permits, sales

tax assessment orders' income tax/wealth tax assessment orders, projected

financial statements, cash/fund flow statements, wherever required/insisted.


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Table showing number of accounting holders at canara

bank of SME sulabh Bangalore metro as at march 2011

Sector No... of accounts Percentage

Micro and small

enterprises

17767 95.72%

Medium enterprises 794 4.28%

Total 18561 100%

With the help of above table we can come to know that SME sulabh of

canara bank has been hold 18561 accounts in that 17767 accounts are micro and

small enterprises and rest of that as medium enterprises.


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Chart Showing number of accounting holders at canara

bank of SME sulabh Bangalore metro as at march 2011

No.. Of accounts

perecentage0

5000

10000

15000

20000

Micro and

Small

enterprise s

medium

enterprisesTotal

17767

794

18561

95.72%4.28%

100%

No.. Of accounts

perecentage

In the above chart we can came to know that bank has more accounts as micro

and small enterprises than the medium enterprises.


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Table showing targeted loan of SME sulabh Bangalore

metro as at march 2011

The table showing that the bank has had a target of 2000 crores loans for micro and small

enterprises and 1100 crore for medium enterprises total it had fixed 3100 crore of loans to

MSME in this branch.

Sector Target (Rs in crores) Percentage

Micro and small

enterprises

2000 64.5%

Medium

enterprises

1100 35.5%

Total 3100 100%


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Chart showing targeted loan of SME sulabh Bangalore

metro as at march 2011

0

500

1000

1500

2000

2500

3000

3500

micro & small

enterprises

medium

enterprises

total

2000

1100

3100

64.50%35.50% 100%

target (Rs in crores)

percentage

The chart showing that target of micro and small enterprises and medium enterprises as an the

report of march 2011.


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Table showing Actual loans issued by SME sulabh as at

March 2011

Sector Amount (in crores) percentage

Micro & small enterprises 2653.77 70.%

Medium enterprises 1131.31 30%

Total 3785.08 100%

The above table represents that the bank has reached 2653.77 crores by issuing

loans to micro and small enterprises. And issued Rs 1131.31 crores to medium

enterprises, the overall achievement is 3785.08 crores.


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Chart showing actual loans issued by SME sulabh as at

March 2011

0

500

1000

1500

2000

2500

3000

3500

4000

Micro and small

enterprises

medium

enterprises

Total

2653.77

1131.31

3785.08

70% 30% 100%

Amount (in crores )

percentage

The above chart showing actual achievement of turnover of loans issued by the bank.


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Page 66

Table showing comparison of Actual loans issued with the

Target amount of loan

Sector Targeted loans

( Rs in crores)

Actual loans

( Rs in crores)

Difference

( in crores)

Micro and small

enterprises

2000 2653.77 653.77

Medium enterprise 1100 1131.31 31.31

Total 3100 3785.08 685.08

This table represents that the comparison of actual loans issued with the targeted loans

estimated by the bank. The bank had estimation of 3100 crores but the actually

achieved 3785.08 crores it means it issued additional of 685.08.


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Page 67

Chart showing comparison of actual loans issued with the

target amount of loan

0

500

1000

1500

2000

2500

3000

3500

4000

Micro & small

enterprises medium

enterprises Total

2000

1100

3100

2653.77

1131.31

3785.08

653.77

31.31

685.08

Target (in crores)

Actual ( in crores)

Diffrences ( in c rores)

The chart showing that the bankhas achieved more than the target what they had, in

different sectors.


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Page 68

Table showing crossed Rs 600 Crore mark in new sanctions

as at March 2011

Particulars No of accounts Amount

( in crores)

New sanctions 289 609.13

Enhancement 113 94.87

Additional / Adhoc.86 1471.33

Total sanctioned 488 2175.33

This table showing that loans are issued by crossing 600 crores marks in loan

sanctioned. In that 289 accounts as new sanctioned with Rs 609.13 crore, for

enhancement 113 accounts Rs of 94.87 crores and as additional of 86 accounts of Rs

1471.33 crores.


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Page 69

Chart showing crossed Rs 600 Crore mark in new sanctions

as at March 2011

0

200

400

600

800

1000

1200

1400

1600

New sanctions Enhancement Additional /

Adhoc.

289

11386

609.13

94.87

1471.33

No of accounts

Amount ( in crores)

The chart showing of previous table results, In that we can observe that bank issued more

amount of loan with less accounts in additional sanctioned.


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Page 70

Table showing disbursement of loans in SME sulabh as at

March 2011

Particulars No of accounts Amount ( in crores)

New sanctions 272 492.70

Enhancement 113 94.87

Additional / Adhoc. 86 1465.58

Total sanctioned 471 2053.15


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Page 71

Chart showing disbursement of loans in SME sulabh as at

March 2011

272

113 86

492.7

94.87

1456.58

0

200

400

600

800

1000

1200

1400

1600

New sanctions Enhancement Additional / Adhoc.

No of accounts

Amount ( in crores)


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Page 72

Table showing Renewal of limits and NFB limits

sanctioned

particulars No of accounts Amount

( in crores)

Renewal of the limits 212 563.58

Non fund based 221 980.34


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Page 73

Chart showing Renewal of limits and NFB limits sanctioned

No of accounts

Amount (in crores)

0

100

200

300

400

500

600

700

800

900

1000

Renewal of the limit

Non fund based

212221

563.58

980.34

No of accounts

Amount (in crores)


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Page 74

Table showing details of meetings / camps conducted

Particular No of camps

MSME credit camps 7

MSME meet 4

Seminar / work shop 2


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Page 75

Chart showing details of meetings / camps conducted

7

4

2

No of camps

MSME credit camps

MSMe meet

Seminar / workshop


76/76


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