Vijay Bank project

7/28/2019 Vijay Bank project

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Performance Of Loans And Advances Of Vijaya Bank

G.H.N College of Commerce, Gangavathi1

Chapter overview scheme

Chapter-I

Introduction

Scope of study

objective

Research design

Limitations

Chapter-II

Industry profile

Company profile

Chapter-III

Theoretical background

Chapter-IV

Data Analysis and interpretation

Chapter-V

Findings, recommendations and conclusions

Anexture

Questionnaire

Bibliography


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Chapter-I__________________________________________________________________________________________

Introduction scope of study objective Research design limitations


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Introduction

In an organization there will be a normal of activities carried

on like production, Marketing, planning, financier etc., among all

these finances plays a major role, which made to study on this.

Finance came to studied as a part of Economics before the turn of

the present category formation of large sized undertakings by

consolidating the smaller ones brought before the Managements the

problem of financing to these enterprises.

The study of potentiality of different securities as a source of

procuring funds from outside world & the role & function of

institutional agencies continue to be emphasized during 1921.

The problem of financing ensured a new dimension in the II world

war.

In 1940s financial wizards continued to be concern with the

necessity for choosing sells a financial structure as would be able to

with stand stress & strains of the part war adjustments.

In 1960s & 70s period was marked by a very faithful & exciting

Era for a nor of alternative developments. The financial manager

started thinking on such important issues. As aggregate stock

prices, business sale & etc.

The dimension of Business financial that was earlier limited to

period but in recent years broadened according to- day-to-day

operations.


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Finance is regarded as lifeblood of an Enterprise. This is because in

the modern money oriented of all Economy finance is one of the

basic foundations of all kinds of economic activities. It is the

master key. Which provides accedes to all sources for beingemployed in manufacturing activities.

Statement of the problem:

In the present scenario, the banks are playing an important

role in the Economic development of our country as they helps inencouraging the people by providing Loan/Advances. Operation and

expansion of business and commercial activities depend a great

deal on the availability of loans/advances from commercial banks

.These Loan/Advances are attracted in the banks for further

productive investment. For the purpose of this the bank has

introduced many Loan/Advances schemes according to the

convenience of people based on the different categories. So, it is felt

very much essential to make a study on these Loan/Advances

schemes that how it influences on the development of Economy &

what are the conditions & terms that are to be fulfilled to make the

Loan/Advances under various schemes.


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Objectives of the study:

1. To ascertain the problem faced by bank by Public regarding

loans & advances.

2. To know the different schemes of Loan/Advances provided

by Vijaya bank.

3. To know the methodology used by bank to Mobilize

Loan/Advances from public.

4. To suggest ways & means of developing the Loan/Advances

schemes.

6. To know the interest rate & other facilities provided by bank

to Loan/Advances holders.

7. To study & know the financial problem of Bank.


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Scope of the study:

In todays world, banking services plays an important role in every

lives of individuals. The technological advancements in the banking

sector have grown rapidly in the last years. This has led to the

birth of new generation banks & competition. The study basically

focuses towards the observation of the operations & performance of

Vijaya Bank regarding Loan/Advances. The study with in its scope

has tried to find out the new trends promoted by the Vijaya Bank

regarding Loan/Advances.

This study attempts at understanding how Vijaya Bank

functions in its changing scenario & how each department at the

head office contributes to the success.

From the management point of view the study helps them to

know whether they are successful with their operations & as

management student this study helps in getting birds eye view of

latest development & upcoming changes in banking sector.


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Methodology:

Personal interview was adopted for collecting data from Vijaya

Bank regarding Loan/Advances schemes for collecting primary data

and secondary data is collected through the following

1. Financial Books

2. Annual reports

Tools & the techniques of data: Analysis & interpretation of data in

based on both primary & secondary data.

Primary data: Primary data are the first hand information collected,

through various methods such as observation, interviews.

Secondary data: Secondary data are obtained from text books,

magazines, news paper & Annual reports & Broachers of the bank

& official website.


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Limitation of study:

Every efforts has been made to make study complete & has exhaustive

as possible, however the study is not free from certain limitations.

Sometimes respondents dislikes to discuses regarding data collection. Time limit for the study The study is only confined to Vijaya Bank & the performance of other

banking company is not compared with it.

The collected information is limited & factual to some extent since someinformation is confidential & Bank opposed to dispose it.

The Exhaustive study has not been made on Vijaya Bank & is limited tothe partial fulfillment for the degree of B.B.M.

Collection of data & study was based purely on observation of theoperation of Vijaya Bank constraint.


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ChapterII______________________________________________________________________________

Industry Profile Company profile


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Industry Profile

Banking in India has a long and elaborate history of more than 200

years. The beginning of this industry can be traced back to 1786, when the

countrys first bank, Bank of Bengal, was established. But the industry

changed rapidly and drastically, after the nationalization of banks in 1969. As

a result, the public sector banks began experiencing numerous positive

changes and enormous growth. Then came the much-talked-about

liberalization and economic reforms that allowed banks to explore new

business opportunities and not just remain constrained to generating revenues

from mere borrowing and lending. This provided the Indian banking scenario a

remarkable facelift that only continues to get better with time. However, eventoday, despite the foray of foreign banks in the country, nationalized banks

continue to be biggest lenders in the country. This is primarily due to the size

of the banks and the penetration of the networks.

Savings banks and savings and loan associations, sometimes called thrift

institutions, are the second largest group of depository institutions. They were

first established as community-based institutions to finance mortgages for

people to buy homes and still cater mostly to the savings and lending needs of

individuals.

Credit unionsare another kind of depository institution. Most credit unions are

formed by people with a common bond, such as those who work for the same

company or belong to the same labor union or church. Members pool their

savings and, when they need money, they may borrow from the credit union,

often at a lower interest rate than that demanded by other financial

institutions.

Federal Reserve banks are Government agencies that perform many financial

services for the Government. Their chief responsibilities are to regulate the

banking industry and to help implement our Nations monetary policy so our

economy can run more efficiently by controlling the Nations money supply


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the total quantity of money in the country, including cash and bank deposits.

For example, during slower periods of economic activity, the Federal Reserve

may purchase government securities from commercial banks, giving them more

money to lend, thus expanding the economy. Federal Reserve banks also

perform a variety of services for other banks. For example, they may make

emergency loans to banks that are short of cash, and clear checks that are

drawn and paid out by different banks.

Interest on loans is the principal source of revenue for most banks, making

their various lending departments critical to their success. The commercial

lending department loans money to companies to start or expand a business or

to purchase inventory and capital equipment. The consumer lending

department handles student loans, credit cards, and loans for home

improvements, debt consolidation, and automobile purchases. Finally, the

mortgage lending department loans money to individuals and businesses to

purchase real estate.

The money to lend comes primarily from deposits in checking and savings

accounts, certificates of deposit, money market accounts, and other deposit

accounts that consumers and businesses set up with the bank. These deposits

often earn interest for the owner, and accounts that offer checking provide an

easy method for making payments safely without using cash. Deposits in many

banks are insured by the Federal Deposit Insurance Corporation, which

ensures that depositors will get their money back, up to a stated limit, if a

bank should fail.


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Performance of Industry

84 percent of the survey respondents described the performance of thebanking Industry as Very Good in the fiscal 2004-05.

newly granted autonomy would certainly make the PSBs morecompetitive and Profitable, said 88 per cent respondents, though some

more changes considered Desirable (refer survey)

48 percent of overall respondents and 67 percent of private bankrespondents expressed the need to relax the prescribed limit of single

ownership and cross holding cap in the Ownership and Governance

guidelines for Private sector Banks.

Although 72 percent of public & private sector bank respondentsexpressed their satisfaction with the recently devised road map for the

foreign banks, majority of foreign Bank respondents (75 percent)

expressed complete dissatisfaction with this Roadmap.

75 percent of the foreign bank respondents expressed that time frameprescribed to expand through Merger & Acquisitions should have been

less and equal number voiced that the guidelines are not in line with

international norms.

Consolidation in the banking industry followed by Technological upgradation was considered as key factors currently required to enhance

the international Competitiveness of the Indian banks.

Free trade agreements (FTA) considered a positive step in the area ofbanking by almost all respondents. The available market size and the

level of access provided to Survey on Status of Indian banking Industry

Progress & Agenda ahead 2 Indian banks in foreign countries should be


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the key factors in consideration, while entering into such agreements, as

highlighted by 76 percent of banks

Rise in the interest rates imminent say 64 percent survey respondents.Majority expects increase by 0.5 percent.

88 percent of Public and private sector banks considered HRD relatedissues as one of the biggest challenge in the process of consolidation.

83 percent respondent banks claim to have more than 85% level oftechnological advancements in their banks with remaining banks stating

it to be around 65-85%.

All our respondents emphasized that customer retention is significantlyimportant for the profitability of the banks.

More than 70 percent of banks felt the need of advanced securitysoftwares and stricter security policies to safeguard and ensure the

security of customer information. Some of the legal changes suggested

are detailed in the survey.

53 percent of respondent banks considered 6 months transition period toshift from MIFOR rupee benchmarks for interest rate derivatives to be

inadequate.

Majority of banks felt that their Risk management framework forimplementation of BASEL II was well in place.


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COMPANY PROFILE

HistoryVijaya Bank, a medium sized bank with presence across India was founded on

23rd October 1931 by the late Shri A.B.Shetty and other enterprising farmers

in Mangalore, Vijaya in India. The objective of the founders was essentially to

promote banking habits, thrift and entrepreneurship among the farming

community of Dakshina Kannada district in Vijaya State. The bank became a

scheduled bank in 1958. Vijaya Bank steadily grew into a large All India bank,

with nine smaller banks merging with it during the 1963-68. The credit for this

merger as well as growth goes to late Shri M.Sunder Ram Shetty, who was then

the Chief Executive of the bank. The bank was nationalised on 15 April 1980.

Growth and Nationalisation

Vijaya Bank grew steadily by merging nine smaller banks into it between 1963-

68. Shri M.Sunder Ram Shetty, who was then the Chief Executive of the bank,

is largely credited with these mergers. The bank was nationalised on 15 April

1980.

Branches

The bank has built a network of 1158 branches,45 Extension Counters and

382 ATMs as at 03.01.2010, that span all 28 states and 4 union territories in

the country.

Area of Corporation

After obtaining the certificate of corporation and certificate of Commencement

and getting the draft of the memorandum of association and articles of

association approved, Vijaya bank Ltd. started functioning as per the provision

of Indian companies act in a small bungalow with a tiled roof (Mangalore tiles)

on Kadri road in Mangalore.


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Background and inception of the companyType : Public BSE: 532401

Founded : 1931 at Mangalore, India.

Headquarters : Bangalore, India

Key people : Albert Tauro, Chairman & Managing Director

Industry : Financial Commercial banks

Employees : 12,107

Website : http://www.vijayabank.com/

Nature Of Business Carried:Banking is a business but it differs from other business in many respects.

This business runs purely on the confidence of the members of the general

public called the depositors who entrust their savings solely out of their

confidence and trust that they will get back their money with interest

whenever they need. So long as there is confidence on the bank in this way,

the deposits will come to the bank.

Similarly in case of loan. While giving, the bank reposes full trust and

confidence on the Borrower that he will repay the same with interest. There

could be security documents undertaking to repay anytime on demand by

the bank and collateral securities for any eventuality. But the documents

and securities are only collateral and secondary and the main consideration

is only the confidence. Thus in both the cases of deposits and advances,

confidence pays a vital role.
http://www.vijayabank.com/http://www.vijayabank.com/http://www.vijayabank.com/


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Vision, Mission & Quality of The CompanyVision:

To provide the most useful and ethical Investment Solutions - guided by

values driven approach to growth, client service and employee development.

Mission:

To create long term value by empowering individual investors through

superior financial services supported by culture based on highest level of

teamwork, efficiency and integrity.

Quality Policy:

IMAGE iscommitted to enhance knowledge, competencies & professionalskills of individuals enabling conversion of training outputs into business

opportunities for achieving organizational growth & excellence.

IMAGE strives for developing innovative training programs &methodologies, for higher involvement of personnel to effectively achieve

the dynamic business needs.

IMAGE motivates & trains all levels of personnel for continualimprovement of the quality management system.

In order to achieve the above policy, IMAGE works on the following

quality objectives.


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QUALITY OBJECTIVES:

Impart training to develop knowledge, sharpen professional skills & re-orient attitudes of individuals for performance excellence.

Develop innovative training programs & methodologies to achievedynamic business needs.

Continuing endeavour & involve all its personal for implementing thequality management system with commitment towards continual

improvement.

Products/Service ProfileProducts

Savings Account Current Account Salary Account RD Account Education Loan Home Loan Agriculture Loan Jewel Loan Loans to Micro Entrepreneurs Vehicle Loan


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Loans & Advances

Retail Lending Schemes Loans Against Securities Non Fund Based Facilities Advances to Agriculture, SSIs and Others Government Sponsored Schemes Special Schemes for Women

NRI Services

Deposits Loans Remittances FOREX Branches FCNR(B) Branches Helpline for NRIs

Remittance Collection and Facilities

FOREX Remittances Inland Remittances Electronic Remittance Services Inward / Outward Collection Instruments


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Credit Cards

Domestic Cards Global cards Debit cards

Forex

FOREX market Information Card Rates Treasury

Other Services

Merchant Banking Vijaya Rakshak V-Arogya Bima Policy Credit Cards Mutual Funds Leasing Hiring Purchases

AREA OF OPERATION:The operation of Vijaya Bank is nationally.

OWNERSHIP PATTERNThe Vijaya Bank is owned by government as well as public sector.


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Ownership Pattern:

Ownership Pattern/Shareholder Pattern

The share holding pattern in Vijaya Bank Ltd is as given below in the form o

table

Dmat No of Shareholders Percentage No of shares

Promoter

Foreign Promoter 0 0 0.00 0Indian Promoter 233,517,8001 53.87 233,517,800

Total Promoter 233,517,8001 53.87 233,517,800

Non Promoter

Institutions

Mutual Funds / UTI 7,536,167 14 1.74 7,536,167FI/Bank 4,864,151 20 1.12 4,864,651Insurance 24,514,928 5 5.65 24,514,928

Govt 19,760,268 9 4.56 19,760,268FII 37,542,895 69 8.66 37,542,895

Other 0 0 0.00 0

Non-Institution

Bodies Corporate 12,672,717 1,800 3.26 14,115,017NRIs/OCBs 2,198,569 2,311 0.62 2,668,569Individuals 60,379,605 271,095 19.76 85,652,275Others 0 0 0.00 0

Total Non-Institution 78,596,121 276,711 24.40 105,781,091Total Non Promoter 172,814,530276,828 46.13 200,000,000Depository Receipts 0 0 0.00 0

Total 406,332,330276,829 100.00 433,517,800

Competitors of Vijaya bankCanara Bank.

Corporation Bank.

ICICI Bank Ltd.

Indian Bank.

Indus Ind Bank Ltd.

Karnataka Bank.

ING Vysya Bank Ltd.

Syndicate Bank.

State Bank of India.


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Infrastructural Facilities:As regards to the infrastructural facilities provided in Vijay Bank

OfficesThe Head office of Vijaya Bank has a central air condition system which helps

the employees to escape from the heat.

Canteen The Bank provides canteen facility to all its employees and itis situated inside the Bank premises.

System The Bank is one of the few banks in the country which usesFinical Software which in turn helps the bank to serve its customers more

efficiently. The Bank also provides internet facility to its employees

Achievement/Awards:In recognition of performance in implementing Hindi Language, the Bank was

awarded III prize under the prestigious INDIRA GANDHI RAJBHASHA

PURASKAR for the year 2007-08. The Bank has also been awarded II prize in

Region 'C" for Progressive Use of Hindi under Reserve Bank Rajbhasha Shield

Scheme for the year 2011-12.

The Bank was awarded I prize by Regional Implementation Office (North- East),

Ministry of Home, Govt of India in North Eastern Region for Progressive Use of

Hindi for the year2011-12. SLBC Gujarat also conferred on the Bank III prize

for effective implementation of the Official Language.


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The Bank's Regional Office, Bangalore (North) was awarded I Prize by TO LIC,

Bangalore for effective Implementation of Official Language for the year 2011-

12. Also Regional Offices, Kolkata and Hubli, were awarded II Prize by TO LIC,

Kolkata and Hubli respectively for effective Implementation of Official

Language. Regional Office, Ahmadabad has been awarded Consolation prize by

TO LIC, Ahmadabad during the year.

The staff members working in Bangalore city participated in the Inter-Bank

competitions conducted under the aegis of TO LIC. 12 competitions were

conducted, in which our Bank bagged 9 prizes, out which 2 were First prizes.

During the year, the Bank received an award from the NABARD in recognition

of the highest share of SHG business to its overall business, under SHG Bank

linkage programme for the year 2011-12, among commercial Banks in the

State of Karnataka.

FUTURE GROWTH & PROSPECTSWe expect an overall growth rate of 18-20 per cent in business

(assets/deposits), which is healthy and good. NIM should be more than three

per cent in this calendar year. On the NPA front, the gross NPA should be

contained within two percent. As far as the NPA accretion is concerned, that

should be not more than 1-1.5 per cent from the present level of three per cent.

The bank is planning to enable Internet Banking as a payment gateway for

shopping that covers at areas of business like Hotel Booking, Ticket Booking,

Purchase of goods etc. The Bank is also planning to introduce mobile Top-up

through ATMs and internet Banking. Further Bank is also planning to tie up

for online trading in shares.


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The Vijaya Bank goes for the following values

Customer Satisfaction Quick and better Service Loyal to the Customers Honest in work

SWOT ANALYSIS

A SWOT analysis focuses on the internal and external environments,examining strengths and weaknesses in the internal environment and

opportunities and threats in the external environment.

STRENGTHS

Ability to lead with the customer. It has value in the market. Strong relationship with customer. Best value of money Proactiveness Low NPA Value


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WEAKNESS

Hierarchical management structure Employee attitude towards work. Employee average age is high.

OPPORTUNITIES

Increasing Network penetration. Can take new Initiatives to make itself from other banks More than 60% of the market is untapped in India. Building Relationship with clients Unfulfilled customer needs India is experiencing in rapid growth in its insurance industry

THREATS

Market may not accept new products Increased competition from other insurance vendors Competition from Canara bank, Indian Bank.


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ANALYSIS OF FINANCIAL STATEMENT

ParticularsMar 2012Rs. Cr

Mar 2011Rs. Cr

Mar 2010Rs. Cr

Banks - Public SectorNet Interest Income / Total funds 2.20 1.91 1.69

Non Interest Income / TotalFunds

1.35 1.29 1.10

Total Income / Capital Employed(%)

0.00 0.00 0.00

Interest Expended / CapitalEmployed (%)

0.00 0.00 0.00

Operating Expense / TotalIncome

17.69 15.57 15.93

Interest Income / Total Funds 7.88 8.89 7.92Interest Expended / Total Funds 5.69 6.98 6.23

Operating Expense / Total Funds 1.63 1.59 1.44

Profit Before Provisions / TotalFunds

1.91 1.62 1.36

Net Profit / Total Funds 0.77 0.45 0.74

Interest Expended /InterestEarned

0.00 0.00 0.00

Other Income / Total Income 14.62 12.72 12.23

Credit Deposit Ratio 66.10 65.53 65.35

Investment Deposit Ratio

33.05

33.18

33.47

Cash Deposit Ratio 8.44 11.12 10.59

Advances / Loan Funds (%) 0.00 0.00 0.00


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PROFIT & LOSS ACCOUNT

Mar 2012 Mar 2011 Mar 2010

I. INCOME :

Interest Earned 5,200.65 5,237.83 3,888.54Other Income 890.58 763.27 542.08

TOTAL 6,091.23 6,001.10 4,430.62

II. EXPENDITURE :

Interest expended 3,751.57 4,113.03 3,058.42

Operating Expenses 1,077.66 934.55 705.95

Provisions & Contingencies 754.70 691.04 304.97

TOTAL 5,583.93 5,738.62 4,069.34

III. PROFIT/LOSS

Net Profit for the year 507.30 262.48 361.28

Prior Year Adjustments 0.00 0.00 -4.76

Profit brought forward 750.47 750.69 610.89

TOTAL 1,257.77 1,013.17 967.41

IV. APPROPRIATIONS

Transfer to Statutory

Reserves

126.82 65.62 90.32

Transfer to Other Reserves 115.28 146.27 24.96

Proposed Dividend /Transfer to Government

161.90 50.81 101.44

Balance c/f to Balance Sheet 853.77 750.47 750.69

TOTAL 1,257.77 1,013.17 967.41

Equity Dividend 108.38 43.36 86.70

Corporate Dividend Tax 18.42 7.36 14.74

Equity Dividend (%) 25.00 10.00 20.00

Earning Per Share (Rs.) 10.47 5.88 7.99

Book Value 61.44 53.47 48.59


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Result of Financial analysis

PROFITABLITY- Though being a season of recession this year the company

has ended up with a net profit ratio of 5.7 which is nearly half to the last years

ratio. It could be considered fair till than but if see the balance sheet there hasbeen a considerable increase in the fixed assets to 10010.79 from 1861.77

which means that there should be increase in the number of buildings and

branches that should lead to more number of branches and more number of

accounts but besides this there are no signs of improvements in profit so the

profitability of Vijaya bank could be rated FAIR.

RETURNS-Share capital and reserves have increased in this year considerably

this shows a good sign of market value and after considering environmental

conditions we can also see that the profit earned after tax this year was lesser

than of the previous year so the returns can be rated as GOOD.

LEAVERAGE- The leverage ratio can be considered doing well as much down

fall is not observed and so it can be considered or rated VERY GOOD.

The banks market value is seem to be increasing and though the returns are

less but the expenses have also fallen to a large extent so Vijaya bank can berated overall as VERY GOOD


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Chapter III

Theoretical Background


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THEORETICAL BACKGROUND

BANK MEANING;

A bankis afinancial institutionand afinancial intermediarythat

acceptsdepositsand channels those deposits intolendingactivities, either directly

by loaning or indirectly throughcapital markets. A bank is the connection between

customers that have capital deficits and customers with capital surpluses.

.

Objectives: enlist the utility of granting loans and advances by commercial banks; differentiate borrowing rates from lending rates; enumerate the ways of lending money; distinguish between long-term and short-term loans; point out the nature of security provided for loans; and outline the procedure for grant of cash credit, overdraft and Discounting of bills of exchange.

Meaning of Loans and Advances

The term loan refers to the amount borrowed by one person from

another. The amount is in the nature of loan and refers to the sum paid to the

borrower. Thus, from the view point of borrower, it is borrowing and from the

view point of bank, it is lending. Loan may be regarded as credit granted

where the money is disbursed and its recovery is made on a later date. It is a

debt for the borrower. While granting loans, credit is given for a definite

purpose and for a predetermined period. Interest is charged on the loan at

agreed rate and intervals of payment. Advance on the other hand, is a credit

facility granted by the bank. Banks grant advances largely for short-term
http://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financial_institutionhttp://en.wikipedia.org/wiki/Financial_intermediaryhttp://en.wikipedia.org/wiki/Financial_intermediaryhttp://en.wikipedia.org/wiki/Financial_intermediaryhttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Capital_markethttp://en.wikipedia.org/wiki/Loanhttp://en.wikipedia.org/wiki/Deposit_accounthttp://en.wikipedia.org/wiki/Financial_intermediaryhttp://en.wikipedia.org/wiki/Financial_institution


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purposes, such as purchase of goods traded in and meeting other short-term

trading liabilities. There is a sense of debt in loan, whereas an advance is a

facility being availed of by the borrower. However, like loans, advances are also

to be repaid. Thus a credit facility- repayable in installments over a period is

termed as loan while a credit facility repayable within one year may be known

as advances. However, these two terms are used interchangeably.

Utility of Loans and Advances

Loans and advances granted by commercial banks are highly beneficial to

individuals, firms, companies and industrial concerns. The growth and

diversification of business activities are effected to a large extent through bank

financing. Loans and advances granted by banks help in meeting short-termand long term financial needs of business enterprises. We can discuss the role

played by banks in the business world by way of loans and advances as follows

:-

Loans and advances can be arranged from banks in keeping with theflexibility in business operations. Traders, may borrow money for day to

day financial needs availing of the facility of cash credit, bank overdraft

and discounting of bills. The amount raised as loan may be repaid within

a short period to suit the convenience of the borrower. Thus business

may be run efficiently with borrowed funds from banks for financing its

working capital requirements.

Loans and advances are utilized for making payment of currentliabilities, wage and salaries of employees, and also the tax liability of

business.

Loans and advances from banks are found to be economical for tradersand businessmen, because banks charge a reasonable rate of interest on

such loans/advances. For loans from money lenders, the rate of interest

charged is very high. The interest charged by commercial banks is

regulated by the Reserve Bank of India.


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Banks generally do not interfere with the use, management and Controlof the borrowed money. But it takes care to ensure that the money lent is

used only for business purposes.

Bank loans and advances are found to be convenient as far as itsrepayment is concerned. This facilitates planning for future and timely

repayment of loans. Otherwise business activities would have come to a

halt.

Loans and advances by banks generally carry element of secrecy with it.Banks are duly-bound to maintain secrecy of their transactions with the

customers. This enhances peoples faith in the banking system.

Borrowing Rate and Lending RatePeople make their funds available to the banks by depositing their savings in

various types of accounts. In other words, bank funds mainly consist of

deposits from the public, though banks may also borrow money from other

institutions and the Reserve Bank of India. Banks, thus mobilises funds

through its deposits. On public deposits the banks pay interest at and the rate

of interest vary according to the type of deposit. The borrowing rate refers to

the rate of interest paid by a bank on its deposits. The rates which the banks

allow depend upon the nature of deposit account and the period for which the

deposit is made with the bank. No interest is generally paid on current account

deposits. The rate is relatively lower on savings account deposits. Higher rates

ranging from 6% to 12% per annum are paid on fixed deposit accounts

according to the period of deposit.

Banks also borrow from other institutions as well as from the Reserve Bank of

India. When the Reserve Bank of India lends money to commercial banks, the

rate of interest it charges for lending is known as Bank Rate.

The rate at which commercial banks make funds available to people is known

as Lending-rate. The lending rates also vary depending upon the nature of


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loans and advances. The rates also vary according to the purpose in view. For

example if the loan is sanctioned for the purpose of activities for the

development of backward areas, the rate of interest is relatively lower as

against loans and advances for commercial/business purposes. Similarly for

smaller amounts of loan the rate of interest is higher as compared to larger

amounts. Again lending rates for consumer durables, e.g. loans for purchase of

two-wheelers, cars, refrigerators, etc. are relatively higher than for commercial

borrowings.

However, the Reserve Bank of India from time to time announces changes in

the interest-rate structure to regulate the lending of funds by banks. Different

rates of interest are prescribed for various categories of advances, such as

advances to agriculture, small scale industries, road transport, etc. Gradedrates of interest are prescribed for backward areas. Lower rate is normally

charged from agencies selling food-grains at fixed price through Govt. approved

outlets.

Lastly, lower rate of interest is charged for loans granted to persons

belonging to weaker sections of the society.

Lending of Money

You have noted in the earlier that commercial banks lend money in fourdifferent ways: (a) direct loans, (b) cash credit, (c) overdraft, and (d) discounting

of bills. These are briefly discussed below:

(I) Loans

Loan is the amount borrowed from bank. The nature of borrowing is that the

money is disbursed and recovery is made in installments. While lending money

by way of loan, credit is given for a definite purpose and for a pre-determined

period.

Depending upon the purpose and period of loan, each bank has its own

procedure for granting loan. However the bank is at liberty to grant the loan

requested or refuse it depending upon its own cash position and lending policy.


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There are two types of loan available from banks:

Demand loan, and Term loan

A Demand Loan is a loan which is repayable on demand by the bank. Inother words, it is repayable at short-notice. The entire amount of demand

loan is disbursed at one time and the borrower has to pay interest on it.

The borrower can repay the loan either in lump sum (one time) or as

agreed with the bank. For example, if it is so agreed the amount of loan

may be repaid in suitable installments. Such loans are normally granted

by banks against security. The security may include materials or goodsin stock, shares of companies or any other asset. Demand loans are

raised normally for working capital purposes, like purchase of raw

materials, making payment of short-term liabilities.

Term Loans : Medium and long term loans are called term loans. Termloans are granted for more than a year and repayment of such loans is

spread over a longer period.

The repayment is generally made in suitable instalments of a fixed

amount.

Term loan is required for the purpose of starting a new business activity,

renovation, modernization, expansion/extension of existing units,

purchase of plant and machinery, purchase of land for setting up of a

factory, construction of factory building or purchase of other immovable

assets. These loans are generally secured against the mortgage of land,

plant and machinery, building and the like.


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II Cash credit

Cash credit is a flexible system of lending under which the borrower has the

option to withdraw the funds as and when required and to the extent of his

needs. Under this arrangement the banker specifies a limit of loan for the

customer (known as cash credit limit) up to which the customer is allowed to

draw. The cash credit limit is based on the borrowers need and as

agreed with the bank.

Against the limit of cash credit, the borrower is permitted to withdraw as and

when he needs money subject to the limit sanctioned. It is normally sanctioned

for a period of one year and secured by the security of some tangible assets or

personal guarantee. If the account is running satisfactorily, the limit of cashcredit may be renewed by the bank at the end of year. The interest is calculated

and charged to the customers account.

Cash credit, is one of the types of bank lending against security by way of

pledge or /hypothecation of goods. Pledge means bailment of goods as

security for payment of debt. Its primary purpose is to put the goods pledged in

the possession of the lender. It ensures recovery of loan in case of failure of the

borrower to repay the borrowed amount. In Hypothecation, goods remain in

the possession of the borrower, who finds himself under the agreement to give

possession of goods to the banker whenever the banker requires him to do so.

So hypothecation is a device to create a charge over the asset under

circumstances in which transfer of possession is either inconvenient or

impracticable.

III Overdraft

Overdraft facility is more or less similar to cash credit facility. Overdraft

facility is the result of an agreement with the bank by which a current account

holder is allowed to draw over and above the credit balance in his/her account.

It is a short-period facility.


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This facility is made available to current account holders who operate their

account through cheques. The customer is permitted to withdraw the amount

of overdraft allowed as and when he/she needs it and to repay it through

deposits in the account as and when it is convenient to him/her.

Overdraft facility is generally granted by a bank on the basis of a written

request by the customer. Sometimes the bank also insists on either a

promissory note from the borrower or personal security of the borrower to

ensure safety of amount withdrawn by the customer. The interest rate on

overdraft is higher than is charged on loan. The following are some of the

benefits of cash credits and overdraft :-

Cash credit and overdraft allow flexibility of borrowing, which dependsupon the need of the borrower.

There is no necessity of providing security and documentation againand again for borrowing funds.

This mode of borrowing is simple and elastic and meets the short termfinancial needs of the business.

IV Discounting of BillsApart from sanctioning loans and advances, discounting of bills of exchange by

bank is another way of making funds available to the customers. Bills of

exchange are negotiable instruments which enable debtors to discharge their

obligations to the creditors. Such Bills of exchange arise out of commercial

transactions both in inland trade and foreign trade. When the seller of goods

has to realize his dues from the buyer at a distinct place immediately or after

the lapse of the agreed period of time, the bill of exchange facilitates this task

with the help of the banking institution.

Banks invest a good percentage of their funds in discounting bills of exchange.

These bills may be payable on demand or after a stated period.


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In discounting a bill, the bank pays the amount to the customer in advance,

i.e. before the due date. For this purpose, the bank charges discount on the bill

at a specified rate. The bill so discounted, is retained by the bank till its due

date and is presented to the drawee on the date of maturity. In case the bill is

dishonored on due date the amount due on bill together with interest and other

charges is debited by the bank to the customers account.

Long-term and Short-term Loans

Commercial banks grant loans for different periods-long, short and medium

term for different purposes.

Short-term loansShort term loans are granted by banks to meet the working capital

needs of business. The working capital needs refer to financial needs

for such purposes as, purchase of raw materials, payment of wages,

electricity bill, taxes etc. Such loans are granted by banks to its

borrowers to be repaid within a short period of time not exceeding 15

months.

Short term loans are normally granted against the security of tangible

assets like goods in stock, shares, debentures, etc. The rate of interest

charged on short term loans ranges from 12% to 18% p.a.

Term LoansMedium and long term loans are generally known as term loans.

These loans are granted for more than 15 months. In case of medium

term loan, the period ranges from 15 months to less than 5 years.

Medium term loans are generally granted for heavy repairs, expansion

of existing units, modernization/renovation etc.


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Such loans are sanctioned against the security of immovable assets.

The normal rate of interest ranges between 12% to 18% depending

upon the period, purpose, nature and amount of the loan. Though

banks may grant long term loans, they avoid granting loan for more

than 5 years

Nature and Security of Loans

To ensure the safety of funds lent, the first and most important factor

considered by a bank is the capacity of borrowers to repay the amount of loan;

The bank therefore, relies primarily on the character, capacity and financial

soundness of the borrower. But the bank can hardly afford to take any risk inthis regard and hence it also has the security of tangible assets owned by the

borrower. In case the borrower fails to repay the loan, the bank can recover the

amount by attaching the assets.

It can sell the assets offered as security and realize the amount. Thus from the

view point of security of loans, we can divide the loans into two categories: (a)

secured, and (b) unsecured. Unsecured loans are those loans which are not

covered by the security of tangible assets. Such loans are granted to

firms/institutions against the personal security of the owner, manager or

director. On the other hand, Secured loans are those which are granted against

the security of tangible assets, like stock in trade and immovable property.

Thus, while granting loan against the security of some assets, a charge is

created over the assets of the borrower in favour of the bank. This enables the

bank to recover the dues from the customer out of the sale proceeds of the

assets in case the borrower fails to repay the loan.

There are various types of securities which may be offered against loans

granted, but all of those are not acceptable to the banks. The types of securities

generally accepted by the bank are the following:


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Tangible assets such as plant and machinery, motor-van, etc. Documents of title to goods, like Railway Receipt (R/R), Bills of exchange,

etc.

Financial Securities (Shares and Debentures) Life-Insurance Policy Real estates (Land, building, etc). Fixed Deposit Receipt (FDR)

Gold ornaments, Jewellery etc.Procedure of granting Cash Credit, Overdraft and Discounting Bills

We have studied in this lesson that banks provide financial assistance to its

customers in the form of loans, advances, cash credit, overdraft and throughthe discounting of bills. The procedure of applying for and sanction of loans

and advances differs from bank to bank. However, the steps which are

generally to be taken in all cases are as follow:

Filling up of loan application formEach bank has separate loan application forms for different categories of

borrowers. When you want to borrow money from a bank, you will have

to fill up a loan application form available with the bank free of cost.

The loan application form contains different columns to be filled by the

applicant. It includes all information required about the borrower,

purpose of loan, nature of facility (cash-credit, overdraft etc) required,

period of repayment, nature of security offered, and the financial status

of the borrower. A running business limit may be required to furnish

additional information in respect of:

assets and liabilities profit and loss for the last 2 to 3 years. The names and addresses of three persons (which may include

borrowers, suppliers, customers and bankers) for reference

purposes.


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Submission of form along with relevant documentsThe loan application form duly filled in should be submitted to the bank

along with the relevant documents.

Sanctioning of loanThe bank scrutinizes the documents submitted and determines the

credit worthiness of the applicant. If it is found to be feasible, the loan is

sanctioned. If the loan is for Rs 5000 or less, normally the Branch

Manager himself can take the decision and sanction the loan. In case the

amount of loan is more than Rs 5000, the application is considered at

regional, zonal or head office level, depending on the amount of loan.

Executing the AgreementWhen the loan is sanctioned by the bank and the borrower is informed

about it, he will have to execute an agreement with the bank regarding

terms and condition for the amount of loan raised.

Arrangement of Security for LoanThe borrower will now arrange for security against the loan. These securities

may be immovable properties, shares, debentures, fixed deposit receipts, and

other documents, like, Kisan Vikas Patra, National Savings Certificate, as per

agreement.When the borrower completes all the formalities, he is allowed to get

the amount of loan/advance/ over draft as sanctioned by the bank. In case of

discounting of bills, the bank credits the amount of bill to the customers

account before the realization of the bill and thus, makes available the fund. In

case, the bill is dishonored on due date, the amount due on the bill together

with interest and other charges are payable by the party whose bill is

discounted.


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The main activities of a commercial bank include acceptance of deposits,

that is mobilisation of funds, and lending these funds to people who require it

for various purpose. On the deposits received the bank pays interest to the

depositors at a specified rate. This is known as the Borrowing Rate. When the

Reserve Bank of India lends money to commercial banks, the rate of interest it

charges is known as Bank rate. The other important activity of a bank is that

of granting loans and advances to the public. The rate of interest at which

commercial banks lend money to the people is known as Lending rate. The

borrowing rates and lending rates are subject to change from time to time.

There are four different ways of lending money by banks; viz. (a) Direct

loans; (b) Cash credits; (c) Overdraft, and (d) discounting of bills. Bank loans

may also be classified into 3 categories i.e. Short-term loan, medium term loan

and Long-term loan. Short-term loans are granted by banks to meet the

working capital needs of business. Medium term loans and long-terms loans

are generally known as Term loans.

These loans are granted for more than one year for heavy repairs,

expansion of units, modernisation/renovation etc. Such loans are sanctionedagainst the security of permanent, immovable assets. To ensure the safety of

the funds lent, banks require the security of tangible assets owned by the

owner, both in the case of short-term and term loans. Unsecured loans are

those granted against the personal security of the borrowers. There are various

types of securities which are acceptable by banks against loans and advances.


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Loans and Advances of Vijaya Bank

Retail Lending Schemes Vijaya Home Loan Vijaya Wheels V - Equip V - Rent V - Cash V- Rakshak V- Shikshak V- Swashakti Trade Finance Educational Loans Jewel Loans Loans to Transport Operators VReverse Mortgage

Loans Against Securities Non Fund Based Facilities Advances to Agriculture, SSIs and Others Government Sponsored Schemes

Prime Minister's Rozgar Yojana Swarna Jayanti Gram Swarozgar Yojana Scheme For Liberation And Rehabilitation of Scavangers Golden Jubliee Rural Housing Scheme Differential Rate of Interest Scheme

Special Schemes for Women


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Retail Lending Schemes

Purpose

The scheme covers financing

For construction of a house building in the plot/site already Purchased/owned

For purchase of a plot/site and a house building thereon. For purchase of a new house/flat. For purchase of old house /flat of age of 30 years and below. For Repairs, Renovation (including cost of kitchen Cabinet, racks,

wardrobes, electrical/solar power fittings) of existing house of age 50years and below (HOME IMPROVEMENT LOAN).

For extending the existing house building HOME EXTENSION LOAN. Short term Bridge Finance for the interim period between sales of the

existing/ old house and purchase of a new house (HOME BRIDGE LOAN)

to the extent of 80% of market price of the existing house or 80% of cost

of the new house to be purchased whichever is less but invariably

against the Security of new house.

For taking over of the existing Housing loans availed from otherBanks/Other lending Companies/Agencies

V Wheels

Purpose

For purchase of new two-wheeler / motorcar of any make for private useor professional or business use.

For purchase of second hand / used two-wheeler / motorcar of not morethan 5 years old.


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V Equip Scheme

A convenient finance scheme, the V-Equip loan can be availed to purchase

consumer durables such as Computers, Refrigerators, Televisions, Air

conditioners, equipments, domestic appliances, etc.

Purpose

For purchase of consumer durables like Refrigerator, Airconditioner, Furniture,

Kitchen appliances, Vacuum cleaner, Electrical appliances, Home appliances,

Solar water heater, Sound system, Television, CD/VCD Players, Personal

computer, Portable generator, Electric motor etc. and Equipments required for

professional and self employed persons.

V-Rakshak

Objective

An honour in recognition and appreciation of the role of Defence Personnel to

the nation.

Purpose

To meet the credit needs of the Defence Personnel (serving/retired) for

purchase of consumer durable/ motor vehicles, for meeting any type of

household expenses such as repairs/ renovations of the house, educational /

marriage/ medical expenses/ family functions, etc/ traveling expenses in India

and abroad, etc.


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V Cash Scheme

V-CASH is a very convenient scheme that one can avail of to meet short- term

credit needs for individuals / working women / pensioners / Senior

Citizens. Purpose For meeting unforeseen short time credit needs of the

applicants / family members which includes medical expenses, marriage of

applicant / family members, purchase of consumer durables, etc

V-Shikshak

Objective

An honour in recognition and appreciation of the role of teachers in serving the

society by imparting knowledge to the younger generations.

Purpose

Teachers can avail any of the following schemes under concessional rate :-

V-Cash Vijaya Home Loan Vijaya Wheels V-Equip

V Swashakti

Objective

To expand the employment and Income Generating Schemes and Programme

so as to make women Self-reliant and economically independent.

Purpose

Offering assistance to Women Entrepreneurs for economic pursuits in Small

Business, Professional or Professional or Self Employed and Retail Trade and

Credit facilities to Women Entrepreneurs (Term Loan / Working capital) for the

following:


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Tailoring Canteen and Catering Pickle and Masala Making

Clinics

Papad Making Beauty Parlour Creche and Playschool Tuitions and Coaching Class Library Ceramics Departmental Stores Handicrafts Medical Shop Counseling Doctors / Chartered Accountants Candle Making Health Center Laundry Bakery florist Travel Agency Milk Booth


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Education Loan

Central Scheme of Interest Subsidy for Educational Loans

An initiative to help students from Economically Weaker SectionsOne of the major concerns of the Government of India is to ensure that

nobody is denied professional education because he or she is poor. Indian

Banks' Association (IBA) has formulated a comprehensive model educational

loan scheme for adoption by all Banks. In order to support students from

Economically Weaker Sections of the Society, Department of Education,

Ministry of Human Resource Development, Government of India has

launched this interest subsidy scheme.

Loans against Securities

Against Govt Of India Relief Bonds

dvances can be extended against the security of Govt. of India Relief Bonds

issued in different series with 15% margin on the face value.

Maximum amount of lending is limited to Rs.10 lakh.

Loans Against Term Deposits

Advances against Banks deposits are granted by way of Overdraft orLoans.

Such advances should be normally made to depositors in whose namesthe deposits stand.

Advances to third parties against Banks Deposits can be made withdue sanction of the Authorities to whom powers are granted duly

complying with the prescribed norms.

Deposits in the name of minors can be considered only for the benefitof minor depositors and an undertaking letter to the effect that the

amount of advance would be utilized for the benefit of the minor


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should be obtained from the guardian.

The maximum duration may be from the date of advance to the date ofmaturity of the deposit.

No. advance shall be made against the deposits belonging to a minorwith guardian appointed by a court without court order.

No. advance shall be made against deposits of other banks. The interest rate chargeable in respect of advances shall depend upon

the category of the borrower and the purpose of the advance.

Advances Against Nre And Fcnrb Deposits

For guidelines on loans against the security of deposits of NRI/FCNR refer

H.O.Gen.circular 8/2001, Gen. circular No.3/02. and guidelines issued by

International Banking Division, H.O. Bangalore, and RBI from time to time.

Advances Against Ivp/Kvp/Nsc

Loans/Overdrafts can be sanctioned for productive purposes at theBanks usual rate of interest with a margin of 25% on the face value of

IVP/KVP for a period not exceeding the maturity period of IVP/KVP as

the case may be lodged as security.

Genuineness of the Bearer securities and bonafide of the borrowershall be ensured by the Branches by observing the guidelines given in

MOA-Vol-II.Item No.27-11-6.

The margin prescribed at 35% in case of NSCs purchased within aperiod of the preceding 12 months and 25% in other cases on the face

value.

Only after the concerned Post office makes an endorsement on therelative certificate to the effect that the certificate has been transferred


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as security to the Bank, the advance may be allowed.

Advances Against Shares

Advances against companies debentures and approved shares may bemade either as loans or as Overdraft.

While considering grant of advance against shares/Debentures, Banksmust follow the normal procedures for pre-sanction appraisal and post

sanction follow up.

Advances against primary security of shares/debentures may be givenonly to

Individuals Stock & share brokers Trusts & endowments.

Loans & Advances against demated approved shares & debentures-Maximum Limit Rs.20 lakh.

Margin- 40% demated shares.Margin50% on physical / InfoTech shares on the lowest price as onthe last Friday of the month in a recognised stock exchange or monthly

average price whichever is lower.

Mortgage Loans:

Housing

Loans for construction/repair/Renovation/Extension./ Loans forpurchase of plot/site.

Bridge loan for housing Taking over of Housing Loan.


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No. upper ceiling (for repairs Rs.10 lakh) for construction ofhouse/flat.

Addition amount may be considered to the extent of face value oNSC/KVP/TD/S.V. of LIC Policy.

Loan up to 80% (Margin 20%) The age of the house up to 30 years. Maximum repayment is 15 to 20 years. Age of the building up to 50 years for repair. Loan amount up to 60 months salary/income.

Mortgage Loans Against Immovable Properties

Immovable Property includes land, benefits to arise out of land and things

attached to earth but do not include standing timber, growing crops or grass.

Though the proposals of the following categories will continue to be regarded

as low priority, proposals of such categories may be entertained subject to

fulfilling the eligible norms stated in HOC.5/2002 and guidelines given at

chapter 44 of MOA-Vol-3.

Loans to Real Estate/Property developers/Builders. Loans to construction of cinema Theatre. Loans to Community/convention/Meeting/Marriage halls. Loans to Educational Institutions. Loans for setting up Hotels, Lodges, Holiday resorts, Private clubs. Trading in Tobacco & Processing Advances to coffee curing and trading in coffee beans.


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hile granting advances against immovable properties branches should

obtain legal opinion and valuation report on the properties in the Banks

prescribed format covering all the aspects at the stipulated intervals.

Property inspection should be carried out & the inspection report in the

prescribed format shall be held on record. While accepting immovable

property as security and in order to prevent deposit of fake title deeds,

certain precautions are to be taken as envisaged in HOC 270/99

Advances Against Gold Ornaments And Jewellery

Loans against gold ornaments and Jewelleries at the rate of Rs.575/- per

gram (22 carat) or up to 80% of the appraised value whichever is lower maybe granted in rural and semi-urban areas, particularly at the branches,

here there is not much scope for commercial business.

Jewel Loan can also be granted for agriculture purpose but the quantum o

the loan should be need based and assessed on the basis of crops grown or

investment proposed.

Advances Against Hypothecation Of Machinery

here machines are proposed as security, the following procedure should be

followed :

If the plant and machinery proposed to be hypothecated arepermanently embedded to the earth and the land and building in

which they are so embedded are owned by the applicant but have

already been mortgaged by him to someone else, such Machinery can

not be taken as security and therefore Branches should not take

interest in such proposals.

If the land & building belongs to a person other than the applicant andhas been taken on lease by the applicant, hypothecation of machinery


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installed thereon subject to proof of applicants ownership may be

accepted even if it is embedded to the earth, provided a letter of no

claim is received from the owner of the land.

If the machinery proposed to be hypothecated is permanently fixed inthe building owned by the applicant but which is not encumbered in

any manner, the security of such machinery could be accepted.

The machinery proposed to be hypothecated should be generally new.If the machinery is second hand, the year of purchase, residual life and

the normal depreciation to be allowed should be taken into account to

determine the value of security.

Branch Manager should ensure that the machinery proposed to behypothecated to the Bank is suitable for the project.

After hypothecation of the machinery, it should be got insured againstthe risk of fire with Bank clause incorporated in the policy.

Small tin plate with wordings Hypothecated to Vijaya BankBranch should be fixed on each item of machinery to evidence

that the plant & Machinery are under hypothecation to the Bank.

If the borrower is a limited company, the charge created in favour ofthe Bank should be got registered with Registrar of companies.

The Machinery should be got valued by a competent engineer approvedby the Bank.

The original invoice should be got scrutinized. The market value ofmachinery may be taken into account for purpose of valuation after

considering its life.

Whenever advances are granted against Machinery/equipments,branches should ensure that the prescribed margin on the value

thereof is maintained at all times.

When advances are granted against motor vehicles, banks lien on such


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vehicles should be got registered with the Regional transport

Authorities.

The various instructions contained in the chapter on advances againstmotor vehicles and industrial advances should be followed.

Loans To Real Estate Property Developers And Builders

Though the proposals of Real Estate Property Developers and Builders will

continue to be regarded as low priority, proposals of such categories may be

entertained subject to fulfilling the eligible norms stated in HOC.5/2002 and

guidelines given at chapter 44 of MOA-Vol-3.and policy guidelines issued

from time to time.

Loans To Construction Of Cinema Theatres Production Of Motion

Pictures

Though the proposals of Real Estate Property Developers and Builders and

loans to construction of Cinema theatres will continue to be regarded as low

priority, proposals of such categories may be entertained subject to fulfilling

the eligible norms stated in HOC.5/2002 and guidelines given at chapter 44

of MOA-Vol-3.and policy guidelines issued from time to time.

Hypothecation of Book Debts and Receivables

hile extending such facilities, the terms of contract with the drawee

companies should be studied to ensure that the period of credit does not

exceed 90 days generally. Though advances against book debts is now beingclassified as secured advances (HOC 189/2000), there is a ceiling (within the

total limits) to be observed while exercising the delegated powers. In respect

of advance against supply bills, irrevocable power of attorney executed by the

borrower in favour of the bank should be got registered with the drawees on


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hom the bills are drawn or to whom supplies are made.

Loans To Educational Institutions

Though loans to Educational Institutions will continue to be regarded as low

priority, proposals of such categories may be entertained subject to fulfilling

the eligible norms stated in HOC.5/2002 and guidelines given at chapter 44

of MOA-Vol-3.and policy guidelines issued from time to time.

Loans For Construction Of Community Convention Meeting And

Marriage Halls

Though loans for construction of community/Convention/Meeting and

Marriage Halls will continue to be regarded as low priority, proposals of suchcategories may be entertained subject to fulfilling the eligible norms stated in

HOC.5/2002 and guidelines given at chapter 44 of MOA-Vol-3.and policy

guidelines issued from time to time.

Loans And Advances For Purchase Of Estates

Though the proposals for purchase of Estates will continue to be regarded as

low priority, proposals of such categories may be entertained subject to

fulfilling the eligible norms stated in HOC.5/2002 and guidelines given at

chapter 44 of MOA-Vol-3.and policy guidelines issued from time to time.


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Advances to Agriculture, MSME and Others

Agricultural Advances - Direct

Direct loans to Agriculture and allied activities include loans to individual

farmers or SHGs / JLGs of Farmers for the following purposes:

Short term loans for raising crops Short term loans to traditional Plantation and Horticulture. Pledge loans up to Rs. 10.00 lakhs repayable in 12 months irrespective of

whether farmers have availed crop loans or not.

Working capital and term loans for financing production and investmentrequirements for agriculture and allied activities.

Loans to small and marginal farmers for purchase of land for agriculturalpurposes.

Loans to distressed farmers indebted to Non-Institutional lenders againstappropriate collateral or group security.

Loans granted for Pre-Harvest or Post- harvest activities such asspraying, weeding, harvesting, grading, sorting, processing and

transporting undertaken by individuals, SHGs and Co-operative in rural

areas.

Short term loans for allied activities such as dairying, Fishery, Piggery,Poultry, Bee Keeping etc.

Purchase of agricultural implements and machinery Iron ploughs,harrows, hose, land - levellers, bund formers, hand tools, sprayers,

dusters, hay-press, sugarcane crushers, thresher machines etc.

Purchase of farm Machinery - Tractors, trailers, power tillers, tractoraccessories viz Disc ploughs etc.


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Indirect loans to Agriculture

Loans in excess of Rs.1.00 crore to Corporates, Partnership Firms &Institutions, two thirds portion over and above Rs.1.00 crore come under

indirect agriculture

Loans to Food & Agro based processing units with investment cost onplant and machinery up to Rs.10.00 crore undertaken by those other

than individuals, SHGs and Co-Operatives in rural areas

Credit for purchase & distribution of fertilizers, pesticides, seeds etc. Credit up to Rs.40.00 lakhs for purchase & distribution of inputs for the

allied activities such as cattle feed, poultry feed etc

Finance for hire purchase schemes for distribution of agriculturalmachinery and implements.

Loans for construction and running of storage facilities -warehouse,market yards, go-downs, silos, and cold storages designed to store

agriculture produce / products irrespective of the location.

Advances to custom service units managed by individuals institutions ororganisations who maintain a fleet of tractors, bulldozers, well boring

equipment, threshers, combines etc. and undertake work for farmers on

contract basis.

Finance for setting up of Agri Clinic and Agri Business Centers Loans to ferments through primary agricultural credit societies (PACS),

Farmers Service Societies (FSS), and Large Sized Adivasi Multipurpose

Societies (LAMPS)

Loans to Co-operative Societies of farmers for disposing off the produce ofmembers.

Financing farmers indirectly through the Co-operative system. Loans up to Rs.30.00 lakhs for dealers in Drip irrigation / Sprinkler

Irrigation / Agricultural Machinery irrespective of the location.


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Government Sponsored Schemes

Swarna Jayanti Gram Swarozgar Yojana ( SGSY )

The gist of SGSY Scheme guidelines is given below

Launching

A new programme known as Swarnjayanthi Gram Swarozgar Yojana has been

launched from 1.4.99.This is a holistic programme covering all aspects of self

employment such as organisation of the poor into Self Help Groups, training,

credit, technology, infrastructure and marketing. With the introduction of this

scheme, the earlier programmes viz., IRDP, TRYSEM, DWCRA, SITRA, GKY and

MWS are discontinued.

Scheme for Liberation and Rehabilitation of Scavengers

(SLRS)

Launching of SLRS

The National Scheme for Liberation and Rehabilitation of Scavengers was

launched by the Government of India on 22.03.1992.

Objective

The objective of the scheme is to liberate the scavengers and their dependents

from their existing hereditary and obnoxious occupation.

Implementation

The state level Scheduled Caste Development and Finance Corporations wouldbe the chief agency for implementation of the scheme at the State level. At the

district level, the District Collector / District Magistrate / Deputy

Commissioner of the District would be responsible for the overall

implementation of the scheme.


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Golden Jubilee Rural Housing Scheme

The salient features of the scheme are outlined below

Objective

The objective of the scheme is to address the problems of Rural Housing

through improved access of housing credit which would enable an individual to

build a modest new house or improve or add to his existing dwelling unit in

rural area.

Operational Area

Rural area for the purpose of the scheme is the area comprised in any village

including the area comprised in any town, the population of which does not

exceed 50,000 as per 1991 census.

Differential Rate Of Interest Scheme

Purpose

This scheme offers need based financial assistance to those who intend taking

up any productive activity and has been tailored for persons whose income is

very low. This scheme is meant for:

Persons belonging to SC/STs, Advises engaged in agricultural operationsand/ or allied activities

Persons engaged in collection of forest products, fodder and selling thesein markets.

Persons engaged in Village and Cottage Industries on a very small scale. Indigent students aspiring to pursue higher studies. Physically handicapped persons.


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Institution of physically handicapped for their productive activities. Orphanages, Women's Homes where saleable goods are made. State Level Corporations working for welfare of SC/ST.

Co-operative Societies, large sized multi-purpose societies organisedspecially for the benefit of tribal population in areas identified by

Government of India.

Special Schemes for Women

Assistance To Women In Non Farm Development (ARWIND)The scheme of Assistance to Rural Women in Non-Farm Development is being

introduced mainly to support economic activities in non-Farm sector on a

cluster/group basis by rural women. The scheme has two components via

Credit component Promotional component

Under component (1) a voluntary agency having minimum 3 years of proven

track record in assisting womens groups, womens development corporation

set up by the central/State governments, KVIC/KVIBs or any institutions

under the KVIC/KVIB fold, any other registered institution including

cooperatives, trusts and corporations set up by central/State governments for

the purpose may evolve a scheme to organise rural womens groups for

undertaking any productive activity in the non-farm sector and assist them in

setting up their own units and /or provide such other backward/forward

linkages including training as are considered necessary for improving viability

of individual/group enterprises.

The loan assistance under the scheme to the individuals, should not normally

exceed Rs.50000/- per borrower or say Rs.10 lakhs for a group activity

involving 20 rural women.


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Chapter: IV

Data analysis and Interpretation


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1.Table showing bank net interest income of total

funds in public sector

Graph showing bank net interest income of total

funds in public sector

Interpretation :

As per the above analysis the net interest of on income in total fund in

the 2012 is the least that is 29 % it is comparably high in before years as in

2010 & ,2011 that is 38%, 33% as the interest declining in the year of 2012 is

1.69.

2012

29%

2011

33%

2010

38%

0%

5%

10%

15%

20%

25%

30%

35%

40%

In %

In %

YEAR NET INT INCOME IN

TOTAL FUND

In %

2012 1.69 29%

2011 1.91 33%

2010 2.20 38%

Total 100


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2.Table showing the total interest expended on total

funds

-; Graph showing interest expended on total funds ;-

Interpretation:

As per the above analysis the interest expanded on total funds in the

2012 30% and in 2010 it is same but in 2011 it is increased to 37% as the

interest declining in the year 2012 is 5.29

30%

2012

37%

2011

30%

2010

NET INT EXPANDED ON TOTAL

FUNDS

YEAR NET INT EXPANDED ON

TOTAL FUNDS

In percentage

2012 5.69 30%

2011 6.98 37%

2010 6.23 33%

Total 100


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3.Table showing interest earned on the deposits of bank

YEAR NET INT EARNED

ON THE DEPOSITSOF BANK

In %

20125200.65

36%

20115237.83

37%

20103888.54

27%

Total100

-; Graph showing net interest earned on deposits ;-

Interpretation:

As per above analysis the net interest earned on the deposit of the bank in

2012 36% and in 2011 37% and in 2010 27% as the interest declining in the

year of 2010 is 3888.54

0%

10%

20%

30%

40%

2012

36%

2011

37%

2010

27%

In %


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4.Table showing the operating expenses in the bank

YEAR OPERATING

EXPENSES IN THE

BANK

In %

2012 1077.66 39%

2011 934.55 35%

2010 705.95 26%

Total 100

-; Graph showing operating expenses ;-

Interpretation:

As per the above analysis operating expenses of the bank in the year 2012

39%, in the year 2011 35%, and in 2010 its 26%, as per he operating expenses

declining in the year of 2010 is 705.95

0%

5%

10%

15%

20%

25%

30%

35%

40%

39%

201235%

201126%

2010

In %


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5.Table showing provisions and contingencies in the bank

YEAR PROVISIONS AND

CONTINGENCIES OF

THE BANK

In %

2012 754.70 43%

2011 691.04 40%

2010 304.97 17%

Total 100

-; graph showing provisions and contingencies;-

Interpretation:

As per the above analysis the provisions and contingencies of the bank in the

year 2012 is 43%, and in the year 2011 is 40%, and in 2010 is 17% as per the

provisions and contingencies declining in the year of 2010 is 304.97

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

43%

201240%

2011

17%

2010

In %


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6.Table showing the other incomes in the bank

YEAR OTHER INCOMES IN

THE BANK

In %

2012 890.58 40%

2011 763.27 35%

2010 542.08 25%

Total 100

-; graph showing other incomes ;-

Interpretation:

As per the above analysis the other incomes of the bank in the year 2012 40%,

and in the year 2011 35%, and in the year 2010 is 25% as the other incomes

declining in the year 2010 542.08

40%

2012

35%

2011

25%25%

2010

In %


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7.Table showing the non interest income

YEAR NON INTEREST

INCOME

In %

2012 1.35 36%

2011 1.29 34%

2010 1.10 30%

Total 100

-: graph showing non interest incomes:-

Interpretation:

As per the above analysis the non interest incomes of the bank in the year

2012 36%,in the year 2011 34%,and in the year 2010 its 30% as the non

interest incomes declining in the year 2010 is 1.10

27%

28%

29%

30%

31%

32%

33%

34%

35%

36%

36%

201234%

2011

30%

2010


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8.Table showing the borrowings of the bank

YEAR BORROWINGS OF

THE BANK

In %

2012 1938.56 32%

2011 2269.24 37%

2010 1918.87 31%

Total 100

-: graph showing borrowings :-

Interpretation:

As per the above analysis the borrowings of the bank in the 2012 32%,in 2011

it is 37% it is highest when compared to 2012 and 2010 as the borrowings of

the bank declining in the year 1918.87

28%

29%

30%

31%

32%

33%

34%

35%

36%

37%

32%

2012

37%

2011

31%

2010

In %


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G.H.N

Vijay Bank project

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