Bba Project

MANAGEMENTOFLOANSANDADVANCES
CHAPTER1
EXECUTIVESUMMARY
INTRODUCTION
Cooperative movement in India was entitle to provide for the Credit
needs of the rural class by organizing on democrative principles, based on mutual support aimed at overall development. Accordingly the cooperative societiesactwaspassedin1904,whichwaslaterreplacedbythecooperative societysAct1912thecooperativeCreditStatureisfunctioningundera3tier systemconsistingofstatecooperativebankthecentralcooperativebanksin thedistrictlevelandprimarycreditsocietiesatgrossroots level.Thesystem consist of primary agricultural credit societies and nonagricultural credit societies central cooperative banks state cooperative banks including land developmentbanksthatspecializeinlongtermcredittothefarmers.
TITLEOFSTUDY
TO STUDY MANAGEMENT OF LOANS AND ADVANCES AT AZAD
COOPERATIVE.BANKLTD.,GADAG.
OBJECTIVESOFTHESTUDY
1. 2. 3. 4. Tostudythepositionofvariousloansandadvancesinthebank. Tostudythemannerinwhichfundsareraisedandutilizedinthebank. Tostudythenonperformingassets(NPAs)inthebank. Tostudytherecoverymeasuresandmethodsfollowedbythebank.
SMEsABDULKALAMCOLLEGEOFINFORMATIONSCIENCEANDMANAGEMENT(BBA),GADAG1
SCOPEOFTHESTUDY
The present study is a case study on The Azad CoOperative Bank
Limited, Gadag. The study converted to all functional areas of the bank. The functionalareasofthebanktheperformanceindicatorsareidentifiedtomake more effective study. The financial statements of the bank for the period of 2008,2009,2010,2011areusedforanalysis.
NEEDFORSTUDY
Theneedsforthisstudyisassesswhethertheirbankhasbeenableto
meettheneedsofthemerchantsofthistownandextentwithoutperformance thisneedcannotbeservedandthereforemanagementofloansandadvances ofAzadCooperativebanksGadaginundertakenfortheprojectwork.
METHODOLOGY
The primary data is collected through person interview with manager
and the staff members and the secondary data is collected from the annual reportsofbanksandbythelawsofbankwherevernecessary. The make effective financial analysis comparative statements and
commonsizestatementsareused. ANALYSISANDINTERPRETATION This chapter provides an analysis of the data with required interpretation. Tablesgraphandchartsareusedwherevernecessary
FINDINGS
1. 2. 3. 4. Theamountofrecoveryisinproportiontotherespectiveadvance. Thereisincreaseintherecoveryrateofcashcredit. Theaverageproportionofcashcreditis54.03%ofthetotaladvances. The average proportion of pledge/mortgage loans 25.78% of the total advances.
LIMITATIONSOFTHESTUDY
1. 2. 3. ThestudyislimitedonlytoAzadCooperativeBankLtd. Thestudyislimitedtoinformationprovidedbybank. Thedataiscollectedonlyfor4years.
CHAPTER2
INDUSTRYPROFILE
INTRODUCTION
Bankisaninstitution,whichcreatesandissuescredit.Inotherwords,it
is a lender and borrower of money. There are various types of Institutions performingthefunctionsofabankunderdifferenttypesofmanagementsand serving different types of managements and serving different classes of people. Hence for its classification the functions of bank are to be taken into consideration because "Just as a tree is known by it fruit so is abank by the functionsitdischarge." Section 5[b] of the Banking Regulation Act 1949 defines Banking as
"Acceptingforthepurposeoflendingorinvestmentthedepositofmoneyfrom the Public repayable on demand or otherwise withdrawal by cheque, draft, orderorotherwise." DifferentTypesofBankingInstitutionare: 1. 2. 3. 4. 5. CommercialBanks. IndustrialBanks. LanddevelopmentBanks. ExchangeBanks. CooperativeBanks.
HISTORYOFCOOPERATIVEBANK
The word 'bank' is derived on the word 'Bancus' or 'Banque' that is a bench. Jews who were considered to be the early bankers transacted their business on benches in the market. Some people trace the origin of word 'bank'fromGermanword'bank'meaninga"Jointstockfund".
Banks play an important role in the economic development of the
country.Theentirecommercialandindustrialactivitiesarewellknittedwith thebanks.Intheearlydays,thebankingbusinesswasconfinedtoreceivingof deposits and lending of money. But the modern bankers undertake a wide variety of functions to assist there, customers. The peculiar of the Indian bankingisthatthebankswerestarted,foundedandmanagedbyindustrialist toenablethemtogetadequatefinancefortheirbusinessorindustries,cansee adirectrelationshipbetweenbanksandbusinesshouses.
COOPERATIVEBANKS
Cooperationmeansworkingtogether.Acooperativeisanautonomous
association of person united voluntarily to meet their common, economical, social and culture needs aspirations through a jointly owned and democraticallycontrolledenterprise.Thehistoryofmoderncivilizationisthat without cooperation the social and economic progress would have been impossible. Therefore cooperatives are based on the values of self help, responsibility,democracy,democracy,equityandsolidarity.Inthetraditionof theirfounders,cooperativemembersbelieveintheethicalvaluesofhonesty, openness,socialresponsibilityandcaringforothers. Cooperative movement owes it origin to England where a great
philosopher. Robert Owen (17711858) gave. The idea of "Self help through mutual help" to mitigate the sufferings to exploited class in the wake of industrialrevolution. The cooperative banking in India has grown in size and volume. A
specialfeatureofcooperativebanksinIndiaisitsfederalstructure.Theunits rangingfromprimaryleveltonationallevel.CooperativebankinginIndiacan bedividedintotwoimportantareasviz.,agriculturalandnonagricultural.The
agriculturalcooperativebanks areprimarycooperativebanks atthevillage level,centralcooperativebankatthedistrictlevelandthestatecooperative bankatthestatelevel. The non agricultural cooperative bank includes urban cooperative
banks, Employees Credit cooperative banks and Housing Cooperatives Banks. Themainobjectiveofcooperativebankistofacilitateruralcreditand
promoteeconomicallyweakersectionsofthesociety.Likecommercialbanks, thecooperativebankalsoreceivesdepositsandlendsmoney.Buttheylendto theirmembersandmakeincidentalprojectalthoughtheirsoleobjectiveisnot profitearning.
COOPERATIVEMOVEMENTININDIA:
Therealbeginningofthecooperativemovementwasmadeonlywhen
theGovernmentpassedthecooperativeSocietiesActin1904providedforthe formation of cooperative credit Societies only. After passing this act a large number of credit societies were started but this act had certain defects they were. a) b) Inprovidedfortheformationofcreditsocietiesonly. TheclassificationofCreditSocietiesintoruralandurbanconsideredto beunscientificandinconvenient.
To rectify these defects the net act that the cooperative society act of
1912 was passed, which provided for the establishment of cooperative control banks by a union of primary credit societies or buy individuals. It gainedgreathelptothegrowthofmovement. In 1999, another act was passed called cooperative societies act of
1919. This act gave the states, the option to follow the 1912 act or to have their own act. Accordingly Several States passed their own acts in their restrictionstates.Asaresult,cooperationmovementmadegoodprogressand thenumberofcooperativesocietiesarealsoincreased. A major development took place after the independence. It received
took place after the independence. It received extra support from the government to enquire the working of the cooperative movement. In 1951, Government appointed committee called :All India Rural Credit Survey Committee. This committee remarked that cooperative has failed but co operationmustsucceed. The government accepted the recommendations made by the
committee and implemented it positively. Therefore, the number of co operative societies increased considerably. Idea of growth of cooperative movementinIndiacanbehadfromthefactthattherewereasmany3.5lakhs cooperative societies of all types with total membership abut 16 crore and total working capital about 62,500 crores as on 30th June 1990. The distinguishingfeatureofcooperativesystemisthatifislargelyvillagebased. In other words it is suitable for village dominate country like ours. Participationofmassesatdifferentlevelsindevelopmentschemeisamust.
STRUCTUREOFCOOPERATIVEBANKINGININDIA Definition: Thecooperativebankingsystemisanintegratedonandbecauseofits
three tier structure, has been enabled to extend credit to agriculturists, artisanset.Thethreetiersystemalsoallowsarationalizedblowofresources from the metropolitan centers to villages and combines this with fairly low costsofoperations. COOPERATIVEBANKSTRUCTURE
CoOperativeBank
Institutionsforshort TermandMedium
Village/Primary Co operativeBanks StateCoOperative
InstitutionsforLong term
PrimaryDevelopment Banks
banks
CentralLand DevelopmentBanks
CentralorDistrictCo OperativeBank

UrbanCoOperative Bank
I.
PRIMARYCOOPERATIVEBANK These operate at village level and maintain direct relationship with
farmersfortheirownrequirementsoffinancethesearelinked tocentralco operative banks which in turn, are linked to state cooperative banks. They fulfillshorttermandmediumtermcreditneedsofthefarmers.Themembers elect the managing committee, who conduct the day to day activities of the society,whereasgeneralbodyissupremeauthority. Themainfunctionsofprimarycooperativesocietiesareasfollows. 1. To supply short term and medium term credit to their members. (i.e. shareholders) 2. Tosupplyagriculturalandotherproductionrequirementssuchasterm equipmentsandtotakemarketingoftermproduce. 3. Inculcatingthehabitsofsavinguponthemembersisalsoafunctionof thesesocieties. 4. A society helps in the formulation and implementation of plans for agriculturalproductionforthevillageandundertakensucheducative, advisoryandwelfarefunctiondesiredbythemembers. The primary cooperative societies occupy strategic position in co
operativecreditstructureofruraleconomy.In195051therewere1.08lakh primarycooperativesocieties.Whichwereincreasedto2.12lakh.in196061 duetoreorganizationprogrammeinvariousstates,theirnumberdeclinedto 94.48in198081whichfurtherdeclinedto91.749in1985. Now considerable attention is gives to build the primary agricultural
societiesintostronginstitutions.Infact,RBIhasbeentaking,adequatesteps to strengthen the weak cooperative credit banks in collaboration with state government.
II.
CENTRALCOOPERATIVEBANK These banks are the federation of the primary cooperative credit
societies.Thesebanksaremanagedbyaboardofdirectorsconsistingof1215 members. They have been function as an intermediary between the primary cooperativesocietiesandstatecooperativesocieties.Themainobjectiveisto raisefinancethroughdepositsfromthepublicandlendtothe primarycredit societiesatthevillagelevel. In addition to this, they are expected to give technical advise,
supervisionandadministrativeadvisetoprimarycooperativesocieties.These banks are normally situated at the district head quarters and open branches areTaluqlevel. In 198182 there were 332 Central cooperative banks with aggregate
workingcapitalof5327croreanddepositsofRs2768crore. In198586thiswasincreasedto352withaggregateworkingcapitalof
Rs. 8663 crore and deposits of Rs 4932 crore. Total deposits of central co operativebanksamountedtoRs.11,180.56crores.ByJune1986,173central cooperativebankswereunderrehabilitationprogramme.Althoughthebank showed good amount progress. Yet, many of them were financially and organizationallyweak.
III.
STATECOOPERATIVEBANK Itmeanstheprincipalsocietyinastatewhichisregistered ordeemed
toberegisteredunderthecooperativesocietyactof1912. Everystatehasastatecooperativebank.Itistheapexbankandleader
ofthecooperativecreditinstitutionsinthestate. Themainfunctionsareasfollows. 1. 2. Itactsasbankers'banktothentralcooperativebank. It links different sectors of the money market the cooperative institutionsandtheNABARD. 3. To manage financial requirement of the state as a whole and acts as financialcenterofallcooperativebanks. 4. To maintain a central reserve of fluid resources, so that central cooperativebankmaybeassertedofitssupportintimesofdifficulties. 5. 6. Year 198081 198586 TocoordinatetheworkingofCentralcooperativebanks. TospreadcooperativeEducation. Number 27 29 WorkingCapital 2749.6Crores 5547.0Crores
Statecooperativebankshave667offices.Theprogressshownbythese
banks is remarkable but still some state cooperative banks are under rehabilitationprogramme.
IV.
URBANCOOPERATIVEBANKS Urban Cooperative Bank has been defined as one which has been
organized for accepting of deposits from the public which are usually repayable by cheques, drafts etc and which carry on normal banking transactions. These banks are situated in urban areas. These Urban Co operative Banks are enjoying various concessions. Such as, higher rate of interestondeposits,lowerliquidityratio,exclusionofborrowingsfromhigher financing agencies from outside liabilities etc., With the objective, among otherstopromotethriftandmobilizationofresources,fromthecommunityof areaof operation for the purpose of provisionof credit at reasonable rate to smallborrowers.Thebankreceivesdepositsfromitsmembersandpublicand lendsloanstothem.AnUrbanCooperativebankisrestrictedtomoneytoits customers residing in the municipal corporation limits depending on its bye laws. These banks act as commercial bank generally accepting time and
demanddeposits. V. CENTRALLANDDEVELOPMENTBANK These banks are organized on cooperative banks. The structural
systemofthesebanksfallintofederaltypeorunitarytype.Whilecommercial andcooperativebanksprovidesonlyshorttermcredit.Therewasnoagency toprovidelongtermcredit.Aspecialinstitutionwassetuptometlongterm needs. The idea of the institution was land mortgage bank. This was set up primarily on cooperative basis. Now these banks are known as Land DevelopmentBanks.
The Land development Bank may be classified as primary land
development bank and central land development bank. The primary land developmentbankgrantsloansforcultivationattheTaluqanddistrictlevels, whereascentrallanddevelopmentbankfunctionsatstatelevel. Land Development Bank made a beginning in the twenties, mainly to
provide loans to farmers for the purpose of debt redemption. These banks provide credit for variety of purposes like irrigations, farm mechanization through tractors, etc, Land reclamations and development of horticulture. During recently years land development banks are bent upon lending loans onlyforlandimprovementandcultivation.
CHAPTER3
COMPANYPROFILE
The "Azad cooperative bank "Gadag, was established on 1/8/1961 undertheleadershipofAlHajSayyedTajuddinsahebR.Umachagitrustingthe cooperative movement, a few enthusiastic people at business were involved inestablishingthisbankwithasmallamountofcapitali.e.9000. ShriAlHajSayyadTajuddinsahebR.UmachagiwastheFounderofthe
bankandShriShamirAbdulRazaksahebR.UmachagiwasFounderChairman ofthisbank. As a result of the efforts of Shri AlHaj Sayyed Tajuddinsaheb R.
Umchagithebankwasrenamedas'"Azadcooperativebankltd." Intheyear 1961. In that same year the bank was a rented building at Sir M. Vishweshwarayya Road, and stared its operation with the permission of the cooperativedepartment. Thebankwasgivenpermissiontofunction,bytheRBIandcooperative
department under the license NO.UBDKAN1463P.RROM 1997 /since then thebankhasexpendeditsoperationandhelpedmanyfamiliesandbymaking manytradersasitsmembers,ithasbeenfunctioningsuccessfullyinthisarea. ThebankislocatedinthecentralareaofGadagcityanditisnearH.O.
SIR M. VISHWESHWARAYYA ROAD GANGAPURPETH, GADAG near to other centersanditisconvenienttothebankcustomers. Thebankhasmaintainedinsecularcharacterbyhavingmembersfrom
Muslim, community, Hindus and others communities. At the time of its establishment it had only 69 members but in the year 2007 it has 3062 members.Thechairmanandvicechairmenhavebeenexperiencedinthefield
of banking. They concentrated more on the recovery of loans granted to the members in order to reduce the percentage of nonperforming assets (NPA). Many small traders expanded their field of activity by taking financial assistance from the bank. Member/customers who have taken the loan from this bank have now become the DEPOSITORS of the bank it has won the confidenceoftheshareholders.DepositorsaswellaspublicoftheGadagcity andithavecontinuedasan"A"gradebank. Thebankhasprovidedloantoprioritysectorsweakersectionsmalland
tiny industrieslike village/cottage industries, carpenters, potters,vegetables, vendorsand.smalltradersinthedirectionofmakingthemselfreliant. InformationoftheBank Name Address : : : : : : : : : TheAzadCoOperativeBankLtd.Gadag Near,SirM.VishweshwarayyaRoad, GangapurPeth,Gadag GadagDistrict. 1961 UBDKAN1463P(591997) 1 MarketArea,NamjoshiRoad,Gadag UBDBG.BL369201199 Late. Alhaj Sayyed Tajuddinsaheb R
AreaofOperation Establishment RBILicenseNumber NumberofBranch Address BranchRBILicenseNo Founder
Umachagi. ChiefPromoter : Late.SameerAbdulRajaksaheb.R.Umachagi.
THESALIENTFEATURESOFTHEBANKARE:
Deposits up to Rs.100000 per individual are granted by deposit insuranceschemes. Interest rate on all deposits is higher than the other scheduled bank rate. Alltypesofadvanceonreasonabletermsandconditions. RateofinterestondepositispaidasperRulesofRBI.
ListofBankers(RelationtoBank) 1) 2) 3) 4) 5) 6) 7) 8) 9) StateBankofIndiaGadag SyndicateBankGadag CorporationBank AxisBankLtd INGVysyaBankLtd INGVysyaBankLtdHubli TheKarnatakaStateCoopApexBankLtdHubli TheK.C.C.BankLtdGadag AmanathCoopBankLtdBangalore
10) ICICIBankGadag 11) HDFCBankHubli Thisbanksrelatedtothe11bankinKarnataka.
SHARECAPITAL
TheauthorizedsharecapitalofthebankshallbeRs71.75lakhsanditis
fixed by the general body from time to time. Each share value 100. The full valueofshareshallbepaidinonelumpsumalongwiththeapplication. A member can hold number of shares and can claim, interest in the
shareactuallyheldbyhiminthebank.
FUNDS:
Raisingfunds: Thefundsforcarryingoutalloranyoftheobjectivesmayberaisedby
thefollowingways: Issueofshares. Acceptingdepositsofvariouskinds. Obtainingcash/overdraftsorotherloansFromKarnatakacooperative bank district central cooperative bank and with the prior approval of registerfromanyofthenationalizedcommercialbank. Donations. Accepting subscription from members for member death relief fund/ memberswelfarefunds. Anyothermeanspermittedundertheact.
RESERVEFUND:
Thereservefundconsistsof: 1. 2. Theamountannuallycreditedtothefundinaccordancewithbyelaws. Thevalueofdividendshallbeconsideredasreservefund.
This fund as on proceeding 31st March shall be deposited with the
concerned district control cooperative bank or the Karnataka state co operativeapexbankorlongtermfixeddepositstheamountsodepositedshall notbewithdrawnexceptwiththeapprovaloftheregistrar.
THEAIMSANDOBJECTIVESOFTHEBANK
1. encouragethriftselfhelpandcooperativeamountthemembersand depositorsofthebank.. 2. Todobankingbusinessasdefinedundersection5(b)ofthebankingact 1949 (as applicable to cooperative societies) and also engage in such otherbusinessasispermittedundersection6ofthesaidact. 3. 4. Tomobilizeorborrowfunds. To prepare and finance projects to improve the financial condition to themembersparticularlythosebelongingtoweakersectionofthebank. 5. 6. Toorganizeselfhelpgroupsandtocollectpigmydeposits. To carry out certain functions which all facilitate the growth and strengthofbankingtransaction.Toextendtheservicesofthebankwith thehelpofmoderntechnologybyaccessingallbankingactivities. 7. To undertake activities for the promote of economic welfare of the membersandincidentallyofthegeneralpublic. 8. Todoallotheractivities,whicharerequiredtopromotearidstrengthen thebankingactivities. 9. Tomanage,sellthepropertywhichmaycomeintopositionofthebank inpartial/fullsatisfactionofitsclients 10. Tocreatefundsforthepromotionoftheoperativeeducation.
ORGANIZATIONCHART

BoardofDirectors(India9Directors) Manager AsstManager Accountant AsstAccountant
Clerks Attenders PigmyCollectorsis7
StaffChart ManagerA.G.Yargudi AccountantJ.A.Mangalore AsstAccountantH.J.Harlapur SaleofficerR.M.Nadaf
JuniorAsst: M.H.Badni
JuniorAsst: A.M.Shaikh
JuniorAsst: A.G.Hanagi
AttenderI.F.Namazi PeonH.I.Makashi,A.A.Dhalayat
TheAzadCoopBankhasitsbranchnearNamjoshiRoad,Market Area
Gadag.Theinformationasitfollows
ListofPresentDirectors 1) 2) 3) 4) 5) 6) 7) 8) 9) ShriSarafrazAhmedS.Umachagi Shri.H.R.Bellary Chairman. Director. Director. Director. Director. Director. Director. Director. Director.
Smt.ShantawaS.Naregal Shri.M.M.Shaikh Shri.A.M.Mulla
ShriR.L.Bagalkot ShriM.A.Dhalayath ShriM.A.Hanagi ShriN.B.Shastri
StaffMembers 1) 2) 3) 4) B.S.Dhalayath Y.S.Hubli M.J.Mangalore I.R.Kagadagar BranchManager JuniorAsst JuniorAsst Peon
PigmyAgentsare4peoples
TYPESOFDEPOSITS: Thebanksreceivevarioustypesofdeposit: 1. 2. 3. 4. Fixeddeposits(FD) Savingsdeposits(SB) Currentdeposits(CD) Recurringdeposit(RD)
Inaddition/thebankhasthefollowingdeposits. A) B) C) A) Pigmydeposit Pigmyagentssecuritydeposit* Providentfund Pigmy deposits: the bank collects these deposits through pygmy agents.Theseagentswillcollecttheamountfromthecitizensandthev depositinthebanktheirindividualsnameonthecollectedamountthey earn commission from the bank. Is 2% after 6 months the deposits receives1%interestontheirdeposits. B) Pigmy agent security Deposit: An amount is collected bv the every pygmyagent,aSECURITYDEPOSITtoprovidesafetyfortheirservice, as they handle cash belonging to the individuals. This deposit is receivedfromtheseagentstheystartcollectionpygmy. C) Provident fund;thesedepositsarecollectedfromtheemployeesofthe bank. This deposit includes 8.33% of the basic salary plus DA. On retirement, resignation every employee has the right to receive his contributionalongwithemployerscontribution. INTERESTRATEONDEPOSITS Rateofinterestondepositsas31/3/2010 1) 2) Savingsdeposits3.5% FixedDeposits
RateofInterest
DurationofDeposits 15Daysto45Days 46Daysto180Days 181Daysto12Months 13Monthsto36Months 36Monthsandabove UsualDepositors 5.5% 6.5% 8% 9% 10% SeniorCitizens 6.00% 7.00% 8.50% 9.50% 10.50%
TYPESOFADVANCES/LOANS 1. Mortgage Loan: Thisloanisgivesonpledgingthevaluablethings.The minimum amount of loan 25000 and the maximum amount depend upon the value of the mortgage. The extent of limit is 40% to 50% of marketpriceofthemortgageproperty. 2. Gold loans: This loan is provided against gold and golden ornaments. Thelimitoftheloanis75%ofthemarketdue. 3. Hire Purchase Loan: This loan is provided for personal and transportation purposes. The loan is paid for the purchases of TV, Vehicles like Two wheelers, four wheelers and other purchases. The limit of the loan is 75% of the price. Normal repayment, period is 12 monthsto5yearsonmonthlyinstallment. 4. Cashcredits:Itisanarrangementunderwhichtheborrowerisallowed to borrow money up to a certain limit against a bond of credit. The borrower has to provide one or more securities or certain securities. The borrower can draw the amount of by means or cheques as and whenheneeds.Thisisthemostcommonmethodofgrantingloansby banks.Thisloanisprovidedtothebusinesspeople.
5.
Government Security Loan: This loan is provided to those who forward government securities as security to the bank like national savings certificate (NSC), Indian Vikas Patra (IVP), Kisan Vikas Patra (KVP)act,LICPolicy.Thelimitoftheloanis75%ofthefacevalue.
6.
Surety loan: without forwarding any tangible security a person can availloanbyprovidingsuritiesofrepute.
7.
Fixed Loan: This loan is given on the strength of fixed deposit. The periodofloandependsontheperiodoffixeddeposit.
8.
Pigmy Deposit Loan: Theperiodofpygmyisthebasisforsanctioning oftheloan.
9.
Warehouse Receipt Loan: This loan provided on warehouse receipt after the storage of the goods in the warehouse. State Warehouse receiptandcentralwarehousereceiptcanbeforwardassecurity.
10.
Cash credit on fixed deposit: Cashcreditfacilityisgiventothosewho providefixeddepositreceiptsecurity.Theborrowerneednotwithdraw thewholeamountofthecreditsogranted.
11. Provident Fund: thisisprovidedtotheemployeesontheirbalanceof providentfundasonthedateoftheapplicationoftheloan. INTERESTOFLOANS: 1. 2. Interestongoldloanwarehouseloan12%Govt.securityloanH.Ploan. Interest on other secured loan like mortgage 13% Building loan and cashcreditloan. The above interest is charged if installment of loan interest is paid
regularly.
SpecialtiesofBank 1) 2) 3) QuickService. IssuingDemandDraftatConcessionalrateorlowrate. Spot or immediate loan on national security bonds warehouse receipt vehiclepurchases,LICBondsetc., 4) Taxexemptionforwithdrawals.
MEMBERSHIPINOTHERCOOPERATIVEINSTRUCTION The Bank may become a member of the following cooperative
instructions. DistrictCentralcooperativebankofthedistrictconcerned. KarnatakastatecooperativeapexBanklimitedBangalore. KarnatakastatecooperativeFederallimitedBangalore. WithotherCoopBanks.
MissionStatement: A Mission to continuously strive for synergy between technology, systemsandhumanresourcesoastoprovideproductsandservicesthatmeet the quality, performance and aspiration of its vast clientele. For this, we maintain highest standards of ethics and societal responsibilities constantly innovateproductsandprocessesanddevelopteamsthatkeepthemomentum goingtotaketheBanktoexcellenceinthenewmillennium. VisionStatement: Avisionofrelentlesslypursuingouraimandobjectiveofmakingthe bank emerge as a luminous stand in the tapestry of Indias Banking System.Wewill strivetomould theAzad Bankinto agile and resilient
Organization by adopting the finetuned customer relationship, management strategies, operations based on assetliability and risk management systems, up gradation of required technology capabilities and developing the human resource to meet the challenges ofthe paradigm shift. Our vision seeks to serve, as our Chairman has aptly put it, as a reference point for making strategicdecisions,conveyingbenefitstostakeholder,articulatingcompetitive advantageandunderscoringthedrivingprinciplesofOrganization
SWOTANALYSIS
STRENGTHS These banks have limited and known customer base, which give them morepotentialtocontrolcreditrisk. Asthesebanksarelocalizedtheyareabletomaintainapersonaltouch withdepositorsandborrowers. Thesebankscanavailofcheaperlaborandthuscanmaintainlowcosts.
WEAKNESS Thesebankssufferfromdualaccountabilitytoboththeregulators(RBI) andthestategovernment. Lackofinternalcontrolsystemsmakesthesebanksvulnerabletofraud andscams. Smaller size and lesser profit make it difficult for the banks to adopt latestMISsystemsandothertechnologies
OPPORTUNITIES Thesebankshavetheopportunitytotaplocalresourcesformobilizing depositsandgrantingadvances. They can provide better customized services thus leading to longer relationshipsandcustomersatisfaction. THREATS Thesebanksfaceseriousthreatsfromprivatebanksandforeignbanks, which use advanced techniques and technologies for risks and fund management. As public sector banks have also joined the competition, cooperativebanksfacethreatsfromthesebankstoo.
CHAPTER4
ANALYSISOFLOANSANDADVANCES
LOANSANDADVANCES
A loan is a kind of advance made with or without security. In case of
loan the hank makes a lump sum payment to the borrower or credits his deposit account with the money advanced. Repayments may he made in installments or at the expiry of a certain period. The customer has to pay interest on the total advance whether he withdraws the money from his account(i.e.creditedwiththeloan)ornot.Aloanoncerepaidinfullor part cannotbedrawnagainbytheborrowunlessthebankersanctionafreshloan. Themostimportantdecisiontobetakenbythebankadministrationis
useofdepositsanditsfundstoenablethebanktoearnprofit.Sincethebanks aredealingwithpublicmoney.Thereforebankshouldproperlyemployallits funds lo achieve its objectives. The bank can not lend entire funds, as the depositorsarclikelytowithdrawtheirdepositsatanytime. A banks capacity to attract deposits primarily depends on the
confidence of the public on the banks. If the bank is not able lo collect the moneypaidtotheborrower,itcannotpaytoitsdepositorsintime.Hencethe bank should lake a decision to lend primarily on the basis ofavailability and natureoffunds,RBIguidelinesandinvestmentpolicyofthebank. Bank can no, act merely as creditors for borrowers, but more as
custodianfordepositsofcustomers.Thusbankisnotonlyanswerable,toits shareholders but also its depositors at large. This the activities of the banks suchasmethodoflendingrate,groupofwhichitlendsetcarecloselywatched bythepublicandgovernment.
In recent years, the bank is more careful and takes adequate
precautions which lending against securities, In case if the borrower fails to repay the loans as per the terms, the bank will take legal action against the defaulters. Different types of securities such as gold, gold ornaments, fixed deposit, warehouse, receipt etc are offered by the customer. Each type of securityhasitsownfeaturestoguardagainstbankersrisk. Whilegrantingdifferenttypesofloans,differenttypesofdocumentare
asked by the bank. In order to sanction business loan the customer should haveregulartransactionswiththebanks.Therearecertainnormswhichare followedbythebankwhilegrantingtheloanstoitscustomersi.e.margintobe maintained,policiesoflendingandotherfactors.
TYPESOFADVANCES/LOANS
1. MortgageLoan : Thisloanisgivenonpledgingthevaluablethings.The minimum amount of loan is Rs. 25,000 and the maximum amount dependsuponthevalueofthemortgage.Theextendoflimitis 50%to 70%ofmarketpriceofthemortgageproperty. 2. GoldLoan:Thisloanisprovidedagaingoldandgoldenornaments.The limitoftheloanis75%ofthemarketvalue. 3. Hire Purchase Loan: This loan is provided for personal and commercialpurposes.TheloanispaidforpurchaseofTV,Vehicleslike Twowheelers,loanis65%ofthePrice.Normalrepaymentperiodis18 monthsto5yearsonmonthlyinstallment. 4. Cash Credit: Itisanarrangementunderwhichtheborrowerisallowed to borrow money upto a certain limit again bond of credit. The borrower has to provided one or more securities or certain securities. The borrower can draw the amount of by means of cheques as and
whenheneeds.Thisisthemostcommonmethodofgrantingloansby banks.Thisloanisprovidedtothebusinesspeople. 5. Government Security Loan :Thisloanprovidedtothosewhoforward government securities as security to the bank like National Savings Certificate(NSC),IndiraVikasPatra(IVP)KisanVikasPatra(KVP)etc., Thelimitoftheloanis75%ofthefacevalue. 6. Security Loan:WithoutforwardinganyTangibleSecurityapersoncan availloanbyprovidingasuretyofarepute. 7. Fixed Deposit Loan:Thisloanisgivenonthestrengthoffixeddeposit. Theperiodofloandependsontheperiodoffixeddeposit. 8. Pigmy Deposit Loan: The period of the Pigmy is the basis for sanctioningoftheloan. 9. WarehouseReceiptLoan:ThisloanisprovidedonWarehouseReceipt afterthestorageofthegoodsinthewarehouse.WarehouseReceiptof State Warehouse Receipt and Central Warehouse Receipt can be forwardasSecurity. 10. CashCreditonFixedDeposit:CashCreditfacilityisgiventothosewho provide Fixed Deposit Receipt as Security the borrower need not with drawthewholeamountofthecreditsogranted. 11. Provident Fund Loan : This is provided to the employees on their balanceofprovidentfundasonthedateoftheapplicationoftheloan.
MEANINGOFANALYSISOFFINANCIALSTATEMENT
It is a Methodical classification of the data given in the financial
statements. The figures given in the financial statements will not help for comparisonunlesstheyareputinasimplifiedform.
AccordingtoE.wordinhisbookBusinessAccountingVolumeIIto
interpret means to put the meaning of statement in simple terms for the benefitofaperson. It includes criticism, examination and analysis. The term analysis and
interpretationarecomplementarytoeachotherforinterpretationanalysisis necessaryandanalysiswithoutinterpretationismeaningless. In other words of Connedy and Mullar the analysis and interpretation
meansitisanattempttodeterminethesignificanceandmeaningoffinancial statementsdata,sothatforecastmaybemadeofprospectsforfutureearnings ability to pay interest, debt maturity and profitability of sound dividend policy. Therefore analysis and interpretation of financial statement includesthefollowing: 1. 2. 3. 4. 5. Analysis Comparison StudyofTrend DrawingConclusion CriticismofSuggestions.
ObjectivesofAnalysisofFinancialStatement 1. 2. Toexaminetheearningcapacityandefficiencyofbusinessactivities. Toestimateaboutperformanceefficiencyandmanagerialabilitybythe managementofbusinessconcern. 3. To determine the short term and long term solvency of the business concern.
4.
To enquire about financial position and ability to pay of the concern seekingloansandcredit.
5. 6.
Todeterminetheprofitabilityandfutureprospectusoftheconcern. Toinvestigatethefuturepotentialoftheconcern.
USESOFANALYSISANDINTERPRETATION
1. 2. Ithelpstotakeproperandtimelydecisions. AlltheusersoftheFinancestatementmaynotbeexpertinaccounting thebusinessactivitiesandrelationship. 3. 4. Threadtodecisionsarenegligible. Toexaminetheaccuracyandcorrectnessofdecisionsalreadytaken.
LIMITATIONS
1. 2. 3. 4. 5. Financialanalysisisonlyameansandnotanend. Itignorespricelevelchange. Financialstatementsareinterimreports. Influenceofpersonaljudgment. Disposalofmonitoryfactsonly.
TECHNIQUESORTOOLSOFANALYSISANDINTERPRETATION
1. 2. Comparativefinancialstatements. Commonsizestatements.
CORPORATEFINANCIALSTATEMENTS
These statements are prepared to study the various elements of
financialposition.Underthismethodthefinancialdatawillbemoremeaning ful.Inthismethodthestatementoftwoormoreyearsarepreparedtoknow theincreaseordecreaseinabsolutedatainvalueandalsoinpercentages.The comparativefinancialstatementscanhepreparedforbothincomeStatement andBalanceSheet.
COMMONSIZESTATEMENTS
This statement explains the relationship of various items with some
common item. In case of this method the percentage of one year can be compared with the percentage of other years to draw the meaningful conclusions.
TABLE1 Loan/Advances
1. 2. 3. 4. 5. 6. 7. 8. 9. PigmyDeposit GoldLoan N.S.C.Loan H.P. Merchandise L SecuredCash Credit OverDraft Warehouse Loan CashCredit
STATEMENTOFADVANCES Years
2008 11,75,439 9,75,352 3,54,023 38,63,921 61,87,403 6,19,322 9,11,588 2,05,029 72,534 1,38,13,265 1,12,88,159 1,80,161 20,94,873 1,39,078 15,44,261 40,10,069 2,72,967 18,60,000
2009 8,38,977 13,28,417 2,46,099 37,27,555 59,18,912 5,22,641 49,87,612 1,75,905 88,869 1,32,15,927 1,06,27,936 2,05,857 30,11,089 1,17,878 10,31,488 30,57,343 3,67,237 2,65,00,000
2010 1,53,302 25,52,148 3,02,468 26,51,152 86,14,450 16,26,079 5,95,000 1,51,086 31,377
2011 14,08,144 34,38,930 4,11,637 17,76,236 1,27,49,502 27,01,752 4,22,000 1,30,734 55,356
Cheque Discount 10. MortgageLoan 11. EquitableLoan 12. 13. 14. 15. 16. 17. H.P.Consumer DurableArticle loan H.P.Vehicle Loan H.P.Machinery Loan FixedDeposit Loan A.C.C.Loan Recurring DepositLoan PersonalLoan
1,80,63,317 3,02,43,789 1,08,08,823 2,05,233 75,68,819 1,19,089 29,90,655 21,35,361 3,05,462 94,25,826 2,11,748 93,03,119 12,24,372 53,87,891 28,16,221 3,18,214
18.
2,65,00,000 1,86,00,000
Loans/
TABLE2
ADVANCEINBRIEF Years
Advances 1. 2. 3. 4. Mortgage Loan GoldLoan Vehicle Personal Loan 5. CashCredit 5. Others Total TABLE3
2008 2,61,93,173 9,75,352 22,33,951 1,12,20,680
2009 2,90,37,332 13,28,417 31,28,967 55,41,144
2010 2,96,72,373 25,52,148 76,87,908 72,47,248
2011 4,03,03,363 34,38,930 1,05,27,491 1,21,18,343
70,84,288
67,06,327
1,04,22,992
15,63,744 8,20,25,471
4,77,07,144 4,94,64,942 6,02,33,821
COMPARATIVESTATEMENTS 200809 200910 Increase/Decrease In(Rs) 6,35,041 12,23,731 45,58,941 17,06,104 37,16,665 In(%) 2.18 92.11 59.30 33.78 55.42 201011 Increase/Decrease In(Rs) 1,06,30,990 8,86,782 28,39,583 48,71,095 88,59,248 In(%) 26.37 34.74 26.97 67.21 14.70
Loans/ Advances
Increase/Decrease In(Rs) 28,44,159 3,53,065 8,95,016 5,67,536 3,77,961 In(%) 10.86 36.19 40.06 50.61 5.33
1. Mortgage Loan 2. GoldLoan 3. Vehicle Loan 4. Personal Loan 5. Cash Credit
Interpretation 1. MortgageLoan In the year 2009 amount of mortgage loan is Rs. 2844159 & that is 10.86%intheyear2010decreasedbyRs.635041thatis2.18%andin theyear2011itisincreased10630990thatis26.37%. 2. GoldLoan: Intheyear2009theamountofgoldloanisincreasedRs.353063thatis 36.19% and in the year 2010 it also increased at Rs. 1223751 i.e. 92.11%andintheyear2011itisdecreasedtoRs.886782that35.74% comparedtopreviousyear. 3. VehicleLoan: Intheyear2009theamountofvehicleloaninRs.895016thatis40.06% intheyear2010itisincreasedtoRs.4558941thatis59.30%andinthe year 2011 it is decreased to Rs.2939583 i.e. 26.97% compared to last year. 4. PersonalLoan: Intheyear2009theamountofpersonalloanisRs.5679536i.e.50.61% in the year of 2010 it is increased to Rs. 33.78% and in the 2011 it is increasedtoRs.4871095i.e.67.21%comparedtoyear2010. 5. CashCredit: Intheyear2009theamountofcashcreditisRs.377961that5.33%in the year 2010 it is increased to 55.42% and in the year 2011 it is decreasedto8859248thatis14.70%comparedtopreviousyear.
TABLE4
COMMONSIZESTATEMENTOFADVANCES Years 2008% 54.90 2.04 4.68 23.51 14.84 100 2009% 58.70 2.68 6.32 11.20 13.55 100 2010% 49.26 4.23 12.76 12.03 17.30 100 2011% 49.13 4.19 12.83 14.77 1.90 100
Loans/Advances 1. 2. 3. 4. 5. MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit
Total
COMMONSIZEGRAPH
2008
2009
2010
2011
Interpretation 1. MortgageLoan: Intheyear2008thepercentageofmortgageloanis54.90%tothetotal advances. In the year 2009 it is increased to 58.70%. But in the year 2010 and 2011 it is decreased to 49.26%, 49.13% respectively of the totaladvance. 2. GoldLoan: In the year 2008 the percentage of gold loan is 2.04% to the total advances.Intheyear2009itisincreasedto2.68%tothetotaladvances and in the year 2010 it is increased to 4.23% whether as in the year 2011itisdecreasedto4.19%tothetotaladvances. 3. VehicleLoan: In the year 2008 the percentage of vehicle loan is 4.68% to the total advancesintheyear2009itisincreasedto12.76%butwhereasinthe year2010itisincreasedto12.83%tothetotaladvances. 4. PersonalLoan: Intheyear2008thepercentageofpersonalloanis23.51%tothetotal advances. In the year 2009 it is decreased to 11.20% but again in the year 2010 it is increased to 12.03% where as in the year 2011 it is increasedto14.77%tothetotaladvances. 5. Cashcredit: In the year 2008 the percentage of cash credit is 14.84% to the total advance, in the year 2009 it is decreased to 13.55% and in the year 2010itisincreasedto17.30%butinthe2011itisdecreasedto1.90% tothetotaladvance.
TABLE5
STATEMENTOFRECOVERY Years
Loans/Advances 1. 2. 3. 4. 5. MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit Total
2008 13,74,600 6,87,300 3,43,650 29,78,300 14,89,150 68,73,000
2009 7,74,400 15,48,800 12,04,622 18,06,933 24,09,245 77,44,000
2010 16,51,200 4,81,600 2,06,400 8,25,600 9,63,200
2011 24,24,400 12,12,200 18,85,644 28,28,467 37,71,289
41,28,000 1,21,22,000
(Source:Annualreportofthebank,2008,2009,2010,2011) TABLE6 200809 Loans/ Advances Increase/Decrease In(Rs) 1. 2. 3. 4. 5. Mortgage Loan GoldLoan Vehicle Loan Personal Loan CashCredit 9,20,095 61.78 14,46,045 60.02 28,08,089 291.53 11,71,367 250.53 9,81,333 5.43 20,02,887 242.59 6,00,200 8,61,500 8,60,972 In(%) 43.66 125.34 236.75 COMPARATIVESTATEMENTOFRECOVERY 200910 Increase/Decrease In(Rs) 8,76,800 1,07,200 9,98,222 In(%) 113.22 68.90 82.86 201011 Increase/ Decrease In(Rs) In(%) 7,73,200 7,30,600 16,79,244 46.82 151.70 813.58
Interpretation 1. MortgageLoan Intheyear2009therecoveryofmortgageloanisincreasedRs.600200 that is 43.66% again in the year 2010 increased to Rs. 876800 that is 113.22% and the year 2011 it is increased to Rs.773200 that is 46.82 whencomparedtopreviousyear. 2. GoldLoan Intheyear2009therecoveryofGoldloanincreasedRs.861500thatis 125.34%andintheyear2010itisdecreased1067200thatis68.910% andintheyear2011increasedtoRs.730600thatis151.70%compared topreviousyear. 3. VehicleLoan: Intheyear2009therecoveryofvehicleloanincreasedRs.860972that is 236.75% in the year 2010 it is decreased Rs.998222 that is 82.86% andintheyear2011itisincreasedtoRs.1679244thatis813.58when comparedtopreviousyear. 4. PersonalLoan: Intheyear2009therecoveryofpersonalloanitisdecreasedRs.860972 that is 250.53% in the year 2010 it is again decreased Rs.981333 that 5.43%andintheyear2011itisincreasedRs.2002887thatis243.59% whencomparedtopreviousyear. 5. CashCredit: Intheyear2009therecoveryofcashcreditincreasedRs.920095thatis 61.78%andintheyear2010itisdecreasedRs.1446045thatis60.02% andagainintheyear2011itisincreasedtoRs.2808089thatis291.53% whencomparedtotheirpreviousyear.
TABLE7 Loans/advances 1. 2. 3. 4. 5. MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit TOTAL
COMMONSIZESTATEMENTRECOVERY Years 2008% 20.00 9.00 29.00 21.60 20.40 100 2009% 10.01 20.02 15.55 23.33 31.11 100 2010% 40.01 11.66 5.00 20.00 23.33 100 2011% 20.02 10.01 15.55 23.34 31.11 100
COMMONSIZEGRAPH
2008
2009
2010
2011
Interpretation 1. Thetablesshowsthat MortgageLoan: In the year 2008 the recovery of percentage mortgage loan 20.00% to thetotaladvance.Intheyear2009itisdecreasedto10.00%Butinthe year 2010 it is in increased to 40.01% to the total advance and in the year 2011 it is decreased to 20.02% to the total advance when comparedtotheirrespectivepreviousyears. 2. GoldLoan: Intheyear2008therecoverypercentageoftheGoldloanis10.00%to thetotaladvance,intheyear2009itisincreasedto20.01%tothetotal advance. In the year 2010 it is decreased to 11.66% and in the year 2011 again it is decreased the 10.01% to the total advance when comparedtotheirrespectivepreviousyear. 3. VehicleLoan: Intheyear2008therecoveryofthevehicleloanis50.00%tothetotal advance,intheyear2009itisdecreasedto15.55%tothetotaladvance intheyear2010itisdecreased5.00%thetotaladvanceandintheyear 2011itisincreasedto15.55%tothetotaladvance. 4. PersonalLoan: Intheyear2008therecoverypercentageofthisloanis43.00%tothe total advance in the year 2009 it is decreased 23.33% to the advance. Andintheyear2010itisdecreasedto20.00%tothetotaltheadvance butintheyear2011itisincreasedto23.34%tothetotaladvance.
5.
CashCredit: Intheyear2008therecoverypercentageofthisloanis21.66%tothe total advance in the year 2009 it is increased to 31.11% to the total advance, and in the year 2010 it is decreased to 23.33% to the total income but in the year 2011 it is increased to 31.11% to the total advance.
TABLE8
STATEMENTSOFOVERDUES Years 2008 2009 56,08,386 11,03,649 26,59,566 43,96,041 13,65,356 2010 54,17,070 3,72,337 11,04,835 35,78,443 11,40,315 2011 50,35,872 12,56,907 18,16,186 19,98,534 12,52,500 1,13,60,000
Loans/Advances 1. 2. 3. 4. 5. MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit TOTAL
1,00,90,506 12,64,663 27,38,117 55,83,648 15,46,070
2,12,23,000 1,51,32,998 1,16,13,000
(Source:Annualreportofthebank2008,2009,2010,2011) TABLE9 COMPARATIVESTATEMENTOFOVERDUES 200910 Increase/ Decrease In(Rs) 1,91,316 1,61,014 15,54,731 8,17,598 2,25,041 In(%) 3.41 14.58 58.45 18.59 16.48 201011 Increase/ Decrease In(Rs) 3,81,178 8,84,570 7,11,351 15,79,909 1,12,185 In (%) 7.03 16.38 64.38 44.15 9.83
200809 Loans/Advances Increase/ Decrease In(Rs) 1. MortgageLoan 2. GoldLoan 3. VehicleLoan 4. PersonalLoan 5. CashCredit 44,82,120 1,61,014 78,551 11,87,603 1,80,714 In(%) 44.42 12.73 2.86 21.26 11.68
Interpretation Thetableshowsthat 1. MortgageLoan Intheyear2009theoverduesamountofmortgageisRs.4482120thatis 44.42%intheyear2010itisdecreasedto191316thatis3.41%andin theyear2011itisincreasedto381178thatis7.03%whencomparedto theirrespectivepreviousyear. 2. GoldLoan: Intheyear2009theoverduesamountofgoldloanisRs.161014thatis 12.73%intheyear2010itisincreasedRs.162014thatis14.58%andin the year 2011 it is increased to Rs.884570 that is 16.38% when comparedtopreviousyear. 3. VehicleLoan: Intheyear2009theoverduesamountofvehicleloanisRs.78551thatis 2.86% in the year 2010 it is increased to Rs.1554731 that is 58.45% again in the year 2011 it is increased the Rs.711351 that is 64.38% comparedtopreviousyear. 4. PersonalLoan In the year 2009 the overdues amount of personal loan is Rs.1187603 thatis21.26%inthe2010itisdecreasedtoRs.817598thatis18.59% butintheyear2011itisincreasedtoRs.1579909thatis44.15%when comparedtopreviousyear. 5. CashCredit: Intheyear2009theoverduesamountofcashcreditisRs.180714thatis 11.68%intheyear2010itisincreasedtoRs.225041thatis16.48%and in the year 2011 it decreased to Rs.112185 that is 9.83% when comparedtotheirrespectivepreviousyear.
TABLE10 COMMONSIZESTATEMENTSOFOVERDUES LOANS/ADVANCES 2008% 47.54 5.95 12.90 26.30 7.28 100 COMMONSIZEGRAPH 2009% 37.06 7.29 17.57 29.04 9.02 100 2010% 46.64 32.07 9.51 3.81 9.81 100 2011% 44.32 11.06 15.98 17.59 11.02 100
1. 2. 3. 4. 5.
MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit TOTAL
2008
2009
2010
2011
Interpretation: 1. Thetableshowsthat MortgageLoan Intheyear2008thepercentageofoverdueamountofmortgageloanis 47.54%tothetotaladvances.Intheyear2009itisdecreased37.06%to thetotaladvanceagainintheyear2010itisincreasedto46.64%butin theyear2011itisdecreasedto44.32%tothetotaladvances. 2. GoldLoan In the year 2008 the percentage of overdue amount of Gold Loan is 5.95%tothetotaladvances,intheyear2009itisincreasedto7.29%to theadvances,intheyear2010itisincreasedto32.07%butintheyear 2011itisdecreasedto11.06%tothetotaladvances. 3. VehicleLoan: In the year 2008 the percentage of overdue amount of vehicle loan is 12.90%tothetotaladvances,intheyear2009itisincreasedto17.57% tothetotaladvancesintheyear2010itisdecreasedto9.51%Butinthe year2011itisincreasedto15.98%tothetotaladvances. 4. PersonalLoan Intheyear2008thepercentageofoverdueamountofpersonalloanis 26.30% to the total advances but in the year 2009 it is increased to 29.04%tothetotaladvancesintheyear2010itisincreasedto30.18% butintheyear2011itisdecreasedto17.59%tothetotaladvances.
5.
CashCredit: In the year 2008 the percentage of overdue amount of cash credit in 7.28% to the total advances, But in the year 2009 it is increased to 9.02%tothetotaladvancesintheyear2010itisincreasedto9.81%to thetotaladvancesandintheyear2011itisincreasedto11.02%tothe totaladvances.
NONPERFORMINGASSETS 1. StandardAssets: Theseassetsdonotdiscloseanyproblemanddoesnotcarrymorethan normalriskattachedtothebusiness. 2. SubStandardAssets Adoubtfulassetisannonperformingassetswhichhascontinuedtobe soforaperiodexceeds2years. 3. Doubtfulassets Adoubtfulassetsisanperformingassetswhichhascontinuedtobeso foraperiodexceeding2years. 4. Lossassets: It is an asset identified by the bank or interest auditor or external auditorofRBIinspectorsaslossassets,buttheamounthasnotyetbeen writtenoffwhollyorpartly.
CHAPTER5
FINDINGSANDSUGGESTIONS
FINDINGS
The pledge / mortgage loans, vehicle loans and gold loans have increasedinthefirstyear200910thatis43.66%anddecreaseinthe subsequentyears201011. Cash credit and personal loans have increased throughout the period 200809, 201011. But the rate of increase is more the first two years anditislessinthepreviousyears200910. The average proportion of pledge/mortgage loans 25.78% of the total advances. Theaverageproportionofcashcreditis54.03%ofthetotaladvances. The recovery of pledge/mortgage loan, vehicle loan. Gold loan and personalloanispoorintheprevioustwoyears2008,2009,2010,2011.. Thereisincreaseintherecoveryrateofcashcredit. Theamountofrecoveryisinproportiontotherespectiveadvance. The overdues in respect of pledge/mortgage loan, cash credit and personalloanshaveincrease.Butoverduesinregardtovehicleloanand cashcredithavedecrease.
SUGGESTIONS
Loanshouldbemotivatedtopaytheirduesintime.Advancesshouldbe createdinthemabouttheinterestburdenondelay,penalinterestrate mayalsobeadopted. Thebankisadvisedtofollowsoundlendingpolicy. Thebankhastomakeonefforttoachieve100%standardassets. Theamountofrecoveryismoreorlessinproportiontotheamountof advances.Thereforeitisnecessarytoincreasetherecoverytoincrease to100%ofadvances.
CHAPTER6
CONCLUSION
Now, It is very much clear that cooperative banks have very much importanceinNationaldevelopment.Withoutthehelpofcooperativebanks, millions of people in India would be lacking the much needed financial support. Cooperative banks take active part in local communities and local
development with a stronger commitment and social responsibilities. These banks are best vehicles for taking banking to doorsteps of common men, unbanked people in urban and rural areas. Their presence in the social, economicanddemocraticstructureofthecountryisessentialtobring about Harmonious development and that perhaps is the best justification for nurturingthemandstrengtheningtheirbase.Thesebanksaresuretowinin theracebecausetheyarefromthepeople,bythepeopleandofthepeople.
BIBLIOGRAPHY

AdvancedAccountancyS.N.Maheshwari BalanceSheetandAnnualReportsprovidedbythebankfor4years. Bylawsofthebankprovidebythemanager. AbookofCooperationinIndiaDr.B.S.Mathur EncyclopediaofCooperativeMage. EditedbyB.S.hatia,H.C.Verma,MaheshC.Garg.

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MANAGEMENTOFLOANSANDADVANCES

meettheneedsofthemerchantsofthistownandextentwithoutperformance thisneedcannotbeservedandthereforemanagementofloansandadvances ofAzadCooperativebanksGadaginundertakenfortheprojectwork.

Banks play an important role in the economic development of the

specialfeatureofcooperativebanksinIndiaisitsfederalstructure.Theunits rangingfromprimaryleveltonationallevel.CooperativebankinginIndiacan bedividedintotwoimportantareasviz.,agriculturalandnonagricultural.The

promoteeconomicallyweakersectionsofthesociety.Likecommercialbanks, thecooperativebankalsoreceivesdepositsandlendsmoney.Buttheylendto theirmembersandmakeincidentalprojectalthoughtheirsoleobjectiveisnot profitearning.

STRUCTUREOFCOOPERATIVEBANKINGININDIA Definition: Thecooperativebankingsystemisanintegratedonandbecauseofits

STATECOOPERATIVEBANK Itmeanstheprincipalsocietyinastatewhichisregistered ordeemed

The Land development Bank may be classified as primary land

bankandShriShamirAbdulRazaksahebR.UmachagiwasFounderChairman ofthisbank. As a result of the efforts of Shri AlHaj Sayyed Tajuddinsaheb R.

SIR M. VISHWESHWARAYYA ROAD GANGAPURPETH, GADAG near to other centersanditisconvenienttothebankcustomers. Thebankhasmaintainedinsecularcharacterbyhavingmembersfrom

AreaofOperation Establishment RBILicenseNumber NumberofBranch Address BranchRBILicenseNo Founder

Umachagi. ChiefPromoter : Late.SameerAbdulRajaksaheb.R.Umachagi.

10) ICICIBankGadag 11) HDFCBankHubli Thisbanksrelatedtothe11bankinKarnataka.

This fund as on proceeding 31st March shall be deposited with the

BoardofDirectors(India9Directors) Manager AsstManager Accountant AsstAccountant

Clerks Attenders PigmyCollectorsis7

StaffChart ManagerA.G.Yargudi AccountantJ.A.Mangalore AsstAccountantH.J.Harlapur SaleofficerR.M.Nadaf

Smt.ShantawaS.Naregal Shri.M.M.Shaikh Shri.A.M.Mulla

ShriR.L.Bagalkot ShriM.A.Dhalayath ShriM.A.Hanagi ShriN.B.Shastri

StaffMembers 1) 2) 3) 4) B.S.Dhalayath Y.S.Hubli M.J.Mangalore I.R.Kagadagar BranchManager JuniorAsst JuniorAsst Peon

TYPESOFDEPOSITS: Thebanksreceivevarioustypesofdeposit: 1. 2. 3. 4. Fixeddeposits(FD) Savingsdeposits(SB) Currentdeposits(CD) Recurringdeposit(RD)

Pigmy Deposit Loan: Theperiodofpygmyisthebasisforsanctioning oftheloan.

Cash credit on fixed deposit: Cashcreditfacilityisgiventothosewho providefixeddepositreceiptsecurity.Theborrowerneednotwithdraw thewholeamountofthecreditsogranted.

MEMBERSHIPINOTHERCOOPERATIVEINSTRUCTION The Bank may become a member of the following cooperative

instructions. DistrictCentralcooperativebankofthedistrictconcerned. KarnatakastatecooperativeapexBanklimitedBangalore. KarnatakastatecooperativeFederallimitedBangalore. WithotherCoopBanks.

In recent years, the bank is more careful and takes adequate

financialposition.Underthismethodthefinancialdatawillbemoremeaning ful.Inthismethodthestatementoftwoormoreyearsarepreparedtoknow theincreaseordecreaseinabsolutedatainvalueandalsoinpercentages.The comparativefinancialstatementscanhepreparedforbothincomeStatement andBalanceSheet.

2008 2,61,93,173 9,75,352 22,33,951 1,12,20,680

2009 2,90,37,332 13,28,417 31,28,967 55,41,144

2010 2,96,72,373 25,52,148 76,87,908 72,47,248

2011 4,03,03,363 34,38,930 1,05,27,491 1,21,18,343

4,77,07,144 4,94,64,942 6,02,33,821

1. Mortgage Loan 2. GoldLoan 3. Vehicle Loan 4. Personal Loan 5. Cash Credit

Loans/Advances 1. 2. 3. 4. 5. MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit

Loans/Advances 1. 2. 3. 4. 5. MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit Total

2008 13,74,600 6,87,300 3,43,650 29,78,300 14,89,150 68,73,000

2009 7,74,400 15,48,800 12,04,622 18,06,933 24,09,245 77,44,000

2010 16,51,200 4,81,600 2,06,400 8,25,600 9,63,200

2011 24,24,400 12,12,200 18,85,644 28,28,467 37,71,289

TABLE7 Loans/advances 1. 2. 3. 4. 5. MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit TOTAL

Loans/Advances 1. 2. 3. 4. 5. MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit TOTAL

1,00,90,506 12,64,663 27,38,117 55,83,648 15,46,070

2,12,23,000 1,51,32,998 1,16,13,000

MortgageLoan GoldLoan VehicleLoan PersonalLoan CashCredit TOTAL

AdvancedAccountancyS.N.Maheshwari BalanceSheetandAnnualReportsprovidedbythebankfor4years. Bylawsofthebankprovidebythemanager. AbookofCooperationinIndiaDr.B.S.Mathur EncyclopediaofCooperativeMage. EditedbyB.S.hatia,H.C.Verma,MaheshC.Garg.

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