Loans and Advances 2016

A
SUMMER INTERNSHIP PROJECT

ON
A STUDY OF THE CUSTOMER PREFERENCE TOWARDS LOANS AND
ADVANCES AT THE SUTEX CO-OPERATIVE BANK LTD
Submitted to
S.R. LUTHRA INSTITUTE OF MANAGEMENT

IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

In
Gujarat Technological University

UNDER THE GUIDANCE OF
Faculty Guide:
Company Guide:
Dr. Ranjan Sabhaya
Mr. Bhadhresh K. Noticewala
Asst. Professor
Branch Manager
(The Sutex Co-op. Bank Ltd.)
Submitted by
Ms. Bindiya R. Patel [Batch No. 2015-17, Enrollment No. 157500592070]
MBA SEMESTER III
S.R. LUTHRA INSTITUTE OF MANAGEMENT 750

MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
July, 2016
Students Declaration
I, Ms Bindiya R. Patel, hereby declare that the report for Summer Internship
Project
entitled
A STUDY OF THE CUSTOMER PREFERENCE
TOWARDS LOANS AND ADVANCES AT THE SUTEX CO-OPERATIVE

BANK LTD. is a result of my own work and my indebtedness to other work
publications, references, if any, have been duly acknowledged.
Place: Surat
Date: _____________
__________________
(Bindiya R. Patel)
Institutes Certificate
Certified that this Summer Internship Project Report Titled A STUDY OF THE
CUSTOMER PREFERENCE TOWARDS LOANS AND ADVANCES AT THE
SUTEX CO-OPERATIVE BANK LTD. is the bonafide work of Ms. Bindiya R.
Patel (Enrollment No. 157500592070), who has carried out the research
under my supervision. I also certify further, that to the best of my knowledge
the work reported herein does not form part of any other project report or
dissertation on the basis of which a degree or award was conferred on an
earlier occasion on this or any other candidate.
Place: Surat
Date:
___________________
(Ranjan Sabhaya)
Asst. Professor
______________
(J. M. Kapadia)
I/C Director
PREFACE
Every problem has a solution provided in-depth knowledge is acquired and
reasonable data is gathered from the same.
This project report is on A Study Of The Customer Preference Towards

Loans And Advances At The Sutex Co-Operative Bank Ltd. is as per syllabus
prescribed by Gujarat Technological University for MBA student. For this I
have selected Sutex o-op Bank Ltd. popularly known as Sutex, a very
prestigious and developing firm of the banking sector in our economy & also it
is the life line of the economy.
In regard to this I have visited Sutex Co-op Bank Ltd. the companys head
office is situated at, Udhna magdalla road of surat city.
I have prepared the report of this banking sector on the basic of information,
which I collected from the bank, I got all the information, which I wanted from
this bank. I noted the matter, which I observed during my visit to The Sutex
Co-op Bank Ltd.
ACKNOWLEDGEMENT
I would like to take an opportunity of express the feelings of gratitude towards

Gujarat Technological University as a part of Summer Internship project
Report.
I am heartily thankful to Sutex Co-op Bank Ltd. for providing me learning
opportunity. I am also thankful to Mr. Bhadhresh K. Noticewala (Manager of
Sutex Co-op Bank Ltd Jahangirpura Branch) Who Permitted me to take
training & undergo work in such a prestigious bank.
I express my gratitude to College Dr. J. M. Kapadia (Director, SRLIM) for
arranging the summer training in good schedule.
I would like to my sincere thanks and gratitude to Dr. Ranjan Sabhaya (Asst
Professor, S. R Luthra Institute of Management, Surat) for providing all
resources to complete this work successfully. I feel myself lucky to have guide
like her.
EXECUTIVE SUMMARY
The information regarding the banking industry and its current scenario. The
introduce of the banking at global, national and state level, PESTEL analysis
of banking industry , major player and current trend in banking industry.
The major influence being done through this report is to know the significance
of loans and advances from customers point of view. Over the last decades
the role of loans sector has undergone a paradigm shift. It is widely
recognized as an important aspect of the sources of loans for the people and
considered it as a short and long term investment.
In the research is containing introduction of company in which information

branch of bank, history of bank, organogram of bank and director.
The research report is explaining about literature review in which summary
given about different research paper which had been done on topic of A Study
Of The Customer Preference Towards Loans And Advances At The Sutex
Co-Operative Bank Ltd.
The present study is aimed at explaining the research Methodogology

adopted for carrying out the research work. While examine customer
preference Towards Loans and Advances, the adapted version of SPSS was
for the present study.
The Research has been taken descriptive research and sampling method is
non-probability convenience sampling method. For the research the sample of
200 loan account customers of surat city is taken. The research is done with
the help of primary and secondary data collection
The information about analysis work of research in that chi-square test and
percentage analysis of different statement and question with graph and
interpretation.
TABLE OF CONTENTS
Particulars
Sr. No.
Page
No.
1.
Introduction
2.
Industry Profile
12
3.
a. Global
12
b. National
14
c. State
17
d. PESTEL
21
e. Current trends
23
f. Major Players
25
g. Major Offerings
26
28
Company Profile
a. Company Profile
28
b. Organogram
33
c. Divisions/ Departments
34
d. SWOT
35
36
e. Market Position
4.
Review of Literature
37
5.
Research Methodology
49
a. Problem Statement
49
b. Research Objective
49
c. Research Design
49
i.
Type of Design
ii.
Sampling
iii.
Data Collection
iv.
Tools for Analysis
v.
Limitations of the Study
6.
Data Analysis & Findings
53
7.
Conclusions and Recommendations
87
8.
Bibliography
90
LIST OF TABLE
Sr No.
Table Name
Table No.
Page No.
1.
Machinery Loan
1.1
Education Loan
1.2
Vehicle Loan
1.3
4.
Overdraft Loan against F.D
1.4
10
5.
Business Loan
1.5
10
6.
Cash Credit Loan
1.6
10
7.
Factory Shed Loan
1.7
11
8.
Consumer Loan
1.8
11
9.
Housing Loan
1.9
11
10.
Agriculture
1.10
11
Alied
Activities
Loan
11.
Bank Parameters
2.1
21
12.
Staff At Sutex Co-Op.Ltd
3.1
29
13
Board of Directors
3.2
32
14
Branches
3.3
31
15
Financial Health of Bank
3.4
32
16
Rank of co-op bank ltd
3.5
36
17
Age
6.1
53
18
Gender
6.2
54
19
Education
6.3
55
20
Occupation
6.4
56
21
Annual Family Income
6.5
57
22
Type of Loan
6.6
58
23
preference level of Loan
6.7
60
24
loan and advances Borrowed
6.8
61
25.
Processing charges
6.9
62
Sr No.
Table Name
Table No.
Page No.
26.
Loan Features
6.10
64
27.
Loan Factors
6.11
66
28.
To know about loans and advances
6.12
67
29.
Face any difficulties while taken a loan
6.13
68
30.
Taken loan from other Bank
6.14
69
31.
one of alternative for loan and advances
6.15
70
32.
loan and advances borrowed Cross

tabulation of Occupation
Chi-square Tests
6.16
70
6.17
71
know about loan and advance Cross

tabulation of Gender
Chi-square Tests
6.18
71
6.19
72
6.20
72
37.
Face any difficulties while taken a loan

Cross tabulation of Age
Chi-square Tests
6.21
73
38.
KMO AND Bartlett's Test
6.22
73
39.
Communalities
6.23
74
40.
Total Variance Explained
6.24
76
41.
Component Matrix
6.25
77
6.26
77
6.27
77
33.
34.
35.
36.
42.
43.
Apply Alpha Test

Loan Features
44.
Repayment specially design
6.28
78
45.
Complex procedure
6.29
78
46.
Rotated Component Matrix
6.30
79
47.
Component Transformation Matrix
6.30
79
6.31
80
6.32
81
6.33
82
48.
49.
50.
Component Score Coefficient Matrix

Component Score Covariance Matrix
Loans data
10
LIST OF FIGURE
Sr No.
Figure Name
Figure No.
Page No.
1. Or Procedures of Loans
1.1
2.
Banking industry in India
2.1
13
3.
Pestel Analysis
2.2
21
4.
Organogram
3.1
33
5.
Division/ Department
3.2
34
6.
Age
6.1
53
7.
Gender
6.2
54
8.
Education
6.3
55
9.
Occupation
6.4
56
10.
6.5
57
11.
Type of Loan
6.6
59
12.
preference level of Loan
6.7
60
13.
loan and advances Borrowed
6.8
61
14.
Processing charges
6.9
63
15.
Loan Features
6.10
65
16.
Loan Factors
6.11
66
17.
6.12
67
18.
face any difficulties while taken a loan
6.13
68
19.
6.14
69
20.
one
6.15
81
6.16
82
of
alternative
for
loan
and
advances
21.
various loans sanctioned by bank
LIST OF CHART
Sr No.
Chart Name
1. Or Scree plot
11
Chart No.
Page No.
6.1
76
CHAPTER-1
INTRODUCTION
12
CONSUMER PREFERENCE
Consumer preferences are defined as the subjective (individual) tastes, as
measured by utility, of various bundles of goods. They permit the consumer to
rank these bundles of goods according to the levels of utility they give the
consumer. Note that preferences are independent of income and prices.
Ability to purchase goods does not determine a consumers likes or dislikes.
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 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 instalments 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 shortterm and long term financial needs of business enterprises.
13
The role played by banks in the business world by way of loans and
advances as follows :(a) Loans and advances can be arranged from banks in keeping with the
flexibility 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.
(b) Loans and advances are utilized for making payment of current liabilities,
wage and salaries of employees, and also the tax liability of business.
(c) Loans and advances from banks are found to be economical for traders
and 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.
(d) Banks generally do not interfere with the use, management and control of
the borrowed money. But it takes care to ensure that the money lent is used
only for business purposes.
(e) Bank loans and advances are found to be convenient as far as its
repayment is concerned. This facilitates planning for future and timely
repayment of loans. Otherwise business activities would have come to a halt.
(f) Loans and advances by banks generally carry element of secrecy with it.
Banks are duty-bound to maintain secrecy of their transactions with the
customers. This enhances peoples faith in the banking system.
Lending Of Money:
Co-operative banks lend money in four different ways: (a) direct loans, (b)
cash credit, (c) overdraft and (d) discounting of bills.
These are briefly discussed below:
14
1) Loans:
In case of loans, the banker advances a lump sum for a certain period at an
agreed rate of interest. The entire amount is paid on an occasion either in
cash or by credit in his current account, which he can draw at any time. The
interest is charged for the full amount sanctioned whether he withdraws the
money from his account or not. The loan may be repaid in instalments or at
the expiry of a certain period. The loan may be made with or without security.
A loan once repaid in full or in part cannot be withdraw again by the customer.
In case a borrower wants further loan, he has to arrange for a fresh loan.
Loan may be a demand loan or a term loan. Demand loan is payable on
demand. It is for a short period and usually granted to meet working capital
needs of the borrower. Term loans may be medium term or long term loan.
Medium term loans are granted for a period ranging from one year to five
years for the purchased of vehicles, tractors, tools and equipment's. Long
term loans are granted for capital expenditure such as purchase of land,
construction
of
factory
building,
purchase
of
new
machinery
and
modernization of plants etc.
Types of Loans:
Banks grant loans for different periods- shorts, medium and long, for different
propose. Broadly, the loans granted by banks are classified follows:1) Short term loans:
Short-term loans are granted to meet the working capital needs of the
borrowers. These loans are granted against the security of tangible assets
mainly the movable asset like goods and commodity shares, debentures etc.
Since April 1995 RBI has made it mandatory for the banks to grant a portion
of bank credit to big customers in the form of loans, which may be for various
maturities. The reserve bank has also permitted the banks to roll over such
loans, i.e. to extend the loan for another period at the expiry of the tenor of the
first loan.
15
2) Term loans: Term loans are given for medical and loan periods, and loans are used for
acquiring fixed assets or for modernization and expansion of existing units.
They may also be used for working capital requirements. An important feature
of term loans is the felt that they are repayable in yearly or half-yearly
instalments over a period of time. Payment is to be made according to a
specified schedule, extending up to 15 years, which imposes a sort of
financial discipline on the borrowing concern. The amortization gradually
starts 2 to 3 years after the sanction of the loan.
3) Bridge loans: Bridge loans are essentially short-term loans, which are granted to industrial
undertaking to meet their urgent and essential needs during the period when
formalities for availing of the term loans sanctioned by financial institutions are
being fulfilled or necessary steps are being taken to raise the capital market.
These loans are granted by financial institutions themselves and are
automatically repaid out of amount of the term loans or the funds raised in the
capital market.
4) Composite loans:When a loan is granted both for buying capital assets and for working capital
purposes, it is called a composite loan. Such loans are usually granted to
small borrowers, such as artisans, farmers, small industries etc.
5) Consumption loan:
Though normally banks provide loans for productive purposes only, but as an
exception loans are also granted on a limited scale to meet the medical needs
or the educational expenses or expenses relating to marriages and other
social ceremonies etc. of the needy persons. Such loans are called
consumption loans.
Classification
of
loans
and
advances:
secured
unsecured:
The loans granted by banks are broadly classified into two categories:
16
and
Secured loans.
Unsecured loans.
According to section 5(a) of banking regulation act, 1949, a secured loan or

advances means a loan or advances made on the security of assets, the
market value0 of which is not at any time less than the amount of such loan or
advances, and unsecured loan or advances means a loan or advances not so
secured. Thus the distinguishing of the secured loan or advances are as
follows:
1. The loan must be made on the security of tangible assets, like goods and
commodities, land and buildings, gold and silver, corporate and
government securities etc. A charge on any such assets offered as
security must be created in favour of the banker.
2. The market value of such security must not be less than the amount of the
loan at any time till the loan is repaid. If the farmer falls below the latter
because of decline in the market prices, the loan is considering as partly
secured.
2)
Cash credit system:
Cash credit is one of the most important methods of lending in India. Under
this method, the banker fixes a limit for a customer, called the cash credit
limit. The limit is generally specified after taking into account the important
features of the borrowing concern, for example, production, sales, inventory,
past credit limits etc. The customer is allowed to withdraw money from cash
credit account according to his requirements. Similarly he may deposit money
in the account as and when surplus funds are available with him. The cash
credit account is, thus, an active and running account to which deposits and
withdraws may be effected frequently..
3)
Overdrafts:
Overdraft is an arrangement between a banker and his customer by which

the latter is allowed to withdraw over and above his credit balance in the
current account up to an agreed limit. This is only a temporary
accommodation usually granted against securities.
17
Temporary Overdraft: Banks, sometimes, grant unsecured overdraft for small amount to customers
having current account with them. Such customers may be government
employees with fixed income or traders. Temporary overdrafts are permitted
only where reliable source of funds is available to a borrower for repayment.
4) Bills discounted and purchased:

Banks grant advances to their customers by discounting bill of exchange or
promote. In this form of lending, the banker receives the interest in advance.
Banks, sometimes, purchase the bills instead of discounting them. The
bankers purchase bills, which are accompanied by documents of title to
goods such as bills of landing or railway receipt. The term 'Bills Purchased'
seems to imply that the bank becomes the purchaser/ owner of such bills.
But in almost all cases the bank holds the bill only as a security for the
advances.
Procedures of Loans:
Submit the Application
Appraisal of Loan
Documantation
Convene to Loan Application
To issue Draft or Pay Order

Figure No: 1.2 Procedures of Loans
18
Recovery procedure of loan: Recovery is an important part of the bank. Bank play a role of collects the
amount from saver and provide to borrowers. After giving loan, it returns with
in its fixed period, If it does not return then, it responsibility of banker to collect
the loan amount and which includes interest and principle amount. It is prime
responsibility of banker to collect loan banker takes the following action,
i) Give letter remainder with details of its account.
-
First remainder
Second remainder (To give information to the director who sign the loan
application).
Third/ Strong remainder.
ii) Through discussion.

iii) Recovery schemes.
iv) Legal provision.
Various loans:
1. Vehicle Loan
2. Machinery Loan,
3. Overdraft/Loan Against F.D
4. Consumer Loan
5. Education Loan
6. Business Loan
7. Cash Credit Loan
8. Housing Loan
9. Agriculture Alied Activities Loan
19
Various Loan Schemes:

1. Machinery Loan:
Limit pe r Borrow er
Table No: 1.1 Machinery Loan

Rs .1 200.00 Lacks
Rate of interest
New machinery loan
12.5%
New machinery embroidery loan
12.50%
Old machinery loan
12.50%
Margin:
20%
of
Profor ma
Inv oic e
amount
in
case
of
New
Machine ries .
20% in case of FFP
30% of Va luation in case o f Old Mach ineries
No. of EMIs:
72+6=78 (General)
66+6=72 (FFP)
72 (agains t Old Mach ineries)
54+6=60 (For Embroider y Mac hines
2. Education Loan:
Table No: 1.2 Education Loan
Limit per Borrow er
Rs .20.00 Lacks
Rate of interest
(a) In India
Upto Rs. 2,00,000/-
9.50%
Between Rs. 2,00,000 to Rs. 5,00,000
10.50%
Rs. 2,00,000/- to Rs. 5,00,000/-
11.00%
Above Rs. 5,00,000/-
11.50%
(b) For Foreign

For woman 0.50% less
20
Margin:
15% of quotation Amou nt. ( Sanctioned a mt= Rs. 5.00 La khs)
20% of quotation Amou nt ( Sanctione d a mt= Rs . 5 .0 0 Lakhs)
20% of Quotation Amount for ab road s tudy
No. of EMIs:
60(after completion of course)
3. Vehicle Loan:
Table No: 1.3 Vehicle Loan
Limit per Borrow er
I) For Persona l Use
Rs. 40.00 Lakhs
Ii) For Co mmercial Use
Rs. 100.00 Lakhs
Rate of interest
Two W heeler
11.00%
Three W heeler
11.00%
Four W heeler
11.00%
Margin:
Two W heeler
20% of Pro fo rma
Three W heeler
30% of Pro fo rma
Four W heeler
15% of Pro fo rma
Used Vehicle
30% of Valuation
No. of EMIs:
Two W heeler
60
Three W heeler
60
Four W heeler
48
Used Vehicle
48
21
4. Ove rdraft Loan against F.D

Table No: 1.4 Overdraft Loan against F.D
Limit per Borrow er
90% of Face Value +
Accrued Interest.
Rate of interest
Own FD/ family member
1.00%
Third party
2.00%
Margin Mone y:
10.00%
Margin:
10.00%
No. of EMIs:
Up to the maturit y o f F.D.
5. Business loan
Table No: 1.5 Business Loan
Limit per Borrow er
30% of Ac tual
Working Capital.
Rate of interest
18.00%
Margin:
10.00%
Period
Upto 24 Months
6. Cash credit loan

Table No: 1.6 Cash Credit Loan
Limit per Borrow er
Rs.800.00 Lack
Rate of interest
12.75%
Margin:
25 to 30% of Valuation of Stoc k, 50% of Boo k Debts
No. of EMIs
84
22
7. Factory Shed Loan

Table No: 1.7 Factory Shed Loan
Limit per Borrow er
Rs .600.00 Lacks
Rate of interest
13.00%
Margin
20% of Sale Deed or
25% of Construction Contract
40% of Valuation
No. of EMIs
84
8. Consumer Loan
Table No: 1.8 Consumer Loan
Limit per Borrow er
Rs.3,00 ,0 00.00
Rate of interest
13.00%
Margin
20% of Profor ma
No. of EMIs
50
9. Housing Loan
Table No: 1.9 Housing Loan
Limit per Borrow er
Rs .70.00 Lacks
Rate of interest
11.00%
Margin
20% of Sale Deed or
25% of Construction Contract
No. of EMIs
10.
84 to 144
Loan for Agriculture Allied Acti vitie s

Table No: 1.10 Loan For Agriculture Alied Activities
Limit per Borrow er
Rs .200.00 Lacks
Rate of interest
13.00%
Margin
20%
No. of EMIs
54=6=60
.
23
CHAPTER-2
INDUSTRY
PROFILE
24
BANKING INDUSTRY AT GLOBLE LEVEL

The payments and transaction-banking businesses are evolving at a dizzying
pace. The advance of digital technology, the entry of nontraditional players
with compelling value propositions, and changing preferences in the way
consumers pay for goods and services in their everyday lives have
considerably disrupted the industry landscape.
Which direction will consumer payment habits take in the future? How fast will
people and businesses adopt the latest digital technology and leave traditional
payment methods behind? How can banks not only handle the arrival of new
digital players but also use their own vast infrastructure and customer
knowledge to remain competitive in the shifting market climate? Will joining
forces with nontraditional players, rather than treating them as adversaries,
prove to be a more profitable path forward? These are among the most
pressing questions of the moment.
One industry characteristic that has not changed is that payments and
transaction-banking businesses remain critical elements of the banking
industry and the global financial-services landscape. Because they are a
critical source of reliable revenues and a linchpin of customer relationships
and loyalty, their importance will continue to grow. But competition will
intensify. In order to stand out in a very crowded field, payments players must
differentiate themselves digitally, refine their customer-centric strategies, and
raise their execution skills. Above all, they must listen to the customers voice
and react accordingly.
In the thirteenth edition of The Boston Consulting Groups Global Payments
report, we offer a comprehensive regional overview of the industry. We
discuss the findings of a recent BCG survey of nearly 5,500 consumers in four
countriesFrance, Germany, the U.K., and the U.S.that we conducted with
three goals in mind: discovering why the adoption of digital payments has
been relatively slow to date; identifying current consumer needs, preferences,
and pain points in payments; and formulating the actions that banks can take
to unlock the potential of consumer digital payments. (See "Unlocking the
25
Potential of Consumer Digital Payments.") We also take a detailed look at the

wholesale transaction-banking industry, specifically focusing on how banks
can beef up the treasury and trade services that they provide to their clients.
(See "Bolstering Treasury and Trade Services in Wholesale Transaction
Banking.") In preparing these articles, we have for the fourth consecutive year
collaborated with SWIFT, the global provider of secure financial-messaging
services.
This year also marks the second edition of BCGs Global Payments Model
Interactive, available on BCG perspectives.com, which explores how regions
and segments of the payments market will shift from year-end 2014 through
2024. This feature provides extensive global detail, including interactive charts
on the volume and value of noncash transactions as well as on revenues.
In the Global Payments model, payments revenues include direct and indirect
revenues generated by noncash payment services (excluding interbank
transfers). They are the sum of the following:
Account revenues: spread income on current account balances (also
known as
checking or demand-deposit accounts) and account
maintenance fees
Transaction revenues: transaction-specific revenues on cards (interchange
fees, merchant acquiring fees, and currency conversion fees for crossborder card transactions); fees per transaction on a percentage or fixed
basis for non card payment types; fees for overdrafts and nonsufficient
funds; and monthly or annual card membership fees
Credit card spread (net interest income) and penalty fees
Retail payments are transactions initiated by consumers, and wholesale

payments are transactions initiated by businesses or governments.
As always, our aim in Global Payments 2015: Listening to the Customers
Voice is to provide institutions that are active in the payments and transactionbanking businesses with a clear understanding of the fundamental changes
26
shaping the industry, as well as to offer recommendations on which specific

actions should be taken by various types of players in order to achieve or
maintain market-leading positions. Today more than ever, no institution can
afford to stand pat.
In India among emerging markets, India stands out for its bold governmentled initiatives to promote financial inclusion and digital innovation, which are
driving above-average growth in noncash payments. In 2014, India launched
a financial inclusion campaign that generated 125 million accounts within six
months. In addition, the Reserve Bank of India (RBI) has established new
guidelines to license so-called payment banksinstitutions whose objective is
to improve financial inclusion by providing basic banking and remittance
services to migrant workers, low-income households, small businesses, and
other underserved sectors. More than 40 entities have applied, including
startups and partnerships between leading telcos and banks, and the RBI has
in principle approved more than 10.
Such initiatives have fueled the strong adoption of digital payments and the
rise of new market entrants. Mobile-banking transactions have increased
more than threefold over the past two years, hitting 150 million in 2014. And
mobile-wallet transactions have overtaken m-banking transactions. Prepaid
payment-instruments providers such as Paytm and MobiKwik (which offer mwallets) have been gaining traction and have motivated banks to invest in
their own digital-payment offerings.
BANKING INDUSTRY AT NATIONAL LEVEL

As per the Reserve Bank of India (RBI), Indias banking sector is sufficiently
capitalised and well-regulated. The financial and economic conditions in the
country are far superior to any other country in the world. Credit, market and
liquidity risk studies suggest that Indian banks are generally resilient and have
withstood the global downturn well.
Indian banking industry is expected to witness the roll out of innovative
banking models like payments and small finance banks. 11 payment banks
27
are expected to be launched in 2016 and 2017. Separately about 10 small

finance banks are also expected to be launched. RBIs new measures may go
a long way in helping the restructuring of the domestic banking industry
INVESTMENTS/DEVELOPMENTS
Key investments and developments in Indias banking industry include:
FreeCharge, the wallet company owned by online retailer Snap deal, has
partnered with Yes Bank and MasterCard to launch Free Charge Go, a
virtual card that allows users to pay for goods and services at online shops
and offline retailers.
o Exim Bank of India and the Government of Andhra Pradesh has
signed a Memorandum of Understanding (MoU) to promote exports in
the state.
o Kotak Mahindra Bank Limited has bought 19.9 per cent stake in Airtel
M Commerce Services Limited (AMSL) for Rs 98.38 crore (US$ 14.43
million) to set up a payments bank. AMSL provides semi-closed
prepaid instrument and offers services under the Airtel Money brand
name.
Ujjivan Financial Services Ltd, a microfinance services company, has
raised Rs 312.4 crore (US$ 45.84 million) in a private placement from
33 domestic investors including mutual funds, insurance firms, family
offices and High Net Worth Individuals (HNIs)).
India's largest public sector bank, State Bank of India (SBI), has
opened its first branch dedicated to serving start-up companies, in
Bengaluru.
Global rating agency Moody's has upgraded its outlook for the Indian
banking system to stable from negative based on its assessment of five
drivers including improvement in operating environment and stable
asset risk and capital scenario.
The Reserve Bank of India (RBI) has granted in-principle licences to 10
applicants to open small finance banks, which will help expanding
access to financial services in rural and semi-urban areas.
28
IDFC Bank has become the latest new bank to start operations with 23
branches, including 15 branches in rural areas of Madhya Pradesh.
The RBI has given in-principle approval to 11 applicants to establish
payment banks. These banks can accept deposits and remittances, but
are not allowed to extend any loans.
The Bank of Tokyo-Mitsubishi (BTMU), a Japanese financial services
group, aims to double its branch count in India to 10 over the next three
years and also target a 10 per cent credit growth during FY16.
The RBI has allowed third-party white label automated teller machines
(ATM) to accept international cards, including international prepaid
cards, and said white label ATMs can now tie up with any commercial
bank for cash supply.
GOVERNMENT INITIATIVES
The government and the regulator have undertaken several measures to
strengthen the Indian banking sector.
The Reserve Bank of India (RBI) has allowed additional reserves to be part
of tier-1 or core capital of banks, such as revaluation reserves linked to

property holdings, foreign currency translation reserves and deferred tax
assets, which is expected to shore up the capital of state-run banks and
privately owned banks by up to Rs 35,000 crore (US$ 5.14 billion) and Rs
5,000 crore (US$ 734 million) respectively.
Ministry of Finance has planned to inject Rs 5,000 crore (US$ 734 million)
in eight public sector banks in order to boost their capital,

To reduce the burden of loan repayment on farmers, a provision of Rs
15,000 crore (US$ 2.2 billion) has been made in the Union Budget 2016-17
towards interest subvention.
Under Pradhan Mantri Jan DhanYojna (PMJDY), 210 million accounts!
have been opened and 174.6 million RuPay debit cards have been issued.
These new accounts have mustered deposits worth Rs 33,704 crore (US$
4.95 billion).
The Government of India is looking to set up a special fund, as a part of
National Investment and Infrastructure Fund (NIIF), to deal with stressed

29
assets of banks. The special fund will potentially take over assets which are
viable but dont have additional fresh equity from promoters coming in to
complete the project.
To provide relief to the state electricity distribution companies, Government
of India has proposed to their lenders that 75 per cent of their loans be
converted to state government bonds in two phases by March 2017. This
will help several banks, especially public sector banks, to offload credit to
state electricity distribution companies from their loan book, thereby
improving their asset quality.
Government of India aims to extend insurance, pension and credit facilities
to those excluded from these benefits under the Pradhan Mantri Jan
DhanYojana (PMJDY).
BANKING INDUSTRY AT STATE LEVEL

A. CONSTITUTION OF SLBC
The State Level Bankers Committee (SLBC) has been constituted in April
1977, as an apex inter-institutional forum to create adequate coordination
machinery in all States, on a uniform basis for development of the State.
SLBC is Chaired by the Chairman & Managing Director (CMD) of the
convenor bank/Executive Director of the convenor bank. It comprises
representatives of commercial banks, RRBs, State Cooperative Banks, RBI,
NABARD, heads of Government departments including representatives from
National Commission for Scheduled Castes/Tribes, National Horticulture
Board, Khadi & Village Industries Commission etc. and representatives of
financial institutions operating in a State, who come together and sort out
coordination problems at the policy implementation level.
B. CONDUCT OF SLBC MEETINGS
i) The SLBC meetings are required to be held regularly at quarterly intervals.
SLBC is Chaired by the Chairman & Managing Director (CMD) of the
convenor bank/Executive Director of the convenor bank and co-chaired by
Additional Chief Secretary or Development Commissioner of the State
30
concerned. High Level of participation in SLBC/UTLBC meetings ensure an

effective and desired outcome with meaningful discussion on issues of public
policy of both the Government of India and Reserve Bank of India.
ii) The Chief Minister/Finance Minister and senior level officers of the
State/RBI (of the rank of Deputy Governor / Executive Director) may be
invited to attend the SLBC meetings. Further, the State Chief Ministers are
encouraged to attend at least one SLBC meeting in a year.
C. AGENDA FOR SLBC MEETINGS
While all SLBCs are expected to address the problems particular to the
concerned states, some of the important areas which are common to all
States which the SLBCs should invariably discuss in the fora are as under:
Credit - Deposit Ratio of the State
Flow of credit to priority sector and weaker sections of the society
Assistance under Government sponsored schemes
Grant of educational loans
Progress under SHG - bank linkage
Discuss the problems faced by MSME sector
Steps taken for improving land record and recovery mechanism
Timely submission of data by banks
D. BANKING PENETRATION
i) Over the years, the focus of Lead Bank Scheme has shifted to inclusive
growth and financial inclusion. The use of Information Technology (IT) and
intermediaries has enabled banks to increase outreach, scale and depth of
banking services at affordable cost.
ii) SLBC convenor banks / lead banks are advised to focus attention on the
need for achieving 100% financial inclusion through penetration of banking
services in the rural areas. Such banking services may not necessarily be
extended through a brick and mortar branch but can be provided through any
31
of the various forms of ICT- based models, including through BCs. However,
ICT connectivity should not be an excuse for not pursuing financial inclusion
by commercial banks/RRBs.
E. SLBC - YEARLY CALENDAR OF MEETINGS
To
improve
the
effectiveness
and
streamlining
the
functioning
of
SLBC/UTLBC meetings, SLBC convenor banks have been advised to prepare

a yearly calendar of programme (calendar year basis) in the beginning of the
year itself, for conducting the meetings. The calendar of programme should
clearly specify the cut off dates for data submission to SLBC and acceptance
thereof by SLBC convenor. This yearly calendar should be circulated to all the
concerned as an advance intimation for blocking of future dates of senior
functionaries
of
various
agencies
like
Central
Government,
State
Governments, banks and RBI, etc. The SLBC/UTLBC meetings should be

conducted as per the calendar under all circumstances.
G. LIAISON WITH STATE GOVERNMENT
SLBC convenor banks are expected to co-ordinate the activities of all banks in
the State, discuss with the State Government officials the operational
problems in lending, extending necessary support for banking development
and to achieve the objective of financial inclusion..
8. ROADMAP FOR OPENING OF BANKING OUTLETS IN UNBANKED
VILLAGES
As one of the major recommendations of the High Level Committee was the
need to achieve 100% financial inclusion through penetration of banking
services in the rural areas, a phase wise approach has been adopted to
provide door step banking facilities in all the unbanked villages in the country.
In November 2009, under Phase-I, guidelines for preparation of Roadmap for
providing banking services in villages with population more than 2000 was
issued. After successful completion of Phase-I by March 2012, a roadmap to
32
provide banking services in unbanked villages with less than 2,000 population
has been rolled out in June 2012.
9. DIRECT BENEFIT TRANSFER
Direct Benefit Transfer (DBT) was rolled out by Government of India in
selected districts since January 2013. SLBC convenor banks were advised to
co-ordinate with the authorities to implement DBT. Banks were advised to
include the status of the roll-out of DBT as a regular agenda item for
discussion in SLBC meetings as part of Financial Inclusion/Direct Benefit
Transfer (DBT) implementation. take steps to complete account opening and
seeding Aadhaar number in all the DBT districts.
closely monitor the progress in seeding of Aadhaar number in bank
accounts of beneficiaries.
put in place a system to provide acknowledgement to the beneficiary of
seeding request and also send confirmation of seeding of Aadhaar

number.
form DBT Implementation Co-ordination Committee, along with State
Government department concerned, at district level and review the

seeding of Aadhaar number in bank accounts.
ensure that district and village wise names and other details of business
correspondents (BCs) engaged/other arrangements made by the bank is

displayed on the SLBC website.
10. CREDIT DEPOSIT RATIO
A. CD ratio of banks in Rural and Semi-Urban Areas
Banks have been advised to achieve a credit deposit ratio of 60% in respect
of their rural and semi-urban branches separately on an all-India basis. While
it is not necessary that this ratio should be achieved separately branch-wise,
district-wise or region-wise, the banks should nevertheless, ensure that wide
disparity in the ratios between different States / Regions is avoided in order to
minimise regional imbalance in credit deployment.
33
B. Implementation of the recommendations of Expert Group on CD Ratio

An Expert Group was constituted by Government of India to go into the nature
and magnitude of the problem of low credit deposit (CD) ratio across States /
Regions and to suggest steps to overcome the problem. The Expert Group
examined problems and causes of low CD ratio. As per the recommendations,
the CD ratio of banks should be monitored at different levels on the basis of
the following parameters:
Table No. 2.1 Bank Parameters
Indicator
Institution / Level
Individual banks at Head Office
Cu + RIDF
State Level (SLBC)
Cu + RIDF
District Level
Cs
Where,
Cu= Credit as per place of utilization
Cs= Credit as per place of sanction
RIDF= Total Resource support provided to States under RIDF
PESTEL ANALYSIS OF BANKING INDUSTRY
Figure No: 2.2 Pestel Analysis
34
1. Political analysis
The Indian banking Industry is mostly dependent on the monetary policy
decided by the RBI. Stricter regulations with respect to capital and liquidity
directly affects the business of banks. Bank need to adjust their interest rates
accordingly, which may or may not favor them. Banks are forced to lend as
per the guidelines of RBI that includes credit growth in all sectors. Budgetary
Measures announced by the government at the beginning of every financial
year also lay down guidelines to banks to lend or accept deposits. The
government can also increase credit in particular sectors such as increase in
farm credit, increase in infrastructure credit etc.
2. Economic analysis
Economic factors in the country also effect the Banking Industry both
favorably or unfavorably. When the economy is in good shape in terms of high
per capita income, good agriculture harvest and normal inflation, banks have
an edge as people are left with more money to deposit them with banks. This
helps in more capital formation as more deposits can be realized. Also In the
times of economic boom, more and more FDI is brought into India through
banking channels that actually improves business for banks and the economy
in general.
3. Social analysis
The Indian banking system has been progressing rapidly. There are still
several untapped rural markets, despite the large number of banks in India.
Many farmers still take loans from moneylenders at a very high interest rate
and small-scale industries continue to remain important for banks. However
changes could be expected in the near future for the unorganized sector. The
growing population of India is a great opportunity for Indian banks as a lot of
people in the country want to open a bank account and develop good savings
habits.
35
4. Technological analysis
Indian banking has been consistently working towards the development of
technological changes and its usage in its operations. With the application of
new and improved technologies banks are expected to reduce costs, time and
provide higher customer satisfaction. Internet banking or banking via the
phone can be considered a remarkable development in the banking industry.
Mobile banking enables customers to check their account balance, transfer
funds 24x7, bill payments, booking of bus/flight tickets, recharge prepaid
mobile and do a lot more effortlessly and securely. Banking through cell
phone benefits the banks too. It cuts down on the cost of in-person banking
and helps reduce headcount at branches.
5. Legal analysis
Banking Regulation Act- in 1949, the banking regulation act was enacted
which empowered RBI to regulation, control and inspect the bank in India.
Intervention by RBI- the RBI will intervene to smooth sharp movements in the
rupee and prevent a downward spiral in its value, but will balance with the
need to retain reserves in the event of prolonged turbulence.
CURRENT TRENDS IN BANKING INDUSTRY

1) Electronic Payment Services E Cheques
Now-a-days we are hearing about e-governance, e-mail, e-commerce, e-tail
etc. In the same manner, a new technology is being developed in US for
introduction of e-cheque, which will eventually replace the conventional paper
cheque. India, as harbinger to the introduction of e-cheque, the Negotiable
Instruments Act has already been amended to include; Truncated cheque and
E-cheque instruments.
2) Real Time Gross Settlement (RTGS)
Real Time Gross Settlement system, introduced in India since March 2004, is
a system through which electronics instructions can be given by banks to
transfer funds from their account to the account of another bank. The RTGS
36
system is maintained and operated by the RBI and provides a means of

efficient and faster funds transfer among banks facilitating their financial
operations. As the name suggests, funds transfer between banks takes place
on a Real Time' basis. Therefore, money can reach the beneficiary
instantaneously and the beneficiary's bank has the responsibility to credit the
beneficiary's account within two hours.
3) Electronic Funds Transfer (EFT)

Electronic Funds Transfer (EFT) is a system whereby anyone who wants to
make payment to another person/company etc. can approach his bank and
make cash payment or give instructions/authorization to transfer funds directly
from his own account to the bank account of the receiver/beneficiary.
Complete details such as the receiver's name, bank account number, account
type (savings or current account), bank name, city, branch name etc. should
be furnished to the bank at the time of requesting for such transfers so that
the amount reaches the beneficiaries' account correctly and faster. RBI is the
service provider of EFT.
4) Electronic Clearing Service (ECS)
Electronic Clearing Service is a retail payment system that can be used to
make bulk payments/receipts of a similar nature especially where each
individual payment is of a repetitive nature and of relatively smaller amount.
This facility is meant for companies and government departments to
make/receive large volumes of payments rather than for funds transfers by
individuals.
5) Automatic Teller Machine (ATM)
Automatic Teller Machine is the most popular devise in India, which enables
the customers to withdraw their money 24 hours a day 7 days a week. It is a
device that allows customer who has an ATM card to perform routine banking
transactions without interacting with a human teller. In addition to cash
withdrawal, ATMs can be used for payment of utility bills, funds transfer
between accounts, deposit of cheques and cash into accounts, balance
enquiry etc.
37
6) Point of Sale Terminal

Point of Sale Terminal is a computer terminal that is linked online to the
computerized customer information files in a bank and magnetically encoded
plastic transaction card that identifies the customer to the computer.
7) Tele Banking
Tele Banking facilitates the customer to do entire non-cash related banking on
telephone. Under this devise Automatic Voice Recorder is used for simpler
queries and transactions. For complicated queries and transactions, manned
phone terminals are used.
8) Electronic Data Interchange (EDI)
Electronic Data Interchange is the electronic exchange of business
documents like purchase order, invoices, shipping notices, receiving advices
etc. in a standard, computer processed, universally accepted format between
trading partners. EDI can also be used to transmit financial information and
payments in electronic form.
MAJOR PLAYERS IN BANKING INDUSTRY

As of 2005, Indian banking grew much stronger than its Asian counterparts, in
terms of both performance indices and product range. The continued
deregulation
of
deposits
greater understanding
of
and interest
capital
on
structure,
loans
have
led
increased competition
to
a
and
autonomy, as well as technological up gradation.

1. State Bank of India
The State bank of India (SBI) is the largest state-owned banking and financial
services company in India. It is the 29th most reputed company in the world
according to Forbes and it is the only bank to get featured in the coveted "top
10 brands of India" list in an annual survey conducted by Brand Finance and
The Economic Times in 2010. SBI posted a net profit of INR91.6 billion for
2009-10, registering a moderate growth of 0.49% as compared to 2008-09.
38
2. ICICI
ICICI bank has a network of 2,016 branches (as on 31 March 2010) and about
5,219 ATMs in India and presence in 18 countries. ICICI Bank the largest
issuer of credit cards in India offers a wide range of banking products and
financial services to corporate and retail customers. The net profit of the bank
for the financial year ending 2010 was INR40.25 billion, 7.1% higher than
2009.
3. HDFC Bank
In 2010, HDFC Bank had over 1,725 branches and 4,232 ATMs, in 779 cities
in India, and all branches of the bank were linked on an online real-time basis.
HDFC bank registered a net profit of INR29.4 billion as of March 31 2010, an
increase of 31% over 2009.
4. Axis Bank
Axis Bank is a financial services firm that began operations in 1994, after the
Government of India allowed new private banks to be established. At the end
of September 2010, the bank had a very wide network of more than 1,095
branches and over 4,846 ATMs. In the year 20092010, Axis bank posted a
net profit of INR25.1 billion, an increase of 38.5% over 2009.
MAJOR OFFERING OF BANKING INDUSTRY

The different products in a bank can be broadly classified into:
Retail Banking
Trade Finance
Treasury Operations
1. Retail Banking
Deposits
Loans, Cash Credit and Overdraft
Negotiating for Loans and advances
Remittances
39
Book-Keeping (maintaining all accounting records)
Receiving all kinds of bonds valuable for safe keeping
2. Trade Finance
Issuing and confirming of letter of credit.
Drawing, accepting, discounting, buying, selling, collecting of bills of

exchange, promissory notes, drafts, bill of lading and other securities.
3. Treasury Operations
Buying and selling of bullion, Foreign exchange.
Acquiring, holding, underwriting and dealing in shares, debentures, etc.
Purchasing and selling of bonds and securities on behalf of

constituents.
The banks can also act as an agent of the Government or local authority.
They insure, guarantee, underwrite, participate in managing and carrying out
issue of shares, debentures, etc.
40
CHAPTER-3
SUTEX CO-OP.
BANK LTD.
PROFILE
41
HISTORY OF THE SUTEX CO-OPERATIVE BANK LTD:

The Sutex Co-Operative Bank Ltd. has started on 15th May 1972 with 270
members and 10,000-share capital and funds of Rs. 523315/- in the ground
floor of The Surat Textile Market. After these, today it works in bank block
Surat Textile Market. It was established by the chairman Mr. Surajram H.
Bachakaniwala and vice-chairman late Mr. Ashabhai R. Patel and Late Mr.
Bhupatlal R. Dholabhai
(Regional Manager of DENA Bank), late Mr.
Bhagwandas Lekhadiya, late Mr. Manilal Chevali, Mr. Manilal Kapadiya, Mr.
Chaturbhai Tanawala, Mr. Mohanlal Nayak etc.,
The bank has eighteen Branches, one Administrative office and five ATM
service available to customer in various areas. In 2015-16 year to open a 3
new branch this branch is good working condition in very short period. The
bank has 217 employers to give training at Administrative office and 36
employers to other branches in previous year. The bank information
technology of working in LAN system at all branches.
The bank is good facility to provide senior citizen in fixed deposit. The facility
is 1% more interest on fixed deposit. The bank is economical, social,
educational, and medical activity with go ahead in surat city and surat district.
Bank has provided donation in year 2010-11 in various economical and social
activities. The bank has received audit class A, in last 39 year; it is a great
achievement of the bank. The bank provided in year 1994-95 continuously
15% dividend to share holders as per profit.
Under technology up-gradation scheme of Indian Governments textile
industry, Sutex Bank has got approval to provide direct advances and loans.
Sutex Bank was the first Bank to achieve such approval across the nation
under Urban Co-op. Banks Category. Currently Bank provides all kinds of
Banking facilities including CBS,E-statements, SMS alerts, RTGS/NEFT, Epayments, ATM's etc... In present bank thinks about Wireless Anywhere Bank
(satellite bank). The bank in year 2015-16 arban co-operative. Bank
federation through outstanding achievement for capital fund and business per
employee category avoid are achieve by bank.
42
The following member of the bank team at udhna main road branch has
played an important role in shaping my training by making this venture a
purposeful and an educational one.
STAFF AT SUTEX CO-OP.LTD. AT UDHNA MAIN ROAD BRANCH

Table No. 3.1 Staff At Sutex Co-Op.Ltd
NAME
POSITION
Mr. Dinesh T. Rana
Branch Manager
Mr. Pahadsingh M. Gohil
Manager Function
Mr. Ketal B. Bhatt
Officer
Mr. Harshad N. Mehta
Officer
Mr. Natvar M Patel
Clerk
Mr. Paresh B. Jaihindam
Clerk
Mr. Nitesh J. Pancholi
Peon
Mr. Dinesh M.Borse
Peon
VISION
The bank aims to double its business in next 5 years. Expansion plan is there
for opening of 3 more branches in prime locations of the city. Main focus is to
cover the areas which are not covered.
The adoption of all modern
technologies for better service will be priority of the bank in future. The
environment of all the branches will match an international standard.
Bank is poised to move towards needs based and behaviour based

segmentation in the next few years. Recounting that the number of mobile
phone users is increasing day by day, bank has already started services of
mobile banking and will shortly commence net banking. The bank will expand
its horizons beyond the traditional banking products and enter into newer
ventures to increase its bottom line combines with cost rationalization.
43
Present Situation of THE SUTEX CO-OPERATIVE BANK Ltd.

Name
: - "The SUTEX Co-operative Bank Ltd."
Registered No.
: - UBD.AH.GUJ.19P DTD 19/02/2002
Registered Office
: - 2nd Floor, Surajram Bachkaniwala Bhavan,

Nr.Navjivan Circle, Udhna Magdalla Road.,
Surat-2632519
Administrative Office:- Shop.No-26,27, Exotica Commercial Hub,

Jahangirpura,
Surat 2919773
Board of Directors
Table No. 3.2 Board of Directors
No.
Name
Position
1.
Shri Nimeshbhai S. Bachkaniwala
Chairman
2.
Shri Arunkumar B. Kanodiya
Vice Chairman
3.
Shri Kamal Vijay R. Tulsian
Executive Chairman
4.
Shri NirmalKumar Vrajlal Vakharia
Jt. Exec. Chairman
5.
Shri Ravindrabhai B. Dholabhai
Dir. & Secretary
6.
Shri Prabhatsinh F. Solanki
Dir. & Secretary
7.
Shri Kartik U. Hathiwala
Dir. & Secretary
8.
Shri Jyotindrabhai B. Lekhadia
Director
9.
Shri Manharlal R. Bachkaniwala
Director
10.
Shri Hasmukhlal B. Mistry
Director
11.
Shri Sharadchandra C. Kapadia
Director
12.
Shri Raj M. Kapadia
Director
13.
Shri Ashvinbhai J. Desai
Director
14.
Shri Bhikhubhai Mohanbhai Desai
Director
15.
Shri Dilipbhai J Dhamanwala
Director
44
BRANCHES OF SUTEX CO-OPERATIVE BANK LTD.

Table No. 3.3 Branches
HEAD OFFICE
Udhna Magdalla Road
Surajram Bachkaniwala Bhavan,
Nr.Navjivan Circle, Udhna Magdalla Road., Surat-395017
BRANCHES
1. Ring Road
2. Parvat Patiya
Surat Textile Market,
First Floor, Surbhi Complex,
Ring Road, Surat-395002
Parvat Patiya, Surat-394210
3. Station Road
4. City light Road
Meghani Mensons,
Hirapanna Shopping Center,
Station Road, Surat-395003.
City Light Road, Surat-395007
5. Katargam
6. Salabatpura
163-B G.I.D.C.,
Piperdi Sheri,
Katargam, Surat-395004.
Salabatpura Surat-395003
7. Gopipura
8. Pandesara
Subhas Chowk,
Plot No. 196-c, Keval Commercial
Gopipura, Surat-395001
Complex,Pandesara, Suart-395007
9. Rander Road
10. Sahara Darwaja
Ashirwad Society,
N.T.M. Market,
Nr. Ashiewad Society,
Sahara Darwaja
Palanpur, Surat-395009
Surat-39500
11. Varachha Road
12. Uthna Main Road
Shreyas Diamond Center,
Shrinath Complex
Varachha Road, Surat-395006
Uthna Main Road, Surat-394210
13. Athwalines
14. Adajan
Anjana Salakha,
646, Block No-B 2, First Flour,
Athwalines,
Fant side, J-9,
Surat-395001
Adajan, Surat
45
15. Udhna Magdalla Road
16. Vesu
Surajram Bachkaniwala Bhavan,
Shop No-G/1, Shubh Universal,
Udhna Magdalla Road,
Nr. VIjaya Laxmi Hall,
Surat-395019
Vesu,Surat
17. Sachin G.I.D.C
18. Jahangirpura
Plot No.1008, G.I.D.C,
Shop.No-26,27
Sachine,
Exotica Commercial Hub,
Surat-394230
Jahangirpura, Surat
FINANCIAL HEALTH OF BANK

Table No. 3.4 Financial Health of Bank
Particular
31/03/2015
31/03/2016 Increase/Decrease (%)
Share Capital
31.94
33.73
+ 5.61 %
Reserve Fund
88.33
102.53
+ 16.07%
Working Capital
1400.31
1648.61
+ 17.73%
CRAR
13.07
13.77
Deposit
1247.83
1476.79
+ 18.35%
Advance
841.37
882.96
+ 4.94%
Total Business
2089.20
2359.75
+ 12.95%
Net profit
15.68
17.03
+ 8.61%
Gross NPA
2.12
0.49
- 76.78
Net NPA
Audit Class
Branches
15
18
+3
46
ORGANOGRAM
Chairman
Vice-Chairman
Secretary
Chief Executive Officer
Personnel Manager
Credit Manager
Invest Manager
Manager
Officer
Clerk
Peon & Other Staff

Figure No. 3.1 Organogram
47
DIVISION/ DEPARTMENT
Administative Office
Loan Department
Share Department
Investment Department
Computer Department
Data Center
HR Department
Figure No: 3.2 Division/ Department
48
SWOT ANALYSIS
Strengths
1. It is one of the best services- provide banks.
2. There is availability of enough funds.
3. The bank have efficient work force.
4. It is fully computerized.
5. It takes care of employers.
6. It has well and growth oriented future city.
7. The bank is running legally in all process.
Weaknesses
1. Expenses and operating costs are very high.
2. There is less emphasis on marketing
3. Over burden of work
4. There is no proper planning to face to face competitors.
Opportunities
1. There Is more opportunity for starting new branch in surat; due to high
population
2. The bank can widen the scope to all over Gujarat.
3. It has an opportunity to become a schedule bank in near of
competition.
Threats
1. All Co-operative banks of Surat are opening more branches so there is
a threat of competition.
2. As the banks are becoming Multi state it has more threat of
competition.
49
MARKET POSITION
Indian banking industry is expected to witness the roll out of innovative
banking models like payments and small finance banks. 11 payment banks
are expected to be launched in 2016 and 2017. Separately about 10 small
finance banks are also expected to be launched. RBIs new measures may go
a long way in helping the restructuring of the domestic banking industry.
Market Size
The Indian banking system consists of 26 public sector banks, 25 private
sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban
cooperative banks and 93,550 rural cooperative banks, in addition to
cooperative credit institutions. Public-sector banks control nearly 80 percent of
the market, thereby leaving comparatively much smaller shares for its private
peers.
List of Rank Wise Co-op Bank Ltd. In Surat

Table No. 3.5 Rank of co-op bank ltd
Top 10 Banks
Total Deposit
Total
Total
(Rs. In crore)
Advance
Business
31/03/16
(Rs. In crore)
31/03/16
The Surat Peoples co-op bank Ltd.
3180.30
2167.58
5347.88
The Sutex co-op bank Ltd
1477.00
833.00
2360.00
Prime co-op bank Ltd
890.55
570.36
1460.91
Varachha co-op bank Ltd
875.47
491.54
1367.01
Surat National co-op bank Ltd
539.98
374.27
914.25
Surat Marcantile co-op bank Ltd
275.88
188.70
464.58
Akhand Anand co-op bank Ltd
110.00
62.66
172.66
Associate co-op bank Ltd
100.37
45.34
145.71
Panchsheel Merc. Co-op bank Ltd
85.03
54.56
139.59
79.92
22.81
102.73
10 Taxtile co-op bank Ltd
50
CHAPTER-4
LITERATURE
REVIEW
51
MORRISSEY THOMAS F. Journal of Finance. (1971) The Demand For

Mortgage Loans And The Concomitant Demand For Home Loan Bank
Advances By Savings And Loan Associations, The article examines the
relationship between the demand for mortgage loans and demand for Federal
Home Loan Bank (FHLB) advances on the part of savings and loan
associations in the U.S. The author constructs a loan-offer function for
savings and loans, and confirms it using actual yearly data for new loan
acquisitions for the period 1964-1969. Analysis is presented illustrating
conditions under which a bank will seek additional funds from the FHLB, and
implications for FHLB policy are discussed.
Kwon Jene K., Thornton Richard M. Feb (1972) The Federal Home Loan
Bank and Savings and Loan Associations: An Examination of the
Financing of Federal Home Loan Bank Advances. The Review of
Economics and Statistics, 97-100. This article focuses on federal home
loan bank and savings and loan associations. The main emphasis of this note
is to focus attention on a hitherto overlooked aspect of Federal Home Loan
Bank (FHLB) operations, which may be partly responsible for accentuating the
hardships of the Savings and Loan (S and L) industry during tight money
periods. A primary function of the FHLB system is to advance funds to
member S and L associations as unusual demands for funds arise. These
funds are usually obtained in the open market by floating consolidated bonds.
If substitution exists between FHLB bonds and S and L deposits, it means
they compete simultaneously in the open market causing disinter mediation of
savings. The basic form of a demand for saving deposits and FHLB bonds is
a linear version of a stock adjustment approach to the demand for assets. In
estimating the demand function for deposits at FSLIC insured S and L's, two
alternative measures of deposits were used, the first difference of Gross
Deposits and Net New Savings.
52
O. Emre Ergungor (2001) Theories of bank loan commitments.

Economic Review-Federal Reserve Bank of Cleveland, 37(3), 2. A loan
commitment is an agreement by which a bank promises to lend to a customer
at pre specified terms while retaining the right to renege on its promise if the
borrower's creditworthiness deteriorates. The contract also specifies the
various fees that must be paid over the life of the commitment. Loan
commitments are widely used in the economy. As their use has spread, a rich
literature has evolved to explain why they exist, how they are priced, and how
they affect the risk of the bank and the deposit insurer. This article
summarizes what we have learned on these issues. Its main insight is that
loan commitments are an optimal tool for risk sharing and for resolving
informational problems. The author also points out some issues that the
current literature leaves unexplained.
HALLORAN JOHN A (1979) The article explains a theoretical framework

for assessing the effect of the Federal Home Loan Bank .The advance
system on the savings and loan (S&L) industry in the United States. When
open market interest rates are higher than the interest rate limits on S&L
savings shares, government assistance to S&L has been in the form of loans,
which are financed by the sale of open market debt. A supply and demand
model is used to determine conditions that result in flow or cost of funds to the
industry if there had been no government intervention.
MARIS BRIAN A, (1981) FHLB Advances and the Cost and Availability
of Funds to S&Ls: A Comment." The Journal of Finance 36.4 (1981): 971974 Comments are presented on the article "FHLB Advances and the Cost
and Availability of Funds to S&Ls," by John Halloran, published in a previous
issue. The article in question presented a theoretical model used to analyze
the impact of actions by the Federal Home Loan Bank (FHLB) system on the
savings and loan (SL) industry. The author attempts to show how Halloran's
conclusions for the impact of a deposit rate ceiling and FHLB advances are
inconsistent with his assumptions. The author criticizes Halloran's assumption
53
that the FHLB will attempt to cause an increase in funds at SLs beyond the
level of deposits that would exist in a free-market equilibrium, noting that this
result is impossible given the model presented.
Mays, Elizabeth ,de Marco, Edward J (2003) The Demand for Federal
Home Loan. Bank Advances by Thrift Institutions: Some Recent
Evidence." Real Estate Economics 17.3 (1989): 363-379. This paper
develops a model of the demand for Federal Home Loan Bank (FHLB)
advances by thrift institutions. It expands on a model developed in Kent [1983]
by accounting for net worth in the balance sheet constraint and for borrowing
in excess of the advances limit. The demand equation is estimated using
pooled time-series and cross-sectional data for individual thrift institutions
over the period 19791986. The results indicate that in addition to the
traditional use of advances as a source of liquidity, advances are a particularly
attractive source of funds for poorly capitalized institutions. Further, thrifts'
demand for advances is responsive to the price of advances, mortgage
interest rates, the dividend rate on FHLB stock, and rates on substitute
sources of funds.
Ducy Mary E, Iqbal, Zahid (2003) Effects of FHLB advances on

commercial bank loans and profitability in Texas. Bank Accounting &
Finance, 16(6), 24-32.Presents a study that investigated the effects of the
expansion of the Federal Home Loan Banks (FHLB) on commercial bank
loans and profitability in Texas. Methodology; Relation between declining
bank liquidity and FHLB advances; Analysis of the return on assets and return
on equity in borrowing banks.
Rogers Michael F (2003) This article describes how to provide a current
benefit to selected family members while still treating other family
members fairly. With interest rates at historically low levels, interfamily loans
to a child with greater current needs than his or her siblings may make sense
as part of a family's estate plan. The problem with a substantial advance
54
inheritance is that the parents' ultimate estate may not be large enough to
leave an equal amount to the other children at the later death of both parents.
If the parents should get into financial difficulties, the loan is an asset their
creditors might want to attach, and it's an asset that should be included on
any financial statement the parents prepare. A case study regarding the issue
was discussed and contemplated a single loan to one child without
forgiveness of the principal during life or at death, and the strategy could be
coupled with a systematic gifting program for all children.
Jimenez and Saurina (2003) Collateral, type of lender and relationship

banking as determinants of credit risk. Journal of banking & Finance,
28(9), 2191-2212. used logic model for analyzing the determinants of the
probability of default (PD) of bank loans in terms of variables such as
collateral, type of lender and bank-borrower relationship while controlling for
the other explanatory variables such as size of loan, size of borrower, maturity
structure of loans and currency composition of loans. Their empirical results
suggested that collateralized loans had a higher PD, loans granted by savings
banks were riskier and a close bank-borrower relationship had a positive
effect on the willingness to take more risk. At the same time, size of bank loan
had a negative effect on default while maturity term of loans.
Mohan (2003) Non-performing loans and terms of credit of public sector

banks in India: An empirical assessment. Occasional Papers, 24(3), 81121. In the banking literature, the problem of NPLs has been revisited in
several theoretical and empirical studies. A synoptic review of the literature
brings to the fore insights into the determinants of NPL across countries. A
considered view is that banks lending policy could have crucial influence on
non-performing loans (Reddy, 2004). Reddy (2004) critically examined
various issues pertaining to terms of credit of Indian banks. In this context, it
was viewed that the element of power has no bearing on the illegal activity. A
default is not entirely an irrational decision. Rather a defaulter takes into
account probabilistic assessment of various costs and benefits of his
55
decision. conceptualized lazy banking while critically reflecting on banks

investment portfolio and lending policy. In a study of institutional finance
structure and implications for industrial growth emphasized on key lending
terms of credit, such as maturity and interest-terms of loans to corporate
sector. The Indian viewpoint alluding to the concepts of credit culture owing
to Reddy (2004) and lazy banking owing to Mohan (2003a) has an
international perspective since several studies in the banking literature agree
that banks lending policy is a major driver of non-performing loans
Tarron Khemraj
,Sukrishnalall Pasha
(2004)
Determinants
of
Nonperforming Loans in Guyana. In Financial Deepening and Post-Crisis

Development in Emerging Markets (pp. 169-187). The study explores the
determinants of nonperforming loans (NPLs) in the Guyanese banking sector.
The panel econometric modelcontrolling for macroeconomic and firm-level
variablesfinds an appreciation in the real effective exchange rate increasing
NPLs and GDP growth decreasing NPLs. We also find that banks, which
charge relatively higher interest rates and have relaxed lending standards, are
more likely to incur higher levels of NPLs. However, contrary to previous
studies, our results do not support the view that bank size impacts
significantly on NPLs.
Nash Claire Y., Quinn Tina (2004) Gross Income Includes Returned Fees;
Advance Litigation Costs Are Loans. Journal of Accountancy, Vol. 197
Issue 3, p67-69. 3p.
This article discusses gross income and advance
litigation costs. Section 61 of the U.S. Internal Revenue Code defines gross
income as all income from all sources, unless specifically excluded by law. In
general, a taxpayer must include in gross income any increase in wealth he or
she realizes in the period realization occurs. The claim of right doctrine says
realization takes place whenever a taxpayer receives an amount without
restriction as to how he or she can dispose of it. This happens when the
recipient has no definitive obligation to repay the amount. Therefore,
compensation for services is income when received, even if the taxpayer later
56
voluntarily returns the payment to the employer. In the case of John M. and
Carolyn Merritt, residing in Oklahoma City, John was a licensed attorney and
sole owner of JMA & Associates, a personal service law corporation. The law
firm generally entered into two types of contingent fee contracts. Clients
reimbursed the firm for litigation costs it had advanced and then paid the firm
a fee equal to 50 percent of the net recovery remaining. On July 6, 1998, the
Internal Revenue Service determined a deficiency in the Merritts' 1994 joint
federal income tax liability.
L.K. Vong (2005) Loans and profitability of banks in Macao. AMCM

Quarterly Bulletin, 2, 91-107 Over the past few years, banks in Macao have
been facing new challenges in their operating environment. Interest rates
have reached historically low levels, competition has been mounting in the
local financial market, and most notably, demand for domestic credit has
flattened out. These forces have squeezed the interest spread
between
lending and borrowing, which used to be the single most important

determinant of profitability of banks operating in Macao. However, although
the interest margin of the local banking sector has been reducing in the past
four years, the operating profit has risen since 2002. This paper tries to
examine the credit environment of Macao and the ways for the Macao
banking sector to weather these influences and sustain its profitability. It is
found that banks in Macao, like their counterparts in advanced economies,
have diversified into areas of personal finance which are fee- or commissionbased, and become relatively less dependent on traditional credit operations.
Reichert, Charles J. (2006) The article presents a case study of marine

engine manufacturer Ingmar Products. to discuss whether the transfer of
cash by shareholders to a closely held corporation is considered a loan or a
capital contribution. In a dispute between Indmar and the U.S. Internal
Revenue Service, the Tax Court ruled that the advances made by the
stockholders were not loans. However, the Sixth Circuit Court of Appeals
57
applied the Roth Steel factors and ruled for the taxpayer, emphasizing that
shareholder advances to a closely held corporation will be treated as loans.
Euroweek. (2006) The article presents news briefs on syndicated loans
in Thailand. Euroweek., Issue 974, Special Section p1-9. 2p. The article
presents news briefs on syndicated loans in Thailand. Advance Info Service
has continued its Bt12.5 billion five year facility loan despite the sale of Shin
Corp., the largest shareholder of AIS, to Temasek Holdings. Oil and gas
company PTT is close to naming a club of lenders for its $300 million seven
year deal.
Frame, W. Scott , Hancock, Diana ,Passmore, Wayne (2008) Federal

home loan bank advances and commercial bank portfolio composition."
Journal of Money, Credit and Banking 44.4 (2012): 661-684.
This paper considers the role of Federal Home Loan Bank (FHLB) advances
in stabilizing their commercial bank members' residential mortgage lending
activities. Our
theoretical
model
shows that using mortgage-related
membership criteria or requiring mortgage-related collateral does not ensure

that FHLB advances will be put to use for stabilizing members' financing of
housing. Using panel vector auto regression (VAR) techniques, we estimate
recent dynamic responses of U.S. bank portfolios to FHLB advance shocks,
bank lending shocks, and macroeconomic shocks. Our empirical findings
suggest that FHLB advances are just as likely to fund other types of bank
credit as to fund single-family mortgages.
Stojanovic Dusan ,
Vaughan Mark D , Yeager Timothy J (2008) Do
Federal Home Loan Bank membership and advances increase bank risktaking?Journal of Banking & Finance, 32(5), 680-698. Since the early
1990s, commercial banks have turned to Federal Home Loan Bank
(FHLBank) advances to plug the gap between loan and deposit growth. Is this
trend worrisome? On the one hand, advances implicitly encourage risk by
insulating borrowers from market discipline. On the other, advances give
borrowers greater flexibility to managing interest rate and liquidity risk. And
58
access to FHL Bank funding encourages members to reshape their balance

sheets in ways that could lower credit risk. Using quarterly financial and
supervisory data for banks from 1992 to 2005, we assess the effect of FHL
Bank membership and advances on risk. The evidence suggests liquidity and
leverage risks rose modestly, but interest-rate risk declined somewhat.
Dutta and Basak (2008)
suggested that Co operative Banks should
improve their recovery performance adopt new system of computerized

monitoring of loans, implement proper prudential norms and organize regular
workshops to sustain in the competitive banking environment
Autio Minna , Wilska Terhi-Anna , Kaartinen Risto , Lhteenmaa Jaana

(2009) T The use of small instant loans among young adultsa gateway
to a consumer insolvency?." International Journal of Consumer Studies
33.4 (2009): 407-415. the aim of this paper is to study 18- to 29-year-old
Finnish consumers' use of instant small loans (i.e. SMS loan) and other
consumer credit services that have increased notably in the past few years.
We examine what kind of expenditures instant credit is used for and focus
also on young consumers' financial situation and their perceptions of
themselves as money handlers. The research method is quantitative, and
data are derived from an open online survey ( n = 1610). Our results reveal
that consumer credit is used by young people in all income brackets and
employment positions. However, there is a clear connection between certain
life-course stages (young, single parent), financial positions (low income),
employment situations (marginal) and the propensity to take instant loans and
consumer credit. The young people who take an instant loan once are likely to
do it again. Typical purposes of use included buying alcohol, cigarettes and
partying. For some consumers, the use of small loans is part of controlled and
economical use of money. However, particularly in the low-income brackets, it
is also common to buy food and to repay credit or interest. Young people, who
use instant loans recognize flaws in their money management and see
themselves as wasteful consumers more often than those who do not use
59
instant loans. On the basis of this empirical study, it is unquestioned that

young people's consumer education needs to be strengthened. In Finland,
this need has already been recognized in both consumer policy and teacher
education.
Consumers' Research Magazine. (2010) Examines how the lingering
recession and credit crunch in the United States are now fueling a
national epidemic of advance-fee loan scams. In such a scam,
`guaranteed' loans are promised in exchange for up-front payments often
ranging from as little as $100 or up to $100,000 or more. Inside the scams;
Loan scams and the law; Six ways to protect oneself.
Vetrivel T., vetri Devasenathipathi (2010) The purpose of this study is

to investigate the differing preference and satisfaction level of
customers towards Loans, Deposit schemes, Insurance and Value-added
services rendered by various banks in Coimbatore and Erode cities. By using
non-probability convenient sampling, 300 samples were taken at various
branches and ATM centers, etc. Simple percentage and chi-square test
results revealed that Business and Vehicle Loans are fast moving and
customers had overall satisfaction. Bank loans, bank deposit schemes
showed a positive response and in value-added services, customer
preference for Net banking got the least rank. Among four basic services,
Insurance services have been paid limited attention and the study
recommends special attention on banking insurance service satisfaction and
the implications were recorded for future researchers.
Villa Christophe , Yusupo Nurmukhammad (2011) Recent Advances in

Lending
to
the
Poor with
Asymmetric
Information:
journal of
Development Studies. Sep2011, Vol. 47 Issue 9, p1371-1390. 20p.

Microfinance institutions have successfully extended unsecured small loans to
poor and opaque borrowers at the bottom of the economic pyramid. This
success is largely due to innovative financial contracts that impose joint
60
liability and create dynamic incentives to mitigate the effects of asymmetric

information. Given recent advances in microfinance contracts, there is a need
to map the theoretical developments. This article aims to accomplish that by
performing a critical literature survey of micro lending contracts, focusing on
joint liability and dynamic incentives, bringing out some of the deficiencies of
contract-theoretic propositions that cannot effectively account for the social
mission of microfinance.
Venkateswarlu P (2015) Loan Assets Classification of Scheduled

Commercial Banks in India." CLEAR International Journal of Research in
Management, Sciences & Technology 5.10 Indian banking sector is facing
a serious problem of NPA. The extent of NPA is comparatively higher in public
sectors banks. To improve the efficiency and profitability, the NPA has to be
scheduled. Various steps have been taken by government to reduce the NPA.
It is highly impossible to have zero percentage NPA. But at least Indian banks
can try competing with foreign banks to maintain international standard. The
study observed that there is increase in advances over the period of the
study. It is found on the basis of analysis that there is considerable
development in the management of nonperforming assets in India. The study
finally viewed that the prudential norms and other schemes has rushed banks
to improve their performance and accordingly resulted into orderly down of
NPA as well as enhancement in the financial strength of the Indian banking
structure.
Working Papers -- U.S. Federal Reserve Board's Finance & Economic
Discussion Series. (2007) The article focuses on the role of the traditional
product of the Federal Home Loan Banks (FHLBs) in stabilizing the residential
mortgage lending activities of the commercial bank members. It says that the
dynamic responses of the U.S. bank portfolios to FHLB advanced shocks
were estimated using panel vector auto regression (VAR) techniques. It adds
that the FHLB advances were used by some banks to reduce variability in
commercial and industrial lending in response to macroeconomic shocks.
61
Foster Harvey (2015) Efficacy of cognitive behavioural therapy for sleep

improvement in patients with persistent delusions and hallucinations
2(11), 975-983 The article focuses on the need of using integrated
technology for lending services of credit unions (CUs). It states that according
to Mortgage Bankers Association's Quarterly Performance Report operational
costs of mortgages have increased substantially due to regulatory
requirements and mentions that U.S. Consumer Financial Protection Bureau
requires access to an easily audited chain of information on loans. It notes
that by using technology CUs can streamline data across departments.
Deborah Elkins (2015) This action against PHEAA and other private and
state-created student-loan entities under the False Claims Act, 31 U. S.
Challenging that from 2002 through 2006, the defendants fraudulently claimed
hundreds of millions of dollars in federal student-loan interest-subsidy
payments to which they were not entitled. As this case has proceeded up and
down the appeals ladder, the other defendants have settled or were
dismissed from the case, and PHEAA is now the sole remaining defendant.
The only issue in this appeal is whether PHEAA qualifies as an arm of the
state or alter ego of Pennsylvania such that it cannot be sued under the
FCA. We conclude that PHEAA is not an arm of Pennsylvania, and we
therefore reverse the district courts order granting summary judgment in favor
of PHEAA and remand for further proceedings on the merits of Obergs FCA
claims against PHEAA.
Zou Yonghua (2015) Reexamining the Neighborhood Distribution of
Higher Priced Mortgage Lending: Global versus Local Methods. Growth
and Change, 46(4), 654-674. This paper demonstrates the application of the
local geographically weighted regression ( GWR) method to mortgage
studies, using the Philadelphia metropolitan statistical area ( MSA) as a case
study. Previous related studies widely employed the global, ordinary least
square ( OLS) method to examine the spatial distribution of subprime/higher
priced mortgages. The OLS method, however, masks the spatial variations in
62
mortgage distributions. The innovative GWR method not only provides a

significant improvement in model fitness but also reveals that the statistical
relationships between neighborhood characteristics and the prevalence of
higher priced mortgage shares are spatially varied. In addition, the GWR
method can bring forward potential implications for place-based policy
making. Improving upon previous methodologies in mortgage studies, this
paper shows that the GWR method can advance our understanding of how
neighborhood environments are associated with mortgage lending patterns.
Davidson Travis, Simpson W.jan (2016) The Federal Home Loan Bank
system (FHLB) has evolved into a major source of liquidity for the
banking system. The demonstrated ability to borrow over a trillion dollars in
world financial markets based on an implied U. S. Treasury guarantee. The
FHLB loans the borrowed funds to commercial banks at reduced rates that
are not adjusted for the risk of an individual bank. Moral hazard could cause
member banks using FHLB loans to increase financial leverage and exposure
to high risk assets. Conversely, the FHLB offers banks additional liquidity and
specialized debt instruments that help them manage interest rate risk. We use
dynamic panel generalized method of moments estimation to test the relation
between FHLB advances and bank risk. We find that if banks have relatively
normal default probabilities, advances are not associated with increased bank
risk but, instead, advances are related to decreased interest rate risk.
However, when bank default probabilities are high, our evidence suggests
advances and higher bank risk are related.
Hunt Richard American Banker (2016) Conference on Neuraxial Anesthesia

and Anticoagulation). Regional anesthesia and pain medicine, 28(3), 172197. The article discusses a small-dollar lending proposal introduced by the
U.S. Consumer Financial Protection Bureau (CFPB). Banks hoped that the
proposal would give flexibility to financial institutions to provide consumers
with better credit options. The benefits of offering deposit advance products to
63
consumers are identified, including greater transparency, positive feedback

from borrowers and low default rates.
FRAME W. SCOTT , HANCOCK DIANA , PASSMORE WAYNE Jun( 2016)

Federal home loan bank advances and commercial bank portfolio
composition." Journal of Money, Credit and Banking 44.4 (2012): 661684 .Federal Home Loan Bank (FHLB) advances are a source of
government-sponsored liquidity intended to encourage housing finance,
although 'community financial institutions' may use such funds more
generally. Because money is fungible, it is an empirical question as to how
advances are actually employed. Using panel-vector auto regression
techniques, we estimate dynamic responses of U.S. commercial bank
portfolios
to:
FHLB
advance
shocks,
bank
lending
shocks,
and
macroeconomic shocks. We find that FHLB advances: (i) are used as a

general source of liquidity by U.S. commercial banks of all sizes and (ii)
dampen the sensitivity of mortgage lending to macroeconomic shocks at small
banks.
64
CHAPTER-5
RESEARCH
METHODOLOGY
65
1) RESEARCH PROBLEM:
The title of the study is customer preferences towards loan and advances at
sutex co-operative bank Ltd
The Sutex Co-operative bank is one of the known co-operative banks in surat
city. In recent due to entrance of private competitions among bank has
increased. Every bank has started offering their loans into various sector at
really competitive rates. It has become difficult to attract respondent in recent
times. Knowing existing respondents view towards current offering of loan and
advances get really good insight about performance of the same.
2) RESEARCH OBJECTIVES:
To study the Banking Industry is customer preferences towards loan and
advances at Sutex co-operative bank Ltd.
To know different type of loans preferred by different sets of customers.
To analysis which factor influences the customer most while taking loan
from the bank
To analyze the growth of loan and advances of Sutex bank.
3) RESEARCH DESIGN:
The research design is the conceptual structure within which research is
conducted
A. Type of Research Design
My study is Descriptive in nature because:
It is describes the business or market characteristics.
It seeks to determine the answers to who, what, where, when and how
questions. It is based on some previous understanding of the matter.
66
Descriptive Research Design is in this study because it will ensure the

minimization of bias and maximization of reliability of data collected. Research
has got a very specific objective and clear cut data requirements.
B. Sampling
Population
All the customer of who are taken loan for Sutex Co-operative bank are part
of population for this study.
Sample Size
For the purpose of proper survey, there is need of perfect research
instruments to find out sample size for more accurate result customer
preferences towards loan and advances at Sutex co-operative bank Ltd. The
sample size taken in the study is 200 Loan account Customer of Sutex cooperative bank Ltd.
Sampling Method
This study uses Non probability convenience sampling method because
sample elements are selected based on my own convenience.
Sample Area
Sample was taken from the city of Surat.
Gopipura Branch (150)
Jahangirpura Branch (50)
Rander Branch (50)
Sampling Unit:
The Study population includes the customers of bank and Sampling Unit for
Study was Individual loan account Customer.
67
Sampling Frame:
The sampling frame of this study is customer of Sutex Co-operative Bank
Ltd.
4) DATA COLLECTION TOOL:
i. Primary Sources of Data:

The main tool in gathering primary data was structured questionnaire which
was collected from 200 Loan account customer.
ii. Secondary Sources of Data:
The data required to carry out the research will be obtained through
secondary sources. It was collected from internal sources. The secondary
data was collected on the basic of office records and Annual report of The
Sutex Co-operative Bank Ltd.
5) DATA COLLECTION METHOD:

There are many methods for data collection like survey, focused group,
interview, observation etc This study uses survey as method for data
collection because Survey is the gathering information through respondents
for any pre-established research objective.
6. TOOLS FOR ANALYSIS:

The analysis of research is conduct chi square test and Alpha test by using
SPSS and Excel for analysis of data.
68
7. BENEFIT OF RESEARCH:
1) It may help in getting practical knowledge of loan system.
2) It get information and understanding about various factor influencing on
customer to purchase of loan scheme of bank.
3) It also helps to know getting idea about the loan structure and loan
procedures.
4) Get knowledge about general activity of banking.
8. LIMITATION OF THE STUDY:

1) Sample size is limited to 200 Respondents in specific branch only. The
sample size may not adequately represent the national market.
2) The time period for the analysis is not sufficient for detailed analysis; this
may be limitation of the study.
3) Effects of various political, legal and other macro environment factors are
ignored.
69
CHAPTER-6
DATA
ANALYSIS
70
A. PRIMARY DATA ANALYSIS

1. Age:
Table No. 6.1 Age
Age
No. of Respondents
% of Respondents
18-25 years
22
11.0%
26-30 years
46
23.05
31-40 years
57
28.5%
41-50 years
58
29.0%
51-60 years
16
8.0%
Above 60 years
0.5%
200
100.0%
Total
Figure No. 6.1 Age
Age
1%
8%
11%
18-25 years
26-30 years
23%
29%
31-40 years
41-50 years
51-60 years
Above 60 years
28%
INTERPRETATION:
From the above table and figure, it can be seen that 11% of the respondents
having age of 18-25 years, 23% Respondents having age of 26-30 years,
28% Respondents having age of 31-40 years, 29% Respondents having age
of 41-50 years, 8% Respondents having age of 51-60 years and 1%
Respondents having age of above 60 years.
71
2. Gender
Table No. 6.2 Gender
Gender
No. of Respondents
% of Respondents
Male
147
73.5%
Female
53
26.5%
Total
200
100.0
Figure No. 6.2 Gender
Gender
27%
Male
73%
Female
INTERPRETATION:
From the above table and Figure, showing detailed regarding
percentage on gender wise. In that 73% respondents are male and
27% respondents are female.
72
3. Education
Table No. 6.3 Education
Education
No. of Respondents
% of Respondents
Undergraduate
93
46.5%
Graduate
78
39.0%
Post Graduate
29
14.5%
Total
200
100.0%
Figure No. 6.3 Education
Occupation
15%
46%
Undergraduate
Graduate
39%
Post Graduate
INTERPRETATION:
From the above table and figure, it can be seen that 46.5 % of the
respondents were having undergraduate, while 39% of the respondents were
having Graduate and only 15% of the respondents having Post Graduate.
73
4. Occupation
Table No. 6.4 Occupation
Occupation
No. of Respondents
% of Respondents
Salaried
88
44.0%
Professional
16
8.0%
Businessmen
47
23.5%
Government Employee
13
6.5%
Student
10
5.0%
House Wife
26
13.0%
Total
200
100.0%
Figure No. 6.4 Occupation
Occupation
Salaried
13%
Professional
5%
Businessmen
7%
44%
Government
Employee
23%
Student
8%
House Wife
INTERPRETATION:
From the above table and figure, it can be seen that 44% of the respondents
were salaried, while 8% respondents were professional, while 23%
respondents were Businessman, while 7% respondents were Govt. employee,
while 13% respondents were Housewife, while only 5% of them were Student.
74
5. Annual Family Income

Table No. 6.5 Annual Family Income
No. of Respondents
% of Respondents
Less than Rs. 3,00,000
88
44.0%
Rs. 3,00,000-Rs. 5,00,000
16
8.0%
Rs. 5,00,000- Rs. 10,00,000
47
23.5%
More than Rs. 10,00,000
13
6.5%
Total
10
5.0%
Table No. 6.5 Annual Family Income
7%
19%
46%
Less than Rs. 3,00,000

Rs. 3,00,000-Rs. 5,00,000
28%
Rs. 5,00,000- Rs. 10,00,000

More than Rs. 10,00,000
INTERPRETATION:
From the above table and figure showing detailed regarding percentage of
respondents of response from annual income wise. 46% of the respondents
having annual family income less than Rs. 3,00,000 while only 7% of them
having annual family income are more than Rs. 10,00,000.
75
6. Which type of Loan have you taken from the SUTEX COOPERATIVE Bank Ltd.? (Multiple Tike Possible)
Table No. 6.6 Type of Loan
Type of Loan
No. of Respondent
Machinery Loan
27
Vehicle Loan
47
18
Business Loan
21
Cash Credit Loan
40
Education Loan
38
Factory Shed Unit Loan
10
Consumer Loan
19
Housing Loan
38
Agriculture Alied Activity Loan
13
Figure No. 6.6 Type of Loan
Type of Loan
Machinery Loan
5%
14%
10%
Vehicle Loan
17%
7%
4%
14%
Overdraft Loan against

F.D
Business Loan
8%
15%
Cash Credit Loan
6%
Education Loan
INTERPRETATION:
From the above table and figure, it can be seen that 47 of the Respondents
have taken vehicle loan and very few 13 and 10 respondents have taken
Agriculture Alied Activity Loan and Factory Shed Unit Loan.
76
7. Rate the preference level which kind of loan you

preferred? [5= Highly Preferred, Preferred 4=, 3= Neutral,
2=Less Preferred, 1= Not at all Preferred]
Table No. 6.7 preference level of Loan

Highly
Preferred
Neutral
Preferred
Less
Not at
Preferred
all
Preferred
Machinery Loan
34
21
23
39
83
Vehicle Loan
29
50
23
39
59
Overdraft Loan
16
17
32
54
81
24
25
28
39
84
25
37
28
38
72
Education Loan
29
48
27
34
62
Factory Shed
17
16
20
46
101
Consumer Loan
16
23
26
38
97
Housing Loan
27
33
25
24
91
Agriculture Alied
15
14
21
30
120
against F.D
Business Loan
Cash Credit
Loan
Unit Loan
Activity Loan
77
Figure No. 6.7 preference level of Loan
Machinery Loan
34
21 23
Vehicle Loan
29
50
16 17
Business Loan
24
Cash Credit Loan
25
Education Loan
29

Consumer Loan
27
37
Preferred
59
81
39
28
48
84
38
27
46
26
72
34
62
101
38
33
15 14 21
39
54
28
16 23
0
Highly Preferred
32
25
83
23
17 16 20
Housing Loan
39
25
97
24
30
50
120
100
Neutral
91
150
Less Preferred
200
250
Not at all Preferred
INTERPRETATION:
From the above table and chart, it can be seen that 83 and 59 respondents
were that machinery loan and vehicle loan currently being offered by bank
respectively not at all important. Around 34 and 29 respondents were that
machinery loan and vehicle loan currently being offered by bank respectively
is highly important.
78
8. What the amount of loan and advances you have borrowed?
Table No. 6.8 loan and advances Borrowed

Criteria
No. of Respondents
% of Respondents
Below Rs. 5,00,000
109
54.5%
Rs. 5,00,000- Rs. 10,00,000
55
27.5%
Rs. 10,00,000- Rs. 20,00,000
33
16.5%
Above 20,00,000
1.5%
200
100.0%
Total
Figure No. 6.8 loan and advances Borrowed
Loan Borrowed
2%
Below Rs. 5,00,000
17%
Rs. 5,00,000- Rs. 10,00,000
27%
54%
Rs. 10,00,000- Rs. 20,00,000

Above 20,00,000
INTERPRETATION:
From the above data it shows that 109 customers are amount borrowed for
loan below Rs. 5,00,000 , 55 customers are amount borrowed for loan Rs.
5,00,000- Rs. 10,00,000, 33 customers are amount borrowed for loan Rs.
10,00,000- Rs. 20,00,000 and only 3 customer are amount borrowed for loan
Above 20,00,000.
79
9.
Do you think that the processing charges of the SUTEX Cooperative Bank were high?
Table No. 6.9 Processing charges

Criteria
No. of Respondents
% of Respondents
Yes
35
17.5%
No
165
82.5%
Total
200
100.0%
Figure No. 9.6 Processing charges
Processing charges
17%
Yes
No
83%
INTERPRETATION:
From the above data it shows that 35 customers think about the high
processing charges of The Sutex co-operative bank and 165 customer are
dont think that high processing charges of The Sutex co-operative bank Ltd.
80
10. Rate the Following feature did you like most in Loan segment of
SUTEX Co-operative bank Ltd.? [1=Highly Important, 2=Important,
3=Neutral, 4=Less important, 5=Not at all important]
Table No. 6.10 Loan Features

CRITERIA
Less Paper Work
18
76
25
19
62
Attractive Interest Rate
17
78
25
28
52
Simple Processing
19
74
29
33
45
Transparency
13
70
53
30
34
Interest Rebate
16
73
57
23
31
Easy Documentation
19
70
53
30
28
Good customer Support
25
63
57
25
30
Complex Procedure
28
72
49
32
19
Different Repayment
34
55
50
32
29
No Repayment Charges
31
60
40
36
33
Long Waiting For
25
69
63
25
18
29
67
42
24
38
42
56
49
28
25
39
44
41
35
41
Options
Sanctioning Loan
Flexibility to Choose an
EMI base Loan
Longer tenure Loan for
ease of repayment
Specially Design Facilities
for Self employed
81
Figure No. 9.10 Loan Features
Features
Highly Important
Important
Neutral
Less Important
Not at all Important
Less Paper Work
18
76
25 19
17
78
25
Simple Processing
19
74
29
Transparency 13
70
62
28
52
33
53
45
30
34
Interest Rebate
16
73
57
23
31
Easy Documantation
19
70
53
30
28
Good customer Support
25
63
57
25
30
Complex Procedure
28
72
Different Repayment Options
34
55
50
31
60
40
Long Waiting For Sactioning Loan
25
69
Flexibility to Choose an EMI base Loan
29
67
Longer teure Loan for ease of repayment
42
Specially Design Facilities for Self employed
39
49
32
42
33
25 18
24
49
41
19
29
36
63
56
44
32
28
35
38
25
41
INTERPRETATION:
From the above table and figure, it can be seen that 18 and17 respondent
were that less paper work and attractive interest rate currently being offered
by the bank respectively Highly important. Around 60 and 52 respondent were
that less paper work and attractive interest rate currently being offered by the
bank respectively not at all important.
82
11. Rate the various factor you consider for taking a loan in SUTEX
CO-OPERATIVE Bank Ltd.? [5= Highly Preferred, Preferred 4=, 3=
Neutral, 2=Less Preferred, 1= Not at all]
Table No. 6.11 Loan Factors

CRITERIA
interest rate offered
78
65
43
Repayment Period
59
87
38
12
Efficient Customer Service
50
92
49
Security Demanded
28
88
60
16
EMI Scheme offered by
28
90
66
13
Time Period
39
91
57
Documentation
46
87
54
Terms and Condition
32
78
57
28
Fees and Charges
46
83
50
16
Easy Sanctioning of loan
35
88
47
22
Staff Support
65
76
44
12
Bank
83
Figure No. 6.11 Loan Factors
Factor
Not at all Preferred
Less Preferred
interest rate offered 5 9

Repayment Period 4 12
Efficient Customer Service 45
Security Demanded
43
38
49
50
60
66
57
Documentation 6 7
54
28
90
28
39
87
46
57
78
50
8 22
88
91
Terms and Condition 5 28
Staff Support 312
59
92
Time Period 6 7
Highly Preferred
78
87
EMI Scheme offred by Bank 3 13
Easy Sanctioning of loan
Preferred
65
8 16
Fees and Charges 5 16
Neutral
83
47
32
46
88
44
76
35
65
INTERPRETATION:
From the above table and figure, it can be seen that 5 and 4 respondents
were that interest rate Offered and Repayment period currently being offered
by the bank respectively not at all important. Around 78 and 59 respondents
interest rate Offered and Repayment period currently being offered by the
bank respectively highly important.
84
12. How did you come to know about loans and advances of SUTEX
Co-operative Bank Ltd.?
Table No. 6.12 To know about loans and advances

Criteria
No. of Respondents
% of Respondents
90
26
60
14
190
10
200
45.0
13.0
30.0
7.0
95.0
5.0
100.0
Friends/Relatives
Trust
Easy availability loan
Advertisement
Total
System
Total
Figure No. 6.12 To know about loans and advances

7%
5%
45%
30%
Friends/Relatives
Trust
Easy availability loan
Advertisement
13%
Others
INTERPRETATION:
out of 200 customer, 90 said come to know about friends/Relatives, 26 said
Trust, 60 said easy availability loan and rest said advertisement.
85
13. Have you face any difficulties while taken a loan from SUTEX Cooperative Bank Ltd.?
Table No. 6.13 face any difficulties while taken a loan
Criteria
No. of Respondents
% of Respondents
Yes
30
15.0
No
170
85.0
Total
200
100.0%
Figure No. 6.13 face any difficulties while taken a loan
you face any difficulties while taken a

loan
15%
Yes
No
85%
INTERPRETATION:
From the above data it shows that 15% customers face difficulty while taken a
loan. Whereas 85% of them have not face any difficulty for taken a loan.
86
14. Have you taken loan from other than SUTEX Co-operative Bank
Ltd.?
Table No. 6.14 Taken loan from other Bank

Criteria
No. of Respondents
% of Respondents
Yes
47
23.5
No
153
76.5
Total
200
100.0%
Figure No. 6.14 Taken loan from other Bank
23%
Yes
No
77%
INTERPRETATION:
From the above data Out of 200 customers shows that, 47 would like to take
other than The SUTEX Co-operative Bank Ltd. and 153 customers are taking
loan from The SUTEX Co-operative Bank Ltd.
87
15. Do you consider SUTEX Co-operative Bank Ltd. as one of

alternative for loan and advances in future if you have need?
Table No. 6.15 one of alternative for loan and advances in

future if need
Criteria
No. of Respondents
% of Respondents
Yes
143
71.5
No
57
28.5
Total
200
100.0%
Figure No. 6.15 one of alternative for loan and advances in

future if need
one of alternative for loan and advances

in future if need
29%
Yes
71%
No
INTERPRETATION:
From the above data it shows that 71% customers says that as one of
alternative for loan and advances in future. Whereas 29% have not one of
alternative for loan and advances in future need.
88
Hypothesis Testing By Using Chi-Square Test

Hypothesis
HO = There is no Significant Difference between Respondents Occupation
and amount of loan and advances borrowed
H1 = There is Significant Difference between Respondents Occupation and
amount of loan and advances borrowed
Table No. 6.16 amount of loan and advances borrowed Cross tabulation of
Occupation
Amount of loan and advances borrowed
Salaried
Below Rs.
Rs. 5,00,000-
Rs. 10,00,000-
Above
5,00,000
Rs. 10,00,000
Rs. 20,00,000
20,00,000
Total
56
21
11
88
Professional
16
Businessmen
15
16
14
47
Govt. Employee
13
Student
10
18
26
109
55
33
200
Occupation
House Wife
Total
Table No. 6.17 amount of loan and advances borrowed Cross tabulation of
Occupation
Chi-square Tests
Pearson Chi-Square
Value
df
Asymp. Sig. (2-sided)
26.397a
15
.034
INTERPRETATION:
From the above table, it can be seen that the significant value is 0. 034 which
is less than 0.05 it means null hypothesis is rejected. Hence, it is statistically
prove that there is significant difference between Respondents Occupation
and amount of loan and advances borrowed.
89
Hypothesis
HO = There is no Significant Difference between Respondents Gender and to
know about loan and advances
H1 = = There is Significant Difference between Respondents Gender and to
know about loan and advance
Table No. 6.18 To know about loan and advance Cross tabulation of Gender
To know about loan and advances
Gender
Friends/
Relatives
Trust
61
29
90
22
4
26
Male
Female
Total
Easy
availability
loan
47
13
60
Advertisement
Total
10
4
14
140
50
190
Table No. 6.19 To know about loan and advance Cross tabulation of Gender
Chi-square Tests
Pearson Chi-Square
Value
df
3.927a

.269
INTERPRETATION:
is greater than 0.05 it means null hypothesis is accepted. Hence, it is
statistically prove
that
there
is
no significant
difference between
Respondents Gender and to know about loan and advances
90
Hypothesis
HO = There is no Significant Difference between Respondents Age and Face
any difficulties while taken a loan
H1 = There is Significant Difference between Respondents Age and Face any
difficulties while taken a loan
Table No. 6.20 Face any difficulties while taken a loan Cross tabulation of
Age
Face any difficulties

while taken a loan
Age
Yes
3
6
7
11
3
0
30
18-25 years
26-30 years
31-40 years
41-50 years
51-60 years
Above 60 years
Total
Total
No
19
40
50
47
13
1
170
22
46
57
58
16
1
200
Table No. 6.21 Face any difficulties while taken a loan Cross tabulation of
Age
Chi-square Tests
Pearson Chi-Square
Value
df
1.569a
.905
INTERPRETATION:
is greater than 0.05 it means null hypothesis is accepted. Hence, it is
statistically prove
that
there
is
no significant
difference between
Respondents Age and Face any difficulties while taken a loan.
91
FACTOR ANALYSIS
KMO AND BARTLETT'S TEST
Table No. 6.22 KMO AND Bartlett's Test
Kaiser-Meyer-Olkin Measure of
0.887
Sampling Adequacy.
Bartlett's Approx. Chi-Square
Test of
Sphericity
df
Sig.
1877.006
91
0
INTERPRETATION:
From the above table, it can be seen that Kaiser sampling adequacy is more
than 0.05. It means accept the value. So it said that be confident that factor
analysis is appropriate for these data. The significance value is 0 it means
sum of partial correlations is larger relative to the sum of correlations,
indicating diffusion in the pattern of correlations.
COMMUNALITIES
Table No. 6.23 Communalities
Rate the Following feature did you like
most in Loan segment of the Sutex Cooperative Bank Ltd.?- Less Paper Work
Initial
1.000
Extraction
.850
1.000
.815
Simple Processing
1.000
.853
Transparency
1.000
.645
Interest Rebate
1.000
.629
Easy Documentation
1.000
.748
Good Customer Support
1.000
.691
Complex Procedure
1.000
.751
1.000
.657
1.000
.612
92
Long Waiting For Sanctioning Loan
1.000
.468
1.000
.511
Longer Tenure Loan For ease of

Repayment
1.000
.685
Specially Design Facilities for Self

Employed
1.000
.582
Extraction Method: Principal Component Analysis
INTERPRETATION:
Table no. 6.22 shows that communalities before and after extraction. Is shows
that the initial value is all the variance is common; therefore, before extraction
communalities are all 1, So it said that extraction value associated with all 1.
TOTAL VARIANCE EXPLAINED
Co
mp
one
nt
1
2
3
4
5
6
7
8
9
10
Table No. 6.24 Total Variance Explained

Initial Eigenvalues
Extraction Sums of
Rotation Sums of
Squared Loadings
Squared Loadings
Total % of
Cumul Total % of
Cumu Total % of
Cumu
Variance ative
Varia lative
Varia lative
%
nce
%
nce
%
6.95
49.643 49.643 6.95 49.64 49.64 4.55 32.49 32.49
3
3
7
7
1.37
9.791
59.434 1.37 9.791 59.43 2.48 17.72 50.21
1
1
4
1
6
1.17
8.405
67.839 1.17 8.405 67.83 2.46 17.62 67.83
7
7
9
7
2
9
0.87
6.255
74.093
6
0.75
5.363
79.457
1
0.67
4.838
84.295
7
0.52
3.742
88.036
4
0.40
2.885
90.921
4
0.32
2.3
93.221
2
0.29
2.078
95.299
1
93
11
12
13
14
0.23
3
0.18
4
0.13
2
0.11
1.663
96.962
1.312
98.274
0.941
99.215
0.785
100
INTERPRETATION:
From the above table shows that the actual factor that were extracted. It show
at the rotation sums of squared loading. These 3 factors with eighenvalues is
greater than 1. The % of variance column said that how much of the total
variability.
Y
X
Chart No. 6.1 Scree plot
INTERPRETATION:
From the above chart It show that looks like the slope of this curve levels out
after just two factors, rather than three.
94
COMPONENT MATRIX
Table No. 6.25 Component Matrix
Component
1
2
0.839
0.827
Simple Processing
0.815
Transparency
0.791
Interest Rebate
0.757
Easy Documentation
0.778
0.749
Complex Procedure
0.532
0.678
0.749
0.656

0.669

Repayment
Employed
0.594
0.509
0.578
Extraction Method: Principal Component Analysis.

a. 3 components extracted.
95
Apply Alpha Test

Table No. 6.26 Apply Alpha Test
Repayment specially
design
Loans features
1. Less Paper Work
2. Attractive Interest
Rate
2. Simple Processing
1. Longer Tenure Loan For

ease of Repayment
Specially Design Facilities
for Self Employed
Complex procedure
1. Complex procedure
3. Transparency
4. Interest Rebate
5. Easy
Documentation
6. Good Cu3stomer
Support
7. Complex Procedure
8. Different
Repayment Options
9. No Repayment
Charges
10. Flexibility to Choose
an EMI base Loan
11. Longer Tenure Loan
For ease of
Repayment
RELIABILITY STATISTICS
1. Loan Features
Table No. 6.27 Loan Features
Cronbach's Alpha
.923
No. of Items
12
2. Repayment specially design

Table No. 6.28 Repayment specially design
Cronbach's Alpha
.703
No. of Items
2
96
3. Complex procedure
Table No. 6.29 Complex procedure
Cronbach's Alpha
.656
No. of Items
1
INTERPRETATION:
Table no. 6.30 shows details regarding that how closely related a set of items
are as under three groups. The first group alpha coefficient for the 12 items is
0.923, suggesting that the items have relatively high internal consistency,
second group alpha coefficient for the 2 items is 0.703 and third group alpha
for the only 1 items is 0.656. So it shows that all three alphas are accepted.
ROTATED COMPONENT MATRIX

Table No. 6.30 Rotated Component Matrix
Component
1
2
Rate the Following feature did you like most in
0.87
Loan segment of the Sutex Co-operative Bank
Ltd.?- Less Paper Work
0.856
Simple Processing
0.889
Transparency
0.69
Interest Rebate
0.67
Easy Documentation
0.691
0.52
0.567
0.603
Complex Procedure
0.844
0.703
97
0.616
0.524
Longer Tenure Loan For ease of Repayment
0.778
Specially Design Facilities for Self Employed
0.755

Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 6 iterations.
INTERPRETATION:
From the above table, it shows that Rotated Component Matrix shows the
factor loadings for each variable. It shows that the high component value of all
3 components loaded most strongly.
COMPONENT TRANSFORMATION MATRIX

Table No. 6.31 Component Transformation Matrix
Component
0.758
0.45
0.473
-0.549
0.831
0.088
-0.353
-0.326
0.877

COMPONENT SCORE COEFFICIENT MATRIX

Table No. 6.32 Component Score Coefficient Matrix
Component
1
2
3
0.275
-0.001
-0.185
0.269
98
-0.026
-0.154
Simple Processing
0.301
-0.027
-0.208
Transparency
0.155
-0.002
-0.005
Interest Rebate
0.15
-0.108
0.092
Easy Documentation
0.15
-0.199
0.186

Complex Procedure
0.068
-0.217
-0.154
-0.03
0.265
0.538
-0.108
0.01
0.37
-0.028
0.153
0.128
-0.142
0.321
0.069
0.026
0.211
-0.039

-0.058
Repayment
-0.113
Employed
0.422
-0.129
0.444
-0.109
Component Scores.
COMPONENT SCORE COVARIANCE MATRIX

Table No. 6.33 Component Score Covariance Matrix
Component 1
1
1
0
0
2
0
1
0
3
0
0
1
Extraction Method: Principal
Component Analysis.
Rotation Method: Varimax with Kaiser
Normalization.
Component Scores.
99
B. SECONDARY DATA ANALYSIS

Various Customers Borrowing Loans data of The Sutex co-operative
Bank: (Rs. In lakhs)
Table No. 6.34 Loans data
Particular
2012
2013
2014
2015
2016
Machinery Loan
18917.21
18440.65
19739.03
29359.88
32740.74
Vehicle Loan
2586.40
2032.54
1704.26
1458.55
1394.62
2585.40
3345.11
4546.80
4263.28
3815.27
Business Loan
595.74
565.29
425.89
219.50
284.38
Cash Credit Loan
1156.05
2145.00
3898.02
5350.95
6966.04
Education Loan
314.05
324.42
317.92
364.72
376.85
9856.21
10440.73
17941.91
19109.85
24779.17
Consumer Loan
602.73
1,080.22
704.42
908.53
1008.26
Housing Loan
1465.52
1664.22
1301.98
1626.74
1718.18
Overdraft
Loan
against F.D
Factory
Shed
Loan
Unit
Figure No. 6.16 various loans sanctioned by bank

35000
30000
25000
2012
20000
2013
15000
2014
10000
2015
5000
2016
100
INTERPRETATION:
In 2016, the bank has provides more loan is machinery loan, i.e. 32740.74
Vehicle loan is high in 2012-13 and decreases in last 3 years.
Overdraft Loan against F.D is decreases in 2016 compared to previous 4
years.
Cash Credit Loan and Factory Shed Unit Loan increase by year to year.
Sutex bank has lower focus on Education loan.

Education loan account decreased by 0.10 % in 2011 and 0.13 % in 2013
respectively.
Consumer Loan is high in 2013 compare to other 4 years i.e. 1,080.22
From the year 2012 to 2016 the sanctioning of the Machinery Loan and
Factory Shed Unit Loan is very good as compare to other loan.
101
FINDINGS
102
A. Findings from the banking industry

From the industry profile it has been found that the thirteenth edition of The
Boston
Consulting
Groups
Global
Payments
report,
we
offer
comprehensive regional overview of the industry. We discuss the findings of a

recent BCG survey of nearly 5,500 consumers in four countriesFrance,
Germany, the U.K., and the U.S.
To reduce the burden of loan repayment on farmers, a provision of Rs 15,000
crore (US$ 2.2 billion) has been made in the Union Budget 2016-17 towards
interest subvention. Under Pradhan Mantri Jan DhanYojna (PMJDY), 210
million accounts! have been opened and 174.6 million RuPay debit cards
have been issued. These new accounts have mustered deposits worth Rs
33,704 crore (US$ 4.95 billion).
B. Findings from the Sutex Co-operative Bank Ltd.

From the Sutex Co-Operative Bank Ltd. it has been found that has started on
15th May 1972 with 270 members and 10,000-share capital and funds of Rs.
523315/- in the ground floor of The Surat Textile Market. The bank has
eighteen Branches, one Administrative office and five ATM service available
to customer in various areas. In 2015-16 year to open a 3 new branch this
branch is good working condition in very short period.
The bank has 217 employers to give training at Administrative office and 36
employers to other branches in previous year. The bank is good facility to
provide senior citizen in fixed deposit. The facility is 1% more interest on
fixed deposit. The bank provided in year 1994-95 continuously 15% dividend
to share holders as per profit. It has been found that the bank information
technology of working in LAN system at all branches.
103
C. Findings from the Primary Data Analysis

In primary data researcher as a tool for analysis use gathering structured
questionnaire which was collected from 200 Loan account customer.
It has been found that the lowest respondent belongs to above 60 years of
age group and a highest respondent belongs to 41-50 years of age group. It
can be found that 93 of the respondents were having undergraduate, while 78
of the respondents were having Graduate and only 29 of the respondents
having Post Graduate.
From the types of loans that 47 of the Respondents have taken vehicle loan
and very few 13 and 10 respondents have taken Agriculture Alied Activity
Loan and Factory Shed Unit Loan. And also found that 83 and 59
respondents were that machinery loan and vehicle loan currently being
offered by bank respectively not at all important. Around 34 and 29
respondents were that machinery loan and vehicle loan currently being
offered by bank respectively is highly important.
From the chi-square test Respondents Occupation and amount of loans and
advances borrowed for the customers it finds that the significant value is
0.034 which is less than 0.05 it means null hypothesis is rejected. It has been
founds that from the chi-square test Respondents Gender and to know about
loan and advances that the significant value is 0. 269 which is greater than
0.05 it means null hypothesis is accepted. And it has been also founds that
from the chi-square test Respondents Age and Face any difficulties while
taken a loan Respondents that the significant value is 0. 905 which is greater
than 0.05 it means null hypothesis is accepted.
It has been found that out of 200 customer, 90 said come to know about
friends/Relatives, 26 said Trust, 60 said easy availability loan and rest said
advertisement. And Out of 200 customers shows that, 47 would like to take
other than The SUTEX Co-operative Bank Ltd. and 153 customers are taking
loan from The SUTEX Co-operative Bank Ltd.
104
From the factor analysis it has been found that the Component Matrix through
find out three different alphas in three groups. First group alpha coefficient for
the 12 items is 0.923, second group alpha coefficient for the 2 items is 0.703
and third group alpha for the only 1 item is 0.656. That all three alphas are
accepted.
D. Findings from the Secondary Data Analysis

In the secondary data was collected on the basic of office records and Annual
report of The Sutex Co-operative Bank Ltd.
It can be found that the Various Customers Borrowing Loans Data of the
Sutex Co-Operative Bank ltd. in year 2012-2016. In 2016, the bank has
provides more loan is machinery loan, i.e. 32740.74. Vehicle loan is high in
2012-13 and decreases in last 3 years. Overdraft Loan against F.D is
decreases in 2016 compared to previous 4 years. Education loan account
decreased by 0.10 % in 2011 and 0.13 % in 2013 respectively. Consumer
Loan is high in 2013 compare to other 4 years i.e. 1,080.22
It has been found that for the year 2012 to 2016 the sanctioning of the
Machinery Loan and Factory Shed Unit Loan is very good as compare to
other loan.
105
CONCLUSIONS
106
It is concluded that from the industry profile in the thirteenth edition of The
Boston Consulting Groups Global Payments report offer a comprehensive
regional overview of the industry in four countriesFrance, Germany, the
U.K., and the U.S.that we conducted with three goals in mind: discovering
why the adoption of digital payments has been relatively slow to date;
identifying current consumer needs, preferences, and pain points in
payments; and formulating the actions that banks can take to unlock the
potential of consumer digital payments.
It is concluded that from the Sutex Co-Operative Bank Ltd. The bank is
economical, social, educational, and medical activity with go ahead in Surat
city and Surat district. Bank has provided donation in year 2010-11 in various
economical and social activities. The bank has received audit class A, in last
39 year; it is a great achievement of the bank. The bank provided in year
1994-95 continuously 15% dividend to share holders as per profit.
conclude that the Sutex Co-operative Bank Ltd.
It is
Provide 21 loan to its
customers. It can be found that the bank staff are good and help to customer
of any difficulty of loan processes.
It can be concluded that the Sutex bank has under technology up-gradation
scheme of Indian Governments textile industry; Sutex Bank has got approval
to provide direct advances and loans. Sutex Bank was the first Bank to
achieve such approval across the nation under Urban Co-op. Banks
Category. Currently Bank provides all kinds of Banking facilities including
CBS, E-statements, SMS alerts, RTGS/NEFT, E-payments, ATM's etc...
The conclusion from the primary data says that majority of customers who
have taken loans from the Sutex Co-operative Bank Ltd, they are highly
preferred customer service and time period. It concluded that by Using ChiSquare test Respondents Occupation and amount of loans and advances
borrowed for the customers that the null hypothesis is rejected. So it is
statistically proved that there is significant difference between Respondents
Occupation and amounts of loans and advances borrowed.
107
By Using Chi-Square test Respondents Gender and to know about loan and
advances that the null hypothesis is accepted. It is statistically prove that
there is no significant difference between Respondents Gender and to know
about loan and advances. It also concluded that by using Chi-Square test
Respondents Age and Face any difficulties while taken a loan that the null
hypothesis is accepted. So it is statistically prove that there is no significant
difference between Respondents Age and Face any difficulties while taken a
loan.
The conclusion from the secondary data says that Various Customers
Borrowing Loans data of The Sutex co-operative Bank Ltd. In 2016, the bank
has provides more loan is machinery loan. Sutex bank has lower focus on
Education loan. Cash Credit Loan and Factory Shed Unit Loan increase by
year to year.
108
RECOMMENDATIONS
109
It has been suggested for The Sutex Co-op. Bank Ltd. uses fincraft and
shift Doc. Software. The fincraft is old system for the Sutex bank all the
A/Cs are open in this system. The shift Doc. Through scan customer
profile and all proof. its a good for the bank.
On the basis of project report it is recommended to the bank that they

should emphasis more on repayment period and time period of their
offering because majority of customers have rated them important factor
to taking loan. This can help to bank in getting more customers in future.
It is also recommended that bank should emphasis on making easy

procedure for customers to take loan, and by increasing manpower at
bank can also reduce the time of sanctioning of loan.
It has been suggested for the company Provide locker facility at other
branches if possible.
Bank can also needs to update its websites, so customer can be easily
aware about the Sutex co-operative banks progress.
It is recommended to the bank can appoint more employees who always

help the customer in solving queries and help customers in their request.
It has been suggested for The Sutex Co-op. Bank Ltd Provide VAT
machine facility, this will help customer to check their balance when they
came to bank. So that work of clerks is not disturbed.
110
BIBLIOGRAPHY
111
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121
ANNEXURE
122
QUESTIONNIRE
Dear respondent,
I am Bindiya Patel, student of, S.R. Luthra Institute of Management (SRLIM),
Athwalines, surat. I am conducting survey for Summer Internship Project on A STUDY
OF THE CUSTOMER PREFERENCE TOWARDS LOANS AND ADVANCES AT THE
SUTEX CO-OPERATIVE BANK LTD, SURAT. I assure you that information given by you
will be strictly used for academic purpose only. I request you to help me in gathering
required information by filling up the following information. I am thankful for your kind of
co-operation.
BINDIYA PATEL
1. Which type of Loan have you taken from The Sutex Co-Operative Bank
Ltd.? (Multiple Tike Possible)
Machinery Loan
Education Loan
Vehicle Loan
Consumer Loan
Business Loan
Housing Loan
Cash Credit Loan
Any Other
2. Rate the preference level which kind of loan you preferred? [5= Highly
Preferred, 4=Preferred , 3= Neutral, 2=Less Preferred, 1= Not at all]
Sr. No.
Criteria
1.
Machinery Loan
2.
Vehicle Loan
3.
4.
Business Loan
5.
Cash Credit Loan
6.
Education Loan
7.
8.
Consumer Loan
9.
Housing Loan
10.
11.
Other
123
(5)
(4)
(3)
(2)
(1)
3. What the amount of loan and advances you have borrowed?

Below Rs. 5,00,000
Rs. 10,00,000- Rs. 20,00,000
Rs. 5,00,000- Rs. 10,00,000
Above 20,00,000
4. Do you think that the processing charges of The SUTEX Co-operative

Bank Ltd. were high?
Yes
No
5. Rate the Following feature did you like most in Loan segment of The
Sutex Co-operative Bank Ltd.? [1=Highly Important, 2=Important,
3=Neutral, 4=Less important, 5=Not at all important]
Sr.
Criteria
No.
1.
Less Paper Work
2.
3.
Simple Processing
4.
Transparency
5.
Interest Rebate
6.
Easy Documentation
7.
8.
Complex Procedure
9.
10.
11.
12.
13.
Longer tenure Loan for ease of repayment
14.
Specially Design Facilities for selfemployed
15
Others
124
(5)
(4)
(3)
(2)
(1)
6. Rate the various factor you consider for taking a loan in The Sutex CoOperative Bank Ltd.? [5= Highly Preferred, 4=Preferred , 3= Neutral,
2=Less Preferred, 1= Not at all]
Sr.
Criteria
(5)
(4)
(3)
(2)
No.
1.
Interest rate offered
2.
Repayment Period
3.
Efficient Customer Service
4.
Security Demanded
5.
EMI Scheme offered by Bank
6.
Time Period
7.
Documentation
8.
Fees and Charges
9.
Terms and Conditions
10.
Easy sanctioning of loan
12.
Staff support
13.
Others
7. How did you come to know about loans and advances of The Sutex CoOperative Bank Ltd.?
8.
Friends/ Relatives
Trust
v Easy availability loan
Advertisement
Any Other
Have you face any difficulties while taken a loan from THE Sutex CoOperative Bank Ltd.?
Yes
No
9. Have you taken loan from other than The Sutex Co-Operative Bank Ltd.?
Yes
No
125
(1)
10. Do you consider The SUTEX Co-operative Bank Ltd. as one of

alternative for loan and advances in future if you have need?
Yes
No
PERSONAL DETAILS
16. Name:
17. Age:
18. Gender:
19. Education:
20. Occupation:
21. Annual Family Income:
126
Various Customers Borrowing Loans data of The Sutex co-operative

Bank:
31/03/2012
Customers Borrowing
31/03/2013
Loans
1,891,721,231.06
Machinery Loan
1,844,065,245.96
258,640,531.12
Vehicle Loan
203,253,461.87
258,540,632.85
334,511,398.46
59,574,213.31
Business Loan
56,229,251.00
115,605,512.99
Cash Credit Loan
214,500,574.50
314,055,852.64
Education Loan
32,411,949.02
985,621,231.20
6,027,302.23
146,552,533.50
31/03/2014
Consumer Loan
Housing Loan
Customers Borrowing
104, 407,387.50
1,080,233.00
166,422,767.40
31/03/2015
Loans
1,973,903,511.67
Machinery Loan
2,935,988,588.99
170,426,898.81
Vehicle Loan
145,855,733.00
454,680,320.20
426,328,705.82
42,589,678.00
Business Loan
21,950,166.00
389,802,455.80
Cash Credit Loan
31,792,610.27
Education Loan
36,472,697.04
179,419,140
191,098,520.50
740,420.00
Consumer Loan
130,198,824.01
Housing Loan
127
535, 095,525.05
908,539.00
162,674,698.31
Customers Borrowing
31/03/2016
Loans
Machinery Loan
3,274,074,786.00
Vehicle Loan
139,462,930.66
381, 827,764.11
Business Loan
28,438,523.00
Cash Credit Loan
696,604,733.00
Education Loan
37,685,488.09
247,971,772.25
Consumer Loan
1,008,265.00
Housing Loan
171,818,963
128

Loans and Advances 2016

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A

SUMMER INTERNSHIP PROJECT

S.R. LUTHRA INSTITUTE OF MANAGEMENT

MASTER OF BUSINESS ADMINISTRATION

Gujarat Technological University

Dr. Ranjan Sabhaya

Mr. Bhadhresh K. Noticewala

MBA SEMESTER III

S.R. LUTHRA INSTITUTE OF MANAGEMENT 750

A STUDY OF THE CUSTOMER PREFERENCE

TOWARDS LOANS AND ADVANCES AT THE SUTEX CO-OPERATIVE

This project report is on A Study Of The Customer Preference Towards

I would like to take an opportunity of express the feelings of gratitude towards

In the research is containing introduction of company in which information

The present study is aimed at explaining the research Methodogology

Tools for Analysis

Limitations of the Study

Data Analysis & Findings

Conclusions and Recommendations

Overdraft Loan against F.D

Cash Credit Loan

Factory Shed Loan

Staff At Sutex Co-Op.Ltd

Financial Health of Bank

Rank of co-op bank ltd

Annual Family Income

preference level of Loan

loan and advances Borrowed

To know about loans and advances

Face any difficulties while taken a loan

Taken loan from other Bank

one of alternative for loan and advances

loan and advances borrowed Cross

know about loan and advance Cross

Face any difficulties while taken a loan

KMO AND Bartlett's Test

Total Variance Explained

Apply Alpha Test

Repayment specially design

Rotated Component Matrix

Component Transformation Matrix

Component Score Coefficient Matrix

Banking industry in India

Annual Family Income

preference level of Loan

loan and advances Borrowed

To know about loans and advances

face any difficulties while taken a loan

Taken loan from other Bank

various loans sanctioned by bank

MEANING OF LOANS AND ADVANCES:

Utility of Loans and Advances:

modernization of plants etc.

According to section 5(a) of banking regulation act, 1949, a secured loan or

Cash credit system:

Overdraft is an arrangement between a banker and his customer by which

4) Bills discounted and purchased:

Convene to Loan Application

To issue Draft or Pay Order

Third/ Strong remainder.

ii) Through discussion.

Various Loan Schemes:

Table No: 1.1 Machinery Loan