ACKNOWLDGEMENT

I take this opportunity and privilege to express my deep sense of gratitude to Professor
M.N.Navale, Honorable Founder President, Dr. (Mrs.) S.M.Navale, Founder Secretary, The
Sinhgad Technical Education Society, Pune and Dr. Sachin Borgave, Director SIBACA. They
have been a source of inspiration to me and I am indebted to them for initiating me in the field of
research.

I am deeply indebted to Faculty Member, SIBACA Prof. MANISHA BADGUJAR my research

guide at Sinhgad Institute of Business Administration & Computer Application, Lonavala
without whose help completion of the project was highly impossible.

I take this opportunity and privilege to articulate my deep sense of gratefulness to the Managing
Director and the staff of the SUVARNAYUG SAHAKARI BANK for their timely help and
positive encouragement.

I wish to express a special thanks to all teaching and non-teaching staff members of Sinhgad
Institute of Business Administration & Computer Application, Lonavala for their continuous
support. I would like to acknowledge all my family members, relatives and friends for their help
and encouragement.

Place: SIBACA, LONAVALA

Date: …………………………. RIYA SAURESH PARMAR

1
 EXECUTIVE SUMMARY

The topic of the project is “A Study On Loans and Advances Process at Suvarnayug
Sahakari Bank Limited” the objective of the project are to know the existing problems in the
process of loans and advances of the bank, review the producer of the loan adopted by the bank,
to have knowledge of the various facilities given by the bank. The methodology used in the
project is primary as well as secondary. The main findings of the bank find large part of the
customer from commercial and industrial segments. Other branches of the bank are situated in
the residential region so the bank finds more housing loan, personal loan etc. The advances are
increasing day by day the demand is increasing the suggestion of the bank are increasing the
ATM facility, more schemes should be brought in festival times locker facility should be
available at every branch the conclusion of the project are the services provided by the banks are
efficient and qualitative, the loan is given to the customer after due consideration of the each and
every document.

Major portion of the banks funds is employed by way of loans and advances there are various
kinds of loans are given by banker to its customer. While lending his funds a banker, therefore
follow various cautions polices as conduct his business on basis of well-known principle of
lending. In order to minimize risk. Loans and advances are important products for bank.

2
 LIST OF TABLES

TABLE TITLE OF THE TABLE Page

NO No

4.1 Total Advances and Total Deposits 58

4.2 Deposits Amount 60

4.3 Loan Amount 61

4.4 Percentage of NPA to total Advances 62

4.5 Total Loans and Total Advances 63

4.6 Total NPA 64

4.7 Rate of interest for granting different types of loan 65

3
 LIST OF FIGURES

FIGURE TITLE OF THE FIGURES Page

NO No

4.1 Total Advances and Total Deposits 59

4.2 Deposits Amount 60

4.3 Loan Amount 61

4.4 Percentage of NPA to total Advances 62

4.5 Total Loans and Total Advances 63

4.6 Total NPA 64

4.7 Rate of interest for granting different types of loan 65

4
 CHAPTER NO I

INTRODUCTION TO LOANS AND ADVANCES

5
INTRODUCTION TO LOANS AND ADVANCES

The commercial banks accept deposits and also lend money to the people who require it for
various purposes. Lending of funds to traders, businessmen and industrial enterprises is one of
the important activities of commercial banks. The major part of the deposits received by the
banks is lent out, and a large part of their income is earned from interests on such lending. There
is a considerable difference between the rate of interests which the difference which the
commercial banks grants on deposits, and the rate they charge on loans and advances. It is the
difference which constitutes the main source of bank earnings.

1.1 Theoretical Concepts:

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 agreed rate and intervals
of payment.
 ‘Advances’ on the other hand is a ‘credit facility’ granted by the bank. Banks grant
advances largely for short-term purposes.

6
Meaning of Loan
An arrangement in which a lender give money or property to a borrower and the borrower
agree to return the property or repay the money, usually along with interest at so future point in
time. Usually there is a predetermined time for repairing. A loan and generally the lenders has to
bear the risk that the borrower may not repay a loan.

The co-operative banks have a history of almost 100 years. The co-operative banks are important
constitute of the Indian Financial System, judging by the role assigned to them, the expectations
they are supposed to fulfill the co-operative movement originated in the west, but the importance
than such banks have assumed in India is rarely parallel anywhere else in the world.

What is a ‘Loan?’
A loan is the act of giving money, property or other material goods to another party in
exchange for future repayment of the principal amount along with interest or other finance
charges. A loan may be for a specific, one-time amount or be available as an open –ended line of
credit up to a specified limit or ceiling amount.

The terms of loan are agreed to by each party in the transaction before any money or property
changes hands. If the lender requires collateral, that is outlined in the loan documents. Most
loans have provision regarding the maximum amount of interest, as well as other covenants such
as the length of time before repayment is required.

Loans can come from individuals, corporations, financial institutions, and governments. They
offer a way to grow the overall money supply in an economy as well as open up competition and
expand business operations. The interest and fees from loans are primary source of revenue for
many financial institutions such as banks, as well as some retailers through the use of credit
facilities.

7
 Co-operative

Credit Institutions.

Urban (primary) Rural Co-operative

Co-operative Banks Credit Institutions

Urban co-operative banks are registered under Co-operative Societies Act of the respective state
Government prior to 1996; UCBs were exclusively under the preview of the governments.
Consequently, the RBI became the Regulatory and supervisory authority of UCBs for their
banking related operations.

Urban Co-operative Banks play an important role in meeting the growing credit needs of urban
and semi-urban areas. Urban Co-operative Banks mobilize savings from the middle and lower
income groups and survey credit to small borrowers, including weaker sections of the society.
The number of urban Co-operative banks stood 1872 at end of March2011

The Co-operative banks in urban areas mainly finance various categories of people for self-
employment, industries small scale units, home finance, consumer finance, personal finance, etc.
The exponential growth of urban Co-operative Banks is attributed mainly to their nerve of the
local clientele.

Urban Co-operative Banks have growth rapidly since early 1990s. Various entities in the urban
Co-operative Banking sector display a high degree of heterogeneity in terms of deposits / assets
base, areas of operation and nature of business. It is imperative that the sector emerges as a

8
sound and healthy network of jointly owned, democratically controlled and professionally
managed institutions.

1.2 Utility of Loans and Advances

 Loans and advances can be arranged from bank in keeping with the flexibility in business
operation. Traders may borrow money for day to day financial needs availing of the
facility of cash credit, bank overdraft and discounting of bill. The amount raised as loan
may be repaid within a short period to suit the convenience of the borrower. Thus
business may be run efficiently with borrowed funds from banks for financing its
working capital requirements.
 Loans and advances are utilized for making payment of current liabilities, wage and
salaries of employees, and also the tax liability of business.
 Loans and advances from banks are found to be ‘economical’ for traders and
businessmen, because bank charge a reasonable rate of interest on such loans/advances.

1.3 Need of the Society:

The project forms very vital aspects during the curriculum of MBA at the end of first year
students are required to undergo a summer tanning programmed of 60 days.

This training is an internal part of MBA course and its importance lies in the fact that gives the
students there first exposure in an organization,

The tanning undertaken in Suvarnayug Saharawi Bank L.T.D is with a few objectives:

1. To get opportunities of real life business experiences.

2. To be able to apply theoretical knowledge obtained at the institute practically in actual
business environment.
3. To have comprehensive understanding of the company.
4. To have acquired with real organizations problems, perception and challenges.
5. To get an opportunities to interact with dynamic managers

9
1.4 Statement of the Problem
The Title of the project is “A Study of Loans and Advances”. There is a wide fluctuation
between different sectors. While issuing loans to different sectors, should analyze the external
factor which is affecting to the particular sector. Bank should increase the Net Income and
Reduce the NPA level of the bank. While issuing loans Major portion of the Income is derived
from the Loan and Advances of the bank in the context, study is related to the contribution to
Total income from the different sector and the total income of the bank. This analytical study of
income loans and advances to different sector which helps the risk and return from various
sectors.

1.5 Objectives of the Project

1. To study various loans schemes provided by the bank.

2. To study the various loan sanctioning procedure.

3. To study the interest rate of loans and advances department.

4. To study the total deposits & advances of the bank.

5. To study and understand the documents involved in the home loan scheme and the repayment

Methodology adopted by the bank.

1.5 Limitations of the Project:

1) Time period is very short ie.2months.

2) The Confidential Data was provided by Suvarnayug Sahakari Bank Limited.

10
 CHAPTER NO II
PROFILE OF THE ORGANIZATION

11
 CHAPTER 2

PROFILE OF THE ORGANIZATION

Name of the bank: Suvarnayug Sahakari Bank Ltd. Lonavla

Address:-

Registered Office:

Address with pin code no. Suvarnayug Sahakari Bank Darker

Building, MG Road, Near Railway
Station. Lonavla-410401
Telephone No./ Fax No. Telephone No: 02114-278303

Fax No. :
Established on 02-10-1973

Chairman Shri Amar Vasantrao Kondre

CEO Shri Prakash Tamhne

Branches 18 Branches including Head Office

Working Capital 31/03/2016 59,274.71 lakhs

Deposit 31/03/216 49,317.23 lakhs

Loans 31/03/216 30,757.33 lakhs

Net Profit/Loss 31/03/2016 751.42 lakhs

Audit Class Audit Class ‘A’

Time Mon to Tue: Morning 10:00 to 02:30

& Evening 03:00 to 05:30
Saturday 10:00 to 02:30

12
SERVICES PROVIDED BY SUVARNAYUG SAHAKARI BANK:

Cards Credit card/Debit card

Bank TYPE Co-operative

Branch Details Current A/C ,Debit card facility, Loan

facility ,Saving A/C

Business Hours 10:30 AM to 3:30 PM Monday to Friday and

Saturday 10:00 AM to 2:00 PM

A/c Types Current A/c, Demat A/c, Fix Deposit,

Recurring deposits / Saving A/c.

Personal Loans Agricultural Loan Schemes, Commercial

Vehicle Loan,
Educational Loan, 4 wheeler loan, Home
Improvement Loan, Housing Loan , Loan
against vehicle, 2 wheeler Loan, Investment

Investment Product Equity, FD, Flexible Deposit, Insurance, MF,

Stock-Investment.

Business Loan Business Loans against deposit, Professional

Loan, Self-help group Finance & Term loan.

Other Services Insurance , Pradhanmantri jeevan jyot yojna,

jeevan suraksha to all reliable customer ,
Collecting Income Tax, VAT, Service Tax
From Customer.
.

13
 HEAD OFFICIE OF SUVARNAYUG SAHAKARI BANK:

BUDWAR PETH
1102/10-11, “Marne Heights” Budhwar Peth, Near

Mahatma Phule Mandai, PUNE-411002.

Phone Number: 24486039, 24478868 Fax: 2473118

Monday to Friday: Morning 10.00am to Afternoon 2.30pm and Afternoon to 3.00 pm Evening
5.30pm Saturday: Morning 10.00am to Afternoon 2.30pm

BRANCHES OF SUVARNAYUG SAHAKARI BANK:

Market yard Branch Chakan Branch

Chattrapati Shivaji Market Yard, Pune 37. Nanekarwadi, Talekar chowk,

Phone No: 24260888, 24269642 Pune-Road, Chakan 410501.

Phone No: (0213) 5249061

Upper-Indiranagar-Bibvewadi Branch Jejuri Branch

Mansi Apartment, Bibvewadi, Pune-37. Mahadawar Road, Jejuri.

Phone No: 24281357, 24280564 Phone No: (02114) 253082, 254082

Sanghvi Branch Chandannagar Branch

Krushnanagar, New Sanghvi, Pune 27. Prabhakar nagar, Pune 14.

Phone No: 27203035, 27203036 Phone No: 27243464, 27243465

14
 Karvenagar Branch Alandi Branch

Murlidhar apartment karvenagar, Pune 52. Dehu phata alandi, Pune 412205

Phone No: 25442677, 25442688 Phone No: 27185044

Narhe Branch Warje Branch

Siddhivinayak Home, Pune 41. Uttam nagar shivne, Pune 58

Phone No: 7057899994 Phone No: 25230001

Ambegao Branch Keshav Nagar Branch

Maharanapratap chowk, Pune 43. Keshavnagar Mundva, Pune 36

Phone No: 24377577. Phone No: 9028336060

Lonavala Branch

Darker Building, MG Road, Lonavla

Phone No: 02114-278303

15
 EXAULTATION COUNTER

VIT EXT VIT EXT

VIT College, Bibvewadi, Pune. VIIT college, E-Building,

Phone no: 24202156 Kondhwa budhruk, Pune-48

Phone no: 24202156

PROPOSED BRANCHES

(1)Lonavala Branch (2) Kalewadi

Darker Building, MG Road, Lonavla-410401 (3) Hadapsar

(4) Dhanori
Phone No: 02114-278303
(5) Kothrud / Paud Road

16
DIFFERENT LOAN SCHEME:

Business

Overdraft Loan
Gold
Loan
Loan

Property
Different Personal
Mortgage
Loan Loan
Loan
Schemes

Group
Vehicle
Loan Educational
Loan
Loan

17
 DIFFERENT DEPOSIT SCHEME

Fixed Deposits

Suvarnayug
Recurring
Saving Deposits
Deposits

DIFFERENT
Janta Vikas
DEPOSITS Current
Patra
SCHEMES Deposits
T

Chintamani Regular Savings

Lakpati Yojna Mangalmurti Account

Tev Deposits

DIFFERENT SERVICES PROVIDED BY SUVARNAYUG SAHAKARI

BANK:

Core Facility

ATM Facility Services provided Locker Facility

n,bml,h/,l,nl,h,ln,v/,
By bank

RTGS Facility

18
 COMPITITORS OF SUVARNAYUG SAHAKARI BANK:

VIJAYA
BANK
UNION CENTRAL

BANK BANK

Competitors
BANK OF
HDFC
Of Suvarnayug MAHARAS-
BANK
Sahakari Bank HTRA

STATE
PDC
BANK
BANK
ICIC OF INDIA

BANK

19
ORGANISATIONAL CHART:

Boards of Directors

CEO

General Manager

Branch Manager &

officer

Employees of the Bank

20
 BOARDS OF DIRECTORS:

NAME DESIGNATION

MR. AMAR VASANTRAO CHAIRMAN

KODRE

MR. ASHOKRAO GHASE DIRECTOR

MR. HEMANT RASNE DIRECTOR

MR. VILLAS BHUJBAT DIRECTOR

MR. RAJENDRA DIRECTOR

SURYANSHI

MR. CHANDRAKAT DIRECTOR

MANCHE

MR. SARVESH JOSHI DIRECTOR

ADV.MR.PRATAP EXPERT
PARDESHI DIRECTOR

MRS. JYOTSANA VICE

KEADARI PRESIDENT

MR. BALASAHEB DIRECTOR

RAYKAR

MR. RAHUL DIRECTOR

CHAVAN

21
MR. RAJARAM GHODKE PRESIDET

MR. ARUN SHINDE DIRECTOR

MR. GANESH AAGLAVE DIRECTOR

MRS. SHARMILA DIRECTOR

BHOSALE

MR. PRAKASH TAMHNE C.E.O

MR. BHARAT WADEKAR BRANCH MANAGER

VISSION:
The Vision of the bank is to provide Credit facility and financial help to small business man and
entrepreneur by providing them with low rate of interest and also them with loan facility.

MISSION:
The mission of Suvarnayug bank is to create more than 5000 crore depositors in upcoming year.

22
AWARDS AND ACHIEVEMENT:

1) Firstly the branches of Suvarnayug Bank had started in Pune, Nashik, and Aurangabad
district. Now we are feeling proud to say that Reserve Bank of India and government had
declared that to increase the branches of this bank all over Maharashtra.

2) Suvarnayug Bank has been awarded by The Maharashtra Urban Co-operative Banks
Federation Ltd.as “Best Bank 2015”. This award was given by Minister Chandrakant
Dada Patil.

3) The Suvarnayug Sahakari Bank has been awarded by “Pune District Sahakari Banks
Association Ltd”. For financial year2015-16 for maintaining “Gross NPA” below “5%”
for this they have been awarded as special award.

4) The Suvarnayug Sahakari Bank has been awarded by “Green world Publication”
government banking sector for special contribution towards “Sahakar Bhusan -
2015”.This award has been awarded to Suvarnayug Bank by Shri. Chandrakant Dalvi.

5) Banking Frontiers has awarded Suvarnayug Bank as “Frontiers in corporative banking

award 2016. This was the very special award and the Suvarnayug Bank received this
award at our capital “New Delhi”.

23
CREDIT POLICY:

1) HIGHLIGHTS:

In the changing scenario the social service approach been partially amended and profitability
aspects is gaining with a view to international practices and to bring financial discipline amongst
the borrower, to encourage better management of funds and minimize the NPAs the credit policy
is framed with the objective of :
i. Improvements in the quality assets.
ii. Increasing exposure largely in standers assets.
iii. Reducing exposure to unsatisfactory assets.
iv. Ensuring credit deployment in tune with the capital adequacy requirements and
augmenting non-fund based incomes.
v. Avoiding concentration of credits in a particular activity/ industry/ group.
vi. Achieving target and priority sectors advances.
vii. Going for low risk assets and obtaining adequacy security.
viii. Maximizing interest income as well as non-fund based incomes.

Deploying credit in self-liquidating and short term assets and availing of refinancing where ever
to improve CD ratio.

2) GENERAL PRINCIPAL:
The success or failure of the bank would largely depend upon the quality of its advances the
offer/ manager is accepted to make through enquires about the prospective borrowers and there
credit properties. It is immaterial whether the final decision is to be taken at board level, but all
the information is to be collected and assessment is to be made by the officer/ manager/initially.
At the outset, he should check up that the purpose of the advances is acceptable to the bank.

The rational of every sanction of credit facility must be firmly based on favorable outcome of
information collection and apprise done on the following aspects of the credit properties:

24
A. The prospective borrower = He must have the mental and physical abilities to carry out high
scheme of business and the trustworthiness required for fair dealings with the bank.
B. Commercial viability = The market condition hand its trend/ cyclicality must be conductive
to satisfactory demand for the relative products/ service generation of sufficient surplus to
meet the business needs, bank installments/ interests and required drawings by the
prospective borrower.
C. Technical feasibility : The prospective borrower must possess/ have assured access to know-
how, location, land and building, machines fixed assets, transport, factory shed (where
required), electricity, raw material, and other input required, as also the requisite, license/
permit/ clearance from the concerned authorities.
D. Financial feasibility: The cost of the project must be estimated on realistic basis for an
optimized scale of business and the source of fund must be adequate and acceptable from the
point view of safety and security of the proposed advances. Availability of collateral security
/guarantee is relevant here.

All of the above aspects are of extreme importance. Even then, for a new business, aspects (1)
and the (2) for an existing business going for expansion, aspects (4) would be given special
attention.

OTHER RULES FOR LOAN PRODUCTS:

A. PROCESSING FEE:
Processing fee presently as under will be recovered 0.50% for sanction loan amount.

B. CONFIDENTIAL REPORT:
Confidential report of the borrower, Guarantor shall be obtained in case of borrower is enjoying
credit facility from any other bank/ financial institution. If borrower is already enjoying credit
facility with another primary Co-operative bank, no objection certificate from such bank shall be

25
obtained and where the aggregate of the credit facilities enjoyed by the borrower exceeds the
ceiling stipulated in the directive for single party, the borrower of RBI shall be obtained.

C. PROCESS NOTE:
The process note contains the analysis of the gathered facts and figure on the basis of which the
credit decision advice. Therefore to understand the sanction advice logically, and for proper
implementation of sanction stipulation and as will be seen, for future follow up of the account,
the process note is indispensable. Hence every sanction advice should be invariably accompanied
by the process note.

D. SANCTION:

Some important terms and condition are as follow:

 Amount of facility granted purpose thereof and type and advances.

 Rate of interest w.r.t.PLR and also other charges like processing change payable by
the borrower.
 Quantum of margin and how it will be maintained (e.g. on stock /by way of FDR etc.)
 Full details of principle security and collateral security.
 Grantors full name and membership number and their personal net worth etc.
 Repayment schedule of term loan the first installment will fall due, whether equated
monthly installment, whether gestation period is allowed.
 In case of the hypothesis facility it would be made clear that they are for specific
period and are subject to review and renewable after one year.

26
 KINDS OF CREDITS

KINDS

OF CREDIT

CASH PURCHSASE

CREDIT OVERDRAFT LOAN AND BILL

SYSTEM SYSTEM DISCOUNTING

The main style of credit or financing prevalent in our country is:

1) CASH CREDIT SYSTEM

2) OVERDRAFT
3) LOAN SYSTEM
4) PURCHASE AND BILL DISCOUNTING

1) LOAN SYSTEM:

Normally these loans are repayable in installments. Funds are required for single non repetitive
transactions and withdrawn only once, if borrower needs funds, again or wants renewal of an
existing under the loan system, credit is given for definite purpose and for a predetermined
period. Loan a fresh request is made to the bank. Thus borrower is required to negotiate every

27
time he is taking a new loan or receiving an exisiting loan. Banker is at liberty to grant or refuse
such a request depending upon his own cash resource and the credit policy of the central bank.
ADVANTAGES OF LOAN SYSTEMS:
1) Financial discipline on the borrower - as the repayment of the loan or its installments is
fixed in advanced, this system ensures a greater degree of self-discipline on borrower as
compared to the cash credit system.
2) Period review of loan account - Whenever any loan is granted or its renewal is
sanctioned; the banker gets an opportunity of automatically renewing the loan account.
Unsatisfactorily loan accounts may be discontinued at the direction of banker.
3) Profitability – the system is comparatively simple; interest accrues to the bank on the
entire amount lent to a customer.

DRAWBACKS OF LOAN SYSTEMS:

1) Inflexibilities – every time a loan is required it is to be negotiated with the banker. To
avoid it, borrower may in excess of their exact requirements to provide for any
contingency.
2) Banks have no control over the use of funds borrowed by the customer. However, banks
insist on hypothecation of the asset/vehicle purchased with loan amount.
3) Though the loans are for fixed periods, but in practice they roll over, that are renewed
frequently.
4) Loan documentation is more comprehensive as compared to cash credit systems.

2) CASH CREDIT:

Cash credit is a flexible system of lending under which borrower has the option to withdraw the
funds as and when required and to the extent of his needs. Under this arrangement the banker
specific a limit of loan for the customer up to which the customer is allowed to draw. The cash
credit limit is based on the borrowers need and as agreed with the bank. Against the limit of cash
credit, the borrower is permitted to withdraw as and when he needs money subject to the limit
sanctioned. It is sanctioned for a period of year and secured by the security of some tangible

28
assets or personal guarantee. If the account is running satisfactorily, the limit of cash credit may
be renewed by the bank at the end of year. The interest is calculated and charged to the
customer’s account.

3) OVERDRAFT:

Overdraft facility is more or less similar to ‘cash credit’ facility. Overdraft facility is the result of
an agreement with the bank by which a current account holder is allowed to draw over and above
t6he credit balance in his/her account. It is a short-period facility. This facility is made available
to current account holders who operate their account through cheques.The customer is permitted
to withdraw the amount as and when it is convince to him/her. The following are some of the
benefits of cash credits and overdraft:

a) Cash credit and overdraft allow flexibility of borrowing which depends upon the need of
the borrower.
b) There is no necessity of providing security and documentation again and again for
borrowing funds.

c) This mode of borrowing is simple and elastic and meets the short term financial needs of
the business.

4) DISCOUNTING BILLS:

Apart from sanctioning loans and advances, discounting of bills of exchange by bank is another
way of making funds available to the customers. Bills of exchange are negotiable instruments
which enable debtors or discharge their obligations to the creditors. Such bills of exchange arise
out of commercial transactions both in inland trade and foreign trade. When the seller of goods
has to realize his dues from the buyer at a distant place immediately or after the lapse of the
agreed period of time, the bill of exchange facilities this task with the help of the banking
institution. Banks invest a good percentage of their funds in discounting bills of exchange. These
bills may be payable on demand or after a stated period. In case the bill is dishonored on due date
the amount due on bill together with interest and other charges is debited by the bank to the
customer’s account.

29
 TYPES OF LOANS:

BANK

LOANS

SHORT TERM MEDIUM TERM LONG TERM

LOANS LOANS
LOANS

1) SHORT TERM LOANS:

Short terms are loans are granted to meet the working capital needs of the borrower. These loans
are granted to meet the working capital needs of the borrower these loans are granted against the
securities of tangible assets-mainly the movable assets like goods and commodities, share,
debenture etc.
The loans are granted for one year generally not more than one year therefore this type of loan is
called short term loan.
The reserve bank has also permitted the bank to extend the loan for another period at the expiry
of the tenure of the first loan.

2) MEDIUM TERM LOAN:

Medium term loans are usually called term loans. Because its help to the organization/bank/in
creating of fixed assets. These kinds of loans are given by bank for the period from 3 to 10 years.

30
3) LONG TERM LOAN:

Long term loans are also called as term loans. This loan is granted for more than 10 years. It
helps to purchase of capital assets for the establishments of new units and for expansion or
diversification. This loan is usually secured by the tangible assets like lands, building, plant and
machinery.

PURPOSE OF THE LOAN:

While lending his funds, the banker enquires from the borrower the purpose for which he seeks
the loan. Banks do not grant loan for each and every purpose they ensure the safety and liquidity
of their funds by granting loans productive purpose only via, for meeting working capital needs
of a business enterprise.

Loans are not advanced for speculative purpose like social functions and ceremonies or for
pleasure trips and repayment of a period loan.

Loans are capital expenditure for establishing business is of long term nature and the bank grants
such term loan also.

PRINCIPLES OF SOUND LENDING:

These are cardinals principles of goods lending that have been followed by the commercial bank
since long.

These are the principle of safety, liquidity, profitability.

1. Safety = As the bank lends the funds entrusted to it by the depositors, the first and
foremen principle of lending are to ensure the safety of the funds lent. Safety is meant
that the borrower is in a position to repay the loan, along with interest, according to the
term of the loan contract. The repayment of the loan depends upon the borrower.
Capacity to pay and willingness to pay.
2. Liquidity =Banks are essentially intermediaries for short funds. Therefore they lend
funds short periods mainly for working capital purpose. The loans are, there, largely
payable on demand for ex-goods and commodities are easily marketable while fixed asset

31
 like land and buildings are specialized types of plants and equipment can be liquidated
after time interval.
3. Profitability= Commercial banks are profit-earning institutions; the nationalize banks
are no expectations to this.

CLASSIFICATION OF LOANS AND ADVANCES:

The loans and advances granted by the bank are broadly classified into.

TYPES OF
ADVANCES

SECURED UNSECURED
ADVANCES ADVANCES

1) SECURED ADVANCES:
According to section 5(A) of banking regulations act, 1949(a) secured loan and advances made
on the security of assets, the market value of which is not at any time less than the amount of
such loan or advance.

32
Features of secured loan or advances are as follows:
The loan must be made on the security of tangible assets like goods and commodities, land
and building, gold and silver, corporate and government securities etc. Change on any such
assets offered as security must be created in fever of the bank. 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 former falls
below the letter because of decline in the market price, the loan is considered as partly secured.
2) UNSECURED ADVANCES:
Unsecured loans and advances mean a loan or advances not so secured. The distinction between
secured loans is made on the basis of the legal title or charge in the favor of leader in fact,
financial position, but no charge or right is created on any such assets of the borrower in the
favor of the bank.

GOLDEN RULES FOR GOODS CREDIT MANAGEMENT:

 Strategic that bought past property will not necessarily work in the coming years.
 Some borrowers with the history of stability and profitability are moving towards
instability and marginal profitability.
 Fundamentals and basic assumption need to be re-examined.
 Is it possible to probe future with dependable certainty?
 If the market is not growing do not relax credit standards.
 Avoid over generosity of economic and condition.
 Recognize the importance of economic and condition.
 Assess whether the deal is good for the bank as also the borrower? Would I put my
money in to it?
 Need to know the changes in industry, production and technology.
 Carefully consider borrower’s character, management experience, capabilities.
 Moral standing integrity and business style must be thoroughly checked.
 Exercise common sense, good judgment-credit decisions cannot be entirely based on
set of guidelines or analytical techniques.
 The ablest banker is the one who knows how to do business- What to do and what not
to do.

33
  Please remember loan don’t go when good judgment is not exercised, flaw in the
structuring, inadequate follow up, defective documentation or other defects in the
credit process. Guard against unanticipated external factors and notice environmental
factor’s and notice environmental factors, changing technology, management
inefficiencies.
DEPOSITS SCHEMES IN LOANS AND ADVANCES:

1) FIXED DEPOSITS;
A Term Deposit is an Interest Payout at monthly and quarterly basis. Our Term Deposit scheme
as follows

Savings has been an essential part of all the earnings, we at Saraswati Bank, help you earn more
on your savings by offering savings schemes which come with suitable tenures and attractive
interest rates.

Fixed Deposit Monthly & Quarterly Interest

The Monthly or Quarterly Interest rate should be transfer to Saving A/c of Depositor. After
matured Auto renewal facility also available in this scheme

Sr. No Duration Interest Rate

1 30 Days to 45 Days 6%
2 46Days to 90 Days 7%
3 91 Days to 180 Days 7.50%
4 181 Days to 12 Months 8%
5 13 Months to 24 Months 9.75%
6 25 Months to 36 Months 9.50%
7 37 Months to 60 Months 9%
8 61 Months and onwards 8.50%

For the Sr. citizen 0.5% interest rate extra for the period 13 months & above.

34
2) Term Deposits
A term deposit is an Interest Payout savings scheme which offers interest at half yearly, quarterly
and monthly basis.

3) Kalpataru Deposits
The Kalpataru Deposit scheme is a cumulative interest scheme, this means that interest earned at
the end of every quarter is invested along with the principal helping you make the most of your
money.

Features & Benefits:

 TDS applicable Form 15H/15G required to be submitted for exemption of TDS.

 Nominal member of the bank will also be exempted from TDS. If you are exempt from
tax, you need to present Form 15H when you open a Fixed Deposit and subsequently at the
beginning of the following financial year.

 A minimum amount of Rs. 1000/- and further rise in multiples of Rs. 100/- is required to
open Term Deposits Account.

Eligibility:

Individuals (singly or jointly), Minor by guardian, Organizations, Co-op. Societies.

4) Recurring Deposits:
Just like little drops make an ocean, see your small investments every month turn into a huge
Features & Benefits:

 Invest little sums every month.

 Facility of Standing Instruction through which the amount can be debited from your
savings account.
 Attractive Interest Rates.
 No TDS.
 Scheme applicable for 12 months to 36 months.
 Amount of installment once fixed, cannot to be charged.

35
  Recurring deposits are accepted in equal monthly installments of minimum Rs 5.

Eligibility:
Individuals (singly or jointly), Minor by guardian, Organizations’, Co-op. Societies.

Charges:
• Penalty for delayed monthly installment Rs. 1.50 per Rs.100 p.a. In case of payment before
maturity, Interest up to 15 days will be Nil.
• Above 15 days 1% less than applicable rate of Interest for the actual period for which deposit is
kept with the Bank.

5) RECURRING DEPOSITS:

The Monthly specific amount deposited & get large amount in hand of Depositor. Minimum
amount required Rs.-100/- and minimum period is 12 months.

Period From – to (in days/months) Interest Rate

12 months 8.00%
13 to 24 months 9.75%
25 to 36 months 9.50%
37 to 60 months 9.00%
Above 60 months 8.50%

6) CURRENT ACCOUNT:

Banking that helps your business grow faster than you would imagine. The features of our
Current account make banking a comfortable experience.

Features & Benefits:

• Minimum balance requirement of Rs 5000/- per quarter
• Free Internet Banking

36
 • Free Mobile Banking – Check your account balance/transaction.
• Free International Visa Debit Card for the 1st year.
• Avail of Safe Deposit Locker facilities (subject to availability).
• Free monthly statement.
• Avail personalized chequebook for enhanced security at nominal prices.
• Take advantage of Easy Pay. An instant solution to all your frequent utility bill
payments.

Eligibility:
You can open a Current account with us if you are:
• Public or Private Limited Companies
• Partnership Firms
• Proprietorship Concerns
• HUFs
• Trusts
• Clubs, and Associations

Officially Valid Documents:

(i) Passport, (ii) Driving license, (iii) PAN Card, (iv) Voter’s Identity Card (v) NREGA Job Card
(vi) Letter issued by the UIDAI containing details of name, address and Aadhaar number.

2 latest passport size photographs and any one of the officially valid documents as Identity and
Address proof.

If the address on the document submitted for identity proof is same as that declared by him / her
in the account opening form, the document may be accepted as a valid proof of address also?

Public or Private Limited Companies

• Certificate of Incorporation and Commencement of Business.
• Certified true copy of Memorandum and Articles of Association.
• Certified Board resolution authorizing the opening and operation of the account.
• PAN or GIR No. or completed Form 60.

37
7) REGULAR SAVINGS ACCOUNT:

Inculcate the habit of saving through our Easy & Convenient Features & avoid thrift.
Personalized Service coupled with technology enabled products is the Hallmark of our Service.

Features & Benefits:

• Wide Network of Branches & ATM coverage. Get connected to ATMs across the world
through our VISA Debit Card.
• Bank offers convenient facilities like Net Banking. Take advantage of Easy Pay, an instant

Interest Rates:

Interest Rate applicable on Savings Deposit Scheme is 4% p.a. 1st April 2012.

Eligibility:

Our Savings Account is for anyone who is a resident individual (sole or joint) or comes from a
Hindu undivided family. A Trust & Foundation can also open a Savings Account.

Officially Valid Documents:

(i) Passport, (ii) Driving license, (iii) PAN Card, (iv) Voter’s Identity Card (v) NREGA Job Card
(vi) Letter issued by the UIDAI containing details of name, address and Aadhaar number.

2 latest passport size photographs and any one of the officially valid documents as Identity and
Address proof

If the address on the document submitted for identity proof is same as that declared by him / her
in the account opening form, the document may be accepted as a valid proof of address?

8) MANGALMURTI THEV DEPOSIT:

This scheme offer the interest rate is 10.50% for the period from 700 days to 1000 days. The
Monthly or Quarterly Interest rate should be transfer to Saving A/c of Depositor. After matured
Auto renewal facility also available in this scheme

38
 9) JANATA VIKAS PATRA:
This scheme offer Cumulative interest rate. After matured Auto renewal facility also available in
this scheme.

Period For Sr.Citizen

Interest For the Effective Interest
From – to Effective Interest
Rate Amount Rate
(in months) Rate
13 to 24 months 9.75% 10000/- 10.13% to 10.61% 10.67% to 11.20%
25 to 36 months 9.50% 10000/- 10.36% to 10.83% 10.95% to 11.49%
37 to 60 months 9.00% 10000/- 10.23% to 11.20% 10.88% to 11.97%
Up to & above Up to & above
Above 60 months 8.50% 10000/-
10.50% 11.24%

I. EDUCATIONAL LOAN:
As the name suggests this kind of the loan is given for the purpose of minor students this loan is
not for the educational institutions. Loan is given for pursuing graduate and post graduate studies
professional courses or job oriented diploma courses in India or abroad, educational loan is long
term loan and it is also secured type of the loan it can be provided to the shareholders of the
bank.
Producer for granting educational loans:

Bank introduced this scheme as per demand from members in Annual General Meeting for F.Y.
2004-05.
The policy was formed for this scheme, as under

1 There should be appropriate security

2 Repayment capacity is taken in to consideration
3 Repayment will be in equal monthly installment

39
4 Duration of loan will be maximum 60 months
5 Rate of interest – 13.5%
6 Two guarantors are compulsory with adequate net worth
7 Maximum limit will ` 5,00,000/- (In words ` Five Lacs Only)
The loan will be disbursed as follows —
75% to be paid by Pay slip in favor of the Institute
8
25% will be given to that student for other educational expenses. (i.e. for books & other
material)

II. PERSONAL LOAN:

Personal loan is unsecured type of loan there is no kind of any special security is required for the
loan. It is given to person depends on their annual income. If the person is an employee then the
amount of the loan depends upon its salary. It is generally given for personal use.

Loan Amount Rs.200000/- (Rs Two lack only)

Interest Rate 15 %
Purchase of Furniture, Eel. appliances,(Quotation required),Marriage,
Purpose
Medical reason or Ceremonial reasons, festivals
Security LIC Policy, Term Deposit of our Bank, NSC (25% of the loan amount)
Tenure 60 months
Sanctioning
Hon. Chairman and General Manager Jointly
Powers
Shares
i) Up to Rs. 100
lack 1) 2.5% of sanctioned amount.
ii) Above Rs.1.00 2) 5% of sanctioned amount.
lack
Processing chg. As per rules
1) Central & State Govt.Employees.
2) Semi-Govt. Company Employees.
Eligibility 3) School/College, University Employees
4) Public ltd.Company Employees
5) Recognized Private ltd.Company Employees

40
 (as per repayment capacity)
About Service Service should be minimum 5 yrs. and confirmed
50% of the total salary including all other deductions as well as the said
Deduction
loan installment
1) Company/Institutions undertaking about loan deduction from salary
2) If such undertaking is not possible then the salary should be credited in
Required our Bank.
documents 3) If salary is credited in our Bank, the consent letter from the borrower
about installment deductions
4) All other required documents as per Bank rule.
1) Husband/wife, or father/mother in which name immovable property is
Guarantor/s there.
2) Two outside Guarantors- good wealth required
As per banks credit policy all other rules & regulations applicable.

III. VECHILEL LOAN:

As the name suggest that this kind of loan is given for the person for purchasing of a vehicle the
banker must directly make payment to the dealer in vehicles on the basis of performance invoice
to ensure that the loan is properly utilized the banker must insist that the borrower makes a
comprehensive insurance policy on the vehicle in the joint names of the borrower and the banker
for its full value. The policy must continue till the entire amount of the loan is repaid.

Title Norms

Purpose For purchase of new car

Eligibility Salaried persons / Businessman / Commercial organizations
Repayment
Max 5 years.
Period

For Private use : 13%

Rate of Interest
For Commercial use : 14%

41
Shareholding 2.50% of the Loan amount
Security Hypothecation of vehicle to be purchased
Processing fees As per rule.
1. Duly filled prescribed application form
2. Latest photograph, Identity and residence proof of the Applicant and
Guarantor (if any)
3. Income documents a) or b) as applicable
Documentation a) In case of salaried person, salary slip for last 3 months and bank
statement for last 6 months, ITR of the past 3 years.
b) In case of businessman, last 2 years profit & loss & ITR copies, balance
sheet and bank statement of business account for last 6 months.
4. Performa Invoice

IV. HOME LOAN:

Title Norms

Construction of own house / Purchase of ready built house/flat/resale

Purpose
flat / takeover of housing loans from other banks/institutions
Eligibility Salaried Employees / Businessmen / Professionals
Limit of loan Per Beneficiary Max Rs. 25 lack
i) 70% of Cost of flat +Stamp Duty +Registration OR Cost of land
& construction thereon
Basis of Advance ii) Salaried : Max 60 times of the Avg net take-home salary
Businessman : Max 5 times of Avg Net cash accruals
i) or ii) stated above whichever is lower
Maximum 20 years for salaried class- holiday for repayment of
principle up to 12 months
Repayment Period
Businessmen : Max 15 years
Step-up repayment/ bullet repayment option

Loan Amount Floating

Rate of Interest Up to Rs. 10 lack 13.00%
Above Rs. 10 lack 13.50%

Processing fees 1% of sanctioned amount or ` 50000/- whichever is less.

42
Shareholding 2.50% of loan amount
Security Equitable/ legal Mortgage of house property to be purchased.
Max Rs. 25 lack
Top up loan
Repayment period subject to max. 7years
1. The cost of the land should not exceed 65% of total cost of
Loan for construction
project.
of house
2. Construction should be completed within 24 months
Conversion From Fixed to floating or vice versa option available
1. Prescribed application form with photo identity and residence
proof of Applicant and Guarantor (if any)
2. Income proof a) or b) as applicable
a) Salaried: salary slip for last 3 months and bank statement for
Documentation
last 6 months, ITR & form 16 for 3 years
b) Businessman: Profit & loss , ITR copies and Balance sheet of
last 3 years, 6 month bank statement.
3. Legal Documents for creating mortgage as per requirement

V. PROPERTY MORTGAGE LOAN:

Name of the
Suvarnayug Property Mortgage Loan Scheme
Scheme
Purpose Business purpose
Minimum above Rs. 25.00 lakhs &
Loan amount maximum up to Rs. 50.00 lakhs
(As per repayment capacity)
Eligibility Businessman (Business should be from last 3 years)
Processing Fees As per rule
Interest Rate 15%
Type of Loan Term Loan
Tenure Max. 7 years

43
 Two competent guarantors required
1) One guarantor should be with good Net worth.
2) If borrower firm is partnership firm then personal guarantee of all partners
Guarantors
should be taken.
3) If borrower firm is Private Ltd. Company then personal guarantee of all
Directors should be taken.

Shares As per rule

Immovable Property
1) Property should be Residential or Commercial.
2) Property given as a security should be owned by the borrower.
3) If the property given as a security is owned jointly then all owners should
Security
be taken as co-borrowers.
4) If the property is an inheritance / ancestral then the signature of all co-
owners & hires should be taken on the Registered Mortgage.
5) Lease Property will not be taken as security.

Valuation &
Property should not be less than 25 years old & remaining life will be
Status of
minimum 15 years necessary
Property
Margin 40% of Valuation (60% of valuation loan will be sanctioned.
C. A. Credit As per Loan policy C. A Credit Appraisal is necessary for loan amount
Appraisal above Rs. 20 lakhs.

a) 20% of Total Turnover or 3 times of Net Profit if Net Profit is less than
Rs. 10 lakhs (Average net profit of previous 3 years will be considered &
Repayment capacity will be considered) (Depreciation/Loan in it will not
added back)
Loan Amount
b) 20% of Total Turnover or 4 Times of Net Profit if net profit is above
Rs.10 lakhs. (Average net profit of previous 3 years will be considered & As
per repayment capacity) (Depreciation will not be considered & Loan it will
not be added back.)

1) Property should be fully insured with Bank’s clause against fire, flood,
earthquake, riot & other risk. (Premium should be paid by Borrower only.)
Insurance
2) Life Insurance policy is necessary to the extent of Loan amt. (One Time
Premium should be paid by Borrower.)

1) Loan Proposal Application.

2) All Original Documents of Property.
Required
3) Legal Opinion / Search Report / Valuation / C An Appraisal of Property.
Documents
4) Receipt of Latest Property Tax paid.
5) All other documents as per KYC Norms.

44
VI. GOLD LOAN:

1) Up to ` 5,00,000/-
Loan Amount
2) Above ` 5,00,000/-

Interest Rate 14.00% p.a.

Age 55 years Maximum

Margin 40% of gold valuation

Security Genuine Gold Ornaments

Tenure 1) 12 to 24 months (EMI) & branch should insist to borrower for

i) Loan up to Rs. repayment loan in monthly installment.
1.00 lack 2) 12 months overdraft in rare case ( Bullet Payment)
ii) Loan above Rs. 1) 12 to 36 months ( EMI)
1.00 lack

Membership Regular / Nominal membership

Processing chg. As per rules ( 0.25% of sanction amount & minimum Rs.250/-)

Consent letter of women is required who belongs gold ornaments

Documents required
(STREE DHAN) and are pledged with bank for loan.

Others As per banks credit policy all other rules & regulations applicable.

45
PRODUCER OF LOAN:

1 A Loan form is issued to the members or the shareholders.

2 Accept the loan application from the member or the shareholders.

3 After the submission of documents along with form by the applicant,

scrutiny/processing are done at branch level.

4 Where the account status, loaned liability and guarantors’ liability and
guarantors’ liability is checked and thus after checking the status,
recommendations positive or negative is done at branch level.
5 After the recommendations by the branch for the loan, the loan file is sent to the
centralized loan department at head office where the loan officer checks the file
and scrutiny is done by the branch. If there are any compliance the loan officer
writes on the scrutiny note.
6 After that is presented before Deputy CEO and after to CEO for signature.

7 After signature the file is kept in the loan sub-committee meeting where
discussion about the loan is done and accordingly it is recommended.
After the recommendation is done. The file is kept for suitable approval from
8 the board of director.
9 In the board of meeting the loan is sanctioned or rejected or any other
compliance may be added, and after that final entry is made in the Centralized
Loan Department.
10 After the finals entry in the Centralized loan department, the loan file of the
particular branch is sent to the respective branch.
11 The branch cells respective applicants and informs about the loan sanctioned
and asks them to come to the branch to fulfill the formalities for disbursal of
loan.

46
 CHAPTER NO III

RESEARCH METHODOLOGY

47
 CHAPTER NO 3

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. Research

constitutes of research methods, selection criterion of research methods, used in context of
research study and explanation of using a particular method or technique so that research result
are capable of being evaluated either by researcher himself scientifically. The research
methodology is used in exploratory research method. In this, we study problems along with the
logic behind them, to understand why we are using particular method of techniques so that the
research result are capable of being evaluated. The data to understand the concept of Loans and
Advances and what their causes, the data collected was analyzed and then used as information in
project. Maximum exposure and enormous support was provided by the bank authority. During
my project work, I have used a lot of data to understand the concept of Loans and Advances and
to study the recovery processes. The data collected was interpreted and used.

Research Design
www.slideshare.net
The Research Design refers to the overall strategy that it choose to integrate the different
components of the study in a coherent and logical way, ensuring you will effectively address the
research problem; it constitutes the blue print for the collection , measurement and analyses of
data.

Data Collection
There are several ways of collecting appropriate data which differ considerably in context of
money, cost, time and other sources at the dispose of researcher. There are two types of data

48
  Primary Data.
 Secondary Data.

Primary Data:
Primary data are those which are collected afresh and for the first time, and thus happen to be
original in character. The primary data was obtained either through observation and interview
with the staff at the company.

Secondary Data:
Secondary data are those which have already been collected by someone else and have already
been passed through statistical process.

TYPES OF RESEARCH:
The basic types of research are as follows:
1. Practical Research:
The practical approach consists of the empirical study of the topic under research and
chiefly consists of hands on approach. This involves first hand research in the form of
questioners, surveys, interviews, observations and discussion group.
2. Theoretical Research:
A non-empirical approach to research, this usually involves perusal of mostly published
works like researching through archives of public libraries, court rooms and published
academic journal.
3. Descriptive Research:
Descriptive research includes surveys and fact finding enquiries of different kinds. In this
method researcher has no control over the variables. He too can only report what has
happened and what is happening. In social research it is called as Ex-post factor research.
4. Analytical Research:
In these research facts, information used to make critical evaluation. In analytical
research detailed analysis of facts is given.
5. Qualitative Research:

49
 This research concerned with qualitative phenomenon such as quality or kind. This
research aims at discovering the underlying motives and desires. This research is
important in behavioral science.

6. Quantitative Research:
This kind of research is based on quantity or any kind of measurement carried out.
7. Empirical Research:
This research is based on experience or observations. It is database research, in which
first hand facts are main source of information, evidences gathered through empirical
studies or experiment.
8. Historical Research:
This research is based on past facts and figures. Historical research helps in describing
future prospectus.
9. Quasi-Experimental:
This research involves the comparison of two groups, one which is influenced by an
external source and another which is not.
10. Experimental:
Use of random assignment to place participants in two groups; an experimental group
which receives intervention, and another control group without any intervention. It is
using a positive control for you to base it or compare it in your result.
11. Meta-Analysis
This research method is useful for finding out the average impact of several different
studies on a hypothesis.
12. Applied Research:
Applied research aims at finding a solution for an immediate problem facing a society or
an industries or business organization.
13. Fundamental Research:
Fundamental research is mainly concerned with generalization and with the formulation
of theory.

In this project report, both types of data have been used. Secondary data was gathered
from annual reports, internet, IPO prospectus, etc.

WHO DOES RESEARCH?

 Government departments
 Manufacturing or service companies

50
  Research companies
 Consultancies
 Advertising agencies
 Voluntary organizations
 And of course we students
MOTIVATION IN RESEARCH
 Desire to get research degree along with its significant benefits.
 Desire to face challenges in solving the unsolved problem.
 Desire to get intellectual joy of doing some creative work.
 Desire to be of service to the society.
 Desire to get respect.
IMPORTANCE OF RESEARCH
 Research identifies the problem areas.
 Research is an aid to forecasting.
 Research helps in all managerial functions.
 Research helps in economic utilization of resources.
 It is helpful in making policy and strategy.
SOURCES OF DATA COLLECTION:
Data for this project is collected through
During my project, I collected data through various sources:
Primary Data:-
Primary data for this project is collected through various forms:-
1. Branch Manager and other employees of the bank.
2. Customer who have taken loan.
Secondary data:-
Secondary data is collected from published reports or prepared and used by other are
called secondary data. The subject matter of study requires this data. So mainly select this
source. The various sources for getting information are as follows:
1. Financial statement:
The bank have provided Financial Statements, Balance Sheet and Profit & Loss
A/c from Annual Audit Report.
2. Induction Manual:

51
 Information related to bank history and profile are gathered from audit report of
the bank.

Also some information was collected from some books and official website of the
respective bank.

Limitations:
 Bank has provided their financial data but it is confidential in nature so as to make
certain changes such as client’s names.
 Lack of assessment of financial status.
 In auditing report the data is consolidated so we cannot get the proper figure.
 In summer training 60 days are very short period to understand the overall processing
of the Loans and Advances.

52
 CHAPTER – IV
DATA ANALYSIS AND INTERPRETATION

53
CHAPTER – IV: DATA ANALYSIS AND INTERPRETATION

Statutory Auditor’s Report

SUVARNAYUG SAHAKARI BANK LIMITED

BUDHWAR PETH, PUNE 411002.

We have audited the attached Balance Sheet of “SUVARNAYUG SAHAKARI BANK LTD.
PUNE” as at 31st march 2015 and also the Profit & Loss Account for the year ended on that date
annexed hereto in which are incorporated the returns of 14 branches & extension counter
audited by us. These financial statement are the responsibility of the Bank’s Management. Our
responsibility is to express an opinion on these Financial Statements based on our audit.

We have conducted our audit in accordance with the auditing standards generally accepted in
India (IGAAP). Those standards require that, we plan and perform the audit to obtain reasonable
assurance, about whether the financial statements are free from material misstatements. An audit
includes examining, on test basis, evidence supporting the amounts and disclosures in the
Financial Statements. An audit also includes assessing the accounting principles used and
significant estimates made by the management, as well as evaluating the overall financial
statements presentation. We believe that, our audit provides a reasonable basis for our opinion.

Balance sheet and Profit & Loss Account have been drawn up in accordance with prescribed
form under the Co-operative Societies Act, 1960 and Banking Regulation Act, 1949 (as
applicable to Co-operative Societies) and are in conformity with the accounting principles
generally accepted in India.

We report that,

1. Accounting of certain income on cash basis is not in accordance with Accounting

Standard s No 9 on Revenue Recognition issued
2. Disclosures as required by Accounting Standards prescribed by the institute of Chartered
Accountants of India are reported herewith.

54
 3. i) Provision in respect of overdue interest on NPA accounts is short by RS.4,97,066/-
The details of such accounts have been given in our report of even date ,which shows
that, net profit of the bank has been under stated by Rs. 4.97,066/- hence current year’s
profit is overstated to that extent.
ii) The bank has amortized excess amount of premium on its govt. securities by Rs.6,
81,355/- hence the profit of current year is understated to direct extent.

iii) The bank is charging depreciation on computer at 33.33% p.a. on SLM basis,
however for the F.Y. 2014-15, the depreciation on computer at H.O. were depreciated at
33.33% on W.D.V. basis. As result of change on method of charging depreciation of
computer at H.O. depreciation is less provided by Rs.6,07,501/- hence profit of current
year is overstated that extent and computer asset is overstated by Rs.6,07,501/- in the
balance sheet dated 31st march 2015.
Subject to above, we report that:
1. We have obtained all the information and explanation which to the best of our knowledge
and belief were necessary for the purpose of our audit.
2. In our option, proper books of accounts are required by the law, MCS Act and rules and bye
laws of the bank, have been kept by the bank, so far as appears from our examination of
those books.
3. In our opinion and according to the information given to us, there has been no material
impropriety and irregularity in the expenditure or in the realization of money due to the bank
which has come to our notice.
4. The Balance Sheet and Profit & Loss account dealt with by this report are in the agreement
with the books of accounts and are drawn in conformity with the law, except as otherwise
stated.
5. The transaction of the bank which has come to our notice have been within the competence
of the bank.
Subject to comments in Part A, B, C of our report.
We further state that
The bank had not compiled with the requirement of disclosing required information on
mandatory accounting standard issued by ICAI and as applicable to bank as follows:

55
Accounting Standard No. Particulars
2 Valuation of inventories
5 Prior period items & change in Accounting Policies
17 Segment Reporting
22 Accounting for Taxes on income
29 Provision, contingent liabilities and contingent asset.

6. Subject to our comments and observations contained in the Audit

Memorandum, in our opinion, and to best of our information and according to
the explanation given to us, the said accounts read together with the notes
thereon give a true and fair view and are in conformity with the accounting
principles generally accepted in India:
A) In case of the Balance Sheet, of the state of the affairs of the Bank as at 31st
march 2015.
B) In case of Profit and Loss Account, of the profit for the year ended on that
date.
7. The Bank is awarded audit classification “A” under the CAMELS rating
systems of the Co-operative Department.

56
FINANCIAL POSITION:
SUVARNAYUG SAHAKARI BANK LTD,
LONAVLA
SUVARNAYUG SAHAKARI BANK DARKER BULDING, MG ROAD, NEAR RAILWAY
STATION LONAVLA.TAL- MAVAL, DIST- PUNE,410401.
PH-02114-278303.

No of branches -18, financial position as on 31-03-2014, 31-03-2015, and 31-03-2016 (audited)

amount in lakhs:
PARTICULARS 31-03-2014 31-03-2015 31-03-2016
Date of 02-10-1973
Establishment

Paid up Share capital 1151.36 1323.74 1457.91

No of 18893 19132 17898

share holders
Deposits 38668.88 43659.96 49317.23

Investment 18818.48 20780.94 22716.27

Loans and Advances 24536.10 27030.36 30757.33

Working capital 63204.98 53027.17 59274.71

NPA 1297.17 1368.31 1403..84

57
Percentage of Net 0 0 0
N.P.A

DATA ANALYSIS AND INTERPRETATION

Table No 4.1
Table showing Total Advances to Total deposits from 2014-2016

(RS. In Lacs)
Rs. In Lakhs
Years Total Deposits Total Advances
31-03-2014 38668.88 24536.90
31-03-2015 43659.95 27030.36
31-03-2016 49317.23 30757.33

The above table is depicted in the following diagram:

58
 Figure 4.1
Chart showing Total and Advance to Total Deposits from 2014-2016

Total Deposits & Total Advances

60000

50000
49317.23
40000 43659.95
38668.88
30000
30757.33
27030.36
20000 24536.9

10000

0
31-03-2014 31-03-2015 31-02-2016

Rs. In Lakhs Total Deposits Rs. In Lakhs Total Advances

Interpretation:

Figure 4.1 clearly shows the relationship between total deposits and total advances from
2014 to 2016. The deposits and advances are shown on x-axis and amounts is shown on
y- axis. Total Deposits is increasing year by year where as the total advances is
decreasing year by year.

59
Table No 4.2 Table showing Deposits Amount
(RS. In Lacs)

Sr. No Year Deposits Amount

1 2013-14 36,88.88

2 2014-15 43,695.95

3 2015-16 49,317.23

Fig 4.2Chart showing Deposit Amount

Deposits Amount
60,000.00

50,000.00
49,317.23
40,000.00 43,695.95
36,688.88
30,000.00

20,000.00

10,000.00

0.00
2013-14 2014-15 2015-16
1 2 3

Interpretation:
In the above graph on X-axis years and on Y-axis amount of deposit in lakhs are
mentioned. The deposits in year was Rs.38, 668.88 lakhs, in year 2014-15 Rs.43, 695.95
lakhs and in year 2015-16 lakhs. Hence the deposits were increasing rapidly year by

60
Table No 4.3 Table showing Loan Amount:
(RS. In Lacs)
Sr. No Year Loan Amount

1 2013-14 24,536.90

2 2014-15 27,030.36

3 2015-16 30,757.33

Fig 4.3 Chart showing Loan Amount:

Loan Amount
35000

30000

25000

20000

15000 30,757.33
27,030.36
24,536.90
10000

5000

0 1
0 0
2 0
3
1 2 3

Sr. No Year Loan Amount

Interpretation:
In the above graph X-axis shows years and Y-axis shows the amount in lakhs as
mentioned above. The data shows the loans in year 2013-14 was Rs.24, 536.90 Lakhs In
the year 2014-15 was Rs.27, 030.36 lakhs. And in year 2015-16 loan was Rs.30, 7.5733
Lakhs. There is rapid increase in the loans amount.

61
 Table No 4.4 Table showing Percentage of Total NPA to Total Advances

from 2014-2016
(RS. In Lacs)
Rs. In Lakhs % of NPA to
Years Total Advances Total NPA total advances
31-03-2014 24536.90 1297.17 5.21
31-03-2015 43659.95 1368.31 5.06
31-02-2016 49317.23 1403.84 4.26

Figure4.4 chart showing Total loans & Total Advance

Total NPA & Total Advances

60000

50000 4.26
1403.84
5.06
1368.31
40000

30000
5.21
1297.17 49317.23
20000 43659.95

24536.9
10000

0
31-03-2014 31-03-2015 31-02-2016

Rs. In Lakhs Total Advances Rs. In Lakhs Total NPA % of NPA to total advances

Interpretation:

Figure 4.2 in the above chart total advances, total NPA and percentage of NPA to
advances is shown on x-axis and amount is shown on y-axis. Shows the relationship
between total advances and total advances from 2014 to 2016. Total advances is
increasing in every year and at the same time total NPA is also increasing in every year
Where as percentage to NPA is decreasing in every year,

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 Table No 4.5 Table showing Total loan & Advances:
(RS. In Lacs)

Sr.No Particular 2013-14 2014-15 2015-16

1 Total loans & 24,536.90 27,030.36 30,757.33

Advances

Fig 4.5 chart showing Total Loans and Advances

Total loans & Advances

35,000.00

30,000.00

25,000.00

20,000.00

15,000.00 30,757.33
27,030.36
24,536.90
10,000.00

5,000.00

0.00
2013-14 2014-15 2015-16
1 Total loans & Advances 24,536.90 27,030.36 30,757.33

Interpretation:
In the above graph on X-axis past three years are mentioned and on Y-axis the amount of
loan are mentioned. The graph show the total loan & advances of the bank is increasing
year by year.

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 Table No 4.6 Table showing Total NPA:
(RS. In Lacs)

Sr. No Particulars 2013-14 2014-15 2015-16

1 Total NPA 1297.17 1368.31 1403.84

Fig 4.6 chart showing Total NPA:

Total NPA
1420
1403.84
1400
1380 1368.31
1360
1340
1320
1297.17
1300
1280
1260
1240
2013-14 2014-15 2015-16

Interpretation:

In the above graph on X-axis years and on Y-axis amount of total NPA in lakhs are mentioned.
Graph shoes that in year 2013-14 NPA was 1297.17 lakhs and in year 2014-14 NPA was
1368.31 lakhs and in year 2015-16 was 1403.84 lakhs thus we can see that NPA is increasing
every year.

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 Table No 4.7 Table showing Rate of interest for granting different types
of loans:

Sr.No Particular Rate of interest for year

2015-2016
1 Education loan 13.5%
2, Personal loan 15%
3 Vehicle loan 13%
4 Home loan 13.50%
5 Property mortgage loan 15%
6 Gold loan 14%

Fig 4.7 showing rate of interest for granting different types of loans:

Rate of interest for the year 2015-2016

15.50%

15.00%
15% 15%
14.50%

14.00%
14%
13.50%
13.50% 13.50%
13.00%
13%
12.50%

12.00%
Education loan Personal loan Vehicle loan Home loan Property Gold loan
mortgage loan

Interpretation:
In the above graph different kinds of loans are shown on x axis and on y axis rate of interest are
shown. Personal loan and property mortgage loan has the highest rate of interest i.e. 15%.
Vehicle loan has the lowest rate of interest i.e.13%.

65
 CHAPTER NO 5

FINDINGS AND SUGGESTION

66
 CHAPTER NO 5

FINDINGS AND SUGGESTION

FINDINGS:

1.) Total deposits to total advances are increasing rapidly year by year.
2.) Deposits of bank is increasing rapidly as compare to year 2013 to 2016 deposits are
increased.
3.) The bank act as financial support by giving productive lending for increasing the
productivity and income level of the rural families bank has been providing wide varieties
of services and facilities to the different customers. Suvarnayug Sahakari Bank is fully
computerized and has adopt all modern banking practices.
4.) Loans amount is also increasing in year 2013-14 loan amount was Rs.25536.90 and it got
increased 2015-16 and the loan amount was Rs.30757.33.
5.) Percentage of NPA to total advances in year 2014 was 5.21% and it suddenly got
decreased by 4.26% in year 2016.
6.) Total NPA is also increasing in year 2013-14 NPA was Rs.129.17 it got increased in
2015-16 and NPA was Rs. 1403.84. Therefore NPA was increasing year by year.
7.) Rate of interest granted on different types of loans for home loan rate of interest is higher
13.50% and for vehicle loan rate of interest is lower compare to other loan.

67
 SUGGESTIONS

On the basis of findings following suggestion are given for improvement:

 Bank should reduce lead time for processing of loan proposal and should make
some simplified form and required documents.
 The entire bank system is working in Marathi so they should try to implement their
system to work in English.
 Online banking must be adopted so that customers can transact easily.
 Bank should concentrate more on computerized resources where it can be helpful
for them in reduce paper work, which can be helpful for them in reducing many
errors while dealing in Loans and Advances.
 As the bank is carrying out their transaction in Marathi so they should try to keep
their records in English also.

68
CHAPTER N0-6

CONCLUSION

69
 CONCLUSION

The Suvarnayug Sahakari Bank is working according to the Rules & Regulation,
Guidelines .The bank follows all the banking terms and laws relating to the loans and
advances. Working through summer internship with Suvarnayug Sahakari Bank was really
good. The bank officers and employees were very co-operative. I would like to thank each
and every one in bank specially our bank manager who has provided with necessary
information and had answered for each and every query. The bank offers different kinds of
Loans and Advances, services and facility. The Suvarnayug Sahakari Bank has been
awarded by “Pune District Sahakari Banks Association Ltd”. For financial year2015-16
for maintaining “Gross NPA” below “5%” for this they have been awarded as special
award.

70
CHAPTER N0- 7
BIBLIOGRAPHY

71
 BIBLIOGRAPHY

1) Financial Management by Ravi Kishore

2) Suvarnayug Sahakari Bank hand book
3) Website:
 www.RBI.com
 www.suvarnayug bank.com
 Wikipedia
4) Other Sources:
 Referred project from Library
 Bank guide
 Guided by Manisha Badgujar

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