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A DISSERTATION REPORT ON RETAILCREDIT AT

Almora Urban Co-Operative BANK LTD.


Head Office Lala Bazar ALMORA

In partial fulfillment of requirement for MBA Degree Submitted To Pooja Johari Lecturer Submitted By Ashok Joshi Roll. No.07290500009

Saraswati Institute of Management &Technology, Rudrapur Gadarpur main road, Rudrapur (Uttrakhand) (Affiliated to Uttrakhand Technical University, Dehradun)

CONTENTS
Topic Preface Acknowledgement Deceleration College Certificate Chapter 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.1 2.2 3.1 4.1 4.2 4.3 Introduction Chapter Arrangement Objective of Study Period of Study Research Methodology Method (Tools of Analysis) Scope of the study Limitations of study Operational Definition Chapter 2 Industry Profile Company Profile Chapter 3 Data Analysis and Findings Chapter 4 Summery of Findings Recommendations Conclusion Bibliography Annexes Questioners Page No.

PREFACE

I undertook a summer training project at Almora Urban Co-Operative Bank Ltd. LALA BAZAR, ALMORA, in the area of Financial Management & Marketing Management. The basic idea that lies behind Summer Training is to help the student get as much knowledge and information as possible in the given period of time by actually being a part of the corporate world. I chose Almora Urban Co-operative Bank to pursue my summer training in, because it being a part of the Banking Industry could give me maximum exposure that I need to face the real rationale corporate world. The Almora Urban Co-operative Bank is a fast Growing Bank. The Minimum standards decided by the Reserve Bank of India for Urban Cooperative Banks to become viable were fulfilled in just Six months after establishment of the Bank. To be associated with the Almora Urban Co-operative Bank was a wonderful opportunity in itself.

ACKNOWLEDGEMENT
This project has given me a perfect exposure on myriad fields of managerial applications in the industry. This project has been a great learning experience for me & I would like to express my gratitude towards all the people who guided me throughout and without whose guidance & support this project would not have been completed successfully. I am really out of words to express my hurtful gratitude to Mr. P. C. Tewari (Secretary/General Manager) Almora Urban Co-operative Bank for not just his help & guidance but also for all the censors & criticisms, which helped me, work better. He introduced me to the various intricacies of work process. I owe a lot to him. During my assignment my association with Mr. Deep Kandpal Officer, Credit Department Almora Urban Co-operative Bank was over whelming. His contribution has been outstanding as regards invaluable advice on all aspects of management, irrespective of the specialty boundaries. He stood as an embodiment of inspiration during my entire stay with company. Back at SIMT, Gadarpur I found my faculty to be ever obliging, catering to the academic aspects of the project. Mrs. Pooja Johri Faculty of Management Department, SIMT person who imparted the knowledge onto me & help on each occasion. I would also like to thank my parents without whose support this project would not have been completed. To sum up, my experience with Almora Urban Co-operative Bank has been a valuable one .The value addition was enormous & this impact long lasting. I thank everyone once again. ASHOK JOSHI MBA (2007-09)

DECLARATION

This dissertation has been undertaken as a partial fulfillment of the requirement for the award of the degree of Master of Business Administration, Uttrakhand Technical University, Dehradun. This project was executed under the supervision of Lecturer Mrs. Pooja Johri, department of Management at SIMT, Gadarpur.

Further I declare that this dissertation is my original work and the analysis and findings are for academic purpose. This dissertation has not been presented in any seminar or submitted else where for the award of any degree or diploma.

Counter signed By: Mrs. Pooja Johari Lecturer Department of Management Studies

Name & Full Signature of the student Ashok Joshi

CHAPTER 1

1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9

Introduction Chapter Arrangement Objectives of study Period of study Research Methodology Method (Tools of Analysis) Scope of the study Limitations of study Operational Definitions

1.1. Introduction

Training is a very crucial function of company. It helps the trainee in updating their practical knowledge. So that they can sustain in competitive world. It improves the performance of a person towards the society and also towards the organization. Project is an organized process for increasing the knowledge and skills of a management student. This project helps a management student in applying his theoretical knowledge in practical. Through this one would also string his/her presentation skill. I have taken this project to enhance or to gain knowledge in financial area of an organization. I had completed my training from Almora Urban Co-operative Bank Ltd. Almora.

1.2. Chapter Arrangements


Chapter I

Chapter include the introduction, chapter arrangement , objective of the study, time period of study, methodology used in research, tools of analysis, limitation and scope of study and operational definition of the study. Introduction represents an overview of the research work. Objective of study conclude the basic objective or purpose of study. In research methodology describe the data applied in project such as primary and secondary data. Tools used in project work shown in the tools or methods of analysis. The meaning and definition are described in operational definition of the study.

Chapter II
Chapter second includes theoretical background such as industry profile and company profile of industry (Bank). In industry profile the overall industry structure of Bank are described. Industry profile includes Promoter, Business Focus, Capital Structure, Distribution Network, Technology, Businesses, and Ratings. Company profile consist the basic business and structure of particular head office where I did my summer training.

Chapter III
Chapter third includes data analysis and data interpretation. There are two tools used for data analysis such as ratio Analysis and Trend Analysis.

Chapter IV
Chapter fourth includes Findings, Recommendations after analyzing data. It is followed by conclusion , bib..and anx.

1.3. OBJECTIVE

During the last few years, retail lending activities are occupying the centre stage in the Indian Banking Industry & it is expected that the trend will continue. This study deals with following objectives.
Objective: i. ii. iii. iv.

Identification of awareness of Almora Urban Co-operative Bank Products. Identifying the sources of awareness.
To analyze the trend of Retail Credit. Suggesting strategies for effective marketing of retail loan product.

1.4. Period of Study

I am a student of Saraswati Institute of Management &Technology, Rudrapur-Gadarpur main road, Gadarpur, pursuing my two year Post Graduation course in MBA (MASTER IN BUSINESS ADMINISTRATION) approved by UTTRANCHAL TECHNICAL UNIVERSITY, DEHRADUN. My field of

specialization is Finance.

I did a summer training project at Almora Urban Co-Operative Bank, (Head Office),
LALA BAZAR, ALMORA, (6 week) on Retail Credit.

1.5. RESEARCH METHODOLOGY

Methodology used in the study involves both primary and secondary data. The primary data were collected by: I. Administering a questionnaire to 100 randomly selected people. The information sought through the questionnaire related to: a) Awareness of Almora Urban Co-operative Bank Schemes. b) Sources of awareness. II. Discussions were held with various Branch functionaries, senior executives of banks, officials of credit department. III. Secondary data was collected from annual reports, publicity materials, web sites of various banks, reports of RBI, publications of IBA, etc.

1.6. Sampling Plan 1. 2. 3. Sampling Unit: Sample Size: Area: Retail Credit User. 100 customers. Almora. Tools of Analysis Chart Tables Percentage Analysis

1.7. SCOPE OF STUDY

The study has been done mainly with an objective to analyze the Indian banking industry with specific reference to Almora Urban Co-operative Bank and to study the important factors influencing the Retail Credit and other facilities provided by the bank. The scope of the study is narrow, keeping in mind its ultimate purpose for the academic value in MBA programme. Study was conducted on the employees to know the way in which they solve the problems of their consumers and to understand the behavior of the consumers through them. So this study will help the bank in getting acquainted with the preferences of the consumers according to which it can design plans and strategy for the various facilities provided by the bank.

1.8. Limitation of study

The project was incorporated under the following constraint: 1).To maintain the secrecy some confidential information of the clients were not revealed. 2).The time duration of 8 weeks for the in insufficient. 3). The tool I used for the study was structured questionnaire, which is itself has narrow scope. 4). Sometimes due to lack of respondents support it has become difficult to get required information. 5). The data collected is approximate as it is obligatory for every company to disguise its actual data. 6). Sample size of customer is very small. 7). The analysis done has got limited scope. depth study of the project was

1.9. Operational Definitions


What is Retail Credit?

It is necessary to understand the meaning and implication of retail credit in the context in which the credit is provided to the borrower. In simple terms the concept of retail credit is opposite to the concept of wholesale credit. The term wholesale credit is used in the context of large quantum of credit provided to the corporate and institutional customers of commercial banks. Not only the individual credit limits are large, the convents attached to these credit propositions are also complicated in nature. Dispensation of wholesale credit therefore requires the services of experts in the field, which may not always be available in plenty. As against this retail credit signifies credit provided to the masses for consumption (Non productive) as well as productive purposes. There is a notion that retail credit perhaps does not include the productive segments i.e. the SSI sector, tiny, village and cottage industries that help a large number of families earn their living. This is perhaps not true. These segments continue to be a very important part of the credit provided to these segments, the lending banks have been providing certain concessions, thus making them distinct from the other segment of retail credit viz, housing finance, personal and mortgage loans, educational loans, loans for financing consumer durables etc.

Special Features of Retail Credit

One of the prominent features of retail credit banking products is that it is a volume driven business. Further retail credit ensures that the business risk is widely dispersed among a large customer base, unlike in the case of corporate lending where the risk may be concentrated on a select few clients. Ability of any bank to administer a large portfolio of retail credit products depends on such factors as the following: Strong credit assessment capability: Because of large volume good infrastructures is required. If the credit assessment itself is qualitative, then the need for follow up in

the future reduces considerably. Sound documentation: A robust system for credit documentation is a necessary prerequisite for healthy growth of retail credit portfolio-as in the case of credit assessment this will also minimize the need to follow up at a future point of time. Strong processing capability: Since large volumes of transactions are involved excellent infrastructure for processing of day-to-day transactions, maintenance of back-ups etc. is required. Regular and constant follow-up: Ideally follow up for loan repayments should be an ongoing process; it should start from the customer enquiry and last till the loan is repaid in full. Skilled human resources: This is one of the most important pre-requisites for the efficient management of a large & diverse retail credit portfolio. Only highly skilled & experienced manpower can withstand the ragout of administering a diverse and complex retail credit portfolio. Technological Support: This is yet another vital requirement. Retail Credit is highly technological intensive in nature, because of the large volumes of business, the need to provide instantaneous service to the customers at large, faster processing, maintaining databases etc. Prospects of Retail Credit and Nature of the Retail Credit Market: While earlier banks used to finance only those activities which "Production-Based" (like financing for working capital, term loan requirements or trade financing etc.) now there has been paradigm shifts towards retail credit which is not generally connected with any production activity per se. However the fact is that this "unproductive retail credit can also contribute towards economic development as in the case of industrial/corporate credit; because it generates demand and also enhances employment. Further some of these retail

activities(like housing) can generate multiplier effects on the economy because of the presence of many linkages(forward & backward) with several other industries including core industries like cement, steel etc. Moreover, in a recession hit economy like that of ours, retail credit is probably an imperative for economic revival, rather than option. The incidence of bad advances is lesser in the case of retail credit compared to corporate credit. This is particularly true in respect of housing finance where the average default rate on an annualized basis is less than 1%. The size of retail banking market is of the order of Rs.1, 30,000 corers. While there has been impressive growth in retail credit during the last few years the fact is that the market is still in its nascent stage in India and the level of market penetration in India is just 2% of GDP, as against 20% of GDP in respect of South East Asia & 50% in case of US. Thus the size of the retail credit market is enormous and the prospects of industry are bright. A recent study undertaken by CRISIL has revealed that even a growth rate of 40% in retail credit is sustainable in India, at least for the next five years. Another point which deserves mention here is that the income from retail operations represents the real interest income, unlike that from treasury and allied operations which represent non-interest income or other income. Hence, this source of income is less risky and highly desirable in the long run. Accordingly the retail credit business as a business alternative is less vulnerable to risk than the non-interest or feebased business of banks.

SUCCESS FACTORS IN CREDITThe recent surge in the retail credit has amply proved that certain requisites would have to be put in place by the lending banks in order to ensure a respectable growth rate in the sector as also to maintain the quality of the portfolio. That a few select

bank have stolen a march in this regard over other commercial bank, is only on account of the fact that the former had ensured due care and emphasis on the need for putting the respective implementation factors in place before jumping into it. The other commercial banks also now set to ensure that the following requisites are in place before they tart implementing their marketing strategies in retail lending sector. An advanced, latest and the right technology is an absolute necessity for implementing the retail lending strategies. Retail lending is mass lending in a segment and only the right technology can ensure fast processing of the huge amount of data required for and generated from such lending. His is also the reason why the technology rich banks could implement their strategies in retail lending much earlier than their public sector counterparts. Besides, decision making in retail lending is usually done on the basis of credit storing models, which needs the support of advanced technology and networking. Monitoring of retail loans require processing of vast numbers of post dated cheques where the support of customized technology becomes an absolute must. As a corollary to the above, lending bank needs skilled manpower to operate the systems driven by the latest technology and advanced networking. The new Private sector banks again steal the show in this regard. However, the public sector banks are also fast catching up with them. Some of the PSBs are also going for lateral recruitment in order to ensure that there is adequate number of techno savvy employees to man the systems. A necessary condition for sustaining a good growth in the retail credit portfolio (both quality and quantity-wise) is product improvement and customization on a continuous basis. This is possible only if the huge database containing details of customer behavior and product preference generated from the system is properly analyzed and meaningful

inferences derived. Ability to undertake a proper market research and product innovation is thus a necessity for an efficient retail lending system.

The efficiency of retail lending system also depends on how efficiently a lending bank
ties up with the various parties for marketing of different categories of retail lending product. For example a good housing loan portfolio depends a good deal on the tie-ups with builders of repute. Similarly, sharing of ATMs by different banks leads to effective cost management of resources. Besides having a tie up with other strategic partners, a pool of specialists like lawyers, civil engineers, values, automobile specialists etc. would be a prerequisite for the banks desiring to build up a good retail lending portfolio. Perhaps the most important of all is that the lending bank needs to have a pool of frontline personnel who excel in customer service and possess a good knowledge of the products offered by the lending banks. No amount of sophistication in automation and technology can match the human touch offered by the service providers of the lending bank. Along with this, the retail lenders have to maintain a specialized group of people who are aware of the whereabouts of the borrowers, and are able to monitor the developments in the loan accounts in a consistent manner. Risk appraisal in respect of Retail advances Traditionally, retail loans in personal segment have been considered as less risky than credit facilities provided to wholesale or corporate sector. In reality, this has not been subjected to rigorous testing in Indian conditions. This impression may have been gathered from the fact that till about 1990s, the Indian banking sector had provided personal loans against specified securities that were self-liquidating in nature. The risk appraisal in respect of the borrower was therefore never a concern. In the changing circumstances, however, the lending banker must pay specific attention to the following risk elements in respect of this segment (housing loan-specific risk elements have been discussed separately):

Since retail advances are provided by bank branches in bulk, there is always a risk of adverse selection of borrower. There is little that a credit officer can do if a borrower has taken multiple borrowings from different banks, or has borrowed beyond his means and the applicant has concealed this fact from the lending bank

Sometimes, the credit officers are asked to put high emphasis on dispensing higher volume of retail credit, perhaps on account of the high yield and low NPA formation in this segment, without having a retail loans policy put in place by the lending bank. This may lead to unwarranted composition of assets and the asset portfolio may become subject to liquidity risk and interest rate risk etc.

The surge in the retail loan segment also leads to volume risk. This means that it becomes increasingly difficult to monitor the large number of loan accounts spread over a wide geographical area

.The task of maintaining the asset quality of the portfolio may be quite challenging which may require more manpower with the passage of time. One may observe that high growth trend in retail advances is more on account of the current disbursement in the wake of low interest rates and high competition amongst the lending banks. However, a large proportion of these advances are recoverable over a very long term (for example, housing loans may go up to 20 years).The retail advances are therefore fraught with time risk and a little slippage in monitoring the credit portfolio could mean higher incidence of NPA in this segment.

From the point of lending bank, providing long term retail credit especially housing finance, education loans etc. also invite asset liability mismatch risk. This is because such long term loans are funded by short term deposits mobilized by

the lending bank. Thus, in case the long term loans exceed an accepted level, the lending bank may face a liquidity crunch. As we have already discussed, one of the most important reasons for the current surge in the retail lending is the prevailing low rate of interest. Mostly, the borrowers want to avail the benefit of the low rate and therefore prefer to avail the credit at floating rates of interest. The credit officers also assess the viability of the project on the basis of the prevailing rates. However, the viability of the credit proposition and the repayment capacity of the borrower may be adversely impacted if the interest rates go upwards. A credit in the retail segment locked on a long term basis therefore exposes the borrower to interest rate risk. This aspect, if not examined properly, may create NPAs in the books of the lending bank in future. The long term structure in certain forms of retail credit also may lead to decline in the

value of the securities. The margins stipulated by lending banks in respect of these credit proposals have already come down considerably. Any decline in the value of securities may therefore mean increase in the risk undertaken by the lending bank.

Why Retail Credit?


The large corporate houses are floating funds through various sources other than the bank finance. These include from generating internal resources, to floating commercial papers (CPs). If at all the finance is availed through banks, the ROI is mostly in this flavor, which is Sub-PLR in majority of the cases. Under the above scenario the banks are forced to look into the retail segment for mobilizing deposits as well as lending. The spurt in retail banking in sectors like flexible deposit products, housing finance, consumer finance, two wheeler & four wheeler loans, financial services have helped the associated industries to grow at a faster rate. Another good feature prevalent in the retail banking is that it gives a very good

return to the banks in both the deposit as well as the advance products. Due to shift competition the spread of almost all the banks have come down during the past decade, but the spread available in the retail lending. Retail lending is high in comparison to wholesale or other types of products. Most of the schemes are either readymade or tailor made. The products can be designed & amended as per the need & suitability of the buyers or the users, the volume is high, the risk is diversified & the appraisal is also simpler. The only factor that hampers retail banking is the higher cost involved it as compared to wholesale banking. Retail banking has proved to be a boom for the banks to expand their net interest income. The changing habits & the lifestyle of the people have also added to the growth of retail banking. This is clear from the following chart: PAST PHENOMENA Income ExpenditureConsumptionSaving PRESENT PHENOMENA ExpenditureFinanceIncome less RepaymentConsumption The focus on saving has also reduced to the increased consumption culture. The present value of money is more than any future value. Inflation has further added to this tendency. The addition by way of interest has been eaten away by the inflation. Saving has become less popular except for the specific purposes or the tax exemption purposes. The boost in the economy is also a result of consumption culture. Retail finance can be a means of increasing effective demand. Interest income constitutes major source of income for the banks. It is observed that interest income over the years has declined. The reason for

decline in the interest income can be attributed to-

Soft interest rate scenario due to adequate liquidity.

The Banks are allowed to lend at Sub-PLR. Intense competition. Alternatives available to the corporate for raising funds in international market and through commercial papers thereby reducing dependence on bank borrowings. Slow off take of credit. The rates of interest have moved Southwards since last 5-6 years. The bank rate has declined by 200 basis points from 8% in 1999 to 6% in 2003.In line with decline in bank rate; the PLR on advances of most banks has also declined by 300 basis points from 14.50% in 1999 to 11.50% in 2002, thereby adversely affecting the interest income of the banks. The call money rates due to adequate liquidity had been low at around 5% thus yielding low returns from lending operations of the banks in the market. The coupon rates in the investments market fell below the bank rate. The investments made by banks during 2001-02 and 2002-03 will yield less interest income for banks in the coming years. It has been estimated that about 85% of the investments will be replaced by low yielding securities by 2005-06 thus reducing the interest income by 40%.In a deregulated and competitive market the management of rate of interest has become a crucial factor for interest income and business development. Under the above scenario banks are forced to look into the retail segment for lending and RBI no longer applies any brakes. Retail credit is no longer unproductive from the national economy perspective. The spurt in retail credit in sectors like consumer finance, automobiles, two-wheelers, financial services and home loans sector indirectly helps the economy by pushing up the sales of the products and services involved. Consumer debt is on the rise world wide. But if we compare the following statistics relating to the consumer debt-to GDP of other countries, we stand amongst the lowest.

Indian market offers a huge potential for growth of retail credit. As percentage to GDP, although the level of penetration of retail banking is only 2% till today in our country, statistics show that the annual growth rate of retail lending in our country exceeds 30% now which hardly any other sector can boast off The last few years have been trend setting in the behavioral pattern of Indian consumers. There has been a radical change in the attitude of Indian consumers towards spending. The new middle class has come out of old perception and is no longer debt-averse. The 350 million Indians in the age group 15 to 35 look at life and life styles quite differently from the 122 million Indians in the 36 to 45 age group. The neomiddle class consumers in our country have grown at a pace of more than 10% every year during the past decade. There are other reasons also for banks increasingly focusing on retail segment. (A): 1) Risk is diversified. 2) Spread is higher. 3) There is tremendous untapped potential. 4) Wide & perpetual customer base. 5) Incidence of NPAs is the least.

B). Whole Sale Lending Large Low Thin Complex Complex High Retail Lending Small Large Simple Simple Simple Low/Negligible

Size Volume Spread Documentation Appraisal Regulatory Impact

All these have opened up the new opportunity of Retail Business before the Banks in India. Fuelled further by the sluggish industrial climate in the country, the Indian Banks are now very bullish about retail segment and every major market player has higher targets in this sector.

MARKETING OF RETAIL PRODUCTS


Marketing is creating awareness of the product, stoking interest, creating the desire to buy, facilitating the action of purchase, and most importantly, ensuring the satisfaction process. Every organization or service outfit ensures satisfaction through the post sale process. While there may be vast disparities in the income levels of the people in the country, most of the socio-cultural segments are large enough to be mini markets in themselves. The gaps between the urban and rural market and the users, in case of many products are narrowing. The main basis of difference is the purchasing power. Usage of different products in different sections of the society does vary, and it requires a through and insightful study. India is a mosaic of markets and therefore tastes, habits, consumption patterns, are heterogeneous. New buyers are entering the market place everyday. Fear of new products failing is on the increase. This can kill the initiative. Errors of judgment may also be there in the imperfectly understood field, where traditional solutions do not hold much promise or are of decreasing power with each passing day. Branding has come of age in the last few years. This calls for a sophisticated understanding of brands as some thing designed by the marketer but built over time by the consumer in the latters mind. MARKETING STRATEGY:

SEARCH for the potential customers. GET good customers. KEEP or retain good customers. GROW with good customers.

HOW TO RETAIN EXISTNG CUSTOMERS: Care Concern Competence

HOW TO ATTRACT A CUSTOMER IN MARKETING A PRODUCT: 1) Regular visits to bungalow/flats/complex/shops for marketing a product. 2) Render best, courteous service to the existing customers in order to get more customers. 3) Distribute sweets to all customers on festival days. 4) Distribute varieties of sticker sheets such as He-Man,Animals,Birds etc. and pencils or ball point pens to kids who open accounts or who accompany with parents in branch. 5) Send Thanks cards along with new product broachers/pamphlets to all customers who open new savings/current or term deposit accounts. 6) Send Birthday Greeting cards to depositors. You may take the birth date at the time of opening of account or note down the same on account opening card and also a note in the ledger may do this. 7) Special function like blood donation camp, literacy drive may also be organized with the help of outside agencies and distribute the schemes pamphlets. 8) Close liaison should be maintained with social groups and denominational bodies viz. church groups, mosque groups, temple groups etc.

9) Request all depositors/customers to give at least five names that are residing nearby so that the branch officials may pay a visit. 10)Hoardings and banners at prominent [laces around the banks area, a close rapport with the village would help to create the confidence in them about the bank and to get deposits/loans and in marketing a product in phase manner. 11)Relationship with a customer should be on a long-term basis. Call the customer to your seat and chitchat over a cup of tea.

MARKETING IN RURAL AREAS: The rural market in India has so far not been tapped for retail banking. The people residing in rural and semi urban areas are to be captured and brought under the retail banking in urban areas takes care of mainly the housing and auto loans, consumption financing, IPO funding, financing for buying shares etc. he retail banking in rural and semi urban will take care of the cash needs, financing of consumer durables, agricultural implements, artisans equipments, needs of the tiny sector, insurance products including life insurance policies, transport facilities etc. The action to be initiated is to assess the needs of the residents of a particular locality and design the products accordingly. The important aspect is that the people in rural and semi urban areas have more faith in the public sector Banks them all other mediators or agencies for supplying them any of the products. Success will therefore depend on the availability of diverse products for pro active marketing. The staff posted at rural centers lack marketing skills. The thinking is restricted to their earlier attitudes. They need to move outside their locations. The growing need in urban areas as well as the new potential in rural and semi urban areas will yield expected results for growth for retail banking in India.

NEW IDEAS OF RETAIL BANKING: Speaking customers language and publishing pamphlets in regional language: people prefer to do business in their own language. Stepping into the shoes of the customer: knowing and fulfilling his expectations. Providing good service: it is the service and not the product which makes the difference. Making customer service and satisfaction survey by personal interview. Customer Relations Management by developing social and personal relations. Building image in the local areas.

OTHER ADVANTAGES OF RETAIL BANKING: Banks have opportunity to sell various retail products to the include the following products and services: Loan products Deposit products Insurance products Credit and Debit cards Lockers and safe custody facility Payment of bills etc. Portfolio management Mutual fund products Collection of taxes Consultancy services Other ancillary services customers. These may

CONCLUSION:Above all, there is an immediate and urgent need for a change in our thinking and attitude, to understand the imperatives of competition perceive the changes in the Banking Industry and plan and adopt a dynamic Marketing Approach for our various products and services to accelerate the Business Growth of the Bank.

CHEPTER -2

2.1 Industry Profile 2.2 Company Profile

2.1. INDUSTRY PROFILE

Unlike other highly advanced industrial countries of the world, banks do not play a very important role in providing necessary working capital to industries in our country. Banks in our country have always assumed a very

conservative attitude in advancing money to the industries. Industrial Banks, providing long-term capital to the industries, do not exist in this country. Commercial banks provide only short-term loans to meet the temporary needs

of the industrial concerns for working capital. Even these short-term loans are made on very unfavorable terms. Banks in our country, usually give financial help to the industries in the following three ways: Advancing against tangible marketable securities, lodged or

pledged with the bank; Advances against personal credit with two signatures to the

pronote; and Advances against the personal credit of the borrower only.

BANKING OVERVIEW
The major participants of the Indian financial system are the commercial

banks, the financial institutions (FIs), encompassing term-lending institutions, investment institutions, specialized financial institutions and the state-level

development banks, Non-Bank Financial

Companies (NBFCs) and other

market intermediaries such as the stock brokers and money-lenders. The commercial banks and certain variants of NBFCs are among the oldest of the market participants. The FIs, on the other hand, are relatively new entities

in the financial market place.

HISTORICAL PERSPECTIVE
Bank of Hindustan, set up in 1870, was the earliest Indian Bank . Banking in India on modern lines started with the establishment of three presidency banks under Presidency Bank's act 1876 i.e. Bank of Calcutta, Bank of Bombay and Bank of Madras. In 1921, all presidency banks were amalgamated to form the Imperial Bank

of India. Imperial bank carried out limited central banking functions also prior to establishment of RBI. It engaged in all types of commercial banking business except dealing in foreign exchange.

Reserve Bank of India Act was passed in 1934 & Reserve Bank of India (RBI) was constituted as an apex bank without major government ownership. Banking Regulations Act was passed in 1949. This regulation brought Reserve Bank of India under government control. Under the act, RBI got wide ranging powers for supervision & control of banks. The Act also vested licensing powers & the authority to conduct inspections in RBI. In 1955, RBI acquired control of the Imperial Bank of India, which was renamed as State Bank of India. In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making them as its 100% subsidiaries.

RBI was empowered in 1960, to force compulsory merger of weak banks with the strong ones. The total number of banks was thus reduced from 566 in 1951 to 85 in 1969. In July 1969, government nationalized 14 banks having deposits of Rs.50 crores & above. In 1980, government acquired 6 more banks with deposits of more than Rs.200 crores. Nationalization of banks was to make them play the role of catalytic agents for economic growth. The Narsimham Committee report suggested wide ranging reforms for the banking sector in 1992 to introduce internationally accepted banking practices.

The amendment of Banking Regulation Act in 1993 saw the entry of new privatesectorbanks. Banking Segment in India functions under the umbrella of Reserve Bank of India the regulatory, central bank. This segment broadly consists of:

1. 2.

Commercial Banks Co-operative Banks

NATIONALIZATION
By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the GOI controlled around 91% of the banking business of India. After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

CURRENT SCENARIO
Currently (2007), overall, banking in India is considered as fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure

from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility-without any stated exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector, the demand for banking services-especially retail banking, mortgages and investment services are expected to be strong. M&As, takeovers, asset sales and much more action (as it is unravelling in China) will happen on this front in India. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them. Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively. CHALLENGES WITH IN THE BANKING INDUSTRY The banking industry is a highly regulated industry with detailed and focused regulators. All banks with FDIC-insured deposits have the FDIC as a regulator; however, for examinations, the Federal Reserve is the primary federal regulator for

Fed-member state banks; the Office of the Comptroller of the Currency (OCC) is the primary federal regulator for national banks; and the Office of Thrift Supervision, or OTS, is the primary federal regulator for thrifts. State non-member banks are examined by the state agencies as well as the FDIC. National banks have one primary regulatorthe OCC. Each regulatory agency has their own set of rules and regulations to which banks and thrifts must adhere. The Federal Financial Institutions Examination Council (FFIEC) was established in 1979 as a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions. Although the FFIEC has resulted in a greater degree of regulatory consistency between the agencies, the rules and regulations are constantly changing. In addition to changing regulations, changes in the industry have led to consolidations within the Federal Reserve, FDIC, OTS and OCC. Offices have been closed, supervisory regions have been merged, staff levels have been reduced and budgets have been cut. The remaining regulators face an increased burden with increased workload and more banks per regulator. While banks struggle to keep up with the changes in the regulatory environment, regulators struggle to manage their workload and effectively regulate their banks. The impact of these changes is that banks are receiving less hands-on assessment by the regulators, less time spent with each institution, and the potential for more problems slipping through the cracks, potentially resulting in an overall increase in bank failures across the United States.

The changing economic environment has a significant impact on banks and thrifts as they struggle to effectively manage their interest rate spread in the face of low rates on loans, rate competition for deposits and the general market changes, industry trends and economic fluctuations. It has been a challenge for banks to effectively set their growth strategies with the recent economic market. A rising interest rate environment may seem to help financial institutions, but the effect of the changes on consumers and businesses is not predictable and the challenge remains for banks to grow and effectively manage the spread to generate a return to their shareholders. The management of the banks asset portfolios also remains a challenge in todays economic environment. Loans are a banks primary asset category and when loan quality becomes suspect, the foundation of a bank is shaken to the core. While always an issue for banks, declining asset quality has become a big problem for financial institutions. There are several reasons for this, one of which is the lax attitude some banks have adopted because of the years of good times. The potential for this is exacerbated by the reduction in the regulatory oversight of banks and in some cases depth of management. Problems are more likely to go undetected, resulting in a significant impact on the bank when they are recognized. In addition, banks, like any business, struggle to cut costs and have consequently eliminated certain expenses, such as adequate employee training programs. Banks also face a host of other challenges such as aging ownership groups. Across the country, many banks management teams and board of directors are aging. Banks also face ongoing pressure by shareholders, both public and private, to achieve earnings and growth projections. Regulators place added pressure on banks to manage the various categories of risk. Banking is also an extremely competitive

industry. Competing in the financial services industry has become tougher with the entrance of such players as insurance agencies, credit unions, check cashing services, credit card companies, etc.

2.2. COMPANY PROFILE

Almora Urban Co-Operative Bank HEAD OFFICE


Lala Bazar, Almora

Uttranchal-263601 (India)
Phone: 05962-230743

The Bank was established on 14 th August 1991 with an initial working capital of 2.56 lakhs and only one branch at Almora. Today the Bank has fully computerized 17 Branches and working capital of more than 400 Crores.

Almora Urban Co-Operative Bank HONOURS YOUR TRUST


Global banking has changed rapidly and Almora Urban Co-Operative Bank has worked hard to adapt to these changes. The bank looks forward to the future with excitement and a commitment to bring greater benefits to the customers.

Almora Urban Co-Operative Bank, with years of dedicated service to the Nation active financial participation in all segments of the economyAgriculture, trade & commerce, Service Sector, Infrastructure Sector etc., is keeping pace with the changing environment. With a district wide network of more than 17 service units, which includes specialized and computerized branches in Uttaranchal, Almora Urban CoOperative Bank has marched into the 21st Century matched with dynamism and growth. The Bank was established on 14 th August 1991 with an initial working capital of 2.56 lakhs and only one branch at Almora. And today Almora Urban Co-Operative Bank has crossed the Rs.400 crore business marks in March 2006.

Progress of bank shown by graph:-

At the beginning of the financial year 2004-2005 the total deposit was Rs.27055.28 lakhs which became Rs. 33787.33 Crores on 31 Mar, 2006.

The growth in deposit thus 19% compared to 15% growth in nationalized banks. The deposit from 1998-99 are shown in the following figure:

Deposit
35000 30000 25000 20000 15000 10000 5000 0
33787.33 27055.28 22701.62 17809.1 14344.12 10716.78 5412.83 7667.02

1998- 1999- 2000- 2001- 2002- 2003- 2004- 20051999 2000 2001 2002 2003 2004 2005 2006

Net Profit of the Bank :Net profit as on 31 Mar 2006 Rs.364.59 Crores & Gross Profit Rs.1233.59. The following diagram shows the profit for the years 1998 to 2006.

Net Profit
400 350 300 250 200 150 100 50 0
132.5 108.51 151.84 363.84 308.55 364.59

68.65

88.06

97.9

1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 20051998 1999 2000 2001 2002 2003 2004 2005 2006

Organization Structure

Headquarter in Almora, the Bank Has 17 Branches Offices spread all over Kumaun.

S.No. 1

Location Almora- Chowk Bazar (Computerised)

Working hours Weekdays: 10:00 AM to 4:45 PM Lunch break 02:00 to 3.45 PM Saturday: 10:00 AM to 1:30 PM Closing day: Sunday Weekdays: 10:00 AM to 4:00 PM Sunday: 10:00 AM to 1:00 PM Closing day: Monday Weekdays: 10:00 AM to 4:00 PM Saturday: 10:00 AM to 1:30 PM Closing day: Sunday Weekdays: 10:00 AM to 4:00 PM Saturday: 10:00 AM to 1:30 PM Closing day: Sunday Weekdays: 10:00 AM to 4:00 PM Saturday: 10:00 AM to 1:30 PM Closing day: Sunday Weekdays: 10:00 AM to 4:00 PM Friday: 10:00 AM to 1:30 PM

Manager Mr. Anand singh Sountiyal Ph: 230702, 235458

Date of Starting 14-08-1991

Ranikhet- Sadar Bazar

Mr. C. S. Manral Ph:220805

14-12-1994

Bageswar- Chowk Bazar.(Computerised)

Mr. B. S. Mehta Ph: 220176

16-01-1997

Dwarahat- Doonagiri Road.(Computerised)

Mr. M. K. Shah 258119

18-03-1997

Pithoragarh- Gandhi Chowk.(Computerised)

Mr. M. C. Pathak 224958

06-10-1997

Haldwani- Meera Marg. (Computerised)

Mr. M. C. Dalakoti 251219

21-04-1998

Haldwani- Naveen Aadarsh Mandi. (Computerised)

Closing day: Saturday Weekdays: 10:00 AM to 4:00 PM Friday: 10:00 AM to 1:30 PM Closing day: Saturday Weekdays: 10:00 AM to 4:00 PM Friday: 10:00 AM to 1:30 PM Closing day: Saturday

Mr. L. S. Bisht 246043

22-02-2000

Haldwani(evening)Kaladhungi Road. (Computerised)

Mr. C. S. Pathak 255144

17-02-2002

Nainital- Bara Bazar, Mallital.(Computerised)

Weekdays: 10:00 AM to 4:00 PM Saturday: 10:00 AM to 1:30 PM Closing day: Sunday Weekdays: 10:00 AM to 3:00 PM Sunday: 10:00 AM to 1:00 PM Closing day: Monday Weekdays: 10:00 AM to 3:00 PM Thursday: 10:00 AM to 1:00 PM Closing day: Friday

Mr. L. L. Verma 236985

18-07-1998

10

Rudrapur- Main Market.

Mr. H. C. S. Jagati 244735

18-02-2000

11

Ramnagar- Jwala Line. (Computerised)

Mr C. P. Joshi 252826

25-03-2000

12

Tanakpur- Cement Road.(Computerised)

Weekdays: 10:00 AM to 4:00 PM Thursday: 10:00 AM to 1:30 PM Closing day: Friday Weekdays: 10:00 AM to 4:00 PM Monday: 10:00 AM to 1:30 PM Closing day: Tuesday

Mr. H.D. Bhatt 265911

06-05-2000

13

Sitarganj- Khatima Road.(Computerised)

Mr. N.S. Adhikari 254848

30-12-2001

14

Khatima- Sitarganj Road.(Computerised)

Weekdays: 10:00 AM to 4:00 PM Tuesday: 10:00 AM to 1:30 PM Closing day: Wednesday Weekdays: 10:00 AM to 4:00 PM Monday: 10:00 AM to 1:30 PM Closing day: Tuesday

Mr. G. S. Syunari 252710

26-02-2002

15

Kashipur- Post Office Road.(Computerised)

Mr Abhinav Bagga 273252

23-03-2002

16

Kichha- Main Market. (Computerised)

Weekdays: 10:00 AM to 4:00 PM Tuesday: 10:00 AM to 1:30 PM Closing day: Sunday

Mr. M.K. Verma 263310

12-05-2002

17

Bhimtal.(Computerised)

Weekdays: 10:00 AM to 4:00 PM Tuesday: 10:00 AM to 1:30 PM Closing day: Sunday

Mr. D. K. Nayal

17-03-2005

Performance Highlights for the year 2005-2006

At the beginning of the financial year 2003-2004 the total deposit was Rs.22701.62 lakhs which became Rs. 33787.33 Crores on 31 Mar, 2006.

Net Profit of the Bank was Rs.308.55 lakhs (After Provision) as on 31-03-2004. The Net profit as on 31 Mar 2006 Rs.364.59 Crores & Gross Profit Rs.1233.59.

Performance in brief:(Rs. in Lac.) As on 31st Incremental March 2006 Progress 15334 1527 407.62 62.97 4635.12 33787.33 17467.46 1181.29 6732.05 3677.61

S. No. 1. 2. 3. 4. 5.

Particular Membership Share Security & Other Treasury Investment Loan & Advances

Viable 2000 25.00 4.00 86.00 70.00

As on 31st March 2005 13807 344.65 3453.83 27055.28 13789.85

CHAPTER -3

3.1

Data Analysis and Interpretation

3.1. An ANALYSIS OF ALMORA URBAN CO-OPERATIVE BANKS PRODUCTS

In Indian banking industry the term retail finance is being used very loosely. Different banks club different products under this head. We have, however Almora Urban CoOperative Bank confined the study to the definition of retail credit given by RBI, which includes the following types of loans:

a) Housing Finance b) Transport Finance c) Fixed Deposit Finance d) Salary Loans e) Cash Credit Limit f) Self Employment Loans

Almora Urban Co-operative Banks RETAIL CREDIT/MID MARKET PRODUCTS

Being a Commercial Bank, giving Loans and Advances is Almora Urban Co-operative Banks primary activities. Apart from our participation in meeting both Term Loan and Working Capital requirements of Agriculture sector, Trade and Service sector, Large/Medium and Small Scale Industries sector, Infrastructure sector etc. including taking care of their Export/Import and non-fund based needs like Letter of Credit, Bank Guarantee etc. Almora Urban Co-operative Bank have a fairly large basket of loan products specially designed to suit your personal needs. Salient features of some of the more attractive Loan Schemes are described below:--------------------------------------------------------------------------------------------------

Transport Loan Housing Loan Salary Loan Mid Term Loan Gold Loan Bank Guarantee Cash Credit Limit F.D. Loan Self Employment Loan Education Loan Consumer Loan

------------------------------------------------------------------------------------------------------------

Transport Loan:Transport loan is provided for the purchase of vehicles. Interest rates Upto Rs. 2 Lakhs Rs 2 To Rs 5 Lakh Rs 5 Lakhs Above 11.00 % 11.25 % 11.50 %

Loan Rates will be 2% more in new vehicles. Against Old Vehicle Loan will be given to good & complete secure parties. Two Wheelers will not come against Transport Vehicles. It will come under Consumer Loan. Eligibility Employees/salaried group/established professionals & Businessmen
Loan

Housing Loan:This housing finance scheme brings to you an excellent opportunity to have your own house or flat. The scheme has been carefully tailored to suit your requirements and match your capacity. The reasonable rate of interest that you pay will be calculated on reducing balance, i.e. you do not have to pay interest on the loan installments actually repaid from the date of such repayment. Rate of Interest Up to Rs 10 Lakh Rs More than 10 Lakh 11.00 % 11.50 %

In House Loans Interest will be taken against floating pattern. House Loan will be paid in maximum 120 months EMI. If Loan is paid before its schedule term then 2% more of the remaining loan will be charged as Foreclosure Charges.

The Interest rate will be 12.00% for House Loan (Commercial) such as School, Banquet Hall, and Hotel etc. Eligibility singly, or jointly as husband-wife/parent-son/parent-daughter, if you are Indian resident having regular source of income. Minimum 21 years of age.

Salary Loan:Bank charges 12.75% interest rate for Salary Loan.

Loan Against Fixed Deposit:Bank charges 1% higher rates than allowed in fixed deposit scheme.

Mid Term Loan:Bank charges 12.50% interest rates for Mid Term Loan.

Gold Loan:Bank charges 11.00 % interest rates for Gold Loan.

Bank Guarantee:Bank charges 11.50% interest rates for Bank Guarantee.

Cash Credit Limit:This loan is given against stock of Items to Shopkeepers to promote the business. Rate of Interest:Upto Rs. 5 lakhs Rs. 5 Lakhs to 25 Lakhs More than 25 Lakhs 11.25% 11.75% 12.25%

OD Above Limit

15.00%

FD Loan:This loan is given against Fixed Deposits. Following are the interest rates: Our bank FD Third Party FD Other banks FD Above 2% of FD Above 3% of FD 12.75%

Self Employment Loan:Bank charges 12.00 % interest rates for Self employment loan.

Education Loan :The scheme extends a helping hand to meritorious students desirous of pursuing basic/higher/professional/technical education either in India or abroad. Bank charges 11.75 % interest rates for Education loan.

Consumer Loan:Bank charges 12.75 % interest rates for Consumer loan.

COMPARATIVE STUDY OF CAR LOAN

Serial No.

Parameters

ALMORA URBAN COOPERATI VE BANK Yes Yes


For salaried person: Min.

UCO BANK

ICICI BANK

SBI

UTI

ALLAH. BANK

1.

Borrower Salaried/Self employed Professional/ Businessmen Eligibility

Yes Yes
For salaried person-Min.

Yes Yes
For salaried person:

Yes

Yes Yes

Yes Yes
For salaried person: Min.

>21 but less than 65yrs

For salaried person: Min

income Rs.10000/p.m.
For professional/ Businessmen:

take home pay 7500+EMI For


professional/ Businessmen-

>21 but less than 50yrs at the time of maturity.


For professional/B usinessmen :>

salary of Rs.10, 000/.p.m.

income Rs.10000/p.m.
For professional/ Businessmen :

For
professional/B usinessmen: Min. Net

Min. monthly gross income Rs.10000/-

Min.income Rs.1.20lac p.a.

21but<65 at the time of maturity

annual income Rs.2lakh

Min. monthly gross income Rs.10000/-

2.

Purpose
New Car

Yes
Yes, not older than 3yrs Max. 75% of cost of the vehicle Restricted to75% of the agreed purchase price or 60% of the valuation of vehicle whichever is less.

Yes
Yes, not older than 5yrs 7.50 lac or 85% of cost of vehicle whichever is less Max. 3.50lac or 70%/60% of cost of the vehicle whichever is less

Old car

Yes Yes

Yes
Yes, not older than 5yrs

Yes
Yes

Yes
Yes, not older than 3yrs Max. 85% of cost of the vehicle. Restricted to 85% of the agreed purchase price or 60% of the valuation of vehicle whichever is less.

3.

Quantum
New 90% of cost of vehicle,Min. 1lac 85% of valuation of the car.Min.75, 000/-. Min. 2.5 times the net annual income. There is no upper limit Cost of vehicle registration, insurance or 20 times of net monthly salary income of salaried person/equi valent of net annual income, whichever is less
For Salaried Individual:

Old

4.

Margin
New Old 25% 15% Pre used not more than 4yrs old30%.Pre used vehicle between 45yrs-40%
Up to 6 lacs-

15%

10%to 15%.
Above 6 lacs-

10%
For self employed customers who have a previous banking relationship: 15% For self

20%to30%

Suggestion: Conducting Car Loan Mela in association with the car manufacturing companies in prominent cities & towns.

Tie-ups at the dealer level and company level for financing the purchases of the customer
at the competitive prices.

DATA ANALYSIS AND INTERPRETATION


A graphical analysis was preferred to a numerical one because graph helps us to visualize the trend of the component & leads to better understanding of the situation.

CUSTOMERS OF ALMORA URBAN CO-OPERATIVE BANK

24%

ALMORA URBAN CO-OPERATIVE BANK OTHER BANKS


76%

ANALYSIS: The analysis revealed that 76% customers are Almora Urban Co-operative Bank customer, and 24% customers are Other Banks.

CUSTOMER SATISFACTION IN RESPECT OF BANK EMPLOYEES

14% SATISFIED NOT STAISFIED 86%

ANALYSIS: The analysis revealed that 86% customers are satisfied to Almora Urban Cooperative Bank employees behaviors, and 14% customers are not satisfied to bank employees. CUSTOMER SATISFACTION IN RESPECT OF BANK AGENTS

18% SATISFIED NOT STAISFIED 82%

ANALYSIS: The analysis revealed that 82% customers are satisfied to Almora Urban Cooperative Bank agents behaviors, and 14% customers are not satisfied to bank agents.

CUSTOMER SATISFACTION IN RESPECT OF BANK PAPER WORK

28% SATISFIED NOT STAISFIED 72%

ANALYSIS: The analysis revealed that 72% customers are satisfied to Almora Urban Cooperative Bank paper work, and 14% customers are not satisfied.

AWARNESS OF ALMORA URBAN CO-OPERATIVE BANK MID MARKET SCHEMES


Housing Loan

30 25 No. OF PERSONS 20 15 10 5 0 SCHEMES

Mid Term Loan Self Employment Transport Loan Salary Loan Gold Loan F D Loan Bank Gurantee Cash Credit Limit Consumer Loan

ANALYSIS: The analysis revealed that 25% people are aware of Housing Loan scheme,23% people are aware of Transport scheme,20% people are aware of Salary Loan scheme and 17% people are aware of F D Loan scheme. These are the four schemes that

are most people aware of. Rests of the schemes are not so popular. So Bank may keep more attention in these products. SOURCES OF AWARENESS

35% 30% No. of Persons 25% 20% 15% 10% 5% 0% Mode 20% 15% 10%

30% 24%

ADVERTISEMENT PRINT ADVERTISEMENT MAGAZINES/ JOURNALS HOARDINGS RELATIVE/ FRIENDS/PEERS USER REFERENCE

1%

ANALYSIS: The analysis revealed that Relative/Friends/Peers are the main source of awareness. User Reference and Advertisement are also good source of awareness. 30% people are aware of Relative/Friends/Peers, 24% people are aware of User Reference, 20% people are aware of Advertisement. So Bank has to focus in these areas. By all form of advertising Bank can tap the market in retail credit. ATTRIBUTES IMPORTANT IN TAKING DECISION

40 NO. OF PERSONS 35 30 25 20 15 10 5 0 25 25

35

Hassle free serv ice Prompt action/on the spot in pricipal sanction Lower interest rate 10 5

Longer of flexible payback period Low margin/security

ATTRIBUTES

ANALYSIS: The study revealed that people prefer lower interest rate as most important attribute in taking decision for loan. After that hassle free service & prompt action/on the spot in principal sanction are the most important attribute. Longer flexible payback period & Low margin/security are less prefer by people.

CHAPTER 4

4.1 4.2 4.3

Summery of Findings Suggestion & Recommendations Conclusion

4.1. Summery of Findings

In my summer training survey I went through 100 respondents.

1. 86% respondents are aware about the various schemes of Almora Urban C0-operative Bank. 2. The behaviors of employees are satisfactory in all levels. 3. The Bank use the various source of schemes for promoting sale and revenue like Print media, Hoardings, Main source of the advertising is inter personal and impersonal communication. 4. The interest rates are lower then commercial Banks which help to attract customers.

With the help of customer response the bank is performing well in comparison to last few years and the bank profit is increasing last fore and five years. It means Bank doing a good business and earned a good profit on invested money. Increment in profit shows the strong position of shareholders because they get sufficient return on their investment.

4.2. RECOMMENDATION
To enable Almora Urban Co-Operative Bank to penetrate the market to achieved the planned growth we suggest the following marketing strategies to ensure continuous growth of Almora Urban Co-Operative Bank mid market segment products:

1). Display of posters regarding mid market segment products in the lobby of the branch. A large no. of customers come to the branch every day for their various banking needs and this would enable them to know our various retail products. 2). Broachers regarding various mid market schemes should be available with the branch head & credit officers for being given to the potential borrowers. 3). Most of the schools/colleges/ institutions have accounts in Almora Urban Co-Operative Bank. The salaries of the employees of such institutions are also being disbursed by the Almora Urban Co-Operative Bank branches. The bank should arrange with the authorities of these bodies for making presentation of various mid market schemes (in which they are likely to be interested) before the employees of these institutions. 4). A number of cities are now having high rise residential complexes where basically middle class people are residing. These multi-story complexes should be targeted for increasing our lending under mid market schemes and residents could be approached on some Sunday/holiday.

5). Hoardings can be erected in important cities regarding our mid market schemes at various vantage points. 6). In rural areas the panchayat office could serve as a focus point where some of the mid market products could be publicized. 7). Bank should organize customers meeting every month. Customer meet must be held at branches at least once in a half year. During these meets information should be conveyed regarding our mid market products to various customers. 8). Most of Almora Urban Co-Operative Bank rural & semi urban branches are disbursing pension to pensioners, Such pensioners at times need financial support to meet certain imperative social obligations like marriage expenses in the family, medical expenses etc.

Such branches as are disbursing pension can talk to ascertain their needs, if any & provide financial assistance.

4.3. CONCLUSION
Two month time is not enough for knowing completely about the bank process of a banking company. Still I managed to get significant insights about the real life working space & its limitations. This project work has helped me to know about retail credit. Retail credit is the important part of a banking organization because the retail banking is growing at the rate of

30-40% and hence it is the key to growth in the recent times and can not be overlooked. Due to tailor-made schemes, various products to suit the needs of different persons, lower cost of operation, borrower as well as lender friendly schemes, reasonable returns, diversified risk and lower NPA, the retail banking has to be a thrust area for the lending institutions. More products will be inducted in the future. The number of customers may be doubled in a couple of years and then the cost of operations will further come down, meeting fully with the competitive environment when the net interest margin of the banks will be gradually shrinking. Further it also adds to the profitability of the banks in the form of other income such as processing charges, disbursement charges, prepayment charges etc.The banks having efficient marketing personnel as well as superior technology will acquire more shares in the growth leaving behind others in the race. A strategic approach to retail credit can help reduce inefficiencies & increase credit portfolio of the Bank.

8. BIBLIOGRAPHY

Text Books: Mukherjee D. D. Credit Appraisal, Risk Analysis & Decision Making , Vikas Publication House 2002, New Delhi.

Bhalla V. K., Financial Management, 1999, Sultan Chand & Sons Publications, New Delhi. Kothari C.R. Research Methodology Method & Techniques Wishwa Prakashan, Daryaganj, New Delhi- 110 002 `

Gupta S. P., Financial Management, 2003, Sahitya Bhawan Publications, New Delhi.

Journals & Magazines: Business today Banks annual report Banks published journals

Web Sites: www.almoraurban.com www.ucobank.com www.icicibank.com www.hdfcbank.com www.coporationbank.com www.sbi.com

9. QUESTIONNAIRE
1. 2. 3. Name (Mr./Mrs./Miss) .. Address: . Contact Number: (Off.) (Res.) .

4.

Are you a customer of Almora Urban Co-Operative Bank? I. Yes [ ] II. No [ ]

5.

Are you aware of the various loan schemes of Almora Urban Co-Operative Bank? I. Yes [ ] II. No [ ]

6.

Please specify the scheme of Almora Urban Co-Operative Bank you are aware of: I. III. V. VII. IX. XI. 7. Transport Loan Salary Loan Gold Loan Cash Credit Limit Self Employment Loan Consumer Loan II. IV. VI. VIII. X. Housing Loan Mid Term Loan Bank Guarantee F.D. Loan Education Loan

From which source have you got this information? I. II. III. IV. V. VI. Advertisement (TV) Print Advertisement Magazines/ Journals Holdings Relatives/Friends/ Peers User Reference

8.

Rate the following attributes according to their importance/ priority in your decision. I. II. III. IV. V. Hassle free services Prompt action/ on the spot in principal sanction Lower interest rate Longer or flexible payback period Low margin/Security Any other (Please specify).

9.

Are you satisfied the bank paper work? I. Yes [ ] II. No [ ]

10. Are you satisfied the bank agents? I. Yes [ ] II. No [ ]

11. Are you satisfied the bank employees behavior? I. Yes [ ] II. No [ ]

10. ANNEXURE
PROMISSORY NOTE Rs. Date .

ON DEMAND I/WE Promise to pay The Almora Urban Co-operative Bank Ltd . Branch or order the sum of

Rupees .. With intrest at the rate of .. percent per annum or as per the R.B.I. Directives above the Reserve Bank of India rate subject to minimum rate of interest .. percent per annum or at such other rate as may be decided by The Almora Urban Co-operative Bank Ltd. For time to time with rests for value reseved.

Sig. & Address of Excutent

The Almora Urban Co-operative Bank Ltd.


H. O. ALMORA Branch

Rs.

Date .

Received from the Almora Urban Co-operative Bank Ltd. . ..Branch, the Sum of Rupees

..being the amount promoted Revenue Stamp

FORM-44

The Almora Urban Co-operative Bank Ltd.


LOAN AGREEMENT
Loan No. .. Branch .

I .. hereby acknowledge to have received from the above named Bank a Loan of Rs. .. ...... (Rupees ..) and are agree as follows,

1.I shall repay this loan in . Installment of Rs . of which the first shell be repayable on or before and the other installment by a regular interval of one month i.e. on before 10th of every month there after with interest them due. The loan shall be at the interest of . Percent per annum. 3. If I fall to pay once the Loan installment with interest as provided in clause liable to pay at once the whole amount them due together with interest due I here of shall be there on in terms of my DEMAND PROMISSORY NOTE dated if called upon to do so by the Board of Director of the Bank. 4. I shall employ the loan for purpose stated in the application dated . and shall when called upon furnish satisfactory proof of the loan having been so applied failing which I shall be liable to pay at once the whole or part of the loan as the Board may decide together with all interest due there on. 5. I hare with pledge the security as detailed in the loan application dated as security for the loan which. I hereby solemnly declare, I have full right in plunged which the Board shall have the right of sale in case of default in repayment of the loan as stipulated above. 6. I shall be bound by the rules and bye-laws of the above Bank which are new in force or hereafter may come into force and the terms there of shall be deemed to been incorporated into this agreement. Dated . the day of . Borrowers Signature We .. & .do here by stand as securities and binn ourselves to be jointly and severally liable to above named Bank for the due repayment of this loan with internet there on it accordance with the above condition any rules and bye- laws of the bank and we agree that our liability here under shall not be terminated or effected by the Board of Director of the said Bank giving it me or any other indulgence to the within named borrower. Dated this day of Signature of Sureties 1.

2. Received this day .. from Almora Urban Co-operative Bank Ltd. being the amount of the loan with in mentioned.

Rs. .

Borrowers Signature

LETTER OF CONTINUTY

The Manager The Almora Urban Co-operative Bank Ltd. Branch . Dear Sir

Date .200

I/We beg to enclose a Demand Promissory Note dated for Rs. .. (Rs. .) signed by me/us which is given present outstanding in my/our name or in the name of either of us and also for the repayment of any Overdraft/Cash/Credit which is at

present outstanding in my/our name or in the name of either I or us and also for the repayment of any Overdraft/Cash/Credit to extent of Rs. . (Rs. ) which I/We or either of us may avail of here after and the said promissory notice is to be a security to you for the repayment of the ultimate balance sum remaining unpaid on the Overdraft/Cash/Credit and I/ We are to remain liable on the said promissory Note not which Standing the fact that by payment made in to the account the said Overdraft/Cash Credit may show a Credit balance. Although the said Overdraft/Cash Credit accounts will be operated upon only by the said Shri. .. all of us shall be jointly and severally liable for the same.

Yours Faithfully Signature . Signature . Name Address

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