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A PROJECT REPORT ON “A STUDY ON VARIOUS TYPES OF LOANS OFFERED BY SREE THYAGARAJA CO-OPERATIVE BANK LIMITED” BANGALORE SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF BACHELOR OF BUSINESS MANAGEMENT DEGREE COURSE OF BANGALORE UNIVERSITY ALI RAAZ REG. NO: 13DVC24014 UNDER THE GUIDANCE OF MR. R.L. DAS LECTURER OF COMMERCE AND MANAGEMENT DEPARTMENT

2015-2016 BRINDAVAN COLLEGE 2ND CROSS VINAYAKA LAYOUT R.M.V 2ND STAGE, BANGALORE-560094

CONTENTS

Chapter No. 1.

CHAPTER NAMES INTRODUCTION

1-26

PART A: About Industry

1-18

              

Introduction to The Banking system Evolution Origin of Modern Bank History of Banking In India Meaning and definition of the term Bank Classification of Banks Introduction to co-operative Banking History and growth of Co-operative Bank History of Co-operative in India Development in Co-operative Banking Categories Features of Co-operative Bank RBI policies Structure of Cooperative Banking system in India Overview of Banking sector

PART B: About Subject      2.

Page No.

Introduction to the topic loans and advances Types of loans Classification of Bank Advances Recovery of loans and Advances Meaning of non-performing assets

RESEARCH DESIGN      

19-26

Title of the Study Statement of the problem Objectives of the Study Scope of the study Limitations of the study Methodology of the study

27-29

 Research Instruments 3.

4.

COMPANY PROFILE             

Inception Mission of the Bank Objectives of the Bank Boards of directors The Corporate locations of the Bank Business operations Service profile Competitors Future Prospects Classification of loans and advances Loan for Household/Home Appliances Loan Loan on Vehicle Loan to buy Machineries to small scale industry

            

and working capital Personal surety loan Business loan Mortgage loan Loan on stock receipt Salary loan Loan on Contractors Loan for a Construction of new House Loan for the purchase of house/land Loans for the Purpose of repairs and renovation Analysis of interest rates of the loan schemes Growth of the Bank Functional Chart Organisational Chart

DATA ANALYSIS AND NTREPRETATION      

5.

30-49

50-110

Title of the Table Analysis of the table Inferences of the Table Graphs Loan Granting Procedure Loan recovery procedure

SUMMARY OF FINDINGS AND CONCLUSION

111-115

 Summary of Findings  Conclusion 6.

RECOMMENDATIONS AND SUGGESTIONS

116-117

 Recommendations  Suggestions 7.

APPENDICES AND ANNEXURES

8.

BIBLIOGRAPHY

LIST OF TABLES:

Sl. No.

TABLE NAMES

Page No.

1.

Table showing sanctions and recovery of surety loan

50

2.

Table showing sanctions and recovery of immovable property loan

52

3.

Table showing Sanctions and disbursements of Vehicle loan

54

4.

Table showing Sanctions and disbursements of Gold loan

56

5.

Table showing Sanctions and disbursements of Salary loan

58

6.

Table showing sanctions and recovery of Overdraft

60

7.

Table showing sanctions and recovery of Cash Credit loan

62

8.

Table showing sanctions and recovery of Advance against

64

deposits 9.

Table showing Sanctions and disbursements of Staff loan

66

10.

Table showing sanctions and recovery of National Certificate

68

loan 11.

Table showing sanctions and recovery of Business loan

70

12.

Table showing sanctions and recovery of Bill Discount

72

13.

Table showing the total sanctions of loans

74

14.

Table showing the total disbursements of loans

76

15.

Table showing the Banashankari III stage (Kathriguppe) Branch’s target fixed and achieved in loans

78

16.

Table showing target fixed and achieved in loans of J.P. Nagar Branch

80

17.

Table showing Mysore Road Branch’s target fixed and achieved in loans

82

18.

Table showing Kaamakshipalya Branch’s target fixed and achieved in loans

84

19.

Table showing Banashankari I stage (Srinivasa Nagar)

86

Branch’s target fixed and achieved in loans 20

Table showing Banashankari II stage (K.R Road) Branch’s

88

target fixed and achieved in loans 21.

Table showing the target fixed and achieved in loans of Sree

90

Thyagaraja Co-operative bank Ltd. (HEAD OFFICE) 22.

Table showing the target fixed for loans in the branches of Sree

92

Thyagaraja Co-operative bank Ltd. (including head office) 23.

Table showing the achieved in loans in the branches of Sree

94

Thyagaraja Co-operative Bank Ltd.(including head office) 24

Table showing the analysis of loans procedure (unsecured

96

loans) 25.

Table showing the procedure of recovery of unsecured loans

98

through different stages 26.

Table showing the comprehensive analysis in the interest rates

100

of the loan schemes 27.

Table showing the interest rate of the loans based on the

102

maturity period 28.

Table showing the analysis of Non-performing Asset (Gross)

104

29.

Table showing the analysis of Non-performing Asset (Net)

106

LIST OF GRAPHS:

Sl. No.

GRAPH NAMES

Page No.

1.

Graph showing sanctions and recovery of Surety loan

51

2.

Graph showing sanctions and recovery of Immovable property loan

53

3.

Graph showing sanctions and disbursements of Vehicle loan

55

4.

Graph showing sanctions and disbursements of Gold loan

57

5.

Graph showing sanctions and disbursements of Salary loan

59

6.

Graph showing sanctions and recovery of Overdraft

61

7.

Graph showing sanctions and recovery of Cash Credit loan

63

8.

Graph showing sanctions and recovery of Advance against

65

Deposits 9.

Graph showing sanctions and disbursements of Staff loan

67

10.

Graph showing sanctions and recovery of National Certificate

69

loan 11.

Graph showing sanctions and recovery of Business loan

71

12.

Graph showing sanctions and recovery of Bill Discount

73

13.

Graph showing the total sanctions of loans

75

14.

Graph showing the total disbursements of loans

77

15.

Graph showing the Banashankari III stage (Kathriguppe) Branch’s target fixed and achieved in loans

79

16.

Graph showing target fixed and achieved in loans of J.P. Nagar Branch

81

17.

Graph showing Mysore Road Branch’s target fixed and achieved in loans

83

18.

Graph showing Kaamakshipalya Branch’s target fixed and achieved in loans

85

19.

Graph showing Banashankari I stage (Srinivasa Nagar)

87

Branch’s target fixed and achieved in loans 20

Graph showing Banashankari II stage (K.R Road) Branch’s

89

target fixed and achieved in loans 21.

Graph showing the target fixed and achieved in loans of Sree

91

Thyagaraja Co-operative bank Ltd. (HEAD OFFICE) 22.

Graph showing the target fixed for loans in the branches of

93

Sree Thyagaraja Co-operative bank Ltd. (including head office) 23.

Graph showing the achieved in loans in the branches of Sree

95

Thyagaraja Co-operative Bank Ltd.(including head office) 24

Graph showing the analysis of loans procedure (unsecured

97

loans) 25.

Graph showing the procedure of recovery of unsecured loans

99

through different stages 26.

Graph showing the comprehensive analysis in the interest rates

101

of the loan schemes 27.

Graph showing the interest rate of the loans based on the

103

maturity period 28.

Graph showing the analysis of Non-performing Asset (Gross)

105

29.

Graph showing the analysis of Non-performing Asset (Net)

107

30.

Graph showing the term-loans of the Bank

108

A Study on various types of loans offered by sree Thyagaraja co-operative bank Ltd

INTRODUCTION: PART A: ABOUT INDUSTRY

Introduction to the Banking System: The development of “Banking” is evolutionary in nature. There is no single answer to the question of what is banking, because a bank performs a multitude of functions and services which cannot be comprehended in to single definition for a common man, a bank means a store house of money for a businessman. It is an institution of finance and for a worker it may be a depository for savings.

Evolution: Initially, the bankers, the JEWS in LOMBARDY transacted their business on benches in the market place resembled the banking counter. If a banker failed, his “Banque” (Bench) was broken by the people; hence the word ‘Bankrupt has come. In simple terms, bankrupt means a person who has lost all his money, wealth or financial resources.

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A Study on various types of loans offered by sree Thyagaraja co-operative bank Ltd

The origin of the word bank can be traced as follows:

Banck

German (Joint Stock Fund)

Banco

Italian (Heap of money)

Bancus/Banque

French (Bench/chest a place where valuable are kept)

Bank

English (Common meaning prevalent today )

Banking: The term “Banking” as a accepting for the purpose of lending or investment of deposit of money from the public repayable on demand or otherwise and withdraw able by cheque, draft, orders.

The origin of modern bank is traced to three important sources they are: 1. The Goldsmiths:

The Goldsmiths by virtue of dealing in facilities for the safe keeping of valuable. People largely because of the danger of the theft, started to leave their precious bullion and coin in the custody of goldsmiths. Goldsmiths began imposing charges for safe keeping services. Brindavan College

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A Study on various types of loans offered by sree Thyagaraja co-operative bank Ltd

2. The Moneylenders:

Moneylenders were men of means and reputations. They used to lend their surplus funds to the needy at high rates of interest and earned large incomes. The Moneylenders borrowed money at lower rates of interest, and lent it to the needy at higher rates of interest. The difference between two interests constituted the profits.

3. Merchant Bankers:

These people are originally trades in commodities. They were engaged in trade, internal as well as external. In course of time, besides trading, they undertook the financing trade, especially the foreign trade. Thus, the merchant who started as trader in goods slowly developed as financials of foreign trade or banker. It is clear that merchant banker, money lender, and goldsmith were largely responsible for the development of modern banks. Modern banks possess the characteristics of all these ancestors like the merchant bankers; modern banks finance foreign trade and use bills of exchange in their financing of foreign trade. Like the Moneylenders, modern banks accept deposits from those who have surplus money to spare and lend the same to the needy for productive purposes. Like the goldsmith, modern banking provides to the depositors and a convenient means of payment in the form of cheques and creates money.

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A Study on various types of loans offered by sree Thyagaraja co-operative bank Ltd

History of Banking in India: Banking was in existence in India from very early times. The writings of Manu and Kautilya contained references to banking. But modern banking that is banking on western lines started in India only from the beginning of the 19th century. The Indian commercial banking system had to pass through a series of financial crisis, and so, its growth was very slow during the first half of the 20 th century. Further many banks failed during this period as a result of financial crisis.

It is only after independence, the Indian banking system has made rapid Progress. Today, the Indian banking system is one of the well-developed commercial banking systems in the world.

Meaning of the term Bank: The term “Bank” is derived from the German word ‘Banck’ which means a joint stock fund or a common fund that is a heap of money raised from a large number of the public. They contend that the early European banker raised a common fund or heaps of money from the public for the purposes of financing the needy. As bank deals in common fund or heap of money raised from the public.

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A Study on various types of loans offered by sree Thyagaraja co-operative bank Ltd

Definition of the term Bank: The Indian Banking Companies Act of 1949 defines the term “Banking Company” as “any company which transacts the business of banking in India” and the term “Banking” as “accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque, draft, order or otherwise”.

Types of Banks: Banks are classified in to several types based on the functions they perform. Generally, the banks are classified in to:

1. Commercial Banks: Commercial Banks perform all the business transaction of a typical bank. They accept three types of deposits, fixed deposits, current deposits and which are repayable on demand. Since the commercial banks are expected to meet immediate requirement of depositors, they cannot invest credit overdrafts. They provide cheque facility, ATM’s facility, and bank draft for transfer of funds, safeguarding the valuables, discounting the bills of exchange, collecting customer’s stocks and shares etc.

2. Investment Bank or Industrial Banks: Investment bank is those banks, which provides funds on long term for industries and also known as Industrial banks. These banks are specialized in providing long term loans to industries with a view to buy plant and machinery. These banks obtain funds through share capital, debentures and long-term

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A Study on various types of loans offered by sree Thyagaraja co-operative bank Ltd

deposits from the public. These banks underwrite or issue new shares and debentures of industrial company and also purchase entire issue of new securities of companies and later sell them to the public at a higher price. These banks play a major role in the economic development of a country.

3. Exchange Banks: Exchange Banks are known as foreign banks or foreign exchange banks, which provide foreign exchange for import trade. Their main function is to make international payment through the purchases and sale of exchange of bills. They convert home currency in to foreign currency and vice versa. They discount foreign exchange bills, which are used in foreign trade. These banks function like commercial banks, accepting deposits and lending funds for investment. These banks are required to undertake the business with utmost care.

4. Land Mortgage Banks: Whenever agriculturists require investment loans, they have to approach Land Development Banks, where the loans are given on long- term basis. Modern loan mortgage banks provide long-term loans on security of the land to initiate permanent improvements on the lands and to buy agricultural machineries. The Central Mortgage Banks raise resources by means of selling debentures in the money market. The government may also stand as security to the debentures. In India the land development banks function on co-operative basis.

5. Savings Banks: Savings Banks are specialized financial institutions established to mobilize the savings from the people. Generally, they pool the savings of the Brindavan College

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A Study on various types of loans offered by sree Thyagaraja co-operative bank Ltd

small incomes of the community. The primary object of the commercial bank is to promote thrift among the low middle-income groups. The banks also offer interest on these deposits. The depositors are allowed to withdraw money from their accounts when necessary. The savings bank’s business in urban and cosmopolitan centres is increasing significantly in recent years. On account of various facilities lie frequent Withdrawals, attractive rates of interest, the use of cheques etc, business has become prominent than other forms of accounts.

6. Central Banks: Central Bank is the apex bank in the country, which bring the entire banking system united, controlled and regulated. In fact, the central bank is the main source of an efficient banking system in the country. The monetary policy of a country is formulated and enforced by the central bank. These banks are responsible for monetary stability in the country. Central banking is a specialist monetary system under which all other banking institution have to function. It regulates the note issue. The expansion and contraction of note issue are managed by central bank. Every country has a central bank. It is called as Reserve Bank of India.

7. Co-operative Banks: Co-operative Banks are promoted to meet banking requirements of consumers not only in urban areas but also in rural areas. The Co- operative bank functions like commercial banks receiving deposits and lending money in rural areas. These banks supply finance to agriculture, while in urban areas they provide finance to buy consumer goods. They provide short and medium-term loans. They are formed on the co- operative principles and as such they are more service oriented than profit oriented. The co-operative banks provide credit at lower rates of interest to people of small means, like small cultivators and artisans, petty shopkeepers etc.

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A Study on various types of loans offered by sree Thyagaraja co-operative bank Ltd

INTRODUCTION TO CO-OPERATIVE BANKING: The Co-operative banks have a history of almost 100 years. The Co- operative banks are an important...