Financial assistance by the cbs bank mba finance project report

Financial Assistance by the CBS Bank, Gangavathi

CONTENTS
CHAPTER-1 Page No

Executive summary 3-5
• BABKING PROFILE
• CBS BANK PROFILE
• NEEDS OF THE STUDY
• OBJECTIES OF THE STUDY
• SCOP OF THE STUDY
• MATHODOLOGY
• FINDINGS
• CONCLUSION

CHAPTER-2
INTRODUCTION OF THE STUDY
• PROFILE OF THE BANKING 7-8
• PROFILE OF THE CBS BANK 9-11

CHAPTER-3 13-18
Literature review

CHAPTER-4
ANALYSIS AND INTRERPRITION
• LONS AND ADVANCESS OFFERED BY CBS
20-47
BANK
• GUIDELANCE 48-55
• ANNUAL REPORT AS ON 2008-2009 56-66

CHAPTER-5
FINDINGS, SUGGESTION AND CONCLUSION 68-70

Bibliography 71

BABASAB PATIL FINANCE PROJECT REPORT 1


CHAPTER:1



EXECUTIVE SUMMARY

BANKING PROFILE:

As per the Banking Regulation Act 1949 RBI given authority to Co-Operative Banks to do
Banking Business were extended to Co-Operative Banks. It has been licensing of existing and
new Banks Branches, sanctioning of credit limits to state Co-Operative Banks on behalf of
primary Co-Operative Banks. The present Banking system in India has undergone a Program
of tremendous Branch expansion Program which has helped sector Banks to mobiles savings
substantially from the for hung areas of the country and out funds to the weaker sections of the
society Banks have penetrated in to Rural, semi Urban and Backward Areas.

ORGANIZATION PROFILE:

The main Preference for the study is to have an exposure to the corporate world to
understand how really business organizations operate. As the study is made in the “Shri
Channabasava Swamy Souhardha Pattana Sahakari Niyamita” Co-operative bank which
is a co-operative banking finance company there was a need to know about how they manage
their loans & advance
In Gangavathi presently CBS Bank is the number one co-operative bank. This is local
bank. All people will know about the bank. I choose the topic about loans and advances
because some people don’t know what type of loans are given by the bank; what types of
document they maintain .Finance is one of the powerful strength to every person so loans &
advances are also one type of the strength or assistance to people who want that type of
strength so the title “Financial Assistance By The Bank” is selected.



NEED FOR THE STUDY
The Indian Banking industry comprises segments that provide comprehensive banking services
to individuals, corporate and small business. Industry segments are Public Sector Banks,
Private Sector Bank and Foreign Banks.
In this Project the report is mainly focused on FINANCIAL ASSISTANCE BY THE CBS
BANK GANGVATHI.
Objectives of the study:
 To view the services offered by the CBS Bank.
 To get practical knowledge about loans & advances.
 To know about the collateral Ssecurities asked for sanctioning loans.
SCOPE FOR THE STUDY:-
This project acts as a reference guide or as a source of information. It gives the idea
about the financial assistant of the CBS Bank . The main scope of the study was to put into
practical the theoretical aspect of the study into real life work experience. The study deals with
analysis and interpretation of the data collected through the sources of primary and secondary
data for a period one year annual report i.e2008-2009 Graphs, diagrams and tabulation methods
are used to analyze and interpret the data collected. It will help to understand the company’s
liquidity position.
METHODOLOGY
Sources of Data :
The data furnished in the report has been collected from two sources.
Primary Data: It is collected through personal interview with manager, accountant &
assistant accountant.
Secondary Data: It is collected through various annual reports, pamphlets of Co-
operativeBank Training Academy, Banking theory book
Limitations of the study:
 Time allotted sixty days were a short period to study in detail regarding loans and
advances in CBS Bank.
 The Study was based on available information and documents


 The study was carried out in the light of the limited knowledge.
 The Study is limited to only Gangavathi

Findings
• As the city is based on agriculture, so the bank is based on agricultural loan mainly.
• Self operated minor deposits are not allowed.
• Interest rates are high compared to nationalized banks.
• Interest from mortgage loan is very high compared to other loans given by bank
CONCLUSTION.
After the study, we can come to a conclusion that, C.B.S Bank has to improve in all the aspects
of its banking operations, the C.B.S Bank can still strengthen Bank should increase the
customers account, deposits and there should be more transaction.Bank should extend their
loan facility to industries also.

Suggestion
• Banks should cullet the feasible securities
• As nationalized banks are giving loan at low interest rates, many of them are
benefited with it. So in order to have more transaction they should reduce the
interest rates while providing loan.
• Since liabilities are more than bank balance, bank should increase the customers
account, deposits and there should be more transaction.



CHAPTER 2



BANKING PROFILE:

As the Study was conducted in the Co-operative CBS Bank, it is necessary to have
some information about the Co-Operative Banking.

As per the Banking Regulation Act 1949 RBI given authority to Co-Operative Banks to
do Banking Business were extended to Co-Operative Banks. It has been licensing of existing
and new Banks Branches, sanctioning of credit limits to state Co-Operative Banks on behalf of
primary Co-Operative Banks. The present Banking system in India has undergone a Program
of tremendous Branch expansion Program which has helped sector Banks to mobiles savings
substantially from the for hung areas of the country and out funds to the weaker sections of the
society Banks have penetrated in to Rural, semi Urban and Backward Areas.

The present system of Banking is mass Banking than Class Banking. The larger number
of branches operating in rural and semi rural areas has greatly increased the memorization of
the economy, have raised the share of Finance Institutions in the total financial transactions in
these areas and have brought a good part of the un-organized sector of the money market under
the control of the RBI and Government.

What are Co-Operative Banks?

The amending Act 23 of l965 called the Banking laws Applications to Co-Operative
Banks as.

 All the Co-Operative Banks are under state or Apex Co-Operative Banks.
 All the Co-Operative Banks main principle in States and Districts, Primary object
which is the Financing of Co-Operative Banks in their respective States and Districts.


 All the Primary Non-Agricultural Credit Societies including Urban Co-Operative Banks
as have Banks as their principle Business and paid up Capital and Reserves of a
nominal value of Rs.100000/- or more.
 It is also known in the form as financial institutions.
 A Co-Operative banking which is a Company and which has principle Business the
receiving of Deposits under any Schemes and giving loans and other Banking facilities
to customers.

Definition of Co-Operative Bank:
A Co-Operative is an autonomous association of persons united voluntary to meet
common economic, social and cultural needs and aspirations through a jointly owned and
democratically controlled enterprise.
Principles:
The Co-operative principles or guidelines by which co-operatives put their values into
practice.
• Voluntary and Open Membership.
• Democratic Member Control.
• Member Economic Participation.
• Autonomy and Independence.
• Education, Training and Information.
• Co-Operation among Co-Operatives.
• Concerned for Community.
Values:
Co-Operative is based on the values of self-help, self-responsibility, democracy,
equality, equity and solidarity. In the tradition of their founders, Co-Operative Members
believe in the ethical values of honesty, openness, social responsibility and caring for others.

Objectives of Co-Operative Banks:
 To ensure increased flow of assistance to the neglected sectors.
 To speed up the growth of new and progressive entrepreneurs.


 To extend banking services especially to urban, semi-urban and rural areas.

CHANNABASAVA SWAMY BANK PROFILE:

As the Gangavathi being the part of Koppal District is considered as one of the most
important in field of Agriculture, Trade and Commerce and in Banking Sectors is growing at
Top level.

As the Gangavathi is well known as a “Rice Bowl of Karnataka” and also commercially
it is known as “Paddy City” and it is famous for the gracious presence of Lord Channabasava
Swami. Entire Gangavathi Taluka is very potential in Agriculture Market and it is surrounded
by more than 140 Rice Mills 40% of the Rice is being exported to Foreign Countries like
Singapore, Hong Kong and many other countries.

The CBS Bank is a residuary Co-Operative Bank. Which was established on 30th June
l995.It has Two Branches One at Gangavathi and another at Kartagi. Shri Siddapur Manjunath
is the main promoter of the bank. He started bank with the Capital of Rs.12Lacs. Earning is
Rs.96,000.00, Present Capital employed is Rs.56,56,635.00 Earning is Rs.61,10,000.00

In Gangavathi CBS Bank is playing a major role in banking sectors, as per daily
transaction of CBS Bank is about 2 crores. It has been facing competition from Nationalized as
well as other Co-operative banks.

As Gangavathi is basically based on only agriculture i.e., paddy. So, The Bank meets
some low Profits in past Two Years. Because of famine and also faced some problems in
collecting loans because of single crop.



The Bank is not a community based as Co-Operative Banks are community based. As
being the potential Market in Gangavathi Shri Siddapur Manjunath (Chairman) planned to do
Co-Operative Bank with the committee which will be helpful for local trader and investors.
The main aim of the Bank is to give utmost service to the smaller region people as the
Gangavathi is surrounded by many villages and to give service for illiterate that by giving
awareness of banks and for the purpose of the social service……

Distinctions:
 Over 14 year in service.
 Pioneered small savings.
 Wide transactions.
 Door step customer service.
 Pioneered designed banker.
 Free value added service.
 Technology driven environment.
 Involvement in social categories.
Vision:
 To reach Rs.50 crores in deposits.
 Bank to convert from co-operative bank to schedule bank with in 2010.
 Extending its branches for better customer service at different places like Karatagi,
Kustagi, Koppal and Hospet.
 Maintain transparency in dealing with customers & invariable fulfill all commitments.
 Train its employees to render professional & pleasing services.
 Practice judicious management of risks & after service to satisfy customer needs and
wants.
Special Features of Bank:
• The Bank is paying two thousand to the Members for their funeral Function if it occurs.
• Twenty-five thousand to one lakh is paid for accidental death of members.
• Cash prize is given for the highest Scorer in Under- Graduation.
• The Bank used to sponsor scholarship to a poor student up to degree level.



OBJECTIVES OF CHANNABASAVA SWAMY BANK
Objectives:
• The bank ensures safety & profitability of assets by due diligence & by adopting
appropriate information technology.
• The bank’s main aim is to give opportunity for career advancement of the employees.
• The bank aims to grow in size & geographical spread by introducing variety of
innovative services.

ORGANIZATION STRUCTURE

BOD

Chairman

Vice Chairman

General Manager

Branch Manager Manager for Loan

Maintenance Accountant

Accountant Assistant Accountant

Assistant Account



Staff

CHAPTER:3



THEORETICAL BACKGROUND

NEED FOR THE STUDY

The Indian Banking industry comprises segments that provide comprehensive banking services
to individuals, corporate and small business. Industry segments are Public Sector Banks,
Private Sector Bank and Foreign Banks.
In this Project the report is mainly focused on FINANCIAL ASSISTANCE BY THE CBS
BANK GANGVATHI.

Objectives of the study:

 To view the services offered by the CBS Bank.
 To get practical knowledge about loans & advances.
 To know about the collateral Ssecurities asked for sanctioning loans.

SCOPE FOR THE STUDY:-
This project acts as a reference guide or as a source of information. It gives the idea
about the financial assistant of the CBS Bank . The main scope of the study was to put into
practical the theoretical aspect of the study into real life work experience. The study deals with
analysis and interpretation of the data collected through the sources of primary and secondary


data for a period one year annual report i.e2008-2009 Graphs, diagrams and tabulation methods
are used to analyze and interpret the data collected. It will help to understand the company’s
liquidity position.
METHODOLOGY
Sources of Data :
The data furnished in the report has been collected from two sources.
Primary Data: It is collected through personal interview with manager, accountant &
assistant accountant.
Secondary Data: It is collected through various annual reports, pamphlets of Co-
operativeBank Training Academy, Banking theory book

Introduction:

Banking occupies one of the most important positions in the modern economic world. It
is necessary for trade and industry. Hence, it is one of the great agencies of commerce. One of
the primary functions of a bank is to grant loans. Whatever money the bank receives by way of
deposit, it lends a major part of it to its customers by way of loans, advances, cash credit and
over draft. Interest received on such loans and advances is the major source of its income. The
bank makes a contribution to the economic development of the cover by growing loans to
industrial and agricultural source.

Definition of Banking:

According to Regulation Act 1949

“Accepting for the purpose of lending and investment of deposits of money from public.
Repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise”.

Types of banks:
 Commercial Banks



 Industrial Banks
 Mixed Banks
 Agricultural Banks
 Exchange Banks
 Savings Bank
 Indigenous Banks
 Central Bank
 Co-Operative Banks

Meaning of Loans: (In General)
Giving money to the various people by taking with their various securities, services for
various purposes.

Types of Loans and Advances:
Loans and advances are of different types. There can mainly be classified on the
following bases.
I. On the basis of Object or Purpose:
For which purpose a loan is being taken it may be for the following purposes.
a. Commercial Loans:
This loan is taken to meet show room requirements of capital. Eg: Working capital.
b. Consumer Loan:
This loan is taken to finance house hold goods like: Fridge, T.V., washing mashine etc.
c. Agricultural Loan:
Such loan is taken by the farmers to meet their short term requirements
like buying Seeds, Fertilizers, Insecticides, Agriculture Development Loans etc.

II. On the basis of Time:



a. Short term Loan: Such loan is taken for a period of less than a year. For Eg: to meet
working capital requirements.
b. Medium term Loan: Such loan is taken for a period ranging from 1 year to 3 years. For
Eg: to purchase equipments for professionals or furniture etc.,
c. Long term Loan: Such loan is taken to meet long term requirements from 3 years
to 20 years or more. For eg: Loans to purchase land, building, plant and whichever etc.,
however banks provide long term loans to a very limited extent only.

III. On the basis of Security:

a. Secured Loan: Such loan is granted on the security of tangible asset, Sec 5(a) of the
Banking Regulation Act 1949, defines a “Secured loan or advance” as loan or advance made
on the basis security of assets, the market value of which is not at any time less than the
amount of such loan or advance.
b. Unsecured Loan: Such a loan is granted without any security, According to Sec 5(a) of
the above act an unsecured loan or advance means a loan or advance not so secured.

IV. On the basis of Form:
A. Loan: This is the old age and popular form of lending by the banks. In case of loans,
financial assistance is given for a specific purpose and for fixed period. The consumer can
withdraw the entire amount of loan in a single installment. As such interest is payable on the
entire amount. Ordinary the loan is repayable in one installment. However a consumer may
return the loan in more than one installment also.
Merits of growing loans:
a. Simplicity: The method is very simple interest is payable on the entire amount of the
loan.
b. Better recovery of Interest and Loan: The customer knows in advance the time of
return of the loans.
c. Profitability: From the point of view of the bank, the method is economical.
Demerits:
a. Inflexibility: Borrower has to be made a fresh request for the loan every time he
requires the loan.



b. Over Borrowing: a customer known in advance the time of return of the loan.
c. More Formalities: As compared to cash credit and overdraft needs loan documentation
is more complicated.
B. Cash credit: under this system a limit called the credit limit is specified by the bank. A
borrower is entitled to borrow up to that limit. It is granted against the security of tangible
assets or guarantee. The borrower can withdraw money, any number of times up to that
limit they can also deposit any amount of surplus funds with in from time to time?.
Merits:
a) Flexibility.
b) Economical.
c) Less Formalities.
Demerits:
a) Over borrowing.
b) Division of Funds.
c) Non utilization of Funds.

C. Overdraft: One of the main advantages of a current account is that its holder can avail
of the facility of overdraft. An overdraft facility is granted to a customer on a written request
sometimes it may be implied where a customer overdraws his account and the banks honors
his charges.
Features:
 This is a running account and the customer may deposit and withdraw any number of
times.
 The bank provides cheque book facility.
 It is permitted only in a current account.
 Usual account opening formalities for a current account has to be gone through.
D. Bills purchased:
Bill clear or documentary are sometimes purchased from approved customers in
whose favor regular limits are sanctioned.
The word “Bills purchased” indicates that the bank becomes the purchaser / owner of
such bills. But guarantee the bank holds the bills only as security for the advance.



E. Bills discoursed:
It is done only for approved parties. This is done mainly in respect of since bills
maturing within 90 days or so after the due of the bill or after sight.

Principle of sound lending:
1. Safety
2. Liquidity
3. Profitability
4. Diversification
5. Object of loan
6. Security
7. Margin money
8. National interest
9. Character of the borrower

Lending process:
Whatever may be the type of advance, the process of appraisal of a loan proposal is
very important, lending money involves the following functions.
1. Understanding the market.
2. Prospecting for the right customer.
3. Credit investigation.
4. Sourcing for the customer by obtaining the application.
5. Obtaining and collecting the required information for appraisal.
6. Doing the appraisal process including verification of place of business securities.
7. Recommendation and sanction.
8. Obtaining securities, documentation and creation of charges.
9. Disbursement.
10. Enquiring the end use.
11. Follow up monitoring and renewal.
12. Recovery of advance.


Modes of charging:
I. Lien: A lien is the right of person or a bank to retain the goods or securities in his
possession until the debt due to him is settled.
II. Pledge: The bailment of goods as security for the payment of a debt or performance
of a promise.
III. Mortgage: It is mode of charge created on immovable properties like land and
buildings. It is the transfer of legal or equitable interest in property as security for
the debt.
IV. Hypothecation: It is a charge on a property of which neither ownership for
possession is transferred to the creator. In simple word it is a pledge without
transferring the possession of goods.

CHAPTER :4



FINANCIAL ASSISTANCE BY THE CHANNABASAVA SWAMY BANK

The main purpose of bank lending is to helps economic development of the country. All
types of business activity including trade, industry & agriculture have to depend upon bank
finance in one form or the other .banks help in canalizing the savings of the people into
productive uses. Thus from banks help both depositors & borrowers. It helps in creation of
employment potential & thus helps raising the standard of living of the people.
Following are the various loans & advances offered by the bank.
1. Gold loan
2. Loan on fixed deposit
3. Trade loan
4. Loan on pigmy
5. Loan on recurring deposit
6. Mortgage loan


7. Overdraft account
8. Cash or limit account
9. Consumption loan
10. Key loan
11. Personal loan
12. Construction loan
13. Hypothecation loan
14. Warehouse receipt loan
15. Surety loan
16. Loan on securities
17. Hosing loan
18. Vehicle loan
19. Loan on poultry form
20. Professional loan
21. Salary earner loan

1. Loans against Fixed Deposit
Eligible Borrowers:
Loans against deposits can be sanctioned either to the depositors or third persons.

Types of Deposit Eligible Borrower

A. Deposit in single name The depositor himself.

B. Deposit in joint name All depositor jointly or one of the depositors with
consent/authority from all.



C. Guardian operated minors [upon a declaration that loan is required for the benefit
deposit of the minor]


Financial Assistance by The CBS Bank, gangavathi

Third Parties:
 Persons not connected to deposit can also avail loan against authorization from
depositor(s). Such third party loans carry a different rate of interest.
 Loan given to a proprietor against the deposits in his firms name or vice versa should
not be treated as third party loans.
 Loans given to partnership firm against the deposits in the name of a partner should not
be treated as a third party loan. However, if a partner avails loan against deposits in the
name of the firm it should be treated as a third party loan.

Ineligible Deposits:
 Self operated minor’s deposit: Loans can not be sanctioned against self operated minor’s
term deposits, neither to the minor nor to his guardian.
 Third party loan against guardian operated minor deposit account: is not operated.
 Term deposits under capital gains scheme[issued under section 54E of Income tax act
1961] can not be taken as security.
 Other bank term deposits: banks do not sanction loans against term deposits of other banks,
as the latter will not register the assignment offering its right of general lien on such
deposits.
 Deposits representing earnest money for a contract: It should not be taken as the deposit is
already charged to the concerned department.
Margin:
The RBI has withdrawn the minimum margin requirement of 15% on advances against
term deposits. Primary Urban Co-Operative Banks are free to determine the rate of margin to
be maintained on advances granted by them against term deposits.
Interest rate:12
Banks at their discretion may not charge excess rate of interest of 2% in case of
advances up to Rs.300000 granted to a member/retired member of the bank’s staff or a spouse
of a deceased member/deceased retired member of the banks staff against the term deposit.
RBI has stipulated that all advances against term deposit should carry interest not
exceeding Prime Lending Rate [PLR] but where the rate of interest given on deposits is more
than the PLR banks are free to charge suitable rate of interest even exceeding PLR.
SVMVVSANGA’S INSTUTION OF MANAGEMENT 23
STUDIES,ILKAL


Where deposits are renewed:
During the tendency of the loan, it is not necessary to get discharge on the renewed
deposit.
Documents to be obtained:
A. Original deposit receipt duly discharged by the depositor (s) on revenue stamp is to be
obtained. Discharge must be undated as dated discharge may tantamount to payment before
maturity.
B. A document containing the following convenient should also be obtained.
o Application for the loan by the borrower.
o Undertaking to deliver the security.
o Authority to bank to exercise general lien & right of setoff.
o Authority to renew deposit on maturity.
o A letter of continuity (if the loan is sanctioned as a overdraft or cash credit).

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Comparison of interest rate(below one year only
ING BANK 9.5%
SBI BANK 7.75%
SBM BANK 7.25%
SBH BANK 7.5%
AXIX BANK 8%
ANDRA BANK 7.5%
CBS BANK 12%

Comparison of interest rates

Interpretation: The fixed deposit CBS bank interest rate is more then the nationalized bank in
Gangavathi.

2) Advances Against National Savings Certificate:

STUDIES,ILKAL


Banks can sanction loans against NSC VIII issues. NSCs are government securities
being sold through post offices. It is available in denominations of Rs.100, Rs.500, and
Rs.1000 & Rs.10000.
NSC VIII issue was introduced in 1989. They mature for payment after 6 years with
interest compounded at half yearly with interest compounded at half yearly rests. Certificates
issued before 31st December 1988 carry interest @ 12% P.A & certificates issued from
1.1.1999 carry interest @ 11.5% P.A & those issued from 15.1.2000 carry interest @ 11% P.A.
NSC in the name of a minor loan can be given to a guardian where he declares that the
loan is meant for the benefit of the minor.

As per NSC issue rules can be transferred to banks as security.
This transfer is affected by submitting to post office the duly filled letter of pledge in
prescribed format under the signature of the NSC holder & the bank. The post office charges
Rs.5/- per certificate for VIII issue and makes a noting of the transfer on the certificate under
its seal. A bank official should get the lien noted personally or through authorized officials and
no third party should be engaged for this purpose.

Margin and maximum loan:
RBI has now made banks free to stipulate margin as per their commercial judgment.
Loan can be sanctioned against principal value plus accrued interest.
Rate of interest:
Commercial rate of interest at Bank’s discretion.
For staff: the loan will bear interest at a rate which is minimum 1% higher than the interest rate
payable on the NSC (RBI Guideline).
Documentation:
• Application form for loan
• Security delivery letter
• NSC in original
• Form NSC41 duly signed by NSC holder & bank for getting the NSC pledged in favour
of bank.
• Demand promissory note.

STUDIES,ILKAL


• Repayment letter.
 There is no need to get the NSC discharged ( by its holder by signing on its back with
or without revenue stamp)
 The transferee bank is entitled for the interest apart from the principal.
 NSC does not get cancelled when pledged.
 Nominee does not have a prior right over the pledge.
 In case of a NSC in the name of a minor, the guardian can borrow on behalf of minor
for the letter’s benefit.
 After the closure of the loan the bank should write to the post office in standard format
for transferring the NTSC’s bank in the name of the depositor.

3) Loans against Gold Ornaments:
Eligibility:

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• Customers who own gold ornaments.
• Loans should be sanctioned against gold ornaments & not against gold biscuits purring
of gold should be minimum 18 carats.
• A pawn broker holding jewels as pledge is ordinarily not allowed to repledge them to
bank for availing loan.
Loan amount:
Quantum & rate as decided by the bank. The advance amount if found out on the basis
of weight, fineness of gold & as per the rate prescribed by the bank from time to time.

Appraisal:
It has to be done by an approved appraiser appointed by the bank. The commission paid
to the appraiser is to be recovered from the borrower
Repayment period:
As per the rules fixed by the Board. Generally between 12 to 36 months.

Procedure:
 Application in the prescribed format should be obtained.
 Jewel loan cards should be obtained in triplicate. I copy to be put inside the bag along
with the ornaments pledged II copy to be pinned to the bag outside – the III copy to be
given to the borrower.
 DP Note.
 The jewels pledged should be kept in a bag duly scaled & in bank’s safe custody.
INTERST RATE:15%

Auction of jewels:

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 Bank should send demand notices by registered post with AD giving 15 days notice for
payment of dues.
 It should publish the notice of sale in the local newspapers preferably in vernacular
language & display notice in the bank’s branch office notice board.
 Members of the staff of the bank can not participate in the auction sale.
 Auction can be made through a licensed Auctioneer.
 Highest bidder to deposit immediately 25% of the bid.
 The minimum bid should be fixed @ 80% of the current market value.
 Ones the bank conforms the bid bidder should deposite the balance with in three days
of demand.

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Comparison of interest rates of gold(below one year only)
SBI BANK 8%
SBM BANK 8%
SBH BANK 3.5%
AXIS BANK 2.95%
ANDRA BANK 12%
ING BANK 16%
CBS BANK 15%

Interpretation: The interest of gold loan of CBS bank is less than ING bank and more than
other compared to other banks

STUDIES,ILKAL


4) Vehicle Loans:
Purpose:
1. For purchase of vehicles for self use (by individuals)
2. Exclusively for the use of Educational Institutions.
3. For transport operators.
Eligibility: For all individuals.
Repayment period: 36 to 48 months.
Rate of Interest: 14%.
Maximum limit:
75% of cost of the vehicle subject to a maximum of Rs.l5 Lakhs for individuals.
75% of the cost of vehicle subject to a maximum of Rs.25 Lakhs for educational institutions.
75% of the costs of vehicle subject to a maximum of Rs.50 lakhs for transport operators.
Security:
Primary security will be hypothecation of vehicle purchased out of the loan. The
vehicle should be registered in the joints names of the borrowers and the Bank. Additional
collateral security as prescribed by the management. All loans above Rs.One Lakh should be
given with collateral security only. Regular member, associate members, nominal member may
act as securities.
1. Loan application form duly signed by all the borrowers.
2. Last three years income Tax assessment.
3. Assets and liability statement for calculating repaying capacity.
4. In case of salaried borrower, letter from the employer about the salary with details of
deductions made.
5. Hypothecation Agreement.
6. Registration of charge with the Road Transport Authority.
7. Insurance of the vehicle in the joint names of the borrower and Bank.
8. Mortgage formalities in respect of collateral security.
9. Copy of the R.C. Book, Duplicate Key and the Insurance policy should be deposited by
the borrower.
10.Copy of permanent Driving license.

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Disbursement of the loan:
The borrower should deposit the margin money with the Bank. The Cost of the vehicle will
be paid directly to the dealer of the vehicle by means of Bankers cheque or DemandDraft

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.Comparison of interest rate of vehicle loan
SBI BANK 8%
SBM BANK 9.5%
SBH BANK 9.5%
AXIS BANK 15.5%
ANDRA BANK 8%-14.5%
CBS BANK 14%
Comparison of interest rates of vehicle loan of different banks

Interpretation: the interest rate of CBS bank is less compared to andhra and axis bank and
it is more than other banks.

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5) Surety Loans:
Eligible purposes:
Personnel purposes like inland and foreign tours, repayment of debts, medical expenses,
Educational expenses, marriage, thread ceremonies, for purchase of sites/houses, repairs,
payment of Rent advance etc.,.
Rate of Interest: l6%
Maximum amount of Loan:
As prescribed by the Board from time to time. The Maximum amount should relate to the
repaying capacity of the borrower assessed by the Bank
a. Application form
b. Demand Promissory note.
c. Letter of guarantee from two approved sureties.
d. Letter from the employer (in case of salaried borers) Agreeing to deduct the loan
installment and remit the same directly to the Bank.
e. Letter of authority by the borrower addressed to the employer asking him to deduct
the loan installment from his salary.
f. Salary slip indicating details of salary and deductions made thereon.
g. Information regarding assets and liability of the borrower or last three years income
Tax assessment.
h. If the take home salary is not sufficient from the slips, Bank should ascertain from
the borrower, additional sources of income for the family.
i. If there are more earning members in the family, then the guarantee of other earning
members should be obtained, if their earnings are also included for considering the
repaying capacity of the borrower.

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6) Housing Loan or Construction Loan:
HOME LOAN INDUSTRY:

The demand - supply gap in housing in colossal (estimated at 21.23 million in urban
areas and 13.66 million in rural area). Yet home financing continues to have a limited spread
in India. Organized home-loans account for only 14% of total housing investment and add up
to about 20% of home purchases. Traditionally the mindset of Indians is debt-averse. Home
loan companies could do little to change this attitude as they have a narrow base and
beseeched with their own set of problems.

• Presently many companies in both private and public sectors offer home finance. The
prominent players amongst are only few. HDFC in the private sector and LIC Housing
Finance, Can Fin Homes in the public sector of the leading names in the industry. Many
commercial banks like Corporation Bank, Bank Of Baroda and foreign banks like Citibank,
HSBC, ANZ Grindlays are all getting very active in this business.
For public sector companies like LIC, GIC, SBI and the nationalized banks, home
finance was a logical extension of their existing businesses. They have massive network of
branch office networks, a captive base of clientele, staff experienced in real estate matters and
importantly, access to cheap sources of funds. For them therefore, the setting up of housing
finance subsidiaries to service captive-market shares was a logical development. Absence of
such entry-level advantage clearly affected many other players who could not make much
headway in business, which is largely retail in nature.

The true glory for making home-finance a household name however, goes to the
Housing Development Corporation Ltd.(HDFC), which through a mix of good customer
service and energetic sales pitch captured a sizeable market share in a sunrise industry.

The creation of the National Housing Bank (NHB) is a true milestone in the industry's
growth-path. NHB initiated operations in 1990s as an apex financing institution for granting
loans to home-finance companies. It streamlined the operating rules, business procedures,
interest rates and created a favorable climate for other home-finance companies to take a
serious look at this business. It is now mandatory for all home finance companies to follow
the prudential norms laid down by NHB. This has brought discipline into the market and

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helped even the small players to access concessional finance from NHB to remain
competitive.

It is the lack of low cost and stable long term sources of funds that has been the crux
of the problem. Though there are about 383 Housing Finance Companies today, the
disbursement by the leading 26 HFC's eligible for refinance from National Housing Bank
constitute almost 95% of loans. And of these, two- LIC Housing and HDFC - virtually
command the retail market with their assets.

However, it is here that banks might have an edge. Even before the cut in Bank Rate, a
bank's average weighted cost of borrowing was a low 10-1 1% allowing them to lend at
13-14% and afforded them a comfortable spread. Currently, a bank's cost of borrowing has
dipped even further to 8-8.5%. Sensing the opportunity, most of the banks are now setting up
separate home-finance divisions to leverage their personal banking relationships with a
captive database of account holders.

The year 1996-97 witnessed poor growth of about 5% following the slump in property
prices. Thereafter, in 1997-98 the market rebounded with a 23.5% growth with disbursals
totaling Rs. 5,700 crore.

The total flow of funds sanctioned to the housing sector in 1999-2000 was Rs.
21623.51 crore for 32.15 lakh housing units in the country under various housing finance
schemes. This represented an increase of 27.34 % over the years. In the current year (up to
September 2000) a total of Rs. 11791.27 crore has been sanctioned for 19.63 lakh-housing
units. In terms of disbursements a total of Rs. 19475.88 crore was disbursed for 28.55 % over
previous year. In the current year (up to September 2000) a total of Rs. 8482.97 crore have
been disbursed for 6.93 lakh housing units.

The National Housing Bank (NHB) was established in July, 1988, under the National
Housing Bank Act, 1987, as an apex bank , on the lines of IDBI and as a wholly owned
subsidiary of the RBI. It is the principal agency to promote housing finance institutions at the
regional and local levels, and to provide financial and other support to such institutions
connected with housing and human settlements. The major objectives of NHB are to promote,
establish, support or aid in the promotion, establishment and support of housing finance
institutions and to make loans and advances or render any form of financial assistance

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whatsoever to housing finance institutions and scheduled bank or to any authority established
under the Central Act and engaged in slum clearance and to frame guidelines for housing
finance institutions to follow for availing of the refinance from the NHB and for registration
as the eligible housing finance institution.
The growth rate of the economy might go up to levels up to 6%, if the revival is kept up.
Share markets are not entirely looking up, though they are stabilizing at levels, which can be
termed as reasonable. Industrial growth rate, which was wallowing at a low of 1.5%, is
now at around 5%. In fact, industrial credit given out by banks which in normal times would
be about 4-5 times of bank credit given to housing, had in the last few years reduced to levels
below advances to housing loans. But the happy feature is that industrial growth is picking up.
Even, the steel sector, which was hopelessly down, is now having hopes of revival.

It is only housing, amidst all these that seems to have kept up fairly stable front. Yes, the late
90s saw even housing go through a bad phase. But, then with that phase crossed, there has
been a steady revival and stabilization of the market at levels, which can be termed as
reasonable from the point of view of both the customers and those on the supply side. Housing
is a basic need and like any basic human need will be constantly in demand. The potential for
housing in this country is huge by NHB estimates. And the requirements by NI IB estimates
are around 20 million houses. There are other estimates, which suggest that it is at a much
higher level. Even going by the conservative estimate taken by the NHB, the requirements in
the area of housing are massive. This really means that a lot of investments cab is there in the
coming years and there is room for multiple players.

The customer who is purchasing a house today has not only the options of competitively
lowest rates of interest, but also choice of different types of loans starting from the house-
purchase or house-building loans to house-improvement loans, home equity loans [loans on
mortgage of property], home extension loans, NRI loans etc. It has never been better than this
ever before.

As far as availability of finance to the retail customers is concerned, there has been a
tremendous improvement in the possibility over the last few years. There are over 32 NHB
recognized Housing Finance Companies which dot the map of this country with their presence

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all-over. The nationalized banks have in addition made housing a thrust area and added to the
reach for advancing loans to individuals. The LICHFL, which organization I happen to
represent, itself has over 200 centers in this country, which are covered by their physical
presence. Leading Housing Finance organizations like the cbs bank also have a widespread
network all over the city giving out loans to customers for housing. The banking major, SB J
covers over 500 centers through their branches where personal banking
division functions. The other banks too are not far behind in their reach out to the house
purchasing public.

In pursuance of its objectives, as the principal agency to promote a sound, healthy,
viable and cost effective housing finance institutions/companies and to provide financial and
other support to them, the NHB has issued operating guidelines for the HFC's in India. They
must conform to these guidelines to the eligible for financial/re finance support from the
NHB. Presently, it provides to eligible HFC's refinance facilities in respect of housing loans
for acquisition/construction of new housing units. The important guidelines are briefly
summarized in this section.

Home Purchase Loans: There are the basic home loans for the purchase of a new
home,
* A loan for ready built house / flat
Home Improvement Loans: These loans are given for implementing repair works and
renovations in a home that has already been purchased by you.

Home Construction Loans: These loans are available for the construction of a new home.

Home Extension Loans: Are given for expanding or extending an existing home. For example
addition of an extra room, etc. Home transfer Loans: Are available for those who have
financed the present home with a Home Loan and wish to purchase and move to another home
for which some extra funds are

required. Through a Home Conversion Loan, the existing loan is transferred to the new home
including the extra amount required, eliminating the need for pre-payment of the previous
loan.

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and Purchase Loans: These loans are available for purchase of land for both home
construction or investment purposes.

Balance Transfer: Balance Transfer loans help you to pay off an existing home loan and avail
the option of a loan with a lower rate of interest.

Refinance Loans: These loans help you pay off-the debt you have incurred from private
sources such as relatives and friends, for the purchase of your present home.

Loans To NRls: Are tailored for the requirements of NRIs wishing to build or buy a home in
India

.
Purpose:
a. Repairs, alterations and additions to existing houses.
b. Purchase of site & construction.
c. Purchase of flat.

Eligibility criteria:

a. Individuals or Co-Operative Housing Societies, Housing Boards, Local Bodies etc.,
undertaking Housing Projects.
b. Individuals, Members of co-operative Housing Societies belonging to SC & ST and
Low and Middle income groups.

Terms and Conditions:
R.B.I. as under has prescribed maximum amount of housing loan. Which can be
granted by urban Co-operative Banks.

 The maximum amount of housing loan which can be granted by urban co-operative
Banks having deposits up to Rs.50 crores will be Rs.5 lakhs and for Banks with
deposits above Rs.50 Crores will be Rs.l0 lakhs.

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 Income criteria for determining the quantum of Housing Loan to an individual
borrower belonging to economically weaker section, low middle and higher income
group has been discontinued the Banks are free to identify the eligible borrowers and
housing loans depending upon their commercial judgment, deposit resources, repaying
capacity of the borrower etc.,.
 Maximum amount of loan for repairs, additions and alterations per individual’s
borrower is Rupees 75,000.
 The quantum of housing advances is now related to deposit resources of Bank
irrespective of the fact whether it is scheduled bank or not. The Banks can utilized up to
15% of the deposit resources to provide housing loans and other block capital loans.

Security:
The loan should be secured by either by mortgage of property or by government guarantee or
by both.
Rate of interest: 14%
Documentation:
Collateral securities should be given along with some Documents.
• Tax paid receipts.
• Sale DD.
• Khata extract for 15 years.
• Legal opinion from the legal advisor
• Mutation order.
• Encumbrance certificate for 15 years.
• Approved NA order along with approved layout.
• Map.Margin: up to 75% of the amount.

Comparison of interest rates of home loan.

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ING BANK 9%
SBI BANK 8%
SBM BANK 8%
SBH BANK 8%
AXIS BANK 9%
ANDRA BANK 8.5%
CBS BANK 14

Interpretation: the interest rate of home loan of CBS Bank is more compared to other banks.

7) Cash credit Limit:
Purpose:
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This facility is sanctioned to meet their working capital requirements & business
improvement purpose.
Eligibility:
Generally cash credit limit shall be granted to traders against hypothecation/pledge
of stock as approved by the bank to members, associate members. They must be engaged in
bonafied trade, industry or other business activity.

Period:
Cash credit limits are generally sanctioned for a period of one year at the first
instance. Depending upon the operations & deed, the limit is reviewed at the end of the first
year. Cash credit accounts are running accounts like current accounts.
Margin: up to rupees 500000.
 Deed of hypothecation.
 Promissory note.
 Letter of continuity.
 Letter of lien & setoff.
 Mortgage formalities in respect of collateral security.
 Declaration about ownership of goods.
 Letter of access for inspection of shop/godown.
 Letter of guarantee in case of third party guarantee.
 Copy of sanction letter duly acknowledged by the borrowers.

8) Personal and Professional Loan:
Purpose: For purchase of office requirements.
Eligibility:

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Medical practitioners including Dentists, Charted Accountants, Cost Accountants,
Practicing Company Secretary, Lawyers, Solicitors, Engineers, Architects, Surveyors,
Construction Contractors, or Management Consultants.
Margin: 75% of amount.
Security: Bills Quotation
Comparison of interest rate of personal and professional loan
SBI BANK 10%
SBM BANK 13%
SBH BANK 11.25%
AXIS BANK 15%-23%
ANDRA BANK 15.5%-15.75%
CBS BANK 14%
Comparison of interest rate of personal and professional loan of different banks.

Interpretation: The Personal and professional loan of CBS bank’s interest rate is less
compared to axis and andhra banks and it is more than SBI,SBH and SBM banks.

9) Loan on Pigmy Depositors:
Purpose: Scheme for pigmy depositors to meet any contingencies.
Eligibility: Regular contributor for pigmy for 2 years.

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Quantum of loan: 80% of the pigmy amount.

10) Loan on Recurring Deposit:
This deposit is paid against amount of 80% of deposit.

11) Mortgage Loan:
Purpose: Issued for any purpose repayment of old debt, agriculture, trade, construction etc,
Margin: 60% of collateral securities
Repayment period: up to 5 years.
This is medium term loan.
Securities: Collateral securities like land & building etc,

12) Over draft Account:
Purpose: for improvement of business.
Eligibility: for traders
Margin: up to 500000
Rate of interest: 15%.
Security: collateral securities (land & building).
Renewal for every 1 year.

13) Consumption loan:
Purpose: given for purchase of consumer durables like TV, Refrigerators.
Eligibility: salaried/ non salaried class.
Surety: two members

14) Key loan:
Purpose: for seasonal requirements

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Eligibility: for traders
Security: against the pledge of stock-paddy, rice, ground nuts.
Borrower should pay insurance on the stock & bank charges.

15) Personal loan:
Purpose: for general purpose.
Surety: two members is given up to 25%.

16) Hypothecation loan:
Purpose: to purchase official requirements like X-ray machine, printing off set.
Repayment period: 5 years
Eligibility: Doctors, Printers
Margin: 75% of amount
Security: hypothecation of plant & machinery

17) Warehouse receipt loan:
Purpose: to meet the ware house facilities
Margin: up to 60%
Securities: ware house security receipt issued by the ware house authorities
Goods pledge in the name of financial institute.

18) Loan on poultry form or dairy loan:
Eligibility: for the formers as agriculture allied activity.
Purpose: poultry form, piggery of birds

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Security: poultry form premier along with the stocks. Additional security of land &
building.
This type of loan will be treated as priority sector lending by the RBI.
Surety: two members

19) Salary earner loan:
Eligibility: employees of all kinds.
Surety: two members
Purpose: to meet their personal requirements.
Security: undertaking letter, salary certificate/ against their wages.

Recurring bank deposit accounts:
Recurring deposit account are variants of and innovations over the savings bank accounts. In
short, they are a form of savings deposits.
Features of Recurring Deposit Accounts:

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1. It is meant for for people who have regular monthly savings.
2. It encourages savings habit among the depositors.
3. Fixed some of for an agreed period.
4. Monthly installments has to be made.
Comparison of Recurring deposit interest rate of different banks
Name of the Bank Rate of Interest

Ing vasya 3.4%
State bank of India 0.50%
State Bank of Mysore 0.25%
State Bank of Hyderabad 1.50%
Axis Bank 5.25%
Andhar bank 2.5%
Channabasava Swamy Bank 7.25%

Comparison of recurring deposits interest rates of different banks

The above table shows that the interest of recurring deposit a/c of CBS bank is more than other
banks.

Savings bank account Interest

Name of the Bank Rate of Interest
Ing vasya 1.40%
State bank of India 1.50%

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State Bank of Mysore 1.25%
State Bank of Hyderabad 1.50%
Axis Bank 1.25%
Andhar bank 1.25%
Channabasava Swamy Bank 1.00%

Interpretation: The above table shows that the interest of Savings bank a/c of CBS bank is less
than other nationalized banks.

Guidelines on Documentation:
Documentation is the term used to describe the execution of documents in proper from
and in accordance with the requirements of low proper documentation constitutes the legal
security of the bank. Since it establishes the legal relationship between the Bank and the
borrower. Documents should be properly drawn up executed and stamped as required by law.
They should also be attested and registered where so required by law. Then only the rights and
obligations of the bank and the borrower can be said to have established.

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Documentation is necessary to enforce the Bank’s right against the borrower to recover
the amount advanced.

Keep in mind the following “Do s” and “Don’t s” of Documentation.

Do:

 Issue a letter with terms and conditions of credit facilities sanctioned and obtain
acknowledgement of the borrower/s and guarantor/s.

 Get the documents filled up and then get them executed in the presence of an officer of
the bank.

 Use correct form of DP note as per the constitution of the borrower.

 Obtain full signature of the borrower wherever there is any alteration / addition /
deletion of the document.

 Ensure that the document is adequately stamped as per the law applicable in the state
where it is executed.
 Use proper description of stamp on documents.

 Get the revenue stamp cancelled with the signature of the borrower.

 Stamp the document executed out side India with in 3 months after it is received in the
country.

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 Mention the rare of increase linking to prime lending race except in case of advance
against deposits.

 In the case of illiterate borrowers, write the name of the illiterate to person below the
thump impression mark.

 Obtain a statement signed by a third party staring that the contents of the document
were explained to the illiterate borrower.

 Obtain signatures of all parties to the document.

 Examine all documents in detail before disbursement.

 Ensure that charges requiring registration are filed with the registrar of companies as
per Section 125 of the Indian Companies Act.

 Send a copy of the certificate of registration to the borrower after receiving the original.

 Verify the articles of association above use of “Common Seat” of the company on
documents.

 Examine fully the legal opinion on property issued by the advocate.

 Send the mortgage duel for registration to the Sub registrar

 Draw the memorandum in case of equitable mortgage on the next day of the deposit of
the instrument.
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 Take acknowledgement of debt fro borrower/guarantor once in six months.

 Try to obtain debit balance confirmation / acknowledgement of debt on banks format
from all parents / guarantor.

 Obtain signature of the party whenever payment is made into loan accounts.

 Obtain fresh DP note and agreement for revival of time barred debt for full amount due
up to date. (including interest up to date)

 Issue a notice to the borrower guarantor before filing of suit.

 Keep the envelope unopened if the “Suit Notice” or “Letter” is returned undelivered or
refused.

 Obtain fixed deposit receipt duly discharged by all the joint holders along with the
letter of lien.

Do Not:
 Disburse advance without obtaining all documents as per sanction letter.

 Hand over the bank documents to the borrower for execution.

 Send documents by post to the borrower for execution.

 Fill up document unless adequate stamp duty is paid.

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 Get the document typed.

 Keep any column in the document blank.

 Use different color ink / pen for filing up a document.

 Obtain signature of executants without filing up the documents.

 Affix revenue stamp one below the other.

 Cancel the revenue stamp on DP note by crossing them as “X”

 Accept share signatures of borrowers on documents unless it is required as per rules.

 Attach blank stamp papers to the document.

 Disburse loan without registering the mortgage deed.

 Accept photocopy / true copy of title deed for equitable mortgage.

 Accept any letter from the owner of the property along with the title deeds.

 Prepare memorandum on the same day of deposit of title deeds.

 Issue receipt for the title deeds on the same day.

 Part with the title deeds / securities during the currency of advance.

 Obtain revised hypothecation agreement for enhanced limit in respect of limited
companies.
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 Advance loan against party paid up shares.

 Accept a minor as a borrower / Co-borrower / guarantor.

 Take DP notes separately for each installment disbursed.

 Punch in the documents.

 Offer opinion on document to the borrower.

Steps involved in documentation:
1. Drafting of documents.
2. Preparing a set of documents.
a. Constitution of borrower.
b. Types of advance granted.
c. Nature of security offered.
d. Types of charge to be created.

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2. Stamping of documents.
3. Filling up of documents.
4. Execution of documents.

Limitation:
Limitation period is the time limit within which an action can be taken in a Court of
Law. Limitation Act l963 prescribed the periods of limitation for filing various types of suits
and appeals. A court will not entertain a suit filed after the expiry of limitation period as laid
down by law. If there is no limitation the Courts will flooded with litigations relating to very
old transactions. It becomes very difficult either to prove or disprove the transactions in view
of non availability of the concerned persons to the tractions or relevant documents. More over,
the law intends to protect those people who are vigilant about their rights.

The limitation act bars only the legal remedy but not the right of a creditor. He can
exercise the right of lien, and also recover his dues by disposing of the securities in his
possession like goods under pledge, even after the expiry of documents.

Limitation can be extended by the Acts of the parties in any one of the
fallowing ways:

Renewal of documents: If the borrower executes a fresh set of documents for the existing dept,
the limitation is automatically extended from the date of renevel of documents.

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Acknowledgement: According to Sec.l8 of limitation Act, when a borrower acknowledges his
liability in writing before the expiry of the limitation period, A fresh period of limitation
commence from the date of signing such acknowledgement.

Part Payment: According to Sec.l9 of limitation Act, when a borrower makes part payment on
account of the debt either by himself or his agent duly authorized by him in this behalf, before
expiry of limitation period, a fresh period of limitation shall commence from the date of such
payment.
In order to take advantage under this section, the following requisites are to be
complied with:
a. Part payment should be made by the borrower or by his agent.
b. Part payment must have been made with the knowledge and consent of the
borrower.
c. Part payment should be received before expiry of limitation period.
d. Part payment should have been received by the creditor.

Revival of time barred debt:
It is not possible to review time barred debt either by taking acknowledgement or by
accepting part payment after the expiry of the limitation period. A time barred debt should be
given a new life by a specific and express promise preparably in the form of an Agreement.

a. Fresh promise to pay the time barred debt is to be obtained in writing.

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b. Fresh D.P. note is to be obtained. In case of term loans the amount outstanding
inclusive of interest up to date is to be filled in the D.P.Note. Where as, in case of
running accounts like cash credits and over drafts, the amount of limit or outstanding
inclusive of interest up to date, whichever is more, is to be filled the D.P.note.

Annual report as on year ending 2008-2009
INCOME
INTEREST EARNED
AMOUNT
INTEREST/DISCOUNT ON
ADVANCES/BILLS 20,917,494.40
Interest from Gold Loan 43,358

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Interest from Loan on FD 202,443
Interest from loan of RD 1,573
Interest from LFD (Double Scheme) 29,588
Interest from Loan on Pigmy 827
Interest from Trade Loan 589,692
Interest from Over Draft 3,241,645
Interest from Cash Credit Limit 1,934,726
Interest from Key Loan 3,617,845
Interest from Poultry Loan 4,250
Interest from Surity Loan 217,898
Interest from Personal Loan 33,038
Interest from Hypothecation Loan 701,479
Interest from Vehicle Loan 986,567
Interest from Housing Loan 691,665
Interest from Loan on Securities 1,285,637
Interest from Salary Earner Loan 612,500
Interest from Mortgage Loan 6,186,832
Interest On Bills Purchased 450,123
Interest On Professional Loan 1,675
Interest On Loan on warehouse Receipt 84,133

Interest On Investments (FD/GOI Sec) Others 12,677,260.40

Total 33,594,754.80

OTHER INCOMES
AMOUNT
Commission, Exchange and Brokerage 1,126,952.99
Profit on Sale of Investment NIL

Misc.Incomes 1,422,130.87

Other Income 40,061.98
Cheque Book Charges 33,041
Transfer fee for Share 572
Loan Application Fee 13,983
Processing Fee 833,697
Share Fee 5,525
Share Application Fee 1,110
Admission Fee 1,380
Misc.Charges on Current & S.B.Accounts 277,790.37
Locker Rent 30,500
NDC Charges 5,470.52
Pigmy Misappropriation Amt Recovered 170,000

Total 2,549,083.86

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EXPENDITURE
INTEREST EXPENDITURE
Interest Paid on Deposits 15,503,213.87
Saving Bank Deposits 1,936,439
Fixed Deposits 12,379,045
Recurring Deposits 84,210
Pigmy Deposits 502
Interest On R.B.I./Inter.-Bank Barrowings Others 1,103,017.87

Total 15,503,213.87

OPARATING EXPENSES
Payments and provissions for Employees 3,675,795
Salaries 2,736,186
Provident Fund 346,962
Ex-gracia 416,976
Gratuity & Group Insurance 114,484
Medical Allowances 61,187

Management Expenses 237,540
Board Meeting Expenses 128,089
Travelling & Training Expenses 106,751
Car Hire & Fuel Charges 2,700

Rent Taxes Lighting and Insurance 621,339
Rent 103,200
Electricity 195,113
Insurance 323,026.09

Printing, Stationery and Advertisement 215,015.25
Printing & Stationery 126,610.25
Advertisement & Publicity 88,403
Depreciation on Fixed Assets/Furniture’s 572,134
Audit Fees 25,000
Postage, Telegrams & Telephone Etc. 95,899.54
Postage/Courier Charges 24,501
Telephone Charges 71,398.54

Other Expenditures

Newspapers & Periodicals 19,139
Repairs & Main. And Computer AMC 63,127.50
AMC Charges 109,772
Computer Accessories 2,162

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Business Development Expenses 4,938
Office Expenses 83,120
Quest Expenses 1,528
Local Conveyance 7,000
Clearing House & Locker Rent 7,500
G B Meeting Expenses 144,194
Donations 44,310
Federation Fees 31,500
Loan Recovery Expenses 3,462
Fringe Benefit Tax 37,270
Provision for Bad/doubtful debts 828,719
Income Tax Provision 3,372,884.13
Professional Tax 2,500
Depreciation on investments 3,200,000
Remuneration to Advisor 84,000
Vehicle Maintenance expenses 243,112.47
Commission Paid to Banks 49,329.51

Total 5,442,722.88

BALANCE SHEET AS ON 31st MARCH, 2009
Capital & Liabilities AMOUNT
Capital 7,748,212
Reserve & Surplus Funds 62,056,533.56
Deposits 263,426,920.73
Borrowings 362,482.11
Other Liabilities & Provisions 23,794,919.41

Total 357,389,068

Profit & Loss Account 6,847,464.30

Grand Total 364,236,532

CAPITAL
Paid up Share Capital 4,225,112
Loan Additional Share amount 3,431,526
Associate Membership 91,574

Total 7,748,212

Reserves & Surplus
Statutory Reserves 32,866,574.65
Co-Operative Education Fund 193,313.74
Souharda Co-Operative Education Fund 3,259

STUDIES,ILKAL


Building Fund 6,853,656
Charity Fund 1,345,410
Propaganda Fund 52,012
Members Death Fund 382,478
Dividend Equalization Fund 201,026
Jubilee Fund 1,454,176
Provision for Standard Assets 314,000
Bad Debt Fund(BDDR) 6,972,944
Investment Depreciation Reserve 9,091,470
……Management Reserve Fund 225,861.18
Contingency Operative Management Fund 309,553.76
Common Good Fund 95,480.09
Education Donation Fund 81,273.66
Members Welfare Fund 377,374
Staff Welfare Fund 801,575
Directors & Staff Training Fund 435,096

Total 62,056,533.56

DEPOSITS
Demand Deposits
From Banks Nil
From Others Nil

Current Deposits 49,039,825.29
Current Deposits 47,599,732.17
Credit Balance of OD 883,475.30
Credit Balance of CCL 556,617.82
Saving Bank Deposits 107,725,189.34
Term Deposits 106,661,906.10
Fixed Deposits 105,491,223.40
Recurring Deposits 1,019,527.00
Pigmy Deposits 151,155.70

Total 263426920.7

BORROWINGS
Borrowings in India
From Reserve Bank of India Nil
From Other Banks
SBH OD 362,482.11
Borrowings Outside India Nil

Total 362,482.11

STUDIES,ILKAL


OTHER LIABILITIES & PROVISIONS
Bills Payable Nil
Inter Office Adjustments(Net) Nil
Others (Including Provisions)
Interest Payable on Deposits 17,842,183.00
On Fixed Deposits 17,745,936.00
On Recurring Deposits 96,247.00
On Staff Security Deposits
Auditors Expenditure 22,425
Share Suspense 79,769.46
Pay Order 1,414,552
Provident Fund Payable 103,066
Professional Tax Payable 2,530
Staff LIC Payable 16,293
Dividend Payable 1,549,956.80
Sundry Creditors A/c 11,232.25
Income Tax Payable 1,990,514.13
Exgracia Payable (Bonus) 409,976
Pigmy Fraue Provision 162,000
Anganawal Suspense salary A/C 119,379.49
TDS Payable A/c 2,575
Clearing sunspence Lty A/c 68,467.28

Total 23794919.41

CASH & BALANCES WITH RBI

Cash on Hond 250,731
Balance with RBI
Current Accounts Nil
Other Accounts Nil
Total 250,731

BALANCES WITH BANKS, MONEY AT CALL AND SHORT NOTICE

Balance with Banks(in Current Accounts)
State Bank of Hyderbad A/c.No.1750 465,182.43
Syndicate OD A/C 2,197,406.95
State Bank of Mysore, Gangavati 192,341
State Bank of India, Gangavathi. 1,068,577.17
Canar Bank A/C. No.883/VII 24,472.25
Cyndicate Bank, Multicity A/c 1,352,456.17
Andra Bank, Gangavati 1,468,877.70

STUDIES,ILKAL


Vijay Bank, Gangavati 83,578.00
Vysya Bank A/C. No.850 128,264.40
KSC Bank, Bangalore 3,553,298.00
RDCC Bank, Gvt.A/C. No.34 4,964,993.00
RDCC Bank, Raichur A/c.No.8 1,566,916.48
RDCC Bank,Koppal 2,357,559.00
RDCC Bank, Hubli A/c5500 17,686,449.84
HDFC Current A/c 97,250.87
HDFC Bank, Bangalore A/c. 194 287,795.41
HDFC Bank, Hubli A/c.No.133 1,038,218.12
6,482,763.31
Nagar U C B, S R Nagar 134,239.00
Balance with Bank (in other Deposit Accounts)
Outside Nil

Total 45,150,638.60

INVESTEMENTS

In India
Government Securities 28,500,000.00
Others Securities 15,000,000.00
Others Investments 26,122,050.00
Investment in IDBI 10,100,000.00
Shares
in Central Co-operative Bank, Raichur 10,000.00

Others (Deposits with) 80,564,588.61

Total 160,296,638.61

LOANS & ADVANCES

Bills Discount Purchases 8,022.00
Cash Creditors on Demand 14,153,738.38
Overdraft 18,275,391.68
Term Loans 120,834,946.00

Total 153,272,098.06

FIXED ASSETS(DEAD STOCK)

Premises Nil
Other Fixed Assets
Bank Vehicle Asset A/c 741,689.00

STUDIES,ILKAL


Fixed Assets 301,841.00
Furiniture & Fixtures 1,874,422.60
Generator 77,486.00
Computers & Accessories 128,266.40
Air-Conditioners 107,612.00
Automation Equipments 201,298.00

Total 3432615

Other Assets

Inter-Office Adjustment 136,429.75
Stationery & Loans
Others
Telephone Deposit 15,289.00
KPTCL Deposits 61,863.00
Staff Festival Advance 21,700.00
Building Advance 5,530.00
G-Security Prem To Amortise 653,435.00
TDS Reservable 715,605.00
Libra Loans 8,000.00
Pigmy Expenses(KV Swamy) 61,133.00
Clean Expenses(asset) A/C 154,826.09
TOTAL 1833810.84

STUDIES,ILKAL


CHAPTER-5

STUDIES,ILKAL


FINDINGS

• Liabilities are more than bank balance.

• Branch network is limited to a particular area.

• As the city is based on agriculture, so the bank is based on agricultural loan mainly.

• Self operated minor deposits are not allowed.

• Interest rates are high compared to nationalized banks.

• Interest from mortgage loan is very high compared to other loans given by bank.

• Bank is receiving higher interests on FD compared to SB,RD and pigmy.

• Bills payable is nill.

• The bank is not collecting feasible securities on loans.

STUDIES,ILKAL


Suggestions and Recommendations

• Since liabilities are more than bank balance, bank should increase the customers account,
deposits and there should be more transaction.

• Bank should open their new branches in other places.

• As bank is giving loan to farmers only, so they should extend their loan facility to
industries also.

• As nationalized banks are giving loan at low interest rates, many of them are benefited with
it. So in order to have more transaction they should reduce the interest rates while
providing loan.

• Loan recovery should be done as soon as the loan period completes.

• Banks should cullet the feasible securities

• Bank should provide quick service to the customer

STUDIES,ILKAL


Conclusion

After the study, we can come to a conclusion that, C.B.S Bank has to improve in all the aspects
of its banking operations, the C.B.S Bank can still strengthen its position by looking into the
following.

• Bank should increase the customers account, deposits and there should be more
transaction.
• Bank should extend their loan facility to industries also.
• Bank should provide loan at low interest rates.
• Recovery of loan should be done otherwise bank will suffer huge loss.
• Bank should keep observing the nationalized banks in order to develop its functional
operations.

Everything has been taken into to know the financial assistance of the C.B.S
Bank.

STUDIES,ILKAL


BIBLIOGRAPHY:
TEXT BOOKS:
1)BANKING LAW AND PRACTIES
(B.S.RAMAN)
2)CORPORATE BANKING
(V.MADUSUDION)
WEB SITE:
WWW.ING.COM
WWW.SBI.COM
WWW.SBM.COM
WWW.SBH.COM WWW.
WWW.ANDRA BANK.COM
DOCUMENT:
ANNULE REPORTS
JENERNAL

STUDIES,ILKAL

Financial assistance by the cbs bank mba finance project report

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