Financial Planning And Forecasting

Name of the Learner : Ms. NEELAM

Registration No. : 201505759
Program Name : Post Graduate Diploma in
Business Administration
Specialization: : FINANCE MANAGEMENT

Submitted to
SYMBIOSIS CENTER FOR DISTANCE LEARNING
(2015 - 2017)
 DECLARATION

This is to declare that I have carried out this project work myself in part fulfillment of the Post
Graduate Diploma in Business Administration Specialization in Finance Management
Program of SCDL.

The work is original, has not been copied from anywhere else and has not been submitted
to any other University/Institute for an award of any degree/diploma.

Date: 22.07.2019 Signature:

Place: NEW DELHI Name: Ms. NEELAM

 CERTIFICATE OF SUPERVISOR

Certified that the work incorporated in this “Financial Planning and Forecasting” by “Ms.
Neelam” is his/her original work and completed under my supervision.

Material obtained from other sources has been duly acknowledged in the Project Report.

Date: 22.07.2019 Sameer Malhotra

Place: New Delhi (Project Guide)
 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

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

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.
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-operative
Bank Training Academy, Banking theory book

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]
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.

23
 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.

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).

24
 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.

25
2) Advances against National Savings Certificate:

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:

26
 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.
 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.

27
3) Loans against Gold Ornaments:
Eligibility:
 Customers who own gold ornaments.
 Loans should be sanctioned against gold ornaments & not against gold biscuits purring
of

Comparison of interest rate of vehicle loan

28
 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.

5) Surety Loans:

29
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
Documents to be obtained:
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.

6) Housing Loan or Construction Loan:

30
 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

31
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

32
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
 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:
Medical practitioners including Dentists, Charted Accountants, Cost Accountants,
Practicing Company Secretary, Lawyers, Solicitors, Engineers, Architects, Surveyors,
Construction Contractors, or Management Consultants.
Rate of interest: 14%
Margin: 75% of amount.
Security: Bills Quotation

Comparison of interest rate of personal and professional loan

SBI BANK 10%
SBM BANK 13%

33
 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.
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
Rate of interest: 14%
Repayment period: up to 5 years.

34
 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.
Rate of interest: 14%
Surety: two members

14) Key loan:

Purpose: for seasonal requirements
Eligibility: for traders
Rate of interest: 13%
Security: against the pledge of stock-paddy, rice, ground nuts.
Borrower should pay insurance on the stock & bank charges.

15) Personal loan:

Rate of interest: 16%
Purpose: for general purpose.
Surety: two members is given up to 25%.

16) Hypothecation loan:

35
Purpose: to purchase official requirements like X-ray machine, printing off set.
Rate of interest: 14%
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
Rate of interest: 14%
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
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
Rate of interest: 14%

19) Salary earner loan:

Eligibility: employees of all kinds.
Rate of interest: 16%
Surety: two members
Purpose: to meet their personal requirements.
Security: undertaking letter, salary certificate/ against their wages.

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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:
1. It is meant 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 have 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%

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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%
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%

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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.

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.

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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.
 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

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  Draw the memorandum in case of equitable mortgage on the next day of the deposit of
the instrument.
 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.
 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.

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  Disburse loan without registering the mortgage deed.
 Accept photocopy / true copy of title deed for equitable mortgage.
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
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

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 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
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

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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

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