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SUMMER PROJECT REPORT

STUDY OF LENDING FUCTION OF BANK AND COMPARATIVEANALYSIS OF LOANS OFFERED BY VARIOUS

NATIONALIZED BANKS

Prepared for the Mumbai University in the partial fulfillment of the requirementfor the award of the degree in...

MASTERS OF MANAGEMENT STUDIES

Submitted By:

MS.STEVINA S. CORREIA

ROLL NO. 116

Under the guidance ofDR. THOMAS MATHEW

DIRECTOR

SFIMAR

St Francis Institute Of Management And Research, Mt. Poinsur,

S.V.P Road, Borivali (W) Mumbai.

Batch- 2008-2010:

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Company Certificate

Borivli (West) Branch

Mangal Kunj, S. V. Road,

Borivli (W), Mumbai 400 092.

Phone 2898 73 46/2898 16 34

Advances Department

Office No.101 to 108,1st floor,

Sai Leela Commercial Complex,S.V.Road, Near Indraprasth ShoppingCentre, Borivli (West),

Mumbai 400 092.

Date: 30/6/2009

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Stevina S. Correia has successfully completed his/her summer

project on “Study the Functioning of Advance (credit) Department in Bank” for a

period of two months. I.e. from 4th May to 30th June, 2009.

During this period, we found her sincere, honest & hardworking.

We wish her all the best for further assignments.

For Bank of India

Name: S. S. Iyer

Designation: Chief Manager

Department: Advance Department, Borivali (west)

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Acknowledgment

On behalf of St. Francis Institute of Management and Research Borivali (W.), I would like toexpress our deep Gratitude to Assistant General Manager Mr. Anil Bhalla and Chief ManagerMr. Shankar Iyer of Borivali (west) Branch for giving me unique opportunity, and for theirguidance and encouragement. They have spared their valuable time for holding discussions onissues involved and thereby provided necessary guidance.

Also I would like to thank Officer Mr. Puranik and Officer Mr. Akshikar for their valuable inputsand insight in the project. I will also like to keep on record the excellent support received fromMrs. Hansa, Mrs. Usha Nair and Mr. Shamkant Gaikwad.

Finally, I would like to thank all the members of the Borivali (W) Branch of Bank of India fortheir valuable assistance.

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Executive summary

Credit Department banking business primarily involves accepting deposits from the public andinvesting or lending the same and thereby making profit out of it. However, lending money is notwithout risk and therefore banks make loans and advances to farmers, traders, businessmen andindustrialist against either tangible (land, building, stock etc.) or intangible security. Even then,the banks run the risk of default in repayment. Therefore, the banks follow cautious measureswhile lending money to others. This core function of a Bank is performed by the CreditDepartment of the bank. In this case, the relationship of bank and customer is that of the creditorand debtor.

This study has conducted to understand the role played by banks in the business world by way ofloans and advances and understand the bank credit policy in its lending activity.

Comparative analysis was also done to fine out the growth of lending activity in Bank of India. Asample of 3 competitive nationalized banks was. These 3 banks are Bank of Baroda, Dena Bankand Corporative Bank.

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TABLE OF CONTENTS

Sr. No. Topic Page No.

1 Introduction to company 7

1.0 Banks mission and vision &introduction

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1.1 Structure of Bank of IndiaBorivali Br.

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1.2 Product of Bank of India 12

1.3 Current highlights of Banks 14

2 Objectives and need for thestudy

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3 Research Methodology 17

3.0 Data collection 17

3.1 Sampling design 17

4 Collection and Analysis ofData

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4.0 Lending Function of Bank 18

4.1 Introduction 18

4.2 Utility of Loan and Advances 19

4.3 Borrowing Rate and LendingRate

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4.4 Ways of Lending Money 20

4.5 Loan Term and Short TermLoan

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4.6 Nature and Security of Loan 26

4.7 Procedure of Granting Loan 27

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and Advances

4,8 Types of Borrowers 28

4.2.0 Comparative analysis ofvarious nationalized bank

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5 Finding 40

6 Recommendation 42

7 Limitation 42

8 Conclusion 43

9 Bibliography 44

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INTRODUCTION TO COMPANY

BRANCH: BANK OF INDIA BORIVALI (WEST)

DEPARTMENT: LOAN AND ADVANCES

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Bank’s Mission:“To provide superior, proactive banking services to niche markets globally, while

providing cost – effective, responsive services to others in our role as a development bank, and inso doing, meet the requirements of our stakeholders”.

Bank’s Vision:“To become the bank of choice for corporate, medium businesses and up market retail

customers and to provide cost effective developmental banking for small business, mass marketand rural markets”.

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INTRODUCTION

Bank of India was founded on 7th September, 1906 by a group of eminent businessmen fromMumbai. The Bank was under private ownership and control till July 1969 when it wasnationalized along with 13 other banks.

Beginning with one office in Mumbai, with a paid-up capital of Rs. 50 lakh and 50 employees,the Bank has made a rapid growth over the years and blossomed into a mighty institution with astrong national presence and sizable international operations. In business volume, the Bankoccupies a premier position among the nationalized banks.

The Bank has 3021 branches in India spread over all states/ union territories including 93specialized branches. These branches are controlled through 48 Zonal Offices. There are 24branches / offices (including three representatives’ offices) abroad.

The Bank came out with its maiden public issue in 1997. Business has been conducted with thesuccessful blend of traditional values and ethics and the most modern infrastructure. The Bankhas been the first among the nationalized banks to establish a fully computerized branch andATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also aFounder Member for SWIFT in India. It pioneered the introduction of the Health Code System in1982, for evaluating/ rating its credit portfolio.

The Bank’s association with the capital market goes back to 1921 when it entered into anagreement with the Bombay Stock Exchange (BSE) to manage the BSE Clearing House. It is anassociation that has blossomed into a joint venture with BSE, called the BOI Shareholding Ltd.To extend depository services to the stock

broking community. Bank of India was the first Indian Bank to open a branch outside thecountry, at London, in 1946, and also the first to open a branch in Europe, Paris in 1974. TheBank has sizable presence abroad, with a network of 23 branches (including three representativesoffices) at key banking and financial centers viz. London, New York, Paris, Tokyo, Hong-Kongand Singapore. The international business accounts for around 20.10% of Bank’s total business.

The Bank’s corporate personality and philosophy are fully reflected in the emblem, which is afive-pronged Star – a harmonious blend of traditional and the functional. The elongated prongpointing upwards conveys the Bank’s drive to achieve ascending goals. The Star is a beacon andguide to those in need of direction.

The Bank has a strong position in financing foreign trade. Over 270 branches provide exportcredit. The Expertise in this area has enabled the Bank to achieve a leading position in providingexport credit in certain areas like diamond export.

The Bank has identified target groups to develop core advantage for future growth. The Bank hasspecialized branches comprising of Corporate Banking Branches to undertake very large creditbusiness, Overseas Branches specializing in Foreign Exchange Business, NRI Branches whichspecially cater to the requirements of Non- Resident Indians, Capital Market Branches whichundertake all activities relating to capital market such as collection of applications, processing ofrefund orders, Merchant Banking etc. Commercial and Personal Banking Branches cater to the

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requirements of high worth customers. Apart from this, the Bank also has specialized Branchesfor Asset Recovery, Small Scale Industries, Hi-tech Agriculture Finance, Lease Finance andTreasury.

To effectively meet the ever-growing challenges and competition, the Bank has made a goodhead–way in bringing about technological up gradation. MIS and critical functions of controllingoffices have been computerized. At present, the operations at about 2618 branches are totallycomputerized. 26 branches operate in partially-computerized mode besides these 1019 and 31extension counters are migrated to Core Banking Solution. New facilities such as, Telebanking,ATM and Signature Retrieval Systems have been introduced in a progressing manner to addvalue to services. Telebanking facilities with Fax on Demand facility, Remote

Access Terminals for Corporate Customers are now available at many branches. The Bank hasinstalled ATMs in Mumbai and other centres in the country. The Bank is a member of the RBI’sVSAT Network and had installed 39 VSATs linking strategic branches / offices. The Bank ismaking a paradigm shift from branch automation to bank automation and is in the process ofimplementing a Multi – Branch Banking Project that facilitates City-wise Connectivity ofComputerised Branches. The Bank is in the process of installing BOINET, a Wide Area Networkfor providing a inter and intra – city connectivity, as a part of enhancing its decision supportsystem.

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Structure of Bank of India Borivali (west) Branch

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PRODUCTS OF BANK OF INDIA

``

``````

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Insurance Credit Schemes Deposit Scheme Services

Tie upwith StarUnionDai-chifor lifeinsuranceand withNationalinsuranceforgeneralinsurance.

Star FlierSchemeforIndividualDiamondSBCustomers.

StarDomesticTravelInsurance.

FamilyFloaterMediclaim Policy.

StarEducationLoanInsuranceScheme

HomeLoanInsurance.

BullionBanking

Kisan creditcard

AgriculturalLoan

Bill Finance

BankGuarantee

Export Finance

Interest rates

Channel credit

CorporateLoan

Retail Banking

Star FlexiRecurringDeposit

Star SunidhiTax SavingDeposit Scheme

NRI depositScheme

Star powersalary account

BOI saving plusscheme

Star SavingsPlus (PrivilegedCustomers)

Star CurrentDeposit Plus

Star DiamondCustomers

Deposit Schemefor globalInvestors/NRIs/PIOs

Star SupremeFloating RateDeposit scheme.

ATM

BOI STAR e-PAY –PAYMENT ofUtility bills.

InternetBanking.

E – Payment ofDirect &Indirect Taxes.

Online FundsTransfer.

Star CashManagementService

Depositoryservice

Safe DepositVault

Safe CustodyService.

Telebanking &SMS Banking.

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HIGHLIGHTS FOR THE YEAR ENDED 31st MARCH 2009

Business Mix reaches Rs.334440 crores - robust rise of 26.30%.

Net Profit shoots up by 49.68% from Rs.2009 crores to Rs.3007crores.

Operating Profit up by 47.45% (Rs. 5457Crore) supported by growth in net interestincome as well as other income.

Core Operating Profit (net of Treasury) up by 41.26%(Rs. 4711Crore) from Rs. 3335 Crore in Mar’08.

Net Interest Income rises by 30.03% to Rs. 5499Cr fromRs. 4229Cr, despite challenging conditions.

Net Interest Margin improves from 2.95% to 2.97%.

Non Interest Income smartly rises by 44.17% from Rs 2117 crores to Rs 3052 crores.

Gross NPA ratio at 1.71%.

Net NPA ratio drops to 0.44% from 0.52% as on March 2008.

Provision coverage maintained at 74.58%.

Cost to Income Ratio has improved substantially from 41.68% to 36.18%.

Return on Assets jumped from 1.25% to 1.49 %.

Total Income for the Quarter rose to Rs.5278 Crore from Rs.4155 Crore, showing agrowth of 27.03%.

Bank has made adequate provisions for terminal benefits, in line with AS 15requirements. Rs. 384.60 Cr estimated and provided.

CASA amounted to Rs. 48637 crores constituting 31% of Total Deposits.

Earnings per share for 12 months goes up sharply from Rs. 40.83 to Rs.57.26.

Book value per share rises from Rs. 164.05 to Rs.211.89.

Capital Adequacy Ratio rises to 13.01%from 12.04%as per Basel II.

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Deposits grew by 26.46% on YoY basis to Rs.1,89,708 crores.

Advances rose by 26.08% to reach Rs.1,44,732 crores.

Total no of branches are 3021.

2593 branches are functioning on CBS platform covering above 97% of the business,spanning over 700 cities & towns.

Agricultural Debt Waiver & Debt Relief Scheme, 2008 fully implemented.

Net worth of the Bank surpasses Rs.11100 crores.

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OBJECTIVES OF THE STUDY

Study the functioning of the credit department of bank

To understand the role played by banks in the business world by way of loans andadvances

To make comparative analysis of loan procedures between bank of India and other banks

NEED FOR THE STUDY

The face of Indian consumer is changing, this is reflected in a change in the urban householdincome & standard of living is also changing at the rapid pace. The demand for consumerdurables (white goods like washing mashing, machinery etc.) and luxury are increases which aresatisfied by the banks through their various financial products. Therefore granting loan andadvances is an important activity for a bank.

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RESEARCH METHODOLOGY

Data Collection

Type of research: Exploratory Research

Research methodology to be used is based on both primary & secondary data

1. Primary data will be collected from the interaction with the bank manager, staff andemployees.

2. Secondary data would be collected through means such as Banking books, BOImagazines, websites etc.

Sampling Design

A Sample Size of three banks has been selected for the study. The selected banks are oneof the major players in retail lending business in India.The following banks have been selected for the study:

1) Dena Bank2) Bank of Baroda3) Corporation Bank

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COLLECTION AND ANALYSIS OF DATA

LENDING FUNCTION OF BANK

Introduction

Lending money is one of the two major activities of any Bank. In a way, the Bank acts as anintermediary between the people who have the money to lend and those who have the need formoney to carry out business transactions.

This activity places its own requirements on the resources of the Bank. For effective functioningof this, a bank must possess:

Sufficient deposits. Skills to appraise the potential borrowers and the activity. Legal skills for documentation. Legal skills for documentation. Legal skills for recovery of its dues through the courts. Skills to follow up and monitor the end-use of money lent by it. An effective credit delivery system. Review of credit portfolio.

Lending money to the public

Banks accept deposit from public for safe- keeping and pay interest to them. They then lend thismoney to earn interest on this money. In a way, the Banks act as intermediaries between thepeople who have the money to carry out business transactions. The difference between the rate atwhich the interest is paid on deposits and is charged on loans is called the “spread”.

Banks lend money in various forms and they lend for practically every activity. From the pointof view of security, Loans are given against or in exchange of the ownership (physical orconstructive) of various types of tangible items. Some of the securities against which the Bankslend are:

1. Commodities2. Debts3. Financial Instruments4. Real Estate5. Automobiles6. Consumer Durable goods

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7. Documents of Title

Apart from the above category, the Banks also lend to people on the basis of their perceivedpersonal worth. Such loans are called Clean and the Banks are understandably cautious aboutextending such loans. The credit card arms of the various Banks, however, fill up this void.

Utility of Loans and Advances

Loans and advances granted by banks are highly beneficial to individuals, firms, companies andindustrial concerns. The growth and diversification of business activities are effected to a largeextent through bank financing. Loans and advances granted by banks help in meeting short-termand long term financial needs of business enterprises. We can discuss the role played by banks inthe business world by way of loans and advances as follows:-

(a) Loans and advances can be arranged from banks in keeping with the flexibility in businessoperations. Traders may borrow money for day to day financial needs availing of the facility ofcash credit, bank overdraft and discounting of bills. The amount raised as loan may be repaidwithin a short period to suit the convenience of the borrower. Thus business may be runefficiently with borrowed funds from banks for financing its working capital requirements.

(b) Loans and advances are utilized for making payment of current liabilities, wage and salariesof employees, and also the tax liability of business.

(c) Loans and advances from banks are found to be ‘economical’ for traders and businessmen,because banks charge a reasonable rate of interest on such loans/advances. For loans from moneylenders, the rate of interest charged is very high. The interest charged by commercial banks isregulated by the Reserve Bank of India.

(d) Banks generally do not interfere with the use, management and control of the borrowedmoney. But it takes care to ensure that the money lent is used only for business purposes.

(e) Bank loans and advances are found to be convenient as far as its repayment is concerned.This facilitates planning for future and timely repayment of loans. Otherwise business activitieswould have come to a halt.

(f) Loans and advances by banks generally carry element of secrecy with it. Banks are duty-bound to maintain secrecy of their transactions with the customers. This enhances people’s faithin the Banking system.

Borrowing Rate and Lending Rate

People make their funds available to the banks by depositing their ‘savings’ in various types ofaccounts. In other words, bank funds mainly consist of deposits from the public, though banksmay also borrow money from other institutions and the Reserve Bank of India. Banks thus

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mobilizes funds through its deposits. On public deposits the banks pay interest at and the rates ofinterest vary according to the type of deposit. The borrowing rate refers to the rate of interestpaid by a bank on its deposits. The rates which the banks allow depend upon the nature ofdeposit account and the period for which the deposit is made with the bank. No interest isgenerally paid on current account deposits. The rate is relatively lower on savings accountdeposits. Higher rates ranging from 6% to 12% per annum are paid on fixed deposit accountsaccording to the period of deposit. Banks also borrow from other institutions as well as from theReserve Bank of India. When the Reserve Bank of India lends money to commercial banks, therate of interest it charges for lending is known as ‘Bank Rate’. The rate at which commercialbanks make funds available to people is known as ‘Lending-rate’. The lending rates also varydepending upon the nature of loans and advances. The rates also vary according to the purpose inview. For example if the loan is sanctioned for the purpose of activities for the development ofbackward areas, the rate of interest is relatively lower as against loans and advances forcommercial/business purposes. Similarly for smaller amounts of loan the rate of interest is higheras compared to larger amounts. Again lending rates for consumer durables, e.g. loans forpurchase of two-wheelers, cars, refrigerators, etc. are relatively higher than for commercialborrowings. However, the Reserve Bank of India from time to time announces changes in theinterest-rate structure to regulate the lending of funds by banks. Different rates of interest areprescribed for various categories of advances, such as advances to agriculture, small scaleindustries, road transport, etc. Graded rates of interest are prescribed for backward areas. Lowerrate is normally charged from agencies selling food-grains at fixed price through Govt. approvedoutlets. Lastly, lower rate of interest is charged for loans granted to persons belonging to ‘weakersections of the society’.

Lending of Money

Banks lend money in four different ways:

(a) Direct loans, (b) cash credit, (c) overdraft,

(d) Discounting of bills.

(I) Loans

Loan is the amount borrowed from bank. The nature of borrowing is that the money is disbursedand recovery is made in installments. While lending money by way of loan, credit is given for adefinite purpose and for a pre-determined period. Depending upon the purpose and period ofloan, each bank has its own procedure for granting loan. However the bank is at liberty to grantthe Loan requested or refuse it depending upon its own cash position and lending policy. Thereare two types of loan available from banks:

(a) Demand loan, and

(b) Term loan

(a) A Demand Loan is a loan which is repayable on demand by the bank. In other words, it isrepayable at short-notice. The entire amount of demand loan is disbursed at one time and the

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borrower has to pay interest on it. The borrower can repay the loan either in lump sum (one time)or as agreed with the bank. For example, if it is so agreed the amount of loan may be repaid insuitable installments. Such loans are normally granted by banks against security. The securitymay include materials or goods in stock, shares of companies or any other asset. Demand loansare raised normally for working capital purposes, like purchase of raw materials, makingpayment of short-term liabilities.

(B) Term Loans: Medium and long term loans are called term loans. Term loans are granted formore than a year and repayment of such loans is spread over a longer period. The repayment isgenerally made in suitable installments of a fixed amount. Term loan is required for the purposeof starting a new business activity, renovation, modernization, expansion/ extension of existingunits, purchase of plant and machinery, purchase of land for setting up of a factory, constructionof factory building or purchase of other immovable assets. These loans are generally securedagainst the mortgage of land, plant and machinery, building and the like.

(II) Cash credit

Cash credit is a flexible system of lending under which the borrower has the option to withdrawthe funds as and when required and to the extent of his needs. Under this arrangement the bankerspecifies a limit of loan for the customer (known as cash credit limit) up to which the customer isallowed to draw. The cash credit limit is based on the borrower’s need and as agreed with thebank. Against the limit of cash credit, the borrower is permitted to withdraw as and when heneeds money subject to the limit sanctioned. It is normally sanctioned for a period of one yearand secured by the security of some tangible assets or personal guarantee. If the account isrunning satisfactorily, the limit of cash credit may be renewed by the bank at the end of year. Theinterest is calculated and charged to the customer’s account. Cash credit, is one of the types ofbank lending against security by way of pledge or /hypothecation of goods. ‘Pledge’ meansbailment of goods as security for payment of debt. Its primary purpose is to put the goodspledged in the possession of the lender. It ensures recovery of loan in case of failure of theborrower to repay the borrowed amount. In ‘Hypothecation’, goods remain in the possession ofthe borrower, who binds himself under the agreement to give possession of goods to the bankerwhenever the banker requires him to do so. So hypothecation is a device to create a charge overthe asset under circumstances in which transfer of possession is either inconvenient orimpracticable.

(III) Overdraft

Overdraft facility is more or less similar to ‘cash credit’ facility. Overdraft facility is the result ofan agreement with the bank by which a current account holder is allowed to draw over and abovethe credit balance in his/her account. It is a short-period facility. This facility is made available tocurrent account holders who operate their account through cheques. The customer is permitted towithdraw the amount of overdraft allowed as and when he/she needs it and to repay it throughdeposits in the account as and when it is convenient to him/her. Overdraft facility is generallygranted by a bank on the basis of a written request by the customer. Sometimes the bank alsoinsists on either a promissory note from the borrower or personal security of the borrower to

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ensure safety of amount withdrawn by the customer. The interest rate on overdraft is higher thanis charged on loan. The following are some of the benefits of cash credits and overdraft:-

(i) Cash credit and overdraft allow flexibility of borrowing, which depends upon the need of theborrower.

(ii) There is no necessity of providing security and documentation again and again for borrowingfunds.

(iii) This mode of borrowing is simple and elastic and meets the short term financial needs of thebusiness.

(IV) Discounting of Bills

Apart from sanctioning loans and advances, discounting of bills of exchange by bank is anotherway of making funds available to the customers. Bills of exchange are negotiable instrumentswhich enable debtors to discharge their obligations to the creditors. Such Bills of exchange ariseout of commercial transactions both in inland trade and foreign trade. When the seller of goodshas to realize his dues from the buyer at a distant place immediately or after the lapse of theagreed period of time, the bill of exchange facilitates this task with the help of the bankinginstitution. Banks invest a good percentage of their funds in discounting bills of exchange. Thesebills may be payable on demand or after a stated period. In discounting a bill, the bank pays theamount to the customer in advance, i.e. before the due date. For this purpose, the bank chargesdiscount on the bill at a specified rate. The bill so discounted is retained by the bank till its duedate and is presented to the drawee on the date of maturity. In case the bill is dishonored on duedate the amount due on bill together with interest and other charges is debited by the bank to thecustomers account.

Classification of loan

Another way to classify the loan

(A)Priority sector Lending

(B) Commercial Lending

(A) Priority sector Lending: The Government of India through the instrument of Reserve Bank ofIndia (RBI) mandates certain type of lending on the banks operating in India irrespective of theirorigin. RBI sets targets in terms of percentage (of total money lent by banks ) to be lent to certainsectors, which in RBIs perception would not have had access to organized lending market orcould not afford to pay the interest at the commercial rate. This type of lending is called prioritysector lending.

Finding Priority Sector in the economy is not strictly on commercial basis and not only the generalapproach is liberal but also the rate of interest charged on such loans is less. Export finance is, in fact,available at a discount of 20% or more on the normal rate of interest to Indian corporate. Part of thecost of these concession is borne by RBI by means of refinancing such loans at concessional rate.

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Indian Banks, therefore, contribute towards economic development of the country by subsidizing thebusiness activities undertaken by entrepreneurs in the areas which are considered “priority sector” byRBI.

Categories of Priority Sector Lending :i. Direct Finance: financing of Small Scale Industry, Small Business, Agricultural Activities and

Export activities fall under this category. Is also called as directed credit in Indian BankingSystem.

ii. Indirect Finance: indirect finance to small industry include finance to any person providing inputsto or marketing the output of artisans, village and cottage industries, handlooms and to co-operativeproduct in this sector.

Financing priority sector in the economy is not strictly on commercial basis and not only the generalapproach is liberal but also rate of interest charged on such loan is less. Export finance is, in fact,available at a discount of 20% or more on the normal rate of interest to Indian corporate. Part of thecost of this concession is borne by RBI by means of refinancing such loans at concessional rate.Indian Banks, therefore, contribute towards economic development of the country by subsidizing thebusiness activities undertaken by entrepreneurs in the areas which are considered as “priority Sector”by RBI

The Priority Sector comprises the following:

1. Agriculture2. Small Scale Industries (including setting up of industrial estate)3. Small Road & Water Transport Operators (owning up to 10 vehicles).4. Small Business (Original cost of equipment used for business not to exceed Rs. 20 lakh).5. Retail Trade(Advance to private retail traders up to Rs.10 lakh)6. Professional & Self-employed Persons (Borrowing limiot not exceeding Rs.10 lakh of

which not more then Rs.2 lakh for working capital, in the case of qualified medicalpractitioners setting up practice in rural areas, the limits are Rs 15 lakh and Rs 3 lakhrespectively and purchase of one motor vehicle within these limits can be included underpriority sector).

7. State sponsored organizations for Scheduled Castes/Schedule Tribes8. Educations (educational loan granted to individuals by banks)9. Housing (both direct and indirect- loans up to Rs 5 lakhs [direct loan up to Rs 10 lakh in

urban/metropolitan areas], Loans up to Rs 1 lakh & 2 lakh for repairing of houses inrural/semi urban & urban areas respectively)

10. Consumption loans (under the consumption credit scheme for weaker section11. Micro -Credit provided by banks either directly or through any intermediary; Loans to

self help groups (SHGs)/ Non Governmental Organizations (NGOs) for on lending toSHGs

12. Loans to the Software Industry (having credit limit not existing Rs 1 core from thebanking system)

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13. Loans to specified industries in the food and agro- processing sector having investment inplant and machinery up to Rs 5 crore.

14. Investment by banks in venture capital ( venture capital funds/ companies registered withSEBI)

Rate of interest charged for loan under priority sectorAs per the current interest rate policy, in the case of loan upto Rs 2 lakh, the interest rateshould not exceed the prime lending rate (PLR) of the bank, while in case of loans aboveRs 2 lakh, banks are free to determine the interest rate.

Action taken in the case of non- achievement of priority sector lending targeted by a bank1. Domestic schedule commercial banks having shortfall in lending to priority sector

/ agriculture are allocated amounts for contributing on the Rural InfrastructureDevelopment Fund (RLDF) established in NABARD. Details regardingoperationalization of the RIDF such as the amounts to be deposited by banks,interest rates announcement in the Union Budget about setting up of RIDF.

2. In the case of foreign banks operating in India which fail to achieve the prioritysector lending target or sub targets, an amount equivalent to the to the shortfall isrequire to be deposited with SIDBI for one year at the interest rate of 8% perannum.

Monitoring Priority Sector LendingPriority Sector lending by commercial banks is monitored by Reserve Bank of Indiathrough periodical Returns received from them. Performance of banks is also reviewed inthe various for set up under the Lead Bank Scheme

(B))Commercial Lending:This is the Mainstay of Indian Banking- Its bread & butter activity. Although historically,

this activity had been regulated to a secondary position as banks were driven by the desire toexcel themselves in what is known as “priority sector banking” yet it is this part of their loanportfolio which has keep them afloat and meet the costs. This activity survived despite a numberof restrictions imposed on it in the past. With financial sec tor reforms, the focus has shifted from“priority sector banking” and commercial lending has been reinstated to its rightful place. Todaymany banks focus on this activity for improving their bottom lines. Fresh and innovativeproducts are being launched to facilitate the corporate customer who forms the core of thisbusiness. There is big competition among to secure bigger share of this business.At present, commercial loans are available for practically and kind of activity and also for bothlong and short tenures. Based on customer profile, these loans are of two types:

Corporate loans

Retail Loans

Corporate loans:

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These loans are meant for corporate bodies (and bigger ones among other entities likeproprietorships, Partnerships and HUF’s) engaged in any legal activity with the object ofmaking profit. Bank lend to such entities on the strength of their balance sheet, the lengthof cash cycle and depending upon the products available with individual banks.

Retail Loans:

This type of lending is meant for very small entrepreneurs as well as individuals who areengaged in gainful commercial activity and have the capacity to repay the loan. Loans aregiven on the strength of the means of the borrower with an eye on the repaying capacity.The latter is judged through the cash streams (income) available with the borrower forrepayment of the loan.

Loans for purchase of automobiles/consumer durables itemsMost banks nowadays have a product for financing the purchase of automobiles and otherconsumer durable items. The quantum of loan is generally determined by the repayment capacityof the prospective borrower. This in turn, depends upon the monthly income. Most banks havetheir own method to calculate the maximum monthly repayment capacity of a person. Therefore,a loan for which Equated Monthly Installment (EMI) is within this capacity is considered theouter limit for a person. The bank will be glad to finance to this extent for the purchase of anautomobile or any other consumer durable item.

Most Banks judge the monthly income with reference to either the latest salary certificate fromthe employer (in case of employees) or last year’s income tax return (in case of self employedpersons). Other methods are also employed to appraise the maximum limit considered desirablefor a person.

Long-term and Short-term Loans

Commercial banks grant loans for different periods-long, short and medium term for differentpurposes.

(1) Short-term loans

Short term loans are granted by banks to meet the working capital needs of business. Theworking capital needs refer to financial needs for such purposes as, purchase of raw materials,payment of wages, electricity bill, taxes etc. Such loans are granted by banks to its borrowers tobe repaid within a short period of time not exceeding 15 months. Short term loans are normallygranted against the security of tangible assets like goods in stock, shares, debentures, etc. Therate of interest charged on short term loans ranges from 12% to 18% p.a.

(2) Term Loans

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Medium and long term loans are generally known as ‘term loans’. These loans are granted formore than 15 months. In case of medium term loan, the period ranges from 15 months to lessthan 5 years. Medium term loans are generally granted for heavy repairs, expansion of existingunits, modernization/renovation etc. Such loans are sanctioned against the security of immovableassets. The normal rate of interest ranges between 12% to 18% depending upon the period,purpose, nature and amount of the loan. Though banks may grant long term loans, they avoidgranting loan for more than 5 years.

Nature and Security of Loans

To ensure the safety of funds lent, the first and most important factor considered by abank is the capacity of borrowers to repay the amount of loan. The bank therefore, reliesprimarily on the character, capacity and financial soundness of the borrower. But the bank canhardly afford to take any risk in this regard and hence it also has the security of tangible assetsowned by the borrower. In case the borrower fails to repay the loan, the bank can recover theamount by attaching the assets.

It can sell the assets offered as security and realize the amount. Thus from the view point ofsecurity of loans, loans are divided into two categories: (a) secured, and (b) unsecured.

Unsecured loans are those loans which are not covered by the security of tangible assets.Such loans are granted to firms/institutions against the personal security of the owner, manageror director.

On the other hand, Secured loans are those which are granted against the security oftangible assets, like stock in trade and immovable property. Thus, while granting loan against thesecurity of some assets, a charge is created over the assets of the borrower in favour of the bank.This enables the bank to recover the dues from the customer out of the sale proceeds of the assetsin case

the borrower fails to repay the loan. There are various types of securities which may be offeredagainst loans granted, but all of those are not acceptable to the banks.

The types of securities generally accepted by the bank are the following:

Tangible assets such as plant and machinery, motor-van, etc. Documents of title to goods, like Railway Receipt (R/R), Bills of exchange, etc. Financial Securities (Shares and Debentures) Life-Insurance Policy Real estate (Land, building, etc). Fixed Deposit Receipt (FDR) Gold ornaments, Jewellery etc.

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Procedure of Granting Loan and Advances

The procedure of applying for and sanction of loans and advances differs from bank to bank.However, the steps which are generally to be taken in all cases are as follow:–

1. Filling up of loan application form:

Each bank has separate loan application forms for different categories of borrowers. Whenyou want to borrow money from a bank, you will have to fill up a loan application form availablewith the bank free of cost. The loan application form contains different columns to be filled in bythe applicant. It includes all information required about the borrower, purpose of loan, nature offacility (cash-credit, overdraft etc) required, period of repayment, nature of security offered, andthe financial status of the borrower. A running business limit may be required to furnishadditional information in respect of:

— Assets and liabilities

— Profit and loss for the last 2 to 3 years.

— The names and addresses of borrowers, suppliers, customers and Bankers) for referencepurposes.

2. Sanctioning of loan:

The bank scrutinizes the documents submitted and determines the creditworthiness of the applicant. If it is found to be feasible, the loan is sanctioned. The application isconsidered at regional, zonal or head office level, depending on the amount of loan.

3. Executing the Agreement:

When the loan is sanctioned by the bank and the borrower is informed about it, he willhave to execute an agreement with the bank regarding terms and condition for the amount of loanraised.

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4. Arrangement of Security for Loan:

The borrower then arranges for security against the loan. These securities may beimmovable properties, shares, debentures, fixed deposit receipts, and other documents, like,Kisan Vikas Patra, National Savings Certificate, as per agreement.

When the borrower completes all the formalities, he is allowed to get the amount ofloan/advance/ over draft as sanctioned by the bank.

In case of ‘discounting of bills’, the bank credits the amount of bill to the customer’saccount before the realization of the bill and thus, makes available the fund. In case, the bill isdishonored on due date, the amount due on the bill together with interest and other charges arepayable by the party whose bill is discounted.

Types of Borrowers

The essential functions of a Bank are:i. To accept deposits from the society and

ii. To lend or invest the same for earning profitTransactions relating to these functions are invariably routed through accountsmaintained by customers who may be individuals, joint account holders, HUFs, Trust,Executors and Administrators, agent, Attorney, firms, Clubs and Associations, LimitedCompanies. While establishing relationship with a customer, a Bank ha to ensure that theprospective customer (a) is legally capable of entering into a valid contract and (b)applied to the bank in the proper form the above holds good for both deposits as well asborrowers accounts. In respect of borrowers accounts here a bank lends, he has to be notonly more cautious but also conversant with the legal provision of various Acts asapplicable to respective cases. Legal requirement will differ from those relating to Trustsor Limited Companies.

A good transaction with defective legal formalities may turn out to be bad as rights thereunder become legally unenforceable for non compliance of legal requirements. Therefore,on receipt of a loan application and upon its scrutiny, certain fundamental legal enquirethe purposed of the borrowing whether it is legal, legal capacity of the borrower toborrow, the authority of the borrower to deal with the property or asset offered as securityfor the advances, relevant provision of law to the advance. Therefore, a borrower dealingin explosive has to comply with certain additional formalities than the one an iron andsteel materials.

In any contract, two essential wings are:a) Capacity to enter into contract andb) Enforcement of the contract

One without the other is legally useless. Section 11 of the Indian Contract Act 1872stipulates “a person is competent (to enter into a contract) provided he has attained the

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age of maturity according to law to which he is subject, he is of sound mind and he is nototherwise disqualified by any law to which he is subject”. That is how “capacity” isexplained. The other one “enforcement” empowers either of or more of the parties to thecontract to get legal redressed or relief on the basis of the document/s in case ofnecessary. It affords enough legal remedy for recovery of dues and that is how each partyto the contract looks as it.

Various Types of Borrowers are as follows:o Individualso Joint Borrowerso Hindu Joint Familyo Proprietary Firmso Partnership Firmso Limited companies

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Comparative Analysis of Educational Loan offered by variousNationalized Banks

The education loan scheme offered by most nationalized banks in India is on the guidelines ofIBA. They have contents almost similar features which are explained below.

1. ELIGIBILITY CRITERIA:

a) STUDENT'S ELIGIBILITY:

Should be an Indian National;

Secured admission to professional/technical courses in India or Abroad through EntranceTest/Merit based selection process.

Good academic career.

The student should not have outstanding education loan from any other Institution.

Father/Mother should be co-borrower.

Branch nearest to the permanent residence of student will consider the loan.

b) ELIGIBLE COURSE:

(i) Studies in India:

Graduation courses: BA, B.Com., B.Sc., etc.

Post Graduation courses: Masters & Phd.

Professional courses : Engineering, Medical, Agriculture, Veterinary, Law, Dental,Management, Computer, etc

Computer certificate courses of reputed institutes accredited to Department of Electronicsor institutes affiliated to university.

Courses like ICWA, CA, CFA, etc.

Courses conducted by IIM, IIT, IISc, XLRI, NIFT, NID and other Institutes set up byCentral/State Govt.

Evening courses of approved institutes.

Other courses leading to diploma/degree, etc. conducted by colleges/universitiesapproved by UGC/Govt./AICTE/AIBMS/ ICMR, etc.

Courses offered by National Institutes and other reputed private institutions with priorapproval of Head Office.

Courses offered in India by reputed foreign universities with prior approval of HeadOffice.

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(ii) Studies abroad:

Graduation: For job oriented professional/technical courses offered by reputeduniversities.

Post Graduation: MCA, MBA, MS, etc.

Courses conducted by CIMA - London, CPA in USA, etc.

2. EXPENSES CONSIDERED FOR LOAN:

Fee payable to college/school/hostel*

Examination/Library/Laboratory fee.

Purchase of books/equipments/instruments/uniforms.

Caution deposit/building fund/refundable deposit supported by Institution bills/receipts.

Travel expenses/passage money for studies abroad.

Purchase of computers - essential for completion of the course.

Insurance cover for the student.

Any other expense required to complete the course - like study tours, project work, thesis,etc.

3.Minimum Loan Amount: Nil

4. Maximum Loan Amount:

India: Rs. 1000000

Abroad: Rs. 2000000

5.margin:

Below 4 Lacs: Nil

Above 4 Lacs:

India: 5%

Abroad: 15%

6.Repayment period:

Maximum: 7 years

Minimum: 5 years

7.Documentation fee: Nil

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8. processing Fees: Nil

9. Guarantors: parent/ third Party

10. security:

Up to 4 Lacs: Nil

Above 4 Lacs & up to 7.50 Lacs: Collateral in the form of a suitable thirdparty guarantee along with assignment of future income

Above 7.50 Lacs: Tangible collateral security equal to 100% of the loanamount along with assignment of future income

The only differences in the education loan are the interest rate charge by banks.

11. Interest Rate:

Bank of India

Up to Rs. 4 Lacs: 2.50% below BPLR. Min. 9.50% p.a.

Above Rs. 4 Lacs & Up to Rs. 7.50 Lacs: 2.00% below BPLR, Min. 10.00% p.a.

Above Rs.7.50 Lacs: 1.25% below BPLR, Min. 10.75% p.a.

Bank of Baroda

Loans up to Rs. 4.00: 2.00% below BPLR i.e. 10.00%

Loans above Rs. 4.00: at BPLR i.e. 12.00%

Corporation Bank

Up to Rs. 4 Lacs: 11.50%

Above Rs. 4 Lacs & Up to Rs. 7.50 Lacs: 13.00%

Above Rs.7.50 Lacs: a] Secured: 11.50%

b] Unsecured: 13.00%

Dena Bank

Up to Rs. 4.00 Lacs: Repayable in 3 years 9% & Repayable in > 3 yrs. 9.50%

Above Rs. 4.00 Lacs: Repayable in 3 years 12% & Repayable in > 3 yrs. 12.50%

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Comparative Analysis of Housing Loan offered by variousNationalized Banks

Bank of India Bank of Baroda CorporationBank

Dena Bank

Eligibility Salaried persons Professionals

Self employed havingregular source of income

NRIs

Staff Members

Farmers / Agriculturists

Salariedpersons

Professionals

Self employedhaving regularsource of income

NRIs

Staff Members

Salariedpersons with2 years ofconfirmedservice.

Residents

NRIs holdingIndianPassport

Applicantshould be inthe age group18 – 50 years.

Individual,resident ornon-resident,having aregularsource ofincome.

Age on thematurity ofthe loan isless thanretirementage ifsalariedemployeeand below65 yearsincase ofbusinessmen.

Max. Amount Rs.300lakhs Rs. 200lakhs Rs. 100Lakhs Rs. 100Lakhs

Margin 15%-20% 10% - 15% 20% - 25% 15%Repayments Max.20 Years Max. 25 year Max.25 years Max.20 years

ProcessingCharges

For Loans upto Rs. 30lakh : 0.55%

For Loans over Rs. 30lakh upto Rs. 50 lakh:One time flat 15,000/-

For Loans over 50 Lakh

Loans upto Rs. 20/-lakh : 0.35%

Loans above Rs.20/- lakh : 0.40%

Loans aboveRs.15 –20lakhs:

0.50% ofloan subjectto min.Rs.7,500/- &max.

0.50 % of thesanctionedloan amount.

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upto 1.00 Crore: Onetime flat Rs. 20,000/-

For Loans over Rs.1.00core: One time flatRs.25,000

Loans over Rs.3.00crores: One time flatRs.50,000

Maximum : Rs.15000/-

Rs.10,000/-

Loans above20 lakh :0.50% ofloan subjectto min.Rs.10,000/-& max.Rs.50,000/-

Security Equitable Mortgage EquitableMortgage

EquitableMortgage

EquitableMortgage

Interest Rate:

Floating Rate:

Limit up to Rs.30 Lacs:

Up to 5 Years >5-10 years >10-15years >15-20 years

Bank of India 8.75% 9.00% 9.25% 9.25%Bank of Baroda 8.50% 8.75% 8.75%% 9%CorporationBank

8.75% 9.50% 9.50% 9.75%

Dena bankUp to Rs. 15 9.00% 9.50% 9.75% -

Above 30 Lacs& up to Rs. 50Lacs :Bank of India 9.50% 9.75% 10.00% 10.25%Bank of Baroda 9.25% 9.50% 9.50% 9.75%CorporationBank

9.50% 10.00% 10.00% 10.50%

Above Rs. 50Lacs:Bank of India 10.25% 10.50% 10.75% 11.00%

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Bank of Baroda 9.75% 10.25% 10.25% 10.50%CorporationBank

10.00% 10.50% 10.50% 10.75%

Fixed Rate:

Limit up toRs. 30 Lacs:

Up to 5 Years >5-10 years >10-15years >15-20 years

Bank of India - - - -Bank ofBaroda

9.50% 9.75% 10.00% -

CorporationBank

11.00% 11.00% 11.00% 11.00%

Dena bank 9.75% 10.25% 10.25% 10.25%

Above 30Lacs & up toRs. 50 Lacs :Bank of India - - - - -Bank ofBaroda

10.25% 10.50% 10.75% -

CorporationBank

11.50% 11.50% 11.50% 11.50%

Dena bankUp to Rs. 15Lacs

9.75% 10.25% 10.25% 10.75%

Above Rs.15Lacs & up toRs.20 Lacs

10.25% 10.75% 10.75% 10.75%

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Comparative Analysis of personal Loan offered by variousNationalized Banks

Bank of India personal LoanBOI Star Personal Loan Scheme provides funds to meet all personal requirements of you andyour family

1.Purpose: Bank offers loans for marriage expenses, tour and excursions, purchase of all typesof consumer durables, purchase of cars etc.

2.Quantum of advance:

Unsecured/clean: maximum Rs. 200000/ Secured: maximum Rs. 1000000/

3.Eligibility: Salaried employees, professionals and individuals with high net worth.

4.Eligibility Amount:

Unsecured/clean:

o 10 times of monthly Net Emoluments (take home salary) in case of Salaried Employees.

o 50% of Gross Annual Income as per last Income Tax Return for Professionals /Individuals of high net worth

Secured:

o 20 times of monthly Gross Emoluments in case of Salaried Employees.

o 100% of Gross Average Annual Income as per last three Income Tax Returns forprofessions / individuals of high net worth.

5 Rate of Interest:

Fully secured: 11.50% Clean/unsecured: 12.25%

6.Repayment:

Clean / Unsecured Advances:

Repayment in 36 equated monthly instalments (EMIs) w.e.f. one month after first disbursement.Sanctioning Authority may consider longer repayment period upto 60 months at its discretion.

Secured Advances:

Maximum 60 EMIs w.e.f. one month after first disbursement.

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Security: Equitable/ Legal Mortgage of commercial or residential properties. Hypothecationcharge on assets required. Collateral Security in the form of Pledge of Gold / Gold Ornaments,NSC’s / Indira Vikas Patra, Bonds, Assignments of LIC policies, Relief Bonds, etc…

7.Processing and Handling charges: As Advised by Bank from time to time.(1% of Loanamount)

Bank of Baroda Personal Loan1.Purpose:To meet personal expenses / exigencies eg: medical , educational, marriage, family / socialfunctions, travel expenses, payment of tax, honey moon , etc., or any other family needs(excluding for speculative purpose).

2.Amount Of Loan:

Minimum : Rs. 20000 andMaximum of Rs. 2,00,000

3.Repayment:Up to 36 months (maximum) in Equated Monthly Installments.No pre-payment charges. However, penalty of 2% on overdue amount

4.Rate of interest: BARODA PERSONAL LOAN (Realigned on 01.04.09) sanctioned on orafter 01.04.09: 2.50% Above BPLR i.e. 14.50%

· Loan to Pensioners: 1.25% Above BPLR i.e. 13.25%

· Loan to Defence Pensioners: 1.25% Above BPLR i.e. 13.25%

· Loan for Earnest Money Deposit: 0.75% below BPLR i.e. 11.25%

5.Processing charges: 2% 0n Loan

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Corporation Bank Personal Loan

1.Eligibilty:Permanent employees of Central / State Government Offices, Profit making Public SectorUndertakings and Public Limited Companies, Schools, Colleges, Universities and ResearchInstitutions, Pensioners drawing pension through our Bank and individuals with income otherthan salary/pension.

2.Purpose:To meet any genuine personal expenses relating to family functions, education, travel, marriage,medical etc

3.Loan Amount: For salaried persons the maximum loan amount shall be 12 times the take-home pay,

where an undertaking letter has been obtained from the employer. For salaried persons whose salary is routed through our Bank, but where no undertaking

letter from employer is not available, the maximum loan amount shall be restricted to 6times the take-home pay.

In case of pensioners drawing pension through our Bank, the maximum loan amount shallbe restricted to 6 months' pension.

In case of individuals with income other than salary/pension, the maximum amount of theloan shall be 25% of the gross annual income.

3.Rate of Interest: 14.50% p.a. w. e. f 04.5.09

4.Security: Nil

5.Guarantee:

Suitable Third Party Guarantee to be obtained in all cases.

6.Repayment:

Within a maximum period of 60 months in Equated Monthly instalments. Totaldeductions [including the deduction towards the proposed Loan ] not to exceed 50% of the take-home pay.

7.Service Charges:

1.50% of the loan amount subject to a minimum of Rs.500/-

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Dena Bank personal Loan

1.Purpose:

To meet genuine credit requirements for personal purpose I.e. for meeting expenses for marriage/ travel/ medical/ family functions/ educational expenses / celebration of festivals/ unforeseenevents etc.

2.Eligibility:

Application should be a permanent employee between 24 to 55 years having workedfor at least 2 years in a Govt. or PSU/ reputed organization.

Applicants should have gross monthly income of at least Rs. 5,000/-. Income of anyother earning member ( co-applicants) can be clubbed for enhanced eligibility.

Applicants should have a salary disbursement arrangement with us or provide anundertaking form your employer.

3.Loan Amount:

Minimum- Rs. 15,000/- Upto- Rs. 1 lakh or 9 times the net monthly income whichever is less.

4.Margin : Nil

5.Rate of interest: 5.00%

6.No prepayment charges

7.Process Fee: 1% of loan amount.

8.Repayment : Upto 36 EMI’s starting from the month following the month in which theloan is disbursed.

9.Mode of disbursement: By credit to account of the borr

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Findings

Educational loan:

All the policies and procedure for Education Loan of the various Banks taken for thestudy are almost same except the different rate of interest charged by these Banks.

The interest rates of Bank of India are very competitive and are offering the some of thevery good features to the customers.

As loan is long term and repayment starts after the students gainfully employed, theselection of borrower is very important aspects taken into consideration.

The monitoring of loan will also be important. These risk factors are not to be taken asobstacles in implementation of the education loan, and there is no prime security availed.Our approach should be different while dealing education loan proposal.

Housing loan:

Compare to other banks taken for study, Bank of India does not offer fixed rate of interestw.e.f. 01/7/2007.

Maximum repayment limit for housing loan should increase till 25 years.

Tie up arrangement with reputed builders is to made and single search report for entireproject can be obtained. This will reduce the burden on customers.

The existing customer base can be effectively utilized for marketing of Housing loanproduct.

In view of social security, the Bank should prepare and distribute the list of negativeareas, builder’s professions, other details to the various branches from time to time.

Personal loan:

As compared to other banks taken for study, Bank of India offers more amount of loan tothe customers.

The Bank should be very selective while offering its personal Loan schemes as the rate isvery competitive in the market.

As NPA percentage is very high in this segment, Bank of India has to increase the creditbase by adding a new good-rated advance.

The personal loan is granted to existing customer only. Selection of borrower is veryimportant steps.

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Direct tie-up arrangements with the employer for a repayment of the loan by deductingthe salary of the borrower.

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RECOMMENDATIONS

Constant product innovation & Customer service - Customer service is perhaps the mostimportant dimension of banking. Bank of India needs to have an efficient customerservice system to provide better services to the customer. Modify product as percustomers needs, Lots of care taken when identify customer.

Quality service and quickness in delivery- the quality of service that banks offer and theexperience that clients have, matter the most. Hence, to retain the customers, banks haveto come out with competitive products satisfying the desire of the customers at click of aDutton.

Technological development- For effective lending function there is need to provideinstantaneous service to the customer large, faster processing, maintaining database, etc.

Detail market research- banks may go for detail market research, which will help them inknowing what their competitors are offering to their clients. This will enable to have anedge over their competitors and increase their share in retail banking pie by offeringbetter products and services.

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LIMITATION

Time constraints

Data will be selected might not be complete, accurate

Data of the current year was not available.

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CONCLUSION

Banking industry is the fastest growing sector with the key success by attending directly

the needs of the end customers is having glorious future in coming years.

Retail banking sector as a whole is facing a lot of competition ever since financial sector

reforms were started in the country. Walk-in business is a thing of past and banks are now on

their toes to capture business. Banks therefore, are now competing for increasing their retail

Advance business.

There is a need for constant innovation in retail Advance banking. This requires product

development and differentiation, micro-planning, marketing, prudent pricing, customization,

technological up gradation, home / electronic / mobile banking, effective risk management and

asset liability management techniques.

While Banking offers phenomenal opportunities for growth, the challenges are equally

discouraging. How far the retail banking is able to lead growth of banking industry in future

would depend upon the capacity building of banks to meet the challenges and make use of

opportunities profitably.

However, the kind of technology used and the efficiency of operations would provide the

much needed competitive edge for success in retail advance banking business. Furthermore, in

all these customer interest is of chief importance. The banking sector in India is representing this

and I do hope they would continue to succeed in this traded path.

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BIBLIOGRAPHY AND WEBSITES

Books

Manual of Instructions (Advances) volume 3, Part – 1

Bank of India

Handbook of Banking Information

By N. S. Toor

Websites Referred

www.bankofindia.com

www.denabank.com

www.bankofbaroda.com

www.corporationbank.com

www.rbi.org.in