LONG-TERM LOAN POLICY OF ABHYUDAYA CO-OPERATIVE

BANK LTD. - By Aditya Gupta

Roll no. 857

B.B.A LLB (Hons.)VI Semester

1. To give a brief introduction about the Abhyudaya  Cooperative Bank Ltd.

2.  To identify the different types of long term loans policies of Abhyudaya  Cooperative Bank Ltd.

3. To analyse and evalute the long term policies of Abhyudaya  Cooperative Bank Ltd.

OBJECTIVE STATEMENT

The Beginning  The Bank was started by a group of social

workers and labour movement activists, 1964, with a small share capital of Rs. 5,000.

In a short period of time Abhyudaya Co-op. Credit Society got converted into an Urban Co-op. Bank. Finally in June 1965, Abhyudaya Co-op. Bank Ltd. was established with the motto of "Prosperity through Co-operation".

INTRODUCTION

As on 31st March 2013, the bank has 1.51 lakh members and

more than 16.66 lakh depositors.

Bank has achieved substantial growth in all perspectives

reflecting an overall growth of 20.64% in business mix & total

business mix of the bank has reached over Rs. 13145 Crore. 

As on 31st March 2013, Bank’s Deposits have reached upto Rs.

8036.40 Crore with rise of 23.27% while Advances have

reached upto  Rs. 5108.88Crore.

 Paid up Capital and Reserves have amounted to Rs. 970.08

Crore and Investments are to the tune of Rs. 3428.00 Crore.

For the F.Y. 2012-13, the Net Profit of the Bank after tax/provision

stood at Rs. 91.22 Crore.

The Current Position of Abhyudaya Bank

DEFINITION OF LOANThe act of giving money, property or other material

goods to a another party in exchange for future repayment of the principal amount along with interest or other finance charges. A loan may be for a specific, one-time amount or can be available as open-ended credit up to a specified ceiling amount.

TYPES OF LOANS1. Secured Loans: A secured loan is a loan in which

the borrower pledges some asset as a collateral. Ex: Housing Loans

2. Unsecured Loans: Unsecured loans are loans that are not secured against the borrower asset.

INTRODUCTION TO LOANS

2010 2011 2012 20130

1,000

2,000

3,000

4,000

5,000

6,000

Loans (in crores)

AMOUNT OF LOANS GIVEN BY THE ABHYUDAYA BANK.

A. RETAIL LOAN POLICY1. HOUSING LOAN POLICY2. EDUCATION LOAN POLICY3. LOAN AGAINST IMMOVABLE PROPERTY POLICY4. PERSONAL LOAN POLICY

B. BUSINESS LOANS5. BUSINESS TERM LOAN POLICY6. LOAN AGAINST IMMOVABLE PROPERTY TO

BUILDERS AND DEVELOPERS POLICY.(SOD IMP-BUILDERS)

LONG TERM LOAN POLICIESOFFERED BY THE ABHYUDAYA BANK

Type of Policy Rate of Interest on Loan ( in %)

Other Circumstances.

Housing Loan 11.00 15.00(above Rs. 25

lakh)

Education Loan 13.00 14.00 ( above Rs 10

Lakh)

Loan Against

Property

15.00 -

Personal Loan `14.00 -

RATE OF INTEREST ON THE RETAIL LOANS

1. HOUSING LOAN POLICYPURPOSE Purchase of Flat (New or Resale) Construction of House, Extension to existing Flat / House Takeover of Housing Loan from other Financial

Institutions, etc.MAX. AMOUNTMaximum amount of Rs. 70.00 Lakh.Rate of Interest1. Loan upto Rs. 25 Lakhs – 11.00% p.a2. Loan more than Rs. 25 Lakhs – 15.00%

RETAIL LOANS

2. EDUCATION LOAN POLICY PURPOSE Approved courses leading to graduate/post graduate degree and

PG diplomas conducted by recognized colleges / universities recognized by UGC / Govt. / AICTE / AIBMS / ICMR etc.

Courses like ICWA, CA, CFA etc. Courses conducted by IIMs, IITs, IISc, XLRI. NIFT,NID etc. Approved courses offered in India by reputed foreign

universities.EXPENSES CONSIDERED UNDER THE POLICY Fee payable to college / school / hostel Examination / Library / Laboratory fee Travel expenses / passage money for studies abroad Insurance premium for student borrower.Rate of Interest1. For Boys Student : Loan upto Rs. 10.00 Lakh:13.00%

Loan above Rs.10.00 Lakh:14.00%

2. For Girls Students : Loan upto Rs.10.00 Lakh :12.50% Loan above Rs.10.00 Lakh:13.50%

3. LOAN AGAINST IMMOVABLE PROPERTY POLICY.

PURPOSEThe amount can be used for any productive purpose

but shall not be used for purposes prohibited by lawMAX. AMOUNT(a) Rs. 10.00 Lakh:-To individuals, self employed

persons & professionals.(b) (b) Rs. 25.00 Lakh:-To business persons.ELIGIBILITY50% of market value of the property.TENURE36 months, subject to review every year.RATE OF INTEREST – 15.00% p.aSERVICE CHARGES0.70% of sanctioned amount

4. PERSONAL LOAN POLICYPURPOSE Purchase of Consumer durables and furniture/ fixture/

computers Repairs / renovation of flat / house Purchase of 2 wheelers Purchase of gold ornaments Marriage & other religious ceremonies Domestic / Foreign tours & travels Repayment of existing debt For any purpose which is acceptable to bank.ELIGIBLITYa)Permanent Salaried employees b)For Businessmen / Self-Employed / Professional.REPAYMENTUpto 60 months.RATE OF INTEREST14.00 % p.a

1. BUSINESS TERM LOAN POLICYAbhyudaya Bank provides term loan facility for setting up of new

and additional business unit, acquisition of fixed assets like factory shed, industrial gala, Plant & Machinery, equipments, furniture and fixture etc, up-gradation of existing unit, and to meet short term as well as long term funding requirements.

KEY FEATURES OF THE POLICY 75% of the project cost, Maximum Repayment period is 84 EMI’s. Proposal also consider on future prospects of business & its

techno-financial viability. Help to improve your project by our Industrial finance team. Collateral security required as per Banks prescribed norms.RATE OF INTERESTa) Priority Sector – 15.00 % p.ab) Non Priority Sector - 14.00 % p.aDOCUMENTS REQUIRED Brief history and profile of Company and its promoters Bank Statements for last 12 months of all existing loan /OD

accounts Audited Financials for last three financial years.

BUSINESS LOAN POLICIES

Type of Policy Rate of Interest on Loan ( in %)

Other Circumstances.

Business term loan policy 14.00 15.00(Non Priority

Sector)

Working Capital

Finance Policy

14.00 15.00(Non Priority

Sector)

Loan against

Immovable property

to builders and

developers policy.

17.00 -

RATE OF INTEREST ON THE BUSINESS LOANS

2. SECURED OVERDRAFT AGAINST IMMOVABLE PROPERTY TO BUILDERS AND DEVELOPERS POLICY.(SOD IMP-BUILDERS)

PURPOSEThe amount should be used for expenses of the project, like salary,

wages, electricity charges, material etc. Amount Shall not be used for purchase of land.

MAX. AMT – Rs. 3 CroreELIGIBILITY –50% of market value of the property OR Eligibility as per Banks prescribed norms. RATE OF INTEREST – 17.00 % p.aTENURE - 36 months, subject to review every year.SURETIESTwo sureties of good means.SECURITYMortgage & Insurance of immovable properties other than Project Land & Building.

3. WORKING CAPITAL FINANCE POLICY

PURPOSETo  provides business ,the cash it needs to keep growing until you can cover all operating expenses out of revenue. Helps to meet everyday operational fund requirements & immediate business obligations.

RATE OF INTERESTa) Priority Sector – 15.00 % p.ab) Non Priority Sector - 14.00 % p.a

KEY POINTS Assessment on easy terms and special concession in interest rate for SSI

units and SME sector advances. Adequate Drawing power to be maintained. Overdraft facility is subjected to yearly renewal/ review. Priority sector advances are encouraged. Eligibility calculated as per Sales Turnover Method, Production/

Processing Cycle Method and Working capital gap method.

A COMPARATIVE ANALYSIS:RETAIL AND BUSINESS POLICIES

0

6

12

1811 13 15 1414 14

17

0

Interest Rates (%)

Retail Loans Business Loans

The loan policies of Abhyudaya Bank can be divided

into A) Retail Policies. B) Business Policies.

Abhyudaya Bank offers a variety of loan policies under

both, Retail and Business policies.

The Abhyudaya Bank charges a higher rate of Interest

on Loans given under Business Policies than the Retail

Policies.

THE ANALYSIS

THANK YOU !QUESTIONS PLEASE ?