PROJECT REPORT

ON

Branch bankingIN

Vaishya Sahakari bank,

Borivali (E) Branch, Mumbai-400092

SUBMITTED BY

MILIND SHASHIKANT JAHAGIRDAR(M.M.S. - II)

Roll No . :05

Rajaram shinde college of M.B.A. Pedhambe,

Chiplun

[Academic Year-2007-08]

0

PROJECT REPORT

ON

Branch bankingIN

Vaishya Sahakari bank,

Borivali (E) Branch, Mumbai-400092

SUBMITTED BY

MILIND SHASHIKANT JAHAGIRDAR(M.M.S. - II)

Roll No . :05

Rajaram shinde college of M.B.A. Pedhambe,

Chiplun

[Academic Year-2007-08]

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Summer internship Details

Name of the student: Mr. Milind Shashikant Jahagirdar

Specialization opted: Finance

Name of the organization: Vaishya bank co operative Ltd.

Period of SIP: 2 Months

Date of joining: 01-06- 2008

Date of completion: 31-07-2008

Daily working hours 8 Hours

Departments worked clerical.

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CERTIFICATE BY THE FACULTY GUIDE

This is to certify that Mr. Milind S. Jahagirdar, Student of MMS 3rd

Semester has completed the summer training on the topic Branch Banking in a

reputed bank Vaishya Bank at Borivali (E). The summer training project report

is based on the work done by the candidate himself and fulfils the requirement of

the project necessary for partial fulfillment of the MMS degree. The work carried

out by the candidate on the above mentioned topic is up to the mark as supported

by the certificate issued by the Bank where the candidate has undergone training

for completion of the project work.

To the best of my knowledge and belief, the work has not been

submitted anywhere else for award of any degree or diploma.

We wish him success in his life.

Sign of faculty

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ACKNOWLEDGEMENT

I would like to place on record our sincere appreciation and deep gratitude

to our project guide Prof. Mrs.Rucha Khavnekar , for her constant

motivation throughout the work of this project on “branch banking”.

I am also thankful to our external guide Mr.Santosh Kulkarni

(CEO of Vaishya Bank) and Mrs. Gandhi (Manager of Vaishya Bank)

for constant encouragement, guidance and valuable contribution towards

completion of my project.

I am also thankful to all the Staff members of ‘Vaishya, Borivali

Branch, Mumbai’ who have helped me directly or indirectly in making this

project a success.

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Index

Serial no.

Particulars Page no.

1 Objective & Scope 7

2 Research Methodology 9

3 Introduction 13

4 History & Company Profile 21

5 Analysis 30

6 Findings 63

7 Conclusion & Suggestions 65

8 Annexure 67

9 Bibliography 69

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Summary:

The project titled “Branch Banking” being carried out for Vaishya Bank,

Borivali Branch, at Mumbai for the time duration of two months.

This project is on study and analysis of different type of branch

transaction. It studies different types of deposit schemes, loan schemes,

cash transaction, fixed deposit and interest accrued at the end of the

month. The analysis of loan schemes like housing loan scheme, vehicle

loan scheme, personal loan scheme, education loan scheme was taken. The

purpose of this analysis is to know the criteria required for these loans and

the procedure of loan sanctioning and different deposit scheme.

The main objective of this project was to find out the detail procedure of the loan

scheme, the loan sanctioning procedure, interest rate calculation, and clerical

work done by the bank. Also we studied the comparison between above loan

schemes and other advances given by the bank, cash transaction, deposit opened

by the customer in March 2008 and in July 2008.

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Chapter IOBJECTIVE & SCOPE

Chapter IOBJECTIVE & SCOPE

Objective of the Study

1) To study the different loan schemes of the bank.

2) To study the different deposit schemes of the bank.

3) To analyze the process of loan sanctioning & documentation.

4) To find out the interest rate of different loan schemes.

5) To study the comparison between the studied loan scheme and other

advances.

6) To study the transaction between the two parties.

Scope of the work

The scope of the study refers to the job that to know about the activities of the

organization. The study means that the analysis of the banks operation on which

it has to focus.

With respect to time frame:

The project carried out in a period of two months therefore the conclusion

and recommendation of this project are based on the data collected within

these 60 days and restricted to the same.

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With respect to customer:

The bank has more number of customers for different types of loan schemes so

there is chance to make analysis of comparison between the loan schemes.

Try to convenience to customer for opening the saving and deposit account.

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Chapter II

RESEARCHMETHODOLOGY

Chapter II

RESEARCHMETHODOLOGY

Introduction

A research design is the logical & systematic planning & direction of a

piece of research. The research design attempts to integrate various

aspects of the research study, such as what, where when, how why etc.

the design also takes in to account the availability of time, energy &

other resources at disposal. It is a master plan, a blue print that directs the

entire study.

The research will involve: –

1) Define the information

2) Design the type of research.

Method of Research:-

Research method involves to the behavior & instrument used in selecting

& conducting research techniques for e.g. mail questionnaire, personal

interviews etc.

Research methods have been planned under following three groups.

1) Collection of data.

2) Statistical techniques

3) Accurate evaluation

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Research Instruments:-

Questionnaire is used in this research for collection of primary data.

Questionnaire is structured sequence of questions designed to draw out Facts

& which provide vehicle for recording data.

The Research Plan:-

Designing a research plan calls for decision and data Sources, research

approach and instruments.

Data Sources:

(I)Primary Data: -

The study is mainly based on primary data for the purpose of this study oral

interview of Bank Manager was taken to get relevant information or data from

the Bank.

(II) Secondary Data: -

The secondary data has been collected from relevant records of the Vaishya

bank, Borivali Branch.

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Chapter III

INTRODUCTION

Chapter III

INTRODUCTION

Introduction

In banking Regulation Act 1949 Sec.5 (1) (b & c) define banking as

follows:

“Banking means the accepting for the purpose of lending or

investment of deposits of money from the public repayable on demand or

otherwise and withdraw able by cheque, draft, and order or otherwise.”

Banks play a very important role in modern economy. Their functions are

increasing day to day. All banks perform the primary function of deposit

collection and lending. Some of them specialize in a particular operation

of helping a particular sector of the economy. Banks can be classified on

the basis of specialization of their function. The details are as follows:

Fig.1: The structure of Indian Bank

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Structure of Indian Bank

Commercial Bank

Industrial Bank

RBI BankForeign BankAgriculture

BankCo-operative

Bank

14

Major Reform Initiatives

Some of the major reform initiatives in the last decade that have changed the face of the Indian banking and financial sector are:

1) Interest rate deregulation. Interest rates on deposits and lending have been deregulated with banks enjoying greater freedom to determine their rates.

2) Adoption of prudential norms in terms of capital adequacy, asset classification, income recognition, provisioning, exposure limits investment fluctuation reserve, etc.

3) Reduction in pre-emption – lowering of reserve requirements (SLR and CRR), thus releasing more lendable resources which banks can deploy profitably

Government equity in banks has been reduced and strong banks have been allowed to access the capital market for raising additional capital.

4)Banks now enjoy greater operational freedom in terms of opening and swapping of branches, and banks with a good track record of profitability have greater flexibility in recruitment.

5) New private sector banks have been set up and foreign banks permitted to expand their operations in India including through subsidiaries. Banks have also been allowed to set up Offshore Banking Units in Special Economic Zones.

6) New areas have been opened up for bank financing: insurance, credit cards, infrastructure financing, leasing, gold banking, besides of course investment banking, asset management, factoring, etc.

7) New instruments have been introduced for greater flexibility and better risk management: e.g. interest rate swaps, forward rate agreements, cross currency forward contracts, forward cover to hedge inflows under foreign direct investment, liquidity adjustment facility for meeting day-to-day liquidity mismatch.8) Several new institutions have been set up including the National Securities Depositories Ltd., Central Depositories Services Ltd., Clearing Corporation of India Ltd., Credit Information Bureau India Ltd. BRANCH BANKING

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9) Limits for investment in overseas markets by banks, mutual funds and corporate have been liberalized. The overseas investment limit for corporate has been raised to 100% of net worth and the ceiling of $100 million on prepayment of external commercial borrowings has been removed. MFs and corporate can now undertake FRAs with banks. Indians allowed maintaining resident foreign currency (domestic) accounts. Full convertibility for deposit schemes of NRIs introduced.

10) Universal Banking has been introduced. With banks permitted to diversify into long-term finance and DFIs into working capital, guidelines have been put in place for the evolution of universal banks in an orderly fashion.

11) Technology infrastructure for the payments and settlement system in the country has been strengthened with electronic funds transfer, Centralized Funds Management System, Structured Financial Messaging Solution, Negotiated Dealing System and move towards Real Time Gross Settlement.

12) Adoption of global standards. Prudential norms for capital adequacy, asset classification, income recognition and provisioning are now close to global standards. RBI has introduced Risk Based Supervision of banks (against theTraditional transaction based approach). Best international practices in accounting systems, corporate governance, payment and settlement systems, etc. are being adopted.

13) Credit delivery mechanism has been reinforced to increase the flow of credit to priority sectors through focus on micro credit and Self Help Groups. The definition of priority sector has been widened to include food processing and cold storage, software up to Rs 1 crore, housing above Rs 10 lakh, selected lending through NBFCs, etc.14) RBI guidelines have been issued for putting in place risk management systems in banks. Risk Management Committees in banks address credit risk, market risk and operational risk. Banks have specialized committees to measure and monitor various risks and have been upgrading their risk management skills and systems.

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15) The limit for foreign direct investment in private banks has been increased from 49% to 74% and the 10% cap on voting rights has been removed. In addition, the limit for foreign institutional investment in private banks is 49%.

16) Wide ranging reforms have been carried out in the area of capital markets. Fresh investment in CPs, CDs are allowed only in dematerialized form. SEBI has reduced the settlement cycle from T+3 to T+2 from April 1, 2003 i.e. settlement of stock deals will be completed in two trading days after the trade is executed, taking the Indian stock trading system ahead of some of the developed equity markets. Stock exchanges will set up trade guarantee funds. Retail trading in Government securities has been introduced on NSE and BSE from January 16, 2003. A Serious Frauds Office is proposed to be set up.

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The landscape of financial institutions has changed dramatically over the past 10

years. Financial institutions are looking to improve their delivery of product and

service through the most cost-effective means. Traditional brick and mortar

offices are being replaced with convenience centers or in-store outlets, ATM,

telephone banking, Internet and other less expensive options. Additionally,

mergers and acquisitions within the industry have, in some cases, resulted in

branch closures and consolidation efforts.

Branch, the data base included bank name, address, city, state, zip code,

and holding company name and deposit dollars. All branch data was geo

coded at the street address and assigned a latitude and longitude

coordinate and tract ID. By geo coding to the street address the study was

not only able to identify the census tract in which the branch is located, it

is also possible to identify how many other census tracts that branch can

service based on various search radii or density calculations. This allows

us to calculate and analyze the number of branches serving any on census

tract based on the proximity of the branch to the tract.

Consistent with the CRA regulation, income classifications for the census tracts

were based on the CRA regulation defined on page 4 footnote 2.

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As of 1998 there are 62 discrete financial institutions with 497 offices in San

Diego County. There were 51 Commercial Banks with 340 offices and 11

Savings Institutions with 141 Offices in 1998.

From 1991 through 1998, there was a 24.5 percent decline in the number of

FDIC insured Deposit offices in San Diego County.

Banking facilities declined from 681 offices in 1991 to 514 offices in 1998.

Population per office has grown from 3,668 persons per branch in 1991 to 5,437

persons per branch in 1998. The following table summarizes the bank branching

changes in San Diego from 1991 to 1998, by the income classification of the

tracts.

Low and moderate income defined tracts experienced 42 branch closures from

1991 – 1998.

The following map, Exhibit VI-1, shows the change in the banking

industry branch distribution, by census tract, throughout the County.

Red and green highlighted tracts with a net loss of bank branches.

Yellow highlighted tracts with a net gain in branches.

The following table highlights the change in branches by the income

classification of the tracts. From 1997-1998, moderate income defined

tracts experienced new growth in branches. As note din Section V, San

Diego experienced a net decline in the number of small business loans

from 1997 to1998. Moderate income defined census tracts experienced the

smallest decline in number of small business loans from '97-'98. Low-

BRANCH BANKING

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income tracts, which have the fewest number of branches, had the sharpest

decline in number of loans from '97-'98.

Branches serve areas other than just census tracts. One way to assess access to

banking services is to measure the number of branches which intersect census

tracts, based on a radius around the branch. For example, if one measures the

number of banks which intersect all the tracts within a 3-mile radius around the

branch, it appears that low and moderate-income defined tracts have access to a

rather large base of banks within 3 miles to serve them.

· Low and Moderate income defined census tracts receive fewer loans per branch

than middle or high income defined tracts.

Branch density and the relative areas being served by branches can be visualized

utilizing a density map. In this scenario, the density of branches is based on a

search radius of 3 miles.

Calculating density allows us to distribute the number of bank branches

across the census tract base and produce a continuous surface. Density is

calculated for each cell by summing a value for each point found in the

Search Radius and dividing by the area of the circle in Area Units. Area

units in this analysis are square miles. The output density, shown on the

following map, illustrates the density of – branches, per square mile.

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Chapter IV

HISTORY & COMPANY PROFILE

Chapter IV

HISTORY & COMPANY PROFILE

History

Bank Nationalization:

The social control measures outlined were not considered adequate to

achieve the desired social and economic objectives. The Government of

India, therefore, with effect from 19th July, 1969 (by an Ordinance issued on

that date) nationalized fourteen major Indian Commercial Banks with

aggregate deposits of Rs. 2741.75 crores as on 31-12-1968, which

constituted 87.5 per cent of the total deposits of the scheduled banks in the

private sector. The bill nationalizing these banks was passed by the

Parliament as Banking Companies (Acquisition & Transfer of Undertakings)

Act, 1969 which received the President's assent on 9th August, 1969. The

names of the nationalized banks were: The Central Bank of India Ltd., The

Bank of India Ltd., The Punjab National Bank Ltd., The Bank of Baroda

Ltd., The United Commercial Bank Ltd., The Canara Bank Ltd., The United

Bank of India Ltd., The Dena Bank Ltd., The Syndicate Bank Ltd., The

Union Bank of India Ltd., The Allahabad Bank Ltd., The Indian Bank Ltd.,

The Bank of Maharashtra Ltd., and The Indian Overseas Bank Ltd. The

other scheduled banks including foreign banks and the non-scheduled banks

were not nationalized and continued to be in the private sector.

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Co operative bank:

A co-operative is a business, but more than this, it acts together to meet the

common needs and aspirations of its members, sharing ownership and making

decisions democratically. Co-operatives are not about making big profits for

shareholders, but creating value for their members. Their top priority is to

provide the best possible services for their members and to invest in the

communities where they live. This gives co-operatives a unique character and

influences what they stand for.

In this instance, the Co-operative Bank is wholly-owned by Co-operative

Financial Services Ltd, whose sole shareholder is the (member-owned) Co-

operative Group. Members of The Co-operative Group are also entitled to earn

dividend on their account holdings and borrowing with the Bank.

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VAISHYA BANK AT A GLANCE

MISSION STATEMENT

"To emerge as one of the premier and most preferred banks in the country by

adopting highest standards of professionalism and excellence in all the areas of

working!!!"

Vaishya-op. Bank Ltd., one of the leading Urban Co-operative Banks in India, in

its outlook and approach, has the objective of progress and prosperity of all.

From a humble beginning in 12-11- 1945 as a Co-operative Credit society with a

share capital of a merely Rs.5,000/- held by 83 members, today Vaishya Co-op

bank has become one of the large Urban Co-operative Banks with a "Scheduled

Bank" status. The area of operation which was restricted to the State of

Maharashtra.  Currently, the capital base of the bank stands at Rs. 32.32 crores

and Reserves and surpluses at Rs. 619.93 crores. The bank has more than 1lakh

depositors. The Bank has seen a tremendous growth in deposits. The deposits of

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the bank are over Rs. 21 crores as on 31.03.2007, which were Rs. 18 crores as at

the end of the financial year 2005-2006. The loans and advances stood at Rs. 12

crores as on 31.03.2007. The bank had posted a net income of Rs. 18.75 lakh as

on 31.03.2007. The growth rate of the bank compares well with that of others in

the sector. The Bank has maintained a steady growth. The bank has been paying

dividend @ 15% to its members which is maximum permissible as per the

MNCs act.

The Bank has launched different loan schemes tailor-made to suit

the needs of various customers. The schemes aim at providing loans for purchase

or construction of residential premises, repair/renovation of house property,

purchase of car, seeking higher education and for purchase of household

consumer durable. One of the loan schemes, viz. "Udyog Vikas Yojana" is

specially designed for the benefit of small entrepreneurs and businessmen. The

procedure for sanctioning of loans under the schemes has been simplified and

relaxed with a view to attract new customers and facilitating speedy sanction of

loans. The Bank has total 5 Branches in Mumbai. Bank is committed to spread

network of branches throughout the State and provide much needed banking

services to the population, which has been deprived of the banking facilities.

Innovative Banking is another area of operation that Vaishya is currently

focusing on for a sustainable long term growth. The Bank has always

endeavored for providing satisfactory customer service with the help of the latest

technology. The Bank has provided fully computerized services to its valued

clients. Bank is offering 12 Hours fully computerized services at 5 branches.

With a view to meet the challenges of technologically advanced banking system

and to upgrade its existing technology, the bank has decided to introduce "Total

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Bank Automation" to provide the facility of inter-branch connectivity for any

time and any branch banking transactions.

Company Profile

Vaishya Bank:

Shri Santosh Kulkarni CEO

Shri Sandesh S. Narkar Managing director

Shri Santosh Sardal Additional General Manager

Shri Vijay S. Kamrekar Deputy General Manager

Shri Dilip S. Pathre Executive officer

Shri Ramkrishana H.Kolwankar Deputy EO

Shri Pandurang D. J.Active member of samaj (Development Department)

Shri Jaywant R.Pathre active member (Development Department)

Shri A. Adsul Union leader

Smt.A.A.Gandhi Branch Manager (Borivali)

Shri Suhas C. Shetye Officer(Borivali)

Smt Vedhangi V. Mhatre Officer(Borivali)

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BRANCHES

Head officeAddress: 1/2, Shyam bhuvan, J.B.Bhantankarmarg Parel T.T., Mumbai - 400 012Telephone No.:24704331, 24718345Timing: Monday-Friday09.15 a.m. to 1.30 p.m.02.00 p.m. to 03.15 p.m.Saturday-Sunday09.00 a.m. to 12.30 p.m.

DindoshiAddress: A 19/19, Gokuldham shopping, centre, Goregaon (E) Mumbai - 400 063Telephone No.:28407595, 28415113Timing: Monday-Friday09.15 a.m. to 01.30 p.m.02.00 p.m. to 03.15 p.m.Saturday-Sunday09.15 a.m.-12.30 a.m.

BorivaliAddress: Sikar Mahal, Carter Rd. No.4, Borivali (E), Mumbai-400 066Telephone No.:28073418, 28073394Timing: 9.15a.m. To 1.30p.m.2.00p.m. to 3.15p.mSaturday - Sunday9.15a.m. to 12.30p.m

ParelAddress :3/12, Abdulla building, 1st floor, DR.Ambedkar road, Parel Mumbai - 400 012Telephone No.:24131804, Timing: Monday-Friday09.15a.m. To 1.30p.m. Saturday-Sunday09.15 a.m. to 12.30 p.m.

Girgaon Address: 7, Tatya Gharpure path, Girgaon Mumbai-400004.Telephone No.:23856502, *23850432Timing: Monday-Friday9.15a.m. To 3.15p.m. .

BALANCE SHEET OF VAISHYA BANK BRANCH BANKING

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CAPITAL AND LIABILITIES

Scheduled As on 31-03-2007 As on 31-03-2006

Share capital 1 14595115 13459265

reserve and surplus

2 46227834 42677399

Deposits 3 468682122 455352646

Borrowing 4 13306776 nil

other liabilities and provision

5 68373609 88467342

Total 611185456 599956652

ASSETS 6

Cash on hand 7 16247892 11981661

balance with banks 8 12116558 15775821

Investment 9 253955031 270918954

Advances 10 276915051 250038882

fixed assets 11 23295815 23514380

other assets 12 28655109 27726954

Total 611185456 599956652

PROFIT AND LOSS ACCOUNT OF VAISHYA BANK

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Particular Scheduled As on 31-03-2007

As on 31-03-2006

IncomeInterest earned 13 41771530 42915900

Other income 14 3686020 2663315

Total 45457550 45579215

Expenditure

Interest expended 15 25795307 25915878

Operating expenses

16 18609712 17000143

Provision and contingencies

557000 1795000

Total 44962019 44711021

Profit or loss

Net profit of the year

495531 686194

Profit of the previous year brought forward

5024 5171

Total 90920124 91160361

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Chapter V

ANALYSIS

Chapter V

ANALYSIS

Activities

The activities of the bank are divided in two parts that is daily transaction and

monthly transaction. In the daily transaction, all cash transaction that include the

deposit and withdraw the cash as per the requirement and monthly transaction

which include the loan and the advances.

Amongst the standard services provided by Vaishya bank the special

service that it provides is Multi Branch Banking. Multi Branch Banking

(Anywhere Banking) service is available to customers of networked branches of

the Bank. Under this service, the customer of one branch will be able to transact

on his account, from any other networked branch of the Bank. The activities are

classifies in to following:

1) Activities in the savings and current account

2) Deposit

3) Loan

Activities in the savings and current account:

Savings account:

The safest thing to do with your money is to put it into a savings account. If you

carry the money around with you, you might lose it. If the money is under your

mattress, your house could burn down or be robbed. However, if the money is in

a bank savings account, your banking institution is responsible for the

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safekeeping of that money. If the bank burns down, your money won't go with it,

and any reputable bank will not just lose your savings.

How to open

Savings Bank Account can be opened in the name of an individual or in joint

names of the depositors by filling up the appropriate forms. A minor who have

completed ten years of age can also open and operate the account. At the time of

opening an account one must submit the documents like photocopy of passport

or Electoral card, Postal identification cards as address proof and two passport

size photos. 

Most banks also require an introduction for opening an SB account. The

introduction may be obtained either from an existing account holder or from a

respectable citizen, well known to the bank, which should normally call on the

bank and sign in the column specially provided for the purpose of introduction in

the account opening form.

Eligible:

Individual ,Single Accounts, Two or more individuals in JointAccounts,Illiterate

Persons, Blind persons, Minors, Associations, Clubs, Societies, etc. Trusts

Institutions/Agencies specifically permitted by the RBI

Initial Deposits:

Rs.500/- for Cheque book operated and Rs.100/- for non cheque book a/cs, For

Pensioners Rs.100/- and Rs.10/-

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Interest Rate:

3.5% p.a applied twice in a year in Feb and August

Charges of non-maintaining minimum   balance:

Rs.20/- per month for not maintaining min Balance

Current account:

Facility available to Current Deposit Account of Corporate, Proprietorship,

Partnership, Individuals, Schools, Colleges and other institutions (other than

Banks).No Interest will be payable on current account.

Current accounts are cheque operated accounts maintained for mainly business

purposes. Unlike savings bank account no limits are fixed by banks on the

number of transactions permitted in the Account. Banks generally insist on a

higher minimum balance to be maintained in current account. Considering the

large number of transactions in the account and volatile nature of balances

maintained overnight banks generally levy certain service charges for operating a

Current account.

In terms of RBI directive banks are not allowed to pay any interest on the

balances maintained in Current accounts. However, legal heirs of a deceased

person are paid interest at the rates applicable to Savings bank deposit from the

date of death of the account holder till the date of settlement.

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Activities in the savings and current account:

1) Cash Deposits

2) Cash Payments

3) Internal transfer Of Funds

4) Statement of a/c for a Given Period.

5) Marking Stop Payment of a Cheque.

6) Deposits

Cash deposit:

It is the daily activity done by the account holder. Account holder may deposit

cash for future saving or future payment.

Cash payment:

It is payment made by cheque. Account holder drawn cheque to make a

payment. A cross cheque will not allow to receive payment.

Internal transfer of fund:

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It is only possible when account holder have two or more account in the same

bank

Statement of a/c for a given period:

Current account holder can get the monthly statement and saving account holder

can get there passbook updated.

Making stop payment of cheque:

It is instruction given account holder to bank to stop payment of cheque.

Necessary charges will debit from account.

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Fixed deposit:

Time deposits are deposits accepted by banks for a specified period of time. In

terms of RBI directives the minimum period for which term deposits can be

accepted is 15 days. The banks generally do not accept deposits for periods

longer than 10 years.

1) Banks pay interest on term deposits based on the period of deposits and

normally pay higher interest for longer term deposits.

2) Banks have full discretion to fix their interest rates on deposits and these rates

are varied from time to time depending on market conditions.

3) Changes made in interest rates from time to time do not alter the interest paid

on the existing deposits.

4) When banks quote a certain percentage of interest per annum for a given

period it is understood that interest payments are made on a quarterly basis (see

IBA Master Charts).

5) The depositor can collect interest on every quarter or its discounted value at

monthly rests or avail quarterly compounding benefits and receive principal and

interest on maturity.

6) RBI has now permitted banks to quote a higher rate of interest for individual

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7) Banks are allowed to levy a penalty for premature encashment of deposits at

their discretion. Banks generally pay interest on such deposits as applicable for

the period which deposit has been kept with the bank (less penalty if levied).

8) Bank allows loans against the fixed deposits on demand. Margin retained over

the deposit outstanding and interest rates charged thereon are decided by the

bank and may vary from bank to bank.

Opening of a time deposit Account:

normally the requirements as given under savings bank account apply to time

deposits also. However, photographs are not insisted for deposits below

Rs.10,000/-. Also the requirements regarding furnishing of PAN number applies

only to time deposits over Rs.50,000/- made in cash.

Advantage of fixed deposit:

1) If we once deposited into FD (Fixed Deposit) its very safety.

2) Its interest % is high when compare with other deposits like SB (Saving Bank

A/C) & Current A/C.

3) If a senior citizen, the FD gives them the highest rate of interest. Its vary

depends upon the banks.

4) Anybody can keep FD with "Time base and Money base" schemes.

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For example. 2 years deposits or 5 years deposits / up to Rs.50,00,000/- or

Rs.10,00,00,000/-.

Disadvantage of fixed deposit:

We can't withdraw the deposited money back until the terms of deposit

completes.

For example.

We deposit your money into the FD for 5 years up to Rs.50,00,000/-. After 2

years of deposit, we need the deposited money in FD, nobody can't withdraw

back without completion of the deposit amount reached.

If the FD reach Rs.50,00,000/- then it is possible for withdraw the amount. Until

we can't do anything against the FD.

The Only one chance is, "CLOSE THE FD A/C" and then it may get our money

back.......!

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Attractive deposit scheme of Vaishya bank w.e.f.14-07-2008

Period Gen.Publicincluding Regd. Trust Co-op. Societies Senior Citizens

Co-operative Societies

Senior Citizens

Current Deposits NIL NIL NIL

Saving Deposits 3.50% 3.50% 3.50%

Term Deposits

15 days to 45 days 4.25% 4.50% 4.75%

46 days to 180 days 4.50% 4.75% 5.00%

181 days to 1 years 7.00% 7.25% 7.50%

13 months to 15 10.00% 10.25% 10.50%

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Months

16 Months to 2 years 9.50% 9.75% 10.00%

25 Months to 3 years 9.00% 9.25% 9.50%

Above 3 years 8.50% 8.75% 9.00%

Loans and Advances:

Banks finance industries for meeting their day to day requirements as well

as for purchasing or renovating their fixed assets. Similarly, bank grant advances

to farmers for raising crops, for purchasing implements, tractors, seeds and

pesticides as also for irrigational facilities, etc. The advances granted by

commercial banks are expected to develop all sectors of the national economy.

The Sources from which banks get funds may be broadly stated as under

(a) Paid-up capital: Funds paid towards the capital.

(b) Reserves and Surplus: Reserves comprise accumulated profits retained by the

bank from year to year.

(c) Deposits: These are moneys placed by depositors with banks in savings,

current and time deposits.

(d) Borrowings from other banks: Commercial banks borrow moneys from

Reserve Bank of India and State Bank of India against Government & other

securities.

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Methods of Granting Advances:

The main methods of granting advances may be classified as:

1) Cash Credits

2) Overdrafts

3) Bills Discounting

4) Loans

Cash credit:

CASH CREDIT

Purpose:

Finance required for day to day functioning of the business

 

Maximum Amount, Eligibility:

(a) 75% of working capital gap

(b) 20% of Realistic Projected Turnover in case of manufacturing units with

limits above Rs.50 lacs

 

41

Repayment:

Up to one year subject to enhancement of limit

 

Rate of Interest:

Up to Rs.10 lacs (Priority Sector 12%) (Non Priority Sector 13%)

 

Sureties:

(A) Up to Rs. 5 lacs:

Business / salaried surety (salaried person can be considered with monthly gross

salary of Rs.15, 000/- and net salary Rs.10, 000/- p.m. and above)

 

(B) Above Rs. 5 lacs:

Two sureties

One Business surety if collateral is more than 50% of the facility

 

(C) For CC limit up to Rs.10 lacs:

One salaried surety if collateral is more than 50% of the facility

Two salaried sureties with monthly gross salary of Rs.15, 000/- and net salary

Rs.10, 000/- p.m. and above

Service Charges: 1.2% of amount sanctioned

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Loans:

The term 'loan' is popularly used to denote the granting of an advance in lump

sum, generally on the basis of securities acceptable to the banker. The

distinguishing feature of a loan is that interest on it is payable on the entire

amount, whether it is fully utilized or not. It is granted for a definite period and the

borrower is given the facility to repay it in one lump sum or in installments. As far

as a banker is concerned, the operating cost of a loan is lower as compared to a

cash credit or an overdraft. This method of granting an advance has the advantage

of strengthening the financial discipline in the use of bank credit. Follow up,

supervision and control of end-use of bank credit could be made more effective in

the case of loans as compared to cash credits and overdrafts.

Loan Schemes:

The Vaishya Bank has different loan schemes. These are as follows:

1) Vehicles loan

2) Personal Loan

3) Housing Loan Scheme

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Sanction, Documentation & Disbursement

Application form:

Wherever applicable, prescribed application form duly filled is

obtained.

Personal Information forms:

Personal Information form of the borrower and guarantors duly completed in all

respect and supported by documentary proof wherever required. Information

given in the personal information form is properly scrutinized and verified, so as

to assess their net worth. Net worth and income proof of the applicant(s) /

guarantor(s) is cross checked with their latest Wealth tax receipts/return, Audited

Financial statements and Income Tax return.

Xerox copies of any documentary proof are verified from original papers.

Personal Information forms are obtained every year and/or at the time of review/

enhancement of the credit facilities.

Confidential report /Opinion letter:

Confidential Report/opinion letter from the existing bankers is obtained in

case borrowing units are having banking relationship with other banks.

Confidential report of the associate is obtained from their bankers.

Pre-sanction Visit:

Pre sanction visit is paid to verify the facts given by the applicant borrower

about his worth and his proposal.

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The visit report containing gist of observations during the visit is kept on record.

A visit register should be maintained and updated properly immediately after

visiting the unit / account.

The site of the property to be purchased in case of housing loan and the

property/ assets proposed to be mortgaged / hypothecated is visited for

ascertaining their realizable value. .

Need based finance as per realistic projections:

All relevant financial and other documents and information concerning the

credit proposal is obtained from the borrower (s) /guarantors (s) before

assessment of the credit needs. The projections submitted by the

borrower/applicant company are accepted only after proper study and these is

critically analyzed in the proposal note.

Current trends in a particular industry/sector are also being taken into

consideration. Adequate scrutiny of balance sheet and comments thereon is

being incorporated in the proposal note.

Interview of the borrower is conducted after receipt of all the relevant

papers/documents concerning the credit proposal. Important information elicited

through such interviews is brought out in the credit appraisal of the borrower.

Proper analysis of conduct of the account is also being carried out.

Continuations of facilities are considered on their actual utilization in past and

assessment as per future projections.

It is ensured that the existing accounts of the borrower are regular, audit and

inspection irregularities are rectified, estimates are not inordinately inflated and

the vital issues are commented upon properly.

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The sanctioning authority is satisfying itself about the acceptability of credit

needs of the borrower and end use of funds lent with sources of repayment.

At the time of mid-term review of the projects, if additional loans are to be

sanctioned then proper appreciation of the market conditions and the factors,

which led to time and cost over runs in the projects, should be taken into account

by the sanctioning authority.

At the time of take-over of accounts from other, bank/s it should be ensured that

the accounts of the borrower with existing bank/s are regular and conform to the

norms laid down for takeover as per Lending Policy.

Stipulating suitable repayment program and adequate moratorium period:

While appraising the proposal for term loans, need for granting moratorium in

repayment should be assessed and decided, based on period required for

completion of the project, probable date of commencement of trial and

commercial production and leverage for contingencies. After considering above

factors, moratorium should be fixed so that need for extending moratorium

period / rescheduling / restructuring the repayment schedule at initial stage itself

can be avoided.

The repayment programme should be fixed as per income generation /cash

flow from the activity i.e. overall repaying capacity of the borrower including his

other repayment commitments. Besides, the economic life of assets created out

of bank finance should also be taken into account while deciding repayment

period.

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EMI Stipulation:

While stipulating EMI, following points need to be noted:

The repayment period should be reckoned from the date of first disbursement

and the EMI should be stipulated after calculating it properly by referring the

EMI chart so as to ensure that entire dues are recovered within the stipulated

tenor of the loan.

Interest accrued during moratorium period should be either recovered

separately or should be taken into account along with Principal while fixing

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Application form, Note for appraisal of credit facilities, sanction letter:

Application form, Note for appraisal of credit facilities, Sanction letter and other

relevant papers should be held on record along with the documents concerned

file of the borrower.

Conveying sanction and obtaining acceptance:

1) The details of the sanction of a Loan are conveyed by Vaishya bank to the

borrower by a written communication.

2) While conveying the sanction, it is ensured that terms and conditions of

the sanction are specific and not vague.

All the terms and conditions are clearly mentioned in the sanction letter so as

to avoid the possibility of any confusion or misinterpretation. Proper

description of interest rate (in relation to BPLR/Bank Rate, Fixed or Floating

rate etc. and the Credit Rating of the borrower) and validity period of

sanction should also be mentioned in the sanction letter.

A clause stating that the interest rates are subject to change from time to

time depending upon the policy of the Bank should be incorporated.

Compliance of terms and conditions of sanction:

Disbursements is permitted only after compliance of all the terms and

conditions of the sanction including creation of the Bank's charge on assets

and noting of the same with appropriate authorities in applicable cases,

obtaining personal guarantees wherever stipulated. It is ensured that at least

proportionate margin money is brought in / maintained by the borrower.

48

PAPERS/DOCUMENTS REQUIRED FOR LOAN PROPOSAL:

From Borrower:-

1) Copy of PAN Card (or Voter's Card) this is required for proper

identification of the Borrower

2) Last 3 years I.T. Returns (SARAL Forms) - Form No. 16

3) ------- do ------- (Latest salary slip in case of salaried person)

4) Residence Proof - Copy of Ration Card

5) Photos of Borrower

Guarantor (1):-

1) Copy of PAN Card (or Voter's Card)

2) Last 3 year's I.T. Returns (SARAL Forms) - Form No. 16

3) ------- Do ------- (Latest salaries slip in case of salaried person)

Residence Proof - Copy of Index-II of house/flat (MSD Co. Ltd.

Bill/PMC /PCMC Taxes/Tele Bill)

4) Photos

Guarantor (2):- same as above

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Documentation:

Documents are consistent with the terms and conditions of the sanction and

complete in all respects prior to disbursal of facilities. It is ensured that all

necessary documents are properly executed by all concerned.

In case of partnership firms, copy of partnership deed and the certificate of

registration of partnership firm with Registrar of Firms should be obtained.

In case of fixed assets, offered as security, its valuation is got done by our

empanelled valuer and the report also give distress sale value of the asset. It is

ensured that the valuation reports are not older than three years and valuation of

the plant & machinery, vehicles etc.

In case deposit receipts issued by the Bank are taken as security, the deposit

receipt should be duly discharged by the beneficiaries and our lien be noted on the

receipt as well as on the respective record. The deposit receipt should be renewed

on maturity. This should be observed even in case of loans granted to staff

members.

All assets charged to the Bank, in the form of primary or collateral security

except in specified exempted categories, must be adequately insured with Bank

clause. Insurance Policy in force is kept with the documents.

Payment instruments (DD / pay order) issued in favour of supplier / builder is

delivered to them directly and not through the borrower. Acknowledgement of the

supplier/builder for having received the payment instrument/s is kept on record.

All the invoices, bills and receipts for the assets created out of bank finance should

be kept on record.

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50

All security documents are maintained and held on record with adequate care.

These is kept in a proper folder/plastic cover and kept under the custody of the

Branch Head/ Authorized Official of the branch.

Follow up for recovery:

The importance of timely repayment of principal and interest is impressed upon

the borrower. For better follow up suitable record of due dates of repayment is

maintained.

Let us we see the different loan scheme that we studied in detail. These schemes

are as follows:

Consumer Loan (Vehicle)

Personal Loan

Housing Loan

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51

VEHICLES LOAN

For purchase of a new Cars/Jeeps & 2/3 wheeler.

Eligibility: Salaried persons, permanent in service, professional/

businessman having sufficient disposal income to meet the repayment.

Person engaged in agriculture and allied activities are also to be included.

Minimum Gross Income for purchase of

4 wheelers Rs. 1.20 Lakh per annum

2/3 wheelers Rs. 0.50 Lakh per annum

Income of spouse could be included if spouse joins as co-obligant.

Income should be arrived at on the basis of I. T. Returns for the past 3 years

(average) Total deductions including proposed loan installment should not

exceed 65% of Gross Income.

Amount of loan: (90% of the cost of vehicle subject to following ceiling.)

I) For 2 wheeler - Maximum RS.1.00 lack

II) For 4 wheeler - Maximum Rs.10.00lacs

Margin: 10%

Rate of Interest:

Repayment tenor Up to 3 years: 10.75% floating

Repayment tenor above 3 years: 11.75% floating BRANCH BANKING

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Security: Hypothecation of vehicle to be purchased 1 acceptable

guarantor.

Repayment: For 2/3 wheelers - 60 months

For 4 wheelers - 84 months

Processing Fee: @ 0.30%, Minimum Rs.100/-.

Finance for Second hand Vehicles: Finance for 4 wheelers only. The

vehicles up to 4 years old. The margin will be 40% and rate of interest @

BPLR (Bench mark Prime Lending Rate).

DOCUMENTS REQUIRED FOR VEHICLE LOAN PROPOSAL:

1. Quotation from showroom.

2. Receipt of cash payment (If any).

3. Charge "Hypothecation" to be registered with RTO.

4. Xerox copy of Insurance policy.

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53

Note for Vehicle Loan Scheme: (Example)

Date of application 5th July 2008

Name of the applicant XYZAge 30 yearsOccupation ServiceAmount applied for Rs. 30,000/-

Gross salary as per the last salary slip (G.S.)

Rs. 8,500/-

Total deductions (as per salary slip) NIL

Total deductions allowable under scheme (65% of G.S.)

Rs. 5,525/-

Maximum loan installment possible Rs. 5,525/-

Maximum loan amount permissible Rs. 1,69,000/-Cost of vehicle to be purchased Rs. 47,627/-Margin 37.01% Rs. 17,627/-

Bank finance permissible Rs. 30,000/-Security Hypothecation of vehicleName of guarantor LMNAge 28 yearsOccupation ServiceIs he borrower/guarantor in any other loan account: (if yes, details)

No

Annual income Rs. 98,540/-

Rate of interest 10.75%Repayment EMI Rs. 1,000/-First installment to be paid on/ before

Aug.08

Amount paid within 36 months i.e. July 2011

PERSONAL LOAN

54

Purpose: To meet any personal expenses.

Eligibility: Salaried persons with permanent employment,

Professional/Businessmen. Minimum income p. a. based on I. T. Returns

for past 3 years should be Rs. 1.00 lakh and net take home pay after

deduction of proposed loan installment is Rs. 0.40 lakh.

Amount of loan: Minimum Rs.5000/-, Maximum RS.200000/- In case of

salaried person 12 times net monthly salary

For others: 50 % of average annual income based on the I. T. Returns for

past three years.

For deciding the quantum of eligible loan amount, the income of spouse

should be taken into account provided spouse is taken as co-borrower.

Margin: No margin, i.e. 100% loan.

Rate of Interest: BPLR + 1.25%, i.e. @ 14.50% p.a.

Repayment: Maximum within 36 months by EMI

Processing Fee: Up to Rs.25000/- - Rs.50/-,

Above Rs.25001/- to Rs. 1.00 lakh - RS.200/-.

Above Rs. 1.00 lakh 0.25% of amount Sanctioned

Security: Clean loan to be guaranteed by 1 acceptable guarantor.

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DOCUMENTS REQUIRED FOR PERSONAL LOAN PROPOSAL:

1) Undertaking from employer to deduct monthly loan Installment from

salary is required.

2) Standing instructions from borrower to deduct Monthly loan

installment from salary account maintained with us.

3) Post dated cheque from the borrower is mandatory.

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Note for Personal Loan: (Example)

Date of application 16th June 2008

Name of the applicant ABC

Age 49 years

Occupation Service

Amount applied for Rs. 1, 00,000

Gross salary as per the last salary slip (G.S.)

Rs. 9,979/-

Total deductions (as per salary slip) Rs. 1,153/-

Other loan installments existing NIL

Total existing deduction from salary Rs. 1,153/-

Total deductions allowable under scheme

(65% of G.S.)

Rs. 6,492/-

Maximum loan installment possible Rs. 5,539/-

Maximum loan amount permissible Rs. 1,55,000/-

Permissible loan amount Rs. 1,00,000/-

Name of guarantor EFG

Age 32 years

Occupation Service

Is he borrower/guarantor in any other loan account: (if yes, details)

No

Annual income Rs. 98,400/-

Rate of interest 14.50%

Repayment EMI Rs. 3,450/-

First installment to be paid on/ before July 2008

Entire amount with interest to be paid in June 2011

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HOUSING LOAN SCHEME

HOUSING LOAN

Purpose:

Purchase of new flat and construction of house or purchase of old flat / house

including extension to existing flat / house

Maximum Amount:

85% of the (Agreement Value + Stamp Duty + Registration Charges)

Max: Rs.25.00 Lacs

Repayment :

Up to 180 installments in case of salaried employee

Up to 60 to 120 installments in case of others / businessmen

Rate of Interest :( Effective from 01-08-2008)

• 12 % (floating) in case of Loans up to Rs.20.00 lacs

• 13 % (floating) in case of Loans above Rs.30.00

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• In case Flat/House is given on rental basis 15 % (floating) rate of interest will

be charged.13.50 % (floating)in case of Loans above Rs.30.00 lacs up to

Rs.50.00 lacs

 

Sureties:

Two sureties with net income / salary of above Rs.7,000/- per month and age

below 45 years

Purchase of Flats in Building more than 15 years old :

For purchase of flat in Building which is more than 15 years old, loan will be

considered only if it is certified by the Structural Engineer that the residual life

of the building is more than 20 years and the building is in good condition.

DOCUMENTS REQUIRED FOR HOUSING LOAN PROPOSAL:

From Borrower

1. Copy of Agreement with Builder (original)

2. Search & Title Report of Advocate on Bank's Panel

3. Paper’s from Builder (As listed overleaf)

4. Search report

Papers to be obtained From the Builder

1)The Document of the Land-lord showing his ownership such as

Sale-Deed, Gift Deed, Lease- Deed, Will, Family arrangement, etc.

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2) City survey 7/12 Extract

3) Development agreement with the builder

4) Power of attorney given to the builder

5) Sanctioned building plan.

6) Commencement certificates issued by the Pune Municipal

Corporation / PCMC.

7) N. A. Order issued by the collector of Pune

8) Order under ULC Act

9) Completion certificate issued by PMC/PCMC

10) Title Opinion of the Advocate of the builder

11) No objection to mortgage the flat given by the builder

12) Zone certificate

13) Demarcation certificate

If the conveyance is made with the Housing Society, then No

objection from the said Society

15) Share certificate issued by the Society

16. If the Apartment is declared, then the certified copy of the

registered declaration of the Apartment

17) Tax receipt issued by the PMC/PCMC & MSD Co. LTD., BRANCH BANKING

60

18) N.A. receipt showing no dues

19) Agreement of sale of the flat executed between flat purchaser &

builder

21) Registration receipt of the aforesaid agreement

Note for Housing Loan: (Example)

Date of application 10th March 2008

Name of the applicant APK

Age 29 years

Occupation Service

Loan amount applied for Rs. 7,70,000/-Details of the payment made & to be madeTotal price as per agreement Rs. 15,00,000/-

Amount paid as per the agreement/ receipt Rs. 5,00,000/-

Balanced to paid Rs. 10,00,000/-

Terms of payment of the balance Before 10/4/2008

Scheduled date of possession Immediate

Cost of the purchase

Price as per agreement:Registration/ stamp expenses:Legal Mortgage expenses:

Rs. 15,00,000/-Rs. 75,000/-Rs. 25,000/-

Total cost of the purchase: Rs. 16,00,000/-

Means of financing

Loan amount applied for:Own contribution:

Rs. 7,70,000/-Rs. 8,30,000/-

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Source of own contribution Savings from salary

Details of the salary income

Gross salary as per the last salary slip (G.S.)

Rs 15,500/-

Total deductions (Present) Rs. 860/-Other loan installments existing NIL

Total deductions allowable under scheme (65% of G.S.)

Rs. 10,075/-

Maximum allowable loan installment per month

Rs. 9,215/-

Maximum loan available Rs. 9,07,000/-Eligible amount of loan i.e. lesser amount of the three below:

Rs. 7,70,000/-

a) 75% of cost Rs. 12,00,000/-

b) 50 times of G.S. Rs. 7,75,000/-c) Eligibility as per deductions Rs. 9,07,000/-

Repayment:Rate of interest 10.75%Loan amount Rs. 7,70,000/-Interest during moratorium NILTotal amount to be repaid Rs. 7,70,000/-

Period of repayment (months) 240 monthsEMI per month Rs. 7,850/-Date of first installment April 2008Security Registered mortgage of

the flat to be purchased

Personal guarantor name SRPAge 35 yearsOccupation ServiceAnnual income Rs. 1,92,000/-

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BRANCH BANKING

Chapter VI

FINDINGS

Chapter VI

FINDINGS

63

FINDINGS

The bank provides huge amount of loans to every section of the

society. From the above graphs we find that the advances of the bank vary

from March 2008 to June 2008.

In June 2008, the personal loan increased by 0.13%, the education

loan increased by 0.18% and the housing loan increased by 0.13%. While

the vehicle loan decreased by 0.31% because some accounts of vehicle

loan was closed. Due to this the other advances was decreased by 0.14%.

There is more demand for the saving and the current account in the bank

because, the area where the bank is situated there are more number of small scale

business are operating so there are number of cash transaction and the deposit

transaction operating in the bank. The data give that on every day around 150

cheques are sending for clearing house. But due small scale operation bank has

advantage of mouth to mouth advertising.

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BRANCH BANKING

Chapter VII

CONCLUSION & SUGGESTIONS

65

CONCLUSION

We studied different deposit schemes and loan schemes in the

bank. For taking the loan the customer should have to complete all the

legal procedure of the bank. He was to submit all the necessary

documents mentioned by the bank. Then the bank prepares proposal

note. If the customer is applicable then only the loan is sanctioned by the

bank.

SUGGESTIONS

1) Display the instructions & require documents for loan along with

application file.

2) Reduce the time of Loan Sanction procedure.

3) The bank needs to create awareness, as people are unaware about

the schemes of advances available in the bank.

4) As I observe that staff is not Communicate with customer politely.

5) Keep the Suggestion box for customer’s feedback.

6) Try to work as quickly as possible.

7) Keep all required counter document along with the respective table.

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BRANCH BANKING

Chapter VIII

ANNEXURE

Chapter VIII

ANNEXURE

67

Questionnaires

1) What is banking?

2) What are the reasons behind bank nationalization?

3) What are the methods of granting advances?

4) What is loan?

5) What are the loan schemes available in bank?

6) What are the criteria uses by bank to select customers for loan?

7) What are the interest rates of different loan schemes?

8) What is the process of loan sanctioning?

9) How to calculate Equated Monthly Installments (EMI)?

10) How savings account is beneficial to bank?

11) How the interest will charged at the end of the month?

12) What are the rate interests of deposit scheme?

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BRANCH BANKING

Chapter IX

BIBLIOGRAPHY

Chapter IX

BIBLIOGRAPHY

69

BIBLIOGRAPHY

1) Principles and Practice of Bank Management

By P. Subba Rao

2) Banking Theory and Practice Nineteenth Edition

By K. C. Shekhar, Lekshmy Shekhar

3) Hand Book of Vaishya Bank

4) Annual Report 2007-08 of Vaishya Bank

5) Balance sheet of Vaishya Bank

70