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Performance Of Loans And Advances Of Vijaya Bank

Chapter overview scheme


Chapter-I Introduction Scope of study objective Research design Limitations Chapter-II Industry profile Company profile Chapter-III Theoretical background Chapter-IV Data Analysis and interpretation Chapter-V Findings, recommendations and conclusions Anexture Questionnaire Bibliography

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Performance Of Loans And Advances Of Vijaya Bank

Chapter-I
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Introduction scope of study objective Research design limitations

G.H.N College of Commerce, Gangavathi

Performance Of Loans And Advances Of Vijaya Bank

Introduction
In an organization there will be a normal of activities carried on like production, Marketing, planning, financier etc., among all these finances plays a major role, which made to study on this. Finance came to studied as a part of Economics before the turn of the present category formation of large sized undertakings by consolidating the smaller ones brought before the Managements the problem of financing to these enterprises. The study of potentiality of different securities as a source of procuring funds from outside world & the role & function of institutional agencies continue to be emphasized during 1921. The problem of financing ensured a new dimension in the II world war. In 1940s financial wizards continued to be concern with the necessity for choosing sells a financial structure as would be able to with stand stress & strains of the part war adjustments. In 1960s & 70s period was marked by a very faithful & exciting Era for a nor of alternative developments. The financial manager started thinking on such important issues. prices, business sale & etc. The dimension of Business financial that was earlier limited to period but in recent years broadened according to- day-to-day operations. As aggregate stock

G.H.N College of Commerce, Gangavathi

Performance Of Loans And Advances Of Vijaya Bank Finance is regarded as lifeblood of an Enterprise. This is because in the modern money oriented of all Economy finance is one of the basic foundations of all kinds of economic activities. master key. employed in manufacturing activities. It is the Which provides accedes to all sources for being

Statement of the problem:


In the present scenario, the banks are playing an important role in the Economic development of our country as they helps in encouraging the people by providing Loan/Advances. Operation and expansion of business and commercial activities depend a great deal on the availability of loans/advances from commercial banks .These Loan/Advances are attracted in the banks for further productive investment. introduced many For the purpose of this the bank has schemes according to the Loan/Advances

convenience of people based on the different categories. So, it is felt very much essential to make a study on these Loan/Advances schemes that how it influences on the development of Economy & what are the conditions & terms that are to be fulfilled to make the Loan/Advances under various schemes.

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Performance Of Loans And Advances Of Vijaya Bank

Objectives of the study:


1. To ascertain the problem faced by bank by Public regarding loans & advances. 2. To know the different schemes of Loan/Advances provided by Vijaya bank. 3. To know the methodology used by bank to Mobilize Loan/Advances from public. 4. To suggest ways & means of developing the Loan/Advances schemes. 6. To know the interest rate & other facilities provided by bank to Loan/Advances holders. 7. To study & know the financial problem of Bank.

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Performance Of Loans And Advances Of Vijaya Bank

Scope of the study:


In todays world, banking services plays an important role in every lives of individuals. The technological advancements in the banking sector have grown rapidly in the last years. This has led to the birth of new generation banks & competition. The study basically focuses towards the observation of the operations & performance of Vijaya Bank regarding Loan/Advances. The study with in its scope has tried to find out the new trends promoted by the Vijaya Bank regarding Loan/Advances. This study attempts at understanding how Vijaya Bank functions in its changing scenario & how each department at the head office contributes to the success. From the management point of view the study helps them to know whether they are successful with their operations & as management student this study helps in getting birds eye view of latest development & upcoming changes in banking sector.

G.H.N College of Commerce, Gangavathi

Performance Of Loans And Advances Of Vijaya Bank

Methodology:
Personal interview was adopted for collecting data from Vijaya Bank regarding Loan/Advances schemes for collecting primary data and secondary data is collected through the following 1. 2. Financial Books Annual reports

Tools & the techniques of data: Analysis & interpretation of data in based on both primary & secondary data. Primary data: Primary data are the first hand information collected, through various methods such as observation, interviews. Secondary data: & official website. Secondary data are obtained from text books,

magazines, news paper & Annual reports & Broachers of the bank

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Performance Of Loans And Advances Of Vijaya Bank

Limitation of study:
Every efforts has been made to make study complete & has exhaustive as possible, however the study is not free from certain limitations. Sometimes respondents dislikes to discuses regarding data collection. Time limit for the study The study is only confined to Vijaya Bank & the performance of other banking company is not compared with it. The collected information is limited & factual to some extent since some information is confidential & Bank opposed to dispose it. The Exhaustive study has not been made on Vijaya Bank & is limited to the partial fulfillment for the degree of B.B.M. Collection of data & study was based purely on observation of the operation of Vijaya Bank constraint.

G.H.N College of Commerce, Gangavathi

Performance Of Loans And Advances Of Vijaya Bank

Chapter II
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Industry Profile Company profile

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Performance Of Loans And Advances Of Vijaya Bank

Industry Profile
Banking in India has a long and elaborate history of more than 200 years. The beginning of this industry can be traced back to 1786, when the countrys first bank, Bank of Bengal, was established. But the industry changed rapidly and drastically, after the nationalization of banks in 1969. As a result, the public sector banks began experiencing numerous positive changes and enormous growth. Then came the much-talked-about liberalization and economic reforms that allowed banks to explore new business opportunities and not just remain constrained to generating revenues from mere borrowing and lending. This provided the Indian banking scenario a remarkable facelift that only continues to get better with time. However, even today, despite the foray of foreign banks in the country, nationalized banks continue to be biggest lenders in the country. This is primarily due to the size of the banks and the penetration of the networks. Savings banks and savings and loan associations, sometimes called thrift institutions, are the second largest group of depository institutions. They were first established as community-based institutions to finance mortgages for people to buy homes and still cater mostly to the savings and lending needs of individuals. Credit unions are another kind of depository institution. Most credit unions are formed by people with a common bond, such as those who work for the same company or belong to the same labor union or church. Members pool their savings and, when they need money, they may borrow from the credit union, often at a lower interest rate than that demanded by other financial institutions. Federal Reserve banks are Government agencies that perform many financial services for the Government. Their chief responsibilities are to regulate the banking industry and to help implement our Nations monetary policy so our economy can run more efficiently by controlling the Nations money supply

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the total quantity of money in the country, including cash and bank deposits. For example, during slower periods of economic activity, the Federal Reserve may purchase government securities from commercial banks, giving them more money to lend, thus expanding the economy. Federal Reserve banks also perform a variety of services for other banks. For example, they may make emergency loans to banks that are short of cash, and clear checks that are drawn and paid out by different banks. Interest on loans is the principal source of revenue for most banks, making their various lending departments critical to their success. The commercial lending department loans money to companies to start or expand a business or to purchase inventory and capital equipment. The consumer lending department handles student loans, credit cards, and loans for home improvements, debt consolidation, and automobile purchases. Finally, the mortgage lending department loans money to individuals and businesses to purchase real estate. The money to lend comes primarily from deposits in checking and savings accounts, certificates of deposit, money market accounts, and other deposit accounts that consumers and businesses set up with the bank. These deposits often earn interest for the owner, and accounts that offer checking provide an easy method for making payments safely without using cash. Deposits in many banks are insured by the Federal Deposit Insurance Corporation, which ensures that depositors will get their money back, up to a stated limit, if a bank should fail.

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Performance of Industry 84 percent of the survey respondents described the performance of the banking Industry as Very Good in the fiscal 2004-05. newly granted autonomy would certainly make the PSBs more competitive and Profitable, said 88 per cent respondents, though some more changes considered Desirable (refer survey) 48 percent of overall respondents and 67 percent of private bank respondents expressed the need to relax the prescribed limit of single ownership and cross holding cap in the Ownership and Governance guidelines for Private sector Banks.

Although 72 percent of public & private sector bank respondents expressed their satisfaction with the recently devised road map for the foreign banks, majority of foreign Bank respondents (75 percent) expressed complete dissatisfaction with this Roadmap.

75 percent of the foreign bank respondents expressed that time frame prescribed to expand through Merger & Acquisitions should have been less and equal number voiced that the guidelines are not in line with international norms.

Consolidation in the banking industry followed by Technological up gradation was considered as key factors currently required to enhance the international Competitiveness of the Indian banks.

Free trade agreements (FTA) considered a positive step in the area of banking by almost all respondents. The available market size and the level of access provided to Survey on Status of Indian banking Industry Progress & Agenda ahead 2 Indian banks in foreign countries should be

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the key factors in consideration, while entering into such agreements, as highlighted by 76 percent of banks Rise in the interest rates imminent say 64 percent survey respondents. Majority expects increase by 0.5 percent. 88 percent of Public and private sector banks considered HRD related issues as one of the biggest challenge in the process of consolidation. 83 percent respondent banks claim to have more than 85% level of technological advancements in their banks with remaining banks stating it to be around 65-85%. All our respondents emphasized that customer retention is significantly important for the profitability of the banks.

More than 70 percent of banks felt the need of advanced security softwares and stricter security policies to safeguard and ensure the security of customer information. Some of the legal changes suggested are detailed in the survey.

53 percent of respondent banks considered 6 months transition period to shift from MIFOR rupee benchmarks for interest rate derivatives to be inadequate.

Majority of banks felt that their Risk management framework for implementation of BASEL II was well in place.

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COMPANY PROFILE History


Vijaya Bank, a medium sized bank with presence across India was founded on 23rd October 1931 by the late Shri A.B.Shetty and other enterprising farmers in Mangalore, Vijaya in India. The objective of the founders was essentially to promote banking habits, thrift and entrepreneurship among the farming community of Dakshina Kannada district in Vijaya State. The bank became a scheduled bank in 1958. Vijaya Bank steadily grew into a large All India bank, with nine smaller banks merging with it during the 1963-68. The credit for this merger as well as growth goes to late Shri M.Sunder Ram Shetty, who was then the Chief Executive of the bank. The bank was nationalised on 15 April 1980. Growth and Nationalisation Vijaya Bank grew steadily by merging nine smaller banks into it between 196368. Shri M.Sunder Ram Shetty, who was then the Chief Executive of the bank, is largely credited with these mergers. The bank was nationalised on 15 April 1980. Branches The bank has built a network of 1158 branches,45 Extension Counters and 382 ATMs as at 03.01.2010, that span all 28 states and 4 union territories in the country. Area of Corporation After obtaining the certificate of corporation and certificate of Commencement and getting the draft of the memorandum of association and articles of association approved, Vijaya bank Ltd. started functioning as per the provision of Indian companies act in a small bungalow with a tiled roof (Mangalore tiles) on Kadri road in Mangalore.

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Background and inception of the company


Type Founded Headquarters Key people Industry Employees Website : : : : : : : Public BSE: 532401 1931 at Mangalore, India. Bangalore, India Albert Tauro, Chairman & Managing Director Financial Commercial banks 12,107 http://www.vijayabank.com/

Nature Of Business Carried:


Banking is a business but it differs from other business in many respects. This business runs purely on the confidence of the members of the general public called the depositors who entrust their savings solely out of their confidence and trust that they will get back their money with interest whenever they need. So long as there is confidence on the bank in this way, the deposits will come to the bank. Similarly in case of loan. While giving, the bank reposes full trust and confidence on the Borrower that he will repay the same with interest. There could be security documents undertaking to repay anytime on demand by the bank and collateral securities for any eventuality. But the documents and securities are only collateral and secondary and the main consideration is only the confidence. Thus in both the cases of deposits and advances, confidence pays a vital role.

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Vision, Mission & Quality of The Company Vision:


To provide the most useful and ethical Investment Solutions - guided by values driven approach to growth, client service and employee development.

Mission:
To create long term value by empowering individual investors through superior financial services supported by culture based on highest level of teamwork, efficiency and integrity.

Quality Policy:
IMAGE is committed to enhance knowledge, competencies & professional skills of individuals enabling conversion of training outputs into business opportunities for achieving organizational growth & excellence. IMAGE strives for developing innovative training programs &

methodologies, for higher involvement of personnel to effectively achieve the dynamic business needs. IMAGE motivates & trains all levels of personnel for continual improvement of the quality management system. In order to achieve the above policy, IMAGE works on the following quality objectives.

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Performance Of Loans And Advances Of Vijaya Bank


QUALITY OBJECTIVES: Impart training to develop knowledge, sharpen professional skills & reorient attitudes of individuals for performance excellence. Develop innovative training programs & methodologies to achieve dynamic business needs. Continuing endeavour & involve all its personal for implementing the quality management system with commitment towards continual improvement.

Products/Service Profile
Products Savings Account Current Account Salary Account RD Account Education Loan Home Loan Agriculture Loan Jewel Loan Loans to Micro Entrepreneurs Vehicle Loan

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Loans & Advances Retail Lending Schemes Loans Against Securities Non Fund Based Facilities Advances to Agriculture, SSIs and Others Government Sponsored Schemes Special Schemes for Women

NRI Services Deposits Loans Remittances FOREX Branches FCNR(B) Branches Helpline for NRIs

Remittance Collection and Facilities FOREX Remittances Inland Remittances Electronic Remittance Services Inward / Outward Collection Instruments

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Credit Cards Forex FOREX market Information Card Rates Treasury Domestic Cards Global cards Debit cards

Other Services Merchant Banking Vijaya Rakshak V-Arogya Bima Policy Credit Cards Mutual Funds Leasing Hiring Purchases

AREA OF OPERATION: The operation of Vijaya Bank is nationally.

OWNERSHIP PATTERN The Vijaya Bank is owned by government as well as public sector.

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Ownership Pattern:
Ownership Pattern/Shareholder Pattern
The share holding pattern in Vijaya Bank Ltd is as given below in the form of table
Dmat No of Shareholders Percentage No of shares

Promoter Foreign Promoter Indian Promoter Total Promoter Non Promoter Institutions Mutual Funds / UTI FI/Bank Insurance Govt FII Other Non-Institution Bodies Corporate NRIs/OCBs Individuals Others Total Non-Institution Total Non Promoter Depository Receipts Total

0 0 233,517,8001 233,517,8001

0.00 53.87 53.87

0 233,517,800 233,517,800

7,536,167 4,864,151 24,514,928 19,760,268 37,542,895 0

14 20 5 9 69 0

1.74 1.12 5.65 4.56 8.66 0.00 3.26 0.62 19.76 0.00 24.40 46.13 0.00 100.00

7,536,167 4,864,651 24,514,928 19,760,268 37,542,895 0 14,115,017 2,668,569 85,652,275 0 105,781,091 200,000,000 0 433,517,800

12,672,717 1,800 2,198,569 2,311 60,379,605 271,095 0 0 78,596,121 276,711 172,814,530276,828 0 0 406,332,330276,829

Competitors of Vijaya bank


Canara Bank. Corporation Bank. ICICI Bank Ltd. Indian Bank. Indus Ind Bank Ltd. Karnataka Bank. ING Vysya Bank Ltd. Syndicate Bank. State Bank of India.

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Infrastructural Facilities:
As regards to the infrastructural facilities provided in Vijay Bank Offices

The Head office of Vijaya Bank has a central air condition system which helps the employees to escape from the heat. Canteen The Bank provides canteen facility to all its employees and it

is situated inside the Bank premises. System The Bank is one of the few banks in the country which uses

Finical Software which in turn helps the bank to serve its customers more efficiently. The Bank also provides internet facility to its employees

Achievement/Awards:
In recognition of performance in implementing Hindi Language, the Bank was awarded III prize under the prestigious INDIRA GANDHI RAJBHASHA PURASKAR for the year 2007-08. The Bank has also been awarded II prize in Region 'C" for Progressive Use of Hindi under Reserve Bank Rajbhasha Shield Scheme for the year 2011-12. The Bank was awarded I prize by Regional Implementation Office (North- East), Ministry of Home, Govt of India in North Eastern Region for Progressive Use of Hindi for the year2011-12. SLBC Gujarat also conferred on the Bank III prize for effective implementation of the Official Language.

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The Bank's Regional Office, Bangalore (North) was awarded I Prize by TO LIC, Bangalore for effective Implementation of Official Language for the year 201112. Also Regional Offices, Kolkata and Hubli, were awarded II Prize by TO LIC, Kolkata and Hubli respectively for effective Implementation of Official Language. Regional Office, Ahmadabad has been awarded Consolation prize by TO LIC, Ahmadabad during the year. The staff members working in Bangalore city participated in the Inter-Bank competitions conducted under the aegis of TO LIC. 12 competitions were conducted, in which our Bank bagged 9 prizes, out which 2 were First prizes. During the year, the Bank received an award from the NABARD in recognition of the highest share of SHG business to its overall business, under SHG Bank linkage programme for the year 2011-12, among commercial Banks in the State of Karnataka.

FUTURE GROWTH & PROSPECTS


We expect an overall growth rate of 18-20 per cent in business (assets/deposits), which is healthy and good. NIM should be more than three per cent in this calendar year. On the NPA front, the gross NPA should be contained within two per- cent. As far as the NPA accretion is concerned, that should be not more than 1-1.5 per cent from the present level of three per cent. The bank is planning to enable Internet Banking as a payment gateway for shopping that covers at areas of business like Hotel Booking, Ticket Booking, Purchase of goods etc. The Bank is also planning to introduce mobile Top-up through ATMs and internet Banking. Further Bank is also planning to tie up for online trading in shares.

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The Vijaya Bank goes for the following values Customer Satisfaction Quick and better Service Loyal to the Customers Honest in work

SWOT ANALYSIS
A SWOT analysis focuses on the internal and external environments,

examining strengths and weaknesses in the internal environment and opportunities and threats in the external environment.

STRENGTHS
Ability to lead with the customer. It has value in the market. Strong relationship with customer. Best value of money Proactiveness Low NPA Value

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Performance Of Loans And Advances Of Vijaya Bank WEAKNESS


Hierarchical management structure Employee attitude towards work. Employee average age is high.

OPPORTUNITIES
Increasing Network penetration. Can take new Initiatives to make itself from other banks More than 60% of the market is untapped in India. Building Relationship with clients Unfulfilled customer needs India is experiencing in rapid growth in its insurance industry

THREATS
Market may not accept new products Increased competition from other insurance vendors Competition from Canara bank, Indian Bank.

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ANALYSIS OF FINANCIAL STATEMENT


Mar 2012 Rs. Cr Mar 2011 Rs. Cr Mar 2010 Rs. Cr

Particulars

Banks - Public Sector Net Interest Income / Total funds Non Interest Income / Total Funds Total Income / Capital Employed (%) Interest Expended / Capital Employed (%) Operating Expense / Total Income Interest Income / Total Funds Interest Expended / Total Funds Operating Expense / Total Funds Profit Before Provisions / Total Funds Net Profit / Total Funds Interest Expended /Interest Earned Other Income / Total Income Credit Deposit Ratio Investment Deposit Ratio Cash Deposit Ratio Advances / Loan Funds (%)

2.20 1.35 0.00 0.00 17.69 7.88 5.69 1.63 1.91 0.77 0.00 14.62 66.10 33.05 8.44 0.00

1.91 1.29 0.00 0.00 15.57 8.89 6.98 1.59 1.62 0.45 0.00 12.72 65.53 33.18 11.12 0.00

1.69 1.10 0.00 0.00 15.93 7.92 6.23 1.44 1.36 0.74 0.00 12.23 65.35 33.47 10.59 0.00

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PROFIT & LOSS ACCOUNT


Mar 2012 I. INCOME : Interest Earned Other Income TOTAL II. EXPENDITURE : Interest expended Operating Expenses Provisions & Contingencies TOTAL III. PROFIT/LOSS Net Profit for the year Prior Year Adjustments Profit brought forward TOTAL IV. APPROPRIATIONS Transfer to Statutory Reserves Transfer to Other Reserves Proposed Dividend / Transfer to Government Balance c/f to Balance Sheet TOTAL Equity Dividend Corporate Dividend Tax Equity Dividend (%) Earning Per Share (Rs.) Book Value 5,200.65 890.58 6,091.23 3,751.57 1,077.66 754.70 5,583.93 507.30 0.00 750.47 1,257.77 Mar 2011 5,237.83 763.27 6,001.10 4,113.03 934.55 691.04 5,738.62 262.48 0.00 750.69 1,013.17 Mar 2010 3,888.54 542.08 4,430.62 3,058.42 705.95 304.97 4,069.34 361.28 -4.76 610.89 967.41

126.82 115.28 161.90 853.77 1,257.77 108.38 18.42 25.00 10.47 61.44

65.62 146.27 50.81 750.47 1,013.17 43.36 7.36 10.00 5.88 53.47

90.32 24.96 101.44 750.69 967.41 86.70 14.74 20.00 7.99 48.59

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Performance Of Loans And Advances Of Vijaya Bank Result of Financial analysis


PROFITABLITY- Though being a season of recession this year the company has ended up with a net profit ratio of 5.7 which is nearly half to the last years ratio. It could be considered fair till than but if see the balance sheet there has been a considerable increase in the fixed assets to 10010.79 from 1861.77 which means that there should be increase in the number of buildings and branches that should lead to more number of branches and more number of accounts but besides this there are no signs of improvements in profit so the profitability of Vijaya bank could be rated FAIR. RETURNS-Share capital and reserves have increased in this year considerably this shows a good sign of market value and after considering environmental conditions we can also see that the profit earned after tax this year was lesser than of the previous year so the returns can be rated as GOOD. LEAVERAGE- The leverage ratio can be considered doing well as much down fall is not observed and so it can be considered or rated VERY GOOD. The banks market value is seem to be increasing and though the returns are less but the expenses have also fallen to a large extent so Vijaya bank can be rated overall as VERY GOOD

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Chapter III
Theoretical Background

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THEORETICAL BACKGROUND
BANK MEANING; A bank is a financial institution and a financial intermediary that

accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank is the connection between customers that have capital deficits and customers with capital surpluses. .
Objectives: enlist the utility of granting loans and advances by commercial banks; differentiate borrowing rates from lending rates; enumerate the ways of lending money; distinguish between long-term and short-term loans; point out the nature of security provided for loans; and outline the procedure for grant of cash credit, overdraft and Discounting of bills of exchange.

Meaning of Loans and Advances The term loan refers to the amount borrowed by one person from another. The amount is in the nature of loan and refers to the sum paid to the borrower. Thus, from the view point of borrower, it is borrowing and from the view point of bank, it is lending. Loan may be regarded as credit granted where the money is disbursed and its recovery is made on a later date. It is a debt for the borrower. While granting loans, credit is given for a definite purpose and for a predetermined period. Interest is charged on the loan at agreed rate and intervals of payment. Advance on the other hand, is a credit facility granted by the bank. Banks grant advances largely for short-term

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purposes, such as purchase of goods traded in and meeting other short-term trading liabilities. There is a sense of debt in loan, whereas an advance is a facility being availed of by the borrower. However, like loans, advances are also to be repaid. Thus a credit facility- repayable in installments over a period is termed as loan while a credit facility repayable within one year may be known as advances. However, these two terms are used interchangeably. Utility of Loans and Advances Loans and advances granted by commercial banks are highly beneficial to individuals, firms, companies and industrial concerns. The growth and diversification of business activities are effected to a large extent through bank financing. Loans and advances granted by banks help in meeting short-term and long term financial needs of business enterprises. We can discuss the role played by banks in the business world by way of loans and advances as follows : Loans and advances can be arranged from banks in keeping with the flexibility in business operations. Traders, may borrow money for day to day financial needs availing of the facility of cash credit, bank overdraft and discounting of bills. The amount raised as loan may be repaid within a short period to suit the convenience of the borrower. Thus business may be run efficiently with borrowed funds from banks for financing its working capital requirements. Loans and advances are utilized for making payment of current liabilities, wage and salaries of employees, and also the tax liability of business. 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 money lenders, the rate of interest charged is very high. The interest charged by commercial banks is regulated by the Reserve Bank of India.

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Banks generally do not interfere with the use, management and Control of the borrowed money. But it takes care to ensure that the money lent is used only for business purposes. 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 activities would have come to a halt. Loans and advances by banks generally carry element of secrecy with it. Banks are duly-bound to maintain secrecy of their transactions with the customers. This enhances peoples faith in the banking system. Borrowing Rate and Lending Rate People make their funds available to the banks by depositing their savings in various types of accounts. In other words, bank funds mainly consist of deposits from the public, though banks may also borrow money from other institutions and the Reserve Bank of India. Banks, thus mobilises funds through its deposits. On public deposits the banks pay interest at and the rate of interest vary according to the type of deposit. The borrowing rate refers to the rate of interest paid by a bank on its deposits. The rates which the banks allow depend upon the nature of deposit account and the period for which the deposit is made with the bank. No interest is generally paid on current account deposits. The rate is relatively lower on savings account deposits. Higher rates ranging from 6% to 12% per annum are paid on fixed deposit accounts according to the period of deposit. Banks also borrow from other institutions as well as from the Reserve Bank of India. When the Reserve Bank of India lends money to commercial banks, the rate of interest it charges for lending is known as Bank Rate. The rate at which commercial banks make funds available to people is known as Lending-rate. The lending rates also vary depending upon the nature of

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loans and advances. The rates also vary according to the purpose in view. For example if the loan is sanctioned for the purpose of activities for the development of backward areas, the rate of interest is relatively lower as against loans and advances for commercial/business purposes. Similarly for smaller amounts of loan the rate of interest is higher as compared to larger amounts. Again lending rates for consumer durables, e.g. loans for purchase of two-wheelers, cars, refrigerators, etc. are relatively higher than for commercial borrowings. However, the Reserve Bank of India from time to time announces changes in the interest-rate structure to regulate the lending of funds by banks. Different rates of interest are prescribed for various categories of advances, such as advances to agriculture, small scale industries, road transport, etc. Graded rates of interest are prescribed for backward areas. Lower rate is normally charged from agencies selling food-grains at fixed price through Govt. approved outlets. Lastly, lower rate of interest is charged for loans granted to persons belonging to weaker sections of the society.

Lending of Money
You have noted in the earlier that commercial banks lend money in four different ways: (a) direct loans, (b) cash credit, (c) overdraft, and (d) discounting of bills. These are briefly discussed below: (I) Loans Loan is the amount borrowed from bank. The nature of borrowing is that the money is disbursed and recovery is made in installments. While lending money by way of loan, credit is given for a definite purpose and for a pre-determined period. Depending upon the purpose and period of loan, each bank has its own procedure for granting loan. However the bank is at liberty to grant the loan requested or refuse it depending upon its own cash position and lending policy.

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There are two types of loan available from banks: Demand loan, and Term loan

A Demand Loan is a loan which is repayable on demand by the bank. In other words, it is repayable at short-notice. The entire amount of demand loan is disbursed at one time and the 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 in suitable installments. Such loans are normally granted by banks against security. The security may include materials or goods in stock, shares of companies or any other asset. Demand loans are raised normally for working capital purposes, like purchase of raw materials, making payment of short-term liabilities.

Term Loans : Medium and long term loans are called term loans. Term loans are granted for more than a year and repayment of such loans is spread over a longer period. The repayment is generally made in suitable instalments of a fixed amount. Term loan is required for the purpose of starting a new business activity, renovation, modernization, expansion/extension of existing units, purchase of plant and machinery, purchase of land for setting up of a factory, construction of factory building or purchase of other immovable assets. These loans are generally secured against the mortgage of land, plant and machinery, building and the like.

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II Cash credit Cash credit is a flexible system of lending under which the borrower has the option to withdraw the funds as and when required and to the extent of his needs. Under this arrangement the banker specifies a limit of loan for the customer (known as cash credit limit) up to which the customer is allowed to draw. The cash credit limit is based on the borrowers need and as agreed with the bank. Against the limit of cash credit, the borrower is permitted to withdraw as and when he needs money subject to the limit sanctioned. It is normally sanctioned for a period of one year and secured by the security of some tangible assets or personal guarantee. If the account is running satisfactorily, the limit of cash credit may be renewed by the bank at the end of year. The interest is calculated and charged to the customers account. Cash credit, is one of the types of bank lending against security by way of pledge or /hypothecation of goods. Pledge means bailment of goods as security for payment of debt. Its primary purpose is to put the goods pledged in the possession of the lender. It ensures recovery of loan in case of failure of the borrower to repay the borrowed amount. In Hypothecation, goods remain in the possession of the borrower, who finds himself under the agreement to give possession of goods to the banker whenever the banker requires him to do so. So hypothecation is a device to create a charge over the asset under circumstances in which transfer of possession is either inconvenient or impracticable. III Overdraft Overdraft facility is more or less similar to cash credit facility. Overdraft facility is the result of an agreement with the bank by which a current account holder is allowed to draw over and above the credit balance in his/her account. It is a short-period facility.

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This facility is made available to current account holders who operate their account through cheques. The customer is permitted to withdraw the amount of overdraft allowed as and when he/she needs it and to repay it through deposits in the account as and when it is convenient to him/her. Overdraft facility is generally granted by a bank on the basis of a written request by the customer. Sometimes the bank also insists on either a promissory note from the borrower or personal security of the borrower to ensure safety of amount withdrawn by the customer. The interest rate on overdraft is higher than is charged on loan. The following are some of the benefits of cash credits and overdraft : Cash credit and overdraft allow flexibility of borrowing, which depends upon the need of the borrower. There is no necessity of providing security and documentation again and again for borrowing funds. This mode of borrowing is simple and elastic and meets the short term financial needs of the business.

IV Discounting of Bills Apart from sanctioning loans and advances, discounting of bills of exchange by bank is another way of making funds available to the customers. Bills of exchange are negotiable instruments which enable debtors to discharge their obligations to the creditors. Such Bills of exchange arise out of commercial transactions both in inland trade and foreign trade. When the seller of goods has to realize his dues from the buyer at a distinct place immediately or after the lapse of the agreed period of time, the bill of exchange facilitates this task with the help of the banking institution. Banks invest a good percentage of their funds in discounting bills of exchange. These bills may be payable on demand or after a stated period.

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In discounting a bill, the bank pays the amount to the customer in advance, i.e. before the due date. For this purpose, the bank charges discount on the bill at a specified rate. The bill so discounted, is retained by the bank till its due date and is presented to the drawee on the date of maturity. In case the bill is dishonored on due date the amount due on bill together with interest and other charges is debited by the bank to the customers account. Long-term and Short-term Loans Commercial banks grant loans for different periods-long, short and medium term for different purposes. Short-term loans Short term loans are granted by banks to meet the working capital needs of business. The working 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 to be repaid within a short period of time not exceeding 15 months. Short term loans are normally granted against the security of tangible assets like goods in stock, shares, debentures, etc. The rate of interest charged on short term loans ranges from 12% to 18% p.a. Term Loans Medium and long term loans are generally known as term loans. These loans are granted for more than 15 months. In case of medium term loan, the period ranges from 15 months to less than 5 years. Medium term loans are generally granted for heavy repairs, expansion of existing units, modernization/renovation etc.

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Such loans are sanctioned against the security of immovable assets. 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 avoid granting 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 a bank is the capacity of borrowers to repay the amount of loan; The bank therefore, relies primarily on the character, capacity and financial soundness of the borrower. But the bank can hardly afford to take any risk in this regard and hence it also has the security of tangible assets owned by the borrower. In case the borrower fails to repay the loan, the bank can recover the amount by attaching the assets. It can sell the assets offered as security and realize the amount. Thus from the view point of security of loans, we can divide the loans 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, manager or director. On the other hand, Secured loans are those which are granted against the security of tangible assets, like stock in trade and immovable property. Thus, while granting loan against the security 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 assets in case the borrower fails to repay the loan. There are various types of securities which may be offered against loans granted, but all of those are not acceptable to the banks. The types of securities generally accepted by the bank are the following:

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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 estates (Land, building, etc). Fixed Deposit Receipt (FDR) Gold ornaments, Jewellery etc.

Procedure of granting Cash Credit, Overdraft and Discounting Bills We have studied in this lesson that banks provide financial assistance to its customers in the form of loans, advances, cash credit, overdraft and through the discounting of bills. 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: Filling up of loan application form Each bank has separate loan application forms for different categories of borrowers. When you want to borrow money from a bank, you will have to fill up a loan application form available with the bank free of cost. The loan application form contains different columns to be filled by the applicant. It includes all information required about the borrower, purpose of loan, nature of facility (cash-credit, overdraft etc) required, period of repayment, nature of security offered, and the financial status of the borrower. A running business limit may be required to furnish additional information in respect of: assets and liabilities profit and loss for the last 2 to 3 years. The names and addresses of three persons (which may include borrowers, suppliers, customers and bankers) for reference purposes.

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Submission of form along with relevant documents The loan application form duly filled in should be submitted to the bank along with the relevant documents. Sanctioning of loan The bank scrutinizes the documents submitted and determines the credit worthiness of the applicant. If it is found to be feasible, the loan is sanctioned. If the loan is for Rs 5000 or less, normally the Branch Manager himself can take the decision and sanction the loan. In case the amount of loan is more than Rs 5000, the application is considered at regional, zonal or head office level, depending on the amount of loan. Executing the Agreement When the loan is sanctioned by the bank and the borrower is informed about it, he will have to execute an agreement with the bank regarding terms and condition for the amount of loan raised. Arrangement of Security for Loan

The borrower will now arrange for security against the loan. These securities may be immovable 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 of loan/advance/ over draft as sanctioned by the bank. In case of discounting of bills, the bank credits the amount of bill to the customers account before the realization of the bill and thus, makes available the fund. In case, the bill is dishonored on due date, the amount due on the bill together with interest and other charges are payable by the party whose bill is discounted.

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The main activities of a commercial bank include acceptance of deposits, that is mobilisation of funds, and lending these funds to people who require it for various purpose. On the deposits received the bank pays interest to the depositors at a specified rate. This is known as the Borrowing Rate. When the Reserve Bank of India lends money to commercial banks, the rate of interest it charges is known as Bank rate. The other important activity of a bank is that of granting loans and advances to the public. The rate of interest at which commercial banks lend money to the people is known as Lending rate. The borrowing rates and lending rates are subject to change from time to time. There are four different ways of lending money by banks; viz. (a) Direct loans; (b) Cash credits; (c) Overdraft, and (d) discounting of bills. Bank loans may also be classified into 3 categories i.e. Short-term loan, medium term loan and Long-term loan. Short-term loans are granted by banks to meet the working capital needs of business. Medium term loans and long-terms loans are generally known as Term loans. These loans are granted for more than one year for heavy repairs, expansion of units, modernisation/renovation etc. Such loans are sanctioned against the security of permanent, immovable assets. To ensure the safety of the funds lent, banks require the security of tangible assets owned by the owner, both in the case of short-term and term loans. Unsecured loans are those granted against the personal security of the borrowers. There are various types of securities which are acceptable by banks against loans and advances.

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Loans and Advances of Vijaya Bank


Retail Lending Schemes Vijaya Home Loan Vijaya Wheels V - Equip V - Rent V - Cash V- Rakshak V- Shikshak V- Swashakti Trade Finance Educational Loans Jewel Loans Loans to Transport Operators V Reverse Mortgage

Loans Against Securities Non Fund Based Facilities Advances to Agriculture, SSIs and Others Government Sponsored Schemes Prime Minister's Rozgar Yojana Swarna Jayanti Gram Swarozgar Yojana Scheme For Liberation And Rehabilitation of Scavangers Golden Jubliee Rural Housing Scheme Differential Rate of Interest Scheme

Special Schemes for Women

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Purpose The scheme covers financing For construction of a house building in the plot/site already Purchased /owned For purchase of a plot/site and a house building thereon. For purchase of a new house/flat. For purchase of old house /flat of age of 30 years and below. For Repairs, Renovation (including cost of kitchen Cabinet, racks, wardrobes, electrical/solar power fittings) of existing house of age 50 years and below (HOME IMPROVEMENT LOAN). For extending the existing house building HOME EXTENSION LOAN. Short term Bridge Finance for the interim period between sales of the existing/ old house and purchase of a new house (HOME BRIDGE LOAN) to the extent of 80% of market price of the existing house or 80% of cost of the new house to be purchased whichever is less but invariably against the Security of new house. For taking over of the existing Housing loans availed from other Banks/Other lending Companies/Agencies

V Wheels
Purpose For purchase of new two-wheeler / motorcar of any make for private use or professional or business use. For purchase of second hand / used two-wheeler / motorcar of not more

than 5 years old.

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A convenient finance scheme, the V-Equip loan can be availed to purchase consumer durables such as Computers, Refrigerators, Televisions, Air conditioners, equipments, domestic appliances, etc. Purpose For purchase of consumer durables like Refrigerator, Airconditioner, Furniture, Kitchen appliances, Vacuum cleaner, Electrical appliances, Home appliances, Solar water heater, Sound system, Television, CD/VCD Players, Personal computer, Portable generator, Electric motor etc. and Equipments required for professional and self employed persons.

V-Rakshak
Objective An honour in recognition and appreciation of the role of Defence Personnel to the nation. Purpose To meet the credit needs of the Defence Personnel (serving/retired) for purchase of consumer durable/ motor vehicles, for meeting any type of household expenses such as repairs/ renovations of the house, educational / marriage/ medical expenses/ family functions, etc/ traveling expenses in India and abroad, etc.

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V Cash Scheme
V-CASH is a very convenient scheme that one can avail of to meet short- term credit needs for individuals / working women / pensioners / Senior Citizens. Purpose For meeting unforeseen short time credit needs of the applicants / family members which includes medical expenses, marriage of applicant / family members, purchase of consumer durables, etc

V-Shikshak
Objective An honour in recognition and appreciation of the role of teachers in serving the society by imparting knowledge to the younger generations. Purpose Teachers can avail any of the following schemes under concessional rate : V-Cash Vijaya Home Loan Vijaya Wheels V-Equip

V Swashakti
Objective To expand the employment and Income Generating Schemes and Programme so as to make women Self-reliant and economically independent. Purpose Offering assistance to Women Entrepreneurs for economic pursuits in Small Business, Professional or Professional or Self Employed and Retail Trade and Credit facilities to Women Entrepreneurs (Term Loan / Working capital) for the following:

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Tailoring Canteen and Catering Pickle and Masala Making Clinics Papad Making Beauty Parlour Creche and Playschool Tuitions and Coaching Class Library Ceramics Departmental Stores Handicrafts Medical Shop Counseling Doctors / Chartered Accountants Candle Making Health Center Laundry Bakery florist Travel Agency Milk Booth

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Education Loan
Central Scheme of Interest Subsidy for Educational Loans An initiative to help students from Economically Weaker Sections One of the major concerns of the Government of India is to ensure that nobody is denied professional education because he or she is poor. Indian Banks' Association (IBA) has formulated a comprehensive model educational loan scheme for adoption by all Banks. In order to support students from Economically Weaker Sections of the Society, Department of Education, Ministry of Human Resource Development, Government of India has launched this interest subsidy scheme.

Loans against Securities


Against Govt Of India Relief Bonds Advances can be extended against the security of Govt. of India Relief Bonds issued in different series with 15% margin on the face value. Maximum amount of lending is limited to Rs.10 lakh. Loans Against Term Deposits Advances against Banks deposits are granted by way of Overdraft or Loans. Such advances should be normally made to depositors in whose names the deposits stand. Advances to third parties against Banks Deposits can be made with due sanction of the Authorities to whom powers are granted duly complying with the prescribed norms. Deposits in the name of minors can be considered only for the benefit of minor depositors and an undertaking letter to the effect that the amount of advance would be utilized for the benefit of the minor

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should be obtained from the guardian. The maximum duration may be from the date of advance to the date of maturity of the deposit. No. advance shall be made against the deposits belonging to a minor with guardian appointed by a court without court order.

No. advance shall be made against deposits of other banks. The interest rate chargeable in respect of advances shall depend upon the category of the borrower and the purpose of the advance.

Advances Against Nre And Fcnrb Deposits For guidelines on loans against the security of deposits of NRI/FCNR refer H.O.Gen.circular 8/2001, Gen. circular No.3/02. and guidelines issued by International Banking Division, H.O. Bangalore, and RBI from time to time. Advances Against Ivp/Kvp/Nsc Loans/Overdrafts can be sanctioned for productive purposes at the Banks usual rate of interest with a margin of 25% on the face value of IVP/KVP for a period not exceeding the maturity period of IVP/KVP as the case may be lodged as security. Genuineness of the Bearer securities and bonafide of the borrower shall be ensured by the Branches by observing the guidelines given in MOA-Vol-II.Item No.27-11-6. The margin prescribed at 35% in case of NSCs purchased within a period of the preceding 12 months and 25% in other cases on the face value.

Only after the concerned Post office makes an endorsement on the relative certificate to the effect that the certificate has been transferred

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as security to the Bank, the advance may be allowed.

Advances Against Shares Advances against companies debentures and approved shares may be made either as loans or as Overdraft. While considering grant of advance against shares/Debentures, Banks must follow the normal procedures for pre-sanction appraisal and post sanction follow up. Advances against primary security of shares/debentures may be given only to Individuals Stock & share brokers Trusts & endowments.

Loans & Advances against demated approved shares & debenturesMaximum Limit Rs.20 lakh.

Margin-

40%

demated

shares.

Margin 50% on physical / InfoTech shares on the lowest price as on the last Friday of the month in a recognised stock exchange or monthly average price whichever is lower.

Mortgage Loans: Housing

Loans for construction/repair/Renovation/Extension./ Loans for purchase of plot/site.

Bridge loan for housing Taking over of Housing Loan.

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No. upper ceiling (for repairs Rs.10 lakh) for construction of house/flat. Addition amount may be considered to the extent of face value of NSC/KVP/TD/S.V. of LIC Policy.

Loan up to 80% (Margin 20%) The age of the house up to 30 years. Maximum repayment is 15 to 20 years. Age of the building up to 50 years for repair. Loan amount up to 60 months salary/income.

Mortgage Loans Against Immovable Properties Immovable Property includes land, benefits to arise out of land and things attached to earth but do not include standing timber, growing crops or grass. Though the proposals of the following categories will continue to be regarded as low priority, proposals of such categories may be entertained subject to fulfilling the eligible norms stated in HOC.5/2002 and guidelines given at chapter 44 of MOA-Vol-3.

Loans to Real Estate/Property developers/Builders. Loans to construction of cinema Theatre. Loans to Community/convention/Meeting/Marriage halls. Loans to Educational Institutions. Loans for setting up Hotels, Lodges, Holiday resorts, Private clubs. Trading in Tobacco & Processing Advances to coffee curing and trading in coffee beans.

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While granting advances against immovable properties branches should obtain legal opinion and valuation report on the properties in the Banks prescribed format covering all the aspects at the stipulated intervals. Property inspection should be carried out & the inspection report in the prescribed format shall be held on record. While accepting immovable property as security and in order to prevent deposit of fake title deeds, certain precautions are to be taken as envisaged in HOC 270/99 Advances Against Gold Ornaments And Jewellery Loans against gold ornaments and Jewelleries at the rate of Rs.575/- per gram (22 carat) or up to 80% of the appraised value whichever is lower may be granted in rural and semi-urban areas, particularly at the branches, where there is not much scope for commercial business.

Jewel Loan can also be granted for agriculture purpose but the quantum of the loan should be need based and assessed on the basis of crops grown or investment proposed. Advances Against Hypothecation Of Machinery Where machines are proposed as security, the following procedure should be followed : If the plant and machinery proposed to be hypothecated are permanently embedded to the earth and the land and building in which they are so embedded are owned by the applicant but have already been mortgaged by him to someone else, such Machinery can not be taken as security and therefore Branches should not take interest in such proposals. If the land & building belongs to a person other than the applicant and has been taken on lease by the applicant, hypothecation of machinery

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installed thereon subject to proof of applicants ownership may be accepted even if it is embedded to the earth, provided a letter of no claim is received from the owner of the land. If the machinery proposed to be hypothecated is permanently fixed in the building owned by the applicant but which is not encumbered in any manner, the security of such machinery could be accepted. The machinery proposed to be hypothecated should be generally new. If the machinery is second hand, the year of purchase, residual life and the normal depreciation to be allowed should be taken into account to determine the value of security. Branch Manager should ensure that the machinery proposed to be hypothecated to the Bank is suitable for the project. After hypothecation of the machinery, it should be got insured against the risk of fire with Bank clause incorporated in the policy. Small tin plate with wordings Hypothecated to Vijaya Bank

Branch should be fixed on each item of machinery to evidence that the plant & Machinery are under hypothecation to the Bank. If the borrower is a limited company, the charge created in favour of the Bank should be got registered with Registrar of companies. The Machinery should be got valued by a competent engineer approved by the Bank. The original invoice should be got scrutinized. The market value of machinery may be taken into account for purpose of valuation after considering its life. Whenever advances are granted against Machinery/equipments, branches should ensure that the prescribed margin on the value thereof is maintained at all times. When advances are granted against motor vehicles, banks lien on such

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vehicles should be got registered with the Regional transport Authorities.

The various instructions contained in the chapter on advances against motor vehicles and industrial advances should be followed.

Loans To Real Estate Property Developers And Builders Though the proposals of Real Estate Property Developers and Builders will continue to be regarded as low priority, proposals of such categories may be entertained subject to fulfilling the eligible norms stated in HOC.5/2002 and guidelines given at chapter 44 of MOA-Vol-3.and policy guidelines issued from time to time. Loans To Construction Of Cinema Theatres Production Of Motion Pictures Though the proposals of Real Estate Property Developers and Builders and loans to construction of Cinema theatres will continue to be regarded as low priority, proposals of such categories may be entertained subject to fulfilling the eligible norms stated in HOC.5/2002 and guidelines given at chapter 44 of MOA-Vol-3.and policy guidelines issued from time to time. Hypothecation of Book Debts and Receivables While extending such facilities, the terms of contract with the drawee companies should be studied to ensure that the period of credit does not exceed 90 days generally. Though advances against book debts is now being classified as secured advances (HOC 189/2000), there is a ceiling (within the total limits) to be observed while exercising the delegated powers. In respect of advance against supply bills, irrevocable power of attorney executed by the borrower in favour of the bank should be got registered with the drawees on

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whom the bills are drawn or to whom supplies are made. Loans To Educational Institutions Though loans to Educational Institutions will continue to be regarded as low priority, proposals of such categories may be entertained subject to fulfilling the eligible norms stated in HOC.5/2002 and guidelines given at chapter 44 of MOA-Vol-3.and policy guidelines issued from time to time. Loans For Construction Of Community Convention Meeting And Marriage Halls Though loans for construction of community/Convention/Meeting and Marriage Halls will continue to be regarded as low priority, proposals of such categories may be entertained subject to fulfilling the eligible norms stated in HOC.5/2002 and guidelines given at chapter 44 of MOA-Vol-3.and policy guidelines issued from time to time. Loans And Advances For Purchase Of Estates Though the proposals for purchase of Estates will continue to be regarded as low priority, proposals of such categories may be entertained subject to fulfilling the eligible norms stated in HOC.5/2002 and guidelines given at chapter 44 of MOA-Vol-3.and policy guidelines issued from time to time.

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Advances to Agriculture, MSME and Others


Agricultural Advances - Direct Direct loans to Agriculture and allied activities include loans to individual farmers or SHGs / JLGs of Farmers for the following purposes: Short term loans for raising crops Short term loans to traditional Plantation and Horticulture. Pledge loans up to Rs. 10.00 lakhs repayable in 12 months irrespective of whether farmers have availed crop loans or not. Working capital and term loans for financing production and investment requirements for agriculture and allied activities. Loans to small and marginal farmers for purchase of land for agricultural purposes. Loans to distressed farmers indebted to Non-Institutional lenders against appropriate collateral or group security. Loans granted for Pre-Harvest or Post- harvest activities such as spraying, areas. Short term loans for allied activities such as dairying, Fishery, Piggery, Poultry, Bee Keeping etc. Purchase of agricultural implements and machinery Iron ploughs, harrows, hose, land - levellers, bund formers, hand tools, sprayers, dusters, hay-press, sugarcane crushers, thresher machines etc. Purchase of farm Machinery - Tractors, trailers, power tillers, tractor accessories viz Disc ploughs etc. weeding, harvesting, grading, sorting, processing and transporting undertaken by individuals, SHGs and Co-operative in rural

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Indirect loans to Agriculture Loans in excess of Rs.1.00 crore to Corporates, Partnership Firms & Institutions, two thirds portion over and above Rs.1.00 crore come under indirect agriculture Loans to Food & Agro based processing units with investment cost on plant and machinery up to Rs.10.00 crore undertaken by those other than individuals, SHGs and Co-Operatives in rural areas Credit for purchase & distribution of fertilizers, pesticides, seeds etc. Credit up to Rs.40.00 lakhs for purchase & distribution of inputs for the allied activities such as cattle feed, poultry feed etc Finance for hire purchase schemes for distribution of agricultural machinery and implements. Loans for construction and running of storage facilities -warehouse, market yards, go-downs, silos, and cold storages designed to store agriculture produce / products irrespective of the location. Advances to custom service units managed by individuals institutions or organisations who maintain a fleet of tractors, bulldozers, well boring equipment, threshers, combines etc. and undertake work for farmers on contract basis. Finance for setting up of Agri Clinic and Agri Business Centers Loans to ferments through primary agricultural credit societies (PACS), Farmers Service Societies (FSS), and Large Sized Adivasi Multipurpose Societies (LAMPS) Loans to Co-operative Societies of farmers for disposing off the produce of members. Financing farmers indirectly through the Co-operative system. Loans up to Rs.30.00 lakhs for dealers in Drip irrigation / Sprinkler Irrigation / Agricultural Machinery irrespective of the location.

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Government Sponsored Schemes


Swarna Jayanti Gram Swarozgar Yojana ( SGSY ) The gist of SGSY Scheme guidelines is given below Launching A new programme known as Swarnjayanthi Gram Swarozgar Yojana has been launched from 1.4.99.This is a holistic programme covering all aspects of self employment such as organisation of the poor into Self Help Groups, training, credit, technology, infrastructure and marketing. With the introduction of this scheme, the earlier programmes viz., IRDP, TRYSEM, DWCRA, SITRA, GKY and MWS are discontinued.

Scheme for Liberation and Rehabilitation of Scavengers (SLRS)


Launching of SLRS The National Scheme for Liberation and Rehabilitation of Scavengers was launched by the Government of India on 22.03.1992. Objective The objective of the scheme is to liberate the scavengers and their dependents from their existing hereditary and obnoxious occupation. Implementation The state level Scheduled Caste Development and Finance Corporations would be the chief agency for implementation of the scheme at the State level. At the district level, the of District the Collector would / District be Magistrate for / the Deputy overall Commissioner District responsible

implementation of the scheme.

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Golden Jubilee Rural Housing Scheme


The salient features of the scheme are outlined below Objective The objective of the scheme is to address the problems of Rural Housing through improved access of housing credit which would enable an individual to build a modest new house or improve or add to his existing dwelling unit in rural area. Operational Area Rural area for the purpose of the scheme is the area comprised in any village including the area comprised in any town, the population of which does not exceed 50,000 as per 1991 census.

Differential Rate Of Interest Scheme


Purpose This scheme offers need based financial assistance to those who intend taking up any productive activity and has been tailored for persons whose income is very low. This scheme is meant for:

Persons belonging to SC/STs, Advises engaged in agricultural operations and/ or allied activities

Persons engaged in collection of forest products, fodder and selling these in markets.

Persons engaged in Village and Cottage Industries on a very small scale. Indigent students aspiring to pursue higher studies. Physically handicapped persons.

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Institution of physically handicapped for their productive activities. Orphanages, Women's Homes where saleable goods are made. State Level Corporations working for welfare of SC/ST. Co-operative Societies, large sized multi-purpose societies organised specially for the benefit of tribal population in areas identified by Government of India.

Special Schemes for Women


Assistance To Women In Non Farm Development (ARWIND) The scheme of Assistance to Rural Women in Non-Farm Development is being introduced mainly to support economic activities in non-Farm sector on a cluster/group basis by rural women. The scheme has two components via Credit component Promotional component

Under component (1) a voluntary agency having minimum 3 years of proven track record in assisting womens groups, womens development corporation set up by the central/State governments, KVIC/KVIBs or any institutions under the KVIC/KVIB fold, any other registered institution including cooperatives, trusts and corporations set up by central/State governments for the purpose may evolve a scheme to organise rural womens groups for undertaking any productive activity in the non-farm sector and assist them in setting up their own units and /or provide such other backward/forward linkages including training as are considered necessary for improving viability of individual/group enterprises. The loan assistance under the scheme to the individuals, should not normally exceed Rs.50000/- per borrower or say Rs.10 lakhs for a group activity involving 20 rural women.

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Chapter: IV
Data analysis and Interpretation

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1.Table showing bank net interest income of total funds in public sector
YEAR 2012 2011 2010 NET INT INCOME IN TOTAL FUND 1.69 1.91 2.20 Total In % 29% 33% 38% 100

In %
40% 35% 30% 25% 20% 15% 10% 5% 0% 2012 29% 2011 33%

2010 38%

In %

Graph showing bank net interest income of total funds in public sector
Interpretation : As per the above analysis the net interest of on income in total fund in the 2012 is the least that is 29 % it is comparably high in before years as in 2010 & ,2011 that is 38%, 33% as the interest declining in the year of 2012 is 1.69.

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2.Table showing the total interest expended on total funds


YEAR 2012 2011 2010 NET INT EXPANDED ON In percentage TOTAL FUNDS 5.69 30% 6.98 6.23 Total 37% 33% 100

NET INT EXPANDED ON TOTAL FUNDS


30% 2010

30% 2012

37% 2011

-; Graph showing interest expended on total funds ;Interpretation: As per the above analysis the interest expanded on total funds in the 2012 30% and in 2010 it is same but in 2011 it is increased to 37% as the interest declining in the year 2012 is 5.29

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3.Table showing interest earned on the deposits of bank

YEAR

2012 2011 2010

NET INT EARNED In % ON THE DEPOSITS OF BANK 36% 5200.65 37% 5237.83 27% 3888.54 100 Total

In %
40% 30% 20% 10% 0% 2012 36% 2011 37% 2010 27%

-; Graph showing net interest earned on deposits ;Interpretation: As per above analysis the net interest earned on the deposit of the bank in 2012 36% and in 2011 37% and in 2010 27% as the interest declining in the year of 2010 is 3888.54

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4.Table showing the operating expenses in the bank

YEAR

2012 2011 2010

OPERATING EXPENSES IN BANK 1077.66 934.55 705.95 Total

In % THE 39% 35% 26% 100

In %
40% 35% 30% 25% 20% 15% 10% 5% 0% 39% 2012 35% 2011

26% 2010

-; Graph showing operating expenses ;Interpretation: As per the above analysis operating expenses of the bank in the year 2012 39%, in the year 2011 35%, and in 2010 its 26%, as per he operating expenses declining in the year of 2010 is 705.95

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Performance Of Loans And Advances Of Vijaya Bank 5.Table showing provisions and contingencies in the bank YEAR PROVISIONS AND In % CONTINGENCIES OF THE BANK 754.70 43% 691.04 40% 304.97 17% Total 100

2012 2011 2010

In %
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 43% 2012 40% 2011 17% 2010

-; graph showing provisions and contingencies;-

Interpretation: As per the above analysis the provisions and contingencies of the bank in the year 2012 is 43%, and in the year 2011 is 40%, and in 2010 is 17% as per the provisions and contingencies declining in the year of 2010 is 304.97

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6.Table showing the other incomes in the bank


YEAR 2012 2011 2010 OTHER INCOMES IN In % THE BANK 890.58 40% 763.27 35% 542.08 Total 25% 100

In %
35% 2011

25% 2010 40% 2012

25%

-; graph showing other incomes ;Interpretation: As per the above analysis the other incomes of the bank in the year 2012 40%, and in the year 2011 35%, and in the year 2010 is 25% as the other incomes declining in the year 2010 542.08

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7.Table showing the non interest income


YEAR 2012 2011 2010 NON INCOME 1.35 1.29 1.10 Total INTEREST In % 36% 34% 30% 100

36% 35% 34% 33% 32% 31% 30% 29% 28% 27% 30% 2010 36% 2012

34% 2011

-: graph showing non interest incomes:Interpretation: As per the above analysis the non interest incomes of the bank in the year 2012 36%,in the year 2011 34%,and in the year 2010 its 30% as the non interest incomes declining in the year 2010 is 1.10

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8.Table showing the borrowings of the bank


YEAR 2012 2011 2010 BORROWINGS THE BANK 1938.56 2269.24 1918.87 Total OF In % 32% 37% 31% 100

In %
37% 2011 37% 36% 35% 34% 33% 32% 31% 30% 29% 28% 32% 2012 31% 2010

-: graph showing borrowings :Interpretation: As per the above analysis the borrowings of the bank in the 2012 32%,in 2011 it is 37% it is highest when compared to 2012 and 2010 as the borrowings of the bank declining in the year 1918.87

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9.Table showing the reserves and surplus in the bank

YEAR 2012 2011 2010

RESERVES SURPLUS 2541.63 2215.78 2025.53 Total

AND In % 37% 33% 30% 100

In %
30% 2010 37% 2012

33% 2011

-: graph showing reserves and surplus:Interpretation: As per the above analysis the reserves and surplus of the bank in the year 2012 37%, and in the year 2011 33%, and in 2010 30% as the reserves and surplus declining in the year 2010 is 2025.53

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10.Table showing the cash balance with RBI


YEAR 2012 2011 2010 CASH BALANCE WITH In % RBI 4099.58 26% 5730.41 5661.55 Total 40% 34% 100

In %
40% 30% 20% 10% 0% 26% 2012 40% 2011 34% 2010

-:graph showing cash balance with RBI:Interpretation: As per the above analysis the cash balance with RBI in the year 2012 26%, is low when compared to 2011 and 2010, and 2010 is 34% as the cash balance with RBI is declining in the year 2012 4099.58

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Chapter V
Findings & Suggestions

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FINDINGS:
Interest and /or installment of principal remain overdue for a period of more than 90 days in respect of a Loan, The account remains 'out of order' for a period of more than 90 days, in respect of an overdraft/ cash Credit(OD/CC), The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, Interest and/ or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years. in the case of an advance granted for agricultural purpose, and Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts. Vijaya bank can also be look upon as a bank which is functioning as a social business entity cause of its interest taken in educating people and students in banking with the help of its extension

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Suggestions
The Vijaya bank should also have to concentrate in providing agricultural loans to the customer. The vijaya bank has to build a strong relationship with customers.

The vijaya bank has to improve its services provided to investors. It should also pay attention to political environment and labour conditions of the area where if any potential project is to be located

Market and environmental analysis is much more of importance before launching any of the service so Vijaya bank should also foresee the exact market segment

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Conclusion
As a leading bank in the banking industry Vijaya bank should not neglect the promotional activities at all in its activity towards making business as promotional activity is necessary in any business so that the society and customer would know about the benefits of the service and that are influenced to buy. Strikes, Lockouts, Industrial Peace and Communal Harmony in the area play a decisive role in examining success or failure of the project. for each of its product cause many of the schemes are only suitable to a particular location and class of people. Also we should consider the slowdown in the economy due to the recession as banks suffered the most during this time but Vijaya bank was able to maintain the business throughout. The bank is also having a good workforce and also is recruiting fresh employees which mean it is creating opportunities for growth in the income per person in country. .

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Annexure
Yearly Report- Vijaya Bank
Mar'12 INCOME: Net Sales Turnover Other Income Total Income EXPENSES Stock Adjustments Raw Material Consumed Power and Fuel Employee Expenses Administration and Selling Expenses Research and Development Expenses Expenses Capitalised Other Expenses Provisions Made TOTAL EXPENSES Operating Profit EBITDA Depreciation EBIT Interest EBT Taxes Profit and Loss for the Year Extraordinary Items Prior Year Adjustment Other Adjustments Reported PAT KEY ITEMS Reserves Written Back Equity capital Reserves and Surplus Equity Dividend Rate Agg. Non-Promoter Shares(lacks) Agg. Non-Promoter Holding (%) Government Share Capital Adequacy Ratio EPS (Rs.) Mar'11 Mar'10 Mar'09 Mar'08

5,200.65 5,237.82 3,983.42 2,823.11 2,311.80 679.45 698.81 437.15 274.79 368.99 5,880.10 5,936.63 4,420.57 3,097.90 2,680.79 0.00 0.00 0.00 705.62 0.00 0.00 0.00 365.95 355.82 1,427.39 3,773.26 4,452.71 0.00 4,808.53 3,751.57 1,056.96 193.85 863.11 0.00 0.00 -355.82 507.29 0.00 433.52 1,884.55 0.00 2,000.00 45.13 53.87 11.79 11.45 0.00 0.00 0.00 597.47 0.00 0.00 0.00 327.23 357.41 1,282.11 3,955.71 4,654.52 0.00 5,011.93 4,113.02 898.91 279.02 619.89 0.00 0.00 -357.41 262.48 0.00 433.52 1,672.89 0.00 2,000.00 46.13 53.87 13.08 6.05 0.00 0.00 0.00 404.92 0.00 0.00 0.00 296.35 383.29 1,084.56 2,898.86 3,336.01 0.00 3,719.30 3,058.42 660.88 -83.69 744.57 0.00 0.00 -383.29 361.28 0.00 433.52 1,672.89 0.00 2,000.00 46.13 53.87 11.22 8.33 0.00 0.00 0.00 392.14 0.00 0.00 0.00 258.58 348.27 998.99 1,824.12 2,098.91 0.00 2,447.18 1,751.16 696.02 16.41 679.61 0.00 0.00 -348.27 331.34 0.00 433.52 1,186.62 10.00 2,000.00 46.13 53.87 11.21 7.64 0.00 0.00 0.00 378.84 0.00 0.00 0.00 244.70 538.77 1,162.31 1,149.49 1,518.48 0.00 2,057.25 1,339.02 718.23 52.58 665.65 0.00 0.00 -538.77 126.88 0.00 433.52 1,236.05 10.00 2,000.00 46.13 53.87 11.94 2.93

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Performance Of Loans And Advances Of Vijaya Bank Balance Sheet of Vijaya Bank
Mar 2012 CAPITAL AND LIABILITIES Capital Reserves and Surplus Deposits Borrowings Other Liabilities & Provisions TOTAL ASSETS Cash & Balances with RBI Balances with Banks & money at Call & Short Notice Investments Advances Fixed Assets Other Assets TOTAL Contingent Liabilities 4,099.58 1,449.68 21,107.45 41,521.72 493.16 1,550.50 5,730.41 1,941.77 17,387.70 35,467.67 493.25 1,361.36 5,661.55 435.81 16,617.32 31,689.22 507.82 1,273.40 3,399.71 1,670.41 12,018.41 24,223.55 186.18 859.31 2,248.64 586.50 11,179.70 16,664.01 202.49 655.71 933.52 2,541.63 61,931.75 1,938.56 2,876.63 933.52 2,215.78 54,535.42 2,269.24 2,428.20 433.52 2,025.53 47,952.01 1,918.87 3,855.19 433.52 1,463.16 37,604.50 198.14 2,658.25 433.52 1,235.63 27,709.29 515.82 1,642.79 Mar 2011 Mar 2010 Mar 2009 Mar 2008

70,222.09 62,382.16 56,185.12 42,357.57 31,537.05

70,222.09 62,382.16 56,185.12 42,357.57 31,537.05 10,760.84 11,836.82 12,551.42 9,048.03 9,083.26

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QUESTIONARIES: 1. What is the bank net interest income of total funds in public sector? In the year of 2012 2011 2010 In the year of 2012 2011 2010 ---------------------------------------------------------------------

2. What is the total interest expanded on the total funds?

3. What is the interest earned on the deposits of bank? In the year of 2012 2011 2010 -----------------------------------

4. What is the operating expense in the bank? In the year of 2012 2011 2010 -----------------------------------

5. What are the provisions and contingencies in the bank? In the year of 2012 2011 2010 -----------------------------------

6. What are the other incomes in the bank? In the year of 2012 2011 2011 2010 -----------------------------------------------

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7. What is the non interest income? In the year of 2012 2011 2010 -----------------------------------

8. What are the borrowings of the bank? In the year of 2012 2011 2010 -----------------------------------

9. What is the reserves and surplus in the bank? In the year of 2012 2011 2010 In the year of 2012 2011 2010 -------------------------------------------------------------------

10. What is the cash balance with RBI?

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Bibliography

REFERENCES B.S. Raman M.L. Seth Banking Theory Money banking and International Trade Banking Theory Banking & Financial Systems

V.B. Hansa Mithani & Gordon

Annual Report of Vijaya Bank.

www.Vijayabank.com www.ndtv.com www.cnbc18tv.com www.google.com

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