MBA Report On KMF

Credit Risk Management On BDCC Bank
Investments, Advances, Deposits and Borrowings:

The following table shows various Investments of BDCC Bank:
Particulars
Central &
As on 31/3/11
State 12,05,00,000
As on 31/3/12
14,25,00,000
As on 31/3/13
505,00,000
Govt. Securities
Shares in Co-Op 8,15,45,000
4,77,45,000
8,15,45,000
Institutions
Other(debentures,
Nil
20,00,000
2,00,000
Bonds)
In the year 2010-12, the Bank invested high funds in Govt. Securities, Shares in Co.op
Institutions, Bonds and Debentures. In the year 2011-12 the bank did not invested in
Bonds -and Debentures and fully it invested in moderate returns Securities because of the
safest investment option. By this investing decision, Bank able to maintained its profit
growth.
The below Chart shows the inflows and outflows of funds of the bank:
BEC-Department Of Management Studies
Page 1
31/3/2011
31/3/13
31/3/1 2
Analysis and Interpretation

a) Investments:
Management of funds of the Bank was of prime importance obligation to invest their
Surplus funds in Securities, Bonds and Debentures within the parameters of directive
guidelines issued by RBI/NABARD from time to time, with a system of monitoring the
inflow and outflow of funds on day-to-day basis. The bank has been gauge the surplus
funds for the purpose of short term as well as long term investments or even for prepayment of refinances.
B) Advances
The bank is able to maintain dominance in the field of Advances by increased
operation of funds in the form of Loans and Advances.
Page 2

Sl.No
1
2
3
4
5
Sector
Agriculture
Allied Activities
Non-Agriculture
Trade and Service
Cash Credit
Total
2010-11
3150070864
138400
27708750
201655164
467427495
4438581004
2011-12
3120369645
138400
22905090
188758519
638302217
4908527415
2012-13
3636577380
138400
26198300
191573470
874154286
5932538471
Analysis and Interpretation:

The above chart shows the loans and advances of the bank, in the respective years. It depicts
that the average funds outflow is increased year by year. In a similar way the recovery amount
increased and the percentage of NPA(i.e 7.98, 5.9 and 4.48 in the year 2011, 2012 and 2013
respectively) declined year by year it shows the good recovery performance by Bank.
Deposits:
There is consistent increase in the level of Deposits(i.e from Rs.435233576 to Rs 6508525005
from the year 2010 to 2013) in which the bank recorded the deposits growth rate of 49.54% in
two years.
Page 3
Borrowings:
Bank used refinance made available by NABARD under the various Refinance schemes. The
repayments were made as per time schedule according to NABARD guidelines. Bank has
undertaken several measures for reducing NPA, it facilitates the high volume of funds recovery
and used in generation of funds with profit.
Here the Banks maintained stable in its borrowings( i.e from 1952022500 to 1983431700, from
2010 to 2013) for its operation.
It shows the sufficient fund availability in banks by its
successful funds recovery and in its returns.
Demand Collection And Balance Sheet of AGRIL And NON AGRIL Loan Except Cash Credits
as on June 2008
Sl.No
Type of Loan
Demand(lakhs) Collection(lakhs) Balance(lakhs)
Loan on Gold
1152.78
1048.13
104.65
Overdraft Loan
172.02
115.51
56.51
Vehicle Loan
28.10
11.90
16.20
Page 4
Housing Loan
37.40
20.88
16.52
Ind. Salary Earner

Loan
41.12
26.30
14.82
N.F.S
71.03
38.31
32.72
S.T.Non AGRIL
S.E.sty
37.10
32.42
4.68
Weaver Societies
Loan
0.00
0.00
0.00
Loan on NSc
0.00
0.00
0.00
10
M.T. Non AGRIL

Loan
448.79
37.50
411.29
11
Eassy Loan
26.20
17.09
9.11
12
SHG
20.25
18.49
1.76
13
Swarojgar Credit
Card
6.23
5.59
0.64
Total
2041.02
1372.12
668.90
Grand Total
37687.50
31971.25
5716.25
Page 5
Analysis and Interpretation:

In the year of 2008 the Bank had provided the more loan on overdraft and Gold loan
and at average loan to M.T Non Agriculture and salary earner loan. But also it had recovered the
loan on averagely on all different types of loans. Bank has recovered more loan in Swarojgar
Credit and S.T.Non-Agricultural loan. Bank has not recovered loan from M.T.Non-Agril. Loan it
recovered 8.36%. So there will be more risk in the M.T.Non-Agril. Loan. Due to problem of
monsoon and climatical condition the farmers did not paid loan so the loan has not recovered. But
due to balance of the loan on different types of loan it had negative effect on the bank.
DEMAND COLLECTION AND BALANCE OF AGRIL AND NON AGRIL LOAN EXCEPT
CASH CREDITS AS ON JUNE 2009
Page 6

Sl.No
Type of
Loan
Loan on
Gold
742.03
562.62
179.41
Overdraft
Loan
170.99
125.60
45.39
Vehicle
Loan
30.45
21.83
8.62
Housing
Loan
47.64
20.85
26.79
Ind. Salary
Earner
Loan
29.40
18.07
11.33
N.F.S
54.29
19.88
34.41
S.T.Non
AGRIL
S.E.sty
37.41
33.49
3.92
M.T. Non
AGRIL
Loan
542.43
37.50
504.93
Eassy Loan
21.43
13.93
7.50
10
SHG
42.73
31.89
10.84
11
Swarojgar
Credit Card
19.62
12.04
7.58
12
Education
Loan
0.25
0.25
0.00
Page 7
Analysis And Interpretation:

In the year of 2009 there will be more loan granted to the gold loan and average
amount of loan granted to the other types of loan but there will be high percentage of recovery in
Swarojgar Credit Card 91.11% , S.T.Non. Agricultural loan 89.52% and averaged percentage of
recovery in Loan on Gold, Overdraft Loan, Vehicle Loan SHG and in the Educational loan it
recovered completely. But the percentage of recovery has decreased in the year of 2009compare
to 2008 in gold loan and recovery in S.T.Non-Agricultural loan has increased compare to last
year. In this year there will be more credit in M.T.Non-Agricultural loan.
CASH CREDITS AS ON JUNE 2010
Page 8

Type of
Loan
Loan on
Gold
786.49
633.74
152.75
Overdraft
Loan
106.26
59.48
46.78
Vehicle
Loan
19.54
11.20
8.34
Housing
Loan
47.55
31.61
15.94
Ind. Salary
Earner
Loan
18.49
10.46
8.03
N.F.S
60.32
17.25
43.07
S.T.Non
AGRIL
S.E.sty
37.88
37.80
0.08
M.T. Non
AGRIL
Loan
905.68
220.85
684.83
SHG
56.25
50.82
5.43
Swarojgar
Credit Card
31.16
24.75
6.41
Education
Loan
0.70
0.70
0.00
Page 9

In the year of 2010 there will be more loan granted to the M.T.Non-Agricultural Loan. And
there will be high percentage of recovery in S.T.Non-Agricultural loan and percentage of
recovery in this loan has increased from compare to last year and also high percentage of
recovery in SHG and Education loan completely recovered. In this year there will be high risk in
the NFS loan and M.T.Non-Agricultural loan.
Every year there will be more risk in the
M.T.Non-Agriculture loan due to the customers non repayment of loan amount because of high
rate of interest and due to customers financial problem.
CASH CREDITS AS ON JUNE 2011.
Page 10

Sl.No
Type of
Loan
Loan on
Gold
1026.86
952.43
74.43
Overdraft
Loan
108.97
64.01
44.96
Vehicle
Loan
16.91
9.53
7.38
Housing
Loan
38.01
32.12
5.98
Ind. Salary
Earner
Loan
15.16
9.13
6.03
N.F.S
42.16
25.24
16.92
S.T.Non
AGRIL
S.E.sty
50.09
50.09
M.T. Non
AGRIL
Loan
548.81
40.75
508.06
SHG
54.78
53.09
1.69
19
Swarojgar
Credit Card
54.79
41.21
13.58
11
Education
Loan
0.26
0.00
0.26
Page 11

In the year of 2011 there will be high loan granted to the Gold loan compare to last years.
And the percentage of recovery is very high in SHG 96.91%, loan on Gold 92.75% and there
will be complete recovery in S.T.Non-Agricultural loan. But there will be no recovery in
education loan. In this year there will be high risk in M.T.Non-Agricultural loan. Every year
there will be high risk in the M.T.Non-Agricultural loan because of high rate of interest period of
repayment. And also bank not managing proper recovery policy regarding to those loans.
DEMAND COLLECTION AND BALANE OF AGRIL AND NON AGRIL LOAN EXCEPT
CASH CREDITS AS ON JUNE 2012.
Page 12

Type of
Loan
Loan on
Gold
1519.09
1384.86
134.23
Overdraft
Loan
146.50
122.83
23.67
Housing
Loan
18.15
16.47
1.68
Salary
earner
9.23
3.92
5.31
Vehicle
Loan
29.19
22.07
7.12
N.F.S
18.64
3.42
15.22
SHG
55.55
50.66
4.89
SJSY
64.3
50.51
13.79
MT NonAGRIL
LOAN
1665.75
973.11
692.64
Education
Loan
1.57
Analysis
And
Interpretation:
In the year of 2012 there
will
0.83
high
loan
sanctioned to the M.T.Non

Agricultural loan and also
to the loan on Gold. But
there is high percentage of
recovery in Loan on Gold
91.16%, SHG 91.20% and
Housing loan 90.74%. In
this year there will more
risk
0.74
be
in
18.35%.
Housing
the
NFS
loan
In this year
loan
recovered
well because of long period

of repayment of period and the interest rate. Because here the repayment period will be upto
7years on depending on the loan amount its having the limits. Even rate of interest also in
average as 10.5% to 12.5%. And same as Gold loan also recovered well because of rate of
interest and repayment of period and also its having the limits of individual salary earner and for
non individual salary earner like business man and etc.
Page 13

Sl.No
Type of
Loan
Recovery
%-08
Recovery%09
Recovery%10
Recovery
%-11
Recovery%12
Loan on
Gold
90.92
75.82
80.58
92.75
91.16
Overdraft
Loan
67.15
73.45
55.98
58.74
83.84
Vehicle
Loan
42.35
71.69
57.32
56.36
75.61
Housing
Loan
55.83
43.77
66.48
84.30
90.74
Ind. Salary
Earner Loan
63.96
61.46
56.57
60.22
42.47
N.F.S
53.93
36.62
28.60
59.87
18.35
S.T.Non
AGRIL
S.E.sty
87.39
89.52
99.79
100.00
---
Weaver
Societies
Loan
0.00
--
---
---
---
Loan on
NSc
0.00
--
---
---
---
10
M.T. Non
AGRIL
Loan
8.36
6.91
24.38
7.43
58.42
11
Eassy Loan
65.23
65.00
---
---
---
12
SHG
91.31
74.63
90.35
96.91
91.20
13
Swarojgar
Credit Card
89.73
61.37
79.43
75.21
78.55
14
Education
Loan
0.00
100.00
100.00
---
47.13
Page 14
Provision Made Towards NPAs

Page 15
Particulars
Sub Standard Assets
Doubtful Assets
Loss Assets
Total
2008-09
259.32
219.42
8.87
487.61
2009-10
217.34
135.57
92.93
445.84
2010-11
184.28
473.69
17.76
675.73
Interpretation
Here sub-standard assets position is highest in the year 2008-09 i.e. Rs 259.32 and it is decreased
in the year 2010-11 is Rs 184.28. It is lowest in the year 2010-11 as compared to 2008-09 and
2009-10.
The position of the doubtful assets decreased in the year 2009-10 as compared to previous year
i.e. it is decreased from 219.42 to 135.57.But again it is increased to Rs 473.69 in the year 201011.
Page 16

And the position of the loss assets is highest in the year 2009-10 t.e.92.93, as compared to the
remaining years.
Overall percentage of the NPAs to total assets for three years of Bagalkot District Central Cooperative Bank
Sl. No
1
2
3
Year
2010-11
2011-12
2012-13
2010-11
% NPA
7.98%
5.95%
4.48%
2011-12
2012-13

Here the total percentage of NPAs is consistently decreasing year by year for the year
2010-11 it is 7.98. And it is decreased to 5.95 in the year 2011-12 and again it was declined to
4.48 in the year 2012-13.
NPAs, in short are not just a problem for banks. They are bad for the economy. So
here the Bank maintained control on risk bearence capacity by its effective recovery policy and
recovery or credit risk management.
Page 17
Findings:
It is found that the Banks Non Performing Assets percentage declined from the effective
recovery of Loans during the three years (i.e 7.98%, 5.95% and 4.48% in the year 2011,
2012 and 2013 respectively.
The net profit of the bank is in increasing order. This shows the performance of the bank
is good. The net profit of the bank is also increasing order.

The Bagalkot District Central Co-operative Bank Ltd there is a separate department
working in order to recover the loan from the borrowers

BDCC Bank is expanding its Credit in the following focus areas:
a) Term Deposits
b) Recurring Deposits
c) Housing Loan
d) Educational Loans
e) Car loan
f) Personal Loan etc
It is found that in BDCC bank by looking at 5 years loan the recovery percentage of
loan is very less at every year in M.T.Non-Agricultural loan (i.e 8.36%, 6.91%, 24.38%,
7.43% and 58.42%) because of bank is not maintaining the proper recovery policy
towards the that loan.
It is found that bank agricultural advance is 30.5% of the Net Banks Credit, which
shows that Bank has lend enough credit to agricultural sector as compared with other
Education and Personal loans.
It is found that the BDCC bank has maintained the feasible and realistic Credit risk
management process and policies for its effective operations.
Suggestions:
Page 18

Bases on the findings and analysis, I have given the following some of recommendations to the
Bank.
BDCC Bank should customize the Loan Products according to the customers needs and
necessities.
The Bank should keep on revising its Credit Policy which will help to correct the course
of the policies.
Bank should maintain the credit rating procedure or it should adopt any particular method
to reduce the credit risk.
Bank should maintain separate account for borrower whose monthly loan reports should
be made.
The Credit Policy of BDCC Bank has to implement sector-wise differentiation. If sector
wise differentiation is made then it would be easy for the bank to identify and avoid the
risk.
It is suggested that the BDCC Bank should have to computerize all the departments in
order to increase efficiency and effectiveness of the bank.
Bank should evaluate the credit worthiness towards the borrower to reduce the risk and
predict the future growth prospects.
Before providing credit facilities to the borrower the bank should analyse the major heads
of income & expenditure and current and future position of major assets and liabilities.
Conclusion:
I, according to the information given by the bank, learnt that the bank
follows the RBI

Page 19

guidelines and provisioning norms for the Non-performing assets.
In Bagalkot District Central Co-operative Bank Ltd most of the loans are sanctioned for
agriculture purpose. Before sanctioning the loan, each and every security documents are verified
by the concerned officer. The Government of India and RBI is concentrating more towards
Priority Sector Lending which mainly includes Agriculture and Small Scale Industries.
As mentioned credit risk ascertainment and balance in NPA maintenance are the sound for any
economy, so it becomes crucial for banks in lending. They need to understand the risk involved
in lending and the role of credit risk management.
Credit risk management is the area which mainly deals with risk assessment in lending. They
undertake the evaluation of financial and operational risk involved in lending to know the
credibility of the borrower.
Credit rating area of BDCC Bank has been performing at sound level at the time of lending;
Bank first understands the need of credit for the borrower. Then they undertake evaluation of
financial performance of borrower and inspection process.
Once lending is sanctioned, the credit manager takes periodical actions and evaluation of
borrowers. Most of the borrowers are satisfied with BDCC Bank services and they feel the
procedure of sanctioning the loan is simple and borrowers friendly.
The bank has the proper control on NPAs. It shows the Bank effective loan recovery policy
and its competence by sufficient funds and diversified investment approach.
Page 20

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Credit Risk Management On BDCC Bank

Investments, Advances, Deposits and Borrowings:

Credit Risk Management On BDCC Bank

Analysis and Interpretation

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

Analysis and Interpretation:

Credit Risk Management On BDCC Bank

It shows the sufficient fund availability in banks by its

successful funds recovery and in its returns.

Demand(lakhs) Collection(lakhs) Balance(lakhs)

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

Ind. Salary Earner

M.T. Non AGRIL

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

Analysis and Interpretation:

Credit Risk Management On BDCC Bank

Demand(lakhs) Collection(lakhs) Balance(lakhs)

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

Analysis And Interpretation:

Credit Risk Management On BDCC Bank

Demand(lakhs) Collection(lakhs) Balance(lakhs)

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

Analysis And Interpretation:

Every year there will be more risk in the

Credit Risk Management On BDCC Bank

Demand(lakhs) Collection(lakhs) Balance(lakhs)

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

Analysis And Interpretation:

Credit Risk Management On BDCC Bank

Demand(lakhs) Collection(lakhs) Balance(lakhs)

sanctioned to the M.T.Non

well because of long period

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

Provision Made Towards NPAs

Credit Risk Management On BDCC Bank

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

Analysis And Interpretation:

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

is good. The net profit of the bank is also increasing order.

working in order to recover the loan from the borrowers

BEC-Department Of Management Studies

Credit Risk Management On BDCC Bank

follows the RBI

Credit Risk Management On BDCC Bank

BEC-Department Of Management Studies

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