A Study On Credit Management at District Co

A STUDY ON CREDIT MANAGEMENT AT KOLAR AND CHIKBALLAPUR DISTRICT CO-OPERTIVE CENTRAL BANK
INTRODUCTION
1.1 CREDIT MANAGEMENT

Advances play an important role in the gross earnings and net profit of banks.
The basic function of a bank is whether it is a commercial bank or any other credit
institutions, is to enable individuals & business enterprise to purchase of goods &
services. Consumers demand credit to acquire goods for which they pay on a future
date. Demand for credit by business, arises because of time consuming nature of
distribution process.
Of all the function of modern banks, lending with or without security is by far
the most important function. Loans & advances constitute lending. Loans and
advances from the major business activity of the bank.
They need to be liquid and easily realizable as the bank is obliged to repay the
depositors as & when they are due for payment & major part of banks income is
earned from interest earned on advances. The proper management of loans &
advances is known as “MANAGEMENT OF LOANS & ADVANCES IN BANKS”.
Cash the most liquid assets is of vital important to daily operations of business
firms. In the view of its importance it is referred to as the “life blood of business
enterprises”. Cash management firms grant credit to facilitate sale. It is valuable to
those customers. Who cannot borrow from other source or find it very expensive or
inconvenient to do so.
1.2 IMPORTANCE OF CREDIT MANAGEMENT:

1. Credit planning & controlled at the macro level.
2. To ensure the safety of bank advances without an overemphasis on physical
security.
3. It is referred to as the “life blood of business enterprises”.
4. It is valuable to those customers. Who cannot borrow from other source or
find.
5. Cash management firms grant credit to facilitate sale expensive or

inconvenient to do.
BNM Institute of Technology, Bengaluru Page 1

1.3 OTHER RELEVANT ASPECTS OF CREDIT MANAGEMENT:

Funds for lending
A study of balance sheet revels that the main source of funds available of
funds available of lending & investment are:-
 Paid up capital.
 Reserves.
 Deposits & other account.
 Borrowing from RBI.
 Undistributed profit.
 Participation certificate.
 Other financial institutions.
Classification of credit:
Bank credit may be classified account to securities, maturity & method of re-
payment, origin & purpose. The bank advances in the country are classified into
 Secured or un-secured
 Cash credit
 Overdrafts
 Demand loans
 Term loans
 Bills purchase
 Bills discounted
Forms of credit:
Banks offer different kinds of borrowing facilities to their customers. The credit
facilities may be broadly classified on the basis of security, method of payment,
maturity & payment. The credit may be classified as follows,
1. Loans: In case of loan, banker advances a lump sum for a certain period at an
agreed rate of interest. The entire amount is paid on an occasion either in cash
or by credit in his account, which can draw at any time. The interest is charged

for the full amount sanctioned whether he withdraws the money from his
account or not.
2. Cash credit system: A cash credit is an arrangement by which the customer is
allowed to borrow money at to a certain limit. This is a permanent
arrangement & the customer need not draw the sanctioned amount once, but
draw the amount as a required.
3. Overdraft: Overdraft is an arrangement between a banker & his customer by
which the latter is allowed to withdraw over & above his credit balance in the
current account up to an agreed limit. This is only a temporary
accommodation usually granted against securities.
4. Bills discounted: Bills, maturing within 90 days or so after date or sight, for
approved parties. Banks grant advances to their customers by discounting bill
of exchange or promote.
5. Bills purchased: Bills, clean or documentary, are sometimes purchased from
approved customers in whose favour regular limits are sanctioned.
6. Terms loans; Since some time, banker have started lending large amounts for
fairly long periods to industries & agriculture on the security of fixed assets on
“Term Loans” basis. Such loans are repayable by instalment over a amount of
years ranging from 3 to 10 & sometimes more.
7. Demand loans: Loans are given by the bankers to their customer in the form of
over draft, cash credit, bills discounted etc has and when the demand are arises
from their customers.
8. Consumer credit: This method of granting the credit given by the banker to
their customers for purchasing the goods and services for temporary or short
term bases.
1.4 RECOVERY OF LOANS AND ADVANCES

Recovery of loans and advances is as important as granting of Loans and
Advances by the Bank. Any customer who becomes defaulter, May brings a
problem for the bank, who grants the loan from depositor’s money, and that
money has to return back to depositors with regular interest.

Credit Recovery plays a crucial role in CREDIT MANAGEMENT, as it is

a Yardstick to measure banks credit policy. In the sense, it would disclose whether
or not bank is adhering to the principles of sound lending namely; Security,
Profitability, and Liquidity.
1.5 RECOVERY METHODS

As soon as the borrower becomes defaulter, the bank follows two methods
of recovery
1) GENERAL RECOVERY METHOD: In general recovery method, recovery of
loan is done at the Bank Branch level. Where the bank may extent some more days
for the repayment
2) LEGAL RECOVERY METHOD:
a) If the Branch people are not able to recover the amount, the File is referred
to Legal Department for Arbitration.
b) The Legal Department will initiate all the steps to recover the amount.
Finally E.P (Executive Petition) will be filled.
c) The E.P files are handed by Sale Officer Who is appointed from co-
operative department.
d) As soon as the file is received, the Sale Officer will send the recovery force
to identify the defaulter and his property. After identification, Form No. 6
will be
issued attaching the property for sale and to pay the amount between 10
days.
e) If the party doesn't settle the amount within 10 days, then Form No.8 and 9
(sale date of the mortgaged property) will be fixed giving one month time.
f) Even though after issuing of Form No.8 and 9, if the party does not give
any fruitful result, then a Paper Publication "Fixing the Sale of Property"
will be advertised.
g) Before 3 days of option, beat of TOM will be conducted in the locality
where the mortgaged property is existing So that the local people of that
area and others are invited to participate.
h) Then Auction of that property will be conducted between the
Bidders and the Auction will be conformed to the Highest Bidder.

Lending policies:
The principle of loan policy is to arrive at trade off between return & risk.
Loan policy should be such as to maximize return while minimizing Risk. Order to
ensure capital growth the bank has to encourage substantially non-funded.
a) Portfolio Consideration: The objective of any bank is to maximize safety of

funds & yield there on in the process reach acceptable standard for
misemployment of funds keeping the long range view.
b) Terms and conditions: The terms and conditions should create a sense of
confide once among the borrower and lender. Terms and conditions like,
disclosure of the financial information of borrowers and information towards
end user funds that is utilization of borrowed funds for the purpose of for
which it is obtained.
c) Fund position: The lending policy of a bank depends on the market condition,
which reflects on the funds deployment opportunities available to the bank
besides lending over a period of time and deposit mobilization possibility
during that period.
d) Marketing of funds: Any approaches to lending has to be looked in its from

the point of view of achieving desirable ends and after deciding on new
activities, area and type of borrowers by the borrowers.
e) Use of funds and security available: Mostly lending is done against the
security provided by the borrower for the use of funds productively.
Credit analysis:
Besides establishing credit standards for a firm evaluating credit applicants is

credit analysis and investigation. Two basic steps are involved in the credit
investigation process are:

1. Obtaining credit information.

2. Analysis of credit information.
1 Obtaining credit information: The first step in credit analysis is obtaining

credit information which to base the evaluation of a customer. The sources of
information broadly speaking are :
 Internal: Firms require their customers to reveal their details about

financial operations their also required to furnish trade reference,
which the firms can have context to judge the suitability of the
customers for credit. This type of information is obtained from internal
source of credit information. Another internal source of credit
information is derived from the records of the firms contemplating an
extension of credit.
 External : The availability of information from external source to

assess the creditworthiness of customers depends upon the
development of institutional facilities and industry practice in India,
the external source of credit information are not as developed as in the
industrially advance countries of the world.
Following are the externals sources that are employed to collect

information:
 Financial statements.
 Bank reference.
 Trade reference.
 Credit bureau report.
Analysis of credit information:

Once the credit information has been collected from different sources it should
be analyzed to determine the creditworthiness of the applicant. Although these are not
established procedures to analyze the information, the firm should device its own
procedures to suit it needs.
Credit terms: The decision area in account receivables management is the credit
terms. After the credit terms have been assessed, the management of the firm must

determine the terms and conditions on which trade credit is to be made available. The
stipulations under which the goods are sold on credit are referred to as credit terms.
This relates to the repayment under the credit sales.
These credits have three components:
 Credit period
 Cash discount
 Cash discount period
Credit period:
In terms of the duration of credit extended to the customer, the amount must
be repaid promptly before the due date.
Cash discounts:
If any, which the customer can take the advantage of that over all amounts that
will be reduced by this amount.
Cash discount period:

This refers to the period allowed during which the discount can be availed
Credit management in India:
How trade credit is managed in India?

Trade credit in India managed is namely divided into three board areas:
 Credit policies
 Credit analysis
 Control of account receivables.
Credit policy:
A firm with a liberal credit policy may keep a higher level of receivables than
with conservative or rigid credit policy.
Credit analysis:
Two basic steps are involved in the credit analysis process, they are:
 Obtaining credit information

 Analysis of credit information

Control of account receivables:

1) Monitoring and controlling of account receivables is often neither very tough
nor systematic very few firms will have well defined system for monitoring
and controlling account receivables.
2) The measures commonly employed for judging whether account receivables
are “in control” are:
 Bad debts losses
 Average collection period
Bad debt losses:
It arises when the firm is enabling to collect its account receivables. Some of
the customers delay payments and some of them do not pay at all. As a result bad debt
arises.
The firm can certainly avoid or minimize bad debt losses if that does not sell
on credit and then the firm is not availing the opportunity of using credit policy as a
marketing tool for expanding the business opportunity.
Average collection period:
Lengthening of the credit period pushes sales up by indebting existing

customers to purchase more and attracting additional customers and if this is lower
will result in larger investment debtors. And higher incident of the bad debts losses.
Shortening of the credit period would have opposite effect. It tends to sale,
decreases investment in debtors and the incidents of bad debts losses.
Collection procedures: The collection procedures of a firm should be clear cut and
well administered. The purpose of collection policy should speed up of the collection
of dues. The firm should lay down the collection procedure for the individual account.
1) The collection should be clearly established.

2) The responsibility for follow up and collection should clearly fix.
3) To collect dues from a slow paying or non paying customers.
4) Though the collection procedure should be firmly established individuals case
should be dealt with on its merits.

Credit investigation:
After having obtained the credit information of the firm will get an idea
regarding manner that should be further investigated. The factor that affects the extent
of credit investigation is as follows:
1) The type of customer, whether new or existing.

2) The customer's business line, background & related trade risk.
3) The nature of the product perishable or seasonal.
4) The size of the customer orders & expected further volumes of business with
him.
1.6 INDUSTRIAL BACKGROUND (BANK )
Co-operation was introduced in India in the early years of the present century as a
means of helping the poor agriculturists to face their economic conditions.
It started as a movement for providing credit to the agriculturists and was further
extended to other types of activities. It has become a part of our national planning. It is
recognized that, co-operation should progressively become the principal basis of
organization in many branches of economic life.
Co-operatives have played an important role in promoting agricultural and
rural development in India, particularly in the fields of credit, supply of production
inputs, processing and marketing of agricultural produce.
1.7 GENERAL INTRODUCTION

Co-operative banks, in India are more than 100 years old. These banks came
into existence with the enactment of the Agricultural Credit Co-operatives Societies
Act in 1904. Co-operative banks form an integral part of the banking system in India
these banks operate mainly for the benefit of rural areas, particularly the agricultural
sector.
Co-operative banks constitute an important segment of the Indian banking

system. They have an extension branch network and reach out to people in remote
areas. They have traditionally played an important role in creating banking habits

among the Sewer and middle-income groups and in strengthening the rural credit
delivery system.
There are 961 different types of co-operatives in the district, of which 805 are
working, 81 are defunct and 75 are under liquidation.
District co-operative department is headed by a Deputy Registrar of Co-

operative Societies. Each sub-division is headed by assistant Registrar Co-operative
Societies.
Taluk Panchayat, Zillah Panchayat, State government, NCDC and NABARD provide
financial assistance in the form of share capital, loan and subsidy through their
annual action plans.
MEANING
The word co-operative is derived from the Latin word “Co-operative” in
which “Co” means “together” and “operative” means “functions and services or
work”.
Co-operation means “working together”. In the middle of 19 th century, co-

operation took the form of a economic system. During this period Co-operation
became base to the industrial and agriculture-based economy.
The main slogan of a co-operative society or bank is: "EACH FOR ALL, ALL
FOR EACH".
1.8 IMPORTANCE OF CO-OPERATIVE INSTITUTIONS.

A Co-operative is of great significance particularly for economically backward
countries like India. Its importance is clear from the following:
1. For the people with small means, this is the only self-respecting method to
increase their resources and to carve out a place for themselves in this world
of ruthless competition. By pooling their resources, individuals can undertake
large-scale operation and realize its advantages. In the absence of such an
organization, individuals cannot benefit fully even from their own resources.

But, when these resources are used together, they result in greater gain than if
they were used individually and separately.
2. It is a movement, which makes possible to organize resources on the basis of
mutual help and for sharing benefit rather than on the basis of exploitation of
one another, which characterizes the prevalent system of these of resources.
3. Class conflict can be considerably toned down with the help of this institution.
4. No doubt, there is less class-feeling and class-hatred among people of small
means. If we succeed in balancing the entire functioning of the economy on the
principle of cooperation and thus eliminate cut-throat competition and
monopoly, We can hope to reduce the intensity of class war between labourers
and capitalists.
5. These institutions are also helpful in curbing the evils of bureaucracy.

6. Co-operative can also be of great help in running small scale and cottage
industries.
1.9 ORIGIN OF CO-OPERATIVE BANK

1. First Stage [1904-1911]
The first stage of the co-operative credit societies in 1904 marked in the
beginning of the co-operative movement in India. Essential features of Co-operative
Societies Act were:
 A Society could be formed by more than 20 persons living in the same village or
town.
 The co-operative societies were classified as rural and urban.
 The Act provided for the formation of credit societies.
 No member could hold shares for more than Rs. 1000.
2. Second Stage [1912-1918]

The defects of the 1904 Act were removed in 1912 when another Co-operative
Societies Act was passed. With the passing of this Act, the movement entered its
second stage. Essential features of this Co-operative Societies Act were:
 Under this act any society, credit or otherwise, could be registered which
had the objective of the promotion of the economic interests of its

members in accordance with co-operative principles.

 A federal society like the central bank could be registered.
 No member could have more than 1/5 of the total share capital.
3. Third and fourth stage [1929-1939]

A significant event of this period was the establishment of "Reserve Bank of
India" in 1935 and its Agriculture Credit Department, which was charged with studying
various problems relating to agriculture credit.
As per the banking network in the district, and 10 commercial banks, one
Regional rural bank together have 177 branches, of which 145 are rural and semi-urban
branches.
The Karnataka State Co-operative Agricultural and Rural Development Bank
[KSCARDB] has outlets called primary co-operative agricultural and rural
development banks.
1.10 CO-OPERATIVE CREDIT INSTITUTIONS

The Indian co-operative banking has three-tier system. It consists of:
a. Primary credit societies at the base
b. Central co-operative banks in the districts
c. State co-operative banks at the apex level
a. Primary Credit Societies
It is an association of 23 or more persons residing in a particular locality.
Primary credit societies are of two types:
1. Rural credit societies
2. Urban credit societies
``Most of the societies in India are rural societies. They are the associations of traders
and artisans and they are formed on the basis of limited liability.
Urban societies are formed in towns. They are the associations of traders and
artisans, and they too are formed on the basis of limited liability. The fund of primary
credit societies consists of entrance fees, share capital and reserve fund, fixed
deposits from farmers, loans from central co-operative banks etc.

b. Central Co-operative Banks

Due to the failure of primary credit societies to mobilize enough deposits, they were
in need of refinance from another agency. So the Co-operative Societies Act of 1912
provided for the establishment of the central co-operative banks to provide refinance to
the primary credit societies.
District Central Co-operative Banks are the federations of primary credit co-
operative societies operating in a specified area. Generally they are located in the
district headquarters, and they are organized on the basis of limited liability.
The funds of central co-operative banks consist of share capital, reserve fund,
deposit from members and non-members, loans and advances from state co-operative
banks.
c. State Co-operative Banks

Every state has a state co-operative bank at the top of co-operative banking
structure; it is known as Apex Bank. It consists, and co-ordinates the working of all
cooperative banks. It is established in the state capital.
The funds of state co-operative banks consist of share capital, reserve fund,
deposit from members and the general public, loans from RBI and the state
Government and commercial banks. However, loans and advances from the Reserve
Bank constitute the major part of their funds.
Features of Co-operative Organization:

The UCB sector is unique in that there is significant degree of heterogeneity
among the banks in this sector in terms of size, geographical distribution,
performance and financial strength.
The Reserve bank is, therefore, continuously evolving the regulatory and
supervisory frame work for UCBs to ensure their soundness without sacrificing their
competitiveness.
Apart from this, UCBs have the following features:
 Voluntary Association of Persons
 Share capital being the main source of finance

 Democratic control and management

 Service motive
 Disposal of surplus in the form of bonus
Types of Co-operative Societies:
Co-operatives may be formed practically in any work of life. Some of them
concern themselves with the normal moral and social uplift of a weaker section of
the society. The principal types of business co-operatives are as enumerated below:
 Consumer’s Co-operative Societies
 Producer’s Co-operative Societies
 Marketing Co-operative Societies
 Co-operative credit Societies
 Co-operative farming Societies
1.11 HISTORY OF URBAN CO-OPERATIVE BANKS

The term Urban Co-operative Banks (UCBs), through not formally defined,
refers to primary co-operative banks located in urban and semi urban areas. These
banks, till 1996, were allowed to lend money only for non-agricultural purpose. This
distinction does not hold today. These banks were traditionally centred on
communities, localities and work place groups. They essentially lend to small
borrowers and business. Today, their scope of operations has widened considerably.
Urban co-operative banks also referred to as primary co-operative banks, play
an important role in meeting the growing credit needs of urban and semi-urban areas of
the country. They mobilize savings from the middle and lower income groups and
purvey credit to small borrowers, including weaker sections of the society.
It is encouraging to note that the Reserve Bank's initiatives towards the revival
of this sector a unique sector blending banking and co-operation are bearing fruit.
Historical Perspective
The co-operative movement in India started a century ago with the enactment of
Co-operative Societies Act in 1904. Interestingly, legal status was conferred on Credit
societies keeping in view, in particular, the needs of the agricultural sector.

Although joint stock banks opened branches in urban and semi-urban areas,
they did not find it advantageous to cater to the banking and credit requirements of the
urban middle/lower class, comprising of small traders/businessmen, artisans, factory
workers, salaried persons with limited incomes etc.
The origin of cooperative banks can be traced to a small town in South India,
called Kanjeevaram, where in 1904; the Kanjeevaram Urban Co-operative Bank was
set up, to cater to the needs of small businessmen as an alternative to money lenders.
1.12 KARNATAKA STATE CO-OPERATIVE (APEX) BANK

After 1956 the progress of co-operative movement was sharp and the potential
strength was added under the five year plans. The KSC bank is the premier institution
to meet the credit needs of the farmers of the state through the DCCBs. The Karnataka
State Co-operative Apex Bank Ltd., Bangalore has been playing a significant role in
general and the co-operative movement in particular in the state.
BASIC OBJECTIVES OF THE KSC (APEX) BANK

The major objectives of the K.SCB are:
 To provide short-term agriculture loan and loans for marketing of agricultural

products, medium-term loans to farmers for agricultural development, such as
irrigation dairy, poultry, horticulture, gobar gas through the DCCBs.
 To provide cash-credit loans to processing, and marketing consumer co-operatives

and sugar factories in the co-operative sector.
 Advances to the non-agricultural activities like cotton industries, small-scale

industries, rural artisans, handicrafts and weavers.
 The bank undertakes inland mutual adjustment scheme in which cash payments,
recovery of bills and recovery of cheques from its banking members, are handled.

1.13 POLICY INITIATIVES OF RESERVE BANK OF INDIA

Now, let us now take a look at various initiatives taken by the Reserve Bank for
stabilizing and strengthening the Urban Co-operative Banks
Taking a view on the crisis faced by the sector, time and again, the Reserve
Bank, in the annual policy for the year 2004-05, announced its decision to stop
granting fresh licenses for formation of new UCBs. This was followed up with a
decision not to grant any fresh branch license as well. It was made clear that this was
necessitated pending a comprehensive review of the legislative and regulatory
framework governing the sector.
VISION DOCUMENT FOR UCBS BY RBI

The Reserve Bank eventually formulated a draft vision document, placed it in
the public domain, with the following objectives:
 To rationalize the existing regulatory and supervisory approach keeping in
view the heterogeneous character of entities in the sector.
 To facilitate a focused and continuous system of supervision through enhanced
use of technology.
 To put in place a mechanism that addresses the problems of dual control,
given the present legal framework, and the time consuming process in
bringing requisite legislative changes.
1.15 NATIONAL BANK FOR AGRICULTURE AND RURAL

DEVELOPMENT (NABARD)
NABARD is established as a development bank at the National level, in terms
of Ad-the preamble of the Co-operative, for providing and regulating credit
and other facilities for the promotion and development of agriculture, small
scale industries, cottage and village industries, handicrafts and other rural
crafts and other allied economic activities in rural areas with a view to promote
integrated rural development and securing prosperity of rural areas and for
matters connected therewith or incidental thereto.

 NABARD serves as an apex financing agency for the institutions providing

investment and production credit for promoting the various development activities
in rural areas.
 NABARD takes measures towards institution building for improving absorptive

capacity of the credit delivery system, including monitoring, formulation of
rehabilitation schemes, restructuring of credit institutions, training of personnel
etc.
 NABARD undertakes monitoring and evaluations of projects refinanced by it.
ORGANISATION PROFILE
2.1 BACK GROUND
The bank was established on 24/12/1984. According to A.R.K no: 492 it was registered
& its administrative limit spread in 11 taluks of Kolar and Chickballapur district. It
started its operation successfully from 14/ 1/1985. Basically it was started as Service Co-
operative Society for few villages only and later on it was converted as V.S.S.N which
included 8-10 villages then it got expanded as Sericulture cum Farmer Co-operative
Society by which it started lending to both Seri culturists and farmers. In Later days
according to Karnataka Co-operative Society Act 1959, it started as District Central Co-
operative Bank in each districts of Karnataka.
Now Kolar &Chickballapur D.C.C Bank is working as Three Tier Structure, in which
Karnataka Apex Bank is considered as Mother Bank as the maximum funds are raised
from this bank for the purpose of lending. And the Apex Bank will raise its fund from
NABARD. Finally all this funds will be reaching to the farmers with the help of Primary
Agricultural Co-operative Society through D.C.C Bank.
BRANCHES:
Kolar &Chikkaballapur District Central Co-operative Bank has 12 branches, they are:
1.Bangarpet 10.Malur

2.Bagepalli 11.Srinivaspur
3.Chikkaballapur 12. Sidlaghatta
4.Chintamani
5.Gowribidnur
6.Gudibande
7.K.G.F
8.Kolar
9.Mulbagal
2.2NATURE OF BUSINESS
Co-operative banks are organized and managed on the principal of co-operation, self-
help and mutual help. They function with the rule of “no profit, no loss” basis. Co-
operative banks, as a principle, do not pursue the goal of profit maximization. Co-
operative bank performs all the main banking functions of deposit mobilization,
supply of credit and provision of remittance facilities. Co-operative banks provide
limited banking products and are functionally specialists in agriculture related
products. However, co-operative banks now provide housing loans also. UCB’s
provide working capital loans and term loan as well.
2.3VISION, MISSION AND QUALITY POLICY
VISION:
The current vision of the bank is to increase the deposits, issue the crop loans,
providing cash credit loans, increasing the present share investment, provide
medium term loans, non-agricultural loans, and the most important may be
collecting back the loan amounts given to the customers.
MISSION STATEMENT:
As it is a bank it is known to all that the main mission of it will be obviously

accepting the deposits and lending it to its customers, as and when the depositors
demand for their money giving back to them.
GOALS AND QUALITY POLICY:

The Ko;ar&Chikkballapur D.C.C Bank has number of objectives, some of them

are:
 Undertaking common banking activity.
 Lending money and there by extending economic support to farmers.
 Giving loans to the depositors by keeping their deposits as security.
 Bank will provide safe deposit vault and lockers to both its members and
others for rent.
 Encouraging and taking steps to provide loans to the self help groups which
are under the limits of bank.
 Creating funds in order to facilitate or help their staff members and their
dependents.
 Under taking International Exchange business with the permission of Indian

reserve Bank.
 To buy fixed assets for the own use of the Bank with the permission of the
department when ever needed.
2.8 SERVICE PROFILE:
The Bank renders number of services that can be classified into 2 types, they are:
1. Agricultural Loans :
Under this, Bank will provide loans for agricultural purposes, such as Long Term,
Medium Terms and Short Term Loans under different schemes. All these loans are
given to the farmers only after making a study on various aspects like the area of
land that the farmer has, the ability of the farmer to re-pay the loan etc.,.

 Financing of kisan credit card schemes/loans:

Kisan credit card aims at providing timely and adequate credit support to farmers for
their cultivation including investment credit needs in a flexible and cost effective
manner. All DCC banks in the state have implemented the Kisan credit scheme.
2. Non-Agricultural Loans:
These loans include different forms of schemes, they are:
 Loans on Gold Ornaments:

These loans are provided through some branches of the Bank like Gudibanda,
K.G.F, Malur and Bangarpet.
This is a package of program that they have undertaken to provide loans to needy
people at comparatively at very low percentage.

 House / site mortgage loans:

Mortgage loan is available for the purpose of education / marriage of children and
also business purposes. Mortgage loan also extended to the commercial buildings
repayable in 120 months. Loans are also given for site purpose and site mortgage. The
rate of the interest varies from 14% to15% p.a. based on the nature of loan and loan
amount.
 Loans for Self Helping Groups:
In the year 2018-19 Bank is providing loans to these groups to establish 100 groups
newly and among already existing group’s 60 groups are considered to be worth to
give loans.
 Yashaswini Health Insurance Scheme:

The Bank is rendering its services by registering member farmers of the society
under this scheme in order to make them obtain the complete service provided by
the Government of Karnataka.

Though the bank was initially concentrating on farmers it is now broadened its
services by considering sericulture, dairy farmers, merchants, small scale industries
and women to provide economic strength to them.
 Advancing working capital loans:

Advancing working capital loans to state level co-operatives like MARKFED, KCCF
and to national level co-operatives like IFFCO and KRIBHCO. The bank provide
similar facilities to public sector understanding like Karnataka silk marketing board,
Karnataka handloom development corporation, Karnataka small scale industries
development and corporation. Food corporations of India directly and also through
consortium arrangements with commercial banks.
 Advancing medium term loans with economic development:

These loans are advanced for the agricultural infrastructures such as lift irrigation,
dairy, poultry, gobar gas etc that constitutes schematic lending.
3.10 COMPETITORS:

 Pragathi krishna Gramin Bank

 State Bank of Mysore
 State Bank of India
 Canara Bank
 AXIS Bank
 Syndicate Bank
 ICICI Bank
SWOT ANALYSIS
A SWOT analysis is a structured planning method used to evaluate the strengths,

weakness, opportunities, and threats in a project or business venture. A SWOT
analysis can be carried out for a product, place, industry or person. It involves
specifying the objective of the business venture or project and identifying the internal
and external factors that are favourable and unfavourable to achieve the objective.
In this analysis there exist internal factors they are strengths and weakness which are
internal to organization and external factors opportunities and threats which are
internal to organizations.
Strengths: characteristics that place the business or project at a disadvantage relative

to others.
Weakness:Characteristics that place the business or project at a dis advantage relative

to others.

Opportunities: Elements that the project or business could exploit to its advantage.
Threats: Elements in the environment that could cause trouble for the business or
project.
Strengths
 Support from government: As the bank was established by the norms and acts
of government to support agriculture and rural business activities. It has the strong
support from the government to lend or to encourage its customers.
 Rural banking expertise: Through its rural banking initiative the bank has attracted
many rural customers. The bank has the branches in the remote areas where the
branches of other banks are not yet opened which give the bank edge over the other
banks.
 Diversified portfolio: Various types of products designed to cater the needs of
different sections which helps the bank to attract new customers.
 Service oriented:The bank focuses on service to the customers rather than the
profit which other banks do.
Weakness
 Less in resources: KCDCC Bank has less resources’ as compared to the other
nationalized and public banks such as internet banking, less number of ATMs,
branches and mobile banking.

 Political and government Influence:As it is controlled by the directors elected

by the share members of the bank the political and government interference will
be more as compared the other banks.
 Very low promotions and advertising:KCDCC bank lags behind in usage of
promotional activitiesie. advertisement campaigns compared to other banks.
 Limited capital: Due to the restricted area and government restrictions the total
capital of KCDCC Bank is limited.
Opportunities
 Scope of expansion of branches: All though it has the presence in the both
districts serving diverse sector of society. The bank has still scope for expansion
for branch network in unbanked areas.
 Finance to government projects: Being a Co-operative bank it has the opportunity to
finance the government projects.
 Enter to agri- financial business: As it as been focused to cater service to
agriculture it has the opportunity to enter to agriculture support such production
of agricultural equipments, establishment of suitable markets etc.
 Favourable government rural schemes: The government has implemented
various schemes for development of agricultural sector in the country which the
banks can opt for improvement of its portfolio of products.
Threats
 Quality and services: The public and private banks are a way ahead in rendering
the quality in services to the customer .
 Inflation: Economic fluctuation has hampered the performance of the banks. The
policies of the bank have to be changed and checked regularly for healthy
operations of banks.
 Competition: KCDCC bank is facing competition from various banks it involves
public sector banks, private sector banks and also foreign banks. As they
providing attractive facilities, also there is quickness in the various transaction
and quality services.
 Penetration to rural areas: The others banks are now penetrating towards the
rural and semi urban areas is the major threat to KCDCC bank.

 Brand image:More significant brand image in public acceptance of product and

services of public and nationalized banks as compared to cooperative banks.
1.16 FUTURE PROSPECTS OF THE INDUSTRY

Despite a series of scams in recent times, it would be unfair to say that all co-
operative banks are in trouble or that there are no sound co-operative banks in the
country However, their numbers are less. Hence, there is a strong need to reform this
decade-old sector.
Bringing in professionals, strengthening their boards, establishing a single and
strong supervisory body, creating a level playing field, and enhancing a transparency
in their operation could be some of the desirable measures. Or else, there is a danger
that the co-operative banks muddle could have an impact on the commercial banks as
well, as the Madhavpura Co-Operative Bank scam showed. Growth Prospects of
Malur Kolar District DCC Bank
THE MALUR DCC Bank was established on 24.12.1984, according to No: ARK492
it was registered. Its administrative limits spread in 11 taluks of Kolar and
Chickballapur district. It started its operations successfully from 14.1.1955. It was
established with an objective of lending money and there by extending economic
support to farmers. It was basically started as service co-operative society.
And later on it was converted into Vyavasaya Seva Sahakara Sangha Niyamita
(VSSSN) which included 8-10 villages. As Kolar is famous for sericulture activity it
got expanded as Sericulture Cum Farmer Service Co-op Society (SFSCS) by which it
started lending to both farmers and sericulturalists and also it included dairy farming.
In later days according to the “Karnataka Co-operative Society Act-1959” it was
converted as District Co-operative Bank in each district of Karnataka. And now it
functions as three tire structure.
The Kolar D.C.C Bank has number of objectives, some of them are:
 Undertaking common banking activity.

 Lending money and there by extending economic support to farmers.
 Giving loans to the depositors by keeping their deposits as security.
 Bank will provide safe deposit vault and lockers to both its members and
others for rent.
 Encouraging Vikas Voluntary Vahini Clubs.
 Encouraging and taking steps to provide loans to the self help groups which
are under the limits of bank.
 Creating funds in order to facilitate or help their staff members and their
dependents.
 To undertake and execute trust.
 Taking measures to help Co-operative education.
 To buy fixed assets for the own use of the Bank with the permission of the
Department when ever needed.

KOLAR & CHIKBALLAPURA DISTRICT CENTRAL CO OPERATIVE BANK LTD., KOLAR

BALANCE SHEET AS AT 31ST MARCH 2019
Amount in Rs.
As at As at As at
Particulars March 31, March 31, March 31,
2019 2018 2017

I. CAPITAL AND LIABILITIES
Reserves and Other Funds 0 76 78 518 0 72 95 368 0 16 38 300
Profit and Loss Account 2 41 92 584 1 27 17 236 0 38 26 991
Deposits and Other Accounts 16 24 69 266 15 96 89 957 9 02 54 017
Interest Payable 0 35 44 609 0 28 87 126 0 23 58 306
Other Liabilities 2 19 50 075 0 47 76 006 0 26 56 217


Total 21 98 35 052 18 73 65 693 10 07 33 831

II. PROPERTY AND ASSETS

Cash and Balances-RBI 0 43 23 834 1 51 99 451 0 28 79 709
Balance with bank 0 01 91 575 0 03 97 721 0 16 59 620
Loans and Advances 52 17 54 368 58 05 99 141 23 64 39 856
Fixed Assets 0 03 67 932 0 02 06 894 0 01 64 894
Other Assets 5 41 72 943 3 02 92 385 0 15 42 374
Branch Adjustment -3609 75 600 -43 93 29 899 -14 24 22 622

Total 21 98 35 052 18 73 65 693 10 02 63 831

CHAPTER-03
RESEARCH DESIGN
3.1 TITLE OF THE STUDY:
“A STUDY ON CREDIT MANAGEMENT WITH REFERENCE TO

KCDCC BANK AT MALUR BRANCH”.
3.2 STATEMENT OF THE PROBLEM:

“A Bank lives on Credit, till it is trusted. It is nothing, when it ceases to be
trusted, its returns to be nothing”.
Any money accepted as deposits must be for the purpose of lending or
investment. Making advances & investment of funds are equally important.
The functions of nationalized are mainly to cater to the needs of the rural areas
and small borrowers & are concerned more with the financing of agriculturists.
3.4 OBJECTIVES OF THE STUDY:
1) To study loans and advances policies, rules of the bank.

2) To evaluate the manner in which funds are raised.
3) To study various mechanisms through which funds are canalized.
4) To study the positions of various advances.
5) To study management of advances i.e., controlling & monitoring of funds.
3.5 SCOPE OF THE STUDY:

The scope of the study is limited to the data of “DCC BANK MALUR”: The
basic purpose of the study “On credit management” exercise of DCC bank. An
empirical study is needed to know how for the concepts & principals have been
examined through finding out the areas of their operational efficiency and the
management quality taking into consideration.

3.6 METHODOLOGY
There are mainly three types of research designs they are as following
 Analytical research
 Descriptive research
 Empirical research
3.7 SOURCES OF DATA
Having identified and formulated a research problem and having determined

the objectives of research. The next step is data collection. The studies
constitute the both primary & secondary data.
1) Primary data: the data which is collected through Direct Interview and
personal interaction with the branch manager.
2) Secondary data: the data that has been collected through various sources
like Annul report, Financial Statement & records pertaining to the procedure
of lending advances.
PLAN OF ANALYSIS: Statistical analysis:
1) Comparative analysis: The study includes comparative analysis of last three

year’s Balance Sheet and Profit & Loss A/c.
2) Growth % analysis: the study covers the growth rate of loans and advances of
the bank for achieving the research objectives.
3.8 LIMITATIONS:
1. Data is collected only for 3 years Due to confidentiality the study analyses only
those data which are provided by the bank.
2.The data is very strictly controlled in the bank.
3. The study was strictly supervised by the bank officials, due to which disclosure of
some data was restricted.

3.9 CHAPTER SCHEME

This research has been divided into chapters as follows:
 Chapter 1 - Introduction
 Chapter 2 -Conceptual Background and literature Review
 Chapter 3 - Research design
 Chapter 4 - Analysis and interpretation
 Chapter 5 – Findings, conclusion and Suggestions
2.1 INTRODUCTION
Advances play an important role in the gross earnings and net profit of banks.
The basic function of a bank is whether it is a commercial bank or any other credit
institutions, is to enable individuals & business enterprise to purchase of goods &
services. Consumers demand credit to acquire goods for which they pay on a future
date. Demand for credit by business, arises because of time consuming nature of
distribution process.
Of all the function of modern banks, lending with or without security is by far
the most important function. Loans & advances constitute lending. Loans and
advances from the major business activity of the bank.
They need to be liquid and easily realizable as the bank is obliged to repay the
depositors as & when they are due for payment & major part of banks income is
earned from interest earned on advances. The proper management of loans &
advances is known as “MANAGEMENT OF LOANS & ADVANCES IN BANKS”.
2.3 REVIEW OF LITERATURE
Management Policy
Credit management policy is defined as the rules and guidelines established by top
management that governs the company’s credit department audits performance in the

extension of credit privileges Jim Franklin (2011). It is simply a set of guidelines

designed to minimize costs associated with credit while maximizing benefits from it
McNaughton (1996). Credit management policies entail the credit procedures, credit
standards and credit terms.
Credit Procedures
To achieve the good goals of credit management policy Franklin (2011) advised the
adoption use of credit procedures. To Franklin, credit procedures are specific ways in
which top management requires the credit department to achieve the credit
management policies. The credit procedures include instructions on what data to be
used for credit investigation and analysis process, provide information for data
approval process, account supervision and instances requiring management’s
notification. Such credit collection efforts include the use of reminders, insurance
policy, the use of litigation and final write off as highlighted below:
Capital
This refers to the general conditions of the firm. This is ascertained by the analysis of
the financial statements with special emphasis on the risks and the debt-equity ratios
and also evaluating the customer firm working capital positions Floucks (2001). The
financial manager can also assess the balance sheet to ascertain how much the owner
has invested into the business as his own personal stake BPP (2000).
Collateral
This refers to items like land, houses, commercial and residential estates or any other
property of value offered as security of the value of the loan extended to the borrower
Kakuru (2001). The collateral should be safe, easily marketed and that its value
should be able to cover up the debt when sold in case the borrower defaults to pay
Van Horne (1995).
Conditions
These refer to the prevailing economic and financial environment which may affect or
be a detriment to the borrower’s ability to pay the debt and which may prove
unprofitable to the creditor. For instance, under inflationary tendencies it is unsuitable
to grand credit as the creditor is bound to loose on the loaned amount if not earning
low returns. The financial manager should form a reasonable judgment regarding the
chances of default and estimate the probability of loss under such conditions Pandey
(1996).

It is important that the credit standards are set basing on individual credit applicant
bearing in mind the credit information, credit analysis and credit limits AgGm (2012
update).
Credit information
This involves the application of reliable and timely information that is critical in
managing the credit process. Credit information is critical in the sense that it helps
minimize losses resulting from investing in unreliable credit clients Kakuru (2001).
Such information include; the customers’ years in present business, the length of time
at present location, financial data, credit rating with other vendors and credit rating
agencies and the information about the principals of the company and other related
information.
Credit analysis
This involves establishing customers’ willingness and ability to meet the loan
obligations as they fall due. The firm’s credit analysis should ensure that the loans
meet the company’s set credit standards McNaughton (1996), and that it should
follow a typical domestic process flow beginning with data collecting and moving to
action observing AgDm (2012 updates). The credit analysis in an important aspect in
n designing a credit policy since it culminates into the seasons regarding the amount
of loan to be extended to the applicant, Maurice and Monitiz (1970).
Credit limit
This is the maximum amount of credit which the firm can extend to customers at any
point in time. In setting up the credit limit,

COMPANY PROFILE
3.1 HISTORY
The bank was established on 24/12/1984. According to A.R.K no: 492 it was
registered & its administrative limit spread in 11 taluks of Kolar and Chickballapur
district. It started its operation successfully from 14/ 1/1985. Basically it was started
as Service Co-operative Society for few villages only and later on it was converted as
V.S.S.N which included 8-10 villages then it got expanded as Sericulture cum Farmer
Co-operative Society by which it started lending to both Seri culturists and farmers. In
Later days according to Karnataka Co-operative Society Act 1959, it started as
District Central Co-operative Bank in each districts of Karnataka.
Now Malur & Chickballapur D.C.C Bank is working as Three Tier Structure,
in which Karnataka Apex Bank is considered as Mother Bank as the maximum funds
are raised from this bank for the purpose of lending. And the Apex Bank will raise its
fund from NABARD.
Finally all this funds will be reaching to the farmers with the help of Primary
Agricultural Co-operative Society through D.C.C Bank.
3.2 BRANCHES:
Kolar & Chikkaballapur District Central Co-operative Bank has 12 branches, they are:
 Bangarpet
 Bagepalli
 Chikkaballapur
 Chintamani
 Gowribidnur

 Gudibande
 K.G.F
 Kolar
 Mulbagal
 Malur
 Srinivaspur
 Sidlaghatta
Internal financing
In the theory of capital structure, internal financing is the name for a firm using
its profits as a source of capital for new investment, rather than a) distributing them to
firm's owners or other investors and b) obtaining capital elsewhere. It is to be
contrasted with external finance which consists of new money from outside of the firm
brought in for investment. Internal financing is generally thought to be less expensive
for the firm than external financing because the firm does not have to incur transaction
cost to obtain it, nor does it have to pay the taxes associated with paying dividends.
Many economists debate whether the availability of internal financing is an important
determination of firm investment or not. A related conterver is whether the fact that
internal financing is empirically corrected with investment implies firms are credit
constricted and therefore depend on internal financing for investment.
3.3 INDUSTRY:
Industry is the production of a good or service within an economy.[1] Manufacturing

industry became a key sector of production and labor in European and north
American countries during the Industrial Revolution, upsetting previous
mercantile and feudal economies. This occurred through many successive rapid
advances in technology, such as the production of steel and coal.
Following the Industrial Revolution perhaps a third of the world's economic output is
derived from manufacturing industries. Many developed countries and many
developing/semi-developed countries (People's Republic of China, India etc.) depend
significantly on manufacturing industry. Industries, the countries they reside in, and
the economies of those countries are interlinked in a complex web of
interdependence.

Classifications
Industries can be classified in a variety of ways. At the top level, industry is often
classified into sectors: Primary or extractive, secondary or manufacturing and tertiary
or services. Some authors add quaternary (knowledge) or even quinary (culture and
research) sectors. Over time, the fraction of a society's industry within each sector
changes. They are-
Sector Definition
This involves the extraction of resources directly from the Earth; this
Primary includes farming, mining and logging. They do not process the products
at all. They send it off to factories to make a profit.
This group is involved in the processing products from primary

Secondary industries. This includes all factories—those that refine metals, produce
furniture, or pack farm products such as meat.
This group is involved in the delivery and sale of goods. They include
Tertiary
truck drivers and retail workers, for example.
This group is involved in the research of science and technology and

Quaternary
other high level tasks. They include scientists, doctors, and lawyers.
Some consider there to be a branch of the quaternary sector called the

quinary sector, which includes the highest levels of decision making in
Quinary
a society or economy. This sector would include the top executives or
Sector
officials in such fields as government, science, universities, non profit,
healthcare, culture, and the media.
There are many other different kinds of industries, and often organized into different
classes or sectors by a variety of industrial classifications. Market-based classification
systems such as the Global Industry Classification Standard and the Industry
Classification Benchmark are used in finance and market research. These

classification systems commonly divide industries according to similar functions and

markets and identify businesses producing related products.
Industries can also be identified by product, such as: chemical industry petroleum
industry, automotive industry, electronic industry, meatpacking industry, hospitality
industry, food industry, fish industry, software industry, paper industry, entertainment
industry, semiconductor industry, cultural industry, and poverty industry.
MALUR D.C.C Bank is a service oriented institution which mainly focuses
on extending economic strength to farmers, who are considered as back bone of the
Nation.
3.4 7 PRINCIPLES OF CO-OPERATIVE BANK
The co-operative principle are guidelines by which co-operative put their values into
practice
1st principle = voluntary and open membership

Co-operative open to all person able to use their service and willing to accept the
responsibility of membership without gender, social, racial, political or religious
discrimination.
2nd principle = democratic member control.
Co-operative are democratic organization controlled by their member, who actively
representative are accountable to the membership in primary the Co-operative
member have equal voting rights (one member, one vote )and co-operative at other
are also organized in a democratic manner.
3rd principle = member economic participation
Contribute to equitable and democratically control the capital of their co-operative.
The capital is usually the common property of the co-operative member, which
receives limited compensation subscribed, possible by setting up reserve, part of
which at least would be in divisible, benefiting members in proportion to their

transaction with the co-operative, the cooperative and supporting other activities
approved by the membership.
4th principle = AUTOMATIC AND INDEPENDENCE
Co-operative provides education and training for the training for the member, elected
representatives, managers if they enter into agreements with other organization,
including government to raise capital from external sources they do so in terms that
ensure democratic control by their member and maintain their co-operative
autonomy.
5th principle = EDUCATION, TRAINING AND INFORMATION
Co-operative provide education and training for their members elected representative,
managers and employees, so the employee so that, they can contribute effectively to
the development of their co-operative, they inform the general public-particularly
young people and opinion leaders about the nature and benefit of co-operative.
6th principle = CORPORATION AMONG CO-OPERATIVE Co-operative
serve their member most effectively and strength the co-operative movement by
working together through local, national, regional and international structure.
7th principle = CONCERN FOR COMMUNITY
Co-operative work for the sustainable development of their communities through
policies approved by their member.
Nature of Industry

Nature of Kolar & Chikkaballapur D.C.C Bank is Secondary Institution as it

will depend mostly on the man power in order to carry out different activities in the
banking process.
3.5 MISSION STATEMENT

As it is a bank it is known to all that the main mission of it will be obviously
accepting the deposits and lending it to its customers, as and when the depositors
demand for their money giving back to them.
3.6 VISION:
The current vision of the bank is to increase the deposits, issue the crop loans,
providing cash credit loans, increasing the present share investment, provide medium
term loans, non-agricultural loans, and the most important may be collecting back the
loan amounts given to the customers.
3.7 GOALS AND OBJECTIVES:
The Malur & Chickballapur D.C.C Bank has number of objectives, some of them
are:
 Undertaking common banking activity.
 Lending money and there by extending economic support to farmers.
 Giving loans to the depositors by keeping their deposits as security.
 Bank will provide safe deposit vault and lockers to both its members and others
for rent.
 Encouraging and taking steps to provide loans to the self help groups which are
under the limits of bank.
 Creating funds in order to facilitate or help their staff members and their
dependents.

 Under taking International Exchange business with the permission of Indian

Reserve Bank.
 Taking measures to help Co-operative education.
 To buy fixed assets for the own use of the Bank with the permission of the
Department when ever needed.
Work force Strength:

All the activities of Malur & Chikkaballapur District Central Co-operative
Bank are carried out by totally 63 members, who include 4 Junior Managers, 11 First
Divisional Assistants, 38 Second Divisional Assistants, 3 Drivers and 7 Attainders to
execute various activities. Man power is considered to be important power in the
Bank because each and every activity in the Bank has to be carried out by men itself
and without their efforts none of the operations can be done.
3.8 SERVICE PROFILE:

The Bank renders number of services that can be classified into 2 types, they are:
3. Agricultural Loans :
Under this, Bank will provide loans for agricultural purposes, such as Long
Term, Medium Terms and Short Term Loans under different schemes. All
these loans are given to the farmers only after making a study on various
aspects like the area of land that the farmer has, the ability of the farmer to re-
pay the loan etc.,.
4. Non-Agricultural Loans:
These loans include different forms of schemes, they are:
Loans on Gold Ornaments:

These loans are provided through some branches of the Bank like Gudibanda,
K.G.F, Malur and Bangarpet.
This is a package of program that they have undertaken to provide loans to needy
people at comparatively at very low percentage.
 Housing Loan:

In this constantly improving society every man desires to build their own
house. As they are not able to full fill this dream they are opting for loans at a
low rate of interest which is provided by this Bank.
 Loans for Self Helping Groups:

In the year 2011-12 Bank is providing loans to these groups to establish 100
groups newly and among already existing group’s 60 groups are considered to
be worth to give loans.
 Yashaswini Health Insurance Scheme:

The Bank is rendering its services by registering member farmers of the
society under this scheme in order to make them obtain the complete service
provided by the Government of Karnataka.
Though the bank was initially concentrating on farmers it is now broadened

its services by considering sericulture, dairy farmers, merchants, small scale
industries and women to provide economic strength to them.
Sources of funding available for companies

1. They make profit by selling a product for more than it costs to produce. This is
the most basic source of funds for any company and hopefully the method that
brings in the most money.
2. Like individuals, companies can borrow money. This can be done privately
through bank loans, or it can be done publicly through a debt issue. The drawback
of borrowing money is the interest that must be paid to the lender.
3. A company can generate money by selling part of itself in the form of shares to
investors, which is known as equity funding. The benefit of this is that investors
do not require interest payments like bondholders do. The drawback is that further
profits are divided among all shareholders.
In an ideal world, a company would bring in all of its cash simply by selling goods
and services for a profit. But, as the old saying goes, "you have to spend money to
make money," and just about every company has to raise funds at some point to
develop products and expand into new markets.
3.9 SOURCES OF FUNDS:

I. Shares, Entrance fee, Share Price.
II. Deposits
III. D.C.C Bank is obtaining funds from Government of Karnataka, Government

of India according to the Law of India.
IV. Gifts, Provident and Donations.
V. Interest on the deposits.
VI. Commission.
VII. Yearly Subscription.
Organizational Structure:
Special officer DCC Bank
Managing Director
General Manager
Managers
Senior Assistants
Junior Assistants
3.11 GENERAL RULES FOR LOANS AND ADVANCES:

Part -1 FOR REGULAR MEMBERS:
INTRODUCTION:
The rules contained in the following pages are formulated under byelaw no.54 (a) of
the bank policy to control, sanction & disbursement & recovers of loans and advances
under various category. Any diversion from these rules shall be referred to the board.
The procedure to be followed in assign the quantum of loan required, the repaying
capacity of the borrowers and documentation etc., are laid down separately in the
manual of instruction by the Reserve Bank of India and Karnataka State co-operative
Urban Banks Federation.
CLASSIFICATION:
The loans & advances are broadly classified into the following two categories:
A) Secured
B) Un-secured
A) SECURED ADVANCES: The secured loans & advances / CC / DD are those

which are sanctioned against the following securities:
 Deposits
 Gold ornaments
 Vehicles
 Goods
 Land & building
 Plant and machinery
 Bills purchased & discounted
 Government securities
B) UN - SECURED ADVANCES: These are those which are sanctioned against
personnel surety of one or two members. They are
A. Surety loans
B. Bills purchased & discounted
C. Cash credit and over draft

Maximum limit: The maximum limits are overall limits on loans & advances for all
the above categories are as per the directives of RBI issued from time to time.
Mode of repayment: Repayment of loans shall be in monthly installment together with

interest
Rate of interest:
 The interest on all the above loans & advances shall be charged as per the
rates prescribed in the directive of RBI
 Capitalization of overdue interest in respect of terms/fixed loans shall
be done on a quarterly basis.
 Interest on cash credit & overdrafts shall be debited to the accounts
monthly.
 Penal interest @ 2% shall be charged on the overdue installments.
3.12 RULES FOR ADVANCES ON TERM DEPOSITS:
1) Advances against term deposit on the bank may be granted to person in whose
names the term deposits are held in the bank. Whenever such deposits are held
jointly in the name of more than one person, the loan application & all loan
documents should be got signed jointly by all the concerned persons.
2) Advances against term deposit should be granted and realized from the same
office which has issued the deposits receipts.
3) In general no advances should be granted to a guardian against security of the

deposits receipt standing in the name of minor except when such loans are
securely required for the benefits of the minor.
4) Advance shall not be sanctioned on the security of deposits receipt of the other
banks. Similarly, advance shall not be granted against the deposits receipt in
the name of the third party.
5) Whenever advances have to be granted against recurring or daily deposits, an
undertaking in the prescribed form must be obtained from the borrowers along
with the relative pass book & card deposits receipt duly disc hard.
6) For all the loans against deposits including R.D, pigmy etc. The margins as

stipulated in the RBI directive & also the directors should be maintained. The
rate of interest should be as prescribed under the RBI directives.
7) Soon after making advances, the bank line should be permanently noted in the
respective deposits register & also on the face of the deposits receipt or pass
book.
8) If the advances taken on the security of term deposits are not cleared &
selected by the borrowers till the date of maturity of such deposits, on maturity
together with interest there on should be adjusted to the advance without
exception.
9) In any case the loan should not be allowed to continue after the date of
maturity of depositors.
10) The deposits should not be renewed without adjusting & clearing the related
Loan dues of the parties.
 Demand promissory note

 Deposits receipt duly discharged
 Land agreement
 Letter of the authority for pay/wage deduction.
3.13 RULES FOR ADVANCES AGAINST PLEDGE OF GOLD

ORNAMENTS:
Eligibility: The advances under these rules are available to regular associate member.
Law applicable: The gold control order issued by the government of India Rules 1963
has pleased certain restriction on advances against gold other than ornaments.
Period of loan: The period of loan on the security of gold ornaments shall not exceed
18 months.
Maximum advance permissible: The maximum limit of advances to each member

shall not exceed the individual limit fixed under the directives of RBI. The advance
will be made up to 60% of market value or value per gram fixed by the Board of

Directors whichever less is. The manager or any other authorized officer by the Board
may advance loans to the members to the extent permissible on their depositing with
the bank, the article to be pledged.
Rate of interest:
The rate of interest on advances against gold ornaments should be at the rate
as may be fixed by the directives of RBI from time to time. The penal interest will be
levied as per the rates fixed by the Board of directors.
Appraisal of the ornaments:
When the manager is satisfied about the member & the ornaments to be pledge
they are to get appraised by the jewel appraiser appointed, approved by the bank. The
valuation will be made at the rates fixed by the Board from time to time. The jewel
appraising charges shall be paid directly to the appraiser by the borrower.
Record of security:
The full name of the borrower, his residential address, and date of advance,
amount & the description of the ornament in detail should be recorded in the gold
ornaments register which should be checked & initialled by the manager.
Margin:
A margin of 30 to 40 % on the market value is to be maintained interest loan is
to be promptly collected as & when it falls due in order to see that the prescribed
margin is not allowed to be reduce due to non-recovery of interest due or fall in
market value of the articles. Recovery of sufficient amount should always be affected
to see that the required margin is also maintained.
Recall of loans:
The loans may be recalled even before the expiry of the period in case bank is
likely to be put to loss owning to the fall in the value of gold unless the borrower
offers additional margin.
Default in payment:
When the borrower fails to repay the loan on the due date a notice calling
upon him to repay within a specified time should be given & if no response is there

for the notice a reminder may be sent by a registered post informing the borrower that
the ornament would be auctioned & after adjusting the sale proceeds against the
outstanding dues to the bank, the balance, if any, would be paid to the borrower
against his receipts.
3.14 MAIN SOURCES OF FUNDS:
1) DEPOSITS
A deposit account is a savings account, current account or any other type
Of bank account that allows money to be deposited and withdrawn by the account
holder. These transactions are recorded on the bank's books, and the resulting
balance is recorded as a liability for the bank and represents the amount owed by
the bank to the customer. Some banks may charge a fee for this service, while
others may pay the customer interest on the funds deposited.
Major types
 Transactional account
Current account (Commonwealth)/Checking account (US)
 A deposit account held at a bank or other financial institution, for the purpose
of
securely and quickly providing frequent access to funds on demand, through a
variety of different channels. Because money is available on demand these
accounts are also referred to as demand accounts or demand deposit accounts,
except in the case of NOW Accounts.
 Money market account

A deposit account that pays interest, and for which short notice (or no notice)
is required for withdrawals. In the United States, it is a style of instant access
deposit subject to federal savings account regulations, such as a monthly
transaction limit.
 Savings account

Accounts maintained by retail banks that pay interest but cannot be used

directly as money (for example, by writing a cheque). Although not as
convenient to use as checking accounts, these accounts let customers keep
liquid assets while still earning a monetary return.
 Time deposit
A money deposit at a banking institution that cannot be withdrawn for a preset
fixed 'term' or period of time. When the term is over it can be withdrawn or it
can be rolled over for another term. Generally speaking, the longer the term
the better the yield on the money.
 Call deposit
A deposit account that allows for the withdrawal of funds without penalty,
generally without notification to the bank. Often it bears a favourable interest
rate, but also requires a minimum balance to take advantage of the benefits.
Legal framework
Subject to restrictions imposed by the terms and conditions of the account, the
account holder (customer) retains the right to have their money repaid on demand.
The customer may or may not be able to pay money into or out of the account
by cheque, internet banking, EFTPOS or other channels, depending on those terms
and conditions.
The banking terms "deposit" and "withdrawal" mean a customer paying money into,
and taking money out of, the account. From a legal and financial accounting
standpoint, the term "deposit" is used by the banking industry in financial statements
to describe the liability owed by the bank to its depositor, and not the funds that the
bank holds as a result of the deposit, which are shown as assets of the bank.
For example, a depositor opening a checking account at a bank in the United States
with $100 in cash surrenders legal title to the $100 in cash, which becomes an asset of
the bank. On the bank's books, the bank debits its currency and coin on hand account
for the $100 in cash, and credits a liability account (called a demand deposit account,
checking account, etc.) for an equal amount. (See double-entry bookkeeping system.)

In the audited financial statements of the bank, the $100 in currency would be shown
on the balance sheet as an asset of the bank on the left side, and the deposit account
would be shown as a liability owed by the bank to its customer, on the right side of
the balance sheet. The bank's financial statement reflects the economic substance of
the transaction—which is that the bank has borrowed $100 from its depositor and has
contractually obliged itself to repay the customer according to the terms of the
agreement. To offset this deposit liability, the bank now owns the funds deposited
(either in notes and coin or more usually as a debt owed by another bank) and the
bank shows those funds as an asset of the bank. These "physical" reserve funds may
be held as deposits at the relevant central bank and will receive the interest as
per monetary policy.
Typically, an account provider will not hold the entire sum in reserve, but will loan
most of the money out to other clients, in a process known as fractional-reserve
banking. This allows providers to earn interest on the asset and hence to pay out
interest on deposits.
By transferring the ownership of deposits from one party to another, banks can avoid
using physical cash as a method of payment. Commercial bank deposits account for
most of the money supply in use today. For example, if a bank in the United States
makes a loan to a customer by depositing the loan proceeds in that customer's
checking account, the bank typically records this event by debiting an asset account
on the bank's books (called loans receivable or some similar name) and credits the
deposit liability or checking account of the customer on the bank's books. From an
economic standpoint, the bank has essentially created economic money (although
not legal tender). The customer's checking account balance has no dollar bills in it, as
a demand deposit account is simply a liability owed by the bank to its customer. In
this way, commercial banks are allowed to increase the money supply (without
printing currency, or legal tender).
2) BORROWINGS
3.15 NON- PERFORMING ASSETS

Non- performing assets mean the assets which do not generate any
interest income to the Banks, thereby affecting profitability of Banks. It consists of
substandard, doubtful and loss assets. It is of paramount importance to Reduce
Non-performing Assets only. Since none can even dream of 100% elimination of
nonperforming assets. By reducing nonperforming assets, banks profitability can
be increased and amount recovered can be utilized for recycling of funds to get
higher returns.
Causes for ‘Mounting Non- performing Assets’ In Banks: Some of them

are:
1) Non- performing of quality advanced by banks.
2) Non- adherence of norms procedures laid down in the manual of

instruction/guidelines of banks.
3) Poor credit appraisal system. Lack vision foresightness while sanctioning

reviewing or enhancing credit limits.
4) Lack of proper monitoring.
5) Reckless advances to achieve the budgetary targets.
3.16 EFFECTS OF NON-PERFORMING ASSETS (NPAS) :
1) NPAs are drag on profitability of Banks because besides provisioning,

Banks are also required to meet the cost of funding these unproductive
Assets.
2) As NPAs do not earn any income, they adversely affected. Capital

Adequacy Ratio (CAR).
4) No recycling of funds.
5) NPAs also attract cost of capital for maintaining capital adequacy ratio.

DATA ANALYSIS AND INTERPRETATION
INTRODUCTION
Data analysis and interpretation is the process of assigning meaning to the

collected information and determining the conclusion, significance and implication
of the findings. The steps involved in data analysis are the function of the type of
information collected, however returning to the purpose the assessment and
assessment question will provide a structure for the organization of data and focus
for the analysis.
TOOLS USED FOR DATA ANALYSIS AND INTERPRETATION
Tables
Graphs
Tables and charts used analysis and interpretation of data. Charts are the
graphical representation of data. Different types of charts are pie charts, stacked bar
chart, histogram and bar charts.
In this analysis I have used column bar chart for data representation and trend
analysis technique for analyzing the information.

TABLE NO – 4.1
TABLE SHOWING STATEMENT OF FIXED DEPOSITS
(Rs. In lakhs)
Sl. Fixed deposit 2013 2014 2015

No
1 Individuals 1594.6 1413.36 1551.84
2 Other societies 636.79 664.27 1139.38
Total F.D 2231.39 2077.63 2691.22
Increase % - -6.9% 20.6%
Analysis
The individual fixed deposits were 1594.6Rs in 2013 it was decreased to 1413.36in
2014and in 2015 it was increased to 1551.84Rs.
The other societies fixed deposits were 636.79 in 2013, and in 2014 it was increased
to 664.27, and in 2015 it was increased to 1139.38 Rs.
GRAPH – 4.1

GRAPH SHOWING STATEMENT OF FIXED DEPOSITS
1800
1594.6
1600 1551.84
1413.36
1400
1200 1139.38
1000
Individuals
800 Other societies
636.79 664.27
600
400
200
0
2013 2014 2015
Interpretation
The F.D. was 1594.6Rs, in2013 & it was decreased by 181.24 Rs, in 2014 & in 2015
it was increased by 138.
The above table showing in 2014 the percentage is -6.9% and it is increased to 20.6%
in 2015

TABLE – 4.2
TABLE SHOWING STATEMENT OF SAVING BANK DEPOSITS
(Rs.in lakhs)
SL SAVING BANK 2013 2014 2015

NUM DEPOSITS
1 Individuals of which NRI 1092.74 1062.84 1157.26
2 Central Co-operative 0.00 0.00 0.00

Banks
3 Other Societies 174.2 245.28 421.23
TOTAL 1266.94 1308.12 1578.49
Increase% - 3.3 24.6
Analysis
Individuals of which NRI the savings bank deposit are 1092.74 in 2013 & it was
decreased to 1062.84 in 2014 & again it is increased to 1157.26 in 2015
Other societies: is the yr 2013 it was 174.2 & it was increased to 245.28 in 2014 &in
2015 again it increased to 421.23

GRAPH – 4.2
GRAPH SHOWING STATEMENT SHOWING SAVING BANK
DEPOSITS
1157.26
1200 1092.74
1062.84
1000
800
Individuals of which NRI

600 Central Co-operative Banks
421.23 Other Societies
400
245.28
174.2
200
0 0 0
0
2013 2014 2015
Interpretation
IN 2013 the savings deposit were 1092.74 & it was decreased by 29.9 in 2014& it was
increased by 94.42 in 2015
The above table showing in 2014 the percentage is 3.3% and it is increased by 24.6%
in 2015

TABLE NO – 4.3
TABLE SHOWING STATEMENT OF CURRENT DEPOSIT
(Rs.in Lakhs)
SL. NO. CURRENT DEPOSIT 2013 2014 2015
1 INDIVIDUALS 45.51 42.8 69.82
2 Central co-operative 0.00 0.00 0.00

Banks
3 Other Societies 152.84 996.6 836.97
TOTAL 198.35 1039.4 906.79
Increase% - 424.7 357.5
Analysis:
Individuals:
The individual’s current deposits were 45.51 & it was decreased to 42.8 &
increased to 69.82 in 2015 respectively
Other Societies: Other societies current deposits were152.82 in 2013 & it is Increased
to 996.6 in 2014 & significant decreased in 2015 to 836.97

GRAPH – 4.3
GRAPH SHOWING STATEMENT OF CURRENT DEPOSIT
996.6
1000
900 836.97
800
700
600
INDIVIDUALS
500 Central co-operative Banks
400 Other Societies
300
152.84
200
69.82
45.51 42.8
100
0 0 0
0
2013 2014 2015
Interpretation
The current deposits were 45.51 in 2013 & it was reduced by 2.71 in 2014 in 2015
was significantly raised by it 27.02
The above table showing in 2014 the percentage is 424.7% and it is decreased by
357.5% in 2015

TABLE NO – 4.4
TABLE SHOWING STATEMENT OF DEPOSITS
(Rs. in Lakhs)
SL. NO. DEPOSITS 2013 2014 2015
1 FIXED 2231.39 2077.63 2691.22
DEPOSITS
2 S B DEPOSITS 1266.94 1308.12 1578.49
3 CURRENT 198.35 1039.4 906.79
DEPOSITS
TOTAL 4236.98 4619.41 5353.12
Increase% - 9 26.36
Analysis: (a) Fixed deposits The fixed deposits were 2231.39 in 2013 & in 2014 were
reduced to2077.63, &in 2015 were 2691.22 respectively.
(b) Savings deposits: Savings deposits in 2013 was 1266.94& 2014 it was increased
to 1308.12 & 2015 there was increased of saving bank deposit as compared to 2013.
(c) Current deposit: The Current deposit in 2013 it was 198.35 & in 2014 it was
increased to 1039.4& 2015 it was decreased to 906.79

GRAPH – 4.4
GRAPH SHOWING STATEMENT OF DEPOSITS
3000
2691.22
2500
2231.39
2077.63
2000
FIXED DEPOSITS
1500
1266.94 1308.4 S B DEPOSITS
CURRENT DEPOSITS
1039.4 1039.4
1000 906.79
500
198.35
0
2013 2014 2015
Interpretation:
During the year 2013 the total deposits were 4236.98 & it was gradually increased
from year to year up to 2015 compared to 2013.
The above table showing in 2013 the percentage is 9% and it is increased by 26.36%
in 2015

TABLE NO – 4.5
TABLE SHOWING DEPOSIT GROWTH IN PERCENTAGE
SL. NO. DEPOSITS 2013 2014 2015
1 F.D 109.07 149.94 138.93
2 S.B.D 174.2 245.28 421.23
3 C.D 152.84 996.6 836.97
4 Total 436.11 1391.82 1397.13
Increase% - 219 220
Analysis
(A) Fixed deposits
F.D were 109.07 in 2013 & in 2014, 2015 it was 149.94 & 138.93 respectively
(b) Savings deposits:
Savings deposits in 2013 were 174.2 & in 2014, 2015 it was 245.28 & 421.23
respectively
(c)Current deposits:
Current deposits were 152.84 in 2013 & in 2014, 2015 it was 97.806 & 836.97
respectively

GRAPH – 4.5
GRAPH SHOWING DEPOSIT GROWTH IN PERCENTAGE
996.6
1000
900 836.97
800
700
600 FD
500 421.23 SBD
CD
400
245.28
300
174.2152.84 149.94
200 138.93
109.07
100
0
2013 2014 2015
Interpretation
During 2013 the total growths in deposits were 436.11 & in 2014 it were drastically
reduced by 1391.82 but in 2015 there was a tremendous growth by 1397.13.
The above table showing in 2014 the percentage is 219% and it is increased by 220%
in 2015

TABLE NO – 4.6
TABLE SHOWING COMPREHENSIVE ANALYSIS OF
DEPOSITS
SL.
DEPOISTS 2013 2014 2015
NO.
1 F.D 60.36 46.95 51.99
2 S.B.D 34.27 29.56 30.49
3 C.D 5.37 23.49 17.52
4 TOTAL 100 100 100
Increase% - - -
Analysis:
(a) F.D: In 2013 the fixed deposits consists 60.36% of deposit, & in
2014&2015, it was 46.95 & 59.99 respectively
(b) S.B.: In 2013 the savings deposits consists 34.27% of deposit & in
2014&2015, it was 29.56 & 30.49respectively
(c) C.D.: In 2013 the current deposits consists 5.37% of deposits & in
2014&2015 it was 23.49 & 17.52 respective

GRAPH NO – 4.6
GRAPH SHOWING COMPREHENSIVE ANALYSIS OF

DEPOSITS
70 60.36
60
34.27 46.95 51.99
50 23.49
29.56
40 30.4917.52
5.37 FD
30 SBD
CD
20
CD
10
0 SBD
2013
2014 FD
2015
Interpretation:
In 2013 the F. deposits were 60.36 % deposits but in 2014 it has been
increased by 13.41& but in 2015 it has been decreased by 5.44% in 2013 the
S.B deposits were 34.27% & in 2014 it has been decreased by 4.71% as like
2015 there is a increase of 1.39% . In 2013 the current deposits were 5.37 % &
in 2014 it was increased by 18.49 %. in 2015 it was increased by 5.97% .
The above table showing in 2014 the percentage is NILL and 2015 also NILL

TABLE NO – 4.7
TABLE SHOWING BORROWING STATEMENT ANALYSIS
(Rs.in Lakhs)
BORROWINGS
SL. NO. 2013 2014 2015
FROM
i) Short term 3670.8 580.56 2337.12
ii) Medium term 1209.08 1800.00 0
TOTAL 4880.6 2380.56 2337.12
Increase% - -51.2 -52.1
ANALYSIS:
Short term borrowings In 2013 the borrowings were 3670.8rs, there is no

increase or decrease in 2014.But in 2015 it is decreased to 2337.12rs.
Medium term borrowings in 2013 were 1209.08rs, and in 2014 it was

increased to 590.92rs. In 2015 it was increased to 1800rs.

GRAPH NO -4.7
GRAPH SHOWING BORROWING STATEMENT

ANALYSIS
4000
3670.8
3500
3000
2500 2337.12
2000 1800 short term

medium term
1500
1209.08
1000
580.56
500
0
0
2013 2014 2015
INTERPRETATION:
During the year 2013 the borrowings were 4880.6rs, and it was decreased by
2500.04 Rs in 2014 again it was dramatically fall down 2337.12
The above table showing in 2014 the percentage is -51.2% and no change
-52.2% in 2015

TABLE NO-4.8
TABLE SHOWING LOANS AND ADVANCES ANALYSIS
(Rs. in Lakhs)
LOANS 2013 2014 2015
1 SHORT TERM LOANS 7031.32 4771.59 5288.29
MEDIUM TERMS
2 1707.23 1177.62 1336.82
LOANS
3 LONG TERM LOANS 710.21 537.28 452.15
4 TOTAL 9448.76 6486.49 7077.26
INCREASE% - -31.3 -25
Analysis:
(a)S.T.L. In the yr 2013 the s.t.l. Were 7031.32. In the yr 2014 4771.59in the
yr 2015, 5288.29
(b) M.T.L. In the yr 2013 the M.T.L were 1707.23in 2014, 1177.62in 2015 it
was 1336.82
(c)L.T.L.: In the yr 2013 l.t.l were 710.21, in the yr 2014 it was 537.28. In the
yr 2015 it was 452.15

GRAPH NO - 4.8
GRAPH SHOWING LOANS AND ADVANCES ANALYSIS
8000
7031.2
7000
6000
5000 4771.59 5288.29
SHORT TERM LOANS
4000 MEDIUM TERMS LOANS
710.21
1707.23
3000 537.28 LONG TERM LOANS
1177.62 452.15
1336.82
2000
LONG TERM LOANS
1000
0 MEDIUM TERMS LOANS
2013 SHORT TERM LOANS
2014
2015
Interpretation:
In the yr 2013 the borrowings were 9448.76, in the next yr it was decreased by
6486.49&it was increased by 7077.26
The above table showing in 2014 the percentage is -31.3% and it is decreased
by -25% in 2015

TABLE NO 4.9
TABLE SHOWING LOANS AND ADVANCES
GROWTH IN PERCENTAGE
SL. NO. ADVANCES 2014 2015
1 S.T.L 93.434 69.279
2 M.T.L 91.915 68.984
3 L.T.L 93.793 75.792
4 TOTAL LOANS 279.142 214.055
INCREASE% - -23.2
Analysis:
In the year 2014 the short term loans were 93.434 & in 2015 STL were 69.272. In the yr
2014 the M.T.L. were 91.915 & in 2015 M.T.L were 69.984.In the yr 2014 L.T.L
93.793 & in 2015 were 75.792

GRAPH NO – 4.9
GRAPH SHOWING ADVANCES GROWTH IN PERCENTAGE
93.79
91.92 75.79
93.43
100
68.98
90
80
70 69.28 STL
60 MTL
50 LTL
40 LTL
30
20
10 MTL
0
2014 STL
2015
Interpretation:
In the yr 2014 the advances were 279.142, where as in the yr 2015 it has been decreased
by 65.057%
In the yr 2015 the percentage is -23.2

TABLE NO – 4.10
TABLE SHOWING THE AGE OF THE RESPONDENTS
Age No of respondents Percentage
20-30 16 32%
30-40 08 16%
40-50 14 28%
Above 50 12 24%
Total 50 100%
ANALYSIS:
The above table classified the data on the basis of respondents age, 32% of
respondents are falling under the age group of 20-30, 16% of respondents under the
30-40 age group. and 28% of respondents falling under the 40-50 age group distantly
followed by 13% respondents are above 50 years
GRAPH NO – 4.10
GRAPH SHOWING THE AGE OF THE RESPONDENTS

Above 50 20-30
24% 32%
40-50 30-40
28% 16%
INFERENCE:
From the above table it can be inferred that the majority of respondents. Are 20-
30years of age, as this age group of people will be sound enough to take the decision
and they need the loan to start their own business and other occupation?
TABLE NO 4.11
TABLE SHOWING THE QULIFICATION

Qualification No of respondents Percentage
Below 10th 6 12%
SSLC 20 40%
PUC 16 32%
Degree 8 16%
Total 50 100%
ANALYSIS:
From the above table it is analysis that 12% respondents are below 10 th class
qualification, 40% are 10th class, 32% are PUC, and 16% are comes under the Degree
qualification.
GRAPH NO- 4.11
GRAPH SHOWING THE QUALIFICATION

25
20 40%
32%
15
Percentage
No of respondents
10
16%
12%
5
0
Below 10th SSLC PUC Degree
INFERENCE:
It is clear that most of the respondents’ qualification is SSLC. This qualification of

respondents are depending on agriculture and small business like provision shops,
people not have a high qualification to get the good job so they need more loans for
their earnings.

TABLE NO 4.12
TABLE SHOWING THE GENDER DIFFERENCE IN

RESPONDENTS
sex No of respondents Percentage
Male 38 76%
Female 12 24%
Total 50 100%
ANALYSIS:
The above table classifies data on the basis of gender. According to the table
76% of the respondents are male and 24%of the respondents are female.

GRAPH NO 4.12
GRAPH SHOWING THE GENDER DIFFERENCE IN

RESPONDENTS
female
24%
Male
76%
INFERENCE:
From the above table it can be inferred that majority of respondents are male.
In India majority of males is taking all economical risk so they need more loan but
compare to females males are not repaying loan sincerely it was increasing the NPA
accounts more.

TABLE NO 4.13
TABLE SHOWING THE OCCUPATION OF THE

RESPONDENTS
Occupation No of respondents Percentage
Agriculture 18 36%
Business 14 28%
Profession 8 16%
others 10 20%
Total 50 100%
ANALYSIS:
From the above table it is observed that among 50 respondents, 36% of respondents
are from Agriculture, 28% are business, 16% of respondents are from profession, and
20% are from others.

GRAPH NO 4.13
GRAPH SHOWING THE OCCUPATION OF THE

RESPONDENTS
No of respondents Percentage
18
18 40% 36%
16 35%
14
14 30% 28%
12
10 25%
10 20%
8 No of 20% Percentage
respondents 16%
8
15%
6
4 10%
2 5%
0 0%
re ss on rs
Bu re
rs
of s
n
ltu sine essi othe

Pr nes
sio
he
tu
u
es
ul
ic Bu rof
ot
si
gr
ric
A P
Ag
INFERENCE:
From the above table it inferred that the majority of respondents are from
business and agricultural, in India most of the people is depending on agriculture but
this people are economically very poor so they depending on agriculture loans. But in
the agricultural loan the borrowers waiting for clearance of loan from the government,
Here the government is main reason to increase the NPA in the Bank.

TABLE NO 4.14
TABLE SHOWING THE MONTHLY INCOME OF THE

RESPONDENTS
Income No of respondents Percentage
Up to 5000 10 20%
5000-10000 19 38%
10000-20000 17 34%
Above 20000 4 8%
Total 50 100%
ANALYSIS:
As per the table it’s clear that 20% of respondents are having Rs 5000 income per
month, 38% are having Rs 5000 to 10000 income per month, 34% respondents are
having Rs 10000 to 20000 incomes per month. And only 8% respondents having the
above Rs 20000 income per month.
GRAPH NO 4.14

GRAPH SHOWING THE MONTHLY INCOME OF THE

RESPONDENTS
4
10
Up to 5000
17 5000-10000
10000-20000
Above 20000
19
INFERENCE:
The above table observed that the most of the respondents are having Rs 5000 to
10000, monthly income it shows that these respondents need more loans for their
progress, and this respondents getting more economical problem to repay the loan
regularly.

TABLE NO 4.15
TABLE SHOWING TYPES OF LOAN TAKEN BY THE

RESPONDENTS
Type of loan No of respondents Percentage
Loans to SHG 6 12%
Housing loan 18 36%
Agriculture loan 20 40%
Other loan 6 12%
Total 50 100%
ANALYSIS:
The above table shows that the different types of loans taken by the respondents,
loans to SHG 12 % of, housing loans 36%, agricultural loans 40%, and other loans
are 12%, Taken by the respondents.

GRAPH NO 4.15
GRAPH SHOWING TYPES OF LOAN
6 6
18
20
Loans to SHG
Housing loan
Agriculture
loan
Other loan
INFERENCE:
Most of the respondents are taken the agricultural loan because of low interest 3%.and
other benefits, the NPA also very high in agricultural loans because governments.

SUMMARY OF FINDINGS AND CONCLUSION
5.1 FINDINGS:
1. The fixed deposits during the yr 2014-15 increased to1551.84 Rs, as compared
to 2013-14 1413.36rs. While as it was more in 2012-13 1594.6 rs as compared
to next successive years. The other fixed deposits are increasing year by year.
2. There is a fluctuation in Individual savings deposits as decreased to 1062.84rs,
in2014-13 as compared to 1092.74rs in 2011-12 while it was increased to
1175.26rs in 2014-15 and hence was more in 2014-2015 as compared to
previous years, while in case of other societies saving deposits increased year
by year.
Current deposits of individuals was increased 69.83 in 2015-14 as compared to
previous years while it was decreased to 42.8 in 2013-14 as compared to 2011-12
where it was 45.51.while in case of other
3. Societies were increased to 996.6 in 2013-14 and was decreased to 836.97 in

2014-15.
4. Current & fixed deposits are showing fluctuations as getting increased or
decreased among their previous and successive years while as in case of savings
deposits are increasing from year to year.
5. Percentages of deposits were increased year to year while it was more in 2014-
15 by 1397.13 as compared to previous years.
6. Comprehensive analyses of fixed deposits were increased in 2014-15 by 51.99
as compared to 2014-13, which were 46.15 while it was more in 2013-12,
60.36. Savings bank deposits increased by 30.49 in 2014-15 as compared to
2013-14 by 29.56 and were more in 2012-13 by 34.27.current deposits were
drastically increased by 23.49 in 2013-14 and once again decreased by 17.52 in
2014-15.
7. Barrowings statement analysis, short term borrowings decreased to 580.56 in
2013-14 and were increased by 2377.12 in 2014-15 and were more in 2011-12
by 3670.8. Medium term borrowings were increased by 1800 as compared to
2010-11 by 1209.08 and were nil in 2014-15.
8. Short, medium,& long term Loans & advances were gradually decreasing from

year to year.
9. According to financial report it is observed that the standard assets are increasing
every year, for the years 2012, 2014, and 2015. The standard assets are Rs
391.20.lacks, in the year 2012, in 2013 Rs950.11, lacks, and in the year 2014 the
standard assets increased to Rs 3713.85, lacks.
10. Percentage of standard assets is increased from 4.2 % to 42.6% from the year
2012 to 2015.
11. The bank incurred loss in the year 2009-10 was Rs 1406.31 lacks, and in 2012-
2015 Rs 691.47,lacks, but in the year 2013-2014 profit earned Rs 1761.62 lacks.
12. Total issue of loan is reducing from year to year, in the year 2012 total issue of
loan 9406.86, lacks, in the year 2013, Rs 9390, lacks, and 2014, it’s Rs 8726.33
lacks.
13. The total amount of assistance under agriculture loans is very high.
14. The total number of NPA has been decreasing in every sector from year to year.
15. The NPA under agriculture sector has been decreasing year by year and the Bank
has maintained a consistent recovery record over last three years.

5.2 SUGGESTION
1) The Bank should attract more and more Saving Bank Deposits and Current
Deposits by providing good services when compared to the other banks.
2) The Bank should provide its customer Advanced services such as E-banking,
Tele- banking services etc. so that more and more customers are attracted. That
helps the Bank to lend to its higher level and in turn will result in increasing its
profitability.
3) The Bank should increase its advances towards Short-Term Loans to the
maximum extent, so, that it makes possible for the Bank to increase its
profitability.
4) The Bank should provide from its profit more towards its provision. So, that it
helps it in strengthening the position of the Bank.
5) Repayment of loans depends on Income Generating Capacity of the Borrowing
Concern. So, the Bank should advance loans to those concerns Which have
good income generating capacity, and the repayment of loan is definite from
those concerns with regular interest.
Which in turn will result in reducing the Banks NPAs, which in turn will result
in increasing its profitability?
6) The bank should establish its Asset Recovery Branch. Where the Bad and
Doubtful Debts of various existing branches should transferred to the Recovery
Branch. In which the Bank should have trained staff with necessary
background for Recovery. The specialized Recovery Branch may give
undivided attention to recovery of dues, which may help in reducing its
NPAs.
7) The Bank should increase its Banks Branches to the other districts of
Karnataka for its further growth. So, that it may help the Bank to extend its
valuable services to other districts customers.
8) The Bank should conduct “CREDIT SURVEYS" before sanctioning bank

finance. Credit Reports, Proper market Reports must be studied before
financing.

9) Appraisal of loan application should be made thoroughly particularly with

reference to purpose, repayment capacities.
10) Regular contact with borrower and presuming the borrower to repay the
instalments if defaulted.
Proper documentation at the time of disbursement of loan
11) Initiating legal action immediately after continues default of 3 to 4 instalments.
12) To make correspondents with the employer starting from sanction of loan to
closing of loan account of the borrower.
13) The bank should monitor the branches adequately and provide useful suggestions
and recommendations for expedition’s appraisal and recovery of assistance
Suitable selection of borrowers.
14) Assessments of integrity and worth of the borrower in the initial stage

5.3 CONCLUSION:
15) It can be concluded that the banks follows and adhere to the Issued for granting
various types of loans and advance the bank should provide its customer advanced
services such as E-banking Tele- banking etc so that more and more customer are
attracted.
16) It should consider establishing its assets recovery branch, which may give
undivided attention to recovery of clues, which may help in reducing its NPAS.
17) It is observed that the bank is concentrating more to-wards short term borrowings
it should concentrate to reduce medium- term loans than short- term loans over the
year. It should increase its advance towards short-term loans to the maximum
extent.
18) It is observed that fixed deposits constitute a major part of total deposits for the
bank has set up the task force committee monitoring the NPAS and contracting
19) The defaulters with the help of the branch official which is yielding good results
It should increase its banks branches to the other districts of Karnataka for its
further
20) Growth. So that it may help the bank to extend its valuable services to other
district customers. It should attract more and more saving bank deposits and
current deposits by providing good services when compared to the other banks.

A Study On Credit Management at District Co

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A Study On Credit Management at District Co

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A STUDY ON CREDIT MANAGEMENT AT KOLAR AND CHIKBALLAPUR DISTRICT CO-OPERTIVE CENTRAL BANK

1.1 CREDIT MANAGEMENT

1.2 IMPORTANCE OF CREDIT MANAGEMENT:

5. Cash management firms grant credit to facilitate sale expensive or

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1.3 OTHER RELEVANT ASPECTS OF CREDIT MANAGEMENT:

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1.4 RECOVERY OF LOANS AND ADVANCES

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Credit Recovery plays a crucial role in CREDIT MANAGEMENT, as it is

1.5 RECOVERY METHODS

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a) Portfolio Consideration: The objective of any bank is to maximize safety of

d) Marketing of funds: Any approaches to lending has to be looked in its from

Besides establishing credit standards for a firm evaluating credit applicants is

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1. Obtaining credit information.

1 Obtaining credit information: The first step in credit analysis is obtaining

 Internal: Firms require their customers to reveal their details about

 External : The availability of information from external source to

Following are the externals sources that are employed to collect

Analysis of credit information:

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These credits have three components:

Cash discount period:

How trade credit is managed in India?

 Obtaining credit information

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Control of account receivables:

Lengthening of the credit period pushes sales up by indebting existing

1) The collection should be clearly established.

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1) The type of customer, whether new or existing.

1.6 INDUSTRIAL BACKGROUND (BANK )

1.7 GENERAL INTRODUCTION

Co-operative banks constitute an important segment of the Indian banking

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District co-operative department is headed by a Deputy Registrar of Co-

Co-operation means “working together”. In the middle of 19 th century, co-

1.8 IMPORTANCE OF CO-OPERATIVE INSTITUTIONS.

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5. These institutions are also helpful in curbing the evils of bureaucracy.

1.9 ORIGIN OF CO-OPERATIVE BANK

2. Second Stage [1912-1918]

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members in accordance with co-operative principles.

3. Third and fourth stage [1929-1939]

1.10 CO-OPERATIVE CREDIT INSTITUTIONS

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b. Central Co-operative Banks

c. State Co-operative Banks

Features of Co-operative Organization:

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 Democratic control and management

1.11 HISTORY OF URBAN CO-OPERATIVE BANKS

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1.12 KARNATAKA STATE CO-OPERATIVE (APEX) BANK

BASIC OBJECTIVES OF THE KSC (APEX) BANK

 To provide short-term agriculture loan and loans for marketing of agricultural

 To provide cash-credit loans to processing, and marketing consumer co-operatives

 Advances to the non-agricultural activities like cotton industries, small-scale

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1.13 POLICY INITIATIVES OF RESERVE BANK OF INDIA