SYNOPSIS

ON

“Study On Credit policy"

AT
D B And C Employees Co- Operative Credit Society Ltd. With
Reference PWD

Submitted to
Rashtrasant Tukadoji Maharaj Nagpur University, Nagpur
For the award of degree of
Master of Business Administration

Submitted By:-
Varsha P Tajne

G. H. RAISONI INSTITUTE OF INFORMATION

 TECHNOLOGY, NAGPUR
2019-2020

INDEX

SR NO CONTENT PAGE NO

1. INTRODUCTION 1

2. COMPANY PROFILE 2

3. OBJECTIVE OF STUDY 3

4. HYPOTHESIS 4

5. RESEARCH METHODOLOGY 5

6. BIBLIOGRAPHY 6
 Introduction
Credit policy forms a sub part of the monetary policy. It is used to decide the quantum and
the rate of interest at which credit is given by the banks. The monetary policy is either
contractionary or expansionary and the same is decided depending upon the amount of
money supply required in the economy.

In economics, credit policy is government policy at a particular time on how easy or difficult
it should be for employee to borrow money and how much it will cost. This is done through
change in interest rates.
Credit policy varies from firm to firm and is based on the particular business, cash flow
circumstances, industry standards, current economic conditions and the degree of risk
involved.
It also has impact on performance, as a relaxed credit policy boosts sales but also increases
defaults and bad debts whereas a conservative credit policy may restrict sales but will also
minimize defaults.
Credit policy is an important part of the overall strategy of a firm to market its products. It
refers to those decision variables that influence the amount of trade credit i.e investment in
receivables. Credit policy can be lenient or stringent.
There are two types of credit policies. Let us know about them in brief.

a) Lenient/Loose/expansive Credit Policy:

Under this policy, firms sell on credit to customers very liberally even to those customers
whose creditworthiness is not known or doubtful. Because of liberal policy, sales increases
and as a result, profit also increases but bad debts also increase and hence the firm face the
problem of liquidity.

b) Stringent /Tight /Restrictive Credit Policy:

Here, the firm is very selective in extending credit. credit sales are made only to those
customers who have proven worthiness. Because of tight credit standards, chances of bad
debts and other credit costs are minimized but at the same time sales and profits, margins are
restricted.

Therefore, the objectives of credit management should be the achievement of a balance

that maximizes the overall return of the firm. The firms normally follow a credit policy which
is in between lenient and stringent credit policies.
Aspects of Credit Policy:

The important dimensions of a firm’s credit policy are credit terms, credit standards and
collection policies.

1. Credit Terms:

Credit terms are the stipulations under which the firm sells on credit to its customers. These
are with regard to the repayment of the credit sales amount.

1.1 Credit period:

It is time duration for which credit is extended to the customers. it is generally stated in
terms or a net date. For example, ‘net 30’ refers to the payment to be made within 30 days
from the date of the credit sale.

1.2 Cash discount:

In order to induce the customers/debtors to pay their bills early, the cash discount is allowed.
It indicates the rate of discount and the period for which the discount is offered. The customer
is expected to make the payment by the net date if he does not avail himself of this discount
offer.

Credit terms reflect a combination of both credit period and cash discount.

For example, if credit is extended as ‘3/10 net 30’. It implies a cash discount of 3% is offered
to a customer who pays within 10 days from the sale date. If the offer is not availed, then,
payment has to be made by the 30th day. If not paid then, he would be deemed to have
defaulted.

2. Credit Standards:

Credit should be allowed to only those customers who contribute good credit risk. Credit
standards are the basic criteria for extension of credit to customers. they are influenced by
three C’s of credit viz..

1.  The willingness of the customer to pay.

2.  The ability of the customer to pay.
3.  The prevailing economic condition.
Liberal credit standards push up sales by attracting more customers. But, this increases the
incidence of bad debts loss, investment in receivables and cost of collection. Stiff credit
standards tend to depress sales but at the same time, also reduce the incidence of bad debt
loss, investment in receivables and collection costs.

3. Collection policy:
It should aim at accelerating collection from slow payers and be reducing bad debts losses.
The collection program should consist of the following:

 Monitoring the state of receivables.

 Dispatch of letters to the customers whose due date is nearing.
 Telegraphic and telephonic advice to the customers around the due date.
 The threat of legal action to overdue accounts.
If the firm is strict in its collection policy with the permanent customers who are temporarily
slow payers, they get offended and shift to the competitors and thus, the firm loses its
permanent business.

If the firm is lenient in collection policy, receivables increase and thus profitability reduces.

Hence, the optimum collection policy is a trade-off between costs and benefits which
maximizes profitability and the value of the firm.

As you create your policy, consider the link between credit and sales. Easy credit terms can
be an excellent way to boost sales, but they can also increase losses if customers default. A
typical credit policy will address the following points:

 Credit limits. You'll establish dollar figures for the amount of credit you're willing to
extend and define the parameters or circumstances.
 Credit terms. If you agree to bill a customer, you need to decide when the payment
will be due. Your terms may also include early-payment discounts and late-payment
penalties.
 Deposits. You may require customers to pay a portion of the amount due in advance.
 Credit cards and personal checks. Your bank is a good resource for credit card
merchant status and for setting policies regarding the acceptance of personal checks.
 Customer information. This section should outline what you want to know about a
customer before making a credit decision. Typical points include years in business,
length of time at present location, financial data, credit rating with other vendors and
credit reporting agencies, information about the individual principals of the company,
and how much they expect to purchase from you.
 Documentation. This includes credit applications, sales agreements, contracts,
purchase orders, bills of lading, delivery receipts, invoices, correspondence, and so
on.
 Introduction to Company
Public Works Department has a glorious history in the state of over 150 years. It is mainly
entrusted with the construction and maintenance of roads, bridges, and government
buildings. The department also acts as the technical advisor to the State Government.
Initially, the works pertaining to Irrigation, Roads, and Bridges as well as constructions
cum maintenance of Public Buildings were entrusted to this department.
In the year 1960 a separate "State of Maharashtra" came into existence and thereafter this
department by way of reorganization divided into two distinct Departments viz. Irrigation
Department & Building and Communication Department. In the year 1980, the housing
function was looked after by yet another separate Department and existing Public Works
Department continued to get established.

Public Works Department of Govt. of Maharashtra primarily executes the following

different vivid development works.

 Construction of New Roads & Bridges.

 Maintenance and repairs of existing Roads and Bridges.
 Construction of Govt. buildings.
 Maintenance and Repairs of existing Govt. buildings.
 Undertaking Deposit Contribution works relating to different Departments of Govt. of
Maharashtra as well as of other Local Bodies
 Resettlement works due to Natural calamities like flood, earthquakes etc.
 Construction of Road’s under Employment Guarantee Scheme.
 Construction of Helipads for Very Important Person’s visits wherever required.
 Fixation of rent of Private premises requisitioned for housing Govt. offices.
 Designs, construction, maintenance and repairs of runway relating to the Aviation
Department.
 Development of Parks and Gardens in the vicinity of important Public Buildings and
landscaping of grounds in order to transform into a garden
 Reservation of Govt. Rest Houses and Circuit Houses.
 To undertake auction sale of fruit trees along the roadsides.
 To permit construction of approaches on both sides of roads to the private individual,
other institutions, factories, Petrol Pumps etc.
 To allow irrigation drains, electricity lines, telephone duct cables etc. along and across
the roads.
 To evacuate the encroachment coming along the roadsides
 The issue of certificates periodically to Cinema Houses about the stability of
structures/arrangement related to electrical fittings conforming to Cinema Regulation Act.
 Issues of certificate for lift operating in Private Buildings.
 To lease out the Govt. land for Exhibition/Circus or other purposes etc. temporarily.
 Plantation of trees along both sides of the road

Cooperative credit society is an association of members registered under State Co-

operative Societies Act. Share capital is contributed by members. Credit society elects
their chairman and board of directors. They can accept deposit from members and give
loans to members. Profit or loss shared among members.

  The essence or basic features of cooperative banking system must be a larger reliance on
resources mobilized locally and a lesser and lesser dependence on higher credit institutions.
However, many PACSs are at present dependent on CCBs and have failed miserably in
mobilizing rural savings. Heavy dependence on outside funds has, on the one hand, made the
members less vigilant not treating these funds as their own and on the other led to greater
outside interference and control. Overall, this has made the cooperatives a "mediocre,
inefficient and static system". The cooperative credit institutions are plagued by the problem
of high level of over-dues. These over-dues have clogged the process of credit recycling since
they have substantially reduced the capacity of cooperatives to grant loans.

Mission :

To meet the states need for the provision and management of the roads network and building
infrastructures to the best standards within the strategic policy frame work set by the Gov. of
Maharashtra and thus promote the economic well-being and the quality of life of the people.

Vision:

- We work for the community to have a positive effect on the economic and social life
of our state.
- Our people are our most important resource.
- We are enthusiastic to apply the latest technology where it is cost effective to improve
our business.
- We undertake to properly manage the funds allocated to us by the Government.
- We continuously learn how to do things better by imparting training to our workers.
Objectives Of Study
 To understand the types of loan provided by D B And C Employees Co- Operative
Credit Society to it’s Employee.

 To ensure consistency in the processes and procedures used to manage all credit
aspects of an Society.

 To ensure that all customers are treated fairly when making credit decisions.

 To know about schemes and programs introduce by D B And C Employees Co-

Operative Credit Society.
 Hypothesis

 The hypothesis taken under consideration for the study is 2019-2020.

 That the documentation process of procuring Credit Policy of by D B And C

Employees Co- Operative Credit Society Ltd is easy.
 Research Methodology
Research in common parlance refers to the search for knowledge. It can be defined as a
scientific and systematic search for pertinent information on specific topic. In fact search is
an art of scientific investigation. in simple terms research means, ‘a careful investigation or
enquiry especially through search for new facts in any branch of knowledge.

DATA COLLECTION

PRIMARY DATA:- The primary data is not use the project.

SECONDARY DATA:-

The secondary data are collected from Nagpur city Authorized dealer of from:-

 Magazines, journals, brochures, etc..

 Website of the society…
 Bibliography

www.mahasahakar.maharashtra.gov.in