A STUDY OF LOANS AND ADVANCES OFFERED AT CANARA BANK

Presented
By: Aditya Balak

Introduction

Canara Bank has been serving its customers since July 1906 and has undergone various stages of growth over hundred years of excellence. Founded by Shri Ammembal Subba Rao, the bank has attained nationalization in the year 1969. The banking operations are customer friendly and the bank has emerged as the largest nationalized bank in India.

Canara Bank Loans & Advances

Canara Bank Loans are offered to the customers to fulfill their monetary requirements. The various types loans, which are offered to the customers include: Personal Loan Home Loan Consumer Loan Vehicle Loan Educational Loan Credit Cards Facilities Agricultural Loan

Other products of loans

Agriculture & Rural Credit Kisan Credit Card Loans for Agri- Clinic Minor Irrigation Loans Farm Machinery Loans Farm Development Loans Vehicle Loan for Agriculturists Loan for Plantation Crops Loan for Marine Fisheries Loan for Inland Fisheries Loan for Sericulture

Cont.

Loan for Purchasing Agricultural Land Loan for Poultry Export Credit for Agro Products Other Agricultural Loans Loans to Small Scale Industries Loans to Heavy Industries Loans to self employed persons

For Womens

The Centre for Entrepreneurship Development for Women was established by Canara Bank in India at the Bank's Corporate Office, Bangalore during the year 1988 with an objective of assisting the potential women entrepreneurs to select income generating activities and starting ventures of their own.

Mahila Banking branch

An exclusive branch for women and Mahila banking division, which is the 1st of kind in the banking industry. Details are enlisted below:

Mahila Banking Branch, Jayanagar , Bangalore, Karnataka Mahila Banking Division, Mandipet Branch, Davangere, Karnataka Mahila Banking Division, M G Road Branch, Agra, UP Mahila Banking Division, N V Street Branch, Madurai, Tamil Nadu Mahila Banking Division, West Palace Road, Thrissur, Kerala Mahila Banking Division, West Hill, Kozhikode, Kerala Mahila Banking Division, Shimoga Main Branch, Karnataka These specialized branch and divisions offer all banking services to women.

Loans & Advances:

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount.

Rates of loans w.e.f, 2008 in the Bank.

ROI on housing loans w.e.f. 10.11.2008: Upto Rs.30 Lacs:(a) Upto 5 years 9.50% (b) Above 5 years upto 10 years 9.75% (c) Above 10 years upto 25 years 10% Above Rs.30 Lacs:(a) Upto 5 years 10.25% (b) Above 5 years upto 10 years 10.50% (c) Above 10 years upto 25 years 10.75%

Contd.

Can Mobile (Car Loan / Two-Wheeler Loan):@12.50% PA. Gold Loan/Swarna Loan Scheme:- @13.25%

Loans for Traders & Businessmen:(a) Upto Rs. 2Lakhs 14.50% (b) Above Rs. 2 Lakhs 15.00%

Contd.
Vidyasagar Loan for Students: (Rate of Interest Subject to changes as advised by Bank / RBI from time to time):1. Upto Rs 4Lacs 12.50% 2. Above Rs 4Lacs Upto Rs 7.50 lacs 13.50% 3. Above Rs7.50Lacs Upto Rs 20lacs 13.50% 4. For the students who secured admission in IIT/ IIM/ISB 10.75%

Contd.

Doctor's Choice (Medical practitioners Loan Scheme) - @12.75% for more than 10 lacs. IPO Financing: @ 15% PA Loans to assist employees to subscribe to shares of their own companies under reserve quota: @15%PA Loans to individuals against other approved securities: @15%PA Corporate Loan scheme : @14%PA Canara Jeevan : @10.50% for 3 years. Canara Trade : @14% PA.

Types of Loans
1. Secured 2. Unsecured Secured: A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan. A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. A type of loan especially used in limited partnership agreements is the recourse note.

Contd.
Unsecured: Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages: credit card debt personal loans bank overdrafts credit facilities or lines of credit corporate bonds

Contd.
TERM LOANS

Term Loan is normally extended for acquisition of Land, Building and machinery, purchase of vehicles etc. and also along with working capital finance as composite loans. Term Loan is given both for industrial and nonindustrial borrowers i.e. both for projects / activities involved in manufacture/processing/repairing and business / trading activities etc. The project needs to establish technical feasibility and economic viability. Rate of interest on term loans depend upon various factors like nature of the project, quantum of loan, risk rating, repayment period and structure of the debt. Securities for term loans per se would be as per general lending norms of the banks.

CREDIT RISK MEASUREMENT/MODELS

(1) CREDIT RISK MEASUREMENT: The credit risk assessments help the bank to measure whether the potential borrowers will be able to meet their loan obligation in accordance with contractual agreements. All borrowers with the limit of Rs 200000/- and above are to be rated individually and under the appropriate risk rating models developed for the purpose. (2) Rating Models:
(a) Risk Assessment Model (RAM):

This model is applicable for the borrowal accounts with sanctioned limit of over Rs 2 crore.

Contd.
(b) Manual Model:

This model is applicable for the borrowal accounts with sanctioned limit of over Rs 20 lacs and not more than Rs.2 crore. (c)Small value Model: This model is applicable for the borrowal accounts with sanctioned limit of Rs 2 lacs and not more than Rs.20 lakh.
(d)Portfolio Model:

The borrowal accounts of aggregate limits below Rs. 2 lacs and borrowal accounts where financial statement are not available are risk rated under portfolio model, duly grouping the accounts are near homogenous the accounts are near homogenous pool based on category of borrowers and loan schemes/segment. The model covers rating of borrowal accounts classified under priority and non priority segments. The priority sector loans include both Direct and Indirect Agricultural loans, and non priority sector loans include those under schematic lending under retails schemes.

INDUSTRY PROFILE I
Introduction of Banking Sector: Banks in India have played a significant role in the development of the Indian economy. Banks continue to be the major financial intermediaries with a share of 64% of total financial assets. However, on-bank financial companies and development finance institutions are also emerging as alternative source of funding. In India, foreign bank account for only around 8% of the total assets of the banking system. A Bank has been moving into certain areas that were the exclusive domain of the development finance Institutions (DFIs),e.g. project finance and investment banking.

Contd.
MARKETING OF BANK SERVICES: It means designing good services as well as good delivery of these services. It covers following functions: Identification of customer needs, financial/service related Developing appropriate services/products to suit the needs and determining their prices. Setting up channels for their delivery and making the present and potential customers aware about their availability. Developing proper attitude, orientation and culture among the employees for delivering the services to the satisfaction of the customers.

SCOPE OF BANKING INDUSTRY

Banks have voluntarily taken on the entire task of mobilization of savings of the household sector, over the past several decades, and helped achieve impressive household savings rates of 20% of the Countrys GDP. We are already witnessing the ATMs progressing, Tele banking, and Home Banking, and the trends towards aggregation and cross selling of various financial products, such as Banking, Mutual Funds, and Insurance, to name just a few, are very evident. In the insurance Sector collaboration with OBC Bank and HSBC Bank.

COMPANY PROFILE
BANK HISTORY: Canara bank is Founded by Shri Ammembal Subba Rao &CANARA BANK Ltdin 1910 and after become Canara Bank in 1969 nationalized bank of India. "A good bank is not only the financial heart of the community, but also one with an obligation of helping in every possible manner to improve the economic conditions of the common people" - A. Subba Rao Pai.

Founding Principles

To spread education among all to sub-serve the first principle. To inculcate the habit of thrift and savings. To transform the financial institution not only as the financial heart of the community but the social heart as well. To assist the needy. To work with sense of service and dedication. To develop a concern for fellow human being and sensitivity to the surroundings with a view to make changes/remove hardships and sufferings. Sound founding principles, enlightened leadership, unique work culture and remarkable adaptability to changing banking environment have enabled Canara Bank to be a frontline banking institution of global standards.

PROFILE OF CANARA BANK

A Brief Profile of the Bank Widely known for customer centricity, Canara Bank was founded by Shri Ammembal Subba Rao Pai, a great visionary and philanthropist, in July 1906, at Mangalore, then a small port in Karnataka. The Bank has gone through the various phases of its growth trajectory over hundred years of its existence. The eventful journey of the Bank has been characterized by several memorable milestones.

Contd.
Today, Canara Bank occupies a premier position in the comity of Indian banks. With an unbroken record of profits since its inception, Canara Bank has several firsts to its credit. These include:

Launching of Inter-City ATM Network Obtaining ISO Certification for a Branch Articulation of Good Banking Banks Citizen Charter Commissioning of Exclusive Mahila Banking Branch Launching of Exclusive Subsidiary for IT Consultancy Issuing credit card for farmers Providing Agricultural Consultancy Services

Vision & Mission

Vision: To emerge as a Best Practices Bank by pursuing global benchmarks in profitability, operational efficiency, asset quality, risk management and expanding the global reach. Mission: To provide quality banking services with enhanced customer orientation, higher value creation for stakeholders and to continue as a responsive corporate social citizen by effectively blending commercial pursuits with social banking.

Canara Bank in India

Canara Bank in India has a history of nine decades and is the largest public sector banks in India. Canara Bank of India has a total of 47,843 employees and is spread with 2409 branches throughout the country. The Bank has 5 forex dealing rooms located in Mumbai, New Delhi, Calcutta, Chennai and Bangalore in India and one in London branch.

Awards/Accolades:

First National Award, instituted by the Ministry of Micro, Small & Medium Enterprises, Govt. of India for 'Excellence in Micro & Small Enterprises (MSE) Lending. 'Golden Peacock Award for Corporate Social Responsibility. Golden Peacock National Training Award-2007. 'The Organization of the Year Award- for PR (Public Relation) Excellence. Best Performing Bank under Rural Employment Generation Programme, (REGP) of Khadi and Village Industries. Golden Peacock National Training Award 2008 Best Corporate Social Responsibility Practice Award.

Product Information

1.
2. 3. 4. 5.

Deposits: Savings Account Fixed Deposit Recurring Deposit Senior Citizen Services Kids Account Loans:A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

OBJECTIVES

To know various kind of loans offered by canara bank. To know the terms & conditions relating to loans. To know the economic mode of granting loans. To co-ordinate with Government/Voluntary org. regarding loans. To offer counseling services to the Entrepreneurs existing as well as new customers. To assist in the formation of self-help groups. To assist the customers for different financial products in the market. To offer the new loan facilities to their customers and guide properly time to time.

RESEARCH AND METHODOLOGY

Research Design Research was initiated by examining the secondary data to gain insight into the problem. By analyzing the secondary data the study aim is to explore the short comings of the present system and primary data will help to validate the analysis of secondary data besides on unrevealing the areas which calls for improvement.

Contd.

Research plan

Preliminary Investigation In which data on the situation surrounding the problems shall be gathered to arrive at the area. The correct definition of the problem. An understanding of its environment. Developing the research plan The data for this research project has been collected through self Administration. Due to time limitation and other constraints direct personal interview method is used. A structured questionnaire was framed as it is less time consuming, generates specific and to the point information, easier to tabulate and interpret. Moreover respondents prefer to give direct answers. In questionnaires open ended and closed ended, both the types of questions has been used.

Contd.
Collection of data 1. Secondary Data It was collected from internal sources. The secondary data was collected on the basis of organizational file, official records, manuals, newspapers, magazines, management books, preserved information in the banks database and website of the bank. 2. Primary Data All the people from different profession were personally visited, interviewed and telephonically approached. They were the main source of Primary data. The method of collection of primary data was direct personal interview through a structured questionnaire.

Contd.

Sampling Plan Since it is not possible to study whole universe, it becomes necessary to take sample from the universe to know about its characteristics. Sample Technique Random Sampling. Research Instrument Structured Questionnaire.

List of the Public Sector & Private Sector Banks

Sr No 1 Public Sector State Bank of India Private Sector ICICI Bank

2
3 4

Punjab National Bank

Bank of Baroda CANARA Bank Oriental Bank of

HDFC Bank
UTI Bank IDBI Bank

5 6 7 8 9 10

Commerce Bank of India Union Bank Corporation Bank Andhra Bank VIJAYA Bank

ING Vysya Bank Jammu and Kashmir Bank Kotak Bank

DATA ANALYSIS & INTERPRETATI

Q1. Are you interested in taking loan?

Response Yes No Total No. of response 65 35 100 Percentage % 65 35 100

Response

Yes No

Interpretation: 35%respondents are not interested in taking loan but 65% respondents are interested.

Q2. What kind of loan you want to avail?

Response House loan Educational loan Personal loan Vehicle loan Total No. of response 15 35 21 29 100 Percentage % 15 35 21 29 100

No. of respondent
40 30 20 10 0

No. of respondent

Q3. For how many years you want to avail loan?

Response Less than 1 Year 1 to 3 Year 3 to 5 Year More than 5 Year Total No. of response 15 35 21 29 100 Percentage % 15 35 21 29 100

No. of Response

Less than 1 Year 1 to 3 year 3 to 5 Year More than 5 year

Q4. Which Bank is preferred by you for making more transactions relating to loan & advances?
Banks No. of respondents CANARA Bank 37 Other Pvt. Banks 24 Other Nationalized Banks 39

50
40 30 20 10 0 Canara Other Pvt. Bank Nationalised bank

No. of respondent

Q5. Which class avail the maximum bank -loan services?

Occupation No. of respondents Businessman 35 Serviceman 38 Self-employed people 11 Others 16

40 35 30 25 20 15 10 5 0

Businessman

Serviceman
Self-employed people Others

Occupation

Q6. How you prefer to pay your installments ?

Response MONTHLY QUARTERLY ANNUALLY Total No. of response 25 40 35 100 Percentage % 25 40 35 100

No. of Response
40 30 20

10
0

No. of Response

Q7. From which sector you will interested to avail loan ?

Response Public Sector Private Sector Co-operative Sector TOTAL No. of response 65 25 10 100 Percentage % 65 25 10 100

No. of Respondent
80 60 40 20 0

No. of Respondent

LIMITATIONS

Due to inflexibility in account opening it is difficult to convince customers. No authentic evidence of customers is found. No special facilities of loans to businessman are given in semi rural or rural area. The bank is not tapping untapped areas. Lack of communication & delivery channels. Lack of social banking. Loans are not provided without security. Loans are not provided at ease lot of paper work & documentation is involved. The time bound period is the major limitation in research projects.

RECOMMENDATIONS

More customer convenience Services for businessmen Service for Self employed & Servicemans Rural Banking Social Banking

CONCLUSION

The cutthroat competition of 21st century demands not just a satisfied but delighted customer as a key to success in a service industry. Strength, Weakness, Opportunities, threat analysis are apply in the bank to do the work more efficiently. Also, improved advertising efforts, embracement of latest technology, more and more awareness about internet banking thus facilitating customers while providing solutions at their convenience and easy reach and an approach to target the lower income group constituting about 30% of the city population can serve to be the milestones in CANARAs success story..

Thanks