finance project - ksfe

1 Project Submitted by _______________

ON

OF

UNDER GUIDANCE OF: Mr. ABDUL FATHAQUE

Branch Manager – KSFE Main Branch, Palakkad

Submitted in:

Submitted By:


ACKNOWLEDGEMENT

I would like to express my heartiest gratitude to Mr. Abdul Fathaque (Branch

Manager) for giving opportunity to associate myself to the number one financial

institution in Kerala and to carry out my project titled “WORKING OF A

FINANCIAL INSTITUTION”

I am sincerely thankful to all the staffs in KSFE – Palakkad Main Branch under

whose guidance I have successfully completed this project and the time spend with

all has been a great learning experience. I thank all for the constant

encouragement, warm response and for filling every gap with valuable ideas that

has made this project successful.

I would also give special thank to my father and my friends for their support,

information, co-operation, advice to complete my project.

I wish to express my heartiest gratitude to _______________________________

for his support and inputs for preparing a complete project which helped me a lot

in improving my skills and knowledge.

T A Radhika

M.Com 3rd

Semester

VLB Janakiammal College

Coimbatore


KSFE (Kerala State Financial Enterprises)

TYPE : PUBLIC SECTOR (Miscellaneous Non-Banking Financial

Company [MNBFC])

OWNED BY : GOVERNMENT OF KERALA

FOUNDED : 6th NOVEMBER, 1969

HEAD OFFICE : TRICHUR (Known as Hub of Chitty Business in

Kerala)

NUMBER OF BRANCHES : 289

CHAIRMAN : Mr. MANI VITHAYATHIL

MANAGING DIRECTOR : Mr. CHANDRAMOHAN PILLAI

INDUSTRY : FINANCE

PAID UP CAPITAL : Rs. 10 Crores

BUSINESS TURNOVER : Rs. 5,462 Crores

EMPLOYEES : MORE THAN 4,000


INDEX

CHAPTER 1: INTRODUCTION……………………………. 5

� OBJECTIVE OF THE STUDY

� SCOPE OF THE STUDY

CHAPTER 2: PROFILES……………………………………………..7

� HISTORY OF THE COMPANY

� GROWTH PATH

� RECENT DEVELOPMENTS

� PRESENT SCENARIO

� VISION OF THE COMPANY

CHAPTER 3: PRODUCTS PROFILE……………………………….. 13

� LINE OF PRODUCTS

� CHITTY FUNDS – THE PILLAR PRODUCT OF KSFE

� BRIEF ABOUT OTHER PRODUCTS

CHAPTER 4: WORKING OF A BRANCH…………………………. 32

� ORGANIZATION CHART

� DUTIES AND RESPONSIBILITY

� WORKS DONE IN THE BRANCH

� PROCEEDURE OF ACCOUNTING THE DATAS

CHAPTER 5: CONCLUTION………………………………………. 46

� FINDINGS

� SUGGESSIONS

� SWOT ANALYSIS

� CONCLUSION

� DECLARATION


CHAPTER 1

INTRODUCTION

OBJECTIVE OF THE STUDY

SCOPE OF THE STUDY


OBJECTIVE OF THE STUDY

The project was conducted in KSFE, Palakkad, keeping the following objectives in

view:

� The project was done to understand the working of a financial institution.

� To understand the different financial instruments / products used in a

financial institution and the response of the public on different products

� To understand / study the organization structure and the roles and

responsibility of each individuals working in the company.

� To understand the accounting procedures of different type of financial

products like Chitty Products, Savings Deposit, and Fixed Deposit etc.

SCOPE OF THE STUDY

The following bulletin points will describe the important “SCOPE” of the project

conducted:

� The data for this project is collected from internet and from KSFE,

Palakkad Main Branch.

� The reader of this project can understand about the Financial Products in

Kerala. Mainly about CHITTY FINANCE concept in Kerala.

� To understand and to describe about the working of a financial company.

� Through this project we can know the growth of the company and the

present scenario of KSFE and the Financial Market in Kerala.


CHAPTER 2

PROFILES

HISTORY OF THE COMPANY

OBJECTIVES OF THE COMPANY

VISION OF THE COMPANY

FUTURE PLANS OF THE COMPANY


HISTORY OF THECOMPANY

During the year 1967 Government of Kerala took a policy decision to the effect

that Chitties / Kuries should be conducted under State auspices. The then Finance

Minister in his budget speech for financial year 1967-68 made the following

announcement on the floor of the Assembly:

“I view this decision as a bold step forward along the path towards socialism,

aimed at bringing banks and other financial institutions under social

control”.

The Chitty/Kuri business being what it is, there existed ample scope for

exploitation of the ignorance, indifference and gullibility of the needy people by

unscrupulous promoters, who organized financial institutions in the name of

chitty/kuri fund in order to mobilize fluid resources in their own interest and

appropriate for themselves substantial profit accrued out of such organizations.

Government wanted to introduce a check on the unbridled growth of such financial

institutions with a view to safeguard the interest of the general public and at the

same time to channelise the savings so consolidated for productive purposes. With

these objectives, Government appointed a Special Officer in the year 1967 to

prepare a comprehensive scheme for starting chitties and kuries under Government

control. The Special Officer presented his report on 7th October 1967 analyzing all

aspects involved in the proposal and recommending strongly the entry of

Government in the field of chitties and kuries. Though the recommendation was

for conducting the business as an adjunct of the Registration Department,

Government, however, took a different view and decided to bring within the

purview of Government control not only chitties/kuries but also some other

financial transactions for which socialsation was felt necessary. Hire purchase


financing and insurance were the new areas suggested for inclusion within the

ambit of the proposed organization.

Accordingly, Government decided to organize a public sector undertaking with the

name ‘The Kerala State Financial Enterprises Limited’ for the purpose of

conducting Chitty, Hire Purchase and Insurance business under Government

control.

The Kerala State Financial Enterprises Limited is fully owned by the Government

of Kerala and is the first Public Sector Company to conduct chit business in the

whole of India. It was incorporated on 6th

November 1969 with its registered office

at Trichur. It has an authorized capital of Rs.25 lakhs divided into 25,000 equity

shares of Rs.100 each and a paid up capital of Rs.2 lakhs as initial contribution

from Government of Kerala. The share capital contribution of Government was

progressively increased from Rs.2 lakhs to Rs.7 lakhs in the year 1970-71, to

Rs.12 lakhs in the year 1971-72, to Rs.15.5 lakhs in the year 1972-73, to Rs.20.5

lakhs in the year 1973-74, to Rs.27 lakhs in the year 1974-75, to Rs.28 lakhs in the

year 1977-78 and to Rs.38 lakhs in the year 1987-88. The authorized capital was

raised to Rs.50 lakhs in the year 1974-75 and to Rs.100 lakhs in the year 1989-90.

The Management of the company is vested in the Board of Directors constituted

by Governor from time to time. The number of Directors shall not be less than 2

and shall not be more than 9. The maximum number has been subsequently raised

to 15. The Directors shall hold office during the pleasure of the Governor. The

Governor may, from time to time, appoint 2 Directors other than the Managing

Director as Chairman and Vice Chairman of the Board. The first Board was

constituted as per Government Order No.G.O. (RT) 4876/69/Fin. Dated 26th

November 1969 and they assumed charge on 28th November 1969. The Managing


Director is appointed by the Governor on such terms and remuneration as he may

think fit from among the Directors for the conduct and Management of the

business of the company subject to the control and supervision of the Board of

Directors.

General Body representing the shareholders shall be the supreme governing body

of the Company.

OBJECTIVES OF THE COMPANY

The objectives of the company are listed in the Memorandum of Association of the

company. The important objects are as follows:

(a) To start, conduct, promote, manage and carry on the business of chitties

in India or elsewhere.

(b) To promote, undertake, organize, conduct, manage and carry on the

business of general and miscellaneous insurance of any kind in India or

elsewhere.

To start, promote, conduct, operate, carry on and manage the business of dealers,

agents and traders under hire purchase system of articles, vehicles, machinery,

materials goods and tools, of all capital goods and consumer goods and property of

all nature and description for personal, domestic, office, commercial, industrial

and community use and consumption as a business of the Company or as agents of

the Government, State or Central or any body or organization there under or of any

other Company. Besides these objects, there are many other objects, which is

incidental or ancillary to the main objects such as to advance, deposit with or lend

money, securities, property or to receive loans or grants or concession of any

nature or deposits from Banks, Government or Governmental organizations or

others.


VISION OF THE COMPANY

The vision of Kerala State Financial Enterprises is to become a significant player

in the financial services sector by:-

� Providing a whole range of quality services and products.

� Adopting technology and benchmark standards in customer service and

performance.

� Spreading our wings beyond the borders of Kerala, on a global level.

� Retaining the pre-eminent role in Chitty business.

� Continuing focus on extending resources to the Govt. of Kerala.

� Sustaining commitment to the weaker sections of society, as the

neighborhood institution for support, trust and security.

FUTURE PLANS OF THE COMPANY

The government is taking appreciable steps to widen the business activity of KSFE

and to reach every category of people. The future plans of the company include the

following:-

� Making KSFE a fully computerized Company

� Opening more and more new branches, including chitty units to establish its

presence in all major centers and backward areas, aiming at effective rural

penetration.

� Introducing value additions in chitty schemes - for coping with the fierce

competition in the financial market, for more popularity and widening our

customer base.

� Acting as the collection agent for KSEB, KWA, etc., throughout the state.


� To construct a multi-storied building in KSFE's own premises in Kakkanad,

Cochin and to house among others a Staff Training College for itself.

� Introduction of new schemes like, Educational Loan, Agricultural Overdraft

and Cumulative Deposit Scheme.

� Expanding its door collection facility to loan accounts and deposit schemes

suitably, this is expected to create considerable employment opportunities as

part of its social objective.

� Introduction of chitties with simultaneous draw and auction which can be

offered as an incentive to regular customers for whom it will be a great

attraction, particularly for those with saving attitude.

� Introduction of Daily/Weekly draw/auction chitties, which is expected to

have a wide scope among traders, will raise the Company's market share

considerably.

� Enter the arena of Credit/Debit Card business - immediately after branch

networking the Company plans to launch the 'Debit Card' business.

� Starting of Virtual Branch through net worked computer systems for the

benefit of NRIs particularly Malayalees in the Gulf & other countries is on

the anvil. This will obviate the need for "brick and mortar branches" and

will enable customers who have internet access, to transact with the

Company through virtual branches.


CHAPTER 3

PRODUCTS PROFILE

LINE OF PRODUCTS

CHITTY – THE PILLAR PRODUCT OF KSFE

BRIEF ABOUT OTHER PRODUCTS


LINE OF PRODUCTS

� Chitty

� Chitty Loan

� Consumer/Vehicle Loan

� Reliable Customer Loan

� Gold Loan

� Passbook Loan

� Trade Finance

� Housing Finance

� Sugama Deposit

� Fixed Deposit

� Car Loan

� Flexy Trade Loan

� Sugama Security Scheme

� Deposit-in-Trust Scheme

� Safe Deposit Locker

� Tax Planning Loan Scheme

� Western Union Money Transfer


CHITTY – THE PILLAR PRODUCT OF KSFE

Chitty is a unique scheme incorporating the aspects of a recurring deposit and an

advance scheme. In chitty, the subscriber has an opportunity to bid and avail of

advance which amounts to a certain percentage of the total denomination of the

chitty (sala), whereas in recurring deposit the advance can be availed only on the

paid up amount. In case bidding is delayed due to draw of lots in the initial

installments, one can resort to availing of chitty loan, which is a loan that

"bridges" the gap between the need of the subscriber for money and the delay in

the chitty getting prized.

BASIC INFO ABOUT “CHITTY”

Who Conducts a Chitty?

A Chitty is conducted by a person or an institution and this entity is called the

foreman. In the case of KSFE Chitties, KSFE is the foreman.

What is a Chitty?

A chitty is basically a contract between the foreman and the Subscribers. As per

the contract, each subscriber agrees to remit a fixed amount of money every month

for a number of months.

How many tickets can be enrolled in each chitty?

The number of tickets enrolling in a chitty will be equal to the number of months

for which the remittance have to be made or the duration of chitty in months.

What is Chitty “Prize Money”?

The total of the periodic subscription, called the chitty amount, will be given out as

“prize money” to the person who bids by allowing for the maximum reduction in

the prize money.


The maximum reduction possible is 25% as per the prevailing Chitty Act and if

there is more than one subscriber interested in bidding at 25% reduction, the

numbers of the such bidders will be put to a draw.

Thus each subscriber gets an opportunity to receive the prize money once during

the tenure of the chitty. All the promoters have to contribute the periodic

subscription till the end of the chitty.

Foreman’s Commission

The foreman is entitled to a certain percentage of the chitty amount (not more than

5% of the chitty amount) as his commission from each member.

How many tickets can one subscribe in a single chitty?

Maximum number of tickets one can subscribe is limited to 10% of the total

number of tickets of that chitty, subject to approval by Foreman.

Services rendered.

The Company has appointed daily door collection agent who will come and collect

the amount towards monthly installment daily from a subscriber’s office/

residence. Customer can remit the chitty installment in any of the Branches of

KSFE.

How can one enroll in a chitty?

A person can enroll in a chitty either by visiting the Branch or through the agents

of KSFE. You may either click the feed-back or directly ring to any one of the

Branches which is nearer to your location. For finding the list of Branches you

may go to the menu (BRANCHES)


Participation in the auction

A subscriber can participate in the auction, which will be conducted in the Branch

where the chitty pertains to, either in person or through proxy.

What are the Securities Acceptable for Payment of Prize Money?

The types of security acceptable for chitty prize money payment, belong to various

categories like personal sureties (of employees of Government, aided schools,

public undertakings, banks etc.), financial documents (like fixed deposits with

banks and reputed organizations, Deposit-in-Trust, LIC policies, bank guarantees,

National Savings Certificates etc.), Sugama Security, landed property or Gold

ornaments.

Liability waiver

In case of unfortunate death of the subscriber the future liability subject to a

maximum of Rs.1 Lakh will be written off subject to certain conditions.

CHITTY FINANCE - PROCEEDURE

The installment per month for chitties range from Rs. 500 to Rs. 1, 00,000 and the

usual duration of chitties are 30 months, 40 months, 50 months, 60 months and

100 months.

• PURPOSE:

Chitty is intended to provide a measure of saving for people who aspire to save for

the future by setting apart a portion of their income. Chitty is a unique scheme

where the saving aspect & the advance aspect are blended together.


• ELIGIBILITY:

Any Indian citizen who has attained majority can subscribe in Chitties. Enrolment

in joint names is not allowed. In the case of Non-Resident Indians, condition of

RBI, if any, have to be observed. A subscriber cannot hold more than 10% of the

total tickets in chitty. The existing rules regarding Chitty canvassing agents stand

revised with effect from 1.5.1999(see circular 64/99)

• MONETERY RANGE & DURATION OF CHITTIES

Sala of our chitties range upto 10lakhs with monthly subscriptions of Rs.25000/-

.Branches are permitted to start short duration chitties below 40 months with the

consent of Regional Manager concerned. Similarly to start chitties with a sala

exceeding 5 lakhs prior Head Office permission should be obtained.

• DEFAULT INTEREST

9% on Non-prized default & 14% on prized default on the subscription amount

• SUBSTITUTION

A non-prized default subscriber, after serving a removal notice, may be removed

from subscribers registered & another person may be substituted in his place.

Substitution is allowed only upto 60% of the duration of Chitty. If cheque

remittance is made for substitution, the benefits of the substitution can be enjoyed

only after the cheque is realized.

In the event of non- substitution by other parties or after 60% of duration of Chitty,

Company can substitute default tickets in its favour & auction them for Re.1/-If

there is no eligible subscriber to be prized. In the event of death of the Subscriber

non-prized as well as prized tickets can be substituted by the nominee & he will be

entitled to all the rights under the chitty as if he was the original subscriber.


NEW CHITTY LOAN

• PURPOSE:

Through an advance aspect is built into the chitty scheme. It cannot be denied that

a subscriber will have to wait for some time to avail of the benefit of getting the

ticket prized NCL is introduced to bridge the gap between the real need of the

subscribers & the uncertain point of time in future, when the ticket gets prized.

• REGISTRATION CHARGE: RS.10/-

• LIMIT:

a) Loan amount is limited to a maximum of 50% of the chitty sala (per ticket),

rounded off to the lower Rs.100/-

b) Number of loans alive at a time:

A subscriber should not have more than four live loans at a time in the company;

the total of which should not exceed Rs.5 Lakhs.

• ELIGIBILITY:

a. Every non-prized subscriber of chitties will be eligible for availing new chitty

loan upto 50% of sala after remittance of 10% of the total installments, provided

the remittance are upto date.

b. The system of allowing NCL after the 1st auction of the chitty is permitted to

the following cases only subject to a max of Rs 50,000

i. Where the applicant for NCL is an employee acceptable to the company

as surety.

ii. When financial documents viz., FD Receipts, Bank Guarantee, LIC

Policies, NSCs, KVPs, etc., are offered security.


iii. Where the applicant for NCL is a professional/Businessman having a

taxable annual income of Rs 1 Lakh and above(to prove the income,

applicant has to produce last 3 yrs income tax returns)

iv. Where the applicant, whether employed or not, offers personal sureties

as security, provided one of the sureties offered belongs to the SREG

(Salary Recovery Enforceable Group)

c. Subscribers in chitties with sala of more than Rs 1 Lakh can apply a second time

for NCL upto 50% of the sala, on remittance of 10% of installments which have

become due for remittance.

i. He should be upto date and prompt in the payment of the concerned NCL

interest and corresponding chitty installments.

ii. Outstanding dues if any, against the existing NCL account should be

cleared either by direct remittance or by adjustment from the fresh NCL

amount to be sanctioned

d. Where the installment amount with interest is 5000/- and above, the unit head

should ensure the repaying capacity of the loanee and make a note of it for

sanctioning the loan.

e. Loan should not be sanctioned to a loanee whose previous loan account is in

default.

• INTEREST RATE

The interest rate of the advance is 14.5% (simple) and for defaulted accounts

16.5%.

PASS BOOK LOAN:

• PURPOSE:

To provide quick loan to non-prized subscribers to meet the urgent needs on the

security of paid up subscriptions in the chitties.


• LIMIT:

As per chart prescribed, based on the paid up amount in the chitty and the period

remaining for termination of the chitty. Gross subscription remitted reduced by

Forman’s Commission and debit balance is the paid up amount. Loan is rounded

to the lower Rs.100/- of eligible amount.

• ELIGIBILITY:

Chitty subscribers who have made up-to-date remittance in unencumbered chitties

are eligible. Applicant should not be defaulter in any of our schemes as principal

debtor or surety/guarantor.

• INTEREST RATE:

Interest is charged at 13% monthly compounding on the loan This will be

applicable to a loanee who remits his/her chitty monthly installments on or before

the due date. In case of default in chitty installments the interests the interest rate

will be 15% monthly compounding.

• AUCTION OF THE CHITTY:

The chitty can be allowed to be auctioned subject to the limit of 30% if the prize

amount will be adequate to cover the future liability in his chitty, the loan amount

and interest thereon. Prior written permission from the Unit Head to auction the

chitty should be obtained.

• REPAYMENT OF LOAN:

The loan and interest due thereon can be settled at any time by remitting the total

dues in lump. To charge interest only for the exact outstanding loan amount after

adjusting the part remittance on the same day itself and only for the days in debt


provided such remittances are not less than 10% of the outstanding balance as on

the date of remittance.

• PAYMENT OF INTEREST:

The loanee can make periodical interest payment and lump sum interest payment

as well. The practice of treating fraction of a month as full month is discontinued

and interest will be charged only for the exact number of days.

• WHEN CHITTY IS DEFAULTED:

When chitty installments are defaulted the subscriber is removed observing the

usual procedures and the loan and interest thereon are adjusted from the RSC or

APSTC as the case may be.

• AGREEMENT:

Chitty loan agreement is executed on stamp paper of value of Rs. 50/-.

• BOND PREPARATION CHARGE:

Bond preparation charge is 0.2% of loan amount at minimum Rs.10/- and

minimum Rs.60/-


BRIEF ABOUT OTHER MAJOR PRODUCTS

A. GOLD LOAN SCHEME:

The gold loan scheme was launched by the company on 16th Oct 1989. Under the

scheme, short term loans upto Rs. 20,000/- for a maximum period of 12months are

provided on the security of gold ornaments.

• PURPOSE:

The scheme is intended to provide short term loans for people who are urgently in

need of money, on the security of gold ornaments. Gold coins and bullion will not

be accepted as security.

• APPLICATION:

Application form will be supplied free of cost.

• LIMIT OF LOAN:

Maximum loan amount in this scheme is limited to Rs. 1, 00,000 per individual

per day. To insure the identity of the customer copy of documents like Electoral

card, Passport, Driving license or introduction of any KSFE Employ or Gazette

Officer, MPs, MLA’s etc. Customer known to unit head may be obtained and

identified.

• ELIGIBILITY:

The maximum amount that can be granted per gm of 22carat gold jewellery at any

point of time is limited to 70% of the prevailing market price rounded off to the

lower rupees ten, provided the principle plus interest should not exceed 75% of the

market value at any point of time during the loan period. The prevailing market

price of gold listed in any leading newspaper on the date of gold loan is to be

recorded in the loan application by the concerned J.E. and it is to be certified by


the unit head. The same should also be noted in the personal ledger folio. If the

market price of gold in various towns within the state differs from one another, the

lowest prize quoted may be taken as the base for fixing the eligible loan amount

per grams.

• APPOINTMENT OF APPRAISER:

The branch manager concerned may select suitable person who has sufficient

experience in appraising gold ornaments as appraisers for the branch with the

approval of the Regional Manager concerned. The selected appraisers have to take

a fidelity insurance policy for a sum of Rs.5000/-

The appraiser should have the following essential qualifications.

(i) Should know Malayalam (both reading and writing).

(ii) Should have engaged in the manufacture of gold ornaments & must

have sound knowledge and experience of goldsmith work.

(iii) Should have completed 25yrs of age and should not have completed 6

65yrs as on the date of engagement.

(iv) Should hold goldsmith certificate issued by Central Excise Authority.

• PERIOD OF LOAN :

Maximum period of loan is 6 months.

• OVER DUE GOLD LOAN:

The unit heads should send notices demanding the remittance of up-to-date interest

within 15days from the date of notice. If the loanee, in response to our notice,

remits at least the interest due for 6 months within the stipulated time, his account

can be kept live for the period remaining to cover the maximum period of

12months.

.


If the loanee fails to remit the interest as demanded by the company with in the

stipulated time, the unit heads should initiate immediate steps for the auction sale

of pledged gold ornaments after fulfilling the usual formalities. The maximum

period for repayment of gold loan is 1year and even in cases where the loanee has

remitted interest for the first 6months, the account has to got closed immediately

after the completion of 12months.

• INTEREST:

Up to 5,000 - 12%

5,001-25,000 - 13%

Above 25,000 - 14%

• PART PAYMENT:

Part payment towards the loan is accepted at any time provided the interest till the

date of remittance is paid in full and remittance towards principal is made in

hundreds or its multiples.

• DOCUMENTATION:

Loanees stamped receipt, promissory note etc., are the documents for payment of

gold loan.

B. FIXED DEPOSIT

• PURPOSE:

This scheme aims at raising fund for financing our schemes, paying attractive

interest rates.

• LIMIT:

Rs .500/- or above.


• INTEREST RATE:

Simple interest will be paid as fixed by the company from time to time. The rate of

interest on fresh fixed deposit as well as for renewal of existing deposits accepted

from public is;-

• PERIOD RATE

For 1year and above but not exceeding60 months 9.75%

• FIXED DEPOSITS GENERATED FROM PRIZE MONEY

CHITTIES:

Fixed deposits created from prize money of chitties and offered as security

towards the future liabilities irrespective of the duration of the chitties and

quantum of future liabilities.

a. Should be deposited in full without any deduction.

b. Subscribers who avail this facility should open a Sugama account in

his/her name.

c. Should be a single deposit, initially. It can be split up into 2 or more

deposits for different period on the depositors’ request, when it becomes

renewable, provided the subscriber is up to date in remittance.

• PAYMENT OF INTEREST:

Interest will be paid monthly for deposits of Rs.10, 000/- and above. The interest

will also be transferred to the depositors Sugama Account, chitty or loan account

as per request.

• PREMATURE CLOSURE:

(a) Period of deposit less than one month - Nil

(b) Period of deposit one month and above but less than one year –Sugama rate of

interest.


• RENEWAL:

Fixed Deposits can be renewed with retrospective effect. When F.D. is renewed

on a later date interest will be given from the maturity date of the original deposit

provided the deposit is renewed for a minimum period of one year from the

maturity date of the original deposit. The rate of interest will be the rate applicable

on the date of maturity of the original deposit.

• LOAN FACILITY ON ENCUMBERED F.D:

(a) Only one FD Loan account can exist against a deposit at any one time.

So the depositor can draw a second loan on FD, equal to 75% of the deposit

or the amount he requires, whichever is lower, as a new loan after closing

the existing loan on FD.

(c) A loan on the same FD can be allowed for an amount not exceeding 75%

of the unencumbered portion.

• OTHER FEATURES:

Deposits can be in the name of individuals, joint names of two or more persons,

firms and companies.

a) The deposit receipts issued by the company are not transferable.

b) The deposit receipts can be pledged as security for chitty payment and for

availing loans under various schemes of company.

c) Nomination facility is also available.

C. LOAN ON FIXED DEPOSIT:

• PURPOSE:

The loan is intended to provide quick loan to depositors on their Fixed Deposits.

• APPLICATION:

Application is issued free of cost.


• LIMIT:

75% of the F.D amount is paid as loan. The Regional Managers are authorized to

consider individual cases on merit for FD loan above this limit of 75% subject to a

maximum of 90% of FD amount.

• ELIGIBILITY:

Normally the FD on which the loan is intended to be availed must be free of any

liability. Only 1 FD loan account can exist against a deposit at any one time.

• PERIOD OF LOAN:

The period of loan can go up to the maturity date of the FD on which the loan is

availed.

• RATE OF INTEREST:

The interest chargeable on a FD loan is 2% above the rate applicable to the FD on

which such loan is granted.

D. SUGAMA DEPOSIT SCHEMES:

• PURPOSE:

Sugama deposit scheme aims at providing a deposit facility similar in many ways

to SB accounts in bank but without the cheque facility. The scheme helps the

customers in the following manner.

a. The customers can give standing instructions to the company to transfer

the monthly installments towards chitty on the due dates from the Sugama

account.

b. Interest on FD can be transferred to this account as and when it becomes

due on the basis of standing instructions obtained from the depositors.


• MINIMUM BALANCE:

Minimum balance to be maintained at any time should not be less than Rs.100/-.

The minimum balance to be maintained in the Sugama for interest eligibility

should be Rs.250/- or more.

• ELIGIBILITY:

The person who intends to open the account should be introduced by a customer or

respected person known to the co., A Sugama account can be opened.

a. By a person in his own name.

b. On behalf of any minor relative.

• INTEREST RATE:

5% on the minimum balance maintained in the account between 6th and the last

day of any month. The interest will be credited twice in a year, on 30th Sep and

31 Mar.

• MODE OF DEPOSIT:

Remittance of amount for the credit of the account should be made in cash at the

branch office concerned or by way of transfer credit of any amount not exceeding

Rs.20000/- due to the depositor, on request; a subscriber is permitted to transfer

the chitty prize money in full to a sugama account.

• WITHDRAWAL:

Withdrawal from the account shall be made through withdrawal slips supplied by

the co., According to the income tax rule, deposit above Rs.20000/- shall be

refunded only by crossed cheques; this limit being applicable to the total

withdrawal of the day.


E. RELIABLE CUSTOMER LOAN (RCL):

The scheme is intended to provide easy credit facility to our customers.

• APPLICATION FORM:

On registration by payment of Rs. 10/- application can be obtained from the unit

he/she intends to take the loan.

• LIMIT:

The maximum amount of loan is Rs.25000/-. But in the case of single surety,

offered by an unemployed customer, the maximum loan liability is limited to Rs.

20000/-.

• ELIGIBILITY:

All the customers of KSFE can be considered for the RCL.

a. He/She should have been a customer of the branch in which he/she is

applying for the finance, continuously for a minimum period of 12 months.

b. He/She should not be a defaulter at the time of applying for the loan.

c. He/She should not have committed default for more than 3months during

past 1year.

• PERIOD OF LOAN:

The minimum and maximum period of the loan is 12months and 36 months

respectively.

• RATE OF INTEREST:

Interest will be charged at 14% yearly diminishing basis.

• REPAYMENT OF LOAN:

The loan together with interest shall be repaid in monthly installment as per the

EMI table.


• PENAL INTEREST:

Penal interest of 2% for each month of default on the defaulted installments

amount will be charged.

• NUMBER OF LOAN WHICH CAN BE AVAILED UNDER RCL:

At any one time, there should be one and only one live RCL in the co., in the name

of a customer. To ensure this the covering abstract should be sent to HO and

clearance obtained before issuing the loan.

• PREMATURE CLOSURE:

For premature closure re-calculation of EMI up to the month of closure is made

minimum one year’s interest is taken.


CHAPTER 4

WORKING OF A BRANCH

ORGANIZATION CHART

DUTIES AND RESPONSIBILITY

WORKS DONE IN THE BRANCH

PROCEEDURE OF ACCOUNTING THE DATAS


ORGANIZATION CHART

DUTIES AND RESPONSIBILITY

Duties and Responsibilities of Branch Manager:-

He will be responsible for the environment with in the Units in which his

subordinates work and will create conditions conducive to effective work;

To prepare a master plan outlining the proposed activities with the objectives to

be attained in accordance with the policies of the organization and forward it to

the Head Office during February each year to enable the Company to prepare a

realistic budget every year. In addition to the implied duties he will have the

following specific functions;


To do all the basic tasks of the Manager, such as;

• To plan the operations of his subordinates, organize, integrate, control

and co-ordinate their activities for maximum contribution to the

Branch Manager as head of financial unit.

• To post proper persons to various positions in the Branch, train and

develop them to accomplish their task effectively.

• To organize their role relationship

To start chitties conforming to the pattern prescribed by the Head Office and

achieve the targets fixed by the Company;

To issue advertisements, if necessary, directly to the local dailies with the

approval of the Regional Manager.

To perform the duties and to exercise the rights of the foreman under the

relevant provisions of the Acts relating to the chitty.

To receive proxy form on behalf of subscribers enter the details in the register

prescribed, to file the proxy forms chitty-wise, and to be responsible for the

proper inclusion of their names in the auction/ draw.

To keep correct minutes of the proceedings of every auction and drawings, sign

the minutes on behalf of the foreman and to file a true copy of the minutes with

the Registrar on the due date.

To take steps for the payment of the amount due to the defaulting subscriber on

the due date.

To demand in writing, consolidated payment of future subscription from

defaulting subscriber on the due date.

To prepare a separate Annual Balance Sheet for each chitty and to take steps

for the audit of such balance sheets and filing of copies with the Registrar at the

appropriate time.

To initiate timely action under R.R. Act to collect defaulted subscriptions or

other dues recoverable, wherever necessary.


To send intimation cards indicating the amount due for the next installment to

the subscribers/ banks having standing instructions from the subscribers,

timely.

To send recovery schedules to the drawing / disbursing officers in respect of

subscribers who have joined our salary deduction scheme and to ensure the

remittances so received are duly entered in the books of accounts promptly.

To develop chitty business of the branch by starting chitties timely and attain

the budgeted sala of business.

To verify the correctness of the entries in the Money orders Register, sign the

Money order forms, and to receive the Money order, on behalf of the

Company.

To ensure that all the amounts received by Money order on the day have been

duly acknowledged by the cashier.

To ensure that the day-to-day accounts in the Units are written up on a current

basis and satisfactorily maintained.

To be responsible for the proper identification of the subscriber and of his

acknowledgements on the documents, payment voucher, cheque counter foil,

personal ledger folio etc and hand over the cheques to the parties concerned.

To be responsible for the safe keeping of all the documents relating to the

payment of prize money/ removed subscribers contribution

To reconcile the Bank accounts, Head Office Current Accounts and Regional

Office Current Accounts.

To arrange for the preparation of subscribers personal ledger schedules and

their tallying with control accounts.

To schedule payment of prize money in such a way that they are more or less

evenly distributed over the month, also taking into account the ways and means

position and giving priority of payment based on the date of receipt of

surety/security applications and subsequent execution of documents.


To transfer funds to the Regional Office within the date stipulated towards:

a) Other Branch collections

b) Salary deduction

c) Share of tax and Head Office administration overheads

To deposit the entire collections of a day in the bank the same day or on the

morning of the next day.

To check occasionally and ensure that the employees have already performed

their assigned duties (including carrying out checking procedure) satisfactorily;

To build up and enhance the reputation of the Company in its dealings with the

subscribers and prospects, fostering friendliness with the general public

projecting always the good image of the Company so that we may merit a

reputation of our own for the quality of service;

To be responsible for the proper maintenance and updating of

a) Personal files of all employees in the Unit

b) Service records/books

c) Loans, advances and their repayments

Duties and responsibilities of the Asst. Managers:-

Assistant Manager/Deputy Manager will be the front line supervisor in the

Officers’ Cadre who will discharge the following duties, functions and exercise the

following powers and report direct to the Unit Head.

1. To do all the basic tasks of the front line supervisor, such as:

(a) To plan the operations of his subordinates organize, integrate, control and co-

ordinate their activities for maximum contribution;

(b) To post proper persons to the various positions under his control, train and

develop them to accomplish their task effectively;

(c) To organize their role relationships;


(d) To direct their work by clarifying their assignments, guiding them towards

improved performance and motivating them to work with zeal and confidence;

(e) To control them by measuring and correcting their activities to assure that

events conform to plans and to co-ordinate their work.

The major responsibilities of Asst. Managers are as follows:-

To be responsible for supervising and checking of all collection activities of the

Branch.

To ensure by test check or complete check as may be appropriate that all the

financial transactions under his section are in order.

To verify the correctness of the entries in the Money Order Register with

reference to the Money Order Forms to initial every entry in the Money Order

Register authenticating its correctness

To be responsible for the correctness of the entries made in the Money Order

Register and of the amounts received and recorded in the Money Order

Register.

To correspond with persons from whom the Money Order has been received in

cases where proper details regarding such remittances are not available.

To receive and enter all the cheques/demand drafts received in the

“Cheques/Bank Drafts Sent for Collection Register” and to get defects, if any,

rectified or to return the cheques to the parties on the same day if the defects

noticed could not be got rectified, close the register every day.

To ensure that the cheques / bank drafts are duly crossed and if not, to cross

them “Account Payee”;

To supervise the postings in the Chitty Collection Registers/ Chitty Day Book,

Personal Ledgers/ Loan Registers/ Sugama Account Ledger and Collection

Registers, and all the other relevant registers.


To supervise and check the postings in the Personal Ledger

To ensure timely preparation and tallying of quarterly collection summary.

To ensure that the amount kept under suspense are cleared in time..

To regulate and conduct the draw/auction to act as proxy on behalf of the

subscribers who have authorised the Branch Manager for such participation.

To get the auction proceedings voucher prepared.

To get the default statements (prized, non-prized and loan schemes) prepared in

time.

To operate the Bank account of the Branch jointly with the Branch Manager.

To make physical verification of cash with the Cashier at the close of business

every day, to certify the fact of having made such verification in the cash scroll

and to bring to the notice of the Branch Manager difference between the actual

physical cash and book balance;

To arrange for the preparation of chitty balance sheets and its filing.

To scrutinize the cheques/ demand drafts and ensure they are in order;

To be responsible for the remittance of daily cash collection (including the

Money Order collection) in to the bank on the date of collection itself or latest

by the next working day, for the maintenance of the Cash in Transit Register.

To be responsible for the safe keeping of the cheques received until they are

deposited in to the Bank.

To verify and initial transfer chalans and to be responsible for any erroneous or

fraudulent entry in respect of such chalans.

To ensure the writing up of the Chitty Ledger.

To verify the scrutiny report, ensure that the prize amount payable agrees with

the figures shown in the original auction minutes, ensure with reference to

books of accounts that the deductions to be made as shown in the report are

accurate and initial the scrutiny report..


To get all payment vouchers prepared, to check and initial it, and to be

responsible for its accuracy.

To be responsible for the accuracy of the prize amounts and other payments

made.

To review and submit monthly work position reports to the Branch Manager.

To ensure timely completion of annual accounts and related statements.

To transfer funds to Regional Office to wards:

(a) Salary deduction

(b) Share of tax and Head Office administration overheads along with the other

Branch collection.

(c) For meeting emergency requirements.

To get the Bank account and Head Office Current Account/ Regional Office

Current Account reconciled monthly and to give the reconciliation statement,

by 15th of every succeeding month

To be responsible for the safe custody of all the relevant records, registers,

vouchers etc., handled by him and seats under his control.

To initiate action for the starting of chitties in the Branch and to arrange the

release of advertisements with the approval of the Branch Manager.

To assist the Manager in canvassing subscribers as and when necessary

To obtain sufficient security for the payment of future subscription.

To take steps for the payment of prize money to the prized subscriber on the

due date, if the subscriber has furnished adequate security for the payment of

future subscriptions, and to intimate the fact to the prized subscribers;

To verify the genuineness/ liability of the subscribers/ sureties;

To examine all the documents concerned with the payment of prize amount and

ensure that they are in order and correct and complete in all respects.


WORKING OF THE BRANCH

1. OFFICE HOURS

The Office hours for regular employees are from 10 a.m to 5 p.m on all working

days except in the case of Evening Branches. The office hours prescribed for

Evening Branches are from1p.m to7 p.m. In the case of part time employees; it is

fixed from 8 a.m. to 1 p.m. in regular Branches and from 11 a.m to 4 p.m. in

Evening Branches.

2. LUNCH BREAK

45 minutes interval is allowed for lunch break and this has been fixed between 2

p.m and 3 p.m

3. PUNCTUALITY IN ATTENDANCE

All members of the staff are expected to observe punctuality in attendance.

Habitual late attendance and other irregularities connected with attendance are

punishable under the provisions of the Standing Orders of the Company.

Any employee found absent from his seat during office hours for a duration

exceeding five minutes except with the permission of the authorised officer will be

called upon to explain his absence and if this habit persists, disciplinary action will

be taken against such employee who is found guilty.

4. HOLIDAYS

All holidays declared by the Government of Kerala as holidays for its employees

will be holidays for the company also, unless declared to be restricted to specific

department in which the Company is not included.

In addition to the above, the local holidays either whole or part declared by

Government are also available to Company employees of the respective locality.

At the beginning of every year, a list will be drawn up and released showing the

public holidays on the basis of the public holidays declared by the Government. In


addition to the holidays fixed for each year all Sundays and Second Saturdays will

be holidays for the Company.

5. MAINTENANCE OF OFFICE PREMISES

The Unit Heads in the Units, Regional Managers in the Regions and

Administrative Officer in the Head Office are responsible for the security, upkeep

and proper maintenance of the offices concerned.

The office premises shall be kept clean and tidy. All employees are expected to

help in the maintenance of cleanliness of the office premises by not throwing

about papers, cigarette stumps, etc., and by not disfiguring walls, pillars etc., with

writing of slogans and the like and pasting and displaying posters on them.

Recognized unions may, however, put up notices about legitimate union activities

in the space provided for them. The offices shall be arranged to be opened at 8 a.m

or earlier to enable the sweepers to sweep the rooms and premises, cleanup the

furniture, fittings, bathrooms and the lavatories. The Administrative Officer in the

Head Office, the Regional Managers in the Regions and the Unit Heads in the

units shall occasionally inspect the above work and ensure cleanliness and tidiness

of the premises. Files, registers and papers shall be methodically arranged and

when not in use, should be kept neatly stacked in the space provided. No files,

registers or papers shall be kept on the floor. Waste paper should be kept in the

waste paper baskets provided and not strewn about on the floor. Important papers,

files and other records should be kept in safe custody. It must be scrupulously

ensured by all concerned that small items of stationery such as pins, gem clips,

tags, carbon papers, refill, etc., are kept in their proper places and not allowed to

lie strewn about on the floor. The offices should be closed at the end of the day

and the doors and windows securely locked. This should be ensured by the

Administrative Officer in the H.O., Regional Managers in the Regions and Unit

Heads in the Units or by the persons authorised in this behalf. It is the duty of

every member of the staff to observe strict economy in the use of articles supplied


and facilities provided. All stationery items supplied should be economized to the

maximum possible extent and all kinds of waste eliminated. Lights, fans should be

switched off and water taps turned off when not required for use.

6. ACCEPTANCE OF DONATION FROM SUBSCRIBERS.

Members of staff are strictly forbidden from seeking or accepting donations from

subscribers or others either in the personal capacity or in his representative

capacity as member or office bearer of an association.

7. DISPLAY OF NATIONAL FLAG

The National Flag shall be hoisted on the office building on special occasions like

Republic Day or Independence Day

8. OBSERVANCE OF BUSINESS DISCIPLINE IN THE INTEREST OF

GOOD CUSTOMER RELATIONS.

In the dealings of the Company with the customers, it is not enough that the

employees are just and fair, but they should make the customers feel that they are

just and fair. In order to ensure this the members of the staff shall observe the

following business discipline in addition to the directions given elsewhere in this

manual:

(i) To act honestly and faithfully at all times;

(ii) To demonstrate a sense of fair play and impartiality in disposing of cases;

(iii) To show courtesy and consideration in public dealings;

(iv) To maintain strictest secrecy regarding the Company’s affairs whatever be the

Provocation;

(v) To observe scrupulously the rules and regulations;

(vi) To avoid seeking and receiving cash, donations and advertisements from the

Company’s clients, constituents, business associates, etc., even for a good cause;

(vii) To attend the public grievances promptly;


(viii) To dispose of cases promptly but without undue haste;

(ix) To get all oral instructions and decisions of the higher authorities down in

writing and get them confirmed;

(x) To give job rotation to those who are on sensitive positions;

(xi) Not to issue or cause to issue cheques in favour of other subscribers/

loanee/sureties/ guarantors towards payments in connection with the business of

the Company;

(xii) Not to attend the auction as proxy (except the Unit Heads) on behalf of others

in the Unit where they are working;

(xiii) Not to accept payments in connection with the business of the Company on

behalf of others except with the permission of the Unit Head, who shall exercise

such caution and discretion in this regard.

(xiv) Not to make payments in cash in connection with business of the Company

in lieu of cheques issued;

(xv) Not to encash cheques issued to subscribers/ dealers or others in connection

with the business of the Company;

(xvi) Only cashiers/ authorised persons shall accept cash from the transacting

public who should issue proper receipt and keep proper accounts.

(xvii) Not to accept blank cheques /cheques un-accompanied by pay-in-slips/

cheques not duly signed and without details of remittance.

(xviii) To be impartial in all their dealings with the transacting public;

(xix) To supply the intending loanees with a list of approved dealers and the

choice of dealers left to them;

(xx) Unauthorized stay in the Company’s office /premises is strictly prohibited.


PROCEEDURE OF ACCOUNTING THE DATAS

Tally is used in KSFE Branches for accounting purposes and Excel is used for

creating of schedules, reports, daily fund flow summary etc.

The SAMPLE schedule for the major products of KSFE is as below:-


Apart from accounting in Tally, the cashier is maintaining the Daily Cash Scroll

register also. The sample of the Cash Scroll Register is as follows,


CHAPTER 5

CONCLUTION

DECLARATION


CONCLUTION

As there is a proverb that:-

“A journey of a thousand miles begins with a single step”

The journey of KSFE started slowly and in a small scale basis. But not KSFE have

a largest role in the financial market in Kerala.

KSFE stands outstanding with its unique and secured products type and range

when comparing with the other financial institutes in Kerala. The products of

KSFE is a risk free safe haven for the public as KSFE conducts only chitties fully

governed by the provisions of Kerala Chitties Act, 1975. Because of the same

reason and the quality of the service towards Customer Satisfaction and the

products offered KSFE has got a place on the list of trusted Companies in

everyone’s mind.

ALL FROM THE ABOVE STUDY NOT WITHSTANDING ITS

RESTRUCTING EFFORTS KSFE AND ITS PRODUCTS IS STILL FAR

AWAY WITH ITS GREAT COMPETATORS IN KERALA STATE


DECLARATION

I declare that this project report titled “WORKING OF A FINANCIAL

INSTITUTION” done in The Kerala State Financial Enterprises Ltd. is an

original work done by me under the guidance of Mr. Abdul Fathaque

(Branch Manager). I Further declare that it is my original work as a part of

my academic course.

PLACE : PALAKKAD

DATE : 25th

June, 2009

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