loans and advances of the sutex co-opertive bank ltd

1.1> Introduction to co-operative Banks.

1.2> Structure of co-operative banking in India.

1

1.1> Introduction to co-operative Banks: -

Unlike commercial of the economy, the co-operative banks, on the

other hand provide credit and other allied facilities to the rural and

agricultural sectors the drawn of this century saw the evaluation of the co-

operative movement in India. Co-operative societies came into being

when the Co-operative banks which are engaged in serving the industrial

and commercial sectors Societies Act, 1904, was enacted. The movement

was started with the aim of providing farmers funds with low rates of

interest so that exploitation by the village moneylenders is foiled. The Act

provided for the formation of co-operative credit societies and a number

of small primary credit societies were established in various parts of the

country. These societies, however, could not mobilise enough resources

as compared to loans demanded by its members. This led to the

enactment of a new act in 1912. The Co-operative Societies Act of 1912

provided for starting Center Co-operative Banks with headquarters

located in Urban Centers. In 1914 necessary steps were taken by the

government to strengthen the co-operative movement. The government

appointed the Maclagan Committee to look into and make

recommendations for the improvement of a State Co-operative Bank for

each state. The federation of Central Co-operative Banks functioning at

the district level forms the State Co-operative Bank. The present

organization of the co-operative in India is based on the recommendation

made by the Maclagan Committee. In 1919, the Montague Censored Act

made co-operation a provincial subject. Since then, All State

governments have passed separate Co-operative Societies Acts.

Although co-operative banks in India have shown progress since

their establishment, there still exist a number of defects in the

organisation. This has led qualitative improvement to suffer. However,

the Reserve Bank of India took the initiative to revitalize, reorganized and

2

promotes the growth of co-operative bank in India. Under the Banking

Regulation Act of 1949, Co-operative banks have been brought under the

control of the Reserve Bank of India.

1.2> Structure of co-operative banking in India: -

Co-operative banking in India is federal in its structure. It is to be

noted that the word 'federal' means where an institute subordinates its

power authority. The State Co-operative Bank (SCB) which is also

known as the Apex Bank among the co-operatives functions at the state

level. At the district level, there is the District Central Co-operative Bank

(DCCB) for each district. At the base of the pyramid there are the

Primary Credit Societies or the Primary Agricultural Credit Societies

(PACS) which cover small towns and villages. Each higher level co-

operative bank is a federation of those below having membership and

loan operations restricted to their affiliated units.

STRUCTURE OF CO-OPERATIVE BANKING IN EACH STATE

OF INDIA

SCB

(APEX BANK)

DCCB DCCB DCCB

PACS PACS PACS PACS PACS PACS

SCB= The State Co-operative Bank.

3

DCCB= The District Central Co-operative Bank.

PACS= The Primary Agricultural Credit Societies.

STATE LEVEL:-

SCB= The State Co-operative Bank.

DISTRICT LEVEL:-

DCCB= The District Central Co-operative Bank.

VILLAGE LEVEL:-

PACS= The Primary Agricultural Credit Societies.

A>Primary Agricultural Credit Societies: -

At the base of the co-operative credit structure is the primary

agricultural credit societies (PACS) occupying a predominant position.

The organisation of PACS dates back to 1904 when the first co-operative

credit society act was passed. These societies were started with the main

objective of providing cheap credit to farmers. They interact directly with

the borrowers by providing them loans and collecting the repayment of

loan alr3eady given. They are the basic units having links the ultimate

borrowers and the hire financing institutions.

B>District Cultural Co-operative Bank:-

There are now 351 DCCBs which land about Rs. 14000 crore

annually. The Central Co-operative Bank is usually located at the head

quarters of the district. Central Co-operative banks are generally of two

types one is the membership type i.e. federating members known as

'Banking Unian' and the other is the mixed membership type, consisting

of both primary members and individual having some finacial status,

4

influence or special business experience in the field of co-operative

banking. The main function of Central Co-operative Banks is to land

money to their affiliated primary societies.

C>State Co-operative Bank: -

There is 28 STATE Co-operative Banks in the country. The SCBs

have assumed a key position in the co-operative credit structure because

it is only through them that the RBI provides loans and advances to

agriculturist.

5

2.1> History of THE SUTEX CO-OPERATIVE BANK Ltd.

2.2> Present Situation of THE SUTEX CO-OPERATIVE BANK Ltd.

2.3> Board of Directors.

2.4>Growth Rate.

2.5> Organisation Structure.

6

2.1>HISTORY OF THE SUTEX CO-OPERATIVE BANK

LTD.: -

The bank was started in 15th May 1972 with 270 members and

10,000-share capital and funds of Rs. 523315/- in the ground floor of The

Surat Textile Market. After these, today it works in bank block Surat

Textile Market. It was established by the chairman Mr. Surajram H.

Bachakaniwala and vice-chairman late Mr. Ashabhai R. Patel and Late

Mr. Bhupatlal R. Dholabhai (Regional Manager of DENA Bank), late

Mr. Bhagwandas Lekhadiya, late Mr. Manilal Chevali, Mr. Manilal

Kapadiya, Mr. Chaturbhai Tanawala, Mr. Mohanlal Nayak etc.,

First branch of the bank was established in 27th July 1986 at Station

Road, Mavani Tower. It was inaugurated by a great sage revered

Ghanshyam Charan Swamiji of Swaminarayan Temple.

In 1986, The SUTEX Co-operative Bank Ltd., gets wholetime

membership in "Gujarat Urban Co-operative Bankers Federation".

In 1992-93, bank was purchased Hardware from NALCO

Company and Software from Tryology Company and started online

computerization in main branch.

In 15th May 1996, bank was started festival of Rajat Jayanti. Mr.

Surajram Bachackaniwala the chairman of the bank started it. In this year,

bank's funds was Rs. 100 crore. Reserve Bank of India gave permission

to bank to increase their functional areas from Surat, Bharuch, and

Mumbai Municipal Corporation. In this year bank increase their branches

7

and it was at that time 11. At the time of Rajat Jayanti Festival, bank

invites its all members, creditors, other staff members and also Mr.

Fakirbhai Chauhan who was mayor at that time.

In the event of banks Silver Jubilee year, The SUTEX Co-operative

Bank Ltd., offers Rs. 50-lack donation to Sarvajanic Education Society

for Textile Processing faculty. In this way bank fulfill its social

responsibility.

The bank changes its name to "The SUTEX Co-operative Bank

Ltd." and was registered in Multi State Co-operative Act-1984 in

February 8, 1999.

In the year 2000-01, two new branches were established i.e. City

Light branch and Salabatpura branch. All the credits of opening these

branches goes to Mr. J.M.Nayak (C.E.O.) of the bank. In addition, bank

organised to open branch in Mumbai.

The bank has 13 branches and 3 ATM (Automatic Tailor Machine)

in various areas. The ATM machines are available on Rander Road

Branch, Athwalines Chopati Branch and City Light Road Branch. In very

few times, bank provides ATM service in Station Road Branch.

In present bank thinks about Wireless Anywhere Bank (satellite

bank).

"HELPS YOU LIVE BETTER"

8

2.2> Present Situation of THE SUTEX CO-OPERATIVE BANK

Ltd.

(Date: - 1st March 2004)

Name : - "The SUTEX Co-operative Bank Ltd."

Registered no. : - 5033, Date:- 15th May, 1972.

Registered Office : - 2nd Floor,

Bank Block,

Surat Textile Market,

Ring Road,

Surat-2.

Administrative Office: - 2nd Floor,

Surbhi Complex,

Puna Octroy,

Paravat Patiya.

Surat-10.

9

BRANCHES

The bank has 13 branches in Surat City at various areas as

follows: -

Main Office: - Station Road: -

Surat Textile Market, Meghani Mesons,

Ring Road, Station Road,

Surat-395002. Surat-395003,

Gopipura Sona Faliya: - Katargam: -

Subhas Chowk, 163-B G.I.D.C.,

Gopipura, Katargam,

Surat-395001 Surat-395004.

Rander Road: - Varachha Road: -

Ashirwad Society, Shreyas Diamond Center

Rander, Varchha,

Surat-395009. Surat-395006.

Udhana Magdalla: - Athwalines: -

Pashwanath Complex, Anjana Salakha,

Udhna Magdalla, Athwaliane,

Surat-395017 Surat-395001.

Parvat Patiya: - Kim pepodara: -

10

First Floor, Surbhi Complex, J.J. Complex

Parvat Patiya, Kim Charrasta,

Surat-395210. Surat-394111.

Sachin G.I.D.C.:- City light: -

1008, G.I.D.C., Hirapanna Shopping Center,

Sachin, City Light,

Surat-395230. Surat-395007.

Salabatpura: -

Piperdi Sheri,

Salabatpura,

Surat-395003.

2.3> Board of Directors: -

11

"The Sutex Co-operative Bank Ltd." has 15 directors this

name as follows: -

Name Post

Mr. Surajram Hiralal Bachakaniwala Chairman

Mr. Jyotindra Bhagwandas Lekhadiya Vice-Chairman

Mr. Ravindra Bhupatlal Dholabhai Hon. Director

Mr. Vasantlal Ishwarlal Bachakaniwala Hon. Director

Mr. Sureshbhia Ashabhia Patel Hon. Director

Mr. Bhupendra Manilal Chevli Director

Mr. Chaturbhai Nagindas Singapuri Director

Mr. Manharlal Ratilal Bachakaniwala Director

Mr. Manilal Bhaidas Kapadiya Director

Mr. Mohanlal Rudhanath Nayak Director

Mr. Kamal Vijay Tulshan Director

Mr. Hasmukhlal Bhagwandas Mistry Director

Mr. Sharadbhai Champakala Kapadiya Director

Mr. Pankajbhai Amabala Patel Director

Mr. Mohanlal Harikishandas Bhagat Director

Mr. Jitendra M. Nayak CEO

Mr. Jayvant B. shinde Manager

(Credit &personnel)

2.4>Growth Rate(Rs. in crore)

1998 1999 2000 2001 2002 2003

Number 8,906 9,557 10,388 11,481 13,247 14,800

12

of

Members

Share

Capital

10.00 10.00 10.00 10.00 10.00 10.00

Subscribe

Share

Capital

20.91 3.71 4.21 4.80 5.50 6.19

Deposits 135.95 164.36 196.66 219.53 256.32 248.59

Advances 69.02 87.65 89.90 99.22 115.58 123.96

Working

Capital

153.64 184.92 223.73 250.36 301.71 302.10

Profits 2.33 3.53 4.22 3.64 4.16 4.04

Reserve

Fund

2.29 2.92 3.82 4.90 5.83 5.08

Building

Funds

2.79 2.99 3.47 4.57 5.31 6.41

Other

Funds

1.74 2.09 3.40 3.49 5.65 5.75

Audit

class

A A A A A A

Dividend 15% 15% 15% 15% 15% 15%

2.5> Organisation Structure of the bank:-

13

Chairman

14

Vice-Chairman

Managing Director

Board of Director

Manager /C.E.O.

Assistant Manager

Officer

Clerk

Peon

3. OBJECTIVE OF THE PROJECT: -

15

"While selecting the project title 'Loans & Advances' the main objective is to know there is any changes is possible in current or present banks lending procedure of loans and advances". Some other objectives are as follows: -

1> To study different types of loans given by the bank.

2> To study the procedure of loans and advances of the bank.

3> The norms and conditions for sanctioning the loans are studied.

4> To show total advances of the bank.

5> Some focus on the recovery procedure of the loans and advances of the bank.

6> The procedures for giving the loans and advances have been studied.

16

4.1> Introduction of Loans and Advances.

4.2>Types of Loans.

4.3>Procedure of Loans.

4.4>Documents required for the Loans.

4.5>Various Loans Schemes.

4.7> Recovery Procedure of Loans

4. THEORITICAL FRAME WORK: -

17

4.1> Introduction of Loans and Advances: -

Any amount borrowed or lent is called loan. If money is borrowed

it is debt of business ands if loan is given, it is receivable for the business.

Loan is a method of lending under which bank gives credit to a

borrower for a fixed period and for a specific purpose. Loan are promises

for future payment, they have to be repaid in periods beyond a year and

are, therefore long term liabilities.

In other wards "when a banker makes an advances in a lump sum

which can not be paid wholly or partly and which the customer has

permission to withdraw subsequently, it is called a loan."

Profit is the pivot on which the entire business activity

roates. Banking is essentially a business dealing with money and credit.

Like every other business activity. Banks are profit oriented. A bank

invests its funds in many ways to earn income. The bulk of its income is

derived from loans and advances.

Banks make loans and advances to traders, businessman and

industrialist against the security of some assets or on the basis of the

personal security of the borrower. In either case, the banks run the risk of

default in repayment. Therefore, banks have to follow a cautions policy

and sound lending principles in the matter of lending. Banks in India have

to consider the national interest along with their own interest while

determining the lending policy.

Many a time a borrower needs funds for fixed assets or non-

respective type of activities and thus seeks money from the bank that is

withdrawn in one lump sum. The loan amount is normally repaid in

installments. Loan may be short-term, medium-term or long-term.

Principles of sound lending:-

18

Traditionally, banks have been following three principles of

lending viz., safety, liquidity and profitability. Banks in India have

shouldered additional responsibility of fulfilling social obligations.

Hence, the bank observes both the traditional and certain other principles.

1>Sefety: -

A bank leads what it receives from the public as deposits. The

success of the bank depends upon the confidence of the depositing

public. Confidence could be infused in the depositors by investing the

money in safe and sound securities. Safety depends upon (1) the security

offered by the borrower, and (2) the repaying capacity and willingness of

the debtor to repay the loan with interest. So the banker should ensure

that the security offered are adequate and readily releasable and the

borrower is a person of integrity good character and reputation.

2>liquidity: -

Liquidity refers to the ability of assets to convert into cash without

loss within short time.

The liabilities of a bank are repayable on demand or at short notice.

To meet the demand of the depositors in time, the banks should keep its

funds in liquid state. Money locked up in long term loans such as land,

building, plants, machinery, etc., can not be received back in time and so

less liquid.

3>Profitability: -

19

Like all other commercial institutions banks are run for profit.

Even government owned banks are no exception to this. Banks earn profit

to pay interest to depositors, declared dividends to shareholders, meet

establishment charges and other expenses, provide for reserve and for bad

and doubtful debts, depreciation, maintenance and improvements of

property owned by the bank and sufficient resources to meet contingent

loss. So profit is an essential consideration.

4>Security: -

Customers may offer different kinds of securities viz., land,

building, machinery, goods and raw materials to get advances. The

securities of the customers are insurance and bankers can fall back upon

than in times of necessity. Securities which could be marketed easily,

quickly and without less should be preferred.

5>Purpose of the loans: -

Before sanctioning loans a banker should enquire about the

purpose for which it is needed. Loans for undesirable activities such as

speculation and hoarding should be discouraged. Banks readily allow

borrowings for productive purposes. It is also equally important on the

part of banks to insure that a loan is utilised for the proposed for which it

is granted so that repayment will be prompt.

Proposed of the loan has assumed a special significance in the

present day concept of banking it is equally important to insure that the

loan is utilised for the proposed for which it is a granted.

6>Sources of Repayment: -

20

Before giving financial accommodation, a banker should consider

the source from which repayment is promised.

7>Diversification of risk: -

The security conciseness of a banker and the integrity of the

borrower are not adequate factors to keep the bankers on safe side, what

is more important is the diversification of risk. So that a bank should

follow wise-policy for 'do not lay all the eggs in the same basket.' The

bank must advance moderate sums to a large number of customers spread

over a wide area and belonging to different industries.

8>Receipt concept of sound lending: -

A sound credit is one where timely repayment is assumed. This

largely depends on the earning power of the business units and the

repaying capacity of the borrower. So great emphasis is laid on the

productivity of the loan. Since the banks have shouldered an additional

responsibility of keeping the tempo of development of the economy they

should consider the productivity of loan as the chief criterion for

advancing loan.

4.2a>Types or Forms of advances: -

Bank offers different types of borrowing facilities to their

customers. The credit facilities may be broadly classified into four types.

1> Loans,

2> Cash Credit System,

3> Overdraft,

4> Bills Purchased and Discounted.

These can be discussing in brief as follows.

21

1> LOANS:-

In case of loans, the 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 current account, which he can

draw at any time. The interest is charged for the full amount sanctioned

whether he withdraws the money from his account or not. The loan may

be repaid in installments or at the expiry of a certain period. The loan

may be made with or without security. A loan once repaid in full or in

part cannot be withdraw again by the customer. In case a borrower wants

further loan, he has to arrange for a fresh loan.

Loan may be a demand loan or a term loan. Demand loan is

payable on demand. It is for a short period and usually granted to meet

working capital needs of the borrower. Term loans may be medium term

or long term loan. Medium term loans are granted for a period ranging

from one year to five years for the purchased of vehicles, tractors, tools

and equipment's. Long term loans are granted for capital expenditure such

as purchase of land, construction of factory building, purchase of new

machinery and modernization of plants etc.,

Advantages of Loan System: -

1> Financial discipline on the Borrower :-

As the time of repayment of the loan or its instalments is fixed

in advances, this system ensures a greater degree of self-discipline

on the borrower as compared to the cash credit system.

2> Periodic Review of Local Account: -

Whenever any loan is granted or its renewal is sanctioned the

banker gets an opportunity of automatically reviewing the loan

account. Unsatisfactory loan accounts may be discontinued at the

discretion of the banker.

22

3> Profitability:-

The system is comparatively simple. Interest accrues to the

bank on the entire amount lent to a customer.

Drawbacks/ Limitations: -

1> Inflexibility: -Every time a loan is required, it is to be negotiated

with the banker. To avoid it, borrowers may borrow in excess of

their exact requirements to provide for any contingency.

2> Banks have not control over the use of funds borrowed by the

customer. However, banks insist on hypothecation of the assets/

vehicle purchased with loan amount.

3> Though the loans are for fixed periods, but in practice they roll

over, i.e., they are renewed frequently.

4> Loan documentation is more comprehensive as compared to each

credit system.

4.2b>Types of Loans: -

Banks grant loans for different periods- shorts, medium and long,

for different propose. Broadly, the loans granted by banks are classified

follows:-

1> Short term loans: -

23

BANK LOANS

Short Term Loans

Medium&Long Terms

Loans

Bridge Composite

Loans

Consumption Loans

Short-term loans are granted to meet the working capital needs

of the borrowers. These loans are granted against the security of tangible

assets mainly the movable asset like goods and commodity shares,

debentures etc. Since April 1995 RBI has made it mandatory for the

banks to grant a portion of bank credit to big customers in the form of

loans, which may be for various maturities. The reserve bank has also

permitted the banks to roll over such loans, i.e. to extend the loan for

another period at the expiry of the tenor of the first loan.

2> Term loans: -

Term loans are given for medical and loan periods, and loans

are used for acquiring fixed assets or for modernization and expansion of

existing units. They may also be used for working capital requirements.

An important feature of term loans is the felt that they are repayable in

yearly or half-yearly installments over a period of time. Payment is to be

made according to a specified schedule, extending up to 15 years, which

imposes a sort of financial discipline on the borrowing concern. The

amortization gradually starts 2 to 3 years after the sanction of the loan.

Together with the normal interest, a commitment charge of one per cent

per annum is also levied on the utilized portion of loan. The basic point in

term lending is that the borrower should utilize the amount in such a way

as to repay the loan as well as the interest accruing thereon from the

anticipated income earned by the use of that loan itself. This is the reason

why before allowing a term credit, the banker evaluates the technical and

economics viability of the project for which the loan is sought and also

the repaying capacity of the borrowing concern.

3(a)> Bridge loans: -

24

Bridge loans are essentially short-term loans, which are

granted to industrial undertaking to meet their urgent and essential needs

during the period when formalities for availing of the term loans

sanctioned by financial institutions are being fulfilled or necessary steps

are being taken to raise the capital market. These loans are granted by

financial institutions themselves and are automatically repaid out of

amount of the term loans or the funds raised in the capital market.

In April 1995 RBI banned bridge loans granted by banks and

bank permitted the banks to sanction bridge loans/ interim finance against

commitment mad by a financial institution faces temporary liquidity

constraint subject to the following conditions:

1. The prior consent of the other bank / financial institution which has

sanctioned a term loan must be obtained.

2. The term lending bank / financial institution must give commitment to

permit the amount of the term to the bank concerned.

3. The period of such bridge loans should not exceed four months.

4. No extension of time for repayment of bridge loan will be allowed.

5. To ensure that bridge loan sanctioned is utilized for the purpose for

which the term loans has been sanctioned.

3(b)> Composite loans:-

When a loan is granted both for buying capital assets and for

working capital purposes, it is called a composite loan. Such loans are

usually granted to small borrowers, such as artisans, farmers, small

industries etc.

4> Consumption loan:

25

Though normally banks provide loans for productive purposes

only, but as an exception loans are also granted on a limited scale to meet

the medical needs or the educational expenses or expenses relating to

marriages and other social ceremonies etc. of the needy persons. Such

loans are called consumption loans.

Classification of loans and advances: secured and unsecured:

The loans granted by banks are broadly classified into two

categories:

- Secured loans.

- Unsecured loans.

According to section 5(a) of banking regulation act, 1949, a

secured loan or advances means a loan or advances made on the security

of assets, the market value0 of which is not at any time less than the

amount of such loan or advances, and unsecured loan or advances means

a loan or advances not so secured. Thus the distinguishing of the secured

loan or advances are as follows:

1. The loan must be made on the security of tangible assets, like goods

and commodities, land and buildings, gold and silver, corporate and

government securities etc. A charge on any such assets offered as

security must be created in favor of the banker.

2. The market value of such security must not be less than the amount of

the loan at any time till the loan is repaid. If the farmer falls below the

latter because of decline in the market prices, the loan is considering

as partly secured.

The distinction between secured and unsecured loans is made on

the basis of legal title or charge created in favour of the lender. Under

the traditional principles of lending, the borrowing capacity of the person

26

is judged on the basis of the tangible assets in the possession of the

borrower, i.e. the larger is the creditworthiness of a borrower, if larger is

the value of his tangible assets. However, it should not be understood

that unsecured loans, also called clean loans and advances, are granted to

persons without observing the abovementioned criterion of

creditworthiness. In fact, unsecured loans are also granted to persons of

sufficient means, possessing tangible assets and with sound financial

position, but no charge or right is created on any such assets of the

borrower in favour of the banker.

In case of secured advances, the legal status of the banker is that of

a secured creditor; he gets the first and absolute right to recover his dues

out of the sale proceeds of the assets over which a charge is created in

favour of the banker.

2> CASH CREDIT SYSTEM: -

Cash credit is one of the most important methods of lending in

India. Under this method, the banker fixes a limit for a customer, called

the cash credit limit. The limit is generally specified after taking into

account the important features of the borrowing concern, for example,

production, sales, inventory, past credit limits etc. The customer is

allowed to withdraw money from cash credit account according to his

requirements. Similarly he may deposit money in the account as and

when surplus funds are available with him. The cash credit account is,

thus, an active and running account to which deposits and withdraws may

be effected frequently. But the customer has to provide tangible assets as

security for the amount borrowed from the banker. The interest is charged

on the actual amount utilised by the customer and it is calculated only for

the period of actual utilisation only.

27

Advantages of Cash Credit System: -

1>Flexibility: -

The borrower need not keep their surplus funds idle with

themselves. They can recycle the funds quite efficiently and can minimise

interest charges by depositing all cash accruals in the bank account and

thus keeping the drawls at the minimum level. The system thus ensures

lesser cost of funds to the borrowers and better turnover of mind for the

banks.

2> Operative convenience: -

Banks have to maintain one account for all the transactions of a

customer. The repetitive documentation can be avoided.

Weakness of the system: -

1> Fixation of Credit limits: -

The cash credit limits are prescribed once in a year. Hence it gives

rise to the practice of fixing large limits than is required for most part of

the year. The borrowers misutilise the unutilised gap in times of credit

restraint.

2> Bank's inability to verify the end use of funds: -

Under this system the stress in on security aspect. Hence there is no

conscious effort on the part of banks to verify the end use of funds.

Funds are diverted, without banker's knowledge, to unapproved

purposes.

3> Lack of proper management of funds: -

Under this system the level of advances in a bank is determined

not by how much the banker can lend at a particular time but by the

28

borrower's decision to borrow at that time. The system therefore does not

encourage proper management of the funds by banks.

These weaknesses of the cash credit system were highlighted by a

number of committees appointed for this purpose in India. Guidelines

have been issued by the Reserve Bank for reforming the cash credit

system on the basis of recommendations of the Tandon Committee and

Chore Committee.

3> OVERDRAFTS: -

Overdraft is an arrangement between a banker and his customer by

which the latter is allowed to withdraw over and above his credit balance

in the current account upto an agreed limit. This is only a temporary

accommodation usually granted against securities. The borrower is

permitted to draw and repay any number of times, provided the total

amount overdrawn does not exceed the agreed limit. The interest is

charged only for the whole amount sanctioned.

A cash credit differs from an overdraft in one respect. Businessman

in doing regular business whereas overdraft is made occasionally and for

short duration uses a cash credit for long term.

Temporary Overdraft: -

Banks, sometimes, grant unsecured overdraft for small amount to

customers having current account with them. Such customers may be

government employees with fixed income or traders. Temporary

overdrafts are permitted only where reliable source of funds is available

to a borrower for repayment.

4> BILLS DISCOUNTED AND PURCHASED: -

29

Banks grant advances to their customers by discounting bill

of exchange or promote. The amount, after deducting the interest from

the amount of the instrument, is created in the account of the customer.

In this form of lending, the banker receives the interest in advance.

Discounting of bill constitutes a clean advance and banks rely on the

credit worthiness of the parties to the bill.

Banks, sometimes, purchase the bills instead of discounting

them. The bankers purchase bills, which are accompanied by documents

of title to goods such as bills of landing or railway receipt. In such cases,

the banker grants loans in the form of overdraft or cash credit against the

security of the bills. The term 'Bills Purchased' seems to imply that the

bank becomes the purchaser/ owner of such bills. But in almost all cases

the bank holds the bill only as a security for the advances.

Advantages of Discounting of Bills: -

1>Safety of bank funds: -

A banker is primarily concerned with the safety of the funds he

lends. Through the banker does not get charge over any tangible assets in

case of discounting of bills, legal instrument bearing signatures of two

parties considered good for the amount of the bill. The banker can

enforce his claim much more easily in the case of bills. If the acceptor of

the bill fails to make payment on its due date, the drawer has the remedy

to claim the whole amount from his customer, the drawer of the bill. In

case the bill is dishonored, the banker debts amount to his customers

account and send him intimation. Thus, the banker is fully confidence of

recovering his money on the due date. To be on the safer side a banker

should discount bills of exchange offered by parties of standing and

good reputation.

2> Certainty of payment: -

30

A Bill of Exchange is considered and ideal self-liquidating assets

because it originates from an actual commercial transaction and the

debtor meets the obligation to pay by disposing of the goods acquired

from the creditor within a short period of time. As the Bill of Exchange

matures within a 'short period of time' the banker recovers his money on

the due date with certainty. The bills are therefore, called 'semi-liquid'

assets. As the banker known in advance the dates on which the

discounted bills will mature, he can invest his funds in such a way that

the same are profitably utilised to the maximum extent, without

unnecessarily maintaining large cash balances. Thus, a banker is able to

maximise his profit without taking any undue risk.

3> Facility of Refinance: -

When a banker is in need of funds, he can secure accommodation

from the central bank of country on the basis of eligible securities

including the bills is counted. The bills can also be rediscounted with the

central bank or any other bank/ financial institution and thus the need for

cash balances can be met more easily and quickly.

4>Stability in the value of the bill: -

The value of the bills as a security does not fluctuate while the

value of all-tangible goods and securities is liable to fluctuations. The

amount payable on account of a bill is fixed and the acceptor or the

drawer is liable to pay the same in full. As the bill is a legally enforceable

instrument, neither of these parties can subsequently dispute the validity

of the banker's claim. These parties may be summarily sued for the

payment of the amount of the bill.

5> Profitability: -

31

While discounting the bills the banker deducts interest from the

amount of the bill. In case of other types of loan and advances, interest is

payable by the debtor quarterly or half-yearly. Thus, the yield from

discounting of bills is a title higher, if the rate of interest or discount

remains the same as in the case of other loans, for example, if a bill of

exchange for Rs. 1,000/-payable after 3 months is discounted @ 6 per

cent per annum, the banker pays Rs. 985 (Rs. 1,000-Rs. 15). The actual

yield thus comes to 6.38 per cent per annum.

4.3> Procedure of Loans: -

32

1. Bank's for all types of loan's necessary application from are printed. In

this borrower or customer is required to fill out the loan application

form printed by the bank. Which seeks comprehensive information

about the loans. Specially the loan application form concerns all the

detail is the borrower.

2. All the loan application form fully fill up forms and other related

papers are accepted in branch office of the bank.

3. In branch office all the application firms are scrutinize and to know if

it is completed or not by loan department officer. If the application is

not completed then asked to borrower to give necessary information

about the loans and other relevant.

4. In branch level, "flash report" or "office" report can be prepared and

for its sanction purpose manger recommendation letter is written and

after that the loan file or office report and managers recommendation

letters are presented in administration's office.

5. In administration office it will be presented in "Loan committee" of

The SUTEX Co-operative bank meet every Tuesday and four times in

a month. In "Loan Committee" it can be rescrutinize or recheck and it

will be presented in "Board meeting" for its sanction purpose.

6. After that to call party and take share application form's money,

Document's charges, and after that to sign and stamp can be done to

the loan application.

33

7. After that if it is essential, lawyer's help and valuare's report can be

taken.

8. After stamp and sign, it can be return to branch from where it comes.

All the paper's and files are given to branch office.

9. In branch office, payment of loan can be done who is sanctioned. In

administrative office and take entry in computer to open its account

and field all the detail related with the loans.

10.After all, how many months' loans can be accepted and when the

installment of loan is started related with it a letter can be given to

party or borrower.

34

4.4> Various loans Schemes:-

The bank providing various loan are as follows:-

► Vehicle Loan,

► Machinery Loan,

► Education Loan,

► Consumer Loan,

► Staff Loan,

► Clean Loan,

► Finance for Profession Person,

► Housing Loan,

► Fixed Deposit Loan,

► NSC/ KVP Loan,

► Purchased Bill Discounting Limit

These can be describing as follows: -

1>Vehicle Loan: -

The vehicle loan is provided to customer by purchased a

two-wheeler vehicle or four wheeler vehicles. This loan is providing to

individual, partner ship, and proprietorship private limited company. The

bank provides a loan before all papers clear with a 24 hours sanction a

loan. 75% of an original price of vehicle to provide customer and the

maximum period of loan is 60 months. The bank for its security to

collected by customer property documents.

Limit: -

Maximum limit in Rs. 75% of an original price of vehicle.

Rate of interest :-

35

Upto 2,00,000/-

Between 2,00,000/- to 4,00,000/-

Above 4,00,000/

12.00%

12.50%

13.00%

Margin: -

For two wheeler 20%

For three wheeler 30%

For two wheeler 15%

Security:-

The bank for its security to collected by customer property

documents.

Requirements for vehicle loans:-

All basic documents,

Evident of shareholder,

Invoice of purchasing vehicle etc.

2> Machinery Loan: -

This loan provides to purchase Machinery. New Machinery

purchase and hand old machinery valuation loan. The machinery loan

provides to partnership firm, proprietorship firm etc.

Bank provides different machinery loans according to business

requirements and different margins.

Limit: -

i> New Machinery :- 80% of quotation

ii> Old Machinery :- (1) 70% of valuation of valuare committee

member's valuation who is Textile Machinery

Degree Holder.

(2) 70 % of other approved machinery.

36

In machinery loan bank accepts pre and post inspection. In present

maximum advances or loans amount is Rs. 425 crore.

Rate of interest :-

Particular Int.

Rate

Machinery Loan

(Factory Type, CC and Working Capital)

Upto 5,00,000/-

Between 5,00,000/- to 15,00,000/-

Above 15,00,000/-

12.50%

13.00%

13.50%

Margin: -

When dept equity ratio is 2:1 then 20%on loan amount.

Stamp: -

It is necessary to stamp at 0.20% of hypothecation loan amount. In

this mostly upto Rs. 1,00,000/- stamp is involves.

Time period:-

-72 to 73 installment

Bank grants mostly 6 years installment in this loan. In this 6

months Moratorium Periods are included.

Security:-

-3lacks then 1 surety

-Above 3lacks 2 surety

The bank for its security to collected by customer property

documents.

Documents required for loans: -

i> Income proof (with other income),

ii> Quotation of machinery,

iii> One surety upto Rs.3,00,000/- and two surety beyond

37

Rs. 3,00,000/-,

iv> Factory proof,

v> Electric Bills,

vi> Registered Certificate,

vii> C.S.T./G.S.T./S.S.I. number/ senvate Registration Certificate,

viii> If having old machinery then its receipt of bill,

ix> Additional Security if having more amount.

Most of advances or loans of bank are in machinery. In which

mostly in Textile Machinery's. It is biggest risk of bank liquidity position.

All the loan application of machinery is sanction by 'Loan

Committee'. In this applicant does not presence. In present bank adopts

Technology Upgradation Fund (T.U.F.) Scheme.

In machinery loan the bank prepares the following documents: -

i> Loan Paper,

ii> Surety Letter,

iii> Promissory Note,

iv> Declaration,

v> Equitable Mortgage if necessary,

vi> If does not have member then Share Application Form,

3> Education Loan: -

Education loan is a better facility to student of higher study in India

or Foreign. The bank provided a loan according to student parent's

income. The rate of loan is different in India and Foreign. This loan is

providing after standard 12th. This facility is good facility to student who

wants to study more.

Now a day's bank gives education loan for higher study. In this

bank gives loan as follows: -

Limit: -

38

(i) For study in India, maximum Rs. 8,00,000/- is given,

(ii) Out of India (foreign) study, maximum Rs.

10,00,000/- (including air ticket) is given.

Rate of interest :-

(A) In India: -

Upto Rs. 2,00,000/- 7%

Between Rs. 2,00,000/- to Rs. 5,00,000/- 10%

After 12th Standard course 10%

(B) For Foreign: -

Upto Rs. 5,00,000/- 10%

Between Rs. 5,00,000/- to Rs. 10,00,000/- 12%

After 12th Standard course 12%

Margin: -

In this scheme bank take 10% as margin and 5% loans amount

taken.

Security:-

In this bank take as securities are as follows:-

(i) Property of applicant,

(ii) Government Security,

(iii) Its fixed deposit,

L.I.C. policy etc.

If more than Rs. 5,00,000/- given as a loan then take one property

mortgage and 25% of loans amounts LIC policy is assign to bank.

Requirements for education loans:-

In this the following documents are required: -

Application form printed by the bank,

Bio-data of applicant,

Marksheet of last exam,

39

Copy of admission form of institution where they want to study and

detail of its expenses, if they want to study in foreign then copy of I-

20.

4> Consumer Loan: -

This loan is providing to purchase daily used items in house.

Banks this types of loans involves different types of instruments like

daily use of house is Television, Refrigerator, Gas, Telephone, Computer,

Furniture, Video, Washing Machine, Truck, Auto Rickshaw, Tempo, Car,

Scooter etc. The bank providing a loan according to price. Banks margin

for all these are as follows: -

Limit:-

i> 80% of the quotation of Television, Refrigerator, Gas,

Telephone, Computer, Furniture, Video, Washing Machine

etc.

ii> 85% of the quotation of Truck, Auto Rickshaw, Tempo,

Car, Scooter etc.

Rate of Interest:-

Particular Int. RateConsumer Loan 12.50%

Security:

For this types of loan bank takes security for scooter loans Rs.

500/- and for car loan Rs. 5000/-. It gives to customer after receiving

R.T.O. book, insurance policy and bills receipts.

Time period:-

50 installment

Margin:-

30% of loan amount

40

Documents Required for the Loan:-

Income Proof,

Proof of place where vehicles are park,

One surety who have properties,

Quotation,

All the documents or details if previously any types of loans

are taken,

Other necessary information.

If applicant purchase any instruments within the 6 months

then bank grants above margin. Only 'Loan Committee' has right of

acceptance of loan. Then after for final selection purpose it presented in

the board meeting. When bank wants any additional securities in that case

ask for customer after some time for it.

For these purpose the following documents prepared by the bank:

i> Promissory Notes (with Revenue Stamp),

ii> Loan Paper,

iii> Surety Paper,

iv> Undertaking (if have),

v> If board member is not then nominal member/ share

application form

For this types of loans bank gives share of 2.5% of loans amount

(excluding case of consumer loan).

5> Staff Loan: -

This loan provided only bank staff. The loan is provided low rate

of interest and loan margin is also favor of staff. This loan is provided

related to employee salary. This loan is more benefit to staff. This loan is

only provided staff to self-use.

Rate of Interest:-

41

Particular Int. RateStaff loan 6.00%

Margin:--For officer clerk 25,000/--for sub-staff 20,000/-

-Manager 30,000/-

Documents Required for the Loan:- -All basic documents

Income Proof,



Quotation,


are taken,


6>Clean loan: -

Personal individual loan is called Clean Loan. The rate of interest

is @ 14.00% per annum. This loan providing only individual person, to

use personal work.

Limit:- The loan gets maximum Rs. 45,000/-.

Rate of Interest:-Particular Int. RateClean loan 14.00%

Time Period:--50 installment


42

Income Proof,



Quotation,


are taken,


7> NSC (National Saving Certificate) Loan: -

Reserve Bank of India suggested to co-operative bank that bank

take 25% margin on National Saving Certificate and does not take

interest on margin. In this way upto 75% of loans granted by the bank.

For this applicant gives application in proper form and with this

copy of N.S.C., income proof and residence proof given in the banks.

Bank grants 75% of NSCs face value.

Limit:- 75% of N.S.C./ K.V.P. Face value

Rate of Interest:-Particular Int. Rate

N.S.C./K.V.P. LOAN 9.50%

Stamp:-50.00 Rs.

Margin:-25% on investment

Security:-- All the basic documents of N.S.C./K.V.P.

Time Period:--36 installments


43

i> Loan Agreement,

ii> Promissory Notes,

In this scheme at branch level, branch manager have power

to accept upto Rs. 25,000/- loans. After its acceptance bank takes

its Leyan Mark in NSC through applicant in post office and give

loans after receiving original certificate and receipts and if more

than Rs. 25,000/- than power of acceptance or sanction of it is in

the hand of administrative office, manager credit and CEO (Chief

Executive Officer) and after its acceptance it gives return to

branch office and after this it presented in board for its acceptance.

In this scheme interest Rate is at 9.5%.

In this bank gives maximum 36 installments facility to

customer.

8> Limits on Stock: -

For requirements of working capital in business bank gives

cash credit facilities. For cash credit facilities the following documents

are required: -

Limit:- Rate of Interest:-

Particular Int. Rate


i> Banks have different types of form for limit on stock. In this

three years income proof, proof of place where good are stored,

if registration is related to business then G.S.T./C.S.T./S.S.I.

number/ Senvet Registration Certificate, last stock statement of

the firm etc.

44

ii> Generally banks gives 70% of loan on stock to their customers

or applicants and take 30% as margin. Bank takes additional

security if it's required or necessary.

iii> All the limits on stock accepted in "Loan Committee". It is

generally a year only. It is receivable in one year.

In stock on limit the following documents are prepared: -

i> Hypothecation deed of stock/ with Machinery Security Letter,

ii> Promissory Notes,

iii> Letter of continuing Security,

iv> Surety Letter,

v> Contract of C.C. Account,

vi> Declation.

Before giving loan bank first take inspection of stock.

In this types of loan applicant have to give stock statement in

1st to 5th date in the month. On the basis of it bank increase or

decrease in its drawing power. Limit was fixed, but drawing

power is changing one or changeable.

9> SURETY LOAN: -

Surety loan is included in unsecured advances. According to

rules & regulation any banks having demand and time liabilities of less

than Rs. 50 Crore than upto Rs. 25,000/- more than 50 crore then upto Rs.

50,000/- are given as a self guarantee. According to this, ' The SUTEX

Co-operative Bank Ltd.' grants upto Rs. 45,000/- as a self-guarantee.

Objective of these types of loans:-

For business purpose,

i> For house repairing,

ii> For social work,

45

iii> For furniture etc.,

Limit:-According to rules & regulation any banks having demand and

time liabilities of less than Rs. 50 Crore than upto Rs. 25,000/- more than

50 crore then upto Rs. 50,000/- are given as a self guarantee. According

to this, ' The SUTEX Co-operative Bank Ltd.' grants upto Rs. 45,000/- as

a self-guarantee.

For all these bank grants upto Rs. 45,000/- as loans.


Surety loan

Stamp:-Upto Rs. 45,000/- loans the following documents charges take by the

bank: -

i> Promissory Note (with Revenue Stamp) Rs. 1.00

ii> Loan Paper Rs. 110.00

iii> Surety Paper Rs. 60.00

iv> Undertaking (if having) Rs. 50.00

Documents Required for the Loan:-i> Last two years income proof,

ii> Residence proof,

iii> All the details of taking previously any types of loan in

the bank,

iv> Business's /Service's proof,

v> Copy of surety's city survey & tax receipts etc,

vi> Acceptance proof of objects for which loans are

demanded.

46

v> If board member is not than nominal member/ Share

Application Form.

Bank's all self-guarantee unsecured loans or advances do not

increase 33*1/3% on total DTL.

10> Housing loan:-

Housing loan provide to a purchase a house, flats, shop, office

or building. The loan providing individual, partnership, proprietorship,

private ltd. co. to customer etc.

Limit:--Less than 50 crore then 5 lacks-Above 50 crore then 10 lacks


Housing loan:- For Staff member:- As per rulesFor general public:-Upto Rs 3,00,000/-Above Rs 3,00,000/-

6.00%

12.25%14.00%

Margin:-The margin of loan is 50% of valuation

Security:-All original documents to present bank and after bank providing loan

Time Period:-The period of loan is more than 10 years. and 25% of installment.

Documents Required for the Loan:-i> Last two years income proof,

ii> Residence proof,

47

iii> All the details of taking previously any types of loan in

the bank,

iv> Business's /Service's proof,

v> Copy of surety's city survey & tax receipts etc,

vi> Acceptance proof of objects for which loans are

demanded.

v> If board member is not than nominal member/ Share Application Form.

11> FFP (Finance for Professional Person) Loan: -

FFP Loan is Finance for Professional Person. A person with

the professional degree and engaged in that professional independently.

For example, Doctor, Architects, Chartered Accountants etc. this loan

providing an individual, firm/ limited company. For the purpose a

professional be eligible for the finance for purchased land, building,

furniture, vehicle, professional equipment's for the purposes of

professional. In this scheme no penalty for premature repayment of the

loan. In this scheme no other charges than the interest charges.


F.F.P. Loan 12.25%

Margin:-The margin is 15% on cost price.

Security:--Degree papers of applicant.

Time Period:-The maximum period is normally 72 months, but depending on the project longer period can be considered.


48

i> All basic documents of loan.ii> Last two years income proof,

iii> Residence proof,

iv> All the details of taking previously any types of loan in the

bank,

v> Business's /Service's proof,

vi> Copy of surety's city survey & tax receipts etc,

vii> Acceptance proof of objects for which loans are demanded.

viii> If board member is not than nominal member/ Share Application Form.

12> FD Loan: -

This loan given by the fixed depositor. Limit:-

-90.00% of face value of receipt. Rate of Interest:-

Particular Int. RateFD Loan-for own FD-for third party

2.00% more then FD3.00% more then FD

Margin:-The loan margin is 25% of the FD.

Time Period:-- This loan maturity date is same as FD.

Documents Required for the Loan:-- All basic documents.

RATE OF INTEREST CHARGE BY THE BANK

Sr.

no.

Types of Advances Rate

1 Clean Loan 14.00%

2 Vehicles Loan

Upto 2,00,000/- 12.00%

49

Between 2,00,000/- to 4,00,000/-

Above 4,00,000/

12.50%

13.00%

3 Factory Shade Loan 13.00%

4 Machinery Loan

(Factory Type, CC and Working

Capital)

Upto 5,00,000/-

Between 5,00,000/- to 15,00,000/-

Above 15,00,000/-

12.50%

13.00%

13.50%

5 Loan/ O.D. Against NSC/K.V.P./

Govt.Sec.

9.50%

6 FD Loan

(i) Issued FD Own

(ii) Issued FD Third party

2% more to FD

3% more to FD

7 Purchase & Usense Bill Discount Loan 15.50%

9 Consumer Loan 12.50%

10 Retail Trade Loan 12.50

11 Education loan

Our Country: Up to 2,00,000/-

Rs2,00,001/-to 5,00,000/-

Out of Country : Up to 5,00,000/-

Rs5,00,001/-to 10,00,000/-

(Note:- After Standard 12th)

7.00%

10.00%

10.00%

12.00%

12 Cash Credit(Against Stock in Market

Shop)

13.00%

13 Housing Loan

Scheme :1

50

Staff Acco.Rules

General Up to 5,00,000/-

Above 5,00,000/-

Scheme:2

Upto 5 years

Scheme:3

Upto 6 years

Upto 7 years

Upto 8 years

6.00%

12.00%

12.25%

9.00%

9.00%

9.50%

10.00%

14 FFP Loan (Finance for Professional) 11.00%

15 Cash Credit & Overdraft A/c

TOD/Excess

17.00%

4.7> Recovery procedure of loan: -

Recovery is an important part of the bank. Bank play a role of

collect the amount from saver and provide to borrowers. After giving

loan, it returns with in its fixed period, If it does not return then, it

responsibility of banker to collect the loan amount and which includes

interest and principle amount. It is prime responsibility of banker to

collect loan banker takes the following action,

51

i) Give letter remainder with details of its account.

- First remainder

- Second remainder (To give information to the director who

sign the loan application).

- Thired/ Strong remainder.

ii)Through discussion.

iii) It necessary then loyer's notice.

iv) Recovery schemes.

v) Legal provision.

52

Comparative study of rate of interest with The Surat District Co-operative. Bank.

Sr.

no.

Types of Advances Rate of

Interest

Sutex

Rate of

Interest

Surat

53

1 Clean Loan 14.00% -

2 Vehicles Loan

Upto 2,00,000/-

Between 2,00,000/- to 4,00,000/-

Above 4,00,000/

12.00%

12.50%

13.00%

12.00%

13.00%

13.00%

3 Factory Shade Loan 13.00% -

4 Machinery Loan

(Factory Type, CC and Working

Capital)

Upto 5,00,000/-

Between 5,00,000/- to 15,00,000/-

Above 15,00,000/-

12.50%

13.00%

13.50%

13.00%

13.50%

14.00%

5 NSC Loan/ Overdraft 9.50% 10.00%

6 FD Loan/O.D.:-

(iii) Own FD

(iv) Third party FD

2.00%

more

3.00%

more

2.00%

more

2.00%

more

7 Purchase Bill Discount Loan 15.50% 14.50%

8 Users Bill Discount Loan 14.50% NIL

9 Consumer Loan 12.50% 12.00%

10 Retail Trade Loan 12.50 13.00%

11 Education loan Up to 2,00,000/-

In India Up to 5,00,000/-

Up to 5,00,000/-

Out of Country Up to 10,00,000/-

7.00%

10.00%

10.00%

12.00%

54

(Note:- After Standard 12th)

12 Cash Credit limit(Against Sock in

Market Shop)

13.00% 13.00%

13 Housing Loan Staff Acco.Rules

General Up to 5,00,000/-

Above 5,00,000/-

6.00%

9.00%

10.00%

NIL

11.50%

12.50%

14 FFP Loan (Finance for Professional) 11.00% NIL

15 Cash Credit & Overdraft A/c

TOD/Excess

17.00% NIL

55

Findings and suggestions: -

1> It is not cleared that one-person take surety in

howmany loans application? So that bank has to make this

types of rules. It can be not down in application form.

2> Bank has to invite each and every loan applicant to

take once presence in bank.

3> Bank has to keep a P.R.O. counter, which gives

proper information related with various loans schemes. So

that settlement of loan application can be done easily or

speedily.

56

4> It is necessary for bank to change or improve its

working procedure for sanctioning of loans because loan

procedure of bank is too tough.

5> For acceptance of loan application to keep separate

"Loan Department" and at clerk level all the papers of loan

can be prepared then after officer of the loan dept. can

scrutinize it and then with recommendation letter of

manager credit & personnel/ C.E.O. (Chief Executive

Officer) Sir's. It can be presented in "Loan Committee". So

that loan procedures can be completed speedily or easily

and loans and advances of the bank can be increases.

6> Bank has tries to take varieties in loan schemes. So

that loans and advances of the bank can be increases.

7> Bank has to provide loans related to loan applicant's

own requirements or objective.

8> Acceptance of loan application by bank, it can be

inward before it can be access by recovery dept. It can be

only possible when loan dept. and recovery dept. can be

connected.

9> When to give loans to other bank's customer's then to

request to customer's that they open its current or saving

account in "The SUTEX Co-operative Bank Ltd."

10> Bank gives power to branch manager of sanctioning

upto Rs. 25,000/- on N.S.C. & bank's FD. In this, limit of

57

loan amount does not take and give complete power of

sanction of these types of loan.

11> Bank has to take full time service of loyer. So that in

future in any case does not face any difficulty.

12> If any loan application taken by the bank with

positive attitude and proper papers then pre action can be

taken before putting in "Loan Committee".

13> Pre sansion and post inspection procedure can be

very important for all loans.

14> For sanction of big-amount loans, it is necessary to

take advice or opinion of C.A.

15> It is beneficial for the bank to give loans to any one

group but it can be very risky for the bank.

16> The power of sanctioning small amount loans can be

given to manager, manager credit & personnel and C.E.O.

Sir's. e.g. Two wheeler loans, Staff loans, clean loans and

Three wheeler loans.

17> Instead of taking different different forms for

different loans, a single form for all-purpose of loans can

be prepared.

18> Bank gives most of its loans to "Textile Industries".

It can be opposite of principle of lending but it is main

industries or business of 'Surat City'. So that it can be

acceptable. But bank has to try to take variety in loans in

present situations.

58

19> In today's competitive era, loans procedures can be

make as possible as speedy when interest rate is lowest.

20> In today's Competitive era, it can be very essential

for the bank to take settlement of loan application speedy

for this, to keep separate loan dept. and in this increases

loan manager, officers or increases employees in loan

dept. So that work can be increases.

21> Every branch has interlinked with 'Textile Market'

accordingly or in that manner take interlink between

Administrative officer and branches. So that related with

loan settlement and closing can be done speedily and also

Reserve Banks paper's can be done speedy.

22> By creating interlink between administrative office

and branches, all the works done simply as well as

employees time and money can be save and also increases

productivity and decrease costs or expenses.

23> Loans procedure and loan documents can be make as

possible as simple.

59

BIBLIOGRAPHY

1>Banking Law and Practice

(for S.Y.B.Com)

-Prof. P.N.Shah

-Sri Gajanan Publication (Surat).

2>Banking Theory, Law and Practice

-Gordon, Natarajan

61

-Himalaya Publication Hall.

3>Banking Theory and Practice

-Dr. P.K. Srivastava

--Himalaya Publication Hall.

4>Loan Pamphlets of the bank.

5>Annual Report of the bank.

62