APROJECT REPORT

ON

STUDY OF LOANS & ADVANCES IN CO-OP. BANKING SECTOR

AT

THE THANE JANATA SAHAKARI BANK LTD.

SUBMITTED BY

Mr.Ganesh S. Dayma

SUBMITTED TO

Dr. Babasaheb Ambedkar University,AurangabadIN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE

M.COM. II (BATCH 2012-2013)

UNDER THE GUIDANCE OFProf. Rathi Madam

Swami Ramanand Teerth Mahavidyalaya Ambajogai

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ACKNOWLEDGEMENT

The project is never an individual effort. It is contributory effort of many

hearts, hands & brains. For the completion of this project. This project would not

be possible if not aided by few kind souls.

First & foremost I would like to take this opportunity to thank

“The Thane Janata Sahakari Bank Ltd. Pune” for giving me such opportunity

to do this project in such esteem organization.

I would also like to thanks Mrs Rathi Madam, (Project Guide) & all other

faculty members for providing valuable suggestion in preparing my project without

them this project would not have been possible.

DATE: - / /2013 Mr. Ganesh Dayma

PLACE: - Ambajogai (M.Com II)

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INDEX:-SR.

NO.

PARTICULAR PAGE

NO.1. Introduction 4

2. Objective of the study 8

3. Company Profile 10

4. Review of Literature 16

5. Research Methodology 44

6. Data Analysis and Interpretation 47

7. Limitation of the Study 56

8. Findings 57

9. Suggestions 58

10. Conclusion 59

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INTRODUCTION

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INTRODUCTION

A period of less than a year. Under the loans system, the loan amount is given to the borrower normally in one installment and further drawings in the loan account are permitted. The amount is given for a predetermined period.

Normally loans are repayable in installments. Funds are required for single non-repetitive transaction. As the period of repayment of the loan or its installments ate fixed in advances, the loans system ensures greater degree of discipline on the part of the borrower. Interest on the full amount of the loan is available Banking system occupies in an important place in every nation’s economy. A good banking system with strong banking institutions is indispensable for the economic growth of a country. In India, we have an organized banking structure comprising

Co-op. banks and private scheduled / non-scheduled banks, foreign banks, commercial and co-operative banks, development banks etc. This complex structure has developed over a period of last 150 years. The objectives and methods of working of banks have undergone significant changes.

In the case of Co-op. banks, it was necessary to pass laws in order to control their irregularities and mushroom growth. However, in the case of ‘Co-op bank’ it was found necessary to make legal provisions so that the bank will be encouraged to come into existence.After doing this project I have come to know that now a day’s banking sector or any financial institute plays very important role in the society. As in this topic we can see the various types of loans and what is the procedure for sanctioning the loan.

Loan constitutes the major form of intermediate term financing. Unlike short-term loans, which are self-liquidating over able to the bank under this system and it is, therefore, profitable from the bank’s point of view

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IMPORTANCE OF THE TOPIC:-

Banking system occupies an important place in every nation’s Economy.

Good banking system with strong banking institutions is Indispensable for the

economic growth of a country. In India, we have an organized banking structure

comprising Co-op banks and private scheduled / non-scheduled banks, foreign

banks, commercial and co-operatives, development banks etc. This complex

structure has developed over a period of last 150 years. The objectives and methods

of working of banks have undergone significant changes.

In the case of commercial banks, it was necessary to pass laws in order to

control their irregularities and mushroom growth. However, in the case of banks’ it

was found necessary to make legal provisions so that the national banks will be

encouraged to come into existence.

Generally the banks grant loans against different types of securities like fixed

deposits, shares, goods, machineries etc. Certain special precautions have to be taken

while granting the loans. Term loans is emerging as an important source of business

financing in recent years because of added advantage of easy availability of the loan,

its cheapness and flexibility. A firm with assured credit for a stipulated period of

time can go ahead with plans and projects benefiting the firm. Since the terms of the

outcome direct negotiation between the lender and the borrower, the same can be

tailed to satisfy the needs of the borrower. Furthermore, term loan is available

quickly and at less expense as compared to public issue of debentures. If a firm

decides to float debentures of loan funds from the market, it must seek the

permission of SEBI, prepare prospectus and registrations statement and file with

Registrar of Joint Stock Companies and allot debentures to then applicants. All this

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costs to the firm about 3% of the borrowing amount. This can be avoided in bank

terms loans.

A Bank is an institution, which is engaged in the business of accepting

deposits and giving loans & Advances. Bank accepts deposits from various

peoples, institutions that have surplus funds and advance the loans to those who

need them. Thus, the main function of bank is to accept deposits by mobilizing the

savings and give loans & Advances to needy people for different purposes. There

are different definitions stated by different authorities, which make the nature and

important functions of bank very closer.

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OBJECTIVES OF THE STUDY:-

The aims and objectives of the study can be summarized under the

Following points.

1. The aim of the study is to analyze the different types of loans and studying the

procedure of granting the loans.

2. To secure information regarding the documents required for acquiring the loan

3. To analyze the education loan scheme in respect of eligibility, quantum of

finance, security, interest rates, repayment, etc.

4. Aim of the study is to understand the concept of loan under Co-op banking sector

in the small places.

5. The mail objective of the study is to analyze and interpret the data which has

given through financial statements and through the annual financial report of the

bank.

6. This study is required for every shareholder, who is the real owner of the

organization. The shareholder should know how the items in the balance sheet

are varying and inter relationship with other components in the statement.

7. The aim of the study is to analyze the different types of loans and studying the

procedure of granting the loans.

8. To secure information regarding the documents required for acquiring the loan

9. To analyze the education loan scheme in respect of eligibility, quantum of

finance, security, interest rates, repayment, etc.

10.Aim of the study is to understand the concept of loan under Co-op banking sector

in the small places.

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11.The mail objective of the study is to analyze and interpret the data which has

given through financial statements and through the annual financial report of the

bank.

12.This study is required for every shareholder, who is the real owner of the

organization. The shareholder should know how the items in the balance sheet

are varying and inter relationship with other components in the statement.

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COMPANY PROFILE

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INTRODUCTION TO ORGANISATION:-

The Birth

Registered on 04th Feb 1972 with an authorized capital of Rs 10.00 lakh and commenced business on 8th Feb 1936.

The Childhood

Known as a common man's bank since inception, its initial help to small units has given birth to many of today's industrial houses. After nationalization in 1969, the bank expanded rapidly. It now has 1421 branches all over India. The Bank has the largest network of branches by any Public sector bank in the state of Maharashtra.

The Adult

The bank has fine tuned its services to cater to the needs of the common man and incorporated the latest technology in banking offering a variety of services.

Organization vision

To be a vibrant, forward looking, techno-savvy, customer centric bank serving diverse sections of the society, enhancing shareholders’ and employees’ value while moving towards global presence.

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The Deepmal

With its many lights rising to greater heights.

The Pillar

Our institution- Symbolizing strength.

The Diyas

Our Branches- Symbolizing service.

The 3 M's

Mobilization of Money Modernization of Methods and Motivation of Staff.

Organizations Aims:-

The bank wishes to cater to all types of needs of the entire family, in the whole country. Its dream is "One Family, One Bank, Bank of Maharashtra ".

The Autonomy:-

The Bank attained autonomous status in 1998. It helps in giving more and more services with simplified procedures without intervention of Government.

Our Social Aspect:-

The bank excels in Social Banking, overlooking the profit aspect; it has a good share of Priority sector lending having 38% of its branches in rural areas.

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Other Attributes:-

Bank is the convener of State level Bankers committee.

Bank offers Depository services and Demat facilities at 131 branches.

Bank has a tie up with LIC of India and United India Insurance Company for

sale of Insurance policies.

All the branches of the Bank are fully computerized.

It’s Quest for excellence through exploring new horizons Banking.

The bank has been committed to its quality policy which is to strive to meet the

expectations of their Customers, to be reliable provider of their services and

facilities in respect of several schemes launched by the bank.

Due to its wide scope and spectrum I looked forward towards the opportunity

to work with the bank as a summer trainee. It is my privilege having achieved the

same. With the presence of a well established management and supportive and co-

operative employee network, I could perform my study successfully at the bank.

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ACHIVEMENTS:-

Date of Establishment of Bank : 16.09.1935

Date of Commencement of Business : 08.02.1936

First Branch Open at Bajirao Road, Pune : 06.02.1936

100th branch opened at Swargate, Pune : 17.12.1965

Nationalization of bank along with 13 other : 19.07.1969Major Banks

500th branch opened at Allahabad : 21.06.1977

500th opened in Maharashtra state : 14.05.1980(Nariman point, Mumbai)

100th branch opened in Madhya Pradesh (sehore) : 10.03.1983

100th branch opened in Pune district : 12.03.1983(Kale colony, district-Pune)

1000th branch opened at Indri Vaasa, Pune : 27.12.1987

Bank’s IPO opened for subscription of 10 core : 25.02.2004Equity shares at a premium of RS.13/- each

(Over subscribed 10 times)

Listing of bank’s shares on stock exchanges : 12.04.2004

Bank entered into an agreement with Western : 21.10.2005Union Money Transfer to enable NRIs to remit

Funds from abroad to India

Banc assurance (non-life) launched for selling : 18.05.2006Non-life insurance products of united IndiaInsurance co. ltd.

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Banc assurance (life) launched for selling : 26.07.2006Life insurance products of life insurance corp.Of India.

Bank tied-up with Franklin Templeton Mutual : 05.10.2006Fund for selling mutual fund products

Bank surpassed Business landmark of : 01.12.2006RS. 50000 crores

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REVIEW OF LITERATURE

Definition of Bank:-

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Definition by the Indian Regulation Act 1949:

This act defines a banking company under section 5c as a company, which

transacts business of banking. This definition makes it clear that bank can be

defined only with reference to the business, which goes with the term banking. The

act also define the term banking in section 5b according to which

“Banking means acceptance, for the purpose of lending or investment of

deposits of money from public repayable on demand or otherwise, withdrawal by

Cheques, Draft or order.”

Definition by Prof. R. S. Sayers:-

“A Bank is an institution whose debts, usually referred to as bank deposits

are commonly accepted in final settlement of other people debts.”

Origin of the concept of Banking:-

We have understood the meaning & scope of the term ‘Bank’ in the light of the

various functions that a bank performed today. But the present character of a bank

has evolved through time. It is therefore, necessary to follow this process of the

evolution banking.

According to one view, the English word bank owes its origin to the Italian

words Banco, Bancus, Banque or Banc. All these words means a ‘Bench’ upon

which the mediaeval European moneylenders & moneychangers used to display

their coins. The Jews in Europe practiced this business. These Jews possibly

flourished most in Italy in the early years; & hence the Italian word came into

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vogue. In England, Banking as an independent business dates back to the

fourteenth century. In those days the Jews of Lombardy, in England used to

transact their business on benches at market places. One can further point to a

historical fact in support of this view. When a banker was unable to meet his

obligations to his customers, according to the custom, his ‘banco’. Were destroyed

or broken to pieces. Hence, the word ‘Bankrupt’ was derived. Thus it appears that

the word bank is derived from the Italian words Banco, Bancus etc.

Here are others however, who trace the word bank is derived from the Italian word

Monte, which means a ‘mound’ or a ‘heap’. This word implies that one requires a

heap of money for carrying on the banking business.

We are obviously not interested in the controversy over the etymology of the

word ‘bank’. We are interested in the origin of banking & whichever view is

accepted, the fact remains that this derivation takes banking back to the Middle

Ages.

Classification of Bank :-

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Bank can be classified on different basis clarity demand that the basis of

classification should be determined first & then classifications should be made. On

the basis of direct dealing with the public, banks can be divided into central &

other banks. Banks are also divided on the basis of their day to day transaction

means as per heavy transaction they are classified under particular categories.

A] Central Bank:-

In the banking system of any country, there is a central bank & a number of

other types of banks. Central banks are different from all the other types of banks.

All the distinctive features of a central bank are a partly & precisely

summarized in this quotation. A central bank has the monopoly of note-issue. It

acts as bank to the government. It acts as a friend, philosopher & guide to the

entire bank in the country. Regulation & control of credit is an important

responsibility of a central bank. Thus, the central bank is an apex institution, which

stands out as the supreme bank above all other banks.

A central bank does not directly deal with public. It does not accept the public

deposits; nor does it grant loans to individuals. Indirectly, it can help agriculture,

industry, and etc. by augmenting the resources of the other banks.

B] Commercial Banks:-

Commercial banking is, by far, the most important type of banking, so much

so that the term ‘bank’ unqualified by any objective, is taken to mean a commercial

bank. Like any other, receipt of deposits & provision of credit are primary

functions of a commercial bank. However, the major part of the working capital

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with a commercial bank comes from public deposit. This is why commercial banks

are called deposit banks, because commercial banks have a commitment to return

the deposits as & when required by the deposits they provide mainly short-term

credit. Thus, for example, British banks do not provide industrial credit, but

Japanese commercial bank provides it. Indian commercial banks are playing an

increasingly important role in agricultural credit. Thus though commercial banks

are basically deposit banks normally providing only commercial credit, they also

called as investment banks, saving banks, etc.

C] Industrial Banks:-

Industrial banks as the term indicates specialize in industrial finance.

Modem industries require long-term credit for the exaction of factories & plants.

They also require medium-term loans for the purchases of equipment, import of

spares & so on. The function of making long term investment is left to investment

banks .which is another name for industrial banks. Industrial credit also requires

different types of banking expertise. An industrial bank maintains this expertise &

specialized in this type of activity Thus the role played by industrial banks is very

important in planning, promoting & developing industrial units.

D] Agricultural banks:-Financing of agricultural poses special problem. The credit needs of agriculture

are three folds:

1) Short term 2) Medium term 3) Long term

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1) Short-term credit: Short-term credit is requires for carrying out the day in

day agriculture operations and for the purchase of manure, seeds, etc.

2) Medium term credit: Medium term credit serves the purpose of buying

cattle, etc.

3) Long term credit: Long term credit is require for purchase of agriculture

machinery, for effecting permanent like digging wells, leveling land etc. &

for buying additional land.

Since agriculture is followed as personal or family occupation, the loan

virtually becomes a personal loan. But many times, as in India, the credit

worthiness of an agriculturist is limited.

E] Co-operative banks:-

Co-operative bank means a state co-operative bank, a central co-operative

society. The primary object of which is to provide financial accommodation to its

members & includes a co-operative Land Mortgage Bank. Director, in relation to

co-operative society, includes a member of any committee or body, for the time

being wasted with the management of the affairs of their society. Primary

agricultural credit society is distinguished from other societies in that it finances

agricultural purpose. Primary co-operative bank means a co-operative society

carrying out banking with a paid-up capital reserve of more than one lack. With

less than one lack it becomes primary credit society.

F] Exchange banks:-

Just as a trader needs a credit in internal trade, they need it in international

trade as well. The traders in the field of international trade are import & export

trade. They provide facilities for the remittance of money from one country to

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another country. They discount bills of exchange, which arise in international

trade. They also issue letters of credit. Due to the nature of exchange banking some

very big banks dominates this field. These banks have branches in all the important

centers of the world. Now a day, however commercial banks are also participating

in the foreign exchange business in India.

H] International Banks:-

International banks are a class by themselves. the fun timing of these banks ,

unlike that of all other banks enumerated so far , is on an official level in the sense

that the government of various countries are involve in their formation , working &

control.

G] Consumer banks:-

Consumer banks came in to existence in the U.S.A they became popular

these & then spread to other advance countries, these banks provide credit to

consumer for buying car furniture & other durable consumer goods. Credit for

housing is an important aspect of these banks. People can borrow money a long

term basis from these banks for purchasing or constructing houses. The repayment

of is spread over a long periods in easy monthly installment.

THEORY RELATING TO TOPIC:-

Under the loans system, the loan amount is given to the borrower normally in

one installment and further drawings in the loan account are permitted. The amount

is given for a predetermined period. Normally loans are repayable in installments.

Funds are required for single non- repetitive transactions. As the period of

repayment of the loan or its installments are fixed in advances, the loans system

ensures greater degree of the loan is available to the bank under this system and it is,

therefore, profitable from the bank’s point of view.

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Loans are given short, medium and long term basis according to the purpose

of the loan. Short term loans are up to a period of 15 months. Medium term loan are

up to the period of 5 years. As the borrower gets a lump-sum he is able to purchase

consumer articles like TV, fridge, vehicle or a flat for his residence. Installments are

fixed for repayment of the loans on the basis of repaying capacity of the borrower.

As loans are given only once, and no further drawings in these accounts are

permitted, the management cost of loans is less. At times loan amount is made

available to the borrowers in installments as per the programmed of this project and

till the full amount is drawn by him, repayment installments are not fixed. For

examples, if a loan is given for the constructions of the house, the loan amount is

released in installments taking into account the progress of constructions. This

procedure ensures that the loan amount is used for the purpose for which it is

sanctioned. Term loan constitute the major form of intermediate term financing.

Unlike short-term loans are given for a period of more than one year but less than

ten years. Such loans are generally employed to finance more a permanent portion of

working capital requirements. As a result, most of these loans are paid in the regular

and periodic installments, through there are exceptions to the rule. Term loan may

take form of an ordinary loan or a revolving credit. In ordinary term loan the lender

lends funds as per the agreement outright for a period of more than a year and up to

ten year. A revolving credit, on the other hand, is a formal commitment by a lender

to lend up to a certain amount of money to a concern over a specified period of time.

This is thus a guaranteed time of credit where by the lender agrees to lend the money

on demand in a future period, frequently for two to three years.

MATURITY:-

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Term loan bear a maturity period of more than one year but not more than

ten year. In India commercial banks generally grants term loans mostly for a period

of five to seven years.

PURPOSE:-

Term loans are sought for financing core portion of working capital, minor

additions to stock of plant and equipments and research and development

activities. Term loans are also used for meeting all expenses, including those for

repairs, replacement of equipment and others due to modernization of the plant.

COLLATERAL:-

Term loans are more frequently secured than short term loans due to greater

risks involved in term lending. Term loans are usually secured against mortgage

secured loans does not exceed the appraised value of the property. In India,

commercial banks and the other financial institutions are subject to regulations

imposed by the Reverse Bank of India which limit these mortgages to certain

specified portion of the appraised value of the property.

Different Types of Loan

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Educational Loan:-

Who is eligible?

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Students enrolled with an approved educational institute and desirous of

availing the education loan can make an application, with the earning

parent/guardian being the co-applicant to the loan. Currently, new entrants and

existing students of only selected leading national educational institutions are

eligible to apply for education loans.

Terms & Conditions:-

Loans are given to students who are citizens of India. The student should

have a consistently good academic record, and admission to an approved

educational institute for pursing a recognized course. Loans can be availed up to a

maximum of 90% of the total cost as determined by Maharashtra Bank. The costs

would generally cover expenses incurred towards the course fee, library charges,

hostel and mess charges, cost of books and equipment. Maharashtra Bank lends up

to a maximum of Rs 7,50,000 (studies in India) & Rs.15,00,000(studies outside

India) on an educational loans.

The repayment period of the loan is determined on the merits of each case but

would not exceed 5 years. The repayment can be accelerated on completion of the

course, considering the earning capacity of the student. Maharashtra bank’s main

concern is to help individuals comfortably repay the borrowed amount.

You repay the loan in Equated Monthly Installments (EMI) comprising

principal and interest. EMI commence three months after the completion of the

course Pending commencement of EMI, you pay simple interest on the portion of

the loan disbursed. This is payable every month from the date of each

disbursement up to the date of commencement of EMI. This interest is called pre-

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EMI interest. Prepayment of the loan in full or parts is possible. In the event where

the student plans to leave the country for any reason, the loan would generally be

required to be in full, however, the same would be considered on a case-to-case

basis depending on the merits of each case and on such terms as May required.

The security for the loan would normally comprise personal guarantees and such

other security acceptable to Maharashtra bank.

MARGIN:-

No margin up to : Rs. 4.00 lakhs

For loan above : Rs. 4.00 lakhs

For studies in India : 5 %

For studies outside India : 15%

Rate of Interest:-

Up to 4.00 lakhs- BPLR at present 12.00%p.a

Above 4.00 lakhs- BPLR +1 at present 13.00%p.a

PROCESSING FEE :-

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0.50% of Loan amount with a cap of Rs.10,000/-(including Service Tax)

MAXIMUM REPAYMENT PERIOD :-

For applicants up to 45 years of age: 25 years For applicants over 45 years of age: 15 years

SECURITY:-

No security up to 4.00 lakhs Above 4.00 lakhs & 7.50 lakhs –collatereral in the form of third party Equitable mortgage of the property 2 additional guarantors acceptable by bank.

How to apply:-

The loan application forms are available at your nearest Maharashtra Bank

office. The completed application form, together with all supportive documents,

needs to be submitted through your Educational Institute. Maharashtra bank will

make inquiries as are necessary or call the applicant for a discussion.

The loan would be disbursed in suitable installments on the compliance of

necessary formalities such as providing personal guarantees; execution of loan

documents etc. further, disbursement of the loan would also be subject to review of

progress reports from the concerned Educational Institute.

Consumer Loan:-

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Finance your consumer goods purchases with the Maharashtra Bank

consumer loan The consumer loan will facilitate the purchase of a wide range of

consumer durables like TV’s washing machines, refrigerators, air-conditioners,

pc’s branded furniture, new two wheelers and new cars. In addition, the loan

can be also be used to refinance a purchase made in the last six month and/or to

repay an outstanding car/two wheeler/consumer durable loan taken from any

other institution or bank. To top it all, the Maharashtra bank consumer loan can

be used to purchase more than one product and can be availed over a period of

time.

Terms & Conditions:-

Maharashtra bank’s consumer loans are easy to apply for and repayable

in comfortable monthly installments all the applicants of the housing loan

availed from Maharashtra Bank, (including co-applicants) are required to apply

for the consumer loan if they wish to also take this loan.

Amount:-

Loans can be availed up to 100% of the cost of the products.

Maharashtra Bank will determine the loan amount based on the repayment

capacity of the individual. Maharashtra bank’s main concern is to help

individuals comfortably repay the borrowed amount.

Fees:-

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An administrative fee of 0.30 % of the amount disbursed is payable at

the time of & Minimum Rs 100/-, Maximum Rs. 300/-

However, the administrative fees are being waived for loans disbursed

before March 31, 2009.

Rate of Interest and Repayment Term:-

Prepayment:-

You can repay your loan ahead of schedule. In the case of a consumer

durable/ two-wheeler loan, you can prepay only the entire loan amount. In case of

a car loan, you may make a part prepayment (subject to minimum amount of 25%

of the outstanding loan amount). There is a charge of 9.25% payable only if the

loan is prepaid within one year from the date of disbursement.

Security for loan:-

Security for the consumer loan will be the extension of the existing security

on your housing loan. In case the current value of the security is not adequate, then

you may be required to provide to provide additional security.

How to apply:-

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It’s simple! You can get the application form by head office of Maharashtra

Bank. Alternately, you can collect the application from any of your nearest branch

of Maharashtra bank in Nasik district.

You need to submit the application form along with the supporting

documents.

Supporting Documents to be attached:-

With the application form:

1. Proof of ID having your photograph

2. latest salary slip/certificate (if employed)

3. latest balance sheet, P&L account and income-tax return (if self-employed)

4. clean loan to be guaranteed by 1 acceptable guarantor

At the time each disbursement:-

1. Applicable administrative fee

2. Proof of ID having your photograph

3. Copy of perform invoice(s)

After each disbursement:-

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1. Copy of final invoice(s)

2. Copy of registration book (for two-wheelers and cars only)

Home Loan:-

Terms & Conditions:-

Home loans offers you various unique benefits and are easy to arrange and

repayable in easy monthly installments. The term of the loan can be structured

according to your unique requirements. Home loans can be applied for by either

individually or jointly. Proposed owners of the property, in respect of which the

loan is being sought, will have to be co-applicants. However, the co-applicants

need not to be co-owners.

Loans can be availed up to a maximum of 85% of the cost of the property

(Including the cost of the land) on a home loan to an individual. You can repay the

loan over a we will determine the loan amount after evaluating the repayment

capacity of the individual. Maharashtra bank’s main concern is to help individuals

comfortably repay the borrowed amount.

Fees:-

A processing fee of 15% of the loan amount applied for i.e. up to

Rs.5,00,000 RS. 1000/- of the loan applied for is payable when the application

forms submitted to the bank. This fee is in respect of costs incidental to the

application.

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For example:

Loan applied for Fees

RS.5,00,000 RS. 1000/-

On approval of the loan, a loan offer is made to you. On acceptance of the

offer, you will have to pay an administrative fee of 2% of the loan approved. You

can also pay the processing fee and administrative fees upfront i.e. 1% of the loan

at the time of submission of the loan application itself.

Rate of Interest:-

The current applicable fixed rate of interest in respect of the total loan

approved is are as follows.

Annual Rest Option:-

Term of Loan (No. of years) Rate of Interest (%p.a.)

Up to 5 9.00%

6-10 9.50%

11-20 9.75%

You repay the loan in Equated Monthly Installments (EMI) comprising

principal and interest.

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RS. EMI per 1, 00,000 for Annual Rest Option

Term of loan (No. of Years) Rupees

5 2416

10 1208

20 604

Pending final disbursement, you pay interest on the portion of the loan

disbursed. This interest is called pre-EMI interest.

Security for the loan:-

Security for the loan is a first mortgage of the property to be financed,

normally by way of deposit of title deeds and/or such other collateral security as

may be necessary. Interim security may be required, if the property is under

construction.

How to apply:-

It’s simple! You can get the application form by the bank itself or form any

of its branches.

You need to submit it along with supporting documents and the processing

fee at any head office of the bank or to any branch that convenient to you. You can

make payments by cheque marked “Payee’s account only” drawn on a bank in a

city where Maharashtra bank has an office, by demand draft (payable at par to

Maharashtra bank) or by cash. You can make an application at any time after you

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have decided to acquire a house, even if the house has not been selected or the

construction has not commenced.

Maharashtra bank will consider your application, make enquires as it deems

necessary and convey its decision to you. On acceptance of the offer, you will have

to pay an administrative fee for the loan approved. You can take disbursement of

the loan after the property has been technically appraised, all legal documentation

has been completed and you have invested your own contribution in full (own

contribution is the total cost of the property less Maharashtra bank loan). The loan

will be disbursed in full or in suitable installments (normally not exceeding three in

number) taking into account the requirement of funds and the progress of

construction, as assessed by Maharashtra bank and not necessarily according to a

builder’s agreements.

DOCUMENTS REQUIRED FOR HOME LOAN:-

Completed application form.

Passport size photograph.

Proof of Identity – PAN Card/ Voters ID/ Passport/ Driving License.

Proof of Residence – Recent Telephone Bill/ Electricity Bill/ Property

tax receipt/Passport / Voters ID.

Proof of business address in respect of businessmen/ industrialist

Supporting Documents to be attached

~ 35 ~

a) Common for all applicants:-

1. Allotment letters of the national bank/ associations of apartment others.

2. Copy of approved drawings of proposed construction/ purchase.

3. Agreement for sale/ sale deed/ detailed from architects/ engineers for the

property to be purchased or conducted.

4. If you have been in your present employment / business or profession for

less than a year mention details of occupations for the previous 5 years,

giving position held, reasons for change and period of the same.

5. Application processing fees.

6. Any other information regarding your repayment that is necessary and will

assist Maharashtra bank in appraising the case.

7. Passport size photograph for security purpose.

Additionally

If You Are Employed:-

1. Latest salary slip/salary certificate showing all deductions.

2. If your job is transferable, permanent address where correspondence relating

to the application can be mailed.

~ 36 ~

3. A letter from your employer agreeing to deduct monthly installment towards

repayment of the loan from your loan salary. This will expedite the

processing of your loan application

If You Are Self-Employed:-

1. Balance Sheets and Profit & Loss Accounts of the business/ profession along

with copies of individual income tax returns for the three years certified by a

Chartered Accountant.

2. A note giving information on the nature of your business/ profession, from of

organization, clients, suppliers, etc.

Home Equity loans:-

With an Maharashtra bank Home Equity Loan, you can cash your

investment in a dwelling unit without having to dispose it off. The end usage of the

funds will not be monitored by Maharashtra bank. However, the funds should not be

used for speculation or any illegal purposes. Loans can be advanced against any

freehold or leasehold properties that have a clear marketable title. Loans can be

repaid on an EMI basis or on a simple interest basis. Moreover, the loan shall be

approved only in respect of units that are self occupied; units which are rented out

are not covered under this scheme.

Terms & Conditions:-

~ 37 ~

Maharashtra bank’s Home Equity Loans are easy to arrange and repayable in

easy monthly installments. The terms of the loan can be structured according to your

unique requirements. Home Equity Loans can be applied either individually or

jointly. Owners of the current property, in respect of which the loan is being sought,

will have to be co-applicants. However, the co-applicants need not be co-owners.

Maharashtra bank’s technical officers at the branch offices would ascertain

the market value of the unit. Valuations could also be carried out by government

approved value/ external agency acceptable to/ recommended by Maharashtra bank.

Loans can be availed up to a maximum of 40% of the market value of the

property (including the cost of the land). You can repay the loan over a maximum

period of 5 years for a loan on an EMI basis and 2 years for a loan on a simple

interest basis. We will determine the loan amount after determining the repayment

capacity of the individual. At Maharashtra bank, our main concern is to help

individuals comfortably repay the borrowed amount.

Fess:-

A processing fee of 2% of the loan amount applied for, i.e. Rs. 20 per Rs. 1000

of the loan applied for, is payable when the application form is submitted to

Maharashtra bank. This fee will cover the valuation fee for valuations undertaken.

In case of closures/cancellations, the processing fee less valuation fee would be

refunded. No refund is entertained in case the valuation fees exceed the processing

fee.

Rate of Interest

Annual Rest:-

~ 38 ~

The rate of interest on the home equity loan (simple interest) on a fixed rate

basis is 12.00% p.a. while the interest on home equity loan (EMI) on a fixed rate is

11.00% p.a.

Monthly Rest:-

The rate of interest on the home equity loan (simple interest) on a fixed rate

basis is 12.00% p.a. While the interest on home equity loan (EMI) on a fixed rate

basis is 11.00% p.a.

Maharashtra bank wills advances funds in the form of a term loan. The loan

will be repayable by way of (EMI) comprising principal and interest. Pending final

disbursement, you pay interest on the portion of the loan disbursed. This interest is

called pre-EMI interest.

However, in case loans with simple interest rates, the principal repayments

would be in equal quarterly installments with interest payments being made on a

monthly basis. Post-dated cheques for repayment of loan will be required in all

cases. No early redemption charge would be charged if the loan is prepaid ahead of

schedule.

Security for the loan:-

Security for the loan is a first mortgage of the property against which

Maharashtra bank has advanced the loan. In addition, Maharashtra bank may

request for additional/interim/collateral security. Liquid securities in the nature of

shares, fixed deposits etc. may be accepted as additional securities on a selective

basis.

~ 39 ~

How to apply:-

Maharashtra bank will consider your application, make enquiries as it deems

necessary and convey its decision to you. On approval of the loan, a loan offer is

made to you. On acceptance of the offer, you will have to pay an administrative fee

for the loan approved.

Supporting Documents to be attached

For approval of loan

a) Common for all applicants:-

1. Allotment letter of the national bank / associations of apartment owners.

2. Agreement for sale /sale deed for the property.

3. If you have been in your present employment/ business or profession for less

than a year, mention details of occupation for previous 5 years, giving position

held reasons for change and period of the same.

4. Applicable processing fees.

5. Any other information regarding your repayment capacity that is necessary and

will Assist Maharashtra bank in appraising the case.

b) Additionally

If you are Employed:-

1. Latest salary slip/salary certificates showing all deductions.

2. If your job is transferable, permanent address where correspondence relating to

the application can be mailed.

~ 40 ~

3. A letter from your employer agreeing to deduct the monthly installments

towards repayment of the loan salary. This will expedite the processing of your

loan application.

If you are Self-Employed:-

1. Balance sheets and profit & loss accounts of the business/profession along with

copies of individual income tax returns for the last three years certified by C.A.

2. A note giving information on the nature of your business/profession, form of

organization, clients, suppliers, etc.

3. Please take photocopies of all documents that are submitted to Maharashtra bank

(including the application form) for your personal record.

4. Personal Loan:-

These loans are generally granted without obtaining any specific from

the borrower. However, the bank may ask for the security if it feels it necessary to

do so in the case of borrowers with a financially weaker status. The following

procedure and precautions are normally taken.

Who is eligible?

1. The prospective borrower should have dealings with the bank for a period of at

least 3 years or more.

2. The loan should be guaranteed by two independent guarantors (who should be

Members or nominal members).

~ 41 ~

3. The borrower and guarantors should be working or serving in the area of

operation of the branch.

4. Where necessary, the bank may ask the borrower to furnish adequate security by

way of gold ornaments, shares, life policies etc.

Security:

If necessary the bank may order for good security in that case the borrower

should give the security.

Guarantors:

For personal loan the borrower should have minimum two guarantors with

him/her. These people should be member or the nominal member of urban bank.

Limitation:

Normally, loans for consumption purpose should not exceed an amount of

RS.50000/-. For other purposes, the limit may be fixed at RS.200000/- depending

on the purpose of the advance.

If the borrower is an employee of any institution, the maximum loan amount

should not normally exceed 5 times his monthly total emoluments. If he has any

other source of income a larger, amount of advances could be considered.

The loan should be repaid within a period of 3 to 5 years in monthly

installments. If advances are granted by way of cash credit, the limit will have to

be renewed every year.

Rate of interest:

The rate of interest will be governed by the directives, if any, I issued by the

Reserve Bank of India from time to time. The interest will be calculated on daily

~ 42 ~

product basis and debited to the borrower’s loan account in March, June,

September and December. If it is not paid within month, the bank may charge

penal interest at 2% over the normal rate of interest both for overdue installment

and interest.

BPLR+ 2% i.e. 14% p.a.

Other conditions:

The borrower should utilize the loan amount for the purpose for which it

is granted and may be asked to provide a proof of having done so if the borrower

has taken a loan from any other bank or institution, normally no loan may be

granted. However, if the other institution gives a “No Objection Certificates” and if

the bank is satisfied about the need and creditworthiness of the borrower, it may

consider grant of loan to him.

How to apply:

The loan application forms are available at your nearest Maharashtra bank

office. The completed application form, together with all supportive documents.

Maharashtra bank will make all such enquiries as are necessary or call the

applicant for a discussion.

~ 43 ~

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY:-

Research in common parlance refers to a search for knowledge. One can

also define research as a scientific and systematic search for pertinent information

on a specific topic.

~ 44 ~

The word research has been derived from French word Researcher means to

search.

FRANCIES RUMMER defined “Research: It is a careful inquiry or examination

to discover new information or relationship and to expand or verify existing

knowledge.

Research is the solution of the problem, whether created or already

generated. When research is done, some new outcome, so that the problem

(created or generated) to be solved.

RESEARCH OBJECTIVES:

The main objectives of research in management are: -

1.To verify and to test the existing facts and theories.

2.To gain familiarity with a phenomenon or to achieve new insights into it.

3.To establish generalization in various fields of knowledge.

4.To bring to limelight information that could have never been brought to the

knowledge under normal course.

~ 45 ~

RESEARCH DESIGN:-

Research Design is the conceptual structure within which research is

conducted. It constitutes the blueprint for collection, measurement and analysis of

data. The design used for carrying out this research is Descriptive.

DATA TYPE: - In this research the type of data collection is

Primary data

The primary sources of information collection were through discussion with the

faculties and the advisors in the company.

Secondary data

The main source of information is taken from annual reports of the companies and

through related websites which has enabled in analyzing the equities.

Internet sources

Annual Reports

Text Books

DATA SOURCE: - The sources of collection of secondary data are:

Books

Websites

Brochure

Annual Reports

~ 46 ~

DATA ANALYSIS

~ 47 ~

Data analysisUnder this chapter I have discussed about loans, advances, investments and

working capital. In which whatever data I have collected from the organization

Interest on loans is the first income of any financial institute or may

bank so loan plays very important loan in banking sector. From last three years

what are the positions of loans, deposits, investment and working capital in the

bank of Maharashtra we can analyze below.

DEPOSITS:-

YEAR AMOUNT.

2007-08 26906,18,75

2008-09 33919,33,85

2009-10 41758,33,23

2010-11 52254 ,91 ,96

Under this table I have shown the amount as per the year. As per this table the

amount of deposit has increased comparatively last year. The graph has shown in

the next page.

~ 48 ~

2007-08 2008-09 2009-10 2010-110

10000

20000

30000

40000

50000

60000

Deposits

Deposits means saving a sum of amount in the bank for a fixed period of the time

bank gives the same amount including the interest as per the bank’s rate of interest.

From last five years the deposits have increased drastically as in the this bar graph

in 1997 the deposit was 1405.09 lakhs and after five years that is in 2001 the

deposit is 5315.04 lakhs. From this bar d diagram we can understand that the bank

is increasing its goodwill in market.

~ 49 ~

Working capital:-

YEAR AMOUNT.

2007-08 312,394,14

2008-09 325,90,28

2009-10 354,24,93

2010-11 394,001,42

2007-08 2008-09 2009-10 2010-110

50

100

150

200

250

300

350

400

450

Working capital

~ 50 ~

Under this table I have shown the amount of working capital. This amount has

shown in thousands, & even in this table the amount has increased comparatively

last year. The graph has shown in next page.

Working capital can be defined in two ways.

1. Working capital means the difference between the current assets and current

liabilities.

2. Working capital is the portion of current assets which is financed in long

term funds.

Under the working capital the capital has increased very fast because of the

daily transaction of the bank.

The working capital of the bank in the last year ended 2009-2010 is 394,001,42

Thousand RS

~ 51 ~

Loans:-

YEAR AMOUNT.

2007-08 488,38,04

2008-09 200,90,08

2009-10 199,24,83

2010-11 190 ,01 ,32

As loan is very important role in any banking firm. So even of this bank the

loan which has given to the customer is very high comparatively every year.

Even in this graph the amount has shown in thousand and the graph is shown in

the next page.

2007-08 2008-09 2009-10 2010-110

1

2

3

4

5

6

7

8

9

Loans

~ 52 ~

Under the loan system, the loan amount is given to borrower in one installment

and further drawings in the loan account are permitted.

Getting interest loan is the first and basic income of any bank or financial

institution. So receiving the proper interest on loan is very necessary. For any

bank. In this bank the bank has given the loan very efficiently. In the above

table bank has given the loan in year ended 2005-06 488,38,04And after 5 years

2008-09 the bank has given 190 ,01 ,32

~ 53 ~

Investment:-YEAR AMOUNTPER YEAR

2007-08 11354,26,19

2008-09 11298,39,55

2009-10 12282,95,24

2010-11 18382 ,14 ,36

Under this table I have shown the how much is the investment of the bank in

other financial institute. According to this table the investment has decrease in the

year end of the year.

The amount has shown in thousand and the graph is shown on next page.

2007-08 2008-09 2009-10 2010-110

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Investment

~ 54 ~

Investment is very third category of fixed assets. It represents the investments of

funds in the securities of the companies. They are long term assets outside the

business of the firm. The purpose of such investment is either to earn return or

control other company. It customarily shown in the balance sheet at cost with value

shown in the parenthesis.

~ 55 ~

LIMITATIONS OF THE STUDY:-

Although every effort has been made to study the “STUDY OF LOANS &

ADVANCES IN NATIONALISE BANKING SECTOR” in detail, in an

organization of MAHARASHTRA BANK, it is not possible to make exhaustive

study in a limited duration of 2 months.

Financial matters. Apart from the above constraint, one serious limitation of

the study is that it is not possible to reveal some of the financial data owing to the

policies and procedures laid down by MAHARASHTRA BANK. However the

available data is analyzed with great effort to get an insight into Loans and

Advances Company generally cannot disclose its internal policies to outsiders. In

such case, it is very difficult to find out and gather complete and true information

in the forms of figures regarding

~ 56 ~

FINDING & SUGGESTIONS

~ 57 ~

Findings:-

1. Bank has concentrated only on the part of deposits rather than advances which

is the most important area of the whole banking. Rate growth of deposit is much

higher than the rate of advances. Management should understand that the deposits

are the liabilities of the bank and advances are the real income of the bank.

2. For the purpose of attracting the customers bank has undertaken a deposit

scheme of the higher rate of interest. Due this bank’s deposit rises tremendously.

Bank become famous but in the coming year’s bank will have to pay the interests

on their deposits.

3. At the stage when the bank is having a plenty of funds in their hands, it has

seen that the management is not taking any serious step towards increasing the

level of advances. When an organization is having surplus funds, it should try to

invest it to earn maximum possible returns on it.

4. As far as banks activities are concern it looks like bank is really working to

provide maximum customer service which is one of the most important object of

any bank, so that object is very well served by the bank.

5. Thus bank’s social images are well settled. Goodwill which is the most

precious asset, is with the bank even the financial growth of the bank is very much

satisfactory as the employees has got the bonus as their salaries.

~ 58 ~

Suggestions:-

1. It is suggested that the bank should concentrate on higher amount of advances,

rather than high amount of deposits.

2. Advances should be profitable advances in the sense it should contain those

advances which can be repayable in the specified time of period.

3. To attract the customer for availing advances, there are certain types of loans

which I have mentioned in this project i.e. educational loan, home loan, home

equity loan, personal loan, consumer loan. Thus the bank should concentrate more

on these loans other than other than other types of clean loans.

~ 59 ~

Conclusion:-

The study of project reveals that the Bank of Maharashtra ware in the analysis

& interpretation of the project states that the bank provides various types of loan’s

& advances to the society. The bank makes various steps in reducing loss again the

loan’s & advances provided to the society.

As compare to the private financial organization the Bank of Maharashtra

had more efficient and valuable changes in the facilities to the common people

with less of charges.

Different types of loan like Personal loan, Consumer loan, House loan,

Education loan etc. are made available by bank in the same manner crop loan for

the farmer are provided as per the NABARD and RBI NORMS. The KISAN credit

card facility is also made available to the farmer.

The overall study reveals back customer connect to the Bank of Maharashtra

are made over satisfied with the bank. The Bank of Maharashtra play very

important role in the development of rural areas by lending funds.

~ 60 ~