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A Study On RETAIL LOANS
Executive summary
Banking industry has undergone a paradigm shift in recent times, banking
industry has transformed into relationship industry from transaction oriented
industry. This industry provides variety of services according to the
expectations of customers.
Commercial bank follows certain well-defined system and practice for
loan proposal. These systems practices have been rigidly followed by
Karur Vysya Bank.the funds are sanctioned to those customers who have
ability to repay so that the money sanctioned is not misused.
The system and practice regarding loan proposal begin with verification
of application given by applicant and ends with sanction of loan. In this
process, corporation collects, verifies financial statements of the applicants,
security taken for the project and other related documents, and establishes
financial, market viability and technical feasibility of the project. After
completing the procedure the project sanction committee/sanctioning authority
accepts the feasibility of project, and the loan is sanctioned.
The present report describes and analyses the loan system as
observed in Karur Vysya Bank, Tumkur. The study also examines the
profitability and performance of loan in the bank for 3years.
Data collection is secondary in nature and is taken from; record
maintained by bank, interacting with bank staff and also from annual report.
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PART -A
INTRODUCTION
BANK The English word “bank” is derived from an Italian word “Banco”, the
Latin word “bancus” and the French word “banque”, which means a bench.
They are of the opinion that the medieval European bankers
(I.e. money changers and money lenders) transacted their banking activities.
As such, the word “bank” should be associated with an Italian word “Banco”.
But according to others, the term ‘bank’ is derived from the German word,
‘Banck’, which means a joint stock fund or a common fund (i.e. a heap of
money) raised from a larger no. of members of the public. As banks deal in
common fund or heaps of money raised from the public, the term bank should
be traced to the German word, ‘Banck.”
Meaning and definition of bank
A bank is an institution, which deals with money. It means that a bank
receives money in the form of deposits from the public and lends money for
the development of trade and commerce.
Prof. Hart says that a banker is one who in the ordinary course of his
business receives money, which he repays by honoring the cheques of
persons from whom or on whose account he receives it.
Prof. Kinley defines a bank as an establishment that makes to
individuals such advances of money as may be required and safely made and
to which individuals entrust money, which is not required by them of use.
All types of Banks in India are regulated and the activities monitored by a
standard bank called the Reserve Bank of India that stands at the apex of the
banking structure. It is also called the Central Bank, as major banking
decisions are taken at this level. The other types of banks in India are placed
below this bank in the hierarchy.
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Types of Banks
There are various types of banks which operate in our country to meet the
financial requirements of different categories of people engaged in agriculture,
business, profession, etc. On the basis of functions, the banking institutions in
India may be divided into the following types:
1. Central Bank(RBI, in India)
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2. Commercial Banks
Public Sector Banks
Private Sector Banks
Foreign Banks
3. Development banks
4. Co-operative Banks
Primary Credit Societies
Central Co-operative Banks
State Co-operative Banks
1. Central Bank
A bank which is entrusted with the functions of guiding and regulating the
banking system of acountry is known as its Central bank. Such a bank does
not deal with the general public. It acts essentially as Government’s banker,
maintain deposit accounts of all other banks and advances money to other
banks, when needed. The Central Bank provides guidance to other banks
whenever they face any problem. It is therefore known as the banker’s bank.
The Reserve Bank of India is the central bank of our country. The Central
Bank maintains record of Government revenue and expenditure under various
heads. It also advises the Government on monetary and credit policies and
decides on the interest rates for bank deposits and bank loans. In addition,
foreign exchange rates are also determined by the central bank.
Another important function of the Central Bank is the issuance of currency
notes, regulating their circulation in the country by different methods. No other
bank than the Central Bank can issue currency.
2. Commercial Banks
Commercial Banks are banking institutions that accept deposits and grant
short-term loans and advances to their customers. In addition to giving short-
term loans, commercial banks also give medium-term and long-term loan to
business enterprises. Now-a-days some of the commercial banks are also
providing housing loan on a long-term basis to individuals.
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Types of Commercial banks: Commercial banks are of three types i.e.,
Public sector banks,
Private sector banks and Foreign banks.
(i) Public Sector Banks: These are banks where majority stake is held by the
Government of India or Reserve Bank of India. Examples of public sector
banks are: State Bank of India, Corporation Bank, Bank of Baroda and Dena
Bank, etc.
(ii) Private Sectors Banks: In case of private sector banks majority of share
capital of the bank is held by private individuals. These banks are registered
as companies with limited liability. For example: The Jammu and Kashmir
Bank Ltd., Bank of Rajasthan Ltd., Development Credit Bank Ltd, Lord
Krishna Bank Ltd., Bharat Overseas Bank Ltd.,Global Trust Bank, Vysya
Bank, etc.
(iii) Foreign Banks: These banks are registered and have their headquarters
in a foreign country but operate their branches in our country. Some of the
foreign banks operating in our country are Hong Kong and Shanghai Banking
Corporation (HSBC), Citibank, American Express Bank, Standard &
Chartered Bank, Grindlay’s Bank, etc. The number of foreign banks operating
in our country has increased since the financial sector reforms of 1991.
3. Development Banks
Business often requires medium and long-term capital for purchase of
machinery and equipment, for using latest technology, or for expansion and
modernization. Such financial assistance is provided by Development Banks.
They also undertake other development measures like Public Sector Banks
comprise 19 nationalized banks and
State Bank of India and its 7 associate banks. Business Studies 8
subscribing to the shares and debentures issued by companies, in case of
under subscription of the issue by the public. Industrial Finance Corporation of
India (IFCI) and State Financial Corporations (SFCs) are examples of
development banks in India.
4. Co-operative Banks
People who come together to jointly serve their common interest often form a
co-operative society under the Co-operative Societies Act. When a co-
operative society engages itself in banking business it is called a Co-operative
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Bank. The society has to obtain a license from the Reserve Bank of India
before starting banking business. Any co-operative bank as a society is to
function under the overall supervision of the Registrar, Co-operative Societies
of the State.
As regards banking business, the society must follow the guidelines set and
issued by the Reserve Bank of India.
Types of Co-operative Banks
There are three types of co-operative banks operating in our country. They
are primary credit societies, central co-operative banks and state co-operative
banks. These banks are organized at three levels, village or town level, district
level and state level.
(i) Primary Credit Societies: These are formed at the village or town level
with borrower and non-borrower members residing in one locality. The
operations of each society are restricted to a small area so that the members
know each other and are able to watch over the activities of all members to
prevent frauds.
(ii) Central Co-operative Banks: These banks operate at the district level
having some of the primary credit societies belonging to the same district as
their members. These banks provide loans to their members (i.e., primary
credit societies) and function as a link between the primary credit societies
and state co-operative banks.
(iii) State Co-operative Banks: These are the apex (highest level) co-
operative banks in all the states of the country. They mobilize funds and help
in its proper channelization among various sectors. The money reaches the
individual borrowers from the state co-operative banks through the central co-
operative banks and the primary credit societies.
5. Specialized Banks
There are some banks, which cater to the requirements and provide overall
support for setting up business in specific areas of activity. EXIM Bank, SIDBI
and NABARD are examples of such banks. They engage themselves in some
specific area or activity and thus, are called specialized banks. Let us know
about them.
i. Export Import Bank of India (EXIM Bank): If you want to set up a
business for exporting products abroad or importing products from foreign
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countries for sale in our country, EXIM bank can provide you the required
support and assistance. The bank grants loans to exporters and importers
and also provides information about the international market.
It gives guidance about the opportunities for export or import, the risks
involved in it and the competition to be faced, etc.
ii.Small Industries Development Bank of India (SIDBI): If you want to
establish a small-scale business unit or industry, loan on easy terms can be
available through SIDBI. It also finances modernisation of small-scale
industrial units, use of new technology and market activities. The aim and
focus of SIDBI is to promote, finance and develop small-scale industries.
iii. National Bank for Agricultural and Rural Development (NABARD): It is
a central or apex institution for financing agricultural and rural sectors. If a
person is engaged in agriculture or other activities like handloom weaving,
fishing, etc. NABARD can provide credit, both short-term and long-term,
through regional rural banks. It provides financial assistance, especially, to co-
operative credit, in the field of agriculture, small-scale industries, cottage and
village industries handicrafts and allied economic activities in rural area
Private banking is a term for banking, investment and other financial services
provided by banks to private individuals investing sizable assets. The term
"private" refers to the customer service being rendered on a more personal
basis than in mass-market retail banking, usually via dedicated bank advisers.
It should not be confused with a private bank, which is simply a non-
incorporated banking institution.
Historically private banking has been viewed as very exclusive, only catering
for high net worth individuals with liquidity over $2 million, although it is now
possible to open some private bank accounts with as little as $250,000 for
private investors. An institution's private banking division will provide various
services such as wealth management, savings, inheritance and tax planning
for their clients. A high-level form of private banking (for the especially
affluent) is often referred to as wealth management.
The word "private" also alludes to bank secrecy and minimizing taxes through
careful allocation of assets or by hiding assets from the taxing authorities.
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Swiss and certain offshore banks have been criticized for such cooperation
with individuals practicing tax evasion. Although tax fraud is a criminal offense
in Switzerland, tax evasion is only a civil offense, not requiring banks to notify
taxing authorities.
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INDUSTRY PROFILE
The Banking Industry was once a simple and reliable business that took
deposits from investors at a lower interest rate and loaned it out to borrowers
at a higher rate. However deregulation and technology led to a revolution in
the Banking Industry that saw it transformed.
Banks have become global industrial powerhouses that have created ever
more complex products that use risk and securitization in models that only
PhD students can understand. Through technology development, banking
services have become available 24 hours a day, 365 days a week, through
ATMs, at online banking, and in electronically enabled exchanges where
everything from stocks to currency futures contracts can be traded.
The Banking Industry at its core provides access to credit. In the lenders
case, this includes access to their own savings and investments , and interest
payments on those amounts. In the case of borrowers, it includes access to
loans for the creditworthy, at a competitive interest rate.
Banking services include transactional services, such as verification of
account details, account balance details and the transfer of funds, as well as
advisory services, that help individuals and institutions to properly plan and
manage their finances. Online banking channels have become key in the last
10 years.
The collapse of the Banking Industry in the Financial Crisis, however, means
that some of the more extreme risk-taking and complex securitisation
activities that banks increasingly engaged in since 2000 will be limited and
carefully watched, to ensure that there is not another banking system
meltdown in the future.
There are three ways in which recent developments have put pressure on
legislation, regulatory standards and supervisory practice. First, the job of
supervision has simply become more challenging as a result of the increased
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size, geographic scope, complexity, globalization and diversity of banking
organizations.
Second, the effectiveness of one of the foundations of the current regulatory
framework, the risk-based capital rules, has eroded as improvements in credit
risk measurement facilitated increased use of securitization and credit
derivatives to arbitrage those capital rules. These innovations have allowed
banks to reduce the capital charges for a given set of risks, making reported
risk-based capital ratios increasingly less meaningful and the current
standards progressively less effective.
Third, banks and other financial institutions, often with the help of their
regulators, have found ways, within statutory limits, to expand not only the
activities in which they engage, but also to compete more effectively with one
another. Market developments and regulatory actions have created tensions
with the existing legislative framework underpinning banking and financial
services.
A loan is a type of debt. Like all debt instruments, a loan entails the
redistribution of financial assets over time, between the lender and the
borrower.
In a loan, the borrower initially receives or borrows an amount of money,
called the principal, from the lender, and is obligated to pay back or repay an
equal amount of money to the lender at a later time. Typically, the money is
paid back in regular installments, or partial repayments; in an annuity, each
installment is the same amount. The loan is generally provided at a cost,
referred to as interest on the debt, which provides an incentive for the lender
to engage in the loan. In a legal loan, each of these obligations and
restrictions is enforced by contract, which can also place the borrower under
additional restrictions known as loan covenants.
A loan is a financial arrangement under which an advance is granted
by a bank to a borrower on a separate account is called the loan account.
When loan is sanctioned to a borrower the entire amount of loan & debited to
the loan accounts of the borrower and is paid to the borrower at once in a
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lump sum. Either in cash or by transfers to the credit of his current account.
Paying entire amount of loan sanctioned in a one lump sum or in installment
basis is also permitted.
Advances take the form of loans over drafts and cash credits. A loan is an
arrangement under which an advance is granted to a borrower. A separate
account called the loan account when a loan is granted the entire loan amount
is debited to the loan account of the borrower and is generally placed to the
credit of the current account of the borrower. As entire amount of the loan is
immediately placed at the disposal of the borrower, interest is charged on the
whole amount of loan granted.
Recoveries of loans mean collection of the loans given by the bank to its
customers. It is very significant for the bank as it can function properly only
when the recovery is done and also determines the debt equity ratio of the
bank
LOANS
Short-term loans Medium term loans Long-term loans
LIC Loan Instrument loan
NSC loan Machinery loan Housing loan
Gold loan Vehicle loan
Godown loan
Warehouse loan
Deposit loan (loan against deposit)
Overdrafts
BANK PROFILE
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Karur Vysya Bank is a privately held Indian bank, headquartered in Karur in
Tamil Nadu. It was set up in 1916 by M. A. Venkatarama Chettiar and
Athi Krishna Chettiar. Its current chairman is Mr. P. T. Kuppuswamy.
The bank has 322 branches — about 45 of them are in rural areas. The bank
has installed 275 ATMs across the country so far. All the branches are
powered with CBS — Core Banking Solution. The bank also offers Internet
banking and mobile banking facilities to its customers.
History
Commercial banking in India can boast of a history of about 200 years.
Though one could trace the history of banking back to the 19th century, the
beginning of the last century saw the birth of many banks in India, set up by
people with vision, commitment and national spirit.
The Karur Vysya Bank Limited, popularly known as KVB, one such
endeavour, was set up in 1916 by two great visionaries and illustrious sons of
Karur, the Late Shri M A Venkatarama Chettiar and the Late Shri Athi Krishna
Chettiar to inculcate the habit of savings and provide financial assistance to
S.I.T 2009-2011 Page 12
Karur Vysya Bank
Type Public
Industry Banking
Founded 1916
Headquarters Karur, Tamil Nadu, India
Key people P. T. Kuppuswamy Group Chairman
Website www.kvb.co.in
A Study On RETAIL LOANS
traders and small agriculturists in and around Karur, a textile town in Tamil
Nadu.
Though the bank started with a seed capital of Rs.1 lakh, it has withstood
innumerable changes and challenges in the past few decades and has
profitably emerged as one of the leading banks in India without compromising
on its fundamentals.
The bank is professionally managed and guided by the Board of Directors
drawn from different fields with vision, experience, knowledge and business
acumen.
Shedding its inherent regional flavor, the bank has now spread its wings far
and wide with over 320 branches in 13 States and 3 Union Territories in order
to gain a pan India presence. The bank has been conducting its affairs
meticulously to conform to all the prudential norms and exacting statutory
regulations.
KVB has consistently maintained strong fundamentals with a higher
percentage of Capital Adequacy Ratio than mandated by the RBI. KVB has
also been generating profits and rewarding its stakeholders with handsome
dividends since inception.
VISION:
Delight the customers continually by blending tradition with technology to
deliver innovative products and services at affordable rates through a pan
India branch network.
MISSION
Adapt technology to introduce innovative products and services as well
as increase the value of products on an on-going basis and provide
them at reasonable rates.
Expand branch network to reach the top business centre’s, besides
unbanked and under banked areas in the country;
Strengthen the financials through effective deployment of funds and
ensuring financial discipline while adhering to the regulator's guidelines
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Update the knowledge and skills of the human capital to provide quality
customer support
Origin
Karur Vysya Bank was started in the year 1916 in Karur, then a small textile
town with a vast agricultural background, by two illustrious sons of the soil –
Sri M.A. Venkatarama Chettiar and Sri Athi Krishna Chettiar. What started as
a venture with a seed capital of Rs. 1.00 lakh has grown into a leading
financial institution that offers the wide gamut of financial services to millions
of its customers under one roof.
Financial landmarks of the bank:
Total business of the bank was at Rs. 32946.85 cr. with total deposits
at Rs. 19271.85 cr. and total advances at Rs. 13675 cr. as on
31.03.2010. KVB is the first Tamilnadu based private sector bank to
cross the milestone figure of Rs. 30000 cr. total business.
The net profit of the bank for the year was Rs. 336.03 cr.
The net owned funds of the bank are Rs. 1619.98 cr.
The bank has a Capital Adequacy Raito of 14.49% (Basel II) as against
the RBI stipulated norm of 9%.
The bank has one of the lowest net NPA ratios in the country @ 0.23%.
The bank has been earning profits since inception and has been
declaring dividend uninterruptedly.
The bank has declared 100% dividend since 2003-04. For 2005-06,
2007-08, 2008-09 and 2009-10, the dividend was 120%.
Branch and ATM network: The bank has a branch network of 335 and an
ATM network of 376. The bank plans to add another 50 branches by the end
of the financial year 2010 -11.
Technological accomplishments:
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KVB is one of the earliest banks in the country to achieve full networking of its
branches under Core Banking Solutions, offering services through multiple
delivery channels. Some of the noteworthy accomplishments of KVB are:
Any Branch Banking
Multicity Account facilities for both current and savings bank
customers.
Internet Banking
On line utility bill payments facility through Bill-desk
On line shopping facility through CC Avenues
e-commerce facilities backed with the safety of Verified by VISA
Mobile Banking
Real Time Gross Settlement (RTGS) and National Electronic Funds
Transfer (NEFT) facilities at all branches
VISA Debit card facility with a card base of over 1.70 million
On-line rail and air ticket booking using KVB VISA Debit card
VISA enabled Gift Card
Access to over 335 KVB ATMs and over 13000 domestic ATMs under
the VISA / NFS / MITR /Axis bank cluster and over 1 million VISA
ATMs worldwide
Card to Card and Card to account transfer of funds through KVB ATMs
Payment of institutional fees through ATMs
Payment for air tickets (Kingfisher) through KVB ATMs
Mobile top up facility at KVB ATMs
24 X 7 toll free professional help desk services for all ATM, Internet
Banking, Mobile Banking and e-commerce transactions
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Banking and Para banking services:
KVB offers several deposit and loan products, tailor-made to cater to
the specific needs of customers
The bank offers all types of general insurance policies through a tie-up
with M/s Bajaj Allianz General Insurance Company
The bank offers life insurance policies through a tie-up with M/s Birla
Sun Life Insurance Company
The Bank distributes the Mutual Fund products of UTI, SBI MF,
Reliance MF, Sundaram BNP Parbas MF, Birla Sunlife MF, Franklin
Templeton MF and LIC MF
The Bank is a Depository Participant through NSDL and opens demat
accounts
ASBA facility available
Off-line and on-line trading facility is available to the demat customers
enabled through a tie-up with M/s Religare Securities Ltd and M/s IDBI
Caps respectively
KVB is one of the authorized banks to open accounts under the New
Pension Scheme.
Recognitions:
Ranked as the Best Mid-sized Bank by Business Today – KPMG for
2009
Was rated as the Most Efficient Small Bank by Business Today –
KPMG and as the No. 1 old private sector bank by Financial Express –
Ernst & Young for two years in succession (2006 & 2007)
Ranked by The Banker, London among the TOP 1000 Banks of the
world for the year 2009 (One among 32 Indian Banks featuring in the
list). Also one of only 6 Indian Banks featured in the list of top
performers under Return on Assets
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Awarded the "Banking Technology Excellence Awards - 2008" for Best
use of IT for Customer Service in Semi-Urban and Rural Areas and the
"Banking Technology Excellence Awards - 2009" - Special Award –
Best IT Infrastructure Management, 2009 by Institute for Development
and Research in Banking Technology, Hyderabad
Awarded the Gold CIO Award in the more than Rs. 1000 cr. category of
the Enterprise Connect Awards ’09 instituted by CIOL (Cybermedia
India Online Limited)-Dataquest recognizing the “leadership combined
with vision and mission in deploying information technology for
business benefits through pioneering and innovative use within and
outside the organization”
Received the CFBP Jamnalal Bajaj Award for Fair Business Practices
in the Financial Sector Category. The award has been instituted by the
Council for Fair Business Practices, Mumbai based on evaluation
parameters like customer satisfaction, customer communication,
employee motivation, social conscience, corporate social responsibility
and compliance with law
Future outlook:
The bank has in place robust risk management systems and adheres to the
tenets of Corporate Governance. The bank is well-equipped to boldly take up
the challenges in the industry and emerge as a top-notch one-stop-shop
techie financial supermarket. KVB will continue its endeavours to bring the
best of products and services to its customers to emerge as the techie bank
that provides the gateway to Smart Way to bank.
Our Loan Products: Some the products that offer tailor-made solutions for
the loan requirements of our customers are:
KVB Vartagamitra to meet the working capital requirements of traders
KVB Fleximobile for purchase of a four-wheeler to provide mobility
KVB Rentfin that provides finance against future rent receivables
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KVB Professional Loan that provides term finance for all categories of
professionals
KVB Bon Voyage that finances expenditure incurred for business,
official or personal visits abroad
KVB Happy Home that provides finance for purchase of the dream
house
The branch in Tumkur was started in the year 1984December in shirani
road.
McKinsey 7S model
The McKinsey 7S model involves seven interdependent factors which are
categorized as either "hard" or "soft" elements:
Hard Elements
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Strategy
Structure
Systems
Soft Elements
Shared Values
Skills
Style
Staff
"Hard" elements are easier to define or identify and management can directly
influence them: These are strategy statements; organization charts and
reporting lines; and formal processes and IT systems.
"Soft" elements, on the other hand, can be more difficult to describe, and are
less tangible and more influenced by culture. However, these soft elements
are as important as the hard elements if the organization is going to be
successful.
1) Structure: the organization structure of KVB Ltd has been shown in chart
below. The top most position is occupied by manager. In the next level deputy
manager then followed by assistant manager, clerical staff and sub staff.
The structure of the bank at corporate level
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Structure of bank at branch level:
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Manager
Deputy Manager
Assistant Manager
Clerical Staff
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Departments and their functions:
For facilitating easy administration, the bank is divided into different
departments with each department headed by respective department head
are responsible for overall administration of their department and also to carry
out various activities coming under their departments by taking the help of
officers and staff of the departments.
Following are the different departments:
Administration
Planning & development
Marketing
Loans & operations
Inspection & audit department
2) Staff:
The Karur Vysya Bank has very efficient and multi skilled employees. The
staff will specify the process by which employees are recruited, deployed and
developed. It also specifies the skills required by particular branch according
to their requirements and this will be done in consultation of head office.
The bank has training and development programs for new and existing
employees. Induction programs will be provided to newly recruited employees
to make the working environment familiar. The training to the employees is
provided in respective branches only. The employees are sent to some other
branch to understand the work in different branches.
There are 44,000employess around India, and 11employees in tumkur
branch.
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Sub-Staff
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The human resource has been divided into following levels
Operational management
Tactical management
Strategic management
Operational management:
Operations management focuses on carefully managing the processes
to produce and distribute products and services. They provide high
speed and accurate processing of record keeping of basic operational
processes. These include calculation, storage and retrieval.
Tactical level:
This is second level where employees are designated as sales
manager, regional manager for each department. They help in problem
solving and decision making.
Strategic level
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This is top level consist of board of directors who develop and
implement the plan. They can be designated as managing directors,
executive directors & CEO.
Recruitment:
The bank will recruit the employees by conducting exam.
Training program:
Every new employee is given on the job training. The duration of
training varies from three weeks to five weeks as per requirements of
organization. Regular training is provided to existing employees
whenever necessary.
Facilities:
KVB is known as best employee benefit provider. House rent
allowance, medical allowances etc are provided to employees.
3) Skills:
As the bank is growing it requires multi skilled employees to meet its
growth and competition. Few important skills required by the bank are:
Managerial
Computer skills
Inter personal skill
Creative innovative skill
4) System:
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“System” refers to rules, regulations and procedures, both formal and
informal. The system in organization is well established so as to take easy
and proper decisions related to particular branch. In each branch the bank
has maintained proper system so as to facilitate proper functions of
organization. It include
Information technology
Computerized system
Marketing system
Finance system
5) Style:
The style of the organization refers to patterns of action taken by the top level
over a period of time. The style of the organization depends upon the culture
that is in practice.
KVB follows top to down style of management. It works in autocratic style.
The decisions are taken by top management concerning matters related to
bank. It has been observed that the behavior of superior towards subordinate
is pleasant. They motivate fresher’s who are working under them. The
superior guides subordinate what to do and what not to do. Employees are
free to give any ideas, suggestions etc for the betterment of the bank.
6) Strategy:
The concept of strategy includes purpose, mission, objectives, goals and
major plans policies. A strategic thinking involves the understanding of basic
economics of business; identifying one’s source of competitive advantages
and allocation of resource.
VISION:
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Delight the customers continually by blending tradition with technology to
deliver innovative products and services at affordable rates through a pan
India branch network.
MISSION
Adapt technology to introduce innovative products and services as well
as increase the value of products on an on-going basis and provide
them at reasonable rates.
Expand branch network to reach the top business centre’s, besides
unbanked and under banked areas in the country;
Strengthen the financials through effective deployment of funds and
ensuring financial discipline while adhering to the regulator's guidelines
Update the knowledge and skills of the human capital to provide quality
customer support
7) Shared values:
KVB’s main values are stated in its vision and mission statement. Beside
these, there are other shared values of bank, they are:
Loyalty and pride in company
Strict adherence to commitments
Integrity and fairness in all matters
In ensuring speed response
Faster team work
SWOT ANALYSIS
STRENGTH
Technological advancement.
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24 * 7 e-banking, m-banking.
Largest bank in old privatized bank.
Customer base.
Well trained man power.
Excellent service provider.
WEAKNESS
Do not provide service in rural areas.
Promotional activities are very less.
OPPORTUNITIES:
Expansion of branches and ATM’s.
Can enhance business by introducing new services which satisfy the
customers.
Can establish branches in rural areas.
THREATS
Public sector banks, both in urban and rural areas.
Competition from other private banks such as, karnataka bank, Axis
bank, Lakshmi vilas bank and others.
Types and Features of loan
1) Happy Home Loan
Features
It is a loan to help finance your housing requirements.
It is eligible for all individuals (including NRIs) and HUF (opening
through Kartas)
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This loan can be taken for various purposes as shown below:
o For construction of Independent Houses
o For outright purchase of Independent Houses, Flats (not older
than 15 years) from individuals or builders
o For purchase of plots and construction on the plots purchased
o For improvement of existing houses or flats
o For purchase of Plots or Flats from a Statutory Authority
o For Repairs, renovation or additional construction
Personal guarantee of husband or father in case of female borrowers or a
third party guarantee in case of male borrower.
Terms and Conditions
In the case of salaried employees, a Salary and Service Certificate
from the Employers should be submitted
The take home pay after the deduction of the home loan installment
should not be less than 25% of Gross salary.
The incomes of Husband and Wife can be clubbed together to decide
the loan quantum, if they are joint borrowers.
This loan is also considered for agriculturists.
A loan may be considered for purchase of a vacant approved site,
provided the applicant has sources of income to construct the house.
Life cover can be taken under this loan through the Group Mortgage
Redemption Assurance (GMRA) scheme.
The premium for the policy is a single low cost premium. The premium
can be included in the loan amount.
Types of Home Loan
There are different types of home loans available in the market to cater
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borrower’s different needs.
• Home Purchase Loan : This is the basic type of a home loan which has the
purpose of purchasing a new house.
• Home Improvement Loan : This type of home loan is for the renovation or
repair of the home which is already bought
• Home Extension Loan : This type of loan serves the purpose when the
borrower wants to extend or expand an existing home, like adding an extra
room etc.
• Home Construction Loan : This type of loan taken when the borrower
wants to construct a new home.
Salaried Individuals
Salary slip/Form 16 A.
A photocopy of the first and last pages of Ration card or copy of
PAN/Telephone/Electricity bills.
A photocopy of Investments (FD Certificates, Shares, any fixed asset
etc. or any other documents
supporting the financial background of the borrower.
A photocopy of LIC policies with the latest premium payment receipts
(if any).
Photographs (as applicable).
A photocopy of bank statement for the last six months.
Self-Employed/Businessmen
1. Balance Sheet, Profit and Loss account and statement of
income with Income Tax returns for the last 3 years certified by
a CA.
2. A photocopy of Advance Tax payments (if applicable).
3. A photocopy of Registration Certificate of establishment under
shops and Establishments Act/Factories Act.
4. A photocopy of Registration Certificate for deduction of
Profession Tax (if applicable).
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5. Bank statements of current and saving accounts for the last 6
months.
6. A photocopy of any bank loan (if applicable).
7. A photocopy of the first and last pages of the Ration card or a
copy of PAN/Telephone/Electricity Bills.
8. A photocopy of LIC policy (if applicable).
9. A photocopy of investments (FD Certificates, Shares, any other
fixed asset)
2) Two Wheeler Loan
Features
This is a hypothecation loan
It is available to individuals and professionals
It is for the purchase of a two wheeler for personal use
Terms and Conditions
An undertaking from the employer to deduct loan installments and
interest from the salary of the borrower in case of salaried employees
shall be insisted on.
Branches shall verify credit worthiness, integrity, local standing and
repayment capacity of the borrower before entertaining the proposals
under the Scheme
3) Flexi Mobile Loan
Features
This is a hypothecation loan for vehicles
It can be used by Individuals, proprietorships, partnerships and
corporate (except those engaged in a car hiring business)
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The loan is for the purchase of a new or second hand car (not older
than 5 years) which is for business or personal use, except for car
hiring
The loan is for eligible business entities older than 3 years and earning
profits during the immediate preceding 2 years.
Documents Required
Audited Balance Sheet (ABS) or Income statements to be obtained to
establish repayment capacity of the applicant
Post dated cheques for the next 12 months should be collected in
advance
Salaried
Application form with photograph, Identity & residence proof, Latest salary
slip, Form 16, Bank statements not necessary
Self employed
Application form with photograph, Identity & residence proof, Last 2 years
income tax returns, Last 6months bank statement.
4) Educational Loan
KVB has made it possible for you to pursue your educational dreams. Our
loan has been specifically structured to provide you with financial help if you
wish to pursue further education of your choice, either in India and abroad.
You can avail of our loans for graduate and post-graduate courses at the
university you prefer.
Features
It is a term loan given for studies in India and abroad.
This loan is eligible for Indian nationals who have secured admission to
professional/ technical courses in India through a common Entrance
Test, or who have secured admission to a foreign University or
Institution.
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The Father or guardian of the student will be the guarantor in case of
individual applicants.
Terms and Conditions
A capability certificate can be issued by branches after obtaining
supporting documents.
NDC from other banks need not be insisted on, a declaration or
affidavit is enough.
The loan is to be sanctioned at a branch nearest to the place of
domicile of the applicant.
The loan should be disposed off within 15 days to 1 month from the
receipt of complete details from the party.
Documents required
1. Mark sheets of the qualifying examinations for school and graduate
studies in India.
2. Proof of admission to the course.
3. Schedule of expenses for the course.
4. Copies of letters confirming scholarship, etc.
5. Copies of foreign exchange permits, if applicable.
6. Passport-size photographs.
7. Statement of the borrower's bank account for the past six months.
8. Brief statement of the borrower's assets and liabilities.
9. Residency proof for non existing customer.
5) Personal loan
The KVB Personal loan is for individuals and small companies that require
loans which are of a very large amount and mainly for personal use. These
loans are repaid in installments and anyone who has availed of the KVB insta
loan will be able to avail of this loan without much difficulty.
Features
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It is an installment loan
The loan is available for salaried employees of PSUs, reputed
companies, self employed individuals, all other individuals who provide
full securities by covering the loan amount with NSCs, KVPs, IVP, RBI
bonds, LIC policies, etc.
The loan is for personal purposes
A guarantor for a secured loan is not insisted upon. However, for an
unsecured loan a colleague drawing the same salary should be used
as a guarantor
Terms and Conditions
For individuals- IT returns to be submitted.
Minimum take-home salary of 25% after deduction of the loan amount.
An applicant who has availed of a KVB Insta Loan earlier shall be
eligible for this loan after closure of the Insta loan.
For an unsecured loan up to Rs. 50,000 the applicant should be from a
reputed company with a minimum of 5 years of service & unexpired
service of 3 years in that organisation.
A salary or service Certificate is a must to establish repayment
capacity.
6) Bon Voyage
KVB has constructed a loan to help individuals or proprietorship firms. It
covers all expenses on foreign travel for business or pleasure. The loan has
been specifically designed so the borrower can repay it in easy installments.
Features
This is an Installment Loan
It is specifically for individuals and partnership firms.
The loan is for personal purposes
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The loan amount is to finance foreign travel expenditure whether it is
business or personal.
The guarantor can be any credit worthy persons who is related to the
borrower, including the employer of borrower or firm, the company in
which borrower is a partner or director and the owner of the collateral
security
Terms and Conditions
The Person should be an Indian citizen and resident in India
Foreign Exchange cannot be released for travel in Nepal / Bhutan
In case the person is employed, take home salary should be at least
Rs1.20 lakhs p.a.
In case the person is employed, it shall be ensured that the net take
home salary available to the borrower, after deducting the EMI for the
proposed loan, shall be at least 25% of gross salary as indicated by
salary certificate or pay slip.
The amount of loan eligible shall be arrived at after reducing the
stipulated margin from the eligible costs. All ineligible costs shall be
met entirely by the borrower.
Documents Required
In case the person is employed, an undertaking letter shall be obtained
from the employer to deduct monthly installments and make direct
payments to our bank.
In case credit facilities are already sanctioned to the borrower by higher
authorities, the proposal for the loan shall be forwarded to such higher
authorities for sanction
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7) Swarnamitra
Don’t just let your gold and jewelry sit idle. You can now use your jewelry to
get a loan for your personal needs without having to sell it. The Swarna Mitra
loan is designed to give you financial assistance after the valuation of your
gold.
Features
It is an overdraft loan
It is specific to individuals who own jewelry
The loan is specifically for personal purposes
A guarantor for the loan is optional
Terms and Conditions
Monthly interest and other expenses debited should be serviced, to be
eligible for renewal.
At the time of renewal, the limit should be fixed with regard to the
prevailing rate to be applied on the gold as notified by CO.
Once an overdraft a/c becomes irregular or overdue, all the provisions
applicable to jewel Loans (Recovery by auction etc) shall be applica
8) Professional Loan
As the name suggests, this is for professionals to help them with business
expansion and development expenses and for travel expenses for business
purposes.
Features
This is a term loan.
It is eligible for doctors, CAs, lawyers, Chartered Engineers, Architects,
Individual, Proprietorships and Partnership Firms.
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It can be taken for the purchase of machinery, equipment, apparatus,
computers, tools, vehicles, furniture, interiors and office equipment.
This loan can also be used to finance foreign trips, seminars and
conferences.
The loan is for any individual doctor holding as least an MBBS or BDS
degree and who is registered as a medical practitioner. He/She should
be engaged in the practice of his/her profession for at least 3 years.
Terms and Conditions
The applicant should have been in his profession for a minimum period
of 3 years and earning profit for the last 2 years.
Assembled computers are not eligible for finance.
For foreign travel, only airfare, hotel expenses and seminar fees are
eligible.
Documents Required
Documentary evidence is required for professional memberships and
partnership deeds.
ABS (with Tax Audit Report for Gross revenue exceeding Rs. 10 lacs)
and/or ITAO/IT Returns for last 3 years are required to ensure the
repayment capacity and adequate DSCR of the applicant.
The borrower must furnish full details of his/her other debts and their
repayment terms.
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PART-B
RESEARCH DESIGN
Scope of the study
The study analyzes overall functions performed by Karur Vysya Bank
in granting loan, and information about various types of loan provided by
bank, and the performance of loans for 3years.
TITLE OF THE PROJECT
“A Study on Retail Loans At Karur Vysya Bank LTD,Tumkur Branch”
Objectives of the study
To know different kinds of loans provided by the bank and their
performance.
To know interest rate charged for each kind of loan
To know the durations provided in different loan schemes
To know what kind of securities the bank accepts
To know the kind of customers approaching bank.
Statement of the problem
Money plays vital role in each and everybody’s life. Banks are the only
financial institutions who provide money at a better interest rates.
The topic is chosen to know exactly the schemes provided by bank, to
study the performance of loans. Hence this study aims at analyzing loan
system or procedure followed by bank and also determines the type of
customer.
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RESEARCH METHODOLOGY OF THE STUDY
The details in brief of the study are listed below for easy and effortless
understanding of this project work.
1. Area of Study: finance
2. Title of the project:A study on retail loans.
3. Source of information: Primary data and secondary data.
4. Method of gathering primary data: Survey method.
5. Area covered: Tumkur
Research is the process of gathering recording and analyzing of critical facts
of any activity. It indicates critical searching study and scientific investigation
of a problem a proposed course of action of hypothesis or theory.
Information is the lifeblood of any organization information. Knowledge
gained through study, communication, research, instruction or factual data
Research is the systematic and intelligent investigation of “Who, what,
where, when, why, how of actual and potential buyers” any research study
must be done methodically in order to arrive at the best result, this study
which was carried out for an academic requirement was done in such a way
to follow the methodology as best as possible.
The study was conducted to analyze the loan schemes at
Karur Vysya Bank Ltd,Tumkur.It was pragmatic to assess to collect
information through conducting a survey. A simple statistical method is used
to arrive at the conclusion over the specific terms
1. Data Collection: The data were collected through primary and secondary
sources.
a) Primary Data: It is collected through first hand information directly from
the bank.
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b) Secondary Data: Data which someone else has already collected and
have already passed through statistical process. It is obtained from
company records, magazines, websites, and other research reports.
DATA COLLECTION TOOLS
QUESTIONAIRE:
Set of questions was prepared and were put in front of customer.
PERSONAL DISCUSSION:
Personal discussions was conducted with bank staff and customers
RESEARCH DESIGN:
Sampling Design:
Sampling design consist of three divisions that is sampling unit,
sampling size, and sampling procedure.
Sampling Plan:
1. Sampling Unit: This particular survey was directed at only respondents
who are customers of KVB at Tumkur branch
2. Sampling Size: The sample size is 30 respondents who are who are
customers of KVB
3. Sampling Procedure: convenience sampling method was used.
LIMITATIONS:
i. Sample size was limited to 30 because of difficulty in generalization of
results.
ii. The study does not covers loans to professionals
iii. To collect the information from customer was quite difficult due to non-
cooperation of customers.
iv. The study is limited only to Tumkur branch.
v. There was limitation of time to conduct survey
vi. The collection of data is limited for 3 years
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DATA ANALYSIS AND INTERPRETATION
For the following analyses of different Loan schemes 2007-2008 is
taken as base year for calculation of percent of loans, and further years Loans
are calculated with respect to the base year.
Table 1: Table showing the change in Overdraft loan
Chart 1: Chart showing the change in Overdraft loan
S.I.T 2009-2011 Page 39
Year Rupees(in lakhs) Percentage(%)
2007-2008 141
2008-2009 140 99
2009-2010 803 569
A Study On RETAIL LOANS
Interpretation:
Business people are the major customers of the bank and users of overdraft
account, the advantage over draft account is that bank charges interest on the
exact amount used by person during the month. Due to efficient promotional
activities carried out bank there was sudden increase from Rs140lakh to
Rs803lakh
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Table 2: Table showing the change in Car loan
Chart 2: Chart showing the change in Car loan
S.I.T 2009-2011 Page 41
Year Rupees(in lakhs) Percentage(%)
2007-2008 55
2008-2009 90 163
2009-2010 171 310
A Study On RETAIL LOANS
Interpretation:
The above table shows clearly that there is increase in car loan year by year.
In the year 2008-09 the loan amount has been increased to 163%.and in the
year 2009-10 the loan amount has been increased by 310%.
Due to increasing number of showrooms in tumkur, banks are giving more
preference to car loans and are attracting customers by their schemes.
Table 3: Table showing the change in Two-wheeler
Chart 3: Chart showing the change in Two-wheeler
S.I.T 2009-2011 Page 42
Year Rupees(in lakhs) Percentage (%)
2007-2008 25
2008-2009 17 68
2009-2010 7 28
A Study On RETAIL LOANS
Interpretation:
In the year 2007-08 the loan sanctioned was Rs25, in the year 2008-09 the
loan issued was Rs17lakh, and in the year 2009-10 declining trend continued
and reached to Rs7lakh.
The cost of two-wheeler is less compared to car, it can be afforded by middle
class families from their savings and also many people felt that buying
four-wheeler is safe and comfortable, so the demand for two –wheeler has
declined.
Table 4: Table showing the change in Housing loan
Chart 4: Chart showing the change in Housing loan
S.I.T 2009-2011 Page 43
Year Rupees(in lakhs) Percentage (%)
2007-2008 70
2008-2009 79 113
2009-2010 42 60
A Study On RETAIL LOANS
Interpretation:
The above table clearly shows that in the year 2007-08 the housing loan
amount was Rs70lakh in the year 2008-09 the loan amount increased by
Rs9lakh, and in the year 2009-10 the loan amount decreased by Rs37 lakh
and reached 42rupees.
The demand for housing loan has come down because due to floating interest
rate the borrower may feel difficult to pay the EMI from their monthly budget.
A person may be penalized if the loan is paid before the due date on the fixed
portion.
Table 5: Table showing the change in Education loan
S.I.T 2009-2011 Page 44
Year Rupees(in lakhs) Percentage (%)
2007-2008 2
2008-2009 7 350
2009-2010 15 750
A Study On RETAIL LOANS
Chart 5: Chart showing the change in Education loan
Interpretation:
The above table clearly shows that Education loan is also mounting every
year. In the year 2007-08 the loan amount was Rs 2lakh. In the year 2008-09
the loan amount was Rs7lakh, and in the year 2009-10the amount increased
by 8lakh and reached 15lakh.
In India higher education has become expensive as compare to earnings of
Indian people. Banks provide education loan for graduation course, post
graduation course and professional course. This system has encouraged
many people to study further.
Table 6: Table showing the change in Personal loan
S.I.T 2009-2011 Page 45
Year Rupees(in lakhs) Percentage (%)
2007-2008 52.00
2008-2009 42.00 81
2009-2010 32.00 32
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Chart 6: Chart showing the change in Personal loan
Interpretation:
Usually, these loans are available with higher interest rates. The interest rate
of personal loan can be sometimes double that of home loans. And it may be
difficult for the person to pay monthly installments, so the demand has been
decreased.
Table 7: Table showing the change in Bon voyage
S.I.T 2009-2011 Page 46
Year Rupees(in lakhs) Percentage (%)
2007-2008 4
2008-2009 7 175
2009-2010 15 375
A Study On RETAIL LOANS
Chart 7: Chart showing the change in Bon voyage
Interpretation:
The above table clearly shows that travel loan in the year 2007-08 was Rs
4lakh, in the year 2008-09 the loan amount raised to Rs 7lakh, and in the
2009-10 the upward trend continued and reached Rs15lakh.
This helps to meet all traveling expense such as cost of ticket, hotel stay,
visa, airport tax, and many more. And also advantage is the borrower has a
period of 36months to repay the loan amount.
Table 8: Table showing the change in Gold loan
Chart 8: Chart showing the change in Gold loan
S.I.T 2009-2011 Page 47
Year Rupees(in lakhs) Percentage (%)
2007-2008 340
2008-2009 381 112
2009-2010 493 145
A Study On RETAIL LOANS
Analysis:
The above table clearly shows the loan against loan in the year 2007-08 was
Rs 340lakh, in the year 2008-09 the loan amount has been improved by
40lakh and reached Rs 381.0, in the year 2009-10 the upward trend
continued and reached Rs 493lakh.
Gold loans require minimum documentation and the processing will be quick.
Gold loan is more attractive, because the rate of interest charged on gold
loans tends to be much lower than that of a personal loan.
Table 9: Table showing the change in Agricultural loan
Chart 9: Chart showing the change in Agricultural loan
S.I.T 2009-2011 Page 48
Year Rupees(in lakhs) Percentage (%)
2007-2008 280
2008-2009 340 122
2009-2010 415 148
A Study On RETAIL LOANS
Interpretation:
The above table indicates that the loan amount in the year 2007-08 was Rs
280lakh,in the year 2008-09 the amount mounted by Rs 60lakh,and in the
year 2009-10 the same uptrend continued and reached Rs 415 lakh.
Agricultural loans include loan for fishing, crop loan, poultry, development
loan, agri-term loan, warehouse loan, flowery culture but the karur Vysya bank
in tumkur has issued loan only for warehousing, because of lack of demand
for other loans.
Table 10: Table showing the change in Advances
Chart 10: Chart showing the change in Advances
S.I.T 2009-2011 Page 49
Year Rupees(in crs) Percentage (%)
2007-2008 18
2008-2009 16 89
2009-2010 19 105
A Study On RETAIL LOANS
Interpretation:
For the financial year 2008-09 the total advances stands at 16crore against
financial year 07-08,09-10,however the bank is able to achieve more than
100% in 2009-10.Due to recession advances in the year 2008-09 has been
decreased.
Table 11: Table showing the change in Profit
Chart 11: Chart showing the change in Profit
S.I.T 2009-2011 Page 50
Year Rupees(in lakhs) Percentage (%)
2007-2008 87
2008-2009 80 92
2009-2010 89 102
A Study On RETAIL LOANS
Interpretation:
The profit in the year 2008-09has been decreased due to decrease in
advances. Profit in the year 2009-10 has been increased due to increase in
deposits and advances.
Table12: Table showing the change in Recovery
Chart 12: Chart showing the change in Recovery
S.I.T 2009-2011 Page 51
Year Rupees(in lakhs) Percentage (%)
2007-2008 40
2008-2009 40 100
2009-2010 41 102
A Study On RETAIL LOANS
Interpretation:
From the above table it is observed that there is constant recovery,
and in the year 2008-09 there is increase by 2%.
Table13: Table showing the change in Deposit
Chart13: Chart showing the change in Deposit
S.I.T 2009-2011 Page 52
Year Rupees(in crs) Percentage (%)
2007-2008 14
2008-2009 16 114
2009-2010 20 143
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Interpretation:
As the bank has used push and pull marketing strategy and aggressive
counter selling, the deposits are mounting year by year
Table14: Table showing the change in Business per employee
Deposits + advances
Business per employee =
Number of employees
S.I.T 2009-2011 Page 53
Year Rupees(in crs) Percentage (%)
2007-2008 2.909
2008-2009 2.909 100
2009-2010 3.54 122
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Chart14: Chart showing the change in Business per employee
Interpretation:
Since there is increase in deposits and advances, business per employee has
been increased.
Table15: Table showing the change in Profit per employee
Profit earned
S.I.T 2009-2011 Page 54
Year Rupees(in lakhs) Percentage (%)
2007-2008 7.9
2008-2009 7.2 91
2009-2010 8.1 102
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Profit per employee =
Number of employees
Chart 15: Chart showing the change in Profit per employee
Interpretation:
It is found that profit per employee has been decreased in the year 2008-09,
but has been increased in 2009-10 due to increase in profits.
Table16: Table showing the relationship between Age and Loan amount
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Loan_Amt
TotalAge
100,000-
250,000
250,000-
500,000
50,000-
100,000>500,000
20-30 0 1 0 0 1
30-40
40-50
1
2
2
5
1
2
1
8
5
17
>50 1 1 1 4 7
Total 4 9 4 13 30
Chi-Square Tests
Value dfAsymp. Sig. (2-
sided)
Pearson Chi-SquareLikelihood Ratio
N of Valid Cases
4.474a 9 .878
4.760 9 .855
30
a. 14 cells (87.5%) have expected count less than 5. The minimum expected count is .13.
Testing of hypothesis:
Null Hypothesis: Their no difference between age of customer and loan
amount.
Alternative Hypothesis: There is difference between age of customer and
the loan amount.
Interpretation:
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Chi-square test shows that (alpha) is insignificant, that is we cannot reject
the null hypothesis that means there is no difference between age and loan
amount applied.
Monthly income
Loan_Amt
Total100,000-250,000
250,000-500,000
50,000-100,000
>500,000
10,000-15,000
1 3 2 0 6
15,000-25,000
2 2 1 2 7
25,000-35,000
1 1 1 1 4
35,000-50,000
0 1 0 4 5
>50,000 0 2 0 6 8
Total4 9 4 13 30
Table17: Table showing the relationship between monthly
income and loan amount
Chi-Square Tests
Value dfAsymp. Sig.
(2-sided)
Pearson Chi-SquareLikelihood Ratio
N of Valid Cases
15.093a
19.499
30
1212
.236
.077
a. 20 cells (100.0%) have expected count less than 5. The minimum expected count is .53.
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Symmetric Measures
Value Approx. Sig.
Nominal by Nominal
Phi .709 .236
Cramer's V .410 .236
Contingency Coefficient
.579 .236
N of Valid Cases 30
a. Correlation statistics are available for numeric data only.
Testing of Hypothesis:
Null Hypothesis: There is no difference between monthly income earned and
loan amount borrowed.
Alternative Hypothesis: There is difference between monthly income earned
and loan amount borrowed.
Interpretation:
Chi-square source is 0.236which means that (alpha) is insignificant. It
means statistically we cannot reject null hypothesis, there is no difference
between income of individuals and loan borrowed.
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Table18: Table showing the occupation of the customers who have
taken loan
Interpretation:
From the above table it is found that major borrowers are business people,
and then followed by employees and house wives.
S.I.T 2009-2011 Page 59
Profession Frequency Percent
Business 17 56.7
Employee 6 20.0
Housewife 6 20.0
Student 1 3.3
Total 30 100.0
A Study On RETAIL LOANS
Table19: Table showing the purpose of taking loan
Interpretation:
It is found that major customers have borrowed loan for personal use,
26.7%have borrowed for business use and only 16.6% have borrowed for
personal as well as business purpose.
S.I.T 2009-2011 Page 60
Purpose Frequency percentage
Both 5 16.6
Business 8 26.7
Personal 17 56.7
Total 30 100.0
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Type of loanRate of
interestEMI period
Securities/documents
required
Over draft loan 11% Every month IT returns
Car loan 10.5% 60monthsHypothecation of car
purchased
Two wheeler loan 10.5% 36monthsHypothecation of vehicle
purchased
Housing loan 10.5%
IT returns for last 3
years,
certificate of
registration,
bank statements for
last 1year
Education loan 12% 5-7years
government securities
LIC Policies/NSC
Amount in the form of
land & building
Personal loan
Secured 12.25% 36months
NSC’s/LIC Policies
Personal loan
unsecured14.25% 36months
IT Returns
Certificate of salary
Bon voyage 14% 36months Immovable properties
IT Returns
Swarnsmitra 8.5%-12% 12months Pledge of gold jewelry
Agricultural loan 8.50%-10% 12months Phani or record of rights
Table 20: Table showing rate of interest, EMI period securities provided
for various kinds of loan
FINDINGS
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1. The targets for loans and deposits are fixed based on the past performance.
2. Bank is providing short term loans & long term & medium term loans to its
customers
3. Rate of Interest on personal Loan scheme is felt higher compared to other
schemes.
4. The bank has advanced maximum Loans for overdraft scheme and personal
Loan scheme.
5. It is found that loans for professionals are not given in this branch due to lack
of demand in Tumkur branch.
6. It is found from survey that majority borrowers are business people.
7. It is found that maximum customers have borrowed for personal use,only
16.6% of them have borrowed for business and personal purpose
8. It is found that profit earned per employee has been recorded high in the year
2009-2010.
9. It is known from the survey that the majority of borrowers have not faced any
problems while borrowing Loans.
10. It’s also found that respondents are satisfied by the repayment period allowed
by the bank.
11. It is found that the relationship between age and loan amount borrowed is
insignificant.
12. It is found that the relationship between income and loan amount borrowed is
insignificant.
II. GENERAL FINDINGS.
The bank has achieved award for the usage of best technology.
The bank has achieved award for their excellent service.
Banks has encouraged all types of customers to avail the Loan
facilities provided.
The Bank provides repeat Loans when the previous Loans are repaid.
Staff members are good in co-operation with customers.
The funds lent by the bank are fluctuating year to year.
The marketing technique used by the bank is excellent, and helps in
improving the performance.
The bank has modern facilities like ATM and E-Banking.
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SUGGESTIONS
The modern world is the result of so many changes that are being taken
place. A change may be initiated either voluntarily or on the advice given by
someone. The following suggestions are given to the bank for further simplifications
and to reach the expectations of the borrowers of different classes and to become
customer friendly satisfying the financial needs.
1. Since the performance of bank is excellent, it is suggested to maintain the
same status.
2. It is suggested to provide Loan facility for professionals like doctors,
engineers etc.
3. It is suggested to reduce the rate of interest on personal Loan Scheme.
4. It is suggested to expand to its area operations by opening branches in rural
areas.
II. GENERAL SUGGESTIONS
1. It is suggested to maintain a separate ‘enquiry’ may I help you’ counters.
2. Bank may publish periodicals, magazines, half yearly or by quarterly by
mentioning its deposits and Loan scheme to its member, customers of the
bank.
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CONCLUSION
I hereby conclude that as a researcher after keen observation in the area of
“Retail loans” at KVB, Tumkur. It is one of the leading banks which provide various
facilities to its members and public in Tumkur city. It is having good infrastructure and
staff. As far as Lending is concerned, it is lending almost all types of Loans and
advances.
The Rate of Interest charged for different Loans are also satisfied by the
members who have taken Loan. The bank is maintaining good track record for its
documentation and processing of Records.
The bank is lending different types of Loan facilities to all types of customers
like businessmen, employees, house-wives and also for students. The Interest
charged for short term and long terms are also reasonable. The terms and conditions
of Loan are unanimously accepted by all the members of the bank.
In nutshell, the Karur Vysya Bank, Tumkur provides loans to public in
satisfactory manner and helps the nation grow industrially to achieve self sufficiency
and remain competitive in the globe.
BIBLIOGRAPHY
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A Study On RETAIL LOANS
REFRENCE:
Management of banking and financial services -
Padmalatha Suresh and Justin Paul
WEBSITES:
http://www.banking_indstry.com
http://www.bankingindiaupdate.com/
www. kvb .co.in
http://www.mbaknol.com
http://banking.about.com
http://www.wikipedia.org
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QUESTIONNIARE
General information:
1. Name of the respondent…………….2. Age :
20-30 [ ] 30-40 [ ] 40-50 [ ] 50 and above [ ]
3. Sex : Male [ ] Female [ ]
4. Occupation: Students [ ] Employees [ ] Business [ ] Housewife [ ]
5. Educational qualification 10th standard [ ] P.U.C [ ] Graduation [ ] Post-graduation [ ]
6. Monthly income: 10,000-15,000 [ ] 15,000-25,000 [ ] 25,000-35,000 [ ] 35,000-50,000 [ ] 50,000-above [ ]
Specific information7. How did you come to know about loan facility?
Direct visit to bank [ ] Through neighbors [ ] Bank magazines/periodicals [ ] Newspapers [ ] Others [ ]
8. Mention the type of loan availed by you? Home loan Educational loan Vehicle loan Personal loan
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Others specify9. What is the purpose of taking loan?
Business [ ] Personal [ ] Both
10.How much amount of loan have you borrowed? 10,000-50,000 [ ] 50,000-100,000 [ ] 100,000-250,000 [ ] 250,000-500,000 [ ] 500,000 above [ ]
11.What made you to avail the loan from this bank? Interest rate Service Friends and relatives Good will of the bank
12.Time taken for sanctioning and releasing loan? Below 2 weeks 2-3 weeks 3-4 weeks More than 1 month
13.Are you facing any problem in getting loan? Yes [ ] No [ ]
14. If yes, reason for dissatisfaction Lengthy procedure Delay in service
15.Do you encounter any problem while availing loan? Yes No
16.What is your opinion on interest rate charged by the bank? Very high [ ] High [ ] Moderate [ ] Low [ ] Very low [ ]
17.How do you feel about procedure followed by the bank while providing loan?
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Simple [ ] Lengthy [ ]
18.What is your opinion about services provided by syndicate bank? Excellent [ ] Very good [ ] Good [ ] Moderate [ ] Poor [ ]
19.Do you feel the repayment period is sufficient? Yes [ ] No [ ]
20.Do you feel the staffs in the bank are cooperative? Yes [ ] No [ ]
21.What are the documents/securities given by you to the bank?……………………………………………………..
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