Dissertaion Report

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

CHAPTER – I
? Introduction ? Objective of the Study ? Need of the Project ? Scope of the Project ? Research Methodology ? Limitations of the Project

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

INTRODUCTION
The banking sector has under gone turbulent changes in the past few years. The financial sector reforms have provide Nationalized bank with an opportunities to get entered an era of fierce competition, posing tall challenges. The conventional banking as outlined above has given way for professional and high-tech banking. There has been a paradigm shift from the monopolies of nationalized banks to competitive banking. Nationalized banks can no longer remain complacent with their conventional products and services. With walk in business virtually being ruled out, banks are now scouting for quality consumers both for building their resources and assets. There were times when the corporate clientele occupied the centre stage and the retail ones were pushed to the back seat. The slowdown of the economy, sluggish industrial growth and slump in agricultural activities have pushed the commercial banks to look to the retail customers. Retail Credit Lending is one of the main functions of banking business and so an important source of working fund for the bank. Retail credit is an indispensable factor to increase the source of the Banks to serve effectively. The importance of credit facilities of the nationalized banking structure is to provide satisfactory service to the retail customers in order to fulfill their Economical or Financial needs and ultimately their social needs. The success of the banking greatly lies on the Credit Lending performance of the bank as the Credits are normally considered as a cost effective source of working fund. The bank is operating various Retail Credit Lending schemes such as Housing, Education, Vehicle, Personal and other special schemes to meet the varying requirement of the customers. Credit Lending to the public provide low cost working fund for the bank. When it is not fully augmented, the performance of the bank is affected. Innovative business has become more essential for the banks to stay and to progress in this aggressive, ever-changing, competition-packed marketing environment. For a bank, Lending of Credit is as much essential as „Oxygen for Life?. In the post liberalization scenario, the number of players in banking industry has increased considerably which developed competition in bank marketing. „The survival of the fittest? has made applicable for the banks. To enhance profitability, banks take appropriate steps to minimize the Cost and Time for lending the credit. In the present context banks efficiency can be measured with respect to Cost, Profitability and the Time taken for lending.

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Banking is a business of taking risks. One of the important, all pervasive risks that Bankers have to face at all points of functioning is the operational risk and supersedes other risks. It is the risk, arising out of human or technical error. Functionaries not being fully aware of the latest information regarding operations tend to make errors which may prove costly for an individual and also for the bank. It is in this context that there is a need for everyone to be abreast of the latest developments and extant operational guidelines so that the bank could lend the credit facilities to its customer as per their requirements and thereby satisfying them beyond their expectations. This will significantly minimizes the risk and therefore help the bank to achieve its goal more efficiently and effectively.

OBJECTIVE OF THE PROJECT The main objectives of the study are as follows:
? ? ? To study the Concept on which bank can practice active Retail Credit Lending To analyze the need for Retail Credit and the techniques & procedures used for the processing of Retail Loans To study about Bank?s investment, Credit Deployment, and NPAs

? To provide the details of the Risks which are involved in the Retail Credit Lending ? To study about the Risk Management & vigilance of the risks which are associated with
Retail Credit Lending

NEED OF THE PROJECT
The study helps Bank of Maharashtra to effectively implement techniques and procedures, to enhance its performance of Retail Credit operations and to reduce NPA?s

RESEARCH METHODOLOGY
Methodology is to collect the important data through secondary sources like internet, books, circulars and journals. I approached each and every officers of the bank and I obtained very useful information from them. To give a present scenario on the topic I also spoke to the
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Asstt.General Manager of the bank and his Team who also act like a secondary source of data for the completion of my project report.

LIMITATIONS OF THE PROJECT Following Problems were encountered during this project:
? ? ? ? Time constraint Collection of real time data Survey within the bank Bank staff could not provide the detailed information due to bank?s Policy.

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

CHAPTER - II

? COMPANY PROFILE ? BENEFITS GIVEN BY THE COMPANY

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

COMPANY PROFILE

Name of the Bank Area of Operation No. of Branches Class

: : : :

BANK OF MAHARASHTRA Nationwide 1,517 “A” Class SHRI.ANUP SANKAR BHATTACHARYA SHRI. M.G. SANGHVI http://www.bankofmaharashtra.in

Chairman & Managing Director : Executive Director Web site : :

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

Company Profile in Tabular Form
Parameter Total Business Total Deposits Aggregate Deposits Gross Advances Net Bank Credit CD ratio (%) % of Priority Sector Adv. % of Agricultural Adv. Total Investments Gross NPAs % to Gross Advances Net NPAs % to Net Advances Operating Profit Net Profit Other Income (incl. treasury profits) Capital Adequacy Ratio P. E. B. No. of Branches Of which Metro Urban Semi Urban Rural Mar 2010 71556.36 41758.33 41580.37 29798.03 29285.81 71.66 48.63 21.04 12282.95 766.27 2.57 254.05 0.87 672.63 328.39 380.28 10.75 5.26 1375 351 257 251 516 Mar 2011 87072.20 52254.92 52219.43 34817.28 34290.77 66.67 41.06 18.21 18382.14 798.41 2.29 271.90 0.79 793.52 375.16 500.02 12.05 6.39 1421 368 271 262 520 ( Rs. in Crore ) Mar 2012 104230.22 63304.07 63241.02 40926.15 40314.70 64.65 40.88 17.95 21323.85 1209.79 2.96 662.43 1.64 814.54 439.58 591.24 12.78 7.62 1453 380 281 266 526
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

ABOUT BANK OF MAHARASHTRA

ESTABLISHED IN 1935
Bank of Maharashtra is a common man?s bank. Prof. V.G. Kale and the late Shri D. K. Sathe registered as a banking company on the 16th of September, 1935 at Pune with an authorized capital of Rs. 10.00 Lakh and issued capital of Rs. 5 Lakhs by a visionary group of middle class men with the sole aim to serve the common man from Maharashtra who was neglected in the field of banking at that time. Their vision was to reach out to and serve the common man and meet all their banking needs. The bank started functioning on 8th February 1936. In July 1969 when it was nationalized with 13 other major Bank had developed its roots in entire Maharashtra and it enjoyed complete confidence of the common man. Even before the government issued guidelines about deployment of 40% advances to priority sector, the Bank was following the principle of serving common and neglected people of the society, since its inception and it continues even today. Successive leadership of the Bank and the employees has endeavored to fulfill their vision.

Rapid expansion after Nationalization
After Nationalization, the Bank expanded rapidly in other states and also reached the nook and corner of Maharashtra. Around 38% of its branches are in rural area. Today the bank is spread in 22 states and 2 union territories. It has already acquired the status of an all India bank. At the same time it has gained predominance in Maharashtra state through 883 branches. The Bank has migrated 831 branches under CBS as against 773 branches as on 31.03.2012 and 798 branches as on 30.06.2012. The Bank thus holds the record of having highest number of branches of any nationalized Bank in a single State. The mission of the bank is “To be Best in Maharashtra and most liked in other states”.

Milestones
? Milestones: Pre Nationalization 1936 1945 1946 : Commenced business on February 8th. : Deposits crossed Rs. 1.00 crore marks. : Maharashtra Executor and Trustee Company (METCO) established.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 1958 : Listed on Bombay Stock Exchange.

? Milestones: Since Nationalization 1969 1978 : The Bank was nationalized with 153 branches. : Set up first Regional Rural Bank (RRB) 'Marathwada Gramin Bank' with headquarters at Nanded. The Bank was appointed as Convener to the State Level Bankers Committee (SLBC) 1979 : Bank's business crossed Rs.1,000 crore. 1980 : 500th branch of the Bank at Nariman Point, Mumbai inaugurated by the late Smt. Indira Gandhi, the then Prime Minister of India. 1981 : Set up the second RRB “Aurangabad Jalna Gramin Bank”. 1984 Dr Manmohan Singh, the then Governor, Reserve Bank of India, launched the Bank's Golden Jubilee Celebration. 1986 : Set up the third RRB “Thane Gramin Bank” 1987 : 1000th branch of the Bank opened at Indira Vasahat, Pune. 1996 : Bank's Diamond Jubilee Celebration launched by the then RBI Governor, Dr. C. Rangarajan 2004 : Bank came up with Initial Public Offering (IPO) 2009 : 1. Launched ATM-cum-International Debit Card 2. Commenced Bank assurance business 3. Commenced distribution of Mutual Fund products. 4. Surpassed business landmark of Rs. 50,000 crore. 5. 1st CBS branch rolled out on 13th November at Karve Nagar, Pune. 2010 : 1444 branches, 345 ATMs, Total Business over Rs. 90,000 crore, 902 CBS branches nd 2 Mar 2012 : The Bank achieved 100% CBS coverage.

Vision 2012
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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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

Mission
? ? ? ? ? To ensure quick and efficient response to customer expectations To innovate products and services to cater to diverse sections of society To adopt latest technology on a continuous basis To build proactive, professional and involved workforce To enhance the shareholders? wealth through best practices and corporate governance ? To enter international arena through branch network

Our Logo

? 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 symbolizing - Mobilisation of Money - Modernization of Methods and - Motivation of Staff.

Our Aim
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 ".

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

Secured Autonomy
The Bank is one of the progressive Nationalized Banks that got autonomy in the year 1998 and continues to enjoy the status as a result of excellent performance. It helps in giving more and more services with simplified procedures without intervention of Government. The Bank has earned profit for consecutive five years.

SOCIAL BANKING – for equitable economic development
The bank excels in social Banking, overlooking the profit aspect having the highest share of priority sector in net Advances and it derives strength from the common man, as its savings deposit are 29% of its deposits. Around 90% of its depositors are having deposits below Rs.25000/-. The Bank provides an array of banking services that satisfy changing needs of depositors as well as small and big borrowers. The bank has entered into correspondent arrangement with Overseas Bankers also. It provides finance to various sectors ranging from Agriculture to Industry and from Trade to Export. The Bank has established Rural Development Centers at Hadapsar and Bhigwan in Maharashtra to carry out Research, Technical Support, Education, Demonstration and Rural Development Activities. The Bank has also established to trust under RDC, namely Gramin Mahila VA Balvikas Mandal (GMVBM) and Maha Bank Agricultural Research and Rural Development Foundation (MARDEF) Both are NGO?s and are engaged in improvement of women and children in the rural and in transfer of technology in Agricultural sector. -Priority Sector Lending It has been the constant endeavor of the Bank to facilitate equitable and sustainable development by making credit available to productive purposes to Small Borrowers, Small & Marginal Farmers, Micro & Small Enterprises, Retail Traders, Professional & Self Employed, Women Entrepreneurs and economically weak but with entrepreneurial leanings. The outstanding advances under Priority Sector as of March 2012 aggregated to Rs. 12,236 crore, constituting 41.06 per cent of the Adjusted Net Bank Credit of the previous year as against the stipulated minimum target of 40 per cent. The rise in Priority Sector Advances was Rs. 826 crore over March 2011 in absolute terms.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

-Agriculture – sowing to reap The Bank disbursed Rs. 3,143 crore under agriculture during the year 2010-11. The outstanding advances increased to Rs. 5,427 crore showing an increase of Rs. 471 crore. As on March 2012, total advances to agriculture are 18.21 per cent of Adjusted Net Bank Credit. The Bank undertook awareness programmers for all branches for increasing agriculture advances. The Bank successfully implemented Agriculture Debt Waiver and Debt Relief Scheme of the Government of India, by reaching out to 87,157 eligible small and marginal farmers for debt waiver involving Rs. 218.32 crore. The number of farmers eligible for debt relief is 48,237.

-Micro, Small and Medium Enterprises (MSME) – for sustainable growth SMEs are recognized as major growth engines for the Indian economy. They generate opportunities for direct and indirect employment by facilitating use of natural resources and local skills to stem the tide of migration to urban areas and promote low investment enterprises. The Bank?s lending to MSMEs which was at the level of Rs. 2643 crores as at March 31, 2008, has increased to Rs. 3074 crores as at 31st March 2012. Following the special package announced by the Government in September 2011, fresh credit facilities to the tune of Rs. 1170 crores have been extended to MSMEs between September 2011 and March 2012.

Convener of State Level Bankers Committee
The Bank is the convener of State level Bankers committee and is successfully handling the convenorship of state Level Bankers committee for the State of Maharashtra. It is also convener of SLBC for Rajbhasha. It is entrusted with the responsibility of being the Lead Bank under Lead District scheme in six districts namely Aurangabad, Jalna, Nasik, Pune, Satara and Thane, all from Maharashtra. The Bank has sponsored three Regional Rural Banks with their head quarters in Nanded, Aurangabad and Thane, namely Marthwada Gramin Bank, (MGB) Aurangabad Jalna Gramin Bank & Thane Gramin Bank. MGB happens to be the biggest RRB in the country and covers 6 District in Maharashtra. 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.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

Computerization
Computerization activity in the Bank started a way back in 1982. By December 2000, 380 branches were computerized and the total business handled by these branches was more than 69%. The Bank has also introduced sophisticated facilities like ATM, E-mail, TeleBanking, Query Terminal etc. at various branches/offices.

Highlights
? ? ? ?

Autonomy secured in the year 1998 continues. Total business more than Rs. 91000.00 crore of which total deposits more than Rs. 54400 crore and Gross advances more than Rs36600 crore as of 30.9.2012 Branch network comprises of 1433 branches spread over 22 states and 2 union territories. CBS Branches Bank has migrated 831 branches under CBS as against 773 branches as on 31.03.2012 and 798 branches as on 30.06.2011. ATM Network Bank has 345 ATMs. Bank has installed 11 Biometric ATMs. Card base crosses 10 lakh Mahabank Insta International Visa Debit Card Mahabank International Debit Card is issued in collaboration with VISA ATM Card along with PIN is given to the customer as “Welcome Kit” at the time of opening of the current and SB account in all CBS branches. The customer can start using ATM Insta card after 36 hours from date of issue. ( 36000 Insta Cards are issued since July 11) Utility Bill Payment through Internet Banking Facility. The customers can do on line shopping / e-commerce and utility bill payment transaction through Internet Banking facility.( 37000 Customer are using Internet Banking facility) “Maha e-Statement” Customers can get their statement of account on registering their e-mail id and desired frequency of statement with the Bank. Straight Through Processing (STP) STP of NEFT/ RTGS transactions has been implemented for instant processing of inward and outward remittances through RTGS
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA and NEFT. (800 branches are offering RTGS/NEFT facility)

Specialized branches:
? ? ? ? ? ? ? ? ? ?

S M E branches - 14 Agro High-Tech branches - 4 Industrial Finance branches - 2 Overseas branches - 2 Treasury & international Banking - 1 Pension Branch -1 Govt. Business Branch - 1

Bank has 28 FEX centers to handle FEX business. Toll Free telephones at 11 major Metro centers. The bank is shouldering the responsibility of lead bank in six districts viz. Satara, Pune, Thane, Nasik, Aurangabad and Jalna. Our bank is also convening State Level Bankers? Committee and various development issues are taken up to implement the state credit plan and achieving the targets under various Government sponsored schemes. The Bank has set up a Trust viz. Mahabank Agricultural Research and Rural Development Foundation (MARDEF), which is engaged in providing Credit Plus services to the farmers in specific specialized fields like commercial dairy, Emu farming, sericulture, organic farming, etc. The Rural Development Centers at Bhigwan and Hadapsar in Pune District undertake various labs to land programs on improved technologies. A fully fledged soil-testing lab is being set up for the benefit of the farmers to go in for high-tech agriculture. To provide activity specific training to educated unemployed youth, Bank has set up five Mahabank Self Employment Training Institutes (MSETI) at Pune, Aurangabad, Nagpur, Nasik & Amravati for providing training to rural youth for enabling them to acquire skills for self-employment. Bank has formed a Trust by the name Gramin Mahila VA Balak Vikas Mandal (GMBVM), which is primarily engaged in formation, nurturing, training and linkage of self-help groups to various banks, GMBVM has its area of operation in nine districts and has been recognized by Government of Maharashtra as Mother NGO. It also markets various products made by SHGs through its two retail outlets by name “SAVITRI” in Pune district. The GMBVM is now in the process of scaling up viable SHGs to SMEs. The Bank has floated a subsidiary company- The Maharashtra Executor & Trustee Company Ltd. (METCO) which undertakes Trustee Business, Property Management and Tax Consultancy as well.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA
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Bank is the Convener for Town Official Language Implementation Committee (TOLIC) at Mumbai, Pune & Solapur. The Bank secured the First Prize for better implementation of Hindi in both „A? and „B? Region and the Fourth Prize for implementation of Hindi in „C?? Region under Reserve Bank of India Rajbhasha Shield Scheme for the year 20102011. The Bank also secured the Second Prize under R.B.I. Bi-lingual House Magazine Competition for the year 2012.

M-SETI
M-SETI (Mahabank Self-Employment Training Institute) is an institute established under the aegis of Mahabank Agricultural Research & Rural Development Fund (MARDEF), a trust established by Bank of Maharashtra and co-sponsored by the National Bank for rural development (NABARD). The institute is recognized by the Department of employment & selfemployment of Govt. of Maharashtra. The institute trains unemployed youth from the districts of Pune, Kolhapur, Satara, Sangli, Nasik, Ahmednagar, Jalgaon, Dhule and Nandurbar. The objectives of the Institute are:
? ? ? ?

To train the unemployed youth. To promote rural entrepreneurship. To increase self-esteem of participants and To help trainees in improvement, placement and counseling them for Bank facilities and their subsequent status.

The following are the training programs identified by M-SETI:
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA
?

? ? ?

Entrepreneurship development programmes (EDPs) on technical courses viz. two wheelers, TV and VCR and domestic appliances, repairs, motor rewinding, photography and video shooting, beauty parlor, commercial painting, tailoring etc. EDPs specific to the Government sponsored schemes viz. PMRY, SGSY, SJSRY, SHGs, Information technology; Electronic data processing, electronic data entering and computer awareness programmes. The said training is free of cost.

MAHABANK INFO CENTER 1. Mahabank Info Center is a retail banking boutique set up by Bank of Maharashtra having the following activities. Providing information on services provided by the bank at its various branches and specialized branches, 2. Mobilizing deposits for various branches in Pune city, 3. Marketing to increase ATM card base directing prospective clients to respective branches for financial aid on housing, vehicle, consumer durables, education & foreign tours, etc. 4. Development of business through bringing in instructional accounts. 5. Image building exercises.

Benefits Given By the Company

Following are the Services Provide By Bank of Maharashtra:? Bank Deposits ? Lending of Loans ? ATM Services ? Credit Cards ? Demat Services ? Bancs ? Bancassurance ? Distribution Of Mutual Funds ? Executors And Trustee Services ? MAHAbill Pay
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA ? Mahabank Insta Remit Scheme ? Capital Market Application (ASBA) ? NEFT ? MAHAeTRADE (ON LINE trading facility)

Roles and Responsibilityuring my summer internship in the Retail Hub of Bank of Maharashtra, I have learned about the Retail Loans as much as I can. Especially Mr. Rajan Korgaonkar, Asstt.General Manager of the bank and his Team helped me a lot in learning the Retail Credit operation and the Risks involved in Lending Credit. The staff was really very helpful, supportive, coordinating and friendly as well. I also got to realize the importance of know your customer (KYC) norms According to which Bank opens an account or give loans & advances to the customer. Banks completely follows the RESERVE BANK OF INDIA guidelines for deposit and advances.

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

CHAPTER-III
? Theoretical Background ? Data Analysis & Interpretations

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

THEORETICAL BACKGROUND

GENERAL Lending of funds to the constituents comprising of traders, businessman, agriculturists etc. constitutes the main business of Banking Company. Bank has to ensure that in granting of loans and advances, the deployment of funds is made in a most profitable manner. Yet this business of lending is not without inherent risks. The test of a bank?s strength and its success or failure depends on the nature and quality of its advances. Therefore while lending, bank follows prudent policies and conduct its business on the basis of principles of sound lending in order to minimize risks. Safety, liquidity and profitability are the cardinal principles of lending. After nationalization banks have been functioning as an instrument of social change. The GOI and the RBI, during the last two decades have issued a number of directives in this regard highlighting the social/economic purpose which they have to sub-serve. The traditional principles of lending have come under stress. With regard to certain type of lending particularly under priority sector the concept of security and profitability have undergone a radical change and have been subordinated to social objectives. A) Yet a banker has also to remember that he is dealing in funds collected from public by way of deposits and is working as a trustee of their funds. Therefore the basic principles of good and sound lending which are fundamental observed by Banks. The principles may vary depending on situation; however, basic frame will remain the same. B) It needs to be borne in mind that advances form the most important component of bank?s business. The advances portfolio needs to be monitored with due care and responsibility, because of the risk involved in lending operations. C) Safety, liquidity and profitability are the three basic principles of lending. Since the amount to be advanced mainly consists of depositors? funds, bank has to ensure and safeguard depositors? interest. Bank should also remember that some of bank?s deposits are withdraw able on demand or at short notice. It would be in bank?s interest to see that the advances which bank grant are easily liquidated. The canon of liquidity is more important. Bank should also know that bulk of bank?s profit accrues from the advances. However, profitability should not override the other two principles of lending i.e. safety and liquidity. Therefore, the crux of bank?s lending lies in reconciling these conflicting requirements by striking a good balance between these conflicting principles.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

COMPOSITION OF CREDIT PORTFOLIO It is equally relevant to mention here that bank should diversify their advances and should not concentrate such lending to any group or sector of industry/business in one particular area/sector. The maxim “all eggs should not be kept in one basket” should be borne in mind. The purpose for which the advances are to be sanctioned/recommended should be legal and acceptable to the bank and the type of business activity to be financed by the bank should be within broad lending policies framed by the Central Office. Bank should ensure that the purpose of the advance is productive which will generate internal surplus and provide definite source of repayment. The aspect of security (wherever applicable) should not be lost sight of. Tangible security acceptable to the bank should be considered as an insurance or cushion to fall back upon in case of emergency. Even after application of all principles of lending, a particular proposal may not be acceptable to the bank, if it is not in the National Interest. GOI and the RBI issue various directives from time to time in this regard. These should be kept in view while sanctioning/recommending any advance/s. Every proposal should conform to RBI/government/bank?s guidelines and national policy.

Summary
Bank summarize below the principles of sound lending which should be observed while sanctioning/recommending any advance. 1. 2. 3. 4. 5. 6. 7. 8. Safety Liquidity/Economic Viability/Technical Feasibility of the activity of the borrower Profitability Purpose Security Diversification of risks National Policy/RBI Credit policy Bank?s credit policy.

SIGNIFICANT ASPECTS FOR EXAMINING THE ADVANCES

-Advances Portfolio
1. The manager/officer should study the composition and distributive pattern of the credit portfolio of the branch and examine as to whether the branch has been following the guidelines enunciated in credit policy of RBI / Bank.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA The manager / officer should also ascertain as to whether the efforts made by the branch in extending credit to the priority and weaker sectors of society are adequate and that potential offered by the area of its operation for various types of advances has been properly tapped. It should be seen as to whether the branch has proper infrastructure facilities and adequate arrangements for proper credit appraisals, post disbursement supervision and follow up of advances/problematic/sick, weak accounts, more particularly for recovery of non-performing advances/large overdue in these accounts. The manger should examine that he is exercising the delegated sanctioning powers judiciously and there is proper and timely reporting of sanctions to the competent authorities. As far as possible the Branch Manager is expected to refrain from exceeding the delegated powers and it should be seen that in unavoidable cases confirmation I obtained from the competent authority at the earliest specifically giving the reasons as to why it was so necessary to extent ad hoc/temporary/additional credit facility without obtaining prior sanction. It should be verified that the guidelines on advances issued by RBI/HO from time to time are strictly followed by the branch. The assets acquired by the borrowers are available as security for bank?s dues and the branch is taking adequate and necessary timely steps to safeguard interest of the bank.

2.

3.

4. 5.

- Applications for credit Facilities The managers/officers should ensure that: 1. The applications as far as possible are obtained in appropriate forms for different categories of borrowers and types of credit facilities, prescribed by the Head Office. 2. The applications are accompanied by documents relating to the status of the applicant i.e. individual/sole proprietorship/ society/trust deed, Memorandum and Articles of association etc. are obtained and kept on record. The Branch Manager should obtain financial statements for at least past 3 years, wherever so applicable, true copies of latest income tax/sales tax and wealth tax returns and assessment orders. For societies/local bodies/limited companies, certified copies of appropriate resolutions authorizing the signatures/office bearers to operate the accounts and borrow the funds from the bank be obtained and kept on record. - Credit Reports 1. Credit reports on individual borrowers/company/obligant/guarantors are obtained and are kept on record.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 2. The Branch Manager has independently verified the correctness of the information furnished by the borrowers/guarantors in personal information form and has prepared confidential report in the prescribed form (F.85). The credit reports are updated annually and fresh reports wherever required are obtained and held on record. 3. Brief particulars of immovable properties owned by the individual/firm together with the conservative estimates of their market value are kept on branch board. Wherever required and found necessary fixed assets charged to the bank must be got valued from approved Value and such valuation reports is kept on record. 4. That the nature and extent of credit facilities, if any, enjoyed by the applicant/borrowers at different offices of the bank as also at other bank/banks are obtained and kept on record at the branch., while arriving at the credit needs of the applicant care is taken to take into account all such other credit facilities enjoyed by the borrower CREDIT APPRAISAL/PREPARATION OF APPRAISAL NOTES FOR SANCTION/ REVIEW/RENEWAL OF ADVANCES The manager/officers should examine the quality of credit appraisal done at the branch and ascertain to – 1. Whether the branch has been following generally accepted sound lending norms and is examining carefully various aspects like proposed activity, diversification of activity viability of the project, creditworthiness of the applicant/guarantors, purpose and types of the credit facilities requested, competence of the borrowers to manage the business activity etc. 2. Whether the past conduct of the accounts, compliance of terms and conditions of sanctions submission of information like stock statements, QMR, financial statements etc. have been taken into account. 3. Whether notes on review/renewal based on audited financial data contain details and critical observations on performance of the unit, financial position of the unit and its constituents, working results vis-à-vis Projections. 4. Whether status of the security charged to the bank has been re-examined. Wherever eligible i.e. in respect of credit facilities of Rs.50.00 Lakhs and over, whether the same has been verified by independent C.A. firm. 5. Whether operations in the account and a ailment of various credit facilities have been to the satisfaction of the bank and the appraisal note contains comments about the same. 6. Whether exercise for PBF/NWC etc. has been carried out correctly / critically. 7. Whether the branch is complying with RBI/IBA/Head office guidelines/instructions regarding sanctions, review and renewal of advances.\ 8. Whether Nayak Committee/ Ghosh Committee/ Selective credit control norms etc. are followed.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 9. In case the borrower has been banning/availing credit facilities with other banks, whether latest opinion reports from such banks have been obtained. 10. Whether search with Registrar of Companies has been obtained before sanction/review/renewal of credit facilities. 11. Whether it is ensured that partnership firm is registered with registrar of firms and certificate for the same is held on record. 12. Whether necessary certificates which are required for commencement of business activity have been obtained. DOCUMENTATION The manager/officers should verify that the branch has obtained all necessary documents adequately stamped and properly executed as stipulated by the central office for the facilities granted to the borrower. In case of advances above Rs.50.00 Lakhs certificate from the correctness of documents taken is obtained and is held on record. In case law officer is not available, certificate from the local panel advocate be obtained. REPORTING SYSTEM The manager/officers should verify that the credit facilities made available are correctly and timely reported to the competent authority. The control returns submitted depict true picture of the information incorporated. IMPORTANT SCHEMES / PROJECTS OF THE BANK - Retail Financing The Bank is providing retail loans to Individuals, who are salaried persons, professionals, businessmen and pensioners for purchase of consumer durables, two/four wheeler vehicles and also for other personal needs. During the year, the Retail lending portfolio grew by 8.19 per cent. - Housing loan to public To promote the housing in rural and urban parts of India, the Bank has taken the housing as a thrust area and has been lending under the Housing Loan to Public Scheme, on a priority basis. The scheme is simplified and is customer-friendly. Housing loans are also made available to NRIs. The Bank is also implementing Golden Jubilee Rural Housing Finance Scheme in rural areas, having population not exceeding 50,000 (as per 1991 census). The Bank?s lending to housing sector has grown by 13.28 per cent during the year.

23

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

- Model Educational Loan scheme – from learning to earning With the objective of ensuring that no deserving student is denied an opportunity to pursue higher education for financial reasons, the Bank implements a Model Educational Loan Scheme. As of March 2012, the Bank?s educational loans stood at Rs. 347.19 crore to 19249 students. The Bank has provided the facility of submission of online application for education loan through web-access.

-Personal Financing Bank of Maharashtra offer personal loan for all purposes such as medical expenses, expenses on travel / tour, income tax liability, etc. so that you don?t face difficulty in meeting your personal expenses. Bank has simple documentation and eligibility criteria for loan. You can get a Personal loan from around Rs. 25,000 to Rs. 15, 00,000 or even higher, depending on your eligibility, repayment capability and credit history. This is the key cost of taking a personal loan. Being an unsecured loan, the rate of interest is high. In fact it is lower to only credit cards in the loan segment. The rate of interest charged, can be anywhere between 14% and 23%, depending on the type of borrower.

TECHNIQUES AND PROCEDURES ? In Bank Loans : of Maharashtra, I Learned how to deal with the following four types of Retail Home Loan Education Loan Vehicle Loan and Personal Loan

? I am feeling benefited after learning the following operations in the Bank of Maharashtra :Assessment of the loan documents. Preparing the Assessment sheet. Reporting to Concerned officer about the Assessment. Preparing the Housing Loan Processing Note. Preparing the Loan Appraisal forms.
24

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Preparing the Sanctioning Note. Criteria or Conditions for Sanctioning Loan. How to verify the Loan documents? How bank deals with Different Loan Requests?

I have learned all these operations by completing 24 Loan Proposals which includes all the four types of Retail Loans like Housing, Education, Personal and Vehicle loan. And some of them are as follows

? Examples of Retail Loans like Housing, Education, Personal and Vehicle loan :?

Housing

RETAIL ASSET BRANCH, HYDERABAD AJ61/HL/2011-12 The Branch Manager Bank of Maharashtra Khairatabad Branch Dear Sir, Re: Housing loan proposal – Mr. Athuru Siva Kumar. With reference to the captioned proposal submitted by you, we convey our sanction as under: Facility Amount Purpose Mahabank Housing Loans to Public – Festival Offer 2011-12 in the name of Mr. Athuru Siva Kumar Rs. 42,00,000/- (Rupees forty two Lakhs only) T purchase flat no: 511 in fifth floor having a plinth area of 1629 sft
25

December 31, 2011

Sanction No: RAB/HL/39/11-12

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA including common areas together with amenities and two car parking?s with an undivided share of land admeasuring 40 sq.yards out of 3630 sq.yards in the premises Sarovaram Green Homes situated in s no: 187 (part) admeasuring AC 0.30 guntas or 3630 sq. yards situated at Kondapur, Serilingampally Mandal, RR dist. Hyd. 25% in bank?s favor 1st year - 8.25 (Fixed): 2nd year – 8.75 (Fixed): 3rd Year -9.00 (Fixed): 4th year onwards Base Rate + 1.50% (At present = 10.50 %) subject to change in Base rate {Average 10.25%} Equitable mortgage of flat to be purchased out of loan. Mr. Voruganti Krishna Kumar Mr. Athuru Chinnaiah. To be repaid in 240 equated monthly installments (including one month moratorium period) of Rs. 41600/- each. Repayment to begin from Feb 2011. Interest for moratorium period of 1 month is capitalized. Repayment thro Post dated cheques drawn by the loan applicant. Branch should obtain PDCs for ensuing 24 EMIs. Since the applicant is residing outside India, Branch is advised to obtain PDCs drawn by the guarantor Shri A Chinnaiah also to ensure regular repayments. The branch should get fresh 12 PDC every year, so as to always have possession of minimum 24 PDCs. If closed from own source, no charge will be levied. If it is a takeover, 2% on the balance shall be charged as prepayment charges. Inspection charges, documentation charges, Processing fee, insurance to be recovered as and when applied.

Margin Rate of Interest Security Guarantors

Repayment

Pre-payment charges Other Charges

Other terms and conditions: 1. Before loan disbursement, the branch should ensure that the flat construction is as per approved plan and copy of the same to be taken on record. 2. Branch should verify all the photo copies with originals before disbursing the loan. 3. Encumbrance certificate till date of creation of equitable mortgage should be obtained and kept on record. 4. The sale deed and all the link title deeds as per legal opinion should be obtained at the time of mortgage. 5. Receipts for advance payment should be obtained, before disbursal of the loan. 6. Post sanction visit should be conducted by branch. 7. The borrowers should ensure that the property is duly and properly insured against all risks such as earthquake, fire, explosion, storm, cyclone, civil commotion etc. during the currency of the loan, with BOM being made the sole beneficiary under the policy / policies. 8. The loan will not be disbursed in part or full until the borrower has proportionately invested his own contribution.
26

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 9. The dwelling unit for the purchase, construction, improvement or extension of which this loan has been sanctioned, must conform to the standards and requirements of Govt. authorities and rules & regulations as applicable. 10. The borrower should inform Bank in writing about any change / loss of job, business, and profession (as the case may be) immediately after such change / loss. 11. The amount of this loan has been fixed, inter alia, on the cost estimates /agreements submitted by the borrowers. In the event of the cost actually incurred being less, Bank reserves the right to suitably reduce the amount of the loan. 12. In case, at the time of periodic review of the account, if any overdue, in interest/Principal is observed, the same shall be payable by the borrowers, along with interest, immediately, over & above the regular installment. 13. The delay in payment of installment attracts additional interest @ 2% p.a (with monthly rests or at such higher rate as per the rules of Bank and or RBI in that behalf as in force from time to time). In such event, the borrower shall also be liable to pay incidental charges and costs to the Bank. This shall be in addition and without prejudice to the rights available to the Bank. 14. The additional interest as mentioned in (13) above, shall be calculated for the amount in default and period of default, which shall be payable immediately, i.e., before the ensuing installment or along with the ensuing installment. 15. The branch should verify/ensure the end use. The branch should obtain an “End Use Certificate” from the borrower. 16. This letter of sanction shall stand revoked and cancelled and shall be absolutely null and void if: a. there are any material changes in the proposal for which this loan is, in principle, sanctioned; b. any material fact concerning your income, net worth, or ability to repay, or any other relevant aspect of your proposal or your application for loan is faulty suppressed, concealed or not made known to us; c. any statement made in the loan application is found to be incorrect or untrue; d. The "Acceptance Copy" duly signed is not received by us within 45 days of the date of conveying the sanction. 17. Branch has to explore the possibility of covering the advance under Maha Grih Suraksha Insurance Scheme. Yours faithfully, Chief Manager Retail Asset Branch Hyderabad

27

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

BANK OF MAHARASHTRA RETAIL ASSET BRACH, HYDERABAD. Note on Proposal Name of the branch Nature of the proposal Name of the applicant & Age Present Address of the Applicant DT: 31/12/2012 : Khairatabad Branch. : Mahabank Housing Loans to Public – Festival Offer 2011-12 : Athuru Siva Kumar 27 years : 5101 Cyprus CT, Alpharetta, Georgia-30005, USA : Flat no: 406, Diamond Palaces, Nizampet Road, Hyd. LIG 841, Bharati Nagar, BHEL, Ramachnadrapuram, Hyd. : IT Analyst, TCS, 379 Thornall Street 4FL, Edison NJ 08837 USA. : Term loan of Rs.42 lacs. : To purchase flat no: 511 in fifth floor having a plinth area of 1629 sft including common areas together with amenities and two car parking?s with an undivided share of land admeasuring 40 sq.yards out of 3630 sq.yards in the premises Sarovaram Green Homes situated in s no: 187 (part) admeasuring AC 0.30 guntas or 3630 sq. yards situated at Kondapur, Serilingampally Mandal, RR dist. Hyd. : Gross :USD 5450 Deductions :USD 1600 Net pay :USD 3850 : 1. Mr. Athuru Chinnaiah 2. Mr. Voruganti Krishna Kumar

Permanent Address Occupation Present request

Purpose

Income details of the (As per NOV salary slips ) Guarantors

Details of Security Offered: Security : Equitable Mortgage of flat a) Addresses : Flat no: 511 in fifth floor having a plinth area of 1629 sft including common areas together with amenities and two car parking?s with an undivided share of land admeasuring 40 sq.yards out of 3630 sq.yards in the premises Sarovaram Green Homes situated in s no: 187 (part) admeasuring AC 0.30 guntas or 3630 sq. yards situated at Kondapur, Serilingampally Mandal, RR dist. Hyd.
28

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA b) Cost c) Vendors by Prakash, c) Developer Remarks: The applicant Mr. Athuru Siva Kumar is a Non Resident Indian employed in TCS Ltd, and presently working in USA, with a gross monthly salary of $ 5450-equivalent to IRs 256150/- as per Nov 2010 salary slip and net pay is USD 3850- equivalent to IRs 180950. He has submitted last 6 months pay slips and also furnished his last 3 years IT returns for 2010, 2009 filed in USA and also for the Assessment year 2010-11 files in India. As per IT Return submitted his income for the Year 2012 is USD 61789. He has also submitted his ICICI bank statement maintained by him in India and also his salary account statement with Bank of America and DCU USA. He is working with this company since Apr 2006. Before this he worked with Six Sigma and with Intelligent Soft Systems. He is a bachelor. He has given GPA in favour of his father Mr. A Chinnaiah. He is working with BHEL Hyderabad. The applicant?s elder brother and sister in law are also NRIs and working in USA. His sister and brother in law are both practicing Medical doctors in Hyderabad. The GPA holder Mr. Chinnaiah is having his own house in BHEL Ramachnadrapuram Campus. He has given it for rent and residing in elder son?s flat in Nizam Pet. The applicant Mr. Siva Kumar is purchasing a flat in the residential complex developed by our Khairatabad Branch borrower M/S Satyavani Homes in Kondapur. The loan applicant Mr. Siva Kumar represented by his POA holder/father Shri A Chinnaiah aged 57 years has entered in to an agreement of sale on 17.12.2010 with the land owner Mrs. Y Subba Lakshmi w/o Mr. Y Jitendrudu,the land owner, represented by development agreement cum irrevocable GPA holder, Sri P Surya Prakash, Managing Partner M/S Satyavani Homes for purchase of Semi finished Flat no: 511 in fifth floor having a plinth area of 1629 sft including common areas together with amenities and two car parking?s with an undivided share of land admeasuring 40 sq.yards out of 3630 sq.yards in the premises Sarovaram Green Homes situated in s no: 187 (part) admeasuring AC 0.30 guntas or 3630 sq. yards situated at Kondapur, Serilingampally Mandal, RR dist. Hyderabad for a sale consideration of Rs 5216000/- which includes developmental and construction charges. The purchaser has paid an advance of Rs.1016000/- (vide cheque no: 870632 dtd 22.10.2010 for Rs.5000, ch no: 870870634 dtd 08.12.10 for Rs. 2.90 lacs, ch no: 870635 dtd 10.12.10 for Rs. 7.10 lacs and by cash Rs.11, 000). The same is mentioned in the Agreement for sale.
29

: Rs.56.16lacs : Smt. Y Subba lakshmi, w/o Mr. Y Jitendrudu,the land owner, represented Development agreement cum irrevocable GPA holder, Sri P Surya Managing Partner M/S Satyavani Homes. : M/S Satyavani Homes (Managing Partner Shri P Surya Prakash)

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

Prior to this the above said land owner Mrs. Y Subba Lakshmi, the lawful owner of property in survey no: 187 admeasuring AC 0.30 Guntas or 3630 Sq.yards situated at Kondapur Village, Serilingampally Mandal RR dist has entered into Development Agreement cum General Power of Attorney with Mr. P Surya Prakash, Managing Partner M/s Satyavani Homes with an intention to develop Residential Complex under document no 14884/05 dtd 05.10.2005 registered before SRO, MoosaPet. Accordingly the developer / vendor have obtained approval vide permit under proceedings no: G/33/BP/WZ/89/2007 dated 04.10.2007from Zonal Commissioner Hyderabad Municipal Corporation West Zone. Subsequently Mrs. Subba Lakshmi and the GPA holder Mr. Surya Prakash, Managing partner M/S Satyavani Homes have entered into an agreement (first supplementary agreement) vide the agreement dtd 23.02.2008 with M/S Satyavani homes represented by its Managing Partner Mr. P Surya Prakash to carry out the construction of residential complex. Subsequently Mrs. Subba Lakshmi and M/S Satyavani homes have entered into second supplementary agreement on 29.03.2008 regarding the distribution of flats between the two parties. According to this agreement flat no: 511 in the matter falls in the share of M/s Satyavani homes. It is informed by Khairatabad Branch that the Developer M/S Satyavani Homes have availed project loan from them for construction of Sarovaram Green homes where in the flat for which the loan is proposed to sanction is situated. Computation of Eligible loan amount of the applicant: Computation of income (Based on salary slips) Particulars Amount in Rs Gross ($5450 X Rs 47) Net ($3850 X Rs 47) 256150 180950 Whichever is more Applied for a loan of Rs. Amount in Rs. 12807500 10857000 12807500 4200000

Eligibility Gross X 50 Net X 60

Computation of eligibility based on Cost of the flat: Cost of the flat as per the agreement copies is given as under: Particulars Towards agreement of sale Registration charges Agreement made with Mrs. Y Subba Lakshmi Amount 52,16,000 4,00,000
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Total 56,16,000

Eligibility for loan ( Rs. Lacs ) Maximum limit of finance for house property situated in urban area Maximum limit of finance in view of margin requirement of 25% for purchase of new residential flat (75% of Rs. 56.16lacs) Loan applied for / requested by the applicants Amount equal to 50 times of Gross Salary/60times of Net salary whichever is higher Lower of above Means of Finance: Total cost Bank Loan Margin from personal savings

A B C D

Rs. In lac No limit 42.12 42.00 128.07 42.00

Rs. 56, 16,000/- (including registration charges) Rs. 42, 00,000/- (75%) Rs. 14, 16,000/- (25%)

Moratorium Period: Since the flat will be ready for occupation within 1 month as per the information given by the developer and the loan applicant is ready to start the repayment, it is proposed to give moratorium period of one month and also proposed to capitalize the interest for the moratorium period. The interest component for the moratorium comes to Rs.29000/-(approximately). The same is capitalized. Repaying capacity: Applicant is having sufficient income to repay the loan. The applicant is drawing monthly salary of USD 5450, equivalent to Rs.2.56 lacs. Net pay of the applicant is USD 3850 equivalent to Rs.1.81 lacs. He has availed personal loan from HSBC for which EMI is Rs.5870/-. Only 6 installments are remaining. We have taken out the CIBIL Report and there are no adverse remarks in it. The age of applicant is 27 years. As such he proposed to repay the loan in 20 years. As the applicants? age permits to repay the loan in 20 years, we may consider repayment period of 20 years. The eligible loan amount is Rs. 42 lacs and interest for the moratorium period of one month is Rs. 0.29 lacs which are capitalized. Hence EMI has to be fixed for an amount of Rs. 42.29 lacs for a period of 239 months. EMI on Rs. 42.29 Lakhs for 239 months @ 10.25% pa (average) works out to Rs 41600 /Computation of eligibility norms INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE Rs.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Gross income of the applicant (as per latest salary slips)pm USD 5450 @Rs.47 Proposed EMI of proposed loan Rs 41,600 Other deductions from salary USD 1600 @Rs.47 Rs 75,200 Deduction towards personnel loan in HSBC Rs. 5,870 Total monthly deductions % of B to A 47.88 47.88% of total deductions (including proposed EMI) to total income falls well within permissible limit of 65% as per the norms of the scheme Legal Opinion: The flat in the matter is situated in “Sarovaram Green Homes” developed by M/S Satyavani Homes. They have availed project loan from our Khairatabad branch. At the time of sanctioning the loan Khairatabad Branch has taken legal opinion. Branch is requested to obtain latest legal opinion from our panel advocate on the said flat before disbursing the loan. Encumbrance certificate till the date of creation of equitable mortgage should be obtained by the Branch. Valuation: As per the agreement to sale. Guarantors: The applicant has proposed two guarantors Mr. Voruganti Krishna Kumar aged 31 years and Shri A. Chinnaiah. Mr. Kumar is a M C A graduate and working with TCS ltd, with a monthly salary of Rs.75387/-. The proposed guarantor is presently working in Hyd. As per F 16 for AY 2011-12 his gross income was Rs 512594/- per annum. He is acceptable as guarantor for the proposed loan. Mr. Chinnaiah is father of the loan applicant. He is working with BHEL, Hyderabad with a monthly gross salary. Margin: As per the scheme, the margin required for a new flat/construction of a house/for purchase of readily built flat is minimum 25%. In the present case the margin comes to 25% and as such it is within the requisite level. The applicant is having sufficient income / savings to meet the margin requirements as and when required. Repayments tie up:
32

A

256150

B

122670

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Post dated cheques drawn on local Bank from the applicant should be obtained for ensuing 24 EMIs. Further as applicant is residing outside India, PDCs drawn by guarantor Mr. Chinnaiah should also be obtained and kept on record. The branch should get fresh 12 PDC every year, so as to always have possession of minimum 24 PDCs. Pre Sanction visit: Pre sanction visit to the flat under construction is made by the undersigned on 31.12.2010 and the report is kept on record. We also made a visit to the applicant?s father?s house in Nizam Pet on 30.12.2011 and the report is kept on record. Father of the applicant is also one of the guarantors for the proposed loan. Pricing: It is proposed to repay the loan in 240 monthly installments including moratorium period of 1 month. The interest for the moratorium period is capitalized. The proposal is considered under Mahabank Housing Loans to Public – Festival Offer 2011-12 as the proposal is shown as pending in the list submitted to RMO by Khairatabad Branch. The applicable ROI under the said scheme is as under: 1st year - 8.25 (Fixed): 2nd year – 8.75 (Fixed): 3rd Year -9.00 (Fixed): 4th year onwards Base Rate + 1.50% (At present = 10.50 %) subject to change in Base rate {Average (10.25%)}

CIBIL Reports: No adverse remarks in the reports of the loan applicant and guarantors. Entry Level Risk Rating: To be done by the branch before disbursal of loan. KYC Norms: To be fulfilled by the Branch. Delegated Powers: Sanction of the facility falls within the delegated powers of Chief Manager, Retail Asset Brach, and Hyderabad.

Sanction

In view of the above, we sanction as under:
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Mahabank Housing Loans to Public – Festival Offer 2011-12 in the name of Mr. Athuru Siva Kumar Rs. 42,00,000/- (Rupees forty two Lakhs only) To purchase flat no: 511 in fifth floor having a plinth area of 1629 sft including common areas together with amenities and two car parking?s with an undivided share of land admeasuring 40 sq.yards out of 3630 sq.yards in the premises Sarovaram Green Homes situated in s no: 187 (part) admeasuring AC 0.30 guntas or 3630 sq. yards situated at Kondapur, Serilingampally Mandal, RR dist. Hyd. 25% in bank?s favor 1st year - 8.25 (Fixed): 2nd year – 8.75 (Fixed): 3rd Year -9.00 (Fixed): 4th year onwards Base Rate + 1.50% (At present = 10.50 %) subject to change in Base rate {average 10.25%} Equitable mortgage of flat to be purchased out of loan. Mr. Voruganti Krishna Kumar Mr. Athuru Chinnaiah. To be repaid in 240 equated monthly installments (including one month moratorium period) of Rs. 41600/- each. Repayment to begin from Feb 2011. Interest for moratorium period of 1 month is capitalized. Repayment thro Post dated cheques drawn by the loan applicant. Branch should obtain PDCs for ensuing 24 EMIs. Since the applicant is residing outside India, Branch is advised to obtain PDCs drawn by the guarantor Shri A Chinnaiah also, to ensure regular repayments. The branch should get fresh 12 PDC every year, so as to always have possession of minimum 24 PDCs. If closed from own source, no charge will be levied. If it is a takeover, 2% on the balance shall be charged as prepayment charges. Inspection charges, documentation charges, Processing fee, insurance to be recovered as and when applied.

Facility Amount

Purpose

Margin Rate of Interest Security Guarantors

Repayment

Pre-payment charges Other Charges

Other terms and conditions: 1. Before loan disbursement, the branch should ensure that the flat construction is as per approved plan and copy of the same to be taken on record. 2. Branch should verify all the photo copies with originals before disbursing the loan. 3. Encumbrance certificate till date of creation of equitable mortgage should be obtained and kept on record. 4. The sale deed and all the link title deeds as per legal opinion should be obtained at the time of mortgage. 5. Receipts for advance payment should be obtained, before disbursal of the loan. 6. Post sanction visit should be conducted by branch. 7. The borrowers should ensure that the property is duly and properly insured against all risks such as earthquake, fire, explosion, storm, cyclone, civil commotion etc. during the currency of the loan, with BOM being made the sole beneficiary under the policy / policies.
34

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 8. The loan will not be disbursed in part or full until the borrower has proportionately invested his own contribution. 9. The dwelling unit for the purchase, construction, improvement or extension of which this loan has been sanctioned, must conform to the standards and requirements of Govt. authorities and rules & regulations as applicable. 10. The borrower should inform Bank in writing about any change / loss of job, business, and profession (as the case may be) immediately after such change / loss. 11. The amount of this loan has been fixed, inter alia, on the cost estimates /agreements submitted by the borrowers. In the event of the cost actually incurred being less, Bank reserves the right to suitably reduce the amount of the loan. 12. In case, at the time of periodic review of the account, if any overdue, in interest/Principal is observed, the same shall be payable by the borrowers, along with interest, immediately, over & above the regular installment. 13. The delay in payment of installment attracts additional interest @ 2% p.a (with monthly rests or at such higher rate as per the rules of Bank and or RBI in that behalf as in force from time to time). In such event, the borrower shall also be liable to pay incidental charges and costs to the Bank. This shall be in addition and without prejudice to the rights available to the Bank. 14. The additional interest as mentioned in (13) above, shall be calculated for the amount in default and period of default, which shall be payable immediately, i.e., before the ensuing installment or along with the ensuing installment. 15. The branch should verify/ensure the end use. The branch should obtain an “End Use Certificate” from the borrower. 16. This letter of sanction shall stand revoked and cancelled and shall be absolutely null and void if: e. there are any material changes in the proposal for which this loan is, in principle, sanctioned; f. any material fact concerning your income, net worth, or ability to repay, or any other relevant aspect of your proposal or your application for loan is faulty suppressed, concealed or not made known to us; g. any statement made in the loan application is found to be incorrect or untrue; h. The "Acceptance Copy" duly signed is not received by us within 45 days of the date of conveying the sanction. 17. Branch has to explore the possibility of covering the advance under Maha Grih Suraksha Insurance Scheme. Chief Manager Retail Asset Branch, Hyderabad

35

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

?

Education

???? ? ???? ????, ??? ??.4, ????????? ????? ?, ??????? ?????, ?? ?????? 500 072 ? RETAIL ASSET BRANCH,Road no.4, Radha Krishna Estate, KPHB Colony,Hyderabad-72 ?????? /Phone 040-23051521 ? AJ61/Education/11- 12 The Branch Manager ECIL BRANCH, HYDERABAD RAB/Edu/14/2011-12 Dear Sir, Re: Educational loan proposal of Mr. K.Bharat Chandra & Mr.K.Premchand. We refer to the captioned proposal submitted by you. We are pleased to convey our sanction as under: Facility Term Loan Higher Education Abroad Mr. K.Bharat Chandra(applicant ) In the names of Mr. K.Premchand (Co-applicant) Amount Rs. 20,00,000 /- (Rupees Twenty lacs only) To study Master?s in Civil Engineering , General in Wayne State University, Purpose Intl Grad Admissions, Wayne State University, Graduate Admissions, 42 w, warren, suite 416, Datroit, MI 48202, USA Category Priority – Education Margin 25.69 % in our favour Interest ROI is linked to Base Rate. ROI is Base Rate + 2.75%. Presently 12.75%
36

Dt. 11.07.2012

Sanction no:

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA w.m.r. (Interest during moratorium period to be charged on SIMPLE BASIS) Interest for the moratorium period is capitalized. Base Rate is subjected to change. Thro 60 EMIs of Rs. 60000/- each commencing from 31/08/2014 i.e., one year after completion of the course or six months after getting the job, whichever is earlier. Interest for the moratorium period is capitalized. NIL Equitable Mortgage of residential house property in the name of the applicant Mr.K.Bharat Chandra bearing residential building flat No:201, in second floor, bearing Sy.No:2,3,4,6/1,6/2, & 462, Plot No:41, at Fortune Plaza, LIC Colony, Puppalguda Village, RajendraNagar Mandal, R.R.Dist, A.P. as collateral security for the proposed loan. 1. Mr. Mr.Venigalla Mahidhar s/o Mr. V.Eswara Chandra Vidyasagar 2. Mr. K.Lakshmi Narayana s/o Nageswara Rao Kondragunta

Repayment Security-Primary

Collateral Security

Guarantors

Other conditions forming part of sanction: 1. Branch should verify all documents with originals before disbursing the loan. 2. Branch has to take application from Mr. K L Narayana as guarantor. 3. Disbursement is subject to the submission of B Tech Provisional certificate. Branch has to ensure the verification of original and should keep a copy of the same for our record. 4. Disbursement is subject to obtaining VISA. The branch has to ensure that the original copy of VISA and passport is verified and a copy kept on record. 5. Disbursement is made towards tuition fees directly to the University and a copy of the payment confirmation should be kept on record. 6. Interest during moratorium period can be serviced at the option of borrowers. If the borrowers opt for it and service the interest regularly during moratorium period, a concession in interest @1% may be allowed. In such cases, the branch should apply interest at normal rate and interest concession is to be given separately by way of credit to the loan account. The concession in interest is available only for the moratorium period. 7. Branch should keep in touch with College / University authorities so as to obtain progress report regular intervals. 8. In case of default in installments; for the overdue amount penal interest @ 2% should be charged for overdue period. 9. Processing charges of as per co guidelines is to be levied and record of the same be maintained. The processing fee is refunded after availing the Education Loan. In case of
37

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA partial availment / stage wise disbursement, processing fee is to be refunded on first disbursal. 10. Letter of acceptance of sanction to be obtained from the applicant, co-borrower and guarantors. Amount to be released on obtaining proper documents and on compliance of terms of sanction. 11. A letter / declaration should be obtained from the borrowers / guarantors stating that they are not defaulters to any bank / institution. ( As per CO format) 12. Branch should obtain B2, G2 at the time of each disbursement. We are enclosing herewith blank Loan disbursement compliance certificate. Please send the duly filled-in certificate for our record. Please inform the account number by e mail.After opening the account in the system, branch is requested to take out the print-out of system generated sanction letter and compare the same with our/Branch sanction Yours faithfully, Chief Manager Retail Asset Branch, Hyderabad. Proposal Processed by: Ms. Lalitha BANK OF MAHARASHTRA RETAIL ASSET BRACH, HYDERABAD. Note on proposal:

DT: 01.07.2012

Branch : ECIL ROAD, KAPRA BRANCH, HYDERABAD Request for : Education Loan for studies - abroad Category : Priority. 1 (a) Name of the applicant : Mr. Kondragunta Bharat Chandra (b) Age and Date of birth : 22 years. Date of birth: 02.02.1990 (c) Name of the Co-borrower :Mr. K.Premchand & Address Flat No: 201, Fortunes Om Nivas, Plot No: 425 & 426, 6thPhase, KPHB, Hyderabad - 85 2 (a) Eligibility Norms Applicant's Compliance As per scheme i. ii. Course to be pursued Graduation / Post Graduation Indian National Masters in Civil Engineering , General (Post Graduation) Yes
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA iii. Admission through Entrance Test / GRE and TOFEL Selection Process iv. Applicant is nearest to place of domicile Hyderabad Necessary documentary evidence is obtained; therefore, the applicant is eligible under the scheme. (b) Back ground of the applicant, in brief: Mr.K.Bharat Chandra?s educational background is as under: Marks / Month & Year College & University Percentage SSC 80.67% March 2005 Food Samaritan High School, Vengal Rao Nagar, Hyderabad. HSC 75.60% March 2007 Narayana Junior college, S R Nagar, Hyderabad B tech 64% May 2011 Vallurupalli Nageswara Rao provisional Vignana Jyothi Institute of certificate Engineering & technology. submitted

Specialization General

Science (PCM) B.Tech (Civil Engineering)

Mr. Kondragunta Bharat Chandra is the son of sri. Kondragunta Prem Chand, who is the customer of our Sultan Bazar branch and enjoying credit facilities for his firm/company viz. M/s. Dilip Estate & M/s. Perfect Concrete Products Pvt Ltd. With zeal to pursue higher education the applicant has appeared for GRE & TOFEL competitive exams and succeeded in getting admission in Wayne State University, Intl Grad Admissions, Wayne State University, Graduate Admissions, 42 w, warren, suite 416, Datroit, MI 48202, USA to study Master?s in Civil Engineering, General . The total span of the course is 24 months and the cost of the course including the living expenses is US $ 59,808/- equivalent to Rs.2691360/-(approximately). 1 dollar is taken as Rs.45/-). The applicant has requested for a loan of Rs 20.00 Lakhs, the remaining expenses will be met from family savings. Mr. Premchand has availed housing loan from our ECIL Brach and as per the information given by the Branch, vides their e mail dtd 11.07.2011 there are no over-dues in the account. Mr. K.Premchand, F/O the student applicant Mr. K.Bharat Chandra is co-applicant for the loan. He is a business man and managing partner in M/s.Dilip Estates & M/s. Perfect Concrete
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Products Pvt Ltd & enjoying credit facilities with BOM, Sultan Bazar branch. Regarding the status of the accounts we have received the following e mail dtd 11.07.2012 from Sultanbazar Branch. Quote: Following are the credit facilities ejoyed by the above firms: Facility Limit Bal.O/s Dilip Estates. 1. CC 2. Housing Loan 35.00 lacs 13.00 lacs 30.92 lacs 10.99 lacs

Perfect Concrete Product.

1. CC 2. TL 3. TL

50.00lacs 154.00 lacs 50.00 lacs

55.52 lacs 55.30 lacs 36.01 lacs

Operations in the accounts are satisfactory. The term loan installments are paid regularly. However in the term loan account 60004512418 considering the remaining number of monthly installments and the amount of installments the Auditors have commented that there are overdues of Rs,.7.70 lacs. The account is categorized as Standard as per Cream and CBS as on 30/06/2011. We have recovered to day Rs.4.95 lacs in this account. Mr.Premchand has assured to repay the balance of over dues in 2.75 lacs to the credit of the above account within a couple of days. Unquote. (c) About the course as per the Offer Letter: Master?s in Civil Engineering, General starting from 31/08/2012 to 31/08/2014 Duration of the course – 2 Years Course Fee – Rs. 2691360/3. Cost of course and means of finance for 24 months: Expenses to be Means of Finance Amt In Pounds considered As per I20 i. Tuition Fees 38200 i. Own source (25.69) % INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

Amt (Rs.)

6, 91, 360
40

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA ii. Living Expenses iii. Others Total Re. Equivalent @ 45/21608 NIL 59808 Rs. 2691360 ii. Bank Loan (74.31) % 20, 00, 000

Total

26, 91, 360

Maximum ceiling for Bank finance for studies abroad is Rs.20.00 Lakhs with a minimum margin of 15%. The request for Rs. 20, 00,000/- is within the prescribed ceiling, the minimum margin to be maintained is 25.69% hence the quantum of loan to be considered is Rs.20, 00, 000/- (74.31 % of the total cost). 4. Security: As per the model educational loan scheme, for loans above Rs 7.50 lakhs, collateral security is required with 100% cover. The applicants have offered residential building flat No:201, in second floor, bearing Sy.No:2,3,4,6/1,6/2, & 462, Plot No:41, at Fortune Plaza, LIC Colony, Puppalguda Village, Rajendra Nagar Mandal, R.R.Dist, A.P. which is in the name of Mr. K.Bharath Chandra s/o K.Premchand, the applicant as collateral security by way of mortgage for the proposed loan. The branch has obtained valuation of the property from our valuer from M/s Bhide & Associates, our panel valuer and as per their report dtd 09/07/2011, the value of the property is Rs. 31.95 Lakhs. Hence the value of the property covers approx 1.60 times of the proposed educational loan. Hence we can accept the above security by way of additional mortgage. 5. Legal Opinion: Branch has obtained the legal opinion report dated 28.06.2011 from our panel of advocates Mr.N.Srinivasa Rao and he examined the title deeds Doc.No.3765/2008 relating to the property which is situated at Fortune Plaza Aprtments, LIC colony, Puppalguda village, Rajendranagar Mandal, R.R.District is in the name of Mr.K.Bharat Chandra S/o Mr. K.PremChand and he has got a clear and marketable title to the said property and can be taken as security by deposit of title deeds to the property. 6. Guarantors: Mr.Venigalla Mahidhar s/o Mr. V.Eswara Chandra Vidyasagar and K.L.Narayana are the guarantors for the loan . Mr.V.Mahidhar who is residing at Flat No:401, Fortunes Om Nivas, Plot No:425 & 426, 6 the phase, KPHB, Hyderabad -85 is one of the partner in M/s.Dilip Estates. Since Mr.K.Premchand is the co Applicant and he is managing partner in M/s.Dilip Estates, the
41

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA name of the V.Mahidhar is considered as the first Guarantor. His networth as per the networth statement is Rs.270.88. As per ITR of AY2011-2012, the gross income is Rs.2, 02,411/- . Mr. K.Lakshmi Narayana s/o Nageswara Rao Kondragunta residing at Flat No:302, Fortunes OM Nivas, Plot No:425 & 426, 6 th Phase, KPHB Colony, Hyderabad – 85. He is also one of the partners in M/s.Dilip Estates at Flat No:8, Jabbar Building, Begumpet, Hyderabad -16. His gross income as per ITR 2010-11 is 1,14,884. He has submitted ITR for the years 2010-11, 2009-10 & 20098-09. He is the brother of co applicant Mr.K.Premchand. Both the guarantors have availed housing loans from our ECIL Branch and as per the information given by the Branch vide heir e mail dtd 11.07.2012; there are no over-dues in the loan accounts. Both are acceptable as guarantors. 7. Repayment Schedule: Loan is to be repaid thru 60 EMIs of Rs.60000 /- each commencing from 31/08/2014 i.e., one year after completion of the course or six months after getting the job, whichever is earlier. Interest during moratorium period is capitalized. 8. Repayment capacity: On completion of the course the applicant student is confident of getting job in a reputed institution and getting a decent salary to service the loan. Further he co applicant is a well established builder having annual income of Rs.3.70 lacs. 9. EMI: The ROI is Base Rate + 2.75%. At present it is at 12.75% p.a. EMI is fixed for the loan amount of Rs.2000000/- plus interest for the moratorium period (i.e.) Rs.637000/-. The entire amount of Rs.2637000/- is to be repaid in 60 EMIs. The repayment commences from 31/08/2014 with an EMI value of Rs. 60000/- (Moratorium period interest is capitalized). 11. CIBIL Observations: Name Date of Birth Mr. K.Premchand 11/03/1958 Mr.MahidharVenigalla 16/04/1966 Mr.K.Laxmi Narayana Mr. K.Bharat Chandra 11/09/1959 02/02/1990

PAN No AGJPK3556C ACAPV1220B

Result No Dues Credit Card dues of Rs.284/AMBPK9936C No dues Pass port No:H No dues 4133596
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA The CIBIL remarks pertaining to Mr.Mahidhar Venigalla o/s amount of Rs.284/- which is due to credit card . As per recommendation letter dated 04.07.2011 of the branch manager, ECIL branch that he has availed housing loan from the branch and the repayment is very regular and they recommended to ignore this over-dues and recommended him as guarantor for the proposed loan. Hence we have accepted him guarantee for the proposed loan. 12. CRR: Credit risk rating carried out by the Branch and the rating is “AAA” indicating minimal risk. 13. Delegation of Powers: The proposal falls under the sanctioning powers of Chief Manager, RAB, and Hyderabad. 13. Sanction In view of the above, we sanction as under: Facility Term Loan Higher Education Abroad Mr. K.Bharat Chandra(applicant ) In the names of Mr. K.Premchand (Co-applicant) Amount Rs. 20,00,000 /- (Rupees Twenty lacs only) To study Master?s in Civil Engineering , General in Wayne State University, Purpose Intl Grad Admissions, Wayne State University, Graduate Admissions, 42 w, warren, suite 416, Datroit, MI 48202, USA Category Priority – Education Margin 25.69 % in our favour ROI is linked to Base Rate. ROI is Base Rate + 2.75%. Presently 12.75% w.m.r. (Interest during moratorium period to be charged on SIMPLE BASIS) Interest Interest for the moratorium period is capitalized. Base Rate is subjected to change. Thro 60 EMIs of Rs. 60000/- each commencing from 31/08/2014 Repayment i.e., one year after completion of the course or six months after getting the job, whichever is earlier? Interest for the moratorium period is capitalized. Security-Primary NIL Equitable Mortgage of residential house property in the name of the applicant Mr.K.Bharat Chandra bearing residential building flat No:201, in second floor, Collateral Security bearing Sy.No:2,3,4,6/1,6/2, & 462, Plot No:41, at Fortune Plaza, LIC Colony, Puppalguda Village, Rajendra Nagar Mandal, R.R.Dist, A.P. as collateral security for the proposed loan. Guarantors 3. Mr. Mr.Venigalla Mahidhar s/o Mr. V.Eswara Chandra Vidyasagar
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 4. Mr. K.Lakshmi Narayana s/o Nageswara Rao Kondragunta

Other conditions forming part of sanction: 1. Branch should verify all documents with originals before disbursing the loan. 2. Branch has to take application from K L Narayana as guarantor. 3. Disbursement is subject to the submission of B Tech Provisional certificate. Branch has to ensure the verification of original and should keep a copy of the same for our record. 4. Disbursement is subject to obtaining VISA. The branch has to ensure that the original copy of VISA and passport is verified and a copy kept on record. 5. Disbursement is made towards tuition fees directly to the University and a copy of the payment confirmation should be kept on record. 6. Interest during moratorium period can be serviced at the option of borrowers. If the borrowers opt for it and service the interest regularly during moratorium period, a concession in interest @1% may be allowed. In such cases, the branch should apply interest at normal rate and interest concession is to be given separately by way of credit to the loan account. The concession in interest is available only for the moratorium period. 7. Branch should keep in touch with College / University authorities so as to obtain progress report regular intervals. 8. In case of default in installments; for the overdue amount penal interest @ 2% should be charged for overdue period. 9. Processing charges of as per co guidelines is to be levied and record of the same be maintained. The processing fee is refunded after availing the Education Loan. In case of partial a ailment / stage wise disbursement, processing fee is to be refunded on first disbursal. 10. Letter of acceptance of sanction to be obtained from the applicant, co-borrower and guarantors. Amount to be released on obtaining proper documents and on compliance of terms of sanction. 11. A letter / declaration should be obtained from the borrowers / guarantors stating that they are not defaulters to any bank / institution. ( As per CO format) 12. Branch should obtain B2, G2 at the time of each disbursement. Chief Manager Retail Asset Branch, Hyderabad.

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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

?

Personal loan

???? ? ???? ????, ??? ??.4, ????????? ????? ?, ??????? ?????, ?? ?????? 500 072 ? RETAIL ASSET BRANCH, Road no.4, Radha Krishna Estate, KPHB Colony,Hyderabad-72 ,?????? /Phone 040-23051521 ? AJ-61/ADV/Perloan/12-13 To Branch Manager SANCTION/RAB/PER/4/2012-13 Bank of Maharashtra Rajahmundry branch. Dear Sir, Sub: Sanctioning of Personal Loan – Mr. Vaska Rama Rao This is with reference to the captioned subject received vide your letter dated 21.03.2011. We are pleased to convey our sanction as under: Facility Scheme Applicants Name Occupation Amount Purpose Margin Security ROI Guarantor Repayment Term Loan Mahabank Personal Loan Scheme Mr. Vaska Rama Rao Sanitary Supervisor, Municipal Corporation, Rajahmundry Rs 1, 50, 000/-(Rs One lakh Fifty Thousand only ) To meet Domestic Expenses NIL Clean Base Rate+6.00% i.e. 15.50% p.a. with monthly rests subjected to change in base rate (Present base rate is 9.50%) Mr. N. Mutyala Krishna , Working as Sanitary Supervisor, Municipal Corporation, Rajahmundry To be repaid in 36 months with an EMI of Rs 5300/pm without any
45

Dt: 15/04/2012

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA moratorium. Thro SI for deduction of EMI amount from salary account. Salary being credited to Account No: 20168444130 of the loan applicant. 1.50 % of the loan amount subject to a minimum of Rs. 500/-. In this case it is Rs. 2250/No

Repayment mode Processing charges Deviations, if any,

Other terms & conditions: a) A Letter to be obtained from the Employer stating unconditional acceptance to credit the applicant?s salary in to the SB A/c No: 20168444130. b) An irrevocable written mandate by borrower to employer through our Branch to route all payments /salary & allowances due to him/her including terminal benefits through the account maintained with us and also mentioning that he shall not seek change of Bank for salary and allowances during pendency of the loan and Branch should obtain confirmation from the employer that the mandate shall be complied with. The same is to be obtained from guarantor also. c) The employer should further undertake that in case of transfer of the employee, his new place of posting and the name of the salary disbursing authority will be informed to the Bank and also the new salary disbursing authority will be informed of the company?s commitments to the Bank in regard to the loan availed by the employee. The same is to be obtained from guarantor also. d) Irrevocable undertaking by the borrower authorizing the Bank to recover the loan instalments from his/her salary A/c. No. 20168444130 with the Branch and Irrevocable undertaking from employer not to shift the Salary account(s) of the concerned employee till the closure of the loan account(s). The same is to be obtained from guarantor also. e) All copies of documents to be verified from original before disbursement f) All other terms and conditions of MAHA BANK Personal Loan Scheme After opening the account, please submit the following: 1) We are enclosing herewith blank Loan disbursement compliance certificate. Please send the duly filled-in certificate for our record. 2) Please inform the account number by e mail.

Yours faithfully, Chief Manager,
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Retail Asset Branch, Hyderabad Note on Proposal – Personal Loan DT: 15/04/2012 : Rajahmundry Branch, : 21/03/2012 : Mr. Vaska Rama Rao :H.No 5-240/2, Venkateshwara Nagar, Near Balajipeta, Bommuru, Rajahmundry Loan applied for : Rs. 1.50 lakh Scheme : Personal loan Purpose : To meet Domestic Expenses Gross monthly salary : Rs. 34481/Net monthly salary : Rs. 25061/Salary deduction : Rs. 9420/EMI for Rs. 1.50 laks : Rs. 5300/- (rounded off) Total deductions : Rs. 14720/Percentage of deductions Including proposed loan : 42.69% Proposal received from Date of receipt Name of the applicant Address It is informed by the branch that the applicant has earlier availed Personal loan and the Account was closed with regular repayments. Eligibility of loan as per CO guidelines: 1) As per CO guidelines salaried persons, permanent in service having minimum income of Rs. 3 lacs p.a are eligible to avail personal loan. The applicant is working as working as Sanitary Supervisor, Municipal Corporation, Rajahmundry. His gross income is Rs 34481/- pm (Rs 413772/- PA) as per the salary certificate for the month of February 2011. His monthly salary is paid thro our Rajahmundry Branch. Hence the applicant is eligible for availing personal loan. 2) As per CO guide lines, age of the applicant should be minimum 21 years and maximum 60years. The applicant is of 50 Years. Hence eligible. 3) Minimum employment required is 5 years. The applicant has already completed 28 years. 4) As per CO guidelines individuals should be IT assesses and last 2 years IT Returns should be submitted. The applicant has submitted last 2 years form 16. 5) Maximum loan that can be considered is Rs.1.50 lacs. The applicant has requested for a loan of Rs.1.50 lacs only.
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 6) Earning criteria: 6 times gross monthly salary. The applicant?s gross monthly is Rs. 34481 X 6 times of the same comes to Rs. 206886/-. Hence eligible for a loan of Rs.1.50 lacs. 7) Margin Nil. 8) One guarantor is required as per scheme. The applicant has offered the guarantee of Mr. N. Mutyala Krishna, Working as Sanitary Supervisor, Municipal Corporation, Rajahmundry. His gross monthly salary is Rs. 22867/- pm. Hence the guarantor is acceptable. 9) Repayment period: Maximum up to 3 years or residual service whichever is less. The applicant?s residual service is 10 Years and as such the applicant has requested for a repayment period of 36 months. Hence we can allow 36 months of repayment schedule. 10) As per CO guide lines total deductions including proposed loan deduction should not be more than 60%. In the present case the total deductions comes to 42.69%. Hence eligible. CIBIL Repots: Guarantor. There are no negative remarks in the CIBIL reports of the applicant and

Delegated Powers: Sanction of the facility falls within the delegated powers of Chief Manager, Retail Asset Brach, and Hyderabad Sanction: In view of the above we sanction as under: Facility Scheme Applicants Name Occupation Amount Purpose Margin Security ROI Guarantor Repayment Repayment mode Processing charges Deviations, if any, Term Loan Mahabank Personal Loan Scheme Mr. Vaska Rama Rao Sanitary Supervisor, Municipal Corporation, Rajahmundry Rs 1, 50, 000/-(Rs One lakh Fifty Thousand only ) To meet Domestic Expenses NIL Clean Base Rate+6.00% i.e. 15.50% p.a. with monthly rests subjected to change in base rate (Present base rate is 9.50%) Mr. N. Mutyala Krishna , Working as Sanitary Supervisor, Municipal Corporation, Rajahmundry To be repaid in 36 months with an EMI of Rs 5300/pm without any moratorium. Thro SI for deduction of EMI amount from salary account. Salary being credited to Account No: 20168444130 of the loan applicant. 1.50 % of the loan amount subject to a minimum of Rs. 500/-. In this case it is Rs. 2250/No

Other terms & conditions:
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA a) A Letter to be obtained from the Employer stating unconditional acceptance to credit the applicant?s salary in to the SB A/c No: 20168444130. b) An irrevocable written mandate by borrower to employer through our Branch to route all payments /salary & allowances due to him/her including terminal benefits through the account maintained with us and also mentioning that he shall not seek change of Bank for salary and allowances during pendency of the loan and Branch should obtain confirmation from the employer that the mandate shall be complied with. The same is to be obtained from guarantor also. c) The employer should further undertake that in case of transfer of the employee, his new place of posting and the name of the salary disbursing authority will be informed to the Bank and also the new salary disbursing authority will be informed of the company?s commitments to the Bank in regard to the loan availed by the employee. The same is to be obtained from guarantor also. d) Irrevocable undertaking by the borrower authorizing the Bank to recover the loan instalments from his/her salary A/c. No. 20168444130 with the Branch and Irrevocable undertaking from employer not to shift the Salary account(s) of the concerned employee till the closure of the loan account(s). The same is to be obtained from guarantor also. e) All copies of documents to be verified from original before disbursement f) All other terms and conditions of MAHA BANK Personal Loan Scheme

Chief Manager Retail Asset Branch, Hyderabad

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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

?

Vehicle loan

???? ? ???? ????, ??? ??.4, ????????? ????? ?, ??????? ?????, ?? ?????? 500 072 ? RETAIL ASSET BRANCH,Road no.4, Radha Krishna Estate, KPHB Colony,Hyderabad-72 ?????? /Phone 040-23051521 ? AJ-61/ADV/Veh/2012-13 DT: 22/06/2012

The Branch Manager RAB/Veh/22/2012-13 Bank of Maharashtra. Kothguda Branch Dear Sir, Re: Vehicle Loan Sanction – Mr. T.Sunil Kumar.

Sanction no:

We refer to the captioned proposal submitted by you. We are pleased to convey our sanction as under: Facility In the name of Amount Purpose Security Guarantor Margin Rate of Interest Vehicle Loan- 4 wheeler Mr. Talasila Sunil Kumar. Rs. 5,00,000/-( Rs. Five lackhs only) Purchase of a new 4-wheeler vehicle i.e. Honda City (VMT) costing Rs.10.00 lacs Hypothecation of vehicle to be purchased costing Rs.10,00,000/Mr. Atluri Ravindra Prasad s/o.Devendra Prasad 50.00% in our favour. Floating rate linked to Base rate.
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Base Rate + 1.75% i.e. 10.00 %+ 1.25%= 11.25% p.a with monthly rests. Base Rate subject to change. As per C O guidelines. Equated monthly installment of Rs. 16,450/- to commence from the next month of disbursement of the loan & repayment for 36 months. Branch should obtain and maintain sufficient number of PDCs Any charges other than interest such as insurance etc. should be recovered immediately as and when incurred / applied, separately, in addition to the EMI.

Processing Fee Repayment

1 2 3 4 5 6

7 8 9 10 12 13 14

Other terms and conditions forming part of sanction: Receipt of payment has to be obtained by branch, after disbursement and the same be kept with us. For recovery of EMI, post dated cheques are obtained as per CO guidelines. Unconditional acceptance from the borrower and guarantor for all the terms and conditions of sanction should be obtained. Disbursement should be effected by way of direct payment to the dealer / supplier by pay slip / DD, after receipt of the margin from the applicant. Blank TTO forms in duplicate duly signed by the borrower are obtained. Registration of the vehicle under hypothecation agreement in favor of the Bank is done with the RTO concerned. Copy of the Registration Certificate showing Bank?s charge thereon is obtained in due course. Comprehensive insurance policy of the vehicle under bank clause in our favor be obtained & kept on record. Applicant should submit an undertaking to the effect that the vehicle purchased will not be sold during the currency of the loan. Documents should be obtained as per C.O. guidelines. All other terms and conditions as applicable under the Scheme will apply. Housing loan account of the applicant i.e. account No: 60040819424 data in the CBS has to be corrected as per the original sanction letter. CRR for this account to be done by the branch. Branch has to comply with all KYC norms. We are enclosing herewith blank Loan disbursement compliance certificate. Please send the duly filled-in certificate for our record. Please inform the account number by e mail. After opening the account in the CBS, branch is advised to take out the print out of system generated sanction letter and compare the same with our/Branch sanction
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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

Yours faithfully Chief Manager Retail Asset Branch Hyderabad. BANK OF MAHARASHTRA Retail Asset Branch, Hyderabad NOTE ON PROPOSAL (Advance under our Mahabank Vehicle Loan Scheme for public in general) Branch Applicant Pan Card Address (Residential) Proposal received from Kothaguda branch Mr. Talasila Sunil Kumar ACDPT2522M B – 22, Journalist Colony, Jubilee Hills, Hyderabad, Andhra Pradesh. Land line : 23540127, Mobile No: 9963030003 29.11.1975 35 years Salaried working in Satyam Computer Services Limited(Mahindra Satyam) as a Sub Band T-2 Mahindra Satyam Info city, Unit-12, Plot No: 35 & 36, Hi-tech City Layout, Survey No:64, Madhapur , Hyderabad – 500081, Andhra Pradesh. 5 years i.e. from the year 2005 onwards as mentioned in the vehicle loan application

Phone No. Date of birth Age (Completed years) Business / Activity Address (Office)

Since when in business / Service

Guarantor Pan Card Address (Residential)

Mr. Atluri Ravindra Prasad s/o.Devendra Prasad ABLPA3550H 405, Padmavathi Villa, A.S.Raju Nagar, Kukatpally, Hyderabad, Pin – 500 072. Andhra Pradesh. 17.05.1953 58 Years Salaried working as Sr.Vice President – Prasad & Co (pw)
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Date of birth Age (Completed years) Business / Activity

INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA ltd6-3-871, Greenland?s Road, Begumpet, Hyd 500016. Prasad & Company(Project Works) Limited, 6-3-871, Snehalata, Greenland?s, Begumpet, Hyderabad – 500 015.Andhra Pradesh

Address (Office)

KYC norms

Pre-sanction verification & due diligence Quotation Details

Complied. Applicant is maintaining SB a/c no: 68000505711 & Housing loan account NO: 60040819424 & Rs.5000/ of Mahalaxmi deposit account No: 60044075252 with our Kothaguda Br. Kothaguda Branch has to fulfill the KYC norms of Guarantor. To be done by the branch before and after disbursement of loan Quotation is received from “Green Honda Kapil Motors Pvt Ltd Hyd. As per the Quotation total on-road cost of the vehicle is Rs 10, 00,000/-. And the proposed vehicle is Honda City (VMT ) Applicant is having Saving account with our Kothaguda branch bearing A/c no: 68000505711 & also housing loan account No: 60040819424 and the balance as on 22.06.2011 is 23.86 lacks. The housing loan account is showing over dues of Rs.37, 217/-in CBS Banks 24 Software. The Applicant has availed a housing loan of Rs.24.00 lakhs with our kothaguda branch and the repayment is regular as per the recommendations made by the branch manager. But the housing loan account is having over dues of Rs.37, 217/-. As per CBS banks24 software data, the repayment should start from 19.03.2010 i.e. 15 installments x22, 000=3, 30,000/-.has to come by 31.05.2011. As per the statement of account, Rs, 2, 29,873/- had come as repayment. The branch manager informed orally that the data fed in the CBS is wrong and as per the original sanction letter, there are no over dues as on date. The branch has to correct the data in CBS Banks 24 as per the original sanction letter. No over dues.

Existing credit facility

Remarks

CIBIL Reports

Gross salary of last month X 18 times

Income Eligibility Rs 90,668 X 18 = Rs 16,32,024/-

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Gross Monthly Salary Deductions: 1. Salary deductions 2. EMI of other loans ( HL from BOM ) 3. EMI of Proposed loan Total Deductions Percentage of deductions to gross salary Rs. 90,668/Rs 10,086/Rs 22,000/Rs 16,450/Rs. 48,536/53.53%

Total deductions including proposed loan installments come to 53.53%, which is within the norms of the scheme i.e. 60%. Delegated powers: Proposal falls within the sanctioning powers of Chief Manager, RAB, Hyderabad. Sanction: In view of the above, the proposal is sanctioned as below; Facility In the name of Amount Purpose Security Guarantor Margin Rate of Interest Vehicle Loan- 4 wheeler Mr. Talasila Sunil Kumar. Rs. 5,00,000/-( Rs. Five lackhs only) Purchase of a new 4-wheeler vehicle i.e. Honda City (VMT) costing Rs.10.00 lacs Hypothecation of vehicle to be purchased costing Rs.10,00,000/Mr. Atluri Ravindra Prasad s/o.Devendra Prasad 50.00% in our favour. Floating rate linked to Base rate. Base Rate + 1.75% i.e. 10.00 %+ 1.25%= 11.25% p.a with monthly rests. Base Rate subject to change. As per C O guidelines. Equated monthly installment of Rs. 16,450/- to commence from the next month of disbursement of the loan & repayment for 36 months. Branch should obtain and maintain sufficient number of PDCs Any charges other than interest such as insurance etc. should be recovered immediately as and when incurred / applied, separately, in addition to the EMI.

Processing Fee Repayment

Other terms and conditions forming part of sanction: 1 Receipt of payment has to be obtained by branch, after disbursement and the same be kept with us.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 2 For recovery of EMI, post dated cheques are obtained as per CO guidelines. 3 Unconditional acceptance from the borrower and guarantor for all the terms and conditions of sanction should be obtained. 4 Disbursement should be effected by way of direct payment to the dealer / supplier by pay slip / DD, after receipt of the margin from the applicant. 5 Blank TTO forms in duplicate duly signed by the borrower are obtained. 6 Registration of the vehicle under hypothecation agreement in favor of the Bank is done with the RTO concerned. Copy of the Registration Certificate showing Bank?s charge thereon is obtained in due course. 7 Comprehensive insurance policy of the vehicle under bank clause in our favor be obtained & kept on record. 8 Applicant should submit an undertaking to the effect that the vehicle purchased will not be sold during the currency of the loan. 9 Documents should be obtained as per C.O. guidelines. 10 All other terms and conditions as applicable under the Scheme will apply. 12 Housing loan account of the applicant i.e. account No: 60040819424 data in the CBS has to be corrected as per the original sanction letter. 13 CRR for this account to be done by the branch. 14 Branch has to comply with all KYC norms.

Yours faithfully, Chief Manager Retail Asset Branch Hyderabad CHARACTERISTICS OF RETAIL LOANS

-

All these Retail Loans are considered as Fund-based Credit Facilities. They are also known as Term Loan It is an arrangement wherein the credit facility is sanctioned to a borrower for a fixed period but repayable in installments. Once the loan amount is disbursed in full no subsequent debit is to be allowed except by way of interest, insurance charges, DICGC guarantee fees or expenses incurred for protection of the security charged to the bank etc. interest is charged on the amount outstanding from time to time. Interest chargeable is worked out on daily products and applied on quarterly basis/half yearly basis.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA As there is no possibility of a loan account showing credit balance or fluctuating debit balance unlike the operative cash credit account, the operational cost of maintenance of loan account is lower as compared to cash credit account. However, the period for which such loans are considered is longer (ranging from five to seven years)

ADVANTAGES OF RETAIL LOANS Better yield and improved bottom line Risk calculation and NPA perception Builds customer base Helps economic revival of the nation through increased production activity Improves lifestyle and fulfills aspirations of the people through affordable credit. Innovative product development Minimum marketing efforts in a demand-driven economy Risk weight in certain segments like housing loan

BORROWER AND CONFIDENTIAL REPORT - Borrower Selection Bank should have personal knowledge about the borrower/s and their business. As a condition precedent to any advances we should make discreet enquiries about the position and status of the borrower, security offered and repayment proposed etc. Care should be exercised in selection of borrower and advances are to be sanctioned / recommended for borrowers, whose integrity, reputation, capacity to conduct the business and credit-worthiness are established to our satisfaction.

Three Cs: Character, Capacity and Capital are the basic principles for
consideration of an advance. The character of a borrower indicates his intention to repay the advances and his capital and capacity indicate his ability to repay. To sum up integrity of the borrower should be unquestionable. If the borrower?s integrity is questionable (doubtful) Bank should refrain from sanctioning credit facility/is even if a collateral security is offered. Any amount of security cannot substitute integrity of a borrower. The ability of a borrower to utilize the credit facility sanctioned by the Bank Profitably and to repay the same with interest within a reasonable period needs to be looked into. Likewise Bank should enquire into the financial position of the borrower. The lending should be in proportion to the borrower?s own resources. - Banking relations
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA We may ordinarily recommend/sanction credit facilities only to applicants who agree to bank with us exclusively and that too with one branch unless the borrower has offices at different places and his business warrants maintaining accounts with more than one branch. A number of complications viz. Double financing, kite flying etc. arise when borrower deals with more than one branch/bank and hence such precaution is necessary. - Confidential Report A) A confidential report of the borrower and/or guarantor needs to be scrutinized carefully. Scrutiny should lead to some firm conclusions. Information furnished by the borrower/guarantor needs to be independently verified. A conservative estimate of the means of the borrower/guarantor should be formed in order to determine the extent to which they may be considered creditworthy. If these borrowers/guarantors are banking with other banks confidential opinion from all such banks should be obtained when they propose to switch over to our bank to their existing bankers. B) Detailed scrutiny of all such repots compiled and/or collected need to be made by managers to ascertain whether there is a significant variation in net worth of borrowers/guarantors under the review period. Adverse features noticed during annual review should be communicated to the controlling office/central office to enable them to suggest remedial measures to be initiated. However, it should be ensured by the Branch while compiling/collecting such reports or taking annual review of such report/s that it exercises all possible tact and discretion to avoid inconvenience to good customers of long standing while calling for elaborate details. Our form No.157 in respect of collection of information from the borrower and the guarantor should be got filled in and his latest income tax /wealth tax returns/assessment orders should be perused all Personal information forms should be updated on yearly basis.

RISK MANAGEMENT SYSTEMS IN BANKS In the process of globalization and financial disintermediation, banks are now forced with the prospect of facing a wide variety of risks, viz. credit, interest Rate, Forex, Liquidity, legal Regulator, and Reputational, operational and so on. These risks have assumed significance, as the ability to identify measure, monitor and control the overall level of risks have become crucial to the long-term viability and perspective of the banks. Recognizing the significance of these risks as well as the need for their effective management, RBI had issued risk management guidelines in October 1999 for implementation of Risk Management Systems in banks. The RBI guidelines broadly cover the management of
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA credit, market and operational risks and, together with the earlier guidelines on asset liability Management, are to serve as benchmarks for the establishment of an integrated Rise Management System, which is to be operationalised by March 2001. - What is risk Management all about? The broad parameters of a risk management function should encompass: i. Organizational structure ii. Comprehensive risk management approach iii. Broad approved risk management policies iv. Board approved risk management policies v. Strong M.I.S vi. Well-defined procedures and a comprehensive risk reporting framework. vii. Separate risk management framework independent od operational departments. viii. Periodical review and evaluation. The RBI guidelines focus upon setting up of departments/committees for Risk Management, development of credit rating models to identify risk and risk pricing, quantification of risk arising out of expected/unexpected losses, estimation of provisioning requirement, calculation of risk capital requirement, monitoring and control of credit portfolio management and Loan Review Mechanism (LRM), risk analysis of investments proposal and database for credit risk modeling.

RISK MANAGEMENT – EFFECTIVE AND PROACTIVE General As of March 2009 all SCBs in India have come under the purview of Basel II capital adequacy norms notified by the Reserve Bank of India. Banks are required to have sufficient capital to cover credit risk, market risk and operational risk. In order to calculate capital requirement under the Basel II norms, banks have to put in place a comprehensive risk management frame work across the organization. The Bank?s approach to risk management is proactive. The primary goal of risk management is to identify, assess the impact of the risks
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA inherent in the business and adopt risk management / mitigating measures, so as to achieve business growth with improved safety, soundness and profitability. The Bank has also formulated a Risk Management Policy on the basis of the guidelines issued by RBI recognizing the need to effectively identify measures, monitor and control various risks in view of their implications on the Bank?s business growth and financial soundness. RISK MANAGEMENT SYSTEMS – CO-ORDINATE AND COMPREHENSIVE Credit Risk The Bank has in place a comprehensive Lending Policy and Loan Review Policy, which prescribe instruments of Credit Risk Management. Various aspects of Credit Risk, like asset concentration, norms for industry exposure, prudential limits and various financial parameters, substantial exposure limits, standards for collaterals, and review of portfolio etc. are spelt out in the above policies in line with the Risk Management Policy prescriptions. The Bank has also set up Credit Approval Grids at various levels and at Treasury & International Banking Division (TIBD) Mumbai to obtain preliminary clearance on credit proposals from the risk perception view point. The Bank has put in place a comprehensive credit policy and internal credit rating system under which all the borrowable accounts with exposure of Rs. 2.00 lakh and above are rated on various parameters. An in-house developed Credit Risk Rating Framework (CRRF) comprising of risk rating models for existing as well as entry level borrowers recognizes the classes of asset as desired under Basel II, like corporate, banks, commercial real estate and retail. The Bank has prescribed bench-mark ratings for entry level exposures. In addition, as credit risk management measures, substantial exposure limits and very large exposure limits have been prescribed in the Risk Management Policy. The Bank has undertaken migration analysis of credit risk rating and estimated probability of default in line with Basel II requirements. Risk based pricing framework has been implemented. Portfolio reviews and industry studies have been undertaken during the year to assess the risks lying in the credit portfolio and to adopt strategies to improve credit quality and reduce the potential adverse impact of concentration of exposure to particular borrowers, sectors or industries. Policy on Stress Testing has been put in place and reports on stress testing results are placed before the appropriate authorities for periodical review. Interest Rate Risk –Dynamic Pricing The Bank has put in place a system for regular review of lending and deposit rates in order to minimize the interest rate risk. The Bank has put in place an Asset Liability Management (ALM) Policy which is reviewed regularly. The Asset Liability Management
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Committee (ALCO) of the Bank reviews the risk on a regular basis. Continuous Risk Management measures are initiated depending upon the movement of interest rates in the market. The movement in the interest rates is closely monitored for appropriate action. Liquidity Risk – prudence adopted The Bank ensures effective management of liquidity through the statements of Structural Liquidity and Short Term Dynamic Liquidity. Models based on behavioral studies of assets and liabilities have been adopted for maturity gap analysis. ALCO reviews the liquidity position on an on-going basis and decides the strategy for funding and deployment. The Bank has put in place a contingency plan for managing liquidity. Investment Risk – Portfolio Quality of Essence The Investment Policy is in place, covering various aspects relating to Investment decisions, operations and monitoring thereof, from a risk management perspective including Minimum rating/quality standard for investment in corporate. Foreign Exchange Risk – Well Controlled The Bank has adequate systems like prudential limits for open foreign exchange position, set limits on the aggregate gap position. Prudential limits like Daylight limit, Overnight limit, Net open overnight position, Stop loss limit, Limit for undertaking swaps/investment/ borrowing overseas, interbank exposure limits are in place. These limits are monitored on daily basis. Operational Risk – Business Continuity at the Core For mitigating and controlling the operational risk, the Bank has a well established internal control system and an administrative structure to formulate, implement and monitor systems and procedures. The Bank has put in place a Business Continuity Planning Policy and Operational Risk Management Policy. The Bank is in the process of collecting data on operational risk. The Bank has also put in place a policy on outsourcing which facilitates using the expertise available in the market and also as a means of risk transfer.

Regulatory Risk The field functionaries will have to adhere to the guidelines of the regulatory authority and it should be made clear that such guidelines / directive are to be adhering to their totality. Legal Risk
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Documentation has to be completed as per sanction terms and law officer wherever prescribed as per the extant system of getting of borrowable accounts with limits of Rs. 50.00 Lakhs and above. Environment Risk Field staff should keep themselves abreast of the changes in the environment. Detailed guidelines on such matters should be adhered to by the field functionaries and exposures monitored even in cases where the limit is available. Deviations/expectations in such exposures should be promptly reported to the component Authority. Reputation Risk The Bank?s business derived from the branches and it is, therefore, the duty of the field staff to maintain the reputation of the bank high by ensuring extremely cordial relations while observing the statutory guidelines scrupulously. Whether the Bank?s reputation would be at stake while entering into a business relationship & transaction should be analyzed while discharging duties. STEPS PROPOSED BY RESERVE BANK OF INDIA IN IMPLEMENTING RISK MANAGEMENT SYSTEM In moving towards the development and implementation of an integrated risk management system, the bank would be required to: 1. Set up Risk Management Committee 2. Set up Credit Policy Committee(CPC) 3. Establish Credit Risk Management Department 4. Achieve integration of ALCO and CPC 5. Designate Portfolio / Relationship Managers 6. Establish Mid Office for Treasury Function 7. Develop a robust MIS 8. Set up approval Grids 9. Arrange for training to core staff.

STATUS OF IMPLEMENTATION OF RBI GUIDELINES IN THE BANKS AND PROGRESS MADE 1. Asset liability management is already in place. 2. Credit appraisal form redesigned so as to cover risk perception is introduced. 3. Credit Rating System duly revised has already been approved by the board. 4. Benchmark ratios finalized for credit analysis have been approved.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA 5. Board approved loan policy is in place. 6. Present lending policy articulates industry wise exposure limits on historical data. A system utilizing scientific methods is in the process of formulization. 7. Setting up of the following has been approved by the Board. a) Credit Risk Management Department b) Risk Management Committee c) Credit Policy Committee d) Mid Office for Treasury Function e) Approval Grid 8. Loan Review Mechanism is in operation.

VIGILANCE – PREVENTION IS THE KEY
Vigilance activity in the Bank is an integral part of the managerial function. Its objective is to efficient administration, where officials can perform the duties without any fear or favour. Vigilance in the Bank is maintaining a proper balance between flexibility and accountability. Preventive Vigilance is the most important aspect of vigilance. With a view to improve functioning at all levels, the Bank has taken the necessary steps as under: 1. In accordance with CVC directives, Vigilance Committees have been formed at the Branches having staff of 20 and more, to review/ monitor sensitive and fraud prone areas and report irregularities observed therein, if any. High value transactions are scrutinized at more than one level. Field staff at branches is periodically educated through internal communication about the „modus operandi? adopted in various cases of fraud and precautions to be taken to avert similar kind of frauds. „Vigilance Awareness Week? is observed in the Bank every year during which period lectures / talks by the eminent personalities are held for the members of staff and general public at branches / offices, emphasizing the need for transparency, ethical conduct and personal integrity besides preventive vigilance. Sessions on „Preventive Vigilance? are included in the training programmes conducted by the Staff College. A „Fraud Risk Management Policy? has been framed and communicated to staff and field functionaries. It is a guide on prevention, detection, classification and reporting of frauds including action to be taken.

2. 3.

4.

5. 6.

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

DATA ANALYSIS AND INTERPRETATIONS
? INVESTMENTS – PROFITABLE GROWTH The Net investment of the Bank stood at Rs.22, 491crore as on 31.03.2011 as against Rs.21, 223 crore as on 31.03.2010, registering a growth of 5.9 percent. 70.00 percent of the portfolio was held under Held to maturity (HTM) Category, 29.27 percent in Available for Sale (AFS) and balance 0.73 percent in Held for Trading (HFT) categories. The net interest income from investment increased by 13.90 percent to Rs.1, 556 crore from Rs.1, 366 crore during the last year.
Particulars Net investment Net interest income from investment Amt in cr. As on 31.03.2012 21,223 1,366 Amt in cr. As on 31.03.2011 18,382 1,556 Total increase 5.90% 13.90%

25000

20000

15000

Net investment Net interest income from investment

10000

5000

0

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INTERNATIONAL SCHOOL OF BUSINESS AND MEDIA, BANGALORE

ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Interpretation: The net interest income from investment increased by 13.90 percent to Rs.1, 556 crore from Rs.1,366 crore during the last year

?

CREDIT DEPLOYMENT The Bank has put in place a lending policy with an emphasis on qualitative credit growth. The policy is fully in conformity with the guidelines issued by RBI and also the Priority Sector lending norms of the Government of India. The policy enunciates the thrust areas, risk factors and also sets out prudential exposure limits to facilitate qualitative expansion of credit. The Gross Advances increased from Rs.29,798 crores as on 31.3.2010 to Rs. 34,817 crores as on 31.3.2011 with a growth of 16.84 per cent. The Credit Deposit Ratio as on 31.3.2012 was 66.63 per cent. Sectorial deployment of credit - diversified risk and balanced growth: The Bank has continued its efforts to support core, manufacturing and priority sectors as well as infrastructure projects, which serve to drive economic growth. This focus of the Bank will continue in future, in the light of the national economic growth priorities.

S No

Credit Deployment

Outstanding as on % to total 31.03.2012 in crores credit outstanding 32.68% 9.88% 14.82% 6.49% 16.75% 9.03% 0.87% 1.59%
64

1 2 3 4 5 6 7 8

Infrastructure, chemicals, petroleum, iron, engineering 15,519.64 Agriculture MSME Other priority sector Retail sector Housing Education Export 4,691.17 7,037.31 3,083.20 7,953.77 4,288.26 412.20 757.29

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9

Commercial Real Estate

808.82

1.71%

Credit Deployment
1 2 3 4 5 6 7 8 9

1.59% 0.87% 9.03% 32.68% 16.75% 1.71%

6.49% 9.88% 14.82%

Interpretation: The Gross Advances increased with a growth of 16.28 per cent. The Credit Deposit Ratio has also increased.
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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA

? RISK CATEGORY WISE COUNTRY EXPOSURE Exposure (net) as at March 31 , 2012 738.5 647.29 90.22 9.28 36.55 10.17 0 1532.01 Provision held as at March 31, 2012 0 0 0 0 0 0 0 0 Exposure (net) as at March 31, 2011 752.19 462.22 101.52 16.18 0 17 0 1349.11 Provision held as at March 31, 2011 0 0 0 0 0 0 0 0

Risk Category Insignificant Low Moderate High Very high Restricted Off-credit Total

2500

2000

1500

1000

500

0

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Interpretation: Since Bank?s net funded exposure for risk category-wise exposure for each country is less than 1% of bank?s total assets as on 31.03.2012; no provision is required in terms of a particular RBI Circular

? NON-PERFORMING ASSETS
? Non-Performing Assets (NPA)

Particulars (i) (ii) (a) (b) (c) (d) (iii) (a) Net NPAs to Net Advances (%) Movement of NPAs (Gross) Opening balance Additions during the year Reductions during the year Closing balance Movement of net NPAs Net opening balance Add: ECGC/DICDC Settled amount Gross: Opening Balance Additions during the year Reductions during the year Gross closing balance Less: ECGC/DICGC Settled amount Net Closing Balance

31.03.2012 1.32 1209.79 699.15 735.24 1173.70 662.43 21.49 683.92 444.47 475.87 652.52 33.57 618.95

31.03.2011 1.64 798.41 875.72 464.34 1209.79 271.90 21.49 293.39 623.39 232.94 683.92 21.49 662.43

(b) (c) (d)

(iv)

Movement of provisions for NPAs (excluding provisions on standard assets) Opening balance (a) Provisions made during the year (b) Write-back of excess provisions (c) Closing balance (d)

519.11 342.01 349.84 511.28

504.31 250.62 235.82 519.11

Interpretations: The ratio of Net NPAs has improved from 1.64 percent to 1.32 percent.
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?

Details of Loan Assets subjected to Restructuring during the year.
(Rs. In crore) SME debt Restructuring 26 20.94 0.64

Category

Particulars No. of Borrowers

CDR 1 44.73 1.29

Others 1628 344.73 12.56

Standard Advances restructured

Amount Outstanding Sacrifice (Diminution in the fair value ) No. of Borrowers

0 0 0

2 14.32 0.16

17 6.66 0.17

Sub-Standard Advances restructured

Amount Outstanding Sacrifice (Diminution in the fair value ) No. of Borrowers

0 0 0

1 1.01 0

4 0.02 0.0012

Doubtful Advances restructured

Amount Outstanding Sacrifice (Diminution in the fair value ) No. of Borrowers

1 44.73 1.29

29 36.27 0.80

1649 351.41 12.73

Total

Amount Outstanding Sacrifice (Diminution in the fair value )

.

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?

Details of financial assets sold to securitization/Reconstruction Company for Asset Reconstruction (Rs. In Crore)
Particulars (i) (ii) No. of accounts Aggregate value(net of provisions) of accounts sold to Securitization / Reconstruction Company Aggregate consideration Additional consideration realized in respect of accounts transferred in earlier years Aggregate gain over net book value 31.03.2012 0 0.00 31.03.2011 0 0.00

(iii) (iv) (v)

0.00 0.00 0.00

0.00 0.00 0.00

Interpretations: Bank has now started the practice of restructuring and reconstructing the NPAs effectively and efficiently.

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?

ASSET PERFORMANCE – IMPROVED The ratio of Gross Advances has improved from 2.57 percent as on 31.03.2008 to 2.29 percent as on 31.03.2009. The ratio of Net NPAs has improved from 0.87 percent at 31.03.2008 to 0.79 percent at 31.03.2009. NPA coverage has also improved from 65.54 percent as on 31.03.2008 to 63.16 percent as on 31.03.2009

Particulars

31.03.2011

31.03.2012

Ratio of NPAs Ratio of Net NPAs NPA coverage

2.57% 0.87% 61.02%

2.47% 1.32% 58.86%

70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Ratio of NPAs Ratio of Net NPAs NPA coverage

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Interpretations: The ratio of Gross Advances has improved 2.47 percent to 2.57 percent and the ratio of Net NPAs has improved from 1.32 percent to 0.87 percent. NPA coverage has also improved from 58.86 percent 61.02 percent ?

NET NPA comparison of 4 years:

Years 2008-09 2009-10 2010-11 2011-12

Net NPA (%) 0.87% 0.79% 1.64% 1.32%

Net NPA(%)
1.8 1.6 1.4 1.2 1 Net NPA(%) 0.8 0.6 0.4 0.2 0

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Interpretation: By observing the above data we can analyze that the NPA?s are increased in the year 201011, but in the year 2011-12 have decreased and it is the positive result the bank.

? BRANCH NETWORK AND EXPANSION During the year, the Bank opened 83 new branches. As on 31.03.2012, the total branch network comprised of 1536 branches spread over 24 states and 2 union territories. The branch network includes specialized branches of foreign exchange, government business, and treasury & international banking, industrial finance, SME, hi-tech agriculture, pension payment; pension processing, retail credit, Self Help Group and asset recovery. Area wise classification of branches as on 31.03.2012 is given in the table below:

S.no. 1 2 3 4

Classification Rural Semi-Urban Urban Metropolitan Total

As On 31.03.11 526 266 281 380 1453

As On 31.03.12 538 293 301 404 1530

1600 1400 1200 1000 800 600 400 200 0 Rural Semi-Urban Urban Metropolitan Total

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Interpretation: During the year, the Bank opened 83 new branches. As on 31.03.2012, the total branch network comprised of 1536 branches spread over 24 states and 2 union territories. And like this it is continuously expanding its network in allover India

? INCOME, EXPENDITURE AND PROFITABILITY ? Income
Incomes Interest on bills Income on investments Total interest income Non-interest income Total income Interest on borrowings
7000 6000 5000 4000 3000 2000 1000 0 Interest on Income on bills investments Total interest Non-interest income Total income income

2010-2011 3369.63 1297.9 4735.56 591.24 5326.8 256.25

2011-2012 4006.14 1520.3 5563.09 530.86 6093.95 311.94

Variations (%) 18.89 17.02 17.47 10.21 14.4 21.73

Interest on borrowings

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Interpretations: The income factors of the bank has grown in a very positive and in a very significant manner as compare to previous year and this indicates the sound health of the bank.

? Expenditure
Expenses Interest on deposits Interest expenditure Staff expenses Non-staff expenses Total non-interest expenses Total operating expenses 2010-2011 3,183.06 3439.31 603.2 417.45 1072.95 4,512.26 2011-2012 3282.75 3596.69 661.39 487.14 1644.22 5238.91 Variations (%) 3.13 4.52 12.96 16.69 53.24 16.1

6,000.00

5,000.00

4,000.00

3,000.00

2,000.00

1,000.00

0.00 Interest on deposits Interest expenditure Staff expenses Non-staff expenses Total noninterest expenses Total operating expenses

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ANALYSIS OF RETAIL CREDIT OPERATIONS IN BANK OF MAHARASHTRA Interpretations: Due to the very high competition and in order to capture more and more market share, the bank had to incur more expenses to make its facilities more attractive and more worthy so that the bank can retain its customer and it also helps in acquiring new customers

? Profitability
Profitability Operating Profit Provisions And Contingencies Net Profit
900 800 700 600 500 Operating Profit 400 300 200 100 0 -100 Provisions And Contingencies Net Profit

2010-2011 814.55 374.97 439.58

2011-2012 855.03 524.64 330.39

Variations (%) 4.97 39.91 -24.84

Interpretation: Above figure shows that there is a positive bank?s profitability but it has been decreased because this year there is an increase in the provisions and contingencies
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CHAPTER – IV
? Findings ? Suggestions / Recommendations

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? FINDINGS
1.
In today?s era of heavy competition and the fight to sustain in the market, the bank had to incur more expenses to make its facilities more attractive and more worthy so that the bank can retain its customer and it also helps in acquiring new customers which will not only increase the income of the bank but also leads to capture more and more market share.

2.
There is a positive and consistent increase in the bank?s profitability because the bank?s business has increased and the income of the bank has also moved up towards a positive direction because The bank has started capturing more and more market share.

3.
The Net investment of the Bank stood at Rs.22, 491crore as on 31.03.2012 as against Rs.21, 223 cores as on 31.03.2011, registering a growth of 5.9 percent. The net interest income from investment increased by 13.90 percent to Rs.1, 556 crore from Rs.1, 366 crore during the last year.

4.
The ratio of Gross Advances has improved from 2.57 percent to 2.29 percent. The ratio of Net NPAs has improved from 0.87 percent at 31.03.2010 to 0.79 percent. NPA coverage has also improved from 65.54 percent to 63.16 percent. The asset performance has significantly changed and it has not changed but also improved in a positive way.

5.
The investment of the bank is also proved to be a significant source of income because the net income from investment has made a large contribution to the profit of the bank

6.
While financing the various segments of the economy, the Bank has endeavored to maintain a diversified credit portfolio, with a view to ensuring credit-dispersion across sectors. This will minimize the risk and ultimately increase the profit of the bank.

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? SUGGESTIONS / RECOMMENDATIONS
? The data in the tables have clearly shown that how the Bank of Maharashtra has consistently increased its profit by managing its credit but the bank needs to deploy its credit in a more diversified manner which will minimize the risk of losses and also increase the profitability of the bank. ? The overall inference from the table and Chart is that the Retail Financing of Bank of Maharashtra is healthy as compare to other nationalized banks. But it needs to be brought up in order to sustain the financial position of the bank. The Housing and Education Loan must be increased to more than 30 per cent while other loan schemes can also be amended. ? The NPAs are reducing in a very positive way which is the result of avoiding high-risk lending and high monitoring of the credit disbursed. The bank needs to study and analyze from its past losses because it will help in future lending by avoiding high risk proposals and ultimately let the bank to grow more efficiently and effectively. ? Loan products are the ideal Products for the bank to ensure the profitability and therefore, the bank should continuously adapt itself to the changed situation in search of new markets and to provide new attractive schemes and services for the existing customers to retain its market share and at the very same time acquire new customers to expand its market share. ? Efforts are to be oriented towards verifying and processing the loan request. In case of deposits, an added advantage available to the bank is to improve clientele base but in case of borrowings such an advantage does not exist. So the bank must work out some effective strategies for their Loan Products in order to make the clientele base for borrowings. ? The increased number of deposit customers and the increased number of individual membership provide a comfortable clientele base for the bank to choose good borrowers to whom the bank can provide credit facilities. Good borrowers with integrity are as important to the bank as the depositors.

? Raising individual membership, mobilizing more low-cost deposits and avoiding highrisk borrowings are the strategies which could be followed by the bank to improve its efficiency, market share, productivity and profitability.
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BIBLIOGRAPHY
Name of Book/Site
Bank Credit Management Promotion Examination

Author
Dr.G.Vijayaragavan Bank of Maharashtra

Publication
Himalaya Publication Bank of Maharashtra

www.iibf.co.in www.iba.org www.rbi.org www.bankofmaharashtra.in www.financial.indiamart.com http://www.business-standard.com/india/news/bankmaharashtra-banksretail-creditgrowth-in-up/421501/ retail crtedit http://www.bankofmaharashtra.in/press/fy_2010_11.pdf 2010-2011
http://www.bseindia.com/BSEdata/ipo_downloads/BOM%20%20Information%20Memorandum%20Series%20V.pdf about bank

http://www.scribd.com/doc/8817767/A-REPORT-ON-NPA-IN-BANKING 52 http://www.scribd.com/doc/27172638/Management-Research-Project-on-NPA http://www.bankofmaharashtra.in/downdocs/Audited_Financial_2011.pdf

Annual Report:
? Bank of Maharashtra

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ANNEXURE
ATM GOI RBI NPA MSME NP HTM HFT AFS CVC KYC MGB RRB LIC SLBC SMES NBC RDC GMBVM MARDEF NGO CBS IPO METCO STP NEFT RTGS MSETI TOLIC NABARD EDPS PMRY SGSY SJSRY MIS LRM CPC ALM ALCO TIBD CRRF TIBD CRRF Automated Teller Machine Government Of India Reserve Bank Of India Non-Performing Assets Micro, Small And Medium Enterprises Net Profit Held To Maturity Held For Trading Available For Sale Core Vigilance Committee Know Your Customer Marthwada Gramin Bank Regional Rural Bank Life Insurance Corporation State Level Bankers Committee Small And Medium Enterprises Net Bank Credit Rural Development Centres Gramin Mahila Va Balak Vikas Mandal Maha Bank Agricultural Research And Rural Development Foundation Non-Government Organizations Core Banking Solutions Initial Public Offer Maharashtra Executor And Trustee Company Straight Through Processing National Electronic Fund Transfer Real Time Gross Settlement Mahabank Self Employment Training Institutes Town Official Language Implementation Committee National Bank For Agricultural And Rural Development Entrepreneurship Development Programmes Prime Minister?s Rozgar Yojana Swarna Jayanti Gram Swarojgar Yojana Swarna Jayanti Shahari Rozgar Yojana Management Information System Loan Review Mechanism Credit Policy Committee Asset Liability Management Asset Liability Management Committee Treasury & International Banking Division Credit Risk Rating Framework Treasury & International Banking Division Credit Risk Rating Framework

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