ACKNOWLEDGEMENT
It gives me immense pleasure to present this report a written testimony of a very
rewarding practical experience, I have undergone .I must utilize this opportunity to
express my heartfelt gratitude to all those who helped me in making this project work a
success.
I am greatly in debited to my friends, teachers for taking great pains in giving me
guidance.
0 | P a g e
DECLARATION
I hereby declare that this final project report titled !ommercial "oan# is the result of my
own effort in the training which I did as a part of the curriculum, for the fulfillment of
$%&'() *+ $%,%-($(,' &'./0 1$$&2 degree. It has not been duplicated from
any other earlier works and all information provided in this report is genuine.
'his report is submitted for the partial fulfillment of $$& program. It has not been
submitted to any other university or for any other degree.
ABID A AZIZ PARKAR
Roll no:39
MMS V Semeste
3 | P a g e
DE!INITION o" #B$n%#
%n establishment authorised by a government to accept deposits,pay interest,clear
!hecks,make loans, act as an intermediary in financial transactions, and provide
*ther financial services to its customers.
Me$n&n' o" ($n%
% bank is a financial institution which deals with deposits and advances and other )elated
services. It receives money from those who want to save in the form of deposits and it
lends money to those who need it.
4 | P a g e
INTROD)CTION TO T*E TOPIC
INTROD)CTION TO COMMERCIAL LOAN
'here are many financial institutes which are providing many loans and provide
many financial schemes in which commercial loans play very important role. +inancial
schemes development involves raising the socio economic status o the population on
sustainable bails through optimum utilization of resources, both human and society. 'he
essence of financial schemes like commercial loan is to make life easy people have many
dreams regarding their comfort, but for that sometime they don5t have enough money.
'hen these banks help them to come out from the problem. !ommercial loans are
of two types, they are given for either manufacturing purpose or trading purpose but both
types of loan is income generated it is also called business loan. It is given for the setup
of the industry and for the growth and development of the country. 6uman needs can be
fulfilled by these types of loan.
'he commercial banking structure in India consists of7
• &cheduled !ommercial 8anks in India
• .nscheduled 8anks in India
9 | P a g e
&cheduled 8anks in India constitute those banks which have been included in the
&econd &chedule of )eserve 8ank of India 1)8I2 %ct, 3:9;. )8I in turn includes only
those banks in this schedule which satisfy the criteria laid down vide section ;4 1<2 1a2 of
the %ct.
%s on 90th =une, 3:::, there were 900 scheduled banks in India having a total
network of <;,:3> branches. 'he scheduled commercial banks in India comprise of &tate
bank of India and its associates 1>2, nationalized banks 13:2, foreign banks 1;?2, private
sector banks 1942, co@operative banks and regional rural banks.
A&cheduled banks in IndiaA means the &tate 8ank of India constituted under the
&tate 8ank of India %ct, 3:?? 149 of 3:??2, a subsidiary bank as defined in the &tate
8ank of India 1&ubsidiary 8anks2 %ct, 3:?: 19> of 3:?:2, a corresponding new bank
constituted under section 9 of the 8anking !ompanies 1%cBuisition and 'ransfer of
.ndertakings2 %ct, 3:C0 1? of 3:C02, or under section 9 of the 8anking !ompanies
1%cBuisition and 'ransfer of .ndertakings2 %ct, 3:>0 1;0 of 3:>02, or any other bank
being a bank included in the &econd &chedule to the )eserve 8ank of India %ct, 3:9; 14
of 3:9;2.
A,on@scheduled bank in IndiaA means a banking company as defined in clause 1c2
of section ? of the 8anking )egulation %ct, 3:;: 130 of 3:;:2, which is not a scheduled
bankA.
; | P a g e
'he following are the &cheduled 8anks in India 1Public &ector27
• &tate 8ank of India
• Indian *verseas 8ank
• Indian 8ank
• *riental 8ank of !ommerce
• Punjab ,ational 8ank
• Punjab and &ind 8ank
'he following are the &cheduled 8anks in India 1Private &ector27
• I,- Dysya 8ank "td
• %xis 8ank "td
• IndusInd 8ank "td
• I!I!I 8ank "td
• &outh Indian 8ank
? | P a g e
OB+ECTIVES O! COMMERCIAL LOAN
3. !hanging the attitude of people towards commercial loan.
4. 'o generate income through trading and manufacturing
9. Promotion of industries and democratic leadership at the grass roots level by setting up
local community.
;. Provision of basic needs and providing employment to various people with earning
Profit.
?. Improving the infrastructural facilities in village urban areas etc.
< | P a g e
C,$$-te&st&-s . !e$t/es o" $ B$n%:0
3. De$l&n' &n Mone1:0
8ank is a financial institution which deals with other peopleEs money i.e.
money given by depositors.
23 In4&5&4/$l . !&m . Com6$n1:0
% bank may be a person, firm or a company. % banking company means a
company which is in the business of banking.
33 A--e6t$n-e o" De6os&t:0
% bank accepts money from the people in the form of deposits which are
usually repayable on demand or after the expiry of a fixed period. It gives
safety to the deposits of its customers. It also acts as a custodian of funds of
its customers.
73 G&5&n' A45$n-es:0
% bank lends out money in the form of loans to those who reBuire it for
different purposes.
C | P a g e
83 P$1ment $n4 W&t,4$9$l:0
% bank provides easy payment and withdrawal facility to its customers in the
form of cheBues and drafts, It also brings bank money in circulation. 'his
money is in the form of cheBues, drafts, etc.
:3 A'en-1 $n4 )t&l&t1 Se5&-es:0
% bank provides various banking facilities to its customers. 'hey include
general utility services and agency services.
;3 Po"&t $n4 Se5&-e O&ent$t&on:0
% bank is a profit seeking institution having service oriented approach.
<3 E5e &n-e$s&n' !/n-t&ons:0
8anking is an evolutionary concept. 'here is continuous expansion and
diversification as regards the functions, services and activities of a bank.
93 Conne-t&n' L&n%:0
% bank acts as a connecting link between borrowers and lenders of money.
8anks collect money from those who have surplus money and give the same
to those who are in need of money.
=>3 B$n%&n' B/s&ness:0
% bankEs main activity should be to do business of banking which should not
be subsidiary to any other business.
> | P a g e
==3 N$me I4ent&t1:0
% bank should always add the word AbankA to its name to enable people to
know that it is a bank and that it is dealing in money.
!)NCTIONS O! COMMERCIAL BANKS
'he functions of commercial banks are divided into two categories7
3. Primary functions
4. &econdary functions including agency functions.
&? P&m$1 "/n-t&ons:
'he primary functions of a commercial bank include7
a2 %ccepting depositsF and
b2 -ranting loans and advancesF
$? A--e6t&n' 4e6os&ts
'he most important activity of a commercial bank is to mobilize deposits from the
public. People who have surplus income and savings find it convenient to deposit the
amounts with banks.
/epending upon the nature of deposits, funds deposited with bank also earn
interest. 'hus, deposits with the bank grow along with the interest earned. If the rate of
interest is higher, public are motivated to deposit more funds with the bank.
(? G$nt o" lo$ns $n4 $45$n-es
: | P a g e
'he second important function of a commercial bank is to grant loans and
advances. &uch loans and advances are given to members of the public and to the
business community at a higher rate of interest than allowed by banks on various deposit
accounts.
'he rate of interest charged on loans and advances varies depending upon the
purpose, period and the mode of repayment.
'he difference between the rate of interest allowed on deposits and the rate charged on
the "oans is the main source of a bank5s income.
&? Lo$ns
% loan is granted for a specific time period. -enerally, commercial banks grant
short@term loans. 8ut term loans, that is, loan for more than a year, may also be granted.
'he borrower may withdraw the entire amount in lump sum in installments.
6owever, interest is charged on the full amount of loan. "oans are generally granted
against the security of certain assets. % loan may be repaid either in lump sum or in
installments.
&&? A45$n-es
%n advance is a credit facility provided by the bank to its customers. It differs
from loan in the sense that loans may be granted for longer period, but advances are
normally granted for a short period of time. +urther the purpose of granting advances is to
meet the day to day reBuirements of business. 'he rate of interest charged on advances
varies from bank to bank. Interest is charged only on the amount withdrawn and not on
the sanctioned amount.
Mo4es o" s,ot0tem "&n$n-&$l $ss&st$n-e
30 | P a g e
8anks grant short@term financial assistance by way of cash credit, overdraft and
bill discounting.
$? C$s, Ce4&t
!ash credit is an arrangement whereby the bank allows the borrower to draw
amounts up to a specified limit. 'he amount is credited to the account of the customer.
'he customer can withdraw this amount as and when he reBuires. Interest is charged on
the amount actually withdrawn. !ash !redit is granted as per agreed terms and conditions
with the customers.
(? O5e4$"t
*verdraft is also a credit facility granted by bank. % customer who has a current
account with the bank is allowed to withdraw more than the amount of credit balance in
his account. It is a temporary arrangement. *verdraft facility with a specified limit is
allowed either on the security of assets, or on personal security, or both.
-? D&s-o/nt&n' o" B&lls
8anks provide short@term finance by discounting bills that is, making payment of
the amount before the due date of the bills after deducting a certain rate of discount. 'he
party gets the funds without waiting for the date of maturity of the bills. In case any bill is
dishonored on the due date, the bank can recover the amount from the customer.
&&? Se-on4$1 "/n-t&ons
8esides the primary functions of accepting deposits and lending money, banks perform a
number of other functions which are called secondary functions. 'hese are as follows @
a2 Issuing letters of credit, traveler5s cheBues, circular notes etc.
33 | P a g e
b2 .ndertaking safe custody of valuables, important documents, and securities by
providing safe deposit vaults or lockersF
c2 Providing customers with facilities of foreign exchange.
d2 'ransferring money from one place to anotherF and from one branch to another branch
of the bank.
e2 &tanding guarantee on behalf of its customers, for making payments for purchase of
goods, machinery, vehicles etc.
f2 !ollecting and supplying business informationF
g2 Issuing demand drafts and pay ordersF and,
h2 Providing reports on the credit worthiness of customers.
APPROAC*ES TO LOAN
India is predominantly a rural country but prospects of commercial loan share founded
everywhere no matter in rural or urban estate attitude of people must be optimistic some
approaches that are being followed by banks providing commercial loans are as follows7
INDIVID)AL APPROAC*
'hough many development program were initiated during per independence period but in
3:>0s development of many industries was come into existence for that many people was
taken money from various banks the individual approach behind this that one individual
took initiative this approach was helped in creating infrastructure for business
development.
COMPRE*ENSIVE APPROAC*
34 | P a g e
'his is the approach which is known for the community development this is the major
milestone towards commercial loans. It was Buite board and comprehensive in nature it
covered all the facts providing employment training social welfare education etc.
INSTIT)TIONAL APPROAC*
!ommercial loans come inexistence with the objective to generate income it follow
institutional approach because it wants adeBuate participation of people.
INTENSIVE APPROAC*
%pproach was intensive because all the loans follow the aspects of improvement essential
for rapid increase in commercialization or business growth
TARGET GRO)P APPROAC*
In this type of approach banks target those people who really interested to generate
income and who have prospects to earn profit it ensure the benefits of development reach
directly to the people work in there firm.
AREA DEVELOPMENT APPROAC*
*ne of the most popular objective is area development by giving this type of
commercial loan it is insured that there should be development of area where firm or
manufacturing or trading are being done.
39 | P a g e
ROLE O! BANKS PROVIDING COMMERCIAL LOANS
'he banking sector in India has overgrown diversified and overstretched like many of the
sprawling big cities in India it has tried to accommodate all types of banking activities
especially after the industrial revolution. $ajor slice banking was acBuired by the state in
its attempts to cover the commanding heights of the economy.It is the public sector bank
if we talk about state bank of India who is the largest bank known for providing loans in
various areas commercial loans are one of them besides this many private banking are
also come into existence to provide many loans here we will discuss commercial loans
only.
'he rural development planning are absence of total approach at the strategy level lack of
coordinated planning at the programmed level and weak planning components of
individual programmers.!ommercial loans programming or business is not successful
without adeBuate regional planning strong central coordination effective local
organization and people active participation at the planning and implementation
stage.Industrial development can be possible if only there is proper balance between
services oriented programmed and development oriented programmed and self centered
programmed. 'he importance attached to service oriented schemes besides this, has also
resulted in the wastage of precious resources.
3; | P a g e
PRO!ILE O! STATE BANK O! INDIA
&tate bank of India is the largest bank in terms of profits, assets, deposits and employees.
it has a network of over :000 branches in India and ?3 foreign offices in ?4 countries, the
bank command about 3G?th of the total deposits and loans in all scheduled commercial
banks in the country.
'he origin of &.8.I dates to 3>0< when the bank of !alcutta later called bank of 8engal
was established in 3:43, the bank of 8engal and other banks were amalgamated to form
the empirical bank of India.
'he state bank of India is the largest commercial bank in India in terms of profits, assets,
deposits, branches and employees. %bout ;<H of the bank branches are located in rural
areas 4CH in semi urban areas, and <H and 33H are located in urban and metropolitan
areas respectively.
&8Is funding profile is strong underpinned by its strong retail deposits funding base.
Ihile the banks are facing increasing competition in its metropolitan and urban franchise
it5s extensively branch network and dominant presence in rural and semi urban branches
would held it in good stead &8Is strong franchise gives it access to a steady source of
stable retail funds which constitute over C0H of the total resources as on 400; the bank
has pioneered innovative measures and contributed significantly to the growth of Indian
3? | P a g e
economy.
SPECIAL !EAT)RES O! STATE BANK O! INDIA
3. 'here schemes meet the customer varied needs.
4. ,ominal services processing charges.
9. "oan at competitive rates.
;. Interest charges on reducing balance only instead of annual balance.
?. Interest is compounded Buarterly risk.
'he large size of the dominant market position of the bank has helped it to build up a
loan portfolio which is well diversified across industries as well as region thus cushioning
the impact of problems in certain industries moreover the increased focus on its top
clients and the size of relationship banking approach subseBuent to the formation of the
corporate accounting groups 1!%-2 has helped the bank in retaining its top clients.
PRO!ILE O! I3C3I3C3I
I!I!I 8ank "imited provides banking products and financial services to corporate and
retail customers primarily in India. It offers a range of products and services in the areas
of commercial banking, investment banking, and insurance. 'he company5s deposit
products include time deposits, savings accounts, current accounts, payroll accounts, and
accounts for small businesses, nonresident Indian accounts, and certificates of deposit.
3< | P a g e
'he company5s loan portfolio comprises home loans, automobile loans, and two wheeler
loans, commercial vehicle loans, construction eBuipment and farm eBuipment loans,
personal loans, credit cards, loans against time deposits, loans against shares, leasing and
related loans, consumer loans, project and corporate finance, and venture capital
finance.It also offers private banking, debit cards, and agricultural financing products, as
well as distributes third party investment products and issues unsecured redeemable
bonds. +urther, the company has interests in the software development, software services,
insurance, and business process outsourcing businesses. I!I!I 8ank operates a network
of approximately ?C9 branches and 4,000 automated teller machines. It also has
operations in the .nited &tates, the .nited Jingdom, !anada, )ussia, &ingapore,
8ahrain, the Peoples5 )epublic of !hina, the .nited %rab (mirates, &outh %frica, &ri
"anka, and 8angladesh. I!I!I 8ank was founded in 3:?? and is headBuartered
in$umbai,India.
BENE!ITS O! I3C3I3C3I
3. ,o mortgage no security.
4. +aster sanction.
9. "esser documentation.
;. *ne stop solution with a bouBuet of products.
3C | P a g e
?. 'he loan provided in the form of overdrafts letter of credit or bank guarantee and you
can borrow up to maximum of )s. 4? "akhs.
<. %ttractive finance charge floating interest rate
C. +lexible payment schedule part payment pre payment.
PROBLEMS !ACED B@ BANKS
3. 'he Indian socio economic scene is still feudal in nature largely still in the midst of
illiteracy besides this the Indian psyche is deeply entwined with the cultural ethos.
4. !ompounding to this is the problem of nonpayment of loans.
9. 8anks may not find operations economical as sometimes the transaction and follow up
costs are more than the amount of credit.
;. 'he procedures involved in availing bank finance sometimes delay the actual receipt of
the funds the money if receipt of the funds the money if received late may be of no use to
the borrower the next.
T*E C)RRENT RATES O! COMMERCIAL BANKS
3> | P a g e
C)RRENT RATES PROVIDED B@ SBI
3: | P a g e
I,'()(&' )%'(&
6*.&I,- "*%, &!6($(
+or loans .P '* and
inclusive of )s. 3?.00 "acs.
+or loans exceeding )s. 3?.00
"acs.
+ixed )ates for maturity of
maximum 30 years
irrespective of the loan
amount.
'enure 0ears
)evised )ate
H +loating
'enure 0ears
)evised )ate
H +loating
'enure 0ears )evised )ate
.p to ? years 30.?0H .p to ? years 30.C?H .p to ? years 34.?0H
%bove ? K
up to 3?
years
33.00H
%bove ? K up
to 3? years
33.4?H
%bove ? K up
to 3? years
34.?0H
%bove 3? K
up to 40
years
33.?0H
%bove 3? K
up to 40 years
33.C?H
,ote7 Interest rate 1fixed2 will
be reset at the end of every one
year on the basis of interest
rates prevailing then.
$*)'-%-( "*%,&
)evised )ate +loating )evised )ate +ixed
34.4?H 34.C?H
$*,(0 %-%I,&' &6%)(& K &(!.)I'I(& 1$%&&2 %,/ *'6() &P(!I+I(/
&(!.)I'I(&
"I! G ,&! G JDPs G )8I bonds G .nits.
40 | P a g e
C)RRENT RATES PROVIDED B@ ICICI
ICICI Bank Personal Loan
Introduction
ICICI Bank provides loan at an exciting interest rate with 12-60 months
payack options! "#ick processing$
Overview
Salaried Self Employed
loan Plan Personal Loan Personal Loan
Type Term Loan Term Loan
Amount Min. – Rs 50000
Max. – Rs 1500000
Min. – Rs 50000
Max. – Rs 1500000
Duration Min. – 1 !rs Min. – 1 !rs
"nterest Rate Min. – 1 #
Max. – #
Min. – 1$ #
Max. – $ #
Time Pro%ess & days $ days
Loan for Car from ICICI Bank.
%ew car &ld car
loan type 'erm loan 'erm loan
43 | P a g e
(x-)howroom*&n +oad (x-)howroom (x-)howroom
Loan ,mo#nt 'est comment on amo#nt
-in$ . +s /0000
-ax$ . +s /0
'ime period -in$ . 12 1rs -in$ . 12 1rs
Interest on loan 12$20 3 16 3
'ime to Process Loan 1 days 1 days
Pre4erred
-an#4act#rers
Chevorlet! -ar#ti
Chevrolet! 5at! 6ord!
7onda! 7y#ndai!
-ahindra! -ar#ti!
-ercedes-Ben8!
-its#ishi! )koda! 'ata
-otors! 'oyota
Bar Processing 6ees &rigination Charges
+s 200000 . +s 299999 +s 1900 0$100000001290116 3
+s 000000 . +s
1000000
0 3 0$100000001290116 3
ICICI-Loan Against Securities
44 | P a g e
ICICI ank loan against sec#rities make possile to otain loans against
sec#rities$ 1o# have to do is pledge yo#r sec#rities in 4avor o4 ICICI
ank$ ICICI anks then will grant an overdra4t 4acility on yo#r market
linked investment 4#nds or ond$ 'he val#e is determined y the
sec#rities$
'he ank sanctioned the loan on 4ollowing sec#rities$
)ec#rities Loan ,mo#nt
:emat )hares ;p to 20 Lakhs
-#t#al 4#nds ;p to 20 Lakhs
ins#rance policies 0 Crores
;'I Bonds 0 Crores
<isan =ikas Patra > %ational )aving
Certi5cates
0 Crores
Benefts
1$ ,vail maxim#m amo#nt on yo#r sec#rities
2$ Interest rate will e charged on the only #tili8ed amo#nt$
?$ %o additional sec#rity or g#arantor is re"#ired$
2$ %o prepayment charge$
0$ 22*/ c#stomer care center to know the stat#s o4 yo#r acco#nt$
49 | P a g e
T*E C)RRENT STAT)S O! COMMERCIAL LOANS
'he banking sector in India5s has become an agglomerate of banks big and small public
and private old and new viable and non viable. 'here are remarkable diversities in their
sizes of organizational pattern geographical presence and functional specialization. 'ill
recently there was classification of scheduled banks based on capital base. 'here are
regional banks also there who help people to take loans. 'hey are operating exclusively in
the various areas including rural area opposite to them there are many new banks also
functioning only in the urban and metropolitan centers.In terms of size on one extreme
there are also private sector banks there is omnipresent banks also like state bank of India
with over :000 bravely on the other extreme I.!.I.!.I is the private sector bank providing
commercial loans.
4; | P a g e
4? | P a g e
*ISTORICAL BACK GRO)ND O! BANKS PROVIDING
COMMERCIAL LOANS
In the eighties it may be recalled that there was industrial revolution people will come
forward to setup organization they took initiative to setup firms many entrepreneurs come
forward and took initiative for them these type of banks were very helpful and they help
them by providing commercial loans, with minimum interest charges and to give them
benefits of establishing any firm. "ots of people were and also in present scenario are
taking benefits of commercial loans. 'he reserve bank of India who comes into existence
in 3:9? acBuired a supervisory and development role in department of banking operations
and development. 'he banking sector witnessed the process consolidation for the first
time the number of banking companies achieved success drastically now days.'here was
drastically change in mid nineties before establishing rural banking commercial banking
and cooperative banking was there the objective behind setting up this type of banks
providing commercial loans was to generate income and to help in the growth of
countries economy.!ommercial 8anks in India are broadly categorized into &cheduled
!ommercial 8anks and .nscheduled !ommercial 8anks. 'he &cheduled !ommercial
8anks have been listed under the &econd &chedule of the )eserve 8ank of India %ct,
3:9;. 'he selection measure for listing a bank under the &econd &chedule was provided
in section ;4 1<0 of the )eserve 8ank of India %ct, 3:9;.
A-t&5&t&es o" Comme-&$l B$n%s
'he modern !ommercial 8anks in India cater to the financial needs of different
sectors.'he main functions of the commercial banks comprise7
4< | P a g e
? 'ransfer of funds
? %cceptance of deposits
? *ffering those deposits as loans for the establishment of industries
? Purchase of houses, eBuipments, capital investment purposes etc.
'he banks are allowed to act as trustees. *n account of the knowledge of the financial
market of India the financial companies are attracted towards them act as trustees to
take the responsibility of the security for the financial instrument like a debenture.
'he Indian -overnment presently hires the commercial banks for various purposes like
tax collection and refunds, payment of pensions etc.
4C | P a g e
!INDINGS
? $any lenders from commercial banks have been adversely affected by the
catastrophe brought about by the handing out of residential loans. &ince the
4> | P a g e
balance sheets show poor performances, only a small 4H of the total volume of
commercial loans in 400: is now being done.
? !ommercial banks made the declaration that they had to cut short their
release of commercial loans due to some highly troubled reports.
? It is to be expected that this trend will go on, affecting even those banks
which have survived the crisis.
? +or some people, this could seem like the last chance for commercial bank
loans. If you are not able to close the loans within a :0@340 day period, you
will have to wait for a long period of five years.
4: | P a g e
S)GGESTIONS
? 'hese banks make a periodic review of commercial loan to evaluate,
identification, formulation, release and use of funds.
? 8ank should also try to make procedures more simplified for people
? 'hey should try to see from time to time that application submitted to banks
under commercial loan are dealt promptly
? Invest more in marketing activates so as to impart knowledge among peoples
regarding the availability to the commercial loan
? 'o make procedure transparent enough so as to avoid any fraud and obtaining
people confidence.
? /eveloping a strong infrastructure and transport
90 | P a g e
CONCL)SION
%fter going through my whole study I came to the conclusion that different banks
of India either private or public both provide loans with the objective to generate income.
'hey have many financial schemes regarding commercial load. 'here are many
people that are satisfied with the scheme. 'he procedure of getting loan from these banks
is simple and easy and also costumer friendly. I also came to know that many
industrialist, traders, and new entrepreneur were aware of these schemes.
93 | P a g e
94 | P a g e
doc_349806198.doc
It gives me immense pleasure to present this report a written testimony of a very
rewarding practical experience, I have undergone .I must utilize this opportunity to
express my heartfelt gratitude to all those who helped me in making this project work a
success.
I am greatly in debited to my friends, teachers for taking great pains in giving me
guidance.
0 | P a g e
DECLARATION
I hereby declare that this final project report titled !ommercial "oan# is the result of my
own effort in the training which I did as a part of the curriculum, for the fulfillment of
$%&'() *+ $%,%-($(,' &'./0 1$$&2 degree. It has not been duplicated from
any other earlier works and all information provided in this report is genuine.
'his report is submitted for the partial fulfillment of $$& program. It has not been
submitted to any other university or for any other degree.
ABID A AZIZ PARKAR
Roll no:39
MMS V Semeste
3 | P a g e
DE!INITION o" #B$n%#
%n establishment authorised by a government to accept deposits,pay interest,clear
!hecks,make loans, act as an intermediary in financial transactions, and provide
*ther financial services to its customers.
Me$n&n' o" ($n%
% bank is a financial institution which deals with deposits and advances and other )elated
services. It receives money from those who want to save in the form of deposits and it
lends money to those who need it.
4 | P a g e
INTROD)CTION TO T*E TOPIC
INTROD)CTION TO COMMERCIAL LOAN
'here are many financial institutes which are providing many loans and provide
many financial schemes in which commercial loans play very important role. +inancial
schemes development involves raising the socio economic status o the population on
sustainable bails through optimum utilization of resources, both human and society. 'he
essence of financial schemes like commercial loan is to make life easy people have many
dreams regarding their comfort, but for that sometime they don5t have enough money.
'hen these banks help them to come out from the problem. !ommercial loans are
of two types, they are given for either manufacturing purpose or trading purpose but both
types of loan is income generated it is also called business loan. It is given for the setup
of the industry and for the growth and development of the country. 6uman needs can be
fulfilled by these types of loan.
'he commercial banking structure in India consists of7
• &cheduled !ommercial 8anks in India
• .nscheduled 8anks in India
9 | P a g e
&cheduled 8anks in India constitute those banks which have been included in the
&econd &chedule of )eserve 8ank of India 1)8I2 %ct, 3:9;. )8I in turn includes only
those banks in this schedule which satisfy the criteria laid down vide section ;4 1<2 1a2 of
the %ct.
%s on 90th =une, 3:::, there were 900 scheduled banks in India having a total
network of <;,:3> branches. 'he scheduled commercial banks in India comprise of &tate
bank of India and its associates 1>2, nationalized banks 13:2, foreign banks 1;?2, private
sector banks 1942, co@operative banks and regional rural banks.
A&cheduled banks in IndiaA means the &tate 8ank of India constituted under the
&tate 8ank of India %ct, 3:?? 149 of 3:??2, a subsidiary bank as defined in the &tate
8ank of India 1&ubsidiary 8anks2 %ct, 3:?: 19> of 3:?:2, a corresponding new bank
constituted under section 9 of the 8anking !ompanies 1%cBuisition and 'ransfer of
.ndertakings2 %ct, 3:C0 1? of 3:C02, or under section 9 of the 8anking !ompanies
1%cBuisition and 'ransfer of .ndertakings2 %ct, 3:>0 1;0 of 3:>02, or any other bank
being a bank included in the &econd &chedule to the )eserve 8ank of India %ct, 3:9; 14
of 3:9;2.
A,on@scheduled bank in IndiaA means a banking company as defined in clause 1c2
of section ? of the 8anking )egulation %ct, 3:;: 130 of 3:;:2, which is not a scheduled
bankA.
; | P a g e
'he following are the &cheduled 8anks in India 1Public &ector27
• &tate 8ank of India
• Indian *verseas 8ank
• Indian 8ank
• *riental 8ank of !ommerce
• Punjab ,ational 8ank
• Punjab and &ind 8ank
'he following are the &cheduled 8anks in India 1Private &ector27
• I,- Dysya 8ank "td
• %xis 8ank "td
• IndusInd 8ank "td
• I!I!I 8ank "td
• &outh Indian 8ank
? | P a g e
OB+ECTIVES O! COMMERCIAL LOAN
3. !hanging the attitude of people towards commercial loan.
4. 'o generate income through trading and manufacturing
9. Promotion of industries and democratic leadership at the grass roots level by setting up
local community.
;. Provision of basic needs and providing employment to various people with earning
Profit.
?. Improving the infrastructural facilities in village urban areas etc.
< | P a g e
C,$$-te&st&-s . !e$t/es o" $ B$n%:0
3. De$l&n' &n Mone1:0
8ank is a financial institution which deals with other peopleEs money i.e.
money given by depositors.
23 In4&5&4/$l . !&m . Com6$n1:0
% bank may be a person, firm or a company. % banking company means a
company which is in the business of banking.
33 A--e6t$n-e o" De6os&t:0
% bank accepts money from the people in the form of deposits which are
usually repayable on demand or after the expiry of a fixed period. It gives
safety to the deposits of its customers. It also acts as a custodian of funds of
its customers.
73 G&5&n' A45$n-es:0
% bank lends out money in the form of loans to those who reBuire it for
different purposes.
C | P a g e
83 P$1ment $n4 W&t,4$9$l:0
% bank provides easy payment and withdrawal facility to its customers in the
form of cheBues and drafts, It also brings bank money in circulation. 'his
money is in the form of cheBues, drafts, etc.
:3 A'en-1 $n4 )t&l&t1 Se5&-es:0
% bank provides various banking facilities to its customers. 'hey include
general utility services and agency services.
;3 Po"&t $n4 Se5&-e O&ent$t&on:0
% bank is a profit seeking institution having service oriented approach.
<3 E5e &n-e$s&n' !/n-t&ons:0
8anking is an evolutionary concept. 'here is continuous expansion and
diversification as regards the functions, services and activities of a bank.
93 Conne-t&n' L&n%:0
% bank acts as a connecting link between borrowers and lenders of money.
8anks collect money from those who have surplus money and give the same
to those who are in need of money.
=>3 B$n%&n' B/s&ness:0
% bankEs main activity should be to do business of banking which should not
be subsidiary to any other business.
> | P a g e
==3 N$me I4ent&t1:0
% bank should always add the word AbankA to its name to enable people to
know that it is a bank and that it is dealing in money.
!)NCTIONS O! COMMERCIAL BANKS
'he functions of commercial banks are divided into two categories7
3. Primary functions
4. &econdary functions including agency functions.
&? P&m$1 "/n-t&ons:
'he primary functions of a commercial bank include7
a2 %ccepting depositsF and
b2 -ranting loans and advancesF
$? A--e6t&n' 4e6os&ts
'he most important activity of a commercial bank is to mobilize deposits from the
public. People who have surplus income and savings find it convenient to deposit the
amounts with banks.
/epending upon the nature of deposits, funds deposited with bank also earn
interest. 'hus, deposits with the bank grow along with the interest earned. If the rate of
interest is higher, public are motivated to deposit more funds with the bank.
(? G$nt o" lo$ns $n4 $45$n-es
: | P a g e
'he second important function of a commercial bank is to grant loans and
advances. &uch loans and advances are given to members of the public and to the
business community at a higher rate of interest than allowed by banks on various deposit
accounts.
'he rate of interest charged on loans and advances varies depending upon the
purpose, period and the mode of repayment.
'he difference between the rate of interest allowed on deposits and the rate charged on
the "oans is the main source of a bank5s income.
&? Lo$ns
% loan is granted for a specific time period. -enerally, commercial banks grant
short@term loans. 8ut term loans, that is, loan for more than a year, may also be granted.
'he borrower may withdraw the entire amount in lump sum in installments.
6owever, interest is charged on the full amount of loan. "oans are generally granted
against the security of certain assets. % loan may be repaid either in lump sum or in
installments.
&&? A45$n-es
%n advance is a credit facility provided by the bank to its customers. It differs
from loan in the sense that loans may be granted for longer period, but advances are
normally granted for a short period of time. +urther the purpose of granting advances is to
meet the day to day reBuirements of business. 'he rate of interest charged on advances
varies from bank to bank. Interest is charged only on the amount withdrawn and not on
the sanctioned amount.
Mo4es o" s,ot0tem "&n$n-&$l $ss&st$n-e
30 | P a g e
8anks grant short@term financial assistance by way of cash credit, overdraft and
bill discounting.
$? C$s, Ce4&t
!ash credit is an arrangement whereby the bank allows the borrower to draw
amounts up to a specified limit. 'he amount is credited to the account of the customer.
'he customer can withdraw this amount as and when he reBuires. Interest is charged on
the amount actually withdrawn. !ash !redit is granted as per agreed terms and conditions
with the customers.
(? O5e4$"t
*verdraft is also a credit facility granted by bank. % customer who has a current
account with the bank is allowed to withdraw more than the amount of credit balance in
his account. It is a temporary arrangement. *verdraft facility with a specified limit is
allowed either on the security of assets, or on personal security, or both.
-? D&s-o/nt&n' o" B&lls
8anks provide short@term finance by discounting bills that is, making payment of
the amount before the due date of the bills after deducting a certain rate of discount. 'he
party gets the funds without waiting for the date of maturity of the bills. In case any bill is
dishonored on the due date, the bank can recover the amount from the customer.
&&? Se-on4$1 "/n-t&ons
8esides the primary functions of accepting deposits and lending money, banks perform a
number of other functions which are called secondary functions. 'hese are as follows @
a2 Issuing letters of credit, traveler5s cheBues, circular notes etc.
33 | P a g e
b2 .ndertaking safe custody of valuables, important documents, and securities by
providing safe deposit vaults or lockersF
c2 Providing customers with facilities of foreign exchange.
d2 'ransferring money from one place to anotherF and from one branch to another branch
of the bank.
e2 &tanding guarantee on behalf of its customers, for making payments for purchase of
goods, machinery, vehicles etc.
f2 !ollecting and supplying business informationF
g2 Issuing demand drafts and pay ordersF and,
h2 Providing reports on the credit worthiness of customers.
APPROAC*ES TO LOAN
India is predominantly a rural country but prospects of commercial loan share founded
everywhere no matter in rural or urban estate attitude of people must be optimistic some
approaches that are being followed by banks providing commercial loans are as follows7
INDIVID)AL APPROAC*
'hough many development program were initiated during per independence period but in
3:>0s development of many industries was come into existence for that many people was
taken money from various banks the individual approach behind this that one individual
took initiative this approach was helped in creating infrastructure for business
development.
COMPRE*ENSIVE APPROAC*
34 | P a g e
'his is the approach which is known for the community development this is the major
milestone towards commercial loans. It was Buite board and comprehensive in nature it
covered all the facts providing employment training social welfare education etc.
INSTIT)TIONAL APPROAC*
!ommercial loans come inexistence with the objective to generate income it follow
institutional approach because it wants adeBuate participation of people.
INTENSIVE APPROAC*
%pproach was intensive because all the loans follow the aspects of improvement essential
for rapid increase in commercialization or business growth
TARGET GRO)P APPROAC*
In this type of approach banks target those people who really interested to generate
income and who have prospects to earn profit it ensure the benefits of development reach
directly to the people work in there firm.
AREA DEVELOPMENT APPROAC*
*ne of the most popular objective is area development by giving this type of
commercial loan it is insured that there should be development of area where firm or
manufacturing or trading are being done.
39 | P a g e
ROLE O! BANKS PROVIDING COMMERCIAL LOANS
'he banking sector in India has overgrown diversified and overstretched like many of the
sprawling big cities in India it has tried to accommodate all types of banking activities
especially after the industrial revolution. $ajor slice banking was acBuired by the state in
its attempts to cover the commanding heights of the economy.It is the public sector bank
if we talk about state bank of India who is the largest bank known for providing loans in
various areas commercial loans are one of them besides this many private banking are
also come into existence to provide many loans here we will discuss commercial loans
only.
'he rural development planning are absence of total approach at the strategy level lack of
coordinated planning at the programmed level and weak planning components of
individual programmers.!ommercial loans programming or business is not successful
without adeBuate regional planning strong central coordination effective local
organization and people active participation at the planning and implementation
stage.Industrial development can be possible if only there is proper balance between
services oriented programmed and development oriented programmed and self centered
programmed. 'he importance attached to service oriented schemes besides this, has also
resulted in the wastage of precious resources.
3; | P a g e
PRO!ILE O! STATE BANK O! INDIA
&tate bank of India is the largest bank in terms of profits, assets, deposits and employees.
it has a network of over :000 branches in India and ?3 foreign offices in ?4 countries, the
bank command about 3G?th of the total deposits and loans in all scheduled commercial
banks in the country.
'he origin of &.8.I dates to 3>0< when the bank of !alcutta later called bank of 8engal
was established in 3:43, the bank of 8engal and other banks were amalgamated to form
the empirical bank of India.
'he state bank of India is the largest commercial bank in India in terms of profits, assets,
deposits, branches and employees. %bout ;<H of the bank branches are located in rural
areas 4CH in semi urban areas, and <H and 33H are located in urban and metropolitan
areas respectively.
&8Is funding profile is strong underpinned by its strong retail deposits funding base.
Ihile the banks are facing increasing competition in its metropolitan and urban franchise
it5s extensively branch network and dominant presence in rural and semi urban branches
would held it in good stead &8Is strong franchise gives it access to a steady source of
stable retail funds which constitute over C0H of the total resources as on 400; the bank
has pioneered innovative measures and contributed significantly to the growth of Indian
3? | P a g e
economy.
SPECIAL !EAT)RES O! STATE BANK O! INDIA
3. 'here schemes meet the customer varied needs.
4. ,ominal services processing charges.
9. "oan at competitive rates.
;. Interest charges on reducing balance only instead of annual balance.
?. Interest is compounded Buarterly risk.
'he large size of the dominant market position of the bank has helped it to build up a
loan portfolio which is well diversified across industries as well as region thus cushioning
the impact of problems in certain industries moreover the increased focus on its top
clients and the size of relationship banking approach subseBuent to the formation of the
corporate accounting groups 1!%-2 has helped the bank in retaining its top clients.
PRO!ILE O! I3C3I3C3I
I!I!I 8ank "imited provides banking products and financial services to corporate and
retail customers primarily in India. It offers a range of products and services in the areas
of commercial banking, investment banking, and insurance. 'he company5s deposit
products include time deposits, savings accounts, current accounts, payroll accounts, and
accounts for small businesses, nonresident Indian accounts, and certificates of deposit.
3< | P a g e
'he company5s loan portfolio comprises home loans, automobile loans, and two wheeler
loans, commercial vehicle loans, construction eBuipment and farm eBuipment loans,
personal loans, credit cards, loans against time deposits, loans against shares, leasing and
related loans, consumer loans, project and corporate finance, and venture capital
finance.It also offers private banking, debit cards, and agricultural financing products, as
well as distributes third party investment products and issues unsecured redeemable
bonds. +urther, the company has interests in the software development, software services,
insurance, and business process outsourcing businesses. I!I!I 8ank operates a network
of approximately ?C9 branches and 4,000 automated teller machines. It also has
operations in the .nited &tates, the .nited Jingdom, !anada, )ussia, &ingapore,
8ahrain, the Peoples5 )epublic of !hina, the .nited %rab (mirates, &outh %frica, &ri
"anka, and 8angladesh. I!I!I 8ank was founded in 3:?? and is headBuartered
in$umbai,India.
BENE!ITS O! I3C3I3C3I
3. ,o mortgage no security.
4. +aster sanction.
9. "esser documentation.
;. *ne stop solution with a bouBuet of products.
3C | P a g e
?. 'he loan provided in the form of overdrafts letter of credit or bank guarantee and you
can borrow up to maximum of )s. 4? "akhs.
<. %ttractive finance charge floating interest rate
C. +lexible payment schedule part payment pre payment.
PROBLEMS !ACED B@ BANKS
3. 'he Indian socio economic scene is still feudal in nature largely still in the midst of
illiteracy besides this the Indian psyche is deeply entwined with the cultural ethos.
4. !ompounding to this is the problem of nonpayment of loans.
9. 8anks may not find operations economical as sometimes the transaction and follow up
costs are more than the amount of credit.
;. 'he procedures involved in availing bank finance sometimes delay the actual receipt of
the funds the money if receipt of the funds the money if received late may be of no use to
the borrower the next.
T*E C)RRENT RATES O! COMMERCIAL BANKS
3> | P a g e
C)RRENT RATES PROVIDED B@ SBI
3: | P a g e
I,'()(&' )%'(&
6*.&I,- "*%, &!6($(
+or loans .P '* and
inclusive of )s. 3?.00 "acs.
+or loans exceeding )s. 3?.00
"acs.
+ixed )ates for maturity of
maximum 30 years
irrespective of the loan
amount.
'enure 0ears
)evised )ate
H +loating
'enure 0ears
)evised )ate
H +loating
'enure 0ears )evised )ate
.p to ? years 30.?0H .p to ? years 30.C?H .p to ? years 34.?0H
%bove ? K
up to 3?
years
33.00H
%bove ? K up
to 3? years
33.4?H
%bove ? K up
to 3? years
34.?0H
%bove 3? K
up to 40
years
33.?0H
%bove 3? K
up to 40 years
33.C?H
,ote7 Interest rate 1fixed2 will
be reset at the end of every one
year on the basis of interest
rates prevailing then.
$*)'-%-( "*%,&
)evised )ate +loating )evised )ate +ixed
34.4?H 34.C?H
$*,(0 %-%I,&' &6%)(& K &(!.)I'I(& 1$%&&2 %,/ *'6() &P(!I+I(/
&(!.)I'I(&
"I! G ,&! G JDPs G )8I bonds G .nits.
40 | P a g e
C)RRENT RATES PROVIDED B@ ICICI
ICICI Bank Personal Loan
Introduction
ICICI Bank provides loan at an exciting interest rate with 12-60 months
payack options! "#ick processing$
Overview
Salaried Self Employed
loan Plan Personal Loan Personal Loan
Type Term Loan Term Loan
Amount Min. – Rs 50000
Max. – Rs 1500000
Min. – Rs 50000
Max. – Rs 1500000
Duration Min. – 1 !rs Min. – 1 !rs
"nterest Rate Min. – 1 #
Max. – #
Min. – 1$ #
Max. – $ #
Time Pro%ess & days $ days
Loan for Car from ICICI Bank.
%ew car &ld car
loan type 'erm loan 'erm loan
43 | P a g e
(x-)howroom*&n +oad (x-)howroom (x-)howroom
Loan ,mo#nt 'est comment on amo#nt
-in$ . +s /0000
-ax$ . +s /0
'ime period -in$ . 12 1rs -in$ . 12 1rs
Interest on loan 12$20 3 16 3
'ime to Process Loan 1 days 1 days
Pre4erred
-an#4act#rers
Chevorlet! -ar#ti
Chevrolet! 5at! 6ord!
7onda! 7y#ndai!
-ahindra! -ar#ti!
-ercedes-Ben8!
-its#ishi! )koda! 'ata
-otors! 'oyota
Bar Processing 6ees &rigination Charges
+s 200000 . +s 299999 +s 1900 0$100000001290116 3
+s 000000 . +s
1000000
0 3 0$100000001290116 3
ICICI-Loan Against Securities
44 | P a g e
ICICI ank loan against sec#rities make possile to otain loans against
sec#rities$ 1o# have to do is pledge yo#r sec#rities in 4avor o4 ICICI
ank$ ICICI anks then will grant an overdra4t 4acility on yo#r market
linked investment 4#nds or ond$ 'he val#e is determined y the
sec#rities$
'he ank sanctioned the loan on 4ollowing sec#rities$
)ec#rities Loan ,mo#nt
:emat )hares ;p to 20 Lakhs
-#t#al 4#nds ;p to 20 Lakhs
ins#rance policies 0 Crores
;'I Bonds 0 Crores
<isan =ikas Patra > %ational )aving
Certi5cates
0 Crores
Benefts
1$ ,vail maxim#m amo#nt on yo#r sec#rities
2$ Interest rate will e charged on the only #tili8ed amo#nt$
?$ %o additional sec#rity or g#arantor is re"#ired$
2$ %o prepayment charge$
0$ 22*/ c#stomer care center to know the stat#s o4 yo#r acco#nt$
49 | P a g e
T*E C)RRENT STAT)S O! COMMERCIAL LOANS
'he banking sector in India5s has become an agglomerate of banks big and small public
and private old and new viable and non viable. 'here are remarkable diversities in their
sizes of organizational pattern geographical presence and functional specialization. 'ill
recently there was classification of scheduled banks based on capital base. 'here are
regional banks also there who help people to take loans. 'hey are operating exclusively in
the various areas including rural area opposite to them there are many new banks also
functioning only in the urban and metropolitan centers.In terms of size on one extreme
there are also private sector banks there is omnipresent banks also like state bank of India
with over :000 bravely on the other extreme I.!.I.!.I is the private sector bank providing
commercial loans.
4; | P a g e
4? | P a g e
*ISTORICAL BACK GRO)ND O! BANKS PROVIDING
COMMERCIAL LOANS
In the eighties it may be recalled that there was industrial revolution people will come
forward to setup organization they took initiative to setup firms many entrepreneurs come
forward and took initiative for them these type of banks were very helpful and they help
them by providing commercial loans, with minimum interest charges and to give them
benefits of establishing any firm. "ots of people were and also in present scenario are
taking benefits of commercial loans. 'he reserve bank of India who comes into existence
in 3:9? acBuired a supervisory and development role in department of banking operations
and development. 'he banking sector witnessed the process consolidation for the first
time the number of banking companies achieved success drastically now days.'here was
drastically change in mid nineties before establishing rural banking commercial banking
and cooperative banking was there the objective behind setting up this type of banks
providing commercial loans was to generate income and to help in the growth of
countries economy.!ommercial 8anks in India are broadly categorized into &cheduled
!ommercial 8anks and .nscheduled !ommercial 8anks. 'he &cheduled !ommercial
8anks have been listed under the &econd &chedule of the )eserve 8ank of India %ct,
3:9;. 'he selection measure for listing a bank under the &econd &chedule was provided
in section ;4 1<0 of the )eserve 8ank of India %ct, 3:9;.
A-t&5&t&es o" Comme-&$l B$n%s
'he modern !ommercial 8anks in India cater to the financial needs of different
sectors.'he main functions of the commercial banks comprise7
4< | P a g e
? 'ransfer of funds
? %cceptance of deposits
? *ffering those deposits as loans for the establishment of industries
? Purchase of houses, eBuipments, capital investment purposes etc.
'he banks are allowed to act as trustees. *n account of the knowledge of the financial
market of India the financial companies are attracted towards them act as trustees to
take the responsibility of the security for the financial instrument like a debenture.
'he Indian -overnment presently hires the commercial banks for various purposes like
tax collection and refunds, payment of pensions etc.
4C | P a g e
!INDINGS
? $any lenders from commercial banks have been adversely affected by the
catastrophe brought about by the handing out of residential loans. &ince the
4> | P a g e
balance sheets show poor performances, only a small 4H of the total volume of
commercial loans in 400: is now being done.
? !ommercial banks made the declaration that they had to cut short their
release of commercial loans due to some highly troubled reports.
? It is to be expected that this trend will go on, affecting even those banks
which have survived the crisis.
? +or some people, this could seem like the last chance for commercial bank
loans. If you are not able to close the loans within a :0@340 day period, you
will have to wait for a long period of five years.
4: | P a g e
S)GGESTIONS
? 'hese banks make a periodic review of commercial loan to evaluate,
identification, formulation, release and use of funds.
? 8ank should also try to make procedures more simplified for people
? 'hey should try to see from time to time that application submitted to banks
under commercial loan are dealt promptly
? Invest more in marketing activates so as to impart knowledge among peoples
regarding the availability to the commercial loan
? 'o make procedure transparent enough so as to avoid any fraud and obtaining
people confidence.
? /eveloping a strong infrastructure and transport
90 | P a g e
CONCL)SION
%fter going through my whole study I came to the conclusion that different banks
of India either private or public both provide loans with the objective to generate income.
'hey have many financial schemes regarding commercial load. 'here are many
people that are satisfied with the scheme. 'he procedure of getting loan from these banks
is simple and easy and also costumer friendly. I also came to know that many
industrialist, traders, and new entrepreneur were aware of these schemes.
93 | P a g e
94 | P a g e
doc_349806198.doc