SUMMMER INTERNSHIP REPORT

Chapter 1 1.1: Introduction
Almost all of the industrial enterprises whether they are into manufacturing, trading or service sector need bank finance in order to run the businesses. So everyone approaches the bank at some point of time for business loan whether it is for running day to day business or for setting up of a new project. A banker appraises the proposal and then decides whether to lend the money or not. Some tips on what goes behind the credit appraisal of the proposal by the banker. Credit Appraisal It is the process of appraising the credit worthiness of a loan applicant. Factors like age, income, number of dependents, nature of employment, continuity of employment, repayment capacity, previous loans, credit cards, etc. are taken into account while appraising the credit worthiness of a person. Every bank or lending institution has its own panel of officials for this purpose. s

1.2: Objective of the study
The main objective of the research is to understand the concept of credit (Loan) appraisal. What is the definition of credit appraisal? How can it function and control? What are the important things in credit appraisal? How banks can control NPA with nil? Through this project we can also analyze banking industry. What are the challenges this industry is facing. I also included overview of banking sector as well as types of bank. I choose ABHYUDAYA CO-OPERATIVE BANK for my study of CREDIT APPRAISAL. It is the lending urban co-operative sector bank. They perform in credit appraisal and control NPA in very good manner. That why it is interesting to know how they able to do this one,

1.3: Company profile
Abhyudaya Co-op. Bank Ltd., one of the leading Urban Co-operative Banks in India, in its outlook and approach, has the objective of progress and prosperity of all. From a humble beginning in January 1964 as a Co-operative Credit society with a share capital of a merely Rs.5,000/- held by 83 members, today Abhyudaya Co-op bank has become one of the large Urban Co-operative Banks with a "Scheduled Bank" status. The bank has been converted into a “Multi-State Scheduled Urban Co-op. Bank “w.e.f. 11th January, 2007. The area of operation which was restricted to the State of Maharashtra has now been extended to Karnataka State. Currently, the capital base of the bank stands at Rs. 45.78 crores and Reserves and surpluses at Rs.671.95 crores as on 31.03.2009. The bank has 1, 23,011 members and more than 12 lakhs depositors. The Bank has seen a tremendous growth in deposits. The deposits of the bank are over Rs. 3174.81 crores as on 31.03.2009, which were Rs. 2625.51 crores as at the end of the financial year 2008. The loans and advances stood at Rs. 1856.39 crores as on 31.03.2009. The bank had posted a net income of Rs. 92.36 crores as on 31.03.2009. “The growth rate of the bank compares well with that of others in the sector. The Bank has maintained a steady growth. The bank has been paying dividend @ 15% to its members which is maximum permissible as per the MCS Act. The Bank has launched different loan schemes tailor-made to suit the needs of various customers. The schemes aim at providing loans for purchase or construction of residential premises, repair/renovation of house property, purchase of car, seeking higher education and for purchase of household consumer durable. One of the loan schemes, viz. "Udyog Vikas Yojana" is specially designed for the benefit of small entrepreneurs and businessmen. The procedure for sanctioning of loans under the schemes has been simplified and relaxed with a view to attract new customers and facilitating speedy sanction of loans. The Bank has total 75 branches including a Mobile Bank at Navi Mumbai. Bank is committed to spread network of branches throughout the State and provide much needed banking services to the population, which has been deprived of the banking facilities. Page2of 58

Innovative Banking is another area of operation that Abhyudaya is currently focusing on for a sustainable long term growth. The Bank has always endeavored for providing satisfactory customer service with the help of the latest technology. The Bank has provided fully computerised services to its valued clients. Bank is offering 11 Hours fully computerised services at 15 branches and 24 hours ATM service at 42 branches.

Milestones:
1964- Established as Co-operative Credit Society. 1965- Converted into a Bank with one Branch at Abhyudaya Nagar. 1985-Inauguration of Bank’s own Building, Staff Training College and Auditorium at Vashi, RBI Permitted the Bank to open and maintain NRI Accounts. 1986 - Instituted Educational Prizes to the children of Members and Employees. Became 3rd Biggest Urban Co-op. Bank in India. 1988 - Became Scheduled Bank. 1990 - Inauguration of Bank’s own Building at New Panvel. 1995- Decision to set up “Development Reserve Fund” to undertake special schemes. 1997- All Branches fully computerized. 1999- Eleven Hours & Sunday Banking started in 16 Branches. 2000- ATM installed at 3 branches. 2003- Opened 40th Branch with ATM Facility & 11 hours and Sunday banking At Lokmanya Nagar (Thane). 2004- Started RTGS and NDS Facilities. 2006- Merger of Citizen Co-operative Bank Ltd., with 13 branches. 2007- Registration of the Bank under “Multi-State” Co-Op Societies Act on 11th Jan., 2007. 2008- Merger of Shri Krishna Co-operative Bank Ltd, Vadodara Merger of Janata Sahakari Bank, Udupi Foreign Exchange Department we inaugurated Opened recovery call centre at Parel

2009 - Opened Bhayander branch And Dahisar branch

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Overview of Financial Structure of Abhyudaya Co-op Bank Ltd.
(Amt. in Lacs)

31.03.2006 Paid up Share Capital 2628.00 48816.00 183587.00 91487.00 8848.00 7270.00 244870.00 137573.00 1,12,523

31.03.2007 3232.00 61993.00 215498.00 128395.00 7890.00 1875.00 299197.00 137634.00 1,17,139

31.03.2008 4046.00 62965.00 262550.00 161610.00 12607.00 4081.00 343428.00 142072.00 1,20,577

31.03.2009 4577.00 67195.00 317481.00 185639.00 17587.00 9236.00 412215.00 188320.00 1,23,011

Reserves Deposits Loans & Advances Gross Profits Net Profits Working Capital Investments Membership (Nos.)

The deposits have grown to Rs.3174.81 crores at the previous year end and registered a growth of 11.5%. Advances have grown by 16.7% and gone up by Rs.1856.38 crores. As a result bank has achieved a CD ratio of 49.83%. Paid up Capital of the Bank increased from Rs.40.46 crores to Rs.45.78 crores, registering a growth of 17.22% over the previous year. The Reserves and other funds have increased from Rs.629.65 crores to Rs.671.95 crores in the previous year. The working capital have grown to Rs. 2991.97 crores at the previous year end and registered a growth of 10.92%. The net profit has increased from Rs. 40.81 crores to Rs. 92.36 crores.

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Capital to Risk Assets RatioMovement of CRAR Capital Adequacy Ratio Tier I Ratio Tier II Ratio As on 31.3.2008 23.94% 18.83% 5.11% As on 31.3.2009 26.42% 21.24% 5.18%

NPAs NPAs Gross NPAs Net NPAs As on 31.3.2008 Rs. 20417.84 lacs NIL As on 31.3.2009 Rs. 25756.54 lacs NIL

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Chapter 2 RESEARCH METHODOLOGY

The purpose of research is to discover answer to the questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. Though each research study has its own Specific purpose, we may think of following broad categories: ? To gain familiarity with a phenomenon or to achieve new insights Into it. ? To portray accurately the characteristics of a particular individual, Situation or a group. ? To determine the frequency with which something occurs or with which it is associated with something else. Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. Research methodology has many dimensions and research methods do constitute a part of the research methodology. The scope of research methodology is wider than that of research methods. Thus, when we talk of research methodology we not only talk of the research method but also consider the logic behind the methods we use in the context of our research study and why we are using a particular method or technique and we are not using others so that research results are capable of being evaluated either by the researcher himself or by other. Why a research study has been undertaken, what data have been collected and what particular method has been adopted, why particular technique of analyzing data has been used and a host of similar other question are usually answered when we talk of research methodology concerning a research problem or study.

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Research is often described as active; diligent and systematic process of inquiry aimed at discovering, interpreting and revising facts. This intellectual investigation produces a greater understanding of events, behaviors or theories and makes practical application through laws and theories. In other words we can say the purpose of research is to discover answer to the questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. To carry out my project I have used the descriptive research. Descriptive research includes survey and fact finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs, as it exists at present. The main characteristic of this method is that the researcher has no control over the variable; he can only report what is happening. It is also called as ex post facto research. Most ex post facto research projects are used for descriptive studies in which researcher seeks to measure such items as, for example, frequency of shopping, preferences of people, or similar data. Descriptive research also includes attempts by the researcher to discover causes even when they cannot control the variables. The methods of research utilized in descriptive research are survey method of all kinds. WHY DESCRIPTIVE RESEARCH? In this case descriptive research was most suitable because it helped in giving focus to the preferences, knowledge, beliefs & satisfaction of a group of people in a given population and characteristics of the successful and unsuccessful companies. Moreover it helped in determining the relationship between two and more variables. DATA SOURCE To carry out the project work I have consulted the various secondary sources of data such as Magazines, Journals and websites.

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Chapter: 3 Review of Literature Chapter: 4
4.1: BANKING SECTOR- AN OVERVIEW
Banking in India originated in the last decades of the 18th century. The oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980. Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively Indian Banking sector is dominated by Public sector banks (PSBs) which accounted for 72.6% of total advances for all SCBs as on 31st March 2008. PSBs have rapidly Page8of 58

expanded their foot prints after nationalization of banks in India in 1969 and further in 1980. Although there is a restrictive entry/expansion for private and foreign banks in India, these banks have increased their presence and business over last 5 years. Peculiar characteristic of Indian banks unlike their western counterparts such as high share of household savings in deposits (57.4% of total deposits), adequate capitalisation, stricter regulations and lower leverage makes them less prone to financial crisis, as was seen in the western world in mid FY09. The Scheduled Commercial Banks (SCBs) in India have shown an impressive growth from FY04 to the mid of FY09. Total deposits, advances and net profit grew at CAGR of 19.6%, 27.4% and 20.2% respectively from FY03 to FY08. Banking sector recorded credit growth of 33.3% in FY05 which was highest in last 2 and half decades and credit growth in excess of 30% for three consecutive years from FY04 to FY07, which is best in the banking industry so far. Increase in economic activity and robust primary and secondary markets. A significant improvement in recovering the NPAs, lowest ever increase in new NPAs combined with a sharp increase in gross advances for SCBs translated into the best asset quality ratio for banking sector in last two decades. Gross NPAs to gross advances ratio for SCBs decreased from the high of 14% in FY2000 to 2.3% in FY08. The law governing Banking Activities in India is Called “Negotiable Instruments Act 1881”. The banking activities can be classified as: • • • • • • • • Accepting Deposits from public / other (Deposits) Lending money to public (Loans) Transferring money from one place to another (Remittances) Acting as trustees Acting as intermediaries Keeping valuables in safe custody Collection Business Government Business

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Banking Segment in India functions under the umbrella of Reserve Bank of India – the regulatory, central bank. This segment broadly consists of: ? Commercial Banks ? Co-operative Banks Commercial Banks: In 1969, fourteen major commercial banks were nationalized. In 1980, six more commercial banks were nationalized. The State Bank of India and its subsidiaries are also own by the central government. After this amendment the existing structure has evolved in ? Public sector ? Private sector Public sector banks have either the Government of India or Reserve Bank of India as the majority shareholder. This segment comprises of: ? State Bank of India (SBI) and its subsidiaries. ? Other nationalized banks. Private sector banks consist of ? Scheduled Commercial Banks ? Unscheduled Banks Scheduled commercial Banks Constitute those banks which have been included in the Second Schedule of Reserve Bank Of India (RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (60 of the Act. Some co-operative banks are scheduled commercial banks albeit not all co-operative banks are. Being a part of the second schedule confers some benefits to the bank in terms of access to accommodation by RBI during the times of liquidity constraints. 4.2: EVOLUTION OF URBAN CO-OPERATIVE BANKS The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not

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hold today. These banks were traditionally centered on communities, localities work place groups. They essentially lent to small borrowers and businesses. Today, their scope of operations has widened considerably. The origins of the urban cooperative banking movement in India can be traced to the close of nineteenth century when, inspired by the success of the experiments related to the cooperative movement in Britain and the cooperative credit movement in Germany such societies were set up in India. Cooperative societies are based on the principles of cooperation, - mutual help, democratic decision making and open membership. Cooperatives represented a new and alternative approach to organization as against proprietary firms, partnership firms and joint stock companies which represent the dominant form of commercial organization. MAIN FEATURES OF CO-OPERATIVE ORGANIZATION: The main features of Co-operative organization are: • • • • • Voluntary Association Democratic Administration Self-help and Mutual Aid Common Welfare through Common Action Participation of Members on the basis of Equality

CO-OPERATIVE BANKS-STRUCTURE AND FUNCTIONS The primary objective of a Co-operative bank is to encourage ‘Thrift and self help’ and to raise resources by way of deposits. Hence the basis tenet of a Co-operative bank is to encourage the savings habits of its members. Co-operation is definitely a school of thrift, and co-operative saving create first the basis of funds, which are then employed for granting credits and for securing the confidence of depositors and clients. Another objective of co-operative banks is to lend money to those who may not have acceptable assets to secure funds, but who is in need of it, especially to the weaker section of the community. The resources of banks should not be given to a few chosen Page of 58 11

members. All members are entitled to get loans and an individual maximum if fixed to avoid the monopolizing of resources by a few. While lending money, the Co-operative banks see that they are properly used for productive purpose. Then only it would be possible for the borrower to repay the loans in time. The Co-operative system possesses certain qualities, which eliminate the difficulty encountered by commercial banks when lending to small borrowers. Co-operative banks are generally local in character and they have local feel. Therefore, lending by them is more to the needy people of the community and hence recovery becomes easier. The aim of Co-operative lending is not to weaken a member by making debt on unbearable burden but to help him to get rid of financial difficulties by creating assets and to start a new economic life. The purpose of a Co-operative bank is also to offer service to the customer at a reasonable cost. As profit motive is eliminated, a Co-operative banker can afford to render services at a reasonable cost. Co-operative banks been enjoying legislative support from the government. In India, they have been working under the Co-operative Societies Acts of the respective states and have been provided certain concessions In order to help them to face challenges from commercial banks. They now have to pay income tax on their income. At present, Co-operative Banks have been providing all modern banking services comparable to that offered by any Commercial Bank. The functions of Co-operative Banks in India are governed by the Banking Regulation Act, 1949. The Banking Regulation Act was not applicable to Urban Cooperative Bank till March 1966. It was made applicable to them with the ultimate objective of protecting customers interest as large amounts of deposits of deposits were at stake. According to section 6 of banking Regulation Act, Urban Co-operative Banks can immediate following functions. In addition to normal business of banking, Co-operative banks may engage in any one or more of the following activities namely: ? The borrowing, raising or taking up of money, the lending or advancing of money either upon or without security, the drawing making accepting discounting, buying, selling, collecting and dealing of bills of exchange, hundies, promissory notes, coupons, drafts, bills of landing, railway receipts, warrants, debentures, Page of 58 12

certificates, scrip’s and other instruments and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, travelers cheques an circular notes: the buying and selling of foreign exchange, securities and investments of all kinds, the purchasing and selling of bonds, scrips or valuables on deposits or for safe custody or otherwise, the providing of safe deposits vaults: the collecting and transmitting and securities. ? Acting as an agent for any government or local authority or any other persons or persons: the carrying on of agency business of any descriptions including the clearing and forwarding of goods, giving of receipts an discharges and otherwise acting as an attorney on behalf of customers. ? Contracting for public and private loans and negotiating and issuing the same. ? Carrying on and transacting every kind of guarantee and indemnity business. ? Managing, selling and realizing any property which may come into the possession of the Co-operative bank in satisfaction or part satisfaction of its claims. ? Undertaking and executing trusts. ? Undertaking the administration of estates as executor, trustee or otherwise: ? The acquisition, construction, maintenance, and alteration of any building or works necessary or convenient for the purpose of the Co-operative bank. ? Acquiring and undertaking the whole or any part of the business of any persons or company or Co-operative society: when such business is of nature enumerated or described in the sub-section: ? Doing all such other things as are identical or conducive to the promotion or advancement of the business of the Co-operative bank. ? Any other form of business which the central government may by notification in the official gazette, specify as a form of business in which it is lawful for a Cooperative bank to engage.

Present Status
The urban cooperative banking system has witnessed phenomenal growth during the last one and a half decades. From 1307 urban cooperative banks (UCBs) in 1991, the number of UCBs has risen to 2105 in the year 2004. Deposits have increased by over Page of 58 13

1100 percent from Rs.8600 crore to over Rs.100, 000 crore, while advances have risen from Rs.7800 crore to over Rs.65, 000 i.e. by 733 percent during the above 15year period. This growth path has been possible mainly on account of the enabling policy environment in the Post 1991 period, which encouraged setting up of new urban cooperative banks. Further, the deregulation of interest rates, as available to commercial banks, enabled the UCBs to mobilize vast deposits, which, together with the liberal licensing policy propelled the growth of UCBs in terms of numbers as also in size. This significant growth in business, which has come about in a competitive environment was largely due to the efforts and the ability of the sector to harness resources from the small depositors. Thus, while the sector has shown spectacular growth during the last decade exhibiting substantial potential for sustained growth, there are certain infirmities in the sector that have manifested in the form of weakness of some of the entities resulting in erosion of public confidence and causing concerns to the regulators as also to the sector at large. There is, thus, a need to harness the benefit of rapid growth and mitigate the risk to which individual banks and the system are exposed by providing a regulatory and supervisory framework that will address the problems of the sector as also the shortcomings of dual control.

Structures and Spread of UCBs
In terms of geographical spread, UCBs are unevenly distributed across the states. Five states viz., Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Tamil Nadu account for 1523 out of 1942 banks that presently comprise the sector. Further, the UCBs in these states account for approximately 82% of the deposits and advances of the sector as may be seen from the table below: Name of the No State of % to Deposits (Rupees no. of in Lakhs) banks 26.68 60,72,498 % of Advance % to of total banks in total operation Maharashtra 639 deposits (Rupees in Advances to total Lakhs) deposits 55.08 37,42,401.2 advances. 55.09

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Gujarat Karnataka Tamil Nadu Andhra Pradesh Total

321 300 132 131 1,523

15.24 14.25 6.27 6.22 2,106

16,27,946 8,35,274 3,10,521 2,11,324 90,57,563

14.77 7.58 2.82 1.92 82.15

9,70,287.03 5,37,186.7 2,12,113.28 1,37,888.23 55,99,876.5

14.28 7.91 3.12 2.03 82.44

(Source: RBI) For all UCBs in the country, the total Deposits are Rs. 1, 10, 25,642 Lakhs and total Advance are Rs. 67, 93,017 Lakhs

4.3: Types of Loans and Credit Facilities Given by Banks
The entire operations of the banking industry revolve around obtaining deposits and granting loans and different credit facilities to its customers for viable projects. The different types of loans and credit facilities given by the banks can be broadly classified into two types. • • Retail Lending Commercial lending

Retail Lending: Retail finance has become the preferred business of banks because of its higher spreads and low risk of delinquency. The Indian consumer is fast changing his habits, borrowing money to buy the product he wants, not content with buying what he can afford. The resultant consumer boom is what market strategists explain as the key to the access of the Indian retail finance market. Retail finance today is a win-win system in which everyone stands to gain. For the Indian consumer, it is an opportunity to upgrade his standard of living right now instead of waiting for years for his savings to accumulate. For manufacturers, it stimulates demand and lowers inventory. For middlemen, it’s a sales boosting device. For players of consumer finance i.e. banks and lending institutions, it’s a means of profit generation.

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There are a number of retails loans given by banks to its customers, which would suite their requirements. They are stated as under: ? Housing Loan ? Education loan ? Mortgage loan ? Personal loan ? Senior citizen pension scheme ? Rent scheme ? Consumer durables loan ? Auto finance loan ? Trade finance loan ? Loan against National savings certificate (NSC) ? Loan against Kisan Vikas patra (KVP) ? Loan against fixed deposit receipt (FDR) ? Loan against RBI bonds ? Loan against LIC ? Loan against FCNR ? Overdraft against FD/NSC/KVP Commercial Lending: The entire commercial lending can be broadly classified as fund based commercial credit facility and non-fund based commercial credit facility. Fund Based Bank Facilities: Term Loans: Term loan is an installment credit repayable over a period of time in monthly/quarterly/half yearly / yearly installments. Term loan is generally granted for creation of fixed assets required for long-term use by the unit. Term loans are further classified in three categories depending upon the period of repayment as under: • Short term repayable in less than 3 years. Page of 58 16

• •

Medium term loans repayable in a period ranging from 3 years to 7 years. Long-term loans repayable in a period over 7 years.

Cash Credit Facility: A major part of working capital requirement of any unit would consist of maintenance of inventory of raw materials, semi finished goods, finished good, stores and spares etc. In trading concern the requirement of funds will be to maintain adequate stocks in trade. Finance against such inventories by banks is generally granted in the shape of cash credit facility where drawing will be permitted against stocks of goods. It is a running account facility where deposits and withdrawals are permitted. Cash credit facility is of two types (depending upon the type of charge on goods taken as security by bank) (i) Cash credit – pledge: When the possession of the goods is with the bank and drawings in the account are linked with actual movement of goods from / to the possession of the bank. The bank exercises the physical control of the goods. (ii) Cash credit – hypothecation: When the possession of the goods remains with the borrower and a floating charge over the stocks is created in favour of the bank. The borrower has complete control over the goods and the drawings in the account are permitted on the basis of stock statements submitted by the borrower. Overdraft Facility: Overdrawing permitted by the bank is current account is termed as an overdraft facility. Overdraft may be permitted without any security as ‘clean overdraft’ for temporary periods to enable the borrower to tide over some emergent financial difficulty. ‘Secured overdraft’ facility is against fixed deposits, NSC, and other securities. Bill Finance: This facility is against bills of sales raised or book debts. Page of 58 17

Export Finance / Packing Credit: Bank grants export credit on very liberal terms to meet all the financial requirements of exporters. The bank credit for exports can broadly be divided in two groups as under: Pre Shipment advances / packing credit advances: Financial assistance sanctioned to exporters to enable them to manufacture / procure goods meant for export and arrange for their eventual shipment to foreign countries is termed as per shipment credit.

Post shipment credit: The bills purchase / discount facility granted to exporters is grouped as post shipment advance. Non – Fund Based Bank Facilities: Credit facilities, which do not involve actual deployment of funds by banks but help the obligations to obtain certain facilities from third parties, are termed as non-fund based facilities. These facilities include issuance of letter of credit, issuance of guarantees, which can be performance guarantee / financial guarantee. Letter of Credit (LC): A LC represents a commitment of a bank to pay the seller of goods or services a certain amount provided he resents stipulated documents evidencing the shipment of goods or the performance of services within a prescribed period of time. LC can be of two types: ? Inland ? Foreign

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In other words LC is the undertaking of a bank to make payment on behalf of a person to a third party with a conditional undertaking. There are four principle parties to the LC. They are stated as under. • • Applicant (opener): He is the buyer of the goods. LC is opened at the request of the buyer, as per his instructions. Issuing Bank (opening bank): The bank (buyer’s bank) that issues the LC and undertakes conditional payment, at the request of the opener / buyer / importer customer. • Beneficiary: He is the seller of the goods. LC is issued in his favour enabling him to obtain payment on submission of stipulated documents / compliance with the terms and conditions of LC. • Advisory bank: This is the bank which a normally located in the country of the seller that advises the credit to the beneficiary, establishes the genuineness of the credit. Types of LCs: According to the degrees of security provided: o Revocable credit o Irrevocable credit o Irrevocable confirmed credit According to payment methods: o Sight credit o Acceptance credit o Deferred payment credit o Negotiation Credit o Revocable Credit o Installment credit o Credit with advance payment / Anticipatory cred 4.4: CREDIT POLICY OF ABHYUDAYA CO-OPERATIVE BANK Ltd.

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By the definition of the word “banking” lending constitutes the core business of any bank. Given this prime objective of the organization, it is imperative that a bank should have a well defined lending policy known also as loan policy or credit policy that would set the business target and direction of credit business for the bank. Moreover, such a policy is also necessary for laying down the framework of procedures appropriate for achieving the desired growth and controlling and monitoring landing operations at different level in view of sensitive nature, of the business regulatory compulsions and safety of the bank’s funds. The loan policies should be as per the various guidelines issued by the ‘Reserve Bank Of India’ since it’s adoption, changes in the availability of loan able funds, the climate of intense competition from the new private sector banks, the need to fulfill objective assets classification norms, shrinking margins and need for maximizing profits, etc.

1.

Broad Objectives:The broad objectives of Credit Policy are: i) To give clarity about various aspects of credit including acceptance, scrutiny, sanction, delegation, documentation and post-disbursement follow-up. ii) To maintain the CD Ratio 60% throughout the year and to ensure that total exposure of the Bank including amount sanctioned but not disbursed and unutilized portion of CC and other Working Capital. iii) iv) To strengthen credit appraisal, improve post sanction follow-up, monitor loans and advances and to improve quality of credit. To reduce the gross NPAs of the Bank to a reasonable level during the year by strengthening appraisal, sanction, post disbursement supervision and efficient recovery steps. v) To maximize profitability and return on capital.

2.

Direction Of Creditage of 58 20

I. a) b) c) d) e) f)

Thrust Areas/Core Sector Advance:Small Scale Industries & SMEs Housing Loans Retail Trade & Small Business Professionals and Self-employed Surety/SDL/ECS Loans upto Rs. 2.00 Lakh Food Processing in Small Scale Units g) h) i) j) k) Textiles in Small Scale Units Educational Institutions Steel Manufacturers (Small Scale Units) Loans and CC against Govt. Securities and Transferable RBI/Govt. Bonds. Discounting of Bills under confirmed L/Cs issued by Nationalized and reputed Private Sector Banks or reputed Coop. Banks (to the extent of Rs. 25.00 Lakh) l) m) n) o) p) q) r) s) t) Rent Securitisation Loan Educational Loan Working Capital limits to small retailers up to Rs. 20.00 Lakh Loans to women entrepreneurs Credit facilities to minorities like Sikhs, Muslims, Christians, Zoroastrians and Buddhists communities etc. All Priority Sector Advances like loans to Artisans and Craftsmen, Vegetable Vendors, Cart Pullers, Cobblers etc. Software Industries (Loans and Advances only against 100% collateral securities) Civil Contractors registered with PWD, CIDCO, MSRTC, MCGM, NMMC, MIDC and other Govt. organizations. Loans against Govt. Securities. Auto Ancillaries Service Industries

u) v)

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w) II.

Wind Mill (Advances will be considered only against 100% collateral securities except Agricultural Land)

Sensitive Sectors:a. Builders and Developers and Real Estate Development including construction of Shopping Malls and Multiplexes. b. Civil Contractors other than registered with PWD, CIDCO, MSRTC, MCGM, NMMC, MIDC and other Govt. organizations. c. Hotel Industries d. Loans to Iron & Steel Traders e. Mortgage Loans In the above sectors lending to be considered selectively on case-tocase basis on the inherent strength of the Borrower. It is to be recognized that some units in these sectors also perform well. Hence, such units will be financed. Therefore, stringent restrictions are recommended while considering new loan proposals. Financial Parameters for subsequently. They are given under “Benchmark recommendation and sanction” scrutiny,

III.

Restricted Sector:a) b) Loans against shares except to individual up to Rs. 10.00 Lakh if shares are in demat form. In case of Group accounts where one of the accounts is a Nonperforming account, then the facilities for other Standard accounts in the Group Loan be considered only in the Loan Board Meeting. c) d) e) Sugar factories & Textiles and other activities under Co-op. Sector. Loans for making TV serials/feature films, movie etc. Loans to Class-IV employees of Municipal Corporation of Mumbai, Navi Mumbai, Thane, Bhiwandi, Dombivali, Kalyan and Pune etc. f) Loans for purchase of excavators and proclaims

IV.

Banned Sector:-

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a) Advances to share brokers/Co. against the securities of shares/tangibles or any other collateral. b) Loans & Advances for acquisition of/investing in small saving instruments including Kisan Vikas Patras. c) Grant of loans to banned articles including articles possession/production of which is banned under Wild Life Protection Act, 1972. d) HUFs. e) Advances to commodity brokers operating in MCX and NCDEX exchanges. f) Loans for speculative purpose. g) NPA accounts of other Banks. h) Willful defaulters i) NBFCS. j) Capital Market. k) Plantation Firms. l) Borrowers who have defrauded our Bank/other Banks. m) Guarantors who have defrauded our Bank/other Banks. n) Guarantors and Borrowers against whom suit/s are/were filed by the Bank. o) All black listed persons as advised by Government of India/RBI etc. p) Borrowers whose line of activity is included in the Negative list by the Govt. of India/RBI i.e. Defaulter of State/Central Govt. dues. q) Whenever Bank had entered into O.T.S. settlements under One Time Settlement scheme or other scheme and has sacrificed its dues either by way of write-off of principal, interest charged/interest not charged, the Borrower should not be granted fresh credit facilities either in his individual capacity or in the name of any other firm/company. Page of 58 23 of other Bank/our Bank and associate accounts of willful defaulters.

r) Loans for purchase of Land except for Industrial/ Manufacturing Activities where entire project is financed. V. General Sector:Any loan other than above four sectors are treated as General Sector advances. 3. Credit Exposure Norms:Exposure ceiling on credit to Individual/Group Borrowers (i) (ii) Credit Exposure to an individual Borrower does not exceed 15% of capital funds Credit Exposure to a group of Borrowers does not exceed 40% of capital funds. (iii) The maximum per party limit will be Rs. 40.00 crores and group limits Rs. 100.00 crores. (iv) In respect of non-fund based facilities, 100% of sanctioned limit or outstanding whichever is higher is to be taken into account for computing of exposure level. (v) In case of Term Loan, the principal outstanding in the account will be reckoned for arriving at the amount of credit exposure. (vi) Sector wise maximum exposure will be as undera) Housing (b) Educational Institution (c) Builders & Developers (d) Real Estate including Housing, Builders, Mortgage Loan, Hotel Loan etc. (e) Iron & Steel 15% 16% 10% 15% of the total Deposits as on 31.3.2009 15%

Page of 58 24

(vii)Loans to the Directors and their relatives has been prohibited w.e.f. 1.10.2003 as per RBI guidelines except that Directors of the UCBs and their relatives avail loans against FDRs and LIC policies standing in their own name. The Directors and their relatives cannot stand as Surety/guarantor to the Loans and Advances (both secured and unsecured) sanctioned by UCBs. The ‘relative’ of a Director of the Bank shall mean any relative of a Director of the Bank as indicated hereunder: A person shall be, deemed to be relative of another, if and only if: (a) They are members of a Hindu Undivided Family or (b) They are husband and wife or (c) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 4. The one is related to the other in the manner indicated below: Father Mother (including step-mother) Son (including step-son) Son’s wife Daughter (including step-daughter) Daughter’s husband Brothers (including step-brother) Brother’s wife Sister (including step-sister) Sister’s husband Group of Borrowal Accounts:All group advances accounts would be renewed/reviewed at the same time. The financial statements of same date of all group accounts would be obtained and scrutinized to detect inter company/firm diversion of Bank’s funds. Combined Balance Sheet of group would be prepared and MPBF of the group as a whole would be calculated.

Page of 58 25

5.

Credit Rating:I. It has been decided to do Credit Rating exercise in respect of all the Borrowers enjoying only cash credit limit above Rs. 10.00 Lakh or only loan limit above Rs. 25.00 Lakh or either of CC or Secured Loan limit being more than Rs. 10.00 Lakh will be subject to gradation. Thus, the Borrower with cash credit limit of Rs. 5.00 Lakh and Secured Loan of Rs. 11.00 Lakh or vice -versa will be eligible for credit rating. Marks Financial Parameters Security Parameters Conduct of Account Management Business and Other Parameters 36 15 28 10 11 100 II. The accounts shall be graded as under : Marks AAA AA A BB B Above 90 81-90 71-80 61-70 Up to 60

III. The Credit Rating of existing Borrowal accounts should be continued as per norms. The exercise for assigning fresh credit rating should be carried out and completed by 31st December every year on the basis of the audited Balance Sheet and Profit and Loss account as on 31 st March. Branches are advised to take up immediately in writing with each such Borrower for submission of audited financial statements on or before 30th November every year. Page of 58 26

Zonal Offices to ensure that Credit Rating of all Borrowal accounts at Branches under their jurisdiction is completed by 31.12.2009. IV. In case of takeover of standard proposals from other Banks, the grading should be done as per norms. In case of accountholder of our Bank or other Bank with no credit facilities but having established business, its grading should also be done as per norms The parameters and the marks for takeover proposals and existing established units are as under:Sr. No. 1. 2. 3. 4. 5. Financial Parameters Security Prime and Collateral Conduct of Account Management Business and Other Parameters Total Marks 36 15 28 10 11 100

The above grading should be done on the basis of audited financial statements for past 2 years and perusal of their statement of accounts for past 2 years in addition to other parameters specified in Annexure – III. V. In order to pass on the benefit of low interest rates to the Borrowal accounts, credit rating should not be confined to the time of renewal/review of the credit limits. The grading should be done as and when the latest audited financial statements are received and the same should be forwarded through Zonal Offices to Loans & Advances Dept., Head Office for approval. VI. In case of composite borrowing, single grading should be made and applied for different facilities. Same rate of interest on the basis of gradation will be applicable to both Term Loan and CC/DBD accounts of a single Borrower. The gradation is valid for one year. However, in case any abnormalities are observed, fresh review should be made immediately and Account should be graded accordingly in between.

Page of 58 27

VII. It is emphasized that there is need for all Borrowers to be aware of the reduction in the rate of interest and the benefits of credit rating available by submitting latest audited financial statements at the earliest. This will inculcate the habit of submitting financial statements in time. Branches are advised to write to all Borrowers eligible for credit rating so that they can submit audited statements well in time to avail benefit of lower rates upon higher gradation. VIII. Credit Rating is not applicable for Mortgage Loans, Rent Securitization Loans and Premises Loan. IX. In case of loans to Educational Institutions, yearly Credit Rating should be done even though they are offered concessional rate of interest. Penal Interest @ 1% shall be charged if they do not complete the grading by 31.3.2009 w.e.f. 1.4.2009... X. Similarly Credit Rating of loans and advances to paper and stationery traders at Fort Branch should be done though interest rate is not linked to grading. XI. Revised interest rates after grading are applicable from the 1st day of the month in which Credit Rating is completed. 6. (a) Consortium Finance/Multiple Banking/Tie-Up:In order to retain our customers and to extend additional loans and advances to customers of other Banks, Bank would consider loans and advances under Consortium Finance/Multiple Banking. The sharing/dissemination of information among the Banks about the status of the Borrowers enjoying credit facilities from more than one Bank. (b) Takeover Of Loan Accounts From Other Banks:The Bank shall strive to takeover ‘AA’ & ‘AAA’ rated Borrowal accounts of other Banks through vigorous marketing. Only standard category accounts will be taken over. The scrutiny of these proposals will be strictly as per the rules and the procedures of the Bank. 7. Loans and Advances to Officers & Employees of the Bank and their Relativesage of 58 28

(i)

The

loans

to

Officers

&

Employees

(except

Staff

Housing

Loan/Consumption/Vehicle Loans and other Loans and Cash Credit Facility etc. as per Agreement/MOU with Officers’ Association/ Union) are sanctioned only by the Managing Director/Board. (ii) The Loans and Credit Facilities to the relatives of Officers/Employees will also be sanctioned only by the Managing Director/Board. The Officers, Employees and their relatives will be made Nominal Members only.

8.

Acceptance & Scrutiny and Recommendations of Loan Proposals:Acceptance:i. All credit proposals will be accepted by respective Branches/Credit Cell. However, the proposals for In-Principle Acceptance as determined from time to time will be accepted at Regional/Zonal Offices but after acceptance InPrinciple of such proposals by the Board, they will be once again scrutinized by the Branch and sent to Head Office through respective Regional/Zonal Offices. ii. Proposals beyond the powers of Regional/Zonal Offices will be sent to Head Office duly scrutinized and recommended by the Branch and respective Zone. iii. iv. v. In exceptional cases the proposal may be accepted at Head Office directly. Acceptance and Scrutiny should be done as per the laid down norms and The Specialized Credit Cell at Abhyudaya Nagar will follow the procedure as laid down in Office Orders No. 206 dated 10.11.2005 and No. 218 dated 18.9.2006 respectively. They will send proposals beyond the delegated power instructions issued by Head Office from time to time.

Page of 58 29

of DGM and up to the delegated authority of the Managing Director directly to Head Office. vi. The Regional Offices will send the proposals beyond the delegated power of DGM and up to Rs. 50.00 Lakh directly to Head Office for sanction and proposals beyond Rs. 50.00 Lakh and above shall be routed through respective Zonal Offices. vii. It has been decided not to sanction Surety loans against income proof by Affidavit and there is no established business. In case of applications for loans from Class-IV employees of Municipal Corporation of Mumbai, Navi Mumbai, Thane, Bhiwandi, Dombivali, Kalyan and Pune etc. can be considered if their salaries are received/credited regularly through ECS in their accounts for more than six months. viii. Branches shall invariably obtain Credit Report from Credit Information Bureau of India Ltd, (CIBIL) of all applicants i.e. Individual as well as Commercial Borrowers and its Partners, Directors, Trustees as well as the Sureties as per Circular OC No. 433 dated 8.4.2008 and 456 dated 8.10.2008. Branches shall also check the RBI List of Defaulters whenever new and takeover credit proposals are received. ix. In-Principle Loan Sanction Letter (Without Loan Application):In-principle' Loan Sanction letters (without loan application) to be issued to our customers whose salary is being remitted to our Bank through ECS. The sanction amount will be based on the salary amount received in the branch. The Branch In-charge to issue In-principle approval letter. 9. Scrutiny:Various aspects of scrutiny are as under:Benchmark Parameters for the purpose of scrutiny/ recommendations and sanction of Cash Credit above Rs. 10.00 Lakh and Term Loan above Rs. 25.00 Lakh. a. i. ii. For Core & General Sector (New and Existing) Current Ratio = 2.00 Quick Ratio = 1.00 Page of 58 30

iii. iv. v. vi.

Total Long-term Liabilities = 4:1 Total Net Worth Total Liabilities Actual Sales = 5:1 = Minimum 90%. Total Net Worth Projected Sales DSCR = 1.5 or above but not less than 1.25 each year. vii. Prime Security – Should adequately cover the Drawing Power. In case the Borrower operating account within DP throughout a year, it can be eligible for full marks.

viii. ix. x. xi. xii. xiii. b.

Collateral Security – 25% to 50%. Total Security – 160% Margin – As given in the subsequent column under margin. Debtors = Maximum 90 days Creditors should be less than Debtors. Profit making unit For Sensitive category 1) For Builders & Developers:I. Debt Equity Ratio = 2:1 II. Total Liabilities Total Net Worth III. Margin on Prime Security = 50 % IV. Collateral securities = Above 100%. V. Total Securities = 300% VI. Profit > 10% Sale 2) For Other Civil Contractors, I. Debt Equity Ratio = 3:1 II. Total Liabilities = 4:1 Total Net Worth Page of 58 31 Hotel Industry and Iron and Steel Traders, the following ratios are fixed (New and Enhancement) = 3:1

III. Margin = 40% IV. Collateral securities = Minimum 50%. V. Total Securities = 200% VI. Profit > 5% Sale 10. Margin:I. A. Cash Credit – Hypothecation of Stocks & Book Debts (Book Debts older than 3 months do not qualify for DP unless specially permitted by the Board in deserving cases. Stock should be paid stocks.) Stock:a) b) a) b) B. For Priority Sector Advances and manufacturing units For others For Priority Sector Advances and manufacturing units For others a. DBD/SBD/Channel Credit b. Bill Discounting under L/C II. a. New Machineries & Imported Reconditioned Machineries not used in India (Import documents required for assessing the value for Term Loan) b. 2nd hand Indian Machines/ 2nd hand imported machines used in India (Valuation Report by Chartered Engineer is required giving present value and residual Page of 58 32 50% 25% 40% 15% NIL 25% 25% Debtors:25%

life of the machine.) III. Gold/Jewellery Ornaments Repayable within 12 months Repayable within 24 months IV. Purchase of a. Shop/Gala/Office/Commercial/Factory b. Land & Building (Construction) (In case of Mfg. Unit project only) c. Residential Flat/House Up to Rs. 20.00 Lakh Above Rs. 20.00 Lakh V. a. Renovation/Repair of Flat/House (Loan above Rs. 2.00 Lakh) b. Renovation/Repairs of Shop/Factory VI. Vehicle:– A) New not more than five years) a. Used Bus/Tempo/Trucks b. Private Vehicles Car/Jeep VII. Furniture/Computer/Equipments etc. VIII. Medical Instruments/Equipments to Medical Practitioners IX. Mortgage Loan: X. (i) Govt. securities, NSC, KVP, RBI Bond (Accrued Value) a. Up to 2 years old Page of 58 33 30% 40% : : 50% of valuation/Agreement Value whichever is lower. 40% of valuation/Agreement values whichever is lower. 25% 10% 20% B) Used Vehicles (Not more than three years old and for Buses 25% 25% 30% 10% 25% 25% (As per Circulars issued from time to time)

b. Above 2 years up to 4 years old c. Above 4 years old (ii) Secured Cash Credit (SOD) against NSC/KVP/RBI Bonds (Accrued Value)

-

25% 15% 20% For

Customers And NIL for our Bank Officers & Staff

XI. LIC Policy (Surrender Value) XII. Loan against FDR (accrued value) XIII. Bank Guarantee & Letter of Credit

-

10% 10% Min. 25% Cash Margin

11. Calculation of Working Capital requirements/Term Loan
I. Working Capital/Cash Credit/DBD/SBD/WCTL/Channel Credit Limits :i. Up to Rs. 1.00 Crore for Borrowers other than SSI Units and Rs. 5.00 Crore for SSI Units (a) The Assessment of Working Capital requirement of Borrowers other than SSI Units requiring fund based Working Capital limits up to Rs. 1.00 Crore and SSI Units requiring fund based Working Capital limit up to Rs. 5.00 Crore from banking system be made on the basis of their realistic projected annual Turnover. (b) The Working Capital requirement is assessed at 25% of the realistic projected Turnover to be shared between the Borrower and the Bank i.e. Borrower contributing 5% of the Turnover as Net Working Capital and Bank providing minimum of 20% of the Turnover. Page of 58 34

(c)

Drawals against the limits should however be allowed on

the basis of the Drawing Power calculated based on timely submission of monthly statements of Stocks, Receivables and Sundry Creditors and also periodical verification of such statements vis-à-vis physical stocks by Branch Officials. ii. Above Rs. 1.00 Crore for Borrowers other than SSI Units and Rs. 5.00 Crore for SSI Units Here the Bank may adopt Working Capital Gap Method or Production/Process Cycle Method for assessing the Working Capital requirements.

a. Working Capital Gap Method:Current Assets – Current Liabilities excluding outstanding Working Capital Facilities = Working Capital Gap (WCG) – 25% of WCG = Eligible Maximum Permissible Bank finance (MPBF) b. Production/Processing Cycle Method:Sr. Manager/Manager, Industrial Finance Dept. will visit the industrial unit and work out requirement of working capital based on the existing production/processing cycle as well as realistic Projected Cycle. He will take into account credits received on purchase of raw material, credits allowed on sales, inventory levels of raw materials, work in process, finished goods etc. comparing the same with industry level. In order to arrive at the future requirements of the unit, he will scrutinize the projected sales for next two years and work out the requirement of the working capital. II. Loans & Advances to Contractors/Builders/Developers: Loans & Advances to Contractors/Builders/Developers shall be worked out as follows: Page of 58 35

The basis of fixing the eligible Loan amount is on the basis of projected realistic cash flows till the entire Contract/Project is completed. Here while calculating the projected cash flows, Branches should also take into account the Deposits/Tender amount kept with the principals, the period for preparing the Bills and the time gap between submission of Bills and realization of payment as well as the terms of the contract whereby the period for payment for Bill is specified. They should also consider the period of credit available by the suppliers. After going through the Tender, the Branches should get a fair idea of realistic cash flows and arrive at net deficit until the entire project/contract is completed. The Bank’s fund will be the maximum net deficit minus minimum margin. III. Funded Interest Term Loan (FITL): Funded Interest Term Loan is extended for funding the interest on loans. This has to be considered very judiciously and can be extended to the Borrower when the account is Standard Asset or had never been an NPA account and when the Borrower does not have alternative source of servicing the interest on Term Loan. To consider such a finance, Bank will there have is to satisfy that the Borrower really does not have cash genuine deviation delay from for the initial projections like inflow generation from any other source to service interest and when project/implementation reasons beyond the control of the

Borrower. Hence, the Borrower does not pay interest but Bank capitalizes the interest through a separate loan account i.e. FITL IV. Working Capital Term Loan: Working Capital Term Loan limit is extended in the following casesi) To units/trading accounts where large cash credit limit is asked and Bank decides to bifurcate working capital limit into cash credit and loan(WCTL) taking into account the available prime securities and existing substantial collateral security. In that case, WCTL limit shall be secured by Page of 58 36

hypothecation of stocks and book debts including book debts above 90 days. Weightage will be given to new/additional collateral securities offered for availing additional CC and WCTL limits.
(ii)

Where a contractor obtains contract of some amount and it is to be completed within certain months/period, he requires finance for completing the contract. As per the terms of

contract, he receives advance and thereafter receives payment after stage-wise completion of the work. The balance amount is received after some months of completion of the contract. In such cases WCTL is sanctioned taking into account advance receivable, period of contract execution, stage wise receipt of payment of work executed and period of receipt of balance contract amount after execution of the contract. It is secured by Deposits/Advances given to the Principals, Stock, Work in Progress, Book Debts and Receivables of contract. (iii) WCTL should be sanctioned against Book Debts above 90 days only in case of Trading and Manufacturing Units. However, WCTL can be considered to the Govt. and Semi-Govt. contractors against the work orders. (iv) WCTL is also granted while reviving the sick unit under rehabilitation package. Under rehabilitation, additional finance is given for increasing production capacity, purchase of raw materials and for cost of production including payment of salaries and wages etc. (v) SOD limit up to Rs. 10.00 Lakh against Regd. Simple Mortgage of Nonagricultural (N.A.) Land and other immoveable properties would be considered for Borrowers other than Mumbai and Navi Mumbai branches. The value of properties shall be 200% as margin of 50% would be obtained.

Page of 58 37

12. Time Frame for disposal of Loan/Cash Credit proposals:The term “dispose of” means acceptance of loan application, scrutiny, recommendation, sanction, documentation and disbursement of loan. Credit proposals within the delegated powers of Branches should be disposed of within 23 calendar days by the Branches. Further credit proposals beyond the delegated powers of the Branches, the files should be sent to Regional/Zonal Office within 23 days after completing scrutiny in all respects. The Regional/Zonal Offices should dispose of files within 10 days from the date of receipt of file from the Branch. The Industrial Finance Dept. and Mortgage Dept. should also dispose of file within 10 days from the receipt of file by respective Dept. Under no circumstances, the above fixed period should be exceeded by Branch/Regional/Zonal Office/respective Depts. without referring the file to the next authorities for relaxing the time period giving specific reasons. However, in case of new/takeover proposals, the IF/Mortgage Dept. /R.O. and Z.O. should dispose of the credit proposals within 15 days. 13. Visit to Borrower Accounts:The visits to Borrower accounts residence, office, factory and all the properties offered for mortgage should be made well in time and as per the time frame stipulated by the Bank in its various circulars/guidelines. The Visit Report should be given in the specified Bank’s format and complete in all respects. 14. Disbursement of Loans & Advances:a) The disbursement of loans and advances should be made expeditiously after completion of all documentation and compliance of sanction terms and conditions. The Disbursement Authorities can release part disbursement pending part compliance of requirements provided all the requirements are complied before the entire amount is disbursed.

15. Collateral Securities:A] The collateral securities acceptable to the Bank and to be obtained from Borrowers as approved by the Board are enumerated as underage of 58 38

1. Lien/Mortgage/Parri

Passu

or

Second

charge

of

Flat/Gala/

Shop/

Factory/Plot/Land and Building. 2. Assign/Pledge – LIC/NSC/Other Govt. securities/RBI Bonds. 3. Lien on Bank Deposit like FDR/RD etc. 4. Hypothecation of Machinery/Equipments/Vehicles 5. Govt. Guarantees. 6. Any other collateral securities, where Bank lien/Hyp./Mortgage/Charge is available. B] Encumbrances/Third party interest in property offered as mortgage 16. Sureties:At least two sureties are required, as per the bank norms. 17. Housing Loans to Non-Resident Indians:Housing Loans to Non-Resident Indians be considered if the co-applicant is a resident of India and repayment capacity is good. 18. Repayment Schedule:Repayment schedule are decided by both the parties as par the Bank Norms 19. Membership:All Borrowers and their Sureties should be members of the Bank. . 20. Sanction of Credit Facilitiesi) All the credit proposals above Rs. 50.00 Lakh will be sanctioned by the Board of Directors. The Board may delegate Chief Executive Officer and other officials of the Bank to sanction/reject credit facilities. The sanctioning authority is responsible for the quality of loan account. They should follow all the norms laid down in the Credit Policy and norms communicated from time to time while sanctioning the facilities. Page of 58 39

(ii)

The sanctioning authority can reconsider

their earlier sanction in case they are convinced about the eligibility and additional securities if any offered for reconsideration. (iii) (iv) Annexure XI 'A' & ‘B’. 21. Interest Rate Fixationi) The Rate of Interest is normally fixed based on PLR i.e. Prime Lending Rate. However different rates of interest above and below PLR may be charged for different types of loans. Present PLR is 13.50%. (ii) For the Borrowal accounts which are subject to Credit Rating, the Rate of Interest is based on grading of accounts as followsiii) The Rate of Interest changed from time to time will be communicated to the Branches. (iv) All Rate of Interest are floating rate of interest unless it is specifically mentioned by the sanctioning authority as per the norms. Branch Official should exercise delegated Delegation of Powers: The Board has powers within limits fixed to them with due care and judiciously. delegated the powers to sanction credit limits as per the attached

Grade

SSI & Other manufacturing Units % p.a.

Govt. contractors Registered with PWD/MKVDC/Mun. Corpn./CIDCO, etc. % p.a. PLR +0.75 +1.00 +1.50 +2.50

Others (Incl. Traders) % p.a.

AAA AA A BB B

-1.00 -0.50 PLR +1.50 +2.00

PLR +0.50 +1.00 +1.50 +2.50

Page of 58 40

22. Release of Security In Existing Running And Regular Loan Accounts:In respect of release of securities/ immovable properties (other than flat/house in Housing Loans), the DGMs, GM & MD would exercise the delegation in respect of A/cs. within their delegation irrespective of the value of security. The request of A/cs. with limits above Rs. 50.00 Lakh will be placed before the Board. In case of irregular accounts as well as irregular/indirect liability of the Borrowal Accounts, requests for release of securities shall not be considered. In case of new Regular/Standard A/cs., which was earlier irregular/NPA accounts, request of these accounts will also not be considered. In case of closed accounts, requests for release of securities shall be considered by the Branch In-charges after taking into consideration of their direct/indirect liabilities. If there are no irregular indirect liabilities, the securities shall be released by the Branch Incharge.

23. Revalidation Of Limit:If the applicant fails to execute the documents for availing the new facility within 3 months from the date of sanction, his/their application should be submitted to the sanctioning authority for release of loans & advances. The order to release limit should not be automatic. The Sanctioning Authority has to obtain latest audited Balance Sheet, Profit & Loss A/c. of loanee and other details. should submit his report accordingly. For revalidation, following commitment charges to be charged. i) Loans and Advances up to Rs. 5.00 Lakh ii) Loans and Advances above Rs. 5.00 Lakh Page of 58 41 Rs. 100/The In-charge of the Branch shall visit the unit/office and ensure that there are no adverse changes in the position of the account. He

up to Rs. 50.00 Lakh iii) Loans and Advances above Rs. 50.00 Lakh

-

Rs. 500/Rs. 1,000/-

The various powers exercised by the Branches like over drawings, against clearing & cheque purchase/discount shall be sent to the Zonal Offices on the monthly basis. Similarly, powers exercised by the Zonal Offices shall be sent to Head Office on monthly basis. 24. Rejection Power: The Branch In-charge is not authorized to reject any credit proposal. They should refer the proposal to the Regional/Zonal Office for rejection giving specific reasons within 23 days from the date of acceptance of proposal. 25. Permission to Borrower to maintain Current A/C. with Other Banks:Bank permits Borrower accounts to maintain CD A/c. with other Banks for payment of taxes/receipt of export proceeds/release of import documents/realization of upcountry cheques etc. The Borrower should seek permission in writing, explain in detail the requirement and undertake not to avail credit limit from that Bank and to transfer amount credited in those accounts due to realization of upcountry cheques/export bills to cash credit a/c. with our Bank. They shall also undertake to submit statement of account every quarter to the Bank for perusal. The officials are delegated to allow such CD A/c. with other Banks as under:Total Limits DGM GM M.D. Rs. 25.00 Lakh Rs. 50.00 Lakh Above Rs. 50.00 Lakh

While granting permission to the Borrower, the In charge of the Branch should write to the concerned Bank informing credit limits enjoyed by the Borrower, prime securities and advise them not to extend any credit limit without our written permission. It should also be emphasized that CD A/c. is allowed only for the purpose of payment of taxes/collection of upcountry cheques etc.

Page of 58 42

26. Documentation and Release:Effective documentation is the execution of documents in the proper form, according to the requirements of law and strict adherence to the terms and conditions stipulated by the sanctioning authority. Bank officials who are entrusted with the work of documentation and release of credit facilities have no authority to vary or dilute or waive any of the sanctioned stipulations. In case of genuine cases of non-fulfillment of terms and conditions of sanction by the loanee/Borrower accounts, these officials should place the same before the sanctioning authority for necessary decision. A document to be valid in law must be properly executed, attested, duly stamped and registered as required by law. Branches shall obtain from the Borrowers 5 PD Cheques (Blank) in favour of Bank in addition to the standing instructions to debit the loan installments to their CC/CD accounts maintained with us and in case if they do not maintain account with our Bank, then obtain PDCs as per number of installments and 5 Blank Cheques. 27. Monitoring, Review And Post Sanction Follow-Up:Monitoring, Review and Post Sanction Follow-up are most essential to ensure not only end use of finance but to assess the health of any industrial unit/trading activity financed by the Bank. Branches, Regional/Zonal Offices, Industrial Finance Dept. and other Departments/Officials entrusted with the work of monitoring, review and post sanction follow-up should strictly adhere to the time schedule and guidelines/procedures of the Bank. All Loans and Advances of Rs. 50.00 Lakhs and above shall be regularly monitored by the DGMs of respective Zones and AGMs of respective Regional Offices and submit the Report to General Manager, Credit at Head Office. 28. Submission of Audited Financial Statements for the year ended March by Borrowers with the Credit Limit above Rs. 10.00 Lacks:-

Page of 58 43

It is decided that all Borrowers with credit limits above Rs. 10.00 Lacs from the Bank should get their accounts audited compulsorily by their Chartered Accountants. A. For Enhancement of Limits: (i) (ii) To submit audited financial statements from 1st November. To submit Balance Sheet and Profit and Loss Account finalized by Chartered Accountants as per Books of Accounts – up to 31st October. B. Renewal/Review of Limitsi) To submit Balance Sheet and Profit and Loss Account finalized by Chartered Accountants as per Books of Accounts - 30 th November of the year OR (ii) To submit Audited Balance Sheet and Profit and Loss A/c. by 31st December of the year

29. Policy for Valuation of Properties – Empanelment of Values:Valuation of Land & Building, Plant & Machinery and other moveable and immoveable properties including Flat/Gala/Shop/ Office etc. with value above Rs. 15.00 Lacs will be done by professionally qualified Approved Valuers on the panel of the Bank. Valuation of furniture and fixtures shall not be considered while determining value of Prime/Collateral securities of immovable property. 30. Review Of Credit Policy: - The above credit policy must be reviewed annually.

Page of 58 44

4.4: Loans Process & Credit Analysis in Banks:
Loans are the most important assets in a bank’s portfolio, sound credit analysis is the key to making high-quality loans and managing credit risk. As very few firms have the resources to operate their businesses on a cash basis. Most have to rely on credit just to stay in business. Loan Process Flow: Stage 1 Pre-Qualifying >> Preliminary determination of borrowing capacity and credit history Stage 2 Application >> Fill out loan application. >> Gathering documents from applicant. Stage 3 Processing >> Credit check. >> Appraisal of property. >> Title search. >> Page of 58 45 Stage 4 Underwriting >> Loan goes to underwriter for approval. >> All conditions requested by Stage 5 Closing >> Signing documents drawn. >> Documents sent to title company. >> Buyers

Employment & residential history complied. >> Verification of financial reserves.

underwriter are met. >> Loan is approved.

bring in money and sign documents. >> Title company records deed. >> Escrow is now closed. >> Buyers get keys to property.

Figure 2 The above diagram shows various stages involved in the standard loan process flow. As Shown in the diagram, credit analysis in integral and essential part of loan process. Credit analysis is defined as ‘The process of evaluation an applicant’s loan request in order to determine the likelihood that the borrower will live up to his/her obligations’. It means basically it checks the credit worthiness of the borrower. The concept of credit offers a business many benefits, but it always entails risk. You’re caught between two crucial profit objectives. Within your bank’s credit policies, you want to do as much as you can to grant credit – and facilitate sales. But the credit manager is equally obliged to make tough judgments and determinations concerning his/her customer’s credit-worthiness, to ensure that the bank is paid on time and in full. The entire operations of the banking industry revolve around obtaining deposits and granting loans and different credit facilities to its customers for viable projects.

Page of 58 46

Loan Process & Credit Analysis in Abhyudaya Co-op. Bank:
The Loan Process Flow in Abhyudaya Bank Is As Follows:

Page of 58 47

Stage 1 Pre-Qualifying >> Preliminary determination of borrowing capacity and credit history

Stage 2 Application >> Fill out loan application. >> Gathering documents from applicant. >> Consent letter from surety.

Stage 3 Processing >> Credit check. >> Appraisal of property. >> Title search. >> Employment & residential history complied. >> Verification of financial reserves. >> Compiling industrial visit report.

Stage 4 Underwriting >> Loan goes to for approval. >> All conditions prescribed in credit policy are met. >> Loan is approved.

Stage 5 Closing >> Signing documents drawn. >> Documents sent to title company. >> Buyers bring in money and sign documents. >> Title company records deed. >> Escrow is now closed. >> Buyers get keys to property.

Figure 3 The popularity of loan and advances facility provided by Abhyudaya bank is due to its effectively structured loan process and credit policy. The credit policy is being revised at regular interval. These efforts resulted in maintaining the NPAs almost at Zero level Credit analysis of the loan proposal is been carried out as per the outline of credit policy.

Case Study-1 M/s. Sneha Medicare (P) Ltd.

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1. Brief history of directors & company: M/s Sneha Medicare (P) Ltd. is a Private Limited company established in 2003 and enjoying facility since then. Earlier it was a proprietorship firm in the name of M/s Sneha Chemicals enjoying facility since 1991 and the account was opened in 1988. The company consists of 2 directors namely – Mr.Kirti M.Shah and Mrs Bhavita K.Shah. At present the company is enjoying CC limit of Rs.200.00 lacs, LC (Import) facility of Rs.130.00 lacs. Now they have applied for renewal present facilities of CC limit of Rs.200.00 lacs, LC limit of Rs.130.00 lacs and newly applied for FBD/FBP facility of Rs.50.00 lacs. The company is also operating account at IDBI Bank, Kalbadevi Road Branch for collection of outstation cheques. The LC is being opened through HDFC Bank. CR called on 27.02.2008 yet to be received. 2. Details of Associate Accounts: Nil. 3. Product dealt/manufactured: Importers & stockiest in Pharmaceutical raw materials. 4. Sureties offered: Mr.Kirti M.Shah and Mrs.Bhavita M.Shah (both the directors stood as surety in their individual capacity). No outsider sureties offered. Based on audited B/S as on 31.03.2006 & 31.03.2007 5. Capital : Authorised Capital of the company consist of 300000 Equity Shares of Rs.10/- each (Rs.30.00 lacs), Issued, Subscribed and Paid up capital 150000 Equity Shares of Rs.10/- each - Rs.15.00 lacs. 6. Reserves: Reserves & Surplus consist of accumulated balance in P&L A/c. increased from Rs.13.19 lacs in 2006 to Rs.22.20 lacs in 2007 and projected at Rs.30.74 lacs for 2008. 7. Unsecured Loans: Unsecured Loans increased from Rs.62.08 lacs in 2006 to Rs.125.34 lacs in 2007 and projected at Rs.123.08 lacs for 2008. Unsecured loans are from Directors, friends & relatives. 8. Other Liabilities: Other Liabilities increased from Rs.17.19 lacs in 2006 to Rs.24.18 lacs in 2007 on account of provisions made for TDS on commission, brokerage, and

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salary to directors, sales tax payables, and professional fees payable. Other liabilities projected at Rs.12.00 lacs for 2008. 9. Fixed Assets: The fixed assets of the company has decreased from Rs.12.03 lacs to Rs.10.22 lacs after providing depreciation and projected at Rs.8.50 lacs for 2008. 10. Current Assets: Current assets of the Company increased from Rs.1232.14 lacs in 2006 to Rs.1374.00 lacs in 2007 and projected at Rs.1552.12 lacs for 2008. Current Asset includes Sundry Debtors, Loans & Advances, closing stock, cash & bank balance. 11. Profit/Losses: Net Profit before provision of tax decreased from Rs.9.04 lacs in 2006 to Rs.9.01 lacs in 2007. No provision made for taxation for the period 2006-07. 12. Diversion of funds: As per branch report there is no diversion of funds. 13. Performance of the borrower: The Net Sales of the company has increased from Rs.3388.15 lacs in 2006 to Rs.4513 47 lacs in 2007. Sales for the last six month were Rs.1828.21 lacs. Net Profit before provision of tax decreased from Rs.9.04 lacs in 2006 to Rs.9.01 lacs in 2007. No provision made for taxation for the period 2006-07. Average monthly branch and firm turnover during the last six months was Rs.311.08 lacs and Rs.304.70 lacs. Difference being account operation in IDBI Bank. 14. Analysis of Balance Sheet & Profit & Loss A/c. & Interpretation of Ratios. (a) Current Ratio: (b) Total Debt / Equity ratio: (c) Long Term Debt / Equity ratio: (d) Creditors ratio: (f) Debtors ratio: 2006 1.04:1 35.72:1 1.72:1 99 days 115 days 2007 1.08:1– 11.76:1– Unsatisfactory due to low equity base. 0.47:1 - Satisfactory 88 days – now within norms. 107 days - Beyond norms.

15. Comments on report of Industrial Finance Dept: N.A. 16. Payment of Statutory Dues: Company had made provision for payment TDS on TDS on commission & brokerage Rs.1.06 lacs, Sales Tax Payment – Rs.5.08 lacs in the B/S as on 31.03.2007. On the Net Profit of Rs.9.01 lacs during the Year 2006-07, Co.’s tax liability was Rs.3.36 lacs after various deductions & the payment of

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advance tax of Rs.1.00 lakh, TDS of Rs.1.78 lacs & paid tax of Rs.0.59 lakh as per the Computation of Co’s Income for tax purpose. 17. Utilisation of the Cash Credit limit: Party is utilizing the present limit fully. Operation in the account is regular, not maintaining DP. Party had paid Rs.11.72 lacs as an interest for CC utilization for the last 6 months. Present average turnover in the account was Rs.311.08 lacs p.m. 18. RBI Inspection Report observations and compliance thereof: NIL 19. Internal & Concurrent Audit observations & compliance thereof: Stock Audit Report of Navare Dharap & Co. dated 04.12.2007 states that stock is kept in shared go down without specific demarcation. The party has not given list of creditors along with stock statement and hence if counted, will resulted in negative DP. The whole stock is not insured which is kept in different places. However party had given a letter dated 27.12.2007 stating that debtors normally make payment from 90 to 120 days which is about Rs.3.50 crores to Rs.4.00 crores and hence should be included for DP. 20. Non-compliance of sanction stipulations of Board: N.A. 21. Insurance of stocks/Machineries hypothecated etc. : Insurance of Stocks for Rs.10.00 lacs – IFFCO TOKIO Co. valid up to 16.05.2008 lying in Bhiwandi Go down on rental basis and Flat No.48-B, 2nd floor at Swastik Pankaj, LBS Marg, Mumbai-86 adm.520 sq.ft insured for Rs. 8.40 lacs which is valid upto 9.01.2009 insured with ICICI Lombard. 22. Credit Rating: ‘A’ as per audited Balance Sheet as on 31.03.2007. 23. Reconstitution of Partnership: Nil. 24. Mortgage of Immovable Properties: 1) Flat No.48-B, 2nd floor at Swastik Pankaj, LBS Marg, and Mumbai-86 adm.520 sq.ft. (carpet) with market value as per report dated 19.09.2002 of M/s Associates was Rs.28.00 lacs. – mortgaged on 07.10.2002 A.V.Shetty &

2) Shop No.404, Rajshri Plaza, Ghatkopar (West), Area 282 sq.feet, market value Rs.23.50 lacs as per valuation report of Shri Pramod D.Patekar dated 01.10.2005 – Mortgaged on 19.12.2006.

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3) Shop No.405, Rajshri Plaza, Ghatkopar (West), Area 258 sq.feet, market value Rs.21.70 lacs as per valuation report of Shri Pramod D.Patekar Mortgaged on 19.12.2006. All these properties are insured with ICICI – Lombard GEN INS. Co. for Rs.8.40, Rs. 15.75 lacs & for Rs.14.19 lacs respect. As approved in the Board Meeting dated 29.10.2005, all the properties are equitably mortgaged without registration. 25. Collateral securities offered: LIC (PP) Rs.2.41 lacs, FDR Rs.20.91 lacs – Total Rs.23.32 lacs. 26. Group Exposure: Within limit. 27. Special request of the borrower: Party has now requested to consider the proposal for Export Bill Discount Facility Rs.50.00 lacs and for this they have registered their name with Pharmaceutical Exports Promotion Council, Hyderabad for exporting the pharmaceutical products. 28. Need for Working Capital Term Loan: N.A. 29. DSC Ratio: N.A. 30. Branch recommendation: Branch has recommended for renewal of CC of Rs.100.00 lacs, WCTL of Rs.100.00 lacs, Import LC Rs.130.00 lacs and FBD/FBP of Rs.50.00 lacs by continuing existing securities. 31. Zonal Office Recommendations with justification in detail: The applicant company is an old accountholder with regular account operation. They are enjoying CC limit of Rs.200.00 lacs and import LC limit of Rs.130.00 lacs. Our bank opened LC through HDFC Bank No.5 Rs.165.11 lacs in 2006-07 and present O/S is Rs.80.00 lacs in one revolving LC. The monthly turnover is very good at Rs.311.00 lacs. The collateral securities by way of mortgage of residential flat and two offices are also very good in addition to cash collaterals of Rs.23.32 lacs. However there are certain adverse remarks of Auditors. The DP sometimes comes to negative because debtors of about Rs.400.00 lacs are always above 90 days and are not included in the debtor’s statement resulting in negative DP. To overcome this, we have to partly convert the CC into WCTL repayable over a period which will cover only debtors above 90 days. Then CC will be covered by debtors below 90 days. Since it is non priority sector Page of 58 52

advance as per our scrutiny form Tondon Committee Norm II are applied and hence DP is further adversely affected. Now they have started exporting the materials. As per their letter dated 17.03.2008, they have mentioned that so far they have exported 3 consignments to Ghana. To increase the business they have applied for FBP/FBD facility of Rs.50.00 lacs for export financing. In view of the above, we recommend – a) Renewal of CC of Rs.100.00 lacs. b) WCTL of Rs.100.00 lacs covering debtors above 90 days repayable in EMIs. c) Import LC renewal of Rs.130.00 lacs. d) FBP/FBD of Rs.50.00 lacs. Subject to continuation of bank charge on existing all securities. 60

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Financial Position & Projection:

1. Liabilities

As on 31.3.06

Current Year 31.3.07 37.20 74.83 2.32 50.50 251.84 989.00 24.18 1429.87 10.22 1370.51 3.48 45.66 1429.87 4116.96 4513.47 9.01 1.81

Proj. Year 31.3.08 45.74 3.00 123.00 225.00 1785.00 12.00 1593.74 8.50 1500.00 52.12 33.12 1593.74 Not given Not given Not given Not given Not given Not given

Proj. Year 31.3.09 53.50 150.00 225.00 1170.00 15.00 1613.50 8.00 1550.00 20.00 35.50 1613.50 Not given Not given Not given Not given Not given Not given

Proj. Year 31.3.10 60.50 125.00 220.00 1250.00 13.50 1669.00 7.50 1600.00 24.50 37.00 1669.00 Not given Not given Not given Not given Not given Not given

a. Capital & Reserves b. Quasi Capital c. Unsecured Loans (ST) d. Unsecured Loans (LT) e. Bank Borrowings f. Sundry Creditors g. Other Liabilities h. Secured Long Term Loan TOTAL 2. ASSETS a. Fixed Assets b. Current Assets c. Other Current Assets d. Investments TOTAL 3. PROFIT AND LOSSA/C a. Purchases b. Sales c. Gross Profit D. Net Profit e. Depreciation f. I. T. Paid

28.19 4.49 62.08 236.52 928.80 17.19 1277.27 12.03 1231.08 1.05 33.11 12277.27 3293.54 3388.15 5.87 2.41

(A) WORKING CAPITAL ASSESSMENT – Method -1 Actual As Per Projected Current Year 1 Balance Sheet as on 31.03.2008 31.03.2007 1370.51 1500 1013.18 1197 357.33 303 89.33 75.75 Page of 58 54 (Rs. In Lakhs) Projected 2 31.03.2009 1550 1185 365 91.25

Current Assets Current Liabilities Working Capital Gap Margin 25%

P.B.F. Current Ratio

268 1.08 : 1

227.25 1.05 : 1

273.75 1.9 : 1

(B) Working Capital as per Turnover Method: YEARs Projected Sales Working Capital (20% of Projected Sales) CURRENT YEAR 4513.47 902.69 PROJECTED 1 PROJECTED 2 Not Submitted Not Submitted Not Submitted Not Submitted

Position Of Stock/ Book Debts/ Sundry Creditors as on the date of Visit:
(Rs. in Lacks) Priority Stock + Book Debts Sub Total Less: Sundry Creditors Sub Total Less: Margin 25% Drawing Power Non Priority Stock 128 Less: Sundry Creditors 544 Sub Total 415 Less: Margin 25% 103 (A) Total 312 Book Debts Less: Margin 40% (B) Total Drawing Power(A+B) 709 283 425 1139 84 70 96 75 00 27 70 57 61

Bank recommends sanction of limit as under: AMOUNT [1] Cash Credit Rs. 100.00 Lacs [2] Letter of Credit Rs. 130.00 Lacs [3] W.C.T.L Rs. 100.00 Lacs

MARGIN 25% 25%

Conclusion

Currently the credit policy of the Bank is reviewed periodically by taking into account changes in political environment, economical environment and money markets, changes in credit policy announced by the Reserve Bank of India and

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happening of other events to protect the interest of the Bank and to maintain profitability. Proper credit appraisal involving performance of client, sureties and industrial visits helps bank to reduce its NPAs and hence to reduce its credit risks. Bank has classified all the sectors in to five different categories such as core sector general sectors, sensitive sectors, banned sectors and restrictive sectors. If an individual / Business concern or any other applicant need loan from Bank, they have to be member of the bank. Bank use its own credit rating system, CIBIL report as well as confidential report from other banks as per the needs to judge the credit worthiness of clients.

Recommendations
After learning the credit appraisal process at Abhyudaya Co-operative Bank and observing the findings, I put some of my recommendations which, firmly believe, would enhance the overall credit delivery process of the bank and experience of the corporate clients. My suggestions are as follows: Findings: Currently, the processing of credit proposal is done manually by officers. Page of 58 56

Suggestion: The processing of credit appraisal can be expedited by using suitable software that can help the Bank in calculation of Ratios, credit rating and pricing. The Bank could therefore make use of tools to evaluate the proposals for different interest rates and conditions. Findings: The government and Reserve Bank of India have devised compromise settlement schemes to help Banks recover non performing assets specially for genuine borrowers. The scheme provides concession and interest waivers so that immediate settlements can take place. Suggestion: There are special software available that enables the Bank and the users in respect of: o Speedy preparation, evaluation and approval of settlement proposals. o Availability of reliable information and systems to monitor and control the recovery process. Thus, such software could be installed to prepare and evaluate settlement schemes.

BibliographyS

Books:
Financial management - Prasanna Chandra Page of 58 57

Circular - Abhyudaya co-operative bank Banking and law practices – S.L. Gupta Handbook on working capital- D.P.Sarda

Websites:

http://www.abhyudayabank.co.in/profitloss_march09.htm w.e.f 25.06.2009 http://www.abhyudayabank.co.in/resources&deployment.php w.e.f 25.06.2009 http://www.wikipedia.org http://www.rbi.org.in http://www.cibil.com

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doc_635182857.doc