EXECUTIVE SUMMARY

A Study on Credit Management at SUCO Bank

About the Bank
SUCO bank of India was established on 11th November 1919 with its headquarters in
Mumbai. The bank has been playing a very proactive role in the economic growth of India and it
extends credit for the requirements of different sectors of economy, i.e. Industries, exports,
trading agriculture, infrastructure and the individual segments. The bank has deployed credit to
super economic growth and to earn from well diversified portfolio of assets.
Bank was rated as the number one among Indian banking in India in increasing
shareholders wealth during 2013-2014 according to study by ASSOCHAM.

CHAPTER -1
INTRODUCTION

Credit management Introduction;

Credit is the trust which allows one party to provide resources to another party where that
second party does not reimburse the first party immediately (thereby generating a debt) but
instead arranges either to repay or return those resources (or other material of equal value) at
a later data. The resources provided may be financial (e.g. Granting a loan), or they may
consists of goods or services (e.g. consumer credit). Credit encompasses any form of differed
payment also known as a borrower.
Credit

does

not

necessarily

required

money.

The

credit

concept

can

be

applied in batter economics as well, based on direct exchanges of goods and services
(Ingham 2004 p.12-19).
However, in modern societies credit is usually denominated by a unit of account. Unlike
money, credit itself cannot act as a unit of account. Movements of financial capital or
normally dependent on either credit or equity transfers.
Credit is in turn dependent on the reputation or credit worthiness of the entity which takes
responsibility for the funds
Credit is also traded in financial market in the credit insurance.
A credit default swap represents the price at which two parties are exchange this risk the
protection seller takes the rest of default of the credit in return for payment , commonly
denoted in basis points (on the basis point is 1/100 of a percent) of the notional amount to be
referenced, while the protection buyer pay this premium and in the case of default of

underlying (a loans, bonds or other receivables ), delivers receivable to the protection seller
and receives from the seller the par amount (that is, made whole).
The cost of credit is the additional amount, over and above the amount borrowed, that the
borrower has to pay. It included interest, arrangement fee any other charges. Some cost is
mandatory, required by the lender as an integral part of the credit agreement. Other cost, such
as those credit insurance, may be optional. The chooses whether or not they are included as
part of agreement.
Interest and other charges are presented in a variety of different ways, but under many
legislative regimes lender are required to quote all mandatory charges in the form of an
annual percentage rate (APR).
The goal of the APR calculation is a promote truth is lending, to give potential borrower a
clear measure of the true cost of borrowing and to allow a comparison to be made between
competing products

STATEMENT OF PROBLEM:
The comprehensive statement of problem can be thus stated as A STUDY ON CREDIT
MANAGAMENT IN SUCO BANK PVT LTD Bellary city.
To have a good and deep understanding of the following issues in the relation to the
credit management in a co-operative bank.
The credit appraisal techniques followed by the bank before sanctioning loan.
The reporting system in place to get a prompt feedback on the performance of the
borrower with specific references to identifications of probability of default and to
suggest measures to reduce default.

Objective of study:
1) Understand the concept of Credit Management and Credit Rating Tools followed by
SUCO Bank

2) Understand how the bank will manage the Credit to reduce the NPAs
3) Understand the Pre and Post Credit Management Process.
4) Understand the credit management of various sectors like Agriculture, SME and Service
Sector.
5) How the bank will fix the rate of Interest to the borrower.

Methodology:
The required information for the project is taken for both the Sources i.e.
i)
ii)

Primary Data
Secondary Data

1. Primary Data:
The primary data was obtained from the direct interaction with Branch Manager
of SUCO BANK
2.Secondary Data:

Official web site of SUCO Bank and other Web sites.

Annual reports and relevant text books on the subject matter

LIMITAIONS OF THE STUDY:

1)
2)
3)
4)
5)
6)
7)

The time confined is limited.

The study is confined only to Bellary city.
The information is collected only by SUCO Bank.
Less information is available by secondary sources.
Study is only on credit management of the bank.
Brief information is collected by the bank.
Study is followed the procedures of the bank.

on Credit Management in case of Suco Bank in Bellary

Credit Management subject is a key subject which plays an important role in deciding
the overall performance of the bank. Therefore, the subject of Credit Management was chosen
for the project work. Accordingly the project was undertaken at SUCO BANK IN BELLARY