A

PROJECT REPORT
ON

LOAN MANAGEMENT SYSTEM

At
DHANSHRI MULTI-STATE CO-OPERATIVE SOCIETIES
BANK LTD, SOLAPUR.
SUBMITTED BY
MR. SURYAWANSHI S.SANDIP
Under The Guidance Of

Prof. ASHWINI BARPUTE

SUBMITTED TO
University of Pune in partial fulfillment of the requirement for the
award of degree of Master of Business Administration
Through
Jaywant Shikshan Prasarak Mandal,
Nahre Technical Campus.
Batch 2014-15

DECLARATION

I SURYAWANSHI S SANDIP. MBA II YEAR Studying at JSPM Narhe

Technical Campus Pune hereby declare that the project report titled. LOAN
MANAGEMENT SYSTEM was carried by me in the partial fulfillment of MBA
program under university of Pune
This project is undertaken as part of the academic curriculum according to
university rules and norms, and has no commercial motive or interest. It is original work.
It is not submitted to any other organization to any other purpose.

Date:
Place: Pune

SURYAWANSHI S.SANDIP
MBA (Finance)

ACKNOWLEDGEMENT

I take this opportunity of submitting this report to express my regards towards those
who offered their individual guidance in the hour of need.

I sincerely acknowledge with deep sense of gratitude and indebtedness to Director of

JSPM narhe technical campus Pune DR. N.S Nehe and my internal guide Prof.
Ashwini Barpute who has guided me with valuable inputs throughout the project. He
gave knowledgeable insights about the topic, which helped e throughout the
problems.

I also would like to thank prof. shobha kalunge for giving me this opportunity
to work on this topic; it surely has given me insights into areas I was not much
familiar earlier. I have tried to share those insights with you in this report.

This project was really worthwhile to work on because it encompassed all the
learning for a management student. Thus it provided a ground to implement what is
learned and also depicted the real tasks that have to be undertaken in the witty-gritty
involved in the system

Sr
no.

Index
Title

Page no.

Introduction.
1.1 Objective of the Project.
1.2 Selection of the topic for the Project.
1.3 Limitation of the Study.
1.4 Rationale of Study.

Profile of Company.
2.1 Historical Background of Bank.
2.2 Features And Awards of Bank.
2.3 Board of Directors of Bank.

Theoretical aspect of the topic

Research Methodology

Loan Policy Of Sindhudurg dcc bank ltd.

Data Analysis and interpretation

Finding

Suggestion

Conclusion

10

Annexure

11

Bibliography

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

Its a thing of massive gratification for me to present the Project Report on the topic
Study of Loan Management System for Dhanshri Multi-state Co-operative
Societies Bank Ltd.
I have deep interest in studying the loan procedure and system of credit risk management
in banking industry.
This project attempts to identify and know about loan sanctioning work and lending
procedure in Dhanshri Multi-state Co-operative Societies Bank Ltd. It also attempts to
develop at least first approach to these areas, to think through policies, principles, and

practices to accomplish the new tasks. By this practical training I am able to equip
understanding, the thinking, the knowledge, and the skills for today and also for
tomorrows credit managerial work in financial institutions.
Initially I was just having the bookish knowledge about all lending system,
practices and functions, but after doing this project, I got most of the practical
knowledge. I have come to know, what actually happens in the department of credit in
banking industry.
Though it is not possible to have the information of all the spheres in market, in
such a very short period, but I tried to get more and more about all functions and
practices applied in practical working, I have particularly stresses on.
This study, complex as it is, has acquired new dimensions with the dynamic
social and technological changes of the past two decades. Changing trends, cultural
diversity, more educated work force and Awareness of rights and privileges have
prompted a new look at the entire organizational structures and systems.
After the study and analysis of various aspects about the system of Loan
management I have come to the various findings and observations regarding the actual
data analysis which have led me to the suggestions and recommendations which will help
bank to improve its position by reducing non-performing assets and lend money to
increase profit position and status of the bank.
I have studied Loan management system project in Dhanshri multi-state CoOperative Societies Ltd. through their financial statement of last 3 years. In 2012-13,
2013-14 & 2014-15
Deposits is high which a good sign is for the bank. It represents rapidly the increasing the
Deposites and comparively Loan. The amount sanctioned by bank as loan has shown
gradual increase year by year.

Bank has to keep provision for its defaulter and N.P.A. it is up to 100% of loan
amount naturally it create financial burden on bank. The percentage of NPA is
decreasing from year 2012 to 2013 which is good for the bank.

CHAPTER 1

INTRODUCTION

Introduction
I had complete project onLoan Management System at Dhanshri multi-state Cooperative Societies bank ltd. Within two month. This project attempts to identify and
know about loan sanctioning work and lending procedure in Dhanshri multi-state Cooperative Bank Ltd. It also attempts to develop at least first approach to these areas, to
think through policies, principles, and practices to accomplish the new tasks. By this
practical training I am able to equip understanding, the thinking, the knowledge, and the
skills for today and also for tomorrows credit managerial work in financial institutions.
Loan Policy is aimed at accomplishing its mission of retaining the bank's position
as a Premier Financial Services Group, with World class standards and significant global
business, committed to excellence in customer, shareholder and employee satisfaction
and to play a leading role in the expanding and diversifying financial services sector,
while continuing emphasis on its Development Banking role.
All the function of a modern bank, lending is for the most important. Advances
comprise very large portion of a banks structure.The strength of a bank is thus primarily

judged by the soundness of its advances. A wise & prudent policy in regard to advances is
considered an important factor inspiring confidence in the depositors & prospective
customers of a bank. All types of business activity including trade, industry and
agriculture depend on bank finance in one form or the other. Bank assists in creating
more avenues of employment and thus helps raising the standard of living of people.

1.1 Objectives of the project:To understand the various types of loan accounts, documents, terms & condition for the
sanctioning of loans.

To analyse the loan sanctioning procedures of the applicants in Dhanshri multi-state

Co-operative Societies Ltd

To identify the credit worthiness of the borrowers.

To study disbursement and Loan recovery in Dhanshri multi-state Co-operative

Societies Ltd

To analyse the profit generation out of money lending for the bank.

To identify the proportion of advances against deposits.

To provide suggestions and recommendation for improvisation.

1.2 Selection of the topic for the project:-

I have deep interest in studying the loan procedure and system of credit risk
management in banking industry.This project attempts to identify and know about
loan sanctioning work and lending procedure in Dhanshri multi-state Co-operative
Societies Ltd.

On the discussion with the management, of Dhanshri multi-state Co-operative

Societies Ltd. it is understood that the subject of Loan Management System has not
been studied earlier & bank needs to study the same.

Bank also wants to know the actual position of Deposits and Loan policy.

 1.3 Limitations of the Study:-

Some data due to the purpose of secrecy was not disclosed by the bank.

The main limitation of the research is the data source. The data is collected from the
audited financial statements, which are prepared on the historical cost basis.

These financial statements are prepared at the end of the financial year. So, it gives a
view on particular date.

There was time constraint & restriction on the part of management while giving
specific financial information.

Some information is provided by the staff of the Ltd.

 1.4 RATIOANLE OF THE STUDY

Study of Loan System requirement helps to know the banking position about Deposit
and loan comparision yearly.

Any money accepted as deposits must be for the purpose of lending or investments,
making advances & making investments of funds are equally important function.
They are two main sources of the bank.

There are few general principles of good lending which every banker follows when
appraising an advance proposal.

In a demand loan account, the entire amount is paid to the debtor at one time, either in
cash or by transfer to his savings bank or current account. No subsequent debit is
ordinarily allowed except by way of interest, incidental charges, insurance premiums,
expenses incurred for the protection of the security etc. Repayment is provided for by
installment without allowing the demand character of the loan to be affected in any
way

Efficient management of Loan System could enable the bank to reap the benefits as
and when their proportion of Deposits and Loans are good and also enable the bank to
consolidate its position in the market.

Chapter 2
PROFILE OF THE BANK

PROFILE OF THE BANK:

BANK AT A GLANCE

Name of The Bank

Dhanshri Multi-state Co-operative Societies Ltd

Registered and Central Office

Damaji road,mangalwedha,Dist.solapur
Maharashtra, India.

Registration Number

S.U.R /M.D.A /R.S.R 1436

Registered on

1st Jan 2005

Email-id

dhanshribk@multistate.in &

dhanshrimultistate@gmail.com
www.dhanshrimultistateb.com
02188-220132

Website
Contact No.
Number of Branches

35

Regular Members

2570

Nominal Members

400

Paid Up share capital

3.79 Crores

Reserves and Surplus

1.5 Crores

Total Deposits

180Crores

Total Staff

250

Profit of the year

1.70 Crore

Investments

40.68Crores

Audit Class

2.1 Historical Background of Bank:

Dhanshri multi-state Co-operative Societies Ltd. is established on 1st Jan

2005. This bank has constituded with the object of providing funds to
Firms,Education,co-operative societies & others in Solapur, Jat & Vijapur district. Prof.
Shivajirav Kalunge is founder of Dhanshri bank.Firstly Kalunge sir had started Dhanshri
PATPEDHI but after 2002 Goverment including so many Rules & restrication on all
PATHPEDHI that's why they had started Dhanshri co-operative society bank. Currently
we are operating with the network of 35 branches in entire Solapur, Jat & Vijapur district.
Our bank playing very important role in financial sector of Solapur, Jat, Vijapur District.
Our bank is known as farmer's bank & We implemented different schemes in the interest

of farmer & people of Solapur, Jat & Vijapur are having full confidence on our bank.
Therefore nearly more than 40% people of total population of Those District are our
account holders. Currently our working capital is 40.68. crores & our total deposit is 180
cores.

2.2 FEATURES AND AWARDS OF BANK

Features

Insurance security up to Rs 1,00,000/- deposit.

Nomination facility available for deposit account

Safe deposit Locker facility available in Solapur, Pandharpur, Jat, Borale, Sangola
City, Mohol, Gheradi, Marawade & Head Office .Counter branch.

Dhanshri bank had started recuring deposite from 1Jan 2005.

Easy Loan facility for 85 different categories Small scale industries.

Rs 50,000 accidental insurance security for kishancardholder.

Loan available for agriculture farming, dairy, poultry, forest farming & irrigation.

Salary mortgage loan available.

first multi-state bank in solapur which was started the ''KANYARATNA YOJNA''

Half percent more interest available on all types FD for Senior citizen & co-operative
Society.

Loan Available for agriculture graduates for agri clinic & agro industries.

The bank has been awarded A Audit classification for the year ended on 31st march

2015.

AWARDS

Awarded as SAHAKARRATNA Best Multi-State co-op Societies in the years 20112012

Awarded as SAHAKARRATNA Best Multi-State co-op Societies in the years 20132014

State Co-op bank has Awarded our Bank as Best banker for fullfilment Financial
criteria in the year 2014-2015

2.3Board of Directors:

Chairman-Smt.Shobha kalunge
Vice Chairman- Shree.Ishvar gadade
No.

Name of Director

Address

Telephone no

Shree. Shivajirao
kalunge

1220.A/P:Mangalwedha,Tal;Mangalwedha

(02188)221132

Smt.Suvarna
shivajirao Pawar

1920, mangal
karyalay
A/P:Mangalwedha
Tal:-mangalwedha

(02362)221345

Smt.Rajlakshmi
kalunge-Gaykawad

320,solapur-pune
highway.Tal:Solapur

(02367)220132

Shree.Yadappa mali

A/P.Hulajanti,Tal,
Mangalwedha

(02188) 252101

Shree.Nyandev javir

456,A/P:Mangalwedha Tal:mangalwedha

(02188)221150

Smt.Prabhadevi
kanshetti

A/P:Hulajanti Tal:mangalwedha

(02188) 246508

Shree.Kisan sawanji

A/p:Mangalwedha
Tal:-mangalwedha

(02188) 225225

Shree.Dattatray
Nagne

724A/P:- Nagne
galliTal:Mangalwedha

(02188) 253030

Smt.Manisha Kore

S/V.45 A/P:Mangalwedha Tal:mangalwedha

(02188) 224277

10

Smt.Sangita Tad

(02188) 237570

11

Shree.Sharad
Hembade

412
A/PMangalwedha
Tal:-mangalwedha
A/P:-Mangalwedha
Tal:-mangalwedha

(02188) 253031

2.4 Departments of the Dhanshri Multi-State Co-operative Societies

Ltd

::Executives::

::Name::

::Contact No.::

Chief Executive
Officer

Mr.R.K.Fadtare

(02188) 220132

Manager (Adm.)

Mr.S.B.Sawant

(02188)220833

(02188)220832
(Accounts, & Audit)
Manager

Mr.R.A.Unhale

Mr.P.A.Kalunge

(Loan, Dev &

Planning)

(02188)220134
.
(02188)244314
(02188)244315

Manager
(Field & Recovery)

Mr. H.D.Bedare

Manager
(P&D)

Mr. R. B. Sawant

(02188) 245070
EPABX
(02188)221215

Chapter 3
Theoretical aspect of the topic

Mr. P. S. Sawant

3.1 CONCEPT OF BANK:

Banking means the accepting deposits for the purpose of lending or investments, from the
public repayable on demand or otherwise & withdrawal by cheque, draft, order or
otherwise.
Any money accepted as deposits must be for the purpose of lending or investments,
making advances & making investments of funds are equally important function. They
are two main sources of the bank.
Importance of advances in banking business:All the function of a modern bank, lending is for the most important. Advances comprise
very large portion of a banks structure.
The strength of a bank is thus primarily judged by the soundness of its advances. A wise
& prudent policy in regard to advances is considered an important factor inspiring
confidence in the depositors & prospective customers of a bank.
All types of business activity including trade, industry and agriculture depend on bank
finance in one form or the other. Bank assists in creating more avenues of employment
and thus helps raising the standard of living of people.

3.2 MULTI-STATE CO-OPERATIVE SOCIETIES:

Co-Operative Societies
Definition-

A Society reggistered or deemed to be registered under (2002 *39* ) this Act and
includes a national co-operative society and a federal co-operative.it's main object to
serve
the
interests
of
members
in
more
than
one
state.

A co-operative Society is an autonomous of persons united voluntarily to meet their

common economic, social and cultural needs and aspirations through a jointly owned and
democratically enterprise.
The co-operative Societies in plays an important role even today in rural financing.

Values-

Co-operative Society in India are registered under the Co-operative Societies(2002) Act.
The cooperative society is also regulated by the Central Govt. They are governed by the
Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.
Co-operative bank is based on the values of self-responsibility, democracy, equality and
solidarity. In the tradition of their founders, co-operative members believe in the ethical
values of honesty openness, social responsibility and caring for others.

 3.3 Types of Co-operative Banks in India

The co-operative banks are small-sized units which operate both in urban and
non-urban centers. They finance small borrowers in industrial and trade sectors besides
professional and salary classes. Regulated by the Reserve Bank of India, they are
governed by the Banking Regulations Act 1949 and banking laws (co-operative societies)
act, 1965. The co-operative banking structure in India is divided into following 5
categories:

Primary Co-operative Credit Society

The primary co-operative credit society is an association of borrowers and
non-borrowers residing in a particular locality. The funds of the society are derived from
the share capital and deposits of members and loans from central co-operative banks. The
borrowing powers of the members as well as of the society are fixed. The loans are given
to members for the purchase of cattle, fodder, fertilizers, pesticides, etc.

Central Co-operative Banks

These are the federations of primary credit societies in a district and are of
two types-those having a membership of primary societies only and those having a
membership of societies as well as individuals. The funds of the bank consist of share
capital, deposits, loans and overdrafts from state co-operative banks and joint stocks.
These banks provide finance to member societies within the limits of the borrowing
capacity of societies. They also conduct all the business of a joint stock bank.

State Co-operative Banks

The state co-operative bank is a federation of central co-operative bank and
acts as a watchdog of the co-operative banking structure in the state. Its funds are
obtained from share capital, deposits, loans and overdrafts from the Reserve Bank of
India. The state co-operative banks lend money to central co-operative banks and primary
societies and not directly to the farmers.

Land Development Banks

The Land development banks are organized in 3 tiers namely; state, central, and
primary level and they meet the long term credit requirements of the farmers for
developmental purposes. The state land development banks oversee, the primary land
development banks situated in the districts areas in the state. They are governed both by
the state government and Reserve Bank of India. Recently, the supervision of land
development banks has been assumed by National Bank for Agriculture and Rural

development (NABARD). The sources of funds for these banks are the debentures
subscribed by both central and state government. These banks do not accept deposits
from the general public.

Urban Co-operative Banks

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to
primary co-operative 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
hold today. These banks were traditionally centered on communities, localities, work
place groups. They essentially lend to small borrowers and businesses. Today, their scope
of operations has widened considerably.

3.4 Difference between Commercial bank & Co-operative bank

Co-operative banks also perform the basic banking functions of banking but they
differ from commercial banks in the following respects
1. Commercial banks are joint-stock companies under the companies act of 1956, or
public sector bank under a separate act of a parliament whereas co-operative banks were

established under the co-operative societys acts of different states.

2. Commercial bank structure is branch banking structure whereas co-operative banks

have a three tier setup, with state co-operative bank at apex level, central / district cooperative bank at district level, and primary co-operative societies at rural level.

3. Only some of the sections of banking regulation act of 1949 (fully applicable to
commercial banks), are applicable to co-operative banks, resulting only in partial control
by RBI of co-operative banks and

4. Co-operative banks function on the principle of cooperation and not entirely on

commercial parameters.

3.3 FUNCTION OF BANK

Functioning of a Bank is among the more complicated of corporate operations. Since
Banking involves dealing directly with money, governments in most countries regulate
this sector rather stringently. The process of financial reforms, which started in 1991, has
cleared the cobwebs somewhat but a lot remains to be done. The multiplicity of policy

and regulations that a Bank has to work with makes its operations even more
complicated. Banking Regulation Act of India, 1949 defines Banking as "accepting, for
the purpose of lending or investment of deposits of money from the public, repayable on
demand or otherwise and withdrawal by cheques, draft, order or otherwise."Deriving
from this definition and viewed solely from the point of view of the customers, banks
essentially perform the following functions:
1) Accepting deposits from public/ others (Deposits)
2) Lending money to public (Loans)
3) Support to local business
4)Personal Finance
5) Support to farming
6) Small unit Industries

The banks are not limited only these six functions. There are so many functions involved
in the activities that a bank performs today. Banks are organized in a linear structure to
perform these activities at the base of which lies a Branch. The corporate office of a bank
is normally called a head office.

Chapter 4
RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

Research:
According to Clifford Woody research comprises defining redefining problems,
formulating hypothesis or suggested solutions, collecting, organizing and evaluating data,
making deductions and reaching conclusions, last carefully testing the conclusions to
determine whether they fit formulating hypothesis.
The researcher has done the research by using two types of data. Mostly secondary data is
used for the study; in some cases the authorities of the Bank have provided their original
record. Sometimes informal discussions are also carried out for collecting the required
information. In order to collect the data the finance department extends its full co-

operations.
PRIMARY DATA
The data collected originally by the investigator for his research project is called primary
data collection of primary data is not an easy task it requires good amount of time, money
and effort knowledge experience and common sense.

Following are the method of collecting primary data.

1) Observation Method.
2) Interview Method.
3) Information from Correspondents.
The primary data was collected by interview and discussion with manager & employeesstaff.

SECONDARY DATA
Secondary data consist of information that already exists. Secondary data provide a
starting point for research and offer the advantage of the cost. Secondary data was
collected through.
Internet.
Reference Book, Journal, Newspaper etc.
Bank Annual Report.

CHAPTER 5
LOAN POLICY

 5.1 LOAN TYPES OF DHANSHRI MULTI-STATE COOPERATIVE SOCIETY.BANK LTD.

Name of loan:-

Dhanshri Pagar Taran Karj Yojana (Salary mortgage loan)

Loan
purpose:-

Personal needs of the borrower

Eligibility:-

Govt. servant, state transport cooperation, Insurance Company, M.S.E.C,

Municipal corporation employee residing in Solapur District.

Limit of loan:-

Maximum upto Rs 5,00,000/- 20 times salary of (bank salary, VDA

and offer allowances).

Salary deduction should not exceed 75% of total salary

including EMI.

Rate of
Interest:-

16% EMI

Repayment
Period:-

Maximum upto 7 years.

Security:-

Two salaried guarantor, Tri-Party agreement between bank, borrower

and salary issuing officer/employer.

Documents
Required

Photograph, Residence proof of borrower and guarantor.

Recent salary slip of borrower and guarantor.

Tri-party agreement.

To facilitate borrower bank has deligated loan sanctioning powers

of branch manages upto loan amount of loan amount of Rs. 75000/at branches level.

Name of loan:-

Home loan

Loan purpose:-

Construction/purchase of house, purchase of flat, Repair/Renovation

of Home/flat.Personal needs of the borrower

Eligibility:-

80% estimated cost or per square feet construction cost

R.C.C Rs 1800/- Sq. feet
Load Bering & slab Rs 1500/- sq. feet
Laterite/bricks construction of Rs 1000/- sq. feet
Mangalore roof/cement sheets cr mental sheets
As per estimated cost or cost as per above mentioned cost whichever is
lowest for house/flat repair and renovation maximum loan limit is upto
2.00 lac.

Limit of loan:-

Up to Rs 20.00 lac.

Rate of
Interest:-

Upto Rs 5.00 lacs 15.0% EMI

Above Rs 5.00 lacs 16.0% EMI

Repayment
Period:-

Upto 15 years.
For repair/renovation upto 7 years

Security:-

Reg mortgage of land and building or flat, two competent guarantors

Loan
disbursement:-

Loan disbursement will be made in two to three installments by

verifying the work progress

7/12 extract, Plan and estimate by civil Engineer or architect,

Grampanchayat permission for house construction. N.A.
permission. Income proof of borrower and guarantor, title
verification search Report

Bank also take over house loan obtained by customer from other
banks/financial institutions

Documents
Required

Name of loan:-

CONSUMER DURABLE

Loan purpose:-

for the purchase of T.V, fridge, furniture, computers, two wheeler,

mobile

Eligibility:-

90% of the cost/quotation

For salaried persons deduction upto 75% of the total salary.

Limit of loan:-

Max upto Rs. 50,000/-

Rate of
Interest:-

16.0 %

Repayment
Period:-

upto 5 years in case of two wheelers & mobile, maximum upto 3 years

Security:Documents
Required

Hypothecation of the articles to be purchased

Photograph & Residence proof of the borrower and guarantor

salaried person, latest salary slip and for others income tax returns
or income documents

Quotation of the articles to be purchased

for two wheeler, driving license For professional/businessman

loan can be repayed via small savings accounts
Loans upto 40000/- limits can be sanctioned at banks branches
level

Name of loan:-

Vehicle Loan

Loan purpose:-

Purchase of four wheeler and commercial vehicle.

Eligibility:-

Upto 80% of the quotation cost and repayment capacity of the

Borrower

Limit of loan:Rate of Interest:-

Commercial Vehicle-17%EMI
Own Car-16%EMI

Repayment
Period:-

Upto7 years Commercial

5 years self use

Security:-

Hypothecation of the vehicle and if needed more security in the from

of land, Building, Deposit

Guarantors:-

Two Guarantors

Documents
Required:-

Photograph and residence proof of borrower and guarantor.

Income proof of borrower and guarantors salary slip, IT returns,

Bank statement of business.

Quotation of the vehicle (including tax, insurance, Registration)

In case of used vehicles valuation of vehicle to be purchased.

Also loan for purchase of used vehicle can be obtained.
Maximum 3 years old Vehicle can be financed by the bank.

5.3 LOAN SANCTIONED PROCESS:

The Documents, Terms & Conditions Require Being For Application For Various
Types Of Loans For Sanctioning:1) Borrower & guarantors should be shareholder account holder of the bank.
2) Reason for the loan & income certificate of the Borrower & guarantors
3) Xerox copy of Reshan Card / Home bill / Electricity
proof.

Bill / Phone bill for address

4) Photo id of the borrower and guarantors which Includes Election Card/PAN

Card/Driving
5) Balance sheet and Profit & Loss statement order for Previous three years of the
business.
6) Stock statement, furniture, Machinery, shop papers if He is giving it as security.
7) Two photos of both borrower and guarantors.
8) For additional security 1) LIC policy 2) Other banks cheques
9) If amount of loan is than 1, 00,000 then the borrower should have additional shares at
5.0 % of the loan amount. If he doesnt have it then he has to purchase it.

In case of house /Flat /Shops /Plot there are some extra documents required as:

Plot purchase copy

Ownership city survey 7/12 document original.
Original agreement copy between & builder.
To be complete.
Stamp paper according to demand condition.

Loan procedure of The Dhanshri Multi-State Co-operative Society Bank Ltd

Why people take loan from bank? The answer for this question is very loan & the best
answer for this question can be given by the banker only. People take loan for their
personal need, because they dont have money spend to satisfy their needs and wants etc.
The reason of the loan can be anything. By categorizing these reasons the bank
introduces the various types of loan into the market.
All the files for the loan proposal comes to the head office of the Bank.At the Head
Office in every month the bank conduct two meeting of board directors where the files
are decided to sanction or
Every file comes to the head office with the report of the manager. Because bank
manager knows very well that how is the transaction of that applicant on his account.
Then the file goes to the Loan Manager at Head Office for his report on that report. Every

one gives their own view on the basis of the applicants transaction & on the basis of
document which is submitted by the applicant.
After the report the file is placed in to the Directors Meeting on 5th or 21st of every month
in which board of directors decides that which file should be sanctioned and which is not
to be sanctioned. After the meeting all the unsanctioned files is sent to the respective
with all document which was previously submitted by the applicant & the sanctioned
files remains in the Head Office in the Loan Department for the further provisions
Then bank takes the signature of the person to whom the loan is sanctioned along with his
two guarantors. The bank takes the signature of their own sanctioned form on which it is
written that the borrower and the guarantors are liable to pay the amount of loan. The
bank also takes the signature of the borrower on three debit voucher. Debit voucher and
Credit voucher is used for internal transaction of the bank. Bank also takes the signature
on another four documents that are

1) Promissory Note

2) Loan Agreement

3) Lien & Set Off

4) Letter of Guarantee

After that bank ask for the original papers of the property which is to be given as security.
If the borrower had given the LIC policy then bank assigns it in banks favours. So that if
the borrower will fail to pay that loan amount of the bank then the bank can recover it
from LIC policy by giving it to the LIC Company. The bank always gives loan to the
borrower up to 75% to 80% of the total security which is given by the borrower.
After the completion of all the document and signature the file goes to the branch
manager for the signature on the Sanctioned Letter. Once the signature is done then the
bank staffs open the loan account of the borrower and transfer the amount of the loan to
the Saving, Current, Cash Credit or any other account of the borrower.

5.4 Loan Recovery Procedure:

This is the more significant section of the whole bank as people here are having more
work. This is so because, the Bank has 3.44% NPA (Non Performing Asset) and it is
harmful to the banks business, as the name implies this section deals with the recovery of
loan.
Researcher study the loan recovery procedure, each bank has its own procedure of
recovery it includes policy adopted by bank for its recovery. Each and every bank tries to
recover its money as early as possible so banks take observation and also strict
supervision from borrowers. If bank fails to recover the money in time then it is adversely
impacted on banks reputation, so to reduce upcoming problems recovery is necessary.
Recovery procedure includes

Importance of recovery of loan

Provision of bank as per category of borrower
Recovery of loan to its doubtful borrower.
Recovery of loan before its maturity period.

I. Importance of recovery of loan-:

Every banks loan department focuses more attention on its recovery of loan. In brief
quick recovery of loan shows financial soundness of bank to protect from restrictions of
R.B.I. and N.P.A. provision, each bank has very serious about recovery of loan. The loan
recovery policy and its terms are as follows.
1. Banks first recover its interest amount and then recover the principle amount.
2. Bank has to bridge the gap between loan amount and its financial burden and
provision.
3. Recovery is important because it converted borrower into defaulter then bank has to

bear various expenditure, such as

a) Maintaining proper books of loan.
b) Proper inspection of mortgaged items
c) Expansion incurred due to recovery such as legal expenses.
4. Defaulter converted into N.P.A., and then it is permanent loss of bank which cannot fill
up.
5. Each and every time bank has to make the provision for doubtful loan.
6. Share of profit will decreases due to provision.
7. Due to rising N.P.A., R.B.I. takes strict action against those banks it will harmful for
bank it may lose its reputation.
Above mentioned are points shows that why recovery of loan is important and how it will
impact on banks financial condition.

II. Provision of bank as per category of borrower

The bank divides the borrower into 2 types viz. standard borrower doubtful borrower.
The borrower who pay the instalment at regular interval/period, called standard borrower
and those borrower who do not pay the instalment regularly called doubtful borrower.
Bank should make a provision on its standard and doubtful borrower, it standard
borrower pay instalment regularly still bank has to make provision on that loan amount.

III. Recovery of loan to its doubtful borrower

Recovery of loan from doubtful borrower is very difficult task, so bank must be proper
alert about its recovery from doubtful borrower. Bank has to take following steps to
doubtful borrower.
1. Bank sends remerging notice to borrower which inform borrower that his loan account
was overdue

2. Bank charge penalty interest on loan account.

3. Bank sends notice to guarantor, to pay the balancing instalment.
4. If still borrowers dont give any responses then bank send him 2 nd notice to repay the
loan amount within given period.
5. If borrower dont repay the loan, then bank take legal action against him. Bank has full
right to recover of loan and for recollecting loan, bank sale the mortgaged asset into
market and recover amount. If still the selling value should lesser than actual loan
amount, then bank strictly recover the balancing amount from borrower.

IV. Recovery of loan before its maturity period

Recovery is important we know that to recover loan amount, from defaulter is very
difficult task for bank. So bank has to careful watch on recovery. In some cases bank
already found that to recollect loan so its demands loan before its maturity. In case of
following things are happen.
1. Borrower failed or unwilling to pay the instalments within prescribed time period
2. No any transaction in cash credit account for more than 3 months.
3. Borrower not follows the rules and regulation prescribed by R.B.I. and board of
director of bank.
4. Borrower should not repay last 3 months instalment that time account should converted
into doubtful account.
5. Bank found that whichever documents submitted by borrower were duplicated.
6. Bank found that financial condition of borrower is not sound.
7. Bank take precaution that doubtful loan account should not converted into N.P.A

Problems Faced By Bank Regarding Its Recovery

Researcher task is to identify what are the problems faced by bank regarding its recovery.
Researcher finds out these problems with the help of unstructured interview of bank

officer. Following are mentioned various problem faced by banker regarding its
borrowers.

Submission Documents:
Bank usually demanded stock statement 3 month for checking financial soundness of
borrower in cash credit loan, but some borrower delay to submit its stock statement
regularly.

Dividend:
Borrower must be member of bank if he is not the member of bank, then bank give him
temporary membership and give some shares.
Bank must pay dividend on share holders suppose the borrower become defaulter and he
does not pay instalment regularly still bank has to pay dividend on shares. It creates
financial burden for bank.

Misuse of loan:
Many times it was found that borrower take loan for some purpose but it used for
different purpose. It is misuse of loan and such condition there may be possibility of
defaulter of loan.

Overdue, N.P.A. provision:

Bank has to keep provision for its defaulter and N.P.A. it is up to 100% of loan amount
naturally it create financial burden on bank.

Expenditure:
For recovery defaulter of loan bank has to pay various expenditure such as legal,
suspensions of property etc. there will not any possibility of getting money back so it is

unavoidable expenditure for bank.

Above mentioned are the various problems faced by bank regarding its sanctioning
procedure as well as recovery. I.e. Duplicate documents, misuse of loan are the most
important problems. If bank has overcome these problems then it help to improve the
banking business.

CHAPTER 6
DATA ANALYSIS &
INTERPRETATION

DATA ANALYSIS & INTERPRETATION

6.1) Performance Analysis of Deposit & Loans Of The Dhanshri Multi-State Cooperative Society Bank Ltd
Table 1
Year

Deposit

Loan

2012-2013

150.35 Cr.

110.7 Cr.

2013-2014

165.50 Cr.

122.12 Cr.

2014-2015

180.75 Cr.

136.48 Cr.

Graph Showing The Increase And Decrease In The Deposit & Loan Of
Dhanshri Multi-State Co-operative Society bank ltd.

Figure 1

Interpretation:As we have seen Deposits are continuously increasing from 2013, 2014 &

2015. Because Fixed Deposits are increasing continuously last three years.
As we have seen deposits are increasing so that loan is also increasing in same
proportion.

6.2) Performance Analysis Of Loans Of The Dhanshri Multi-State Co operative

Society Bank Ltd For Last 3 Years.

Table 2
Items

Book Debt
Hypothecation
Agst Fixed Deposit

Loan2010
412125.39
3411808.6

Loan 2011

Loan 2012

838892.78 8312390.75
2557707.3

1481648.6

503167

537708.13

850559.5

1554336

2997983

3524165.6

Gold Loan
Cash Credit

House hold

1898127.22

1461691.46 1213650.11

Plant & Mach.

68647

48602.62

48364.62

Vehicle Loan

76574

76402

57480

Term Loan against Saving

A/c

1726174.55

Housing Loan A/c

Term Loan For Staff

194555
3703655.96

2189680.1 2623162.45
289192

229562

4837503.5 5631362.55

% Change In Amounts Given For Various Loans.

Figure 2

Interpretation:

The Housing, Vehicle, Gold Loan of Bank increased continuously.

The Hypothecation, Cash Credit Loan of Bank decreased on 2012-2013.

6.3)Table Showing The Amount Of Hypothecation Loan Of Bank For The Last 3
Years.

Table 3

FINANCIAL YEAR
2012-13
2013-14
2014-15

127887940
87582872
68075425

Graph Showing The Increase And Decrease In Hypothecation Loan Of Bank For
The Last 3years.

AMOUNT (IN RS)

Figure 3

Interpretation:The hypothecation loan was disbursed the most in the year 2013 & 2014 and then there
was a gradual decrease in the loan as other kinds of loans like, Gold loan etc. loans come
up

6.4) Table Showing the Amount of Gold Loan for Last 3 Years
Table 4
FINANCIAL YEAR

AMOUNT (IN Cr.)

2012-13

22.48

2013-14

19.26

2014-15

16.62

Graph Showing The Increase And Decrease In The Gold Loan of Bank.

Figure 4

Interpretation:
Gold Loan was provided by Bank and hence it took time for the
bank to increase its loan sales. Because Interest taken on gold loan is 10%And method
is use for interest is daily rating method. And the chances of loss are very low.

6.5) Table Showing The Amount Of Cash Credit Of Bank For Last 3 Years

Table 5

FINANCIAL YEAR

AMOUNT (IN RS)

2012-13

189278714

2013-14

147065875

2014-15

115547820

Graph Showing The Cash Credit Bank.

Figure 5

Interpretation:-

The year 2012-13 the Cash Credits decreases slightly. Because of that bank management
decided to overcome of that type of loans. Because Recovery of this loan low as
compared to other types of loan.

6.6) Table Showing Profit Amount Of The For The Last 3 Years

Table 6

FINANCIAL YEAR

AMOUNT (IN RS)

2012-13

1.22 Cr.

2013-14

1.40 Cr.

2014-15

1.70 Cr.

Graph Showing The Amount Of Profit The Dhanshri Multi-State Co-operative

Society Bank For The Last 3 Years

Figure 6

Interpretation:-

Profit of bank is increase due to housing loan finance and Gold loan is increased thats
why it affects follows on profit. In bank its NPA percentage is low so that provision for it
is decreased by bank. Recovery of loan is also increased. But so far for last 3 years it has
been observed that the degree of increase of the profit is steady and big rise in profit has

not seen for Bank.

6.7) NON PERFORMANCE ASSET

Meaning:
According to RBI ,Terms loans on which interest or installment of principal remain
overdue for a period of more than 90 days from the end of a particular quarter is
called a Non Performing Asset.

An asset, including a leased asset, becomes nonperforming when it ceases to

generate income for the bank.

A NPA is a loan or an advance where Interest and/ or instalment of principal

remain overdue for a period of more than 90 days in respect of a term loan.

EXAMPLE :-

We suppose that a party was disbursed a loan on 1st Jan 2012, it's due date is 1st June
2012. But a party does not make a payment.So
*It will be an Standard asset from 1st Jan 2012 till 1st June 2012 (Due Date)
*It will be Special Mention Account from 2nd June 2012 till 29th August 2012 (90
Days )
*It will be Sub-standard from 30th August 2012 till 29th August 2013
*It will be doubtful from 30th august 2013 till 29th august 2014

Comparative Statement of NPAs;

Table 7

Sr. No.

2010-11

2011-12

2012-13

Total adv.

1963

2149.64

2500.03

Less provision

160

166

169

Net adv.

1803

1983.64

2331.03

Gross NPA

298.18

283.55

249.28

Net NPA

138.18

117.55

80.28

7.66%

5.93%

3.44%

Particulars

Graph Of Comparative Statement Of NPA :

Figure 7

Interpretation:NPA of the year 2012-13 is less than the previous two years i.e. year 2010-11& 2011-12.
It is the good for bank but it is expected less the NPA, more it will be beneficial to bank

so that the whole managing body of the bank is focused on how to minimize the NPA or
how to avoid the blockages so that bank run very well in competitive situation.

CHAPTER 7
FINDINGS

FINDINGS:-

1)Bank takes into consideration the Character, Capacity, Collateral and

Condition

while sanctioning the loan.

2) Loans and deposits increase in same manner. Due to deposits are increased in
2014, we have seen in increment in loans sanctioned accordingly.
3) The Housing loan finance is having highest portion of loan in total loan.
4) The amount sanctioned by bank as loan has shown gradual increase year by year.
5) Cash credits have inctreased in 2014 due to the recovery from NPAs is observed.
6) The amount of profit from year 2013 to 2015 has shown increase.
The percentage of NPA is decreasing from year 2013to 2015 which is good for the bank.

FINDING ABOUT WORKING OF BANK:

Loans for self employment

Due to recession, lock outs and frequent strikes in the industry, people find it safe to be
self employed. So there is a need to attract new and young entrepreneurs.
Bank lending for a self employment purpose is increasing therefore more attention should
be given towards this area.
Advertising
The area of operations of the bank is mainly the industrial as well as residential sector in
the area of Solapur, Vijapur, and other districts places. The bank should take advantage

of this and arrange any advertising campaigns and loan festivals to attract new customers.

Housing Loans
As there is more demand for housing loans, it forms the major part of advances portfolio
of the bank. Almost 25% of the total advances are given for the housing loan purpose.
Population is increasing rapidly in the places where the branches are located especially in
the area of Solapur, Pandharpur and mohol and also people shift their homes from old
chawls and buildings to newly constructed, fully furnished flat systemised buildings,
which costs a lot than the resale value of their previous houses. Now in this case people
require housing loans to meet the margin. So such customers can be targeted and served
considering their convenience.
First of all is to keep the margin for housing loans to lower side. Because the cost of
accommodation is increasing and its very much difficult for a common man to buy a
house with his own savings.
The bank may bring flexibility in their rules and follow easy instalment schemes.
If possible, the bank should be more liberal while lending for housing purposes. At
present the bank advances 30 times of the net income of the borrower. Instead the bank
should advance more times of customers salary/ income.

Broaden the work area

The bank should broaden the area of work and its service. At present the bank already has
35 branches in Maharashtra & Karnataka. But still some important districts are
unexplored by the bank. Districts like Baramati and Usmanabad, where the industrial

area is much widen now a days, these districts are still untouched by Bank.

Special scheme offering

Bank can introduce new and attractive loan scheme at the time of festival or such
occasions so that more number of customers can be delighted with the special offers or
discounts. The bank has to give attention towards the interest rates it charges from the
competitor analysis it has been found that almost all the banks charge at reducing balance
method. Today the bank has to change with changing time and improve their lending
rates.

Concentration on personal loan

It has been observed that the personal loan has higher interest rates. Personal loan in the
bank is given up to 6.65 Cr. only. Thus it indicates that the proportion of the money lend
is relatively smaller than the money they will have to lend in case of housing loan or
vehicle loan. It is also observed that the customers are willing to get personal loan for the
purpose of repayment of previous debts. It means the customer has hurry to get the
personal loan from the bank as soon as possible. Thus on higher rate of interest and with
lenient security against loan or without any mortgage the bank can provide the loan and
create the bank value in the eyes of the customer.

Small scale industry finance.

Small scale industry finance seems the ignorant sector from the big commercial bank like
ICICI , IDBI and HDFC banks. Small scale sector is growing rapidly. So that, the bank
needs to attend the small scale industry customers and serve their purpose. Today small
scale industry can be said as the back bone of industry. So the bank cant ignore this
anymore. More encouragement is required to be given to the small scale businessmen by
the bank.

Documentation of guarantors
To decrease the growing numbers of NPAs, bank needs to take more care while selecting
the guarantor. The guarantors financial viability should be up to the mark and he should
complete his all the documentation work for the forward procedure of the money lending.
At least 2 valid guarantors should be there in any loan application.

Easy instalment facility

The applicant should be made available with the easy instalment facility. The borrower
sometimes may be busy with the work or due to any other reasons he may not be able to
come to the bank personally to make the payment of instalment of the loan taken. In this
case the bank should facilitate the borrower with the direct debit from the saving bank
account service. This will save the time of borrower and make him relax and tensionless.
From the banks point of view, time to time payment will be made from the borrower
which will result into a good reputation of the bank.

Check of fraud
It is observed that in general more number of bank related frauds is made by borrower of
loan. Fake and forger documents are represented and thus loans are taken. So to avoid
that special auditing department to check the viability and competency level of the loan
applicant should be created. Document inspection, special interview and personal
inspection in case of property mortgage should be done by the department. This
department should check the creditworthiness of the loan applicant and then they will
submit their report to upper level which is Credit department which is in charged by
Mr.Fadatare.R.V

Proper Remainder System:

It is very much observed that Bank lacks in proper remainder system for the loan account
holders to pay their due instalments in time. It will also help their creditworthiness with
the bank. Therefore, I would advice to the bank to keep good remainder system to remind
its loan account holders. It will certainly reduce the amount of NPAs. If the NPAs amount
goes down then, it will surely reflect in the profit of the bank.

CHAPTER 8
SUGGESTIONS

Suggestions:
The basic function of the bank is to accept deposits in various ways through
customers which are account holders of the bank and invest them into productive
activities in the form of loans. The difference between the rate of deposits and the rate
of interest on lending money in term of loan is the profit for the bank.

Suggestions to improve banks lending procedure

Finance to business community

Focus on housing and commodity loan

Bifurcate housing loans according to the loan amount

Finance to small scale industries

Service area should be broadened

CHAPTER 9

CONCLUSION:

CONCLUSION

While doing my project I had a chance to look into the vast field of Loan Procedure and
disbursement. I could only touch a small part of the topic. But after going through the
whole process I firmly believe that before going for any loan decision there is a need to
classify the borrower type and his need according to the creditworthiness of the borrower.
It is also true that there is confusion towards a new loan offer by the Banks. Not its
always better to take loan from the bank having good past record.
I have learnt the provisions of granting the loan to the borrower according to their income
level and degree of need. The Dhanshri Multi-State Co-operative Bank Ltd is marketing
its bank properly by adopting new banking schemes like SMS Banking, Internet Banking
and Telephone Banking. Bank is the first Dhanshri Multi-State cooperative bank in
Solapur,jat to introduce SMS Banking. Keeping proper marketing agenda in mind
The bank is also visiting to the villages which are near to the Solapur, Jat, Vijapur
district. Bank has to start the Transferring money from one place to another
(remittances).It is first Multi-State Co-operative bank in Solapur ,Jat ,Vijapur to start Call
Deposite for 15 Days to the customer.
The Loan management of this Bank consists of many stages. It is responsibility of Loan
officer to check the credit worthiness of the applicant.

Annexure

Chapter 10

Financial Highlights

Years Gross
Total
Net No.of Working No.of
Credit
N.P.A
Rate Of Audit
profit Provision profit staff Capital Branches Deposit
Provision
Dividend Class
Ratio Impaired Gross NPA
Credit

As on
1-12005

205

1228.45

26

58.30%

2005- 144.00
06

96.30 47.70

437

10853.91

51

31.70%

2006- 226.12
2007

173.41 52.71

430

13304.51

51+2

53.15%

2007- 244.52
2008

185.25 59.27

421

15044.54

51+7

2008- 253.37
2009

171.88 81.49

417

18546.16

2009- 290.26
2010

196.42 93.84

410

2010- 450.02
2011

340.77 109.25

2011- 593.14
2012

10%

844.49 13.91%

10%

29.31%

761.02 19.80%

10%

52+14

40.99%

779.09 11.92%

12%

22147.91

52+15

68.05%

749.23 5.79%

13%

419

25571.14

55+13

70.33%

811.74 5.24%

13.5%

469.14 124.00

419

32545.14

62+12

65.75% 1064.48 5.68%

14%

2012- 550.27
2013

398.22 152.05

425

36461.01

64+13

37.69% 1183.45 10.00%

14%

2013- 298.07
2014

136.47 161.60434+15 41546.07

66+11

54.43% 1380.57 7.13%

13%

2014- 340.38
2015

165.38 175.00

433

4651.47

68+10

57.79% 1239.90 5.34%

10%

2005- 200.15
2006

163.17 163.17

453

50876.46

70+9

61.77% 1384.09 5.04%

10%

2006- 379.22
2007

263.22 116.00

442

57594.52

70+9

70.25% 1785.21 5.31%

10%

2007- 847.41
2008

722.41 125.00

569

63202.57

70+10

69.93% 2265.37 6.07%

7.50%

2008- 371.75
2009

91.82 279.93

607

69128.60

71+09

65.94% 3086.74 7.94%

2008- 464.43
2009

184.43 280.00

607

69128.60

71+9

65.95% 3086.55 7.94%

5%

2009- 777.71
2010

440.11 337.60

591

83184.52

82+12

68.32% 3206.88 6.57%


Years

No of
Share Reserves
Total
Total Advances Investments Total
Total
Members Capital and others Deposits
& Bank
Income Expenditure
funds
Balance
Sty. Indl.
Agri Non-Agri

As on 1/7/83 368

65

37.58

75.60

632.30 128.58

240.09

1995-1996

579

56 236.49

764.54 9467.16 942.11 2059.83

5585.37 1215.01

1167.31

1996-1997

594

71 265.45

942.12 11418.41 986.26 2082.80

5301.90 1519.54

1466.83

1997-1998

631

81 291.14

1118.93 13114.05 1295.66 2548.84

9214.50 1732.95

1673.68

1998-1999

653

82 338.82

1263.02 15940.31 1139.08 5395.08

9314.15 1967.70

1886.21

1999-2000

662

83 387.59

1451.61 19025.83 1212.23 11735.30

6982.80 2394.07

2300.23

2000-2001

681

91 450.82

1689.19 22025.45 1492.06 13998.00

7928.00 2908.17

2798.92

2001-2002

736

94 497.29

2150.11 28477.24 1725.71 16999.67

10114.56 3597.16

3473.16

2002-2003

771

93 540.48

2610.20 31393.35 1956.05 9876.58

21471.76 3776.95

3624.90

2003-2004

829

94 635.08

2766.69 35551.76 2530.27 16823.59

19325.62 3646.27

3484.67

2004-2005

851

98 711.06

3013.62 40143.75 2952.57 20247.87

20532.50 3782.43

3607.43

2005-2006

868 101 789.26

3192.72 44487.80 3613.92 23868.12

21285.08 3669.43

3506.26

2006-2007

847 103 866.47

3486.15 47895.58 4144.55 29505.73

22187.01 4123.36

3850.25

2007-2008

848

58 1068.65

4214.72 53376.54 5131.36 32196.59

23905.56 5191.07

5066.07

2008-2009

866

63 1280.33

4380.66 58921.53 4496.33 34361.42

27878.08 5486.48

5206.55

CHAPTER 10

BIBLIOGRAPHY

Bibliography

Reserve Bank Manual.

Diary for co-operative banks

Balance sheet and manual reports of last three years of the Dhanshri Multi-State Cooperative Society Bank Ltd

Practical banking advance

Websites

www.loanmanagements.com

www.rbi.org.in

www.databasemanagers.com

www.dhanshrimsbank.com