EXECUTIVE SUMMARY

The project work entitled Credit Management And Its Impact On The
Financial Performance Of Dhanlaxshmi Bank Ltd, is aimed to evaluate the
effectiveness of credit management in Dhanlaxshmi Banks Thrissur main
branch. Utmost care has been taken at all levels of project work right from the
beginning till the analysis, findings and suggestions. This study is conducted for
the period of 41 days. The study is based on the information from the year 20102014. Tools for the analysis used for the project is ratio analysis, percentage
analysis, and Likert scale analysis. On the basis of analysis and interpretations
suggestions were made. The result indicates that the Credit Management is
effective and there is a positive impact on the performance of the branch.

Chapter 1
Introduction

1.1 INTRODUCTION TO THE STUDY

Credit is the mainstay for any financial institution particularly banks. Almost
60% of the asset side of the banks balance sheet is credit. It is the key
contributor to a bank's profitability. A banks credit management exercise is
aimed at accomplishing its mission of retaining its position as a premier financial
institution. The fundamental principles that are followed by a bank in managing
credit are safety, security, liquidity and profitability. These principles have
undergone changes with changing times and developments in banking industry.
The main source of revenue for the banks comes through lending. By lending
money to the customers it can sometimes make positive or negative impact on
the financial performance of the bank. Here the study is conducted on credit
management and its impact on the financial performance of the branch.

1.2 STATEMENT OF PROBLEM

Banks deals with the funds of a large number of depositors and banks are
required to return the money to the depositors with the promised amount of
interest. Further, banks are also required to monitor the loans do not turn bad.
Consequently, they have to follow the principles of credit management to avoid
the danger of falling. Credit Management is a core process of commercial banks,
and therefore the ability to manage this process is essential for their success.
Credit Management goes beyond the ordinary dimension of loan administration.
It involves the anticipation of problem loans. This demands an ability to perceive
the early warning signals, which necessitates a mastery of both the quantitative
aspects of credit evaluation. Here the study is focused on the credit management
of the bank is effective or not and what will be the impact on the performance of
the bank.

1.3 SCOPE OF THE STUDY

At the corporate level, the credit management is an embodiment of the banks
approach to sanctioning, managing and monitoring credit risk with the aim of
making the systems and controls effective. The credit management includes a
skilful review of existing credit files and a close monitoring of the credit
department to be able to structure a practical solution. The scope of the study is
limited to the Thrissur main branch of Dhanlaxshmi bank limited. The concept
of credit management being a vast subject could not be projected in detail.
Through in this study, a comprehensive outlook on the branch has been given.

Banking is the mirror reflection of economy. The growth of economy

to a large extent depends on the performance of banks. The art of banking has been
constantly evolving to meet the diverse and growing need of economy.

The banks in India, which have been engaged in providing

traditional services have make up late and began offering innovative products and
services. The business strategies are changing to take care of consumer needs for
investment, asset management, banking, insurance, securities and share transaction
etc.

Banking business has its own distinctive features as compared to all other
trade and business. Banking sector reforms, which began with introduction of
prudential norms in 1992-93; picked up rapid momentum in subsequent years.
Now the ambit of reforms covers virtually every faces of banking such as capital
resource mobilization, investment, foreign exchange, financial reporting and
disclosure.

Now we can expect high growth in banking sector. Current budget is

highly favourable to the banking sector. Today new generation banks are only
concentrated to urban areas. Their consideration towards rural areas is very low.

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Mahatma Gandhi said Rural of village people are the power of our economy.
So new generation banks have to consider the rural areas also. Otherwise we
would not achieve the powers of third largest economy till the end of year 2020.

1.4 OBJECTIVES OF THE STUDY

To study about the credit management and its impact on the financial
performance of the bank.
To analyze the Non Performing Assets in the branch.
To suggest suitable measures to improve the effectiveness of branchs credit
management.
.

1.5 PERIOD OF THE STUDY

The study was carried out for a period of 41 days i.e., from 21st April
2015 to 31st May 2015.

1.6 RESEARCH METHODOLOGY

According to Clifford woody research is defined as a which comprises of
defining and redefining problems, formulating hypothesis or suggested solutions,
collecting, organizing and evaluating data, making deductions and reaching
conclusion and at carefully testing the conclusion to determine whether they fit
the formulating hypothesis. Methodology is the systematic procedure involved
in conducting a research process.

Research methodology is the science of studying how research is done

scientifically. It deals with research design, data collecting methods, research
instrument and various statistical tools.

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1.6.1 RESEARCH DESIGN

According to Kiplinger, Research design is the plan, structure strategy of
investigation conceived so as to obtain answer to research questions and control
variances. Plan is outline of research scheme. The strategy shows how the
research will be carried out specifying the methods to be used in collection and
analysis of data.

Research design is the conceptual structure within the research would be

conducting. The preparation of such design facilitates the research as efficient as
possible yielding maximum information. The purpose is to be an accurate
description of a situation or of an association between variables. The suitable
design will one that minimizes biases and maximizes the reliability of data
collected and analyzed.

A research design is the arrangement of conditions for collection and

analysis of data in manner that aims to combine relevance of research purpose
with economy in procedure 3 basic types of research design are descriptive,
exploratory and experimental research design.

In this study, descriptive research design is used. Descriptive research includes

surveys and fact-finding enquiries of different kinds. The major purpose of
descriptive research is to describe the state of affairs or the characteristics of a
particular individual, institution, group etc.

For the purpose of analysis of data the research also used historical research
design in which he has analyzed the historical data for the past 5 years and thus
analyzed the profitability through ratio analysis. Here the narration of facts and
features are to be considered.

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1.6.2 TYPES OF DATA

Primary data and secondary data were used for the study.

1.6.3 SOURCES OF DATA

Data required for analysis is collected primary & secondary sources given
below.
Primary data:- Personal & informal interview and discussion with officials,
employees and customers.
Secondary data:- Annual audit reports, magazines and website of bank.

1.7 LIMITATIONS OF THE STUDY

There is no guarantee that the respondents give full and correct information. i.e.
Personal bias may affect the study.

Result of the study is relying upon the samples taken from the organization.
Respondents non response to some questions either due to lack of knowledge,
inability or due to their unwillingness to reply, analysis of such questions was
difficult.

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Chapter 2
Review of Literature and
Theoretical Framework

14

2.1 REVIEW OF LITERATURE

Bank optimizes utilization of deposits by deploying funds for developmental
activities and productive purposes through credit creation process. Deposit
mobilization & Credit deployment constitute the core of banking activities and
substantial portion of expenditure and income are associated with them. In the
case of deposits, baring few stray instances of operational risks linked to the
system and human failure culminating fraud, forgeries & loss, there may not be
anything alarming. But credit portfolio is the real dynamic activity that requires
close monitoring and continuous management. This articles attempts to focus on
not only credit management but also credit risk management. Till recently, all
the activities of the banks were regulated and hence operational issues were not
conducive to risk taking. The financial sector, now wears a relaxed and liberated
look. Banks have grown from being a financial intermediary, in the past to a risk
intermediary at present. In credit, risks are co-related and exposure to one risk
may lead to another having deeper ramification and, hence the real mantra for
prudent banking lies in successfully managing the risks in an integrated and proactive manner to optimize the exposure already taken or to be assumed by the
bank. Adherence to standards of quick decision and providing adequate and need
based financial assistance on attractive but safe terms, without losing the sight of
the associated risks involved therein, appears to be a difficult proposition.

There is an Implicit understanding on the part of the planners that in the post
nationalization era, banks will meet what is called social obligations through
directed lending. Early stages of nationalization belonged to security oriented
approach; in the nineties it was the spread-oriented era and in the early 21st
century the focus is shifted to risk. When the security oriented approach was
followed, economic activities and banking products were simple and instances of
frauds and forgeries were few and far in between. It is very much essential to
conduct credit investigation before taking up a proposal for consideration. This
is preliminary study should lead to valuable information on borrowers integrity,

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honesty, reliability, credit worthiness, management competency, expertise

associate concern, guarantor, etc. A due diligence report shall invariably
accompany the credit proposal evaluation. Banks have to strictly adhere to the
KYC (Know Your Customer) norms to ensure bonafide identification of borrows
and should also follow the prescribed Fair Practice Code on Lenders Liability,
by evolving their own best practices to be followed by the field so as to avoid
complaints from customer at a later date.

Lending methods ;Even though Tandon Committee norms have been dumped to dustbins,
alternative methods being practiced by the banks are yet to pass the test of time.
While some banks adopt the method of justifying the sanction of loan, others
follow a combination of Turnover

method, Cash

Flow

Method, Cash

Budget Method, Projected Balance Sheet method, Net owned Fund method &
the popular one-size fits all Second Method of lending. Banks have to structure
the assessed limits in the form of various credit facilities, having regard to nature
of activity, Process/business cycle, trade terms, availability of security,
operational convenience, etc. Loan System of Credit Delivery is one such
system, developed a few years ago. This discipline in cash flow management, on
mutual understanding between the bank and the borrower, should be observed in
respect of credit exposures beyond cut-off level of say Rs. 10 crore or so. In
view of the growing competition in banking, take over of borrowal account is
considered to be one of the major routes to accelerate credit expansion. It is just
a shift of the lender, though there is no additional credit or asset creation activity.
However, bankers should exercise due diligence and caution while entertaining a
proposal for take over an account from another lender. When cash flow method
is followed, repayment capacity of borrower is well established and the return to
the bank by way of interest is examined. But the question is how to rely on the
Projected cash flows. This can be overcome by building up industry wise data
and the financials of the borrower. Information such as credit exposure in terms
of sector, industry, security and region wise to all the credit appraisers in the

16

institution should be uniformly made available with reasonable up- date so as to

enable them to price, dispense, manage and monitor. It is observed that extent of
credit dispensation power is not related to the credit skill acquired by the
authority, but linked to the position in the hierarchical ladder and ,delegation has
been based on the credit size and not the credit risk perceived in a proposal . For
this, discretionary powers should be linked to the risk rating of the borrower.
Banks are yet to fully move from credit rating to the risk rating of the borrower.
When a borrower secures 95% marks and rated AAA, what is implied is credit
rating is 95 (AAA) & the risk rating is 5.

The mindset should change from credit rating to risk rating and proper system
should be put in place in this regard. Proposals of non fund based limits should
also

be subjected to the same level of appraisal standards as adopted for

appraising fund based limit so that the asset quality of the bank do not suffer any
undue set back.Multiple analytical ratios are to be worked out in the credit
appraisal duly discussing about the implications of these ratios. Detailed
discussion on cash generation should compulsorily form part of credit appraisal.
Based on the risk rating, the type of security to be obtained and cash margin to
be insisted can be decided. Care should be taken that non-fund based limit in
exclusion of fund and non-fund based limits are only considered. Banks should
put in place their own Security Standards, Guarantee Standards, Documentation
standards & Renewal/review standards to suit their appetite and quality
standards. In big-ticket credit, analytical tools will have to be used in various
aspects of credit dispensation such as appraisal, delivery, monitoring, reporting
re-scheduling, restructuring, etc. As lenders feel that most of exposure ceiling /
setting up limits, etc are regulator driven, it is better to be pro-active in these
areas. Banks themselves should compile separate list of sectors to guide the field
functionaries in the matter of credit deployment and some of these are given
below;

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 Indicative sectors where additional / fresh exposures can be considered

without any prior reference to higher authorities.
List of activities where selective approach is to be adopted and fresh /
additional exposures can be considered only with the prior approval of
appropriate authorities.
Sectors / business segments where additional / Fresh exposure is prohibited
for the time being.

Credit Monitoring:Credit Monitoring refers is an important function of credit management and

some of these aspects are discussed in brief: Credit decisions do not get better,
all because more people review the proposal. It can be Improved only when
those who review it are knowledgeable and carry with them requisite experience
in credit portfolio. Credit Department Should be expertise oriented rather than
going by the scale and grade in the organization, as there are many who climbed
the organization ladder without being exposed the requisite credit management.
Typically, in PSU banks, branch head has a three-year tenure in a particular
branch. They geared for asset based lending, disregard of lending based on the
forecast of cash flows. Even in Asset Based Lending appraiser is bogged down
in the paper financial ratios rather than cash flows which are vital in certain type
of industries like, hospitality, construction, transport, hotel, etc where there are
significant fluctuations in the cash flows. It requires totally different mindset.
Though some banks, in line with the express RBI guidelines on credit
management, follow the committee approach for credit sanction, in reality the
committee hardly meets to share the broader range of skills, expertise &
knowledge. Getting passed the proposal through circulation is more often the
rule than an exception & one persons decision gets the sanctity of committee.
The committee approach is helping the bank is diffusing individual
responsibility from the angle of CVC. At present, due to lack of credit appraisal
skill at the field level, manned by many generalist officials spread across the
branch network, there is greater duplication of work at the sanctioning level at

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head office causing enormous and avoidable delay as the papers pass through
more than a dozen senior officials, before it is placed before the sanctioning
authority. Business Process Re-engineering and Core Banking Project may come
to the rescue of banks. Exposure to sensitive sectors such as Real Estate, Capital
Market & Commodities sector need to be kept under constant watch and
adequately disclosed in the Balance Sheet of banks; Monitoring of unsecured
exposures, both fund based and non-fund based, through internal ceilings
prescribed by the Bank; Rating wise exposure ceilings i.e. achieving not more
than 30% of gross exposures in anyone grade; stipulation of exposure levels
under some of the following headings.

a)

Sub-PLR lending.

b)

Fixed Interest rate

c)

Geographical region wise ceiling

d)

Maturity wise exposures

e)

Precious Metals like gold, diamond

f)

Retail lending

g)

Small & Medium Enterprise

h)

Large Borrowers beyond cutoff level

Credit is an indispensable catalyst in financing the movement of commerce. Its

roots go fairly deep in time and are definitely as old as the concept of trade itself.
As early as 1300 BC the Babylonians were lending on the basis of getting a
charge on security or collateral. Credit touches us in various ways.

To demonstrate the importance of credit, accordingly to Industry Canada

sources the Small Business Loans Act (SBLA), a program that serves start-up
and smaller firms, has succeeded in lending more than $ 20 billion to over
50,000 Small and Medium sized Enterprises (SMEs) in Canada, since its
inception in 1961.The loans have helped in creating approximately four new job
per loan. Today SMEs have become an integral part of the Canadian economy.

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Firms with fewer than 50 employees each were responsible for 81% of the new
jobs in Canada in 1996-1997.

Credit helps in production, distribution, selling, consumption and expansion. It

helps smoothen the rough curve of seasonality of a seasonal business. It
increases the immediate buying power of a consumer. But where there is good
there may also be bad and ugly. Credit could mean a collapse due to
Overbuying. Overexpansion or Overselling. Probably the single most important
factor is the maintenance of proper cash flow in operating a successful franchise.
Accounts Receivables, which can be broadly defined as uncollected sales, are
one of the largest assets of a business, amounting to approximately 15% to 20%
of the total assets of a typical manufacturing business. An uncontrolled growth
in sales could result in an uncontrolled management of account receivables.
What is the mission of a person with credit responsibility? What is the function
of credit and credit management?
To answer these questions I will refer to an article written by Michell WoodsHowell, wherein is mentioned the mission statement of Microsofts Credit
department. To maximize the protection of Accounts receivable while
supporting Microsofts effort to expand sales and increase market share through
out the world, to evaluate accounts receivable worldwide risk and to take sure
we have appropriate reserves in place
It just goes to corroborate the fact that no matter how big or small is the size
of business operation, companies are focusing increasingly on managing and
collecting their receivables efficiently and effectively, thus maximizing their
cash inflows.

Credit is temporary capital and the objective of credit is to lend with the
purpose of increasing profit and sales. A sound credit policy in business is the
blue print to managing by measurement and benchmarks. The question then

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arises is What is a Credit Policy and how does one Credit Policy for their
specific nature of business operations?
Writing an effective Credit Policy begins with an understanding of the
financial exposure that you or your business can endure and the amount of your
working capital that you would be willing to risk, or call it invest in your
customers.
A Credit Policy that is written without an understanding of the market and
ample room for change in it and one that is not frequently revisited could
become obsolete in matter of days.

With the information-age revolution,

knowledge-based activities are becoming increasingly important for existence.

Hence, enhancing skill-sets and knowledge is an intangible component of a
credit policy.
I am of the firm belief that What gets measured gets managed. Therefore
as a matter of policy one should manage by measuring results. Every time a deal
goes bad, review the things that were done incorrectly in either setting up of the
account, monitoring or collecting it. Measure Days Sales Outstanding (DSO),
aging receivables, and bad debts as a percentage of sales. Keep a tab on your
liquidity by reviewing liquidity ratios like current or working capital ratio. Also
keep pulse on your inventory turnover. This will tell you if your efficiency is
increasing, decreasing or the same over different time periods. Profits are a
combined function of liquidity and efficiency. You can use the same logic when
assessing your customer.

Using quality information can help scores in managing risk. Collecting

relevant information requires a well thought-out Credit Application. It should
seek permission from your customers to conduct credit investigation from credit
bureaus, trade and bank references for the purpose of granting credit. A credit
application is a document that not only collects information but is also an
Application for a loan that the applicant fills. Make sure that your credit

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Application reflects the sentiments that you are serious about the amount that
you will be extending in the form of cash or kind.

As a guideline you can write your policy in the following sections. The
contents of cash section can be written to the best fit the nature of your
franchise;

1. The set-up of credit function.

2. Objectives of the credit function.
3. Terms and conditions of sale.
4. Sales responsibilities with credit issues
5. Billing procedures
6. Obtaining Information on new customers.
7. Procedures for opening an account.
8. Process of assessing the information to arrive at line of credit and credit
terms that will be offered
9. Monitoring your investment in your customers.
10. Profiling your customers to do strengths, weakness, opportunity and threat
analysis.
11. The feedback loop for reporting.
12. Allocating resources and responsibilities.
13. Defining past-due and bad debts.
14. Procedure of collecting from delinquent customers.
15. Analyzing the changing needs of your markets / customers.

Ultimately, credit management is an art and not a science. It is definitely an

indefinite. It gets its design from a variety of inputs like the creativity,
experience philosophies and attitudes of the individuals administrating it.
Sometimes a decision based on your gut feeling against all odds could prove to
be the best one. But as a credit adage goes get the calculations right in a

22

calculated risk and remember that A sale is not complete till the money is
collected Good luck with your franchise.

The U.S subprime crisis in July 2007 caused worldwide financial turbulence
and financial markets illiquid. These problems have affected the banks
willingness and ability to lend money to Leveraged Buy Outs (LBO). The
motivation for this thesis is to see how the problems in the financial markets
have affected the Nordic LBO market between 2005-2008 by describing the
development of banks lending to LBO in terms of size, structure and pricing. To
summarize the results: Since the credit crunch in July 2007, the prices of the
loans have increased, the size of the loans has become smaller, and the structure
of the loans has changed significantly. The reasons for these changes are mainly
that the macro environment has changed and competition, from both banks and
institutions such as hedge funds has decreased. The conclusion that can be drawn
based on the result is that the size, structure and pricing of the loans to LBOs are
sounder today. The development of the LBO market seen in 2006-2007 could
not persist in the long run, hence the bubble finally burst. Syndicating loans are
now a days an embedded part of the LBO process and its liquidity is vital for the
LBO industry. In our study, we have also noticed a great influence from market
forces on banks lending to LBOs, to a greater extent than what banks are
willing to admit.
Offering financial services to the unprivileged is a complex task and past
attempts have been rather unsuccessful. One commendable effort that has sprung
from the failures of commercial banks is micro finance and thanks to innovative
ideas, micro finance institutions have managed to cope with many of the
challenges experienced by the formal bank sector in the 1970s through the 90s.
The new approach has successfully managed to overcome obstacles such as
lack of collateral and information asymmetry. By using joint-liability schemes
and by requiring frequent installments microfinance institutions have managed

23

to reduce their risk exposure and by outsourcing the screening process to the
borrowers they have dealt with the lack of information on their clients.

The purpose of this thesis is to investigate what microfinance institutions do

that make them more suitable for delivering financial services to the poor. W e
will look at the supply driven efforts carried out in the past and see how they
differ from the demand driven approach taken today.

The main finding is that group lending subject to social sanctions should
improve the repayment rate. Other mechanisms that may enhance the
performance are the use of dynamic incentives and regular repayment schedules.

Banking is topic, practice, business or profession almost as old as the very

existence of man, but literarily it can be rooted deep back the days of the
Renaissance (by the Florentine Bankers). It has sprouted from the very primitive
Stone-age banking, through the Victorian-age to the technology-driven Google
age banking, automatic teller machines (ATMs), credit and debit cards,
correspondent and internet banking. Credit risk has always been a vicinity of
concern not only to the bankers but to all in the business world because the risks
of a trading partner not fulfilling his obligations in full on due date can seriously
jeopardize the affairs of the other partner.

The axle of this study is to have a clear picture of how banks manage their
credit risk. In this light, the study in its first section gives a background to the
study and the second part is a detailed literature review on banking and credit
risk management tools and assessment models. The third part of this study is on
hypothesis testing and use is made of a simple regression model. This leads us to
conclude in the last section that banks with good credit risk management policies
have a lower loan default rate and relatively higher interest income.

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The banking system which constitutes the core of financial sector, plays a
crucial role in transmitting monitory policy, impulses to the economic system its
efficiency and development therefore are vital for enhancing growth and
improving the chances for stability.

The non-performing assets are causing serious concerns to the banks and
financial institutions in India. The higher percentage of NPAs affects their
profitability, which sends wrong signals to the governments, investors,
depositors and the public. Thus profitability and operations are severely affected;
this makes further lending increasingly difficult.

Reserve Bank of India has issued guidance to the banks for the classification
of their assets in to four categories i.e. standard, substandard, doubtful and the
loss asset. Banking institution is required to classify their asset as performing
asset for the purpose of income recognition.

MEANING OF NPA:-

Non-performing asset are these assets which do not generate any income. A
credit facility is treated as NPA if the interest and / or installment of principal
have remained past due / out of order for ninety days. Moreover, if one advance
of a borrower has turned NPA, all advances granted to that borrower shall be
treated as NPA.
IMPLICATIONS OF ACCOUNT BECOMING NPAS:-

a.

If installments and interest in term loan are not serviced within 90

days.

b.

If interest on working capital facilities is not serviced within 90

days.

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c.

In case the limit is not renewed within 90 days of due date.

d.

If there is no operations in the accounts for more than 90 days.

e.

If the accounts is continuously out of order for 90 days and above

f.

Non receipt of stock statement for 90 days.

IMPACT OF NPAS
A banks efficiency is reflected mainly by the level of returns on its assets.
NPAS do not generate income for the bank. But banks are required to make
provisions of such NPAs from their current profits. An account becomes NPAs
as per the RBIs directions issued from time to time . NPA means an advance
where payment of interest or repayment of installment of principle or remains
unpaid for a period more than 90 days.
The following deleterious effect occurs due to NPAS;
NPAS erode current profit through provisioning requirement.
NPAS result in reduced interest income.
NPA require higher provisioning requirements affecting profits
and accretion
To capital Funds and capacity to increase good quality risk
assets in future.
NPAS limit recycling of funds set in asset liability mismatches
etc.
The growing means of NPAS has added to the existing ill administration,
misusing of fund, poor recovery, dual control, lack of professionalism, limited
area of operation in the country.
The article deals with the issue of credit risk management. Its first part is
concerned with the review of the phenomenons Polish and foreign authors
definitions. The latter part of the paper focuses on selected aspects of credit risk
management.

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Basically, credit risk is regarded the largest and most typical kind of banking
risk. We can talk about it when debtor does not pay capital rates (together with
interest and other fees) by the arranged deadline. This is both the simplest and
most exhaustive definition of the issue in question. According to variety of
aspects taken in to consideration one may find a selection of definitions in the
expert literature. For instance, Boys persuades that complete analysis of credit
risk phenomenon should include objective, time and cause-effect aspects.

Next Buschgen believes the phenomenon defining should be made in

respect of all kinds of the risk. The second most popular group of credit risk
definitions encompasses the ones allowing time aspect (apart from the objective
aspect) which is the danger of delay in the payment of capital and interest.
Credit risk management is a multi-layer process that makes a core of
commercial banking. In practice, even banks previously meant to be deposit
institutions, soon have become agencies providing services concerning funds
flows, and also endangered of credit risk. Particular attention should be paid to
the process of credit risk management as a proper management of bank credit
portfolio influences, to a significant degree, the success or failure of the
institution. As far as banking crisis are concerned, worldwide research proves
that, actually the most common cause of bank failure is low quality of their
assets, i.e, loans and credits. Bearing all these in mind, most bankers believe that
activities aiming at credit risk minimization should be planned for a long run,
and the process of credit risk optimization should be performed on three layers
of;

Credit policy

Risk control,

Risk regulation

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Credit policy:
Viewing the process from the credit policy perspective, a management board
sets banks aims as it comes to revenues from credit activity. Practically, it
means the choice of one of the three fundamental strategies concerning credit
risk management;

1. Conservative Strategy, whose priority is high quality of credit portfolio, as

well as high credit reliability of bank clients. It means that bank will be
willing to give only highest quality credits with minimal risk and
simultaneously will see to proper credit portfolio diversification. As a result,
during economic prosperity the bank does not earn a lot, but when the
economy goes down it does not suffer significant losses, either. Performance
of such strategy requires a lot of credit discipline. In return, the bank obtains
high opinion of reliable stable and wanted business partner.
2. Strategy of controlled risk growth: As far as the assumptions on this strategy
are concerned, there is some revenue instability in the whole conditiondependent cycle. During prosperity the banks earns more using conservative
policy as it allows the use of risky credits where as during bad economic
situation it may record more losses in comparison to the ones with
conservative policy. However, the research shows that globally in the whole
condition-dependent cycle, a bank performing the strategy in question gains
higher profits as compared to conservative credit policy. Summing up, the
priority of a bank with this strategy is immediate profit.
3. Offensive Strategy: The main aim of this strategy is gaining significantly
fast growth of a bank (growth in size, importance and market share). It
results in accepting great fluctuation in banks revenue by the management
board. Once the strategy is not ceased in the right time, it may lead to
irremovable contradictions. On one hand, dynamically developing bank
must offer either cheaper credit, provide higher quality service or assure its
stability and reliability in order to attract new clients. In practice, offensive
activities partially eliminate stability or reliability of the bank. On other

28

hand, significant revenue fluctuations in the whole cycle force inevitably

expensive credits during prosperity. High price of the credits may be
expected from the clients included in the group high risk. In this way, a self
driving mechanism may appear, in which offering risky credits may lead the
bank to greater losses. Optimizing activities are not confined to the choice
of only one strategy, as far as credit policy aspect is concerned. They
become the starting point for detailed credit policy elaboration that includes
the following steps;
Current bank situations analysis here a banks profile should be prepared
according to its competitive elements, as well as characteristics of banks
main target group,
Specification of fundamental bank objective in the long-run strategy,
Elaboration of detailed schedules for these objectives performance,
Selection of methods and techniques securing partial objectives gaining,
Establishing particular tasks for banks organizational units and for single
employees,
Specification of personal responsibility for tasks realization, as well as the
responsibility scope,
Elaboration of effective information system,
Design of current credit control system
Summing up considerations on credit risk one can state that this kind of risk is
one of four fundamental kinds of banking risk. Following this train of thought
many authors assume that if credit activity of a bank is the core of contemporary
banking, the risk related to it significantly influences profits or losses of the
bank.
Defining the effect of the credit risk on banking activity they propose thesis
that it is the most important kind of risk within bank activities. Almost all
bankruptcies have been caused by wrong credit portfolio. Similarly to the whole

29

banking risk, also for credit risk the factors influencing it are of complex
character as well as multidimensional character of operating. This is the main
reason, apart from great form variety of banking product, for existing such great
number of definitions and classifications of this phenomenon. Last but not least,
one should mention a newly born phenomenon, extremely popular in economic
science now a days. This phenomenon is called credit risk management, which
generally may be defined as joint activities aiming at optimizing the relations
between the volume of credits, surplus / credit and credit risk. The functions
performed within risk management are organized well through they do not
correspond fully with classical functions.

We test how active management of bank credit risk exposure through the

loan sales market affects capital structure, lending, profits, and risk. We find that
banks that rebalance their C&I loan portfolio exposures by both buying and
selling loans- that is, banks that use the loan sales market for risk management
purposes rather than to alter their holdings of loanshold less capital than other
banks; they also make more risky loans (loans to business) as a percentage of
total assets than other banks. We conclude that increasingly sophisticated risk
management practices in banking are likely to improve the availability of bank
credit but not to reduce bank risk. Management shortcomings are one of the
major causes of delays of payment: lack of organization, deficient information
systems,

underdeveloped

computer

systems,

technical

facilities

short

administrative needs etc

Beyond traditional training measures, it is necessary to take in to account the
educational value of computerized business management methods.

A credit rating is an assessment by a third party of the creditworthiness of an

issuer of financial securities. It tells investors the likelihood of default, or nonpayment, by the issuer of its financial obligations.

30

Credit analysis is the financial analysis used to determine the creditworthiness

of an issuer. It examines the capability of a borrower or issuer of financial
obligations, to repay the amounts owing on schedule or at all.

Establishing the creditworthiness of borrowers is one of the oldest

established financial activities known. Through history, the act of lending funds
has been accompanied by an examination of the ability of the borrower to repay
funds.
Modern credit analysis developed in the late 1800s when the credit markets
began to issue and trade bonds, largely to finance the development of the new
world, particularly the United States. As lenders were purchasing bonds of
countries and companies that they had little personal knowledge of third party
credit rating agencies such as Duff & Phelps, Inc., Moodys Investors service
and Standard and Poors Corporation were founded to fulfill the need for an
impartial assessment of the creditworthiness of bond issuers.

These companies, most still active today, developed scoring systems that old
investors of the creditworthiness of issuers. Each rating agency has its own
nomenclature or investment grade that ranks the default risk of issuers. The
scale begins at the highest quality ratings, such as AAA, with very low
probability of default, and descends to risky or speculative ratings, such as
BB, where the risk of default is high.
An example of a rating system is the Ratings Definitions of Government Debt of
the Canadian Bond Rating Services (CBRS), which is shown below
Rating Definitions of Long-term Government Debt;
Highest Quality.AAA
Very Good Quality..
Good Quality.

AA
A

Medium Quality BBB

Lower Medium Quality..

BB

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Poor Quality..

Speculative Quality.

Default

What is credit?
Credit allows you to buy goods or commodities now, and pay for them later.
We use credit to buy things with an agreement to repay the loans over a period
of time. The most common way to avail credit is by the use of Credit cards.
Other credit plans include personal loans, home loans, vehicle loans, student
loans, small business loans, trade financing, etc.
What is The Cost of Credit?
Interest Rate is charged on the credit amount that you take. Banks and other
lenders will give credit and charge interest on the amount that is borrowed.
There are two types of loans Secured loans are loans such as home loan and
vehicle loans. They are backed by your assets in order to minimize the risk
assumed by the lender. The assets may be forfeited in case there is a failure to
make the necessary payments. Examples of unsecured loans are personal loans
and credit cards, where the lender has no entitlement to any of the borrowers
assets in case borrowers fail to repay the loan. Such a loan normally carries
higher interest rate than secured loan. Repayment plans of loans vary based on
each type of loans. Home loan repayment plans can be repaid in 3, 5, or 10
years, and the credit period for credit card is around 50 days
.
When someone is in need of financial help, one usually goes to a lender or a
bank for a loan. However, not everyone who applies for one is approved. Why is
this so? Banks have system to determine and compute how much they would be
risking in losses, should the debtor fails to pay. This practice is called the credit
risk measurement. But how do banks measure credit risks?

32

In actuality, it varies from bank to bank. Over the years, banks have been
developing models and devoting resources to improve their calculation of such
economic and financial threats. Because of this, bank regulators have begun to
regulate and validate these models by imposing rules and standards for
regulatory capital functions and computations. Such was the case in 1997 when
the Market Risk Amendment was developed, as well as the IIF and ISDA both in
1998.
How an organization computes the credit risk the size of the loaning party
is taken in to consideration. However regardless of the size, they must take in to
account three factors.
1. Probability of default:- this is the probability of failure to pay over the
period stipulated in the contract. The computation for that year may be
termed as the projected default rate.
2. Exposure of Credit:- how big of an amount will the debt be in case default
occur.
3. Estimated Rate of Recovery:- what portion of the debt can be regained
through freezing of assets and collateral and the like, should default
transpire.
To understand better, remember that each risk is composed of two essentials
exposure (credit exposure) and the quality of credit. Quality of credit is usually
assessed through credit scoring. This process entails getting information, such as
income statements, billing statements, and the like. This procedure is well
standardized and has a formula. Such formula is applied to the gathered
information and assigned a number known as credit score. The bank will then
decide whether or not to grant the loan, depending on the score obtained.

This procedure is also applied by banks when calculating the credit risk of
larger organizations and businesses. However, it becomes more complex, as
aside from looking at the credit rating and following the formulas, human
judgment now comes in to play. This is now what we call credit analysis. Credit
analyst not only take in to consideration the income statements, but also current

33

economic status, the industry the business is in and the performance of that
industry, and the reason for the loan and if it is worth investing in. There are
many models used to compute credit analysis and ratings. As mentioned earlier
on, many banks employ credit analysts to create such specific models, which are
then subjected to regulation.
Calculating credit risks is pretty much similar to your school grading
system. Some use the alphabet when rating. For example those with higher
ratings can be given as AAA, AA or A+, or those that are average as B, and
those below average as C, and so. Others may also use actual numerical values.
Aside from calculating the credit risks, banks may also instigate credit risk
limits. This is the practice of stipulating a maximum amount that the individual
or party can loan. Through this, the bank not only protects them, but also in a
sense, protects the loaning party from loaning more than they are capable of
paying. By answering the question how do banks measure credit risks?, a
win-win situation can then be established for both parties.
Recently business magazines and newspapers have reported regularly about
settled NPL deals NPL is the abbreviation for a non-performing loan and simply
describes a situation in which the debtor stopped complying to the terms agreed
upon with the lender. Depending on the specific credit terms, the borrower has to
pay interest and to repay the principle at a certain time. If this does not happen at
a specific time the lender will demand the debtor to stick to the agreed terms and
finally, in the event that the debtor does not change his or her behaviour,
terminate the underlying contract.
At what specific point in this process the loan should be qualified as a nonperforming loan is not standardized. The range of past due periods varies from
30 days, over 90 days, to even 180 days.

34

Neither accounting rules nor supervisory law specify yet under which
conditions a financial institution has to classify certain loans as non-performing
loans. However, this will change with the enforcement of Basel II, and also
thanks to international distressed debt investors which demand for global
standards.
On other hand banks dispose of traditional instruments to deal with these
customers. The work-out department is usually In charge of collecting
receivables and also the transfer of the respective receivables to debt-collecting
agencies is a long exercised practice among banks. Are these traditional means
no longer able to deal with the indubitable tremendous stock on NPLs in
German banks and will the outsourcing wave reach part of every banks back
office?

Recently settled transactions have proved that the price expectations differ
largely from the bids. Is there any hidden value which could be extracted by the
sale of NPLs and therefore generate potential for price negotiations?
In case of non-performing loans the debtor did not manage to stick to his
contractual obligations. This means that his future potential is also fairly
uncertain, and therefore the outstanding receivable belongs to the most risky
categories. Basel II defines past due loans as the secured part of any loan that
is past due for more than 90 days. For these loans there are basically three
different risk- weights ranging from 150% to 50% depending on the amount of
specific provisions for the loan. The lower limitation is only allowed with
supervisory discretion. Otherwise the minimum risk-weight remains 100%.

The sale of non-performing loans results in a release of equity coverage

since as the selling price (cash) which replaces the former risky assets in the
banks balance sheet does not to be covered with equity.

35

Banking is topic, practice, business or profession almost as old as the very

existence of man, but literarily it can be rooted deep back the days of the
Renaissance (by the Florentine Bankers). It has sprouted from the very primitive
Stone-age banking, through the Victorian-age to the technology-driven Google
age banking, automatic teller machines, credit and debit cards, correspondent
and internet banking. Credit risk has always been a vicinity of concern not only
to the bankers but to all in the business world because the risks of a trading
partner not fulfilling his obligations in full on due date can seriously jeopardize
the affairs of the other partner.

The axle of this study is to have a clear picture of how banks manage their
credit risk. In this light, the study in its first section gives a background to the
study and the second part is a detailed literature review on banking and credit
risk management tools and assessment models. The third part of this study is on
hypothesis testing and use is made of a simple regression model. This leads us to
conclude in the last section that banks with good credit risk management policies
have a lower loan default rate and relatively higher interest income.

36

2.2 THEORETICAL BACKGROUND

Credit is the mainstay for any financial institution particularly banks. Almost
60% of the assets side of a banks balance sheet is credit. It is the key contributor
to a banks profitability. A banks credit management exercise is aimed at
accomplishing its mission of retaining its position as a premier financial
institution.
Credit management has two facts - Credit Appraisal, and Credit Monitoring.
It exists and operates at both formal and informal levels. As regards the formal
policy, it is well documented in the form of circulars, instructions, guidelines
and the book of instructions, where procedural aspects are highlighted.
At the corporate level, the credit management is an embodiment of the
banks approach to sanctioning, managing and monitoring credit risk with the
aim of making the systems and controls effective. Another important objective
of credit management is to strike a balance between underwriting assets of high
quality, and customer oriented selling.
A complete understanding of credit management becomes possible only by
analyzing all the credit activities under two stages i.e. pre-sanction and post
sanction of an advance. These two stages are distinct. A clear distinction is
further made possible by dividing the activities under four areas. i.e. (i) Credit
allocation, (ii) Credit evaluation, (iii) Credit Discipline, and Credit monitoring.
Banks deals with the funds of a large number of depositors and banks are
required to return the money to the depositors with the promised amount of
interest. Further, banks are also required to monitor the loans and also ensure
that the loans do not turn bad. Consequently, they have to follow the principles
of credit management avid the danger of failing.

37

These fundamental principles are like rudder to a ship, which have been
guiding the function of lending ever since banking has evolved as a profession.
The fundamental principles that are followed by a bank in managing credit
portfolio are safety, security, liquidity and profitability.

These principles have undergone changes with changing times and

developments in the banking industry. The various activities, which are directly
concerned with basic objectives of credit management are given below:
i.

Normally, credit management applies to all lending activities. With regard to the
foreign branches, such branches will have their own policies, which are framed
as per the statute of the concerned countries. However such policies are subject
to the general or special directives of the RBI/Government of India.

ii.

Credit management aims at spotting and seizing opportunities and revamping the
products accordingly. Thus a credit policy undergoes a continuous process of
innovation in creating new products according to the need and demand of the
customers

iii.

For developing expertise in credit management setting up and running of an

effective training system is required. Such training shall pertain to all areas of
credit management. Such efforts demonstrate banks commitment to upgrade
skills of staff members on a continuous basis.

iv.

While leaving enough room for flexibility and innovations, credit management
seeks to establish a commonality of approach regarding credit basis, appraisal
skills, documentation standards and awareness of institutional concerns and
strategies

v.

Credit management envisages the setting up of a computerized Management

Information System (MIS). The MIS will be based on a reliable database.

38

vi.

Growth of assets in an orderly manner is to be ensured. For this purpose,

optimum exposure levels to different sectors in the economy are set out in the
credit management strategy.

vii.

The minimum score/ hurdle rates (in terms of Credit Risk Assessment
parameters) for additional bar new exposures are set out.

viii.

A banks general approach to Export Credit and Priority Sector Advances is set
out in policy frame work.

ix.

Specific norms are laid down with regard to take over of advances from other
banks/FIs

x.

The objectives aim at continued growth of assets while at the same time
endeavoring to ensure that such assets remaining as performing and standard
assets. Hence as a matter of policy, banks normally do not take over any NonPerforming Assets (NPA) from another bank.

4 Cs OF CREDIT
Credit investigation could get intricate and dense. The information thats
being gathered could be scattered all over the place. The 4Cs of Credit helps in
making the evaluation of credit risk systematically. They provide a framework
within which the information could be gathered segregated and analyzed. It
binds the information collected in to 4 broad categories namely Character,
Capacity, Capital, Conditions. These Cs have been extended to 5 by adding
Collateral or extended to 6 by adding Competition to it .

39

CHARACTER:-

In analyzing Consumer Credit one would consider the following:

Has the person declared bankruptcy in the past
Does the person have a good credit record
Does he/she have a stable job
What is the level of education/experience
What is the person earning and what is the earning potential
Stability at the place of residence, whether rented or owned.

In analyzing Commercial Credit one would consider the following;

The size of the operations
The number of years in business
The legal form of business
By this means Retail, Wholesale, Service or Manufacturing.
Is the business a Sole proprietor, partnership or corporation?

The number of employees

The management record of the company

Any previous evidence of fraud

The location of the company

Any previous insolvency record?

Any labour disputes or issues?

Is the business practice ethical?

Is the business seasonal/ non-seasonal

Is the business Local/ National or International

What are the references saying?

Are there are too many lay-offs especially of key personnel?

Are there are any Law suits pending against the company?

40

Is there any recent media coverage about the company?

If the companys stock is publicly traded then see how its stock is
performing?

One can also check the indices for a particular type of Industry to see how in
general the industry is doing. The collapse of the NASDAQ last year was a
warning of the debacle of the tech companies.
Capacity:Sometime a business that you are analyzing might not have the required capacity
in kind but the same could be latent and hidden in some other form.

For example a start-up business should have a good business blue-print of

succeeding namely a good business plan. A contractor might have a good media
advertising plan, say an Ad in local yellow pages. All this adds to the capacity of
a business to carry on trade and perhaps be successful. Innovations, Education,
Experience, Knowledge would be some other considerations. Management
should be able to foresee trends in the marketplace and blend accordingly. It
should have plans both for good and bad turns in the economy. Adoption of
sound management techniques and computer related technologies is important.
Companies must remain Relevant with their processes; products an operate with
Speed in todays Digital age. Larger businesses should also have people that
know how not just to manage the company but also its main assets, and its
people. This would bring on the analysis of how the debt of the company is
structured in terms of

secured and unsecured debt with an operating lender,

generally the bank. Short term borrowing could be calculated as a percentage of

the inventory and accounts receivables on hand. If your product being sold is
fiercely competitive then it may not have the capacity to influence timely
payment. If your product does not directly contribute to the COGS of the buyer
then again it might not have the capacity of influencing timely payment.
Competition definitely influences Capacity. The Capacity to expose and increase

41

your credit risk also depends upon your own ability and resilience to getting hit
with either slow payment or perhaps no payment! Credit departments that have a
lot of confidence in their collection ability and ability to influence payment have
wider capacity to expose and absorb. Your product-margin ill also influence this
capacity.
Capital:Capital would refers to the financial resources obtained from financial
records that a company may have in order to deal with its debt. Many a times
credit analysts would make this portion of the credit analysis the most important
one. Weight is given on Balance Sheet items and components like Working
capital, Net Worth and Cash Flow. One must know how to read financial
statements and that too from the perspective of a creditor. Short term liquidity is
important if you are expecting to get paid in the short form. You should be able
to see whether this company has ability to absorb more debt and then where does
your loan (selling on credit is a loan isnt it?) fit in the overall debt-framework
of this business. You should also evaluate to see if you can depend on the
numbers whether they are audited, unaudited or company prepared.

Leveraged borrowing depends on the equity/ net worth that a company has
and it is a good idea to see if the company is committed to improve its
borrowing-power by contributing to its Equity /Capital /Net Worth. One way of
doing this is by retaining all or portions of its earnings. But all said, then undone
Cash and only cash pays bills. Thus keep an eye of the companys cash flow and
cash position. But one must be cognizant of the fact that financial records are
snapshots of the past and credit analysis is trying to figure out the future. Thus
all 4 Cs of credit are important in the overall analysis of a company or an
individual where you combine elements of the past to make a futuristic
prediction.
Conditions:This refers to the external conditions surrounding the business that you are
analyzing. For example the construction industry might get influenced with the

42

changes in the governments wide range of policies on immigration, interest

rates and taxation. There might be likelihood that a company that you are
evaluating deals in international trade and a shift in the currency rates might
have a detrimental or beneficial effect on it. The recent events on September 11th
have had added a new meaning to Force Majuere in context of International
trade terms and conditions. Ford recently announced closing 5 plants in North
America asides from thousands of layoffs one will have to be vigilant on the
impact that it will bear on the suppliers to the Ford Motor company. Again, one
might look at how the interest is defining business. Thus in evaluating the degree
of risk of a customer, information revolving around 4Cs of credit would be
normally necessary.

DEFINITION OF TERMS
Credit:The promise to pay in the future in order to buy or borrow in the present. The
right to differ payment of debt

Credit management:Credit management is a branch of accountancy, and is a function that falls

under the label of Credit and Collection or Accounts Receivable as a
department in many companies and institutions. They will usually deal with the
credit vetting of customers, the resolution of any invoice queries or disputes,
allocations of payments or cash application, internal fund movements,
reconciliations and also maintaining positive working relationships with
customer during the debt collection or credit review and approval process.
Deposits:It is the money entrusted with the bank for safe keeping
Advances:-

43

Advances are money advanced to a borrower. To be repaid at a later date usually

at a interest. Advances include loans, bills purchased and discounted cash credits
overdrafts etc.
Interest Earned:Interest income generated from any assets of the bank

Interest Expended:Interest paid on deposits and on other borrowed funds.

Non-performing assets:Non-performing asset means an asset or account of borrower, which has been
classified by a bank or financial institutions as sub-standard, doubtful or loss
asset, in accordance with the directions or guidelines relating to asset
classification issued by RBI.

Credit Rating:A credit rating estimates credit worthiness of an individual, corporation, or even
a country. Credit ratings are calculated from financial history and current assets
and current liabilities. Typically, a credit rating tells a lender or investor the
probability of the subject being able to pay back loan.

Credit risk:Credit risk is the risk of loss due to a debtors non-payment of a loan or other
line of credit

44

Chapter 3
Industry and Company
Profile

45

A. INDUDTRY PROFILE
The growth in the Indian Banking industry has been more qualitative than
quantitative and it is expected to remain the same in the coming years. Based on the
projections made in the India Vision 2020 prepared by the planning commission and
the draft 10th plan, the report forecasts that the pace of expansion in the balancesheets of banks is likely to decelerate. . It is expected that there will be large additions
to the capital base and reserves on the liability side. According to the Reserve Bank of
India (RBI), the banking sector in India is sound, adequately capitalised and wellregulated. Indian financial and economic conditions are much better than in many
other countries of the world. Credit, market and liquidity risk studies show that Indian
banks are generally resilient and have withstood the global downturn well. With a
sense of optimism slowly creeping in the banking industry expects that 2016 will
bring better growth prospects. This optimism stems from factors such as the
Government working hard to revitalise the industrial growth in the country and the
RBI initiating a number of measures that would go a long way in helping the banks to
restructure. The recent announcements of RBI, it is felt, are a clear pointer to the
future of the restructured domestic banking industry.

Market Size
The Indian banking sector is fragmented, with 46 commercial banks jostling for
business with dozens of foreign banks as well as rural and co-operative lenders. State
banks control 80 percent of the market, leaving relatively small shares for private
rivals. At the end of February, 13.7 crore accounts had been opened under
Pradhanmantri Jan Dhan Yojna (PMJDY) and 12.2 crore RuPay debit cards were
issued. These new accounts have mobilised deposits of Rs 12,694 crore (US$ 2.01
billion). Standard & Poors estimates that credit growth in Indias banking sector
would improve to 12-13 per cent in FY16 from less than 10% in the second half of
CY14.

46

Investments/developments
There have been many investments and developments in the Indian banking sector in
the past few months.

The United Economic Forum (UEF), an organisation that works to improve

socio-economic status of the minority community in India has signed a
memorandum of understanding (MoU) with Indian Overseas Bank (IOB) for
financing entrepreneurs from backward communities to set up businesses in
Tamil Nadu

The RBI has allowed third-party white label automated teller machines (ATM)
to accept international cards, including international prepaid cards, and said
white label ATMs can now tie up with any commercial bank for cash supply.

With the objective of increasing investment opportunities for Indian alternative

investment funds (AIFs), the RBI has allowed these funds to invest overseas.

In a major boost for the infrastructure sector, as well as for banks financing
long gestation projects, the RBI has extended its flexible refinancing and
repayment option for long-term infrastructure projects to existing ones where
the total exposure of lenders is more than Rs 500 crore (US$ 78.98 million).

Syndicate Bank is planning to open 300-500 branches in the next financial year

RBI governor Mr Raghuram Rajan and European Central Bank President Mr

Mario Draghi have signed an MoU on cooperation in central banking. The
memorandum of understanding provides a framework for regular exchange of
information, policy dialogue and technical cooperation between the two
institutions. Technical cooperation may take the form of joint seminars and
workshops in areas of mutual interest in the field of central banking, RBI said
on its website.

RBL Bank has announced that it would be the anchor investor in Trifecta
Capitals Venture Debt Fund, the first alternative investment fund (AIF) of its
kind in India with a commitment of Rs 50 crore (US$ 7.89 million). This move
provides RBL Bank the opportunity to support the emerging venture debt
market in India.

47

The RBI has allowed banks to become insurance brokers, permitting them to
sell policies of different insurance firms subject to certain conditions.

Bandhan Financial Services Pvt. Ltd has raised Rs 1,600 crore (US$ 252.69
million) from two international institutional investors to help convert its
microfinance business into a full service bank. Bandhan was one of the two
entities to get a banking licence in April 2014 along with infrastructure finance
company IDFC Ltd.

Yes Bank Ltd has signed an MoU with the US governments development
finance institution Overseas Private Investment Corp (OPIC) to explore US$
220 million of financing to lend to micro, small and medium enterprises
(MSMEs) in India.

Reliance Industries Limited (RIL) has said that it has applied for a Payments
Bank licence, where the company will be the promoter and State Bank of India
will be its joint venture partner with an equity investment of up to 30 per cent.

The RBI has allowed bonds issued by multilateral financial institutions like
World Bank Group, the Asian Development Bank and the African
Development Bank in India as eligible securities for interbank borrowing. The
move will further develop the corporate bonds market, RBI said in a
notification.

The Competition Commission of India (CCI) has cleared the merger of ING
Vysya Bank with Kotak Mahindra Bank, which would create the country's
fourth largest private sector lender. The proposed Rs 15,000 crore (US$ 2.36
billion) deal is not likely to have any appreciable adverse effect on competition
in India, as per the competition "The share of both entities in various relevant
markets is insignificant," the CCI said.

Tata Consultancy Services Ltd (TCS), Indias largest software services

exporter, has announced that it has expanded its presence in Singapore with the
opening of a new 1,000-seat TCS Singapore banking and financial services
(BFS) centre. The new centre replaces a 500-seat centre opened in 2011 and
will offer a broader range of services to global banks in the Asia-Pacific region,
with a major focus on digital offerings.

48

Government Initiatives
There have been a lot of developments in the Indian banking sector.

The Government has announced a capital infusion of Rs 6,990 crore (US$ 1.1
billion) in nine state run banks, including State Bank of India (SBI) and Punjab
National Bank (PNB), but based on new efficiency parameters such as return
on assets and return on equity. In a statement, the finance ministry said, This
year, the Government of India has adopted new criteria in which the banks
which are more efficient would only be rewarded with extra capital for their
equity so that they can further strengthen their position."

The Union cabinet has approved the establishment of the US$ 100 billion New
Development Bank (NDB) envisaged by the five-member BRICS group as well
as the BRICS contingent reserve arrangement (CRA).

The RBI has decided to allow nominated banks to import gold, including coins,
on a consignment basis, extending its clarification issued in November 2014,
which had eased certain categories of gold imports.

To help Micro Small and Medium Enterprises (MSME), RBI has permitted
setting up of an exchange-based trading platform to facilitate financing of bills
raised by such small entities to corporate and other buyers, including
government departments and PSUs.

Road Ahead
The Indian economy is now on the threshold of a major transformation, with
expectations of policy initiatives being implemented. Positive business sentiments,
improved consumer confidence and more controlled inflation should help boost the
economic growth. Higher spending on infrastructure, speedy implementation of
projects and continuation of reforms will provide further impetus to growth. All this
translates into a strong growth for the banking sector too, as rapidly growing business
turn to banks for their credit needs, thus helping them grow.
Also, with the advancements in technology, mobile and internet banking
services have come to the fore. Banks in India are focusing more and more to provide
better services to their clients and have also started upgrading their technology

49

infrastructure, which can help improve customer experience as well as give banks a
competitive edge.
Many banks, including HDFC, ICICI and AXIS are exploring the option to
launch contact-less credit and debit cards in the market soon. The cards, which use
near field communication (NFC) mechanism, will allow customers to transact without
having to insert or swipe

On the other hand, the private sector banks in India are witnessing immense
progress. They are leaders in internet banking, mobile banking, phone banking,
ATMs. On the other hand the public sector banks are still facing the problem of
unhappy employees. There has been a decrease of 20 percent in the employees in
the strength of the private sector in the wake of the Voluntary Retirement
Scheme(VRS). As far as foreign banks are concerned they are likely to succeed
in India.
Indus land Bank was the first private bank to be set up in India. IDBI, INDG
Vysya Bank, SBI commercial and international bank Ltd, Dhanlaxshmi. Bank
from the public sector include Punjab National bank Vijaya bank, UCO bank,
Oriental bank, Allahabad bank, Andhra bank etc. ANZ Grind lays bank, ABNAMRO bank, American express bank Ltd, Citibank etc are some foreign banks
operating in India.

Transition from class banking to mass banking and from sellers

market to buyers market is drastically changing Indias banking sector. There is
an expanding middle class of 250 to 300 million people in need of varied
banking services.

As opening of new branches and technological upgradation alone may

not suffice to meet our social agenda of financial inclusion, it needs to be
integrated in the banking expansion strategy itself. As a first step, the Centre has

50

asked all commercial and regional rural banks branches in rural and semi-urban
areas to add at least 250 accounts of households every year.

It has also asked private and foreign banks to work towards adopting
states and villages to achieve 100% financial inclusion. There have been a few
successful innovations. FINO, in association with the Union Bank of India, has
successfully commenced a pilot savings bank operation project in Dharavi area
of Mumbai for those who do not have any bank access. They have opened about
20,000 savings accounts in four months and now propose to start a similar
project in New Delhi.

Operationally, banks need to reduce transaction costs, cost of acquisition

as well as fixed and overhead costs. They need to reduce their NP As. Bank of
India has announced plans to sell stressed assets worth around Rs 250 crores to
an asset reconstruction company. Other banks are likely to follow suit. The
number and amount of frauds reported by banks, especially ill housing loans,
have increased significantly. This needs to be addressed by formulating new
prudential norms and by using state of the art security systems.

Finally, statutory and regulatory policies have significant strategic

implications for banking. For example, the recent RBI announcement that
customers cap withdraw cash using their ATM cards from any ATM of
commercial banks from April 2009 without paying transaction fees will
drastically reduce the need for many more ATMs. It will also lead to opportunity
for banks to work collaboratively and create synergies. More such steps need to
be taken at the policy-making level.

Banks in India can be categorized into non-scheduled banks and

scheduled banks. Scheduled banks constitute of commercial banks and cooperative banks. There are about 67,000 branches of Scheduled banks spread
across India. During the first phase of financial reforms, there was a

51

nationalization of 14 major banks in 1969. This crucial-step led to a shift from

Class banking to Mass banking. Since then the growth of the banking industry in
India has been a continuous process.
By 2010, banking in India was generally fairly mature in terms of supply,
product range and reach-even though reach in rural India still remains a challenge for
the private sector and foreign banks. In terms of quality of assets and capital
adequacy, Indian banks are considered to have clean, strong and transparent balance
sheets relative to other banks in comparable economies in its region. The Reserve
Bank of India is an autonomous body, with minimal pressure from the government.
With the growth in the Indian economy expected to be strong for quite some
time-especially in its services sector-the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong. One may also
expect M&As, takeovers, and asset sales.
In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its
stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an
investor has been allowed to hold more than 5% in a private sector bank since the RBI
announced norms in 2005 that any stake exceeding 5% in the private sector banks
would need to be vetted by them.
In recent years critics have charged that the non-government owned banks are
too aggressive in their loan recovery efforts in connexion with housing, vehicle and
personal loans. There are press reports that the banks' loan recovery efforts have
driven defaulting borrowers to suicide.
By 2013 the Indian Banking Industry employed 1,175,149 employees and had a
total of 109,811 branches in India and 171 branches abroad and manages an aggregate
deposit

of 67504.54

billion (US$1.1 trillion

or

1.0 trillion)

and bank

credit of 52604.59 billion (US$840 billion or 780 billion). The net profit of the
banks operating in India was1027.51 billion (US$16 billion or 15 billion) against a
turnover of 9148.59 billion (US$150 billion or 140 billion) for the financial
year 2012-13.

52

On 28 Aug, 2014,Pradhan Mantri Jan Dhan Yojana (Hindi:

, English: Prime Minister's People Money Scheme) is a scheme for
comprehensive financial inclusion launched by the Prime Minister of India, Narendra
Modi. Run by Department of Financial Services, Ministry of Finance, on the
inauguration day, 1.5 Crore (15 million) bank accounts were opened under this
scheme. By

10

January

2015,

11.5 crore accounts

were

opened,

with

around 8698 crore (US$1.4 billion) were deposited under the scheme, which also has
an option for opening new bank accounts with zero balance.

Today the Indian banking system is among the best in the world and as
the years to come may see them taking on the global behemoths.

CLASSIFICATION OF BANKS
The commercial banking system in India is classified as follows:-

PUBLIC SECTOR BANKS

SBI and its associate banks called SBgroup.
19 nationalized banks
Regional rural banks mainly sponsored by public sector banks

PRIVATE SECTOR BANKS

Old generation private banks
New generation private banks
Foreign banks in India
Scheduled co-operative banks
Non scheduled banks

53

CO-OPERATIVE SECTOR BANKS

State co-operative banks

Central co-operative banks

Primary agriculture credit societies

Land development banks

Urban co-operative banks

Primary agriculture development banks

Primary land development banks

State land development banks

DEVELOPMENT BANKS
Industrial Finance Corporation of India (IFCI)
Industrial Development Bank of India (ID B I)
Industrial Credit and Investment Corporation of India (ICICI)
Industrial Investment Bank of India (IIBI)
Small Industries Development Bank of India (SIDBI)
National Bank for Agriculture and Rural Development (NABARD)
Export Import Bank of India (EIBI)
National Housing Bank (NHB)

54

B. COMPANY PROFILE

THE DHANLAXHMI BANK LTD.

Dhanlaxmi Bank Ltd. was incorporated in 1927 at Thrissur, Kerala by a
group of ambitious and enterprising entrepreneurs.Over the 88 years that followed,
Dhanlaxmi Bank with its rich heritage has earned the trust and goodwill of clients. It
is due to banks strong belief in the need to seek innovation, deliver best service and
demonstrate responsibility, that it has grown from strength to strength. With more
than 678 touch points across India at service; banks focus has always been on
customizing services and personalizing relations. It became a Scheduled Commercial
Bank in the year 1977. Today it has 280 branches and 396 ATMs spread over the
states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat,
Delhi, West Bengal, Madhya Pradesh, Punjab, Uttar Pradesh, Rajastan, Chandigarh,
Goa, and Haryana. The Bank serviced a business of over Rs.20,338.97 crores as on
31.03.2014 comprising deposits of Rs.12133.21 crores and advances of Rs.8205.76
crores.

The Bank is tech savvy and has deployed technology widely as an

instrument for enhancing the quality of customer service. It has introduced
Centralised Banking Solution (CBS) on the Flexcute Platform for extending
Anywhere/Anytime banking to its clientele through multiple delivery channels.
The Bank has deployed CBS in all branches covering 100% of total business.
The Bank has set-up a state-of-the-art DATA CENTRE in Bangalore, to keep
the networked system operational 24 hours a day and 7 days a week.

The Bank lays stress on customizing services and personalizing relations. It

has introduced an International Debit Card through a tie-up with M/s Visa
International. As part of this overall effort, the Bank has joined CASHNET, the
first independent wide shared ATM network in India, the National Financial

55

Switch (ATM network) of the IDRBI, promoted by Reserve Bank of India and
Cash tree promoted by a group of public sector banks by joining these
networks, our customers are provided access to more than 25,000 ATMs in the
country. The Bank has installed 70 networked ATMs thus far in centres of high
banking activity.
The Bank has introduced tele-banking and Internet banking at all
branches. It has also implemented centralized CMS software by locating the
CMS hub a Corporate Office Thrissur enabling all CBS branches to do CMS
operations.
The Bank has put in place Real Time Gross Settlement (RTGS) and
National Electronic Fund Transfer (NEFT) System to facilitate large value
payments and settlements in real time on-line mode on a transaction-bytransaction basis.
The Bank has ventured into both life and non-life insurance. It is selling
life insurance products of M/s. MetLife India, a renowned global player in this
segment and non-life insurance products of M/s. Oriental Insurance Co. as their
corporate agent. The Bank is also a depository participant of NSDL (National
Security Depository Limited) offering Demat services through selected
branches.

With a view to making available value-added services to the NRls, the

Bank has set up NRI Boutiques (Relationship Centres) at 9 locations in the State
of Kerala and Tamil Nadu. The Bank has also plans to open specialized NRI
branches with accent on quality of service and thrust on specialisation at
potential locations. As at the end of March 2008, the Bank had rupee drawing
arrangements with.8 Exchange Houses in the Middle East. For fast money
transfer, it has tied up with UAE Exchange & Financial Services for Xpress
Money and Moneygram. Wallstreet Finance for Wallstreet instant cash and

56

Indusind Bank Limited for Zoha Inc. the Bank has also tied up with SBI Mutual
Fund for selling their products.
The Banks Corporate Office, Thrissur and Industrial Finance Branch at
Kochi have been accredited with certification under ISO 9001-2000.
On the socio-economic front, the Bank is a leading player in dispensation
of Micro Credit among Kerala-based Private Sector Banks. This involvement is
part of the Banks objective to act as catalysts for the economic prosperity of the
country. The Bank has recognized micro finance intervention as an effective
tool for poverty alleviation and has streamlined the linkage between the Bank
and Self Help Groups through 121 branches.
The Bank is managed by a Board of Directors comprising professionals
drawn from various walks of life with Sri. G. Sreeram managing director &
CEO.

VISION
BANKING ON RELATIONSHIPS FOR EVER

MISSION
TO BECOME A STRONG AND INNOVATIVE BANK WITH INTEGRITY
AND

SOCIAL

SATISFACTION

RESPONSIBILITY
AS

WELL

AS

TO
THAT

MAXIMISE
OF

SHAREHOLDERS AND THE COMMUNITY.

REGISTERED OFFICE
Dhanalakshmi Buildings
Naickanal, Thrissur 680 001
Kerala
Phone : 91-487-2335104/2335190/2335131/2335177
Fax : 91-487 2335367/2335580

57

THE

CUSTOMER
EMPLOYEES,

PRODUCT PROFILE

Deposit Products

Dhanam +

Dhanam Cumulative Deposit Certificate

Lakshmi Recurring Deposits

Surabhi Deposit Scheme

Insta Money Scheme

Senior Citizen

Dhanam Money Multiplier

Dhanam Supreme

Dhanam Power

Dhanam Simple

Dhanam Tax Advantage

Dhanam Salary

Dhanam Super Power

Dhanam Platinum

Credit Products

Dhanam Home Loan

Dhanam Car Credit

Dhanam Vidya Credit Scheme

Dhanam Easy Loan

Dhanam Ready Money Loan

Dhanam Demat Loan / Overdraft

Dhanam MediEquipment Scheme

Dhanam Mediclinic Finance Scheme

58

Dhanam Lease Loan

Dhanam Two-wheeler Loan

Dhanam Personal Loan

Agriculture Products

Dhanam Kissan Vahana

Dhanam Kissan Card

Relationship Banking

ATM

Mobile Re-charge through ATMs

Mobile Banking Services

Tele banking

Web-Banking

Dhanam Visa International ATM-cum-Debit Card

Money Transfer Across India Through RTGS / NEFT

59

Chapter 4
Data Analysis and
Interpretation

60

TABLE 4.1 SHOWING TOTAL DEPOSIT OF THE BRANCH

YEAR

TOTALDEPOSIT
(in lakhs)

PERCENTAGE
CAHANGE IN TOTAL
DEPOSIT

2009-2010

12,544.09

2010-2011

17,217.37

37.25

2011-2012

22,520.24

30.80

2012-2013

19,647.31

-12.75

2013-2014

25,609.42

30.34

Source: Secondary data.

CHART 4.1 SHOWING TOTAL DEPOSIT OF THE BRANCH

3,00,00,00,000

2,50,00,00,000

2,00,00,00,000

1,50,00,00,000

1,00,00,00,000

50,00,00,000

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
In the year 2010-11 the deposits had a increasing trend by 37.25% but in 2011-2012 it
increased by 30.80% but, it is not up to the mark compared to the previous year. In
2012-2013 it decreased by 12.75% and in 2013-14 again shows an upward trend by
30.34%.

61

TABLE 4.2 SHOWING NET ADVANCE OF THE BRANCH

YEAR

NET ADVANCE
(in lakhs)

PERCENTAGE
CHANGE IN NET
ADVANCE

2009-2010

12,186.88

2010-2011

13,554.87

11.22

2011-2012

14,790.17

9.11

2012-2013

22,216.43

50.21

2013-2014

27,504.85

23.80

Source: Secondary data

CHART 4.2 SHOWING PERCENTAGE CHANGE IN NET ADVANCE

3,00,00,00,000

2,50,00,00,000

2,00,00,00,000

1,50,00,00,000

1,00,00,00,000

50,00,00,000

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
In the year 2010-11 the percentage change in net advance was 11.22. In 2011-12
the change came to 9.11 and in 2012-13 it increased widely by 50.21. The
increased variance in the year 2013-14 was 23.80.

62

TABLE 4.3 SHOWING ADVANCE TO DEPOSIT RATIO

YEAR

ADVANCE
(in lakhs)

DEPOSIT
(in lakhs)

ADVANCE
TO DEPOSIT
RATIO

2009-2010

12,186.88

12,544.09

97.15

2010-2011

13,554.87

17,217.37

78.72

2011-2012

14,790.17

22,520.24

65.67

2012-2013

22,216.43

19,647.31

113.076

2013-2014

27,504.85

25,609.42

107.40

Source: Secondary data

CHART 4.3 SHOWING ADVANCE TO DEPOSIT RATIO

120

100

80

60

40

20

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:. In the year 2009-10 ratio was 97.15%, in 2010-11 it was decreased to 78.72%.
In the year 2011-12 the ratio again decreased to 65.67%. But in 2012-13 and
2013-14 the performance of advance to deposit ratio is much increased by
113.076 and 107.40 compared to previous years.

63

TABLE 4.4

SHOWING NPA OF THE BRANCH

YEAR

NPA(in lakhs)

PERCENTAGE
CHANGE IN NPA

2009-2010

2.74

2010-2011

24.34

788.32

2011-2012

2.18

-91.04

2012-2013

119.48

5380.73

2013-2014

122.51

2.53

Source: Secondary data

CHART 4.4 SHOWING PERCENTAGE CHANGE IN NPA

140

120

100

80

60

40

20

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
In the year 2010-11 the variance was positive figure of 788.32. But in the year
2011-12 NPA had a huge opposite change by 91.04%, but in the year 2012-13 it
increased to 5380.73. In the year 2013-14 it again increased by 2.53%.

64

TABLE 4.5 SHOWING RECOVERY OF NPA

YEAR

NPA RECOVERY

2009-2010

0.00

2010-2011

0.00

2011-2012

21.96

2012-2013

0.25

2013-2014

20.00

Source: Secondary data

CHART 4.5 SHOWING PERCENTAGE CHANGE IN NPA

2500000

2000000

1500000

1000000

500000

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
. In the years 2009-10 and 2010-2011 the no amount was recovered. In 2011-12
21.96, and in the year 2012-13 0.25 and for 2013-14 20.00 was recovered.

65

TABLE 4.6 SHOWING NPA TO NET ADVANCE RATIO

YEAR

NPA
(in lakhs)

NET ADVANCE
(in lakhs)

NPA TO
NET
ADVANCE

2009-2010

2.74

12,186.88

0.022

2010-2011

24.34

13,554.87

0.179

2011-2012

2.18

14,790.17

0.014

2012-2013

119.48

22,216.43

0.53

2013-2014

122.51

27,504.85

0.44

Source: Secondary data

CHART 4.6 SHOWING NPA TO NET ADVANCE

0.6
0.5
0.4
0.3
0.2
0.1
0

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
The above table shows the ratio between NPA and Net advance of the branch. In
the year 2009-10 the ratio was 0.022. In the succeeding years the ratios were 0.179,
0.014, 0.53, 0.44 for the year 2010-11, 2011-12, 2012-13, 2013-14 respectively.

66

TABLE 4.7 SHOWING PERCENTAGE CHANGE IN NET PROFIT

YEAR

NET PROFIT
(in lakhs)

PERCENTAGE
CHANGE IN NET
PROFIT

2009-2010

547.22

2010-2011

365.75

-33.16

2011-2012

86.53

-76.34

2012-2013

1230.42

1321.95

2013-2014

769.31

-37.47

Source: Secondary data

CHART 4.7 SHOWING PERCENTAGE CHANGE IN NET PROFIT

1400
1200
1000
800
600
400
200
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:The above table shows variance in Net Profit of the branch. In the year 2010-11
Net Profit has reduced by 33.16%. In the year 2011-12 it again reduced by
76.34%. But in the year 2012-13 there was tremendous increase in the net profit
by 1321.95%. After that in the year 2013-14 the net profit declined by 37.47%.

67

TABLE 4.8 SHOWING NPA TO NET PROFIT RATIO

YEAR

NPA
(in lakhs)

NET PROFIT
(in lakhs)

NPA TO NET
PROFIT

2009-2010

2.74

547.22

0.50

2010-2011

24.34

365.75

6.65

2011-2012

2.18

86.53

2.51

2012-2013

119.48

1230.42

9.71

2013-2014
122.51
Source: Secondary data

769.31

15.92

CHART 4.8 SHOWING NPA TO NET PROFIT RATIO

16
14
12
10
8
6
4
2
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
The above table shows the ratio between NPA and Net Profit. In the year 200910 the NPA to Net Profit ratio was 0.50, after that it increased in the year 20102011 to 6.65. In the year 20112012 the ratio came to 2.51. For the years 201213 and 2013-14, ratios showed an increasing trend i.e., 9.71, 15.92 respectively.

68

TABLE 4.9 SHOWING COST-INCOME RATIO

COSTINCOME
RATIO

YEAR

INTEREST
EXPENCE
(in lakhs)

INTEREST
INCOME
(in lakhs)

2009-2010

806.42

1323.68

60.92

2010-2011

1188.13

1460.13

81.37

2011-2012

1376.37

1319.75

104.29

2012-2013

1520.84

2585.92

58.81

2013-2014

1684.32

2440.58

69.01

Source: Secondary data

CHART 4.9 SHOWING COST INCOME RATIO

120
100
80
60
40
20

0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
The above table shows the Cost-Income ratio of the branch. In the year 2009-10 the
ratio between interest expense and interest income is 60.92. In 2010-11 it increased
to 81.37. Again it increased to 104.29, for the year 2011-12.In the year 2012-13
ratio came to 58.81 which is a good indicator of performance and in the year 201213 the ratio was 69.01.

69

TABLE 4.10 SHOWING YIELD ON ADVANCE

YEAR

INTEREST ON
ADVANCE
(in lakhs)

NET ADVANCE
(in lakhs)

YIELD ON
ADVANCE

2009-2010

1323.68

12,186.88

10.86

2010-2011

1460.13

13,554.87

10.77

2011-2012

1319.75

14,790.17

8.92

2012-2013

2585.92

22,216.43

11.63

2013-2014

2440.58

27,504.85

8.87

Source: Secondary data

CHART 4.10 SHOWING YIELD ON ADVANCE

12
10
8
6
4
2
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
The above table shows the yield on the advance of the branch. In the tear 2009-10
yield on advance was 10.86. It slightly decreased to 10.77 in the year 2010-11. In the
year 2011-12 it again reduced to 8.92. But in the year 2012-13 yield increased to
11.63 which is a good indicator and in the year 2013-14 the yield was 8.87.

70

TABLE 4.11 SHOWING INTEREST INCOME TO TOTAL INCOME

INTEREST
INCOME
(in lakhs)

TOTAL
INCOME
(in lakhs)

RATIO

2009-2010

1323.68

1373.03

96.40

2010-2011

1460.13

1558.59

93.68

2011-2012

1319.75

1465.25

90.06

2012-2013

2585.92

2750.90

94.00

2013-2014

2440.58

2574.14

94.81

YEAR

Source: Secondary data

CHART 4.11 SHOWING INTEREST INCOME TO TOTAL INCOME

97
96
95
94
93
92
91

90
89
88
87
86
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
The above table shows the ratio of total interest income to the total income. In
2009-10 the ratio was 96.40, after that next two year shows a decrease in the
ratio i.e., in 2010-11 it was 93.68 and in 2011-12 it was 90.06 and in 2012-13 it
increased to 94.00 and in the next year 2013-14 it slightly increased to 94.81.

71

TABLE 4.12 SHOWING SECTOR WISE CLASSIFICATION OF

ADVANCE
PRIORITY SECTOR
YEAR

NON PRIORITY SECTOR

AMOUNT
(in lakhs)

PERCENTA
GE

AMOUNT
(in lakhs)

PERCENTA
GE

2009-2010

11,459.82

94.013

729.79

5.987

2010-2011

12,949.54

95.363

629.66

4.637

2011-2012

14,241.03

96.273

551.31

3.727

2012-2013

21,720.33

97.244

615.57

2.756

2013-2014

27,062.93

97.957

564.42

2.043

Source: Secondary data

CHART 4.12 SHOWING SECTOR WISE CLASSIFICATION OF

ADVANCE
120
100
80
PRIORITY

60

NON PRIORITY

40
20
0
2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

INFERENCE:
In the above table the sector wise classification of advance is given. In the year 200910 94.13% of the total advance is given to the priority sector and 5.987 for the non
priority sector. In the year 2010-11, 95.36 for the priority and 4.637 for non priority.
In the year 2011-12, 96.273% for priority and 3.72% for non priority. In 2012-13 the
advance was 97.244% for the priority and 2.756% for the non priority. In the year
2013-14, 97.957% of advance given to priority sector and 2.043 for non priority
sector.

72

TABLE 4.13 SHOWING SECURED AND UNSECURED LOANS

SECURED LOANS
YEAR

UNSECURED
LOANS
AMOUNT PERCEN
(in lakhs)
TAGE

AMOUNT
(in lakhs)

PERCEN
TAGE

2009-2010

12,067.10

98.99

122.52

1.005

2010-2011

13,437.21

98.95

142.00

1.045

2011-2012

13,211.24

89.31

1581.11

10.68

2012-2013

21,920.33

98.14

415.58

1.86

2013-2014

26,707.68

96.67

919.68

3.33

Source: Secondary data

CHART 4.13 SHOWING SECURED AND UNSECURED LOANS

100
90
80
70
60
SECURED LOAN

50

UNSECURED LOAN

40
30
20

10
0
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

INFERENCE:
In the above table shows the secured and unsecured loans. In the year 2009-10,
98.99% loan is secured and 1.005% is unsecured. Similarly 2010-11, 98.95% is
secured and 1.045% is unsecured. In 2011-12, 89.31% is secured and 10.68% is
unsecured. In 2012-13, 98.14% is secured and 1.86% is unsecured. And in the
year 2013-14, 96.67% of total loan is secured and only 3.33% is unsecured.

73

TABLE 4.14 SHOWING NUMBER OF TIMES LOAN TAKEN

RESPONSE

NUMBER OF
RESPONDENTS

PERCENTAGE

First time

26

52

Second time

11

22

Third time

18

More

50

100

Total
Source: Primary data.

CHART 4.14 SHOWING NO. OF TIMES LOAN TAKEN

120

100

80

60

NO. OF TIMES LOAN TAKEN

40

20

0
First time

Second time Third time

More

Total

INFERENCE:
Out of the 50 respondents, 26(52%) customers opinioned that they are taking loan for
the first time, 11(22%) customers are availing loan for the second time, 9(18%)
customers are availing loan for the third time and 4(8%) customers are availing loan
for more than three time. Majority of the customers, i.e., 52% are availing loan for the
first time from the branch.

74

TABLE 4.15 SHOWING THE REASON FOR SELECTING BRANCH

RESPONSE

NUMBER OF
RESPONDENTS

PERCENTAGE

Better services

21

42

Nearness to residence

12

24

Advice from
relatives/friends
Other

10

12

24

50

100

Total
Source: Primary data

CHART 4.15 SHOWING THE REASON FOR SELECTING BRANCH

Better services

Nearness to residence
Advice from relatives/friends
Other

INFERENCE:
Out of the 50 respondents, 21(42%) customers opinioned that the reason for selecting
the bank was better services, for 12(24%) customers the reason for selecting the
branch was nearness to residence, for 9(18%) customers the reason for selecting the
branch was advice from relatives/friends and for 12(24%) customers there are other
reasons for availing loan. Majority of the customers, i.e., 42% are availing loan
because of better services from the branch.

75

TABLE 4.1.16 TABLE SHOWING THE TYPES OF LOANS TAKEN

TYPES
LOANS

OF

NUMBER OF
RESPONDENTS

PERCENTAGE

Vehicle loans

17

34

Business loans

12

24

Personal loans
Educational loans

5
3

10
6

Commercial loans

Property loans

Loan against security

14

Total

50

100

Source: Primary data

CHART 4.16 SHOWING THE TYPES OF LOANS TAKEN

35
30
25
20
15
10
5
0
Vehicle
loans

Business
loans

Personal
loans

Educational Commercial
loans
loans

Property
loans

Loan
against
security

INFERENCE:
Out of the 50 respondents, 17(34%) customers have taken vehicle loan, 12(24%)
customers have taken business loan, 5(10%) customers have taken personal loan,
3(6%) customers have taken educational loan, 2(4%) customers have taken
commercial loan, 4(8%) customers have taken property loan, 7(14%) customers have
taken loan against security. Majority of the customers have taken Vehicle loans and
Business loans from the branch.

76

TABLE 4.17 SHOWING THE SATISFACION REGARDING INTEREST

RATE OF LOAN
SL
NO.

LEVEL OF
SATISFACTION

NO.OF
RESPONDENTS

MARKS

TOTAL
MARKS

Highly satisfied

10

LIKERT
SCALE
VALUE
0.2

Satisfied

20

80

1.6

Neutral

13

39

0.78

Dissatisfied

15

30

0.6

Highly
dissatisfied
Total

50

3.18

Source: Primary data

Total number of respondents = 50
Likert scale value = (number of respondents * marks provided)/total number of
respondents

CHART 4.17 SHOWING THE SATISFACION REGARDING INTEREST

RATE OF LOAN
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Highly satisfied

Satisfied

Neutral

Dissatisfied

Highly dissatisfied

INFERENCE:
Here the Likert scaling answer is 3.18, which comes between 3 and 4, i.e. most of the
customers are between satisfied and neutral. So, the highest value is for satisfied i.e.
1.6 and some are neutral i.e. 0.78 with the interest rate of loan.. So the respondents
are satisfied.

77

TABLE 4.18 REGARDING THE UTILISATION OF LOAN

AMOUNT FOR THE PURPOSE FOR WHICH IT WAS PROVIDED
RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

Fully

43

86

partially

10

Nothing

Total

50

100

Source: Primary data

CHART 4.18 REGARDING THE UTILISATION OF LOAN

AMOUNT FOR THE PURPOSE FOR WHICH IT WAS PROVIDED
100
90
80
70
60
50
40
30
20
10
0
Fully

partially

78

Nothing

MODE OF DIVERSION OF LOAN AMOUNT

RESPONSE

NO. OF RESPONDENTS

Medical treatment

Marriage

Festival

Cultivation of other crops

House or building construction

Others

Total

INFERENCE:
Out of the 50 respondents, Majority of the customers i.e., 43(86%) had fully used
the loan amount for the purpose for which it was provided. But 5(10%) of the
customers used only partial amount of loan and 2(4%) of customers used no
amount of the loan for the purpose for which it was provided.

79

TABLE 4.19 REGARDING THE NO. OF CUSTOMERS WHO HAVE

DEFAULT IN REPAYMENT
RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

With default

11

22

Without default

39

78

Total

50

100

Source: Primary data

CHART 4.19 REGARDING THE NO. OF CUSTOMERS WHO HAVE

DEFAULT IN REPAYMENT

With default
Without default

80

THE REASON OF DEFAULT IN REPAYMENT

RESPONSE

NO. OF RESPONDENTS

Loss

Delay in cash inflow

Diversion of loan

Others

Total

11

INFERENCE:
Out of the 50 respondents, Majority of the customers i.e., 39(78%) made the
payment without default. But 11(22%) of the customers have default in repayment.
This is mainly because of delay in cash inflow and loss.

81

TABLE 4.20 REGARDING THE NO. OF DAYS AFTER DUE DATE

BANK CONTACT THE CUSTOMER
RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

2 Days

16

4 Days

1 Week

2 Week

Not contacted(no default)

39

78

Total

50

100

Source: Primary data

CHART 4.20 REGARDING THE NO. OF DAYS AFTER DUE DATE

BANK CONTACT THE CUSTOMER
45
40
35

30
25
20
15
10
5
0
2 Days

4 Days

1 Week

2 Week

Not contacted(no
default)

INFERENCE:
Out of the 50 respondents, bank contacted 8(16%) customers made default in
repayment within 2 days after due date and the rest of the 3 defaulters were contacted
by the branch within 4 days after due date. The enquiry did not go beyond 4 days that
means there was no delay in enquiry from branch.

82

TABLE 4.21 REGARDING THE PERIOD OF LOAN

RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

Less than 1 year

16

1 to 5 years

36

72

5 to 10 years

10

More than 10 years

Total

50

100

CHART 4.21 REGARDING THE PERIOD OF LOAN

100
90
80
70
60
50
40
30
20
10

0
Less than 1 year

1 to 5 years

5 to 10 years

More than 10
years

Total

INFERENCE:
Out of the 50 respondents, 8(16%) customers have been repaying loan for less than 1
year, majority of the customers i.e., 36(72%) have been repaying loan for l to 5 years,
5(10%) customers have been repaying loan for 5 to 10 years and one customer has
been repaying loan for More than 10 years.

83

TABLE 4.22 SHOWING THE SOURCE OF REPAYMENT

RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

Income from the project

27

54

Loan from other bank

Selling property

other

16

32

Total

50

100

Source: Primary data

CHART 4.22 SHOWING THE SOURCE OF REPAYMENT

100
90
80
70
60
50
40
30
20
10
0
Income from
the project

Loan from
other bank

Selling property

other

Total

INFERENCE:
Out of the 50 respondents, 27(54%) customers have opinioned that they repay loan by
using the income from the project,

3(6%) have opinioned that their source of

repayment is taking loan from other bank, 4(8%) customers have opinioned that they
repay loan by Selling property, 16(32%) customers have other sources of repayment.

84

TABLE 4.23 SHOWING PERIOD OF TIME IN WHICH THE

INTEREST AND/OR INSTALMENT OF PRINCIPAL REMAIN
OVERDUE OF TERM LOAN
RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

Less than 90 days

More than 90 days

More than 12 months

More than 24 months

More than 3 years

Not overdue

39

78

Total

50

100

Source: Primary data

CHART 4.23 SHOWING PERIOD AFTER OVERDUE OF LOAN

Less than 90 days

More than 90 days

More than 12 months
More than 24 months
More than 3 years
Not overdue

INFERENCE:
In respect of term loan, out of the 50 respondents, 4(8%) customers interest and/or
instalment of principal remain overdue for less than 90 days and became SMA(Special
mention account), 3(6%) customers interest and/or instalment of principal remain
overdue for more than 90 days and became NPA. In case of 2(4%) customers period
went beyond 12 months and became substandard, 1(2%) customers loan crossed the
period of 24 months and became doubtful and 1(2%) customers loan crossed the
period of 3 years and became bad debt.

85

TABLE 4..24 SHOWING PERIOD OF TIME IN WHICH THE

ACCOUNT REMAINS OUT OF ORDER IN RESPECT OF AN
OVERDRAFT/CASH CREDIT(OD/CC)
RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

Less than 90 days

More than 90 days

More than 12 months

More than 24 months

More than 3 years

Not Out of order

42

84

Total

50

100

Source: Primary data

CHART 4.24 SHOWING PERIOD OF TIME IN WHICH THE

ACCOUNT REMAINS OUT OF ORDER
90
80
70

60
50
40
30
20
10
0
Less than 90
days

More than 90
days

More than 12
months

More than 24
months

More than 3
years

Not Out of order

INFERENCE:
In respect of overdraft/cash credit, out of the 50 respondents, 4(8%) customers
account remained out of order for less than 90 days and became SMA(Special
mention account), 2(4%) customers account remained out of order for more than 90
days and became NPA. In case of 1(2%) customers period went beyond 12 months
and became substandard, 1(2%) customers overdraft crossed the period of 24 months
and became doubtful and majority of customers i.e., 42(84%) account were not out of
order.

86

TABLE 4.25 SHOWING PERIOD OF TIME IN WHICH THE BILL

REMAINS OVERDUE IN CASE OF BILLS PURCHASED AND
DISCOUNTED
RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

Less than 90 days

More than 90 days
More than 12 months

5
3
1

10
6
2

More than 24 months

More than 3 years

Not overdue

41

82

Total

50

100

Source: Primary data

CHART 4.25 SHOWING PERIOD OF TIME IN WHICH THE BILL

REMAINS OVERDUE
90
80
70
60
50
40
30
20
10
0

Less than 90 More than 90 More than 12 More than 24 More than 3
days
days
months
months
years

Not overdue

INFERENCE:
In respect of bill purchased and discounted, out of the 50 respondents, 5(10%)
customers bill remained overdue for less than 90 days and became SMA(Special
mention account), 3(6%) customers bills remained overdue for more than 90 days
and became NPA. In case of 1(2%) customers period went beyond 12 months and
became substandard, majority of customers i.e., 41(82%) bills were not overdue.

87

TABLE 4.26 SHOWING PERIOD OF TIME IN WHICH THE AMOUNT

TO BE PAID REMAINS OVERDUE IN CASE OF OTHER ACCOUNTS
RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

Less than 90 days

More than 90 days

More than 12 months

More than 24 months

More than 3 years

Not overdue

44

88

Total

50

100

Source: Primary data

CHART 4.26 SHOWING PERIOD OF TIME IN WHICH THE AMOUNT

TO BE PAID REMAINS OVERDUE
100
90
80
70
60
50
40
30
20
10
0
Less than 90
days

More than 90
days

More than 12
months

More than 24
months

More than 3
years

Not overdue

INFERENCE:
In respect of other accounts, out of the 50 respondents, 2(4%) customers amount to
be paid remained overdue for less than 90 days and became SMA(Special mention
account), 1(2%) customers amount to be paid remained overdue for more than 90
days and became NPA. In case of 2(4%) customers period went beyond 12 months
and became substandard, 1(2%) customers account crossed the period of 24 months
and became doubtful. Majority of customers i.e., 41(82%) amount to be paid were
not remained overdue

88

TABLE 4.27 SHOWING THE ACTION TAKEN BY THE BRANCH IN

CASE OF NPA
RESPONSE

NO. OF RESPONDENTS

PERCENTAGE

No action(no default)

43

86

Frequent enquiry

Personal visit

Attachment

other

Total

50

100

Source: Primary data

CHART 4.27 SHOWING THE ACTION TAKEN BY THE BRANCH

100
90
80
70
60
50
40

30
20
10
0
Frequent enquiry

Personal visit

Attachment

other

No action(no
default)

INFERENCE:
Out of the 50 respondents, In case of 3(6%) customers bank made the frequent
enquiries when their loan became NPA. branch staffs personally visited 3(6%)
customers when their loan became NPA. In case of 1(2%) customer, branch attached
the security because of the nonpayment of loan amount provided.

89

TABLE 4.28 SHOWING THE SATISFACION REGARDING THE

CREDIT MANAGEMENT ACTIONS OF THE BRANCH
SL
NO.

NO.OF
RESPONDENTS

MARKS

TOTAL
MARKS

Highly satisfied

20

LIKERT
SCALE
VALUE
0.4

Satisfied

36

0.72

Neutral

33

99

1.98

Dissatisfied

0.12

Highly
dissatisfied
Total

0.02

50

3.24

Source: Primary data

Total number of respondents = 50
Likert scale value = (number of respondents * marks provided)/total number of

respondents
CHART 4.28 SHOWING THE SATISFACION REGARDING THE
CREDIT MANAGEMENT ACTIONS OF THE BRANCH
2.5
2
1.5
1
0.5
0
Highly satisfied

Satisfied

Neutral

Dissatisfied

Highly dissatisfied

INFERENCE:
Here the Likert scaling answer is 3.24, which comes between 3 and 4, i.e. most of the
respondents are between satisfied and neutral. The highest value is for neutral i.e.
1.98. So the respondents are neutral with the credit management actions of the branch.

90

Chapter 5
Findings, Suggestions and
Conclusion

91

5.1 FINDINGS
Following are the important findings of the study:

1. The total deposits of the branch is increasing annually but a reduction has
been taken place in 2012-13.
2. Total deposit of the branch is increasing for the last five years which is a
good sign for the good performance of the branch.
3. The advance to deposit ratio is fluctuating. But the performance of the
branch is good enough that more than 60% of the total deposit is deployed as
advances in every year.
4. In the year 2012-13 and 2013-2014 NPA has increased highly compared to
the previous years.
5. Recovery procedures are slowly increasing in the last two years, compared
to 2009-2010 and 2010-2011 recovery of NPA is eventually taking place.
6. NPA to net advance ratio is decreasing in the first three years which shows
the customers had been paying their loans without default. But in the last
two years it is increased compared to previous years.
7. The net profit of the branch is fluctuating annually, it came down to the
lowest in the year 2011-12 but in the next year it reached the highest profit
point which shows a good sign of development.
8. NPA to net profit ratio is increasing i.e., the interest income is generating
slowly.
9. Cost income ratio is showing a good trend. But in 2011-12 there is more
interest expense than interest income.
10. The yield on advance ratio is satisfactory.
11. Interest income to the total income is more than 90% in all the years, it
means the branch is getting the major part of revenue from advances.
12. Out of total advance approximately 96.17% is given to the priority sector
and only 3.83% to non-priority sector. it means government policies are
properly working in the branch.

92

13. Majority of the advances are secured i.e., an average of 96% of total
advance is secured and only an average of 4% of total advance is not. This
will bring effective credit performance by reducing the risk.
14. Majority of the customers, i.e., 52% are availing loan for the first time from
branch.
15. Majority of the customers, i.e., 42% are availing loan because of better services
from branch.
16. Most of the customers are satisfied with the interest rate of loan
17. Majority of the customers have fully used the loan amount for the purpose
for which it was provided. But the rest of them used it for other purposes.
18. Majority of the customers made the payment without default. But the rest of
them have default in repayment. This is mainly because of delay in cash
inflow and loss.
19. . The enquiry from the branch did not go beyond 4 days after the due date that
means there was no delay in enquiry from branch in case of default.
20. Majority of the customers (72%) have been repaying loan for l to 5 years
21. More than 50% of the customers are confident that they repay loan by using the
income from the project and the rest of them have other sources for repayment
that means branch has the assurance of repayment.
22. In respect of term loan, 16% has become NPA which includes NPA-6%, Substandard-4%, Doubtful-4% and bad debt-2% branch has to cautious about the
term loan.
23. There is no bad debt in respect of overdraft/cash credit and there is only 8% of
NPA which includes NPA-4%, Sub-standard-2% and Doubtful-2% which
shows satisfactory credit management.
24. There is only NPA of 6% and 2% of sub-standard asset in respect of bills
purchased and discounted which shows effective credit performance.
25. In respect of other accounts, there is a NPA of 8% which includes substandard and doubtful assets to be taken into consideration.

93

26. Branch has taken necessary steps before and after the advances has become
NPA through frequent enquiry, personal visit and attachment of the collateral
security.

94

5.2 SUGGESTIONS
1. The advances for the non priority sector are too low so that advances to them
can be increased.

2. More than 92% of the advances are secured so micro credit and personal
loans can be increased by providing a good credit rating analysis.

3. Branch can take measures for continuous monitoring and follow up of loan
provided to ensure that it is using for the purpose for which it was provided.

95

5.3 CONCLUSION

The past decade has seen dramatic losses in the banking industry. Firms that had
been performing well suddenly announced large losses due to credit exposures
that turned sour, interest rate positions taken, or derivative exposures that may or
may not have been assumed to hedge balance sheet risk. In response to this,
commercial banks have almost universally embarked upon an upgrading of the
risk management and control systems. The study enables to know the Financial
Performance of the branch in respect of credit management is good. The increase
in deposits, advances, and decrease in NPA and all shows the credit management
is effective in the branch.

96

BIBLIOGRAPHY

BOOKS
C.R.Kothari; Research Methodology; New Age International Publishers; New
Delhi; Edition 2009
G.S Popli & S.K Puri; Strategic Credit Management in banks
K. Vaidyanathan; Credit Risk Management For Indian Banks
WEBSITES
www.dhanbank.com

www.rbi.org.in
www.creditriskmgt.com

97

ANNEXURE

98

QUESTIONNAIRE
1). NAME

2) NATIONALITY :
3) PROFESSION :
4) AGE

5) EDUCATIONAL QUALIFICATION :
6) Monthly income :
Below 10,000

10,000-20,000

20,000-30,000

30,000-40,000

40,000-50,000

Above 50,000

7) Do you have taken loan from Dhanlaxmi bank

Yes

No

8) Are you availing the loan for

First time

Second time

Third time

more

9) what is the reason for selecting this bank

Better services

Nearness to residence

Got advice from friends/relatives

other

10) Choose the loan facility you have taken

Vehicle loans

Business loans

Personal loans

Educational loans

Commercial loans

property loans

Loan against security

11) Are you satisfied with the interest rate of loan
Highly satisfied
Neutral

Satisfied
Dissatisfied

Highly dissatisfied

99

12) Did you used the loan amount for the purpose for which it was provided
Fully

Partially

Nothing

13) If partially or nothing specify the mode of diversion

Medical treatment

marriage

Festival

cultivation of other crops

House or building construction

others

14) Did you have any default in the repayment

Yes

No

15) If yes state the reason :

Loss

Delay of cash inflow

Diversion of loan

others

16) How many days after due date bank contact you
2 days

5 days

1 week

2 week

More
17) How long have you been repaying the loan
Below 1 year

1 to 5 years

5 to 10 years

More than 10 years

18) How do you repay loan

Income from the project

loan from other bank

Selling property

other

19) In respect of term loan, the interest and/or instalment of principal remain
overdue for a period of more than
Less than 90 days

More than 90 days

12 months

24 months

3 years

Not overdue

20 ) In respect of an overdraft/cash credit(OD/CC), the account remains out of

order for a period of more than
Less than 90 days

More than 90 days

100

12 months

24 months

3 years

Not overdue

21) In case of bills purchased and discounted, the bill remains overdue for a
period of more than
Less than 90 days
24 months

More than 90 days

3 years

12 months
Not overdue

22) In case of other accounts, any amount to be received remains overdue for a
period more than
Less than 90 days
24 months

More than 90 days

3 years

12 months
Not overdue

23) Did you keep the account without any transactions for more than
Less than 90 days
24 months

More than 90 days

3 years

12 months
Not overdue

24)What was the action taken by the bank in case of your NPA
No action

frequent enquiry

Personal visit

Law suit

25) Are you satisfied with the credit management actions of the bank
Highly satisfied

Satisfied

Neutral

Dissatisfied

Highly dissatisfied

101

FINANCIAL DATA FOR THE LAST FIVE YEARS

DHANLAXMI BANK LTD, THRISSUR MAIN BRANCH, M G ROAD,
THRISSUR-680004
RUPEES IN LAKHS
31/03/2010 31/03/2011 31/03/2012 31/03/2013 31/03/2014
Deposits
12,544.09
17,217.37
22,520.24
19,647.31
25,609.42
Total
12,189.62
13,579.21
14,792.35
22,335.91
27,627.36
advance
Net advance 12,186.88
13,554.87
14,790.17
22,216.43
27,504.85
NPA
2.74
24.34
2.18
119.48
122.51
Recovery of
0
0
21.96
0.25
20
NPA
Interest
806.42
1,188.13
1,376.37
1,520.84
1,684.32
expenses
Interest
1,323.68
1,460.13
1,319.75
2,585.92
2,440.58
income
Secured
12,067.10
13,437.21
13,211.24
21,920.33
26,707.68
loan
Unsecured
122.52
142
1,581.11
415.58
919.68
loan
Sector wise
advance:
Priority
11,459.82
12,949.54
14,241.039
21,720.33
27,062.93
Non 729.79
629.66
551.31
615.57
564.42
priority
Total
1,373.03
1,558.59
1,465.25
2,750.90
2,574.14
income
Total
825.81
1,192.84
1,378.72
1,520.48
1,804.83
expenses
Net profit
547.22
365.75
86.53
1,230.42
769.31

102