CHAPTER NO-1

INTRODUCTION TO THE STUDY

1.1 INTRODUCTION-

Banking sector plays an important role in economic development of a

country. The banking system of a India is featured by a large network of a bank
branches, serving many kinds of financial services of the people. Finance is the
set of activities dealing with the management of funds. More specifically, it is the
decision of collection and use of funds. It is a branch of economics that studies
the management of money and other assets. Finance is also the science and art of
determining if the funds of an organization are being used properly. Through
financial analysis, companies and businesses can take decisions and corrective
actions towards the sources of income and the expenses and investments that need
to be made in order to stay competitive.

Finance is the life blood of business. It flows in mostly from scale of goods
and services. It flows out for meeting various types of expenditure. The activating
element in any business which may be on industrial or commercial undertaking is
the finance. Business finance has been defined as those activities which have to
do with the provision and management of funds for the satisfactory conduct of a
business. Business finance is defined as that business activity which is concerned
with the acquisition and conservation of capital funds in meeting the financial
needs and overall objectives of business enterprises.
 1.2 OBJECTIVES OF THE STUDY

1. To study products and services of Shri Satyavijay Co-operative Bank Ltd.,

Kundal.

2. To conduct analytical study of loans and advances of bank.

3. To know views of borrowers about lending policy of the bank.

1.3 IMPORTANCE OF STUDY:-

1. It has helped to get practical knowledge about working of co-operative bank.

2. It has helped to know different schemes relating to loans and advances.

1.4 SCOPE OF THE STUDY:-

1. Conceptual scope is limited to loans and advances scheme.

2. Geographical scope is restricted to the co-operative bank.
3. Chronological scope covers three years 2016-17, 2017-18, 2018-19

Analytical scope includes use of tables, graphs, percentage

 1.5 RESEARCH METHODOLOGY:-

The information is collected through primary and secondary sources during the
project. The data is tabulated and analyzed. The collected data are divided in two
groups.

1.5.1 DATA COLLECTION :-

Data has been collected by two sources like Primary and Secondary data.

a. Primary Data:-
Primary Data means data observed or collected directly from first-hand
experience.
For present study, primary data has been collected through observation
and personal discussion with managers and the staff of the bank.

b. Secondary Data:-
Secondary Data means Published and second hand data. For present
study bank documents, financial statements and annual reports, reference books
are used for theoretical aspects.

1.5.2 DATA SAMPLING :-

Researcher has selected three years 2016 – 2017, 2017 – 2018,
2018 – 2019 for loans & advances study purpose. (Which are selected by
convenience sampling method)
1.5.3 DATA ANALYSIS :-

Data is analyzed by using techniques like percentage, graphs and tabulation.

1.6 LIMITATIONS:-

1. The study is limited to loans and advances schemes of the bank.

2. Due to busy schedule of banking, bank staff has less time to give detail
information.
 CHAPTER NO.2

INTRODUCTION TO THE BANK

2.1 INTRODUCTION:-

BANK PROFILE

Name of the Bank Shri Satyavijay Co-operative bank ltd. Kundal

A/P- Kundal. Tal- Palus, Dist- Sangli

Hade Office Address
Pin-416309.
Dates & Registration No.
SAN/BNK104/7-16/10/1986

Date & R.B.I License

UBD/MH/605/16.10.86
No.
Sangli, Kolhapur, Satara, Ratnagiri & Solapur
Jurisdiction
District

Email Satyavijaybank@gmail.com

2.2 HISTORY OF THE BANK:-

In accelerating the pace of industrial growth & development of kundal, his

moving spirit & fountain of inspiration behind was Shri. Ramchandra Sakharam
Pawar with his item of the colleagues sharing his mission of co-operative
movements in the fifties founded chain of co-operative institution in Kundal. The
unique achievement of Ramchandra Sakharam Pawar was that, he given a wider
base to the co-operative movements, by extending it to agro based industry. His
one of the landmark, is the foundation of the Shri Satyavijay Sahakari Bank
Limited Kundal.
 In this endeavor, he was ably assisted, among others, by young devoted &
disciplined shri satyavijay bank limited kundal, branch tasgaon. Both of then were
aware of the short coming of his loan crusade in the contest of growing needs of
the people. This society was registred on 16/10/1986 having regard to the efficient
operations, The Reserve Bank of India has no hesitation in granting to the bank
to operate as a bank and granted a banking license as urbon co-operative bank in
Oct 1986 Shri Satyavijay Sahakari bank Limited Kundal, this speaks for itself the
achivement of the bank and reflected the quality of management & the board. It
was natural that, operations of the bank in the beginning were on a limited scale
with financial constraints of funds following from the public. However, soon
schemes of a bank started growing. The bank therefore could land financial
assistance, to, through sustaned efforts for collecting deposit from the public by
innovating the attractive deposits wider range of small & needy entrepreneurs.
This strengthened the trust of the people & more & more co-operative institutions
become valued clients of the bank at the time the traditional handloom industry
was making way for power loom as a need of time the bank has the pride privilege
to claim that, it could make the small power loom owners forced to undertake job
works for want up working capital, could become self-reliant producers with their
own looms.
2.3 BRANCH EXPANSION:

The area of operation of the bank is whole revenue area of Maharashtra State.
To meet the growing need & banking facilities to large section of people the bank
has opened its branches at-

1. Kundal

2. Savantpur Vasahat

3. Palus

4. Takari

5. Market Yard Sangli

6. Savalaj

7. Tasgaon

8. Islampur

9. Mahanager Palika Sangli

10. Chinchani

11. Vasgade
2.4 SERVICES:

The bank provides various services to the customer in many ways, such as-

1. Bill collection facility

2. Safe Deposits locker facility

3. Loans & Advances at reasonable rates to small & cottage industry

4. Prompt & co-ordial service.

5. Internet facility is available in computerized branches.

6. PAN card service is provided.

2.5 BOARD OF DIRECTORS OF THE BANK:

Sr.
Name of Directors Designation
No.
1 Shri. Balasaheb R Pawar Chairman
2 Shri. Diliprao D Nalavde Vice-Chairman
3 Shri. Manikrao M Patil Director
4 Shri. Vikas S Lad Director
5 Shri Ashok S Patil Director
6 Shri. Pandurang D Jadhav Director
7 Shri. Prashant P Pawar Director
8 Shri. Shivaji N Lad Director
9 Shri. Suresh G Mali Director
10 Shri. Vasant B Savant Director
11 Shri. Chandrakant G Kadam Director
12 Shri. Rasul N Nadaf Director
13 Shri. Vikas B Patil Director
14 Sou. Sharda T Aamne Director
15 Sou. Mahananda T Savant Director
16 Shri. Mohan P Rajmane Director
17 Shri. Pandhirinath D Idate Director
18 Shri. Atul K. Dixit Director
19 Shri. Hanmant P. Pawar Director
20 Shri. Jayprakash B Jadhav General Manager
2.6 FINANCIAL SCENARIO IN LAST THREE YEARS 2013-14, 2014-15, 2015-16

Particulars 2016-17 2017-18 2018-19

Membership
Regular 10368 11051 12846
Nominal 1105 2194 2056
Paid up Share Capital 542.48 616.49 658.87
Total Reserves and funds 1062.84 1144.63 1308.47
Deposits (In Lacs Rs.)
Saving 1958.38 1773.15 1923.2
Current 559.64 498.43 520.5
Fixed 13108.17 16093.62 16478.76
Advances (In Lacs Rs.)
Secured 8946.19 10213.89 8904.8
Unsecured 162.01 892.05 1451.65
Investment (In Lacs Rs.)
S.D.C.C 1391 1354.15 1024.14
Nationalized Bank 1510.8 1509.37 1320.59
Govt. Securities 3963.3 4631 5528.95
Others 210.82 260 1100
Overdues % 4.75% 6.11% 8.22%
Audit Classification ‘B' ‘B' ‘B'

Profit of the year 98.27 100.71 110.04

2.7 PRODUCTS OF THE BANK:-

2.7.1 DEPOSIT SCHEMES OF THE BANK:-

Sr. No. Days Interest rate (%)

1 7 Day to 90 Days 6.50%

2 91 Days to 180 Days 7.00 %
3 181 Days to 1 Year 7.25%
4 1 Year 1 Day to 3 Years 8.25%
5 3 Year 1 Day to 5 Year 8.50%
6 5 Year 1 Day to 10 Year 8.75%

2.7.2 LOAN SCHEMES OF THE BANK:-

By the end of 2016

Sr. No. Loan Type Interest Rate (%)

1 Short term loans
i) Secured loans:-
a) Cash credit 14%
b) Loans against fixed deposits
c) Loans against pigmy Deposits
d) Gold loan 13%

ii) Unsecured loans:-

a) Clean loan 14%
b) Micro finance loan

2 Medium term loans

a) Vehicle loan
b) Home loan
c) Agricultural loans
d) Machinery hypothecation 14%
e) Loans against property
f) Salary loan
g) Education loan
h) Industrial loan
 2.8 DOCUMENTS REQUIRED FOR LOAN
Sr. Documents required for Loan Min.. and
Loan Type
No. max.duration of loan
Kyc, Promissory note, debenture, contract latter, other banks Less than 5 year
1 Cash credit no dues statement, stock statements, previous three years
profit/loss and balance sheet documents, etc
Loans against Kyc, Promissory note, debenture, property documents, Less than 5 year
2 fixed deposits property valuation certificate,7-12 statement, insurance
documents, etc
Loans against Kyc, Promissory note, debenture, pigmy documents, etc Less than 1 year
3
pigmy deposits
Gold loan Kyc, Promissory note, contract letter, continuing security Less than 5 years
4
letter, gold purchased documents, etc
Clean loan Kyc, Promissory note, debenture, contract latter, lien letter, Less than 5 years
5
income statements, etc
Micro finance Kyc, Promissory note, debenture, income statements, etc Less than 5 years
6
loan
Kyc, Promissory note, debenture, contract letter, quotation of 1 year to 10 years
Vehicle loan vehicle, income statements, insurance documents, property
7
documents, etc

Home loan Kyc, Promissory note, debenture, contract letter, budget 5 years to 10 years
8
statement, income statements, property documents, etc
Agricultural Kyc, Promissory note, debenture, agriculture related contract 5 years to 10 years
9 loans letter, other banks no dues statement, 7-12 statement, income
statements, etc
Kyc, Promissory note, debenture, contract letter, quotation of 5 years to 10 years
Machinery
10 new machinery, purchase bill, project report of new business,
hypothecation
valuation certificate of new machionery,etc
Kyc, Promissory note, debenture, contract letter, monthly 5 years to 10 years
12 Salary loan salary statements, continuing security letter, other banks no
dues statement, etc
Kyc, Promissory note, debenture, contract letter, admission 5 years to 10 years
13 Education loan letter, college fee related documents, transfer certificate, etc

Kyc, Promissory note, debenture, contract letter, total budget 5 years to 10 years
documents, property documents, property valuation
14 Industrial loan
certificate, machinery quotations, other banks no dues
statement, etc
2.9 PROCEDURE FOR SANCTIONING LOAN

Acceptance Proposal Form

Proposal and Document Verification

Eligibility check

Technical verification

Legal verification

Loan sanction

Loan disbursement
2.10 INFORMATION REQUIRED FOR LOAN PROPOSAL FORM

1. Name in full of Applicant

2. Age
3. Occupation
4. Address
5. Photo of Applicant
6. Whether Applicant is member of bank or not?
7. Membership No.
8. Date of Membership
9. Share Amount Rs.
10. Reason for Loan
11. Type of Business /Occupation in detail
12. Sole proprietor/Partnership Business-Yes /No
13. Turnover of Business
14. Amount of last year income tax /Sales Tax paid
15. Names of family members who are earning in family
16. Tenure of Business
17. Total Annual Income of Family
18. Monthly expenditure
19. Details of Fixed property owned
20. Details of Loan with other bank
21. Whether Guarantor for any loan with same or other bank
22. Names of Two Guarantors
23. Age of Guarantors
24. Photos of Guarantors
25. Guarantor’s Membership No.,
26. Guarantor’s Income source
27. Guarantor’s occupation
28. Guarantor’s loan details .if taken
29. Guarantor’s signature
30. Applicant’s signature
 CHAPTER NO. 3

THEORETICAL BACKGROUND

3.1 MEANING:

A financial institution licensed as a receiver of deposits. There are two types

of bank: 1) Commercial/Retail Banks 2) Investment banks. In most countries,
banks are regulated by the national government or central bank. Commercial
banks are mainly concerned with managing withdrawals & deposits as well as
supplying short-term loans to individual & small business. Consumers primarily
use this bank for basic checking and saving accounts, certificates of deposits and
sometimes for home mortgages. Investment banks focus on providing services
such as underwriting and corporate reorganization to institutional clients.

3.2 TYPES OF BANK:

1. Saving Banks-

These banks are suited for employees with a monthly salary. Low waged
people may open an account in saving bank.

2. Commercial Banks-

These banks collects money from people in various sector and giving the
some as a loan to businesses & make profits in interests this business men pay
since the loan is large the interest rates are also high.
 3. Industrial Development Bank-

These bank are committed to words enhancing the growth of industries by

providing loans for very long period of time. This is vital for the long term growth
of the industries.

4. Loans Development’s Bank-

These banks promotes in the food sector, by giving loans to farmer at a

relatively lower interest rate. The loan is usually given on the basis of land. If a
farmer has lots of agricultural fields then the more will be the loan provided.

5. Indigenous Banks-

They collect money from the community & provide loans to business men &
industrialists for a short amount of time.

6. Mortgage Bank-

These banks are specialized in providing mortgage loan alone. In order to sell
loans they depend solely on the secondary market.

7. Federal or National Bank-

These banks control the principles & policies of other banks across the
country. These banks are managed and run by the government. This bank provides
benchmarks which other bank should follow.

8. Co-operative Banks-

Co-operative bank as the name suggests gets money from the general
community without any bias and provides loans to all sections op people in the
neighborhood. Their motto is not profit alone, but service.
9. Exchange Bank-

These banks will be available in a more than a single country. They provide
services for the buying and selling of gold and silver; transaction will be in foreign
currencies.

10. Consumer’s Bank-

These are consumer friendly banks; they encourage the consumer in buying
commercial products and provide options for easy repay of the loan amount.

11. Private Banks-

These banks are not for the general public and community. They serve entirely
for private personnel’s assets and transaction aloan.

12. Ethical Banks-

As the name implies ethical banks promote candid transaction; between

various customers of the banks. Policies and rules are transparent in nature.

13. Internet Bank-

These banks provide banking facilities only via internet. There will be no
physical contact with the bank. All transaction are permitted only through online.

14. Investment Banks-

These banks are pertinent to large organization’s investment ventures across

the industry. They provide advice investment and promote corporate transactions.
15. Merchant Banks-

These banks exist for a long time. They promote investing in organization
that reap huge benefits for a long time rather than brand new organization.

16. Universal Banks-

These banks have a wide spectrum of a financial assistance to provide.

Insurances to stock they promote everything across all countries around the globe.

3.3 FUNCTIONS OF THE BANK:-

1. Accepting Deposits
2. Giving Loans
3. Overdraft
4. Discounting of Bill of Exchange
5. Investment of Funds
6. Agency Functions
7. Miscellaneous Function

1) Accepting Deposits:
The most important function of commercial banks is to accept deposits
from public. Various section of society, according to their needs and economic
condition, deposits their savings with the bank.
For example, fixed and a low income group people deposit their saving
in small amount from the price of view of security, income and saving
promotion. On the other hand, traders and businessmen deposit their saving in
the bank for the convenience of payment.
a) Current Deposits:

The depositors of such deposits can withdraw and deposit money whenever
they desire. Since banks have to keep the deposited amount of such account in
cash always, they carry either no interest or vary low rate of interest. These
deposits are called Demand Deposits because these can be demanded or
withdrawn by the depositors at any time they want.
b) Fixed Deposits:
These are the deposits which are deposited for a definite period of time.
This period is generally not less than one year and, therefore, these are called
as long term deposits. These deposits cannot be withdrawn before the expiry of
the stipulated time and, therefore, these are also called as time deposits.
c) Saving Deposit:
In such deposit, money up to a certain limit can be deposited and
withdrawn once or twice in a week. On such deposits, the rate of interest is very
less. As evident from the name of such deposits their main objective is to
mobilize small saving in the form of deposits. These deposits are generally done
by salaried people and the people who have fixed and low income.

2) Giving Loans:

The second important function of commercial banks is to advance loan to

its customers. Bank charge interest from borrowers and these is the main source
of the income.
Banks advance loan not only on the basis of the deposits of the public
rather they also advance loans on the basis of depositing money in the account
of borrowers. In other words, they create loans out of deposits and deposit out
of loans. This is called as credit creation by commercial banks.

a) Cash Credit:
In these type of credit scheme, bank advance loans to its customer on the
basis of bonds, inventories and other approved securities. Under this scheme,
banks enter in to an agreement with its customer to which money can be
withdrawn many times during a year. Under this setup banks open account of
their customers and deposit of their loan money. With this type of loan, credit
is created.
b) Demand Loans:
These are such loans that can be recalled on demand by the banks. The
entire loan amount is paid in lump sum by crediting it to the loan account of the
borrower, and thus entire loan because chargeable to interest with immediate
effect.
c) Short Term Loan:
These loans may be given as personal loans, loans to finance working
capital or as priority sector advances. These are made against some security
and either loan amount is transferred to the loan account of the borrower.

3) Over-Draft:

Bank advance loans to its customer's up to a certain amount through over-

draft, if there are no deposits in current account. For this banks demand a
security from from the customers and charge vary high rate of interest.
4) Discounting of bill of exchange:

This is the most prevalent and important method of advancing loans to the
traders for short term purposes. Under this system, bank advance loans to the
traders and business firms by discounting their bills. In this way, businessmen
get loans on the basis of their bill of exchange before the time of their maturity.

5) Investment of Funds:

The banks invest their surplus three types of securities- Government

securities, other approved securities and other securities. Government securities
include both, central and state governments, such as treasury bills, national
saving certificate etc.

Other securities include security of state associated bodies like electricity

boards, housing boards, debentures of Land Development Banks units of UTI,
shares of Regional Rural banks etc.

6) Agency Function:

Banks functions in the in the form of agent and representatives of their

customers. Customers give their consent for performing such functions. The
important functions of these types are as followes:

7) Miscellaneous Function:

Besides the functions mentioed above, banks perform many other

functions of general utility which are as followes:

a) Banks make arrangement of lockers for the safe custody of valuable assets
of their customers such as gold, silver, legal documents etc.

b) Bank gives reference for their customers.

 c) Bank collects necessary and useful statistics relating to trade and industry.

d) For facilitating foreign trade, bank undertakes to sell purchase foreign

exchange.

e) Bank advises their clients relating to investment decisions as specialist.

f) Bank does the under-writing of shares and debentures also.

g) Banks issue litters of credit.

3.4 CO-OPERATIVE -BANKING:-

Co-operative banking is retail and commercial banking organized on a

co-operative basis. Co-operative banking is institution take deposits and lend
money in most parts of the world.

Co-operative banking, includes detail banking carried out by credit

unions mutual saving banks societies and co-operative, as well as commercial
banking services provided by mutual organizations ( such as co-operative
federation) to co-operative businesses. Ledger institutions are often called co-
operative banks. Some are tightly integrated federations of credit unions,
though those member credit unions may not subscribeto all nine of the strict
principles of the World Council of Credit Unions (WOCCU).

Like credit unions, cooperative banks are owned by their customers and
follow the cooperative principle of one person, one vote. Unlike credit unions,
however, cooperative banks are often regulated under both banking and
cooperative legislation. They provided services such as savings and loans to
non-members as well as to embers and some participate in the wholesale
markets for bonds, money and even equities. Many cooperative banks are
traded on public stock markets, with the result that they are partly owned by
non-members. Member control is diluted by these outside stakes, so they may
be regarded as semi-co-operative.

Co-operative banking systems are also usually more integrated than

credit union systems. Local branches of co-operative banks select their own
boards of directors and manage their own operations, but most strategic
decisions require approval from a central office. Credit unions usually retain
strategic decision-making at a local level, through they share bank-office
function, such as access to the global payments system by federating.
 3.5 STRUCTURE OF CO-OPERATIVE BANKING:-

BANKING STRUCTURE IN INDIA

SCHIDULE BANK IN INDIA

SCHEDULED COMMERCIAL SCHIDULE/COOPERATIVE BANK ALL INDIA FINANCIAL

BANK INSTITUTIONS

National Federation of
Cooperative Banks Ltd. NABARD
National- Private Regional (NAFSCOB)
ized Banks Rural SIDBI
Bank Banks

EXIM

Rural Cooperative Urban Cooperative

Credit Institutions Banks IDBI

Short-term Structure Long-term Structure

State District Primary State Primary Co-

Cooperative Central Co- Agricultural Cooperative operative
banks operative Credit Societies Agricultural Agriculture and
Banks And Rural Rural
Development Development
Banks Banks