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Executive summary
Banking industry has undergone a paradigm shift in recent times, banking industry has transformed into relationship industry from transaction oriented industry. This industry provides variety of services according to the expectations of customers. Commercial bank follows certain well-defined system and practice for loan proposal. These systems practices have been rigidly followed by Karur Vysya Bank.the funds are sanctioned to those customers who have ability to repay so that the money sanctioned is not misused. The system and practice regarding loan proposal begin with verification of application given by applicant and ends with sanction of loan. In this process, corporation collects, verifies financial statements of the applicants, security taken for the project and other related documents, and establishes financial, market viability and technical feasibility of the project. After completing the procedure the project sanction committee/sanctioning authority accepts the feasibility of project, and the loan is sanctioned. The present report describes and analyses the loan system as observed in Karur Vysya Bank, Tumkur. The study also examines the profitability and performance of loan in the bank for 3years. Data collection is secondary in nature and is taken from; record maintained by bank, interacting with bank staff and also from annual report.
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PART -A INTRODUCTION
BANK The English word bank is derived from an Italian word Banco, the Latin word bancus and the French word banque, which means a bench. They are of the opinion that the medieval European bankers (I.e. money changers and money lenders) transacted their banking activities. As such, the word bank should be associated with an Italian word Banco. But according to others, the term bank is derived from the German word, Banck, which means a joint stock fund or a common fund (i.e. a heap of money) raised from a larger no. of members of the public. As banks deal in common fund or heaps of money raised from the public, the term bank should be traced to the German word, Banck. Meaning and definition of bank A bank is an institution, which deals with money. It means that a bank receives money in the form of deposits from the public and lends money for the development of trade and commerce. Prof. Hart says that a banker is one who in the ordinary course of his business receives money, which he repays by honoring the cheques of persons from whom or on whose account he receives it. Prof. Kinley defines a bank as an establishment that makes to individuals such advances of money as may be required and safely made and to which individuals entrust money, which is not required by them of use. All types of Banks in India are regulated and the activities monitored by a standard bank called the Reserve Bank of India that stands at the apex of the banking structure. It is also called the Central Bank, as major banking decisions are taken at this level. The other types of banks in India are placed below this bank in the hierarchy.
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Types of Commercial banks: Commercial banks are of three types i.e., Public sector banks, Private sector banks and Foreign banks. (i) Public Sector Banks: These are banks where majority stake is held by the Government of India or Reserve Bank of India. Examples of public sector banks are: State Bank of India, Corporation Bank, Bank of Baroda and Dena Bank, etc. (ii) Private Sectors Banks: In case of private sector banks majority of share capital of the bank is held by private individuals. These banks are registered as companies with limited liability. For example: The Jammu and Kashmir Bank Ltd., Bank of Rajasthan Ltd., Development Credit Bank Ltd, Lord Krishna Bank Ltd., Bharat Overseas Bank Ltd.,Global Trust Bank, Vysya Bank, etc. (iii) Foreign Banks: These banks are registered and have their headquarters in a foreign country but operate their branches in our country. Some of the foreign banks operating in our country are Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, American Express Bank, Standard & Chartered Bank, Grindlays Bank, etc. The number of foreign banks operating in our country has increased since the financial sector reforms of 1991. 3. Development Banks Business often requires medium and long-term capital for purchase of machinery and equipment, for using latest technology, or for expansion and modernization. Such financial assistance is provided by Development Banks. They also undertake other development measures like Public Sector Banks comprise 19 nationalized banks and State Bank of India and its 7 associate banks. Business Studies 8 subscribing to the shares and debentures issued by companies, in case of under subscription of the issue by the public. Industrial Finance Corporation of India (IFCI) and State Financial Corporations (SFCs) are examples of development banks in India. 4. Co-operative Banks
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INDUSTRY PROFILE
The Banking Industry was once a simple and reliable business that took deposits from investors at a lower interest rate and loaned it out to borrowers at a higher rate. However deregulation and technology led to a revolution in the Banking Industry that saw it transformed. Banks have become global industrial powerhouses that have created ever more complex products that use risk and securitization in models that only PhD students can understand. Through technology development, banking services have become available 24 hours a day, 365 days a week, through ATMs, at online banking, and in electronically enabled exchanges where everything from stocks to currency futures contracts can be traded. The Banking Industry at its core provides access to credit. In the lenders case, this includes access to their own savings and investments, and interest payments on those amounts. In the case of borrowers, it includes access to loans for the creditworthy, at a competitive interest rate. Banking services include transactional services, such as verification of account details, account balance details and the transfer of funds, as well as advisory services, that help individuals and institutions to properly plan and manage their finances. Online banking channels have become key in the last 10 years. The collapse of the Banking Industry in the Financial Crisis, however, means that some of the more extreme risk-taking and complex securitisation activities that banks increasingly engaged in since 2000 will be limited and carefully watched, to ensure that there is not another banking system meltdown in the future.
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Short-term loans
Long-term loans
LIC Loan NSC loan Gold loan Godown loan Warehouse loan
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BANK PROFILE
Karur Vysya Bank is a privately held Indian bank, headquartered in Karur in Tamil Nadu. It was set up in 1916 by M. A. Venkatarama Chettiar and Athi Krishna Chettiar. Its current chairman is Mr. P. T. Kuppuswamy. The bank has 322 branches about 45 of them are in rural areas. The bank has installed 275 ATMs across the country so far. All the branches are powered with CBS Core Banking Solution. The bank also offers Internet banking and mobile banking facilities to its customers.
Karur Vysya Bank Type Industry Founded Headquarters Key people Website Public Banking 1916 Karur, Tamil Nadu, India P. T. Kuppuswamy Group Chairman www.kvb.co.in
History Commercial banking in India can boast of a history of about 200 years. Though one could trace the history of banking back to the 19th century, the beginning of the last century saw the birth of many banks in India, set up by people with vision, commitment and national spirit. The Karur Vysya Bank Limited, popularly known as KVB, one such endeavour, was set up in 1916 by two great visionaries and illustrious sons of Karur, the Late Shri M A Venkatarama Chettiar and the Late Shri Athi Krishna
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VISION: Delight the customers continually by blending tradition with technology to deliver innovative products and services at affordable rates through a pan India branch network. MISSION
Adapt technology to introduce innovative products and services as well as increase the value of products on an on-going basis and provide them at reasonable rates.
Expand branch network to reach the top business centres, besides unbanked and under banked areas in the country;
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Strengthen the financials through effective deployment of funds and ensuring financial discipline while adhering to the regulator's guidelines Update the knowledge and skills of the human capital to provide quality customer support
Origin Karur Vysya Bank was started in the year 1916 in Karur, then a small textile town with a vast agricultural background, by two illustrious sons of the soil Sri M.A. Venkatarama Chettiar and Sri Athi Krishna Chettiar. What started as a venture with a seed capital of Rs. 1.00 lakh has grown into a leading financial institution that offers the wide gamut of financial services to millions of its customers under one roof. Financial landmarks of the bank:
Total business of the bank was at Rs. 32946.85 cr. with total deposits at Rs. 19271.85 cr. and total advances at Rs. 13675 cr. as on 31.03.2010. KVB is the first Tamilnadu based private sector bank to cross the milestone figure of Rs. 30000 cr. total business.
The net profit of the bank for the year was Rs. 336.03 cr. The net owned funds of the bank are Rs. 1619.98 cr. The bank has a Capital Adequacy Raito of 14.49% (Basel II) as against the RBI stipulated norm of 9%. The bank has one of the lowest net NPA ratios in the country @ 0.23%. The bank has been earning profits since inception and has been declaring dividend uninterruptedly. The bank has declared 100% dividend since 2003-04. For 2005-06, 2007-08, 2008-09 and 2009-10, the dividend was 120%.
Branch and ATM network: The bank has a branch network of 335 and an ATM network of 376. The bank plans to add another 50 branches by the end of the financial year 2010 -11. Technological accomplishments:
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Any Branch Banking Multicity Account facilities for both current and savings bank customers. Internet Banking On line utility bill payments facility through Bill-desk On line shopping facility through CC Avenues e-commerce facilities backed with the safety of Verified by VISA Mobile Banking Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) facilities at all branches VISA Debit card facility with a card base of over 1.70 million On-line rail and air ticket booking using KVB VISA Debit card VISA enabled Gift Card Access to over 335 KVB ATMs and over 13000 domestic ATMs under the VISA / NFS / MITR /Axis bank cluster and over 1 million VISA ATMs worldwide
Card to Card and Card to account transfer of funds through KVB ATMs Payment of institutional fees through ATMs Payment for air tickets (Kingfisher) through KVB ATMs Mobile top up facility at KVB ATMs 24 X 7 toll free professional help desk services for all ATM, Internet Banking, Mobile Banking and e-commerce transactions
KVB offers several deposit and loan products, tailor-made to cater to the specific needs of customers The bank offers all types of general insurance policies through a tie-up with M/s Bajaj Allianz General Insurance Company The bank offers life insurance policies through a tie-up with M/s Birla Sun Life Insurance Company
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The Bank distributes the Mutual Fund products of UTI, SBI MF, Reliance MF, Sundaram BNP Parbas MF, Birla Sunlife MF, Franklin Templeton MF and LIC MF
The Bank is a Depository Participant through NSDL and opens demat accounts ASBA facility available Off-line and on-line trading facility is available to the demat customers enabled through a tie-up with M/s Religare Securities Ltd and M/s IDBI Caps respectively
KVB is one of the authorized banks to open accounts under the New Pension Scheme. Recognitions:
Ranked as the Best Mid-sized Bank by Business Today KPMG for 2009 Was rated as the Most Efficient Small Bank by Business Today KPMG and as the No. 1 old private sector bank by Financial Express Ernst & Young for two years in succession (2006 & 2007)
Ranked by The Banker, London among the TOP 1000 Banks of the world for the year 2009 (One among 32 Indian Banks featuring in the list). Also one of only 6 Indian Banks featured in the list of top performers under Return on Assets
Awarded the "Banking Technology Excellence Awards - 2008" for Best use of IT for Customer Service in Semi-Urban and Rural Areas and the "Banking Technology Excellence Awards - 2009" - Special Award Best IT Infrastructure Management, 2009 by Institute for Development and Research in Banking Technology, Hyderabad
Awarded the Gold CIO Award in the more than Rs. 1000 cr. category of the Enterprise Connect Awards 09 instituted by CIOL (Cybermedia India Online Limited)-Dataquest recognizing the leadership combined with vision and mission in deploying information technology for business benefits through pioneering and innovative use within and outside the organization
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Received the CFBP Jamnalal Bajaj Award for Fair Business Practices in the Financial Sector Category. The award has been instituted by the Council for Fair Business Practices, Mumbai based on evaluation parameters like customer satisfaction, customer communication, employee motivation, social conscience, corporate social responsibility and compliance with law
Future outlook: The bank has in place robust risk management systems and adheres to the tenets of Corporate Governance. The bank is well-equipped to boldly take up the challenges in the industry and emerge as a top-notch one-stop-shop techie financial supermarket. KVB will continue its endeavours to bring the best of products and services to its customers to emerge as the techie bank that provides the gateway to Smart Way to bank. Our Loan Products: Some the products that offer tailor-made solutions for the loan requirements of our customers are:
KVB Vartagamitra to meet the working capital requirements of traders KVB Fleximobile for purchase of a four-wheeler to provide mobility KVB Rentfin that provides finance against future rent receivables KVB Professional Loan that provides term finance for all categories of professionals KVB Bon Voyage that finances expenditure incurred for business, official or personal visits abroad KVB Happy Home that provides finance for purchase of the dream house The branch in Tumkur was started in the year 1984December in shirani road.
McKinsey 7S model
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The McKinsey 7S model involves seven interdependent factors which are categorized as either "hard" or "soft" elements: Hard Elements Strategy Structure Systems
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Deputy Manager
Assistant Manager
Clerical Staff
Sub-Staff Departments and their functions: For facilitating easy administration, the bank is divided into different departments with each department headed by respective department head are responsible for overall administration of their department and also to carry out various activities coming under their departments by taking the help of officers and staff of the departments. Following are the different departments: 2) Staff: Administration Planning & development Marketing Loans & operations Inspection & audit department
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Operational management:
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3) Skills:
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5) Style: The style of the organization refers to patterns of action taken by the top level over a period of time. The style of the organization depends upon the culture that is in practice. KVB follows top to down style of management. It works in autocratic style. The decisions are taken by top management concerning matters related to bank. It has been observed that the behavior of superior towards subordinate is pleasant. They motivate freshers who are working under them. The superior guides subordinate what to do and what not to do. Employees are free to give any ideas, suggestions etc for the betterment of the bank. 6) Strategy:
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Adapt technology to introduce innovative products and services as well as increase the value of products on an on-going basis and provide them at reasonable rates.
Expand branch network to reach the top business centres, besides unbanked and under banked areas in the country; Strengthen the financials through effective deployment of funds and ensuring financial discipline while adhering to the regulator's guidelines Update the knowledge and skills of the human capital to provide quality customer support
7) Shared values: KVBs main values are stated in its vision and mission statement. Beside these, there are other shared values of bank, they are: Loyalty and pride in company Strict adherence to commitments Integrity and fairness in all matters In ensuring speed response Faster team work
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Customer base.
Well trained man power. Excellent service provider.
WEAKNESS
Do not provide service in rural areas. Promotional activities are very less.
OPPORTUNITIES:
Expansion of branches and ATMs. Can enhance business by introducing new services which satisfy the
customers.
Can establish branches in rural areas.
THREATS
Public sector banks, both in urban and rural areas. Competition from other private banks such as, karnataka bank, Axis
It is a loan to help finance your housing requirements. It is eligible for all individuals (including NRIs) and HUF (opening through Kartas) This loan can be taken for various purposes as shown below:
o o
For construction of Independent Houses For outright purchase of Independent Houses, Flats (not older than 15 years) from individuals or builders For purchase of plots and construction on the plots purchased For improvement of existing houses or flats For purchase of Plots or Flats from a Statutory Authority For Repairs, renovation or additional construction
o o o o
Personal guarantee of husband or father in case of female borrowers or a third party guarantee in case of male borrower. Terms and Conditions
In the case of salaried employees, a Salary and Service Certificate from the Employers should be submitted The take home pay after the deduction of the home loan installment should not be less than 25% of Gross salary. The incomes of Husband and Wife can be clubbed together to decide the loan quantum, if they are joint borrowers. This loan is also considered for agriculturists. A loan may be considered for purchase of a vacant approved site, provided the applicant has sources of income to construct the house. Life cover can be taken under this loan through the Group Mortgage Redemption Assurance (GMRA) scheme. The premium for the policy is a single low cost premium. The premium can be included in the loan amount.
Types of Home Loan There are different types of home loans available in the market to cater
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Salary slip/Form 16 A. A photocopy of the first and last pages of Ration card or copy of PAN/Telephone/Electricity bills. A photocopy of Investments (FD Certificates, Shares, any fixed asset etc. or any other documents supporting the financial background of the borrower.
A photocopy of LIC policies with the latest premium payment receipts (if any). Photographs (as applicable). A photocopy of bank statement for the last six months.
Self-Employed/Businessmen 1. a CA. 2.
3.
income with Income Tax returns for the last 3 years certified by A photocopy of Advance Tax payments (if applicable). A photocopy of Registration Certificate of establishment A photocopy of Registration Certificate for deduction of
under shops and Establishments Act/Factories Act. 4. Profession Tax (if applicable).
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Bank statements of current and saving accounts for the A photocopy of any bank loan (if applicable). A photocopy of the first and last pages of the Ration card A photocopy of LIC policy (if applicable). A photocopy of investments (FD Certificates, Shares, any
last 6 months. 6. 7. 8.
9.
This is a hypothecation loan It is available to individuals and professionals It is for the purchase of a two wheeler for personal use
An undertaking from the employer to deduct loan installments and interest from the salary of the borrower in case of salaried employees shall be insisted on.
Branches shall verify credit worthiness, integrity, local standing and repayment capacity of the borrower before entertaining the proposals under the Scheme
This is a hypothecation loan for vehicles It can be used by Individuals, proprietorships, partnerships and corporate (except those engaged in a car hiring business) The loan is for the purchase of a new or second hand car (not older than 5 years) which is for business or personal use, except for car hiring
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The loan is for eligible business entities older than 3 years and earning profits during the immediate preceding 2 years.
Documents Required
Audited Balance Sheet (ABS) or Income statements to be obtained to establish repayment capacity of the applicant Post dated cheques for the next 12 months should be collected in advance
Salaried Application form with photograph, Identity & residence proof, Latest salary slip, Form 16, Bank statements not necessary Self employed Application form with photograph, Identity & residence proof, Last 2 years income tax returns, Last 6months bank statement. 4) Educational Loan KVB has made it possible for you to pursue your educational dreams. Our loan has been specifically structured to provide you with financial help if you wish to pursue further education of your choice, either in India and abroad. You can avail of our loans for graduate and post-graduate courses at the university you prefer. Features
It is a term loan given for studies in India and abroad. This loan is eligible for Indian nationals who have secured admission to professional/ technical courses in India through a common Entrance Test, or who have secured admission to a foreign University or Institution.
The Father or guardian of the student will be the guarantor in case of individual applicants.
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A capability certificate can be issued by branches after obtaining supporting documents. NDC from other banks need not be insisted on, a declaration or affidavit is enough. The loan is to be sanctioned at a branch nearest to the place of domicile of the applicant. The loan should be disposed off within 15 days to 1 month from the receipt of complete details from the party.
Documents required 1. Mark sheets of the qualifying examinations for school and graduate studies in India. 2. Proof of admission to the course. 3. Schedule of expenses for the course. 4. Copies of letters confirming scholarship, etc. 5. Copies of foreign exchange permits, if applicable. 6. Passport-size photographs. 7. Statement of the borrower's bank account for the past six months. 8. Brief statement of the borrower's assets and liabilities. 9. Residency proof for non existing customer. 5) Personal loan The KVB Personal loan is for individuals and small companies that require loans which are of a very large amount and mainly for personal use. These loans are repaid in installments and anyone who has availed of the KVB insta loan will be able to avail of this loan without much difficulty. Features
It is an installment loan The loan is available for salaried employees of PSUs, reputed companies, self employed individuals, all other individuals who provide
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The loan is for personal purposes A guarantor for a secured loan is not insisted upon. However, for an unsecured loan a colleague drawing the same salary should be used as a guarantor
For individuals- IT returns to be submitted. Minimum take-home salary of 25% after deduction of the loan amount. An applicant who has availed of a KVB Insta Loan earlier shall be eligible for this loan after closure of the Insta loan. For an unsecured loan up to Rs. 50,000 the applicant should be from a reputed company with a minimum of 5 years of service & unexpired service of 3 years in that organisation.
6) Bon Voyage KVB has constructed a loan to help individuals or proprietorship firms. It covers all expenses on foreign travel for business or pleasure. The loan has been specifically designed so the borrower can repay it in easy installments. Features
This is an Installment Loan It is specifically for individuals and partnership firms. The loan is for personal purposes The loan amount is to finance foreign travel expenditure whether it is business or personal. The guarantor can be any credit worthy persons who is related to the borrower, including the employer of borrower or firm, the company in
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The Person should be an Indian citizen and resident in India Foreign Exchange cannot be released for travel in Nepal / Bhutan In case the person is employed, take home salary should be at least Rs1.20 lakhs p.a. In case the person is employed, it shall be ensured that the net take home salary available to the borrower, after deducting the EMI for the proposed loan, shall be at least 25% of gross salary as indicated by salary certificate or pay slip.
The amount of loan eligible shall be arrived at after reducing the stipulated margin from the eligible costs. All ineligible costs shall be met entirely by the borrower. Documents Required
In case the person is employed, an undertaking letter shall be obtained from the employer to deduct monthly installments and make direct payments to our bank.
In case credit facilities are already sanctioned to the borrower by higher authorities, the proposal for the loan shall be forwarded to such higher authorities for sanction
7) Swarnamitra Dont just let your gold and jewelry sit idle. You can now use your jewelry to get a loan for your personal needs without having to sell it. The Swarna Mitra
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It is an overdraft loan It is specific to individuals who own jewelry The loan is specifically for personal purposes A guarantor for the loan is optional
Monthly interest and other expenses debited should be serviced, to be eligible for renewal. At the time of renewal, the limit should be fixed with regard to the prevailing rate to be applied on the gold as notified by CO. Once an overdraft a/c becomes irregular or overdue, all the provisions applicable to jewel Loans (Recovery by auction etc) shall be applica
8) Professional Loan As the name suggests, this is for professionals to help them with business expansion and development expenses and for travel expenses for business purposes. Features
This is a term loan. It is eligible for doctors, CAs, lawyers, Chartered Engineers, Architects, Individual, Proprietorships and Partnership Firms. It can be taken for the purchase of machinery, equipment, apparatus, computers, tools, vehicles, furniture, interiors and office equipment. This loan can also be used to finance foreign trips, seminars and conferences.
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The loan is for any individual doctor holding as least an MBBS or BDS degree and who is registered as a medical practitioner. He/She should be engaged in the practice of his/her profession for at least 3 years.
The applicant should have been in his profession for a minimum period of 3 years and earning profit for the last 2 years. Assembled computers are not eligible for finance. For foreign travel, only airfare, hotel expenses and seminar fees are eligible.
Documents Required
Documentary evidence is required for professional memberships and partnership deeds. ABS (with Tax Audit Report for Gross revenue exceeding Rs. 10 lacs) and/or ITAO/IT Returns for last 3 years are required to ensure the repayment capacity and adequate DSCR of the applicant.
The borrower must furnish full details of his/her other debts and their repayment terms.
PART-B
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RESEARCH DESIGN
Scope of the study
The study analyzes overall functions performed by Karur Vysya Bank in granting loan, and information about various types of loan provided by bank, and the performance of loans for 3years.
To know different kinds of loans provided by the bank and their performance. To know interest rate charged for each kind of loan To know the durations provided in different loan schemes To know what kind of securities the bank accepts To know the kind of customers approaching bank.
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5. Area covered: Tumkur Research is the process of gathering recording and analyzing of critical facts of any activity. It indicates critical searching study and scientific investigation of a problem a proposed course of action of hypothesis or theory. Information is the lifeblood of any organization information. Knowledge gained through study, communication, research, instruction or factual data Research is the systematic and intelligent investigation of Who, what, where, when, why, how of actual and potential buyers any research study must be done methodically in order to arrive at the best result, this study which was carried out for an academic requirement was done in such a way to follow the methodology as best as possible. The study was conducted to analyze the loan schemes at Karur Vysya Bank Ltd,Tumkur.It was pragmatic to assess to collect information through conducting a survey. A simple statistical method is used to arrive at the conclusion over the specific terms
1. Data Collection: The data were collected through primary and secondary
sources.
a) Primary Data: It is collected through first hand information directly from
the bank. b) Secondary Data: Data which someone else has already collected and have already passed through statistical process. It is obtained from company records, magazines, websites, and other research reports.
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customers of KVB
3. Sampling Procedure: convenience sampling method was used.
LIMITATIONS:
i. Sample size was limited to 30 because of difficulty in generalization of results. ii. iii. The study does not covers loans to professionals To collect the information from customer was quite difficult due to noncooperation of customers. iv. v. vi. The study is limited only to Tumkur branch. There was limitation of time to conduct survey The collection of data is limited for 3 years
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Table 1: Table showing the change in Overdraft loan Year 2007-2008 2008-2009 2009-2010 Rupees(in lakhs) 141 140 803 99 569 Percentage(%)
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Interpretation: Business people are the major customers of the bank and users of overdraft account, the advantage over draft account is that bank charges interest on the exact amount used by person during the month. Due to efficient promotional activities carried out bank there was sudden increase from Rs140lakh to Rs803lakh
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Table 2: Table showing the change in Car loan Year 2007-2008 2008-2009 2009-2010 Rupees(in lakhs) 55 90 171 163 310 Percentage(%)
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Interpretation: The above table shows clearly that there is increase in car loan year by year. In the year 2008-09 the loan amount has been increased to 163%.and in the year 2009-10 the loan amount has been increased by 310%. Due to increasing number of showrooms in tumkur, banks are giving more preference to car loans and are attracting customers by their schemes.
Table 3: Table showing the change in Two-wheeler Year 2007-2008 2008-2009 2009-2010 Rupees(in lakhs) 25 17 7 68 28 Percentage (%)
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Interpretation: In the year 2007-08 the loan sanctioned was Rs25, in the year 2008-09 the loan issued was Rs17lakh, and in the year 2009-10 declining trend continued and reached to Rs7lakh. The cost of two-wheeler is less compared to car, it can be afforded by middle class families from their savings and also many people felt that buying four-wheeler is safe and comfortable, so the demand for two wheeler has declined.
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Interpretation:
The above table clearly shows that in the year 2007-08 the housing loan amount was Rs70lakh in the year 2008-09 the loan amount increased by Rs9lakh, and in the year 2009-10 the loan amount decreased by Rs37 lakh and reached 42rupees.
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Percentage (%)
81 32
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Interpretation: Usually, these loans are available with higher interest rates. The interest rate of personal loan can be sometimes double that of home loans. And it may be difficult for the person to pay monthly installments, so the demand has been decreased.
Table 7: Table showing the change in Bon voyage Year 2007-2008 2008-2009 2009-2010 Rupees(in lakhs) 4 7 15 175 375 Percentage (%)
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Interpretation: The above table clearly shows that travel loan in the year 2007-08 was Rs 4lakh, in the year 2008-09 the loan amount raised to Rs 7lakh, and in the 2009-10 the upward trend continued and reached Rs15lakh. This helps to meet all traveling expense such as cost of ticket, hotel stay, visa, airport tax, and many more. And also advantage is the borrower has a period of 36months to repay the loan amount.
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Analysis: The above table clearly shows the loan against loan in the year 2007-08 was Rs 340lakh, in the year 2008-09 the loan amount has been improved by 40lakh and reached Rs 381.0, in the year 2009-10 the upward trend continued and reached Rs 493lakh.
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Table 9: Table showing the change in Agricultural loan Year 2007-2008 2008-2009 2009-2010 Rupees(in lakhs) 280 340 415 122 148 Percentage (%)
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Table 10: Table showing the change in Advances Year 2007-2008 2008-2009 2009-2010 Rupees(in crs) 18 16 19 89 105 Percentage (%)
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Interpretation: For the financial year 2008-09 the total advances stands at 16crore against financial year 07-08,09-10,however the bank is able to achieve more than 100% in 2009-10.Due to recession advances in the year 2008-09 has been decreased.
Table 11: Table showing the change in Profit Year 2007-2008 2008-2009 2009-2010 Rupees(in lakhs) 87 80 89 92 102 Percentage (%)
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Interpretation: The profit in the year 2008-09has been decreased due to decrease in advances. Profit in the year 2009-10 has been increased due to increase in deposits and advances.
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Interpretation: From the above table it is observed that there is constant recovery, and in the year 2008-09 there is increase by 2%.
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Rupees(in crs) 14 16 20
Percentage (%)
114 143
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Table14: Table showing the change in Business per employee Deposits + advances Business per employee = Number of employees
Percentage (%)
100 122
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Interpretation: Since there is increase in deposits and advances, business per employee has been increased.
Table15: Table showing the change in Profit per employee Year 2007-2008 2008-2009 2009-2010 Rupees(in lakhs) 7.9 7.2 8.1 91 102 Percentage (%)
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Interpretation: It is found that profit per employee has been decreased in the year 2008-09, but has been increased in 2009-10 due to increase in profits.
Table16: Table showing the relationship between Age and Loan amount
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100,000250,000 0 1 2 1 4
>500,000 0 1 8 4 13
Total 1 5 17 7 30
Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio N of Valid Cases 4.474a 4.760 30 df 9 9 Asymp. Sig. (2sided) .878 .855
a. 14 cells (87.5%) have expected count less than 5. The minimum expected count is .13. Testing of hypothesis: Null Hypothesis: Their no difference between age of customer and loan amount. Alternative Hypothesis: There is difference between age of customer and the loan amount.
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the null hypothesis that means there is no difference between age and loan
Table17: Table showing the relationship between monthly income and loan amount Chi-Square Tests Value Monthly Pearson Chiincome Square Likelihood Ratio 15.093a 100,00019.499 250,000 30 10,000N of Valid Cases 1 15,000 df Asymp. Sig. (2-sided) Loan_Amt .236 12 50,000.077 100,000 2 >500,000 0 2 1 4 6 13 Total
250,00012 500,000 3
6 7 4 5 8 30
15,000a. 20 cells (100.0%) have expected count less than 5. 2 2 1 The 25,000 expected count is .53. minimum 25,00035,000 35,00050,000 >50,000 Total 1 0 0 4 1 1 2 9 1 0 0 4
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Testing of Hypothesis: Null Hypothesis: There is no difference between monthly income earned and loan amount borrowed. Alternative Hypothesis: There is difference between monthly income earned and loan amount borrowed. Interpretation: Chi-square source is 0.236which means that (alpha) is insignificant. It means statistically we cannot reject null hypothesis, there is no difference between income of individuals and loan borrowed.
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Frequency 17 6 6 1 30
Interpretation: From the above table it is found that major borrowers are business people, and then followed by employees and house wives.
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Frequency 5 8 17 30
Interpretation: It is found that major customers have borrowed loan for personal use, 26.7%have borrowed for business use and only 16.6% have borrowed for personal as well as business purpose.
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Rate of Securities/documents Table 20: Table showing rate of interest, EMI period securities provided Type of loan EMI period interest required Over draft loan Car loan Two wheeler loan 11% 10.5% 10.5% Every month 60months 36months IT returns Hypothecation of car purchased Hypothecation of vehicle
purchased IT returns for last 3 years, certificate of registration, bank statements for last 1year government securities LIC Policies/NSC Amount in the form of land & building
Housing loan
10.5%
36months NSCs/LIC Policies 36months 36months 12months 12months IT Returns Certificate of salary Immovable properties IT Returns Pledge of gold jewelry
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Agricultural loan
FINDINGS
1. The targets for loans and deposits are fixed based on the past performance. 2. Bank is providing short term loans & long term & medium term loans to its
customers
4. The bank has advanced maximum Loans for overdraft scheme and personal
Loan scheme.
5. It is found that loans for professionals are not given in this branch due to lack
of demand in Tumkur branch.
6. It is found from survey that majority borrowers are business people. 7. It is found that maximum customers have borrowed for personal use,only
16.6% of them have borrowed for business and personal purpose
8. It is found that profit earned per employee has been recorded high in the year
2009-2010.
9. It is known from the survey that the majority of borrowers have not faced any
problems while borrowing Loans.
10.
Its also found that respondents are satisfied by the repayment period
11. It is found that the relationship between age and loan amount borrowed is
insignificant.
12. It is found that the relationship between income and loan amount borrowed is
insignificant. II. GENERAL FINDINGS. The bank has achieved award for the usage of best technology. The bank has achieved award for their excellent service. Page 64
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SUGGESTIONS
The modern world is the result of so many changes that are being taken place. A change may be initiated either voluntarily or on the advice given by someone. The following suggestions are given to the bank for further simplifications and to reach the expectations of the borrowers of different classes and to become customer friendly satisfying the financial needs.
1. Since the performance of bank is excellent, it is suggested to maintain the same status. 2. It is suggested to provide Loan facility for professionals like doctors, engineers etc. 3. It is suggested to reduce the rate of interest on personal Loan Scheme. 4. It is suggested to expand to its area operations by opening branches in rural areas.
II. GENERAL SUGGESTIONS 1. It is suggested to maintain a separate enquiry may I help you counters.
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CONCLUSION
I hereby conclude that as a researcher after keen observation in the area of Retail loans at KVB, Tumkur. It is one of the leading banks which provide various facilities to its members and public in Tumkur city. It is having good infrastructure and staff. As far as Lending is concerned, it is lending almost all types of Loans and advances. The Rate of Interest charged for different Loans are also satisfied by the members who have taken Loan. The bank is maintaining good track record for its documentation and processing of Records.
The bank is lending different types of Loan facilities to all types of customers like businessmen, employees, house-wives and also for students. The Interest charged for short term and long terms are also reasonable. The terms and conditions of Loan are unanimously accepted by all the members of the bank.
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BIBLIOGRAPHY
REFRENCE: Management of banking and financial services Padmalatha Suresh and Justin Paul
WEBSITES:
http://www.banking_indstry.com http://www.bankingindiaupdate.com/ www.kvb.co.in http://www.mbaknol.com http://banking.about.com http://www.wikipedia.org
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QUESTIONNIARE
General information: 1. Name of the respondent. 2. Age : 3. Sex : Male [ ] Female [ ] 20-30 [ ] 30-40 [ ] 40-50 [ ] 50 and above [ ]
5. Educational qualification
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Specific information 7. How did you come to know about loan facility? Direct visit to bank [ ] Through neighbors [ ] Bank magazines/periodicals [ ] Newspapers [ ] Others [ ]
8. Mention the type of loan availed by you? Home loan Educational loan Vehicle loan Personal loan Others specify
10. How much amount of loan have you borrowed? 10,000-50,000 [ ] 50,000-100,000 [ ] 100,000-250,000 [ ] 250,000-500,000 [ ] 500,000 above [ ]
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16. What is your opinion on interest rate charged by the bank? Very high [ ]
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17. How do you feel about procedure followed by the bank while providing loan? Simple [ ] Lengthy [ ]
Yes [ ] No [ ]
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