A Project Report On ANALYSIS OF CREDIT DEFAULT OF J&K BANK IN VARIOUS INDUSTRIAL SECTORS OF J&K STATE.

Submitted By: Showkat Ahmad Zargar MBA SEM. III BHARTIA VIDYAPEETH UNIVERSITY SDE (New Delhi)

Supervised By: Miss Rachna Chawla Submitted In Partial Fulfillment of the Requirements For the Degree of Master of Business Administration

ACKNOWLEDGEMENT
Expression of feelings by words makes them less significant when it comes to make statement of gratitude As it often happens that words run out when you are really thankful and sincere to express your feeling of gratitude towards someone but mentioning nothing is more off sense. It gives us immense pleasure to acknowledge gratefully the debt of all the persons who directly or indirectly helped me for completion of this work. First of all, I wish to express my deep sense of gratitude to Mr Fayaz Ahned Mir (Process head) and Mr.Gulzar Ahmed (Manager) for giving me an opportunity and encouragement while carrying out project entitled ANALYSIS OF CREDIT DEFAULT OF J&K BANK IN VARIOUS INDUSTRIAL SECTORS OF J&K STATE. I am extremely thankful to Ms. Rachna for her continuous expert guidance and invaluable tips through discussion and constructive criticism, which was always a source of inspiration for putting my best efforts to ensure the success in this project. Lastly, no words are enough to express my heartiest gratitude to my parents whose blessings are inspiration in the foundation of my work.

SHOWKAT AHMAD ZARGAR

TABLE OF CONTENTS 2

Contents
Chapter-1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Chapter-2 2.1 2.2 2.3
2.3 2.4

Page No.
46 7-9 10 10 10 11 12 - 23 24 27 28 - 29 30 31 32 - 33
34 35

Introduction Introduction of banking industry Introduction to J&K Bank History to J&K bank Mission Vision Financials of J&K bank products Competitors SWOT Analysis Research Methodology Objectives of the study Usefulness Methodology
Data collection Limitations

Chapter-3 Chapter-4 Chapter-5 5.1 5.2 Chapter-6 6.1 Chapter-7 7.1 7.2 7.3

Conceptual Discussion Data Analysis Findings and Suggestions Findings suggestions Appendices Questionnaire Bibliography Books Journals/Magazines Websites

36 - 40 41 - 59 60 - 61 62 - 63 64 - 65 65

CHAPTER -1
3

1.1 Introduction of banking industry

The banking industry is the backbone of any monetized economy. The stage of development of this industry is a good reflection of the development of the economy. The banking industry in India is governed by Banking Regulation Act of India, 1949. Since 1949, this sector has undergone phenomenal reforms due to the efforts and the vision of the policymakers. The first phase of reform began with nationalization of the 14 banks in 1969. At this stage, priority sectors were identified and banking support was given to them. The second phase was the nationalization of 6 more banks in 1980. However, what can be considered as a breakthrough in banking services was the entry to private sector banks which was initiated in 1993. Eight new banks entered the market at this stage with art technology and a brought with them a new wave of professionalism. It was at this time that India was introduced to the concept of Debit and Credit cards; e-transfer of funds, ATM. The Indian banking Industry is growing. Every bank is trying to have good client base. Every bank is providing lot of facilities to its customer e.g. iMobile banking, touch screen banking facility Banks in India can be categorized into non-scheduled banks and scheduled banks. Scheduled banks constitute of commercial banks and co-operative banks. There are about 67,000 branches of Scheduled banks spread across India. During the first phase of financial reforms, there was a 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. As far as the present scenario is concerned the banking industry is in a transition phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking system account for more than 78 per cent of total banking industry assets. Unfortunately they are burdened with excessive Non Performing assets (NPAs), massive manpower and lack of modern technology 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 employee strength of the private sector in the wake of the 4

Voluntary Retirement Schemes (VRS). As far as foreign banks are concerned they are likely to succeed in India.

CHART SHOWING INDIAN BANKING SYSTEM

Central Bank & Monetary AuthorityRBIApex Banking Institutions

APEX BANKING INSTITUTION

IDBI

NABARD

EXIM BANK BANKING INSTITUTIONS

HB

National Housing Bank

Commercial Banks

Regional Rural Banks

Co-operation Bank State Cooperative Bank

Public sector banks

Private Sector Banks

Central Distt. Cooperative Bank State Banks Nationalized Banks Subsidiary Companies State Bank of India Subsidiary banks Indian Banks
Foreign Banks

Primary Credit Societies

Old Banks

New Banks

Local Banks

TYPES OF BANKS

ACCORDING TO OWNERSHIP

ACCORDING TO LAW

ACCORDING TO FUNCTION

PUBLIC SECTOR BANKS

PRIVATE SECTOR BANKS COOPERATIVE BANKS SCHEDULED BANKS NONSCHEDULED BANKS

COMMERCIAL BANK

INDUSTRIAL BANK

SAVING BANK

1.2 Introduction to J&K bank

CENTRAL The Jammu and Kashmir Bank Limited was incorporated on 1st October 1938 and EXCHANGE AGRICULTURE BANK BANK commenced business on 4th July 1939 at Kashmir (India). The bank was started by the
Government of Jammu and Kashmir. The bank is the 1st state owned bank in the country. According to the extended Central laws of the state, the J&K bank was defined as a government company as per the provisions of Indian companies act 1956. In the year 1971 the bank received the status of scheduled bank. It was declared as A class bank by RBI in 1976.

BANK

The new identity for J&K Bank is a visual representation of the Banks philosophy and business strategy. The three colored squares represent the regions of Jammu, Kashmir and Ladakh. The counter-form created by the interaction of the squares is a falcon with outstretched wings a symbol of power and empowerment. The synergy between the three regions propels the bank towards new horizons. Green signifies growth and renewal, blue conveys stability and unity, and red represents energy and power. All these attributes are integrated and assimilated in the white counter-form. The Jammu and Kashmir bank is governed by the Companies Act and Banking Regulation Act of India. The bank is regulated by the Reserve Bank of India and SEBI. The bank is listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) Rated as P1+by Standard and Poor CRISIL connoting highest degree of safety The bank is a private sector bank despite of government holding 53 percent of equity It is a sole banker and lender of last resort to the government of J&K. Plan and non plan funds, tax and non tax revenues routed through the bank. It is the only private sector bank designated as agent of RBI for banking. Carries out banking business of the central government. Collects taxes pertaining to Central Board of Direct Taxes in J&K Unique characteristics: one of a kind

The landmark achievements in the diversification of the banks include the sponsoring of two Regional Rural Banks viz. Kamraz Rural Bank and Jammu Rural Bank ; permission for dealing in foreign Exchange. The bank has been in responding to the need for technology adaptation in meeting its commitment to the customers and offers the best services and a wide range of products. The bank is investing in a big way in information technology; installation of ATMs at Residency Road (Kashmir), Gandhi Nagar (Jammu), Ahmadabad and Mera Road (Mumbai) and at other important centers; introduction of EFT and E-mail services substantiate this fact. The tele-banking facility and anywhere banking facility provided by the bank has been extended many branches. The bank is in the process of 7

connecting its branches through VSAT and lease lines up to the number of 85.A new concept of customer facility Touch Screen kiosks shall be installed at many branches of the bank. J&K BANK- MUTUAL FUND TIE UPS The J&K bank has entered into tie ups with reputed Asset Management Companies (AMCs) for the distribution of MUTUAL FUND products. Mutual funds have become an attractive proposition for investors in the current context and for J&K bank it will be a good investment option to the have in our product portfolio. This shall be an important step towards converting the bank branch into a financial supermarket addressing all the financial needs of the customers thus helping the bank retain the customers within its fold. The AMCs with which the bank has entered into an arrangement are: UTI, Kotak, and Reliance Mutual Fund.

RECOGNITION AND AWARDS

The Bank recently won the prestigious Asian Banking Award 2005 for its Development Project Financing Programme', contributing significantly to the development of tourism industry of the J&K State. The award was presented by the Under Secretary Finance, Philippines, at a glittering Gala Dinner award function held at Manila, Philippines on June 17, 2005. The annual Asian banking awards recognize and honour Asian banks for outstanding, innovative and world-class products and programmes implemented during the previous year. It is the most respected and premier banking awards programme in Asia Pacific region.

It is worth mentioning that the Bank has won the Asian Banking Award consecutively for the second year. Last year, the Bank won the award for Customer Convenience Programmes and was also given runners up certificate for its project Motivating Employees for Better Performance' under operational efficiency programme' category. The Bank was ranked fifth among the top ten Asian banks and 762nd among top 1000 World banks. A renowned business journal "Business Today ranked JK Bank among 25 top investor friendly companies in India, the only bank in the whole Indian Banking industry, which has been ranked in the magazine among first 10 Investor Friendly Companies. The Bank for the second consecutive year was ranked Best Private Sector Bank in Financial Express/Ernest and Young combined Survey for the year 2002-03 released recently. Bank was awarded Shiromani Award' for outstanding achievements in the field of banking and commitment to national progress and human welfare during the year under report. The Bank has figured among 24 Indian companies in Forbes Global - 100 best under a billion Asia's Rising Companies', listed by Forbes magazine in its issue dated November 01 2006. The publication has commended J&K Bank for representing economic dynamism' in the region, sustained growth in all spheres and an excellent track record of rewarding its shareholders.

1.3 J&K Bank history

Jammu and Kashmir Bank Limited was incorporated on 1st October, 1938 and commenced its business from 4th July, 1939 at in Kashmir (India). The Bank was the first in the country as a State owned bank. According to the extended Central laws of the state, Jammu & Kashmir Bank was defined as a govt. Company as per the provision of Indian companies act 1956. In the year 1971, the Bank received the status of scheduled bank. It was declared as "A" Class Bank by RBI in 1976. Today the bank has more than 500 branches across the country and has recently become a billion Dollar Company.

1.4 MISSION OF THE BANK

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The companys mission is two-fold: To provide the people of J&K international quality financial service and solutions and to be a super-specialist bank in the rest of the country. The two together will make it the most profitable bank in the country.

1.5 VISION OF THE BANK

The Bank's vision is To catalyze economic transformation and capitalize on growth. The bank aspires to make Jammu and Kashmir the most prosperous state in the country, by helping create a new financial architecture for the J&K economy, at the center of which will be the J&K Bank. The Bank is committed to achieve healthy growth in profitability and simultaneously to remain consistent with the Bank's risk appetite and at the same time ensuring the highest levels of ethical standards, professional integrity and regulatory compliance.

1.6 FINANCIALS OF THE BANK

Fixed Assets i) Documentation formalities are pending in respect of certain immovable properties held by the bank valued at Rs. 0.62 Crores (Previous Year Rs. 4.38 Crores). In respect of immovable properties valued at Rs. 7.60 Crores (Previous Year Rs. 12.82 Crores) bank hold agreement to sell along with possession of the properties. ii) The Bank has also acquired certain fi xed assets generating cash, parked under respective heads, for the promotion and development of its business. iii) The Bank has been consistently following the method of charging depreciation on fixed assets on diminishing balance as per the rates prescribed in Income Tax Rules which is higher in totality as compared to rates prescribed in Schedule XIV of the Companies Act, 1956.However, the depreciation on computers (including ATMs) along with software 10

forming integral part of computers has been computed at the rate of 33.33% on straight-line method. iv) The Bank has changed the policy of charging depreciation on Mobile Phones from @33.33% to 50% from this year on the Straight Line Method and there is no material effect on the profitability of the Bank. v) Depreciation on Banks property includes amortization in respect of leased properties amounting to Rs. 22.98 Lacs (Previous Year Rs 34.54 Lacs). Th e book value of these properties as on 31.03.2010 was Rs. 11.69 Crores (Previous Year Rs 11.92 Crores). The total investment of the Bank in the Met-life India Insurance Co Pvt. Ltd stood at Rs. 220.27 Crores as on 31.03.2010 (Previous Year, Rs. 220.27 Crores). In compliance with RBI Letter DBOD.BP.07099/21.4.141/2008-09 dated 9th April 2009, The investment stands transferred to AFS Category on 1st October, 2009. The valuation has been carried out at average of two independent valuation reports obtained from Category I merchant Bankers as per RBI guidelines and the consequent appreciation has been ignored in view of the accounting policy in investments respect of such.

1.7 PRODUCTS OF J&K BANK:J&K BANK PERSONAL LOAN Purpose To meet all kinds of personal needs e.g. marriage, family functions etc Eligibility o Permanent employees of State, Central governments, autonomous bodies, corporate, public& private sector undertakings having minimum of 3 years confirmed service. Loan amount 30 months gross salary or Rs. 7 lacs whichever is less Documents required Passport size photograph Latest salary slip and Form 16(for salaried individuals) 11

 For Self-employed individuals and Professionals IT returns for the last two financial years, Proof of Professional Qualification: Copy of highest professional degree held Proof of official address (shop and establishment certificate/Telephone bill) Margin &Security NIL Interest rates Salaried employees of State/Central government - 15.50% Professionals and businessmen Repayment period 84 monthly installments or remaining period of service whichever is less. - 16.50%

J&K BANK HOUSING LOAN

Purpose To provide loan for construction, renovation, purchase of readymade house, purchase of land Eligibility Employees of Govt., Semi-Govt. Dept., Civic Bodies, PSU's with minimum 5 years service. Reputed Businessmen with minimum 5 years standing. Professionals & Self employed like Doctors, Engineers, CAs, Advocates with minimum 5 years standing Loan amount For Construction /Purchase 60 months net salary or 75.00 Lacs whichever is lower. 12

 For repairs/renovation 20 months net salary, subject to a maximum of Rs.10.00 Lacs. For purchase of land: 20 months net salary/income subject to maximum of Rs.5 Lacs within J&K and Rs10.00 Lacs outside J&K. Documents required Passport size photograph. Proof of residence. (This applies only to new or non-bank customers, and could be either a PAN identity card, voter identification card or passport) Bank account Statement or passbook, for the last six months For employees or people in service, you also need to provide. Salary certificate and other information, if any, about your repayment capacity. Form 16 or a copy of the Income Tax Returns for the last 2 years For self employed and other IT assesses. IT returns for the last 3 years Receipts of advance tax paid. Any other information about your repayment capacity. In addition to the above mandatory documents, you are also required to furnish one or more of the following documents wherever applicable. Letter of allotment from the housing board or society. Security Primary: Mortgage of the house Property to be purchased / constructed. Collateral: Third party Guarantee of one person, or assignment of LIC Policies, pledge of Govt. securities etc. Margin 15% for construction/purchase of building house flat. 20% for renovation/purchase of land. Interest rates Repayment period Floating Rate of interest Up to Rs.20 Above Rs.20 13 Fixed Rate of interest Up to Rs.20 Above Rs.20

lacs Up to 5 yrs Above5 up to 10 Above 10 up to 15 yrs Above 15 up to 20 yrs Repayment 10.75% 11.25% 12.25% 12.50%

lacs 12.75% 13.50% 13.75% 14.25%

lacs 11.50% 12.50% XXX XXX

lacs 13.75% 14.50% XXX XXX

For construction of new house 20 years including 9 months moratorium in equal monthly installments. For addition / Renovation 7 years including 2 months moratorium in equal monthly Installments

J&K BANK CAR LOAN

Purpose Finance under this scheme shall be available to purchase new car (any make or model) Eligibility Employees of Government / Semi Government., Civic Bodies, PSU's / Individual / Proprietorship Concerns / Firms / Limited Companies known to the Bank. Net annual income should not be less than Rs.60, 000 per annum. The applicant (individuals) should have a valid driving license in his/her own name. The employees of the State Govt/Semi Govt. Departments/Other Organizations should have a minimum of 5 years active service in the organization/department. 14

Quantum of loan 24 months net monthly income/salary subject to maximum finance of Rs 10.00 lacs. Documents Application form

Photograph Proof of bank account continuity One income proof for the last two years (ITR, Form 16, salary slip) One proof of identity (driving license / voters' identity card / passport / PAN card / photo credit card / photo ration card) One proof of residence (laminated driving license / voters' identity card / photo ration card / passport /utility bills for the last 3 months / company ID - limited company or government / PAN card)

Security Primary: Hypothecation of vehicle Financed. Collateral: Third party guarantee of one person. However, no Third Party Guarantee is required in respect of government employees drawing salary through the bank and maintaining account with us or where drawing and disbursing authorities undertake deduction of required monthly installments from their salaries.

15

In respect of others like professionals, businessmen etc. guarantee of one person good for the amount is obtained along with an affidavit to the effect that the prospective borrower is not defaulter with any bank/ branch of the bank. Interest rates Up to Rs.4.00 lacs 12.50%

Above Rs.4.00 lacs 13.50% Repayment Within 7years Car Loan for Used Cars Purpose The finance under this scheme shall be available for purchase of: An old car / jeep (not more than 5 years old). (Any make or model) Eligibility Permanent employees of Government/Semi-Government Undertakings, Autonomous bodies, Public Sector Undertakings, Private Companies or reputed establishments. Professionals or self employed individuals, Proprietorship Concerns. Partnership Firms, Private /Public Ltd Co.

Age Criteria Salaried Individual: The applicant should be at least 21 years old at the time of application, and below 58 years of age at the time of maturity of the loan. For institutions, where retirement age is 60 years, the upper age limit shall be 60 years. Self- Employed Individual At least 3 years in business. 16

 Partnership Firm should have been in existence for at least 3 years. Private/Public Ltd Co. Limited Companies should have been in existence for at least 3 years. Maximum Loan Amount 2.5 times of the net annual income or 15 lacs, whichever is lower. If married, the spouse's income also considered provided the spouse guarantees the loan. Loan amount for used vehicles shall be subject to a maximum limit of Rs. 15 lacs. Documents Application form Photograph Proof of bank account continuity One income proof for the last two years (ITR, Form 16, salary slip) One proof of identity (driving license / voters' identity card / passport / PAN card / photo credit card / photo ration card) One proof of residence (laminated driving license / voters' identity card / photo ration card / passport /utility bills for the last 3 months / company ID - limited company or government / PAN Security Primary: Hypothecation of vehicle to be purchased. Collateral: No third party guarantee required in respect of employees drawing salary through our branches & where letter of undertaking from employer is available. Third Party Guarantee of two persons for all other applicants. Third Party Guarantee may be waived off in case of existing account holders having good reputation. Instead Post Dated Cheques may be accepted. Margin 25% for vehicles having age less than 3 years 30% for vehicles having age of 3 years and above up to 5 years. Interest rates Up to 4 years 14.75% 17 card)

 Above 4 years 15.50% Repayment Period Maximum repayment period of 72 months for vehicles having age less than 3 years. Maximum repayment period of 48 months for vehicles having age of 3 years & above 5 years.

J&K BANK EDUCATIONAL LOAN

Purpose To provide finance for education Loan amount Loan up toRs.7.50 Lacs is provided for studies in India. Loan up to Rs.15.00 Lacs is provided for studies abroad. Courses Financed

18

 Graduate / P.G Courses in: Medicine, Surgery, Engineering, Hotel Management, Design, Architecture, Bio-chemistry, Agriculture, Veterinary etc. P.G Courses in: Business Management, Chartered or Cost Accounting, Company Secretary Ship. Eligibility Student should be an Indian national; the student should have passed the qualifying examination for admission to the courses& should have secured admission to professional/technical courses. Employed person intending to ,improve their educational qualification and/or receive training in modern technology in India or abroad can also be assisted under this scheme provided training offers prospects of better placement. Documents required Completed Education Loan Application Form. Mark sheets of last qualifying examination Proof of admission scholarship, studentship etc Schedule of expenses for the specified course 2 passport size photographs Borrower's Bank account statement for the last six months Income tax assessment order, of last 2 year Proof of Income (i.e. Salary slips/ Form 16 etc)

Margin For loans up to Rs. 4 lacs - nil For loans above Rs. 4 lacs Studies in India - 5% Studies abroad - 15% Security Primary: Personal guarantee of borrower. Collateral: security equal to amount of loan. 19

Repayment Course period + 1 year or 6 months after getting job, whichever is earlier. The loan is to be repaid in 5 to 7 years after commencement of repayment. If the student is not able to complete the course within the scheduled time, extension of time for completion of course may be permitted for a maximum of two years.

SOME OTHER SPECIALISED FINANCE SCHEMES OF J&K BANK APPLE SCHEME Objective

20

To provide adequate and timely credit for comprehensive requirements of Apple growers to take care of Production & Marketing Costs involved in case of their own orchards and also for those acquired on lease Purpose The facility shall be available for meeting the following costs: Production Costs, which includes: Cost of Fertilizer Cost of Fungicides, Pesticides, etc. Cost of Fertilizer/Fungicides Application & Watch and Ward Marketing

ROSHNI FINANCING SCHEME Objective To provide finance to occupants desirous of acquiring freehold rights of the land under their occupation, as per the SRO-64 dated 5th March 2007, issued by Govt of Jammu & Kashmir. LOAN FOR TRADE&SERVICE Purpose To provide hassle free working capital finance to the borrowers. Nature of facility Cash Credit or overdraft Eligibility Retail and wholesale traders and other business enterprises, with a satisfactory track record of 3 years.

J&K BANK DASTAKAR FINANCE:Objective

21

To promote trade, industry and to preserve the tradition arts and crafts of the state devised a scheme aimed at the financial needs of the artisan community aptly called J & K Bank dastakar finance. Purpose To make the credit hassle free no third party \collateral guarantee is required. Nature of facility The disbursement is phased in quarterly installments and aligned to the status of work in progress [WIP]. J&K BANK ALL PURPOSE AGRI TERM LOAN:Objective The objective has been to provide easy finance to needy farmers through regular channels of finance and to wean them away from the exploitative circle created by the non banking intermediaries. Purpose The product aims to cater to the needs of the small farmers within very little land holdings in the rural and semi urban areas of the J & K State. Nature of facility This product is available for farmers of cereal crops and vegetables, orchids. It is also available for unemployed rural youth for setting up of small dairy, poultry units, in purchase of seeds, pesticides, fertilizers, plough and farm machines. J&K BANK KHATAMBAND FINANCE:Objective Khatamband craft is a specialized scheme that provides employment to few thousand people living in the J & K State. A specialized scheme was customized to the people according to the needs of the Khatamband craftsmen. Purpose To cater to the needs of khatamband craftsmen. Nature of facility

22

The finance is provided as a revolving facility, eligible for enhancement every year on the basis on the turn-over. The product has been intentionally targeted at crafts men aged between 18-55 years, no collateral security is asked for and the documentation process has been kept simple JK BANK ZAFRAN FINANCE:With a view of preserving this prized spice, JK Bank tailored a specific product named JK Bank Zafran Finance. Purpose Its purpose is to provide adequate ,timely and need based finance to Saffron growers. The scheme is for all saffron growers, especially the smaller and Marginal ones including even the contract farmers engaging in or intending to start its cultivation. Nature of facility The quantum of finance is to proportionate to the land holding of a grower. The product also provides an additional finance for post harvest and packaging. The disbursement is done in two phases; 60 % in the first year and 40 % in the second ,when the growers are in need of funds. Repayment The repayment of the advance is scheduled within four year growing cycle of saffron.

OTHER FACILITIES AT THE J&K BANK Ltd:

o Automatic Teller Machines. o Locker Facility. o Mobile ATM Service. o The J&K Bank Credit Cards. o The J&K Bank Global Access Debit Cards.
o o o SMS Banking Anywhere banking facility The J&K bank is the only bank in India which provides Amaranth Yatra Tickets to pilgrims.

1.8 Competitors
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STATE BANK OF INDIA

State Bank of India (SBI) was nationalized in July 1955 under the SBI Act of 1955. The State Bank of India is the Indias largest commercial bank. The State Bank of India, the countrys oldest Bank and is today going through a momentous phase of Change and Transformation the two hundred year old Public sector behemoth is today stirring out of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for their money. The Bank is forging ahead with cutting edge technology and innovative new banking models, to expand its Rural Banking base. It is the only Indian bank to feature in the Fortune 500 list. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked, today it offers the largest banking network to the Indian customer. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs, and other electronic channels such as Internet banking, debit cards, mobile banking, etc. With four national level Apex Training Colleges and 54 learning Centers spread all over the country the Bank is continuously engaged in skill enhancement of its employees. Some of the training programmes are attended by bankers from banks in other countries.

PUNJAB NATIONAL BANK

24

Punjab National Bank (PNB) was registered on May 19, 1894 under the Indian Companies Act with its office in Anarkali Bazaar Lahore. The Bank, founded by Dyal Singh Majithia and Lala Harkishen Lal is the second largest government-owned commercial bank in India and is serving more than 3.5 crore customers through 4540 offices including 421 extensions counters. PNB offers wide variety of banking services which include corporate banking, personal banking, industrial banking, finance for trade and international banking. PNB is one among 300 global companies and seven Indian companies which are expected to emerge as challengers to worlds leading blue chip companies. The bank features at 1308 position among Forbes Global 2000 list of global giants and fast growing companies. At the same time bank is also conscious of its social responsibilities by financing agriculture and small scale industries. Bank has been focusing on expanding its operations outside India and has identified some of emerging economies which offer large business potential. Bank has set up representative offices ay Almaty, Kazakhstan, SHANGHAI, China and London. Bank has also launched the concept of Anytime, Anywhere banking. PNB has recently introduced online utility bill payment. Another step taken by PNB is the launch of Debit/ATM card. The card can be used to withdraw cash at more than 25000 ATM where the maestro logo is displayed.

ICICI BANK
25

ICICI Bank - Industrial Credit and Investment Corporation of India is India's largest private sector bank in market capitalization and second largest overall in terms of assets. ICICI Bank has total assets of about USD 100 Billion (end-Mar 2008), a network of over 1308 branches and offices, about 3950, and 24 million customers (as of end July 2007) and has over 33,000 employees. The Bank now has wholly-owned subsidiaries, branches and representatives offices in 18 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in the UK, Canada and Russia, offshore banking units in Singapore and Bahrain, an advisory branch in Dubai, branches in Sri Lanka, Hong Kong and Belgium, and rep offices in the US, China, United Arab Emirates, Bangladesh, South Africa, Indonesia, Thailand and Malaysia particular, the bank is targeting the NRI (Non Resident Indian). In 2008 ICICI launched iMobile a comprehensive mobile banking solution. iMobile is considered to be a breakthrough in the innovation in Indian banking which allows a customer to do all possible transactions through a GPRS enabled mobile phone.

HDFC BANK
26

HDFC Bank is one amongst the firsts of the new generation; tech-savvy commercial bank of India was incorporated in August 1994 after the Reserve bank of India allowed setting up of Banks in the private sector. The Bank was promoted by the Housing Development Finance Corporation Limited a premier housing finance company (set up in 1977) of India. Net Profit for the year ended March 31, 2006 was Rs. 1,141 corers. Results of the latest quarter ended June 2007, indicate that the bank continues to grow in a steady manner. HDFC was promoted with initial share capital of Rs.100 million. Business Objectives The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets. Organizational Goals:a) b) c) d) Develop close relationships with individual households Maintain its position as the premier housing finance institution in the country Transform ideas into viable and creative solutions Provide consistently high returns to shareholders

1.9 SWOT ANALYSIS

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The term SWOT is the acronym made up of four words viz, Strengths, Weaknesses, opportunities and Threats. The first two variables are internal to an organization whereas the last two are external. The value of SWOT analysis cannot be over emphasized. It is rightly said winners recognize their limitations but focus on their strengths; losers recognize their strength but focus on their limitations. SWOT Analysis
__________________________________________________________________

Internal Environment ____________________

External Environment ____________________

Strengths

Weaknesses

Opportunities

Threats

Internal factors Strength:

Strength is defined as something which is positive, good or such other characteristics that give to the company an edge in the competitive market. The Bank has one unique source of strength which if cultivated carefully, can be virtually impregnable its roots are in the state, and as such it shares with the people of Jammu and Kashmir a kinship, and empathy for the cause of the states progress, which no outside bank ever can. The J&K Bank also performs the leaders role in the J&K. As a leader the Bank continued to discharge its Lead Bank responsibility in 8 out of 14 districts of J&K State satisfactorily.

Weaknesses:
28

A weakness refers to something which one lacks. It is something which restricts us to move forward. While doing my summer training in the J&K Bank I found the following weaknesses; (i) There is less competent staff at lower level. (ii) Weak competitive capability because of lack of lesser advertisement budget. (iii) Labour problems because of militancy in the state which results in strikes and tense conditions. (iv) The activities of Branch managers are not effectively monitored.

External factors Opportunities:

Opportunities are entirely external concerning the business environment. Opportunities do not come very frequently and therefore, the management must exploit them to the maximum extent without any delay. Each opportunity should be analyzed in terms of its profitability. The opportunities analyzed by me for the J&K Bank are; (i) There is agriculture market which is still fully not trapped by the J& K Bank .There are a lot of schemes regarding agriculture such as post harvest , preservation scheme and many other schemes (2) The historical activities of the state such as carpet industry, dastakar finance, khatamband schemes and many other activities of historical importance are not still fully covered by J&K Bank

Threats:
With every opportunity, there also goes alongside certain threats which may adversely affect the profitability and competitive capability of an enterprise. The threats analyzed are; (i) (ii) Competitors like HDFC Bank, Central Co-operative Bank, ICICI Bank etc. may enter in the field to provide finance facility. There may be change in the policies of the state government

Chapter 2
29

RESEARCH METHODOLOGY

2.1 Objectives of the study To study the dredit policy of the banks operating in Jammu & Kashmir with special reference to J&K bank. To study the credit defaults of J&K bank in different industrial sectors. To analyse the different products offered by J&K bank to cater the market needs in the state. To analyse the market strategies adopted by the J&K bank.

2.2 Usefullness:
30

It will support banks in identifying their target segment that they can influence and which can work in their favor. It will become easier for banks to formulate the exact integrated marketing strategies for their target consumers of the organization. It will provide a platform to the market researchers of the respective organization to devise the marketing budget in accordance with a perfect balance between the medium chosen and consumers. The service, communicated can be analyzed by the buying trends of the consumers. Marketers can better predict how consumers will respond to marketing strategies. Marketers can better understand the segment of customers to be targeted.

2.3 Methodology:
31

Success or failure of any project entirely depends upon methodology adopted by the researcher. Methodologies basically use different methods of research systematically and scientifically. Objective of the study, its research design, its sampling design, coding and editing methods, presentations and analyses of the data together with interpretation of the data are essential part of research methodology. Primary data: It is the first hand collection of data from the respondents by using questionnaires and interviews. Secondary data: This is the second hand data that has already by collected by others. It includes data collection through Magazines Journals Internet

This chapter deals with the methodological steps adopted in the present study. The research procedures followed are described under the following headlines: Selection of locale Selection of sample Tools and techniques used in the study Procedure for data collection Statistical analysis

Selection of locale: The present study will be conducted in the Anantnag city. Selection of samples: Sampling is the most important phase in any research. Sampling is known as the foundation of a research project. A sample is that part of universe which I select for the purpose of investigation. The sample should exhibit the characteristics of the universe,that is it should be a small universe. Sampling Method: In this project the random sampling method of Probability will be used. Sampling Area : Study Shall cover Different Areas of Jammu city. 32

Tools and technique used in the study Primary Data : Questionnaire and Personal Interview. Secondary Data: Journals and other research reports. Interview Interview is a Screening of information through a professional conversation with an individual for a research study or to aid in social diagnoses or treatment. The interview is in a sense, their foundation upon which all other elements rest, for it is the data gathering phase. Statistical Analysis: After collecting the required information from the subjects, the schedules will be coded numerically and data will be classified into simple and complex tables. For the tabulation work data will be fed in the computer and tabulation will be done accordingly.

RESEARCH DESIGN
Fundamental to any marketing research project is a sound research design. A good research design has certain characteristics viz. problem definition, specific method of data collection and analysis etc; a research design is purely and simply the framework or plan for a study that guides the collection and analysis of data. In this research Explorative and Descriptive Research method was adopted.

2.4 DATA COLLECTION

33

Data collection is an essential part of every project. Success or failure of any project entirely depends on the method of collection of data. The data can be collected by the following two ways. a) PRIMARY SOURCE b) SECONDARY SOURCE In this project, primary data was collected from the respondents through structured questionnaire. The information brochures of the bank and articles in newspapers have been consulted as a secondary source of information. Secondary data has also been collected through the various websites on the Internet. Contact method- The respondents were contacted personally and a structured questionnaire were administered to them.

Sampling plan
Population The managers of different banks operating in Anantnag. Sample unit-Any manager of the bank. Sampling Procedure-Convenience Sampling.

2.5 LIMITATIONS OF THE STUDY

34

However, every care has been taken to make this report authentic in every sense. Yet, there were few uncomfortable factors, which might have had their influence on the final report. It is said, nothing is perfect and if this quote is true I am sure there would be few shortcomings in this project also. Sincere efforts have been made to eliminate due to the limitations of the study. These are: The study was to be completed in a short time; the time factor put a considerable limit on the scope and the extensiveness of the study. Due to the diversity of nature of respondents the findings of the survey could not be generalized. Some of the respondents gave ambiguous replies for certain questions or omitted the responses to some of them. The interpretation of some responses become difficult and could generate wrong results. The survey was conducted only in Anantnag district

Chapter-3
35

Conceptual discussion 3.1 Credit:

A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date. When a consumer purchases something using a credit card, they are buying on credit (receiving the item at that time, and paying back the credit card company month by month). Any time when an individual finances something with a loan (such as an automobile or a house), they are using credit in that situation as well. 2. The borrowing capacity of an individual or company. 3. Tax credit. Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead arranges either to repay or return those resources (or other materials of equal value) at a later date. The resources provided may be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower.Credit does not necessarily require money. The credit concept can be applied in barter economies as well, based on the direct exchange of goods and services. However, in modern societies credit is usually denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account. Movements of financial capital are normally dependent on either credit or equity transfers. Credit is in turn dependent on the reputation or creditworthiness of the entity which takes responsibility for the funds. Credit is also traded in financial markets. The purest form is the credit default swap market, which is essentially a traded market in credit insurance. A credit default swap represents the price at which two parties exchange this risk the protection "seller" takes the risk of default of the credit in return for a payment, commonly denoted in basis points (one basis point is 1/100 of a percent) of the notional amount to be referenced, while the protection "buyer" pays this premium and in the case of default of the underlying (a loan, bond or other receivable), delivers this receivable to the protection seller and receives from the seller the par amount (that is, is made whole).

36

Trade credit
The word credit is used in commercial trade in the term "trade credit" to refer to the approval for delayed payments for purchased goods. Credit is sometimes not granted to a person who has financial instability or difficulty. Companies frequently offer credit to their customers as part of the terms of a purchase agreement. Organizations that offer credit to their customers frequently employ a credit manager.

Consumer credit
Consumer debt can be defined as money, goods or services provided to an individual in lieu of payment. Common forms of consumer credit include credit cards, store cards, motor (auto) finance, personal loans (installment loans), retail loans (retail installment loans) and mortgages. This is a broad definition of consumer credit and corresponds with the Bank of England's definition of "Lending to individuals". Given the size and nature of the mortgage market, many observers classify mortgage lending as a separate category of personal borrowing, and consequently residential mortgages are excluded from some definitions of consumer credit - such as the one adopted by the Federal Reserve in the US.The cost of credit is the additional amount, over and above the amount borrowed, that the borrower has to pay. It includes interest, arrangement fees and any other charges. Some costs are mandatory, required by the lender as an integral part of the credit agreement. Other costs, such as those for credit insurance, may be optional. The borrower chooses whether or not they are included as part of the agreement.

37

Interest and other charges are presented in a variety of different ways, but under many legislative regimes lenders are required to quote all mandatory charges in the form of an annual percentage rate (APR). The goal of the APR calculation is to promote truth in lending, to give potential borrowers a clear measure of the true cost of borrowing and to allow a comparison to be made between competing products. The APR is derived from the pattern of advances and repayments made during the agreement. Optional charges are not included in the APR calculation. So if there is a tick box on an application form asking if the consumer would like to take out payment insurance, then insurance costs will not be included in the APR calculation (Finlay 2009).

3.2 Credit Default

In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan.[1] Default may occur if the debtor is either unwilling or unable to pay their debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes.

38

3.3 Types of default

Default can be of two types: debt services default and technical default. Debt service default occurs when the borrower has not made a scheduled payment of interest or principal. Technical default occurs when an affirmative or a negative covenant is violated.Affirmative covenants are clauses in debt contracts that require firms to maintain certain levels of capital or financial ratios. The most commonly violated restrictions in affirmative covenants are tangible net worth, working capital/short term liquidity, and debt service coverage. Negative covenants are clauses in debt contracts that limit or prohibit corporate actions (e.g. sale of assets, payment of dividends) that could impair the position of creditors. Negative covenants may be continuous or incurrence-based. Violations of negative covenants are rare compared to violations of affirmative covenants. With most debt (including corporate debt, mortgages and bank loans) a covenant is included in the debt contract which states that the total amount owed becomes immediately payable on the first instance of a default of payment. Generally, if the debtor defaults on any debt to the lender, a cross default covenant in the debt contract states that that particular debt is also in default. In corporate finance, upon an uncured default, the holders of the debt will usually initiate proceedings (file a petition of involuntary bankruptcy) to foreclose on any collateral securing the debt. Even if the debt is not secured by collateral, debt holders may still sue for bankruptcy, to ensure that the corporation's assets are used to repay the debt. There are several financial models for analyzing default risk, such as the Jarrow-Turnbull model, Edward Altman's Z-score model, or the structural model of default by Robert C. Merton (Merton Model).

Sovereign defaults

39

Sovereign borrowers such as nation-states generally are not subject to bankruptcy courts in their own jurisdiction, and thus may be able to default without legal consequences. One example is with North Korea, which in 1987 defaulted on some of its loans. In such cases, the defaulting country and the creditor are more likely to renegotiate the interest rate, length of the loan, or the principal payments[2]. In the 1998 Russian financial crisis, Russia defaulted on its internal debt (GKOs), but did not default on its external Eurobonds.

Strategic default
Strategic default on a mortgage is colloquially called jingle mail. When a debtor chooses to default on a loan, despite being able to service it (make payments), this is said to be a strategic default. This is most commonly done for nonrecourse loans, where the creditor cannot make other claims on the debtor; a common example is a situation of negative equity on a mortgage loan in common law jurisdictions such as the United States, which is in general non-recourse. In this latter case, default is colloquially called jingle mail the debtor stops making payments and mails the keys to the creditor, generally a bank.

Sovereign strategic default

As with Strategic default when a debtor chooses to default on a loan sovereign borrowers such as nation-states also can choose to default on a loan. Ecuador's president Rafael Correa in 2008 had given the order not to approve a debt interest payment

40

Chapter 4
DATA ANALYSIS

Analysis & Interpretation

Banks operating in Anantnag J&K:There are a number of banks operating in the Anantnag District of J&K state which includes J&K Bank, SBI, Canara Bank, Cooperative Bank, Punjab National Bank, HDFC Bank etc. The J&K Bank is among the most prominent bank with 29 branches in the town and one zonal office. The SBI has 5 branches; PNB, Cooperative and Kamaraz Rural Bank are having 4 branches each, Canara bank has 3 and HDFC Bank has 1 branch. Branch wise comparison
J&K Bank 29 SBI 5 PNB 4 Cooperative 4 Canara 3 KRB 4 HDFC 1 Total 50

41

Name of Banks and No of Branches J&K Bank Operating in District

3 4 4 5 1 4
SBI PNB Cooperative Bank Canara Bank

29

HDFC Kamaraz Rural Bank

Q1:What is the total amount of credit your branch has offered during the current financial year? Through this question an attempt was made to figure out the total potential of credit in the district Anantnag Tab: 01 (Rupees in crores)
J&K Bank 70 crores SBI 7 crores PNB 5 crores Cooperative Bank 3 crores Canara Bank 2.5 crores HDFC 0.5 crores Kamaraz Rural Bank 1.25 crores Total 89.25 crores

Chart: 01

42

Amount (in crores)

Total amount of credit by different banks

80 60 40 20 0 70 7 J&K Bank SBI

5 PNB

3 Cooperative Bank

2.5 Canara Bank

0.5 HDFC

1.25 Kamaraz Rural Bank

HDFC KRB Housing Trade SSI Housing Trade SSI

Various Banks
The above graph shows that JK Bank is the only bank in the district with about one fourth of the total credit and is equal to the 70 crore during the current financial year. The PNB and SBI enjoys a credit share of 5 & 7 crores respectively. The Cooperative and the Canara bank enjoys 3 & 2.5cror . The HDFC and the CRZ has less than 2 crore of credit in the district equal to .5 and 1.25 respectively. Q.2:What are the various credit schemes offered by your Bank in district Anantnag ? Through this question an attempt was made to figure out the various credit schemes different banks offer in the district Anantnag? Table: 02 Different Banks offering Various Credit Schemes
S.No 1 2 3 4 J&K BANK Term loans Housing Trade SSI Housing Trade SSI Housing Trade SSI Housing Trade SSI Housing Trade SSI SBI PNB Cooperative Canara

43

5 6 7 8 9

Agriculture TPT. Education Tourism Others

Agriculture TPT. Education Personal

Agriculture TPT.

Agriculture TPT.

Agriculture TPT. TPT.

Agriculture TPT.

Personal Others

44

Q.:3How many loans you have given during the current financial year? Through this question was an attempt made to determine the total no. of credit cases given by the different banks Bank JK BANK No. of cases 1640 220 SBI PNB 215 CANARA COOP. BANK 140 BANK 130 110 90 2190 KRB HDFC TOTAL

T O T A LN O .O FC R E D I TC A S E S B Y B A N K S
1 8 0 0 1 6 0 0 1 4 0 0 NO. 1 2 0 0 1 0 0 0 8 0 0 6 0 0 4 0 0 JK BANK CANARA COOP. SBI 0 HDFC 2 0 0 PNB KRB
S e r ie s 1

B A N K

The above graph shows that JK Bank is the only bank in the district which has provided more than half of the total loans in the district. SBI is the second one and PNB is the third one in providing the loans in the district Anantnag.

45

Q.4: Do your customers regularly pay the loan installments or not? Sample size-50 BANK JK BANK YES NO 21 8 3 2 3 1 3 1 2 1 2 2 1 0 35 15 SBI PNB COOP. CANARA KRB HDFC TOTAL

R E G U L A RP A Y M E N TO FB A N K I N S T A L L E M E N T S
NO. OF RESP. 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0 Y E S B A N K N O 1 5 S e r ie s 1 3 5

From the above graph it is clear that about 35 of the total respondents said that the customers regularly repay their loan installments without any lapse in their installment terms, while as 15 of the respondents said that customers do not pay their installments regularly.

46

Q.5: How many number of default cases your Banks has faced during current financial year? BANK JK BANK No. of cases DEFAULT CASES 1640 40 220 10 215 12 140 10 130 11 110 6 90 3 2190 92 SBI PNB COOP. CANARA KRB HDFC TOTAL

PERCENTAGE

P E R C E N T A G E O F D E F A U L T C A S E S
9 8 7 6 5 4 3 2 1 0
k

7 . 4 5 . 8 4 . 5 2 . 8

7 . 9

S e r ie s 1

0 . 6
S B I P N C B O C OP A N . A R A K R B H D F C K

B A J

B A N K

The above graph shows that J & K Bank is leading in case of default cases with total no. of default cases equal to 40 during the current financial year, then the second leading one among default cases is Cooperative Bank with total no. equal to 18, the third being the PNB with total no. of default cases equal to 12, then KRB equal to 9 , SBI and Canara having 7 & 4 default cases respectively. HDFC is the bank with no default case.

47

Q.6: What is the main reasons behind non-repaying of loan installments according to your view? Sample size 50 REASON Unaware about repaying date Weak economic condition Abnormal factors

NO. OF RESP. 25 15 10

R e a s o n s f o rn o tp a y i n g l a o n i n s t a l l e m e n t s

2 0 % 5 0 % 3 0 %

U n a w a r e a b o u t r e p a y i n g d a t e W e a k e c o n o m i c c o n d i t i o n A b n o r m a l fa c t o r s

The above graph shows that fifty percent of the defaults are due to the unawareness of repaying date by the customers , thirty percent of the default cases are due to the weak

48

economic conditions of the customers and twenty percent of the default cases are due to the abnormal factor Q.7: How much time does your bank gives to default customers to take over their mortgage? Bank Time(YRS ) J&k bank 4 2 2 3 1 4 3 PNB SBI COOP. CANARA KRB HDFC

Time for taking over the mortgage (InYears)

3 4

4 2 3

J&K Bank SBI PNB Cooperative Bank Canara Bank HDFC KRB

49

The above graph shows that all the banks give 2-4 years for their default customers to take their mortgage. The Canara bank gives only one year for their default customers to take their mortgage.

Q.8: Does your bank charge the same rate to the defaulters or not ? YES NO 9 7

50

c h a r g in go f in c r e a s e do r d e c r e a s e din t e r e s tr a t e s

4 4 % 5 6 %

y e s N o

The graph shows that 56 % of the respondents said that they charge the same interest rate to their default customers while as 44% of the respondents said that they does not charge the same interest rates to their default customers.

Q.9: Whether your bank charge increased or decreased rate of interest to the defaulters ? Sample size 7

51

Banks charge increasing rate or decreasing rate

2 Increasing rate Decreasing rate 5

Out of the seven respondents five of them said that they decrease the interest rate to their default customers while as two of the respondents said that they increase the interest rate. The decreasing rate are mainly charged by the Kamraz Rural Bank

CREDIT SURVEY OF J & K BANK:The J & K Bank is the only bank in the Anantnag town which has more than fifty percent of the credit share in the town. The bank has about 77.7 % of the total credit in the market. Every shop of the town is banked with the J&K Bank whether it is the local manufacturing unit or the distributing unit or whether it is the local vegetable grower or the local fruit 52

grower .The J&K Bank has almost covered all the Anantnag district with a small portion remaining aside. The different sections in which J&K Bank has provided loans include term loans, housing loans, trade loans, industry loans, tourism loans, agriculture loans, transport loans, educational loans and other loans. The total credit of the bank in the Anantnag town is about 70 crores which are distributed in the different economic sectors of the town. The weight age of the different credits in different sectors is given in the graph below.
JK BANK CREDITS TO DIFFERENT SECTORS TERM LOANS HOUSING LOANS TRADE LOANS
20% 24%

SSI LOANS AGR. LOANS

9%

8%

TPT. LOANS EDUCATION LOANS TOURISM LOANS OTHER LOANS

1% 1% 1% 0.14% 36%

CREDIT SURVEY OF PUNJAB NATIONAL BANK:The Punjab national bank has a credit of about 5 crore in the town . The Punjab National Bank enjoys only a small portion of the total credit in the town . Punjab national banks credit percentage is about 5.6 % .The different sectors in which Punjab National Bank has allotted credit are car loans, personal loans, housing loans, transport loans, small scale 53

industry loans, trading loans, and agriculture loans. Among these all sectors the trade constitutes about one third of the total credit of the Punjab national bank. The different amount in different sectors are shown as in the graph below.

C R E D IT O FP N BIND IF F E R E N TS E C TO R S

H O U S IN GLO A N S
1 4 % 3 % 3 4 % 2 3 % 9 %

T R A D ELO A N S S S I LO A N S A G R . LO A N S T P T . LO A N S P E R S O N A L

1 0 %

7 %

C A RLO A N S

54

CREDIT SURVEY OF SBI:The SBI is the bank among different banks operating in the town with large market share after J&K Bank. Like J&K Bank the SBI bank also has provided loans or credit in different sectors of the economy of the town. These sectors include housing loans [both for public as well as for staff persons], term loans, agriculture loans, tourism loans, industry loans, transport loans, educational loans and other loans. The total credit given by the SBI bank is about 7 crores. The total market share of the SBI is about 7.7 % of the total credit of all the banks given in the town. Among the credits given trade loans constitutes about 40 % of the total credit given by the SBI in the towns contribution in the different sectors of the economy given by the SBI is given in the graph.

55

CREDIT SURVEY OF COOPERTIVE BANK:The Cooperative bank enjoys a small portion of the credit finance in the town. The total credit given by the cooperative bank in the town is about 3 crore. This constitutes about 3.4 % of the total finance in the town. The credit given by the Cooperative bank in the sectors includes trade loans, transport loans, small scale industry loans, agriculture loans and the other loans. The amount of credit given in the each sector is shown in the diagram below

credits of cooperative bank 17% 1%

AGR. LOANS TRADE LOANS SSI LOANS TPT. LOANS

22%

34%

OTHER LOANS

26%

56

Credit flow of Kamraz Rural Bank.

The above pie chart shows that Kamraz rural bank has more credit flow in small scale industries, trade and in transportation having in each sector 27%, 26%and 21% respectively. The agriculture and housing has 12% and 14% respectively

57

CREDIT SHARE OF DIFFERENT BANKS :The total credit of all the banks in the town is about ninety five crores. The market share of J&K Bank alone is about eighty percent of the total market share of all the banks. The other twenty percent market share is collectively shared by the SBI, Punjab National Bank, Canara Bank, Cooperative Bank, and HDFC. The percentage of each bank is shown in the diagram below.

The above graph shows that JK Bank is the only bank which has about 78 % of the total credit in the market .The SBI has a 8% of the total market share , PNB 6% ,Canara and Cooperative has 3% and 1% for each HDFC and KRZ

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OVER ALL CREDIT IN DIFFERENT SECTORS BY ALL THE BANKS :The over all credits in different sectors shows that transportation is the main sector among all the sectors which constitutes about one third of the total credits in the town. The percentage of different sectors by all the banks is as shown in the chart.

CREDITS IN DIF F ERENT SECTO RS BY ALL THE BANKS

40 35 30 25 20 15 10 5 0
SS ED I UC AT IO HO N US IN AG G RI CL TU TE RE RM TO LO UR AN IS S M LO AN S OT HE RS TR AD E ON

PERCENTAGE

Series1

The above graph shows that transport is the main sector which shares a credit facility of 37 % of the total credit, term loans and others has about 20 % of the total credit and the remaining each sectors constitutes less than 10 % of the credit

TR AN SP OR TA TI

59

CREDIT SURVEY OF CANARA BANK:Like the credit of the cooperative bank same is the case with the Canara bank. Canara bank also enjoys a credit of about 2.5 crore in the town .This constitutes a market share of about 2.8 % in the total town. The credits given in the different sectors of the economy are housing loans, credit loans, agriculture loans, small scale industry loans , educational loans, transport loans and other loans . The trade lone alone constitutes about one third of the total credit given by the Canara bank. The weight age of each sector in terms of money is given in the graph below.

C R E D IT O F C AN AR A B AN K
1% 20% 1% 29%

A G R. LO A NS HO US ING LO A NS TRA DE LO A NS S S I LO A NS TP T. LO A NS O THE R LO A NS

10%

39%

60

CREDIT SURVEY OF CANARA BANK:Like the credit of the cooperative bank same is the case with the Canara bank. Canara bank also enjoys a credit of about 2.5 crore in the town .This constitutes it a market share of about 2.8 % in the total town. The credits given in the different sectors of the economy are housing loans, credit loans, agriculture loans, small scale industry loans , educational loans, transport loans and other loans . The trade lone alone constitutes about one third of the total credit given by the Canara bank. The weight age of each sector in terms of money is given in the graph below.

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Chapter 5
5.1 FINDINGS
During the survey of the town the main findings are as under The J&K Bank is the only Bank in the state having about more than one third of the total credit share in the town. In other words we can say J&K Bank is having monopoly in the town. The J&K Bank is the only in the district which has provided the credit to the Tourism industry. Education has not been properly served by any bank of the district The agriculture and the horticulture has not properly encouraged by the J& K Bank The transportation is the main sector in which J&K Bank and other banks has The maximum credit The potential in the under financed productive sectors like, horticulture, commodities and in the artisan sector has not been properly taped by the J&K Bank. While complicated structured products and derivatives have been designed by the J & K Bank, little attention has been paid to create simple financial products on the basis of customer requirements, their income generating patterns, the phases in their business, their inter-temporal repayment capabilities and the leveraging of business rather than their assets The people are not still aware of the new products of the J & K Bank. These new schemes include Budshah primary Education Finance J K Bank Zafran Finance, JK Bank Khatamband Finance, JK Bank Craft Development Finance, JK Bank Dastakar Finance, JK Bank Giri Finance, JK Bank Commercial Premises Finance and many other such schemes. The J & K Bank has still not initiated the credit counseling centers in the town, so many of the people are not sill having sufficient and complete information about the credit facilities of the JK Bank. Some people are in confusion over the interest rates of the credits provided to them by the different banks 62

Transport is the main economic sector of the town which has consumed about 12 crores of the total credit in the town which is about 14 percent of the total credit provide by all the banks.

Arts and Dastakar finance has been totally ignored in the town which are associate with the history of the Kashmir. JK Bank is the only bank in the town which provides finance to the Tourism Industry and has thus helped the Tourism Department of the state in the promotion of the tourism.

There are also some reports of over charging while applying for the credit facility to the Bank.

5.2 SUGGESTIONS

63

The agriculture and the horticulture should be given prompt attentions and new schemes regarding these sectors should be implemented the fruit grower and the farmer could get more benefits from the scheme.

The J&K Bank should adopt an integrated approach to agriculture financing by addressing an entire chain from production to consumption with a deep sectoral focus. The Bank should also include credit facilities to cold storage and warehouses.

The J&K Bank should also focus on financing of post harvest, infrastructure such as grading, packing facility, cold storage and fruit juice manufacturing and other such facilities.

Education should be given prompt attention and new schemes should be developed for this purpose. The J&K Bank should now follow intensive lending rather than extensive lending , the process of intensive lending builds the network of financial intermediation and then leverages these for extensive lending.

Credit counseling centers should be created so that customers can get complete and adequate information about the different products adopted by the JK Bank and the interest rates

The people should be informed about the new schemes of the JK Bank such as. Budshah primary Education Finance J K Bank Zafran Finance, JK Bank Khatamband Finance, JK Bank Craft Development Finance, JK Bank Dastakar Finance, JK Bank Giri Finance, JK Bank Commercial Premises Finance and many other such schemes and the best use of these schemes to their customers so that maximum profit can be generated by using these schemes by a customer.

The tradition arts and dastakar should be financed with the new schemes of the JK Bank so that the traditional economic sector of the state can be boosted and can be retained in its original form which it has lasted from past few years.

The JK Bank should strength its operations department so that while applying for the credit facility in the JK Bank it should not take more time. There are still some sectors such as saw mills in which J&K Bank doesnt provide credit facility, due to which these sectors are lagging behind in the valley. Therefore 64

JK Bank should take some steps towards such industries so that losses in these sectors can be minimized. The JK Bank should develop customer oriented strategy so that the losted customers can be attracted. The JK Bank should focus on turn over lending rather on asset lending The JK Bank should develop rural strategy for capacity building and offering of new financial services.

65

Chapter-6
Appendices 7.1 Questionaire
Q NO.1:- What is total amount of credit your bank has offered during the current financial year? (a) (b) (c) (d) Below 1 crore 1-2 crore 2-3 crore Above 3 crore

Q NO.2:- What are the various credit schemes offered by your Banks in district Anantnag? (a) Transportation (b) Business (c) SSI (d) Education (e) Agriculture (f) Term loans (g) Tourism (h) Housing (i) Others Q NO.3:- How many loans you have given during current financial year? (a) 1-5 (b) 5-10 (c) 10-15
(d) 15 above

66

Q NO.4:- Are your customers regularly paying the installments? (a) Yes financial year? (a) 1-5 (b) 5-10 (c) 10-15 (d) Above 15 Q NO.6:- What is the main reason behind non repaying of loan installments according to your view? Q NO.7:- How much time does your bank give to defaulters to take over their mortgage? (a) 1 years (b) 2 years (c) 3 years (d) 4 years Q NO.8:- Does you charge the same interest rates to defaulters or not? (a) Yes defaulters ? (a) Increased rate (b) Reduced rate (b) No Q.9: whether your bank charge increased or decreased rate of interest to the (b) No Q NO.5:- How many defaults cases your bank has faced during the current

67

Chapter-7
BIBLIOGRAPHY
Books consulted:
Zeithmal,A.V, A.V. (2007). Service marketing. Tata McGraw-Hill publishing company, vol.6, 16-78 Kotler, p., Keller, k., Koshy, A. & Jha, M. (2008). Marketing management. Pearson Education, VOL.12, 339-359

Magazines:
Business network(BNET) Hindu Business Line Business Standard

Web sites:
http://www.j&k Bank.org www.RBI.com www.myiris.com www.jkbank.net www.sbi.com www.pnb.com www.icicibank.com www.hdfcbank.com Read more: http://www.investorwords.com/1193/credit.html#ixzz17D4FQR4B

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