CREDIT SURVEY OF DISTT.

BARAMULLA (A COMPARATIVE STUDY)

Summer Training Project Report On CREDIT SURVEY OF DISTRICT BARAMULLA

In Partial Fulfillment of the Requirements For the Degree of

Master of Business Administration
June – August 2009 Of

Punjab Technical University

Submitted To

-

Submitted ByBILAL AHMAD PARRAY

Mr. Divakar Joshi H.O.D In Management

MBA 3rd

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

St. Soldier Management and Technical Institute Jalandhar Punjab. ACKNOWLEDGEMENT I would like to acknowledge the invaluable assistance extended by Mr.Reyaz Ahmad Mir; Cluster II head Distt.Baramulla Who gave me his kind permission to successfully complete the project in his organization. I would like to pay my heart full gratitude to Mr. Mohd Aslam and Mr. Javid Ahmad Of Human Resource Department of J&K Bank who provided me their timely guidance to me at every step and also provided to me all relevant and essential data regarding my project report .I also feel a sense of indebtedness to my reverent teacher Mr.Kishore Luthra Lecturer Research Dept. who encouraged, motivated and guided to complete my project report.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Finally I would also like to thank my parents and friends who inspired me and encouraged me to complete my project at J&K Bank in time.

Bilal Ahmad Parray.

Cer tificate -1
This is to certify that the Project report “Credit survey of Distt. Baramulla” in Jammu and Kashmir bank” has been submitted by Bilal Ahmad to the department of management ,St. soldier Management & Technical Institute ,Jalandhar for the fulfillment of the requirement of the degree of M.B.A 3rd sem. and has been carried by his under my supervision.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Training & Placement Officer SSMTI. Jalandhar.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

TABLE OF CONTENT

CHAPTERS
EXECUTIVE SUMMARY A BRIEF HISTORY OF BANKING INTRODUCTION ABOUT BANK HISTORY OF BANKING IN INDIA COMPANY PROFILE RESERVE BANK OF INDIA TYPES OF BANKS BACKGROUND OF J & K BANK VISION OF THE BANK SERVICES PROVIDED BY J & K BANK BANKS NEW IDENTITY SWOT ANALYSIS RESEARCH METHODOLOGY OBJECTIVES OF THE RESEARCH ANALYSIS & INTERPRETATION CREDIT SHARES OF DIFFERENT BANKS €FINDINGS SUGGESTIONS LIMITATIONS OF THE STUDY QUESTIONNAIRE BIBLIOGRAPHY

PAGE
5 6 8 9 13 15 18 19 21 24 30 31 34 36 37 53 55 57 59 60 62

Executive Summary
Indian banking system, which is among the largest banking networks in the world, did not reach most of the rural poor in India. About 70% of the Indian population from rural areas accounted for only 30% of bank deposits. The banks did not meet the credit requirements of the poor and they were forced to fall back on moneylenders for credit. Though the banks were nationalized, they perceived rural credit to be a high risk and high cost proposition. The rural borrowers were bogged down by elaborate procedures that were required to obtain loans.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) The central bank in India, RBI, on its part, tried to cater to the needs of the rural poor by establishing regional rural banks and cooperative banks, but did not meet with success. In the early 1990s, to provide credit and savings services to the poor, microfinance was envisaged. It received further boost with involvement of several non-governmental organizations and microfinance institutions. These efforts led to formation of Self Help Groups (SHGs), where poor from homogenous background formed into groups of around 20 each and pooled money that was lent to the needy in the group. By the mid 1990s, several mainstream banks began providing credit and savings facilities to SHGs that built credible financial discipline. The program was called SHG – Bank linkage program. Over the time, the banks provided other facilities like housing loans and micro insurance services to the poor. There were for profit MFIs, mutual benefit MFIs and not for profit MFIs that participated actively in spreading microfinance initiatives across India. By 2004, there were around 1,000 MFIs in the country. Realizing underlying potential of microfinance, several commercial banks entered into partnership with MFIs. Both banks and MFIs stood to benefit from this association as banks could reach the interior part of the country and MFIs could access more funds and thus reach more people. With the huge potential and low NPAs, several private and foreign banks, unveiled their plans to enter the Indian microfinance sector. The government and the RBI announced several measures to boost microfinance activities in the country. RBI allowed the NGOs involved in microfinance activities to raise External Commercial Borrowings upto US$ 5 million a year. With increase in competition and availability of funds, the Indian microfinance sector could be the ultimate beneficiary. Still there are several poor, who were not under the purview of microfinance, the number of SHGs and microfinance programs did not have any major impact on poverty alleviation in the country. Only in some of the well-developed states in the country, SHGs and microfinance gained popularity. Lot of groundwork was required to spread microfinance activities in North and North East regions of the country.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

A Brief History of Banking
In the recent era, the story of "the Banks" commences with the development of the modern banking system in Middle Ages Europe. At that time, disposable wealth was usually held in the form of gold or silver bullion. For safety, such assets were kept in the custody of the local goldsmith, he usually being the only individual who had a vault on his premises. The goldsmith would issue a receipt for the deposit and, to undertake financial transactions, the buyer would withdraw his gold and give it to the seller, who would then deposit it again, frequently with the same goldsmith. As this was a time-consuming process, it became common practice for people to simply exchange smiths' receipts when conducting financial transactions. As time passed, the goldsmiths began to issue receipts for specific values of gold, making buying and selling easier still. The smiths' receipts thus became the first banknotes. The goldsmiths, now fledgling bankers, noticed that at any one time only a small proportion of the gold held with them was being withdrawn. So they hit upon the idea of issuing more of the receipt notes themselves, notes that did not refer to any actual deposited wealth. By giving these receipts to people seeking capital, in the form of loans, the goldsmiths could use the money deposited with them by others to make money for themselves. It was found that, for every unit of gold held by the goldsmith, ten times the sum could be safely issued as notes without anyone usually becoming any the wiser. If a goldsmith held, say, 100 pounds of other people's gold in his vaults, he could issue banknotes to the value of 1000 pounds. As long as no more than 10 percent of the holders of those notes wanted their gold at any one time, no one would realize the fraud being perpetrated. This practice, known as "fractional reserve lending," continues to this day and is actually the backbone of the modern banking industry. Banks typically loan ten times their actual financial holdings, meaning 90% of the money they lend does not now, never has, and never will exist.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Loans issued by the goldsmiths had to be paid back to them with interest, meaning nonexistent money slowly became converted to tangible assets in the form of goods and labor. Should the loan be defaulted upon, the banker had the right to seize the defaulter's property. As time passed, therefore, the goldsmiths became wealthier and wealthier. They had devised a scheme to create money out of thin air and then convert this money into real goods, labor, or property. A loan of money at 12% interest recouped not merely 12% for the banker, but 112%, as it does to this day. As the industrial era began, so the potential for furthering this scheme increased exponentially. The goldsmiths were now fully-fledged bankers, and their ability to create money out of thin air and then convert it into tangible assets enabled them to begin to control whole industries to the point where the worlds of banking and industry became, to all intents and purposes, seamless entities. As the twentieth century dawned, the banking families hit upon a new means to consolidate and increase their gains. They discovered that by periodically restricting the money supply crashes within the emergent stock exchanges of the world could easily be engineered. The most notable example of this was the famous Wall Street Crash of 1929. What the history books usually fail to record is that, in a crash, wealth is not actually destroyed, but merely transferred. The "Crash of '29" allowed the most powerful of the banking and industrial families to absorb the weaker elements, generating even greater levels of centralized control. As the technological revolution progressed, so the buying up of TV stations and newspapers allowed the creation and control of the mass media. This served to ensure that only a portrayal of events that suited the interests of the elite banking families would get to public attention - invariably one that all but denied their very existence.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

INTRODUCTION ABOUT BANK In modern age, Banking constitutes the fundamental basis of economic growth. The term bank is being used since long time but there is no clear conception regarding its beginning. According to one viewpoint, in good old days, Italian moneylenders were known as Bane chi or Banacheri, because these people kept special type of table to transact their business, called Ban chi. Origin of the word bank belongs to the word Banchi or to the Greek word Banque. Both these words refer to some kind of banking. According to another viewpoint, bank originated from the German word (ital) Banque meaning Joint Fund.

Casa De SanGiorgio was the first bank to be established in 1148. The First Public bank of Veanice. It was established in 1157.
As per Banking Regulation Act. 1949, “Banking” means: “Accepting for the purpose of lending or investment of deposit of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise” In simple words, bank refers to an institution that deals in money. This institution accepts deposits from the people and gives loans to those who are in need. Besides dealing in money, banks these days perform various other functions such as credit creation, agency job and general service. Bank, therefore, is such an institution, which gives loans, creates credit and undertakes agency work. accepts deposits from the people,

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

HISTORY OF BANKING IN INDIA
Without a sound and effective banking system in India, it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades, India's banking system has had several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitan or cosmopolitan areas in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is as simple as instant messaging or dialing for a pizza. Money has become the order of the day. The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below: Phase 1:-Early phase from 1786 to 1969 of Indian Banks Phase 2:-Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. Phase 3:-New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Phase I
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders. In 1865, Allahabad Bank was established and first time exclusively by Indian, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase, the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority. During those days public had lesser confidence in the banks. As a result deposit mobilization was slow. However, the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Phase II
Government took major steps in Indian Banking Sector Reform after independence. In the 1960’s a major portion of nationalization was carried out with nationalization of seven banks forming subsidiaries of State Bank of India on 19th July 1960. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. Fourteen major commercial banks in the country were nationalized. Second phase of nationalization under Indian Banking Sector Reform was carried out in 1980’s with seven more banks. This step brought 80% of the banking segment in India under Government ownership. The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country:
• • • • • • • •

1949: Enactment of Banking Regulation Act. 1955: Nationalization of State Bank of India. 1960: Nationalization of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalization of 14 major banks. 1971: Creation of Credit Guarantee Corporation. 1975: Creation of regional rural banks. 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector banks in India experienced a rise of approximately 800% in deposits and advances took a huge jump by 11,000%. Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Phase III

This phase is characterized by introduction of many more products and facilities in the banking sector due to various reform measures. In 1991, under the chairmanship of M Narasimham, a committee of the same name was set up. Which worked for the liberalization of banking practices? The country was flooded with foreign banks and their ATM’s proliferation. Efforts were started to give a satisfactory service to customers. Phone banking and net banking were introduced. The entire system became more convenient and swift. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Company Profile
The Jammu and Kashmir Bank Limited
Founded Headquarters No. of locations Industry Revenue Employees Website 1938 India 500 branches/offices Financial, Commercial Banks 20,595,000,000 (2008) 6833 http://www.jkbank.net/

Jammu & Kashmir Bank was founded on October 1,1938 and it commenced business from July 4, 1939. The Jammu & Kashmir Bank Limited has been the first of its nature and composition as a State owned bank in the country. The Bank was established as a semi State Bank with participation in capital by State and the public under the control of State Government. The Bank opened its first branch at Residency Road, Srinagar The Jammu & Kashmir Bank is today one of the fastest growing banks in India with a network of more than 500 branches/offices spread across the country offering world class banking products/services to its customers. Today, the Bank has a status of value driven organization and is always working towards building trust with shareholders, customers, borrowers, regulators, employees and other diverse stakeholders, for which it has adopted a strategy directed to developing a sound foundation of relationship and trust aimed at achieving excellence, which of course, comes from the womb of good corporate governance. Good governance is a source of competitive advantage and a critical input for achieving excellence in all pursuits. J&K Bank considers good corporate governance as the sine qua non of a good banking system and has adopted a policy based on all the four pillars of good governance– transparency, disclosures, accountability and value. The bank expanded its areas of operation and widened its credit base by financing schemes like integrated Rural Development Programmes (IRDP), SEED, PMRY, NRY and other self employment programmes sponsored by State and Central Governments. In 1976, the Jammu & Kashmir Bank became the first and only bank, which was permitted by the Reserve Bank of India to sponsor two regional banks, namely, Kamraz Rural Bank and Jammu Rural Bank.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

COMPOSITION OF THE BANKING SYSTEM IN INDIA AS AT THE BEGINNING OF NEW MILLENIUM
At present, the number of nationalized banks is 20. Several Foreign banks were allowed to operate as per the guidelines of RBI. At present the banking system can be classified in following categories: PUBLIC SECTOR BANKS o Reserve Bank of India o State Bank of India and its 7 associate Banks o Nationalized Banks (20 in number) o Regional Rural Banks sponsored by Public sector Banks PRIVATE SECTOR BANKS o o o o o Old Generation Private Banks New Generation Private Banks Foreign Banks in India Local Area Banks Non Scheduled Banks

CO-OPERATIVE SECTOR BANKS o o o o o o o State Co-operative Banks Central Co-operative Banks Primary Agriculture Credit Societies Land Development Banks Urban Co-operative Banks State Land Development Banks Scheduled Co-operative Banks

DEVELOPMENT BANKS o o o o o o Industrial Finance Corporation of India (IFCI) Industrial Development Bank of India (IDBI) Industrial Credit & Investment Corporation of India (ICICI) Industrial Investment Bank of India (IIBI) Small Industries Development Bank of India (SIDBI) National Bank for Agriculture & Rural Development (NABARD) 15

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) o Export-Import Bank of India

RESERVE BANK OF INDIA

The Reserve Bank of India (RBI) is the central bank of India, and was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office is located at Mumbai since inception. Though originally privately owned, since nationalization in 1949, RBI is fully owned by the Government of India. RBI is governed by a central board (board headed by a governor) appointed by the Central Government of India. The current governor of RBI is Dr.Y.Venugopal Reddy, who succeeded Dr. Bimal Jalan on September 6, 2003. RBI has 22 regional offices across India.

Main Functions
Monetary Authority:
o o

Formulates implements and monitors the monetary policy. Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors.

Regulator and supervisor of the financial system:
o

Prescribes broad parameters of banking operations within which the country's banking and financial system functions. Objective: maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public.

o

Manager of Exchange Control:
o

Manages the foreign exchange under Foreign Exchange Management Act, 1999.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)
o

Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

Issuer of currency:
o o

Issues and exchanges or destroys currency and coins not fit for circulation. Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

Developmental role
o

Performs a wide range of promotional functions to support national objectives.

Related Functions
o

Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker. Banker to banks: maintains banking accounts of all scheduled banks.

o

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

CHART SHOWING INDIAN BANKING SYSTEM
Central Bank & Monetary Authority“RBI”Apex Banking Institutions

APEX BANKING INSTITUTION

IDBI

NABARD

EXIM BANK BANKING INSTITUTIONS

HB

National Housing Bank

Banking Institutions

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

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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

EXCHANGE BANK

AGRICULTURE BANK

CENTRAL BANK

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

HISTORICAL BACK GROUND OF THE J&K BANK Ltd.
Entire banking in the state of Jammu and Kashmir was performed by traditional lenders till 1920 -30 and that too at exorbitant interest rates. At the same time some banks functioned on a very limited scale, such as Punjab National Bank Limited, Grind-lay’s Bank and Imperial Bank of India. The role of these banks was reduced to the acceptance of deposits, as they could not grant loans and advances to the people of the state owing to the statutory limitations. Under this scenario banks could not ameliorate the financial and social position of the people of the state. To over come this critical situation the then Maharaja of the state conceived an idea of setting up of a state bank in the state. After a prolonged exercise and deliberations the assignment for establishment of “The Jammu and Kashmir Bank Limited” was given to the late Sir Sorabji N Pochkhanwala, the then Managing Director of the Central Bank of India. Mr. Pochkhawala formulated a scheme on 24-09-1930, suggesting establishment of a semi state Bank with participation in capital by state and the public under the control of state Government. Thus the bank was formally incorporated on the Ist of October 1938 and commenced business from 4th of July 1939 at its Registered Office, Residency Road, Srinagar, Kashmir. The Jammu & Kashmir Bank Limited has been the first of its nature and composition as a State owned bank in the country. The state Govt. besides contributing half of the issued capital also appointed it as its bankers for general banking and treasury business. In its formative years, the bank had to encounter several serious problems, particularly around the time of independence, when out of its total of ten branches two branches of Muzaffarabad and Mirpur fell on the other side of the line of control along with cash and other assets; in 1947. However the State Govt. came to its rescue with the assistance of Rs.6.00 Lacs to meet the claims thereafter, the bank stead fastily over came its difficulties and kept growing.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) Following the extension of Central laws to the state of Jammu & Kashmir, the bank was defined as a govt. company as per the provisions of Indian Companies Act 1956 .The bank had its first full time chairman in 1971, following social Central measures in banks .The year 1971 was a turning point for the bank on conferment of scheduled bank status and witnessed remarkable progress in all the vital fields of operations .The bank was declared as "A" Class Bank by Reserve Bank of India in 1976. In recognition of dominant role and exalted performance , Reserve bank of India appointed the bank as its agent for performing the general banking business of the Central Govt. especially in maintaining currency chests and collection of taxes.

INTRODUCTION ABOUT THE J&K BANK Ltd.
The Jammu & Kashmir Bank is today one of the fastest growing banks in India with a network of more than 526 branches/offices spread across the country offering world class banking products/services to its customers. Today, the Bank has a status of value driven organization and is always working towards building trust with Shareholders, Employees, Customers, Borrowers, Regulators and other diverse Stakeholders, for which it has adopted a strategy directed to developing a sound foundation of relationship and trust aimed at achieving excellence, which of course, comes from the womb of good Corporate Governance. Good Governance is a source of competitive advantage and a critical input for achieving excellence in all pursuits. J&K Bank considers good Corporate Governance as the sine qua non of a good banking system and has adopted a policy based on all the four pillars of good governance – Transparency, Disclosures, Accountability and Value, enabling it to practice Trusteeship, Transparency, Fairness and Control, leading to stakeholders delight, enhanced shareholder value and ethical corporate citizenship. It also ensures that bank is managed by an independent and highly qualified Board following best globally accepted practices, transparent disclosures and empowerment of shareholders, besides ensuring to meet shareholders aspirations and societal expectations following the principles of management's executive freedom to drive the bank forward without undue restraints but within the framework of effective accountability.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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.

MISSION OF THE BANK
The company’s 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.

FINANCIALS OF THE BANK
The Bank recorded an outstanding achievement in the last financial year (2006-07) in key areas of its operations. During the year 2006-07, the Bank the bank continued to register an impressive improvement in earnings. During the year, the total income has increased by 13.34% to Rs. 2056.54 crore from Rs.1817.10 crore in the previous year. The Capital & Reserves of the Bank increased from Rs.1799.47 crore to Rs.2008.73 crore as on 31st March 2007. The Capital Adequacy Ratio stood at 13.24%, which is comfortably much above the minimum stipulated by Reserve Bank of India. The Bank posted a net profit of Rs.274.49 crore in the last fiscal as against the previous year figure of Rs.176.84 crore in 2005-06, registering an impressive growth of 55.22%. 22

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) Bank's aggregate deposits recorded an appreciable accretion of 7.28% to Rs.25194.29 crore at the end of financial year 2006-07. The credit portfolio of the Bank also recorded an appreciable growth during the year. The total advances of the Bank increased to Rs.17080 crore against the corresponding period of the previous year registering a growth of 23%. The net NPA’s stood at 1.09%, as on the end of financial year 2007-08. During the year, the Foreign Exchange business recorded an impressive growth of 19%, moving to Rs.22573.58 crore. The contribution of this segment to the Bank's gross income has been to the tune of Rs.36.98 crore. Keeping in view overall performance of the Bank, the Bank, after the approval of shareholders, paid 115% dividend (free of tax) for the year ended 31st March 2007.

INSURANCE BUSINESS
The Bank has diversified its business activities into insurance, both life and non-life. The Bank not only became the strategic partner of, M/S METLIFE INDIA INSURANCE CO. Ltd but also has been acting as corporate agent of the said company for distribution of their life insurance products through network of its branches. The Bank also entered into a tie-up with BAJAJ ALLIANZ GENERAL INSURANCE COMPANY for distribution of their non-life insurance products. In view of Bank's deep branch network and loyal customer base particularly in Jammu and Kashmir, the Bank has been able to distribute insurance products in deep rural and far flung areas and has made penetration in the new areas thereby adding to its non-interest and fee based income. The bank’s insurance business continued to record splendid growth. During the year under report the bank as a corporate agent further extended the marketing of products of M/S METLIFE INDIA INSURANCE CO. Ltd into new areas, which were hitherto neglected by the traditional competitors in the business. Bank has sold 9019 life policies of METLIFE 23

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) INDIA and collected annualized premium amount of Rs. 1277.84 lacs during the year. In the non-life business, the bank has shown a better performance and collected aggregate premium amount of Rs. 1759.03 lacs. This has yielded non-interest income of Rs.509.21 lacs to the bank

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 24

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) 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.

SERVICES PROVIDED BY THE JAMMU AND KASHMIR BANK TO CUSTOMERS UNDER VARIOUS SCHEMES:
o The J&K Bank Savings Accounts o The J&K Bank Current Accounts

o The J&K Bank Fixed Deposits o The J&K Bank’s various Loans Schemes o The J&K Bank various Depository Schemes

NEW PRODUCTS OF J&K BANK:For the benefit of the people of J & K State , the has developed some special schemes for some special category. These schemes are as under  APPLE ADVANCE SCHEME.  J & K BANK DASTAKAR FINANCE.  J & K BANK ALL TERM AGRI TERM LOANS.  J & K BANK AHATANBAND FINANCE.  J & K BANK ZAFRAN FINANCE  J & K BANK RATION CARD.

APPLE ADVANCE SCHAME:J&K Bank’s specially designed product named as apple advance scheme has struck at the root of the explorative system that thrived on scant or untimely fund availability at times even lack of finance through formal channels. Last year after a detailed study of the apple economy, need based, time specific product was introduced. The product incorporated all the critical necessary to make our financial intervention effective and grow friendly. 25

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) Apple advance scheme was introduced to meet the comprehensive requirements of the apple growers with distinctive features like reduced margins ,higher scale of finance that includes production and post harvest maintenance, auto renewal of limits and most importantly very easy and hassle free documentation.. The scale of finance was increased to Rs. 1.5 lacks per acre from Rs. 40000 per acre The objectives that guided the customization of the product include the easy access, simplified documentation, avoiding redundancies, shortened process time and flexible fund limit. Even for the for the growers who have just leased orchards can avail finance under the scheme.With hypothecation of fruit crop and third party guarantee of two persons as security and no emphasis on collaterals, the borrower is also allowed drawls up to 50 % of the previous year limit till the bank renews the sanction foe the next year.The process has been made extremely easy and hassle free to ensure that comprehensive requirements of apple growers to take care of production and marketing costs are fulfilled adequately and in time. Simplified legal documentation has been made to expedite the loan processing. J&K BANK DASTAKAR FINANCE:J & K Bank in its Endeavour 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. The scheme provides easy and soft credit to the crafts men engaged in the trade ,a and helps them to set up their own ventures, weeding out the middle men responsible for their exploitation. Keeping in view the specific production cycle associated with this trade loan comprises of term loan and working capital components. The disbursement is phased in quarterly installments and aligned to the status of work in progress [WIP].This ensures proper end use, quality control and timely completion of work. The weavers ascertain are allowed a reasonable time for the repayment of the bank finance.

26

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) To make the credit hassle free no third party \collateral guarantee is required. The product has been designed on the banks philosophy of confidence-based lending as opposed to collateral based lending. There are no requirements of any collateral security under this product. The legal documentation has been kept at bare minimum with only two documents to be executed for disbursement of the loan. In order to increase the reach of the product the data base of the weaver’s artisans available with the various trade associations is being utilized besides identification of the people by concerned of the bank. J&K BANK ALL PURPOSE AGRI TERM LOAN:The product aptly named as All-Purpose Agro Term Loan has been designed in a way that lays special emphasis on small and marginal farmers and provides sufficient and more importantly timely finance to the farmers engaged in all types of agriculture and allied activities. 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. 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. Foe that purpose, the product has been devised in such a way that hitherto un-banked customers get an easy access to banking services through simple and affordable documentation process. A maximum credit of 1 lakh, depending upon the agri-activity to be financed is provided but multiple activities can also be considered for finance. The product is offered at affordable interest rates. 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. This seems just the beginning, as the fruits of this harvest are expected to yield much. The strengths of being a community bank with a monopolistic presence are being exploited more effectively so that the product reaches all the small growers of the state. And with every loan granted, we are having more and more happy faces. 27

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

J&K BANK KHATAMBAND FINANCE: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. The product was tailored to provide comprehensive and timely credit to them, based on paper understanding of the production cycle and need for finance at its different stages. 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 . The prospective borrowers have to only submit their identity proofs to avail the facility. The response to the khatamband finance so far, has been Impressive. It has again generated hope among the traditional khatamband crafts of the JK State, especially to the small ones. Access to affordable finance is no longer a problem or them. Kindling such hope is the first step towards the revival of all such culturally rich arts and crafts in the state. J&K BANK TRUMP CARD:Deepening of financial intermediation is a pre-requisite for sustained economic growth. The bank have given a new meaning to inclusive growth by working on empowering people and demonstrating that people with lesser means can be reached and reached profitably. For bank, making making a difference in people’s lives and making profits can not be mutually exclusive. The bank is therefore combining the sensibility of social enterprises with the form of a far- profit business. A very novel initiative was started in this respect , which proved to be quite useful in reaching out to almost every house hold of J & K State. The initiative was to print the ration books for the Govt. The state Govt. annually prints and distributes twenty lakh Ration books to customer families to facilitate them purchase of rations from Govt. 28

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) owned fair prices. Practically every family in the state gets a ration book including more than eight lakh BPL families. These ration books reached places where even roads don’t go. There ration cards can be used as an ideal delivery vehicle to reach out to the unbanked people and to carry out the empowerment initiative through an assured and established distribution network system active across J 7 K State. The ration books also contained personal information coupons which helped the bank create a data base of around twenty lakh people .The data would be used for strategizing the banks other initiatives aimed at economic empowerment. The bank spent quite a sum on printing these ration books, which was other wise to be spent by the J & K State government. But the smiles on the faces of our people were a return that was match less. Applications forms provided within the ration book, they went to their nearest branches to put their hard earned money to better use instead of keeping the cash at home. JK BANK ZAFRAN FINANCE:With a view of preserving this prized spice, JK Bank tailored a specific product named JK Bank Zafran Finance .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. 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. The repayment of the advance is scheduled within th four year growing cycle of saffron. Refinancing facility can be availed on fresh plantation of the crop. The documentation has been simplified and kept minimum to make it hassle free. Saffron finance has made the middle men and other informal channels of finance and attractive for the saffron growers. Besides it has encouraged the small growers to with stand the price fluctuations because now they are not forced to sell their produced and they can wait till they are satisfied with the rates .With the much needed direct finance

29

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) leading to the prosperity of some, others have already made up their mind to follow. Hence the product is in demand across the saffron belts of the valley.

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 SMS Banking Anywhere banking facility

o The J&K bank is the only bank in India which provides Amaranth Yatra Tickets
to pilgrims.

30

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

BANKS NEW IDENTITY

The new identity for J&K Bank is a visual representation of the Bank’s philosophy and business strategy. The three coloured 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.

31

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

SWOT ANALYSIS
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 state’s 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. 32

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Weaknesses:
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

33

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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

Objectives of the Study
 To find out the credits given under various schemes by different banks.  To find out in which sector J&K Bank is lagging behind the other banks in providing the credit.  Credit flow of J&K bank in different sectors of the economy.  What should be done for the sectors in which J&K k is lagging behind. What extra facilities are provided by the other banks to their customers

34

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

RESEARCH METHODOLOGY
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.

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.

DATA COLLECTION
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 is collected from information that was collected from the respondents through structured questionnaire. The information brochures of the bank

35

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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. Sample size- 50 Sampling Procedure-Convenience Sampling.

36

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Objectives of the Research:
1. To objective of the research is to understand concept of Microfinance. 2. To find out existing Structure of Microfinance in World and in India 3. . To understand Policies adopted by different bank 4. The main objective of the research is to find out Potential of Microfinance in Jammu & Kashmir 5. To understand Microfinance structure in J&K Bank and to Find out Flaws if any.

Source of Information:
Primary Source:
• • • • • Through Structured questions. Face to face interview.

Secondary Source:
Records maintained by Bank. Websites. Times of India.

Research Methodology:

The study pertains to detailed understanding of concept of Microfinance, its need, Supply and regulatory methods adopted by various agencies. An exploratory research design was adopted to conducted research, method of selecting sample was convenience sampling. Field survey was carried out to collect the necessary data. Data Used: Both Primary and Secondary Data were used. Websites, Departmental visits, newspapers, Survey magazines, Statistical digest etc were used to collect data. Data Collection: Though most of the respondents were illiterate so Face to face interview was the main source of collecting data. Respondents were interviewed in a structured format. 37

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Analysis & Interpretation
BANKS OPERATING IN THE DISTRICT:There are a number of banks operating in the Baramulla District 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.

J&K Bank 29

SBI 5

PNB 4

Cooperative 4

Canara 3

KRB 4

HDFC 1

Total 50

Name of Banks and No of Branches J&K Bank Operating in District
3 4 4 5 29 1 4
SBI PNB Cooperative Bank Canara Bank HDFC Kamaraz Rural Bank

38

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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 Baramulla 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
Total amount of credit by different banks
80 60 40 20 0 70 7 J&K Bank SBI

Amount (in crores)

5 PNB

3 Cooperative Bank

2.5 Canara Bank

0.5 HDFC

1.25 Kamaraz Rural Bank

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

39

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Q.2:What are the various credit schemes offered by your Bank in district Baramulla ? Through this question an attempt was made to figure out the various credit schemes different banks offer in the district Baramulla? Table: 02 Different Banks offering Various Credit Schemes
S.No 1 2 3 4 5 6 7 8 9 J&K BANK Term loans Housing Trade SSI Agriculture TPT. Education Tourism Others Housing Trade SSI Agriculture TPT. Education Personal Personal Others Housing Trade SSI Agriculture TPT. Housing Trade SSI Agriculture TPT. Housing Trade SSI Agriculture TPT. TPT. Housing Trade SSI Housing Trade SSI Agriculture TPT. SBI PNB Cooperative Canara HDFC KRB

40

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Q.:3How many loans you have given during the current financial year Through this question an attempt was 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 T LN . O C E I C S S O A O F R DT A E B BNS Y AK
10 80 10 60 10 40 NO. 10 20 10 00 80 0 60 0 40 0 JK BANK CANARA COOP. SBI 0 HDFC 20 0 PNB KRB
Sr s eie 1

BN AK

The above graph shows that JK Bank is the only bank in the district which has provided more thatn half of the total loans in the district. SBI is the second omne and PNB is the third one in providing the loans in the district baramulla? Q.4: Do your customers regularly pay the loan installments or not? 41

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) Sample size-501 BANK JK SBI BANK YES NO 21 8 3 2 PNB 3 1 COOP. 3 1 CANARA KRB 2 1 2 2 HDFC 1 0 TOTAL 35 15

R G L RP Y E TO B N E U A AMN F A K IN T L E E T S AL MN S
NO. OF RESP. 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0 YS E BN AK N O 1 5 Sr s eie 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 with out any lapse in their installment terms, while as 15 of the respondents said that customers do not pay their installments regularly.

42

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

Q.5: How many number of default cases your Banks has faced during current financial year? BANK No. of cases DEFAULT CASES
PERCENTAGE

JK SBI BANK 1640 40 220 10

PNB 215 12

COOP. 140 10

CANARA KRB 130 11 110 6

HDFC 90 3

TOTAL 2190 92

P R E T G O D F UT E C NA E F E A L CSS AE
9 8 7 6 5 4 3 2 1 0
k

74 . 58 . 45 . 28 .

79 .

Sr s eie 1

06 .
S B I P N C B O O C P A N . A R A K R B H D F C K

B A J

N

BN AK

The above graph shows that J & K Bank is leading in case of default cases with total no. of default cases equal to 35 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.

43

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) 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 NO. OF RESP. 25 15 10 Weak economic condition Abnormal factors

Ra os o ntpy ga n e s n f r o ai l o n i sa e e t nt l mn l s

2% 0 5% 0 3% 0

Ua ae b u nw r ao t r pyn d t ea i g a e W k c nm e eoo i a c c nii n od o t Anr a b om l fat r cos

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

44

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) economic comditions 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 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

2

1

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

45

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) 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

c a g go i c e s do h r in f n r a e r d c e s di t r s r t s e r a e ne e t ae

4% 4 5% 6

ys e N o

46

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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
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 47

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

CREDIT SURVEY OF J & K BANK:The J & K Bank is the only bank in the Baramulla 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 grower .The J&K Bank has almost covered all the Baramulla 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 Baramulla 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.

48

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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 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.

49

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

C E IT O P BIND F R N S C R RD F N IF E E T E TO S

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

T A ELO N RD A S S I LO N S A S A R LO N G . A S T T LO N P. A S P R O A E S NL

1% 0

7 %

C RLO N A A S

50

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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 town’s contribution in the different sectors of the economy given by the SBI is given in the graph.

51

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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%

52

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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.

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

A G R. LO A NS HO US IN G LO A NS TR A DE LO A NS S S I LO A NS TP T. LO A NS O THE R LO A N S

10%

39%

53

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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

54

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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.

55

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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

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 DIFFERENT SECTORS BY ALL THE BANKS
40 35 30 25 20 15 10 5 0
SS I TI O 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

PERCENTAGE

Series 1

NS PO RT AT IO N TR AD E TR A

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 56

ED

UC A

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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 ptovided 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 Bnak The transportation is the main sector in which J7K 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 57

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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

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.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

SUGGESTIONS
• 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 59

CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY) 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 doesn’t provide credit facility, due to which these sectors are lagging behind in the valley. Therefore 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.

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

LIMITATIONS OF THE STUDY

However, every care has been taken to make this report authentic in every sense. Yet, there were a 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. • Because of 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 to Baramulla district

Questionnaire
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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

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 Q NO.4:- Are your customers regularly paying the installments? (a) Yes (b) No

Q NO.5:- How many defaults cases your bank has faced during the current financial year?
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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

(a) 1-5 (b) 5-10 (c) 10-15 (d) Above 15 Q NO.6:- What is the main reason behind non reoaying of loan installements 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 (b) No

Q.9: whether your bank charge increased or decreased rate of interest to the defaulters ?

(a) Increased rate

(b) Reduced rate

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CREDIT SURVEY OF DISTT. BARAMULLA (A COMPARATIVE STUDY)

BIBLIOGRAPHY
BOOK 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.

WEB SITES • • • • http://www.j&k Bank.org www.RBI,com www.myiris.com www.jkbank.net

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