Analysis of loans and advances

MEANING OF FINANCE
Finance is the set of activities dealing with the management of funds. More specifically, it is the decision of collection and use of funds. It is a branch of economics that studies the management of money and other assets. Finance is also the science and art of determining if the funds of an organization are being used properly. Through financial analysis, companies and businesses can take decisions and corrective actions towards the sources of income and the expenses and investments that need to be made in order to stay competitive. Finance is the life blood of business. It flows in mostly from scale of goods and services. It flows out for meeting various types of expenditure. The activating element in any business which may be on industrial or commercial undertaking is the finance. Business finance has been defined as those activities which have to do with the provision and management of funds for the satisfactory conduct of a business. Business finance is defined as that b usiness activity which is concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of business enterprises. So we can say business finance is mainly developed around three major objectives. Firstly, to obtain an adequate supply of capital for the needs of the business, Secondly, to conserve and increase the capital through better management, Thirdly, to make profit from the use of funds this is an overall objective of a business enterprise. Before industrial revolution, finance was not of much importance. The methods of production were simple. For example, the artisan used to work in open small hut. He had simple tools mostly made by himself. Labour at that time was more important than capital and finance did not pose any problem. Production in those days was, therefore labour intensive.

*Information has been collected from the website www.google.com

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Analysis of loans and advances

INDIAN FINANCIAL SYSTEM
The financial system or the financial sector of any country consists of specialized and non-specialized financial institutions of organized and unorganized financial markets of financial instruments and services, which facilitate transfer of funds procedures and practises adopted in the markets and financial interrelationship, are also part of the system. The structure of a financial system in any economy is as follows: UNORGANISED MARKETS In these markets consist of many lenders, indigenous bankers, transfers and private chit funds etc. whose activities are not controlled by RBI. Recently the RBI has taken steps to bring private function companies and chit funds its strict control but using non banking financial companies directions in 1998. ORGANISED MARKETS In these markets there are standardized rules and regulations by Reserve Bank of India or other regulatory bodies. The organized markets can be further classified into two. They are: 1) Capital markets. 2) Money markets. CAPITAL MARKET: It is a market for long term funds which have a long or indefinite maturity. Capital market further divided into three mainly: a) Industrial Security market: It is a market for industry security namely equity shares or ordinary shares, preference share, debentures or bonds. It is a market where industrial concern raises their capital or debt by assuring appropriate instruments. It can be further subdivided into two. They are:

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Primary market: It is a market for new issue or new financial claims. Secondary market: It is a market for existing securities and those already issued and quoted in stock exchange.

*Information has been collected from the book A Hand book of banking by N. S. Toor

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Analysis of loans and advances

b) Government Securities Market: It is also called gilt-edged securities market. It is a market where government securities are traded (long term securities)

FINANCIAL INSTRUMENTS
A financial instrument refers to these documents which represent financial claims on assets. Financial instrument can also be called financial securities. These instruments are classified into a) PRIMARY SECURITIES: Shares and debentures issued directly to Public. b) SECONDARY SECURITIES: These securities issued by some intermediaries ex; UTI and Mutual fund again these securities may be classified on the basis of duration as follows.
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Short Term Securities: Within one year ex; bills of exchange. Medium Term Security: Maturity period between 1-5 years ex; debentures. Long Term Securities: Maturity period more than 5 years ex; Gilts.

FINANCIAL SERVICES
a) MERCHANT BANKING: A merchant banker is a financial intermediary who helps to transfer capital from those it to those who need it. b) LOAN SYNDICATION: Much number of banks joins together and forms a syndicate to provide loan as big sum to corporate. c) LEASING: A lease is an agreement under which a company acquires a right to make use of capital assets like machinery for agreed period in return for periodic payment of rentals. d) HIRE PURCHASE: It is an agreement relating to transaction in which goods are let on hire. e) FACTORING: It is an agreement under which a financial intermediary assumes the credit risk in the collection of book debt passes for its client. f) VENTURE CAPITAL: A venture capitalist finances a project based on the potentialities of new innovative projects for new entrepreneurs. g) MUTUAL FUND: A mutual fund refers to a fund raised by a financial services company by pooling the savings of the public.

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Analysis of loans and advances

MEANING OF BANK
Banking is one of the most important sectors of business and finance that assists the world of commerce to keep on running. Without banks and the banking services that they provide, commerce and trade would collapse and credit would become virtually extinct. As the decades progress many new concepts are being introduced into banking. At their most basic, banks hold money on behalf of customers, which is payable to the customer on demand, either by appearing at the bank for a withdrawal or by writing a check to a third party. Banks use the money they hold to finance loans, which they make to businesses and individuals to pay for operations, mortgages, education expenses, and any number of other things. Many banks also perform other services for a fee; for instance they offer certified checks to customers guaranteeing payment to third parties. In some countries they may provide investment and insurance services. With the exception of Islamic banks, they pay interest on deposits and receive interest on their loans. Banks are regulated by the laws and central banks of their home countries; normally they must receive a charter to engage in business. Banks are usually organized as corporations.

DEFINATION OF BANK
An organization, usually a corporation, chartered by a state or federal government, which does most or all of the following: receives demand deposits and time deposits, honours instruments drawn on them, and pays interest on them; discounts notes, makes loans, and invests in securities; collects checks, drafts, and notes; certifies depositor's checks; and issues drafts and cashier's checks.

CLASSIFICATION OF BANK
Banks are classified into various types based on the function they perform. They are as follows: 1. COMMERCIAL BANK: Commercial banks perform all the business transactions of a typical bank. They accept saving bank deposits, fixed deposits and current deposits which are repayable on demand or on short notice.

*Information has been collected from the book A Hand book of banking by N. S. Toor

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Analysis of loans and advances

Likewise, they lend or invest only for short durations. They provide funds only for short term needs of trade and commerce. These banks cannot invest credits and overdrafts as they are expected to meet the immediate requirement of depositors. The commercial banks provide a vital service to its customers, a simple means of medium of exchange called cheques. They also perform a large number of agency functions to their customers for which they charge a commission.

2. INDUSTRIAL/ INVESTMENTS BANKS: Investment banks, also called industrial banks, are those banks which provide funds on a long for industries. They are specialized in providing long term loans to industries with a view to buy plant, machineries, etc. These banks obtain funds through share capital, debenture and long term deposits from the public. The bank floats bonds for the sake of mobilizing funds to provide funds for big industrial corporations. They also underwrite or issue new shares and debenture of industrial companies. They also purchase entire issue of new securities of company and later sell them to public at higher prices.

3. EXCHANGE BANKS: Exchange banks are known as foreign banks or foreign exchange banks. These banks also provide foreign exchange for import trade. Their main function is to make international payment through the purchase and sale of exchange bills. The exchange bank provides assistance in the conversion of currencies. They discount foreign exchange bills which are used in foreign trade.

4. CO-OPERATIVE BANKS: Co-operative banks are performed to meet the meet the banking requirements of consumers. They are established in urban as well as rural areas. In rural areas, the bank provides finance to agriculture and in urban area it provides finance to buy consumer goods. These banks function like commercial banks receiving deposits and lending money. They provide short and medium term loans. As they are formed on cooperative principles, they are more service oriented rather than profit. The bank provides credit at lower rates of interest to people of small means like small cultivators,

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Analysis of loans and advances

artisans, petty shop-keepers etc. They have been classified into land development banks or land mortgage banks and urban credit-oriented banks.
5. SAVINGS BANK:

Savings banks are specialized financial institution establishment to mobilize savings from the people. They pool the savings of the small incomes of the community. The savings banks accounts have been provided by all commercial and co-operative banks and even post offices. Saving bank business has become more prominent than others forms of accounts as it provide various facilities like frequent withdrawals, attractive rate of interest, the use of cheques etc.
6. CENTRAL BANK (RBI):

Central bank is an apex bank in the country. It brings the entire banking system unified, controlled and regulated. It is the main source of an efficient banking system in the country. The monetary policy of a country is formulated and enforced by the central bank. It is responsible for monetary stability in the country. The expansion and contraction of note issue are managed by the central bank. It functions as a banker to the government and commercial banks. It assists the government in the implementation of various economies policies.

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FUNCTIONS OF BANKS
Prof. Sayers in his book µModern Banking¶ has described the functions of a modern bank in the following words: ³Ordinary banking business consists of changing cash from bank deposits and bank deposits for cash, transferring bank deposits for cash, transferring bank deposits from one person to another and giving bank deposits in exchange of bills of exchange, government bonds, the secured promises of businessmen to repay and so forth.´ The various functions of a modern bank are as follows: 1.

Accepting deposits from public:

The major function of the commercial banks is accepting various types of deposits such as fixed deposits, current deposits and savings deposits. People want to keep their cash balances safe for which they deposit it with a bank. The commercial bank protects the cash of the customers and provides a convenient method of transferring funds through the use of cheques. It is the obligation of bank to honour cheques drawn upon the bank, making payment across the counter on demand by the customers to the extent of money available at the credit of customer¶s account.
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Fixed deposits: A fixed deposit is one where a customer keeps a certain amount of money in a bank for a specific period. It may be 6months, 1 year, 2 years 3 years or 5 years. The fixed deposit is not expected to be withdrawn before the expiry of the period.

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Saving deposits: Saving deposits are those deposits on which the bank pays a certain conditions. The customers are expected to maintain a minimum balance in the account.

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Current deposits: Current deposits are those deposits which can be withdrawn at any time by means of cheques. The bank does not pay interest on current deposit. A customer who opens a current account has to
*Information has been collected from the book A Hand book of banking by N. S. Toor

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Analysis of loans and advances

maintain a minimum credit balance of Rs. 500. At the same time current holders has to pay service charge.

2.

Making loans and advancesThe second main function of the commercial banks is to provide loans and advances out of the

money the bank receives by the way of deposits. The bank receives deposits in order to lend the same. It is this function of a banker¶s activities which is the largest contributor to the bank¶s profit. Commercial banks provide various types of loans such as direct loans, cash credit, bills discounted and overdrafts etc. Direct loans and advances are provided to all types of persons against the security of movable properties.

3.

Agency servicesAnother important function of a banker is the services offered by them as an agent. The commercial banks render

a significant service by providing to its customers a simple means of medium of exchange called cheques. The cheque system is considered to be the most developed type of credit instrument. The banks perform miscellaneous functions such as undertaking the payment subscriptions, insurance premium, rent, etc. On the behalf of the customers they collect cheques, bills, salaries, pensions, dividends, interests, etc that belongs to the respective accounts of the customers. The banks perform these functions as per the instructions given by the customers and make pa yments as and when directed. For these services they charge a certain amount of fee by means of commission.

4.

General utility servicesA banker performs many general utility personal or miscellaneous services for his customers. The

general utility services include the safe- keeping of valuables and documents, the issue of credit instrument for easy transfer of funds, collection of credit information regarding the customers, transaction in foreign exchange and provision of specialized advisory services to the customers.

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Analysis of loans and advances

EVOLUTION OF BANKING Banking is an ancient business with its history dated back to the 13th century. When the first bill of exchange was used as money in the medieval trade. Banking in India as its origin as early has the Vedic period. During the days of east India Company, it was the turn of the agency house to carry out the banking business. The general bank of India was the first joint stock bank to be established in the year of 1886. The others that followed are the Bank of Hindustan and the Bengal Bank. In 1891 the first purely Indian Bank that is United Commercial Bank came into being. The setting up of Punjab National Bank in 1894 followed it. In 1920, three bank namely Bank of Bengal (1809), Bank of Bombay (1840), Bank of Madras (1843) were amalgamated and a new bank, Imperial Bank of India was established. The Reserve Bank of India, which is the Central bank, was created in 1935, with the passing Reserve Bank of India act in 1934. Later with the passing of State Bank of India in 1955 the undertaking of Imperial Bank of India was taken over by newly constituted State Bank of India. In the wake of Swadeshi Movement in 1905 no. of Bank with Indian Management were established in the country namely Punjab National Bank Ltd. The Bank of Baroda (1908), Bank of India (1906) Canara Bank Ltd. Indian Bank Ltd, Central Bank of India Ltd. (1911). ON July 19th 1969, 14 major Banks of the country were nationalized and on 15th April 1980 six more Commercial Private Banks were also taken over by the government of India. Banking Industry has achieved a tremendous progress during the past few years; many Banks and Financial Institution have entered into the market and have made a rapid growth towards achieving the ultimate object of attaining leadership in Banking Industry.

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Information has been collected from the website www.wikipedia.com

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Analysis of loans and advances

BANKING PROFILE:
The Indian Banking System can be broadly classified into: 1) Nationalized (Government Owned) 2) Private Banks 3) Specialized Banking Institutions

The RBI as a centralized body monitoring any discrepancies and short coming in the system. Private Banks has been fast on the uptake and are reorienting their strategies using the internet as the medium.

BANKING SECTOR REFORMS:
A radical re-structuring of the economic system consisting of industrial deregulation. Liberalization of policies relating to Foreign Direct Investment (FDI), Public Enterprise Reforms, of taxation system, trade liberalization and financial sector has been initiated in 1992-93. Financial sector reforms in the area of commercial banking, capital markets and non-banking finance companies have been undertaken. Improving financial sounds and credibility of banks is a part of banking reforms undertaken by the RBI, a regulatory and supervisory agency over commercial banks under the Banking companies Regulation Act 1949. In the areas of capital markets of SEBI was set up in 1992 to protect the interest of the investors in the securities and to promote development and regulation of security market. In regard to non-banking finance companies the RBi has issued several measures aimed at encouraging disciplined NBFC¶s, which run on sound business principles. The economic reforms also aimed at improved financial viability and institutional strengthening to improve the , effective implementation of monetary policy, linkages among money anf foreign exchange markets have been enforced.

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Analysis of loans and advances

THE ROLE OF BANKS IN ECONOMIC DEVELOPMENT
Commercial Banks are playing a crucial role in the economic development of the country. In fact, without the development of commercial banking in 18th and 19th centuries. In the modern economy, banks considered not only merely as dealers in money but also as reservoirs of resources necessary for the economic development.

Banks provide short-term loans which serve as a capital for industrial establishment. Banks also create credit, which enables the industry and commerce to expand economic activities. Banks are contributing very significantly for the expansion of industrialization. Expansion will provide more funds for the entrepreneurs to start new industries, which results in more employment and income generation. A very important service that banks render to the community is the creation of demand deposits in exchange of debts of short-term and long-term securities. Banks promote capital by means of pooling of savings from people. These are the important services rendered by the bank

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Analysis of loans and advances

FOUNDATION OF MODERN BANKING

After the nationalization of some big commercial banks in India, there has been an immense growth in banking industry with the establishment of more number of banking offices. Today the banking business has become very competitive. Various types of banks provide large number of services not only on national but international ground as well. The growing trade and commerce has made banks to modernize their operations in order to satisfy the customers. Indian banks have also felt the need for modernization of their operations like their counterparts in western countries. This was very essential as well to deal with extremely increased volume of business in an appropriate and efficient manner and to do effective business. Modern banking institutions have sought to automation like introduction of computers and other equipments as well as the wealth of information technology. ³The major objective of modernizing banking system is to improve bank operations while maintaining high level of standards in banking sector.´ Banks are viewed as development agents instead of providers of credit to large industries and big business companies. In India, the banks apart from providing credit to agriculture, trade industry and commerce are offering a large number of services to the customers. They make payments, collects electricity and water bills, telephone bills, take buy and sell decisions on behalf of their customers and so on. Today more and more number of business functions is entrusted on banks. They provide their serv ices to labourers, petty wage earners, small traders, etc. With the appearance of modern banking system, the rural credit system with the money lender nearly collapsed. The modern banks have developed strategies to meet the requirements of common men in achieving economic and social development.

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Analysis of loans and advances

NATIONALIZATION OF 14 MAJOR COMMERCIAL BANKS
In the history of commercial banking, the nationalization of the Imperial Bank of India was a great achievement. In February 1969, the social control of commercial banks came into force. The government made suitable organizational changes in order to implement the provisions of the Amended Act. The banks were directed to grant loans to agriculture, small scale industries and self employment in an increasing manner. The boards of managements of bank were reconstituted. Yet the industrialists who were on the Board of management continued to exert their influence on the lending policies of the big banks. The Reserve Bank of India started exercising its power to direct the banks when necessary to adopt new regulations. In fact, the social control was in stage of infancy. The government felt that that the social control was not sufficient in a planned economy. The government further said that under the private ownership, social objectives cannot be achieved. Therefore on 19th July 1969, the government announced the nationalization of 14 major banks, whose deposits were not less than 50 crores, through an ordinance. The 14 banks controlled 72 percent of total scheduled bank deposits. The banks that were nationalized are as follows:

1. The Central Bank of India, Ltd. 2. The Bank of India, Ltd. 3. The Punjab National Bank, Ltd 4. The Bank of Baroda, Ltd 5. The United Commercial Bank, Ltd. 6. Canara Bank, Ltd. 7. United Bank of India, Ltd. 8. Dena Bank, Ltd.

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Analysis of loans and advances

9. Syndicate Bank of India, Ltd.
10. The Union Bank of India, Ltd

11. Allahabad Bank, Ltd. 12. The Indian Bank, Ltd. 13. The Bank of Maharastra, Ltd. 14. The Indian Overseas Bank, Ltd.

Objectives of Nationalization
As stated in the Act, the objective of nationalization is to control the heights of the economy and to meet gradually and enhance the needs of other development of the economy with respect to National Policy and the objectives. Except this main objective, other specific objectives were:

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Removal of the control of banks by a few persons Provision of adequate credit for agriculture Small scale industry and exports Professional outlook to bank management Encouragement of new classes of entrepreneurs Provide adequate training to staff principal

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The government said that nationalization is a major step in the process of public control over the institution. This would mobilize the people¶s savings

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Analysis of loans and advances

and direct it towards productive purposes. After the nationalization the banks will be more focused on the serving farmers, promoting agricultural production and developing rural sectors. Public ownership of banking will utilize the credit facility towards speculative and other unproductive purposes. Nationalization will also bring right atmosphere for the development of an adequate amount of professional management in the field of banking.

Nationalization of six more banks in 1980
Continuing the policy of nationalization, in 1980 the government nationalized six more banks. They were the Andhra Bank, the Corporation Bank, the New Bank of India, the Oriental Bank of Commerce, the Punjab and Sind Bank and the Vijaya Bank. By nationalization of these banks, the government has been able to exercise control over 91 percent of the resources of the entire banking system. Remaining 9 percent is held by foreign banks and private sector banks.

Achievements :
After nationalization, the government introduced suitable administrative changes to implement the objectives enshrined in the Act. The banks started diversifying lending policies. Government set up different department to handle the proposals. Training centres were established to train the staff. Field officers were recruited to make contact with the prospective customers. Since nationalization, the performance of banking system is outstanding in a lot of respects.

RESERVE BANK OF INDIA
The RBI was established on 1st April 1935 under the reserve bank of India act, which was passed in the year 1934. The reserve bank of India is the central bank of our country. The RBI was started originally as a scheduled bank and its paid up capital was Rs.5 crores. When RBI was established, it took over the function of currency issue

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Information has been collected from the website www.rbi.org.in

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The reserve bank of India was nationalized in the year 1948. The instruments used by reserve bank of India are.
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Bank rate Open market operations Variable cash reserve requirements.

Functions of RBI are :
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The reserve banks of India issues and regulates the issue of currency in India. The RBI acts as banker to government. The RBI looks after the derent financial transactions of the government and manages the public debt of government

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The RBI acts as banker to the commercial bank. Commercial banks keep and maintain their accounts with the reserve bank of India. Commercial bank keep deposits with RBI and they borrow money from RBI when necessary. RBI acts as lender to last resort to commercial banks.

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The RBI exercises the control over the volume of credit created by the commercial banks in order to ensure price stability

The Reserve Bank Of India And Its Promotional Role:
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The RBI established the bill market scheme in 1952.

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The RBI has tried to help the establishment of financial corporation to provide credit to the agricultural sector of the economy.

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The RBI has promoted regional rural banks with the help of commercial banks to extend banking facilities to rural areas.

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The RBI has taken steps to enable the commercial banks to open branch in foreign countries. The RBI encourages and provides research in areas of banking

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INTRODUCTION TO LOANS
One of the primary functions of the commercial bank is µlending¶. Through lending commercial banks meet their objective of making profits. The deposits collected from the public cannot be kept idle. It has to be utilized in order to derive benefits out of it. The bank collects deposits with the objective of lending and makes profit out of the interest received and paid. Their main aim is to deal in money and provide for those who need it. The banker performs the job of lending within the framework of statues governing the banking business, the government policy and guidelines issued by the authorities of the country (RBI in India).The basic objective of nationalization of commercial banks was to provide funds to the neglected sectors like agriculture, tiny industries and other weaker sections of the society. Today nearly 40% of the total commercial bank advances are the priority sectors. Greater part of the commercial bank funds are employed in the form of loans and advances. Loans bring good money to the bank in the form of profit by charging interest. Lending function of a commercial bank benefits the bank in the form of profit and the one who takes loans enjoy the benefit of money required for their activities. The wheels of industry cannot run without the bank advances. The bank needs to assess the condition of industry or trade or any business enterprise while making advances.

SHORT TERMS LOANS FINANCED BY COMMERCIAL BANKS
Commercial banks are the most important source of short-term capital. The major portion of working capital loans are provided by commercial banks. They provide a wide variety of loans tailored to meet the specific requirements of a concern. The different forms in which the banks normally provide loans and advances are loans and advances are loans, cash credit, overdrafts, purchasing and discounting of bills. LOANS: When a bank makes an advance in lump-sum against some security it is called a loan. Here, a specified amount is sanctioned by the bank to the customers. The loan amount so sanctioned is paid to the borrower either in cash or by credit to his account. A certain amount of interest has to be paid by the borrower for the loan that has to be borrowed. A loan can be repaid in lump-sum or in installements. Commercial banks generally provide short term loans up to one year for meeting the working capital requirements. But these days, term loans exceeding one year are also provided by banks. The term loans may be either medium term or long term loans.

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TERM FINANCING BY COMMERCIAL BANKS Commercial banks normally provided short term financial assistance to industrial sector. The assistance provided by them provided by them fulfilled the working capital requirement of the industrial enterprises. A massive investment in industries during second plan and after changed the priority of bank lending. The industrial required high funds for long term financing. The financial institutions failed to meet the increasing demands of the industries. Then the entry of commercial banks came into existence and filled the gap between the demand and supply of long term requirements. The banks started giving term loans to meet the long term needs of the industry. The refinance scheme of IDBI encouraged more term lending by commercial banks. The commercial banks are assisting industrial units by granting term loans, subscribing to shares and debentures of corporate units and underwriting securities issued of these companies.

General lending policy
General Lending Policy in Relation to the business of the borrowers and the purposes for which the advance is required. In handing a proposal relating to a particular nature of facility, apart from the general guidelines that have given, the branches should refer to the detailed instruction as contained in the respective instruction circulars so as to ensure that all instructions relating to a particular type of advance are compiled with. The bank sanctions various kinds of clean / unsecured credit facilities as well as secured credit loans, details of which the security there for and the security documents to be obtained are elaborately explained in the security documents to be obtained are elaborately explained in the guide documentation.It is the nature of the business of the borrowers. In handling a proposal relating to a particular nature of , apart from the general guideline that have been given, the branches should refer to the detailed instructions as contained in the respective instruction circulars so as to ensure that all instruction relating to a particular type of advances are complied with. 1) Housing

Purchase of house/flat, construction of house/ flat , repairs/improvement/extension, Repayment of loan availed from other agency/bank/NBFC. Indian citizen not below 21 years, singly or jointly with other coowners. Maximum Rs.50 lacks depends on repayment capacity subject to net, take home salary

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Analysis of loans and advances

being35% of gross income. Maximum Rs.10 lacks for repairs. However, maximum loan amount in Mumbai and New Delhi may be considered up to Rs.50 lacks. Maximum amount of lo may be an calculated 4 times the annual gross salary or 5 times the annual net salary of the applicant and his/her spouse whichever is higher in the case of salaried people. The margin for purchase of new house/flat/construction 15% of cost. And for repair 30% of cost. 1.1 Security Document
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Equitable Mortgage or simple mortgage of house/flat. If under construction, interim security in the form of LIC/shares/national savings certificate/Kissan vikas pattra/ mortgage of other property.

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One/two guarantors whenever possible. Loan agreement. Letter of authority to employer in case of salaried employee. Letter of guarantee.

Repayment of moratorium upto18 months. Maximum period should not exceed 15 years and 10 years for house repairs in equated monthly instalments. Free insurance benefits such as insurance of property against fire allied perils including earth quake and personal accident (death) as per negotiated terms and conditions to be offered. Other conditions finance can be extended for purchase of existing flats/house of not older than 15 years. House loan outside salaried sector can be granted only to income tax assesses in urban areas. 2) Vehicle loans Purchase of new two/four wheeler for personal/professional use. Purchase of old cars of less 3 years old. The eligibility is 18 years and above. Permanent employee of central state/defence/police/force/ autonomous bodies/public or joint sector under taking/ reputed firms/ Established Educational Institutions. Professionals having regular income. Net take home pay (after deduction of instalment) is rs.2500 for 2 wheeler & branch and irrevocable letter from employer to remit instalments to bank till liability is liquidated. The borrower should be customer of the bank. Loan amount will be three times of

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Analysis of loans and advances

net income/net annual salary subject to maximum of rs.10 lacks 2of the cost of new vehicle. 50% for old cars certified by a reputed automated certification agency. The security document should be Hypothecation of vehicle financed by the bank. Bank¶s lien to be noted with the Transport Authorities. Guarantee of the spouse. In case unmarried third party guarantee of sufficient means D.P note letter of guarantee hypothecation of vehicle. 3) Market Makers :To meet requirement for buying and selling securities by offering 2 way quotes. The eligibility for the market marker who are having minimum net worth of rs.1 crore and are approved by SEBI(Securities and Exchange Board of India) stock exchange. The loan amount for 3 times the net worth or rs.5 crores whichever is lower. Advance should be fully secured by way of collateral security in the form of immovable property or any other security in addition to the securities which are held as part of Market Making operation
4)

Industries (other than small scale):detailed

To establishing a new industrial unit or for expansion of the existing unit or for modernization, a

project feasibility report should be obtained. Industrial concerns are usually limited companies or public sector undertakings, although individuals or partnerships owning small and medium industries cannot be riled out. An industrial concern may be engaged in more than one industrial activity and may also be engaged in other activities such as trade, import, export etc. if the borrower is engaged in more than one type of activity for which finance is required Credit facilities may be extended by way of cash credit/bills . discounting for working capital and by way of term loans for acquiring capital assets namely, construction of factory building purchase and installation of machinery, replacement of machinery etc. If the advance is required for establishing a new industrial unit or for expansion of the existing unit or for modernization, a detailed project feasibility report should be obtained. The feasibility plan and how advances are proposed to be used to get with a view to satisfy about the technical feasibility, commercial viability, financial stability and management competency.

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5. Trade and commerce (other than small traders): Trade and commerce is usually carried on by partnership firm, joint families and individuals, limited liability companies and co-operative societies. The trade may be wholesale or retail and principals or as distribution agents or commission agents. The business may be confined to one or more articles of trade. The finance may be required by way of pledge or hypothecation of commodities, for buying or holding the stocks or by way of purchase and discount of bills for quick receipt of sale proceeds of the goods sold. It has to be ensured that the finance is not required or used for speculative purposes or for hoarding or for socially undesirable purposes. 6) International trade:-

Manual of foreign exchange published by international banking division, central office explains in detail various types of import and export transaction together with exchange control requirement to be observed by bank officials as also the systems and procedures prescribed for handling such transaction at branch level. We will see in brief, credit facilities usually extended to the exporter/importer customers. Import trade Finance for import trade could be either fund based or non-fund based or both. The non-fund based credit facility is in the form of letters of credit. Since such letters of credit (L/C) contain an undertaking by the bank to pay against presentation documents conforming to the terms and conditions stipulated in the letter of credit, opening a letter of credit involves a credit decision for which purpose, the proposal has to be processed in the same manner as it would be, if the proposal were for grant of an advance for an equal amount. Since the bank relies on goods being imported under letter of credit as a security for payment of relative bill, the marketability of such goods, taking into account the licensing conditions should also be considered. a) The import of goods is controlled by government of India through import trade control regulation. The import licenses are issued in 2 copies-µcustomer copy¶ is for the purpose of clearing the imported goods through customs and µexchange control copy¶ to facilitate remittance of foreign exchange in respect of relative import bill.

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b) The funds based import finance generally takes of a back up limits to the letter of credit limit sanctioned to a customer. Such limits are considered where import of goods is made in economic order quantities for use in production over a period of time.

7)

Export trade:-

Credit facilities to exporters are broadly classified as µpre-shipment¶ and µpost-shipment¶. As the term indicates, financial assistance extended up to the time of shipping the goods is called pre-shipment advance, which is controlled in the books under the head µPacking credit¶ Packing credit finance oriented finance and is granted to exporters or manufacturers or sub-suppliers for the specific purpose of procuring raw materials/ purchasing/manufacturing/ processing/ transporting/ warehousing/ packing and shipping the good 8) Retail Products:-

In our corporate objectives for business growth retail banking is identified as a thrust area. It is also the need of the hour to mobilize a good portfolio of retails banking, business, as it provides a major source for sustaining growth in the industry and will thus ensure our position in the market place. Towards this, our personal loan products under retails banking have repackaged and re-launched. Retails banking are a combination of product development and selling strategies, essentially focu sed on personal banking segment. It is a great opportunity for banks that already have a wide branch banking and a large manpower base. The wider reach and staff to support intensive marketing give us an edge to develop the business. It is an opportunity for branches to improve profitability and develop there own loan book to generate attractive income. Hence, retail banking is the source that will support branches across the country in a more sustaining way. 9) Financing Farmers for purchase of land for Agriculture Purpose:-

Term loans for development purposes and short term loans for production purposes. Now, there is need to finance farmers for purchase of land to expand activities and make existing small and marginal units

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Analysis of loans and advances

Economically viable which would enable farmers to diversity their present activities and take up allied activities. The main objective is to make small and marginal holdings economically viable. To bring follow lands and waste lands under cultivation. To step up agricultural production and productivity. To increase the income of share croppers/ tenant farmers/ small and marginal farmers. The eligibility for the small and marginal farmers who are having less than 5 acres non-irrigated land or less than 2.5 acres of irrigated land. Share croppers/ tenant farmers. The farmer should have adequate surplus income from his production activities on the land being financed and other income to repay the bank loan with interest. The purpose of financing the farmers by way of term loan for purchase of land. (Agriculture/ fallow/ waste land) and also finance to meet their working capital requirements of cultivation. Financing can also be done for purchase of land for establishing or diversifying into other allied activities like dairy, poultry etc. The quantum of loan to be sanctioned depends on:y y

Area of the land to be purchased Its value in the market. (for the purpose of valuation of land. For fixing the quantum of finance, the price indicated by the farmer may be cross-checked with the register/ sub-register of the area).

Quantum of loan should include land purchase cost, development cost and cultivation expenses. The margin should be:1) Mortgage of purchase land

2) Hypothecation of crops/ asset

3) D. P Note

4) Hypothecation agreement

5) Mortgage of purchased land

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Analysis of loans and advances

The repayment period is 5 to 7 years in half yearly/ yearly instalments depending upon Cropping pattern including a maximum moratorium period of 12 months In case of any longer period, it will be referred to regional offices with justification.

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Analysis of loans and advances

TITLE OF THE STUDY:
Analysis of loans and advances of United Bank of India.

INTRODUCTION:
Research design here refers to the methods used to collect the required data for the survey. It is the outline of the total project. It contains the information stating the objectives of the study, scope of the study methodology of the study, tools and techniques used for the survey, methods of data collection, limitation of the study etc. in short research design is the chapter in which the blue print of the whole project is explained. The research design includes an outline of the study which was conducted at United Bank of India. There are various types of products and a service offered by UBI, and providing loans to people are one of the important functions of the bank does. As this research study is mainly based on these schemes, we will discuss more on the loan schemes provided by United Bank of India.

OBJECTIVES OF THE STUDY
1. To understand the terms and conditions of various loan schemes provided. 2. To study and evaluate the performance of each loan scheme. 3. To study about the respondent and their varying interest. 4. .To makes suggestion based on findings.

SCOPE OF THE STUDY:
The operational jurisdiction of the research is limited to United Bank of India. The scope covers all loan schemes of UBI. 1. The study is mainly concentrated on the lending practises pattern and influence in the organisation performance. 2. This project is mainly concerned with the lending practises in the nationalised bank of issuing various securities. 3. The study enables the company to know its current position.

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Analysis of loans and advances

4. To know and to set its objectives and goals. 5. The study helps in ascertaining people¶s response on bank lending.

STATEMENT OF THE PROBLEM:
The financial management of public units has been a grinding issue before the mobility of resources. Even after the findings and intensive industries in the sector face huge cash crush and in inadequacy in the mobility of resources. Even after the findings and recommendation of so many committee appointed by the government to enquire into the working capital issues of public sector units.

REVIEW OF LITERATURE:
It is mandatory to scan through the literature which has already gone through the proposed study subject. Various research works on lending practises of UBI has been very helpful in the successful conduct of the study. However all such studies concentrate on certain issues and suggest piecemeal solution. Therefore, a comprehensive study is elusive. The text and academics literature which helped the study in details are:

y y y y y y y

A Hand Book of Banking by N. S. Toor Ramman Finance management. Finance management and policies by James C. Van Horne. Management accounting principle and practises by R. K. Sharma. Accounting for managers S. P Jain and K.L. Narang. Research methodology by C.R. Kothari. Business Research Methods by Appannaiah Reddy and Ramnath

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Analysis of loans and advances

RESEARCH METHODOLOGY:
This refers to the method of data description. Descriptive research includes surveys and fact findings enquire of different kinds. The major purpose of descriptive research is description of the state of affair as it exists at present. In business research we quite often use the term export facto research for descriptive research studies. The main characteristics of this method is that the researcher has no control over the variable, he can only report what has happened or what is happening. The method of research utilised in descriptive research are survey methods of all kinds including comparative and correlation methods.

DATA COLLECTION TOOLS:
Data mainly collected from both primary and secondary sources. 1. PRIMARY DATA: Primary data are freshly gathered for a specific purpose or for a specific research project. Primary data was collected by way of discussion with company officials. Mainly with bank manager. It has colled through the interim schedule, discussion and by interacting with the officials of the organization or the respondents.

2.

SECONDARY DATA: Secondary data that were collected through published materials like pamphlets, company books and from the official website that is www.unitedbankofindia.com

TOOLS AND TECHNIQUES:
Information has to be collected on the basis of the questionnaire distributed to the borrowers

Internet/ prominent search engines have been used for collecting the Data, market watch is also used to some extent for interpretation analysis.

All data collected are carefully classified, tabulated for the purpose of research and interpreted on the basis of charts and tables.

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LIMITATION OF THE STUDY:

1. Confined to one financial institution i.e. United Bank of India. 2. On account of time constraint whole spectrum of long term lending practises was not possible. 3. Inaccurate and inadequate information might have resulted to wrong interpretation. 4. Only a very few no. of respondent were interviewed to get the information. 5. Accounting information is another constraint.

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OVERVIEW OF THE REPORT 1. INTRODUCTION : The first chapter gives the detail introduction on the lending.
2. RESEARCH OF THE STUDY: The second chapter states the objectives scope, source of data, research methodology. 3. COMPANY PROFILE OF THE ORGANIZATION: The third chapter gives the profile of the organization where the project is conducted. It also explains about the future plans of the company. 4. ANALYSIS AND INTERPRETATION: The chapter gives detail regarding the analysis and

interpretation of data after collection. It comprises of brief notes regarding analysis and various methods through which they may be carried out. It also consists of the data in form of tables, graphs and pie-charts and its interpretation. 5. SUMMARY OF FINDINGS, CONCLUSIONS AND SUGGESTIONS: The chapter concluded the project report it comprises of the findings and conclusion draw from the above analysis based on the data collected and also includes suggestion. 6. QUESTIONAIRRE: 7. ANNEXURE: 8. BIBLIOGRAPHY:

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Analysis of loans and advances

COMPANY PROFILE History :
United Bank of India was constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 on July 19, 1969. The Head Office of the Bank was set up at 4 Clive Ghat Street (presently known as N. C. Dutta Sarani, Kolkata 700 001 which was shifted to its present location at 11 Hemanta Basu Sarani, Kolkata ± 700001 in 1972 for operational efficiency. United Bank of India is one of the 14 banks which were nationalised on July 19, 1969. On October 12, 1950, the name of Bengal Central Bank Limited (established in 1918 as Bengal Central Loan Company Limited) was changed to United Bank of India Limited for the purpose of amalgamation and on December 18, 1950, Comilla Banking Corporation Limited (established in 1914), the Camilla Union Bank Limited (established in 1922), the Hooghly Bank (established 1932) stood amalgamated with the Bank. Subsequently, other banks namely, Cuttack Bank Limited, Tezpur Industrial Bank Limited, Hindustan Mercantile Limited and Narang Bank of India Limited were merged with the Bank. Changes in our Head Office The Head Office of our Bank was set up at 4 Clive Ghat Street (presently known as N. C. Dutta Sarani, Kolkata 700001 which was shifted to its present location at 11 Hemanta Basu Sarani, Kolkata ± 700001 in 1972 for operational efficiency.

y

Information has been collected from the website www.unitedbankofindia.com

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Key Milestones
Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 Year Details 1961 The Cuttack Bank Limited and The Tezpur Bank Limited merged with our Bank 1964 Staff Training college at Kolkata (then Calcutta) was setup 1969 Our Bank was nationalised by GoI 1970 Mobile branches were set up by our Bank 1973 Hindusthan Mercantile Bank Limited merged with our Bank 1976 Narang Bank of India Limited merged with our Bank 1980 Appointed as convenor of State Level Bankers¶ Committee in West Bengal, Tripura and Manipur 1993 First branch brought under total branch mechanism 1995 Crossed business level of Rs. 10,000 crore 2006 Crossed business level of Rs. 50,000 crore 2007 Rolled out first CBS branch 2007 Setup United Bank Socio ± Economic Development Foundation Trust in 2007 for rendering assistance to the weaker and under priviledge sections of the society 2007 Setup the first Rural Development & Self Employment Training Institute to provide residential training to small farmers and unemployed youth free of cost 2009 Achieved 100% CBS for all its branches 2009 Crossed business level of Rs. 100,000 crore

13 14 15

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Awards/ certifications received by the Bank
Year 2006 Award and Recognition National Award for the second best performance in financing small scale units by Ministry of Small Scale Industries, Government of India Golden Jubilee Award for the best bank in north east zone for excellence in the field of khadi and village industries from the Ministry of MSME, Government of India

2007

2007-2008 Best Banc assurance partner by Tata AIG 2008 National Award for the best bank for excellence in field of Khadi and village industries for east and north east zones from the Ministry of MSME, Government of India

2008-2009 Pinnacle Partner of the year by Tata AIG 2008-2009 Highest contributor to lives insured by Tata AIG 2009 National Award under Prime Minister Employment Guarantee Programme in north east zone from the Ministry of MSME, Government of India

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OVERVIEW United Bank of India (UBI) is one of the 14 major banks which were nationalised on July 19, 1969. Its predecessor the United Bank of India Ltd., was formed in 1950 with the amalgamation of four banks viz. Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd. (1922) and Hooghly Bank Ltd. (1932) (which were established in the years indicated in brackets after the names). The origin of the Bank thus goes back as far as 1914. As against 174 branches, Rs. 147 crores of deposits and Rs. 112 crores of advances at the time of nationalisation in July, 1969, today the Bank has 1484 branches, over Rs. 54,536 crores of deposits and Rs. 35,727 crores of gross advances as on 31-03-09. Presently the Bank has a three-tier organisational set-up consisting of the Head Office, 28 Regional Offices and 1510 branches. After nationalisation, the Bank expanded its branch network in a big way and actively participated in the developmental activities, particularly in the rural and semi-urban areas in conformity with the objectives of nationalisation. In recognition of the role played by the Bank, it was designated as Lead Bank in several districts and at present it is the Lead Bank in 30 districts in the States of West Bengal, Assam, Manipur and Tripura. The Bank is also the Convener of the State Level Bankers' Committees (SLBC) for the States of West Bengal and Tripura.

UBI played a significant role in the spread of banking services in different parts of the country, more particularly in Eastern and North-Eastern India. UBI has sponsored 4 Regional Rural Banks (RRB) one each in West Bengal, Assam, Manipur and Tripura. These four RRBs together have over 1000 branches. United Bank of India has contributed 35% of the share capital/ additional capital to all the four RRBs in four different states. In its efforts to provide banking services to the people living in the not easily accessible areas of the Sunderban in West Bengal, UBI had established two floating mobile branches on motor launches which moved from island to island on different days of the week. The floating mobile branches were discontinued with the opening of full-fledged branches at the centres which were being served by the floating mobile branches. UBI is also known as the 'Tea Bank' because of its age-old association with the financing of tea gardens. It has been the largest lender to the tea industry.

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Analysis of loans and advances

The Bank has three full fledged Overseas Branches one each at Kolkata, New Delhi and Mumbai with fully equipped dealing room and SWIFT terminal . The operations of 500 branches have been computerised either fully or partially and Electronic Fund Transfer System came to be implemented in the Bank's branches at Kolkata, Delhi, Mumbai and Chennai. The Bank has ATMs all over the country and having Cash Tree arrangement with 11 other Banks.

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Analysis of loans and advances

PRODUCT PROFILE
(1) United Housing Loan Scheme A shelter which you can call your own has been eluding you so far? Not anymore. With the United Housing Loan Scheme, almost anyone can now fulfil his long cherished dream of owning a house or a flat of his/ her choice at most attractive terms. Eligibility: Any individual aged 21 years or above having regular income. Purpose:
y

Purchase of land, purchase or construction of house/ flat.

y

Purchase of up to 35 years old house/ flat.

y

Renovation/ extension/ repair/ furnishing of house/ flat.

y

Taking over of existing Housing Loan form other Bank/ Financial Institution.

y

The loan is now extended to those cases also where flats are being constructed by promoters/ developers where immediate mortgage of the property may not be possible.

Quantum of loan: Quantum of loan depends on the cost of house/flat, application¶s age, income, repayment capacity etc

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Analysis of loans and advances

(2) United Car Loan Scheme
United Bank of India joins Hands with Maruti Udyog Ltd. For Financing Purchase of Maruti Cars Purpose: Purchase of any Maruti Brand Car from authorized Maruti Dealer. Eligibility :
y

Any individual with gross income of Rs.10,000/- and minimum net income of Rs.5,000/- per month.

y

To be eligible the applicant will be required to get minimum score as per structured scoring Model of UBI.

Quantum of Loan : Max. Rs.6 lack. Margin: 10% Security:
y

In case of salaried person: Nil, if employer ensures repayment. In case of professional & Self-employed person :

y

To be secured by personal guarantee of 1 to 2 persons having adequate worth, otherwise at least 60% of loan amount to be covered by liquid security in the form of Term Deposits, NSCs, KVPs, LIPs (SV), and Relief Bonds etc

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Analysis of loans and advances

Eligibility Criteria For purchase of new car as well as old car

Your Savings/ Current Deposit/ Term Deposit A/c holder with the Bank and fulfill the following criteria y

A minimum net income (take home salary for salaried person) of Rs 5,000/- per month.

y

In respect of working couple, net income of the spouse is considered for the purpose of computing net income and monthly instalments, provided the spouse joins as co-borrower and monthly instalment may be realised from the salaries of either of them. In case of salaried person, the applicant should be in regular service for at least 2 years. Professional and self-employed persons who are at least 2 years in their profession.

Quantum of Loan:
y

In case of individuals Maximum amount of loan is 12.00 lacs in case of new car and Rs. 6.00 lacs in case of old car.

Margin:
y y

New Car:- 10% Old Car:- 30% of the valuation amount in case of old car

Processing Charge: 0.50%

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Analysis of loans and advances

(3) United Personal Loan Scheme for Salaried Persons
Daughter¶s marriage, major surgical operation, repairing of old house, passage money for son¶s education abroad or any other social pecuniary liability. You can now heave a sigh of relief. Our Personal loan Scheme has been designed just to meet such eventualities. Eligibility:
y

If you are a salaried person, with permanent service for at least 3 years, you may apply for the loan.

Quantum of Loan:
y

The maximum amount of loan shall be Rs 3 lac or 40 months' net salary, whichever is less.

Period of Loan:
y

The loan is to be repaid within a period not exceeding 36 months.

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Analysis of loans and advances

(4) United Personal Loan Scheme for Pensioners
As a senior citizen of the society, you command a special respect from United Bank of India. The Bank is offering you a loan scheme for assisting you to meet your various family and personal needs after retirement. The salient features of the Revised Scheme are as under: Objective: To extend term loan to you to meet your family and personal expenses. Eligibility: If you are a pensioner of Central and State Governments, Central and State Governments' Undertakings, Defence Services, reputed Companies, Educational Institutions (Universities, Institutes, Schools and Colleges) and drawing pension from the Branches of the United Bank, you are eligible for loan under the Scheme from the Branch, where your pension is paid. Age of the Borrower: Your age at the time of availing loan should be such that the entire loan is repaid before your attaining seventy five years of age. Quantum of Loan: A maximum of Rs 2 lakhs subject to 12 months' gross pension. Margin: Nil Processing Charge: 1% Disbursement of Loan:

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Analysis of loans and advances

The loan shall be disbursed through your Savings Bank A/c other than the account in which your pension is credited every month. If you are not having any other Savings Bank A/c with the branch, you may open a Savings A/c with the Branch jointly with another member of your family, preferably with family pensioner for the purpose of availing of the loan under the Scheme.

(5) United Housing Loan for Pensioners
United Bank of India takes care of your Housing and related requirements at post retirement stage. You will also find us your companion in securing Shelter in any Old-Age Home. Salient features of the Scheme are given below Eligibility : 1. All pensioners of Central and State Governments, Central and State Governments¶ Undertakings, Defense Services, reputed Companies, Educational Institutions (Universities, Institutes, Schools and Colleges) including pensioners (VR and VRS) of United Bank .

2. YourMonthlyNetPensionshouldbeMinimumofRs.5,000/-

3. Your age at the time of availing the loan must be 70 years

4. You must be physically fit and mentally alert to execute the documents. Person(s) in paralytic condition or bed-ridden is/are not eligible for the loan Purpose :
y y

Renovation/extension/repair/furnishing of self-occupied house/ flat. Purchase/construction of new house/ flat.

y

Purchase of old house/ flat not old over 35 years from the date of completion of construction.

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Analysis of loans and advances

y

Securing shelter in any ³Old-Age Home´

Quantum of Loan : Max. Rs. 2 lac provided total deduction including EMI of the loan must not exceed 40% of your net monthly pension. If your spouse joins as co-borrower and if he/ she is also pensioner drawing pension from the our branch, pension of both of you shall be considered for determining the quantum of loan within the overall ceiling. Repayment Period : Entire loan has to be liquidated before your attaining 75 years of age. The age of the 1st pensioner or from whose income (also pensioner), the major recovery of loan will be made, shall be the deciding factor for the period of loan (subject to maximum repayment period of 10 years). However, where loan is extended for getting shelter in ³Old -Age Home´ total repayment period must not exceed 10 years (120 EMI).

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Analysis of loans and advances

(6) United Cash Rental
United Bank of India has come out with a loan scheme against future rent receivables for the owners of house properties who have leased out or rented the same to bank, insurance company, multinationals, company of good market standing, reputation and financial position, financial institutions, financially sound public sector undertakings, Government of India offices. The Salient features of the loan scheme are indicated below: Eligibility If you are an individual (single or joint) or firm or a company owning house, flat or godown and letting or leasing it out to bank, insurance company, multinational company, company of good market standing, reputation and sound financial position, financial institution, financial sound PSU of Govt. of India (not individuals) and you are interested to take loan against future rentals you may apply for the loan. Quantum of Loan calculation Max. Rs. 10 Crore where EMI should not exceed 80% of post tax monthly rent / lease rent receivable (85% when our bank is tenant) & 80% valueof property t o be mortgaged. Repayment The loan is to be repaid within the unexpired period of lease/ tenancy or 8 years whichever is lower. Security
y y y

Mortgage of the unencumbered property and/ or LIP/ KVP/ Relief Bond/ Bank's Term Deposit etc. Assignment of future rent receivables.

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Analysis of loans and advances

Margin 20% of the amount of rent receivables or 20% of the value of the house property or on accrued/ surrender value of other securities. Processing Charge: 1%

(7) United Demand Loan Scheme
United Bank of India introduces a unique loan scheme against your savings in the form of NSCs/ KVPs/ Life Insurance Policies (Surrender Value). You can avail up to 100% of the face value of your savings instruments or even more than that in case of NSCs/ KVPs. The salient features of the scheme are as under: Eligibility: Any individual having investment in the form of LIP (Surrender Value)/ NSC/ KVP to cover the loan amount in his/ her name and be introduced to the bank. Purpose: For meeting all types of personal expenses. Demand loan - Quantum of loan: a) Against LICI Policy -- 90% of Surrender Value b) Against NSCs/ KVPs /Relief Bond etc ±

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Analysis of loans and advances

(8) United Education Loan Scheme

We are now at your doorstep to support your pursuit for excellence. Our Educational Loan Scheme has been designed to meet your expenses for higher studies in India and abroad. If you are an Indian National and secured an admission to any of the following academic/ professional/ technical courses through Entrance Test/ Selection process in a Board/ Institution/ University. Courses Eligible for Study in India:
y y y

Graduation Courses: B.A., B.Com, B.Sc., etc. Post Graduation Courses: Master¶s and Ph.D. Professional Courses: Engineering, Medical, Agriculture, Veterinary, Law, Dental, Management, Computer, etc.

y

Computer Certificate Courses of reputed Institutes accredited to Dept. of Electronics or Institutes affiliated to University.

y y y y y

Courses like ICWA, CA, CFA, etc. Courses conducted by IIM, IIT, IISC, XLRI, NIFT, etc. Courses offered in India by reputed foreign Universities. Evening Courses of approved Institutes. Other Courses leading to Diploma/ Degree, etc. conducted by Colleges/ Universities approves by UGC/ Govt./ AICTE/ AIBMS/ ICMS, etc.

Courses Eligible for Study Abroad:
y y y

Graduation : For job-oriented professional/ technical courses offered by reputed Universities. Post Graduation: MCA, MBA, MS, etc. Courses conducted by CIMA - London, CPA in USA etc.

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Analysis of loans and advances

Quantum of Loan: 1. For study in India: Max. Rs. 10 lack. 2. For study abroad: Max. Rs. 20 lacks Other Rules: Expenses covered by the Loan : i. ii. iii. iv. v. vi. vii. Fees payable to College/ School/ Hostel. Examination/ Library/ Laboratory Fee. Purchase of Books/ Equipments/ Instruments/ Uniforms. Caution Deposit/ Building Fund/ Refundable Deposit supported by Institution Bills/ Receipts. Travel Expenses/ Passage Money for studies abroad. Purchase of Computers: Essential for completion of the Course. Any other expenses required to complete the Course like study tours, project work, thesis, etc.

Repayment of Loan: The loan is to be repaid in 5 to 7 years after commencement of repayment. The repayment will commence after a moratorium/ repayment holiday which is Course period plus 2 years or 6 months after getting job whichever is earlier.

Life Insurance Coverage: To ensure security to student's and borrower's life and against their loan liability and additional loan component for payment of one-time premium for such insurance coverage may be sanctioned by bank on request from the customer.

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Analysis of loans and advances

(9) United Mortgage Loan Scheme
Objectives: Providing loan against mortgage of property to the owner of the property. The property may be House/ Flat or any other commercial property but not agricultural land of any other vacant land. Purpose: The loan is meant for general purpose of the borrower to meet any personal/ business requirement except speculations. Eligibility: Any individual in the age bracket of 21-65 years having property to be mortgaged and income to repay the loan. Company, Partnership firm, Co-operative Society and Trust are, however, not eligible of the loan. Third party property also cannot be mortgaged for taking a loan. Quantum of loan: Term Loan - Maximum Rs.15.00 Lac & OD facility - Max Rs.25.00 lac subject to 1. 24-times of monthly net income. 2. 50% of the value of property.
Total monthly deduction including proposed EMI / Intt on OD should not exceed 50% of the gross monthly income of the borrower

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Analysis of loans and advances

(10)
Coverage

United Reverse Mortgage loan scheme
The Scheme will be operative through Designated Branches in Metro and Urban locations only

Eligibility

1. Age of the Applicant: Min. 60 years on the date of sanction 2. Married couples will be eligible as joint borrowers only and both of them should be of 60 years & above age. 3. Ownership of a residential property (house or flat) located in India, with clear title 4. Borrower(s) should be residing in the same residence at least for the last one year and the same be used as their µpermanent primary residence¶. 5. The property should be self occupied one, an approved construction, not older than 20 years, maintained in good condition and must be free from all encumbrances. 6. No Income Tax is due from the borrower(s). 7. No income proof is required.

Purpose of Loan

1. Supplementing pension/ other income. 2. Up gradation, Renovation and extension of Residential Property. 3. Uses associated with Home Improvement, Maintenance/ Insurance of Residential Property. 4. Medical and related emergency expenditures 5. Repayment of an existing loan taken for and against the residential property to be mortgaged. 6. Meeting any other genuine need.

Quantum of Loan

1. Will depend upon the µµQualifying Amount¶¶ i.e. realizable

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Analysis of loans and advances
value of the property minus margin. 2. µµQualifying Amount¶¶ shall be restricted to Rs. 50 lakhs. 3. Property will be revalued at an interval of every five years & the µµQualifying Amount¶¶ and thus loan amount shall be revised based on such revaluation of property. 4. The quantum of lumpsum payment (if any) and periodic payment shall be decided in such a manner so that the total lump sum payment and total periodic payment to the borrower together with the accrued interest and other charges in the loan account during the sanctioned tenor will not be more than the µµQualifying Amount¶¶ so arrived at after latest valuation of the property (realizable value of the property minus margin). Margin Disbursement Loan of 20% of the value of the property 1. Periodicity: The loan shall be disbursed as regular monthly or periodic cash advances and/or a lump sum payment (upon request). However, lump sum disbursal shall be restricted to end use of the fund. Further, lump sum disbursement should be restricted to loan amount calculated on 40% of the µµQualifying and thereafter period payment shall be fixed on the remaining 60% of the µµQualifying Amount¶¶. 2. Tenor: The tenor of disbursement shall be of 15 years or till the death of the last surviving borrower, whichever is earlier. 3. Extension of the loan period:The Bank may consider extension of loan tenor for additional 5 years at its discretion depending on the market value of the property, its status, purpose of extension and approval from appropriate authority.

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Analysis of loans and advances

(11) Kisan Credit Card
1. Objective The scheme aims at providing adequate and timely credit for the comprehensive credit requirements of farmers for taking up agriculture and allied activities under single window, with flexible and simplified procedure, adopting whole farm approach, including the short-term credit needs and a reasonable component for consumption needs, through Kisan Credit Card including repayment of farmer's dues to non-institutional lenders. 2. Area of operation Through all rural and semi urban branches. 3. Eligibility i. ii. Short term crop loans to farmers those who are owner cultivators/share-croppers/bargadars. KCC can also be issued for meeting the short term production need/working capital needs in respect of the allied activities like poultry, dairy, pisciculture, floriculture, horticulture etc. iii. iv. KCC schemes also covers the term credits for agriculture and allied activities. KCC is issued to individual borrower only on merit and not to corporate body society, association, club, group etc. v. Illiterate and blind persons intending to avail of this facility may be allowed after taking proper safeguard against misuse and tampering.

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Analysis of loans and advances

4. Purpose It is intended that both term as well as short term/working capital credit facilities will be provided through single Kisan Credit Card. The passbook provided to KCC holders are to be divided into three separate portions for maintaining the records of :a) short term credit / crop loans, b) working capital credit for activities allied to agriculture and c) term credit (repayable beyond 12 months) However, it is to be ensured that transaction records of different loan facilities are kept distinct. 5. Credit limit i. Minimum credit limit should be Rs.25000/- and maximum Rs.10.00 lac in the form of working capital and term loan. However, in deserving cases the upper limit may be enhanced above Rs.10.00 lac which has to be disposed of under the D.P. of the General Manager in charge of Priority Sector Lending. ii. Working capital will be in the form of revolving cash credit and any number of withdrawals and repayments in the account is allowed with a view to provide flexibility to the borrower in deciding the appropriate time for withdrawal of the sanctioned limit and reducing his loan and interest burden.(For ST Crop Loan, Consumption Loan and repayment of noninstitutional loans) iii. Term Loan to be sanctioned for purchase of agricultural implements , plant and machinery and land developing including construction of different types of storage facilities. iv. While fixing the limit and sub-limits, entire year's production credit requirement is reckoned, including those of ancillary activities such as storing, marketing, electric expenses etc. v. Credit limit is fixed on the basis of land holding under cultivation, cropping pattern and the scale of finance recommended by District/State level technical committee. In the absence of

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Analysis of loans and advances

such recommendation, the branch may fix appropriate scale of finance for the crop after getting permission from the concerned Regional Office. vi. vii. The branch should also fix season-wise sub-limits within the overall credit limit. Contingency expenses, including consumption loan should not exceed 10% of the ST loan sub-limit subject to maximum Rs.10,000/- till harvesting the benefit of production linking with family need. viii. Repayment of loan availed from non-institutional lenders by the farmer borrowers in addition to consumption/contingency credit limit should not exceed 25% of the ST loan sub-limit subject to maximum Rs.25,000/-.

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Table:1

Table showing total advances from the year 2006 ± 2009

Year
2006 - 2007 2007 - 2008 2008 - 2009 Total

Amount ( in Crores)
22,156.11 27,868.11 35,393.55 85,417.77

Percentage (%)
25.95 32.62 41.43 100

ANALYSIS: From the above table it can be analysed that in the year 2006 ± 2007 the total no. of advances was 22,156.11 crore with a 25.95%; in 2007 ± 2008 the total no. of advances was 27,868.11 crore 32.62% and in the year 2008 ± 2009 the amount is 35,393.55 with 41.43%.

Page 52

Analysis

loans and advances

Graph: 1 Graph showi total advances from the year 2006 ± 2009

Total advances

41%

26%

33%

2006 - 2007
2007 - 2008 2008 - 2009

INTE From t advances.

ET TION: above pie- chart it can be inferred that in the year 2007 ± 2008 showed the maximum

Page 53

Analysis of loans and advances
Table 2 Table showing outstanding amount of loan for the years 2006 - 2009. (a) Housing finance

Year
2006 - 2007 2007 - 2008

Amount (in crore)
1,418.57 1,453.67

Percentage (%)
31.80 32.50

2008 - 2009

1,591.42

35.70

Total

4463.66

100

ANALYSIS:
From the above table it is analysed that when we compare the year 2006 ± 2007 the amount outstanding was 1,418.57 crore with 31.80%. In the year 2007 ± 2008 the amount was 1,453.67 crore with 32.50 % and in the year 2008 ± 2009 it was 1,591.42 crore with 35.70%.

Page 54

Analysis of loans and advances
Graph 2 Graph showing outstanding amount of the loan for the years 2006 - 2009.

(a) Housing finance

Housing finance

36%

32% 2006 - 2007

32%

2007 - 2008 2008 - 200

INTE

ET TION:

From the above pie- chart it can be inferred that there is continuous growth every year in the housing finance segment. There is a noticeable growth in the home loan segment which is very profitable to the bank for their further financial improvement.

 

Page 55

Analysis of loans and advances
Table 3 Table showing outstanding amount of loan for the years 2006 - 2009. (b) Car loans

Year
2006 - 2007 2007 - 2008

Amount (in crore)
70.18 80.07

Percentage (%)
23.62 26.96

2008 - 2009

146.81

49.42

Total

297.06

100

ANALYSIS:
From the above table it is analyzed that when we compare the year 2006 ± 2007 the amount outstanding was 70.18 crore with 23.62% . In the year 2007 ± 2008 the amount was 80.02 crore which shows 26.96% and in the year 2008 ± 2009 the amount was 146.81 crore with 49.42%.

Page 56

Analysis of loans and advances
Graph3 Graph showing outstanding loan for the year 2006 ± 2009. (b) Car loan.

car loan

150 100

50 0
£

Amount outstanding in Rs. Crore Percentage

00 - 00
¡ ¢

Year

INTE

ET TION:

From the above graph it can be inferred that in the year 2008 ± 2009 there is a substantial growth in the car loans as against all previous years.

¤

¤

¡ £

¡

¡

00 - 008
008 - 009

Page 57

Analysis of loans and advances
Graph 4: Table showing outstanding loan for the year 2006 ± 2009. (c) Personal loan

Year
2006 - 2007

Amount( in Crore)
384.46

Percentage (%)
28.31

2007 - 2008

425.11

31.32

2008 - 2009

548.24

40.37

Total

1357.81

100

ANALYSIS:
From the above table it is analyzed that when we compare the year 2006 ± 2007 the amount was 384.46 crore which shows 28.31%. In the year 2007 ± 2008 the amount was 425.11 crore which shows 31.32% and in the year 2008 ± 2009 the amount was 548.24 crore which shows the percentage of 40.37.

Page 58

Analysis of loans and advances

Graph 4: Graph showing outstanding loan for the year 2006 - 2009. (c) Personal loan

personal loan

600
500 400 300 200

Amount outstanding in Rs. Cror
Per entage

100
0 2006 - 2007

2007 - 2008 2008 - 2009

INTE PRET TION: From the above mentioned graph it can be interpreted that there is a substantial growth every year in the personal loans.

¥

Page 59

Analysis of loans and advances

Table 5 Table showing outstanding loan for the years 2006 - 2009. (d) Educational loan

Year
2006 - 2007 2007 - 2008

Amount (in crore)
224.99 276.84

Percentage (%)
26.88 33.09

2008 - 2009

335.07

40.03

Total

836.9

100

ANALYSIS:
From the above table it is analysed that when we compare the year 2006 ± 2007 the amount outstanding is 224.99 crore with 26.88%. In the year 2007 ± 2008 the outstanding amount is 276.84 crore with 33.09% and in the year 2008 ± 2009 the outstanding amount is 335.07 crore with 40.03%.

Page 60

Analysis of loans and advances
Graph Graph showing outstanding loan for the year 2006 - 2009. (d) Educational loan

Outstanding education loans

350

300 250 200 150 100 50 0 2006 - 2007 2007 - 2008
2008 - 2009

Amount outstanding in Rs. Crore Percentage

INTERPRET TION:
From the above graph it is seen that there is a constant growth in the education loan of United Bank of India. There is a noticeable growth in the education loan segment which is very profitable to the bank for their further financial improvement

Page 61

Analysis of loans and advances
Table 6 Table showing outstanding loans to retail sector for the year 2006 - 2009

Year
2006 - 2007 2007 - 2008

Amount (in crore)
3,469.72 3,727.22

Percentage (%)
30.28 32.54

2008 - 2009

4,260.36

37.18

Total

11,457.3

100

ANALYSIS:
From the above table it is analyzed that when we compare the year 2006 ± 2007 the amount was 3,469.72 crore with 30.28%. In the year 2007 ± 2008 the amount was 3,727.22 crore with 32.54% and in the year 2008 ± 2009 the amount was 4,260.36 crore with 37.18% .

Page 62

Analysis of loans and advances
Graph 6 Graph showing outstanding loans to retail sector for the year 2006 - 2009.

Outstanding loans to retail sector
4,500.00

4,000.00
3,500.00 3,000.00

2,500.00
1,500.00

Per entage

1,000.00
500.00

0.00
§

200 - 200
¦

200 - 2008

2008 - 2009

INTERPRET TION: From the above graph it can be inferred that there is a moderate growth in the loans o the retail f sector from 2006 - 2009.The maximum growth is in the year 2008 ± 2009.

©

2,000.00

Amount in rore 

¨

Page 63

Analysis of loans and advances
Table 7 Table showing outstanding loans to corporate sector for the year 2006 ± 2009.

Year
2006 - 2007 2007 - 2008

Amount (in crore)
13,032.09 15,661.44

Percentage (%)
26.05 31.29

2008 - 2009

21,349.41

42.66

Total

50,042.94

100

ANALYSIS: From the above table it is analysed that when we compare the year 2006 ± 2007 the amount was 13,032.09 crore which shows a percentage of 26.05. In the year 2007 ± 2008 the amount was15,661.44 in crore which shows the percentage of 31.29 and in the year 2008 ± 2009 the amount was 21,349.41 in crore which shows the percentage of 42.66.

Page 64

Analysis of loans and advances
Graph Graph showing outstanding loans to corporate sector for the year 2006 - 2009.

Outstanding loans to orporate se tor 


43%

26% 2006 - 2007

31%

2007 - 2008

2008 - 2009

INTERPRET TION: From the above pie-chart it is inferred that there is constant growth in the outstanding loans in corporate sector.

Page 65

Analysis of loans and advances
Table 8 Table showing outstanding loans to others which includes priority sector for the year 2006 - 2009.

Year
2006 - 2007 2007 - 2008

Amount (in crore)
6,138.64 8,763.02

Percentage (%)
24.53 35.03

2008 - 2009

10,118.47

40.44

Total

25,020.14

100

ANALYSIS: From the above table it is analyzed that when we compare the year 2006 ± 2007 the amount was 6,138.64 crore with 24.53%. In the year 2007 ± 2008 the amount was 8,763.02 crore with 35.03% and in the year 2008 ± 2009 the amount was 10,118.47 crore with 40.44%.

Page 66

Analysis of loans and advances
Graph 8 Graph showing outstanding loans to others which includes priority sector for the year 2006 - 2009.

Outstanding loan to others including priority sector
12000

10000
8000

6000
4000 2000

P rc ntage

0 
 
2006 - 200 200 - 2008 2008 - 200

INTERPRET TION: From the above graph it can be inferred that there is a noticeable growth in the outstanding loan by others which includes priority sector which is highly beneficial to the bank . 

Am unt in cror 

 

Page 67

Analysis of loans and advances
Table 9 Table showing total outstanding loans to business sector for the year 2006 - 2009.

Year
2006 - 2007

Amount (in Crore)
22,640.45

Percentage (%)
26.16

2007 - 2008

28,151.68

32.55

2008 - 2009

35,728.24

41.29

Total

86,520.37

100

ANALYSIS: From the above table it is analysed that when we compare the year 2006 ± 2007 the amount outstanding was 22,640.45 crore which shows a percentage of 26.16. In the year 2007 ± 2008 the amount was 28,151.68 crore which shows the percentage of 32.55 and in the year 2008 ± 2009 amount was 35,728.24 crore which shows the percentage of 41.29.

Page 68

Analysis of loans and advances
Graph 9 Graph showing outstanding loan to business sector for the year 2006 - 2009.

Outstanding loan to business se tor 

41%

26% 2006 - 2007 %

INTERPRET TION: From the above graph it is inferred that there is a substantial growth in the outstanding loan in business sector which concludes that it is highly advantageous to the bank for their further financial improvement. 

2007 - 2008 2008 - 2009

Page 69

Analysis of loans and advances
Table 10 Table showing total outstanding retail advances for the year 2006 - 2007

Year
2006 - 2007

Amount (in Crore)
3,469.72

Percentage (%)
30.28

2007 - 2008

3,727.22

32.53

2008 - 2009

4,260.36

37.19

Total

11,457.3

100

ANALYSIS: From the above table it is concluded that when we compare the year 2006 ± 2007 the amount outstanding was 3,469.72 crore with 30.28%. In the year 2007 ± 2008 the outstanding amount was 3,727.22 crore with 32.53% and in the year 2008 ± 2009 the amount is 4,260.36 crore with 37.19%.

Page 70

Analysis of loans and advances
Graph 10 Graph showing total outstanding retail advances for the year 2006 ± 2009.

Total outstanding of retail advances
4,500.00 4,000.00

3,500.00
3,000.00

2,500.00
1,500.00 1,000.00

Per entage 

500.00 0.00
2006 - 2007

2007 - 2008 2008 - 2009

INTERPRET TION: From the above graph it can be inferred that there is a sequential growth year wise which is highly beneficial to the United Bank of India. 

2,000.00

Amount ( Rs. In rore)

Page 71

Analysis of loans and advances
Table 11: Table showing term loans for the years 2006 -2009

Year
2006 - 2007

Amount (in Crore)
13,983.65

Percentage (%)
30.28

2007 - 2008

19,200.56

32.53

2008 - 2009

25,991.64

37.19

Total

59,175.85

100

ANALYSIS: From the table it can be analysed that in the year 2006 ± 2007 the amount is 13,983.65 crore with a percentage of 30.28. In the year 2007 ± 2008 the amount is 19,200.56 crore with a percentage of 32.53 and in the year 2008 ± 2009 the amount is 25,991.64 crore with a percentage of 37.19.

Page 72

Analysis of loans and advances
Graph 11 Graph showing term loan for the year 2006 - 2009

Teram loan

44%

24% 2006 - 2007

32%

2007 - 2008 2008 - 2009

INTERPRET TION:
It can be inferred that there is continuous growth in the term loans provided by the bank wherein the maximum growth is seen in the year 2008 ± 2009.

Page 73

Analysis of loans and advances
Table 12 Table showing educational qualification of the loan borrowers

Particulars

Number of respondent

Percentage (%)

PUC

28

28

Graduate

54

54

Post- graduate

18

28

Total

100

100

ANALYSIS: From the above mentioned table it can be analyzed that 28% have done PUC, 54% are graduate and 18% are post-graduate..

Page 74

Analysis of loans and advances

Graph 12 Graph showing educational qualification of the borrowers.

Educational qualification

60

0 40 30 20 10 0
PUC Graduate Post-graduate Number of respondent percentage

INTERPRET TION: From the above graph it can be inferred that maxim no. of respondents are graduate where as um minimum no. of respondent are post-graduate. 

Page 75

Analysis of loans and advances
Table 13 Table showing break up of respondent--- age wise.

Age in years
20 - 30

No. of respondent
45

Percentage (%)
45

30 - 40

29

29

40 - 50

18

18

Above 50

8

8

Total

100

100

ANALYSIS: From the above table it is seen that in there are 45 respondent in the age group of 20 ± 30, 29 respondents fall in the age group of 30 ± 40, 18 respondent in the age group of 40 ± 50 and 8 respondent above the age group of 50.

Page 76

Analysis of loans and advances
Graph 13 Graph showing break up of respondent--- age wise.

Break up respondent age wise -45 40

35
30

5 0 15 10
5 0 0-30 No. of respondent

Percentage

Interpretation: From the above graph it can be inferred that the majority group of respondents belongs t the age group of o 20 ± 30 followed by the age group of 30 ± 40. The least no. of respondents belongs to the age group above 50.

!

30-40

40-50

Above 50

Page 77

Analysis of loans and advances
Table 14 Table showing break up of respondent--- gender wise.

Gender
Male

No. of respondent
88

Percentage (%)
88

Female

12

12

Total

100

100

ANALYSIS: From the above table it is analysed that 88 respondent are males whereas only 12 respondents are females which shows the maximum no. of respondent were males.

Page 78

Analysis of loans and advances
Graph 14 Graph showing break up of respondent--- gender wise.

Break up of respondent--- gender wise

90 80

70 60 50
No. of respondent 40

Percentage

30 20 10 0 Male
Female

Interpretation: From the above graph it is inferred that that the maximum no. of respondent are males and female participation is less.

Page 79

Analysis of loans and advances
Table 15 Table showing break up of respondent --- occupation wise.

Occupation
Government

No. of respondent
35

Percentage (%)
35

Professional Private Business

15 24 26

15 24 26

Total

100

100

ANALYSIS: From the above table it can be analysed that 35 of the respondents are government employees, 15 are professional, 24 are in private and 26 belongs to the business .

Page 80

Analysis of loans and advances
Graph 1 Graph showing break up of respondent --- occupation wise.

Break up of respondent --- occupation wise

35
30 25 20 15 10 5 No. of respondent Percentage

0 Government Professional Private Business

Interpretation: From the above graph it can be inferred that bank major customer on the basis of occupation are government employees.

Page 81

Analysis of loans and advances
Table 16 Table showing break up of respondent --- income wise.

Income (Rs.)
Less than 50,000

No. of respondent
20

Percentage (%)
20

50,000 ± 1,00,000 1,00,000 ± 1,50,000 Above 1,50,000

28 48 4

28 48 4

Total

100

100

ANALYSIS: From the above mentioned table it can be concluded that there are 20 respondents income is less than 50,000 ; 28 respondents falls in the income group of 50,000 ± 1,00,000 ; 48 respondents in the income group of 1,00,000 ± 1,50,0000 and 4 respondents falls in the income group above 1,50,000.

Page 82

Analysis of loans and advances
Graph 16 Graph showing break up of respondent --- income wise.

Break up of respondent-- income wise
50
45

40
35

30
25 20

15
10

5
0

Le than 50,000
""

50,000 - 1,00,000
"

1,00,000 - 1,50,000 Percentage

Above 1,50,000

No. of re pondent

Interpretation: It can be inferred that majority no. of respondent belongs to income group of 1,00, 00 ± 1,50,000 and the 0 least is below 1,50,000.

Page 83

Analysis of loans and advances
Table 17 Table showing source of awareness

Source
UBI employees

No. of respondent
45

Percentage (%)
45

Magazine Friends and television Newspaper

35 12 8

35 13 8

Total

100

100

ANALYSIS: From the above table it can be analysed that source of awareness of 45 respondents was through UBI employees, 35 was through magazine; 12 was through friends and television and 8 was through newspaper, 12 was through friends and television through

Page 84

Analysis of loans and advances
Graph 1 Graph showing source of awareness.

Source of awareness

45 40
35 30

25
20 15 10 5 0 UBI employees No. of respondent Percentage

Magazine riends and television
#

Newspaper

INTERPRET TION: It can be inferred that majority of the respondent came to know about the bank throughUBI employees followed by magazines, Friends and television and finally the least came to know through newspaper.

Page 85

Analysis of loans and advances
Table 18 Table showing EMI paid by the borrower.

Amount
Below 5,000

No. of respondent
20

Percentage (%)
20

5,000 ± 10,000 10,000 ± 15,000 15,000 ± 20,000

43 30 7

43 30 7

Total

100

100

ANALYSIS: From the above table it can be analysed that below 5,000, 20 respondent paid EMI in between 5,000 ± 10, 000 , 43 in between 10,000 ± 15,000 , 30 paid EMI and the least EMI was paid in between 15,000 ± 20,000.

Page 86

Analysis of loans and advances
Graph 18 Graph showing E I paid by the borrower

EMI paid by the borrower

7% 30%

20% Below 5,000 43% 5,000 - 10,000 10,000 - 15,000

15,000 - 20,000

INTERPRET TION: It can be inferred from the pie- chart that the majority no. of respondent who borrowed MI is in between 5,000 ± 10,000 and the least MI paid by the borrower is in between 15,000 ± 20,000.

Page 87

Analysis of loans and advances
Table 19 Table showing loan amount borrowed by respondent.

Amount ( Rs.)
Below 5,00,000

No. of respondent
30

Percentage (%)
30

5,00,000 ± 10,00,000 10,00,000 ± 15,00,000 15,00,000 ± 20,00,00 Total

45 20 5 100

45 20 5 100

ANALYSIS: It can be analyzed from the above mentioned table that that there were 30 respondents who borrowed amount of loan below 5,00,000 ; 45 between 5,00,000 ± 10,00,000 ; 20 between 10,00,000 to 15,00,000 and there were only 5 respondents who borrowed above 15,00,000. ± 20,00,000

Page 88

Analysis of loans and advances
Graph 19 Graph showing loan amount borrowed by respondent

Loan a ount borrowed by respondent

45 40 5 0 25 20 15 10 5 0
$ $

No. of respondent
Percentage

Below 5,00,000

5,00,000 10,00,000

10,00,000 15,00,000

15,00,000 20,00,000

INTERPRET TION: From the above graph it can be interpreted that the maximum no. of amount borrowed by respondent is in between 5,00,000 ± 10,00,000 whereas the least of amount borrowed by respondent is in between 15,00,000 ± 20,00,000.

Page 89

Analysis of loans and advances
Table 20 Table showing satisfactory level of respondents with loan.

Satisfaction level
Extremely satisfied

No. of respondent
15

Percentage (%)
15

Satisfied Moderate Unsatisfied

53 25 7

53 25 7

Total

100

100

ANALYSIS: From the above table an attempt was made to understand whether respondent feels that the products offered by the bank were extremely satisfied, satisfied, moderate or unsatisfied.

Page 90

Analysis of loans and advances
Graph20 Graph showing satisfactory level of respondents with loan.

Satisfactory level of respondent

7% 5% 15% extremely satisfied 53%

INTERPRET TION: It can be inferred from the pie-chart that that the maximum no. of respondent were satisfied where least no. of respondent were unsatisfied.

%

Satisfied Moderate Unsatisfied

Page 91

Analysis of loans and advances

FINDINGS
1. 45% of the loans taking customers are in between the age of 20 ± 30 while another 29% of customers are in between the age 30 ± 40. 18% of the customers belong to the 40 ± 50 age categories while 8% are above the age of 50. 2. 88% of the loan takers are male while only 12% are female. 3. 35% of loan taking customer are working at the government sector, 15% professional, 24% private and 26% customers are engaged in his / her own business. 4. It can be observed that majority of customers are under the income group of 1,00,000 ± 1,50,000 which is 48% followed by the income group of Rs. 50,000 ± 1,00,000, at 28%. The group earning less than Rs. 50,000 owns 20% and at last the income group of Rs. 1,50,000 and above owns 4%. 5. 45% of respondent are made aware about loan by UBI employee while 35% are made aware by magazine. 13% and 7% of customer are made aware of UBI bank by newspapers and friends. 6. Majority of the EMI was paid by the borrower in between 5,000 ± 10,000 and least EMI was paid by borrowed in between 20,000 ± 30,000. 7. 30% of customer of UBI banks are taking loans below 5,00,000, While 45% are taking between 5,00,00 ± 10,00,000 , 20% are taking between 10,00,000 ± 15,00,000 by 22% and only 5% borrowed in between 15,00,000 ± 20,00,000. 8. 53% of the customers are satisfied with the loan amount while 25% are moderately satisfied and 15% are extremely satisfied but 7% are unsatisfied. 9. It is also found that there is an impressive continuous growth in vehicle loan, education loan and personal loans which is remarkably outstanding for the bank. 10. Home loan segment has a better increasing trend in coming years since it has a high rate of demand in the current market.

Page 92

Analysis of loans and advances

SUGGESTIONS

1. The bank¶s variety of loans and advances are unlimited but they are not communicated well enough to customers. Hence, it is suggested to make additional efforts to provide information to the customers about the range of loans and advances

2. Attractive and competitive interest rates should be adopted since it is the main factor considered for taking loans by the customers. 3. Since all the banks are providing loans with the same features. It is recommended that bank should offer some unique features to its products to acquire strong identity and can be easily distinguished. 4. At the present scenario, United Bank of India should intensify their advertisement campaign in order to gain new customers, make people aware of the new schemes available to them and also take advantage of the current market. 5. Service level provided by the bank should be more efficient and effective for the customer. The customers are very keen on the service provided by the bank. They would rate i as one of the t important factor while selecting the loans. 6. The bank should adopt attractive and competitive rate of interest in order to induce customers to take personal loans and to attain more shares from its competitors. This is also one of the critical factors for selecting the loans. 7. Increase in short- term lending such as cash credits, Overdraft and Loans repayable on demand is most favourable to bank to earn short- term gain and maintain liquidity. 8. A suggestion is made to the bank to expand the business globally and offer more and more services to the people abroad.

Page 93

Analysis of loans and advances

9. Bank should follow guidelines towards priority sector and get benefits out of it.

10. Offer best customer services, lending on profitable ventures, diversifying the business to cope with the competition. 11. Bank should use latest technologies in banking activities. 12. Few customer has not selected the branch because of less branches in southern region compared to the other region.

Page 94

Analysis of loans and advances
Conclusion
Human beings are no more constraint to the basic necessities in their lives. Their needs have diversified through the ages placing an increase demand on resources. The economic boom in the country has wide open the new challenges and opportunities to the people. This has necessitated timely and easy availability of funds to meet the requirements of institutions and individuals in meeting their goals. Thus to keep up with the pace of this increasing demand, the banking industry have come forward with the credit portfolio to provide funds on relatively easier terms and conditions. Today, banks are committed towards providing more and more number of people with finance with a view to make their lives better. The ever increasing demands of the customers have forced the banking sectors to emerge with new retail products bearing new unique features in them. The competition among the banks cannot be neglected. They have been supplying loans for the purpose of purchase of vehicles , pursue of higher education, or to meet their other personal requirements. The banking industry is witnessing a boom at present boosted by the increasing demand for retail loan products. The demand has arisen as a result of genuine individual needs. From an overall view point demand for retail loans is ever rising and the same would be reflected on the demand for funds. Hence the profitability of this particular industry is expected to take a positive track in the future ahead.

Page 95

Analysis of loans and advances
QUESTIONAIRRE

Dear sir / madam

I am a student of CMR institute of management studies, under Bangalore university. I need your kind cooperation regarding the following information, which will be used only for my academic purpose. It will be considered as highly confidential.

MODEL QUESTIONS FOR CUSTOMERS

1. Personal details of customer
y y y

Name:__________________________ Address:_________________________ Gender 1. Male 2. Female

y

Age a) 20 - 30 b) 30 ± 40 c) 40 ± 50 d) 50 -60 e) 50 and above

Page 96

Analysis of loans and advances
Qualification a) Graduate b) Post graduate c) Others 2) Occupation a) Government b) Professional c ) Private d) Business

y

3) Annual income a) Below Rs. 50,000 b) c) d) Rs. 50,000 ± Rs. 1,00,000 Rs. 1,00,000 ± Rs. 1,50,000 Rs. 1,50,000 and above

4)

Accounts in other bank a) Yes b) No

5)

Is this is the first time you borrowing the loan? a) Yes b) No

Page 97

Analysis of loans and advances

6)

For what purpose have you borrowed the loan? a) Housing finance b) Car loan c) d) Educational loan Personal loan

7)

What is the combined annual income of your family? a) Below Rs. 50,000 b) c) d) Rs. 50,000 ± Rs. 1,00,000 Rs. 1,00,000 ± Rs. 1,50,000 Rs. 1,50,000 and above

8)

How many times did you approach the bank to get the loan? a) One b) Two c) Three d) Four

9)

How much loan amount borrowed by you from U.B.I? a) b) c) d) Below 5,00,000 Rs. 5,00,000 ± Rs. 10,00,000 Rs. 10,00,000 ± Rs. 15,00,000 Rs. 15,00,000 ± Rs. 20,00,000

Page 98

Analysis of loans and advances

10)

What is the monthly EMI paid by you? a) Below 5,000 b) c) d) Rs.5,000 ± Rs.10,000 Rs.20,000 ± Rs.30,000 Rs.30,000 and above

11) How many years have you taken the loan for? a) 0 - 3 years b) c) d) 3 ± 6 years 6 ± 10 years 10 years and above

12) Did you face any problems for borrowing loan? a) Yes b) No

13) What are the sources that make you aware of UBI loan schemes? a) Newspaper b) c) d) Magazine Friends and television UBI or other bank employee

Page 99

Analysis of loans and advances

14) Are you satisfied with your decision to take loan from UBI? a) Extremely satisfied b) Satisfied c) d) Moderate Unsatisfied

16) Rate your level of satisfaction in a scale of 1 ± 10 ------------------------------------------------------------------------------------------------------------------------------------17) What do you think about interest rates? a) Extreme High b) High c) d) Low O. k.

18) What do you think about UBI bank service? a) Very good b) Good c) d) O.k. Bad

Page 100

Analysis of loans and advances

BIBLOGRAPHY

y y y y y y

A Hand Book of Banking by N. S. Toor Ramman Finance management. Finance management and policies by James C. Van Horne. Management accounting principle and practises by R. K. Sharma. Accounting for managers S. P Jain and K.L. Narang. Research methodology by C.R. Kothori.

y Business Research Methods by Appannaiah Reddy and Ramnath

WEBSITES:
www.unitedbankofindia.com www.google.com www.rbi.org.in

Page 101

Analysis of loans and advances

Page 102

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