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Syndicate Bank was established in 1925 in Udupi, the abode of Lord Krishna in
coastal Karnataka with a capital of Rs.8000/- by three visionaries - Sri Upendra
Ananth Pai, a businessman, Sri Vaman Kudva, an engineer and Dr.T M A Pai, a
physician - who shared a strong commitment to social welfare. Their objective
was primarily to extend financial assistance to the local weavers who were
crippled by a crisis in the handloom industry through mobilising small savings
from the community. The bank collected as low as 2 annas daily at the doorsteps
of the depositors through its Agents under its Pigmy Deposit Scheme started in
1928. This scheme is the Bank's brand equity today and the Bank collects around
Rs. 2 crore per day under the scheme.
The bank extends finance to corporates for their working capital as well as term
loan requirements. Under the corporate segment Bank has segregated Mid
Corporate segment and Large Corporate segment. Exposure to a borrower up to
Rs 100.00 crore is brought under Mid Corporate segment and exposure of above
Rs 100.00 crore brought under Large corporate segment. Apart from normal
Branch network, Bank has 22 mid corporate Branches, 2 large corporate
Branches, 3 Corporate finance Branches and 1 industrial finance branches to
cater to the need of corporate clients.
The loans offered by our Bank are:

Working Capital Finance

Export Credit

Term Loan Finance

Project Finance including Infrastructure Projects

Loan against Future Rent Receivables



The funds required for day to day business/manufacturing activities are called
Capital. Trade and Service Sector also need working capital funds to run their
Operations .Working capital finance is extended in different forms and will
include fund based working capital finance as well as non-fund based (letter of
credit Bank Guarantee) credit. The fund based working capital is provided for
purchasing inventory, receivable financing, to meet operating expenses. Under
Non fund based facilities, Bank can sanction letter of credit facility for procuring
raw material or can sanction Bank guarantee facility on behalf of the customer to
the suppliers, Government departments etc.



Bank is financing export activities in the form of packing credit and post
shipment credit. Further the Gold cards are extended to eligible exporters.
Pre shipment finance:
1. Packing credit in Rupee
2. Packing credit in foreign currency
Post shipment finance:
1. Purchase and discount of export documents
2. Negotiation /payment/acceptance of documents under LC
3. Advances against export bills sent on collection.
4. Export bills discounted in foreign currency.


A term loan is an advance for a fixed period generally granted for financing
acquisition of fixed assets like land, buildings, machinery and vehicles.
Semantically, term loans will include all rupee loans, foreign currency loans,
deferred payment guarantees, acceptance facilities. Under the term finance Fund
based term finance is extended for capital expenditure/acquisition of fixed assets
towards starting or expanding the business or industrial unit. Non fund based
finance is extended in the form of deferred payment guarantee, letter of credit
for import of machineries etc.


The Bank extends finance to various projects like setting up of factory for
manufacturing activity, Commercial real estate projects etc. Further Projects for
creating infrastructure facilities are classified under Infrastructure projects. In
order to meet financial requirements of the projects credit facilities by way of
finance, term loans, project loans and any other form of fund based and non-fund
based facility may be granted. The project finance covers Greenfield, brownfield
projects, capacity expansion at existing manufacturing units, construction
ventures or other infrastructure projects.


Considering the fact that many multinational and Indian corporates and
organized retailing through supermarket chains are hiring large spaces in metros
and other centres, Bank is extending loans to the owners of the property against

future rent receivables. The scheme envisages financing owners of the property
who have let out the same to reputed companies/ MNCs etc. for their occupation.
It begins with submission of loan proposal by the borrower. Banks follow a
comprehensive approach for credit evaluation.
First the project for which loan is sought will be evaluated in terms of capital
adequacy, projected cash flows, current performance, past performance of the
borrower in terms of repayments and adherence to banking procedures.
Besides these banks follow an internal credit rating system based on
predetermined criteria or they may depend on external credit rating offered by
reputed credit rating agencies. After assessing the project, the next issue will be
evaluation of securities offered as collateral for the loan.
Next in the assessment will be the history of the borrower, the present
management and its competence and other qualitative parameters obtained
through reports from various sources such as other banks having business
relationship with the borrower, suppliers of the borrower and other credit
information agencies.
Once a loan decision has been made, the bank staff will have to monitor and
take up necessary follow up action. Banks insist on receiving periodical reports
from the borrower and also conduct field visits to the premises of the borrower to
ascertain the progress and utilization of loan amount. Banks usually compute
certain key ratios and analyze the cash flow position of the borrower besides
proper valuation of securities for accessing the credit worthiness of the proposal.
Reserve Bank of India has provided guidelines for loan appraisal and evaluation
and insists on adoption of Know Your Customer Norms (KYC) from the
borrowers. Some of the hindrances in proper credit evaluation in banks include
the administrative procedures, competence of the staff and non integration of
credit sanction and follow up procedures. Non adherence to prudential norms
suggested by RBI is another deterrent in the credit evaluation process.
Entity profile
Profile of the group concerns
Financials of the entity for the latest 2 years
Bank statements of the entity for the last 12 months
Office Proof of the entity
Copy of title deeds of the property with Municipal Tax Receipts and
Sanction Plan

Copies of all lease and sub lease agreements in connection with the
MOA and AOA in case of Company or Partnership Deed in case of
partnership firm
Latest 2 years Personal Balance Sheets and ITRs of the directors or
Bank statements of the directors or partners for the last 6 months
Identity proof of all the directors or partners
Residential Proof of all the directors or partners
Election/Voters ID
Permanent driving licence
Permanent Account Number (PAN) card
Aadhaar Card
Election/Voters ID
Permanent driving license
Society outgoing bill (only from registered societies)
Electricity/water/telephone bill
Gas bill (pipeline connection only)
Property tax bill
Domicile certificate with address issued by Municipal Corporation
Receivables finance includes both factoring and invoice discounting. Receivables
are payment due from a supplier, i.e. invoices. Often small companies suffer
from late payment from large corporates, meaning that a significant part of their
balance sheet is illiquid. Receivables finance unlocks the cash that is owed to the
small company by selling the invoice. So, technically it is not lending, but an
asset purchase. You are raising cash against your debtors. Accounts receivable
is more of an expression used in the United States than the UK.

There are two main forms of receivables finance. First there is invoice
discounting, a form of asset based finance which enables a business to release
cash tied up in an invoice and unlike invoice factoring enables a client to retain
control of the administration of its debtors.
Secondly, there is factoring. Factoring is usually used by companies that are
smaller than those that use invoice discounting. The difference between
factoring and invoice discounting is that the credit control function in a factoring
facility is outsourced and that the facility is disclosed. Factoring is the sale of
receivables, whereas invoice discounting is borrowing where the receivable is
used as collateral.
You sign an agreement with the syndicate bank
You provide goods or services to a customer and invoice them
You send the invoice to us
You have access to standby funds up to an agreed percentage of the
invoice value
When and how you use these funds is entirely up to you
When the invoice is paid, you receive the balance
In the case of undisputed receivables where a customer defaults or
becomes insolvent, if you have taken out credit protection on the customer with
us, we will pay you the outstanding balance up to the value of the agreed credit
protection limit.
a) Qualitative Disclosures
Assessment of capital: The Bank has a process for assessing its overall capital
adequacy in relation to the Bank's risk profile and a strategy for maintaining its
capital levels. The process provides an assurance that the Bank has adequate
capital to support all risks inherent to its business and an appropriate capital
buffer based on its business profile. The Bank identifies, assesses and manages
comprehensively all risks that it is exposed to, through sound governance and
control practices, robust risk management framework and an elaborate process
for capital calculation and planning. Bank has, Board approved comprehensive
Internal Capital Adequacy Assessment Process (ICAAP) and Stress test policy
which was adopted in 2008. Bank has been modifying/revising the ICAAP policy
based on the experience gained, sophistication achieved and also as per the
suggestions/observations made by RBI during its AFI/Supervisory Review and
Evaluation Process. The present ICAAP policy was revised and approved by the
Board during June 2014.The Bank has a structured management framework in
the Internal Capital Adequacy Assessment Process for the identification and

evaluation of the significance of all risks that the Bank faces, which may have an
adverse material impact on its financial position. The Bank considers the
following as material risks, it is exposed to, in the normal course of its business
and therefore, factors these while assessing / planning capital:

Credit Risk


Credit concentration risk

Name concentration
Sector concentration

3. Zone concentration
4. Geographical concentration
Liquidity risk:
Interest Rate Risk in Banking Book (IRRBB)
Market Risk
Operational Risk
Reputational Risk
Strategic Risk
Other Risks covered in ICAAP: In addition to the above mentioned risks, bank also assesses the following risks
as part
of Pillar 2. As these risks cannot be quantified at present, the same are assessed
qualitative manner.
Residual Risk
Settlement Risk
Capital Transferability
Compensation practices
Loss of Key personnel Risk
Pension Obligation Risk
Model Risk
The Bank has implemented a Board approved Stress Testing Framework which
forms an

Integral part of the Bank's ICAAP and provides an assessment of the capital
requirement and impact on Profits of the bank under stressed conditions
envisaged by the Bank. The purpose of stress testing is to assess the impact of
various shocks (changes in economic conditions) on the quality of the banks
portfolio and an assessment of the banks ability to withstand such shocks if such
an event/s materializes. As per Basel II Accord, stress scenarios can incorporate
(i) Economic or Industry downturns,
(ii) Market-driven events,
(iii) Tight liquidity conditions etc.
When such events actually take place, the quality of assets held by a bank will
deteriorate and may lead to reduced profits or constrain the bank to keep more
In order to assess the impact on CRAR and income of the bank, the Stress Test
will be conducted on quarterly basis.
The Bank will assess the impact on the following risks, as part of Stress Test:
Credit Risk
Market Risk
Credit concentration risk
Interest Rate Risk in Banking Book
Liquidity Risk
Operational Risk
The Bank is conducting stress test on the above risks and results have been
reported to Risk Management Committee of the Board and Board of Directors on
quarterly basis for their information/ suggestions/ directions.
a) Credit Risk: Credit Risk is defined as the possibility of losses associated with
diminution in the credit quality of counterparties. In a Banks portfolio, losses
stem from outright default due to inability or unwillingness of a customer or
counterparty to meet commitments in relation to lending, trading, settlement
and other financial transactions.
Alternatively, losses result from reduction in portfolio value arising from actual or
perceived deterioration in credit quality of the assets.
b) Credit Risk Strategy: One of the key components of credit risk management
framework is credit risk strategy. Bank has sound credit risk strategy to meet the
objectives of credit risk management. Bank's Credit Risk Strategy is in
consonance with credit philosophy of the Bank, which emphasizes quality assets,

profitable relationships and prudent growth. Accordingly, Bank's Credit Risk

Strategy is guided by the following principles:

Credit granting process of the Bank would be marked by careful

assessment in selecting borrowers and prudence in approving loans.

Credit quality shall not be compromised for the sake of earnings or

volumes. The business development would aim to diffuse credit risks through
broadening of the client base, sectorial diversification and geographical

Credit Risk strategy of the Bank would also seek to mitigate the cyclical
economic trends and ensure that, the shifts in the composition of credit do not
have an adverse effect on overall quality of the credit portfolio.
Bank employs the following processes to accomplish its credit risk strategies.
Establishment of pro-active risk management practices
Separation of credit risk management functions from credit sanction
Risk based appraisal and sanction
Multi-tiered credit approval system
Discriminatory sanction levels based on amount, transaction risks and
Independent loan review mechanism
Focused attention on problem/ weak credit exposures
Review / exit in case of low quality assets.
Risk driven management of credit ceilings or limits
Capture, Analysis and Measurement of Credit Risk
Risk based pricing
Focused approach to specialized lending. This is being done through
of Large / Mid-corporate branches, Centralized Processing Centre for Housing
Identify Low Priority Industries based on the current exposure and NPA
Thus the strategy would determine the Banks willingness to grant loans based
on the type of economic activity, geographical location, currency, market,
maturity and anticipated profitability. This would necessarily translate into the
identification of target markets and business sectors, preferred levels of

diversification and concentration, cost of capital in granting credit and cost of

bad debts.
The credit risk management system encompasses the following:
i. Identification of Risk: Bank has methods and procedures to identify or locate
the credit risk. Timely identification of risk will enable the Bank to initiate timely
corrective action.
ii. Assessment of Risk: Assessment is done by rating the borrower and classifying
the borrower under a particular risk grade. Each risk grade indicates the relative
riskiness of the borrower vis--vis others in the portfolio. Risk assessment is
quantified for the purpose of grading and comparison.
The Bank has an independent Risk Management Department, which is headed by
General Manager and is responsible for managing credit risk, market risk,
operational risk and integration of all risks. The department functions
independent of Credit Department and other operations and decision making
processes. The Risk Management Department focuses on identification,
assessment, monitoring and controlling and mitigating of risks across various
Organisation Structure:
The Bank has implemented a robust and comprehensive Credit Risk Management
framework. The Board of Directors assumes the overall responsibility for credit
risk management and decides the credit risk management policy, strategies and
sets prudential & other limits.
An extension of credit is a making or renewal of any loan, a granting of a line of
credit, or an extending of credit in any manner whatsoever, and includes
(1) A purchase under repurchase agreement of securities, other assets, or
(2)An advance by means of an overdraft, cash item, or otherwise
(3) Issuance of a standby letter of credit (or other similar arrangement regardless
of name or description) or an ineligible acceptance, as those terms are defined in
208.24 of this chapter
(4) An acquisition by discount, purchase, exchange, or otherwise of any note,
draft, bill of exchange, or other evidence of indebtedness upon which an insider
may be liable as maker, drawer, endorser, guarantor, or surety

(5) An increase of an existing indebtedness, but not if the additional funds are
advanced by the bank for its own protection for:
(i) Accrued interest; or
(ii) Taxes, insurance or other expenses incidental to the existing indebtedness;
(6) An advance of unearned salary or other unearned compensation for a period
in excess of 30 days
(7) Any other similar transaction as a result of which a person becomes obligated
to pay money (or its equivalent) to a bank, whether the obligation arises directly
or indirectly, or because of an endorsement on an obligation or otherwise, or by
any means whatsoever.



In the growth and progress of any country, its small scale sector is of equal
importance as of other large scale sectors because a country cannot progress in
its true sense unless its small scale sectors progress. Be it a developed country
like Japan and USA or a developing country like Thailand and India, they form the
backbone of the economy. A dynamic and vibrant SME sector plays a key role in
successful economic growth of the countries. The developmental role of SMEs
has been highly recognized. They provide most of the employment opportunities
for the general public of the country and as a result, they prosper in these
conditions. SMEs allow a homogeneous geographic development throughout the
length and breadth of a country because of the fact that the development is
done at a micro level due to the initiative taken by the general public. This has a
positive effect on the GDP level and the employment conditions in the country.
The SMEs contribute nearly 40% of Indias domestic production and 50% of total
export. Thus SMEs have vital role in socio economic development of our country.
The sector requires the support from all the Stake holders, especially in the
context of liberalization and market reforms being implemented in the country.
The sector should be able to face the growing competition both globally and
domestically. Syndicate bank has identified SME as the thrust area for expanding
credit. The policy measures taken to step up the flow of credit to SMEs by the
government of India and Reserve Bank of India from time to time have been
implemented by Syndicate Bank to improve the credit flow of the sector. The
main objective of the research was to learn above MSME financing, borrowing
pattern of the customers steps taken by bank to promote SME schemes also
learn about the awareness of CGTMSE scheme with the customers. To find out
the satisfaction level of Syndicate Banks SME Borrowers. The Analysis showed

that there is lack of information among SME entrepreneurs of the Scheme in

which they have borrowed and lack of awareness of various new schemes which
are advantageous to the borrowers. Customers suggest that the Interest Rate
Charged by Syndicate Bank is slightly higher compared to other banks


Guarantees, which also include stand-by letters of credit, can be drawn down
in a revolving manner over the life of the facility. Guarantees are also assessed
during the course of working capital requirements. Guarantees are issued for
various purposes such as bid bonds, performance guarantees on behalf of
borrowers for execution of contracts, deferral or exemption from payment of
statutory duties against performance obligations, advance payments, release of
retention monies and other purposes. The term of guarantees is generally 36
months or less, although certain guarantees with a longer term may be
approved. As with documentary credits, the bank sometimes obtains additional
collateral by way of cash margin which, in the case of certain types of
guarantees, may be as much as 100 per cent. A bank guarantee might be used
when a buyer obtains goods from a seller then runs into cash flow difficulties and
can't pay the seller. The bank guarantee would pay an agreed-upon sum to the
seller. Similarly, if the supplier was unable to provide the goods, the bank would
then pay the purchaser the agreed-upon sum. Essentially, the bank guarantee
acts as a safety measure for the opposing party in the transaction. We provide
Bank Guarantee on behalf of our client to various other entities such as
Government, quasi govt bodies, corporate and so on. We provide a range of
guarantee such as Performance guarantee, financial guarantee, EPCG etc. The
tenure of Bank Guarantee ranges from 1 year to 10 years depending upon the
purpose of the guarantee.


Minimum Net Income (Rs.)

5, 00,000 p.a (salaried)7

7, 50,000 p.a (self-employed)

Minimum Age (in years)


Maximum Age (in years) on maturity of loans 58 (salaried)

60 (public limited/government employees)
65 (self-employed)
Minimum Loan Amount (Rs.)


Maximum Loan Amount (Rs.)


Maximum Tenure (in years)

20 years. For salaried applicants 25 years.