Professional Documents
Culture Documents
Chapter-1 Introduction 1.1 Introduction About The Sector
Chapter-1 Introduction 1.1 Introduction About The Sector
BANKING
business. The basic services a bank provides are checking accounts, savings
accounts and time deposits that can be used to save money for future use;
loans that consumers and businesses can use to purchase goods and services;
and basic cash management services such as check cashing and foreign
currency exchange.
TYPES
1) Commercial banks,
4) Credit unions.
customers. This broader definition includes many other financial institutions that
pension funds, security brokers and dealers, mortgage companies, and real
1
PURPOSE
Second, by accepting money deposits from savers and then lending the money
investments. This in turn allows the economy to grow. Enabling the flow of
Banking in India
Banking in India originated in the first decade of 18th century. The General
Bank of India came into existence in 1786. This was followed by Bank of
Hindustan. Both these banks are now defunct. The oldest bank in existence in
India is the State Bank of India being established as "The Bank of Bengal" in
Calcutta in June 1806. A couple of decades later, foreign banks like Credit
Lyonnais started their Calcutta operations in the 1850s. At that point of time,
Calcutta was the most active trading port, mainly due to the trade of the British
Empire, and due to which banking activity took roots there and prospered. The
first fully Indian owned bank was the Allahabad Bank, which was established in
1865. By the 1900s, the market expanded with the establishment of banks such
Mumbai - both of which were founded under private ownership. The Reserve
2
Bank of India formally took on the responsibility of regulating
the Indian banking sector from 1935. After India's independence in 1947, the
Reserve Bank was nationalized and given broader powers. The banking in
India was controlled and dominated by the presidency banks, namely, the Bank
of Bombay, the Bank of Bengal, and the Bank of Madras - which later on
merged to form the Imperial Bank of India, and Imperial Bank of India, upon
India's independence, was renamed the State Bank of India. The presidency
banks were like the central banks and discharged most of the functions of
central banks. They were established under charters from the British East India
on financing of foreign trade. Indian joint stock banks were generally under
capitalized and lacked the experience and maturity to compete with the
presidency banks, and the exchange banks. There was potential for many new
banks as the economy was growing. Under these circumstances, many Indians
came forward to set up banks, and many banks were set up at that time, and a
number of them set up around that time continued to survive and prosper even
now like Bank of India and Corporation Bank, Indian Bank, Bank of Baroda, and
Canara Bank.
3
b. Growth and Present Status of the Industry:-
By the 1960s, the Indian banking industry has become an important tool to
facilitate the development of the Indian economy. At the same time, it has
emerged as a large employer, and a debate has ensued about the possibility to
nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India
expressed the intention of the GOI in the annual conference of the All India
The paper was received with positive enthusiasm. Thereafter, her move was
swift and sudden, and the GOI issued an ordinance and nationalised the 14
largest commercial banks with effect from the midnight of July 19, 1969.
followed in 1980. The stated reason for the nationalisation was to give the
India. After this, until the 1990s, the nationalised banks grew at a pace of
around 4%, closer to the average growth rate of the Indian economy.
4
c. Future of the Industry:-
A healthy banking system is essential for any economy striving to achieve good
The Indian banking system, with one of the largest banking networks in the
world, has witnessed a series of reforms over the past few years like the
banks (PSBs), and the increased participation of private sector banks. The
growth of the retail financial services sector has been a key development on the
market front. Indian banks (both public and private) have not only been keen to
tap the domestic market but also to compete in the global market place. New
foreign banks have been equally keen to gain a foothold in the Indian market.
The momentum in credit growth has been maintained during 2005-06 due to
two factors: The corporate sector has stepped up its demand for credit to fund
its expansion plans; there has also been a growth in retail banking. However,
even as the opportunities increase, there are some issues and challenges that
Indian banks will have to contend with if they are to emerge successful in the
medium to long term. This report discusses these issues and challenges -- both
Consolidation
Consolidation, which has been on the counter over the last year or so, is likely
to gather momentum in the coming years. Post April 2009, when the restrictions
5
capture the Indian market. Their full-fledged entry is expected to transform the
Thus Indian banks have less than three years to consolidate their position.
Despite the stiff resistance from certain segments, consolidation holds the key
► Owing to greater scale and size, consolidation can help save costs and
► Banks will also have to explore different avenues for raising capital to meet
engine.
Though there is no confirmation yet, speculative signals arising from the market
India, Bank of India, Bank of Baroda, Dena Bank, State Bank of Patiala, and
Punjab and Sind Bank. Further, the case for merger between stronger banks
has also gained ground — a clear deviation from the past when only weak
banks were thrust on stronger banks. There is a case being made for mergers
6
CHAPTER-2 PROFILE OF THE ORGANIZATION
Dena Bank was founded on 26th May, 1938 by the family of Devkaran
It became a Public Ltd. Company in December 1939 and later the name was
In July 1969 Dena Bank Ltd. along with 13 other major banks was nationalized
and is now a Public Sector Bank constituted under the Banking Companies
(Acquisition & Transfer of Undertakings) Act, 1970. Under the provisions of the
Banking Regulations Act 1949, in addition to the business of banking, the Bank
7
Milestones
One among six Public Sector Banks selected by the World Bank for
1995.
One among the few Banks to receive the World Bank loan for
(DKSP).
8
2.2 Growth and Development of the Organization:-
serving the public and also excelling in the corporate values. Corporate
responsiveness, and ethical business practices with this in view, the has been
making efforts for adopting the best practices. The bank commitment towards
Dena bank might just be another case of bank in trouble. Going by the recent
observations of the accounting department of the bank itself, the bank’s capital
An analysis of the financial position of the bank for the year 2002-03, by the
Express, showed that the bank’s CAR stood at 9.33% would go down as low as
6.02% as per the latest RBI guidelines. In simple terms, a low CAR implies that
the bank would be trouble there is a run on it since it has overexposed itself.
9
Further, miscellaneous income, which also accounted for the
increase in profits, went up by Rs. 32.92 crore to Rs. 86.06 crore for the year
2002-03. However, the review showed that Rs. 19.50 crore of the
transfer of old credits over five years lying with the bank in suspense receipts/
unclaimed credits.
Another element of doubts in the results is the fact that the bank had reversed
an amount of Rs. 18.40 crore to the balance sheet as disputed tax liability. This
was based on the expert opinions received by bank on tax consultants and also
on a high court decision in the case of American Express Bank. The above
three aspects are taken together accounted for Rs. 83.40 crore of profit.
1. Personal
In the Dena Bank Personal Banking section, the organization offer its services
with a personal touch by reaching out to all in various manners, one of them is
return on all your personal savings and our Loan Schemes which provides the
10
2. Corporate
Corporate Finance
assets and also for meeting day to day working capital requirements of the
constituents. These assistances are termed as Long Term Finance & Short
Term Finance
such as land, building and plant and machinery etc. These could be for setting
given for a longer period and is repayable in installments over the period with or
without Moratorium. The period and the installments are determined based on
11
Working Capital Finance (WCF) is extended for carrying out
for a relatively shorter period generally for a period of 1 year and renewed on
The WCF is considered only after project nearing completion and after full tie up
The Working Capital limits of the borrower are assessed by adopting various
etc. depending upon the aggregate working capital limit required / enjoyed from
the banking system, nature of activity, production cycle etc. Working Capital
finance is in the form of pre-sale and post-sale limits. In Pre Sale Finance the
4. Trust Receipts
12
3. Advances against Export Incentives
The Business units also require Credit Assistance for procurement of Goods,
where the funds are not involved.Such facilities are available against the
Dena Bank is extending such Non Fund Based assistance to the eligible units in
the form of :
Export Credit
Recently, Bank has introduced Gold Card Scheme which provides cheaper
export credits to the eligible borrowers. Selected Clients engaged in exports are
Specific Schemes
The Bank has devised specific schemes for the following Sectors :
1. Educational Institutions,
13
3. Hospitals,
5. Entertainment Industry.
3. NRI Desk
With over 1100 branches spread across the country, Dena Bank is your ideal
All transactions by NRIs in Indian Banks are governed by RBI Rules and
Regulations .
These are the sectors where Dena Bank has taken special care to ensure
14
Priority Sector Schemes:
5. Dena Billpay:-
AutoPay
Just give us your bill details, specify your bank account and we will pay your bill
for you every month from that account. You can specify an upper limit and bills
PhonePay
Get a SMS alert when bill is due and issue payment instructions in accordance.
Internet
If you have access to the internet, you can view and pay your bills online at
www.denabank.com. You will receive new bill notifications, due date reminders
15
6. Dena ATM Services
Dena Bank Debit cum ATM Card offers you an easy and convenient way to do
all your transactions and that too within a fraction of seconds. Presently we
have more than 380 ATMs all across India. Dena Debit cum ATM Card is your
Bank Account in your pocket. Get your Dena Bank Debit cum ATM Card today
and avail round the clock uninterrupted service. Below is the simple procedure
2. If you don’t have Saving or Current Account, first open your account.
3. Get the Debit/ATM Card Application form from the Branch, fill it up and
4. Within 10 days, you will receive your Debit cum ATM Card along with
PIN (Personal Identification Number) and Debit cum ATM Card Booklet.
Bank ATM. After that you can use your card on POS Terminal
( Merchant Establishments)
16
7. Other Services:-
Dena Bank, your trusted family bank, now is proud to offer a range of
cheque, Dena ATM's, Dena Cards, online remittance, Internet Banking, Mobile
banking, Tele banking, Online utility Bill Payment, Value added Service through
ATM, Kiosks, loans and many more. With over 1100 branches across the
country, we are always ready to serve our customers, and to offer them the
Organization Structure:-
HEAD OFFICE
REGIONAL OFFICE
BRANCHES
17
Executive cards of the organization. They are Executive Director, General Manager
(AGM), Chief Managers (CM), Managers and other officers are in the hierarchy at the
head office level functioning in various Departments. The regional Managers heads the
Regional Officers who are assisted by other down in the hierarchy. The Branch is
Branch activities and rendering of satisfactory customer service. The bank has a very
Organization Chart:-
As mentioned above, the organization chart for a regional office is different from
chart for the regional office where the training has taken place consists of
A. C. Katial
(DGM)
18
S.J. Majumdar
(AGM)
G.D. Sinha
(Senior Manager)
Hakeem Alam
(Manager)
Deepika Kansal
(Officer)
The Bank is actively involved since 1973 in non-profit activity called Community
Services Banking. All our branches and administrative offices throughout the
country sponsor and participate in large number of welfare activities and social
causes. Our business is more than banking because we touch the lives of
19
people anywhere in many ways. Our commitment to nation-
has the distinction of being the first Indian bank to have been started solely with
Indian capital.The bank was nationalised in July 1969 along with 13 other
banks. From its modest beginning, the bank has grown in size and stature to
110 years.
Strategic business area covers the large Indo-Gangetic belt and the
metropolitan centres.
London.
20
Bank of India:-
businessmen from Mumbai. The Bank was under private ownership and control
till July 1969 when it was nationalised along with 13 other banks.
Beginning with one office in Mumbai, with a paid-up capital of Rs.50 lakh and
50 employees, the Bank has made a rapid growth over the years and
blossomed into a mighty institution with a strong national presence and sizable
The Bank has 3021 branches in India spread over all states/ union territories
offices) abroad.
The Bank came out with its maiden public issue in 1997 and follow on Qualified
31/03/2009 is 2,35589.
While firmly adhering to a policy of prudence and caution, the Bank has been in
has been conducted with the successful blend of traditional values and ethics
and the most modern infrastructure. The Bank has been the first among the
the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a
21
Founder Member of SWIFT in India. It pioneered the
introduction of the Health Code System in 1982, for evaluating/ rating its credit
portfolio.
Bank of baroda:-
its customers like you. With over 101 years of experience in the banking
industry and a wide network of over 3000 branches all over the country, it has
changing needs.
ensure that customer’s valuables are safe with it. Its countrywide branches offer
the customers convenience and ease in operating them account wherever they
are. Its 24-hour ATMs enable them to withdraw cash, check their account
balance and request for a new cheque book even after banking hours.
Baroda Internet Banking / Baroda Mobile Banking, its latest Internet and Mobile
banking initiatives enable them to operate their account just as they would in
any of its branches. The customers can through the Internet check their
balance, request for chequebooks and print account details. Choose from its
22
various products and services, that the bank sincerely feel will
Name of the Bank Last Market Cap. Net Interest Net Profit Total Assts
Price (Rs. Cr.) Income
SBI 2,266.45 143,892.43 63,788.43 9,121.24 964,432.08
PNB 917.45 28,927.43 19,326.16 3,090.88 246,918.62
Bank Of India 387.50 20,350.54 16,347.36 3,007.35 225,501.75
Bank Of Baroda 499.50 18,195.11 15,091.58 2,227.20 227,406.73
Table No- 1
Fixed Deposit Scheme, Dena Senior Citizen Scheme, Dena Recurring Deposit
Scheme, Dena Loan Linked Recurring Deposit Scheme, Dena Minor Savings
Scheme, and Dena Alpa Bachat Khata. It offers services, such as any branch
banking, multi city cheque, automated teller machines (ATMs), Dena Cards,
bill payment, and value-added service. During the fiscal year ended March 31,
23
Dena Bank. The Company's principal activity is to provide
commercial banking and other related services. The Company also provides in
company's banking products and services are provided through 1184 branches
offices, 387 ATMs all over India. The Company operates only in India.
management and other related services. The company's banking products and
services are provided through 1184 branches offices, 387 ATMs all over India.
38,783,302,000
2009 Sales Employees: 9,883
(Year Ending Jan 2010).
Table No- 2
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CHAPTER-3 DISCUSSIONS ON TRAINING
3.1 Student’s Work Profile:- The summer training was held in the Regional
office of Dena Bank. The work profile at the office was based on the loans and
advances given to small and median enterprises (SME). Hence the whole work
enterprise. The responsibilities handled at the office were started from reading
the company’s project file (sent by the company to whom the loan is to be
financial sector, it has become imperative that the credit functions are
With a view to ensure a healthy loan portfolio, our bank has taken
various steps to bring its policies and procedures in line with the
25
sanction monitoring systems. Further, bank has been
under:
1. All loan facilities be considered after obtaining loan applications from the
2. Project for which the finance has been granted should be technically
time.
3. Cost of the project and means of financing the same should be properly
assessed and tied up. Both under-financing and over-financing can have
must have their stake in the business i.e. they should possess adequate
per the delegating loaning powers and should be disbursed only after
26
6. Projects financed must be closely monitored during implementation
stage to avoid time and cost overruns and thereafter till the adjustments
Bank extends loan facilities by way of fund based facilities and/or non
fund based facilities. The fund based facilities are usually allowed by way
overdrafts etc. Further, the bank also provides non fund facilities by way
The foregoing list contains the usual types of facilities undertaken by the
bank. In case loan application is received for any particular facility which
27
assets, under various schemes of agriculture advances
under special schemes. The term loan would be a loan, which is not a
Term loans are normally granted for periods varying from 3-7 years and
account against credit granted by the bank and is operated in exactly the
book debts, trust securities etc. in cash credit accounts the borrower is
required.
28
goods from India or any other evidence of an order for
export from India having been placed on the exporter or some other
persons, unless lodgment of export orders or letter of credit with the bank
the request of its customers on favour of a third party informing him that
the Bank undertakes to accept the bills drawn on its customers upto the
behalf of its customers in favour of third parties. When bank issues such
bank’s profitability and need urgent attention at all levels. The action
points and strategies for reducing NPAs has to be two pronged (i)
29
action points may vary depending upon the area, nature of activity and
Training in Credit Department (SME) of the bank is very much informative. I felt
glad when first time I got a company’s project file. My senior handover it to me
to read it carefully and analyze it. After reading the file, I started completing the
read the proposal and made necessary corrections in it. Then he again gave
me the proposal to come to know about the mistakes. I analyzed the proposal
made by my senior sincerely and wrote down the doubts in a diary. I learnt a lot
from this first experience. After this I got about 5-6 proposals in my whole
training and learning period and completed the training with a great expertise
and knowledge.
30
CHAPTER-4 STUDY OF SELECTED RESEACH PROBLEMS
DENA Bank is powering its way through a market that is still to unleash its true
potential, as barely two percent of the population has been penetrated so far!
It is not surprising that the bank is not in the mood to take its hands off the
throttle. At Dena Bank, our goal is to satisfy the customers in every way
whatever a customer wants. The goal is to help the customers in every step of
the way in making their world a better place to live in. Besides its will is to
provide a high quality service to all of its customers, Dena Bank takes a stand
of the important issues. Dena bank has been strongly committed not only to
and social issues faced by a business. A bank must not grow at the expense of
The project was done with the objective to study effective management of
Loans and Advances. As the Loans and Advances portfolio is the largest asset
of the bank having direct impact on its profitability. With a view to ensure a
the policies and procedures in line with changing scenario which also aim at
31
effective management and dispersal of credit risks, strengthening of pre-
The objective is to study the various types of facilities appraised by the bank to
the borrower such as Term Loan, Cash Credit Limit, Packing Credit Limit, Bank
Guarantee etc. After this the objective is to learn about the whole procedure
the master plan. It is the blueprint for achieving your objectives, one of which is
The Process
4. Selecting a sample
32
This is the simple way to perform the functions of research design and
methodology. But in the premises of the bank, no such research has been
taken place. The whole research has been done on the credit appraisal
Proposal for :
1. PROFILE
Name
M/s Paragon Cable India.
of borrower
33
29, Rajasthan Udhyog Nagar,
G T Karnal Road, New Delhi-110033
Tel- 011- 27691333, 27692333
Address
Fax- 011-27691129
(Regd. Office
E-mail: pci@vsnl.net, mail@elektron.com
Dealing
1991 Standard B List No
with us since
Manufacturing,
Trading and J
ob Work of
Line of Activity Defaulter / CIBIL List No
Electric Wires
& Power
Cables
Key
Key Person Sh. Vikas Nagpal
Person/Promoter
Sh. Vikas Nagpal
Promoter
Multiple / Consorti
Sole EXISTING PROPOSED
um
Asset
Our share: [Rs. In Lakhs] Category as per CMC Gui P1 P1
delines
34
Insulated
Wires & Cables
– Electrical.
NFB- % 350.00 Activity 8010
Priority No
Risk “Best” BPLR+ 0
Cr Credit Risk Rating “BBB”
Grade as per ABS Dt 31.03.2009 .75%
4. Major Shareholders: N.A. (Since it is Partnership A/c)
5. BRIEF HISTORY OF SANCTIONS INCLUDING REVIEWS
AND ADHOCS DURING THE PAST TWELVE MONTHS.
35
6. PRESENT PROPOSAL:
a) Fund Based
CCH(Stock Stock-25% Stock-25%
1 250.00 135.82 250.00 250.00 Nil
cum Book Book
Book Debts)
Debts-40% Debts-40%
b) Non
- Fund Base
d
Per-10%, Per-10%,
1 Bank 350.00 47.10 350.00 350.00 Nil
Fin/BidBond- Fin/BidBond-
Guarantee 25% 25%
II. SECURITY / DOCUMENTATION:-
36
Proposed
Rs.312.36.00(Inventory) Stock Statement as of
Hyp. of Stock and Book Debts Aug.2009
i) Percentage coverage of collateral security:
37
4 Collateral coverage 72.06%
Collateral Coverage at the time of last renewal was 77.20%. Reason for
dilution of security coverage is that Market value of property (collateral) was
considered whereas distress sale value of property is considered in the
present case. In case Market value is considered in the present case,
collateral coverage would be 90.03%
d) Date of subsequent modification of charge: N.A.
e) Date of vetting of documents by legal officer /Panel Advocate:18-07-
2008
* Branch to obtain and keep on record C.A. certified Personal Balance Sheet/ Net
Worth Statement of the guarantors as of 31-03-2009 and ensure there is no significant
decline in Net Worth of the individual persons vis-a vis last sanction.
III. CREDIT RATING & Pricing:
38
Concession if any N.A. N.A.
No Existing Proposed
9. Ratifications required for actions, exceeding
permitted etc. beyond discretionary powers: N.A.
10. COMPANY PROFILE (in brief)
(DETAILS OF MANAGEMENT, PRODUCTS MANUFACTURED, USER
INDUSTRIES & COMPANY’S MAJOR CUSTOMERS)
11. INDUSTRY SCENARIO
40
m. What are the threats Chinese imports of cheaper
quality goods, market
uncertainties and fluctuations.
12. PRODUCTION CAPACITY
Gross Block
41
- of which exports
Comments on financial performance:
Sales :
The existing Fund Based limit of Rs 400.00 and Non-Fund Based Limit of Rs 250.00
lacs was earlier assessed on an estimated Sales Turnover of Rs 2850.00 during FY
2007-08 against which the actual achievement is Rs 2947.04 lacs i.e. achievement
index of 103.40%. Sales registered 15.52% during FY 2007-08 over the previous
financial year, while the growth registered during FY 2008-09 is 13.60%.
The borrower has now estimated and projected a sales turnover of Rs 2900.00 lacs
and Rs 3200.00 lacs during FY 2009-10 and FY 2010-11 respectively.
The borrower has attributed lower raw material as consequently lower finished good
prices as the main reason for lower sales projections during FY 2009-10. The global
financial crisis leading to depressed market conditions also partly contributed to the
lower sales projections.
42
During the first half of the current financial year i.e. Sept’09, the
borrower has achieved a sales turnover of Rs 1075.00 lacs. The same translates into
annualized turnover of Rs 2150.00 lacs i.e. 74.14% vis-à-vis target. However, based
on orders on hand and improving market sentiments, the borrower is optimistic of
achieving the estimated/projected sales turnover. In fact, the borrower has a track
record of surpassing the projections.
In view of the above, the estimated and projected sales turnover is considered realistic
and achievable and is hence accepted by us.
Capital/Net Worth :
The Capital/Net Worth of the borrower stood at Rs 343.15 lacs as of 31.03.09 and
shows increasing trend over the years due to induction of capital/plough-back of profits
in business.
Unsecured Loans :
Branch should obtain and keep on record an undertaking from the borrower to the
effect that level of unsecured loans would be maintained at least at the level of Rs
80.00 lacs during the currency of bank finance and would not be withdrawn without the
express consent of the Bank. The Unsecured Loans would also remain subordinated to
Bank Finance.
Profitability :
Gross Profit and Net Profit Margin registered increase to 3.49% and 3.04%
respectively.during the FY 2008-09 over the previous financial year.
(Rs. In lacs)
Sales 1075.00
Capital 362.00
43
Auditor’s remarks and Management replies : No such
qualifications/remarks.
INTER-FIRM COMPARISON (PEER GROUP)
16. ASSESSMENT OF WORKING CAPITAL REQUIREMENTS
A. Projection of sales as per last CMA DATA for the year ended 3103.09- Rs.2850.00
lacs
Actual sales for the year ended 31.03.09__Rs.3347.76 lacs
Last Year Current Following
Actual as Year Year
per audited Estimates Projections
Balance Regular Peak Level
Sheet
Year ending
Net Sales 3347.76 2900.00 3200.00
Total Current Assets 843.15 870.00 974.00
Less Current Liabilities (other than Bank
borrowing for working capital) 369.47 300.00 350.00
Working Capital Gap 473.68 570.00 624.00
Minimum Stipulated margin 25% of current
assets/projected NWC (whichever is
higher) 210.79 217.50 243.50
Max. Permissible Bank Finance 239.40 250.00 250.00
Total Existing Working Capital limits 239.40 250.00 25.00
Excess borrowing, if any, to be converted Nil Nil Nil
into Working Capital Term Loan
Raw Materials
44
Work in Progress
Receivables
- Export
Stores & Spares
C. COMMENTS ON ASSESSMENT OF WORKING CAPITAL WITH
JUSTIFICATION
The existing Fund Based limit of Rs 400.00 and Non-Fund Based Limit of Rs 250.00
lacs was earlier assessed on an estimated Sales Turnover of Rs 2850.00 during FY
2007-08 against which the actual achievement is Rs 2947.04 lacs i.e. achievement
index of 103.40%. Sales registered 15.52% during FY 2007-08 over the previous
financial year, while the growth registered during FY 2008-09 is 13.60%.
The borrower has now estimated and projected a sales turnover of Rs 2900.00 lacs
and Rs 3200.00 lacs during FY 2009-10 and FY 2010-11 respectively. The borrower
has attributed lower raw material as consequently lower finished good prices as the
main reason for lower sales projections during FY 2009-10. The global financial crisis
leading to depressed market conditions also partly contributed to the lower sales
projections.
During the first half of the current financial year i.e. Sept’09, the borrower has achieved
a sales turnover of Rs 1075.00 lacs. The same translates into annualized turnover of
Rs 2150.00 lacs i.e. 74.14% vis-à-vis target. However, based on orders on hand and
improving market sentiments, the borrower is optimistic of achieving the
estimated/projected sales turnover. In fact, the borrower has a track record of
surpassing the projections.
In view of the above, the estimated and projected sales turnover is considered realistic
and achievable and is hence accepted by us.
45
2. Receivables 1.88 455.00
The holding levels as above are in tune with the actual holding levels of FY 2008-09
and are considered need-based and reasonable. Hence, the same is accepted by us.
Based on the accepted levels of inventory and receivables as above, the Drawing Power
is calculated as under :
Amount D.P.
Particulars Months Margin
(Rs in lacs) (Rs in lacs)
Total 277.50
The borrower has requested for renewal of the existing CCH limit of Rs 250.00 lacs
and the same has been recommended by the Branch. As per assessment of limits
under Modified MPBF Method, the permissible limit of Rs 250.00 lacs. The requisite
D.P. is also available, as per the aforesaid table.
In view of the above, we recommend for renewal of the existing CCH (Stocks-cum-
Book Debts) limit of Rs 250.00 lacs.
The borrower is presently enjoying Bills Negotiation (under L/C) limit of Rs 150.00 lacs,
outside the overall MPBF, which it has requested for continuation. Branch has
informed that no Bills have being negotiated under the aforesaid limit during FY 2008-
09.
17. ASSESSMENT OF TERM LOAN/ DEFERRED PAYMENT
GUARANTEE: N.A.
A. LETTER OF CREDIT: N.A.
46
B. BANK GUARANTEE
Nature Performance/Financial/Bid Bond Guarantee
of the guarantee limit required i.e.
performance/ financial/ Bid Bond etc.
No. of BG s issued during FY 2008-09 10
Assessment
and justification for the limit proposed Amount of Bank Guarantees (Rs in lacs) 47.10
47
Security Extension of charge over the stock,
receivables and fixed assets of the borrower.
Asset coverage:47.72%
Views/comments on the conduct of the account
Frequency of inspection of stocks. Date of the
last inspection and irregularity/adverse features,
if any observed and steps taken to set right the same.
Insurance cover - Whether securities adequately insured Yes, as reported by the
and in force Branch.
48
Whether terms and conditions of previous sanction Yes, as reported by
have been complied with, if not, specify Branch
time frame to complete (with explanation)
& permission obtained from competent authority
In case of consortium advance, whether our N.A.
bank is getting proportionate share of business
Outstanding N.A.
amount of unhedged Foreign Currency Exposures
Value of account (Deposits)
Process Fee recovered
Income from Third party products / insurance
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Others (Lead Bank Fee, Commitment fee, Penal
Interest, Syndication fee)
Turnover in Foreign Exchange Business
Deposits placed (Owner Directors/ partners or Family
Members, Relatives & Friends)
- Current
- Savings
- Term Deposits
a. Adverse features affecting credit decision and action
proposed (including non compliance to terms and conditions of
sanction and present position)
Nil
b. MAJOR INSPECTION / AUDIT IRREGULARITIES POINTED OUT
IN THE LAST INSPECTION REPORT
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insurance expired on 14/3/2009
6. Half- yearly review of Credit rating not done Credit Rating based on the Audited B/S
as per extant guidelines. as of 31.03.09 is being carried out with
Branch to do credit rating exercise on the the present proposal.
basis of Audited Balance Sheet for the year
2007-08.
7. Branch to get the External Credit rating The borrower has obtained Credit Rating
done, inform the status of External Credit from SMERA (SMERA C3) on 05.12.08.
rating
However, in terms of BASEL-II guidelines,
the borrower has been advised to obtain
External Credit Rating from any of the
approved Rating Agencies i.e. CRISL,
CARE, ICRA, FITCH..
8. Branch to ensure ostentation of CA Certified received on 30-4-2009
Book Debts Statement age-wise and ensure
periodical inspection
Stock Inspection Report dated 24-10-2008 from M/s D.P. Gupta &
Co. Charted Accountant.
2. Audited B/s of the march, 2008 was not Audited B/S as of 31-03-2008 and31-03-
available for verification 2009 has been obtained and kept on
Branch Record.
4. Banks name plate showing “stock Banks name plate showing “stock
hypothecated with Dena Bank” not hypothecated with Dena Bank” is now
displayed being displayed.
5. Vetting of latest documents has not Vetting of latest documents has been
been done.( Documents vetted 05-06- done.
2008)
7. FFR-I & FFR-II has not been obtained FFR-I & FFR-II is now being obtained and
by the branch from the Firm scrutinized by the branch and submitted to
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Regional Office has not been obtained by
the branch from the Firm
c. Directors’ name figuring in RBI/ Wilful Defaulters’ /
CIBIL / SAL – ECGC list and comments
thereon. Impact on taking exposure where
names are appearing in the defaulters list: NIL
d. Position of statutory dues and incentives receivables:-
# wherever borrowers encounter tax disputes, searches, raids by tax authorities, details
along with proceedings and present status should be reported.
f. RISK ASSESSMENT
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2.Borrower/Borrower
Risk The firm may face competition The firm will be able to withstand
from the unorganized sector the competition on the basis of
in the regular cable products. quality and business experience.
3.Security Risk The product is prone to theft and The firm to take comprehensive
fire. insurance, with Bank clause, to
cover such type of risk.
4. Other Risk Nil
Deviation if any with justification
24. RECOMMENDATION:
Branch has recommended for renewal of existing fund based limit of Rs. 400.00
lacs and Non fund based limit of Rs. 350.00 lacs as per existing terms and
conditions.
25. REGIONAL OFFICE RECOMMENDATION:
It is an existing SME client of the branch. SME sector is
presently one of the thrust areas of finance of the Bank.
The Borrower is dealing with us since 1991 and the
overall track record is satisfactory.
The partners have experience of more than 15 years in
the line of business.
The borrower is having profit making track record.
Collateral base of the exposure is 72.60%, which may be
considered satisfactory.
The limits are justified under Modified MPBF method.
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Branch has recommended for renewal of the existing
limits.
PUT UP FOR APPROVAL.
ANNEXURE 'A'
Ref No. NDR/ICFD/SS/ 01
Date : 23-10-2009
1. Our usual documents to be executed by the firm and all the partners/proprietor in
their personal capacity. In the case of limits companies, documents are to be
executed under the common seal of the company backed by proper resolution.
2. Our advance to be guaranteed by the partners Viz. Shri Vikas Nagpal and Smt.
Anjana Nagpal in their personal capacity alongwith Shri D.L.Nagpaland, and Shri
Prem Nagpal
3. All the assets charged to the Bank to be fully insured against fire, theft, burglary,
SRCC, breakdown of machinery with bank clause.
4. The unit/company to submit stock statement and monthly selected operational
data (MSOD) every month.
5. The unit/company to submit QIS/FFR statement regularly.
6. Our advance is restricted to manufacturing/trading activities.
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7. Interest/Commisison rates are subject to revision as per RBI/HO
guidelines or as decided by consortium.
8. Process fee and Supervision Charges to be recovered as per HO guidelines.
9. Branch to ensure that there are no inter-firm transfer of funds except for genuine
sales transactions.
10. Bank will have a right to examine all the times firm's/company's books of accounts,
assets etc. and have the company's workings and operations examined from time
to time by the officers of the bank/or technical experts and/or management
consultancy and fees to be borne by the firm/company.
11. Bank may charge penal rate of interest over and above the rate applicable under
the following circumstances:-
a) delay in submission of stock statement, MSOD, QIS statement.
b) delay in submission of renewal papers.
12. Guidelines issued by HO/RA from time to time are to be strictly adhered to.
13. The borrower be informed of the terms and conditions of sanction and the
confirmation be obtained to the effect thereof in writing.
14. Date of reconsideration - one year after sanction.
_____________________________________________________________________
SENIOR MANAGER
From the above analysis, it is found how a credit limit has been appraised to a
borrower. Starting from the loan application from the borrower till the
disbursement of the loan and after it the close monitoring till the adjustment of
goes as a parallel to the safe side of the bank as in case of the borrower’s
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CHAPTER-5 SUMMERY AND CONCLUSIONS
The summery just states that it was a great experience to join a Nationalized
Bank for training and learning things. I learnt a lot in the Credit Department
(SME) of Dena Bank. Here I worked on many appraisals, which are beyond the
scope of this project. The new day in the premises of the bank was started with
a new project report in the hands. After reading carefully the whole project
Various proposals were look after by me. After making the proposals, I handed
over all the work done to my senior. He used to make necessary corrections in
the work done and hence it was an opportunity for me to learn more and more.
Hence the whole experience of working in such a place was amazing. I leant
here to a great extant about the whole procedures to sanction a limit to the
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5.2 Conclusions and Recommendations:-
Conclusions:-
The project gives the detailed knowledge of the whole process of sanction a
Starting from the loan application from the borrower and compilation of
Confidential Reports on him and the guarantor, the process continues till the
disbursement of loan and after it the close monitoring till the adjustments of
Bank’s Loan.
The project was an attempt to understand and perform the work in the credit
transaction and the credit appraisal which I had included in this project is just an
example of it.
I had worked on many such appraisals, which are beyond the scope of this
was amazing. I found lots of things to learn and understand here. Hence to
conclude, I just state that it was a great job done in a Nationalized Bank with the
experienced employees.
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Recommendations:-
The bank is well doing in its field and having good reputation in Domestic as
The head office, regional office and the branches should work on EDI
of time.
Dena Bank is too conservative in its dealing and hence people are
There is also lack in the initiation of officers. The officers should take
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APPENDIX
A) Credit Rating:-
Definition of Credit Risk:- Credit Risk is the risk of default by borrower due to
inability or unwillingness to repay his debts in accordance with the agreed terms
and conditions.
credit decisions.
borrowers determine the profit that accrues to the bank from that loan. If
the terms are decided without proper assessment of the credit risk, the
bank might be charging low interest rates from poor quality customers
thereby sustaining losses due to default and charging high rates from
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Credit Risk Rating:- Credit risk rating is a rating assigned to borrowers,
based on an analysis of their ability and willingness to repay the debt taken
from the bank. This rating is assigned on a scale, which generally have 6-8
levels. Companies falling in the same credit risk category have similar
probability of default. Better the rating, lower is the probability of default. The
rating deteriorates.
would not like to exposure to borrowers with very poor credit rating.
determined by its credit risk rating. Borrowers with poor credit rating
borrower. The higher the risk category, the greater should be the
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performance, management quality etc. different scales
can be used and the above parameters can be combined with the
risk rating to a large extent depends on the skills of the persons using the
rating tools and his integrity in using the model equitable for all concerns.
1. Current Ratio:-
Current Assets
Current Liability
Current Liabilities= short term bank borrowings+ commercial paper+ loan from
corporate bodies+ bills discounted+ sundry creditors+ unmatured financial
charges+ advance against work in progress+ other current liabilities.
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EBIDT (Earning before interest, depreciation and tax) = profit
before depreciation, interest and tax+ extra ordinary expenses- extra ordinary
income.
List of Tables
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BIBLIOGRAPHY
www.denabankindia.com
www.sebi.gov.in
www.moneycontrol.com
www.pnbindia.com
www.bobindia.com
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