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A Study on loans and advances

INTRODUCTION TO THE CONCEPT

MEANING OF FINANCE:-

Finance may be defined as the provision of money at the time when required.
Finance refers to management of flows of money through an organization. It concerns
with the application of skills in the manipulation, use and control of money. Different
authorities have interpreted the term “Finance” differently. However, there are three
main approaches to finance.

1. The first approach views finance as to providing of funds needed by a business


on most suitable terms. This approach confines finance to the raising of funds
and to the study of financial institutions and instruments from where funds can
be procured.

2. The second approach relates finance to cash.

3. The third approach views finance as being concerned with rising of funds and
their effective utilization.

DEFINITION OF FINANCE:-

According to Guttmann and Dougall, business finance can be broadly defined as


‘the activity concerned with planning, raising, controlling and administering the funds
used in business.

In the words of Panther and Wert, “Business finance deals primarily with raising,
administering and disbursing funds by privately owned business operation in non-
financial fields of industry.”

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According to the encyclopedia of Social Science, “Corporation finance deals


with the financial problems of corporate enterprises. These problems include the
financial aspects of the promotion of new enterprises and their administration during
early development, the accounting problems connected with the distinction between
capital and income, the administrative questions created by growth and expansion, and
finally, the financial adjustments required for the bolstering up or rehabilitation of a
corporation which as come into financial difficulties.”

IMPORTANCE OF FINANCE:-

Finance is the life blood and nerve centre of business. Just as circulation of
blood is essential in the human body for maintaining life, finance is a very essential to
smooth running of the business. It has been rightly termed as Universal Lubricant,
which keeps the enterprise dynamic. No business, whether big, medium or small can
be started without an adequate amount of finance. Fight from the very beginning i.e.,
conceiving an idea to business, finance is needed to promote or establish the business,
acquire fixed assets, make investigations such as market surveys, etc, develop product,
keep men and machine at work, encourage management to
Make require further finance for making improvements or expanding the
Business.

Thus, the importance of finance cannot be over emphasized and the subject of
business finance has become utmost important both to the academicians and
practicing managers.

The importance of corporation finance (which is a constituent of business


finance) has arisen because of the fact that present day business activities are
predominantly carried on company or corporate form of organization. The advent of
corporate enterprises has resulted into:-

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1. The increase in size and influence of the business enterprises.


2. Wide distribution of corporate ownership and
3. Separation of ownership and management.

Finance management is applicable to every type of organization, irrespective of


its size, kind or nature. It is as useful to a small concern as to a big unit. A trading
concern gets the same utility from its application as a manufacturing unit may expect.
This subject is important and useful for all types of ownership organizations. Where
there is a use or finance, financial management is helpful. Every management aims to
utilize its funds in a best possible and profitable way. So this subject is acquiring a
universal applicability.

It is indispensable in any organization as it helps in:-


1. Financial planning and successful promotion of an enterprise.
2. Acquisition of funds as and when required at the minimum possible cost.
3. Proper use and allocation of funds.
4. Taking sound financial decisions.
5. Improving the profitability through financial controls.
6. Increasing the wealth of the investors and the nation and
7. Promoting and mobilizing individual and corporate savings.

SCOPE OF FINANCE:-

The main objective of financial management is to arrange sufficient finances for


meeting short term and long term needs. These funds are procured at minimum costs
so that profitability of business is maximized. With these things in mind, a Financial
Manager will have to concentrate on the following areas of finance functions.

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1. Estimating Financial Requirement:-

The first task of a financial manager is to estimate short-term and long-term financial
requirements of his business. For this purpose, he will prepare a financial plan for
present as will as for future. The amount required for purchasing fixed assets and
funds for working capital will have to be ascertained. The estimations should be
based on sound financial principles so that neither there are inadequate not excess
funds with the concern. The inadequacy of funds will adversely affect the day-to-day
working of the concern where as excess funds may attempt a management to indulge
in extravagant spending and for speculative activities.

2. Deciding Capital Structure:-


The capital structure refers to the kind and proportion of different securities of raising
funds. After deciding about the quantum of funds required it should be decided which
type of securities shouldbe raised. It may be wise to finance fixed assets through
long-term debts. Even here of gestation period is longer, then share capital may e
most suitable. Long-term funds should be employed to finance wording capital also,
if not wholly then partially. Entirely depending upon overdrafts and cash credits for
meeting working capital needs may not be suitable. A decision about various sources
for funds should be linked to the cost of raising funds. It costs of raising funds are
very high then such sources may not be useful for linked to the cost or raising funds.
If cost of raising funds is very high then such sources may not be useful for long.
A decision about the kind of securities to be employed and the proportion in which
these should be used is an important decision, which influences the short-term and
long-term financial planning of an enterprise.

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OBJECTIVE OF FINANCE:-

Financial management is concerned with procurement and use of funds. Its main
aim is to use business funds in such a way that the firm’s value/earnings are
maximized. These are various alternatives available for using business funds. Each
alternative course has to be evaluated in detail. The pros and cons of various
decisions have to look in to before making a final selection. The decisions will have
to take into consideration the commercial strategy of the business. Financial
management provides a frame work for selecting a proper course of action and
deciding a viable commercial strategy. The main objective of a business is to
maximize the owner’s economic welfare. The objective can be achieved by:

1. Profit maximization:-

Profit earning is the main aim of every economic activity. A business being an
economic institution must earn profit is a measure of efficiency of a business
enterprise. Profits also serve as a protection against risks which cannot be ensured.
The accumulated profits enable a business to face risks like fall in prices, competition
from other units, adverse government policies etc. thus following arguments are
advanced in favor of profits maximization as the objective of business.
a) When profit-earning is the aim of business then profit maximization
should be the obvious objective.
b) Profitability is a barometer for measuring efficiency and economic
prosperity of a business enterprise, thus profit maximization is justified
in the grounds of rationality.

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2. Wealth maximization:

Wealth maximization is the appropriate object of an enterprise. Financial theory


ascertains that wealth maximization is the single substitute for a stockholder’s utility.
When the firm maximizes the stockholder’s wealth, the individual stockholder can use
this wealth to maximize his individual utility. It means that by maximizing
stockholder’s wealth the firm is operation consistently towards maximizing
stockholder’s utility.

Financial decisions:
Financial decisions refer to decisions concerning financial matters of a business
firm. There are many kinds of assets to be acquitted, pattern of capitalization,
distribution of firm’s income etc. we can classify these decisions into three major
groups.
1. Investment decisions
1. Financial decisions
2. Dividend decisions

Investment decision relates to the determination of total amount of assets to be


held in the firm, the composition of these assets and the business risk complexions of
the firm as perceived by its investors. It is the most important financial decision. Since
funds involve cost and are available in a limited quantity, its proper utilization is very
necessary to achieve the goal of wealth capital maximization.

The investment decisions can be classified under two broad groups:


1. Long-term investment decision
2. Short-term investment decision
The long-term investment decision is referred to as the capital budgeting and the
short-term investment decision as working capital management.

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The investment decision is important not only for the settings up of new units by
also for the expansion of present units, replacement of permanent assets, research and
development project costs, and reallocation of funds, in case, investments made earlier
do not fetch results as anticipated earlier.

A sound short-term investment decision or working capital management policy is


on which ensures higher profitability, proper liquidity and sound structural health of
the organization.

A finance manager has to select such sources of funds, which will make optimum
capital structure. The important thing to be decided here is the proportion of various
sources in the overall capital mix of the firm. The debt-equity ratio should be fixed in
such a way that it helps in maximizing the profitability of the concern. The raising of
more debts will involve fixed interest liability and dependence upon outsiders. It may
help in increasing the return on equity but will also enhance the risk.

The rising of funds through equity will bring permanent funds to the business
but the shareholders will expect higher rate of earnings. The financial manger has to
strike a balance between various so that the overall profitability then the market prices
of the shares will go up maximizing the wealth of shareholders.

The third major financial decision relates to the disbursement of profits back to
investors who supplied capital to the fir. The term dividend refers to that part of
profits of a company which is distributed by it among its shareholders. It is the reward
of shareholders of investment made by them in the share capital of the company. The
dividend decision is concerned with the quantum of profits to be distributed among
shareholders. A decision has to be taken whether all the profits to be distributed, to
retain all the profits in business or to keep a part of profits in the business and
distributed others among shareholders. The higher rate of dividend may raise the

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market price of shares and thus, maximize the wealth of shareholders. The firm should
also consider the question of dividend stability, stock dividend (bonus shares) and
cash divide

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INDUSTIRAL PROFILE

 INTRODUCTION TO BANKING:-

The development of ‘Banking’ is evolutionary in nature. There is no single


answer to the question of what is banking. It is interesting to trace the origin of the
word ‘Bank’ in the modern sense, to the German word ‘Banck’ which means, heap or
mound or joint stock fund. From this, the Italian word “Banco” meaning heap of
money was coined.

Some people have the opinion that the word “Bank” is derived from the French
words “Bancus” or “Banque” which means a “Bench”. Initially, the bankers, the Jews
in Lombardy, transacted their business on benches in the market place and the bench
resembled the banking counter. If a banker failed, his ‘Banque’ (bench) was broken
up by the people, hence the world “Bankrupt” as come. In simple terms, bankrupt
means a person who has lost all his money, wealth or financial resources.

In India, the Banking Regulation Act, 1949, under which banks are regulated by
the Reserve Bank of India, defines a banking company and banking as under:-

Banking company:-

The Banking Regulation Act, 1949, defines a banking company as a company which
transacts the business of banking in India [section 5 (c)].

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Banking:-

Section 5 (b) defines Banking as accepting for the purpose of lending or investments
of deposits of money from the public, repayable on demand or otherwise and
withdrawal by cheques, drafts, order or otherwise.

 DEFINITION OF A BANK:-

Prof. Kinley “Bank has an establishment which makes to individuals such advance of
money as may be required and safely made and to which individuals entrust money
which is not required by them for use.

 SCHEDULE BANKS:-

Scheduled banks are those banks which are listed in the second schedule to the RBI
Act, 1934. the banks satisfying the following conditions are only included in the
second schedule that the bank’s paid up capital plus free reserves are not less than
Rs.5lakhs and that the affairs of the bank are not conducted to the detrimental interest
of the depositors.

The RBI also has powers to reschedule a bank, when the above mentioned conditions
are not satisfied.

 LOANS AND ADVANCES:-

According to sec 5 of the Banking Regulation Act 1949, a loan and advances means a
loan or an advances made on the security of assets the market value of which is not at
any time less than the amount of such loan or advances.

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 IMPORTANCE OF LOAN AND ADVANCES:-

The major portion of banks fund is employed by way of loans and advances
which is the most profitable employment of its funds Advances comprises a very large
portion of a banks total asset and form the backbone of every bank’s structure.
Advances not only play an important part in gross earnings of banks, but also promote
the economic development of the country. All types of business activity including
trade, industry and agriculture have to depend on bank finance in one form or the
other.

In the money lending business, the money lender must carefully consider the
chances of his being repaid by the borrower. He therefore, does not normally depend
on the obligation of the borrower alone but wants some tangible security to safeguard
his advances in case the borrower is unable to meet his obligation. He must have the
ability to judge the character and credit worthiness of his customer. A wise and
prudent policy in regard to advances in considered an important factor inspiring
confidence in the depositors and prospective customers of a bank.

Loans are repayable on the expiry of the periods for which they are granted. In
case the loan is repayable in the installments and default occurs in the payment of any
installments the entire loan usually becomes immediately recoverable at the option of
the bank.

 PURPOSE OF LOANS AND ADVANCES:-

A banker enquires from the borrower the purpose of loan before lending the
loan to an individual. Banks do not grant loans for speculative purpose. They ensure
the safety and liquidity of their funds by granting loans for productive purposes where

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income generation is there, banks grant loans for professionals, construction of


houses, commercial complex, etc and grants educational loans for higher studies and
also for buying of house hold articles and vehicle, besides personal loans.

Bank’s advances based on purpose are classified as under:-


 Advances to small scale industries.
 Advances to small business finance and trade to Medium and Large scale
Industries.
 Advances to agriculture
 Advances to transport operators.
 Advances to exports and imports

Advances to agriculture, small scale Industries (SSI) and small Business Finance
(SBF) are classified as priority sector advances. These advances help to increase the
productivity and development of the nation by generating employment and revenue.
They also help in exports which earn foreign exchange. Incidentally they will
improve the standard of the people of our country.
On the other hand, if advances are given for unproductive or risky purpose such
as the financing of pleasure tour, meeting of domestic expenses, repayment of
ancestral debts, speculative purpose or anti-social purpose such as the financing
Hoarding of stocks, smuggling, etc the
Chances of failure will be more and the banker will not able to recover all his
advances or loans.

 PRINCIPLES OF SOUNDING LENDING:-

The banker’s follows are very cautions policy while lending his funds and
conducts this business on the basis of will know principles of sound lending in order

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to minimize the risks. The following principles are followed by the banking
institutions while appraising and advances proposal.

 Safety
Safety first is the most crucial principle of good lending when the bankers lends, he
must feel certain that the advances is safe is that a borrower is in a position to repay
the loan along with interest according to the terms of the loan contract. If the bank
funds are not safely employed bank cannot survive. Hence the advance as for as
possible should be made only to people who care for repaying the bank loan honestly.
Insincere and dishonest people should not be given the loan. They only the bank
funds will be safer.

 Liquidity
The bankers must ensure that the borrower is able to repay the loan on demand or with
in a short period in accordance with agreed terms of re-payment. This depends upon
the nature of assets owned by the borrower and pledged the banker. The source of
repayment must also be definite. The Banker regards liquidity as important as safety
because a bulk of their deposits is repayable on demand or at a short notice. If the
banker lends a large portion of his fund to borrowers from whom repayment would be
coming but slowly, the ability of the banker to meet the demands made on him would
be seriously affected in spite at the safety at the advance.

 Profitability
Profitability means earning profit on the assets acquired. Assets here refer to the bank
loans and advances. The bank must employ their funds profitably so as to earn
sufficient income out of which to pay interest to the depositors, salaries to the staff
and to meet various establishment expenses and distribute dividends to the
shareholders. The sound principle of lending is not to sacrifice safety and liquidity for
the sake of higher profitability. Therefore the banks do not grant advances to unsound

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parties who are doubtful in repaying, even if they accept to pay a very high rate of
interest. Such advances ultimately prove to be irrecoverable to the detriment of the
interest of the bank and its depositors.

 The purpose of the loan


The purpose should be productive so that the money not only remarks safe but also
provide a definite source or repayment. While lending funds the banker enquires from
the borrower the purpose for which he seeks the loan. If the advances for
unproductive purpose like consumer credit, speculation etc, the repayment of loan
may be delayed and recovery will be slow. On the other hand if the advance is made
for productive purpose like industry, agriculture or trade, the fund will come back
quickly and without any difficulty. Thus the purpose of loan as advance is also a
guiding factor in lending.

 Diversification
This is a principle of sound lending loans and advanced must spread to different
categories so that it will not concentrate on only one sector. An element of risk is
always present in every advance however secure it might appears to be. In fact, the
entire banking business is one of taking calculated risks and a successful banker an
expert is assessing such risk. He is keen in disturbing the risks involved in leading
over a large number of borrowers over a large number of industries and areas over
different types of securities. The principle of diversification is based on the famous
marks “Do not keep all at the eggs in one basket” it means that the banker would not
concentrate his advances in a few big fines or few industries or in few cities or regions
of the misfortune or certain trade or industries are of the bank will not be jeopardy.
Hence while lending the banker should keep in mind the concept of diversification.

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 Security
Another guiding factor in bank advance is security “it has been the practice banks not
to lend as for as possible expect against security. Security is considered as insurance
or a cushion to full back upon in case of an emergency. When the banker advances
without security he will run the risk of losing the money. If the borrower is prompt in
repayment then there will be no worry. But it is essential that the banker should have
substantial security for his advances. Banker carefully identifies the entire different
expert if an advance before granting it with sufficient security likes gold silver, stock
exchange securities, goods insurance policy etc, because he will be managing the
public money and if the confidence of the public is lost there will be run on the bank.
Hence the banker will not advance without sufficient security. The security should
cover the money advanced interest there on and other changes. Thus the banker
should also bear in mind the security principle while lending.”

 FORMS OF ADVANCES:-
Advances by commercial banks are made in different forms, which are short
from advances namely:
1. Loans
2. Overdrafts
3. Cash Credits
4. Discounting of bills
5. Purchasing of bills
6. Letters of credit (LC)/Bank Guarantees.

1. Loans
A loan is a financial arrangement under which an advance is granted by the bank to a
borrower on a separate account called loan account. From this account the loan
amount is paid in one lump sum to the borrower by cash or by transfer to the credit of
his current account, if any. The repayment of loan is provided in lump sum or by

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installments without allowing the demand character of the loan to be affected in a way
interest is charged in the loan amount from the date of sanction. The period of loan
ranges from one year to ten-twelve years. A loan granted for a period at more than
one year, 2years, 5years and 7years etc., is called a “Term loan” if the loan is given
for still longer period, it is called “long term loan”.
Types of loans:
i) Secured loans
ii) Unsecured loan

I) SECURED LOANS:
According to section 5 (a) of Banking Regulation Act 1949, secured loans of
advances means a loans or advance made on the security of assets the market value of
which is not at any time less than the amount of such loan or advance.
A Banker secured his advances by stock exchange securities, goods and
documents of title of goods sometimes other securities such as real estate, plant and
machinery, gold bullion, gold ornament, life policies fixed deposits receipts, book and
supply like are also accepted as securities for loans or advances.

II) UNSECURED LOANS:


According to section (a) of Banking Regulation Act 1949, an unsecured loan or
advance means a loan or loan of advance not so secured. This are advanced for which
the banker has no collateral or tangible securities unsecured loans are also called clean
loan or advances and they are granted to the parties enjoying high reputation and
sound financial position. The loans are granted with caution and within certain limits
only because in case of default by the borrowers, the bankers rank equal with other
unsecured creditors and share equally with the letter the realized value of the assets.

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2. Over drafts
Overdraft means over drawing the current account up to sanctioned limit. When the
current account holder is permitted by the banker to draw more than what stands to his
credit, such an advance is called an overdraft. The banker may take some collateral
security or may grant such advances on the personal security. An agreed rate of
interest is paid on the utilized portion of the advance sanctioned and for the period it
utilized so it is very advantageous to the borrower. The customer is permitted to
withdraw the amount as and when he needs its and to make deposits in his accounts as
and when he like. Hence an overdraft is a fluctuating account wherein the balance
some terms may be in credit and at the other times in debit. A cheque book will be
issued in an overdraft account. Though overdrafts are considered to be an occasional
way of granting advance this distinction on is not significant now. Overdraft
arrangement is very disadvantageous to the banker, because while he can change into.
Only on the amount actually overdrawn by the customer, he is required to keep at the
disposal of the borrower fine full amount at the overdraft sanctioned. Therefore to
protect the interest of the banker generally, there is a prevision for charging
commitment charge on the utilized portion of the credit limit at the ration of 1% p.a.

3. Cash Credit
Cash Credit is a very popular type of advance made by the commercial bank. It is a
finance arrangement under which a borrower is allowed an advance under a separate
a/c called cash credit a/c up to a specified limit. He can withdrawn and put back the
amount as and when he needs. Thus cash credit is like a running a/c or current a/c
which can be operated according to the will of the borrower cash credit is sanctioned
against the hypothecation or pledge of the goods like agricultural or industrial
products or against the guarantee of the individual or co-obligates or against the
tangible assets as security. The interest will be charged quarterly or half yearly on the
amount actually issued at agreed ratio.

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4.Discounting of bills
Discounting of bills is a type of financial accommodation made between the banker
and customer. According to this, the banker discounts the trade bills exchange for a
shorter period say days to 90 days and credit the customer’s account with the proceeds
i.e. face value of the bill minimum discount charges. Then on the due date of the bill,
the banker receives its face value from its acceptor of the bills. In case the bill is
dishonored by the banker can recover the amount from the customer who has
discounted the bill.

5.Purchasing of bills
The bankers besides discounting the bill also purchasing of bill means obtaining a bill
at sight for the consideration from a customer. The consideration will be credited to
the customer’s account. The banker then received the face value of the bill when the
bill is presented to the drawers of the bill. In case of purchasing the bill, there is nor
date of maturity as incase of discounting the bill and can be obtained on demand from
the acceptor. In this case the rate of discounting the bill and can be obtained on
demand from the acceptor. In their case the rate of discount will be slightly higher
compared to discounting rate only trade bills at sight are purchased.

6.Letters of Credit (LC)


Documentary credit is popular known as letters of credit. They are the integral port of
international trade documentary credit is an instrument of setting trade payments. It is
an arrangement of making payment against document where in the bank at the request
of the customer undertakes to pay the bills drawn by him according to agreed germs of
LC they are similar to bank guarantees.
LC is a sort of loan facility extends y a banking institution to its customer. This is
normally given to customer who will be on travel and to business people. A letter of
credit it is an under taking given by the issuing bank to pay the specified sum of

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money to the person or drawn and which plays money to the holder of LC. There are
two types of LC’s namely.
a) Traveler’s facility letter or personal credit letters.
b) Letter for commercial credits

a) Travelers Facility letter:-


This is issued to a person who will be traveling abroad for a specified period. A letter
by which a banker request another to whom the letter is addressed, to hold a certain
sum at the disposal of a third person who is the holder of that letter and to pay to him
such amount on his required against either cheque on the banker giving this letter or
on the banker to whom the letter is addressed but not exceeding on total the whole
amount covered by the said letter. This letter is generally taken when a customer
wants to obtain funds during that period such credits are also known as encashment
credit.

b) Letter for commercial credit:-


There are letters of credit used for the purpose of financing shipments of good
imported from a country or for the movement of produced manufactured goods from
one place to another in the country it letter for commercial credits me also called
documentary letter of credit.

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RESEARCH METHODOLOGY

 BACKGROUND OF THE STUDY:

A study on Loans and advance at CANARA BANK. This study is an attempt to know
how the bank finances its funds. It’s a study to know about the various loans &
advance and how bank is managing the issuing and recovery of loans provided for the
people. So that a clear analysis and interpretation can be put forth. These findings
would provide with better suggestion.

 STATEMENT OF THE PROBLEM:

A financially strong economy has to be backed by a banking sector. Their strength


should be comparable to international standard. Therefore the RBI in the year 1992
issued guidelines to the commercial banks for adopting uniform income recognition
and assets classification norms. Accordingly banks are now classified their advances
as.
1) Standard assets
2) Substandard assets
3) Doubtful assets
4) Loss assets

According to this definition, the bank loans which are not earning any income are
called non-performing assets. The category 2, 3 and 4 comes under this when any
asset becomes non-performing the banks are required to make provision from their
profits. This affects the profitability of the bank very seriously.

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In whatever form bank advances are granted they are repayable on demand or at the
expiry of some fixed period. This study on Loans and advances mainly concentrates
on how bank classify their loans according to guidelines issued by RBI. It explains
about NPA and treatment in bank. If the loans are not recovered, it will become non-
performing asset (NPA). The classification into NPA is based on recoverability and
non- recoverability of interest and installments of advance given which is the main
problem faced by banks. The study mainly focuses on the granting the loans and
advances in CANARA BANK.

 NEED FOR THE STUDY:

Granting of loans and advances is the primary function of a bank lending


operation is one of the most important aspects of banking of all the functions of
modern banking, the lending of funds, with or without secretly is by far the most
important. About 65% of revenue arises from interest and discount derived from
advance including bills purchased land bills discounted.
The share of advances in the total assets of the bank is about 60% and is the
backbone of the banking structure. The strength of the banking system thus primarily
depends upon the soundness of the advances.

Bank lending is very much needed to the economy, for it makes possible the
financing of the agricultural and commercial activities of the country. The bulk of the
bank loans in India are provided to trade and industries. Bank loans are called “agents
of indirect production”. In additional to the financing of agriculture, commercial and
industrial activities, banks through their consumer loans contribute to consumption
activities- creating constant demand for consumer

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goods like houses, furniture, appliance etc., thus all type of business agriculture
including trade, industry, agriculture have to depend on the bank finance in one form
or other. Hence the need for loans and advances are very important aspects

 OBJECTIVES OF THE STUDY:

 To analyze the need for lending.

 To study the loans and advances of CANARA BANK.

 To compare the position of various loans with comparison with the other
banks

 To analyze the problem faced by CANARA BANK.


 To find out whether the lending scheme have reached the real needy
people.
 To know how the credit applicants are evaluated before granting
credit facility.
 To access the level of consumer satisfaction towards the services
provided by the bank.

 SCOPE OF THE STUDY:

 The study was made to ascertain the customer response on CANARA


BANK loans and advances.

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 The study shows the evaluation and expectation of Bank’s loan


products.

 COLLECTION OF DATA:

The data collected in this study have been classified as:


1. Primary data
2. Secondary data

1. Primary data

The methodology adopted for collecting primary data is basically the questionnaire
method the most popular among data collection techniques. This method has been
mainly employed to extract information from customers. Of course, some information
has been obtained from interviews with the bank employees and very few customers.

2. Secondary data

Sampling is a process of selecting a group of people belonging to a particular locality


or different localities and representing to population. A sampling design is a definite
plan for obtaining a sample from a given population. An integral component of the
research design is the sampling plan. The sampling procedure selected in random
sampling through the questionnaire as it involves both qualitative and quantitative

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aspects. The sampling size is 50, as time is limited, and the study is based on the
survey conducted.

 SAMPLE SIZE:

The sample size is the number of units that we chose for the research purpose.
The research has been conducted on a sample size of 50 respondents who have availed
Loans and Advances from the CANARA BANK and from potential customers, who
want to avail loan.

 SAMPLING TECHNIQUE:

The significant component of a research study is the sampling plan. It


concentrates on 3 aspects:

 Who to survey-Sampling Unit


 How many to survey-Sampling Size
 How to select them-Sampling procedure

Sample is the fraction of the population. Sampling is a technique or method or


selection of samples. The researcher has adopted the most appropriate technique in a
domestic research that is Simple Random Sampling.

Random sampling is a good technique when there are comprehensive lists available of
the target population

According to the simple random sampling method, it is assumed that entire population
is homogeneous and the samples are selected in such a way that each and every unit in
the population has equal chance of occurrence.
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Since random sampling implies equal probability to every unit in the population, it is
necessary that selection of the sample must be free from business.

 LIMITATIONS OF THE STUDY:

Every research has its own limitations. The limitations of this study are:-
1) Sample size was restricted to 50 customers only.
2) Direct interviews could be biased because if the busy schedule of the
respondent and hesitations to provide information to some questions.

3) Study was confined to small group of customers.


4) Lack of time and cost for the study of project.
5) The study is limited only to CANARA BANK
6) As the time lapses the certain portion of study start deprecating due to market
situations.

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CANARA BANK

COMPANY PROFILE
Canara Bank is one of the most prominent commercial banks of India. The bank was
established in the year 1906 at Mangalore, Karnataka by a well known personality Mr.
Ammembal Subba Rao Pai. Initially, it was founded with the name Canara Bank
Hindu Permanent Fund, but later on the name was changed to Canara Bank Limited.

Widely known for customer centricity, Canara Bank was founded by Shri Ammembal
Subba Rao Pai, a great visionary and philanthropist, in July 1906, at Mangalore, then a
small port in Karnataka. The Bank has gone through the various phases of its growth
trajectory over hundred years of its existence. Growth of Canara Bank was
phenomenal, especially after nationalization in the year 1969, attaining the status of a
national level player in terms of geographical reach and clientele segments. Eighties
was characterized by business diversification for the Bank. In June 2006, the Bank
completed a century of operation in the Indian banking industry. The eventful journey
of the Bank has been characterized by several memorable milestones. Today, Canara
Bank occupies a premier position in the comity of Indian banks.

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Over the years, the Bank has been scaling up its market position to emerge as a major
'Financial Conglomerate' with as many as nine subsidiaries/sponsored
institutions/joint ventures in India and abroad. As at June 2010, the Bank has further
expanded its domestic presence, with 3057 branches spread across all geographical
segments. Keeping customer convenience at the forefront, the Bank provides a wide
array of alternative delivery channels that include over 2000 ATMs- one of the highest
among nationalized banks- covering 732 centres, 2681 branches providing Internet
and Mobile Banking (IMB) services and 2091 branches offering 'Anywhere Banking'
services. Under advanced payment and settlement system, all branches of the Bank
have been enabled to offer Real Time Gross Settlement (RTGS) and National

Electronic Funds Transfer (NEFT) facilities.

Not just in commercial banking, the Bank has also carved a distinctive mark, in
various corporate social responsibilities, namely, serving national priorities,
promoting rural development, enhancing rural self-employment through several
training institutes and spearheading financial inclusion objective. Promoting an
inclusive growth strategy, which has been formed as the basic plank of national policy
agenda today, is in fact deeply rooted in the Bank's founding principles. "A good
bank is not only the financial heart of the community, but also one with an
obligation of helping in every possible manner to improve the economic
conditions of the common people". These insightful words of our founder continue
to resonate even today in serving the society with a purpose. The growth story of
Canara Bank in its first century was due, among others, to the continued patronage of
its valued customers, stakeholders, committed staff and uncanny leadership ability
demonstrated by its leaders at the helm of affairs. We strongly believe that the next
century is going to be equally rewarding and eventful not only in service of the nation
but also in helping the Bank emerge as a "Global Bank with Best Practices". This
justifiable belief is founded on strong fundamentals, customer centricity, enlightened
leadership and a family like work culture.

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BRANCHES AND ATM SERVICES

Over the years, the Bank has been scaling up its market position to emerge as a major
'Financial Conglomerate' with as many as nine subsidiaries/sponsored
institutions/joint ventures in India and abroad. As at June 2010, the Bank has further
expanded its domestic presence, with 3057 branches spread across all geographical
segments. Keeping customer convenience at the forefront, the Bank provides a wide
array of alternative delivery channels that include over 2000 ATMs- one of the highest
among nationalized banks- covering 732 centres, 2681 branches providing Internet

and Mobile Banking (IMB) services and 2091 branches offering 'Anywhere Banking'
services. Under advanced payment and settlement system, all branches of the Bank
have been enabled to offer Real Time Gross Settlement (RTGS) and National
Electronic Funds Transfer (NEFT) facilities.

PRODUCTS AND DEPOSITS SCHEMES

Some of the products of Canara Bank:

1) ATM Cheque Deposit Facility. It would enable customers to deposit cheques


through the on-site ATMs of the bank 24x7.

2) Zero balance account service, Canara Super Savings Salary Account, for
employees of government service, mid cap, large corporate, IT and ITE’s companies
and SME’s.

3) Internet Purchases Service using debit card leverages Canara Bank's technological
capabilities and cost efficiencies to serve customers through internet. All debit card
holders of the bank can make internet purchases by logging on to the merchant

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website directly.

4) Multi-city (MCC) facility, enables the customers to issue cheques that are treated as
local cheques in core banking branches.

5) On-Line application for home loan.


6) Global Visa and Master Debit Card was the long felt need which eliminates a
separate card for international travellers.

7) Gifts go digital through the Canara Bank Gift Card in four denominations of Rs
500, Rs 1,000, Rs 2,000 and Rs 5,000.

DEPOSITS SCHEMES

Some of the deposits schems of canra bank :

1) Savings bank account


2) SB Gold scheme
3) Canar tax savings scheme
4) Khmadhenu Deposits
5) Recurring deposits
6) Current account
7) Fixed deposits

LOANS AND ADVANCES

1) Retail Lending Schemes


2) Loans Against Securities

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3) Non Fund Based Facilities


4) Advances to Agriculture, SSIs and Others
5) Government Sponsored Schemes
6) Special Schemes for Women and ETC.

NRI Services

1) Deposits
2) Loans
3) Remittances

4) FOREX Branches
5) Helpline for NR

Credit Cards
1) Domestic Cards
2) Global cards
3) Debit cards

OVERVIEW

Canara Bank has a can-do attitude about banking in India. One of India's largest
banks, Canara Bank (also known as CanBank) has a network of more than 2,700
branches throughout India, in addition to branches in Hong Kong and London. All of
Canara Bank's branches -- including those located in rural areas -- are computerized,
in a country where that is not a given. The modernization of all branches allows the
bank to offer its customers networked ATMs, telebanking, internet banking, and debit
card services. Canara Bank's lending focus is on agriculture, retail, housing, and
infrastructure loans. Other services include asset management and factoring. The
financial institution is 73% owned by India's government.

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AWARDS/ACCOLADE

Received during 2008-09

• Conferred 'First Rank' in India's Best Banks awards under the category
'Strength and Soundness' for 2006-07 by a survey conducted by Ernst &
Young.

• Best Performing Bank under Rural Employment Generation Programme,


(REGP) of Khadi and Village Industries Commission (KVIC), in South Zone
for the year 2007-08, instituted by the Ministry of MSME, Government of

India.

• Golden Peacock National Training Award 2008 for excellence in training.

• Global HR excellence in Training, an award conferred by the Asia Pacific


HR Congress, the largest rendezvous of HR Professionals, at its Employer
Branding Talent Management Congress held on 22nd and 23rd August 2008,
Delhi.

• Best Corporate Social Responsibility Practice Award, instituted by BSE,


NASSCOM and Times Foundation.

• The Bank won two Silver Corporate Collateral Awards for Best Corporate Ad
in the Print Media and Best Corporate Film on Corporate Social
Responsibility at the Public Relations Council of India Awards 2009.

Received during 2009-10

• Best Bank in South Zone Award for the year 2008-09 in respect of lending
under KVIC and PMEGP Schemes. The award was handed over by
Dr.Manmohan Singh, Hon’ble Prime Minister of India.

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• The Bank received the Credit Guarantee Approval Certificate issued by


CGTMSE from Shri Pranab Mukherjee, Hon’ble Finance Minister of India.

PRODUCT PROFILE:

DIFFERENT TYPES OF LOANS AND ADVANCES GIVEN BY


CANARA BANK:

1) CANARA BANK HOME LOAN

2) CAN MOBILE(VECHILE)

3) VIDYASAGAR EDUCATIONAL LOAN

4) PERSONAL LOANS
• HOME IMPROVEMENT LOAN
• CANARA CASH
• CANARA BUDGET
• CANARA SITE LOAN
• CANARA GUIDE

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• CANARA PENSOIN
• TEACHERS LOAN
• SWARANA LOAN
• CANARA RENT
• CANARA JEEVAN
• DOCTORS CHOICE
• CANARA MORTGAGE

1. CANARA BANK HOME LOAN

PURPOSE:

1) For construction of a house building in the plot/site already purchased /owned

2) For purchase of a plot/site and a house building thereon.

3) For purchase of a new house/flat.

4) For purchase of old house /flat of age of 30 years and below.

5) For Repairs, Renovation (including cost of kitchen Cabinet, racks, wardrobes,


electrical/solar power fittings) of existing house of age 50 years and below
(HOME IMPROVEMENT LOAN).

6 )For extending the existing house building HOME EXTENSION LOAN.

7) Short term Bridge Finance for the interim period between sales of the existing/
old house and purchase of a new house (HOME BRIDGE LOAN) –to the extent of
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80% of market price of the existing house or 80% of cost of the new house to be
purchased whichever is less but invariably against the Security of new house.

8) For taking over of the existing Housing loans availed from other Banks/Other
lending Companies/Agencies.

ELIGIBILITY:

1) Salaried individuals, individuals engaged in business / professionals and self-


employed persons.

2) NRIs are also eligible to avail loans without specific permission of RBI

QUANTUM OF LOAN;

1) For salaried employees: 4 years of gross salary income.

2) For persons involved in business or self-employed individuals: 4 years of gross


yearly income

3) For Non-Resident Indians: Up to 2 years’ gross income and discriminatorily up


to 3 years’ gross income.

4) Discriminatingly, a loan amount of upto 5 years’ gross income/salary also


allowed

5) Rs.7.5 lacs for renovations/maintenance/extensions to the existing residential


dwelling unit/flat.

6) Discriminatorily, upto Rs.15 lacs in Urban Centres.

7) For NRIs up to 2 years' gross income and selectively up to 3 years' gross


income.

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LOAN ENTITLEMENT :

New house / flat


(including those for purchase of
:15%
site & construction of house
thereon)
Old house/flat :20%
For second or more houses :25%

MARGIN:

20% of the cost in general. The cost shall include Land cost, Stamp duty,
Registration charges, Fixtures like Ward Robes, Pelmets, Dressing Mirror, Kitchen
cabinets / racks, Geysers etc.

SECURITY:

The branches shall obtain the security of the site and building / flat
constructed / to be constructed / to be purchased for which the finance is being
extended, subject to satisfactory valuation and applicant’s clear marketable title / free
from encumbrance the property.

REPAYMENT:

i) For Salaried Persons:

A maximum repayment period of 20 years or up-to the date of superannuation


(including a moratorium /repayment holiday of maximum of 18 months for
construction of houses and 6 months for repair of houses) whichever is earlier may be

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allowed. In case of outright purchases of ready built house/flat, no repayment holiday


shall be granted.

ii) For others (Other than Salaried class):

Same guidelines as applicable to Salaried class subject to maximum repayment period


of 20 years or 65 years of age of the applicant whichever is earlier (inclusive of
maximum repayment holiday of 18 months in case of loans for construction and 6
months for repairs to existing houses).18 months: generally in equated Monthly

PROCESSING CHARGES:

0.50%of the loan amount minimum of Rs. 500 and max of Rs. 10,000 and no hidden
cost. No application fee. Prepayment Penalty:
2% on the outstanding liability in case of transfer of Housing Loan Accounts to other
banks/ housing finance institutions.

DOCUMENTS:

1) Stipulated Loan Application with 2 passport size photos of applicant / guarantor

2) Sale Deed

3) Agreement for Sale

4) Copy of the approved plan for the proposed construction / extension / addition

5) Detailed cost estimate / valuation report from Bank's Panel Chartered Engineer /
Architect

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6) Allotment letter of Co-operative Housing Society / Apartment Owners'


Association / Housing Board / NOC from the Society / Association / Builders /
Housing Board

7) Legal Scrutiny Report, EC for the past 13 years, Property Tax paid receipt,
SKhata and permission for mortgage, wherever necessary

8) Salary Certificate and Form No.16 (in case of salaried persons)

9) IT Returns filed for the past two years (in case of non-salaried persons)

10) A brief note on the nature of business, year of establishment, type of


organization, etc.,

CAN MOBILE(VECHILE)

PURPOSE:
For buying new or used four wheeler .

ELIGIBILITY :

1) Salaried persons with qualifying income and required repayment capacity.

2) professionals and business people with qualifying income and required


repayment capacity.

3) Reputed firms and corporate are also eligible.

NEW CAR LOANS:

1) Up to 90% finance of the invoice value on a brand new car.

2) No ceiling on maximum loan amount.

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USED CAR LOANS:

1) Finance used cars not older than 5 years

2) Finance 75% of the agreed price or 75% of the value of the car, as assessed by
an automobile engineer or Rs.6 lakh whichever is lower.

RATE OF INTEREST (FIXED RATE):

1) Car loan - 9.50% (fixed)

2) Interest is charged on the daily reducing balance. So you don't have to pay
interest even for a day extra on the portion repaid by you.

REPAYMENT:

In convenient Equated Monthly Instalments up to 72 months. In zero percent


finance offers, the terms are normally upto one year only. So, step into any of
our branches and drive away your dream car.

PROCESSING CHARGES:

0.1% on the loan amount with a minimum of Rs.250/- and maximum of Rs.500/-.

DOCUMENTS:

1) Stipulated Loan Application with 2 passport size photos

2) Latest salary certificate and Form No.16 / income - proof like ITAO / IT Return,
Financial Statements as the case may be

3) Performa Invoice or valuation report (as the case may be)

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4) Guarantee / co-obligation. Waiver considered selectively

5) For used vehicle, other documents as per norms

VIDYASAGAR EDUCATIONAL LOAN:

ELIGIBILITY :

a) Studies in India

• Graduation
• Post-graduation including technical / professional courses with employment
potential conducted by colleges / Universities approved by UGC /
Govt./AICTE/Department of Electronics / IMC, autonomous institutions like
IIT,IIM etc.

b) Studies abroad:

• Job oriented, technical / professional courses- (graduation / post graduation


LOAN DETAILS :

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• Payment of course fees


• Purchase of books, equipments, instruments, uniform
• Payment of hostel fees, examination fees, study tours
• Passage expenses (for studies abroad)

QUANTUM :

• For studies in India : Max. Rs.10.00 lacs


• For studies abroad : Max Rs.20.00 lacs

MARGIN :

• Up to to Rs.4.00 lacks - Nil


• Above Rs.4.00 lacks
for studies in India : 5%
studies abroad : 15%

SECURITY :
Loan is given jointly to the student and parent /guardian
Assignment of future income of the student

• Upto Rs.4.00 lacs - No security


• Above Rs.4.00 lacs upto Rs. 7.50 lacs - Satisfactory third party guarantee
• Above Rs. 7.50 lakhs: colletral security equal to 100% of the loan amount

RATE OF INTEREST

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Subject to changes as advised by Bank/RBI from time to time.

PROCESSING CHARGES:

0.1% on the loan amount subject to a minimum of Rs.100/- and maximum of Rs.250/

REPAYMENT :

• To be repaid in 5 to 7 years.
• Initial repayment holiday of One year both for principal & interest from the
date of completion of course or six months of getting a job whichever earlier.
• Interest will be debited quarterly on simple basis during the repayment
holiday / moratorium period. After commencement of repayment,the accrued

interest is added to the principal amount and EMIs fixed on total outstanding

• amount.
• Penal Interest @ 2% will be charged for above 2.00 Lacs for the overdue
amount and overdue period

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HOME IMPROVEMENT LOAN

“Home Improvement Loan Scheme” provides a packaged financial assistance to


individuals for furnishing their houses / flats at incredibly low rates of interest".

PURPOSE:

For furnishing house / flat with household furniture items, air conditioners, wardrobes,
kitchen cabinets, refrigerator, washing machine, etc.,

• Can be availed along with a Housing Loan from Canara Bank OR


• Separately in cases where Housing Loan is obtained from other Banks /
Financial Institutions OR Without any Housing Loans

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ELIGIBILITY:

• Owners of House / flat who are salaried individuals / individuals engaged in


business / professionals / self-employed. NRIs are also eligible.

LOAN QUANTUM & MARGIN:

1. When availed along with Housing Loan from our Bank, amount upto one year's
gross salary / income over and above the normal eligible amount for housing
finance.
2. In other cases, one year's gross income / salary will be reckoned to determine
the loan quantum under this Scheme.
3. Subject to above, normally, the maximum loan quantum shall be Rs.2 lacs.
Higher quantum considered selectively.
4. If availed as a part of the housing finance from our Bank, then, the margin
stipulated is 15%. In other cases, the margin is 20%.

SECURITY:

1. Hypothecation of assets created out of this loan.


2. Mortgage of house / flat (if housing loan is availed from us)
3. Suitable co-obligation / personal guarantee. Waiver considered selectively.

REPAYMENT:

• In convenient equated monthly instalments upto 60 months.

PROCESSING CHARGES:

• 0.50%of the loan amount minimum of Rs. 500, no hidden cost. No application
fee.

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DISBURSEMENTS:

• Amount will be normally disbursed only after acquiring ready built house / flat
or completion of construction of house / flat or completion of repairs /
renovations, etc., where the loan is availed along with housing finance. In case
this loan is sanctioned independent of a housing loan then, the loan can also be
disbursed against Performa invoice, etc.

DOCUMENTS / FORMALITIES:

• Stipulated Loan application with 2 passport size photographs


• Latest Salary Certificate and Form No.16
• ITAO / IT Returns (for professionals and non-salaried persons)
• Performa Invoices, cost estimates

CANARA CASH

Instant cash against Shares / Debentures / Bonds / Units !

PURPOSE:

• Earn on your investments. And keep them too.


• No need to liquidate your investments even during dire necessities.
• Instead, you can avail Canara Cash loan pledging your investments in Shares,
Debentures, Bonds or Units.

ELIGIBILITY:

• Individuals - Existing customers with satisfactory dealings.


• New customers - well-introduced and credit worthy can also avail.

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QUANTUM OF LOAN :

• Shares and Debentures - upto 50 % of market value


• PSU Bonds upto 70% of Market Value
• Units of UTI and CBMF - 50% of NAV or market value whichever is less.

Avail up to Rs.5 lacks


Maximum loans up to Rs.20 lacks if demat account is maintained with DPs of our bank.

Securities can be replaced / substituted during the currency of the loan up to 10 times.
Nominal charges for substitution of securities

REPAYMENT:

• Up to 60 months. EMI also acceptable.


• Selectively OD limit is also considered.

PROCESSING CHARGES:

• 0.1% of the loan amount subject to a minimum of Rs.100/- and maximum of


Rs.250/-.

DOCUMENTS / FORMALITIES :

• Stipulated Loan Application with 2 passport sized photographs


• Guarantee / co-obligation where applicable
• Statement of holding of scrip's issued by DP
• Latest salary certificate / income proof like ITAO / IT Return
• Financial Statements for the last 2 years (in case of non-salaried individuals)

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CANARA BUDGET

A simple Personal Loan Scheme exclusively for the benefit of employees of


Corporate, PSUs, Government Departments, Institutions, etc., and also Non salaried
class like ; professional/self employed, businessmen

PURPOSE:

To meet genuine personal needs other than speculative purpose.

ELIGIBILITY:

• Confirmed employees of reputed PSUs and Joint Stock Companies


• Confirmed Central / State Government officials

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• Lecturers / Asst. Professors / Professors of Colleges / Research Institutions and


Universities.
• Non Salaried :- Business/self employed who are in the business / profession for
minimum period of 3 year and who are having satisfactory dealings with the
branch for atleast 1 year.
• Employees salary account has to be maintained with our branch

QUANTUM :

• Salaried :- Six months' gross salary or Rs.1 lacks whichever is less.


• For Non salaried :- 50% of average gross annual income of the applicant for
last 3 years subject to maximum of Rs.1 lacks
• Higher quantum also considered selectively.

RATE OF INTEREST:

Compare this with high rates charged for clean Personal Loans by some banks who
advertise aggressively about Personal Loans, but do not mention the rates!

REPAYMENT:

• Salaried : In convenient Equated Monthly Instalments upto 60 months.


• Non salaried : In convenient Equated Monthly Instalments upto 36 months.

SECURITY :

• Salaried : Normally, Co-obligation is required for loans above Rs.50,000/-.


Waivers considered selectively.
• Non Salaried : Suitable co-obligation is required.
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PROCESSING CHARGES:

• 0.5% of the loan amount subject to a minimum of Rs.100/- and maximum of


Rs.500/-.

DOCUMENTS / FORMALITIES

• Stipulated Loan Application with 2 copies of passport size photographs


• Latest Salary Certificate and Form No.16 / ITR/ITAO for last 3 years.
• Co-obligation (unless waived)

CANARA SITE LOAN

PURPOSE:

• A Loan Scheme to individuals for purchase of Housing sites from


State Development/Town Planning Development authorities, Central
and State Governments local authorities either exclusively or in
partnership with private sector entities, or from any other body
constituted by the Government for distribution of sites provided such
layouts are duly approved by the concerned statutory authority.
Housing loan can be availed whenever required for construction of
house of the sites purchased.

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ELIGIBILITY:

• Confirmed salaried class individuals and businessmen/professional


who are in the business for a minimum period of 3 years and whose
net annual income is Rs.1 lacks or above. For employees Net take
home salary should be 40% of the gross salary.

QUANTUM :

• Three years gross annual salary/income with a maximum of Rs.15


lacks for properties situated at six metros of Mumbai, Delhi, Kolkata,
Chennai, Bangalore, Hyderabad and Secunderabad and Rs.10 lacks for
properties situated at other centers.

MARGIN :

• 20% on the project

REPAYMENT PERIOD:

• 5 Years

SECURITY

• Mortgage of the housing site proposed to be purchased. No Co


obligation/personal guarantee will be insisted.

PROCESSING CHARGES:

• 0.5% of the loan amount subject to a minimum of Rs.500/- and


maximum of Rs.10000/-.

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DOCUMENTS / FORMALITIES :

• Application with 2 passport size photographs


• Layout/site plan issued by the development authorities.
• Latest 6 months Salary Certificate/Form No.16 for salaried class and
latest
• ITAO for Businessmen/professionals.
• Legal Scrutiny Report form Bank’s panel Advocate

• Allotment letter other any other evidencing purchase/allotment of sites


issued by the development authorities.

CANARA GUIDE

OBJECTIVE

• Loan scheme to finance individuals possessing a valid certificate to practice as


a Tax Return Preparer (TRP) as per the scheme formulated by the Ministry of
Finance, Government of India for preparation of income tax returns.

PURPOSE

• Purchase of computer, Printer and other peripherals/accessories i.e., necessary


software, furniture, mobile telephone, tax books, technical literature etc.

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ELIGIBILITY

• Individual customers of the bank with satisfactory dealings possessing a valid


TRP Certificate. For new customers, the account should be properly introduced
to the Bank and should satisfy other eligibility norms.

LOAN QUANTUM

• Need based finance with a maximum of Rs.60000/-. (Rupees Sixty thousand


only).

MARGIN

• A minimum margin of 15% on project cost

REPAYMENT

• Entire loan together with interest shall be repaid within 60 months in step up
• EMIs, with 3 months repayment holiday.

SECURITY

• Hypothecation of the assets created out of the loan & Suitable Co-obligation.

PROCESSING CHARGES

• A lump sum amount of Rs.500/- (Rupees Five hundred only)

INSURANCE:

• The assets created to be insured.

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CANARA PENSOIN

PURPOSE:

• To meet the cost of medical expenses and other genuine needs

ELIGIBILITY:

• Pensioners of Central / State Governments / PSUs / Corporate


Pensioners / Pensioners of Banks provided they all draw pension
through our branches.

QUANTUM :

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• Ten month's pension amount or 1,00,000/- whichever is lower.

REPAYMENT :

• Up to 36 months in EMIs.

SECURITY :

• Co-obligation of spouse / suitable person

TEACHERS LOAN

PURPOSE:

• To meet any genuine personal needs.

ELIGIBILITY:

• All confirmed teaching / non-teaching staff working in a school /


college - drawing salary through our branches

QUANTUM :

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• 6 months' gross salary or Rs.1,00,000/- whichever is less.

PROCESSING CHARGES:

• 1% of the loan amount with a minimum of Rs.50/- .

REPAYMENT :

• Up to 60 months.

SECURITY :

• Suitable co-obligation

DOCUMENTS/FORMALITIES :

• Stipulated Loan Application with 2 passport size photographs


• Latest Salary Certificate and Form No.16

• Co-obligation where applicable

SWARANA LOAN

Let your idle gold also glitter.

• Hassle-free, quick loan, co-obligation and no guarantee required.


• Reasonable rate of interest

PURPOSE:

Loan against gold jewellery / ornaments.

REPAYMENT:

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• The entire loan is to be repaid in 24 Equated Monthly Instalments ( EMI )

ELIGIBILITY:

• Credit-worthy SB Account holders with satisfactory dealings or new customers


properly introduced and credit-worthy.

QUANTUM:

• Maximum Rs.2,00,000/-

DOCUMENTS & FORMALITIES:

• Application for Swarana Loan


• Certificate by the Jewel Appraiser (Bank will arrange)
• Salary Certificate and Form No.16 / income proof

CANARA RENT

PURPOSE:

To provide loans to owners of the property to meet their business needs and / or
genuine personal needs, against rents receivable.

ELIGIBILITY:

• Existing customers with satisfactory dealings.


• New customers -well introduced and creditworthy

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The property should have been leased / rented out to PSUs / Central / State / Govt.
undertakings, reputed corporate, financial institutions, insurance companies, MNCs
and banks including Canara Bank branch / office / quarters.

QUANTUM:

• Up to 75% of the gross monthly rent receivables for the unexpired lease period
less TDS portion and advance rent collected.

SECURITY:

• Equitable Mortgage of the leased property, value of which should be at least


100% of the loan amount. In exceptional cases, mortgage of alternative
property also accepted provided the value of the property is 150 % of the loan
amount.
• Assignment of lease rentals in favour of the Bank.
• Personal guarantee from person / s of adequate net worth acceptable to the
Bank. Waiver considered selectively.

REPAYMENT:

• Maximum 60 months or unexpired period of lease which ever is earlier, by way


of EMI. Selectively up to 84 months considered.

PROCESSING CHARGES:

• 0.5% of loan amount.

DOCUMENTS / FORMALITIES:

• Stipulated Loan Application with passport size photographs - 2 copies each

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• Copy of Lease Deed


• Income proof of the applicant and lessees (Salary Certificate, Form No.16 /
Other proof)
• ITAO / IT Return / Wealth Tax Assessment Order, if available
• Title deeds of the property, EC, latest tax paid receipt, Legal Scrutiny Report
• Approved plan of building
• Certificate of balance if finance is availed against property from any other
sources
• Annual Financial Statements for the past 2 years (in case of firms and
companies)

CANARA JEEVAN

REVERSE MORTGAGE LOAN SCHEME FOR SENIOR CITIZENS


(RML)

In the present scenario, for most senior citizens and those nearing retirement the
biggest fear is the need for money to live comfortably after retirement. Reverse
mortgage loan scheme helps them to convert their dwelling house property into liquid
cash flows to meet their living expenses.

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With this objective of meeting the financial needs of the Senior Citizens, a new loan
scheme is introduced, namely “CANARA JEEVAN” - Reverse Mortgage Loan
Scheme For Senior Citizens.

OBJECTIVE:

To meet the financial needs of Senior Citizens owning self occupied residential
property.

PURPOSE OF THE LOAN:

• For supplementing pension/other income


• Maintenance of family, Medical, emergency expenditure
• Repayment of an existing loan taken for the residential property to be
mortgaged
• Up gradation, renovation and extension of residential property
• For uses associated with home improvement, maintenance/insurance of
residential property
• Meeting any other genuine need

ELIGIBILITY

• Owners of residential house/flat, who are residents of India, above 60 years of


age,
• Property self acquired and self occupied as permanent primary residence and
property free from encumbrances
• Residual life of property should be at least 20 year
• Incase of flats the age of the flat should not be more than 10 year.

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• Couples will be eligible as joint borrowers and in such cases, at least one of
them should be above 60 years of age and the spouse/joint borrower should
be more than 55 years of age.
• In case of jointly owned properties the joint owner who is aged above 60 years
shall be the first borrower.
• Commercial property not eligible under the scheme.

DETERMINATION OF ELIGIBLE AMOUNT OF LOAN:

• Depending upon the age of the borrower and the assessed value of the
property. flats/house.
• Incase of independent house Minimum loan quantum Rs.5.00 lacs and
maximum Rs.50.00 lacs . (*)
• Incase of flats Minimum loan quantum Rs.5.00 lacs and maximum Rs.25.00
lacs. (*)

(*) Loan amount including interest till maturity.

NATURE OF PAYMENT:

Nature of payment to be decided in advance as part of the RML covenants, as under:

• Periodic payments (monthly/quarterly)

• One time Lump-sum payment, not more than 20 % of the eligible loan
amount.
• In case of periodic disbursement, the payments shall be made during the loan
period of 15 years or till the death of the last surviving spouse, whichever is
earlier.

Period of Loan: Maximum 15 years.

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INTEREST RATE: 10.50 % p.a. (fixed) with reset every three years.

SECURITY:

The loan shall be secured by way of mortgage of residential property, by way of


Registered Mortgage or equitable mortgage with memorandum of deposit of title
deeds in favour of the bank.

REPAYMENT OF THE LOAN:

• The loan shall become due and payable only when the last surviving borrower
dies or would like to sell the house, or permanently moves out of the house.

DOCTORS CHOICE

Complete solution to cater to the needs of medical practitioners

PURPOSE:

• Purchase of equipment
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• Setting up of Clinic, X-ray lab, Nursing Home, etc.


• Expansion / renovation / modernisation of exiting premises
• Purchase of vehicles, ambulance, computers and other essential equipments
• Meet working capital needs

ELIGIBILITY:

• All qualified registered medical practitioners


• A well established practice / experience of minimum 3 years

LOAN AMOUNT:

Maximum of Rs.10 lacs (Sub-ceiling of Rs.2 lacs for Working Capital)

Term Loan (TL): Need Based

Working Capital (WC):

• 25% of previous years’ turnover or


• 25% of the expected turnover of current year or
• 2 times the Annual Net Income or

• The ceiling amount mentioned above, whichever is less

MARGIN

LOAN LIMIT BOTH TERM LOAN AND WORKING CAPITAL


Loans upto Rs.25,000/- NIL

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Rs.25,001 to Rs.5,00,000 10%


Rs.5,00,001 to Rs.10,00,000 25%

SECURITY:

PRIME : Hypothecation of assets financed by the Bank :

COLLATERAL :

Loans upto Rs.2,00,000/- Existing Assets, if any


Beyond Rs.2,00,000/- Existing assets and collaterals as stipulated by the Bank

REPAYMENT :

Term Loan – 5-7 years in monthly instalments / EMI Working Capital


a) OD Limit valid for one year
b) Loan – repayable in 24-36 months in instalments / EMI

CANARA MORTGAGE

Discover the power of your property .... !


For meeting genuine needs - other than speculative purposes.

ELIGIBILITY:

• Professionals, businessmen, salaried persons


• Customers having satisfactory dealings with our bank

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• New customers well introduced and credit worthy with satisfactory banker's /
market reports on them.

QUANTUM :

• Up to 50% on the value of the property offered as security as per the valuation
report of the bank's panel-valuer.

REPAYMENT :

• Up to 60 months by way of EMI

SECURITY:

• Equitable Mortgage of property acceptable to the Bank having clear marketable


title.

GUARANTEE:

• Personal Guarantee from person / s of adequate net worth acceptable to the


Bank. Waiver considered selectively.

PROCESSING CHARGES:

• 0.5% of loan amount

DOCUMENTS / FORMALITIES :

• Stipulated Loan Application with passport size photographs - 2 copies each


• Copy of lease deed
• Income proof of the applicant and guarantor

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• Income Tax Assessment Order / IT Returns


• Title deeds of the property / EC, latest tax paid receipt / Legal Scrutiny Report
• Approved plan of building
• Certificate of balance if finance is availed against property from any other
source
• Annual Financial Statements for the past 2 years (in case of persons other than
salaried individual

ANALYSIS AND INTREPRETATION

Analysis

Definition:
The tracing of things to their source, and the resolving of knowledge into its
original principles. The resolving of problems by reducing the conditions that are in

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them to equations. A syllabus, or table of the principal heads of a discourse, disposed


in their natural order.

Interpretation

Definition:
Opinion regarding a set of facts. A degree of subjectivity is involved on the
part of the individual, based on his or her experience, personality, and biases. For
example, after performing a detailed analysis of the financial statements of a
company, two financial analysts may differ in their perceptions of what the market
price of the company's stock should be.

TABLE 1

TABLE SHOWING THE AGE OF RESPONDANTS

AGE NO OF CUSTOMERS PERCENTAGE


18-25 4 8%
26-40 10 20%
41-50 28 56%
50&> 8 16%
TOTAL 50 100%

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ANALYSIS:
From this table we analyze that 8% of customers are from the age group of 18-25,
20% of customers are from the age group of 26-40, 56% of customers are from the
age group of 41-50, and lastly 16% of customers are from the age group of 50&>
respectively. The maximum customers are from the age group of 41-50 i.e. 56% of the
customers.

INTREPRETATION:
From the above table it is clear that the all age groups between 18 to 50&> are aware
of CANARA BANK.

GRAPH 1

GRAPH SHOWING AGE PROFILE OF RESPONDENTS

AGE OF CUSTOMERS

18-25
50&> 8%
16%
26-40
20%

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56%
A Study on loans and advances

TABLE 2

TABLE SHOWING THE OCCUPATIONAL CLASSIFICATION OF


CUSTOMERS

OCCUPATION NO OF CUSTOMERS PERCENTAGE


BUSINESS 10 20%
EMPLOYEE 29 58%
RETIRED 3 6%
STUDENT 5 10%
AGRICULTURE 3 6%
TOTAL 50 100%

ANALYSIS:

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From this above table 20% customers are from business category, 58% of customers
are from Employees category, 6% of customers are from retired category, 10% are
from student’s category and lastly 6% customers are from agriculture category.

INTREPRETATION:
From this above table showing occupation classification of customers, maximum
customers are of Employees category i.e. 58% of the total customers and the second
maximum are from Business category i.e. 20% of the total customers. So many of
them customers are Employees and Business men's.

GRAPH 2

GRAPH SHOWING OCCUPATIONAL CLASSIFICATION OF


CUSTOMERS

OCCUPATI ON OF CUSTOMERS

30

25

20

15

10

5
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0
BUSINESSEMPLOYEE RETIRED STU DENT
AGRICULTURE
A Study on loans and advances

TABLE 3

TABLE SHOWING ASSOCIATION WITH THE BANK

NO OF YEARS NO OF CUSTOMERS PERCENTAGE


<5 YEARS 4 8%
5-15YEARS 10 20%
15YEARS&> 36 72%

ANALYSIS:
From the above table showing association with the bank, 8% customers are
transacting with the CANARA BANK for less than 5 years, 20% customers are
transacting with the same bank for between 5 to 15 years, and 72% customers are
transacting with the bank for more than 15years.

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INTREPRETATION:
From the above table showing customers association with the bank, the maximum
customers transacting with the bank from about more than 15 years i.e. 72% of the
total customers. The bank has many customers from many years. This is very much
advantageous to the bank.

GRAPH 3

GRAPH SHOWING ASSOCIATION WITH THE BANK

ASSOCIATION WITH THE BANK

<5 YEARS
8%

5-15YEARS
20% <5 YEARS
5-15YEARS
15YEARS&>

15YEARS&>
72%

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TABLE 4

TABLE SHOWING OPINION OF RESPONDENTS ABOUT THE


SATISFACTION TOWARDS THE SERVICES PROVIDED BY
CANARA BANK

NO OF PERCENTAGE
RESPONDENTS
YES 40 80%

NO 10 20%

ANALYSIS:

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From the above table it is shown that 80% of the respondents are satisfied with the
services provided by CANARA BANK. 20% of the respondents are not satisfied with
the services provided by the CANARA BANK.

INTREPRETATION:
From the above table showing the respondents satisfaction towards the services
provided by CANARA BANK, maximum no of respondents i.e. 80% of the total
respondents largely satisfied with the services provided by the CANARA BANK.

GRAPH 4

GRAPH SHOWING OPINION OF RESPONDENTS TOWARDS THE


SATISFACTION TOWARDS THE SERVICES PROVIDED BY THE
CANARA BANK

SATISFACTION TOWARDS THE SERVICES


PROVIDED BY THE BANK

45
40
35
30
25
NO OF RESPONDE NTS
20
15
10
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0
YES NO
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TABLE 5

TABLE SHOWING OPINION OF RESPONDENT WHO HAVE


AVAILED LOAN FACILITY

NO OF CUSTOMERS PERCENTAGE
WHO HAVE
AVAILED LOAN
FACILITY
YES 40 80%
NO 10 20%

ANALYSIS:

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From the above table showing opinion of respondents who have availed loan facility,
80% of respondents have availed the loan from the bank and 20% have not availed
any loan facility from the bank

INTREPRETATION:
From the above table showing opinion of respondents who have availed loan facility,
maximum respondents i.e. 80% have availed loan facility from the bank.

GRAPH 5

GRAPH SHOWING OPINION OF RESPONDENTS WHO HAVE


AVAILED LOAN FACILITY

NO OF CUSTOMERS WHO HAVE AVAILED LOAN FACILITY

40
35
30
NO OF CUSTOMERS
25 WHO HAVE AVAILED
20 LOAN FACILITY
15
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5
0
YES NO
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TABLE 6

TABLE SHOWING TYPES OF LOAN AVAILED BY THE


CUSTOMERS

TYPES OF LOAN NO OF CUSTOMERS PERCENTAGE


HOUSE LOAN 15 38%
PERSONAL LOAN 10 25%
VEHICLE LOAN 9 22%
EDUCATIONAL 6 15%
LOAN

ANALYSIS:

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From the above table given, 38% of customers have availed house loan, 25% of
customers have availed personal loan, 22% of customers have availed vehicle loan,
and lastly 15% of people have availed educational loan.

INTREPRETATION:
From the above table given, the maximum customers have availed house loan i.e. 38%
of the total customers. Hence many of the customers are focused towards the property.

GRAPH 6

GRAPH SHOWING TYPES OF LOAN AVAILED BY THE


CUSTOMERS

T YPES OF LOANS

6
EDUCATIONAL LOAN

9
VEHICLE LOAN
1
PERSONAL LOAN 0

1
HOUSE LO AN 5
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0 5 10 15 20

NO OF CUSTOMERS
A Study on loans and advances

TABLE 7

TABLE SHOWING OPINION OF RESPONDENTS TOWARDS THE


EASY REPAYMENT OF LOAN

OBJECTTIVE YES NO
EASY REPAYMENT 43 7
OF LOAN
PERCENTAGE 87% 13%

ANALYSIS:
From the above given table, 88% of respondents are satisfied with the easy-repayment
of loan and easier also, 12% of respondents are not satisfied with the easy repayment
of loan.
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INTREPRETATION:
From the above table, maximum respondents of 88% are satisfied with the repayment
of loan. The bank should pay attention to 12% of respondent who are not satisfied
with the repayment of loan

GRAPH 7

GRAPH SHOWING OPINION OF RESPONDENTS TOWARDS THE


EASY-REPAYMENT OF LOAN

EASY REPAYMENT OF LOAN

NO
13%

YES
87%

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TABLE 8

TABLE SHOWING OPINIONS OF RESPONDENTS TOWARDS THE


RATE OF INTEREST

OBJECTIVE YES NO
RATE OF INTEREST 35 15
PERCENTAGE 70% 30%

ANALYSIS:
From the above given table, 70% of respondents are satisfied with the rate of interest
of each type of loan and 30% of respondents are not satisfy

INTREPRETATION:

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From the above table given the Maximum respondents of 70% are satisfied with the
rate of interest and the bank should pay attention to the remaining 30% of the
respondents who are not satisfied with the rate of interest.

GRAPH 8

GRAPH SHOWING OPINION OF RESPONDENTS TOWARDS THE


RATE OF INTEREST

RATE OF INTEREST

NO 15
RATE OF…

YES 35

YES NO
RATE OF
INTEREST 35 15
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TABLE 9

TABLE SHOWING OPINION OF RESPONDENTS TOWARDS THE


REPAYMENT OF LOAN

OBJECTIVE NO OF CUSTOMERS PERCENTAGE


MONTHLY 35 70%
QUARTERLY 15 30%

ANALYSIS:
From the above given table, 70% of customers wants the repayment of loan to be done
monthly and 30% of the customers wants the repayment of loan to be done quarterly.

INTREPRETATION:

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From the above given table, the maximum no of customer are of 75% who wants the
repayment of loan to be done monthly. The bank should also pay attention for the
remaining 25% of customer who wants the repayment of loan to be done quarterly.

GRAPH 9

GRAPH SHOWING OPINION OF RESPONDENTS TOWARD THE


REPAYMENT OF LOAN

OPINION OF REPAYMENT OF LOAN

Q UARTERLY
25% MON THLY
QUAR TERLY
MONT HLY
75%

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TABLE 10

TABLE SHOWING RECOMMENDATION TO FRIENDS AND


RELATIVES

OBJECTIVE YES NO
RECOMMENDATION 45 5
TO
FRIEND/RELATIVE
PERCENTAGE 90% 10%

ANALYSIS:
From the above table given, 90% of customers said that they will recommend taking
any type of loan from CANARA BANK and 10% of customers have said no.

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INTREPRETATION:
From the above table given, the bank should pay attention to the less percentage of
customers who said that they will not recommend anyone to avail any types of loans.

GRAPH 10

GRAPH SHOWING RECOMMENDATIONS TO FRIENDS AND


RELATIVE

RECOMMENDATION TO FRIEND/RELATIVE

YES YES
90% NO
10% NO

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SUMMARY OF FINDINGS

The research has been conducted by the questionnaire method by considering


sample size of 50. The research reveals that the people have availed loan from the
bank, as it is the easy means of getting finance. The summary of the research
undertaken is as below:-

 The study comprises of different age groups from 18 to 50&>, Maximum


respondents are from the age group of 41-50 i.e. 56% of respondents. The
second maximum respondents are from the age group of 26-40 i.e. 20% of
respondents. The third maximum respondents are from the age group of 50&>
i.e. 6% of respondents and lastly the fourth maximum respondents are from the
age group of 18-25 i.e. 8% of respondents of the sample. This shows that all
age groups between 18 to 50&> are aware of the Bank.

 As we observe from the study which comprises of occupation of respondents,


the first maximum respondents are from the Employees category that forms
58% of respondents. The second maximum respondents are from the business
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category that forms 20% of respondents. The third maximum of respondents


are from student’s category that forms 10% of respondents. The fourth
maximum respondents are from the retired and agriculture category that forms
6% respectively.

 The study reveals that the 72% of respondents have been transacting with the
bank for more than 15years. 20% of respondents have been transacting with
the bank between 5 to 15

years and recent 8% of customers who have been transacting with the bank are
less than 5 years.

 As we observe from the study it is clear that 80% of respondents are satisfied
with the services provided by the Bank and 20% of the respondents are not
satisfied.

 The no of respondents who have availed loan from the bank has been revealed
from this study. About 80% of respondents have availed the loan from the
Bank.

 This study reveals that the different types of loans such as house loan, personal
loan, vehicle loan and educational loan. Majority of respondents have availed
house loan that forms 38% of respondents. 25% of respondents have availed
personal loan, 22% of respondents have availed vehicle loan and 15% of
respondents have availed educational loan.

 An observation says that 88% of respondents are satisfied with the easy
repayment of loan and 12% of respondents are not satisfied.

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 As the Bank provide the loans by charging interest, the study reveals the
satisfaction of interest rates provided by the bank. 70% of respondents feel that
they are satisfied with the interest rates charged and 30% of them are not
satisfied.

 Observations says that 75% of respondents want the repayment of loan to be


done monthly and 25% of customers wants the repayment of loan to be done
quarterly.

 As we observe from the study, 90% of respondents said that they will
recommend taking any type of loan from the Bank to their friends and
Relatives.

SUGGESTIONS

 All loans should be sanctioned in a shorter period of time, if the required


documents are proper and the loan should be disbursed quickly.

 The documentations should be reduced and they should stick to the documents
mentioned in brochure rather than asking for more and more documents.

 The Bank should pay attention to the small percentage of respondents who
have said that they will not recommend taking loans from their Bank to their
friends and relatives.

 The Bank should pay attention to the small percentage of respondents who are
not satisfied with the easy repayment of loan and interest rates charged.

 The Bank should try to reduce the interest rates of educational loan as it is
more compared to other bank, which will be useful for the students and also
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introduce special schemes for students who want pursue their higher education
abroad.

 The Bank’s ATM’S are a good place to increase awareness of its Bank’s loan
product because many individuals do not have time to go to enquire product.

 E-Banking facilities should also be improved more so that he loans can be


availed very easily through online.

 The Bank has to advertise about new branches that are opened which will in
turn increase the number of walk-in to the Bank and which will increase in the
sale of every loans.

 Salaried class of customer, whose incomes are directly deducted from their
account, can be considered as prompt borrowers who can avail concessional
interest or discount on processing fee.

 Lower income group who have availed loan which are directly deducted from
salaries are facing lot of problem, as their net income will not be able to meet
their expenses. These customers must be provided with the flexible repayment
policy to meet unforeseen periods of financial difficulties.

 The Bank has to simplified policies and procedures for advances to public.

 Attempts can be made to extend more loan facilities for rural sectors.

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CONCLUSION:-

The research conducted on “Loans and Advances at CANARA BANK”. From


the various findings done, we can conclude that the CANARA BANK is earning a
good profit. The respondents are satisfied with the services provided by the Bank, the
various types of loans availed by them are House loan, Personal loan, Vehicle loan
and Educational loan. The respondents are satisfied with the repayment of loan and
rate of interest charged. By this the research was successful and depends on how well
and flexible are strategies planned and implemented.

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QUESTIONNAIRE

Dear Sir/Madam,
I am IMAM HUSSAIN doing my undergraduate Management Course (BBM) at
S.S.M.R.V DEGREE COLLEGE. I am conducting a survey on “loans and
Advances at CANARA BANK”. This is compulsory for the completion of my
degree. So, kindly spare your valuable time in filling up this questionnaire. I thank for
your co-operation.
IMAM HUSSAIN

1) NAME :

2) AGE : 18-25 26-40


41-50 50 & Above

3) OCCUPATION : Employees/services

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Business
Retired
Student
Agriculture
Others specify

4) Since how long are you related with this Bank?

5) Are you satisfied with the services provided by the Bank?


YES NO

6) Have you availed any loan facilities of this Bank?


YES NO

7) If yes which type of loan?


home loan personal loan
vehicle loan Educational loan
Others specify

8) Does it facilitate easy re-payment of loan?


YES NO

9) How would you like the repayment of loan to be done?


MONTHLY QUARTERLY

10) Are you satisfied with the rate of interest?


YES NO

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11) Would you recommend your friend/relative to avail this loan?


YES NO

12) If NO why?

BIBILIOGRAPHY

WEBSITES:

 www.wikipedia.com

 www.thehindubusinessline.com

 www.Canara bank.com

 www.researchandmarkets.com

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BOOKS:

 Canara Bank Manual

 Canara Bank check list

 Loan Application forms

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