Finance Project

STUDY ON RETAIL LENDING AT THE BANGALORE CITY CO-OPERATIVE BANK LIMITED
CHAPTER-1
INTRODUCTION
JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 1

1.1 Indian Banking

The Reserve Bank of India is the central bank of the country. Central banks are a
relatively recent innovation and most central banks, as we know them today, were established
around the early twentieth century.The Reserve Bank of India was set up on the basis of the
recommendations of the Hilton Young Commission. The Reserve Bank of India Act, 1934, (II of
1934) provides the statutory basis of the functioning of the Bank, which commenced operations
on April 1, 1935.
1.2 The Bank was constituted to : -

 Regulate the issue of banknotes
 Maintain reserves with a view to securing monetary stability and
To operate the credit and currency system of the country to its advantage.
The Bank began its operations by taking over from the Government the functions so far being
performed by the Controller of Currency and from the Imperial Bank of India, the management
of Government accounts and public debt. The existing currency offices at Calcutta, Bombay,
Madras, Rangoon, Karachi, Lahore and Cawnpore (Kanpur) became branches of the Issue
Department. Offices of the Banking Department were established in Calcutta, Bombay, Madras,
Delhi and Rangoon, Burma (Myanmar) seceded from the Indian Union in 1937 but the Reserve
Bank continued to act as the Central Bank for Burma till Japanese Occupation of Burma and
later upto April, 1947.
After the partition of India, the Reserve Bank served as the central bank of Pakistan up to
June 1948 when the State Bank of Pakistan commenced operations. The Bank, which was
originally set up as a shareholder’s bank, was nationalized in 1949.
An interesting feature of the Reserve Bank of India was that at its very inception, the
Bank was seen as playing a special role in the context of development, especially Agriculture.
When India commenced its plan endeavours, the development

role of the Bank came into focus, especially in the sixties when the Reserve Bank, in
many ways, pioneered the concept and practice of using finance to catalyse development. The
Bank was also instrumental in institutional development and helped set up institutions like the
Deposit Insurance and Credit Guarantee Corporation of India, the Unit Trust of India, the
Industrial Development Bank of India, the National Bank of Agriculture and Rural Development,
the Discount and Finance House of India etc. to build the financial infrastructure of the country.
With liberalization, the Bank’s focus has shifted back to core central banking functions
like Monetary Policy, Bank Supervision and Regulation, and Overseeing the Payments System
and onto developing the financial markets.
1.3 COMMERCIAL BANK

Amongst the banking institutions in the organized sector, the commercial banks are the
eldest institutions having a wide network of branches, commanding utmost public confidence
and having the lion shares in the total banking operations. Initially they were established as
corporate bodies with share holdings by private individuals, but subsequently there has been a
drift towards central ownership and control.
Up to late sixties commercial banks were mainly engaged in financing organized trade,
commerce and industry, but since then they are actively participating in financing agriculture,
small business and small borrowers also.
1.4 PROGRESS OF COMMERCIAL BANKING IN INDIA

Bangalore in India on western lines had started from the beginning of 19th century. The
first joint stock was established at Calcutta by the name of Hindustan and was under European
management. but this bank failed at that time, the bank of Bengal (1806), bank of Bombay
(1840) and bank of madras (1843) were started with the financial participation of the
government. These banks were called as the presidency banks and were given the right of note
issue in their respective regions. The first purely Indian Joint stock bank was the Oudh
commercial bank which came into existence in 1889. The swadeshi movement of 1905 gave

great stipules to the starting of the Indian Banks. The Indian banking system had gone through a
series of crisis and consequent bank failures. Its growth was quite slow during the first half of
this century. But after independence, the Indian banking system recorded rapid progress. This
was due to planned economic growth, increase in money supply, growth of banking habit,
control and guidance by the Reserve Bank and nationalization of top banks etc. The
nationalization of 10 top Banks in July 1969 gave banking a sense of direction and purpose. In
1980, there was another nationalization of six smaller banks.
1.5 FUNCTIONS OF COMMERCIAL BANKS
The business of a commercial Bank is primarily to hold deposits and make loans and investments
with the object of securing profit for its shareholders.
It performs the following functions:

1. Receiving deposits from the public
2. Making loans and advances
3. Use of the cheque system
4. Transfer of funds
5. Other functions:
 Issuing and operating credit cards (Visa, Master) etc.,
 Keep the valuable articles of customers in safe custody.
 Making and receiving payments on behalf of its depositors.

1.5 LENDING OPERATIONS OF COMMERCIAL BANKS

Lending of funds to the constituents, mainly traders, business and industrial enterprises,
constitutes the main business of the banking company. The major portion of the banks funds
employed by way of loans and advances. Which is the most profitable employment of its funds.
The major part of the banks income is not without certain inherent risks largely depending on the
borrowed funds an banker cannot afford to take undue risks in lending. While lending his funds,
a banker therefore, follows a very cautious policy in order to minimize the risks.
There are three cardinal principles of banks lending that have been followed by the
commercial banks since long. These are the principles of safety-liquidity, and profitability. The
central Government and the Reserve bank have issued a number of directions in this regard,
highlighting the social purpose which they have to sub serve. The traditional principles of bank
lending have, therefore, been followed with certain modifications.
1.6 RETAIL LENDING – INTRODUCTION

Banking as defined in banking regulation act, is acceptance of deposits for the purpose of
lending and investment and not repayable otherwise than on demand. With the limited network
of commercial banks, and monopolies of few presidency banks, the business flow was
spontaneous and bankers had nothing more to do than banking defined in the statute book.
The nationalization of major commercial banks in the late 1960’s and early 1980’s and the
introduction of lead bank scheme resulted in large scale expansion of bank network in the
country.Added to this, the financial sector reforms have brought in the entry of new private
sector and foreign banks into the country. The conventional banking as outlined above have
given way for professional and hi-tech banking. There has been a paradigm shift from the
monopolies of public sector banks to competitive banking. Public sector banks can no longer
remain complacent with their conventional products and services. There where times, when the
corporate clientele occupied the centre stage and retail ones where pushed to the back seats. The
slow down of the economy, sluggish industrial growth, slump in agricultural activities etc, have
pushed the commercial banks to look to the retail sector.banking has both pros and cons. In a
situation like today, the bankers have very little option, but to chant the ‘retail mantra’.

INTRODUCTION TO FINANCE
In our present day of economy, finance is referred as the provision of money at a time when it is required. Every
enterprise big, small or medium needs finance to carry on its operation and achieve its targets. In fact, finance is
so indispensable that it is rightly said that it is the “Life blood of an enterprise”. Without adequate finance, an
enterprise cannot think of its existenc. The study of principles, practices, procedures and problems concerning
financial management of profit making organization engaged in the fields of industry, trade and commerce is
undertaken under the discipline of “BUSINESS FINANCE”.
BUSINESS FINANCE
The term business finance is composed of two words business and finance. Thus it is essential to understand the
meaning of these two words, which is the starting point to develop the whole concept of finance.
MEANING OF BUSINESS
The word business may be interpreted in one way as “State of being busy”. All human creative activities, which
is relating to the production and distribution of goods and services for satisfying human needs are known as
business.
MEANING OF FINANCE
Finance is referred to as the provision of money at a time when it is required.Finance refers to the management
of flow of money through an organization.Having studied the meaning of business and finance, we can develop
the meaning of the term business finance as an activity, which is concerned, with the acquisitions of funds, use
of funds and distribution of profits by a business firm. Thus business finance deals with the acquisition,
application, allocation of funds and financial control.
DEFINITION OF BUSINESS FINANCE

According to Gouthmann and Dougall, business can be broadly defined as “the activity concerned with
planning, raising, controlling and administering the funds used in the business”.
Wheeler defines business finance as “The activity, which is concerned with the acquisition and conservation of
capital funds in meeting the financial needs and overall objectives of business enterprise”In simple words, the
financial management as practiced by corporate firms can be called as Corporate Finance or Business Finance.

What is Retail Banking?

Retail banking can be crudely defined as the antonym of wholesale or bulk banking. It is nothing,
but shade business. A deposit of Rs 1 lakh from a single customer vs small deposits of Rs. 10000
from ten different customers. The corporate and retail divide is nothing but internal
segmentations and the customers remains always a customer.
Advantages of retail banking :

Retail banking has inherent advantages out weighing certain disadvantages, Advantages are
analyzed both from the resource angle and asset angle.
Resource:
 Stable and constitute core deposits.
 Less bargaining fro additional interest.
 Low cost funds.
 Builds customer base.
 Increases subsidiary business.
 A safe and convenient saving avenue.

Assets side:
 Better yield and improved bottom line.
 Good avenue for funds deployment.
 Lower risk and NPA perception.
 Helps economic revival of the nation through increased production activity.
 Improves lifestyle and fulfills aspirations of the people through affordable credit.
 Innovative product development.
 Minimum marketing efforts in a demand driven economy.
 Risk weight in certain segments like housing loans.
Disadvantages of retail banking:

Retail banking, though by and large, is very handy in times of slow credit off take, is not without
certain disadvantages. A major disadvantage is monitoring and follow up of huge volume of loan
accounts. Housing loan by virtue of its long repayment term in the absence of proper follow-up,
they can become NPA’s (Net Performing Assets).
FINANCIAL MANAGEMENT
INTRODUCTION
Financial Management is concerned with the efficient use of resource, namely capital funds.
Financial Management refers to that part of the management, which is concerned with the
planning, and controlling of firm’s financial resources. It deals with finding out various sources
of funds for the firm. The sources must be suitable and economical for the needs of the business.
The appropriate use of such funds also forms a part of financial management.
DEFINITIONS OF FINANCIAL MANAGEMENT

Financial management refers to “ all those managerial activities or efforts which are concerned
with the mobilization of the finance, short term as well as long term finance needed by the firm,
determination of the suitable sources under the given circumstances and collection of the funds
in time and control over the utilization of funds”.
IMPORTANCE OF FINANCIAL MANAGEMENT

The importance of financial management can be expressed as follows:
1. Finance is the lifeblood of business and every business unit needs money to make more money,
but money will get more money only when it is managed properly.
2. Financial management is absolutely necessary for every business unit, which is required to make
more money.
3. In the words of Collins Brooks “ Bad production and sales management slain hundreds but faulty
finance slains thousands”.
4. Financial management helps a firm in optimizing the output from given input of
funds.

5. Financial management helps a firm in monitoring the effective employment of funds in fixed
assets as well as in current assets.
6. Financial Management helps in profit planning, capital budgeting, controlling inventories and
account receivables.
OBJECTIVES OF FINANCIAL MANAGEMENT

Objectives of financial management can be classified in to two:
I BASIC OBJECTIVES:
1) Maintenance of adequate liquid assets in a firm:
This objective implies that financial management should ensure that there are always
adequate cash in the hands of the firm to meet its obligations.
2) Profit Maximization:
A business firm is a profit seeking organization. Naturally the profit maximization will be
one of the most important objectives of financial management. The earnings or the profits of a
firm can increase either by increasing the output or by minimizing the cost of the production for
a given output.
The objective of profit maximization implies that any financial decisions would be evaluated on
the basis of its overall contribution to the profits or earnings of the enterprise.
3) Wealth Maximization:
Wealth maximization is an appropriate objective of an enterprise. Financial theory asserts
that wealth maximization is the single substitute for a stock holder’s wealth, the individual stock
holders can use this wealth to maximizing the stock holder’s wealth, the firm is operating
consistently towards maximizing stock holders utility.

II OTHER OBJECTIVES:
a) Ensuring maximum operational efficiency through planning, directing and controlling of the
utilization of the funds i.e., through effective employment of funds.
b) Enforcing financial decision in the organization while using
financial resources through co-ordination of the operations of the
various decisions of the organizations.
c) Building up of adequate resources for financing growth and
expansion and ensuring fair returns to share holders.
INTRODUCTION TO BANKING
Banking is nothing but a service. Banks are business organization selling banking services.
Banks continuously reassess how a customer views bank services, what are new and emerging
customer aspiration and how these can be satisfied.
ORIGIN:
Since the banking activities were started in different periods in different countries, there is no
unanimous view regarding the origin of the word bank. The word bank is derived from the
French word ‘Banco’ or ‘Bancus’, which means a Bench. In fact the early Jew in Lombardly
transacted their banking business sitting on benches. When the business ailed, the benches were
broken and hence the word bankrupt came in to vogue.
DEFINITION
The Indian Banking Companies Act, 1949 section 5(b), defines banking asaccepting for the
purpose of lending or investment of deposits from the public, repayable on demand or otherwise
and withdrawals by cheque, drafts, orders or otherwise.”Banks are backbone of our society. A
bank must meet the financial needs of a customer, by acting as a custodian of his assets,
providing credit facilities and assisting him to speedily put through financial transaction of one
type or another. Banking, when you come to think of it, is people. It is not figures, files and
ledgers. Bank services needs considerable improvement on an emergent basis. The time has

come for banks to look inward to find out what is the nature and quality of the products they sell,
what is the product demanded by the customer.
It would be unrealistic today to believe that banks are mere financial institutions, working for
profit. Banks essentially are now social organizations, regarding financial services to sub serving
the socio-economic objectives of the society.
ROLE OF BANKS IN ECONOMIC DEVELOPMENT
Commercial banks are playing a crucial role in the economic development of the country. In fact,
without the development of commercial banks in 18th centuries, industrial revolution would not
have taken place in England at all. It is also true that economic development of country depends
entirely on the development of sound commercial banking.
Banks provide short term loans which serves as capital for industrial establishment. Without
capital it is impossible to start an industry, after starting the industry, the banks provide the
industrialists necessary working capital. Thus by providing with investment capital and short-
term working capital, the banks encourage industrial advancement in the country.
Banks extend credit facilities to industry and trade to develop right type of industry and business.
Expansion of credit will provide more funds for the entrepreneurs to start new industries, which
results in more employment and income. Commercial banks by providing funds encourage
production and cause an increase of national income by means of transferring surplus resources
obtained from rural sector. Banks promote capital formation by means of pooling savings from
the people. They mobilize the idle and dormant capital of the community and provide it for
investment.
Banks can also influence the economy in so many other ways. Banks can regulate the interest
rates in the money market by means of regulating the supply of the funds. A cheap money policy
with low rate of interest will tend to stimulate economic activity during the period of deflation. A
reverse policy is followed during depression

BANKING SCENARIO
During the year 2005-2006, the Reserve Bank of India took several initiatives aimed at
improving the prudential regulation. These include stipulating higher provisioning requirement
for NPAs include under ‘doubtful for more than three years’ category effective from March 31,
2006, prohibiting banks from investing in unrelated non-SLR securities, advising banks to
maintain capital charge for market risk, etc. Further, several initiatives were also taken during the
year aimed at improving the credit delivery to the agricultural and SSI sector. The Government
announced a comprehensive policy, envisaging a 30% increase in agriculture credit in 2005-06
and doubling the credit flow to the agriculture sector in three years.
OPPORTUNITIES AND CHALLENGES

The continued good performance of the Indian economy promises increasing opportunities for
business growth. The financial sector is also witnessing far-reaching changes. The new
generation Private Sector Banks have become active competitors. The foreign banks are likely to
increase their operations. This scenario, though challenging, is leading to improvements in the
functioning of the Public Sector Banks as well. They are now in the process of improving their
capabilities in information technology. Product Innovation and Business Process Re-engineering
are also gaining the center stage. With competition driving down the interest spread, thrust on
business volumes, non-interest income, recovery and cost control are likely to increase further.
Technology would further influence customer service, delivery of products and risk management
practices. In order to conform to the global best practices in the area of risk management, banks
would be increasingly focusing more on new types of risks like operational risks.

From Credit Rationing to Credit Marketing:
Banks are awash with liquidity. Prime corporate do not borrow from banks except at sub – PLR
rates. Other corporate are not favored by banks. Suddenly there is a great change in attitude of
the banks. The name of the game is no longer ‘Lending to big corporate, huge amounts to create
loan assets’. Retail credit is now welcome even from RBI’s perspective. Consumer credit is no
longer considered as unproductive, as it triggers demand for consumer products, which in turn
helps manufacturers in a period of economic showdown while the rates of interest on consumer
credit have fallen, there is still scope for further deduction.
Fixed interest rates on housing loans have fallen sharply, but not the floating rates, which are
linked to medium and long term PLR’s. Banks refuse to reduce these rates, which appears rather
unfair. Credit card business is growing and even Public Sector banks have started marketing
these cards. The interest rates on credit card however is over 2.5% for withdrawal cash. Bank is
reluctant to reduce its interest rate as it hits their bottom.
The personal banking segment customers have become the centre of attraction. It is their deposits
and savings acc. That are actively sought after, and not mega deposits at a slightly higher rate of
Interest. Banks are truly spreading their deposits net rather widely.
Retail Credit help the Economy?

“What matters is what for you is fiancé and not what against” , says the RBI quite often. Its
implication is obvious: bank fiancé being scarce and as there are competing claiments, it has to
be rationed in the best interests of national economic prosperity, by ensuring that loan funds flow
to productive sectors. That is why the RBI rightly stresses that purpose orientation and end use
principle are important in lending.
Infact, RBI has not encouraged consumer finance till very recently. However, things have
radically changed. Banks are awash with excess liquidity, interest rates and inflation southwards.

Corporates do not borrow from banks in a big way due to variety of reasons like economic slow
down, infrastructural constraints, etc. Prime corporate manage to secure sub-PLR rates. Under
these circumstances banks are forced to look into the retail segment for lending and RBI no
longer applies the brakes.
Retail credit is not unproductive from the national economy prospective. The spurt in retail credit
like consumer finance, automobiles, two wheelers, financial services and home loans sector
indirectly help the economy by pushing up the sales of the products and services involved. That
is why central bankers now view with favor retail segment lending.
Interest rates are still high on consumer finance part of the retail credit which includes personal
loans, clean loans, share loans, equipment finance loans, etc. Perhaps, interest rates while fall
further in course of time. Banks need to avoid scattered lending and concentrate on contiguous
arrears and institutional employees for financing. Government banks have to understand that
rigorous marketing is essential to face competition and they have to device ways to train and
deploy a percentage of the surplus staff in marketing efforts. Innovations like graduated payment
mortgages, adjustable rate mortgages etc. have to be introduced to suit the convenience of the
borrowers, in place of the present stand alone EMI structures.
The Retail Mantra

Indian Banking till recently, was not known for its aggressiveness in retail banking, even though
there is tremendous scope to build up high volumes. Retail loans account for a mere 2-6% of
GDP in India, in comparison to around 40-60% in Korea and Taiwan and 75% in USA. Thanks
to the radical change in the perception, banks in India are now extending retail finance very
significantly to the sectors like housing, consumer durables, share loans and other personal loans.
With the onset of superior technology, retail products have become cost effective with new
channels of distribution like ATM’S, credit cards, Internet, mobile phones, etc. technology is
also literally forcing banks to design more innovative products. Credit products have to possess
pricing efficiency with provision of integrated services, Insurance pricing will become more

rational, Investing will become automated, enabling consumers to develop portfolios that meet
their personal needs and risk preferences.
Toward a more Profitable Banking

Banks are chasing retail deposits, which have vast potential to reduce cost of funds. In this
endeavor, they are helped with the modern banking devices like Tele banking, Internet banking,
Mobile banking, Credit cards, etc.
On the assets side, in a scenario of economic slowdown and rising defaults, corporate are no
longer the preferred borrowers. Personal segment advances have therefore come to the limelight.
There is the fierce competition in the form of balance takeovers for credit cards and housing loan
out standings, on finer terms. While retail banking results in wide distribution of credit risk, the
transaction costs could be higher, except in an automated environment.
Retailing : A safe bet

Economic slowdown could be fought through retail banking. Competition, rising NPA’s, low
employee productivity, high operation costs, low quality corporate credit are the reasons that
pushed banks into the retail way. Banks need to adopt strategies like product innovation, high
quality service, speed of delivery, etc.
Retail banking: gaining momentum

Retail banking has made massive strides from the beginning of this millennium. Almost all
banks and leading lending agencies are not vying with each other to park their funds to the
maximum extend in retail banking sector, since it is a safe and secured advance with better
income earning. Leading finance companies and commercial banks ion the public and private
sectors including all the nationalized banks and new and old generation private banks, are
launching innovative loan products / schemes tailor made to suit all sections of the society /
different sectors of the public.

Emergence of the word non-performing asset
The issues relating to definition, management or the mismanagement and recommendations

calling for spectacular solutions to the problem of non-performing advances of banks are being
deliberated at frequent intervals during last decade or so.In late 80s the concept of classification
of bank advances in several health code categories took place though the terminology non-
performing advances did not exist at that time. This is followed by early 90s Anglo-American
model of categorization of bank lending portfolio in several blocks of nomenclature in that
included the non-performing advances.The rapid popularity of the phenomenon can be ascribed
to the opening up of the Indian economy and consequent pressure from western powers to
influence our banking system in the name of international standards of accounting, congruence
of banking supervision by Basle Committee, and so on.
The sudden shock of guidelines relating to non-performing advances and simultaneous of income
recognition made the Indian banking system totter and a number of public sector banks started
incurring losses from the mid-nineties.
Then come the recommendations of the Narasimham Committee with the proposition of creating
asset-reconstruction fund for cleaning the balance sheets of the banks of non-performing
advances as a one-time measure.
Indian economy and NPAs
Undoubtedly the world economy has slowed down, recession is at its peak, globally stock
markets have tumbled and business itself is getting hard to do. The Indian economy has been
much affected due to high fiscal deficit, poor infrastructure facilities, sticky legal system, cutting
of exposures to emerging markets by FIIs, etc.
Further, international rating agencies like, Standard & Poor have lowered India's credit rating to
sub-investment grade. Such negative aspects have often outweighed positives such as increasing
forex reserves and a manageable inflation rate.Under such a situation, it goes without saying that
banks are no exception and are bound to face the heat of a global downturn. One would be

surprised to know that the banks and financial institutions in India hold non-performing assets
worth Rs. 1,10,000 crore. Bankers have realized that unless the level of NPAs is reduced
drastically, they will find it difficult to survive.
Global Developments and NPAs
The core banking business is of mobilizing the deposits and utilizing it for lending to industry.
Lending business is generally encouraged because it has the effect of funds being transferred
from the system to productive purposes, which results into economic growth.
However lending also carries credit risk, which arises from the failure of borrower to fulfill its
contractual obligations either during the course of a transaction or on a future obligation.
A question that arises is how much risk can a bank afford to take? Recent happenings in the
business world - Enron, WorldCom, Xerox, Global Crossing do not give much confidence to
banks. In case after case, these giant corporates became bankrupt and failed to provide investors
with clearer and more complete information thereby introducing a degree of risk that many
investors could neither anticipate nor welcome. The history of financial institutions also reveals
the fact that the biggest banking failures were due to credit risk.
Due to this, banks are restricting their lending operations to secured avenues only with adequate
collateral on which to fall back upon in a situation of default.
Meaning of NPAs
An asset is classified as non-performing asset (NPAs) if the borrower does not pay dues in the
form of principal and interest for a period of 180 days. However with effect from March 2004,
default status would be given to a borrower if dues are not paid for 90 days. If any advance or
credit facilities granted by bank to a borrower becomes non-performing, then the bank will have
to treat all the advances/credit facilities granted to that borrower as non-performing without
having any regard to the fact that there may still exist certain advances / credit facilities having
performing status. In simple words, an asset, which ceases to yield, is a Non-Performing Asset.

DEFINITION GIVEN BY THE NARASIMHAM COMMITTEE:
The committee has defined non-performing assets as advances here, as on the date of balance
sheet,
1. In respect of term loans, interest remains past due for a period of more than 90 days.
2. Overdrafts and cash credits accounts, remain out of order for more than 90 days.
3. Bills purchased and discounted remain over due and unpaid for a period of more than 90 days.
An amount is considered past due when it remains outstanding for 30 days beyond the due date.
RBI REGULATION REGARDING INCOME RECOGNITION, ASSETS

CLASSIFICATION AND PROVISIONING:
INCOME RECOGNITION:
RBI has notified regulations concerning the income recognition of banks while accepting the
recommendations of the Narasimhan committee report. The following is the regulations
regarding income recognition of banks:Interest income should not be recognized until it is
realized. A non-performing asset is one when it is overdue for two quarters or more. In respect of
non-performing assets, interest is not to be recognized on accrual basis but it is to be treated as
income only when it is actually received. NPA’s, banks should not charge or take into account
the interest. In overdue bill, interest should not be charged or taken as income unless realized.
Interest accured and credited to prior accounting period in respect of non-performing assets
should be reversed or provided for in the current account if such interest still remains
uncollected.

CLASSIFICATION OF ASSETS FOR MAKING PROVISION:
For the purpose of making provisions for bad and doubtful loans and advances, banks need to
classify them into the following broad categories:
a. Performing assets
b. Non-performing assets
PERFORMING ASSETS:
Performing assets is also known as standard assets/loans, where the interest or principal are not
overdue beyond 180 days at the end of the financial year. Such loans don’t carry more than the
normal business risk. It is further classified into:
 Sub standard assets

 Bad and doubtful assets
 Loss assets
The above categories are done taking into account the degree of well-defined credit weakness
and extent of dependence on collateral security for realization of dues.
RETAIL LENDING
Any loan the repayment of which is overdue beyond 180 days or two quarters is considered as
NPA. It is also further classified into:
 Sub standard assets

 Doubtful assets
 Loss assets

SUB-STANDARD ASSETS:
Loans which are non-performing for a period not exceeding two years, where the current net
worth of the borrower or the current market value of the security, against which the loan is taken,
is not enough to ensure full recovery of the debt. In other words such an asset will have well
defined credit weaknesses that jeopardize the liquidation of the debt and are characterized by the
distinct possibility that the bank will sustain some loss, if deficiencies are not corrected.
DOUBTFUL ASSETS:
Loans which have remained Non-performing for a period exceeding two years will be treated as
doubtful assets. In the case of loans, where instalments of principal have remained overdue for a
period exceeding two years should be treated as doubtful assets. A loan classified as doubtful has
all the added characteristics that the weakness make the collection or liquidation in full on the
basis of currently know facts, conditions and values-highly questionable and improbable.
LOSS ASSETS:
Loss assets in one, where the bank or internal/external auditors the RBI have identified loss, but
the amount has not been written off fully. These assets are considered unrecoverable and are of
little value to the lending institution.
Guidelines for classification of assets
1. Broadly speaking, classification of assets into above categories should be done taking into
account the degree of well-defined credit weaknesses and the extent of dependence on collateral
security for realizations of dues.
2. Banks should establish appropriate internal systems to eliminate the tendency to delay or
postpone the identification of NPAs, especially in respect of high value accounts. The banks may
fix a minimum cut off point to decide what would constitute a high value account depending
upon their respective business levels. The cut off point should be valid for the entire accounting
year. Responsibility and validation levels for ensuring proper asset classification may be fixed by

the banks. The system should ensure that doubts in asset classification due to any reason are
settled through specified internal channels within one month from the date on which the account
would have been classified as NPA as per extant guidelines.
PROVISIONING FOR LOANS AND ADVANCES:
Banks and other financial institutions have to make the following provisions in their books for
advances, which are considered as non-performing assets. Taking into account the time lag
between an account becoming doubtful of recovery, its recognition as such, the realization of the
security and the erosion over time in the value of security charged to the bank, the banks should
make provision against sub-standard assets, doubtful assets and loss assets as below:
LOSS ASSETS:
The entire asset should be written off. If the assets are permitted to remain in the books for any
reason, 100 percent of the outstanding should be provided for.
i) 100 percent of the extent to which the advance is not covered by the realizable value of the
security to which the bank has a valid recourse and the realizable value is estimated on a realistic
basis.
ii) In regard to the secured portion, provision may be made on the following basis, at the rates
ranging from 20 percent to 50 percent of the secured portion depending upon the period for
which the asset has remained doubtful:

Period for which the Provision

advance has been requirement
considered as (%)
doubtful
Up to one year 20
One to three years 30
More than three years 50
SUB-STANDARD ASSETS:
A general provision of 10 percent on total outstanding should be made without making any
allowance for DICGC/ECGC guarantee cover and securities available. The ‘unsecured
exposures’ which are identified, as ‘substandard’ would attract additional provision of 10% i.e., a
total of 20% on the outstanding balance. Unsecured exposure is defined as an exposure where
the realizable value of the security, as assessed by the bank/approved value’s/reserve bank’s
inspecting officers, is not more than 10%, ab-initio, of the outstanding exposure.
STANDARD ASSETS:
(i) From the year ending 31.03.2000, the banks should make a general provision of a minimum
of 0.25 percent on standard assets on global loan portfolio basis.
(ii) The provisions on standard assets should not be reckoned for arriving at net NPAs.
(iii) The provisions towards Standard Assets need not be netted from gross advances but shown
separately as 'Contingent Provisions against Standard Assets' under 'Other Liabilities and
Provisions - Others' in Schedule 5 of the balance sheet.

RBI GUIDELINES FOR RECOVERY OF NON-PERFORMING ASSETS

UPTO RS. 5.00 CRORE
COVERAGE:
(a) The revised guidelines will cover all. NPAs in all sectors irrespective of the nature of
business, which have doubtful or loss as on 31st March 1997 with outstanding, balance of Rs.
5.00 crore and below on the cutoff date.
(b) The guidelines will also cover NPAs classified as sub-standard as on 31st March 1997, which
have subsequently become doubtful or loss category.
(c) These guidelines will also cover cases pending before Courts/Debt Recovery Tribunals/Board
For Industrial Finance and Reconstruction subject to consent decree being obtained from the
Courts/DRTs/BIFR.
(d) Cases of willful default, fraud and malfeasance will not be covered.
(e) The revised guidelines will remain operative only up to 31st March 2001
GUIDELINES FOR RECOVERY OF NON-PERFORMING ASSETS OVER

RS. 5.00 CRORE
(a) CMD’s should personally supervise the NPAs of Rs. 5.00 Crore and above on case-to-case
basis. A list of such NPAs should be prepared and all cases reviewed by CMD personally and the
course of action decided in terms of rehabilitation/restructuring, one time settlement of filing of
suits, by 31st August 2000. The matter should be placed before the Board of Directors, finalizing
the course of action by 30th September 2000 in each such case.
(b) The Board of Directors may evolve policy guidelines regarding one time settlement of NPAs
over Rs. 5.00 crore covering the computation formula, realizable amount, cut off date and
payment conditions with reference to factors of security and disposability, etc., as part of its loan

recovery policy including setting up of Settlement Advisory Committee, staff accountability and
other relevant aspects and decide individual cases in accordance with such policy.
(c) Wherever a suit is required to be filed against the defaulters, who have not come up for one
time settlement, or where restructuring is not feasible, suits must be filed in all such cases by
31st October, 2000.
(d) Banks should follow up suit filed cases vigorously and effectively in the Courts to enable
DRTs to decide the cases within 6 months as laid down in the DRT Act and realization of dues
completed at the earliest. A quarterly report in regard to outstanding of above Rs. 5.00 crore
should also be prepared and held on the file.
(e) Any deviation from the above settlement guidelines for any borrower should be made only by
the Board of Directors.
CREDIT RISK AND NPAS
Quite often credit risk management (CRM) is confused with managing non-performing assets
(NPAs). However there is an appreciable difference between the two. NPAs are a result of past
action whose effects are realized in the present i.e. they represent credit risk that has already
materialized and default has already taken place.
On the other hand managing credit risk is a much more forward-looking approach and is mainly
concerned with managing the quality of credit portfolio before default takes place. In other
words, an attempt is made to avoid possible default by properly managing credit risk.
Considering the current global recession and unreliable information in financial statements, there
is high credit risk in the banking and lending business.To create a defense against such
uncertainty, bankers are expected to develop an effective internal credit risk models for the
purpose of credit risk management.

IMPORTANCE OF CREDIT RATING IN ASSESSING THE RISK OF

DEFAULT FOR LENDERS:
Fundamentally Credit Rating implies evaluating the creditworthiness of a borrower by an

independent rating agency. Here objective is to evaluate the probability of default. As such,
credit rating does not predict loss but it predicts the likelihood of payment problems.
Credit rating has been explained by Moody's a credit rating agency as forming an opinion of the
future ability, legal obligation and willingness of a bond issuer or obligator to make full and
timely payments on principal and interest due to the investors.Banks do rely on credit rating
agencies to measure credit risk and assign a probability of default.
Credit rating agencies generally slot companies into risk buckets that indicate company's credit
risk and is also reviewed periodically. Associated with each risk bucket is the probability of
default that is derived from historical observations of default behavior in each risk bucket.
However, credit rating is not foolproof. In fact, Enron was rated investment grade till as late as a
month prior to it's filing for Chapter 11 bankruptcy when it was assigned an in-default status by
the rating agencies. It depends on the information available to the credit rating agency. Besides,
there may be conflict of interest, which a credit rating agency may not be able to resolve in the
interest of investors and lenders.
Stock prices are an important (but not the sole) indicator of the credit risk involved. Stock prices
are much more forward looking in assessing the creditworthiness of a business enterprise.
Historical data proves that stock prices of companies such as Enron and WorldCom had started
showing a falling trend many months prior to it being downgraded by credit rating agencies.

ACCOUNTING PROCEDURE FOR NPA’S
1. Reversal of Unrealized Interest

In respect of the accounts, which have become NPA first time during the year, the unrealized
portion of interest, which was taken to P&L account on the accrual basis pertaining to the
preceding year, if any, shall also be reversed. Once the advance was identified as NPA, interest
should not be charged to such accounts and interest if any charged for the previous quarters has
to be reversed.
2. Shadow accounts
As per accounting norms, the banks have to maintain shadow accounts in respect of all NPAs, as
interest was not charged to the real NPA account. Interest will be calculated for NPAs each
month and the bank will not pass any entries for them as they are restrained to do so. In order to
know the amount due from the borrower and the unrecovered interest in the account, shadow
accounts are maintained. At any point of time the difference between the real account and the
shadow account indicates the unrealistic interest in the account.
3. Partial recoveries
In respect of part payments received in NPA accounts, first credit must be posted in real account
and then in the shadow account. The real account must be debited to the extent of recovery or
uncovered interest as indicated in shadow account whichever is lower and the contra credit will
go to the banks P&L account. Thus to the extent of recovery interest can be debited (to the extent
it is already charged) to Non Performing advances and credit to the bank’s P&L.
4.Change in the status of the account from non-performing asset to

performing asset
As per the guidelines, once the required installments and interest is recovered in NPAaccount,
the status of the account can be changed from Non Performing Asset to Performing Asset.

Impact of NPAs on Profitability and Balance Sheet of the Banks:

The crucial factor that decides the performance of banks nowadays is the spotting NPAs. For
every Rs.100/- in NPA, the bank is losing Rs.30/- p.a i.e., Rs.8 towards the average interest paid
on deposits (which is the source of lending) +Rs. 10/- towards the provision+ Rs.12/- towards
non-recognition of income and PLR. In this way, within 3 years, the loss is as much as the
principal.
The impact of NPAs on the profitability of the banks is summarized in the following points.
 Reduces earning capacity of the assets: NPA’s reduce the earning capacity of the assets and as a
result of this return on assets get affected.
 Blocks capital: NPA’s carry risk weight of 100% (to the extent it is uncovered). Therefore they
block capital for maintaining Capital adequacy. As NPA’s do not earn any income, they are
adversely affecting “Capital Adequacy Ratio” of the bank.
 Incurrence of additional cost: Carrying of NPA’s require incurrence of ‘Cost of Capital
Adequacy’, ‘Cost of funds in NPAs’ and ‘Operating cost for monitoring and recovering NPAs’.
 Reduces EVA: While calculating Economic Value Added (EVA =Net operating profit after tax
minus cost of capital) for measuring performance towards shareholders value creation,
cumulative loan loss provisions on NPAs s considered as capital. Hence, it increases cost of
capital and reduces EVA.
 Low yield on advances: Due to NPAs, yield on advances shows a lower figure than actual yield
on “standard Advances”. The reasons that yield are calculated on weekly average total advances
including NPAs.
 Affect on Return on Assets: NPAs reduce earning capacity of the assets and as a result of this,
ROA gets affected.

FUNDAMENTALS CAUSES FOR NPA’S:
The information collected in the research and the reports regarding performance of various
industrial segments indicated that the dues to the banking sector are generally related to the
performance of the unit/ industrial segment. In a few cases of NPA has been due to internal
factors (to the banks) such as weak appraisal or follow-up of loans but more often than not, it is
due to factors such as management inefficiency of borrowal units, obsolescence, lack of demand,
non availability of inputs, environmental factors etc. Wherever the unit/segment is doing well the
credit relationship is generally maintained except in cases of willful default/ misappropriation/
diversion of funds. The problems to the unit/segment arising out of various internal/ external
factors were felt to be originating point for NPAs in banks.
Diversion of funds, mostly for expansion/ diversification/ modernization, taking up new projects
and for helping/ promoting associate concerns, is the single most prominent reason. Besides
being so, this factors like recessionary trends developing during the expansion/ diversification/
promotion phase and failure to raise capital/ debt from public issue due to market turning
lukewarm. Time/cost overrun during the project implementation stage leading to liquidity strain
and turning NPA is the next factor.
NPAs may result due to the following reasons:
1.Willful Default:
Some borrowers though have the capacity and resources to repay the loan will not do the same.
These sorts of people will come under willful defaulters. They will take advantage of the
loopholes in the legal system. As per RBI guidelines, willful default broadly covers the following
 Deliberate non-payment of the dues despite adequate cash flow and good net worth.
 Assets financed have either not being purchased or have been sold and the proceeds have been
misutilised.
 Misrepresentation/falsification of records.
 Disposal/removal of securities without the banks knowledge.
 Fraudulent transaction by the borrower.

The identification of the willful defaults is to be made keeping in view the track record of
the barrower and not on the basis of isolated transaction/incident. The default to be categorized
as willful must be intentional, deliberate and calculated.
2.Failure of a business unit either resulting from lack of its own competitive advantage or generic
weakness of the industry. Business failure like product failing to capture the market, inefficient
management, strike or strained labour relations, wrong technology, technical problems, product
obsolescence, etc.,
3. Lack of adequate risk assessment and monitoring system within the bank. Absence of proper
credit management system is a very serious issue i.e., in many of the Indian banks particularly
state owned ones there are several dimensions to the problem. The most important being lack of
trained manpower i.e., the analysts should be in adequate number to appraise critically the credit
worthiness of the potential clients.
4. Lack of prudential regulation. Risk management practices can be effective only when financial
statements present accurate picture of level of risk.
5. Time or cost overrun while implementing the project.
6.Internal factors like raw material shortage, raw material/input price escalation, power shortage,
industrial recession, excess capacity, natural calamities like floods, accidents, etc.,
7.Failure, non-payment/over dues in other countries, recession in other countries, externalization

problems, adverse exchange rates, etc.,
8.Deficiencies on the part of the banks viz. in credit appraisal, monitoring and fallow-up, delay
in release of limits, delay of settlement of payments or subsidies by government bodies etc.,
9.Government or political interferences in the working of banking system. Government policies

like excise, import duties changes, deregulation, pollution control orders, etc.,

In conclusion, this means that management of non-performing advances depends on the causes
rather than treating the lag indicators which are nothing but symptoms. If all the five causes
stated above are taken care of, the problem, at least the intensity of it would have automatically
come down. It should be appreciated that the issue on non-performing advances is serious as the
absence of income stream from this category of assets causes continued deterioration in the
health of banks. Taking piecemeal corporate debt recast body will only not solve the problem,
but also keep the real issues underground that may cause more damage in future on a long term
basis.
CHECK LIST FOR REDUCTION OF NPA’S

Early identification:
 Identification accounts showing early warning signals.
 High values NPA’s should be given focused attention.
 A systematic review of Problem Loans should be done. The time norms for the problem loan
review should be adhered to. Action plan to be drawn up for each account and follow up.
Recovery:
Actual recovery occurs in the accounting in which the total recovery of the dues is warranted.
Through regular pre and post sanction monitoring, follow-ups, the NPA’s can be eliminated.
Up gradation:
The NPA accounts in which part recovery of the total dues will upgrade the account from NPA
to performing asset. Generally the NPA accounts with less than 2 years of the age under NPA are
covered. The main characteristic of these accounts is after elimination
from NPA, also these accounts continued to be part of advances. Since lending is a main
business of the banks up gradation of accounts is preferred.
 Substandard accounts to be specially targeted for up gradation.

 Up gradation strategies would include adjustment of irregularity, repayment of over due interest/
installment and up gradation following restructuring/ rehabilitation.
 Replacement / re-schedulement of loans should be done in deserving cases promptly. After 1
year of successful implementation, account to be reviewed for up gradation.

Rehabilitation:
 Rehabilitation of units should be taken up in deserving cases.
Repayment:
 Fixing repayment programme for accounts while continued viability is in doubt.
 Fixing installments for irregular amount were limits to be continued with reduced exposure.
Compromise:
Through compromise the accounts are closed by negotiated settlement with the borrowers as per
the compromise policy of the bank. Generally compromises are encouraged in cases of chronic
NPA accounts.
 Compromise proposals need to be considered where necessary, and in time.

 Option of OTS through Lok Adalat should be examined.

Chapter – 2
DESIGN OF THE STUDY/RESEARCH DESIGN

II DESIGN OF THE STUDY/RESEARCH DESIGN
Lending money to the persons is one of the many areas of banks business. Bank would like to
know about the problems and perception of its customers. Hence this study has been undertaken
to find out whether this scheme is more viable, customer friendly and provides value added
service.
2.1 TITLE OF THE STUDY - Study on Retail Lending at The Bangalore City Co-
Operative Bank Chamrajpet Branch “ .
2.2 STATEMENT OF THE PROBLEM – The highest valued asset of a banking company
is its loans and advances. Therefore this study has been undertaken to study the procedures for
availing the loan facilities under the innovated schemes introduced by the bank and their
efficiency.
2.3 OBJECTIVES OF THE STUDY –

a. To study the various Retail Lending Schemes provided by The Bangalore City
Co-Operative Bank Limited.
b. To find out the efficiency of the various schemes.
c. To analyse the growth of the various loan schemes.
d. To identify the awareness of the various schemes among the customers of
The Bangalore City Co-Operative Bank Limited.

2.4 OPERATIONAL DEFINITION OF THE CONCEPTS

Banking: - the term banking is defined as “accepting, for the purpose of lending or investment,
of deposits of money from the public, repayable on demand or otherwise, and withdraw able by
cheque, draft, order or othersise” .
Customer: - A person who has a bank account in his name and for whom the banker undertakes
to provide the facilities as a banker, is considered to be a customer.
Loan : - under the loan system, credit is given for a definite purpose and for a predetermined
period
Interest : - payments made by a borrower for the use of money, calculated as percentages of the
capital borrowed.
Moratorium period: - temporary stop of repayments of interest on loan or capital owned
Repayment period: - It is a period in which the loan amount should be repaid.
Scope of Study – The study has been conducted in The Bangalore City Co-Operative Bank
Limited, Chamrajpet Branch, Bangalore.
2.5 AREA OF STUDY

The city of Bangalore was chosen for three main reasons
1. It has a lot of people working as government employees.
2. It is one of the cosmopolitan cities of India.
3. The income disparities among the resident is very high.
The study was also limited to working people with the monthly income of rupees 8000 and
above.

2.6 METHODOLOGY AND DATA COLLECTION
Data Collection Methods –

The data has been collected mainly through two sources:
a) Primary Data
b) Secondary Data
Primary Data – The data, which is collected especially for a study and is not published in any
form before is called Primary data. Information has been obtained through general discussion
with the Branch Manager. Data has also been collected through a questionnaire.
Secondary Data – The secondary data for the study of innovations in consumer
financing/retail lending is mainly collected through:
a) Annual Reports
b) Management Reports
c) Magazines
d) Circulars &
e) Internet

2.7 SAMPLING AND SAMPLING TECHNIQUES

Since the population of the customers with monthly income of Rs. 8000 and above and who are
working as government employees is very vast in the city of Bangalore. It was very difficult to
carry out 100 percent coverage study within a limited period; hence sampling survey method is
adopted for this study.
a) Universe: All the people working as government employees and failing in the monthly income
bracket of rupees 8000 and above.
b) Sampling methods: A pre requisite for doing probability sampling is that here should be
complete knowledge about all the sampling units in the universe since this was not so, non
probability sampling was used.
c) Sample size: Sampling size is 30 respondents who are using various loan schemes.
2.8 PLAN OF ANALYSIS

The data collected through questionnaires and from the banks records books was tabulated and
analysed separately. Whenever possible tables were drawn and percentages were calculated.
2.9 LIMITATIONS OF THE STUDY: -

a) The study is only limited to The Bangalore City Co-Operative Bank Limited,
Chamrajpet Branch.
b) The study has been constrained only to the innovations in retail lending/consumer financing.
c) The study does not include competition from the various other lending institutions with regards
to Consumer Financing.
d) The study was not an extensive one due to the time constraint.

CHAPTER-3
COMPANY PROFILE

Story of the Bangalore City Co-operative Bank Limited
“THE BANGALORE CITY CO-OPERATIVE BANK LIMITED” was the first urban co-
operative bank in the country started in April 06, 1907 by Sri.k.Ramaswamaiah and others.
The Bangalore City Co-operative Bank Limited was established under the co-operative society
act bearing registration number 314/CS, dated 08.04.1907 from the Registar of Co-operative
societies in Karnataka and the License was granted by RBI no.UBD/KA/642, dated 11.11.1986
for conducting the “Banking Business”. The bank has 12 branches along with one administration
office and all branches have been computerized under the jurisdiction of Bangalore City Co-
operative Corporation, Bangalore Development Authority and Bangalore urban city and
peripheral areas. The operation of the bank is throughout Bangalore Co-operative limited.
In consideration of the application submitted to the Govt, of India, to get registered the above
image of godess Lakshmi as Trademark, as per the Trademark Act of 1959, sec 23(2), rule 62(1)
trademark no.943843 dated 31-7-2000 the Govt. approved and registered the above image as
trademark and has been given letter of approval on 15-03-2008.
Nature of the business carried
The business carried by the bank is generally related with providing short term and long term
loans. It also accepts deposits from the public. BCCB also provides loans to processing,
marketing and consumer as well as agriculture in Karnataka and working capital loans to state
level and national level institutions. They offer all types of banking services to customers like
deposits, loans, DD, payorder, bank guarantees, cheques collection facility, etc.
 Cash receipts/ deposits.

 Cash withdrawals.
 Sanction and disbursements of loan.
 Lockers facilities.
 Updating and issuing of new pass book and cheque books.
 Issuing demands drafts.
 Issuing gold coins.

VISION, MISSION AND QUALITY POLICY
Vision
 Accepting deposits for the purpose of promoting saving habits in the minds of the public and the
members.
 The BCCB has vision to mobilize deposits of rs.1000 and to raise advance portfolio to
rs.800vrores in the next 3 years.
 To increase the branch network to 25 branches.
 The BCCB believes that every individual from each strata society needs affordable, relevant and
quality banking to fulfill personal aspirations.
 The vision of the bank is to constantly strive towards meeting those social needs by providing
world-class infrastructure for co-operative banking.
Mission
 In fulfillment of its vision, the bank commits itself to a mission to excel in all its activities to
create an atmosphere of effective banking, induce healthy challenges and competitions,
encourage sustainable accomplishments and ensure enriching rewards to everyone members,
staff, associates and the society of large.
 To meet the growing aspiration of the customers of the bank in particular and other in the general
in the changing environment.
 To bring about total customers satisfaction by providing quality services.
 To meet the economic and career aspiration of the employees of the bank.
 To promote the effectiveness of credit and to reduce the risk in granting a credit through careful
and continuous supervision.
Quality Policy
Following are some of the rules and regulation provided by the bank for the benefits of
customers.
 Avail nomination facilities to a/c holders including savings bank a/c and current a/c holders.
 Bank will exchange mutilated currency notes as per RBI guidelines.
 Banks will give standing instructions for the payment of bills, rents, interest, insurance,etc.
 Bank provides required and important guidelines to the lockers holders.

PRODUCTS/ SERVICE PROFILE
The main operation of the bank (customer service)
 Withdrawals
 Cash receipts.
 Sanctions and disbursement of loans.
 Lockers facilities.
 Clearing cheques.
 Updating pass book.
 Issue new cheque book.
 Issuing demand draft.
 Pay order.
 Telegraphic transfer.
 Opening of fixed deposit account.
AREA OF OPERATION
The Bank has a widespread network of 13 branches along with one administration office at
Chamarajpet and all the branches have been computerized under jurisdiction of Bangalore city
which offering a wide range of services to the customers.

BRANCHES OF BCCB
YEARS AREA
1907 Head Office,

Chamarajpet
1980 Vijayanagar
1981 Jayanagar
1983 Indranagar
1988 Chamarajpet West
1992 Shantinagar
1994 Mahalakshmipuram
1994 Sanjayanagar
1995 Padmanabhanagar
1996 Koramangala
2002 Avalahalli
2002 R.T.Nagar
2009 Jnanajyothinagar

Branches of BANGALORE CITY CO-OPERATIVE BANK
Ownership pattern
PRESIDENT Sri.AvalahalliChandrappa
.R.
VICE Sri. Anjanappa
PRESIDENT
DIRECTORS Sri. Dr. Devaraj. T.M.

Smt. C. M.
Bhagyalakshamma
Sri. Basavaraju.
Sri.P.Doddaiah.
Sri. K. Krishnappa.
Sri. C.Govindaraj.
Sri. K.C. Chikkannaiah
Sri. K.P. Suresh
Sri. U.P. Puranik.
Sri. C. Raghunath.
Sri.K.Krishna Murthy.
Dr. T.P. Yoga.
Smt. G.S. Vijaya

Competitors information
As the Bangalore City Co-operative Bank Ltd., is the urban Co-operative Bank, it is facing
competition from the commercial banks undertake a number of banking services. Since the urban
co-operative banks are localized and do not have network of bankers they are not in position to
meet all the banking services.
Therefore the institution like government, public sector undertakings and the urban co-operative
banks are facing competition from the commercial banks.
The list of competitors is as given below
 Karnataka co-operative bank.

 Srinagar co-operative bank.
 Basavangudi co-operative bank.
 State bank of india.
 Bank of baroda.
 Bank of india.
 Canara bank.
 Union bank of india.
 Allahabad bank.
 Indian bank.
 Corporation bank, etc…..
2.8 Infrastructure Facilities
The bank has 160*134sq.feet site. The building is built in 100*100 sq.feet of the site. A ground
floor and first floor is built to carry out the activities. It is built for own use. In the ground floor,
there is a head office branch of the bank and in the first floor. There is an administrative office.
The head office of the bank is located in chamarajpet, Bangalore. It has 13 branches including 1
head office. The entire branch has computer facilities. Each branch has its own department which
are fully furnished and well equipped for smooth functioning of the banking activities. Proper
lighting, ventilation, drinking water facilities is arranged.

Achievements/Awards
 Since from the opening, the bank has been functioning effectively. The Bangalore city
cooperative bank ltd., was awarded by “Shri.Kanteerava Narasimha Raja Odeyar Bahadur” Ex.
King Of Mysore in 1926 and 1928 as the “Best Urban Co-Operative bank”.
 In 2001-2002 and 2003-2004 the state government of Karnataka awarded as the “Best
Urban Co-Operative Bank”.
 The bank has always certified with “A” class by the Audit.

Workflow Model
Mortage loan work flow activity
Customer approaches the banks branch office
Loan forms is given to the customer; customer fills the form and submits it with
the necessary original documents customer approaches the bank’s branch office
Case worker scrutinizes the application and sends it to the branch manager
Branch manager inspects property & sends the application to the administrative
office
Re-scrutiny is done and the application is sent to legal opinion
Valuation of the property takes place, when board approves, sanction of loan takes
place
For sanctioned loans, documentation takes place
When documentation is complete, release order is sent to branch office
Mortgage loan is sanctioned

Work Flowmodel Of Mortgage Loan Activity
2.9. Future Growth And Prospects
 Taking permission from rbi to start branches in T.Dasarahalli, Banasavadi, Krishnarajapura And
Yelahanka.
 To rise deposits up to 500crorers and loans and advances up to 370 crorers.
 To make all branches to core banking facilities and help to customers.
 Provide training for employees to acquire more knowledge about the bank work.
 The bank wants to increase its operations by setting up its banches all over the Karnataka.
 There are planning to enter core banking.
 Installation of ATM facility in all the areas.
 Opening of branches at all district head-quarters and minorities concentrated centers.
 Launching of mobile banking and teller banking.
 To increase deposits. Improve the customer service by adopting latest technology.
 Improve customer service.
 The bank aim to achieve 1000 crorers deposits in few years.
 Foreign exchange banking.

STRUCTURE
PRESIDENT
VICE -PRESIDENT
BOARD OF DIRECTOR
GENERAL MANAGER
DEPUTY GENERAL MANAGER
ASSISTANT GENERAL MANAGER
BRANCH MANAGER
ACCOUNTANT
ASSISTANT ACCOUNTANT
SENIOR ASSISTANT
EMPLOYEES

Organization Strucutre
SWOT ANALSIS
Swot analysis is done for a company to find out overall strength, weakness, threats and
opportunities, lending to gauging the comparative potential of the company. The SWOT analysis
enables a company at recognizes its market standing and adopt strategies accordingly. Here
SWOT analysis of the Bangalore city co-operative bank is made to understand the positioning of
the bank better.
STRENGTHS
1. BRAND NAME:
The Bangalore city co-operative bank has earned a reputation in the market for extending quality
services to the market vis-a-vis is competitors. I have earned a strong brand name in co-operative
banking.
2. VAST EXPERIENCE:
The Bangalore city co-operative bank has a vast experience of hundred years in banking
business.
3. DIVERSIFIED PORTFOLIO:
The Bangalore city co-operative bank has the entire product under its belt, which helps it to
extend the relationship with existing customer. The bank has umbrella of product to offer their
customers, if once customer has relationship with the bank, some product, which bank offering
are:-
 Retail banking
 Business banking.
 Merchant establishment services
 Personal loans & car loans.
 Insurance
 Housing loans.

4. AGGRESSIVE MARKETING:
The Bangalore city co-operative bank is known for its aggressive marketing of its products.
Recent strategy to push its product is, it is the sole sponsor of a kannada music show which is
telecasted in ETV kannada channel.
5. FOCUS ON ALL KINDS OF CUSTOMERS:
The bank targets not only the top bracket of clients but even carter to the needs of small
customers. Due to this reason the bank may retain good clients effectively.
6. AGGRESSIVE APPROACH IN LENDING:

7.
Bank has an aggressive approach in lending. Because of this policy companies prefer this bank
when to other nationalized bank.
WEAKNESS:
1. TECHNOLOGY:
From its inception, bank has not adopted a policy of selecting internationally proven and
specialized packaged systems for its technology. Banks technology platform has not been
acknowledged globally which as a competitive advantage for any bank.
2. NO PRESENCE OUTSIDE INDIA:
Bank is having any presence outside india, because of which companies prefer MNC bank,
mainly city bank tries to emerge outside india then it has a huge potential of customers.
3. POOR CUSTOMER CARE/SERVICE:
With its aggressive marketing this bank is rapidly increasing its customer base. They are not
however, increase the number of employees accordingly. This is leading to deterioration of the
standard the number of employees accordingly. This leading to detonation of the standard of
customer services.

4. MARKET SHARE:
Bank has not got market share in the industry in according to our survey. Which is a great
setback for any business?
OPPORTUNITIES:
1. NEW IT & ITES COMPANIES:
IT & ITES sector is on boom in the Indian market context,with new companies mushrooming in
the market; it opens the door for bank to capture the huge untapped market.
2. DISSATISIFIED CUSTOMERS OF OTHER BANKS:
The groups from its survey and analysis of companies have found out that there are many
companies which are not satisfied its current bank, so the bank with its superior service quality
long working hours can capture those customers.
3. BUSINESS ADVISING FOR SMALL PLAYERS:
The analysis has also indicated that the concept of business advising through very popular with
the higher end players is virtually nonexistent in the lower end of the market. It should take this
opportunity to provide business advising to the smaller companies at competitive rate and try to
take the first mover advantage.

THREATS:
1. ADVENT OF MNC BANK:
Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies
adopted by the government. This can increase the level of competition and prove a potential
threat for market share of the bank.
2. DISSATISFIED CUSTOMERS:
The analysis indicated that through most of the companies are satisfied with the product offer by
this bank but the poor customer support/services is creating a lot of dissatisfaction among the
customers , this can prove to be a serious problem as far as the market reputation of the bank is
concerned and can be a major threst in future business accusation.
3. EVER IMPROVING NATIONALIZED BANKS:
With PSU banks like SBI going all out to compete with the private banks and government giving
them a free hand to do so, it can prove to be serious threat foe the bank like the Bangalore City
Co-Operative Bank.

Area of Operation
Up to 2009 the area of operation of the bank was confined to the area of the city of Bangalore
and its agglomeration area. In the year 2009 the bank has extended its area of operation to the
entire State of Karnataka with the permission of Reserve Bank of India and Registrar of co-op
Societies of Karnataka with the intention of extending its activity through out the State of
Karnataka.
The Bank is having its Administrative Office at No. 3, Pampa Mahakavi Road, Chamarajpet,
Bangalore.
Presently bank is having 22 branches of which 20 are operating in prime locations of Bangalore
City with own buildings at Chamarajpet, Indiranagar and one branh each in Ramanagr and
Mysore City. The bank also has plans to expand its branch network to other major towns of
Karnataka State. For the convenience of the customers and also to provide speedy and
satisfactory customer service all the branches are computerized with Core Banking Solutions
with Any Branch Banking facility and are functioning in customer friendly morning and evening
working hours.
Social Commitment
Apart from banking activities our bank is also committed to social responsibilities also:
The Bank used to donate generously to Prime Minister Relief Fund / Chief Minister Relief Fund
of the States whenever nation faces natural calamities.
Bank donated to build a ward in the KIDWAI INSTITUTE OF ONCOLOGY, BANGALORE

Bank also donated Rs.10.00 lakhs to Jayadeva Institute of Cardiology, Bangalore to provide
financial assistance to poor heart patients.
Bank organised Free Eye and Medical Checkup Camps for the members and general public.
The Bank is encouraging merit students to do better by identifying and awarding them.
The Bank also used to honour Best Customers of the bank.
The Bank is also organizing Customers Meet to have a cordial relationship with them.
The Bank has donated Rs. 15.00 lakhs for setting up of Pure Drinking Water Unit at Kempapura
Agrahara, Magadi Road, Bangalore

Achievements
Bank awarded as Best Urban Co-operative Bank of the then Mysore Province for the years 1923,
1927 & 1928 with meritorious Certificate and Shield from the then Yuvaraja of Mysore Sri Sri
Sri Kanteerava Narasimharaja Odeyar Bahadur.
Also awarded as Best Urban Co-operative Bank by the Government of Karnataka for the years
2001-02, 2003-04, 2007-08, 2012-13, 2013-14 & 2014-15. Also awarded as one among the top
three Urban Co-operative Banks of the State of Karnataka during the past years viz. 2015-16 &
2016-17.
Bank celebrated Platinum Jubilee in the year 1977.
First branch of the bank was opened in Vijayanagar on 24-02-1980
8 More branches opened during the period
Branches Years
Jayanagar 9 th Block 25-01-1981
Indiranagar 09-12-1983
Chamarajpet west 07-02-1988
Shanthinagar 03-09-1992
Mahalakshmipuram 07-07-1994
Sanjayanagar 11-08-1194
Padmanabhanagar 04-09-1995
Koramangala 30-10-1996
Bank operations were computerized in the year 1993
Deposits of the bank have crossed 50.00 crores in the year 1997
Deposits of the bank have crossed Rs. 150.00 crores in the year 2000

CHAPTER – 4
ANALYSIS OF DATA

Table -1
The table showing the amount of funds disdursed towards the various Retail Lending
Schemes
Month/Year Number of Amount

Account
holder
2014-15 485 8,66,27,816

2015-16 514 8,92,83,025
2016-17 555 9,11,50,645
TOTAL 1551 26,70,61,486
Analysis
In the year 2014-15 -482 A/c holder and 8,66,27,816 amount in 2015-16 -514 A/c Holdder and
amount is 8,92,83,025. In 2016-17 -555 A/c Holder and amount is 9,11,50,645.

GRAPH – 1
Graph showing the number of account holders under the various Retail
Lending Schemes
101.2
101
100.8
100.6
100.4
100.2
100
99.8
99.6
99.4
2015-16 2016-17
Interpretation:
From the above graph it can be inferied that number of account holder in THE BANGALORE
CITY CO-OPERATIVE BANK LIMITEDcontinuously increased number of account holder in
2014-15the THE BANGALORE CITY CO-OPERATIVE BANK LIMITEDprovide attractive
interest & account opeingin scheme.

TABLE-2
Amount of fund disursed towards the Retail Lending Scheme V-Cash

Account Disbursed
holders
2014-15 314 2,00,11,271
2015-16 328 2,08,31,134
2016-17 332 2,04,95,630
Total 974 6,13,38,035
Interpretation:
From the table it can be concluded that although the amount of founds disbursed is constant
during the year 2015-16,2016-17the number of account has shown an increase during the same
period.

Graph-2
Graph showing the number of account holder under the Retail lending Scheme V-Cash
102
100
98
96
Datenreihen1
94
92
90
2014-15 2015-16 2016-17

Table- 3
Table showing the amount of fund disbursed towards the Retail Lending Scheme V-Home
loan

Account Disbursed
holders
2014-15 94 5,71,85,118
2015-16 101 5,85,96,238
2016-17 100 6,11,36,280
Total 295 17,69,17,636
Interpretation:
From the table give above it can be see the numbers of customers aviling of this facility had
shown a considerable increase from the year 2014 to 2017. The number have remained more or
less constant after that period.

Graph-3
Graph showing the number of account holder under the Retail lending Scheme V-Home
loans
102
100
98
96 Datenreihen1
94
92
90
2014-15 2015-16 2016-17

TABLE -4
Table showing the amount of funds disbursed towards the Retail Lending Scheme V-
Professional and the number of account holder
Month/year Number of Amount

account Disburses
holders
2014-15 1 2,27,832
2015-16 1 2,25,007
2016-17 1 2,25,007
Total 03 6,77,846
Interpretation:
The scheme V-Professional is a relatively new scheme. It was introduced during the year 2014.
Since its inception, there has been no increase in the number of customer availing this
facility.Also the amount disbursed has remained constant throughout. This can be seen from the
table given above.

GRAPH-4
Graph showing the number of account holder Retail Lending Scheme V-Professional
101
100.8
100.6
100.4
100.2
100
99.8
99.6
99.4
2015-16
2016-17

TABLE - 5
Table showing the amount of funds disbursed towards the Retail Lending Scheme Loans to
Road Transport Operators.

account Disburses
holders
2014-15 33 22,02,169
2015-16 33 21,62,569,
2016-17 32 21,50909
Total 98 65,15,647
Interpretation:
From the above table it can be stated that the number of account holder availing of this facility
and the total amount disbursed have remained constant from the year 2014-15 to 2016-17

GRAPH -5
Graph showing the numbers of account holderRetail Lending Scheme Loans to Road
Transport Operators.
101
100.8
100.6
100.4
100.2
100
99.8
99.6
99.4
2015-16
2016-17

TABLE -6
Table showing the amount of funds disbursed towards the Retail Lending Scheme V-trade
Finance.

account Disburses
holders
2014-15 2 27,86,201
2015-16 5 26,80,651
2016-17 4 21,25,267
Total 11 75,92,119
Interpretation:
From the above table it can be states that has been a constant change in the amount of funds
disbursed under this scheme. There has been a constant decrease in the total amount disburses.

GRAPH -6
Graph showing the numbers of account holder underthe Retail Lending Scheme V-trade
Finance.
2016-17
2015-16
99.4 99.6 99.8 100 100.2 100.4 100.6 100.8 101 101.2

TABLE -7
Table showing the amount of funds disbursed towards the Retail Lending Scheme V-
Educational loans and number of account holder

account Disburses
holders
2014-15 16 3,29,223
2015-16 16 32,25,238
2016-17 17 33,48,708
Total 49 69,03,169
Interpretation:
From the above table it can be conclusded that while there has been an increase of 43% in the
total amount of found disbursed under this scheme from year 2014-15 to 2016-17, there has only
been a marginal increase in the number of people availing of this loan facility from 16 to 17in the
same period.

GRAPH -7
Graph showing the numbers of account holder under the Retail Lending Scheme
V-Educational loans
17.2
17
16.8
16.6
16.4
16.2 Datenreihen1
16
15.8
15.6
15.4
2014-15 2015-16 2016-17

TABLE -8
Table showing the amount of funds disbursed towards the Retail Lending Scheme
V-Mangala, V-Equip, V-Kanayadan & V-solar numbers of account holder

account Disburses
holders
2014-15 4 6,31,201,
2015-16 6 7,34,624
2016-17 6 7,33,874
Total 16 20,99,699
Interpretation:
For the period ended 2014-15 the retail lending schemes V-Mangala, V-Equip, V-Kanayadan &
V-solar had yet been initiated. All these schmes were started in the later half of the year
.Howeever since its inception these scheme have shown an increase both in terms of thenumber
of account holder as well as the amount disbursed.

GRAPH – 8
Graph showing the number of account holder under Retail Lending Scheme V-Mangala,
V-Equip, V-Kanayadan & V-solar.
2016-17
2015-16
99.4 99.6 99.8 100 100.2 100.4 100.6 100.8 101 101.2

Analysis of Questionnair
TABLE -9
Table showing the awareness level of the various loan schemes offered by the
bank amoung the respondents
Particular Number of percentage

Respondents
V-Home 30 100%
loans
V-cash 30 100%
V- 26 87%
Educational
loan
V- Trade 19 70%
finance
V-Rent 17 63%
Interpretation:
From the above table it is evident that while 87% of the respondent were of the loan schme V-
cash, only 37% of the responcedent were of the scheme V-rent-63%.and V-loans & V-cash is
100%

GRAPH -9
Graph showing the awareness level of the various loan schemes offered by the bank
amoung the respondents
100%
90%
80%
70%
60%
50%
40% Datenreihen1
30%
20%
10%
0%
2014-15 2015-16
2016-17

Table -10
The table showing the number of responced who had loans from the bank
Particular Number of Percentage

Responcdent
Account 24 80%
Holders
Non- 6 20%
Account
Holers
Interpretation:
From the above table we can see that 24 out of the 30 respondents had an account in bank while
6 respondent i.e 20% did not have an account with bank.

TABLE -11
Table showing the number of respondents who had loans from bank
Particular Numbers of Percentage

respondents
Account 16 67%
holder who
had availed
loans
Account 8 37%
holders who
did not avail
loans
Interpretation:
Out of the 24 Respondent who had an account in bank 16 of them availed of loans from the bank
while the remaining 8respondents did not take any loan from bank

CHAPTER-5
FINDINGS, CONCLUSION AND SUGGESTIONS.

SUMMARY AND FINDING
 The THE BANGALORE CITY CO-OPARATIVE BANK has been successful in reducing its
level of retail lending and there by improving the quality of the loans. The bank’s level of retail
lending which was 0.91% in the year 2014-15 was reduced to 0.59% in the financial year 2015-
16 and again it was increased to 0.85% in the year 2016-17, it is less than 10% and since one of
the criteria for any bank to come under schedule status is that the level of Retail lending should
be less than 10% the THE BANGALORE CITY CO-OPARATIVE BANK has been given
schedule Status.
 The study conducted, reveals that the banks adhering to the prudential and norms for asset
classification, income recognition and provisioning prescribed by the Reserve Bank of India.
 The Bank has declared 15% divided for the year and it has complied with the requirements of sec
11 of banking regulation act that if any bank wants to declare dividends, it must fully provide
retail lending which indicates that the THE BANGALORE CITY CO-OPARATIVE BANK is
providing enough provisions for all kinds of RETAIL LENDING
 The study reveals, that THE BANGALORE CITY CO-OPARATIVE BANK has been taking
Innovative steps to reduce its level of retail lending.
 When retail lending falls into the category of loss assets, the bank has to write off the loss
portion from the total capital of the bank. This in turn will reduce the Total capital.
 has embarked upon an Innovative and Creative way of recovery of bank dues from defaulting
borrowers. This has been titled as “ The Road Show”. In a democratic and legitimate
methodology, the representatives of various branches of THE BANGALORE CITY CO-
OPARATIVE BANK have virtually hit the roads. This is one of the marvelous way for the
recovery of the debts.

 It is noted that absence of income from these advances causes continuous damages in the health
of Bank. Approaches like creation of asset reconstruction fund or corporate debt which will not
only solve the problem but also keep the real issues underground that may cause more damage in
future on a long term basis.
 retail lending have a serious impact on performance as it cuts down the profit level, which affects
the P&L A/c. Dividend is also affected, as the bank cannot declare the dividend when there is no
profit.
 On the basis of ratios calculated by the Narasimham Committee which considered THE
BANGALORE CITY CO-OPARATIVE BANK as a weak performing bank. But in 2005-06 due
to successful reduction of retail lending level of 0.85% THE BANGALORE CITY CO-
OPARATIVE BANK has become one of the leading public sector banks in India.
 THE BANGALORE CITY CO-OPARATIVE BANK is awarded ‘THE BEST BANK OF THE
YEAR 2004’ among Indian Bank by BUSINESS STANDARDS ANNUAL SURVEY.
 retail lending decreases Net profit which results in decrease in Gross profit. Net profit gets
reduced when provision is made in P&L A/c decrease in profit affects the morale of employees
and staff and reduces their expectation in promotion and hike in salary. All these demotivate
employees and indirectly affects the over all bank performance.
 retail lending affect the current years profit. This is because the current years profit is taken to
reserves to make up the losses made in the previous year due to Retail lending .
 The main aim of credit policy will be to screen out the best proposal for acceptance. Despite the
screening most banks will have Retail lending bank can in fact quantify its credit risk based on
the level.

RECOMMENDATIONS
 Creating awareness about the impact of Retail lending :

First and the most important is to create awareness among the customers and the staff about
the effect of Retail lending on the performance of the bank and ultimately on the customers.
 Funds lent by Bank:
 It becomes imperative that the funds lent by bank as loans are received back timely for
maturity match and recycling also to make it sure, the bankers are required to follow certain
principles of lending not only at the pre-sanction stage but at the post discoursement stage also.
These basic principles include the safety of the advance, purpose for which the loan is given,
liquidity, security and profitability.
 Using tools and techniques of credit appraisal and applying the same effectively can improve
quality of advances.
 Establish special task force for the recovery of dues, which have fallen under the category of loss
assets.
 Early detection of NPA can be made by the bank, when the cheques were returned, non-payment
of installment/interest within a fixed period, poor performance in terms of decline sales
and profits, etc.,

 Up gradation of credit skills of the operating staff working in advances.
 Timely sanction/ release to avoid time and cost overruns.
 The top management in banks should recognize this function of prevention of NPA’s as a
priority over other issues as it affects the profitability of the bank.
 Newly turned NPA’s must be targeted for immediate up gradation
 The greening of loans by bank officials must be strictly prohibited and stringent punishment
must be given for violation of the rules. Refresher courses and training must be given to bank
officers frequently

CONCLUSION
The problem of Retail lending has been major issue for the banking industry. The RBI, which is
the apex bank t control the level of retail lending has been giving guidelines and getting norms
for the banks in order to control incidence of defaults. This study on management of retail
lending with specific reference to THE BANGALORE CITY CO-OPARATIVE BANK was
conducted, to find out the reasons for the incidence of retail lending and how public sector banks
manage it and its effect on performance of the bank.
The study revealed that the THE BANGALORE CITY CO-OPARATIVE BANK has been
successful in its level of retail lending and has been providing for retail lending . The analysis of
the studies indicated that if a bank fails to keep a check on retail lending , it will have serious
impact on their earnings and the capital. And finally it would be difficult for a bank to exist with
a higher level of retail lending .

BIBLIOGRAPHY

BOOKS REFERRED:
 Mckinley, John And Berrickman, Jolin R (1994). “ Strategic Credit Risk Management
Intruduction”, Rebert Manis Associates, Pp 4-5
 Arun Kumar, Rekha And Kotreswar, G, (2003). “Risk Management In Commercial Banks”’
Social Science Reserch Network, Pp 1-22
 Kim, Joocheol And Lee, Duyelo (2007). “Simulation Based Approach For Measuring
Concentration Risk”, Mpra Paper No.2968, Pp 1-15
 Bidani S.N., (2002). “Managing Nonperforming Assets In Bank’s Vision Books Publishers, Pp.
71-74.
 Duffie, D. And Singleton, K.J., 2003. Credit Risk: Pricing, Measurement And Management.
Oxferd: Princetion University Press.
 Horcher, K.A. 2005. Essentials Of Financial Of Financial Risk Management Hoboken: John
Wiley& Sons, Incorporated.
 Monetary Authority Of Singapore, 2006. Credit Risk. Monetary Authority Of Singapore,
February.
 Jackson, P. And Perraudin, W., 1999.The Nature Of Credit Risk: The Effect Of Maturity, Types
Of Obligor And Countery Of Domicile. Financial Stability Review, November.
 M.Y.Khan And P.K.Jain, Management Accounting (Third Edition), Tata Mcgraw Hill.
M.Y.Khan And P.K.Jain, Management Accounting (Fourth Edition), Tata Mcgraw

Hill.D.M.Mitta, Money, Banking, International Trade And Public Finance (Eleventh Edition),
Himalaya Publishing House.

ANNEXURE

Key Financial Indicators for the 3 years and projections for the current year
Indicators March March March

31,2015 31,2016 31,2017
Turnover 1124.22 1231.32 1375
Increase in Turnover 6.94 10.17 14.37

% over Previous yesr
PBDIT
Less: Interest 2.58 6.44 28.19
Net cash profit 191.47 178.05 50.93

before dep & tax
Less: Dpereciation 31.35 33.34 92.50
Less: tax
Net profit after Dep 122.38 112.43 32.66

& tax
Capital (paid) 424.45 442.69 464.23
Net worth 424.45 442.69 464.23
Current ratio 3.71 2.86 2.33
Stock turn over ratio 13.45 13.17 16.34
Total outstanding 29.28 55.77 64.14

liabilities/total net
worth ratio

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STUDY ON RETAIL LENDING AT THE BANGALORE CITY CO-OPERATIVE BANK LIMITED

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 1

1.1 Indian Banking

1.2 The Bank was constituted to : -

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 2

1.3 COMMERCIAL BANK

1.4 PROGRESS OF COMMERCIAL BANKING IN INDIA

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 3

1.5 FUNCTIONS OF COMMERCIAL BANKS

It performs the following functions:

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 4

1.5 LENDING OPERATIONS OF COMMERCIAL BANKS

1.6 RETAIL LENDING – INTRODUCTION

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 5

DEFINITION OF BUSINESS FINANCE

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 6

What is Retail Banking?

Advantages of retail banking :

Disadvantages of retail banking:

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 7

DEFINITIONS OF FINANCIAL MANAGEMENT

IMPORTANCE OF FINANCIAL MANAGEMENT

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 8

OBJECTIVES OF FINANCIAL MANAGEMENT

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 9

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 10

ROLE OF BANKS IN ECONOMIC DEVELOPMENT

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 11

OPPORTUNITIES AND CHALLENGES

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 12

From Credit Rationing to Credit Marketing:

Retail Credit help the Economy?

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 13

The Retail Mantra

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 14

Toward a more Profitable Banking

Retailing : A safe bet

Retail banking: gaining momentum

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 15

Emergence of the word non-performing asset

The issues relating to definition, management or the mismanagement and recommendations

Indian economy and NPAs

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 16

Global Developments and NPAs

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 17

DEFINITION GIVEN BY THE NARASIMHAM COMMITTEE:

RBI REGULATION REGARDING INCOME RECOGNITION, ASSETS

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 18

CLASSIFICATION OF ASSETS FOR MAKING PROVISION:

 Sub standard assets

 Sub standard assets

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 19

Guidelines for classification of assets

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 20

PROVISIONING FOR LOANS AND ADVANCES:

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 21

Period for which the Provision

One to three years 30

More than three years 50

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 22

RBI GUIDELINES FOR RECOVERY OF NON-PERFORMING ASSETS

GUIDELINES FOR RECOVERY OF NON-PERFORMING ASSETS OVER

JNANAVIKAS INSTITUTION OF MANAGEMENT STUDIES AND COMMERCE Page 23