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A STUDY ON LOANS AND ADVANCES AT THE BANGALORE CITY CO-OPERATIVE BANK LTD

EXECUTIVE SUMMARY Indian economy is undergoing a significant change because of overall liberalization measures caused out since July 1991. Commencing from the days of imperial bank, Indian banking industries has been seeing changes in developments, with the policies of the government. Banking is said to be one of the barometer of the country‟s economy. Accordingly, the banking industry shows the health of the country. Today bank are also business entity like any other business, the deposit collected from customers are not the banks own property. If a bank conducts its business without exercising the required determinately to the interest and stability of the entire financial sector and can adversely affect the economic health of the country. Indian banker today has innumerable challenges: worrying level of nonperforming assets, stricter prudential norms and diversified risks. They should maintain adequacy of capital and reserve of the bank in relation to loans related risks, the quality of assets and consequent guidelines for providing of assets of bad and doubtful quality and recognition of income that the assets generated so as to give the true and correct picture of profitability of the banks. In order to avoid default risk the bank should manage the credit risk by developing a rating model. The study is based on analysis of financial statements of small scale industry and then developing a rating model or avoids the default risk of the barrowers. The analysis is based on previous financial reports of small scale industry. The rating modal consists of rating of various factors such as the debt equity ratio. Current ratio, net sales increase in profit demand analysis capacity utilization and various other factors. The rating model is developing by considering the credit policy of “The Bangalore City Co-Operative Bank”.

BRINDAVAN COLLEGE, BANGALORE

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The basic limitation of traditional financial statement at each of the financial year end is to know the exact financial position of the organization. Never-the- less they provide some extremely useful information to the extent that the balance sheet mirrors. It is important to know how founds are available during the ing period for disbursement. Thus the problem taken hears is for study under loans and advances about a “Bangalore City Co-Operative Bank Ltd”. The study covers the major part of deposit received by bank and lent out as loans. There is a considerable difference between the inflow and outflow of resources. Every enterprise needs founds to carry on its operation and to achieve his target i.e. operation and expansion of business activities. After studying we will be able to Enlist the utility of granting loans and advances by co-operating bank.  Differentiate borrowing rates from lending rates.  Enumerate the ways of lending money.  Distinguish between long term and short term loans.  Point out the nature of security provided for loans.


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INTRODUCTION


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CHAPTER-1 INTRODUCTION TO CO-OPERATIVE BANKING The beginning of co-operative banking in India dates back to 1904. The institutional source of credit for agricultural and related activities was very inadequate at that time. The money lenders would provide some credit at very high rates of interest. The co-operative banks were expected to substituted such unorganized money market agencies and provide short and long term credit at reasonable rate of interest. It was expected that they would coordinate the activities of unorganized segments of Indian money market. Subsequent to the adoption of economic planning in 1951, co-operative banks were expected to play a crucial role in achieving agricultural and rural development. Before the nationalization of commercial bank were the only substitute for money lenders and other informal sector lenders. But after nationalization and creation of Regional Rural Banks and NABARD they relatives share declined. Co-Operative Banks in India (with their network ; spread over remote rural arias and a large number of smaller towns), have historically played a major in mobilization of domestic savings for economical development of the country. They have provided the farmers and non-farm entrepreneurs with the needed credit . These institutions have also contributed significantly to private capital formation in agriculture and accelerated the pace of distribution of form inputs NABORD 2002. Co-operative banks are promoted to meet the banking requirement of consumer‟s. they are established not only in the urban areas they are starts to provide finance to buy consumer goods. They provided short and medium term loans. They provide loans at a lower rate comparatively. They are formed on the co-operative society principles and has more service then profit oriented.


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Definition and Meaning of Co-Operative Banks In the words of HENRY WOLF “Co-operating banking is an agency which is in a position to deal with the small means on his own accepting the security he has and without drawing the protection of rich”. DEVINE defines “a mutual society formed composed and governed by working people themselves for encouraging regular savings an generating miniature loans on easy of interest and repayments”. On the analysis of above definitions, one can say that co-operative banks is a co-operative organization where persons voluntarily associate together as human being on the basis of equality for the promotion of economic interest of themselves engaged in the banking functions of acceptance of deposits and lending the credit. In short, co-operative bank is an institution, which performs the banking functions of accepting deposits and borrowings of funds and lending of credit.

FEATURES OF CO-OPERATIVE BANKS  They are organized and managed on the principle of co-operation self help and mutual help. They function with the rule of “one member one vote”.  Co-operative banks perform all the main banking function of deposit mobilization, supply of credit and provisions for remittance facilities.  Co-operative banks are perhaps the first government ed agency in India.  A co-operative bank belongs to the money market as well as a capital markets.  Co-operative banks accept current, savings, fixed and other types of time deposits from individuals and institutions including banks.  Co-operative banks also required to comply with requirement of statutory liquidity ratio (SLR) and cash reserve ratio (CRR) liquidity requirements as other scheduled and non-scheduled banks.


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DEFINITION OF LOANS AND ADVANCE: Loans and advances is one of the types of facility or criteria provided to the people to fulfill their and requirements which are also profitable to the bank or financial institutions by getting the appropriate rate of interest.

IMPORTANCES OF LOANS 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 bank „s total asset and form the backbone of the 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 of safeguard his advance 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 policy in regard to advances is 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 instilments and default occurs in the payment of any instilments the entire loan usually becomes immediately recoverable at the option of the bank.


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PURPOSE OF LOANS AND ADVANCE: A banker enquires from the borrower the purpose for which he seeks loan before lending him. Banks do not grant loans for speculative purpose. They ensure the safety and liquidity of their funds by granting loans for providing purposes where income generation is there, banks grant loans only for those people who have professionals, etc. bank also grant studies, buying of house hold articles and vehicles besides personal loans.

TYPES OF LOANS: BANK LOANS

SHORT TERM LOAN

MEDIUM & LONG TERM LOAN

BRIDGE LOAN

COMPOSIT LOAN

CONSUMPTIO N LOAN

SHORT TERM LOANS: Short term loans are granted to meet the working capital needs of the borrowers. These loans are granted against the security to tangible assets – mainly the movable assets like goods and commodities, shares, debentures etc.


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TERM LOANS: Medium and long term loans are as usually called term loans. These loans are granted for more than a year and are meant for purchase of capital assets for the establishment of new units and for expansion or diversification of an existing unit. Banks usually grant such loans together with specialized financial institutions like industrial finance corporation of India. Industrial credit and Investment Corporation etc. Such loans constitute a part of the project finance which industrial enterprises are required to rise from different sources. These loans are usually secured by the tangible assets like land, buildings, plants, and machinery etc.

BRIDGE LOANS: Bridge loans are essential short term loans which are granted to industrial undertaking to meet their urgent and essential needs during the period when formalities for availing of the term loans sanctioned by financial institutions are being fulfilled or necessary steps are being taken to raise the funds from the capital market. These loans are granted by banks or by financial institutions themselves and are automatically repaid out of the amount of the term loans or the funds raised in the capital market.

COMPOSITE LOANS: When a loan is granted both for buying capital assets and for working capital purposes, it is called a composite loan. Such loans are usually granted to small borrowers, such as artisans, farmers, small industries etc,.

CONSUMPTION LOANS: Though normally banks provide loans for productive purposes only, but as an exception loans are also granted on a limited scale to meet the medical needs or the


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educational expenses or expenses relating to marriages and other social ceremonies etc., of the needy person‟s. such loans are called consumption loans.

CLASSIFICATION OF LOANS AND ADVANCES: LOANS AND ADVANCES

SECURED LOANS

UNSECURED LOANS

SECURED LOANS: According to section 5 {a} of Banking Regulation Act 1949, secured loans or advances means a loan or advances made on the security of assets the market value of which is not at many time less than the amount of such loan or advances. 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 ornaments, life policies, fixed deposits receipts are also accepted as securities for loans or advances.

UNSECURED LOANS: According to section 5{a} of Banking Regulation Act 1949, an unsecured loans or advances means a loan or advance not so secured.


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This is advances 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 partied enjoying high reputation and sound financial position.

INDUTRIAL PROFILE GROWTH OF BANKING IN INDIA: Banking in India back to 1786 where the first bank that was established in India. Then the nationalization of banks in 1969 liberalization in 1991. In India, Banking sector is segregated as public sector banks, private sector banks and co-operative banks. Banks in India can be categorized into non-scheduled banks and schedule banks constitute of commercial banks. There are about 67000 branches of scheduled banks across India. During the first phase of financial reforms, there was a nationalized of 14 banks in 1969. The crucial step led to a shift from class banking to mass banking. Since then growth of banking industry in India has been a continuous progress. As far as the present scenario is concerned the banking industry in a transaction phase. The public sector banks (PSBs), which are the foundation of the Indian banking system for more than 78% of the total banking industry assets. Banking industry has revolutionalized the transactions and financial services system worldwide. Through the development in technology, banking services has been availed to customers at all times, even after the normal banking hours. Banking industry services is nothing but the access of most of banking related services (verification of details, going with transaction, etc).

DEFINITION OF BANKING:


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Sec 5(1) (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 cheque, draft, order or otherwise.

IMPORTANCE OF BANKING IN INDIA: Banking plays a very important role in economic development of a country. They touch every aspects of the modern banking. Some of the important roles played by banking for the development of Indian economy are as follows.  Banking mobilizes the small, scattered and ideal saving of the people and make available for the productive purposes i.e., they help in the process of capital formation.  By offering interest banks attracts depositors and promote the habit of thrift and saving among people.  Bank is a convent and economic means payment and transfer of funds i.e. cheque, DD, banks drafts.  Banks helps the movement of funds from regions where they are not very useful to regions where they can be more usefully employed.  Though the supply of money (bank money and credit money) bank expert a powerful influence on the interest rates in the money market.  Banks helps trade and commerce. Industry and agriculture by meeting their financial needs.  Banks directs flow of funds into productive channels. While lending money they discriminate in favor of essential activities and against non-essential activities.


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 In the modern economy people who save and people who undertakes investment are different hence there is a need for financial intermediaries like banks that should help the flow of funds from savers to investors.

INDIAN BANKING SYSTEM The Indian banking system can be broadly classified into nationalized, private bank and specialized banking institutions, the RESERVE BANK OF INDIA acts as a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of bank in 1969 the public sector like THE BANGALORE CITY CO-OPERATIVE BANK LTD etc. have acquired a place of prominence and has since then seen tremendous progress. The need to become highly CUSTOMER FOCUSED has forced the slow moving public sector banks to adopt a fast track approach, the varieties of products and services through e-banking has increased the scope of our banking system. The conservative banking practices allowed Indian banks to be insulted partially from the Asian countries(vie Hong Kong, Singapore, Philippines etc) that have major problems linked to huge Non-performing assets(NPA‟s) and payment default. The Indian banking has finally worked up to face the competitive dynamic of the new Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ INFORMATION TECHNOLOGY SOLUTIONS are perceived to be “FUTURISTICS” and “PROACTIVE” players capable of meeting the multifarious requirements of the large customer‟s base.


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The Indian banking has come from a long way from being a sleepy business institutions to a highly proactive and dynamics entity. This information has been largely brought about by the large close of liberalization and economic reforms that allowed banks to expose new business opportunities rather than generating revenues from conventional steams (i.e. borrowing and lending). The banking in Indian is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advance. Indian nationalized banks (i.e. government owned) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposits mobilizations.

ESSENTIAL CHARACTERISTICS OF BANK:  Acceptance of deposits from the public on fixed, current or savings bank .  Allowing of withdrawals of such deposits by cheques, drafts, orders or otherwise.  Utilization of deposits in hands for the purpose of lending or investment.  Performance of other activities called subsidiary, in addition to the principal activities.

KINDS OR TYPES OF BANKS:  Commercial Bank  Industrial Bank  Foreign Exchange Bank  Co-operative Bank  Agriculture Bank  Land And Development Bank


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CO-OPERATIVE BANKS: INTRODUCTION: In 1904, the co-operative movement was started in India with a view to provide agriculturists with finance required for agricultural operations at low rates of interest. Co-operative banks are important constituents of the Indian Financial System, judging by the role assigned to them, the expectations they are supposed to fulfill their number and the range of offices they operate. The co-operative movement originated in the west, but the important which such banks have assumed in India is rarely parallel anywhere else in the world.

DEFINATION OF CO-OPERATIVE BANK: A co-operative bank is a financial entity which belongs to its , who are at the same time the owners and the customers of their bank. Co-operative banks are often created by persons belonging to the same local or professional community or sharing a common interest. Co-operative banks generally provide their with a wide range of banking and financial services (loans, deposits, banking s…). In India co-operative banks are regulated with RBI governed by Banking Regulation Act 1949 and Co-operative Societies Act, 1965.

TYPES OF CO-OPERATIVE BANK: BRINDAVAN COLLEGE, BANGALORE

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PRIMARY CREDIT SOCIETIES: A co-operative credit society can be started with 10 or more persons. Normally belonging to a village, the value of each share is generally nominal so as to enable even the poorest former to become a member. Loans are given for short periods, normally for one harvest season, for carrying on agricultural operations. The village co-operative society, known as the primary credit society, was expected to attract deposits from among the well-to- of the village thrift and self-help.

STATE CO-OPERATIVE BANK: State co-operative bank are at the top of co-operative credit structure. It is known as Apex bank. Its are co-operative societies. It rediscounts the bills of district central co-operative banks. All the states in India have established state cooperative banks. The state co-operative banks apart from functioning as a central bank to co-operative credit societies, functions as commercial bank, accepting deposits, giving loans and advance on the securities, fixed deposit receipts etc.

CENTRAL CO-OPERATIVE BANKS: The central co-operative banks are federation of primary credit societies in a specified area, normally a district and are usually located in the district headquarters or some prominent town of the district. Central co-operative banks have three sources of fund via their own capital and reserves, deposits from the public and loans from the state co-operative banks. They lead to the village primary societies to enable the latter to their .

URBAN CO-OPERATIVE BANKS: Urban co-operative are similar to commercial banks in their operations. Generally, urban co-operative banks are lending and borrowing institutions like commercial banks. An urban co-operative bank provides loans only to its on the security of life insurance policies; fixed deposit receipt on personal guarantee and banks accept savings, fixed deposits and current deposits. BRINDAVAN COLLEGE, BANGALORE

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ORIGIN OF CO-OPERATIVE BANKING IN INDIA Co-operative movement in India was started primarily for dealing with the problems of rural credits. This history of Indian Co-operative Banking started with the ing of co-operative Societies Act in 1904. The objective of this Act was to establish credit societies were set up under this Act. The co-operative societies Act 1912 recognized the need for establishment of new organizations for supervision, auditing and supply of co-operative credit. These organizations were. A union consisting of primary societies.  The central Banks  Provincial Banks Although beginning has been in the direction of establishing co-operative societies and extending co-operative credits, the progress remained UN satisfactory in the pre independence period.

RECENT DEVELOPMENT: Over the years, primary (urban) co-operative banks have ed a significant growth in number, size and volume of business handled. As on 31st march, 2003 there were 2104UCBs of which 56 were schedule banks. About 79 percentages of these are located in five states-Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu. According to sources the total deposits & lending of co-operative banks in India.


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STRUCTURE OF CO-OPERATIVE BANKING IN INDIA RBI

NABARD

SCBs

RBI

SLDBs

CCBs

CLDBs

PACs

PLDBs

: Reserve Bank of India

UCBs (PCBs)

Branches of SLDBs

NABARD : National Bank of Agriculture and Rural Development SCB‟S

: State Co-operative Bank

SLDB‟S

: State Land Development Bank


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UCB‟S

: Urban Co-operative Bank

DCCB‟S

: District Central Co-operative Bank

PAC‟S

: Primary Agricultural Credit Societies

CLDB‟S

: Central Land Development Bank

PLDB”S

: Primary Land Development Bank

STRUCTURE OF CO-OPERATIVE ORGANIZATION: STATE CO-OPERATIVE BANK (APEX BANK)

Non-Agricultural Co-operative Bank

Agricultural Credit Cooperative Bank

Short term lending

State level (Apex bank)

Long term lending

Urban Credit Cooperative Bank

Industrial cooperative

Customer cooperative

State land bank

Credit District Central CooperativeCOLLEGE, BANGALORE BRINDAVAN bank schemes

Non-credit

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Primary Land development

ESS

MP cooperative societies


Land Mortgage

Grain bank

Housing Banks Urban Banks -Bank Employee‟s -Specialized cooperatives

Primary cooperative bank

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RESEARCH DESIGN


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CHAPTER-2 LITERATURE REVIEW- RESEARCH DESIGN SELECTION OF THE TOPIC: In the present scenario each and every thing is finance in nature. So each and every person needs money to lead his routine work. So they take help of banks, particularly for taking loans from banks. So I preferred this topic i.e. Loans and Advances for my research work.

Literature Review of Financial Inclusion Is it possible to imagine a world without banks? Impossible! Banks today for several reasons have become cornerstones of our economy. They transfer risk, provide liquidity, facilitate both major and minor transactions, and provide financial information for both individuals and businesses. (2009) concluded that financial literacy program has no effect on the likelihood of opening a bank savings , but do find modest effects for uneducated and financially illiterate households.

According to Ravichandran and Alkhathlan (2009), very few people have access to banking services. There are number of factors affecting access to financial services by weaker section of society in India. The lack of awareness, low incomes and assets, social exclusion, illiteracy are the barriers from demand side.

According to Reddy (2010) suggested a new approach to banks to reach wider population in rural areas by establishing mobile-banks/representatives/agents who operate on commercial basis rather than just by self-help groups. These agents/representatives work on commission basis and hence self-motivated and cost effective in assisting banks in service provision/deposit mobilization.


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According to Gosh (2007) suggests that the Post Office Saving Bank (POSB) can be used to cater the financial need of rural India where Microfinance Institutions (MFIs) have very little presence in total demand of finance. To boost micro financing initiatives and financial inclusion program banks are deploying Biometric ATM solutions to its rural customers helping illiterate or barely literate folks to become part of the banking community (Biswas, 2010).

According to Gupta, D. & Gupta, P. (2008), “Mother Tongue Friendly eDelivery Banking Channels in India Ultimate Solution for its Popular Usage”,

STATEMENT OF THE PROBLEM: In our country banks through lending meet most of the credit requirements of corporate customers. Lending is one of the financial services, which provide working capital to business. The need for credit to small scale units will continue to be the order of the day in, as much as expenditure continues to increase due to industries diversifications, expansion, innovation, change in technology, taste, fashion, and change of customer requirements.

OBJECTIVE OF THE STUDY: There are some of the objectives to study are as follows:  To understand and analyze various loans and advances provided by the Bangalore City Co-operative Bank Ltd.  To understand and learn the various schemes of sanctions of commercial bank with special references to Bangalore City Co-operative Bank ltd.


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 To understand problems involved in a few schemes and to suggest the necessary changes so that all schemes of Bangalore City Co-operative Bank Ltd can perform well.  To know the operating efficiency of the bank.

SCOPE OF THE STUDY: The scope of the study is loans and advance of The Bangalore City Co-operative Bank, Bangalore. This topic of the project is mainly concerned with loans and advance section. The main area covered under this is the study offered by the Bangalore city co-operative bank to attract customers. Hypothesis to be tested: Null hypothesis: There is no impact on asset liability management on the performance of Bangalore city co-operative bank. Alternative hypothesis: Asset liability management affects the operational efficiency of Bangalore city co-operative bank.

RESEARCH METHODOLOGY: Research design is the conceptual structure within which research is conducted. It constitutes the blueprint for the collection measurement and analysis of data. It is the method of finding solution to a problem and adding a new knowledge. Analytical Research Design is used in the project because the study and the inferences are drawn based on the analysis made for the secondary data collected using Analytical Techniques in drawing inferences.

METHODOLOGY: The present work is based on the secondary data. Secondary data is collected from published reports, articles, brochures etc. The secondary data contain true and


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adequate information relating to my study and I have analyzed and interpreted in this report.

Sampling plan: The sources of secondary data are questionnaire and websites, books, journals, company annual reports. This study is based on scientific approach of the benefits provided by Bangalore city co-operative Bank. The samples of the data are considered for the study. Statistical data: The statistical tools used in the study are bar graph, tables and parametric and non parametric test to authenticity of hypothesis.

LIMITATIONS:  Due to lack of time, justice could not be given to the topic and it was very difficult to make a detailed study.  The study related to Bangalore City Co-operative Bank Ltd only and not compared with any other branches.

TECHNIQUES USED: The data collected from various sources are analyzed with the help of Tables  Graphs. For the purpose of analysis, statistical tools, charts and diagrams were also used for the interpretation of the collected data.


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COMPANY PROFILE


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CHAPTER-3 COPANY PROFILE BRIEF HISTORY AND PROFILE OF THE BANGALORE CITY CO-OPERATIVE BANK LIMITED: BANGALORE CITY CO-OPERATIVE BANK Logo of BCCB Ltd

Head Office of BCCB Ltd in Chamarajpet


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The Bangalore City Co-operative Bank Ltd was the first urban co-operative bank in the country started in 06.04.1907 by Sri. K. Ramaswamy and others. The Bangalore City Co-operative Bank Ltd was established under the Co-operative Society Act bearing registration number 314/CS, dated RBI NO granted 08.04.1907 from the Registration of Co-operative Societies in Karnataka and License. UBT/KA/642, dated 11.11.1986 for conducting the “Banking Business”. The bank has 12 branches along with one istration office and all branches have been computerized under the jurisdiction of Bangalore City Co-operative Bank, Bangalore Development Authority and Bangalore Urban and peripheral areas. The operation of the bank is throughout Bangalore Co-operative Limited. Section 3(F) of the multi state Co-operative societies Act 1984 defines Co-operative principles are as: hip of multi-state co-operative society should be voluntary an open without any social, political or religious discrimination, to all persons who can in a society other than with institutional h+ip. Individual member should enjoy equal rights of voting one member, one vote. Surplus of savings, if any arising out of the operation of the society belongs to the society as a whole and no individual has a claim to the surplus. The bank has been making steady and consistent progress on all spheres having established on 6th April 1907 with head office at Pampamahakavi Road, Chamarajapete, Bangalore. With an intention to provide loan and give high interest on deposit to the customer‟s and . The bank was established under the cooperative society Act bearing registration on number 314/CS, on 8th April 1907 from the registrar of co-operative societies in Karnataka and license was granted by RBI vide no, UBD/KA/642 dated 11th November 1986 for conducting banking business. The Bangalore City Co-Operative Bank Ltd is one among the top urban cooperative banks in the country. The banks were honored as the best urban co-operative bank in the period of 1926, 1927, and 1928 by the Mysore province. During 2002 and 2004 Karnataka state government has honored the bank as best urban co-operative bank. BRINDAVAN COLLEGE, BANGALORE

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The bank has been extending credit facility and also including the habit of savings among the small traders, foot path vendors, hawkers coming under priority sector. The bank has made advances to large number of 3 wheelers, self-employed owners and thus has extended self-employed owners and thus has extended self employment opportunities to large number of people with small means. Bank completing 100 years in 2007.

NATURE OF THE BUSINESS CARRIED The Bangalore City Co-Operative Bank‟s nature of the business carried is as following under the points:  Issuing of gold coins  Cash receipts/deposit  Cash withdrawals  Sanction and disbursement of loans  Locker facilities  Updating and issuing of new books and cheque books  Issuing demand drafts  RTGS facilities The bank has prescribed certain time norms on banking transaction for the benefits of the customers. These norms are given below:  book will be updated immediately within 20 minutes  Customers can purchase a demand draft within 30 minutes  Nomination facility is made available  Cheque books are issued on demand to depositors  Cash payment given to the customer within 10 minute


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VISION, MISSION AND QUALITY POLICY VISION: As per the laws of the banks:  Accepting deposits for the purpose of promoting saving habits in the minds of public and the .  Providing various types of loans facilities to .  To open new branches with permission from RBI and of co-operative societies.  To provide short term and medium term credit worthy farmers.  To carry out banking business.  To serve as balancing center in the state.  To function as a leader of co-operative in Karnataka.  To raise the deposits of the bank more than 550 crores.

MISSION:  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 promote socio economic development and employment as national and social objectives.  To meet the economic and career aspirations of the employees of the bank.  To promote the effectiveness of credit and to reduce the risk in getting a credit through careful and continuous supervision.


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QUALITY POLICY: Following are some of the rules and regulations provided by the bank for the benefit 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.  Bank will give standing instructions for the payment of bills, interest, insurance etc.  Bank provides required and important guidelines to the locker holders  The bank will observe customers days as decided by the board of directors

FUNCTIONS:  Provisions of short term loans to carry out seasonal agriculture and for the purpose of sale of agriculture products.  Provisions for medium term loans for irrigation, poultry farming, animal husbandry etc.  Acceptance of deposits  Provision of remittance and payment facilities  Collection of cheques, drafts etc. for the customers.  Acceptance of valuables for safe custody.


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THE MAIN OPERATIONS OF THE BANK: (CUSTOMER SERVICES)  Withdrawals  Cash receipts  Sanctions and disbursements of loans  Locker facilities  Clearing cheques  Updating book  Issuing new cheque book  Issuing demand draft  Pay order  Mail transfer  Telegraphic transfer  Opening of fixed deposits The bank also provides nomination facilities:  Savings Bank Holder  Current Holder  Term Deposit Holder  Safe Deposit Holder  Individual/t Holder  Housing Loan Holder (return of original documents)

AREA OF OPERATION The bank has 13 branches along with one istration office and all the branches have been computerized under jurisdiction of Bangalore city co-operative B.D.A.


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The providing banking services to its and depositors, nearby their residence only the bank along with its head office and istration offices at Chamarajapete, have started 13 or its branches at various areas in the city. The following table shows you the area of operation of Bangalore City CoOperative Bank and its establishment of several branches in different years at many areas or citie

YEARS

AREA/CITIES

1907

Head office Chamarajpete, Bangalore.

1980

Vijayanagara, Bangalore.

1981

Jayanagar, Bangalore.

1983

Indiranagar, Bangalore.

1988

Chamarajpete west, Bangalore.

1992

Shanthinagar, Bangalore.

1994

Mahalakshmipuram, Bangalore.

1994

Sanjaynagar, Bangalore.

1995

Panabhanagar, Bangalore.

1996

Koramangala, Bangalore.

2002

Avalhalli Bangalore.

2002

R.T.nagar, Bangalore.

2009

Jananajyothi nagar Bangalore.


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OWNERSNIP PATTERN Bangalore City Co-operative Bank Ltd is city co-operative bank providing its services to business people and to the general public. The bank issued all its shares to its only and it issued equal shares for each member of the bank. The number of in the year 2010-11 is 47698.

BOARD OF DIRECTORS President

: Dr. Devraj T.M.

Vice President : Sri Anjanappa Directors

: Smt. C.M. Bhagyalakshmamma, Sri K. Krishnappa, Sri C. Govindraj, Sri Basavaraju, Sri K.C. Chikanaiah, Dr. T.P. Yoga, Sri K.P. Suresh, Sri C. Raghunath, Smt.G.S. Vijaya, Sri U.P. Puranik, Sri K. Krishnamurthy, Sri P. Doddaiah.

General Manager: Sri N. Manjunath


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COMPETITORS INFORMATION: The Bangalore City Co-operative Bank is one of the leading co-operative banks in the Bangalore city operating its activities with several branches in and around Bangalore it is facing many competitors in the market. The list of competitors is as given below:  Apex Bank  State Bank of India  State Bank of Mysore  Canara Bank  ICICI Bank  Karnataka Bank  Syndicate Bank

INFRASTRUCTURAL FACILITIES: The bank has 160x134 sq. feet site. The building is built in 100x100 sq. feet of the site. A ground floor and first floor is built to carry out the banking 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 istrative office. The head office of the bank is located in Chamarajpete. It has 13 other branches. All the branches have computer facilities. Each branches 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.

AWARD AND ACHIEVEMENT: The Bangalore City Co-operative Bank has got “Best urban co-operative bank in the state award on the time of Shriman Maharaja Shri Kanteerava Narassimharaja Odeyar and it also got “Good Co-Operative bank in state” in the year 2003 and 2004. The bank for its excellent series in the year 1926, 1927, and 1928 in the year 2002 and 2004 the bank got the “Best urban co-operative bank” from state government. BRINDAVAN COLLEGE, BANGALORE

34


YEARS

AWARDS

2002

The

best

urban

co-operative

bank

in

Karnataka 2004

The best urban co-operative bank

2007

100 years completed co-operative bank in Karnataka

2008

The

best

urban

co-operative

bank

in

Karnataka

WORK FLOW MODEL: Different types of activity carried on by the bank.  Loan activity  Deposit activity  Clearing activity  Shares activity

LOANS AND ADVANCES OFFERED BY THE BANK: Business loans to traders, workshop, hotels and other business ventures. Vehicle loans 75% loans against the cost of vehicle (two, three and four wheeler) with repayment span as per payment capacity. Personal loans for petty, trade, education, housing,

marriage

and

other

ceremonial

purposes.

Housing

loans

for

construction/acquisition of homes repairs, renovation etc. Consumer loans for purchase of house hold articles like TV, fridge, furniture, computer etc. for graduates, and educational loans professional courses.


35


FUTURE GROWTH AND PROSPECTS:  The bank wants to increase its operations by setting up its branches all over the Karnataka.  There are planning to enter core banking.  Mobilization of saving, deposits, loans etc.  Installation of ATM facility in all the areas.  Opening of branches at all direct head quarters and minorities concentrated centers.  Introduction of more added services such as home banking, net working services, E-banking and E-sampling.  Launching of mobile banking and teller banking.  Foreign exchange business.  Opening of currency chest and small coin depot.  To increase deposits.  Improve the customer services by adopting latest technology.  Taking permission from RBI to start branches in T. Dasarahalli, Banasavadi, Krishnarajapura and Yelahanka.  To raise deposits up to 500 crore and loans and advances up to 370 crore.  To increase net profit up to 9 crore.  To reduce non-performing assets at 0%.  To make all branches to core banking facilities and help to customers.  To acquire own building for all branches.  To provide training for employees to acquire more knowledge about the bank work.


36


BANK GROWTH –A BIRD VIEW (31.03.2011) Paid up share capital

28,7112,907.00

Reserves and surplus

54,77,16,457.56

Deposits

597,62,10,335.29

Working capital

681,10,39,699.85

Loans and advances

444,12,12,211.50

Investment

299,13,05,825.19

Net profit

8,31,75,815.93

Number of

50,639

Net NPA

1.08%

C.R.A.R(%)

13.88

RBI classification

Grade “1”

Audit classification

“A”


37


3.1 MCKINSEY'S 7S framework The 7‟s model is better known as Mc Kinsey 7S this is because the two individuals who developed this model, Tom Peters and Roberty Waterman, had been consultants at Mc Kinsey & Co during that time. They published their 7s model article “Structure is not organisation”1980, in their books “The art of Japanese management” (1981) and “In search of excellence”(1982). The model starts on the premise that an organization is not just structure, but consists of seven elements: The Strategy, Structure, Systems are feasible and easy to identify. They can be found in Strategy statements, corporate plans, organization charts and other documents.

"Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems.


38


"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful.

1. STRATEGY: A strategy is a long-term plan chosen deliberately and consciously after a thorough analysis of the internal and external environment of the organization. It refers to the plan formulated in response to or in anticipation of changes in environment. It seeks to improve the company‟s competitive position. It is designed to provide guidance and direction to the operations of the organization. It is true that organizations, which continuously carry out strategic planning and strategic management; tend to outperform those, which do not. Strategy indicates a specific program of action for achieving the organization objectives by efficiently employing the firm‟s resources. It involves preparing oneself for meeting unforeseen factors. It is also concerned with meeting the challenges posed by the policies and actions of other competitors in the market. BCCB in spite of being incepted in a competitive environment at Bangalore has achieved the best monthly sales (loans and advance) volume throughout the periods.

2. STRUCTURE: The design of organization structure is a downward communication of information in the bank. The information flows top down, i.e. from top level management to lower levels. The president has the sole authority in the organization. They give instructions to the executive directors and the general manager who in turn give instructions to the lower level managers. The middle level management consists of general manager. Among these departments the general manager division is very large. It consists of many sections and sub sections. All sectional heads will communicate or report their sectional performance or activities regularly to the general manager.


39


ORGANIZATION STRUTURE

BOARD OF DIRECTORS

GENERAL MANAGER

DEPUTY GANERAL

ASSISTANT GENERAL

ANT

ASSISTANT ANT

JUNIOR ASSISTANT


SENIOR ASSISTANT

CLASS IV OFFICERS

40


3. SYSTEM: Training system: The bank under various categories were imported training in diverse functional areas such as assets liability management, consumer credit, housing finance, retail finance Recovery, trade finance. The Bank adopts its own training system with the help of their training center. Training mainly helps with updating skills, knowledge improvement etc. Technology System: The bank has initiated business process re-engineering with an effort to stay at the top in the competition. It has to be enabled core banking service and has initiated installation ATM in Head Office Branch. Recruitment & selection system: The sources of recruitment at the organization in the form of both external and internal. The Bank follows the recruitment and selection processes that are commonly followed by the instructions of Registrar of CoOperative Societies (RCS). Systems and Procedures: Many systems and procedures in the bank were received reoriented and simplified during the year. Without diluting any controls. Noteworthy among the initiatives were revision/updating of all ten credit manuals, rationalization of entire applications in retail lending schemes, simplification of documentation against valuable securities, rationalization of printing supply and usage of forms, pilot implementation of single window system at select branches revision of DD payment procedure and streamlining of procedures or scanning of signature at branches. 4. STAFF: The bank is motivated to harness the unique assets of the human resources for growth of the institution and to imbibe team spirit for self and mutual development among bank‟s staff. The bank has made inroads towards establishment of quality circle concept among its employees. BCCB does concentrate in managing the people in the organization. The compensation packages and the career development prospects are meeting the best in the industry. BRINDAVAN COLLEGE, BANGALORE

41


5. SKILLS: The most important software for the success of any organization is the skills of the employees and of the management. The BCCB is having highly skilled employees. The skills of the organizations are: Credit skills: They face the challenges in improving the asset quality suitable training programs for upgrading the appraisal and credit monitoring skills, Pre-sanction and Post-sanction supervision, including monitoring of stocks, financial statements etc.., will be provided. The rigor of NPA discipline and provisioning will only increase in the days to come and they have to equip themselves for this task. Technology Skills: BCCB having a very good brand equity and loyalty of customers. It has celebrated the 100th year of service to the customers; Bank has introduced ATM. cross selling of other financial services like insurance. Increasing non-fund income, personal segment advances & trades finance in order to improve the profitability and to make growth in business volumes more sustainable. Importance has also been given to areas like low cost deposits, NPAs recovery & reduction in operating expenses to improve efficiency of their operations.

Operating Skills: Bank has to increasing non-fund income, personal segment advances & trades finance in order to improve the profitability and to make growth in business volumes more sustainable. Importance has also been given to area like low cost deposits, reduction in operating expenses taken sufficient measures to identify measure, monitor and manage various risks associated with the Banking business in the areas of credit, interest rate and liquidity. 6. STYLE: The style of an organization becomes evident from the pattern of actions taken by top management over a period of time and the reporting relationship. It is reflected in the traditions, norms, rituals and actions of an organization. BCCB follows an entrepreneurial, innovative and centralized style of management.


42


7. SHARED VALUES:  Increase number of performing branches.  To develop competent and vibrant human work force.  To develop the competencies and skills of the employees through training (internal and external) and other HRD measures.  To improve the work environment in the bank through welfare measures and healthy industrial relations.  To encourage employees to share knowledge and information about the various activities in the bank through the House Magazine and other publications.  To encourage employees for implementation of office language in their day to day work.  The wing will continually improve all the processes involved during the performance of the above functions for “Total satisfaction of customers” (Internal) by implementing quality management system requirement of all personal of the bank.


43


3.2 SWOT ANALYSIS SWOT analysis is done for a company to find out overall strength, weaknesses, 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. Hare SWOT analysis of the Bangalore city cooperative 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.


44


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 the sole sponsored of a Kannada music show which is telecasted in ETV Kannada channel. 5. FOCUSON ALL KINDS OF CUSTOMERS: The bank targets not only the top bracket of clients but even cater to the needs of small customers. Due to this reason the bank may retain good clients effectively. 6. AGGRESSIVE APPROACH IN LENDING: 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. So if the 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.


45


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. DISSATISFIED 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.


46


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. DISSATIESFIED CUSTOMERS: The analysis indicated that through most of the companies are satisfied with the product offer by this bank but the poor customer /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 threat 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 freehand to do so, it can prove to be serious threat for the bank like the Bangalore City Co-Operative Bank.


47


DATA ANALYSIS & INTERPRETATION


48


CHAPTER-4 DATA ANALYSIS AND INTERPRETATION TYPES OF LOANS  LONG TERM LOAN  MEDIUM TERM LOAN  SHORT TERM LOAN  LOAN TO ITS STAFF

LONG TERM LOAN  House Construction Loan  Vehicle Loan  Industrial Loan MEDIUM TERM LOAN  Surety Loan  Business Loan  Gold Loan  IVP/NSC/LIC Bond Loan SHORT TERM LOAN  Overdraft on Current  Overdraft on Deposits


49


LOAN TO ITS STAFF  Festival Advance  Staff Vehicle Loan  Special Salary Advance  Staff House Building Loans

LONG TERM LOANS 1.1 HOUSE CONSTRUCTION LOAN: Quantum of loan: Up to 4,99,999 - 13% of interest 5,00,000 to 14,99,999 - 13.50% of interest More than 15,00,000 – 14.50% of interest Purpose: For the construction of house. Period Of Loan: The period of loan is 180/120 months Objective: To provide financial assistance to the middle class people to build and own house.


50


Release of loans in 4 installments as follows:  1st loan installment of 25% amount are given after the completion of foundation site.  2nd installment of 25% amount is released during the ceiling of the house.  3rd installment of 25% amount is released after the ceiling during plastering time.  4th installment of 25% amount is released for painting. The total loan amount for last five financial years is as follows: Table 1.1:

YEAR

LOANS (Amount in crores)

2006-2007

19.43

2007-2008

38.40

2008-2009

51.45

2009-2010

54.23

2010-2011

62.85

ANALYSIS:

From the Bangalore City Co-operative Bank statement it is clearly analyzed that the house construction loan financial position of the last five year is:  2006-2007 (19.43 CRORES)  2007-2008 (38.40 CRORES)  2008-2009 (51.45 CRORES)  2009-2010 (54.23 CRORES)  2010-2011 (62.85 CRORES) BRINDAVAN COLLEGE, BANGALORE

51


Graph 1.1:

HOUSE CONSTRUCTION LOAN 70 60 50 40 30 20 10 0 LOANS (Amount in crores)

20062007 19.43

20072008 38.4

20082009 51.45

20092010 54.23

20102011 62.85

INTERPRETATION:

The above chart shows the house construction loan position of the last five years of the Bangalore City Co-operative Bank. The comparison has been made between 2006-07 to 2010-11. The house construction loan shows a study increase from 19.43 crores to 62.85 crores. This shows the bank has growth towards sanction of house construction loan. 1.2 VEHICLE LOAN (Three wheeler, Cars, Trucks, Buses): Quantum of Loan: 70% of amount of loans is given on the full amount of the vehicles.


52


Rate of interest: The rate of interest of vehicle loan is 13% per year

Period: The repayment of the loan is 60 months.

Objectives:  To hire purpose for anyone  To provide loan to their business purpose for vehicles like auto rickshaws, trucks, cars, buses.  To become self employed and which gradually reduces unemployment. The total loan amount for last five financial years is as follows: Table 1.2: YEAR

LOANS (Amount in lakhs)

2006-2007

12.88

2007-2008

13.88

2008-2009

12.94

2009-2010

30.23

2010-2011

40.57


53


ANALYSIS:

From the Bangalore City Co-operative Bank statement it is clearly analyzed that the vehicle loan financial position of the last five years is:

 2006-2007 (12.88 LAKHS)  2007-2008 (13.88 LAKHS)  2008-2009 (12.94 LAKHS)  2009-2010 (30.23 LAKHS)  2010-2011 (40.57 LAKHS) Graph 1.2:

VEHICLE LOAN 70 60 50 40 30 20 10 0 LOANS (Amount in crores)

20062007

20072008

20082009

20092010

20102011

19.43

38.4

51.45

54.23

62.85


54


INTERPRETATION: The above chart shows the vehicle loan position of the five financial year of Bangalore City Co-operative Bank. The table helped to analyze the total vehicle loan differ from year to year. In the year 2008-09 the loan amount given by the bank is decreases. And in the year 2009-10 and 2010-11 the loan amount is increased. 1.3 INDUSTRIAL LOAN: Purpose:  For starting of the industry.  For purchase of machinery/building and other implements. Rate of interest: Rate of interest is according to the amount of loan taken by the borrower. The total loan amount for last five financial years is as follows: Table 1.3: YEAR

LOANS (Amount

in

lakhs) 2006-2007

158.4

2007-2008

472

2008-2009

472

2009-2010

400

2010-2011

400


55


ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the industrial loan financial position of the last five year is:  2006-2007 (158.4 LAKHS)  2007-2008 (472 LAKHS)  2008-2009 (472 LAKHS)  2009-2010 (400 LAKHS)  2010-2011 (400 LAKHS)  Graph 1.3:

INDUSTRIAL LOAN 500 400 300 200 100 0 LOANS (Amount in lakhs)

20062007 158.4

20072008 472

20082009 472

20092010 400

20102011 400

INTERPRETATION: The above chart shows the industrial loan position of the five financial year of Bangalore City Co-operative Bank. The loan amount is decreased year by year due to the slowdown in economy.


56


MEDIUM TERM LOAN 2.1 SURETY LOAN: Quantum of Loan: Maximum amount up to 1, 00,000

Rate of interest: The rate of interest of surety loan is 16.50%

Period: The period of loan is 50 months

Purpose: To meet personal causes of the people surety loans is taken behalf other persons.

Features:  The surety loan means if original benefit or does not pays the loan then the surety holders has to pay the amount back.  The installment must not exceed the 40% of his actual salary.  One person as to give surety to only on borrower.


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The total loan amount for last five financial years is as follows: Table 2.1

YEAR


2006-2007

4.54

2007-2008

3.74

2008-2009

2.73

2009-2010

2.12

2010-2011

1.67

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the syrety loan financial position of the last five year is:

 2006-2007 (4.54 CRORES)  2007-2008 (3.74 CRORES)  2008-2009 (2.73 CRORES)  2009-2010 (2.12 CRORES)  2010-2011 (1.67 CRORES)


58


Graph 2.1:

SURETY LOAN 250 200 150 100 50 0 LOANS (Amount in lakhs)

20062007 49.75

20072008 66.74

20082009 89.92

20092010 157.23

20102011 214.71

INTERPRETATION: The above chart shows the surety loan position of last five year of Bangalore City Co-operative Bank. The loan amount given by the bank is decreased year by year from 4.54 crores to 1.67 crores. Due to the customers are not repaying the loan properly and they cheated the guarantors. Even they fail to fulfill the obligation. So the bank has decreased the disbursement of surety loan.


59


2.2 BUSINESS LOAN: Quantum of Loan: Maximum amount up to 1, 00,000

Rate of interest: The rate of interest of surety loan is 16.50%

Period: The period of loan is 50 months

Purpose: Bank provides loans to its hip customer for their business transactions improvements.

Features:  This loan is provided to small scale business.  This loan helps in self employment of the people.


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The total loan amount for last five financial years is as follows: Table 2.2: YEAR


2006-2007

49.75

2007-2008

66.74

2008-2009

89.92

2009-2010

157.23

2010-2011

214.71

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the business loan financial position of the last five year is :  2006-2007 (49.75 LAKHS)  2007-2008 (66.74 LAKHS)  2008-2009 (89.92 LAKHS)  2009-2010 (157.23 LAKHS)  2010-2011 (214.71 LAKHS)


61


Graph 2.2:

BUSINESS LOAN 250 200 150 100 50 0 LOANS (Amount in lakhs)

20062007 49.75

20072008 66.74

20082009 89.92

20092010 157.23

20102011 214.71

INTERPRETATION:

The above chart shows the business loan position of last five year of Bangalore City Co-operative Bank. The comparison has been made between2006-07 to 2010-11 the business loan shows a study increase from 49.75 lakhs to 214.71 lakhs.


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2.3 GOLD LOAN: Quantum of Loan: Maximum amount up to 10,00,000 on gold ornaments as 1 gram gold amount to Rs.1500. Rate of interest: The rate of interest of gold loan is 12.50% per annum. Period: The period of loan is 60 months.

Features:  This loan is especially given only in these types of co-operative banks.  There is no much of security needed.


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The total loan amount for last five financial years is as follows: Table 2.3:

YEAR

LOANS (Amount

in

crores) 2006-2007

7.54

2007-2008

11.29

2008-2009

15.70

2009-2010

22.58

2010-2011

34.23

ANALYSIS:

From the Bangalore City Co-operative Bank statement it is clearly analyzed that the gold loan financial position of the last five year is:  2006-2007 (7.54 CRORES)  2007-2008 (11.29 CRORES)  2008-2009 (15.70 CRORES)  2009-2010 (22.58 CRORES)  2010-2011 (34.23 CRORES)


64


Graph 2.3

GOLD LOANS 250 200 150 100 50 0 LOANS (Amount in lakhs)

20062007 37.2

20072008 85.91

2008- 2009- 20102009 2010 2011 162.06 119.74 242.72

INTERPRETATION:

The above chart shows the gold loan position of the last five financial year of the Bangalore City Co-operative Bank. The loan amount is increased year by year from 7.54 crores to 34.23 crores. So the earning of the bank are better as for as the gold loan are concern.


65


2.4 IVP/NSC/LIC BOND LOANS: Quantum of loan: Maximum 70% on paid on IVP/NSC/LIC Bonds. Rate of interest: The rate of interest is 14% Interest amount rate may change from period to period as per the directions of reserve bank I and istrative board. The total loan amount for last five financial years is as follows: Table 2.4 YEAR

LOANS (Amount

in

Thousands) 2006-2007

14.6

2007-2008

16.74

2008-2009

10

2009-2010

10

2010-2011

26.10

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the IVP/NSC/LIC Bond loan financial position of the last five year is:  2006-2007 (14.6 THOUSANDS)  2007-2008 (167.4 THOUSANDS)  2008-2009 (10 THOUSANDS)  2009-2010 (10 THOUSANDS)  2010-2011 (26.10 THOUSANDS) BRINDAVAN COLLEGE, BANGALORE

66


Graph 2.4

IVP/NSC/LIC BOND LOANS 250 200 150 100 50 0 LOANS (Amount in lakhs)

20062007

20072008

20082009

20092010

20102011

37.2

85.91

162.06 119.74 242.72

INTERPRETATION:

The above chart shows the IVP/NSC/LIC bond loan position of the last five financial year of the Bangalore City Co-operative Bank. The table helped to analyze the requirement of loan by the different the loan amount has been decreased by 99,619.


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SHORT TERM LOANS 3.1 OVERDRAFT ON CURRENT : Quantum of loan: Up to 4,99,999 – 13.50% of interest 5,00,000 to 14,99,999 – 14.50% of interest More than 15,00,000 – 14.75%

Purpose:  For urgent need of money for business.  To enhance the relationship between customers and bank.  It is helpful for business person.

Eligibility:  The holder should have maximum amount and maximum times of transactions.  The holder has to be person who has holding from many years.  The person in past should have maintained good balance.

Permission:  The holder can get this privilege by consulting respective manager.  Manager has to clarify with his senior authority.


68



YEAR


2006-2007

29.07

2007-2008

31.83

2008-2009

66.12

2009-2010

62.11

2010-2011

90.65

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the overdraft on current financial position of the last five year is:

 2006-2007 (29.07 LAKHS)  2007-2008 (31.83 LAKHS)  2008-2009 (66.12 LAKHS)  2009-2010 (62.11 LAKHS)  2010-2011 (90.65 LAKHS)


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Graph 3.1:

OVERDRAFT ON CURRENT 300 250 200 150 100 50 0


20062007

20072008

20082009

20092010

20102011

37.2

85.91

162.06

119.74

242.72

INTERPRETATION:

The above chart shows the overdraft on current position of the last five financial year of the Bangalore City Co-operative Bank. This is due to the variation in requirement of the customers.


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3.2 OVERDRAFT ON DEPOSITS: Amount of overdraft: It is purely given on deposits basis; up to 85% loan is eligible.

Rate of interest: Deposit rate + 1%

Purpose:  To meet the personal needs of customers  To develop a good relation between customer and bank.

Eligibility:  An holder should submit the original deposit bond.  He should have a good record of transaction and maintain the good balance.

Permission:  holder should approach the manager in respective department head.  The management will decide to allow or not.


71



YEAR


2006-2007

37.20

2007-2008

85.91

2008-2009

162.06

2009-2010

119.74

2010-2011

242.72

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the overdraft on current financial position of the last five year is:  2006-2007 (37.20 LAKHS)  2007-2008 (85.91 LAKHS)  2008-2009 (162.06 LAKHS)  2009-2010 (119.74 LAKHS)  2010-2011 (242.72 LAKHS)


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Graph 3.2:

OVERDRAFT ON DEPOSIT 300 250 200 150 100 50 0


20062007

20072008

20082009

20092010

20102011

37.2

85.91

162.06

119.74

242.72

INTERPRETATION The above chart shows the overdraft on deposit position of the last five financial year of the Bangalore City Co-operative Bank. The table helped to analyze the requirement of loans by the different customers.


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LOAN TO ITS STAFF 4.1 FESTIVAL ADVANCE: Quantum of advance: Maximum amount is 3000.

Period: The period of loan is 10 months.

Purpose:  To meet the expense of the festival.  To celebrate the festival and maintain the culture of different religion.

Repayment: The amount is processed in their salaries.


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The total advance amount for last five financial years is as follows: Table 4.1:

YEAR

LOANS (Amount

in

Thousands) 2006-2007

127.8

2007-2008

180

2008-2009

140.7

2009-2010

150.3

2010-2011

153.3

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the festival advance financial position of the last five year is:  2006-2007 (127.8 THOUSANDS)  2007-2008 (180 THOUSANDS)  2008-2009 (140.7 THOUSANDS)  2009-2010 (150.3 THOUSANDS)  2010-2011 (153.3 THOUSANDS)


75


Graph 4.1:

FESTIVAL ADVANCE 180 160 140 120 100 80 60 40 20 0 LOANS (Amount in Thousands)

20062007

20072008

20082009

20092010

20102011

127.8

180

140.7

150.3

153.3

INTERPRETATION: The above chart shows the festival advance position of the last five financial year of the Bangalore City Co-operative Bank. The advance amount varies mainly due to the services rule.


76


4.2 STAFF VEHICLE LOAN: Quantum of loan: 70% of amount is given on the full amount of the two wheeler vehicle maximum amount up to 50,000. 70% of amount is given on the full amount of the four wheeler is maximum amount up to 3, 00,000.

Rate of interest: The rate of interest for two wheelers and four wheeler is 8%

Period: Two wheeler

72 months

Four wheeler

84 months

Purpose:  For the transportation of its staff.  For their personal purpose.

Repayment: The loan amount is deducted in their salary with a very low interest rate than other.


77



YEAR


2006-2007

6.45

2007-2008

15.26

2008-2009

25.67

2009-2010

34.27

2010-2011

36.43

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the staff vehicle loan financial position of the last five year is:  2006-2007 (6.45 LAKHS)  2007-2008 (15.26 LAKHS)  2008-2009 (25.67 LAKHS)  2009-2010 (34.27 LAKHS)  2010-2011 (36.43 LAKHS)


78


Graph 4.2:

STAFF VEHICLE LOAN 40 35 30 25 20 15 10 5 0 LOANS (Amount in lakhs)

20062007 6.45

20072008 15.26

20082009 25.67

20092010 34.27

20102011 36.43

INTERPRETATION: The above chart shows the staff vehicle loan position of the last five financial year of the Bangalore City Co-operative Bank. In all the year the loan amount is increased continuously.


79


4.3 SPECIAL SALARY ADVANCE: Quantum of loan: Maximum amount up to 1, 00,000

Rate of interest: The rate of interest of special salary advance is 8%

Period: The period of advance is 120 months.

Purpose:  For the personal purpose of staff.  To expense before the salary date.

Repayment: The advance amount is deducted in future salaries.


80


The total advance amount for last five financial years is as follows: Table 4.3:

YEAR


2006-2007

87.4

2007-2008

84.6

2008-2009

100.35

2009-2010

92.69

2010-2011

89.28

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the special salary advance financial position of the last five year is:  2006-2007 (87.4 LAKHS)  2007-2008 (84.6 LAKHS)  2008-2009 (100.35 LAKHS)  2009-2010 (92.69 LAKHS)  2010-2011 (89.28 LAKHS)


81


Graph 4.3:

SPECIAL SALARY ADVANCE 105 100 95 90 85 80 75 LOANS (Amount in lakhs)

20062007 87.4

20072008 84.6

20082009 100.35

20092010 92.69

20102011 89.28

INTERPRETATION:

The above chart shows the special salary advance position of the last five financial year of the Bangalore City Co-operative Bank. The advance amount varies mainly due to the service rule.


82


4.4 STAFF HOUSE BUILDING LOAN: The loan taken from the bank employee, He/ She have clear the loan before one year of his retirement period of time.

Rate of interest: The rate of interest is 6% of EMI.

Purpose:  Staff to own their house.  To secure themselves.

Repayment: The loan amount is deducted in their salaries.


83



YEAR


2006-2007

1.65

2007-2008

2.20

2008-2009

2.53

2009-2010

2.81

2010-2011

2.81

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the staff house building loan financial position of the last five year is:  2006-2007 (1.65 CRORES)  2007-2008 (2.20 CRORES)  2008-2009 (2.53 CRORES)  2009-2010 (2.81 CRORES)  2010-2011 (2.81 CRORES)


84


Graph 4.4:

STAFF HOUSE BUILDING LOAN 3 2.5 2 1.5 1 0.5 0 LOANS (Amount in crores)

2006- 2007- 2008- 2009- 20102007 2008 2009 2010 2011 1.65

2.2

2.53

2.81

2.81

INTERPRETATION: The above chart shows the staff house building loan position of the last five financial year of the Bangalore City Co-operative Bank. The table helped to analyze the loan amount differ from year to year. The loan amount is increased year by year between 1.65 crores to 2.81 crores.


85


LOANS AND ADVANCES Table 5.1

YEAR

LOANS (Amount

in

crores) 2006-2007

150.17

2007-2008

233.67

2008-2009

294.84

2009-2010

352.98

2010-2011

444.12

ANALYSIS: From the Bangalore City Co-operative Bank statement it is clearly analyzed that the staff house building loan financial position of the last five year is:  2006-2007 (150.17 CRORES)  2007-2008 (233.67 CRORES)  2008-2009 (294.84 CRORES)  2009-2010 (352.98 CRORES)  2010-2011 (444.12 CRORES)


86


Graph 5.1

LOANS AND ADVANCES

20062007 10% LOANS (Amount in crores)

2010-2011 30%

2009-2010 24%

2007-2008 16% 2008-2009 20%

INTERPRETATION: The above chart shows the loans and advances position of the last five financial year of the Bangalore City Co-operative Bank. The table helped to analyze that the total loans and advances differ from year to year. The loan amount is increased by year to year. So the profit of the bank is gradually increased.


87


SUMMARY OF FINDINGS, CONCLUSION & SUGGESTIONS.


88


CHAPTER-5 FINDINGS,CONCLUSION AND SUGGESTIONS FINDINGS

The important findings of the study are as follows: Allotting of loans has been increased in 2010-11 when compared to the financial year 2006-07, 2007-08, 2008-09 and 2009-10.

During the project process I found that bank officials and staffs were cooperative while dealing with customers.

With the help of computerization it has enabled the bank‟s staff to perform their task efficiently.

The bank branches are limited to Bangalore city only.

Findings the study it is found that the interest rates of different types of loan will be fluctuating.

Small enterprises are provided loans under business loan category. Bank operates mostly to customers of middle class and lower middle class people.

Bank does not have website and online banking. BRINDAVAN COLLEGE, BANGALORE

89


SUGGESTIONS

The bank has to extend their branches throughout the state and expand as the bank grows.

The Bangalore City Co-operative Bank Ltd must introduce ATM‟s throughout the city so that services rendered to the customers will have a better impact on the bank.

In this modern world the banking must be wide spread for this reason website and online banking has to be started.

Bank has to introduce new loan schemes to encourage more and more different classes of people.

The profit position can be improved by reducing the interest rates on loans.


90


CONCLUSION The study of loans and advances undertaken “Bangalore City Co-operative Bank” was done to analyze the financial performance and to suggest the measure to improve the current performance. The bank possesses a sound investment planning and also it has good profit it is playing a dominate role in co-operative banking industries. Bangalore city co-operative bank has been set up to provide essential help for promoting economic development of the country. It plays a natural role in providing financial assistance to small and medium scale industries which are located in rural and urban areas. It provides advance facility within the short span of time. Compared to other nationalized bank in Bangalore, it takes every primitive measure while issuing loans. For this reason only bank must not face any problems while recovering loans back. Most of the banks face problems while issuing and getting back from improper documentation. Here in this bank, growing person should provide two securities also. Performance of the bank is very good. Finally we can conclude private sector bank are laying strong and powerful role than public sector bank.


91


POLICY IMPLICATION AND SCOPE FOR FURTHER STUDY

The Bangalore City Co-operative Bank Ltd must introduce ATM‟s throughout the city so that services rendered to the customers will have a better impact on the bank. Bank has to introduce new loan schemes to encourage more and more different classes of people. The profit position can be improved by reducing the interest rates on loans. Bangalore city co-operative bank has been set up to provide essential help for promoting economic development of the country. It plays a natural role in providing financial assistance to small and medium scale industries which are located in rural and urban areas.


92


Bibliography


93


BIBLIOGRAPHY BOOKS: S.L.NO

TITLE

AUTHOR

PUBLISHER

D/OF PUBLISHING

01.

FINANCIAL MANAGEMENT

KHAN &JAIN

HIMALAYA PUBLISHERS

4th Edition

02

FINANCIAL MANAGEMENT

G.S. MAHAJANSHETTER

SUDHA PUBLICATION

2002

03

ESSENCIALS OF FINANCIAL MANAGEMENT

RREDDY AND APPANIAH

VIKAS PUBLISHERS

2007

04

MANAGEMENT ING

B.S.RAMAN

UNITED

1st Edition

PUBLICATION

JOURNALS: 1.

Banking and Finance

2.

finance India

3.

Indian Management

4.

Journal of management Research

WEBSITES: 1.

www.Bangalorecitycooperativebank.co.in

2.

www.rbi.org.in


94


Annexure


95


ANNEXURES BALANCE SHEET AS ON: 31/03/2007

LIABILITIES

AMOUNT

ASSESTS

AMOUNT

Share capital

11,41,64,541

Cash in hand

2,27,68,021

& 38,53,63,257

Cash at bank

5,97,03,938

124,46,55,493

Reserves Other Funds Deposits

224,43,62,150

Investments

Suspense

54,21,134

Loans

s

& 150,17,47,820

advances

Other liabilities

9,24,31,631

Other assets

5,19,13,992

Branch

108,35,64,213

Branch

109,32,03,966

s

s

Interest payable 2,32,26,069

Furniture

17,53,624

Building

67,48,424

Generator cost

67,48,424

Vehicle cost

2,41,688

Computer cost

8,64,489

Total

398,40,82,260

on deposits Profit for the 3,55,49,263 current year

Total

398,40,82,260


96


BALANCE SHEET AS ON: 31/03/2008 LIABILITIES

AMOUNT

ASSESTS

AMOUNT

Share capital

13,94,22,103

Cash in hand

3,09,56,688

& 41,57,51,667

Cash at bank

8,80,14,753

107,73,20,493

Reserves Other Funds

Deposits

289,10,54,009

Investments

Suspense

64,27,754

Loans

s

& 233,67,94,705

advances

Other liabilities

12,24,86,197

Other assets

7,38,85,505

Branch s

113,67,31,214

Branch s

115,74,04,752

Furniture

41,37,510

Building

93,78,200

Generator cost

1,75,333

Vehicle cost

3,59,853

Computer cost

8,64,145

Total

477,92,91,939

Interest payable 2,46,95,207 on deposits

Profit

for

the 4,27,23,786

current year

Total

477,92,91,939


97


BALANCE SHEET AS ON: 31/03/2009

LIABILITIES AMOUNT

ASSESTS

AMOUNT

Share capital

17,33,63,267

Cash in hand

3,43,68,746

& 44,98,27,118

Cash at bank

10,01,13,012

140,58,20,493

Reserves Other Funds Deposits

378,63,09,868

Investments

Suspense

47,56,009

Loans

s

& 294,84,43,869

advances

Other

15,16,46,024

Other assets

13,23,88,764

160,25,34,828

Branch s 160,31,68,942

2,81,97,948

Furniture

79,51,791

Profit for the 5,17,00,057

Building

91,43,744

Generator cost

6,67,687

Vehicle cost

2,39,903

Computer cost

60,08,168

Total

624,83,35,122

liabilities Branch s Interest payable

on

deposits

current year

Total

624,83,35,122


98



LIABILITIES

AMOUNT

ASSESTS

AMOUNT

Share capital

21,84,53,827

Cash in hand

3,12,62,897

Reserves & Other 48,25,77,806

Cash at bank

13,13,73,812

199,13,74,743

Funds Deposits

489,58,18,010

Investments

Suspense

31,66,749

Loans

s

& 352,98,19,370

advances

Other liabilities

17,48,68,047

Other assets

15,44,37,682

Branch s

206,47,87,656

Branch s

206,62,25,845

Furniture

1,21,91,561

Building

89,15,151

Generator cost

8,10,238

Vehicle cost

1,19,952

Computer cost

42,21,352

Total

793,07,52,606

Interest

payable 3,77,02,976

on deposits Profit

for

the 5,33,77,802

current year

Total

793,07,52,606


99



LIABILITIES

AMOUNT

ASSESTS

AMOUNT

Share capital

28,71,12,907

Cash in hand

3,35,90,290

Reserves & Other 54,26,10,058

Cash at bank

17,50,07,942

229,13,05,825

Funds Deposits

597,62,10,335

Investments

Suspense

30,27,360

Loans

s

& 444,12,12,211

advances

Other liabilities

21,66,40,368

Other assets

17,18,64,798

Branch s

2,429,618,505

Branch s

2,428,803,838

Furniture

1,28,68,259

Building

2,01,72,212

Generator cost

10,17,846

Vehicle cost

6,48,328

Computer cost

20,81,688

Total

957,92,34,219

Interest

payable 4,51,09,375

on deposits Profit

for

the 7,95,66,288

current year

Total

957,92,34,219


100


BCCB-ISTRATIVE OFFICE CONSOLIIDATED PROFIT & LOSS STATEMENT FROM: 1/04/2007 TO 31/03/2008 PARTICULARS

LOSS

Interest On Deposits

196337492.76

Interest Provision A/c

268021.00

Establishment A/c

46892710.00

istrative Expenses

3070140.37

Conveyance Expenses

86900.00

Other Expenditure

86073919.71

Computer

1247586.50

Provisions

9665709.00

Insurance & Tax

2598181.00

Depreciation

2669810.60

PROFIT

2000.00

122161.00

Interest On Loans

237169268.80

Interest On Investment

87235720.02

Rent Received

105494.00

Other Items

66999613.60

Net Profit

42723786.48

TOTAL

391634257.42


391634257.42

101


PROFIT & LOSS STATEMENT FROM: 1/04/2008 TO 31/03/2009 PARTICULARS

LOSS


286372094.50


3502741.00

Establishment A/c

52337753.00

istrative Expenses

3096724.25

Conveyance Expenses

61900.00

Other Expenditure

95290633.74

Computer

1213919.00

Provisions

10541426.00

Insurance & Tax

3220635.00

Depreciation

3693283.89

PROFIT

Interest On Loans

360422492.00


81265519.99

Rent Received

74838.00

Other Items

69274317.88

Net Profit

51700057.49

TOTAL

511037167.87


511037167.87

102


PROFIT & LOSS STATEMENT FROM: 1/04/2009 TO 31/03/2010

PARTICULARS

LOSS


389511846.50


9170906.00

Establishment A/c

60369103.00

istrative Expenses

4291247.78

Conveyance Expenses

60800.00

Other Expenditure

139245174.02

Computer

1137464.42

Provisions

7697857.00

Insurance & Tax

4221386.17

Depreciation

5063171.55

PROFIT

Interest On Loans

434866244.63


118585513.55

Rent Received

69738.00

Other Items

120625262.71

Net Profit

53377802.45

TOTAL

674146758.89


674146758.89

103


PROFIT & LOSS STATEMENT FROM: 1/04/2010 TO 31/03/2011

PARTICULARS

LOSS


443935172.37


7406399.00

Establishment A/c

84437935.00

istrative Expenses

4467473.11

Conveyance Expenses

81000.00

Other Expenditure

157403723.63

Computer

1352898.00

Provisions

38059709.00

Insurance & Tax

5379089.00

Depreciation

5252102.51

PROFIT

19735.10

Interest On Loans

560852799.80


143244509.11

Rent Received

40940.00

Other Items

123183806.17

Net Profit

79566288.56

TOTAL

827341790.18

827341790.18

s BRINDAVAN COLLEGE, BANGALORE

104

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