Loans Nd Advances

RECOVERY OF LOANS AND ADVANCES

CHAPTER 1 INTRODUCTION

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RECOVERY OF LOANS AND ADVANCES MEANING OF FINANCE Finance is the set of activities dealing with the management of funds. More specifically, it is the decision of collection and use of funds. It is a branch of economics that studies the management of money and other assets. Finance is also the science and art of determining if the funds of an organization are being used properly. Through financial analysis, companies and businesses can take decisions and corrective actions towards the sources of income and the expenses and investments that need to be made in order to stay competitive. Finance is the life blood of business. It flows in mostly from scale of goods and services. It flows out for meeting various types of expenditure. The activating element in any business which may be on industrial or commercial undertaking is the finance. Business finance has been defined as those activities which have to do with the provision and management of funds for the satisfactory conduct of a business. Business finance is defined as that business activity which is concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of business enterprises. So we can say business finance is mainly developed around three major objectives. Firstly, to obtain an adequate supply of capital for the needs of the business, Secondly, to conserve and increase the capital through better management, Thirdly, to make profit from the use of funds this is an overall objective of a business enterprise. Before industrial revolution, finance was not of much importance. The methods of production were simple. For example, the artisan used to work in open small hut. He had simple tools mostly made by himself. Labour at that time was more important than capital and finance did not pose any problem. Production in those days was, therefore labour intensive.

*Information has been collected from the website www.google.com

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RECOVERY OF LOANS AND ADVANCES

INDIAN FINANCIAL SYSTEM The financial system or the financial sector of any country consists of specialized and non-specialized financial institutions of organized and unorganized financial markets of financial instruments and services, which facilitate transfer of funds procedures and practises adopted in the markets and financial interrelationship, are also part of the system. The structure of a financial system in any economy is as follows: UNORGANISED MARKETS In these markets consist of many lenders, indigenous bankers, transfers and private chit funds etc. whose activities are not controlled by RBI. Recently the RBI has taken steps to bring private function companies and chit funds its strict control but using non banking financial companies directions in 1998. ORGANISED MARKETS In these markets there are standardized rules and regulations by Reserve Bank of India or other regulatory bodies. The organized markets can be further classified into two. They are: 1) Capital markets. 2) Money markets. CAPITAL MARKET: It is a market for long term funds which have a long or indefinite maturity. Capital market further divided into three mainly: a) Industrial Security market: It is a market for industry security namely equity shares or ordinary shares, preference share, debentures or bonds. It is a market where industrial concern raises their capital or debt by assuring appropriate instruments. It can be further subdivided into two. They are: 

Primary market: It is a market for new issue or new financial claims.



Secondary market: It is a market for existing securities and those already issued and quoted in stock exchange.

*Information has been collected from the book A Hand book of banking by N. S. Toor

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RECOVERY OF LOANS AND ADVANCES

b) Government Securities Market: It is also called gilt-edged securities market. It is a market where government securities are traded (long term securities)

FINANCIAL INSTRUMENTS A financial instrument refers to these documents which represent financial claims on assets. Financial instrument can also be called financial securities. These instruments are classified into a) PRIMARY SECURITIES: Shares and debentures issued directly to Public. b) SECONDARY SECURITIES: These securities issued by some intermediaries ex; UTI and Mutual fund again these securities may be classified on the basis of duration as follows. 

Short Term Securities: Within one year ex; bills of exchange.



Medium Term Security: Maturity period between 1-5 years ex; debentures.



Long Term Securities: Maturity period more than 5 years ex; Gilts.

FINANCIAL SERVICES a) MERCHANT BANKING: A merchant banker is a financial intermediary who helps to transfer capital from those it to those who need it. b) LOAN SYNDICATION: Much number of banks joins together and forms a syndicate to provide loan as big sum to corporate. c) LEASING: A lease is an agreement under which a company acquires a right to make use of capital assets like machinery for agreed period in return for periodic payment of rentals. d) HIRE PURCHASE: It is an agreement relating to transaction in which goods are let on hire. e) FACTORING: It is an agreement under which a financial intermediary assumes the credit risk in the collection of book debt passes for its client. f) VENTURE CAPITAL: A venture capitalist finances a project based on the potentialities of new innovative projects for new entrepreneurs. g) MUTUAL FUND: A mutual fund refers to a fund raised by a financial services company by pooling the savings of the public.

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RECOVERY OF LOANS AND ADVANCES INTRODUCTION TO LOANS One of the primary functions of the commercial bank is ‘lending’. Through lending commercial banks meet their objective of making profits. The deposits collected from the public cannot be kept idle. It has to be utilized in order to derive benefits out of it. The bank collects deposits with the objective of lending and makes profit out of the interest received and paid. Their main aim is to deal in money and provide for those who need it. The banker performs the job of lending within the framework of statues governing the banking business, the government policy and guidelines issued by the authorities of the country (RBI in India).The basic objective of nationalization of commercial banks was to provide funds to the neglected sectors like agriculture, tiny industries and other weaker sections of the society. Today nearly 40% of the total commercial bank advances are the priority sectors. Greater part of the commercial bank funds are employed in the form of loans and advances. Loans bring good money to the bank in the form of profit by charging interest. Lending function of a commercial bank benefits the bank in the form of profit and the one who takes loans enjoy the benefit of money required for their activities. The wheels of industry cannot run without the bank advances. The bank needs to assess the condition of industry or trade or any business enterprise while making advances.

SHORT TERMS LOANS FINANCED BY COMMERCIAL BANKS Commercial banks are the most important source of short-term capital. The major portion of working capital loans are provided by commercial banks. They provide a wide variety of loans tailored to meet the specific requirements of a concern. The different forms in which the banks normally provide loans and advances are loans and advances are loans, cash credit, overdrafts, purchasing and discounting of bills. LOANS: When a bank makes an advance in lump-sum against some security it is called a loan. Here, a specified amount is sanctioned by the bank to the customers. The loan amount so sanctioned is paid to the borrower either in cash or by credit to his account. A certain amount of interest has to be paid by the borrower for the loan that has to be borrowed. A loan can be repaid in lump-sum or in installements. Commercial banks generally provide short term loans up to one year for meeting the working capital requirements. But these days, term loans exceeding one year are also provided by banks. The term loans may be either medium term or long term loans.

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RECOVERY OF LOANS AND ADVANCES

CHAPTER 2 RESEARCH DESIGN

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RECOVERY OF LOANS AND ADVANCES TITLE OF THE STUDY: Recovery of loans and advances at “State Bank of Mysore”

Introduction Any amount borrowed or lent is called a loan. If money is borrowed it is debt of business and if loan is given, it is receivable for the business.

Loan is a method of lending under which bank gives credit to a borrower for a fixed period and for a specific purpose. Loan are promises for future payment, they have to be repaid in periods beyond a year and are, therefore long term liabilities.

The process of granting of loans and advances post credit worthy evaluation of the borrower coupled with the legal documentation is more often than not , reinforced by a strong recovery and monitoring process. The risks associated with adverse selection and moral hazard are to be prevented at any cost.

REVIEW OF LITERATURE: It is mandatory to scan through the literature which has already gone through the proposed study subject. Various research works on lending practises of SBM has been very helpful in the successful conduct of the study. However all such studies concentrate on certain issues and suggest piecemeal solution. Therefore, a comprehensive study is elusive. The text and academics literature which helped the study in details are: 

A Hand Book of Banking by N. S. Toor



Ramman Finance management.



Finance management and policies by James C. Van Horne.



Management accounting principle and practises by R. K. Sharma.

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Accounting for managers S. P Jain and K.L. Narang.

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Research methodology by C.R. Kothari.

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Business Research Methods by Appannaiah Reddy and Ramnath

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RECOVERY OF LOANS AND ADVANCES STATEMENT OF THE PROBLEM: SBM is one of the nationalized banks in India which provides loans and advances when it is required by individual or companies and accepts the deposits from public. Being in the business of primarily lending and taking deposits, State Bank of Mysore has a track record of low credit risk manifestation. Yet given the global recessionary trend, the Indian banks have also not been spared. The banking sector has, over the years, witnessed increasing trend of delinquent loan accounts. This study is focused at evaluating the credit management process at the State Bank of Mysore, Bangalore. The thrust will be on evaluating the quality of the loans and the level of non-performing assets in the loan portfolio. At the end of the project the study will endeavour to find a conclusion to the question as to whether the State Bank of Mysore. Bangalore has managed its loan recovery system effectively and efficiently

Objectives 

To study different types of loans extended by the bank.

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To study the procedure of granting loans and advances by the bank.

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To evaluate the norms for sanctioning loans.

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To confirm the non existence of the conditions of adverse selection and moral hazard.

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The ascertain the reasons, if any, for the non performance assets and if significant to evaluate the recovery process

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To ascertain the credit risk management system at the bank

Operational Definitions of Concept:

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RECOVERY OF LOANS AND ADVANCES RESEARCH METHODOLOGY:

This refers to the method of data description. Descriptive research includes surveys and fact findings enquire of different kinds. The major purpose of descriptive research is description of the state of affair as it exists at present. In business research we quite often use the term export facto research for descriptive research studies. The main characteristics of this method is that the researcher has no control over the variable, he can only report what has happened or what is happening. The method of research utilised in descriptive research are survey methods of all kinds including comparative and correlation methods. Sources of data Collection The data is most vital and the integral aspect, which is responsible for the completion of any project.

Primary data The primary data will be collected through personal interaction with the executives and managers of the Bank as also from an verification of the records to the extent permitted. Primary data will also be collected, collated and interpreted through observation of the processes at the bank

Secondary data It will be retrieved and collated from the annual reports of the Bank, from reports in various magazines, academic journals and other published papers of repute.

Plan of Analysis The data collected will be analyzed using the various techniques and tools generally accepted as proper for such analysis. Techniques like Risk Identification and financial analysis will be used in arriving at the logical conclusion.

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RECOVERY OF LOANS AND ADVANCES Limitation  This study is limited by resource and time constraints  For the reasons mentioned above the study is restricted to only one Bank and in that direction it may not be reflective of the pattern at the other banks  Due to confidential nature of the record may not be in a position to collect data in totality but through a representative sampling technique will endeavour to overcome this limitations

Chapter Scheme 1) INTRODUCTION 2) RESEARCH DESIGN 3) INDUSTRY PROFILE 4) PROFILE OF THE COMPANY/ORGANISATION/SYSTEM. 5) ANALYSIS AND INTREPRETATION OF DATA. 6) SUMMARY OF FINDINGS ,CONCLUSION & RECOMMENDATION. BIBLOGRAIPHY. APPENDIX.

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RECOVERY OF LOANS AND ADVANCES

CHAPTER 3 COMPANY PROFILE

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RECOVERY OF LOANS AND ADVANCES History State Bank of Mysore was established in 1913 as Bank of Mysore under the patronage of the erstwhile government of Mysore, at the instance of the banking committee headed by the great EngineerStatesman, Late Dr Sir M Visvesvaraya. Subsequently, in March 1960, the bank became an Associate of State Bank of India. State Bank of India holds 92.33% of shares. The bank's shares are listed in Bangalore, Chennai, and Mumbai stock exchanges. SBM has a widespread network of 671 branches (as on 31.01.2009) and 20 extension counters spread all over India which includes 6 specialized SSI branches, 4 Industrial Finance branches, 3 Corporate Accounts Branches, 4 specialized Personal Banking Branches, 10 Agricultural Development Branches, 3 Treasury branches, 1 Asset Recovery Branch and 7 Service Branches, offering wide range of services to the customers. The bank has a dedicated workforce of 9720 employees consisting of 3169 supervisory staff, 6551 nonsupervisory staff (as on 31.03.2008). The skill and competence of the employees have been kept updated to meet the requirement of our customers keeping in view the changes in the environment. The paid up capital of the Bank is Rs.360 Millions as on 31.03.2008 out of which State Bank of India holds 92.33%.The Bank has achixeved a capital adequacy ratio of 11.73% as at the end of March 2008. The bank has an enviable track record of earning profits continuously and uninterrupted payment of dividend since its inception in 1913. Total deposits of the bank as at the end of January 2009 is Rs 31817 Crores and the total advances stood at Rs. 24713 Crores which include export credit of Rs. 10159.50 million. The forex turnover of the bank crossed Rs 336963.50 million during the year March 2007 to March 2008 which is 44.66% higher. State Bank of Mysore is the first Karnataka-based Bank with fully networked branches. The bank is fully on 'CORE BANKING SOLUTION' from 31.12.2005. In record time of one calendar year, the bank completed the exercise of converting all the branches to Core Banking to provide the convenience of anytime, anywhere banking to all our valued customers. State Bank of Mysore embarked upon the latest Banking Technology platform by implementing the Core Banking Solutions (CBS) across all its branches, with an objective of providing banking convenience to the customers.

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RECOVERY OF LOANS AND ADVANCES Services Offered By The Company: Deposits 

My bank Surakhshna- A unique deposit scheme linked with insurance cover has been introduced. Insurance cover to a maximum of Rs. 5 lakh on deposits held for 5 years and more.



Saving Plus- In order to provide value added services to our Personal Segment customers, a new specialized auto sweep product for Personal Segment savings bank customers has been introduced.

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Saral Savings Bank account (No Frills account)- This account comes with very low minimum balances as well as low / nil charges, to cater to the needs of individual from the vast sections of population who are, otherwise, not fulfilling certain conditions of our existing Savings Bank requirements.



SBM Tax Saver Scheme (Tax saving scheme under Sec 80c of the IT act)A Bank Term Deposit Scheme 2006 has been introduced by the Central Government commencing from the financial year 2006-07 wherein time deposits made upto Rs.1.00 lakh for a period of 5 years are exempted from payment of Income tax under Sec 80C The following are the Deposit Scheme provided by State Bank of Mysore:

Multi Option Deposit Scheme

It combines the features of Current account, Savings Bank a/c, TDR or RID a/c. The product proposes to give liquidity to the depositor with high returns and convenience. It provides the depositor an automatic overdraft facility in Current a/c and automatic withdrawal of Term deposits in units through SB a/c. Depositor has to simultaneously open TDR / RID a/c for Rs.1000/-, SB a/c with balance Rs.500/- and Current a/c.

Long Term Floating Deposit account

A fixed deposit scheme for 5 & 8 years to get an additional interest of 0.25% and 0.5% respectively more on base interest rate (of 3 years deposit). The depositor has the option to invest in long term maturity at a floating rate with an opportunity to gain in any upward movement in interest rate. Minimum deposit of Rs.50000/-.

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RECOVERY OF LOANS AND ADVANCES Savings Bank account

Customer can open an account with a deposit as low as Rs.100/- to Rs.300/-(Rs. 250/- for chequebook facility and Rs.100/- without chequebook facility) depending upon the area and earn interest at 3.5% (wef 01/03/2003) per annum. Computerized branches - Rs.500/- and for Specialized hi-tech branches - Rs.2000/-

Term Deposits

In this scheme, customers can invest a lumpsum amount for a specific period from 15 days upto 120 months and collect interest at monthly (discounted), quarterly, half- yearly or yearly intervals.

Reinvestment Deposits

According to this scheme, customers investment and interest for the specified period is paid together at the end of the term. It gives the highest yield of interest on savings taking care of customers future needs like marriage, house construction, children's higher education, etc., Period can be from 6 months upto 10 years

Recurring Deposits

In this scheme, the minimum monthly installment is Rs.20/- and is accepted in multiples of Rs.5/thereafter. Deposits are accepted from 6 months to 120 months

Cash Certificate

In this scheme, customers pay an odd sum of money and receive a huge round sum. The period of this scheme is from 6 months to 10 years, with quarterly compounding of interest.

Grameena Thevani Yojana

A special deposit scheme, with interest compounding quarterly for persons with seasonal income like agriculture. Deposit in five yearly installments gets a huge sum after 10 years.

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RECOVERY OF LOANS AND ADVANCES

Perennial Income Plan

A novel pension plan for a tension free future specially for self-employed / daily wage earners who are not covered under pension scheme. Customers save specified amount at regular monthly intervals for a specified period of say, 7 / 10 years when young and energetic. They get a regular monthly income after 7th / 11th year equal to or twice the monthly saving throughout life or get a huge sum for their large needs.

Super Savings Package

This is a plan which takes care of old age. Customers save a specified small sum every month for 15 or 25 years (renewed every 10 years) and it is re-cycled every 10 years to get the maximum benefit of compound interest.

Advances 

Personal Banking schemes



Commercial & Institutional Banking schemes

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Agricultural Banking schemes

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Micro and Small Enterprises schemes (MSE)

NRI Services 

NRI Deposits

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International Banking - Forex services

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Performa for foreign currency remittances

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Account opening form for non-resident Indians

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Interest rates on NRE Deposits and schemes

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Details of its correspondent Banks -Exchange companies with Draft drawing arrangement with the Bank -Money Transfer to India Through Western Union -Remittance facility through State Bank of India, New York Branch

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RECOVERY OF LOANS AND ADVANCES

LOAN SCHEMES Personal Loans Eligibility Individuals, employees of state / central government, Public Sector undertakings, reputed profit making Public limited companies, Multi national companies with a minimum service of two years and drawing a net salary of Rs. 6,000/- or above. Purpose To meet personal expenses like marriage, family functions, medical expenses, travel etc., Loan Amount Upto Rs. 1.50 lacs depending on repayment capacity of the individuals. Security Third party guarantee of equal means. Securities like LIC policies, NSC, KVIP, Shares etc., Period of Repayment 12 months to 36 months. Type of Loan Demand loan. Processing Fee 1% of loan amount (one time).

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RECOVERY OF LOANS AND ADVANCES

Mortgage Loan Eligibility Individuals, employees, professionals, self-employed and others who are income tax assessee whose net monthly income is of Rs. 12,000/- for salaried persons or net annual income of Rs. 1,50,000/- in case of others and self-employed. AGE Maximum age - 65 years. Loan Amount Rs. 1.00 lac to Rs. 50.00 lacs Salaried Class - Maximum 36 times net monthly income. Others - Maximum three times the net annual income. Type of Loan Term loan or current account overdraft Security Equitable mortgage of unencumbered residential house / flat or urban commercial or industrial property in the name and possession of the borrower, either self acquired or vacant property. Rented out property will be accepted as security only where lease is in existence in favour of corporation of good standing and repute. Power of attorney authorising the Bank to collect rent should be given. Margin 50% of the market value of the security. Period of Repayment Repayable in 84 equated monthly instalments. Processing Fee 1.25% of the loan amount (one time)

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RECOVERY OF LOANS AND ADVANCES INSURANCE The property being mortgaged should be insured against the risk of fire / riot / earthquake / lightning / floods etc.,

Housing Loan Under Personal Segment, You can avail a loan for 

Construction or Purchase of a new house or flat Repairs / Renovation / Extension of existing house



For purchase of plot for construction of house within two years

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For purchase of built houses not more than 15 years old

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Housing loan against II charge

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For Purchase of Furnishings / Consumer durables as part of the project

Quantum of Loan amount Loan amount for all categories Net Annual Income

EMI / NMI Ratio

Upto Rs. 60000/-

20%

Above Rs. 60000 to less than Rs.1,20,000/-

25%

Above Rs. 1,20,000/- to less than Rs.2,00,000/-

30%

Above Rs. 2,00,000 to less than Rs.5,00,000/-

50%

Above Rs. 5,00,000 to less than Rs.10,00,000/-

55%

Above Rs. 10 lacs

65%

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RECOVERY OF LOANS AND ADVANCES Maximum Repayment period Age

Repayment period

For persons below 35 years of age

25 years

For persons below 45 years of age

20 years

For persons above 45 years of age

15 years

Margin Amount

Margin (%)

Upto Rs. 30 lakhs

20%

Above Rs. 30 laks to 75 lakhs

20%

Above Rs 75 lakhs to 1.00

25%

Crore Above Rs 1.00 crore

40%

Margin for Purchase of New houses which are ready for possession (Applicable to First sale only) Amount

Margin (%)

Upto Rs. 75 lakhs

15%

Above Rs.75 laks to 1 cr

20%

Above Rs 1.00 crore

30%

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RECOVERY OF LOANS AND ADVANCES

Interest Penal interest of 1% in case of default of three or more consecutive instalments. Loan amount

Processing Charges (w.e.f. 01.06.2011)

Upto Rs 25 Lacs

0.25% of loan amount, with a minimum of Rs 500/-

Above Rs 25 Lacs and upto Rs 75

Rs 10,000/-

Lacs Above Rs 75.00 Lacs

Rs 20,000/-

Insurance The house property has to be insured covering all risks. Group insurance is available to cover the life of the borrower on payment of one time upfront premium. Disbursement Direct to the sellers in case of purchase. For Construction / Repairs / Renovations – in a phased manner Repayment Repayable in monthly instalments. Repayment period ranging from 5 to 25 years, including a moratorium period ranging from 6 to18 months from the date of the first disbursement. Schemes and Interest Rates are subject to changes from time to time. Attractive features of State Bank of Mysore’s Housing Finance scheme 

Loans from State Bank of Mysore are cheaper than housing finance agencies / companies.

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Nominal processing charges.

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No administration charges.

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No commitment charges.

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Interest charged on reducing balances.

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Facility available at all branches in India.

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Exemption from wealth tax for one house under Wealth Tax Act.

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RECOVERY OF LOANS AND ADVANCES Pre-payment Penalty No Pre-closure / Pre-payment penalty on all Home Loans.

Happy Home- Consumer Durable Loan Scheme Happy Home Loan Purpose State Bank of Mysore is now at your doorsteps to provide you all good things in life you have been craving for. You richly deserved them but couldn’t buy them perhaps for want of ready cash. Here is where State Bank of Mysore steps in to solve your problems and make your home a ‘Happy Home’. Colour TV Sets, VCRs, Refrigerators, Cars, Scooters, Mopeds, Washing Machines, Mixers / Grinders, Coolers, Air conditioners, Furniture and what have you? All these goodies brought to you within your reach under State Bank of Mysore’s Happy Homes Scheme. Highlights of the Scheme Tailor-made for employees of Govt / Public Sector undertakings, Corporations, Private Sector Companies, Police, Defence forces and reputed establishments with a minimum of 5 years service. Professionals, Self-employed with a minimum of 5 years standing. Net monthly salary / income should be Rs.2000/75% of the cost of the articles.Maximum loan of Rs. 1.00 lac or eight times the net monthly income / salary of the borrower whichever is lower.

Repayable in 36 to 60 months. Minimum loan amount Rs. 10000/-. Demand Loans upto Rs.25000/- payable in 36 months. Demand Loans above Rs. 25000/- repayable in 36 months Term loans repayable in more than 36 months and upto 60 months.

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RECOVERY OF LOANS AND ADVANCES Simple security needed. 

Hypothecation of assets created (articles bought)

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Third party guarantee acceptable to the bank if check off facility is not available.

Insurance Cover 

Vehicles bought to be insured for full value.



For articles above Rs.10000/- insurance will be for market value or atleast 110% of the loan amount whichever is higher.

A small one-time service fee of 1% of the loan amount.

Specially for the Salaried class for purchase of two-wheelers Minimum net salary of Rs.2000/- per month with availability of check off system. Loan sanctioned upto 90% of the cost of vehicle or 12 times the net monthly income whichever is less. Gross deduction including loan instalment should not exceed 33% of the gross salary.Maximum - Rs. 4.00 lacs or 80% of the cost of vehicle +1%. Second hand cars - 60% of market value; not older than 5 years; Maximum loan - Rs. 2 lacs. Repayable in 36 months, may be extended upto 60 months

Security offered should be: 

Hypothecation of vehicle



Registration of hypothecation charge with Regional Transport Authority.

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RECOVERY OF LOANS AND ADVANCES 

Third party guarantee

Vehicle should be insured for full value. One-time service fee of 1% of loan amount.

Gnanamitra Educational Loan Purpose To enable students with academic brilliance to meet tuition and other fees / maintenance costs / books and equipment and cost of passage for studies abroad etc., for pursuing studies at recognised school / college / institution. Courses Eligible- Higher Studies Diploma / Graduate / Post-graduate courses in the faculties of Engineering, Technology, Architecture, Medicine, Dental Science, Agricultural Science, Veterinary Science and Computer Certificate courses of reputed institutes accredited to department of electronics or affiliated to university Limit Amount of loan (in Indian Rupees)

MIN(Rs.) MAX(Rs.)

Higher Education- In India

10000

10.00 lacs

Higher Education- Abroad

10000

20.00 lacs

Margin Upto Rs. 4.00 lacs

Nil

Above Rs. 4.00 lacs

-

For studies in India

5%

For studies abroad

15%

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RECOVERY OF LOANS AND ADVANCES

INTEREST RATES: SCHEMES AND INTEREST RATES ARE SUBJECT TO CHANGES FROM TIME TO TIME. Second Educational Loan To enable the students for taking higher education, provided the student secures 60% marks in existing course. The second loan is to be availed only from the branch where the first educational loan has been sanctioned. Repayment Technical / Professional Higher studies in India / Abroad Repayment of loan to commence immediately after disbursal, by the parent / guardian, out of his / her income. Instalments may be nominal (to cover interest portion, at least) during the period the student is undertaking the studies. The instalments will be stepped up one year after the completion of the course or after the student gets a job, whichever is earlier, so that the loan gets repaid together with interest within a period of 60 to 84 months thereafter. Security Amount. Upto Rs. 4.00 lacs

Security NIL

Above Rs. 4.00 lacs Collateral in the form of a suitable 3rd party guarantee and upto Rs. 7.50 lacs Above Rs. 7.50 lacs Collateral security by way of immovable property or equal to the loan amount in the and upto Rs. 10.00

form of Government securities / NSCs / Units of UTI

lacs

Guarantee of parents / guardians (in the case of minors, the parent / guardian will execute the documents on behalf of the minor and also in his capacity as co-borrower) / third party guarantee where sufficient collateral security is not available

Insurance An insurance policy will be taken on the life of the student borrower for an amount equivalent to the loan amount and the policy should be convertible whole-life one for 25 / 30 years, convertible after 5 years into Page 24

RECOVERY OF LOANS AND ADVANCES one with endowment benefits. The Bank will pay the insurance premia on the policy by debiting it to the loan account. On liquidation of the loan, the policy will be reassigned and delivered to the borrower. Repayment Completion of course + 1 year or 6 months after getting a job, whichever is earlier.The interest to be debited monthly on simple basis during the repayment holiday / moratorium period. Penal interest @2% will be charged for amount above Rs. 2 lacs for the overdue amount and overdue period. Interest concession of 1% per annum is available, provided the interest is repaid during moratorium period as and when the interest is applied.

MyBank Scholar Loan MYBANK SCHOLAR- A SCHEME FOR STUDENTS OF PREMIER AND REPUTED INSTITUTIONS Purpose Loans will be granted to deserving/meritorious students for pursuing full time courses in India at selected premier and reputed institutions identified by the Bank. Eligibility The applicant should be an Indian National and should have secured admission to full time professional/ technical courses in selected elite institutes Eligible Expenses 

Fee payable to college/school/ hostel



Examination/ Library/Laboratory fees



Purchase of books/equipments/ instruments/ uniforms



Caution deposit/ building fund/ refundable deposit supported by institution bills/receipts [not to exceed 10% of tuition fees for the entire course]



Purchase of computers, if essential for completion of course



Any other expense required to complete the course like study tours, visits to foreign universities in exchange programs, project work, thesis, etc

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RECOVERY OF LOANS AND ADVANCES Institutes & loan amount: Presently 100, which include IIMs and IITs etc. Maximum loan amount Rs.15.00 lacs depending upon the course/institute. Courses covered Regular full time Degree/Diploma Courses and not certificate/part-time courses, through entrance test/ selection process. In case of IIMs full time Executive Management Courses like PGPX are covered A) 2.50% above BASE RATE (Refer Interest rates) B) Simple Interest to be charged during moratorium/ repayment holiday. Interest concession of 1% for the entire period of loan if the interest is serviced during course period and moratorium. This concession will be released in two stages. Margin: 

Upto Rs. 4 lacs: Nil. Above Rs.4 lacs: 5%



Scholarship/ assistantship to be included in the margin



Margin may be brought in on year to year basis as and when disbursements are made on a pro-rata basis

Security: Co-obligation of parent/guardian. In case of married person, co-obligation can either be of spouse or parent/parent-in-law. Processing Fee Nil Moratorium Period Up to 6 months after completing the course. Repayment Maximum 5-7 years after commencement of repayment

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RECOVERY OF LOANS AND ADVANCES Car Loan Scheme For New Cars: Salient features of the scheme: Purpose: For the purchase of new passengers Cars, Jeeps, Multi Utility Vehicles (MUV) and SUVs. Eligibility: Individuals between the age group of 21 years to 65 years. Annual Income: Salaried class with an annual income of Rs. 2,50,000/- & above. Self employed & Professionals with an annual income of Rs.2,50,000/- & above. Loan amount: For salaried persons: 48 times of the Net Monthly Income For others: 4 times of the Net Annual Income The income of the spouse can be included for arriving at the loan amount, provided spouse joins as coborrower. Margin: 15% Security: 1) Hypothecation Charge over the car. 2) Noting of Bank’s lien with the R.T.O. 3) Third party guarantee (if there is a need) Repayment: the loan to be repaid in 84 EMIs (Maximum)

Page 27

RECOVERY OF LOANS AND ADVANCES Insurance: Comprehensive insurance cover for the full value of the vehicle. Service Charges: 0.50 % of the loan amount with a minimum of Rs.500/- and maximum of Rs.10,000/Prepayment charges: No Pre Closure / Pre Payment penalty on all car loans. FREE ACCIDENT INSURANCE COVER (DEATH RISK ONLY) Papers to be submitted: 1. Statement of Bank account of the borrower for last 12 months. 2. 2 passport size photographs of borrower/guarantor. 3. Signature identification from bankers of borrower/guarantor. 4.

A copy of Passport /Voters ID card/PAN card.

5.

Proof of residence by way of tax receipts, telephone bill, electricity bill or any other document that comply with the regulatory and/or KYC requirements.

6. Latest salary-slip showing all deductions and TDS Certificate-Form 16 in case of salaried persons. 7.

Copy of Income tax Return for the last 2 financial years duly acknowledged by the ITO for professionals, Self employed and others.

8.

Proof of official address for non-salaried individuals.

9.

Proforma invoice of the vehicle.

Page 28

RECOVERY OF LOANS AND ADVANCES For Used Cars: Salient features of the scheme: Purpose: For the purchase of passengers Cars, Jeeps, Multi Utility Vehicles which are not more than 5 years old. Valuation: Certificate of fitness / valuation from a reputed garage is required. Repayment: The loan has to be repaid within 7 years from the date of original purchase of the vehicle. Loan for purchase of residential site / plot Eligibility Individuals not above the age of 60 years with a steady source of income Purpose To purchase site / plot by BDA / Housing Board / District Urban Development Authority / City Improvement Trust Board / Municipal Corporation / State Development Authority, on first sale only Loan Amount 24 times net monthly income / 2 years annual income (subject to production of satisfactory proof) or 80% of the cost of the site whichever is less Income of Spouse For arriving the quantum of loan, income of the spouse may be considered where the allotment will be in single name and spouse stands as guarantor Other Income Regular income of the borrower from all sources can be considered subject to the satisfactory proof of the income

Page 29

RECOVERY OF LOANS AND ADVANCES Margin 20% of the cost of site / plot Type of Account Medium Term Loan Account Repayment Maximum of 60 months in equated monthly instalments Processing Fee Rs. 500/- flat per account Security Equitable Mortgage of the site / plot to be purchased Other Conditions a) The letter of allotment / agreement for sale from the Housing Board / BDA / District Urban Development Authority / City Improvement Trust Board etc., should be obtained b) A letter signed by the allottee duly expressing his / her intention to create the Mortgage (equitable / registered) in favour of the Bank to be obtained and forwarded to the allotting agency c) The said letter should also contain a direction to the allotting agency to hand over the Documents directly to the Bank / Bank's Representative after registration of the property d) A letter of undertaking to be obtained from the site allottee to the effect that a house will be constructed in due course and the relative site will not be sold on commercial consideration

Page 30

RECOVERY OF LOANS AND ADVANCES MYBANK ARAKSHAK Personal loan scheme for Police Personnel This scheme is introduced to assist the Police Personnel to avail the loan hastle free Eligibility All Police Personnels (Permanently employed) Purpose Personal loan for any purpose including purchase of consumer durables Loan Amount 10 times net monthly income with a maximum of Rs.1.50 lac Income of Spouse Spouse income may be considered to arrive at the eligible loan amount provided spouse is also employed (permanent employment) and stands as guarantor Type of Account Demand Loan Account Margin Nil Repayment Maximum of 36 months in equated monthly instalments Processing Fee Rs.250/- flat. Security Upto Rs.25,000/- Nil Above Rs.25,000/- check off facility. NSC,LIC policy may be insisted for security wherever possible or third party guarantee of equal means

Page 31

RECOVERY OF LOANS AND ADVANCES Other Conditions/Requirements Loan Recovery through check off facility

MYBANK ADHYAPAK Personal loan scheme for teacher community Eligibility Permanent Teachers / Non-Teaching Staff of Central / State Govt. Educational Institutions and also Teachers and Non-Teaching Staff of Govt. Recognised Schools / Colleges / Aided Institutions Purpose Personal Loan for any purpose including purchase of consumer durables Loan Amount 10 times net monthly income with a maximum of Rs.1.00 lac Income of Spouse Spouse income may be added to arrive at the eligible loan amount provided spouse is also employed and stands as guarantor. Type of Account Demand Loan Account Margin Nil Repayment Maximum of 36 months in equated monthly instalments Processing Fee Rs.250/- flat Security Upto Rs.25,000/- Nil (only Check off facility).

Page 32

RECOVERY OF LOANS AND ADVANCES Above Rs.25,000/- check off facility. NSC,LIC policy may be insisted for security wherever possible or third party guarantee of equal means

MYBANK UTSAV Personal loan scheme for individuals for meeting expenditure related to Festivals Eligibility a)Employees of State / Central Govt.,/ PSUs / profit making Public / Private Ltd., Companies, Institutions etc., with a minimum of 2 years service. b)Self employed persons with a minimum 3 years standing / experience. c)Persons having regular source of income from verifiable channels like Pensions and Interest on TDRs / NSCs / Govt. Securities etc., Purpose Loan to individuals for meeting expenditure related to Festivals Minimum Net Income Net Monthly Income (NMI) of Rs.3000/- & above Loan Amount Four times the net monthly income with a minimum of Rs.5000/- and a maximum of Rs.50,000/- (Borrowers other than salaried people should produce acceptable proofs with respect to their annual income) Security Primary - Nil Collateral - personal guarantee of the spouse if employed, or any other person of adequate worth where check off facility is not available Repayment Period Maximum of 12 months through EMIs. No penalty for prepayment Processing Fee Rs.100/- per application

Page 33

RECOVERY OF LOANS AND ADVANCES Type of Loan Clean Demand Loan Disbursement To the borrowers by credit to their account MYBANK ADHYAPAK Personal loan scheme for teacher community Eligibility Permanent Teachers / Non-Teaching Staff of Central / State Govt. Educational Institutions and also Teachers and Non-Teaching Staff of Govt. Recognised Schools / Colleges / Aided Institutions Purpose Personal Loan for any purpose including purchase of consumer durables Loan Amount 10 times net monthly income with a maximum of Rs.1.00 lac Income of Spouse Spouse income may be added to arrive at the eligible loan amount provided spouse is also employed and stands as guarantor. Type of Account Demand Loan Account Margin Nil Repayment Maximum of 36 months in equated monthly instalments Processing Fee Rs.250/- flat

Page 34

RECOVERY OF LOANS AND ADVANCES Security Upto Rs.25,000/- Nil (only Check off facility). Above Rs.25,000/- check off facility. NSC,LIC policy may be insisted for security wherever possible or third party guarantee of equal means

Sanjeevini This scheme is introduced to provide timely assistance for obtaining Medical treatment for Salaried class, Self employed persons, Employees of reputed PSUs, Profit making public limited companies, Self employed engineers, Doctors, Architects, Chartered Accountants, MBAs, Pesioners of PSUs, Govt. (state/central) public sector banks and also pensioners of State Bank of Mysore. Salient features of the scheme: Eligibility: a) Employees of Government, Reputed PSUs and profit making Public Limited Compani, with a minimum of 10 years service b) Self Employed Engineers, Doctors, Architects, Chartered Accountants, MBAs, with a minimum 5 years standing. They should be below 65 years of age c) Pensioners of PSUs / Govt. (State/Central) Public Sector Banks who have taken premature voluntary retirement and are 60 years of age or less, including pensioners of SBM d) Agents of Insurance / KVP / Mutual Funds etc., who are tax assesees and whose gross annual income exceeds Rs. 1.50 lacs. The facility will be considered only if a power of attorney or mandate is registered with the principal organisation with which the agent deals, authorising them to remit the commission direct to the Bank. Provided, however, that if the person treated happens to be a minor Son / Daughter of an eligible applicant, the loan can be extended to the Parent earning Income Criteria: a) For Employees / Pensioner - Net monthly income Rs. 6000/b) For Self Employed Person - Net annual income of Rs. 1,50,000/- as per latest I.T. Returns c) For Agents - Gross income exceeding Rs. 1.50 lakh per annum (to produce latest I.T. Returns) d) Income of the spouse can be considered if the spouse guarantees the loan Loan

Amount:

Page 35

RECOVERY OF LOANS AND ADVANCES Minimum

Rs.

20,000/-

Maximum 12 months net monthly income, Net of all deductions, including Income Tax for salaried individuals and pensioners and 1 year's net annual income in case of Self-employed professionals

subject

Employees

and

to

the

Professionals:

ceilings Rs.

as

below:

1.50

lacs

Pensioners who have taken early retirement and Agents under eligibility above Rs. 1.00 lac Margin: 15 % of the total cost of Hospital bill Rate of Interest: (wef 10.08.2008) With check-off facility

15.25%

Without check-off facility

15.50%

Type of Loan: Medium Term Loan Security: Tangible Collateral Security. Procesing fee: 0.50% with a maximum of Rs. 500/-. Disbursal: 1. Directly to hospital against production of bills or 2. Payment against indents from hospital 3. Reimbursement may also be considered within 15 days from the date of discharge when payment has already been made Repayment: Minimum -36 months Maximum 72 months - out of Salary / Pension /Professional Income / Agricultural Income Age limit: Maximum 65 years Other Conditions:

Page 36

RECOVERY OF LOANS AND ADVANCES In case of Pensioners any one earning member of the family should be a co-borrower If salaried person is accepted as co-borrower / Guarantor, check-off facility to be obtained For professionals, minimum 2 years of Income tax assesment should be obtained

Samachar This product has been introduced to meet the needs of journalist community who are directly involved in providing updated happenings over the globe. For purchase of Cameras, Computer, Books, Two wheelers, Mobile phones etc., for permanent employees of leading Newspapers. Salient features of the scheme: Eligibility: a) Permanent employees of Leading Newspapers b) Minimum net salary Rs. 5000/- per month Loan Amount: a) 12 times of Net monthly income. b) Minimum Rs. 10000/-. Maximum Rs. 1,00,000/Margin: 10% Type of Loan: Term loan repayable in 36 - 60 months Security: Hypothecation of the articles / Vehicles purchased Guarantee: i) No guarantee needed if check-off facility is available ii) Acceptable third party guarantee if check-off facility is not available

Page 37

RECOVERY OF LOANS AND ADVANCES Insurance: 10% above the market value of articles Processing Charges: 0.50% with a maximum of Rs. 500/Disbursal: Direct to the dealer Necessary papers to be given by the applicants: 1. Application form 2. Credit Declaration form 3. Salary Certificate 4. Income Tax returns copy 5. Statement of Bank account for the last 6 months 6. Undertaking from the employer to deduct instalments 7. 3 photographs of applicant / guarantor 8. Undertaking that articles are allowed to be inspected any time by the Bank officials

Page 38

RECOVERY OF LOANS AND ADVANCES STRATEGIES FOR

RECOVERY

1. Preparation Of Demand List:-

The society shall prepare a village wise demand list of all the borrowers. The list shall contain the information of over dues at the beginning of the year i.e. 1st April; loans falling due for repayment are subsequent months up to March. The total demand for the year should be arrived at on basis of demand falling due in different months. The demand register shall be prepared by 30th November by the Secretary of the society which shall be test checked by the Supervisor in at least 10% cases.The list of defaulters shall be displayed in the notice board of the society, gram panchayat and at conspicuous places in the village for information of the borrowers. A copy of the list shall be supplied to the Area Directors and President of the society to pursue with the defaulting members for repayment 2. Service Of Demand Notice:The demand notice to members shall be prepared by the Secretary and service of the notices on the members completed by 31st December. In case of KKGC and KKSC holders, the demand notice shall be served by the Bank Supervisor. As regards other members, the Secretary of the society shall personally have the notices and obtain the dated acknowledgement of the borrowers on the reverse of the duplicate copy. In case the borrower is absent from the village, the notice shall be served on his purpose or any adult member of the family. In no case the demand notice shall be allowed to be served on the borrowers through the Peon/Watchman of the society 3.Fixation Of Target:Fortnightly target for recovery should be fixed for each society/branch month wise starting from December onwards and communicated to all concerned. Normally the target for recovery should be 15% of the demand by December, 20% in January 25% in February and 30% in March. The achievement against the target shall be monitored and reviewed every month in branch level meetings of PACS and branch Managers meeting at the Head Office of the CCBs. The shortfall in achievement during the month shall be added to the next month’s target. Fortnightly report of recovery of loans shall be submitted by the CCBs to OSCB in the prescribed format from January to March on the 3rd day of the succeeding fortnight to which it relates.

Page 39

RECOVERY OF LOANS AND ADVANCES 4. Recovery Squard :A recovery squard for each branch shall be formed with 2 to 3 staff comprising an officer from Head office, Field Officer of the branch who will attend recovery of loan and contact big defaulters of Rs. 5,000.00/- and above. In case of shortage of staff, a recovery squard may be formed to cover the loanees of 2 to 3 branches. The squard shall draw up programme in advance to visit specific areas/society on a definite date. The achievement in recovery of loans shall be reported to the Secretary of CCB on the subsequent day of visit. The squard shall be giving more attention for recovery of NPA loan accounts. The loan accounts likely to become NPA by end of the year shall be extracted by Dec. 3 and also pursued for recovery. The recovery squard shall also assist in execution of E.P. cases in the area.

5. Display Of Default List:The names of top 20 defaulters shall be displayed prominently by painting in black color on the wall in the branch/PACS premises. This should be updated twice a year i.e. in April and October.

6. Recovery Camp:Recovery camps shall be organized at strategic places for a cluster of societies. The detail schedule of holding such camps should be drawn up much in advance and communicated to all concerned. The senior officers of Head Office shall attend those camps unfailingly for which mobilization of the loanees should be done by the field staff of the Society/branch at least 2 weeks prior to the date of the camp. The District Collector and other senior officers like P.D., DRDA, DDA, DAO, DRCS, and BDO may be invited to attend such camps. The non-official Directors and President of societies may also be associated in recovery of loans. Other line department officers should also be invited to attend the recovery camps. The CEO of CCBs shall attend at least 15 recovery camps in a month during the recovery drive (January-March and May-June).

7. Supervise Of Field Movement:The CEOs/Senior Officers of CCB should contact surprise check on the movement of the field staff and take exemplary against the erring employees. The secretary of PACS shall display his tour programme on the notice board/wall of the society when leaving HQs. 8. Legal Action:All defaulted loan accounts of Rs. 2,000/- and above crop seasons shall be covered by disputes. In case of direct lending by KCCB, all NPA accounts shall also be covered under dispute. The dispute

Page 40

RECOVERY OF LOANS AND ADVANCES cases shall be prepared and filed by 31st August. The KCCB would arrange for holding camps at the branch level for preparation and filing of dispute cases in consultation with DRCS and Circle ARCS. In such camps the societies will attend the branch with relevant records and after scrutiny by Branch/Department Officer, the dispute cases will be filled before the appropriate authority in the camp itself. The decree copies already received shall also be covered by E.P. cases in in those camps. All dispute and E.P. cases should be routed through the branch managers to ensure that all required formalities are complied with before the case is filed. RCS (O) in his letter No. 4641 dated 27-03-2003 has issued instruction to the Circle ARCS to send a copy of the decree to concerned branch manager so as to enable them to ensure filing of E.P. cases with in 15 days from the date of award of decree. The Branch Manager should also keep close contact with the Principle Officer/Arbitrator/Sale Officer for expeditious disposal of cases filed. The progress of disposal of dispute and E.P. cases shall be reviewed in close coordination with the Divisional DRCS and Circles ARCS in the monthly meetings. Dispute cases filed by the societies pending for more than three months and E.P. cases more than one year should be identified and brought to the notice of concerned ARCS and DRCs with copy to RCS, Orissa and Managing Director, OSCB. Similarly in direct advance cases disputes pending for more than six months and E.P.S pending for more than one year should be identified and reported to proper quarter.

Page 41

RECOVERY OF LOANS AND ADVANCES

CHAPTER 4 ANALYSIS AND INTREPRETATION

Page 42

RECOVERY OF LOANS AND ADVANCES FINANCIAL ANALYSIS

Investment Valuation Ratios

Profitability Ratios

Management Efficiency Ratios

Leverage Ratios

Particulars Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs)

Mar 12 10

Mar 11 10

Mar 10 10

110.47

156.22

250.01

1176.49

961.09

1108.66

Interest Spread

4.36

4.77

4.29

Net Profit Margin Adjusted cash margin (%) Return on longterm fund Interest income / Total Funds Net Interest income / Total Funds Non Interest income / Total Funds Interest Expended / Total Funds Current Ratio

6.64

11.06

11.08

7.54

12.17

12.13

115.78

102.75

145.93

9.9

9.34

9.42

3.62

4.27

3.94

0.08

0.06

0.07

6.28

5.08

5.48

0.03

0.03

0.02

Quick Ratio

24.73

21.01

20.74

78.77

77.62

76.88

Capital adequacy ratio

12.55

13.76

12.42

Interest earned

68.8

59.89

62.25

79.07

77.42

76.82

29.61

29.74

31.86

6.14

6.66

6.27

Advances/loans Profit and loss funds(%) account ratio

Debt coverage Credit deposit ratio ratio Investment deposit ratio Cash deposit ratio

Page 43

RECOVERY OF LOANS AND ADVANCES INTREPRETATION:

Page 44

RECOVERY OF LOANS AND ADVANCES Table:1

Table showing total advances from the year 2009– 2012

Year

Amount ( in Crores)

Percentage (%)

2009- 2010

22,156.11

25.95

2010 – 2011

27,868.11

32.62

2011 – 2012

35,393.55

41.43

Total

85,417.77

100

ANALYSIS: From the above table it can be analysed that in the year 2009 – 2010 the total no. of advances was 22,156.11 crore with a 25.95%; in 2007 – 2008 the total no. of advances was 27,868.11 crore 32.62% and in the year 2010– 2011the amount is 35,393.55 with 41.43%.

Page 45

RECOVERY OF LOANS AND ADVANCES Graph: 1 Graph showing total advances from the year 2009 – 2012

Total advances

INTERPRETATION: From the above pie- chart it can be inferred that in the year 2010 – 2011 showed the maximum advances.

Page 46

RECOVERY OF LOANS AND ADVANCES Table 2 Table showing outstanding amount of loan for the years 2009 – 2012. (a) Housing finance

Year

Amount (in crore)

Percentage (%)

2009 – 2010

1,418.57

31.80

2010 - 2011

1,453.67

32.50

2011- 2012

1,591.42

35.70

Total

4463.66

100

ANALYSIS: From the above table it is analysed that when we compare the year 2009 – 2010 the amount outstanding was 1,418.57 crore with 31.80%. In the year 2010 – 2011 the amount was 1,453.67 crore with 32.50 % and in the year 2011 – 2012 it was 1,591.42 crore with 35.70%.

Page 47

RECOVERY OF LOANS AND ADVANCES Graph 2 Graph showing outstanding amount of the loan for the years 2009- 2012. (a) Housing finance Housing finance

32%

36%

2009- 2010 32%

2010 - 2011 2011 - 2012

INTERPRETATION: From the above pie- chart it can be inferred that there is continuous growth every year in the housing finance segment. There is a noticeable growth in the home loan segment which is very profitable to the bank for their further financial improvement.

Page 48

RECOVERY OF LOANS AND ADVANCES Table 3 Table showing outstanding amount of loan for the years 2009 - 2012 (b) Car loans

Year

Amount (in crore)

Percentage (%)

2009 - 2010

70.18

23.62

2010 - 2011

80.07

26.96

2011- 2012

146.81

49.42

Total

297.06

100

ANALYSIS: From the above table it is analyzed that when we compare the year 2009– 2010 the amount outstanding was 70.18 crore with 23.62% . In the year 2010 – 2011 the amount was 80.02 crore which shows 26.96% and in the year 2011 – 2012 the amount was 146.81 crore with 49.42%.

Page 49

RECOVERY OF LOANS AND ADVANCES Graph3 Graph showing outstanding loan for the year 2009 – 2012. (b) Car loan.

car loan

150 100 Amount outstanding in Rs. Crore

50

Percentage 0 2009 - 2010

2010 - 2011

2011 - 2012

Year

INTERPRETATION: From the above graph it can be inferred that in the year 2011 – 2012 there is a substantial growth in the car loans as against all previous years.

Page 50

RECOVERY OF LOANS AND ADVANCES Graph 4: Table showing outstanding loan for the year 2009 – 2012. (c) Personal loan

Year

Amount( in Crore)

Percentage (%)

2009- 2010

384.46

28.31

2010 - 2011

425.11

31.32

2011 – 2012

548.24

40.37

Total

1357.81

100

ANALYSIS: From the above table it is analyzed that when we compare the year 2009 – 2010 the amount was 384.46 crore which shows 28.31%. In the year 2010 – 2011 the amount was 425.11 crore which shows 31.32% and in the year 2011 – 2012 the amount was 548.24 crore which shows the percentage of 40.37.

Page 51

RECOVERY OF LOANS AND ADVANCES Graph 4: Graph showing outstanding loan for the year 2009- 2012. (c) Personal loan

personal loan

600 500 400 300 Amount outstanding in Rs. Crore Percentage

200 100 0 2009 - 2010 2010 - 2011 2011 - 2012

INTERPRETATION: From the above mentioned graph it can be interpreted that there is a substantial growth every year in the personal loans.

Page 52

RECOVERY OF LOANS AND ADVANCES

Table 5 Table showing outstanding loan for the years 2009- 2012. (d) Educational loan

Year

Amount (in crore)

Percentage (%)

2009 – 2010

224.99

26.88

2010 - 2011

276.84

33.09

2011 – 2012

335.07

40.03

Total

836.9

100

ANALYSIS: From the above table it is analysed that when we compare the year 2009 – 2010 the amount outstanding is 224.99 crore with 26.88%. In the year 2010 – 2011 the outstanding amount is 276.84 crore with 33.09% and in the year 2011 – 2012 the outstanding amount is 335.07 crore with 40.03%.

Page 53

RECOVERY OF LOANS AND ADVANCES Graph 5 Graph showing outstanding loan for the year 2009 - 2012. (d) Educational loan

Outstanding education loans

350 300 250 Amount outstanding in Rs. Crore

200 150 100 50 0

Percentage

2009 - 2010

2010 - 2011

2011 - 2012

INTERPRETATION: From the above graph it is seen that there is a constant growth in the education loan of State Bank of Mysore. There is a noticeable growth in the education loan segment which is very profitable to the bank for their further financial improvement

Page 54

RECOVERY OF LOANS AND ADVANCES Table 6 Table showing outstanding loans to retail sector for the year 2009 - 2012

Year

Amount (in crore)

Percentage (%)

2009 – 2010

3,469.72

30.28

2010 - 2011

3,727.22

32.54

2011 – 2012

4,260.36

37.18

Total

11,457.3

100

ANALYSIS: From the above table it is analyzed that when we compare the year 2009 – 2010 the amount was 3,469.72 crore with 30.28%. In the year 2010 – 2011 the amount was 3,727.22 crore with 32.54% and in the year 2011 – 2012 the amount was 4,260.36 crore with 37.18% .

Page 55

RECOVERY OF LOANS AND ADVANCES Graph 6 Graph showing outstanding loans to retail sector for the year 2009 - 2012.

Outstanding loans to retail sector 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00

Amount in crore

1,500.00

Percentage

1,000.00 500.00 0.00 2009 - 2010

2010 - 2011 2011 - 2012

INTERPRETATION: From the above graph it can be inferred that there is a moderate growth in the loans of the retail sector from 2009 - 2012.The maximum growth is in the year 2011 – 2012.

Page 56

RECOVERY OF LOANS AND ADVANCES Table 7 Table showing outstanding loans to corporate sector for the year 2009 – 2012.

Year

Amount (in crore)

Percentage (%)

2009 – 2010

13,032.09

26.05

2010 - 2011

15,661.44

31.29

2011 – 2012

21,349.41

42.66

Total

50,042.94

100

ANALYSIS: From the above table it is analysed that when we compare the year 2009 – 2010 the amount was 13,032.09 crore which shows a percentage of 26.05. In the year 2010 – 2011 the amount was15,661.44 in crore which shows the percentage of 31.29 and in the year 2011 – 2012 the amount was 21,349.41 in crore which shows the percentage of 42.66.

Page 57

RECOVERY OF LOANS AND ADVANCES

Graph 7 Graph showing outstanding loans to corporate sector for the year 2009 - 2012.

Outstanding loans to corporate sector

43%

26% 2009 - 2010 31%

2010 - 2011 2011- 2012

INTERPRETATION: From the above pie-chart it is inferred that there is constant growth in the outstanding loans in corporate sector.

Page 58

RECOVERY OF LOANS AND ADVANCES

Table 8 Table showing outstanding loans to others which includes priority sector for the year 2009 - 2012.

Year

Amount (in crore)

Percentage (%)

2009 – 2010

6,138.64

24.53

2010 – 2011

8,763.02

35.03

2011 - 2012

10,118.47

40.44

Total

25,020.14

100

ANALYSIS: From the above table it is analyzed that when we compare the year 2009 – 20010 the amount was 6,138.64 crore with 24.53%. In the year 2010 – 2011 the amount was 8,763.02 crore with 35.03% and in the year 2011 – 2012 the amount was 10,118.47 crore with 40.44%.

Page 59

RECOVERY OF LOANS AND ADVANCES Graph 8 Graph showing outstanding loans to others which includes priority sector for the year 2009 - 2012.

Outstanding loan to others including priority sector 12000 10000 8000 Amount in crore 6000

Percentage

4000 2000 0 2009 - 2010

2010 - 2011

2011 - 2012

INTERPRETATION: From the above graph it can be inferred that there is a noticeable growth in the outstanding loan by others which includes priority sector which is highly beneficial to the bank.

Page 60

RECOVERY OF LOANS AND ADVANCES Table 9 Table showing total outstanding loans to business sector for the year 2009 - 2012.

Year

Amount (in Crore)

Percentage (%)

2009 – 2010

22,640.45

26.16

2010 - 2011

28,151.68

32.55

2011 – 2012

35,728.24

41.29

Total

86,520.37

100

ANALYSIS: From the above table it is analysed that when we compare the year 2009 – 2010 the amount outstanding was 22,640.45 crore which shows a percentage of 26.16. In the year 2010 – 2011 the amount was 28,151.68 crore which shows the percentage of 32.55 and in the year 2011 – 2012 amount was 35,728.24 crore which shows the percentage of 41.29.

Page 61

RECOVERY OF LOANS AND ADVANCES Graph 9 Graph showing outstanding loan to business sector for the year 2009- 2012.

Outstanding loan to business sector

41%

26% 2009- 2010 33%

2010 - 2011 2011 - 2012

INTERPRETATION: From the above graph it is inferred that there is a substantial growth in the outstanding loan in business sector which concludes that it is highly advantageous to the bank for their further financial improvement.

Page 62

RECOVERY OF LOANS AND ADVANCES

Table 10 Table showing total outstanding retail advances for the year 2009- 2012

Year

Amount (in Crore)

Percentage (%)

2009 – 2010

3,469.72

30.28

2010 - 2011

3,727.22

32.53

2011 - 2012

4,260.36

37.19

Total

11,457.3

100

ANALYSIS: From the above table it is concluded that when we compare the year 2009 – 2010 the amount outstanding was 3,469.72 crore with 30.28%. In the year 2010 – 2011 the outstanding amount was 3,727.22 crore with 32.53% and in the year 2011 – 2012 the amount is 4,260.36 crore with 37.19%.

Page 63

RECOVERY OF LOANS AND ADVANCES Graph 10 Graph showing total outstanding retail advances for the year 2009 – 2012.

Total outstanding of retail advances 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00

Amount ( Rs. In crore)

1,500.00

Percentage

1,000.00 500.00 0.00 2009 - 2010

2010- 2011

2011 - 2012

INTERPRETATION: From the above graph it can be inferred that there is a sequential growth year wise which is highly beneficial to the State Bank of Mysore.

Page 64

RECOVERY OF LOANS AND ADVANCES

Table 11: Table showing term loans for the years 2009 -2012

Year

Amount (in Crore)

Percentage (%)

2009 - 2010

13,983.65

30.28

2010 – 2011

19,200.56

32.53

2011 - 2012

25,991.64

37.19

Total

59,175.85

100

ANALYSIS: From the table it can be analysed that in the year 2009 – 2010 the amount is 13,983.65 crore with a percentage of 30.28. In the year 2010 – 2011 the amount is 19,200.56 crore with a percentage of 32.53 and in the year 2011 – 2012 the amount is 25,991.64 crore with a percentage of 37.19.

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RECOVERY OF LOANS AND ADVANCES Graph 11 Graph showing term loan for the year 2009 - 2012

Teram loan

44%

24% 2009 - 2010 32%

2010 - 2011 2011 - 2012

INTERPRETATION: It can be inferred that there is continuous growth in the term loans provided by the bank wherein the maximum growth is seen in the year 2011 – 2012.

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RECOVERY OF LOANS AND ADVANCES Table 12 Table showing educational qualification of the loan borrowers

Particulars

Number of respondent

Percentage (%)

PUC

28

28

Graduate

54

54

Post- graduate

18

28

Total

100

100

ANALYSIS: From the above mentioned table it can be analyzed that 28% have done PUC, 54% are graduate and 18% are post-graduate..

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RECOVERY OF LOANS AND ADVANCES Graph 12 Graph showing educational qualification of the borrowers. Educational qualification

60 50 40 30 20 10 0 PUC Graduate Post-graduate Number of respondent

percentage

INTERPRETATION: From the above graph it can be inferred that maximum no. of respondents are graduate where as minimum no. of respondent are post-graduate.

Page 68

RECOVERY OF LOANS AND ADVANCES Table 13 Table showing break up of respondent--- age wise.

Age in years

No. of respondent

Percentage (%)

20 - 30

45

45

30 - 40

29

29

40 - 50

18

18

Above 50

8

8

Total

100

100

ANALYSIS: From the above table it is seen that in there are 45 respondent in the age group of 20 – 30, 29 respondents fall in the age group of 30 – 40, 18 respondent in the age group of 40 – 50 and 8 respondent above the age group of 50.

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RECOVERY OF LOANS AND ADVANCES Graph 13 Graph showing break up of respondent--- age wise.

Break up respondent-- age wise 45 40 35 30 25 No. of respondent

20

Percentage

15 10 5 0 20-30

30-40

40-50

Above 50

Interpretation: From the above graph it can be inferred that the majority group of respondents belongs to the age group of 20 – 30 followed by the age group of 30 – 40. The least no. of respondents belongs to the age group above 50.

Page 70

RECOVERY OF LOANS AND ADVANCES Table 14 Table showing break up of respondent--- gender wise.

Gender

No. of respondent

Percentage (%)

Male

88

88

Female

12

12

Total

100

100

ANALYSIS: From the above table it is analysed that 88 respondent are males whereas only 12 respondents are females which shows the maximum no. of respondent were males.

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RECOVERY OF LOANS AND ADVANCES Graph 14 Graph showing break up of respondent--- gender wise.

Break up of respondent--- gender wise

90 80 70 60 50

No. of respondent

40

Percentage

30 20 10 0 Male Female

Interpretation: From the above graph it is inferred that that the maximum no. of respondent are males and female participation is less.

Page 72

RECOVERY OF LOANS AND ADVANCES Table 15 Table showing break up of respondent --- occupation wise.

Occupation

No. of respondent

Percentage (%)

Government

35

35

Professional

15

15

Private

24

24

Business

26

26

Total

100

100

ANALYSIS: From the above table it can be analysed that 35 of the respondents are government employees, 15 are professional, 24 are in private and 26 belongs to the business .

Page 73

RECOVERY OF LOANS AND ADVANCES Graph 15 Graph showing break up of respondent --- occupation wise.

Break up of respondent--- occupation wise

35 30 25 No. of respondent

20

Percentage 15 10 5 0 Government

Professional

Private

Business

Interpretation: From the above graph it can be inferred that bank major customer on the basis of occupation are government employees.

Page 74

RECOVERY OF LOANS AND ADVANCES Table 16 Table showing break up of respondent --- income wise.

Income (Rs.)

No. of respondent

Percentage (%)

Less than 50,000

20

20

50,000 – 1,00,000

28

28

1,00,000 – 1,50,000

48

48

Above 1,50,000

4

4

Total

100

100

ANALYSIS: From the above mentioned table it can be concluded that there are 20 respondents income is less than 50,000 ; 28 respondents falls in the income group of 50,000 – 1,00,000 ; 48 respondents in the income group of 1,00,000 – 1,50,0000 and 4 respondents falls in the income group above 1,50,000.

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RECOVERY OF LOANS AND ADVANCES Graph 16 Graph showing break up of respondent --- income wise.

Break up of respondent-- income wise 50 45 40 35 30 25 20 15 10 5 0 Less than 50,000

50,000 - 1,00,000

1,00,000 - 1,50,000

No. of respondent

Above 1,50,000

Percentage

Interpretation: It can be inferred that majority no. of respondent belongs to income group of 1,00,000 – 1,50,000 and the least is below 1,50,000.

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RECOVERY OF LOANS AND ADVANCES

Table 17 Table showing source of awareness

Source

No. of respondent

Percentage (%)

SBM employees

45

45

Magazine

35

35

Friends and television

12

13

Newspaper

8

8

Total

100

100

ANALYSIS: From the above table it can be analysed that source of awareness of 45 respondents was through SBM employees, 35 was through magazine; 12 was through friends and television and 8 was through newspaper, 12 was through friends and television through

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RECOVERY OF LOANS AND ADVANCES

Graph 17 Graph showing source of awareness.

Source of awareness

45 40 35 30 25 20

No. of respondent

15

Percentage

10 5 0 SBM employees

Magazine

Friends and television

Newspaper

INTERPRETATION: It can be inferred that majority of the respondent came to know about the bank through SBM employees followed by magazines, Friends and television and finally the least came to know through newspaper.

Page 78

RECOVERY OF LOANS AND ADVANCES Table 18 Table showing EMI paid by the borrower.

Amount

No. of respondent

Percentage (%)

Below 5,000

20

20

5,000 – 10,000

43

43

10,000 – 15,000

30

30

15,000 – 20,000

7

7

Total

100

100

ANALYSIS: From the above table it can be analysed that below 5,000, 20 respondent paid EMI in between 5,000 – 10, 000 , 43 in between 10,000 – 15,000 , 30 paid EMI and the least EMI was paid in between 15,000 – 20,000.

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RECOVERY OF LOANS AND ADVANCES

Graph 18 Graph showing EMI paid by the borrower

EMI paid by the borrower

7%

20%

30%

Below 5,000 43%

5,000 - 10,000 10,000 - 15,000 15,000 - 20,000

INTERPRETATION: It can be inferred from the pie- chart that the majority no. of respondent who borrowed EMI is in between 5,000 – 10,000 and the least EMI paid by the borrower is in between 15,000 – 20,000.

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RECOVERY OF LOANS AND ADVANCES

Table 19 Table showing loan amount borrowed by respondent.

Amount ( Rs.)

No. of respondent

Percentage (%)

Below 5,00,000

30

30

5,00,000 – 10,00,000

45

45

10,00,000 – 15,00,000

20

20

15,00,000 – 20,00,00

5

5

Total

100

100

ANALYSIS: It can be analyzed from the above mentioned table that that there were 30 respondents who borrowed amount of loan below 5,00,000 ; 45 between 5,00,000 – 10,00,000 ; 20 between 10,00,000 to 15,00,000 and there were only 5 respondents who borrowed above 15,00,000. – 20,00,000

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RECOVERY OF LOANS AND ADVANCES

Graph 19 Graph showing loan amount borrowed by respondent

Loan amount borrowed by respondent

45 40 35 30 25 20 15 10 5 0

No. of respondent Percentage

Below 5,00,000

5,00,000 10,00,000

10,00,000 15,00,000

15,00,000 20,00,000

INTERPRETATION: From the above graph it can be interpreted that the maximum no. of amount borrowed by respondent is in between 5,00,000 – 10,00,000 whereas the least of amount borrowed by respondent is in between 15,00,000 – 20,00,000.

Page 82

RECOVERY OF LOANS AND ADVANCES Table 20 Table showing satisfactory level of respondents with loan.

Satisfaction level

No. of respondent

Percentage (%)

Extremely satisfied

15

15

Satisfied

53

53

Moderate

25

25

Unsatisfied

7

7

Total

100

100

ANALYSIS: From the above table an attempt was made to understand whether respondent feels that the products offered by the bank were extremely satisfied, satisfied, moderate or unsatisfied.

Page 83

RECOVERY OF LOANS AND ADVANCES Graph20 Graph showing satisfactory level of respondents with loan.

Satisfactory level of respondent

7% 25%

15% extremely satisfied 53%

Satisfied Moderate Unsatisfied

INTERPRETATION: It can be inferred from the pie-chart that that the maximum no. of respondent were satisfied where least no. of respondent were unsatisfied.

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RECOVERY OF LOANS AND ADVANCES

TOTAL ASSET

YEAR

2007-

2008-

2009-

2010-

2011-

08

09

010

011

012

TOTAL ASSET(RS. CR)

407185

459883

494029

566565

721526

800000 700000 600000 500000 400000

YEAR

300000

TOTAL ASSET(RS. CR)

200000 100000 0 1

2

3

4

5

6

YEAR

Interpretation:-Above graph show that total assets of SBI is increased in 2007-08 by 52658 crore, in 2011-12 increased by 154961rs. crore. So assets of the SBM bank increased from last five year.

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RECOVERY OF LOANS AND ADVANCES

GROSS NPA

YEAR

2007-08

2008-09

2009-10

2010-11

2011-12

12667

12456

9628

9998

12837

_GROSS NPA(RS.CR)

_GROSS NPA(RS.CR) 14000 12000 10000 8000

_GROSS NPA(RS.CR)

6000 4000 2000 0 200708

200809

200910

201011

201112

Interpretation:- above graph shows that Non-performing assets of SBM decreased from 2007-08 to2009-10 and increased in 2011-12. There are so many reason of increases of NPA

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RECOVERY OF LOANS AND ADVANCES

NET NPA

YEAR NET NPA(RS. CR.)

2007-08

2008-09

2009-10

2010-11

2011-12

5442

5349

4906

5258

7424

NET NPA(RS. CR.) 8000 7000 6000 5000 4000

NET NPA(RS. CR.)

3000 2000 1000 0 2007- 2008- 2009- 2010- 201108 09 10 11 12

Interpretation :Above graph show that net NPA decreased from 2007-08 to 2008-09 and increased in 2009-10 to 2011-12

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RECOVERY OF LOANS AND ADVANCES

GROSS NPA (RATIO%) YEAR GROSS NPA(RATIO%)

2007-08

2008-09

2009-10

2010-11

2011-12

7.75

5.96

3.61

2.92

3.04

GROSS NPA(RATIO%) 8 7 6 5 4

GROSS NPA(RATIO%)

3 2 1 0 2007- 2008- 2009- 2010- 201108 09 10 11 12

Interpretation : Above graph shows that the gross NPA (Ratio%)of SBM is decreased from 2008-09 to 2009-10 and increased in 2011-12.

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RECOVERY OF LOANS AND ADVANCES

NET NPA(RATIO%)

YEAR

2007-08

2008-09

2009-10

2010-11

2011-12

3.48

2.65

1.88

1.56

1.78

NET NPA(RATIO%)

4 3.5 3 2.5

YEAR

2

NET NPA(RATIO%)

1.5 1 0.5 0 1

2

3

4

5

6

Interpretation: Above graph shows that the net NPA(Ratio%) of SBM is decreased from 2008-09 to 2009 -10 and increased in 2011-12

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RECOVERY OF LOANS AND ADVANCES

CHAPTER 5 FINDINGS , SUGGESTIONS AND CONCLUSION

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FINDINGS 1. 45% of the loans taking customers are in between the age of 20 – 30 while another 29% of customers are in between the age 30 – 40. 18% of the customers belong to the 40 – 50 age categories while 8% are above the age of 50. 2. 88% of the loan takers are male while only 12% are female. 3. 35% of loan taking customer are working at the government sector, 15% professional, 24% private and 26% customers are engaged in his / her own business. 4. It can be observed that majority of customers are under the income group of 1,00,000 – 1,50,000 which is 48% followed by the income group of Rs. 50,000 – 1,00,000, at 28%. The group earning less than Rs. 50,000 owns 20% and at last the income group of Rs. 1,50,000 and above owns 4%. 5. 45% of respondent are made aware about loan by SBM employee while 35% are made aware by magazine. 13% and 7% of customer are made aware of SBM bank by newspapers and friends. 6. Majority of the EMI was paid by the borrower in between 5,000 – 10,000 and least EMI was paid by borrowed in between 20,000 – 30,000. 7. 30% of customer of SBM banks are taking loans below 5,00,000, While 45% are taking between 5,00,00 – 10,00,000 , 20% are taking between 10,00,000 – 15,00,000 by 22% and only 5% borrowed in between 15,00,000 – 20,00,000. 8. 53% of the customers are satisfied with the loan amount while 25% are moderately satisfied and 15% are extremely satisfied but 7% are unsatisfied. 9. It is also found that there is an impressive continuous growth in vehicle loan, education loan and personal loans which is remarkably outstanding for the bank. 10. Home loan segment has a better increasing trend in coming years since it has a high rate of demand in the current market.

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SUGGESTIONS

1. The bank’s variety of loans and advances are unlimited but they are not communicated well enough to customers. Hence, it is suggested to make additional efforts to provide information to the customers about the range of loans and advances 2. Attractive and competitive interest rates should be adopted since it is the main factor considered for taking loans by the customers. 3. Since all the banks are providing loans with the same features. It is recommended that bank should offer some unique features to its products to acquire strong identity and can be easily distinguished. 4. At the present scenario, SBM should intensify their advertisement campaign in order to gain new customers, make people aware of the new schemes available to them and also take advantage of the current market. 5. Service level provided by the bank should be more efficient and effective for the customer. The customers are very keen on the service provided by the bank. They would rate it as one of the important factor while selecting the loans. 6. The bank should adopt attractive and competitive rate of interest in order to induce customers to take personal loans and to attain more shares from its competitors. This is also one of the critical factors for selecting the loans. 7. Increase in short- term lending such as cash credits, Overdraft and Loans repayable on demand is most favourable to bank to earn short- term gain and maintain liquidity. 8. A suggestion is made to the bank to expand the business globally and offer more and more services to the people abroad. 9. Bank should follow guidelines towards priority sector and get benefits out of it. 10. Offer best customer services, lending on profitable ventures, diversifying the business to cope with the competition. 11. Bank should use latest technologies in banking activities. 12. Few customer has not selected the branch because of less branches in southern region compared to the other region.

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Conclusion Human beings are no more constraint to the basic necessities in their lives. Their needs have diversified through the ages placing an increase demand on resources. The economic boom in the country has wide open the new challenges and opportunities to the people. This has necessitated timely and easy availability of funds to meet the requirements of institutions and individuals in meeting their goals. Thus to keep up with the pace of this increasing demand, the banking industry have come forward with the credit portfolio to provide funds on relatively easier terms and conditions. Today, banks are committed towards providing more and more number of people with finance with a view to make their lives better. The ever increasing demands of the customers have forced the banking sectors to emerge with new retail products bearing new unique features in them. The competition among the banks cannot be neglected. They have been supplying loans for the purpose of purchase of vehicles , pursue of higher education, or to meet their other personal requirements. The banking industry is witnessing a boom at present boosted by the increasing demand for retail loan products. The demand has arisen as a result of genuine individual needs. From an overall view point demand for retail loans is ever rising and the same would be reflected on the demand for funds. Hence the profitability of this particular industry is expected to take a positive track in the future ahead.

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s

BIBLOGRAPHY



A Hand Book of Banking by N. S. Toor



Ramman Finance management.



Finance management and policies by James C. Van Horne.



Management accounting principle and practises by R. K. Sharma.



Accounting for managers S. P Jain and K.L. Narang.



Research methodology by C.R. Kothori.



Business Research Methods by Appannaiah Reddy and Ramnath

WEBSITES: www.statebankofmysore.com www.google.com www.rbi.org.in

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