CHAPTER NO I

INTRODUCTION

CHAPTER NO I Introduction
Lending policy in other word we can say that credit policy or policy for loans and advances. Lending means loans and advances which are the important operation of every bank weather it is Nationalized or private bank. Lending is also known as source of income in form of interest. Lending captures the high percentage in banks profitability. Lending includes the fund base as well as non -fund base lending or loans and advances. Lending policy gives guidelines for the lending operations. The information is gathered and personally experienced the lending operation is through consult and communication with one of the biggest nationalized bank BANK OF MAHARASHTRA and their customers. The aim of the project is to focus on how the lending policy operations to perform better and effectively and an overview and detailed understanding of each and every aspect of lending policy.

PROBLEM STATEMENT:The study is mainly undertaken to study of current position of lending policy existing Bank of Maharashtra (Branch Pimpode Bk. Koregaon). The intention of study find ways to increase the lenders or attract the people towards bank and to giving facilities to more people for their future developments and need.

OBJECTIVE OF THE STUDY:1. To study the Importance of lending policy for performing the banking operations. 2. To understanding how the guidelines, rules and regulations issued by Reserve Bank of India are followed. 3. How does Bank of Maharashtra prepare their own lending policy. 4 .To study and understand the importance of preparing own lending policy for lending operation. 5. To study the Minimization of NPA- Non-Performing Assets.
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SCOPE OF STUDY:The scope of study is related studying of effectiveness of the sources of finance of Bank of Maharashtra. In rural areas people are not aware about the lending policy of banks and also the nationalized banks are not concentrating on their services. Study will help management to focus on the manner in which they are working. Study will indicate best deposits scheme which bank has to adopt. Suggestions given in project will help to bank management to improve their system to become more effective in banking sector as such.

LIMITATIONS OF THE STUDY:The following limitations were experienced during the study. 1. The time available for research is only 45 days 1. According to policies of bank department provided only screened information. 2. The study is confined to Pimpode Branch only; hence the results cannot be generalized. 3. The findings in this study are purely dependent on the answers of the respondents. 4. Since the study was limited to a specific period, further qualitative research on the topic was not possible. 5. The information recorded is based on the opinion and reactions of the respondents as on the date of research.

CHAPTER NO II

ORAGANISATION PROFILE

CHAPTER NO II ORAGANISATION PROFILE

INTRODUCTION OF BANK OF MAHARASHTRA HISTORY MILESTONE VISION MISSION LOGO THE PILLER AIMS SOCIAL ASPECTS

1) History:The bank was established in the year 1935 with an initial authorized capital worth Rs. 10.00 Lakhs, although it became operational in the early phase of the next year. The bank got nationalized by the Government of India in the year 1969. With a total number of 1421 branches located all over India as of April 2009, the bank claims to have the largest number of branches within the state of Maharashtra, among all the Public Sector banks. Commonly known as a common man's bank, Bank of Maharashtra adopts a philosophy of "Technology with personal touch", and follows its motto stating "One Family, One Bank, Bank of Maharashtra". Facilities:All the branches of Bank of Maharashtra have been fully computerized, with Depository services and Demat facilities being offered at 131 branches as of April 2009. The bank aims at increasing its ATM network from 345 to 500 soon, apart from planning to install Biometric ATMs at some selected branches. Apart from it, introduction of Phone Banking, Internet Banking and Mobile Banking is also on the cards. Head Office:Bank of Maharashtra Lokmangal, 1501, Shivajinagar, Pune (Maharashtra) - 411 005 Website: www.bankofmaharashtra.in

2) MILESTONS:Milestones in the journey for nation building:

Steadily to spread its business operations all over Maharashtra and as opportunity allows, outside that area offering varied services to the general public while trying to be useful to trade , commerce and industry consistently with high standards of safety and efficiency 1936 : Commenced operations on 08-02-1936 in Pune 1938 : Second branch of the bank was opened in 1938 at Fort, Bombay. 1940 : Third branch came up at Deccan Gymkhana, Pune 1944 : Status as Scheduled Bank obtained 1946 : Deposits crossed Rs One crore mark
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Formed fully owned subsidiary, The Maharashtra Executor & Trustee Company First branch outside Maharashtra opened in Hubli (Mysore Starte, Now Karnataka) 1963 : Expansion to Goa: Panjim Branch opened 1966 : Expansion to Madhya Pradesh: Indore branch opened Entered in Gujarat: Baroda branch opened

Millstones: Since Nationalization:1969 1974 1976 1978 1979 : : : : : Nationalized along with 13 other Banks Deposit base crossed Rs. 100 Crore mark Marathwada Grameena Bank, first RRB established on 26-08-1976 Deposits crossed the figure of Rs.500 Crores Mahabank Agricultural Research and Rural Development Foundation, registered as a public trust, was established for undertaking research and extension work and to provide more extensive services to farmers. 500th branch in Maharashtra state was opened at the hands of the then Prime Minister, Mrs. Indira Gandhi at Nariman Point, Mumbai. First Advanced Ledger Posting Machine (ALPM) was installed at the branch. Golden Jubilee Year Celebrations launched at the hands of Dr. Manmohan Singh, Governor Reserve Bank of India Thane Grameena Bank sponsored The 1000th branch of the Bank was inaugurated at Indira vasahat, Bibwewadi, Pune. "Mahabank Farmer Credit Card " was launched Entered in to Domestic Credit Card Business Main Frame Computer installed Became member of the SWIFT

1985 :

1986 : 1987 : 1991 :

1996 : Moved into A category from the earlier C category. Autonomy obtained 2000 : Deposits crossed Rs 10000 crore mark 2004 : Public Issue of Shares 24% owned by Public Listed in BSE and NSE 2005 : Bank assurance and Mutual Fund distribution business started 2006 : Crossed total business level of Rs.50,000 Crore Branch CBS Project started 2009 : Entered in to 75th year of dedicated service to the Nation Adopted 75 underdeveloped villages for integrated overall development 2010 : 100% CBS of branches achieved Total Business crossed Rs One lakh crore Opened 76 branches in the Platinum Year taking the total to 1506
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3) Mission:To ensure quick and efficient response to customer expectations. To innovate products and services to cater to diverse sections of society. To adopt latest technology on a continuous basis. To build proactive, professional and involved workforce. To enhance the shareholders wealth through best practices and corporate governance. To enter international arena through branch network. To be a vibrant, forward looking, techno-savvy, customer centric bank serving diverse sections of the society, enhancing shareholders' and employees' value while moving towards global presence.

4) Our Logo:-

The Diyas Our Branches- Symbolizing service. The 3 M's symbolizing :Mobilization of Money Modernization of Methods and Motivation of Staff.

5) Social Responsibility:Apart from providing regular banking services to the customers, Bank of Maharashtra has established two Joint Ventures to full fill its other commitments towards the general public and society. These Joint Ventures are M-SETI and Mahabank Info Centre. Mahabank Self-Employment Training Institute (M-SETI) is an effort initiated by Mahabank Agricultural Research & Rural Development Fund (MARDEF), a trust run by Bank of Maharashtra receiving help from National Bank for Rural Development (NABARD). The institute runs various self-employment oriented training courses for the rural unemployed youth from the districts of Pune, Kolhapur, Satara, Sangli, Nashik, Ahmednagar, Jalgaon, Dhule and Nandurbar. Mahabank Info Centre is a yet another initiative by Bank of Maharashtra aimed at providing various retail baking related information to the customers, and enabling smoother operations for them.

CHAPTER NO III

RESEARCH METHODOLOGY

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CHAPTER NO III RESEARCH METHODOLOGY

Introduction:
According to the oxford advanced Learners Dictionary of current English the meaning of research is a careful study or investigation especially in order to discover new facts or information. Research is defined as movement from the known to the unknown. It is an effort to discover something. According to Clifford Woody Research comprise defining and redefining problems formulating hypothesis or suggested solutions, collecting/organizing and evaluating data making deduction & research conclusions and at last carefully testing the conclusion to determine whether they fit the formulation hypothesis. Research methodology concerns itself with obtaining information through empirical observation that can be used to systematically develop logically related propositions so as to attempt to establish casual relationships among variables. To study the objective following methodology is adopted for sources of data.

A) Primary data :
Primary data is the data which collected first time by the researcher and not available in any form before collection primary data was collected through Personal Interviews and discussion Observation Questionnaire Design: Quite often questionnaire is considered as the heart of a survey operation. Hence it should be very constructed. Questionnaire was prepared with the combinations of various types of questions.

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a) Observation:

The observation method is the method commonly used method specially in studies relating to behavioral sciences under the observation method the information is sought by way of investigators own direct observation without asking form the respondent controlled observation. If the observation takes place in natural setting, it may be termed plans involving experimental procedure it termed a controlled observation.

b) Discussions:

Discussions method of collecting data involves presentation of oral-verbal stimuli and reply in terms of oral-verbal responses. This method can be used through personal interviews usually carried out in a structured way. Interviews involve the use of predetermined questions and highly standardized techniques of recording. The main task of the interviewer in case of focused

Interviewed is to confine the respondent to a discussion of issues with be conversance.

B) Secondary data:Here the researcher has collected the secondary data from annual reports and records of bank of Maharashtra. Secondary data was helpful in understanding the performance of the bank over the past years. Secondary data - The data already available i.e. they refer to the data which have already been collected analyzed by someone else.

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Unpublished data:

The sources of unpublished data are many may be found in diaries, letters, unpublished biographies and auto biographies and also may be available with scholars and research workers, trade association, lab our burials and other public private individuals and organizations.

Sample selected:The researcher has used primary data collection method and a structured questionnaire was prepared. The researcher have taken randomly selected 50 lenders (respondents) of Bank of Maharashtra ( Pimpode Bk Branch).

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CHAPTER NO IV

THEROTICAL BACKGROUND

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CHAPTER NO IV THEROTICAL BACKGROUND

LENDINGS
NON-BANKS VERSUS BANKS NON BANK LENDING BANK-LENDING BANK LENDING AND RESERVES

CAPITAL ADEQUACY REQUIREMENT

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LENDING:-

NON-BANKS VERSUES BANK:Banks play a key role in the monetary system, yet their lending now accounts for less than 20% of the total credit market debt in the U.S. Most of the lending is done by non-bank financial institutions such as finance companies, mortgage companies, insurance, pension funds, and investment banks. Non-banks cannot accept demand deposits, and therefore play no direct role in the payment system. But they provide a variety of financial products and complete with banks and each other for lending opportunities.

NON-BANKING LENDING:Non-banks are ordinary intermediaries. They act as a conduit between those with funds to lend and those in need of funds. By pooling the funds of invertors from whom they borrow, they can then lend in various amounts and periods. For their service they charge a fee, usually in the form of periodic interest payments. Their borrowing and lending increase the total credit market debt but has no direct effect on the money supply. Non-banks simply intermediate the transfer of funds from the bank account of the original investors to the bank accounts of the ultimate borrowers. Non-bank usually borrows short-term at lower rates to lend longer term at higher rates. That means a non-bank must be able to roll over its short-term debt at favorable rates. It must also be able to borrow on short notice to manage any cash flow problems. For that reason it must maintain an excellent credit rating, or it may not be able to borrow at all.

BANK LENDING:Banks are not ordinary intermediaries. Like non-banks, they also borrow, but they do not lend then if necessary borrowing the funds needed to meet the reserve ratio requirement. The account s of other depositors remain intact and their deposits fully available for withdrawal. Thus a bank loan increases the total of bank deposits, which means an increase in the money supply. When the loan is paid up, the money supply decreases. A net increase in bank lending results in a shortage of reserves needed by the banking system, which only the fed can supply in order to maintained control of fed funds rate. i.e. the interest rate on overnight loans between banks, the fed must provide the funds as required. It does so purchasing treasury securities from the public. Bank lending has no effect on a banks own capital. But bank lending is limited by the capital ratio requirement set by the fed. If a bank has sufficient capital, it can expand its balance sheet by issuing more loans however if it is not holding excess reserves it will have acquire more in order to meet reserve ratio requirement. Banks therefore actively seek new deposits of course they prefer deposits on which they pay no interest, like ordinary checking accounts. They also borrow from savers who open saving accounts and investors who buy their CDs.
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BANK LENDING AND RESERVES:He following scenario illustrated hoe the reserve ratio requirement related to bank lending. Suppose a bank has 1, 00, 00, 00,000/-, in demand deposits and 1, 00, 00, 00, 00/- in reserves, which is just enough to meet the reserve ratio of 10%. The banks plans to issue mortgage loans totaling 50, 00000/- for new housing development. Can it do before it acquires more reserves? (** the reserve ratio required for the amount of demand deposits is somewhat less than 10%, but we use that figure to keep the arithmetic simple)

CAPITAL ADEQUACY REQUIREMENT:A banks lending ultimately limited by the amount of its own capital (assets minus liabilities). The capital adequacy rule requires that the ratio its capital to riskweighted assets be at least 8%. Mortgage loans have a risk weighting of 0.5 in contrast to ordinary loans which have risk weighting of 1.0. Since the bank plans to expand its balance sheet by $5,000,000, it must have excess capital of at least$ 5,000,000 *0.5*.80=$200,000. We will assume the bank satisfies this requirement.

BORROWING RESERVE WHEN NEEDED:Assume the first loan is for $1,000,000. The immediate effect of the loan is to increase the banks assets and liabilities by that amount, without affecting its reserves or capital. When the borrower spends the $1,000,000, if the proceeds are deposited in other bank, the lending bank loss that much in reserves to their banks but it no longer has that deposits liability. However the banks original demand deposits of $1,000,000 have not changed and they are now backed by only $1,000,000.in reserves. The bank must therefore acquire $1,000,000 more in reserves to meet the 10% reserve requirement.

ISSUING THE REMAINING LOANS

This process can be repeated with other borrowers to issue the $5,000,000 in new mortgage loans. The fed will then have added $5,000,000 to banking system reserved on its one initiative. At no time has the reserve requirement been a constraint on the banks lending. Assuming it has a good credit rating, the bank can borrow the reserves as needed. Indeed it can do so after each loan has been issued because reserves are figured as the average over successive fourteen day periods. That allows a bank to be short of reserves on any given day.

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MAINTAINING CONTROL OF THE FED FUNDS RATE:We have assumed that the money loaned by the bank and spent by the borrowers has all remained in demand deposits around the banking system. If instead some of that money gets parked in saving or term deposits for which reserves are not required, the banking system would likely have more reserves than it needed and would after them in the fed funds market. In order to hold the fed funds rate on target, the fed would need to drain the excess reserves. It would do so by selling Treasury securities from its own portfolio. Note that the whole system revolves around what must be done to control the fed funds rate, the primary monetary policy tool of the fed. The fed funds rate sets the upper limit on the cost to banks of borrowed funds, which in turn determine the interest rate bank charges on loans to the public. There mainly two types of lending 1. Priority sector lending. 2. Non-priority sector lending.

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PRIORITY SECTOR
There are certain conditions are imposed by RBI on loan procedures. It means banks working as per the guidelines of RBI regarding the sanctioning the loan .Each and every bank doing the every transaction as per the guidelines of the RBI but there are certain conditions or loan limit given by the RBI. It should be come under the priority sector lending. For e.g. as RBI given the loan limit for sectioning the priority sector lending i.e. for home loan the limit is 30 lakhs. The whatever loan given to people which are up to 30 laces it comes under the priority sector lending (home loan). If the loan given by the bank to customers is beyond the 30 lakhs it comes under the non priority sector lending. RBI also has given the percentage of loan sanctioning limit of priority sector lending i.e.40%. It should be there in ever bank. Every bank should keep that percentage i.e.40% for priority sector lending. It means every bank should lend 40% lending as a priority sector lending out of its total lending and out of that 40% 18% should be for agriculture lending. Whatever loan given by bank as priority sector lending i.e.40% out of that 40% bank should lend 18% should be for agriculture sector. Bank should follow for these guidelines while lending.

LENDING TO PRIORITY SECTOR:At a meeting of the National Credit Council held in July 1968, it was emphasized
that commercial banks should increase their involvement in the financing of priority sector. The description of the priority sectors was later formalized in 1972 on the basis of the report submitted by the Informal Study Group on Statistics relating to advances to the priority sector constituted by the Reserve Bank Of India in may 1971. On the basis of this report, the Reserve Bank prescribed a modified return for reporting priority sector advances and certain guidelines were issued return for reporting priority sector advances and certain guidelines were issued in this connection indicating the scope of the items to be included under the various categories of priority sector. In November 1974 the banks were advised to raise the share of these sectors in their aggregate advances to the level of 33 1/3 per cent by March 1979. At a meeting of the union finance minister with the chief executive officers of public sector banks held in March 1980, it was agreed that banks should aim at raising the proportion of their advances to priority to priority sector to 40% by March 1985. Subsequently, on the basis of their commendation of the working group on the modalities of Implementation of Priority sector lending and the Twenty point Economic Programmed by Banks. All commercial banks were advised to advise the target of priority sector lending at 40% aggregate bank advances by 1985. Sub-targets were also specified for lending to agriculture and the weaker section within the priority sector. Since then, there have been several changes in the scope of priority sector lending and the targets and sub target applicable to various bank groups. On the basis of the recommendation of the internal working group, set up in Reserve Bank to examine, review and recommend changes, if any, in the existing policy on priority sector lending including the segment constituting the priority sector, targets and sub targets,etc.and the comments /suggestions received thereon from banks, financial
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institutions, public and the Indian Bank Association(IBA), it has been decided to include only those sectors that impact large segment of population and weaker sections, and which are employment intensive ,as part of the priority sector.

CATEGORIES OF PRIORITY SECTOR

1. The broad categories of priority sector for all scheduled commercial banks are as under: i. Agriculture ( Direct and Indirect Finance) Direct finance to agriculture shall include short, medium and long term loans given for agriculture and allied activities directly to individuals farmers, self- help Groups (SHGs) or Joint Liability Group (JLGs) of individual farmers without limit and to others ( such as corporate ,partnership firms and institutions) up to Rs.20 lakhs, for taking up agriculture /allied activities. Indirect finance to agriculture shall include loans given for agriculture and allied activities.

ii.

Small Scale Industries (direct and indirect finance):

I. Direct finance to small scale industries (SSI) shall include all loans given to SSI units which are engaged in manufacture, processing or preservation of goods and whose investment in plant and machinery (Original Cost) excluding land and building does not exceed the amounts specified in section Indirect finance to SSI shall include finance to any person provident inputs to or marketing the output of artisans, village cottage industries, handlooms and to cooperatives of producers in these sectors. Small business/Service enterprises shall include small business, retail trade, professional and self employed persons, small road & water transport operator and other service enterprises as per the definition given in section I and other enterprises that are engaged in providing or rendering of services, and whose investment in equipment does not exceed the amount specified in section I.

iii.

Micro Credit : Provision of credit and other financial services and products of very small amounts not exceeding Rs. 50,000 per borrower to the poor in rural, semi urban and urban areas ,either directly or through a group mechanism, for enabling them to improve their living standards, will constitutes micro credit.

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iv.

v.

Education Loans : Education loans include loans and advances granted to only individual for educational purposes up to Rs. 10 lakhs for studies in India and Rs. 20 lakhs for studies abroad, and do not include those granted to institutions. Housing loans : This includes loans up to Rs.15 lakhs for construction of house by individuals,(excluding loan granted by banks to their own employees)and loans given for repairs to the damaged houses of individual up to Rs.1 lakh in rural and semi urban areas and up to Rs.2 lakh in urban areas .

2. Investments by banks in securitized assets, representing loans to agriculture (direct or indirect), small scale industries (direct or indirect) and housing, shall be eligible for classification under respective categories of priority sector (direct or indirect) depending on the underlying assets, provided the securitized assets are originated by banks and financial institutions and fulfill the Reserve Bank of India guidelines on securitizations. 3. The targets and sub-targets under priority sector lending would be linked to adjusted net bank credit (Net bank credit plus investments mad e by banks in non-SLR bonds held in HTM category) or credit equivalent of off-balance sheet exposures. Whichever is higher, as on March 31 of the previous year. 4. In order to encourage banks to increasingly lend directly to the priority sector borrowers, the banks deposits placed with NABARD/SIDBI on account of nonachievement of priority sector lending targets would not be eligible for classification as indirect finance to agriculture/SSI, as the case may be.

II.

TARGETS/SUB-TARGETS

The targets and sub-target set under priority sector lending for domestic and foreign banks operating in India are furnished below. Domestic Foreign banks commercial banks Total priority 40 percent of 32 percent of ANBC Sector adjusted net bank or credit equivalent advances credit (ANBC) or amount of offcredit equivalent balance sheet amount of offexposure, whichever balance sheet is higher. exposure, whichever is higher. Total 18 percent of ANBC No target. Agricultural or credit equivalent Advances amount of offbalance sheet exposure, whichever
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SSI advances

Micro Enterprises with in SSI

is higher. Of this, indirect lending in excess of 4.5% of ANBC or credit equivalent amount of offbalance sheet exposure, whichever is higher, will not be reckoned for computing performance under 18 percent target. However, all agricultural advances under the categories direct and indirect will be reckoned in computing performance under the overall priority sector target of 40 percent of ANBC or credit equivalent amount of offbalance sheet exposure, whichever is higher. Advances to SSI sector will be reckoned in computing performance under the overall priority sector target of 40 percent of ANBC or credit equivalent amount of offbalance sheet exposure, whichever is higher. 40percent of total SSI advances should go to units having investment in plant
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10 percent of ANBC or credit equivalent amount of offbalance sheet exposure, whichever is higher.

Same as for domestic banks.

and machinery up to Rs.5 lakh, 20 percent of total SSI advances should go to units with investment in plant and machinery between Rs.5 lakh and Rs. 25 lakh ( thus, 60 percent of SSI advances should go to the micro enterprises.) Export credit Export credit is not a part of priority sector for domestic commercial banks. 12 percent of ANBC or credit equivalent amount of offbalance sheet exposure, whichever is higher. No target.

Advances to weaker Section

Differential Rate of Interest scheme

10 percent of ANBC or credit equivalent amount of offbalance sheet exposure, whichever is higher. 1 percent of total No target. advances outstanding as the end of the previous year. It should be ensured that not less than 40 percent of the total advances granted under DRI scheme go to scheduled caste/scheduled tribes. At least two third of DRI advances should be granted through rural and semi-urban branches.
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[ANBC or credit equivalent of off-balance sheet exposure denotes the outstanding as on March 31 of the previous year. For this purpose, FCNR (B) and NRNR deposits balances will no longer be deducted for computation of NBC for priority sector lending purposes. For the purpose of priority sector lending, adjusted NBC (ANBC) denotes NBC plus investments made by banks in non-SLR bonds held in HTM category.] The detailed guidelines in this regards are given her under.

SECTION I
1. AGRICULTURE DIRECT FINANCE 1.1 Finance to individual farmers [including self help groups (SHGs) or joint liability groups (JLGs), i.e. groups of individual farmers] for agriculture and allied activities. 1.1.1 Short term loans for raising crops, i.e. for crop loans. This will include traditional/non traditional plantations and horticulture. 1.1.2 Advances up to Rs.10 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months, irrespective of whether the farmers were given crop loans for raising the produce or not. 1.1.3 Working capital and term loans for financing production and investment requirements for agriculture and allied activities. 1.1.4 Loans to small and marginal farmers for purchase of land for agricultural purposes. 1.1.5 Loans to distressed farmers indebted to non-institutional lenders, against appropriate collateral or group security. 1.1.6 Loans granted for pre-harvest and post-harvest activities such as spraying, weeding, harvesting, grading, sorting, processing and transporting undertaken by rural and semi-urban household or groups/cooperatives of rural and semiurban households. 1.2 Finance to other up to an aggregate amount of Rs. 20 lakh per borrower for the purposes listed at 1.1.1 to 1.1.3 above.

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INDIRECT FINANCE 1.3 Finance for agriculture and allied activities. 1.3.1 Loans to entities covered less than 1.2 above in excess of Rs. 20 lakh in aggregate per borrower for agriculture and allied activities. In such cases, the entire amount outstanding shall be treated as indirect finance for agriculture. 1.3.2 Loans to food and agro-based processing units with investments in plant and machinery up to Rs. 10 crore, undertaken by other than rural and semi-urban households. 1.3.3 Loans to non-banking financial companies (NBFCs) for on lending to individual farmers. 1.3.4 a) Credit for purchase and distribution of fertilizers, pesticide, seeds, etc. b) loans up to Rs. 40 lakh granted for purchase and distribution of inputs for the allied activities such as cattle feed, poultry feed, etc. 1.3.5 Finance for setting up of agriclinics and agribusiness centers. 1.3.6 Finance for hire-purchase schemes for distribution of agricultural machinery and implements. 1.3.7 Loans to farmer through primary agricultural credit societies (PACS), farmers service societies (FSS) and large-sized advice multipurpose societies (LAMPS). 1.3.8 Loans to cooperative societies of farmer for disposing of the produce of members. 1.3.9 Financing the farmer indirectly through the cooperative system (otherwise than by subscription to bonds and debenture issues) provided a certificate from the state cooperative bank/state cooperative agriculture and rural development bank (SCARDB), as the case may be, are produced, certifying the end use of such loans. 1.3.10 investments by banks in special bonds issued by NABARD with the objective of financing exclusively agriculture/allied activities for classification under priority sector lending with effect from April 1, 2007) 1.3.11 loans for construction and running of storage facilities (warehouse, market yards, godowns, and silos) including cold storage units designed to store agriculture produce/products, irrespective of their location. If the storage unit is registered as SSI unit, the loans granted to such units may be classified under advances to SSI, provided the investment in plant and machinery is within the stipulated ceiling. 1.3.12 advances to customs service units managed by individuals, institutions or organizations who maintain a fleet of tractor, bulldozers, well-boring equipment, threshers, combines, etc. and undertake work for farmers on contract basis. 1.3.13 finance extended to dealers in drip irrigation/sprinkler irrigation system/agricultural machinery, irrespective of their location, subject to the following conditions: a) The dealer should be dealing exclusively in such items of if dealing in other products, should be maintain separate and distinct records in respect of such items. b) A ceiling of up to Rs. 30 lakh per dealer should be observed.
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1.3.14 loans to arties (commission agents in rural/semi-urban areas functioning in markets/mandies) for extending credit to farmers, for supply of inputs as also for buying the output from the individual farmers/SHGs/JLGs. 1.3.15 50% of the credit outstanding under loans for general purposes under general credit cards (GCC)

2. SMALL SCALE INDUSTRIES DIRECT FINANCE

2.1 Direct finance in the small scale industries sector will include credit to: 2.1.1 Small scale industries units engaged in the manufacture, processing or preservation of goods and whose investment in plant and machinery (Original Cost) excluding land and building does not exceed Rs.5 crore. 2.1.2 Micro enterprises Small scale units whose investment in plant and machinery (Original Cost) excluding land and building is up-to 25 lakh, irrespective of the location of the units, are treated as micro enterprises. 2.1.3 KVI SECTOR All advances granted to units in the KVI sector, irrespective of their size of operations, location and amount of original investment in plant and machinery. Such advances will be eligible for consideration under the subtarget (60%) of the SSI segment within the priority sector.

INDIRECT FINANCE
2.2 indirect finance in the small scale industrial sector will include credit to: 2.2.1 Persons involved in assisting the decentralized sector in the inputs to and marketing of outputs of artisans, village and cottage industries. 2.2.2 Advances to cooperatives of producers in the decentralized sector viz. artisans village and cottage industries. 2.2.3 Subscription to bonds issued by NABARD with the objective of financing exclusively nonfarm sector (not eligible for classification under priority sector lending with effect from April 1, 2007). 2.2.4 Loans granted by banks to NBFCs for a lending to SSI sector.

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3. SMALL BUSINESS/SERVICE ENTERPRISES

3.1 Loans granted to small business and service enterprise such as, small Road and Water Transport Operations, Small business, professional & self Employed persons, etc. engaged in providing/rendering of services (which are industry related), and whose investment in equipment (original cost and excluding land and building) does not exceed Rs.2 crore. 3.2(i) Advances granted to retail traders dealing in essential commodities (fair price shops), consumer co-operative stores, and; (ii) Advances granted to private retail with credit limits not exceeding Rs.20lakh. 3.3 Loans to NBFCs for the purpose of no-lending to various categories of small business services enterprises.

4. MICRO CREDIT:4.1 Loans of very small amount not exceeding Rs.50, 000 per borrower, provided by banks to the poor in rural, semi-urban and urban areas, either directly or through a group mechanism, for enabling them to improve their living standards. 4.2 Loans to urban poor indebted to informal sector Loans to distressed urban poor to prepay their debt to lenders in the informal sector would be eligible for classification under priority sector. Urban poor for this purpose may include those families in the urban areas who are below the poverty line. Such loans to urban poor may be classified under weaker section within the priority sector.

5 STATE SPONSORED ORGANIZATIONS FOR SCHEDULD CASTES/SCHEDULED TRIBES

Advances sanctioned to state sponsored organization for scheduled castes/ scheduled tribes for the specific purpose of purchase and supply of inputs to and/or the marketing of the outputs of the beneficiaries of these organization. Advances sanctioned to state sponsored organization for scheduled castes/ scheduled tribes for the specific purpose of purchase and supply of inputs to and/ or the marketing of the outputs of the beneficiaries of these organizations.

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6. EDUCATION
Educational loans should include only loans and advances granted to individuals for educational purpose up to Rs.10 lakh for studies abroad, and not those granted to institutions.

7. HOUSING:7.1 Loans up to Rs.15lakh, irrespective of location, for construction of houses by individuals, excluding loans granted by banks to their own employees. 7.2 loans given for repairs to the damaged houses of individuals up to Rs1lakh in rural an semi urban areas and up to Rs 2lakh in urban areas 7.3assistance up to Rs 1.25lakh per housing unit given to any governmental agency/non governmental agency.

SECTION III
COMMAN GUIDELINES FOR PRIORITY SECTOR ADVANCES 1. Banks should follow the following common guidelines prescribed by the reserve bank for or categories of advances under the priority sector. 2. PROCESSING OF APPLICATIONS 2.1-complition of application forms In case of government sponsored schemes such as SGSY, the concerned project authorities like DRDAs, DISs, etc.should arrange for completion of application forms received from borrowers. In other areas, the bank staff should help the borrowers for this purpose. 2.2-issue of acknowledgement of loan applications Bank should give acknowledgement for loan application received from weaker sections towards these purpose, it may be ensured that all loan application forms have perforated portion for acknowledgement to be completed an issued by the receiving branch. Each branch may affix on the main application form as well as the corresponding portion for acknowledgement, a running serial number. While using the existing stock of application forms which do not have a perforated portion for acknowledgement is separately given, care should be taken to ensure that the serial number given on the acknowledgement is also recorded on the main application. The loan application should have a check list of document required for guidelines of the prospective borrowers. 2.3Disposal of Application (i) All loans application up to a credit limits of Rs. 25000/- should be disposed of within a fortnight and those for over Rs.25000/- within 4 weeks. (ii)All applications for SSI up to a credit limit of Rs.25000/- should be disposed of within 2 weeks and those up to Rs.5lakh within 4 weeks, provided the loan application are complete in all respects and are accompanied by a check list.
28

2.4Rejection of proposals:Branch managers may rejects applications (excepts in respects of SC/ST) provided the cases of rejection are verified subsequently by the Divisional Regional Managers. In the case of proposals from SC/ST rejection should be at a level higher than that of branch managers. 2.5Register of Rejected Applications:A register should be maintained at the branch wherein the date of receipt, sanction rejection with reasons therefore, etc. should be recorded. The register should be making available to all inspecting agencies.

3. MODE OF DISBURSMENT OF LOAN:With a view to providing farmers wider choice as also eliminating undesirable practices, banks may disburse all loans for agricultural purpose in cash which will facilitate dealer choice to borrowers and foster an environment of trust. However, the banks may continue the practice of obtaining receipts from borrowers.

4. REPAYMENT SCHEDULE:4.1Repayment programmed should be fixed taking into account the sustenance requirement, surplus generating capacity, the break-even point the life of the asset, etc. and in an ad hoc manner. In respect of compact of composite loans, repayment schedule may be fixed for term loan component only. 4.2 As the repaying capacity of the people affected by natural calamities gets severely impaired due to the damage to the economic pursuits and loss of economic assets the benefits such as restructuring of existing loans, etc. as envisaged under our circular RPCE.CO.OLFS.NO. BC16/05.04.02/2006-07 dated Augest9, 2006 may be extended to the affected borrowers. 5. RATES OF INTEREST:5.1 The rate of interest on various categories of priority sector advances will be as per RBI directors issued from time to time. 5.2(a) In respect of direct agricultural advances, banks should not compound the interest in the case of current dues, i.e. crop loans and installments not fallen due in respect of term loans, as the agriculturists do not have any regular source of income other than sale proceeds of their crops (b) When the default is due to genuine reasons banks should extend the period of loan or reschedule the installments under term loan. Once such a relief has been extended, the over dues become current dues and banks should not compound interest. (c) Banks should charge interest of agricultural advances in respect of long duration crops, at annual rests instead of quarterly of longer rests, and could compound the interest, if the Loan/installments become overdue.

29

6. PENAL INTEREST:6.1.1 In issue of charging penal interests that should be levied for reasons such as default in repayment, non-submission of financial statement etc. has been left to the Board of each bank. Banks have been advised to formulate policy for charging such penal interest with the approval of their Boards, to be governed by well accepted principles of transparency, fairness, incentive to service the debt and regard to difficulties of customers. 6.1.2 NO penal interest should be charged by banks for loans under priority sector up to Rs.25000/- as hitherto. However banks will be free to levy penal interest of loans exceeding Rs.25000/- in terms of the above guidelines . 7. SERVICE CHARGES/INSPECTION CHARGES 7.1.1 No service charges/inspection charges should be levied on priority sector loans up to Rs.25000/7.1.2 For loans above Rs.25000/- banks will be free to prescribe service charges with the prior approval of their Boards, in the terms of circular No. DOBD.Dir.BC.86/3.01.00/992000 dated September 7, 1999. 8) INSURSNCE AGAINST FIRE & OTHER RISKS 8.1 Banks may waive insurance of assets financed by bank credit in the following cases No. Category Type of risks Type of assets (a) All category of priority sector Fire |& other risks Equipment &current advances up to & inclusive of assets. Rs.10000 /(b) Advances to SSI sector up to Fire Equipment and & inclusive of Rs.25000/- by Fire current Assets way of Fire Equipment Current assets.sss Composite loans to artisans, village and cottage industries. All term loans. Working capital where these are against non-hazardous goods.

30

8.2 where, however, insurance of vehicle or machinery or other equipment/assets is compulsory under the prevision of any law or where such a requirement is stipulated in the refinance scheme of any refinancing agency or as part of a government-sponsored programmers such as SGSY, insurance should not be waived even if the relative credit facility does not exceed Rs.10, 000/- or Rs.25, 000/-, as the case may be.

9. PHOTOGRAPHS OF BORROWERS
While there is no objective to taking photographs of the borrowers for purposes of identification, banks themselves should make arrangements for the photographs and also bear the cost of photographs of borrowers falling in the category of weaker sections. It should also be ensured that the procedure does not involve any delay in loan disbursement.

10. DISCRETIONARY POWERS

All branch managers of banks should be vested with discretionary power to sanction proposal from weaker sections without reference to any higher authority. If there are difficulties in extending such discretionary powers to the entire branch managers, such powers should exist at least at the district level and arrangements be ensured that credit proposals on weaker sections are cleared promptly.

11. MACHINERY TO LOOK INTO COMPLAINTS

There should be machinery at the regional offices to entertain complaints from the borrowers if the branches do not follow these guidelines, and to verify periodically that these guidelines are scrupulously implemented by the branches.

12. AMENDMENTS
These guidelines are subject to any instructions that may be issued by the RBI from time to time.

TYPES OF LENDING PRINCIPLE OF BANK LENDING POLICIES INTEREST RATES PRINCIPLE OF BANK LENDING POLICIES
The major business of banking company is to grant loans and advances to traders as well as commercial and industrial institutes. The most important use of banks money is lending. Yet, there are risks in lending. While lending loans or advances the banks usually keep such securities and assets as a supports so that lending may be safe and secured. Suppose, any particular state is hit by disasters but the bank shall get advantages from the lending to another states units. Thus, the effect

31

on the entire business of banking is reduced. So the banks follow certain principles to minimize the risk. Following are the important areas to be taken care while lending: Safety Liquidity Profitability Purpose of loan Principle of diversification of risks Safety Normally the banks use the money of depositors in granting loans and advances. Because of that while granting loans the banker should think about the safety of depositors money. The purpose behind the safety is to see the financial position of the borrower, whether he can pay the debt as well as interest easily. Liquidity It is a legal duty of a banker to pay the total deposited money to the depositor on demand. So the banker has to keep certain percent cash o the total deposits in hand. Moreover the bank grants loan. It is also for the addition of short term or productive capital. Such type of lending is recovered on demand. Profitability Commercial banks are profit earnings institutes; nationalized banks are also not an exception. They should have planning of deposits in a profitability way to pay more interest to the depositors and more salary to the employees. Before taking any decision the banker should make sure that it is profitable. Purpose of loan Banks never lend or advance for any type of purpose that will lead to loose of money. The banks grant loans and advances for the safety of its wealth, and assurance of recovery of loan and the bank lends only for productive purpose. Before giving loan the bank has to make sure that whether the purpose for which the loan has given is productive or not. Principle of diversification of risks A bank should be very careful while lending loans because if the bank lends to a non credit worthy customer, it will affect the survival of the bank. To diversify the lending risk they should lend loans to customers from different sectors such as agriculture, housing, educational, etc. concentrating on a particular set of customers will adversely affect the bank.

32

LOAN SCHMES PROVIDED BY BANK OF MAHARASTRA

Term loans, overdrafts, letters of credit, guarantees and many more such products are included in the credit basket. Recognizing individual customer needs Bank Of Maharashtra has identified customer segments. For the individual we have finance schemes that translate your dreams into reality.

33

INTERST RATES
Interest rate on advances Benchmark PLR 12.25% Effective date- 06/07/11 Loan against term deposit- 1% over rate of interest on term deposit; for cash credit against deposits- 1.3% over rate of interest on term deposit. Mahabank housing loan scheme: Tenor Fixed Floating P.A. Up to and Inclusive of 5 years Above 5 years Up to and inclusive of 10 years. BPLR-3.50% 8.75% 10.00% BPLR-2.75% 9.50% 10.50% Above 10 years but below and inclusive of 20 years. BPLR-3.25% 9.00% -BPLR-2.50% 9.75% --

Sanctioned load amount up to Rs.30.00 lakh. Sanctioned loan amount above Rs.30.00 lakh.

Floating

BPLR-3.75% 8.50% 9.50% BPLR-3.25% 9.00% 10.25%

Fixed Floating

Fixed

For repairs and renovation: BPLR-3.00% i.e. 9.25% p.a.

Mahanank consumer loan scheme: 13.50% (w.e.f.06.07.09) Mahabank vehicle loan scheme Particulars ROI De-linked ti BPLR Repayment up to 3 years 9.75% p.a. Repayment above 3 years 10.75% p.a. Second hand vehicles 13.25% p.a. Model education loan scheme Loan slab Loan amount up to and inclusive of Rs.4.00 lakh. Loan amount above Rs.4.00 lakh.

Rate of interest BPLR-2.00% i.e. 10.25% p.a. BPLR- 1.25% i.e. 11.00% p.a.

Mahabank adhar loan scheme: BPLR-0.75% i.e. 11.50% Personal loan : 14.00% (w.e.f.06.07.09)
34

Micro, small and medium enterprises (MSME): Rate of interest on all advances to MSMEs with effect from 15.02.2010 as under : Credit facility Rate of interest Up to 25 lakhs 9.25% p.a. Above 25 lakhs and up to Rs. 1 crore 10.25% p.a. Above 1 crore to 10 crore 11.25% p.a. The above-mentioned fixed rate of interest are applicable for new sanctions w.e.f.15.02.2010 for first year and from second year onward rate of interest as per risk based pricing (RBP) as given below shall be applicable.

For working capital facilities with or without term loan component : For term loans only : Risk grade as per Rate of interest for Concessional ROI Concessional ROI CRRF units enjoying total for micro for small and fund based limits enterprises medium enterprises above Rs. 10.00 enjoying total fund crores. based limits up to Rs. 10.00 crores. AAA BPLR- 1.25% BPLR-2.25% BPLR-1.75% i.e. i.e.11.00% i.e.10.00% 10.50% AA BPLR-0.75% BPLR-1.75% BPLR-1.25% i.e. i.e. 11.50% i.e. 10.50% 11.00% A BPLR-0.50% BPLR-0.75% BPLR-1.00% i.e. i.e.11.75% i.e. 10.75% 11.25% BBB BPLR+0.25% BPLR-0.75% BPLR-0.25% i.e. i.e. 12.50% i.e. 11.50% 12.00% BB BPLR+0.75% BPLR-0.25% BPLR+0.25% i.e. i.e. 13.00% i.e. 12.00% 12.50% B&C BPLR+1.25% BPLR+0.25% BPLR+0.75% i.e. i.e. 13.50% i.e. 12.50% 13.00%

35

RESERVE BANK OF INDIA HIGHLIGHTS OF MONETORY AND CREDTI POLICIES (1999-2010)

RBI feels that inflation will be contained and recovery process sustained, despite hike. RBI hike repo, reverse repo and CRR by 0.25% in the annual credit and monetary policy 2010-11 on 20th April 2010. RBI releases macroeconomics and monetary developments in 2009-10. RBI hikes repo and reserve rates on 19th March 2010 by 25 bps due to inflationary pressures. Rationale behind repo rate hike of 19th March 2010. Bank lending rates in India are expected to go up after March 2010. RBI raises GDP growth forecast for 2009-10 to 7.5% RBI to maintain an interest rate environment consistent with price stability, financial stability and growth. RBI hikes cash reserve ratio (CRR) by 0.75% keeps band rate, repo rate and reverse repo rate at same level. RBI to monitor inflation and take measures swiftly and effectively, when required. Bank rate, repo rate, reverse repo rate, cash reserve ratio kept unchanged, statutory liquidity ratio restored to 25% The Reserve bank of India will shortly issue Rs.50/- denomination banknotes. Except for the change in the inset letter, the design of these notes to be issued now is similar in all respects to the banknotes in Mahatma Gandhi Series 2005, with additional/ new security features issued on August 24, 2005. All banknotes in the denomination of Rs,.50/- issued by the Bank in the past will continue to be legal tender.

36

 RBI keeps Bank rates, cash reserve ratio (CRR), repo rates, reverse repo rate unchanged in first quarter review of monetary policy 2009-10 announced. RBI to maintain an accommodative monetary stance until definite signs of recovery. RBI cut repo rates by 50bps to encourage banks to lower interest rates. RBI again cut repo rates and CRR to inject additional liquidity of Rs.20, 000 crore. RBI announces further measures to stimulate growth. RBI slashes repo rates by 100 basis points to provide growth stimulus. RBI extends the time period for various liquidity enhancing measures. RBI unveils more measures to enhance Rupee and Forex liquidity and credit. RBI cuts repo rate by 100 basis points to 8.0 per cent. RBI announces further measures for improving domestic and foreign currency liquidity cut CRR by 100 bps, release Rs. 25,000 crore part payment against loan Waiver, increase interest on NRI deposits. Reserve bank of India reduces the cash reserve ratio (CRR) by 150 basis points to 7.50 per cent instead of the 50 basis reduction announced. As a result of this reduction in the CRR, an amount of about Rs 60,000 crore would be released into the system.

RBI has clarified on utilization of the funds borrowed under LAF facility for inter-bank lending.

37

PREAMBLE & OBJECTIVES OF LENDIG POLICY PREAMBLE BROAD OBJECTIVES OF THE LENDING POLICY 2011-2012 STRSTEGIES

38

`PREAMBLE & OBJECTIVES OF LENDIG POLICY PREAMBLE:The lending policy is formed with the purpose of enunciating the trust areas, risk perception; exposure to various segments/sector etc. the policy of the bank aims to providing broad guidelines for handling new credit proposals as well as existing credit portfolio, to evaluate the risk profile of the credit portfolio so as to mitigate the risk, effective and efficient management of the credit portfolio of the bank so as to ensure reasonable return on advances with adequate safety of the funds.

BROAD OBJECTIVES OF THE LENDING POLICY 2011-2012

The main objectives of the lending policy would be 1. Due compliance of all regulatory requirement, such as exposure norms, prudential norms, assets-liability management guidelines, regulatory and other statutory restrictions, other related directives instructions issued by government of India, R.B.I., Bank Board of Directors and the top management. 2. To ensure planned lending and healthy growth of loan portfolio and achieve lending pre-emption & preventing assets-liabilities mismatches while keeping the NPA level to the minimum and improving the yield on advances which is main driver of profit. 3. To induce improvements of systems and procedure and decentralized decision making & have a built flexibility in operations. 4. To have a well-making and diversified loan portfolio with proper pricing policies, dispersed credit risks covering various sectors of the economy and different industries sector vis--vis market forces and competition. 5. Special emphasis on flow of credit towards segments of priority sector i.e. agriculture, SME, retail, export housing finance to individuals and other allied industries. 6. To enlarge client base through aggressive credit marketing and meet the diverse needs of customers through product mix development and innovation. 7. To improve the non-fund business with a view to increase fee based income. 8. To ensure that aggregate risk in loan assets is not allowed to increase by stabilizing and percolating credit risk management system. 9. Timely and adequate flow of credit to meet the genuine needs of existing and prospective borrowers, to fulfil socio-economic obligations and also to meet the genuine credit needs of the clients by ensuring quicker and prompt credit decisions. 10.Comprehend the importance of financial sector reforms and resultant rapid changes in the economy.
39

STRSTEGIES 1.BORROWER INDENTIFIC AND DESIGN OF SPECIALISED PRODUCT: Following the concept of KYC (know your Customer) in letter and spirit. Bank shall endeavour to develop special credit schemes for large and important segments/group of borrowers so as offer an array of credit products targeting emerging and existing market segments, new class of customers.

2.INTENSIVE AND FOCUSSED CREDIT MARKETING: Aggressive credit marketing through specialized branches industrial finance specialized SSI, housing finance foreign exchange branches etc. for securing new business connections relations and high quality loan assets. Tapping new potential in rural and semi-urban areas for growth of credit, abiding by the national priorities as also to aim at reducing inequalities. Marketing shall focus at increasing the clientele including young generation customers. Develop credit marketing team at central office and RO level as also at major branches.

3. TECHINCAL COMPETENCE/CREDIT APPRISAL SKILLS/EFFECTIVE SUPERVISION AND MONEITORING: The bank shall continue to take steps to develop skills of officers to improve appraisal techniques and update knowledge by providing exposure to the nuances of credit management internally as well as through external resources. The database such as prowess of Centre for Monitoring Indian Economy (CMIE), CYGNUS on companies and information on industry for marketing of credit proposals shall be utilized. The assistance of Dun & Bradstreet will also to take to obtain information on foreign buyers. Toning up the existing system for effective supervision and monitoring of the credit portfolio to maintain highest quality of loan assets. Preferred attention to loan assets in high-risk category such as Special Mentioned accounts, restructured accounts etc. in order to avoid their slippage into NPA category.

40

LOANS FIGURES COMPARISON PERIOD BY PERIOD:-

PARTICULARS

31.03.2011

30.09.2011

31.03.2012 36095266.36 106804268 55295416 10312837.65 1897966 48084731 4116358 183008 2654188 924254 1017235 1109864 6310498.68 834831.30 4822

Loans SSI and cottage, artisans, 42118581.52 38197656.77 Handicraft Loans- large industries Housing loan- public industry Education loan- priority Loans- other priority Housing loan- non priority Mahabank reality scheme 133553395 45828762 9078697 1942811 45616020 5349791 1236444516 48894416 10742750 2611065 45668697 459301 286503 3713407 1014894 1152718 965356 27447623.68 881856.30 23968 619717

Consumer loan (consumer durable)620918 Consumer loan (vehicles) Mahabank aadhar loan Personal loan Loan against NSC/KVP/LIC/RBI/Bonds etc. Loans- non priority others Staff housing loans schematic Staff loans- loans wheeler Loans- trade and services schemesOther priority Loan- trade and services- non Priority Total Term Loan 323313787.50 3763484 1105164 1227546 1072088 30829792.68 1196960.30 29777

1574363 3103362444.75 295199906.99

41

Study of lending figures at branch level

As per RBI guidelines, rules and regulation there should be 40%of priority sector lending. But above table shows that the percentage of priority sector is stipulated at 40% at branch level it cannot be possible..Because advances/ lending depends on environment surrounding the bank i.e. potential for particular business. The external environment affect the banks lending advances. It means if as per RBI there should be 40% of priority lending but if the external surrounding of the branch is not proper then branch cannot achieve that particular target. If you analyze above figures it shows that branch cannot meet the particular target of priority lending i.e. 40%.above table of lending figures shows that the priority sector lending are less than the non-priority sector lending.

It means the priority sector lending should be 40% as per RBI then the remaining i.e. Non-priority sector lending should be 60%

But in case of above table if you see priority and non-priority advances you can observed that non-priority advances are more than 60% of the total advances of the branch which actually should be less than or up to 60%. It means branch has not achieved 40% priority target through loan under housing. (As housing loan above 30 lakh are treated as non-priority)

As discussed earlier loan /advances affect because of external surrounding of the branch/bank. Above figures are related with the branch (Pimpode BK Branch)

42

CHAPTER NO V

DATA ANALYSIS AND INTERPRETATION

43

CHAPTER NO V DATA ANALYSIS AND INTERPRETATION

Q. 1) Why are you choose Bank Of Maharashtra to taken a loan? a) Minimum security/Mortgage b) Lower interest rates c) Long banking relations d) Others Table no. 1.1 showing choice of customers. Particular Frequency Minimum security/Mortgage 20 Lower interest rates 15 Long banking relations 10 Others 5 Total 50

Percentage 40% 30% 20% 10% 100%

10%

Frequency
Lower interest rates Others

Minimum security/Mortgage Long banking relations

20%

40%

30%

Table no. 1.1

Interpretation: The above table shows that 40% customers are choice BOM for minimum security, 30% choice for lower rate of interest, 20% choice for long banking relations and only 10% customers are choice for different purposes.

44

Q. 2) In which form you taken a loan? a) Short term loan b) Medium term loan c) Long term loan

Table no.1.2 shows form of loan Particular Frequency Short term loan 30 Medium term loan 5 Long term loan 15 Total 50

Percentage 60% 10% 30% 100%

Frequency
Short term loan Medium term loan Long term loan

30%

10%

60%

Table no. 1.2

Interpretation: The above table interpret that near about 60% customers taken loan for short term,30% taken for medium term and only 10% customer taken loan for long term.

45

Q. 3) What is your occupation or profession? a) Farmer b) Government servant c) Businessmen d) Others Table no. 1.3 showing occupation of customer. Particular Frequency Farmer 30 Government servant 10 Businessmen 6 Others 4 Total 50

Percentage 40% 30% 20% 10% 100%

Frequency
Farmer Government servant Businessmen Others

8% 12%

20%

60%

Table no. 1.3 Interpretation: The above table indicates that 60% customers are farmers, 20% are govt. servant, 12% are businessmen and only 8% are other customers

46

Q. 4) Why are you taken loan from Bank Of Maharashtra? a) Future needs b) Working capital c) Business expansion Table no.1.4 shows purpose of loan. Particular Frequency Future needs 20 Working capital 18 Business expansion 12 Total 50

Percentage 40% 36% 24% 100%

Frequency
Future needs Working capital Business expansion

24% 40%

36%

Table no. 1.4 Interpretation: The above table shows that near about 40% customers taken loan for future needs, 36% taken for working capital and remaining 24% taken loan for business expansion.

47

Q.5) How much amount you want as a loan? a) Up to 5 lakh b) Up to 10 lakh c) Up to 20 lakh d) More than 20 lakh Table no. 1.5 showing requirement of loan to customers. Particular Frequency Up to 5 lakh 25 Up to 10 lakh 13 Up to 20 lakh 8 More than 20 lakh 4 Total 50

Percentage 60% 10% 20% 10% 100%

Frequency
Up to 5 lakh Up to 10 lakh Up to 20 lakh More than 20 lakh

8% 16% 50%

26%

Table no. 1.5 Interpretation: The above table indicates that 50% customer want loan up to 5 lakh, 26% customer wants up to 10 lakh, 16% customer want loan up to 20 lakh and only 8% customers want loan more than 20 lakh.

48

Q.6) If your loan account goes to NPA so bank give any concession to repayment of installment or interest? a) Yes b) No Table no.1.6 shows concession in repayment by bank. Particular Frequency Yes 33 No 17 Total 50

Percentage 66% 34% 100%

Frequency
Yes No

34%

66%

Table no. 1.6

Interpretation: The above table interpret that 66% customers get concession on repayment and 34% customers do not get any concession.

49

Q.7) Which type of installment methods are used to repay to loan amount? a) Monthly b) Quarterly c) Half yearly d) Yearly Table no. 1.7 showing different kinds of installment methods. Particular Frequency Percentage Monthly 6 60% Quarterly 12 10% Half yearly 7 20% Yearly 25 10% Total 50 100%

Frequency
Monthly Qurrterly Half yearly Yearly

12% 50%

24%

14%

Table no. 1.7 Interpretation: The above table shows that bank used yearly method to repay to loan amount to 50% customers, quarterly method for 24% customers, half yearly for 14% customers and monthly for 12% customers.

50

Q.8) In which type of loan you taken from Bank Of Maharashtra? a) Agriculture b) Education c) Home loan d) Others Table no. 1.8 showing purpose of customer to take loan. Particular Frequency Agriculture 25 Education 7 Home loan 10 Others 8 Total 50

Percentage 60% 10% 20% 10% 100%

Frequency
Agriculture Education Home loan Others

16% 50%

20%

14%

Table no. 1.8

Interpretation: The above table indicates that 50% customer take loan for agriculture purpose, 14% customer take for education, 20% customer take loan for Home and 16% customers take loan for other purposes.

51

Q.9)

Which are the financial institutions provide finance to you rather than Bank Of Maharashtra? a) Co-operative bank b) Merchant bank c) Scheduled bank d) Private sector bank Table no. 1.9 showing different financial institute providing finance to customer. Particular Frequency Percentage Co-operative bank 21 60% Merchant bank 16 10% scheduled bank 4 20% Private sector bank 9 10% Total 50 100%

Frequency
Co-operative bank Merchant bank scheduled bank Private sector bank

18% 8% 42%

32%

Table no. 1.9

Interpretation: The above table interpret that 42% customer get other financial services rather than BOM from cooperatives banks,32% customers get from merchant bank,8% customer get from scheduled bank and 18% get finance from private sector bank.

52

Q.10) Are you satisfied with lending policies of Bank of Maharashtra? a) Yes b) No Table no.1.10 showing satisfaction of customers. Particular Frequency Yes 43 No 7 Total 50

Percentage 66% 34% 100%

Frequency
Yes No

14%

86%

Table no.1.10

Interpretation: The above table shows that 86% customers are satisfied with lending policies of BOM and only 14% customers are unsatisfied.

53

CHAPTER NO VI

FINDINGS

54

CHAPTER NO VI FINDINGS
Lending is nothing but source of income for the bank in form of interest. Bank lends their money to general public or business in form of loans and advances. Bank should follow the rules, regulation and guidelines for granting loans and advances. For lending bank prepare their own lending policy with consideration of rules, regulations and guidelines formed by reserve bank of India. Normally bank follows their own lending policy while granting a loans and advances. Lending policy of bank is guidelines for bank for granting loans and advances but some time it is not possible to go with lending policy. It is depend upon the situation. Periodic visits are very essential in lending. Pre as well as post visit should be there before or after granting of loans and advances. NPA is like accidents on road. It means they are not predictable same the NPAs cannot be predictable as there is various factors involved. Only thing is in hand of bank is keep it to minimum extent.

55

CHAPTER NO VII

RECOMMENDATION

:-

56

CHAPTER NO VII

RECOMMENDATION:1) The bank should increase their lending approach towards the agricultural development. 2) The bank should design more proper and less documentation policy. 3) The proper treatment should be give to customer by the staff of the bank. 4) As compare to private sector bank our bank provides less A.T.M. centres. 5) Our interest rates of Deposits are much lower as compare to co-operative banks. 6) Increase the working hours from 10.30 am. To 5 pm so people can access more services. 7) Try to locate the Branches in easily assessable areas. 8) The bank has to provide more effective services to Royal customers and long term customer. 9) Give incentives to staff to motivation them for maintaining long term relationship with customers. 10) Develop the infrastructure of branch to provide more services to customer.

57

CHAPTR VIII

CONCLUSION

58

CHAPTR VIII CONCLUSION:Banking in India is from long time back. But that time banking and todays banking has huge difference. Because there are many developments in banking sectors. Internet banking, core banking these is new face of todays banking system. Only keeping money safe in the bank is not the business, banks expand their business time to time with the era of technology. Giving loan is one of the important functions of the bank. Lending is nothing but granting of loans and advances to general public or business. We can say sanctioning loan is a major source of finance to bank. It means if the bank has more lenders then banks ultimately the bank accepting more deposits in large amount of income i.e. interest. For smooth functioning of sanctioning loans banks prepare their own policy with consideration of rules, regulations and guidelines of RBI. We studied different lending policies of bank of Maharashtra but customers behavior is depend upon the interest rates of banks given to loans.

59

BIBLIOGRAPHY:Books:-

Lending policy of bank of Maharashtra-Broucher. Financial Markets and Institution L.M. Bhole. Financial Markets and Services-Gordon and Natarajan Research Methodolgy Dr.C.R.Kothari.

Websites:www.google.com www.rbi.org.in www.bankofmaharastra.com

60

ANNEXURE
Q. 1) Why are you choice Bank Of Maharashtra to taken a loan? a) Minimum security/Mortgage b) Lower interest rates c) Long banking relations d) Others Q. 2) In which form you taken a loan? a) Short term loan b) Medium term loan c) Long term loan Q. 3) What is your occupation or profession? a) Farmer b) Government servant c) Businessmen d) Others Q. 4) Why are you taken loan from Bank Of Maharashtra? a) Future needs b) Working capital c) Business expansion Q.5) How much amount you want as a loan? a) Up to 5 lakh b) Up to 10 lakh c) Up to 20 lakh d) More than 20 lakh

Q.6) If your loan account goes to NPA so bank give any concession to repayment of installment or interest? a) Yes b) No Q.7) Which type of installment methods are used to repay to loan amount? a) Monthly b) Quarterly c) Half yearly d) Yearly Q.8) In which type of loan you taken from Bank Of Maharashtra? a) Agriculture b) Education
61

c) Home loan d) Others Q.9) Which are the financial institutions provide finance to you rather than Bank Of Maharashtra? a) Co-operative bank b) Merchant bank c) Scheduled bank d) Private sector bank Q.10) Are you satisfied with lending policies of Bank Of Maharashtra? a) Yes b) No

62