A STUDY ON CREDIT MANAGEMENT

WITH REFERENCE TO CANARA BANK

A Proj ect Report Submi t t e d to Bangal or e
Uni versi t y in parti al fulfill me nt for the
award of the Degr e e of
MASTER OF BUSINESS ADMINISTRATION.
2005-2006
Submitted by:
ALIASGER.
Reg. No. 04ACCM6002
Under the guidance of
Mr. Anirban Ghatak M.B.A

AL -AMEEN INSTITUTE OF MANAGEMENT
STUDIES
Affili at e d to Bangal or e Uni versi t y,
Hosur Road, Bangal or e 56002 7

TABLE OF CONTENTS
CHAPT
ER
List of Tables
List of Graphs
PARTICULARS
PAG
E NO
I INTRODUCTION 1
1.1 OBJECTIVE OF FINANCE 3
1.2 INTRO!CTION TO FINANCIAL
"ANAGE"ENT
#
1.3 OBJECTIVE OF FINANCIAL
"ANAGE"ENT
$
1.# CLA%%IFICATION OF CREIT 11
1.$ LENING &RINCI&LE% 13
1.' RI%( A%%E%%"ENT AN
"ANAGE"ENT
1)
1.) CREIT "ANAG"ENTIN INIA 1*
1.+ CLA%%IFICATION OF A%%ET% FOR
"A(ING &ROVI%ION%
2#
%TR!CT!RE OF BAN(ING %,%TE"
IN INIA
2+
II RESEARCH DESIGN 2*
2.2 TITLE OF T-E %T!, 2*
2.3 %TATE"ENT OF T- E &ROBLE" 2*
2.# %CO&E OF T-E %T!, 2*
2.$ OBJECTIVE OF T-E %T!, 3.
2.' LI"ITATION OF T-E %T!, 3.
III COMPANY PROFILE 32

IV INDUSTRY PROFILE 44
#.1 INTRO!CTION TO BAN(ING
IN!%TR,
##
#.2 CLA%%IFICATION OF BAN(% #+
V DATA ANALYSIS AND
INTERPRETATION
$#
$.1 R!LE% OF CANARA BAN( FOR
%EC!RE AVANCE%
$)
$.2 -,&OT-ECATION '+
$.3 IFFERENT %EG"ENT OF LOAN% ).
$.# LENING RI%( OF T-E BAN( ++
$.$ INVE%T"ENT &ORTFOLIO OF T-E
BAN(
+*
$.' INVE%T"ENT &ORTFOLIO OF
CANARA BAN( O!T%IE INIA
*.
$.) E&O%IT TO CREIT RATIO *1
$.* COR&ORATE GRO/T- OF T-E
BAN(
*3
VI SUMMARY OF FINDI NGS 96
VII SUGGESTIONS AND
RECOMMENDATI ONS
98
VIII ANNEXURE 99
IX BIBLIOGRAPHY 100

INTRODUC TI ON T O
INTRODUC TI ON T O

FINANCE
FINANCE
Finance is a vast area of facts, principles and teories
dealin! "it vario#s "a$s of raisin! and #sin! it %$ individ#als and
oters& It deals "it o" individ#als and co'panies divide teir
%#siness inco'e %et"een cons#'ption and o" to coose fro'
a'on! te availa%le invest'ent opport#nities and o" te$ raise
'one$ for increased cons#'ption or invest'ent&
It also enco'passes te st#d$ of financial (ar)ets,
instit#tions and activities of Govern'ent, "it stress on tose
aspects relatin! to financial decisions of individ#als and co'panies&
In fact finance is so indispensa%le, tat it is ri!tl$ said tat
Finance is te Life *lood of an Enterprise&
Finance acts, as a 'ainsprin! in a "atc, "ere "ito#t
te 'ainsprin! te "atc is of no #se, tat is 'ainsprin! is a '#st
for te perfect f#nctionin! of te "atc& Finance is ver$ i'portant
for te enterprise and "ito#t it, te enterprise cannot f#nction
properl$& +ito#t ade,#ate finance no enterprise can f#lfill its
desired o%-ectives as planned&
.Finance/ is one of te %asic fo#ndations for all )inds of
econo'ic activities& Finance is re!arded as te 'ain )e$ or (aster

)e$ "ic provides access to all oter so#rces e'plo$ed in te
'an#fact#rin! and 'ercandisin! activities& Ho"ever it is tr#e tat
'one$ '#ltiplies 'ore 'one$ onl$ "en it is properl$ 'ana!ed and
tis can %e acieved tro#! proper plannin! and decision 'a)in!&
0 Finance0 is te 'ana!e'ent of te 'onetar$ affairs of a
co'pan$& It incl#des deter'inin! "at as to %e paid for raisin!
te 'one$ on te %est ter's availa%le and devotin! availa%le f#nds
to te %est #ses&
0 Financin!0 is te process of or!ani1in! te flo" of f#nds
so tat a %#siness can carr$ o#t its o%-ectives in te 'ost efficient
'anner and 'eet its o%li!ations as te$ fall d#e&
0 Finance0 is te 'ana!e'ent of te 'onetar$ affairs of a
co'pan$& It incl#des deter'inin! "at as to %e paid for raisin!
te 'one$ on te %est ter's availa%le and devotin! availa%le f#nds
to te %est #ses&
1.1 Objectives of Finance 2 3
Te 'ain o%-ective of finance is to arran!e as '#c as f#nds
for te %#siness enterprise as re,#ired fro' ti'e to ti'e& Te oter

o%-ectives of finance are as follo"s2
4& Acquiring sufficient funds2
Tis o%-ective of finance is to f#lfill te financial needs of an
enterprise and to find o#t s#ita%le so#rces to raise te f#nds& Te
f#nds co#ld %e raised fro' Lon!3ter' so#rces li)e Sare Capital,
5e%ent#res, Ter' Loans and O"ner f#nds and fro' sort ter'
so#rces li)e sot ter' invest'ent, loans and advances etc&
6& Increasing Profitability2
Is one of te i'portant o%-ective of finance& Tis o%-ective
ai's at increasin! profita%ilit$ of te concern& To increase
profita%ilit$ s#fficient f#nds "ill ave to %e invested& Te finance
f#nction so#ld %e so planned tat te concern neiter s#ffers fro'
inade,#ac$ of f#nds nor s#rpl#s of f#nds ten re,#ired& Te cost of
ac,#irin! f#nds so#ld %e s#c tat it res#lts in 'a7i'#' ret#rns&
8& Proper Utilization of Funds2
Effective #tili1ation of f#nds is a ver$ i'portant f#nction and
it so#ld %e a "a$ tat 'a7i'#' %enefits is derived fro' te'& Te
ret#rns fro' teir #se so#ld %e 'ore ten teir cost and it so#ld
%e ens#red tat f#nds do not re'ain idle at an$ point of ti'e&

9& Maximizing Concern`s Value2
It is stated tat concern/s val#e is directl$ lin)ed "it its
profita%ilit$& *esides profits, te t$pe of so#rces #sed for raisin!
f#nds, te cost of f#nds, te condition of 'one$ 'ar)et, te de'and
of prod#cts are so'e oter considerations "ic infl#ences a fir'/s
val#e&
1.2 Introduction to Financial Management
Financial (ana!e'ent is tat 'ana!erial activit$ "ic
is concerned "it te plannin! and controllin! of te fir'/s
financial reso#rces& Financial (ana!e'ent is 'ainl$ concerned "it
te proper 'ana!e'ent of f#nds& Te finance 'ana!er '#st see tat
te f#nds are proc#red in a 'anner tat te ris) cost and control
considerations are properl$ %alanced in a !iven sit#ation and tere
is opti'#' #tili1ation of f#nds&
As a separate activit$ or a discipline, it is of recent
ori!in& It "as a part of econo'ics till 4:;<& Onl$ in te %e!innin! of
te 6<
t
Cent#r$, did corporate finance !ot reco!nition& It "as
identified as a separate f#nction of te %#siness activit$& Te
s#%-ect 'atter of financial 'ana!e'ent deals "it te 'ana!erial
activit$ "ic is concerned "it te fir'/s financial reso#rces tat
ave to %e properl$ allocated to acieve te %est #se of f#nds
availa%le&
It, terefore, deals "it sit#ations, "ic call for
selection of specific assets and specific lia%ilities as also "it te

pro%le's of si1e and !ro"t of an enterprise& An anal$sis of tese
decisions is %ased #pon e7pected inflo"s and o#tflo"s of f#nds and
teir effects on te stated 'ana!erial o%-ectives&
1.3 Objective of Financial Management
Financial (ana!e'ent is concerned "it proc#re'ent and #se of
f#nds& Its 'ain ai' is to #se %#siness f#nds in s#c a "a$ tat te
earnin! are 'a7i'i1ed tat is to 'a7i'i1e te o"ner/s econo'ic
"elfare& Tese o%-ectives can %e acieved %$2
1) Profit Maximization:
A %#siness %ein! an econo'ic instit#tion '#st earn profits to
cover its cost and provide f#nds for !ro"t& T#s, profit is a
'eas#re of efficienc$ of a %#siness enterprise and also serve as a
protection a!ainst ris)s "ic cannot %e ens#red& Price s$ste's is
te 'ost i'portant 'ecaniser of a 'ar)et econo'$ indicatin! "at
!oods and servicin! te societ$ "ants& Goods and servicin! in !reat
de'and co''and i!er prices, "ic in t#rn res#lts in i!
profits& In case of stiff co'petition, tere 'a$ %e no de'and or less
de'and in te 'ar)et and 'a$ res#lt in te fall in prices, "ic
'eans less or no profits ence, prices are deter'ined %$ de'and
and s#ppl$ conditions, as "ell as co'petitive forces as te$ !#ide
te allocation of reso#rces for vario#s prod#ctive activit$&
Te ar!#'ent "ic favo#rs profit 'a7i'i1ation is as follo"s2

Profita%ilit$ elps in 'eas#rin! te efficienc$ and econo'ic
prosperit$ of te %#siness&
Profits are 'ain so#rce for te !ro"t and develop'ent of te
%#siness&
Profits 'a7i'i1ation is also essential for f#lfillin! te socials
!oals "ic in t#rn, elps in 'a7i'i1in! te socio3econo'ic
!oals&
Profit 'a7i'i1ation o%-ect as, o"ever, %een critici1ed in recent
$ears& It is a!reed tis o%-ective ass#'es perfect co'petition and in
te face of i'perfect co''on 'ar)ets, it cannot %e a le!iti'ate
o%-ective of te fir'& In ne" %#siness environ'ent, onl$ profits
'a7i'i1ation is re!arded as #nrealistic, diffic#lt, inappropriate and
i''oral&
It is also feared tat te profit 'a7i'i1ation %eavio#r in 'ar)et
econo'$ 'a$ tend to prod#ce !oods and services tat are "astef#l
and #nnecessar$ fro' te societ$/s point of vie" and also 'a$ tend
to ine,#alit$ in inco'e and "ealt& Apart fro' tis, profit
'a7i'i1ation fails to serve as an operational criterion for
'a7i'i1in! te o"ner/s econo'ic "elfare&
It s#ffers for' te follo"in! li'itations2
4& It is a va!#e concept&
6& It i!nores te ti'in! of ret#rns&
8& It i!nores ris)&
9& It is an o#t3dated o%-ective&

2) Wealth Maximization:
(a7i'i1ation of "ealt 'eans 'a7i'i1ation of te "ealt of
te co'pan$ tat is te net present "ort of te co'pan$, over te
lon! r#n& It is an appropriate o%-ective of an enterprise& In fact, it is
asserted to %e te sin!le s#%stit#te for a stoc) older/s #tilit$&
+en a fir' 'a7i'i1es te stoc)older/s "ealt, te individ#al
stoc)older can #tili1e tis "ealt to 'a7i'i1e is individ#al
#tilit$& T#s "ealt 'a7i'i1ation 'eans 'a7i'i1in! te o"ner/s
econo'ic "elfare&
Advantages of Wealth Maximization2
a= Te concept of "ealt 'a7i'i1ation is ver$ clear and not
va!#e& It 'eans te present val#e of te f#t#re cas flo"s or
cas %enefits arisin! fro' a financial action 'in#s te cost of
invest'ents on te financial action&
%= Te "ealt 'a7i'i1ation concept considers te ti'e val#e of
'one$& It reco!ni1es te fact tat a r#pee received toda$ as
'ore val#e tat a r#pee received after a $ear, and so, te cas
flo"s or cas %enefits fro' a pro-ect in different $ears are not
e,#al in val#e&
c= Tis concept ta)es into acco#nt even te dividend polic$ of
te co'pan$& Tat is, tis concept allo"s te dividend polic$
of te co'pan$ to ave its effect on te 'ar)et val#e of te

e,#it$ sares&
d= Te o%-ective of "ealt 'a7i'i1ation is in total a!ree'ent
"it te o%-ective of 'a7i'i1in! te econo'ic "elfare of te
sareolders of te co'pan$&
Limitations of Wealth Maximization 2
a= (a7i'i1ation of "ealt is s#%-ect to social responsi%ilities of
te fir'& Te fir' cannot i!nore social responsi%ilities >i&e&,
te protection of te interests of te cons#'ers, la%o#rers and
te societ$ at lar!e&=
%= (a7i'i1ation of "ealt is also s#%-ect to Govern'ent
restraints& Te vario#s stat#tor$ provisions, enacted %$ te
Govern'ent to protect te interests of te societ$ red#ce te
freedo' of a %#siness fir' in its efforts to 'a7i'i1e "ealt&
Introduction to Credit Management
Advances pla$ an i'portant part in te !ross earnin!s
and net profit of %an)s& Te %asic f#nction of a %an) is "eter it is
a co''ercial %an) or an$ oter credit instit#tion, is to ena%le
individ#als and %#siness enterprises to p#rcase !oods and services&
Cons#'ers de'and credit to ac,#ire !oods for "ic te$ pa$ in
f#t#re& 5e'and for credit %$ %#siness'an arises %eca#se of ti'e
cons#'in! nat#re of te prod#ctive and distri%#tion process&

Of all te f#nctions of 'odern %an)in!, lendin! "it or "ito#t
sec#rit$ is %$ far te 'ost i'portant f#nctions& Loans and Advances
constit#te lendin!& Loans and Advances for' te 'a-or %#siness
activit$ of te %an), te$ need to %e li,#id and easil$ reali1a%le as
te %an) is o%li!ated to repa$ te depositors as and "en te$ are
d#e for pa$'ent and 'a-or part of *an)/s inco'e is earned fro'
interest earned on Advances& Te proper 'ana!e'ent of Loans and
Advances is )no"n as credit 'ana!e'ent& Terefore credit
'ana!e'ent can %e defined as ?(ana!e'ent of Loans and
Advances in *an)s@&
Funds for Lending
A St#d$ of *alance seet reveals tat te 'ain so#rces of f#nds
availa%le for lendin! andA or invest'ent are2
4& Paid #p capital&
6& Reserves&
8& 5eposits and oter Acco#nts&
9& *orro"in! fro' te R*I&
B& Undistri%#ted profit&
C& Participation Certificates&
D& Refinance loan fro' te ind#strial develop'ent *an),
A!ric#lt#ral refinance and 5evelop'ent, etc&
:& Oter Financial instit#tes&
1.4 Classification of Credit

*an) credit 'a$ %e classified accordin! to sec#rit$, 'at#rit$,
'etod of pa$'ent, ori!in and p#rpose& Te *an) advances in te
co#ntr$ are classified into2
a= Sec#red or #nsec#red&
%= Cas Credit&
c= Over 5raft&
d= 5e'and Loans&
e= Ter' Loans&
f= *ills P#rcase&
!= *ills 5isco#nted&
= Cons#'er Credit&
The Three C`s of Credit
(#t#al confidence and clear #nderstandin! are te %asis of
!ood lendin!& Eno"in! te %orro"er/s 'eans, )no"in! i', vis3F3
vis is %#siness are ver$ i'portant& (en %eind te advances needs
to %e te !#idin! principle to te lendin! %an)er&
It/s a co'%ination of tree C/s&
4= Caracter&
6= Capacit$&
8= Capital&
Character 2
Te 'ost i'portant tas) in credit anal$sis is anal$sis of

caracter of te person, as its predo'inantl$ depends on te correct
-#d!e'ent of is Capacit$& A Good %orro"er is e7pected to
'aintain a code of in disclosin! is %#siness affairs to te %an)er&
Tis 'a$ !o %e$ond is *alance Seet and Profit and Loss acco#nt&
Anoter code of cond#ct relates to te end #se of f#nds %orro"ed
%$ te %orro"er tat is #tili1ation of %orro"ed f#nds for te p#rpose
for "ic te$ "ere lent&
Capacity 2
Te Capacit$ to ono#r co''it'ent depends #pon te a%ilit$
of te %#siness to !enerate cas flo"s& To esti'ate capacit$ of a
%orro"er, te lender so#ld 'a)e a detailed cas flo" anal$sis of
te %#siness&
Capital 2
Te capital of te %orro"er inf#ses confidence in is
creditors& F#rter, it ena%les te %orro"er to 'eet te losses of is
%#siness i'self "ito#t siftin! te' to is creditors& Te capital
of te %orro"er refers to is o"n f#nds invested in is %#siness&
Terefore, if te %orro"er as s#fficient f#nds of is o"n, e "ill
%e considered eli!i%le for a %an) advance&
1.6 Lending Principles 2

4& Safet$&
6& Li,#idit$&
8& Profita%ilit$&
9& P#rpose&
Safety 2 3
Safet$ is anoter i'portant principle of so#nd lendin!& Safet$
of advance 'eans tat %orro"er is in a position to repa$ te loan
"it interest accordin! to te ter's of lendin!& Te repa$'ent
depends on te capacit$ and "illin!ness to repa$& If te %orro"er
invests te 'one$ in an #nprod#ctive or spec#lative vent#re or if
te %orro"er i'self is disonest, te advance "o#ld %e in
-eopard$&
Liquidity 2
It is not -#st s#fficient if advances is safe& (one$ so#ld co'e
%ac) on de'and or in accordance "it te repa$'ent pro!ra''e&
Tis is possi%le onl$ "en te %orro"er as #sed te f#nds for te
p#rpose for "ic e as %orro"ed&
Profitability:
*an) '#st deplo$ te f#nds in a profita%le "a$ and so#ld
'a7i'i1e ret#rns, to#! profita%ilit$ is ver$ i'portant& For te
sa)e of i!er profita%ilit$ te %an)er so#ld not !rant advances to
#nso#nd part$, to#! te$ are read$ to pa$ i!er rate of interest&

Purpose :
Advances can %e safe and li,#id onl$ "en it is !ranted for a
prod#ctive p#rpose and #sed onl$ for te p#rpose it is %orro"ed&
Advances per'itted for spec#lative p#rpose, even if te %orro"er is
read$ to pa$ i!er interest is a!ainst te principle of %an) lendin!&
Lending Policy:
Te principle of a loan polic$ is to arrive at trade off %et"een
ret#rns and ris)s "it te %roader fra'e"or) of te strate!$ of te
%an)& Infact, loan polic$ so#ld %e s#c as to 'a7i'i1e ret#rns
"ile 'ini'i1in! ris)& In order to ens#re capital !ro"t and profit,
te %an) as to enco#ra!e s#%stantiall$ non3f#nded %#siness&
4& Portfolio Consideration2
A!!re!ate deplo$'ent of f#nds as to %e done in s#c a
'anner tat te s#dden can!e in environ'ent so#ld not affect te
f#nds adversel$&
Te O%-ect of an$ %an) is to 'a7i'i1e safet$ of f#nds and $ield
tere on in te process reac accepta%le standard for deplo$'ent of
f#nds )eepin! te lon!3ran!e vie"&
6& (ar)etin! of f#nds2
An$ approac to lendin! as to %e done fro' te point of vie"

of acievin! desira%le ends& Lendin! so#ld %e done after decidin!
on ne" activities, areas and t$pe of %orro"ers&
8& Ter's and conditions2
Te ter's and condition so#ld create a sense of confidence
a'on! te %orro"er and te lender& Te ter's and condition ave to
%e accepta%le and advanta!eo#s, enco'passin! te d#ties of te
lender and te o%li!ation of te %orro"er, and '#st also disclose,
financial infor'ation of %orro"er, and te infor'ation '#st %e
directed to"ards te end #se of f#nds tat is #tili1ation of %orro"ed
f#nds for te p#rpose for "ic it is o%tained&
9& F#nd Position2
Te lendin! polic$ of a %an) depends on te 'ar)et
conditions, "ic reflects on te f#nds deplo$'ent opport#nities
availa%le to te %an) %esides lendin! over a period of ti'e and
deposit 'o%ili1ation possi%ilities d#rin! tat period&
B& Use of f#nds %$ te *orro"er and Sec#rit$ Availa%le2
(ostl$ lendin! is done a!ainst te sec#rit$ of so'e sort of te
oter in te for' of tan!i%le assets provided %$ te %orro"er&
Risk and Banking 2
Ris) "as till recentl$ a concept alien to Indian *an)s& Ris)

(ana!e'ent "as never teir do'ain %eca#se ret#rns ave never
%een teir 'a-or concern& Acco#ntin! policies did te -o% for te',
%#t te sit#ation as no" transfor'ed %e$ond reco!nition&
Pr#dential acco#ntin! standards, capital ade,#ac$, inco'e
reco!nition and assets classification nor's, provisionin!
re,#ire'ent on %ad de%ts and depreciation ca#sed %$ 'ar)in! a part
of te sec#rities invest'ents portfolio to 'ar)et val#e created
a"areness to 'ana!e credit ris) effectivel$ tro#! vario#s
'eas#res&
*an)s no" enco#nter a "ole arra$ of ris)s, pro'inent a'on! tese
%ein! credit ris), 'ar)et ris)3 li,#idit$ ris), interest rate ris), and
c#rrenc$ ris) and interest rate ris) are relativel$ ne" for te Indian
*an)s&
Risk Assessment and Management:
Ris) is inerent in %an)in! and for tat 'atter in ever$
%#siness& Te Tas) of asset and lia%ilit$ 'ana!e'ent to#! cannot
%e avoided it so#ld %e as lo" as possi%le and 'ana!e it and )eep
different t$pes of ris)s "it an accepta%le level& Te *an) is
e7posed to different ris)s&
To#! ris) in %#siness cannot %e avoided te %an)er is doin! is
%#siness of %an)in! is e7pected to ta)e 'ini'#' calc#lated ris)&
4& Credit Ris)
6& Li,#idit$ Ris)

8& Interest Rate Ris)
9& C#rrenc$ Ris)
Credit Risk 2
Credit ris) refers to te ris) of defa#lt on loans and advances
!ranted %$ %an)s "en ti'el$ repa$'ent of principle and interest or
%ot is treatened d#e to ina%ilit$ or #n"illin!ness of te %orro"er&
Liquidity Risk:
Li,#idit$ ris) refers to te ris) of 'eetin! te 'at#rin!
lia%ilities and not findin! eno#! 'at#rin! assets to 'eet tese
lia%ilities& Tis ris) arises %eca#se %an) 'o%ili1es deposits for
different 'at#rities in te for' of de'and and ti'e deposits, and
loc)s te' %$ lendin! of different 'at#rities& Li,#idit$ !ap also
arises d#e to #npredicta%ilit$ of deposits "itdra"als&
Interest Rate Risk:
Refers to te ris) of can!es in interest rates s#%se,#ent to
creation of te assets and lia%ilities at fi7ed rates& Freedo' is !iven
to te co3operative %an)s to fi7 #p rate of interest on advances,
re!ional r#ral %an)s and co''ercial %an)s, "ic te$ need to do
dependin! on te cost of teir deposit&
Currency Risk:

Tis ris) is a res#lt of forei!n c#rrenc$ e7pos#re and can!es
in te rate of e7can!e of a !iven c#rrenc$ in ter's of e7can!e for
a !iven c#rrenc$ in ter's of %ot te do'estic and oter forei!n
c#rrencies& A %an) en!a!ed in international 'ar)et operations is
e7posed to s#c ris)s&
1.8 Credit Management in India
Ho" is credit 'ana!ed in IndiaG
Tese %road areas are
a= Credit Polic$&
%= Credit Anal$sis&
c= Control of acco#nt receiva%le&
A. Credit Policy
a= Her$ fe" co'panies ave atte'pted a s$ste'atic
artic#lation and for'#lation of teir credit polic$&
Generall$ credit as ens#red as #nstated conventions&
%= Te #nderta)in! credit pilosop$ is so'eti'es stated in
!eneral to %e of '#c relevance in !#idin! credit decision
"it te state'ent 'ade %$ a co'pan$& O#r credit polic$
see)s to 'a7i'i1e sales !ro"t consistent "it an
accepta%le de!ree of ris)&
c= Repa$'ent sced#le offered %$ %an)s for credits e7tended&

d= Te practice of offerin! cas disco#nt for pro'pt pa$'ent
is not ver$ co''on&
*& Credit Analysis 2
a= Prospective c#sto'ers !enerall$ re,#ire to f#rnis t"o or
tree trade reference&
%= Te financial state'ents of te prospective c#sto'ers are, in
!eneral not anal$1ed in detail&
c= Independent credit ratin! a!encies are conspic#o#s %$ teir
a%sence& Creditors o%tain fairl$ relia%le infor'ation a%o#t te
credit standin! of prospective c#sto'ers fro' teir a!encies&
d= So'e of te ,#estions creditors often as)s a%o#t prospective
c#sto'ers %efore e7tendin! credit are
+at is cas credit li'it of te c#sto'erG
Ho" lon! as te c#sto'er %een in te %#sinessG
e= Te lar!er %#siness fir's #s#all$ classif$ teir c#sto'ers
#nder different cate!ories&
Co'pletel$ relia%le c#sto'er&
Hi!l$ relia%le c#sto'er&
Sli!tl$ relia%le c#sto'er&
5o#%t f#ll C#sto'er&

C& Control of Receivables 2
a= (aintainin! and controllin! of acco#nt receiva%le is neiter
toro#! nor s$ste'atic, ver$ fe" fir's "ell 'aintained
acco#nts&
%= 5efined s$ste's of 'onitorin! and controllin! acco#nt
receiva%le&
c= Te 'eas#res co''onl$ e'plo$ed for -#d!in! "eter
acco#nts receiva%les are in control are2
*ad de%ts losses&
Avera!e collection period&
A!ein! sced#le&
Credit Investigation:
After avin! o%tained te credit infor'ation te fir' "ill set
an idea re!ardin! te 'atter "ic so#ld %e f#rter investi!ated&
Te factors tat affect te e7tent and notice credit investi!ation are2
4& Te t$pe of c#sto'er/s "eter ne" or e7istin!&
6& Te c#sto'er/s %#siness line, %ac)!ro#nd and relate trade ris)&
8& Te nat#re of te prod#ct perisa%le or seasona%le&
9& Si1e of c#sto'er/s order and inspected f#rter vol#'e %#siness

"it i'&
B& Co'pan$/s credit polic$&
A Co'preensive and 'eanin!f#l investi!ation can %e carried o#t
onl$ "en ade,#ate dates are availa%le& Te dates so#ld %e
pro'ptl$ !atered& Unnecessar$ dela$ in respondin! to te
c#sto'er/s re,#est can prove to %e detri'ental& Te c#sto'er can
%e directl$ approaced to provide infor'ation a%o#t i'self&
Anoter "a$ to investi!ate te credit "ortiness of te c#sto'er
can %e to e7a'ine is financial state'ent of previo#s tree3fo#r
$ears&
Asset-Liability Management (ALM)
Asset Lia%ilit$ (ana!e'ent >AL(= is a tool tat ena%les %an)
'ana!e'ent to ta)e %#siness decision in a 'ore infor'ed
fra'e"or)& Te AL( Anal$sis infor's te 'ana!e'ent te c#rrent
'ar)etin! ris) profile of te %an) and te i'pact tat vario#s
alternate %#siness decisions "o#ld ave on f#t#re ris) profile& Te
(ana!e'ent can, ten coose te %est co#rse of action&
Scrutiny of Credit Portfolio- Application of Non-Perfoming
Assets recommended by Narasimham committee
Te Govern'ent ad appointed a co''ittee #nder te
cair'ansip of Sri (& Narasi'a' >Narasi'a' Co''ittee= to

e7a'ine te 'atter relatin! to proper s$ste's of reco!nition of
inco'e, classification of assets and provision of %ad de%ts& Te
Co''ittee reco''ended tat a polic$ of inco'e reco!nition, assets
classification and provisionin! so#ld %e o%-ective and %ased on
record of recover$ onl$ rater tan on an$ oter considerations& Te
classification of assets as to %e done on te %asis of o%-ective
criteria, "ic "o#ld ens#re a #nifor' and consistent application of
nor's&
Income Recognition
Accordin! to te Narasi'a' co''ittee, inco'e fro' NPA
so#ld not %e reco!ni1ed on accr#al %asis %#t so#ld %e %oo)ed as
inco'e onl$ "en it is act#all$ received& Te co''ittee
reco''endations ave %een e7a'ined and it as %een decide tat a,
NPA so#ld %e defined as credit facilit$ or an advance, as on te
date of *alance Seet, in respect of "ic interest as re'ained
#npaid for a period of 9 ,#arters d#rin! te $ear endin! 84
s t
(arc
4;;8, for tree ,#arters d#rin! te $ear endin! 84
st
(arc 4;;9 and
for t"o ,#arters d#rin! te $ear endin! 84
s t
(arc 4;;B and
on"ards&
1.9 Classifications of Assets for making provisions
Te co''ittee as reco''ended tat of te p#rpose of 'a)in!
provisions for %ad and do#%tf#l de%ts, loans and advances of te

%an)s so#ld %e classified to te follo"in! %road !ro#ps&
1. Standard Assets
It is not a non3perfor'in! asset >NPA=& It does not disclose an$
pro%le's, "ic does not carr$ 'ore ten nor'al ris) attaced to
te %#siness&
2. Sub-Standard Assets:
It is an assets, "ic as re'ained as non3perfor'in! asset for
periods not e7ceedin! t"o $ears& In oter "ords s#c asset "ill
ave "ell defined credit "ea)ness tat -eopardi1e te li,#idation of
te de%t and are caracteri1ed %$ te distinct possi%ilit$ tat te
%an) "ill s#stain so'e loss if deficiencies are not corrected&
8& Doubtful Assets 2
An asset, "ic as re'ained non3perfor'in! asset for a period
e7ceedin! t"o $ears, "ill %e treated as a do#%tf#l asset&
A loan classified as do#%tf#l as all "ea)ness inerent is tat
classified as s#%3standard "it te added caracteristics tat te
"ea)ness 'a)e collection or li,#idation is f#ll&
9& Loss Assets 2
A loss is one "ere te loss as %een identified %$ te %an)er or %$

internal or e7ternal a#ditors or %$ te co3operation depart'ent or %$
te R*I inspections %#t te a'o#nt as not %een "ritten off, "oll$
or partl$&
Provision for loans and advances
Ta)in! into acco#nt te ti'e la! %et"een an acco#nt %eco'in!
do#%tf#l, of recover$, its reco!nition as s#c, te reali1ation of te
sec#rit$ and te erosion over ti'e in te val#e of sec#rit$ car!ed
to te %an)s, it as %een decided tat te %an)s so#ld 'a)e
provision a!ainst loss assets, do#%tf#l assets and s#%3standard
assets, at least to te e7tent of te a'o#nt indicated %elo"&
1. Loss Assets
Te entire assets so#ld %e "ritten off if te assets are per'itted to
re'ain in te %oo)s for an$ reason, 4<<I of te o#tstandin! so#ld
%e provided for&
2. Doubtful Asset:
a= 4<<I of te e7tent to "ic te advances is not covered %$
sec#rit$&
%= A%ove, dependin! #pon te period for "ic te asset as
re'ained do#%tf#l, 6<I3B<I of te sec#red portion&

Period for "ic te advances as %een
considered as do#%tf#l
I of Provision
Up to One Jear 6<
One to Tree $ears 8<
(ore tan Tree $ears B<
3. Sub-Standard Assets:
A !eneral provision of 4<I of total o#tstandin!s&
4. Standard Assets:
<&6BI on Standard Assets&
Structure of Banking system in India
Reserve Bank of India


Title of the study
Te title of te st#d$ is ?Credit (ana!e'ent at Canara *an)@&
Statement of the problem
Co''ercial *an)s
State *an) of India and
State Associated *an)s
Nationali1ed *an)s
Re!ional R#ral *an)s
Forei!n *an)s etc
NABARD
Pri'ar$ Land
5evelop'en
t *an)/s
*rances of State Land
5evelop'en
t *an)/s
State Co3
operative
*an)/s
State Land
5evelop'ent
*an)/s
5istrict
Central
Co3operative
Central Land
5evelop'ent
Co3operative
Ur%an
Co3operative
*an)/s

Te 'ost i'portant f#nction of 'odern %an)in! is te
lendin! of f#nds& Te Stren!t of %an)in! s$ste' t#s pri'aril$
depends #pon te so#ndness of its advances& *efore !rantin! credit
te %an) as to loo) at te credit "ortiness of te %orro"er K
%eca#se it carries a certain de!ree of ris)& T#s a detailed st#d$ and
anal$sis of te policies, proced#re and ter's follo"ed %$ Canara
*an) "ile 'a)in! advances is re,#ired to ens#re tat te %an)
does not face an$ diffic#lt$ in recoverin! te loan&
Methodology
*ot pri'ar$ and secondar$ data as %een collected&
Pri'ar$ data as %een collected fro' disc#ssions eld "it officials
of te %an)& Te secondar$ data as %een collected fro' te Ann#al
Reports and (ana!e'ent reports of te past 8 $ears&
Objectives of the study
4& Te o%-ect of tis st#d$ is to anal$se te credit portfolio
follo"ed %$ te %an)&
6& To st#d$ in detail te practical approac follo"ed in !rantin!
vario#s t$pes of advances to cater to te needs of priorit$
sector %orro"ers and also to te Trade, Ind#str$ and
Co''erce&
8& To st#d$ te li,#idit$ pattern of te %an) after follo"in! te
le!al re,#ire'ents of 'aintainin! stat#tor$ li,#idit$ ratio and

cas reserve ratio&
9& To st#d$ te invest'ent pattern of te %an)&
Scope of the study
Tis st#d$ i!li!ts te policies, proced#res and practices of a
Nationalised *an)&
Tools for data Collection
Appropriate statistical tools ave %een 'ade #se of
"erever necessar$& Te data "as collected fro' p#%lised so#rces
and disc#ssions eld "it officials of te Canara *an)&
Limitations of the Study
In dept st#d$ "as not done&
Te st#d$ is li'ited to infor'ation provided %$ te %an)&
Ti'e Constraints&

Origin Of Canara Bank
Canara *an) "as fo#nded in 4;<C %$ late Sri& A''e'%al
S#%%a Rao Pai, and ten tis t#rned into a li'ited Co'pan$ as
?Canara *an) Ltd@ in 4;4< and later it *eca'e Canara *an) in
4;C; after Nationalisation&
Canara *an) is one of te pre'ier %an)s in te co#ntr$,
accredited "it #'pteen distinctions& Te present stat#re of te
%an) is d#e to its stron! f#nda'entals and ,#alit$ c#sto'er
orientations& Profit 'a)in! since inception, te %an) toda$
epito'i1es a perfect %lend of co''ercial and social %an)in!&
Founding Principles of Canara bank :

4& To re'ove S#perstition and i!norance&
6& To spread ed#cation a'on! all to s#%3serve te first principle&
8& To inc#lcate te a%it of trift and savin!s&
9& To transfor' te financial instit#tion not onl$ as te financial
eart of te co''#nit$ %#t te social eart as "ell&
B& To assist te need$&
C& To "or) "it sense of service and dedication&
D& To develop a concern for fello" #'an %ein! and sensitivit$ to
te s#rro#ndin!s "it a vie" to 'a)e can!esA re'ove ardsips
and s#fferin!s&
Growth and Development 2
Canara %an) started off "it a fe" n#'%er %rances %#t toda$ te
n#'%er is not fe" %#t infact its rised to 2409 %rances in India as
on 84&8&6<<6&
For te $ear (arc6<<6, te *an) cloc)ed te i!est net profit
>Rs& D94 crore= a'on! Nationalised %an)s, "it si!nificant
i'prove'ent in capital ade,#ac$ ratio >44&::I= and asset ,#alit$
>net NPA ratio of >8&:;I=&
Te *an) as alread$ carved a nice in providin! in providin! IT
%ased services& Co'p#teri1ed %rances, acco#ntin! for CBI of te
%rances nd :4I of a!!re!ated %#siness, provide a "ide arra$ of
services, s#c, as IT %ased services& Co'p#teri1ed %rances,
acco#ntin! for CBI of te %rances nd :4I of a!!re!ated %#siness,
provide a "ide arra$ of services, s#c, as Net"or)ed AT(s,
An$"ere *an)in!, Tele%an)in!, Re'ote Access Ter'inals etc& Te

*an) "as te first a'on! %an)s to la#nc net"or)ed AT(s and
o%tain ISO Certification&
Highlights of Canara Bank
Gross profit increased fro' Rs& 4484 crore for 6<<<3<4 to Rs.
1656 crore in 6<<43<6, re!isterin! a ealt$ 9C&9I !ro"t&
Net profit sot #p Rs. 741 crore fro' Rs&6:B crore, postin!
all3ti'e !ro"t of 4C<I&
*#siness per e'plo$ee rose fro' Rs& 4&;4 crore to Rs. 2.15
crore. Profit per e'plo$ee 'oved #p fro' Rs& <&C8 La) to
Rs. 1.64 lakh.
Glo%al *#siness of te %an) rose fro Rs :C;<6 crore to Rs.
97157 crore re!isterin! a !roet rate of 46I&
Glo%al 5eposits of te %an) rose to Rs. 64030 crore
co'pared to Rs& B;<D< crore as at (arc 6<<4&
Advances >net= increased to Rs. 33127 crore as at (arc
6<<6 vis3F3vis Rs& 6D:86 crore as at (arc 6<<4, re!isterin! a
!ro"t rate of 4;I&
Priorit$ sector advances, at Rs. 10536 crore, for'ed 94I of
net credit as a!ainst te stip#lated nor' of 9<I&

N#'%er of co'p#teri1ed %rances rose to 1564 fro' ;;C,
coverin! CBI of %ranc net"or) and :4I of te %an)/s
%#siness&
AT( Stren!t rose to 103 fro' 84&
N#'%er of %rances #nder ISO ;<<4 certification "ent #p to
122 fro' 49&
Canara Bank Awards2
Co''ercial consideration as, no "a$ dil#ted te %an)/s role in
national priorities& Canara *an) is in fact te First Bank to %e
conferred FICCI a"ard for te contri%#tion to r#ral develop'ent&
Credit portfolio2
Te *an)/s credit portfolio is "ell diverse, te %an) co''ited to a
ealt$ credit c#lt#re tat reco!ni1e te need to ins#re i! ,#alit$
processin! ti'el$ dis%#rse'ent and eas$ repa$'ent& Te %an) as
adopted c#sto'er friendl$ for assessin! credit re,#ire'ent and as
iss#ed !#idelines for vario#s t$pes of advances !ranted %$ it&
New Product and service Offered by Canara Bank 2

4& Net"or)ed AT(s&
6& An$"ere *an)in!&
8& Tele%an)in!&
9& Forei!n E7can!e&
B& Internet *an)in!&
C& Credit crads&
D& Gift Ce,#es&
:& 5eposit services&
;& C#'#lative fi7ed deposit&
Period of deposit Rate of interest
car!ed
>I= p&a&
4B da$s to 9B da$s 9&6B
9C da$s to ;< da$s B&<<
;4 da$s to 4D; da$s B&6B
4:<da$s to less tan 4
$ear
B&B<
4 $ear less tan 6 $ear B&DB
6 $ears to less tan 8
$ears
C&<<
8 $ears L a%ove C&6B
Schemes offered by the Bank :
Deposits :
4& AT( Facilit$ for ro#nd te cloc) %an)in! service to te
c#sto'ers&
6& Attractive rate of interest&
8& Pa$'ent of interest on ter' deposit at te coice of te
depositor/s i&e&, 'ontl$, ,#arterl$, etc&
9& Facilit$ for i''ediate "itdra"al %efore 'at#rit$ incase of

needs&
B& On K te3 spot loan facilit$ at a 'ar!in of 4BI of deposits&
C& Facilit$ for acceptin! NREA NRO deposits&
D& L#crative3 sce'es s#ited to te clientele li)e Ro1ana *acat
Rec#rrin! deposits, Ter' deposits, Cas Certificates etc&
:& No'ination facilit$ for all deposit acco#nts&
Loans and advances :
*#siness loans To Traders +or)sops, Hotels and oter
%#siness vent#res&
Ind#strial loans To start S'all Scale Ind#striesA (edi#' Scale
Ind#stries&
Heicle loans DBI loan a!ainst te cost of veicles >t"o,
tree and fo#r "eelers=&
Personal loans For pit$ trade, ed#cation, o#sin!, 'arria!e
and oter cere'onial p#rposes&
Ho#sin! loans For constr#ctionA ac,#isitive of o'es repairs
renovation etc&
Cons#'er loans For p#rpose of o#se old activities li)e TH,
Frid!e, F#rnit#re, Co'p#ter, etc&
Professional loans For 5octors, En!ineers, Cartered
Acco#ntants, etc to set#p teir offices&
Ed#cational loans For !rad#ates, Post Grad#ates and
professional co#rses&
Oter loans A!ainst tan!i%le sec#rities, Gold orna'ents,
NSE, LIC policies EHP, IHP,etc&

Gowth over the Years Gowth over the Years


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&rofits

4.1 Introduction to Banking
History of Banking Industry
*an)in! s$ste' occ#pies an i'portant place in a nation/s
econo'$& A *an)in! instit#tion is indispensa%le in a 'odern
societ$& It pla$s a pivotal role in te econo'ic develop'ent of a
co#ntr$ and for's te core of te 'one$ 'ar)et in an advanced
co#ntr$& *an)in! "as pri'aril$ te %#siness of dealin! in 'one$
and instr#'ents of credit& *an)s "ere traditionall$ differentiated
fro' oter financial instit#tions %$ teir principal f#nctions of
acceptin! deposits3 s#%-ect to "itdra"al or transfer %$ cec)3 and
'a)in! loans&
General History
A si'ple for' of %an)in! "as practiced %$ te ancient te'ples
of E!$pt, *a%$lonia, and Greece, "ic loaned at i! rates of
interest te !old and silver deposited for safe)eepin!& Private
%an)in! e7isted %$ C<< *&C& and "as considera%l$ developed %$ te
Gree)s, Ro'ans, and *$1antines& Te forer#nners of 'odern %an)s
"ere fre,#entl$ cartered for a specific p#rpose, e&!&, Te *an) of
Henice >44D4= and te *an) of En!land >4C;9=, in connection "it
loans to te !overn'ent& te %an) of A'sterda' >4C<;=, to receive
deposits of Gold and silver&
Indian Banking system
*an)s in India "ere started on te *ritis pattern in te
%e!innin! of te 4;
t
Cent#r$& In tose da$s, all te %an)s "ere

-oint stoc) %an)s and a lar!e n#'%er of te' "ere s'all and "ea)&
At te ti'e of te Second "orld "ar, a%o#t 4B<< -oint stoc) %an)s
"ere operatin! in #n3divided India, o#t of "ic over 49<< "ere not
sced#led %an)s& M#ite a fe" of te' "ere 'ana!ed %$ %ad and
disonest 'ana!e'ent and nat#rall$ te$ "ere a n#'%er of %an)s
fail#res& Hence te Govern'ent as to step to te *an)in!
Co'panies Act, 4;9; >"ic "as s#%se,#entl$ rena'ed as %an)in!
re!#lation act= "as enacted "ic led to !rad#al eli'ination of
"ea) %an) tat "ere not in a position to f#lfill te vario#s
re,#ire'ents of te Act& In order to stren!ten te "ea) #nits and
revive p#%lic confidence in te %an)in! s$ste' a ne" section 9B
"as inserted in te %an)in! re!#lation act in Septe'%er 4;C<,
e'po"erin! te !overn'ent of India to co'p#lsoril$ a'al!a'ate
"ea) #nits "it stron!er ones on te reco''endations of R*I&
R*I "as e'po"ered in 4;C<, to force co'p#lsor$ 'er!er of "ea)
%an)s "it te stron!er ones& Te total n#'%er of %an)s "as t#s
red#ced fro' BCC in 4;B4 to :B in 4;C;& In N#l$ 4;C;, Govern'ent
Nationalised 49 %an)s avin! deposit of Rs& B< crores and a%ove& In
4;:<, Govern'ent ac,#ired C 'ore %an)s "it deposits of 'ore
tan Rs& 6<< crores& Nationalisation of %an)s "as to 'a)e te'
pla$ te role of catal$tic a!ents for econo'ic !ro"t& Te
Narsi'a' co''ittee report s#!!ested "ide ran!in! refor's for te
%an)in! sector in 4;;6 to introd#ce internationall$ accepted
%an)in! practices& Te A'end'ent of *an)in! Re!#lation Act in
4;;8 sa" te entr$ of ne" private sector %an)s&
DEVELOPMENT OF MODERN BANKING

For te istor$ of 'odern %an)in! in India, a reference
to te En!lis a!enc$ o#ses in te da$s of te east India co'pan$
"o#ld %e necessar$& Tese a!enc$ o#ses "it al'ost no capital of
tere o"n and dependin! entirel$ on deposits "ere in fact tradin!
fir's carr$in! on %an)in! as a part of tere %#siness& S#c a
co'%ination of tradin! "it %an)in! ad necessaril$ to %e fatal& No
"onder, terefore tat al'ost all s#c a!enc$ o#ses vanised fro'
te scene in te crisis of 4:6;34:86&In te first alf of te 4;
t
cent#r$ , te east India co'pan$ esta%lised 8 %an)s3te %an) of
*en!al in 4:<;,te %an) of *o'%a$ in 4:9< and te %an) of 'adras
in 4:98&te 8 %an)s are also )no"n as presidenc$ %an)s "ere
independent #nits and f#nctioned as "ell &it "as o"ever
considered tat it "o#ld %e in te interest of tese %an)s and te
co#ntr$ tat te$ so#ld a'al!a'ate& In 4;6< "as passed te
i'perial *an) of India "as esta%lised in 4;64&Te *an) "as
a#tori1ed to old !overn'ent %alances and 'ana!e and p#%lic
de%t& It "as not ,o"ever !iven po"er to iss#e notes &te %rances
of te %an) "ere to "or) as clearin! o#ses &it "as 'ainl$ a
co''ercial %an) co'petin! "it oter %an)s &te I'perial *an) of
India "as nationali1ed c in 4;BB ,%$ te state %an) of India act&
DEFINITION OF BANKING /BANKING COMPANY/
BANKER/BANK
Section B>4= >c=of te Indian *an)in! Re!#lation act of 4;9;
defines te ter' ?%an)in! as .acceptin!/ ,for te p#rpose of lendin!
or invest'ent of deposits of 'one$ fro' p#%lic ,repa$a%le on
de'and or oter"ise and "itdra" a%le %$ ce,#e , t ,order or

oter"ise &@

Einla$ defines a %an) as@ an esta%lis'ent "ic 'a)es to
individ#als &s#c advance of 'one$ as 'a$ %e re,#ired and safel$
'ade and to "ic individ#als entr#st 'one$ "en not needed %$
te' for #se@&
G Cro"ter defines a %an) as a ? dealer in de%t ,is o"n and oter
peoples@&
5r H l Hart defines a %an)er as ?one "o in te ordinar$ co#rse of
is %#siness, ono#rs ce,#es dra"n #pon i' %$ persons fro' and
for "o' e receives 'one$ on c#rrent acco#nts@&
4.2 CLASSIFICATION OF BANKS
Classification of %an)s is as #nder 2
A!ric#lt#ral develop'ent instit#tions ,"e ave a set of develop'ent
%an)s,
4& Co-operative banks
in te first cate!or$ te pri'ar$ co3operative
%an)s "ic are s'all si1ed #nits or!ani1ed in te cooperative
sector "ic operate %ot in #r%an and non #r%an centers &te$
finance s'all %orro"ers in ind#strial and trade sectors ,%esides
professionals and salaried classes &re!#lated %$ Reserve *an) of
India ,te$ are !overned %$ te %an)in! re!#lations act 4;9; and
%an)in! la"s >co operative societies= act 4;CB&
6& Land Development Banks

State land develop'ent %an) is a co3operative
societ$ ,"ic is te principal %an) in a state "ose pri'ar$ -o% is
to provide lon! ter' finance for a!ric#lt#ral develop'ent&
8& Regional Rural banks
Re!ional r#ral %an)s "ere set #p #nder an act of
parlia'ent in 4;BC "it te o%-ective of developin! r#ral econo'$
tro#! pro'otion of a!ric#lt#re, trade, co''erce ,ind#str$ and
e7tendin! credit partic#larl$ to te s'all and 'ar!inal far'ers
,a!ric#lt#ral la%o#rers ,artisans and s'all entreprene#rs&
9& National Bank for agriculture and rural development
(NABARD)
Te Govern'ent of India set #p te national %an)
for a!ric#lt#ral and r#ral develop'ent %$ 'eetin! 'er!in!
a!ric#lt#ral credit depart'ent and r#ral plannin! cell of Reserve
%an) of India as "ell as te entire #nderta)in! of a!ric#lt#ral
refinance and develop'ent corporation "ic "as f#nctionin! as an
independent develop'ent %od$ earlier &NA*AR5 is te ape7
develop'ent %an) in te co#ntr$ for pro'otin! a!ric#lt#re and r#ral
develop'ent&
B& Agricultural finance corporation limited (AFC)
Tis is a consorti#' of co''ercial %an)s
pro'oted %$ Indian %an)s association in April 4;::,Te pri'ar$
f#nction of te AFC is to dra" #p pro-ects for pro'otin!
a!ric#lt#ral develop'ent ,it #nderta)es tecnical feasi%ilit$ and
financial via%ilit$ st#dies of different pro-ects referred to it %$

%an)s or !overn'ent&
*an)in! se!'ent in India f#nctions #nder te #'%rella of Reserve
*an) of India K te re!#lator$, Central *an)& Tis se!'ent %roadl$
consist ofO
Co''ercial *an)s&
Co3operative *an)s&
Co''ercial *an)s2
Te co''ercial %an)in! str#ct#re in India consists of2
Sced#led co''ercial %an)s&
Unsced#led *an)s&
Sced#led Co''ercial %an)s constit#te tose %an)s tat ave %een
incl#ded in te second sced#le of Reserve *an) of India >R*I= act,
4;89& R*I in t#rn incl#des onl$ tose %an)s in tese sced#le tat
satisf$ te criteria laid do"n vide section 96 >C< of te act=& So'e
co3operative %an)s are sced#led co''ercial %an)s al%eit not all
co3operative %an)s are& *ein! te parts of te second sced#led
confers so'e %enefits to te %an)s in ter' of access to
acco''odation %$ R*I d#rin! te ter's of li,#idit$ constraints& At
te sa'e ti'e, o"ever, tis stat#s also s#%-ects te %an) certain
conditions and o%li!ations to"ards te reserve re!#lations of R*I&
Tis s#% sector can %roadl$ %e classified into2
P#%lic sector&
Private sector&
Forei!n %an)s&

Unsced#led *an)s are tose -oint stoc) %an)s, "ic are not
incl#ded in te second sced#le of te R*I act on acco#nt of te
fail#re to co'pl$ "it te 'ini'#' re,#ire'ents for %ein!
sced#led&
RBI Banking
Te reserve *an) of India is te Central %an)in! instit#tion
in India& It is te sole a#torit$ for iss#in! *an) notes and te
s#pervisor$ %od$ for %an)in! operations in India& It s#pervises
and ad'inisters e7can!e control and %an)in! re!#lations and
ad'inisters te !overn'ent/s 'onetar$ polic$& It is also
responsi%le for !rantin! licenses for ne" %an) %rances& 6B
Forei!n %an)s operate in India "it f#ll %an)in! licenses& Several
licenses for private %an)s ave %een approved& 5espite fairl$
%road %an)in! covera!e nation "ide, te financial s$ste' re'ains
in accessi%le to te poorest people in India&
Government and RBI regulations:
All co''ercial %an)s face stiff restrictions on te #se of
%ot teir assets and lia%ilities& 9<I of te loans '#st directed to
?Priorit$ Sectors@ and te i! li,#idit$ ratio and cas reserve
re,#ire'ents severel$ li'it te availa%ilit$ of deposits for
lendin!& Te R*I re,#ires tat do'estic Indian %an)s 'a)e 9<I
of teir loans at concessional rates to priorit$ sectors selected %$
te !overn'ent& Tese sectors consist lar!el$ of a!ric#lt#re,
E7porters and s'all %#sinesses&
Since N#l$ 4;;8, forei!n %an)s ave %een re,#ired to 'a)e 86I

of teir loans to tese priorit$ sectors& +it in te tar!et of 86I
t"o s#%3tar!ets for loans to te s'all3scale sector >'ini'#' of
4<I= and e7ports >'ini'#' of 46I= ave %een fi7ed&
*an)in! re!#lation act of India, 4;9; defines %an)in! as ?
Acceptin!, for te p#rpose of lendin! of deposits of 'one$ fro'
te p#%lic repa$a%le on de'and or oter "ise and "itdra"al %$
ce,#e, draft, order or oter "ise@&
(ost of te activities a %an) perfor's are derived fro' te a%ove
definition& In addition, %an)s are allo"ed to perfor' certain
activities tat are ancillar$ to tis %#siness of acceptin! deposits
and lendin!& A %an)/s relationsip "it te p#%lic, terefore,
revolves aro#nd acceptin! deposits and lendin! 'one$& Anoter
activit$ tat is ass#'in! increasin! i'portance is transfer of
'one$3 %ot do'estic and forei!n3 for' one place to anoter&
Tis activit$ is !enerall$ )no"n as ?re'ittance %#siness@ in
%an)in! parlance& Te so3called fore7 >forei!n e7can!e=
%#siness is lar!el$ a part of re'ittance al%eit it involves %#$in!
and sellin! of forei!n c#rrencies&
Te la" !overnin! *an)in! Activities in India is called
?Ne!otia%le Instr#'ents Act 4::4@& Te *an)in! activities can
%e classified as2
Acceptin! 5eposits fro' p#%licA oters >5eposits=
Lendin! 'one$ to p#%lic >Loans=&
Transferrin! 'one$ fro' one place to anoter >Re'ittance=&
Actin! as Tr#stees&

Actin! as Inter'ediaries&
Eeepin! val#a%les in safe c#stod$&
Collection *#siness&
Govern'ent *#siness&
General Principles of lending2 3
(one$ accepted as deposits, refinance etc, are te ra" 'aterials of
%an)s "ic so#ld %e "isel$ and profita%l$ invested in

loansAadvances and invest'ent, so as to earn s#fficient interest
inco'e and to pa$ interest on te deposits and also earn so'e
profits& Te General principles are as follo"s2
4& Safety2 3
Te Advance can %e considered safe "en te %orro"er as te
capacit$ to repa$ te loan and te capital in "icever for' it is
deplo$ed re'ains intact& Te %orro"er so#ld %e a 'an of
caracter, "it necessar$ capital "eter of is o"n or %orro"ed
and capacit$ to 'eet is o%li!ation&
6& Liquidity2 3
*an)er as to 'eet is o%li!ation to"ards is depositor c#sto'er %e
it de'and or ti'e li,#idit$& Here li,#idit$ 'eans te possi%ilit$ of
reali1in! te d#es %$ resortin! to te disposal of sec#rit$ is ver$
i'portant is considerin! te proposals&
8& Profitability: 3
Ever$ %#siness activit$ as to %e #nderta)en res#ltin! in
profita%ilit$, oter"ise its ver$ e7istence "ill %e in dan!er& So
Profita%ilit$ is one of te principles of Lendin!&
9& Desirability of Purpose2 3
+$ is te 'one$ "antedG

Ascertainin! te p#rpose and te a'o#nt re,#ired3 "eter
te loan is re,#ired for %onafide trade p#rpose or for
spec#lationG
+at is te proprietor/s sta)eG
B& Remuneration: 3
Interest, co''ission, 5isco#nt and oter car!es, e7pected o#t of
te credit facilit$ offered to te %orro"er&
Loans and Advances of Canara Bank2
Te loan and advances are %roadl$ classified into te follo"in! t"o
cate!ories2
A& Sec#red Advances&
*& Unsec#red Advances&
A. Secured Advances.
Sec#red loans are tose loans, "ic are !ranted a!ainst te
sec#rit$ of so'e propert$& Te Sec#rit$ arran!e'ent 'a$ %e
$potecation, pled!e or 'ort!a!e&
Te loans are sanctioned a!ainst te follo"in! sec#rities2 3
4& Ter' 5eposits&
6& Gold Orna'ents&
8& Heicles&
9& Goods >Pled!e or H$potecation=&
B& Land and *#ildin!&

C& Plant and (aciner$&
D& *ills p#rcased and disco#nted&
:& Govern'ent Sec#rities&
;& +areo#se receipts&
4<& Govern'ent S#ppl$ *ills&
44& L&I&C Polic$&
B. Unsecured Advances
Advances, "ic are !ranted "ito#t an$ sec#rit$ for te advance,
are called Unsec#red advances or "ic are sanctioned a!ainst
personal sec#rit$ of one or 'ore 'e'%ers& Te$ are2 3
a= S#ret$ Loans&
%= *ills p#rcased and disco#nted&
c= Clean overdraft&
5.1Rules of Canara Bank for Secured advances
1. Term Deposit
a= Advances a!ainst ter' deposit of te %an) 'a$ %e !ranted
to person in "ose na'e te ter' deposits are eld in
%an)& In selected cases, te$ 'a$ %e !ranted to a tird
part$ also, "it d#e consent of te depositor& +enever
s#c deposits are eld -ointl$ %$ all te concerned persons&

Te deposit receipt so#ld also %e !ot discar!ed %$ all
te depositors on appropriate reven#e sta'ps&
%= Advances 'a$ not %e per'itted on te sec#rit$ of deposit
receipt of oter %an)s&
c= +enever advances are !ranted a!ainst rec#rrin! or dail$
deposit, te %orro"er '#st s#%'it an #nderta)in! in te
prescri%ed for', alon! "it te relative pass%oo)A and
cardA deposit receipt d#l$ discar!ed&
d= For all te loans a!ainst incl#din! R&5 te 'ar!in as
stip#lated in te R*I directives and also as te %oard of
director/s stip#late so#ld %e 'aintained& Te rate of
interest so#ld also %e prescri%ed %$ te %an)&
e= Nor'all$ te deposit so#ld not %e rene"ed "ito#t
ad-#stin! and clearin! te related loan d#es of te parties&
f= Ordinaril$ no advance so#ld %e !ranted to a !#ardian
a!ainst sec#rit$ of te deposit receipt standin! in te na'e
of te 'inor e7cept "en s#c loans are necessaril$
re,#ired for te %enefit of te 'inor&
In s#c cases, declaration so#ld %e o%tained fro' te
!#ardian tat te a'o#nt of advances "o#ld %e #tili1ed for
te %enefit of te 'inor and tat e "ill personall$ %e
lia%le to te %an) in case is a#torit$ to raise te loan on

%ealf of te 'inor is ,#estioned later on&
!= Advance 'a$ not %e sanctioned on te sec#rit$ of deposit
receipts of oter %an)s&
= Soon after 'a)in! advance, te %an)/s lien so#ld %e
pro'inentl$ noted in te respective deposit re!isterA led!er
and also on te face val#e of te deposit receipt or pass
%oo)&
5oc#'ents o%tained for loans a!ainst Ter' 5eposit
5e'and Pro'issor$ Note&
5eposit Receipt d#l$ discar!ed&
Application3c#'3loan a!ree'ent&
Letter of a#torit$ for pa$A "a!e ded#ction, "erever
applica%le&
2. Gold Ornaments
a) Eligibility:
Te advances #nder tese r#les are availa%le nor'all$ to
)no"n c#sto'ers of te %an)&
%= Period of loan2
Te period of loan on te sec#rit$ of Gold orna'ents
does not e7ceed 69 'onts&
c= (a7i'#' Advance per'issi%le2

Te 'a7i'#' advance to eac c#sto'er does not e7ceed
te individ#al li'it fi7ed #nder te directives of R*I&
Te advance "ill %e 'ade #p to :<I of te 'ar)et val#e
or at te rate per !ra' fi7ed %$ te *oard of 5irector
"ic ever is less&
d= (ar!in2
A 'ar!in of 6<I on te 'ar)et val#e is 'aintained&
Interest on te loan is pro'ptl$ collected as an "en it
falls d#e, in order to see tat te prescri%ed 'ar!in is
not allo"ed to %e red#ced d#e to non3recover$ of interest
d#e or fall in 'ar)et val#e of te article&
e= Recall of te loan2
Te loan 'a$ %e recalled even %efore te e7pir$ of te
period in case, %an) is li)el$ to %e p#t to loss o"in! to
te fall in te val#e of Gold #nless te %orro"er offerin!
additional 'ar!in&
f= 5efa#lt in Pa$'ent
+en te %orro"er fails to repa$ te loan on te d#e
date a notice callin! #pon i' to repa$ te loan "it in a
specific ti'e !iven and if no response is tere for te
notice a re'inder 'a$ %e sent %$ re!istered post
infor'in! i' tat te orna'ents "o#ld %e a#ctioned and
after ad-#stin! te sale proceeds a!ainst te o#tstandin!
d#es to te %an), te %alance "o#ld if an$, "o#ld %e
paid to te %orro"er a!ainst is receipt&

3. Advance against Vehicles:
Advance a!ainst veicles is nor'all$ !iven for p#rcase of
co''ercial veicles as "ell as personal veicles vi1&, Tr#c)s,
Tractors, Cars, Te'pos, Tree +eeler, T"o +eeler etc&
Nor'all$ advances are !iven a!ainst ne" veicles onl$& Ho"ever
loans a!ainst veicles not 'ore tan B $ears old 'a$ %e !ranted to
rep#ted c#sto'ers&
R#les2
a= In respect of old veicles te partic#lars s#c as (odel,
Jear of 'an#fact#re, Cassis N#'%er, Invoice n#'%er
are o%tained& Te val#ation of te veicle so#ld %e
arrived at )eepin! in vie" te re'ainin! condition of te
veicle&
Te 'ar!in in respect of old veicles is not less tan
B<I of te val#e assessed %$ te e7pert val#ator
appointed %$ te %an) and or te ins#ra%le val#es of
s#c veicle "ic ever is less&
%= Te veicle %e $potecated in favo#r of te %an) and
%an)s car!e on te veicle is re!istered "it te
Re!ional Transport A#torities and also in te
re!istration *oo)& A certificate to tat effect 'a$ %e
o%tained for Re!ional Transport A#torities and is )ept
on te %an)/s record&
Co3o%li!ation for te loan is ta)en "erever necessar$ as
per !#idelines&

c= Te 'ar!in retained for ne" veicles is nor'all$ 6BI of
te invoice price,&
d= Finall$ te advance is 'ade availa%le %$ direct pa$'ent
'ade to te s#pplier& An A#torit$ letter fro' te
%orro"er a#tori1in! te %an) to pa$ te price directl$
to te s#pplier is o%tained&
Default In Payment:
Te %orro"er so#ld repa$ te loan install'ents re!#larl$
%efore te stip#lated date& In te event of defa#lt te %an) "ill ave
te po"er to sie!e te veicle and arran!e for te disposal %$ sale
or oter"ise& For tis p#rpose te %orro"er so#ld f#rnis to te
%an) a %lan) transfer for' d#l$ si!ned %$ i'&
4. Rules for advances on Land & Building:
a= Te application for advance #nder tis cate!or$ so#ld
interalia so#ld contain all te necessar$ infor'ation
a%o#t te propert$ offered as sec#rit$ s#c as na'e of
te o"ner, description of te propert$, its location,
'eas#re'ents, appro7i'ate val#e, le!al title, prior
enc#'%rance etc&

%= A 'ar!in of not less tan 8<I of te val#e of 'ort!a!ed
propert$ as eval#ated %$ te approved eval#ator is
'aintained&
c= Periodic revie" of te val#ation of te properties is
'ade to see tat te 'ar!in is 'aintained at all ti'es&
d= Period of repa$'ent of te loan23
Period of repa$'ent is fi7ed on te %asis of loan
period&
*#siness trade 23 #p to 46 'onts in te
case of CCAO5&
Repa$'ent of de%t 23 Up to C< 'onts&
Constr#ction 23 Up to 69< 'onts >e7act
Period is fi7ed accordin!
to Repa$in! capacit$&
e= Te %an) prepares a s#ita%le repa$'ent sced#le for
repa$'ent of te loan "it in te over all li'it fi7ed %$
te *oard of 5irectors&
f= Te 'ana!er so#ld also see tat2

Te %orro"er as prod#ced all 'aterial doc#'ents of
title relatin! to te propert$&
Te ori!inal doc#'ents ave %een prod#ced&
Facts and events 'aterials to te title ave %een
satisfactoril$ proved&
All consents, per'issions, no o%-ection certificate for
transfer of propert$ %$ te %orro"er to te %an) ave
%een o%tained&
Identit$ of te propert$ as %een esta%lised&
All oAs enc#'%rances ave %een ta)en care of, and tat
tere are no enc#'%rances of do#%tf#l and s#spicio#s
nat#re, vi1&, an$ 'aterial doc#'ent is alle!ed to %e lost
or an$ doc#'ent %earin! 'ar) of endorse'ent to
indicate its prod#ction as sec#rit$ or as evidence in a
co#rt of la"&
!= Te %an) ta)e le!al opinion fro' its le!al advisors to
cover all te points detailed in r#les a%ove, and
infor'ation on te nat#re of ten#re, te validit$ of te
title to te propert$ "eter te %orro"er is co'petent
to create a 'ort!a!e& It so#ld also %e ens#red fro' te
records of s#%3re!istrar of ass#rances tat tere is no
prior enc#'%rance on te propert$ d#rin! te past 48
$ear period&
= Te propert$A properties proposed to %e 'ort!a!ed to
te %an) so#ld %e eval#ated properl$ %$ an e7pert
val#ator and te val#ation report so#ld indicate te

%asis of val#ation& Te val#ation report so#ld %e
o%tained in a prescri%ed for#'&
i= *efore !rantin! te advance, a second no enc#'%rance
certificate coverin! te period #p to date of e7ec#tion of
te e,#ita%le 'ort!a!e papers so#ld %e o%tained to
ens#re and confir' tat tese properties are free fro'
an$ oter enc#'%rance to tat date&
-= Te %an) so#ld !et te 'ort!a!e properties ins#red
a!ainst fine and oter ris) s#c as stri)e and civil
co''otion "erever considered necessar$&
)= A "atc over te pa$'ents of ta7es !ro#nd rent etc& ,
d#e on te 'ort!a!ed properties so#ld %e 'aintained
and te relative receipts so#ld %e verified periodicall$&
5. Rules on advances on Plant & Machinery:
a= +ile !rantin! advances for Plant L 'aciner$ te %an)
so#ld caref#ll$ e7a'ine te financial condition, past
perfor'ance of te %orro"er, if an$ and is financial
a%ilit$ to 'eet te repa$'ent sced#le of loan
install'ents re!#larl$&
%= +erever te Plant L (aciner$ are e'%edded in te
!ro#nd of te factor$ pre'ises o"ned %$ te %orro"er
i'self, s#c advances 'a$ %e !ranted on 'ort!a!e of

s#c propert$& +erever Plant L (aciner$ are not
e'%edded ten advances 'a$ %e 'ade as $potecation
loans&
c= +en Plant L (aciner$ are installed in a Land,
*#ildin! factor$ ta)en on a lon! lease %$ te %orro"er
ten te le!al 'ort!a!eA $potecation sall %e o%tained
coverin! all te 'aciner$ and plant %ot i''ova%le L
'ova%le&
d= >i= Hal#ation report of s#c plant and 'aciner$ sall %e
o%tained fro' te e7pert val#ator in te line and te
val#ation so#ld %e 'ade on a safer side&
>ii= In case of loan !ranted for p#rcase of ne"
'aciner$ a 'ini'#' 'ar!in of 6BI over te
invoice price incl#din! accessories sall %e 'ade
%$ te %an) direct to te s#pplier after collectin!
'ar!in for' te p#rcaser&
e= Te 'aciner$ ac,#ired on ire p#rcase %asis
sall not %e ta)en as sec#rit$ till te loan tere
a!ainst is cleared&
f= Te 'ar!in in respect of old 'aciner$ so#ld not %e
less ten B<I of te val#e assessed %$ te val#ator or
val#er appointed %$ te %an) or ins#ra%le val#e of s#c
'aciner$ "icever is less&

!= Te repa$'ent sced#le so#ld %e prescri%ed "ile
advancin! te loan and te loan so#ld %e
recovered pro'ptl$ and re!#larl$ as per te
install'ents fi7ed& +enever te %orro"er fails to
repa$ te install'ents te lapse so#ld %e %ro#!t
to te notice of te i!er a#torities i''ediatel$
for f#rter action&
5.2Hypothecation
(eanin! of $potecation2
A H$potecation is a contract #nder "ic specific propert$ is
desi!nated as sec#rit$ for an advance, 'ost co''on for' of tis
sec#rit$ in stoc) of !oods&
5an!er of H$potecation2
Even to#! te doc#'ent 'a$ e'po"er te %an) to ta)e
possession of te !oods, te %orro"er 'a$ activel$ resist an$
atte'pt to do so& If possession is denied, te onl$ "a$ is to ta)e
reco#rse to co#rt proceedin! and tere is ever$ dan!er of te %an)s
ri!ts to %e postponed to tose of oter parties, or te !oods 'a$
disappear %efore -#d!e'ent is o%tained&
5an!er of advances of fir's and individ#als2 3
In le!al proceedin!s relatin! to $potecation %$ fir's and
individ#als te %an)/s ri!t 'a$ %e postponed to tose of2
a= A pled!e or p#rcase is possession for val#e&
%= +o as no notice of te %an)/s $potecationG

It is, terefore clear tat $potecation fro' fir's and individ#als
are of ever$ do#%tf#l val#e and so#ld ordinaril$ %e accepted "it
s#ita%le collateral sec#rit$&
Stock Verification:
Te stoc) $potecation to te %an) '#st %e verified %$ te %ranc
'ana!er in te first instance and "ill %e periodicall$ inspected %$
te 'ana!er or oter officers, on rotation %asis re!#larl$ at irre!#lar
intervals&
Factor$ Inspection2
a= Location
Is te location of te factor$ ideal3 area of Land "eter
land is ade,#ate for te factor$/s i''ediate and f#t#re
re,#ire'ents3 "eter te location as advanta!es and
disadvanta!es of availa%ilit$ of "ater, po"er and eas$ access
to s)illed and #ns)illed la%o#rs and transport and
co''#nication facilities and also pro7i'it$ to te 'ar)et&
%= Factor$ *#ildin!2
T$pe of Constr#ction&
c= Essential Services2
Arran!e'ents for s#ppl$ of "ater and po"er
"eter ade,#ate&
d= Co''#nication2
Telepone, *road *oard co''#nication as re,#ired&
e= Plant L (aciner$2+at are te ra" 'aterials #sedG
+eter tese can %e readil$ i'ported or locall$
readil$ availa%le&

f= Electricit$ and "ater2
+eter s#fficient electricit$ and "ater
arran!e'ents are 'ade&
!= La%o#r2
Total stren!t of s)illed L #ns)illed la%o#rers&
= Prod#ction
Prod#ction 'etod3rates L licensed Capacit$&
Periodicit$ and 'etods of prod#ction c$cle&
i= (ar)etin! arran!e'ents2
Is tere sales depart'ents in te factor$ it self or it is
separatel$ o#sed3 "eter te$ ave an$ sole3sellin! a!enc$
arran!e'ent or do so te$ 'ar)et it directl$&
-= Licensin!2
Re,#ired ind#strial licensin! fro' te co'ple'ent
a#torit$ is availa%le, "erever applica%le, clearance fro'
poll#tion control A#torities "erever re,#ired&
B. Rules for Unsecured loans
Surety loans2
S#ret$ loans are sanctioned to "ell )no"n c#sto'ers of te
%an) a!ainst personal sec#rit$ of anoter c#sto'erA respecta%le
person&
S#ret$ loans is 'ainl$ !ranted for Trade, Co''erce L identifia%le
prod#ctive p#rpose s#c as Crop Prod#ction, Po#ltr$ Far'in!, *ee

Eeepin!, 5iar$ far'in! etc&
Period of Loan:
Te period of loan sall %e 4636B 'onts for te p#rpose of Trade,
Co''erce and identifia%le prod#ctive s#c as Po#ltr$ far'in!, *ee
Eeepin!, 5iar$ far'in!, etc&
Limit:
Te over all li'its of te #nsec#red loans sall not e7ceed te li'it
as prescri%ed #nder te directives of R*I fro' ti'e to ti'e&
Unsecured Loans for Salaried Employees&
In case of salaried e'plo$ees te %an) to o%tain te infor'ation
relatin! to isAer 'ontl$ inco'e to find o#t "eter te s#rpl#s
availa%le >after ded#ctin! is 'ontl$ e7pendit#re= "ill %e
s#fficient to cover te repa$'ent of principle and interest&
Te %orro"er in addition to te salar$ certificate as to !ive an
#nderta)in! to re!#larl$ ded#ction of loan install'ents fro' salar$
and its re'ittance to te %an) directl$& Tis so#ld %e
co''issioned %$ te salar$ 5is%#rsin! a#torit$&
Cash Credit/ Over Draft (or) Clean Overdraft:
Unsec#red cas creditA over draft is !ranted onl$ to te ver$ "ell
)no"n c#sto'ers of te %an) "o are en!a!ed in %onafide trade,

co''erce, ind#stries&
Period
Cas CreditA Overdraft 'a$ %e allo"ed for s#c periods as 'a$ %e
fi7ed %$ te %an) in eac case, %#t not e7ceedin! one $ear in an$
case&
Cas creditA Overdraft a'o#nt to %e advanced on te sec#rit$ of
te ter' deposits sall not e7ceed ;<I of te deposits&
Closing Cash Credit/ Overdraft Account:
Cas credit A Overdraft acco#nt is lia%le to %e closed at te
discretion of te %an) and steps to recover te d#es "ill %e ta)en
"en2
Te cas creditA Overdraft acco#nt is not operated #pon
contin#o#sl$ for tree 'onts >or=
Te t#rn over in te acco#nt is not in t#ne "it %#siness
pro-ections&
Lending to priority sector2
Te R*I Polic$ of ens#rin! te provisions of s#fficient and ti'el$
credit at reasona%le rate of interest to a lar!e se!'ent of r#ral
pop#lation as possi%le, it facilitate te %roadenin! of te

instit#tional %ase in te r#ral sector and te flo" of credit tro#! a
'#lti a!enc$ 'ecanis' co'prisin! co3operatives, co''ercial %an)
and spread tro#! o#t te co#ntr$&
R*I Introd#ced te concept of priorit$ sector to foc#s attention on
i'portant econo'ic areas s#c as a!ric#lt#re, s'all3scale
ind#stries, transport and te "ea)er section, and "it tese sectors
to!eter "it povert$ alleviation and e'plo$'ent !eneration
pro!ra''es&
Te !#ide lines iss#ed %$ te R*I is re!ard to te lendin! of
priorit$ sector2
Te p#%lic sector %an)s so#ld acieve a tar!et of 9<I of teir
total advanced for priorit$ sector lendin!&
Of te total priorit$ sector advances at least 6BI so#ld ave
%een advances to "ea)er section and 4:I to a!ric#lt#re&
Te follo"in! is te list of priorit$ sector ite's and tose to %e
considered as "ea)er section advances&
Priorit$ sector
Advances "ic 'a$ %e considered
as tose to "ea)er section
4& Advances to individ#al for
activities allied to a!ric#lt#re&
6& Loans and Advances to cotta!eA
SSI and e,#ip'ent of ne"
rene"a%le so#rces of ener!$&
Persons "it %orro"in! li'its not
e7ceed Rs& 4<<<<A3
Advance #p to 6B,<<<3
8& Advances 'ade to road and "ater
transport operator
O"in! not 'ore tan t"o veicles
Advance #p to 8<<<<A3 for p#rcase
of C$cle K Ric)sa"s, A#to K
ric)sa"s, s'all %oats and

incl#din! te one proposed to %e
financed in respect or Ur%an
%an)s&
+it ti'e and de'and lia%ilities
#p to and incl#sive of Rs& 4<
crores&
replace'ent of spare parts&
9& >4= Private retail traders dealin! in
essential co''oditiesA fair price
sops&
>6= Oter private retail traders
"it credit li'it not e7ceedin! Rs&
B<<<<A3 >or Rs& 4<<<<<A3=
Advance #p to Rs& 6B<<<A3
B& S'all *#siness enterprises Advances #p to Rs& 6B<<<A3
C& Professional and self3e'plo$ed
persons&
Advances #p to Rs& 6B<<<A3
D& Ed#cation loan Advances to persons avin! 'ontl$
inco'e not e7ceedin! Rs& C<<A3 per
fa'il$&
:& Ho#sin! loan not e7ceedin!
Rs&6B<<<A3
Advances #p to te li'ited specified
#nder te priorit$ sector in te
cate!or$ sanctioned to sced#le castA
sced#le tri%e "o'en&
;& Cons#'ption loan #p to Rs& B<<A3
per individ#al&
Advances #p to te li'ited specified
#nder te priorit$ sector in te
cate!or$ sanctioned to sced#le
casteA sced#le tri%e and "o'en
Rules to Small - Scale Industries
Meaning of Small Scale Industry
A S'all Scale #nit is a #nit "ic covers an$ #nit tat is it is
en!a!ed in Ind#strial activities s#c as 'an#fact#rin! processin! or
preservation of !oods, "ose ori!inal invest'ent in Plant and
(aciner$ and E,#ip'ent doe not e7ceed Rs& 4 Crore&
Advances to SSI

Advances to SSI are considered as priorit$ sector advance& In vie"
of its i'portance to te national econo'$ a#torities ave called #p
on all te %an)s for enlar!in! teir assistance to tis sector&
Follo"in! T$pes of credit facilities covered #nder SSI
4& (edi#' Ter' Loan&
6& Overdraft&
8& Inland 5oc#'entar$ *ills p#rcased and disco#ntedA Advances
a!ainst *ills for collection&
9& Si!t letters of credit& Unsec#red facilities s#c as clean
overdraft and p#rcase of #p co#ntr$ ce,#es&
*efore providin! an$ credit facilit$, a satisfactor$ stat#s report is
o%tained& +ile co'pilin! te report te e'pasis is on te
tecnical )no"led!e and e7perience of te Proprietor A Partner A
5irectors in 'ana!in! S'all Scale Ind#strial #nits tan on teir
'eans&
1. Medium Term Loan
Tis facilit$ "ill nor'all$ %e availa%le onl$ to a ne" #nit for
financin! p#rcase of Plant, (aciner$ and E,#ip'ent re,#ired for
settin! #p a S'all3 Scale Ind#strial #nit& A ter' loan "ill also %e
considered for an e7istin! #nit provided te loan is to %e #tili1ed for
financin! p#rcase of fi7ed assets re,#ired for e7pansion of its
capacit$ for prod#ction&
*efore !rantin! a 'edi#' ter' loan a caref#l scr#tin$ of te pro-ect
and its via%ilit$ and its capacit$ to !enerate s#fficient s#rpl#s to

ena%le it to 'eet its o%li!ation in d#e ti'e is 'ade& F#rter, "e
so#ld e7a'ine te tecnical feasi%ilit$ of te #nit "it partic#lar
reference to te vario#s ite's of Plant, and (aciner$, "ic "ill
%e p#rcased for #se in te factor$&
Security
Te sec#rit$ for te 'edi#' ter' loan "ill %e a first car!e on te
entire fi7ed assets of te #nit %$ "a$ of 'ort!a!e %$ deposit of title
deeds and $potecation of Plant and (aciner$A (ova%les&
Margin for Loan:
Nor'all$ %an) "ill as) for a 'ar!in %ased on te cost of vario#s
ite's of te fi7ed assets& In !en#ine cases, te %an) "ill accept a
red#ced 'ar!in after tal)in! into consideration te financial
position of te pro'oter, is tecnical )no"led!e and efficienc$ of
te #nit& (edi#' ter' loans are re,#ired to %e repaid "itin a
'a7i'#' period of 8 to D $ears in convenient install'ents&
Disbursement of loans
*an) "ill 'a)e dis%#rse'ent of te 'edi#' ter' loan after proper
verification of te t$pe of fi7ed assets ac,#ired its val#es and oter
details fro' ori!inal invoice etc& It is preferred to 'a)e direct

pa$'ent to te 'aciner$ and oter s#ppliers to te de%it of te
acco#nt of %orro"ers acco#nt&
All te A%ove nor's "ill e,#all$ appl$ "ere a 'edi#' ter' loan
is re,#ired %$ an e7istin! #nit for financin! its e7pansion&
2. Cash Credit/ Secured Overdraft facilities for financing
Working Capital Requirement
*an) "o#ld consider cas credit or sec#red overdraft facilities
a!ainst te sec#rit$ of ra" 'aterial and finised !oods on a pled!e
%asis, "itin "ic a s'all portion can also %e considered in
deservin! cases #nder $potecation of ra" 'aterial, stoc)s, tat
are nor'all$ #nder process and finised !oods& +ere
H$potecation facilities are re,#ired, te %an) #s#all$ insists for a
car!e on fi7ed assets to old te' as collateral Sec#rit$& Tis is
%ein! stip#lated as an additional preca#tion "ere te %an) as no
control over te sec#rit$ car!ed&
S'all3Scale Ind#stries ave to face stiff co'petition fro' and lar!e
ind#stries& It is terefore, not advisa%le to provide "or)in! capital
facilities "ic are disproportionate to te act#al need of te #nit&
Te levels of stoc) of ra" 'aterial, finised !oods and oter
c#rrent assets are decided %ased on prod#ction c$cle, lead ti'e
re,#ired to proc#re ra" 'aterial etc&
3. Inland Documentary Bills purchase/ Advances against Bills
for collection
Te *an) so#ld also consider 'oderate li'its for p#rcase of #p

co#ntr$ ce,#es received %$ SSI& +ere te %an) is satisfied tat
tere is a te'porar$ sort fall in te "or)in! capital re,#ire'ent of
a partic#lar #nit on acco#nt of dela$ in reali1ation of its
receiva%les, te %an) 'a$ consider !rantin! of #nsec#red overdraft
facilities for te'porar$ periods& Tese are !enerall$ called post3
sales li'its&
Schemes for Professional and Self-Employed Persons
Credit Schemes:
1. Object
Te o%-ect of te sce'e is to elp ,#alified or s)illed A
e7perienced persons to start or develop teir professions or
independent %#siness&
2. Eligibility
a= M#alified en!ineers or tecnicians "o ave filed e7perience in
teir respective line, and "o "is to start or develop teir o"n
"or)sop or service stations, s#c as repair "or)sop for
a#to'o%iles, radio or electrical e,#ip'ents, lates or 'aciner$
etc, &
%= M#alified professional s#c as (edical practitioners, Radiolo!ist,
Patolo!ist, La"$ers, Cartered Acco#ntants, Cons#ltants,
Arcitects, (ana!e'ent Cons#ltant, Contractors and Tecnical
en!ineers "o "is to start or develop teir o"n professional
%#siness avin! alread$ attained e7perience in teir respective
line as Apprentice, Assistant or #nderst#d$ to %e ?Senior@ in te

respective profession or avin! alread$ %een in te line doin!
independent practice A %#siness for at least t"o $ears&
c= Oter self e'plo$ed s#c as Crafts'an, Tailors, Oil 'illers,
Flo#r (illers, Electricians, Pl#'%ers, La#nders, F#rnit#re
'a)ers, S'its, Co''ercial artists, etc&, "o are alread$ in te
line avin! teir o"n independent %#siness and Aor e7perienced A
s)illed in te line of %#siness&
3. Purpose
a= To ,#alified En!ineers and Tecnicians&
For p#rcase of E,#ip'ent and tools&
For repairs or renovation of teir costl$ e,#ip'ent A "or)sop&
For "or)in! capital re,#ire'ents and as for p#rcase for ra"
'aterials, spares or se'i3processes !oods&
%= To Professionals&
For p#rcase of professional or office e,#ip'ent or costl$
reference %oo)s&
c) To other self-employed
For p#rcase of e,#ip'ents and tools&
For "or)in! capital re,#ire'ents and as for p#rcase for ra"
'aterials, spares or se'i3processes !oods&
d) Security
5e'and pro'issor$ note coverin! te a'o#nt of te loan&
H$potecation of e,#ip'ents, tools, or $potecation of
pled!ed or ra" 'aterials, stoc)3in3trade as te ca#se 'a$ %e&

A !#arantee of a respecta%le person considerin! !oods for
si'ilar acco#nt&
In case of "or)in! capital loans a!ainst $potecation, a stoc)
state'ent at te end of te co''ercial $ear "en te self
e'plo$ed artisans nor'all$ open ne" %oo)s of acco#nts,
ever$ tree 'onts, 'ere stoc) val#e state'ents so#ld %e
s#%'ittin! !ivin! val#e of stoc) p#rcased, val#e of sales and
stoc) on and&
e) Terms and conditions
Te residence or place of %#sinessA practice of te %orro"er
so#ld %e "itin a reasona%le area covered %$ te %ranc&
*orro"er so#ld ave no %orro"in! arran!e'ents "it oter
%an)s&
Self3e'plo$ed artisans so#ld ave %een in te line for at least
8 $ears doin! teir o"n independent %#siness&
En!ineers, tecnicians or professionals see)in! assistance for
startin! of teir o"n %#siness practice so#ld ave at least 8
$ears e7perience as tecniciansA en!ineer, assistant or #nder
st#d$ in a %#sinessA "or)sop or #nder ?Seniors@ in teir
respective profession& Tose see)in! assistance to develop or
e7pand teir e7istin! %#sinessA practice at least for 6 $ears
"it inco'e -#stif$in! e7pansionA develop'ent renovation&
Tools and e,#ip'ent p#rcased so#ld %e %rand ne" and
so#ld %e p#rcased on a o#t3ri!t %asis and not on ire and
p#rcase ter's&
E,#ip'entsA +or)sops for repairs or renovation of "ic te
loan is applied for so#ld %e o"ned %$ te %orro"er and

so#ld not ave %een can!ed to an$ oter financers, or no
a'o#nt so#ld %e d#e tere a!ainst, declaration of tis effect
so#ld %e !iven&
A'o#nt advances for p#rcase of e,#ip'ent or tools or for
repairs or renovation is repa$a%le in a 'ini'#' prescri%ed
'ontl$ install'ents spread over te period of loan&
In case of loans for "or)in! capital needs, te %orro"er so#ld
'aintain a c#rrent acco#nt& Te loans "o#ld %e !ranted in te
for' of sec#red overdraft eiter a!ainst
$potecation or pled!ed or ra" 'aterials are stoc) in trade
"it a 'ar!in&
Schemes for Small Business Enterprise
+it a vie" to e7tendin! te covera!e of credit !ranted to te
"ea)er section, a sce'e for financin! s'all %#siness enterprises is
devised, tese enterprises #s#all$ provide so'e )ind of service in
r#ral or se'i3#r%an centers&
Eligibility
To %e eli!i%le for classification as a S'all %#siness, te enterprise
so#ld ave %een esta%lised and r#n %$ an individ#al/s or fir's&
Purpose
For financin! "or)in! capital need of teir %#siness&

For p#rcase of an$ e,#ip'ent to %e #tili1ed for carr$in! on
te %#siness of te concern&
Security / Security Documents
a= 5e'and pro'issor$ note coverin! te a'o#nt of te loan&
%= Pled!e A $potecation of !oods and oter assets, if an$&
c= H$potecation of e,#ip'ents&
Terms and Conditions
a= Te %orro"er so#ld f#rnis infor'ation, credit infor'ation
acco'panied %$ a state'ent of asset and lia%ilities&
%= Te %orro"er so#ld no %orro"in! arran!e'ents fro' oter
%an)s& A 5eclaration to tis effect so#ld %e ta)en fro' te
%orro"er&
c= Te sops "ere te %orro"er does te %#siness %e eiter is
o"n or rented %$ i' in is o"n na'e& 5oc#'entar$ proof for
tis so#ld %e s#%'itted to te %ranc, "ere pre'ises are rented
a letter fro' te land lord so#ld, as far as possi%le %e o%tained
per'ittin! te %an)/s representative to enter te pre'ises for te
p#rpose of inspection of !oods stores or located in te pre'ises
and %oo)s of acco#nt as also to posses to recover !oods or assets
car!ed in favo#r of te %an)&
d= In case of loans for "or)in! capital need te %orro"er so#ld
'aintain a c#rrent acco#nt& Te loan !ranted in te for' of
sec#re overdraft, eiter a!ainst $potecation or pled!e or stoc)3
in3trade "it a 'ar!in
e= In case of finance for te p#rcase of e,#ip'ent, te %an) "ill
re'it te cost price %$ te %an)/s pa$ order directl$ to te seller&

For tis p#rpose te %orro"er so#ld f#rnis ori!inal invoice
esti'ate fro' te dealerAseller&
f= A'o#nt Advanced for p#rcase of e,#ip'ent etc is repa$a%le
"itin te stip#lated period in 'ontl$ install'ents& Te a'o#nt
of install'ent "ill %e de%ited %$ te %an) to te %orro"er/s
c#rrent acco#nt at te %e!innin! of ever$ 'ont&
Schemes for Traders in Goods
A trader is an individ#al or fir', and is en!a!ed "oll$ or 'ainl$ in
carr$in! on trade i&e& %#$in! and sellin! !oods&
Eligibility
a= Esta%lised Retail Traders&
In r#ral, se'i #r%an as "ell as 'etropolitan areas dealin! in food
!rains, !rocer$, piece !oods electrical !oods, etc&
%= +olesale Traders&
In r#ral and se'i3#r%an areas doin! %#siness on a S'all Scale&
Purpose
For financin! "or)in! capital needs of teir %#siness a!ainst
pled!eA $potecation of 'ercandise, readil$ salea%le or a!ainst
%ills or %oo)3 de%ts representin! a'o#nts receiva%les on acco#nt of
sale of 'ercandise&
Security Documents

a= 5e'and Pro'issor$ Note&
%= A!ree'ent of pled!e or $potecation as te case 'a$ %e on te
%an)/s standard for'&
c= In case of $potecation acco#nt, a stoc) state'ent at te end of
te co''ercial $ear, "en te traders #nderta)e a co'plete
stoc) cec)in! and periodical stoc) state'ents, %ased on si1e of
te loan&
d= Ins#rance polic$ coverin! !oods pled!ed or $potecated to te
%an)&
Terms and Conditions
a= Te %orro"er so#ld ave a c#rrent acco#nt&
%= Te %orro"er so#ld f#rnis is o"n infor'ation acco'panied %$
a ro#! state'ent of affairs, "ic is prepared at te end of eac
co''ercial $ear %$ retailers&
c= Te %orro"ers so#ld ave no %orro"in! arran!e'ents fro'
oter %an)s& A 5eclaration to tis affect and an #nderta)in! no to
%orro" fro' oter %an)s or financial instit#tion so#ld %e
o%tained& It '#st also contain a declaration so"in! f#nds
%orro"ed fro' friends and relatives&
d= Te sop "ere te trader does is %#siness so#ld %e eiter is
o"n or rented %$ i' in is o"n na'e, doc#'entar$ proof of tis
so#ld %e s#%'itted to te %ranc&
Insurance
a= Goods pled!ed so#ld %e ins#red for fire ris)s for f#ll 'ar)et
val#e "it an ins#rance co'pan$ approved %$ central office&
%= Te polic$ so#ld %e in te na'e of te acco#nt %orro"er&

c= Te ris) so#ld %e #na'%i!#o#s, state te correct address of te
!odo"n and so#ld contain %an) cla#se and also cla#ses coverin!
stri)e, riot and civil co''otion&
d= See tat tere are no onero#s cla#ses in te polic$ and tat all
te "arranties are scr#p#lo#sl$ follo"ed&
e= +ere policies are d#e to e7pire sortl$ see tat te %ranc as
ta)en steps to rene" te' on d#e date&
f= E7pir$ date of te policies so#ld %e diarised&
!= Un pled!ed !oods if stored in te !odo"n so#ld also %e covered
%$ ins#rance&
5.4Lending risk of the Bank
1. Non Performing Assets
Apart fro' raisin! reso#rces tro#! fres deposits, %orro"in! etc,
rec$clin! of f#nds received %ac) fro' %orro"er constit#tes a 'a-or
part of findin! credit dispensation activit$& Non3recover$ of
install'ents as also interest on te loan portfolio ne!ates te
effectiveness of tis process of te credit c$cle&
Provision of Non Performing Assets (NPA)
*ased on te Asset clarification te %an)s are re,#ired to 'a)e
provision a!ainst te NPA/s at 4<<I for loss assets, 4<<I of te

#nsec#red portion of do#%tf#l de%ts pl#s 6<I to B<I of te sec#red
portion, dependin! on te period for "ic te acco#nt as
re'ained in do#%tf#l cate!or$ and 4<I !eneral provision on te
o#tstandin! %alance in respect of s#%3 standard assets& *an) also
re,#ire to classif$ s'all advances of Rs& 6B<<<A3 and %elo" in tese
fo#r cate!ories %$ 84
st
(arc 6<<6 and in case it is not a%le to do
so te$ are re,#ired to 'a)e a provision P 4BI of a!!re!ate
o#tstandin! incl#din! perfor'in! loans& *an)s are also %ein! as)ed
to 'a)e provisions P <&6BI of o#tstandin! standard assets&
2. Credit Risk
Credit ris) refers to te ris) of defa#lt on loans and advances
!ranted %$ %an)s "en ti'el$ repa$'ent of principal and interest or
%ot is treatened d#e to ina%ilit$ or "illin!ness of te %orro"ers&
5.5 Investment Portfolio of the Bank in India
Particulars
4& Govern'ent sec#rities
6& Oter Approved sec#rities
8& Sares
9& 5e%ent#res L *onds
B& S#%sidiaries L -oint vent#res
C& Oters
a= UTI Units
Amount
4CBD6<
469C9
68C9
9649B
4866
Percentage
D8&BI
B&6I
4I
4:&BI
&BI

%= Instit#tion investor sce'e
c= Can%an) vent#re Capital F#nd
d= (#t#al f#nds
e= Co''ercial paper
6<<
6<<
6<9
BB
9::
66B4C6
&<:I
&<:I
&<;I
&<6I
&64I
4<<I
5.6 Investment Portfolio of Canara Bank outside India
Particulars
4& S#%sidiaries L -oint vent#res
6& Oters
Amount
6B6
B<48
B6CB
Percentage
BI
;BI
4<<I

5.7Deposit to credit Ratio
Particulars 2003 2004 2005
5eposit
to
Credit
9:<<48
68B9CD
4<<3333G
Q 9;I
B;<C;B
6D:84D
4<<3333G
Q 9DI
C9<8<<
8846CD
4<<3333G
Q B4I

%eries14 #*5
%eries14 #)5
%eries14 $15
#35
#$5
#)5
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Comparative Growth of the Bank
Particulars 2003 2004 Growth
Invest'ents 6499B 6866< :&6I
5eposit B;<D< C9<8< :&8I
Advances 6D:86 8846D 4;I
Int& paid on 5eposits 8BD9D 98B<9 66I
Int& inco'e on Advances 66898 69;CD 46I
Net profit 6:B D94 4C<I
INVESTMENT PORTFOLIO OF CANARA BANK.

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Other Appro0e1 %e37rities
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Ca2ba28 Ve2t7re Capital F721
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Co66er3ial paper

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Interpretation 2
Stat#tor$ Li,#idit$ Re,#ire'ents is 6BI and Cas Reserve Ratio is
9&BI so te total re,#ire'ents is 6;&B and te re'ainin! D<&BI is
availa%le for lendin! %#siness of te %an)&

Findings :
4& *$ st#d$in! te *alance seet of te %an) for te $ear 6<<6, "e
find te *an)/s credit portfolio as
5e'and 5eposits 3 D49:66&D: La)s
Savin!s %an) 5eposits 3 49B449B&:; La)s
Ter' 5eposits 3 968D<86&6D La)s
Te total deposits a'o#nted to Rs C9<8<<<&;9 La)s&
6& Te *an) follo"s and co'plies "it all te R*I !#idelines in
!rantin! vario#s t$pes of advances& Te *an) not onl$ caters to
te needs of te priorit$ sector %orro"ers and also to te Trade,
Ind#str$ and co''erce %#t also provides vario#s t$pes of Loans
to st#dents, professionals and to self e'plo$ed people&
8& Te Invest'ent of te %an) so"s tat it is ta)in! care of te
ade,#ac$ of te stat#tor$ li,#idit$ Ratio and te cas Reserve
ratio& Te %an) as 'ade s#fficient invest'ents in te priorit$
sector as re,#ired #nder te la"&
Te invest'ent pattern of te %an) so"s tat 'a-orit$ of te
%an)/s invest'ents are in Govern'ent sec#rities i&e&, D9I, oter
approved sec#rities CI, sares 4I, de%ent#res and %onds 4;I,
s#%sidiaries L Noint vent#res &BI, invest'ents in UTI &<:I,
instit#tion investor sce'e &<:I, Can%an) vent#re Capital Fnd &
<;I, (#t#al F#nd &<6I , Co''ercial paper &64I&

Canara %an) also as its invest'ent/s o#tside India i&e&, in
S#%sidiaries and Noint Hent#res BI, and oter invest'ent "ic
constit#tes ;BI&
9& Te %an) is !ivin! lot of e'pasis on providin! e7cellent
c#sto'er service&
B& *$ st#d$in! te ta%le so"in! te co'parative !ro"t of te
%an) over te $ear >6<<936<<B= "e find tat
Te invest'ents of te %an) ave increased %$ :&6I&
5eposits ave increased %$ :&8I&
Interest on 5eposits as increased %$ 66I&
Interest inco'e on advances increased %$ 48&8I&
Net profit as increased %$ 4C<I&
C& Te n#'%er of %rances of te %an) as increased fro' 6<9: in
4;;8 to 89<; in 6<<B&

4& Te *an) so#ld !ive 'ore i'portance on !ivin! advances to
corporate %orro"ers in te for' of consorti#' advances&
6& Te *an) so#ld increase its advances to te 'a7i'#' possi%le
e7tent to increase profita%ilit$&
8& Te *an) so#ld also tr$ to increase its non3f#nded %#siness %$
i'provin! on te co''ission inco'e, %ro)era!e inco'e etc& Tis
"ill f#rter increase te profita%ilit$ of te %an)&
9& (ore and 'ore *an)s are e'pasi1in! on te need to open
AT(/s& Canara *an) so#ld also increase te n#'%er of AT(/s
to provide %etter service to its c#sto'ers&
B& Te *an) so#ld also !ive 'ore e'pasis on Internet %an)in! in
order to )eep #p "it te can!in! trends in International
*an)in!&
C& *an) so#ld ave inter3 cit$ transaction li)e oter %an)s&
D& *an) so#ld ave sin!le "indo" operation&
:& proced#res for'alit$ to %e red#ced to 'ore c#sto'er for loans
and advances&
;& Interest rates to %e red#ced&
4<& Co'petitive c#sto'er e7ec#tive so#ld %e on te elp des) to
elp c#sto'er&


4& Essentials of Financial (ana!e'ent %$ I&( Pande$
3 Hi'ala$a P#%lisin! Ho#se&
6& Financial (ana!e'ent %$ Redd$ and Appania
3 Hi)as P#%lisers&
8& Financial (ana!e'ent %$ *&S Ra'an
3 United P#%lisers
9& Financial (ana!e'ent %$ Sar'a L G#pta
B& Financial (ana!e'ent %$ Ean L Nain
3 Tata (c Gra"3Hill&
No#rnals 2
Indian (ana!e'ent
Finance India

+e%sites2
"""&Can%an)india&co'
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