1.1> Introduction to co-operative Banks.

1.2> Structure of co-operative banking in India.

1
1.1> Introduction to co-operative Banks: -
Unlike commercial of the economy, the co-operative banks, on the
other hand provide credit and other allied facilities to the rural and
agricultural sectors the drawn of this century saw the evaluation of the co-
operative movement in India. Co-operative societies came into being
when the Co-operative banks which are engaged in serving the industrial
and commercial sectors Societies Act, 1904, was enacted. The movement
was started with the aim of providing farmers funds with low rates of
interest so that exploitation by the village moneylenders is foiled. The
Act provided for the formation of co-operative credit societies and a
number of small primary credit societies were established in various parts
of the country. These societies, however, could not mobilise enough
resources as compared to loans demanded by its members. This led to the
enactment of a new act in 1912. The Co-operative Societies Act of 1912
provided for starting Center Co-operative Banks with headquarters
located in Urban Centers. In 1914 necessary steps were taken by the
government to strengthen the co-operative movement. The government
appointed the Maclagan Committee to look into and make
recommendations for the improvement of a State Co-operative Bank for
each state. The federation of Central Co-operative Banks functioning at
the district level forms the State Co-operative Bank. The present
organization of the co-operative in India is based on the recommendation
made by the Maclagan Committee. In 1919, the Montague Censored Act
made co-operation a provincial subject. Since then, All State
governments have passed separate Co-operative Societies Acts.
Although co-operative banks in India have shown progress since
their establishment, there still exist a number of defects in the
organisation. This has led qualitative improvement to suffer. However,
the Reserve Bank of India took the initiative to revitalize, reorganized

2
and promotes the growth of co-operative bank in India. Under the
Banking Regulation Act of 1949, Co-operative banks have been brought
under the control of the Reserve Bank of India.

1.2> Structure of co-operative banking in India: -

Co-operative banking in India is federal in its structure. It is to be
noted that the word 'federal' means where an institute subordinates its
power authority. The State Co-operative Bank (SCB) which is also
known as the Apex Bank among the co-operatives functions at the state
level. At the district level, there is the District Central Co-operative Bank
(DCCB) for each district. At the base of the pyramid there are the
Primary Credit Societies or the Primary Agricultural Credit Societies
(PACS) which cover small towns and villages. Each higher level co-
operative bank is a federation of those below having membership and
loan operations restricted to their affiliated units.

STRUCTURE OF CO-OPERATIVE BANKING IN EACH STATE

OF INDIA

SCB
(APEX BANK)

DCCB DCCB DCCB

PACS PACS PACS PACS PACS PACS

⇒ SCB= The State Co-operative Bank.

3
⇒ DCCB= The District Central Co-operative Bank.
⇒ PACS= The Primary Agricultural Credit Societies.

 STATE LEVEL:-
⇒ SCB= The State Co-operative Bank.

 DISTRICT LEVEL:-
⇒ DCCB= The District Central Co-operative Bank.

 VILLAGE LEVEL:-
⇒ PACS= The Primary Agricultural Credit Societies.

A>Primary Agricultural Credit Societies: -

At the base of the co-operative credit structure is the primary
agricultural credit societies (PACS) occupying a predominant position.
The organisation of PACS dates back to 1904 when the first co-operative
credit society act was passed. These societies were started with the main
objective of providing cheap credit to farmers. They interact directly with
the borrowers by providing them loans and collecting the repayment of
loan alr3eady given. They are the basic units having links the ultimate
borrowers and the hire financing institutions.

B>District Cultural Co-operative Bank:-

There are now 351 DCCBs which land about Rs. 14000 crore
annually. The Central Co-operative Bank is usually located at the head
quarters of the district. Central Co-operative banks are generally of two
types one is the membership type i.e. federating members known as
'Banking Unian' and the other is the mixed membership type, consisting

4
of both primary members and individual having some finacial status,
influence or special business experience in the field of co-operative
banking. The main function of Central Co-operative Banks is to land
money to their affiliated primary societies.

C>State Co-operative Bank: -

There is 28 STATE Co-operative Banks in the country. The SCBs
have assumed a key position in the co-operative credit structure because
it is only through them that the RBI provides loans and advances to
agriculturist.

5
2.1> History of THE SUTEX CO-OPERATIVE BANK Ltd.
2.2> Present Situation of THE SUTEX CO-OPERATIVE BANK Ltd.
2.3> Board of Directors.
2.4>Growth Rate.

6
2.5> Organisation Structure.
2.1>HISTORY OF THE SUTEX CO-OPERATIVE BANK
LTD.: -

The bank was started in 15th May 1972 with 270 members and
10,000-share capital and funds of Rs. 523315/- in the ground floor of The
Surat Textile Market. After these, today it works in bank block Surat
Textile Market. It was established by the chairman Mr. Surajram H.
Bachakaniwala and vice-chairman late Mr. Ashabhai R. Patel and Late
Mr. Bhupatlal R. Dholabhai (Regional Manager of DENA Bank), late
Mr. Bhagwandas Lekhadiya, late Mr. Manilal Chevali, Mr. Manilal
Kapadiya, Mr. Chaturbhai Tanawala, Mr. Mohanlal Nayak etc.,

First branch of the bank was established in 27th July 1986 at Station
Road, Mavani Tower. It was inaugurated by a great sage revered
Ghanshyam Charan Swamiji of Swaminarayan Temple.

In 1986, The SUTEX Co-operative Bank Ltd., gets wholetime

membership in "Gujarat Urban Co-operative Bankers Federation".

In 1992-93, bank was purchased Hardware from NALCO

Company and Software from Tryology Company and started online
computerization in main branch.

In 15th May 1996, bank was started festival of Rajat Jayanti. Mr.
Surajram Bachackaniwala the chairman of the bank started it. In this year,
bank's funds was Rs. 100 crore. Reserve Bank of India gave permission
to bank to increase their functional areas from Surat, Bharuch, and

7
Mumbai Municipal Corporation. In this year bank increase their branches
and it was at that time 11. At the time of Rajat Jayanti Festival, bank
invites its all members, creditors, other staff members and also Mr.
Fakirbhai Chauhan who was mayor at that time.

In the event of banks Silver Jubilee year, The SUTEX Co-operative

Bank Ltd., offers Rs. 50-lack donation to Sarvajanic Education Society
for Textile Processing faculty. In this way bank fulfill its social
responsibility.

The bank changes its name to "The SUTEX Co-operative Bank

Ltd." and was registered in Multi State Co-operative Act-1984 in
February 8, 1999.

In the year 2000-01, two new branches were established i.e. City
Light branch and Salabatpura branch. All the credits of opening these
branches goes to Mr. J.M.Nayak (C.E.O.) of the bank. In addition, bank
organised to open branch in Mumbai.

The bank has 13 branches and 3 ATM (Automatic Tailor Machine)

in various areas. The ATM machines are available on Rander Road
Branch, Athwalines Chopati Branch and City Light Road Branch. In very
few times, bank provides ATM service in Station Road Branch.

In present bank thinks about Wireless Anywhere Bank (satellite

bank).

"HELPS YOU LIVE BETTER"

8
 2.2> Present Situation of THE SUTEX CO-OPERATIVE BANK
Ltd.
(Date: - 1st March 2004)

Name : - "The SUTEX Co-operative Bank Ltd."

Registered no. : - 5033, Date:- 15th May, 1972.
Registered Office : - 2nd Floor,
Bank Block,
Surat Textile Market,
Ring Road,
Surat-2.
Administrative Office: - 2nd Floor,
Surbhi Complex,
Puna Octroy,
Paravat Patiya.
Surat-10.

9
 BRANCHES

The bank has 13 branches in Surat City at various areas as

follows: -
Main Office: - Station Road: -
Surat Textile Market, Meghani Mesons,
Ring Road, Station Road,
Surat-395002. Surat-395003,

Gopipura Sona Faliya: - Katargam: -

Subhas Chowk, 163-B G.I.D.C.,
Gopipura, Katargam,
Surat-395001 Surat-395004.

Rander Road: - Varachha Road: -

Ashirwad Society, Shreyas Diamond Center
Rander, Varchha,
Surat-395009. Surat-395006.

Udhana Magdalla: - Athwalines: -

Pashwanath Complex, Anjana Salakha,
Udhna Magdalla, Athwaliane,
Surat-395017 Surat-395001.

10
Parvat Patiya: - Kim pepodara: -
First Floor, Surbhi Complex, J.J. Complex
Parvat Patiya, Kim Charrasta,
Surat-395210. Surat-394111.

Sachin G.I.D.C.:- City light: -

1008, G.I.D.C., Hirapanna Shopping Center,
Sachin, City Light,
Surat-395230. Surat-395007.

Salabatpura: -
Piperdi Sheri,
Salabatpura,
Surat-395003.

2.3> Board of Directors: -

11
 "The Sutex Co-operative Bank Ltd." has 15 directors this
name as follows: -
Name Post
Mr. Surajram Hiralal Bachakaniwala Chairman
Mr. Jyotindra Bhagwandas Lekhadiya Vice-Chairman
Mr. Ravindra Bhupatlal Dholabhai Hon. Director
Mr. Vasantlal Ishwarlal Bachakaniwala Hon. Director
Mr. Sureshbhia Ashabhia Patel Hon. Director
Mr. Bhupendra Manilal Chevli Director
Mr. Chaturbhai Nagindas Singapuri Director
Mr. Manharlal Ratilal Bachakaniwala Director
Mr. Manilal Bhaidas Kapadiya Director
Mr. Mohanlal Rudhanath Nayak Director
Mr. Kamal Vijay Tulshan Director
Mr. Hasmukhlal Bhagwandas Mistry Director
Mr. Sharadbhai Champakala Kapadiya Director
Mr. Pankajbhai Amabala Patel Director
Mr. Mohanlal Harikishandas Bhagat Director
Mr. Jitendra M. Nayak CEO
Mr. Jayvant B. shinde Manager
(Credit &personnel)

2.4>Growth Rate
(Rs. in crore)
1998 1999 2000 2001 2002 2003

12
Number 8,906 9,557 10,388 11,481 13,247 14,800
of
Members
Share 10.00 10.00 10.00 10.00 10.00 10.00
Capital
Subscribe 20.91 3.71 4.21 4.80 5.50 6.19
Share
Capital
Deposits 135.95 164.36 196.66 219.53 256.32 248.59
Advances 69.02 87.65 89.90 99.22 115.58 123.96
Working 153.64 184.92 223.73 250.36 301.71 302.10
Capital
Profits 2.33 3.53 4.22 3.64 4.16 4.04
Reserve 2.29 2.92 3.82 4.90 5.83 5.08
Fund
Building 2.79 2.99 3.47 4.57 5.31 6.41
Funds
Other 1.74 2.09 3.40 3.49 5.65 5.75
Funds
Audit A A A A A A
class
Dividend 15% 15% 15% 15% 15% 15%

2.5> Organisation Structure of the bank:-

Chairman

Vice-Chairman

Managing Director

13
Assistant
Manager
Board Peon
of Manager
/C.E.O.
Officer
ClerkDirector
14
3. OBJECTIVE OF THE PROJECT: -

"While selecting the project title 'Loans & Advances' the main
objective is to know there is any changes is possible in current or present
banks lending procedure of loans and advances". Some other objectives
are as follows: -

1> To study different types of loans given by the bank.

15
2> To study the procedure of loans and advances of the bank.

3> The norms and conditions for sanctioning the loans are studied.

4> To show total advances of the bank.

5> Some focus on the recovery procedure of the loans and advances of
the bank.

6> The procedures for giving the loans and advances have been studied.

16
4.1> Introduction of Loans and Advances.
4.2>Types of Loans.
4.3>Procedure of Loans.
4.4>Documents required for the Loans.
4.5>Various Loans Schemes.
4.7> Recovery Procedure of Loans

4. THEORITICAL FRAME WORK: -

4.1> Introduction of Loans and Advances: -

Any amount borrowed or lent is called loan. If money is borrowed
it is debt of business ands if loan is given, it is receivable for the business.
Loan is a method of lending under which bank gives credit to a
borrower for a fixed period and for a specific purpose. Loan are promises

17
for future payment, they have to be repaid in periods beyond a year and
are, therefore long term liabilities.
In other wards "when a banker makes an advances in a lump sum
which can not be paid wholly or partly and which the customer has
permission to withdraw subsequently, it is called a loan."
Profit is the pivot on which the entire business activity
roates. Banking is essentially a business dealing with money and credit.
Like every other business activity. Banks are profit oriented. A bank
invests its funds in many ways to earn income. The bulk of its income is
derived from loans and advances.
Banks make loans and advances to traders, businessman and
industrialist against the security of some assets or on the basis of the
personal security of the borrower. In either case, the banks run the risk of
default in repayment. Therefore, banks have to follow a cautions policy
and sound lending principles in the matter of lending. Banks in India have
to consider the national interest along with their own interest while
determining the lending policy.
Many a time a borrower needs funds for fixed assets or non-
respective type of activities and thus seeks money from the bank that is
withdrawn in one lump sum. The loan amount is normally repaid in
installments. Loan may be short-term, medium-term or long-term.

◊ Principles of sound lending:-

Traditionally, banks have been following three principles of

lending viz., safety, liquidity and profitability. Banks in India have
shouldered additional responsibility of fulfilling social obligations.
Hence, the bank observes both the traditional and certain other principles.

18
1>Sefety: -
A bank leads what it receives from the public as deposits. The
success of the bank depends upon the confidence of the depositing
public. Confidence could be infused in the depositors by investing the
money in safe and sound securities. Safety depends upon (1) the security
offered by the borrower, and (2) the repaying capacity and willingness of
the debtor to repay the loan with interest. So the banker should ensure
that the security offered are adequate and readily releasable and the
borrower is a person of integrity good character and reputation.

2>liquidity: -
Liquidity refers to the ability of assets to convert into cash without
loss within short time.
The liabilities of a bank are repayable on demand or at short notice.
To meet the demand of the depositors in time, the banks should keep its
funds in liquid state. Money locked up in long term loans such as land,
building, plants, machinery, etc., can not be received back in time and so
less liquid.

3>Profitability: -
Like all other commercial institutions banks are run for profit.
Even government owned banks are no exception to this. Banks earn profit
to pay interest to depositors, declared dividends to shareholders, meet
establishment charges and other expenses, provide for reserve and for bad
and doubtful debts, depreciation, maintenance and improvements of

19
property owned by the bank and sufficient resources to meet contingent
loss. So profit is an essential consideration.

4>Security: -
Customers may offer different kinds of securities viz., land,
building, machinery, goods and raw materials to get advances. The
securities of the customers are insurance and bankers can fall back upon
than in times of necessity. Securities which could be marketed easily,
quickly and without less should be preferred.

5>Purpose of the loans: -

Before sanctioning loans a banker should enquire about the
purpose for which it is needed. Loans for undesirable activities such as
speculation and hoarding should be discouraged. Banks readily allow
borrowings for productive purposes. It is also equally important on the
part of banks to insure that a loan is utilised for the proposed for which it
is granted so that repayment will be prompt.
Proposed of the loan has assumed a special significance in the
present day concept of banking it is equally important to insure that the
loan is utilised for the proposed for which it is a granted.

6>Sources of Repayment: -
Before giving financial accommodation, a banker should consider
the source from which repayment is promised.

7>Diversification of risk: -

20
 The security conciseness of a banker and the integrity of the
borrower are not adequate factors to keep the bankers on safe side, what
is more important is the diversification of risk. So that a bank should
follow wise-policy for 'do not lay all the eggs in the same basket.' The
bank must advance moderate sums to a large number of customers spread
over a wide area and belonging to different industries.

8>Receipt concept of sound lending: -

A sound credit is one where timely repayment is assumed. This
largely depends on the earning power of the business units and the
repaying capacity of the borrower. So great emphasis is laid on the
productivity of the loan. Since the banks have shouldered an additional
responsibility of keeping the tempo of development of the economy they
should consider the productivity of loan as the chief criterion for
advancing loan.

4.2a>Types or Forms of advances: -

Bank offers different types of borrowing facilities to their
customers. The credit facilities may be broadly classified into four types.
1> Loans,
2> Cash Credit System,
3> Overdraft,
4> Bills Purchased and Discounted.

These can be discussing in brief as follows.

1> LOANS:-
In case of loans, the banker advances a lump sum for a certain
period at an agreed rate of interest. The entire amount is paid on an
occasion either in cash or by credit in his current account, which he can

21
draw at any time. The interest is charged for the full amount sanctioned
whether he withdraws the money from his account or not. The loan may
be repaid in installments or at the expiry of a certain period. The loan
may be made with or without security. A loan once repaid in full or in
part cannot be withdraw again by the customer. In case a borrower wants
further loan, he has to arrange for a fresh loan.
Loan may be a demand loan or a term loan. Demand loan is
payable on demand. It is for a short period and usually granted to meet
working capital needs of the borrower. Term loans may be medium term
or long term loan. Medium term loans are granted for a period ranging
from one year to five years for the purchased of vehicles, tractors, tools
and equipment's. Long term loans are granted for capital expenditure such
as purchase of land, construction of factory building, purchase of new
machinery and modernization of plants etc.,

⇒ Advantages of Loan System: -

1> Financial discipline on the Borrower :-
As the time of repayment of the loan or its instalments is fixed
in advances, this system ensures a greater degree of self-discipline
on the borrower as compared to the cash credit system.
2> Periodic Review of Local Account: -
Whenever any loan is granted or its renewal is sanctioned the
banker gets an opportunity of automatically reviewing the loan
account. Unsatisfactory loan accounts may be discontinued at the
discretion of the banker.
3> Profitability:-
The system is comparatively simple. Interest accrues to the
bank on the entire amount lent to a customer.
⇒ Drawbacks/ Limitations: -

22
 1> Inflexibility: -Every time a loan is required, it is to be negotiated
with the banker. To avoid it, borrowers may borrow in excess of
their exact requirements to provide for any contingency.
2> Banks have not control over the use of funds borrowed by the
customer. However, banks insist on hypothecation of the assets/
vehicle purchased with loan amount.
3> Though the loans are for fixed periods, but in practice they roll
over, i.e., they are renewed frequently.
4> Loan documentation is more comprehensive as compared to each
credit system.

4.2b>Types of Loans: -
Banks grant loans for different periods- shorts, medium and long,
for different propose. Broadly, the loans granted by banks are classified
follows:-

BANK LOANS

Short Medium& Bridge

Consumption
Term Loans Long Terms Composite
Loans
Loans Loans
1> Short term loans: -
Short-term loans are granted to meet the working capital needs
of the borrowers. These loans are granted against the security of tangible
assets mainly the movable asset like goods and commodity shares,
debentures etc. Since April 1995 RBI has made it mandatory for the
banks to grant a portion of bank credit to big customers in the form of

23
loans, which may be for various maturities. The reserve bank has also
permitted the banks to roll over such loans, i.e. to extend the loan for
another period at the expiry of the tenor of the first loan.

2> Term loans: -

Term loans are given for medical and loan periods, and loans
are used for acquiring fixed assets or for modernization and expansion of
existing units. They may also be used for working capital requirements.
An important feature of term loans is the felt that they are repayable in
yearly or half-yearly installments over a period of time. Payment is to be
made according to a specified schedule, extending up to 15 years, which
imposes a sort of financial discipline on the borrowing concern. The
amortization gradually starts 2 to 3 years after the sanction of the loan.
Together with the normal interest, a commitment charge of one per cent
per annum is also levied on the utilized portion of loan. The basic point in
term lending is that the borrower should utilize the amount in such a way
as to repay the loan as well as the interest accruing thereon from the
anticipated income earned by the use of that loan itself. This is the reason
why before allowing a term credit, the banker evaluates the technical and
economics viability of the project for which the loan is sought and also
the repaying capacity of the borrowing concern.

3(a)> Bridge loans: -

Bridge loans are essentially short-term loans, which are
granted to industrial undertaking to meet their urgent and essential needs
during the period when formalities for availing of the term loans
sanctioned by financial institutions are being fulfilled or necessary steps
are being taken to raise the capital market. These loans are granted by

24
financial institutions themselves and are automatically repaid out of
amount of the term loans or the funds raised in the capital market.
In April 1995 RBI banned bridge loans granted by banks and
bank permitted the banks to sanction bridge loans/ interim finance against
commitment mad by a financial institution faces temporary liquidity
constraint subject to the following conditions:
1. The prior consent of the other bank / financial institution which has
sanctioned a term loan must be obtained.
2. The term lending bank / financial institution must give commitment to
permit the amount of the term to the bank concerned.
3. The period of such bridge loans should not exceed four months.
4. No extension of time for repayment of bridge loan will be allowed.
5. To ensure that bridge loan sanctioned is utilized for the purpose for
which the term loans has been sanctioned.

3(b)> Composite loans:-

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

4> Consumption loan:

Though normally banks provide loans for productive purposes
only, but as an exception loans are also granted on a limited scale to meet
the medical needs or the educational expenses or expenses relating to
marriages and other social ceremonies etc. of the needy persons. Such
loans are called consumption loans.

25
◊ Classification of loans and advances: secured and unsecured:
The loans granted by banks are broadly classified into two
categories:
- Secured loans.
- Unsecured loans.
According to section 5(a) of banking regulation act, 1949, a
secured loan or advances means a loan or advances made on the security
of assets, the market value0 of which is not at any time less than the
amount of such loan or advances, and unsecured loan or advances means
a loan or advances not so secured. Thus the distinguishing of the secured
loan or advances are as follows:
1. The loan must be made on the security of tangible assets, like goods
and commodities, land and buildings, gold and silver, corporate and
government securities etc. A charge on any such assets offered as
security must be created in favor of the banker.
2. The market value of such security must not be less than the amount of
the loan at any time till the loan is repaid. If the farmer falls below the
latter because of decline in the market prices, the loan is considering
as partly secured.

The distinction between secured and unsecured loans is made on

the basis of legal title or charge created in favour of the lender. Under
the traditional principles of lending, the borrowing capacity of the person
is judged on the basis of the tangible assets in the possession of the
borrower, i.e. the larger is the creditworthiness of a borrower, if larger is
the value of his tangible assets. However, it should not be understood
that unsecured loans, also called clean loans and advances, are granted to
persons without observing the abovementioned criterion of

26
creditworthiness. In fact, unsecured loans are also granted to persons of
sufficient means, possessing tangible assets and with sound financial
position, but no charge or right is created on any such assets of the
borrower in favour of the banker.
In case of secured advances, the legal status of the banker is that of
a secured creditor; he gets the first and absolute right to recover his dues
out of the sale proceeds of the assets over which a charge is created in
favour of the banker.

2> CASH CREDIT SYSTEM: -

Cash credit is one of the most important methods of lending in
India. Under this method, the banker fixes a limit for a customer, called
the cash credit limit. The limit is generally specified after taking into
account the important features of the borrowing concern, for example,
production, sales, inventory, past credit limits etc. The customer is
allowed to withdraw money from cash credit account according to his
requirements. Similarly he may deposit money in the account as and
when surplus funds are available with him. The cash credit account is,
thus, an active and running account to which deposits and withdraws may
be effected frequently. But the customer has to provide tangible assets as
security for the amount borrowed from the banker. The interest is charged
on the actual amount utilised by the customer and it is calculated only for
the period of actual utilisation only.

⇒ Advantages of Cash Credit System: -

1>Flexibility: -
The borrower need not keep their surplus funds idle with
themselves. They can recycle the funds quite efficiently and can minimise
interest charges by depositing all cash accruals in the bank account and

27
thus keeping the drawls at the minimum level. The system thus ensures
lesser cost of funds to the borrowers and better turnover of mind for the
banks.

2> Operative convenience: -

Banks have to maintain one account for all the transactions of a
customer. The repetitive documentation can be avoided.

⇒Weakness of the system: -

1> Fixation of Credit limits: -
The cash credit limits are prescribed once in a year. Hence it gives
rise to the practice of fixing large limits than is required for most part of
the year. The borrowers misutilise the unutilised gap in times of credit
restraint.
2> Bank's inability to verify the end use of funds: -
Under this system the stress in on security aspect. Hence there is no
conscious effort on the part of banks to verify the end use of funds.
Funds are diverted, without banker's knowledge, to unapproved
purposes.

3> Lack of proper management of funds: -

Under this system the level of advances in a bank is determined
not by how much the banker can lend at a particular time but by the
borrower's decision to borrow at that time. The system therefore does not
encourage proper management of the funds by banks.
These weaknesses of the cash credit system were highlighted by a
number of committees appointed for this purpose in India. Guidelines
have been issued by the Reserve Bank for reforming the cash credit

28
system on the basis of recommendations of the Tandon Committee and
Chore Committee.

3> OVERDRAFTS: -
Overdraft is an arrangement between a banker and his customer by
which the latter is allowed to withdraw over and above his credit balance
in the current account upto an agreed limit. This is only a temporary
accommodation usually granted against securities. The borrower is
permitted to draw and repay any number of times, provided the total
amount overdrawn does not exceed the agreed limit. The interest is
charged only for the whole amount sanctioned.
A cash credit differs from an overdraft in one respect. Businessman
in doing regular business whereas overdraft is made occasionally and for
short duration uses a cash credit for long term.

⇒ Temporary Overdraft: -
Banks, sometimes, grant unsecured overdraft for small amount to
customers having current account with them. Such customers may be
government employees with fixed income or traders. Temporary
overdrafts are permitted only where reliable source of funds is available
to a borrower for repayment.

4> BILLS DISCOUNTED AND PURCHASED: -

Banks grant advances to their customers by discounting bill
of exchange or promote. The amount, after deducting the interest from
the amount of the instrument, is created in the account of the customer.
In this form of lending, the banker receives the interest in advance.
Discounting of bill constitutes a clean advance and banks rely on the
credit worthiness of the parties to the bill.

29
 Banks, sometimes, purchase the bills instead of discounting
them. The bankers purchase bills, which are accompanied by documents
of title to goods such as bills of landing or railway receipt. In such cases,
the banker grants loans in the form of overdraft or cash credit against the
security of the bills. The term 'Bills Purchased' seems to imply that the
bank becomes the purchaser/ owner of such bills. But in almost all cases
the bank holds the bill only as a security for the advances.

⇒ Advantages of Discounting of Bills: -

1>Safety of bank funds: -
A banker is primarily concerned with the safety of the funds he
lends. Through the banker does not get charge over any tangible assets in
case of discounting of bills, legal instrument bearing signatures of two
parties considered good for the amount of the bill. The banker can
enforce his claim much more easily in the case of bills. If the acceptor of
the bill fails to make payment on its due date, the drawer has the remedy
to claim the whole amount from his customer, the drawer of the bill. In
case the bill is dishonored, the banker debts amount to his customers
account and send him intimation. Thus, the banker is fully confidence of
recovering his money on the due date. To be on the safer side a banker
should discount bills of exchange offered by parties of standing and
good reputation.
2> Certainty of payment: -
A Bill of Exchange is considered and ideal self-liquidating assets
because it originates from an actual commercial transaction and the
debtor meets the obligation to pay by disposing of the goods acquired
from the creditor within a short period of time. As the Bill of Exchange
matures within a 'short period of time' the banker recovers his money on
the due date with certainty. The bills are therefore, called 'semi-liquid'

30
assets. As the banker known in advance the dates on which the
discounted bills will mature, he can invest his funds in such a way that
the same are profitably utilised to the maximum extent, without
unnecessarily maintaining large cash balances. Thus, a banker is able to
maximise his profit without taking any undue risk.
3> Facility of Refinance: -
When a banker is in need of funds, he can secure accommodation
from the central bank of country on the basis of eligible securities
including the bills is counted. The bills can also be rediscounted with the
central bank or any other bank/ financial institution and thus the need for
cash balances can be met more easily and quickly.
4>Stability in the value of the bill: -
The value of the bills as a security does not fluctuate while the
value of all-tangible goods and securities is liable to fluctuations. The
amount payable on account of a bill is fixed and the acceptor or the
drawer is liable to pay the same in full. As the bill is a legally enforceable
instrument, neither of these parties can subsequently dispute the validity
of the banker's claim. These parties may be summarily sued for the
payment of the amount of the bill.

5> Profitability: -
While discounting the bills the banker deducts interest from the
amount of the bill. In case of other types of loan and advances, interest is
payable by the debtor quarterly or half-yearly. Thus, the yield from
discounting of bills is a title higher, if the rate of interest or discount
remains the same as in the case of other loans, for example, if a bill of
exchange for Rs. 1,000/-payable after 3 months is discounted @ 6 per

31
cent per annum, the banker pays Rs. 985 (Rs. 1,000-Rs. 15). The actual
yield thus comes to 6.38 per cent per annum.

4.3> Procedure of Loans: -

1. Bank's for all types of loan's necessary application from are printed. In
this borrower or customer is required to fill out the loan application
form printed by the bank. Which seeks comprehensive information
about the loans. Specially the loan application form concerns all the
detail is the borrower.

32
2. All the loan application form fully fill up forms and other related
papers are accepted in branch office of the bank.

3. In branch office all the application firms are scrutinize and to know if
it is completed or not by loan department officer. If the application is
not completed then asked to borrower to give necessary information
about the loans and other relevant.

4. In branch level, "flash report" or "office" report can be prepared and

for its sanction purpose manger recommendation letter is written and
after that the loan file or office report and managers recommendation
letters are presented in administration's office.

5. In administration office it will be presented in "Loan committee" of

The SUTEX Co-operative bank meet every Tuesday and four times in
a month. In "Loan Committee" it can be rescrutinize or recheck and it
will be presented in "Board meeting" for its sanction purpose.

6. After that to call party and take share application form's money,
Document's charges, and after that to sign and stamp can be done to
the loan application.

7. After that if it is essential, lawyer's help and valuare's report can be

taken.

8. After stamp and sign, it can be return to branch from where it comes.
All the paper's and files are given to branch office.

33
9. In branch office, payment of loan can be done who is sanctioned. In
administrative office and take entry in computer to open its account
and field all the detail related with the loans.

10.After all, how many months' loans can be accepted and when the
installment of loan is started related with it a letter can be given to
party or borrower.

4.4> Various loans Schemes:-

The bank providing various loan are as follows:-

► Vehicle Loan,
► Machinery Loan,
► Education Loan,

34
► Consumer Loan,
► Staff Loan,
► Clean Loan,
► Finance for Profession Person,
► Housing Loan,
► Fixed Deposit Loan,
► NSC/ KVP Loan,
► Purchased Bill Discounting Limit
These can be describing as follows: -

1>Vehicle Loan: -
The vehicle loan is provided to customer by purchased a
two-wheeler vehicle or four wheeler vehicles. This loan is providing to
individual, partner ship, and proprietorship private limited company. The
bank provides a loan before all papers clear with a 24 hours sanction a
loan. 75% of an original price of vehicle to provide customer and the
maximum period of loan is 60 months. The bank for its security to
collected by customer property documents.

⇒ Limit: -
Maximum limit in Rs. 75% of an original price of vehicle.
⇒ Rate of interest :-
Upto 2,00,000/- 12.00%
Between 2,00,000/- to 4,00,000/- 12.50%
Above 4,00,000/ 13.00%
⇒ Margin: -
For two wheeler 20%
For three wheeler 30%

35
 For two wheeler 15%
⇒ Security:-
The bank for its security to collected by customer property
documents.
⇒ Requirements for vehicle loans:-
 All basic documents,
 Evident of shareholder,
 Invoice of purchasing vehicle etc.

2> Machinery Loan: -

This loan provides to purchase Machinery. New Machinery
purchase and hand old machinery valuation loan. The machinery loan
provides to partnership firm, proprietorship firm etc.
Bank provides different machinery loans according to business
requirements and different margins.
⇒ Limit: -
i> New Machinery :- 80% of quotation
ii> Old Machinery :- (1) 70% of valuation of valuare committee
member's valuation who is Textile Machinery
Degree Holder.

(2) 70 % of other approved machinery.

In machinery loan bank accepts pre and post inspection. In present
maximum advances or loans amount is Rs. 425 crore.
⇒ Rate of interest :-
Particular Int.
Rate
Machinery Loan
(Factory Type, CC and Working Capital)

36
 Upto 5,00,000/-
Between 5,00,000/- to 15,00,000/- 12.50%
Above 15,00,000/- 13.00%
13.50%
⇒ Margin: -
When dept equity ratio is 2:1 then 20%on loan amount.
⇒ Stamp: -
It is necessary to stamp at 0.20% of hypothecation loan amount. In
this mostly upto Rs. 1,00,000/- stamp is involves.
⇒ Time period:-
-72 to 73 installment
Bank grants mostly 6 years installment in this loan. In this 6
months Moratorium Periods are included.
⇒ Security:-
-3lacks then 1 surety
-Above 3lacks 2 surety
The bank for its security to collected by customer property
documents.
⇒ Documents required for loans: -
i> Income proof (with other income),
ii> Quotation of machinery,
iii> One surety upto Rs.3,00,000/- and two surety beyond
Rs. 3,00,000/-,
iv> Factory proof,
v> Electric Bills,
vi> Registered Certificate,
vii> C.S.T./G.S.T./S.S.I. number/ senvate Registration Certificate,
viii> If having old machinery then its receipt of bill,
ix> Additional Security if having more amount.

37
 Most of advances or loans of bank are in machinery. In which
mostly in Textile Machinery's. It is biggest risk of bank liquidity position.
All the loan application of machinery is sanction by 'Loan
Committee'. In this applicant does not presence. In present bank adopts
Technology Upgradation Fund (T.U.F.) Scheme.
⇒ In machinery loan the bank prepares the following documents: -
i> Loan Paper,
ii> Surety Letter,
iii> Promissory Note,
iv> Declaration,
v> Equitable Mortgage if necessary,
vi> If does not have member then Share Application Form,

3> Education Loan: -

Education loan is a better facility to student of higher study in India
or Foreign. The bank provided a loan according to student parent's
income. The rate of loan is different in India and Foreign. This loan is
providing after standard 12th. This facility is good facility to student who
wants to study more.
Now a day's bank gives education loan for higher study. In this
bank gives loan as follows: -
⇒ Limit: -
(i) For study in India, maximum Rs. 8,00,000/- is given,
(ii) Out of India (foreign) study, maximum Rs.
10,00,000/- (including air ticket) is given.
⇒ Rate of interest :-
(A) In India: -
Upto Rs. 2,00,000/- 7%

38
 Between Rs. 2,00,000/- to Rs. 5,00,000/- 10%
After 12th Standard course 10%
(B) For Foreign: -
Upto Rs. 5,00,000/- 10%
Between Rs. 5,00,000/- to Rs. 10,00,000/- 12%
After 12th Standard course 12%
⇒ Margin: -
In this scheme bank take 10% as margin and 5% loans amount
taken.
⇒ Security:-
In this bank take as securities are as follows:-
(i) Property of applicant,
(ii) Government Security,
(iii) Its fixed deposit,
L.I.C. policy etc.
If more than Rs. 5,00,000/- given as a loan then take one property
mortgage and 25% of loans amounts LIC policy is assign to bank.
⇒ Requirements for education loans:-
In this the following documents are required: -
 Application form printed by the bank,
 Bio-data of applicant,
 Marksheet of last exam,
 Copy of admission form of institution where they want to study and
detail of its expenses, if they want to study in foreign then copy of I-
20.

4> Consumer Loan: -

39
 This loan is providing to purchase daily used items in house.
Banks this types of loans involves different types of instruments like
daily use of house is Television, Refrigerator, Gas, Telephone, Computer,
Furniture, Video, Washing Machine, Truck, Auto Rickshaw, Tempo, Car,
Scooter etc. The bank providing a loan according to price. Banks margin
for all these are as follows: -
⇒ Limit:-
i> 80% of the quotation of Television, Refrigerator, Gas,
Telephone, Computer, Furniture, Video, Washing Machine
etc.
ii> 85% of the quotation of Truck, Auto Rickshaw, Tempo,
Car, Scooter etc.
⇒ Rate of Interest:-

Particular Int. Rate

Consumer Loan 12.50%

⇒ Security:
For this types of loan bank takes security for scooter loans Rs.
500/- and for car loan Rs. 5000/-. It gives to customer after receiving
R.T.O. book, insurance policy and bills receipts.
⇒ Time period:-
50 installment
⇒ Margin:-
30% of loan amount
⇒ Documents Required for the Loan:-
 Income Proof,
 Proof of place where vehicles are park,
 One surety who have properties,
 Quotation,

40
  All the documents or details if previously any types of loans
are taken,
 Other necessary information.
If applicant purchase any instruments within the 6 months
then bank grants above margin. Only 'Loan Committee' has right of
acceptance of loan. Then after for final selection purpose it presented in
the board meeting. When bank wants any additional securities in that case
ask for customer after some time for it.
⇒ For these purpose the following documents prepared by the bank:
i> Promissory Notes (with Revenue Stamp),
ii> Loan Paper,
iii> Surety Paper,
iv> Undertaking (if have),
v> If board member is not then nominal member/ share
application form
For this types of loans bank gives share of 2.5% of loans amount
(excluding case of consumer loan).

5> Staff Loan: -

This loan provided only bank staff. The loan is provided low rate
of interest and loan margin is also favor of staff. This loan is provided
related to employee salary. This loan is more benefit to staff. This loan is
only provided staff to self-use.
⇒ Rate of Interest:-
Particular Int. Rate
Staff loan 6.00%

⇒ Margin:-
-For officer clerk 25,000/-
-for sub-staff 20,000/-
-Manager 30,000/-

41
⇒ Documents Required for the Loan:-
-All basic documents
 Income Proof,
 Proof of place where vehicles are park,
 One surety who have properties,
 Quotation,
 All the documents or details if previously any types of loans
are taken,
 Other necessary information.

6>Clean loan: -
Personal individual loan is called Clean Loan. The rate of interest
is @ 14.00% per annum. This loan providing only individual person, to
use personal work.
⇒ Limit:-
The loan gets maximum Rs. 45,000/-.

⇒ Rate of Interest:-
Particular Int. Rate
Clean loan 14.00%

⇒ Time Period:-
-50 installment

⇒ Documents Required for the Loan:-

 Income Proof,
 Proof of place where vehicles are park,
 One surety who have properties,
 Quotation,

42
  All the documents or details if previously any types of loans
are taken,
 Other necessary information.

7> NSC (National Saving Certificate) Loan: -

Reserve Bank of India suggested to co-operative bank that bank
take 25% margin on National Saving Certificate and does not take
interest on margin. In this way upto 75% of loans granted by the bank.
For this applicant gives application in proper form and with this
copy of N.S.C., income proof and residence proof given in the banks.
Bank grants 75% of NSCs face value.

⇒ Limit:-
75% of N.S.C./ K.V.P. Face value

⇒ Rate of Interest:-
Particular Int. Rate
N.S.C./K.V.P. LOAN 9.50%

⇒ Stamp:-
50.00 Rs.
⇒ Margin:-
25% on investment

⇒ Security:-
- All the basic documents of N.S.C./K.V.P.

⇒ Time Period:-
-36 installments

⇒ Documents Required for the Loan:-

i> Loan Agreement,
ii> Promissory Notes,
In this scheme at branch level, branch manager have power
to accept upto Rs. 25,000/- loans. After its acceptance bank takes

43
 its Leyan Mark in NSC through applicant in post office and give
loans after receiving original certificate and receipts and if more
than Rs. 25,000/- than power of acceptance or sanction of it is in
the hand of administrative office, manager credit and CEO (Chief
Executive Officer) and after its acceptance it gives return to
branch office and after this it presented in board for its acceptance.
In this scheme interest Rate is at 9.5%.
In this bank gives maximum 36 installments facility to
customer.

8> Limits on Stock: -

For requirements of working capital in business bank gives
cash credit facilities. For cash credit facilities the following documents
are required: -
⇒ Limit:-
⇒ Rate of Interest:-
Particular Int. Rate

⇒ Documents Required for the Loan:-

i> Banks have different types of form for limit on stock. In this
three years income proof, proof of place where good are stored,
if registration is related to business then G.S.T./C.S.T./S.S.I.
number/ Senvet Registration Certificate, last stock statement of
the firm etc.
ii> Generally banks gives 70% of loan on stock to their
customers or applicants and take 30% as margin. Bank takes
additional security if it's required or necessary.

44
 iii> All the limits on stock accepted in "Loan
Committee". It is generally a year only. It is receivable in one
year.
In stock on limit the following documents are prepared: -
i> Hypothecation deed of stock/ with Machinery Security Letter,
ii> Promissory Notes,
iii> Letter of continuing Security,
iv> Surety Letter,
v> Contract of C.C. Account,
vi> Declation.
Before giving loan bank first take inspection of stock.
In this types of loan applicant have to give stock statement in
1st to 5th date in the month. On the basis of it bank increase or
decrease in its drawing power. Limit was fixed, but drawing
power is changing one or changeable.

9> SURETY LOAN: -

Surety loan is included in unsecured advances. According to
rules & regulation any banks having demand and time liabilities of less
than Rs. 50 Crore than upto Rs. 25,000/- more than 50 crore then upto Rs.
50,000/- are given as a self guarantee. According to this, ' The SUTEX
Co-operative Bank Ltd.' grants upto Rs. 45,000/- as a self-guarantee.
Objective of these types of loans:-
For business purpose,
i> For house repairing,
ii> For social work,
iii> For furniture etc.,

45
⇒ Limit:-
According to rules & regulation any banks having demand and
time liabilities of less than Rs. 50 Crore than upto Rs. 25,000/- more than
50 crore then upto Rs. 50,000/- are given as a self guarantee. According
to this, ' The SUTEX Co-operative Bank Ltd.' grants upto Rs. 45,000/- as
a self-guarantee.
For all these bank grants upto Rs. 45,000/- as loans.

⇒ Rate of Interest:-
Particular Int. Rate
Surety loan

⇒ Stamp:-
Upto Rs. 45,000/- loans the following documents charges take by the
bank: -
i> Promissory Note (with Revenue Stamp) Rs. 1.00
ii> Loan Paper Rs. 110.00
iii> Surety Paper Rs. 60.00
iv> Undertaking (if having) Rs. 50.00

⇒ Documents Required for the Loan:-

i> Last two years income proof,
ii> Residence proof,
iii> All the details of taking previously any types of loan in
the bank,
iv> Business's /Service's proof,
v> Copy of surety's city survey & tax receipts etc,
vi> Acceptance proof of objects for which loans are
demanded.

v> If board member is not than nominal member/ Share

Application Form.

46
 Bank's all self-guarantee unsecured loans or advances do not
increase 33*1/3% on total DTL.

10> Housing loan:-

Housing loan provide to a purchase a house, flats, shop, office
or building. The loan providing individual, partnership, proprietorship,
private ltd. co. to customer etc.
⇒ Limit:-
-Less than 50 crore then 5 lacks
-Above 50 crore then 10 lacks

⇒ Rate of Interest:-
Particular Int. Rate
Housing loan:-
For Staff member:-
As per rules 6.00%
For general public:-
Upto Rs 3,00,000/- 12.25%
Above Rs 3,00,000/- 14.00%

⇒ Margin:-
The margin of loan is 50% of valuation

⇒ Security:-
All original documents to present bank and after bank providing
loan

⇒ Time Period:-
The period of loan is more than 10 years. and 25% of installment.

⇒ Documents Required for the Loan:-

i> Last two years income proof,
ii> Residence proof,
iii> All the details of taking previously any types of loan in
the bank,

47
 iv> Business's /Service's proof,
v> Copy of surety's city survey & tax receipts etc,
vi> Acceptance proof of objects for which loans are
demanded.
v> If board member is not than nominal member/ Share
Application Form.

11> FFP (Finance for Professional Person) Loan: -

FFP Loan is Finance for Professional Person. A person with
the professional degree and engaged in that professional independently.
For example, Doctor, Architects, Chartered Accountants etc. this loan
providing an individual, firm/ limited company. For the purpose a
professional be eligible for the finance for purchased land, building,
furniture, vehicle, professional equipment's for the purposes of
professional. In this scheme no penalty for premature repayment of the
loan. In this scheme no other charges than the interest charges.
⇒ Rate of Interest:-
Particular Int. Rate
F.F.P. Loan 12.25%

⇒ Margin:-
The margin is 15% on cost price.

⇒ Security:-
-Degree papers of applicant.

⇒ Time Period:-
The maximum period is normally 72 months, but depending on the
project longer period can be considered.

⇒ Documents Required for the Loan:-

i> All basic documents of loan.
ii> Last two years income proof,

48
iii> Residence proof,
iv> All the details of taking previously any types of loan in the bank,
v> Business's /Service's proof,
vi> Copy of surety's city survey & tax receipts etc,
vii> Acceptance proof of objects for which loans are demanded.
viii> If board member is not than nominal member/ Share Application Form.

12> FD Loan: -
This loan given by the fixed depositor. Limit:-
-90.00% of face value of receipt.
⇒ Rate of Interest:-
Particular Int. Rate
FD Loan
-for own FD 2.00% more then FD
-for third party 3.00% more then FD
⇒ Margin:-
The loan margin is 25% of the FD.
⇒ Time Period:-
- This loan maturity date is same as FD.

⇒ Documents Required for the Loan:-

- All basic documents.
RATE OF INTEREST CHARGE BY THE BANK

Sr. Types of Advances Rate

no.
1 Clean Loan 14.00%
2 Vehicles Loan
Upto 2,00,000/- 12.00%
Between 2,00,000/- to 4,00,000/- 12.50%
Above 4,00,000/ 13.00%
3 Factory Shade Loan 13.00%
4 Machinery Loan
(Factory Type, CC and Working

49
 Capital)
Upto 5,00,000/- 12.50%
Between 5,00,000/- to 15,00,000/- 13.00%
Above 15,00,000/- 13.50%

5 Loan/ O.D. Against NSC/K.V.P./ 9.50%

Govt.Sec.
6 FD Loan
(i) Issued FD Own 2% more to FD
(ii) Issued FD Third party 3% more to FD
7 Purchase & Usense Bill Discount Loan 15.50%
9 Consumer Loan 12.50%
10 Retail Trade Loan 12.50
11 Education loan
Our Country: Up to 2,00,000/- 7.00%
Rs2,00,001/-to 5,00,000/- 10.00%
Out of Country : Up to 5,00,000/- 10.00%
Rs5,00,001/-to 10,00,000/- 12.00%
(Note:- After Standard 12th)
12 Cash Credit(Against Stock in Market 13.00%
Shop)
13 Housing Loan
Scheme :1
Staff Acco.Rules 6.00%
General Up to 5,00,000/- 12.00%
Above 5,00,000/- 12.25%
Scheme:2
Upto 5 years 9.00%
Scheme:3
Upto 6 years 9.00%
Upto 7 years 9.50%

50
 Upto 8 years 10.00%
14 FFP Loan (Finance for Professional) 11.00%
15 Cash Credit & Overdraft A/c 17.00%
TOD/Excess

4.7> Recovery procedure of loan: -

Recovery is an important part of the bank. Bank play a role of

collect the amount from saver and provide to borrowers. After giving
loan, it returns with in its fixed period, If it does not return then, it
responsibility of banker to collect the loan amount and which includes
interest and principle amount. It is prime responsibility of banker to
collect loan banker takes the following action,

i) Give letter remainder with details of its account.

- First remainder
- Second remainder (To give information to the director who
sign the loan application).
- Thired/ Strong remainder.
ii)Through discussion.
iii) It necessary then loyer's notice.
iv) Recovery schemes.
v) Legal provision.

51
52
Comparative study of rate of interest with The Surat District Co-
operative. Bank.

Sr. Types of Advances Rate of Rate of

no. Interest Interest
Sutex Surat

1 Clean Loan 14.00% -

2 Vehicles Loan
Upto 2,00,000/- 12.00% 12.00%
Between 2,00,000/- to 4,00,000/- 12.50% 13.00%
Above 4,00,000/ 13.00% 13.00%
3 Factory Shade Loan 13.00% -
4 Machinery Loan
(Factory Type, CC and Working
Capital)

53
Upto 5,00,000/- 12.50% 13.00%
Between 5,00,000/- to 15,00,000/- 13.00% 13.50%
Above 15,00,000/- 13.50% 14.00%

54
5 NSC Loan/ Overdraft 9.50% 10.00%
6 FD Loan/O.D.:-
(iii) Own FD 2.00% 2.00%
(iv) Third party FD more more
3.00% 2.00%
more more
7 Purchase Bill Discount Loan 15.50% 14.50%
8 Users Bill Discount Loan 14.50% NIL
9 Consumer Loan 12.50% 12.00%
10 Retail Trade Loan 12.50 13.00%
11 Education loan Up to 2,00,000/- 7.00%
In India Up to 5,00,000/- 10.00%
Up to 5,00,000/- 10.00%
Out of Country Up to 10,00,000/- 12.00%
(Note:- After Standard 12th)
12 Cash Credit limit(Against Sock in 13.00% 13.00%
Market Shop)
13 Housing Loan Staff Acco.Rules 6.00% NIL
General Up to 5,00,000/- 9.00% 11.50%
Above 5,00,000/- 10.00% 12.50%
14 FFP Loan (Finance for Professional) 11.00% NIL
15 Cash Credit & Overdraft A/c 17.00% NIL
TOD/Excess

55
56
 Findings and suggestions: -

1> It is not cleared that one-person take surety in

howmany loans application? So that bank has to make this
types of rules. It can be not down in application form.
2> Bank has to invite each and every loan applicant to
take once presence in bank.
3> Bank has to keep a P.R.O. counter, which gives
proper information related with various loans schemes. So
that settlement of loan application can be done easily or
speedily.
4> It is necessary for bank to change or improve its
working procedure for sanctioning of loans because loan
procedure of bank is too tough.
5> For acceptance of loan application to keep separate
"Loan Department" and at clerk level all the papers of loan
can be prepared then after officer of the loan dept. can
scrutinize it and then with recommendation letter of
manager credit & personnel/ C.E.O. (Chief Executive
Officer) Sir's. It can be presented in "Loan Committee". So
that loan procedures can be completed speedily or easily
and loans and advances of the bank can be increases.
6> Bank has tries to take varieties in loan schemes. So
that loans and advances of the bank can be increases.

57
7> Bank has to provide loans related to loan applicant's
own requirements or objective.
8> Acceptance of loan application by bank, it can be
inward before it can be access by recovery dept. It can be
only possible when loan dept. and recovery dept. can be
connected.
9> When to give loans to other bank's customer's then to
request to customer's that they open its current or saving
account in "The SUTEX Co-operative Bank Ltd."
10> Bank gives power to branch manager of sanctioning
upto Rs. 25,000/- on N.S.C. & bank's FD. In this, limit of
loan amount does not take and give complete power of
sanction of these types of loan.
11> Bank has to take full time service of loyer. So that in
future in any case does not face any difficulty.
12> If any loan application taken by the bank with
positive attitude and proper papers then pre action can be
taken before putting in "Loan Committee".
13> Pre sansion and post inspection procedure can be
very important for all loans.
14> For sanction of big-amount loans, it is necessary to
take advice or opinion of C.A.
15> It is beneficial for the bank to give loans to any one
group but it can be very risky for the bank.

58
16> The power of sanctioning small amount loans can be
given to manager, manager credit & personnel and C.E.O.
Sir's. e.g. Two wheeler loans, Staff loans, clean loans and
Three wheeler loans.
17> Instead of taking different different forms for
different loans, a single form for all-purpose of loans can
be prepared.
18> Bank gives most of its loans to "Textile Industries".
It can be opposite of principle of lending but it is main
industries or business of 'Surat City'. So that it can be
acceptable. But bank has to try to take variety in loans in
present situations.
19> In today's competitive era, loans procedures can be
make as possible as speedy when interest rate is lowest.
20> In today's Competitive era, it can be very essential
for the bank to take settlement of loan application speedy
for this, to keep separate loan dept. and in this increases
loan manager, officers or increases employees in loan
dept. So that work can be increases.
21> Every branch has interlinked with 'Textile Market'
accordingly or in that manner take interlink between
Administrative officer and branches. So that related with
loan settlement and closing can be done speedily and also
Reserve Banks paper's can be done speedy.

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22> By creating interlink between administrative office
and branches, all the works done simply as well as
employees time and money can be save and also increases
productivity and decrease costs or expenses.
23> Loans procedure and loan documents can be make as
possible as simple.

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 BIBLIOGRAPHY

1>Banking Law and Practice

(for S.Y.B.Com)
-Prof. P.N.Shah
-Sri Gajanan Publication (Surat).

2>Banking Theory, Law and Practice

-Gordon, Natarajan
-Himalaya Publication Hall.

3>Banking Theory and Practice

-Dr. P.K. Srivastava
--Himalaya Publication Hall.

4>Loan Pamphlets of the bank.

5>Annual Report of the bank.

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