Finance Project KSFE

ON OF
UNDER GUIDANCE OF:

Mr. ABDUL FATHAQUE Branch Manager KSFE Main Branch, Palakkad
Submitted in: Submitted By:
1
Project Submitted by _______________
ACKNOWLEDGEMENT
I would like to express my heartiest gratitude to Mr. Abdul Fathaque (Branch Man
ager) for giving opportunity to associate myself to the number one financial ins
titution in Kerala and to carry out my project titled WORKING OF A FINANCIAL INST
ITUTION
I am sincerely thankful to all the staffs in KSFE Palakkad Main Branch under who
se guidance I have successfully completed this project and the time spend with a
ll has been a great learning experience. I thank all for the constant encouragem
ent, warm response and for filling every gap with valuable ideas that has made t
his project successful.
I would also give special thank to my father and my friends for their support, i
nformation, co-operation, advice to complete my project.
I wish to express my heartiest gratitude to _______________________________ for
his support and inputs for preparing a complete project which helped me a lot in
improving my skills and knowledge.
T A Radhika M.Com 3rd Semester VLB Janakiammal College Coimbatore
2
KSFE (Kerala State Financial Enterprises)

TYPE
:
PUBLIC SECTOR
(Miscellaneous Non-Banking Company [MNBFC]) Financial
OWNED BY
:
GOVERNMENT OF KERALA 6th NOVEMBER, 1969
FOUNDED
:
HEAD OFFICE
:
TRICHUR
(Known as Hub of Chitty Business in Kerala)
NUMBER OF BRANCHES CHAIRMAN
: :
289 Mr. MANI VITHAYATHIL
MANAGING DIRECTOR
:
Mr. CHANDRAMOHAN PILLAI
INDUSTRY
:
FINANCE
PAID UP CAPITAL
:
Rs. 10 Crores
BUSINESS TURNOVER
:
Rs. 5,462 Crores
EMPLOYEES
:
MORE THAN 4,000

3
INDEX CHAPTER 1: INTRODUCTION. 5

OBJECTIVE OF THE STUDY SCOPE OF THE STUDY CHAPTER 2: PROFILES..7 HISTORY OF
TH RECENT DEVELOPMENTS PRESENT SCENARIO VISION OF THE COMPANY CHAPTER 3: PRODUCT
S PROFILE.. 13 LINE OF PRODUCTS CHITTY FUNDS THE PILLAR PRODUCT OF KSFE BRIEF A
ODUCTS CHAPTER 4: WORKING OF A BRANCH. 32 ORGANIZATION CHART DUTIES AND RESPONSIBIL
KS DONE IN THE BRANCH PROCEEDURE OF ACCOUNTING THE DATAS CHAPTER 5: CONCLUTION
GESSIONS SWOT ANALYSIS CONCLUSION DECLARATION
4 Project Submitted by _______________
CHAPTER 1
INTRODUCTION
OBJECTIVE OF THE STUDY SCOPE OF THE STUDY
5
OBJECTIVE OF THE STUDY

The project was conducted in KSFE, Palakkad, keeping the following objectives in
view: The project was done to understand the working of a financial institution
. To understand the different financial instruments / products used in a financi
al institution and the response of the public on different products To understan
d / study the organization structure and the roles and responsibility of each in
dividuals working in the company. To understand the accounting procedures of dif
ferent type of financial products like Chitty Products, Savings Deposit, and Fix
ed Deposit etc.
SCOPE OF THE STUDY
The following bulletin points will describe the important SCOPE of the project con
ducted: The data for this project is collected from internet and from KSFE, Pala
kkad Main Branch. The reader of this project can understand about the Financial
Products in Kerala. Mainly about CHITTY FINANCE concept in Kerala. To understand
and to describe about the working of a financial company. Through this project
we can know the growth of the company and the present scenario of KSFE and the F
inancial Market in Kerala.
6
CHAPTER 2
PROFILES
HISTORY OF THE COMPANY OBJECTIVES OF THE COMPANY VISION OF THE COMPANY FUTURE PL
ANS OF THE COMPANY
7
HISTORY OF THECOMPANY
During the year 1967 Government of Kerala took a policy decision to the effect t
hat Chitties / Kuries should be conducted under State auspices. The then Finance
Minister in his budget speech for financial year 1967-68 made the following ann
ouncement on the floor of the Assembly: I view this decision as a bold step forwa
rd along the path towards socialism, aimed at bringing banks and other financial
institutions under social control. The Chitty/Kuri business being what it is, th
ere existed ample scope for exploitation of the ignorance, indifference and gull
ibility of the needy people by unscrupulous promoters, who organized financial i
nstitutions in the name of chitty/kuri fund in order to mobilize fluid resources
in their own interest and appropriate for themselves substantial profit accrued
out of such organizations. Government wanted to introduce a check on the unbrid
led growth of such financial institutions with a view to safeguard the interest
of the general public and at the same time to channelise the savings so consolid
ated for productive purposes. With these objectives, Government appointed a Spec
ial Officer in the year 1967 to prepare a comprehensive scheme for starting chit
ties and kuries under Government control. The Special Officer presented his repo
rt on 7th October 1967 analyzing all aspects involved in the proposal and recomm
ending strongly the entry of Government in the field of chitties and kuries. Tho
ugh the recommendation was for conducting the business as an adjunct of the Regi
stration Department, Government, however, took a different view and decided to b
ring within the purview of Government control not only chitties/kuries but also
some other financial transactions for which socialsation was felt necessary. Hir
e purchase
financing and insurance were the new areas suggested for inclusion within the am
bit of the proposed organization.
Accordingly, Government decided to organize a public sector undertaking with the
name The Kerala State Financial Enterprises Limited for the purpose of conducting
Chitty, Hire Purchase and Insurance business under Government control.
The Kerala State Financial Enterprises Limited is fully owned by the Government
of Kerala and is the first Public Sector Company to conduct chit business in the
whole of India. It was incorporated on 6th November 1969 with its registered of
fice at Trichur. It has an authorized capital of Rs.25 lakhs divided into 25,000
equity shares of Rs.100 each and a paid up capital of Rs.2 lakhs as initial con
tribution from Government of Kerala. The share capital contribution of Governmen
t was progressively increased from Rs.2 lakhs to Rs.7 lakhs in the year 1970-71,
to Rs.12 lakhs in the year 1971-72, to Rs.15.5 lakhs in the year 1972-73, to Rs
.20.5 lakhs in the year 1973-74, to Rs.27 lakhs in the year 1974-75, to Rs.28 la
khs in the year 1977-78 and to Rs.38 lakhs in the year 1987-88. The authorized c
apital was raised to Rs.50 lakhs in the year 1974-75 and to Rs.100 lakhs in the
year 1989-90.
The Management of the company is vested in the Board of Directors constituted by
Governor from time to time. The number of Directors shall not be less than 2 an
d shall not be more than 9. The maximum number has been subsequently raised to 1
5. The Directors shall hold office during the pleasure of the Governor. The Gove
rnor may, from time to time, appoint 2 Directors other than the Managing Directo
r as Chairman and Vice Chairman of the Board. The first Board was constituted as
per Government Order No.G.O. (RT) 4876/69/Fin. Dated 26th November 1969 and the
y assumed charge on 28th November 1969. The Managing
Director is appointed by the Governor on such terms and remuneration as he may t

hink fit from among the Directors for the conduct and Management of the business
of the company subject to the control and supervision of the Board of Directors
. General Body representing the shareholders shall be the supreme governing body
of the Company.
OBJECTIVES OF THE COMPANY
The objectives of the company are listed in the Memorandum of Association of the
company. The important objects are as follows: (a) To start, conduct, promote,
manage and carry on the business of chitties in India or elsewhere. (b) To promo
te, undertake, organize, conduct, manage and carry on the business of general an
d miscellaneous insurance of any kind in India or elsewhere. To start, promote,
conduct, operate, carry on and manage the business of dealers, agents and trader
s under hire purchase system of articles, vehicles, machinery, materials goods a
nd tools, of all capital goods and consumer goods and property of all nature and
description for personal, domestic, office, commercial, industrial and communit
y use and consumption as a business of the Company or as agents of the Governmen
t, State or Central or any body or organization there under or of any other Comp
any. Besides these objects, there are many other objects, which is incidental or
ancillary to the main objects such as to advance, deposit with or lend money, s
ecurities, property or to receive loans or grants or concession of any nature or
deposits from Banks, Government or Governmental organizations or others.
VISION OF THE COMPANY

The vision of Kerala State Financial Enterprises is to become a significant play
er in the financial services sector by:Providing a whole range of quality services and products. Adopting technology an
d benchmark standards in customer service and performance. Spreading our wings b
eyond the borders of Kerala, on a global level. Retaining the pre-eminent role i
n Chitty business. Continuing focus on extending resources to the Govt. of Keral
a. Sustaining commitment to the weaker sections of society, as the neighborhood
institution for support, trust and security.
FUTURE PLANS OF THE COMPANY
The government is taking appreciable steps to widen the business activity of KSF
E and to reach every category of people. The future plans of the company include
the following:Making KSFE a fully computerized Company Opening more and more ne
w branches, including chitty units to establish its presence in all major center
s and backward areas, aiming at effective rural penetration. Introducing value a
dditions in chitty schemes - for coping with the fierce competition in the finan
cial market, for more popularity and widening our customer base. Acting as the c
ollection agent for KSEB, KWA, etc., throughout the state.
To construct a multi-storied building in KSFE s own premises in Kakkanad, Cochin

and to house among others a Staff Training College for itself. Introduction of
new schemes like, Educational Loan, Agricultural Overdraft and Cumulative Deposi
t Scheme. Expanding its door collection facility to loan accounts and deposit sc
hemes suitably, this is expected to create considerable employment opportunities
as part of its social objective. Introduction of chitties with simultaneous dra
w and auction which can be offered as an incentive to regular customers for whom
it will be a great attraction, particularly for those with saving attitude. Int
roduction of Daily/Weekly draw/auction chitties, which is expected to have a wid
e scope among traders, will raise the Company s market share considerably. Enter
the arena of Credit/Debit Card business - immediately after branch networking t
he Company plans to launch the Debit Card business. Starting of Virtual Branch
through net worked computer systems for the benefit of NRIs particularly Malaya
lees in the Gulf & other countries is on the anvil. This will obviate the need f
or "brick and mortar branches" and will enable customers who have internet acces
s, to transact with the Company through virtual branches.
12
CHAPTER 3
PRODUCTS PROFILE
LINE OF PRODUCTS
CHITTY THE PILLAR PRODUCT OF KSFE
BRIEF ABOUT OTHER PRODUCTS
13
LINE OF PRODUCTS Chitty Chitty Loan Consumer/Vehicle Loan Reliable Customer Loan
Gold Loan Passbook Loan Trade Finance Housing Finance Sugama Deposit Fixed Depo
sit Car Loan Flexy Trade Loan Sugama Security Scheme Deposit-in-Trust Scheme Saf
e Deposit Locker Tax Planning Loan Scheme Western Union Money Transfer
CHITTY THE PILLAR PRODUCT OF KSFE

Chitty is a unique scheme incorporating the aspects of a recurring deposit and a
n advance scheme. In chitty, the subscriber has an opportunity to bid and avail
of advance which amounts to a certain percentage of the total denomination of th
e chitty (sala), whereas in recurring deposit the advance can be availed only on
the paid up amount. In case bidding is delayed due to draw of lots in the initi
al installments, one can resort to availing of chitty loan, which is a loan that
"bridges" the gap between the need of the subscriber for money and the delay in
the chitty getting prized. BASIC INFO ABOUT CHITTY Who Conducts a Chitty? A Chitt
y is conducted by a person or an institution and this entity is called the forem
an. In the case of KSFE Chitties, KSFE is the foreman. What is a Chitty? A chitt
y is basically a contract between the foreman and the Subscribers. As per the co
ntract, each subscriber agrees to remit a fixed amount of money every month for
a number of months. How many tickets can be enrolled in each chitty? The number
of tickets enrolling in a chitty will be equal to the number of months for which
the remittance have to be made or the duration of chitty in months. What is Chi
tty Prize Money? The total of the periodic subscription, called the chitty amount,
will be given out as prize money to the person who bids by allowing for the maxim
um reduction in the prize money.
The maximum reduction possible is 25% as per the prevailing Chitty Act and if th
ere is more than one subscriber interested in bidding at 25% reduction, the numb
ers of the such bidders will be put to a draw. Thus each subscriber gets an oppo
rtunity to receive the prize money once during the tenure of the chitty. All the
promoters have to contribute the periodic subscription till the end of the chit
ty. Foremans Commission The foreman is entitled to a certain percentage of the ch
itty amount (not more than 5% of the chitty amount) as his commission from each
member. How many tickets can one subscribe in a single chitty? Maximum number of
tickets one can subscribe is limited to 10% of the total number of tickets of t
hat chitty, subject to approval by Foreman. Services rendered. The Company has a
ppointed daily door collection agent who will come and collect the amount toward
s monthly installment daily from a subscribers office/ residence. Customer can re
mit the chitty installment in any of the Branches of KSFE. How can one enroll in
a chitty? A person can enroll in a chitty either by visiting the Branch or thro
ugh the agents of KSFE. You may either click the feed-back or directly ring to a
ny one of the Branches which is nearer to your location. For finding the list of
Branches you may go to the menu (BRANCHES)
16
Participation in the auction A subscriber can participate in the auction, which

will be conducted in the Branch where the chitty pertains to, either in person o
r through proxy. What are the Securities Acceptable for Payment of Prize Money?
The types of security acceptable for chitty prize money payment, belong to vario
us categories like personal sureties (of employees of Government, aided schools,
public undertakings, banks etc.), financial documents (like fixed deposits with
banks and reputed organizations, Deposit-in-Trust, LIC policies, bank guarantee
s, National Savings Certificates etc.), Sugama Security, landed property or Gold
ornaments. Liability waiver In case of unfortunate death of the subscriber the
future liability subject to a maximum of Rs.1 Lakh will be written off subject t
o certain conditions. CHITTY FINANCE - PROCEEDURE The installment per month for
chitties range from Rs. 500 to Rs. 1, 00,000 and the usual duration of chitties
are 30 months, 40 months, 50 months, 60 months and 100 months.
PURPOSE: Chitty is intended to provide a measure of saving for people who aspire
to save for the future by setting apart a portion of their income. Chitty is a
unique scheme where the saving aspect & the advance aspect are blended together.
17
ELIGIBILITY: Any Indian citizen who has attained majority can subscribe in Chitt
ies. Enrolment in joint names is not allowed. In the case of Non-Resident Indian
s, condition of RBI, if any, have to be observed. A subscriber cannot hold more
than 10% of the total tickets in chitty. The existing rules regarding Chitty can
vassing agents stand revised with effect from 1.5.1999(see circular 64/99)
MONETERY RANGE & DURATION OF CHITTIES Sala of our chitties range upto 10lakhs wi
th monthly subscriptions of Rs.25000/.Branches are permitted to start short dura
tion chitties below 40 months with the consent of Regional Manager concerned. Si
milarly to start chitties with a sala exceeding 5 lakhs prior Head Office permis
sion should be obtained.
DEFAULT INTEREST 9% on Non-prized default & 14% on prized default on the subscri
ption amount
SUBSTITUTION A non-prized default subscriber, after serving a removal notice, ma
y be removed from subscribers registered & another person may be substituted in
his place. Substitution is allowed only upto 60% of the duration of Chitty. If c
heque remittance is made for substitution, the benefits of the substitution can
be enjoyed only after the cheque is realized. In the event of non- substitution
by other parties or after 60% of duration of Chitty, Company can substitute defa
ult tickets in its favour & auction them for Re.1/-If there is no eligible subsc
riber to be prized. In the event of death of the Subscriber non-prized as well a
s prized tickets can be substituted by the nominee & he will be entitled to all
the rights under the chitty as if he was the original subscriber.
NEW CHITTY LOAN PURPOSE: Through an advance aspect is built into the chitty sche
me. It cannot be denied that a subscriber will have to wait for some time to ava
il of the benefit of getting the ticket prized NCL is introduced to bridge the g
ap between the real need of the subscribers & the uncertain point of time in fut
ure, when the ticket gets prized. REGISTRATION CHARGE: RS.10/ LIMIT: a) Loan amou
nt is limited to a maximum of 50% of the chitty sala (per ticket), rounded off t
o the lower Rs.100/b) Number of loans alive at a time: A subscriber should not h
ave more than four live loans at a time in the company; the total of which shoul
d not exceed Rs.5 Lakhs. ELIGIBILITY: a. Every non-prized subscriber of chitties
will be eligible for availing new chitty loan upto 50% of sala after remittance
of 10% of the total installments, provided the remittance are upto date. b. The
system of allowing NCL after the 1st auction of the chitty is permitted to the
following cases only subject to a max of Rs 50,000 i. Where the applicant for NC
L is an employee acceptable to the company as surety.
ii. When financial documents viz., FD Receipts, Bank Guarantee, LIC Policies, NS
Cs, KVPs, etc., are offered security.
19
iii. Where the applicant for NCL is a professional/Businessman having a taxable

annual income of Rs 1 Lakh and above(to prove the income, applicant has to produ
ce last 3 yrs income tax returns) iv. Where the applicant, whether employed or n
ot, offers personal sureties as security, provided one of the sureties offered b
elongs to the SREG (Salary Recovery Enforceable Group) c. Subscribers in chittie
s with sala of more than Rs 1 Lakh can apply a second time for NCL upto 50% of t
he sala, on remittance of 10% of installments which have become due for remittan
ce. i. He should be upto date and prompt in the payment of the concerned NCL int
erest and corresponding chitty installments. ii. Outstanding dues if any, agains
t the existing NCL account should be cleared either by direct remittance or by a
djustment from the fresh NCL amount to be sanctioned d. Where the installment am
ount with interest is 5000/- and above, the unit head should ensure the repaying
capacity of the loanee and make a note of it for sanctioning the loan. e. Loan
should not be sanctioned to a loanee whose previous loan account is in default.
INTEREST RATE The interest rate of the advance is 14.5% (simple) and for default
ed accounts 16.5%. PASS BOOK LOAN: PURPOSE: To provide quick loan to non-prized
subscribers to meet the urgent needs on the security of paid up subscriptions in
the chitties.
LIMIT: As per chart prescribed, based on the paid up amount in the chitty and th
e period remaining for termination of the chitty. Gross subscription remitted re
duced by Formans Commission and debit balance is the paid up amount. Loan is roun
ded to the lower Rs.100/- of eligible amount. ELIGIBILITY: Chitty subscribers wh
o have made up-to-date remittance in unencumbered chitties are eligible. Applica
nt should not be defaulter in any of our schemes as principal debtor or surety/g
uarantor. INTEREST RATE: Interest is charged at 13% monthly compounding on the l
oan This will be applicable to a loanee who remits his/her chitty monthly instal
lments on or before the due date. In case of default in chitty installments the
interests the interest rate will be 15% monthly compounding. AUCTION OF THE CHIT
TY: The chitty can be allowed to be auctioned subject to the limit of 30% if the
prize amount will be adequate to cover the future liability in his chitty, the
loan amount and interest thereon. Prior written permission from the Unit Head to
auction the chitty should be obtained.
REPAYMENT OF LOAN: The loan and interest due thereon can be settled at any time
by remitting the total dues in lump. To charge interest only for the exact outst
anding loan amount after adjusting the part remittance on the same day itself an
d only for the days in debt
21
provided such remittances are not less than 10% of the outstanding balance as on
the date of remittance. PAYMENT OF INTEREST: The loanee can make periodical int
erest payment and lump sum interest payment as well. The practice of treating fr
action of a month as full month is discontinued and interest will be charged onl
y for the exact number of days. WHEN CHITTY IS DEFAULTED: When chitty installmen
ts are defaulted the subscriber is removed observing the usual procedures and th
e loan and interest thereon are adjusted from the RSC or APSTC as the case may b
e. AGREEMENT: Chitty loan agreement is executed on stamp paper of value of Rs. 5
0/-. BOND PREPARATION CHARGE: Bond preparation charge is 0.2% of loan amount at
minimum Rs.10/- and minimum Rs.60/22
BRIEF ABOUT OTHER MAJOR PRODUCTS A. GOLD LOAN SCHEME:

The gold loan scheme was launched by the company on 16th Oct 1989. Under the sch
eme, short term loans upto Rs. 20,000/- for a maximum period of 12months are pro
vided on the security of gold ornaments. PURPOSE: The scheme is intended to prov
ide short term loans for people who are urgently in need of money, on the securi
ty of gold ornaments. Gold coins and bullion will not be accepted as security. A
PPLICATION: Application form will be supplied free of cost. LIMIT OF LOAN: Maxim
um loan amount in this scheme is limited to Rs. 1, 00,000 per individual per day
. To insure the identity of the customer copy of documents like Electoral card,
Passport, Driving license or introduction of any KSFE Employ or Gazette Officer,
MPs, MLAs etc. Customer known to unit head may be obtained and identified. ELIGI
BILITY: The maximum amount that can be granted per gm of 22carat gold jewellery
at any point of time is limited to 70% of the prevailing market price rounded of
f to the lower rupees ten, provided the principle plus interest should not excee
d 75% of the market value at any point of time during the loan period. The preva
iling market price of gold listed in any leading newspaper on the date of gold l
oan is to be recorded in the loan application by the concerned J.E. and it is to
be certified by
the unit head. The same should also be noted in the personal ledger folio. If th
e market price of gold in various towns within the state differs from one anothe
r, the lowest prize quoted may be taken as the base for fixing the eligible loan
amount per grams. APPOINTMENT OF APPRAISER: The branch manager concerned may se
lect suitable person who has sufficient experience in appraising gold ornaments
as appraisers for the branch with the approval of the Regional Manager concerned
. The selected appraisers have to take a fidelity insurance policy for a sum of
Rs.5000/The appraiser should have the following essential qualifications. (i) (i
i) Should know Malayalam (both reading and writing). Should have engaged in the
manufacture of gold ornaments & must
have sound knowledge and experience of goldsmith work. (iii) Should have complet
ed 25yrs of age and should not have completed 6 65yrs as on the date of engageme
nt. (iv) Should hold goldsmith certificate issued by Central Excise Authority.
PERIOD OF LOAN : Maximum period of loan is 6 months. OVER DUE GOLD LOAN: The uni
t heads should send notices demanding the remittance of up-to-date interest with
in 15days from the date of notice. If the loanee, in response to our notice, rem
its at least the interest due for 6 months within the stipulated time, his accou
nt can be kept live for the period remaining to cover the maximum period of 12mo
nths. .
24
If the loanee fails to remit the interest as demanded by the company with in the
stipulated time, the unit heads should initiate immediate steps for the auction
sale of pledged gold ornaments after fulfilling the usual formalities. The maxi
mum period for repayment of gold loan is 1year and even in cases where the loane
e has remitted interest for the first 6months, the account has to got closed imm
ediately after the completion of 12months. INTEREST: Up to 5,000 - 12% 5,001-25,
000 - 13% Above 25,000 - 14% PART PAYMENT: Part payment towards the loan is acce
pted at any time provided the interest till the date of remittance is paid in fu
ll and remittance towards principal is made in hundreds or its multiples. DOCUME
NTATION: Loanees stamped receipt, promissory note etc., are the documents for pa
yment of gold loan.
B. FIXED DEPOSIT
PURPOSE: This scheme aims at raising fund for financing our schemes, paying attr
active interest rates. LIMIT: Rs .500/- or above.
25
INTEREST RATE: Simple interest will be paid as fixed by the

time. The rate of interest on fresh fixed deposit as well as
sting deposits accepted from public is; PERIOD For 1year and
ing60 months FIXED DEPOSITS GENERATED FROM RATE 9.75% PRIZE
company from time to

for renewal of exi
above but not exceed
MONEY
CHITTIES: Fixed deposits created from prize money of chitties and offered as sec
urity towards the future liabilities irrespective of the duration of the chittie
s and quantum of future liabilities. a. Should be deposited in full without any
deduction. b. Subscribers who avail this facility should open a Sugama account i
n his/her name. c. Should be a single deposit, initially. It can be split up int
o 2 or more deposits for different period on the depositors request, when it beco
mes renewable, provided the subscriber is up to date in remittance. PAYMENT OF I
NTEREST: Interest will be paid monthly for deposits of Rs.10, 000/- and above. T
he interest will also be transferred to the depositors Sugama Account, chitty or
loan account as per request. PREMATURE CLOSURE: (a) Period of deposit less than
one month - Nil (b) Period of deposit one month and above but less than one yea
r Sugama rate of interest.
26
RENEWAL: Fixed Deposits can be renewed with retrospective effect. When F.D. is r
enewed on a later date interest will be given from the maturity date of the orig
inal deposit provided the deposit is renewed for a minimum period of one year fr
om the maturity date of the original deposit. The rate of interest will be the r
ate applicable on the date of maturity of the original deposit. LOAN FACILITY ON
ENCUMBERED F.D: (a) Only one FD Loan account can exist against a deposit at any
one time. So the depositor can draw a second loan on FD, equal to 75% of the de
posit or the amount he requires, whichever is lower, as a new loan after closing
the existing loan on FD. (c) A loan on the same FD can be allowed for an amount
not exceeding 75% of the unencumbered portion. OTHER FEATURES: Deposits can be
in the name of individuals, joint names of two or more persons, firms and compan
ies. a) The deposit receipts issued by the company are not transferable. b) The
deposit receipts can be pledged as security for chitty payment and for availing
loans under various schemes of company. c) Nomination facility is also available
.
C. LOAN ON
PURPOSE:
Deposits.
27 Project
FIXED DEPOSIT:
The loan is intended to provide quick loan to depositors on their Fixed
APPLICATION: Application is issued free of cost.
Submitted by _______________
LIMIT: 75% of the F.D amount is paid as loan. The Regional Managers are authoriz
ed to consider individual cases on merit for FD loan above this limit of 75% sub
ject to a maximum of 90% of FD amount. ELIGIBILITY: Normally the FD on which the
loan is intended to be availed must be free of any liability. Only 1 FD loan ac
count can exist against a deposit at any one time. PERIOD OF LOAN: The period of
loan can go up to the maturity date of the FD on which the loan is availed. RAT
E OF INTEREST: The interest chargeable on a FD loan is 2% above the rate applica
ble to the FD on which such loan is granted.
D. SUGAMA DEPOSIT SCHEMES:
PURPOSE: Sugama deposit scheme aims at providing a deposit facility similar in m
any ways to SB accounts in bank but without the cheque facility. The scheme help
s the customers in the following manner. a. The customers can give standing inst
ructions to the company to transfer the monthly installments towards chitty on t
he due dates from the Sugama account. b. Interest on FD can be transferred to th
is account as and when it becomes due on the basis of standing instructions obta
ined from the depositors.
28
MINIMUM BALANCE: Minimum balance to be maintained at any time should not be less
than Rs.100/-. The minimum balance to be maintained in the Sugama for interest
eligibility should be Rs.250/- or more. ELIGIBILITY: The person who intends to o
pen the account should be introduced by a customer or respected person known to
the co., A Sugama account can be opened. a. By a person in his own name. b. On b
ehalf of any minor relative. INTEREST RATE: 5% on the minimum balance maintained
in the account between 6th and the last day of any month. The interest will be
credited twice in a year, on 30th Sep and 31 Mar. MODE OF DEPOSIT: Remittance of
amount for the credit of the account should be made in cash at the branch offic
e concerned or by way of transfer credit of any amount not exceeding Rs.20000/due to the depositor, on request; a subscriber is permitted to transfer the chit
ty prize money in full to a sugama account. WITHDRAWAL: Withdrawal from the acco
unt shall be made through withdrawal slips supplied by the co., According to the
income tax rule, deposit above Rs.20000/- shall be refunded only by crossed che
ques; this limit being applicable to the total withdrawal of the day.
29
E. RELIABLE CUSTOMER LOAN (RCL):

The scheme is intended to provide easy credit facility to our customers. APPLICA
TION FORM: On registration by payment of Rs. 10/- application can be obtained fr
om the unit he/she intends to take the loan. LIMIT: The maximum amount of loan i
s Rs.25000/-. But in the case of single surety, offered by an unemployed custome
r, the maximum loan liability is limited to Rs. 20000/-. ELIGIBILITY: All the cu
stomers of KSFE can be considered for the RCL. a. He/She should have been a cust
omer of the branch in which he/she is applying for the finance, continuously for
a minimum period of 12 months. b. He/She should not be a defaulter at the time
of applying for the loan. c. He/She should not have committed default for more t
han 3months during past 1year. PERIOD OF LOAN: The minimum and maximum period of
the loan is 12months and 36 months respectively. RATE OF INTEREST: Interest wil
l be charged at 14% yearly diminishing basis. REPAYMENT OF LOAN: The loan togeth
er with interest shall be repaid in monthly installment as per the EMI table.
PENAL INTEREST: Penal interest of 2% for each month of default on the defaulted
installments amount will be charged.
NUMBER OF LOAN WHICH CAN BE AVAILED UNDER RCL: At any one time, there should be
one and only one live RCL in the co., in the name of a customer. To ensure this
the covering abstract should be sent to HO and clearance obtained before issuing
the loan. PREMATURE CLOSURE: For premature closure re-calculation of EMI up to
the month of closure is made minimum one years interest is taken.
31
CHAPTER 4
WORKING OF A BRANCH
ORGANIZATION CHART DUTIES AND RESPONSIBILITY WORKS DONE IN THE BRANCH
PROCEEDURE OF ACCOUNTING THE DATAS
32
ORGANIZATION CHART
DUTIES AND RESPONSIBILITY Duties and Responsibilities of Branch Manager:He will
be responsible for the environment with in the Units in which his subordinates w
ork and will create conditions conducive to effective work; To prepare a master
plan outlining the proposed activities with the objectives to be attained in acc
ordance with the policies of the organization and forward it to the Head Office
during February each year to enable the Company to prepare a realistic budget ev
ery year. In addition to the implied duties he will have the following specific
functions;
33
To do all the basic tasks of the Manager, such as; To plan the operations of his
subordinates, organize, integrate, control and co-ordinate their activities for
maximum contribution to the Branch Manager as head of financial unit. To post p
roper persons to various positions in the Branch, train and develop them to acco
mplish their task effectively. To organize their role relationship To start chit
ties conforming to the pattern prescribed by the Head Office and achieve the tar
gets fixed by the Company; To issue advertisements, if necessary, directly to th
e local dailies with the approval of the Regional Manager. To perform the duties
and to exercise the rights of the foreman under the relevant provisions of the
Acts relating to the chitty. To receive proxy form on behalf of subscribers ente
r the details in the register prescribed, to file the proxy forms chitty-wise, a
nd to be responsible for the proper inclusion of their names in the auction/ dra
w. To keep correct minutes of the proceedings of every auction and drawings, sig
n the minutes on behalf of the foreman and to file a true copy of the minutes wi
th the Registrar on the due date. To take steps for the payment of the amount du
e to the defaulting subscriber on the due date. To demand in writing, consolidat
ed payment of future subscription from defaulting subscriber on the due date. To
prepare a separate Annual Balance Sheet for each chitty and to take steps for t
he audit of such balance sheets and filing of copies with the Registrar at the a
ppropriate time. To initiate timely action under R.R. Act to collect defaulted s
ubscriptions or other dues recoverable, wherever necessary.
To send intimation cards indicating the amount due for the next installment to t
he subscribers/ banks having standing instructions from the subscribers, timely.
To send recovery schedules to the drawing / disbursing officers in respect of s
ubscribers who have joined our salary deduction scheme and to ensure the remitta
nces so received are duly entered in the books of accounts promptly. To develop
chitty business of the branch by starting chitties timely and attain the budgete
d sala of business. To verify the correctness of the entries in the Money orders
Register, sign the Money order forms, and to receive the Money order, on behalf
of the Company. To ensure that all the amounts received by Money order on the d
ay have been duly acknowledged by the cashier. To ensure that the day-to-day acc
ounts in the Units are written up on a current basis and satisfactorily maintain
ed. To be responsible for the proper identification of the subscriber and of his
acknowledgements on the documents, payment voucher, cheque counter foil, person
al ledger folio etc and hand over the cheques to the parties concerned. To be re
sponsible for the safe keeping of all the documents relating to the payment of p
rize money/ removed subscribers contribution To reconcile the Bank accounts, Hea
d Office Current Accounts and Regional Office Current Accounts. To arrange for t
he preparation of subscribers personal ledger schedules and their tallying with
control accounts. To schedule payment of prize money in such a way that they are
more or less evenly distributed over the month, also taking into account the wa
ys and means position and giving priority of payment based on the date of receip
t of surety/security applications and subsequent execution of documents.
To transfer funds to the Regional Office within the date stipulated towards: a)
Other Branch collections b) Salary deduction c) Share of tax and Head Office adm
inistration overheads To deposit the entire collections of a day in the bank the
same day or on the morning of the next day. To check occasionally and ensure th
at the employees have already performed their assigned duties (including carryin
g out checking procedure) satisfactorily; To build up and enhance the reputation
of the Company in its dealings with the subscribers and prospects, fostering fr
iendliness with the general public projecting always the good image of the Compa
ny so that we may merit a reputation of our own for the quality of service; To b
e responsible for the proper maintenance and updating of a) Personal files of al
l employees in the Unit b) Service records/books c) Loans, advances and their re
payments Duties and responsibilities of the Asst. Managers:Assistant Manager/Dep
uty Manager will be the front line supervisor in the Officers Cadre who will disc
harge the following duties, functions and exercise the following powers and repo
rt direct to the Unit Head. 1. To do all the basic tasks of the front line super
visor, such as: (a) To plan the operations of his subordinates organize, integra
te, control and coordinate their activities for maximum contribution; (b) To pos
t proper persons to the various positions under his control, train and develop t
hem to accomplish their task effectively; (c) To organize their role relationshi
ps;
36
(d) To direct their work by clarifying their assignments, guiding them towards i
mproved performance and motivating them to work with zeal and confidence; (e) To
control them by measuring and correcting their activities to assure that events
conform to plans and to co-ordinate their work. The major responsibilities of A
sst. Managers are as follows:To be responsible for supervising and checking of a
ll collection activities of the Branch. To ensure by test check or complete chec
k as may be appropriate that all the financial transactions under his section ar
e in order. To verify the correctness of the entries in the Money Order Register
with reference to the Money Order Forms to initial every entry in the Money Ord
er Register authenticating its correctness To be responsible for the correctness
of the entries made in the Money Order Register and of the amounts received and
recorded in the Money Order Register. To correspond with persons from whom the
Money Order has been received in cases where proper details regarding such remit
tances are not available. To receive and enter all the cheques/demand drafts rec
eived in the Cheques/Bank Drafts Sent for Collection Register and to get defects,
if any, rectified or to return the cheques to the parties on the same day if the
defects noticed could not be got rectified, close the register every day. To en
sure that the cheques / bank drafts are duly crossed and if not, to cross them Ac
count Payee; To supervise the postings in the Chitty Collection Registers/ Chitty
Day Book, Personal Ledgers/ Loan Registers/ Sugama Account Ledger and Collectio
n Registers, and all the other relevant registers.
To supervise and check the postings in the Personal Ledger To ensure timely prep
aration and tallying of quarterly collection summary. To ensure that the amount
kept under suspense are cleared in time.. To regulate and conduct the draw/aucti
on to act as proxy on behalf of the subscribers who have authorised the Branch M
anager for such participation. To get the auction proceedings voucher prepared.
To get the default statements (prized, non-prized and loan schemes) prepared in
time. To operate the Bank account of the Branch jointly with the Branch Manager.
To make physical verification of cash with the Cashier at the close of business
every day, to certify the fact of having made such verification in the cash scr
oll and to bring to the notice of the Branch Manager difference between the actu
al physical cash and book balance; To arrange for the preparation of chitty bala
nce sheets and its filing. To scrutinize the cheques/ demand drafts and ensure t
hey are in order; To be responsible for the remittance of daily cash collection
(including the Money Order collection) in to the bank on the date of collection
itself or latest by the next working day, for the maintenance of the Cash in Tra
nsit Register. To be responsible for the safe keeping of the cheques received un
til they are deposited in to the Bank. To verify and initial transfer chalans an
d to be responsible for any erroneous or fraudulent entry in respect of such cha
lans. To ensure the writing up of the Chitty Ledger. To verify the scrutiny repo
rt, ensure that the prize amount payable agrees with the figures shown in the or
iginal auction minutes, ensure with reference to books of accounts that the dedu
ctions to be made as shown in the report are accurate and initial the scrutiny r
eport..
38
To get all payment vouchers prepared, to check and initial it, and to be respons
ible for its accuracy. To be responsible for the accuracy of the prize amounts a
nd other payments made. To review and submit monthly work position reports to th
e Branch Manager. To ensure timely completion of annual accounts and related sta
tements. To transfer funds to Regional Office to wards: (a) Salary deduction (b)
Share of tax and Head Office administration overheads along with the other Bran
ch collection. (c) For meeting emergency requirements. To get the Bank account a
nd Head Office Current Account/ Regional Office Current Account reconciled month
ly and to give the reconciliation statement, by 15th of every succeeding month T
o be responsible for the safe custody of all the relevant records, registers, vo
uchers etc., handled by him and seats under his control. To initiate action for
the starting of chitties in the Branch and to arrange the release of advertiseme
nts with the approval of the Branch Manager. To assist the Manager in canvassing
subscribers as and when necessary To obtain sufficient security for the payment
of future subscription. To take steps for the payment of prize money to the pri
zed subscriber on the due date, if the subscriber has furnished adequate securit
y for the payment of future subscriptions, and to intimate the fact to the prize
d subscribers; To verify the genuineness/ liability of the subscribers/ sureties
; To examine all the documents concerned with the payment of prize amount and en
sure that they are in order and correct and complete in all respects.
39
WORKING OF THE BRANCH 1. OFFICE HOURS The Office hours for regular employees are
from 10 a.m to 5 p.m on all working days except in the case of Evening Branches
. The office hours prescribed for Evening Branches are from1p.m to7 p.m. In the
case of part time employees; it is fixed from 8 a.m. to 1 p.m. in regular Branch
es and from 11 a.m to 4 p.m. in Evening Branches. 2. LUNCH BREAK 45 minutes inte
rval is allowed for lunch break and this has been fixed between 2 p.m and 3 p.m
3. PUNCTUALITY IN ATTENDANCE All members of the staff are expected to observe pu
nctuality in attendance. Habitual late attendance and other irregularities conne
cted with attendance are punishable under the provisions of the Standing Orders
of the Company. Any employee found absent from his seat during office hours for
a duration exceeding five minutes except with the permission of the authorised o
fficer will be called upon to explain his absence and if this habit persists, di
sciplinary action will be taken against such employee who is found guilty. 4. HO
LIDAYS All holidays declared by the Government of Kerala as holidays for its emp
loyees will be holidays for the company also, unless declared to be restricted t
o specific department in which the Company is not included. In addition to the a
bove, the local holidays either whole or part declared by Government are also av
ailable to Company employees of the respective locality. At the beginning of eve
ry year, a list will be drawn up and released showing the public holidays on the
basis of the public holidays declared by the Government. In
addition to the holidays fixed for each year all Sundays and Second Saturdays wi
ll be holidays for the Company. 5. MAINTENANCE OF OFFICE PREMISES The Unit Heads
in the Units, Regional Managers in the Regions and Administrative Officer in th
e Head Office are responsible for the security, upkeep and proper maintenance of
the offices concerned. The office premises shall be kept clean and tidy. All em
ployees are expected to help in the maintenance of cleanliness of the office pre
mises by not throwing about papers, cigarette stumps, etc., and by not disfiguri
ng walls, pillars etc., with writing of slogans and the like and pasting and dis
playing posters on them. Recognized unions may, however, put up notices about le
gitimate union activities in the space provided for them. The offices shall be a
rranged to be opened at 8 a.m or earlier to enable the sweepers to sweep the roo
ms and premises, cleanup the furniture, fittings, bathrooms and the lavatories.
The Administrative Officer in the Head Office, the Regional Managers in the Regi
ons and the Unit Heads in the units shall occasionally inspect the above work an
d ensure cleanliness and tidiness of the premises. Files, registers and papers s
hall be methodically arranged and when not in use, should be kept neatly stacked
in the space provided. No files, registers or papers shall be kept on the floor
. Waste paper should be kept in the waste paper baskets provided and not strewn
about on the floor. Important papers, files and other records should be kept in
safe custody. It must be scrupulously ensured by all concerned that small items
of stationery such as pins, gem clips, tags, carbon papers, refill, etc., are ke
pt in their proper places and not allowed to lie strewn about on the floor. The
offices should be closed at the end of the day and the doors and windows securel
y locked. This should be ensured by the Administrative Officer in the H.O., Regi
onal Managers in the Regions and Unit Heads in the Units or by the persons autho
rised in this behalf. It is the duty of every member of the staff to observe str
ict economy in the use of articles supplied
and facilities provided. All stationery items supplied should be economized to t

he maximum possible extent and all kinds of waste eliminated. Lights, fans shoul
d be switched off and water taps turned off when not required for use. 6. ACCEPT
ANCE OF DONATION FROM SUBSCRIBERS. Members of staff are strictly forbidden from
seeking or accepting donations from subscribers or others either in the personal
capacity or in his representative capacity as member or office bearer of an ass
ociation. 7. DISPLAY OF NATIONAL FLAG The National Flag shall be hoisted on the
office building on special occasions like Republic Day or Independence Day 8. OB
SERVANCE OF BUSINESS DISCIPLINE IN THE INTEREST OF GOOD CUSTOMER RELATIONS. In t
he dealings of the Company with the customers, it is not enough that the employe
es are just and fair, but they should make the customers feel that they are just
and fair. In order to ensure this the members of the staff shall observe the fo
llowing business discipline in addition to the directions given elsewhere in thi
s manual: (i) To act honestly and faithfully at all times; (ii) To demonstrate a
sense of fair play and impartiality in disposing of cases; (iii) To show courte
sy and consideration in public dealings; (iv) To maintain strictest secrecy rega
rding the Companys affairs whatever be the Provocation; (v) To observe scrupulous
ly the rules and regulations; (vi) To avoid seeking and receiving cash, donation
s and advertisements from the Companys clients, constituents, business associates
, etc., even for a good cause; (vii) To attend the public grievances promptly;
(viii) To dispose of cases promptly but without undue haste; (ix) To get all ora
l instructions and decisions of the higher authorities down in writing and get t
hem confirmed; (x) To give job rotation to those who are on sensitive positions;
(xi) Not to issue or cause to issue cheques in favour of other subscribers/ loa
nee/sureties/ guarantors towards payments in connection with the business of the
Company; (xii) Not to attend the auction as proxy (except the Unit Heads) on be
half of others in the Unit where they are working; (xiii) Not to accept payments
in connection with the business of the Company on behalf of others except with
the permission of the Unit Head, who shall exercise such caution and discretion
in this regard. (xiv) Not to make payments in cash in connection with business o
f the Company in lieu of cheques issued; (xv) Not to encash cheques issued to su
bscribers/ dealers or others in connection with the business of the Company; (xv
i) Only cashiers/ authorised persons shall accept cash from the transacting publ
ic who should issue proper receipt and keep proper accounts. (xvii) Not to accep
t blank cheques /cheques un-accompanied by pay-in-slips/ cheques not duly signed
and without details of remittance. (xviii) To be impartial in all their dealing
s with the transacting public; (xix) To supply the intending loanees with a list
of approved dealers and the choice of dealers left to them; (xx) Unauthorized s
tay in the Companys office /premises is strictly prohibited.
43
PROCEEDURE OF ACCOUNTING THE DATAS

Tally is used in KSFE Branches for accounting purposes and Excel is used for cre
ating of schedules, reports, daily fund flow summary etc. The SAMPLE schedule fo
r the major products of KSFE is as below:44
Apart from accounting in Tally, the cashier is maintaining the Daily Cash Scroll
register also. The sample of the Cash Scroll Register is as follows,
45
CHAPTER 5
CONCLUTION
DECLARATION
46
CONCLUTION
As there is a proverb that:A journey of a thousand miles begins with a single ste
p The journey of KSFE started slowly and in a small scale basis. But not KSFE hav
e a largest role in the financial market in Kerala.
KSFE stands outstanding with its unique and secured products type and range when
comparing with the other financial institutes in Kerala. The products of KSFE i
s a risk free safe haven for the public as KSFE conducts only chitties fully gov
erned by the provisions of Kerala Chitties Act, 1975. Because of the same reason
and the quality of the service towards Customer Satisfaction and the products o
ffered KSFE has got a place on the list of trusted Companies in everyones mind.
ALL FROM THE ABOVE STUDY NOT WITHSTANDING ITS RESTRUCTING EFFORTS KSFE AND ITS P
RODUCTS IS STILL FAR AWAY WITH ITS GREAT COMPETATORS IN KERALA STATE
47
DECLARATION
I declare that this project report titled WORKING OF A FINANCIAL INSTITUTION done
in The Kerala State Financial Enterprises Ltd. is an original work done by me un
der the guidance of Mr. Abdul Fathaque (Branch Manager). I Further declare that
it is my original work as a part of my academic course.
PLACE : PALAKKAD DATE : 25th June, 2009
48

Finance Project KSFE

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Finance Project KSFE

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ON OF

UNDER GUIDANCE OF:

KSFE (Kerala State Financial Enterprises)

MORE THAN 4,000

INDEX CHAPTER 1: INTRODUCTION. 5

OBJECTIVE OF THE STUDY

Director is appointed by the Governor on such terms and remuneration as he may t

VISION OF THE COMPANY

To construct a multi-storied building in KSFE s own premises in Kakkanad, Cochin

CHITTY THE PILLAR PRODUCT OF KSFE

Participation in the auction A subscriber can participate in the auction, which

iii. Where the applicant for NCL is a professional/Businessman having a taxable

BRIEF ABOUT OTHER MAJOR PRODUCTS A. GOLD LOAN SCHEME:

INTEREST RATE: Simple interest will be paid as fixed by the

company from time to

E. RELIABLE CUSTOMER LOAN (RCL):

and facilities provided. All stationery items supplied should be economized to t

PROCEEDURE OF ACCOUNTING THE DATAS

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