A

COMPREHENSIVE PROJECT REPORT

ON
A study on Lending Practices and Non- Performing Assets
Management at Akhand Anand Co-operative Bank

Submitted to
S.R. LUTHRA INSTITUTE OF MANAGEMENT
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

In
Gujarat Technological University
UNDER THE GUIDANCE OF

Faculty Guide:

Company Guide:

Ms. Swapna Nair

Mr. Dipak Soni

Assistant Professor

C.E.O
(Akhand Anand Co-operative Bank)
Submitted by

MS. JYOTI B. DABHI [Batch No. 2015-17, Enrollment No.157500592013

MS. DAMINI B. MAISURIYA[Batch No. 2015-17,EnrollmentNo.157500592050
MBA SEMESTER III
S.R. LUTHRA INSTITUTE OF MANAGEMENT 750/805
MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
November, 2016

Company Certificate (For Sem. 3) (On Company Letterhead)

Students Declaration
We, Ms. Jyoti B. Dabhi and Ms. Damini B. Maisuriya, hereby declare that the
report for Comprehensive Project entitled A study on Lending Practices and
Non- Performing Assets management at Akhand Anand co-operative bank is
a result of our own work and our indebtedness to other work publications,
references, if any, have been duly acknowledged.

Place: Surat

Date: _____________
__________________
(Jyoti B. Dabhi)

__________________
(Damini B. Maisuriya)

Institutes Certificate
Certified that this Comprehensive Project Report Titled A study on Lending
Practices and Non- Performing Assets management at Akhand Anand cooperative bank is the bonafide work of Ms. Jyoti B. Dabhi (Enrollment No.
157500592013) and Ms. Damini B. Maisuriya (Enrollment No.157500592050),
who carried out the research under my supervision. I also certify further, that
to the best of my knowledge the work reported herein does not form part of
any other project report or dissertation on the basis of which a degree or
award was conferred on an earlier occasion on this or any other candidate.

Place: Surat
Date: ________________

___________________
(Swapna Nair)
Assistant Professor

___________________
(J.M. Kapadia)
Director

PREFACE
It is great opportunity for management students of GTU to get exposure to the
banking industry as a part of in Comprehensive Project (CP) academic
curriculums of MBA & get wide exposure to the real world during industry
project.
This project report has been prepared in partial fulfillment of the requirement
for the subject of Comprehensive Project (SEM III) & in the academic year
2016-2017 For preparing the CP Report. The blend of learning & knowledge
acquired during our report studies the How are lending practices managed
and Non- Performing Assets managed at Akhand Anand co-operative bank?
is presented in this project report.

It is great pleasure that researcher has undertaking writing of this report. It

realized during training that banking industry is different than what we learn in
theorized. Thus, practical exposure to this industry is valuable for us as a
management student.
The prime objective of this practical training is to student get some knowledge
& experience of management affairs. In that How NPA and lending Practices
managed in Co-operative bank &all aspect while complete requirement for
the MBA course.

ACKNOWLEDGEMENT

We take the opportunity to express the feeling of gratitude towards Gujarat

Technology University for keeping Comprehensive Project (CP) as part of
M.B.A. Course.

The project report could never been accomplished without the guidance and
cooperation from our respected faculties and our training guide Dipak Soni
(Branch Manager) at Akhand Anand Co-operative Bank, Surat ( Katargam
branch). We Sincerely thankful to all staff member of Akhand Anand Cooperative Bank.
We would like to express our special thanks to our director DR. JIMMY
KAPADIA and S.R. Luthra Institute of Management.

We take this opportunity to thank our guide Ms. Swapna Nair helped us at
every step during the preparation of the work of study A study on Lending
Practices and Non- Performing Assets management at Akhand Anand cooperative bank.

Writing this report appeared to be a great experience to us. It added a lot to

our knowledge while we were working on this project. We can say that this
project is one of our memorable experiences in student life.
We also highly obliged all of them who help us during the training period and
co-operated in solving queries and also very grateful to our college who have
directly or indirectly help us to bring this effort to completion.

EXECUTIVE SUMMARY
This research has been undertaken basically for A study on Lending
Practices and Non- Performing Assets management at Akhand Anand cooperative bank

The study begins with introduction of Banking Industry, Co-operative bank,

NPA and Lending Practices (credit facility).

Further it includes the concept of Banking Industry at global, national and

state level. In this report we have also study external factors like political,
economical, social and technological, Environmental, Legal which affect
industry and also given the brief explanation about current trends and major
players and recent developments of Banking industry.

The report also shows the history and SWOT analysis of Akhand Anand Cooperative bank.

The study continues with literature review which includes various review given
by different author and literature related with NPA and Lending practices.

Lastly the Research Methodology which include objective of the study,

Methodology of the project which include Research problem, Research
design,

sampling,

tools

for

analysis

and

limitation

of

study.

TABLE OF CONTENTS

Sr.

Particulars

Page

No.

No.

1.

Introduction

2.

Industry Profile Name of the Industry

a. Global
b. National
c. State
d. PESTEL
e. Current trends
f. Major Players
g. Major Offerings

3.

Company Profile Name of the Company

a. Company Profile
b. Organogram
c. Divisions/ Departments
d. SWOT
e. Market Position
4.

Review of Literature

5.

Research Methodology
a. Problem Statement
b. Research Objective
c. Research Design

6.

i.

Type of Design

ii.

Sampling

iii.

Data Collection

iv.

Tools for Analysis

v.

Limitations of the Study

Bibliography

LIST OF TABLES
Table

Page

No.

No.

Sr. No.

Particulars

Branches of Akhand Anand Co-operative bank

3.1

Board of Directors

3.2

LIST OF FIGURES
Figure

Page

No.

No.

Sr. No.

Particulars

structure of co-operative bank

2.1

banking industry in India

2.2

Organogram of Akhand Anand Co-op. Bank

3.1

Chapter: 1
Introduction

Non Performing Asset Concept:

A Non-Performing Asset (NPA) is defined as a credit facility in respect of
which the interest and/or installments of principal has remained past due for a
specified period of time.
In India, the definition of NPAs has changed over time. According to the
Narasimham Committee Report (1991), those assets (advances, bills
discounted, overdrafts, cash credit etc.) for which the interest and/or
installments of principal remains due for a period of four quarters (180 days)
should be considered as NPAs.
With an aim of moving towards the international best practices and ensuring
greater transparency, a standard criterion of 90 days overdue norm was
fixed for identification of NPA from the FY ending March, 2004 in the Indian
financial system. Thus, as per present convention, a non-performing asset
refers to a loan or an advance where:
Interest and/or installments of principal remain overdue for a period of
more than 90 days in respect of a term loan,
The account remains out of order for a period of more than 90 days,
in respect of an Overdraft/Cash Credit (OD/CC),
The bill remains overdue for a period of more than 90 days in the case
of bills purchased and discounted,
Interest and/or installments of principal remains overdue for two
harvest seasons but for a period not exceeding two half years in the
case of an advance granted for agricultural purposes, and
Any amount to be received remains overdue for a period of more than
90 days in respect of other accounts
NORMS FOR ASSET CLASSIFICATION/ CLASSIFICATION OF NPA :
The loan accounts in Banks are classified into four categories. Out of these
four categories, the following three categories are considered as NPAs:-

a) Sub-standard Assets:
Before 31 March 2001, sub-standard asset was classified as NPA for a
period not exceeding two years but with effect from 31 March 2001, a
sub-standard asset which has remained NPA for a period less than or
equal to 18 months. With effect from 31 March 2005 the norms have been
further squeeze and a sub-standard asset would be one, which has
remained NPA for a period less than or equal to 12 months. In such
cases, the current net worth of the borrower/ guarantor or the current
market value of the security charged is not enough to ensure recovery of
the dues to the banks in full.

b) Doubtful Assets:
Before 31 March 2001, doubtful asset was remained NPA for a period
exceeding two years but with effect from 31 March 2001, it had remained
NPA for a period exceeding 18 months. With effect from March 31, 2005,
the norms have been further squeeze, and an asset would be classified as
doubtful if it remained in the sub-standard category for 12 months.
c) Loss Assets:
A loss asset is one where loss has been identified by the bank or internal
or external auditors or the RBI inspection but the amount has not been
written off wholly. In other words, such an asset is considered uncollectible
and of such little value that its continuance as a bankable asset is not
warranted although there may be some salvage or recovery value.
However, only those advances are classified as loss assets where no
security is available. In accounts where some security / ECGC /DICGC
cover is available, these accounts are not reported under loss assets.
The fourth category of loan accounts, which is not included in NPA categories
- is Standard Assets. Standard Asset is one which does not disclose any
problems and which does not carry only normal risk attached to the business.
According to the RBI guidelines, as and when an asset becomes a NPA, such
advances would be first classified. However, it needs to be noted that the

asset classification is only for the purpose of computing the amount of

provision that needs to be made with respect to bank advances.

Causes for Creation of Non-Performing Assets:

External causes:
Natural

calamities

and

climatic

conditions,

Recession,

changes

in

Government policies changes in economic conditions, Industry related

problems, Impact of liberalization on industries, Technical problems.

Internal causes:
Internal defaulters, Faculty projects, Most of the project reports are ground
realities, proper linkages, product pricing etc. Some approach for the heck of
starting a venture, with poor knowledge of product risks, over depended on
poorly paid killed workers and technicians, Building up pressure for sanctions,
Inept handling by bankers lack of professionalism and appraisal standards,
Non-observance of system, procedures and noninsistence of collaterals etc,
Lack of post sanction monitoring, unchecked diversions.

Meaning of Credit Facility:

A credit facility is a type of loan made in a business or corporate finance
context, including revolving credit, term loans, committed facilities, letters of
credit and most retail credit accounts. Companies frequently implement a
credit facility in conjunction with closing a round of equity financing or raising
money by selling shares of its stock. A key consideration for any company is
how it will incorporate debt in its capital structure while considering the
parameters of its equity financing.

Advance on the other hand, is a credit facility granted by the bank. Banks
grant advances largely for short-term purposes, such as purchase of goods
traded in and meeting other short-term trading liabilities.
There is a sense of debt in loan, whereas an advance is a facility being
availed of by the borrower. However, like loans, advances are also to be

repaid. Thus a credit facility- repayable in instalments over a period is termed

as loan while a credit facility repayable within one year may be known as
advances. However, these two terms are used interchangeably.

BREAKING DOWN 'Credit Facility'

A credit facility lets a company take out an umbrella loan for generating capital
over an extended period of time.

Flexibility of a Credit Facility

A business may use a credit facility rather than reapplying for a loan each
time it needs money. The company may take out a credit facility based on
collateral that may be sold or substituted without altering the terms of the
original contract. The facility may apply to different projects or departments in
a business and be distributed at the companys discretion. The time period for
repaying the loan is flexible.

Terms and Structure of a Credit Facility

A credit facility agreement details the borrowers responsibilities, loan
warranties, lending amounts, interest rates, loan duration, default penalties,
and repayment terms and conditions. The contract opens with the basic
contact information for each of the parties involved, followed by a summary
and definition of the credit facility itself. The summary includes a brief
discussion of the facilitys origin, the purpose of the loan and the ways in
which funds are distributed. Specific precedents on which the facility rests are
included as well. For example, statements of collateral for secured loans or
particular borrower responsibilities may be discussed.

Repayment Terms of a Credit Facility

The terms of interest payments, repayments and loan maturity are detailed.
They include the interest rates and date for repayment, if a term loan, or the
minimum payment amount and recurring payment dates, if a revolving loan.
The agreement details whether interest rates may change and specifies the
date on which the loan matures, if applicable.

Legal Provisions of a Credit Facility

The credit facility agreement addresses the legalities that may arise under
specific loan conditions, such as a company defaulting on a loan payment or
requesting a cancelation. The section details penalties the borrower faces if
defaulting and steps the borrower takes to remedy the default. A choice of law
clause itemizes particular laws or jurisdictions consulted in case of future
contract disputes.

Utility of Credit Facility:

Credit Facility granted by commercial banks are highly beneficial to
individuals, firms, companies and industrial concerns. The growth and
diversification of business activities are effected to a large extent through
bank financing. Loans and advances granted by banks help in meeting shortterm and long term financial needs of business enterprises.
The role played by banks in the business world by way of loans and
advances as follows:-

(a) Credit Facility can be arranged from banks in keeping with the flexibility in
business operations. Traders may borrow money for day to day financial
needs availing of the facility of cash credit, bank overdraft and discounting of
bills. The amount raised as loan may be repaid within a short period to suit
the convenience of the borrower. Thus business may be run efficiently with
borrowed funds from banks for financing its working capital requirements.

(b) Credit Facility are utilized for making payment of current liabilities, wage
and salaries of employees, and also the tax liability of business.
(c) Credit Facility from banks are found to be economical for traders and
businessmen, because banks charge a reasonable rate of interest on such
loans/advances. For loans from money lenders, the rate of interest charged is
very high. The interest charged by commercial banks is regulated by the
Reserve Bank of India.

(d) Banks generally do not interfere with the use, management and control of
the borrowed money. But it takes care to ensure that the money lent is used
only for business purposes.

(e) Bank credit facility are found to be convenient as far as its repayment is
concerned. This facilitates planning for future and timely repayment of loans.
Otherwise business activities would have come to a halt.

(f) Credit Facility by banks generally carry element of secrecy with it. Banks
are duty-bound to maintain secrecy of their transactions with the customers.
This enhances peoples faith in the banking system.
.

Classification of Credit Facility: 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 favour 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 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.
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 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 mutualise the unutilised gap in times of credit restraint.
1) 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.
2)

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.

Procedure of Credit Facility:

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.

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

Akhand Anand Co-operative bank meet every Tuesday and four times in a
month. In "Loan Committee" it can be scrutinize 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 values 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.

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
installments of loan is started related with it a letter can be given to party
or borrower.

Recovery procedure of Credit Facility: 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).

Third/ Strong remainder.

ii) Through discussion.

iii)

Recovery schemes.

iv)

Legal provision.

Various loans Schemes:

The bank providing various loan are as follows:-

Vehicle Loan,
Machinery Loan,
Education Loan,
Consumer Loan,
Staff Loan,
Clean Loan,

 Finance for Profession Person,

Housing Loan,
Fixed Deposit Loan,
NSC/ KVP Loan,
Purchased Bill Discounting Limit

Chapter 2
Industry Profile of
Banking Industry

EARLY HISTORY OF BANKING

As early as 2000 B.C., the Babylonians has developed a banking system.
There is evidence to show the temples of Babylon were used as banks. After
a period of time, there was a spread of irreligion, which soon destroyed the
public sense of security in depositing money and valuable in temples. The
priests were longer acting as financial 45 agents. The Romans did minute
regulations, as to conduct private banking and to create confidence in it. Loan
banks were also common in Rome. From these the poor citizens received
loans without paying interest, against security of land for 3 or 4 years.

During the early periods, although private individuals mostly did the banking
business, many countries established public banks either for the purpose of
facilitating commerce or to serve the government.

However, upon the revival of civilization, growing necessity forced the issued
in the middle of the 12th century and banks were established at Venice and
Genoa. The Bank of Venice established in 1157 is supposed to be the most
ancient bank. Originally, it was not a bank in the modern sense, during simply
an office for the transfer of the public debt.

Again the origin of modern banking may be traced to the money dealers in
Florence, who received money on deposit, and were lenders of money in the
14th century and also in 1349, the business of banking was carried on by
drapers of Barcelona.

In India, as early as the Vedic Period, banking, in most crude from existed.
The books of Manu contain references regarding deposits, pledges, policy of
loans, and rate of interest. True, the banking in those days largely mint money
lending and they did not know the complicated mechanism of modern
banking.

This is true not only in the case of India but also of other countries. Although,
the business of banking is as old as authentic history, banking institutions
have since then changed in character and content very much. They have
developed from a few simple operations involving the satisfaction of a few
individual wants to the complicated mechanism of modern banking, involving
the satisfaction of capital slowly seeking employment and thus providing the
very life blood of commerce.

THE ORIGIN OF WORD BANK

The word Bank itself derived from the word bancus
or banque that is a French. There were others of the
opinion that the word Bank is originally derived from
the German word back meaning joint for which was
Italianised into banco.

History of Banking in India:

Without a sound and effective banking system in India it cannot have a
healthy economy. The banking system of India should not only be free but

should be able to meet new challenges posed by the technology and any
other external and internal factors.

For as far back as three decades India's keeping money framework has a few
remarkable accomplishments amazingly. The most striking is its broad span.
It is no more bound to just metropolitans in India. Truth be told, Indian
managing an account framework has come to try and to the remote corners of
the nation. This is one of the primary reasons of India's development
procedure.
The administration's consistent approach for Indian bank subsequent to 1969
has paid rich profits with the nationalization of 14 noteworthy private banks of
India.

Quite recently, a record holder needed to sit tight for a considerable length of
time at the bank counters for getting a draft or for pulling back his own
particular cash. Today, he has a decision. Gone are days when the most
proficient bank exchanged cash from one branch to other in two days.
Presently it is straightforward as texting or dials a pizza. Cash has turned into
the request of the day.
The first bank in India, though conservative, was established in 1786. From
1786 till today, the journey of Indian banking system can be segregated into
three distinct phases. They are as mentioned below:

Early stage from 1786 to 1969 of Indian banks

Nationalization of Indian banks and up to 1991 preceding Indian

banking area changes.

New period of Indian managing an account framework with the

approach of Indian budgetary and keeping money area changes
after 1991.

To make this review more informative, I prefix the situation as stage I, stage II
and stage III.

Stage I
The general bank of India was set up in the year 1786. Next came bank of
Hindustan and Bengal bank. The East India Organization set up Bank of
Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as free
units and called it Administration Banks.

In 1865 Allahabad Bank was set up and first time solely by Indians, Punjab
national bank ltd. was set up in 1894 with base camp at Lahore. Somewhere
around 1906 and 1913, BOI, RBI, Sway, Canara Bank, Indian Bank, and Bank
of Mysore were set up. Save Bank of India came in 1935. The primary stage
the development was moderate and banks likewise experienced occasional
disappointments somewhere around 1913 and 1948. There were roughly
1100 banks, generally little. RBI was vested with broad forces for the
supervision of saving money in India as the Focal Managing an account

Power. Amid those days open has lesser trust in the banks. As a result store
assembly was moderate.

Stage II
Government stepped in this Indian keeping money segment change after
freedom. In 1955, it nationalized Supreme Bank of India with broad saving
money offices on a huge scale extraordinarily in rustic and semi-urban
ranges. Seven banks framing backup of State Bank of India was nationalized
in 1960 on nineteenth July, 1969, noteworthy procedure of nationalization was
completed. It was the exertion of the then Head administrator of India, Mrs.
Indira Gandhi. 14 noteworthy business banks in the nation were nationalized.

Second period of nationalization Indian Managing an account Part Change

was completed in 1980 with seven more banks. This progression brought
80% of the keeping money portion in India under Government proprietorship.
The accompanying are the strides taken by the Legislature of India to Manage
Keeping money Establishments in the nation:

1949: Authorization of banking Direction Act.

1955: Nationalization of State Bank of India.

1959: Nationalization of SBI auxiliaries.

1961: protection spread stretched out to stores.

1969: Nationalization of 14 noteworthy banks.

1971: making of credit certification partnership.

1975: making of local provincial banks.

1980: Nationalization of 7 saves money with stores more than 200crore.

Stage III
This stage has presented numerous more items and offices in the saving
money segment in its changes measure. In 1991, under the chairmanship of
M Narasimham, an advisory group was set up by his name which worked for
the liberalization of saving money hones. The nation is overwhelmed with
outside banks and their ATM stations. Endeavours are being put to give an

agreeable administration to Clients. Telephone managing an account and net

saving money is presented. The whole framework turned out to be more
helpful and quick.

RESERVE BANK OF INDIA

The Hilton-young commission, appointed in 1926 has recommended the
necessity of centrally empowered institution to have effective control over
currency and

financial

transaction in the

country.

Accordingly,

the

Government had then passed Reserve Bank of India Act, 1934 and
established the Reserve Bank of India with effect from 1 st April 1935. The
principal aim behind this was to organize proper control over the currency
management in the interest of country benefits and to maintain financial
stability. With this, the RBI mainly looks after the following important functions:

To keep effective control over creation of credits and currency supply.

To control the Banking transactions of Central and State Governments.

To act as Central administered Authority of all other Banks in the

Country.

To organize control over Foreign Currency Transaction

To assist for improvement in financial aspects of the country

Nationalize Banks
The Banking Company Act establishes it in July 1969 by nationalization of 14
major banks of India. The sent percent ownership of the bank is of
government of India.
State Bank Group
The State Bank of India was established under the State Bank of India Act,
1955, the subsidiary banks under the State Bank of India (subsidiary Banks)
Act, 1959. The Reserve Bank of India owns the State Bank of India, to a large
extent, and rest of the part is some private ownership in the share capital of
State Bank of India. The State Bank of India owns the subsidiary Banks.

Old Private Banks

These banks are registered under Company Act, 1956. Basic difference
between co-operative banks and private banks is its aim. Co-operative banks
work for its member and private banks work for earn profit.
New Private Banks
These banks lead the market of Indian banking business in very short period,
because of its variety of services and approach to handle customer, also
because of long working hours and speed of services. This is also registered
under the Company Act, 1956.

Foreign Banks
Foreign Bank means multi-countries bank. In case of India Foreign Banks are
such Banks, which open its branch office in India and their head office is
outside of India.

Regional Rural Banks (RRB)

Regional Rural Banks are added in Indian Banking since October 1975. The
Government of India in terms of the provision of the Regional Rural Bank Act
1976 has established these banks. The distinctive feature of Regional Rural
Bank is that through it is a separate body corporate with the Commercial
Bank, which has sponsored the proposal to establish it. The Central
Government, while establishing a Regional Rural Bank at the request of a
Commercial Bank, shall specify the local limits within which it shall operate.
The Regional Rural Bank may establish its branches or agencies at any place
within the notified area.
State Bank of Saurashtra sponsors Regional Rural Banks in Saurashtra.

CO-OPERATIVE BANK
Introduction:
The Co-operative banks and social orders play out a vital part in meeting the
prerequisites of individuals in country regions. Co-operative banks are
particular substances without anyone else's input with discrete purview and
autonomous top managerial staff. The co-operative banks are sorted out on a
co-operative premise and are administered by their individuals as indicated by
co-agent laws. They are under the control of particular state governments.
Certain procurements of the managing an account direction act likewise apply
to co-operative banks. Co-operative banks in India are government in their
structure.
The first thought of setting up an essential society to give credits and
advances to the poor persons out of the offer capital store and different
assets. Before long it was understood that the assets are not adequate to
address developing issues of the general population. The administration built
up two other acknowledge establishments, for example, area focal co-agent
banks and state co-agent banks and state co-operative banks to renegotiate
the advances and advances made by the essential co-operative credit social
orders.

Co-operative banks in India finance urban areas under.

- Small-scale units
- Consumer finance
- Self-employment
- Home finance
- Personal finance - Industries

Co-operative banks in India financing rural areas under.

- Hatchery
- Cattle
- Personal finance
- Milk

- Farming

Some facts about co-operative banks in India.

-

According to NAFCUB the total deposits & lending of cooperative

banks in India is much more than old private sector banks.
- Some co-

Figure 2.1 structure of co-operative bank

This exponential growth of co-operative banks in India is attributed mainly to

their much better local reach, personal interaction with customers their ability
to catch the nerve of the local client.

Co-operative Banks

State Co-operative Banks

State Co-operative Bank means the principal Co-operative society in the
state. The primary objective of which is the financing other co-operative
societies in the state.

Central / District Co-operative Banks

Central / District co-operative Bank means the principal co-operative society
in a district, the primary objective of which is the financing of other cooperative in that particular district.
Primary / Urban Co-operative Banks
The primary objective of principal business of which the transaction is of
banking business and paid up share capital and reserve of which are not less
than rupees 100,000 and bye-laws of which do not permit admission of any
other co-operative society as a member.

THREE TIRE STRUCTURE OF CO-OPERATIVE BANK IN INDIA :

1) Primary Co-operative credit society: A Primary credit society can be started with ten or more person, normally
belonging to a village. So that the village co-operative credit society was
expected to direct deposits from among the well to do members and nonmembers of the village. It should of the loan and advances to needy members
mainly out of these deposits.
2)

Central Co-operative Bank: -

The Central Co-operative credit society is federation of primary credit society

in a specified area, normally a district and is usually located at the district. The
Central Co-operative banks have been under taking normal commercial
banking business also such as attracting deposits from the general public and
lending to the needy against proper securities.

3) State Co-operative Bank: State co-operative bank expectivelly co-ordinator the activities of district
&central co-operative banks and give them required guidance. State cooperative bank is a between co-operative activity and countrys money
market.

a. Global scenario of banking Industry

The year 2014-15 was a troublesome period for the worldwide saving money
framework, with difficulties emerging from the worldwide budgetary framework
and in addition the rising monetary and financial development situations
crosswise over nations.
Worldwide banks showed a few enhancements in capital adequacy yet were
ambushed by frail credit development, high influence and poor resource
quality. Interestingly, in major rising economies, credit development stayed at
moderately abnormal states, which was viewed as a reason for concern given
the expanding inflationary weights and capital inflows in these economies.
In the advance economies, credit accessibility remained especially compelled
for little and medium ventures and the use of managing an account benefits
likewise remained at a low, flagging money related prohibition of the populace
in the post-emergency period. On the positive side, both progressed and
developing economies, exclusively, and multi-along the side, pushed ahead
towards viable systemic danger administration including activities for
enhancing the macroprudential administrative structure and changes
identified with systemically essential money related organizations.
From the extreme difficulty experienced in 2010-11, the worldwide economy
pushed forward with blended monetary energy, for the most part tilted toward
a positive financial development direction in 2014-15. A few unmistakable
economies over the globe spent the last couple of years improving their
administrative and approach structures in the wake of the budgetary
emergency. According to IMF, worldwide genuine GDP for 2015 expanded
3.8%, drove by a moderate recuperation in cutting edge and developing
nations.

While recovery crosswise over developing economies was solid, the

propelled economies keep on being delicate, with developing worries of
unemployment, heavily indebted households and governments, and moderate

recovery of money related foundations. According to Global Economic

Prospects, World Bank extends the worldwide development to stay solid in
2012 and 2013. Subsequent to achieving a development rate of 3.8% in 2010,
the worldwide genuine GDP development is anticipated to stay firm at 3.6% in
2014 and 2015. Creating economies would be a noteworthy commitment to
this, developing at a much higher rate of 6.3% by 2014. Then again, GDP in
cutting edge economies is anticipated to develop by 2.7% in 2014. The US
economy extended 2.8% in 2011 and is relied upon to hold the development
of 2.7% in 2015.

The global banking industry has been hit hard as of late because of the
whirlwind of the emergency that influenced all budgetary commercial
enterprises as of late. The worldwide banking industry recovered in 2012, with
incomes expanding especially and benefits additionally developing in extent.
In 2012, the worldwide managing an account market created incomes of
around $3.8 trillion, with worldwide saving money benefits hitting over $700
billion. Eminently, incomes from banks in developing markets became
unequivocally, with incomes up about 20% in India, 18% in Brazil and 14% in
China.
However, there came a crisis in the global banking industry in the summer of
2012. The share prices of banks were falling and a number of indicators
indicated little confidence in the prospects of the global banking industry.
The budgetary emergency seriously affected the advantage and benefit
development of the worldwide keeping money part, which began to
recuperate amid 2012 and 2013. The development rate of advantages for the
Top 1000 banks developed by 5.9% amid 2012 13, achieving great over the
pre-emergency level. Be that as it may, amid 201213 the development
directed to 4.9% because of the continuous Euro zone emergency, which was
to some degree remunerated by the development of advantages in the AsiaPacific and Latin American districts. Benefits before-expense (PBT) of the
keeping money segment additionally saw solid development amid 2011 and
2013.

The worldwide saving money segment has gained some ground over the
previous year towards settling after the monetary emergency.
The world retail loaning area was worth near $31.4 trillion in 2012. Market
development is required to surpass a yearly rate of 5% somewhere around
2010 and 2015, to reach just about $40.4 trillion. Contract loaning speaks to
the main business sector fragment, and achieved near $24 trillion in 2012,
representing right around 76% of the general business sector as far as
quality.
The worldwide brilliant card shipment business sector is figure to record
yearly development of 12% somewhere around 2011 and 2014. The business
sector is profiting from Long Term Evolution rollout around the world, state
backing and relocation to Euro pay, MasterCard and VISA (EMV). Secure
chip contactless savvy card shipments are relied upon to record 22% yearly
development somewhere around 2011 and 2014.
The worldwide portable installments business sector is relied upon to surpass
1.5 billion clients by 2012. It is gauge there will be near 5.5 billion handsets
utilized as a part of the versatile endorser area in 2015. Obstructions to
market development incorporate the low infiltration of contactless terminals
and handsets in adult markets.
The world retail lending sector was worth close to $31.4 trillion in 2010.
Market growth is expected to exceed a yearly rate of 5% between 2010 and
2015, to reach almost $40.4 trillion. Mortgage lending represents the leading
market segment, and reached close to $24 trillion in 2010, accounting for
almost 76% of the overall market in terms of value.

b. National scenario of banking Industry

As per the Reserve Bank of India (RBI), Indias banking sector is sufficiently
capitalised and well-regulated. The financial and economic conditions in the
country are far superior to any other country in the world. Credit, market and
liquidity risk studies suggest that Indian banks are generally resilient and have
withstood the global downturn well.
Indian banking industry has recently witnessed the roll out of innovative
banking models like payments and small finance banks. The central bank
granted in-principle approval to 11 payments banks and 10 small finance
banks in FY 2015-16. RBIs new measures may go a long way in helping the
restructuring of the domestic banking industry.
Market Size
The Indian banking system consists of 26 public sector banks, 25 private
sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban
cooperative banks and 93,550 rural cooperative banks, in addition to
cooperative credit institutions. Public-sector banks control nearly 80 percent of
the market, thereby leaving comparatively much smaller shares for its private
peers. Banks are also encouraging their customers to manage their finances
using mobile phones.
Standard & Poors estimates that credit growth in Indias banking sector would
improve to 11-13 per cent in FY17 from less than 10 per cent in the second
half of CY14.

The Indian banking system consists of 26 public sector banks, 20 private

sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban
cooperative banks and 93,550 rural cooperative banks, in addition to
cooperative credit institutions. The Indian banking sectors assets reached
US$ 1.8 trillion in FY14 from US$ 1.3 trillion in FY10, with 70 per cent of it
being accounted by the public sector.
Total lending and deposits increased at a compound annual growth rate
(CAGR) of 20.7 per cent and 19.7 per cent, respectively, during FY07-14 and
are further poised for growth, backed by demand for housing and personal

finance. Total asset size of banking sector assets is expected to increase to

US$ 28.5 trillion by FY25. Deposits have grown at a CAGR of 13.6 per cent
during FY0515 to an estimated US$ 1.48 trillion in FY15. Deposit growth has
been mainly driven by strong growth in savings amid rising disposable income
levels.

Indian banks are increasingly focusing on adopting integrated approach to risk

management. Banks have already embraced the international banking
supervision accord of Basel II. According to RBI, majority of the banks already
meet capital requirements of Basel III, which has a deadline of March 31,
2019. Most of the banks have put in place the framework for asset-liability
match, credit and derivatives risk management
Rising incomes are expected to enhance the need for banking services in
rural areas and therefore drive the growth of the sector; programmes like
MNREGA have helped in increasing rural income aided by the recent Jan
Dhan Yojana. The Reserve Bank of India (RBI) has relaxed its branch
licensing policy, thereby allowing banks (which meet certain financial
parameters) to set-up new branches in tier-2 to tier-6 centers, without prior
approval from RBI. It has emphasis the need to focus on spreading the reach
of banking services to the un-banked population of India.

Present set up of Banking Industry in India

RBI

Development
bank

State cooperative
bank

Commercial
bank

Indian Bank

Private
Sectors

NABARD

Foreign Bank

Public
Sectors

State bank &

its subsidiary

Nationalized
bank

Figure: 2.2 banking industry in India

1. Reserve Bank of India

2. Commercial Banks
3. Development Banks
4. Exim Banks
5. Co-Operative Banks
6. Regional Rural Banks
7. National Bank for Agriculture and Rural Development
8. Lead development

EXIM
bank

RRBS

STATUS WISE BIFURCATION OF BANKS

Scheduled Banks
Non-Scheduled Banks
Scheduled Banks
In first schedule, Government of India notifies the Primary Banks, which are
licensed and whose demand and time liability are not less than 50 crores in
1987.Government of India notifies the Primary banks, which are licensed and
whose demand and time liability are not less than 100 crores can only qualify
to be included in the second schedule since 1993.A bank becomes scheduled
when it fulfill the followings:

A grade rating from RBI

Demand and Time Liability over 100 Crores

Satisfy the RBI guidelines related to CRR and SLR

As per the norms Priority Sector wise lending

Benefits of Being a Scheduled co-operative are described below:

RBI would provide Rediscounting facility at nominal rate

RBI gives remittance facility at par

The demerit of being a scheduled co-operative bank is that the bank

will not get 0.5% subsidy from RBI.

The conferment of scheduled status on the banks has certain advantages like
refinance facility, directly industrial finance from Reserve Bank of India, avail
of Reserve Bank of India Remittance facility scheme, accept deposits from
local bodies, quasi-government organization, religious, and charitable
institutions, guarantees and cheques issued by Banks are accepted by
Government Departments. At the same time, it casts greater responsibility on
the banks in the maintenance of books of accounts and submission of returns.

Non-Scheduled Bank
The banks, which are not applicable as per the criteria of Scheduled Banks,
are called as a Non-scheduled Banks. These are very small banks.

TYPES OF BANKS
Regional Rural Bank
Nationalize Bank
State Bank Group
Co-operative Bank
Private Bank
Foreign Bank

c. State scenario of banking Industry

In the keeping banking industry, office and administrative support workers
constitute 2 out of 3 employments; tellers represent around 3 out of 10
occupations. Numerous openings for work are normal for tellers and other
office and regulatory bolster specialists, in light of the fact that these
occupations are substantial and have high turnover. Numerous administration
positions are filled by advancing experienced, in fact talented expert work
force.
Managing an account is included two sections: Monetary AuthoritiesCentral
Bank, and Credit Intermediation and Related Activities.
The previous incorporates the bank foundations of the U.S. Central bank
System that deal with the Nation's cash supply and global stores, hold save
stores of other household banks and the national banks of different nations,
and issue the money we utilize. The foundations in the credit intermediation
and related administrations industry give saving money administrations to the
overall population. They safely spare the cash of investors, give checking
administrations, and loan the assets raised from contributors to purchasers
and organizations for home loans, venture advances, and credit extensions.

There are a few sorts of banks, which contrast in the quantity of

administrations they give and the customers they serve. Albeit a portion of the
contrasts between these sorts of banks have decreased as they have
extended the scope of items and administrations they offer, there are still key
recognizing qualities.
a) Commercial banks, which rule this industry, offer a full scope of
administrations for people, organizations, and governments. These banks
arrive in an extensive variety of sizes, from vast worldwide banks to local and
group bank.

b) Global banks are included in worldwide loaning and outside coin

exchanging, notwithstanding the more run of the mill keeping money
administrations.

c) Regional banks have various branches and mechanized teller machine

(ATM) areas all through a multi-state zone that give managing an account
administrations to people. Banks have turned out to be more situated toward
promoting and deals. Accordingly, workers need to think about a wide range
of items and administrations offered by banks.

d) Community banks are based locally and offer more individual

consideration, which numerous people and little organizations incline toward.

e)

As of late, online bankswhich give all administrations totally over the

Internethave entered the business sector, with some achievement. Be that

as it may, numerous conventional banks have likewise extended to offer web
saving money, and some time ago Internet-just banks are picking to open
branches.

Investment funds banks and reserve funds and credit affiliations, here and
there called thrift establishments, are the second biggest gathering of
storehouse organizations. They were initially settled as group based
organizations to back home loans for individuals to purchase homes and still
provide food generally to the reserve funds and loaning needs of people.

Credit unions are another sort of storehouse foundation. Most credit unions
are framed by individuals with a typical bond, for example, the individuals who
work for the same organization or have a place with the same worker's party
or church. Individuals pool their investment funds and, when they require
cash, they may acquire from the credit union, regularly at a lower loan cost
than that requested by other budgetary establishments.

d. PESTEL analysis of banking industry

1. Political Analysis
Banking has been sheltered by the regulations and policies made by different
governments

in the countries where they are working. The Bank has been

able to remain to the policies agreed by each government to make sure that
the company will be able to accomplish business operation successfully and
effectively. Economic analysis being one of the worlds leading and
completive businesses in conditions of banking and finance have a secure
and successful economic strength. In spite of lots of dangers that they meet in
many parts of the world, the management of HSBC make what they need to
be able to go beyond such struggles and to have a better economic condition
and create a shield against unemployment.
2. Economic Analysis
The Indian economy has recorded remarkable growth over the past decade.
India's economic growth is expected to robust in 2013 and 2014. The
International Monetary Fund (IMF) has pared Indias economic growth
projection to 6.9%in 2013 from its January estimate of 7%, the only emerging
economy for which it has done so. Banks provide capital formation to various
sectors which directly help in the growth of Indian economy.

3. Social analysis
Indian banking system has been progressing rapidly. There are ample
opportunities for the banks to cover untapped rural market. Yet, banking
facilities are not available in many rural areas. Many farmers are taking loan
from moneylender at a very high rate of interest. Small-scale industries would
remain important for banks. Changes could be expected in near future for
unorganized sectors.

4. Technological analysis
The urgent situation of information technology, internet and generally the
improvement of technology effects how bank has been working in the past
years. The company search for different systems and used internet to get to
their costumer all over the world and also help them know the latest trends in
the global business. Technological breakthroughs can create new industries
which might prove a danger to presented organizations.
5. Environmental analysis:
Indian economy has registered a high growth for last three years and is
expected to maintain robust growth rate as compare to other developed and
developing countries. Banking Industry is directly related to the growth of the
economy. It is great news that today the service sector is contributing more
than half of the Indian GDP.

6. Legal analysis:
In 1949, the Banking Regulation Act was enacted which empowered the
Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in
India. The Banking Regulation Act also provided that no new bank or branch
of an existing bank could be opened without a license from the RBI, and no
two banks could have common directors

e. Current trends of banking Industry

The present low loan cost environment is influencing banks' net revenues.
Less benefit, combined with couple in client visits to branch workplaces, are
adding to bank's choices to decrease staff and close branches. Bank of
America has been the most forceful in shutting branches. A year ago it shut
256 branches and just opened 12. Bank of America could conceivably cut
back its branch system by 10 percent, however there is no prompt
arrangement to do so.While diminishing branch workplaces is underway for
some excessively soaked banks, others are opening more branches. These
banks are rising where they are not yet a built up nearness. Pursue, for
instance, while shutting 77 branches, opened 166 branches a year ago, 66 of
them in California.
Group banks have been supported by the recovering economy and the
movement in system of huge banks.In a message to its clients, Origami
Bank's President, Kevin J. Lynch, composed, "While huge numbers of the
enormous banks are dispensing with administrations, shutting branches and
raising charges, Origami has stayed consistent with low expenses and
exceptionally aggressive credit and store rates." Origami Bank, with a branch
situated at 560 Cedar Lane in Teaneck, opened three branches in the
previous year. They have likewise contracted new staff individuals and
redesigned their PC framework to better address client issues. In its yearning
to put client benefit to begin with, Cross River Bank, headquartered at 885
Teaneck Road in Teaneck, expanded its workforce by about 60 percent this
previous year. The single branch bank prides itself on "extraordinary
administration, item assortment, and customized banking."
1) Electronic Payment Services
E Cheques Now-a-days we are hearing about e-governance, e-mail, ecommerce, e-tail etc. In the same manner, a new technology is being
developed in US for introduction of e-cheque, which will eventually replace the
conventional paper cheque. India, as harbinger to the introduction of e-

cheque, the Negotiable Instruments Act has already been amended to

include; Truncated cheque and E-cheque instruments.

2) Real Time Gross Settlement (RTGS)

Real Time Gross Settlement system, introduced in India since March 2004, is
a system through which electronics instructions can be given by banks to
transfer funds from their account to the account of another bank. The RTGS
system is maintained and operated by the RBI and provides a means of
efficient and faster funds transfer among banks facilitating their financial
operations. As the name suggests, funds transfer between banks takes place
on a Real Time' basis. Therefore, money can reach the beneficiary
instantaneously and the beneficiary's bank has the responsibility to credit the
beneficiary's account within two hours.

3) Electronic Funds Transfer (EFT)

Electronic Funds Transfer (EFT) is a system whereby anyone who wants to
make payment to another person/company etc. can approach his bank and
make cash payment or give instructions/authorization to transfer funds directly
from his own account to the bank account of the receiver/beneficiary.
Complete details such as the receiver's name, bank account number, account
type (savings or current account), bank name, city, branch name etc. should
be furnished to the bank at the time of requesting for such transfers so that
the amount reaches the beneficiaries' account correctly and faster. RBI is the
service provider of EFT.
4) Electronic Clearing Service (ECS)
Electronic Clearing Service is a retail payment system that can be used to
make bulk payments/receipts of a similar nature especially where each
individual payment is of a repetitive nature and of relatively smaller amount.
This facility is meant for companies and government departments to
make/receive large volumes of payments rather than for funds transfers by
individuals.

5) Automatic Teller Machine (ATM)

Automatic Teller Machine is the most popular devise in India, which enables
the customers to withdraw their money 24 hours a day 7 days a week. It is a
device that allows customer who has an ATM card to perform routine banking
transactions without interacting with a human teller. In addition to cash
withdrawal, ATMs can be used for payment of utility bills, funds transfer
between accounts, deposit of cheques and cash into accounts, balance
enquiry etc.
6) Point of Sale Terminal
Point of Sale Terminal is a computer terminal that is linked online to the
computerized customer information files in a bank and magnetically encoded
plastic transaction card that identifies the customer to the computer. During a
transaction, the customer's account is debited and the retailer's account is
credited by the computer for the amount of purchase.

7) Tele Banking
Tele Banking facilitates the customer to do entire non-cash related banking on
telephone. Under this devise Automatic Voice Recorder is used for simpler
queries and transactions. For complicated queries and transactions, manned
phone terminals are used.
8) Electronic Data Interchange (EDI)
Electronic Data Interchange is the electronic exchange of business
documents like purchase order, invoices, shipping notices, receiving advices
etc. in a standard, computer processed, universally accepted format between
trading partners. EDI can also be used to transmit financial information and
payments in electronic form.

f. Major players of banking industry

Private Sector banks:
HDFC
Housing Development Finance Corporation Limited, popularly known as
HDFC Bank was incorporated in the year 1994. Headquartered in Mumbai,
HDFC was founded by Hasmukhbhai Parekh. HDFC was the first to receive
approval from Reserve Bank of India to set up a bank and started its
operations in the year 1995. It provides various products like Insurance, Credit
cards, Loans, FOREX services, Premium Banking, Private Banking etc.

ICICI Bank:
ICICI Bank (Industrial Credit and Investment Corporation of India) an Indian
multinational banking and financial services company headquartered in
Mumbai, Maharashtra, India, with its registered office in Vadodara. In 2014, it
was the second largest bank in India in terms of assets and third in term of
market capitalisation. It offers a wide range of banking products and financial
services for corporate and retail customers through a variety of delivery
channels and specialised subsidiaries in the areas of investment banking, life,
non-life insurance, venture capital and asset management. The bank has a
network of 4,450 branches and 13,995 ATMs in India, and has a presence in
19 countries including India.

Axis Bank:
Axis Bank is the third largest private-sector banks in India offering a
comprehensive suite of financial products. Headquartered in Mumbai, the
bank has 2,959 branches, 12,743 ATMs and nine international offices. The
bank employs over 50,000 people and had a market capitalization of 1.0583
trillion (US$16 billion) (as on March 31, 2016). It offers the entire spectrum of
financial services to customer segments, spanning large and mid-corporates,
SME, and retail businesses. Axis Bank has its registered office in
Ahmedabad.

Public Sector Banks:

STATE BANK OF INDIA:
State Bank of India (SBI) is an Indian multinational, public sector banking and
financial services company. It is a government-owned corporation with its
headquarters in Mumbai, Maharashtra. As of 2014-15, it had assets of
20.480 trillion (US$300 billion) and more than 14,000 branches, including
191 foreign offices spread across 36 countries, making it the largest banking
and financial services company in India by assets. The company is ranked
232nd on the Fortune Global 500 list of the world's biggest corporations as of
2016.

BANK OF BARODA:
Bank of Baroda is an Indian state-owned banking and financial services
company headquartered in Vadodara (earlier known as Baroda) in Gujarat,
India. It is the second largest bank in India, next to State Bank of India. Its
headquarters is in Vadodara, it has a corporate office in the Bandra Kurla
Complex in Mumbai.
PUNJAB NATIONALBANK:
Punjab National Bank is an Indian multinational banking and financial services
company. It is a state-owned corporation based in New Delhi, India. Founded
in 1894, the bank has over 6,968 branches and over 9,656 ATMs across 764
cities. It serves over 80 million customers. It has a banking subsidiary in the
UK (PNB International Bank, with seven branches in the UK), as well as
branches in Hong Kong, Kowloon, Dubai and Kabul. It has representative
offices in Almaty (Kazakhstan), Dubai (United Arab Emirates), Shanghai
(China), Oslo (Norway) and Sydney (Australia). In Bhutan it owns 51% of
Druk PNB Bank, which has five branches. PNB owns 20% of Everest Bank
Limited, which has 50 branches in Nepal. Lastly, PNB owns 84% of JSC (SB)
PNB Bank in Kazakhstan, which has four branches.

Foreign Banks:
CITI BANK:
Citibank is the consumer division of financial services multinational Citigroup.
Citibank was founded in 1812 as the City Bank of New York, later First
National City Bank of New York. The United States is the largest single
market with approximately 26% of branches, generating 51% of revenues.
Citibank's 983 North American branches are concentrated in major
metropolitan areas including New York City, Chicago, Los Angeles, San
Francisco, Washington, D.C., and Miami. Latin America markets make up
25% of revenues, Asia 20%, and Europe / Middle East / Africa 4%.
STANDARD CHARTERED:
Standard Chartered PLC is a British multinational banking and financial
services company headquartered in London. It operates a network of more
than 1,200 branches and outlets (including subsidiaries, associates and joint
ventures) across more than 70 countries and employs around 87,000 people.
It is a universal bank with operations in consumer, corporate and institutional
banking, and treasury services. Despite its UK base, it does not conduct retail
banking in the UK, and around 90% of its profits come from Asia, Africa and
the Middle East.

HSBC:
HSBC Bank USA, National Association, is an American subsidiary of UKbased HSBC Holdings plc, is a bank with its operational head office in New
York City and its nominal head office in McLean, Virginia (as designated on its
charter). HSBC Bank USA, N.A. is a national bank chartered under the
National Bank Act, and thus is regulated by the Office of the Comptroller of
the Currency (OCC), a part of the U.S. Department of the Treasury.

Top Co-operative Bank:

JANLAXMI COOPERATIVE BANK:
The Janalaxmi Co-operative Bank Ltd., Nashik was founded by Shri
Madhavrao B. Patil, a great visionary and philanthropist on 14 Feb., 1976 at
Nashik a place of tradition and heritage which is around 200 km away from
Mumbai. The Bank has gone through the various phases of its growth
trajectory over 25 years of its existence. Growth of The Janalaxmi Cooperative Bank Ltd., Nashik was phenomenal, especially in mid of 90s.

NEW INDIA COOPERATIVE BANK:

New India Co-Operative Bank Limited is a fast growing & strong bank with its
headquartering in Mumbai. The Bank is focused on upgrading and improving
the services by optimising the use of the latest technology as well as
continuous training of its Management and staff. The bank was founded in
Mumbai in 1968 & was renamed as the New India Co-Operative Bank Limited
in 1977. Since then the bank has grown into a strong and scheduled multi
state bank with a network of branches in various states offering a wide range
of services including forex services, trade services, home loans, small
business loans and more.
SURAT DISTRICT COOPERATIVE BANK:
District Cooperative Central Bank, popularly known as DCC Bank is a
cooperative banking network established in India to serve cooperatives and
rural areas. It was established to provide banking to rural hinterland for
agriculture sector with the branches primarily established at rural and semiurban areas.

g. Major offerings of banking Industry

1) Ac & Deposits
Banks are a leading service provider for the Ac & Deposits which includes
services like Savings A/c & Current A/c since 2014

a) Saving account
Initial Amount to Open Savings Account = Rs.1000 Rate of interest = 4.0%

Benefits

Passbook Facility

Any Branch Banking

ATM facility

RTGS/ NEFT Facility

Free SMS Alerts On Request

E-Statement facility

Cheque Book Facility

Standing Instructions

Insurance Cover (for more details contact branch manager)

b) Current A/c
Initial Amount to Open Current Account = Rs.5000
General Rules:

Bank reserves the right to close any account, if cheque drawn are
returned unpaid frequently for want of funds or the account is
considered as irregular / non-satisfactory.

Account not operation for more than two years will be treated as
inoperative / dormant account.

Bank reserves the right to alter, amend and rescind the rules from time
to time.

1) Overdrafts AC
It includes services like Loan / Overdraft Facility against Fixed Deposit
& Overdraft Facility.
2) Fixed Deposits scheme
Banks are a leading service provider for the Fixed Deposits which
includes services like Fixed Deposits Ordinary Scheme & MIP
Schemes.
3) Recurring Deposits
Banks are a leading service provider for the Recurring Deposits which
includes services. Ordinary Recurring Deposits schemes helps every
individual to invest a fixed amount of money on a regular basis.
4) Loans facility

5) ATM Services
ATMs plays a vital role in facilitating the banking services to banks as
well as customers. ATM is the back bone of retail banking sector.
ATM Services:

Cash Withdrawal

Fast Cash

Balance Inquiry

6) RTGS/NEFT
Real Time Gross Settlement/ National Electronic Fund Transfer

RTGS/NEFT is one of the safest secure modes of fund transfer.

Credits the Beneficiarys A/c The same day Though RTGS

Credits The Beneficiarys A/c The Same Day/Next Day If

Remittance Done Late In The Day

For RTGS Eligibility: Transactions above 2 Lacs.

For NEFT Eligibility: No Limit

7) Lockers
Akhand Anand Co-operative bank provides Safe Deposit Locker
Facilities to keep your valuables at a safe and secured place.
Availability of Lockers in various sizes and dimensions.

Major Developments
Key investments and developments in Indias banking industry include:

RBL Bank Limited, an Indian private sector bank, has raised Rs 330
crore (US$ 49.6 million) from a UK-based development finance
institution CDC Group Plc, which will help RBL to strengthen the capital
base to meet future requirements.

The State Bank of India (SBI) signed an agreement with The World
Bank for a Rs 4,200 crore (US$ 625 million) credit facility, aimed at
financing grid connected rooftop solar photovoltaic (GRPV) projects in
India.

Indias first small finance bank called the Capital Small Finance Bank
has started its operations by launching 10 branch offices in Punjab,
and aims to increase the number of branches to 29 in the current FY
2016-17.

Free Charge, the wallet company owned by online retailer Snapdeal,

has partnered with Yes Bank and MasterCard to launch FreeCharge
Go, a virtual card that allows users to pay for goods and services at
online shops and offline retailers.

Exim Bank of India and the Government of Andhra Pradesh has signed
a Memorandum of Understanding (MoU) to promote exports in the
state.

Kotak Mahindra Bank Limited has bought 19.9 per cent stake in Airtel
M Commerce Services Limited (AMSL) for Rs 98.38 crore (US$ 14.43
million) to set up a payments bank. AMSL provides semi-closed
prepaid instrument and offers services under the Airtel Money brand
name.

India's largest public sector bank, State Bank of India (SBI), has
opened its first branch dedicated to serving start-up companies, in
Bengaluru.

Global rating agency Moody's has upgraded its outlook for the Indian
banking system to stable from negative based on its assessment of five

drivers including improvement in operating environment and stable

asset risk and capital scenario.

The Reserve Bank of India (RBI) has granted in-principle licences to 10

applicants to open small finance banks, which will help expanding
access to financial services in rural and semi-urban areas.

The RBI has given in-principle approval to 11 applicants to establish

payment banks. These banks can accept deposits and remittances, but
are not allowed to extend any loans.

The RBI has allowed third-party white label automated teller machines
(ATM) to accept international cards, including international prepaid
cards, and said white label ATMs can now tie up with any commercial
bank for cash supply.

The RBI has allowed Indian alternative investment funds (AIFs), to

invest abroad, in order to increase the investment opportunities for
these funds.

Government Initiatives
The government and the regulator have undertaken several measures to
strengthen the Indian banking sector.

In July 2016, the government allocated Rs 22,915 crore (US$ 3.41

billion) as capital infusion in 13 public sector banks, which is expected
to improve their liquidity and lending operations, and shore up
economic growth in the country.

The Reserve Bank of India (RBI) has released the Vision 2018
document, aimed at encouraging greater use of electronic payments by
all sections of society by bringing down paper-based transactions,
increasing the usage of digital channels, and boosting the customer
base for mobile banking.

The Reserve Bank of India (RBI) has issued guidelines for priority
sector lending certificates (PSLCs), according to which banks can
issue four different kinds of PSLCsthose for the shortfall in
agriculture lending, lending to small and marginal farmers, lending to

micro enterprises and for overall lending targets to meet their priority
sector lending targets.

Chapter: 3
Company Profile of Akhand Anand co-op. bank

AKHAND ANAND CO-OP BANK LTD

HEAD OFFICE
ANATH BALASHRAM, KATARGAM ROAD,
SURAT-395004
TEL - (0261)2532540/2536772/2539361/2532540
FAX NO-(0261)2532232
BRANCH OFFICE
SHOP NO-1 TO 6, GROUND FLOOR, TULSI MARKET, RING ROAD,
SURAT-395002
TEL -2350500.AAt1ht1hJKLKJKJLJLJKLJKJFFDFSSDFSDFS

History of Akhand Anand Co-operative Bank:

Akhand Anand Co-Op. Bank Ltd is one of the fastest Grooving Co-op Bank in
South Gujrat. In 1st June, 1999, with the efforts of Late Shri Popatlal
Mulshankarbhai Vyas (Former Home Minister of Gujarat State and Founder
Chairman Of Akhand Anand Co Op Bank) Akhand Anand Co Op Bank Ltd
Was registered for Better Service in Surat City/District to the customer at
Katargam. Technology has always remained on our fore-front and we are
among the firsts to introduce information technology to its best for the benefits
of our customers.

Aim/ vision/ mission:-

The bank aims to double its business in next 5 years. Expansion plan is there
for opening of 3 more branches in prime locations of the city. Main focus is to
cover the areas which are not covered.

The adoption of all modern technologies for better service will be priority of
the bank in future. The environment of all the branches will match an
international standard.

Bank is poised to move towards needs based and behaviour based

segmentation in the next few years. Recounting that the number of mobile
phone users is increasing day by day, bank has already started services of
mobile banking and will shortly commence net banking.
The bank will expand its horizons beyond the traditional banking products and
enter into newer ventures to increase its bottom line combines with cost
rationalization. In summary, bank will spotlight on customer service as well as
satisfaction across all channels.

Branches:
Administrative Office:

Ring Road Branch:

2nd Floor, Mahavir Shopping, Near Shop No 1 to 6, Tulsi Market, Near

Mahavir Nagar Society, Amroli Road, Rushabh Petrol Pump, Ring Road,
Katargam,Surat-395004

Surat-395002.

Katargam Branch:

Varracha Road Branch:

Near

AnathBalashram,

Main Road, Surat- 395004.

Katargam Shop

2-3-4,

Center,

Bahuchar

Shopping

Gitanjali

Cinema-

Opp.

395006.
Kadodara Branch:

Kamrej Branch:

\\\"SAHKAR\\\", Lakdawala Complex, Shop 1 to 5, Dharam Empire , Near

B/H Kadodra Police Station, Kadodra- Kamrej Char Rasta, Opp. Kamrej
394327.

Bus Station, Kamrej -394185

Table 3.1 Branches of Akhand Anand Co-operative bank

b. Organogram of Akhand Anand Co-op. Bank

Chairman

Vice-chairman

Managing director

Board of Director

Manager /C.E.O

Assistant Manager

Officer
Clerk
Peon
Figure 3.1 Organogram of Akhand Anand Co-op. Bank

Board of Directors:

The Akhand Anand Co-operative Bank Ltd." has 9 directors this name as
follows:
Sr. No.

Name

Designation

1.

Shri Dhanjibhai N. Patel

Chairman

2.

Shri Popatbhai N. Patel

Vice-Chairman

3.

Shri Pravinbhai N. Kakadiya

Managing Director

4.

Shri Hiralal J. Patel

Director

5.

Shri Natubhai I. Patel

Director

6.

Shri Manojbhai O. Godhani

Director

7.

Shri Bharatbhai V. Shah

Director

8.

Shri Gordhanbhai V. Sarvaiya

Director

9.

Shrimati Sanjanaben D. Prajapati

Director

10.

Shri Mehulbhai K. Desai

Director

11.

Shrimati Bhartiben N. Patel

Director

12.

Shri Kiritbhai S. Patel

Director

13.

Shri Pranavbhai D. Patel

Director

14.

Shrimati Jayaben C. Soneriya

Director

15.

Shri Karanbhai M. Patel

Director

16.

Shri Bhimjibhai T. Chaklasiya

Co-Opt Director

17.

Shri Pradipbhai F. Jadiya

Co-Opt Director

18.

Shri Dipak A. Soni

General Manager/CEO

19.

Shri Jatinbhai V. Dave

Main Branch Manager

20.

Shri KalpeshBhai R. Patel

Ring Road Manager

21.

Shri Himanshubhai J. Parikh

Varachha

Branch

Manager
22.

Shri Ashishbhai K. Vyas

Kadodra Branch Manager

23.

Shri Kalpeshbhai B. Shukla

Kamrej Branch Manager

Table 3.2 Board of Directors

c. Division and Department of Akhand Anand Co-op. Bank

NEW ACCOUNT DEPARTMENT
New Account is opened as well as old accounts are closed in this department.
Accounts are of two types:

A. Current Account.
B. Saving Account.
Daily nearly on an average about 10 to 12 current accounts and 15 to 20
saving account are opened and 1 or 2 are closed every day the procedure for
opening new accounts in the bank starts with fill up the form given by bank.
The bank has requirements for opening a current account is two to open a
new account in the bank and license of the firm. To open saving account only
one photographs of the account holder and if the account is opened for
company or firm then the photograph of the directors or proprietors or
administrator, the sign and account number of the person who wants
photograph of account holder, signature of account holder in the same bank
as well as papers or documents which give true and pair residential address
such as driving license, rationing card, light or phone bill, school living
certificate etc.
The minimum balance for current account is Rs.0 and the minimum balance
for saving account is Rs.1000. Any account holder, current or saving, cant
close his account before completion of six months in the bank. Closing of new
account is somewhat difficult task as each and every aspect of the account is
to be noted. The bank provides service of cash credit and overdraft against for
the current account holders.

ISSUE OF CHEQUE BOOK AND PASS BOOK

Issue of Cheque Book and Pass Book is one part of the new account
department bank. In this part of the department new passbook and 34

Cheque book are issued. The new account department gives details of new
customers and according to that new cheque book and passbook are issued.
This consists of only one employee who gives cheque book and passbook to
the customers. Customers who are in need of a new cheque book have to
apply a day before with a counter given in the old cheque book. For each
account holder it is compulsory to allow at least five cherubs to be cleared or
presented to bank for issuing a new cheque book. Daily 70 to 75 new cheque
books are issued to the customers.
CLEARING DEPARTMENT
The most important department of the bank is clearing department. This
department has maximum number of employees. Nearly about seven or eight
person are continuously working in this department. Clearing per day is nearly
about two or three crores. Clearing house of all banks in Surat is situated at
State Bank of India, Nanpura, and Surat.

TOKEN DEPARTMENT
It is small but department with only two employees. The working hours of this
department is from 11:00 am to 3:00 pm. Token is issued after various strict
verification of cheque such as signature amount in figure as well as in words
etc. This department is small but has full of responsibility. Bank has a special
service for its customers that is up to Rs.20,000 for saving account holders
and no limit for current account holders can be withdrawn directly from the
cash counts without the procedure of Token.
LOAN DEPARTMENT
The Loan Department secures and collects information relating to borrowers.
Checks statements submitted by them. In charge of credit files which contain
information as to the reliability, business habits and financial strength of
borrowers. Each lending product has individuals who work only in those
areas.
These include the following:
A. Auto loan,

B. Agriculture loan
C. Home Loan
D. Education Loan

d. SWOT analysis of Akhand Anand Co-op. Bank

STRENGTHS
AACBs is selfreliant in financial with less risk in operations.
Non-discrimination against caste, class, creed, religion, and gender.
Its customer relationship management
Democratic management

WEAKNESS
The process of computerization of AACBs is rather slow. Though
computers have been installed, trained staff is are less available.
Slow policy revision
Less offering than other bank.
OPPORTUNITIES
Use of mobile banking and internet banking on large scale
Cover untapped market
Offering more customer services

THREATS
Increasing incidence of frauds and misappropriation
Tightening of Income Recognition and Asset Classification Norms had
a direct bearing on the balance sheet of the AACB.
Higher cost of management especially for interest on deposits and
establishment cost.
External pressure to finance ineligible borrowers.

e. Market position of Akhand Anand co-operative bank:

Akhand Anand co-operative Bank offices are spread all over Gujarat keeping
in minds the end goal to encourage saving money operations at areas other
than the bank's focal area. Numerous substantial and little banks use branch
keeping money with a specific end goal to extend their range of
administrations to various areas. Because of the developing interest and
focused monetary business sector the bank fanning framework has
experienced numerous progressions. In any case, it is troublesome keep up
every one of the subtle elements of these branches like location contact
numbers, codes for online exchanges, and so forth we require such points of
interest of Akhand Anand bank offices for number of reasons like making
online exchange, asking about the clearing cheques, asking for versatile
managing an account for our record asking about new administrations
included and so forth. Bank office in fills this need well and is spot where you
can without much of a stretch find closest Akhand Anand bank offices. The
operations of bank are limited in compared to other cooperative banks in
Gujarat.

Chapter-4
Review of Literature

Singh (March 2016) The Study was on Non-Performing Assets of

Commercial Banks and its recovery in India. It shows that extent of NPA is
comparatively very high in public sectors banks. Although various steps have
been taken by government to reduce the NPAs but still a lot needs to be done
to curb this problem. The NPAs level of our banks is still high as compared to
the foreign banks. It is not at all possible to have zero NPAs. The bank
management should speed up the recovery process. So the problem of NPA
needs lots of serious efforts otherwise NPAs will keep killing the profitability of
banks which is not good for the growing Indian economy at all.

Rao and Patel (March 2015) The study was on non-performing assets
management with reference to public sector banks, private sector banks and
foreign banks in India The findings reveals the percentage of Gross NPA to
Gross advances is increasing for public banks, ratio of Loss Advances to
Gross Advances are higher in foreign banks, the Estimated Gross NPA for
2014 is also more in public banks as compared to private and foreign banks
and from the ANOVA test, it is concluded Ratio of Gross NPA to Gross
Advances for public sector, private Sector and foreign Banks does not have
significant difference between 2009 to 2013.
Narula and Singla (2014) evaluated the non performing assets of Punjab
National Bank and its impact on profitability & to see the relation between total
advances, Net Profits, Gross & Net NPA. The study uses the annual reports
of Punjab National Bank for the period of six years from 2006-07 to 2011-12.
These papers conclude that there is a positive relation between Net Profits
and NPA of PNB. It is because of the mismanagement on the side of bank

Sikdar and Makkad (2013) this paper provided insight on the role of NPA in
risk frame work of selected Indian commercial banks and try to put forward
the means of interpreting credit risk from existing levels of bank NPAs.
Further, research highlights the significant steps taken and procedures
implemented by major Indian commercial banks, within the public and private

sector, towards recovery of loans and advances falls into the NPA bracket.
The research for the present paper is based on extensive study of annual
publications on performance of public sector and private sector commercial
banks by the Indian Banks Association (IBA). Further, annual reports of
commercial banks in focus for the year ending March 2012 have been
studied. The study conclude that problem of NPAs can be tackled only with
proper credit assessment and risk management mechanism.

Rajput, Arora and Kaur (April 2012) Management of non-performing assets

a study of Indian public sector banks This study was traced the movement of
the nonperforming assets present in Indian public sector banks by analysing
the financial performance of the banks with respect to key performance
indicators and management of the non-performing assets under the purview
of new policy actions and regulatory adherence of the Reserve Bank of India.

Pinto (2009-10) Management of Non-performing assets in co-operative

agricultural banks Management of non-performing asset is a fundamental
challenge for every bank. The banks must see that whatever the funds
disbursed must be recovered with an added effect. If not the banking business
will not reach its objective and will be far away from its sustenance. Apart from
commercial banks the co-operative banks usually confront higher degree of
risk in converting the loan assets into performing assets.

S. N. Bidani (2002) feels that Non-performing Assets are the smoking gun
threatening the very stability of Indian banks. NPAs wreck a bank's profitability
both through the loss of interest, income and write-off of the principal loan
amount itself. In a bid to stem the lurking rot, RBI issued in 1993 guidelines
based on recommendations of the Narasimham Committee that mandated
identification and reduction of NPAs and reducing NPAs was treated as a
'national priority'

Antony (2005) found that the Co-operative sector is plagued by many ills,
both man made as well as natural. They are affected by mal-administration,

misuse of funds, poor recovery, dual control, lack of professionalism, limited

areas of operation, mounting NPAs etc. In spite that the co-operative bank is
the lifeline of the rural sector, any setback in their liquidity and solvency
position would undoubtedly affect agriculture, the back bone of the economy.
Kulkarni (2005) founded that the co-operative bank was miserably failed to
keep pace with the banking sector reforms. The other banking groups have
significantly surpassed the co-operative banking sector, not only in the
performance but also in the market share in the core area so far dominated by
the cooperative banks. If things do not improve, the co-operative banking
sector may cease to exist by 2020. The high amount of NPA's is one major
aspect for this failure
Mathew (2006) observed that rising over dues and high level of NPAs among
the co-operatives in the country is a matter of serious concern. The
politicization of the recovery management has further vitiated the recovery
climate. The growth in over dues has been much higher than the growth in
loans outstanding. For example in Kerala, while the loans outstanding with the
PACS in the state increased by 55% between 1999 and 2003, the loans over
dues increased by 113% (The Hindu, 2004). This alarming situation in over
dues has to be seriously addressed
Vallabhi, Bhatio and Mishra (2007) explained that the Non-performing
assets are considered an important instrument to judge the efficiency and
financial health of banks. The level of Nonperforming assets is one of the
factors effecting a financial stability and growth of the banking industry. The
authors made an effort to find the fundamental factors which impact Nonperforming assets of banks. It is seen that priority sector lending is a major
cause for Non-performing assets
Avudalammal B and Vasanth G (2009) claimed that Co-operative banking
was started in India to remove the proverbial poverty but Non-Performing
Assets is one of the critical functions of the banks management. They also

studied the trend of the Non-performing Assets level in urban co-operative

banks and found that when compared with the percentage of Non-performing
Assets of public sector bank to that of urban banks, the latter enjoy a better
position than the former
Sen and Gupta (2009) explained in his article that banks frequently indulge in
loan restructuring whenever they sense that the borrower is in stress and
account may lead into a bad loan or Non-performing assets. It allowed them
to declare a lower Nonperforming assets ratio, the percentage of tricky loans
to total loans, and a dead weight in their books

Srinivas K T (2013) emphasis on identify the Non-performing assets at

Commercial banks in India. This paper highlights the various general reasons
which convert advances/ assets into NPA and also give suitable suggestion
on findings to overcome the mentioned problem.

Sikdar and Makkad (2013) The paper provided insight on the role of NPA in
risk frame work of selected Indian commercial banks and try to put forward
the means of interpreting credit risk from existing levels of bank NPAs.
Further, research highlights the significant steps taken and procedures
implemented by major Indian commercial banks, within the public and private
sector, towards recovery of loans and advances falls into the NPA bracket.
The research for the present paper is based on extensive study of annual
publications on performance of public sector and private sector commercial
banks by the Indian Banks Association (IBA). Further, annual reports of
commercial banks in focus for the year ending March 2012 have been
studied. The study conclude that problem of NPAs can be tackled only with
proper credit assessment and risk management mechanism.
Olekar and Talawar (2012) studied NPA management with reference to
Karnatak central cooperative bank ltd., where they described conceptual data
about NPA and on the other hand, they calculated few NPA related ratios and
used trend projection method to predict next year advances for the bank.

Their finding includes the considerable reduction of NPA for the bank and
some suggestions for recovery of NPA.

Kaur and Saddy (2011) in the research paper entitled A Comparative Study
of Non-Performing Assets of Public and Private Sector Banks an attempt is
made to clarify the concept of NPA, the factors contributing to NPAs, the
magnitude of NPAs, reasons for high NPAs and their impact on Indian
banking operations. Besides capital to risk weight age assets ratio of Public
and Private sector banks, management of credit risk and measures to control
the threat of NPAs are also discussed.
Hosmani and Hudagi (2011) conducted study on Unearthing the Epidemic
of Non-Performing Assets with Reference to Public Sector Banks in India an
empirical and descriptive in nature which shows the magnitude and trend of
Public Sector banks in India and found that there is a slight improvement in
the asset quality reflected by decline in the diverse NPA percentage. The
study concluded that NPA is an important parameter for assessing financial
performance of banks in terms of profitability, liquidity and economies of scale
in operation and banks has to take timely action against degradation of good
performing assets.
Nandhini Mishra (2011) identified sectors of Non-Performing Assets, housing
loan and education loan are more responsible to the increase of Nonperforming assets. Real estate is another sector which is in part of which
more than 40% of total Non-performing Assets and 2% of education shows
outstanding.

Chander and Chandel (2010) analyzed the financial efficiency and viability of
HARCO Bank and found poor performance of the bank on capital adequacy,
liquidity, earning quality and the management efficiency parameters.

Thanker H M and Dubule U S (2010) made an effort on the effect to nonperforming assets management. Authors suggested the measures to

decrease the Non-performing assets, awareness and training camps should

arrange in their area of operation once in a year and recovery camps should
be organized for better recovery. They also suggested that the training should
be given to the selected borrowers at approved training center before
releasing finance
Rana (2010) has completed his study Management of Performing and NonPerforming Assets A study of selected Urban Co-operative Bank in South
Gujarat. In his study he has focus on urban co-operative banks located in
south Gujarat region. In his study he found that that all the selected UCBs of
South Gujarat are managing their NPAs very satisfactorily, though there may
be some weakness somewhere and they must be carefully looked after.
Meenakshi and Mahesh (2010) this exploratory paper examined the trend of
NPAs at global level One interested observation is that most of the countries
that fall under the higher NPA/Total Loan ratio Category are in the Asian
region & Also examine India from various magnitudes and also identification
of the problem & recovery mechanism to a great extent. It also show that NPA
in the priority sector is higher than non priority sector. The paper also
discusses the role of joint liability groups (JLGs) or self help groups (SHGs) in
enhancing the loan recovery rate.
Singh and Singh (2006) studied the funds management in the District
Central Cooperative Banks (DCCBs) of Punjab with specific reference to the
analysis of financial margin. It noted that a higher proportion of own funds and
the recovery concerns have resulted in the increased margin of the Central
Co-operative Banks and thus had a larger provision for non-performing assets

Mavaluri, Boppana and Nagarjuna (2006) suggested that performance of

banking in terms of profitability, productivity, asset quality and financial
management has become important to stable the economy. They found that
public sector banks have been more efficient than other banks operating in
India.

Pal and Malik (2007) investigated the differences in the financial

characteristics of 74 (public, private and foreign) banks in India based on
factors, such as profitability, liquidity, risk and efficiency. It is suggested that
foreign banks were better performers, as compared to other two categories of
banks, in general and in terms of utilization of resources in particular.

Campbell (2007) focused on the relationship between nonperforming loans

(NPLs) and bank failure and argued for an effective bank insolvency law for
the prevention and control of NPLs for developing and transitional economies
as these have been suffering severe problems due to NPLs.

Dutta and Basak (2008) suggested that Co-operative banks should improve
their recovery performance, adopt new system of computerized monitoring of
loans, implement proper prudential norms and organize regular workshops to
sustain in the competitive banking environment
Kamalakannan and Namasivayam (2006) said that the small scale
industries in India over the past fifty years have made a significant
contribution to building a strong and stable national economy. The SIDBI has
been playing an important role by operating various schemes of financial
assistance to small scale industries. Besides, in order to widen its area of
operations, the SIDBI should open more branches in district headquarters.
Small scale industries have an important role to play in achieving the planned
objectives

of

increasing

industrial

production,

generating

additional

employment and reducing regional imbalances of growth. The Small

Industries Development Bank of India (SIDBI) was set up for promoting,
financing and developing industries in the small scale sector and for
coordinating the function of other institutions engaged in similar activities.
Lakshmanan and Dharmendran (2007) examined the impact of NPAs on
selected performance variables viz., net profit, Investments and legal
expenses. The regression model was applied to analyze its impact on

performance variables. The result showed that the impact of NPAs on all the
above performance variables of the bank was negative and insignificant at 5%
level in all the equation. Therefore, he concluded that efforts are required at
RBI, NABARD and Bank level to control the management of NPAs and
performance.
Prakash (2009) found in his studies of the working of Bhutan Development
Finance Corporation Limited that the amount of loan received and the number
of installments has the same influence on the repayment of loan under the
different schemes. He also pointed out that the reasons for non-payment of
loan listed by the beneficiaries were due to severe competition, lack of
demand for their products, hike in price of essential commodities and
unforeseen domestic expenditure
S. N. Bidani (2002) feels that Non-performing Assets are the smoking gun
threatening the very stability of Indian banks. NPAs wreck a bank's profitability
both through the loss of interest, income and write-off of the principal loan
amount itself. In a bid to stem the lurking rot, RBI issued in 1993 guidelines
based on recommendations of the Narasimham Committee that mandated
identification and reduction of NPAs and reducing NPAs was treated as a
'national priority'
Bhattacharya (2001) in his book Banking Strategy, Credit Appraisal and
lending decision rightly point out that increasing rate regime quality borrowers
would switch over to other avenue like capital market, internal accrual for their
requirement of funds. Under such circumstances banks would not have any
option but to dilute the quality of borrowers thereby increasing the probability
of generation of NPAs.
Bhaskaran and Josh (2000) concluded that the recovery performance of cooperative credit institutions continues to unsatisfactory which contributes to
the growth of NPA even after the introduction of prudential regulations. They
suggested legislative and policy prescriptions to make co-operative credit

institutions more efficient, productive and profitable organization in tune with

competitive commercial banking.

Jain (2001) has done a comparative performance analysis of District Central

Cooperative Banks (DCCBs) of Western India, namely Maharashtra, Gujarat
and Rajasthan and found that DCCBs of Rajasthan have performed better in
profitability and liquidity as compared to Gujarat and Maharashtra.

Korten 2009 : claimed that fractional-reserve banking, by expanded the

money supply, will lower the interest rates compared to a hypothetical fullreserve banking system, although this idea has been criticized within
mainstream economics and increase the Loans and advances.
RBI (Amd.) Bill 2006: has been enacted and has come into force with its
gazette notification consequent upon and to subsection to 42 (1), the RBI
having regard to the needs of securing the monitory stability in the country
can resemble CRR for scheduled banks without any floor rate or ceiling rate.
According to Mankiw, N. Gregory (2002), Repeated bank failures and
financial crises led to the creation of central banks public institutions that
have

the

authority

to

regulate

commercial

banks,

impose

reserve

requirements, and act as lender-of-last-resort if a bank runs low on liquidity.

The emergence of central banks mitigated the dangers associated with
fractional reserve banking.
demiyi (1988,P.8) describe credit as a crucial factor in the growth process of
any economy and as such it should be supplied adequately be the credit
agencies of which the commercial bank as a group is the guard. He
delineates investment, commercial and consumers and three types of credit.
Ajaiyi (1980,P.7) looked at loan and advance from two perspectives. The first
is from the angle of the commercial bank; the second is from that of the
economy. He said as profit making is concerned, loan and advance is

important item in which it is consistently accounted for about one third of the
banks total assets. In respect to the economy, the injection of fund is
important for the development of the industrial facilities and industries etc. he
contend that the rate and the direction for the credit facility has implication for
the growth of the money supply and price stability for the economy. From the
forgoing review of literature, it is obvious that there is a consensus of opinion
as to the important of credit to the economic development of a nation.
Commercial banks are seen as well placed in extending credit facility to
individual, firm and other institutional borrowers and hence the economy in
general.

Corns (1962,P.6) pointed out that bad loan are made in the so called good
time but good loan and bad are also made in time of economic prosperity
not due to economic factor but for human element of management, instability
of the borrower either through negligence or inexperience to cope with every
changing business condition or through perverted judgment by the loan
officers.In appraising loan application, loan officer may be influenced by
friendship, business, and political and family connections.
Braceter (1984, P.11) noted that There should be an element of favor or
blousing in either borrowing or lending. It is a commercial agreement freely
entered into by both parties and any implication that the bank has hand to be
pressed by them into agreement is misplaced

Robinson (1962, P.12) who uphold the view that successful banker is a
successful lender expressed the view that the toll use to manage lending is
credit analysis, budgeting and supervision. Lending also has to be
enlightened by a competitive but reasonable policy for interest changes on
loan. Thus it is observed that an addition to credit analysis is budgeting
supervision of the lending are the important aspect of the management in
lending. To have a good loan, the lender must know its purpose and source of
repayment.

OMalia (1979,P.7) claimed that Analysis then becomes the tool by which one
measure the capability of his repayment. In a common sense view, one
almost end up by asking if what the client is proposing is feasible and it past
records supports it.
Robbetal (1983,P.10) agreed with o Malia that to ensure in the safety term,
the committed lending that we need a comprehensive approach to the lending
decision based on a review of the significant areas, market strategy, finance
operation, soundness of the management whereby we look at the past,
present and the future performance.

Davidson (1986,P.7) who wrote about the dangers of monitoring only

recognize problems, believed that the early recognition of the company
weakness dose not happen in vacuums,. He stressed further that the bank
must instill a certain frame of mind in its people and must have a system for
monitoring all the credit even those it believed to be healthy.
Anayo, (1994,P.5) said across various commercial bank, provision for bad
debt account as a proportion of net income has risen from about 50% to 90%
from 1992 to 1993. This scenario indicates that the role of non-recovered loan
and advance has been raised at an alarming rate. Some recent result depict a
groper trend and suggest that this undesirable situation will probably continue
unless positive steps are taken to arrest it by enhancing the quality of banking
lending decision process. However, the ability of the commercial industry to
attain to this objective required understanding of the nature of lending
decision task under the condition of uncertainty. As well as the factor, which
may influence the bank loan officer in the process of some decision aid that
could enhance the degree of professionalism and thus the judgment accuracy
of the bank loan officers.
Oyerela (1989,P.5) stated that bank must learn the skill of preventing the
worst possible situation from occurring. In order to do so, he must learn to
reorganize early sing of a potential bad debt. The occurrence of situation

where debts are not paid on time or they are not paid atall has given rise to
the need for classifying bad debt into various categories and due to he various
situation of the classifier. For reason of simplicity, it is often preferred to
classified debt into good, doubtful and bad debts
Singh and Balraj (1979) conducted a study on advantages of loans from
banks in Hissar District of Haryana, and states that rural people are under the
exploitation of money lenders. Majority of the villagers depend on the money
lenders for their personal and business purposes because of their mode of
operation is best suited to the rural people. Operation of a nationalized bank
in the village can relieve the rural people from the exploitation of money
lenders to a certain extent. They also report that the banking facilities are not
easily accessible to the rural people because of the cumbersome procedure,
unnecessary formalities and delay in disbursement of loans

A V. Dhond (1994) conducted a study on the role of commercial banks in the

Development of Small Scale Industries. In the study, he remarks that the
importance of small scale industries in the economic development of our
country cannot be ignored. The multi-national companies which, are going to
set up their units in India will increase the demand for the products of SSI
units. Thus the SSI units have a bright future in the country. Therefore, the
commercial banks should take necessary steps to increase the credit to SSI
units.

M.A.Ommen (1972) stated that commercial banks have an important role in

financing SSI units in Kerala. Though the financial institution at state level and
all India level provided financial assistance to SSI units for meeting their fixed
and working capital requirements, the major part of the financial requirements
of SSI units are satisfied by the loans and advances of commercial banks
Nambiar P. C.D. (1977) conducted a study on financing of Priority Sector. He
is of the view that the commercial bank's neglect of priority sectors including
agriculture, small scale industries, small artisans, self employed persons, etc,

is one of the major reasons for their backwardness. The banks are reluctant to
take up the financing of the priority sectors due to the smallness of their size
arid their precarious existence at the margin of viability. Their urban origin,
security orientation, methods and procedures of operations are not suitable
for financing the priority sectors. Financing of priority sectors is a new
experience for the banks and presents a number of problems. They have to
reorient their lending policies with a shift of emphasis from security to viability
of the project. He also states that the role of commercial banks in the priority
sectors does not end with the provision of finance but it also includes the
evaluation of the feasibility of a project and to aid the entrepreneurs to select
the right type of projects. An improved co-ordination between various
agencies including government agencies and commercial banks is necessary
for a better result.

Chapter-5
Research Methodology

1. Problem of Statement:
How are lending practices managed and Non- Performing Assets managed at
Akhand Anand co-operative bank?

2. Research Objectives:
The study has been undertaken with regard to the following objectives:
To study and measure efficiency of lending practices at Akhand Anand
Co-operative bank.
To study the disbursement of different loans at Akhand Anand cooperative bank.
To analyse various components of NPAs at bank.
To study the trends of short term loans and advances provided by
bank.
To study the recovery performance of the bank.

3. Research Design
There are three types of Research Design. Exploratory Research design,
Descriptive Research design and casual Research design.

3.1 Type of design: Descriptive Research Design

3.2 Data Collection:

The study relies on both primary as well as secondary data.
3.2.1 Primary data:
A Structured Questionnaire is designed to collect data from customers of bank
on lending practices of bank.

3.2.2 Sampling Units:

The Customers who are taking loan facility at Akhand Anand Co-operative
bank at Katargam branch.
3.2.3 Sample size:
200 Customers at Katargam Branch.

3.2.4 Sampling Method:

Non Probability convenience sampling method.

3.3 Secondary data:

Secondary data refers to data collected from websites, Annual Reports
Annual reports, Internet, Newspaper, Magazine and Review of Literature. In
this study data relating to different types of loans and advances, various
components of NPA will be collected from Annual reports of Bank.
3.3.1Data Period: Secondary Data- 2009 to 2016

3.4 Data analysis tool and techniques

3.4.1

Descriptive statistics, frequencies and chart

For responses collected from questionnaire.

3.4.2 Trend analysis

Trend analysis is applied to study the trend of different secured and
unsecured loans and Advances
3.4.3

Ratio analysis
Ratio analysis will be used to study the different components of Non Performing assets

3.5 Limitation of study:

Findings and analysis is relevant only for the given period of time and
its usefulness change with time.
The study is restricted to only one co-operative bank.
Sample size is restricted to 200 people which will not provide results
that can be generalized.

BIBLIOGRAPHY
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Donald R. Cooper and Pamela Schindler, sampling strategies survey

research, business research methods, research and methodology 2 nd
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Annual reports of bank

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Malyadri, p., & sirisha, s. (2011). a comparative study of non-performing

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Olekar, r., & talawar, c. (2012). Npm-performing assets management in

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Weblinks:

https://co-operativebaunnkbrianches.com

https://www.co-operativebank.co.nz/

https://en.wikipedia.org/wiki/Cooperative_banking

https://akhand.anadco-operativebanj.254okij.com

www.akhandanandbank.com/

https://en.wikipedia.org/wiki/Banking_in_India

https://www.icicibank.com/

www.bankofindia.co.in/

https://www.indianbank.net.in/

https://www.axisbank.com/bank-smart/internet-banking/featuresservices