Professional Documents
Culture Documents
ON
RETAIL CREDIT
(WITH SPECIAL REFERENCE TO
BANK OF MAHARASHTRA)
By:
SHRIRAM YADAV
Roll No-60 (PGDM-BFM)
Every human being to whichever walk of his life he belongs, seeks success in
whatever he does. Success especially tastes sweet when it is combined with
hard work and sense of dedication. But he can’t take all credit for the success
he earns because some forces work in the background from him.
I take this opportunity to give due “Credit” to these forces they deserve and
show my gratitude towards them.
First and foremost I would like to thank my parents and colleagues for all their
support, which helped me reach where I am today.
Last but not the least, I would like to thank Prof.Monika Tikkoo for being my
project guide. It was due to her valuable support and guidance that I was able
to successfully complete my project. She not only reviewed my progress at
each step but also helped me design the project. It was because of her cordial
guidance and suggestions that I could implement project efficiently and in
time.
Mr. / Ms. _______________ has completed his / her project on RETAIL CREDIT –
With Special Reference To Bank of Maharashtra.
Project Guide:
Mr. Rajan Korgaonkar
Asstt.General Manager
BANK OF MAHARASHTRA
I also declare that this project report is the result of my own effort and has
Not been submitted to any other institute or University.
SHRIRAM YADAV
Roll no-60 (PGDM -BFM)
TOPIC
PAGES
Chapter – I 06
Chapter – II 14
Chapter – III 31
Chapter – IV 57
RETAIL CREDIT-Special reference to Bank of Maharashtra Page 5
4.1 Findings ----------- 58
4.2 Suggestions / Recommendations ----------- 59
Bibliography ----------- 60
Annexure ----------- 61
CHAPTER – I
Introduction
Objective of the Study
Need of the Project
Scope of the Project
Research Methodology
Limitations of the Project
The banking sector has under gone turbulent changes in the past few years. The financial
sector reforms have provide Nationalized bank with an opportunities to get entered an era of
fierce competition, posing tall challenges. The conventional banking as outlined above has
given way for professional and high-tech banking. There has been a paradigm
shift from the monopolies of nationalized banks to competitive banking. Nationalized banks
can no longer remain complacent with their conventional products and services. With walk
in business virtually being ruled out, banks are now scouting for quality consumers both for
building their resources and assets. There were times when the corporate clientele occupied
the centre stage and the retail ones were pushed to the back seat. The slowdown of the
economy,
sluggish industrial growth and slump in agricultural activities have pushed the commercial
banks to look to the retail customers.
Retail Credit Lending is one of the main functions of banking business and so an important
source of working fund for the bank. Retail credit is an indispensable factor to increase the
source of the Banks to serve effectively. The importance of credit facilities of the
nationalized banking structure is to provide satisfactory service to the retail customers in
order to fulfill their Economical or Financial needs and ultimately their social needs. The
success of the banking greatly lies on the Credit Lending performance of the bank as the
Credits are normally considered as a cost effective source of working fund. The bank is
operating various Retail Credit Lending schemes such as Housing, Education, Vehicle,
Personal and other special schemes to meet the varying requirement of the customers.
Credit Lending to the public provide low cost working fund for the bank. When it is not
fully augmented, the performance of the bank is affected. Innovative business has become
more essential for the banks to stay and to progress in this aggressive, ever-changing,
competition-packed marketing environment.
For a bank, Lending of Credit is as much essential as ‘Oxygen for Life’. In the post
liberalization scenario, the number of players in banking industry has increased
considerably which developed competition in bank marketing. ‘The survival of the fittest’
has made applicable for the banks. To enhance profitability, banks take appropriate steps to
minimize the Cost and Time for lending the credit. In the present context banks efficiency
can be measured with respect to Cost, Profitability and the Time taken for lending.
Banking is a business of taking risks. One of the important, all pervasive risks that Bankers
have to face at all points of functioning is the operational risk and supersedes other risks. It
is the risk, arising out of human or technical error. Functionaries not being fully aware of
• To analyze the need for Retail Credit and the techniques & procedures used for the
processing of Retail Loans
• To provide the details of different modes of lending along with the steps involved in the
Credit lending
• To describe the various methods and techniques and important measures which are used
for processing of the Retail Credit Lending
• To provide the details of the Risks which are involved in the Retail Credit Lending
• To study about the Risk Management & vigilance of the risks which are associated with
Retail Credit Lending
To study the processing of Retail Credit and Risk associated with them
To study the various methods and techniques used for management of the Retail
Credit
Bank staff could not provide the detailed information due to bank’s Policy.
COMPANY PROFILE
ORGANISATIONAL CHART
- BOARD OF DIRECTORS
- TOP MANAGEMENT
ESTABLISHED IN 1935
Bank of Maharashtra is a common man’s bank. Prof. V.G. Kale and the late Shri D.
K. Sathe registered as a banking company on the 16th of September, 1935 at Pune with an
authorized capital of Rs. 10.00 Lakh and issued capital of Rs. 5 Lakhs by a visionary group
of middle class men with the sole aim to serve the common man from Maharashtra who was
neglected in the field of banking at that time. Their vision was to reach out to and serve the
common man and meet all their banking needs. The bank started functioning on 8th
February 1936. In July 1969 when it was nationalized with 13 other major Bank had
developed its roots in entire Maharashtra and it enjoyed complete confidence of the
common man. Even before the government issued guidelines about deployment of 40%
advances to priority sector, the Bank was following the principle of serving common and
neglected people of the society, since its inception and it continues even today. Successive
leadership of the Bank and the employees has endevoured to fulfill their vision.
Milestones
1996 : Bank's Diamond Jubilee Celebration launched by the then RBI Governor,
Dr. C. Rangarajan
5. 1st CBS branch rolled out on 13th November at Karve Nagar, Pune.
2009 : 1444 branches, 345 ATMs, Total Business over Rs. 90,000 crore, 902 CBS
branches
Vision 2010
Mission
Our Logo
The Deepmal
The Pillar
The Diyas
- Mobilisation of Money
- Motivation of Staff.
Our Aim
The bank wishes to cater to all types of needs of the entire family, in the whole country. Its
dream is "One Family, One Bank, Bank of Maharashtra ".
Secured Autonomy
The Bank is one of the progressive Nationalized Banks that got autonomy in the year 1998
and continues to enjoy the status as a result of excellent performance. It helps in giving
more and more services with simplified procedures without intervention of Government.
The Bank has earned profit for consecutive five years.
The bank excels in social Banking, overlooking the profit aspect having the highest share of
priority sector in net Advances and it derives strength from the common man, as its savings
deposit are 29% of its deposits. Around 90% of its depositors are having deposits below
Rs.25000/-. The Bank provides an array of banking services that satisfy changing needs of
depositors as well as small and big borrowers. The bank has entered into correspondent
The Bank has established Rural Development Centres at Hadapsar and Bhigwan in
Maharashtra to carry out Research, Technical Support, Education, Demonstration and Rural
Development Activities. The Bank has also established to trust under RDC, namely Gramin
Mahila VA Balvikas Mandal (GMVBM) and Maha Bank Agricultural Research and Rural
Development Foundation (MARDEF) Both are NGO’s and are engaged in improvement of
women and children in the rural and in transfer of technology in Agricultural sector.
The Bank successfully implemented Agriculture Debt Waiver and Debt Relief Scheme of
the Government of India, by reaching out to 87,157 eligible small and marginal farmers for
debt waiver involving Rs. 218.32 crore. The number of farmers eligible for debt relief is
48,237.
Computerization
Computerization activity in the Bank started a way back in 1982. By December 2000, 380
branches were computerized and the total business handled by these branches was more
than 69%. The Bank has also introduced sophisticated facilities like ATM, E-mail, Tele-
Banking, Query Terminal etc. at various branches/offices.
Highlights
Specialized branches:
S M E branches - 14
Agro High-Tech branches - 4
Industrial Finance branches - 2
Overseas branches - 2
Treasury & international Banking - 1
Pension Branch -1
Govt. Business Branch - 1
Bank has 28 FEX centers to handle FEX business.
Toll Free telephones at 11 major Metro centers.
The bank is shouldering the responsibility of lead bank in six districts viz. Satara,
Pune, Thane, Nasik, Aurangabad and Jalna. Our bank is also convening State Level
Bankers’ Committee and various development issues are taken up to implement the
state credit plan and achieving the targets under various Government sponsored
schemes.
The Bank has set up a Trust viz. Mahabank Agricultural Research and Rural
Development Foundation (MARDEF), which is engaged in providing Credit Plus
services to the farmers in specific specialized fields like commercial dairy, Emu
farming, sericulture, organic farming, etc.
The institute trains unemployed youth from the districts of Pune, Kolhapur, Satara, Sangli,
Nashik, Ahmednagar, Jalgaon, Dhule and Nandurbar.
BOARD OF DIRECTORS
TOP MANAGEMENT
TOP MANAGEMENT
Bank Deposits
Lending of Loans
ATM Services
Credit Cards
Demat Services
Bancs
Bancassurance
Distribution Of Mutual Funds
Executors And Tustee Services
MAHAbill Pay
Mahabank Insta Remit Scheme
Capital Market Application (ASBA)
NEFT
MAHAeTRADE (ON LINE trading facility)
In Bank of Maharashtra, I Learned how to deal with the following four types of
Retail Loans :
- Home Loan
- Education Loan
- Vehicle Loan and
- Personal Loan
I have learned all these operations by completing 24 Loan Proposals which includes all the
four types of Retail Loans like Housing, Education, Personal and Vehicle loan.
Theoretical Background
Data Analysis & Interpretations
GENERAL
Safety, liquidity and profitability are the cardinal principles of lending. After
nationalization banks have been functioning as an instrument of social change. The GOI
and the RBI, during the last two decades have issued a number of directives in this regard
highlighting the social/economic purpose which they have to sub-serve. The traditional
principles of lending have come under stress. With regard to certain type of lending
particularly under priority sector the concept of security and profitability have undergone a
radical change and have been subordinated to social objectives.
A) Yet a banker has also to remember that he is dealing in funds collected from
public by way of deposits and is working as a trustee of their funds.
Therefore the basic principles of good and sound lending which are
fundamental observed by Banks. The principles may vary depending on
situation, however, basic frame will remain the same.
C) Safety, liquidity and profitability are the three basic principles of lending.
Since the amount to be advanced mainly consists of depositors’ funds, bank
has to ensure and safeguard depositors’ interest. Bank should also remember
that some of bank’s deposits are withdrawable on demand or at short notice.
It would be in bank’s interest to see that the advances which bank grant are
easily liquidated. The canon of liquidity is more important. Bank should also
know that bulk of bank’s profit accrues from the advances. However,
It is equally relevant to mention here that bank should diversify their advances and
should not concentrate such lending to any group or sector of industry/business in one
particular area/sector. The maxim “all eggs should not be kept in one basket” should be
borne in mind. The purpose for which the advances are to be sanctioned/recommended
should be legal and acceptable to the bank and the type of business activity to be financed
by the bank should be within broad lending policies framed by the Central Office. Bank
should ensure that the purpose of the advance is productive which will generate internal
surplus and provide definite source of repayment. The aspect of security (wherever
applicable) should not be lost sight of. Tangible security acceptable to the bank should be
considered as an insurance or cushion to fall back upon in case of emergency. Even after
application of all principles of lending, a particular proposal may not be acceptable to the
bank, if it is not in the National Interest. GOI and the RBI issue various directives from time
to time in this regard. These should be kept in view while sanctioning/recommending any
advance/s. Every proposal should conform to RBI/government/bank’s guidelines and
national policy.
Summary
Bank summarize below the principles of sound lending which should be observed
while sanctioning/recommending any advance.
1. Safety
3. Profitability
4. Purpose
5. Security
6. Diversification of risks
-Advances Portfolio
1. The manager/officer should study the composition and distributive pattern of the
credit portfolio of the branch and examine as to whether the branch has been
following the guidelines enunciated in credit policy of RBI / Bank.
The manager / officer should also ascertain as to whether the efforts made by the
branch in extending credit to the priority and weaker sectors of society are
adequate and that potential offered by the area of its operation for various types
of advances has been properly tapped.
2. It should be seen as to whether the branch has proper infrastructure facilities and
adequate arrangements for proper credit appraisals, post disbursement
supervision and follow up of advances/problematic/sick, weak accounts, more
particularly for recovery of non-performing advances/large overdues in these
accounts.
5. The assets acquired by the borrowers are available as security for bank’s dues
and the branch is taking adequate and necessary timely steps to safeguard
interest of the bank.
- Credit Reports
2. The Branch Manager has independently verified the correctness of the information
furnished by the borrowers/guarantors in personal information form and has
prepared confidential report in the prescribed form (F.85). the credit reports are
updated annually and fresh reports wherever required are obtained and held on
record.
4. That the nature and extent of credit facilities, if any, enjoyed by the
applicant/borrowers at different offices of the bank as also at other bank/banks are
obtained and kept on record at the branch., while arriving at the credit needs of the
applicant care is taken to take into account all such other credit facilities enjoyed by
the borrower
The manager/officers should examine the quality of credit appraisal done at the branch and
ascertain to –
2. Whether the past conduct of the accounts, compliance of terms and conditions of
sanctions submission of information like stock statements, QMR, financial
statements etc. have been taken into account.
3. Whether notes on review/renewal based on audited financial data contain details and
critical observations on performance of the unit, financial position of the unit and its
constituents, working results vis-à-vis Projections.
4. Whether status of the security charged to the bank has been re-examined. Wherever
eligible i.e. in respect of credit facilities of Rs.50.00 Lakhs and over, whether the
same has been verified by independent C.A. firm.
5. Whether operations in the account and availment of various credit facilities have
been to the satisfaction of the bank and the appraisal note contains comments about
the same.
6. Whether exercise for PBF/NWC etc. has been carried out correctly / critically.
8. Whether Nayak Committee/ Ghosh Committee/ Selective credit control norms etc.
are followed.
9. In case the borrower has been banning/availing credit facilities with other banks,
whether latest opinion reports from such banks have been obtained.
10. Whether search with Registrar of Companies has been obtained before
sanction/review/renewal of credit facilities.
11. Whether it is ensured that partnership firm is registered with registrar of firms and
certificate for the same is held on record.
12. Whether necessary certificates which are required for commencement of business
activity have been obtained.
DOCUMENTATION
REPORTING SYSTEM
The manager/officers should verify that the credit facilities made available are correctly and
timely reported to the competent authority. The control returns submitted depict true picture
of the information incorporated.
- Retail Financing
The Bank is providing retail loans to Individuals, who are salaried persons, professionals,
businessmen and pensioners for purchase of consumer durables, two/four wheeler vehicles
and also for other personal needs. During the year, the Retail lending portfolio grew by 8.19
per cent.
- Borrower Selection
Bank should have personal knowledge about the borrower/s and their business. As a
condition precedent to any advances we should make discreet enquiries about the position
and status of the borrower, security offered and repayment proposed etc. Care should be
exercised in selection of borrower and advances are to be sanctioned / recommended for
borrowers, whose integrity, reputation, capacity to conduct the business and credit-
worthiness are established to our satisfaction.
Three Cs: Character, Capacity and Capital are the basic principles for
consideration of an advance. The character of a borrower indicates his intention to repay the
advances and his capital and capacity indicate his ability to repay. To sum up integrity of
the borrower should be unquestionable. If the borrower’s integrity is questionable
(doubtful) Bank should refrain from sanctioning credit facility/ies even if a collateral
security is offered. Any amount of security cannot substitute integrity of a borrower. The
ability of a borrower to utilize the credit facility sanctioned by the Bank Profitably and to
repay the same with interest within a reasonable period needs to be looked into. Likewise
Bank should enquire into the financial position of the borrower. The lending should be in
proportion to the borrower’s own resources.
- Banking relations
We may ordinarily recommend/sanction credit facilities only to applicants who
agree to bank with us exclusively and that too with one branch unless the borrower has
offices at different places and his business warrants maintaining accounts with more than
one branch. A number of complications viz. Double financing, kite flying etc. arise when
borrower deals with more than one branch/bank and hence such precaution is necessary.
- Confidential Report
A) A confidential report of the borrower and/or guarantor needs to be scrutinized
carefully. Scrutiny should lead to some firm conclusions. Information furnished
by the borrower/guarantor needs to be independently verified. A conservative
estimate of the means of the borrower/guarantor should be formed in order to
determine the extent to which they may be considered creditworthy. If these
borrowers/guarantors are banking with other banks confidential opinion from all
such banks should be obtained when they propose to switch over to our bank to
their existing bankers.
In the process of globalization and financial disintermediation, banks are now forced
with the prospect of facing a wide variety of risks, viz. credit, interest Rate, Forex,
Liquidity, legal Regulator, Reputational, operational and so on. These risks have assumed
significance, as the ability to identify measure, monitor and control the overall level of risks
have become crucial to the long-term viability and perspective of the banks.
Recognizing the significance of these risks as well as the need for their effective
management, RBI had issued risk management guidelines in October 1999 for
implementation of Risk Management Systems in banks. The RBI guidelines broadly cover
the management of credit, market and operational risks and, together with the earlier
guidelines on asset liability Management, are to serve as benchmarks for the establishment
of an integrated Rise Management System, which is to be operationalised by March 2001.
1. General
As of March 2009 all SCBs in India have come under the purview of Basel II capital
adequacy norms notified by the Reserve Bank of India. Banks are required to have
sufficient capital to cover credit risk, market risk and operational risk. In order to calculate
capital requirement under the Basel II norms, banks have to put in place a comprehensive
risk management frame work across the organization. The Bank’s approach to risk
management is proactive. The primary goal of risk management is to identify, assess the
impact of the risks inherent in the business and adopt risk management / mitigating
measures, so as to achieve business growth with improved safety, soundness and
profitability.
The Bank has also formulated a Risk Management Policy on the basis of the guidelines
issued by RBI recognizing the need to effectively identify measures, monitor and control
various risks in view of their implications on the Bank’s business growth and financial
soundness.
Credit Risk
The Bank has in place a comprehensive Lending Policy and Loan Review Policy,
which prescribe instruments of Credit Risk Management. Various aspects of Credit Risk,
like asset concentration, norms for industry exposure, prudential limits and various financial
parameters, substantial exposure limits, standards for collaterals, and review of portfolio
etc. are spelt out in the above policies in line with the Risk Management Policy
prescriptions. The Bank has also set up Credit Approval Grids at various levels and at
Treasury & International Banking Division (TIBD) Mumbai to obtain preliminary clearance
on credit proposals from the risk perception view point. The Bank has put in place a
The Bank has undertaken migration analysis of credit risk rating and estimated probability
of default in line with Basel II requirements. Risk based pricing framework has been
implemented. Portfolio reviews and industry studies have been undertaken during the year
to assess the risks lying in the credit portfolio and to adopt strategies to improve credit
quality and reduce the potential adverse impact of concentration of exposure to particular
borrowers, sectors or industries. Policy on Stress Testing has been put in place and reports
on stress testing results are placed before the appropriate authorities for periodical review.
Regulatory Risk
The field functionaries will have to adhere to the guidelines of the regulatory authority and
it should be made clear that such guidelines / directive are to be adhering to their totality.
Legal Risk
Documentation has to be completed as per sanction terms and law officer wherever
prescribed as per the extant system of getting of borrowable accounts with limits of Rs.
50.00 Lakhs and above.
Environment Risk
Field staff should keep themselves abreast of the changes in the environment. Detailed
guidelines on such matters should be adhered to by the field functionaries and exposures
monitored even in cases where the limit is available. Deviations/expectations in such
exposures should be promptly reported to the component Authority.
Reputation Risk
The Bank’s business derived from the branches and it is, therefore, the duty of the field staff
to maintain the reputation of the bank high by ensuring extremely cordial relations while
observing the statutory guidelines scrupulously. Whether the Bank’s reputation would be at
stake while entering into a business relationship & transaction should be analyzed while
discharging duties.
20000
15000
10000
5000
Total increase Amt in cr. As on 31.03.2008
0 Amt in cr. As on 31.03.2009
Amt in cr. As on 31.03.2008
Total increase
Interpretation:
CREDIT DEPLOYMENT
The Bank has put in place a lending policy with an emphasis on qualitative credit growth.
The policy is fully in conformity with the guidelines issued by RBI and also the Priority
Sector lending norms of the Government of India. The policy enunciates the thrust areas,
risk factors and also sets out prudential exposure limits to facilitate qualitative expansion of
credit. The Gross Advances increased from Rs.29,798 crores as on 31.3.2008 to Rs. 34,817
crores as on 31.3.2009 with a growth of 16.84 per cent. The Credit Deposit Ratio as on
31.3.2009 was 66.63 per cent.
infrastructure,petroleum,iron,textil
es,engineering,chemicals
Agriculture
1 2.04 MSME
5.11
8.5 Other priority sector
37.88
13.05
retail sector
11.92 housing
8.83 15.59
education
Exports
Interpretation:
The Gross Advances increased with a growth of 16.84 per cent. The Credit Deposit Ratio
has also increased.
RISK CATEGORY WISE COUNTRY EXPOSURE
(Rs. In
Crore)
Risk Category Exposure (net) as Provision Exposure Provision
at March 31 , held as at (net) as at held as at
2009 March 31, March 31, March 31,
2009 2008 2008
Insignificant 970.13 0.00 774.49 0.00
Low 391.01 0.00 293.59 0.00
Moderate 73.23 0.00 77.06 0.00
High 23.25 0.00 4.31 0.00
Very high 8.51 0.00 11.71 0.00
Restricted 0.11 0.00 0.00 0.00
Interpretation: Since Bank’s net funded exposure for risk category-wise exposure for each
country is less than 1% of bank’s total assets as on 31.03.2009, no provision is required in
terms of a particular RBI Circular.
NON-PERFORMING ASSETS
doubtful Advances 0 3 3
restructured
0 7.85 4.86
0 0.24 0.01
Interpretations:
NPA coverage has also improved from 65.54 percent 63.16 percent.
Interpretations: Bank has now started the practice of restructuring and reconstructing the
NPAs effectively and efficiently.
BRANCH NETWORK AND EXPANSION
During the year, the Bank opened 43 new branches besides upgrading 3extension counters
into full fledged branches. As on 31.03.2010, the total branch network comprised of 1421
branches spread over 22 states and 2union territories. The branch network included
specialized branches in the areas of foreign exchange, government business, treasury and
international banking, industrial finance, small-scale industry, hi-tech agriculture, Pension
Payment Branch and Central Pension Processing Cell. The area wise classification of
branches as on 31.03.10 is given in the table below:
600
500
400
300
AsOn 31.03.09
100
0 AsOn 31.03.10
Interpretation:
The Bank opened 43 new branches besides upgrading 3extension counters into full fledged
branches and like this it is continuously expanding its network in allover India.
The ratio of Gross Advances has improved from 2.57 percent as on 31.03.2008 to 2.29
percent as on 31.03.2009. The ratio of Net NPAs has improved from 0.87 percent at
31.03.2008 to 0.79 percent at 31.03.2009. NPA coverage has also improved from 65.54
percent as on 31.03.2008 to 63.16 percent as on 31.03.2009.
70
60
50
40
31.03.2008
30
31.03.2009
20
10
31.03.2009
0
31.03.2008
Ratio of NPAs
Ratio of Net NPAs
NPA coverage
Interpretations: The ratio of Gross Advances has improved 2.57 percent to 2.29 percent
and the ratio of Net NPAs has improved from 0.87 percent to 0.79 percent. NPA coverage
has also improved from 65.54 percent 63.16 percent.
Income
Incomes 2008-2009 2009-2010 Variations (%)
5000
4500
4000
3500
3000
2500
2008-2009
2000
2009-2010
1500 variations ()%
1000
500
Interpretations:
The income factors of the bank has grown in a very positive and in a very significant manner
as compare to previous year and this indicates the sound health of the bank.
OPERATING INCOME RISES 11.88% TO RS 1246.49 CRORE
For the audited full year, net profit rose 17.17% to Rs 439.57 crore in the year ended March
2010 as against Rs 375.17 crore during the previous year ended March 2009. Total
operating income rose 10.35% to Rs 4735.56 crore in the year ended March 2010 as against
Rs 4291.56 crore during the previous year ended March 2009.
Date Mar. 2010 Mar. 2009 % Var. Mar. 2010 Mar. 2009 % Var.
16
14
12
10
%Var. Of Quarter Ended march 2010
8
%Var of Year Ended 2009
6
0
sales %Var. Of Quarter Ended march 2010
-2 OPM PBDT PBT NP
Interpretations:
Net profit of Bank of Maharashtra rose 1.26% to Rs 139.06 crore in the quarter ended March
2010 as against Rs 137.33 crore during the previous quarter ended March 2009.
3500
3000
2500
2000
2008-2009
2009-2010
1500
Variations (%)
1000
500
0
Interest on Interest Staff expenses Non-staff
deposits expenditure expenses
Interpretations:
Profitability
700
600
500
2008-2009
400
2009-2010
Variations (%)
300
200
100
0
OperatingProfit ProvisionsAnd Net Profit
Contingencies
Interpretations:
Above figure shows that there is a positive and consistent increase in the bank’s profitability
because the bank’s business and income has also moved up towards a positive direction.
- Findings
- Suggestions / Recommendations
1.
In today’s era of heavy competition and the fight to sustain in the market, the bank had to
incur more expenses to make its facilities more attractive and more worthy so that the bank
can retain its customer and it also helps in acquiring new customers which will not only
increase the income of the bank but also leads to capture more and more market share.
2.
There is a positive and consistent increase in the bank’s profitability because the bank’s
business has increased and the income of the bank has also moved up towards a positive
direction because the bank has started capturing more and more market share.
3.
The ratio of Gross Advances has improved from 2.57 percent to 2.29 percent. The ratio of
Net NPAs has improved from 0.87 percent at 31.03.2008 to 0.79 percent. NPA coverage
has also improved from 65.54 percent to 63.16 percent. The asset performance has
significantly changed and it has not changed but also improved in a positive way.
4.
The investment of the bank is also proved to be a significant source of income because the
net income from investment has made a large contribution to the profit of the bank
5.
While financing the various segments of the economy, the Bank has endeavoured to
maintain a diversified credit portfolio, with a view to ensuring credit-dispersion across
sectors. This will minimize the risk and ultimately increase the profit of the bank.
The data in the tables have clearly shown that how the Bank of Maharashtra has
consistently increased its profit by managing its credit but the bank needs to deploy
its credit in a more diversified manner which will minimize the risk of losses and
also increase the profitability of the bank.
The overall inference from the table and Chart is that the Retail Financing of Bank
of Maharashtra is healthy as compare to other nationalized banks. But it needs to be
brought up in order to sustain the financial position of the bank. The Housing and
Education Loan must be increased to more than 30 per cent while other loan
schemes can also be amended.
The NPAs are reducing in a very positive way which is the result of avoiding high-
risk lending and high monitoring of the credit disbursed. The bank needs to study
and analyze from its past losses because it will help in future lending by avoiding
high risk proposals and ultimately let the bank to grow more efficiently and
effectively.
Loan products are the ideal Products for the bank to ensure the profitability and
therefore, the bank should continuously adapt itself to the changed situation in
search of new markets and to provide new attractive schemes and services for the
existing customers to retain its market share and at the very same time acquire new
customers to expand its market share.
Efforts are to be oriented towards verifying and processing the loan request. In case
of deposits, an added advantage available to the bank is to improve clientele base
but in case of borrowings such an advantage does not exist. So the bank must
work out some effective strategies for their Loan Products in order to make
the clientele base for borrowings.
The increased number of deposit customers and the increased number of individual
membership provide a comfortable clientele base for the bank to choose good
borrowers to whom the bank can provide credit facilities. Good borrowers with
integrity are as important to the bank as the depositors.
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