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BHAI PARMANAND INSTITUTE OF BUSINESS STUDIESS SHAKARPUR, DELHI-92. Date:

DECLARATION BY THE CANDIDATE I hereby declare that the work, which is being present in this Project, entitled Working Capital Management and Term Loan Financing with case study in PNB is an authentic record of my own work carried out by me under the Supervision and Guidance of Shri G.T.V.L.N CHARYULU, Project Guide and Faculty, Lecturer of MBA, Bhai Parmanand Institute of Business Studies, Delhi-92.

This Project was undertaken as a Partial Fulfillment of Summer Training Project of MBA Degree as per the Curriculum of Guru Gobind Singh Indraprastha University, Delhi.

I have not submitted the matter embodied here in this Project for the award of any other Degree/Diploma.

Himanshu Malhotra 03111403910 MBA BPIBS, Delhi.

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BHAI PARMANAND INSTITUTE OF BUSINESS STUDIES SHAKARPUR, DELHI-92.

Date: CERTIFICATE OF PROJECT GUIDE

TO WHOMSOEVER IT MAY CONCERN This is to certify that Mr. Himanshu Malhotra Roll No. 03111403910 of BPIBS, Delhi, has done a Research Project Titled Working Capital Management and Term Loan Financing with case study in PNB as a part of Curriculum of MBA Degree under my direct Guidance and Supervision.

His performance was satisfactory during his Research Process for the above said Summer Training project .

[Shri G.T.V.L.N CHARYULU] Project Guide & Faculty, B.P.I.B.S

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BHAI PARMANAND INSTITUTE OF BUSINESS STUDIES SHAKARPUR, DELHI-92.

ACKNOWLEDGEMENT The Project entitled Working Capita Management and Term Loan Financing with case study in PNB was a challenging assignment for me and required an improved environment, extensive endeavour and all necessary guidance and support. I take this opportunity to express my gratitude to Shri G.T.V.L,N CHARYULU, Faculty and Project Guide for his able guidance, co-operation and out of box thinking without which this Project would not have been exciting at all.

The successful progression of this project also gives me an opportunity to acknowledge and appreciate Mr. Satish Puri who has provided me much needed stimulating suggestion and encouragement in order to steer this project towards completion.

Himanshu Malhotra MBA 3RD Semester Roll no.03111403910

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EXECUTIVE SUMMARY
This project explains various credit facilities and policies followed by one of the most reputed banks in the country, Punjab National Bank. Each bank has its own set of policies within the overall RBI guidelines that must be followed while sanctioning a loan and care must be taken that the money provided by the bank is being used up for the intended purpose only. The task ranging from acceptance of loan proposal to sanctioning of loan is carried out at Credit Division of the bank. Moreover, each loan proposal falls under powers at different hierarchical levels for adequate decentralization & faster decision making depending on the size of the proposal. Different corporate bodies require funds for various functions & mainly for: To finance their new projects. To meet their working capital requirements. So this project is undertaken to understand the various aspects of working capital assessment and Credit Risk Management carried out at PNB. With a developing economy and many multinational companies coming up, new projects are being undertaken. These projects require huge amount of fund and thus banks come forward to finance these projects depending on the feasibility of the project. PNB carries out an extensive study of the project and checks for its feasibility such as Technical, Economic and Financial Feasibility and if the project seems to be feasible, a decision is taken. This process of carrying out the feasibility test of the project is called Project Appraisal. Various companies require fund for daily operations. In order to finance these needs, a company approaches bank for credit facilities. CD at PNB takes care of

these facilities and based on the credit worthiness and other useful parameters, the bank sanctions it at a particular rate of interest. In order to understand this, one must be clear with basic topics such as working capital management, balance sheet analysis and forecasting, and cash budget. However in case of working capital financing the basic task for the bank and the company is to evaluate the Net Working capital, which is done through working capital assessment. Further, the project also covers the Credit Risk Rating carried out at Integrated Risk Management Department (IRMD) of the bank. Rating is done in order to find out the capability or the willingness of the company to pay its debt. PNB uses its own model to rate a company and this model is one of its kind in the country. Depending on the type of project, a suitable model is chosen and based on financials of the company and the track record of the management, rating is done. This rating also helps in determining the rate of interest at which the loan should be given. Generally, a company with good ratings is gives loan at a lower ROI since the risk involved is lower.

In this report we shall discuss the various aspects that PNB took into consideration before granting term loan and enhancing working capital limits through 1 case studies how Working capital loan appraisal a PBF note based on the CMA data given by the company is prepared based on which the bank decides how much contribution is to be brought in by the borrower and how much is the permissible bank finance.