karur bank on retail loans

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A Study On RETAIL LOANS Executive summary Banking industry has undergone a paradigm shift in recent times, banking industry has transformed into relationship industry from transaction oriented industry. This industry provides variety of services according to the expectations of customers. Commercial bank follows certain well-defined system and practice for loan proposal. These systems practices have been rigidly followed by Karur Vysya Bank.the funds are sanctioned to those customers who have ability to repay so that the money sanctioned is not misused. The system and practice regarding loan proposal begin with verification of application given by applicant and ends with sanction of loan. In this process, corporation collects, verifies financial statements of the applicants, security taken for the project and other related documents, and establishes financial, market viability and technical feasibility of the project. After completing the procedure the project sanction committee/sanctioning authority accepts the feasibility of project, and the loan is sanctioned. S.I.T 2009-2011 Page 1

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A Study On RETAIL LOANS

Executive summary

Banking industry has undergone a paradigm shift in recent times, banking

industry has transformed into relationship industry from transaction oriented

industry. This industry provides variety of services according to the

expectations of customers.

Commercial bank follows certain well-defined system and practice for

loan proposal. These systems practices have been rigidly followed by

Karur Vysya Bank.the funds are sanctioned to those customers who have

ability to repay so that the money sanctioned is not misused.

The system and practice regarding loan proposal begin with verification

of application given by applicant and ends with sanction of loan. In this

process, corporation collects, verifies financial statements of the applicants,

security taken for the project and other related documents, and establishes

financial, market viability and technical feasibility of the project. After

completing the procedure the project sanction committee/sanctioning authority

accepts the feasibility of project, and the loan is sanctioned.

The present report describes and analyses the loan system as

observed in Karur Vysya Bank, Tumkur. The study also examines the

profitability and performance of loan in the bank for 3years.

Data collection is secondary in nature and is taken from; record

maintained by bank, interacting with bank staff and also from annual report.

S.I.T 2009-2011 Page 1

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PART -A

INTRODUCTION

BANK The English word “bank” is derived from an Italian word “Banco”, the

Latin word “bancus” and the French word “banque”, which means a bench.

They are of the opinion that the medieval European bankers

(I.e. money changers and money lenders) transacted their banking activities.

As such, the word “bank” should be associated with an Italian word “Banco”.

But according to others, the term ‘bank’ is derived from the German word,

‘Banck’, which means a joint stock fund or a common fund (i.e. a heap of

money) raised from a larger no. of members of the public. As banks deal in

common fund or heaps of money raised from the public, the term bank should

be traced to the German word, ‘Banck.”

Meaning and definition of bank

A bank is an institution, which deals with money. It means that a bank

receives money in the form of deposits from the public and lends money for

the development of trade and commerce.

Prof. Hart says that a banker is one who in the ordinary course of his

business receives money, which he repays by honoring the cheques of

persons from whom or on whose account he receives it.

Prof. Kinley defines a bank as an establishment that makes to

individuals such advances of money as may be required and safely made and

to which individuals entrust money, which is not required by them of use.

All types of Banks in India are regulated and the activities monitored by a

standard bank called the Reserve Bank of India that stands at the apex of the

banking structure. It is also called the Central Bank, as major banking

decisions are taken at this level. The other types of banks in India are placed

below this bank in the hierarchy.

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Types of Banks

There are various types of banks which operate in our country to meet the

financial requirements of different categories of people engaged in agriculture,

business, profession, etc. On the basis of functions, the banking institutions in

India may be divided into the following types:

1. Central Bank(RBI, in India)

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2. Commercial Banks

Public Sector Banks

Private Sector Banks

Foreign Banks

3. Development banks

4. Co-operative Banks

Primary Credit Societies

Central Co-operative Banks

State Co-operative Banks

1. Central Bank

A bank which is entrusted with the functions of guiding and regulating the

banking system of acountry is known as its Central bank. Such a bank does

not deal with the general public. It acts essentially as Government’s banker,

maintain deposit accounts of all other banks and advances money to other

banks, when needed. The Central Bank provides guidance to other banks

whenever they face any problem. It is therefore known as the banker’s bank.

The Reserve Bank of India is the central bank of our country. The Central

Bank maintains record of Government revenue and expenditure under various

heads. It also advises the Government on monetary and credit policies and

decides on the interest rates for bank deposits and bank loans. In addition,

foreign exchange rates are also determined by the central bank.

Another important function of the Central Bank is the issuance of currency

notes, regulating their circulation in the country by different methods. No other

bank than the Central Bank can issue currency.

2. Commercial Banks

Commercial Banks are banking institutions that accept deposits and grant

short-term loans and advances to their customers. In addition to giving short-

term loans, commercial banks also give medium-term and long-term loan to

business enterprises. Now-a-days some of the commercial banks are also

providing housing loan on a long-term basis to individuals.

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Types of Commercial banks: Commercial banks are of three types i.e.,

Public sector banks,

Private sector banks and Foreign banks.

(i) Public Sector Banks: These are banks where majority stake is held by the

Government of India or Reserve Bank of India. Examples of public sector

banks are: State Bank of India, Corporation Bank, Bank of Baroda and Dena

Bank, etc.

(ii) Private Sectors Banks: In case of private sector banks majority of share

capital of the bank is held by private individuals. These banks are registered

as companies with limited liability. For example: The Jammu and Kashmir

Bank Ltd., Bank of Rajasthan Ltd., Development Credit Bank Ltd, Lord

Krishna Bank Ltd., Bharat Overseas Bank Ltd.,Global Trust Bank, Vysya

Bank, etc.

(iii) Foreign Banks: These banks are registered and have their headquarters

in a foreign country but operate their branches in our country. Some of the

foreign banks operating in our country are Hong Kong and Shanghai Banking

Corporation (HSBC), Citibank, American Express Bank, Standard &

Chartered Bank, Grindlay’s Bank, etc. The number of foreign banks operating

in our country has increased since the financial sector reforms of 1991.

3. Development Banks

Business often requires medium and long-term capital for purchase of

machinery and equipment, for using latest technology, or for expansion and

modernization. Such financial assistance is provided by Development Banks.

They also undertake other development measures like Public Sector Banks

comprise 19 nationalized banks and

State Bank of India and its 7 associate banks. Business Studies 8

subscribing to the shares and debentures issued by companies, in case of

under subscription of the issue by the public. Industrial Finance Corporation of

India (IFCI) and State Financial Corporations (SFCs) are examples of

development banks in India.

4. Co-operative Banks

People who come together to jointly serve their common interest often form a

co-operative society under the Co-operative Societies Act. When a co-

operative society engages itself in banking business it is called a Co-operative

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Bank. The society has to obtain a license from the Reserve Bank of India

before starting banking business. Any co-operative bank as a society is to

function under the overall supervision of the Registrar, Co-operative Societies

of the State.

As regards banking business, the society must follow the guidelines set and

issued by the Reserve Bank of India.

Types of Co-operative Banks

There are three types of co-operative banks operating in our country. They

are primary credit societies, central co-operative banks and state co-operative

banks. These banks are organized at three levels, village or town level, district

level and state level.

(i) Primary Credit Societies: These are formed at the village or town level

with borrower and non-borrower members residing in one locality. The

operations of each society are restricted to a small area so that the members

know each other and are able to watch over the activities of all members to

prevent frauds.

(ii) Central Co-operative Banks: These banks operate at the district level

having some of the primary credit societies belonging to the same district as

their members. These banks provide loans to their members (i.e., primary

credit societies) and function as a link between the primary credit societies

and state co-operative banks.

(iii) State Co-operative Banks: These are the apex (highest level) co-

operative banks in all the states of the country. They mobilize funds and help

in its proper channelization among various sectors. The money reaches the

individual borrowers from the state co-operative banks through the central co-

operative banks and the primary credit societies.

5. Specialized Banks

There are some banks, which cater to the requirements and provide overall

support for setting up business in specific areas of activity. EXIM Bank, SIDBI

and NABARD are examples of such banks. They engage themselves in some

specific area or activity and thus, are called specialized banks. Let us know

about them.

i. Export Import Bank of India (EXIM Bank): If you want to set up a

business for exporting products abroad or importing products from foreign

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countries for sale in our country, EXIM bank can provide you the required

support and assistance. The bank grants loans to exporters and importers

and also provides information about the international market.

It gives guidance about the opportunities for export or import, the risks

involved in it and the competition to be faced, etc.

ii.Small Industries Development Bank of India (SIDBI): If you want to

establish a small-scale business unit or industry, loan on easy terms can be

available through SIDBI. It also finances modernisation of small-scale

industrial units, use of new technology and market activities. The aim and

focus of SIDBI is to promote, finance and develop small-scale industries.

iii. National Bank for Agricultural and Rural Development (NABARD): It is

a central or apex institution for financing agricultural and rural sectors. If a

person is engaged in agriculture or other activities like handloom weaving,

fishing, etc. NABARD can provide credit, both short-term and long-term,

through regional rural banks. It provides financial assistance, especially, to co-

operative credit, in the field of agriculture, small-scale industries, cottage and

village industries handicrafts and allied economic activities in rural area

Private banking is a term for banking, investment and other financial services

provided by banks to private individuals investing sizable assets. The term

"private" refers to the customer service being rendered on a more personal

basis than in mass-market retail banking, usually via dedicated bank advisers.

It should not be confused with a private bank, which is simply a non-

incorporated banking institution.

Historically private banking has been viewed as very exclusive, only catering

for high net worth individuals with liquidity over $2 million, although it is now

possible to open some private bank accounts with as little as $250,000 for

private investors. An institution's private banking division will provide various

services such as wealth management, savings, inheritance and tax planning

for their clients. A high-level form of private banking (for the especially

affluent) is often referred to as wealth management.

The word "private" also alludes to bank secrecy and minimizing taxes through

careful allocation of assets or by hiding assets from the taxing authorities.

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Swiss and certain offshore banks have been criticized for such cooperation

with individuals practicing tax evasion. Although tax fraud is a criminal offense

in Switzerland, tax evasion is only a civil offense, not requiring banks to notify

taxing authorities.

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INDUSTRY PROFILE

The Banking Industry was once a simple and reliable business that took

deposits from investors at a lower interest rate and loaned it out to borrowers

at a higher rate. However deregulation and technology led to a revolution in

the Banking Industry that saw it transformed.

Banks have become global industrial powerhouses that have created ever

more complex products that use risk and securitization in models that only

PhD students can understand. Through technology development, banking

services have become available 24 hours a day, 365 days a week, through

ATMs, at online banking, and in electronically enabled exchanges where

everything from stocks to currency futures contracts can be traded.

The Banking Industry at its core provides access to credit. In the lenders

case, this includes access to their own savings and investments , and interest

payments on those amounts. In the case of borrowers, it includes access to

loans for the creditworthy, at a competitive interest rate.

Banking services include transactional services, such as verification of

account details, account balance details and the transfer of funds, as well as

advisory services, that help individuals and institutions to properly plan and

manage their finances. Online banking channels have become key in the last

10 years.

The collapse of the Banking Industry in the Financial Crisis, however, means

that some of the more extreme risk-taking and complex securitisation

activities that banks increasingly engaged in since 2000 will be limited and

carefully watched, to ensure that there is not another banking system

meltdown in the future.

There are three ways in which recent developments have put pressure on

legislation, regulatory standards and supervisory practice. First, the job of

supervision has simply become more challenging as a result of the increased

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size, geographic scope, complexity, globalization and diversity of banking

organizations.

Second, the effectiveness of one of the foundations of the current regulatory

framework, the risk-based capital rules, has eroded as improvements in credit

risk measurement facilitated increased use of securitization and credit

derivatives to arbitrage those capital rules. These innovations have allowed

banks to reduce the capital charges for a given set of risks, making reported

risk-based capital ratios increasingly less meaningful and the current

standards progressively less effective.

Third, banks and other financial institutions, often with the help of their

regulators, have found ways, within statutory limits, to expand not only the

activities in which they engage, but also to compete more effectively with one

another. Market developments and regulatory actions have created tensions

with the existing legislative framework underpinning banking and financial

services.

A loan is a type of debt. Like all debt instruments, a loan entails the

redistribution of financial assets over time, between the lender and the

borrower.

In a loan, the borrower initially receives or borrows an amount of money,

called the principal, from the lender, and is obligated to pay back or repay an

equal amount of money to the lender at a later time. Typically, the money is

paid back in regular installments, or partial repayments; in an annuity, each

installment is the same amount. The loan is generally provided at a cost,

referred to as interest on the debt, which provides an incentive for the lender

to engage in the loan. In a legal loan, each of these obligations and

restrictions is enforced by contract, which can also place the borrower under

additional restrictions known as loan covenants.

A loan is a financial arrangement under which an advance is granted

by a bank to a borrower on a separate account is called the loan account.

When loan is sanctioned to a borrower the entire amount of loan & debited to

the loan accounts of the borrower and is paid to the borrower at once in a

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lump sum. Either in cash or by transfers to the credit of his current account.

Paying entire amount of loan sanctioned in a one lump sum or in installment

basis is also permitted.

Advances take the form of loans over drafts and cash credits. A loan is an

arrangement under which an advance is granted to a borrower. A separate

account called the loan account when a loan is granted the entire loan amount

is debited to the loan account of the borrower and is generally placed to the

credit of the current account of the borrower. As entire amount of the loan is

immediately placed at the disposal of the borrower, interest is charged on the

whole amount of loan granted.

Recoveries of loans mean collection of the loans given by the bank to its

customers. It is very significant for the bank as it can function properly only

when the recovery is done and also determines the debt equity ratio of the

bank

LOANS

Short-term loans Medium term loans Long-term loans

LIC Loan Instrument loan

NSC loan Machinery loan Housing loan

Gold loan Vehicle loan

Godown loan

Warehouse loan

Deposit loan (loan against deposit)

Overdrafts

BANK PROFILE

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Karur Vysya Bank is a privately held Indian bank, headquartered in Karur in

Tamil Nadu. It was set up in 1916 by M. A. Venkatarama Chettiar and

Athi Krishna Chettiar. Its current chairman is Mr. P. T. Kuppuswamy.

The bank has 322 branches — about 45 of them are in rural areas. The bank

has installed 275 ATMs across the country so far. All the branches are

powered with CBS — Core Banking Solution. The bank also offers Internet

banking and mobile banking facilities to its customers.

History

Commercial banking in India can boast of a history of about 200 years.

Though one could trace the history of banking back to the 19th century, the

beginning of the last century saw the birth of many banks in India, set up by

people with vision, commitment and national spirit.

The Karur Vysya Bank Limited, popularly known as KVB, one such

endeavour, was set up in 1916 by two great visionaries and illustrious sons of

Karur, the Late Shri M A Venkatarama Chettiar and the Late Shri Athi Krishna

Chettiar to inculcate the habit of savings and provide financial assistance to

S.I.T 2009-2011 Page 12

Karur Vysya Bank

Type Public

Industry Banking

Founded 1916

Headquarters Karur, Tamil Nadu, India

Key people P. T. Kuppuswamy Group Chairman

Website www.kvb.co.in

A Study On RETAIL LOANS

traders and small agriculturists in and around Karur, a textile town in Tamil

Nadu.

Though the bank started with a seed capital of Rs.1 lakh, it has withstood

innumerable changes and challenges in the past few decades and has

profitably emerged as one of the leading banks in India without compromising

on its fundamentals.

The bank is professionally managed and guided by the Board of Directors

drawn from different fields with vision, experience, knowledge and business

acumen.

Shedding its inherent regional flavor, the bank has now spread its wings far

and wide with over 320 branches in 13 States and 3 Union Territories in order

to gain a pan India presence. The bank has been conducting its affairs

meticulously to conform to all the prudential norms and exacting statutory

regulations.

KVB has consistently maintained strong fundamentals with a higher

percentage of Capital Adequacy Ratio than mandated by the RBI. KVB has

also been generating profits and rewarding its stakeholders with handsome

dividends since inception.

VISION:

Delight the customers continually by blending tradition with technology to

deliver innovative products and services at affordable rates through a pan

India branch network.

MISSION

Adapt technology to introduce innovative products and services as well

as increase the value of products on an on-going basis and provide

them at reasonable rates.

Expand branch network to reach the top business centre’s, besides

unbanked and under banked areas in the country;

Strengthen the financials through effective deployment of funds and

ensuring financial discipline while adhering to the regulator's guidelines

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Update the knowledge and skills of the human capital to provide quality

customer support

Origin

Karur Vysya Bank was started in the year 1916 in Karur, then a small textile

town with a vast agricultural background, by two illustrious sons of the soil –

Sri M.A. Venkatarama Chettiar and Sri Athi Krishna Chettiar. What started as

a venture with a seed capital of Rs. 1.00 lakh has grown into a leading

financial institution that offers the wide gamut of financial services to millions

of its customers under one roof.

Financial landmarks of the bank:

Total business of the bank was at Rs. 32946.85 cr. with total deposits

at Rs. 19271.85 cr. and total advances at Rs. 13675 cr. as on

31.03.2010. KVB is the first Tamilnadu based private sector bank to

cross the milestone figure of Rs. 30000 cr. total business.

The net profit of the bank for the year was Rs. 336.03 cr.

The net owned funds of the bank are Rs. 1619.98 cr.

The bank has a Capital Adequacy Raito of 14.49% (Basel II) as against

the RBI stipulated norm of 9%.

The bank has one of the lowest net NPA ratios in the country @ 0.23%.

The bank has been earning profits since inception and has been

declaring dividend uninterruptedly.

The bank has declared 100% dividend since 2003-04. For 2005-06,

2007-08, 2008-09 and 2009-10, the dividend was 120%.

Branch and ATM network: The bank has a branch network of 335 and an

ATM network of 376. The bank plans to add another 50 branches by the end

of the financial year 2010 -11.

Technological accomplishments:

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KVB is one of the earliest banks in the country to achieve full networking of its

branches under Core Banking Solutions, offering services through multiple

delivery channels. Some of the noteworthy accomplishments of KVB are:

Any Branch Banking

Multicity Account facilities for both current and savings bank

customers.

Internet Banking

On line utility bill payments facility through Bill-desk

On line shopping facility through CC Avenues

e-commerce facilities backed with the safety of Verified by VISA

Mobile Banking

Real Time Gross Settlement (RTGS) and National Electronic Funds

Transfer (NEFT) facilities at all branches

VISA Debit card facility with a card base of over 1.70 million

On-line rail and air ticket booking using KVB VISA Debit card

VISA enabled Gift Card

Access to over 335 KVB ATMs and over 13000 domestic ATMs under

the VISA / NFS / MITR /Axis bank cluster and over 1 million VISA

ATMs worldwide

Card to Card and Card to account transfer of funds through KVB ATMs

Payment of institutional fees through ATMs

Payment for air tickets (Kingfisher) through KVB ATMs

Mobile top up facility at KVB ATMs

24 X 7 toll free professional help desk services for all ATM, Internet

Banking, Mobile Banking and e-commerce transactions

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Banking and Para banking services:

KVB offers several deposit and loan products, tailor-made to cater to

the specific needs of customers

The bank offers all types of general insurance policies through a tie-up

with M/s Bajaj Allianz General Insurance Company

The bank offers life insurance policies through a tie-up with M/s Birla

Sun Life Insurance Company

The Bank distributes the Mutual Fund products of UTI, SBI MF,

Reliance MF, Sundaram BNP Parbas MF, Birla Sunlife MF, Franklin

Templeton MF and LIC MF

The Bank is a Depository Participant through NSDL and opens demat

accounts

ASBA facility available

Off-line and on-line trading facility is available to the demat customers

enabled through a tie-up with M/s Religare Securities Ltd and M/s IDBI

Caps respectively

KVB is one of the authorized banks to open accounts under the New

Pension Scheme.

Recognitions:

Ranked as the Best Mid-sized Bank by Business Today – KPMG for

2009

Was rated as the Most Efficient Small Bank by Business Today –

KPMG and as the No. 1 old private sector bank by Financial Express –

Ernst & Young for two years in succession (2006 & 2007)

Ranked by The Banker, London among the TOP 1000 Banks of the

world for the year 2009 (One among 32 Indian Banks featuring in the

list). Also one of only 6 Indian Banks featured in the list of top

performers under Return on Assets

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Awarded the "Banking Technology Excellence Awards - 2008" for Best

use of IT for Customer Service in Semi-Urban and Rural Areas and the

"Banking Technology Excellence Awards - 2009" - Special Award –

Best IT Infrastructure Management, 2009 by Institute for Development

and Research in Banking Technology, Hyderabad

Awarded the Gold CIO Award in the more than Rs. 1000 cr. category of

the Enterprise Connect Awards ’09 instituted by CIOL (Cybermedia

India Online Limited)-Dataquest recognizing the “leadership combined

with vision and mission in deploying information technology for

business benefits through pioneering and innovative use within and

outside the organization”

Received the CFBP Jamnalal Bajaj Award for Fair Business Practices

in the Financial Sector Category. The award has been instituted by the

Council for Fair Business Practices, Mumbai based on evaluation

parameters like customer satisfaction, customer communication,

employee motivation, social conscience, corporate social responsibility

and compliance with law

Future outlook:

The bank has in place robust risk management systems and adheres to the

tenets of Corporate Governance. The bank is well-equipped to boldly take up

the challenges in the industry and emerge as a top-notch one-stop-shop

techie financial supermarket. KVB will continue its endeavours to bring the

best of products and services to its customers to emerge as the techie bank

that provides the gateway to Smart Way to bank.

Our Loan Products: Some the products that offer tailor-made solutions for

the loan requirements of our customers are:

KVB Vartagamitra to meet the working capital requirements of traders

KVB Fleximobile for purchase of a four-wheeler to provide mobility

KVB Rentfin that provides finance against future rent receivables

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KVB Professional Loan that provides term finance for all categories of

professionals

KVB Bon Voyage that finances expenditure incurred for business,

official or personal visits abroad

KVB Happy Home that provides finance for purchase of the dream

house

The branch in Tumkur was started in the year 1984December in shirani

road.

McKinsey 7S model

The McKinsey 7S model involves seven interdependent factors which are

categorized as either "hard" or "soft" elements:

Hard Elements

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Strategy

Structure

Systems

Soft Elements

Shared Values

Skills

Style

Staff

"Hard" elements are easier to define or identify and management can directly

influence them: These are strategy statements; organization charts and

reporting lines; and formal processes and IT systems.

"Soft" elements, on the other hand, can be more difficult to describe, and are

less tangible and more influenced by culture. However, these soft elements

are as important as the hard elements if the organization is going to be

successful.

1) Structure: the organization structure of KVB Ltd has been shown in chart

below. The top most position is occupied by manager. In the next level deputy

manager then followed by assistant manager, clerical staff and sub staff.

The structure of the bank at corporate level

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Structure of bank at branch level:

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Manager

Deputy Manager

Assistant Manager

Clerical Staff

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Departments and their functions:

For facilitating easy administration, the bank is divided into different

departments with each department headed by respective department head

are responsible for overall administration of their department and also to carry

out various activities coming under their departments by taking the help of

officers and staff of the departments.

Following are the different departments:

Administration

Planning & development

Marketing

Loans & operations

Inspection & audit department

2) Staff:

The Karur Vysya Bank has very efficient and multi skilled employees. The

staff will specify the process by which employees are recruited, deployed and

developed. It also specifies the skills required by particular branch according

to their requirements and this will be done in consultation of head office.

The bank has training and development programs for new and existing

employees. Induction programs will be provided to newly recruited employees

to make the working environment familiar. The training to the employees is

provided in respective branches only. The employees are sent to some other

branch to understand the work in different branches.

There are 44,000employess around India, and 11employees in tumkur

branch.

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Sub-Staff

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The human resource has been divided into following levels

Operational management

Tactical management

Strategic management

Operational management:

Operations management focuses on carefully managing the processes

to produce and distribute products and services. They provide high

speed and accurate processing of record keeping of basic operational

processes. These include calculation, storage and retrieval.

Tactical level:

This is second level where employees are designated as sales

manager, regional manager for each department. They help in problem

solving and decision making.

Strategic level

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This is top level consist of board of directors who develop and

implement the plan. They can be designated as managing directors,

executive directors & CEO.

Recruitment:

The bank will recruit the employees by conducting exam.

Training program:

Every new employee is given on the job training. The duration of

training varies from three weeks to five weeks as per requirements of

organization. Regular training is provided to existing employees

whenever necessary.

Facilities:

KVB is known as best employee benefit provider. House rent

allowance, medical allowances etc are provided to employees.

3) Skills:

As the bank is growing it requires multi skilled employees to meet its

growth and competition. Few important skills required by the bank are:

Managerial

Computer skills

Inter personal skill

Creative innovative skill

4) System:

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“System” refers to rules, regulations and procedures, both formal and

informal. The system in organization is well established so as to take easy

and proper decisions related to particular branch. In each branch the bank

has maintained proper system so as to facilitate proper functions of

organization. It include

Information technology

Computerized system

Marketing system

Finance system

5) Style:

The style of the organization refers to patterns of action taken by the top level

over a period of time. The style of the organization depends upon the culture

that is in practice.

KVB follows top to down style of management. It works in autocratic style.

The decisions are taken by top management concerning matters related to

bank. It has been observed that the behavior of superior towards subordinate

is pleasant. They motivate fresher’s who are working under them. The

superior guides subordinate what to do and what not to do. Employees are

free to give any ideas, suggestions etc for the betterment of the bank.

6) Strategy:

The concept of strategy includes purpose, mission, objectives, goals and

major plans policies. A strategic thinking involves the understanding of basic

economics of business; identifying one’s source of competitive advantages

and allocation of resource.

VISION:

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Delight the customers continually by blending tradition with technology to

deliver innovative products and services at affordable rates through a pan

India branch network.

MISSION

Adapt technology to introduce innovative products and services as well

as increase the value of products on an on-going basis and provide

them at reasonable rates.

Expand branch network to reach the top business centre’s, besides

unbanked and under banked areas in the country;

Strengthen the financials through effective deployment of funds and

ensuring financial discipline while adhering to the regulator's guidelines

Update the knowledge and skills of the human capital to provide quality

customer support

7) Shared values:

KVB’s main values are stated in its vision and mission statement. Beside

these, there are other shared values of bank, they are:

Loyalty and pride in company

Strict adherence to commitments

Integrity and fairness in all matters

In ensuring speed response

Faster team work

SWOT ANALYSIS

STRENGTH

Technological advancement.

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24 * 7 e-banking, m-banking.

Largest bank in old privatized bank.

Customer base.

Well trained man power.

Excellent service provider.

WEAKNESS

Do not provide service in rural areas.

Promotional activities are very less.

OPPORTUNITIES:

Expansion of branches and ATM’s.

Can enhance business by introducing new services which satisfy the

customers.

Can establish branches in rural areas.

THREATS

Public sector banks, both in urban and rural areas.

Competition from other private banks such as, karnataka bank, Axis

bank, Lakshmi vilas bank and others.

Types and Features of loan

1) Happy Home Loan

Features

It is a loan to help finance your housing requirements.

It is eligible for all individuals (including NRIs) and HUF (opening

through Kartas)

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This loan can be taken for various purposes as shown below:

o For construction of Independent Houses

o For outright purchase of Independent Houses, Flats (not older

than 15 years) from individuals or builders

o For purchase of plots and construction on the plots purchased

o For improvement of existing houses or flats

o For purchase of Plots or Flats from a Statutory Authority

o For Repairs, renovation or additional construction

Personal guarantee of husband or father in case of female borrowers or a

third party guarantee in case of male borrower.

Terms and Conditions

In the case of salaried employees, a Salary and Service Certificate

from the Employers should be submitted

The take home pay after the deduction of the home loan installment

should not be less than 25% of Gross salary.

The incomes of Husband and Wife can be clubbed together to decide

the loan quantum, if they are joint borrowers.

This loan is also considered for agriculturists.

A loan may be considered for purchase of a vacant approved site,

provided the applicant has sources of income to construct the house.

Life cover can be taken under this loan through the Group Mortgage

Redemption Assurance (GMRA) scheme.

The premium for the policy is a single low cost premium. The premium

can be included in the loan amount.

Types of Home Loan

There are different types of home loans available in the market to cater

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borrower’s different needs.

• Home Purchase Loan : This is the basic type of a home loan which has the

purpose of purchasing a new house.

• Home Improvement Loan : This type of home loan is for the renovation or

repair of the home which is already bought

• Home Extension Loan : This type of loan serves the purpose when the

borrower wants to extend or expand an existing home, like adding an extra

room etc.

• Home Construction Loan : This type of loan taken when the borrower

wants to construct a new home.

Salaried Individuals

Salary slip/Form 16 A.

A photocopy of the first and last pages of Ration card or copy of

PAN/Telephone/Electricity bills.

A photocopy of Investments (FD Certificates, Shares, any fixed asset

etc. or any other documents

supporting the financial background of the borrower.

A photocopy of LIC policies with the latest premium payment receipts

(if any).

Photographs (as applicable).

A photocopy of bank statement for the last six months.

Self-Employed/Businessmen

1. Balance Sheet, Profit and Loss account and statement of

income with Income Tax returns for the last 3 years certified by

a CA.

2. A photocopy of Advance Tax payments (if applicable).

3. A photocopy of Registration Certificate of establishment under

shops and Establishments Act/Factories Act.

4. A photocopy of Registration Certificate for deduction of

Profession Tax (if applicable).

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5. Bank statements of current and saving accounts for the last 6

months.

6. A photocopy of any bank loan (if applicable).

7. A photocopy of the first and last pages of the Ration card or a

copy of PAN/Telephone/Electricity Bills.

8. A photocopy of LIC policy (if applicable).

9. A photocopy of investments (FD Certificates, Shares, any other

fixed asset)

2) Two Wheeler Loan

Features

This is a hypothecation loan

It is available to individuals and professionals

It is for the purchase of a two wheeler for personal use

Terms and Conditions

An undertaking from the employer to deduct loan installments and

interest from the salary of the borrower in case of salaried employees

shall be insisted on.

Branches shall verify credit worthiness, integrity, local standing and

repayment capacity of the borrower before entertaining the proposals

under the Scheme

3) Flexi Mobile Loan

Features

This is a hypothecation loan for vehicles

It can be used by Individuals, proprietorships, partnerships and

corporate (except those engaged in a car hiring business)

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The loan is for the purchase of a new or second hand car (not older

than 5 years) which is for business or personal use, except for car

hiring

The loan is for eligible business entities older than 3 years and earning

profits during the immediate preceding 2 years.

Documents Required

Audited Balance Sheet (ABS) or Income statements to be obtained to

establish repayment capacity of the applicant

Post dated cheques for the next 12 months should be collected in

advance

Salaried

Application form with photograph, Identity & residence proof, Latest salary

slip, Form 16, Bank statements not necessary

Self employed

Application form with photograph, Identity & residence proof, Last 2 years

income tax returns, Last 6months bank statement.

4) Educational Loan

KVB has made it possible for you to pursue your educational dreams. Our

loan has been specifically structured to provide you with financial help if you

wish to pursue further education of your choice, either in India and abroad.

You can avail of our loans for graduate and post-graduate courses at the

university you prefer.

Features

It is a term loan given for studies in India and abroad.

This loan is eligible for Indian nationals who have secured admission to

professional/ technical courses in India through a common Entrance

Test, or who have secured admission to a foreign University or

Institution.

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The Father or guardian of the student will be the guarantor in case of

individual applicants.

Terms and Conditions

A capability certificate can be issued by branches after obtaining

supporting documents.

NDC from other banks need not be insisted on, a declaration or

affidavit is enough.

The loan is to be sanctioned at a branch nearest to the place of

domicile of the applicant.

The loan should be disposed off within 15 days to 1 month from the

receipt of complete details from the party.

Documents required

1. Mark sheets of the qualifying examinations for school and graduate

studies in India.

2. Proof of admission to the course.

3. Schedule of expenses for the course.

4. Copies of letters confirming scholarship, etc.

5. Copies of foreign exchange permits, if applicable.

6. Passport-size photographs.

7. Statement of the borrower's bank account for the past six months.

8. Brief statement of the borrower's assets and liabilities.

9. Residency proof for non existing customer.

5) Personal loan

The KVB Personal loan is for individuals and small companies that require

loans which are of a very large amount and mainly for personal use. These

loans are repaid in installments and anyone who has availed of the KVB insta

loan will be able to avail of this loan without much difficulty.

Features

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It is an installment loan

The loan is available for salaried employees of PSUs, reputed

companies, self employed individuals, all other individuals who provide

full securities by covering the loan amount with NSCs, KVPs, IVP, RBI

bonds, LIC policies, etc.

The loan is for personal purposes

A guarantor for a secured loan is not insisted upon. However, for an

unsecured loan a colleague drawing the same salary should be used

as a guarantor

Terms and Conditions

For individuals- IT returns to be submitted.

Minimum take-home salary of 25% after deduction of the loan amount.

An applicant who has availed of a KVB Insta Loan earlier shall be

eligible for this loan after closure of the Insta loan.

For an unsecured loan up to Rs. 50,000 the applicant should be from a

reputed company with a minimum of 5 years of service & unexpired

service of 3 years in that organisation.

A salary or service Certificate is a must to establish repayment

capacity.

6) Bon Voyage

KVB has constructed a loan to help individuals or proprietorship firms. It

covers all expenses on foreign travel for business or pleasure. The loan has

been specifically designed so the borrower can repay it in easy installments.

Features

This is an Installment Loan

It is specifically for individuals and partnership firms.

The loan is for personal purposes

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The loan amount is to finance foreign travel expenditure whether it is

business or personal.

The guarantor can be any credit worthy persons who is related to the

borrower, including the employer of borrower or firm, the company in

which borrower is a partner or director and the owner of the collateral

security

Terms and Conditions

The Person should be an Indian citizen and resident in India

Foreign Exchange cannot be released for travel in Nepal / Bhutan

In case the person is employed, take home salary should be at least

Rs1.20 lakhs p.a.

In case the person is employed, it shall be ensured that the net take

home salary available to the borrower, after deducting the EMI for the

proposed loan, shall be at least 25% of gross salary as indicated by

salary certificate or pay slip.

The amount of loan eligible shall be arrived at after reducing the

stipulated margin from the eligible costs. All ineligible costs shall be

met entirely by the borrower.

Documents Required

In case the person is employed, an undertaking letter shall be obtained

from the employer to deduct monthly installments and make direct

payments to our bank.

In case credit facilities are already sanctioned to the borrower by higher

authorities, the proposal for the loan shall be forwarded to such higher

authorities for sanction

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7) Swarnamitra

Don’t just let your gold and jewelry sit idle. You can now use your jewelry to

get a loan for your personal needs without having to sell it. The Swarna Mitra

loan is designed to give you financial assistance after the valuation of your

gold.

Features

It is an overdraft loan

It is specific to individuals who own jewelry

The loan is specifically for personal purposes

A guarantor for the loan is optional

Terms and Conditions

Monthly interest and other expenses debited should be serviced, to be

eligible for renewal.

At the time of renewal, the limit should be fixed with regard to the

prevailing rate to be applied on the gold as notified by CO.

Once an overdraft a/c becomes irregular or overdue, all the provisions

applicable to jewel Loans (Recovery by auction etc) shall be applica

8) Professional Loan

As the name suggests, this is for professionals to help them with business

expansion and development expenses and for travel expenses for business

purposes.

Features

This is a term loan.

It is eligible for doctors, CAs, lawyers, Chartered Engineers, Architects,

Individual, Proprietorships and Partnership Firms.

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It can be taken for the purchase of machinery, equipment, apparatus,

computers, tools, vehicles, furniture, interiors and office equipment.

This loan can also be used to finance foreign trips, seminars and

conferences.

The loan is for any individual doctor holding as least an MBBS or BDS

degree and who is registered as a medical practitioner. He/She should

be engaged in the practice of his/her profession for at least 3 years.

Terms and Conditions

The applicant should have been in his profession for a minimum period

of 3 years and earning profit for the last 2 years.

Assembled computers are not eligible for finance.

For foreign travel, only airfare, hotel expenses and seminar fees are

eligible.

Documents Required

Documentary evidence is required for professional memberships and

partnership deeds.

ABS (with Tax Audit Report for Gross revenue exceeding Rs. 10 lacs)

and/or ITAO/IT Returns for last 3 years are required to ensure the

repayment capacity and adequate DSCR of the applicant.

The borrower must furnish full details of his/her other debts and their

repayment terms.

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PART-B

RESEARCH DESIGN

Scope of the study

The study analyzes overall functions performed by Karur Vysya Bank

in granting loan, and information about various types of loan provided by

bank, and the performance of loans for 3years.

TITLE OF THE PROJECT

“A Study on Retail Loans At Karur Vysya Bank LTD,Tumkur Branch”

Objectives of the study

To know different kinds of loans provided by the bank and their

performance.

To know interest rate charged for each kind of loan

To know the durations provided in different loan schemes

To know what kind of securities the bank accepts

To know the kind of customers approaching bank.

Statement of the problem

Money plays vital role in each and everybody’s life. Banks are the only

financial institutions who provide money at a better interest rates.

The topic is chosen to know exactly the schemes provided by bank, to

study the performance of loans. Hence this study aims at analyzing loan

system or procedure followed by bank and also determines the type of

customer.

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RESEARCH METHODOLOGY OF THE STUDY

The details in brief of the study are listed below for easy and effortless

understanding of this project work.

1. Area of Study: finance

2. Title of the project:A study on retail loans.

3. Source of information: Primary data and secondary data.

4. Method of gathering primary data: Survey method.

5. Area covered: Tumkur

Research is the process of gathering recording and analyzing of critical facts

of any activity. It indicates critical searching study and scientific investigation

of a problem a proposed course of action of hypothesis or theory.

Information is the lifeblood of any organization information. Knowledge

gained through study, communication, research, instruction or factual data

Research is the systematic and intelligent investigation of “Who, what,

where, when, why, how of actual and potential buyers” any research study

must be done methodically in order to arrive at the best result, this study

which was carried out for an academic requirement was done in such a way

to follow the methodology as best as possible.

The study was conducted to analyze the loan schemes at

Karur Vysya Bank Ltd,Tumkur.It was pragmatic to assess to collect

information through conducting a survey. A simple statistical method is used

to arrive at the conclusion over the specific terms

1. Data Collection: The data were collected through primary and secondary

sources.

a) Primary Data: It is collected through first hand information directly from

the bank.

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b) Secondary Data: Data which someone else has already collected and

have already passed through statistical process. It is obtained from

company records, magazines, websites, and other research reports.

DATA COLLECTION TOOLS

QUESTIONAIRE:

Set of questions was prepared and were put in front of customer.

PERSONAL DISCUSSION:

Personal discussions was conducted with bank staff and customers

RESEARCH DESIGN:

Sampling Design:

Sampling design consist of three divisions that is sampling unit,

sampling size, and sampling procedure.

Sampling Plan:

1. Sampling Unit: This particular survey was directed at only respondents

who are customers of KVB at Tumkur branch

2. Sampling Size: The sample size is 30 respondents who are who are

customers of KVB

3. Sampling Procedure: convenience sampling method was used.

LIMITATIONS:

i. Sample size was limited to 30 because of difficulty in generalization of

results.

ii. The study does not covers loans to professionals

iii. To collect the information from customer was quite difficult due to non-

cooperation of customers.

iv. The study is limited only to Tumkur branch.

v. There was limitation of time to conduct survey

vi. The collection of data is limited for 3 years

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DATA ANALYSIS AND INTERPRETATION

For the following analyses of different Loan schemes 2007-2008 is

taken as base year for calculation of percent of loans, and further years Loans

are calculated with respect to the base year.

Table 1: Table showing the change in Overdraft loan

Chart 1: Chart showing the change in Overdraft loan

S.I.T 2009-2011 Page 39

Year Rupees(in lakhs) Percentage(%)

2007-2008 141

2008-2009 140 99

2009-2010 803 569

A Study On RETAIL LOANS

Interpretation:

Business people are the major customers of the bank and users of overdraft

account, the advantage over draft account is that bank charges interest on the

exact amount used by person during the month. Due to efficient promotional

activities carried out bank there was sudden increase from Rs140lakh to

Rs803lakh

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Table 2: Table showing the change in Car loan

Chart 2: Chart showing the change in Car loan

S.I.T 2009-2011 Page 41

Year Rupees(in lakhs) Percentage(%)

2007-2008 55

2008-2009 90 163

2009-2010 171 310

A Study On RETAIL LOANS

Interpretation:

The above table shows clearly that there is increase in car loan year by year.

In the year 2008-09 the loan amount has been increased to 163%.and in the

year 2009-10 the loan amount has been increased by 310%.

Due to increasing number of showrooms in tumkur, banks are giving more

preference to car loans and are attracting customers by their schemes.

Table 3: Table showing the change in Two-wheeler

Chart 3: Chart showing the change in Two-wheeler

S.I.T 2009-2011 Page 42

Year Rupees(in lakhs) Percentage (%)

2007-2008 25

2008-2009 17 68

2009-2010 7 28

A Study On RETAIL LOANS

Interpretation:

In the year 2007-08 the loan sanctioned was Rs25, in the year 2008-09 the

loan issued was Rs17lakh, and in the year 2009-10 declining trend continued

and reached to Rs7lakh.

The cost of two-wheeler is less compared to car, it can be afforded by middle

class families from their savings and also many people felt that buying

four-wheeler is safe and comfortable, so the demand for two –wheeler has

declined.

Table 4: Table showing the change in Housing loan

Chart 4: Chart showing the change in Housing loan

S.I.T 2009-2011 Page 43

Year Rupees(in lakhs) Percentage (%)

2007-2008 70

2008-2009 79 113

2009-2010 42 60

A Study On RETAIL LOANS

Interpretation:

The above table clearly shows that in the year 2007-08 the housing loan

amount was Rs70lakh in the year 2008-09 the loan amount increased by

Rs9lakh, and in the year 2009-10 the loan amount decreased by Rs37 lakh

and reached 42rupees.

The demand for housing loan has come down because due to floating interest

rate the borrower may feel difficult to pay the EMI from their monthly budget.

A person may be penalized if the loan is paid before the due date on the fixed

portion.

Table 5: Table showing the change in Education loan

S.I.T 2009-2011 Page 44

Year Rupees(in lakhs) Percentage (%)

2007-2008 2

2008-2009 7 350

2009-2010 15 750

A Study On RETAIL LOANS

Chart 5: Chart showing the change in Education loan

Interpretation:

The above table clearly shows that Education loan is also mounting every

year. In the year 2007-08 the loan amount was Rs 2lakh. In the year 2008-09

the loan amount was Rs7lakh, and in the year 2009-10the amount increased

by 8lakh and reached 15lakh.

In India higher education has become expensive as compare to earnings of

Indian people. Banks provide education loan for graduation course, post

graduation course and professional course. This system has encouraged

many people to study further.

Table 6: Table showing the change in Personal loan

S.I.T 2009-2011 Page 45

Year Rupees(in lakhs) Percentage (%)

2007-2008 52.00

2008-2009 42.00 81

2009-2010 32.00 32

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Chart 6: Chart showing the change in Personal loan

Interpretation:

Usually, these loans are available with higher interest rates. The interest rate

of personal loan can be sometimes double that of home loans. And it may be

difficult for the person to pay monthly installments, so the demand has been

decreased.

Table 7: Table showing the change in Bon voyage

S.I.T 2009-2011 Page 46

Year Rupees(in lakhs) Percentage (%)

2007-2008 4

2008-2009 7 175

2009-2010 15 375

A Study On RETAIL LOANS

Chart 7: Chart showing the change in Bon voyage

Interpretation:

The above table clearly shows that travel loan in the year 2007-08 was Rs

4lakh, in the year 2008-09 the loan amount raised to Rs 7lakh, and in the

2009-10 the upward trend continued and reached Rs15lakh.

This helps to meet all traveling expense such as cost of ticket, hotel stay,

visa, airport tax, and many more. And also advantage is the borrower has a

period of 36months to repay the loan amount.

Table 8: Table showing the change in Gold loan

Chart 8: Chart showing the change in Gold loan

S.I.T 2009-2011 Page 47

Year Rupees(in lakhs) Percentage (%)

2007-2008 340

2008-2009 381 112

2009-2010 493 145

A Study On RETAIL LOANS

Analysis:

The above table clearly shows the loan against loan in the year 2007-08 was

Rs 340lakh, in the year 2008-09 the loan amount has been improved by

40lakh and reached Rs 381.0, in the year 2009-10 the upward trend

continued and reached Rs 493lakh.

Gold loans require minimum documentation and the processing will be quick.

Gold loan is more attractive, because the rate of interest charged on gold

loans tends to be much lower than that of a personal loan.

Table 9: Table showing the change in Agricultural loan

Chart 9: Chart showing the change in Agricultural loan

S.I.T 2009-2011 Page 48

Year Rupees(in lakhs) Percentage (%)

2007-2008 280

2008-2009 340 122

2009-2010 415 148

A Study On RETAIL LOANS

Interpretation:

The above table indicates that the loan amount in the year 2007-08 was Rs

280lakh,in the year 2008-09 the amount mounted by Rs 60lakh,and in the

year 2009-10 the same uptrend continued and reached Rs 415 lakh.

Agricultural loans include loan for fishing, crop loan, poultry, development

loan, agri-term loan, warehouse loan, flowery culture but the karur Vysya bank

in tumkur has issued loan only for warehousing, because of lack of demand

for other loans.

Table 10: Table showing the change in Advances

Chart 10: Chart showing the change in Advances

S.I.T 2009-2011 Page 49

Year Rupees(in crs) Percentage (%)

2007-2008 18

2008-2009 16 89

2009-2010 19 105

A Study On RETAIL LOANS

Interpretation:

For the financial year 2008-09 the total advances stands at 16crore against

financial year 07-08,09-10,however the bank is able to achieve more than

100% in 2009-10.Due to recession advances in the year 2008-09 has been

decreased.

Table 11: Table showing the change in Profit

Chart 11: Chart showing the change in Profit

S.I.T 2009-2011 Page 50

Year Rupees(in lakhs) Percentage (%)

2007-2008 87

2008-2009 80 92

2009-2010 89 102

A Study On RETAIL LOANS

Interpretation:

The profit in the year 2008-09has been decreased due to decrease in

advances. Profit in the year 2009-10 has been increased due to increase in

deposits and advances.

Table12: Table showing the change in Recovery

Chart 12: Chart showing the change in Recovery

S.I.T 2009-2011 Page 51

Year Rupees(in lakhs) Percentage (%)

2007-2008 40

2008-2009 40 100

2009-2010 41 102

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Interpretation:

From the above table it is observed that there is constant recovery,

and in the year 2008-09 there is increase by 2%.

Table13: Table showing the change in Deposit

Chart13: Chart showing the change in Deposit

S.I.T 2009-2011 Page 52

Year Rupees(in crs) Percentage (%)

2007-2008 14

2008-2009 16 114

2009-2010 20 143

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Interpretation:

As the bank has used push and pull marketing strategy and aggressive

counter selling, the deposits are mounting year by year

Table14: Table showing the change in Business per employee

Deposits + advances

Business per employee =

Number of employees

S.I.T 2009-2011 Page 53

Year Rupees(in crs) Percentage (%)

2007-2008 2.909

2008-2009 2.909 100

2009-2010 3.54 122

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Chart14: Chart showing the change in Business per employee

Interpretation:

Since there is increase in deposits and advances, business per employee has

been increased.

Table15: Table showing the change in Profit per employee

Profit earned

S.I.T 2009-2011 Page 54

Year Rupees(in lakhs) Percentage (%)

2007-2008 7.9

2008-2009 7.2 91

2009-2010 8.1 102

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Profit per employee =

Number of employees

Chart 15: Chart showing the change in Profit per employee

Interpretation:

It is found that profit per employee has been decreased in the year 2008-09,

but has been increased in 2009-10 due to increase in profits.

Table16: Table showing the relationship between Age and Loan amount

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Loan_Amt

TotalAge

100,000-

250,000

250,000-

500,000

50,000-

100,000>500,000

20-30 0 1 0 0 1

30-40

40-50

1

2

2

5

1

2

1

8

5

17

>50 1 1 1 4 7

Total 4 9 4 13 30

Chi-Square Tests

Value dfAsymp. Sig. (2-

sided)

Pearson Chi-SquareLikelihood Ratio

N of Valid Cases

4.474a 9 .878

4.760 9 .855

30

a. 14 cells (87.5%) have expected count less than 5. The minimum expected count is .13.

Testing of hypothesis:

Null Hypothesis: Their no difference between age of customer and loan

amount.

Alternative Hypothesis: There is difference between age of customer and

the loan amount.

Interpretation:

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Chi-square test shows that (alpha) is insignificant, that is we cannot reject

the null hypothesis that means there is no difference between age and loan

amount applied.

Monthly income

Loan_Amt

Total100,000-250,000

250,000-500,000

50,000-100,000

>500,000

10,000-15,000

1 3 2 0 6

15,000-25,000

2 2 1 2 7

25,000-35,000

1 1 1 1 4

35,000-50,000

0 1 0 4 5

>50,000 0 2 0 6 8

Total4 9 4 13 30

Table17: Table showing the relationship between monthly

income and loan amount

Chi-Square Tests

Value dfAsymp. Sig.

(2-sided)

Pearson Chi-SquareLikelihood Ratio

N of Valid Cases

15.093a

19.499

30

1212

.236

.077

a. 20 cells (100.0%) have expected count less than 5. The minimum expected count is .53.

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Symmetric Measures

Value Approx. Sig.

Nominal by Nominal

Phi .709 .236

Cramer's V .410 .236

Contingency Coefficient

.579 .236

N of Valid Cases 30

a. Correlation statistics are available for numeric data only.

Testing of Hypothesis:

Null Hypothesis: There is no difference between monthly income earned and

loan amount borrowed.

Alternative Hypothesis: There is difference between monthly income earned

and loan amount borrowed.

Interpretation:

Chi-square source is 0.236which means that (alpha) is insignificant. It

means statistically we cannot reject null hypothesis, there is no difference

between income of individuals and loan borrowed.

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Table18: Table showing the occupation of the customers who have

taken loan

Interpretation:

From the above table it is found that major borrowers are business people,

and then followed by employees and house wives.

S.I.T 2009-2011 Page 59

Profession Frequency Percent

Business 17 56.7

Employee 6 20.0

Housewife 6 20.0

Student 1 3.3

Total 30 100.0

A Study On RETAIL LOANS

Table19: Table showing the purpose of taking loan

Interpretation:

It is found that major customers have borrowed loan for personal use,

26.7%have borrowed for business use and only 16.6% have borrowed for

personal as well as business purpose.

S.I.T 2009-2011 Page 60

Purpose Frequency percentage

Both 5 16.6

Business 8 26.7

Personal 17 56.7

Total 30 100.0

A Study On RETAIL LOANS

Type of loanRate of

interestEMI period

Securities/documents

required

Over draft loan 11% Every month IT returns

Car loan 10.5% 60monthsHypothecation of car

purchased

Two wheeler loan 10.5% 36monthsHypothecation of vehicle

purchased

Housing loan 10.5%

IT returns for last 3

years,

certificate of

registration,

bank statements for

last 1year

Education loan 12% 5-7years

government securities

LIC Policies/NSC

Amount in the form of

land & building

Personal loan

Secured 12.25% 36months

NSC’s/LIC Policies

Personal loan

unsecured14.25% 36months

IT Returns

Certificate of salary

Bon voyage 14% 36months Immovable properties

IT Returns

Swarnsmitra 8.5%-12% 12months Pledge of gold jewelry

Agricultural loan 8.50%-10% 12months Phani or record of rights

Table 20: Table showing rate of interest, EMI period securities provided

for various kinds of loan

FINDINGS

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1. The targets for loans and deposits are fixed based on the past performance.

2. Bank is providing short term loans & long term & medium term loans to its

customers

3. Rate of Interest on personal Loan scheme is felt higher compared to other

schemes.

4. The bank has advanced maximum Loans for overdraft scheme and personal

Loan scheme.

5. It is found that loans for professionals are not given in this branch due to lack

of demand in Tumkur branch.

6. It is found from survey that majority borrowers are business people.

7. It is found that maximum customers have borrowed for personal use,only

16.6% of them have borrowed for business and personal purpose

8. It is found that profit earned per employee has been recorded high in the year

2009-2010.

9. It is known from the survey that the majority of borrowers have not faced any

problems while borrowing Loans.

10. It’s also found that respondents are satisfied by the repayment period allowed

by the bank.

11. It is found that the relationship between age and loan amount borrowed is

insignificant.

12. It is found that the relationship between income and loan amount borrowed is

insignificant.

II. GENERAL FINDINGS.

The bank has achieved award for the usage of best technology.

The bank has achieved award for their excellent service.

Banks has encouraged all types of customers to avail the Loan

facilities provided.

The Bank provides repeat Loans when the previous Loans are repaid.

Staff members are good in co-operation with customers.

The funds lent by the bank are fluctuating year to year.

The marketing technique used by the bank is excellent, and helps in

improving the performance.

The bank has modern facilities like ATM and E-Banking.

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SUGGESTIONS

The modern world is the result of so many changes that are being taken

place. A change may be initiated either voluntarily or on the advice given by

someone. The following suggestions are given to the bank for further simplifications

and to reach the expectations of the borrowers of different classes and to become

customer friendly satisfying the financial needs.

1. Since the performance of bank is excellent, it is suggested to maintain the

same status.

2. It is suggested to provide Loan facility for professionals like doctors,

engineers etc.

3. It is suggested to reduce the rate of interest on personal Loan Scheme.

4. It is suggested to expand to its area operations by opening branches in rural

areas.

II. GENERAL SUGGESTIONS

1. It is suggested to maintain a separate ‘enquiry’ may I help you’ counters.

2. Bank may publish periodicals, magazines, half yearly or by quarterly by

mentioning its deposits and Loan scheme to its member, customers of the

bank.

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CONCLUSION

I hereby conclude that as a researcher after keen observation in the area of

“Retail loans” at KVB, Tumkur. It is one of the leading banks which provide various

facilities to its members and public in Tumkur city. It is having good infrastructure and

staff. As far as Lending is concerned, it is lending almost all types of Loans and

advances.

The Rate of Interest charged for different Loans are also satisfied by the

members who have taken Loan. The bank is maintaining good track record for its

documentation and processing of Records.

The bank is lending different types of Loan facilities to all types of customers

like businessmen, employees, house-wives and also for students. The Interest

charged for short term and long terms are also reasonable. The terms and conditions

of Loan are unanimously accepted by all the members of the bank.

In nutshell, the Karur Vysya Bank, Tumkur provides loans to public in

satisfactory manner and helps the nation grow industrially to achieve self sufficiency

and remain competitive in the globe.

BIBLIOGRAPHY

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REFRENCE:

Management of banking and financial services -

Padmalatha Suresh and Justin Paul

WEBSITES:

http://www.banking_indstry.com

http://www.bankingindiaupdate.com/

www. kvb .co.in

http://www.mbaknol.com

http://banking.about.com

http://www.wikipedia.org

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QUESTIONNIARE

General information:

1. Name of the respondent…………….2. Age :

20-30 [ ] 30-40 [ ] 40-50 [ ] 50 and above [ ]

3. Sex : Male [ ] Female [ ]

4. Occupation: Students [ ] Employees [ ] Business [ ] Housewife [ ]

5. Educational qualification 10th standard [ ] P.U.C [ ] Graduation [ ] Post-graduation [ ]

6. Monthly income: 10,000-15,000 [ ] 15,000-25,000 [ ] 25,000-35,000 [ ] 35,000-50,000 [ ] 50,000-above [ ]

Specific information7. How did you come to know about loan facility?

Direct visit to bank [ ] Through neighbors [ ] Bank magazines/periodicals [ ] Newspapers [ ] Others [ ]

8. Mention the type of loan availed by you? Home loan Educational loan Vehicle loan Personal loan

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Others specify9. What is the purpose of taking loan?

Business [ ] Personal [ ] Both

10.How much amount of loan have you borrowed? 10,000-50,000 [ ] 50,000-100,000 [ ] 100,000-250,000 [ ] 250,000-500,000 [ ] 500,000 above [ ]

11.What made you to avail the loan from this bank? Interest rate Service Friends and relatives Good will of the bank

12.Time taken for sanctioning and releasing loan? Below 2 weeks 2-3 weeks 3-4 weeks More than 1 month

13.Are you facing any problem in getting loan? Yes [ ] No [ ]

14. If yes, reason for dissatisfaction Lengthy procedure Delay in service

15.Do you encounter any problem while availing loan? Yes No

16.What is your opinion on interest rate charged by the bank? Very high [ ] High [ ] Moderate [ ] Low [ ] Very low [ ]

17.How do you feel about procedure followed by the bank while providing loan?

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Simple [ ] Lengthy [ ]

18.What is your opinion about services provided by syndicate bank? Excellent [ ] Very good [ ] Good [ ] Moderate [ ] Poor [ ]

19.Do you feel the repayment period is sufficient? Yes [ ] No [ ]

20.Do you feel the staffs in the bank are cooperative? Yes [ ] No [ ]

21.What are the documents/securities given by you to the bank?……………………………………………………..

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