loans and deposits

7/28/2019 Loans and Deposits

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INTRODUCTION

Loans and deposits

One of the primary functions of the commercial bank is lending. Through

lending commercial banks meet their objective of making profits. The deposits

collected from the public cannot be kept idle. It has to be utilized in order to derive

benefits out of it. The bank collects deposits with the objective of lending and makes

profit out of the interest received and paid.

Their main aim is to deal in money and provide for those who need it. The

banker performs the job of lending within the framework of statues governing the

banking business, the government policy and guidelines issued by the authorities of

the country (RBI in India).The basic objective of nationalization of commercial banks

was to provide funds to the neglected sectors like agriculture, tiny industries and other

weaker sections of the society.

Today nearly 40% of the total commercial bank advances are the priority

sectors. Greater part of the commercial bank funds are employed in the form of loans

and advances. Loans bring good money to the bank in the form of profit by charging

interest. Lending function of a commercial bank benefits the bank in the form of

profit and the one who takes loans enjoy the benefit of money required for their

activities. The wheels of industry cannot run without the bank advances. The bank

needs to assess the condition of industry or trade or any business enterprise while

making advances.


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Banks are known to accept deposits for the purpose of keeping over the year.

The process of lending have been stream lined in to purpose oriented lending in India

by means of various direction guidelines issued by R.B.I, lending are recorded in,

bank books under "loans and advances" of various types the approved purposes for

which loans and advances can be usually granted are

Working capital needs of trade, commerce, industry and agricultureintroducing priority sectors.

Consumption requirements of individuals.

LOANS

In to select the objectives of the bank in lending and also to meet the

requirements of the people of district co-operative bank, has been lending money for

various purposes which include as follows:

1. Short term loans2. Medium term loans3. Long term loans

Short term loans

A short-term loan is given for a period of not exceeding one year and it is

given mainly for the working capital requirement of the industries.

Medium term loans

Medium term loans are granted for a period of month exceeding five years.

Loans given for a period of five years and above came under the category long-term

loans.


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Long term loans

Long-term loans are granted for meeting capital expenditure like purchase of

machinery construction of factory building etc. Term loans are generally granted for a

period of more than three years and less than ten years by banks. Term loans up to

seven years are called medium term loans and beyond that are long-term loans.

Loan policy can be defined as the decision made in advances about themanage

ment of credit. Today the services of bank have expanded and different

loan procedures are applied in order to maximize shareholders fund. The bank has

used to act as a bridge between the savers and users of fund. However, to maximize

the shareholders wealth by accepting deposit and granting loan in society has

alwaysremained the prior purpose of commercial bank. The bank cannot remain idol.

Therefore, the bank has to invest its fund in loan and advances, risky assets in order

to provide maximum return

DEPOSITS

Deposit is the Money given in advance to show intention to complete the purchase of

a property and in other works, Money transferred into a customer's account at a

financial institution. Individuals and corporations need money to pursue their daily

business. They place the money on deposit to earn interest, using the money market.

Deposit is the main sources of fund collected by the bank from different customers.

The growth of the bank depends primarily upon the growth of its deposits. The

volume of funds that management will use for creating income through loans and

investments is determined by the banks policy governing deposits.
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Deposit is the collection made by customer in the bank for security purpose, future

safety purpose as well as in order to earn interest of total deposit. Bank provides

reasonable rates of interest to the customers for the deposited amount on the basis

of the different account. In the banking business volume of credit extension muchdepe

nds upon the deposits base of the bank. When the deposit of the bank

increases,the assets of the bank also increases as a result liabilities of the bank rises.Tr

aditionally, the deposit of the bank was determines by the depositors not by

bank management.

There is regular change in this view in the modern banking industry. Thus bank has

evolved from relatively passive acceptors of deposits to active bidders for the funds.

Deposits are one of the aspects of the bank liabilities that management has been

influencing through deliberate actions.

Types of deposits are:

Call deposits, the depositor has the right to use the money at any time, sometimesshort notice periods are agreed. As the depositor can show up any time to request

the deposit back, it is also called sight deposit.

Fixed depositsbear a fixed time and fixed interest rate, and are therefore alsocalled term ortime deposits.

Overnight lending occurs usually from noon to noon, using a special rate. to giveas security or in part payment.
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NEED & IMPORTANCE OF THE STUDY

Since the banks are playing a vital role in modern days, it is important to

understand the loans and deposits of the Banks. Loans and deposits plays a vital role

in functioning of the bank.

It provides various types of loans to the customers and collects higher interest

rate. Therefore, the loan policy of the bank should be effective to attract the

customers. This study is mostly focused on deposit & loan of Karimnagar

Cooperative Urban Bank. There are various types of deposits such as saving deposits,

fixed deposits, current deposits etc. So, there is a need for the study to study on the

loans and deposits of Karimnagar Cooperative Urban Bank.

OBJECTIVES OF THE STUDY

The main objective of the present study is to evaluate or appraise loans and

advances of Karimnagar Cooperative Urban Bank in respect of loans and advances

for the time period of five years.

1.To study the performance of the bank in relation to loans and advances.2.To analyze the effectiveness of the bank performance in analyzing funds in the

form of different types of loans for different purposes.

3.To know the different types of loans issued by the bank.4.To understand the performance of the bank like no.of members, share capital and

working capital etc.

5.Finally to make suitable suggestions for improving the performance of the bank.


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SCOPE OF THE STUDY

Deposit is the main source of fund for commercial bank to invest in profitable sector.

Money from deposit can be invested in the productive and socially desirable sector.

The bank accepts deposits from those who can save but not profitably utilize the

saving themselves. To attract saving from all sort of individual the bank receives a

number of deposits in various fame in various accounts. Bank utilize the money from

deposit by providing various types of loan like hire purchase loan, housing loan,

educational loan etc. the bank also invests this money to purchase share, debenture,

bond etc of other company form that bank earn profit after certain time

period. From loan bank collect the interest in higher rate. So, the deposit is the main

source of income for commercial bank. Similarly, bank utilizes the deposited money

in the form of loan & advances.

The DCCBs have come into existence due to the failure of primary societies

to attract required resources in the form of deposits from well to do sections of the

village community on one hand and to inspire the habit of thrift and savings among

their members to provide strong capital base on the other. The present study covers

exclusively performance of Karimnagar Cooperative Urban Bank in terms of loans

and advances. For the purpose of study five years financial data has been taken into

account.


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METHODOLOGY OF THE STUDY

Methodology is systematic procedure of collecting information in order to analyze

and verifying a phenomenon. The collection of date is done through two principle

source viz.

1. Primary Data2. Secondary Data

Primary Data

It is the information collected directly without any reference. In the study, it was

mainly interviews with concerned officer and staffs either individually or collectively.

This study does not include any primary data.

Secondary Data

Secondary data is defined as data collected earlier for a purpose other than the one

currently being pursued. Secondary data are often in a form of public data but the

unpublished data such as records, reports or statistics gather or complied by

others prior to your study are also secondary data. For the internship report

the statement of Loan and deposit is obtained from books of account and financial

record of the bank and reference form text books and journals relating to financial

management and articles published in business dairies like the Economics times,

Business line etc.,Statistical tools used

Statistical tools used for the study are tables, percentage analysis and relevant

graphs like bar charts.


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LIMITATIONS OF THE STUDY

The study is based mainly on secondary data. Since the study is confined to only few aspects like loans and advances, so the

overall performance of the bank cannot be measured accurately.

Here, the calculations are approximated. The accuracy of the results is subjected to the accuracy of the data furnished

by the annual reports.


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LOAN

In finance, a loan is a debt evidenced by a note which specifies, among other things,

the principal amount, interest rate, and date of repayment. A loan entails the

reallocation of the subject asset(s) for a period of time, between the lenderand

the borrower.

In a loan, the borrower initially receives or borrows an amount ofmoney, 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. Although this article

focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks forfinancial institutions.

For other institutions, issuing ofdebt contracts such as bonds is a typical source of

funding.

TYPES OF LOANS

Secured

A secured loan is a loan in which the borrowerpledges some asset (e.g. a car or

property) as collateral.
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A mortgage loan is a very common type of debt instrument, used by many individuals

to purchase housing. In this arrangement, the money is used to purchase the property.

The financial institution, however, is given securitya lien on the title to the house

until the mortgage is paid off in full. If the borrowerdefaults on the loan, the bank

would have the legal right to repossess the house and sell it, to recover sums owing to

it.

In some instances, a loan taken out to purchase a new or used car may be secured by

the car, in much the same way as a mortgage is secured by housing. The duration of

the loan period is considerably shorteroften corresponding to the useful life of the

car. There are two types of auto loans, direct and indirect. A direct auto loan is where

a bank gives the loan directly to a consumer. An indirect auto loan is where a car

dealership acts as an intermediary between the bank or financial institution and the

consumer.

Unsecured

Unsecured loans are monetary loans that are not secured against the borrower's assets.

These may be available from financial institutions under many different guises or

marketing packages:

credit card debt

personal loans

bankoverdrafts

credit facilities or lines of credit

corporate bonds (may be secured or unsecured)
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The interest rates applicable to these different forms may vary depending on the

lender and the borrower. These may or may not be regulated by law. In the United

Kingdom, when applied to individuals, these may come under the Consumer Credit

Act 1974.

Interest rates on unsecured loans are nearly always higher than for secured loans,

because an unsecured lender's options for recourse against the borrower in the event

of default are severely limited. An unsecured lender must sue the borrower, obtain a

money judgment for breach of contract, and then pursue execution of the judgment

against the borrower's unencumbered assets (that is, the ones not already pledged to

secured lenders). In insolvency proceedings, secured lenders traditionally have

priority over unsecured lenders when a court divides up the borrower's assets. Thus, a

higher interest rate reflects the additional risk that in the event of insolvency, the debt

may be uncollectible.

Demand

Demand loans are short term loans [1] that are atypical in that they do not have fixed

dates for repayment and carry a floating interest rate which varies according to the

prime rate. They can be "called" for repayment by the lending institution at any time.

Demand loans may be unsecured or secured.

Subsidized

A subsidized loan is a loan on which the interest is reduced by an explicit or

hidden subsidy. In the context of college loans in the United States, it refers to a loan

on which no interest is accrued while a student remains enrolled in
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education.[2] Otherwise, it may refer to a loan on which an artificially low rate of

interest (or none at all) is charged to the borrower.

An unsubsidized loan is a loan that gains interest at a market rate from the date of

disbursement

1. Personal Loans

These loans are offered by most banks, and the proceeds may be used for virtually

any expense (from buying a new stereo system to paying off a common bill).

Typically, personal loans are unsecured, and range anywhere from a few hundred to a

few thousand dollars. As a general rule, lenders will typically require some form of

income verification, and/or proof of other assets worth at least as much as the

individual is borrowing. The application for this type of loan is typically only one or

two pages in length. Approvals (or denials) are generally granted within a few days.

The downside is that the interest rates on these loans can be quite high. According to

the Federal Reserve, they range from about 10-12%. The other negative is that these

loans sometimes must be repaid within two years, making it impractical for

individuals looking to finance large projects.

In short, personal loans (in spite of their high interest rates) are probably the best way

to go for individuals looking to borrow relatively small amounts of money, and who

are able to repay the loan within a couple of years.

2. Credit Cards

When consumers use credit cards, they are essentially taking out a loan with the

understanding that it will be repaid at some later date. Credit cards are a particularly
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attractive source of funds for individuals (and companies) because they are accepted

by many - if not most - merchants as a form of payment.

In addition, to obtain a card (and, by extension, $5,000 or $10,000 worth of credit),

all that's required is a one-page application. The credit review process is also rather

quick. Written applications are typically approved (or denied) within a week or two.

Online / telephone applications are often reviewed within minutes. Also in terms of

their use, credit cards are extremely flexible. The money can be used for virtually

anything these days from paying college tuition to buying a drink at the local

watering hole. (To find out more about this process, see The Importance of Your

Credit Rating and How Credit Cards Affect Your Credit Rating.)

There are definitely pitfalls, however. The interest rates that most credit-card

companies charge range as high as 20% per year. In addition, a consumer is more

likely to rack up debt using a credit card (as opposed to other loans) because they are

widely accepted as currency and because it's psycho logically easier to hand someone

a credit card than to fork over the same amount of cash. (To read more on this type of

loan, see Take Control Of Your Credit Cards, Credit, Debit And Charge: Sizing Up

The Cards In Your Wallet and Understanding Credit Card Interest.)

3. Home-Equity Loans

Homeowners may borrow against the equity they've built up in their house using

a home-equity loan. In other words, the homeowner is taking a loan out against the

value of his or her home. A good method of determining the amount of home equity

available for a loan would be to take the difference between the home's market value

and the amount still owing on the mortgage.
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The loan proceeds may be used for any number of reasons, but are typically used to

build home additions, or fordebt consolidation. The interest rates on home-equity

loans are very reasonable as well. In addition, the terms of these loans typically range

from 15 to 20 years, making them particularly attractive for those looking to borrow

large amounts of money. But, perhaps the most attractive feature of the home-equity

loan is that the interest is usually tax deductible.

The downside to these loans is that consumers can easily get in over their heads by

mortgaging their homes to the hilt. Furthermore, home-equity loans are particularly

dangerous in situations where only one family member is the breadwinner, and the

family's ability to repay the loan might be hindered by that person's death or

disability. Even a 1% increase in interest rates could mean the difference between

losing and keeping your home if you rely too heavily on this style of loan.

Note: In situations like these, life/disability insurance is frequently used to help

protect against the possibility ofdefault. (To keep reading on this subject, see Home-

Equity Loans: The Costs and The Home-Equity Loan: What It Is And How It Works.)

4. Home-Equity Line of Credit

This line of credit acts as a loan and is similar to home-equity loans in that the

consumer is borrowing against his or her home's equity. However, unlike traditional

home-equity loans, these lines of credit are revolving, meaning that the consumer

may borrow a lump sum, repay a portion of the loan, and then borrow again. It's kind

of like a credit card that has a credit limit based on your home's equity! These loans

may be tax deductible and are typically repayable over a period of 10 to 20 years,

making them attractive for larger projects.
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Because specific amounts may be borrowed at different points in time, the interest

rate charged is typically pegged to some underlying index such as the "prime rate".

This is both good and bad in the sense that at some times, the interest rates being

charged may be quite low. However, during period of rising rates, the interest charges

on outstanding balances can be quite high.

There are other downsides as well. Because the amount that can be borrowed can be

quite large (typically up to $500,000 depending upon a home's equity), consumers

tend to get in over their heads. These consumers are often lured in by low interest

rates, but when rates begin to rise, those interest charges begin racking up and the

attractiveness of these loans starts to wane.

5. Cash Advances

Cash advances are typically offered by credit-card companies as short-term loans.

Other entities, such as tax-preparation organizations, may offer advances against an

expected IRS tax refund or against future income earned by the consumer.

While cash advances may be easy to obtain, there are many downsides to this type of

loan. For example:

They are not typically tax deductible.

Loan amounts are typically in the hundreds of dollars, making themimpractical for many purchases, particularly large ones.

The effective interest rate charges and related fees can be very high.
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In short, cash advances are a fast alternative for obtaining money (funds are typically

available on the spot), but because of the numerous pitfalls, they should be considered

only as a last resort. (Learn more about cash advances in Payday Loans Don't Pay.)

6. Small Business Loans

The Small Business Administration (SBA) or your local bank typically extend small

business loans to would-be entrepreneurs, but only after they've submitted (and

received approval for) a formal business plan. The SBA and other financial

institutions typically require that the individual personally guarantee the loan, which

means that they will probably have to put up personal assets as collateral in case the

business fails. Loan amounts can range from a few thousand to a few million dollars,

depending on the venture.

While the term of the loan may vary from institution to institution, typically,

consumers will have between five and 25 years to repay the loans. The amount of

interest incurred from the loan depends on the lending institution in which the loan is

made. Keep in mind that borrowers can negotiate with the lending institution with

regard to the level of interest charged. However, there are some loans on the market

that offer a variable rate.

Small business loans are the way to go for anyone looking to fund a new or existing

business. However, be forewarned: getting a business plan approved by the lending

institution may be difficult. In addition, many banks are unwilling to finance "cash

businesses" because their books (ie. tax records) often do not accurately reflect the

health of the underlying business.
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Bank loans are available to finance the purchase of inventory and equipment as well

as to obtain operating capital and funds for business expansion. These loans are a

time-honored and reliable method of financing a small business, but banks often only

finance firms with substantial collateral and a long track record, and the terms they

offer are often very strict. Business owners should weigh the advantages and

disadvantages of bank loans against other means of finance.

ADVANTAGES OF LOANS

A bank loans money to a business based on the value of the business and its perceived

ability to service the loan by making payments on time and in full. Banks do not take

any ownership position in businesses. Bank personnel also do not get involved in any

aspect of running a business to which a bank grants a loan. Once a business borrower

has paid off a loan, there is no more obligation to or involvement with the bank lender

unless the borrower wishes to take out a subsequent loan.

Tax and Financial Planning Advantages

The interest on business bank loans is tax-deductible. In addition, especially with

fixed-rate loans, in which the interest rate does not change during the course of a

loan, loan servicing payments remain the same throughout the life of the loan. This

makes it easy for businesses to budget and plan for monthly loan payments. Even if

the loan is an adjustable-rate loan, business owners can use a simple spreadsheet to

compute future payments in the event of a change in rates.

Difficulties in Obtaining Loans

One of the greatest disadvantages to bank loans is that they are very difficult to obtain

unless a small business has a substantial track record or valuable collateral such as


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real estate. Banks are careful to lend only to businesses that can clearly repay their

loans, and they also make sure that they are able to cover losses in the event of

default. Business borrowers can be required to provide personal guarantees, which

means the borrower's personal assets can be seized in the event the business fails and

is unable to repay all or part of a loan.

Cost of Bank Loans

Interest rates for small-business loans from banks can be quite high, and the amount

of bank funding for which a business qualifies is often not sufficient to completely

meet its needs. The high interest rate for the funding a business does receive often

stunts its expansion, because the business needs to not only service the loan but also

deal with additional funding to cover funds not provided by the bank. Loans

guaranteed by the U.S. Small Business Administration offer better terms than other

loans, but the requirements to qualify for these subsidized bank loans are very strict.

Speed

A bank loan can be secured quickly; in less than an hour, a qualified borrower can

complete a bank loan transaction.

A bank loan can be used in a number of ways; money can be borrowed for many

large-ticket items, such as furniture, vehicles or home renovations.


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Disadvantages

Fees

Some loans carry a prepayment penalty, preventing the borrower from paying the

note off early without incurring extra cost.

Limitations

There are a number of limitations on the transaction. Good credit is often required to

borrow money, and there are stipulations on how the money can be used.

Cash Flow

Borrowing too much money can lead to decreased cash flow and payments can even

overtake income in some cases; this is why many loan payments are limited to a

certain percentage of a borrower's income.

DEPOSITS

Individuals and corporations need money to pursue their daily business. They place

the money on deposit to earn interest, using the money market. Types of deposits are:

One of the most essential aspects in the functioning of a bank is to accept

the deposits from public. Hence it is necessary to classify the deposits; basically there

are basically four types of deposits
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1. Time or term deposits

These are those deposits that are deposited by savers for a fix period of time hence

they can withdrew the deposit only on the maturity of deposit. If it is withdrawn in

advance then it involves penalty. They offer the maximum amount of interest.

A time deposit (also known as acertificate of depositin the United States, a term

deposit, particularly in Canada, Australia and New Zealand; a bond in the United

Kingdom; Fixed Deposits in India and in some other countries) is a money deposit at

a banking institution that cannot be withdrawn for a certain "term" or period of time

(unless a penalty is paid)[citation needed]. When the term is over it can be withdrawn

or it can be held for another term. Generally speaking, the longer the term the better

the yield on the money. In its strict sense, certificate deposit is different from that of

time deposit in terms of its negotiability. CDs are negotiable and can be rediscounted

when the holder needs some liquidity, while time deposits must be kept until

maturity.

The opposite, sometimes known as a sight deposit or "on call" deposit, can be

withdrawn at any time, without any notice or penalty: e.g., money deposited in

a checking account orsavings account in a bank.

The rate of return is higher than for savings accounts because the requirement that the

deposit be held for a prespecified term gives the bank the ability to invest it in a

higher-gain financial product class. However, the return on a time deposit is generally

lower than the long-term average of that of investments in riskier products like stocks

or bonds.
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A deposit of funds in a savings institution is made under an agreement stipulating that

(a) the funds must be kept on deposit for a stated period of time, or (b) the institution

may require a minimum period of notification before a withdrawal is made.

"Small" time deposits are defined in the U.S. as those under $100,000, while "large"

ones are $100,000 or greater in size. The term "jumbo CD" is commonly used in the

United States to refer to large time deposits.

In the U.S., banks are not subject to a reserve requirement against their time deposit

holdings.

2. Saving deposits

This is a kind of demand deposit and there is certain limit on number of withdrawals

from the account during a specific period of time, also account holder has to maintain

minimum balance in the account which is decided by the bank, non compliance of

which leads to penalty. Interest rates offered on these deposit is lower than that of

term deposits.

Saving accounts are accounts maintained by retail financial institutions that

pay interestbut cannot be used directly as money in the narrow sense ofamedium of

exchange (for example, by writing a cheque). These accounts let customers set aside a

portion of their liquid assets while earning a monetary return. For the bank, money in

a savings account may not be callable immediately and in some jurisdictions, does not

incur a reserve requirement, freeing up cash from the bank's vault to be lent out with

interest.

The other major types ofdeposit account are transactional (checking) account, money

market account, and time deposit.
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In the United States, underRegulation D, 12 Code of Federal Regulations(CFR)

204.2(d)(2), the term "savings deposit" includes a deposit or an account that meets the

requirements of Sec. 204.2(d)(1) and from under the terms of the deposit contract or

by practice of the depository institution, the depositor is permitted to make up to six

pre-authorized transfers or withdrawals per month or statement cycle of at least four

weeks. There is no regulation limiting number of deposits into the account.

Within most European countries,[clarification needed] interest paid on deposit

accounts is taxed at source. The high rates of some countries has led to the

development of a significant offshore savings industry. The European Union Savings

Directive has made arrangements with many offshore financial centres for either

information on interest earned to be shared with EU tax authorities or for withholding

tax to be deducted on interest paid on offshore accounts, because of concerns relating

to potential tax evasion. Account holders must either pay the withholding tax or

disclose account holder information to relevant tax authorities.

Withdrawals from a savings account are occasionally costly, and they are more time-

consuming than withdrawals from a demand (current) account. However, most saving

accounts do not limit withdrawals, unlike certificates of deposit. In the United States,

violations of Regulation D often involve a service charge, or even a downgrade of the

account to a checking account. With online accounts, the main penalty is the time

required for the Automated Clearing House to transfer funds from the online account

to a "brick and mortar" bank where it can be easily accessed. During the period

between when funds are withdrawn from the online bank and transferred to the local

bank, no interest is earned.
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3. Current depositsThough it is similar to saving deposit but it does not offer any

interest and hence there is no limit on the number of withdrawals by individuals from

his account. This type of account is normally maintained by companies and

individuals who have higher frequency of withdrawing from their accounts.

Apart from above there is another type of deposit which is called recurring deposit in

which individual will have to pay a small sum every month for a particular period of

time; it can be on a daily, weekly or monthly basis. The interest offered on this is

almost equivalent to that of term deposits.

3. Current account

Current account is the name given to a transactional account in the United

Kingdom and countries with a UK banking heritage, offering various flexible

payment methods to allow customers to distribute money directly to others. Most

current accounts come with a cheque book and offer the facility to arrange standing

orders, direct debits and payment via a debit card. Current accounts may also allow

borrowing via an overdraft facility.

Current Deposit Meaning:

In deposit terminology, the term Current Deposit refers to a deposit to a bank account

or financial institution without a specified maturity date. These types of Current

Deposit account generally only earn demand deposit interest.

Current Deposit Example:

For example, a Current Deposit will often be made into a bank or other financial

institutions account in the local currency. The deposit will then generally be m ade


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available to the customer for withdrawal at any time and without an early withdrawal

penalty. Funds are typically made immediately available to the customer for

withdrawal by writing a check. Such Current Deposit accounts are generally used for

businesses that have a need for issuing checks to pay employee salaries and bonuses,

as well as to provide cash for inventories and other such business expenses. The bank

or financial institution where the Current Deposit account is held usually pays out

interest on the funds periodically, such as monthly or quarterly.

4. Fixed Deposits

A fixed deposit (FD) is a financial instrumentprovided by Indian and South African

banks which provides investors with a higher rate ofinterest than a regularsavings

account, until the given maturity date . It may or may not require the creation of a

separate account. It is known as a term deposit ortime

deposit in Canada, Australia, New Zealand, and the US, and as a bond in theUnited

Kingdom. They are considered to be very safe investments. Term deposits in India is

used to denote a larger class of investments with varying levels of liquidity. The

defining criteria for a fixed deposit is that the money cannot be withdrawn for the FD

as compared to a recurring deposit or a demand depositbefore maturity. Some banks

may offer additional services to FD holders such as loans against FD certificates at

competitive interest rates. It's important to note that banks may offer lesser interest

rates under uncertain economic conditions. The interest rate varies between 4 and 11

percent. The tenure of an FD can vary from 10, 15 or 45 days to 1.5 years and can be

as high as 10 years. These investments are safer than Post Office Schemes as they are

covered under the Deposit Insurance & Credit Guarantee Scheme of India. They also

offerincome tax and wealth taxbenefits.
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Fixed deposits are a high-interest-yielding Term deposit offered by banks in India.

The most popular form of Term deposits are Fixed Deposits, while other forms of

term Deposits are Recurring Deposit and Flexi Fixed Deposits (the latter is actually a

combination of Demand deposit and Fixed deposit).

To compensate for the low liquidity, FDs offer higher rates of interest than saving

accounts. The longest permissible term for FDs is 10 years. Generally, the longer the

term of deposit, higher is the rate of interest but a bank may offer lower rate of

interest for a longer period if it expects interest rates, at which RBI lends to banks

("repo rates"), will dip in the future.

Usually in India the interest on FDs is paid every three months from the date of the

deposit. (e.g. if FD a/c was opened on 15th Feb., first interest instalment would be

paid on 15 May). The interest is credited to the customers' Savings bank account or

sent to them by cheque. This is a Simple FD.[4] The customer may choose to have the

interest reinvested in the FD account. In this case, the deposit is called the Cumulative

FD or compound interest FD. For such deposits, the interest is paid with the invested

amount on maturity of the deposit at the end of the term.

Although banks can refuse to repay FDs before the expiry of the deposit, they

generally don't. This is known as a premature withdrawal. In such cases, interest is

paid at the rate applicable at the time of withdrawal. For example, a deposit is made

for 5 years at 8%, but is withdrawn after 2 years. If the rate applicable on the date of

deposit for 2 years is 5 per cent, the interest will be paid at 5 per cent. Banks can

charge a penalty for premature withdrawal.
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Banks issue a separate receipt for every FD because each deposit is treated as a

distinct contract. This receipt is known as the Fixed Deposit Receipt (FDR), that has

to be surrendered to the bank at the time of renewal or encashment.

Many banks offer the facility of automatic renewal of FDs where the customers do

give new instructions for the matured deposit. On the date of maturity, such deposits

are renewed for a similar term as that of the original deposit at the rate prevailing on

the date of renewal.

Income tax regulations require that FD maturity proceeds exceeding Rs 20,000 not to

be paid in cash. Repayment of such and larger deposits has to be either by " A/c

payee " crossed cheque in the name of the customer or by credit to the saving bank

a/c or current a/c of the customer.

Some Benefits of Fixed Deposits

Customers can avail loans against FDs up to 80 to 90 per cent of the value ofdeposits. The rate of interest on the loan could be 1 to 2 per cent over the rate

offered on the deposit.[7]

Non resident Indian's and Person of Indian Origin can also open theseaccounts.

Taxability

Tax is deducted by the banks on FDs if interest paid to a customer at any branch

exceeds Rs 10,000 in a financial year. This is applicable to both interest payable or

reinvested per customer or per branch. This is called Tax deducted at Source and is
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presently fixed at 10% of the interest. Banks issue Form 16 A every quarter to the

customer, as a receipt for Tax Deducted at Source.[8]

If the total income for a year does not fall within the overall taxable limits, customers

can submit a Form 15 G (below 65 years of age) or Form 15 H (above 65 years of

age).
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BANKING SYSTEM IN INDIA

Banking system occupies an important place in nations economy. A banking

instruction is indispensable in a modern society. It plays a pivotal in the economic

development of a country and forms a core of the money market in an advanced

country.

In India, though the money market is still characterized by the existence of

both the organized segments, institutions in the organized money market have grown

significantly and playing an increasingly important role. The unorganized sector,

comparing the money leaders and indigenous bankers, cater to the credit needs of

large number of persons especially in the country side. Among the institutions in the

organized sector of the money market, commercial banks and co-operative banks have

been in existence for the past several decades.

The regional rural banks came into existence since the middle of seventies.

Thus, with phenomenal geographical expansion of the commercial banks and the

setting up of the regional rural banks during recent past, the organized sector of

money market has penetrated into rural areas as well.

Besides the aforesaid institutions, which mainly serve as sources of short term

credit to industry, trade, commerce and agriculture, variety of specialized financial

institutions have been set up in the country to cater to the specific needs of industry,

agriculture and foreign trade.

Development banking has its genesis in post independence period in India and

has contributed significantly to the industrial growth of the country during the period.


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In the field of industrial finance, the Industrial Development Bank of India

(IDBI), setup in 1964 is the apex bank, which undertakes besides direct financing of

big industrial project, refinancing of term loan granted by other financial institutions

including the commercial bank. There are two prominent all-infuse institutions in the

field, namely The Industrial Finance Corporation of India (IFCI), and The

Industrial Credit and Investment Corporation of India (ICICI).

Besides, the State Financial Corporations (SFC) and State Industrial

Development Corporations (SID) have been setup to meet the requirements of small

and medium scale industries. In the respect State Industrial Reconstruction Bank of

India (IRBI) has been setup to bring back normally the industrial units which fall sick.

All these institutions, engaged in the task of development are now designated as

development banks which are distinct from the traditional commercial banks.

Development banking has its genesis in post independence period in India. It

has contributed significantly to the industrial growth of the country during the period.

For financing agriculture and allied activities in the rural areas, co-operative credit

societies and central co-operative banks have been participating since long

commercial banks began their active participation after the nationalization of major

banks in 1989. Long and medium term credit to the agriculturists is being provided by

another specialized institution, namely the Land Development Banks at the district

level and State Land Development Banks at the state level.

National Bank for Agriculture and Rural Development (NABARD) is the full-

fledged apex institution in the field of agriculture and rural development. With the

establishment of Export Import Bank of India (EXIM) on January 1, 1982, a new


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APEX BANK has come into existence in the field of financing the foreign trade of the

country.

Besides, the institutions which are mainly engaged in meeting the credit needs

of various segments of the economy, there are few other institutions, which are

essentially engaged in the business of investing in the corporate and government and

Life Insurance Corporation of India (LIC) and General Insurance Corporation of India

(GIC) and the Unit Trust of India (UTI) channels them into desirable securities.

Hence, they are called the investing institutions or institutional investors.

To facilitate the banking business and to foster the growth of banking habit,

two other institutions have been setup. The deposit insurance and credit guarantee

corporation (ECGC) provide protection to the banks in respect of risks inherent in

financing the export trade. The financial system may be claimed to have finest setup

comparable to any advanced country.

ABOUT RESERVE BANK OF INDIA (RBI)

On this occasion, we have a need to know something about Reserve Bank of

India. As the central bank of the country, the Reserve Bank of India performs both the

traditional functions of a central bank and a verity of development and promotional

functions. The Reserve Bank of India Act, 1934 confers upon it the power to act as

note issuing authority, bankers bank and banker to the government.


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FUNCTIONS OF RBI

Note issue authority

The currency of our country consists of one rupee notes and coins issued by

the Government of India and bank notes issued by the Reserve Bank as required by

section 38 of the reserve.

According to Bank of India Act, government puts into circulation one rupee

notes through Reserve Bank only. The reserve bank has the sole right to issue bank

notes in India. The notes issued by the Reserve Bank and the one rupee notes and

coins issued by the government are unlimited legal tender. Reserve bank also bears

the responsibility of exchange notes and coins to those of other denominations

required by the public.

Banker to government

The Reserve Bank of India acts as banker to the central and state governments.

According to section 20, it is obligatory for the bank to transact government business

including the management of the public debt of the union. Section 21 requires the

central government on entrust the bank all its money remittance, exchange and

banking transaction in India and in particular deposit free of interest all is cash

balance with the bank.

In terms of section 21(A), the Reserve Bank performs similar function on

behalf of the state governments. The bank entered into agreements with central and

state governments for carrying on the functions. To conduct ordinary banking

business of the central government, the bank is not entitled to any remuneration.


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It holds cash balances of the government free of interest. For the management

of the public debt, the bank is entitled to charge a commission.

The bank is also required to maintain currency chests of its issued department

at places prescribed by the government and to maintain sufficient notes and coins

therein.

The Reserve Bank is also authorized to make to the central and state

government, ways and means of advances which are repayable within 3 months for

the date of making the advance. The bank also acts as adviser to the government on

important financial matters.

CO-OPERATIVE BANKING SYSTEM

Definition

A co-operative bank is an autonomous association of person united voluntarily

to meet their common economic, social and cultural needs and aspirations through a

jointly-owned and democratically controlled enterprise.

Meaning

Co-operative bank is an institution established on the co-operative basis and

dealing in ordinary banking business like other banks. The co-operative banks collect

funds through shares. They accept deposits and grant loans. They are generally

concerned with rural credit and provide financial assistance for agricultural and rural

activities.


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TYPES OF CO-OPERATIVE BANKS

There are different types co-operative credit institutions or banks working in

India. These institutions can be classified into two broad categories.

1) Agricultural2) Non agricultural

Agricultural credit societies dominate the entire co-operative credit structure.

Agricultural credit institutions are further divided into short term agricultural credit

institutions and long term agricultural institutions or banks. Non agricultural

cooperatives are those which work for the non agricultural purposes.

State co-operative banks

These co-operative banks are formed by federating all districts central co-operative

banks in particular state. The state co-operative bank is the apex bank of co-operative

sector in the state. The state co-operative bank secures fund for its business from

share capital, reserves, deposits and borrowings from NABARD and state

government. NABARD supplies 60% of the working capital of state co-operative

banks in the country.

There are 28 state co-operative banks in India. On an average, they lend about ` 7700

crores annually to central co-operative bank and primary co-operative societies. They

perform commercial banking functions also like accepting deposits, granting loan and

collection of cheques. They also guide the co-operative institutions in their state.


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Brief History of Urban Cooperative Banks in India

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to

primary cooperative banks located in urban and semi-urban areas. These banks, till

1996, were allowed to lend money only for non-agricultural purposes. This distinction

does not hold today. These banks were traditionally centred around communities,

localities work place groups. They essentially lent to small borrowers and businesses.

Today, their scope of operations has widened considerably.

The origins of the urban cooperative banking movement in India can be traced to the

close of nineteenth century when, inspired by the success of the experiments related to

the cooperative movement in Britain and the cooperative credit movement in

Germany such societies were set up in India. Cooperative societies are based on the

principles of cooperation, - mutual help, democratic decision making and open

membership. Cooperatives represented a new and alternative approach to organisaton

as against proprietary firms, partnership firms and joint stock companies which

represent the dominant form of commercial organisation.

The Beginnings

The first known mutual aid society in India was probably the Anyonya Sahakari

Mandali organised in the erstwhile princely State of Baroda in 1889 under the

guidance of Vithal Laxman also known as Bhausaheb Kavthekar. Urban co-operative

credit societies, in their formative phase came to be organised on a community basis

to meet the consumption oriented credit needs of their members. Salary earners

societies inculcating habits of thrift and self help played a significant role in

popularising the movement, especially amongst the middle class as well as organized

labour. From its origins then to today, the thrust of UCBs, historically, has been to


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mobilise savings from the middle and low income urban groups and purvey credit to

their members - many of which belonged to weaker sections.

The enactment of Cooperative Credit Societies Act, 1904, however, gave the real

impetus to the movement. The first urban cooperative credit society was registered in

Canjeevaram (Kanjivaram) in the erstwhile Madras province in October, 1904.

Amongst the prominent credit societies were the Pioneer Urban in Bombay

(November 11, 1905), the No.1 Military Accounts Mutual Help Co-operative Credit

Society in Poona (January 9, 1906). Cosmos in Poona (January 18, 1906), Gokak

Urban (February 15, 1906) and Belgaum Pioneer (February 23, 1906) in the Belgaum

district, the Kanakavli-Math Co-operative Credit Society and the Varavade Weavers

Urban Credit Society (March 13, 1906) in the South Ratnagiri (now Sindhudurg)

district. The most prominent amongst the early credit societies was the Bombay

Urban Co-operative Credit Society, sponsored by Vithaldas Thackersey and Lallubhai

Samaldas established on January 23, 1906..

The Cooperative Credit Societies Act, 1904 was amended in 1912, with a view to

broad basing it to enable organisation of non-credit societies. The Maclagan

Committee of 1915 was appointed to review their performance and suggest measures

for strengthening them. The committee observed that such institutions were eminently

suited to cater to the needs of the lower and middle income strata of society and

would inculcate the principles of banking amongst the middle classes. The committee

also felt that the urban cooperative credit movement was more viable than agricultural

credit societies. The recommendations of the Committee went a long way in

establishing the urban cooperative credit movement in its own right.


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In the present day context, it is of interest to recall that during the banking crisis of

1913-14, when no fewer than 57 joint stock banks collapsed, there was a there was a

flight of deposits from joint stock banks to cooperative urban banks. Maclagan

Committee chronicled this event thus:

As a matter of fact, the crisis had a contrary effect, and in most provinces, there was

a movement to withdraw deposits from non-cooperatives and place them in

cooperative institutions, the distinction between two classes of security being well

appreciated and a preference being given to the latter owing partly to the local

character and publicity of cooperative institutions but mainly, we think, to the

connection of Government with Cooperative movement.

Under State Purview

The constitutional reforms which led to the passing of the Government of India Act in

1919 transferred the subject of Cooperation from Government of India to the

Provincial Governments. The Government of Bombay passed the first State

Cooperative Societies Act in 1925 which not only gave the movement its size and

shape but was a pace setter of cooperative activities and stressed the basic concept of

thrift, self help and mutual aid. Other States followed. This marked the beginning of

the second phase in the history of Cooperative Credit Institutions.

There was the general realization that urban banks have an important role to play in

economic construction. This was asserted by a host of committees. The Indian Central

Banking Enquiry Committee (1931) felt that urban banks have a duty to help the

small business and middle class people. The Mehta-Bhansali Committee (1939),

recommended that those societies which had fulfilled the criteria of banking should be

allowed to work as banks and recommended an Association for these banks. The Co-


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operative Planning Committee (1946) went on record to say that urban banks have

been the best agencies for small people in whom Joint stock banks are not generally

interested. The Rural Banking Enquiry Committee (1950), impressed by the low cost

of establishment and operations recommended the establishment of such banks even

in places smaller than taluka towns.

The first study of Urban Co-operative Banks was taken up by RBI in the year 1958-

59. The Report published in 1961 acknowledged the widespread and financially sound

framework of urban co-operative banks; emphasized the need to establish primary

urban cooperative banks in new centers and suggested that State Governments lend

active support to their development. In 1963, Varde Committee recommended that

such banks should be organised at all Urban Centres with a population of 1 lakh or

more and not by any single community or caste. The committee introduced the

concept of minimum capital requirement and the criteria of population for defining

the urban centre where UCBs were incorporated.

Duality of Control

However, concerns regarding the professionalism of urban cooperative banks gave

rise to the view that they should be better regulated. Large cooperative banks with

paid-up share capital and reserves of Rs.1 lakh were brought under the perview of the

Banking Regulation Act 1949 with effect from 1st March, 1966 and within the ambit

of the Reserve Banks supervision. This marked the beginning of an era of duality of

control over these banks. Banking related functions (viz. licensing, area of operations,

interest rates etc.) were to be governed by RBI and registration, management, audit

and liquidation, etc. governed by State Governments as per the provisions of


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respective State Acts. In 1968, UCBS were extended the benefits of Deposit

Insurance.

Towards the late 1960s there was much debate regarding the promotion of the small

scale industries. UCBs came to be seen as important players in this context. The

Working Group on Industrial Financing through Co-operative Banks, (1968 known as

Damry Group) attempted to broaden the scope of activities of urban co-operative

banks by recommending that these banks should finance the small and cottage

industries. This was reiterated by the Banking Commisssion (1969).

The Madhavdas Committee (1979) evaluated the role played by urban co-operative

banks in greater details and drew a roadmap for their future role recommending

support from RBI and Government in the establishment of such banks in backward

areas and prescribing viability standards.

The Hate Working Group (1981) desired better utilisation of banks' surplus funds and

that the percentage of the Cash Reserve Ratio (CRR) & the Statutory Liquidity Ratio

(SLR) of these banks should be brought at par with commercial banks, in a phased

manner. While the Marathe Committee (1992) redefined the viability norms and

ushered in the era of liberalization, the Madhava Rao Committee (1999) focused on

consolidation, control of sickness, better professional standards in urban co-operative

banks and sought to align the urban banking movement with commercial banks.

A feature of the urban banking movement has been its heterogeneous character and its

uneven geographical spread with most banks concentrated in the states of Gujarat,

Karnataka, Maharashtra, and Tamil Nadu. While most banks are unit banks without

any branch network, some of the large banks have established their presence in many


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states when at their behest multi-state banking was allowed in 1985. Some of these

banks are also Authorised Dealers in Foreign Exchange

Recent Developments

Over the years, primary (urban) cooperative banks have registered a significant

growth in number, size and volume of business handled. As on 31st March, 2003

there were 2,104 UCBs of which 56 were scheduled banks. About 79 percent of these

are located in five states, - Andhra Pradesh, Gujarat, Karnataka, Maharashtra and

Tamil Nadu. Recently the problems faced by a few large UCBs have highlighted

some of the difficulties these banks face and policy endeavours are geared to

consolidating and strengthening this sector and improving governance.

IMPORTANCE OR BENEFITS OF CO-OPERATIVE BANKS

The co-operative movement has become a powerful instrument for rapid economic

growth. It has resulted in several benefits. The expansion of co-operative banks has

resulted in several benefits.

a) They have provided cheap credit to farmers. They discourage unproductiveborrowing.

b) They have reduced the importance of money lenders. More than 60% of creditneeds for agriculturists are now met by co-operative banks. Thus, co-operative

banks have protected the rural population from the clutches of money lenders.

c) Small and marginal formers are being assisted to increase the income.d) They have promoted saving and banking habits among the people, especially

the rural people. Instead of hoarding money, the rural people lend/deposit their


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savings in the co-operative or commercial banks.

e) They have undertaken several welfare activities. They have also taken steps toimprove the morals, polity and education.

Values

Co-operatives are based on the values of self help, self-responsibility, democracy,

equality and solidarity. In the tradition of their founders, co-operative members

believe in the ethical value of honesty, openness, social responsibility and earning for

others.

Functions

The following are the functions of central co-operative banks

a) They finance the primary credit societies.b) They accept deposits from the public.c) They provide remittance facilities.d) They grant credit to their customers on the security of first class securities,

gold etc.,

e) They act as balancing centers by shifting the excess funds of a surplusprimary society to the defect society.

f) They supervise, inspect and co-ordinate the activities of the primary co-operative societies.

There are now 360 district central co-operative banks in India. They lend about Rs.

14,000 crores annually. The most distressing feature of the functioning of central co-

operative banks is heavy and increasing over due loans.


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HISTORY OF THE KARIMNAGAR CO-OPERATIVE URBAN

BANK LTD.

The Karimnagar Co-operative Urban Bank Ltd. was organized and registered

during the tenure of Sri K.s Sharma (M.A, M.Sc, and IAS), District collector

Karimnagar who was the founder and president. The bank was registered with No

1123/TD of 16.12.1980, with a membership of 1950 at time of registration and with a

paid up capital of ` 4,78,295. The bank had started functioning from 7th may 1981.

Even since its inception of the bank, its membership has increased to 17,050. The

bank has started with the more deposits of ` 4.96 lakhs and the present deposits

position has been increased to ` 3,627.46 lakhs.

The bank has constructed its own building at a total cost of ` 11.79 lakhs in the

land of municipality which was provided by the government. The bank is functioning

in its own building from 04.09.1991. The bank was opened a branch at Jagityal in

Karimnagar district in the year 06th November 1986 and proposals for opening

another three branches at Godavarikani, Metpally and Mankammathota of

Karimnagar town were also submitted to the Reserve Bank of India during the VIII

plan period and the permission is awaiting.

OBJECTIVES OF THE BANK

The objectives of the urban co-operative bank are as follows.

1. To encourage small scale investment.2. To encourage self employment schemes.3. To encourage small trading people in urban areas.4. To be in accordance with state government sponsored schemes.


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Membership

The membership of the Karimnagar co-operative bank limited is limited to the

persons residing in Karimnagar town like salaried employees, factory workers, small

traders, professionals etc., The area of operations of the bank extends to Karimnagar

municipal limits and villagers within radius of 10 km and all other Mandal head

quarters except nine mandals of old Siricilla talooq.

Share capital

The bank has two sources for its funds viz., own funds and borrowed funds.

Own funds consist of paid up share capital and accumulated profit or retained profit.

Various forms of resources created of different types of deposits accepted form

members and non members.

Normally, face value of shares issued by the bank is ` 10 and ` 5 for A class

and B class shares respectively. So that, poor people also become members of the

bank with the right to attend, participate and vote in general body meeting, special

body meeting, contest for elections.

Deposits

The bank has different types of deposits accepted from the members and non

members. The deposits are as follows.

a) Current depositsb) Saving deposits

c)

Fixed deposits


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d) Pavani depositse) Recurring depositsf) Maruthi cash certificatesThe bank has started the more deposits of` 4.96 lakhs and the present deposits

position has been increased to ` 3,627.46 lakhs.

INTEREST RATE FOR DEPOSITS

Types of deposits Interest rate

Saving deposits 3.50%

30 days to 45 days 4.00%



180 days to below 1 year 7.00%

1 year to below 2 years 8.00%

2 years to below 3 years 8.25%

Above 3 years 8.50%

A fixed deposit on senior citizens and womens gives 0.50% more interest.

Interest on loans

All types of loans 18.00%

Gold loans 14.00%


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The above table comprises the information of rates of interest being offered to

customers on various deposits in Urban co-operative bank, Karimnagar. The data

presented in the table shows that the rate of interest would be high as the periods of

deposits are longer.

BANK MEMBERS:

1) Sri Karra Rajashekar garu President2) Sri MD. Samiyoddin garu Wise president3) Sri E. Laxman garu Director4) Smt. Varala Jyothi garu Director5) Sri Dhesha vedadri garu Director6) Sri Anarasu kumar Director7) Sri K. Ravi garu Director8) Sri Sarilla Prasad garu Director9) Sri Vazeer Ahmad garu Director

10)Sri Tatikonda Baskar garu Director11)Sri Basetti Kishan garu Director12)Sri C. Rajireddy garu Co-option member13)Sri K. Venkateswar garu Co-option member14)Sri GT. Venkatreddy garu CEO


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15)Sri CH. Mutyam rao garu (BA,LLB) Senior advocate16) Sri E. Rajeswar rao garu (CA) Chartered accountant17)Sri Kola Annareddy garu (BE) Valuation engineer18) Sri S. Baravi Sharma garu (BE. Civil) Valuation engineer19) Sri T. Kanakachari Gold checker and

Accountants 02

Assistant accountants 0

Cashiers 03

Counter clerks 09

Typists 01

Attenders 04

Watchmen 02

Security guards 01

Call boy 01


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TABLE NO. 1

GOLD LOAN

YEAR LOAN GIVEN PERCENTAGE OFLOAN GIVEN

2007-08 16640444 11.50

2008-09 12243908 8.46

2009-10 17777126 12.29

2010-11 32554311 22.50

2011-12 65438674 45.24

TOTAL 144654463 100.00

INTERPRETATION:

From the above analysis, it is clear that in 2007-08, the gold loan given was Rs.

16640444. The value decreased to 12243908. After 2008-09, the gold loan issued was

increased year by year. In the 2009-10, the value is 17777126. It increased upto

65438674 in the year 2011-12.

16640444

12243908

17777126

32554311

65438674

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

2007-08 2008-09 2009-10 2010-11 2011-12

LOANG

IVEN

YEAR

GOLD LOAN


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TABLE NO. 2

PERSONAL LOAN


2007-08 4303735.20 24.23

2008-09 4287513.20 24.14

2009-10 - -

2010-11 4586070 25.82

2011-12 4586070 25.82

TOTAL 17763388 100.00

INTERPRETATION:

From the above table, we can know that the personal loan given in the year 2007-08 is

4303735.2. it decreased to 4287513.2 in the year 2008-09. In the year 2009-10,

personal loan was not issued. After that in the year 2010-11 and 2011-12, the personal

loan issued was 4586070.

4303735.2 4287513.2

0

4586070 4586070

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

5000000

2007-08 2008-09 2009-10 2010-11 2011-12

LOANGIV

EN

YEAR

PERSONAL LOAN


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TABLE NO. 3

HOUSE MORTGAGE LOAN


2007-08 158435691 18.89

2008-09 202241576 24.11

2009-10 222299769 26.50

2010-11 157892685 18.82

2011-12 97940646 11.68

TOTAL 838810367 100.00

INTERPRETATION:

From the above analysis, house mortgage loan from the years 2007-08 to 2011-12 is

obtained. In the 2007-08, the house mortgage loan issued was 158435691. In the year

2008-09, the loan was increased to 202241576 and to 222299769 in the year 2009-10.

After the year 2009-10, the amount of the loan given was decreased to 157892685 and

further decreased to 97940646 in the year 2011-12.

158435691

202241576

222299769

157892685

97940646

0

50000000

100000000

150000000

200000000

250000000

2007-08 2008-09 2009-10 2010-11 2011-12

LOANGIVEN

YEAR

HOUSE MORTGAGE LOAN


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TABLE NO. 4

NORMAL LOAN AGAINST DEPOSITS


2007-08 134729 0.19

2008-09 15728241 22.28

2009-10 18092555 25.63

2010-11 19142597 27.12

2011-12 17496863 24.78

TOTAL 70594985 100.00

INTERPRETATION:

By analyzing the above data, it is clear that the amount of normal loan given against

deposits was 134729 in the year 2007-08. The value is in fluctuating trend during the

study period. The amount of loan given was 15728241 in the year 2008-09. It incrased

to 18092555 in the 2009-10 and to 19142597 in the year 2010-11. In the year 2011-

12, the amount of the loan issued was decreased to 17496863.

134729

15728241

1809255519142597

17496863

0

5000000

10000000

15000000

20000000

25000000

2007-08 2008-09 2009-10 2010-11 2011-12

LOANGIVEN

YEAR

NORMAL LOAN AGAINST DEPOSITS


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TABLE NO. 5

STAFF LOAN

YEAR LOAN GIVENPERCENTAGE OF

LOAN GIVEN

2007-08 4513167 23.42

2008-09 3558924 18.47

2009-10 3025429 15.70

2010-11 4237967 22.00

2011-12 3931561 20.41

TOTAL 19267048 100.00

INTERPRETATION:

By analyzing the above graph, it is clear that the staff loan was in fluctuating trend

during the study period. In the year 2007-08, the amount is 4513167. It decreased to

3558924 in the year 2008-09 and to 3025429 in the year 2009-10. In the year 2010-

11, the amount of loan increased to 4237967 and decreased to 3131561 in the year

2011-12.

4513167

3558924

3025429

42379673931561

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

5000000

2007-08 2008-09 2009-10 2010-11 2011-12

LOANGIVEN

YEAR

STAFF LOAN


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TABLE NO. 6

SELF EMPLOYMENT LOAN


2007-08 371186 8.84

2008-09 578367 13.77

2009-10 918172 21.86

2010-11 1165260 27.75

2011-12 1166741 27.78

TOTAL 4199726 100.00

INTERPRETATION:

From the above table and graph, it is clear that the amount of self employment loan is

in increasing trend up to the year 2010-11. In the year 2007-08, the loan is 371186.

371186

578367

918172

1165260 1166741

0

200000

400000

600000

800000

1000000

1200000

1400000

2007-08 2008-09 2009-10 2010-11 2011-12

LOVANGIVEN

YEAR

SELF EMPLOYMENT LOAN


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TABLE NO. 7

VEHICLE LOAN


2007-08 1860084 15.03

2008-09 2236731 18.07

2009-10 2536133 20.49

2010-11 2619681 21.17

2011-12 3122650 25.23

TOTAL 12375279 100.00

INTERPRETATION:

From the above table, it is clear that the amount of vehicle loan issued by the bank is

increasing year by year during the study period i.e., from 2007-08 to 2011-12. The

amount is 1860084 in the year 2007-08 the value increased to 2236731 in the year

2008-09. In the year 2009-10, the amount of loans was increased to 2536133 and

further to 2619681 in the year 2010-11. In the year 2011-12, the amount of vehicle

loan issued was 3122650.

1860084

2236731

2536133 2619681

3122650

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

2007-08 2008-09 2009-10 2010-11 2011-12

LOANGIVEN

YEAR

VEHICLE LOAN


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TABLE NO. 8

KISAN VIKAS PATRAM


2007-08 2968980 22.00

2008-09 2857401 21.17

2009-10 3355322 24.86

2010-11 2576326 19.09

2011-12 1738192 12.88

TOTAL 13496221 100.00

INTERPRETATION:

From the above table, it is clear that amount of Kisan vikas patram loan issued was

2968980 in the year 2007-08. In the year 2008-09 was 2857401. In the year 2009-10,

the value increased to 3355322. After that the value decreased to 2576326 in the year

2010-11 and

loans and deposits

Documents