A Detailed Study Report on the Procedure of

Disbursing Commercial Loans and Its Related Aspects

With Special Reference To

Submitted To-

Dr. (Prof.) Chandana Goswami

Department of Business Administration

Tezpur University

Submitted By-

Suparna Neog (BAM16006)

Saurav Kumar Choudhury (BAM16015)

Suprakash Kar (BAM16016)

Chandan Kumar Das (BAM16032)

Vandana Dutta (BAM16039)

PREFACE

This report attempts to bring under one roof the entire work and dedication

put by our group in the completion of the project work on “Procedure of Disbursement of Commercial Loans by Allahabad Bank and its related aspects.”

We have expressed our experiences in our own simple way. We hope all the

readers of this report find it useful and informative and it will be worth reading. All

constructive feedback is cordially invited.

1

ACKNOWLEDGEMENT

Every project big or small is successful largely due to the effort of a number

of wonderful people who have always given their valuable advice or lent a helping

hand. We sincerely appreciate and thank for the inspiration, support and guidance

of all those people who have been instrumental in completing and making this

report a success.

At this juncture we feel deeply honored in expressing our sincere thanks to

Mr. Pankaj Neeraj, Senior Manager, Allahabad Bank, Tezpur Branch for

making the resources available at right time and providing valuable insights

leading to the successful completion of our project.

We the students of Department of Business Administration are extremely

grateful to Dr. (Prof.) Chandana Goswami Madam for the confidence bestowed

in us and providing us the opportunity to learn and understand the matter well.

Last but not the least we place a deep sense of gratitude to all our friends

who have been constant source of inspiration during the preparation of this Project

Report.

-Regards

Suparna Neog

Saurav Kumar Choudhury

Suprakash Kar

Chandan Kumar Das

Vandana Dutta

2

CONTENTS

TOPIC PAGE NO.

PREFACE 1

ACKNOWLEDGEMENT 2

CONTENTS 3-4

LIST OF TABLES 5

LIST OF FIGURES 5

Introduction 6 – 8

Allahabad Bank : Its Profile 9

Commercial Loan 10 – 12

Commercial Vehicle Finance Scheme 13 – 16

Trade Loan 17 – 19

Property Loan 20 – 23

Processing Fees & Repayment Fees 24

Documentation 25 – 26

Recovery of overdue loan 27

Disbursement of loan 28 – 29

Findings of the study 30

3

TOPIC PAGE NO.

Conclusion 31

Reference 32

Questionnaire 33 – 36

4

LIST OF TABLE

SL. Table Page No.

No.

1

Rate of interest of AB Commercial Vehicle Finance

14

Scheme

2 Rate of interest of AB Fleet Finance Scheme 16

3 Rate of interest of Trade Loan 19

4

Processing Fees & Prepayment Fees for Commercial

24

Loan

5 Documents to be submitted to the bank 25 – 26

LIST OF FIGURE

SL. Figure Page No.

No.

1 Functions of Banks 7

5

INTRODUCTION

Accounting for trillions in asset worldwide, the banking system is a crucial

component of the global economy. Banks are one part of the world of financial

institutions, standing alongside investment banks, insurance companies, finance

companies, investment managers & other companies that profit from the creation

and flow of money. As financial intermediaries, banks stand between depositors

who supply capital and borrowers who demand capital.

The Indian Banking Sector is broadly classified into Scheduled Bank and

Non-Scheduled banks. The Scheduled banks are those included under the 2nd

Schedule of the Reserve Bank of India Act, 1934. The Scheduled Banks are further

classified into : Nationalized Bank ; State Bank of India and its associates ;

Regional Rural Banks (RRBs) ; Foreign Banks ; and other Indian private sector

banks. The term commercial bank refers to both Scheduled and Non-Scheduled

commercial banks regulated under The Banking Regulation Act, 1949.

Types of Bank:

Savings Bank: These banks function with the intention to culminate savings

habits among people, especially those who belong to low income groups or those

who are salaried.

Commercial Bank: these banks functions to help the entrepreneurs and

businesses.

Cooperative Bank: these banks are controlled, owned, managed and operated by

cooperative society and came into existence under the Cooperative Societies Act,

1912.

6

Investment Bank: these are financial institutions that provide financial and

advisory assistance to their customers.

Specialized Bank: these banks provide unique services to their customers which

include Foreign exchange Banks, Development Bank, Export Bank, etc.

Central Bank: the central bank is banker’s bank in a country. It regulates the

monetary policy of the country. In India Reserve Bank Of India is the Central

Bank.

Functions of Banks:

Figure 1 : Functions of Banks

7

Loan and its Types:

In Finance a loan is the lending of money from one individual, or business

organization or entity to another individual, organization or entity. A loan is a debt

provided by an entity to another entity at an interest rate.

A bank loan is a fixed amount for a fixed term with regular fixed

repayments. A bank loan can be further sub-divided into:

Secured Loan (Example: - Home loan, vehicle loan, etc.)

Unsecured Loan (Example: - Credit card facility, personal loan, etc.)

Demand Loan (Example :- Overdraft)

Subsidized Loan (Example :- Subsidized Education Loan)

Concessional Loan (Example :- The Chinese government announced a

grant and soft loan package totaling US$23 million to support Ethiopian

development activities.)

Objective of the study:

The project has been undertaken to study the procedure of disbursing commercial

loan of Allahabad Bank, Tezpur Branch.

8

ALLAHABAD BANK: IT’S PROFILE

Allahabad Bank is a nationalized bank with its headquarters in Kolkata,

India. It is the oldest joint stock bank in India. It was founded in the year 1865 in

Allahabad. On 24 April 2014, the bank entered into its 150th year of establishment.

As of 31 March 2015, Allahabad Bank had over 3,071 branches across India.

The bank did a total business of INR 358,352 crore during the FY 2015-16. The

bank's market capitalization in March 2016 was INR 6178.32 crore and it

ranked 1,834 on the list.

VISION AND MISSION STATEMENT:

VISION: To put bank on a higher growth path by building a strong customer-base

through Talent Management, induction of State-of-the-art Technology and through

Structural Re-organization.

MISSION: To ensure anywhere and anytime banking for the customer with latest

state-of-the-art technology and by developing effective customer centric

relationship and to emerge as a world-class service provider through efficient

utilization of Human Resources and product innovation.

Employee:

As on 31 March 2016, the bank had 24,557 employees, out of which around

15% were women. Out of the total employees, 51% were officers, 30% were clerks

and remaining 19% were subordinate staff.

Allahabad Bank provides various loans and advances, but with our limited

scope, time and resources we will only focus on the types of commercial loan the

bank offers to its customers.

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Forbes Global 2000

COMMERCIAL LOAN

A commercial loan is a debt-based funding arrangement between a business

and a financial institution, typically used to fund major capital expenditures and/or

cover operational costs that the company may otherwise be unable to afford. Most

of the commercial loans are secured.

Expensive upfront costs and regulatory hurdles often prevent small

businesses from having direct access to debt and equity markets for financing. So,

smaller businesses must rely on other lending products, such as a line of credit,

unsecured loans or term loans.

Types of Commercial Loan

Cash Credit Facility :

Cash Credit Facility are loans granted in the form of overdrafts on the

security of stock in trade or process or raw materials. Cash credit facilities are

usually secured by pledging current assets of the organization like inventory or

receivables. Cash credit limits are based on drawing power which is arrived at after

deduction of margin fixed by the bank over the stocks. It is ensured that the

balance outstanding doesn’t exceed the drawing power. Cash credit facility is ideal

for financing working capital.

Accounts Receivable Loan :

An Accounts receivable loan allows us to pay monthly operating expenses

while waiting for payments from customers. This type of loan is based on having

credit worthy customers.

10

Term Loan :

Term loans provide a set amount of capital for a particular need. These loans

are funded all at once and then paid back over a specified length of time, generally

5 to 15 years. Term loans are secured with cash, inventory, equipment, securities or

real estate.

Equipment and Vehicle Loan :

These loans are provide for purchase of computer, heavy equipment, new or

used car, van, truck or other machinery for commercial use. Repayment terms are

dependent upon type and age of collateral.

Real Estate Loan :

Financing is for purchase, refinance or construction of office buildings,

apartments, retail buildings, industrial buildings, medical/dental offices or

warehouses. Collateral is usually the property acquired or refinanced.

Land and Subdivision Development

This type of loan allows us to purchase a lot to build on or buy land to

subdivide. Subdivision loans usually allow up to 18 months to subdivide, improve

and begin selling. Lot loans usually allow up to 5 years.

Letter of Credit :

A Letter of Credit is a type of credit facility wherein the bank guarantees

that the seller will receive payment on certain conditions. In the event that the

buyer vis unable to make payment on the purchase, the bank will cover the

outstanding amount. Letters of Credit are often used by import/export business,

11

contractors and travel agencies to serve as an assurance of payment. Documentary

letters of credit are usually for less than six months. A stand-by letter of credit may

be renewed annually.

Types of commercial loan rendered by Allahabad Bank

A variety of business loans are available to suit the requirements of various

types of requirements of the divergent business units. Allahabad Bank believes that

for any business unit to succeed the availability of funds throughout its life cycle is

of paramount importance and hence Allahabad Bank offers a wide range of

services in loan segment to meet the banking requirements of its business clients.

However the limit of the loans to be provided are decided keeping a view the

need of the organization / proprietor, value of security offered, credit score of the

customer, previous relationship with the bank and other alike factors.

The various kinds of business advances under the roof of Allahabad Bank

include the following:-

Commercial Vehicle Finance Scheme

Trade Loan

Property Loan

12

COMMERCIAL VEHICLE FINANCE SCHEME`

The Commercial Vehicle Finance Scheme of Allahabad Bank is further

subdivided into:-

AB Commercial Vehicle Finance Scheme

AB Fleet Finance Scheme

AB Commercial Vehicle Finance Scheme

Eligibility Criteria:

All individual transport operators/firms/companies/association of persons engaged

in transportation business.

Minimum Age :

Individuals 21-65 years.

Partnership Firms, Companies & Associations of persons should have in

existence for at least 2 years.

Quantum of Finance :

Maximum INR 200 lakhs.

Margin :

For loans up to INR 5 lakhs – 10% of the Project Cost.

For loans above INR 5 lakhs – 20% of the Project Cost.

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Working Capital :

25% minimum.

Moratorium Period :

Up to 3 months

Repayment Period :

Five years including moratorium period. (7 years in case of heavy

commercial vehicles.)

Security :

Primary: Hypothecation of vehicles.

Collateral: Suitable collateral security.

Insurance :

Comprehensive insurance of the vehicles with Bank’s clause at the borrowers

cost till pendency of the loan.

Rate of interest :

Loan Amount Micro Enterprise Small Enterprise

Up to Rs.0.50 Lac 9.55% 9.55%+0.50%

Above Rs.0.50 Lac to 9.55%+1.00% 9.55%+1.50%

Rs.2Lac

Above Rs.2 Lac to 9.55%+1.50% 9.55%+2.00%

Rs.10Lac

Above Rs.10.00 Lac Rate of Interest is linked to Risk rating of the borrower

Table 1 : Rate of interest of AB Commercial Vehicle Finance Scheme

14

AB Fleet Finance Scheme

Eligibility Criteria:

Surface Transport Operators owning 10 vehicles and having 3 years experience in

the line of activity.

Minimum Age:

Individuals – 18 to 60 years.

Partnership Firms, Companies & Associations of persons should have in

existence for at least 3 years.

Quantum of Finance:

Minimum above Rs 200 lacs, Maximum Rs 500 lacs

Purpose:

Financing Trucks, Tankers, Trailers, Luxury Busses etc..

Margin:

Term Loan For Chassis 20% of the cost.

Body Building – 30% of the cost.

Road Tax & Insurance – 10% of the cost.

Working Capital:

25% minimum.

15

Moratorium Period:

Up to 3 months

Repayment Period:

Maximum 7 years.

Security:

Primary: Hypothecation of vehicles.

Collateral: varies from case to case and in some cases fully waived.

Insurance:

Comprehensive insurance of the vehicles with Bank’s clause at the borrowers

cost till pendency of the loan.

Rate of interest :

Loan Amount Micro Enterprise Small Enterprise

Up to Rs.0.50 Lac 9.55% 9.55%+0.50%

Above Rs.0.50 Lac to

9.55%+1.00% 9.55%+1.50%

Rs.2Lac

Above Rs.2 Lac to

9.55%+1.50% 9.55%+2.00%

Rs.10Lac

Above Rs.10.00 Lac Rate of Interest is linked to Risk rating of the borrower

Table 2 : Rate of interest of AB Fleet Finance Scheme

16

TRADE LOAN

Target Group:

All Traders who are individuals, firms, companies, co-operative societies dealing

in any lawful trading activity i.e. trading in goods & services, which is neither

restricted nor prohibited by RBI/Govt.

Business concerns/agencies providing services such as Xeroxing, dry cleaning,

licenses to deal in petroleum products/LPG, auto service centers, ISD/STD PCO

Booths etc. are also eligible.

Eligibility:

Traders/ Business concerns having Registration/ License as applicable under local

laws (i.e. Shops & Establishments Act)/ appropriate authorities.

The proponent should preferably be engaged in the line of business for at least

one complete financial year for which Income Tax Returns have been submitted

along with Statement of Financial Results duly certified by a firm of Chartered

Accountants acceptable to the sanctioning authority. The unit should be a profit

making one.

Purpose:

Working Capital Requirements: To meet day to day working capital requirement

of the unit/establishment.

Term Loan: Acquiring/construction of premises, go-downs on ownership basis

required for running the business/for repair, furnishing, renovating existing

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business premises and/or purchase of furniture & fixtures and for purchase of

brand new equipments, business tools, computers, UPS etc.

Quantum of Loan:

Credit facilities will be sanctioned up to a limit of Rs. 5.00 Crore.

Security:

Primary

Exclusive hypothecation charge on stocks, book debts & other current assets and

exclusive hypothecation charge on all fixed assets such as, equipments, business

tools, computers, furniture & fixtures etc. of the unit. In case of loan sanctioned

for acquiring/ construction of premises on ownership basis, the property should

be mortgaged in favour of Bank as per Bank’s manual of mortgages.

Collateral

For existing units :

Collateral security in the shape of NSC’s, LIP (Surrender Value) or any other

tangible security with realizable value at least equivalent to 75% of the total

exposure.

For New units:

Collateral security in the shape of NSC’s, LIP (Surrender Value) or any other

tangible security with realizable value at least equivalent to 100 % of the total

exposure.

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Guarantee:

In case of Partnership firms, personal guarantee of all the partners.

For Private Limited companies, personal guarantee from all the promoter

directors required.

For Public Limited companies, personal guarantee of at least one of the promoter

directors and/or directors having major financial stake in the business required.

Margin:

25% on stocks

30% on receivables up to 90 days only

25% on term loan sanctioned for equipments, tools, furniture & fixture, computer

hard-wares etc.

50% on term loan sanctioned for acquiring/construction of premises, go-downs.

20% cash for Letter of Credit/ Bank Guarantee.

Tenure of Repayment:

Depending upon the cash flows as well as effective life of the equipment, a

maximum of 84 months including moratorium.

Rate of interest:

Loan Amount Micro Enterprise Small Enterprise

Up to Rs.0.50 Lac 9.55% 9.55%+0.50%

Above Rs.0.50 Lac to 9.55%+.050% 9.55%+1.00%

Rs.2Lac

Above Rs.2 Lac to 9.55%+1.0% 9.55%+1.50%

Rs.10Lac

Above Rs.10.00 Lac Rate of Interest is linked to Risk rating of the borrower

Table 3: Rate of interest of Trade Loan

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PROPERTY LOAN

Target Group:

Individuals (singly or jointly) including salaried persons, professionals & self-

employed and agriculturist/ firms / company/ trust/ societies registered under

Society Act

The loan for trust and society will only be permitted for those activities which

are covered under trust / society deeds.

Loan to HUF is not considered.

Eligibility:

Income Criteria

Individual: Income should be minimum Rs.1.20 Lacs per annum.

Joint Borrower: While computing quantum of loan in case of joint borrowers,

income of all borrowers will be clubbed.

In case of firm/ Company, Net Cash generation (after adding back depreciation)

is considered as income for calculation of loan amount and considering repayment

capacity. However, the income will be taken as per audited balance sheet/ IT return

of last financial year.

In case of firm, personal income of proprietor/ partners and in case of company

personal income of Directors may be clubbed with the income of firm /Company if

the source of income is different.

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Age Criteria

Minimum 21 years & maximum 70 years at the time of sanction of loan.

In case of Firms/ Companies/ Society/ Trust, it should be minimum five years

old.

Nature of owned property Criteria

Un encumbered Residential or Commercial Property free from all litigation (i.e.

litigation with tenant or other occupant) in the name/s of borrower/s & situated at

good residential or business centre will be covered in the Scheme. Property should

be in the name of the proposed Borrower.

Loan will not be extended against property that have been developed /

constructed for the purpose of sale.

Loan will not be extended against Agricultural Property.

Loan will not be extended against Partition Deed.

Open Land under this scheme can also be accepted on the condition that Land is

identifiable, demarcated, situated in residential/ commercial area and easily

marketable.

Purpose:

Any Purpose for meeting business/ personal needs but not for speculative Purpose.

However, Loan / limit sanctioned to the companies / firms should be for existing

business purpose only.

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Loan Amount:

Minimum: Rs.5.00 Lac

Maximum: Rs 200.00* Lacs

For Salaried Persons: 36 times of monthly take home salary.

For others except agriculturist: 3 times of the net cash generation (after

adding back depreciation) as per audited Bal. Sheet/ I.T Return of last

Financial Year.

For Agriculturist: 3 times of the net annual income. The income will be

assessed on the basis of value of produce less standard cost of production

(as prescribed by NABARD/ DLCC from time to time) as per the

cropping pattern adopted by the agriculturist.

Repaying Capacity:

Net monthly Income/Take Home Salary (taking in to account all existing & new

deductions/EMI) should not be below 40% of the Gross Monthly Income/Salary.

Margin :

50% of the valuation of property in case of Residential & Commercial Building.

60% of the valuation of property in case of open land.

Primary Security:

Equitable Mortgage of Property against which loan is sanctioned.

Property to be mortgaged should be on first charge basis.

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Guarantee:

In case of credit facility in the name of firm/ company/ Trust/ society, personal

guarantee of proprietor/ individual

major partners/ promoter directors/ Trustee/office bearer or authorized signatory

to be obtained.

Repayment :

Maximum 108 Months (Equated Monthly Installment). Repayment

will start from next month of the date of disbursement.

Rate of interest:

9.55% (Marginal Cost Lending Rate) + 5.50%

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PROCESSING FEES & PRE-PAYMENT FEES

Scheme Processing Charges Prepayment Penalty

Up to Rs 25 lakhs 1.22%,

Minimum Rs 30705

Above Rs 25 lakhs 0.61%, 2.28% of Outstanding Balance only

7Property Loan Minimum Rs 30705

in case of takeover.

Above Rs 150 lakhs 0.31%,

Minimum Rs 92115

Rs 230 per lakh

Trade Loan Minimum Rs 2047

2.28% of Outstanding Balance only

in case of takeover

Maximum Rs 23029

Commercial

0.41% of loan 2.28% of Outstanding Balance only

Vehicle Finance

Minimum Rs 2047 in case of takeover

Scheme

Table 4: Processing Fees & Prepayment fees for commercial loan

24

DOCUMENTATION

TYPE OF CUSTOMERS

GENERAL

SPECIFIC DOCUMENTS

DOCUMENTS/KYC

ID PROOF BANK STATEMENTS, LAST 2

(PASSPORT, VOTER YEARS ITR’S, GUARANTOR

ID, DL, AADHAR AGREEMENT,

CARD), ADDRESS HYPOTHECATION/MORTGAGE

PROOF ( RATION AGREEMENT, PROOF OF

CARD, TELEPHONE BUSINESS EXISTENCE,

BILL, ELECTRICITY PROJECT REPORTS, CASH

INDIVIDUALS/PROPRIETORS BILL, LEASE FLOW REPORTS, ESTIMATED

AGREEMENT, TRADE PROFITABILITY REPORTS,

LICENSE), COPY OF PROJECTED INCOME ETC.

PAN CARD, ,

EDUCATIONAL

QUALIFICATION

CERTIFICATES, AGE

PROOF, ETC.

PROOF OF BUSINESS CASH FLOW REPORTS,

EXISTENCE ESTIMATED PROFITABILITY

REPORTS, PROJECTED

PROJECT REPORTS,

INCOME, DETAILS OF

TRADE LICENSE, EXISTING ASSETS AND THE

BUSINESS UNITS/ENTITIES PROJECTED BUSINESS WORKING CYCLE,

BALANCE SHEET,

Memorandum and Articles of

Association of the Company,

BANK STATEMENTS,

GUARANTOR AGREEMENT,

ITR’S, ETC. HYPOTHECATION/MORTGAGE

AGREEMENT, etc.

25

Copy of Ration Certified copy of

card/Passport / Voter Memorandum and Articles of

ID card of all the Association /Certificate of

promoters / directors / Incorporation,

SMSE/ SSI guarantors, Audited Financial statements

photograph of all the for the last three years, SSI

promoters / directors, registration certificate.

etc. Bio data and Net worth, etc.

Table 5: Documents to be submitted to the bank

26

RECOVERY OF OVERDUE LOANS

The bank disburses loans to its customers always with good faith and with

the expectation that the customer shall remain loyal to the bank and will not

default over the same. However many a times it is found that the customers do not

keep the faith intact and the loans turns into an Non Performing Asset (NPA). As

such bank has certain policies regarding the recovery of unpaid loans and NPAs.

This includes the following:-

At the first stage a demand notice is served to the customer for repayment

of the outstanding interest installments.

Secondly if the customer does not reply, the bank will serve a Legal

Notice to the customer.

Thirdly a total loan amount recall notice is sent to the customer.

After that the loan is declared as an NPA and appropriate steps are

undertaken for auctioning of the property kept as security under the

SARFAESI Act (Securitization and Reconstruction of Financial Assets

and Enforcement of Security Interest Act).

As a last step the bank also files a case with the Lok Adalat against

the willful defaulter.

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DISBURSEMENT OF LOAN

The procedure for disbursement of loan at Allahabad Bank is as follows:

1. Filled in Application Form: - The bank receives the filled in loan application

form along with all other necessary documents from the customer. The loan

application form contains certain fields for entering personal and property

details, loan amount required tenure for which the loan is required and most

importantly the purpose of the loan.

2. Scrutiny of documents and the Application form: - Once the bank has

received the application form with documents, it does a proper and through

scrutiny of all the papers and asks for a cheque regarding the processing fee from

the customer. The bank has also provisions for refunding of the processing fees if

the loan is rejected. The process of scrutiny of loan documents is done within

time frame of 5-7 days depending upon the loan amount seeded.

3. On the basis of the loan amount the application once scrutinized and found

appropriate is forwarded to the Credit Managers for further approvals and

completion of formalities who in turn assesses the various risk factors involved

on the loan.

4. Field Investigation: - The bank usually carries on a field verification of the

prospective buyers through undisclosed agents who provides a confidential report to

the Credit Manager regarding various parameters on which the visit is done.

5. Approval/Rejection: - The bank after completing all its formalities and

checks on the customer, it either approves or rejects the loan application. In case

of rejection, the applicant is informed with proper reasons for rejecting and the

processing fee is refunded as per bank policies.

28

6. Sanctioning: - Once the bank approves a loan of the customer, the amount of

loan is sanctioned in the name of the applicant which may vary form 75-90% of the

loan amount applied for depending upon bank policies. The bank issues a sanction

letter to the customer and the customer is asked to provide further documentation

for disbursement of the loan within the time frame provided and signing of the loan

agreement takes place at this stage.

7. Disbursement: - The bank will finally disburse the amount of loan to the

customer through cheque/ draft in the name of the applicant. The applicant is also

informed from time to time regarding any changes in the interest rates , EMI’s

etc with regards to the loan he/she has taken.

8. Post Disbursement Review: - The responsibility of the bank does not end with

the disbursement of the loan. Allahabad Bank has the policy of reviewing the

utilization of the loan amount by the customer quarterly through which it

determines whether the said amount has been utilized for the purpose mentioned in

the loan application.

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FINDINGS OF THE STUDY

Allahabad Bank being one of the topmost nationalized and commercial bank

in India with an asset size of Rs 235828.38 crores is serving to a large public size

in India with respect to Commercial Loan lending. Currently its total loan size

amounts to Rs 157707 crores as on March 2016 through its 6300 branches spread

across India.

Through the study of this project we came to know the entire process of

disbursement of commercial loans starting from the base till the end, its types and

all other related aspects.

The bank has a total of 3 types of commercial loans available under it

primarily. However it has many other forms of loans to suit the business

requirements of its clients and prospective borrowers. The bank is also taking

initiative in providing loans mainly to the small scale sector business units, small

business units, Small Scale Industries etc. It has also adopted certain women

friendly strategies to attract woman entrepreneurs like providing loans at an

concessional rates. However it also caters to large business houses for meeting

their short term liabilities and fund requirements.

With respect to Tezpur Branch of Allahabad Bank we found that currently it

does not have large base of commercial loan customers but it is trying to expand its

base at a large scale by attracting customers through implementation of new

marketing strategies of banking products, field visits and conducting survey of

customers requiring business loans. This Branch is mainly serving its local area,

small scale business houses and is being approached mainly by industries like

Commercial Dairy Units, Packaging Industries, Agri Business Units and

Readymade Food Packaging Units etc.

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CONCLUSION

Based on the study conducted at Tezpur Branch of Allahabad Bank with

respect to Commercial Loans we can conclude that presently the branch has a

limited number of offers in terms of commercial loans and it has also a limited

base of customers for Business Loans. The branch is currently categorized as a

Semi Urban Branch. However the bank’s other zonal branches and regional

branches are fully functioning in terms of disbursement of Business Loans.

We also came to know about the total process of disbursing a Commercial

Loan and all its related aspects and the various types of loans available under the

roof of Allahabad bank.

However the bank is seen to be taking lot of initiative in attracting

customers, helping them financially and provide expert support as and when

required to its nearby business units to either set up or expand its operations.

The report is hereby concluded assuming that it had tried to touch every

aspect for which the report was prepared.

31

REFERENCE

1. Mr. Pankaj Neeraj, Senior Manager, Allahabad Bank, Tezpur Branch

2. Allahabad Bank website – www.allahabadbank.in

3. www.allbankingsolutions.com

4. www.en.wikipedia.org/wiki/Allahabad_Bank

5. www.allbankonline.in

6. www.moneycontrol.com

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QUESTIONNAIRE

1. What are the different types of commercial loan ?

2. Who is the target group for different types of commercial loan ?

3. What is the income slab for different target groups ?

4. For how many years the proprietor should be engaged in the line of

business for applying commercial loan ?

5. What is the minimum and maximum quantum of loan for different types

of commercial loan and different target groups ?

6. What are the documents to be submitted by the customer to the bank on

the basis of which the bank can give a loan ?

33

7. What is the loan amount stated in your bank circular for which an

audit report is required ?

8. What kind of security and mortgage does the bank accept for giving a loan?

9. What is the loan to mortgage ratio ?

10. Who are the guarantor in the following cases :-

i) Individual

ii) Partnership Firm

iii) Co-operative society

iv) Private Ltd Company

v) Public Ltd Company

34

11. What is the tenure of repayment of different types of commercial loan?

12. What is the procedure of repayment of the loans ?

13. How much time is required for sanctioning of different types of commercial

loan ?

14. Please state in brief the process of commercial loan disbursing . 15. What is the current rate of interest at which the bank is sanctioning the loans?

16. What is the processing fees ?

35

17. Is there any pre-payment penalty ?

18. Does all the branch disburse commercial loan ? If so then what is the

maximum limit of loan a branch can disburse.

19. What steps are taken incase a loan becomes a Non Performing Asset ?

36