This is to attest that the summer internship undertaking submitted by Ms Rachna Singh Chandel. Roll No. KHR2011PGDM21F216 to ITM Business School. Kharghar in the partial fulfilment of the demand for the award of the Post Graduate Diploma in Business Management is a bonafide piece of work carried out by her under my direct and close supervising and counsel. The contents of this study. in full or in parts have non been submitted in any signifier to any other institute or university for any other grade or sheepskin or to any other individual.
I hereby declare that the undertaking study entitled “Credit Appraisal Process in Bank of Maharashtra” which is being submitted in partial fulfilment of demand for the award of the Post Graduate Diploma in Business Management is my original work and is carried out under the counsel and supervising of Mr. Suhas V. Vaishampayam. Faculty Guide. ITM Business school.
I further declare that I or any other individual has non antecedently submitted this undertaking study to any other institution/ university for any other degree/ sheepskin or to any other individual.
Topographic point: Kharghar. Navi Mumbai
Rachna Singh ChandelRecognition
I place on record and heartily acknowledge the timely suggestions and divine counsel offered by my module guide Mr. Suhas V. Vaishampayam. ITM Business School. Kharghar. in conveying this study to a successful completion.
I will stay extremely indebted to my Industry usher Mr. Narendra Jain. Chief Manager. Bank of Maharashtra. Katora Talab. Raipur to give me this chance to make my summer internship in the company. I owe this fantastic experience of corporate life to him.
I am thankful to Mr. Pradeep Hazari. Deputy Regional Manager. Bank of Maharashtra for all the treatments I had with him which made my head clear and acquire my ideas on the right path. Particular thanks to for his uninterrupted encouragement and priceless supervising of Ms. Laxmi Lakhwani. Credit Manager. Regional Office. Raipur and for rectifying me whenever I made errors. This undertaking would non hold been possible without her. I am thankful to Mr. D V Sonuley. Regional Manager. Bank of Maharashtra for widening all possible aid whenever I needed it.
I have to thank Mr. Mehra. Mr. Aseem Baani and Avani Rathod for all the aid and to hold made my term of office in Bank of Maharashtra a enjoyable experience. Last I would wish to show my sincere gratitude to all those individuals who have straight and indirectly contributed in completion of this undertaking.
Rachna Singh Chandel
Executive SummaryIt gives me great pleasance to show this undertaking study on “Credit Appraisal Process” at bank of Maharashtra. The undertaking was carried out from 10th May to 10th July 2012. The chief aim of the undertaking was to analyze the procedure by which Bankss appraise loans/advances. To cognize inside informations of the process by which Bankss take the determination of supplying a house with the funded or not funded finance asked by them. Firms need aid from the bank in signifier of funded or non funded installations to run into their long term medium term or short term demands. Business can non last without money and handiness of money being limited and wants being unlimited. And procurance of fund is one of the of import maps in commercial & amp ; non-commercial endeavors. Firms ask for working capital or hard currency recognition for short term demands and term loan for their medium and long term demands. To endorse them up during a trade they need missive of recognition or warrant from the bank. Though houses depend mostly on Bankss to run into their recognition demands. Bankss need to do certain that these houses are so in demand of these financess and whether or non they will be able to pay back.
Besides is it a profitable investing on portion of bank or whether there are opportunities that this investing may turn into a Non Performing Asset after some clip. In this undertaking I have tried to cover all the points that bank takes into consideration while measuring a proposal/project. It includes the methods. procedure and rules/conditions of assessment. The theory has been backed up by the instance surveies which give a proper thought as to what is really done in the assessment by looking at the ratios and assorted projections done by the bank to get at a determination. Bank’s work does non stop here it keeps on supervising the history even after supplying the progress to look any kind of hazard or trouble that may come in the close hereafter. This whole procedure is really cumbrous and logical and it takes a batch of hardwork and hazard on the portion of determination shapers i. e. the bank and its assorted sections that closely work to take the hard determination i. e. -To spring or non to give the loan? “Credit Appraisal is a procedure of measuring the recognition worthiness of loan appliers. The financess of depositor’s i. e. general populace are mobilized by agencies of such progress / investing. Thus it highly of import for the loaner bank to measure the hazard associated with recognition. thereby guarantee the security for the financess deposited by the depositors. ”
Aims of the Undertaking
* To analyze the recognition assessment methods.* To measure the suitableness of the company for expense of recognition. This would affect the undermentioned actions:* Calculation of recognition evaluation.* Use of recognition evaluation charts* Evaluation of direction hazard* Evaluation of fiscal hazard* Evaluation of market-industry hazard* Evaluation of the installation* Evaluation of conformity of countenance footings* To understand the commercial. fiscal & A ; proficient viability of the proposal proposed and it’s determination form
This is analytical research country where we analyses information with cause and its effects relationship. This analysis leads to the simple decisions of whether to impart money to the establishment for concern. Besides if the money is lend so there is world the norms are non ever perfect and hence it is indispensable to priorities rigorous parametric quantities and secondary parametric quantities.
Research Type- Analytical
Beginning of Data- Primary and Secondary
Sample Unit- Industries using for loan
Sample- Case surveies
Sample Technique- Allocation of Case Analysis
Tool used Financial Analysis-
Primary Datas:* Observation. Discussion with the director.* The company profile. one-year studies have been obtained from BOM
Secondary Datas:* Old countenance proposals* Reference books* Web sites* Bank Diaries
Restriction OF THE STUDY:
* As the recognition assessment is one of the important countries for any bank. some of the Technicalities are non revealed.
* Credit assessment system includes assorted types of item surveies for different countries of analysis. but due to clip restraint. our analysis was of limited countries merely.
Bank of MaharashtraBank of Maharashtra is a public sector bank in Maharashtra. which offers personal banking. hard currency direction. retail loans and other fiscal services. Their services include sedimentations. savings/current bank history. vehicle loans. personal loans. retail trade finance. planetary banking. loaning to precedence sector and little graduated table sector. foreign exchange and export finance. corporate loans and equipment loans. The Bank has one subordinate. viz. The Maharashtra Executor & A ; Trustee Company Pvt Ltd. which undertakes direction of public/ private trusts and administration/ executing of Will. They besides sponsored three Regional Rural Banks. viz. Aurangabad Jalna Gramin Bank. Thane Gramin Bank and Marathwada Gramin Bank with head office at Aurangabad. Thane and Nanded severally. Bank of Maharashtra was incorporated on September 16. 1935 and started their concern on February 8. 1936. In April 10. 1946. The Maharashtra Executor & A ; Trustee Company Pvt Ltd was incorporated as a entirely owned subordinate of the Bank. In July 1969. Bank of Maharashtra was nationalized along with 13 other Bankss. After nationalisation. the Bank expanded quickly.
In the twelvemonth 1998. the Bank attainted the independent position. which helped the Bank in supplying more and more services with simplified processs without intercession of Government. In the twelvemonth 2000. they incorporated Magic eMoney Ltd ( MeM ) a joint venture of Bank of Maharashtra. Dena Bank. NextStep Infotech P. Ltd. ( NSIPL ) and Magic Software Enterprises ( MSE ) Israel continued to set about departmental undertakings. The Bank acquired a interest of 9 % in Global Trade Finance Pvt Ltd. a non banking finance company promoted by the EXIM Bank. In January 2006. the Bank signed a MoU with Life Insurance Corporation of India. for distribution of their insurance merchandises. Besides. they launched a strategy of money transportation service for Non Resident Indians and other foreign history clients. utilizing the Western Union Money Transfer Services provided by Western Union Financial Services Inc. For this respect. the Bank has entered into understanding with Weizmann Forex Ltd. the primary agent of Western Union Financial Services Inc. In May 2006. they entered into tie up with United Insurance Company Ltd for distribution of their non-life insurance merchandises Products and Services|
* Savings Deposits
* Term Deposits
* Current DepositsLOANS: –
* Loans for Agriculturists
* Loans for Corporates-Funded and Non Funded Facilities
* Loans to Exporters
* Loans for Entrepreneurs
* Education Loan Scheme
* Personal Loans
* Vehicle Loan
* Consumer Loan
* Loan strategy for Individuals
* Loan strategy for Professionals and Self EmployedSERVICES: -|
* ATM Services|
* Credit Card|
* DEMAT Services- Bank of Maharashtra is a Depository Participant ( DP ) of CDSL since 1999.
Servicess rendered are for keeping / reassigning / pledging of securities such as portions / Debentures / Bonds / Commercial Papers/ UTI units / etc ( known as securities ) in electronic signifier ( Dematerialized signifier ) . |
* Bancassurance- With the committedness to customers’ convenience. the Bank has tied up with insurance companies so that clients can avail of insurance service at the subdivisions. We are the corporate agent of the Life Insurance Corporation of India for the distribution of their life insurance merchandises. In non-life sector. our Bank is the corporate agent of United Insurance company for the distribution of their non life insurance merchandises. Both our Insurance spouses offer a broad scope of insurance merchandises. which are available at our subdivisions as a consequence of our Banassuanace tie ups. |
* Distribution of Mutual Funds- Bank of Maharashtra is ever looking to add value to the relationship which clients have with us. For the convenience of our clients. we are seeking to supply a host of fiscal services under one roof. The Bank has tied up with Franklin Templeton common fund for distribution of their common fund merchandises through our subdivisions. We welcome you to our subdivision. the fiscal supermarket which offers banking every bit good as insurance with investing services at one halt. |
* Executors and Trustee Services|
* Mahabill Pay|
* RTGS/NEFT- The RTGS and NEFT installation has been made available for clients to reassign fund from one Bank to another Bank at all Branches of our Bank. The minimal sum for client minutess through RTGS is Rs. 2 Lakhs while there is no sum limitation for NEFT minutess. In RTGS both Customer and Inter-Bank minutess are permitted whereas in NEFT merely Customer minutess are permitted. |
* Capital Market Application ( ASBA ) – ASBA means “Application Supported by Blocked Amount” . enables investors to use for IPOs / FPOs and rights issues without doing a payment. Alternatively. the sum is blocked in investors’ ain history and merely an sum proportionate to the portions allotted goes out when allocation is finalized. It is a auxiliary procedure of using in initial public offers ( IPO ) . right issues and follow on public offers ( FPO ) made through book edifice path and co-exists with the current procedure of utilizing check as a manner of payment and submitting applications.
Bank is supplying this value added service free of costs for issues with book edifice at BSE. |
* MAHAeTRADE ( On line Share Trading Facility ) – Bank of Maharashtra in association with M/s Religare Securities Ltd. . M/s Munoth Capital Market Ltd. . M/s Enam Securities Direct Pvt Ltd. . brings frontward a fast. easy. transparent and hassle-free manner for puting / trade in portions in secondary capital market through National Stock Exchange and Bombay Stock Exchange. Investment in portions traded on the NSE and BSE can be made without holding to see your share-broker. All other associated hurdlings like tracking of colony rhythms. paying and having financess in nest eggs account. paying and having portions in Demat histories have been removed. Now from a distant location while on circuit. field day. vacation – through cyberspace an laptop / personal computing machine – you can besides merchandise in the stock market. You can hold entree to universe category research studies. perfectly free. on trading and investing from the Brokers’ sites|
* Mahabank Swasthya Yojna|
* E Payment Taxes|
The Bank has put in topographic point a loaning policy in conformance with the guidelines issued by RBI and besides the precedence sector loaning norms of the Government of India. It emphasizes on qualitative recognition growing and ensures conformity with regulative demands every bit good as the prudential exposure bounds.
Several stairss have been taken for decrease in the proposal processing clip at all degrees and for betterment in the quality of recognition. Some of them are as follows:
* Improvement in recognition assessment techniques.
* Stipulating proposal processing and timing norms.
* Credit selling at field degree and meeting bing and possible clients from Head Office.
* Creating consciousness of recognition disposal and growing.
* 5 Mid-Corporate Branchs have been opened to hike mid- corporate recognition.
* -Training provided to recognition officers to upgrade their recognition assessment & A ; selling accomplishments
* Customers’ meet & A ; exporters’ run into were organized at assorted topographic points with engagement of senior Executives from Head Office to hold direct interaction with the clients.
* Opening of Loan Syndication Cell at Mumbai to augment big progresss.
As a consequence of assorted stairss taken by the Bank. output on progresss has improved during the twelvemonth.
The Mid Corporate vertical which has been created last twelvemonth has resulted in nucleus recognition growing besides scattering of recognition hazard.Bank has been able to earn significant concern under Mid Corporate perpendicular with comparatively high output. Financing mid-corporate shall go on to be one of the thrust countries of the Bank.
Sectoral Deployment of Credit: –
While financing to assorted sections of the economic system. the Bank has endeavored to keep a diversified recognition portfolio. with a position to guaranting recognition scattering across sectors Industry wise recognition deployment as on 31. 03. 2012 is as under The Bank has continued its attempts to back up nucleus. fabrication and precedence sectors every bit good as substructure undertakings. which serve to drive economic growing.This focal point of the Bank will go on in future. in line with the national economic growing precedences.It has been the changeless enterprise of the Bank to ease just and sustainable economic development by timely and hassle-free handiness of recognition for productive intents to Small and Marginal Farmers. Micro & A ; Small Enterprises. Retail Traders. Professional & A ; Self Employed. Women Entrepreneurs and enterprisers from economically weaker subdivisions.
The Banking industry in India has a immense canvas of history. which covers the traditional banking patterns from the clip of Britons to the reforms period. nationalisation to denationalization of Bankss and now increasing Numberss of foreign Bankss in India. Therefore. Banking in India has been through a long journey. The Banking Industry was one time a simple and dependable concern that took sedimentations from investors at a lower involvement rate and loaned it out to borrowers at a higher rate. However deregulating and engineering led to a revolution in the Banking Industry that saw it transformed. Banks have become planetary industrial human dynamos that have created of all time more complex merchandises that use hazard and securitisation in theoretical accounts that is impossible for a regular individual to understand. Through engineering development. banking services have become available 24 hours a twenty-four hours. 365 yearss a hebdomad. through ATMs. at on-line bankings. and in electronically enabled exchanges where everything from stocks to currency hereafters contracts can be traded.
However. the cardinal facets of banking i. e. trust and assurance of the people on the establishment remains the same. The bulk of the Bankss are still successful in maintaining with the assurance of the stockholders every bit good as other stakeholders. However. with altering kineticss of banking industry a new sort of hazard exposure comes into image. In recent clip. we have witnessed that the universe economic system is go throughing through some intricate fortunes as bankruptcy of banking and fiscal establishments. debt crisis in major economic systems of the universe and euro zone crisis. The scenario has become really unsure doing recession in major economic systems like US and Europe. This poses some serious inquiries about the endurance. growing and keeping sustainable developement. However. amidst all this convulsion India’s Banking Industry has been amongst the few to keep resiliency. The pacing of developement for the banking industry has been singular over the past decennary. It is apparent from the higher gait of recognition enlargement. spread outing profitableness and productiveness similar to Bankss in developed markets. lower incidence of non-performing assets and concentrate on fiscal inclusion have contributed to doing Indian Banking Industry vibrant and strong. Indian Banks have begun to revise their growing attack and re-evaluate the chances on manus to maintain the economic system turn overing.
RecognitionRecognition is the proviso of resources ( such as allowing a loan ) by one party to another party where that 2nd party does non reimburse the first party instantly. thereby bring forthing a debt. and alternatively arranges either to refund or return those resources ( or stuff of equal value ) at a ulterior day of the month. The first party is called a creditor. besides known as a loaner. while the 2nd party is called a debitor. besides known as a borrower. Credit allows you to purchase goods or trade goods now. and pay for them subsequently. We use recognition to purchase things with an understanding to refund the loans over a period of clip. The most common manner to avail recognition is by the usage of recognition cards. Other recognition programs include personal loans. place loans. vehicle loans. pupil loans. little concern loans. trade. In banking footings. Credit is a legal contract where one party receives resource or wealth from another party and promises to refund him on a hereafter day of the month along with involvement. Bank as a Source of Meeting Credit Requirements:
While bank recognition is considered as a major beginning of run intoing the fiscal demands of the industry. the Bankss have to see the undermentioned factors before run intoing their demands A. What should be the sum of aid?
B. What should be the signifier in which aid may be extended? To obtain the bank recognition for run intoing the working capital demands. the company will be required to gauge the working capital demands and will be required to near the Bankss along with the necessary supporting informations. On the footing of the estimations submitted by the company. the bank may make up one’s mind the sum of aid which may be extended. after sing the border demands. This border is to supply the shock absorber against the decrease in the value of security. If the company fails to carry through its duties. the bank may be required to recognize the security for retrieving the dues.
Form of Aid:
After make up one’s minding the sum of overall aid to be extended to the company. the bank can pay out the sum in any of the undermentioned signifiers Non-Fund Based LendingFund Based Lending
Non-Fund Based LendingIn instance of Non-Fund Based Lending. the lending bank does non perpetrate any physical escape of financess. As such. the financess place of the loaning bank remains integral. The Non-Fund Based Lending can be made by the Bankss in two forms-
Borrowing and loaning of money had become a portion and package of commercial minutess. The loaner of course desires to safeguard his ain place and wants to guarantee that the money Lent was received back without fail. As a agency of such precaution he seeks from the loanee the warrant of another individual ( who was considered good for the sum in inquiry ) for the prompt refund of the debt in instance the loanee fails to refund.
Letter of Credit:
The non-fund based loaning in the signifier of missive of recognition is really on a regular basis found in the international trade. In instance the exporter and the importer are unknown to each other. Under these fortunes. exporter is worried about acquiring the payment from the importer and importer is worried as to whether he will acquire the goods or non. In this instance. the importer applies to his bank in his state to open a missive of recognition in favor of the exporter whereby the importer’s bank undertakes to pay the exporter or accept the measures or bill of exchanges drawn by the exporter on the exporter carry throughing the footings and conditions specified in the missive of recognition.
Fund Based LendingIn instance of Fund Based Lending. the loaning bank commits the physical escape of financess. As such. the financess place of the loaning bank gets affected. The Fund Based Lending can be made by the Bankss in the undermentioned forms- Loan: -In this instance. the full sum of aid is disbursed at one clip merely. either in hard currency or by transportation to the company’s history. It is a individual progress. The loan may be repaid in installments. the involvements will be charged on outstanding balance. Overdraft: – In this instance. the company is allowed to retreat in surplus of the balance standing in its Bank history. However. a fixed bound is stipulated by the Bank beyond which the company will non be able to overdraw the history. Legally. overdraft is a demand aid given by the bank i. e. bank can inquire for the refund at any point of clip. However in pattern. it is in the signifier of uninterrupted types of aid due to one-year reclamation of the bound. Interest is collectible on the existent sum drawn and is calculated on day-to-day merchandise footing.
-In pattern. the operations in hard currency recognition installation are similar to those of overdraft installation except the fact that the company need non hold a formal current history. Here besides a fixed bound is stipulated beyond which the company is non able to retreat the sum. Legally. hard currency recognition is a demand installation. but in pattern. it is on uninterrupted footing. The involvements is collectible on existent sum drawn and is calculated on day-to-day merchandise footing.
Bills purchased or discounted:
-This signifier of aid is relatively of recent beginning. This installation enables the company to acquire the immediate payment against the recognition measures raised by the company. The bank holds the measure as a security till the payment is made by the client. The full sum of measure is non paid to the company. The Company gets merely the present worth of the sum of measure. the difference between the face value of the measure and the sum of aid being in the signifier of price reduction charges. On adulthood. bank collects the full sum of measure from the client. While allowing this installation to the company. the bank necessarily satisfies itself about the recognition worthiness of the client. A fixed bound is stipulated in instance of the company. beyond which the measures are non purchased or discounted by the bank.
-To meet the working capital demands of the company. Bankss may allow the on the job capital term loans for a period of 3 to 7 old ages. collectible in annually or half annual installments.
-This type of aid may be considered by the bank to take attention of specific demands of the company when it receives some export order. Packing recognition is a installation given by the bank to enable the company to purchase the goods to be exported. If the company holds a confirmed export order placed by the abroad purchaser or a missive of recognition in its favor. it can near the bank for packing recognition installation.
Lending PolicyThe Lending Policy of the bank aims at supplying wide guidelines for managing new recognition proposals every bit good as recognition portfolio. to measure the hazard profile of the recognition portfolio so as to extenuate the hazard. effectual and efficient direction of the recognition portfolio of the bank so as to guarantee sensible return on progresss with equal safety of the financess. OBJECTIVES –
The chief aims of loaning policy are as follows-
* Due conformity of all regulative demands such as exposure norms. prudential norms. asset-liability direction guidelines. regulative and other statutory limitations. other related directeves/instructions issued by Government of India. RBI. bank’s board of managers and the top of direction.
* To guarantee planned loaning and healthy growing of loan portfolio and accomplish imparting marks as per the corporate programs. an optimum Cadmium ratio after run intoing statutory preemption and forestalling plus liability mismatches while maintaining the NPA degree to the lower limit and bettering the output on progresss. which is the chief driver of net income.
* To bring on betterment of systems and processs and deconcentrate determination doing guaranting expenditious decision-making and have in built flexibleness in operations.
* To hold a well balanced and diversified loan portfolio with proper pricing policies. dispersed recognition hazards covering assorted sectors of the economic system and different industries/sectors vis-a-vis market forces and competition.
* Particular accent on flow of recognition towards sections of precedence sector i. e. Agriculture. MSME. Retail trade. Export. Housing Finance to persons and other allied sectors.
* To enlarge client base through aggressive recognition selling and run into the diverse demands of clients through merchandise mix/development and invention.
* To better the non fund concern with a position to increase fee based income.
* To guarantee that sum hazard in loan assets is non allowed to increase by stabilising and leaching recognition hazard direction system.
* Seasonably and equal flow of recognition to run into the echt demands of bing and prospective borrower. to carry through socio-economic duties and besides to run into the echt recognition demands of the clients by guaranting quicker and motivate recognition determination.
* Grok the importance of fiscal sector reforms and attendant rapid alterations in the economic system. CREDIT APPRAISAL
Recognition Appraisal is a procedure to determine the hazards associated with the extension of the recognition installation. It is by and large carried by the fiscal establishments which are involved in supplying fiscal support to its clients. Credit hazard is a hazard related to non refund of the recognition obtained by the client of a bank. Therefore. it is necessary to measure the credibleness of the client in order to extenuate the recognition hazard. Factors like age. income. figure of dependants. nature of employment. continuity of employment. refund capacity. old loans. recognition cards. etc. are taken into history while measuring the recognition worthiness of a individual. This usually involves measuring the borrower’s payment history and set uping the quality and sustainability of his income. By and large the recognition installations are extended against the security know as collateral. But even though the loans are backed by the collateral. Bankss are usually interested in the existent loan sum to be repaid along with the involvement. Therefore. the customer’s hard currency flows are ascertained to guarantee the timely payment of chief and the involvement. Every bank or loaning establishment has its ain panel of functionaries for this intent.