Corporation Bank BBM Project

CORPORATION BANK
Chapter 1-Introduction
Origin of Bank Definition of Banking Vision of Banks in India Objectives of the Study History of Banking Functions of Banker Indian Banking Industry
B.B.M., ATNCC, Shimoga
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CORPORATION BANK
INTRODUCTION
ORIGIN OF BANK
Today Bank has become part and parcel of our life. Apart from their traditional business oriented functions, they have now come out with national responsibilities. Banks accelerate the economic growth of the country and steer the wheels of the country towards its goal of self reliance in all fields. It naturally arouses our interest in knowing more about the origin of bank. The first banks were probably the religious temples of the ancient world. It was probably established sometimes during the third millennium BC. Banks probably predated the invention of money. There are extant records of loans from the 18 th century BC in Babylon that were made by temple priests or monks to merchants. Since the banking activities were started in different countries, there is no unanimous view regarding the origin of the word Bank. The word Bank is said to have derived from the French word Banco or Bancus or Banc or Banque which means a bench.In fact the early Jews in Lombardly transacted their banking business by sitting on benches. However, Macleod in his book,Theory and Practice of Banking has expressed a different view. According to him the money changes were never called Benchieri in the Middle Ages. So, this derivation may be a mere conjecture. Another common-held view is that the word Bank might be originated from the German word Back which means a joint stock fund. In due course, it was Italianised into Banco, Frenchised into Bank and finally Anglicized into Bank. This view is most prevalent even today.
DEFINITION OF BANKING
The word bank is derived from the Italian word banca, Latin word bancus and French word banque, all meaning a table or bench where business was transactions took place. In Italy between 1200 and 1600 money changing business was done on benches in the streets of Florence, Rome, Venice and so on. The German word banck means a joint stock firm. Modern banks do reflect the character of a joint stock business.
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CORPORATION BANK A bank is an institution, which borrows, lends out money and creates credit. Banks are often described as factories of credit, manufacturers of money and the purveyors of credit. Normally a bank receives deposits from the public and supplies credit to manufacturers, businessmen, agriculturists, artisans and other productive agents in the economy. According to Kinley, A bank is an establishment which makes to individual such advances of money as may be required and safely made, and to which individuals entrust money when not required by them for use. In the words of Hart, A banker is one who in the ordinary course of his business, receives money which he repays by honoring cheques of persons from whom or on whose account he receives, it, his own and other peoples. The Indian banking system is financially stable and resilient to the shocks that may arise due to higher non-performing assets (NPAs) and the global economic crisis, according to a stress test done by the Reserve Bank of India (RBI).
VISION OF BANKS IN INDIA

The banking scenario in India has already gained all the momentum, with the domestic and international banks gathering pace. The focus of all banks in India has shifted their approach to 'cost', determined by revenue minus profit. This means that all the resources should be used efficiently to better the productivity and ensure a win-win situation. To survive in the long run, it is essential to focus on cost saving. Previously, banks focused shifted their approach to the 'profit' model, which meant that banks aimed at higher profit maximization.
OBJECTIVES OF THE STUDY

1. 2. To make study of Lending and Recovery Management in Corporation Bank To know the effective utilization of credit facilities provided by the bank.
3. To study the various corp loan facilities are available to customer. 4. To study the establishment, growth and progress of customer service provided by the Bank. B.B.M., ATNCC, Shimoga Page No. 3
CORPORATION BANK
5. To know the opinion of the customer regarding lending and recovery facilities provided by the bank.
HISTORY OF BANKING Banking developed earlier than coinage of money. Receipts came to be used for transfers not only to depositors but also to the third parties. In ancient Egypt, banking started with harvests being stored in the state warehouses. It was also the general method of payment of debts to other person including tax gatherers, priests and traders. Banking exists in India from time immemorial. The writings of Manu and Kautilya contained references to Banking. But modern banking is of recent origin which started in India only in the dawn of 19th century. Corporation Bank, being one of the oldest banks in India, is also an organization board on the tradition of Indian values of services to the community and is regarded as one of the well- run public sector Banks in the country. Corporation Bank is one of the leading public sector Banks in India, which is established in the year 1906.The bank was founded by a group of eminent citizen under the leadership of Late Khan Bahadur Haji Abdulla Haji Khasim Sahib Bahadur with the motto Sarve Jana Sukino Bhavanthu, which means prosperity to all with its strategic business focus, innovative spirit, product risk management system, infusion of technology, the bank has emerged as a premier Banking institution in the public sector. Corporation Bank has brought about a virtual distinction between personnel and human resource function by introducing 3T framework transactional, transformation activities and programs. Money is one of the much talked-about commodities. There are fables and fantasies connected with money. People will do almost anything for money, as much as money will do almost anything for people. Money is a circulating, captivating and motivating puzzle both for the poor and the rich. The universality, uniqueness and utility of money are such that its possession or dispossession can make people glad or sad, bad or mad.
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CORPORATION BANK Bank is a unique institution that creates money and acts as a financial intermediary at the same time. Banking is as old as civilization, says the World Bank encyclopedia. In the New Testament there are significant references to money changing activities done in temples of Jerusalem. In ancient Greece, around 2000 BC the temples of Ephesus, Delphi and Olympia served as depositories of peoples surplus funds and a center of money-lending transactions. Similar references are also found in the ancient history of Assyria. Phoenicia, Egypt and Rome. Vedic periods literature mentions about the money and banking activities in India too. Manu the great law-giver of India speaks of the earning of interest as the business of the vaishyas (a community).Banking in ancient Rome suffered oblivion after the fall of the mighty Roman Empire in 565 AD but had a new beginning with the revival of trade and commerce in the Middle Ages. Jews were known for money lending business during this period.Raising financial requirement of the monarchial governments was an added reason for the development of early banking activity. As Adam Smith observes, in Italy banks lent to the governments. Alfred Marshall in his Money, Credit and Commerce (1923), refers to the activities of private money changers who reduced many a metallic currency more or less exactly, to a common unit, accepted deposits and gave loans, both for interest. In India, the first Joint Stock Bank was the bank of Hindustan established in 1770.In 1806; the East India Company established three presidency banks (Calcutta, Bombay and Madras respectively).Till 1862 they had the right of note issue. In 1881 came the Oudh Commercial Bank as a purely Indian Joint Stock Bank, followed by the Punjab National Bank in 1894 and peoples Bank of India in 1901. These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India. It served as a governments bank till the arrival of a Central Bank with the name of the Reserve Bank of India (RBI) in 1935. RBI was nationalized in 1949. It has the monopoly of note issue. It controls scheduled Banks in India. Banking Acts in India were passed in 1946 and in 1949. The year 1969 was water shed in the banking history of India, 14 major commercial banks were nationlised on 19th July 1969.On April 15th, 1980, six more commercial banks in India including Corporation Bank were nationalized. The number of branches of commercial banks today has crossed 65,450.Since 1980 and particularly with 1991s new Economic policy under banking sector reforms, government lent force to the argument of
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CORPORATION BANK privatization of banks even foreign banks are increasingly appearing on Indian banking scene. A Bank is a commercial or state institution that provides financial services, including issuing money in various forms, receiving deposits of money, lending and processing transactions. A commercial bank accepts deposits from customers and in turn makes loans based on those deposits. Some banks (called Banks of issue) issue banknotes as legal tender. Many banks offer financial services to make additional profit. Currently in most jurisdictions commercial banks are regulated and require permission to operate. Operational authority is granted by bank regulatory authorities who provide rights to conduct the most fundamental banking services such as accepting deposits and making loans. A commercial bank is usually defined as an institution that both accepts deposits and makes loans; there are also financial institutions that provide selected banking services without meeting the legal definition of a bank. Banks have influenced economics and politics for centuries. The primary purpose of a bank was to provide loans to trading companies. Banks provide funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers. Commercial lending today is a very intense activity, with banks carefully analyzing the financial condition of its business clients to determine the level of risk in each loan transaction. Banking services have expanded to include services directed at individuals and risk in these mush smaller transactions is pooled. A bank generates a profit from the differential between what level of interest it pays for deposits and other sources of funds, and what level of interest it charges in its lending activities. This difference is referred to as the spread between the cost of funds and the loan interest rate. Historically, profitability from lending activities has been cyclic and dependent on the needs and strengths of loan customers. In recent history, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including service charges on array of deposit activities and ancillary services (international banking, foreign exchange,
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CORPORATION BANK insurance, investments, wire transfers, etc.).However lending activities still provide the bulk of a commercial banks income.
FUNCTIONS OF BANKER
Borrowing and lending are the two basic functions of a Bank. There are many other functions which a modern banker performs. All these functions are grouped under following heads: 1. Raising Funds 2. Lending Money 3. Discounting Bills 4. Agency services 5. Miscellaneous Services
1. Raising Funds
A Banker is a dealer in credit. The lending power of a banker depends largely on the amounts he can borrow by way of deposits. Bank deposits are three types: Fixed Deposits, Savings Deposits and Current Deposits The term Fixed Deposit (also known as Time Deposit in United States) means deposit repayable after the expiry of a certain period, which originally varies from 3 months to several years. The rate of interest on FD varies with the period for which money is deposited. Savings Bank Deposit account is suitable to those who want to deposit their small savings in a bank, which they need to borrow only occasionally, and not every day or many times a day. The interest allowed on SB deposits is certainly lower than that allowed on FD accounts. In case of Current Deposit Account, a customer is allowed to deposit or withdraw moneys as and when he likes; he may do so several times a day, if he so chooses. No interest is allowed by First Class Banks. There are various ways in which bank deposits arise. Customers may deposit actual cash or they may deposit rights to receive cash; these rights to receive cash may be in the form of a cheque, a bill, a promissory note owing to
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CORPORATION BANK them etc. However, all the banks insist that while opening a new account, the first deposit must be in the form of cash.
2. Lending of Money
The business of lending is usually done in the form of loans and advances, overdrafts, cash credit and discounting of bills of exchange. It is this function of a bankers activities which is the largest contributor to the banks profit since interest earned is the major source of income to any Banker.
3. Discounting of Bills
In this form, Banker advances money. The personal security of the drawer and acceptor is the only security in case of Clean Bill. If the bill happens to be documentary one, it is followed either by a railway receipt, bills of lading or a Wharfingers Certificate etc., which means that the security of the drawer and the acceptor is further strengthened by the goods which means are laying with the railway, shop or wharfinger. This type of advance is becoming more and more popular.
4. Agency Services
Banker performs the following services as an agent of customer. a. Collection and payment of Cheques, Bills and promissory Notes b. Execution of standing orders c. Collection of Dividend and Interest d. Purchase and sales of Securities e. Remittance of funds through Mail Transfers, Telegraphic Transfers and Bank Drafts.
5. Miscellaneous Services
The miscellaneous services of Banker are as follows. a. Letter of Credit The banker issues personal as well as commercial letter of credit. This enables the customer to make profit by the superior credit of the bank. b. Foreign Exchange B.B.M., ATNCC, Shimoga Page No. 8
CORPORATION BANK The commercial community receives facilities for its dealings with foreign nationals a fact which is also profitable business for a banker. In assisting foreign trade by discounting foreign Bills of Exchange, a bank has sometimes to arrange for Transport, Insurance and Warehousing of goods. c. Safe Custody Services The Bank provides safety to valuables of securities against theft and fire. Normally there are two methods of ensuring safety of customers valuables: (i) Bank accepts the valuables, e.g. documents of title, jewellery etc., for safe custody (ii) Bank provides safe deposit vaults (Lockers) on hire to the customers.
INDIAN BANKING INDUSTRY

The brief structure of Indian banking is as below. 1. The Central Bank Central bank is an important financial institution in every sovereign independent state in modern times. It is the apex of economys banking system. 2. Establishment The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The central Office of the Reserve Bank has been in Mumbai since inception. The Central Office is where the governor sits and is where policies are formulated. Through originally privately owned, since nationalization in 1949; the Reserve Bank is fully owned by the Government of India.
3. Preamble
The preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as: To regulate the issue of Bank Notes and keeping of reserve with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.
Central Board
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CORPORATION BANK The Reserve Banks affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act. Appointed/ nominated for a period of four years Constitution:
Official Directors
Full-time : Governor and not more than four Deputy Governors
Non-Official Directors
Nominated by Government: ten Directors from various fields and one government Official Others: four Directors one each from local boards
The Indian banking Industry can be categorized into two as scheduled and nonscheduled banks. Scheduled banks constitute of commercial banks and co-operative banks .There is about 67000 branches of scheduled banks spread across India. During the first phase of financial reforms, there was a nationalization of 14 major banks in 1969 and 1980 another 6 banks. This crucial step led to a shift from class banking to mass banking. Since then the growth of the banking industry in India has been a continuous process. As far as the present scenario is concerned, the banking industry in India is in a transitional phase. The Public Sector Banks (PSBs), which are the foundation of the Indian Banking system account for more than 78 percent of total banking industry assets. Unfortunately they are burdened with excessive Non Performing Assets (NPAs), massive manpower and lack of modern technology. On the other hand the private sector Banks are witnessing immense progress. They are leaders in internet banking, mobile banking. Phone banking, ATMs. On the other hand the Public Sector Banks are still facing the problem of unhappy employees. There has been a decrease of 20 percent in the employee strength of the private sector in the wake of the Voluntary Retirement Schemes (VRS).As far foreign banks are concerned they like to succeed in India.
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CORPORATION BANK Indusland Bank was the first private bank to be set up in India. IDBI, ING Vyasa Bank, SBI Commercial and International Bank Ltd, Dhanalakshmi Bank Ltd, Karur Vysya Bank Ltd, Bank of Rajasthan Ltd etc, are some Private Sector Banks. Banks from the public sector include Punjab National bank, Vijaya Bank, UCO Bank, Allahabad Bank, Andhra Bank etc. ANZ Grind lays Bank, ABN-AMRO Bank, American Express Bank Ltd; Citibank etc are some foreign banks operating in India. The brief description of Banks in India is as below.
1. Commercial Banks
Commercial banks have been in existence for many decades. Commercial Banks mobilize savings in urban areas and make them available to large and small individual and trading units mainly for working Capital requirements. After 1969, Commercial Banks are broadly classified into nationalized public sector banks and private sector banks. The State Bank of India and its associate Banks along with another 20 banks are the public sector banks. The private sector banks include a small number of Indian Scheduled banks which have not been nationalized and branches of foreign banks operating in India commonly known as Foreign Exchange Banks. The Regional Rural Banks (RRB) came into existence since the middle of 1970s with the specific objective of providing credit and deposit facilities particularly to the small and marginal farmers, agricultural laborers and artisans and small entrepreneurs. 2. Public Sector Banks State Bank of India and its associate banks called the State Bank Group. Nationalized banks. Regional Rural banks
3. Private Sector Banks

Old Generation private banks Page No. 11
CORPORATION BANK New Generation banks Non Scheduled private banks Foreign banks Co-operative Banks
4. Co-operative Banks In India, co-operative Banks has assigned an important role in the development of vital areas such as agriculture, rural and small-scale industry, retail distribution; housing etc. The co-operative banking sector has been developed in the country to replace the village money lenders. They also promote savings of the farmers and meet their credit needs for cultivation. The co-operative banking sectors are not only in rural areas but now they have spread to urban areas also. Co-operative banks include the following. State co-operative banks Central co-operative banks Primary credit societies Land development banks Urban co-operative banks Primary agricultural development banks Primary land developments banks State land developments banks
Development banks/industrial financial institutions are as below. Industrial finance corporation of India(IFCI) Industrial development bank of India(IDBI) Industrial investment bank of India(IICI) State industries development bank of India(SIDBI) National bank for agricultural and rural development(NABARD) Export Import bank of India National housing bank(EXIM Bank) Page No. 12
CORPORATION BANK
5. Scheduled banks and non scheduled banks

Under the RBI Act, 1934, banks were classified as Scheduled banks and non scheduled banks. The scheduled banks are those which have are included in the schedule (second) of RBI Act, 1934. these banks have a paid up capital and reserves of an aggregate value of not less than Rs 5 lakhs and which satisfy RBI that their affairs are carried out in the interest of their depositors .Scheduled Banks comprise commercial banks and the co-operative banks, In terms of ownership, Commercial banks can be further grouped into nationalized banks, the State Bank of India and its group banks, Regional Rural Banks and private sector Banks (old, new, domestic and foreign). These banks have over 67000 branches spread across the country. Non-scheduled banks are those which have not been included in the second schedule of RBI Act, 1934, at present, there are three non-scheduled banks in India.
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CORPORATION BANK
Chapter 2-Company Profile

History of Corporation Bank Organisation Structure of Sagar Branch
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CORPORATION BANK
HISTORY OF CORPORATION BANK

Corporation bank is the oldest banks in India, was founded in 1906 in the Temple Town of Udupi, by a small group of philanthropists led by Khan Bahadur Haji Abdulla Haji Saheb Bahadur. The first branch of a modern bank established in the district was the Bank of Madras, one of the three presidency Banks, which set up its office in Mangalore in 1868 largely to cater to the business needs of a few British firms dealing in export of plantation products. Its agent used to visit Udupi once a fortnight or so, to do banking. Money remittance had to be made only through postal medium during those days. To overcome these drawbacks and also to provide banking facilities for Udupi in particular and the district in general, a cosmopolitan group of philanthropists led by Haji Saheb made a bold venture to start this institution. The Canara Banking Corporation (Udupi) Ltd., as the institution was called then, started functioning as a Nidhi with a humble beginning. The initial capital was Rs.5, 000/- and at the end of the first day, its resource stood are 38 Rupees 13 Annas and 2 Pies. The setting up of the Canara Banking Corporation Ltd. seems to have given a fillip to co-operative Banking and also to regular banking elsewhere in the district. Between 1909 and 1917, six co-operative banks came into being and during the decade immediately after the First World War (1914-18) South Kanara gave birth to as many as eight banks. It is to the credit of this Bank that despite two world wars, economic depression and stiff competition, the Bank not only quite survived, but also made satisfactory progress. Having been started at Udupi, the Bank first branched out by opening a branch at Kundapur in 1923. The second branch of the Bank was opened in Mangalore at Car Street 1926. The Bank stepped into Kodagu District in 1934 by opening its seventh branch in Madikeri.In 1937, the Bank was included in the second schedule of Reserve Bank of India Act, 1934.In 1939, the Banks name changes from Canara Banking Corporation (Udupi) Ltd. To Canara Banking Corporation Ltd. The Bank graduated into a
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CORPORATION BANK Regional Bank in 1945 when the total number of its branches stood at 28.In the year 1961, it took over Bank of Citizens, Belgaum. In the same year, the Banks Administration Office shifted from Udupi to Mangalore. The second change in the name of the Bank occurred in 1972, from Canara Banking Corporation Ltd. To Corporation Bank Limited. The Bank was nationalized in 1980 along with 5 other private sector banks. After nationalization, the pace of growth of the Bank accelerated and it made allround progress. Started as a common mans bank, it changed with the times to meet the aspirations of the people but never swerved from its motto- Sarve Janah Sukhino Bhavantu meaning Prosperity for All. It endeavored and succeeded in striking a right balance between traditional values and innovative approach, personalized service and professional outlook and commercial considerations and public concern. One of the unique achievements of the Bank is that it has been paying dividend continuously for the last 98 years since its inception. Today, with the most modern technology-driven products and services and nationwide branches & ATMs, Corporation Bank stands tall among the Public Sector Banks in the country and is hailed as one among the well-managed Public Sector Banks with excellent track record in all the key parameters of banking. The Bank has the second largest ATM network in the public sector. Corporation Bank had the honor of paying host to many a distinguished personality. During the Banks platinum Jubilee Celebrations in 1976, the new Administrative Office Building at Pandeshwar Mangalore was opened by Shri B.D.Jatti, the Vice-President of India. The bronze statue of Pt Jawaharlal Nehru installed by the Bank at the Traffic Island in front of its Corporate Office at Pandeshwar Mangalore, was unveiled by Mr. Justice E.S. Venkataramaiah, the then Chief Justice of India. In 1992, his Excellency Shri R. Venkataraman, the then President of India, visited the Bank to inaugurate its 85th anniversary celebrations and 60th anniversary of the Banks commencement of operation in Tamil Nadu state. In the year 1996, Mr. Justice A.M.Ahmadi, the then Chief Justice of India, visited the Bank to deliver the 90 th year commenmorative lecture. Corporation Bank House, the new premises of the Banks Car Street Mangalore branch, was inaugurated by Dr. Manmohan Singh , who was then the
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CORPORATION BANK Union Finance Minister. Dr. C. Rangarajan, the then Governor of Reserve Bank of India, Launched the prestigious deposit product Crop Classic during his visit to the Banks Corporate Office in 1997.The Banks new Millennium Building was inaugurated by the then Union Minister of State for Finance Shri Vikhe Patil in the year 2000.In the same year, Shri Yashwant Sinha, who was the Honble Union Finance minister at that, launched the Banks CorpFast product at the Corporate Office. First Public Sector Bank (other than SBI Associates) to achieve 100% CBS developed and implemented by Laser Soft Info systems Limited, Chenni.
100yrs of Corporation Bank

Corporation Bank completed 100 years of existence on 12 March 2006. The Centenary celebrations were launched by Shri V. Leeladhur, Deputy Governor, Reserve Bank of India with the Banks Foundation Day lecture on 12 March 2005.
As a part of the Banks centenary celebrations, a number of programmes and projects were planned and executes. As a first step, the Bank has launched the Corp Kissan Card -debit card tied up with VISA international, to enable the farmers make timely purchases for agricultural operations. At Yeshwantpur-Malur in Kolar District, the birth place of the Bank by Shri P.Chidambaram, Honble Union Finance Minister on 2 March 2006.The library building also houses a Numismatic Museum and a multi purpose hall for intellectual activities. The Bank has also set up libraries in 25 villages and given away scholarship to 100 meritorious students of such villages for the pursuit of their higher education. Such libraries will be set up in 75 more villages in a phased manner. Corporation Bank A Corporate Journey, the history of the Bank and Haji Abdullah Saheb a biography of the Banks Founder President have been published on thee occasion of the valedictory function of the Banks Centenary Celebrations.
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CORPORATION BANK
WORK FLOW MODEL OF CREDIT DIVISION CORPORATION BANK

CREDIT PROPOSAL FROM THE BORROWER
PROPOSAL SENT TO THE SENCTIONING AUTHORITY
KNOW YOUR CUSTOMER (KYC)
GENERAL DISCUSSION
TERMS AND CONDITIONS COMMUNITACTED
DATABASE CREATED
APPRISAL OF THE PROPOSAL
RISK MEETING
FINAL DISCUSSION
The following is the process of credit divisions:Credit proposal from the borrower This is the first step wherein the proposal is received from the borrower for the loan, the borrow must either be a customer or must be introduced by a certain customers, etc. he must apply to the bank as to the loan, the reason for taking loan, etc. the amount of the loan that the applies for must also be stated in advance.
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CORPORATION BANK
Proposal sent to the sanctioning authority The proposal is sent to the sanctioning authority for evaluation of the proposal because the final amount can only be sanctioned with the affirmation from the sanctioning authority. This is the department that will finally sanction the amount so it will see to it that the bank has adequate funds for lending. Know your customer This step is very much important because the viability of the customer can only be assessed in this step. The customer is assessed regarding his financial feasibility and his ability to repay the loan amount along with the interest. The customer can be assessed on the basis of his previous dealings with the bank. Information about it can also be sought from the person who introduced the customer to the bank. General discussion There is a general discussion as to granting of loans. Depending upon the amount the proposal is sent to the zonal office, regional office and the head office. If the loan amount is reasonably much it involves discussion with the AGM, DGM and the board. Discussion with these people is required because their expertise and opinion can play a major role here. Communication of the terms and conditions The term and conditions as to the proposal is communicated to the borrower as regards to the loan amount that can be granted, the interest rate applicable for the type of loan, the terms as regards to the payment of installments, the interest rate chargedwhether it is simple or compounded. The borrower must confirm his agreement to the terms and conditions. Database is created regarding the proposal A database is created regarding the loan proposal the loan amount, the interest rate, the borrowers name, his credentials, his income statement, etc. it must all the
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CORPORATION BANK information that is required to grant the loan. The entire flow of the proposal must be in writing.
Appraisal of the proposal The proposal is property and carefully appraised so that finally no wrong decision is taken. Risk meeting A high level risk meeting is conducted as to the proposal; legal opinion is also sought sometimes regarding the proposal if the appraisal was not satisfactory. This risk meeting will decide whether the loan amount can be financed with two promote banks jointly so that the risk burden can be shared amongst the borrowers. Final discussion A final discussion is undertaken among all the appraisers and only if the proposal seems to be feasible and viable to the bank in the future the proposal is accepted or else it is rejected. Final decision A final decision is taken in the final discussion and it is communicated to the borrower. He must comply with all the terms and conditions and must submit all the documents as required by the bank.
Awards and Accolades of the Bank

The awards and accolades of the Bank are as below. National Award for Assistance to Exporters from the President of India (1976-77). Gem & Jeweler Export Promotion Council Award successively for 5 years from 1981 to 1985. Shiromani Award 1992 for Banking from Union Minister for Commerce. Best Bank Award for Excellence in Banking Technology from Institute for Development and research in Banking Technology (IDRBT), Hyderabad (2001).
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CORPORATION BANK Best Bank Award for Innovative Usage and Application on INFINET (Indian Financial Network) from Institute for Development and Research in Banking Technology (IDRBT), Hyderabad (2002). Best Bank Award for Delivery Channels from Institute for Development and Research in Banking Technology (IDRBT), Hyderabad (2003). Runner-up Award in the Best Online and Multi-channel Banking Term and Outstanding achiever of the year-corporate categories in recognition of outstanding achievement in Banking Technology for 2004, instituted under the aegis of Indian Banks Association and Trade Fairs & Conference International .
INFRASTRUCTURE
Corporation bank is the fast expanding National Bank with over 1800 service outlets across the nation in 23 States and 2 Union territories. We are present in all most all 100 top centers in the country. We have a large presence in major Metros in India Delhi over 150 outlets Mumbai over 140 outlets Bangalore over 170 outlets Chennai over 50 outlets Hyderabad over 40 outlets To serve esteemed customers with Convenience banking, Corporation bank strong network of over 1032 ATMs across the country. Corporation bank is excited at the growing opportunities for business by meeting the customer expectations exceedingly well, expanding the footprints and reaching our brand to new destinations. The branch of Corporation Bank in Sagar was established in the year 1936. Now it has a main branch in heart of Sagar town and a branch at APMC yard to serve the are can at merchants and growers. The main branch has staff strength of 13 out of which 1 manager, 3 officers, 6 clerks, 2 attainder and 1 part-time attainder.
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CORPORATION BANK
THE ORGANIZATION STRUCTURE OF SAGAR BRANCH.

Manager
Officer
Clerks
Peon/Security Guard
The Bank is well known for innovations and offers and wide range of products and services to meet the needs to various segments of the society. It is consistently performing throughout the year and is ranked among Indias top public sector banks. There are various division in the Bank which support the functioning of the Bank as whole, Resource Mobilization Division, credit division, Credit Risk Management Division , Investment and International Banking Division, Finance and Risk Management Division, Information Technology Division, Personal Administration Division, Human Resource Development Division, Inspection and Audit Division are some of the major divisions in the bank.
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CORPORATION BANK Excellence in performance and uniqueness in customers service forms central core of Banks organizational culture. The growth of confidence of its clienteles is well reflected in the Banks performance in all critical areas of its operations all through the years. As a part of the Banks centenary celebrations, a number of programmers and projects were planned and executes. As a first step, the Bank has launched the Corp Kissan Card -debit card tied up with VISA international, to enable the farmers make timely purchases for agricultural operations. At Yeshwantpur-Malur in Kolar District, the birth place of the Bank by Shri P.Chidambaram, Honble Union Finance Minister on 2 March 2006.The library building also houses a Numismatic Museum and a multi purpose hall for intellectual activities. The Bank has also set up libraries in 25 villages and given away scholarship to 100 meritorious students of such villages for the pursuit of their higher education. Such libraries will be set up in 75 more villages in a phased manner. Corporation Bank A Corporate Journey, the history of the Bank and Haji Abdullah Saheb a biography of the Banks Founder President have been published on thee occasion of the valedictory function of the Banks Centenary Celebrations.
BRANCH NETWORK
Presently, the Bank has a network of 1054 Branches, 7 Extension counters, 1032 ATMs.The geographical distribution of bank are as below (Table 2.1) Table 2.1 Category Rural Semi Urban Urban Metro Total Number 521 553 499 380 1953
OWNERSHIP PATTERN
The bank is a public sector unit with 57.17% of share capital held by the Government of India. The Bank came out with its initial public offer in October 1997. After the Government of India as the major shareholder the next is LIC followed by
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CORPORATION BANK Financial institutions, mutual funds and UTI, corporate bodies, foreign institutional investors (FIIs) and corporate bodies, NRIs and the resident Indians. Table 2.2 shows the category of shareholders.
Table 2.2
Category of Shareholders
Sl.No. 1 2 3 4 5 6 Total Category of shareholders Government of India Life Insurance Corporation of India Financial Institutions, Mutual Funds, Banks & Corporate Bodies Foreign Institutional Investors & Overseas Corporate Bodies Non Residual Indians Residual Individuals % to total holding 57.17 26.32 9.93 3.62 0.29 2.67 100.00
CORPORATE
Corp Bank offers several Corporate Banking services. The Bank offers unique services tailor-made for the requirement of Corporate & large business houses as well as Small & Medium Enterprises. Apart from the various borrowing products, the Bank offers pioneering Cash Management Services and speedy Collection and Payment Services (CAPS) across a network of locations in India. The vision and mission statement of bank is as below.
VISION STATEMENT:
To emerge as the most preferred bank with global standards in financial, efficiency, technology, products and services. The bank has charted out a shared vision of its centenary year 2008.The bank had achieved a business level of Rs55,000 crores and plans to add over Rs50,000 crores by B.B.M., ATNCC, Shimoga Page No. 24
CORPORATION BANK 2007-08. The Bank will continue its endeavors in providing high quality services to its customers. With its strategic business focus and innovation the bank is striving for better performance in the coming years and has transpired as one of the efficient, strong profitable and well capitalized bank among banks in India. To reach this height it was never easy in the pursuit of niche banking with technology as the competitive edge, the bank has drawn up an IT plan to provide better services to its customers. The bank aims in a new order of process change, which not only improves the quality of service but also improve the speed in delivery of products and services to customers.
MISSION STATEMENT:
To become a provider of world class financial services To meet customer expectations through innovation and technological initiatives To emerge as a role model with distinct cultural identity values and good corporate governance. To enhance shareholders wealth by sustained, profitable and financially sound growth with prudent risk management systems. To fulfill national and social obligations as a responsible corporate citizen. To create an environment, intellectually satisfying and professionally rewarding to the employees.
Customer Service and Technology
ATMs- with the accelerated thrust for ATM network, in tune with changes and
customer preferences, the Bank has optionalised and the total number of ATMs to 1032 across the country. The Bank has accelerated its technology drive during the year by offering several innovative tailor made products and services with the ultimate objective of delivering value to customers.
Corp e-rail - facilitating booking of railway tickets through interest by customers of the bank. Corp Kisan Card - Facility for operating comprehensive credit limits fixed for farmers through the Banks ATMs.
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CORPORATION BANK Corp Companion- any branch banking facility by which our customers of core connected branches can operate their account from over 366 crores branches of the Bank spread over 133 centres. Corp Power Cheque multi city cheque facility wherein the customer can issue cheques drawn on the base branch, payable t par at selected remote centres. Corp Mediclaim -facility to meet the medical insurance needs of our customers who are holders of Corp Convenience Debit Card. Corp 4 in 1 Account- (variants of current accounts). A product wherein the customer has the option to open any one of 4 types of current accounts and enjoy graded concession in various service charges based on quarterly average balance maintained in the account. Corp Quick Remit-an online remittance service for the NRIs based in USA and Canada which provides them a means to transfer funds to India quickly, securely, conveniently and in a cost-effective manner through Automated Clearing House (ACH) network in USA. Corp Xpress Money- a facility for fast money transfer to India for NRIs based in the Gulf and Middle East in association with the UAE exchange center. The Bank has implemented the facility of Electronic recharge of prepaid mobile phones for its card holders through Corp Bank ATMs. Corp Junior and Senior Account- these are ATM based accounts for children and parents. Sometimes parents may be in a different city and their children may be studying somewhere else. To facilitate them to access funds without resorting to transfer of funds from centre to centre, corp senior or corp junior accounts are opened in their own ATM/Debit cards. Corp Elite Account- a premium saving account with free adds on facilities. Corp Net (internet banking) its an internet enabled delivery channel which allows to conduct banking even without stepping into the Bank, just by the click of the mouse. Once can enquire, give standing instructions and even transfer funds between accounts. Corp Smart- a combi card combining an electronic purse and ATM card. Corp Reach- the remote access facility that enables you to bank from the comfort of your home or even your work place.
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CORPORATION BANK Corp Convenience- (corp banks international debit card) corp convenience gives the flexibility to pay for purchase at over 24 million outlets in India and other 240 countries. It can be used at shops, restaurants, travel agencies, hostels and quick cash withdrawals at Corp Bank ATMs or ATMs that display the VISA logo worldwide. Corp Payroll- a unique payroll account for disbursal of staff salaries with special benefits to employees. Corp Karsuvidya- a loan facility for meeting income tax obligations. Corp Vault- locker facility for safety, security, reliability, to keep your jewelers, important documents like deeds, wills and any other valuable items. Corp Dial (tele banking facility) - it is a specially designed tele banking facility to take care of ones every banking information need at their doorstep. One need not come to Bank, he can access every information by just dialing a telephone number. Corp Jeevan Raksha (Life Insurance Cover)- it is a hassle free life insurance cover of Rs 10 lakh with lowest premium for special account holders. In case of an accident, the insurance cover is doubled.LIC offers a group life insurance scheme namely Corp Jeevan Raksha to Corp Bank for its deposit holders. The scheme offers pure term insurance cover under one year renewal term assurance plan. The scheme covers risk of death only.
FUTURE GROWTH PROSPECTS

With the confidence that can only come from earning the trust of generations, corporation bank now looks to an exciting future. In the medium term, it aims to reach a business level of Rs.100000 crores and 10million customers by March 2009 with focus on double bottom line. The Bank plans to open over 600 outlets in three years, taking the tally of outlets to more than 2400 across the country. The bank has set its sight on overseas operations and plans to open representative offices in foreign countries. Corporation bank aims at leveraging its position as a financial institution that combines a rich heritage with a futuristic look. Its activities will continue to assist corporate in their business, even as it helps the common man realizes his dreams. And its
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CORPORATION BANK services shall continue to spread deeper into rural India, even as it reaches out further across the globe.
Chapter 3-Management of Lending and Recovery
Basic requirements of lending Principles of sound lending Secured and Unsecured Advances Forms of Advances Loan schemes
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MANAGEMENT OF LENDING AND RECOVERY

This chapter is divided into two parts. Part-A deals with principles of sound lending and Part-B with loan schemes. Lending is a crucial activity for a bank as it enables it to sustain profitability. But to sustain profitability, prudent decisions need to be taken both prior to and after sanctioning the credit. These decisions generally relate to the amount of credit to be extended during a financial year, the industries to focus on, the geographical spread, the type of credit to offer, the type of proposals to finance, the disbursal mechanism, the collateral value, the method of pricing, the repayment schedule, the monitoring process, etc. These macro and micro level consideration of the lending activity contribute to the achievement of the banks objectives. The banks management should thus, ensure that lending decisions fall in the with the banks overall objectives. Ultimately, the composition of the lending portfolio is determined by the regulatory prescriptions along with the profitability purpose. The demand for credit is on two-sides. Firstly, on the demand side of the economy are the consumers of goods and services who require funds basically for acquiring certain assets like consumers durables. And secondly, on the supply side, the need for credit arises from the corporate in the manufacturing, trading and services sectors. These corporate basically require funds for long-term investment as well as for day-today operations. Thus, the need for credit arises from the supply side as well as the demand side of the economy. Thus, at any point of time, in the credit market, there will always be some players to extend credit and a few others who will be seeking credit. However, to ensure that the borrowing and lending take place in the credit market, the lender should meet the needs of the borrower.
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BASIC REQUIREMENTS OF LENDING

1. Capital To ensure that the lending activities take place in an uninterrupted manner, a financial intermediary needs capital first to commence its operations and second to continue its operations as a running business. This need is even more important for a bank, for the reason that the availability of capital enables the bank to have the same as a buffer. This buffer is necessary since the losses if and when they arise, may be substantial. Capital provides the margin of safety that allows the bank to continue operations without any loss of momentum. It also helps the bank buy time, which in turn enables it to re-establish its operational momentum. Capital also acts as the cushion to absorb possible losses and entities that deal with such institutions remain more protected. Such increased levels of confidence will help to sustain not only the existence of an individual bank, but the entire financial system as well, which is very vital for proper functioning of the economic system. The significance of capital varies depending on the level of activity of a bank. The requirement of capital for a bank depends on its needs for servicing its depositors, for maintaining net worth requirements, for acquiring assets and establishing branch network as per statutory requirements etc. Further, the need for capital also arises out of the need for entering into fund-based activities besides performing the task of servicing its depositors. In the context of globalization the capital requirements of banks in India and abroad are guided by certain norms. 2. Borrowers Constitution Banking operations survive and thrive on the activity of lending. In the course of lending operations banks serve varied customers with different legal capacities and perspectives. They vary from a single individual to a group of individuals and even the government. The requirements of the borrower will sometimes be typical depending on the constitution of the borrowers account. To open a deposit account and avail a loan facility, the customer is requires to submit certain documents. The bona fides of the customer will be reflected in these B.B.M., ATNCC, Shimoga Page No. 30
CORPORATION BANK documents and if the banker is satisfied the business relationship will be commenced. These documents are vital from the view points of both the banker and customer. The types of customers who happen to be borrowers could be individuals, partnership firms, companies, governments, etc. The precautions that a banker takes in opening and running of the account besides the practices followed in the operations of such account. 3. Documentation As part of the initial exercise, during the post-sanction phase, the bank has to obtain the details regarding the customer/s so as to bind him/them legally and enforce the charge. This is possible only if the bank keeps in force the documentation for the loan/s granted to the customer/s. It is very important for the bank to establish the primary evidence in all disputes. Without keeping the proper documents in force, banks would not be in a position to defend their claims against customers in courts of law. The importance of documentation lies in the fact that with proper documentation in force, there will not be any problem in enforcing a claim by the bank against the customer in case of any default in repayment of the loan or in the wake of any other legal issues. It is important for documents to be properly filled up. It is possible that, due to lack of information, enforcement could become impossible sometimes. When the documents are filled in, care should be taken to ensure the ready availability of basic information regarding the borrower/s such as constitution of borrowers, nature and type of security offered its legality, the liability of guarantors and other statutory provisions. 4. Credit Monitoring The post-disbursal period is very important for the banker since the health of the asset is determined during this phase. Banks are required to keep constant watch of the unit vis-a vis the loan account after sanctioning the loan in order to ensue that the amount sanctioned to the unit is safe, generates income and does not turn out to be sick. This process is termed as Credit Monitoring. There are three types of follow-up that constitute Credit Monitoring. These are: (a) Financial follow-up, (b) Physical follow-up, and (c) Legal follow-up. B.B.M., ATNCC, Shimoga Page No. 31
CORPORATION BANK The loan account, by itself, would indicate most explicitly the quality of loan. Frequent delays and defaults in repayment that may be reflected in the loan account give the warning signal to the bank. There is a need to identify these signals emanating from a loan repayments, it could result in defaults thereby leading to a further degeneration in the quality of the loan and create problem loans.
PART A Principles of Sound Lending

Traditionally, banks have been following three cardinal principles of lending, viz., safety, liquidity and profitability. Banks in India have shouldered additional responsibility of fulfilling social obligations. Hence, the banks observe both the traditional and certain other principles. 1. Safety Safety first as advocated by tannon should be the guiding principle. A bank lends what it receives from the public as deposits. The success of the bank depends upon the confidence of the depositing public. Confidence could be infused in the depositors by investing the money in safe and sound securities. Safety depends upon (a) the security offered by the borrower, and (b) the repaying capacity and willingness of the debtor to repay the loan with interest. So the banker should ensure that the security offered is adequate and readily realizable and the borrower is a person of integrity, good character and reputation. 2. Liquidity Liquidity refers to the ability of an asset to convert into cash without loss within short time. The liabilities of a bank are repayable on demand or a short notice. To meet the demand of the depositors in time, the banks should keep its funds in liquid state. Money locked up in long-term loans such as land, building, plant, machinery etc.cannot be received back in time and so less liquid. Short-term loans and loans granted against securities such as goods can be converted into cash easily and so liquid. So a bank should confine its lending to short-term against marketable securities. 3. Profitability Like all other commercial institutions banks are run for profit. Even government owned banks are no exception to this. Banks earn profit to pay interest to depositors, B.B.M., ATNCC, Shimoga Page No. 32
CORPORATION BANK declare dividend to shareholders, meet establishment charges and other expenses, provide for reserve and for bad and doubtful debts, depreciation, maintenance and improvements of property owned by the bank and sufficient resource to meet contingent loss. So profit is an essential consideration. A banker should employ his funds in such a way that they will bring him adequate return. The main source of profit comes from the difference between the interest received on loans and those paid on deposit. Anyway a banker should never give undue importance to profitability. 4. Security Customers may offer different kinds of securities, viz., land, building, machinery, goods and raw material to get advances. The securities of the customers are insurance and banker can fall back upon them in times of necessity. For the sake of safety he should ensure that the securities are adequate, marketable and free from encumbrances. Securities which could be marketed easily, quickly and without loss should be preferred. 5. Purpose of the Loan Before sanctioning loans a banker should enquire about the purpose for which it is needed. Loans for undesirable activities such as speculation and hoarding should be discouraged. Borrowings for productive purposes are readily allowed by banks. It is also equally important on the part of banks to ensure that a loan is utilized for the purpose for which it is granted so that repayment will be prompt. In many countries the central Bank gives directions as to the purpose for which loan may be made. Section 21 of Banking Regulation Act 1949 confers on Reserve Bank of India the power to control advance by banks. Purpose of the loan has assumed a special significance in the present day concept of banking. Before sanctioning a loan a banker should enquire about the purpose for which it is needed. A loan granted for productive purpose increases the earning capacity of the borrower and ensures prompt repayment. Loans for undesirable activities such as speculation, hoarding etc., should be discouraged. It is equally important to ensure that the loan is utilized for the purpose for which it is granted.
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6. Sources of Repayment Before financial accommodation, a banker should consider the source from which repayment is promised. In some instances, debentures which are to be redeemed in few months time or a life policy which is to mature in near future may be offered as security. Advances against such security give no trouble. Sometimes customers may apply for loans for additional working capital for their business and undertaken to repay out of the profits over a period. In such cases the rate at which the customer can reasonably hope to repay should be ascertained. An examination of the audited accounts may guide the banker in knowing the repayment capacity of the customer. 7. Diversification of Risks The security consciousness of a banker and the integrity of the borrower are not adequate factors to keep the banker on safe side. What is more important is the diversification of risk. This means he should not lend a major portion of his loanable funds to any single borrower or to an industry or to one particular region. An adverse change in the economy of these may affect the entire business. In such a case repayment will be highly and the survival of the bank becomes questionable. Therefore a bank should follow wise policy of do not lay all the eggs in the same basket. The bank must advance moderate sums to a large number of customers spread over a wide area and belonging to different industries. 8. Recent Concept of Sound Lending Productivity of the loan: In the wake of nationalization of the 14 banks, banking has undergone a metamorphosis. Today a bank is not exclusively a financial institution but is alive to the needs of the people. It has a strong social objective and social conscience. Banks are catalytic agents in catering to the better needs of development in conformity with the national objectives. If rapid progress is to be realized; bank credit
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CORPORATION BANK should made available to the neglected sectors of economic activity and to the underprivileged sections of the society. To make this a reality, banks have to shed their outlook of security- consciousness. The traditional belief of security being the measurement of credit needs is a myth. A sound lending is one where timely repayment is assured. This largely depends on the earning power of the business unit and the repaying capacity of the borrower. So great emphasis is laid on the productivity of the loan. Since the banks have shouldered an additional responsibility of keeping the tempo of development of the economy they should consider the productivity of loan as the chief criterion for advancing loans.
SECURED AND UNSECURED ADVANCES

Loans and advances may be made either on the personal security of the borrower or on the security of some tangible assets. The former is called unsecured or clean or personal advances and the latter is called secured advances.
Unsecured Advances
Section 5(i) (n) of the Banking Regulation Act defines unsecured loan as unsecured loan or advance means a loan or advance not so secured. The distinguishing feature of this type of loan, according to the definition is that no tangible security is offered to the bank. Clean advances are granted to customers of integrity with a sound financial blacking, high business reputation and capacity to manage the business. In such a case the general capacity of the customer is security in itself. In case of his default to repay the Bankers position is unsafe and can rank equal with other unsecured creditors to realize the assets of borrower. So to safeguard his position a banker lends on personal security coupled with the guarantee of one or more persons. Confidence in the borrower is the basis of unsecured advances. A banker pins his faith on the ability and willingness of the borrower. It is a sine qua non of good lending that the banker should know his customer well and be able to form a judgment about his B.B.M., ATNCC, Shimoga Page No. 35
CORPORATION BANK integrity which should be undoubted. The confidence is judged by three considerations, character, capacity and capital usually referred to as the three Cs. 1. Character Character constitutes the best asset of a man. The word character implies personal qualities like honesty, responsibility, promptness, reputation and goodwill. A person who possesses most of the above qualities is considered as a man of character and a bank can extent credit to him without any reservation. With such men of integrity repayment of loan will be certain and timely. So character is of paramount importance for unsecured loans. 2. Capacity The capacity a borrower refers to his ability to manage the business. Success of the enterprise depends mainly on the initiative, interest, experience and managerial ability of the entrepreneur. So capacity is the next consideration in granting clean advances. Nationalisation of banks has widened the meaning of capacity of the borrower. In judging the capacity, greater reliance is made on the economic viability of the project for which loan is sough. Economic, viability means the capacity to manufacture goods at the lowest cost and to leave sufficient profit to meet its commitment of loan. It is also expected that the enterprise should contribute to higher production and serve social objective. Thus the capacity of a borrower is assessed by his technical competence, experience in that line of business, operational efficiency of the project, its earning power and also the productive purpose of the loan. 3. Capital In addition to the character and capacity of a borrower, a banker looks into another aspect, i.e., capital. A bank provides mainly the working capital requirement of the business. A borrower should have sufficient capital to conduct his business and adequate plant and machinery to carry out normal production.
Secured Advances
Secured advances mean loans made on the security to tangible assets like land, building, machinery, goods and documents of title to goods. Such loans provide absolute safety to a banker by creating charge on the assets in favour of him.
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CORPORATION BANK Section 5 (i) (n) of the Banking Regulation Act, 1949, defines secured advances as secured loan or advance means a loan or advance made on the security of assets the market value of which is not at any time less than the amount of loan or advance. The definitions explain the two essential features of secured advances: (i) The advance must be made against tangible security Kolkata and Chennai, government bonds and stock exchange securities are offered. In large industrial areas raw materials and finished goods are given as cover for the loan. Agricultural produce is the principle security offered in agricultural centres.In addition to the above, a banker may also lend against movable properties, book debts, life policy etc. Security may be classified as primary security and collateral security. 1. Primary Security The security deposited by the borrower himself as cover for the loan is called the primary security. In the banking parlour, it refers to the asset which has been bought with the help of bank finance. For instance, machinery has been bought with the help of bank finance. That machinery constitutes the primary security to the banker. All other securities deposited to cover advance are called collateral securities. 2. Collateral Security The tern collateral security is used in two senses. In a narrow sense it refers to the securities deposited by the third party to secure advance for the borrower. In a wider sense it denotes any type of security on which the creditor has a personal right of action on the debtor in respect of the advance. (ii) The market of security offered varies from place. In big cities likes Mumbai,
FORMS OF ADVANCES
Banks offer different kinds of borrowing facilities to their customers. The credit facilities may be broadly classified into four types: 1. Loan 2. Cash Credit 3. Overdraft 4. Bills Purchased and Discounted. B.B.M., ATNCC, Shimoga Page No. 37
CORPORATION BANK
1. Loans
Incase of loan, the banker advances a lump sum for a certain period at an agreed rate of interest. The entire amount is paid on an occasion either in cash or by credit in this current account which he can draw any time. The interest is charged for the full amount sanctioned whether he withdraws the money from his account or not. The loan may be repaid in installments or at the expiry of a certain period. The loan may be made with or without security. A loan once repaid in full or in part cannot be withdrawn again by the customer. In case a borrower wants further loan, he has to arrange for a fresh loan. Loan may be demand loan or a term loan. Demand loan is payable on demand. It is for a short period and usually granted to meet working capital needs of the borrower. Term loans may be medium-term or long-term loan. Medium-term loans are granted for a period ranging from one year to five years for the purchase of vehicles, tractors, tools and equipments. Long-term loans are granted for capital expenditure such as purchase of land, construction of factory building, purchase of new machinery and modification of plant.
2. Cash Credit
Cash is an arrangement by which the customer is allowed to borrow money up to a certain limit. This is a permanent arrangement and the customer need not draw the sanctioned amount at once, but draw the amount as and when required. He can put back any surplus amount which he may find with him. Thus cash credit is an active and running account to which deposits and withdrawals may be affected frequently. Interest is charged only for the amount withdrawn and not for the whole amount charged. Cash Credit arrangements are usually made against pledge or hypothecation of goods. Sometimes, this facility is also provided against personal security. If the customer does not use the cash credit limit to the full extent, a commitment charge is made by the bank. This charge is imposed on the unutilized portion of cash credit only. Cash credit provides an elastic form of borrowing since the limit fluctuates according to the needs of the business. Cash credits are the most favorite mode of borrowing by large commercial and industrial concerns in India.
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3. Overdraft
Overdraft is an arrangement between a banker and his customer by which the latter is allowed to withdraw over and above his credit balance in the current account up to an agreed limit. This is only a temporary accommodation usually granted against securities. The borrower is permitted to draw and repay any number of times, provided the total amount overdrawn does not exceed the agreed limit. The interest is charged only for the amount drawn and not for the whole amount sanctioned. A cash credit differs from an overdraft in one respect. A cash credit is used for long-term by businessmen in doing regular business whereas overdraft is made occasionally and for short duration. Temporary Overdraft Banks, sometimes, grant unsecured overdraft for small amounts to customers having current account with them. Such customers may be government employees with fixed income or traders. Temporary overdrafts are permitted only where reliable source of funds are available to a borrower for repayment.
4. Bill Discounted and Purchased

Banks grant advances to their customers by discounting bill of exchange or Pronote. The amount, after deducting the interest from the amount of the instrument, is created in the account of the customer. In this form of lending, the interest is received by the banker in advance. Discounting of bill constitutes a clean advance and banks rely on the credit worthiness of the parties to the bill. Banks, sometimes, purchase the bill instead of discounting them. Bill which are accompanied by documents of title to goods such as bills of lading or railway receipt are purchased by the bankers. In such cases, the banker grants loan in the form of overdraft or cash credit against the security of the bills. The term bills purchased seems to imply that the bank becomes the purchaser/owner of such bills. But in almost all cases the bank holds the bill only as a security for the advance.
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CORPORATION BANK
Part-B Loan Schemes

INTRODUCTION Corp Bank offers a variety of loans to choose from. The various retail loans are given as Corp Schemes highlighting the traditional Crop Bank commitment on giving the best in terms of service, speedy disposal and of course at very competitive interest rates.
FAIR PRACTICES
Following is the Code of Fair Practices of the Bank: 1. Processing of Loan applications: (a) The Bank shall provide comprehensive information including information about fees and charges and amount of such fees refundable in case of non-acceptance of application as per the details, more fully described in schedule1, to all categories of loans irrespective of amount of the loan sought by the borrower. (b) The Bank shall provide details of prepayment options, if any/applicable, and any other matters which affect the interest of the borrower as per schedule2. I The Bank would ordinarily provide to the borrowers a due acknowledgment for receipt of loan application/s. The above said acknowledgment shall mention the time-frame within which loan application/s up to Rs.2 lakhs will be disposed of by the Bank. (d) The Bank shall verify the loan applications within a reasonable period of time as per the time-frame mentioned in schedule 3 and shall intimate the borrower immediately thereafter for the additional details/ documents, if any, required for processing the proposal. (e) Wherever possible the Bank shall convey in writing the main reason(s) which, in the opinion of the Bank, after due consideration, has/have led rejection of the loan application within a stipulated time, as mentioned in schedule 3. 2. Loan Appraisal (a) The Bank shall ensure that there is a proper assessment of credit applications made by the borrower. (b) The Bank shall convey to the borrower the credit limit/credit facilities sanctioned along with the terms and conditions thereof. B.B.M., ATNCC, Shimoga Page No. 40
CORPORATION BANK (c) On a demand being made, the Bank shall provide a copy of the loan agreement to the borrower. 3. Disbursement of Loan and changes in terms and conditions: (a) The Bank shall ensure timely disbursement of loans sanctioned in conformity with the terms and conditions governing such sanction. (b) The Bank shall give notice of any change in terms and conditions including interest rates, service charges, etc. to the borrower and ensure that changes in interest rates and charges are made prospectively. Whenever the changes made are not borrower specific and apply to any/all categories of borrowers, notice of change shall construed to be made if the communication of the same is made in any of the following media; Display in the notice Board of the Bank in the branch where the borrowers account is maintained, or News paper publicity, or In the Banks web site, or Over telephone in the cases where tele banking facility is extended, or Direct communication by courier/post.
4. Post-Disbursement Supervision: (a) Post- Disbursement Supervision by the Bank, particularly in respect of loans up to Rs.2 lakhs, shall be constructive with a view to taking care of any lenders related genuine difficulty that the borrower may face. (b) Before taking a decision to recall/accelerate payment or performance under the agreement or seeking additional securities, the Bank shall give notice to the borrower, as specified in loan agreement, within a reasonable period even if no such condition exists in the loan agreement. I The Bank shall release all securities on receiving payment of loan or in realization of loan subject to any legitimate right or lien for any other claim the Bank may have against the borrower. If such right of set off is to be exercised, the borrower shall be given notice about the same with full particulars about the remaining claims and the documents under which the Bank is entitled to retain the securities till the relevant claim is settled/paid.
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CORPORATION BANK 5. General: (a) The Bank shall refrain from interference in the affairs of the borrowers expect for what is provided in the terms and conditions of the loan sanction documents (unless new information, not earlier disclosed by the borrower, has come to the notice of thee Bank). (b) The Bank shall not discriminate on grounds of sex, caste and religion in the matter of lending. However, this does not preclude the Bank from participating in credit linked schemes framed for weaker sections of the society. I In the matter of recovery of loans, the Bank shall not resort to undue harassment that is, persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc. (d) In case of receipt of request for transfer of borrowal account, either from the borrower or from a Bank/financial institution which proposes to takes over the account, the consent or otherwise, i.e., objection of the bank, if any shall be conveyed within 21 days from the date of receipt of such request. Corp Bank offers Housing Loans, Education Loans, Consumer Loans for purchase of consumer durables like TV, washing machines, music systems and other electronic goods, loans against future rent receivables on leased out building /premises, loans to purchase two-wheelers & four wheelers, loans against shares, loans for purchase of medical and other such sophisticated equipments, loan to acquire office premises/building & furniture, personal loans, loans to women to buy pure gold/ jewellery, loan against mortgage of property etc. The loan products are as below.
1. Corp Site Purchase Loan

To finance the application money (initial deposit) payable to local development authority for allotment of residual site/plot. Eligible applicants are Salaried Individuals confirmed in service. Non salaried class engaged in business, professional and self employed persons who are It assesses and having minimum of 2 years satisfactory dealings with the bank. Maximum loan amount is Rs 1 lakh or initial deposit payable whichever is less, but should not exceed 12 times of monthly take home pay in case of salaried persons. Rate of Interest 13.75% p.a. (with effect from .02.08.2012) Repayment Within 12 months
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2. Corp IPO Scheme

To provide finance to general public to subscribe to IPO/Public Issues/Rights/ESOP of reputed Corporate / Corporate approved by the Bank from time to time. Individuals (such as salaried persons, professionals, businessmen, pensioners etc.) either individually in their own names or jointly with others, with sufficient income to service the loan. Quantum of loan Minimum Rs.0.20 lakh and Maximum Rs.10.00 lakh. Rate of Interest: 12.75% under floating rate (w.e.f. 02.08.2012) Repayment Loan is repayable in 36 months.
3. Corp Byte Computer Loan

Eligibility Students (Indian Nationals) of colleges / University / Educational institutions pursuing their courses in India Loan is for pursuing professional courses only. Purpose To finance purchase of personal Computers/ Laptops/Notebooks/Palmtops/ PDAs / Tablet PCs etc., including other peripheral accessories like pointers/ printers/scanners/ digital stylus/ external AC converters /UPS etc., essential for professional studies. Rate of Interest Floating rate of 13.00% p.a. with effect from 02.08.2012 (fixed rate option not available) Repayment The loan to be repaid on monthly basis, beginning from the month subsequent to the month of loan release and scheduled in a manner that would coincide with the students residual period of study at the Educational Institution / College / University, so that the loan account stands closed when the student completes his/her studies at the Educational Institution/ College/ University.
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4. Corp Home Housing Loan

Through this scheme, one could build/acquire/extend/repair a house/flat of their own. Loans up to Rs. 500 lakh available depending upon the purpose, at rates as given below. Any individual, satisfying normal borrower standards and with sufficient repaying capacity is eligible. One can repay net within 25 years, in convenient installments that will not exceed 50% of their salary/income. Purpose For construction of house/flat, purchase of ready built house/flat For repairs/extension of existing house/flat. For take-over of housing loans from other bank/institutions. Eligibility:Residents/NRIs holding Indian passports aged 18-60 years with adequate to repay the loan. Table: 3.1 Loan Amount Area Metro & Port Town Centers Urban Centers Semi Urban & Rural Centers For Repair/Renovation/ Extension/Improvement Table 3.2 Fixed Rate Loan Tenor Loan Amount Rs.500 Lakh Rs50 Lakh Rs.25 Lakh Rs.5 Lakh Loan for Site Rs.30 Lakh Rs.15 Lakh Rs.10 Lakh -
Up to Rs.30 Lakh
Up to 5 years 11.00% Above 5 & Up to 15 11.00% years Above 15 years & 11.00% 11.50% 11.50% Up to 20 years Above 20 & Up to 11.00% 11.50% 11.50% 25 years Maximum tenor under fixed rate loans restricted to 20 years salaried class and 15 years for other category of borrowers. Housing loans under fixed rate of interest is offered up to 20 years only. The rate of interest will be reset at the discretion of the Bank once in 5 years.
Above Rs.30 Lakh & Up to Rs.50 Lakh 11.50% 11.50%
Above Rs.50 Lakh 11.50% 11.50%
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CORPORATION BANK
Table: 3.3 Floating Rate Loan Tenor Up to 5 years Above 5 & Up to 15 years Above 15 years & Up to 20 Years Above 20 & Up to 25 years Up to Rs.30 Lakh 10.80% 10.90% 11.00% 10.25% Above Rs.30 Lakh & Up to Rs.50 Lakh 11.65% 11.65% 11.65% 10.75% Above Rs.50 Lakh 12.15% 12.25% 12.25% 12.35%
5. Corp Rental
The Scheme envisages financing the owner of the commercial properties against future rent receivables for the unexpired period of lease specified in the lease agreement. Eligibility Eligible applicants for financing under the Scheme would be individuals/ Partnership Firms / Corporate/ Trusts/ HUFs, owning commercial buildings let out to reputed organizations, where the unexpired period of lease is generally more than three years. The Loan may be availed for any productive purpose such as taking up new projects, business to towards contingencies or to meet domestic / personal / any other commitments. Rate of Interest: 13.75% with effect from 02.08.2012 Repayment Loan shall be repaid in Equated Monthly Installments within the unexpired period pf lease or 120 months (maximum) whichever is less.
6.
Corp Vidya Educational Loan

For higher education in India /aboard. Applicant should be an Indian National and
secured admission to professional/ technical courses through Entrance test/ Merit based selection process in India or aboard. Eligibility of the Student
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CORPORATION BANK Student should be an Indian national Should have completed previous qualifying examination Secured admission to professional/ Technical cources in India or aboard through Entrance test/ Merit based selection process/management quota Person already in gainful employment not eligible for loan under the scheme expected for pursuing evening course covered under the scheme of approved Institute. If a gainfully employed person wants to pursue full time education either on study leave or by resigning from present employment, such proposals may be considered provided the applicant submits the proof in the regard to the sanctioning authority before disbursement of loan. Rate of Interest Applicable for fresh loans sanctioned / initially disbursement on or after 14.08.2012 Table: 3.4 Up to 4.00 lakh Above Rs. 4.00 lakh & upto Rs 7.50 lakh Above Rs. 7.50lakh Repayment The loan to be repaid within a period of 7 10 years after completion of repayment holiday Repayment holiday is course period + 1 year or 6 months after getting the job whichever is earlier. 12.25% 13.25% 12.75%
7. Corp Cash Demat Share Loan

Eligibility:Individuals who have been properly introduced to the Bank If the shares are in joint names, the loan account should be in joint names. Purpose To provide liquidity to investors against shares To meet contingencies and personal needs or for subscribing to the Rights /New Issues of shares / Debentures/ Bonds or for purchases in the secondary market. Loan Amount:- Minimum Rs. 50000/- ; Maximum Rs. 20.00 lakh Rate of Interest
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CORPORATION BANK Floating rate of interest 14.50% p.a. w.e.f. 02.08.2012. Fixed interest rate option not available Repayment Repayable in maximum of 24 months, subject to annual review.
8. Corp Mortgage Loan against property

To meet personal / domestic expenses & business requirement. Individuals in the age group of 18-65 years owing residual/ commercial property land and /or building) and who are Income Tax Assesses. In addition to Individuals, Proprietorship concerns, Partnership Firms & Companies may be considered for financing under the scheme, provided they are IT assesses. NRIs also may be financed under the scheme. Salaried persons with minimum net monthly income of Rs.20000/-* & others with minimum net annual income of Rs. 250000/- are eligible for loan under the scheme. The income of close relative may be added, if he/she must join as co- applicant. Loan Amount The maximum loan amount not to exceed 5 times of the Net annual Income. Minimum Rs. 2 lakh & maximum Rs. 50 lakh Rural: Rs. 5 lakh Semi Urban: Rs.10 lakh Urban: Rs. 25 lakh Metro & port Town: Rs.50 lakh Rate of Interest 14.50% under floating rate (w.e.f. 02.08.2012) Fixed rate option is not available under the scheme. Repayment Where the loan is in the form of Term loan, the same is repayable within maximum repayment period of 7 to 10 years.
9.
Corp Doctor Plus Equipment finance for Medical Professionals
To finance brand new Electro Medical & other sophisticated equipments including OT equipments, Air conditioners, ambulance, Generators, Personal Computers and accessories with related software and UPS etc. In the case of setting up of clinics, B.B.M., ATNCC, Shimoga Page No. 47
CORPORATION BANK purchase of furniture & fixtures, furnishing, Air conditioning, Electrification may also be financed. Any Registered Medical Practitioner in the age group of 25 to 60 years with a minimum experience of one year is eligible. Loan Amount: Upto Rs. 2.50 crores Rate of Interest 12.50% p.a.with effect from 02.08.2012. Fixed rate of option is not available under this scheme. Repayment Where loan is for construction/purchase of hospital/clinic, repayment period is upto a maximum of 10 years including initial repayment holiday, if any.
10.
Corp Personal
To meet any genuine personal expenses relating to family functions, education, travel, marriage, medical etc. permanent employees of Central / State Government Offices, Profit making Public Sector Undertakings and Public Limited Companies, Schools, Colleges, Universities and Research Institutions, Pensioners drawing pension through our Bank and individuals with income other than salary/ pension are eligible. Maximum Loan amount Rs.2 lakh Rate of Interest 14.00% p.a. w.e.f.04.05.2012 Repayment For salaried class Loan repayable in 36 months For than salaried class loan repayable in 60 months. Crop Professional- for acquiring Office premises by professionals To finance acquisition of office premises for self occupation and Furniture and Fixtures required for the office premises purchased under the Scheme. Eligibility Registered Medical Practitioners, practicing Advocates, Chartered Accountants, Company Secretaries, consulting Engineers and Architects, etc., individually/jointly or as a partnership firm, having an established practice with a minimum experience of three
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CORPORATION BANK years, in the age group of 25 to 65 years. The applicant should be an Income Tax Assessee with a minimum annual gross income of Rs.1.50 lakh. Quantum of Loan Upto Rs. 50 lakhs in Metro, Rs.25 lakhs in Urban/Port-town, Rs.10 lakhs in Semi-urban and Rs.5 lakhs in rural places. The maximum loan amount determined based on financial viability and income/repayment capacity of the professional. Rate of Interest 12.50% p.a. w.e.f. 02.08.2012 Repayment The loan repayable in maximum period 10 years
11. Corp Vyapar

To meet short term working capital facilities. Traders engaged mainly in buying and selling of goods/commodities either on retail or wholesales basis. Individual/sole proprietors/Partnership firm/HUF/joint Stock Company or any other entity engaged in trading /business activity for a period of one year prior to seeking sanction loan. Quantum of Loan Minimum loan 50000 & Maximum Rs. 50 lakh. Rural: Rs. 10 lakh Semi Urban: Rs.25 lakh Urban: Rs.50 lakh Merto & Port Town: Rs. 50lakh Rate of Interest 12.50% p.a. Under Floating rate (w.e.f.02.08.2012) Repayment Loan repayable in maximum 60 months
12. Corp Mitra

To meet personal/domestic expenses/contingencies. All the confirmed Employees/ Executives/ Officials of the LIC of India, LIC Housing Finance Ltd., LIC Mutual Funds and other insurance companies under public sector and their subsidiaries whose salary is routed through our Bank.
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CORPORATION BANK Rate of Interest 14.25% under floating rate (w.e.f.02.08.2012) Repayment Maximum 60 months.
13. Corp consumer

To finance purchase of consumer durables such as Refrigerator, Cooking range, Food processor, Grinder, Television, Electronic Audio System, Washing Machine, Acs, Microwave Oven, Lap Top / PCs including accessories, Mobile Phone, Multi Media Kits, UPS, Digital Camera, Generators, Hand Video Camera and furniture, YO-Bike, Electric Bike, Solar heating Solar electricity systems. Loan Amount : Maximum Rs. 1 lakh. Rate of Interest 13.00% p.a. (w.e.f. 03.02.2012) Repayment Maximum of 36 months.
14. Corp Vehicle Loan

Individuals (professionals/ Businessmen/ Salaried class and others) sole proprietors, Partnership Firms HUFs, Companies Trusts/ Institutions are eligible. Purpose For purchase of two/three/four wheelers /heavy road /water transport vehicles/ for personal/ transport/ business/commercial purpose. Loan Amount For 2 wheelers: Rs. 1 lakh per vehicle For 3 wheelers: Rs. 2.00 lakh per vehicle For 4 wheelers and heavy vehicles / water transport vehicles: maximum Rs.75 lakh per vehicle. Rate of Interest Tenor upto 3 years 10.50% (w.e.f.04.05.2012) Tenor above 3 years & upto 5 years 11.00% Tenor above 5 years & upto 7 years 11.25% Repayment Maximum 60 months for purchased 2/3 wheelers. Maximum 84 months for other than 2/3 wheelers. B.B.M., ATNCC, Shimoga Page No. 50
CORPORATION BANK
Chapter 4- Research Design
Scope of the study Limitations of the study Tools and Techniques of Data Collection Views of Customers
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CORPORATION BANK
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CORPORATION BANK
RESEARCH DESIGN
Banks deal with the funds of a large number of depositors and banks are requires to return the money to the depositors with the promised amount of interest. Further, banks are also required to monitor the loans and also ensure that the loans do not turn bad. Consequently, they have to follow the principles of credit management to avoid the danger of failing. These fundamental principles are like a rudder to a ship, which have been guiding the function of lending ever since banking has evolved as a profession. The fundamental principles that are followed by a bank in managing the credit portfolio are safety, security, liquidity and profitability. These principles have undergone changes with changing times and developments in the banking industry. Lending is a crucial activity for a bank as it enables the bank generates income. But to sustain income generation, prudent decisions need to be taken both prior to and after sanctioning the credit. These decisions generally relate to the size, security and repayment of credit to be extended during a financial year, the industries to focus on, the geographical spread, the type of credit to offer, the type of proposals to finance, the disbursal mechanism, the collateral value, the method of pricing, the repayment schedule, the monitoring process, etc. The macro and micro level policies of the lending activity contribute to the achievement of the banks financial objectives. The banks management should thus, ensure that lending decisions fall in line to sub-serve the banks overall objectives of growth and stability. The present study is focusing the Lending and Recovery Management of Corporation Bank
OBJECTIVES OF THE STUDY

To highlight the Origin of Bank and Functions of Banker. To give the profile of Corporation Bank To give the Vision and Mission Statement of the bank and Organisation Structure To know the progress of the Bank To give the Profile of Sagar Taluk and Branch of corporation bank in brief To analysis the performance of Sagar branch in terms of Lending and Recovery B.B.M., ATNCC, Shimoga Page No. 53
CORPORATION BANK To offer suggestion for better performance of the Bank Role of Lending and Recovery management in Corporation Bank
To analyze the lending policy of the corporation bank limited
SCOPE OF THE STUDY

The study was done so as to know more about the Corporation Bank and its functioning. It was done in order to know about the performance of the bank over the years To make the readers of this project report aware of the features and benefits of lending and recovery offered by Corporation Bank The main scope of this study was to understand the Lending and Recovery Management
LIMITATIONS OF THE STUDY

The study is conducted in Sagar only Obtaining information from the office staff during the working hours was in convenient. The analysis is made by using simple statistical tools The study holds good only for the time period when the project was undertaken. This study is subject to time constraint. Some of the confidential information relating to the Lending and Recovery Management they have not revealed. Some of the confidencial information can not be given by them.
TOOLS AND TECHNIQUES OF DATA COLLECTION

There are two ways through which the data has been collected. Primary data Secondary data
PRIMARY DATA Primary data collected is the data collected through
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CORPORATION BANK Personal interview Report of the company
SECONDARY DATA Secondary data is that data which is obtained through Companys catalogue. Brochures Magazines Bank websites.
1. Approach to Bank The analysis on how the customers approached the bank for their requirements has indicated that 16 customers have approached the bank on their own and 4 through help of other. 2. Clearness of loan application Time taken for sanction of loans to customers will have greater impact on their attitude towards the bank of the 20 surveyed, 4 viewed that time log for sanctioning the loan to lindy, 5 moderate lindy and 11 as normal. 3. Repayment period About the repayment period 13 customers viewed that the period is sufficient and balance as in sufficient. Women customers opined that more time should be given to them. 4. Security Out of the 20 customers 18 have opined that security obtained by the bank fair and 2 felt that it is unfair. Those who opined unfair are of the opinion that the bank demand huge value of security but failed to met our hole of the financial requirement. This will affect the borrowings from other banks, as they will not give loan against the already secured properties. 5. Rate of Interest Out of 20 customers 15 have opined that the rate of interest is normal 2 as moderates high and 3 viewed as high. 6. Promoters Contribution B.B.M., ATNCC, Shimoga Page No. 55
CORPORATION BANK No banker is providing 100% loan to the purpose for which it is required. Asked about the promoter contribution in case of 10 customers 6 opined treat minimum promoters contribution is normal, and 2 each opined as moderately high and too high. 7. Legal Formalities About the legal formalities observed, 14 opined that the legal formalities follows by bank is simple and rest opined as rigid and complicated. 8. Effect is commencement of activity On these issue 16 customers has given the opinion among them 12 opined that the loan was given in time and rest opined that the period taken to sanction the loan is too lengthy. 9. Recovery Procedure Of the 20 customers 12 have viewed it has not strict and 8 has not strict. 10. Service Rating The image and reputation of the bank is much influenced by the consolidated opinion of the customers on various issues listed above. Based on the experience with the bank, the customers surveyed asked to assign the rates on the services of the bank. Four options were given to customers viz; VERY GOOD GOOD, AVERAGE, and BAD. Of the 20 customers surveyed 2 have opined that the service of corporation bank is VERY GOOD, 12 customers as GOOD and the remaining customers as AVERAGE. No customer opined that the service of Corporation Bank is average.
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CORPORATION BANK
Chapter 5-Analysis and Interpretation of the Data
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CORPORATION BANK This chapter is based on the secondary date collected from the sagar branch of Corporation Bank. The chapter throws light on the deposit mobilized by the bank, account wise deposit, advances across the activity, NPA level over the years etc. The primary data is collected as the lending and recovery related issues.
ANALYSIS OF DEPOSITS, ADVANCES AND RECOVERY

The analysis of the deposit and advance related an issue is made in the ensuring pages.
1. DEPOSITS
Accepting the money deposits is the primary function of any commercial bank. It is the source of strength which facilitates the lending function of the bank. The data relating to deposits during 2006-2007 to 2011-2012 accept. Presented in below table 5.1 Table 5.1 Deposits over the years (Rs. In cores) Year Ended Deposits %to Total Growth Rate 2006-2007 16.25 11.25% 2007-2008 17.61 12.19% 108.37% 2008-2009 19.42 13.44% 110.28% 2009-2010 19.66 13.61% 101.24% 2010-2011 36.08 24.98% 183.52% 2011-2012 35.43 24.53% 98.20% TOTAL 144.45 100.00% It can be seen from table 5.1 that the bank was able to increase the deposits from year to year. To be specific, the bank was able to mobilize 175.52 crores in 6 years in the study. The deposit is witnessing a positive growth rate in 2006-2007 to 2011-2012. Graphical Representation of Deposits
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CORPORATION BANK
2. ACCOUNT WISE DEPOSITS

The banker is accepting is deposits under S B account, current account, time deposit account. Table 5.2 shows the account wise deposits accepted in the year 2009-2010 and 2011-2012 Table 5.2 Accounts wise Deposits Type of Accounts 2009-2010 Savings Bank Accounts (SB) 12.22 Current Accounts (CA) Time Deposits (TD) TOTAL 2.58 21.28 36.08 % 33.87 7.15 58.98 100 (Rs. In cores) 2011-2012 % 12.18 2.31 20.94 35.43 34.38 6.52 59.1 100
It can be seen from table 5.2 that a big portion of the bank deposits came from time deposit account or term deposit accounts. To be specific in the year 2009-2010 out of 36.08 crores deposits, Rs 21.28 crores constituting 58.98% to total is from time deposits. This percentage rose to 59.10% in 2011-2012.The share of S.B. account is 33.87% in2009-2010 and 34.38% in 2011-2012. The current account which is preferred by traders occupied third position with just 2.58 crores and 2.31 crores deposits in 20092010 and 2011-2012 respectively. Thus the bank is stronger liquidity wise. Because the time deposits which are not often withdrawn by the customers. Graphical Representation of Account Wise Deposits
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CORPORATION BANK
3. ADVANCES
Advancing the money to the customers is another key function of the bank. The Corporation Bank is advancing the money for wide range of activities is studying part-b of the previous chapter. They include site purchase loan, vehicle loan, education loan, and business purposes. The total advances made by the bank over the years is given is presented in table 5.3 Table 5.3 Advances Over The Year Year Ended Advances 2006-2007 5.78 2007-2008 7.57 2008-2009 8.35 2009-2010 9.1 2010-2011 19.48 2011-2012 13.06 TOTAL 63.34 (Rs. In cores) % Total 9.13 11.95 13.18 14.37 30.76 20.61 100 Growth Rate 130.97 110.29 109.02 214.05 67 -
Table 5.3 reveals that there is continues increasing bank advances from the year 20062007 to 2011-2012.But declined in 2011-2012. In total Rs.63.04 crores is advanced by the banks during the period under study. They respective shares the total advances is 9.13% in 2006-2007, 11.95% in 2007-2008, 13.18% in 2008-2009, 14.37% in 2009-2010, 30.76% in 2010-2011 and 20.61% in 2011-2012. The growth rate in advances is high in 2010-20011. The ratio of deposits to advances during 1:0.438. That means out of every 1 rupees deposit 44 paise is lent are given to the customers. Graphical Representation of Advances
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CORPORATION BANK
4. ACTIVITY WISE ADVANCES

The bank is providing the money for various purposes are activities listed in chapter four. Agriculture, small enterprises and retail trade are the key lending areas of the bank.Table 5.4 shows the activity wise advances made by the bank. Table 5.4 Activity Wise Advances Activity Agriculture Small Enterprises Retail Trade Personal Loan 2009-2010 8.68 3.32 6.31 1.17 %to Total 2011-2012 44.56 17.04 32.39 6.01 3.55 2.36 6.11 1.04 (Rs in Cores) %to Total 27.18 18.07 46.78 7.97
TOTAL 19.48 100 13.06 100 It can be seen from table 5.4 that the agriculture was the top priority of the bank in 2009-2010 and retail trade in 2011-2012. To be specific in 2009-2010 out of Rs 93.48 crores advances, Rs 8.68 crores was lend to agriculture (constituting 44.56% to total advances) followed by retail trade to which 6.31 crores has advanced (constituting 32.39% to total).The share of small enterprises is 17.04% (loan amount is 3.32 crores) and personal loan amounting to Rs 1.17 crores. The percentage share of retail trade which ranked first in 2011-2012 is 46.78% (6.11 crores) agriculture is 27.18 crores (3.55 crores), 18.07% (amounting to Rs 2.36 crores. In these two years the ranking between agriculture and retail trade are interchanged. Graphical Representation of Activity wise Advances
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CORPORATION BANK
5.SECTOR WISE ASSISTENCE

The Sagar branch bank is lending money for three important sectors such as priority sector, agriculture and small scale industry. Table 5.5 shows the sector wise assistance given by the bank. Sector Wise Assistance Agriculture Small Scale Priority Sector Sector Industry Amount % Amount Amount 74.1 39300000 1 11900000 1824000 75.4 48400000 5 12400000 3350000 77.3 56600000 9 12500000 4037000 77.4 58400000 9 25000000 1966000 57.3 161600000 8 86800000 33200000 68.8 130600000 4 35500000 23600000
Year 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Total 53024000 64150000 73137000 85366000 281600000 189700000
It can be seen from table 5.5 that the priority sector (agriculture and small scale industry are the part of it) has received a loan to the tune of Rs 39300000 lakh out of total advances in the year 2006-2007 which constitute 74.11% to total advances in that year.The share of priority sector to total advances in 2007-2008 is 75.45%, in 2008-2009 it is 77.39%, in 2009-2010 77.49%, in 2010-2011 57.38% and 2011-12 it is 68.84%. Thus priority sector advances is increasing from year to year but declined in 2010-2011. Graphical Representation of Sector Wise Assistance
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CORPORATION BANK
6.RECOVERY POSITION
Management os recovery is one of the impportanr cash mangement areas of the bank since it affect the long run solvency and liquidity position of the bank. The data relating to the position of the recovery 2008-2009 to 2011-2012 is available from the bank.Table 5.6 shows the details. Table 5.6 Cash Recovery Year Amount 2008-2009 257000 2009-2010 2068000 2010-2011 2964000 2011-2012 1531000
Table 5.6 shows that the amount recovered is increasing from year to year in first three years but reduced in 2011-2012. Graphical Representation of Cash Recovery
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CORPORATION BANK
7.MANAGEMENT OF NPA
The assest which is not performing it is called NPAs. NPAs are inavaitable burden of the bankers.Table 5.7 shows the NPA leval of the bank over the year. Table 5.7 Year Ended 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 NPA Level Amount 6334000 6836000 5302000 4213000 4500000 10100000 % 107.93% 77.56% 79.46% 106.81% 224.44%
Table 5.7 reveals that the NPA level is witnessing a fluctuating variance over the years. To be specific compare to the year 2006-2007 the level of NPA has increased in 20072008 and decreased in 2008-2009 and 2009-2010 again increased in 2010-2011 and in 2011-2012 witnessed a sharp increase in NPA level of the bank. Some of the reasons identified this increase is: 1. Crop failure 2. Reduction in the price of arcanut which is the major economic crop of the sagar taluk. 3. The frequent loan waiver policies of the government is causing for poor recovery. The loan waiver on the one hand affected the recovery position and negatively influencing the repayment. Now formers are of the opinion that those who differed the payment are the intelligence and who has paid promptly is not intelligence. Graphical Representation of NPA Level
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CORPORATION BANK
Chapter 6- Summary of Findings, Suggestions and Conclusion
Analysis of the Survey Findings Problem Faced by Corporation Bank Sagar Branch Suggestions Conclusion
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CORPORATION BANK
ANALYSIS OF SURVEY FINDINGS

1. The following table shows the distribution
of respondents on
the basis of their age

AGE
18-25 25-50 50 and above TOTAL
NO OF RESPONDENTS
30 10 10 50
PERCENTAGE
60 20 20 100
From the above table is clear that more number of consumer belonging to the age group between 18-25. Thus is need to extend the credit facilities to the persons belonging to age group of 18-25 and 50 and above. The following graph shows the distribution of respondents on basis of their age
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CORPORATION BANK
2.Following graph shows the distribution of respondents on the basis of their sex and marital status PERTICULAR Male married Male unmarried Female married Female unmarried Total NO OF RESPONDENT 25 10 8 7 50 PERCENTAGE 50 20 16 14 100
From the above table, it is clear that more number of respondents belonging to male and married, thus there is need to extend credit facilities to the persons belonging to the female category and male unmarried category. The following Graph shows the distribution of respondents on the basis of their sex and marital status:
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CORPORATION BANK 3.The following table shows the occupation of the respondent OCCUPATION Student Professional Business House wife TOTAL NO OF RESPONDENT 10 30 40 20 100 PERCENTAGE 10 30 40 20 100
From the above table it is clear that the more number of account holders are business mans When compared to professionals and students, since they deal with day to day transactions and more benefited.
The following graph shows the occupation of respondent received there in
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CORPORATION BANK 4. The following table shows distribution of respondents on the basis of their INCOME
INCOME 1000-5000 5000-10000 10000-15000 15000 and above TOTAL
PER MONTH
NO OF RESPONDENT 20 60 10 10 100 PERCENTAGE 20 60 10 10 100
From the above table it is clear that the majority of account holder are belonging to 5000 to 10000 The following graph shows distribution of respondents on basis of their INCOME PER MONTH
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CORPORATION BANK
5.The following table shows the distribution of respondent on the basis of their education QUALIFICATION SSLC PUC DEGREE OTHER TOTAL NO OF RESPONDENT 10 20 60 10 100 PERCENTAGE 10 20 60 10 100
Above analysis it is clear that majority of account holders are degree holders compared to other groups and they have been operating account efficiently and without any difficulty. The following graph shows the distribution of respondent on the basis of their education
6.The following table shows The Media Through Which respondents Come To Know About SAGAR BRANCH(CORPORATION BANK) B.B.M., ATNCC, Shimoga Page No. 71
CORPORATION BANK
AREA Friends Advertisement Relatives Other TOTAL
NO OF RESPONDENT 25 12 8 5 50
PERCENTAGE 50 24 16 10 100
From the above table is clear that the most of the respondents comes to know about sagar Branch through friends. The following graph shows the media through which respondent come to know about SAGAR BRANCH (CORPRATION BANK)
50 45 40 35 30 25 20 15 10 5 0
50
25
24 16 12 8 10 5
Other
F riends
Advertis em ent
Relatives
7.The following table shows purpose for which the respondents taken loans. PURPOSES Addition of new product B.B.M., ATNCC, Shimoga NO OF RESPONDENTS 12 PECENTAGE 24 Page No. 72
CORPORATION BANK Expansion of business Modernization Installation of machinery TOTAL 28 8 2 50 56 16 4 100
From the above table it is clear that majority of account holders have taken Loans for expansion of their business rather than addition of new product, Modernisation and installation of machinery.
The following graph shows purpose for which the respondents taken loan
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CORPORATION BANK 8 The following table shows opinion of the respondents towards general concern of the clients : PARTICULARS Courteous Co-Operative Indifferent Rigid TOTAL NO OF RESPONDENTS 25 12 8 5 50 PERCENTAGE 50 24 16 10 100
Regarding general attitude of the clients towards the sagar branch survey revealed that50% respondents expressed as courteous, where as 24% respondents expressed as co-operative. 16% as indifferent
The following graph shows opinion of the respondent towards the general concerns of the client.
25
25
20
15
12
10
8 5
0 C ourteous C o-Operative Indifferent R ig id
9.The following table shows opinion of respondents towards compression of B.B.M., ATNCC, Shimoga Page No. 74
CORPORATION BANK the o the Corporation Bank Sagar Branch: PARTICULARS Excellent Good Cannot be compared Bad TOTAL NO OF RESPONDENTS 30 13 5 2 50 PERCENTAGE 60 26 10 4 100
From the above table it is clear that out of fifty respondents 30 of them felt services provided by the bank was excellent, 13of the felt good, out of 50, 5 respondents opinioned that it cannot be compared, 2 of them felt that the service
The following graph shows opinion of the respondents towards compression of the Corporation bank sagar
Problem faced by Corporation Bank Sagar Branch: The following are the problem faced by the Sagar Branch: B.B.M., ATNCC, Shimoga Page No. 75
CORPORATION BANK This Branch face stiff competition from commercial and co-operative banks and other private banks. Small gap between deposits and interests and advances, interest rates which results in lower profits. Recovery of funds is showing a poor performance, borrowers are not returning loans with in time. High interests rates with other banks results in heavy withdrawals of funds. Over dues and poor recovery. Problem faced by customer of sagar Branch: Delay in getting facilities: Some of the borrowers of the bank takes more times to loans felt tat the banks takes more time to complete formalities which results in delay in project and there by customer face losses. Loan instalment: In survey many customers have told that the bank must increase the loan instalment for the purpose of making recovery with low interest. Insufficient in repayment period: The number of beneficiaries are dissatisfied with the repayment period of loan. Beneficiaries told many reasons like proper incomes household requirement etc.. with such problems they cannot pay dues promptly. Hence people finds difficulty to meet their own loans with in a stipulated time.
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CORPORATION BANK
SUMMARY OF FINDINGS, SUGGESTIONS & CONCLUSION Corporation Bank is one of the major financial players in the country in general and Karnataka State in particular as for as sagar town is concerned, it is the only bank with 3 branches, and 2 ATMs counters. The bank is providing wide range of services to its customers and occupied a position of pride in sagar town. The present project report aim at analyzing the financial role of the bank with respect to lending and recovery and views of the customers on the services of the bank. Based on the banking literacy, annual reports, the major findings and views of the study are presented in the ensuring pages. SUMMARY OF FINDINGS The summary of the major findings of the study are as below. 1. The Sagar branch of Corporation Bank was started in the year 1936. 2. The loan schemes of the bank are corp. Site purchase loan, corp IPO scheme, crop byte computer loan, corp. home housing loan. corp Rental loan, corp vidya education loan,corp cash demat- share loan, corp Mortgage loan against property, corp docter plus equipment finance for medical professionals, corp personal loan, corp vyapar, loan, corp mitra, Corp Consumer, Corp Vehicle loan. 3. The bank is advancing for agriculture, Small enterprises and retail trade. 4. Though recoveries improved NPA level is also increased 5. It is providing good financial assistance. 6. Sagar branch of corporation bank charge considerable rate of interest for corp loans. 7. It pays a considerable rate of interest on deposits made by the customers. 8. Loan amount and Loan installment provided by the bank is satisfied to a maximum number of customer. 9. customer opinion is that the compression of Corporation bank with the other bank is excellence. 10. Customers are satisfied with the service provided by the sagar branch.
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CORPORATION BANK SUGGESTION The following are the suggestion given on the basis of survey made: 1. Rate of Interest: Interest charges by the bank is considerable. So it has to maintains its rate of interest in future. 2. Loan installment: From the survey it is quite clear that the bank has not providing the adequate loan installment so it has to increase the adequate loan installment. 3. Recovery Charges: Recovery charges should be reduced as low as possible because all are not in the position to pay more amounts. 4.New Schemes: The Bank should take necessary steps to promote the new schemes. 5. Lack Of Staff: The bank should take necessary steps to reduce over burden on employees because of Less number of employees. The may result in fatigue and frustration. 6. Political Influence: The banker should never care for political influence. They should act promptly according To the rules and regulation of the bank as well as government. Branch manager should report the Management authorities about such political influence. 7. Innovative loan schemes shall be introduced to face the completion. 8. The bank can think in terms of installing ATM counter in APMC yard branch sagar. 9. The bank is weak in terms of agriculture loan. Therefore efforts to attract the formers in sagar taluk should be made. 10. It is advisably to locate sagar branch at ground floor so as to give access to old age and women customers.
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CORPORATION BANK
CONCLUSION The present study as evaluated the lending and recovery management of Corporation Bank Sagar. The analysis is made by taking the views of the customers about sagar branch and by analysing the advances and recovery. The study revealed that the bank has performed well in term of lending the money and recovering the same. But the increase in NPA level over the years at the national level is an alarming one. Based on the views of the customers, some suggestions are offered by the study to facilitate the first growth and development of the bank.
Page No. 79
CORPORATION BANK
ANNEXURE
Questionnaire Bibliography
Page No. 80
CORPORATION BANK QUESTIONNAIRE Dear Sir/Madam I am student final year BBM in Acharya Tulasi National College of Commerce, Shimoga, for the partial fulfillment of requirement for award of BBM degree, I am doing a project report on Lending and Recovery management, A case study of corporation bank. Sagar. So I request your co-operation in filling the questionnaire, please take few minutes to fill the appropriate answer. The data collected will be used for academic purpose only. Thanking You, Yours faithfully, Navaneeta. G 1. Name 2. Address 3. Age: 18-25( ) 4. Sex : Male( ) 5. Marital State: Married ( ) 6. Education: SSLC ( ) Degree ( ) 7. Occupation: Student ( ) Employee ( ) House wife ( ) 8. Income : 1000 ( ) 5000-10000 ( ) 9.Do you deal with banks : Yes ( ) 10000-15000 ( ) 15000 and above ( ) No ( ) professional ( ) Businessmen ( ) PUC ( ) others ( ) Unmarried ( ) Female( ) 25-50 ( ) 50 and above ( ) : :
10.Have you heard about the Corporation Bank, sagar branch: Yes ( ) No ( )
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CORPORATION BANK 11.If yes, from whom you have heard about the sagar branch: Friends ( ) Advertisement ( ) Relatives ( ) Others( ) 12.Do you have any account in corporation bank: Yes ( ) No( ) 13. Have you received any Loans advances in this branch : Yes ( ) No ( ) 14.If yes, for what purpose you have taken loans: Addition of new product( ) Expansion of business( ) Modernization ( ) Installation of machinery ( ) 15.Are you satisfied with the loan amount: Yes ( ) No ( ) 16.What is your opinion about the Legal Formalities adopted by the bank: Simple ( ) Rigid and complicated ( ) 17. What is your opinion about the Rate of interest on loans and advances Reasonable ( ) Low ( ) Very high ( ) Satisfactory ( ) 18.how much time will taken for sanctioning of loan? Moderate ( ) Normal ( ) 19.How is the General concern to clients: Courteous ( ) Rigid ( ) Co-operative ( ) Indifferent ( )
20.Have you taken any financial assistance from other bank: Yes ( ) No ( ) 21.if yes, what is your compression of Corporation Bank with that Bank: Excellence ( ) Good ( ) Cannot be compared ( ) Bad ( ) 22. Are you satisfied with the loan installment Yes ( ) 23.Overall opinion about bank Very good ( ) Good ( ) Date B.B.M., ATNCC, Shimoga No ( ) Average ( ) Bad ( ) Signatures Page No. 82
CORPORATION BANK
BIBLIOGRAPHY Books: Baligar G.B, Law and Practice of Banking, Ashok Prakasher, Hubli. Gordon and Natarajan, Banking Theory Law and Practice Himalaya Publishing House, Mumbai. Raman B.S, Banking Theory and Practice, United Publishers, Mangalore. Premkumar Srivatsava, Banking Theory and Practice, Himalaya Publishing House, Mumbai-2007. Others Annual Report-Corporation Bank www.corporationbank.com www.rbi.com
Page No. 83

Corporation Bank BBM Project

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CORPORATION BANK

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

VISION OF BANKS IN INDIA

OBJECTIVES OF THE STUDY

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

INDIAN BANKING INDUSTRY

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

3. Private Sector Banks

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

5. Scheduled banks and non scheduled banks

B.B.M., ATNCC, Shimoga

Chapter 2-Company Profile

B.B.M., ATNCC, Shimoga

HISTORY OF CORPORATION BANK

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

100yrs of Corporation Bank

B.B.M., ATNCC, Shimoga

WORK FLOW MODEL OF CREDIT DIVISION CORPORATION BANK

PROPOSAL SENT TO THE SENCTIONING AUTHORITY

KNOW YOUR CUSTOMER (KYC)

TERMS AND CONDITIONS COMMUNITACTED

APPRISAL OF THE PROPOSAL

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

Awards and Accolades of the Bank

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

THE ORGANIZATION STRUCTURE OF SAGAR BRANCH.

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

Customer Service and Technology

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

FUTURE GROWTH PROSPECTS

B.B.M., ATNCC, Shimoga

Chapter 3-Management of Lending and Recovery

B.B.M., ATNCC, Shimoga

MANAGEMENT OF LENDING AND RECOVERY

B.B.M., ATNCC, Shimoga

BASIC REQUIREMENTS OF LENDING

PART A Principles of Sound Lending

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

SECURED AND UNSECURED ADVANCES

B.B.M., ATNCC, Shimoga

B.B.M., ATNCC, Shimoga

4. Bill Discounted and Purchased

B.B.M., ATNCC, Shimoga

Part-B Loan Schemes

B.B.M., ATNCC, Shimoga

1. Corp Site Purchase Loan

B.B.M., ATNCC, Shimoga

2. Corp IPO Scheme

3. Corp Byte Computer Loan

B.B.M., ATNCC, Shimoga

4. Corp Home Housing Loan